<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
X ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
--- TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _____________
Commission file number 0-26035
HUGHES ELECTRONICS CORPORATION
------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
STATE OF DELAWARE 52-1106564
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
200 North Sepulveda Boulevard
El Segundo, California 90245
(310) 662-9688
(Address, including zip code, and telephone number,
including area code, of registrants' principal executive office)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, par value $1.00 per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
As of December 31, 1999, there were outstanding 1,000 shares of the issuer's
$1.00 par value common stock.
The registrant has met the conditions set forth in General Instructions
I(1)(a) and (b) of Form 10-K and is therefore filing this Annual Report on Form
10-K with the reduced disclosure format.
<PAGE>
HUGHES ELECTRONICS CORPORATION
PART I
ITEM 1. Business
General
Hughes Electronics Corporation ("Hughes") (the "Company") (the "Registrant")
is a wholly-owned subsidiary of General Motors Corporation. General Motors
primarily engages in the automotive and satellite and wireless communications
industries. General Motors also has financing and insurance operations and, to
a lesser extent, engages in other industries.
Hughes has been a pioneer in many aspects of the satellite and wireless
communications industry, and its technologies have driven the creation of new
services and markets and have established Hughes as a leader in each of the
markets it serves. Hughes believes that its ability to identify, define and
develop new markets early has provided it with a significant competitive
advantage in building sustainable market leadership positions.
In January 2000, Hughes announced a strategy designed to accelerate the growth
of its services businesses. In connection with this new focus on its services
businesses, Hughes recently entered into an agreement to sell its satellite
systems manufacturing businesses to The Boeing Company ("Boeing") for $3.75
billion in cash. In addition, Hughes has realigned its marketing efforts to
focus on its two major customer groups: consumers and business enterprises.
Hughes believes this marketing realignment will enable it to obtain the full
benefit of the synergies between its various business units and more effectively
reach its customers.
Hughes provides advanced communications services on a global basis. Hughes has
developed a range of entertainment, information and communications services for
the home and business markets, including video, data, voice, multimedia and
Internet services. Hughes believes that these services provide the potential for
higher value through higher margins and higher growth than Hughes' traditional
manufacturing businesses. For the years ended December 31, 1999 and 1998, multi-
channel entertainment services, satellite transponder leasing and other services
revenues represented about $4.6 billion, or about 82%, of Hughes' total revenues
and about $2.6 billion, or about 76%, of Hughes' total revenues, respectively.
This represents about 72% year-over-year growth in service revenues. These
figures exclude revenues attributable to Hughes' satellite systems manufacturing
businesses.
Hughes' businesses include:
. DIRECTV, the world's leading digital multi-channel entertainment service,
based on the number of subscribers. DIRECTV includes businesses in the United
States and Latin America, and constitutes Hughes' Direct-to-Home Broadcast
segment. In 1999, DIRECTV gained a record 1.6 million net new high power
subscribers in the United States, representing a 39% growth rate over 1998.
As of December 31, 1999, DIRECTV U.S. had over 8 million subscribers and
average monthly revenue per high power subscriber of $58, the highest in the
U.S. multi-channel entertainment industry. Record subscriber growth was also
achieved in the Latin America DIRECTV businesses where total subscribers
grew to 804,000 in 1999 from 484,000 in 1998, a 66% increase. Average
monthly revenue per subscriber for the Latin America DIRECTV businesses was
$36 at December 31, 1999.
. PanAmSat, the owner and operator of the largest commercial satellite fleet in
the world. PanAmSat, a publicly-held company of which Hughes owns 81%,
constitutes Hughes' Satellite Services segment. PanAmSat owns and operates
20 satellites that are capable of transmitting signals to geographic areas
covering a substantial portion of the world's population. PanAmSat provides
satellite capacity for the transmission of cable and broadcast television
programming from the content source to the consumer distribution point (the
consumer's home or cable operator). PanAmSat satellites have the capability
to reach over 125 million cable households around the world and serve as
transmission platforms for 6 direct-to-home services worldwide. In addition,
PanAmSat provides satellite services to telecommunications carriers,
corporations and Internet service providers for the provision of satellite-
based communications networks, including private corporate networks employing
very small aperture terminals and international access to the U.S. Internet
backbone.
. Broadband Services and Products, which includes Hughes Network Systems, a
leading provider of satellite and wireless communications ground equipment
and business communications services. Hughes Network Systems has more than a
50% share of the global market for very small aperture terminals or `` VSAT''
private business networks. Hughes Network Systems is also one of the two
largest manufacturers of DIRECTV subscriber equipment having shipped over 2.1
million units in 1999. Hughes Network Systems is also leading the development
of Spaceway, a satellite-based broadband communications platform that is
expected to provide customers with high-speed, two-way data communications on
a more cost-efficient basis than systems that are currently available.
Spaceway is expected to launch service in North America in 2003 and currently
is not a separately reported business segment.
I-1
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HUGHES ELECTRONICS CORPORATION
In addition, Hughes' business currently includes its satellite systems
manufacturing businesses. Hughes Space and Communications, the largest component
of Hughes' satellite systems manufacturing businesses, is the principal
component of the discontinued operations caption in Hughes' financial statements
because Hughes has agreed to sell Hughes Space and Communications and its
related satellite systems manufacturing assets to Boeing. See Note 17 of the
Notes to Financial Statements in Part II for further discussion.
Segment Reporting Data
Operating segment and principal geographic area data for 1999, 1998 and 1997
are summarized in Note 19 of the Notes to Financial Statements in Part II.
* * * * * * *
The Registrant makes no attempt herein to predict the future trend of its
business and earnings or the effect thereon of the results of changes in general
economic, industrial, regulatory, and international conditions.
ITEM 2. Properties
As of December 31, 1999, the Company, excluding its discontinued operations,
had approximately 54 locations operating in 17 states and 43 cities in the
United States and approximately 29 additional locations in 12 cities in
approximately 11 countries outside the United States. At such date, Hughes
owned approximately 1.3 million square feet of space and leased an additional
1.4 million square feet of space.
ITEM 3. Legal Proceedings
(a) Material pending legal proceedings, other than ordinary routine
litigation incidental to the business, to which the Company became, or was, a
party during the year ended December 31, 1999 or subsequent thereto, but before
the filing of this report are summarized below:
In connection with the 1997 spin-off of the defense electronics business of
Hughes' predecessor as part of the Hughes restructuring transactions and the
subsequent merger of that business with Raytheon Company, the terms of the
merger agreement provided processes for resolving disputes that might arise in
connection with post-closing financial adjustments that were also called for by
the terms of the merger agreement. These financial adjustments might require a
cash payment from Raytheon to Hughes or vice versa.
A dispute currently exists regarding the post-closing adjustments which Hughes
and Raytheon have proposed to one another and related issues regarding the
adequacy of disclosures made by Hughes to Raytheon in the period prior to
consummation of the merger. Hughes and Raytheon are proceeding with the dispute
resolution process. It is possible that the ultimate resolution of the post-
closing financial adjustment and of related disclosure issues may result in
Hughes making a payment to Raytheon that would be material to Hughes. However,
the amount of any payment that either party might be required to make to the
other cannot be determined at this time. Hughes intends to vigorously pursue
resolution of the disputes through the arbitration processes, opposing the
adjustments proposed by Raytheon, and seeking the payment from Raytheon that
Hughes has proposed.
***
I-2
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HUGHES ELECTRONICS CORPORATION
On June 3, 1999, the National Rural Telecommunications Cooperative ("NRTC")
filed a lawsuit against DIRECTV, Inc. and Hughes Communications Galaxy, Inc.,
which Hughes refers to together in this description as ``DIRECTV'', in the U.S.
District Court for the Central District of California, alleging that DIRECTV has
breached the DBS Distribution Agreement with the NRTC. The DBS Distribution
Agreement provides the NRTC with certain rights, in certain specified portions
of the United States, with respect to DIRECTV programming delivered over 27 of
the 32 frequencies at the 101 (degrees) west longitude orbital location. The
NRTC claims that DIRECTV has wrongfully deprived it of the exclusive right to
distribute programming formerly provided by U.S. Satellite Broadcasting Company
, Inc. ("USSB") over the other five frequencies at 101 (degrees). DIRECTV denies
that the NRTC is entitled to exclusive distribution rights to the former USSB
programming because, among other things, the NRTC's exclusive distribution
rights are limited to programming distributed over 27 of the 32 frequencies at
101 (degrees). The NRTC's complaint seeks, in the alternative, the right to
distribute former USSB programming on a non-exclusive basis and the recovery of
related revenues from the date USSB was acquired by Hughes. DIRECTV maintains
that the NRTC's right under the DBS Distribution Agreement is to market and sell
the former USSB programming as its agent and the NRTC is not entitled to the
claimed revenues. DIRECTV intends to vigorously defend against the NRTC claims.
DIRECTV has also filed a counterclaim against the NRTC seeking a declaration of
the parties' rights under the DBS Distribution Agreement.
On August 26, 1999, the NRTC filed a second lawsuit against DIRECTV alleging
that DIRECTV has breached the DBS Distribution Agreement. In this lawsuit, the
NRTC is asking the court to require DIRECTV to pay the NRTC a proportionate
share of unspecified financial benefits that DIRECTV derives from programming
providers and other third parties. DIRECTV denies that it owes any sums to the
NRTC on account of the allegations in these matters and plans to vigorously
defend itself against these claims.
***
Pegasus Satellite Television, Inc. and Golden Sky Systems, Inc., the two
largest NRTC affiliates, filed an action on January 11, 2000 against DIRECTV in
the U.S. District Court in Los Angeles. The plaintiffs allege, among other
things, that DIRECTV has interfered with their contractual relationship with the
NRTC. The plaintiffs plead that their rights and damages are derivative of the
rights and claims asserted by the NRTC in its two cases against DIRECTV. The
plaintiffs also allege that DIRECTV has interfered with their contractual
relationships with manufacturers and distributors by preventing those parties
from selling receiving equipment to the plaintiffs' dealers. DIRECTV denies that
it has wrongfully interfered with any of the plaintiffs' business relationships
and will vigorously defend the lawsuit.
***
EchoStar Communications Corporation and others commenced an action in the U.S.
District Court in Colorado on February 1, 2000 against DIRECTV, Hughes Network
Systems and Thomson Consumer Electronics, Inc. seeking, among other things,
injunctive relief and unspecified damages, including treble damages, in
connection with allegations that the defendants have entered into agreements
with retailers and program providers and engaged in other conduct that violates
the antitrust laws and constitutes unfair competition. DIRECTV believes that
the complaint is without merit and intends to vigorously defend against the
allegations raised.
***
General Electric Capital Corporation ("GECC") and DIRECTV, Inc. entered into a
contract on July 31, 1995, in which GECC agreed to establish and manage a
private label consumer credit program for consumer purchases of hardware and
related DIRECTV programming. Under the contract, GECC also agreed to provide
certain related services to DIRECTV, including credit risk scoring, billing and
collections services. DIRECTV agreed to act as a surety for loans complying with
the terms of the contract. Hughes guaranteed DIRECTV's performance under the
contract. A complaint and counterclaim have been filed by the parties in the
U.S. District Court for the District of Connecticut concerning GECC's
performance and DIRECTV's obligation to act as a surety. GECC claims damages
from DIRECTV in excess of $140 million. DIRECTV is seeking damages from GECC in
excess of $45 million. Hughes intends to vigorously contest GECC's allegations
and pursue Hughes' own contractual rights and remedies. Pretrial discovery is
completed. No specific trial date has been set, but a trial may be held in 2000.
***
I-3
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HUGHES ELECTRONICS CORPORATION
There is a pending grand jury investigation into whether Hughes should be
accused of criminal violations of the export control laws arising out of the
participation of two of its employees on a committee formed to review the
findings of Chinese engineers regarding the failure of a Long March rocket in
China in 1996. Hughes is also subject to the authority of the State Department
to impose sanctions for non-criminal violations of the Arms Export Control Act.
The possible criminal and/or civil sanctions could include fines as well as
debarment from various export privileges and participating in government
contracts. If Hughes were to enter into a settlement of this matter prior to the
closing of the Boeing transaction that involves a debarment from sales to the
U.S. government or a material suspension of Hughes' export licenses or other
material limitation on projected business activities of the satellite systems
manufacturing businesses, Boeing would not be obligated to complete the purchase
of Hughes' satellite systems manufacturing businesses. Hughes does not expect
the grand jury investigation or State Department review to result in a material
adverse effect upon its businesses. However, there can be no assurance as to
such a favorable outcome.
***
In November 1996, Personalized Media Communications, Inc. ("PMC") brought an
International Trade Commission proceeding against DIRECTV, USSB, Hughes Network
Systems and other manufacturers of receivers for the DIRECTV system to prevent
importation of certain receivers manufactured in Mexico, alleging infringement
of one of its patents. During 1997, the International Trade Commission held for
DIRECTV and other respondents on all claims at issue, finding each to be
invalid. PMC appealed these adverse rulings to the Court of Appeals for the
Federal Circuit. During 1998, the Court of Appeals affirmed the lower court's
holdings as to three of the claims, and remanded to the International Trade
Commission for further deliberation on a remaining claim. PMC then moved for
dismissal of the proceeding, which was granted, terminating the action. Also in
1996, PMC filed a related action in the U.S. District Court for the Northern
District of California. This case has been stayed pending outcome of the
International Trade Commission proceeding. The complaint alleges infringement
and willful infringement of three PMC patents, and seeks unspecified damages,
trebling of damages, an injunction and attorneys' fees. Hughes denies that it
engaged in acts of infringement of the asserted patents and intends to
vigorously contest these claims.
***
In October 1994, a California jury awarded a total of approximately $90
million in damages against Hughes, which include approximately $10 million of
actual damages and punitive damages of $40 million to each of two former Hughes
employees, Lane (race discrimination/retaliation) and Villalpando (retaliation),
based on claims of mistreatment and denials of promotions. The trial court
granted Hughes' motion to set aside the verdicts because of insufficient
evidence and ordered a new trial of the matter. On January 6, 1997, the Court of
Appeal reversed the trial court's decision that had set aside the verdicts and
ordered a new trial. The Court of Appeal also reinstated the jury verdicts,
while reducing the two $40 million punitive damage awards to $5 million and
approximately $3 million, resulting in an aggregate judgment of approximately
$17 million. Hughes' petition for review by the California Supreme Court was
granted in November 1997. On March 6, 2000, the California Supreme Court
reversed the judgment of the Court of Appeal, remanding the case with
instructions to set aside the verdicts as to actual and punitive damages and
affirming the order of the trial court to proceed with a new trial.
***
Hughes is subject to the requirements of federal, state, local and foreign
environmental and occupational safety and health laws and regulations. These
include laws regulating air emissions, water discharge and waste management.
Hughes has an environmental management structure designed to facilitate and
support its compliance with these requirements. Hughes cannot provide
assurance, however, that Hughes is at all times in complete compliance with all
such requirements. Although Hughes has made and will continue to make capital
and other expenditures to comply with environmental requirements, Hughes does
not expect capital or other expenditures for environmental compliance to be
material in 2000 and 2001. Environmental requirements are complex, change
frequently and have become more stringent over time. Accordingly, Hughes cannot
provide assurance that these requirements will not change or become more
stringent in the future in a manner that could have a material adverse effect on
Hughes' business.
I-4
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HUGHES ELECTRONICS CORPORATION
Hughes is also subject to environmental laws requiring the investigation and
cleanup of environmental contamination at facilities it formerly owned or
operated or currently owns or operates or to which it sent hazardous wastes for
treatment or disposal. Hughes is aware of contamination at certain of its sites.
In addition, Hughes has been named as a potentially responsible party at several
Superfund sites. Although Hughes believes its reserve is adequate to cover
environmental investigation and cleanup, Hughes cannot provide assurance that
Hughes' environmental cleanup costs and liabilities will not exceed the current
amount of its reserve.
***
I-5
<PAGE>
HUGHES ELECTRONICS CORPORATION
PART II
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
All of the Company's common stock and preferred stock are owned by General
Motors. Accordingly, there is no public trading market for Hughes' common or
preferred equity. Dividends on the common stock will be paid when and if
declared by General Motors' Board of Directors. At present, the Company has no
plans to pay a dividend on the common stock. Dividends on the preferred stock
are payable to General Motors at an annual rate of 6.25%.
None of Hughes' common and preferred stock is subject to outstanding options
or warrants to purchase common or preferred stock. There are no securities
convertible into Hughes' common or preferred stock. None of the Company's
common and preferred stock currently can be sold under Rule 144. The Company is
not currently publicly offering any of its common and preferred stock. See
Notes 15 and 16 of the Notes to Financial Statements in Part II for further
discussion.
II-1
<PAGE>
HUGHES ELECTRONICS CORPORATION
ITEM 6. Selected Financial Data
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- --------- ---------
(Dollars in Millions)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Total revenues $ 5,560.3 $ 3,480.6 $ 2,838.3 $2,058.3 $1,554.0
Total operating costs and expenses 5,988.3 3,526.8 2,794.8 2,109.2 1,573.6
--------- --------- --------- -------- --------
Operating profit (loss) $ (428.0) $ (46.2) $ 43.5 $ (50.9) $ (19.6)
========= ========= ========= ======== ========
Income (loss) from continuing operations before
extraordinary item and cumulative effect of
accounting change $ (391.1) $ 63.5 $ 236.9 $ 13.1 $ (29.9)
Income from discontinued operations, net
of taxes 99.8 196.4 170.6 149.4 36.1
Gain on sale of discontinued operations, net of
taxes - - 62.8 - -
Extraordinary item, net of taxes - - (20.6) - -
Cumulative effect of accounting change, net of
taxes - (9.2) - - -
--------- --------- --------- -------- --------
Net income (loss) (291.3) 250.7 449.7 162.5 6.2
Adjustments to exclude the effect of GM purchase
accounting adjustments 21.0 21.0 21.0 21.0 21.0
Preferred stock dividends (50.9) - - - -
--------- --------- --------- -------- --------
Earnings (Loss) Used for Computation of Available
Separate Consolidated Net Income (Loss) $ (321.2) $ 271.7 $ 470.7 $ 183.5 $ 27.2
========= ========= ========= ======== ========
Balance Sheet Data:
Cash and cash equivalents $ 238.2 $ 1,342.0 $ 2,783.7 $ 6.2 $ 6.9
Total current assets 3,858.0 4,075.2 5,179.1 1,658.4 1,619.8
Total assets 18,597.0 12,617.4 12,141.5 3,861.3 3,512.7
Total current liabilities 2,642.1 1,346.0 1,007.4 691.9 477.9
Long-term debt 1,586.0 778.7 637.6 - -
Minority interests 544.3 481.7 607.8 12.3 -
Owner's equity 11,681.3 8,412.2 8,340.2 2,491.6 2,608.9
Other Data:
EBITDA(1) $ 222.7 $ 341.7 $ 303.8 $ 112.6 $ 130.0
Depreciation and amortization 650.7 387.9 260.3 163.5 149.6
Capital expenditures 1,665.3 1,328.8 712.7 361.6 389.1
- -------
(1) EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
is the sum of operating profit (loss) and depreciation and amortization.
</TABLE>
II-2
<PAGE>
HUGHES ELECTRONICS CORPORATION
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------
1999 1998 1997
--------- --------- ---------
(Dollars in Millions)
<S> <C> <C> <C>
Statement of Operations Data:
Total revenues $5,560.3 $3,480.6 $2,838.3
Total operating costs and expenses 5,988.3 3,526.8 2,794.8
-------- -------- --------
Operating profit (loss) (428.0) (46.2) 43.5
Other income (expense), net (232.0) (57.0) 330.6
Income tax provision (benefit) (236.9) (142.3) 162.0
Minority interests in net losses of subsidiaries 32.0 24.4 24.8
-------- -------- --------
Income (loss) from continuing operations before
extraordinary item and cumulative effect of
accounting change (391.1) 63.5 236.9
Income from discontinued operations, net
of taxes 99.8 196.4 170.6
Gain on sale of discontinued operations, net of
taxes - - 62.8
Extraordinary item, net of taxes - - (20.6)
Cumulative effect of account change, net of taxes - (9.2) -
-------- -------- --------
Net income (loss) (291.3) 250.7 449.7
Adjustments to exclude the effect of GM purchase
accounting adjustments 21.0 21.0 21.0
Preferred stock dividends (50.9) - -
-------- -------- --------
Earnings (Loss) Used for Computation of Available
Separate Consolidated Net Income (Loss) $ (321.2) $ 271.7 $ 470.7
======== ======== ========
</TABLE>
HUGHES ELECTRONICS CORPORATION
SELECTED SEGMENT DATA
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------
1999 1998 1997
---------- ---------- ----------
(Dollars in Millions)
<S> <C> <C> <C>
Direct-To-Home Broadcast
Total Revenues $ 3,785.0 $ 1,816.1 $ 1,276.9
Operating Loss (292.1) (228.1) (254.6)
EBITDA (1) 19.9 (125.8) (168.5)
EBITDA Margin (1) 0.5% N/A N/A
Depreciation and Amortization $ 312.0 $ 102.3 $ 86.1
Segment Assets 9,056.6 2,190.4 1,408.7
Capital Expenditures (2) 516.9 230.8 105.6
Satellite Services
Total Revenues $ 810.6 $ 767.3 $ 629.9
Operating Profit 338.3 318.3 292.9
Operating Profit Margin 41.7% 41.5% 46.5%
EBITDA (1) $ 618.8 $ 553.3 $ 438.1
EBITDA Margin (1) 76.3% 72.1% 69.6%
Depreciation and Amortization $ 280.5 $ 235.0 $ 145.2
Segment Assets 5,984.7 5,890.5 5,682.4
Capital Expenditures (3) 956.4 921.7 625.7
Network Systems
Total Revenues $ 1,384.7 $ 1,076.7 $ 1,011.3
Operating Profit (Loss) (227.3) 10.9 74.1
Operating Profit Margin N/A 1.0% 7.3%
EBITDA (1) $ (178.1) $ 52.6 $ 106.1
EBITDA Margin (1) N/A 4.9% 10.5%
Depreciation and Amortization $ 49.2 $ 41.7 $ 32.0
Segment Assets 1,167.3 1,299.0 1,215.6
Capital Expenditures 35.0 40.0 43.1
Eliminations and Other
Total Revenues $ (420.0) $ (179.5) $ (79.8)
Operating Loss (246.9) (147.3) (68.9)
EBITDA (1) (237.9) (138.4) (71.9)
Depreciation and Amortization 9.0 8.9 (3.0)
Segment Assets 2,388.4 3,237.5 3,834.8
Capital Expenditures 157.0 136.3 (61.7)
Total
Total Revenues $ 5,560.3 $ 3,480.6 $ 2,838.3
Operating Profit (Loss) (428.0) (46.2) 43.5
EBITDA (1) 222.7 341.7 303.8
EBITDA Margin (1) 4.0% 9.8% 10.7%
Depreciation and Amortization $ 650.7 $ 387.9 $ 260.3
Total Assets 18,597.0 12,617.4 12,141.5
Capital Expenditures 1,665.3 1,328.8 712.7
</TABLE>
Certain prior period amounts have been reclassified to conform with the 1999
classifications.
(1) EBITDA (Earnings (Loss) Before Interest, Taxes, Depreciation and
Amortization) is the sum of operating profit (loss) and depreciation and
amortization. EBITDA margin is calculated by dividing EBITDA by total
revenues.
(2) Includes expenditures related to satellites amounting to $136.0 million in
1999 and $70.2 million in 1998.
(3) Includes expenditures related to satellites amounting to $532.8 million,
$726.3 million and $606.1 million, respectively. Also included in the 1999
and 1998 amounts are $369.5 million and $155.5 million, respectively,
related to the early buy-out of satellite sale-leasebacks.
This Annual Report may contain certain statements that Hughes believes are, or
may be considered to be, "forward-looking statements," within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements generally can be
identified by use of statements that include phrases such as we "believe,"
"expect," "anticipate," "intend," "plan," "foresee" or other similar words or
phrases. Similarly, statements that describe our objectives, plans or goals also
are forward-looking statements. All of these forward-looking statements are
subject to certain risks and uncertainties that could cause our actual results
to differ materially from those contemplated by the relevant forward-looking
statement. The principal important risk factors which could cause actual
performance and future actions to differ materially from forward-looking
statements made herein include economic conditions, product demand and market
acceptance, government action, local political or economic developments in
or affecting countries where Hughes has operations, ability to obtain export
licenses, competition, ability to achieve cost reductions, technological risk,
limitations on access to distribution channels, the success and timeliness of
satellite launches, in-orbit performance of satellites, ability of customers to
obtain financing and Hughes' ability to access capital to maintain its financial
flexibility. Additionally, Hughes and its 81% owned subsidiary, PanAmSat
Corporation ("PanAmSat"), have experienced satellite anomalies in the past and
may experience satellite anomalies in the future that could lead to the loss or
reduced capacity of such satellites that could materially affect Hughes'
operations. Readers are urged to consider these factors carefully in evaluating
the forward-looking statements. The forward-looking statements included in this
Annual Report are made only as of the date of this Annual Report and we
undertake no obligation to publicly update these forward-looking statements to
reflect subsequent events or circumstances.
General
Business Overview
The continuing operations of Hughes are comprised of the following segments:
Direct-To-Home Broadcast, Satellite Services and Network Systems. The
discontinued operations of Hughes consist of its satellite systems manufacturing
businesses, which in January 2000, Hughes agreed to sell to The Boeing Company.
Also included in discontinued operations for 1997 is the Avicom in-flight
entertainment business, which was sold to Rockwell Collins, Inc. in December
1997. These transactions are discussed more fully below in "Liquidity and
Capital Resources - Acquisitions, Investments and Divestitures."
Hughes' financial information does not include the business of Delco
Electronics Corporation ("Delco") or Hughes' defense electronics business.
These businesses were divested as part of Hughes' recapitalization in December
1997, as more fully discussed in Note 1 to the financial statements.
The Direct-To-Home Broadcast segment consists primarily of the United States
and Latin America DIRECTV businesses, which provide digital multi-channel
entertainment. The DIRECTV U.S. operations grew significantly during 1999 with
Hughes' acquisition of the 2.3 million subscriber direct broadcast satellite
medium-power business of PRIMESTAR in April 1999 and Hughes' acquisition of
United States Satellite Broadcasting ("USSB"), a provider of premium
subscription programming services, in May 1999. DIRECTV intends to continue to
operate the medium-power PRIMESTAR business, PRIMESTAR by DIRECTV, through the
end of 2000. During such time, the medium-power subscribers will continue to be
offered the opportunity to transition to the high-power DIRECTV service. The
USSB acquisition provided DIRECTV with 25 channels of video programming,
including premium networks such as HBO, Showtime, Cinemax and The Movie Channel,
which are now being offered to DIRECTV's subscribers. The results of operations
for PRIMESTAR and USSB have been included in Hughes' financial information since
their dates of acquisition. See Note 17 to the financial statements and
"Liquidity and Capital Resources - Acquisitions, Investments and Divestitures,"
below, for further discussion of these transactions.
In addition, DIRECTV U.S. launched local broadcast network services in the
fourth quarter of 1999. Currently, DIRECTV is providing major local broadcast
networks to 23 U.S. markets and plans to increase these markets to at least 25
in the first half of 2000. DIRECTV U.S. also launched foreign language
programming in seven U.S. cities through its DIRECTV Para Todos /TM/ service,
which currently provides programming packages with up to 21 Spanish special
interest channels combined with up to 77 English channels. DIRECTV expects to
expand the DIRECTV Para Todos service nationwide in the first half of 2000 and
to expand its programming in other languages. The launch of these services did
not materially affect revenues in 1999, but is expected to result in increased
revenues in 2000 and thereafter.
The Latin America DIRECTV businesses are comprised of Galaxy Latin America,
LLC ("GLA"), Hughes' 78% owned subsidiary that provides DIRECTV services to 27
countries in Latin America and the Caribbean Basin; SurFin Ltd. ("SurFin"), a
company 75% owned by Hughes, that provides financing of subscriber receiver
equipment to certain GLA operating companies; Grupo Galaxy Mexicana, S.R.L. de
C.V. ("GGM"), the exclusive distributor of DIRECTV in Mexico which was acquired
in February 1999; and Galaxy Brasil, Ltda. ("GLB"), the exclusive distributor of
DIRECTV in Brazil, which was acquired in July
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1999. The results of operations for SurFin, GGM, and GLB have been included in
Hughes' financial information since their dates of acquisition. See Note 17 to
the financial statements and "Liquidity and Capital Resources - Acquisitions,
Investments and Divestitures," below, for further discussion of these
transactions.
Also included as part of the non-operating results of the Direct-To-Home
Broadcast segment is DIRECTV Japan, a company 42.2% owned by Hughes that
provides DIRECTV services in Japan. On March 1, 2000, Hughes announced that
DIRECTV Japan's operations would be discontinued and that its subscribers would
migrate to SkyPerfecTV, a company in Japan providing direct-to-home satellite
broadcasting. In connection with this transaction, Hughes will receive an
ownership interest in SkyPerfecTV. See "Liquidity and Capital Resources-
Acquisitions, Investments and Divestitures," below, for further discussion.
In June 1999, Hughes announced a new strategic alliance with AOL to develop
and market digital entertainment and Internet services nationwide. This alliance
is expected to accelerate subscriber growth and revenue per subscriber for
DIRECTV, DirecPC(R) and eventually the new broadband services to be delivered
via Spaceway(TM). As part of this alliance, Hughes and AOL plan to introduce two
new enhanced TV and Internet-based interactive services in 2000. The first is a
combination television receiver that will allow the consumer not only to receive
DIRECTV's extensive programming, but also to access "AOL TV," a new service that
will bring AOL's extensive interactive and Internet content to the consumer's
television. The second is a high-speed Internet service called "AOL Plus via
DirecPC" that will be delivered using Hughes Network Systems' DirecPC satellite
network. Additionally, Hughes and AOL also plan to jointly develop new services
and content for DIRECTV.
The Satellite Services segment consists of PanAmSat, Hughes' 81% owned
subsidiary. PanAmSat provides satellite services to its customers primarily
through long-term operating lease contracts for the full or partial use of
satellite transponder capacity. In May 1997, Hughes and PanAmSat Corporation
merged their respective satellite service operations into a new publicly-held
company, which retained the name PanAmSat Corporation. As a result of this
merger, Hughes obtained a 71.5% ownership interest in PanAmSat. Since the date
of the merger, Hughes has included PanAmSat's results of operations in its
financial information. In May 1998, Hughes purchased an additional 9.5%
interest in PanAmSat, increasing Hughes' ownership to 81%. See Note 17 to the
financial statements and the "Liquidity and Capital Resources - Acquisitions,
Investments and Divestitures" section, below, for further discussion of these
transactions.
The Network Systems segment consists of Hughes Network Systems ("HNS"), a
manufacturer of DIRECTV receiver equipment and provider of satellite and
wireless communications ground equipment and business communications services.
In December 1999, HNS recorded a pre-tax non-operating gain of approximately
$39.4 million resulting from the sale of securities of its 56.1% owned
subsidiary, Hughes Software Systems Private Limited ("HSS"), in conjunction with
HSS' initial public offering in India. In January 2000, Hughes announced the
discontinuation of its mobile cellular and narrowband local loop product lines
at HNS. As a result of this decision, HNS recorded a fourth quarter 1999 pre-tax
charge to continuing operations of $272.1 million. The charge represents the
write-off of receivables and inventories, licenses, software and equipment with
no alternative use.
The Network Systems segment was also affected in February 1999 by a
notification received by Hughes from the Department of Commerce that it intended
to deny a U.S. government export license that Hughes was required to obtain in
connection with its contract with Asia-Pacific Mobile Telecommunications
Satellite Pte. Ltd. ("APMT") for the provision of a satellite-based mobile
telecommunications system. As a result, APMT and Hughes terminated the contract
on April 9, 1999, resulting in a pre-tax charge to Hughes' earnings of $92.0
million in the first quarter of 1999. Of the $92.0 million charge, $11.0
million was attributable to the Network Systems segment and the remainder to
Hughes Space and Communications which is included in discontinued operations.
The charge represented the write-off of receivables and inventory, with no
alternative use, related to the contract.
Satellite Fleet
At December 31, 1999, Hughes had a fleet of 25 satellites, five owned by
DIRECTV and 20 owned and operated by PanAmSat. The satellite fleet was expanded
in the fourth quarter of 1999 with the launch of DTV-1R and Galaxy-XI. DTV-1R
was placed into service at DIRECTV's 101 degree west longitude orbital slot and
an existing satellite, DBS-1, was moved to DIRECTV's 110 degree west longitude
orbital slot. The DTV-1R satellite adds additional capacity for DIRECTV U.S.'
basic programming and local network channels. Galaxy-XI will become an integral
component of PanAmSat's Galaxy cable neighborhood and is expected to be
operational in the first half of 2000.
PanAmSat expects to add additional satellites as part of its comprehensive
satellite expansion and restoration plan adopted in 1998. The additional
satellites are intended to meet the expected demand for additional satellite
capacity, replace capacity affected by satellite anomalies, and provide added
backup to existing capacity. In connection with this plan, two satellites were
successfully launched, Galaxy-XI in 1999 and Galaxy-XR in January 2000. In
addition, five satellites are now under construction for PanAmSat by Hughes
Space and Communications. PanAmSat expects to launch four of these satellites
in 2000 and one in 2001.
In the third quarter of 2000, DIRECTV U.S. expects to launch DIRECTV 5, which
will replace the DIRECTV 4 satellite located at 119 degree west longitude.
DIRECTV U.S. has also contracted with Hughes
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Space and Communications to build DIRECTV 4S, a high-powered spot-beam satellite
that will provide additional capacity for new local channel service or other new
services beginning in 2002.
