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THE EXHIBITS ATTACHED TO THIS DOCUMENT ARE COPIES
OF THE EXHIBITS TO THE SCHEDULE 13D FILED ON MAY 28, 1997
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
------------
PANAMSAT CORPORATION
--------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
--------------------------------------
(Title of Class of Securities)
697933-10-9
-----------
(CUSIP Number)
EMILIO ROMANO
AV. VASCO DE QUIROGA 2000
COLONIA SANTA FE
C.P. 01210 MEXICO, D.F.
(525) 261-2414
-------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
MAY 16, 1997
------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box [ ].
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent
amendment containing information which would alter disclosures
provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GRUPO TELEVISA, S.A.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
MEXICO
NUMBER OF 7 SOLE VOTING POWER
SHARES 11,239,594 SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 11,239,594 SHARES
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
11,239,594 SHARES
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5%
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
SATELLITE COMPANY, LLC
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEVADA
NUMBER OF 7 SOLE VOTING POWER
SHARES 11,239,594 SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 11,239,594 SHARES
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
11,239,594 SHARES
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5%
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Item 1. SECURITY AND ISSUER
-------------------
This statement relates to shares of common stock, par value
$.01 per share (the "Common Stock"), of PanAmSat Corporation, a
Delaware corporation (the "Company" or "New PanAmSat"). The
principal executive offices of the Company are located at One Pickwick
Plaza, Greenwich, Connecticut 06830.
Item 2. IDENTITY AND BACKGROUND
-----------------------
This statement is being filed jointly by Grupo Televisa,
S.A., a Mexican corporation ("Televisa") and Satellite Company,
LLC, a Nevada limited liability company and a directly and
indirectly wholly-owned subsidiary of Televisa ("Satellite," and
together with Televisa, the "Reporting Persons"). The Reporting
Persons are filing this Statement jointly pursuant to a Joint
Filing Agreement attached hereto as Exhibit 1.
The address of Televisa's principal office is Av. Vasco
de Quiroga 2000, Colonia Santa Fe, C.P. 01210 Mexico, D.F. The
address of Satellite's principal office is c/o Fonovisa Centroamerica,
S.A., De Popa de Curridabat 25 Mts. Este, Edificio Galerias del
Este, Local 8, San Jose, Costa Rica. The names, business addresses,
principal businesses and citizenship of each of the directors and
executive officers of Televisa and the manager of Satellite are set
forth on Schedule 1 hereto and incorporated by reference herein.
Televisa is the world's leading producer and broadcaster
of Spanish-language television. As the largest media company in
the Spanish-speaking world, Televisa has interests in television
production and broadcasting, international distribution of
television programming, direct-to-home satellite programming
publishing, music recording, radio production and broadcasting,
cable television, professional sports and special events
promotion, feature film production and distribution, outdoor
advertising, paging services and dubbing. The principal business
of Satellite is to serve as a holding company.
During the last five years, none of the Reporting Persons nor, to
the best of their knowledge, any of the executive officers,
directors or managers, as the case may be, of any of the Reporting
Persons, has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
During the last five years, none of the Reporting
Persons nor, to the best of their knowledge, any of the executive
officers or directors of any of the Reporting Persons, has been a
party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and, as a result of such proceeding was
or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
-------------------------------------------------
On May 16, 1997, Hughes Communications, Inc. ("HCI") and PanAmSat
International Systems, Inc. (formerly known as PanAmSat
Corporation, "Old PanAmSat") combined their satellite operations
pursuant to an Agreement and Plan of Reorganization, dated as of
September 20, 1996, as amended as of April 4, 1997 (the
"Reorganization Agreement"), between HCI and certain of its
subsidiaries and Old PanAmSat. The transaction was consummated
through the merger of a directly and indirectly wholly-owned
subsidiary of a newly formed holding company, New PanAmSat, with
and into Old PanAmSat and a contribution of the satellite services
business of HCI to New PanAmSat, with the result that Old PanAmSat
became a wholly-owned subsidiary of New PanAmSat and New PanAmSat
became the owner and operator of the HCI satellite services
business (the "Merger"). Immediately prior to the Merger, in a
separate but related transaction (the "Univisa Contribution"),
pursuant to the Stock Contribution and Exchange Agreement, dated
as of September 20, 1996 (the "Univisa Contribution Agreement"),
among Televisa, Satellite, New PanAmSat and HCI, New PanAmSat
acquired from Satellite all of the capital stock of Univisa, Inc.
("Univisa"), which was the indirect holder of all of the
outstanding shares of the Class B Common Stock, par value $.01 per
share of Old PanAmSat (the "PAS Class B Common Stock"). Following
the Merger and related transactions, Old PanAmSat was renamed PanAmSat
International Systems, Inc. and New PanAmSat was renamed PanAmSat
Corporation. In connection with the Univisa Contribution,
Satellite received for each share of PAS Class B Common Stock,
indirectly owned by Univisa, $16.38 and 0.45 shares of Common
Stock. Prior to the Merger, each of the Reporting Persons owned
shares of PAS Class B Common Stock. The Reporting Persons
acquired their respective shares of Common Stock as a result of
Satellite's receipt of the consideration described above under the
Univisa Contribution Agreement and related transactions. Copies
of the Reorganization Agreement and the Univisa Contribution
Agreement were filed with the Securities and Exchange Commission
as part of the Company's (under its former name of Magellan
International, Inc.) Form S-4 Registration Statement on April 16,
1997 and are incorporated herein by reference.
Item 4. PURPOSE OF TRANSACTION
----------------------
The Reporting Persons acquired the securities of the
issuer as consideration in the Univisa Contribution discussed in
Item 3. They acquired these shares for investment purposes.
Concurrently with the execution and delivery of the Reorganization
Agreement, Satellite entered into a Principal Stockholders
Agreement with HCI and certain stockholders of Old PanAmSat,
whereby such stockholders agreed, among other things, to vote in
favor of the Merger, the Reorganization Agreement and the other
transactions contemplated thereby and to vote against certain
actions which would be inconsistent with the Principal
Stockholders Agreement, the Reorganization Agreement and the other
transactions contemplated thereby. A copy of the Principal
Stockholders Agreement was filed with the Securities and Exchange
Commission as part of the Company's (under its former name of
Magellan International, Inc.) Form S-4 Registration Statement on
April 16, 1997 and is incorporated by reference herein.
Concurrently with the consummation of the reorganization of Old
PanAmSat, HCI, Satellite and certain stockholders of Old PanAmSat
entered into an Amended and Restated Stockholder Agreement,
whereby such parties agreed, among other things, (a) to certain
restrictions on HCI, such stockholders and the Company regarding
sales of shares of Common Stock; and (b) to designate directors of
the Company's Board of Directors. In addition, the Company, HCI,
Satellite and certain stockholders of Old PanAmSat entered into an
Amended and Restated Registration Rights Agreement pursuant to
which Satellite and such stockholders will have, among other
things, the right under certain circumstances and subject to
certain exceptions, to require the Company to register all or any
portion of the shares of Common Stock held by them, provided that
the aggregate value of such shares is at least $100,000,000. The
Amended and Restated Stockholders Agreement and the Amended and
Restated Registration Rights Agreement, attached hereto as
Exhibits 5 and 6 respectively, are incorporated by reference herein.
The Reporting Persons intend to review their investment
in the Company from time to time and, depending upon the price
and availability of the Common Stock, subsequent developments
affecting the Company, the Company's business and prospects,
other investment and business opportunities available to the
Reporting Persons, general stock market and economic conditions
and other factors deemed relevant, may decide to increase or
decrease the size of their investment in the Company.
Except as described herein, none of the Reporting
Persons has any present plan or proposal which relates to, or
could result in, any of the events referred to in paragraphs (a)
through (j), inclusive, of Item 4 of Schedule 13D. However, the
Reporting Persons will continue to review the business of the
Company and, depending upon one or more of the factors referred
to above, may in the future propose that the Company take one or
more of such actions.
Item 5. INTEREST IN SECURITIES OF THE ISSUER
------------------------------------
(a) For the information required by Item 5(a), see
items 11 and 13 on the cover page for each of Televisa and
Satellite.
(b) For the information required by Item 5(b), see
items 7, 8, 9 and 10 on the cover page for each of Televisa and
Satellite.
(c) For the information required by Item 5(c), see the
description of the Merger discussed in Item 3.
(d) Item 5(d) is not applicable.
(e) Item 5(e) is not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER
------------------------------------------------------
Under the Pledge and Security Agreement, dated as of May
16, 1997 among Satellite, Televisa and IBJ Schroder Bank & Trust
Company (the "Pledge Agreement") and the Collateral Trust
Agreement, dated as of May 16, 1997 among Magellan International,
Inc., HCI, Satellite, Televisa and IBJ Schroder Bank & Trust
Company (the "Trust Agreement" together with the "Pledge
Agreement" collectively, the "Collateral Agreements") Televisa and
Satellite agreed to deposit five million shares of Common Stock,
among other things, in trust to secure their indemnification
obligations under the Univisa Contribution Agreement. For
additional information required by Item 6, See Item 4.
Item 7. MATERIAL TO BE FILED AS EXHIBITS
--------------------------------
Exhibit 1. Joint Filing Agreement dated as of
May 22, 1997.*
Exhibit 2. Agreement and Plan of Reorganization,
dated as of September 20, 1996, as
amended, by and among Hughes
Communications, Inc., Hughes
Communications Galaxy, Inc., Hughes
Communications Satellite Services, Inc.,
Hughes Communications Services, Inc.,
Hughes Communications Carrier Services,
Inc., Hughes Communications Japan, Inc.,
Magellan International, Inc., and PanAmSat
Corporation.**
Exhibit 3. Stock Contribution and Exchange Agreement,
dated as of September 20, 1996, among
Grupo Televisa, S.A., Satellite Company,
LLC, Magellan International, Inc. and
Hughes Communications, Inc.**
Exhibit 4. Principal Stockholders Agreement, dated
September 20, 1996, by and among Hughes
Communications, Inc., Hughes
Communications Galaxy, Inc., Satellite
Company, LLC, Univisa Satellite Holdings,
Inc., and certain stockholders of PanAmSat
Corporation.**
Exhibit 5. Amended and Restated Stockholder
Agreement, dated as of May 16, 1997, by
and among Magellan International, Inc.,
Hughes Communications, Inc., Satellite
Company, LLC and certain stockholders of
PanAmSat Corporation.*
Exhibit 6. Amended and Restated Registration Rights
Agreement, dated as of May 16, 1997, by
and among Magellan International, Inc. and
certain stockholders of PanAmSat
Corporation.*
Exhibit 7. Pledge and Security Agreement, dated as of
May 16, 1997, among Satellite, Televisa and
IBJ Schroder Bank & Trust Company.*** (CE)
Exhibit 8. Collateral Trust Agreement, dated as of May
16, 1997, among Magellan International
Inc., HCI, Satellite, Televisa and IBJ
Schroder Bank & Trust Company.*** (CE)
- -----------------
* Previously filed.
** Filed with the Securities and Exchange Commission as an
appendix to Magellan International, Inc.'s Form S-4
Registration Statement (No. 333-25293) on April 16, 1997
and incorporated herein by reference.
*** Filed herewith.
SIGNATURE
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this
statement is true, complete and correct.
Date: May 27, 1997
By: GRUPO TELEVISA, S.A.
By: /s/ Emilio Romano
--------------------------
Name: Emilio Romano
Title: Authorized Signatory
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in
this statement is true, complete and correct.
Date: May 27, 1997
By: SATELLITE COMPANY, LLC
By: Fonovisa Centroamerica, S.A.
Title: Manager
By: /s/ Jorge Suarez Barbosa
--------------------------
Name: Jorge Suarez Barbosa
Title: Attorney-in-Fact
SCHEDULE 1
DIRECTORS AND PRINCIPAL OFFICERS OF GRUPO TELEVISA, S.A.
The name, business address, present principal
occupation or employment, and the name, principal business and
address of any corporation or other organization in which such
employment is conducted, as well as the citizenship of each of
the directors and principal officers of Grupo Televisa, S.A. is
set forth below.
Principal
Occupation, If
Other Than As
Position with Principal Officer
Name and Business Grupo of Grupo Citizen-
Address Televisa, S.A. Televisa, S.A. ship
- ----------------- ----------- ------------- -------
Emilio Azcarraga Chairman of Mexico
Jean the Board,
c/o Grupo President,
Televisa, S.A. Chief
Av. Vasco de Executive
Quiroga 2000 Officer and
Colonia Santa Fe Director
C.P. 01210 Mexico,
D.F.
Guillermo Canedo Executive Vice Mexico
White President -
c/o Grupo Chief
Televisa, S.A. Corporate
Av. Vasco de Officer,
Quiroga 2000 President of
Colonia Santa Fe Executive
C.P. 01210 Mexico, Committee and
D.F. Director
Miguel Aleman Vice-Chairman Mexico
Velasco of the Board,
c/o Grupo President of
Televisa, S.A. DTH Division
Av. Vasco de and Director
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Miguel Aleman Executive Vice Mexico
Magnani President of
c/o Grupo Engineering
Televisa, S.A. and
Av. Vasco de Technological
Quiroga 2000 Development,
Colonia Santa Fe Vice President
C.P. 01210 Mexico, of Executive
D.F. Committee and
Director
Alejandro Burillo Director Private Investor Mexico
Azcarraga
c/o Grupo
Televisa, S.A.
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Jose Antonio Canedo Director President of Grupo Mexico
White Televicentro and
c/o Grupo President of
Televisa, S.A. Desarrollo Axis
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Juan Abello Gallo Director President of Grupo Spain
c/o Grupo Torreal, Spain
Televisa, S.A.
