<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: May 13, 1999
Date of Earliest Event Reported: April 28, 1999
PHOENIXSTAR, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
000-23883 84-1441684
(Commission File Number) (I.R.S. Employer Identification No.)
8085 South Chester, Suite 300
Englewood, Colorado 80112
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (303) 712-4600
PRIMESTAR, INC.
(Former name, if changed since last report)
<PAGE>
Item 2. Disposition of Assets.
- - ------- ----------------------
Effective April 28, 1999 (the "Hughes Closing Date") and pursuant to
an asset purchase agreement dated January 22, 1999 (the "Hughes Medium Power
Agreement"), Phoenixstar, Inc. (formerly PRIMESTAR, Inc.)("Phoenixstar" or the
"Company") sold its medium-power direct broadcast satellite business to Hughes
Electronics Corporation ("Hughes"), a subsidiary of General Motors Corporation,
for aggregate consideration of $1,358.2 million (the "Hughes Medium Power
Transaction"). Such consideration was comprised of $1,100 million in cash
(before working capital adjustments and closing costs) and 4.871 million shares
of General Motors Class H common stock ("GMH Stock") valued at $258.2 million on
the Hughes Closing Date. The purchase price is subject to working capital
adjustments to be settled within 90 days after the Hughes Closing Date.
Item 5. Other Events.
- - ------- -------------
Concurrently with the Hughes Medium Power Transaction, Phoenixstar
reached an agreement (the "Lock-up Agreement") with holders of approximately 84%
of the aggregate principal amount of its 10-7/8% Senior Subordinated Notes due
2007 (the "Senior Subordinated Notes"), 12-1/4% Senior Subordinated Discount
Notes due 2007 (the "Senior Subordinated Discount Notes" and, together with the
Senior Subordinated Notes, the "Notes"), and notes issued under its Senior
Subordinated Credit Facility dated as of April 1, 1998 (the "Bridge Loans").
Holders participating in the privately negotiated transaction agreed to sell
their Notes and Bridge Loans to the Company for cash equal to 85.6% of the
aggregate principal amount thereof, plus stock appreciation rights ("SARs") on
the shares of GMH Stock received by Phoenixstar in the Hughes Medium Power
Transaction. Each SAR issued in the transaction entitles the holder to receive
a payment from Phoenixstar at the end of one year from the date of issuance in
the amount, if any, by which the market price per share of GMH Stock at such
time exceeds $47.00 per share. Participating Note holders and bridge lenders
will receive approximately 7.8 SARs per $1,000 principal amount of debt sold to
Phoenixstar pursuant to the Lock-up Agreement. Participating Note holders and
bridge lenders also agreed to (i) consent to the transaction with Hughes and
(ii) amend the indentures by supplemental indentures (the "Supplemental
Indentures") and credit agreement governing such debt obligations to remove
substantially all covenants, other than the covenants to pay interest on and
principal of the Notes and Bridge Loans when due and covenants relating to
certain required purchase offerings.
The SARs are secured by a first priority pledge and security interest
in the underlying shares of GMH Stock, and such pledge and security interest
have been pledged by Phoenixstar for the benefit of the holders of the SARs.
The shares of GMH Stock received by Phoenixstar are subject to certain
restrictions on transfer during the first year after the closing of the Hughes
Medium Power Transaction, and Phoenixstar will be entitled to certain
registration rights with respect to such shares following the expiration of such
one-year period.
Under the terms of the indentures and credit agreement governing
Phoenixstar's subordinated debt, Phoenixstar is required to make an offer to
purchase the remainder of the outstanding publicly traded Notes at a purchase
price equal to 101% of par. In that connection, the Company has commenced an
offer to purchase the remaining Notes, as described below.
1
<PAGE>
In connection with the Hughes Medium Power Transaction, affiliates of
the stockholders of the Company, other than TCI Satellite Entertainment, Inc.
("TSAT"), and an affiliate of Tele-Communications, Inc. (collectively, the
"Stockholder Affiliates") committed to make funds available to the Company,
either in the form of capital contributions or loans, up to an aggregate of
$1,013 million (the "Stockholder Commitment"). Pursuant to such commitment, the
Stockholder Affiliates contributed to the Company $307.7 million on the Hughes
Closing Date (the "Initial Funding Amount"). On the Hughes Closing Date, the
Company used a portion of the cash proceeds from the Hughes Medium Power
Transaction and the Initial Funding Amount to (i) repay principal, interest and
fees due under the Company's senior bank credit facility ($537.5 million), (ii)
fund amounts due pursuant to the Lock-up Agreement ($543.5 million) and (iii)
fund amounts due to holders of Bridge Loans who were not party to the Lock-up
Agreement pursuant to the terms of the credit agreement governing the Bridge
Loans ($10.1 million).
Pursuant to the indentures governing the Notes (the "Indentures"), on
May 13, 1999, the Company commenced a tender offer to purchase all Notes not
purchased pursuant to the Lock-up Agreement (the "Remaining Notes"), on the
terms required by the Indentures. The terms and conditions of such tender offer
are set forth in the Offer to Purchase, dated May 13, 1999 (the "Offer to
Purchase"), sent by the Company to the holders of the Remaining Notes. The
Offer to Purchase and related materials are filed as an exhibit hereto. In
connection therewith, the Company also sent to the holders of the Remaining
Notes notice informing them that a "change of control" had occurred and
informing them of the effectiveness of the Supplemental Indentures, as required
by the Indentures.
In connection with their approval of the Hughes Medium Power
Transaction, the stockholders of Phoenixstar also approved the payment to TSAT
of consideration in the form of 1.407 million shares of GMH Stock (the
"Phoenixstar Payment"), subject to the terms and conditions set forth in an
agreement dated as of January 22, 1999 (the "Phoenixstar Payment Agreement"). In
consideration of the Phoenixstar Payment, TSAT agreed to approve the Hughes
Medium Power Transaction and Hughes High Power Transaction as a stockholder of
Phoenixstar, to modify certain agreements to facilitate the Hughes High Power
Transaction, and to issue to the Company a share appreciation right with respect
to the shares of GMH Stock received as the Phoenixstar Payment, granting the
Company the right to any appreciation in such GMH Stock over the one-year period
following the date of issuance, over an agreed strike price of $47.00. Pursuant
to the Phoenixstar Payment Agreement, TSAT has also agreed to forego any
liquidating distribution or other payment that may be made in respect of the
outstanding shares of Phoenixstar upon any dissolution and winding-up of
Phoenixstar, or otherwise in respect of Phoenixstar's existing equity. On the
Hughes Closing Date, the Company distributed to TSAT 1.407 million shares of GMH
Stock in satisfaction of the Phoenixstar Payment.
2
<PAGE>
Subsequent to the Hughes Closing Date, the Company is responsible for
(i) the payment of certain obligations not assumed by Hughes, (ii) the payment
of costs, currently estimated to range from $270 million to $340 million,
associated with the termination of certain vendor and service contracts and
lease agreements not assumed by Hughes, (iii) the payment to all Note holders
who participate in the tender offer for the Remaining Notes the purchase price
for each Note so tendered, as provided in the Offer to Purchase, and, the
repayment of principal and interest due pursuant to the Notes not paid as part
of the Lock-up Agreement or Offer to Purchase and (iv) the repayment of amounts
due under the Company's Partnership Credit Facility. The Company currently
expects to fund such obligations with available cash, additional advances and/or
contributions from the Stockholder Affiliates pursuant to the Stockholder
Commitment and any proceeds received by the Company in connection with the
previously announced sale to Hughes of the high power direct broadcast satellite
system being constructed by Tempo Satellite, Inc (a subsidiary of TSAT), and the
sale and/or termination of the Company's rights with respect thereto.
3
<PAGE>
Item 7. Financial Statements and Exhibits.
- - ------- ----------------------------------
(b) Pro forma financial information.
PRIMESTAR, Inc. Condensed Pro Forma Combined Financial Statements Year
ended December 31, 1998.
(c) Exhibits.
4.1 Indenture between TSAT, as issuer,, and The Bank of New York, as
trustee (the "Trustee"), dated as of February 20, 1997, governing the
12-1/4% Senior Subordinated Discount Notes (the "Original Discount
Indenture"), incorporated by reference from TSAT's Annual Report on
Form 10K for the year ended December 31, 1996 (Commission File No. 0-
21317).
4.2 Amendment and Supplement to the Original Discount Indenture, dated as
of April 1, 1998, pursuant to which the Registrant assumed TSAT's
obligations under the Original Discount Indenture, incorporated
herein by reference from TSAT's Registrations Statement on Form S-4/A
(Registration Number 333-25001), filed with the Commission on
February 13, 1998, as declared effective by the Commission on
February 17, 1998. Only the form of such Amendment and Supplemental
Indenture was filed.
4.3 Second Supplemental Indenture to the Original Discount Indenture,
dated as of April 27, 1999, between the Company and the Trustee,
filed herewith.
4.4 Indenture between TSAT and the Trustee, dated as of February 20,
1997, governing the 10-7/8% Senior Subordinated Notes (the "Original
Coupon Indenture"), incorporated herein by reference from TSAT's
Annual Report on Form 10-K for the year ended December 31, 1996
(Commission File No. 0-21317).
4.5 Amendment and Supplement to the Original Indenture, dated as of April
1, 1998, pursuant to which the Registrant assumed TSAT's obligations
under the Original Coupon Indenture, incorporated herein by reference
from TSAT's registration Statement on Form S-4/A (Registration Number
333-25001), filed with the Commission on February 13, 1998, as
declared effective by the Commission on February 17, 1998. Only the
form of such Amendment and Supplemental Indenture was filed.
4.6 Second Supplemental Indenture to the Original Coupon Indenture, dated
as of April 27, 1999, between the Company and the Trustee, filed
herewith.
10.1 Funding Agreement, filed herewith.
10.2 Lock-up Agreement, filed herewith.
10.3 Indemnity Agreement, dated as of April 28, 1999, filed herewith.
10.4 Registration Rights Agreement, dated as of April 28, 1999, filed
herewith.
4
<PAGE>
10.5 Share Appreciation Rights Agreement, dated as of April 28, 1999,
filed herewith.
10.6 Pledge and Security Agreement, dated as of April 28, 1999, filed
herewith.
10.7 PRIMESTAR Payment Agreement, filed herewith.
10.8 Hughes Medium Power Agreement, incorporated by reference to the
Company's Current Report on Form 8-K dated February 1, 1999
(Commission File No. 000-23883).
99.1 Press Release, dated April 28, 1999, filed herewith.
99.2 Press Release, dated May 13, 1999, announcing the Offer to Purchase,
filed herewith.
99.3 Offer to Purchase (and related materials relating to the required
tender offer for the Notes), filed herewith.
99.4 Notice of "change of control" and the effectiveness of the
Supplemental Indentures, filed herewith.
5
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: May 13, 1999
PHOENIXSTAR, INC.
(Registrant)
By: /s/ Kenneth G. Carroll
-----------------------
Name: Kenneth G. Carroll
Title: Senior Vice President and
Chief Financial Officer
6
<PAGE>
PHOENIXSTAR, INC. AND SUBSIDIARIES
(formerly PRIMESTAR, Inc.)
Condensed Pro Forma Combined Financial Statements
December 31, 1998
(unaudited)
Effective April 28, 1999 (the "Hughes Closing Date") and pursuant to
an asset purchase agreement dated January 22, 1999 (the "Hughes Medium Power
Agreement"), the Company sold its medium-power direct broadcast satellite
business to Hughes Electronics Corporation ("Hughes"), a subsidiary of General
Motors Corporation, for aggregate consideration of $1,358.2 million (the "Hughes
Medium Power Transaction"). Such consideration was comprised of $1,100 million
in cash (before working capital adjustments and closing costs) and 4.871 million
shares of General Motors Class H common stock ("GMH Stock") valued at $258.2
million on the Hughes Closing Date.
Concurrently with the Hughes Medium Power Transaction, Phoenixstar
reached an agreement (the "Lock-up Agreement") with holders of approximately 84%
of the aggregate principal amount of its 10-7/8% Senior Subordinated Notes due
2007 (the "Senior Subordinated Notes"), 12-1/4% Senior Subordinated Discount
Notes due 2007 (the "Senior Subordinated Discount Notes" and, together with the
Senior Subordinated Noted, the "Notes"), and notes issued under its Senior
Subordinated Credit Facility dated as of April 1, 1998 (the "Bridge Loans").
Holders participating in the privately negotiated transaction agreed to, among
other things, sell their Notes and Bridge Loans to the Company for cash equal to
85.6% of the aggregate principal amount thereof, plus stock appreciation rights
on the shares of GMH Stock received by Phoenixstar in the Hughes Medium Power
Transaction.
Under the terms of the indentures and credit agreement governing
Phoenixstar's subordinated debt, Phoenixstar is required to make an offer to
purchase the remainder of the outstanding publicly traded Senior Subordinated
Notes and Senior Subordinated Discount Notes at a purchase price equal to 101%
of par. In that connection the Company commenced an offer to purchase the
remaining Notes.
In connection with the Hughes Medium Power Transaction, affiliates of
the stockholders of the Company, other than TSAT, and an affiliate of Tele-
Communications, Inc. (collectively, the "Stockholder Affiliates") committed to
make funds available to the Company, either in the form of capital contributions
or loans, up to an aggregate of $1,013 million (the "Stockholder Commitment").
On the Hughes Closing Date, the Company used a portion of the cash proceeds from
the Hughes Medium Power Transaction and amounts contributed by the Stockholder
Affiliates on the Hughes Closing Date (the "Initial Funding Amount") to (i)
repay principal, interest and fees due under the Company's senior bank credit
facility, (ii) fund amounts due pursuant to the Lock-up Agreement and (iii) fund
amounts due to holders of Bridge Loans who were not party to the Lock-up
Agreement pursuant to the terms of the credit agreement governing the Bridge
Loans.
<PAGE>
In connection with their approval of the Hughes Medium Power
Transaction, the stockholders of Phoenixstar also approved the payment to TSAT
of consideration in the form of 1.407 million shares of GMH Stock (the
"Phoenixstar Payment"), subject to the terms and conditions set forth in an
agreement dated as of January 22, 1999. On the Hughes Closing Date, the Company
distributed to TSAT 1.407 million shares of GMH Stock in satisfaction of the
Phoenixstar Payment.
The following unaudited condensed pro forma combined balance sheet of
the Company, dated as of December 31, 1998, assumes that the Hughes Medium Power
Transaction had occurred as of such date. The following unaudited condensed pro
forma combined statement of operations of the Company for the year ended
December 31, 1998 assumes that the Hughes Medium Power Transaction had occurred
as of January 1, 1998.
The unaudited pro forma results do not purport to be indicative of the
results of operations that would have been obtained if the Hughes Medium Power
Transaction had occurred as of January 1, 1998.
<PAGE>
PHOENIXSTAR, INC. AND SUBSIDIARIES
(formerly PRIMESTAR, Inc.)
Condensed Pro Forma Combined Balance Sheet
December 31, 1998
(unaudited)
<TABLE>
<CAPTION>
PRIMESTAR Pro forma PRIMESTAR
historical adjustments pro forma
------------ ----------- -----------
amounts in thousands
<S> <C> <C> <C>
Assets
- - ------
Cash and cash equivalents $ -- 976,940 (1) 25,000
229,944 (2)
(1,181,884)(3)
Accounts receivable and prepaid expenses 143,567 (143,567)(1) --
Investment in GMH stock -- 258,187 (1) 183,600
(74,587)(4)
Property and equipment, net 1,148,590 (1,148,590)(1) --
Intangible assets, net 786,373 (316,875)(1) 469,498
Deferred financing costs and other assets, net 33,557 (5,500)(1) --
(28,057)(3)
----------- ----------- -----------
$ 2,112,087 (1,433,989) 678,098
=========== =========== ===========
Liabilities and Stockholders' Deficit
- - -------------------------------------
Accounts payable and accrued expenses $ 331,424 (293,624)(1) 81,000
43,200 (1)
Accrued interest payable 16,142 (10,507)(3) 5,635
Deferred revenue 100,948 (100,948)(1) --
Phoenixstar GMH SAR liability -- 29,229 (3) 29,229
Debt 1,833,195 (1,321)(1) 578,952
(1,252,922)(3)
Deferred income taxes 75,057 (75,057)(1) --
Other liabilities 40,095 (15,033)(1) 25,062
----------- ----------- -----------
Total liabilities 2,396,861 (1,676,983) 719,878
----------- ----------- -----------
Stockholders' Deficit:
Common stock 2,009 -- 2,009
Additional paid-in capital 1,511,041 229,944 (2) 1,740,985
Accumulated deficit (1,797,824) 63,378 (1) (1,776,330)
24,259 (3)
(66,143)(4)
TSAT GMH SAR receivable -- (8,444)(4) (8,444)
----------- ----------- -----------
Total stockholders' deficit (284,774) 242,994 (41,780)
----------- ----------- -----------
Commitments and contingencies
$ 2,112,087 (1,433,989) 678,098
=========== =========== ===========
</TABLE>
See accompanying notes to condensed pro forma combined financial statements.
<PAGE>
PHOENIXSTAR, INC. AND SUBSIDIARIES
(formerly PRIMESTAR, Inc.)
Condensed Pro Forma Combined Statement of Operations
Year ended December 31, 1998
(unaudited)
<TABLE>
<CAPTION>
PRIMESTAR Pro forma PRIMESTAR
historical adjustments pro forma
------------ ------------- -----------
amounts in thousands,
except per share amounts
<S> <C> <C> <C>
Revenue $ 1,289,666 (1,289,666)(5) --
------------ ------------- -----------
Operating costs and expenses:
Operating, selling, general and
administrative 1,133,834 (1,133,834)(5) --
Impairment of long-lived assets 950,289 (950,289)(5) --
Depreciation and amortization 543,087 (543,087)(5) --
------------ ------------- -----------
2,627,210 (2,627,210) --
------------ ------------- -----------
Operating loss (1,337,544) 1,337,544 --
Other expense:
Interest expense (145,939) 119,117 (6) (26,822)
Other, net (7,749) 7,749 (5) --
------------ ------------- -----------
(153,688) 126,866 (26,822)
------------ ------------- -----------
Loss before income taxes (1,491,232) 1,464,410 (26,822)
Income tax benefit 147,528 (147,528)(7) --
------------ ------------- -----------
Net loss $ (1,343,704) 1,316,882 (26,822)
============ ============= ===========
Basic and diluted loss per common share $ (8.02) 7.86 (.16)
============ ============ ===========
</TABLE>
See accompanying notes to condensed pro forma combined financial statements.
<PAGE>
PHOENIXSTAR, INC. AND SUBSIDIARIES
(formerly PRIMESTAR, Inc.)
Notes to Condensed Pro Forma Combined Financial Statements
December 31, 1998
(unaudited)
(1) Represents the sale of the Company's medium power DBS assets and
liabilities, exclusive of assets not acquired and liabilities not assumed
by Hughes, for $1,100 million in cash (before working capital adjustments
of $116.0 million and closing expenses of $7.1 million) and 4.871 million
shares of GMH Stock valued at $53.00 per share (the GMH Stock closing price
on the Hughes Closing Date). Also represents the recognition of
liabilities in the aggregate amount of $43.2 million related to employee
severance and the termination of certain leases and vendor contracts.
(2) Represents the Initial Funding Amount contributed by the Stockholder
Affiliates.
(3) Represents the repayment of principal and accrued interest and fees
pursuant to the Company's senior bank credit facility, the Notes and the
Bridge Loan and the elimination of related deferred loan costs. Repayment
of the Notes and Bridge Loan assumes 84% of the aggregate principal amount
was repaid at 85.6% of par, and the remaining 16% of the aggregate
principal amount was repaid at 101% of par. Also represents recognition of
the amount due to the former lenders pursuant to the Phoenixstar GMH SAR
calculated as follows:
Fair value of GMH Stock on April 28, 1999 $ 53
Phoenixstar GMH SAR exercise price (47)
------------
Difference 6
Number of shares of GMH Stock subject to
Phoenixstar GMH SAR x 4,871,448
------------
Phoenixstar GMH SAR liability $ 29,228,688
============
(4) Represents the payment of 1.407 million shares of GMH Stock (valued at $53
per share) to TSAT and the recognition of the amount due from TSAT pursuant
to the TSAT GMH SAR calculated as follows:
Fair value of GMH Stock on April 28, 1999 $ 53
TSAT GMH SAR exercise price (47)
------------
Difference 6
Number of shares of GMH Stock subject to
TSAT GMH SAR
x 1,407,307
------------
TSAT GMH SAR receivable $ 8,443,842
============
<PAGE>
(5) Represents the elimination of the historical results of operations of the
Company's medium power DBS business.
(6) Represents the elimination of the historical interest expense related to
the Company's senior bank credit facility, the Notes and the Bridge Loans.
(7) Represents the assumed income tax effect of the pro forma adjustments.
<PAGE>
Exhibit Index
-------------
4.1 Indenture between TSAT, as issuer,, and The Bank of New York, as trustee
(the "Trustee"), dated as of February 20, 1997, governing the 12-1/4%
Senior Subordinated Discount Notes (the "Original Discount Indenture"),
incorporated by reference from TSAT's Annual Report on Form 10K for the
year ended December 31, 1996 (Commission File No. 0-21317).
4.2 Amendment and Supplement to the Original Discount Indenture, dated as of
April 1, 1998, pursuant to which the Registrant assumed TSAT's obligations
under the Original Discount Indenture, incorporated herein by reference
from TSAT's Registrations Statement on Form S-4/A (Registration Number 333-
25001), filed with the Commission on February 13, 1998, as declared
effective by the Commission on February 17, 1998. Only the form of such
Amendment and Supplemental Indenture was filed.
4.3 Second Supplemental Indenture to the Original Discount Indenture, dated as
of April 27, 1999, between the Company and the Trustee, filed herewith.
4.4 Indenture between TSAT and the Trustee, dated as of February 20, 1997,
governing the 10-7/8% Senior Subordinated Notes (the "Original Coupon
Indenture"), incorporated herein by reference from TSAT's Annual Report on
Form 10-K for the year ended December 31, 1996 (Commission File No. 0-
21317).
4.5 Amendment and Supplement to the Original Indenture, dated as of April 1,
1998, pursuant to which the Registrant assumed TSAT's obligations under the
Original Coupon Indenture, incorporated herein by reference from TSAT's
registration Statement on Form S-4/A (Registration Number 333-25001), filed
with the Commission on February 13, 1998, as declared effective by the
Commission on February 17, 1998. Only the form of such Amendment and
Supplemental Indenture was filed.
4.6 Second Supplemental Indenture to the Original Coupon Indenture, dated as of
April 27, 1999, between the Company and the Trustee, filed herewith.
10.1 Funding Agreement, filed herewith.
10.2 Lock-up Agreement, filed herewith.
10.3 Indemnity Agreement, dated as of April 28, 1999, filed herewith.
10.4 Registration Rights Agreement, dated as of April 28, 1999, filed herewith.
10.5 Share Appreciation Rights Agreement, dated as of April 28, 1999, filed
herewith.
10.6 Pledge and Security Agreement, dated as of April 28, 1999, filed herewith.
10.7 PRIMESTAR Payment Agreement, filed herewith.
<PAGE>
10.8 Hughes Medium Power Agreement, incorporated by reference to the Company's
Current Report on Form 8-K dated February 1, 1999 (Commission File No.
000-23883).
99.1 Press Release, dated April 28, 1999, filed herewith.
99.2 Press Release, dated May 13, 1999, announcing the Offer to Purchase, filed
herewith.
99.3 Offer to Purchase (and related materials relating to the required tender
offer for the Notes), filed herewith.
99.4 Notice of "change of control" and the effectiveness of the Supplemental
Indentures, filed herewith.
<PAGE>
EXHIBIT 4.3
================================================================================
PRIMESTAR, INC.
and
THE BANK OF NEW YORK, Trustee
____________________
SECOND SUPPLEMENTAL INDENTURE
Dated as of April 27, 1999
To the Indenture
Dated as of February 20, 1997
____________________
10-7/8%% Senior Subordinated Notes due 2007
================================================================================
1
<PAGE>
SUPPLEMENTAL INDENTURE NO. 2 dated as of April 27, 1999 (this
"Supplemental Indenture") between PRIMESTAR, Inc., a Delaware corporation (the
"Company"), and The Bank of New York, as trustee ("Trustee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, (i) TCI Satellite Entertainment, Inc. ("TSAT") and the
Trustee entered into the Indenture, dated as of February 20, 1997 (the "Original
Indenture"), with respect to $200,000,000 aggregate principal amount of 10-7/8%
Senior Subordinated Notes due 2007, Series A and Series B (the "Notes") and (ii)
TSAT, the Company, and the Trustee entered into the First Supplemental Indenture
to the Original Indenture, dated as of April 1, 1998 (the "First Supplemental
Indenture" and, together with the Original Indenture, the "Indenture"), pursuant
to which the Company assumed TSAT's obligations with respect to the Notes;
WHEREAS, all capitalized terms used but not defined herein shall have
the same meanings ascribed to such terms in the Indenture;
WHEREAS, Section 10.02 of the Indenture provides that the Company and
the Trustee may amend or supplement certain provisions of the Indenture with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding;
WHEREAS, the Company, Holders constituting at least a majority in
principal amount of the Notes outstanding and certain other parties have entered
into that certain lock-up agreement, dated as of April 20, 1999 (the "Lock-up
Agreement"), pursuant to which such Holders consented to the Proposed Amendments
(as defined in the Lock-up Agreement) to the Indenture;
WHEREAS, in accordance with the terms of the Lock-up Agreement, the
holders of a majority in principal amount of the outstanding Notes have
consented to the Proposed Amendments to be effected by this Supplemental
Indenture;
WHEREAS, the Company has authorized the execution and delivery of this
Supplemental Indenture and the Trustee has received an Opinion of Counsel and an
Officers' Certificate pursuant to Sections 10.06 and 13.04 of the Indenture, and
therefore the Company and the Trustee are authorized to execute and deliver this
Supplemental Indenture;
NOW THEREFORE, in consideration of good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
2
<PAGE>
SECTION 1. AMENDMENTS TO INDENTURE.
-----------------------
(a) Effective as of the Operative Date (as hereinafter defined), the
following sections of the Indenture are hereby eliminated: Section 4.03; Section
4.04; Section 4.06; Section 4.07; Section 4.08; Section 4.09; Section 4.10;
Section 4.15; Section 4.16; Section 4.17; Section 4.18; Section 4.20; Section
4.21; Section 4.22; Section 5.01; Section 5.02; Section 6.01(6); and Section
6.01(7).
The text of the above sections are replaced by the phrase
"Intentionally deleted", and the surrounding sections are not renumbered.
(b) All definitions set forth in Section 1.01 that relate to defined
terms used solely in sections deleted hereby are deleted in their entirety as of
the Operative Date (as defined below).
SECTION 2. MISCELLANEOUS.
-------------
(a) Operative Date. The amendments to the Indenture made hereby shall
---------------
only become effective on the Note Purchase Closing Date (as defined in the Lock-
up Agreement) applicable to the Notes (the "Operative Date"). This Supplemental
Indenture is effective upon execution.
(b) Conflict with the TIA. If any provision of this Supplemental
----------------------
Indenture modifies or excludes any provision of the TIA that is required under
such Act to be part of and govern the Indenture, the latter provision of the TIA
shall control. If any provision hereof modifies or excludes any provision of
the TIA that may be so modified or excluded, the latter provision of the TIA
shall be deemed to apply to this Supplemental Indenture, as so modified or
excluded, as the case may be.
(c) Notes Deemed Conformed. Beginning at the Operative Date, the
-----------------------
provisions of each Note then outstanding shall be deemed to be conformed,
without the necessity for any reissuance or exchange of such Note or any other
action on the part of the Holders, the Company or the Trustee, so as to reflect
this Supplemental Indenture.
(d) Successors. All agreements of the Company and the Trustee in this
-----------
Supplemental Indenture and in the Indenture shall bind their respective
successors.
(e) Benefits of Supplemental Indenture. Nothing in this Supplemental
-----------------------------------
Indenture, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder, any Agent and the Holders, any benefit or
any legal or equitable right, remedy or claim under this Supplemental Indenture
or the Indenture.
3
<PAGE>
(f) Separability. In case any provision in this Supplemental
-------------
Indenture, or in the Indenture, shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
(g) Trustee Responsibility. The Trustee assumes no duties,
-----------------------
responsibilities or liabilities by reason of this Supplemental Indenture other
than as set forth in the Indenture. The Trustee assumes no responsibility for
the correctness of the statements herein contained, which shall be taken as
statements of the Company. This Supplemental Indenture is executed and accepted
by the Trustee subject to all of the terms and conditions of its acceptance of
the trust under the Indenture, as fully as if said terms and conditions were
herein set forth in full.
(h) Headings. The Section headings of this Supplemental Indenture
---------
have been inserted for convenience of reference only, are not to be considered a
part of this Supplemental Indenture and shall in no way modify or restrict any
of the terms or provisions hereof.
(i) Counterparts. This Supplemental Indenture may be executed in
-------------
counterparts, each of which shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
(j) Governing Law. This Supplemental Indenture shall be governed by
--------------
and construed in accordance with the internal laws of the State of New York.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the day and year first above written.
PRIMESTAR, INC.
By: /s/ Kenneth G. Carroll
---------------------------------------------
Name: Kenneth G. Carroll
Title: SVP & Chief Financial Officer
THE BANK OF NEW YORK
By: /s/ Walter N. Gitlin
---------------------------------------------
Name: Walter N. Gitlin
Title: Vice President
5
<PAGE>
EXHIBIT 4.6
================================================================================
PRIMESTAR, INC.
and
THE BANK OF NEW YORK, Trustee
________________
SECOND SUPPLEMENTAL INDENTURE
Dated as of April 27, 1999
To the Indenture
Dated as of February 20, 1997
____________________
12-1/4%% Senior Subordinated Discount Notes due 2007
================================================================================
1
<PAGE>
SUPPLEMENTAL INDENTURE NO. 2, dated as of April 27, 1999 (this
"Supplemental Indenture") between PRIMESTAR, Inc., a Delaware corporation (the
"Company"), and The Bank of New York, as trustee ("Trustee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, (i) TCI Satellite Entertainment, Inc. ("TSAT") and the
Trustee entered into the Indenture, dated as of February 20, 1997 (the "Original
Indenture"), with respect to $275,000,000 aggregate principal amount of 12-1/4%
Senior Subordinated Discount Notes due 2007, Series A and Series B (the "Notes")
and (ii) TSAT, the Company, and the Trustee entered into the First Supplemental
Indenture to the Original Indenture, dated as of April 1, 1998 (the "First
Supplemental Indenture" and, together with the Original Indenture, the
"Indenture"), pursuant to which the Company assumed TSAT's obligations with
respect to the Notes;
WHEREAS, all capitalized terms used but not defined herein shall have
the same meanings ascribed to such terms in the Indenture;
WHEREAS, Section 10.02 of the Indenture provides that the Company and
the Trustee may amend or supplement certain provisions of the Indenture with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding;
WHEREAS, the Company, Holders constituting at least a majority in
principal amount of the Notes outstanding and certain other parties have entered
into that certain lock-up agreement, dated as of April 20, 1999 (the "Lock-up
Agreement"), pursuant to which such Holders consented to the Proposed Amendments
(as defined in the Lock-up Agreement) to the Indenture;
WHEREAS, in accordance with the terms of the Lock-up Agreement, the
holders of a majority in principal amount of the outstanding Notes have
consented to the Proposed Amendments to be effected by this Supplemental
Indenture;
WHEREAS, the Company has authorized the execution and delivery of this
Supplemental Indenture and the Trustee has received an Opinion of Counsel and an
Officers' Certificate pursuant to Sections 10.06 and 13.04 of the Indenture, and
therefore the Company and the Trustee are authorized to execute and deliver this
Supplemental Indenture;
NOW THEREFORE, in consideration of good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
2
<PAGE>
SECTION 1. AMENDMENTS TO INDENTURE.
-----------------------
(a) Effective as of the Operative Date (as hereinafter defined), the
following sections of the Indenture are hereby eliminated: Section 4.03; Section
4.04; Section 4.06; Section 4.07; Section 4.08; Section 4.09; Section 4.10;
Section 4.15; Section 4.16; Section 4.17; Section 4.18; Section 4.20; Section
4.21; Section 4.22; Section 5.01; Section 5.02; Section 6.01(6); and Section
6.01(7).
The text of the above sections are replaced by the phrase
"Intentionally deleted", and the surrounding sections are not renumbered.
(b) All definitions set forth in Section 1.01 that relate to defined
terms used solely in sections deleted hereby are deleted in their entirety as of
the Operative Date (as defined below).
SECTION 2. MISCELLANEOUS.
-------------
(a) Operative Date. The amendments to the Indenture made hereby shall
---------------
only become effective on the Note Purchase Closing Date (as defined in the Lock-
up Agreement) applicable to the Notes (the "Operative Date"). This Supplemental
Indenture is effective upon execution.
(b) Conflict with the TIA. If any provision of this Supplemental
----------------------
Indenture modifies or excludes any provision of the TIA that is required under
such Act to be part of and govern the Indenture, the latter provision of the TIA
shall control. If any provision hereof modifies or excludes any provision of
the TIA that may be so modified or excluded, the latter provision of the TIA
shall be deemed to apply to this Supplemental Indenture, as so modified or
excluded, as the case may be.
(c) Notes Deemed Conformed. Beginning at the Operative Date, the
-----------------------
provisions of each Note then outstanding shall be deemed to be conformed,
without the necessity for any reissuance or exchange of such Note or any other
action on the part of the Holders, the Company or the Trustee, so as to reflect
this Supplemental Indenture.
(d) Successors. All agreements of the Company and the Trustee in this
-----------
Supplemental Indenture and in the Indenture shall bind their respective
successors.
(e) Benefits of Supplemental Indenture. Nothing in this Supplemental
-----------------------------------
Indenture, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder, any Agent and the Holders, any benefit or
any legal or equitable right, remedy or claim under this Supplemental Indenture
or the Indenture.
3
<PAGE>
(f) Separability. In case any provision in this Supplemental
-------------
Indenture, or in the Indenture, shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
(g) Trustee Responsibility. The Trustee assumes no duties,
-----------------------
responsibilities or liabilities by reason of this Supplemental Indenture other
than as set forth in the Indenture. The Trustee assumes no responsibility for
the correctness of the statements herein contained, which shall be taken as
statements of the Company. This Supplemental Indenture is executed and accepted
by the Trustee subject to all of the terms and conditions of its acceptance of
the trust under the Indenture, as fully as if said terms and conditions were
herein set forth in full.
(h) Headings. The Section headings of this Supplemental Indenture
---------
have been inserted for convenience of reference only, are not to be considered a
part of this Supplemental Indenture and shall in no way modify or restrict any
of the terms or provisions hereof.
(i) Counterparts. This Supplemental Indenture may be executed in
-------------
counterparts, each of which shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
(j) Governing Law. This Supplemental Indenture shall be governed by
--------------
and construed in accordance with the internal laws of the State of New York.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the day and year first above written.
PRIMESTAR, INC.
By: /s/ Kenneth G. Carroll
---------------------------------------------
Name: Kenneth G. Carroll
Title: SVP & Chief Financial Officer
THE BANK OF NEW YORK
By: /s/ Walter N. Gitlin
---------------------------------------------
Name: Walter N. Gitlin
Title: Vice President
5
<PAGE>
EXHIBIT 10.1
FUNDING AGREEMENT ("Agreement") dated as of March 31, 1999, by and among TIME
WARNER ENTERTAINMENT COMPANY, L.P., ADVANCE/NEWHOUSE PARTNERSHIP, COMCAST
CORPORATION, COX COMMUNICATIONS, INC., MEDIAONE OF DELAWARE, INC., GE AMERICAN
COMMUNICATIONS, INC., UNITED ARTISTS INVESTMENTS HOLDINGS, LLC, PARAGON
COMMUNICATIONS (collectively, the "Funding Parties") and PRIMESTAR, INC. (the
"Company").
RECITALS
(A) The Funding Parties, other than United Artists Investments
Holdings, LLC ("TCI"), or affiliates of such Funding Parties, are stockholders
of the Company
(B) The Funding Parties, other than GE American Communications, Inc.
("GEAC") are account parties under Existing Letters of Credit (as hereinafter
defined).
(C) GEAC is a provider of satellite services to customers including
the Company and the other Funding Parties or their affiliates and states that it
is entering into this Agreement in recognition of its relationship as a vendor
of such services to such customers.
(D) The Company is party to the Asset Purchase Agreement, dated as of
January 22, 1999 (the "Medium Power Agreement"), among Hughes Electronics
Corporation (the "Buyer"), the Company, PRIMESTAR Partners L.P., a wholly owned
subsidiary of the Company ("PLP"), PRIMESTAR MDU, Inc., a wholly owned
subsidiary of the Company ("MDU"), and the Funding Parties other than TCI. By a
separate agreement (the "TCI Reimbursement Letter"), TCI has agreed to reimburse
the other Funding Parties for a portion of certain obligations specified
therein, including, without limitation, certain obligations assumed by such
other Funding Parties under the Medium Power Agreement.
(E) Section 9.10(a) of the Medium Power Agreement provides that the
Company, PLP and MDU agree to use all commercially reasonable efforts to satisfy
the condition that holders (the "Bondholders") of the Current Pay Notes and the
Discount Notes (as hereinafter defined) and the lenders (the "Lenders") under
the Company's Bridge Loans (as hereinafter defined) consent to modifications to
the terms of such debt in accordance with the provisions of the Medium Power
Agreement.
(F) Concurrently with the execution and delivery of this Agreement,
the Company is entering into one or more agreements (collectively, the "Lock-up
Agreement"), among the Company and certain holders of the Current Pay Notes,
Discount Notes and Bridge Loans, in
<PAGE>
order to induce such creditors (the "Senior Subordinated Creditors") to
participate in the Exchange Offer and/or Private Transactions (as hereinafter
defined).
(G) In order to induce the Senior Subordinated Creditors to enter into
the Lock-up Agreement, the Funding Parties and the Company are entering into
this Agreement with the express intent that the Senior Subordinated Creditors be
intended third party beneficiaries of this Agreement.
(H) Each of the Funding Parties which is or has an affiliate that is a
stockholder of the Company has determined that the transactions contemplated by
the Medium Power Agreement and the Lock-up Agreement are in the best interests
of the Company and its subsidiaries, and in the best interests of such Funding
Party, and TCI has determined that the transactions contemplated by the Medium
Power Agreement and the Lock-up Agreement are in the best interests of TCI.
(I) Notwithstanding the specific obligations of the account parties to
the Existing Letters of Credit in respect thereof, none of the Funding Parties
(nor any affiliate of a Funding Party that is a stockholder of the Company) has
any pre-existing legal or contractual obligation to enter into this Funding
Agreement or to provide the financial support to the Company provided for
herein.
(J) This Agreement is, and is intended to be, a financial
accommodation by the Funding Parties within the meaning of Title 11 of the
United States Code.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions.
-----------
(a) As used in this Agreement, the following terms shall have the
corresponding meanings:
"Bridge Loans" means all loans made pursuant to the Interim Loan Facility,
whether or not converted into `Term Loans' or exchanged for `Exchange Notes' as
provided for therein.
"Cash Interest Election" has the meaning ascribed thereto in the indenture
governing the Discount Notes.
"Closing Date" means the date that the Medium Power Asset Sale is
consummated pursuant to the Medium Power Agreement.
"Closing Date Required Amount" means the sum of: (i) the Senior Bank
Payoff Amount, (ii) the Sub Debt Maximum Agreed Amount, and (iii) $25,000,000.
2
<PAGE>
"Company" means PRIMESTAR, Inc.
"Contingent Note Consideration" means any share appreciation right,
contingent value right, security, contract or other obligation of the Company
issued to holders of Current Pay Notes, Discount Notes and Bridge Loans pursuant
to any Exchange Offer or Private Transaction.
"Current Pay Notes" means the Company's 10-7/8% Senior Subordinated Notes
due 2007, Series A and B.
"Discount Notes" means the Company's 12-1/4% Senior Subordinated Discount
Notes due 2007, Series A and B.
"Exchange Offer" means an offer by the Company to the holders of the
Current Pay Notes and the Discount Notes to tender such notes for exchange, in
each case substantially on the terms provided for in the Lock-up Agreement.
"Existing Letters of Credit" means any standby letters of credit issued
for the account of any of the Funding Parties (or any affiliate of a Funding
Party other than the Company) other than GEAC to secure the payment of any
obligations of the Company or any of its subsidiaries.
"Expected Closing Date Proceeds" means an amount of money equal to the net
cash proceeds payable to the Company on the Closing Date under the Medium Power
Agreement, as set forth in the Initial Funding Certificate.
"GMH Stock" means Class H Common Stock of General Motors Corporation, a
Delaware corporation.
"High Power Agreement" means the Asset Purchase Agreement, dated as of
January 22, 1998, among Hughes, the Company, PLP, Tempo and the stockholders of
the Company listed therein
"Hughes" means Hughes Electronics Corporation.
"Initial Funding Amount" means an amount of money equal to the lesser of
(i) the Closing Date Required Amount minus the Expected Closing Date Proceeds,
-----
and (ii) the Medium Power Commitment.
"Initial Funding Certificate" is defined in Section 2.
"Interim Loan Facility" means the Company's Senior Subordinated Credit
Agreement, dated as of April 1, 1998.
"Lock-up Agreement" is defined in the recitals.
3
<PAGE>
"Medium Power Agreement" is defined in the recitals.
"Medium Power Asset Sale" means the sale of the medium-power business to
Hughes pursuant to the terms of the Medium Power Agreement.
"Medium Power Commitment" means $540 million.
"Minimum Tender Condition" shall have the meaning assigned to such term in
the Lock-up Agreement.
"Non-Debt Payment" means a payment made by any Funding Party to or for the
benefit of the Company, with no expectation of, or right to, repayment.