On March 17, 1999, Hughes announced its intention to make an initial
investment of $1.4 billion in the Spaceway satellite system. The Spaceway
system, when completed, will provide high-speed, two-way communications of
video, voice and data directly to companies and individual consumers. Hughes
expects that this initial investment will allow it to construct three high-
powered satellites to provide broadband network services ``on demand'' for
video-conferencing, data transfer and other purposes in North America by 2003.
Hughes is currently assessing the possibility of providing Spaceway services to
most of the world using high-orbit satellites as well as complementary services
from a low-orbit system. These subsequent phases would require significant
additional investment.
Hughes' in-orbit satellites are subject to the risk of failing prematurely due
to, among other things, mechanical failure, collision with objects in space or
an inability to maintain proper orbit. Satellites are subject to the risk of
launch delay and failure, destruction and damage while on the ground or during
launch and failure to become fully operational once launched. Delays in the
production or launch of a satellite or the complete or partial loss of a
satellite, in-orbit or during launch, could have a material adverse impact on
the operation of Hughes' businesses. With respect to both in-orbit and launch
problems, insurance carried by PanAmSat and Hughes does not compensate for
business interruption or loss of future revenues or customers. Hughes has, in
the past, experienced technical anomalies on some of its satellites. Service
interruptions caused by these anomalies, depending on their severity, could
result in claims by affected customers for termination of their transponder
agreements, cancellation of other service contracts or the loss of other
customers.
Results of Operations
1999 compared to 1998
Overall
Revenues. Revenues increased 59.8% to $5,560.3 million in 1999 from $3,480.6
million in 1998. The Direct-To-Home Broadcast segment was the primary
contributor to the growth in revenues resulting from record subscriber growth in
both the U.S. and Latin America DIRECTV businesses and from additional revenues
for the U.S. DIRECTV businesses from the PRIMESTAR and USSB acquisitions. Also
contributing to the growth in revenues were increased sales of DIRECTV receiver
equipment at the Network Systems segment.
Operating Costs and Expenses. Operating costs and expenses grew to $5,988.3
million in 1999 from $3,526.8 million in 1998. Broadcast programming and other
costs increased $863.7 million during 1999 due primarily to the added costs for
the PRIMESTAR by DIRECTV and premium channel services. Cost of products sold
increased $348.0 million in 1999 from 1998 due to the increased sales of DIRECTV
receiver equipment discussed above and the write-off of $91.5 million of
inventory associated with the discontinued wireless product lines at the Network
Systems segment. Selling, general and administrative expenses increased by
$987.0 million due primarily to increased costs at the Direct-To-Home Broadcast
segment for subscriber acquisition costs and added costs for the PRIMESTAR by
DIRECTV business and a charge of $180.6 million at the Network Systems segment
resulting from the write-off of receivables, licenses and equipment associated
with the discontinued wireless product lines. Depreciation and amortization
increased $262.8 million in 1999 over 1998 due primarily to added goodwill,
intangibles and property, plant and equipment resulting from the acquisitions
discussed above, and additions to PanAmSat's satellite fleet.
EBITDA. Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA"). EBITDA is defined as operating profit (loss), plus depreciation and
amortization. EBITDA is not presented as an alternative measure of operating
results or cash flow from operations, as determined in accordance with generally
accepted accounting principles. However, Hughes believes EBITDA is a meaningful
measure of Hughes' performance and that of its business units. EBITDA is a
performance measurement commonly used by other communications, entertainment and
media service providers and therefore can be used to analyze and compare Hughes'
financial performance to that of its competitors. EBITDA is also a measurement
used for certain of Hughes' debt covenants and is used by rating agencies in
determining credit ratings. EBITDA does not give effect to cash used for debt
service requirements and thus does not reflect funds available for investment in
the business of Hughes, dividends or other discretionary uses. EBITDA margin is
calculated by dividing EBITDA by total revenues.
EBITDA declined to $222.7 million in 1999 from $341.7 million in 1998. The
decline was attributable to charges incurred at the Network Systems segment
which included the $272.1 million charge related to the discontinued wireless
product lines and the $11.0 million write-off related to the termination of the
APMT contract. These declines were offset by an increase in EBITDA of $145.7
million at the Direct-To-Home Broadcast segment and $65.5 million at the
Satellite Services segment.
Operating Loss. Hughes' operating loss was $428.0 million in 1999, compared
to $46.2 million in 1998. The increased operating loss resulted from the
decrease in EBITDA, discussed above, and higher
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HUGHES ELECTRONICS CORPORATION
depreciation and amortization at the Direct-To-Home Broadcast segment resulting
primarily from goodwill from recent acquisitions.
Interest Income and Expense. Interest income declined to $27.0 million in 1999
compared to $112.3 million in 1998. This change resulted from a decline in cash
and cash equivalents. Interest expense increased to $122.7 million in 1999 from
$17.5 million in 1998. The increase in interest expense resulted from an
increase in debt and interest associated with liabilities for above-market
programming contracts assumed in the acquisitions of PRIMESTAR and USSB. The
changes in cash and cash equivalents and debt are discussed in more detail below
under "Liquidity and Capital Resources."
Other, Net. Other, net declined to a net expense of $136.3 million in 1999
from a net expense of $151.8 million in 1998. Other, net for 1999 included
losses from equity method investments of $189.2 million of which $134.9 million
related to DIRECTV Japan, offset by the gain of $39.4 million from the sale of
securities in the HSS initial public offering and other miscellaneous items.
Other, net for 1998 included losses from equity method investments of $128.3
million, of which $83.2 million related to DIRECTV Japan, and a provision of
$34.5 million for estimated losses associated with the bankruptcy filings of two
Network Systems segment customers. These losses were offset by the gains on the
sale of property and investments of about $15.0 million.
Income Taxes. Hughes recognized an income tax benefit of $236.9 million in
1999 compared to $142.3 million in 1998. The higher tax benefit in 1999
resulted primarily from higher losses from continuing operations. The income
tax benefit in 1998 included a favorable adjustment relating to an agreement
with the Internal Revenue Service regarding the treatment of research and
experimentation credits for the years 1983 through 1995.
Income (Loss) From Continuing Operations. Hughes reported a loss from
continuing operations in 1999 of $391.1 million compared with 1998 income from
continuing operations of $63.5 million.
Discontinued Operations. Revenues for the satellite systems manufacturing
businesses decreased to $2,240.7 million for 1999 from revenues of $2,820.4
million for 1998. Revenues, excluding intercompany transactions, were $1,780.4
million for 1999 and $2,483.3 million for 1998. The decrease in revenues was
principally due to contract revenue adjustments and delayed revenue recognition
that resulted from increased development costs and schedule delays on several
new product lines and decreased activity associated with the contract with ICO
Global Communications (Operations) Ltd.
The satellite systems manufacturing businesses reported an operating loss of
$0.6 million for 1999 compared to operating profit of $286.3 million for 1998.
The reported operating loss, excluding intercompany transactions, amounted to
$10.4 million for 1999 compared to operating profit of $295.3 million for 1998.
The 1999 operating loss included a pre-tax charge of $125.0 million that
resulted from increased development costs and schedule delays on several new
product lines, a one-time pre-tax charge of $81.0 million resulting from the
termination of the APMT contract and decreased activity associated with a
contract with ICO Global Communications (Operations) Ltd.
Hughes had maintained a lawsuit against the U.S. government since September
1973 regarding the U.S. government's infringement and use of a Hughes patent
covering `` Velocity Control and Orientation of a Spin Stabilized Body,''
principally satellites (the `` Williams patent''). On April 7, 1998, the U.S.
Court of Appeals for the Federal Circuit reaffirmed earlier decisions in the
Williams patent case, including an award of $114.0 million in damages, plus
interest. In March 1999, Hughes received a payment from the U.S. government as
a final settlement of the suit and as a result, recognized as income from
discontinued operations a pre-tax gain of $154.6 million.
Accounting Changes. In 1998, Hughes adopted American Institute of Certified
Public Accountants Statement of Position 98-5, Reporting on the Costs of Start-
Up Activities. Statement of Position 98-5 requires that all start-up costs
previously capitalized be written off and recognized as a cumulative effect of
accounting change, net of taxes, as of the beginning of the year of adoption. On
a prospective basis, these types of costs are required to be expensed as
incurred. The unfavorable cumulative effect of this accounting change at January
1, 1998 was $9.2 million after-tax.
Direct-To-Home Broadcast Segment
Revenues for the Direct-To-Home Broadcast segment more than doubled to
$3,785.0 million in 1999 from $1,816.1 million in 1998. Operating losses grew
to $292.1 million in 1999 from $228.1 million in 1998 while EBITDA increased to
$19.9 million in 1999 from negative $125.8 million in 1998.
United States. The DIRECTV U.S. businesses reported revenues of $3,404.6
million in 1999, more than twice the reported revenues of $1,604.1 million in
1998. The increase in revenues resulted from an increase in subscribers for the
high-power business and added revenues from PRIMESTAR by DIRECTV and premium
channel services. Subscribers for the high-power DIRECTV business increased by
2.2 million subscribers (1.6 million excluding PRIMESTAR conversions and
incremental subscribers from USSB) during 1999 to 6.7 million subscribers at the
end of 1999. Including PRIMESTAR by DIRECTV subscribers there were over 8
million subscribers at the end of 1999. Average monthly revenue per subscriber
for the high-power business increased to $58 for 1999 from $46 for 1998. This
increase resulted primarily from the addition of the premium channel services in
April of 1999.
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HUGHES ELECTRONICS CORPORATION
EBITDA for 1999 was $151.2 million in 1999 compared to negative $17.9 million
in 1998. The change in EBITDA resulted from the increased revenues that were
partially offset by increased subscriber acquisition costs and added operating
costs from the PRIMESTAR by DIRECTV and premium channel services. The DIRECTV
U.S. businesses reported an operating loss of $97.9 million in 1999 compared to
$100.0 million in 1998. The decreased operating loss resulted from increased
EBITDA which was generally offset by increased depreciation and amortization
that resulted from the PRIMESTAR and USSB acquisitions.
Latin America. Revenues for the Latin America DIRECTV businesses increased
82.3% to $315.3 million in 1999 from $173.0 million in 1998. The increase in
revenues reflects an increase in subscribers and the consolidation of the GGM,
GLB and SurFin businesses. Subscribers grew to 804,000 at the end of 1999 from
484,000 at the end of 1998. Average revenue per subscriber decreased to $36 in
1999 from $41 in 1998. The decline in average revenue per subscriber resulted
from currency devaluations in Brazil.
EBITDA was negative $105.6 million in 1999 compared to negative $93.0 million
in 1998. The change in EBITDA resulted primarily from additional losses from
the consolidation of GGM and GLB. The Latin America DIRECTV businesses incurred
an operating loss of $168.4 million in 1999 compared to $113.2 million in 1998.
The increased operating loss resulted from the decline in EBITDA and higher
depreciation and amortization that resulted from the GGM, GLB and SurFin
transactions.
Satellite Services Segment
Revenues increased for the Satellite Services segment by $43.3 million to
$810.6 million in 1999 from $767.3 million in 1998. This increase was primarily
due to increased operating lease revenues, partially offset by a decrease in
sales and sales-type lease revenues. Operating lease revenues, which reflect
long-term satellite service agreements from which PanAmSat derives revenues over
the duration of the contract, were 97% of total 1999 revenues and increased by
6.9% to $787.5 million from $736.7 million in 1998. Total sales and sales-type
lease revenues were $23.1 million for 1999 compared to $30.6 million for
1998.
EBITDA was $618.8 million compared to $553.3 million in 1998. The increase
was principally due to higher revenue that resulted from the commencement of new
service agreements on additional satellites placed into service in 1999 and
lower leaseback expense resulting from the exercise of certain early buy-out
opportunities under sale-leaseback agreements during 1999. Operating profit was
$338.3 million in 1999, an increase of $20.0 million over 1998. The increase
resulted from the higher EBITDA in 1999 offset by increased depreciation expense
resulting from increased capital from additions to the satellite fleet.
Backlog for the Satellite Services segment, which consists primarily of
operating leases on satellite transponders, was $4,856.3 million in 1999
compared to $4,461.9 million in 1998.
Network Systems Segment
Revenues for the Network Systems segment increased 28.6% to $1,384.7 million
in 1999 from $1,076.7 million in 1998. The higher revenues resulted from
greater shipments of DIRECTV receiver equipment. Shipments of DIRECTV receiver
equipment totaled about 2.1 million units in 1999 compared to about 0.7 million
units in 1998.
The Network Systems segment reported negative EBITDA of $178.1 million in 1999
compared to EBITDA of $52.6 million in 1998. The Network Systems segment
incurred an operating loss of $227.3 million in 1999 compared to operating
profit of $10.9 million in 1998. The decline in EBITDA and operating profit
resulted from the $272.1 million charge related to the discontinuation of the
wireless product lines, offset in part by the increased sales of DIRECTV
receiver equipment.
Backlog for the Network Systems segment, which consists primarily of private
business networks and satellite-based mobile telephony equipment orders, was
$996.0 million in 1999 compared to $1,333.4 million in 1998.
Eliminations and Other
The elimination of revenues increased to $420.0 million in 1999 from $179.5
million in 1998 due primarily to increased manufacturing subsidies received by
the Network Systems segment from the DIRECTV businesses which resulted from the
increased DIRECTV receiver equipment shipments.
Operating losses for "elimination and other" increased to $246.9 million in
1999 from $147.3 million in 1998. The increase was primarily due to increases in
eliminations of intercompany profit and corporate expenditures. The increased
intercompany profit elimination resulted from the increased intercompany sales
noted above and increased corporate expenditures resulted primarily from higher
pension and other employee costs.
1998 compared to 1997
Overall
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HUGHES ELECTRONICS CORPORATION
Revenues. Revenues in 1998 increased 22.6% to $3,480.6 million compared with
$2,838.3 million in 1997. Each of Hughes' business segments contributed to the
growth in revenue, which included continued strong subscriber growth in the
Direct-to-Home Broadcast segment, the effect of the PanAmSat merger and
increased operating lease revenues for video, data and Internet-related services
in the Satellite Services segment and increased sales of DIRECTV receiver
equipment in the Network Systems segment.
Operating Costs and Expenses. Operating costs and expenses increased to
$3,526.8 million in 1998 from $2,794.8 million in 1997. Broadcast programming
and other costs increased $299.1 million during 1998 due to increased
programming costs at the Direct-To-Home Broadcast segment and the effects of a
full year of costs from PanAmSat. The increase in costs of products sold of
$68.2 million during 1998 resulted primarily from the costs related to the
increased shipments of DIRECTV receiver equipment. Selling, general and
administrative expenses increased $237.1 million in 1998 due primarily to
increased marketing and subscriber acquisition costs in the Direct-to-Home
Broadcast segment and increased expenditures to support the growth in the
remaining business segments. The increase in depreciation and amortization
expense of $127.6 million in 1998 resulted from increased goodwill amortization
related to the PanAmSat transactions and increased capital expenditures in the
Direct-to-Home Broadcast and Satellite Services segments.
EBITDA increased slightly during 1998 to $341.7 million from $303.8 million in
1997. The increase in EBITDA resulted from the full year effects of PanAmSat
and improved EBITDA at DIRECTV U.S. These EBITDA improvements were offset by
higher corporate expenses, primarily related to pension and other employee
costs, and a decline in EBITDA in 1998 at the Network Systems segment due
principally to lower sales of wireless telephone systems and private business
networks in the Asia-Pacific region and provisions for estimated losses
associated with uncollectible amounts due from certain wireless customers.
Operating Profit (Loss). Hughes incurred an operating loss of $46.2 million in
1998 compared with operating profit of $43.5 million in 1997. This decline
resulted from increased goodwill amortization, resulting primarily from the
PanAmSat transactions, which more than offset the improvement in EBITDA.
Interest Income and Expense. Interest income increased to $112.3 million in
1998 compared to $33.0 million in 1997, due primarily to higher cash balances
resulting from the recapitalization of Hughes. Interest expense decreased $73.5
million to $17.5 million in 1998 versus $91.0 million in 1997 resulting from the
repayment of debt, arising from the PanAmSat merger, at the end of 1997.
Other, net. Other, net for 1998 relates primarily to losses from
unconsolidated subsidiaries of $128.3 million, attributable principally to
equity investments, including American Mobile Satellite Corporation and DIRECTV
Japan, and a provision for estimated losses associated with bankruptcy filings
by two customers of the Network Systems segment. Other, net for 1997 includes a
$489.7 million pre-tax gain recognized in connection with the May 1997 PanAmSat
merger offset by losses from unconsolidated subsidiaries of $72.2 million.
Income Taxes. Hughes recorded a tax benefit of $142.3 million in 1998 compared
to a tax provision of $162.0 million in 1997. Income taxes in 1998 benefited
from the favorable adjustment relating to a fourth quarter 1998 agreement with
the Internal Revenue Service regarding the treatment of research and
experimentation costs for the years 1983 through 1995 and also reflect the tax
benefit recorded for the losses incurred from continuing operations.
Income (Loss) From Continuing Operations. Income from continuing operations
was $63.5 million in 1998 compared with $236.9 million in 1997.
Discontinued Operations and Extraordinary Item. On December 15, 1997, Hughes
Avicom International, Inc. was sold to Rockwell Collins, Inc., resulting in an
after-tax gain of $62.8 million. Hughes recorded an extraordinary after-tax
charge of $20.6 million in 1997 related to the refinancing of PanAmSat's debt.
For additional information see Note 8 to the financial statements.
Also included in discontinued operations are the results of the satellite
systems manufacturing businesses. Revenues for the satellite systems
manufacturing businesses increased 13.2% in 1998 to $2,820.4 million from
$2,491.9 million in 1997. Revenues, excluding intercompany sales, were $2,483.3
million in 1998 compared to $2,290.0 million in 1997. The increase in revenues
resulted primarily from higher commercial satellite sales to customers such as
Thuraya Satellite Telecommunications Company, PanAmSat, ICO Global
Communications and Orion Asia Pacific Corporation. Operating profit for the
satellite systems manufacturing businesses in 1998 was $286.3 million, an
increase of 52.9% over $187.2 million in 1997. Operating profit, excluding
intercompany transactions, was $295.3 million in 1998 compared to $241.9 million
in 1997. The increase was primarily due to the higher commercial satellite sales
noted above.
Accounting Changes. In 1998, Hughes adopted American Institute of Certified
Public Accountants Statement of Position 98-5, Reporting on the Costs of Start-
Up Activities. Statement of Position 98-5 requires that all start-up costs
previously capitalized be written off and recognized as a cumulative effect of
accounting change, net of taxes, as of the beginning of the year of adoption. On
a prospective basis, these types of costs are required to be expensed as
incurred. The unfavorable cumulative effect of this accounting change at January
1, 1998 was $9.2 million after-tax.
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Direct-To-Home Broadcast Segment
The Direct-to-Home Broadcast segment's revenues for 1998 increased 42.2% to
$1,816.1 million from $1,276.9 million in 1997. EBITDA for the segment improved
in 1998 to negative $125.8 million compared to negative $168.5 million in 1997.
The operating loss for the segment declined to $228.1 million in 1998 from
$254.6 million in 1997.
United States. The DIRECTV U.S. business was the biggest contributor to the
segment's revenue growth with revenues of $1,604.1 million for 1998, a 45.4%
increase over prior year's revenues of $1,103.3 million. The large increase in
revenues resulted primarily from an increase in subscribers. Subscribers grew to
about 4.5 million at the end of 1998 compared to 3.3 million at the end of 1997.
Average monthly revenue per subscriber also increased during 1998 to $46,
compared to $44 for 1997.
DIRECTV U.S. reported negative EBITDA of $17.9 million in 1998 compared to
negative EBITDA of $68.0 million in 1997. The full-year 1998 operating loss for
DIRECTV U.S. was $100.0 million compared with $137.0 million in 1997. The
improvement in EBITDA and lower operating loss was principally due to increased
subscriber revenues which more than offset increased sales and marketing
expenditures.
Latin America. Revenues for the Latin America DIRECTV businesses increased to
173.0 million in 1998 from $70.0 million in 1997. The increase in revenues
resulted from an increase in subscribers to 484,000 at the end of 1998 from
300,000 at the end of 1997.
EBITDA was negative $93.0 million in 1998 compared to negative $96.5 million
in 1997. The operating loss was $113.2 million in 1998 compared with $111.8
million in 1997. The increased operating loss resulted from higher sales and
marketing expenditures and subscriber acquisition costs.
Satellite Services Segment
Revenues for the Satellite Services segment in 1998 increased 21.8% to $767.3
million from $629.9 million in 1997. The increase in revenues was due to the May
1997 PanAmSat merger and increased operating lease revenues from the
commencement of service agreements for full-time video distribution, as well as
short-term special events and an increase in data and Internet-related service
agreements. The increase was partially offset by a decrease in sales and sales-
type lease revenues.
As a result of the increased revenues described above, the Satellite Services
segment's EBITDA and operating profit improved. EBITDA increased to $553.3
million in 1998 from $438.1 million in 1997. Operating profit increased 8.7% to
$318.3 million in 1998, compared with the prior year's operating profit of
$292.9 million. Operating profit margin in 1998 declined to 41.5% from 46.5% in
the prior year principally due to goodwill amortization associated with the
PanAmSat merger, a provision for losses relating to the May 1998 failure of
PanAmSat's Galaxy IV satellite and increased depreciation expense resulting from
increased capital expenditures by PanAmSat.
Backlog for the Satellite Services segment, which consists primarily of
operating leases on satellite transponders, was $4,461.9 million in 1998
compared to $5,772.5 million in 1997.
Network Systems Segment
Revenues for the Network Systems segment in 1998 were $1,076.7 million
compared with $1,011.3 million in 1997. The increase in revenues resulted from
the growth in sales of DIRECTV receiver equipment and increased sales of private
business networks and satellite-based mobile telephony equipment offset by lower
international sales of wireless telephony systems and private business networks,
primarily in the Asia-Pacific region.
EBITDA was $52.6 million in 1998, a decrease of $53.5 million from 1997.
Operating profit in 1998 was $10.9 million compared with $74.1 million in 1997
and operating profit margin declined to 1.0% from 7.3%. These decreases were
primarily due to a $26.0 million provision for estimated losses associated with
the bankruptcy filing by a customer, provision for uncollectible amounts due
from certain wireless customers and lower international sales of wireless
telephony systems and private business networks, primarily in the Asia Pacific
region.
Backlog for the Network Systems segment, which consists primarily of private
business networks and satellite-based mobile telephony equipment orders, was
$1,333.4 million in 1998 compared to $1,101.4 million in 1997.
Eliminations and Other
The elimination of revenues increased $99.7 million in 1998 to $179.5 million
due primarily to increased intercompany activity resulting from the PanAmSat
merger and increased manufacturing subsidies received by the Network Systems
segment from DIRECTV that resulted from the increased shipment of DIRECTV
receiver equipment.
Operating losses for "eliminations and other" increased to $147.3 million in
1998 from $68.9 million in 1997. The increase was primarily due to increases in
eliminations of intercompany profit and corporate expenditures. The increased
intercompany profit elimination resulted from the increased intercompany sales
noted above and increased corporate expenditures resulted primarily from higher
pension and other employee costs.
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Liquidity and Capital Resources
Cash and cash equivalents were $238.2 million at December 31, 1999 compared to
$1,342.0 million at December 31, 1998. The decrease in cash resulted primarily
from increased investing activities, offset in part by increased borrowings and
the issuance of preferred stock.
Cash provided by operating activities was $379.5 million in 1999, compared to
$612.1 million in 1998 and $90.6 million in 1997. The change in 1999 from 1998
resulted primarily from increased cash requirements for working capital offset
by increased income from continuing operations excluding non-cash adjustments
such as depreciation and amortization, the loss resulting from the
discontinuation of the wireless product lines and deferred taxes. The change in
1998 from 1997 resulted primarily from increased income from continuing
operations excluding non-cash adjustments and decreased working capital
requirements.
Cash used by investing activities was $3,941.8 million in 1999, compared to
$2,128.5 million in 1998 and $2,115.6 million in 1997. The increase in 1999
investing activities reflects the acquisitions of PRIMESTAR and the related
Tempo Satellite assets, USSB, SurFin, GGM and GLB. The 1999 increase is also due
to investments in DIRECTV Japan convertible bonds, the early buy-out of
satellite sale-leasebacks at PanAmSat and an increase in expenditures for
property, compared to 1998. The increase in 1998 investing activities reflects
the purchase of an additional 9.5% interest in PanAmSat, the early buy-out of
satellite sale-leasebacks at PanAmSat and an increase in expenditures for
satellites, compared to 1997, offset in part by proceeds from insurance claims
for the full or partial loss of certain PanAmSat satellites.
Cash provided by (used in) financing activities was $2,577.5 million in 1999,
compared to $(63.6) million in 1998 and $5,014.0 million in 1997. 1999 financing
activities reflect increased borrowings and proceeds from the issuance of
preferred stock. 1998 financing activities include the payment to General Motors
for the Delco post-closing price adjustment stemming from the Hughes
Transactions, offset in part by net long-term borrowings. 1997 financing
activities reflect the impact of the PanAmSat merger, the Hughes Transactions
and cash contributions from the Parent Company.
Cash provided by (used in) discontinued operations was $(119.0) million in
1999, compared to $138.3 million in 1998 and $(211.5) million in 1997. The
decrease in 1999 was due to increased working capital requirements, increased
development costs, the termination of the APMT contract and decreased activity
associated with the ICO contract. The increase in 1998 compared to 1997 was due
to a decrease in working capital requirements.
Liquidity Measurement. As a measure of liquidity, the current ratio (ratio of
current assets to current liabilities) at December 31, 1999 and 1998 was 1.46
and 3.03, respectively. Working capital decreased by $1,513.3 million to
$1,215.9 million at December 31, 1999 from $2,729.2 million at December 31,
1998. The change in working capital resulted principally from the decrease in
cash and cash equivalents discussed above.
Property and Satellites. Property, net of accumulated depreciation, increased
$540.0 million to $1,223.0 million in 1999 from $683.0 million in 1998. The
increase in property resulted primarily from capital expenditures of about
$506.4 million, additions resulting from acquisitions of about $281.6 million,
offset by depreciation of $227.0 million. The increase in capital expenditures
of $262.5 million in 1999 over 1998 was primarily due to an increase in
subscriber leased DIRECTV receiver equipment used in the conversion of PRIMESTAR
subscribers. Satellites, net of accumulated depreciation, increased $709.8
million to $3,907.3 million in 1999 from the $3,197.5 million reported in 1998.
Capital expenditures, including expenditures related to satellites, increased to
$1,665.3 million in 1999 from $1,328.8 million in 1998. 1999 capital
expenditures include $789.4 million for the construction of satellites and
$369.5 million for the early buy-out of satellite sale-leasebacks.
Common Stock Dividend Policy and Use of Cash. As discussed in Note 15 to the
financial statements, since the completion of the recapitalization of Hughes in
late 1997, the GM Board has not paid, and does not currently intend to pay in
the foreseeable future, cash dividends on its Class H common stock. Similarly,
since such time, Hughes has not paid dividends on its common stock to GM and
does not currently intend to do so in the foreseeable future. Future Hughes
earnings, if any, are expected to be retained for the development of the
businesses of Hughes. Hughes expects to have significant cash requirements in
2000 primarily due to capital expenditures of approximately $1.5 to $2.0 billion
for satellites and property. In addition, Hughes expects to increase its
investment in affiliated companies, primarily related to its international
DIRECTV businesses. These cash requirements are expected to be funded from a
combination of cash provided from operations, cash to be received upon
completion of the Boeing transaction, amounts available under credit facilities
and debt and equity offerings, as needed.
Debt and Credit Facilities. Short-Term Borrowings. In October 1999, Hughes
issued $500.0 million ($498.9 million net of unamortized discount) of floating
rate notes to a group of institutional investors in a private placement. The
notes bear interest at a variable rate which was 7.45% at December 31, 1999 .
Interest is payable quarterly and the notes are due and payable on October 23,
2000.
Notes Payable. PanAmSat issued five, seven, ten and thirty-year notes
totaling $750.0 million in January 1998. The outstanding principal balances and
interest rates for the five, seven, ten and thirty-year notes as of December 31,
1999 were $200 million at 6.0%, $275 million at 6.125%, $150 million at 6.375%
and $125 million at $6.875%, respectively. Principal on the notes is payable at
maturity, while interest is payable semi-annually.
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In July 1999, in connection with the early buy-out of satellite sale-
leasebacks, PanAmSat assumed $124.1 million of variable rate notes, all of which
were outstanding at December 31, 1999. The notes bear interest at various rates.
The weighted average interest rate on the notes at December 31, 1999 was 6.75%.
The notes mature on various dates through January 2, 2002.
Revolving Credit Facilities. Hughes has three unsecured revolving credit
facilities totaling $1.6 billion, consisting of a $750.0 million multi-year
facility, a $350.0 million 364-day facility, and a $500.0 million bridge
facility. The multi-year credit facility provides for a commitment of $750.0
million through December 5, 2002 and borrowings bear interest at various rates,
of which the weighted average rate at December 31, 1999 was 7.09%. The 364-day
facility provides for a commitment of $350.0 million through November 22, 2000.
These facilities also provide backup capacity for Hughes' commercial paper
program. The bridge facility provides for a commitment of $500.0 million through
the earlier of November 22, 2000 or the receipt of proceeds from the issuance of
any debt securities of Hughes in a public offering. $500.0 million was
outstanding under the multi-year facility at December 31, 1999. No amounts were
outstanding under the commercial paper program, 364-day, or bridge facilities at
December 31, 1999.
PanAmSat maintains a $500.0 million multi-year revolving credit facility that
provides for short-term and long-term borrowings and a $500.0 million commercial
paper program that provides for short-term borrowings. The multi-year revolving
credit facility provides for a commitment through December 24, 2002 . Borrowings
under the credit facility and commercial paper program are limited to $500.0
million in the aggregate. No amounts were outstanding under either the multi-
year revolving credit facility or the commercial paper program at December 31,
1999.
At December 31, 1999, Hughes' 75% owned subsidiary, SurFin, had a total of
$227.9 million outstanding under a $400.0 million unsecured revolving credit
facility expiring on June 2002. Borrowings under the credit facility bear
interest at various rates of interest. The weighted average interest rate on
these borrowings at December 31, 1999 was 6.84%.
Other. At December 31, 1999, GLB had a total of $24.3 million outstanding
under variable rate notes bearing interest at various rates. The weighted
average interest rate of the notes was 11.9% at December 31, 1999. Principal is
payable in varying amounts at maturity in April and May 2002, and interest is
payable monthly.
Other long-term debt totaling $16.2 million and $28.9 million at December 31,
1999 and 1998, respectively, consisted primarily of notes bearing fixed rates of
interest of 9.61% to 11.11%. Principal is payable at maturity in April 2007,
while interest is payable semi-annually.
As part of a debt refinancing program undertaken by PanAmSat in 1997, an
extraordinary charge of $20.6 million ($34.4 million before taxes) was recorded
that resulted from the excess of the price paid for the debt over its carrying
value, net of deferred financing costs.
Hughes has filed a shelf registration statement with the Securities and
Exchange Commission with respect to an issuance of up to $2.0 billion of debt
securities from time to time. No amounts have been issued as of December 31,
1999.
Acquisitions, Investments and Divestitures. On March 1, 2000, Hughes announced
that DIRECTV Japan's operations will be discontinued and that its subscribers
would migrate to SkyPerfecTV. As a result of this transaction, Hughes will
acquire a 6.8% interest in SkyPerfecTV, which is expected to complete an IPO
during its fiscal year ending March 31, 2001. Hughes will be required to fund a
substantial portion of the costs to be incurred over the next six to nine months
to exit the DIRECTV Japan business. Hughes will accrue such exit costs during
the first quarter of fiscal 2000. The first quarter charge will be offset by the
fair value of the SkyPerfecTV interest received; however the amounts are not yet
estimable. In addition, Hughes will continue to record its share of DIRECTV
Japan's operating losses during 2000.
On January 13, 2000, Hughes announced that it had reached an agreement to sell
its satellite systems manufacturing businesses to Boeing for $3.75 billion in
cash. The final transaction, which is subject to regulatory approval, is
expected to close in the second or third quarter of 2000 and result in an after-
tax gain in excess of $1 billion. The financial results for the satellite
systems manufacturing businesses are treated as discontinued operations for all
periods presented herein.
Also on January 13, 2000, Hughes announced the discontinuation of its mobile
cellular and narrowband local loop product lines at Hughes Network Systems. As a
result of this decision, Hughes recorded a fourth quarter 1999 pre-tax charge to
continuing operations of $272.1 million. The charge represents the write-off of
receivables and inventories, licenses, software and equipment with no
alternative use.
In September and November of 1999, DIRECTV Japan raised a total of
approximately $281 million through the issuance of bonds, convertible into
common stock, to five of its major shareholders, including $244.7 million issued
to Hughes.
On July 28, 1999, GLA acquired GLB, the exclusive distributor of DIRECTV in
Brazil, from Tevecap S.A. for approximately $114.0 million plus the assumption
of debt. In connection with the transaction, Tevecap also sold its 10% equity
interest in GLA to Hughes and The Cisneros Group of Companies, the
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remaining GLA partners, which increased Hughes' ownership interest in GLA to
77.8%. As part of the transaction, Hughes also increased its ownership interest
in SurFin from 59.1% to 75.0%. The total consideration paid in the transactions
amounted to approximately $101.1 million.
