EXECUTION COPY COOPERATION AGREEMENT BY AND AMONG PEGASUS SATELLITE TELEVISION, INC.Cooperation Agreement |
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EXECUTION COPY
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COOPERATION AGREEMENT
BY AND AMONG
PEGASUS SATELLITE TELEVISION, INC.
on its own behalf and on behalf of its direct and indirect
subsidiaries that are Sellers under the Asset Purchase Agreement
AND
DIRECTV, INC.
Dated as of July 30, 2004
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS...................................................1
1.1 Certain Definitions...........................................1
1.2 Other Definitional and Interpretive Matters...................4
ARTICLE II OPERATIONAL MATTERS...........................................5
2.1 Working Teams.................................................5
2.2 Customer Account Migration....................................6
2.3 Customer Service Operations...................................7
2.4 Customer Billing and Collection Activities....................8
2.5 Sales and Distribution Activities; Retention and Upgrade;
Residence Servicing Activities................................8
2.6 Member Agreements.............................................9
2.7 Existing Migration Process....................................9
ARTICLE III COST REIMBURSEMENT...........................................10
3.1 Customer Offers Reimbursement................................10
3.2 Migration Plan Reimbursement.................................11
3.3 Customer Conversion Reimbursement............................11
3.4 Reimbursement Procedures.....................................11
ARTICLE IV POST-CLOSING TRANSITION......................................11
4.1 Transition Services..........................................11
4.2 Incentive Fee................................................12
ARTICLE V TERMINATION..................................................12
5.1 Bankruptcy Court Approval....................................12
5.2 Termination of Agreement.....................................12
5.3 Procedure Upon Termination...................................12
5.4 Effect of Termination........................................13
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE VI MISCELLANEOUS................................................14
6.1 Post-Petition Amounts Due from Pegasus to DIRECTV............14
6.2 Audit........................................................14
6.3 Expenses.....................................................14
6.4 Submission to Jurisdiction; Consent to Service of Process....14
6.5 Financial Dispute............................................15
6.6 Waiver of Right to Trial by Jury.............................15
6.7 Entire Agreement; Amendments and Waivers.....................15
6.8 Governing Law................................................15
6.9 Notices......................................................16
6.10 Severability.................................................17
6.11 Binding Effect; Assignment...................................17
6.12 Non-Recourse.................................................18
6.13 Counterparts.................................................18
6.14 Reservation of Rights........................................18
6.15 No Survival..................................................18
Schedule
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1.1 Customer Conversion Reimbursement
2.1(a) Working Teams
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COOPERATION AGREEMENT
COOPERATION AGREEMENT, dated as of July 30, 2004, by and among Pegasus
Satellite Television, Inc. ("PST") (on its own behalf and on behalf of its
direct and indirect subsidiaries that are Sellers under the Asset Purchase
Agreement (as defined below) (collectively with PST, "Pegasus")), and DIRECTV,
Inc., a California corporation ("DIRECTV").
WITNESSETH:
WHEREAS, Pegasus and certain of its Affiliates, each commenced a case
(collectively, the "Chapter 11 Case") under chapter 11 of title 11 of the United
States Code (the "Bankruptcy Code"), on June 2, 2004 by filing respective
voluntary petitions with the United States Bankruptcy Court for the District of
Maine (the "Bankruptcy Court");
WHEREAS, PST, Golden Sky Systems, Inc., other Affiliates of Pegasus and
DIRECTV have entered into an Asset Purchase Agreement, dated as of the date
hereof, as the same may be amended, modified or supplemented from time to time
in accordance with the terms and provisions thereof (the "Asset Purchase
Agreement") and Pegasus Satellite Communications, Inc., DIRECTV and certain
other parties have entered into the Settlement Agreement;
WHEREAS, the Asset Purchase Agreement, this Agreement and the
Settlement Agreement are integral, interdependent parts of an overall settlement
of the matters referred to in the Settlement Agreement; and
WHEREAS, certain terms used in this Agreement are defined in
Section 1.1.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. For purposes of this Agreement, the following
terms shall have the meanings specified in this Section 1.1:
"Actions" shall have the meaning set forth in the Settlement Agreement.
"Active Subscriber" shall have the meaning set forth in the Asset
Purchase Agreement.
"ADS Facility" shall have the meaning set forth in Section 2.3(a).