"Notes" means and includes each of the Bridge Loans, the Current Pay Notes,
and the Discount Notes.
"Partnership Credit Facility" means PLP's Credit Agreement, dated as of
March 9, 1994, as amended.
"PLP" is defined in the recitals.
"Post-Closing Working Capital Requirements" means, for any period following
the Closing Date, (i) the aggregate amount of all Scheduled Post-Closing
Obligations that are due and payable, or by their terms will become due and
payable, during the period in question, less (ii) the aggregate amount of all
----
cash and cash equivalents of the Company on hand or in banks at the beginning of
such period and available to be used to satisfy Scheduled Post-Closing
Obligations.
"Private Transaction" means any transaction or series of transactions by
which the Company acquires (i) Current Pay Notes and Discount Notes or (ii)
Bridge Loans, in either case in an aggregate principal amount that would meet
the Minimum Tender Condition with respect to such securities or loans, on
substantially the terms provided for in the Lock-up Agreement.
"Pro Rata Share" means, for each Funding Party, the percentage set forth
opposite the name of such Funding Party on Schedule I attached hereto.
"Reimbursement Agreements" means those reimbursement agreements, each dated
as of April 1, 1998, between the Company and each of the Funding Parties other
than GEAC, or affiliates thereof, which provide for, among other things, the
assumption by the Company of all the obligations of such Funding Party (or
affiliate) under its respective Existing Letter of Credit and the existing
reimbursement agreements and/or other existing documentation between such party
and the issuing bank relating to such letter of credit, including all existing
and future payment obligations of such party thereunder, and the indemnification
by the Company of such party for any and all
4
<PAGE>
losses, claims, damages, liabilities, deficiencies, obligations, costs and
expenses of such party relating thereto.
"Required Funding Parties" means Funding Parties with an aggregate Pro Rata
Share in excess of 55%.
"Scheduled Post-Closing Obligations" means and includes each of the
obligations of the Company and its subsidiaries set forth on Schedule IV
attached hereto (including, without limitation, estimates of the Company's
ordinary costs and expenses to be incurred after the Closing Date during the
Shutdown Period), as such schedule may be modified by the Company, with the
consent of the Required Funding Parties, from time to time.
"Senior Bank Payoff Amount" means the amount required by the Company in
accordance with the Senior Credit Facility to pay and discharge in full on the
Closing Date all monetary obligations of the Company under the Senior Credit
Facility, including without limitation the aggregate principal amount of, and
accrued unpaid interest on, all loans then outstanding thereunder, and all
accrued unpaid commitment fees and other expenses thereunder, as set forth in
the aggregate on the Initial Funding Certificate.
"Senior Credit Facility" means the Company's $700,000,000 Credit Agreement,
dated as of March 31, 1998.
"Shutdown Costs" means all obligations and liabilities of the Company and
its subsidiaries on the Closing Date, other than (i) the Senior Bank Payoff
Amount, (ii) all obligations and liabilities of the Company under the Discount
Notes, the Current Pay Notes and the Bridge Loans, (iii) any such obligations or
liabilities assumed by Hughes on the Closing Date pursuant to the Medium Power
Agreement or assumed by Hughes pursuant to the High Power Agreement, and (iv)
any such obligations or liabilities to the extent backed by Existing Letters of
Credit.
"Shutdown Period" means the period beginning on the Closing Date and ending
on the earlier to occur of (i) the fourth anniversary of the Closing Date and
(ii) the last day of the fourth calendar month following the payment or
satisfaction and discharge in full of all Shutdown Costs.
"Sub Debt Maximum Agreed Amount" means the sum of: (i) 88.2% of the
aggregate principal amount of the Current Pay Notes, the Discount Notes and the
Bridge Loans outstanding on the Closing Date, determined in the case of the
Discount Notes as if the Company had made a Cash Interest Election as of
February 15, 1999, and (ii) 100% of all accrued unpaid interest through the
Closing Date under the Current Pay Notes, the Discount Notes and the Bridge
Loans, determined in the case of the Discount Notes as if the Company had made a
Cash Interest Election as of February 15, 1999, as set forth in the aggregate on
the Initial Funding Certificate.
"TCI Reimbursement Letter" is defined in Recital (D).
"Tempo" means Tempo Satellite, Inc.
5
<PAGE>
"TSAT Consideration Shares" means the number of shares of GMH Stock equal
to the product of (65,000,000/225,000,000) multiplied by 4,871,448 (i.e.,
1,407,307.2 shares of GMH Stock).
"Working Capital Facility" has the meaning provided in Section 6(a) hereof.
"Working Capital Sub-Commitment" means the Medium Power Commitment less (x)
----
the Initial Funding Amount, (y) the sum of all amounts paid by the Funding
Parties as additional funding pursuant to Section 5(b) hereof, and (z) the sum
of all amounts paid by the Funding Parties to the Company or TSAT (as defined
herein) pursuant to Section 5(c) hereof; provided, however, that if any
-----------------
Scheduled Post-Closing Obligation is satisfied or discharged for an amount less
than that shown on Schedule IV, the Working Capital Sub-Commitment shall be
reduced by the amount of such difference; and provided further that if the
----------------
Company sells (including pursuant to any forward sale contract or similar
arrangement) or otherwise disposes of any GMH Stock that it obtains from the
closing of the Medium Power Asset Sale, and the proceeds of such transaction are
available to the Company to pay Scheduled Post-Closing Obligations (without
violating the contractual obligations of the Company to any third party,
including, without limitation, the obligations of the Company under the Pledge
and Security Agreement to be entered into pursuant to the Lock-up Agreement),
the Working Capital Sub-Commitment shall be reduced by the net proceeds received
from such sale, taking into consideration any amounts required to be paid to the
Senior Subordinated Creditors pursuant to any share appreciation rights granted
to such creditors under the Lock-up Agreement.
(b) Capitalized terms used herein and not otherwise defined have the
meanings ascribed thereto in the Medium Power Agreement.
Section 2. Funding Amounts; Schedule.
-------------------------
As soon as practicable after delivery by the Company of the
Preliminary Working Capital Certificate pursuant to Section 4.2 of the Medium
Power Agreement, but in any event not less than 10 days prior to the Closing
Date, the Company shall deliver to each of the Funding Parties a certificate
(the "Initial Funding Certificate"), signed by the Chief Financial Officer and
Chief Executive Officer of the Company and approved by the Board of Directors of
the Company, showing in reasonable detail the amount and calculation of: (i) the
Expected Closing Date Proceeds, determined in accordance with the Preliminary
Working Capital Certificate, (ii) the Senior Bank Payoff Amount, (iii) the Sub
Debt Maximum Agreed Amount (including the components of such amount as described
in clauses (i) and (ii) of the definition thereof) and (iv) the Initial Funding
Amount. The Initial Funding Certificate shall also include a detailed
projection of the Company's Post-Closing Working Capital Requirements for each
calendar month for the 12-month period following the Closing Date. An unsigned
draft of the Initial Funding Certificate, prepared for informational purposes
based on the current best estimates of the Company as to the items to be stated
therein, is attached to this Agreement as Schedule III.
6
<PAGE>
Section 3. Agreement to Provide Initial Non-Debt Funding.
---------------------------------------------
Subject to the conditions set forth in Section 4, on or before the Closing
Date, each of the Funding Parties shall pay and deliver to the Company, as an
equity investment, contribution to capital or Non-Debt Payment (as such Funding
Party shall determine), such Funding Party's Pro Rata Share of the Initial
Funding Amount, by wire transfer of immediately available funds.
Section 4. Conditions to Initial Funding; Conditions to Medium Power Sale.
--------------------------------------------------------------
(a) The obligation of each of the Funding Parties pursuant to
Section 3 hereof to pay its Pro Rata Share of the Initial Funding Amount shall
be subject to the satisfaction or waiver (to the extent waivable) on or before
the Closing Date of each of the following conditions :
(i) the Minimum Tender Condition;
(ii) all other conditions to the closing of the Exchange Offer
(provided, however, that this condition shall be satisfied to the extent
------------------
that the Minimum Tender Condition is met through one or more Private
Transactions);
(iii) the absence of the filing of any petition with respect to the
Company or PLP as debtor under the United States Bankruptcy Code; and
(iv) the closing of the Medium Power Asset Sale.
(b) The Company acknowledges that satisfaction of the Minimum Tender
Condition will constitute satisfaction of the Debt Tender Condition for all
purposes of the Medium Power Agreement, and that any failure of the Minimum
Tender Condition to be satisfied on or before the Closing Date will constitute a
failure of the Debt Tender Condition for such purposes. The Company does not
intend to consummate the Medium Power Asset Sale if the Minimum Tender Condition
is not satisfied on or before the Closing Date.
Section 5. Additional Non-Debt Funding.
---------------------------
(a) The Company shall provide each of the Funding Parties as
promptly as practicable with copies of (i) the Estimated Working Capital
Certificate, (ii) the Final Working Capital Certificate (as defined in the
Medium Power Agreement), (iii) any written notice of disagreement delivered to
Hughes pursuant to Section 4.2(a)(iii) of the Medium Power Agreement, and (iv)
in the event of any arbitration pursuant to such Section 4.2(a)(iii), the
written report of the Arbiter in connection therewith.
(b) In the event that the Company is required to make a working
capital adjustment in favor of Hughes pursuant to Section 4.2 of the Medium
Power Agreement, whether
7
<PAGE>
as an adjustment to the purchase price or a payment pursuant to Section
4.2(a)(iii), then, within five business days after any such adjustment or
payment, upon written demand by the Company, each of the Funding Parties shall
pay and deliver to the Company, as an equity investment, contribution to capital
or Non-Debt Payment (as such Funding Party shall determine), such Funding
Party's Pro Rata Share of such adjustment or payment, by wire transfer of
immediately available funds; provided, however, that the aggregate obligations
-------- -------
of any Funding Party pursuant to this Section 5, plus the portion of the Initial
Funding Amount paid by such Funding Party, shall not exceed such Funding Party's
Pro Rata Share of the Medium Power Commitment.
(c) (i) Reference is made to the Agreement dated as of January 22,
1999 (the "TSAT Agreement"), between TCI Satellite Entertainment, Inc. ("TSAT")
and the Company, pursuant to which the Company has agreed, on the terms and
subject to the conditions set forth therein, to make a payment to TSAT in the
amount of $65,000,000 (the "TSAT Consideration"), in consideration of the
undertakings by TSAT made therein, and not as a dividend on TSAT's common stock
of the Company, and in consideration of the obligations of the Funding Parties
hereunder. Subject to the satisfaction or waiver, on or before the Closing Date,
of each of the conditions set forth in clauses (i), (ii), (iii) and (iv) of
Section 4(a), as and when the TSAT Consideration is due and payable to TSAT
pursuant to the TSAT Agreement, the Company shall pay the TSAT Consideration by
delivering the TSAT Consideration Shares as provided in the TSAT Agreement. In
the event that the Company does not provide TSAT with good and valid title to
the TSAT Consideration Shares free and clear of all liens and encumbrances,
other than those contemplated by the TSAT Agreement, each of the Funding Parties
shall pay and deliver (or cause to be paid and delivered) to TSAT, in the form
of cash or shares of GMH Stock (as such Funding Party shall determine), with
shares of GMH Stock being valued on the same basis used to establish the value
of the TSAT Consideration Shares, such Funding Party's Pro Rata Share of the
TSAT Consideration. The Company and each of the Funding Parties acknowledge that
TSAT shall be entitled to rely on and enforce the obligations of the Funding
Parties hereunder as an express third-party beneficiary. In that connection,
TSAT acknowledges that no Funding Party shall have any liability for the payment
duties of any other Funding Party with respect to payments required by this
Section 5(c) as guarantor, co-obligor or otherwise.
(ii) The Company hereby represents and warrants to each Funding
Party that the transfer of the TSAT Consideration Shares to TSAT pursuant to
this Section 5(c) will not violate any provisions of the Medium Power Agreement
or the Lock-up Agreement.
Section 6. Working Capital Facility.
------------------------
(a) Subject to the satisfaction or waiver, on the Closing Date, of the
conditions set forth in Section 4 of this Agreement, each of the Funding Parties
hereby agrees to make available to the Company, under a revolving credit
facility or similar arrangement (the "Working Capital Facility") mutually
acceptable to the Company and the Required Funding Parties (and consistent with
the terms of this Agreement), subordinated loans and/or other extensions of
credit necessary
8
<PAGE>
to fund the Post-Closing Working Capital Requirements of the Company during the
Shutdown Period, up to such Funding Party's Pro Rata Share of the Working
Capital Sub-Commitment
(b) All loans and/or other extensions of credit made by the Funding
Parties to the Company pursuant to the Working Capital Facility shall be junior
and subordinated in right of payment to the prior indefeasible payment in full
of all obligations of the Company outstanding on the Closing Date under the
Senior Credit Facility, the Current Pay Notes, the Discount Notes, the Bridge
Loans, the Shutdown Costs and the Contingent Note Consideration. All cash
interest accruing under the Working Capital Facility shall be due and payable
only at maturity; however interest accruing during any period prior to maturity
may be payable in kind.
(c) The Working Capital Facility shall remain outstanding at all times
during the Shutdown Period.
(d) Drawings under the Working Capital Facility shall be used by the
Company only to pay (i) Scheduled Post-Closing Obligations, (ii) costs and
expenses incurred by the Company after the Closing Date in the ordinary course,
and (iii) any additional amounts approved by the Required Funding Parties. The
Working Capital Facility may provide as a drawing condition that the Company
certify to the Funding Parties the specific Scheduled Post-Closing Obligations
to be satisfied with the proceeds of any drawing and any mitigation efforts
undertaken by the Company with respect to such Shutdown Costs.
(e) At the end of the Shutdown Period, if the aggregate obligations of
the Company to the Funding Parties under the Working Capital Facility, including
the principal amount of all loans and other extensions of credit thereunder and
all unpaid interest accrued thereon, shall exceed the assets of the Company
available to repay such obligations, including without limitation any GMH Stock
then held by the Company, or any proceeds thereof, then each of the Funding
Parties shall convert its Pro Rata Share of such excess into an equity
investment, contribution to capital or Non-Debt Payment (as such Funding Party
shall determine) to the Company.
Section 7. Existing Letters of Credit.
--------------------------
(a) The parties acknowledge that: (i) an aggregate of $575 million
principal amount of loans are currently outstanding under the Partnership Credit
Facility; (ii) such loans are due and payable in full on June 30, 1999, together
with accrued unpaid interest of not more than $15 million; (iii) the full and
timely payment of such principal and interest are secured by (A) Existing
Letters of Credit issued for the account of Funding Parties (or affiliates
thereof), other than GEAC, in the aggregate drawable amount of $580 million and
(B) a standby letter of credit issued for the account of the Company pursuant to
the Senior Credit Facility in the maximum drawable amount of $5 million; (iv)
the initial closing under the High Power Agreement occurred on March 10, 1999;
(v) the second closing under the High Power Agreement is expected to occur prior
to June 30, 1999; and (vi) assuming consummation of both closings under the High
Power Agreement, the Partnership expects to receive an aggregate of $465 million
in satisfaction of the Reimbursement Obligation (as
9
<PAGE>
defined in the High Power Agreement), which amount will be available to apply
against amounts due under the Partnership Credit Facility.
(b) On or before June 30, 1999, each of the Funding Parties, other
than GEAC, will pay or contribute to the Company sufficient funds to enable the
Company to pay (or to enable the Company to cause the Partnership to pay)
against amounts due under the Partnership Credit Facility (including interest
and principal) an amount equal to the product of (x) $125 million, times (y) the
percentage set forth opposite the name of such Funding Party on Schedule II
attached hereto. Amounts paid by any Funding Party pursuant to this Section
7(b) shall constitute an equity investment in, capital contribution to, or Non-
Debt Payment (as such Funding Party shall determine) to the Company, and shall
be in addition to the obligations of such Funding Party pursuant to Section 3
and Section 5 hereunder.
(c) If prior to June 30, 1999, the Subsequent Closing under the High
Power Agreement shall not have occurred, then, on or before June 30, 1999, each
of the Funding Parties, other than GEAC, will advance to the Company sufficient
funds to enable the Company to pay (or to enable the Company to cause the
Partnership to pay) against amounts due under the Partnership Credit Facility an
amount equal to the product of (x) $348.25 million, times (y) the percentage set
forth opposite the name of such Funding Party on Schedule II attached hereto.
Amounts advanced by any Funding Party pursuant to this Section 7(c) shall be
ratably secured by a security interest in the In-Orbit Satellite Assets, to the
full extent of the Company's rights and interests therein.
(d) On or before June 30, 1999, taking into account all payments
theretofore made pursuant Section 7(b) hereof (and, if the Subsequent Closing
shall not have occurred under the High Power Agreement, pursuant to Section 7(c)
hereof) , the Company will pay or cause the Partnership to pay in full all
obligations of the Partnership under the Partnership Credit Facility, including
without limitation the principal amount of all outstanding loans thereunder, all
accrued unpaid interest thereon, and any and all fees and expenses due in
respect thereof, against the termination and release in full of the Existing
Letters of Credit. The parties acknowledge that the Company shall utilize for
such payments $139.5 million of cash proceeds from the Initial Closing under the
High Power Agreement (which amount shall be so applied as soon as practicable
after the date hereof, subject to any applicable agreements with third parties,
and in any event on the Closing Date, subject to the closing of the Medium Power
Asset Sale) and, if the Subsequent Closing occurs prior to June 30, 1999, $325.5
million of cash proceeds therefrom, and the Company agrees that it shall not use
such proceeds for any other purpose, assuming the full and timely performance by
each of the Funding Parties, other than GEAC, of their respective obligations
hereunder.
(e) Notwithstanding anything in the Reimbursement Agreements to the
contrary, if a drawing is made under an Existing Letter of Credit issued for the
account of any Funding Party (or for the account of an affiliate of such Funding
Party), such Funding Party shall immediately and automatically cause the
reimbursement obligation of the Company with respect to such drawing to be
converted into an equity investment in, capital contribution to, or Non-Debt
Payment (as such Funding Party shall determine) to the Company by such Funding
Party (or affiliate). Any such equity
10
<PAGE>
investment, capital contribution or Non-Debt Payment shall reduce the
obligations of such Funding Party pursuant to Sections 7(b) and 7(c) hereunder,
but shall be in addition to the obligations of such Funding Party pursuant to
Section 3 and Section 5 hereunder.
Section 8. Entire Agreement; Amendment.
---------------------------
(a) This Agreement embodies the entire agreement of the parties
hereto with respect to the subject matter hereof and supersedes any and all
prior or contemporaneous agreements with respect to such subject matter, whether
written or oral or claimed to arise from any course of conduct.
(b) Subject to any restrictions on amendment provided for in the
Lock-up Agreements, this Agreement may be amended by written agreement of the
Company and the Required Funding Parties; provided, however, that no such
-------- --------
amendment shall increase the Medium Power Commitment, the obligations of each
Funding Party pursuant to Section 7 hereof, or the Pro Rata Share of any Funding
Party without the prior written consent of each Funding Party so affected, and
provided further that no amendment or waiver to the provisions of Section 4
- - ----------------
hereof or Sections 2, 5(c) and 6, which are subject to the conditions of Section
4 hereof, shall be effective without the prior written consent thereto of each
Funding Party nor shall any amendment of Section 5(c) hereof be effective
without the prior written consent of TSAT, and provided further that no
----------------
amendment or waiver to this Agreement shall result in the disparate treatment of
any Funding Party without the consent of such Funding Party. Except as
expressly provided in this Section 8, this Agreement may not be modified or
amended, nor may any term or provision of this Agreement be waived.
Section 9. Representation Regarding Scheduled Post-Closing Obligations. The
-----------------------------------------------------------
Company hereby represents and warrants to each of the Funding Parties that, to
the best knowledge of the Company after due inquiry, the Scheduled Post-Closing
Obligations include all monetary obligations of the Company and its subsidiaries
on a consolidated basis anticipated to exist on the Closing Date, other than (A)
any such obligations required to be assumed by Hughes on the Closing Date
pursuant to the Medium Power Agreement, (B) any such obligations under the
Senior Credit Facility, the Current Pay Notes, the Discount Notes, the Bridge
Loans and the Partnership Credit Facility, (C) the contingent and/or disputed
obligations set forth on Schedule V attached hereto, and (D) such other
obligations of the Company and its subsidiaries as shall not individually or in
the aggregate exceed $3,000,000. The Company shall use its best efforts from
time to time prior to the Closing Date, as required, to prepare draft updates
to Schedule IV for approval by the Required Funding Parties.
Section 10. Assignment; Parties Bound and Benefited.
---------------------------------------
(a) This Agreement may not be assigned or delegated without the prior
written consent of the Company and the Required Funding Parties, except by
operation of law.
11
<PAGE>
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns, and
the provisions of Section 5(c) of this Agreement shall inure to the benefit of
TSAT and its successors and permitted assigns.
(c) Each of the parties to the Lock-up Agreement (other than the
Company) (the "Signing Creditors") is intended to be a third-party beneficiary
of this Agreement, and shall have the right to rely on and enforce this
agreement in such capacity, subject (after the termination of the Lock-up
Agreement) to the right of the parties hereto to modify, amend or waive any
provision of this Agreement as provided herein, to the extent such modification,
amendment or waiver shall not materially adversely affect any such third-party
beneficiary. TSAT is intended to be a third-party beneficiary of Section 5(c)
this Agreement, and shall have the right to rely on and enforce this Agreement
in such capacity. Prior to the payment to the Signing Creditors of the Agreed
Consideration (as defined in the Lock-up Agreement), the obligations of the
Funding Parties to the Company or to TSAT hereunder shall be subordinated to the
rights of the Signing Creditors under the Lock-up Agreement, and any
distributions made by the Funding Parties to the Company or TSAT shall be held
in trust for the benefit of the Signing Creditors and paid over to the Signing
Creditors until they have been paid the Agreed Consideration in accordance
therewith.
(d) Other than as specifically set forth in this Section 10, no other
party is intended to be a third-party beneficiary of this Agreement.
Section 11. Notices.
-------
All notices, requests, consents, demands, elections and other
communications required or permitted hereunder shall be in writing and shall be
given to the intended recipients at their addresses or facsimile numbers as last
provided to the parties hereto.
Section 12. Paragraph Headings.
------------------
The paragraph headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction of or be
taken into consideration in interpreting this Agreement.
Section 13. Governing Law and Jurisdiction.
------------------------------
12
<PAGE>
This Agreement shall be construed in accordance with and governed by the
internal laws of the State of New York without giving effect to any conflicts of
laws principles. Each party hereto hereby irrevocably submits to the
jurisdiction of any New York State court sitting in the Borough of Manhattan or
any federal court sitting in the Borough of Manhattan in respect of any suit,
action or proceeding arising out of or relating to this Agreement and the
transactions pursuant hereto and in connection herewith, and irrevocably agrees
that all claims in respect of any such suit, action or proceeding shall be heard
and determined in any such court. Each party irrevocably waives any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in any such court and any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum.
Section 14. Specific Performance.
--------------------
Without intending to limit the remedies available to the Company, each of
the Funding Parties acknowledges and agrees that a violation by such Funding
Party of any terms of this Agreement will cause irreparable injury for which an
adequate remedy at law is not available. Therefore, the parties agree that the
Company shall be entitled to an injunction, restraining order or other form of
equitable relief from any court of competent jurisdiction compelling a Funning
Party, and their respective successors, to specifically perform, and restraining
such party from committing any breach of, or threatened breach of, any provision
of this Agreement.
Section 15. Severability.
------------
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the full
extent permitted by law.
Section 16. Maximum Liability of TCI; Several Liability of each Funding Party.
-----------------------------------------------------------------
(a) Notwithstanding anything to the contrary contained herein, (i) the
total equity contributions, Non-Debt Payments and outstanding loans made by TCI
hereunder shall not at any time exceed (and shall be counted toward) the maximum
liability of TCI under the TCI Reimbursement Letter, as then in effect, and (ii)
nothing herein shall alter or otherwise affect or limit the respective rights
and obligations under the TCI Reimbursement Letter of the parties thereto.
(b) No Funding Party shall have any liability for the payment duties or
other obligations of any other Funding Party hereunder, as guarantor, co-obligor
or otherwise.
13
<PAGE>
Section 17. Indemnification.
---------------
Notwithstanding anything to the contrary contained herein, the Company
shall continue to maintain insurance for its directors and officers adequate to
enable the Company to indemnify all of its current, former and future officers
and directors to the full extent permitted by law. The Working Capital Facility
can be drawn to pay premiums necessary to maintain indemnification insurance.
Section 18. Representations and Warranties.
------------------------------
Each of the Company and each Funding Party hereby acknowledges, warrants
and represents as to itself that the following statements are true, correct and
complete as of the date hereof:
(a) It has all requisite power and authority to enter into this Agreement
and to carry out the transactions contemplated by, and perform its respective
obligations under, this Agreement;
(b) The execution and delivery of this Agreement and the performance of its
obligations hereunder have been duly authorized by all necessary action on its
part, it has been duly authorized to make the representations and commitments
included herein, and the person executing and delivering this Agreement on
behalf of it has been duly authorized to do so;
(c) The execution, delivery and performance by it of this Agreement do not
and shall not violate any provision of law, rule or regulation applicable to it
or any of its subsidiaries or its organizational documents or those of any of
its subsidiaries; and
(d) This Agreement is its legal, valid and binding obligation, enforceable
against it by each other party hereto (and each intended third party beneficiary
hereof) in accordance with its terms.
Section 19. Termination.
-----------
This Agreement shall terminate upon the commencement of a case by or
against the Company or any Funding Party under Title 11, United States Code.
Section 20. Counterparts.
------------
This Agreement may be executed in counterparts, each of which shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered on and as of the date first written above.
PRIMESTAR, INC.
_______________________________
Name:
Title:
TIME WARNER ENTERTAINMENT
COMPANY, L.P.,
by AMERICAN TELEVISION AND
COMMUNICATIONS CORPORATION,
a general partner
_______________________________
Name:
Title:
ADVANCE/NEWHOUSE PARTNERSHIP,
by ADVANCE COMMUNICATION CORP.,
as general partner
_______________________________
Name:
Title:
COMCAST CORPORATION
_______________________________
Name:
Title:
COX COMMUNICATIONS, INC.
_______________________________
Name:
<PAGE>
Title:
MEDIAONE OF DELAWARE, INC.
_______________________________
Name:
Title:
GE AMERICAN COMMUNICATIONS, INC.
_______________________________
Name:
Title:
UNITED ARTISTS INVESTMENTS
HOLDINGS, LLC
_______________________________
Name:
Title:
PARAGON COMMUNICATIONS,
by AMERICAN TELEVISION AND
COMMUNICATIONS CORPORATION,
a general partner
_______________________________
Name:
Title:
<PAGE>
EXHIBIT 10.2
LOCK-UP AGREEMENT
This Agreement (this "Agreement" or this "Lock-up Agreement"), dated as of
April ___, 1999, is made by and among PRIMESTAR, Inc., a Delaware corporation
(the "Company") and each of the undersigned holders (each a "Holder") (each a
"Party" and, collectively, the "Parties") of Notes issued by the Company under
the documents listed on Schedule 1 (the "Existing Agreements"). The obligations
of each Holder hereunder shall be several, and not joint or joint and several.
R E C I T A L S
(A) Each Holder is either the record holder of, beneficial owner of or
serves as investment manager or financial advisor with investment discretion and
authority over various funds or other accounts which own certain of the Bridge
Loans, Discount Notes, or Current Pay Notes. The amount of Notes held by each
Holder or funds or other accounts as to which such Holder acts as an investment
manager or financial advisor with investment discretion and authority, is set
forth on Schedule 2 attached hereto.
(B) The Holders of (i) Bridge Loans and (ii) Discount Notes and Current Pay
Notes have formed unofficial committees (each, a "Committee" and, collectively,
the "Committees") to represent the members of such Committees in negotiations
with the Company regarding the Notes.
(C) The Company has entered into the Medium Power Agreement, which provides
for the Medium Power Asset Sale.
<PAGE>
(D) The Debt Tender Condition is a condition precedent to the obligations
of the Company under the Medium Power Agreement.
(E) In order to facilitate the closing of the Medium Power Asset Sale, the
Parties desire to enter into this Agreement and to perform their respective
obligations hereunder.
NOW, THEREFORE, in consideration of the foregoing and for good and valuable
consideration, the Company and the Holders agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
-------------------
following terms have the corresponding meanings:
"Actual Lock-up Percentage" means the percentage of holders of the Notes,
by aggregate principal amount of Notes held, that enter into this Agreement;
provided, however, that if the Company commences an Exchange Offer with respect
- - -----------------
to the Bonds, the Actual Lock-up Percentage shall include, in addition to the
foregoing, the percentage of the holders of the Notes, by aggregate principal
amount of Notes held, that exchange Bonds in the Exchange Offer.
"Bonds" means, collectively, the Current Pay Notes and the Discount Notes.
"Bridge Holder's Minimum Pro Rata Share" means, for each Holder of Bridge
Loans, the percentage that the principal amount of such Holder's Bridge Loans
purchased pursuant to a Private Transaction bears to the aggregate principal
amount of Notes outstanding immediately prior to the Medium Power Closing Date.
"Bridge Loans" means and includes all notes issued by the Company pursuant
to the Senior Subordinated Credit Agreement dated as of April 1, 1998 (the
"Interim Loan Agreement"), whether or not converted into `Term Loans' or
exchanged for `Exchange Notes' as provided for therein.
2
<PAGE>
"Cash Interest Election" has the meaning ascribed thereto in the Indenture
governing the Discount Notes.
"Current Pay Notes" means the Company's 10-7/8% Senior Subordinated
Discount Notes due 2007, Series A and B.
"Debt Tender Condition" means the condition precedent to the obligations of
the Company under the Medium Power Agreement that holders of Notes representing
at least 80% in aggregate principal amount of the Notes (including at least 51%
in aggregate principal amount of each tranche of the Notes) consent to the
Medium Power Asset Sale and agree to a reduction in the aggregate principal
amount of such Notes (or agree to sell such Notes to the Company or its designee
at a price equal to such reduced aggregate principal amount), as further
described in the Medium Power Agreement and the schedules thereto.
"Discount Notes" means the Company's 12 1/4% Senior Subordinated Discount
Notes due 2007, Series A and B. All references herein to the "principal amount"
of any Discount Notes shall mean the principal amount at maturity of such Notes
determined as if the Company had made a Cash Interest Election as of February
15, 1999.
"Exchange Offer" means with respect to each tranche of Bonds, an offer by
the Company to the holders of such tranche of Bonds to tender such Bonds for
exchange, substantially on the terms of the Private Transaction with the Holders
of Bridge Loans and subject to the conditions set forth herein. An Exchange
Offer shall also include a solicitation of consents to the Proposed Amendments.
"Funding Agreement" means an agreement among the Company and each of the
Funding Parties, substantially in the form of Exhibit A attached hereto.
3
<PAGE>
"Funding Parties" shall have the meaning ascribed to such term in the
Funding Agreement.
"GMH Shares" means an aggregate of 4,871,448 shares of the Class H Common
Stock, par value $0.10 per share, of General Motors Corporation.
"High Power Agreement" means the Asset Purchase Agreement dated as of
January 22, 1999, among Hughes, the Company, PRIMESTAR Partners L.P., Tempo
Satellite, Inc., and the stockholders of the Company (or affiliates thereof)
listed therein.
"High Power Asset Sale" means (i) the assignment to Hughes, pursuant to the
High Power Agreement, of the Company's option to acquire 100% of the capital
stock of Tempo Satellite, Inc., or 100% of its assets and the assumption of
liabilities, (ii) the exercise by Hughes of such option to acquire 100% of the
assets of Tempo Satellite, Inc., subject to its liabilities, and (iii) all other
transactions contemplated thereby, taken as a whole.
"Holder's Notes" means, with respect to any Holder, the principal amount of
Notes set forth opposite the name of such Holder in Schedule 2, together with
any additional Notes acquired by such Holder (or acquired by a fund or other
account as to which such Holder serves as investment manager or financial
advisor with investment discretion and authority) after the date hereof
(provided that such Holder has complied with the provisions of Section 12(l)
hereof).
"Hughes" means Hughes Electronics Corporation.
"Indemnity Agreement" means an Indemnity Agreement between each of the
Funding Parties and the Holders, substantially in the form of Exhibit B hereto.
"Indentures" mean (i) the Indenture dated as of February 20, 1997, by and
between TSAT and The Bank of New York (the "Trustee") with respect to the
Discount Notes, as amended by the First Supplemental Indenture dated as of April
1, 1998, by and among TSAT, the Company and the
4
<PAGE>
Trustee, pursuant to which the Company assumed TSAT's obligations with respect
to the Discount Notes, and (ii) the Indenture dated as of February 20, 1997, by
and between TSAT and the Trustee, with respect to the Current Pay Notes, as
amended by the First Supplemental Indenture dated as of April 1, 1998, by and
among TSAT, the Company and the Trustee, pursuant to which the Company assumed
TSAT's obligations with respect to the Current Pay Notes.
"Medium Power Agreement" means the Asset Purchase Agreement dated as of
January 22, 1999, among Hughes, the Company, PRIMESTAR Partners L.P., PRIMESTAR
MDU, Inc., and the stockholders of the Company (or affiliates thereof) listed
therein.
"Medium Power Asset Sale" means the sale to Hughes, pursuant to the Medium
Power Agreement, by the Company (and the subsidiaries of the Company party
thereto), on the terms and conditions set forth therein, of substantially all
the assets of the Company.
"Medium Power Closing Date" means the date that the Medium Power Asset Sale
is consummated pursuant to the Medium Power Agreement.
"Minimum Tender Percentage" means 80%.
"Notes" means and includes each of the Bridge Loans and each of the Bonds.
All references herein to any "tranche" of Notes or Bonds shall mean the Bridge
Loans, the Current Pay Notes or the Discount Notes, as applicable.
"Note Purchase Closing Date" means (i) in the case of any Private
Transaction, the Medium Power Closing Date, and (ii) in the case of any Exchange
Offer, the later of (A) the Medium Power Closing Date and (B) the third business
day after the expiration of the period that such Exchange Offer is required to
be kept open under the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder, including any extensions of such
period required as
5
<PAGE>
a result of any amendment to the terms of such Exchange Offer otherwise
permitted by this Agreement.
"Person" means any individual, partnership, corporation, limited liability
company, association, trust, joint venture, unincorporated organization or other
entity.
"Pledge and Security Agreement" means a pledge and security agreement with
respect to the GMH Shares, substantially in the form of Exhibit C.
"Private Transaction" means any transaction or series of transactions by
which the Company acquires (i) the Bonds or (ii) Bridge Loans, on the terms and
conditions set forth herein. Each Holder that enters into a Private Transaction
with the Company shall be deemed to have consented to the Proposed Amendment for
each tranche of Notes held by such Holder, with respect to all Notes of such
tranche with respect to which such Holder has sole or shared voting power.
"Proposed Amendment" means, with respect to each of the Existing
Agreements, an amendment to such Existing Agreement eliminating substantially
all of the covenants therein, other than the covenants to pay interest on and
principal of the Notes when due and certain covenants relating to required
purchase offers, as well as certain events of default. The Proposed Amendment
to the Interim Loan Agreement will be set forth in an amendment between the
Company and the agents thereunder, and the Proposed Amendment to each of the
Indentures will be set forth in supplemental indentures thereto, to be entered
into in accordance with the terms of such Existing Agreements, as applicable. A
summary of each of the Proposed Amendments is attached hereto as Schedule 3.
"Pro Rata Share" means, for each Holder, the percentage that the principal
amount of such Holder's Notes purchased pursuant to one or more Exchange Offers
and/or Private Transactions
6
<PAGE>
bears to the aggregate principal amount of all Notes purchased pursuant to one
or more Exchange Offers and/or Private Transactions.
"Registration Rights Agreement" means a Registration Rights Agreement
relating to the Share Appreciation Rights, substantially in the form of Exhibit
E.
"SEC" means the Securities and Exchange Commission.
"SEC Communication" means a written or oral communication from the staff of
the SEC, received by the Company or any of its representatives or advisors
(including, without limitation, legal counsel) prior to the Medium Power Closing
Date, advising, in substance, that the staff of the SEC would view the Company's
purchase of Notes (or of any of the Notes of one or more tranches) in one or
more Private Transactions, including without limitation any offering or sale of
Share Appreciation Rights in connection therewith, as a violation or potential
violation of the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, or any other applicable U.S. Federal securities law.
"Senior Bank Facility" means the Company's Senior Credit Agreement dated as
of March 31, 1998, between the Company and the parties thereto, as amended.
"Share Appreciation Rights" means transferable rights issued by (i) the
Company or (ii) a trust or special purpose vehicle established by the Company
with the consent of a majority of the Holders by principal amount, substantially
in the form of Exhibit F attached hereto, entitling the holders thereof to
payment by the issuer, on the terms and subject to the conditions set forth
therein, based on the appreciation, if any, in the market value of an aggregate
of 4,871,448 shares of the Class H Common Stock, par value $0.10 per share, of
General Motors Corporation.
7
<PAGE>
"Tender Fraction" means the quotient of the Minimum Tender Percentage
divided by the Actual Lock-up Percentage, expressed as a fraction.
"Transaction Documents" shall have the meaning ascribed to such term in
Section 17 hereof.
"TSAT" means TCI Satellite Entertainment, Inc.
Section 2. Purchase and Sale of Notes. (a) The Company hereby agrees to
--------------------------
buy from each Holder, and such Holder hereby agrees to sell, on the applicable
Note Purchase Closing Date, such Holder's Notes, on the terms and conditions set
forth herein. The aggregate purchase price for all Notes purchased from each
Holder pursuant to this Section 2 shall be equal to (i) $850 for each $1,000
principal amount of Notes so purchased, plus (ii) such Holder's Pro Rata Share
of the Share Appreciation Rights (collectively, the "Agreed Consideration");
provided, however, that if the Actual Lock-up Percentage exceeds the Minimum
- - -----------------
Tender Percentage, the Company will pay the Agreed Consideration to each Holder
with respect to that fraction of such Holder's Notes equal to the Tender
Fraction, and will pay to each Holder cash in the amount of 101% of the
principal amount of the remainder of such Holder's Notes (the "101
Consideration") on (i) the Note Purchase Closing Date, if all Holder's Notes are
purchased pursuant to Private Transactions and (ii) if an Exchange Offer is
commenced pursuant to the terms hereunder, on the consummation of such Exchange
Offer. In addition, on the applicable Note Purchase Closing Date (and earlier if
otherwise required), the Company shall pay all accrued and unpaid interest
(determined, in the case of the Discount Notes, as if the Company had made a
Cash Interest Election as of February 15, 1999) in respect of the Notes
purchased on such date through the date of such payment, whether or not then
due. Anything contained herein to the contrary notwithstanding, the obligation
of the Company to purchase and pay for the Notes under this Section 2, whether
pursuant to an Exchange Offer or Private Transaction,
8
<PAGE>
shall be subject to the condition that, on or prior to the first Note Purchase
Closing Date, the Medium Power Asset Sale shall have been consummated and the
conditions listed in Section 20, as in effect at such time, shall have been
satisfied.
(b) In the event a Note Purchase Closing Date occurs with respect to
the Bridge Loans prior to a Note Purchase Closing Date with respect to the
Bonds, then the amount payable with respect to such Bridge Loans on the
applicable Note Purchase Closing Date shall be equal to (i) $850 for each $1,000
principal amount of Notes so purchased, plus (ii) such Holder's Bridge Holder's
Minimum Pro Rata Share of the Share Appreciation Rights. On any subsequent Note
Purchase Closing Date, subject to Section 3(e) hereof, such a Holder of Bridge
Loans shall receive as additional consideration (i) any additional Share
Appreciation Rights and (ii) any 101 Consideration to which such Holder of
Bridge Loans may be entitled to receive pursuant to Section 2(a), calculated on
the basis of all Notes purchased to such date.
(c) The closing of each purchase of Notes referenced in Section 2(a)
above shall take place at the offices of Ropes & Gray, 885 Third Avenue, New
York, New York (or at such other place as the Medium Power Asset Sale shall be
closing, if such closings are concurrent) at 10:00 a.m. (Eastern time) on the
applicable Note Purchase Closing Date, subject to the satisfaction or waiver (if
waivable) of the terms and conditions set forth herein, at which time the
Company shall deliver the consideration set forth in Section 2(a). The cash
portion of such consideration shall, unless otherwise requested by each Holder,
be paid by wire transfer of immediately available federal funds.
(d) If the Company receives from Hughes any consideration in respect
of the Medium Power Asset Sale or the High Power Asset Sale, not currently
provided for in the Medium Power Agreement or in the High Power Agreement
("Additional Consideration"), the Company shall
9
<PAGE>
increase the aggregate cash consideration being paid to the Holders pursuant to
this Section 2 by an aggregate amount equal to 80% of such Additional
Consideration; provided, however, that any Additional Consideration must be
-------- -------
provided for in an amendment to the Medium Power Agreement or the High Power
Agreement. For purposes of clarifying what constitutes "Additional
Consideration", (i) the execution by the Company and Hughes of the Agency
Agreement, dated as of February 25, 1999 and (ii) the assumption by Hughes of
working capital or other obligations of the Company, shall not constitute
Additional Consideration.
Section 3. Exchange Offer or Private Transaction. (a) Each purchase and
-------------------------------------
sale of Notes pursuant to Section 2 above shall be effected by means of a
Private Transaction, unless the Company has received an SEC Communication, in
which case any such purchase and sale of the Bonds may be effected by means of
(i) an Exchange Offer, or (ii) a combination of the Exchange Offer and one or
more Private Transactions, subject to compliance with the requirements of the
U.S. Federal securities laws and the rules and regulations of the SEC
promulgated thereunder, in accordance with the SEC Communication and any written
legal opinion from Company counsel.
(b) If the Company shall commence an Exchange Offer with respect to
any tranche of Bonds, the Company will commence such Exchange Offer within five
business days after the first Note Purchase Closing Date and keep it open for at
least 20 business days.
