Document:

Exhibit 10.45

 

SATELLITE SALE AGREEMENT

 

between

 

Rainbow DBS Company LLC

 

and

 

EchoStar Satellite L.L.C.

 

 

Dated: January 20, 2005

 

Confidential and Proprietary

 

 

TABLE
OF CONTENT

 

	
  1.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  PURCHASE AND SALE

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Assets to be Transferred

  	
   

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Consideration

  	
   

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  The
  Closing

  	
   

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Deliveries at Closing

  	
   

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  2.6

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  CONDITIONS TO CLOSING

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Conditions to Obligation of Buyer

  	
   

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Conditions to Obligation of Rainbow DBS

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS, WARRANTIES AND COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Representations, Warranties and Covenants
  of Rainbow DBS

  	
   

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Representations, Warranties and Covenants
  of Buyer

  	
   

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Further Agreements of the Parties

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Termination of Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Effect of Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Survival

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  DISCLAIMER OF WARRANTIES, LIMITATION OF
  LIABILITY AND INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Disclaimer of Warranty

  	
   

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Limitation of Liability

  	
   

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  Indemnification Provisions for Benefit of
  Buyer

  	
   

  
	
   

  	
   

  	
   

  
	
  6.4

  	
  Indemnification Provisions for Benefit of
  Rainbow DBS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.5

  	
  Indemnification Procedure

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  ASSIGNMENT AND SUCCESSORS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Successors

  	
   

  

 

i

 

 

	
  8.

  	
  CONFIDENTIALITY

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Non-Disclosure

  	
   

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Proprietary
  Information

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Applicable Law, Attorney Fees, Entire
  Agreement and Effectiveness

  	
   

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  U.S. Export Control Laws

  	
   

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  No Third Party Beneficiary

  	
   

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  Non-Waiver of Breach

  	
   

  
	
   

  	
   

  	
   

  
	
  9.6

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  9.7

  	
  Headings

  	
   

  
	
   

  	
   

  	
   

  
	
  9.8

  	
  Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  9.9

  	
  Reconstitution

  	
   

  
	
   

  	
   

  	
   

  
	
  9.10

  	
  Counterparts
  and Facsimile Signatures

  	
   

  
	
   

  	
   

  	
   

  
	
  9.11

  	
  Specific
  Performance

  	
   

  

 

	
  Appendix A 

  	
  Satellite
  Performance Specifications

  	
   

  
	
   

  	
   

  	
   

  
	
  Appendix B 

  	
  Bill of Sale

  	
   

  
	
   

  	
   

  	
   

  
	
  Appendix C 

  	
  Test Plan

  	
   

  

 

ii

 

SATELLITE SALE AGREEMENT

 

This SATELLITE SALE AGREEMENT (this “Agreement”) is made and effective
as of this 20th day of January, 2005 (the “Execution Date”), by and between
Rainbow DBS Company LLC, a limited liability company organized under the laws
of the State of Delaware (“Rainbow DBS”), and EchoStar Satellite L.L.C., a
limited liability company organized under the laws of the State of Colorado (“Buyer”).  Buyer and Rainbow DBS are referred to
collectively herein as the “Parties” and individually as a “Party.”

 

RECITALS

 

WHEREAS, Rainbow DBS wishes to sell, and Buyer wishes to purchase, a
certain DBS satellite known as Rainbow-1 currently in geostationary orbit at
the 61.5o West Longitude orbital location (“Rainbow-1”) and certain other
assets relating to the ownership and operation of Rainbow-1, in accordance with
and subject to the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the respective promises herein
made; the representations, warranties, and covenants herein contained; and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:

 

1.                                      DEFINITIONS

 

In addition to the capitalized terms defined elsewhere herein, the
following terms shall have the following meanings:

 

1.1                                 “Acquired
Assets” means Rainbow-1, the Contract Rights, the Deliverable Data, the Ground
Equipment, and, except as provided in Section 2.1 with respect to the
Unlicensed Frequency Channels, the FCC Licenses.

 

1.2                                 “Acquired
Asset Material Adverse Effect” means a material adverse effect on the use by or
benefit to Buyer of any of the Acquired Assets, excluding any change or
development resulting from (i) events adversely affecting any of the principal
markets served by the businesses of Buyer or any of its Affiliates, or (ii)
general economic conditions, including changes in the economies of any of the
jurisdictions in which Buyer or any of its Affiliates conduct business.

 

1.3                                 “Actual
CONUS Beam Operational Capability” means, when Rainbow-1 is configured to
operate with the maximum number of CONUS beam Transponders, the sum of the
periods (expressed in years and/or portions thereof, measured from Closing and
determined based upon the results of the in-orbit testing contemplated pursuant
to Section 4.3.9) over which it is determined that each CONUS beam
Transponder operating in boost

 

1

 

mode will
remain an Operating Transponder, or until the end of the Remaining Mission
Life, whichever is earlier.  Actual CONUS
Beam Operational Capability shall be expressed in Transponder years (or
portions thereof), i.e., one (1)
CONUS beam Operating Transponder for one (1) year equals one (1) Transponder
year.

 

1.4                                 “Actual
Spot Beam Operational Capability” means, when Rainbow-1 is configured to
operate with the maximum number of spot beam Transponders, the sum of the
periods (expressed in years and/or portions thereof, measured from Closing and
determined based upon the results of the in-orbit testing contemplated pursuant
to Section 4.3.9) over which it is determined that each spot beam Transponder
will remain an Operating Transponder, or until the end of the Remaining Mission
Life, whichever is earlier.  Actual Spot
Beam Operational Capability shall be expressed in Transponder years (or
portions thereof), i.e., one
hundred thirty (130) spot beam Operating Transponders for one (1) year equals
one hundred thirty (130) Transponder years.

 

1.5                                 “Affiliate”
means, with respect to a specified Person, any other Person, directly or
indirectly, controlling, controlled by, or under common control with the Person
specified.  “Control” (including, with
correlative meaning, “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 a Person, whether through the
ownership of voting securities, by contract or otherwise.

 

1.6                                 “Agreement”
shall have the meaning set forth in the Preamble.

 

1.7                                 “Buyer”
shall have the meaning set forth in the preamble to this Agreement.

 

1.8                                 “Buyer
Material Adverse Effect” means a material adverse effect on the business,
assets, operations, prospects or condition (financial or otherwise) of Buyer
and its Affiliates, taken as a whole, excluding any change or development
resulting from (i) events adversely affecting any of the principal markets
served by the business of Buyer or any of its Affiliates or (ii) general
economic conditions, including changes in the economies of any of the
jurisdictions in which Buyer or any of its Affiliates conduct business.

 

1.9                                 “Closing”
shall have the meaning set forth in Section 2.3.

 

1.10                           “Communications
Act” means the Communications Act of 1934, as amended.

 

1.11                           “Consideration”
shall have the meaning set forth in Section 2.2.

 

1.12                           “Contract
Rights” means all rights and remedies of Rainbow DBS under the Lockheed
Contract, including any indemnities, warranty payments, support services,
Flight Operations (TT&C) and guarantees due from the manufacturer of
Rainbow-1 and its subcontractors, but excluding any obligations remaining to be
performed by Rainbow DBS under the Lockheed Contract.

 

2

 

1.13                           “DBS”
means direct broadcast satellite.

 

1.14                           “Deliverable
Data” means all specifications, technical drawings and data, design data, test
data and test results and other data and documentation regarding Rainbow-1
provided to Rainbow DBS by the manufacturer of Rainbow-1 and/or any of such
manufacturer’s subcontractors; all operational and maintenance logs and data
for Rainbow-1 generated or maintained by or for Rainbow DBS; and all data
regarding any and all anomalies identified on or experienced by Rainbow-1,
including without limitation the results of any anomaly investigations.

 

1.15                           “Execution
Date” shall have the meaning set forth in the preamble to this Agreement.

 

1.16                           “FCC”
means the Federal Communications Commission and any successor agency thereto.

 

1.17                           “FCC
Licenses” means (i) the permanent FCC authorization to construct, launch and
operate Rainbow-1 in the Direct Broadcast Satellite Service over 11 frequency
channels (1-21 odd) at the 61.5° West Longitude orbital location (FCC DBS8701);
(ii) the FCC special temporary authority to operate the Unlicensed Frequency
Channels at the 61.5° West Longitude orbital location (FCC File No.
SAT-STA-20030623-00122, extension requests pending, FCC File No.
SAT-STA-20040319-00081; SAT-STA-20040924-00191); and (iii) any application for
modification of any of the foregoing licenses that may be required to be filed
hereafter until Closing.

 

1.18                           “Governmental
Entities” shall have the meaning set forth in Section 3.1.2.

 

1.19                           “Ground
Equipment” means all personal property of Rainbow DBS situated on the real
property located in Black Hawk, South Dakota, referred to in Section 4.3.6.

 

1.20                           “Hart-Scott-Rodino
Act” or “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

 

1.21                           “Indemnified
Party” shall have the meaning set forth in Section 6.5.1.

 

1.22                           “Indemnitor”
shall have the meaning set forth in Section 6.5.1.

 

1.23                           “Liability”
means any liability or obligation of any nature (whether known or unknown,
whether absolute or contingent, whether liquidated or unliquidated, whether due
or to become due and whether accrued or unaccrued), including without
limitation any liability for Taxes.

 

1.24                           “Liens”
means any lien, mortgage, deed of trust, pledge, hypothecation, assignment,
security interest, charge, easement, encumbrance, preference, option,
restrictive covenant, priority or other security agreement or preferential
arrangement of any kind or nature

 

3

 

(including
without limitation any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).

 

1.25                           “Lockheed
Contract” mean the Contract between R/L DBS Company, LLC (now known as Rainbow
DBS) and Lockheed Martin Corporation for Rainbow-1, dated as of May 1, 2001, as
previously amended through the Execution Date.