On May 20, 1999, Hughes acquired by merger all of the outstanding capital
stock of USSB, a provider of premium subscription television programming via the
digital broadcasting system that it shares with DIRECTV. The total
consideration of about $1.6 billion paid in July 1999, consisted of about $0.4
billion in cash and 22.6 million shares of Class H common stock.
On April 28, 1999, Hughes completed the acquisition of PRIMESTAR's 2.3 million
subscriber medium-power direct-to-home satellite business. The purchase price
consisted of $1.1 billion in cash and 4.9 million shares of Class H common
stock, for a total purchase price of $1.3 billion. As part of the agreement to
acquire PRIMESTAR, Hughes agreed to purchase the high-power satellite assets and
related orbital frequencies of Tempo Satellite Inc., a wholly-owned subsidiary
of TCI Satellite Entertainment Inc. The purchase price for the Tempo Satellite
assets consisted of $500 million in cash. Of this purchase price, $150 million
was paid on March 10, 1999 for a satellite that has not yet been launched and
the remaining $350 million was paid on June 4, 1999 for an in-orbit satellite
and 11 related satellite orbital frequencies.
In February 1999, Hughes acquired an additional ownership interest in GGM, a
Latin America local operating company which is the exclusive distributor of
DIRECTV in Mexico, from Grupo MVS, S.R.L. de C.V. Hughes' equity ownership
represents 49.0% of the voting equity and all of the non-voting equity of GGM.
In October 1998, Hughes acquired from Grupo MVS an additional 10.0% interest in
GLA, increasing Hughes' ownership interest to 70.0%. Hughes also acquired an
additional 19.8% interest in SurFin, a company providing financing of subscriber
receiver equipment for certain local operating companies located in Latin
America and Mexico, increasing Hughes' ownership percentage from 39.3% to 59.1%.
The aggregate purchase price for these transactions was $197.0 million in cash.
In May 1998, Hughes purchased an additional 9.5% interest in PanAmSat for
$851.4 million in cash, increasing its ownership interest in PanAmSat to 81.0%.
PanAmSat was originally acquired in May 1997, when Hughes and PanAmSat completed
the merger of their respective satellite service operations into a new publicly-
held company, which retained the name PanAmSat Corporation. Hughes contributed
its Galaxy satellite services business in exchange for a 71.5% interest in the
new company. Existing PanAmSat stockholders received a 28.5% interest in the new
company and $1.5 billion in cash. Such cash consideration and other funds
required to consummate the merger were funded by new debt financing totaling
$1,725.0 million borrowed from GM, which was subsequently repaid in December
1997. The PanAmSat merger was treated as a partial sale of the Galaxy business
by Hughes and resulted in a one-time pre-tax gain of $489.7 million ($318.3
million after-tax).
The financial information included herein, reflect the acquisitions discussed
above from their respective dates of acquisition. The acquisitions were
accounted for by the purchase method of accounting and, accordingly, the
purchase price has been allocated to the assets acquired and the liabilities
assumed based on the estimated fair values at the date of acquisition. The
excess of the purchase price over the estimated fair values of the net assets
acquired has been recorded as goodwill, resulting in goodwill additions of
$3,612.4 million and $702.9 million for the years ended December 31, 1999 and
1998, respectively.
The December 31, 1999 financial statements for the PRIMESTAR transaction
reflect a preliminary allocation of the purchase price for the transaction based
upon information currently available. Adjustments relating to the tangible
assets, including equipment located on customer premises; intangible assets,
including customer lists and dealer network; and accrued liabilities for
programming contracts and leases with above-market rates are estimates pending
the completion of independent appraisals currently in process. Additionally, the
adjustment to recognize the benefit of net operating loss carryforwards of USSB
represents a preliminary estimate pending further review and analysis by Hughes
management. The foregoing appraisals, review and analysis are expected to be
completed by March 31, 2000. Accordingly, the final purchase price allocations
may be different from the amounts reflected herein. As a result of the
acquisitions of GGM, SurFin and GLB, foreign currency risk, as more fully
described in ``Market Risk Disclosure,'' has increased for Hughes and may
increase in the future.
On December 15, 1997, Hughes sold substantially all of the assets and
liabilities of the Hughes Avicom business to Rockwell Collins, Inc. for cash,
which resulted in an after-tax gain of $62.8 million. Hughes Avicom is treated
as a discontinued operation for all periods prior to its disposition.
Also, in December 1997, Hughes repurchased from AT&T for $161.8 million, a
2.5% equity interest in DIRECTV, ending AT&T's marketing agreement to distribute
the DIRECTV direct broadcast satellite television service and DIRECTV(TM)
receiver equipment.
New Accounting Standards. In September 1999, the Financial Accounting
Standards Board ("FASB") issued Emerging Issues Task Force Issue 99-10 ("EITF
99-10"), Percentage Used to Determine the Amount of Equity Method Losses. EITF
99-10 addresses the percentage of ownership that should be used to compute
equity method losses when the investment has been reduced to zero and the
investor holds other securities of the investee. EITF 99-10 requires that
equity method losses should not be recognized solely on the percentage of common
stock owned; rather, an entity-wide approach should be
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HUGHES ELECTRONICS CORPORATION
adopted. Under such an approach, equity method losses must be recognized based
on the ownership level that includes other equity securities (e.g., preferred
stock) and loans/advances to the investee or based on the change in the
investor's claim on the investee's book value. Hughes adopted EITF 99-10 during
the third quarter of 1999 which resulted in Hughes recording a higher percentage
of DIRECTV Japan's losses subsequent to the effective date of September 23,
1999. The unfavorable impact of adopting EITF 99-10 was $39.0 million after-tax.
In June 1998, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities.
SFAS No. 133 requires all derivatives to be recorded as either assets or
liabilities and the instruments to be measured at fair value. Gains or losses
resulting from changes in the values of those derivatives are to be recognized
immediately or deferred depending on the use of the derivative and whether or
not it qualifies as a hedge. Hughes plans to adopt SFAS No. 133, as amended, by
January 1, 2001, as required. Hughes does not expect that the adoption of SFAS
No. 133 will have a material impact on Hughes' results of operations and
financial position.
Commitments and Contingencies
Hughes may be required to make a cash payment to, or receive a cash payment
from, Raytheon in connection with the merger of the defense electronics business
of Hughes with Raytheon in 1997. The amount of any such cash payment to or from
Raytheon, if any, is not determinable at this time.
There is a pending grand jury investigation into whether Hughes should be
accused of criminal violations of the export control laws arising out of the
participation of two of its employees on a committee formed to review the
findings of Chinese engineers regarding the failure of a Long March rocket in
China in 1996. Hughes is also subject to the authority of the State Department
to impose sanctions for non-criminal violations of the Arms Export Control Act.
The possible criminal and/or civil sanctions could include fines as well as
debarment from various export privileges and participating in government
contracts. If Hughes were to enter into a settlement of this matter prior to
the closing of the Boeing transaction that involves a debarment from sales to
the U.S. government or a material suspension of Hughes' export licenses or other
material limitation on projected business activities of the satellite systems
manufacturing businesses, Boeing would not be obligated to complete the purchase
of Hughes' satellite systems manufacturing businesses. Hughes does not expect
the grand jury investigation or State Department review to result in a material
adverse effect upon its business. However, there can be no assurance as to
those conclusions.
Hughes has contracts with ICO Global Communications (Operations), Ltd. to
build the satellites and related components for ICO's global wireless
communications system. ICO's parent company recently filed for bankruptcy
protection under Chapter 11. If ICO's parent company is unable to confirm a plan
of reorganization that provides for full payment to Hughes under these
contracts, ICO may be unable to pay these amounts and the most likely outcome
would be a liquidation proceeding. In the event that a liquidation becomes
probable, Hughes would expect to record a pre-tax charge to income of up to
approximately $350 million, of which $100 million would be attributable to
continuing operations and $250 million would be attributable to discontinued
operations. A portion of the purchase price to be paid by Boeing will be placed
in escrow under certain circumstances if prior to completing this sale to
Boeing, Hughes' contracts with ICO are not assumed by ICO with bankruptcy court
approval or new similar contracts are not entered into with bankruptcy court
approval.
At December 31, 1999, minimum future commitments under noncancelable operating
leases having lease terms in excess of one year are primarily for real property
and aggregated $250.8 million, payable as follows: $102.8 million in 2000,
$52.3 million in 2001, $24.2 million in 2002, $17.8 million in 2003, $12.5
million in 2004 and $41.2 million thereafter. Certain of these leases contain
escalation clauses and renewal or purchase options. Rental expenses under
operating leases, net of sublease rental income, were $58.5 million in 1999,
$82.7 million in 1998 and $89.1 million in 1997.
Hughes is contingently liable under standby letters of credit and bonds in the
amount of $222.0 million at December 31, 1999. In Hughes' past experience, no
material claims have been made against these financial instruments. In
addition, at December 31, 1999, Hughes has guaranteed up to $209.1 million of
bank debt, including $105.0 million related to American Mobile Satellite
Corporation. Of the bank debt guaranteed, $105.0 million matures in March 2003;
$55.4 million matures in September 2007; the remaining $48.7 million is due in
variable amounts over the next five years.
In connection with the direct-to-home broadcast businesses, Hughes has
commitments related to certain programming agreements which are variable based
upon the number of underlying subscribers and market penetration rates. Minimum
payments over the terms of applicable contracts are anticipated to be about
$1,000.0 million to $1,150.0 million.
As part of a marketing agreement entered into with AOL on June 21, 1999,
Hughes committed to increase its sales and marketing expenditures over the next
three years by about $1.5 billion relating to DirecPC/AOL-Plus, DIRECTV,
DIRECTV/AOL TV and DirecDuo.
See Note 20 to the financial statements for further discussion of the above
matters and various legal proceedings and claims that could be material,
individually or in the aggregate, to Hughes' continuing operations or financial
position.
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Year 2000
A comprehensive, company-wide, Year 2000 program was initiated in 1996 to
identify and remediate potential Year 2000 problems. The Year 2000 program was
implemented in seven phases which included awareness, inventory, assessment,
remediation, testing, implementation and contingency planning. Hughes incurred
and expensed approximately $10.0 million during 1999, approximately $4.0 million
during 1998 and approximately $1.0 million through 1997, related to the
assessment of, and ongoing efforts in connection with, its Year 2000 program.
Future spending for remaining system remediation and testing is currently
estimated to be from $0.6 million to $1.0 million.
As of the date of this report, Hughes has experienced no significant problems
related to the Year 2000 conversion either domestically or in foreign locations.
After extensive system verification and testing, all computerized information
and process control systems are operating normally. The performance of critical
customers and suppliers continues without notable change. Production and
business activities are normal at all locations. Hughes also has not received
any material complaints regarding any Year 2000 issues related to its products.
However, Hughes cannot provide assurance that problems will not arise.
Hughes continues to monitor the status of its operations, suppliers and
distribution channels to ensure no significant business interruptions.
In addition to the above, the satellite systems manufacturing businesses
incurred expenditures related to the Year 2000 conversion of about $11.0 million
and $5.0 million during 1999 and 1998, respectively. Future spending for the
satellite systems manufacturing businesses is estimated at about $1.0 million.
As of the date of this report, the satellite systems manufacturing businesses
have experienced no significant problems related to the Year 2000 conversions,
however, Hughes cannot provide assurance that problems will not arise.
Each Hughes operating company is funding its respective Year 2000 efforts with
current and future
operating cash flows.
Security Ratings
On January 14, 2000, subsequent to the announced sale of Hughes' satellite
systems manufacturing businesses to Boeing, Standard and Poor's Rating Services
("S&P") and Moody's Investors Service ("Moody's") each affirmed its respective
debt ratings for Hughes. S&P maintained its BBB - minus credit rating, which
indicates the issuer has adequate capacity to pay interest and repay principal.
S&P maintained the short-term corporate credit and commercial paper ratings at
A-3. S&P revised its outlook to positive from negative.
Moody's confirmed Hughes' Baa2 long-term credit and P-2 commercial paper
ratings. While the outlook remains negative, Moody's ended its review for
possible downgrade. The Baa2 rating for senior debt indicates adequate
likelihood of interest and principal payment and principal security. The P-2
commercial paper rating is the second highest rating available and indicates
that the issuer has a strong ability for repayment relative to other issuers.
Debt ratings by the various rating agencies reflect each agency's opinion of
the ability of issuers to repay debt obligations as they come due. Lower
ratings generally result in higher borrowing costs. A security rating is not a
recommendation to buy, sell, or hold securities and may be subject to revision
or withdrawal at any time by the assigning rating organization. Each rating
should be evaluated independently of any other rating.
Market Risk Disclosure
The following discussion and the estimated amounts generated from the
sensitivity analyses referred to below include forward-looking statements of
market risk which assume for analytical purposes that certain adverse market
conditions may occur. Actual future market conditions may differ materially
from such assumptions because the amounts noted below are the result of analyses
used for the purpose of assessing possible risks and the mitigation thereof.
Accordingly, the forward-looking statements should not be considered projections
by Hughes of future events or losses.
General
Hughes' cash flows and earnings are subject to fluctuations resulting from
changes in foreign currency exchange rates, interest rates and changes in the
market value of its equity investments. Hughes manages its exposure to these
market risks through internally established policies and procedures and, when
deemed appropriate, through the use of derivative financial instruments.
Hughes' policy is to not enter into speculative derivative instruments for
profit or execute derivative instrument contracts for which there are no
underlying exposures. Hughes does not use financial instruments for trading
purposes and is not a party to any leveraged derivatives.
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HUGHES ELECTRONICS CORPORATION
Foreign Currency Risk
Hughes generally conducts its business in U.S. dollars with a small amount of
business conducted in a variety of foreign currencies and therefore is exposed
to fluctuations in foreign currency exchange rates. Hughes' objective in
managing the exposure to foreign currency changes is to reduce earnings and cash
flow volatility associated with foreign exchange rate fluctuations.
Accordingly, Hughes enters into foreign exchange-forward contracts to mitigate
risks associated with future foreign currency firm commitments. Foreign
exchange-forward contracts are legal agreements between two parties to purchase
and sell a foreign currency, for a price specified at the contract date, with
delivery and settlement in the future. At December 31, 1999, the impact of a
hypothetical 10% adverse change in exchange rates on the fair values of foreign
exchange-forward contracts and foreign currency denominated assets and
liabilities would not be significant.
Investments
Hughes maintains investments in publicly-traded common stock of unaffiliated
companies and is therefore subject to equity price risk. These investments are
classified as available-for-sale and, consequently, are reflected in the balance
sheets at fair value with unrealized gains or losses, net of taxes, recorded as
part of accumulated other comprehensive income (loss), a separate component of
stockholder's equity. At December 31, 1999, the fair values of the investments
in such common stock were $1,025.2 million. The investments were valued at the
market closing prices at December 31, 1999. No actions have been taken by Hughes
to hedge this market risk exposure. A 10% decline in the market price of these
investments would cause the fair value of the investments in common stock to
decrease by $102.5 million as of December 31, 1999.
Interest Rate Risk
Hughes is subject to interest rate risk related to its $2.1 billion of debt
outstanding at December 31, 1999. As of December 31, 1999, debt consisted of
Hughes' $500.0 million floating rate line of credit and a $498.9 million
floating rate note, PanAmSat's fixed-rate borrowings of $750.0 million, and
various other floating and fixed rate borrowings. Hughes is subject to
fluctuating interest rates which may adversely impact its results of operations
and cash flows for its variable rate bank borrowings. Fluctuations in interest
rates may also adversely effect the market value of Hughes' fixed-rate
borrowings. At December 31, 1999, outstanding borrowings bore interest at rates
ranging from 6.00% to 11.11%. The potential fair value loss resulting from a
hypothetical 10% decrease in interest rates related to Hughes' outstanding debt
would be approximately $29.0 million as of December 31, 1999.
Credit Risk
Hughes is exposed to credit risk in the event of non-performance by the
counterparties to its foreign exchange-forward contracts. While Hughes believes
this risk is remote, credit risk is managed through the periodic monitoring and
approval of financially sound counterparties.
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ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by this section is included in Item 7.
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RESPONSIBILITIES FOR FINANCIAL STATEMENTS
The following financial statements of Hughes Electronics Corporation (as
more fully described in Note 1 to the financial statements) were prepared by
management, which is responsible for their integrity and objectivity. The
statements have been prepared in conformity with generally accepted accounting
principles and, as such, include amounts based on judgments of management.
Management is further responsible for maintaining internal control designed to
provide reasonable assurance that the books and records reflect the transactions
of the company and that established policies and procedures are carefully
followed. Perhaps the most important feature in internal control is that it is
continually reviewed for effectiveness and is augmented by written policies and
guidelines, the careful selection and training of qualified personnel and a
strong program of internal audit.
Deloitte & Touche LLP, an independent auditing firm, is engaged to audit the
financial statements of Hughes Electronics Corporation and issue reports
thereon. The audit is conducted in accordance with generally accepted auditing
standards that comprehend the consideration of internal control and tests of
transactions to the extent necessary to form an independent opinion on the
financial statements prepared by management. The Independent Auditors' Report
appears on the next page.
The Board of Directors, through its Audit Committee, is responsible for
assuring that management fulfills its responsibilities in the preparation of the
financial statements and engaging the independent auditors. The Audit Committee
reviews the scope of the audits and the accounting principles being applied in
financial reporting. The independent auditors, representatives of management,
and the internal auditors meet regularly (separately and jointly) with the Audit
Committee to review the activities of each, to ensure that each is properly
discharging its responsibilities and to assess the effectiveness of internal
control. It is management's conclusion that internal control at December 31,
1999 provides reasonable assurance that the books and records reflect the
transactions of the company and that established policies and procedures are
complied with. To ensure complete independence, Deloitte & Touche LLP has full
and free access to meet with the Audit Committee, without management
representatives present, to discuss the results of the audit, the adequacy of
internal control, and the quality of financial reporting.
/s/MICHAEL T. SMITH /s/ROXANNE S. AUSTIN
Michael T. Smith Roxanne S. Austin
Chairman of the Board and Senior Vice President and
Chief Executive Officer Chief Financial Officer
II-17
<PAGE>
HUGHES ELECTRONICS CORPORATION
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of Hughes Electronics Corporation:
We have audited the accompanying Balance Sheets of Hughes Electronics
Corporation (as more fully described in Note 1 to the financial statements) as
of December 31, 1999 and 1998 and the related Statements of Operations and
Available Separate Consolidated Net Income (Loss), Statements of Changes in
Stockholder's Equity and Statements of Cash Flows for each of the three years in
the period ended December 31, 1999. Our audits also included the financial
statement schedule listed in Item 14. These financial statements and the
financial statement schedule are the responsibility of Hughes Electronics
Corporation's management. Our responsibility is to express an opinion on these
financial statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Hughes Electronics Corporation at December
31, 1999 and 1998 and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1999 in conformity with
generally accepted accounting principles. Also, in our opinion, the financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
As discussed in Note 2 to the accompanying financial statements, effective
January 1, 1998, Hughes Electronics Corporation changed its method of accounting
for costs of start-up activities by adopting American Institute of Certified
Public Accountants Statement of Position 98-5, Reporting on the Costs of Start-
Up Activities.
/s/DELOITTE & TOUCHE LLP
- ------------------------
DELOITTE & TOUCHE LLP
Los Angeles, California
January 19, 2000
(March 1, 2000 as to Note 21)
II-18
<PAGE>
HUGHES ELECTRONICS CORPORATION
ITEM 8. Financial Statements and Supplementary Data
STATEMENTS OF OPERATIONS AND
AVAILABLE SEPARATE CONSOLIDATED NET INCOME (LOSS)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------
1999 1998 1997
--------- --------- ---------
(Dollars in Millions)
<S> <C> <C> <C>
Revenues
Direct broadcast, leasing and other services $4,550.1 $2,640.2 $1,984.7
Product sales 1,010.2 840.4 853.6
-------- -------- --------
Total Revenues 5,560.3 3,480.6 2,838.3
-------- -------- --------
Operating Costs and Expenses
Broadcast programming and other costs 2,075.1 1,211.4 912.3
Cost of products sold 954.6 606.6 538.4
Selling, general and administrative expenses 2,307.9 1,320.9 1,083.8
Depreciation and amortization 647.4 384.6 257.0
Amortization of GM purchase accounting adjustments 3.3 3.3 3.3
-------- -------- --------
Total Operating Costs and Expenses 5,988.3 3,526.8 2,794.8
-------- -------- --------
Operating Profit (Loss) (428.0) (46.2) 43.5
Interest income 27.0 112.3 33.0
Interest expense (122.7) (17.5) (91.0)
Other, net (136.3) (151.8) 388.6
-------- -------- --------
Income (Loss) From Continuing Operations Before
Income Taxes, Minority Interests, Extraordinary Item
and Cumulative Effect of Accounting Change (660.0) (103.2) 374.1
Income tax provision (benefit) (236.9) (142.3) 162.0
Minority interests in net losses of subsidiaries 32.0 24.4 24.8
-------- -------- --------
Income (Loss) from continuing operations before extraordinary
item and cumulative effect of accounting change (391.1) 63.5 236.9
Income from discontinued operations, net of taxes 99.8 196.4 170.6
Gain on sale of discontinued operations, net of taxes - - 62.8
-------- -------- --------
Income (Loss) before extraordinary item and cumulative
effect of accounting change (291.3) 259.9 470.3
Extraordinary item, net of taxes - - (20.6)
Cumulative effect of accounting change, net of taxes - (9.2) -
-------- -------- --------
Net Income (Loss) (291.3) 250.7 449.7
Adjustments to exclude the effect of GM purchase
accounting adjustments 21.0 21.0 21.0
-------- -------- --------
Earnings (Loss) excluding the effect of GM purchase
accounting adjustments (270.3) 271.7 470.7
Preferred stock dividends (50.9) - -
-------- -------- --------
Earnings (Loss) Used for Computation of Available
Separate Consolidated Net Income (Loss) $ (321.2) $ 271.7 $ 470.7
======== ======== ========
Available Separate Consolidated Net Income (Loss)
Average number of shares of General Motors Class H
Common Stock outstanding (in millions) (Numerator) 124.7 105.3 101.5
Average Class H dividend base (in millions) (Denominator) 418.5 399.9 399.9
Available Separate Consolidated Net Income (Loss) $ (95.7) $ 71.5 $ 119.4
======== ======== ========
</TABLE>
____________
Reference should be made to the Notes to Financial Statements.
II-19
<PAGE>
HUGHES ELECTRONICS CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-----------------------
ASSETS 1999 1998
---------- ----------
(Dollars in Millions)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 238.2 $ 1,342.0
Accounts and notes receivable, net of allowances of
$92.9 and $23.9 960.9 764.6
Contracts in process 155.8 179.0
Inventories 236.1 286.6
Net assets of discontinued operations 1,224.6 1,005.8
Deferred income taxes 254.3 209.7
Prepaid expenses and other 788.1 287.5
--------- ---------
Total Current Assets 3,858.0 4,075.2
Satellites, net 3,907.3 3,197.5
Property, net 1,223.0 683.0
Net Investment in Sales-type Leases 146.1 173.4
Intangible Assets, net 7,406.0 3,185.9
Investments and Other Assets 2,056.6 1,302.4
--------- ---------
Total Assets $18,597.0 $12,617.4
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable $ 1,062.2 $ 691.8
Deferred revenues 130.5 43.8
Short-term borrowings and current portion of long-term debt 555.4 156.1
Accrued liabilities and other 894.0 454.3
--------- ---------
Total Current Liabilities 2,642.1 1,346.0
--------- ---------
Long-Term Debt 1,586.0 778.7
Other Liabilities and Deferred Credits 1,454.2 957.7
Deferred Income Taxes 689.1 641.1
Commitments and Contingencies
Minority Interests 544.3 481.7
Stockholder's Equity
Capital stock and additional paid-in capital 9,809.5 8,146.1
Preferred stock 1,487.5 -
Retained earnings (deficit) (84.4) 257.8
--------- ---------
Subtotal Stockholder's Equity 11,212.6 8,403.9
--------- ---------
Accumulated Other Comprehensive Income (Loss)
Minimum pension liability adjustment (7.3) (6.8)
Accumulated unrealized gains on securities 466.0 16.1
Accumulated foreign currency translation adjustments 10.0 (1.0)
--------- ---------
Accumulated other comprehensive income 468.7 8.3
--------- ---------
Total Stockholder's Equity 11,681.3 8,412.2
--------- ---------
Total Liabilities and Stockholder's Equity $18,597.0 $12,617.4
========= =========
</TABLE>
____________
Reference should be made to the Notes to Financial Statements.
II-20
<PAGE>
HUGHES ELCTRONICS CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(Dollars in Millions)
<TABLE>
<CAPTION>
Capital Stock
Parent and Accumulated
Company's Additional Retained Other Total
Net Paid-In Preferred Earnings Comprehensive Stockholder's Comprehensive
Investment Capital Stock (Deficit) Income (Loss) Equity Income
---------- ------- ----- --------- ------------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $ 2,497.0 $ (5.4) $ 2,491.6
Net contribution from Parent
Company 1,124.2 1,124.2
Transfer of capital from Parent
Company's net investment (4,063.8) $4,063.8 -
Capital contribution resulting
from the Hughes Transactions 4,259.0 4,259.0
Minimum pension liability
adjustment resulting from the
Hughes Transactions (6.3) (6.3)
Unrealized gains on securities
resulting from the Hughes
Transactions 21.4 21.4
Net income 442.6 $ 7.1 449.7 $ 449.7
Foreign currency translation
adjustments 0.6 0.6 0.6
-------
Comprehensive income $ 450.3
--------- -------- -------- ------- ------ --------- =======
Balance at December 31, 1997 - 8,322.8 - 7.1 10.3 8,340.2
Net Income 250.7 250.7 $ 250.7
Delco post-closing price
adjustment (199.7) (199.7)
Tax benefit from exercise
of GM Class H common
stock options 23.0 23.0
Minimum pension liability
adjustment (0.5) (0.5) (0.5)
Foreign currency translation
adjustments 3.8 3.8 3.8
Unrealized gains on securities:
Unrealized holding gains 1.8 1.8 1.8
Less: reclassification
adjustment for gains
included in net income (7.1) (7.1) (7.1)
-------
Comprehensive income $ 248.7
--------- -------- -------- ------- ------ --------- =======
Balance at December 31, 1998 - 8,146.1 - 257.8 8.3 8,412.2
Net Loss (291.3) (291.3) $(291.3)
Preferred stock $1,487.5 1,487.5
Preferred stock dividends (50.9) (50.9)
Shares reacquired (11.1) (11.1)
Stock options exercised 114.4 114.4
Shares issued in connection
with acquisitions 1,506.7 1,506.7
Tax benefit from exercise of
GM Class H common stock
options 53.4 53.4
Minimum pension liability
adjustment (0.5) (0.5) (0.5)
Foreign currency translation
adjustments 11.0 11.0 11.0
Unrealized gains on securities 449.9 449.9 449.9
-------
Comprehensive income $ 169.1
--------- -------- -------- ------- ------ --------- =======
Balance at December 31, 1999 $ - $9,809.5 $1,487.5 $ (84.4) $468.7 $11,681.3
========= ======== ======== ======= ====== =========
</TABLE>
- --------------------------
Reference should be made to the Notes to Financial Statements.
* * * * * * * * * * *
II-21
<PAGE>
HUGHES ELECTRONICS CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------
1999 1998 1997
---------- ---------- ----------
Cash Flows from Operating Activities (Dollars in Millions)
<S> <C> <C> <C>
Income (Loss) from continuing operations before extraordinary
item and cumulative effect of accounting change $ (391.1) $ 63.5 $ 236.9
Adjustments to reconcile income (loss) from continuing
operations before extraordinary item and cumulative effect
of accounting change to net cash provided by operating activities
Depreciation and amortization 650.7 387.9 260.3
Equity losses from unconsolidated affiliates 189.2 128.3 72.2
Amortization of gains on sale-leasebacks (10.8) (36.2) (42.9)
Net gain on sale of investments and businesses sold (30.0) (13.7) (489.7)
Gross profit on sales-type leases - - (33.6)
Net loss on discontinuation of wireless product lines 272.1 - -
Net loss on disposal of assets 2.7 - -
Deferred income taxes and other 271.1 99.6 220.5
Change in other operating assets and liabilities
Accounts and notes receivable 35.0 (49.4) (246.2)
Contracts in process 23.2 1.7 (19.5)
Inventories (38.7) 12.9 (39.9)
Prepaid expenses and other (494.0) (91.6) (138.0)
Collections of principal on net investment in sales-type leases 22.2 40.6 22.0
Accounts payable 101.4 224.0 (183.9)
Deferred revenues (50.3) (34.0) (21.2)
Accrued liabilities and other 59.6 (19.0) 207.3
Other (232.8) (102.5) 286.3
--------- --------- ---------
Net Cash Provided by Operating Activities 379.5 612.1 90.6
--------- --------- ---------
Cash Flows from Investing Activities
Investment in companies, net of cash acquired (2,443.7) (1,231.0) (1,796.8)
Investment in convertible bonds (244.7) - -
Expenditures for property (506.4) (243.9) (137.4)
Increase in satellites (789.4) (929.4) (633.5)
Early buy-out of satellites under sale and leaseback (245.4) (155.5) -
Proceeds from sale of discontinued operations - - 155.0
Proceeds from disposal of property 15.8 20.0 55.1
Proceeds from sale of investments - 12.4 242.0
Proceeds from insurance claims 272.0 398.9 -
--------- --------- ---------
Net Cash Used in Investing Activities (3,941.8) (2,128.5) (2,115.6)
--------- --------- ---------
Cash Flows from Financing Activities
Net increase in notes and loans payable 343.0 - -
Long-term debt borrowings 8,165.6 1,165.2 2,383.3
Repayment of long-term debt (7,494.4) (1,024.1) (2,851.9)
Net proceeds from issuance of preferred stock 1,485.0 - -
Stock options exercised 114.4 - -
Purchase and retirement of GM Class H common stock (11.1) - -
Preferred stock dividends paid to General Motors (25.0) - -
Premium paid to retire debt - - (34.4)
Contributions from Parent Company - - 1,124.2
Payment to General Motors for Delco post-closing price adjustment - (204.7) -
Capital contribution resulting from Hughes Transactions - - 4,392.8
--------- --------- ---------
Net Cash Provided by (Used in) Financing Activities 2,577.5 (63.6) 5,014.0
--------- --------- ---------
Net cash provided by (used in) continuing operations (984.8) (1,580.0) 2,989.0
Net cash provided by (used in) discontinued operations (119.0) 138.3 (211.5)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents (1,103.8) (1,441.7) 2,777.5
Cash and cash equivalents at beginning of the year 1,342.0 2,783.7 6.2
--------- --------- ---------
Cash and cash equivalents at end of the year $ 238.2 $ 1,342.0 $ 2,783.7
========= ========= =========
</TABLE>
- --------------------------
Reference should be made to the Notes to Financial Statements.
II-22
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 1: Basis of Presentation and Description of Business
On December 17, 1997, Hughes Electronics Corporation ("Hughes Electronics")
and General Motors Corporation ("GM"), the parent of Hughes Electronics,
completed a series of transactions (the "Hughes Transactions") designed to
address strategic challenges facing the three principal businesses of Hughes
Electronics and unlock stockholder value in GM. The Hughes Transactions
included the tax-free spin-off of the defense electronics business ("Hughes
Defense") to holders of GM $1-2/3 par value and Class H common stocks, the
transfer of Delco Electronics Corporation ("Delco"), the automotive electronics
business, to GM's Delphi Automotive Systems unit and the recapitalization of GM
Class H common stock into a new tracking stock, GM Class H common stock, that is
linked to the remaining telecommunications and space business. The Hughes
Transactions were followed immediately by the merger of Hughes Defense with
Raytheon Company ("Raytheon"). For the periods prior to the consummation of the
Hughes Transactions on December 17, 1997, Hughes Electronics, consisting of its
defense electronics, automotive electronics and telecommunications and space
businesses, is hereinafter referred to as former Hughes or Parent Company.
In connection with the recapitalization of Hughes Electronics on December 17,
1997, the telecommunications and space business of former Hughes, consisting
principally of its direct-to-home broadcast, satellite services, satellite
systems and network systems businesses, was contributed to the recapitalized
Hughes Electronics. Such telecommunications and space business, both before and
after the recapitalization, is hereinafter referred to as Hughes. The
accompanying financial statements and footnotes pertain only to Hughes and do
not include balances of former Hughes related to Hughes Defense or Delco.
Prior to the Hughes Transactions, the Hughes businesses were effectively
operated as divisions of former Hughes. For the period prior to December 18,
1997, these financial statements include allocations of corporate expenses from
former Hughes, including research and development, general management, human
resources, financial, legal, tax, quality, communications, marketing,
international, employee benefits and other miscellaneous services. These costs
and expenses have been charged to Hughes based either on usage or using
allocation methodologies primarily based upon total revenues, certain tangible
assets and payroll expenses. Management believes the allocations were made on a
reasonable basis; however, they may not necessarily reflect the financial
position, results of operations or cash flows of Hughes on a stand-alone basis
in the future. Also, prior to December 18, 1997, interest expense in the
Statements of Operations and Available Separate Consolidated Net Income (Loss)
included an allocated share of total former Hughes' interest expense.
Revenues, operating costs and expenses, and other non-operating results for
discontinued operations are excluded from Hughes' results from continuing
operations for all periods presented herein. The financial results of these
businesses are presented in Hughes' Statements of Operations and Available
Separate Consolidated Net Income (Loss) in a single line item entitled "income
from discontinued operations, net of taxes," the related assets and liabilities
are presented in the balance sheets on a single line item entitled "net assets
of discontinued operations" and the net cash flows as "net cash provided by
(used in) discontinued operations. See further discussion in Note 17.