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Luis Maria Anson Director Managing Director Spain
c/o Grupo of Diario ABC,
Televisa, S.A. Spain
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Antonio Ariza Director Chief Executive Mexico
Alduncin Officer of Pedro
c/o Grupo Domecq
Televisa, S.A.
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Julio Barba Hurtado Director Director of Grupo Mexico
c/o Grupo Televicentro
Televisa, S.A.
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Ricardo Claro Director President of Chile
Valdes Megavision
c/o Grupo
Televisa, S.A.
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Manuel Jorge Director President and Cuba
Cutillas Covani Chairman of the
c/o Grupo Board of Bacardi
Televisa, S.A. International
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Jaime Davila Executive Vice Mexico
Urcullu President -
c/o Grupo Chief
Televisa, S.A. Operating
Av. Vasco de Officer, Vice
Quiroga 2000 President of
Colonia Santa Fe Executive
C.P. 01210 Mexico, Committee and
D.F. Director
David Evans Director Executive Vice United
c/o Grupo President, News States
Televisa, S.A. Corporation, and
Av. Vasco de President and CEO
Quiroga 2000 of SKY
Colonia Santa Fe Entertainment
C.P. 01210 Mexico, Services Latin
D.F. America, Inc.
Ruben Fuentes Colin Director Director of Grupo Mexico
c/o Grupo Televicentro
Televisa, S.A.
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Claudio X. Gonzalez Director Chairman and Chief Mexico
c/o Grupo Executive Officer
Televisa, S.A. of Kimberly-Clark
Av. Vasco de de Mexico
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Rafael de Haro Vice President Mexico
Lebrija of Sales
c/o Grupo
Televisa, S.A.
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Roberto Hernandez Director President of Grupo Mexico
Ramirez Financiero Banamex
c/o Grupo Accival
Televisa, S.A.
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Enrique Krauze Chief Executive Mexico
Kleinbort Officer of
c/o Grupo Editorial Clio
Televisa, S.A. and Director
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Alfonso Romo Garza Director President of Pulsar Mexico
c/o Grupo Internacional
Televisa, S.A.
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Fernando Senderos Director President and Chief Mexico
Mestre Executive Officer
c/o Grupo of DESC
Televisa, S.A.
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
Jaime E Yordan Director Managing Director, United
c/o Grupo Goldman, Sachs & States
Televisa, S.A. Co.
Av. Vasco de
Quiroga 2000
Colonia Santa Fe
C.P. 01210 Mexico,
D.F.
MANAGER OF SATELLITE COMPANY, LLC
The name and business address as well as the
jurisdiction of organization of the manager of Satellite Company,
LLC is set forth below.
Name: Fonovisa Centroamerica, S.A.
Business Address: De Popa de Curridabat 25 Mts. Este
Edificio Galerias del Este
Local 8
San Jose, Costa Rica
Jurisdiction of
Organization: Costa Rica
EXHIBIT INDEX
Exhibit 1. Joint Filing Agreement dated as of May 22,
1997.*
Exhibit 2. Agreement and Plan of Reorganization,
dated as of September 20, 1996, as
amended, by and among Hughes
Communications, Inc., Hughes
Communications Galaxy, Inc., Hughes
Communications Satellite Services, Inc.,
Hughes Communications Services, Inc.,
Hughes Communications Carrier Services,
Inc., Hughes Communications Japan, Inc.,
Magellan International, Inc., and PanAmSat
Corporation.**
Exhibit 3. Stock Contribution and Exchange Agreement,
dated as of September 20, 1996, among Grupo
Televisa, S.A., Satellite Company, LLC,
Magellan International, Inc. and Hughes
Communications, Inc.**
Exhibit 4. Principal Stockholders Agreement, dated
September 20, 1996, by and among Hughes
Communications, Inc., Hughes
Communications Galaxy, Inc., Satellite
Company, LLC, Univisa Satellite Holdings,
Inc., and certain stockholders of PanAmSat
Corporation.**
Exhibit 5. Amended and Restated Stockholder
Agreement, dated as of May 16, 1997, by
and among Magellan International, Inc.,
Hughes Communications, Inc., Satellite
Company, LLC and certain stockholders of
PanAmSat Corporation.*
Exhibit 6. Amended and Restated Registration Rights
Agreement, dated as of May 16, 1997, by
and among Magellan International, Inc. and
certain stockholders of PanAmSat
Corporation.*
Exhibit 7. Pledge and Security Agreement, dated as of
May 16, 1997, among Satellite, Televisa and
IBJ Schroder Bank & Trust Company.*** (CE)
Exhibit 8. Collateral Trust Agreement, dated as of May
16, 1997, among Magellan International
Inc., HCI, Satellite, Televisa and IBJ
Schroder Bank & Trust Company.*** (CE)
- -----------------
* Previously filed.
** Filed with the Securities and Exchange Commission as an
appendix to Magellan International, Inc.'s Form S-4
Registration Statement (No. 333-25293) on April 16, 1997
and incorporated herein by reference.
*** Filed herewith.
EXHIBIT 7
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "Agreement"),
dated as of May 16, 1997, is entered into by SATELLITE COMPANY,
LLC, a Nevada limited liability company, and GRUPO TELEVISA,
S.A., a corporation (Sociedad Anonima) organized under the laws
of Mexico (together, the "Debtors"), in favor of IBJ SCHRODER
BANK & TRUST COMPANY, a New York banking corporation, as Trustee
under the Collateral Trust Agreement described below ("Secured
Party").
RECITALS
A. The Debtors and Magellan International, Inc., a
Delaware corporation ("Newco"), and Hughes Communications, Inc.,
a California corporation ("HCI" and, together with Newco, the
"Newco Group") are parties to a Stock Contribution and Exchange
Agreement, dated as of September 20, 1996.
B. Pursuant to the Stock Contribution and Exchange
Agreement, (i) the Debtors and Newco Group have entered into a
Collateral Trust Agreement with Secured Party, as Trustee, dated
as of May 16, 1997, under which Secured Party holds the Trust
Estate therein described in trust as set forth therein (as from
time to time amended, the "Collateral Trust Agreement"), and (ii)
the Debtors are executing and delivering this Pledge and Security
Agreement to Secured Party to hold as part of such Trust Estate.
AGREEMENT
In consideration of the foregoing and the mutual
promises contained herein and for other good and valuable
consideration the receipt and adequacy of which are hereby
acknowledged, the Debtors, intending to be legally bound, hereby
agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1 Collateral Trust Agreement Definitions.
The following terms shall have the meanings assigned to them in
the Collateral Trust Agreement:
Cash Equivalents
Letter of Credit
Newco Common Stock
Initial Trust Estate
Stock Contribution and Exchange Agreement
Trust Estate
SECTION I.2 U.C.C. Definitions. Where applicable and
except as otherwise expressly provided herein, terms used herein
(whether or not capitalized) shall have the respective meanings
assigned to them in the Uniform Commercial Code as in effect in
the State of New York on the date of the Stock Contribution and
Exchange Agreement (the "Code").
SECTION I.3 Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Agreement" means this Pledge and Security Agreement.
"Collateral" is defined in Section 2.1.
"Event of Default" means any of the following events:
(i) a Debtor fails to pay any Secured Obligation when due, and
such failure continues for 10 calendar days after either (A) it
is acknowledged in writing by any Debtor or (B) such Secured
Obligation is determined to be due and payable in arbitration
proceedings conducted in accordance with Section 24 of the
Collateral Trust Agreement or by order of a court of competent
jurisdiction; (ii) any representation or warranty made by any
Debtor in the Collateral Trust Agreement or this Agreement proves
to have been inaccurate in any material respect when made, and
such inaccuracy continues for 30 calendar days after written
notice thereof is given to the Debtors by Secured Party or by
Newco Group; (iii) any Debtor fails to perform or observe any
term, covenant or agreement contained in the Collateral Trust
Agreement or this Agreement, and such failure continues for 30
calendar days after either (A) it is acknowledged in writing by
any Debtor or (B) such failure is determined to have occurred and
such term, covenant or agreement is determined to be enforceable
in arbitration proceedings conducted in accordance with Section
24 of the Collateral Trust Agreement or by order of a court of
competent jurisdiction; (iv) any Debtor admits in writing its
inability to pay its debts generally or makes a general
assignment for the benefit of creditors; (v) any proceeding is
instituted by or against any Debtor seeking an order for relief
under the United States Bankruptcy Code or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts or the appointment of a
receiver, trustee, custodian or other similar official for it or
for any substantial part of its property under any law relating
to bankruptcy, insolvency, liquidation or reorganization or
relief of debtors and either (A) any such relief in any such
proceeding is sought or consented to by it or an order for any
such relief is entered against it, or (B) any such proceeding
instituted against it remains undismissed and unstayed for a
period of 60 calendar days; (vi) any Debtor takes any corporate
action to authorize any of the actions described in clause v
above; (vii) any provision of the Collateral Trust Agreement or
this Agreement for any reason ceases to be valid and binding on
any Debtor in any respect materially adverse to Secured Party or
the holders of Secured Obligations, and a valid and binding
reasonably equivalent substitute is not offered to Secured Party,
to be held in trust as part of the Trust Estate, within 30
calendar days after written notice thereof is given to the
Debtors by Secured Party or by Newco Group; (viii) any Debtor
repudiates or purports to revoke or terminate, in any material
respect, any of its obligations under the Collateral Trust
Agreement or this Agreement, and such event continues for 10
calendar days after written notice thereof is given to the
Debtors by Secured Party or by Newco Group; or (ix) the
Collateral Trust Agreement and this Agreement for any reason do
not create or cease to create a valid and perfected first
priority security interest in any property described herein as
part of the Collateral, and such event continues for 10 calendar
days after written notice thereof is given to the Debtors by
Secured Party or by Newco Group.
"Lien" means any mortgage, deed of trust, lien, pledge,
charge, security interest, hypothecation, assignment, deposit
arrangement or encumbrance of any kind in respect of any asset,
whether or not filed, recorded or otherwise perfected or
effective under applicable law, as well as the interest of a
vendor or lessor under any conditional sale agreement, capital or
finance lease or other title retention agreement relating to such
asset.
"Proceeds" includes (i) any and all payments,
dividends, cash, options, warrants, rights, instruments and other
property of any type or nature at any time received, receivable
or otherwise distributed, voluntarily or involuntarily, on
account of, in respect of or in replacement, substitution or
exchange for any item of Collateral or upon the collection, sale,
or other disposition of any item of Collateral; (ii) any and all
insurance or payments under any indemnity, warranty or guaranty
now or hereafter payable in respect of any item of Collateral or
any proceeds thereof or any loss relating thereto; (iii) any and
all claims against any person or entity based on or in any
respect relating to or arising from any item of Collateral; (iv)
any and all "proceeds" of any Collateral, as the term "proceeds"
is used in the Code; and (v) any and all property and interests
in property acquired with or in exchange for any of the
foregoing.
"Secured Obligations" means each and all present and
future indemnities, liabilities and obligations of every type and
description of any or all of the Debtors at any time arising
under, pursuant to or in respect of (i) Article VIII of the Stock
Contribution and Exchange Agreement, (ii) this Agreement, or
(iii) the Collateral Trust Agreement (in each case whether now
outstanding or hereafter arising or incurred, whether sole,
joint, several, or joint and several and, in the case of each
Debtor, whether owed by it or by any other Debtor) and all costs
and expenses incurred by Secured Party in asserting, collecting,
enforcing or protecting its security interest in any Collateral
in any bankruptcy case or insolvency proceeding to which any
Debtor may be party and all collection costs and enforcement
expenses incurred by Secured Party in retaking, holding,
preparing for sale, selling or otherwise disposing of or
realizing on any Collateral or otherwise exercising or enforcing
any of its rights or remedies hereunder, together with Secured
Party's reasonable attorneys' fees and disbursements and court
costs related thereto.
"Secured Party" means the person identified as such in
the preamble to this Agreement, acting as Trustee under the
Collateral Trust Agreement, and any successor Trustee thereunder.
ARTICLE II
SECURITY INTEREST AND COLLATERAL
SECTION II.1 Creation of Security Interest. As
security for the due and punctual payment and performance of each
and all of the Secured Obligations, each Debtor hereby grants
Secured Party a security interest in all right, title and
interest of such Debtor in, to, under or derived from the
following property (collectively, the "Collateral"), in each case
whether now owned or hereafter acquired by such Debtor and
wherever located:
(a) NEWCO COMMON STOCK: 5,000,000 shares of
Newco Common Stock and all other stock of Newco at any time
delivered or transferred to or held by Secured Party as part
of the Trust Estate;
(b) CASH, CASH EQUIVALENTS AND OTHER ASSETS OF
THE TRUST ESTATE: All cash, Cash Equivalents and other
property of every type and description now or at any time
hereafter constituting part of the Trust Estate;
(c) INTEREST IN THE TRUST ESTATE OR UNDER THE
TRUST AGREEMENT: All rights and interests of every type
and description, whenever and however arising, in or to the
Trust Estate or in, to or under the Collateral Trust
Agreement; and
(d) PROCEEDS: All Proceeds, except Proceeds
that have been released from the Trust Estate and delivered
to Contributor pursuant to the Collateral Trust Agreement.
SECTION II.2 Delivery of Instruments. All stock
certificates, notes, bonds, debentures and other instruments
constituting Collateral shall be delivered to and held by Secured
Party, without any notice from or demand by Secured Party, in
each case in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or
assignments in blank or with appropriate endorsements, in form
and substance satisfactory to Secured Party.
