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Separation Agreement

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Title:

Separation Agreement

Entities:

Corporation Trust Co.; General Motors Corp.; News Corp. Ltd.; Jenner & Block LLP; Jones, Day, Reavis & Pogue; Kirkland & Ellis; Latham & Watkins; Skadden, Arps, Slate, Meagher & Flom LLP; Weil, Gotshal & Manges LLP

Date:

2003

Size:

Preview shows 31KB of 109KB total

Price:

$52

ID:

#113340

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Start of Preview

SEPARATION AGREEMENT

by and between

GENERAL MOTORS CORPORATION

and

HUGHES ELECTRONICS CORPORATION

Dated as of April 9, 2003

{PAGE}

TABLE OF CONTENTS

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{CAPTION}

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{S} {C}

ARTICLE 1 CERTAIN INTERCOMPANY MATTERS...................................................................... 3

Section 1.1. Ancillary Separation Agreements.................................................. 3

Section 1.2. Insurance Matters................................................................ 4

Section 1.3. Registration Rights.............................................................. 5

Section 1.4. GM Contingent Liabilities........................................................ 6

Section 1.5. Publicity........................................................................ 7

Section 1.6. Director and Officer Insurance................................................... 7

Section 1.7. Closing Agreement................................................................ 9

ARTICLE 2 CONFIDENTIALITY................................................................................... 9

Section 2.1. Treatment of Confidential Information............................................ 9

Section 2.2. Legally Required Disclosure of Confidential Information.......................... 10

Section 2.3. Policies and Procedures.......................................................... 10

ARTICLE 3 CONTINUING INFORMATION SUPPORT.................................................................... 11

Section 3.1. Access to Information............................................................ 11

Section 3.2. Production of Witnesses.......................................................... 11

Section 3.3. Reimbursement.................................................................... 11

Section 3.4. Retention of Records............................................................. 12

ARTICLE 4 EXPENSES.......................................................................................... 12

Section 4.1. General.......................................................................... 12

Section 4.2. Certain Transaction Costs........................................................ 12

ARTICLE 5 INDEMNIFICATION................................................................................... 13

Section 5.1. Indemnification by Hughes........................................................ 13

Section 5.2. Indemnification by GM............................................................ 14

Section 5.3. Certain Definitions.............................................................. 16

Section 5.4. Other Liabilities................................................................ 17

Section 5.5. Tax Effects of Indemnification................................................... 18

Section 5.6. Effect of Insurance Upon Indemnification......................................... 18

Section 5.7. Procedure for Indemnification Involving Third-Party Claims....................... 19

Section 5.8. Procedure for Indemnification Not Involving Third-Party Claims................... 20

Section 5.9. Exclusive Remedies............................................................... 20

ARTICLE 6 TERMINATION....................................................................................... 21

Section 6.1. Termination of Agreement......................................................... 21

{/TABLE}

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{PAGE}

TABLE OF CONTENTS

(Continued)

{TABLE}

{CAPTION}

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Section 6.2. Effect of Termination............................................................ 21

ARTICLE 7 MISCELLANEOUS..................................................................................... 21

Section 7.1. Further Assurances............................................................... 21

Section 7.2. Survival......................................................................... 21

Section 7.3. Notices.......................................................................... 21

Section 7.4. Interpretation; Absence of Presumption........................................... 22

Section 7.5. Counterparts..................................................................... 23

Section 7.6. Entire Agreement; Severability................................................... 23

Section 7.7. Third Party Beneficiaries........................................................ 23

Section 7.8. Governing Law.................................................................... 24

Section 7.9. Specific Performance............................................................. 24

Section 7.10. Assignment....................................................................... 24

Section 7.11. Amendment........................................................................ 24

Section 7.12. Dispute Resolution............................................................... 24

Section 7.13. Consent to Jurisdiction.......................................................... 24

Section 7.14. Conditions to Obligation to Close................................................ 25

{/TABLE}

-ii-

{PAGE}

EXHIBITS

Exhibit A-1 Amended and Restated Agreement for the Allocation of United

States Income Taxes

Exhibit A-2 Agreement for the Allocation of United States Income Taxes,

effective as of December 29, 1985, by and among General Motors

Corporation, Hughes Electronics Corporation (formerly GM Hughes

Electronics Corporation), HE Holdings, Inc. (formerly Hughes

Aircraft Company), and Delco Electronics Corporation, as

amended

Exhibit A-3 Tax Sharing Agreement, dated as of December 17, 1997, by and

among General Motors Corporation, Hughes Electronics

Corporation and HE Holdings, Inc. (subsequently renamed

Raytheon Company), as amended

Exhibit B Form of Special Employee Items Agreement

Exhibit C Intellectual Property Agreement, effective as of September 25,

2001, by and among General Motors Corporation and Hughes

Electronics Corporation

-iii-

{PAGE}

INDEX OF DEFINED TERMS

{TABLE}

{CAPTION}

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{S} {C}

Affiliate................................................................................................... 16