 

1.26                           “Operating
Transponder” means a Transponder that, at Closing has been determined based
upon the results of the in-orbit testing contemplated pursuant to Section 4.3.9
to meet the applicable Satellite Performance Specifications, including through
periods of eclipse, or that Buyer, using reasonable business judgment, and
after examining all reasonable technical alternatives for correcting any
failures of such Transponder to meet the Satellite Performance Specifications,
determines can be used for its intended commercial communications purposes.  In the event a component of Rainbow-1 fails,
all applicable spare components available must be used before an affected
Transponder ceases to be an Operating Transponder.

 

1.27                           “Ordinary
Course of Business” means the ordinary course of business consistent with past
custom and practice (including without limitation with respect to quantity and
frequency), but in all events at least the same degree of care as would be
exercised by a reasonably prudent satellite owner and operator.

 

1.28                           “Partial
Loss” means that, at Closing and as determined based upon the results of the
in-orbit testing contemplated pursuant to Section 4.3.9, either Actual
CONUS Beam Operational Capability is less than Stated CONUS Beam Operational
Capability or Actual Spot Beam Operational Capability is less than Stated Spot
Beam Operational Capability, but in either case Rainbow-1 is not a Total Loss.

 

1.29                           “Person”
means an individual, partnership, trust, corporation, joint venture, limited
liability company, association, government bureau or agency or other entity of
whatever kind or nature.

 

1.30                           “Rainbow-1”
shall have the meaning set forth in the Recitals.

 

1.31                           “Rainbow
DBS” shall have the meaning set forth in the preamble to this Agreement.

 

1.32                           “Regulatory
Approvals” means (a) all approvals from the FCC (or a bureau or subdivision
thereof acting under delegated authority) required for the assignment of the
FCC Licenses provided that such approvals are effective, have not been stayed,
enjoined or reconsidered by the FCC or any bureau thereof or by any court, and
the period for such reconsideration by the FCC or any bureau thereof or by any
court has elapsed, and (b) the expiration or termination of the waiting period
(and any extensions thereof) with respect to this transaction under the HSR Act
or the entry of a final non-appealable consent judgment by a court of competent
jurisdiction that permits such transaction.

 

4

 

1.33                           “Regulatory
Provisions” means all applicable requirements of the Communications Act and the
published policies, rules, decisions, and regulations of the FCC, in each case
as amended from time to time.

 

1.34                           “Remaining
Mission Life” means fifteen (15) years minus the number of days between July 27,
2003 and the Closing.

 

1.35                           “Satellite
Performance Specifications” means the performance specifications for Rainbow-1
in the form of Appendix A hereto.

 

1.36                           “Stated
CONUS Beam Operational Capability” means, when Rainbow-1 is configured to
operate with the maximum number of CONUS beam Transponders, thirteen (13) CONUS
beam Operating Transponders operating in boost mode, multiplied by the
Remaining Mission Life, and expressed in Transponder years and/or portions
thereof.  For example, if the Remaining
Mission Life at Closing is twelve (12) years, the stated CONUS Beam Operational
Capability would equal one hundred fifty-six (156) CONUS beam Transponder
years.

 

1.37                           “Stated
Spot Beam Operational Capability” means, when Rainbow-1 is configured to
operate with the maximum number of spot beam Transponders, one hundred thirty
(130) spot beam Operating Transponders multiplied by the Remaining Mission
Life, and expressed in Transponder years and/or portions thereof.  For example, if the Remaining Mission Life at
Closing is twelve (12) years, the Stated Spot Beam Operational Capability would
equal one thousand five hundred sixty (1,560) spot beam Transponder years.

 

1.38                           “Survival
Date” shall have the meaning set forth in Section 5.3.

 

1.39                           “Taxes”
shall have the meaning set forth in Section 2.5.

 

1.40                           “Total
Loss” means that, at Closing and as determined based upon the results of the
in-orbit testing contemplated pursuant to Section 4.3.9, (i) the Actual
CONUS Beam Operational Capability of Rainbow-1 is equal to or less than
twenty-five percent (25%) of the Stated CONUS Beam Operational Capability of
Rainbow-1, (ii) the Actual Spot Beam Operational Capability of Rainbow-1 is
equal to or less than twenty-five percent (25%) of the Stated Spot Beam
Operational Capability of Rainbow-1, or (iii) the sum of the Actual CONUS Beam
Operational Capability and the Actual Spot Beam Operational Capability of
Rainbow-1 is equal to or less than twenty-five percent (25%) of the sum of the
Stated CONUS Beam Operational Capability and the Stated Spot Beam Operational
Capability of Rainbow-1.  In the event
that Rainbow-1 meets the criteria for a Total Loss, Buyer may exercise its
unilateral right nevertheless to declare a Partial Loss of Rainbow-1 instead of
a Total Loss of Rainbow-1, in which case the Consideration would be adjusted pursuant
to Section 4.3.11.

 

1.41                           “Transponder”
means, individually, those sets of equipment within the communications
subsystem of Rainbow-1 that provide a discrete path to receive communications
signals from Earth, translate and amplify such signals, and transmit them to
Earth.

 

5

 

1.42                           “TT&C”
means tracking, telemetry and control functions.

 

1.43                           “Unconditional”
with respect to any Regulatory Approvals or other consents means that such
Regulatory Approvals or other consents contain no conditions that would (a)
have a material adverse effect (i) on either Party’s ability to consummate the
transactions contemplated by this Agreement, or (ii) on Buyer’s ability to own
and operate the Acquired Assets after Closing, or (b) create any obligation on
the part of Buyer to accept (as a condition to receipt of such Regulatory
Approvals or otherwise): (i) any restriction on the right of Buyer to operate
pursuant to (A) the FCC Licenses (except with respect to the Unlicensed
Frequency Channels), (B) the DBS authorizations held by Buyer and its
Affiliates with respect to frequency channels at 61.5° W.L., 110° W.L., 119°
W.L., 148° W.L. or 157° W.L., or (C) its existing arrangement with Dominion
Video Satellite, Inc. for the use of certain DBS authorizations at 61.5° W.L.
(the “Dominion Arrangement”), including, without limitation, the right to use
all frequency channels (except the Unlicensed Frequency Channels) authorized
thereunder to provide high-powered DBS services, other than (1) any
restrictions generally imposed on operators of high-powered DBS services, by
applicable Regulatory Provisions and restrictions of the types generally and
customarily imposed by the FCC on operators of high-powered DBS services, and
(2) such other restrictions, which, individually or in the aggregate, do not
have an Acquired Asset Material Adverse Effect or a Buyer Material Adverse
Effect; or (ii) a requirement that Buyer dispose of all or any part of the 11
frequency channels at 61.5° W.L., the 29 frequency channels at 110° W.L., the
21 frequency channels at 119° W.L., the 32 frequency channels at 148° W.L., or
the 32 frequency channels at 157° W.L. (29 of which are pending at 157° W.L.)
owned by Buyer and its Affiliates, or the 6 frequency channels that Buyer is
authorized to use at 61.5° W.L. pursuant to the Dominion Arrangement, other
than (A) any restrictions generally imposed on operators of high-powered DBS
services, by applicable regulatory provisions and restrictions of the types
generally and customarily imposed by the FCC on operators of high-powered DBS
services, and (B) such other restrictions, which, individually or in the
aggregate, do not have an Buyer Material Adverse Effect.

 

1.44                           “Unlicensed
Frequency Channels” means DBS frequency channels 23 and 24 at the 61.5o West
Longitude orbital location that have not been assigned permanently by the FCC
and for which Rainbow DBS currently holds special temporary authority to
operate from the FCC (File Nos. SAT-STA-20030623-00122, SAT-STA-20040319-00081
and SAT-STA-20040924-00191 (extension requests pending)).

 

2.                                      PURCHASE AND SALE

 

2.1                                 Assets to be
Transferred.  At the Closing,
in accordance with and subject to the terms and conditions set forth in this
Agreement, Rainbow DBS agrees to sell, assign, transfer and convey to Buyer, or
at Buyer’s option, one or more Affiliates of Buyer, all of Rainbow DBS’ right,
title and interest in and to the Acquired Assets, free and clear of any and all
Liens; provided that if the FCC does not permit Rainbow DBS to assign the
portion of the FCC Licenses authorizing operation of the Unlicensed Frequency
Channels, or imposes any

 

6

 

conditions or
restrictions on such assignment of the Unlicensed Frequency Channels
whatsoever, (i) the Parties will proceed with the Closing on all other Acquired
Assets, (ii) there shall be no adjustment to the Consideration paid by Buyer
hereunder, and (iii) Rainbow DBS shall have no Liability arising out of the FCC’s
refusal to permit the assignment of the portion of the FCC Licenses authorizing
operation of the Unlicensed Frequency Channels or any conditions or
restrictions placed on such assignment of the Unlicensed Frequency
Channels.  Except for obligations arising
after Closing in the Ordinary Course of Business under the Contract Rights and
the FCC Licenses, Buyer will take the Acquired Assets free of, and Buyer is not
assuming any Liabilities of Rainbow DBS.

 

2.2                                 Consideration.  As consideration for the sale, assignment,
transfer and conveyance of the Acquired Assets hereunder, in accordance with
and subject to the terms and conditions set forth in this Agreement, Buyer
agrees to pay Rainbow DBS at Closing the sum of Two Hundred Million United
States Dollars ($200,000,000) subject to adjustment as set forth in Section 4.3.11
(the “Consideration”).

 

2.3                                 The Closing.  The closing of the transactions contemplated
by this Agreement (the “Closing”) shall occur at 9:00 a.m. local time on the
fifth (5th) business day following the date on which all conditions to closing
in Article 3 have been satisfied or waived, at the offices of Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Chrysler Center, 666 Third
Avenue, New York, NY  10017, or on such
other date or at such other time or place as the Parties may agree.

 

2.4                                 Deliveries at
Closing.

 

2.4.1                  Rainbow Deliveries.  At the Closing, Rainbow DBS shall deliver to
Buyer (i) a bill of sale in the form of Appendix B and other assignments and
instruments of transfer reasonably requested by Buyer, all in form and
substance reasonably acceptable to Buyer, transferring good and marketable
title to all of the Acquired Assets to Buyer, free and clear of any and all
Liens, (ii) a certificate dated as of the date of Closing, containing a true
and accurate description of the performance specifications of Rainbow-1 as of
the Closing, and as determined based upon the results of the in-orbit testing
contemplated pursuant to Section 4.3.9, (iii) the certificate specified in
Section 3.1.1, and (iv) the Deliverable Data.