(c) If the Company shall consummate, pursuant to a Private
Transaction, the purchase and sale of any Note of a tranche of Notes, it shall
purchase all the Notes of such tranche held by the Holders hereunder pursuant to
one or more Private Transactions.
(d) The Company shall promptly notify the parties specified in Section
23 of any SEC Communication received by the Company or any of its
representatives. If such SEC
10
<PAGE>
Communication is in writing, such notice shall include a copy thereof; if in
oral form, a fair summary thereof in writing, certified as accurate by an
officer of the Company.
(e) In the event that Bridge Loans are purchased before the Bonds, the
definitive calculation of each Holder's Pro Rata Share of the Share Appreciation
Rights, and each Holder's 101 Consideration, shall be made upon consummation of
the Exchange Offer. In the event that the Exchange Offer is not consummated for
any reason, then at such time, if any, that the Exchange Offer is withdrawn or
abandoned, then the Company and those Holders which have sold Notes (the
"Selling Holders") to the Company hereunder shall engage in good faith
negotiations to determine the amount, if any, of additional 101 Consideration
and Share Appreciation Rights in excess of the Bridge Holder's Minimum Pro Rata
Share of Share Appreciation Rights which should be paid to such Selling Holders.
In determining such amounts, the parties shall take into account, among other
things, the consideration, if any, paid to Holders whose Notes were not
purchased hereunder or in the Exchange Offer and the value of the Share
Appreciation Rights as of the time of such negotiations.
Section 4. Terms of the Exchange Offer and Private Transaction. The terms
---------------------------------------------------
and conditions of all Private Transactions effected hereunder, including any
amendments thereto, shall be identical in all material respects, except for such
differences as shall be necessary to reflect the identity of the Holder, the
tranche and amount of Notes to be sold thereunder, and the manner in which such
Holder holds such Notes, and the terms and conditions of such Private
Transactions shall be identical in all material respects with those of any
Exchange Offer commenced hereunder, except for such differences as shall be
reasonable and customary in the context of the transactions contemplated hereby,
or as required by applicable law or regulation. Certain reasonable and
11
<PAGE>
customary differences reflected in an Exchange Offer would include, without
limitation, a minimum tender condition not greater than the Minimum Tender
Percentage and a provision permitting the Company to refuse to purchase the
Bonds pursuant to this Agreement upon the occurrence of the following events:
(a) there shall be instituted or pending any action, proceeding or
formal investigation by or before any United States state or Federal court or
government agency or authority, which challenges the making of the Exchange
Offer, the acquisition of Notes pursuant to the Exchange Offer or the obtaining
of consents to the Proposed Amendments pursuant to the Exchange Offer;
(b) a statute, rule, regulation, judgment, order, stay, decree or
injunction shall have been proposed (with a proposed effective date prior to the
expected closing date for the Exchange Offer), promulgated, enacted, entered,
enforced or deemed to be applicable by any United States state or Federal court
or government agency or authority, which would directly or indirectly prohibit,
prevent, restrict or delay consummation of the Exchange Offer;
(c) the Trustee under either Indenture shall have objected in any
respect to, or taken any action that could, in the sole judgment of the Company,
adversely affect the consummation of the Exchange Offer or the Company's ability
to effect the Proposed Amendments, or shall have taken any action that
challenges the validity or effectiveness of the procedures used by the Company
in soliciting consents to the Proposed Amendments (including the form thereof)
or in the making of the Exchange Offer or the acceptance of or payment for any
of the Bonds; or
(d) upon the occurrence of any of the events described in Sections
4(a), 4(b) and 4(c) hereof, the Company shall use its best efforts to cure such
events; if such an event is not cured within 15 days after the Company's refusal
to purchase any of the Bonds as a result of the occurrence of
12
<PAGE>
any event described in Sections 4(a), 4(b) and 4(c), then, the holders of a
majority of the Bonds held by Holders then outstanding (provided, however, that
-----------------
for purposes of voting, any Bonds held by the Company shall not be voted and
shall not be counted for any voting purposes) shall have the right to terminate
this Agreement upon delivery of written notice to the Company and the other
Holders.
Section 5. Amendments to the Exchange Offer or Private Transaction. The
-------------------------------------------------------
Company shall have no right to amend any Exchange Offer or Private Transaction
hereunder, provided, however, that the Company (i) may amend any Exchange Offer
-----------------
so as to extend the Exchange Offer (subject to Section 4(d) hereof), if at the
time of any such extension the conditions to closing set forth in such Exchange
Offer shall not have been satisfied or waived, or to reduce any minimum tender
condition of such Exchange Offer permitted by Section 4, and (ii) may, subject
to Section 4 hereof, amend any Exchange Offer or Private Transaction to increase
the aggregate purchase price payable thereunder above the Agreed Consideration
or to waive any closing condition of the Company thereunder.
Section 6. Tender in Exchange Offer; No Revocation, Etc. (a) If the
---------------------------------------------
Company commences an Exchange Offer for Bonds of any tranche held by any Holder,
then subject to the conditions set forth in Section 9(a), on or before the
termination date for such Exchange Offer, such Holder shall (i) execute a
"Letter of Transmittal and Consent" pursuant to such Exchange Offer with respect
to that fraction of all Bonds of such tranche that such Holder directly or
indirectly holds, manages or advises equal to the Tender Fraction, and (ii)
tender and deliver all such Bonds to the Company pursuant to such Exchange
Offer, accompanied by such executed Letters of Transmittal and Consent.
13
<PAGE>
(b) Prior to the termination of this Agreement as provided in Section
13, each Holder agrees that it will not (i) revoke or withdraw any tender made
by it of the Holder's Notes pursuant to any Exchange Offer commenced hereunder,
(ii) revoke or modify any consent to the Proposed Amendments delivered by it, or
(iii) seek to amend, modify or terminate any Private Transaction entered into by
such Holder hereunder, except as expressly provided herein or therein.
Section 7. Support of the Exchange Offer or Private Transaction. (a) Each
----------------------------------------------------
Holder agrees that from and after the date hereof, (i) it will not vote for,
consent to, provide any support for, participate in the formulation of, or
solicit or encourage others to formulate any other tender offer, settlement
offer, or exchange offer for the Notes other than any Exchange Offer or Private
Transaction commenced hereunder; (ii) it will use its reasonable and appropriate
efforts to cause the Committees to take all appropriate actions, including,
without limitation, execution and distribution to holders of Notes of a letter
asking such holders to tender their Notes in any Exchange Offer, deemed to be
advisable in order to cause the consummation of any Exchange Offer commenced
hereunder or, subject to compliance with applicable securities laws, rules and
regulations, to cause such holders of Notes to sell or exchange in any such
Exchange Offer or in Private Transactions Notes in an aggregate principal amount
equal to at least 80% of the aggregate principal amount of Notes outstanding on
the date hereof, including at least 51% of the aggregate principal amount of
each tranche of Notes; and (iii) it will permit public disclosure, including in
a press release, of the contents of this Agreement, including, but not limited
to, the commitments given in this Section 7(a), but not including information
with respect to individual Holder's ownership of Notes; provided, however, that
-----------------
nothing herein shall be deemed to prevent any Holder from taking any action
which
14
<PAGE>
it is obligated to take in the performance of any fiduciary or similar duty
which the Holder owes to any other Person.
(b) Each Holder further agrees that it will not object to or
otherwise commence any proceeding to oppose any Exchange Offer commenced
hereunder, or any Private Transaction, and shall not take any action that is
inconsistent with, or that would delay the consummation of any Exchange Offer or
Private Transaction hereunder; provided, however, that nothing herein shall be
-----------------
deemed to prevent any Holder from taking any action which it is obligated to
take in the performance of any fiduciary or similar duty which the Holder owes
to any other Person.
Section 8. Certain Obligations of Each Holder. (a) Subject to the
-----------------------------------
satisfaction of the conditions set forth in Section 9(a) hereof:
(i) Each Holder hereby waives any default, event of default or other
breach under any of the Notes or Existing Agreements that such Holder
might otherwise have claimed to exist on the date hereof or arising
hereafter and agrees to forbear until the termination of this
Agreement from the exercise of any rights or remedies such Holder may
have under the Existing Agreements, applicable law or otherwise
(including, in the case of any Notes governed by an indenture,
instructing the trustee under such indenture to refrain from taking
actions on its behalf, and, in the case of any Notes governed by a
credit agreement, instructing the agents under such credit agreement
to refrain from taking actions on its behalf), provided, however,
-----------------
that, upon any termination of this Agreement pursuant to any of
15
<PAGE>
subsections (ii) through (vii) of Section 13(a) hereof, the foregoing
waivers and forbearance shall be null and void and of no force and
effect whatsoever;
(ii) Each Holder of the Bonds hereby agrees (A) to cooperate with the
Company or any other Person to enable The Depository Trust Company
(the "DTC"), the ultimate holder of record of the Bonds, to convey its
consent to the Proposed Amendments to the Indentures to the Trustee
prior to the Note Purchase Closing Date for such Bonds; provided,
---------
however, that the Proposed Amendments shall not become effective until
-------
the Note Purchase Closing Date for such Bonds and (B) to remit its
Bonds to the Trustee's account at the DTC on the applicable Note
Purchase Closing Date.
(iii) Each Holder of a Bridge Loan hereby agrees (A) to extend the
period of time by which the Company is required to deliver financial
statements pursuant to Section 5.1(B) of the Interim Loan Agreement to
April 15, 1999, and (B) until the termination of this Agreement, to
waive any right which may arise if any "going concern" or similar
qualification in the audit report referred to therein would be an
"Impermissible Qualification" (as defined in the Interim Loan
Agreement) under such Section 5.1(B), provided, however, that, upon
-----------------
any termination of this Agreement pursuant to any of subsections (ii)
through (vii) of Section 13(a) hereof, the waiver in clause (B) of
this
16
<PAGE>
paragraph shall be null and void and of no force and effect
whatsoever with respect to any audit report qualification, other than
a qualification that is dependent on the closing of the Medium Power
Asset Sale.
(iv) Each Holder hereby agrees to execute and deliver to the Company,
on or before the Medium Power Closing Date, such Holder's written
consent to the Medium Power Asset Sale, substantially in the form of
Exhibit G attached hereto. Such consent shall provide for the waiver
of all covenants, terms and conditions of the Notes and the Existing
Agreements that (A) would prohibit the Medium Power Asset Sale, or (B)
would cause the Medium Power Asset Sale to give rise to any default,
additional liability, mandatory prepayment or offer to purchase upon
a "change of control" under any of the Notes or Existing Agreements,
including, without limitation, under Section 5.01 of each of the
Indentures or under Section 6A.8 of the Interim Loan Agreement;
provided, however, the waivers of such Holder set forth in clause (B)
-----------------
of this subsection 8(a)(iv) shall be null and void and of no force and
effect whatsoever, upon the earlier of (I) the failure or refusal by
the Company to purchase the Notes of any Holder as set forth in
Section 2 hereof, on or before the applicable Note Purchase Closing
Date or (II)
17
<PAGE>
termination of this Agreement pursuant to subsections (ii) through
(vii) of Section 13(a) hereof.
(b) Subject to the satisfaction of the conditions set forth in
Sections 9(a) and 9(b) hereof, each Holder hereby agrees to execute and deliver
to the Company, on or before the Note Purchase Closing Date, a mutual written
release signed by such Holder substantially in the form of Exhibit H attached
hereto. Such release shall provide for, among other things, the waiver, release,
discharge and agreement not to sue each of the Company, its current, former and
future stockholders, their respective subsidiaries and affiliates, all former,
current or future officers, directors, employees, agents, advisors and
representatives of any of the foregoing (including without limitation the
initial purchasers who purchased the Bonds from the Company's predecessor and
the agents, arrangers and syndicators of the Bridge Loans, and any and all of
their affiliates, former, current or future officers, directors, employees,
agents, advisors and representatives), and the predecessors, successors and
assigns of each of the foregoing (collectively, the "Releasees") as to all
liabilities of any kind that the Holder ever had, has or hereafter may have
against any Releasee as a result of or in any manner related to the Holder's
purchase, ownership or sale of the Notes.
(c) Subject to the satisfaction of the conditions set forth in
Sections 9(a) and 9(b) hereof, each Holder hereby further consents, with respect
to all of such Holder's Notes, to the adoption of the Proposed Amendments,
effective as of the purchase of such Holder's Notes as set forth in Section 2 on
the Note Purchase Closing Date.
(d) Any additional Notes acquired by a Holder after the date hereof
shall automatically be deemed to be subject to the terms of this Agreement.
Each Holder shall promptly
18
<PAGE>
advise the Company of the acquisition of any such additional Notes and promptly
deliver to the Company a revised and restated version of Schedule 2.
(e) Each Holder hereby agrees that it shall not sell, use, assign,
transfer or otherwise dispose of any of the Notes, or any other securities of or
claims against the Company unless the transferee agrees in writing to be bound
by all the terms of this Agreement by executing (i) a counterpart signature page
of this Agreement and (ii) the "Form of Provisions for Transfer of Agreement"
attached as Exhibit D to this Agreement, and delivering a copy of such items to
the Company. Any such transfer shall be effective only upon receipt of such
items by the Company and, upon receipt thereof, the selling Holder shall be
relieved of all obligations hereunder.
Section 9. Conditions to the Obligations of Each Holder. (a) The
--------------------------------------------
obligations of each Holder set forth in Section 8(a), Section 8(b) and Section
8(c), and, if an Exchange Offer is commenced hereunder, the obligation of such
Holder to tender its Notes thereunder, are subject to (i) the prior execution
and delivery of the Funding Agreement by each of the parties thereto, (ii) there
having occurred no material breach of the Funding Agreement by any party
thereto, and (iii) there having occurred no termination of this Agreement prior
to the Holders' performance of such obligations.
(b) The obligations of each Holder to sell its Notes in any Private
Transaction or pursuant to any Exchange Offer hereunder, to deliver a release as
set forth in Section 8(b) and to consent to the Proposed Amendments as set forth
in Section 8(c), are subject to the following:
(i) the payment and delivery to such Holder of the aggregate
purchase price set forth in Section 2 hereof, including, without
limitations, the issuance of the Share Appreciation Rights;
19
<PAGE>
(ii) the execution and delivery by the Funding Parties of the
Indemnity Agreement;
(iii) the execution and delivery by the Company (or the issuer, if
different from the Company) of the Registration Rights Agreement
and the Pledge and Security Agreement and delivery by the
Company of the Collateral (as defined in the Pledge and Security
Agreement) to the collateral agent under the Pledge and Security
Agreement;
(iv) the execution and delivery of the Funding Agreement by each of
the parties thereto and the continued effectiveness of such
Funding Agreement;
(v) the payment by the Company of certain fees and expenses of the
Committees of holders of Notes in the amount of $3,150,000;
(vi) the payment in full by the Company of all obligations of the
Company under its Senior Bank Facility and the termination of
all commitments thereunder;
(vii) the execution and delivery by TSAT and the Company of the TSAT
SARs (as defined in the Pledge and Security Agreement), by the
parties to the TSAT Pledge Agreement (as defined in the Pledge
and Security Agreement) and the delivery of the collateral
thereunder (including 1,407,307 shares of Class H Common Stock,
par value $0.10 per share, of General Motors Corporation)
pursuant to the terms thereof and the delivery of all of the
above to the Collateral Agent (as defined in the Pledge and
20
<PAGE>
Security Agreement) under the terms of the Pledge and Security
Agreement.
(viii) the receipt of customary officer's certificates from the
Company.
Section 10. Certain Obligations of the Company. (a) Subject to the
----------------------------------
performance by each Holder of its obligations to be performed pursuant to this
Agreement on or before the date required for such performance (assuming
satisfaction of the conditions to such obligations set forth herein), the
Company shall, on the Medium Power Closing Date:
(i) perform all obligations of the Company to be performed under
the Medium Power Purchase Agreement;
(ii) waive the Debt Tender Condition; and
(iii) upon the closing of the Medium Power Asset Sale, apply the cash
proceeds received by the Company thereunder on the Medium Power
Closing Date as provided in Section 10(b);
21
<PAGE>
(b) Subject to the closing of the Medium Power Sale and on or prior to
each Note Purchase Closing Date hereunder, as applicable, the Company shall:
(i) purchase from each Holder, whose Notes are being purchased on
such Note Purchase Closing Date, all Notes subject to this
Agreement on the terms set forth herein and make, or cause to
be made, the payment and delivery to such Holder of the
aggregate purchase price set forth in Section 2 hereof,
including, without limitation, the issuance of the Share
Appreciation Rights and payment of all accrued and unpaid
interest;
(ii) deliver to each Holder concurrently with the purchase of such
Holder's Notes, the Indemnity Agreement, duly executed by each
of the Funding Parties;
(iii) execute and deliver the Registration Rights Agreement and the
Pledge and Security Agreement to each Holder whose Notes are
being purchased on such Note Purchase Closing Date;
(iv) provide a certificate, executed by each of the Funding Parties,
confirming the due execution and delivery of the Funding
Agreement by each of such parties thereto and the continued
effectiveness of such
22
<PAGE>
Funding Agreement, to each Holder whose Notes are being
purchased on such Note Purchase Closing Date;
(v) execute and deliver counterparts to the mutual release signed
by the Holders pursuant to Section 9(b) hereof;
(vi) on the first Note Purchase Closing Date only, pay certain fees
and expenses of the Committees of holders of Notes in the
amount of $3,150,000; and
(vii) on the first Note Purchase Closing Date only, pay and discharge
in full all obligations of the Company under the Senior Bank
Facility and terminate all commitments thereunder and provide a
certificate of the President of the Company confirming the
payment in full by the Company of all obligations of the
Company under its Senior Bank Facility and the termination of
all commitments thereunder.
(c) On the Medium Power Closing Date, upon the closing of the Medium
Power Asset Sale, the Company shall deposit into escrow pursuant to an "Escrow
Agreement" substantially in the form of Exhibit I attached hereto an amount
equal to (i) 88.2% of the aggregate principal amount of the Current Pay Notes,
the Discount Notes and the Bridge Loans outstanding immediately prior to the
Medium Power Closing Date, determined in the case of the Discount Notes as if
the Company had made a Cash Interest Election as of February 15, 1999, plus (ii)
----
100% of all accrued unpaid interest through the Medium Power Closing Date under
the Current Pay Notes, the Discount
23
<PAGE>
Notes and the Bridge Loans, determined in the case of the Discount Notes as if
the Company had made a Cash Interest Election as of February 15, 1999, minus
-----
(iii) all cash paid to Holders on the first Note Purchase Closing Date. Such
Escrow Agreement shall prohibit the escrowed funds from being used during the
term thereof for any purpose whatsoever other than to pay the tender or purchase
price of Notes in accordance with this Agreement and any accrued unpaid interest
thereon.
(d) The Company shall close all Private Transactions simultaneously with
the closing of the Medium Power Asset Sale, and shall close all purchases of
Notes pursuant to any Exchange Offers as promptly thereafter as possible.
(e) The Company shall not amend the Funding Agreement prior to the final
Note Purchase Closing Date hereunder; thereafter, the Company shall not amend
the Funding Agreement in a manner that adversely affects the Holders without the
consent of Holders of 66-2/3% of the aggregate principal balance of Notes;
provided, however, that for purposes of voting, any Notes held by the Company
- - -----------------
shall not be voted and shall not be counted for any voting purposes.
Section 11. Representations and Warranties of the Company. The Company
---------------------------------------------
hereby acknowledges, warrants and represents that the following statements are
true, correct and complete as of the date hereof, and will be true, correct and
complete on the Note Purchase Closing Date:
(a) Power and Authority. It has all requisite power and authority to
-------------------
enter into this Agreement and to carry out the transactions contemplated by, and
perform its respective obligations under, this Agreement;
(b) Authorization. The execution and delivery of this Agreement and the
-------------
performance of its obligations hereunder have been duly authorized by all
necessary action on its part, it has been duly authorized to make the
representations and commitments included herein, and
24
<PAGE>
the person executing and delivering this Agreement on behalf of the Company has
been duly authorized to do so;
(c) Organization. The Company is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware.
(d) No Conflicts. The execution, delivery and performance by it of this
------------
Agreement and any other agreement provided for hereunder, and consummation of
the transactions provided for hereunder or thereunder, do not and shall not
violate any provision of law, rule or regulation applicable to it or any of its
subsidiaries or its organizational documents or those of any of its
subsidiaries;
(e) Binding Obligation. This Agreement is the legally valid and binding
------------------
obligation of the Company, enforceable against it by each Holder in accordance
with the terms of this Agreement;
(f) Acknowledgment. This Agreement is the product of good faith
--------------
negotiations between the Company and the Holders and/or their representatives;
and
(g) Representation by Counsel. It has been represented by counsel in
-------------------------
connection with this Agreement and the transactions contemplated by this
Agreement. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intent of the parties hereto.
Section 12. Acknowledgments, Warranties and Representations of the
------------------------------------------------------
Holders. Each Holder hereby acknowledges, warrants and represents that, as to
such Holder, the following statements are true, correct and complete as of the
date hereof, and will be true, correct and complete on the applicable Note
Purchase Closing Date:
25
<PAGE>
(a) Power and Authority. It has all requisite power and authority to
-------------------
enter into this Agreement and to carry out the transactions contemplated by, and
perform its respective obligations under, this Agreement;
(b) Authorization. The execution and delivery of this Agreement and the
-------------
performance of its obligations hereunder have been duly authorized by all
necessary action on its part, it has been duly authorized to make the
representations and commitments included herein, and the person executing and
delivering this Agreement on behalf of the Holder has been duly authorized to do
so;
(c) Organization. Such Holder (except if such Holder is an individual)
------------
is an organization duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization.
(d) No Conflicts. The execution, delivery and performance by it of this
------------
this Agreement and any other agreement provided for hereunder, and consummation
of the transactions provided for hereunder or thereunder, do not and shall not
violate any provision of law, rule or regulation applicable to it or any of its
subsidiaries or its organizational documents or those of any of its
subsidiaries, or any participation agreement relating to any Notes to which such
Holder is a party;
(e) Binding Obligation. This Agreement is the legally valid and binding
------------------
obligation of the undersigned, enforceable by the Company against it in
accordance with the terms of this Agreement;
(f) Acknowledgment. This Agreement is the product of good faith
--------------
negotiations between the Company and the Holders and/or their representatives;
26
<PAGE>
(g) Representation by Counsel. It has been represented by counsel in
-------------------------
connection with this Agreement and the transactions contemplated by this
Agreement. The provisions of this Agreement shall be interpreted in a reasonable
manner to effect the intent of the parties hereto;
(h) Securities Held by Holder. Set forth in Schedule 2 attached hereto
-------------------------
is the amount of Notes with respect to which the Holder is record holder,
beneficial owner or serves as investment manager or financial advisor with
investment discretion and authority;
(i) Reliance by Company. It is making the commitments and
-------------------
representations included in this Agreement to induce the Company to take action
subsequent to the effective date of this Agreement, to consummate the Medium
Power Asset Sale and to implement the transactions contemplated by the Exchange
Offer or Private Transaction, as applicable, and that the Company is relying
upon such commitments and representations;
(j) Information Reviewed by Holders. Each Holder has reviewed, or has
-------------------------------
had the opportunity to review, with the assistance of professional financial
and legal advisors of its choosing, sufficient information necessary for it to
decide to tender the Holder's Notes pursuant to the Exchange Offer or enter into
a Private Transaction, as applicable;
(k) Accredited Investor/QIB Status. It is an accredited investor
------------------------------
("Accredited Investor") within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations of the SEC
promulgated thereunder, or a qualified institutional buyer ("QIB") within the
meaning of Rule 144A under the Securities Act, and that it has such experience
and expertise in financial matters as to enable it to evaluate the potential
risks and benefits of entering into this Agreement and to make all investment
decisions relating thereto. It is entering into this Agreement and acquiring
the Share Appreciation Rights to be acquired by it hereunder for its
27
<PAGE>
own account, or a fund or other account as to which such Holder serves as
investment manager or financial advisor with investment discretion and
authority, and not with a view to the distribution thereof, and has not
participated in any public offering of any Share Appreciation Rights or any
general solicitation or public offering to Holders to enter into this Agreement;
and
(l) Record Date. Such Holder is the record holder of or the beneficial
-----------
owner of, or serves as investment manager or financial advisor with investment
discretion and authority for the record holder or beneficial owner of, the Notes
listed opposite the name of such Holder on Schedule 2 attached hereto as of the
date of this Agreement (such date being the record date for the Private
Transactions and any Exchange Offer), or, if such Holder (or any fund or account
for which such Holder serves as investment manager or financial advisor with
investment discretion and authority) acquired any Notes after the date of this
Agreement, such Holder has caused the Company to be provided with a letter,
substantially in the form of Exhibit J attached hereto, signed by or on behalf
of the person or entity that was the record holder or beneficial owner of such
Notes on such record date.
Section 13. Termination of this Agreement. (a)This Agreement shall
-----------------------------
terminate upon the earliest to occur of (i) the purchase by the Company of all
Notes held by the Holders through one or more Exchange Offers and/or Private
Transactions and the payment or delivery of the consideration therefor set forth
in Section 2 hereof, and the execution and delivery of the Indemnity Agreement,
the Pledge and Security Agreement, the Registration Rights Agreement, the Share
Appreciation Rights, consents to the Medium Power Asset Sale (in substantially
the form of Exhibit G attached hereto), mutual releases (in substantially the
form of Exhibit H attached hereto) and the escrow agreement (as provided in
Section 10(c) hereof, but only if there is an Exchange Offer); (ii)
28
<PAGE>
the commencement of a case by or against the Company or any Funding Party under
Title 11, United States Code, (iii) the acceleration of the obligations of the
Company under the Senior Bank Facility prior to the Medium Power Closing Date,
(iv) the giving of notice by the Company required under Section 14 that the
closing of the second portion of the High Power Agreement will take place prior
to the closing of the Medium Power Asset Sale, (v) the failure of the Company to
purchase, whether by Exchange Offer or Private Transaction, all Holders' Notes
on or prior to the applicable Note Purchase Closing Date, (vi) the occurrence of
the events specified in Section 4(d) hereof or (vii) 5:00 p.m., Eastern time on
May 21, 1999; provided, however, that in the event the Company has commenced an
-----------------
Exchange Offer in accordance with this Agreement which has not been consummated
by May 21, 1999, in the absence of the events set forth in Section 4(d) hereof,
the "May 21, 1999" date shall be extended to the date four business days after
the date upon which such Exchange Offer is consummated in accordance with this
Agreement; provided, further, that any termination of this Agreement shall not
-----------------
limit the remedies of any Party for a breach of this Agreement prior to such
termination.
(b) Upon termination of this Agreement pursuant to any of subsections
(a)(ii) through (a)(vii) of this Section 13:
(i) the waivers under Section 8 hereof by any Holder all of whose
Notes have not been purchased pursuant to this Agreement (a
"Remaining Holder"), and any waivers delivered by the Company to
any Remaining Holder under Section 10(b)(v) hereof, shall be
null
29
<PAGE>
and void and of no force or effect whatsoever, except as
expressly provided in Section 8(a)(iii);
(ii) a Remaining Holder may exercise any rights and remedies it may
have under the Existing Agreements, applicable law or otherwise;
(iii) any release delivered by a Remaining Holder under Section 8(c)
shall be null and void and of no force or effect whatsoever; and
(iv) neither the Company nor any of the Holders shall have any
obligations under this Agreement to any other Party hereto,
except as expressly provided in the proviso at the end of
-------
Section 13(a).
(c) The provisions of Section 10(e) shall survive any termination of
this Agreement pursuant to clause (i) of Section 13(a).
Section 14. Termination of Ground Satellite Escrow Agreement. The Escrow
------------------------------------------------
Agreement dated as of March 10, 1999, among the Company, PRIMESTAR Partners L.P.
and each of the Committees (the "Ground Satellite Escrow Agreement") shall
remain in full force and effect until such time as the Medium Power Closing Date
and the first Note Purchase Closing Date. Attached hereto as Schedule 4 is a
list of the bank accounts in which the Company holds the funds subject to the
Ground Satellite Escrow Agreement. The Company agrees that it shall give to the
Holders written notice of the closing of the second portion of the High Power
Agreement if such closing is scheduled to occur before the consummation of the
Medium Power Asset Sale; such notice
30
<PAGE>
shall be given to the Holders not less than three business days prior to the
scheduled closing of the second portion of the High Power Agreement.
Section 15. No Waiver of Participation. The Company and each Holder each
--------------------------
expressly acknowledges and agrees that, except as expressly provided in this
Agreement, nothing herein is intended to, or does, in any manner waive, limit,
impair or restrict the ability of any Party to protect and to preserve all of
its rights, remedies and interests, including, without limitation, with respect
to its claims against and interests in the Company.
Section 16. Further Assurances. Each Holder hereby further covenants and
------------------
agrees to execute and deliver all further agreements and take all further action
that may be reasonably necessary or desirable, or that the Company may
reasonably request, in order to enforce and effectively implement the terms and
conditions of this Agreement. Until the final Note Purchase Closing Date, the
Company agrees to allow any holder of Notes that is a QIB or an Accredited
Investor to become a party to this Agreement. The final Note Purchase Closing
Date shall be the first and only Note Purchase Closing Date if the Company
purchases all of the Holders' Notes in Private Transactions on the Medium Power
Closing Date.
Section 17. Complete Agreement; Modification of Agreement. This
---------------------------------------------
Agreement, the Indemnity Agreement, the Pledge and Security Agreement, the
Registration Rights Agreement, the Share Appreciation Rights, the consents to
the Medium Power Asset Sale (in substantially the form of Exhibit G attached
hereto), the mutual releases (in substantially the form of Exhibit H attached
hereto) (including, without limitation, the Schedules and Exhibits attached
hereto) (collectively, the "Transaction Documents"), constitute the complete
agreement between the Parties with respect to the subject matter hereof and
thereof and supersede all prior and contemporaneous negotiations,
31
<PAGE>
agreements and understandings with respect to the subject matter hereof and
thereof. The Transaction Documents (with the exception of the Pledge and
Security Agreement, which may be modified pursuant to the terms and conditions
contained therein) may not be modified, altered, amended or waived except by an
agreement in writing signed by the Company and the Holders of at least 66-2/3%
of the aggregate principal balance of the Notes and a majority of the aggregate
principal balance of each tranche of Notes, provided however, that the Agreed
-------- -------
Consideration shall not be reduced without the consent of each Holder affected,
and provided further that for purposes of voting, any Notes held by the Company
-------- -------
shall not be voted and shall not be counted for any voting purposes.
Section 18. Specific Performance. The Parties acknowledge and agree that
--------------------
money damages would not be a sufficient remedy for any breach of this Agreement
by any Party and each non-breaching Party shall be entitled to specific
performance and injunctive or other equitable relief as a remedy of any such
breach, and each Party agrees to waive any requirement for the securing or
posting of a bond in connection with such remedy.
Section 19. Parties. This Agreement shall be binding upon, and inure to
-------
the benefit of, the Parties and their respective successors and assigns. Nothing
in this Agreement, express or implied, shall give to any person or entity, other
than the Parties, any benefit or any legal or equitable right, remedy or claim
under this Agreement, and no other person or entity shall be a third-party
beneficiary hereof.
Section 20. Effectiveness; Modification of Certain Percentages. This
--------------------------------------------------
Agreement shall not become effective and binding on the Parties unless and until
counterpart signature pages hereto shall have been executed and delivered by the
Company and Holders holding Notes that
32
<PAGE>
constitute in the aggregate at least (i) 80% of the outstanding principal amount
of Notes (the "Effectiveness Percentage") and (ii) a majority of the outstanding
principal amount of each tranche of the Notes (the "Tranche Percentage"). The
Company, in its sole discretion, may (but shall have no obligation to) reduce
either the Effectiveness Percentage or the Tranche Percentage for the benefit of
the Company.
Section 21. Governing Law; Consent to Jurisdiction. This Agreement shall
--------------------------------------
be construed in accordance with and governed by the internal laws of the State
of New York without giving effect to any conflicts of laws principles. Each
party hereto irrevocably submits to the jurisdiction of any New York State court
sitting in the Borough of Manhattan or any federal court sitting in the Borough
of Manhattan in respect of any suit, action or proceeding arising out of or
relating to this Agreement and the transactions pursuant hereto and in
connection herewith, and irrevocably agrees that all claims in respect of any
such suit, action or proceeding shall be heard and determined in any such court.
Each party irrevocably waives any objection which it may now or hereafter have
to the laying of the venue of such suit, action or proceeding brought in any
such court and any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.
Section 22. Limitation of Obligations. Nothing contained in this
-------------------------
Agreement shall be deemed to obligate any Party to engage in any action that can
reasonably be expected to involve a violation of law.
Section 23. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) upon
telephonic confirmation of facsimile, (ii) when sent by overnight
33
<PAGE>
delivery or (iii) when mailed by registered or certified mail return receipt
requested and postage prepaid, to the addresses listed on the signature pages
hereto. Any party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address, telephone
number or telecopier number for such recipient (i) if such recipient is the
Company, as set forth below:
PRIMESTAR, Inc.
8085 South Chester Street
Suite 300
Englewood, Colorado 80112
Telephone: (303) 712-4600
Telecopy: (303) 712-4973
Attention.: Chief Financial Officer
with a copy to:
Baker & Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022
Telephone: (212) 705-5000
Telecopy: (212) 705-5125
Attention: Marc A. Leaf, Esq.
and (ii) if such recipient is a Holder, as set forth on the signature pages
hereto, with copies to:
Orrick, Herrington & Sutcliffe, LLP
666 Fifth Avenue
New York, New York 10022
Telephone: (212) 506-5000
Telecopy: (212) 506-5151
Attention: Duncan N. Darrow, Esq.
and
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Telephone: (617) 951-7000
Telecopy: (617) 951-7050
34
<PAGE>
Attention: William F. McCarthy, Esq.
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other party notice in the manner herein set forth.
Section 24. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall, collectively and separately, constitute one
agreement.
[signature pages follow]
35
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have executed this Lock-up
Agreement as of the date first above written.
PRIMESTAR, INC.
By:________________________________
Name:
Title:
NAME OF HOLDER
__________________________________________
(Please type or print proper name of Holder)
By:_____________________________________
Name:_____________________________________
Title: ___________________________________
Address: __________________________________
__________________________________
__________________________________
Facsimile No.:______________________________
Telephone No.:______________________________
Taxpayer Identification No.:_____________________
36
<PAGE>
EXHIBIT 10.3
INDEMNITY AGREEMENT
This Indemnity Agreement (the "Agreement" or the "Indemnity Agreement") is
dated the ___ day of April, 1999 among the entities listed on the signature
pages hereof as Holders (each individually a "Holder" and collectively, the
"Holders"), and the parties listed on the signature pages hereof as Indemnitors
(each individually an "Indemnitor" and collectively, the "Indemnitors").
RECITALS
A. PRIMESTAR, Inc. ("Primestar") is the obligor with respect to (i) notes
("Bridge Loans") issued by Primestar pursuant to the Senior Subordinated Credit
Agreement dated as of April 1, 1998, (ii) Primestar's 12-1/4% Senior
Subordinated Discount Notes due 2007, Series A and B (the "Discount Notes") and
(iii) Primestar's 10-7/8% Senior Subordinated Notes due 2007, Series A and B
(the "Current Pay Notes" and, together with the Bridge Loans and the Discount
Notes, the "Notes").
B. The Holders have entered into a lock-up agreement (the "Lock-up
Agreement") with Primestar under the terms of which the Holders will agree to
exchange with Primestar each one thousand ($1,000) dollars principal amount of
Notes (pursuant to the terms of the Lock-up Agreement) for the consideration set
forth in Section 2 of the Lock-up Agreement (the "Exchange Consideration").
Capitalized terms used herein but not defined shall have the meanings ascribed
to such terms in the Lock-up Agreement.
C. Affiliates of the Indemnitors are stockholders of Primestar and/or the
account parties under certain outstanding standby letters of credit that secure
certain other obligations of Primestar or its subsidiaries and will derive
substantial benefits as a result of Primestar consummating the transactions
contemplated by the Lock-up Agreement.
D. Indemnitors' delivery to the Holders of this Indemnity Agreement is a
condition to the Holders' consummation of the transactions contemplated by the
Lock-up Agreement.
E. The Indemnitors are the Funding Parties (as defined in the Funding
Agreement).
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements contained herein and in the Lock-up Agreement and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby covenant and agree as follows:
AGREEMENTS
1. Indemnification.
---------------
<PAGE>
Subject to the condition precedent set forth in Section 2 of this
Agreement, each of the Indemnitors agrees to indemnify and hold harmless each
Holder, each beneficial owner of, or party with an interest in, Notes held by
such Holder and their officers, directors, agents and advisers (collectively,
the "Indemnitees") from and against such Indemnitor's Pro Rata Share (as defined
in the Funding Agreement) of any and all losses, claims, damages, liabilities
and expenses (including, without limitation, all reasonable legal fees and other
costs of defense) ("Loss") which the Indemnitees, or any of them, may become
subject by reason of any action to avoid the transfer of, or otherwise recover,
the Exchange Consideration, (which shall include any transfer or payment made in
respect of or as security for any Exchange Consideration) any portion thereof or
the value thereof, brought by or on behalf of any bankruptcy estate of Primestar
or any affiliate of Primestar, or any assignee of such bankruptcy estate, or any
present or future creditor of Primestar or any affiliate of Primestar, or any
assignee of such a creditor, under (S)(S)544, 547, 548 or 550 of the United
States Bankruptcy Code or under the Uniform Fraudulent Transfer Act, the Uniform
Fraudulent Conveyance Act or any similar preference or fraudulent conveyance
provision of statute or common law as in effect in any state or other
jurisdiction; provided, however, that no Indemnitor shall indemnify an
-------- -------
Indemnitee if such Indemnitee files an involuntary bankruptcy against Primestar
or any of its affiliates at any time after the closing of the transactions
contemplated by the Lock-up Agreement; provided, further, that no Indemnitor
-------- -------
shall have any liability for the payment duties or other obligations of any
other Indemnitor hereunder, as guarantor, co-obligor or otherwise.
2. Condition Precedent.
-------------------
Anything contained herein to the contrary notwithstanding, the obligations
of each Indemnitor under Section 1 of this Agreement shall not be applicable,
and shall have no force or effect, unless (i) such Indemnitor shall be in
default in any material respect of the obligations of such Indemnitor under the
Funding Agreement, or (ii) in respect of a Loss resulting from a bankruptcy case
--
of Primestar, such Indemnitor or any affiliate of such Indemnitor shall have
received any recovery or distribution from the bankruptcy estate of Primestar in
such bankruptcy case (a "Recovery"), and then only to the extent of such
Recovery.
3. Assignment of Recovery.
----------------------
In the event that any Indemnitor or any affiliate of such Indemnitor shall
receive any Recovery, whether or not such Indemnitor or affiliate sought a
Recovery, such Recovery shall be held in trust for the benefit of the
Indemnitees and will be turned over to the Indemnitees within five business days
after such receipt for application to the obligations, if any, of such
Indemnitor under Section 1 above, until such obligations shall have been
satisfied in full.
-2-
<PAGE>
4. Binding Effect.
--------------
This Agreement shall be binding on and inure to the benefit of the parties
hereto and their respective successors and assigns. No assignment by an
Indemnitor shall relieve an Indemnitor from its obligations hereunder.
5. Notices.
-------
All notices, requests, demands, claims, and other communications hereunder
will be in writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given (i) upon telephonic confirmation of
facsimile, (ii) when sent by overnight delivery or (iii) when mailed by
registered or certified mail return receipt requested and postage prepaid, to
the addresses listed on the signature pages hereto. Any party may send any
notice, request, demand, claim, or other communication hereunder to the intended
recipient at the address, telephone number or telecopier number for such
recipient (i) if such recipient is an Indemnitor, as set forth on the signature
pages hereof, with a copy to:
Baker & Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022
Telephone: (212) 705-5000
Telecopy: (212) 705-5125
Attention: Marc A. Leaf, Esq.
and (ii) if such recipient is a Holder, as set forth on the signature pages
hereto, with copies to:
Orrick, Herrington & Sutcliffe, LLP
666 Fifth Avenue
New York, New York 10022
Telephone: (212) 506-5000
Telecopy: (212) 506-5151
Attention: Duncan N. Darrow, Esq.
and
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Telephone: (617) 951-7000
Telecopy: (617) 951-7050
Attention: William F. McCarthy, Esq.
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is
-3-
<PAGE>
received by the intended recipient. Any party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
6. General; Choice of Law; Consent to Jurisdiction.
-----------------------------------------------
The invalidity or unenforceability of any provision hereof shall not affect
the validity or enforceability of any other provision hereof, and any invalid or
unenforceable provision shall be modified so as to be enforceable to the maximum
extent of its validity or enforceability. The headings in this Agreement are for
convenience of reference only and shall not limit, alter or otherwise affect the
meaning hereof. This Agreement constitutes the entire understanding of the
parties with respect to the subject matter hereof and supersedes all prior and
current understandings and agreements, whether written or oral, with respect to
such subject matter. This Agreement may be executed in any number of
counterparts, which together shall constitute one instrument. No amendment of
any provision of this Indemnity Agreement shall be valid unless the same shall
be in writing and signed by the Holders and the Indemnitors. This Agreement
shall be construed in accordance with and governed by the internal laws of the
State of New York without giving effect to any conflicts of laws principles.
Each party hereto hereby irrevocably submits to the jurisdiction of any New York
State court sitting in the Borough of Manhattan or any federal court sitting in
the Borough of Manhattan in respect of any suit, action or proceeding arising
out of or relating to this Agreement and the transactions pursuant hereto and in
connection herewith, and irrevocably agrees that all claims in respect of any
such suit, action or proceeding shall be heard and determined in such court.
Each party irrevocably waives any objection which it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding brought in any
such court and any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.