The accompanying financial statements include the applicable portion of
intangible assets, including goodwill, and related amortization resulting from
purchase accounting adjustments associated with GM's purchase of Hughes in 1985,
with certain amounts allocated to the satellite systems manufacturing
businesses.
Hughes is a leading provider of digital entertainment, information and
communication services and satellite-based private business networks. Hughes is
the world's leading digital multi-channel entertainment service provider with
its programming distribution service known as DIRECTV, which was introduced in
the U.S. in 1994 and was the first high-powered, all digital, direct-to-home
("DTH") television distribution service in North America. DIRECTV began service
in Latin America in 1996. Hughes is also the owner and operator of the largest
commercial satellite fleet in the world through its 81% owned subsidiary,
PanAmSat. Hughes is also a leading provider of satellite wireless
communications ground equipment and business communications services. Its
equipment and services are applied in, among other things, data, video and audio
transmission, cable and network television distribution, private business
networks, digital cellular communications and DTH satellite broadcast
distribution of television programming.
II-23
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 2: Summary of Significant Accounting Policies
Principles of Combination and Consolidation
Prior to December 18, 1997, the financial statements present, on a combined
basis, the financial position, results of operations and cash flows of the
telecommunications and space business owned and operated by former Hughes.
Subsequent to the Hughes Transactions, the accompanying financial statements are
presented on a consolidated basis. The financial statements include the
accounts of Hughes and its domestic and foreign subsidiaries that are more than
50% owned or controlled by Hughes, with investments in associated companies in
which Hughes owns at least 20% of the voting securities or has significant
influence accounted for under the equity method of accounting.
Use of Estimates in the Preparation of the Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect amounts reported therein. Due to the inherent uncertainty involved in
making estimates, actual results reported in future periods may be based upon
amounts which differ from those estimates.
Revenue Recognition
Revenues are generated from sales of DTH broadcast subscriptions, and the sale
of transponder capacity and related services through outright sales, sales-type
leases and operating lease contracts, and sales of communications equipment and
services.
Sales are generally recognized as products are shipped or services are
rendered. DTH subscription revenues are recognized when programming is viewed
by subscribers. Programming payments received from subscribers in advance of
viewing are recorded as deferred revenue until earned.
Satellite transponder lease contracts qualifying for capital lease treatment
(typically based on the term of the lease) are accounted for as sales-type
leases, with revenues recognized equal to the net present value of the future
minimum lease payments. Upon entering into a sales-type lease, the cost basis
of the transponder is charged to cost of products sold. The portion of each
periodic lease payment deemed to be attributable to interest income is
recognized in each respective period. Contracts for sales of transponders
typically include telemetry, tracking and control ("TT&C") service agreements.
Revenues related to TT&C service agreements are recognized as the services are
performed.
Transponder and other lease contracts that do not qualify as sales-type leases
are accounted for as operating leases. Operating lease revenues are recognized
on a straight-line basis over the respective lease term. Differences between
operating lease payments received and revenues recognized are deferred and
included in accounts and notes receivable or investments and other assets.
A small percentage of revenues are derived from long-term contracts for the
sale of large wireless communications systems. Sales under long-term contracts
are recognized primarily using the percentage-of-completion (cost-to-cost)
method of accounting. Under this method, sales are recorded equivalent to costs
incurred plus a portion of the profit expected to be realized, determined based
on the ratio of costs incurred to estimated total costs at completion. Profits
expected to be realized on long-term contracts are based on estimates of total
sales value and costs at completion. These estimates are reviewed and revised
periodically throughout the lives of the contracts, and adjustments to profits
resulting from such revisions are recorded in the accounting period in which the
revisions are made. Estimated losses on contracts are recorded in the period in
which they are identified.
Hughes has from time to time entered into agreements for the sale and
leaseback of certain of its satellite transponders. However, as a result of
early buy-out transactions described in Note 4, no obligations under sale-
leaseback agreements remain at December 31, 1999. Prior to the completion of the
early buy-out transactions, the leasebacks were classified as operating leases
and, therefore, the capitalized cost and associated depreciation related to
satellite transponders sold were not included in the accompanying financial
statements. Gains resulting from the sale and leaseback transactions were
deferred and amortized over the leaseback period. Leaseback expense was recorded
using the straight-line method over the term of the lease, net of amortization
of the deferred gains. Differences between operating leaseback payments made and
expense recognized were deferred and included in other liabilities and deferred
credits.
Cash Flows
Cash equivalents consist of highly liquid investments purchased with original
maturities of 90 days or less.
Net cash from operating activities includes cash payments made for interest of
$174.6 million, $53.2 million and $156.8 million in 1999, 1998 and 1997,
respectively. Net cash refunds received by Hughes for prior year income taxes
amounted to $197.2 million and $59.9 million in 1999 and 1998, respectively.
Cash payments for income taxes amounted to $24.0 million in 1997.
Certain non-cash transactions occurred in connection with the consummation of
the Hughes Transactions on December 17, 1997, resulting in a contribution of a
net liability of $133.8 million.
II-24
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 2: Summary of Significant Accounting Policies - Continued
In 1997, in a separate non-cash transaction, Hughes' subsidiary, PanAmSat
Corporation ("PanAmSat"), converted its outstanding preferred stock into debt
amounting to $438.5 million.
Contracts in Process
Contracts in process are stated at costs incurred plus estimated profit, less
amounts billed to customers and advances and progress payments applied.
Engineering, tooling, manufacturing, and applicable overhead costs, including
administrative, research and development and selling expenses, are charged to
costs and expenses when incurred. Amounts billed under retainage provisions of
contracts are not significant, and substantially all amounts are collectible
within one year. Advances offset against contract related receivables amounted
to $114.5 million and $112.0 million at December 31, 1999 and 1998,
respectively.
Inventories
Inventories are stated at the lower of cost or market principally using the
average cost method.
Major Classes of Inventories
<TABLE>
<CAPTION>
(Dollars in Millions) 1999 1998
------ ------
<S> <C> <C>
Productive material and supplies $ 59.1 $ 55.0
Work in process 67.0 118.6
Finished goods 110.0 113.0
------ ------
Total $236.1 $286.6
====== ======
</TABLE>
Property, Satellites and Depreciation
Property and satellites are carried at cost. Satellite costs include
construction costs, launch costs, launch insurance and capitalized interest.
Capitalized satellite costs represent the costs of successful satellite
launches. The proportionate cost of a satellite, net of depreciation and
insurance proceeds, is written off in the period a full or partial loss of the
satellite occurs. Depreciation is computed generally using the straight-line
method over the estimated useful lives of the assets. Leasehold improvements
are amortized over the lesser of the life of the asset or term of the lease.
Intangible Assets
Goodwill, which represents the excess of the cost over the net tangible and
identifiable intangible assets of acquired businesses, and intangible assets are
amortized using the straight-line method over periods not exceeding 40 years.
Software Development Costs
Other assets include certain software development costs capitalized in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 86,
Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise
Marketed. Capitalized software development costs at December 31, 1999 and 1998,
net of accumulated amortization of $98.7 million and $70.6 million,
respectively, totaled $70.4 million and $104.1 million. The software is
amortized using the greater of the units of revenue method or the straight-line
method over its estimated useful life, not in excess of five years. Software
program reviews are conducted to ensure that capitalized software development
costs are properly treated and costs associated with programs that are not
generating revenues are appropriately written off.
Valuation of Long-Lived Assets
Hughes periodically evaluates the carrying value of long-lived assets to be
held and used, including goodwill and other intangible assets, when events and
circumstances warrant such a review. The carrying value of a long-lived asset is
considered impaired when the anticipated undiscounted cash flow from such asset
is separately identifiable and is less than its carrying value. In that event, a
loss is recognized based on the amount by which the carrying value exceeds the
fair value of the long-lived asset. Fair value is determined primarily using the
anticipated cash flows discounted at a rate commensurate with the risk involved.
Losses on long-lived assets to be disposed of are determined in a similar
manner, except that fair values are reduced for the cost of disposal.
II-25
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 2: Summary of Significant Accounting Policies - Continued
Foreign Currency
Substantially all of Hughes' foreign operations have determined the local
currency to be their functional currency. Accordingly, these foreign entities
translate assets and liabilities from their local currencies to U.S. dollars
using year-end exchange rates while income and expense accounts are translated
at the average rates in effect during the year. The resulting translation
adjustment is recorded as part of accumulated other comprehensive income (loss),
a separate component of stockholder's equity. Gains and losses resulting from
remeasurement into the functional currency of transactions denominated in non-
functional currencies are recognized in earnings. Net foreign currency
transaction gains and losses included in operations were not material for all
years presented.
Financial Instruments and Investments
Hughes maintains investments in equity securities of unaffiliated companies.
These investments are considered available-for-sale and carried at current fair
value with unrealized gains or losses, net of taxes, reported as part of
accumulated other comprehensive income (loss), a separate component of
stockholder's equity. Fair value is determined by market quotes, when
available, or by management estimate.
Market values of financial instruments, other than debt and derivative
instruments, are based upon management estimates. Market values of debt and
derivative instruments are determined by quotes from financial institutions.
The carrying value of cash and cash equivalents, accounts and notes
receivable, investments and other assets, accounts payable, amounts included in
accrued liabilities and other meeting the definition of a financial instrument
and debt approximated fair value at December 31, 1999.
Hughes' derivative contracts primarily consist of foreign exchange-forward
contracts. Hughes enters into these contracts to reduce its exposure to
fluctuations in foreign exchange rates. Foreign exchange-forward contracts are
accounted for as hedges to the extent they are designated as, and are effective
as, hedges of firm foreign currency commitments. Gains and losses on foreign
exchange-forward contracts designated as hedges of firm foreign currency
commitments are recognized in income in the same period as gains and losses on
the underlying transactions are recognized.
Stock Compensation
Hughes issues stock options to employees with grant prices equal to the fair
value of the underlying security at the date of grant. No compensation cost has
been recognized for options in accordance with the provisions of Accounting
Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to
Employees. See Note 12 for information regarding the pro forma effect on
earnings of recognizing compensation cost based on the estimated fair value of
the stock options granted, as required by SFAS No. 123, Accounting for Stock-
Based Compensation.
Compensation related to stock awards is recognized ratably over the vesting
period and, where required, periodically adjusted to reflect changes in the
stock price of the underlying security.
Product and Service Related Expenses
Advertising and research and development costs are expensed as incurred.
Advertising expenses were $115.8 million in 1999, $130.0 million in 1998 and
$74.2 million in 1997. Expenditures for research and development were $98.8
million in 1999, $92.6 million in 1998 and $81.9 million in 1997.
Market Concentrations and Credit Risk
Hughes provides services and extends credit to a number of wireless
communications equipment customers and to a large number of DTH consumers.
Management monitors its exposure to credit losses and maintains allowances for
anticipated losses.
Accounting Change
In 1998, Hughes adopted American Institute of Certified Public Accountants
Statement of Position ("SOP") 98-5, Reporting on the Costs of Start-Up
Activities. SOP 98-5 requires that all start-up costs previously capitalized be
written off and recognized as a cumulative effect of accounting change, net of
taxes, as of the beginning of the year of adoption. On a prospective basis,
these types of costs are required to be expensed as incurred. The unfavorable
cumulative effect of this accounting change at January 1, 1998 was $9.2 million
after-tax.
II-26
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 2: Summary of Significant Accounting Policies - Concluded
New Accounting Standards
In September 1999, the Financial Accounting Standards Board ("FASB") issued
Emerging Issues Task Force Issue 99-10 ("EITF 99-10"), Percentage Used to
Determine the Amount of Equity Method Losses. EITF 99-10 addresses the
percentage of ownership that should be used to compute equity method losses when
the investment has been reduced to zero and the investor holds other securities
of the investee. EITF 99-10 requires that equity method losses should not be
recognized solely on the percentage of common stock owned; rather, an entity-
wide approach should be adopted. Under such an approach, equity method losses
must be recognized based on the ownership level that includes other equity
securities (e.g., preferred stock) and loans/advances to the investee or based
on the change in the investor's claim on the investee's book value. Hughes
adopted EITF 99-10 during the third quarter of 1999 which resulted in Hughes
recording a higher percentage of DIRECTV Japan's losses subsequent to the
effective date of September 23, 1999. The unfavorable impact of adopting
EITF 99-10 was $39.0 million after-tax.
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 , as amended, requires all
derivatives to be recorded as either assets or liabilities and the instruments
to be measured at fair value. Gains or losses resulting from changes in the
values of those derivatives are to be recognized immediately or deferred
depending on the use of the derivative and whether or not it qualifies as a
hedge. Hughes will adopt SFAS No. 133 by January 1, 2001, as required. Hughes
does not expect that the adoption of SFAS No. 133 will have a material impact on
Hughes' results of operations or financial position.
Reclassifications
Certain reclassifications have been made to the prior year balances to conform
to the 1999 presentation.
Note 3: Property and Satellites, Net
<TABLE>
<CAPTION>
Estimated
Useful Lives
(Dollars in Millions) (years) 1999 1998
------------- -------- --------
<S> <C> <C> <C>
Land and improvements 7 - 25 $ 51.4 $ 32.5
Buildings and leasehold improvements 2 - 30 197.0 136.3
Machinery and equipment 3 - 10 795.2 642.4
Equipment under operating lease 6 333.1 -
Furniture, fixtures and office machines 3 - 13 92.3 67.7
Construction in progress - 363.4 206.6
-------- --------
Total 1,832.4 1,085.5
Less accumulated depreciation 609.4 402.5
-------- --------
Property, net $1,223.0 $ 683.0
======== ========
Satellites 12 - 16 $4,683.1 $3,783.2
Less accumulated depreciation 775.8 585.7
-------- --------
Satellites, net $3,907.3 $3,197.5
======== ========
</TABLE>
Hughes capitalized interest of $65.1 million, $55.3 million and $64.5 million
during 1999, 1998 and 1997, respectively, as part of the cost of its satellites
under construction.
Note 4: Leasing Activities
Future minimum payments due from customers under sales-type leases and related
service agreements, and noncancelable satellite transponder operating leases as
of December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Sales-Type Leases
--------------------
Minimum Service
Lease Agreement
(Dollars in Millions) Payments Payments Operating Leases
- --------------------- -------- --------- ----------------
<S> <C> <C> <C>
2000 $ 42.0 $ 5.3 $ 702.0
2001 43.4 5.7 626.4
2002 43.4 5.7 575.0
2003 43.4 5.7 538.5
2004 39.7 5.2 503.1
Thereafter 37.1 5.2 1,911.3
------ ----- --------
Total $249.0 $32.8 $4,856.3
====== ===== ========
</TABLE>
II-27
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 4: Leasing Activities - Concluded
The components of the net investment in sales-type leases are as follows:
<TABLE>
<CAPTION>
(Dollars in Millions) 1999 1998
------ ------
<S> <C> <C>
Total minimum lease payments $249.0 $301.9
Less unearned interest income and allowance
for doubtful accounts 81.1 106.0
------ ------
Total net investment in sales-type leases 167.9 195.9
Less current portion 21.8 22.5
------ ------
Total $146.1 $173.4
====== ======
</TABLE>
In 1996 and 1992, Hughes entered into sale-leaseback agreements for certain
satellite transponders with other companies, including General Motors Acceptance
Corporation ("GMAC"), a subsidiary of GM. Deferred gains from these sale-
leaseback agreements are amortized over the expected term of the leaseback
period. In 1998, PanAmSat exercised certain early buy-out options and
repurchased a portion of the leased transponders for a total payment of $155.5
million. In 1999, PanAmSat exercised early buy-out options for the remaining
transponders for $245.4 million in cash and $124.1 million of assumed debt. As a
result of the above transactions, no deferred amounts remain outstanding at
December 31, 1999.
Note 5: Intangible Assets
At December 31, 1999 and 1998, Hughes had $6,642.3 million and $3,184.6
million, respectively, of goodwill, net of accumulated amortization. Goodwill is
amortized over 10 to 40 years. Hughes also had , net of accumulated
amortization, $763.7 million and $1.3 million of intangible assets at December
31, 1999 and 1998, respectively, which are amortized over 2 to 40 years.
Intangible assets consist mainly of FCC licenses, customer lists and dealer
networks.
Note 6: Investments
Hughes has various investments that are accounted for under the equity method
of accounting. Under the equity method of accounting, the investment is recorded
at cost and adjusted for the appropriate share of the net earnings or losses of
the investee. Investee losses are recorded up to the amount of the investment
plus advances and loans made to the investee, and financial guarantees made on
behalf of the investee. Aggregate investments in affiliated companies, including
advances and loans, accounted for under the equity method at December 31, 1999
and 1998, amounted to $317.4 million and $57.1 million, respectively. Of these
amounts, approximately $232.1 million and $55.9 million at December 31, 1999 and
1998, respectively, represent the investment in DIRECTV Japan, net of
accumulated losses of $237.6 million and $102.7 million as of December 31, 1999
and 1998, respectively. Hughes' pre-tax share of losses of investees is
disclosed in Note 13, Other Income and Expenses.
Investments in marketable equity securities stated at current fair value and
classified as available-for-sale totaled $1,025.2 million and $486.0 million at
December 31, 1999 and 1998, respectively. Accumulated unrealized holding gains,
net of taxes, recorded as part of accumulated other comprehensive income (loss),
a separate component of stockholder's equity, were $466.0 million and $16.1
million as of December 31, 1999 and 1998, respectively.
Note 7: Accrued Liabilities and other
<TABLE>
<CAPTION>
(Dollars in Millions) 1999 1998
------ ------
<S> <C> <C>
Payroll and other compensation $157.2 $ 93.5
Contract-related provisions 82.3 38.5
Provision for consumer finance and rebate programs 107.3 93.0
Programming contract liabilities 82.6 -
Other 464.6 229.3
------ ------
Total $894.0 $454.3
====== ======
</TABLE>
Included in other liabilities and deferred credits are long-term programming
contract liabilities which totaled $627.1 million at December 31, 1999.
Note 8: Short-Term Borrowings and Long-Term Debt
Short-Term Borrowings
In October 1999, Hughes issued $500.0 million ($498.9 million net of
unamortized discount) of floating rate notes in a private placement with a group
of institutional investors. The notes bear interest at a variable rate which was
7.45% at December 31, 1999. Interest is payable quarterly and the notes are due
and payable on October 23, 2000.
II-28
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 8: Short-Term Borrowings and Long-Term Debt - Concluded
<TABLE>
<CAPTION>
Long-Term Debt Interest Rates at
(Dollars in Millions) December 31, 1999 1999 1998
------------------ -------- ------
<S> <C> <C> <C>
Notes payable 6.00% - 6.875% $ 874.1 $750.0
Revolving credit facilities 6.77% - 7.10% 727.9 155.9
Other debt 11.69% - 12.29% 40.5 28.9
-------- ------
Total debt 1,642.5 934.8
Less current portion 56.5 156.1
-------- ------
Total long-term debt $1,586.0 $778.7
======== ======
</TABLE>
Notes payable. PanAmSat issued five, seven, ten and thirty-year notes totaling
$750.0 million in January 1998. The outstanding principal balances and interest
rates for the five, seven, ten and thirty-year notes as of December 31, 1999
were $200 million, $275 million, $150 million and $125 million, respectively.
Principal on the notes is payable at maturity, while interest is payable semi-
annually.
In July 1999, in connection with the early buy-out of satellite sale-
leasebacks, PanAmSat assumed $124.1 million of variable rate notes, all of which
were outstanding at December 31, 1999. The notes mature on various dates
through January 2, 2002.
Revolving credit facilities. Hughes has three unsecured revolving credit
facilities totaling $1.6 billion, consisting of a $750.0 million multi-year
facility, a $350.0 million 364-day facility, and a $500.0 million bridge
facility. The multi-year credit facility provides for a commitment of $750.0
million through December 5, 2002. The 364-day facility provides for a
commitment of $350.0 million through November 22, 2000. These facilities also
provide backup capacity for Hughes' commercial paper program. The bridge
facility provides for a commitment of $500.0 million through the earlier of
November 22, 2000 or the receipt of proceeds from the issuance of any debt
securities of Hughes in a public offering. $500.0 million was outstanding under
the multi-year facility at December 31, 1999. No amounts were outstanding under
the commercial paper program, 364-day, or bridge facilities at December 31,
1999.
Each of Hughes' credit facilities contain covenants that Hughes must comply
with. The covenants require Hughes to maintain a minimum level of consolidated
net worth and not to exceed certain specified ratios. At December 31, 1999,
Hughes was in compliance with all such covenants.
PanAmSat maintains a $500.0 million multi-year revolving credit facility that
provides for short-term and long-term borrowings and a $500.0 million commercial
paper program that provides for short-term borrowings. The multi-year revolving
credit facility provides for a commitment through December 24, 2002. Borrowings
under the credit facility and commercial paper program are limited to $500.0
million in the aggregate. No amounts were outstanding under either the multi-
year revolving credit facility or the commercial paper program at December 31,
1999.
At December 31, 1999, Hughes' 75% owned subsidiary, SurFin Ltd. ("SurFin"),
had a total of $227.9 million outstanding under a $400.0 million unsecured
revolving credit facility expiring in June 2002.
Other. At December 31, 1999, Galaxy Latin America, LLC's ("GLA") 100% owned
subsidiary, Galaxy Brasil, Ltda. ("GLB"), had a total of $24.3 million
outstanding under variable rate notes payable in varying amounts at maturity in
April and May 2002.
Other long-term debt at December 31, 1999 and 1998 consisted primarily of
notes that are payable at maturity in April 2007.
As part of a debt refinancing program undertaken by PanAmSat in 1997, an
extraordinary charge of $20.6 million ($34.4 million before taxes) was recorded
that resulted from the excess of the price paid for the debt over its carrying
value, net of deferred financing costs.
Hughes has filed a shelf registration statement with the Securities and
Exchange Commission with respect to an issuance of up to $2.0 billion of debt
securities from time to time. No amounts have been issued as of December 31,
1999.
The aggregate maturities of long-term debt for the five years subsequent to
December 31, 1999 are $56.5 million in 2000, $21.2 million in 2001, $798.8
million in 2002, $200.0 million in 2003 and $566.0 million in 2005 and
thereafter.
Note 9: Income Taxes
The provision for income taxes is based on reported income from continuing
operations before income taxes, minority interests, extraordinary item and
cumulative effect of accounting change. Deferred income tax assets and
liabilities reflect the impact of temporary differences between the amounts of
assets and liabilities recognized for financial reporting purposes and such
amounts recognized for tax purposes, as measured by applying currently enacted
tax laws.
Hughes and former Hughes (prior to December 18, 1997), and their domestic
subsidiaries join with General Motors in filing a consolidated U.S. federal
income tax return. The portion of the consolidated income tax liability or
receivable recorded by Hughes is generally equivalent to the amount that would
have been recorded on a separate return basis.
Prior to December 18, 1997, income tax expense was allocated to Hughes as if
Hughes filed a separate income tax return.
II-29
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 9: Income Taxes - Continued
The income tax provision (benefit) consisted of the following:
<TABLE>
<CAPTION>
(Dollars in Millions) 1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
Taxes currently payable (refundable):
U.S. federal $(406.5) $(201.9) $(51.9)
Foreign 30.1 15.9 9.5
State and local (24.2) (36.5) 7.7
------- ------- ------
Total (400.6) (222.5) (34.7)
------- ------- ------
Deferred tax liabilities (assets):
U.S. federal 185.0 50.8 181.9
State and local (21.3) 29.4 14.8
------- ------- ------
Total 163.7 80.2 196.7
------- ------- ------
Total income tax provision (benefit) $(236.9) $(142.3) $162.0
======= ======= ======
</TABLE>
Income (loss) from continuing operations before income taxes, minority
interests, extraordinary item and cumulative effect of accounting change
included the following components:
<TABLE>
<CAPTION>
(Dollars in Millions) 1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
U.S. income (loss) $(519.0) $ (10.2) $415.3
Foreign loss (141.0) (93.0) (41.2)
------- ------- ------
Total $(660.0) $(103.2) $374.1
======= ======= ======
</TABLE>
The combined income tax provision (benefit) was different than the amount
computed using the U.S. federal statutory income tax rate for the reasons set
forth in the following table:
<TABLE>
<CAPTION>
(Dollars in Millions) 1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
Expected tax (refund) at U.S. federal statutory income tax rate $(231.0) $ (36.1) $131.0
Research and experimentation tax benefits and resolution of tax
contingencies (78.9) (172.9) (35.3)
Foreign sales corporation tax benefit (13.6) (15.6) (13.0)
U.S. state and local income taxes (29.5) (4.6) 14.6
Losses of equity method investees 60.3 36.7 25.3
Minority interests in losses of partnership 19.0 19.3 17.5
Non-deductible goodwill amortization 31.0 20.0 9.7
Other 5.8 10.9 12.2
------- ------- ------
Total income tax provision (benefit) $(236.9) $(142.3) $162.0
======= ======= ======
</TABLE>
Temporary differences and carryforwards which gave rise to deferred tax assets
and liabilities at December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998
----------------------- -----------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
(Dollars in Millions) Assets Liabilities Assets Liabilities
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Accruals and advances $ 106.1 $143.6
Sales and leasebacks - 65.4
Customer deposits, rebates and commissions 44.1 $ 114.1 52.9
State taxes 27.9 - 38.8
Gain on PanAmSat merger - 186.3 - $191.1
Satellite launch insurance costs - 136.8 - 103.1
Depreciation and amortization - 545.0 - 437.5
Net operating loss and tax credit carryforwards 287.3 - 77.8 -
Programming contract liabilities 285.0 - - -
Unrealized gains on securities - 318.6 - 1.2
Write-off related to wireless product lines 95.9 - - -
Other 204.4 100.7 70.9 83.7
-------- -------- ------ ------
Subtotal 1,050.7 1,401.5 449.4 816.6
Valuation allowance (84.0) - (64.2) -
-------- -------- ------ ------
Total deferred taxes $ 966.7 $1,401.5 $385.2 $816.6
======== ======== ====== ======
</TABLE>
II-30
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 9: Income Taxes - Concluded
No income tax provision has been made for the portion of undistributed
earnings of foreign subsidiaries deemed permanently reinvested that amounted to
approximately $29.7 million and $18.5 million at December 31, 1999 and 1998,
respectively. Repatriation of all accumulated earnings would have resulted in
tax liabilities of $10.4 million in 1999 and $6.4 million in 1998.
At December 31, 1999, Hughes has $84.0 million of deferred tax assets relating
to foreign operating loss carryforwards expiring in varying amounts between 2000
and 2004. A valuation allowance was provided for all foreign operating loss
carryforwards. At December 31, 1999, a Hughes subsidiary has $45.2 million of
alternative minimum tax credits generated in separate filing years, which can be
carried forward indefinitely. At December 31, 1999, Hughes' subsidiaries have
$126.2 million of deferred tax assets relating to federal net operating loss
carryforwards which will expire in varying amounts between 2009 and 2018. Hughes
has $11.9 million of deferred tax assets relating to state net operating loss
carryforwards which will expire in varying amounts between 2004 and 2018. Hughes
also has $20 million of research and experimentation credits which will expire
in 2019.
Hughes has an agreement with Raytheon which governs Hughes' rights and
obligations with respect to U.S. federal and state income taxes for all periods
prior to the merger of Hughes Defense with Raytheon. Hughes is responsible for
any income taxes pertaining to those periods prior to the merger, including any
additional income taxes resulting from U.S. federal and state tax audits.
Hughes is entitled to any U.S. federal and state income tax refunds relating to
those years.
The U.S. federal income tax returns of former Hughes have been examined
through 1994. All years prior to 1986 are closed. Issues relating to the years
1986 through 1994 are being contested through various stages of administrative
appeal. The Internal Revenue Service ("IRS") is currently examining former
Hughes' U.S. federal tax returns for years 1995 through 1997. Management
believes that adequate provision has been made for any adjustment which might be
assessed for open years.
Hughes reached an agreement with the IRS regarding a claim for refund of U.S.
federal income taxes related to the treatment of research and experimentation
costs for the years 1983 through 1995. Hughes recorded a total of $172.9
million of research and experimentation tax benefits during 1998, a substantial
portion of which related to the above noted agreement with the IRS and covered
prior years.
Hughes has taxes receivable from GM at December 31, 1999 and 1998,
respectively, of approximately $610.6 million and $379.3 million of which $290.8
million and $45.1 million, respectively, are included in prepaid expenses and
other in the balance sheets.
Note 10: Retirement Programs and Other Postretirement Benefits
Substantially all of Hughes' employees participate in Hughes' contributory and
non-contributory defined benefit retirement plans. Benefits are based on years
of service and compensation earned during a specified period of time before
retirement. Additionally, an unfunded, nonqualified pension plan covers certain
employees. Hughes also maintains a program for eligible retirees to participate
in health care and life insurance benefits generally until they reach age 65.
Qualified employees who elected to participate in the Hughes contributory
defined benefit pension plans may become eligible for these health care and life
insurance benefits if they retire from Hughes between the ages of 55 and 65.
Prior to December 18, 1997, the pension related assets and liabilities and the
postretirement benefit plans were maintained by former Hughes for its non-
automotive businesses and were not included in the Hughes balance sheet. A
portion of former Hughes' net pension expense and postretirement benefit cost
was allocated to Hughes and is included in the Statements of Operations and
Available Separate Consolidated Net Income (Loss). For 1997, the pension
expense and post retirement benefit cost components were not determined
separately for the Hughes participants. The 1997 information presented below is
based on pro rata allocations from former Hughes for each pension and
postretirement benefit component.
II-31
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 10: Retirement Programs and Other Postretirement Benefits - Continued
The components of the pension benefit obligation and the other postretirement
benefit obligation, as well as the net benefit obligation recognized in the
balance sheets, are shown below:
<TABLE>
<CAPTION>
Other
Postretirement
Pension Benefits Benefits
------------------ -------------------
(Dollars in Millions) 1999 1998 1999 1998
-------- ------- ------- ---------
<S> <C> <C> <C> <C>
Change in Benefit Obligation
Net benefit obligation at beginning of year $341.8 $316.4 $ 24.7 $ 19.5
Service cost 14.5 13.6 0.6 0.5
Interest cost 23.9 22.5 1.5 1.2
Plan participants' contributions 3.0 3.0 - -
Actuarial (gain) loss (31.3) 17.1 (2.7) 5.1
Benefits paid (34.2) (30.8) (1.3) (1.6)
------ ------ ------ ------
Net benefit obligation at end of year 317.7 341.8 22.8 24.7
------ ------ ------ ------
Change in Plan Assets
Fair value of plan assets at beginning of year 346.6 337.0 - -
Actual return on plan assets 69.6 30.3 - -
Employer contributions 3.0 4.3 (1.3) (1.6)
Plan participants' contributions 3.0 3.0 - -
Benefits paid (34.2) (30.8) 1.3 1.6
Transfers 2.1 2.8 - -
------ ------ ------ ------
Fair value of plan assets at end of year 390.1 346.6 - -
------ ------ ------ ------
Funded status at end of year 72.4 4.8 (22.8) (24.7)
Unamortized amount resulting from changes
in plan provisions (0.4) 1.9 - -
Unamortized net amount resulting from changes
in plan experience and actuarial assumptions (38.7) 26.7 (1.4) 0.7
------ ------ ------ ------
Net amount recognized at end of year $ 33.3 $ 33.4 $(24.2) $(24.0)
====== ====== ====== ======
Amounts recognized in the balance sheet consist of:
Prepaid benefit cost $ 43.0 $ 42.0
Accrued benefit cost (24.6) (23.2) $(24.2) $(24.0)
Intangible asset 2.6 3.2 - -
Deferred tax assets 5.0 4.6 - -
Accumulated other comprehensive loss 7.3 6.8 - -
------ ------ ------ ------
Net amount recognized at end of year $ 33.3 $ 33.4 $(24.2) $(24.0)
====== ====== ====== ======
</TABLE>
Included in the pension plan assets at December 31, 1999 and 1998 are GM Class
H common stock of $0.6 million and $0.4 million, GM $1-2/3 common stock of $0.3
million and $1.3 million and GMAC bonds of $0.5 million and $0.6 million,
respectively.
II-32
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 10: Retirement Programs and Other Postretirement Benefits - Concluded
<TABLE>
<CAPTION>
Other
Postretirement
Weighted-average assumptions as of Pension Benefits Benefits
December 31 ---------------- ----------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Discount rate 7.75% 6.75% 7.50% 6.50%
Expected return on plan assets 9.50% 9.50% N/A N/A
Rate of compensation increase 5.00% 5.00% N/A N/A
</TABLE>
For measurement purposes, a 9.0% annual rate of increase per capita cost of
covered health care benefits was assumed for 2000. The rate was assumed to
decrease gradually 0.5% per year to 6.0% in 2006.
<TABLE>
<CAPTION>
Other
Postretirement
Pension Benefits Benefits
--------------------------- ------------------------
(Dollars in Millions) 1999 1998 1997 1999 1998 1997
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Components of net periodic benefit cost
Benefits earned during the year $ 14.5 $ 13.6 $ 11.4 $0.6 $ 0.5 $ 0.5
Interest accrued on benefits earned in
prior years 23.9 22.5 22.4 1.5 1.2 1.2
Expected return on assets (28.5) (26.3) (24.7) - - -
Amortization components
Asset at date of adoption - (2.7) (3.0) - - -
Amount resulting from changes in
plan provisions 0.4 0.4 0.4 - - -
Net amount resulting from changes
in plan experience and actuarial
assumptions 4.7 2.7 2.0 - (0.1) (0.2)
------ ------ ------ ---- ----- -----
Net periodic benefit cost $ 15.0 $ 10.2 $ 8.5 $2.1 $ 1.6 $ 1.5
====== ====== ====== ==== ===== =====
</TABLE>
The projected benefit obligation and accumulated benefit obligation for the
pension plans with accumulated benefit obligations in excess of plan assets were
$52.9 million and $42.4 million, respectively, as of December 31, 1999 and $49.8
million and $38.9 million, respectively, as of December 31, 1998. The pension
plans with accumulated benefit obligations in excess of plan assets do not have
any underlying assets.