 

2.4.2                        Buyer Deliveries.  At the Closing, Buyer shall deliver to
Rainbow DBS (i) the Consideration by wire transfer to an account designated in
writing by Rainbow DBS not less than five (5) business days prior to Closing,
and (ii) the certificate specified in Section 3.2.1.

 

2.5                                 Taxes.  Each Party shall pay for, and indemnify,
defend and hold the other Party harmless pursuant to Sections 6.3, 6.4 and 6.5
from and against, fifty percent (50%) of any and all taxes, charges, levies,
duties, usage or other fees (including, without limitation, value added taxes,
and other similar taxes and charges, if any) which may be asserted by any

 

7

Governmental Entity (collectively, “Taxes”) with
respect to the transfer of the Acquired Assets; with the sole exception that
FCC annual license fees for the calendar year in which the Closing occurs shall
be pro-rated between the Parties according to the proportion of such calendar
year that each Party owned the Acquired Assets. 
Notwithstanding the foregoing, neither Party shall be liable for any
taxes based upon or measured by the net income of the other Party.

 

2.6           Further
Assurances.  At any time and from time to time after the
Closing, at the request of Buyer and without further consideration, Rainbow DBS
will promptly execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation, and will, without delay, take such
further action, as may be reasonably requested in order to more effectively
transfer, convey and assign to Buyer, and to confirm Buyer’s title free and
clear of all Liens (other than Liens arising under contracts to which Buyer or
its Affiliates are a party) to, the Acquired Assets, and each of the Parties
shall execute such other documents and take such further action as may be
reasonably required or desirable to carry out the provisions of this Agreement
and the transactions contemplated hereby.

 

3.                                      CONDITIONS TO
CLOSING

 

3.1           Conditions to Obligation of Buyer. 
The obligation of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment, at or prior to Closing, of
each of the following conditions (unless waived by Buyer):

 

3.1.1        Representations,
Warranties and Covenants.  The
representations and warranties of Rainbow DBS contained in this Agreement shall
be true and correct in all material respects as of the Execution Date and the
Closing, and all the covenants contained in this Agreement to be complied with
by Rainbow DBS at or before the Closing shall have been complied with in all
material respects, and Buyer shall have received a certificate of Rainbow DBS
to such effect signed by a duly authorized officer of Rainbow DBS.

 

3.1.2        Compliance
with Law.  There shall be no
statute, law, judgment, decree, injunction, rule or order of any federal,
state, local or foreign government, governmental authority, governmental
department, commission, administrative or regulatory agency, instrumentality,
court or arbitrator (“Governmental Entities”) outstanding or in effect that
prohibits, restricts, conditions (except for conditions that, despite their
existence would make the matter Unconditional hereunder) or delays consummation
of the transactions contemplated by this Agreement.  There shall be no litigation pending that
would enjoin, restrain, condition (except for conditions that, despite their
existence would make the matter Unconditional hereunder), delay or prohibit the
consummation of the transactions contemplated by this Agreement.

 

3.1.3        Regulatory
Approvals.  The Parties shall
have received the Unconditional grant of all Regulatory Approvals, except for
any approval from the FCC to assign Rainbow DBS’ special temporary authority
with respect to the Unlicensed Frequency Channels.

 

 

8

 

3.1.4        Third
Party Consents.  Rainbow DBS
shall have obtained the necessary consent from Lockheed Martin Corporation to
assign the Contract Rights to Buyer.

 

3.1.5        Total
Loss.  No Total Loss shall
have occurred on or before the Closing.

 

3.1.6        In-orbit
Testing.  The in-orbit testing
contemplated by Section 4.3.9 below shall have been completed and the
report on such testing shall have been delivered as specified in
Section 4.3.9.

 

3.2           Conditions to Obligation of
Rainbow DBS.  The obligation of Rainbow DBS to consummate
the transactions contemplated by this Agreement shall be subject to the
fulfillment, at or prior to the Closing, of each of the following conditions
(unless waived by Rainbow DBS):

 

3.2.1        Representations,
Warranties and Covenants.  The
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects as of the Execution Date and the
Closing, and all the covenants contained in this Agreement to be complied with
by Buyer at or before the Closing shall have been complied with in all material
respects and Rainbow DBS shall have received a certificate of Buyer to such
effect signed by a duly authorized officer of Buyer.

 

3.2.2        Compliance
with Law.  There shall be no
statute, law, judgment, decree, injunction, rule or order of any Governmental
Entities outstanding or in effect that prohibits, restricts, conditions (except
for conditions that, despite their existence would make the matter
Unconditional hereunder) or delays consummation of the transactions
contemplated by this Agreement.  There
shall be no litigation pending that would enjoin, restrain, condition (except
for conditions that, despite their existence would make the matter
Unconditional hereunder), delay or prohibit the consummation of the
transactions contemplated by this Agreement.

 

3.2.3        Regulatory
Approvals.  The Parties shall
have received the Unconditional grant of all Regulatory Approvals, except for
any approval from the FCC to assign Rainbow DBS’ special temporary authority
with respect to the Unlicensed Frequency Channels.

 

3.2.4        Third
Party Consents.  Rainbow DBS
shall have obtained the necessary consent from Lockheed Martin Corporation to
assign the Contract Rights to Buyer.

 

4.                                      REPRESENTATIONS,
WARRANTIES AND COVENANTS

 

4.1           Representations, Warranties and
Covenants of Rainbow DBS.  Rainbow DBS
represents, warrants and covenants to Buyer as follows:

 

9

 

4.1.1        Organization
of Rainbow DBS.  Rainbow DBS
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware.  Rainbow DBS has all requisite power and authority
to own and operate the Acquired Assets as currently owned and operated by
it.  Rainbow DBS is duly qualified or
licensed as a foreign entity to conduct business, and is in good standing,
under the laws of each jurisdiction where the character of the properties
owned, leased or operated by it, or the nature of its activities, makes such
qualification or licensing necessary, except where the failure to do so would
not have a material adverse effect on its ability to consummate the
transactions contemplated by this Agreement.

 

4.1.2        Authority.  Rainbow DBS has all requisite power and
authority to execute and deliver this Agreement and the other documents
executed and delivered pursuant hereto, to perform its obligations hereunder
and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement
and the other documents executed and delivered pursuant hereto, the performance
of Rainbow DBS’ obligations hereunder and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary action on the
part of Rainbow DBS and no other proceedings are necessary in connection
therewith.  No vote of the holders of the
outstanding shares of any class of Rainbow DBS’ outstanding securities is necessary
to approve the consummation of the transactions contemplated by this Agreement.

 

4.1.3        Binding
Obligation.  This Agreement
and the other documents delivered pursuant hereto have been duly executed and
delivered by Rainbow DBS and constitute valid and binding obligations of
Rainbow DBS, enforceable against it in accordance with their terms.

 

4.1.4        No
Conflicts.  Except with
respect to matters that would not have a material adverse effect on Rainbow
DBS’ ability to consummate the transactions contemplated by this Agreement, the
execution and delivery of this Agreement and the other documents delivered
pursuant hereto do not, and the performance by the Rainbow DBS of its
obligations hereunder and the consummation of the transactions contemplated
hereby, will not (A) conflict with or result in any violation of, or default
(with or without notice or lapse of time, or both), or (B) give rise to any
right of termination, cancellation or acceleration of any obligation or to a
loss of a material benefit under, (i) any provision of Rainbow DBS’
organizational documents or those of any Affiliate of Rainbow DBS, (ii) any
material contract (including the Lockheed Contract) to which Rainbow DBS or any
of its Affiliates is a party, or (iii) subject to the governmental filings and
other matters referred to in Section 4.1.5, any permit, license,
franchise, statute, law, ordinance, rule, regulation, writ, injunction,
judgment, decree or order applicable to Rainbow DBS or any of its Affiliates,
or by which any of their respective properties or assets may be bound or
affected.  Except for any Liens arising
under contracts to which Buyer or its Affiliates are a party, the consummation
of the transactions contemplated by this Agreement will not result in any Liens
on the Acquired Assets.

 

10

 

4.1.5        Governmental
Consents.  No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Rainbow DBS or
any of its Affiliates in connection with the execution and delivery of this
Agreement and the other documents delivered pursuant hereto and the
consummation of the transactions contemplated hereby, except for (i) the
Unconditional grant of the Regulatory Approvals, and (ii) such consents,
approvals, orders or authorizations, or registrations, declarations or filings
which if not obtained or made will not, or could not reasonably be expected to,
adversely affect in any material respect the transactions contemplated by this
Agreement.