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"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, and the term
"control" (including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Cooperation Agreement, by and between PST and
DIRECTV (as the same may be amended, modified or supplemented from time to time
in accordance with the terms and provisions hereof).
"Approval Motion" shall have the meaning set forth in the Asset
Purchase Agreement.
"Asset Purchase Agreement" shall have the meaning set forth in the
Recitals hereto.
"Bankruptcy Code" shall have the meaning set forth in the Recitals
hereto.
"Bankruptcy Court" shall have the meaning set forth in the Recitals
hereto.
"Business Day" means any day of the year on which national banking
institutions in New York are open to the public for conducting business and are
not required or authorized to close.
"Chapter 11 Case" shall have the meaning set forth in the Recitals
hereto.
"Closing" shall have the meaning set forth in the Asset Purchase
Agreement.
"Closing Date" shall have the meaning set forth in the Asset Purchase
Agreement.
"Contact Persons" shall have the meaning set forth in Section 2.1(b).
"Covered Transaction" shall have the meaning set forth in the Asset
Purchase Agreement.
"Creditors' Committee" means the statutory committee of unsecured
creditors duly appointed in the Chapter 11 Case.
"Customer" means the customers of Pegasus for DIRECTV(R) services and
related services and products.
"Customer Conversion Reimbursement Amount" means an aggregate amount
equal to the product of (i) the Excess Migration Amount, (ii) $0.77, and (iii)
the number of days between the date of conversion and the Reference Date
calculated for each date from the date hereof (not including the date hereof)
until the Reference Date; provided, however, that in no event shall Sellers' owe
DIRECTV any money under this calculation. An illustrative calculation is set
forth on Schedule 1.1.
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"Customer Transfer" shall have the meaning set forth in Section 2.2(b).
"DIRECTV" shall have the meaning set forth in the Preamble hereto.
"Dispute Statement" shall have the meaning set forth in Section 6.5.
"Excess Migration Amount" means the amount obtained by subtracting (i)
twelve hundred fifty (1,250) from (ii) the number of Active Subscribers, who are
Qualified Subscribers as of the date hereof, that terminate existing accounts
with Pegasus and activate new accounts with DIRECTV on a given date between the
date hereof (not including the date hereof) and the Reference Date, such amount
to be determined on a daily basis. For any given day, such amount may be
positive, negative or zero.
"Existing Migration Process" shall have the meaning set forth in
Section 2.7(a).
"Governmental Body" means any government or governmental or regulatory
body thereof, or political subdivision thereof, whether foreign, federal, state
or local, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
"HSR Act" shall have the meaning set forth in the Asset Purchase
Agreement.
"Implementation Date" means the first day following the later of (i)
the granting of the Approval Order (as defined in the Asset Purchase Agreement)
and (ii) the expiration or termination of the HSR Act waiting period without any
governmental order enjoining the Closing.
"Incentive Fee" shall have the meaning set forth in Section 4.2.
"Member Agreements" means the NRTC/Member Agreements for Marketing and
Distribution of DBS Services (as amended, including in 1994) between Pegasus and
NRTC.
"Migration Plan" shall have the meaning set forth in Section 2.2(a).
"Migration Planning" shall have the meaning set forth in
Section 2.2(a).
"Net Service Obligations" shall have the meaning set forth in the Asset
Purchase Agreement.
"NRTC" means National Rural Telecommunications Cooperative, a District
of Columbia non-profit cooperative corporation.
"Pegasus" shall have the meaning set forth in the Preamble hereto.
"Person" means any individual, corporation, cooperative, partnership,
limited liability company, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, Governmental Body or other entity.
"PST" shall have the meaning set forth in the Preamble hereto.
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"Purchase Price" shall have the meaning set forth in the Asset Purchase
Agreement.
"Qualified Subscriber" shall have the meaning set forth in the Asset
Purchase Agreement.
"Referee" shall have the meaning set forth in the Asset Purchase
Agreement.
"Reference Date" means the date which is the earlier of September 15,
2004 and the Closing Date.
"Seamless Agreement" means the Revised Seamless Consumer Program, dated
as of October 3, 2001, as amended, among PST, Golden Sky Systems, Inc. and
DIRECTV.
"Sellers" shall have the meaning set forth in the Asset Purchase
Agreement.
"Settlement Agreement" shall have the meaning set forth in the Asset
Purchase Agreement.