7. Agreement on Certain Trading Activities.
---------------------------------------
Each Indemnitor agrees that during the 15 calendar day period from and
including April 21, 2000, through and including May 5, 2000, it shall refrain,
and shall cause Primestar to refrain, from any trading activity in shares of the
Class H Common Stock, par value $.10 per share, of General Motors Corporation
(the "GMH Stock"), or any security convertible into, or exercisable or
exchangeable for, shares of GMH Stock, with the purpose of reducing the market
price of the GMH Stock over such 15 calendar day period. Without limiting the
generality of the foregoing, nothing in this Section 7 shall be construed to
prohibit any trading, portfolio, treasury or pension management activity in the
ordinary course of business by or on behalf of an Indemnitor. Anything
contained herein to the contrary notwithstanding, in the event of any
"Reorganization Event," as such term is defined in the Share Appreciation
Rights, all references in this Section 7 to shares of GMH Stock shall thereafter
mean and refer to shares of "Covered Stock," as such term is defined in the
Share Appreciation Rights.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Indemnity
Agreement on the date first written above.
HOLDER:
____________________________________________
(Please type or print proper name of Holder)
By:________________________________________
Name:_____________________________________
Title:_____________________________________
Address: ___________________________________
___________________________________
___________________________________
Telecopy No.:_______________________________
Telephone No.:______________________________
<PAGE>
INDEMNITORS:
____________________________________
(Please type or print proper name of Indemnitor)
By:______________________________________
Name:____________________________________
Title:___________________________________
Address:___________________________________
___________________________________
___________________________________
Telecopy No.:______________________________
Telephone No.:_____________________________
<PAGE>
EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT ("Agreement"), dated as of April 28,
---------
1999 by and among PRIMESTAR, Inc., a Delaware corporation (the "Company"), each
other party whose name is set forth on the signature pages hereof beneath the
heading "Holder" (each a "Holder" and collectively, the "Holders"), and, if
------ -------
other than the Company, the issuer of the SARs whose name is set forth on the
signature pages hereof beneath the heading "Issuer" (if applicable, the
"Issuer", provided that if no such entity is a party to this Agreement,
------ -------- ----
references herein to the Issuer shall be deemed references to the Company) .
WHEREAS, the Issuer has agreed to grant to each Holder certain share
appreciation rights (the "SARs") pursuant to those certain Share Appreciation
----
Rights Agreements dated as of the date hereof (the "SAR Agreements") between
--------------
each respective Holder and the Issuer, evidencing such Holder's right to receive
certain payments upon an increase in the value of the Class H Common Stock, par
value $0.10 per share, of General Motors Corporation (the "GMH Stock"). The
---------
SARs are "restricted securities" (as defined in Rule 144 under the Securities
Act), and the Issuer has agreed to provide the registration rights set forth
herein, which rights shall be effective as of the issuance of the SARs (the
"Closing").
- - --------
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows (capitalized terms used herein but not defined herein shall have the
meanings ascribed to such terms in the SAR Agreements):
1. Certain Definitions. As used in this Agreement, the following
-------------------
terms shall have the corresponding meanings:
Best Efforts: With respect to any undertaking by the Issuer hereunder,
------------
the best efforts of the Issuer with respect to such undertaking at the time
thereof, taking into account all relevant circumstances, provided, however, that
-------- -------
the Issuer shall not be required to do any of the following: (i) dispose of any
of its assets; (ii) hold any of its assets separately from any other assets;
(iii) modify its capital structure; (iv) agree to the appointment of any trustee
or receiver; (v) qualify to do business in any jurisdiction in which it would
not otherwise be required to qualify; or (vi) agree to amend any provision of,
or waive any right of the Issuer under, any of the Lock-up Agreement, the
Funding Agreement, the Pledge and Security Agreement, any SAR Agreement or this
Agreement.
Commission: The Securities and Exchange Commission, or any other
----------
Federal agency at the time administering the Securities Act or the Exchange Act.
Exchange Act: The Securities and Exchange Act of 1934, as amended, or
------------
any successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, as they each may, from time to time, be in effect.
1
<PAGE>
Prospectus: The prospectus included in the Registration Statement as
----------
of the date it becomes effective under the Securities Act and, in the case of
references to the Prospectus as of a date subsequent to the effective date of
the Registration Statement, as amended or supplemented as of such date,
including all documents incorporated by reference therein, as amended, and each
prospectus supplement relating to the offering and sale of any of the
Registrable Securities.
Registrable Securities: All of the SARs issued to Holders pursuant to
----------------------
the SAR Agreements. Any Registrable Security will cease to be a Registrable
Security when (i) a registration statement covering such Registrable Security
has been declared effective by the Commission and such Registrable Security has
been disposed of pursuant to such effective registration statement, (ii) such
Registrable Security is no longer held by a Holder or any permitted transferee
of such Holder or (iii) all of the SARs then held by a Holder and/or its
permitted transferees could be sold without registration in a single transaction
pursuant to Rule 144 under the Securities Act.
Registration Statement: A registration statement of the Issuer on any
----------------------
form (to be selected by the Issuer) for which the Issuer then qualifies and
which permits the secondary resale thereunder of the number of Registrable
Securities required pursuant to this Agreement to be included therein. The term
"Registration Statement" shall also include all exhibits and financial
statements and schedules and documents incorporated by reference in such
Registration Statement when it becomes effective under the Securities Act, and
in the case of the references to the Registration Statement as of a date
subsequent to the effective date, as amended or supplemented as of such date.
Securities Act: The Securities Act of 1933, as amended, or any
--------------
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, as they each may, from time to time, be in effect.
2. Shelf Registration.
------------------
(a) As promptly as possible, but in any event no later than thirty
days after the Closing, the Issuer shall prepare and file with the Commission a
Registration Statement with respect to the offering and sale of the Registrable
Securities by the Holders on a delayed or continuous basis pursuant to Rule 415
under the Securities Act (such Registration Statement, a "Shelf Registration
------------------
Statement"). The Issuer shall use its Best Efforts to cause the Shelf
- - ---------
Registration Statement to become effective as soon as practicable after the
filing thereof.
(b) The Issuer will use its Best Efforts to cause the Shelf
Registration Statement to remain effective, and to file promptly with the
Commission such amendments and supplements as may be necessary to keep the
Prospectus current and in compliance with the Securities Act until the sooner to
occur of the Determination Date and the sale of all of the Registrable
Securities covered by such Shelf Registration Statement. Notwithstanding the
foregoing, the Issuer shall not be required to keep any Shelf Registration
Statement effective if there are no Registrable Securities outstanding.
2
<PAGE>
(c) The Issuer shall notify the Holders (A) when a Shelf Registration
Statement becomes effective; (B) when the filing of a post-effective amendment
to a Shelf Registration Statement or supplement to the Prospectus is required,
when the same is filed, and in the case of a post-effective amendment, when the
same becomes effective; (C) of any request by the Commission for any amendment
of, or supplement to, a Shelf Registration Statement or any Prospectus relating
thereto or for additional information, and (D) of the entry of any stop order
suspending the effectiveness of such Shelf Registration Statement or of the
initiation of any proceedings for that purpose. The Issuer shall furnish to
each Holder a conformed copy of the Shelf Registration Statement as declared
effective by the Commission and of each post-effective amendment thereto, and
such number of copies of the final Prospectus and of each post-effective
amendment or supplement thereto as may reasonably be required to facilitate the
distribution of the Registrable Securities.
(d) The Shelf Registration Statement shall be prepared by the Issuer
in accordance with the Securities Act and the rules and regulations promulgated
thereunder. The section of the Shelf Registration Statement entitled "Selling
Stockholders" shall be prepared in accordance with the requirements of Item 507
of Regulation S-K promulgated by the Commission under the Securities Act
("Regulation S-K") and shall be based upon the information provided by each
- - ----------------
Holder to the Issuer pursuant to Section 4(a). The section of the Shelf
Registration Statement entitled "Plan of Distribution" shall be prepared in
accordance with the requirements of Item 508 of Regulation S-K, shall be based
upon the information provided by each Holder to the Issuer pursuant to Section
4(a), except that the Plan of Distribution shall not permit any underwritten
public offering of the Registrable Securities unless Holders in the aggregate of
------
more than fifty percent (50%) of the Registrable Securities elect to undertake
such an underwritten public offering, in which case there shall be permitted
under this Registration Rights Agreement and the Shelf Registration Statement
contemplated hereby a single underwritten public offering of Registrable
Securities.
(e) Promptly, and in any event within fifteen days, after having been
notified by a Holder of such Holder's intention to distribute Registrable
Securities in a manner contemplated by the Shelf Registration Statement in the
section entitled "Plan of Distribution" and after having received the
information required to be delivered to the Issuer by such Holder as provided in
Section 4(c), the Issuer will, if necessary, (i) prepare a supplement to the
Prospectus based upon the information so provided and file the same with the
Commission pursuant to Rule 424(b) under the Securities Act and (ii) register or
qualify the Registrable Securities to be sold under the securities or blue sky
laws of such jurisdictions in the United States as such Holder shall reasonably
request; provided, however, that the Issuer shall in no event be required to
-------- -------
qualify to do business as a foreign corporation or as a dealer in any
jurisdiction where it is not so qualified, to conform its capitalization or the
composition of its assets at the time to the securities or blue sky laws of any
such jurisdiction, to execute or file any general consent to service of process
under the laws of any jurisdiction, to take any action that would subject it to
service of process in suits other than those arising out of the offer and sale
of Registrable Securities, or to subject itself to taxation in any jurisdiction
where it has not theretofore done so.
3
<PAGE>
3. Expenses of Registration. All expenses in connection with a Shelf
------------------------
Registration Statement, any qualification or compliance with federal or state
laws required in connection therewith, and the distribution of the Registrable
Securities shall, as between each Holder and the Issuer, be borne as follows:
(a) The Issuer shall pay and be responsible for the registration fee
payable under the Securities Act, blue sky fees and expenses, if applicable, and
all fees and disbursements of the Issuer's counsel and accountants. The Issuer
will not engage the services of a printer with respect to the Shelf Registration
Statement or the Prospectus, but will arrange for the photocopying thereof and
bear the photocopying costs.
(b) Each Holder shall pay all fees and disbursements of its own
counsel and advisers, all stock transfer fees (including the cost of all
transfer tax stamps) or expenses, if any, and all other expenses (including
brokerage discounts, commissions and fees) related to the distribution of the
Registrable Securities owned by such Holder that have not expressly been assumed
by the Issuer as set forth above.
4. Holders' Covenants Regarding the Registrable Securities. Each
-------------------------------------------------------
Holder, severally and not jointly, covenants and agrees with the Issuer that:
(a) Holder will cooperate with the Issuer in connection with the
preparation of the Shelf Registration Statement, and for so long as the Issuer
is obligated to keep the Shelf Registration Statement effective, Holder will
provide to the Issuer, in writing, for use in the Shelf Registration Statement,
all information regarding Holder, its plan of distribution of the Registrable
Securities and such other information as may be necessary to enable the Issuer
to prepare the Registration Statement and Prospectus covering the Registrable
Securities and to maintain the currency and effectiveness thereof.
(b) During such time as Holder may be engaged in a distribution of the
Registrable Securities, Holder will comply with Regulation M promulgated under
the Exchange Act and pursuant thereto will, among other things: (i) not engage
in any stabilization activity in connection with the securities of the Issuer in
contravention of such Regulation; (ii) distribute the Registrable Securities
owned by Holder solely in the manner described in the Registration Statement;
(iii) cause to be furnished to each agent or broker-dealer to or through whom
the Registrable Securities may be offered, or to the offeree if an offer is made
directly by Holder, such copies of the Prospectus (as amended and supplemented
to such date) and documents incorporated by reference therein as may be required
by such agent, broker-dealer or offeree; and (iv) not bid for or purchase any
securities of the Issuer or attempt to induce any person to purchase any
securities of the Issuer in contravention of the Exchange Act.
(c) With respect to any distribution pursuant to the Shelf
Registration Statement, at least ten (10) days prior to any distribution of the
Registrable Securities, Holder will advise the Issuer in writing of the dates on
which the distribution will commence and terminate, the
4
<PAGE>
number and type of the Registrable Securities to be sold, the terms and the
manner of sale (including, to the extent applicable, the purchase price, the
name of any agent or broker-dealer to or through whom such distribution is being
made, and the amount of any selling commissions or other items constituting
compensation to such agent or broker-dealer) and the number of Registrable
Securities that will be owned beneficially by Holder after giving effect to such
sale.
(d) If the Issuer gives Holder written notice that the filing by the
Issuer of a post-effective amendment to a Shelf Registration Statement,
supplement to the Prospectus, or a current report on Form 8-K is required to
permit the continued distribution of Registrable Securities under the Shelf
Registration Statement without violation of any applicable securities laws or
regulations, then Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the Shelf Registration Statement, provided that the
-------------
Issuer shall file such post-effective amendment to such Shelf Registration
Statement, supplement to the Prospectus and/or current report on Form 8-K within
five business days thereafter and, in the case of a post-effective amendment to
the Shelf Registration Statement, shall notify Holder at such time as such post-
effective amendment becomes effective. If the Issuer gives Holder written
notice of the entry of a stop order suspending the effectiveness of a Shelf
Registration Statement, Holder will forthwith discontinue disposition of
Registrable Securities pursuant to such Shelf Registration Statement until
notified in writing by the Issuer that such stop order has been rescinded. If
so directed by the Issuer, each Holder will deliver to the Issuer, at the
Issuer's expense, all copies of the most recent Shelf Registration Statement,
preliminary Prospectus, Prospectus or post-effective amendment or supplement
thereto covering any Registrable Securities in such Holder's possession at the
time of Holder's receipt of any notice contemplated by this Section 4(d).
(e) Holder acknowledges that neither General Motors Corporation nor
Hughes Electronics Corporation nor any of their respective subsidiaries or
affiliates (collectively, the "GM Parties") is a party to this Agreement and
----------
that neither Holder nor the Issuer has any right to require the GM Parties or
the applicable Covered Share Issuer to provide any information in connection
with the Shelf Registration Statement or the Prospectus included therein or
otherwise to assist the Issuer in complying with its obligations under this
Agreement. Holder further acknowledges that the Issuer shall have no liability
to Holder for any failure of the Shelf Registration Statement to become
effective to the extent that such failure to become effective is attributable to
the failure by any GM Party or the applicable Covered Share Issuer to provide
information required by law or otherwise cooperate in connection with the
preparation of the Shelf Registration Statement or the Prospectus included
therein.
5. Indemnification.
---------------
(a) The Issuer and the Company, jointly and severally, agree to
indemnify and hold harmless each Holder, its directors and officers, if any,
each person, if any, who controls such Holder within the meaning of either the
Securities Act or the Exchange Act and any agent, employee, professional
advisor, broker-dealer or underwriter engaged by such Holder (the "Issuer
------
Indemnified Parties") from and against any losses, claims, damages or
- - -------------------
liabilities, joint or
5
<PAGE>
several, to which such Issuer Indemnified Parties may become subject, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof) are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement or the Prospectus, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and, subject to
Section 5(c), the Issuer and the Company, jointly and severally, agree to
reimburse each Issuer Indemnified Party for any legal or other expenses
reasonably incurred by it in connection with investigating or defending any such
loss, claim, damage or liability; provided, however, that neither the Issuer nor
-------- -------
the Company will indemnify or hold harmless any Issuer Indemnified Party from or
against any such loss, claim, damage, liability or expense if the untrue
statement, omission or allegation thereof upon which such losses, claims,
damages, liabilities or expenses are based (x) was made in reliance upon and in
conformity with written information provided by any Issuer Indemnified Party
specifically for use or inclusion in the Shelf Registration Statement, or (y)
was made in any Prospectus used after such time as the Issuer advised the
Holders that the filing of a post-effective amendment or supplement thereto was
required, except the Prospectus as so amended or supplemented.
(b) Each Holder severally and not jointly agrees to indemnify and hold
harmless the Issuer, the Company, and each of their respective directors and
officers, each person, if any, who controls the Issuer or the Company, as
applicable, within the meaning of either the Securities Act or the Exchange Act,
any agent, employee, professional advisor, broker-dealer or underwriter engaged
by the Company, each other Holder, its directors and officers, each person, if
any, who controls such other Holder within the meaning of either the Securities
Act or the Exchange Act, and any agent, employee, professional advisor, broker-
dealer or underwriter engaged by such Holder (the "Holder Indemnified Parties"),
--------------------------
from and against any losses, claims, damages or liabilities, joint or several,
to which the Holder Indemnified Parties may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Shelf Registration Statement or the Prospectus,
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, if the statement or
omission was made in reliance upon and in conformity with written information
provided by such Holder specifically for use or inclusion in the Shelf
Registration Statement, or (ii) the use of any Prospectus after such time as the
Issuer has advised such Holder that the filing of a post-effective amendment or
supplement thereto is required, except the Prospectus as so amended or
supplemented; and, subject to Section 5(c), such Holder will reimburse such
Holder Indemnified Parties for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage or liability. Each Holder's indemnification and reimbursement
obligations shall be limited to such Holder's proceeds from the sale of SARs.
(c) Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice to the party required to provide
- - ------------------
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
------------------
has actual knowledge of any claim as
6
<PAGE>
to which indemnity may be sought, and the Indemnifying Party may participate at
its own expense in the defense, or if he or it so elects, to assume the defense
of any such claim and any action or proceeding resulting therefrom, including
the employment of counsel and the payment of all expenses. The failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party from its obligations to indemnify such Indemnified Party,
except to the extent the Indemnified Party's failure to so notify actually
prejudices the Indemnifying Party's ability to defend against such claim, action
or proceeding; it being understood and agreed that the failure to so notify the
Indemnifying Party prior to the execution of a binding settlement agreement or
the entry of a judgment or issuance of an award with respect to a claim, action
or proceeding shall constitute actual prejudice to the Indemnifying Party's
ability to defend against such claim, action or proceeding. In the event that
the Indemnifying Party elects to assume the defense in any action or proceeding,
the Indemnified Party shall have the right to employ separate counsel in any
such action or proceeding and to participate in the defense thereof, but the
fees and expenses of such separate counsel shall be such Indemnified Party's
expense unless (i) the Indemnifying Party has agreed to pay such fees and
expenses or (ii) the named parties to any such action or proceeding (including
any impleaded parties) include an Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall have been advised by counsel that there may be
a conflict of interest between such Indemnified Party and the Indemnifying Party
in the conduct of the defense of such action (in which case, if such Indemnified
Party notifies the Indemnifying Party that he or it elects to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying Party shall
not assume the defense of such action or proceeding on such Indemnified Party's
behalf, it being understood, however, that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all Indemnified
Parties, which firm shall be designated in writing by the applicable Holder or
the Issuer and the Company acting jointly, as the case may be). No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of the Indemnified Party, consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. The Indemnifying Party
shall not be liable for any settlement of any such action or proceeding effected
without its written consent, but if settled with its written consent, or if
there be a final judgment for the plaintiff in any such action or proceeding,
the Indemnifying Party shall indemnify and hold harmless the Indemnified Party
from and against any loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for under this Section 5 is
unavailable to or insufficient to hold the Indemnified Party harmless under
subparagraphs (a) or (b) above in respect of any losses, claims, damages or
liabilities referred to therein for any reason other than as specified therein,
then the Indemnifying Party shall contribute to the amount paid or payable by
such Indemnified Party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party on the one hand and such Indemnified Party on the
other in connection with the statements or omissions which resulted in such
7
<PAGE>
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by (or omitted to be supplied by) the Issuer or the
applicable Holder, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
the relative benefits received by each party from the sale of the Registrable
Securities and any other equitable considerations appropriate under the
circumstances. The amount paid or payable by an Indemnified Party as a result
of the losses, claims, damages or liabilities referred to above in this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or defending
any such action or claim. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
6 Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) upon
telephonic confirmation of facsimile, (ii) when sent by overnight delivery or
(iii) when mailed by registered or certified mail return receipt requested and
postage prepaid, to the addresses listed on the signature pages hereto. Any
party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address, telephone number or
telecopier number for such recipient (i) if such recipient is the Issuer or the
Company, set forth below:
8085 South Chester, Suite 300
Englewood, Colorado 80112
Telephone: (303) 712-4600
Telecopy: (303) 712-4977
Attention: Chief Financial Officer
with a copy to:
Baker & Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022
Telephone: (212) 705-5000
Telecopy: (212) 705-5125
Attention: Marc A. Leaf, Esq.
and (ii) if such recipient is a Holder, as set forth on the signature pages
hereto, with copies to:
Orrick, Herrington & Sutcliffe, LLP
666 Fifth Avenue
New York, New York 10022
Telephone: (212) 506-5000
8
<PAGE>
Telecopy: (212) 506-5151
Attention: Duncan N. Darrow, Esq.
and
Ropes & Gray
One International Place
Boston, Masschusetts 02110
Telephone: (617) 951-7000
Telecopy: (617) 951-7050
Attention: William F. McCarthy, Esq.
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other party notice in the manner herein set forth.
7 Amendment. Any provision of this Agreement may be amended or
---------
modified, in whole or in part at any time by an agreement in writing to which
the Company and the Issuer are parties and which is approved by Holders of a
majority in principal amount of SARs, provided that such Holders shall be
-------- ----
registered as Holders in the SAR Register and such Holders shall not include the
Company, Issuer, or any of their respective affiliates. No consent, waiver or
similar act shall be effective unless in writing.
8 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
9 Governing Law; Consent to Jurisdiction. This Agreement shall be
--------------------------------------
construed in accordance with and governed by the internal laws of the State of
New York without giving effect to any conflicts of laws principles. Each party
hereto irrevocably submits to the jurisdiction of any New York State court
sitting in the Borough of Manhattan or any federal court sitting in the Borough
of Manhattan in respect of any suit, action or proceeding arising out of or
relating to this Agreement and the transactions pursuant hereto and in
connection herewith, and irrevocably agrees that all claims in respect of any
such suit, action or proceeding shall be heard and determined in any such court.
Each party irrevocably waives any objection which it may now or hereafter have
to the laying of the venue of such suit, action or proceeding brought in any
such court and any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.
10 Assignment. Each Holder may, in connection with any transfer of
----------
SARs permitted by the applicable SAR Agreement (whether made pursuant to Rule
144 of the Securities
9
<PAGE>
Act or otherwise, but not if such transfer is made pursuant to a valid
Registration Statement), assign its rights under this Agreement to the same
person(s) to whom the Holder is making such a permitted transfer or transfers.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
11 Entire Agreement. The provisions of this Agreement, together
----------------
with the SAR Agreements and the Lock-up Agreement, set forth the complete
understanding and intention of the parties with respect to the subject matter
hereof and supersede all prior agreements or understandings, whether written or
oral, relating to the subject matter hereof.
10
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this signature page
intending to be bound by the foregoing Registration Rights Agreement as of the
date first above written.
PRIMESTAR, INC.
By:______________________________________________
Name:
Title:
ISSUER:
-------------------------------------------------
-------------------------------------------------
By:
Name:
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this signature page
intending to be bound by the foregoing Registration Rights Agreement as of the
date first above written.
HOLDER:
__________________________________________
(Please type or print proper name of Holder)
By:____________________________________
Name:__________________________________
Title: __________________________________
Address: __________________________________
__________________________________
__________________________________
Telecopy No.:______________________________
Telephone No.:____________________________
Taxpayer Identification No.:_______________
<PAGE>
EXHIBIT 10.5
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDEDUserFinancial Printing GroupTHE SECURITIES REPRESENTED BY THIS INSTRUMENT
HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT. IN ADDITION, THE TRANSFERABILITY OF THESE SECURITIES IS RESTRICTED AS
SET FORTH BELOW.
PRIMESTAR, INC.
No. April 28, 1999
Share Appreciation Rights with Respect to Shares of
---------------------------------------------------
Class H Common Stock of General Motors Corporation
--------------------------------------------------
_________________
Void After May 10, 2000
_________________
The undersigned PRIMESTAR, INC. (the "Issuer"), HEREBY GRANTS to , its
successors and assigns (the "Holder"), the number of share appreciation rights
(the "Share Appreciation Rights" or "SARs") set forth on such Holder's signature
page of this agreement (this "Agreement"). Each SAR represents the right of the
Holder thereof to receive from the Issuer, on the terms and conditions set forth
herein, the Per Share Settlement Amount (as defined herein), if any, with
respect to one share of Class H Common Stock, $0.10 par value per share (the
"GMH Stock"), of General Motors Corporation (as each such share of GMH Stock is
adjusted from time to time as provided in Section 2 of this Agreement, a
"Covered Share"). The Share Appreciation Rights are being originally issued
pursuant to a Lock-up Agreement dated as of April 20, 1999 (the "Lock-up
Agreement") between PRIMESTAR, Inc. ("Primestar") and certain holders of senior
subordinated indebtedness of Primestar and are part of a series of share
appreciation rights granted by the Issuer in connection therewith. Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed
thereto in Section 16 of this Agreement.
SECTION 1. Exercise of SARs. (a) The SARs represented by this
----------------
Agreement shall automatically be exercised for the benefit of the registered
Holder hereof on May 5, 2000 (the "Determination Date").
<PAGE>
(b) On the Determination Date, the Holder shall be entitled to receive
from the Issuer a payment in cash in respect of each SAR owned by such Holder on
the Determination Date equal to (x) the Fair Market Value of a Covered Share on
the Determination Date plus (y) the Distribution Amount (if any) per Covered
----
Share, minus (z) the Strike Price per Covered Share (such amount so calculated,
-----
the "Per Share Settlement Amount"). The gross payment to be made to each Holder
of SARs shall be equal to the product of the Per Share Settlement multipied by
the total number of SARs owned by such Holder (the "Aggregate Settlement
Amount"); provided, however, that if the Aggregate Settlement Amount on the
-------- -------
Determination Date is equal to or less than zero, then no payment shall be
required to be made by the Issuer hereunder. The SARs shall be exercisable
solely for cash as provided herein, and do not represent a right to purchase or
receive any shares of GMH Stock or any other property. Payment of the Aggregate
Settlement Amount shall be made by wire transfer in immediately available funds
on the third business day following the Determination Date (the "Settlement
Date"). The Aggregate Settlement Amount shall be fixed on the Determination
Date. If the Issuer shall fail to pay any part of the Aggregate Settlement
Amount hereunder (if any) on the Settlement Date, the unpaid portion of such
Aggregate Settlement Amount shall accrue interest from the Settlement Date until
the date paid, at the rate of 12% per annum, payable monthly.
SECTION 2. Adjustment of Strike Price and Covered Shares. Upon the
---------------------------------------------
occurrence of any Dilution Event, the Strike Price per Covered Share and the
Covered Shares subject to each SAR in effect immediately prior to such event
shall be adjusted as follows:
a. In the case of a Dilution Event of a type described in clauses (i),
(ii), (iii) or (iv) of the definition thereof, the Covered Shares
shall be adjusted to equal the number of shares of Covered Stock (or,
in the case of a reclassification of the type described in clause (iv)
of such definition, the number of shares of such other class or series
of common stock of the Covered Share Issuer) which a holder of the
Covered Shares immediately prior to such event would have owned or
been entitled to receive in respect thereof immediately following such
event.
b. In the case of a Dilution Event of the type described in clause (v) of
such definition, the Covered Shares shall be adjusted to equal the
number of shares of Covered Stock equal to the number of such shares
constituting the Covered Shares immediately prior to such Dilution
Event, times a fraction, the numerator of which shall be (1) the
-----
number of shares of Covered Stock outstanding on the record date for
such event, plus (2) the number of additional shares of Covered Stock
offered for subscription or purchase pursuant to such rights or
warrants, and the denominator of which shall be (x) the number of
shares of Covered Stock outstanding on the record date for such event,
plus (y) the number of additional shares of Covered Stock which the
aggregate offering price of the total number of shares of Covered
Stock offered pursuant to such rights or warrants would purchase at
the Fair Market Value of the Covered Stock on the business day next
following the record date for such issuance; provided, however, that
-------- -------
if any such rights or warrants shall expire without exercise on or
before the Determination Date, then an appropriate adjustment shall be
made to reverse the adjustment provided for by this clause (b) to the
extent of such expired unexercised rights or warrants.
2
<PAGE>
c. In the case of any Dilution Event, the Strike Price shall be adjusted
by multiplying the Strike Price in effect immediately prior to such
event by a fraction, the numerator of which shall be the number of
shares of Covered Stock constituting the Covered Shares immediately
prior to such event, and the denominator of which shall be the number
of shares of Covered Stock constituting the Covered Shares immediately
following such event.
d. Any shares of Covered Stock issuable in payment of a dividend shall be
deemed to have been issued immediately prior to the close of business
on the record date for such dividend for purposes of calculating the
number of outstanding shares of Covered Stock under this paragraph 2.
e. All calculations under this Section shall be made to the nearest $.001
or to the nearest one-tenth of a share, as the case may be.
SECTION 3. Reorganization Events. (a) In the event, at any time
---------------------
during the period from the date hereof through the trading day immediately
preceding the Determination Date (such period, the "Adjustment Period"), of (i)
any capital reorganization of the Covered Share Issuer, (ii) any
reclassification of the capital stock of the Covered Share Issuer (other than a
change in par value or from par value to no par value or from no par value to
par value or as a result of a stock dividend or subdivision, split-up or
combination or shares), (iii) any consolidation or merger of the Covered Share
Issuer with or into another person (other than a consolidation or merger in
which the Covered Share Issuer is the continuing corporation and which does not
result in any change in the common stock of the Covered Share Issuer), (iv) any
statutory exchange in which the Covered Shares are mandatorily exchanged for
securities of another issuer, (v) any sale, transfer, assignment or other
disposition of 80% or more of the business of Hughes Electronics Corporation
("Hughes") (based on the fair market value of the assets, both tangible and
intangible, of Hughes as of the time that any such proposed sale, transfer,
assignment or other disposition is approved by the board of directors of the
Covered Share Issuer), or (vi) any complete liquidation of the Covered Share
Issuer (any such event, a "Reorganization Event"), then after the consummation
of such Reorganization Event, all references herein to the Covered Shares shall
mean and refer to the kind and number of shares of stock or other securities or
property of the Covered Share Issuer (or of the person or entity resulting from
such Reorganization Event) to which the Holder would have otherwise been
entitled if such Holder had held the Covered Shares as in effect hereunder
immediately prior to such Reorganization Event; provided, however, that in the
-------- -------
case of any Reorganization Event that provides for alternate forms of
consideration, after the consummation of such Reorganization Event, all
references herein to the Covered Shares shall mean and refer to the kind and
number of shares of stock or other securities or property of the Covered Share
Issuer (or of the person or entity resulting from such Reorganization Event)
into or for which the shares of Covered Stock pledged under the Pledge and
Security Agreement immediately prior to such Reorganization Event are converted,
exchanged or redeemed in such Reorganization Event. The provisions of this
Section 3 shall similarly apply to successive reorganizations,
reclassifications, consolidations and mergers and sales and other dispositions.
(b) Anything contained herein to the contrary notwithstanding, if
upon the consummation of any Reorganization Event, the Covered Shares shall
consist solely of cash and/or
3
<PAGE>
property other than Reported Securities, then within 30 days after the closing
of such Reorganization Event and the receipt by the Issuer (or by the Collateral
Agent under the Pledge and Security Agreement) of such cash and/or property
other than Reported Securities, the Issuer shall provide the Holder with the
written notice required by Section 4 of this Agreement, which notice shall
include the Fair Market Value per Covered Share, as determined in accordance
with this Agreement, and the date of such notice shall constitute the
Determination Date for all purposes hereof.
SECTION 4. Notice of Certain Transactions. In the event of (a) any
------------------------------
adjustment in the Strike Price after the date hereof, (b) the consummation of
any Reorganization Event, or (c) receipt by the Issuer of any Dividend, the
Issuer shall give written notice thereof to the Holder, including in any such
notice pursuant to clause (b) of this Section 4 (to the best knowledge of the
Issuer) the number, kind or class of shares or other securities or property
which shall constitute the Covered Shares after the occurrence of such action.
The Holder acknowledges that any such notice shall be based on publicly
available information provided by or on behalf of the Covered Share Issuer and
that each Holder is responsible for confirming the information and calculations
set forth therein. The Issuer shall not have any liability whatsoever for any
error or omission in such notice, except for any such error or omission
resulting solely from the bad faith or gross negligence of the Issuer.
SECTION 5. Certain Other Rights of Holder. The Holder shall be
------------------------------
entitled to the rights of a holder of SARs under the Registration Rights
Agreement and the Pledge and Security Agreement, in accordance with the terms
thereof.
SECTION 6. Transfer and Securities Law Provisions.
--------------------------------------
(a) The issuance of the SARs has not been registered under the
Securities Act, or under the securities or "blue sky" laws of any state, in
reliance upon exemptions from the registration provisions thereof. Holder
represents that it is acquiring the SARs for investment for its own account or
the account of an affiliate, and not with the view to, or for resale in
connection with, any distribution thereof, nor with any present intention of
distributing the same.
(b) The Holder shall have the right to require the Issuer to register
the SARs under the Securities Act, for offering and sale on a delayed or
continuous basis pursuant to Rule 415 thereunder, on such terms and conditions
as are set forth in the Registration Rights Agreement. However, the SARs shall
not be transferable except pursuant to an effective registration statement under
the Securities Act or a valid exemption from the registration provisions
thereof.
(c) Upon the request of the Holder at any time prior to the
Expiration Date that the Issuer is not subject to the reporting requirements of
the Exchange Act, the Issuer shall provide to the Holder and to any prospective
purchaser designated by the Holder that is a "qualified institutional buyer"
within the meaning of Securities Act Rule 144A, the following information, which
shall be reasonably current in relation to the date of any proposed resale of
any SARs: (i) a very brief statement of the nature of the business of the
Issuer and the products and services, if any, that it offers; and (ii) the
Issuer's most recent balance sheet and profit and loss and retained earnings
statements, and similar financial statements for each of the two preceding
fiscal years, which financial statements shall be audited to the extent
reasonably available.
4
<PAGE>
(d) Subject to the last sentence of Section 6(b) hereof, the SARs
shall be transferable in denominations of at least 1,000 SARs by registration of
such transfer on the books and records of the Issuer (or any transfer agent
appointed by the Issuer) to be maintained for such purpose (the "SAR Register"),
upon surrender of this Agreement at the office of the Issuer or another office
or agency designated by the Issuer, together with a written assignment
substantially in the form of Schedule 1 attached hereto, duly executed by the
Holder or its duly appointed legal representative or attorney-in-fact. Upon
such surrender, the Issuer shall, at its expense, promptly execute and deliver a
new agreement substantially in the form of this Agreement (a "SAR Agreement"),
in the name of the assignee and in the denomination specified in such instrument
of assignment, and shall issue promptly to the assignor a new SAR Agreement
evidencing the number of SARs (if any) not assigned. Any SARs properly assigned
in compliance herewith may be exercised by the new holder thereof whether of not
the Issuer shall have issued and delivered the SAR Agreement with respect
thereto. However, the Issuer shall not be required to pay and deliver the
Aggregate Settlement Amount of any SAR to any person other than the registered
Holder thereof on the SAR Register.
SECTION 7. Lost, Stolen, Mutilated or Destroyed SAR. If this
----------------------------------------
Agreement is lost, stolen, mutilated or destroyed, the Issuer may, on such terms
as to indemnity or otherwise as it may in its discretion impose (which shall, in
the case of a mutilated Agreement, include the surrender thereof), provide the
Holder with a duplicate counterpart of this Agreement with respect to the SARs
represented thereby. Any such new SAR Agreement shall constitute a separate
contractual obligation of the Issuer in accordance with its terms, whether or
not the allegedly lost, stolen, mutilated or destroyed SAR Agreement shall be at
any time enforceable by anyone.
SECTION 8. No Stockholder Rights. Neither this Agreement nor the
---------------------
SARs represented hereby shall entitle the Holder to any voting rights or other
rights as a holder of Covered Shares or a stockholder of the Issuer.
SECTION 9. Withholding for Taxes. It shall be a condition precedent
---------------------
to any exercise of the SARs represented hereby that the Holder make provision
acceptable to the Issuer for the payment or withholding of any and all Federal,
state and local taxes required to be withheld by the Issuer to satisfy any tax
liability of the Holder associated with such exercise, as determined in good
faith by the Board of Directors of the Issuer on the advice of counsel.
SECTION 10. Notices. All notices, requests, demands, claims, and
-------
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) upon
telephonic confirmation of facsimile, (ii) when sent by overnight delivery or
(iii) when mailed by registered or certified mail return receipt requested and
postage prepaid, to the addresses listed on the signature pages hereto. Any
party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address, telephone number or
telecopier number for such recipient (i) if such recipient is the Issuer or the
Company, set forth below:
8085 South Chester, Suite 300
Englewood, Colorado 80112
Telephone: (303) 712-4600
Telecopy: (303) 712-4977
5
<PAGE>
Attention: Chief Financial Officer
with a copy to:
Baker & Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022
Telephone: (212) 705-5000
Telecopy: (212) 705-5125
Attention: Marc A. Leaf, Esq.
and (ii) if such recipient is a Holder, as set forth on the signature pages
hereto, with copies to:
Orrick, Herrington & Sutcliffe, LLP
666 Fifth Avenue
New York, New York 10022
Telephone: (212) 506-5000
Telecopy: (212) 506-5151
Attention: Duncan N. Darrow, Esq.
and
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Telephone: (617) 951-7000
Telecopy: (617) 951-7050
Attention: William F. McCarthy, Esq.
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other party notice in the manner herein set forth.
SECTION 11. Governing Law. This Agreement and the SARs represented
-------------
hereby shall be construed in accordance with and governed by the internal laws
of the State of New York without giving effect to any conflicts of laws
principles. Each party hereto hereby irrevocably submits to the jurisdiction of
any New York State court sitting in the Borough of Manhattan or any federal
court sitting in the Borough of Manhattan in respect of any suit, action or
proceeding arising out of or relating to this Agreement and the transactions
pursuant hereto and in connection herewith, and irrevocably agrees that all
claims in respect of any such suit, action or proceeding shall be heard and
determined in such court. Each party irrevocably waives any objection which it
may now or hereafter have to the laying of the venue of any such suit, action or
proceeding brought in any such
6
<PAGE>
court and any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
SECTION 12. Construction. References in this Agreement to "this
------------
Agreement" and the words "herein," "hereof," "hereunder" and similar terms
refer to this Agreement, including all Schedules as a whole, unless the context
otherwise requires. The headings of the paragraphs of this Agreement have been
included for convenience of reference only, are not to be considered a part
hereof and shall not modify or restrict any of the terms or provisions hereof.
SECTION 13. Duplicate Originals. The Issuer and Holder may sign any
-------------------
number of copies of this Agreement. Each signed copy shall be an original, but
all of them together represent the same agreement.
SECTION 14. Entire Agreement. Except with respect to the Lock-up
----------------
Agreement, the Registration Rights Agreement, and the Pledge and Security
Agreement, this Agreement is in satisfaction of and in lieu of all prior
discussions and agreements, oral or written, between the Issuer and the Holder
with respect to the subject matter hereof. Each of the Issuer and Holder hereby
declares and represents that no promise or agreement not herein expressed has
been made and that this Agreement, together with the Lock-up Agreement, the
Registration Rights Agreement, and the Pledge and Security Agreement contains
the entire agreement between and among the parties hereto with respect to the
SARs and supersedes any prior or contemporaneous agreements and understandings
between the Issuer and the Holder or any other person regarding the SARs.
SECTION 15. Amendment. This Agreement may be reasonably amended,
---------
modified or supplemented by the Issuer, without the consent of the Holder to
cure any ambiguity or to correct or supplement any provision herein which may be
defective. Except as provided above, this Agreement may be amended, modified or
supplemented only by written agreement of the parties hereto or their permitted
assigns and transferees.
SECTION 16. Definitions. As used in this Agreement, the following
-----------
terms shall have the corresponding meanings:
"Adjustment Period" is defined in Section 3.
"Aggregate Settlement Amount" is defined in Section 1.
"Agreement" is defined in the initial paragraph of this Agreement.
"Appraiser" means an investment banking firm of national reputation
selected on the Note Purchase Closing Date by the Issuer and a majority of
Holders as defined in the Lock-up Agreement that is not affiliated with Hughes,
the Issuer or the Holder.
"Closing Price" of a share of any class or series of capital stock on
any day means the last sale price (or, if no last sale is reported, the average
of the high bid and low asked prices) for a share of such class or series of
capital stock on such day (or, if such day is not a trading day, on the
immediately preceding trading day) as quoted on the principal United States
national stock exchange on which such shares are listed, or if such class or
series of capital stock is not listed on a United States national stock
7
<PAGE>
exchange, as reported on NASDAQ or, if not reported on NASDAQ, as quoted by the
National Quotation Bureau Incorporated. If for any trading day the Closing
Price of a share of such class or series of capital stock is not determinable by
any of the foregoing means, then the Closing Price for such day shall be
determined in good faith by the issuer's Board of Directors on the basis of such
quotations and other considerations as such Board may deem appropriate.
"Covered Share Issuer" shall mean General Motors Corporation or such
other entity as shall be the issuer of the Covered Shares.
"Covered Shares" shall mean the number of shares of GMH Stock subject
to each SAR (which initially shall be one), as the same shall be adjusted from
time to time in accordance with this Agreement.
"Covered Stock" means the GMH Stock or such other class or series of
stock of the Covered Share Issuer represented by the Covered Shares.
"Determination Date" is defined in Section 1, subject to adjustment as
provided in Section 3.
"Dilution Event" means the occurrence of any of the following actions
by the Covered Share Issuer:
(i) the payment of a stock dividend or distribution on the
Covered Stock, payable in additional shares of Covered Stock;
(ii) any stock split or other subdivision of the Covered Stock;
(iii) any reverse stock split or combination of the Covered
Stock into a smaller number of shares of such stock;
(iv) the issuance by reclassification of the Covered Stock of
shares of any other class or series of common stock of the Covered Share Issuer
(other than any stock split, reverse stock split or other transaction of the
type described in clause (ii) or (iii) of this definition, and other than a
reclassification that would constitute a Reorganization Event); or
(v) the issuance of any rights or warrants to all holders of
the Covered Stock, entitling them to subscribe for or purchase shares of Covered
Stock (other than any dividend reinvestment or odd lot plan) at a price per
share less than the Fair Market Value of such shares on the business day next
following the record date for such issuance.