 

4.1.6        FCC
Licenses and Acquired Assets. 
Except for Rainbow DBS’ special temporary authorization for the
Unlicensed Frequency Channels for which requests for extension were timely
filed and are presently pending before the FCC, each of the FCC Licenses is
valid and in full force and effect and none of the FCC Licenses has been
modified, canceled, revoked, or conditioned, except for the conditions
expressly stated therein or which, despite their existence, would make the matter
Unconditional hereunder.  None of the
Acquired Assets has been sold, conveyed, pledged, assigned or transferred to
any other Person, and no Person (other than Buyer or Rainbow DBS) has any
present or future preemptive right, right of first refusal or other right to
acquire, license or use any of the Acquired Assets.  Rainbow DBS is the licensee under, and
controls, the FCC Licenses and is the owner of, and controls, the other
Acquired Assets.  The Acquired Assets are
not subject to any Liens.  Rainbow DBS
has timely and completely performed all material obligations required to date under the FCC Licenses.  Rainbow DBS has taken all required actions to
date to achieve international coordination of the Acquired Assets, including,
without limitation, cooperating with the FCC in filing and prosecuting all
necessary modifications to the International Telecommunication Union’s Region 2
Broadcasting-Satellite Service Plan and associated feeder link plan set forth
at Appendices 30 and 30A to the International Radio Regulations, including
TT&C for the system, and such Acquired Assets have been designed and are in
compliance with, and Rainbow DBS has been, and is, in compliance with, all
material obligations required to date under the FCC Licenses and the applicable
Regulatory Provisions.  Rainbow DBS is
not aware of any facts or circumstances relating to the FCC qualifications of
Rainbow DBS or any of its Affiliates or otherwise, or to the International
Telecommunication Union’s coordination process, that would prevent or
materially delay the Unconditional grant of the relevant Regulatory Approvals
by the FCC or the modification of the International Telecommunication Union’s
Region 2 Broadcasting-Satellite Service Plan and associated feeder link plan.  Except for Rainbow DBS’ pending applications
to extend its temporary authority for the Unlicensed Frequency Channels, there
is no pending, or, to the knowledge of the Rainbow DBS, threatened,
application, petition, objection or other pleading with the FCC or other Governmental
Entity which challenges the validity of, or any rights of the holder under, the
FCC Licenses and no pending or, to the knowledge of Rainbow DBS, threatened FCC
enforcement proceeding is underway regarding the FCC Licenses.  Rainbow DBS and its Affiliates have been and
are in compliance with the Communications Act and the rules and regulations of
the FCC, except where such non-compliance could not reasonably be

 

11

 

expected to have a material adverse effect on the
transactions contemplated by this Agreement.

 

4.1.7        Compliance
with Laws .  Rainbow DBS and
its Affiliates, and their ownership and operation of the Acquired Assets, have,
at all times, been and are in compliance with all, federal, state, local and
foreign statutes, laws, rules, regulations, judgments, orders, writs,
injunctions and decrees, and are not in violation of, and have not received any
actual or, to the knowledge of Rainbow DBS, threatened claim or notice of
violation of, any such statutes, laws rules, regulations, judgments, orders,
writs, injunctions and decrees with respect to the conduct of its business
related to, or the ownership and operation of, the Acquired Assets, except for
such instances of non-compliance or violation, if any, which could not
reasonably be expected to have a material adverse effect on the transactions
contemplated by this Agreement.  Rainbow
DBS and its Affiliates have complied with, and Rainbow-1 has been designed and
constructed in compliance with, all material Regulatory Provisions applicable
to the Acquired Assets.

 

4.1.8        Agreements,
Contracts and Commitments. 
Rainbow DBS has supplied to Buyer true, complete (excluding certain
redactions required by Lockheed Martin Corporation) and correct copies of all
agreements containing Contract Rights, and each such agreement is in full force
and effect and is the valid and legally binding obligation of Rainbow DBS,
Rainbow DBS’ Affiliates and the other parties thereto, enforceable in
accordance with their respective terms, and, subject to obtaining the consent
of Lockheed Martin Corporation, is freely and fully assignable to Buyer free
and clear of all Liens without penalty or other adverse consequences.  Neither Rainbow DBS, Rainbow DBS’ Affiliates
nor, to the knowledge of Rainbow DBS or Rainbow DBS’ Affiliates, any other
party to such agreement is in breach of, or default under, any such
agreement.  Neither Rainbow DBS nor
Rainbow DBS’ Affiliates has received or delivered any notice of default under
any such agreement and no event, occurrence or condition exists which, with the
passage of time or the giving of notice or both, would constitute a default
under any such agreement by Rainbow DBS, Rainbow DBS’ Affiliates or to Rainbow
DBS’ knowledge, any other party thereto. 
Neither Rainbow DBS nor Rainbow DBS’ Affiliates has received notice of
the pending or threatened cancellation, modification, revocation or termination
of any such agreement, nor does Rainbow DBS have knowledge of any facts or
circumstances which could reasonably be expected to lead to any such
cancellation, modification, revocation or termination.  Rainbow DBS has performed all of its required
obligations under the Lockheed Contract and, between the Execution Date and the
Closing, will not (i) terminate the Lockheed Contract or (ii) amend or modify
the Lockheed Contract in a manner that would have a material adverse effect on
the Contract Rights.  Rainbow DBS has the
Contract Right to require Lockheed Martin Corporation to provide Flight
Operations (as defined in the Lockheed Contract) for Rainbow-1 in accordance
with the terms and conditions of the Lockheed Contract at no additional charge
through August 28, 2005.

 

4.1.9        Acquired
Assets.  Rainbow DBS has made
available and, between now and the Closing will continue to make available to
Buyer, at Rainbow DBS’ offices, and will deliver to Buyer at Closing, all
Deliverable Data related to Rainbow-1, all waivers and

 

12

 

deviations from the Rainbow-1 performance
specification approved by Rainbow DBS, all variations from the Satellite
Performance Specifications occurring and observed on Rainbow-1, all anomalies
occurring and observed on Rainbow-1 since its launch and all actions taken with
respect thereto.  The health and
operational reports provided to Buyer regarding the status of Rainbow-1
pursuant to Section 4.3.3 are the originals, or true and correct copies
of, the health and operational reports delivered to Rainbow DBS by Lockheed
Martin Corporation.  Rainbow-1 and the
other Acquired Assets has not been sold, conveyed, pledged, assigned or
transferred to any other Person, and no Person (other than Buyer or Rainbow
DBS) has any right to acquire, or has any other economic interest in, Rainbow-1
and the other Acquired Assets.  No other
Person except Rainbow DBS has rights to access or use the Acquired Assets.  None of the Acquired Assets is subject to any
Liens, and, upon Closing, Buyer shall acquire good and marketable title to the
Acquired Assets, free and clear of any Liens. 
From the date of its acquisition of Rainbow-1, Rainbow DBS has, or has
caused, Rainbow-1 to be operated and maintained in accordance with the
requirements of Rainbow-1’s manufacturer and pursuant to procedures and
processes that meet general standards in the industry for the operation and
maintenance of communications satellites. 
Rainbow DBS owns Rainbow-1 free and clear of any Liens.

 

4.1.10      Litigation.  There is no suit, action, arbitration, claim,
governmental or other proceeding or investigation before any Governmental
Entity pending or, to the knowledge of the Rainbow DBS, threatened, against
Rainbow DBS or any of its Affiliates related to the Acquired Assets or the
transactions contemplated by this Agreement which, if decided adversely could
reasonably be expected to have a material adverse effect on Rainbow DBS’
ability to consummate the transactions contemplated by this Agreement.  There are no agreements with any taxing
authority with respect to the taxation of the Acquired Assets or income
therefrom.

 

4.1.11      Performance
Specifications.  The Satellite
Performance Specifications attached as Appendix A hereto (Docket No. 8584123,
Revision B, June 20, 2002, issued and released August 19, 2002) is
the revision of the Rainbow-1 satellite performance specifications in effect on
the Execution Date, under the Lockheed Contract, and includes all waivers and
deviations that have been approved by Rainbow DBS as of the Execution Date.

 

4.1.12      Brokers’
Fees.  Except with respect to
Morgan Stanley representing an Affiliate of Rainbow DBS, neither Rainbow DBS
nor any of its Affiliates has any Liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.  In no event
would Buyer be liable for any fees to Morgan Stanley.

 

4.2           Representations, Warranties and
Covenants of Buyer.  Buyer represents, warrants and
covenants to Rainbow DBS as follows:

 

13

 

4.2.1        Organization
of Buyer.  Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Colorado.  Buyer
is duly qualified or licensed as a foreign entity to conduct business, and is
in good standing, under the laws of each jurisdiction where the character of
the properties owned, leased or operated by it, or the nature of its
activities, makes such qualification or licensing necessary, except where the
failure to do so would not have a material adverse effect on its ability to
consummate the transactions contemplated by this Agreement.

 

4.2.2        Authority.  Buyer has all requisite power and authority
to execute and deliver this Agreement and the other documents executed and
delivered pursuant hereto, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.  The execution and delivery of this Agreement
and the other documents delivered pursuant hereto, the performance of Buyer’s
obligations hereunder and the consummation of the transactions contemplated
hereby, have been duly authorized by all necessary action on the part of the
Buyer and no other proceedings are necessary in connection therewith.  No vote of the holders of the outstanding
shares of any class of Buyer’s outstanding securities is necessary to approve
the consummation of the transactions contemplated by this Agreement.

 

4.2.3        Binding
Obligation.  This Agreement
and the other documents delivered pursuant hereto have been duly executed and
delivered by Buyer and constitute valid and binding obligations of Buyer,
enforceable against it in accordance with their terms.

 

4.2.4        No
Conflicts.  Except with
respect to matters that would not have a material adverse effect on Buyer’s
ability to consummate the transactions contemplated by this Agreement, the
execution and delivery of this Agreement and the other documents delivered
pursuant hereto do not, and the performance by Buyer of its obligations
hereunder and the consummation of the transactions contemplated hereby, will
not (A) conflict with or result in any violation of, or default (with or
without notice or lapse of time, or both), or (B) give rise to any right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit under (i) any provision of Buyer’s organizational documents or
those of any Affiliate of Buyer, (ii) any material contract to which Buyer or
any of its Affiliates is a party, or (iii) subject to the governmental filings
and other matters referred to in Section 4.2.5, any permit, license,
franchise, statute, law, ordinance, rule, regulation, writ, injunction,
judgment, decree or order applicable to Buyer or any of its Affiliates, or by
which any of their respective properties or assets may be bound or affected.

 

4.2.5        Governmental
Consents.  No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Buyer or any of
its Affiliates in connection with the execution and delivery of this Agreement
and the other documents executed and delivered pursuant hereto, and the
consummation of the transactions contemplated hereby, except for:  (i) the Unconditional grant of the Regulatory
Approvals and (ii) such consents, approvals, orders or authorizations, or
registrations, declarations or filings which if not obtained or made, will not
or could not

 

14

 

reasonably be expected to have a material adverse
effect on Buyer’s ability to consummate the transactions contemplated by this
Agreement.