A one-percentage point change in assumed health care cost trend rates would
have the following effects:
<TABLE>
<CAPTION>
1-Percentage 1-Percentage
(Dollars in Millions) Point Increase Point Decrease
-------------- --------------
<S> <C> <C>
Effect on total of service and interest cost components $0.4 $(0.3)
Effect on postretirement benefit obligation 3.2 (2.8)
</TABLE>
Hughes maintains 401(k) plans for qualified employees. A portion of employee
contributions are matched by Hughes and amounted to $12.5 million, $10.6 million
and $9.6 million in 1999, 1998 and 1997, respectively.
Hughes has disclosed certain amounts associated with estimated future
postretirement benefits other than pensions and characterized such amounts as
"other postretirement benefit obligation." Notwithstanding the recording of such
amounts and the use of these terms, Hughes does not admit or otherwise
acknowledge that such amounts or existing postretirement benefit plans of Hughes
(other than pensions) represent legally enforceable liabilities of Hughes.
Note 11: Stockholder's Equity
In connection with the Hughes Transactions, Hughes was recapitalized on
December 17, 1997 at which time 1,000 shares of $1.00 par value common stock,
representing all of the authorized and outstanding common stock of Hughes, were
issued to GM. Prior to December 17, 1997, the equity of Hughes was comprised of
Parent Company's net investment in its telecommunications and space business.
II-33
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 11: Stockholder's Equity - Concluded
The following represents changes in the components of accumulated other
comprehensive income (loss), net of taxes, as of December 31:
<TABLE>
<CAPTION>
1999 1998 1997
----------------------------- ----------------------------- --------------------------
Tax Tax
Pre-tax (Credit) Net Pre-tax (Credit) Net Pre-tax Tax Net
(Dollars in Millions) Amount Expense Amount Amount Expense Amount Amount Expense Amount
-------- -------- ------- -------- -------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Minimum pension
liability adjustments $ (0.8) $ (0.3) $ (0.5) $ (0.8) $(0.3) $(0.5) - - -
Foreign currency
translation
adjustments $ 11.0 - $ 11.0 $ 3.8 - $ 3.8 $0.6 - $0.6
Unrealized gains
on securities $767.3 $317.4 $449.9 $ 3.0 $ 1.2 $ 1.8 - - -
Reclassification
adjustment for gains
included in net income - - - $(11.8) $(4.7) $(7.1) - - -
</TABLE>
Note 12: Incentive Plans
Under the Hughes Electronics Corporation Incentive Plan ("the Plan"), as
approved by the GM Board of Directors in 1999, shares, rights or options to
acquire up to 77.6 million shares of GM Class H common stock on a cumulative
basis were available for grant through December 31, 1999.
The GM Executive Compensation Committee may grant options and other rights to
acquire shares of GM Class H common stock under the provisions of the Plan. The
option price is equal to 100% of the fair market value of GM Class H common
stock on the date the options are granted. These nonqualified options generally
vest over two to four years, expire ten years from date of grant and are subject
to earlier termination under certain conditions.
As part of the Hughes Transactions, the outstanding options of former Hughes
employees who continued as Hughes employees were converted on December 18, 1997
into options to purchase recapitalized GM Class H common stock. Recognition of
compensation expense was not required in connection with the conversion.
Changes in the status of outstanding options were as follows:
<TABLE>
<CAPTION>
Shares Under Weighted-Average
GM Class H Common Stock Option Exercise Price
------------ ----------------
<S> <C> <C>
Outstanding at December 31, 1997 13,961,615 $29.08
Granted 4,180,525 51.02
Exercised (1,506,241) 23.22
Terminated (937,179) 31.79
---------- ------
Outstanding at December 31, 1998 15,698,720 $35.32
Granted 5,004,275 48.23
Exercised (3,436,057) 29.84
Terminated (1,431,582) 40.46
---------- ------
Outstanding at December 31, 1999 15,835,356 $39.84
========== ======
</TABLE>
II-34
<PAGE>
HUGHES ELECTRONICS CORPOATION
Note 12: Incentive Plans - Concluded
The following table summarizes information about the Plan stock options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------- ----------------------------
Weighted-
Average
Remaining Weighted- Weighted-
Range of Number Contractual Average Number Average
Exercise Prices Outstanding Life (years) Exercise Price Exercisable Exercise Price
--------------- ----------- ------------ -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$9.86 to $20.00 326,686 2.9 $15.06 326,686 $ 15.06
20.01 to 30.00 663,549 4.9 22.24 663,549 22.24
30.01 to 40.00 6,634,506 7.1 31.74 3,842,272 32.01
40.01 to 50.00 5,573,775 9.0 46.37 17,712 47.63
50.01 to 85.72 2,636,840 8.5 55.78 1,031,719 54.79
--------------- ---------- --- ------ --------- -------
$9.86 to $85.72 15,835,356 7.8 $39.84 5,881,938 $ 33.59
===== ====== ========== === ===== ========= =======
</TABLE>
At December 31, 1999, 43.1 million shares were available for grant under the
Plan subject to GM Executive Compensation Committee approval.
On May 5, 1997, PanAmSat adopted a stock option incentive plan with terms
similar to the Plan. As of December 31, 1999, PanAmSat had 3,455,832 options
outstanding to purchase its common stock with exercise prices ranging from
$29.00 per share to $59.75 per share. The options vest ratably over three to
four years and have a remaining life ranging from seven years to nine years. At
December 31, 1999, 439,420 options were exercisable at a weighted average
exercise price of $36.46. The PanAmSat options have been considered in the
following pro forma analysis.
The following table presents pro forma information as if Hughes recorded
compensation cost using the fair value of issued options on their grant date, as
required by SFAS No. 123, Accounting for Stock Based Compensation:
<TABLE>
<CAPTION>
(Dollars in Millions) 1999 1998 1997
-------- ------ ------
<S> <C> <C> <C>
Earnings (loss) used for computation of available
separate consolidated net income (loss)
as reported $(321.2) $271.7 $470.7
pro forma (384.9) 186.7 427.2
</TABLE>
The pro forma amounts for compensation cost are not indicative of the effects
on operating results for future periods.
For stock options granted prior to the Hughes Transactions, the estimated
compensation cost was based upon an allocation from former Hughes which was
calculated using the Black-Scholes valuation model for estimation of the fair
value of its options. The following table presents the estimated weighted-
average fair value of options granted and the assumptions used for the 1999,
1998 and 1997 calculations (for 1998 and 1997, stock volatility was estimated
based upon a three-year average derived from a study of a Hughes determined peer
group):
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
Estimated fair value per option granted $ 24.02 $ 22.78 $26.90
Average exercise price per option granted 48.23 51.02 31.71
Expected stock volatility 38.0% 32.8% 32.5%
Risk-free interest rate 5.2% 5.6% 5.9%
Expected option life (in years) 7.0 6.2 7.0
</TABLE>
Note 13: Other Income and Expenses
<TABLE>
<CAPTION>
(Dollars in Millions) 1999 1998 1997
------- ------- ------
<S> <C> <C> <C>
Equity losses from unconsolidated affiliates $(189.2) $(128.3) $(72.2)
Gain on PanAmSat merger - - 489.7
Gain from sale of common stock of an affiliate 39.4 - -
Other 13.5 (23.5) (28.9)
------- ------- ------
Total other, net $(136.3) $(151.8) $388.6
======= ======= ======
</TABLE>
II-35
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 13: Other Income and Expenses - Concluded
Equity losses from unconsolidated affiliates at December 31, 1999 are
primarily comprised of losses at DIRECTV Japan, of which Hughes owns 42.2%,
Hughes Ispat Limited, of which Hughes owns 45%, Galaxy Entertainment de
Venezuela, C.A., of which Hughes owns 20% and American Mobile Satellite
Corporation ("AMSC"). During the third quarter of 1999, AMSC issued new shares
of its common stock, resulting in Hughes recording an increase in its investment
in AMSC of $50.2 million with an offsetting adjustment to other comprehensive
income (loss), a separate component of stockholder's equity. The issuance of the
new shares diluted Hughes' ownership in AMSC to 14%. Since Hughes no longer
exerted significant influence over AMSC's operations, the accounting for the
AMSC investment from the equity method to the cost basis of accounting.
Note 14: Related-Party Transactions
In the ordinary course of its operations, Hughes provides telecommunications
services and sells electronic components to, and purchases sub-components from,
related parties.
The following table summarizes significant related-party transactions:
<TABLE>
<CAPTION>
(Dollars in Millions) 1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Revenues $46.5 $40.5 $25.0
Costs and expenses
Purchases 35.2 29.0 38.4
Allocation of corporate expenses - - 57.9
Allocated interest - - 31.6
</TABLE>
Note 15: Available Separate Consolidated Net Income (Loss)
Holders of GM Class H common stock have no direct rights in the equity or
assets of Hughes, but rather have rights in the equity and assets of GM (which
includes 100% of the stock of Hughes).
Amounts available for the payment of dividends on GM Class H common stock are
based on the Available Separate Consolidated Net Income (Loss) ("ASCNI") of
Hughes. The ASCNI of Hughes is determined quarterly and is equal to the
separate consolidated net income (loss) of Hughes, excluding the effects of GM
purchase accounting adjustments arising from GM's acquisition of Hughes and
including the effects of preferred dividends paid and/or payable to GM (earnings
(loss) used for computation of ASCNI), multiplied by a fraction, the numerator
of which is equal to the weighted-average number of shares of GM Class H common
stock outstanding during the period (124.7 million, 105.3 million and 101.5
million during 1999, 1998 and 1997, respectively) and the denominator of which
is a number equal to the weighted- average number of shares of GM Class H common
stock which, if issued and outstanding, would represent 100% of the tracking
stock interest in the earnings of Hughes (Average Class H dividend base). The
Average Class H dividend base was 418.5 million during 1999 and 399.9 million
during 1998 and 1997. Upon conversion of the GM Series H preference stock into
GM Class H common stock, both the numerator and the denominator used in the
computation of ASCNI will increase by the number of shares of the GM Class H
common stock issued (see further discussion in Note 16). In addition, the
denominator used in determining the ASCNI of Hughes may be adjusted from time to
time as deemed appropriate by the GM Board of Directors ("GM Board") to reflect
subdivisions or combinations of the GM Class H common stock, certain transfers
of capital to or from Hughes, the contribution of shares of capital stock of GM
to or for the benefit of Hughes employees and the retirement of GM Class H
common stock purchased by Hughes. The GM Board's discretion to make such
adjustments is limited by criteria set forth in GM's Restated Certificate of
Incorporation.
In connection with the PRIMESTAR and USSB transactions (see further discussion
in Note 17), GM contributed to Hughes an amount of cash sufficient to enable
Hughes to purchase from GM, for fair value as determined by the GM Board, the
number of shares of GM Class H common stock delivered by Hughes. In accordance
with the GM certificate of incorporation, the Class H dividend base was
increased to reflect that number of shares. The number of shares issued as part
of the PRIMESTAR acquisition and the USSB merger have been included in the
calculation of both the numerator and denominator of the fraction described
above since the consummation dates of the transactions.
II-36
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 15: Available Separate Consolidated Net Income (Loss) - Concluded
Effective January 1, 1999, shares of Class H common stock delivered by GM in
connection with the award of such shares to and the exercise of stock options by
employees of Hughes increases the numerator and denominator of the fraction
referred to above. Prior to January 1, 1999, the exercise of stock options did
not affect the GM Class H dividend base (denominator). From time to time, in
anticipation of exercises of stock options, Hughes purchases Class H common
stock on the open market. Upon purchase, these shares are retired and therefore
decrease the numerator and denominator of the fraction referred to above.
Dividends may be paid on the GM Class H common stock only when, as, and if
declared by GM's Board of Directors in its sole discretion. Dividends may be
paid on GM Class H common stock to the extent of the amount initially determined
to be available for the payment of dividends on GM Class H common stock, plus
the portion of earnings of GM after the closing of the Hughes Transactions
attributed to GM Class H common stock. The GM Board determined that the amount
initially available for the payment of dividends on shares of the recapitalized
GM Class H common stock was the cumulative amount available for the payment of
dividends on GM Class H common stock immediately prior to the closing of the
Hughes Transactions, reduced by a pro rata portion of the net reduction in GM's
total stockholder's equity resulting from the Hughes Transactions. As of
December 31, 1999 , the amount available for the payment of dividends on GM
Class H common stock was $5.4 billion . The GM Board does not currently intend
to pay cash dividends on the recapitalized GM Class H common stock.
Note 16: Hughes Series A Preferred Stock
On June 24, 1999, as part of a strategic alliance with Hughes, America Online
("AOL") invested $1.5 billion in shares of GM Series H 6.25% Automatically
Convertible Preference Stock ("GM Series H Preference Stock"). The GM Series H
preference stock will automatically convert into GM Class H common stock in
three years based upon a variable conversion factor linked to the GM Class H
common stock price at the time of conversion, and accrues quarterly dividends at
a rate of 6.25% per year. It may be converted earlier in certain limited
circumstances. GM immediately invested the $1.5 billion received from AOL in
shares of Hughes Series A Preferred Stock designed to correspond to the
financial terms of the GM Series H preference stock. Dividends on the Hughes
Series A Preferred Stock are payable to GM quarterly at an annual rate of 6.25%.
These preferred stock dividends payable to GM will reduce Hughes' earnings used
for computation of the ASCNI of Hughes, which will have an effect equivalent to
the payment of dividends on the Series H preference stock as if those dividends
were paid by Hughes. Upon conversion of the GM Series H preference stock into GM
Class H common stock, Hughes will redeem the Series A Preferred Stock through a
cash payment to GM equal to the fair market value of the GM Class H common stock
issuable upon the conversion. Simultaneous with GM's receipt of the cash
redemption proceeds, GM will make a capital contribution to Hughes of the same
amount. In connection with this capital contribution, the denominator of the
fraction used in the computation of the ASCNI of Hughes will be increased by the
corresponding number of shares of GM Class H common stock issued. Accordingly,
upon conversion of the GM Series H preference stock into GM Class H common
stock, both the numerator and denominator used in the computation of ASCNI will
increase by the amount of the GM Class H common stock issued.
Note 17: Acquisitions, Investments and Divestitures
Acquisitions and Investments
In September and November of 1999, DIRECTV Japan, Hughes' 42.2% owned
affiliate, raised a total of approximately $281 million through the issuance of
bonds, convertible into common stock, to five of its major shareholders,
including $244.7 million issued to Hughes.
On July 28, 1999, GLA acquired GLB, the exclusive distributor of DIRECTV
services in Brazil, from Tevecap S.A. for approximately $114.0 million plus the
assumption of debt. In connection with the transaction, Tevecap also sold its
10% equity interest in GLA to Hughes and The Cisneros Group of Companies, the
remaining GLA partners, which increased Hughes' ownership interest in GLA to
77.8%. As part of the transaction, Hughes also increased its ownership interest
in SurFin from 59.1% to 75.0%. The total consideration paid in the transactions
amounted to approximately $101.1 million.
II-37
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 17: Acquisitions, Investments and Divestitures - Continued
On May 20, 1999, Hughes acquired by merger all of the outstanding capital
stock of U.S. Satellite Broadcasting Company ("USSB"), a provider of premium
subscription television programming via the digital broadcasting system that it
shares with DIRECTV. The total consideration of approximately $1.6 billion paid
in July 1999, consisted of approximately $0.4 billion in cash and 22.6 million
shares of Class H common stock.
On April 28, 1999, Hughes completed the acquisition of PRIMESTAR's 2.3
million subscriber medium-power direct-to-home satellite business. The purchase
price consisted of $1.1 billion in cash and 4.9 million shares of Class H common
stock, for a total purchase price of $1.3 billion. As part of the agreement to
acquire PRIMESTAR, Hughes agreed to purchase the high-power satellite assets and
related orbital frequencies of Tempo Satellite Inc., a wholly-owned subsidiary
of TCI Satellite Entertainment Inc. The purchase price for the Tempo Satellite
assets consisted of $500 million in cash. Of this purchase price, $150 million
was paid on March 10, 1999 for a satellite that has not yet been launched and
the remaining $350 million was paid on June 4, 1999 for an in-orbit satellite
and 11 related satellite orbital frequencies.
Hughes agreed, in connection with its acquisition of PRIMESTAR, to exit the
medium-power business prior to May 1, 2001. Hughes formulated a detailed exit
plan during the second quarter of 1999 and immediately began to migrate the
medium-power customers to DIRECTV's high-power platform. Accordingly, Hughes
accrued exit costs of $150 million in determining the purchase price allocated
to the net assets acquired. The principal components of such exit costs include
penalties to terminate assumed contracts and costs to remove medium-power
equipment from customer premises. The timing of subscriber migration and exit of
the medium-power business is currently estimated to occur by the end of 2000,
but is subject to change pending final management determination, which could
result in an adjustment to the amount of accrued exit costs. The amount of
accrued exit costs remaining at December 31, 1999 was $123.9 million.
In February 1999, Hughes acquired an additional ownership interest in Grupo
Galaxy Mexicana, S.R.L. de C.V. ("GGM"), a Latin America local operating company
which is the exclusive distributor of DIRECTV in Mexico, from Grupo MVS, S.R.L.
de C.V. Hughes' equity ownership represents 49.0% of the voting equity and all
of the non-voting equity of GGM. In October 1998, Hughes acquired from Grupo
MVS an additional 10.0% interest in GLA, increasing Hughes' ownership interest
to 70.0%. Hughes also acquired an additional 19.8% interest in SurFin, a
company providing financing of subscriber receiver equipment for certain local
operating companies located in Latin America and Mexico, increasing Hughes'
ownership percentage from 39.3% to 59.1%. The aggregate purchase price for
these transactions was $197.0 million in cash.
In May 1998, Hughes purchased an additional 9.5% interest in PanAmSat for
$851.4 million in cash, increasing its ownership interest in PanAmSat to 81.0%.
PanAmSat was originally acquired in May 1997, when Hughes and PanAmSat completed
the merger of their respective satellite service operations into a new publicly-
held company, which retained the name PanAmSat Corporation. Hughes contributed
its Galaxy satellite services business in exchange for a 71.5% interest in the
new company. Existing PanAmSat stockholders received a 28.5% interest in the new
company and $1.5 billion in cash. Such cash consideration and other funds
required to consummate the merger were funded by new debt financing totaling
$1,725.0 million borrowed from GM, which was subsequently repaid in December
1997. The PanAmSat merger was treated as a partial sale of the Galaxy business
by Hughes and resulted in a one-time pre-tax gain of $489.7 million ($318.3
million after-tax).
The financial information included herein reflects the acquisitions
discussed above from their respective dates of acquisition. The acquisitions
were accounted for by the purchase method of accounting and, accordingly, the
purchase price has been allocated to the assets acquired and the liabilities
assumed based on the estimated fair values at the date of acquisition. The
excess of the purchase price over the estimated fair values of the net assets
acquired has been recorded as goodwill, resulting in goodwill additions of
$3,612.4 million and $702.9 million for the years ended December 31, 1999 and
1998, respectively.
The December 31, 1999 financial statements reflect a preliminary allocation
of the purchase price for the PRIMESTAR transaction based upon information
currently available. Adjustments relating to the tangible assets, including
equipment located on customer premises; intangible assets, including customer
lists and dealer network; and accrued liabilities for programming contracts and
leases with above-market rates are estimates pending the completion of
independent appraisals currently in process. Additionally, the adjustment to
recognize the benefit of net operating loss carryforwards of USSB represents a
preliminary estimate pending further review and analysis by Hughes management.
The foregoing appraisals, review and analysis are expected to be completed by
March 31, 2000. Accordingly, the final purchase price allocations may be
different from the amounts reflected herein.
II-38
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 17: Acquisitions, Investments and Divestitures - Concluded
The following selected unaudited pro forma information is being provided to
present a summary of the combined results of Hughes and USSB and PRIMESTAR for
1999 and 1998 as if the acquisitions had occurred as of the beginning of the
respective periods, giving effect to purchase accounting adjustments. The pro
forma data presents only significant transactions, is presented for
informational purposes only and may not necessarily reflect the results of
operations of Hughes had these companies operated as part of Hughes for each of
the periods presented, nor are they necessarily indicative of the results of
future operations. The pro forma information excludes the effect of non-
recurring charges.
<TABLE>
<CAPTION>
(Dollars in Millions) 1999 1998
--------- --------
<S> <C> <C>
Total Revenues $6,350.3 $5,318.6
Income (loss) before extraordinary item and
cumulative effect of accounting change (297.1) 160.0
Net income (loss) (297.1) 150.8
Pro forma available separate consolidated net
Income (loss) (103.1) 53.4
</TABLE>
Divestitures
On January 13, 2000, Hughes announced that it had reached an agreement to sell
its satellite systems manufacturing businesses to The Boeing Company ("Boeing")
for $3.75 billion in cash. The final transaction, which is subject to regulatory
approval, is expected to close in the second or third quarter of 2000. The
financial results for the satellite systems manufacturing businesses are treated
as discontinued operations for all periods presented herein.
On December 15, 1997, Hughes sold substantially all of the assets and
liabilities of the Hughes Avicom business to Rockwell Collins, Inc. for cash,
which resulted in an after-tax gain of $62.8 million. Hughes Avicom is treated
as a discontinued operation for all periods prior to its disposition.
Summarized financial information for the discontinued operations
follows:
<TABLE>
<CAPTION>
(Dollars in Millions) 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues $1,780.4 $2,483.3 $2,392.5
Income tax provision 42.9 97.6 74.7
Net income 99.8 196.4 170.6
</TABLE>
Hughes also announced on January 13, 2000, the discontinuation of its mobile
cellular and narrowband local loop product lines at Hughes Network Systems. As a
result of this decision, Hughes recorded a fourth quarter 1999 pre-tax charge to
continuing operations of $272.1 million. The charge represents the write-off of
receivables and inventories, licenses, software and equipment with no
alternative use.
Also, in December 1997, Hughes repurchased from AT&T for $161.8 million, a
2.5% equity interest in DIRECTV, ending AT&T's marketing agreement to distribute
the DIRECTV direct broadcast satellite television service and DIRECTV/TM/
receiver equipment.
Note 18: Derivative Financial Instruments and Risk Management
In the normal course of business, Hughes enters into transactions that expose
it to risks associated with foreign exchange rates. Hughes utilizes derivative
instruments in an effort to mitigate these risks. Hughes' policy is to not
enter into speculative derivative instruments for profit or execute derivative
instrument contracts for which there are no underlying exposures. Instruments
used as hedges must be effective at reducing the risk associated with the
exposure being hedged and designated as a hedge at the inception of the
contract. Accordingly, changes in market values of hedge instruments are highly
correlated with changes in market values of the underlying transactions, both at
the inception of the hedge and over the life of the hedge contract.
Hughes primarily uses foreign exchange-forward contracts to hedge firm
commitments denominated in foreign currencies. Foreign exchange-forward
contracts are legal agreements between two parties to purchase and sell a
foreign currency, for a price specified at the contract date, with delivery and
settlement in the future. The total notional amounts of contracts afforded
hedge accounting treatment at December 31, 1999 and 1998 were not significant.
Hughes is exposed to credit risk in the event of non-performance by the
counterparties to its foreign exchange-forward contracts. While Hughes believes
this risk is remote, credit risk is managed through the periodic monitoring and
approval of financially sound counterparties.
II-39
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 19: Segment Reporting
Hughes' segments, which are differentiated by their products and services,
include Direct-To-Home Broadcast, Satellite Services, and Network Systems.
Direct-To-Home Broadcast is engaged in acquiring, promoting, selling and/or
distributing digital entertainment programming via satellite to residential and
commercial customers. Satellite Services is engaged in the selling, leasing and
operating of satellite transponders and providing services for cable television
systems, news companies, Internet service providers and private business
networks. Network Systems is engaged in manufacturing DIRECTV receiver equipment
and providing satellite wireless communications ground equipment and business
communications services. Other includes the corporate office and other entities.
Selected information for Hughes' operating segments are reported as follows:
<TABLE>
<CAPTION>
Direct-To-
Home Satellite Network
(Dollars in Millions) Broadcast Services Systems Other Eliminations Total
- --------------------------- ----------- --------- --------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1999
External Revenues $3,781.7 $ 673.6 $1,091.7 $ 13.3 - $ 5,560.3
Intersegment Revenues 3.3 137.0 293.0 2.5 $(435.8) -
-------- -------- -------- -------- ------- ---------
Total Revenues $3,785.0 $ 810.6 $1,384.7 $ 15.8 $(435.8) $ 5,560.3
-------- -------- -------- -------- ------- ---------
Operating Profit (Loss) $ (292.1) $ 338.3 $ (227.3) $ (143.8) $(103.1) $ (428.0)
Depreciation and
Amortization 312.0 280.5 49.2 20.8 (11.8) 650.7
Intangibles, net 4,308.5 2,368.6 46.9 682.0 - 7,406.0
Segment Assets 9,056.6 5,984.7 1,167.3 2,765.9 (377.5) 18,597.0
Capital Expenditures (1) 516.9 956.4 35.0 170.0 (13.0) 1,665.3
-------- -------- -------- -------- ------- ---------
1998
External Revenues $1,813.7 $ 643.8 $1,000.6 $ 22.5 - $ 3,480.6
Intersegment Revenues 2.4 123.5 76.1 1.4 $(203.4) -
-------- -------- -------- -------- ------- ---------
Total Revenues $1,816.1 $ 767.3 $1,076.7 $ 23.9 $(203.4) $ 3,480.6
-------- -------- -------- -------- ------- ---------
Operating Profit (Loss) $ (228.1) $ 318.3 $ 10.9 $ (114.2) $ (33.1) $ (46.2)
Depreciation and
Amortization 102.3 235.0 41.7 13.9 (5.0) 387.9
Intangibles, net - 2,433.5 53.6 698.8 - 3,185.9
Segment Assets 2,190.4 5,890.5 1,299.0 3,470.6 (233.1) 12,617.4
Capital Expenditures (1) 230.8 921.7 40.0 3.3 133.0 1,328.8
-------- -------- -------- -------- ------- ---------
1997
External Revenues $1,276.9 $ 537.3 $ 998.3 $ 25.8 - $ 2,838.3
Intersegment Revenues - 92.6 13.0 2.7 $(108.3) -
-------- -------- -------- -------- ------- ---------
Total Revenues $1,276.9 $ 629.9 $1,011.3 $ 28.5 $(108.3) $ 2,838.3
-------- -------- -------- -------- ------- ---------
Operating Profit (Loss) $ (254.6) $ 292.9 $ 74.1 $ (63.7) $ (5.2) $ 43.5
Depreciation and
Amortization 86.1 145.2 32.0 - (3.0) 260.3
Intangibles, net - 2,498.5 - 63.6 - 2,562.1
Segment Assets 1,408.7 5,682.4 1,215.6 3,918.0 (83.2) 12,141.5
Capital Expenditures (1) 105.6 625.7 43.1 0.4 (62.1) 712.7
-------- -------- -------- -------- ------- ---------
</TABLE>
(1) Includes expenditures related to satellites in segments as follows: $136.0
million and $70.2 million in 1999 and 1998, respectively, for Direct-To-Home
Broadcast segment; $532.8 million, $726.3 million and $606.1 million in
1999, 1998 and 1997, respectively, for Satellite Services segment. Satellite
Services segment also includes $369.5 million and $155.5 million in 1999 and
1998, respectively, related to the early buy-out of satellite sale-
leasebacks.
II-40
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 19: Segment Reporting - Concluded
A reconciliation of operating profit (loss) to income (loss) from continuing
operations before income taxes, minority interests, extraordinary item and
cumulative effect of accounting change, as shown in the Statement of Operations
and Available Separate Consolidated Net Income (Loss), follows:
<TABLE>
<CAPTION>
(Dollars in Millions) 1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
Operating profit (loss) $(428.0) $ (46.2) $ 43.5
Interest income 27.0 112.3 33.0
Interest expense (122.7) (17.5) (91.0)
Other, net (136.3) (151.8) 388.6
------ ------ -----
Income (loss) from continuing operations before income
taxes, minority interests, extraordinary item and
cumulative effect of accounting change $(660.0) $(103.2) $374.1
======= ======= ======
</TABLE>
The following table presents revenues earned from customers located in
different geographic areas. Property is grouped by its physical location. All
satellites are reported as United States assets.
<TABLE>
<CAPTION>
1999 1998 1997
----------------------- ----------------------- -----------------------
Net Net Net
Total Total Property & Total Property & Total Property &
(Dollars in Millions) Revenues Satellites Revenues Satellites Revenues Satellites
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
North America
United States $4,407.9 $4,891.8 $2,645.6 $3,830.6 $1,781.5 $3,178.6
Canada and Mexico 114.6 51.8 56.9 2.0 44.8 -
-------- -------- -------- -------- -------- --------
Total North America 4,522.5 4,943.6 2,702.5 3,832.6 1,826.3 3,178.6
-------- -------- -------- -------- -------- --------
Europe
United Kingdom 175.2 10.5 111.3 14.1 25.8 10.4
Other 47.6 0.2 61.2 0.3 121.7 0.1
-------- -------- -------- -------- -------- --------
Total Europe 222.8 10.7 172.5 14.4 147.5 10.5
-------- -------- -------- -------- -------- --------
Latin America
Brazil 157.7 151.1 150.9 4.6 102.1 -
Other 245.3 9.8 104.2 11.1 90.4 -
-------- -------- -------- -------- -------- --------
Total Latin America 403.0 160.9 255.1 15.7 192.5 -
-------- -------- -------- -------- -------- --------
Asia
Japan 103.6 0.7 67.5 0.5 21.1 0.5
India 85.1 12.4 79.9 14.7 41.9 12.7
China 27.7 1.2 63.4 1.7 154.3 1.5
Other 108.5 0.5 65.5 0.6 359.9 0.4
-------- -------- -------- -------- -------- --------
Total Asia 324.9 14.8 276.3 17.5 577.2 15.1
-------- -------- -------- -------- -------- --------
Total Middle East 11.9 - 20.0 - 47.2 -
Total Africa 75.2 0.3 54.2 0.3 47.6 -
-------- -------- -------- -------- -------- --------
Total $5,560.3 $5,130.3 $3,480.6 $3,880.5 $2,838.3 $3,204.2
======== ======== ======== ======== ======== ========
</TABLE>
Note 20: Commitments and Contingencies
In connection with the 1997 spin-off of the defense electronics business of
Hughes' predecessor as part of the Hughes restructuring transactions and the
subsequent merger of that business with Raytheon Company, the terms of the
merger agreement provided processes for resolving disputes that might arise in
connection with post-closing financial adjustments that were also called for by
the terms of the merger agreement. These financial adjustments might require a
cash payment from Raytheon to Hughes or vice versa.
II-41
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 20: Commitments and Contingencies - Continued
A dispute currently exists regarding the post-closing adjustments which Hughes
and Raytheon have proposed to one another and related issues regarding the
adequacy of disclosures made by Hughes to Raytheon in the period prior to
consummation of the merger. Hughes and Raytheon are proceeding with the dispute
resolution process. It is possible that the ultimate resolution of the post-
closing financial adjustment and of related disclosure issues may result in
Hughes making a payment to Raytheon that would be material to Hughes. However,
the amount of any payment that either party might be required to make to the
other cannot be determined at this time. Hughes intends to vigorously pursue
resolution of the disputes through the arbitration processes, opposing the
adjustments proposed by Raytheon, and seeking the payment from Raytheon that
Hughes has proposed.
On June 3, 1999, the National Rural Telecommunications Cooperative ("NRTC")
filed a lawsuit against DIRECTV, Inc. and Hughes Communications Galaxy, Inc.,
which Hughes refers to together in this description as `` DIRECTV'', in the U.S.
District Court for the Central District of California, alleging that DIRECTV has
breached the DBS Distribution Agreement with the NRTC. The DBS Distribution
Agreement provides the NRTC with certain rights, in certain specified portions
of the United States, with respect to DIRECTV programming delivered over 27 of
the 32 frequencies at the 101 (degrees) west longitude orbital location. The
NRTC claims that DIRECTV has wrongfully deprived it of the exclusive right to
distribute programming formerly provided by USSB over the other five frequencies
at 101 (degrees). DIRECTV denies that the NRTC is entitled to exclusive
distribution rights to the former USSB programming because, among other things,
the NRTC's exclusive distribution rights are limited to programming distributed
over 27 of the 32 frequencies at 101 (degrees). The NRTC's complaint seeks, in
the alternative, the right to distribute former USSB programming on a non-
exclusive basis and the recovery of related revenues from the date USSB was
acquired by Hughes. DIRECTV maintains that the NRTC's right under the DBS
Distribution Agreement is to market and sell the former USSB programming as its
agent and the NRTC is not entitled to the claimed revenues. DIRECTV intends to
vigorously defend against the NRTC claims. DIRECTV has also filed a counterclaim
against the NRTC seeking a declaration of the parties' rights under the DBS
Distribution Agreement.
On August 26, 1999, the NRTC filed a second lawsuit against DIRECTV alleging
that DIRECTV has breached the DBS Distribution Agreement. In this lawsuit, the
NRTC is asking the court to require DIRECTV to pay the NRTC a proportionate
share of unspecified financial benefits that DIRECTV derives from programming
providers and other third parties. DIRECTV denies that it owes any sums to the
NRTC on account of the allegations in these matters and plans to vigorously
defend itself against these claims.