SECTION II.3 Further Assurances. Each Debtor will
promptly (and in no event later than five days after request by
Secured Party) execute and deliver, and use its reasonable and
diligent best efforts to obtain from others, any and all
instruments, certificated securities and documents (including,
without limitation, assignments, transfer documents and transfer
notices, financing statements and other lien notices), in form
and substance satisfactory to Secured Party, and take all other
actions which are necessary or, in the good faith judgment of
Secured Party, desirable or appropriate to create, perfect,
protect, or enforce Secured Party's security interests in the
Collateral, to enable Secured Party to exercise and enforce its
rights and remedies hereunder with respect to any Collateral, to
protect the Collateral against the rights, claims or interests of
third persons, or to effect or to assure further the purposes and
provisions of this Agreement, and the Debtors will pay all costs
related thereto and all reasonable expenses incurred by Secured
Party in connection therewith.
SECTION 2.4 Survival of Security Interest. Except as
otherwise required by law, the security interest granted hereby
shall, except as to property released from the Trust Estate and
delivered to or for account of the Debtors by Secured Party
pursuant to the Collateral Trust Agreement, (i) remain
enforceable as security for any and all Secured Obligations,
whether now outstanding or created or incurred at any future
time, until all of the Secured Obligations have been indefeasibly
paid, retired and discharged, and (ii) survive any sale, exchange
or other disposition by a Debtor of its interest in any
Collateral and remain enforceable against each transferee and
subsequent owner of such interest (to the fullest extent
permitted under applicable law), even if such sale, exchange or
other disposition is permitted at the time under the Collateral
Trust Agreement.
SECTION 2.5 Reinstatement. If at any time any payment
on any Secured Obligation is set aside, avoided, or rescinded or
must otherwise be restored or returned, this Agreement and the
security interest created hereby shall remain in full force and
effect and, if previously released or terminated, shall be
automatically and fully reinstated, without any necessity for any
act, consent or agreement of any Debtor, as fully as if such
payment had never been made and as fully as if any such release
or termination had never become effective.
ARTICLE III
DEBTORS' REPRESENTATIONS AND WARRANTIES
SECTION III.1 Representations and Warranties. The
Debtors represent and warrant that:
(a) Schedule A completely and accurately describes the
cash and Newco Common Stock delivered to Secured Party as
part of the Initial Trust Estate pursuant to the Collateral
Trust Agreement.
(b) Each Debtor's chief executive office is located at
the address shown as the chief executive office on Schedule
B hereto. No Debtor has any place of business within the
United States. All tangible Collateral and all of each
Debtor's records relating to any intangible Collateral owned
by it are kept solely at such chief executive office.
(c) No Debtor does business, or at any time during the
five years preceding the date of this Agreement has done
business, within the United States.
(d) Each Debtor at all times is (or, as to any item of
Collateral acquired after the date hereof, will be) the sole
legal and beneficial owner of all Collateral reflected on
its books and records as belonging to it and has exclusive
possession and control thereof free and clear of any and all
Liens, subject to the Collateral Trust Agreement and this
Agreement and the interests, possession and control granted
to Secured Party thereunder. No financing statement, notice
of lien, mortgage, deed of trust or instrument similar in
effect covering the Collateral, any portion thereof, or any
proceeds thereof, exists or is on file in any public office,
except as may have been filed in favor of Secured Party.
(e) All originals of all stock certificates, notes,
bonds, debentures and other instruments constituting
Collateral have been delivered to Secured Party with all
necessary or appropriate endorsements.
(f) Except as set forth in Schedule C and except
for the Code, no Debtor and no Collateral purported to
be granted by it is subject to any requirement of law
or contractual obligation which prohibits, restricts,
or limits the execution, delivery or performance of
this Agreement or the creation, perfection or
enforcement of the security interest purported to be
created hereby.
(g) Neither Debtor has a United States federal
taxpayer identification number.
(h) Each Debtor is a corporation or limited liability
company organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized
and is duly qualified to do business and in good standing in
each jurisdiction where its material assets are located or
its material operations are conducted, except where the
failure to be so qualified could not reasonably be expected
to cause a change that would be material and adverse to such
Debtor.
(i) Each Debtor has the corporate or partnership power
to execute, deliver and perform its obligations under the
Collateral Trust Agreement and this Agreement.
(j) The execution, delivery and performance by each
Debtor of the Collateral Trust Agreement and this Agreement
(i) have been duly authorized by all necessary action of its
board of directors or governing authority, (ii) do not
contravene its certificate or articles of incorporation or
by-laws or its members agreement or other governing
document, and (iii) do not and will not result in or require
the creation of any Lien (other than pursuant to the
Collateral Trust Agreement and this Agreement) upon any of
its property or assets.
(k) No authorization or approval or other action by,
and no notice to or filing with, any governmental officer,
department, agency or authority is required for the due
execution, delivery and performance by each Debtor of the
Collateral Trust Agreement or this Agreement, except the
filing of financing statements to perfect Secured Party's
security interest which have been duly filed.
(l) The Collateral Trust Agreement and this Agreement
are legal, valid and binding obligations of each Debtor,
enforceable against each Debtor in accordance with their
respective terms, subject to laws generally affecting the
enforcement of creditors' rights.
(m) The execution, delivery and performance by each
Debtor of the Collateral Trust Agreement and this Agreement
(i) do and will comply with all applicable laws, (ii) do and
will comply with, and do not and will not conflict with,
constitute a breach of or give rise to any Lien, default,
event of default or other adverse consequence under, any
note, indenture, undertaking, agreement or other contractual
obligation that is binding upon any Debtor or secured by or
enforceable against any property of any Debtor.
(n) Secured Party holds an enforceable and perfected
first Lien in the Collateral. No other Liens are
outstanding against the Collateral.
ARTICLE IV
COVENANTS OF THE DEBTORS
SECTION IV.1 Covenants. Each Debtor covenants and
agrees that so long as the security interest created hereby
remains outstanding:
(a) Each Debtor will deliver to Secured Party
each instrument and certificated security included in
the Collateral as set forth in Section 2.3.
(b) No Debtor will (i) cause, permit or suffer any
voluntary or involuntary change in its name, identity or
corporate structure, or in the location of its chief
executive office, or (ii) keep any tangible Collateral or
any records relating to any Claim owned by it, or permit or
suffer any such Collateral or records to be moved, to any
other location unless (in each case) (x) Schedule B has
first been appropriately supplemented with respect thereto,
and (y) an appropriate financing statement has been filed in
the proper office and in the proper form, and all other
requisite actions have been taken, to perfect or continue
the perfection (without loss of priority) of Secured Party's
security interest in the Collateral.
(c) Each Debtor will defend the Collateral
against all claims and demands of all persons at any
time claiming the same or any interest therein.
(d) No Debtor will encumber, sell, exchange or
otherwise dispose of any item of Collateral or any
interest therein, or permit or suffer any such item to
be encumbered, sold, exchanged or otherwise disposed
of, unless (i) such action is permitted at the time
under the Collateral Trust Agreement and (ii) the
Debtors make all payments on account of the Secured
Obligations required to be made therefrom, or in
exchange or substitution therefor, and each Debtor
takes all other actions required to be taken in
connection therewith, under the Collateral Trust
Agreement.
(e) Secured Party is hereby authorized to file one or
more financing statements or fixture filings, and
continuations thereof and amendments thereto, relative to
all or any part of the Collateral, without the signature of
any Debtor where permitted by law. A copy of this Agreement
may be filed as a financing statement wherever permitted by
law.
(f) Secured Party may at any time (but shall not
be obligated to) (i) perform any of the obligations of
any Debtor under this Agreement if such Debtor fails to
perform such obligation within 30 calendar days after
written demand by Secured Party and (ii) make any
payments and do any other acts Secured Party may deem
necessary or desirable to protect its security interest
in the Collateral, including, without limitation, the
right to pay, purchase, contest or compromise any Lien
that attaches or is asserted against any Collateral and
to appear in and defend any action or proceeding
relating to the Collateral, and the Debtors will
promptly reimburse Secured Party for all payments made
by Secured Party in doing so, together with interest
thereon at the judgment rate and all costs and expenses
related thereto as set forth in Section 9.10.
ARTICLE V
VOTING RIGHTS, DIVIDENDS AND DISTRIBUTIONS
SECTION V.1 Voting Rights. So long as no Event of
Default has occurred and is continuing or would result from any
exercise thereof, the Debtors shall have and may exercise all
voting rights with respect to any and all Newco Common Stock held
in the Trust Estate, except that the Debtors may not and will not
act or vote in favor of any action that would be or cause an
Event of Default or any event which, with the giving of notice or
lapse of time (or both), would constitute an Event of Default.
Upon the occurrence of an Event of Default, Secured Party may
(but shall not be obligated to) suspend or terminate the Debtors'
right to exercise voting rights with respect to any or all such
Newco Common Stock, by giving written notice of such suspension
or termination to the Debtors, and Secured Party shall thereupon
have the sole right and power to exercise such voting rights.
SECTION V.2 Dividends, Distributions and Payments.
Secured Party shall be entitled to receive and hold as part of
the Trust Estate, subject to the Collateral Trust Agreement, all
dividends and distributions on the Newco Common Stock, all income
from Cash Equivalents and all Proceeds.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION VI.1 Remedies. Upon and at any time after the
occurrence of any Event of Default, and from time to time on each
occasion when an Event of Default has occurred and is continuing,
Secured Party may exercise and enforce each and all of the rights
and remedies available to a secured party upon default under the
Code or other applicable law and each and all of the following
rights and remedies:
(a) Secured Party may notify any or all account
debtors and obligors on any Collateral to make payment
directly to Secured Party.
(b) Secured Party may take possession of all
items of Collateral that are not then in its possession
and require the person or entity in possession thereof
to deliver such Collateral to Secured Party at one or
more locations designated by Secured Party and
reasonably convenient to it and the Debtors.
(c) Secured Party may cause any or all Newco
Common Stock and other instruments or investment
securities constituting part of the Trust Estate to be
transferred into Secured Party's name and exercise and
enforce any or all of the rights, interests, privileges
and remedies of a holder against the issuer thereof, as
freely and fully as if Secured Party were the absolute
owner but as a secured party and as part of the Trust
Estate.
(d) Secured Party may sell or otherwise dispose of any
or all of the Collateral or any part thereof in one or more
parcels and from time to time in any quantity or portion and
on any number of occasions, at a public sale or in a private
sale or transaction, on any exchange or market or at Secured
Party's offices or at any other location, for cash, on
credit or for future delivery, and may enter into all
contracts necessary or appropriate in connection therewith,
without any notice whatsoever unless required by law,
subject to the following limitations:
(1) Secured Party may sell or otherwise
dispose of Newco Common Stock held in the Trust Estate
at any particular time only if the cash and the
immediately realizable net liquidation value of Cash
Equivalents and Letters of Credit then held in the
Trust Estate are not sufficient to pay in full (i) all
amounts which Secured Party is then required or has
then been instructed to pay out from the Trust Estate
pursuant to the Collateral Trust Agreement and (ii) all
Secured Obligations which are then payable; and
(2) Secured Party shall not sell or
otherwise dispose of shares of Newco Common Stock at
any particular time in excess of a number of shares
(determined on a rounded-up commercially reasonable
regular lot basis) the proceeds of which would be
sufficient, when added to the cash and the immediately
realizable net liquidation value of Cash Equivalents
and Letters of Credit then held in the Trust Estate, to
pay in full (i) all amounts which Secured Party is then
required or has then been instructed to pay out from
the Trust Estate pursuant to the Collateral Trust
Agreement, (ii) all amounts which Secured Party in
good faith anticipates it will be required or
instructed to pay out from the Trust Estate on account
of Known Liabilities and pending Tax Claims pursuant to
the Collateral Trust Agreement within the next 90
calendar days (and for such purpose Secured Party may
rely conclusively on a certificate as to such amounts
given to Secured Party by Newco Group), and (iii) all
Secured Obligations which are then payable.
The Debtors agree that at least 10 calendar days' written
notice to the Debtors of the time and place of any public
sale or the time after which any private sale is to be made
shall be commercially reasonable. The giving of notice of
any such sale or other disposition shall not obligate
Secured Party to proceed with the sale or disposition, and
any such sale or disposition may be postponed or adjourned
from time to time, without further notice.
(e) Secured Party may, on a royalty-free basis,
use and license use of any trademark, trade name, trade
style, copyright, patent or technical knowledge or
process owned, held or used by any Debtor in respect of
any Collateral as to which any right or remedy of
Secured Party is exercised or enforced.
In addition, but without expanding the duties or limiting the
rights, powers and immunities of Secured Party under this
Agreement or the Collateral Trust Agreement, each holder of any
Secured Obligation may exercise and enforce such rights and
remedies for the collection of such Secured Obligation as may be
available to it by law or agreement. Such exercise or
enforcement shall not impose any obligation or liability upon
Secured Party.
SECTION VI.2 Remedies Cumulative. Secured Party may
exercise and enforce each right and remedy available to it upon
the occurrence of an Event of Default either before or
concurrently with or after, and independently of, any exercise or
enforcement of any other right or remedy of Secured Party or any
holder of any Secured Obligation against any person, entity or
property. All such rights and remedies shall be cumulative, and
no one of them shall exclude or preclude any other.
SECTION VI.3 Surplus; Deficiency. Any surplus
proceeds of any sale or other disposition of Collateral by
Secured Party remaining after all the Secured Obligations are
indefeasibly paid in full and discharged shall be paid over to
the Debtors or to whomever may be lawfully entitled to receive
such surplus or as a court of competent jurisdiction may direct,
except that if any contingent, unliquidated or unmatured Secured
Obligation then remains outstanding, such surplus proceeds may be
retained by Secured Party and held as Collateral until such time
as all outstanding Secured Obligations have been determined,
liquidated and indefeasibly paid in full and discharged. The
Debtors shall be and remain liable for any deficiency.