 

4.2.6        Compliance
with Laws .  Buyer and its
Affiliates have, at all times, been and are in compliance with all federal,
state, local and foreign statutes, laws, rules, regulations, judgments, orders,
writs, injunctions and decrees, and are not in violation of and have not
received any written claim or notice of violation of, any such statutes, laws,
rules, regulations, judgments, orders, writs, injunctions and decrees with
respect to the conduct of its business related to the acquisition and operation
of the Acquired Assets, except for such instances of non-compliance or
violation, if any, which could not reasonably be expected to havea material
adverse effect on Buyer’s ability to consummate the transactions contemplated
by this Agreement.

 

4.2.7        Litigation.  There is no suit, action, arbitration, claim,
governmental or other proceeding or investigation before any Governmental
Entity pending or, to the knowledge of the Buyer, threatened, against Buyer or
any of its Affiliates related to the Acquired Assets or the transactions
contemplated by this Agreement which, if decided adversely, could reasonably be
expected to have a material adverse effect on Buyer’s ability to consummate the
transactions contemplated by this Agreement.

 

4.2.8        FCC
Licenses.  There is no
pending, or, to the knowledge of Buyer, threatened, application, petition,
objection or other pleading with the FCC or other Governmental Entity which
challenges the ability of Buyer to acquire the FCC Licenses, other than the FCC
Order, FCC 04-271, released December 3, 2004, in AUC 03-52, relating to
the Unlicensed Frequencies.  To the
knowledge of Buyer there are no circumstances 
or actual or threatened actions that could result in the imposition of
any conditions (other than those deemed Unconditional hereunder) in connection
with the Regulatory Approvals.  Buyer and
its Affiliates have been and are in compliance with the Communications Act and
the rules and regulations of the FCC, except where such non-compliance could
not reasonably be expected to have a material adverse effect on Buyer’s ability
to consummate the transactions contemplated by this Agreement.

 

4.2.9        Brokers’
Fees.  Neither Buyer nor any
of its Affiliates has any Liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement for which Rainbow DBS would be liable.

 

4.3           Further Agreements of the Parties.

 

4.3.1        General.  Each of the Parties will cooperate to its fullest
extent and use its respective best efforts to take all action and to do all
things necessary, proper, or advisable to consummate and make effective the
transactions contemplated by this Agreement (including without limitation
satisfying the closing conditions set forth in Article 3 above) as soon as
practicable following the date of this Agreement.

 

15

 

4.3.2        Application
for Government Approvals. 
Within ten (10) days of the Execution Date, the Parties shall jointly
file all applications necessary for the Unconditional grant of the Regulatory
Approvals.  In addition to, but not in
limitation of the Parties’ obligations under Section 4.3.1 above, each of
Buyer and Rainbow DBS shall take all steps, and shall supply to the other Party
and/or to Governmental Entities all information reasonably necessary to obtain
the Unconditional grant of the Regulatory Approvals.  The Parties shall split the costs of any
filing fees necessary in connection with the joint application for the
Regulatory Approvals.

 

4.3.3        Ongoing
Data.  After the date hereof
and until the Closing, Rainbow DBS shall deliver to Buyer (i) prompt notice of
any anomalies on Rainbow-1, or of any anomaly notice or alert from the
manufacturer of Rainbow-1, and (ii) monthly health and operational reports
reflecting the performance of Rainbow-1, and any anomalies thereto, during the
preceding month.

 

4.3.4        Operation
of Rainbow-1.  Title to and
risk of loss of the Acquired Assets shall remain with Rainbow DBS until
Closing, and at Closing shall transfer to Buyer.  After the date hereof and until the Closing,
Rainbow DBS shall cause Rainbow-1 to be operated and maintained (including the
provision of TT&C) in accordance with the FCC Licenses and all applicable
laws, rules and regulations, and with the same degree of diligence and care
that a reasonably prudent satellite owner and operator would use.

 

4.3.5        TT&C.  Commencing sixty (60) days prior to the later
to occur of August 28, 2005 or the scheduled Closing, Rainbow DBS shall
coordinate with Buyer and the manufacturer of Rainbow-1 (which currently
provides TT&C for Rainbow-1) to transition in a safe and effective manner
the TT&C, operation and maintenance of Rainbow-1 on the later to occur of
August 28, 2005 or the date of Closing, and, effective as of the later to
occur of August 28, 2005 or the date of Closing, the TT&C, operation
and maintenance of Rainbow-1 shall be the responsibility of Buyer.

 

4.3.6        Black
Hawk Facilities.  Within five
(5) business days after the execution of this Agreement, Rainbow DBS and Buyer
will enter into a Letter Agreement regarding property located in Black Hawk,
South Dakota, currently owned by Rainbow DBS and used by Rainbow DBS to support
telemetry, tracking and control (“TT&C”) and beacon tracking for Rainbow-1
(the “Black Hawk Facilities”).  If the
closing of the transactions under such agreement (the “Black Hawk Closing”)
does not occur simultaneous with the Closing under this Agreement, Rainbow DBS
will permit Buyer, the manufacturer of Rainbow-1 or any other third-party
designated by Buyer (as applicable) to use, from the Closing until the earlier
of the Black Hawk Closing or one (1) year after the Closing hereunder, the
Black Hawk Facilities to support the provision of TT&C and beacon tracking
for Rainbow-1.  Buyer will reimburse
Rainbow DBS on a monthly basis for that portion of the operating costs of the
Black Hawk Facility incurred by Rainbow DBS that
are reasonably allocable to supporting TT&C and beacon tracking for Rainbow-1.  If, at the end of such one (1) year period,
the Black Hawk Closing has

 

16

 

still not occurred, Buyer shall cease all use of the
Black Hawk Facilities and Buyer shall remove the Ground Equipment from the
Black Hawk property.  Except in the case
of gross negligence or willful misconduct, Rainbow DBS will have no liability
whatsoever for any damage or loss to Rainbow-1 after Closing resulting from any
malfunction or improper operation of the Black Hawk Facilities during any
period that Buyer is using the Black Hawk Facilities under this
Section 4.3.6.  After the Black Hawk
Closing, Rainbow DBS shall have no further obligations or liabilities to Buyer
under this Section 4.3.6.

 

4.3.7        Conduct
of Business.  Rainbow DBS
covenants and agrees that, during the period between the date hereof and the
Closing, unless Buyer shall otherwise agree in writing, the business of Rainbow
DBS as it relates to the Acquired Assets shall be conducted in, and Rainbow DBS
shall not take any action regarding the Acquired Assets except in, the Ordinary
Course of Business or in connection with the winding down of Rainbow DBS’
direct-to-home satellite television business. Rainbow DBS shall enforce its
Contract Rights and will not modify the Contract Rights or take any other
action that could reasonably result in a material adverse effect on the
transactions contemplated by this Agreement. 
Rainbow DBS shall deliver to Buyer promptly any and all notices and
copies of all written communications with the FCC or other Governmental
Entities related to the Acquired Assets.

 

4.3.8        Cooperation;
Consents.  Each Party
covenants and agrees that, during the period between the date hereof and the
Closing, it shall cooperate with the other and use its best efforts to (i)
cause the conditions to Closing set forth in Article 3 to be satisfied;
and (ii) obtain any required governmental and third party consents and make and
obtain effectiveness of all filings necessary for the consummation of the transactions
contemplated hereunder.

 

4.3.9        In-Orbit
Testing and  Test Plan.  Commencing as soon as reasonably practicable
after the receipt of all Regulatory Approvals, Rainbow DBS, with the assistance
of Lockheed Martin Corporation, shall conduct an in-orbit test of Rainbow-1 in
accordance with the test plan attached hereto as Appendix C to ascertain (i)
the then-current performance of Rainbow-1 vis-à-vis the Spacecraft Performance
Specifications, and (ii)  the Actual
CONUS Beam Operational Capability and the Actual Spot Beam Operational
Capability based on such performance, including without limitation the
performance of the solar arrays, batteries, propulsion system and
communications payload of Rainbow-1.  It
is anticipated that such in-orbit testing can be completed in no more that two
(2) days.  Buyer may observe such
in-orbit tests at the test facility.  At
the conclusion of the test, Rainbow DBS, with assistance of Lockheed Martin Corporation,
shall deliver a report on the test results to Buyer which report shall state
the Actual CONUS Beam Operational Capability and the Actual Spot Beam
Operational Capability based on the results of the in-orbit tests.

 

4.3.10      Special
Provision Relating to Total Loss. 
In the event that a Total Loss of Rainbow-1 occurs at or before the
Closing, Buyer shall have the right, in its sole discretion for any reason or
no reason, to terminate this Agreement in accordance with the provisions of
Section 5.1(iii) below.

 

17

 

4.3.11      Special
Provision Relating to Partial Loss. 
In the event that a Partial Loss of Rainbow-1 occurs at or before the
Closing, the Parties shall proceed with Closing, but the Consideration shall be
reduced in accordance with the following formula:

 

	
  R = (

  	
  a - b

  	
  X $100 Million)
  + (

  	
  x - y

  	
  X $100 Million) 

  	
   

  
	
  a

  	
  x

  

 

	
  Where

  	
   

  	
  R

  	
   

  	
  =

  	
   

  	
  Amount of Reduction in Consideration

  
	
   

  	
   

  	
  a

  	
   

  	
  =

  	
   

  	
  Stated CONUS Beam Operational Capability

  
	
   

  	
   

  	
  b

  	
   

  	
  =

  	
   

  	
  Actual CONUS Beam Operational Capability

  
	
   

  	
   

  	
  x

  	
   

  	
  =

  	
   

  	
  Stated Spot Beam Operational Capability

  
	
   

  	
   

  	
  y

  	
   

  	
  =

  	
   

  	
  Actual Spot Beam Operational Capability

  

 

If, at Closing, the Parties are not in agreement as to
the Actual CONUS Beam Operational Capability and/or the Actual Spot Beam
Operational Capability of Rainbow-1 and the amount of any reduction in the
Consideration pursuant to this Section 4.3.11, the Parties will proceed to
Closing, the undisputed amount of the Consideration shall be paid to Rainbow
DBS, and the dispute shall be submitted to binding arbitration as described
below.  Within ten (10) days after
Closing, each Party will select one (1) arbitrator who is independent (i.e., does not have an affiliation to
either Party) and experienced in communications satellite manufacturing and
operations and the two (2) arbitrators will be instructed to select a third
independent arbitrator with similar qualifications within ten (10) additional
days.  The arbitration will be governed
by the rules of the American Arbitration Association, will be conducted in
Chicago, Illinois, and the decision of the arbitrators as to the Actual CONUS
Beam Operational Capability and the Actual Spot Beam Operational Capability
will be final and binding on the Parties. 
The Parties will cooperate with each other in order to commence the
arbitration hearing no later than thirty (30) days after selection of the three
(3) arbitrators.  No discovery shall be
permitted and the Parties will instruct the arbitrators to complete the
arbitration process and render a decision within sixty (60) days after
commencement of the arbitration.  The
arbitrators’ decision shall be final and shall be binding and enforceable in a
court of competent jurisdiction.  In the
event that the Arbitrator’s decision finds that all or a portion of the
disputed amount is owing to Rainbow DBS from Buyer, then within five (5) days
after the release of any arbitrators’ decision hereunder, Buyer will pay to
Rainbow DBS the amount of the disputed Consideration, if any, determined in
accordance with the arbitrators’ decision to be owed to Rainbow DBS.