Pegasus Satellite Television, Inc. and Golden Sky Systems, Inc., the two
largest NRTC affiliates, filed an action on January 11, 2000 against DIRECTV in
the U.S. District Court in Los Angeles. The plaintiffs allege, among other
things, that DIRECTV has interfered with their contractual relationship with the
NRTC. The plaintiffs plead that their rights and damages are derivative of the
rights and claims asserted by the NRTC in its two cases against DIRECTV. The
plaintiffs also allege that DIRECTV has interfered with their contractual
relationships with manufacturers and distributors by preventing those parties
from selling receiving equipment to the plaintiffs' dealers. DIRECTV denies that
it has wrongfully interfered with any of plaintiffs' business relationships and
will vigorously defend the lawsuit. Although an amount of loss, if any, cannot
be estimated at this time, an unfavorable outcome could be reached in the NRTC
and Pegasus litigation that could be material to Hughes' results of operations
or financial position.
General Electric Capital Corporation ("GECC") and DIRECTV, Inc. entered into a
contract on July 31, 1995, in which GECC agreed to establish and manage a
private label consumer credit program for consumer purchases of hardware and
related DIRECTV programming. Under the contract, GECC also agreed to provide
certain related services to DIRECTV, including credit risk scoring, billing and
collections services. DIRECTV agreed to act as a surety for loans complying with
the terms of the contract. Hughes guaranteed DIRECTV's performance under the
contract. A complaint and counterclaim have been filed by the parties in the
U.S. District Court for the District of Connecticut concerning GECC's
performance and DIRECTV's obligation to act as a surety. GECC claims damages
from DIRECTV in excess of $140 million. DIRECTV is seeking damages from GECC in
excess of $45 million. Hughes intends to vigorously contest GECC's allegations
and pursue its own contractual rights and remedies. Hughes does not believe that
the litigation will have a material adverse impact on its results of operations
or financial position. Pretrial discovery is completed. No specific trial date
has been set, but a trial may be held in 2000.
II-42
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 20: Commitments and Contingencies - Concluded
There is a pending grand jury investigation into whether Hughes should be
accused of criminal violations of the export control laws arising out of the
participation of two of its employees on a committee formed to review the
findings of Chinese engineers regarding the failure of a Long March rocket in
China in 1996. Hughes is also subject to the authority of the State Department
to impose sanctions for non-criminal violations of the Arms Export Control Act.
The possible criminal and/or civil sanctions could include fines as well as
debarment from various export privileges and participating in government
contracts. If Hughes were to enter into a settlement of this matter prior to
the closing of the Boeing transaction that involves a debarment from sales to
the U.S. government or a material suspension of Hughes' export licenses or other
material limitation on projected business activities of the satellite systems
manufacturing businesses, Boeing would not be obligated to complete the purchase
of Hughes' satellite systems manufacturing businesses. Hughes does not expect
the grand jury investigation or State Department review to result in a material
adverse effect upon its business.
Hughes Space and Communications International, a wholly owned subsidiary of
Hughes Space and Communications Company, has certain contracts with ICO Global
Communications Operations to build the satellites and related components for a
global wireless communications system. Hughes owns approximately 2.6% of the
equity in ICO's parent company (which Hughes has agreed to sell to Boeing as
part of the sale of Hughes' satellite systems manufacturing businesses). On
August 27, 1999, the ICO parent company filed for bankruptcy protection under
Chapter 11 in U.S. Bankruptcy Court in Wilmington, Delaware. On December 3,
1999, the U.S. Bankruptcy Court in this case granted final approval of debtor-
in-possession financing in the amount of $500 million to a group led by Craig
McCaw, the Chairman of Teledesic LLC, a company establishing a global broadband
Internet-in-the-Sky satellite communications network. In October 1999, McCaw
and his group also agreed to provide an additional $700 million in financing
upon the ICO parent's emergence from bankruptcy court protection, to the extent
that this financing is not provided by other investors. This exit financing is
expected to be completed in mid-2000, upon court approval and consummation of
the ICO parent company reorganization plan. There can be no assurance when the
consummation of the reorganization plan will occur or if the ICO parent company
will be successful in confirming any plan of reorganization. If it is unable to
do so the most likely outcome would be a liquidation proceeding. In the event
that a liquidation becomes probable, Hughes would expect to record a pre-tax
charge to income of up to approximately $350 million, of which $100 million
would be attributable to continuing operations and $250 million would be
attributable to discontinued operations. A portion of the purchase price to be
paid by Boeing will be placed in escrow under certain circumstances if prior to
completing this sale to Boeing, Hughes' contracts with ICO are not assumed by
ICO with bankruptcy court approval or new similar contracts are not entered into
with bankruptcy court approval.
At December 31, 1999, minimum future commitments under noncancelable operating
leases having lease terms in excess of one year are primarily for real property
and aggregated $250.8 million, payable as follows: $102.8 million in 2000, $52.3
million in 2001, $24.2 million in 2002, $17.8 million in 2003, $12.5 million in
2004 and $41.2 million thereafter. Certain of these leases contain escalation
clauses and renewal or purchase options. Rental expenses under operating leases,
net of sublease rental income, were $58.5 million in 1999, $82.7 million in 1998
and $89.1 million in 1997.
Hughes is contingently liable under standby letters of credit and bonds in the
amount of $222.0 million at December 31, 1999. In Hughes' past experience, no
material claims have been made against these financial instruments. In
addition, at December 31, 1999 Hughes has guaranteed up to $209.1 million of
bank debt, including $105.0 million related to American Mobile Satellite
Corporation. Of the bank debt guaranteed, $105.0 million matures in March 2003;
$55.4 million matures in September 2007; the remaining $48.7 million is due in
variable amounts over the next five years.
In connection with the DTH broadcast businesses, Hughes has commitments
related to certain programming agreements which are variable based upon the
number of underlying subscribers and market penetration rates. Minimum payments
over the terms of applicable contracts are anticipated to be approximately
$1,000.0 million to $1,150.0 million.
As part of a marketing agreement entered into with AOL on June 21, 1999,
Hughes committed to increase its sales and marketing expenditures over the next
three years by approximately $1.5 billion relating to DirecPC/AOL-Plus, DIRECTV,
DIRECTV/AOL TV and DirecDuo.
Hughes is subject to various claims and legal actions which are pending or may
be asserted against it. The aggregate ultimate liability of Hughes under these
claims and actions was not determinable at December 31, 1999. In the opinion of
Hughes management, such liability is not expected to have a material adverse
effect on Hughes' results of operations or financial position.
II-43
<PAGE>
HUGHES ELECTRONICS CORPORATION
Note 21: Subsequent Events
On March 1, 2000, Hughes announced that DIRECTV Japan's operations will be
discontinued and that its subscribers would migrate to SkyPerfecTV, a company in
Japan providing direct-to-home satellite broadcasting. As a result of this
transaction, Hughes will acquire a 6.8% interest in SkyPerfecTV, which is
expected to complete an IPO during its fiscal year ending March 31, 2001. Hughes
will be required to fund a substantial portion of the costs to be incurred over
the next six to nine months to exit the DIRECTV Japan business. Hughes will
accrue such exit costs during the first quarter of fiscal 2000. The first
quarter charge will be offset by the fair value of the SkyPerfecTV interest
received; however the amounts are not yet estimable. In addition, Hughes will
continue to record its share of DIRECTV Japan's operating losses during fiscal
2000.
EchoStar Communications Corporation and others commenced an action in the U.S.
District Court in Colorado on February 1, 2000 against DIRECTV, Hughes Network
Systems and Thomson Consumer Electronics, Inc. seeking, among other things,
injunctive relief and unspecified damages, including treble damages, in
connection with allegations that the defendants have entered into agreements
with retailers and program providers and engaged in other conduct that violates
the antitrust laws and constitutes unfair competition. DIRECTV believes that the
complaint is without merit and intends to vigorously defend against the
allegations raised. Although an amount of loss, if any, cannot be estimated at
this time, an unfavorable outcome could be reached that could be material to
Hughes' results of operations or financial position.
* * *
II-44
<PAGE>
HUGHES ELECTRONICS CORPORATION
SUPPLEMENTAL INFORMATION
<TABLE>
<CAPTION>
Selected Quarterly Data (Unaudited)
1st 2nd 3rd 4th
- -------------------------------------------------------------------------------------------------
(Dollars in Millions)
<S> <C> <C> <C> <C>
1999 Quarters
- -------------
Revenues $918.4 $1,316.1 $1,627.8 $1,698.0
------ -------- -------- --------
Loss from continuing operations before
income taxes and minority interests $(31.0) $ (70.8) $ (87.4) $ (470.8)
Income tax benefit (13.4) (9.5) (36.8) (177.2)
Minority interests in net losses of subsidiaries 6.5 6.8 8.8 9.9
Income from discontinued operations 84.1 (43.1) 6.9 51.9
------ -------- -------- --------
Net income (loss) 73.0 (97.6) (34.9) (231.8)
Earnings (Loss) used for computation of
available separate consolidated net income
(loss) $ 78.3 $ (93.9) $ (54.3) $ (251.3)
====== ======== ======== ========
Average number of shares of
General Motors Class H common stock
outstanding (in millions) 106.3 121.0 135.1 136.3
Average Class H dividend base (in millions) 400.2 414.9 428.9 430.1
Available separate consolidated net income (loss) $ 20.8 $ (27.4) $ (17.1) $ (79.6)
Stock price range of General Motors Class
H common stock
High $53.00 $ 63.88 $ 62.44 $ 97.63
Low $38.50 $ 48.94 $ 48.75 $ 55.94
</TABLE>
II-45
<PAGE>
HUGHES ELECTRONICS CORPORATION
SUPPLEMENTAL INFORMATION
<TABLE>
<CAPTION>
Selected Quarterly Data (Unaudited) - Concluded
1st 2nd 3rd 4th
- --------------------------------------------------------------------------------------------
(Dollars in Millions)
<S> <C> <C> <C> <C>
1998 Quarters
- -------------
Revenues $739.7 $780.5 $855.2 $1,105.2
------ ------ ------ --------
Income (Loss) from continuing operations before
income taxes, minority interests and
cumulative effect of accounting
change $ 19.9 $(26.3) $(19.8) $ (77.0)
Income tax provision (benefit) 12.9 (8.5) (3.7) (143.0)
Minority interests in net losses of subsidiaries 1.3 8.6 9.3 5.2
Income from discontinued operations 40.1 60.0 44.4 51.9
Cumulative effect of accounting change (1) (9.2) - - -
------ ------ ------ --------
Net income 39.2 50.8 37.6 123.1
Earnings used for computation of available
separate consolidated net income $ 44.5 $ 56.1 $ 42.9 $ 128.2
====== ====== ====== ========
Average number of shares of
General Motors Class H common stock
outstanding (in millions) 104.1 105.2 105.7 105.9
Average Class H dividend base (in millions) 399.9 399.9 399.9 399.9
Available separate consolidated
net income $ 11.5 $ 14.7 $ 11.4 $ 33.9
Stock price range of General Motors Class
H common stock
High $48.00 $57.88 $50.81 $ 42.38
Low $31.50 $42.75 $35.00 $ 30.38
</TABLE>
- --------------
(1) Hughes adopted SOP 98-5, Reporting on the Costs of Start-Up Activities,
effective January 1, 1998. The unfavorable cumulative effect of adopting
SOP 98-5 was $9.2 million. The impact on the second, third and fourth
quarters of 1998 was not significant.
II-46
<PAGE>
HUGHES ELECTRONICS CORPORATION
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
II-47
<PAGE>
HUGHES ELECTRONICS CORPORATION
PART III
ITEM 10. Directors and Executive Officers of the Registrant
Omitted.
ITEM 11. Executive Compensation
Omitted.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
Omitted.
ITEM 13. Certain Relationships and Related Transactions
Omitted.
III-1
<PAGE>
HUGHES ELECTRONICS CORPORATION
PART IV
ITEM 14. Exhibits, Financial Statement Schedule, and Reports on Forms 8-K
<TABLE>
<CAPTION>
Page
Number
<C> <S> <C>
(a) 1. All Financial Statements See Part II
2. Financial Statement Schedule II - Valuation and Qualifying Accounts
for the Years Ended December 31, 1999, 1998, and 1997 IV-6
3. Exhibits (Including Those Incorporated by Reference)
Exhibit
Number
- ------
*2.1 Agreement and Plan of Merger among General Motors Corporation, Hughes
Electronics Corporation and United States Satellite Broadcasting
Company, Inc. dated December 11, 1998 (incorporated by reference to
Exhibit 2(a) to the Current Report on Form 8-K of General Motors
Corporation filed December 17, 1998 (the "December 8-K")).
*2.2 Shareholders Agreement dated December 11, 1998 among General Motors
Corporation, Hughes Electronics Corporation, Hubbard Broadcasting,
Inc., Stanley S. Hubbard, Stanley E. Hubbard and Robert W. Hubbard
(incorporated by reference to Exhibit 2(b) to the December 8-K).
*2.3 Asset Purchase Agreement among PRIMESTAR, Inc., PRIMESTAR Partners
L.P., PRIMESTAR MDU, Inc., the stockholders of PRIMESTAR, Inc. and
Hughes Electronics Corporation, dated as of January 22, 1999
(incorporated by reference to Exhibit 99.1 to the Current Report on
Form 8-K of General Motors Corporation filed February 2, 1999 (the
"February 8-K")).
*2.4 Asset Purchase Agreement among PRIMESTAR, Inc., PRIMESTAR Partners
L.P., Tempo Satellite, Inc., the stockholders of PRIMESTAR, Inc. and
Hughes Electronics Corporation, dated as of January 22, 1999
(incorporated by reference to Exhibit 99.2 to the February 8-K).
**2.5 Stock Purchase Agreement between The Boeing Company, Hughes Electronics
Corporation and Hughes Telecommunications and Space Company for the
purchase and sale of the outstanding capital stock of Hughes Space and
Communications Company and certain additional outstanding capital
stock, dated as of January 13, 2000.
*3.1 Amended and Restated Certificate of Incorporation of Hughes Electronics
Corporation (incorporated by reference to Exhibit 3.1 to the Form 10 of
Hughes Electronics Corporation filed August 13, 1999 (the "Form 10").
*3.2 Bylaws of Hughes Electronics Corporation (incorporated by reference to
Exhibit 3.2 to the Form 10).
*4.1 Specimen form of certificate representing Common Stock of Hughes
Electronics Corporation (incorporated by reference to Exhibit 4.1 to
the Form 10).
**4.2 Indenture by and between Hughes Electronics Corporation and The Bank of
New York, as Trustee, dated October 22, 1999.
**4.3 Form of Floating Rate Note (included in Exhibit 4.2).
*10.1 Revolving Credit Agreement (364-day Facility), dated as of December 5,
1997 among Hughes Network Systems, Inc. to be renamed Hughes
Electronics Corporation, the Banks named therein and Bank of America
National Trust and Savings Association as Administrative Agent, Morgan
Guaranty Trust Company of New York, as Syndication Agent, Citicorp USA,
Inc. and The Chase Manhattan Bank as Documentation Agents (the "364-day
Facility") (incorporated by reference to Exhibit 10.1 to the Form 10).
*10.2 First Amendment to the 364-day Facility, dated as of December 3, 1998
(incorporated by reference to Exhibit 10.2 to the Form 10).
</TABLE>
IV-1
<PAGE>
HUGHES ELECTRONICS CORPORATION
PART IV - Continued
ITEM 14. Exhibits, Financial Statement Schedule, and Reports on Forms 8-K
(continued)
<TABLE>
<CAPTION>
<S> <C>
Exhibit Page
Number Number
- ------ ------
*10.3 Revolving Credit Agreement (Multi-Year Facility), dated as of December
5, 1997 among Hughes Network Systems, Inc. to be renamed Hughes
Electronics Corporation, the Banks named therein and Bank of America
National Trust and Savings Association as Administrative Agent, Morgan
Guaranty Trust Company of New York, as Syndication Agent, Citicorp USA,
Inc. and The Chase Manhattan Bank as Documentation Agents (the "Multi-
Year Facility") (incorporated by reference to Exhibit 10.3 to the Form
10).
*10.4 First Amendment to the Multi-Year Facility, dated as of December 15,
1998 (incorporated by reference to Exhibit 10.4 to the Form 10).
**10.5 Second Amendment to the Multi-Year Facility, dated as of November 24, 1999.
**10.6 Credit Agreement, dated as of June 3, 1999 among SurFin Ltd., certain
designated subsidiaries, the Banks named therein and Citicorp USA, Inc.
as Administrative Agent, Bank of America NT & SA as Syndication Agent,
Deutsche Bank A.G., New York and Cayman Islands Branches, as
Documentation Agent, The Chase Manhattan Bank, the First National Bank
of Chicago, Morgan Guaranty Trust Company of New York and Westdeutsche
Landesbank Girozentrale, New York and Cayman Islands Branches, as
Senior Managing Agents.
**10.7 Revolving Credit Agreement (364-day Facility), dated as of November 24,
1999 among Hughes Electronics Corporation, the Banks named therein and
Bank of America, N.A. as Administrative Agent, Citicorp USA, Inc. as
Syndication Agent, Deutsche Bank A.G., New York Branch, as
Documentation Agent (the "Revolving Credit Agreement - 364-day
Facility").
**10.8 First Amendment to Revolving Credit Agreement - 364-day Facility, dated
as of December 31, 1999.
**10.9 Amended and Restated Revolving Credit Agreement (Multi-Year Facility),
dated as of November 24, 1999 among Hughes Electronics Corporation, the
Banks named therein and Bank of America, N.A. as Administrative Agent,
Morgan Guaranty Trust Company of New York as Syndication Agent,
Citicorp USA, Inc. and The Chase Manhattan Bank as Documentation Agents
(the "Revolving Credit Agreement - Multi-Year Facility").
**10.10 First Amendment to Revolving Credit Agreement - Multi-Year Facility,
dated as of December 31, 1999.
**10.11 Revolving Credit Agreement (Bridge Facility), dated as of November 24,
1999 among Hughes Electronics Corporation, the Banks named therein and
Bank of America, N.A. as Administrative Agent (the "Revolving Credit
Facility -Bridge Facility").
**10.12 First Amendment to Revolving Credit Agreement - Bridge Facility, dated
as of December 31, 1999.
*10.13 DBS Distribution Agreement between Hughes Communications Galaxy, Inc.
and National Rural Telecommunications Cooperative, dated April 10, 1992
(the "DBS Agreement") (incorporated by reference to Exhibit 10.5 to the
Form 10).+
*10.14 Addendum I to the DBS Agreement (incorporated by reference to Exhibit
10.6 to the Form 10).
</TABLE>
IV-2
<PAGE>
HUGHES ELECTRONICS CORPORATION
PART IV - Continued
ITEM 14. Exhibits, Financial Statement Schedule, and Reports on Forms 8-K
(continued)
<TABLE>
<CAPTION>
<S> <C>
Exhibit Page
Number Number
- ------ ------
*10.15 Amendment No. 1 to the DBS Agreement, dated May 11, 1992 (incorporated
by reference to Exhibit 10.7 to the Form 10).
*10.16 Amendment No. 2 to the DBS Agreement, dated May 26, 1992 (incorporated
by reference to Exhibit 10.8 to the Form 10).
*10.17 Amendment No. 3 to the DBS Agreement, Letter of Agreement, dated May
29, 1992 (incorporated by reference to Exhibit 10.9 to the Form 10).
*10.18 Amendment No. 4 to the DBS Agreement, dated December 1, 1992
(incorporated by reference to Exhibit 10.10 to the Form 10).
*10.19 Amendment No. 5 to the DBS Agreement, dated December 11, 1992
(incorporated by reference to Exhibit 10.11 to the Form 10).
*10.20 Amendment No. 6 to the DBS Agreement, dated December 23, 1992
(incorporated by reference to Exhibit 10.12 to the Form 10).
*10.21 Amendment No. 7 to the DBS Agreement, Letter of Agreement, dated July
9, 1993 (incorporated by reference to Exhibit 10.13 to the Form 10).
*10.22 Amendment No. 8 to the DBS Agreement, Letter of Agreement, dated
February 14, 1994 (incorporated by reference to Exhibit 10.14 to the
Form 10).+
*10.23 Amendment No. 9 to the DBS Agreement, Letter of Agreement, dated June
22, 1994 (incorporated by reference to Exhibit 10.15 to the Form 10).
*10.24 Loan Agreement, dated May 15, 1997, between Hughes Network Systems,
Inc. and PanAmSat (incorporated by reference to the Annual Report on
Form 10-K for the year ended December 31, 1997 of PanAmSat Corporation
(PanAmSat's "Form 10-K").
*10.25 First Amendment to Loan Agreement, dated December 23, 1997
(incorporated by reference to PanAmSat's Form 10-K).
*10.26 Subordination and Amendment Agreement, dated as of February 20, 1998,
among Hughes Electronics Corporation, PanAmSat and Citicorp USA Inc.
(incorporated by reference to PanAmSat's Form 10-K).
*10.27 Subordination Agreement, dated as of January 16, 1998, between Hughes
Electronics and PanAmSat (incorporated by reference to PanAmSat's Form
10-K).
*10.28 Credit Agreement, dated February 20, 1998, among PanAmSat, certain
lenders and Citicorp USA (incorporated by reference to PanAmSat's Form
10-K).
**27 Financial Data Schedule (for SEC information only). IV-8
</TABLE>
- --------------------------------
* Incorporated by reference.
** Filed herewith.
+ Confidential treatment received for certain portions of this exhibit
pursuant to Rule 406 promulgated under the Securities Act.
IV-3
<PAGE>
HUGHES ELECTRONICS CORPORATION
PART IV - Continued
ITEM 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K
(continued)
(b) Reports on Form 8-K
One report on Form 8-K, dated October 14, 1999 was filed during the quarter
ended December 31, 1999 reporting matters under Item 5, Other Events.
IV-4
<PAGE>
HUGHES ELECTRONICS CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Additions
Balance at charged to Additions Balance
beginning of costs and charged to at end
year expenses other accounts Deductions of year
------------- ----------- --------------- ---------- --------
<S> <C> <C> <C> <C> <C>
Description
- -----------
(Dollars in Millions)
For the Year Ended December 31, 1999
Allowances Deducted from Assets
Accounts and notes receivable (for
doubtful receivables) $(23.9) $(138.9) $(79.5) a $149.4 b $ (92.9)
Net investment in sales-type leases
(for doubtful receivables) (10.6) - - 0.3 b (10.3)
Inventories (principally for obsolescence
of service parts) (9.1) (110.4) - 6.0 c (113.5)
------ ------- ------ ------ -------
Total Allowances Deducted from Assets $(43.6) $(249.3) $(79.5) $155.7 $(216.7)
====== ======= ====== ====== =======
For the Year Ended December 31, 1998
Allowances Deducted from Assets
Accounts and notes receivable (for
doubtful receivables) $(15.1) $ (37.5) $(22.1) a $ 50.8 b $ (23.9)
Net investment in sales-type leases
(for doubtful receivables) (12.9) - - 2.3 b (10.6)
Inventories (principally for obsolescence
of service parts) (4.7) (6.4) - 2.0 c (9.1)
------ ------- ------ ------ -------
Total Allowances Deducted from Assets $(32.7) $ (43.9) $(22.1) $ 55.1 $ (43.6)
====== ======= ====== ====== =======
For the Year Ended December 31, 1997
Allowances Deducted from Assets
Accounts and notes receivable (for
doubtful receivables) $ (7.7) $ (19.4) $(24.2) a, d $36.2 b $ (15.1)
Net investment in sales-type leases
(for doubtful receivables) - - (13.4) d 0.5 b (12.9)
Inventories (principally for obsolescence
of service parts) (3.3) (1.6) - 0.2 c (4.7)
------ ------- ------ ------ -------
Total Allowances Deducted from Assets $(11.0) $ (21.0) $(37.6) $ 36.9 $ (32.7)
====== ======= ====== ====== =======
</TABLE>
- ----------------------
a. Primarily reflects the recovery of accounts previously written-off and
increases resulting from acquisitions.
b. Relates to accounts written-off.
c. Relates to obsolete parts written-off.
d. Resulting from the PanAmSat merger in May 1997, $1.0 million for allowance
for doubtful accounts and notes receivable and $13.4 million for allowance
for doubtful sales-type lease receivables were added.
Reference should be made to the Notes to Financial Statements.
IV-5
<PAGE>
HUGHES ELECTRONICS CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized.
HUGHES ELECTRONICS CORPORATION
-----------------------------
(Registrant)
Date: March 9, 2000 By
/s/MICHAEL T. SMITH
-------------------
(Michael T. Smith
Chairman of the Board of Directors
and Chief Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on this 9th day of March 2000 by the following
persons on behalf of the Registrant and in the capacities indicated.
<TABLE>
<S> <C> <C>
Signature Title
--------- -----
/s/MICHAEL T. SMITH Chairman of the Board of ) Principal
------------------- Directors and Chief ) Executive
(Michael T. Smith) Executive Officer ) Officer
/s/ROXANNE S. AUSTIN Senior Vice President and )
-------------------- Chief Financial Officer ) Principal
(Roxanne S. Austin) ) Financial
) Officers
/s/MARK A. MCEACHEN Vice President and )
------------------- Treasurer )
(Mark A. McEachen)
/s/MICHAEL J. GAINES Controller ) Principal
-------------------- Accounting
(Michael J. Gaines) Officer
/s/THOMAS E. EVERHART Director
---------------------
(Thomas E. Everhart)
/s/J. MICHAEL LOSH Director
------------------
(J. Michael Losh)
/s/HARRY J. PEARCE Director
------------------
(Harry J. Pearce)
/s/ECKHARD PFEIFFER Director
-------------------
(Eckhard Pfeiffer)
ALFRED C. SIKES Director
------------------
(Alfred C. Sikes)
/s/JOHN G. SMALE Director
----------------
(John G. Smale)
/s/JOHN F. SMITH JR. Director
--------------------
(John F. Smith Jr.)
/s/BERNEE D.L. STROM Director
--------------------
(Bernee D.L. Strom)
</TABLE>
IV-6
<PAGE>
EXHIBIT 2.5
PURCHASE AGREEMENT
BETWEEN
THE BOEING COMPANY,
HUGHES ELECTRONICS CORPORATION
AND
HUGHES TELECOMMUNICATIONS AND SPACE COMPANY
for the purchase and sale
of
the outstanding capital stock
of
HUGHES SPACE AND COMMUNICATIONS COMPANY
and certain additional outstanding capital stock
Dated as of January 13, 2000
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
Article I TRANSFER AND ASSUMPTION............................................................. 2
1.1 Transfer and Contribution of Assets.................................................. 2
1.2 Assumption of Liabilities............................................................ 2
1.3 Method of Transfer and Assumption.................................................... 3
1.4 Nonassignable Contracts.............................................................. 3
1.5 Other Agreements..................................................................... 4
Article II SALE AND PURCHASE OF SHARES......................................................... 4
2.1 Sale and Purchase of Shares.......................................................... 4
Article III PURCHASE PRICE AND PAYMENT........................................................... 4
3.1 Amount of Purchase Price............................................................. 4
3.2 Purchase Price Adjustment............................................................ 7
Article IV CLOSING AND TERMINATION............................................................. 9
4.1 Closing Date......................................................................... 9
4.2 Transactions on the Closing Date..................................................... 9
4.3 Termination of Agreement............................................................. 10
4.4 Procedure Upon Termination........................................................... 10
4.5 Effect of Termination................................................................ 11
Article V REPRESENTATIONS AND WARRANTIES OF HUGHES AND THE SELLER............................. 11
5.1 Organization and Good Standing....................................................... 11
5.2 Authorization of Agreement........................................................... 11
5.3 Capitalization....................................................................... 12
5.4 Subsidiaries and Equity Investments.................................................. 12
5.5 Corporate Records.................................................................... 13
5.6 Conflicts; Consents of Third Parties................................................. 13
5.7 Ownership of Additional Satellite Assets and Transfer of Shares;
Sufficiency of Assets................................................................ 14
5.8 Financial Statements................................................................. 14
5.9 No Undisclosed Liabilities........................................................... 15
5.10 Absence of Certain Developments...................................................... 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5.11 Taxes................................................................................... 16
5.12 Real Property........................................................................... 17
5.13 Tangible Personal Property.............................................................. 20
5.14 Intangible Property..................................................................... 20
5.15 Material Contracts...................................................................... 27
5.16 Employee Benefits....................................................................... 30
5.17 Labor................................................................................... 31
5.18 Litigation.............................................................................. 32
5.19 Compliance With Laws.................................................................... 32
5.20 Environmental Matters................................................................... 33
5.21 Insurance............................................................................... 35
5.22 Inventories; Receivables; Payables...................................................... 36
5.23 Intercompany Indebtedness............................................................... 37
5.24 United States Contracts................................................................. 37
5.25 Banks................................................................................... 38
5.26 Clearances.............................................................................. 38
5.27 Year 2000 Issues........................................................................ 38
5.28 Financial Advisors...................................................................... 39
5.29 Launch Service Agreements............................................................... 39
Article VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASER........................................ 39
6.1 Organization and Good Standing.......................................................... 39
6.2 Authorization of Agreement.............................................................. 39
6.3 Conflicts; Consents of Third Parties.................................................... 40
6.4 Litigation.............................................................................. 40
6.5 Investment Intention.................................................................... 40
6.6 Financial Capability.................................................................... 41
6.7 Financial Advisors...................................................................... 41
Article VII COVENANTS.............................................................................. 41
7.1 Access to Information................................................................... 41
7.2 Conduct of the Business Pending the Closing............................................. 42
7.3 Consents................................................................................ 45
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
7.4 Filings with Governmental Bodies........................................................ 45
7.5 Insurance............................................................................... 46
7.6 Novations and Other Transfers........................................................... 47
7.7 Other Actions........................................................................... 47
7.8 No Solicitation......................................................................... 48
7.9 Preservation of Records................................................................. 49
7.10 Publicity............................................................................... 49
7.11 Non-Competition Agreements.............................................................. 50
7.12 Guarantees and Letters of Credit........................................................ 52
7.13 Sublease for Shared Facilities.......................................................... 52
7.14 Guarantee of Performance................................................................ 52
7.15 Access.................................................................................. 53
7.16 Certain Notices......................................................................... 53
7.17 Preferred Provider...................................................................... 53
7.18 On Orbit Incentives..................................................................... 53
7.19 Thuraya................................................................................. 53
7.20 Spaceway................................................................................ 54
Article VIII CONDITIONS TO CLOSING................................................................. 54
8.1 Conditions Precedent to Obligations of Each Party....................................... 54
8.2 Conditions Precedent to Obligations of the Purchaser.................................... 55
8.3 Conditions Precedent to Obligations of the Seller....................................... 56
Article IX DOCUMENTS TO BE DELIVERED............................................................. 56
9.1 Documents to be Delivered by the Seller................................................. 56
9.2 Documents to be Delivered by the Purchaser.............................................. 57
Article X INDEMNIFICATION....................................................................... 57
10.1 Non-Income Tax Indemnification.......................................................... 57
10.2 Certain Limitations..................................................................... 59
10.3 Non-Income Tax Indemnification Procedures............................................... 59
10.4 Employee Benefits and Labor Indemnity................................................... 60
10.5 China Investigation..................................................................... 60
Article XI TAX MATTERS........................................................................... 63
11.1 Filing of Income Tax Returns; Payment of Income Taxes................................... 63
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
11.2 Indemnification for Income Taxes........................................................ 66
11.3 Refunds................................................................................. 67
11.4 Income Tax Contests..................................................................... 67
11.5 Cooperation and Exchange of Information................................................. 68
11.6 Resolution of Disputes.................................................................. 72
11.7 Payments................................................................................ 73
11.8 Existing Tax Allocation Agreements...................................................... 74
11.9 Section 338(h)(10) Election............................................................. 74
11.10 Transfer Taxes.......................................................................... 75
11.11 Sole Remedy............................................................................. 75
Article XII SURVIVAL.............................................................................. 75
12.1 Survival................................................................................ 75
Article XIII LIMITATION OF LIABILITY DISCLAIMER.................................................... 76
13.1 Liabilities............................................................................. 76
Article XIV MISCELLANEOUS......................................................................... 76
14.1 Certain Definitions..................................................................... 76
14.2 Interpretation.......................................................................... 91
14.3 Dispute Resolution...................................................................... 91
14.4 Expenses................................................................................ 92
14.5 Further Assurances...................................................................... 93
14.6 Submission to Jurisdiction; Consent to Service of Process............................... 93
14.7 Entire Agreement; Amendments and Waivers................................................ 93
14.8 Governing Law........................................................................... 93
14.9 Table of Contents and Headings.......................................................... 93
14.10 Notices................................................................................. 94
14.11 Severability............................................................................ 94
14.12 Binding Effect; Assignment.............................................................. 95
</TABLE>
iv
<PAGE>
Exhibits
- --------
EXHIBIT A Intellectual Property Agreement
EXHIBIT B Trademark and Trade Name License Agreement
EXHIBIT C Technical Services Agreement
EXHIBIT D United States Government Contract Agreement
EXHIBIT E Employee Matters Agreement
EXHIBIT F Information Technology Services Term Sheet
EXHIBIT G Transition Services Term Sheet
EXHIBIT H Newco Joint Venture Term Sheet
v
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of January 13, 2000 (the
"Agreement"), between HUGHES ELECTRONICS CORPORATION, a Delaware corporation
("Hughes"), HUGHES TELECOMMUNICATIONS AND SPACE COMPANY, a Delaware corporation
(the "Seller"), and THE BOEING COMPANY, a Delaware corporation (the
"Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller owns (i) all of the issued and outstanding shares
of common stock (the "Company Shares"), of HUGHES SPACE AND COMMUNICATIONS
COMPANY, a Delaware corporation (the "Company"), (ii) all of the issued and
outstanding shares of common stock (the "Spectrolab Shares"), of SPECTROLAB,
INC., a Delaware corporation ("Spectrolab"), and (iii) approximately 2.69% of
the issued and outstanding shares of common stock of ICO Holdings (the "ICO
Shares," and together with the Company Shares and the Spectrolab Shares, the
"Shares"); and
WHEREAS, the Company and its Subsidiaries are engaged in the business
of designing and building satellites for both commercial customers and
government agencies (the "Satellite Business");
WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, the Shares for the purchase price
and upon the terms and conditions hereinafter set forth;
WHEREAS, on or prior to the Closing Date, Hughes shall or shall cause
its appropriate Subsidiary to, assign, transfer, convey and deliver the
Additional Satellite Assets to the Company, and the Company shall assume the
Additional Satellite Liabilities in accordance with Article I hereof (the
"Additional Satellite Assets Transfer");
WHEREAS, on or prior to the Closing Date, the Seller shall cause its
appropriate Subsidiary to assign, transfer, convey and deliver the Excluded
Assets to Hughes or a Subsidiary of Hughes in accordance with Article I hereof
(the "Excluded Assets Transfer," and together with the Additional Satellite
Assets Transfer, the "Transfers");
WHEREAS, following the Transfers, the Purchaser shall purchase, and
the Seller shall sell, the Shares upon the terms and conditions hereinafter set
forth;
WHEREAS, the parties hereto also intend to enter into certain
agreements governing their relationships after the Closing Date as contemplated
hereby; and
<PAGE>
WHEREAS, certain capitalized terms used in this Agreement are defined
in Section 14.1;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE I
TRANSFER AND ASSUMPTION
1.1 Transfer and Contribution of Assets.
-----------------------------------
(a) Subject to the terms and conditions of this Agreement, on or
prior to the Closing Date, Hughes shall, or shall cause its appropriate
Subsidiary to, transfer to the Company (or at the Company's election, a
Subsidiary of the Company) all of Hughes' (or its Subsidiary's) right, title and
interest in and to the Additional Satellite Assets.