SECTION VI.4 Information Related to Collateral. If
Secured Party determines to sell or otherwise dispose of any
Collateral, the Debtors shall, and shall cause any person
controlled by any Debtor to, furnish to Secured Party all
information Secured Party may request that pertains or could
pertain to the value or condition of such Collateral or would or
might facilitate its sale. Secured Party may provide such
information to any potential purchaser of any or all of the
Collateral, subject to such confidentiality terms as the Debtors
may reasonably request in writing.
SECTION VI.5 Sale Exempt from Registration. Secured
Party shall be entitled at any such sale, if it deems it
advisable to do so, to restrict the prospective bidders or
purchasers to persons who will provide assurances satisfactory to
Secured Party that they may be offered and sold the Collateral to
be sold without registration under the Securities Act of 1933, as
amended (the "Securities Act"), or any other applicable state or
federal statute, and upon the consummation of any such sale,
Secured Party shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so
sold. Secured Party may solicit offers to buy the Collateral, or
any part of it, from a limited number of investors deemed by
Secured Party, in its commercially reasonable judgment, to meet
the requirements to purchase securities under Regulation D
promulgated under the Securities Act (or any other regulation of
similar import). If Secured Party solicits such offers from such
investors, then the acceptance by Secured Party of the highest
offer obtained therefrom shall be deemed to be a commercially
reasonable method of disposition of the Collateral.
SECTION VI.6 Registration Rights. If Secured Party
determines that registration of any securities constituting
Collateral under the Securities Act or other applicable law is
required or desirable in connection with any foreclosure sale,
each Debtor will use its best efforts to assist and cooperate in
all respects reasonably requested by Secured Party or Newco Group
in causing such registration to become effective and to be kept
effective for such time as may be reasonably necessary in the
opinion of Secured Party, except that no Debtor shall be
obligated under this Section 6.6 to exercise any registration
rights that may be available to it with respect to Newco Common
Stock.
ARTICLE VII
THE SECURED PARTY
SECTION VII.1 Collateral Trust Agreement Provisions.
Secured Party is executing and delivering this Agreement, and
accepting the security interests, rights, remedies, powers and
benefits conferred upon Secured Party hereby, as Trustee under
the Collateral Trust Agreement. The provisions of the Collateral
Trust Agreement and all rights, powers, immunities and
indemnities granted to the Trustee under the Collateral Trust
Agreement shall apply in respect of such execution, delivery and
acceptance and in respect of any and all actions taken or omitted
by Secured Party under, in connection with or with respect to
this Agreement.
SECTION VII.2 No Liability. Secured Party makes no
statement, promise, representation or warranty whatsoever, and
shall have no liability whatsoever, to any holder of any Secured
Obligations as to the authorization, execution, delivery,
legality, enforceability or sufficiency of this Agreement or as
to the creation, perfection, priority or enforceability of any
security interest granted hereunder or as to the existence,
ownership, quality, condition, value or sufficiency of any
Collateral or as to any other matter whatsoever.
SECTION VII.3 Holders Bound. Except where the consent
of others may be required pursuant to the express provisions of
the Collateral Trust Agreement, any modification, amendment,
waiver, termination or discharge of any security interest, right,
remedy, power or benefit conferred upon Secured Party hereby that
is effectuated in a writing signed by Secured Party shall be
binding upon all holders of Secured Obligations if it is
authorized in the Collateral Trust Agreement or directed in
writing by Newco Group.
SECTION VII.4 Duty of Care. Neither Secured Party nor
any director, officer, employee, attorney or agent of Secured
Party shall be obligated to care for the Collateral hereunder or
to collect, enforce, vote, or protect the Collateral or any
rights or interests of any Debtor related thereto or to preserve
or enforce any rights which any Debtor or any other Person may
have against any third party, except only that Secured Party
shall exercise reasonable care in physically safekeeping any item
of Collateral that was delivered into Secured Party's possession.
Secured Party shall be deemed to have exercised such reasonable
care if the Collateral is accorded treatment substantially equal
to that which Secured Party accords to its own property or if it
selects, with reasonable care, a custodian or agent to hold such
collateral for Secured Party's account.
ARTICLE VIII
EXONERATION WAIVERS
SECTION 8.1 Rights and Interests not Prejudiced,
Affected or Impaired. Neither the security interests granted
hereby, nor the trusts and interests created under the Collateral
Trust Agreement nor any power, privilege, right or remedy of
Secured Party relating thereto, nor the beneficial interest of
Newco Group and other holders of Secured Obligations therein and
thereunder shall at any time in any way be prejudiced, affected
or impaired by any act or failure to act on the part of any of
the Debtors or by any act or failure to act on the part of
Secured Party or Newco Group or any other holder of Senior
Secured Obligations or by any breach or default by any of them in
the performance or observance of any promise, covenant or
obligation enforceable by any Debtor, regardless of any knowledge
thereof that Secured Party or Newco Group and any such other
holder may have or otherwise be charged with.
(a) Without in any way limiting the generality of
the foregoing, Secured Party, Newco Group and each other
holder of any Secured Obligations may at any time and from
time to time, without the consent of or notice to any
Debtor, without incurring any responsibility or liability to
any Debtor and without in any manner prejudicing, affecting
or impairing any such security interest, trust, interest,
power, privilege, right or remedy or the obligations of the
Debtors to Secured Party, Newco Group and the other holders
of Secured Obligations:
(i) Make loans and advances to any
one or more of the Debtors, or issue, guaranty or
obtain letters of credit for account of any one or more
of the Debtors or otherwise extend credit to any one or
more of the Debtors, in any amount and without any
limitation or restriction whatsoever, on any terms,
whether pursuant to a commitment or as a discretionary
advance and whether or not any default or event of
default or failure of condition is then continuing;
(ii) Change the manner, place or
terms of payment or extend the time of payment of, or
renew or alter, compromise, accelerate, extend,
refinance, release or discharge, any Secured Obligation
or any other indebtedness or liability of any of the
Debtors or any agreement, guaranty, lien or obligation
of any of the Debtors or any other person or entity in
any manner related thereto, or otherwise amend,
supplement or change in any manner any Secured
Obligation or any such indebtedness or liability or any
such agreement, guaranty, lien or obligation;
(iii) In any manner modify,
transform, change, refinance, replace, reclassify,
subordinate or recharacterize any such indebtedness or
liability;
(iv) Release or discharge any
guaranty or any other lien, right, remedy or claim
against any person or entity;
(v) Take or fail to take any
collateral security for any Secured Obligation or take
or fail to take any action which may be necessary or
appropriate to ensure that any lien upon any property
securing any Secured Obligation is duly enforceable or
perfected or entitled to priority as against any other
lien or to ensure that any proceeds of any property
subject to any lien are applied to the payment of any
Secured Obligation;
(vi) Release, discharge or permit
the lapse of any or all liens upon any property at any
time securing any Secured Obligation;
(vii) Exercise or enforce, in
any manner, order or sequence, or fail to exercise or
enforce, any right or remedy against any one or more of
the Debtors or in respect of the Collateral or the
Trust Estate or any other collateral security or any
other person, entity or property in respect of any
Secured Obligation or lien securing any Secured
Obligation or any right under this Agreement or the
Collateral Trust Agreement; or
(viii) Sell, exchange, release,
foreclose upon or otherwise deal with any property that
may at any time be subject to any lien securing any
Secured Obligation.
(b) No exercise, delay in exercising or failure
to exercise any right arising under this Agreement or the
Collateral Trust Agreement, no act or omission of Secured
Party, Newco Group or any other holder of any Secured
Obligation in respect of any or all of the Debtors or any
other person or entity or the Collateral or the Trust Estate
or any other collateral security for any Secured Obligation
or any right arising under this Agreement or the Collateral
Trust Agreement, no change, impairment, or suspension of any
right or remedy of Secured Party, Newco Group or any other
holder of any Secured Obligation, and no other act, failure
to act, circumstance, occurrence or event which, but for
this provision, would or could act as a release or
exoneration of the obligations of any Debtor shall in any
way affect, decrease, diminish or impair any of the
obligations of the Debtors under this Agreement or give any
Debtor or any other person or entity any recourse or defense
against Secured Party, Newco Group or any other holder of
Secured Obligations in respect of any security interest,
trust, interest, power, privilege, right or remedy arising
under this Agreement or the Collateral Trust Agreement.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION IX.1 Notices. All notices, requests,
approvals, consents and other communications required or
permitted to be made hereunder shall, except as otherwise
provided, be given in the manner specified and to the addresses
set forth in Section 16 of the Collateral Trust Agreement.
SECTION IX.2 Headings. The various headings in this
Agreement are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or any provision
hereof.
SECTION IX.3 Changes. This Agreement or any provision
hereof may be changed, waived, or terminated only by a statement
in writing signed by the party against which such change, waiver
or termination is sought to be enforced. Any such waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given.
SECTION IX.4 Debtors Remain Liable. Each Debtor shall
remain liable under all contracts and agreements included in the
Collateral to the extent set forth therein to perform all of its
duties and obligations thereunder to the same extent as if this
Agreement had not been executed. The exercise or enforcement by
Secured Party of any of its rights and remedies under this
Agreement or in respect of the Collateral shall not release any
Debtor from any of its duties or obligations under any such
contracts or agreements. Secured Party shall not be obligated to
perform any such duties or obligations and shall not be liable
for any breach thereof.
SECTION IX.5 No Waiver. No failure by Secured Party
to exercise, or delay by Secured Party in exercising, any power,
right or remedy under this Agreement shall operate as a waiver
thereof. No waiver by Secured Party shall be effective unless
given in a writing signed by it. No waiver so given shall
operate as a waiver in respect of any other matter or in respect
of the same matter on a future occasion. Acceptance of or
acquiescence in a course of performance in respect of this
Agreement shall not waive or affect the construction or
interpretation of the terms of this Agreement even if the
accepting or acquiescing party had knowledge of the nature of the
performance and opportunity for objection.
SECTION IX.6 Entire Agreement. This Agreement and the
Collateral Trust Agreement are intended by the parties as a final
expression of their agreement and a complete and exclusive
statement of the terms and conditions related to the subject
matter thereof.
SECTION IX.7 Severability. If any provision of this
Agreement is invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the
remaining provisions hereof, or of such provision in any other
application, shall not be in any way affected or impaired thereby
and such other provisions and applications shall be enforceable
to the fullest extent lawful.
SECTION IX.8 Power of Attorney. Each Debtor hereby
appoints and constitutes Secured Party or any delegate, nominee
or agent acting for Secured Party as such Debtor's attorney-in-
fact with the power and authority (but not the duty), in the name
of such Debtor or in the name of Secured Party or such delegate,
nominee or agent, to (i) execute, deliver and file such financing
statements, agreements, deeds and writings as such Debtor is
required to execute, deliver or file hereunder, (ii) endorse,
collect or transfer any item of Collateral which such Debtor is
required to endorse, collect or transfer hereunder or which
Secured Party is permitted to endorse, collect or transfer
hereunder, (iii) make any payments or take any action under
Section 2.3 or Section 4.1(f), (iv) take any other action
required of such Debtor or permitted to Secured Party hereunder,
and (v) take any action reasonably necessary or incidental to any
of the foregoing. This power of attorney is coupled with an
interest and is irrevocable as to the Debtors. Secured Party
shall have no duty whatsoever to exercise any power herein
granted it.
SECTION IX.9 Counterparts. This Agreement and any
amendments, waivers, consents or supplements may be executed in
any number of counterparts, each of which when so executed and
delivered shall be deemed an original, but all of which shall
together constitute one and the same agreement.
SECTION IX.10 Costs and Expenses; Indemnification.
The Debtors hereby agree (i) to pay or reimburse Secured Party
for all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees and disbursements and
court costs) incurred in connection with or as a result of the
exercise or enforcement by Secured Party of any right or remedy
available to it or the protection or enforcement of Secured
Party's interest in the Collateral in any bankruptcy case or
insolvency proceeding and (ii) to indemnify Secured Party for,
and defend and hold it harmless against, any loss, liability or
expense incurred by it in connection with its entering into this
Agreement or carrying out any of its duties or exercising any of
its rights hereunder, on the terms and subject to the limitations
set forth in Section 14 of the Collateral Trust Agreement.
SECTION IX.11 GOVERNING LAW; SUBMISSION TO
JURISDICTION; WAIVER OF JURY TRIAL; LIMITATION OF LIABILITY;
WAIVER OF BOND.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK,
EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE SECURITY
INTERESTS HEREUNDER IN RESPECT OF ANY PARTICULAR COLLATERAL
IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
(b) SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN
THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION
OF THOSE COURTS. EACH PARTY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT
OR ANY DOCUMENT RELATED HERETO. SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS MAY BE MADE BY ANY MEANS
PERMITTED BY NEW YORK LAW.
(c) WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES
ALL RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE COLLATERAL TRUST AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF
THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE, AND
AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED
BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, EACH PARTY FURTHER AGREES THAT ITS RIGHT TO A
TRIAL BY JURY IS HEREBY WAIVED AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT OR THE COLLATERAL TRUST AGREEMENT OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE COLLATERAL TRUST
AGREEMENT.
(d) LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY
THE DEBTORS AGAINST SECURED PARTY OR THE AFFILIATES,
DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF
SECURED PARTY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM (WHETHER BASED UPON
BREACH OF CONTRACT, TORT, BREACH OF STATUTORY DUTY OR ANY
OTHER THEORY OF LIABILITY) ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND THE
DEBTORS HEREBY WAIVE, RELEASE AND AGREE NOT TO SUE UPON ANY
CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT NOW ACCRUED AND
WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN THEIR FAVOR.
(e) WAIVER OF BOND. THE DEBTORS WAIVE THE POSTING OF
ANY BOND OTHERWISE REQUIRED OF SECURED PARTY IN CONNECTION
WITH THE ENFORCEMENT OF ANY OF ITS REMEDIES HEREUNDER,
INCLUDING, WITHOUT LIMITATION, ANY ORDER OR WRIT FOR
REPLEVIN OR DELIVERY OF POSSESSION OF ANY COLLATERAL.