 

4.3.12      No Solicitation.  Except for the transactions contemplated by
this Agreement, from and after the date of the Execution Date, until the date
of receipt of the Regulatory Approvals, Rainbow DBS shall not, nor shall it
authorize any officer, director or employee of, or any investment banker,
attorney, accountant, or other representative retained by, any one of them to,
directly or indirectly, solicit, initiate, participate in, encourage or
entertain (including by way of furnishing information) discussions, offers or
proposals for the

 

18

 

purpose or with the intention of leading to any
proposal or offer from any Person to acquire any portion of the Acquired
Assets.

 

4.3.13      Special
Provision Relating to Insurance.

 

(a)           At the request of Buyer, Rainbow DBS,
using International Space Brokers (ISB) or such other broker as may be
designated by Buyer from time to time as its broker, shall obtain quotes for
in-orbit insurance for Rainbow-1 covering the period from and after the
Execution Date through and including Closing (or any portion of such period) on
such terms and conditions (including without limitation the sum insured) as
Buyer may from time to time request.  In
the event that Buyer, in its sole discretion, elects to accept one of the
quotes obtained by Rainbow DBS, then Buyer shall direct Rainbow DBS in writing
to procure such insurance (the “Insurance Policy”) at Buyer’s expense.  Upon Rainbow DBS’s receipt of such written request,
Rainbow DBS shall promptly procure the Insurance Policy and Buyer will pay to
Rainbow DBS, or directly to the underwriters and/or insurers, as applicable
under the Insurance Policy all amounts due under such Insurance Policy.

 

(b)           Buyer shall be the named insured and
loss payee under any insurance policy placed by Rainbow DBS under this
Section 4.3.13.  In the event that,
notwithstanding the foregoing, any loss is paid to Rainbow DBS under the
Insurance Policy, then Rainbow DBS agrees to hold such amounts in trust for
Buyer and to pay such amounts to Buyer as soon as reasonably practicable (and
in any event within three (3) business days) after Rainbow DBS receives the
corresponding payment from the insurers. 
Notwithstanding the foregoing, Rainbow DBS shall reasonably cooperate
with Buyer in recovering all amounts due from the insurers under the Insurance
Policy, in which case Buyer shall be entitled to direct and control any
litigation and settlement negotiations arising in connection therewith and
Buyer shall (whether incurred by Buyer or Rainbow DBS) pay all costs of
litigation and administrative costs and expenses, including attorney’s fees,
incurred in connection with the prosecution of any such litigation.  Buyer shall comply with all material terms
and conditions in the Insurance Policy necessary for the payment of claims,
including any terms and conditions relating to salvage.

 

(c)           In lieu of requesting that Rainbow
DBS procure insurance under Section 4.3.13(a) and (b), above, Buyer, at
its option, may procure insurance directly for Rainbow-1.  Regardless of whether Buyer or Rainbow DBS is
attempting to procure insurance regarding risks relating to the in orbit
operation of Rainbow-1, Rainbow DBS shall, at its own cost and expense, timely
provide all reasonable assistance requested by Buyer in connection with the
procurement of insurance for Rainbow-1, provide such information regarding
Rainbow-1 as is reasonably requested by Buyer’s or Rainbow DBS’s brokers and
underwriters, and perform technical presentations to brokers and underwriters.  In addition, Rainbow DBS shall provide such
information regarding Rainbow-1 as is reasonably requested by the insurer(s)
and will cooperate in any insurance reviews.

 

19

 

5.                                      TERMINATION

 

5.1           Termination
of Agreement.

 

The Parties may terminate
this Agreement only as provided below:

 

(i)            Buyer and Rainbow DBS may terminate
this Agreement by mutual agreement in writing;

 

(ii)           In the event that the conditions to
Closing for the benefit of a Party set forth in Article 3 have not been
met by the other Party on or before the first anniversary of the Execution
Date, the Party for whose benefit conditions have not been met may terminate
this Agreement upon notice to the other Party; provided that if the condition
to Closing that has not been met is the Regulatory Approvals specified in
Sections 3.1.3 and 3.2.3, either Party may extend the termination date for an
additional ninety (90) days, and if such condition (and all other conditions to
Closing) have been satisfied by such extended date, the Parties shall proceed
with Closing; and

 

(iii)          Buyer may terminate this Agreement, in
its sole and absolute discretion for any reason or no reason, in the event that
a Total Loss occurs on or before the Closing.

 

5.2           Effect
of Termination.  If any Party terminates this Agreement
pursuant to Section 5.1, this Agreement shall become null and void and all
obligations of the Parties hereunder shall terminate without any Liability of
either Party to the other Party, except with respect to any Liability arising
out of a breach or default prior to the time of such termination of this
Agreement.

 

5.3           Survival. The covenants, agreements and
obligations set forth in Sections 4.3.6 and 4.3.11 shall survive for the
periods set forth therein, and the covenants, agreements and obligations set
forth in Section 4.3.13 shall survive for a reasonable period to permit
the Parties to comply with the requirements set forth therein.  The covenants, agreements and obligations set
forth in Sections 2.5, and 2.6, and Articles 6, 8 and 9 (except for
Section 9.9) shall survive indefinitely (and not be affected in any
respect by) the Closing, any investigation conducted by any Party hereto and
any information which any Party may receive. 
Notwithstanding anything to the contrary in the foregoing, each
representation and warranty contained in this Agreement or made pursuant to any
document delivered pursuant hereto (other than the representations and
warranties of Rainbow DBS contained in Section 4.1.9 (as it relates to the
ownership of Rainbow-1), which shall survive indefinitely) shall terminate on
the last day of the eighteenth (18th) month anniversary of the Closing (the
“Survival Date”); provided, however, that the right to indemnification with
respect to such representations and warranties, and the Liability of any Party
with respect thereto, shall not terminate with respect to any claim, whether or
not fixed as to Liability or liquidated as to amount, with respect to which
such Party has been given written notice prior to the Survival Date.

 

20

 

6.                                      DISCLAIMER
OF WARRANTIES, LIMITATION OF LIABILITY AND INDEMNIFICATION

 

6.1           Disclaimer
of Warranty.  ANY AND ALL EXPRESS AND IMPLIED WARRANTIES,
INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY
PURPOSE OR USE WITH RESPECT TO THE ACQUIRED ASSETS, ARE EXPRESSLY EXCLUDED AND
DISCLAIMED AND BUYER ACKNOWLEDGES THAT IT IS ACQUIRING EACH OF THE ACQUIRED
ASSETS “AS IS.”  FOR THE AVOIDANCE OF
DOUBT, NOTHING IN THIS SECTION 6.1 IS INTENDED OR SHALL BE CONSTRUED TO
LIMIT ANY RIGHT THAT BUYER MAY HAVE TO A REDUCTION OF THE CONSIDERATION UNDER
SECTION 4.3.11.

 

6.2           Limitation
of Liability.  NOTWITHSTANDING ANYTHING TO THE CONTRARY SET
FORTH HEREIN, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR
ANY EXEMPLARY, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT
LIMITATION ANY PAYMENT FOR LOST BUSINESS, FUTURE PROFITS, OR LOSS OF GOODWILL,
WHETHER FORESEEABLE OR NOT, OCCASIONED BY ANY CAUSE WHATSOEVER; PROVIDED THAT
THIS SECTION 6.2 SHALL NOT LIMIT THE INDEMNIFICATION OBLIGATIONS OF THE
PARTIES SET FORTH IN SECTIONS 6.3 AND 6.4. 
THE PROVISIONS OF THIS SECTION 6.2 SHALL SURVIVE EXPIRATION OR
TERMINATION OF THIS AGREEMENT (FOR ANY REASON WHATSOEVER) INDEFINITELY.

 

6.3           Indemnification Provisions for
Benefit of Buyer.  Rainbow DBS shall indemnify,
defend and hold Buyer and its Affiliates, and its and their respective
officers, directors, employees, agents and shareholders, and its and their
respective assigns, heirs, successors and legal representatives (collectively
the “Buyer Group”) harmless from and against, any and all costs, losses,
liabilities, damages, lawsuits, judgments, claims, actions, penalties, fines
and expenses (including, without limitation, interest, penalties, reasonable
attorney fees and all monies paid in the investigation, defense or settlement
of any or all of the foregoing) (“Claims”) incurred by any member of the Buyer
Group that arise out of, or are incurred in connection with, the breach or
default of any representation, warranty, covenant or obligation of Rainbow DBS
hereunder.

 

6.4           Indemnification Provisions for
Benefit of Rainbow DBS.  Buyer shall
indemnify, defend and hold Rainbow DBS and its Affiliates, and its and their
respective officers, directors, employees, agents and shareholders, and its and
their respective assigns, heirs, successors and legal representatives
(collectively the “Rainbow DBS Group”) harmless from and against, any and all
Claims incurred by any member of the Rainbow DBS Group that arise out of, or
are incurred in connection with, the breach or default of any representation,
warranty, covenant or obligation of Buyer hereunder.