(b) Subject to the terms and conditions of this Agreement, on or
prior to the Closing Date, the Seller shall cause its appropriate Subsidiary to
transfer to Hughes (or at Hughes' election, a Subsidiary of Hughes) all of such
Subsidiary's right, title and interest in and to the Excluded Assets.
(c) Each of the parties hereto acknowledges and agrees that as
between and among Hughes and its Affiliates, and the Purchaser and its
Affiliates, the Additional Satellite Assets and the Excluded Assets will each be
transferred "as is where is" and, except as expressly provided herein, that each
Transferor makes and has made no warranty, either express or implied, including
warranties of merchantability or fitness for a particular purpose, with respect
to any Additional Satellite Assets or Excluded Assets, as the case may be.
(d) Each of the representations, warranties, covenants and
undertakings of the Seller or Hughes contained herein shall be given or made as
if, and on the basis that, the Transfers had occurred prior to all dates
relevant therein. Any references to the Company and its Subsidiaries in any such
representations, warranties, covenants and undertakings shall be deemed to be a
reference to the Company and its Subsidiaries after giving effect to the
Transfers unless the context clearly indicates otherwise.
1.2 Assumption of Liabilities. Simultaneously with the actions
-------------------------
referred to in Section 1.1(a), the Company, in partial consideration for the
Transfer of the Additional Satellite Assets, shall assume and on a timely basis
pay, satisfy and discharge (or cause its Subsidiaries to pay, satisfy and
discharge) in accordance with their terms any and all Additional Satellite
Liabilities.
2
<PAGE>
1.3 Method of Transfer and Assumption. The parties hereto
---------------------------------
acknowledge and agree that (i) any Transfer shall be effected by delivery by the
Transferor to the Transferee of (A) with respect to Excluded Assets which are
evidenced by capital stock certificates or similar instruments, certificates
duly endorsed in blank or accompanied by stock powers or other instruments of
assignment executed in blank, (B) with respect to any real property interest
and/or any improvements thereon, a grant deed conveying the property on an "as
is where is" basis, and (C) with respect to all other Additional Satellite
Assets or Excluded Assets, as the case may be, such good and sufficient
instruments of contribution, assignment, conveyance, transfer and delivery, in
form and substance reasonably satisfactory to the Purchaser and to the
appropriate Transferor and Transferee, as shall be necessary to vest in such
Transferee all of the Transferor's right, title and interest in and to any such
Assets and (ii) the assumption of the Additional Satellite Liabilities
contemplated pursuant to Section 1.2 hereof shall be effected by delivery, by
the party assuming such Liability to the party which is the obligor under such
Liability, of such good and sufficient instruments of assumption, in form and
substance reasonably satisfactory to the Purchaser and to such two parties, as
shall be necessary for the assumption of such Additional Satellite Liabilities.
Each party hereto also agrees to deliver to each other party hereto such other
documents, instruments, certificates and agreements as may be reasonably
requested by any such other party hereto in connection with the transactions
contemplated hereby and to take such further action as may be reasonably
necessary to carry out the provisions hereof. Notwithstanding any provision to
the contrary contained in this Agreement, in the event and to the extent that
there is any conflict between the provisions of this Agreement and the
provisions of any of the instruments of transfer or assumption referred to in
this Section 1.3, the provisions of this Agreement shall prevail and govern. To
the extent that any Transfers contemplated hereby are not consummated on or
prior to the Closing Date, the parties hereto covenant and agree to take all
actions reasonably necessary or appropriate to complete such transfers promptly
following the Closing Date.
1.4 Nonassignable Contracts. Anything contained herein to the
-----------------------
contrary notwithstanding, but subject to Sections 7.3 and 8.2(g), this Agreement
shall not constitute an agreement to assign any Contract or Asset if an
assignment or attempted assignment of the same without the Consent of another
Person would constitute a breach thereof or entitle any other party thereto to
terminate, or accelerate or assert additional material rights thereunder. If any
such Consent is not obtained or if an attempted assignment would be ineffective
or have such other effect, then (a) the party purporting to make such transfer
(the "Intended Transferor") shall (i) use its commercially reasonable efforts to
provide or cause to be provided to the party entitled to the benefits of such
purported transfer (the "Intended Transferee"), to the extent permitted by Law,
the benefits of any such Contract or Asset, (ii) cooperate in any lawful
arrangements designed to provide such benefits to the Intended Transferee, (iii)
enforce, at the request of and for the account of the Intended Transferee, any
rights of the Intended Transferor arising from such Contract or Asset, including
the right to elect to terminate any such Contract in accordance with the terms
thereof upon the advice of the Intended Transferee, and (iv) promptly pay or
cause to be paid to the Intended Transferee when received all
3
<PAGE>
moneys received by the Intended Transferor with respect to any such Contract or
Asset and (b) in consideration for the matters described in clause (a) above the
Intended Transferee shall pay, perform and discharge on behalf of the Intended
Transferor all of the Intended Transferor's Liabilities thereunder in a timely
manner and in accordance with the terms thereof. In addition, the Intended
Transferor shall take such other actions as may reasonably be requested by the
Intended Transferee in order to place the Intended Transferee, insofar as
reasonably possible, in the same position as if such Contract or Asset had been
transferred as contemplated hereby and so that all the benefits and burdens
relating thereto, including possession, use, risk of loss, potential for gain
and dominion, control and command, shall inure to the Intended Transferee. The
foregoing arrangements shall be reasonably satisfactory to the Intended
Transferee. If and when such Consents are obtained, the transfer of the
applicable Contract or Asset shall be effected in accordance with the terms of
this Agreement.
1.5 Other Agreements. On the Closing Date, the parties hereto shall
----------------
enter into agreements embodying certain relationships between the Company and
the Satellite Business, on the one hand, and Hughes and its remaining
businesses, on the other hand, after the Closing Date. These agreements will be
in the form set forth in Exhibits A and B with respect to Intellectual Property,
Exhibit C with respect to the provision of certain technical services, Exhibit D
with respect to certain United States Contract matters and Exhibit E with
respect to employee matters. In addition, the parties hereto agree to enter
into definitive agreements on the Closing Date that incorporate the agreements
with respect to the treatment of information technology services, the provisions
of certain transitional services and the establishment of a joint venture
between the parties regarding research and development activities on the terms
set forth on Exhibit F, G and H, respectively (Exhibits A through H,
collectively, the "Definitive Agreements").
ARTICLE II
SALE AND PURCHASE OF SHARES
2.1 Sale and Purchase of Shares. Upon the terms and subject to the
---------------------------
conditions contained herein, on the Closing Date and after the completion of the
Transfers, the Seller shall sell, assign, transfer, convey and deliver to the
Purchaser, and the Purchaser shall purchase, acquire and accept from the Seller,
the Shares free and clear of any Liens.
ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 Amount of Purchase Price. (a) The aggregate purchase price for
------------------------
the Shares shall be $3.75 billion, payable on the Closing Date by wire transfer
in immediately available funds to an account designated by the Seller, subject
to adjustment
4
<PAGE>
pursuant to this Section and Section 3.2 (as adjusted, the "Purchase Price").
Five days prior to the Closing Date, the Seller will deliver to the Purchaser an
estimate of the Closing Net Assets, which shall be the net assets as of the end
of the most recent accounting month for which internal financial statements are
available determined on a basis consistent with the methodology to be employed
in the calculation of the Closing Net Assets as set forth below (the "Estimated
Closing Net Assets"). To the extent that the Estimated Closing Net Assets are
greater than $1,149.0 million (the "Target Amount"), the Purchase Price to be
remitted at Closing will be increased by such excess. To the extent that the
Estimated Closing Net Assets are less than the Target Amount, the Purchase Price
to be remitted at Closing will be decreased by such shortfall. Subsequent to
Closing, the provisions of Section 3.2 will be applied.
(b) If at or prior to the Closing there shall not have occurred an
ICO Pre-Closing Resolution, then an amount equal to 40% of the ICO Contract
Estimated Net Asset Value shall be withheld from the Purchase Price and paid
into escrow. Such escrow shall be established with a nationally recognized
banking institution (as escrow agent) pursuant to an escrow agreement (the
"Escrow Agreement") which embodies the terms set forth below together with such
other terms and conditions as are agreed by Seller and Purchaser. No escrow
shall be established and no withholding of a portion of the Purchase Price shall
occur if an ICO Pre-Closing Resolution shall have occurred prior to Closing.
(i) The Escrow Agreement shall provide that the funds deposited
therein (together with interest earned thereon) shall be released by the
escrow agent as follows:
(A) upon the occurrence of an ICO Post-Closing Resolution which
does not involve an ICO Contract Material Modification, the entire
escrow shall be paid to Seller;
(B) upon the occurrence of an ICO Post-Closing Resolution which
does involve an ICO Contract Material Modification, the ICO Escrow
Amount shall be paid to Seller less such amount, if any (which amount
shall in no case be more than $25 million) as shall be equal to (A)
40% multiplied by the excess, if any, of (B) any reduction in the net
carrying value of assets (i.e., less any liabilities or reserves)
relating to the ICO Contract resulting from the ICO Contract Material
Modification over (C) the present value (discounted at a rate equal to
7.5% per annum) of any incremental net profit that may be received by
Purchaser and its Affiliates as a result of all other agreements or
understandings entered into after the Closing, or which are
modifications made after the Closing to agreements or understandings
existing at the Closing, between Purchaser or its Affiliates and ICO
and its Affiliates (such as, but not limited to, contracts to provide
launch services, but excluding contracts described in clauses (ii)(x)
and (y) of the definition of ICO Post-Closing Resolution), whether or
not the value thereof is recorded as an asset for accounting purposes.
5
<PAGE>
Any remaining amount of the ICO Escrow Amount shall be paid to
Purchaser. Each of Seller and Purchaser shall receive a pro rata
portion of the interest earned on the entire escrow fund;
(C) upon the entry of a final non-appealable order of a
bankruptcy court (or the equivalent): (a) converting the ICO
bankruptcy case to a liquidation case; (b) dismissing the ICO
bankruptcy without leave on the part of ICO to commence a new
bankruptcy case; or (c) confirming a plan for the complete liquidation
of the assets of ICO; the entire escrow shall be paid to Purchaser,
provided that if the sum of the payments and liquidating distributions
paid to the Company or its Affiliates after the Closing which are
attributable to the ICO Contract Closing Net Asset Value exceeds 60%
of the ICO Contract Closing Net Asset Value, then a portion of the ICO
Escrow Amount equal to the dollar amount of such excess, together with
a pro rata portion of the interest earned on the entire escrow fund,
shall be paid to Seller; or
(D) upon the expiration of 24 months following the last day of
the month in which the Closing occurs, if no ICO Post-Closing
Resolution shall have occurred, the entire escrow shall be paid to
Purchaser, provided that if the amounts, if any, paid to the Company
or its Affiliates after the Closing which are attributable to the ICO
Contract Closing Net Asset Value exceed 60% of the ICO Contract
Closing Net Asset Value, then a portion of the ICO Escrow Amount equal
to the dollar amount of such excess, together with a pro rata portion
of the interest earned on the entire escrow fund, shall be paid to
Seller.
(ii) The Escrow Agreement also shall provide that if as a result of
the resolution of all matters subject to the purchase price adjustment
provisions set forth in Section 3.2 hereof (a) the ICO Contract Closing Net
Asset Value is determined to be less than the ICO Contract Estimated Net
Asset Value (the amount of any such reduction being the "ICO Closing
Downward Adjustment"), a portion of the amount initially deposited in
escrow equal to 40% of the ICO Closing Downward Adjustment shall be paid to
Seller together with a pro rata portion of the interest earned on the
entire escrow funds to the date of such payment, or (b) the ICO Contract
Closing Net Asset Value is determined to be greater than the ICO Contract
Estimated Net Asset Value (the amount of any such increase being the "ICO
Closing Upward Adjustment"), Seller shall deposit into the escrow fund an
amount equal to 40% of the ICO Closing Upward Adjustment. The Escrow
Agreement further shall provide that if in connection with the purchase
price adjustment provisions in Section 3.2 there shall exist a dispute
between Seller and Purchaser regarding an asset or liability amount
relating to the ICO Contract, then no payments shall be made from the
escrow funds to any party (even if an ICO Post-Closing Resolution shall
have occurred) until the ICO Contract Closing Net Asset Value is determined
and the adjustments to the amount of the escrow fund contemplated in this
paragraph have been made. The
6
<PAGE>
amount (without giving effect to interest earned) which is to constitute
the escrow fund, after giving effect to any adjustment contemplated by this
Section 3.1(b)(ii), is referred to as the "ICO Escrow Amount."
3.2 Purchase Price Adjustment.
-------------------------
(a) Within 60 days after the Closing Date, the Seller shall prepare
and deliver to the Purchaser a statement of assets and liabilities of the
Company as of the close of business on the Business Day immediately preceding
the Closing Date. This statement will take into account the Spectrolab Shares
and the ICO Shares and will give effect to the Transfers contemplated by Article
I hereof and will be in a format comparable to the unaudited combined statement
of assets and liabilities reflected on Schedule 5.8(a) (such statement, the
"Closing Statement of Assets and Liabilities"). Except as identified on Schedule
3.2(c) or Schedule 5.8(b), the Closing Statement of Assets and Liabilities will
be prepared in accordance with GAAP consistently applied using the same
accounting methods, policies, practices and procedures, with consistent
classifications and estimation methodologies as were used in the preparation of
the Interim Statement of Assets and Liabilities, and will not include any
changes in assets or liabilities as a result of purchase accounting adjustments
arising from or resulting as a consequence of the transactions contemplated
hereby. In the event that the Business Day immediately preceding the Closing
Date does not occur at a financial week or month end for accounting purposes,
the parties shall agree on mutually acceptable roll forward or roll back
procedures.
(b) The Closing Statement of Assets and Liabilities shall be
accompanied by an additional schedule of information (the "Closing Statement of
Net Assets") which will identify the amounts to be eliminated from the Closing
Statement of Assets and Liabilities to arrive at amounts to be included in the
purchase price adjustment calculation. The first column of the Closing Statement
of Net Assets shall consist of the balances from the Closing Statement of Assets
and Liabilities. The second column will detail the amounts to be eliminated from
the Closing Statement of Assets and Liabilities to arrive at amounts to be
included in the determination of the purchase price adjustment calculation.
Balances related to the following items will be excluded from all aspects of the
purchase price adjustment calculation: the ICO Shares, all pension related
accounts, all OPEB related accounts, all other employee related liabilities
carried at the Hughes corporate level, all income tax accounts, any reserve for
the China Investigation and goodwill. After the elimination of these items, the
third column will include the remaining asset and liability balances to be used
to determine the Closing Net Assets.
(c) The parties hereto agree that the purchase price adjustment is
not intended to permit the introduction of different accounting methods,
policies, practices, procedures, classifications or estimation methodologies for
purposes of determining the asset and liability balances from those used in the
preparation of the Interim Statement of Assets and Liabilities unless required
by GAAP. Further, the purchase price adjustment shall treat certain items in the
manner specified on Schedule 3.2(c) and Schedule 5.8(b). Each party shall
provide the other party and its representatives with reasonable access to
7
<PAGE>
books and records and relevant personnel during the preparation of the Closing
Statement of Net Assets referred to in paragraph (b) above and the resolution of
any disputes that may arise under this Section 3.2.
(d) If the Purchaser disagrees with the determination of the
Closing Net Assets as shown on the Closing Statement of Net Assets, the
Purchaser shall notify the Seller in writing of such disagreement within 60 days
after delivery of the Closing Statement of Net Assets, which notice shall
describe the nature of any such disagreement in reasonable detail, identify the
specific items involved and the dollar amount of each such disagreement. The
Purchaser shall provide reasonable supporting documentation for each such
disagreement no later than three days after delivery of the notice. After the
end of such 60-day period, the Purchaser may not introduce additional
disagreements with respect to any item in the Closing Statement of Net Assets or
increase the amount of any disagreement, and any item not so identified shall be
deemed to be agreed to by the Purchaser and will be final and binding upon the
parties. Similarly, a disagreement by the Purchaser does not provide any right
to the Seller to introduce any changes to net assets not directly related to the
disputed item. During the 60-day period of its review, the Purchaser shall have
reasonable access to any documents, schedules or workpapers used in the
preparation of the Closing Statement of Net Assets.
(e) The Purchaser and the Seller agree to negotiate in good faith
to resolve any such disagreement and any resolution agreed to in writing by the
Purchaser and the Seller shall be final and binding upon the parties. If the
Purchaser and the Seller are unable to resolve all disagreements properly
identified by the Purchaser pursuant to Section 3.2(d) within 60 days after
delivery to Seller of written notice of such disagreement, then the disputed
matters shall be referred to the Chief Financial Officers of the respective
businesses for resolution. If the Chief Financial Officers are unable to resolve
all disagreements within 30 days, then, within 30 days thereafter, the Purchaser
and the Seller shall jointly select an arbiter from one of the "Big 5"
accounting firms that is not the independent auditor of either the Purchaser or
the Seller; if the Purchaser and the Seller are unable to select such an arbiter
within such time period, the American Arbitration Association shall make such
selection (the person so selected shall be referred to herein as the "Accounting
Arbitrator"). The Accounting Arbitrator so selected will only consider those
items and amounts set forth in the Closing Statement of Net Assets as to which
the Purchaser and the Seller have disagreed within the time periods and on the
terms specified above and must resolve the matter in accordance with the terms
and provisions of the Agreement. The Accounting Arbitrator shall deliver to the
Purchaser and the Seller, as promptly as practicable and in any event within 180
days after his or her appointment, a written report setting forth the resolution
of any such disagreement determined in accordance with the terms of the
Agreement. The Accounting Arbitrator shall select as a resolution the position
of either the Purchaser or the Seller for each item of disagreement (based
solely on presentations and supporting material provided by the parties and not
pursuant to any independent review) and may not impose an alternative
resolution. Such report shall be final and binding upon the Purchaser and the
Seller. The
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fees, expenses and costs of the Accounting Arbitrator shall be borne one-half by
the Purchaser and one-half by the Seller.
(f) If the Closing Net Assets as finally determined in accordance
with this Section 3.2 are less than the Estimated Closing Net Assets, the
Purchase Price shall be decreased on a dollar for dollar basis by the amount of
such shortfall, and if the Closing Net Assets are greater than the Estimated
Closing Net Assets, the Purchase Price shall be increased on a dollar for dollar
basis by the amount of such excess.
(g) If any adjustment under this Section 3.2 results in a reduction
in the Purchase Price, the Seller shall pay to the Purchaser the amount of such
reduction, and if any adjustment results in an increase in the Purchase Price,
the Purchaser shall pay to the Seller the amount of such increase, in each case,
by wire transfer of immediately available funds to an account designated by the
party receiving payment within five Business Days after the final determination
of the amount of such reduction or increase in Purchase Price, plus interest on
the amount of such reduction or increase from the Closing Date to the date of
such payment thereof at the per annum rate equal to the rate announced by
Citibank, N.A. in the City of New York as its base rate in effect on the Closing
Date.
ARTICLE IV
CLOSING AND TERMINATION
4.1 Closing Date. Subject to the satisfaction of the conditions set
------------
forth in Article VIII hereof (or the waiver thereof by the party entitled to
waive that condition), the closing of the Transfers and the subsequent sale and
purchase of the Shares provided for in Sections 1.1(a), 1.1(b) and 2.1 hereof
(the "Closing") shall take place at 10:00 a.m., at the offices of Gibson, Dunn
and Crutcher LLP, located at 333 South Grand Avenue, Los Angeles, California (or
at such other place as the parties may designate in writing) no later than five
Business Days after the satisfaction or waiver of the conditions set forth in
Section 8.1(a) and (b), and if the other closing conditions contained in Article
VIII are not then satisfied or waived then on such date as all such conditions
are satisfied or waived, or on such other date as the Seller and the Purchaser
may designate in writing; provided that the Seller may elect to close the
--------
Transfers at an earlier date or a different location in its sole discretion.
The date on which the Closing shall be held is referred to in this Agreement as
the "Closing Date."
4.2 Transactions on the Closing Date.
--------------------------------
(a) At the Closing, the Seller shall deliver to the Purchaser each
of the certificates and other documents contemplated by Section 9.1 hereof.
(b) At the Closing, the Purchaser shall deliver to the Seller (i)
each of the certificates and other documents contemplated by Section 9.2 hereof
and (ii) $3.75
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billion (as adjusted pursuant to Section 3.1) by wire transfer in immediately
available funds to the account or accounts designated by the Seller.
4.3 Termination of Agreement. This Agreement may be terminated prior
------------------------
to the Closing as follows:
(a) At the election of the Seller or the Purchaser on or after
October 31, 2000, if the Closing shall not have occurred by the close of
business on such date, provided that the terminating party is not in default in
any material respect of any of its covenants or other obligations hereunder;
(b) By mutual written consent of the Seller and the Purchaser;
(c) By the Seller or the Purchaser if there shall be in effect a
final nonappealable Order of a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby; it being agreed that the parties hereto shall
promptly appeal any adverse determination which is not nonappealable (and pursue
such appeal with reasonable diligence);
(d) By the Purchaser, if there shall have been a breach in any
material respect of any of the representations, warranties, covenants or
agreements on the part of the Seller set forth in this Agreement and such breach
has not been cured by the Seller within thirty days after receipt of notice of
such breach, and the failure of the Seller to have cured such breach, would
reasonably be expected to have a Material Adverse Effect; or
(e) By the Seller, if there shall have been a breach in any
material respect of any of the representations, warranties, covenants or
agreements on the part of the Purchaser set forth in this Agreement and such
breach has not been cured by the Purchaser within thirty days after receipt of
notice of such breach and the failure of the Purchaser to have cured such breach
would reasonably be expected to materially hinder or materially delay the
Closing or the ability of the Purchaser to comply with its obligations hereunder
or under the Definitive Agreements.
Notwithstanding the foregoing, no party shall be entitled to terminate
this Agreement pursuant to this Section 4.3, if such party's intentional breach
of this Agreement has prevented the satisfaction of a condition. Any
termination pursuant to this Section 4.3 shall be effected by a written
instrument signed by the terminating party or parties, which instrument shall
specify the section hereof pursuant to which this Agreement is being terminated.
4.4 Procedure Upon Termination. In the event of termination by the
--------------------------
Purchaser or the Seller, or both, pursuant to Section 4.3 hereof, written notice
thereof shall forthwith be given to the other party, and this Agreement shall
terminate and the Transfers and the purchase of the Shares hereunder shall be
abandoned, without further
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action by the Purchaser or the Seller. If this Agreement is terminated as
provided herein, each party shall redeliver all documents, work papers and other
materials of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same.
4.5 Effect of Termination. In the event that this Agreement is
---------------------
validly terminated as provided herein, then each of the parties shall be
relieved of its duties and obligations arising under this Agreement after the
date of such termination and such termination shall be without liability to the
Purchaser, the Company or the Seller; provided that the obligations of the
--------
parties set forth in Sections 4.4, 7.1, 7.10, 14.4, 14.6, 14.8 and 14.3 (but
only to the extent a dispute exists concerning the foregoing sections or the
right to validly terminate this Agreement) hereof shall survive any such
termination and shall be enforceable hereunder; and provided, further, that
-------- -------
nothing in this Section 4.5 shall relieve the Purchaser or the Seller of any
liability for a breach of this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HUGHES AND THE SELLER
Each of Hughes and the Seller jointly and severally represents and
warrants to the Purchaser that:
5.1 Organization and Good Standing. Each of Hughes, the Seller and
------------------------------
the Company is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now conducted. The Company is duly qualified or
authorized to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction in which it owns or leases real property and each
other jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, with such exceptions as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
5.2 Authorization of Agreement. Each of Hughes, the Seller and the
--------------------------
Company has all requisite power, authority and legal capacity to execute and
deliver this Agreement and the Definitive Agreements to which it is a party, as
the case may be, and each other agreement, document, or instrument or
certificate to be executed by the Seller or the Company in connection with the
consummation of the transactions contemplated by this Agreement (such other
agreements, documents, instruments or certificates, together with this Agreement
and such Definitive Agreements, are collectively referred to herein as the
"Seller Documents"), and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement has been, and of each of
the other Seller Documents will be at or prior to Closing, and the performance
of Hughes', the Seller's and the Company's obligations, as the case may be,
hereunder and thereunder have been duly authorized by all necessary corporate
action by each of the
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boards of directors and the stockholders (if necessary) of Hughes, the Seller
and the Company, and no other corporate proceedings on the part of Hughes, the
Seller or the Company are necessary to authorize such execution, delivery and
performance. This Agreement has been, and each of the other Seller Documents
will be at or prior to the Closing, duly and validly executed and delivered by
each of Hughes, the Seller and the Company (as applicable) and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each of the other Seller Documents when so
executed and delivered will constitute, legal, valid and binding obligations of
Hughes, the Seller or the Company, as the case may be, enforceable against
Hughes, the Seller or the Company, as the case may be, in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
5.3 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of 1,000
shares of common stock, no par value (the "Common Stock"). As of the date
hereof, there are 1,000 shares of Common Stock issued and outstanding and no
shares of Common Stock are held by the Company as treasury stock. All of the
issued and outstanding shares of Common Stock are owned by the Seller free and
clear of any and all Liens and were duly authorized for issuance and are validly
issued, fully paid and non-assessable.
(b) There are no existing options, warrants, calls, rights,
commitments or other agreements of any character to which the Seller or the
Company is a party requiring, and there are no securities of the Company
outstanding which upon conversion or exchange would require, the issuance, sale
or transfer of any additional shares of Common Stock of the Company or other
securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase Common Stock of the Company. Neither the Seller nor
the Company is a party to any voting trust or other voting agreement with
respect to any of the shares of Common Stock of the Company or to any agreement
relating to the issuance, sale, redemption, transfer or other disposition of the
Common Stock of the Company.
5.4 Subsidiaries and Equity Investments.
-----------------------------------
(a) Schedule 5.4 hereto sets forth as of the date hereof (i) the
name of each direct or indirect Subsidiary of the Company, (ii) the name of each
corporation, partnership, joint venture or other entity (other than the
Subsidiaries) in which the Company has, or pursuant to any agreement has the
right to acquire at any time by any means, directly or indirectly, an equity
interest or investment and (iii) in the case of each of the entities described
in clause (i) above, (A) the jurisdiction of incorporation or organization, (B)
the authorized capitalization thereof and (C) the share ownership of
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<PAGE>
each such entity. The outstanding shares of Capital Stock of each such
Subsidiary are validly issued, fully paid and non-assessable, and all such
shares or other equity interests represented as being owned by the Company are
owned by it free and clear of any and all Liens (other than Permitted
Exceptions). No shares of Capital Stock are held by any Subsidiary of the
Company as treasury stock. There is no existing option, warrant, call,
commitment or agreement to which any such Subsidiary is a party requiring, and
there are no convertible securities of any such Subsidiary outstanding which
upon conversion would require, the issuance of any additional Capital Stock of
any such Subsidiary or other securities convertible into Capital Stock of any
such Subsidiary. The Seller does not, directly or indirectly, own any Capital
Stock or other ownership interest in any corporation, partnership, joint venture
or other entity that is engaged in the Satellite Business, other than the
capital stock represented by the Shares and as listed on Schedule 5.4 hereto.
Neither the Seller nor the Company nor any of the Company's Subsidiaries is a
party to any Contract, other than this Agreement, relating to the purchase of
any interest in, or the obligation to invest in any such entity.
(b) Each Subsidiary of the Company is a duly organized and validly
existing corporation or other entity in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
own its properties and assets and to conduct its business as now conducted.
Each such Subsidiary is duly qualified to do business and is in good standing
under the laws of (i) each jurisdiction in which it owns or leases real property
and (ii) each other jurisdiction in which the conduct of its business or the
ownership of its assets requires such qualification, in each case, with such
exceptions as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
5.5 Corporate Records.
-----------------
(a) The Seller has delivered or made available to the Purchaser
true, correct and complete copies of the certificates of incorporation and by-
laws or comparable organizational documents of the Company and each of its
Subsidiaries.
(b) The minute books of the Company and each of its Subsidiaries
previously made available to the Purchaser contain complete and accurate records
of all meetings and accurately reflect all other corporate action of the
stockholders and board of directors (including committees thereof) of the
Company and each of its Subsidiaries. The stock certificate books and stock
transfer ledgers of the Company and each of its Subsidiaries previously made
available to the Purchaser are true, correct and complete.
5.6 Conflicts; Consents of Third Parties.
------------------------------------
(a) Except as set forth on Schedule 5.6(a), none of the execution
and delivery by the Seller and the Company of this Agreement and the other
Seller Documents, the consummation of the transactions contemplated hereby or
thereby, or the compliance by the Seller and the Company with any of the
provisions hereof or thereof will, subject to receiving the consents referred to
in Section 5.6(b), (i) conflict with, or
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<PAGE>
result in the breach of, any provision of the certificate of incorporation or
by-laws or comparable organizational documents of the Company or any of its
Subsidiaries; (ii) conflict with, violate, result in the breach or termination
of, or entitle any other party thereto to terminate, or accelerate or assert
additional material rights under, any material Permit or Contract to which the
Company or any of its Subsidiaries is a party or by which any of them or any of
their respective properties or Assets is bound; (iii) conflict with or violate
any Law of any Governmental Body by which the Company or any of its Subsidiaries
is bound; or (iv) result in the creation of any Lien (other than Permitted
Exceptions) upon the properties or Assets of the Company or any of its
Subsidiaries except, in the case of clauses (ii), (iii) and (iv), for such
conflicts, violations, breaches, defaults or Liens as would not have,
individually or in the aggregate, a Material Adverse Effect.
(b) Except for the novation of any United States Contract, filings
as may be required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and the rules and regulations promulgated thereunder (the "HSR Act"), the
laws of the European Union or similar Governmental Bodies and except as
otherwise set forth on Schedule 5.6(b), no Consent of any Person or Governmental
Body is required on the part of the Seller, the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement or
any of the other Seller Documents, or the compliance by the Seller or the
Company, as the case may be, with any of the provisions hereof or thereof, other
than Consents which have been obtained, or which if not obtained, would not
have, individually or in the aggregate, a Material Adverse Effect.
5.7 Ownership of Additional Satellite Assets and Transfer of Shares;
----------------------------------------------------------------
Sufficiency of Assets.
- ---------------------
(a) The Seller has, or the Company or a Subsidiary thereof will
have at the Closing Date, good and valid title to all of the Additional
Satellite Assets, free and clear of any and all Liens (other than Permitted
Exceptions). The delivery of the Shares to the Purchaser as contemplated by
Section 2.1 hereof shall convey to the Purchaser good and valid title to such
Shares, free and clear of any and all Liens.
(b) Following the Closing and after giving effect to the
transactions contemplated hereby, the Purchaser, the Company or the Company's
Subsidiaries will own or have contractual rights to use all of the Assets owned
by Hughes or any Subsidiary of Hughes and used or held for use by any of them
primarily in connection with the Satellite Business, or which are necessary for
the conduct of such business as presently conducted. Such Assets are sufficient
for the conduct of the Satellite Business, as currently conducted.
5.8 Financial Statements. The Seller has delivered to the Purchaser
--------------------
copies of (i) the unaudited combined statements of assets and liabilities of the
Company as of December 31, 1997 and 1998 and the related unaudited combined
statements of revenues, costs and expenses of the Company for the years then
ended and (ii) the unaudited combined statement of assets and liabilities of the
Company as of September 30, 1999
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<PAGE>
and the related unaudited combined statement of revenues, costs and expenses of
the Company for the nine month period then ended (such unaudited statements in
paragraphs (i) and (ii) are referred to herein as the "Financial Statements").