Agreement................................................................................................... 1

Ancillary Separation Agreements............................................................................. 4

Applicable Law.............................................................................................. 18

Business Days............................................................................................... 19

Certificates................................................................................................ 14

Closing Date................................................................................................ 2

Code........................................................................................................ 3

Confidential Information.................................................................................... 10

Confidentiality Agreement................................................................................... 21

Control..................................................................................................... 16

D&O Insurance............................................................................................... 7

D&O Insurance Policy........................................................................................ 8

Disclosure Documents........................................................................................ 12

Employee Benefit Plan Registration Rights Agreement......................................................... 5

ERISA Affiliate............................................................................................. 16

Exchange Act................................................................................................ 11

FCC......................................................................................................... 12

Final Determination......................................................................................... 18

GM.......................................................................................................... 1

GM $1-2/3 Common Stock...................................................................................... 2

GM Affiliate................................................................................................ 16

GM Business................................................................................................. 17

GM Certificate of Incorporation............................................................................. 1

GM Charter Amendment........................................................................................ 1

GM Class H Common Stock..................................................................................... 1

GM Disclosure Portions...................................................................................... 15

GM Financial Advisors....................................................................................... 13

GM Indemnitees.............................................................................................. 17

GM Sales Process Claim...................................................................................... 16

Governmental Authority...................................................................................... 7

Hourly Pension Plan......................................................................................... 5

Hughes...................................................................................................... 1

Hughes Affiliate............................................................................................ 17

Hughes Business............................................................................................. 17

Hughes Class B Common Stock................................................................................. 1

Hughes Common Stock......................................................................................... 1

Hughes Covered Person....................................................................................... 8

Hughes DCLs................................................................................................. 9

Hughes Disclosure Portions.................................................................................. 13

Hughes ERISA Affiliate...................................................................................... 14

Hughes Financial Advisors................................................................................... 12

Hughes Group................................................................................................ 9

{/TABLE}

-iv-

{PAGE}

INDEX OF DEFINED TERMS

(Continued)

{TABLE}

{CAPTION}

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{S} {C}

Hughes Indemnitees.......................................................................................... 17

Hughes Permits.............................................................................................. 12

Hughes Separation Transactions.............................................................................. 2

Hughes Succession Agreement................................................................................. 6

Indemnifying Party.......................................................................................... 18

Indemnitee.................................................................................................. 18

Indemnity Payment........................................................................................... 18

Insurance Policy............................................................................................ 4

Insurance Proceeds.......................................................................................... 18

Interim Period.............................................................................................. 6

Liabilities................................................................................................. 7

Losses...................................................................................................... 17

Merger...................................................................................................... 2

Merger Agreement............................................................................................ 2

Merger Sub.................................................................................................. 2

NPAL........................................................................................................ 2

Person...................................................................................................... 6

PRIMESTAR Registration Rights Agreement..................................................................... 5

Proxy/Consent Solicitation Statement........................................................................ 12

Purchaser................................................................................................... 1

Purchaser Stock............................................................................................. 2

Qualified Subsidiary........................................................................................ 1

Registration Rights Agreements.............................................................................. 5

Registration Statements..................................................................................... 12

Representatives............................................................................................. 9

Request..................................................................................................... 20

Salaried Pension Plan....................................................................................... 5

Securities Act.............................................................................................. 5

Separate Counsel............................................................................................ 19

Service Agent............................................................................................... 25

Shares...................................................................................................... 1

Special Dividend............................................................................................ 1

Split-Off................................................................................................... 1

Split-Off Effective Time.................................................................................... 4

Stock Purchase Agreement.................................................................................... 1

Stock Sale.................................................................................................. 1

Subsidiary.................................................................................................. 2

Surviving Corporation....................................................................................... 2

Surviving Corporation Class B Common Stock.................................................................. 2

Surviving Corporation Common Stock.......................................................................... 2

Tax......................................................................................................... 10