"Distribution Amount" means, for each Covered Share, the amount of all
Dividends paid in respect of such Covered Share, the record date for which shall
occur on or after the date hereof and prior to the fifth business day preceding
the Determination Date. To the extent that any
8
<PAGE>
such Dividend is paid in securities or other property, other than cash, the
amount of such Dividend shall be determined as follows:
(i) for any Reported Securities received in an Dividend, such amount
shall be the Fair Market Value of such Reported Securities on the
Determination Date; and
(ii) for any property received in any Dividend other than cash or
Reported Securities, such amount shall be the Fair Market Value of such
property on the date such property is received.
For purposes of calculating the Distribution Amount, any cash, Reported
Securities or other property receivable in a Dividend shall be deemed to have
been received immediately prior to the close of business on the record date for
such Dividend or, if there is no record date for such Dividend, immediately
prior to the close of business on the effective date of such Dividend.
"Dividend" means any dividend or distribution payable on all the
outstanding Covered Stock, other than any dividend or distribution that would
constitute a Dilution Event or Reorganization Event.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute or statutes thereto, and the rules
and regulations promulgated by the Securities and Exchange Commission
thereunder. References to any specific section of the Exchange Act or rule
thereunder shall include any successor section or rule.
"Fair Market Value" means, as of any date, (i) in the case of any
Reported Security, the average of the Closing Prices of such Reported Security
for each of the five trading days immediately preceding such date, and (ii) in
the case of any other property, the fair market value of such property on such
date, as determined by an Appraiser, taking into account all circumstances
deemed relevant by such Appraiser.
"GMH Stock" is defined in the initial paragraph of this Agreement.
"Holder" is defined in the initial paragraph of this Agreement.
"Hughes" is defined in Section 3.
"Issuer" is defined in the initial paragraph of this Agreement.
"Lock-up Agreement" is defined in the initial paragraph of this
Agreement.
"NASDAQ" means The Nasdaq Stock Market, Inc.
"Per Share Settlement Amount" is defined in Section 1.
"Pledge and Security Agreement" means the Pledge and Security
Agreement dated as of the date hereof, between PRIMESTAR, Inc. or, if the issuer
of share appreciation rights
9
<PAGE>
pursuant to share appreciation rights agreements substantially in the form of
this Agreement entered into on the date hereof is an entity other than
PRIMESTAR, Inc., such entity, and the Collateral Agent named therein, for the
ratable benefit of the Holder and the holders of the other share appreciation
rights agreements substantially in the form of this Agreement entered into by
the Issuer on the date hereof.
"Reorganization Event" is defined in Section 3.
"Reported Securities" means any securities that (A) are (i) listed on
a United States national securities exchange, (ii) reported on a United States
national securities system subject to last sale reporting, or (iii) traded in
the over-the-counter market and reported on the National Quotation Bureau or
similar organization and (B) are either (x) perpetual equity securities or (y)
non-perpetual equity or debt securities with a stated maturity after the
Determination Date.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the date hereof, among PRIMESTAR, Inc., the original
holder of this Agreement, the original holders of the other share appreciation
rights agreements substantially in the form of this Agreement entered into by
the Issuer on the date hereof and, if the issuer of share appreciation rights
pursuant to any such agreement is an entity other than PRIMESTAR, Inc., such
entity.
"SARs" means Share Appreciation Rights.
"SAR Register" is defined in Section 7.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor statute or statutes thereto, and the rules and
regulations promulgated by the Securities and Exchange Commission thereunder.
Reference to any specific section of the Securities Act or rule thereunder shall
include any successor section or rule.
"Settlement Date" is defined in Section 1.
"Share Appreciation Rights" is defined in the initial paragraph of
this Agreement.
"Strike Price" means, initially, $47 per Covered Share, as such amount
may be adjusted from time to time in accordance with the terms of this
Agreement.
10
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this signature page
intending to be bound by the foregoing Share Appreciation Rights Agreement as of
the date first above written.
ISSUER:
PRIMESTAR, INC.
By:_______________________________________________
Name: Kenneth G. Carroll
Title: Senior Vice President and Chief Financial
Officer
ATTEST:
- - ---------------------
Secretary
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this signature page
intending to be bound by the foregoing Share Appreciation Rights Agreement as of
the date first above written.
HOLDER:
__________________________________________
(Please type or print proper name of Holder)
By:_____________________________________
Name:_____________________________________
Title: ___________________________________
Address: __________________________________
__________________________________
__________________________________
Telecopy No.:______________________________
Telephone No.:____________________________
Taxpayer Identification No.:______________
Number of Share Appreciation Rights:
________________________
<PAGE>
Schedule 1
----------
[Form of]
ASSIGNMENT
(To be executed only upon assignment of the SARs)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers ____ Share Appreciation Rights unto
______________________________________________________________________ (name and
address of assignee must be printed or typewritten) (the "Transferee"), together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _______________________ Attorney-in-fact, to transfer
said Share Appreciation Rights on the books of ___________________ (the
"Issuer") or its duly authorized transfer agent with full power of substitution
in the premises.
Dated: ________________________
Signature: ______________________________
______________________________
______________________________
________________________, The above-mentioned Transferee, does hereby give
notice of the above-written assignment to the Issuer, or the Issuer's duly
authorized transfer agent, and in presenting this Assignment does request that
the transfer of ownership effected hereby be noted in the SAR Register, and
does further request that any payments made now or hereafter by the Issuer with
respect to the SARs transferred to Transferee hereby be made to the account of
Transferee at:
[Wire Transfer Instructions]
Signature: ______________________________
______________________________
______________________________
13
<PAGE>
EXHIBIT 10.6
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is made on and as of
this ___ day of April, 1999, by and between PRIMESTAR, Inc., a Delaware
corporation, as pledgor ("Pledgor"), and The Bank of New York, as collateral
agent (the "Collateral Agent").
RECITALS
A. Reference is made to the several Share Appreciation Right Agreements
("SAR Agreements"), each dated as of the date hereof, between Pledgor and the
initial holders named therein. This Agreement is the Pledge and Security
Agreement referred to in each of the SAR Agreements. Capitalized terms used in
this Agreement and not defined herein have the meanings ascribed to such terms
in the SAR Agreements.
B. The SAR Agreements provide for the issuance by Pledgor of share
appreciation rights ("SARs"), on the terms set forth therein, with respect to an
aggregate of 4,871,448 shares (the "GMH Shares") of the Class H Common Stock of
General Motors Corporation ("GMH Stock") being acquired concurrently herewith by
the Pledgor, in connection with sale by the Pledgor of its medium power assets.
C. The Pledgor is the holder of those certain share appreciation rights
("TSAT SARs") with respect to 1,407,307 shares of GMH Stock granted to Pledgor
by TCI Satellite Entertainment, Inc. ("TSAT") pursuant to a share appreciation
rights agreement (the "TSAT SAR Agreement") between TSAT and Pledgor dated as of
the date hereof, and the rights of Pledgor thereunder are secured by the Pledge
and Security Agreement (the "TSAT Pledge Agreement") dated the date hereof,
entered into between TSAT and The Bank of New York, as collateral agent (the
"TSAT Collateral Agent") .
D. Pledgor desires to grant to the Collateral Agent, for the ratable
benefit of the initial holders of the SARs and their successors and permitted
assigns (collectively, the "Secured Parties") a pledge of and security interest
in all of Pledgor's right, title and interest in, to and under the Collateral
(as defined herein) from time to time pledged hereunder, to secure (i) the full
and timely payment by Pledgor to each registered holder of SARs, on the terms
and subject to the conditions set forth in the SAR Agreements, of the
obligations of Pledgor thereunder and (ii) the payment of the reasonable costs
and expenses (including, without limitation, attorneys' fees and expenses)
incurred by the Collateral Agent or any Secured Party in connection with
enforcing their rights under this Agreement after an Event of Default (as
defined herein) has occurred (collectively, the "Secured Obligations") on the
Settlement Date (as defined in the SAR Agreements).
<PAGE>
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be bound hereby, the parties hereto hereby agree
as follows:
1. Grant of Security Interest. The Pledgor hereby assigns, pledges,
--------------------------
transfers and grants to the Collateral Agent, on behalf of and for the ratable
benefit of the Secured Parties, a security interest in all of Pledgor's right,
title and interest in, to and under the property described in Section 2 below
(collectively, the "Collateral"), to secure the full and timely payment by
Pledgor of the Secured Obligations.
2. Collateral. The Collateral shall consist of all right, title and
----------
interest of the Pledgor in, to and under each of the following, in each case
whether now owned or existing or hereafter acquired or arising:
(a) 3,464,141 shares of GMH Stock represented by certificate number
CHF086305;
(b) TSAT SARs with respect to 1,407,307 shares of GMH Stock
represented by the TSAT SAR Agreement;
(c) The TSAT Pledge Agreement;
(d) 1,407,307 shares of GMH Stock represented by certificate number
CHF086306 owned beneficially and of record by TSAT and pledged to
the TSAT Collateral Agent for the benefit of Pledgor pursuant to
the TSAT Pledge Agreement;
(e) The Cash Collateral Account, any and all funds at any time held
in such account, and any and all rights of the Pledgor to
payments made in respect of such account; and
(f) All proceeds of any of the foregoing.
3. Appointment of Custodian. The Pledgor hereby appoints the Collateral
------------------------
Agent to act as agent, bailee and custodian for the benefit of the Pledgor and
the Secured Parties as their respective interests shall appear with respect to
the Collateral. The Collateral Agent hereby accepts such appointment and agrees
to maintain and hold all Collateral at any time delivered to it as agent, bailee
and custodian for the benefit of the Pledgor and the Secured Parties in
accordance with the terms of this Agreement. The Collateral Agent agrees to act
in accordance with this Agreement and in accordance with any written
instructions properly delivered hereunder. The Collateral Agent shall deliver
possession of the Collateral to the Pledgor or any other person named by
Pledgor, or otherwise release any Collateral from the lien created hereby, only
in accordance with the express terms of this Agreement or otherwise upon the
written instruction of the Pledgor and/or the Secured Parties, as applicable.
<PAGE>
4. Certain Actions to Maintain Perfection of Security Interest. The
-----------------------------------------------------------
Pledgor agrees (i) that the lien created or purported to be created hereunder
shall at all times be valid and enforceable against the Pledgor and all third
parties, in accordance with the terms hereof, as security for the Secured
Obligations, (ii) that the lien created by this Agreement with respect to the
Collateral described in Sections 2(a), 2(b), 2(c), 2(e), and, subject always to
the proviso of this clause (ii), Section 2(f) (to the extent the Cash Collateral
Account and the funds therein represent proceeds from the Collateral described
in Sections 2(a), 2(b), 2(c) or 2(e)), shall be a first priority perfected lien,
provided that, with respect to Collateral described in Section 2(d) and, only to
- - -------------
the extent that Collateral described in Section 2(f) relates to Collateral
described in Section 2(d), Section 2(f), the lien created by this Agreement
shall be a perfected lien subordinate only to the lien in favor of the TSAT
Collateral Agent for the benefit of the Pledgor created under the TSAT Pledge
Agreement, and (iii) that the Collateral shall not at any time be subject to any
other lien. The Pledgor shall take all action that may be necessary or desirable
so as at all times (a) to maintain the validity, perfection, enforceability and
priority of the liens created or purported to be created hereunder in conformity
with the requirements of the immediately preceding sentence, (b) to protect and
preserve the Collateral and (c) to protect and preserve, and to enable the
exercise and enforcement of, the rights of the Secured Parties therein and
hereunder.
5. Delivery of Collateral. Pledgor agrees that the GMH Shares, the TSAT
----------------------
SARs and any other certificated securities that may from time constitute
Collateral hereunder shall be evidenced by certificates, and (ii) that all such
certificates shall be accompanied by stock powers, executed in blank, or by
other proper instruments of assignment duly executed by Pledgor, and by any such
other instruments or documents as the Collateral Agent may reasonably request.
6. Custody of Collateral. Upon the Collateral Agent's receipt of the
---------------------
Collateral, the Collateral Agent shall retain exclusive possession and custody
thereof, subject to the terms of this Agreement, for purposes of perfecting the
security interest therein of the Secured Parties. The Collateral Agent shall
make appropriate notations in its books and records to reflect that the
Collateral contained therein has been pledged to the Secured Parties and is held
by the Collateral Agent for the benefit of the Pledgor and the Secured Parties
as their respective interests appear hereunder. Except as otherwise expressly
provided in this Agreement, all instruments representing Collateral shall be (i)
held by the Collateral Agent in fire-proof vaults, safe deposit boxes or file
cabinets under its exclusive custody and control and (ii) segregated from all
such documents held by The Bank of New York for its own account or for the
account of other persons. The Collateral Agent shall not have any duty to
collect dividends, or other amounts due or to become due on any Collateral or,
except as expressly set forth herein, to take any action to preserve any rights
of the Pledgor or the Secured Parties as against any person obligated with
respect to any Collateral.
7. Release of Collateral. During the term of this Agreement, the
---------------------
Collateral shall be released only as follows:
3
<PAGE>
(a) From the Determination Date through the Termination Date, so long
as no Event of Default shall have occurred and be continuing, the
Collateral Agent shall (i) release to the Pledgor for sale or otherwise, or
(ii) sell in accordance with the instructions of the Pledgor, in either
case promptly upon Pledgor's written request, all or any portion of the
Collateral that constitutes Covered Shares; provided that, in the case of
--------
any release pursuant to clause (i) of this subsection, Pledgor shall
simultaneously deposit or cause to be deposited into the Cash Collateral
Account (as defined below), and in the case of any sale by the Collateral
Agent pursuant to clause (ii) of this subsection, the Collateral Agent
shall deposit into the Cash Collateral Account out of the proceeds of such
sale, in cash, an amount equal to the product of (A) the Per Share
Settlement Amount times (B) the number of Covered Shares so sold or
-----
released.
(b) On the Settlement Date, the Collateral Agent shall pay, by wire
transfer of immediately available funds, the Aggregate Settlement Amount
owing to each registered Holder of a SAR under the applicable SAR Agreement
pursuant to instructions, which shall include the Aggregate Settlement
Amount and wire transfer instructions for such Holder, certified in writing
to the Collateral Agent two business days prior to the Settlement Date by
the Company, or, during an Event of Default, the registered Holder of a
SAR. Payments of the Aggregate Settlement Amount pursuant to this Section
7(b) shall be made first, from amounts on deposit in the Cash Collateral
-----
Account at the end of the business day preceding the Settlement Date,
including cash, if any, that Pledgor has deposited in the Cash Collateral
Account to enable the payment of Aggregate Settlement Amounts hereunder,
and second, from the proceeds of the sale by the Collateral Agent, at the
------
instruction of the Pledgor or, during an Event of Default, the Required
Secured Parties, of such amount of Pledged Securities as shall be required
to enable the Collateral Agent to pay the Aggregate Settlement Amount for
each registered Holder with respect to whom the Collateral Agent has
received the certification described in the first sentence of this Section
7(b). Any amounts realized from a sale of Pledged Securities in excess of
the amount required to pay the Aggregate Settlement Amounts owing on the
Settlement Date and any other Secured Obligations hereunder shall be
deposited in the Cash Collateral Account and distributed in accordance with
Section 7(c).
(c) On the first business day following the date all obligations
of the Pledgor under the SARs shall have been satisfied or discharged in full
(the "Termination Date"), the lien and security interest created by this
Agreement on and in the Collateral shall automatically be released, and the
entire Collateral, including without limitation all amounts in the Cash
Collateral Account, shall be returned to the Pledgor on or promptly following
such date, and the Collateral Agent shall execute and deliver such agreements,
termination statements or other documents or filings as the Pledgor shall
reasonably request to evidence or effect the release of such lien and security
interest.
4
<PAGE>
8. Cash Collateral Account. All cash proceeds of any Collateral
-----------------------
hereunder, including, without limitation, all cash distributions and dividends
with respect to such Collateral, and all amounts paid by or on behalf of the
Pledgor pursuant to Section 7(a)(i) shall be paid directly to a "no access"
account of the Pledgor maintained with the Collateral Agent (the "Cash
Collateral Account"). Until the Termination Date, the Cash Collateral Account
shall be under the exclusive dominion and control of the Collateral Agent for
the ratable benefit of each of the Secured Parties, and any transfer or
withdrawal of funds therefrom shall be governed by this Agreement. On the
Termination Date, all amounts on deposit in the Cash Collateral Account shall be
paid to the Pledgor in accordance with Section 7(c) hereof. The Pledgor shall
not have the right to amend the TSAT SARs or TSAT Pledge Agreement without the
consent of the Required Secured Parties.
9. Rights of Pledgor With Respect to The Collateral. Notwithstanding
------------------------------------------------
Pledgor's pledge of the Collateral under this Agreement, Pledgor shall have
during the term of this Agreement, except as expressly set forth to the contrary
in this Agreement, all rights associated with the ownership of the Collateral,
including, without limitation, in the case of the GMH Shares and any other
securities from time to time constituting Collateral (collectively, "Pledged
Securities"), (a) all voting and consensual rights relating to Pledged
Securities and (b) the right to make any election to which a holder of Pledged
Securities may become entitled with respect to any dividend or distribution on,
or conversion, exchange, reclassification or other change to, such Pledged
Securities, including without limitation any election with respect to the
consideration to be received in any merger affecting the issuer of such Pledged
Securities, together with all other rights now or hereafter associated with
ownership of any Pledged Securities.
10. Sale of Collateral. Upon any sale or other disposition of the
------------------
Collateral pursuant to this Agreement, upon Event of Default or otherwise, the
Collateral Agent shall have the right to deliver, assign and transfer to the
purchaser thereof (including the Pledgor) the Collateral or portion thereof so
sold or disposed of and all proceeds thereof shall be promptly transmitted to
the Collateral Agent for application by the Collateral Agent in accordance with
Section 7 of this Agreement. Each purchaser (including Pledgor) at any such
sale or other disposition shall hold the Collateral free from any claim or right
of whatever kind. The Pledgor hereby specifically waives (to the extent
permitted by law) all rights of stay or appraisal which it has or may have under
any rule of law or statute now existing or hereafter adopted. Nothing herein
contained shall be construed as an assumption by the Collateral Agent, any other
Secured Party or any of their respective appointees of any liability of the
Pledgor with respect to any of the Collateral, and the Pledgor shall be and
remain responsible for all such liabilities. Pledgor hereby acknowledges that
any sale by the Collateral Agent of any Pledged Securities must be made in
compliance with the Securities Act of 1933 (the "Securities Act"), all other
Federal securities laws, as well as any applicable Blue Sky or other state
securities laws which may impose limitations as to the manner in which a Secured
Party or any other person may sell, transfer or otherwise dispose of securities.
Pledgor acknowledges that any sale or disposition contemplated pursuant hereto
may be at prices and on terms less favorable to any Secured Party than those
obtainable through a public sale without any applicable restrictions, and,
notwithstanding such
5
<PAGE>
circumstances, Pledgor agrees that any such sale or other disposition shall be
deemed to have been made in a commercially reasonable manner.
11. Standard of Care of Collateral Agent; Duties; Indemnification. The
-------------------------------------------------------------
Collateral Agent is a bailee for hire and shall hold the Collateral in
accordance with customary standards for those engaged as custodians of
commercial documents in similar capacities. Notwithstanding anything to the
contrary contained herein:
(a) The provisions of this Agreement set forth the exclusive duties of
the Collateral Agent and no implied duties or obligations shall be read
into this Agreement against the Collateral Agent. The Collateral Agent
shall not be bound in any way by any agreement or contract other than this
Agreement and any other agreement to which it is a party. The Collateral
Agent shall not be required to ascertain or inquire as to the performance
or observance of any of the conditions or agreements to be performed or
observed by any other party, except as specifically provided in this
Agreement. The Collateral Agent disclaims any responsibility for the
validity or accuracy of the recitals to this Agreement and any
representations and warranties contained herein, unless specifically
identified as recitals, representations or warranties of the Collateral
Agent.
(b) Throughout the term of this Agreement, the Collateral Agent shall
have no responsibility for ascertaining the value of any Collateral, the
title of any party therein, the validity or adequacy of the security
afforded thereby, or the validity of this Agreement (except as to
Collateral Agent's authority to enter into this Agreement and to perform
its obligations hereunder).
(c) The Collateral Agent shall not be under any duty to examine or
pass upon the genuineness, validity or legal sufficiency of any of the
documents constituting part of the Collateral, and shall be entitled to
assume that all documents constituting part of such Collateral are genuine
and valid and that they are what they purport to be, and that any
endorsements or assignments thereof are genuine and valid. The Collateral
Agent may rely upon and shall be protected in acting in good faith upon any
notice, resolution, request, consent, order, certificate, report, statement
or other paper or document appearing on its face to be genuine and to have
been signed or presented by the proper party or parties or by a person or
persons authorized to act on behalf of the proper party or parties. The
Collateral Agent shall not be liable for any action or omission to act as
bailee except for its own gross negligence or willful misconduct.
(d) No provision of this Agreement shall require the Collateral Agent
to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of any
of its rights or powers, if, in its sole judgment, it shall believe that
repayment of such funds or adequate indemnity against such risk or
liability is not assured to it.
6
<PAGE>
(e) The Collateral Agent is not responsible for preparing or filing
any reports or returns relating to Federal, state or local income taxes
with respect to this Agreement, other than for the Collateral Agent's
compensation or for reimbursement of expenses.
(f) The Pledgor agrees to reimburse and hold harmless the Collateral
Agent, its directors, officers, employees and agents from and against any
and all liability, damage, claim (whether asserted by the Pledgor, the
Secured Parties or any other person) and loss and reasonable out-of-pocket
expenses (including reasonable counsel fees and expenses) arising from or
connected with the Collateral Agent's execution and performance of this
Agreement, including the claims of any third parties (including any
assignee) relating to the Collateral Agent's execution and performance of
this Agreement, except in any such case for any liability, damage, claim,
loss or expense resulting from gross negligence or willful misconduct on
the part of the Collateral Agent.
(g) The Collateral Agent shall have the power to employ such agents as
it may deem necessary or appropriate in the performance of its duties and
the exercise of its powers under this Agreement and shall not be liable for
the acts or omissions of any agent appointed with due care by it hereunder.
(h) Notwithstanding anything to the contrary herein, this Section 11
shall survive the termination of this Agreement.
12. Fees and Expenses of Collateral Agent. The Collateral Agent shall
-------------------------------------
notify the Pledgor of all fees, expenses and charges of the Collateral Agent
arising out of the Collateral Agent's execution and performance of its duties
and obligations under this Agreement, and such reasonable fees, expenses and
charges shall be paid promptly by the Pledgor. The Collateral Agent may employ,
at the Pledgor's reasonable expense, such legal counsel and other experts as it
deems necessary in connection with performing its duties and obligations under
this Agreement. Notwithstanding anything to the contrary contained herein, this
provision shall survive the termination of this Agreement.
13. Removal or Resignation of Collateral Agent. Pledgor, with the consent
------------------------------------------
of Secured Parties who are registered Holders on the SAR Register, other than
the Pledgor, the Issuer, or any affiliate, holding in the aggregate a majority
of the total number of SARs outstanding at any time (the "Required Secured
Parties"), may at any time remove and discharge the Collateral Agent from the
performance of its duties under this Agreement. Any such removal shall be
effective immediately if such termination is for cause or upon not less than 30
days' prior written notice to the Collateral Agent if such termination is
without cause. In addition, the Collateral Agent may, at any time, effective
upon 30 days' prior written notice to the Pledgor and the Secured Parties of the
appointment of a successor Collateral Agent, terminate its agreement to act as
the Collateral Agent under both this Agreement and the TSAT Pledge Agreement.
Upon the date of any such termination, the Collateral Agent shall promptly
deliver the Collateral then held by it or its agents to the successor Collateral
Agent and shall execute and shall promptly deliver, upon payment of all amounts
owed it hereunder, such notices, instructions and
7
<PAGE>
assignments as may be reasonably necessary or desirable to transfer the rights
of the Collateral Agent with respect to the Collateral to the successor
Collateral Agent. The appointment of the Collateral Agent by the Pledgor
pursuant to Section 3 above shall constitute the appointment of any successor
Collateral Agent designated pursuant to this Section 13.
14. Availability of Documents. Each of the Pledgor, each Secured Party and
-------------------------
their respective agents, accountants, attorneys and auditors will be permitted
during normal business hours at any time and from time to time upon reasonable
notice to the Collateral Agent to examine (to the extent permitted by applicable
law) the files, documents, records and other papers in the possession or under
the control of the Collateral Agent relating to any or all of the Collateral and
to make copies thereof. All costs and expenses associated with the exercise
from time to time by the Pledgor or any Secured Party of its rights under this
Section 14 shall be for the account of the Pledgor or such Secured Party.
15. Representations and Warranties of Pledgor. The Pledgor hereby
-----------------------------------------
represents and warrants that: (a) except with respect to the Collateral
described in Section 2(d) and, to the extent that Collateral described in
Section 2(f) relates to Collateral described in Section 2(d), Collateral
described in Section 2(f), the Pledgor is the sole owner of the Collateral (or,
in the case of after acquired Collateral, and subject to the exception set forth
in this Section 15(a), at the time the Pledgor acquires rights in the
Collateral, will be the sole owner thereof); (b) except for the lien under the
TSAT Agreement and the lien granted hereunder to the Secured Parties, no Person
has (or, in the case of after-acquired Collateral, at the time the Pledgor
acquires rights therein, will have) any right, title, claim or interest (by way
of security interest or other lien or charge or otherwise) in, against or to all
or any of the Collateral; (c) no consent of any other Person is required for the
grant of the security interest provided herein by the Pledgor in any of the
Collateral (except for any consent of Hughes Electronics Corporation or General
Motors Corporation, which has been received), nor will any consent need to be
obtained for the Secured Parties to exercise their rights with respect to any of
the Collateral, and (d) no filings, except for such filings as have been made,
are being made concurrently with the execution of this Agreement, or will be
made by the Pledgor within the time period required by applicable law, are
required to perfect the lien granted by this Agreement.
16. Covenants of Pledgor. The Pledgor hereby agrees: (a) to procure,
--------------------
execute and deliver from time to time any and all endorsements, assignments,
financing statements, notices and other writings necessary or appropriate to
perfect, maintain and protect the Collateral Agent's security interest hereunder
and the priority thereof and to deliver promptly to the Collateral Agent all
originals of Collateral or proceeds consisting of chattel paper or instruments;
(b) not to surrender or lose possession of (other than to the Collateral Agent
or as otherwise permitted by this Agreement), sell, encumber, or otherwise
dispose of or transfer, any Collateral or right or interest therein other than
as otherwise permitted under this Agreement; (c) to account fully for and
promptly to deliver to the Collateral Agent, in the form received, all proceeds
received, endorsed to the Collateral Agent as appropriate and accompanied by
such assignments and powers, duly executed, as the Collateral Agent shall
request, and until so delivered all
8
<PAGE>
Collateral and proceeds shall be held in trust for the Collateral Agent,
separate from all other property of the Pledgor and identified as being subject
to the interest of the Collateral Agent; (d) not to move its chief executive
office to a new location unless (i) the Required Secured Parties shall have
approved such move in writing or (ii) (A) the Pledgor shall have given the
Secured Parties not less than 20 days prior notice thereof, (B) the new location
shall be within one of the 50 States of the United States or the District of
Columbia and (C) the Collateral Agent shall have received such evidence
reasonably satisfactory to it as it may reasonably request (including
acknowledgment copies of financing statements and opinions of counsel) that
Pledgor's rights with respect to the Collateral will not be adversely affected
by such move; (e) to do, to the extent permitted by this Agreement, all acts to
maintain, preserve and protect the Collateral that an owner of assets of the
same type as the Collateral would deem customarily necessary or desirable
therefor; and (f) to appear in and defend, at the Pledgor's cost and expense,
any action or proceeding which may affect its title to or the Secured Parties'
interest in the Collateral.
17. Authorized Action by Collateral Agent. The Pledgor hereby irrevocably
-------------------------------------
appoints the Collateral Agent as its attorney-in-fact, coupled with an interest,
to do (but the Collateral Agent shall not be obligated to and shall incur no
liability to the Pledgor or any third party for not so doing), at the request
and direction of the Required Secured Parties upon the occurrence of an Event of
Default and while such Event of Default is continuing, any act which the Pledgor
is obligated by this Agreement to do, and to exercise such rights and powers as
the Pledgor might exercise with respect to the Collateral, including the right
to (a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all interest, payments, proceeds and other sums and property now or
hereafter payable on or on account of the Collateral; (b) preserve the
Collateral; (c) transfer the Collateral to the Collateral Agent's own or its
nominee's name; or (d) sell or otherwise dispose of the Collateral (provided
--------
that nothing in this Section 17 shall limit the power of the Collateral Agent to
- - ----
sell Pledged Securities as provided in this Agreement). Notwithstanding
anything contained herein, in no event shall the Collateral Agent or any Secured
Party be required to make any presentment, demand or protest or give any notice,
and neither the Collateral Agent nor any Secured Party need take any action to
preserve any rights against any prior party or any other person in connection
with the Secured Obligations or with respect to the Collateral. The Collateral
Agent is, and shall at all times continue to be, authorized to file financing
statements (and amendments to, and continuation statements in respect of,
financing statements) with respect to the Collateral without the signature of
the Pledgor in such filing offices as shall be necessary or appropriate for the
purpose of perfecting maintaining the perfection of the security interest
provided for herein. The Collateral Agent shall give the Pledgor a copy of each
filing so made prior thereto or promptly thereafter.
18. Default and Remedies.
--------------------
(a) As used herein, the term "Event of Default" means the occurrence
of any of the following events:
9
<PAGE>
(i) the Pledgor's failure to pay or cause to be paid, when due,
to each registered holder of SARs, the full Aggregate Settlement
Amount and any other outstanding Secured Obligations payable to such
registered holder in respect of its SARs, as provided in the SAR
Agreements;
(ii) any representation of the Pledgor in this Agreement shall
have been untrue in any material respect when made;
(iii) the Pledgor shall breach in any material respect any
covenant of the Pledgor in this Agreement;
(iv) the Pledgor shall make an assignment for the benefit of
creditors or admit in writing its inability to pay its debts as they
mature or come due, or shall petition or apply for the appointment of
a trustee or other custodian, liquidator or receiver, or shall
commence any case or other proceeding under any bankruptcy,
reorganization, arrangement, insolvency , readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or
hereafter in effect, or if any such case or other proceeding shall be
commenced against the Pledgor, the Pledgor shall indicate its approval
thereof, consent thereto or acquiescence therein or such petition or
application shall not have been dismissed within 90 days after the
filing thereof;
(v) a decree or order shall be entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the Pledgor
bankrupt or insolvent, or approving a petition in any such case or
other proceeding, or a decree or order for relief is entered in
respect of the Pledgor in a case under Federal bankruptcy laws as now
or hereafter constituted; or
(vi) any event of default under the TSAT SARs or the TSAT
Pledge Agreement.
(b) On or after the Determination Date, upon the occurrence and during
the continuation of any Event of Default (whether such Event of Default
first occurred before or on or after the Determination Date), the
Collateral Agent, upon request of the Required Secured Parties, shall: (i)
foreclose or otherwise enforce the Secured Parties' lien in the Collateral
in any manner permitted by law or provided for hereunder; or sell or
otherwise dispose of the Collateral or any part thereof at one or more
public or private sale, for credit or future delivery (without the
assumption of any credit risk), on such terms and in such manner as the
Collateral Agent may determine to be commercially reasonable (taking into
account the circumstances under which the Collateral is being sold); and
(ii) pay and distribute to the registered holders of the SARs, ratably in
proportion to the number of SARs held, out of the Cash Collateral Account
(and against delivery of SAR Agreements representing such SARs, or such
other evidence as the Collateral Agent shall
10
<PAGE>
reasonably request), any and all amounts then due and payable to such
registered holders in respect of such SARs, which amounts shall be
satisfied and discharged to the extent of any such payments actually
received.
19. Cumulative Rights. The rights, powers and remedies of the Collateral
-----------------
Agent and the Secured Parties under this Agreement shall be in addition to all
rights, powers and remedies given to the Collateral Agent and the Secured
Parties by virtue of any statute or rule of law, the SAR Agreements or any other
agreement, all of which rights, powers and remedies shall be cumulative and may
be exercised successively or concurrently. Without limiting the generality of
the foregoing, the Collateral Agent shall have all rights of a secured party
under the New York Uniform Commercial Code and other applicable New York law.
20. Waiver. Any waiver, forbearance, failure or delay by the Collateral
------
Agent or the Secured Parties in exercising, or the exercise or beginning of
exercise by the Collateral Agent or the Secured Parties of, any right, power or
remedy, simultaneous or later, shall not preclude the further, simultaneous or
later exercise thereof, and every right, power or remedy of the Collateral Agent
or the Secured Parties shall continue in full force and effect.
21. Binding Upon Successors. All rights and obligations of the Pledgor,
-----------------------
the Collateral Agent and the Secured Parties under this Agreement shall bind and
inure to the benefit of the Pledgor, the Collateral Agent and the Secured
Parties and their successors and assigns.
22. Entire Agreement; Severability. This Agreement contains the entire
------------------------------
security agreement and agency agreement, with respect to the Collateral, among
the Collateral Agent, the Secured Parties and the Pledgor (other than the TSAT
Pledge Agreement, to the extent applicable). If any of the provisions of this
Agreement shall be held invalid or unenforceable, this Agreement shall be
construed as if not containing such provisions, and the rights and obligations
of the parties hereto shall be construed and enforced accordingly.
23. Choice of Law; Submission to Jurisdiction. This Agreement shall be
-----------------------------------------
construed in accordance with and governed by the internal laws of the State of
New York without giving effect to any conflicts of laws principles, and terms
used herein, except as otherwise (by reference or otherwise) defined herein
shall have the meanings given to them in the New York Uniform Commercial Code.
Each party hereto irrevocably submits to the jurisdiction of any New York State
court sitting in the Borough of Manhattan or any Federal court sitting in the
Borough of Manhattan in respect of any suit, action or proceeding arising out of
or relating to this Agreement and the transactions pursuant hereto and in
connection herewith, and irrevocably agrees that all claims in respect of any
such suit, action or proceeding shall be heard and determined in any such court.
Each party irrevocably waives any objection which it may now or hereafter have
to the laying of the venue of such suit, action or proceeding brought in any
such court and any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.
11
<PAGE>
24. Amendments, Etc. No amendment or waiver of any provision of this
---------------
Agreement, nor consent to any departure by the Pledgor or the Collateral Agent
here from, shall be effective unless the same shall have been effected in
accordance with Section 15 of the SAR Agreements.
25. Notice. All notices, requests, demands, claims, and other
------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given to the
intended recipient (i) upon telephonic confirmation of facsimile, (ii) when sent
by overnight delivery or (iii) seventy-two hours after deposit in the United
States mail when mailed by first class mail, postage prepaid, to the addresses
or telecopier number, as applicable, listed below or on the signature pages
hereto. Any party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address, telephone
number or telecopier number for such recipient (i) if such recipient is the
Collateral Agent, set forth on the signature page hereof; (ii) if such recipient
is the Pledgor, set forth below:
8085 South Chester, Suite 300
Englewood, Colorado 80112
Telephone: (303) 712-4600
Telecopy: (303) 712-4977
Attention: Chief Financial Officer
with a copy to:
Baker & Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022
Telephone: (212) 705-5000
Telecopy: (212) 705-5125
Attention: Marc A. Leaf, Esq.
and (iii) if such recipient is a Holder, as set forth on the signature pages to
the relevant SAR Agreement, with copies to:
Orrick, Herrington & Sutcliffe, LLP
666 Fifth Avenue
New York, New York 10022
Telephone: (212) 506-5000
Telecopy: (212) 506-5151
Attention: Duncan N. Darrow, Esq.
and
12
<PAGE>
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Telephone: (617) 951-7000
Telecopy: (617) 951-7050
Attention: William F. McCarthy, Esq.
Notices, requests, demands, claims or other communications may be sent by any
other means (including personal delivery, expedited courier, messenger service,
telecopy, or electronic mail), but no such notice, request, demand, claim, or
other communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party may change the
address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other party notice in the manner
herein set forth.
26. Execution in Counterparts. This Agreement may be executed in
-------------------------
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
27. Removal of Collateral Agent under TSAT Pledge Agreement. Pledgor
-------------------------------------------------------
hereby covenants and agrees, for the benefit of the Secured Parties, that
Pledgor shall not consent to the removal and discharge of the collateral agent
under the TSAT Pledge Agreement pursuant to Section 13 thereof, without the
consent of the Required Secured Parties hereunder.
13
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Collateral Agent have caused
this Agreement to be executed and delivered as of the day and year first above
written.
PRIMESTAR, INC.
By: _______________________________________
Name:
Title:
THE BANK OF NEW YORK, as Collateral Agent
By: _______________________________________
Name: Walter N. Gitlin
Title: Vice President
Notice Address: 101 Barclay Street
Floor 21 West
New York, New York 10286
Attn: Corporate Trust
Trust Administration
Telecopy No.: 212-815-5915
Telephone No.: 212-815-5375
14
<PAGE>
EXHIBIT 10.7
AGREEMENT dated as of January 22, 1999, among TCI SATELLITE ENTERTAINMENT, INC.,
a Delaware corporation ("TSAT"), PRIMESTAR, INC., a Delaware corporation
("Primestar"), the Funding Parties (as hereinafter defined) and Paragon
Communications ("Paragon", and together with the Funding Parties, the
"Stockholders").
RECITALS
A. Primestar and each of the Funding Parties desire to enter into an Asset
Purchase Agreement, to be dated as of the date hereof (the "Medium Power
Agreement"), among Hughes Electronics Corporation ("Hughes"), Primestar,
PRIMESTAR Partners L.P., PRIMESTAR MDU, Inc., and the persons indicated as
stockholders of Primestar named therein (the "Funding Parties"). The Medium
Power Agreement provides for, among other things, the purchase and sale of all
of the assets of Primestar and its subsidiaries that are used in the business of
distributing the "PRIMESTAR" service, all as provided therein (the "Medium Power
Asset Sale").
B. TSAT is the holder of 100% of the outstanding shares of Class B Common
Stock of Primestar (the "Class B Common Stock"). Pursuant to the Restated
Certificate of Incorporation of Primestar, the Medium Power Asset Sale may not
be consummated without the affirmative vote of TSAT as the holder of record of
all of the Class B Common Stock. TSAT is not willing to authorize the execution
and delivery of the Medium Power Agreement or the consummation of the Medium
Power Asset Sale unless Primestar and the Funding Parties enter into this
Agreement.
C. TSAT and Primestar are parties to (i) the TSAT Tempo Agreement dated as
of February 6, 1998 (the "TSAT Tempo Agreement"), and (ii) the Agreement and
Plan of Merger dated as of February 6, 1998 (the "TSAT Merger Agreement").
D. The TSAT Merger Agreement provides for, among other things, the payment
by Primestar during the term of such agreement of certain ongoing expenses of
TSAT.
E. Primestar and each of the Funding Parties also desire to enter into an
Asset Purchase Agreement, to be dated as of the date hereof (the "High Power
Agreement"), among Hughes, Primestar, Tempo Satellite, Inc., a wholly-owned
subsidiary of TSAT ("Tempo") and the Funding Parties. It is a condition to the
obligations of Hughes thereunder that (i) the TSAT Tempo Agreement be amended as
provided in Exhibit A attached hereto (the "Proposed Amendment"), (ii) the TSAT
Merger Agreement be terminated in accordance with its terms, with no party
thereto having any liability to any other party to the High Power Agreement as a
result of such termination, and (iii) Space Systems/Loral, Inc. ("Loral")
consent to the assignment to
<PAGE>
Hughes, pursuant to the High Power Agreement, of the satellite construction
agreement between Tempo and Loral.
F. TSAT is not willing (i) to amend the TSAT Tempo Agreement, (ii) to
grant any releases in connection with the termination of the TSAT Merger
Agreement, or (iii) to cause Tempo to enter into the High Power Agreement unless
Primestar and the Stockholders enter into this Agreement.
G. Capitalized terms used herein and not otherwise defined have the
meanings ascribed thereto in the High Power Agreement and the Medium Power
Agreement, as applicable.
NOW THEREFORE, in consideration of the premises, of the mutual agreements
set forth herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement,
intending to be bound hereby, hereby agree as follows:
1. TSAT will use its best efforts to cause Loral to provide its consent to
the transactions contemplated by the High Power Agreement. Effective as of the
initial closing under the High Power Agreement (the "Initial Closing"), TSAT and
Tempo will execute and deliver the Proposed Amendment amending the TSAT Tempo
Agreement and TSAT will execute and deliver an agreement terminating the TSAT
Merger Agreement as provided in Exhibit B attached hereto.
2. (a) Subject to the consummation of the Initial Closing, Primestar
hereby agrees to pay to TSAT either (i) $65 million in cash or (ii) 1,407,307
shares (the "Shares") of Class H Common Stock of GM ("GMH Stock") out of the
4,871,448 shares of GMH Stock required to be delivered by Hughes as part of the
consideration for the Medium Power Asset Sale (the applicable of the foregoing
being the "Consideration"), as Primestar may elect. The Consideration shall be
paid simultaneously with the closing of the Medium Power Asset Sale (the "Medium
Power Closing"). If Primestar elects to cause the Shares to be delivered in
payment of the Consideration, the number and kind of shares deliverable shall be
adjusted for stock dividends, stock splits, combinations, distributions,
reclassifications, recapitalizations and other similar events after January 22,
1999 and prior to the delivery of the Shares pursuant hereto, if and to the same
extent that the Parent Securities are so adjusted.