SECTION 9.12 Successors and Assigns. This Agreement
is binding upon and enforceable against the Debtors and their
respective successors and assigns. It shall inure to the benefit
of and may be enforced by Secured Party and its successors and
assigns, for the benefit of Newco Group and each and every other
person or entity which at any time holds or is entitled to
enforce any of the Secured Obligations and each of their
respective heirs, representatives, successors and assigns.
Secured Party reserves the right to resign as Trustee under the
Collateral Trust Agreement, in the manner and with the effect set
forth in Section 13(f) and 13(g) thereof.
SECTION 9.13 Joint and Several Obligation. This
Agreement and the security interest granted by each Debtor
hereunder and all obligations of each Debtor hereunder shall be
the joint and several obligation of each Debtor and may be freely
enforced against each Debtor for the full amount of the Secured
Obligations, without regard to whether enforcement is sought or
available against any other Debtor.
[intentionally left blank]
IN WITNESS WHEREOF, the parties have caused this Pledge
and Security Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first above written.
SATELLITE COMPANY, LLC,
By:/s/ Jorge Suarez Barbosa
------------------------
Name: Jorge Suarez Barbosa
Title: General Manager
GRUPO TELEVISA, S.A.
By:/s/ Raul Lopez Martinez
------------------------
Name: Raul Lopez Martinez
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY,
as trustee under the Collateral
Trust Agreement described herein
By:/s/ Stuart Rothenberg
------------------------
Name: Stuart Rothenberg
Title: Assistant Vice President
Index of Schedules
A Description of the Collateral
B Location of Chief Executive Office; Other Locations
C Restrictions - 3.1(f)
EXHIBIT 8
COLLATERAL TRUST AGREEMENT
This COLLATERAL TRUST AGREEMENT (this "Agreement"),
dated as of May 16, 1997, is entered into by and among MAGELLAN
INTERNATIONAL, INC., a Delaware corporation ("Newco"), HUGHES
COMMUNICATIONS, INC., a California corporation ("HCI," and
together with Newco, the "Newco Group"), SATELLITE COMPANY, LLC,
a Nevada limited liability company ("Contributor"), GRUPO
TELEVISA, S.A., a corporation (Sociedad Anonima) organized under
the laws of Mexico ("Parent"), and IBJ SCHRODER BANK & TRUST
COMPANY, a New York banking corporation with offices at One State
Street, New York, New York 10004, as Collateral Trustee for Newco
Group (the "Trustee").
RECITALS
A. Newco Group, Contributor and Parent have entered
into a Stock Contribution and Exchange Agreement, dated as of
September 20, 1996 (the "Stock Contribution and Exchange
Agreement"), which provides, among other things, for the transfer
by Contributor of all of the stock of Univisa, Inc. ("Univisa"),
a Delaware corporation, to Newco.
B. The Stock Contribution and Exchange Agreement
provides that Contributor and Parent, jointly and severally,
shall indemnify, save and hold harmless Newco Group, its
affiliates and Subsidiaries, with respect to certain matters upon
the terms and subject to the conditions provided in the Stock
Contribution and Exchange Agreement and that as security therefor
(and not in lieu thereof) a trust estate shall be established for
the protection of Newco Group, its affiliates and Subsidiaries.
C. A material condition to the consummation of the
transactions contemplated by the Stock Contribution and Exchange
Agreement is that the parties hereto enter into this Agreement
and that Contributor, Parent and the Trustee enter into a Pledge
and Security Agreement of even date (the "Pledge and Security
Agreement").
D. The Trustee has agreed to hold the Trust Estate
(as defined herein) in accordance with the terms and provisions
contained herein.
AGREEMENT
In consideration of the foregoing and the mutual
promises contained herein and for other good and valuable
consideration the receipt and adequacy of which are hereby
acknowledged, the parties, intending to be legally bound, hereby
agree as follows:
1. Defined Terms.
-------------
(a) For purposes of this Agreement:
"cash" means United States Dollars in such form as may,
at the time, be legal tender for the payment of debts in the
United States.
"Cash Equivalents" means Short-Term Treasuries or Joint
Approval Cash Equivalents.
"Event of Default" has the meaning assigned in the
Pledge and Security Agreement.
"Expiration Date" means the last day in the 91-day
period following the expiration of the statutes of limitations
applicable to the assessment of any tax against Univisa or USHI
(or any affiliate or Subsidiary of either of them) with respect
to all Pre-Closing Periods taking into account any waivers,
extensions or tollings of any such statutes of limitation;
PROVIDED, HOWEVER, that if as of the last day of such 91-day
period there are any Tax Claims, then, notwithstanding the
foregoing, the Expiration Date shall not occur until the day
immediately following the day on which there are no Tax Claims.
"Fair Market Value" means, as of any date of
determination, the average of the Quoted Prices of Newco Common
Stock for the 20 consecutive trading days prior to such date of
determination.
"Final Tax Amount" means, as of any date of
determination, the amount, if any, of a Liability or Damages in
respect of taxes of Univisa or USHI (or any affiliate or
Subsidiary of either of them) for which Contributor and Parent
would be liable under Section 8.2(a)(ii) of the Stock
Contribution and Exchange Agreement, which taxes (a) are
determined to be due and payable as of such date pursuant to (i)
a final determination made by, or settlement concluded with, the
applicable taxing authority with respect to such taxes or (ii) a
final, binding and nonappealable judgment rendered with respect
to such taxes and (b) are unpaid as of such date.
"Known Liabilities" means Liabilities or Damages which
are Indemnification Obligations that are now or hereafter
included as Scheduled Liabilities or are the subject of a
Liabilities Claim.
"Joint Approval Cash Equivalents" means United States
Dollar indebtedness in any of the following forms, if and to the
extent the Trustee has been directed to invest in such
indebtedness in a joint written investment direction signed both
by the Representative and by the Indemnitees' Agent: (i)
marketable direct obligations guaranteed by the United States
Government and backed by the full faith and credit of the United
States, issued after July 18, 1984 and maturing within 90 days
from the date of acquisition thereof, (ii) marketable direct
obligations issued by any state of the United States of America
or any political subdivision of any such state or any public
instrumentality thereof maturing within 90 days from the date of
acquisition thereof and, at the time of acquisition, having a
rating in one of the two highest rating categories obtainable
from either Standard & Poor's Corporation or Moody's Investors
Service, Inc. (or, if at any time, neither of such rating
services shall be rating such obligations, then from such other
nationally recognized rating services as may be acceptable to
Newco), (iii) certificates of deposit maturing within 90 days
from the date of acquisition thereof and issued by any commercial
bank which accepts deposits insured by the Federal Deposit
Insurance Corporation and which has a combined capital and
surplus greater than $500 million and a long term certificate of
deposit rating in one of the two highest rating categories
obtainable from either Standard & Poor's Corporation or Moody's
Investors Service, Inc. (or, if at any time, neither of such
rating services shall be rating such obligations, then from such
other nationally recognized rating services as may be acceptable
to Newco) (any such commercial bank, an "Acceptable Bank"); (iv)
repurchase agreements, Eurodollar deposits and bankers
acceptances maturing within 90 days from the date of acquisition
thereof and issued by an Acceptable Bank; (v) investments in
money market funds that invest solely in (x) Short-Term
Treasuries or repurchase agreements secured by Short-Term
Treasuries or (y) Joint Approval Cash Equivalents of the type
described in clauses (i) and (ii) above or repurchase agreements
secured by such Joint Approval Cash Equivalents; or (vi) any
other instrument that is specifically approved in writing by
Contributor, Parent and Newco Group, if the Trustee receives
opinions of counsel reasonably satisfactory to it stating that
such writing has been duly authorized, executed and delivered by
each of them and is binding upon and enforceable against each of
them.
"Liabilities Claim" means a claim (other than a Tax
Claim) by any party that a Liability or Damages which are
Indemnification Obligations exist, but only to the extent that
such claimed Liability or Damages are not included as Scheduled
Liabilities.
"Maintenance Level" means (i) prior to the third
anniversary of the date hereof, $5 million, (ii) on and after the
third and prior to the tenth anniversary of the date hereof, $2
million, and (iii) -0- thereafter.
"Newco Common Stock" means Common Stock, $ .01 par
value, of Newco.
"Pending Amounts" means, at any time, the aggregate
amount of all Liabilities Claims, except Liabilities Claims in
respect of a Liability or Damages for which both (i) it has been
and remains agreed or determined, in accordance with Section 6
hereof, that a reserve should or should not be maintained as part
of the Scheduled Liabilities and (ii) no claim, dispute,
arbitration or proceeding is pending as to the amount of any such
reserve.
"Quoted Price" means the last reported sale price of
Newco Common Stock as reported by NASDAQ or, if Newco Common
Stock is listed on a national securities exchange, the last
reported sale price on such exchange (which shall be for
consolidated trading if applicable to such exchange), or if
neither so reported or listed, the last reported bid price of
Newco Common Stock.
"Scheduled Liabilities" means Known Liabilities listed
on the Schedule of Liabilities to be maintained pursuant to
Section 6 hereof.
"Short-Term Treasuries" means United States Dollar
indebtedness consisting of marketable direct obligations issued
by the United States Government or any agency thereof and backed
by the full faith and credit of the United States, in the form of
Book-entry Securities maintained by the Trustee or any nominee
acting for it, solely in its name, in an account at the Federal
Reserve Bank of New York under the Treasury/Reserve Automated
Debt Entry System, issued after July 18, 1984 and maturing within
90 days from the date of acquisition thereof.
"Tax Claim" means, as of any date of determination, a
claim asserted or assessed in any (i) revenue agent's report,
(ii) notice of proposed adjustment, (iii) notice of deficiency,
(iv) notice of assessment, (v) judicial pleading, (vi) other
written document of similar import received from a taxing
authority or (vii) potential claim relating to an applicable
requirement or obligation to notify a state or local taxing
authority with respect to a federal income tax adjustment
involving a claim described in clauses (i) - (vi), involving, in
any case, a Liability or Damages in respect of taxes of Univisa
or USHI (or any affiliate or Subsidiary of either of them) for
which Contributor and Parent would be liable under Section
8.2(a)(ii) of the Stock Contribution and Exchange Agreement but
only to the extent that such claim has not been resolved pursuant
to either (a) a final determination made by, or settlement
concluded with, the applicable taxing authority with respect to
such claim, or (b) a final, binding and nonappealable judgment
rendered with respect to such claim.
"Tax Reserve" means 100% of the amount of any Tax Claim
or Final Tax Amount, as applicable.
"Unknown Liabilities" means Liabilities or Damages
which are Indemnification Obligations but are not Known
Liabilities.
(b) Capitalized terms used herein without
definition shall have the meanings ascribed to them in the
Stock Contribution and Exchange Agreement.
2. Declaration of Trust. To secure the payment,
observance and performance by Contributor and Parent of each and
all of their present and future indemnities, liabilities and
obligations at any time arising under, pursuant to or in respect
of Article VIII of the Stock Contribution and Exchange Agreement
(collectively, the "Indemnification Obligations"), and the
covenants and conditions of this Agreement and the Pledge and
Security Agreement (collectively, including the Indemnification
Obligations, the "Secured Obligations"), Newco grants and
transfers to the Trustee to hold, and the Trustee is hereby
authorized and directed by the Contributor and Parent to accept,
and the Trustee hereby accepts, in trust under this Agreement,
for the benefit of Newco Group, its affiliates, Subsidiaries and
all other present and future holders of any of the Secured
Obligations and each and all of their members, successors and
assigns, all right, title and interest in the following property:
(a) an amount equal to the aggregate amount of
the Scheduled Liabilities set forth on the Statement of
Liabilities attached hereto as Annex 1, in cash (as such
amount may be increased or decreased hereafter pursuant to
the provisions hereof, "Fund A"); and
(b) $25 million in cash plus 5,000,000 shares of
Newco Common Stock, represented by certificate number
TP00018 issued for such number of shares in the name of
Contributor, accompanied by an assignment thereof duly
executed in blank by Contributor (as such amount or number
of shares may be increased or decreased hereafter pursuant
to the provisions hereof, "Fund B")
(collectively, the "Initial Trust Estate," and together with (i)
all rights and interests of the Trustee under the Pledge and
Security Agreement, (ii) any and all other property at any time
hereafter transferred to the Trustee in trust under this
Agreement, and (iii) any and all present and future income,
distributions, substitutions, replacements and proceeds of or
from the Initial Trust Estate and any other such property, the
"Trust Estate"). The Trustee, its successors in trust under this
Agreement and its assigns and the assigns of its successors and
assigns in trust shall have and hold the foregoing Trust Estate
until released to Newco Group or Contributor in accordance with
the terms hereof, in trust under and subject to the terms and
conditions set forth herein for the benefit of Newco Group and as
security for and for the enforcement of the payment, observance
and performance of all Secured Obligations (it being understood
that, while all of the Trust Estate secures all Secured
Obligations, Fund A shall be allocated for administrative
purposes to Scheduled Liabilities and Fund B shall be allocated
for administrative purposes to Unknown Liabilities, Liabilities
Claims, Final Tax Amounts and Tax Claims). Newco Group,
Contributor and Parent hereby consent to the foregoing
declaration of trust and agree that the Trust Estate is to be
held and applied by the Trustee subject to the further covenants,
conditions and trust set forth herein.
3. Appointment of Representative and Indemnitees'
----------------------------------------------
Agent.
- ------
(a) Contributor and Parent hereby designate:
Jaime Davila
Lawrence W. Dam
Charles Steinberg
Guillermo Canedo White
Javier Mondragon
Raul Lopez Martinez
and Emilio Romano
each of whom is authorized to act alone, as their duly
appointed agents and attorneys-in-fact, with full power of
substitution, in any and all capacities, for all purposes of
this Agreement (each, the "Representative"). Actions and
inactions by such Representatives under this Agreement shall
be binding and conclusive on Contributor and Parent and may
be conclusively relied upon by the other parties hereto.