"Subscriber List" shall have the meaning set forth in the Asset
Purchase Agreement.
"Transition Period" shall have the meaning set forth in Section 4.1.
"WARN Act" means the Worker Adjustment and Retraining Notification Act
of 1988.
"Working Teams" shall have the meaning set forth in Section 2.1(a).
1.2 Other Definitional and Interpretive Matters.
(a) Unless otherwise specified, for purposes of this
Agreement, the following rules of interpretation shall apply:
Calculation of Time Period. When calculating the period of time before
which, within which or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in calculating
such period shall be excluded unless otherwise expressly provided. If the last
day of such period is a non-Business Day, the period in question shall end on
the next succeeding Business Day.
Dollars. Any reference in this Agreement to "$" shall mean U.S.
dollars.
Schedules. The Schedules annexed hereto or referred to herein are
hereby incorporated in and made an integral part of this Agreement as if set
forth in full herein. Any capitalized terms used in any Schedule but not
otherwise defined therein shall be defined as set forth in this Agreement.
Gender and Number. Any reference in this Agreement to gender shall
include all genders, and words imparting the singular number only shall include
the plural and vice versa.
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Headings. The provision of the Table of Contents, the division of this
Agreement into Articles, Sections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement. All references in this
Agreement to any "Article" or "Section" of or "Schedule" to are to the
corresponding Article or Section of or Schedule to this Agreement.
Herein. The words such as "herein", "hereinafter", "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear.
Including. The word "including" or any variation thereof means
"including, without limitation" and shall not be construed to limit any general
statement that it follows to the specific or similar items or matters
immediately following it.
(b) The parties hereto have participated jointly in the
negotiation and drafting of this Agreement and, in the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as jointly drafted by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provision of this Agreement.
ARTICLE II
OPERATIONAL MATTERS
2.1 Working Teams.
(a) The Persons set forth on Schedule 2.1(a) will constitute
the "Working Teams". Each party hereto may make additions to the Working Teams
by providing notice to the other party. The Working Teams will be responsible
for managing the implementation of this Agreement, including formulating a plan
with respect to the following functional areas:
(i) Billing and IT infrastructure;
(ii) Customer service and Customer communications;
(iii) Customer residence servicing activities (such
as equipment servicing calls and equipment upgrade
activities);
(iv) Accounting and financial operations;
(v) Sales and marketing; and
(vi) Customer retention and churn minimization
tactics.
(b) Each party shall designate, within three (3) Business Days
of the date hereof, one person to coordinate all contacts and communications
between the parties regarding the implementation of this Agreement (the "Contact
Persons").
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(c) The Working Teams shall, in good faith, attempt to resolve
any disputes regarding the specific operations under, and timing or method of
implementation or interpretation of this Agreement. If the Working Teams cannot
reach a resolution within five (5) Business Days from the day a dispute first
arises, the dispute shall be referred to the Contact Persons for resolution. If
the Contact Persons cannot reach an agreement within five (5) Business Days of a
dispute being referred to them, such dispute shall be submitted to the
Bankruptcy Court in accordance with Section 6.4, provided, however, that in the
event that such dispute is a financial dispute, such dispute shall be submitted
to the Referee in accordance with Section 6.5. Pegasus and DIRECTV acknowledge
the necessity for such disputes to be adjudicated on an expedited basis and
agree that they will jointly request that the Bankruptcy Court schedule a
hearing on such matters on a shortened emergency basis and seek similar
expedited treatment from the Referee.
2.2 Customer Account Migration.
(a) Promptly after the date hereof, the Working Teams will
begin to develop a plan to migrate the Customers to align with DIRECTV's
business rules ("Migration Plan") that includes the process to implement such
plan (the "Migration Planning"). Business rules for the Migration Plan will
cover all aspects of the standard DIRECTV customer experience, including
standard DIRECTV programming packages, pricing and offers, equipment lease
rates, extended warranty provisions, Customer upgrades, Customer acquisition
costs and Customer retention and churn minimization tactics that may, at
DIRECTV's discretion and direction, vary from the standard DIRECTV offers and
rules.
(b) Pegasus Working Team members shall provide DIRECTV Working
Team members with such access, information and input as necessary for DIRECTV to
determine the most efficient approach for the transfer of Customers to DIRECTV
at the Closing or over such period of time after the Closing as directed by
DIRECTV (the "Customer Transfer").