(b) If Primestar elects to pay the Consideration in cash, then
Primestar shall deliver to TSAT $65 million in cash at the Medium Power Closing.
If Primestar elects to pay the Consideration in Shares, then, subject to TSAT's
compliance with the provisions of Section 2(c), Primestar shall direct Hughes to
deliver at the Medium Power Closing the Shares, registered in the name of TSAT,
to the TSAT Collateral Agent (as defined below).
(c) If Primestar elects to cause Shares to be delivered in payment of
the Consideration, then simultaneously with the delivery of the Shares as
provided in Section 2(b),
2
<PAGE>
TSAT shall enter into (i) a Share Appreciation Rights Agreement (the "SAR
Agreement") with Primestar with respect to the Shares in the form annexed as
Exhibit C hereto, and (ii) a Pledge and Security Agreement (the "Pledge
Agreement") with The Bank of New York, as Collateral Agent (the "TSAT Collateral
Agent"), in the form annexed as Exhibit D hereto, providing for the Shares to be
deposited into a collateral account with the TSAT Collateral Agent pursuant to
the Pledge Agreement to secure TSAT's obligations with respect to the SAR
Agreement.
3. TSAT acknowledges that the Medium Power Agreement contemplates that
Primestar and Hughes will enter into Parent Security Documents that will
restrict the transfer of the Parent Securities for a period of one year from the
Medium Power Closing and will provide certain demand registration rights with
respect to the Parent Securities. TSAT agrees that the Shares shall be subject
to such one-year restriction on transfer, in addition to the restrictions
pursuant to the Pledge Agreement, and Primestar agrees that at the request of
TSAT the Shares, or such portion thereof as TSAT may request, will be included
in any demand registration effected pursuant to the Parent Security Documents,
on the same terms and subject to the same conditions as are applicable to
Primestar's exercise of its registration rights with respect to the Parent
Securities. If requested by Hughes or Primestar, TSAT will become a party to
the Parent Security Documents with respect to the Shares, provided that the
terms thereof do not purport to impose any obligations on TSAT or its affiliates
(other than Primestar), including, without limitation, any restrictions on its
exercise of full rights of ownership of the Shares, other than as contemplated
by this Agreement or consented to by TSAT. TSAT acknowledges that neither
Primestar nor any of the Funding Parties will guarantee or in any way assume
responsibility for TSAT's obligations pursuant to such registration.
4. Notwithstanding Section 2 hereof, if the Medium Power Agreement is
terminated prior to the consummation of the Medium Power Asset Sale, TSAT's
right to receive the Consideration shall automatically terminate; provided,
--------
however, that Primestar shall not agree to any termination of the Medium Power
- - -------
Agreement prior to April 30, 1999. Further, Primestar shall not agree to any
other material modification or amendment to the Medium Power Agreement without
the prior written consent of TSAT, which shall not be unreasonably withheld; it
being understood and agreed that it shall not be unreasonable for TSAT to
withhold its consent to any proposed modification or amendment that would
adversely affect TSAT's rights or increase its obligations hereunder, including,
without limitation, its right to receive the Consideration (including any
condition thereto) and its right, if the Consideration is paid in Shares, to
exercise full rights of ownership thereof, subject only to the restrictions
contemplated hereby.
5. Notwithstanding the termination of the TSAT Merger Agreement, Primestar
shall continue to pay or reimburse TSAT for all reasonable costs and expenses of
the nature that the TSAT Merger Agreement required Primestar to bear, as
specified in the following sentence, that are incurred or accrued prior to or
with respect to periods prior to the effective date of the termination of the
TSAT Merger Agreement, it being understood and agreed by Primestar and TSAT that
the aggregate amount of the costs and expenses of such nature that may be
incurred
3
<PAGE>
following the date hereof through the date of termination of the TSAT Merger
Agreement will not exceed $150,000. If the Medium Power Agreement is terminated
prior to the consummation of the Medium Power Asset Sale, or if (for whatever
reason, other than a breach by TSAT of this Agreement or the Medium Power
Agreement) TSAT shall not have received the Consideration by May 7, 1999, then,
without limitation of TSAT's rights or remedies, Primestar shall reimburse TSAT
for all reasonable costs and expenses (including reasonable legal fees of
outside counsel and reasonable fees of TSAT's independent public accountants)
incurred by TSAT that are in excess of the aggregate amount actually received by
TSAT pursuant to the High Power Agreement in payment of the exercise price of
the Option and were incurred during the period commencing on the effective date
of the termination of the TSAT Merger Agreement and ending on June 30, 2000 (i)
in preparation of tax returns and other reports to Governmental Entities, (ii)
for payment of required taxes, franchise fees, NASDAQ fees and similar fees,
(iii) in complying with its reporting obligations under the Securities Act and
the Exchange Act and (iv) to maintain D&O Insurance on terms reasonably
acceptable to Primestar (capitalized terms used in this Section 5 having the
meanings ascribed thereto in the TSAT Merger Agreement). It is further
understood and agreed that Primestar shall be solely responsible for all legal
and other costs and expenses incurred or required to be incurred in order to
comply with the requirements of and effect the transactions contemplated by the
High Power Agreement (including, without limitation, for Tempo Satellite, Inc.
to maintain its FCC licenses pending the transfer thereof) and that TSAT and
Tempo shall have no liability therefor.
6. (a) Subject to the following sentence, TSAT further agrees that
effective upon the receipt in full by it of the cash, or of good and valid title
to the Shares, being delivered in payment of the Consideration, free and clear
of all liens and encumbrances not contemplated by this Agreement, and in
consideration of the Stockholders' having agreed to the indemnification
provisions of the Medium Power Agreement and the High Power Agreement and having
entered into or agreed to enter into the Additional Liability Agreements (as
defined below) and to perform their obligations thereunder all without any
requirement (and by its execution hereof, each Stockholder confirms, on behalf
of itself and each of its subsidiaries that are stockholders of Primestar, the
waiver of any such requirement) that TSAT become a party to any such agreement
or contribute to, or indemnify any Stockholder (or any such subsidiary) against,
any payment(s) made or required to be made thereunder:
(i) it shall waive its rights as a stockholder of Primestar to
participate in any dividends or distributions by Primestar to its stockholders
as such, whether in liquidation or otherwise, or any payments made by Primestar
in redemption of its stock, in an aggregate amount up to and including $65
million; and
(ii) subject to the approval of TSAT's stockholders, it will transfer
all (but not less than all) of its Primestar stock (the "TSAT Shares") to the
other stockholders of Primestar (each, a "purchaser"), pro rata in accordance
with their respective percentage equity interests in Primestar (net of TSAT's
interest), provided that the consummation of such purchase does not and will not
(A) violate any provision of law, rule or regulation applicable to the purchaser
or by
4
<PAGE>
which the purchaser or its assets are bound or subject or the organizational
documents of the purchaser or (B) result in (whether with the giving of notice
or passage of time or both) any breach or violation of or default under any
indebtedness of the purchaser or any material agreement or arrangement to which
the purchaser is a party or by which it or its assets are bound or subject.
If at any time TSAT no longer has indefeasible title to the Consideration as a
result of a claim by any person (other than TSAT) based on a theory of illegal
dividends, illegal redemption, fraudulent conveyance or preference or any
similar theory, then at TSAT's election the agreements of TSAT in the preceding
sentence shall be of no further force and effect, and its ownership of the TSAT
Shares and its rights as a Primestar stockholder shall be reinstated,
prospectively and not retroactively. Nothing contained in the foregoing is
intended to limit or affect TSAT's rights under this Agreement, the Medium
Power Agreement or the High Power Agreement, or under any other agreement with
Primestar. For purposes of the foregoing, "Additional Liability Agreements"
means each of the following: the Contribution Agreement, dated as of January 22,
1999, among certain of the Stockholders; the Funding Agreement referred to in
Section 7 hereof, and the Indemnity Agreement (in the form annexed hereto as
Exhibit E) to be entered into by the Stockholders that will be parties to the
Funding Agreement and the holders of certain debt instruments issued by
Primestar.
(b) TSAT shall call a meeting of its stockholders to be held as
promptly as practicable for the purpose of voting upon the transfer by TSAT of
the TSAT Shares contemplated by clause (ii) of the first section of Section 6(a)
and shall use its reasonable best efforts to obtain such approval.
7. TSAT shall be entitled to rely on and enforce, as an express third
party beneficiary, the obligations of the Funding Parties under Section 5(c) of
the Funding Agreement in the form annexed hereto as Exhibit F to be entered into
by Primestar, the Funding Parties and United Artists Investments, LLC, and no
amendment of Section 5(c), of Section 8(b) (as it relates to the requirement of
TSAT's consent to any amendment of Section 5(c)) or of Section 10(b) (as its
relates to Section 5(c)) shall be effected without the prior written consent of
TSAT.
8. This Agreement shall terminate automatically upon the termination of
the Medium Power Agreement and abandonment of the transactions contemplated
thereby. Upon termination of this Agreement as provided in the immediately
preceding sentence, this Agreement shall become null and void and of no further
force and effect, except for the provisions of Section 5, this Section 8,
Section 9 and Section 10.
9. This Agreement shall be construed in accordance with and governed by
the internal laws of the State of New York without giving effect to any
conflicts of laws principles. Each party hereto hereby irrevocably submits to
the jurisdiction of any New York State court sitting in the Borough of Manhattan
or any federal court sitting in the Borough of Manhattan in respect of any suit,
action or proceeding arising out of or relating to this Agreement and the
5
<PAGE>
transactions contemplated hereby, and irrevocably agrees that all claims in
respect of any such suit, action or proceeding shall be heard and determined in
any such court. Each party irrevocably waives any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
10. Without intending to limit the remedies available to any party hereto,
each party acknowledges and agrees that a violation by such party of any of the
terms of this Agreement will cause irreparable injury for which an adequate
remedy at law is not available and accordingly, the nonbreaching party shall be
entitled to an injunction, restraining order or other form of equitable relief
from any court of competent jurisdiction compelling the breaching party to
specifically perform, and restraining such party from committing any breach of,
or threatened breach of, any provision of this Agreement.
11. This Agreement may be executed in counterparts, each of which shall
for all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered on and as of the date first written above.
<TABLE>
<S> <C>
PRIMESTAR, INC. ADVANCE/NEWHOUSE PARTNERSHIP,
By ADVANCE COMMUNICATION CORP.,
as general partner
By: _____________________________________ By: _____________________________________
Name: Name:
Title: Title:
TIME WARNER ENTERTAINMENT COMCAST CORPORATION
COMPANY, L.P.,
By AMERICAN TELEVISION AND
COMMUNICATIONS By: _____________________________________
CORPORATION, Name:
a general partner Title:
By: _____________________________________ MEDIAONE OF DELAWARE, INC.
Name:
Title:
By: _____________________________________
Name:
Title:
COX COMMUNICATIONS, INC. TCI SATELLITE ENTERTAINMENT,
INC.
By: _____________________________________ By: _____________________________________
Name: Name:
Title: Title:
GE AMERICAN COMMUNICATIONS, TEMPO SATELLITE, INC.
INC.
By: _____________________________________ By: _____________________________________
Name: Name:
Title: Title:
</TABLE>
<PAGE>
PARAGON COMMUNICATIONS, a
Colorado general partnership,
By: AMERICAN TELEVISION AND COMMUNICATIONS
CORPORATION,
a general partner,
By: _____________________________________
Name:
Title:
<PAGE>
EXHIBIT 99.1
[LOGO OF PRIMESTAR, INC. APPEARS HERE]
FOR IMMEDIATE RELEASE Contacts:
---------
PRIMESTAR, Inc. Media Relations
-------------------------------
Richard Edmonds 212/521-5212
PRIMESTAR, Inc. Investor Relations
----------------------------------
Sean Clarke 303/712-4647
PRIMESTAR COMPLETES SALE OF ITS
MEDIUM POWER ASSETS
ENGLEWOOD, CO. April 29, 1999 - PRIMESTAR, Inc. ("PRIMESTAR") announced
today that it has completed the previously announced sale of its medium power
direct broadcast satellite business to Hughes Electronics Corporation
("Hughes"). PRIMESTAR received $1.1 billion in cash and 4,871,000 shares of
General Motors Corporation Class H Common Stock (NYSE: GMH) for the transferred
assets, which constitute substantially all of the operating assets of PRIMESTAR.
PRIMESTAR will officially change its name to "Phoenixstar, Inc.".
PRIMESTAR announced that it reached agreement with holders of approximately
84% of the aggregate principal amount of its 10-7/8% Senior Subordinated Notes
due 2007 (the "Senior Subordinated Notes"), 12-1/4% Senior Subordinated Discount
Notes due 2007 (the "Senior Subordinated Discount Notes"), and notes issued
under its Senior Subordinated Credit Facility dated as of April 1, 1998 (the
"Bridge Loans"), to clear the way for the closing. Holders participating in the
privately negotiated transaction agreed to consent to the transaction with
Hughes, amend the indentures and credit agreement governing such debt
obligations to remove substantially all covenants, and sell their notes and
bridge loans to the Company for cash equal to 85.6% of the aggregate principal
amount thereof, plus stock appreciation rights ("SARs") on PRIMESTAR's GMH
shares. Each stock appreciation right issued in the transaction entitles the
holder to receive a payment from PRIMESTAR at the end of one year in the amount,
if any, by which the market price per share of GMH stock at such time exceeds
$47.00 per share. Participating note holders and bridge lenders will receive
approximately 7.8 SARs per $1,000 principal amount of debt sold to PRIMESTAR
pursuant to the agreement.
(more)
<PAGE>
SALE OF MEDIUM POWER ASSETS, page 2
Under terms of the indentures and credit agreement governing PRIMESTAR's
senior subordinated debt, PRIMESTAR is required to make an offer to purchase the
remainder of the outstanding publicly traded Senior Subordinated Notes and
Senior Subordinated Discount Notes and the Bridge Loans at a purchase price
equal to 101% of par. PRIMESTAR intends to comply with the terms of its
indentures and credit agreement.
Pursuant to a previously announced arrangement, PRIMESTAR has transferred
to TCI Satellite Entertainment, Inc. ("TSAT") (OTC: TSATA, TSATB), as
compensation for certain undertakings by TSAT in connection with the Hughes
transactions, 1,407,000 shares of the GMH stock, subject to a stock appreciation
right issued by TSAT in favor of PRIMESTAR on the same terms as the stock
appreciation rights issued in the negotiated debt restructuring. TSAT owns a
37% interest in PRIMESTAR. The GMH shares transferred to TSAT are pledged to
secure the stock appreciation right issued by TSAT to PRIMESTAR. PRIMESTAR in
turn has pledged such stock appreciation right and security interest, together
with all GMH shares held by PRIMESTAR, to secure the stock appreciation rights
issued by PRIMESTAR in the negotiated debt restructuring.
In addition to the medium power transaction, Hughes agreed in January 1999
to purchase PRIMESTAR's rights to acquire the high power DBS assets of Tempo
Satellite, Inc. ("Tempo"), a subsidiary of TSAT. The first closing under the
high power purchase agreement, relating to Tempo's ground-spare satellite and
related assets, closed in March. A second closing under such agreement,
relating to Tempo's in-orbit satellite and related assets, including Tempo's
rights under its FCC authorizations with respect to 11 transponders in the 119
degree W.L. orbital position, is subject to regulatory approvals and is expected
to occur mid-year.
###
<PAGE>
EXHIBIT 99.2
Phoenixstar, Inc.
FOR IMMEDIATE RELEASE Contact:
--------
Phoenixstar, Inc. Investor Relations
Sean Clarke: (303) 712-4859
Phoenixstar Announces
Tender Offer and Name Change
Englewood, Colorado, May 13, 1999 - Phoenixstar, Inc., formerly known as
PRIMESTAR, Inc. (the "Company"), announced today that it has commenced a tender
offer (the "Offer") for its 12-1/4% Senior Subordinated Discount Notes due 2007
(the "Senior Subordinated Discount Notes") and its 10-7/8% Senior Subordinated
Notes due 2007 (the "Senior Subordinated Notes" and, together with the Senior
Subordinated Discount Notes, the "Notes"), each of which were originally issued
by TCI Satellite Entertainment, Inc. On April 28, 1999, the Company completed
its previously announced sale (the "Medium Power Sale") of its medium power
direct broadcast satellite business, which constituted substantially all of the
operating assets of the Company, to Hughes Electronics Corporation. Pursuant to
the terms of the Medium Power Sale, the Company officially changed its name to
"Phoenixstar, Inc." on April 29, 1999.
The indentures governing the Notes require the Company make an offer to
purchase, on the terms set forth in such indentures, any outstanding Notes upon
the sale by the Company of substantially all of its assets. The Company is
offering to purchase (i) the Senior Subordinated Discount Notes, from holders of
such Notes as of May 7, 1999, at a price equal to 101% of the accreted value of
each Senior Subordinated Discount Note as of the date of payment and (ii) the
Senior Subordinated Notes, from holders of such Notes as of May 7, 1999, at a
price equal to 101% of the principal amount of each Senior Subordinated Note,
plus any accrued and unpaid interest accumulated thereon up to the date of
payment. The Offer is set to expire at 5:00 p.m., New York City time, on
Thursday, June 10, 1999 (unless further extended at the Company's option
pursuant to the terms of the Offer). Payment for the Notes pursuant to the
Offer will be made in cash and must be made within five business days after the
expiration date. The Company entered into a privately negotiated agreement,
dated as of April 20, 1999 (the "Lock-up Agreement"), with certain holders of
Notes, pursuant to which such holders agreed to sell their Notes to the Company
pursuant to the terms of such agreement; therefore, the Company shall not be
required to accept, pursuant to the Offer, from any holder that is party to the
Lock-up Agreement, any Notes sold or required to be sold under the Lock-up
Agreement.
As of June 15, 1999, the current expected date of payment for the Offer,
(i) 101% of the accreted value of the Senior Subordinated Discount Notes will be
$735.87 for each $1,000 principal amount at maturity of such Notes and (ii) 101%
of the principal amount, plus accrued and unpaid interest to such date, of the
Senior Subordinated Notes will be $1,046.25 for each $1,000 principal amount of
such Notes.
<PAGE>
The Depositary and Paying Agent for the Offer is The Bank of New York. The
Offer is being made pursuant to an Offer to Purchase (and related materials),
which more fully sets forth the terms of the Offer. Additional information
concerning the terms of the Offer, tendering Notes and conditions to the Offer
may be obtained from the Company by phoning the telephone number listed above.
###
<PAGE>
EXHIBIT 99.3
PHOENIXSTAR, INC.
(formerly known as PRIMESTAR, Inc.)
Change of Control Offer To Purchase for Cash
Any and All Outstanding
10 7/8% Senior Subordinated Notes due February 15, 2007
and 12 1/4% Senior Subordinated Discount Notes due February 15, 2007
Phoenixstar, Inc., formerly known as PRIMESTAR, Inc. (the "Company"),
hereby offers to purchase for cash, on the terms and subject to the conditions
set forth in this Change of Control Offer (as the same may be amended or
supplemented from time to time, the "Offer to Purchase") and the related Letter
of Transmittal (which together constitute the "Offer"), any and all of its
outstanding 10 7/8% Senior Subordinated Notes due February 15, 2007 (the "Senior
Subordinated Notes") and its 12 1/4% Senior Subordinated Discount Notes due
February 15, 2007 (the "Senior Subordinated Discount Notes" and, together with
the Senior Subordinated Notes, the "Notes"), at a purchase price of (i) 101% of
the principal amount of each Senior Subordinated Note purchased pursuant to the
terms and conditions set forth in this Offer, plus any accrued and unpaid
interest accumulated thereon up to the date the Notes are accepted for purchase
and of payment, as provided herein (the "Purchase Date"), net to the seller in
cash, and (ii) 101% of the Accreted Value of each Senior Subordinated Discount
Note purchased pursuant to the terms and conditions set forth in this Offer, net
to the seller in cash (collectively the "Offer Price"). As used herein, the
term "Accreted Value" has the meaning ascribed to such term in the Indenture
governing the Senior Subordinated Discount Notes. As of June 15, 1999 (the date
on which the Company currently expects to accept for purchase and pay for all
Notes properly tendered pursuant to the Offer), the Accreted Value of the Senior
Subordinated Discount Notes will be $728.58 for each $1,000 principal amount at
maturity of such Notes. Interest or Accreted Value on any Note not tendered or
tendered but not purchased by the Company pursuant to this Offer to Purchase
will continue to accrue or accrete, as the case may be.
Tenders of Notes pursuant to the Offer will be accepted only in
denominations of $1,000 or integral multiples thereof. Holders of Notes
("Holders") whose Notes are being purchased only in part will be issued new
Notes equal in principal amount to the unpurchased portion of the Notes
surrendered. Each Note purchased and each such new Note issued shall be in
denominations of $1,000 and integral multiples thereof.
<TABLE>
<CAPTION>
CUSIP No. Security Tender Offer Consideration
- - --------- -------- --------------------------
<S> <C> <C>
872298AB0 12 1/4% Senior Subordinated Discount 101% of Accreted Value as of the Purchase Date.
Notes due February 15, 2007, Series A
872298AF1 12 1/4% Senior Subordinated Discount 101% of Accreted Value as of the Purchase Date.
Notes due February 15, 2007, Series B
872298AA2 10 7/8% Senior Subordinated Notes due 101% of the Note's principal amount, plus any accrued and
February 15, 2007, Series A unpaid interest accumulated thereon up to the Purchase Date.
872298AE4 10 7/8% Senior Subordinated Notes due 101% of the Note's principal amount, plus any accrued and
February 15, 2007, Series B unpaid interest accumulated thereon up to the Purchase Date.
</TABLE>
THE NOTES REFERRED TO HEREIN WERE ORIGINALLY ISSUED BY TCI SATELLITE
ENTERTAINMENT, INC.
<PAGE>
- - --------------------------------------------------------------------------------
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE 10, 1999, UNLESS
THE OFFER IS EXTENDED (JUNE 10, 1999 OR SUCH LATER DATE TO WHICH THE OFFER IS
EXTENDED BEING HEREINAFTER REFERRED TO AS THE "EXPIRATION DATE"). HOLDERS MUST
TENDER NOTES ON OR PRIOR TO THE EXPIRATION DATE (AND MUST NOT HAVE WITHDRAWN
SUCH NOTES) IN ORDER TO RECEIVE THE OFFER PRICE. TENDERED NOTES MAY BE WITHDRAWN
AT ANY TIME NOT LATER THAN THE CLOSE OF BUSINESS ON THE FIFTH BUSINESS DAY
PRECEDING THE EXPIRATION DATE.
- - --------------------------------------------------------------------------------
The Offer constitutes an offer to purchase following the occurrence of a
change of control pursuant to Section 4.14 of the Notes' respective Indentures,
each dated as of February 20, 1997, between TCI Satellite Entertainment, Inc.
("TSAT") and The Bank of New York, as trustee (the "Trustee"), as supplemented
and amended on April 1, 1998 (pursuant to which the Company assumed TSAT's
obligations for the Notes) and April 27, 1999 (each, an "Indenture" and
collectively, the "Indentures"). The Company has commenced the Offer in
connection with the Asset Purchase Agreement, dated as of January 22, 1999 (the
"Asset Purchase Agreement"), among the Company, PRIMESTAR Partners L.P.,
PRIMESTAR MDU, Inc., the stockholders of the Company named therein and Hughes
Electronics Corporation (the "Purchaser"), pursuant to which the Purchaser
agreed to acquire the Company's medium power direct broadcast satellite business
(the "Medium Power Business") for aggregate consideration consisting of $1.1
billion in cash (subject to adjustment based on the Company's closing working
capital position, as provided in the Asset Purchase Agreement) and 4,871,448
shares (the "GMH Shares") of the Class H Common Stock of General Motors
Corporation (collectively, the "Purchase Price"). The sale of the Company's
Medium Power Business, pursuant to the Asset Purchase Agreement, was consummated
on April 28, 1999. The assets sold to the Purchaser pursuant to the Asset
Purchase Agreement constituted substantially all the assets of the Company and
its subsidiaries, which resulted in a Change of Control as defined in Section
1.01 of the Indentures.
The Notes are obligations solely of Phoenixstar, Inc. (formerly known as
PRIMESTAR, Inc.). Neither Hughes Electronics Corporation nor TCI Satellite
Entertainment, Inc. have any obligation whatsoever in respect of any Notes,
whether or not tendered or accepted for purchase pursuant to the Offer.
Section 4.14 of each of the Indentures requires the Company to make an
offer to purchase all outstanding Notes within twenty days after the Company
undergoes a Change of Control. The purpose of the Offer is to acquire all of
the Company's outstanding Notes.
Holders who tender Notes that are purchased pursuant to the Offer shall be
paid the Offer Price for such Notes on the Purchase Date, which will occur
promptly after the Expiration Date, and in no event later than five business
days after the Expiration Date. On the Purchase Date the Offer Price will
become due and payable upon each Note accepted for payment pursuant to this
Offer to Purchase. From and after the Purchase Date interest shall cease to
accrue on the Senior Subordinated Notes accepted for purchase hereunder and the
Accreted Value of all Senior Subordinated Discount Notes accepted for purchase
hereunder shall cease to accrete.
Requests for additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be directed to the
Company.
ii
<PAGE>
The Bank of New York will be the depositary and the paying agent for the
Offer (the "Depositary").
Any Holder desiring to tender all or any portion of such Holder's Notes
should either (i) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
mail or deliver it together with the tendered Notes and any other required
documents to the Depositary or tender such Notes pursuant to the procedure for
book-entry transfer set forth in "The Offer--Procedure for Tendering Notes"; or
(ii) request such Holder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such Holder. A Holder who has Notes
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact that entity if such Holder desires to tender such
Notes. Any Holder who desires to tender such Holder's Notes and whose Notes are
not immediately available or who cannot comply with the procedures for book-
entry transfer on a timely basis may tender such Notes by following the
procedures for guaranteed delivery set forth in "The Offer--Procedure for
Tendering Notes."
The Depository Trust Company ("DTC") has authorized DTC participants that
hold Notes on behalf of beneficial owners of Notes through DTC to tender their
Notes as if they were Holders. To effect a tender, DTC participants may, in lieu
of physically completing and signing the Letter of Transmittal, transmit their
acceptance to DTC through the DTC Automated Tender Offer Program ("ATOP"), for
which the transaction will be eligible, and follow the procedure for book-entry
transfer set forth in "The Offer--Procedure for Tendering Notes." A beneficial
owner of Notes that are held of record by a custodian bank, depositary, broker,
trust company or other nominee must instruct such nominee to tender the Notes on
the beneficial owner's behalf. See "The Offer--Procedure for Tendering Notes."
See "Special Factors" for a discussion of certain factors that should be
considered in evaluating the Offer.
-----------------------------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF SUCH TRANSACTIONS NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS OFFER TO PURCHASE AND LETTER OF TRANSMITTAL. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE OFFER TO PURCHASE DOES NOT CONSTITUTE AN OFFER TO PURCHASE IN ANY
JURISDICTION IN WHICH, OR TO OR FROM ANY PERSON TO OR FROM WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER UNDER ANY APPLICABLE SECURITIES OR BLUE SKY LAWS. THE
DELIVERY OF THIS OFFER TO PURCHASE SHALL NOT UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN OR IN ANY ATTACHMENTS HERETO OR IN THE AFFAIRS OF
THE COMPANY OR ANY OF ITS AFFILIATES SINCE THE DATE HEREOF.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS OFFER TO PURCHASE AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MAY NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE DEPOSITARY.
iii
<PAGE>
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO A
TENDER OF NOTES.
iv
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
INTRODUCTION.................................................... 1
PURPOSE OF THE OFFER............................................ 1
SOURCE AND AMOUNT OF FUNDS...................................... 2
SPECIAL FACTORS................................................. 2
Effects of the Asset Purchase Agreement.................... 2
Limited Market for the Notes............................... 2
Subsequent Company Repurchases or Defeasance of Notes...... 3
DESCRIPTION OF NOTES............................................ 3
General.................................................... 3
THE OFFER....................................................... 4
Principal Terms of the Offer............................... 4
Acceptance for Payment and Payment for Notes............... 6
Procedure for Tendering Notes.............................. 7
Procedures for Guaranteed Delivery......................... 8
Other Effects of Tender.................................... 9
Withdrawal Rights.......................................... 10
Interest on Notes.......................................... 10
Certain Legal Matters...................................... 10
Depositary and Paying Agent................................ 11
CERTAIN INCOME TAX CONSEQUENCES................................. 11
ADDITIONAL INFORMATION.......................................... 12
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................. 13
MISCELLANEOUS................................................... 13
v
<PAGE>
INTRODUCTION
The Company hereby offers to purchase for cash, on the terms and subject to
the conditions set forth in the Offer, any and all of the outstanding Notes at
the Offer Price.
The Offer Price is equal to (i) 101% of the principal amount of each Senior
Subordinated Note purchased pursuant to the terms and conditions set forth in
this Offer, plus any accrued and unpaid interest accumulated thereon up to the
Purchase Date, net to the seller in cash and (ii) 101% of the Accreted Value of
each Senior Subordinated Discount Note purchased pursuant to the terms and
conditions set forth in this Offer, net to the seller in cash. As used herein,
the term "Accreted Value" has the meaning ascribed to such term in the Indenture
governing the Senior Subordinated Discount Notes. As of June 15, 1999 (which
the Company currently expects will be the Purchase Date), the Accreted Value of
the Senior Subordinated Discount Notes will be $728.58 for each $1,000 principal
amount at maturity of such Notes.
If a Holder's Notes are not properly tendered pursuant to the Offer on or
prior to the Expiration Date, such Holder will not receive the Offer Price.
Notes may not be withdrawn after the close of business on the fifth
business day preceding the Expiration Date. See the procedures for withdrawal
described below in "The Offer--Withdrawal Rights."
Holders who tender their Notes will not be obligated to pay brokerage fees
or commissions on the purchase by the Company of Notes pursuant to the Offer.
The Company will pay or reimburse all fees and expenses of The Bank of New York,
the Depositary and paying agent for the Offer, and all other costs and expenses
in connection with the Offer.
The Company expressly reserves the absolute right, in its sole discretion,
from time to time after the Expiration Date, (i) to purchase any Notes through
open market or privately negotiated transactions, one or more additional tender
or exchange offers, or otherwise, upon such terms and at such prices as it may
determine, and (ii) to exercise its rights under the Indentures to discharge its
obligations with respect to the Notes by complying with the terms and conditions
of the Indentures.
The purchase of Notes pursuant to the Offer would reduce the number of
Notes that might otherwise trade publicly. This could adversely affect, among
other things, the liquidity or prices realizable in sales of the Notes following
the completion of the Offer. See "Special Factors--Limited Market for the Notes"
for a discussion of these and other possible effects of the Offer.
Holders are urged to read the Offer to Purchase and Letter of Transmittal
carefully before deciding whether to tender their Notes pursuant to the Offer.
PURPOSE OF THE OFFER
Pursuant to Section 4.14 of the Indentures, the Company is required to
offer to purchase all of its outstanding Notes, at the Offer Price, within 20
days after the occurrence of a Change of Control (as defined in Section 1.01 of
the Indentures). On April 28, 1999, the Company consummated the Asset Purchase
Agreement, pursuant to which, subject to the terms and conditions set forth
therein, the Purchaser purchased the Medium Power Business, which
<PAGE>
constituted substantially all the assets of the Company and its subsidiaries,
resulting in a Change of Control as defined in the Indentures. Holders who
tender Notes that are purchased pursuant to the Offer shall be paid the Offer
Price on or before the Purchase Date. On the Purchase Date the Offer Price will
become due and payable upon each Note accepted for payment pursuant to this
Offer to Purchase. From and after the Purchase Date interest shall cease to
accrue on the Senior Subordinated Notes accepted for purchase hereunder and the
Accreted Value of all Senior Subordinated Discount Notes accepted for purchase
hereunder shall cease to accrete.
SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Company to pay the total Offer
Price, plus any accrued and unpaid interest required to be paid pursuant to the
Offer, in connection with the Offer is estimated to be approximately
$117,482,196 (assuming all outstanding Notes are tendered and accepted for
payment prior to the Expiration Date, and the Purchase Date is June 15, 1999).
The Company plans to use the proceeds from the Asset Purchase Agreement to pay
the Offer Price. If necessary, any additional funds required will be obtained
by the Company in the form of capital contributions, equity investments or other
non-debt payments to the Company pursuant to a Funding Agreement, dated as of
March 31, 1999, between the Company and the other parties thereto.
SPECIAL FACTORS
Effects of the Asset Purchase Agreement
Pursuant to the Asset Purchase Agreement, the Company has sold
substantially all of its assets. As a result, the Company is required to make a
purchase offer to the Holders pursuant to Section 4.14 of each of the
Indentures. In addition, as a result of the consummation of the transactions
provided for in the Asset Purchase Agreement, the Company will not generate any
recurring revenue from operations, and will not have revenue from any sources
sufficient to pay the principal and interest on Notes as they come due.
Consequently, the liquidity, market value and price volatility of any Notes that
remain outstanding following the consummation of the Offer will likely be
adversely affected.
Limited Market for the Notes
In April 1999, in connection with the consummation of the Asset Purchase
Agreement, the Company entered into an agreement (the "Lock-up Agreement") with
the holders of approximately 68.45% of the aggregate principal amount of the
Senior Subordinated Notes and the holders of approximately 74.57% of the
aggregate principal amount at maturity of the Senior Subordinated Discount
Notes. Those holders party to the Lock-up Agreement sold (the "Lock-up Sale")
their Notes to the Company for cash equal to approximately 85.6% of the
aggregate principal amount thereof, plus stock appreciation rights on the GMH
Shares. In addition, those holders party to the Lock-up Agreement consented to
amend the Indentures in order to remove substantially all of the covenants
contained therein, other than the covenants to pay interest on and principal of
the Notes when due and covenants relating to required purchase offers.
In addition, the Notes are not listed on any national or regional
securities exchange. To the extent that the Notes have been tendered pursuant to
the Lock-up Sale or are tendered and accepted in the Offer, any existing trading
market for the Notes that are not tendered pursuant to the Offer and remain
outstanding will be severely limited. A debt security with a smaller outstanding
principal amount available for trading (a smaller "float") may
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command a lower price than would a comparable debt security with a larger float.
Also, the removal of almost all of the protective covenants contained in the
Indentures may be expected to cause a dimunition in the price of the Notes.
As a result of the foregoing factors, the liquidity, market value and price
volatility of any Notes that remain outstanding are expected to be adversely
affected.
Holders of unpurchased Notes may attempt to obtain quotations for the Notes
from their brokers; however, there can be no assurance that any trading market
will exist for the Notes following the Lock-up Sale or the consummation of the
Offer. The extent of the public market for the Notes following the consummation
of the Offer would depend upon the number of Holders remaining at such time, the
interest in maintaining a market in such Notes on the part of securities firms,
and other factors.
Although the Company believes that the Notes may currently trade on a
negotiated basis between certain market makers and holders of the Notes, no
generally reliable public pricing information for the Notes is available.
Holders of Notes are urged to contact their brokers to obtain the best available
information as to potential current market prices.
Subsequent Company Repurchases or Defeasance of Notes
The Company expressly reserves the absolute right, in its sole discretion,
from time to time after the Expiration Date (i) to purchase any Notes through
open market or privately negotiated transactions, one or more additional tender
or exchange offers, or otherwise, upon such terms and at such prices as it may
determine and (ii) to exercise its rights under the Indentures to discharge its
obligations with respect to the Notes by depositing certain securities with the
Trustee and otherwise complying with Article Nine of each of the Indentures.
DESCRIPTION OF NOTES
The following is a summary of certain terms of the Notes, forms of which
(together with the Indentures described below) have been filed as exhibits to
the Company's filings with the Securities and Exchange Commission and can be
obtained as described under the caption "Additional Information." The following
summary of the terms of the Notes is qualified in its entirety by reference to
the full text of the Notes and the Indentures as so filed. Capitalized terms
used herein that are not otherwise defined have the meanings assigned to them in
the Indentures, copies of which may be obtained from the Company or the Trustee.
General
Senior Subordinated Notes. The Senior Subordinated Notes are senior
subordinated unsecured obligations of the Company. The Senior Subordinated
Notes are governed by the Indenture dated February 20, 1997, between TSAT and
the Trustee, which Indenture was supplemented and amended by two Supplemental
Indentures. The First Supplemental Indenture, dated as of April 1, 1998, had
the effect of causing TSAT's obligations under the Senior Subordinated Notes to
be assumed by the Company thereby releasing TSAT. The Second Supplemental
Indenture, dated as of April 27, 1999, eliminated substantially all of the
covenants in the Indenture other than the covenants to pay interest on and
principal of the Notes when due and covenants relating to the Company's
obligation to make an offer to purchase the Notes upon certain circumstances
(such Indenture, as so amended and supplemented, the
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"Senior Subordinated Note Indenture"). The Senior Subordinated Notes mature on
February 15, 2007. Cash interest on the Senior Subordinated Notes is payable
semiannually, on each February 15 and August 15, to the persons in whose names
the Senior Subordinated Notes are registered at the close of business on
February 1 or August 1 (or, if such date is not a business day, the next
succeeding business day) prior to the payment date, at an annual rate of
10 7/8%. The Senior Subordinated Notes are redeemable by the Company at any time
on or after February 15, 2002, at the redemption prices set forth in the Senior
Subordinated Note Indenture, plus accrued and unpaid interest thereon, if any,
to the date of redemption.
Senior Subordinated Discount Notes. The Senior Subordinated Discount Notes
are senior subordinated unsecured obligations of the Company. The Senior
Subordinated Discount Notes are governed by the Indenture dated February 20,
1997, between TSAT and the Trustee, which Indenture was supplemented and amended
by two Supplemental Indentures. The First Supplemental Indenture, dated as of
April 1, 1998, had the effect of causing TSAT's obligations under the Senior
Subordinated Discount Notes to be assumed by the Company thereby releasing TSAT.
The Second Supplemental Indenture, dated as of April 27, 1999, eliminated
substantially all of the covenants in the Indenture other than the covenants to
pay interest on and principal of the Notes when due and covenants relating to
the Company's obligation to make an offer to purchase the Notes upon certain
circumstances (such Indenture, as so amended and supplemented, the "Senior
Subordinated Discount Note Indenture"). The Senior Subordinated Discount Notes
mature on February 15, 2007. Cash interest on the Senior Subordinated Discount
Notes does not accrue nor is it payable prior to February 15, 2002 (unless the
Company makes a Cash Interest Election as described below). Thereafter,
interest on the Senior Subordinated Discount Notes accrues at an annual rate of
12 1/4%, payable in cash semiannually, on each February 15 and August 15, to the
persons in whose names the Senior Subordinated Discount Notes are registered at
the close of business on February 1 or August 1 (or, if such date is not a
business day, the next succeeding business day) prior to the payment date, at an
annual rate of 12 1/4%. Prior to February 15, 2002 the Company may make a Cash
Interest Election on any interest payment date in accordance with the terms and
conditions set forth in the Senior Subordinated Discount Note Indenture. Upon
the making of a Cash Interest Election, the principal amount of each outstanding
Senior Subordinated Discount Note will be fixed to equal the Accreted Value of
such Note as of the date of such election, and cash interest on such principal
amount shall thereafter accrue at the rate provided for in the Indenture and
thereafter be payable on each subsequent interest payment date. The Senior
Subordinated Discount Notes are redeemable by the Company at any time on or
after February 15, 2002 at the redemption prices set forth in the Senior
Subordinated Discount Note Indenture, plus accrued and unpaid interest thereon,
if any, to the date of redemption.
THE OFFER
Principal Terms of the Offer
The Offer. The Company hereby offers to purchase for cash, on the terms and
subject to the conditions set forth in the Offer, all of the outstanding Notes
at the Offer Price.
The Offer Price is equal to: (i) 101% of the principal amount of each
Senior Subordinated Note purchased pursuant to the terms and conditions set
forth in this Offer, plus any accrued and unpaid interest accumulated thereon up
to the Purchase Date, net to the seller in cash and (ii) 101% of the Accreted
Value of each Senior Subordinated Discount Note purchased pursuant to the terms
and conditions set forth in this Offer, net to the seller in cash. As used
herein, the term "Accreted Value" has the meaning ascribed to such term in the
Indenture governing the Senior Subordinated Discount Notes. As of June 15, 1999
(which the Company currently expects
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will be the Purchase Date), the Accreted Value of the Senior Subordinated
Discount Notes will be $728.58 for each $1,000 principal amount at maturity of
such Notes.
Tenders of the Notes pursuant to the Offer will be accepted only in
denominations of $1,000 or integral multiples thereof. In the case of any
Holder whose Notes are purchased only in part, the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Notes without
service charge, a new Note or Notes, of any authorized denomination as requested
by such Holder, in an aggregate principal amount (at maturity, in the case of
the Senior Subordinated Discount Notes) equal to and in exchange for the
unpurchased portion of the Notes so tendered. Each Note purchased and each such
new Note issued shall be in denominations of $1,000 and integral multiples
thereof.
On the terms and subject to the conditions of the Offer, the Company will
accept for payment, and thereby purchase, all Notes validly tendered on or prior
to the Expiration Date and not properly withdrawn on or prior to the close of
business on the fifth business day preceding the Expiration Date in the manner
described in "--Withdrawal Rights." The term "Expiration Date" means 5:00 p.m.,
New York City time, on June 10, 1999, unless and until the Company, in its sole
discretion, has extended the period of time for which the Offer is open, in
which event the term Expiration Date will mean the latest time and date on which
the Offer, as so extended by the Company, expires.