Contributor and/or Parent, upon 10 days' written notice to
the other parties, may remove any person appointed as
Representative or appoint another person as Representative.
No Representative shall be liable for any action taken or
omitted by it, or any action suffered by it to be taken or
omitted, in good faith, and in the exercise of its own best
judgment.
(b) Newco and HCI hereby appoint:
Kenneth H. Heintz
and
James W. Cuminale
each of whom is authorized to act alone, as their duly
appointed agents and attorneys-in-fact, with full power of
substitution, in any and all capacities, for all purposes of
this Agreement (each, the "Indemnitees' Agent"). Actions
and inactions by the Indemnitees' Agent under this Agreement
shall be binding and conclusive on Newco Group and may be
conclusively relied upon by the other parties hereto. HCI
or Newco, upon 10 days' written notice to the other parties,
may remove any person appointed as Indemnitees' Agent or
appoint another person as Indemnitees' Agent. No
Indemnitees' Agent shall be liable for any action taken or
omitted by it, or any action suffered by it to be taken or
omitted, in good faith, and in the exercise of its own best
judgment.
4. Investment and Valuation of Trust Estate.
-----------------------------------------
(a) The Trustee hereby acknowledges receipt of
the Initial Trust Estate.
(i) The Trustee shall keep all cash at
any time held by it as part of the Trust Estate, from
whatever source such cash may be derived, in a non-
interest-bearing account in United States Dollars
maintained by the Trustee solely in the name of the
Trustee, as Trustee hereunder, except that:
(1) Such cash shall be
invested and reinvested by the Trustee in Short-
Term Treasuries, (i) if the Trustee is so directed
in writing by the Indemnitees' Agent and if the
Indemnitees' Agent states in such writing that an
Event of Default has occurred and is continuing,
and (ii) after the Trustee receives written
directions from the Representative, stating that
any and all cash held by the Trustee as part of
the Trust Estate shall be kept invested in Short-
Term Treasuries, and
(2) Notwithstanding the
foregoing, such cash shall be invested by the
Trustee in Joint Approval Cash Equivalents if and
to the extent so directed by the Representative
and the Indemnitees' Agent, acting jointly, but
only if the Trustee has received an opinion of
counsel approved in writing by the Indemnitees'
Agent, confirming to the reasonable satisfaction
of the Indemnitees' Agent that on the date of such
investment, if such investment is made in the
manner directed by the Representative and the
Indemnitees' Agent, the Trustee will have a valid
and perfected security interest in such investment
and the proceeds thereof, free from any adverse
claim, if the Trustee makes such investment in
good faith and without notice of an adverse claim;
and
(ii) Such cash and Cash Equivalents
shall be invested and reinvested solely:
(1) at the risk of
Contributor and Parent; and
(2) in the name of the
Trustee or its nominee.
(b) The Trustee shall be entitled to sell or
redeem any such investment as necessary to make any
distributions required under this Agreement and shall not be
liable or responsible for any loss resulting from any such
sale or redemption or from any investment or failure to
invest made in accordance with this Agreement.
(c) Income, if any, resulting from the investment
of the Trust Estate shall be for the account of Contributor,
but shall be held as part of the Trust Estate, subject to
the provisions of this Agreement.
(d) For purposes of this Agreement, as of any
date of valuation, and unless otherwise expressly provided
herein, Newco Common Stock shall be valued at Fair Market
Value and cash or Cash Equivalents shall be valued at face
value except that:
(i) Any Cash Equivalent consisting of
an investment in a fund having a readily ascertainable
market value or surrender value shall be valued at such
value;
(ii) Any Cash Equivalent that has
matured and has not been paid shall be valued at zero;
(iii) Any Cash Equivalent on which
any partial payment of principal or any interest
payment is then more than three days past due shall be
valued at zero; and
(iv) Any Cash Equivalent as to which the
Indemnitees' Agent has notified the Trustee,
Contributor and Parent in writing that Newco Group
reasonably believes the obligor is (or more probably
than not is) unable to pay the Cash Equivalent at
maturity or upon demand shall be valued at such amount,
including zero, as the Indemnitees' Agent may set forth
in such notice. The valuation set forth in a notice
given pursuant to this Section 4(d)(iv) shall become
effective on the eleventh day after receipt of such
notice by the Trustee, unless prior to such eleventh
day the Representative gives the Trustee and the
Indemnitees' Agent written notice of objection to such
valuation, in which event such the Cash Equivalent
subject to such valuation shall be valued at face value
until the Trustee receives notice of any different
value that has been determined in accordance with
Section 7 hereof and shall thereafter be valued at the
value so determined.
5. Required Trust Estate Values.
-----------------------------
(a) The Trust Estate shall be valued by the
Trustee at the end of each calendar quarter (a "quarterly
valuation"). The Trustee shall send the other parties
hereto written notice of such quarterly valuation within 10
days after the end of such quarter.
(b) The value of Fund B shall be as follows:
(i) After the date hereof and prior to
the date which is 16 months after the date hereof, at
any quarterly valuation the value of Fund B shall be no
less than $ 175 million, of which no less than $ 25
million shall be cash or Cash Equivalents.
(ii) After the date which is 16 months
after the date hereof and prior to the termination of
this Agreement, at any such quarterly valuation, the
value of Fund B shall be no less than $ 100 million, of
which no less than $ 25 million shall be cash or Cash
Equivalents.
(iii) After the Expiration Date, the
value of Fund B may be reduced to the Maintenance
Level, all of which may be maintained in Newco Common
Stock.
Notwithstanding the foregoing, while there is any Tax Claim,
Final Tax Amount or pending Liabilities Claim, Fund B shall
be maintained in an amount equal to the sum of all Tax
Reserves for all Tax Claims, Final Tax Amounts, the
Maintenance Level, all Pending Amounts, and all other
amounts required to be paid out from or maintained in Fund
B.
(c) At any quarterly valuation, the value of Fund
A shall be no less than the then amount of Scheduled
Liabilities.
(d) If the values of Funds A and B as determined
by the Trustee in accordance with this Agreement in any
quarterly valuation are less than the values then required
to be maintained under Sections 5(b) and 5(c) hereof (a
"deficiency"), the Trustee shall notify the parties and,
within 15 days from the date such quarterly valuation is
sent by the Trustee to the other parties hereto, Contributor
and Parent shall cause to be deposited with the Trustee, as
part of the Trust Estate, cash or Cash Equivalents in the
amount of the deficiency in Fund A and cash or Cash
Equivalents or Newco Common Stock in the amount of the
deficiency in Fund B, provided that no less than $ 25
million of Fund B shall at all times consist of cash or Cash
Equivalents (such deposits, a "Make-Whole Payment").
Notwithstanding the foregoing, if the deficiency in Fund B
would be eliminated if the value of the Newco Common Stock
increased 11.1 % or less from the value used in the
quarterly valuation, the deficiency in Fund B need not be
deposited.
(e) If the values of Funds A and B as determined
by the Trustee in any quarterly valuation are more than the
values then required to be maintained under Sections 5(b)
and (c) hereof (a "surplus"), the Trustee shall notify the
parties and, within 15 days from the date such quarterly
valuation is sent by the Trustee to the other parties
hereto, the Trustee shall cause the surplus of cash or Cash
Equivalents in Fund A to be released to Contributor, and
shall cause the surplus of cash or Cash Equivalents or Newco
Common Stock in Fund B to be released to Contributor,
provided that no less than $ 25 million of Fund B shall at
all times consist of cash and Cash Equivalents.
Notwithstanding the foregoing, if the surplus in Fund B
would be eliminated if the value of the Newco Common Stock
decreased by 10% or less from the value used in the
quarterly valuation, the surplus in Fund B shall not be
released. Further, no amount shall be released to
Contributor pursuant to this Section 5(e) while an Event of
Default is continuing.
(f) Contributor and Parent may deliver a Make-
Whole Payment consisting of cash, Cash Equivalents or (to
the extent permitted under Section 5(d) hereof) Newco Common
Stock owned by Contributor or Parent or by any Subsidiary of
Parent, if, in the case of Newco Common Stock owned by any
such Subsidiary, (i) such Subsidiary executes and delivers
to the Trustee an agreement reasonably satisfactory to the
Trustee and Newco Group by which such Subsidiary agrees to
join in and be bound by this Agreement and the Pledge and
Security Agreement on the same terms and conditions as those
by which Parent is bound, together with such financing
statements, assignments and transfer instruments requested
as to such Subsidiary by the Trustee or Newco Group, and
(ii) Parent executes and delivers to the Trustee an
instrument reasonably satisfactory to the Trustee warranting
the due authorization, execution, delivery, legality and
enforceability of such agreement, financing statements,
assignments and transfer instruments and guaranteeing due
and punctual payment and performance of all liabilities and
obligations of such Subsidiary thereunder.
6. Trust Estate Scheduled Liabilities - Determination
--------------------------------------------------
and Payment.
- ----------
(a) The Trustee shall maintain on an ongoing
basis a schedule of Known Liabilities (the "Schedule of
Liabilities") determined as provided in this Section 6. The
initial Schedule of Liabilities is the Statement of
Liabilities attached hereto as Annex 1. Each Scheduled
Liability shall be stated at an amount equal to its
liquidated amount if it is a Known Liability which is
liquidated (i.e., in an amount certain) or at its related
reasonable reserve if it is a Known Liability which is
unliquidated (i.e., in an amount which is uncertain or
contingent). The liquidated amount or the reserve, as the
case may be, with respect to any Known Liability is its
"Scheduled Amount." Amounts claimed under Tax Claims and
Final Tax Amounts shall not be Scheduled Liabilities.
(b) The Schedule of Liabilities shall also
include for Known Liabilities which are liquidated their
respective discrete (one or more) or periodic due dates and
the names and addresses of the persons entitled to payment.
Unless the Representative or the Indemnitees' Agent shall
give notice to the Trustee at least 10 days prior to the due
date of any Known Liability which is liquidated that payment
should not be made on such due date, the Trustee shall pay
from Fund A Known Liabilities which are liquidated when due,
and the related Known Liability shall be deemed satisfied
and removed (to the extent satisfied) from the Schedule of
Liabilities.
(c) If any party (other than the Trustee) becomes
aware that any Known Liabilities which are liquidated have
arisen after the date hereof, such party shall (through the
Representative or the Indemnitees' Agent, as the case may
be) give notice, and provide relevant documentation, if any,
to the other parties. The notice shall contain the
information called for by the first sentence of Section 6(b)
hereof. If no party (other than the trustee) object to such
notice within 10 days of the notice, the subject Known
Liabilities shall be added to the Schedule of Liabilities.
(d) If any party (other than the Trustee) becomes
aware that any Known Liabilities which are unliquidated have
arisen after the date hereof, such party shall (through the
Representative or the Indemnitees' Agent, as the case may
be) give notice, and provide relevant documentation, if any,
to the other parties and shall propose a reasonable reserve
therefor. If no party (other than the Trustee) objects to
such notice within 10 days of the notice, the subject Known
Liabilities shall be added to the Schedule of Liabilities at
the amount of the proposed reserve.
(e) If there shall occur any developments or
events which cause any party (other than the Trustee)
reasonably to believe that the reserve for a Known Liability
which is unliquidated or the scheduled amount of a Known
Liability which is liquidated should be adjusted, such party
shall (through the Representative or the Indemnitees' Agent,
as the case may be) give notice to the other parties of the
proposed adjustment and the basis therefor. If no party
(other than the trustee) objects to such notice within 10
days of the notice, the reserve or Scheduled Amount for such
Known Liability shall be adjusted as proposed.
(f) If Known Liabilities which are unliquidated
become liquidated through final resolution or settlement,
the party responsible for the resolution shall give notice
to the other parties of the nature and amount of the
resolution and present evidence thereof in the form of a
release, receipt, or otherwise. If no party (other than the
trustee) objects to such notice within 10 days of the
notice, the subject Known Liability shall be deemed
liquidated at the amount of the resolution and, up to the
Scheduled Amount, shall be paid as provided in Section 6(b)
hereof.
(g) In addition, if the Representative shall give
notice to the other parties hereto at least 15 days prior to
a quarterly valuation that Parent or Contributor has
satisfied, or caused to be satisfied, any Known Liability
and shall present evidence thereof in the form of a receipt,
release or other proof of its claim, then if the
Indemnitees' Agent does not give notice of objection within
10 days of the Representative's notice, the Trustee shall
reimburse Contributor or Parent (as the case may be) out of
the Trust Estate for the amount paid in satisfaction of the
Known Liability up to its Scheduled Amount. Such Known
Liability shall thereafter be deemed satisfied and removed
(to the extent satisfied) from the Schedule of Liabilities.
(h) In addition, if the Indemnitees' Agent shall
give notice to the other parties hereto at least 15 days
prior to a quarterly valuation that HCI or Newco has
incurred or has satisfied, or caused to be satisfied, any
Known Liability and shall present evidence thereof in the
form of a receipt, release or other proof of its claim, then
if the Representative does not give notice of objection
within 10 days of the Indemnitees' Agent's notice, the
Trustee shall reimburse HCI or Newco (as the case may be)
out of the Trust Estate for the amount paid in satisfaction
of the Known Liability up to its Scheduled Amount. Such
Known Liability shall thereafter be deemed satisfied and
removed (to the extent satisfied) from the Schedule of
Liabilities.