Tax Allocation Agreement.................................................................................... 3

Third-Party Claim........................................................................................... 19

Transactions................................................................................................ 2

U.S. Trust.................................................................................................. 5

{/TABLE}

-v-

{PAGE}

INDEX OF DEFINED TERMS

(Continued)

{TABLE}

{CAPTION}

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VEBA........................................................................................................ 5

{/TABLE}

-vi-

{PAGE}

SEPARATION AGREEMENT

This Separation Agreement (this "Agreement") is made and entered into as of

April 9, 2003, by and between General Motors Corporation, a Delaware corporation

("GM"), and Hughes Electronics Corporation, a Delaware corporation and a wholly

owned subsidiary of GM ("Hughes").

WHEREAS, Hughes is currently a wholly owned subsidiary of GM;

WHEREAS, the currently outstanding GM Class H Common Stock (as defined in

the Stock Purchase Agreement (as defined below)) represents an approximately

80.1% indirect economic interest in the financial performance of Hughes, and GM

retains an approximately 19.9% economic interest in the financial performance of

Hughes;

WHEREAS, simultaneously with the Stock Sale (as defined below), GM,

pursuant to provisions that have been implemented pursuant to the Stock Purchase

Agreement (as defined below) by means of an amendment of the General Motors

Corporation Restated Certificate of Incorporation (the "GM Certificate of

Incorporation") substantially in the form set forth as Exhibit A to the Stock

Purchase Agreement (the "GM Charter Amendment"), shall distribute to the holders

of record of GM Class H Common Stock as of immediately prior to the Split-Off

Effective Time (as defined below) shares of Hughes Common Stock (as defined in

the Stock Purchase Agreement) in exchange for all of the outstanding shares of

GM Class H Common Stock in accordance with the GM Certificate of Incorporation,

as amended pursuant to the GM Charter Amendment, and the GM Class H Common Stock

shall thereupon be redeemed and cancelled (the "Split-Off");

WHEREAS, GM and Hughes desire to consummate the separation of Hughes from

GM on the terms set forth in this Agreement and to set forth certain rights and

obligations of GM with respect to the separation of Hughes from GM pursuant to

the Split-Off;

WHEREAS, pursuant to the Split-Off, Hughes shall become an independent,

publicly owned company, separate from and no longer wholly owned by GM;

WHEREAS, prior to and as a condition to the Split-Off, Hughes shall

distribute a special cash dividend to GM in an amount equal to Two Hundred

Seventy-Five Million Dollars ($275,000,000) (the "Special Dividend");

WHEREAS, simultaneously with, and as a condition to consummation of the

Split-Off, GM shall sell to The News Corporation Limited, an Australia

corporation ("Purchaser") (or a Qualified Subsidiary (as defined in the Stock

Purchase Agreement) of Purchaser designated by Purchaser) and Purchaser shall

purchase (or cause its Qualified Subsidiary to purchase) from GM, all of its

shares of Hughes Class B Common Stock (as defined in the Stock Purchase

Agreement), representing its retained economic interest in Hughes immediately

prior to the Split-Off, held as of such time (the "Shares") for the purchase

price and upon the terms and conditions set forth in that certain Stock Purchase

Agreement entered into by and among General Motors Corporation, Hughes

Electronics Corporation and The News Corporation Limited on the date hereof (the

"Stock Purchase Agreement") (the "Stock Sale");

{PAGE}

WHEREAS, Purchaser's Subsidiary (as defined in the Stock Purchase

Agreement) NPAL (as defined in the Stock Purchase Agreement) currently owns all

of the outstanding capital stock of GMH Merger Sub, Inc., a Delaware corporation

("Merger Sub");

WHEREAS, immediately following the consummation of the Split-Off and the

Stock Sale, Hughes and Purchaser shall merge Merger Sub with and into Hughes

(the "Merger"), with Hughes as the surviving corporation (the "Surviving

Corporation"), as more fully described in that certain Agreement and Plan of

Merger by and among The News Corporation Limited, GMH Merger Sub, Inc. and

Hughes Electronics Corporation dated as of April 9, 2003 (the "Merger

Agreement");