 

21

 

6.5           Indemnification
Procedure.

 

6.5.1        Notice.  Each party indemnified under
Section 6.3 or Section 6.4 above (an “Indemnified Party”) shall,
promptly after receipt of notice of a claim or action against such Indemnified
Party in respect of which indemnity may be sought hereunder, notify the
indemnifying party (the “Indemnitor”) in writing of the claim or action; provided
that the failure to notify the Indemnitor shall not relieve it from any
liability that it may have to an Indemnified Party on account of the indemnity
agreements contained in Section 6.3 or Section 6.4 above except to
the extent that the Indemnitor was actually substantially prejudiced by such
failure, and in no event shall such failure relieve the Indemnitor from any
other liability that it may have to such Indemnified Party.

 

6.5.2        Assumption
of Defense.  If any such claim
or action shall be brought against an Indemnified Party, and it shall have
notified the Indemnitor thereof, the Indemnitor shall be entitled to
participate therein and, to the extent that it wishes, assume the defense
thereof.

 

6.5.3        Cooperation.  If the Indemnitor elects to assume the
defense of any such claim or action, it shall within thirty (30) calendar days
(or sooner, if the nature of the claim or action so requires) notify the
Indemnified Party of its intent to do so, and the Indemnified Party shall, at
the Indemnitor’s request and expense, give the Indemnitor all reasonable
cooperation and assistance in the defense against, such claim or action, which
cooperation and assistance shall include, among other things, the retention and
(upon the Indemnitor’s request) the provision to the Indemnitor of any books,
records, documents and other information in its control as reasonably necessary
or appropriate for such defense, and making employees available on a mutually
convenient basis as reasonably necessary or appropriate for such defense.  Except as expressly set forth to the contrary
below, after timely notice from the Indemnitor to the Indemnified Party of its
election to assume the defense of any such claim or action and the undertaking
of such defense with counsel reasonably acceptable to the Indemnified Party,
the Indemnitor shall not be liable to the Indemnified Party under this
Section 6.5 for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof.

 

6.5.4        Defense
by Indemnified Party.  If the
Indemnitor elects not to defend any such claim or action, fails to timely
notify the Indemnified Party of its election as herein provided or contests its
obligation to indemnify under this Agreement (or if counsel to the Indemnified
Party advises such party that there may be a potential conflict of interest
between the Indemnitor and the Indemnified Party), the Indemnified Party may
defend, at the expense of the Indemnitor, such claim or action as the
Indemnified Party considers appropriate.

 

6.5.5        Admission.  The Indemnified Party shall not
make any admission as to liability or agree to any settlement of, or otherwise
compromise, any claim or action without the prior written consent of the
Indemnitor (such consent not to be unreasonably withheld, delayed or
conditioned).  Any Indemnitor against
whom indemnity may be sought under this Section 6.5

 

22

 

shall not be liable to indemnify an Indemnified Party
if such Indemnified Party makes an admission as to liability, settles or
otherwise compromises such claim or action without the consent of the
Indemnitor (such consent not to be unreasonably withheld, delayed or
conditioned).  The Indemnitor shall not
settle or otherwise compromise any such claim or action over the objection of
the Indemnified Party; provided,  however, that consent to settlement or
compromise shall not be unreasonably withheld by the Indemnified Party.

 

6.5.6        Participation.  With respect to any claim or
action as to which the Indemnitor has timely assumed the defense thereof, the
Indemnified Party shall continue to be entitled to participate in the defense
thereof, with counsel of its own choice, but the Indemnitor shall not be
obligated hereunder to reimburse the Indemnified Party for the costs thereof
unless: (i) the Indemnitor agrees to pay such costs; (ii) the Indemnitor fails
to promptly assume and continue the defense of such claim or action with
counsel reasonably satisfactory to the Indemnified Party; (iii) counsel to such
Indemnified Party advises that a potential conflict of interest between such
Indemnified Party and Indemnitor may exist in respect of such claim; or (iv)
the Indemnitor contests its obligation to indemnify under this Agreement.

 

7.                                      ASSIGNMENT AND
SUCCESSORS

 

7.1           Assignment. 
Neither Party may assign its rights and interests under this Agreement
without the prior written consent of the other Party; provided, however, that
EchoStar may assign its rights, but not its obligations, under this Agreement,
in its sole discretion for any reason or no reason, to one of its
Affiliates.  As used in this Section 7.1,
“assign” shall mean to grant, sell, assign, encumber or otherwise convey
directly or indirectly, in whole or in part.

 

7.2           Successors. 
Subject to the provisions concerning assignments above, this Agreement
shall be binding on and shall inure to the benefit of any successors and
permitted assigns of the Parties.  Any
purported assignment by either Party not in compliance with the provisions of
this Agreement shall be null and void and of no force and effect.

 

8.                                      CONFIDENTIALITY

 

8.1           Non-Disclosure. 
Buyer and Rainbow DBS will hold in confidence the material terms and
conditions of this Agreement; provided that disclosure, on a confidential
basis, by either Party is permitted: (a) to its principals, auditors,
attorneys, investors, lenders, insurance agents, and proposed and actual
successors in interest and (b) to comply with law and enforce its rights and
perform its obligations under this Agreement.

 

8.2           Proprietary
Information.  To the extent that either Party discloses to
the other Party any other information which it considers proprietary, said
Party shall identify such information as proprietary when disclosing it to the
other Party by marking it clearly and conspicuously as proprietary
information.  Any proprietary disclosure
to either Party, if made orally, will be identified at the time of disclosure
as proprietary information, if the disclosing

 

23

 

Party wishes to keep such information proprietary
under this Agreement.  Any such
information disclosed under this Agreement will be used by the recipient
thereof only in its performance under this Agreement.  Neither Party will be liable for the
inadvertent or accidental disclosure of such information marked as proprietary,
if such disclosure occurs despite the exercising of the same degree of care as
the receiving Party normally takes to preserve and safeguard its own
proprietary information (but not less than reasonable care) or if such
information (i) is or becomes lawfully available to the public from a source
other than the receiving Party; (ii) is released in writing by the disclosing
Party without restrictions; (iii) is lawfully obtained by the receiving Party
from a third party or parties without obligation of confidentiality; (iv) is
lawfully known by the receiving Party prior to such disclosure; or (v) is at
any time lawfully developed by the receiving Party completely independently of
any such disclosure or disclosures from the disclosing Party.  In addition, neither Party will be liable for
the disclosure of any proprietary information which it receives under this
Agreement pursuant to judicial action or decree, or pursuant to any requirement
of any government or any agency or department thereof, having jurisdiction over
such Party, provided, that in the reasonable opinion of counsel for such Party
such disclosure is required, and provided further that such Party to the extent
reasonably practical shall have given the other Party notice prior to such
disclosure.

 

9.                                      MISCELLANEOUS

 

9.1           Applicable Law, Attorney Fees,
Entire Agreement and Effectiveness.  This Agreement
shall be interpreted according to the laws of the State of New York, U.S.A.
and, where applicable, subject to compliance with the laws, rules and
regulations of the United States, including, without limitation, those of the
FCC and those governing communications, exports and re-exports, without regard
to any conflict of law provisions.  Each
Party consents to the jurisdiction of courts located in New York.  In any action or arbitration brought with
respect to this Agreement by one Party hereto against the other Party hereto,
in addition to any other money damages awarded, the prevailing Party shall be
entitled to recover from the other Party its reasonable costs, including
reasonable attorneys’ fees, in successfully bringing or defending against such
action or arbitration.  This Agreement,
including the Appendices and any non-disclosure agreements between the Parties,
constitutes the entire agreement between the Parties and supersedes any and all
prior or contemporaneous statements, understandings, writings, commitments, or
representations concerning its subject matter. This Agreement may not be
amended or modified in any way, and none of its provisions may be waived,
except by a prior writing signed by an authorized officer of each Party. This
Agreement shall not be binding or effective on any Party until fully executed
by both Parties hereto.

 

9.2           U.S.
Export Control Laws.  The Parties acknowledge and
agree that the Acquired Assets, technical information, and/or accompanying technology
provided under this Agreement are subject to export controls under the laws and
regulations of the United States.  Each
Party shall comply with such laws and regulations and agrees not to export,
re-export, or otherwise transfer such services or items to foreign persons
(including foreign national employees) without first obtaining all required
United States authorizations or licenses.

 

24

 

9.3           Severability. 
Nothing contained in this Agreement shall be construed so as to require
the commission of any act contrary to law. 
If any provision of this Agreement shall be held invalid or
unenforceable, the provisions of this Agreement so affected shall be curtailed
and limited only to the extent necessary to permit compliance with the minimum
legal requirements and the remaining provisions of this Agreement shall not in
any way be affected or impaired.

 

9.4           No
Third Party Beneficiary.  Except as
expressly set forth herein, the provisions of this Agreement are for the
benefit only of Rainbow DBS and Buyer and no third party may seek to enforce or
benefit from these provisions.

 

9.5           Non-Waiver
of Breach.  Either Party may specifically waive any
breach of this Agreement by the other Party; provided, that no such waiver
shall be binding or effective unless in writing and signed by an authorized
officer of the Party to be bound and no such waiver shall constitute a
continuing waiver of similar or other breaches. 
A waiving Party may at any time, upon notice given in writing to the
breaching Party, direct future compliance with the waived term or terms of this
Agreement, in which event the breaching Party shall comply as directed from
such time forward.