Extension or Amendment of the Offer. The Company expressly reserves the
right, at any time or from time to time, at its sole discretion, and regardless
of the circumstances, to (i) extend the period of time during which the Offer is
open by giving oral or written notice of such extension to the Depositary and
(ii) amend the Offer (if permitted by the Indentures) in any respect by giving
oral or written notice of such amendment to the Depositary. The rights reserved
by the Company in this paragraph include the Company's right, without
limitation, in its sole discretion, to extend or amend the Offer (if permitted
by the Indentures). Any extension or amendment will be followed as promptly as
practicable by public announcement thereof, such announcement, in the case of an
extension, to be issued no later than 5:00 p.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company may choose to make any public announcement, the
Company currently intends to make announcements by issuing a press release to
the Dow Jones News Service and/or the PR Newswire. If the Company extends the
Offer, then, without prejudice to the Company's rights under the Offer, the
Depositary may retain tendered Notes on behalf of the Company, and such Notes
may not be withdrawn, except as described below in "--Withdrawal Rights." The
Offer Price for the Senior Subordinated Notes only will include all accrued and
unpaid interest on such Notes accumulated up to the Purchase Date.
If the Company makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Company will disseminate additional tender offer materials and extend the
Offer. As used in this Offer to Purchase, "business day" means a day (other than
Saturday or Sunday) on which the DTC and banks in New York are open for
business.
The Offer to Purchase, Letter of Transmittal and other relevant materials
are being mailed by the Company to record holders of Notes as of May 7, 1999
(the "Record Date") and are being furnished to brokers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the Company's list of Holders or, if applicable, who are listed as
participants in the DTC's security participant listing, for subsequent
transmittal to beneficial Holders.
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The Offer is not open to those Holders as of the Record Date that were
party to the Lock-up Agreement and, pursuant thereto, have previously sold or
have agreed to sell their Notes to the Company, with respect to any Notes sold
or required to be sold by such Holders pursuant to the Lock-up Agreement.
Therefore, the aggregate principal amount of the outstanding Senior Subordinated
Notes that the Company is offering to purchase pursuant to this Offer to
Purchase is $63,101,000 and the aggregate Accreted Value as of the Record Date
of the outstanding Senior Subordinated Discount Notes that the Company is
offering to purchase pursuant to this Offer to Purchase is approximately
$50,337,115. These amounts constitute all of the principal amounts outstanding
as of the Record Date for each tranche of Notes, minus the principal amounts of
Notes sold or required to be sold to the Company by certain Holders pursuant to
the Lock-up Agreement.
Acceptance for Payment and Payment for Notes
On the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Company will accept for payment, and thereby purchase, and will
pay the Offer Price for all Notes validly tendered on or prior to the Expiration
Date (and not properly withdrawn in the manner described in "--Withdrawal
Rights") on or before the Purchase Date. On the Purchase Date the Offer Price
will become due and payable pursuant to this Offer to Purchase. Interest shall
cease to accrue on the Senior Subordinated Notes accepted for purchase hereunder
and the Accreted Value of all Senior Subordinated Discount Notes accepted for
purchase hereunder shall cease to accrete. In all cases, payment for Notes
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) the Notes, or timely confirmation (a "Book-Entry
Confirmation") of the book-entry transfer of such Notes into the Depositary's
account at the DTC (the "Book-Entry Transfer Facility") in accordance with the
procedures described in "--Procedure for Tendering Notes," (ii) a properly
completed and duly executed Letter of Transmittal or facsimile thereof, with any
required signature guarantees, or an Agent's Message (as hereafter defined) in
the case of a book-entry transfer, and (iii) all other documents required by the
Letter of Transmittal. The term "Agent's Message" means a message, transmitted
by the Book-Entry Transfer Facility to, and received by, the Depositary and
forming a part of a Book-Entry Confirmation, which states that such Book-Entry
Transfer Facility has received an express acknowledgment from the participant in
such Book-Entry Transfer Facility tendering the Notes which are the subject of
such Book-Entry Confirmation, that such participant has received and agrees to
be bound by the terms of the Letter of Transmittal, and that the Company may
enforce such agreement against such participant.
For purposes of the Offer, the Company will be deemed to have accepted for
payment, and thereby purchased, tendered Notes if, as and when the Company gives
oral or written notice to the Depositary of its acceptance of such Notes for
payment. Payment for Notes accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for the tendering Holders for the purposes of receiving payment
from the Company and transmitting payments to the tendering Holders. Payments
for the Senior Subordinated Notes only will include all accrued interest
accumulated up to the Purchase Date.
Under no circumstances will any interest be payable by the Company because
of any delay in transmission of funds by the Depositary to the Holders of
purchased Notes.
If any tendered Notes are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if more Notes than are tendered
are submitted to the Depositary, Notes for such unpurchased or untendered Notes
will be returned, without expense to the submitting Holder (or, in the case of
Notes tendered by the book-entry transfer of such Notes into the Depositary's
account at the Book-Entry Transfer Facility in
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accordance with the procedures set forth in "--Procedure for Tendering Notes,"
such Notes will be credited to an account maintained within such Book-Entry
Transfer Facility), as promptly as practicable following the expiration,
termination, or withdrawal of the Offer.
Each Note purchased and each new Note issued shall be in denominations of
$1,000 or integral multiplies thereof.
If, prior to the Expiration Date, the Company increases the consideration
offered to Holders pursuant to the Offer, such increased consideration will be
paid to all Holders whose Notes are purchased pursuant to the Offer whether or
not such Notes have been tendered prior to such increase in consideration.
The Company reserves the right, in its sole discretion, to transfer or
assign to any person, in whole or from time to time in part, Notes now or
hereafter beneficially owned by it. Any transfer or assignment contemplated in
this paragraph will not relieve the Company of its obligations under the Offer
and will in no way prejudice the rights of tendering Holders to receive payment
for Notes validly tendered and accepted for payment pursuant to the Offer.
Procedure for Tendering Notes
For Notes to be validly tendered pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal or facsimile thereof, with any
required signature guarantees, or an Agent's Message in the case of a book-entry
transfer, and all other documents required by the Letter of Transmittal, must be
received by the Depositary at its address set forth on the back cover of this
Offer to Purchase on or prior to the Expiration Date. In addition, either (i)
Notes must be received by the Depositary, together with the Letter of
Transmittal, at such address, or such Notes must be tendered pursuant to the
procedures for book-entry tender described below and a Book-Entry Confirmation
received by the Depositary, in each case on or prior to the Expiration Date, or
(ii) the guaranteed delivery procedure described below must be complied with.
Delivery of documents to an account established by the Depositary at the Book-
Entry Transfer Facility does not constitute delivery to the Depositary.
Letter of Transmittals and Notes should be sent to the Depositary, not to
the Company.
In order for any tender of Notes to be valid, it must be in proper form.
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for payment of any tender of Notes,
and all other determinations by the Company contemplated by the Offer, including
in respect of the conditions to the Offer, will be determined by the Company, in
its sole discretion, which determination will be final and binding on all
parties. The Company reserves the right to waive any defect or irregularity in
the tender of any Notes. No tender of Notes will be deemed to have been validly
made until all defects and irregularities have been cured or waived. None of the
Company, the Depositary or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. The Company's interpretation of the
terms and conditions of the Offer (including this Offer to Purchase and Letter
of Transmittal and instructions thereto) will be final and binding.
The Depositary will establish an account with respect to the Notes at the
Book-Entry Transfer Facility for purposes of the Offer within two business days
after the date of this Offer to Purchase. Any financial institution that is a
participant in the Book-Entry Transfer Facility's system may make book-entry
delivery of Notes by causing such Book-Entry Transfer Facility to transfer such
Notes into the Depositary's account in accordance with such Book-Entry Transfer
Facility's procedure for such transfer. Although delivery of Notes may be
effected through
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book-entry at the Book-Entry Transfer Facility, a properly completed and duly
executed Letter of Transmittal or Facsimile thereof, with any required signature
guarantees, or an Agent's Message in the case of a book-entry transfer, and all
other documents required by the Letter of Transmittal, must, in any case, be
transmitted to and received by the Depositary at its address set forth on the
back cover of this Offer to Purchase on or prior to the Expiration Date, or the
guaranteed delivery procedure described below must be complied with. To
effectively tender Notes that are held through DTC, DTC participants may also
tender beneficial owners' Notes to the Depositary's account maintained at the
DTC for the benefit of the Depositary through the DTC's ATOP system, including
transmission of a computer generated message that acknowledges and agrees to be
bound by the terms of the Letter of Transmittal. By complying with DTC's ATOP
procedures with respect to the Offer, the DTC participant confirms on behalf of
itself and the beneficial owner of the tendered Notes all provisions of the
Letter of Transmittal applicable to it and such beneficial owners as fully as if
it completed, executed and returned the Letter of Transmittal to the Depositary.
If Notes are tendered otherwise than (i) by a registered holder of such
Notes or (ii) for the account of a financial institution that is a participant
in the Securities Transfer Agents Medallion Program, the Stock Exchange
Medallion Program or the New York Stock Exchange, Inc. Medallion Signature
Program (each an "Eligible Institution"), all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of
the Letter of Transmittal for the proper procedure for tendering in this manner.
If the Notes are registered in the name of a person other than the signer of a
Letter of Transmittal, the Notes must be endorsed or accompanied by appropriate
instruments of power, in either case signed exactly as the name or names of the
registered holder or holders appear on the Notes, with the signatures on the
Notes or such instruments of power guaranteed as provided in the Letter of
Transmittal. See Instruction 1 of the Letter of Transmittal.
The method of delivery of all required documents is at the election and
risk of each Holder. Delivery of such documents will be deemed made only when
actually received by the Depositary. If delivery is by mail, the use of
registered mail with return receipt requested, properly insured, is recommended,
and it is recommended that the mailing be made sufficiently in advance of the
Expiration Date to permit delivery to the Depositary prior to such date.
Procedures for Guaranteed Delivery
If a Holder desires to tender Notes pursuant to the Offer and such Holder's
Notes are not immediately available or such Holder cannot deliver such Holder's
Notes and all other required documents to the Depositary on or prior to the
Expiration Date, or if the procedure for book-entry transfer cannot be completed
on a timely basis, such Notes may nevertheless be tendered if all of the
following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company herewith, is
received by the Depositary as provided below on or prior to the Expiration
Date; and
(iii) the Notes for all physically delivered Notes in proper form for
transfer or a Book-Entry Confirmation, together with a properly completed
and duly executed Letter of Transmittal or facsimile thereof, with any
required signature guarantees, or Agent's Message in the case of a book-
entry transfer, and
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all other documents required by the Letter of Transmittal, are received by
the Depositary within five business days after the date of such Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
In all cases, payment for Notes tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of such
Notes or of a Book-Entry Confirmation relating to such Notes and a properly
completed and duly executed Letter of Transmittal or facsimile thereof, with any
required signature guarantees, or an Agent's Message in the case of a book-entry
transfer, and all other documents required by the Letter of Transmittal.
Other Effects of Tender
By executing a Letter of Transmittal as set forth above, a tendering Holder
irrevocably appoints designees of the Company as such Holder's attorneys-in-fact
and proxies, each with full power of substitution and resubstitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
Holder's rights with respect to the Notes tendered by such Holder and accepted
for payment by the Company and with respect to any and all other Notes or other
securities issued or issuable in respect of such Notes on or after the date of
this Offer to Purchase. All such proxies will be considered coupled with an
interest in the tendered Notes. Such appointment will be effective when, and
only to the extent that, the Company accepts such Notes for payment pursuant to
the Offer. Upon such appointment, all prior proxies given by such Holder with
respect to such Notes will be revoked, without further action, and no subsequent
proxies with respect thereto may be given by such Holder (and, if given, will
not be deemed effective). The designees of the Company will be empowered, among
other things, to exercise all voting and other rights of such Holder as they in
their sole discretion may deem proper at any meeting of the Holders or
otherwise. In order for Notes to be validly tendered, upon the acceptance for
payment of such Notes, the Company must be able to exercise full voting rights
with respect to such Notes (or other securities or rights), including voting at
any meeting of Holders, whether or not scheduled, and consenting to any action
to be taken by Holders in the absence of a meeting.
Subject to, and effective upon, the acceptance for purchase of, and payment
for, the Notes tendered pursuant to the Offer, the Holder hereby (i) sells,
assigns and transfers to, or upon the order of, the Company, all right, title
and interest in and to the Notes that are being tendered pursuant to the Offer
and (ii) releases and discharges the Company and any and all other persons from
any and all claims that such Holder is entitled to receive additional principal
or interest payments with respect to the Notes or to participate in any
redemption or defeasance of the Notes and any claims arising out of the Holder's
ownership of the Notes or any decline in the value thereof.
The tender of Notes pursuant to one of the procedures described above will
constitute a binding agreement between the tendering Holder and the Company on
the terms and subject to the conditions of the Offer, including the tendering
Holder's representation and warranty that (i) such Holder has full power and
authority to tender, sell, assign and transfer such Notes and (ii) when the same
are accepted for payment by the Company, the Company will acquire good,
marketable, and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and will not be subject to any adverse
claim.
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Withdrawal Rights
Tenders of Notes may be withdrawn at any time not later than the close of
business on the fifth business day preceding the Expiration Date (but not
thereafter, except as otherwise described below).
For a withdrawal of a tender of Notes to be effective, a written or
facsimile transmission notice of withdrawal must be received by the Depositary
not later than the close of business on the fifth business day preceding the
Expiration Date at its address set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must (i) specify the name of the person
who tendered the Notes to be withdrawn, (ii) contain the description of the
Notes to be withdrawn and identify the CUSIP/certificate number or numbers shown
on the particular certificate evidencing such Notes (unless such Notes were
tendered by book-entry transfer) and the aggregate principal amount represented
by such Notes (in the case of Senior Subordinated Notes) and the aggregate
principal amount at maturity represented by such Notes (in the case of Senior
Subordinated Discount Notes) and (iii) be signed by the Holder of such Notes in
the same manner as the original signature on the Letter of Transmittal by which
such Notes were tendered (including any required signature guarantees), if any,
or be accompanied by (x) documents of transfer sufficient to have the Trustee
register the transfer of the Notes into the name of the person withdrawing such
Notes and (y) a properly completed irrevocable proxy that authorized such person
to effect such revocation on behalf of such Holder. If the Notes to be withdrawn
have been delivered or otherwise identified to the Depositary, a signed notice
of withdrawal is effective immediately upon written or facsimile notice of
withdrawal even if physical release is not yet effected. Any Notes properly
withdrawn will be deemed to be not validly tendered for purposes of the Offer.
Withdrawal of Notes can be accomplished only in accordance with the
foregoing procedures.
The Notes are debt obligations of the Company. There are no appraisal or
other similar statutory rights in connection with the Offer.
All questions as to the validity (including time of receipt) of notices of
withdrawal will be determined by the Company, in the Company's sole discretion
(whose determination shall be final and binding). None of the Company, the
Depositary, the Trustee or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal, or
incur any liability for failure to give any such notification.
Interest on Notes
Interest under any of the Notes payable as of an interest payment date
prior to the date of acceptance for payment of Notes tendered pursuant to the
Offer will be retained by the registered owner of the Notes on which such
interest was paid as of such date. The Offer Price for the Senior Subordinated
Notes only will include any interest on such Notes that is accrued and unpaid up
to the Purchase Date.
Certain Legal Matters
The Company is not aware of any approval or other action by any domestic or
foreign governmental or administrative agency that would be required prior to
the acquisition of Notes by the Company pursuant to the Offer or any state
takeover statute that is applicable to the Offer. Should any such approval or
other action be required, or any such state takeover statute be applicable, the
Company will evaluate at such time whether such approval or
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action will be sought or compliance with such takeover statute will be effected.
There can be no assurance that any such approval, action or compliance, if
needed, would be obtained or effected or, if obtained or effected, would be
obtained or effected without substantial conditions or adverse consequences.
Depositary and Paying Agent
The depositary and paying agent for the Offer is The Bank of New York. All
deliveries to or correspondence with the Depositary relating to the Offer should
be directed to the address or telephone number set forth on the back cover of
this Offer to Purchase. The Company will pay the Depositary and paying agent
reasonable and customary compensation for its services in connection with the
Offer, plus reimbursement for out-of-pocket expenses. The Company will
indemnify the Depositary and paying agent against certain liabilities and
expenses in connection therewith, including liabilities under the federal
securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed
by the Company for customary mailing and handling expenses incurred by them in
forwarding material to their customers. The Company will not pay any fees or
commissions to any broker, dealer or other person in connection with the
solicitation of tenders of Notes pursuant to the Offer.
CERTAIN INCOME TAX CONSEQUENCES
The following discussion is a summary of certain anticipated U.S. federal
income tax consequences of the Offer to Holders of Notes. This discussion is
general in nature, and does not discuss all aspects of U.S. federal income
taxation that may be relevant to a particular Holder in light of the Holder's
particular circumstances, or to certain types of Holders subject to special
treatment under U.S. federal income tax laws (such as insurance companies, tax-
exempt organizations, financial institutions, brokers, dealers in securities,
and taxpayers that are neither citizens nor residents of the United States, or
that are foreign corporations, foreign partnerships or foreign estates or trusts
as to the United States). In addition, the discussion does not consider the
effect of any foreign, state, local or other tax laws, or any U.S. tax
considerations other than U.S. federal income tax considerations (e.g., estate
or gift tax), that may be applicable to particular Holders. Further, this
summary assumes that Holders hold their Notes as "capital assets" (generally,
property held for investment) within the meaning of section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code").
This summary is based on the Code and U.S. Treasury Regulations, rulings,
administrative pronouncements and decisions in effect as of the date hereof, all
of which are subject to change or differing interpretations at any time with
possible retroactive effect.
EACH HOLDER IS URGED TO CONSULT ITS OWN TAX ADVISOR TO DETERMINE THE
FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES TO IT OF THE OFFER.
Tax Considerations for Tendering Holders. A sale of Notes by a Holder
pursuant to the Offer will be a taxable transaction to such Holder for U.S.
federal income tax purposes. A Holder will generally recognize capital gain
(subject to the market discount rules discussed below) or loss on the sale of a
Note in an amount equal to the difference between (i) the amount of cash
received for such Note, other than the portion of such amount that is properly
allocable to accrued but previously unpaid interest (other than accrued original
issue discount), which amounts will be taxed as ordinary income, and (ii) the
Holder's "adjusted tax basis" for such Note at the time of
11
<PAGE>
sale. Such capital gain or loss will be long-term if the Holder held the Note
for more than one year at the time of such sale. Generally, a Holder's adjusted
tax basis for a Note will be equal to the cost of the Note to such Holder,
increased by the amount of any original issue discount previously included in
such Holder's gross income up to the date of disposition, less any payments
(other than stated interest payments on the Senior Subordinated Notes) received
on the Notes. If applicable, a Holder's tax basis in a Note would be increased
by any market discount previously included in income by such Holder pursuant to
an election to include market discount in gross income currently as it accrues,
or would be reduced by the amount of any amortizable bond premium that the
Holder has previously elected to offset against interest inclusion.
An exception to the capital gain treatment described above may apply to a
Holder who purchased a Note at a "market discount." Subject to a statutory de
minimis exception, market discount is the excess of (i) the sum of the original
issue price of the Note and the aggregate amount of original issue discount
includable in gross income of all Holders of such Notes during periods before
the acquisition of the Note over (ii) the Holder's tax basis in such Note
immediately after its acquisition by such Holder. In general, unless the Holder
has elected to include market discount in income currently as it accrues, any
gain realized by a Holder on the sale of a Note having market discount in excess
of a de minimis amount will be treated as ordinary income to the extent of the
market discount that has accrued on the Note (on a straight line basis or, at
the election of the Holder, on a constant interest rate basis) while such Note
was held by the Holder.
Backup Withholding. The receipt of the Offer Price by a Holder who tenders
its Notes may be subject to backup withholding at the rate of 31% with respect
to such payments unless such Holder (i) is a corporation or comes within certain
other exempt categories and, when required, demonstrates this fact, or (ii)
provides a correct taxpayer identification number, certifies as to no loss of
exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. Any amount withheld under these
rules will be credited against the Holder's U.S. federal income tax liability.
A Holder who does not provide its correct taxpayer identification number may be
subject to penalties imposed by the Internal Revenue Service.
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO PARTICULAR HOLDERS IN LIGHT OF THEIR PARTICULAR
CIRCUMSTANCES AND INCOME TAX SITUATIONS. HOLDERS SHOULD CONSULT THEIR TAX
ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE OFFER, INCLUDING
THE EFFECT OF ANY FEDERAL, STATE, LOCAL, FOREIGN OR OTHER LAWS.
ADDITIONAL INFORMATION
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file with the
Commission periodic reports and other information relating to its business,
financial condition and other matters. Attached hereto are the Company's most
recent annual financial statements and the Company's most recent Form 8-K that
were filed with the Commission. The Company is required to disclose in such
reports certain information, as of particular dates, concerning operating
results and financial condition, its officers and directors, the principal
holders of its securities, any material interests of such persons in
transactions with the Company and other matters. These reports and other
informational filings required by the Exchange Act should be available for
inspection at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and
also should be available for
12
<PAGE>
inspection and copying at the regional offices of the Commission located at
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60611 and 7 World
Trade Center, 13th Floor, New York, New York 10048. The Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
Such reports, proxy and information statements and other information may be
found on the Commission's Web site address, http://www.sec.gov. Copies of such
material may be obtained by mail, upon payment of the Commission's customary
fees, from the Commission's principal office at Judiciary Plaza, 450 Fifth
Street, Washington, D.C. 20549. Information regarding the Company may also be
obtained at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed by the Company pursuant to
the Exchange Act are hereby incorporated by reference in this Offer to Purchase:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998.
2. The Company's Current Report on Form 8-K, dated on May 13, 1999.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Offer to Purchase and
prior to the Expiration Date will be deemed to be incorporated by reference in
this Offer to Purchase and be a part hereof from the dates of filing such
documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein will be deemed to be modified or
superseded for purposes of the Offer to Purchase to the extent that a statement
contained herein, or in any other subsequently filed document which also is or
is deemed to be incorporated herein, modifies or supersedes such statement. Any
such statement so modified or superseded will not be deemed, except as so
modified or superseded, to constitute a part of this Offer to Purchase.
MISCELLANEOUS
No person has been authorized to give any information or make any
representation other than as contained in this Offer to Purchase or the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
The Offer is being made to all Holders who own Notes as of the Record Date
except that parties to the Lock-up Agreement may not tender hereunder any Notes
sold or required to be sold to the Company by such parties pursuant to the Lock-
up Agreement. The Company is not aware of any jurisdiction in which the making
of the Offer is prohibited by administrative or judicial action pursuant to a
state statute. If the Company becomes aware of any jurisdiction where the making
of the Offer is so prohibited, the Company will make a good faith effort to
comply with any such statute or seek to have such statute declared inapplicable
to the Offer. If, after such good faith effort, the Company cannot comply with
any applicable statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the Holders in such jurisdiction. In those
jurisdictions where securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of the Company by one or more registered brokers or dealers licensed
under the laws of such jurisdiction. The Offer will not be made, and will be
deemed not to have been made, in those jurisdictions where securities, blue-sky
or other laws prohibit the Offer from being made.
13
<PAGE>
PHOENIXSTAR, INC.
May 13, 1999
14
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter of
Transmittal and Notes and any other required documents should be sent by each
Holder or his broker, dealer, commercial bank, trust company or nominee to the
Depositary at the address set forth below:
________________
The Depositary and Paying Agent for the Offer is:
THE BANK OF NEW YORK
_________________________
By Mail, Hand or Overnight
Courier:
The Bank of New York
Reorganization Department
101 Barclay Street, Floor 7E
New York, New York 10286
Attention: Theresa Gass, Corporate Trust Operations
By Facsimile Transmission:
(For Eligible Institutions Only)
(212) 815-4699
For Information or Confirmation by Telephone:
(212) 815-5942
_________________________
Any questions or requests for assistance or additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the Company at the telephone number and location listed below. You
may also contact your broker, dealer, commercial bank or trust company for
assistance concerning the Offer.
PHOENIXSTAR, INC.
8085 South Chester, Suite 3000
Englewood, CO 80112
(303) 712-4647
Attention: Sean Clarke
<PAGE>
LETTER OF TRANSMITTAL
To Tender Any and All Outstanding
10 7/8% Senior Subordinated Notes due February 15, 2007
and 12 1/4% Senior Subordinated Discount Notes due February 15, 2007
of
PHOENIXSTAR, INC.
(formerly known as PRIMESTAR, INC.)
Pursuant to the Change of Control Offer,
dated May 13, 1999
- - --------------------------------------------------------------------------------
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE 10, 1999, UNLESS
THE OFFER IS EXTENDED (JUNE 10, 1999 OR SUCH LATER DATE TO WHICH THE OFFER IS
EXTENDED BEING HEREAFTER REFERRED TO AS THE EXPIRATION DATE"). HOLDERS OF
NOTES MUST TENDER NOTES ON OR PRIOR TO THE "EXPIRATION DATE (AND NOT HAVE
WITHDRAWN SUCH NOTES) IN ORDER TO RECEIVE THE OFFER PRICE. TENDERED NOTES MAY
BE WITHDRAWN AT ANY TIME NOT LATER THAN THE CLOSE OF BUSINESS ON THE FIFTH
BUSINESS DAY PRECEDING THE EXPIRATION DATE.
- - --------------------------------------------------------------------------------
The Notes referred to herein were originally issued by TCI Satellite
Entertainment, Inc.
To Depositary:
The Bank of New York
<TABLE>
<S> <C> <C>
By Hand/Overnight Courier: Confirm by Telephone: By Mail:
The Bank of New York (212) 815-5942 The Bank of New York
Reorganization Department Reorganization Department
101 Barclay Street, Floor 7E By Facsimile Transmission: 101 Barclay Street, Floor 7E
New York, New York 10286 (212) 815-4699 New York, New York 10286
Attention: Theresa Gass, Corporate Attention: Theresa Gass, Corporate
Trust Operations Trust Operations
</TABLE>
Delivery of this Letter of Transmittal to an address other than as set
forth above will not constitute a valid delivery.
The instructions contained herein and the Offer to Purchase should be read
carefully before this Letter of Transmittal is completed.
By execution hereof, the undersigned acknowledges receipt of the Change of
Control Offer dated May 13, 1999 (as the same may be amended from time to time,
the "Offer to Purchase") and this Letter of Transmittal and instructions hereto
(the "Letter of Transmittal"), which together constitute the offer to purchase
by the Company (the "Offer") of any and all of the Company's outstanding 10 7/8%
Senior Subordinated Notes due February 15, 2007 (the "Senior Subordinated
Notes") and 12 1/4% Senior Subordinated Discount Notes due February 15, 2007
(the "Senior Subordinated Discount Notes" and, together with the Senior
Subordinated Notes, the "Notes"), upon the terms and subject to the conditions
set forth in the Offer to Purchase.
<TABLE>
<CAPTION>
<S> <C>
CUSIP NO. Security
--------- --------
872298AB0 12 1/4% Senior Subordinated Discount Notes due February 15, 2007, Series A
872298AF1 12 1/4% Senior Subordinated Discount Notes due February 15, 2007, Series B
872298AA2 10 7/8% Senior Subordinated Notes due February 15, 2007, Series A
872298AE4 10 7/8% Senior Subordinated Notes due February 15, 2007, Series B
</TABLE>
1
<PAGE>
Use this Letter of Transmittal only to tender Notes pursuant to the Offer.
This Letter of Transmittal is to be used by Holders if (i) Notes are to be
physically delivered to The Bank of New York (the "Depositary") herewith by
Holders, (ii) tender of Notes is to be made by book-entry to the Depositary's
account at The Depository Trust Company ("DTC") pursuant to the procedures set
forth in the Offer to Purchase under the caption "The Offer--Procedure for
Tendering Notes" by any financial institution that is a participant in DTC and
whose name appears on a security participant listing as the owner of Notes (a
Holder and any such DTC participant, acting on behalf of Holders, are referred
to herein as an "Acting Holder"), unless an Agent's Message (as defined below)
is delivered in connection with such book-entry transfer, or (iii) tender of
Notes is to be made according to the guaranteed delivery procedures set forth in
the Offer to Purchase under the caption "The Offer--Procedure for Tendering
Notes." Delivery of documents to DTC does not constitute delivery to the
Depositary.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Offer.
All capitalized terms used herein and not defined shall have the respective
meanings ascribed to them in the Offer to Purchase.
Your bank or broker can assist you in completing this form. The
instructions included with this Letter of Transmittal must be followed. Requests
for additional copies of the Offer to Purchase, Letter of Transmittal and the
Notice of Guaranteed Delivery may be directed to the Company. See Instruction 10
below.
Subject to, and effective upon, the acceptance for purchase of, and payment
for, the Notes tendered with this Letter of Transmittal, the undersigned hereby
(i) sells, assigns and transfers to, or upon the order of, the Company, all
right, title and interest in and to the Notes that are being tendered hereby and
(ii) releases and discharges the Company and any and all other persons from any
and all claims that such Holder is entitled to receive additional principal or
interest payments with respect to the Notes or to participate in any redemption
or defeasance of the Notes and any claims arising out of the Holder's ownership
of the Notes or any decline in the value thereof.
2
<PAGE>
METHOD OF DELIVERY
[_] CHECK HERE IF CERTIFICATES FOR TENDERED NOTES ARE ENCLOSED HEREWITH.
- - --------------------------------------------------------------------------------
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH DTC AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution:
-------------------------------------------------
Account Number with DTC:
-------------------------------------------------------
Transaction Code Number:
-------------------------------------------------------
If Holders desire to tender Notes pursuant to the Offer and (i) such Notes
are not lost but are not immediately available, (ii) time will not permit this
Letter of Transmittal, such Notes or other required documents to reach the
Depositary prior to the Expiration Date, or (iii) the procedures for book entry
transfer (including delivery of an Agent's Message) cannot be completed prior to
the Expiration Date, such Holders may effect a tender of such Notes in
accordance with the guaranteed delivery procedures set forth in the Offer to
Purchase under the caption "The Offer--Procedure for Tendering Notes." See
Instruction 1 below.
- - --------------------------------------------------------------------------------
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name of Registered Holder(s):
--------------------------------------------------
Window Ticket No. (if any):
----------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
----------------------------
Name of Eligible Institution that Guaranteed Delivery:
-------------------------
If Delivered by Book-Entry Transfer:
-------------------------------------------
Account Number with DTC:
-------------------------------------------------------
Transaction Code Number:
-------------------------------------------------------
3
<PAGE>
List below the Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, list the CUSIP/certificate numbers and
principal amounts on a separately executed schedule and affix the schedule to
this Letter of Transmittal. Tenders of Notes will be accepted only in principal
amounts equal to $1,000 or integral multiples thereof.
<TABLE>
<S> <C> <C> <C>
- - --------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SENIOR SUBORDINATED NOTES
- - --------------------------------------------------------------------------------------------------------------------------
Aggregate
Name(s) and Address(es) of Holder(s) Certificate Principal Amount Principal Amount
(Please fill in, if blank) Number(s)* Represented** Tendered
- - --------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------
- - --------------------------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF SENIOR
SUBORDINATED NOTES
- - --------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer (see below).
** Unless otherwise indicated in the column labeled "Principal Amount Tendered" and subject to the terms and conditions of
the Offer to Purchase, a Holder will be deemed to have tendered the entire aggregate principal amount represented by
the Senior Subordinated Notes indicated in the column labeled "Aggregate Principal Amount Represented." See
Instruction 2.
- - --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
- - --------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SENIOR SUBORDINATED DISCOUNT NOTES
- - --------------------------------------------------------------------------------------------------------------------------
Aggregate
Principal Amount Principal Amount
Name(s) and Address(es) of Holder(s) Certificate At Maturity At Maturity
(Please fill in, if blank) Number(s)* Represented** Tendered
- - -------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------
- - --------------------------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL AMOUNT AT MATURITY
OF SENIOR SUBORDINATED DISCOUNT
NOTES
- - --------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer (see below).
** Unless otherwise indicated in the column labeled "Principal Amount Tendered" and subject to the terms and conditions
of the Offer to Purchase, a Holder will be deemed to have tendered the entire aggregate principal amount at maturity
represented by the Senior Subordinated Discount Notes indicated in the column labeled "Aggregate Principal Amount
Represented." See Instruction 2.
- - --------------------------------------------------------------------------------------------------------------------------
</TABLE>
HOLDERS WHO WISH TO ACCEPT THE OFFER AND TENDER THEIR NOTES MUST COMPLETE
THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
4
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Offer, the undersigned
hereby tenders to the Company the principal amount of Senior Subordinated Notes,
and principal amount at maturity of Senior Subordinated Discount Notes,
indicated above.
Subject to, and effective upon, the acceptance for purchase of, and payment
for, the Notes tendered with this Letter of Transmittal, the undersigned hereby
(i) sells, assigns and transfers to, or upon the order of, the Company, all
right, title and interest in and to the Notes that are being tendered hereby and
(ii) releases and discharges the Company and any and all other persons from any
and all claims that such Holder is entitled to receive additional principal or
interest payments with respect to the Notes or to participate in any redemption
or defeasance of the Notes and any claims arising out of the Holder's ownership
of the Notes or any decline in the value thereof. The undersigned hereby
irrevocably constitutes and appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned (with full knowledge that the Depositary
also acts as the agent of the Company) with respect to such Notes, with full
power of substitution and resubstitution (such power-of-attorney being deemed to
be an irrevocable power coupled with an interest) to (i) present such Notes and
all evidences of transfer and authenticity to, or transfer ownership of, such
Notes on the account books maintained by DTC to, or upon the order of, the
Company, (ii) present such Notes for transfer of ownership on the books of the
Company and (iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Notes.
The undersigned understands that tenders of Notes may be withdrawn only by
written notice of withdrawal received by the Depositary not later than the close
of business on the fifth business day preceding the Expiration Date.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Notes tendered
hereby and that when such Notes are accepted for purchase and payment by the
Company, the Company will acquire good title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim or right. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Notes tendered
hereby.
The undersigned understands that tenders of Notes pursuant to any of the
procedures described in the Offer to Purchase under the caption "The Offer" and
in the instructions hereto, and acceptance thereof by the Company, will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Offer.
For purposes of the Offer, the undersigned understands that the Company
will be deemed to have accepted for purchase validly tendered Notes (or
defectively tendered Notes with respect to which the Company has waived such
defect) if, as and when the Company gives oral, to be followed by written,
notice thereof to the Depositary.
5
<PAGE>
The undersigned understands that, under certain circumstances and subject
to certain conditions of the Offer (each of which the Company may waive) set
forth in the Offer to Purchase, the Company may not be required to accept for
purchase any of the Notes tendered (including Notes tendered after the
Expiration Date). Any Notes not accepted for purchase will be returned promptly
to the undersigned at the address set forth above unless otherwise indicated
herein under "Special Issuance and Special Delivery Instructions" below.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death or incapacity of the undersigned and every
obligation of the undersigned under this Letter of Transmittal shall be binding
upon the undersigned's heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives.
The undersigned understands that the delivery and surrender of the Notes is
not effective, and the risk of loss of the Notes does not pass to the
Depositary, until receipt by the Depositary of this Letter of Transmittal, or a
facsimile hereof, properly completed and duly executed, together with all
accompanying evidences of authority and any other required documents in form
satisfactory to the Company. All questions as to the form of all documents and
the validity (including time of receipt) and acceptance of tenders and
withdrawals of Notes will be determined by the Company, in its sole discretion,
which determination shall be final and binding.
Unless otherwise indicated herein under "Special Issuance and Special
Delivery Instructions," the undersigned hereby requests that any Notes
representing principal amounts not tendered or not accepted for purchase be
issued in the name(s) of the undersigned (and in the case of Notes tendered by
book-entry transfer, by credit to the account at DTC) and checks constituting
payments for Notes to be purchased be issued to the order of the undersigned.
Similarly, unless otherwise indicated herein under "Special Issuance and Special
Delivery Instructions," the undersigned hereby requests that any Notes
representing principal amounts not tendered or not accepted for purchase and
checks constituting payments for Notes to be purchased be delivered to the
undersigned at the address(es) shown above. In the event that the "Special
Issuance Instructions" box or the "Special Delivery Instructions" box or both
are completed, the undersigned hereby requests that any Notes representing
principal amounts not tendered or not accepted for purchase be issued in the
name(s) of and checks constituting payments for Notes to be purchased be issued
in the name(s) of and be delivered to, the person(s) at the address(es) so
indicated, as applicable. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" box or "Special
Delivery Instructions" box to transfer any Notes from the name of the registered
holder(s) thereof if the Company does not accept for purchase any of the
principal amount of such Notes so tendered.
6
<PAGE>
- - --------------------------------------------------------------------------------
PLEASE SIGN HERE
(To Be Completed By All Tendering Holders of
Notes Regardless of Whether Notes Are Being Physically
Delivered Herewith, Unless an Agent's Message Is Delivered
in Connection With A Book-Entry Transfer of Such Notes)
The completion, execution and delivery of this Letter of Transmittal will
constitute an acceptance of the Offer to tender Notes.
This Letter of Transmittal must be signed by the registered holder(s) of
Notes exactly as their name(s) appear(s) on the Notes or, if tendered by a
participant in DTC, exactly as such participant's name appears on a security
participant listing as the owner of Notes, or by person(s) authorized to become
registered holder(s) by endorsements and documents transmitted with this Letter
of Transmittal. If the signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below
under "Capacity" and submit evidence satisfactory to the Company of such
person's authority to so act. See Instruction 3 below.
If the signature appearing below is not of the registered holder(s) of the
Notes, then the registered holder(s) must sign a valid proxy or bond power.
X
-------------------------------------------------------------------------------
X
-------------------------------------------------------------------------------
(Signature(s) of Holder(s) or Authorized Signatory)
Date: 1999
-------------
Name(s):
-----------------------------------------------------------------------
-------------------------------------------------------------------------
(Please Print)
Capacity:
----------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
-------------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone No.:
---------------------------------------------------
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
SIGNATURE GUARANTEE (See Instruction 3 below)
Certain Signatures Must be Guaranteed by an Eligible Institution
- - --------------------------------------------------------------------------------
(Name of Eligible Institution Guaranteeing Signatures)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Address (including zip code) and Telephone Number
(including area code) of Firm)
- - --------------------------------------------------------------------------------
(Authorized Signature)
- - --------------------------------------------------------------------------------
(Printed Name)
- - --------------------------------------------------------------------------------
(Title)
Date: 1999
-------------
- - --------------------------------------------------------------------------------
7
<PAGE>
- - --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 2, 3, 4, and 6)
To be completed ONLY if Notes in a principal amount not tendered or not accepted
for purchase are to be issued in the name of, or checks constituting payments
for Notes to be in connection with the Offer are to be issued to the order of,
someone other than the person or persons whose signature(s) appear(s) within
this Letter of Transmittal or issued to an address different from that shown in
the box entitled "Description of Notes" within this Letter of Transmittal, or if
Notes tendered by book-entry transfer that are not accepted for purchase are to
be credited to an account maintained at DTC other than the one designated above.
Issue [_] Notes
[_] Checks
(check as applicable)
Name
---------------------------------------------------------------------------
(Please Print)
Address
------------------------------------------------------------------------
(Please Print)
- - --------------------------------------------------------------------------------
Zip Code
- - --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 herein)
Credit unpurchased Notes by book-entry transfer to the DTC account set forth
below:
- - --------------------------------------------------------------------------------
(DTC Account Number)
Name of Account Party:
- - --------------------------------------------------------------------------------
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
SIGNATURE GUARANTEE (See Instruction 3 below) Certain Signatures Must be
Guaranteed by an Eligible Institution
- - --------------------------------------------------------------------------------
(Name of Eligible Institution Guaranteeing Signatures)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Address (including zip code) and Telephone Number
(including area code) of Firm)
- - --------------------------------------------------------------------------------
(Authorized Signature)
- - --------------------------------------------------------------------------------
(Printed Name)
- - --------------------------------------------------------------------------------
(Title)
Date: , 1999
-----------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 2, 3, 4, and 6)
To be completed ONLY if Notes in a principal amount not tendered or not accepted
for purchase or checks constituting payments for Notes to be purchased are to be
sent to someone other than the person or persons whose signature(s) appear(s)
within this Letter of Transmittal or to an address different from the shown in
the box entitled "Description of Notes" within the Letter of Transmittal.
Deliver [_] Notes
[_] Checks
(check as applicable)
Name
---------------------------------------------------------------------------
(Please Print)
Address
------------------------------------------------------------------------
(Please Print)
- - --------------------------------------------------------------------------------
Zip Code
- - --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 herein)
- - --------------------------------------------------------------------------------
8
<PAGE>
INSTRUCTIONS
These Instructions Form Part of the Terms and Conditions of the Offer
1. Delivery of this Letter of Transmittal and Notes or Book-Entry
Confirmations; Guaranteed Delivery Procedures; Withdrawal of Tender. To tender
Notes in the Offer, the Notes (or a confirmation of any book-entry transfer into
the Depositary's account with DTC of Notes tendered electronically, as well as a
properly completed and duly executed copy (or facsimile) of this Letter of
Transmittal (or Agent's Message (as defined below) in connection with a book-
entry transfer), and any other documents required by this Letter of Transmittal,
must be received by the Depositary at its address set forth herein on or prior
to 5:00 p.m., New York City time, on the Expiration Date. The method of delivery
of this Letter of Transmittal, Notes and all other required documents to the
Depositary is at the election and risk of Holders. If such delivery is by mail,
it is suggested that Holders use properly insured registered mail, return
receipt requested, and that the mailing be made sufficiently in advance of the
Expiration Date, to permit delivery to the Depositary on or prior to such date.
Except as otherwise provided below, the delivery will be deemed made when
actually received or confirmed by the Depositary. This Letter of Transmittal and
Notes should be sent only to the Depositary, not to the Company.
The term "Agent's Message" means a message transmitted to DTC to, and
received by, the Depositary and forming a part of a Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the Notes, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and the Company may
enforce such agreement against the participant.