WHEREAS, pursuant to the Merger, (x) all of the Shares shall remain

outstanding as shares of Class B common stock, par value $0.01 per share of the

Surviving Corporation (the "Surviving Corporation Class B Common Stock") and

shall immediately after the Merger Effective Time, convert into an equal number

of shares of common stock of the Surviving Corporation ("Surviving Corporation

Common Stock"), (y) all of the outstanding capital stock of Merger Sub shall be

converted into shares of Surviving Corporation Common Stock, such that

immediately following the Merger Effective Time (as defined in the Stock

Purchase Agreement), Purchaser and its Subsidiaries own, including the shares

described in clause (x) above, thirty-four percent (34%) of the aggregate number

of issued and outstanding shares of Surviving Corporation Common Stock and

Surviving Corporation Class B Common Stock, and (z) all of the shares of Hughes

Common Stock outstanding as of immediately prior to the Merger Effective Time

not held by Purchaser or any Subsidiary of Purchaser shall be converted into

shares of Surviving Corporation Common Stock representing sixty-six percent

(66%) of the aggregate number of shares of Surviving Corporation Common Stock

and Surviving Corporation Class B Common Stock outstanding immediately after the

Merger Effective Time and Purchaser Stock (as defined in the Merger Agreement)

and/or cash, as applicable, in accordance with the terms and conditions of the

Merger Agreement;

WHEREAS, the Special Dividend, the consummation of the Split-Off and the

separation of Hughes from GM as contemplated by this Agreement (collectively,

the "Hughes Separation Transactions" and, together with the Stock Sale and the

Merger, the "Transactions") are conditioned on, among other things, the approval

by the holders of a majority of the outstanding shares of GM $1-2/3 Common Stock

(as defined in the Stock Purchase Agreement) and by the holders of a majority of

the outstanding shares of GM Class H Common Stock, each voting as a separate

class and both voting together as a single class based on their respective per

share voting power, of matters pertaining to the Transactions, including the GM

Charter Amendment;

WHEREAS, the consummation of the Stock Sale is conditioned upon the

consummation of the Split-Off and shall occur on the Closing Date (as defined in

the Stock Purchase Agreement) at the time of the consummation of the Split-Off;

WHEREAS, the consummation of the Merger is conditioned upon the

consummation of the Split-Off and the Stock Sale and shall occur on the Closing

Date immediately after the consummation of the Split-Off and the Stock Sale;

-2-

{PAGE}

WHEREAS, Purchaser is unwilling to acquire any shares of Hughes capital

stock unless Hughes shall become a publicly-traded company simultaneously with

such acquisition;

WHEREAS, the parties intend the Split-Off to qualify as a distribution of

Hughes stock to GM stockholders with respect to which no gain or loss will be

recognized pursuant to Section 355 and related provisions of the Internal

Revenue Code of 1986, as amended, together with the rules and regulations

promulgated thereunder (the "Code"), by GM, Hughes and their respective

stockholders; and

WHEREAS, the respective Boards of Directors of GM and Hughes have

determined that the transactions contemplated hereby are advisable, desirable

and in the best interests of their respective stockholders and, by resolutions

duly adopted, the respective Boards of Directors of GM and Hughes have approved

and adopted this Agreement.

NOW, THEREFORE, in consideration of the premises and the representations,

warranties, covenants and agreements contained herein, and for other good and

valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, and intending to be legally bound hereby, the parties hereby agree

as follows:

ARTICLE 1

CERTAIN INTERCOMPANY MATTERS

Section 1.1. Ancillary Separation Agreements. GM and Hughes, together with

their respective affiliates specified therein, have entered into either prior

to, or concurrently with, the execution of this Agreement, each of the

following:

(a) the Amended and Restated Agreement for the Allocation of United States

Income Taxes between General Motors Corporation and Hughes Electronics

Corporation in the form set forth as Exhibit A-1 hereto (the "Tax Allocation

Agreement");

(b) the Agreement for the Allocation of United States Income Taxes,

effective as of December 29, 1985, by and among General Motors Corporation,

Hughes Electronics Corporation (formerly GM Hughes Electronics Corporation), HE

Holdings, Inc. (formerly Hughes Aircraft Company), and Delco Electronics

Corporation, as amended, a copy of which is set forth as Exhibit A-2 hereto;

General Motors Corporation, Hughes Electronics Corporation and HE Holdings, Inc.

(subsequently renamed Raytheon Company), as amended, a copy of which is set

forth as Exhibit A-3 hereto;

(d) the Special Employee Items Agreement between General Motors Corporation

and Hughes Electronics Corporation, in the form set forth as Exhibit B hereto;

and

(e) the Intellectual Property Agreement, effective as of September 25,

2001, by and among General Motors Corporation and Hughes Electronics

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