 

9.6           Notices. 
Except as otherwise expressly set forth to the contrary herein, any
notice or other communications required or permitted to be given hereunder
shall be in English, in  writing and
shall be delivered personally or sent by facsimile transmission, or by first
class certified mail, postage prepaid, or by overnight courier service, charges
prepaid, to the Party to be notified, addressed to such Party at the address
set forth below, or sent by facsimile to the fax number set forth below, or
such other address or fax number as such Party may have substituted by written
notice to the other Party.  The sending
of such notice with confirmation of receipt thereof (in the case of facsimile
transmission) or receipt of such notice (in the case of personal delivery or
delivery by mail or by overnight courier service) shall constitute the giving
thereof:

 

	
  If to EchoStar:

  	
   

  	
  EchoStar Satellite L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  P.O. Box 6655 (for certified mail)

  
	
   

  	
   

  	
  Englewood, Colorado 80155

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9601 S. Meridian Blvd. (for overnight courier)

  
	
   

  	
   

  	
  Englewood, Colorado 80112

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn:

  	
  Charles W. Ergen, President and Chief

  Executive Officer

  
	
   

  	
   

  	
  Fax:

  	
  303.723.1099

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  EchoStar Satellite L.L.C.

  

 

25

 

	
   

  	
   

  	
  (same addresses as above)

  
	
   

  	
   

  	
  Attn:

  	
  David K. Moskowitz, Senior Vice President and

  General Counsel

  
	
   

  	
   

  	
  Fax:

  	
  (303) 723-1699

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to Rainbow DBS:

  	
   

  	
  Rainbow DBS Company LLC

  
	
   

  	
   

  	
  200 Jericho Quadrangle

  
	
   

  	
   

  	
  Jericho, New York 11753

  
	
   

  	
   

  	
  Attn: Hank Ratner

  
	
   

  	
   

  	
  Fax:

  	
  516.803.2577

  
	
   

  	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Cablevision Systems Corporation

  
	
   

  	
   

  	
  1111 Stewart Avenue

  
	
   

  	
   

  	
  Bethpage, New York 11714

  
	
   

  	
   

  	
  Attn: 
  Victoria Salhus

  
	
   

  	
   

  	
  Fax:

  	
  516.803.2577

  

 

9.7           Headings. 
The descriptive headings of the sections and subsections of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.

 

9.8           Documents.  Subject to
applicable legal compliance, each Party agrees to provide information and to
execute, and, if necessary, to file with the appropriate Governmental Entities
and international organizations, such documents as the other Party shall reasonably
request in order to carry out the purposes of this Agreement.

 

9.9           Reconstitution.  In the event
the Regulatory Approvals necessary to consummate this transaction are denied or
conditioned (except for any condition that would make the matter Unconditional
hereunder) by any Governmental Entity, the Parties will use their respective
best efforts for a period of six (6) months thereafter to reconstitute this
Agreement in a manner that would permit each Party to realize the material
benefits of this Agreement in a manner that either does not require Regulatory
Approval or can reasonably be expected to achieve such Unconditional approval,
and if such material benefits can be realized, the Parties will proceed to
implement this Agreement as reconstituted; provided,
however, that no Party shall be obligated to enter into any such
reconstituted Agreement that would require it to make material expenditures or
dispose of material assets in excess of the amount of expenditures or assets
contemplated by this Agreement unless compensated for such arrangement.

 

9.10         Counterparts and Facsimile Signatures. 
This Agreement may be executed by facsimile signatures and in several
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute but one and the same instrument.

 

9.11         Specific
Performance. 
Nothing herein shall be deemed to preclude either Party from seeking
injunctive relief, if necessary, in order to prevent the other from breaching
its

 

26

 

material obligations under this Agreement or to compel
the other to perform its material obligations under this Agreement in the event
of a failure to comply with this Agreement. 
Both Parties acknowledge that the Acquired Assets are unique and not
readily available on the open market and that, if the Acquired Assets are not
available to Buyer because the terms of this Agreement are not fulfilled
through no fault of Buyer and for reasons attributable to a breach of this
Agreement by Rainbow DBS, then Buyer’s remedies at law would not be adequate.

 

IN WITNESS WHEREOF, each
of the Parties has duly executed and delivered this Agreement as of the
Execution Date.

 

 

	
  ECHOSTAR SATELLITE L.L.C.

  
	
   

  
	
   

  
	
  By:

  	
  /s/

  	
  Charles W. Ergen

  	
   

  
	
   

  	
  Charles W. Ergen

  
	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  RAINBOW DBS COMPANY LLC

  
	
   

  
	
   

  
	
  By:

  	
  /s/

  	
  James L. Dolan

  	
   

  
	
   

  	
  James L. Dolan

  
	
   

  	
  CEO and President

  

 

27Exhibit 10.46

 

AGREEMENT

 

This Agreement sets forth
the terms upon which the business of Rainbow DBS (“Rainbow DBS”) will be funded
and conducted during the period March 1, 2005 through March 31, 2005.

 

The funding authorization
for Rainbow DBS expired on February 28, 2005.  The Board of Directors (the “Board”) of
Cablevision Systems Corporation (“Cablevision”) has authorized and directed the
shutdown of Rainbow DBS.

 

The parties hereto agree
as follows:

 

	
  Agreement on
  Baseline Plan:

  	
   

  	
  Cablevision and
  Charles F. Dolan (“Dolan”) intend to work together in an open and cooperative
  manner to finalize the separation of Rainbow DBS from Cablevision.
  Cablevision has begun the shutdown of the business of Rainbow DBS. No new
  shutdown actions will be undertaken. The business will continue to be
  operated in accordance with the budget of Required Costs for March agreed
  to by Cablevision and Dolan (the “Baseline Plan”), subject to modification as
  provided below. Cablevision and Dolan agree not to take any actions, directly
  or indirectly, that are inconsistent with the Baseline Plan, except that
  Dolan may cause actions inconsistent with the Baseline Plan to be taken as
  provided below under “Expenditures” and “Commitments and Changes”.

  
	
   

  	
   

  	
   

  
	
  Expenditures:

  	
   

  	
  The Rainbow DBS
  business shall continue to make the expenditures that would have been
  incurred under the Baseline Plan. Expenditures above such amounts (“Additional
  Expenditures”) shall be made only if authorized by the Chief Financial
  Officer of Cablevision or his designee (the “CFO”), which authorization shall
  be provided if the CFO is satisfied that cash or Funding Shares are on
  deposit with

  

 

 

	
   

  	
   

  	
  Cablevision
  (excluding Segregated Shares) with a Market Value adequate to pay such
  Additional Expenditures. The CFO shall act reasonably and promptly.

  
	
   

  	
   

  	
   

  
	
  Funding:

  	
   

  	
  Dolan shall fund
  the Additional Expenditures. On a daily basis, Cablevision shall effect Dolan’s
  funding of the Additional Expenditures by withdrawing cash deposited with
  Cablevision by Dolan in an amount equal to such Additional Expenditures or
  withdrawing and canceling shares of Class A Common Stock and Class B Common
  Stock deposited with Cablevision by Dolan (the “Funding Shares”) with a
  Market Value equal to the amount of such Additional Expenditures. The funding
  amount on any day shall first come from any unsegregated cash on deposit,
  then from any unsegregated shares of Class A Common Stock, and then from any
  shares of unsegregated Class B Common Stock.

  
	
   

  	
   

  	
   

  
	
  Commitments and
  Changes:

  	
   

  	
  Rainbow DBS
  shall make no commitments or other agreements and shall not alter the
  Baseline Plan or reverse actions previously taken in accordance with the
  Baseline Plan, in each case without the prior written approval of the CFO.
  The CFO shall provide the required written approval if the CFO is satisfied
  that sufficient cash or Funding Shares are on deposit to fully pay the costs
  of such action. The CFO shall act reasonably and promptly. If such an action
  is approved, the CFO shall segregate that cash or those Funding Shares, which
  shall then be unavailable for any other purpose (“Segregated Cash” and “Segregated
  Shares”). The CFO shall use the Segregated Cash and Segregated Shares to pay
  the costs associated with the actions that gave rise to the segregation.

  
	
   

  	
   

  	
   

  
	
  Funding Shares:

  	
   

  	
  Dolan shall
  deliver to Cablevision by the close of business on March 9, 2005 cash

  

 

2

 

	
   

  	
   

  	
  and/or shares of
  Class A Common Stock or Class B Common Stock free and clear of any liens,
  claims and encumbrances and together with a stock power duly endorsed to
  Cablevision and having a Market Value of $10 million. Dolan may substitute
  cash for unsegregated Funding Shares at any time by depositing cash in an
  amount equal to the Market Value of the Funding Shares to be withdrawn. 

   

  “Market Value”
  means the arithmetic average of the closing price of the Class A Common Stock
  on The New York Stock Exchange over the 10 New York Stock Exchange trading
  days preceding the date of any determination (or in the case of a
  substitution of cash for Funding Shares, the closing price on the day prior
  to the date of substitution).

  
	
   

  	
   

  	
   

  
	
  Corporate
  Controls:

  	
   

  	
  As with every
  subsidiary of Cablevision, Rainbow DBS is and shall remain subject to the
  management and internal controls of Cablevision. Cablevision shall continue
  to have the right to contact and deal with any employee, consultant, vendor,
  supplier or customer of Rainbow DBS. Neither Dolan nor Tom Dolan shall,
  directly or indirectly, give any instruction or take any action inconsistent
  herewith. The actions of Cablevision under the Baseline Plan shall be
  coordinated with Tom Dolan through advance notification of those actions.

  
	
   

  	
   

  	
   

  
	
  Termination:

  	
   

  	
  This Agreement
  shall terminate at 5:00 P.M. New York City time on March 31, 2005. Dolan
  shall have the right to terminate this Agreement at any earlier time. Upon
  any termination (i) any cash or Funding Shares not previously cancelled,
  other than Segregated Cash or Segregated Shares, shall be returned to Dolan,
  and (ii) the shutdown of Rainbow DBS shall be implemented immediately.
  Cablevision may terminate this Agreement immediately upon the 

  

 

3

 

	
   

  	
   

  	
  occurrence of
  any breach of the terms hereof by Dolan or Tom Dolan. Upon any termination,
  the Segregated Cash and Segregated Shares shall be held as security against
  claims arising out of the commitments or actions that gave rise to their
  segregation.

  

 

 

	
  CABLEVISION
  SYSTEMS CORPORATION

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name: Hank J.
  Ratner

  	
   

  
	
   

  	
  Title: Vice
  Chairman

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Charles F. Dolan

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Thomas C. Dolan

  
				

 

4

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