If a Holder desires to tender Notes pursuant to the Offer and (i) such
Notes are not lost but are not immediately available, (ii) time will not permit
this Letter of Transmittal, Notes or other required documents to reach the
Depositary on or prior to the Expiration Date, or (iii) the procedures for book-
entry transfer cannot be completed on or prior to the Expiration Date, such
Holder may effect a tender of Notes in accordance with the guaranteed delivery
procedures set forth in the Offer to Purchase under the caption "The
Offer--Procedure for Tendering Notes."
Pursuant to the guaranteed delivery procedures:
(a) such tender must be made by or through an Eligible Institution
(defined as an institution that is a member of a Signature Guarantee
Program recognized by the Depositary, i.e., the Securities Transfer Agents
Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) and
the New York Stock Exchange, Inc. Medallion Signature Program (MSP));
(b) on or prior to the Expiration Date the Depositary must have
received from such Eligible Institution, at one of the addresses of the
Depositary set forth herein, a properly completed and duly executed Notice
of Guaranteed Delivery (by mail or hand delivery) substantially in the form
provided by the Company, setting forth the name(s) and address(es) of the
Acting Holder(s), and the principal amount of Notes being tendered and
stating that the tender is being made thereby and guaranteeing that within
5 business days after the date of the Notice of Guaranteed Delivery, a
properly completed and duly executed Letter of Transmittal, or a facsimile
thereof, or an Agent's Message together with the Notes (or confirmation of
book-entry transfer of such Notes into the Depositary's account with DTC as
described above), and any other documents required by this Letter of
Transmittal and the instructions hereto, will be deposited by such Eligible
Institution with the Depositary; and
9
<PAGE>
(c) this Letter of Transmittal or a facsimile hereof, properly
completed, or an Agent's Message, and all physically delivered Notes in
proper form for transfer (or confirmation of book-entry transfer of such
Notes into the Depositary's account with DTC as described above, including
an Agent's Message in connection therewith) and all other required
documents must be received by the Depositary within 5 business days after
the date of the Notice of Guaranteed Delivery.
Tenders of Notes may be withdrawn by written notice of withdrawal received
by the Depositary delivered by mail, hand delivery or facsimile transmission,
which notice must be received by the Depositary at one of its addresses set
forth herein not later than the close of business on the fifth business day
preceding the Expiration Date. To be effective, notice of withdrawal of tendered
Notes must (i) be received by the Depositary not later than the close of
business on the fifth business day next preceding the Expiration Date as its
address set forth herein, (ii) specify the name of the person who deposited the
Notes to be withdrawn (the "Depositor"), the name in which the Notes are
registered (or, if tendered by book-entry transfer, the name of the participant
in DTC whose name appears on a security participant listing as the owner of such
Notes) if different from that of the Depositor, (iii) state the principal amount
of Notes to be withdrawn and (iv) be signed by the Acting Holder in the same
manner as the original signature on this Letter of Transmittal (including any
required signature guarantee(s)) or be accompanied by evidence satisfactory to
the Company and the Depositary that the person withdrawing the tender has
succeeded to beneficial ownership of the Notes. If Notes have been delivered or
otherwise identified (through confirmation of book-entry transfer of such Notes)
to the Depositary, the name of the Acting Holder and the Notes withdrawn must
also be furnished to the Depositary as aforesaid, prior to the physical release
of the withdrawn Notes (or, in the case of Notes transferred by book-entry
transfer, the name and number of the account at DTC to be credited with
withdrawn Notes).
2. Partial Tenders. Tenders of Notes pursuant to the Offer will be
accepted only in principal amounts (or, in the case of the Senior Subordinated
Discount Notes, face amounts representing principal amounts at maturity) equal
to $1,000 or integral multiples thereof. If less than the entire principal
amount of any Notes evidenced by a submitted certificate is tendered, the
tendering Holder must fill in the principal amount tendered in the last column
of the box entitled "Description of Notes" herein. The entire principal amount
for all the Notes delivered to the Depositary will be deemed to have been
tendered unless otherwise indicated. If the entire principal amount of all Notes
is not tendered or not accepted for purchase, the principal amount of Notes not
tendered or not accepted for purchase will be sent (or, if tendered by book-
entry transfer, returned by credit to the account at DTC designated herein) to
the Acting Holder unless otherwise provided in the appropriate box on this
Letter of Transmittal (see Instruction 4), promptly after the Notes are accepted
for purchase.
3. Signatures on this Letter of Transmittal; Bond Powers and Endorsement;
Guarantee of Signatures. If this Letter of Transmittal is signed by the
registered holder(s) of the Notes tendered hereby, the signature(s) must
correspond with the name(s) as written on the face of the certificate(s) without
alteration, enlargement or any chance whatsoever. If this Letter of Transmittal
is signed by a participant in DTC whose name is shown as the owner of the Notes
tendered hereby, the signature must correspond with the name shown on the
security participant listing as the owner of the Notes.
IF THE LETTER OF TRANSMITTAL IS EXECUTED BY A HOLDER OF NOTES WHO IS NOT
THE REGISTERED HOLDER, THEN THE REGISTERED HOLDER MUST SIGN A VALID BOND POWER,
WITH THE SIGNATURE OF SUCH REGISTERED HOLDER GUARANTEED BY AN ELIGIBLE
INSTITUTION.
10
<PAGE>
If any of the Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal. If any
tendered Notes are registered in different names, it will be necessary to
complete, sign and submit as many separate copies of this Letter of Transmittal
and any necessary accompanying documents as there are different names in which
the Notes are held.
If this Letter of Transmittal is signed by the Acting Holder, and the
principal amount of Notes not tendered or accepted for purchase are to be issued
(or if any principal amount of Notes that is not tendered or not accepted for
purchase is to be reissued or returned) to or, if tendered by book-entry
transfer, credited to the account at DTC of the Acting Holder, and checks
constituting payments for Notes to be purchased are to be issued to the order of
the Acting Holder, then the Acting Holder need not endorse any Notes, nor
provide a separate bond power. In any other case (including if this Letter of
Transmittal is not signed by the Acting Holder), the Acting Holder must either
properly endorse the Notes tendered or transmit a separate properly completed
bond power with this Letter of Transmittal (in either case, executed exactly as
the name(s) of the registered holder(s) appear(s) on such Notes, and, with
respect to a participant in DTC whose name appears on a security position
listing as the owner of Notes, exactly as the name(s) of the participant(s)
appear(s) on such security position listing), with the signature on the
endorsement or bond power guaranteed by an Eligible Institution, unless such
bond powers are executed by an Eligible Institution.
If this Letter of Transmittal or any Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Company of their authority so to act must be submitted with this Letter of
Transmittal.
Endorsements on Notes, signatures on bond powers provided in accordance
with this Instruction 3 by registered holders not executing this Letter of
Transmittal must be guaranteed by an Eligible Institution.
No signature guarantee is required if: (i) this Letter of Transmittal is
signed by the registered Holder(s) of the Notes tendered herewith (or by a
participant in DTC whose name appears on a security position listing as the
owner of Notes) and the payments for the Notes to be purchased, or any Notes for
principal amounts not tendered or not accepted for purchase are to be issued,
directly to such registered holder(s) (or, if signed by a participant in DTC,
and Notes for principal amounts not tendered or not accepted for purchase are to
be credited to such participant's account at DTC) and the "Special Issuance
Instructions" box of this Letter of Transmittal has not been completed; or (ii)
such Notes are tendered for the account of an Eligible Institution. In all other
cases, all signatures on Letters of Transmittal accompanying Notes must be
guaranteed by an Eligible Institution.
4. Special Issuance and Special Delivery Instructions. Tendering Holders
should indicate in the applicable box or boxes the name and address to which
Notes for principal amounts not tendered or not accepted for purchase or checks
constituting payments for Notes to be purchased are to be issued or sent, if
different from the name and address of the Acting Holder signing this Letter of
Transmittal. In the case of issuance in a different name, the taxpayer
identification or social security number of the person named must also be
indicated. If no instructions are given, Notes not tendered or not accepted for
purchase will be returned to the Acting Holder of the Notes tendered. Any Holder
of Notes tendering by book-entry transfer may request that Notes not tendered or
not accepted for purchase be credited to such account at DTC as such Holder may
designate under the caption "Special Issuance Instructions." If no such
instructions are given, any such Notes not tendered or not accepted for purchase
will be returned by crediting the account at DTC designated above.
11
<PAGE>
5. Taxpayer Identification Number. Each tendering Holder is required to
provide the Depositary with the Holder's correct taxpayer identification number
("TIN"), generally the Holder's social security or federal employer
identification number, on Substitute Form W-9, as is provided under "Important
Tax Information" below, or, alternatively, to establish another basis for
exemption from backup withholding. A Holder must cross out item (2) in the
Certification box on Substitute Form W-9 if such Holder is subject to backup
withholding. Failure to provide the information on the form may subject the
tendering Holder to 31% federal income tax backup withholding on the payments
made to the Holder or other payee with respect to Notes purchased pursuant to
the Offer. The box in Part 3 of the form should be checked if the tendering
Holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked and the Depositary
is not provided with a TIN within 60 days, thereafter the Depositary will
withhold 31% from all such payments with respect to the Notes to be purchased
until a TIN is provided to the Depositary.
6. Transfer Taxes. The Company will pay all transfer taxes applicable to
the purchase and transfer of Notes pursuant to the Offer, except in the case of
deliveries of Notes for principal amounts not tendered or not accepted for
payment that are registered or issued in the name of any person other than the
Acting Holder of Notes tendered hereby.
7. Irregularities. All questions as to the form of all documents and the
validity (including time of receipt) and acceptance of the tenders and
withdrawals of Notes will be determined by the Company, in its sole discretion,
which determination shall be conclusive, binding and final. Alternative,
conditional or contingent tenders will not be considered valid. The Company
reserves the absolute right to reject any or all tenders of Notes that are not
in proper form or the acceptance of which would, in the Company's opinion, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Notes. The Company's
interpretations of the terms and conditions of the Offer(including the
instructions in this Letter of Transmittal) will be conclusive, binding and
final. Any defect or irregularity in connection with tenders of Notes must be
cured within such time as the Company determines, unless waived by the Company.
Tenders of Notes shall not be deemed to have been made until all defects or
irregularities have been waived by the Company or cured. None of the Company,
the Depositary or any other person will be under any duty to give notice of any
defects or irregularities in tenders of Notes, or will incur any liability to
Holders for failure to give any such notice.
8. Waiver of Conditions. The Company expressly reserves the absolute
right, in its sole discretion, to amend or waive any of the conditions to the
Offer in the case of any Notes tendered, in whole or in part, at any time and
from time to time.
9. Mutilated, Lost, Stolen, or Destroyed Notes. Any Holder of Notes
whose Notes have been mutilated, lost, stolen or destroyed should write to or
telephone The Bank of New York (which is the Trustee for the Notes under each
Indenture and the Depositary and paying agent hereunder) at the address or
telephone number set forth in the back of this Letter of Transmittal.
10. Requests for Additional Copies. Requests for additional copies of the
Offer to Purchase and this Letter of Transmittal may be directed to the Company,
whose address and telephone number appears in the back of this Letter of
Transmittal.
12
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Notes are accepted
for payment is required to provide the Depositary (as payer) with such Holder's
correct TIN on Substitute Form W-9 below or otherwise establish a basis for
exemption from backup withholding. If such Holder is an individual, the TIN is
his social security number. If the Depositary is not provided with the correct
TIN, a $50 penalty may be imposed by the Internal Revenue Service, and payments
made with respect to Notes purchased pursuant to the Offer may be subject to
backup withholding. Failure to comply truthfully with the backup withholding
requirements also may result in the imposition of severe criminal and/or civil
fines and penalties.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Depositary. A foreign person, including entities, may qualify as an
exempt recipient by submitting to the Depositary a properly completed Internal
Revenue Service Form W-8, signed under penalties of perjury, attesting to that
Holder's foreign status. A Form W-8 can be obtained from the Depositary. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the Holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the Federal income tax liability of
persons subject to backup withholding will be credited by the amount of tax
withheld. If withholding results in an overpayment of taxes a refund may be
obtained from the Internal Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments made with respect to Notes
purchased pursuant to the Offer, the Holder is required to provide the
Depositary with either: (i) the Holder's correct TIN by completing the form
below, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such Holder is awaiting a TIN) and that (A) the Holder has not been
notified by the Internal Revenue Service that the Holder is subject to backup
withholding as a result of failure to report all interest or dividends; or (B)
the Internal Revenue Service has notified the Holder that the Holder is no
longer subject to backup withholding; or (ii) an adequate basis for exemption.
What Number to Give the Depositary
The Holder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the registered holder of
the Notes. If the Notes are held in more than one name or are held not in the
name of the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
13
<PAGE>
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Part 1--PLEASE PROVIDE YOUR TIN IN --------------------------------------------
SUBSTITUTE THE BOX AT RIGHT AND CERTIFY BY Social security number
Form W-9 SIGNING AND DATING BELOW. OR
Department of the
Treasury --------------------------------------------
Internal Revenue Employer identification number
Service
----------------------------------------------------------------------------------------
Part 2--Certification--Under Penalties of Perjury, I Part 3C
Certify that:
Payer's Request for Taxpayer (1) The number shown on this form is my correct Awaiting TIN [_]
Identification Number (TIN) Taxpayer Identification Number (or I am waiting for a
number to be issued to be issued to me) and
(2) I am not subject to backup withholding either because
I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup
withholding as a result of failure to report all
interest or dividends, or the IRS has notified me
that I am no longer subject to backup withholding.
-----------------------------------------------------------------------------------------
Certificate instructions--You must cross out item (2) in Part 2 above if you have been
notified by the IRS that you are subject to backup withholding because of under
reporting interest or dividends on your tax return. However, if after being notified
by the IRS that you were subject to backup withholding you received another notification
from the IRS stating that you are no longer subject to backup withholding, do not cross
out item (2).
SIGNATURE DATE , 199
-------------------------------- --------------- --
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
- - --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
,1999
- - ----------------------------------------- -----------------------------
Signature Date
- - --------------------------------------------------------------------------------
14
<PAGE>
THE DEPOSITARY AND PAYING AGENT FOR THE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
<S> <C> <C>
By Hand/Overnight Courier: For Information or By Mail:
The Bank of New York Confirmation by Telephone: The Bank of New York
Reorganization Department (212) 815-5942 Reorganization Department
101 Barclay Street, Floor 7E 101 Barclay Street, Floor 7E
New York, New York 10286 Facsimile Transmission: New York, New York 10286
Attention: Theresa Gass, Corporate (For Eligible Institutions Attention: Theresa Gass, Corporate
Trust Operations Only) Trust Operations
(212) 815-4699
</TABLE>
Any requests for additional copies of this Letter of Transmittal, the Offer
to Purchase and the Notice of Guaranteed Delivery may be directed to the Company
at the telephone number and location listed below. You may also contact your
broker, dealer, commercial bank or trust company for assistance concerning the
Offer.
PHOENIXSTAR, INC.
c/o Sean Clarke
8085 South Chester Suite 300
Englewood, CO 80112
(303) 712-4647
15
<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
10 7/8% Senior Subordinated Notes due February 15, 2007
and
12 1/4% Senior Subordinated Discount Notes due February 15, 2007
of
PHOENIXSTAR, INC.
(formerly known as PRIMESTAR, INC.)
This form or one substantially equivalent hereto must be used to accept the
Offer (as defined below) if notes representing the 10 7/8% Senior Subordinated
Notes due February 15, 2007 (the "Senior Subordinated Notes") or the 12 1/4%
Senior Subordinated Discount Notes due February 15, 2007 (the "Senior
Subordinated Discount Notes" and together with the Senior Subordinated Notes,
the "Notes") of Phoenixstar, Inc., formerly known as PRIMESTAR, Inc., are not
immediately available or time will not permit all required documents to reach
the Depositary on or prior to the Expiration Date (as defined in the Offer To
Purchase (as defined below)) or if the procedure for book-entry transfer cannot
be completed on a timely basis. Such form may be delivered by hand or sent by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution (as defined under the caption "The Offer--
Procedure for Tendering Notes" in the Offer To Purchase).
The Notes referred to herein were originally issued by TCI Satellite
Entertainment, Inc.
<TABLE>
<CAPTION>
CUSIP NO. Security
- - --------- --------
<S> <C>
872298AB0 12 1/4% Senior Subordinated Discount Notes due February 15, 2007, Series A
872298AF1 12 1/4% Senior Subordinated Discount Notes due February 15, 2007, Series B
872298AA2 10 7/8% Senior Subordinated Notes due February 15, 2007 Series A
872298AE4 10 7/8% Senior Subordinated Notes due February 15, 2007, Series B
</TABLE>
The Depositary and Paying Agent for the Offer is:
THE BANK OF NEW YORK
By Hand, Mail or Overnight Courier:
The Bank of New York
Reorganization Department
101 Barclay Street, Floor 7E
New York, New York 10286
Attention: Theresa Gass, Corporate Trust Operations
By Facsimile Transmission:
(For Eligible Institutions Only)
(212) 815-4699
For Information or Confirmation by Telephone:
(212) 815-5942
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS
OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE
NUMBER OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Phoenixstar, Inc., formerly known as
PRIMESTAR, Inc., on the terms and subject to the conditions set forth in its
Change of Control Offer, dated May 13, 1999 (as it may be supplemented and
amended from time to time, the "Offer To Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of which is hereby
acknowledged, the principal amount of Notes indicated below pursuant to the
guaranteed delivery procedures set forth under the caption "The Offer--Procedure
for Tendering Notes" in the Offer To Purchase.
(Please Type or Print) Name(s):
Principal Amount of Notes Tendered:
------ -------------------------------------
Address:
If Notes will be delivered by -----------------------------
book-entry transfer, check box: -------------------------------------
-------------------------------------
[_] The Depository Trust Company Zip Code
Account Number: Area Code and Telephone Number:
-------------------- ------
Dated: Signature(s):
----------------------------- ------------------------
Certificate No(s). (if available):
-------
GUARANTEE
(not to be used for signature guarantee)
The undersigned, a financial institution that is a participant in the
Securities Transfer Agents Medallion Program, the Stock Exchange Medallion
Program, or the New York Stock Exchange, Inc. Medallion Signature Program,
hereby guarantees to deliver to the Depositary the Notes, as applicable,
tendered hereby, in proper form for transfer, or a Book-Entry Confirmation (as
defined in "The Offer--Acceptance for Payment and Payment for Notes" in the
Offer To Purchase) with respect to such Notes, together with a properly
completed and duly executed Letter of Transmittal or facsimile thereof, with any
required signature guarantees, or an Agent's Message (as defined in "The Offer--
Acceptance for Payment and Payment for Notes" in the Offer To Purchase) in the
case of a book-entry transfer, and any other required documents, all within five
business days from the date hereof.
- - ---------------------------------- ------------------------------------------
Name of Firm Authorized Signature
- - ---------------------------------- ------------------------------------------
Address Name (Please Type or Print)
- - ---------------------------------- ------------------------------------------
<PAGE>
City, State Zip Code Title
- - ---------------------------------- ------------------------------------------
Area Code and Telephone Number Date
DO NOT SEND CERTIFICATES WITH THIS FORM. CERTIFICATES
SHOULD BE SENT WITH THE LETTER OF TRANSMITTAL.
<PAGE>
PHOENIXSTAR, INC.
(formerly known as PRIMESTAR, INC.)
Offer to Purchase for Cash All of its Outstanding
10 7/8% Senior Subordinated Notes due February 15, 2007
and
12 1/4% Senior Subordinated Discount Notes due February 15, 2007,
Pursuant to the Offer To Purchase dated May 13, 1999
- - --------------------------------------------------------------------------------
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE 10, 1999,
UNLESS THE OFFER IS EXTENDED (JUNE 10, 1999 OR SUCH LATER DATE TO WHICH THE
OFFER IS EXTENDED BEING HEREINAFTER REFERRED TO AS THE "EXPIRATION DATE").
HOLDERS OF NOTES MUST TENDER NOTES ON OR PRIOR TO THE EXPIRATION DATE (AND
MUST NOT HAVE WITHDRAWN SUCH NOTES) IN ORDER TO RECEIVE THE OFFER PRICE.
TENDERED NOTES MAY BE WITHDRAWN AT ANY TIME NOT LATER THAN THE CLOSE OF
BUSINESS ON THE FIFTH BUSINESS DAY PRECEDING THE EXPIRATION DATE.
- - --------------------------------------------------------------------------------
May 13, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Phoenixstar, Inc., formerly known as PRIMESTAR, Inc., a Delaware
corporation (the "Company"), is offering to purchase all of its outstanding
10 7/8% Senior Subordinated Notes due February 15, 2007 (the "Senior
Subordinated Notes") and its 12 1/4% Senior Subordinated Discount Notes due
February 15, 2007 (the "Senior Subordinated Discount Notes" and together with
the Senior Subordinated Notes, the "Notes"), upon the terms and subject to the
conditions set forth in the Change of Control Offer, dated May 13, 1999, (as it
may be supplemented and amended from time to time, the "Offer to Purchase") and
the related Letter of Transmittal (which together constitute the "Offer"). All
capitalized terms used herein shall have the meaning set forth in the Offer to
Purchase.
The Notes referred to herein were originally issued by TCI Satellite
Entertainment, Inc.
Enclosed herewith are copies of the following documents:
1. The Change of Control Offer;
2. The Letter of Transmittal for the Notes for your use and for the
information of your clients, together with guidelines of the Internal
Revenue Service for Certification of Taxpayer Identification Number on
Substitute Form W-9 providing information relating to backup federal income
tax withholding;
<PAGE>
3. Notice of Guaranteed Delivery to be used to accept the Offer if
the Notes and all other required documents cannot be delivered to the
Depositary on or prior to the Expiration Date;
4. A form of letter which may be sent to your clients for whose
account you hold the Notes in your name or in the name of a nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer to Purchase;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. A return envelope addressed to the Depositary.
We urge you to contact your clients as promptly as possible.
DTC Participants will be able to execute tenders through the DTC Automated
Tender Offer Program (ATOP).
The Company will not pay any fees or commissions to any broker or dealer of
other person for soliciting tenders of the Notes pursuant to the Offer. You will
be reimbursed for customary mailing and handling expenses incurred by you in
forwarding the enclosed materials to your clients.
Additional copies of the enclosed materials may be obtained from the
Company, at the address and telephone number set forth on the back page of the
enclosed Offer to Purchase.
Very truly yours,
PHOENIXSTAR, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR THE DEPOSITARY OR AUTHORIZE YOU
OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF
OF ANY OF THEM WITH RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE
OR THE LETTER OF TRANSMITTAL.
<PAGE>
PHOENIXSTAR, INC.
(formerly known PRIMESTAR, INC.)
Offer To Purchase for Cash Any and All Outstanding
10 7/8% Senior Subordinated Notes due February 15, 2007
and 12 1/4% Senior Subordinated Discount Notes due February 15, 2007
(which were originally issued by TCI Satellite Entertainment, Inc.)
- - --------------------------------------------------------------------------------
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE 10, 1999, UNLESS
THE OFFER IS EXTENDED (JUNE 10, 1999 OR SUCH LATER DATE TO WHICH THE OFFER IS
EXTENDED BEING HEREINAFTER REFERRED TO AS THE "EXPIRATION DATE"). HOLDERS OF
NOTES MUST TENDER NOTES ON OR PRIOR TO THE EXPIRATION DATE (AND MUST NOT HAVE
WITHDRAWN SUCH NOTES) IN ORDER TO RECEIVE THE OFFER PRICE. TENDERED NOTES MAY BE
WITHDRAWN NOT LATER THAN THE CLOSE OF BUSINESS ON THE FIFTH BUSINESS DAY
PRECEDING THE EXPIRATION DATE.
- - --------------------------------------------------------------------------------
May 13, 1999
TO OUR CLIENTS:
Enclosed for your consideration is the Change of Control Offer, dated
May 13, 1999 (as it may be supplemented and amended from time to time, the
"Offer to Purchase") and the accompanying Letter of Transmittal (the "Letter of
Transmittal") relating to the offer (the "Offer") by Phoenixstar, Inc., formerly
known as PRIMESTAR, Inc., a Delaware corporation (the "Company") to purchase its
10 7/8% Senior Subordinated Notes due February 15, 2007 (the "Senior
Subordinated Notes") and its 12 1/4% Senior Subordinated Discount Notes due
February 15, 2007 (the "Senior Subordinated Discount Notes" and together with
the Senior Subordinated Notes, the "Notes") at a price per Note set forth in the
Offer to Purchase. Tenders of the Notes pursuant to the Offer will be accepted
only in denominations of $1,000 or integral multiples thereof. In the case of
any Holder whose Notes are purchased only in part, the Company shall execute and
the Trustee shall authenticate and deliver to the Holder of such Notes without
service charge, a new Note or Notes, of any authorized denomination as requested
by such Holder, in an aggregate principal amount (at maturity, in the case of
the Senior Subordinated Discount Notes) equal to and in exchange for the
unpurchased portion of the Notes so tendered. All capitalized terms used herein
shall have the meaning set forth in the Offer to Purchase.
We are the registered Holder of Notes held by us for your account. A
tender of any such Notes can be made only by us as the registered Holder and
pursuant to your instructions. The Letter of Transmittal is furnished to you for
your information only and cannot be used by you to tender Notes held by us for
your account.
Accordingly, we request instructions as to whether you wish us to tender
any or all such Notes held by us for your account, pursuant to the terms and
conditions set forth in the Offer to Purchase and the Letter of Transmittal. We
urge you to read the Offer to Purchase and the Letter of Transmittal carefully
before instructing us to tender your Notes.
<PAGE>
Your instructions to us should be forwarded as promptly as possible in
order to permit us to tender Notes on your behalf in accordance with the
provisions of the Offer. Notes tendered pursuant to the Offer may only be
withdrawn under the circumstances described in the Offer to Purchase.
Your attention is directed to the following:
1. The Offer constitutes an offer to purchase following the
occurrence of a change of control, pursuant to Section 4.14 of the Notes'
respective Indentures, each dated as of February 20, 1997, between TCI Satellite
Entertainment, Inc. ("TSAT") and The Bank of New York, as supplemented and
amended on April 1, 1998 (pursuant to which the Company assumed TSAT's
obligations for the Notes) and April 27, 1999 (each, an "Indenture" and
collectively, the "Indentures"). The Company has commenced the Offer in
connection with the Asset Purchase Agreement, dated as of January 22, 1999 (the
"Asset Purchase Agreement"), among the Company, PRIMESTAR Partners L.P.,
PRIMESTAR MDU, Inc., the stockholders of the Company named therein and Hughes
Electronics Corporation (the "Purchaser"), pursuant to which the Purchaser
agreed to acquire the Company's medium power direct broadcast satellite business
for aggregate consideration consisting of $1.1 billion in cash (subject to
adjustment based on the Company's closing working capital position, as provided
in the Asset Purchase Agreement) and 4,871,448 shares of the Class H Common
Stock of General Motors Corporation (collectively, the "Purchase Price"). The
sale of the Company's Medium Power Business, pursuant to the Asset Purchase
Agreement, was consummated on April 28, 1999. The assets sold to the Purchaser
pursuant to the Asset Purchase Agreement constitute substantially all the assets
of the Company and its subsidiaries, resulting in a Change of Control as defined
in Section 1.01 of the Indentures. Section 4.14 of the Indentures requires the
Company to make an Offer to Purchase all outstanding Notes within 20 days after
the Company undergoes a Change of Control. The purpose of the Offer is to
acquire all of the Company's outstanding Notes..
2. The Offer to Purchase and Letter of Transmittal.
3. Tendering holders may withdraw any tender of Notes at any time
at or prior to 5:00 p.m., New York City time, on the fifth business day
preceding the Expiration Date as provided in the Offer to Purchase.
4. Any transfer taxes incident to the transfer of Notes from the
tendering Holder to the Company will be paid by the Company, except as
provided in the Offer to Purchase and the instructions to the Letter of
Transmittal.
5. The Offer will expire at 5:00 p.m., New York City time, on
June 10, 1999, unless extended.
The Offer is being made to all record holders of Notes as of May 7, 1999
(the "Record Date") that were not party to the Lock-up Agreement, as defined in
the Offer to Purchase. The Company is not aware of any jurisdiction in which the
making of the Offer is prohibited by administrative or judicial action pursuant
to a state statute. If the Company becomes aware of any jurisdiction where the
making of the Offer is so prohibited, the Company will make a good faith effort
to comply with any such statute or seek to have such statute declared
inapplicable to the Offer. If, after such good faith effort, the Company cannot
comply with any applicable statute, the Offer will not be made to
2
<PAGE>
(nor will tenders be accepted from or on behalf of) the Holders in such
jurisdiction. In those jurisdictions where securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Company by one or more registered brokers or
dealers licensed under the laws of such jurisdiction. The Offer will not be
made, and will be deemed not to have been made, in those jurisdictions where
securities, blue-sky or other laws prohibit the Offer from being made.
If you wish to have us tender any or all of the Notes held by us for your
account, please so instruct us by completing, detaching and returning to us the
instruction form set forth on the next page. If you authorize a sale of your
Notes, the entire principal amount of Senior Subordinated Notes (or entire
principal amount at maturity of Senior Subordinated Discount Notes) held for
your account will be sold, unless otherwise specified below.
3
<PAGE>
Instruction With Respect to
PHOENIXSTAR, Inc.
(formerly known as PRIMESTAR, INC.)
Offer To Purchase for Cash Any and All Outstanding
10 7/8% Senior Subordinated Notes Due February 15, 2007 and
12 1/4% Senior Subordinated Discount Notes due February 15, 2007
The undersigned acknowledge(s) receipt of your letter and the enclosed
Change of Control Offer, dated May 13, 1999 (as it may be supplemented and
amended from time to time, the "Offer to Purchase") and the accompanying Letter
of Transmittal relating to the offer (the "Offer") by Phoenixstar, Inc.,
formerly known as PRIMESTAR, Inc., to purchase its 10 7/8% Senior Subordinated
Notes due February 15, 2007 (the "Senior Subordinated Notes") and its 12 1/4%
Senior Subordinated Discount Notes due February 15, 2007 (the "Senior
Subordinated Discount Notes" and together with the Senior Subordinated Notes,
the "Notes").
This will instruct you to accept the Offer with respect to the Notes
indicated below held by you for the account of the undersigned, upon the terms
and subject to the conditions set forth in the Offer to Purchase.
FOR SENIOR SUBORDINATED NOTES
Principal Amount of Senior Subordinated Notes
in Respect of Which the Offer is to be Accepted
- - --------------------------------
FOR SENIOR SUBORDINATED DISCOUNT NOTES
Principal Amount at Maturity of Senior Subordinated
Discount Notes in Respect of Which the Offer is to be
Accepted
- - --------------------------------
SIGN HERE
Dated: ________________ __, 1999 --------------------------------
Signature
--------------------------------
Signature
--------------------------------
--------------------------------
--------------------------------
Name(s) (Please Print)
Address and Zip Code
Area Code and Telephone No.
4
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer.--
Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-
0000. Employer identification numbers have nine digits separated by only one
hyphen: i.e. 00-0000000. The table below will help determine the number to give
the payer.
<TABLE>
<CAPTION>
- - ------------------------------------------------------- ----------------------------------------------------
Give the
Give the EMPLOYER
SOCIAL SECURITY IDENTIFICA-
For this type of account: number of-- For this type of account: TION number of
- - ------------------------------------------------------- ----------------------------------------------------
<S> <C> <C> <C>
1. Individual The individual 6. Sole proprietorship The owner(3)
2. Two or more individuals The actual owner of 7. A valid trust, estate, The legal entity (Do
(joint account) the account or, if or pension trust not furnish the
combined funds, the identifying number
first individual on of the personal
the account(l) representative or
trustee unless the
legal entity itself is
not designated in
the account title.)
(4)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor-trustee(l)
savings trust (grantor
is also trustee)
8. Corporate The corporation
b. So-called trust account The actual owner(l) 9. Association, club, The organization
that is not a legal or religious, charitable,
valid trust under state educational or other
law tax-exempt
organization
5. Sole proprietorship The owner(3) 10. Partnership The partnership
11. A broker or The broker or
registered nominee nominee
12. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a state
or local government,
school district, or
prison) that receives
agricultural program
payments
- - ------------------------------------------------------- ----------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner.
(4) List first and circle the name of the legal trust, estate, or pension trust.
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Section references are to the Internal Revenue Code
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service (the "IRS") and
apply for a number.
Payees Exempt from Backup Withholding
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in (1)
through (13) and a person registered under the Investment Advisers Act of 1940
who regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except that a corporation
(except certain hospitals described in Regulations section 1.6041-3(c)) that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends, and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under section 403(b)(7),
if the account satisfies the requirements of section 401(f)(2).
(3) The United States or any of its agencies or instrumentalities.
(4) A State, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends generally not subject to backup
withholding also include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Mortgage interest paid to you.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details see sections 6041, 6041(A), 6042, 6044, 6045,
6049, 6050A and 6050N, and the regulations under such sections.
Privacy Act Notice.--Section 6109 requires you to give your correct taxpayer
identification number to persons who must file information returns with the IRS
to report interest, dividends, and certain other income paid to you, mortgage
interest you paid, the acquisition or abandonment of secured property,
<PAGE>
cancellation of debt, or contributions you made to an IRA. The IRS uses the
numbers for identification purposes and to help verify the accuracy of your tax
return. You must provide your taxpayer identification number whether or not you
are required to file a tax return. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your correct taxpayer identification number to a payer,
you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect To Withholding.--If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99.4
PHOENIXSTAR, INC.
(FORMERLY KNOWN AS PRIMESTAR, INC.)
Notice of Change of Control
And
Notice of Supplemental Indenture
With respect to its 10 7/8% Senior Subordinated Notes due February 15, 2007 and
12 1/4% Senior Subordinated Discount Notes due February 15, 2007
(originally issued by TCI Satellite Entertainment, Inc.)
NOTICE IS HEREBY GIVEN to all record holders ("Holders"), as of May 7, 1999
(the "Record Date"), of 10 7/8% Senior Subordinated Notes due February 15, 2007
(the "Senior Subordinated Notes") and 12 1/4% Senior Subordinated Discount Notes
due February 15, 2007 (the "Senior Subordinated Discount Notes" and, together
with the Senior Subordinated Notes, the "Notes"), of Phoenixstar, Inc., formerly
known as PRIMESTAR, Inc., (the "Company"), that are not party to the Lock-up
Agreement (as defined herein), pursuant to Sections 4.14 and 10.02 of the Notes'
respective Indentures, each dated as of February 20, 1997, between TCI Satellite
Entertainment, Inc. ("TSAT") and The Bank of New York as Trustee (the
"Trustee"), as supplemented and amended by the First Supplemental Indentures,
each dated as of April 1, 1998 (pursuant to which the Company assumed TSAT's
obligations for the Notes) and the Second Supplemental Indentures, each dated as
of April 27, 1999 (each an "Indenture" and collectively, the "Indentures").
The Company entered into an Asset Purchase Agreement, dated as of January
22, 1999 (the "Asset Purchase Agreement") between the Company, PRIMESTAR
Partners L.P., PRIMESTAR MDU, Inc., the stockholders of the Company named
therein and Hughes Electronics Corporation (the "Purchaser"), pursuant to which
the Purchaser agreed to acquire the Company's medium power direct broadcast
satellite business (the "Medium Power Business") for aggregate consideration
consisting of $1.1 billion in cash (subject to adjustment based on the Company's
closing working capital position, as provided in the Asset Purchase Agreement)
and 4,871,448 shares of the Class H Common Stock of General Motors Corporation
(collectively, the "Purchase Price"). The sale of the Company's Medium Power
Business, pursuant to the Asset Purchase Agreement, was consummated on April 28,
1999. The assets sold to the Purchaser pursuant to the Asset Purchase Agreement
constituted substantially all the assets of the Company and its subsidiaries.
Change of Control Right
The consummation of the Asset Purchase Agreement constituted a "Change of
Control" under Section 4.14 of the Indentures. As a result, under the
Indentures, each Holder of the Notes as of the Record Date has the right (the
"Change of Control Right"), until 5:00 p.m., Eastern time, on June 10, 1999 (the
"Expiration Date"), to require the Company to purchase such Holder's Notes in
whole or in part in integral multiples of $1,000 at a purchase price payable in
cash in an amount equal to (i) 101% of the principal amount of each Senior
Subordinated Note, plus any accrued and unpaid interest accumulated thereon up
to the Purchase Date (as hereinafter defined), net to the seller in cash, and
(ii) 101% of the Accreted Value on the Purchase Date of each Senior Subordinated
Discount Note, net to the seller in cash (collectively the "Offer Price"). As
used herein, the term "Accreted Value" has the meaning ascribed to such term in
the Indenture governing the Senior Subordinated Discount Notes. The Notes will
be purchased by the Company in accordance with the terms and subject to the
conditions set forth in the Change of Control Offer, dated as of May 13, 1999
(as the same may be amended from time to time, the "Offer to Purchase") and the
related Letter of Transmittal and instructions thereto (the "Letter of
Transmittal") (which together constitute the "Offer"), copies of which are
enclosed herewith. Holders who tender Notes that are purchased pursuant to the
Offer shall be paid the Offer Price for such Notes promptly after the Expiration
Date, but in no event later than five business days after the Expiration Date
(the "Purchase Date"). On the Purchase Date the Offer Price will become due and
payable upon each Note being accepted for payment pursuant to the Offer to
Purchase. Interest shall cease to accrue on the Senior Subordinated Notes
accepted for purchase and the Accreted Value of all Senior Subordinated Discount
Nots accepted for purchase hereunder shall cease to accrete. In the case of any
Holder whose Notes are purchased only in part, the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Notes without
service charge, a new Note or Notes, of any authorized denomination as requested
by such Holder, in an aggregate principal amount (at maturity, in the case of
the Senior Subordinated Discount Notes) equal to and in exchange for the
unpurchased portion of the Notes so tendered. Each Note purchased and each such
new Note issued shall be in denominations of $1,000 and integral multiples
thereof. Anything contained herein to the contrary notwithstanding, the Company
shall not be required to accept, pursuant to the Offer to Purchase, from any
Holder that is a party to the Lock-up Agreement (as defined herein), any Notes
sold or required to be sold under the Lock-up Agreement.
For Notes to be validly tendered pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal or facsimile thereof, with any
required signature guarantees, or an Agent's Message, as defined in the Offer to
Purchase, in the case of a book-entry transfer, and all other documents
required by the Letter of Transmittal, must be received by The Bank of New York
(the "Depositary") at its address set forth on the back cover of the Offer to
Purchase, on or prior to the Expiration Date. In addition, either (i) Notes
must be received by the Depositary, together with the Letter of Transmittal, at
such address, or such Notes must be tendered pursuant to the procedures for
book-entry tender described in the Offer to Purchase and a Book-Entry
Confirmation received by the Depositary, in each case on or prior to the
Expiration Date, or (ii) the guaranteed delivery procedure described in the
Offer to Purchase must be complied with. Delivery of documents to an account
established by the Depositary at the Book-Entry Transfer Facility does not
constitute delivery to the Depositary. See "The Offer--Procedure for Tendering
Notes" in the Offer to
<PAGE>
Purchase for a more detailed description of the procedures that must be followed
in order to validly tender the Notes pursuant to the Offer.
Letter of Transmittals and Notes should be sent to the Depositary, and not
to the Company.
Tenders of Notes, pursuant to the Offer, may be withdrawn at any time at or
prior to 5:00 p.m., New York City time, on the fifth business day preceding the
Expiration Date. For a withdrawal of a tender of Notes to be effective, a
written or facsimile transmission notice of withdrawal must be received by the
Depositary at or prior to 5:00 p.m., New York City time, on the fifth business
day preceding the Expiration Date at its address set forth on the back cover of
the Offer to Purchase. Any such notice of withdrawal must (i) specify the name
of the person who tendered the Notes to be withdrawn, (ii) contain the
description of the Notes to be withdrawn and identify the CUSIP/certificate
number or numbers shown on the particular certificate evidencing such Notes
(unless such Notes were tendered by book-entry transfer) and the aggregate
principal amount represented by such Notes (in the case of Senior Subordinated
Notes) and the aggregate principal amount at maturity represented by such Notes
(in the case of Senior Subordinated Discount Notes) and (iii) be signed by the
Holder of such Notes in the same manner as the original signature on the Letter
of Transmittal by which such Notes were tendered (including any required
signature guarantees), if any, or be accompanied by (x) documents of transfer
sufficient to have the Trustee register the transfer of the Notes into the name
of the person withdrawing such Notes and (y) a properly completed irrevocable
proxy that authorized such person to effect such revocation on behalf of such
Holder. See "The Offer-Withdrawal Rights" in the Offer to Purchase for a more
detailed description of the procedures that must be followed in order to validly
withdraw tendered Notes.
Amendments to the Indentures Pursuant to the Second Supplemental Indentures
On April 20, 1999, the Company entered into a lock-up agreement (the "Lock-
up Agreement") with certain holders of its senior subordinated indebtedness,
including Holders of at least a majority in principal amount of each tranche of
the Notes. In connection with the Lock-up Agreement, such Holders consented to
amend the Indentures as set forth below.
On April 27, 1999, in accordance with Section 10.02 of each of the
Indentures, the Company amended the Indentures with the consent of the Holders
of at least a majority in principal amount of the Notes. Each of the Second
Supplemental Indentures became effective on the Note Purchase Closing Date (as
defined in the Lock-up Agreement), which is the date that the Company sold its
Medium Power Business, April 28, 1999. The Second Supplemental Indentures
eliminated the following sections of the Indentures: Section 4.03; Section 4.04;
Section 4.06; Section 4.07; Section 4.08; Section 4.09; Section 4.10; Section
4.15; Section 4.16; Section 4.17; Section 4.18; Section 4.21; Section 4.22;
Section 5.01; Section 5.02; Section 6.01(6); and Section 6.01(7). The
elimination of these sections served to eliminate substantially all of the
covenants in the Indentures other than the covenants to pay interest on and
principal of the Notes when due and covenants relating to the Company's
obligation to make an offer to purchase the Notes upon certain circumstances.
PHOENIXSTAR, INC.
May 13, 1999