(i) When so directed in writing by the
Representative upon at least 10 days' prior written notice,
if (and only if) no Make-Whole Breach is then continuing
under Section 8(c) hereof, the Indemnitees' Agent shall
direct the Trustee (x) to sell or otherwise liquidate (in
any commercially reasonable manner set forth in the
Representative's notice) Cash Equivalents or Newco Common
Stock held by the Trustee in Fund B as necessary to pay and
discharge a Tax Claim or Final Tax Amount and (y) to pay
directly to the taxing authority certified in the
Representative's notice to be entitled to payment of such
Tax Claim or Final Tax Amount, on account and in
satisfaction of such Tax Claim or Final Tax Amount, such
amount as is set forth in the Representative's notice. The
Trustee shall not take any action under this Section 6(i)
unless it receives such notice from the Indemnitees' Agent,
regardless of the Trustee's receipt of any notice from the
Representative.
(j) The Trustee (i) shall not be obligated to
give any notice under any of the foregoing provisions in
this Section 6, (ii) shall not be entitled to object to any
notice given under any such provisions, (iii) shall not be
obligated to make any adjustment in the Schedule of
Liabilities, unless and until it receives notice thereof in
accordance with such provisions and either (x) the time for
objection thereto, as set forth in such provisions, has
expired or (y) any such objection that was timely given has
been resolved pursuant to Section 7 hereof, and (iv) shall
give notice to the other parties hereto if it believes in
good faith that any liquidated Known Liability has arisen,
but shall not have any liability for (or suffer any
diminution in its rights under Section 14 hereof on account
of) any such notice given or not given by it in good faith.
7. Certain Disputes. In the event that either the
Representative or the Indemnitees' Agent shall give notice of
objection to any notice given under any of the provisions of
Sections 4(d), 6 or 9 hereof, the parties (other than the
Trustee) shall promptly meet and confer and attempt to resolve
the objection. If they succeed, they shall promptly and jointly
notify the Trustee and the Trustee shall act in accordance with
the notice. If they shall not succeed within 15 days of the
notice of objection, they shall, within an additional 45 days,
commence and complete an arbitration proceeding in accordance
with the provisions of Section 24 hereof. Unless the parties
shall otherwise jointly instruct the Trustee, the Trustee shall
act with respect to the subject valuation (as to notice of
objection under Section 4(d) hereof) or the subject Known
Liability (as to notice of objection under Section 6 hereof) in
accordance with the arbitrator's award when received. A party
must have a reasonable basis in giving any such notice of
objection and shall set forth the basis of its objection in the
notice.
8. Certain Releases, Substitutions; Consequences of
------------------------------------------------
Make-Whole Breach.
- -----------------
(a) When so directed in writing by the
Representative upon at least 10 days' prior written notice
(with a copy to the Trustee), the Indemnitees' Agent shall
instruct the Trustee to release from Fund B and deliver to
Contributor any or all cash, Cash Equivalents and Newco
Common Stock then held by the Trustee in Fund B, but only if
prior to any such release and delivery there is deposited
with the Trustee, to be held as part of the Trust Estate and
as part of Fund B, an irrevocable standby letter of credit
which shall be issued in favor of the Trustee in an amount
at least equal to the value of the cash, Cash Equivalents
and Newco Common Stock so to be released and which shall be
in form and substance and issued by a bank satisfactory to
Newco in its reasonable discretion and shall be reasonably
satisfactory to the Trustee (a "Letter of Credit"). Each
Letter of Credit in any event (i) must be available for
payment to the Trustee under each, any and all of the
circumstances under which any payment by the Trustee from
the Trust Estate is or becomes due pursuant to the
provisions of this Agreement and, in addition, (ii) must be
freely available for payment to the Trustee in the full
amount of such Letter of Credit at all times during the
period that commences on the 30th day prior to the date on
which such Letter of Credit, by its terms, expires, unless a
substitute Letter of Credit has been delivered, approved and
accepted by the Trustee as set forth in the preceding
sentence. Unless otherwise instructed by the Indemnitees'
Agent, the Trustee shall draw or demand payment under each
Letter of Credit, for the full amount of such Letter of
Credit, at least 20 days prior to its expiration. The
Trustee shall also draw or demand payment under Letters of
Credit at any time when the assets in Fund B are to be
applied in accordance with this Agreement to fund payment of
a Known Liability or a Tax Claim or Final Tax Amount or any
other amount payable from Fund B. For purposes of valuation
of Fund B, the amount that is available to be drawn, but has
not been drawn, under any Letter of Credit held in Fund B
shall be counted as Cash Equivalents.
(b) When so directed in writing by the
Representative upon at least five days prior written notice,
the Indemnitees' Agent shall instruct the Trustee to release
from Fund B and deliver to Contributor the number of shares
of Newco Common Stock specified in such notice, but only if
Contributor transfers to the Trustee, to be held as part of
the Trust Estate, cash in an amount equal to the Fair Market
Value of such shares of Newco Common Stock, concurrently
with and in exchange for delivery of such shares of Newco
Common Stock.
(c) If Contributor and Parent at any time fail to
deposit any Make-Whole Payment required to be deposited by
them pursuant to Section 5(d) hereof (a "Make-Whole
Breach"), then at all times thereafter until the full amount
of such Make-Whole Payment is received by the Trustee, in
cash and as part of the Trust Estate, (i) the Indemnitees'
Agent shall have the sole power to direct and control the
application of the Trust Estate to the settlement, payment
and satisfaction of any and all Scheduled Liabilities,
Liabilities Claims, Final Tax Amounts and Tax Claims
(whether or not disputed or liquidated), at such times and
in such amounts, manner and order and on such conditions as
the Indemnitees' Agent from time to time, in its sole
discretion, may determine and (ii) subject to applicable
laws, regulations, orders, judgments and decrees and the
provisions of Section 13 hereof, the Trustee shall honor all
instructions received by it in writing from the Indemnitees'
Agent to collect any or all Cash Equivalents, sell any or
all Newco Common Stock and otherwise liquidate any and all
property of the Trust Estate and pay, from cash in the Trust
Estate, any or all such Scheduled Liabilities, Liabilities
Claims, Final Tax Amounts and Tax Claims, in such amount,
manner and order as the Indemnitees' Agent in its sole
discretion may elect and direct, in each case (x) whether or
not any claim so paid has then been settled or liquidated or
is then binding upon Contributor or Parent under any
judgment or award, (y) whether or not Contributor or Parent
has participated in or approved any settlement or payment of
any claim, and (z) whether or not Parent or Contributor has
given the Trustee notice of objection to any such
instructions or notice of any demand for arbitration or
judicial relief in respect thereof. No such action by the
Indemnitees' Agent shall be determinative of any liability
of Parent or Contributor for or as to any Liability or
Damages pursuant to the provisions of the Stock Contribution
and Exchange Agreement.
(d) The Trustee shall not take any action under
Section 8(a) hereof or Section 8(b) hereof unless it
receives the notice therein required from the Indemnitees'
Agent, regardless of the Trustee's receipt of any notice
from the Representative.
(e) The parties agree to discuss in good faith
the terms and conditions on which Section 8(a) hereof may be
replaced, under an amendment and restatement of this
Agreement, by terms and conditions pursuant to which one or
more letters of credit meeting requirements that are yet to
be agreed might be substituted for the cash and Cash
Equivalents in Fund A and for the cash, Cash Equivalents and
Newco Common Stock in Fund B. Such replacement of Section
8(a) hereof shall become effective only if and as set forth
in a written agreement executed and delivered by the parties
hereto. If such a written agreement becomes effective, it
shall supersede the provisions of Section 8(a) hereof. None
of the parties shall be obligated to agree to any such terms
and conditions or to enter into any such agreement. No
party shall (i) suffer any reduction, loss or other change
in any of its rights, powers, immunities and benefits
hereunder (including those arising under Section 8(a)
hereof) on account of any failure or refusal on its part to
agree to any such terms and conditions or any act or
omission in connection therewith or (ii) otherwise be liable
in respect of any such failure, refusal, act or omission so
long as such party participates in such discussions in good
faith. In no event shall the Trustee be obligated to sign
any amendment that affects the rights, duties, liabilities
or immunities of the Trustee in any respect that is adverse
to the Trustee.
9. Termination of Agreement.
------------------------
(a) Ninety (90) days after the 10th anniversary
of the date hereof (the "Cut-off Date"), (i) the Trustee
shall determine, by a valuation in accordance with Sections
4 and 6 hereof, the excess, if any, (the "Excess Amount") of
(A) all property then held in the Trust Estate over (B) the
amount required to pay the sum of all Scheduled Liabilities,
all Tax Reserves for all Tax Claims and Final Tax Amounts,
all Pending Amounts, and all other amounts required to be
paid from Fund B, and (ii) the Trustee shall release such
Excess Amount to Contributor, unless at such time the
statute of limitations applicable to the assessment of
United States federal income tax against Univisa or USHI (or
any affiliate or Subsidiary of either of them) with respect
to any Pre-Closing Period shall not have expired, in which
event any Excess Amount shall be determined and released to
Contributor upon the day following the earliest to occur of
(x) the expiration of such statute of limitations, (y) a
final determination by the Internal Revenue Service to the
effect that neither Univisa nor USHI (nor any affiliate or
Subsidiary of either of them) has any unsatisfied liability
for taxes for which Parent and Contributor would be liable
pursuant to Section 8.2(a)(ii) of the Stock Contribution and
Exchange Agreement, and (z) the assertion of a Tax Claim by
the Internal Revenue Service.
(b) After the Cut-off Date, no Known Liabilities
shall be added to the Schedule of Liabilities other than as
a result of the determination of Pending Amounts.
(c) After satisfaction and discharge of all
remaining Scheduled Liabilities and Final Tax Amounts,
determination of all Pending Amounts, final, indefeasible
and nonappealable satisfaction and discharge of all Tax
Claims and Liabilities Claims, and payment or satisfaction
of all previously unpaid amounts to which the Trustee may be
entitled under Section 14 hereof, and after the Excess
Amount (if any) is released in accordance with Section 9(a)
hereof, all amounts remaining in the Trust Estate shall be
delivered to Contributor.
(d) Upon the final distribution of all of the
Trust Estate in accordance with the terms of this Agreement,
this Agreement shall terminate, except that the provisions
of Section 13 and 14 hereof shall survive such termination.
(e) The Trustee shall not be obligated to release
or deliver any assets of the Trust Estate pursuant to this
Section 9 except if and to the extent (i) the Trustee
receives joint written instructions from the Representative
and the Indemnitees' Agent, directing such release or
delivery, (ii) the Trustee (x) receives notice from the
Representative directing that such release or delivery be
made on any date occurring after the Cut-Off Date, (y) has
given the Indemnitees' Agent notice of the Trustee's receipt
of such direction from the Representative, and at least 30
days have elapsed since such notice was given to the
Indemnitees' Agent, and (z) has not received notice of
objection to such release or delivery from the Indemnitees'
Agent, or (iii) in accordance with an arbitrator's award,
directing that such release or delivery be made on any date
occurring after the Cut-Off Date, delivered in an
arbitration proceeding conducted in accordance with the
provisions of Section 24 hereof.
10. Directions to Trustee. Both prior to and after
the occurrence of any Event of Default, the Trustee shall
(subject to Sections 12 and 13 hereof) exercise and enforce its
rights and remedies under the Pledge and Security Agreement in
accordance with such instructions as the Trustee from time to
time may receive from Newco Group, so long as such instructions
do not, in the good faith opinion of the Trustee, require it to
engage in any action which would violate any applicable law,
regulation, judgment, order or decree or expose it to liability
for which it has not received indemnification from Newco Group
pursuant to Section 14 hereof.
11. Tax Matters. Each party to this Agreement shall
provide a completed IRS Form W-8 or Form W-9 to the Trustee
upon request by the Trustee. Subject to Section 14, Contributor
and Parent, jointly and severally, covenant and agree to
indemnify and hold the Trustee harmless against all liability for
tax withholding and/or reporting for any payments made by the
Trustee pursuant to this Agreement.
12. Duties of the Trustee. The Trustee shall have no
duties or responsibilities other than those expressly set forth
in this Agreement and the Pledge and Security Agreement, and no
implied duties or obligations shall be read into this Agreement
or the Pledge and Security Agreement against the Trustee. The
Trustee shall have no duty to enforce any obligation of any
person, other than as provided herein. The Trustee shall be
under no liability to anyone by reason of any breach or failure
on the part of any party hereto or any maker, endorser or other
signatory of any document or any other person to perform such
person's obligations under any such document.
13. Liability of the Trustee; Withdrawal.
------------------------------------
(a) The Trustee shall not be liable for any
action taken or omitted by it, or any action suffered by it
to be taken or omitted, in good faith (except as provided in
the immediately succeeding sentence), and may rely
conclusively and shall be protected in taking or omitting to
take any action based upon any order, notice, demand,
certificate, opinion or advice of counsel (including counsel
chosen by the Trustee), statement, instrument, report or
other paper or document (not only as to its due execution
and the validity and effectiveness of its provisions, but
also as to the truth and acceptability of any information
therein contained) which is believed by the Trustee to be
genuine and to be signed or presented by the proper
person(s). The Trustee shall not be held liable for any
error in judgment made in good faith by an officer of the
Trustee unless it shall be proved that the Trustee was
grossly negligent in ascertaining the pertinent facts or
acted intentionally in bad faith. The Trustee shall not be
bound by any notice of demand, or any waiver, modification,
termination or rescission of this Agreement or any of the
terms hereof, unless evidenced by a writing delivered to the
Trustee signed by the proper party or parties and, if the
duties or rights of the Trustee are affected, unless it
shall give its prior written consent thereto.
(b) Without limitation of any other provision of
this Agreement, the Trustee shall not be responsible for and
may conclusively rely upon and shall be protected,
indemnified and held harmless by Contributor and Parent,
acting jointly and severally, for the sufficiency or
accuracy of the form of, or the execution, validity, value
or genuineness of any document or property received (from
any party), held or delivered by it hereunder, or of the
signature or endorsement thereon, or for any description
therein; nor shall the Trustee be responsible or liable in
any respect on account of the identity, authority or rights
of the persons executing or delivering or purporting to
execute or deliver an document, property or this Agreement.
(c) No provision of this Agreement or the Pledge
and Security Agreement shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee
may refuse to perform any duty or exercise any right or
power hereunder or thereunder unless it receives indemnity
reasonably satisfactory to it against any loss, liability or
expense.
(d) The Trustee makes no statement, promise,
representation or warranty whatsoever, and shall have no
liability whatsoever, to Newco Group or its successors or
assigns as to the authorization, execution, delivery,
legality, enforceability or sufficiency of this Agreement or
the Pledge and Security Agreement or as to the creation,
perfection, priority or enforceability of any security
interest granted hereunder or thereunder or as to the
existence, ownership, quality, condition, value or
sufficiency of any of the Trust Estate or as to any other
matter whatsoever, except only that the Trustee represents
and warrants to the other parties hereto that (i) it has the
right, power and authority, and all required licenses and
consents, to execute, deliver and perform its duties under
this Agreement and the Pledge and Security Agreement, and
(ii) this Agreement and the Pledge and Security Agreement
have been duly executed and delivered by it, upon due
authorization, and (without representing as to the legality,
binding effect or sufficiency of any provision herein or
therein) are binding upon and legally enforceable against
it, subject to laws generally affecting the enforcement of
creditors' rights and the effect of equitable principles,
whether considered in a court of law or equity.
(e) In the event that the Trustee shall become
involved in any arbitration or litigation relating to the
Trust Estate, the Trustee is authorized to comply with any
final, binding and nonappealable decision reached through
such arbitration or litigation.
(f) The Trustee may resign at any time and be
discharged from its duties and obligations hereunder and
under the Pledge and Security Agreement, by giving notice to
the other parties. Such resignation shall not discharge or
otherwise effect the Trust Estate or any property comprising
part of the Trust Estate or any beneficial interest therein
or the rights, powers and liens created by or arising under
this Agreement and the Pledge and Security Agreement. Such
resignation shall take effect when a successor Trustee has
been appointed by Newco and has accepted the trusts herein
provided. If a successor Trustee does not take office
within 60 days after the retiring Trustee resigns, the
retiring Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(g) A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to
Newco Group. Thereupon, the resignation of the retiring
Trustee shall become effective, and the successor Trustee
shall have all the rights, powers and duties of the Trustee
under this Agreement and all of the rights, powers and liens
granted to the Trustee under the Pledge and Security
Agreement. The successor Trustee shall mail a notice of its
succession to Contributor and Parent. The retiring Trustee
shall promptly transfer all property held by it as Trustee
to the successor Trustee provided all sums owing to the
retiring Trustee have been paid.
(h) Notwithstanding the replacement of the
Trustee pursuant to this Section 13, the resigning Trustee
shall continue to be entitled to the rights, immunities and
benefits provided under Sections 12, 13, 14 and 24 hereof.
14. Trustee's Fees and Indemnification. All fees (as
may from time to time be agreed in writing by the Trustee,
Contributor and Parent) and reasonable expenses and disbursements
of the Trustee for its services hereunder and under the Pledge
and Security Agreement, shall be paid by Contributor and Parent.
Newco Group, Contributor and Parent, jointly and severally,
hereby agree to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense incurred without
gross negligence or wilful misconduct on the part of the Trustee,
including legal or other fees arising out of or in connection
with its entering into this Agreement and the Pledge and Security
Agreement and carrying out its duties hereunder or thereunder,
including the costs and expenses of defending itself against any
claim of liability in the premises or any action for
interpleader. The Trustee shall be under no obligation to
institute or defend any action, suit, or legal proceeding in
connection with this Agreement or the Pledge and Security
Agreement, unless first indemnified and held harmless to its
satisfaction in accordance with the foregoing, except that the
Trustee shall not be indemnified against any loss, liability or
expense arising out of its bad faith, gross negligence or willful
misconduct. Such indemnity shall survive the termination or
discharge of this Agreement or resignation of the Trustee.
15. Inspection. All funds or other property held as
part of the Trust Estate shall at all times be clearly identified
on the Trustee's accounts as being held by the Trustee hereunder.
Any party hereto may at any time during the Trustee's business
hours (with reasonable notice) inspect any records or reports
relating to the Trust Estate.
16. Notices. All notices, requests, demands and other
communications which are required or may be given under this
Agreement shall be in writing and shall be deemed to have been
duly given (i) when received if personally delivered, (ii) when
receipt is automatically acknowledged if transmitted by telecopy,
electronic or digital transmission method, (iii) the day after it
is sent, if sent for next day delivery to an address within the
United States and Puerto Rico by recognized overnight delivery
service (e.g. Federal Express), (iv) the third day after it is
sent, if sent for next day delivery to any other address by
recognized international delivery service, and (v) and upon
receipt, if sent by certified or registered mail, return receipt
requested. In each case notice shall be sent to:
(a) If to Contributor or the Representative:
SATELLITE COMPANY, LLC
c/o Fonovisa Centroamerica, S.A.
De Popa de Curridabat 25 Mts. Este
Edificio Galerias del Este
Local 8
San Jose, Costa Rica
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Joseph A. Stern, Esq.
Telephone: (212) 859-8000
Telecopy: (212) 859-4000
(b) If to Parent:
GRUPO TELEVISA, S.A.
Avenida Vasco de Quiroga # 2000
Colonia Santa Fe
Mexico, QF 01210
Attention: Emilio Romano
Telephone: 011-525-261-2414
Telecopy: 011-525-261-2487
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Joseph A. Stern, Esq.
Telephone: (212) 859-8000
Telecopy: (212) 859-4000
(c) If to Newco or Indemnitees' Agent:
MAGELLAN INTERNATIONAL, INC.
c/o PANAMSAT CORPORATION
1 Pickwick Plaza, Suite 270
Greenwich, Connecticut 06830
Attention: James W. Cuminale, Esq.
Telephone: (203) 622-6664
Telecopy: (203) 861-8684
with a copy to:
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Dennis J. Friedman
Telephone: (212) 408-5200
Telecopy: (212) 541-5369
(d) If to HCI:
HUGHES COMMUNICATIONS, INC.
PO Box 9712
Long Beach, California 90810-9928
Attention: Jerald Farrell, President
Telephone: (310) 525-5010
Telecopy: (310) 525-5015
with a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: Bruce R. Lederman, Esq.
Telephone: (213) 485-1234
Telecopy: (213) 891-8763
(e) If to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Department
Telephone: (212) 858-1234
Telecopy: (212) 858-2952
17. Non-Exclusive Remedy. Newco Group, Contributor
and Parent agree and acknowledge that the Trust Estate shall not
be Newco Group's exclusive method of receiving indemnification
from Contributor and Parent pursuant to Section 8.2 of the Stock
Contribution and Exchange Agreement and Contributor and Parent
shall be and remain in all respects personally liable for all
Indemnification Obligations and each liability may be enforced by
any lawful means.
18. Modification; Waiver. Subject to applicable law,
this Agreement may be amended, modified or supplemented, with
respect to any of the terms contained herein, only by written
agreement of the parties and the rights, remedies, immunities and
benefits created hereby or arising hereunder in favor of any
person may be waived by it only by and instrument in writing
signed by it. No such right, remedy, immunity or benefit shall
be deemed waived by reason of such person's failure to act, oral
statements or course of conduct, including any grant of a waiver
on a different or prior occasion.
19. Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of
this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the word "include", "includes" or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation". This Agreement
shall not be construed for or against either party by reason of
the authorship or alleged authorship of any provision hereof or
by reason of the status of the respective parties.
20. Assignment. Except for assignments by a member of
the Newco Group to any affiliate or Subsidiary of such member
with respect of some or all of its rights under this Agreement
(which assignment can be made without the written consent of
Contributor or Parent), neither this Agreement, nor any of the
rights, interests or obligations hereunder, shall be assigned by
any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of Contributor,
Parent and Newco Group. The Trustee shall not be bound by any
assignment, unless it receives written notice thereof. No other
party hereto may assign its obligations to the Trustee without
the Trustee's written consent. Subject to the foregoing
provisions of this Section 20, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
21. Governing Law. This Agreement shall be construed
and interpreted, and the rights of the parties shall be
determined, in accordance with the laws of the State of New York
(without reference to the choice of law provisions).
22. Interest in Trust Estate. Neither Contributor nor
Parent has any interest in the Trust Estate except only as to any
property which has been released from the Trust Estate and
delivered to Contributor or Parent as herein provided, effective
upon such release and delivery.
23. Severability. Each party agrees that, should any
court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or
order any party to take any action inconsistent herewith or not
to take an action consistent herewith or required hereby, the
validity, legality and enforceability of the remaining provisions
and obligations contained or set forth herein shall not in any
way be affected or impaired thereby. Upon any such holding that
any provision of this Agreement is null, void or unenforceable,
the parties will negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are consummated to the extent
possible. The Trustee shall not be obligated to agree to any
amendment that adversely affects its rights or obligations
hereunder. Except as otherwise contemplated by this Agreement,
to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required
hereby pursuant to an order or judgment of a court or other
competent authority, such party shall incur no liability unless
such party did not in good faith seek to resist or object to the
imposition or entering of such order or judgment; PROVIDED,
HOWEVER, that nothing in this Section 23 shall be deemed to limit
or otherwise modify the Trustee's rights under Sections 13, 14
and 24 hereof, including Section 13(c).
24. Arbitration. Notwithstanding anything in any
other Section of this Agreement to the contrary, in the event
that there shall be a dispute among the parties arising out of or
relating to this Agreement, the parties agree that such dispute
shall be resolved by final and binding arbitration in Los
Angeles, California, administered by Judicial Arbitration &
Mediation Services, Inc. ("JAMS"), in accordance with JAMS' rules
of practice then in effect or such other procedures as the
parties may agree to prior to the Closing. Depositions may be
taken and other discovery may be obtained during such arbitration
proceedings to the same extent as authorized in civil judicial
proceedings. Any award issued as a result of such arbitration
shall be final and binding between the parties thereto, and shall
be enforceable by any court having jurisdiction over the party
against whom enforcement is sought. The fees and expenses of
such arbitration (including reasonable attorneys' fees) or any
action to enforce an arbitration award shall be paid by the party
that does not prevail in such arbitration.
Notwitstanding anything in the preceding paragraph of
this Section 24 to the contrary, the parties shall have the right
to submit to a court, in accordance with the following provisions
of this Section 24, (i) any claim asserted by the Trustee, in its
personal capacity, for the payment of fees, expenses,
disbursements or indemnification due to the Trustee under Section
14 hereof (or due under any indemnity given to the Trustee
pursuant to Section 14 hereof), (ii) any claim asserted against
the Trustee personally, seeking damages or other relief against
the Trustee (and not for purposes of binding the Trust Estate)
based on or relating to any alleged breach of any duty or other
actionable conduct of the Trustee, and (iii) any claim asserted
by or against the Trustee personally (and not for purposes of
binding the Trust Estate) otherwise relating in any manner to the
rights, immunities and benefits granted to the Trustee under
Sections 12, 13 and 14 hereof; and, with respect to solely to
such claims:
(a) No party shall be obligated or entitled to
submit such claim to arbitration or be bound by any
arbitrator's award that might in any manner relate to such
claim;
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO SUCH CLAIM MAY BE BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY HERETO CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS
FOR PURPOSES OF ADJUDICATION OF ANY SUCH CLAIM. EACH PARTY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
FOR PURPOSES OF ADJUDICATION OF ANY SUCH CLAIM. SERVICE OF
ANY SUMMONS, COMPLAINT OR OTHER PROCESS MAY BE MADE BY ANY
MEANS PERMITTED BY NEW YORK LAW.
(c) EACH PARTY HERETO WAIVES ALL RIGHTS TO A
TRIAL BY JURY OF ANY SUCH CLAIM AND AGREES THAT SUCH CLAIM
SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, EACH PARTY FURTHER AGREES THAT ITS
RIGHT TO A TRIAL BY JURY IS HEREBY WAIVED AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT OR THE PLEDGE AND SECURITY AGREEMENT OR ANY
PROVISION HEREOF OR THEREOF, INSOFAR AS IT MAY CREATE A
DEFENSE TO ANY SUCH CLAIM. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE PLEDGE AND SECURITY
AGREEMENT.
25. Remedies Cumulative. All rights and remedies of
each party hereto are cumulative of each other and of every other
right or remedy such party may otherwise have at law or in
equity, and the exercise of one or more rights or remedies shall
not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
26. Counterparts. This Agreement may be executed in
two or more counterparts, each of which will be considered one
and the same instrument and shall become effective when executed
and delivered by each of the parties.
27. Specimen Signature. Each person at any time
appointed as Representative or Indemnitees' Agent shall present a
specimen signature to the Trustee within a reasonable time.
[intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this
Collateral Trust Agreement as of the date first written above.
MAGELLAN INTERNATIONAL, INC.
By:/s/ Kenneth N. Heintz
--------------------------------
Name: Kenneth N. Heintz
Title: Treasurer
HUGHES COMMUNICATIONS, INC.
By:/s/ Jerald F. Farrell
--------------------------------
Name: Jerald F. Farrell
Title: President
SATELLITE COMPANY, LLC
By:/s/ Jorge Suarez Barbosa
--------------------------------
Name: Jorge Suarez Barbosa
Title: General Manager
GRUPO TELEVISA, S.A.
By:/s/ Raul Lopez Martinez
--------------------------------
Name: Raul Lopez Martinez
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY
By:/s/ Stuart Rothenberg
--------------------------------
Name: Stuart Rothenberg
Title: Assistant Vice President