Except as set forth on Schedule 5.8(b), the Financial Statements (x) have been
prepared in accordance with GAAP applied consistently with the accounting
principles used in the preparation of the audited financial statements of
Hughes, (y) take into account the Spectrolab Shares and the ICO Shares and (z)
fairly present on a pro forma basis the financial position of the Company and
its Subsidiaries after giving effect to the Transfers.
For the purposes hereof the unaudited combined statement of assets and
liabilities of the Company as of September 30, 1999 is referred to as the
"Interim Statement of Assets and Liabilities" and September 30, 1999 is referred
to as the "Interim Date."
5.9 No Undisclosed Liabilities. Except as set forth on Schedule 5.9,
--------------------------
the Company has no material Liabilities of any kind (whether accrued, absolute,
contingent or otherwise, and whether due or to become due) that would have been
required to be reflected in or reserved against in the Interim Statement of
Assets and Liabilities in accordance with the accounting principles detailed on
Schedule 5.8(b).
5.10 Absence of Certain Developments. Except as expressly
-------------------------------
contemplated by this Agreement or as set forth on Schedule 5.10, since the
Interim Date:
(a) there has not been any Material Adverse Change nor has there
occurred any event which is reasonably likely to result in a Material Adverse
Change;
(b) there has not been as of the date hereof any damage,
destruction or loss, including condemnation or casualty, whether or not covered
by insurance, with respect to the property and assets of the Company or any of
its Subsidiaries having a replacement cost of more than $1,000,000 for any
single loss or $5,000,000 for all such losses and there has not been any such
damage, destruction or Loss not covered by insurance having a replacement cost
of more than $5,000,000 for any single loss or $15,000,000 for all such Losses;
(c) there has not been any declaration, setting aside or payment of
any dividend or other distribution in respect of any Capital Stock of the
Company or its Subsidiaries or repurchase, redemption or other acquisition by
the Seller or the Company or any of its Subsidiaries of any outstanding Capital
Stock of the Company or any of its Subsidiaries;
(d) neither the Company nor any of its Subsidiaries has entered
into or modified any employment, severance, termination, retention or similar
agreements or arrangements with, or granted any bonuses, salary increases,
severance or termination pay to, or otherwise increased the compensation or
benefits of, any officer, director, consultant or employee other than increases
in salary, compensation or benefits of employees other than officers of the
Company or its Subsidiaries granted in the ordinary
15
<PAGE>
course of business, except as may be required by applicable Law or a binding
written Contract in effect on the date of this Agreement;
(e) there has not been any material change by the Company or any of its
Subsidiaries in accounting methods or policies, except as required by GAAP;
(f) neither the Company nor any of its Subsidiaries has entered into any
transaction or Contract, or otherwise conducted its business, other than in the
ordinary course of business other than (i) as may arise out of negotiations
relating to the Company's contract with and/or investment in ICO and ICO
Holdings and (ii) the settlement of any Legal Proceeding involving the China
Investigation;
(g) neither the Company nor any of its Subsidiaries has failed to pay or
otherwise discharge current Liabilities on a timely basis except where disputed
in good faith by appropriate proceedings and except for immaterial oversights or
errors;
(h) other than in the ordinary course of business, neither the Company
nor any of its Subsidiaries has made any material loans, advances or capital
contributions to, or investments in, any Person or paid any material fees or
expenses to the Seller or any Affiliate of the Seller;
(i) neither the Company nor any of its Subsidiaries has made or
committed to make any capital expenditures or capital additions or betterments
in excess of $5,000,000 individually or $25,000,000 in the aggregate;
(j) neither the Company nor any of its Subsidiaries has instituted or
settled any material Legal Proceeding (other than the settlement of any Legal
Proceeding involving the China Investigation after the date hereof);
(k) neither the Company nor any of its Subsidiaries has made any
acquisition, or any sale, lease or disposition, of any material Assets of the
Satellite Business, except in the ordinary course of business consistent with
past practice; and
(l) neither the Seller nor the Company has agreed to do anything set
forth in this Section 5.10.
5.11 Taxes. Except as set forth on Schedule 5.11:
-----
(a) (i) All material Tax Returns required to be filed by or on behalf of
the Company or any of its Subsidiaries have been duly and timely filed with the
appropriate taxing authorities (after giving effect to any valid extensions of
time in which to make such filings) and (ii) all amounts shown on such Tax
Returns (including interest and penalties) as due from the Company or any of its
Subsidiaries have been fully and timely paid.
(b) The Company and its Subsidiaries have complied in all material
respects with all applicable Laws relating to the withholding of Taxes and have
duly and
16
<PAGE>
timely withheld from employee salaries, wages and other compensation and have
paid over to the appropriate taxing authorities all material amounts required to
be so withheld and paid over for all periods under all applicable Laws.
(c) As of the date of this Agreement, all material deficiencies asserted
or assessments made as a result of any examinations by any taxing authority of
Tax Returns (other than Income Tax Returns) of or covering the Company or any of
its Subsidiaries have been fully paid and there are no other audits or
investigations relating to any Tax Returns (other than Income Tax Returns) by
any taxing authority in progress, nor have the Seller or the Company or any of
its Subsidiaries received any written notice from any taxing authority that it
intends to conduct such an audit or investigation.
(d) The Seller is not a foreign person within the meaning of Section
1445 of the Code.
(e) Neither the Company nor any of its Subsidiaries is a party to any
tax sharing or similar agreement or arrangement (whether or not written)
pursuant to which it will have any obligation to make any payments after the
Closing Date.
(f) The Company and those Subsidiaries of the Company listed on Schedule
5.11(f) join in the filing of a consolidated federal income tax return with the
Seller and GM and neither the Company nor any of its Subsidiaries has been a
member of an affiliated group of corporations (within the meaning of Section
1504(a)) filing a consolidated federal income tax return (or a group of
corporations filing a consolidated, combined or unitary income tax return under
comparable provisions of state, local, or foreign tax law) for any taxable
period, other than a group the common parent of which is GM.
(g) None of the Assets of the Company or any its Subsidiaries is
property that either the Company or the Subsidiary (A) is required to treat as
being owned by any other person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954, as
in effect immediately prior to enactment of the Tax Reform Act of 1986; (B)
directly or indirectly secures any debt the interest on which is tax exempt
under Section 103(a) of the Code; or (C) is "tax-exempt use property" within the
meaning of Section 168(h) of the Code.
5.12 Real Property.
-------------
(a) Owned Real Property. Schedule 5.12(a) sets forth a complete list of
all real property and interests in real property owned as of the date hereof by
the Company and its Subsidiaries, or that prior to the Closing after giving
effect to the Transfers, will be owned in fee by the Company or one of its
Subsidiaries (individually, an "Owned Property," and collectively, the "Owned
Properties"). The Company and each of its Subsidiaries have, or will have prior
to the Closing Date, good, marketable and insurable fee title to the Owned
Property, free and clear of any and all Liens (other than Permitted Exceptions).
The Seller has delivered, made available or will make available
17
<PAGE>
to the Purchaser, prior to the Closing with respect to the Owned Property being
conveyed to the Company, true, correct and complete copies of all deeds, title
insurance policies, surveys, mortgages and other material documents in its
possession granting the Company or one of its Subsidiaries title to or otherwise
affecting or evidencing the state of title with respect to the Owned Properties
(the "Owned Properties Documents") and, to the Knowledge of the Seller, the
legal descriptions in such deeds are true and correct.
(b) Leased Property. Schedule 5.12(b) sets forth a complete list of all
leases, licenses, subleases, easements and occupancy agreements, together with
any amendments, modifications and supplements thereto (the "Leases") with
respect to all real property and interests in real property leased as of the
date hereof, or that will be leased prior to the Closing after giving effect to
the Transfers, by the Company or one of its Subsidiaries (individually, a
"Leased Property," and collectively the "Leased Properties," and the Leased
Properties together with the Owned Properties, being referred to herein
individually as a "Company Property" and collectively as the "Company
Properties"). The Seller has delivered or made available to the Purchaser true,
correct and complete copies of the following: (i) Leases, together with all
amendments, modifications and supplements thereto (the Leases together with the
Owned Properties Documents are collectively referred to herein as the "Title
Documents"); and (ii) true and complete copies of each Phase 1 and Phase 2
environmental report that has been prepared with respect to any of the Company
Properties within the last 5 years. The Company and its Subsidiaries hold their
respective leasehold interests under each Lease to which the Company or such
Subsidiary is the lessee or sub-lessee, free and clear of all Liens other than
Permitted Exceptions. Without limiting the generality of the foregoing,
Schedule 5.12(b) identifies any material lease, sublease, license or similar
agreement affecting any material interest in real property under which the
Company or any of its Subsidiaries is or will be as of the Closing Date (after
giving effect to the Transfers) a lessor, sublessor, licensor or grantor.
(c) Except as set forth on Schedule 5.12(c), each of the Leases is or
will be as of the Closing Date, after giving effect to the Additional Satellite
Assets Transfer, to the Seller's Knowledge, in full force and effect and is or
will be as of the Closing Date the legal, valid and binding obligation of the
Company and/or its Subsidiaries, enforceable against them in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). No option has been
exercised under any of such Leases, except options whose exercise has been
evidenced by a written document, a true, complete and accurate copy of which has
been delivered or made available to the Purchaser with the corresponding Lease.
Except as set forth on Schedule 5.12(c), there is no material default under any
of the Leases by the Company or, to the Seller's Knowledge, any other party
thereto.
(d) Except as set forth on Schedule 5.12(d):
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(i) To the Seller's Knowledge, each of the Leases and Owned Property
Documents constitutes the valid and binding obligation of each of the other
parties thereto, enforceable against them in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity);
(ii) To the Seller's Knowledge, none of the Company or the
Subsidiaries nor any other party to a Title Document is in default with
respect to any material term or condition thereof, and no event has
occurred that, with the passage of time or the giving of notice or both,
would constitute a default thereunder or would cause the acceleration of
any obligation of any party thereto or the creation of a Lien upon any
asset of any of the Company or any Subsidiaries, except in each case for
such defaults or events that are not material;
(iii) The Company and each of its Subsidiaries have not experienced
during the two years preceding the date hereof any material interruption in
the delivery of adequate quantities of any utilities (including
electricity, natural gas, potable water, and fuel oil) or other public
services (including, without limitation, sanitary and industrial sewer
service) required by the Company or its Subsidiaries in the operation of
their businesses during such period;
(iv) The Seller has not received from any relevant Government Body
any written notice of violation of the Americans with Disabilities Act that
remains uncured;
(v) There is no special proceeding pending or, to the Seller's
Knowledge, threatened in which any taxing authority having jurisdiction
over any Company Property is seeking to materially increase the assessed
value thereof;
(vi) There is no condemnation or eminent domain proceeding pending
which relates to any of the Company Properties, and to the Seller's
Knowledge, there is no such proceeding threatened by any relevant
Governmental Body; and
(vii) To the Seller's Knowledge, the Company Properties are in
compliance with restrictive covenants.
(e) All of the Company Property, buildings, fixtures and
improvements thereon owned or leased by the Company and its Subsidiaries are in
good condition and repair (ordinary wear and tear excepted) and the operation
thereof as presently conducted is not in material violation of any applicable
code, zoning ordinance or other similar zoning laws.
19
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5.13 Tangible Personal Property.
--------------------------
(a) Schedule 5.13(a) sets forth a complete list of all leases of
personal property involving annual payments in excess of $1,000,000 (the
"Personal Property Leases") relating to personal property used in the Satellite
Business or to which the Company or any of its Subsidiaries is a party or by
which the properties or Assets of the Company or any of its Subsidiaries are
bound. The Seller has delivered or otherwise made available to the Purchaser
true, correct and complete copies of the Personal Property Leases, together with
all amendments, modifications or supplements thereto.
(b) Except as set forth on Schedule 5.13(a), each of the Personal
Property Leases is in full force and effect and is the legal, valid and binding
obligation of the Company and/or its Subsidiaries, enforceable against them in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity) and, to the Seller's Knowledge, any third party thereto. There is no
material default under any Personal Property Lease by the Company or any of its
Subsidiaries or, to the Seller's Knowledge, by any other party thereto, and to
the Seller's Knowledge, no event has occurred that with the lapse of time or the
giving of notice or both would constitute a material default thereunder.
(c) All items of tangible personal property reflected in the Interim
Statement of Assets and Liabilities which, individually or in the aggregate, are
material to the operation of the Satellite Business (except for items sold or
disposed of subsequent to the date thereof in the ordinary course of business),
are in good condition (ordinary wear and tear excepted).
5.14 Intangible Property. (a) Certain Definitions. When used in
-------------------
this Section 5.14, the following capitalized terms shall have the following
meanings:
(i) "Intellectual Property Rights" means intellectual property rights
----------------------------
arising from or in respect of the following, whether protected, created or
arising under the laws of the United States or any other jurisdiction:
(A) fictional business names, trade names, trademarks and service
marks (whether registered or unregistered, including any applications
for registration of any of the foregoing), logos, Internet domain
names, trade dress rights and general intangibles of a like nature,
together with the goodwill associated with any of the foregoing
(collectively, "Marks");
-----
(B) patents and applications therefor, including continuation,
divisional, continuation-in-part, or reissue patent applications and
patents issuing thereon (collectively, "Patents");
-------
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(C) copyrights and registrations and applications therefor
(collectively, "Copyrights") and mask work rights; and
----------
(D) know-how, inventions, discoveries, concepts, ideas, methods,
processes, designs, formulae, technical data, drawings,
specifications, data bases and other proprietary and confidential
information, including customer lists, in each case excluding any
rights in respect of any of the foregoing that comprise or are
protected by Copyrights, mask work rights or Patents (collectively,
"Trade Secrets");
--------------
(ii) A "Material" Intellectual Property Right or item of Software is
--------
one that is material to the operation of the Satellite Business; and
(iii) "Software" means any and all (w) computer programs, including
--------
any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (x) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (y) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing,
and (z) all documentation, including user manuals and training
documentation, relating to any of the foregoing.
(b) Marks. Schedule 5.14(b) sets forth an accurate and complete
------
list of all registered Marks, pending applications for registration of any Marks
and Material unregistered Marks, in each case owned by Hughes and its
Subsidiaries and used in the Satellite Business (collectively, "Owned Marks"),
indicating for each (to the extent applicable) the applicable owner
jurisdiction, registration or application number and date issued (or date filed)
and the class of goods or services to which such Owned Mark relates. Except as
may be set forth in Schedule 5.14(b):
(i) Hughes and its Subsidiaries own all right, title and interest in
each of the Owned Marks, free and clear of any and all Liens (other than
Permitted Exceptions), and none of Hughes or any of its Subsidiaries has
received any written notice or claim challenging Hughes' or its
Subsidiaries' ownership of any of the Material Owned Marks;
(ii) to the Knowledge of the Seller, none of Hughes or any of its
Subsidiaries has taken any action (or failed to take any action), conducted
the Satellite Business, or used or enforced any of the Owned Marks, in each
case in a manner that would result in the abandonment, cancellation,
forfeiture, relinquishment, or unenforceability of any of the Material
Owned Marks;
(iii) to the Knowledge of the Seller, Hughes and its Subsidiaries have
taken reasonable steps to protect Hughes' and its Subsidiaries' rights in
and to each of the Material Owned Marks and to prevent the unauthorized use
thereof by any other Person;
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<PAGE>
(iv) None of Hughes or any of its Subsidiaries has granted to any
Person any right, license or permission to use any of the Material Owned
Marks;
(v) all Owned Marks that have been registered have been effectively
registered in accordance with all applicable material legal requirements
and, to the Knowledge of the Seller, are currently in compliance in all
material respects with all applicable legal requirements (including as to
payment of maintenance fees and the like);
(vi) no Material Owned Mark has been or is now involved in any
material opposition or cancellation proceeding and no written notice has
been received by Hughes or any of its Subsidiaries indicating an intention
on the part of any Person to bring any such action;
(vii) to the Seller's Knowledge, the use of any of the Material Owned
Marks does not create a likelihood of confusion with any trade name,
trademark or service mark of any other Person;
(viii) to the Seller's Knowledge, there has been no prior use of any
Material Owned Marks by any third party which would confer upon such third
party superior rights in such Owned Marks; and
(ix) to the Seller's Knowledge, no other Person has infringed or is
infringing on any of the Owned Marks, so as to materially affect the
Satellite Business.
(c) Owned Patents. Schedule 5.14(c) sets forth an accurate and
-------------
complete list of all unexpired Patents owned by Hughes and its Subsidiaries and
used in the Satellite Business (collectively, "Owned Patents"). Except as may be
set forth on Schedule 5.14(c):
(i) Hughes and its Subsidiaries are the owners of all right, title
and interest in and to all Owned Patents, in each case free and clear of
any and all Liens (other than Permitted Exceptions), and Hughes and its
Subsidiaries have not received any written notice or claim challenging
Hughes' and its Subsidiaries' ownership of any of the Material Owned
Patents or asserting that any other Person has any material claim of
ownership with respect thereto;
(ii) Hughes and its Subsidiaries have not received any written notice
or claim challenging the validity or enforceability of any of the Material
Owned Patents or indicating an intention on the part of any Person to bring
a claim that any such Owned Patent is invalid, is unenforceable or has been
misused;
(iii) Hughes and its Subsidiaries have taken reasonable steps to
protect ownership of Hughes and its Subsidiaries in and to the Owned
Patents;
22
<PAGE>
(iv) none of Hughes or any of its Subsidiaries has granted to any
Person any right, license or permission to make satellites, satellite
subsystems or components thereof in competition with the Satellite Business
under any of the Material Owned Patents other than licenses granted in the
ordinary course of business (x) to customers involving customer-funded
development of such satellites, satellite subsystems or components, or (y)
to vendors under contracts involving improvements to vendor-supplied
technology or products;
(v) to the Knowledge of the Seller, all of the Owned Patents are
currently in compliance in all material respects with applicable legal
requirements (including payment of maintenance fees and the like);
(vi) no Owned Patent is involved in any material interference,
reissue, reexamination or any other material litigation or like proceeding;
and
(vii) to the Seller's Knowledge, the activities, technology, products
or operations of no other Person has infringed or is infringing on any of
the Owned Patents, so as to materially affect the Satellite Business.
(d) Owned Copyrights. Schedule 5.14(d) sets forth an accurate and
----------------
complete list of all registered Copyrights (whether registered with the United
States Copyright Office or in the appropriate office in any foreign
jurisdiction) owned by Hughes and its Subsidiaries and used in the Satellite
Business, indicating for each the owner thereof, and pending applications for
registration of Copyrights filed by Hughes and its Subsidiaries and used in the
Satellite Business (or by a third party that has assigned its rights thereunder
to Seller) anywhere in the world (collectively, "Registered Copyrights").
Except as may be set forth on Schedule 5.14(d):
----------------
(i) Hughes and its Subsidiaries are the owners of all right, title
and interest in and to each of the Registered Copyrights and each of the
other Copyrights in any works of authorship prepared by or for Hughes or
its Subsidiaries that are material to the operation of the Satellite
Business (in the case of such Copyrights in works of authorship prepared
for, but not by, Hughes or its Subsidiaries, the foregoing being limited to
the Knowledge of the Seller) other than those as to which the rights being
exercised by Hughes or its Subsidiaries in the Satellite Business have been
licensed from another Person (collectively, "Owned Copyrights"), free and
clear of any and all Liens (other than Permitted Exceptions), and Hughes
and its Subsidiaries have not received any written notice or claim
challenging Hughes' and its Subsidiaries' ownership of any of the Material
Owned Copyrights or asserting that any other Person has any claim of
ownership with respect thereto;
(ii) none of Hughes or any of its Subsidiaries has received any
written notice or claim challenging or questioning the validity or
enforceability of any of the Material Owned Copyrights or indicating an
intention on the part of any
23
<PAGE>
Person to bring a claim that any Material Owned Copyright is invalid, is
unenforceable or has been misused;
(iii) to the Knowledge of the Seller, none of Hughes or any of its
Subsidiaries have taken any action or failed to take any action (including
a failure to disclose required information to the United States Copyright
Office in connection with any registration of a Registered Copyright
therewith) or used or enforced any of the Owned Copyrights, in each case in
a manner that would result in the unenforceability of any of the Material
Owned Copyrights;
(iv) Hughes and its Subsidiaries have taken reasonable steps to
protect Hughes' and its Subsidiaries' ownership in and to the Owned
Copyrights;
(v) none of Hughes or any of its Subsidiaries has granted to any
Person any right, license or permission to exercise any rights under any of
the Material Owned Copyrights other than licenses of Software,
documentation and data granted in the ordinary course of business to
customers or vendors; and
(vi) to Seller's Knowledge, no other Person has infringed or is
infringing any of the Owned Copyrights so as to materially affect the
Satellite Business.
(e) Trade Secrets. Schedule 5.14(e) sets forth an accurate and
-------------
complete list of all invention disclosures owned by Hughes and its Subsidiaries
and used in the Satellite Business that are not covered by any patents or patent
applications included in the Owned Patents, excluding any of the foregoing as to
which Hughes or any such Subsidiaries no longer intends to pursue possible
patent protection therefor (collectively, the "Invention Disclosures"). Hughes
and its Subsidiaries have taken reasonable precautions in accordance with
standard industry practice to protect the secrecy, confidentiality and value of
all Invention Disclosures and all other Material Trade Secrets of Hughes and its
Subsidiaries and used in the Satellite Business (collectively, "Owned Trade
Secrets"). Except as may be set forth in Schedule 5.14(e):
(i) Hughes and its Subsidiaries own all of the Owned Trade Secrets and
none of the Owned Trade Secrets is subject to any Liens (other than
Permitted Exceptions), and Hughes and its Subsidiaries have not received
any written notice or claim challenging Hughes' and its Subsidiaries'
ownership of any of the Material Owned Trade Secrets;
(ii) to the Knowledge of the Seller, there has been no disclosure by
Hughes or any of its Subsidiaries of material confidential information or
other Owned Trade Secrets to any other Person, except in the ordinary
course of business and subject to restrictions that are reasonable,
appropriate and practicable in the circumstances and that, to the Knowledge
of the Seller, have been complied with in all material respects; and
24
<PAGE>
(iii) to the Knowledge of the Seller, no other Person has
misappropriated any of the Owned Trade Secrets so as to materially affect
the Satellite Business.
(f) Software. Schedule 5.14(f) sets forth a complete and accurate
--------
list of (i) all Software that, to the Knowledge of the Seller, is owned
exclusively by Hughes and its Subsidiaries and otherwise is material to the
operation of the Satellite Business (collectively, the "Owned Software"), and
(ii) all Software that is used by Hughes or any of its Subsidiaries in the
Satellite Business that is not exclusively owned by Seller (collectively, the
"Licensed Software"), excluding Software available on reasonable terms through
commercial distributors or in consumer retail stores for a license fee of no
more than One Hundred Thousand Dollars ($100,000) (collectively, "COTS
Software"). Except as may be set forth on Schedule 5.14(f):
(i) Hughes and its Subsidiaries are the owners of all right,
title and interest in and to all Owned Software, including without
limitation all Copyrights, Trade Secrets and other Intellectual Property
Rights relating thereto, in each case free and clear of any and all Liens
(other than Permitted Exceptions), and Hughes and its Subsidiaries have not
received any written notice or claim challenging Hughes' and its
Subsidiaries' ownership of any of the Material Owned Software or any
Intellectual Property Rights relating thereto, or asserting that any other
Person has any material claim of ownership with respect thereto;
(ii) of Hughes or its Subsidiaries has granted to any Person
any right, license or permission to distribute any Material Owned Software
used in the Satellite Business in connection with the sale to third parties
of satellites, satellite subsystems or components thereof in competition
with the Satellite Business, including under any of its Copyrights, Trade
Secrets or other Intellectual Property Rights therein, excluding any
licenses granted in the ordinary course of business (x) to customers
involving customer-funded development of such satellites, satellite
subsystems or components, or (y) to vendors under contracts involving
improvements to vendor-supplied technology or products;
(iii) Hughes and its Subsidiaries have treated the source code of the
Owned Software, and the data associated therewith, as confidential and
proprietary business information, and have taken reasonable steps to
protect the same as trade secrets of Hughes and its Subsidiaries including
through appropriate confidentiality undertakings in any licenses of source
code granted to customers of the Satellite Business that are reasonable,
appropriate and practicable in the circumstances.
(g) Agreements in Respect of Licensed Technology. Schedule 5.14(g)
--------------------------------------------
contains a complete and accurate list of all agreements pertaining to any
material technology (other than Software) used or practiced by Hughes and its
Subsidiaries in the Satellite Business as to which a Person other than Hughes
and its Subsidiaries owns any Intellectual Property Rights (together with the
agreements pertaining to Licensed
25
<PAGE>
Software other than COTS Software, the "Licensed Technology Agreements").
Schedule 5.14(g) sets forth a complete and accurate list of all material payment
obligations of Hughes or any of its Subsidiaries in the Satellite Business under
any Licensed Technology Agreements. To the Seller's Knowledge, except as may be
set forth in Schedule 5.14(g):
(i) all Licensed Technology Agreements are, and until the Closing
Date will remain (to the extent the technology licensed under the
particular Licensed Technology Agreement continues to be used in the
Satellite Business until the Closing Date), in full force and effect, and
Hughes or its Subsidiary that is party thereto is not in material breach
thereof;
(ii) there are no written notices of any disputes or disagreements
with respect to any Licensed Technology Agreement; and
(iii) the rights licensed under each Material Licensed Technology
Agreement shall be exercisable by the Company or any of its Subsidiaries
after the Closing Date to the same extent as exercisable by Hughes or its
Subsidiaries prior to the Closing Date (subject to any applicable Consent
requirement).
(h) Infringement. Except as may be set forth in Schedule 5.14(h),
------------
neither Hughes nor any of its Subsidiaries is, nor has Hughes and its
Subsidiaries been during the two (2)-year period prior to the date hereof, a
party to any action or proceeding, nor is any material action or proceeding
threatened in writing, that involves or involved a claim of infringement,
misappropriation or other wrongful use or exploitation, by any Person against
Hughes or any of its Subsidiaries of any material Intellectual Property Right
used or exploited by Hughes or any of its Subsidiaries in the conduct of the
Satellite Business. Except as may be set forth in Schedule 5.14(h), to the
Knowledge of Seller, the use, practice or other commercial exploitation of (a)
any Owned Marks, Owned Patents, Owned Copyrights, Owned Trade Secrets and
Intellectual Property Rights licensed under Licensed Technology Agreements or
(b) any of the products or technologies used, made, marketed, sold or licensed
by the Company or any of its Subsidiaries in the Satellite Business as presently
conducted do not materially infringe upon, violate, or result in a
misappropriation of, any patent, copyright, trade secret or other Intellectual
Property Right of any Person, nor, to the Seller's Knowledge, is any of the
foregoing subject to any outstanding order, judgment, decree, stipulation or
agreement restricting the use thereof by Hughes or its Subsidiaries, except as
would not materially affect the Satellite Business. Except as may be set forth
in Schedule 5.14(h), Hughes and its Subsidiaries have the right to bring actions
against any Person that is infringing any Owned Marks, Owned Patents, Owned
Copyrights or Owned Trade Secrets and to retain for themselves any damages
recovered in any such action.
(i) Employee Confidentiality Agreements. Except as set forth in
------------------------------------
Schedule 5.14(i), to the Knowledge of the Seller:
26
<PAGE>
(i) all current and former employees and consultants of Hughes and
its Subsidiaries whose duties or responsibilities relate to the Satellite
Business have entered into confidentiality and invention assignment
agreements with Hughes and its Subsidiaries in substantially the form
provided to the Purchaser with exceptions that are not material;
(ii) no such employee or consultant of Hughes or its Subsidiaries is
obligated under any agreement (including licenses, covenants or commitments
of any nature) or subject to any judgment, decree or order of any court or
administrative agency, or any other restriction that would materially
interfere with the use of his or her best efforts to carry out his or her
duties for Hughes and its Subsidiaries, which restriction, individually or
together with any and all other such restrictions, is material to the
Satellite Business; and
(iii) the carrying on of the Satellite Business by such employees and
contractors of Hughes and its Subsidiaries and the conduct of the Satellite
Business as presently proposed, will not, to the Seller's Knowledge, result
in a material breach of the terms, conditions or provisions of, or
constitute a material default under, any contract or agreement under which
any of such employees or consultants are obligated, which breach or
default, individually or together with any and all other such breaches or
defaults, is material to the Satellite Business.
(j) Disabling Code and Contaminants. Hughes and its Subsidiaries have
-------------------------------
taken reasonable steps and implemented reasonable procedures to ensure that (i)
systems and components made or manufactured by Hughes and its Subsidiaries for
use in the Satellite Business and in which Software is embedded or incorporated
are free of any disabling codes or instructions (a "Disabling Code"), and any
--------------
virus or other intentionally created, undocumented contaminant (a
"Contaminant"), that may, or may be used to, access, modify, delete, damage or
-----------
disable any Systems (as defined below) or that may result in damage thereto and
(ii) its internal computer systems (consisting of hardware, software, databases
or embedded control systems, "Systems") are free from Disabling Codes and
-------
Contaminants. Except as may be set forth on Schedule 5.14(j), the Seller has in
place appropriate disaster recovery plans, procedures and facilities and has
taken reasonable steps to safeguard its Systems and restrict unauthorized access
thereto.
5.15 Material Contracts. (a) Schedule 5.15(a) sets forth all of the
------------------
following Contracts to which the Company or any of its Subsidiaries is a party
or by which any of them is bound (collectively, the "Material Contracts") other
than classified government contracts:
(i) Contracts with the Seller, any Subsidiary of the Seller, or any
current or former officer or director of the Seller or any of its
Subsidiaries;
(ii) Contracts with any labor union or association representing any
employee of the Company or any of its Subsidiaries;
27
<PAGE>
(iii) any Contracts featuring incentive payments reasonably expected
to extend for a period more than one year beyond the Closing Date and (A)
pursuant to which the Company or any of its Subsidiaries is required to
purchase or sell a stated portion of its requirements or output from or to
another party and (B) involving a future annual payment in excess of
$1,000,000 (other than any Contracts entered into from and after the date
hereof in the ordinary course of business);
(iv) Contracts for the pending sale of any of the material Assets of
the Company or any of its Subsidiaries other than in the ordinary course of
business or Contracts for the grant to any Person of any preferential
rights to purchase any of its Assets;
(v) any joint venture or teaming agreements;
(vi) Contracts containing covenants of the Company or any of its
Subsidiaries not to compete in any line of business or with any Person in
any geographical area, or covenants of any other Person not to compete with
the Company or any of its Subsidiaries in any line of business or in any
geographical area;
(vii) Contracts relating to the proposed acquisition by the Company or
any of its Subsidiaries of any operating business or the Capital Stock of
any other Person with a value in excess of $1,000,000 (other than purchases
of inventory in the ordinary course of business);
(viii) Contracts relating to the borrowing of money;
(ix) Contracts with the Company's ten largest customers (as measured
by the dollar amount of purchases thereby in 1998);
(x) Contracts with the Company's ten largest suppliers (as measured
by the dollar amount of purchases therefrom in 1998);
(xi) any Contract relating to capital expenditures not contemplated
by the capital expenditures budget of the Company and its Subsidiaries,
copies of which have been provided to the Purchaser, and involving future
payments which, together with future payments under all other Contracts
relating to the same capital project, exceed $25,000,000;
(xii) a power of attorney (other than powers of attorneys given in the
ordinary course of the Satellite Business);
(xiii) other than any progress payment Liens arising from progress
payments made by the United States Government or any agency thereof or any
other Governmental Body on United States Contracts, any mortgage, pledge,
28
<PAGE>
security agreement, deed of trust or other document granting a material
Lien (including material Liens upon properties acquired under conditional
sales, capital leases or other title retention or security devices);
(xiv) any multiple launch Contract relating to the provision of launch
services, other than any such Contract with the Purchaser or its
Affiliates;
(xv) any financial obligation or guarantee issued by Hughes or its
Subsidiaries relating to contractual obligations being performed or to be
performed by the Company or its Subsidiaries;
(xvi) the ten largest Contracts between the Company and each of its
(A) foreign sales consultants and (B) domestic consultants; or
(xvii) any other Contracts, other than Leases, which involve the
expenditure of more than $10,000,000 annually.
(b) Except as set forth on Schedule 5.15(b) and, excluding, for
purposes of this Section 5.15(b), joint venture and teaming agreements not,
individually or in the aggregate, material to the business, properties, results
of operations or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole:
(i) Neither the Company nor any of its Subsidiaries has received
written notice of any material performance deficiencies, schedule
delinquencies or warranty claims with respect to the Company's performance
of a Material Contract;
(ii) Neither the Company nor any of its Subsidiaries has received
written notice of the intent of a customer to a Material Contract to
terminate, cancel, repudiate, or otherwise materially reduce the scope of
performance or compensation originally specified by such Contract, or
demand liquidated damages, price reductions or rebates in amounts that are
material, or deny material performance incentives, or impose any other form
of material penalty;
(iii) To the Seller's Knowledge, there is no material defect,
discrepancy, non-conformance or deficiency in material equipment, supplies
or services that are the subject of a Material Contract, that became known
only after delivery to the customer; and
(iv) Except as set forth in the Material Contracts or as previously
disclosed in writing to the Purchaser, none of the Seller, the Company nor
any of the Company's Subsidiaries have made any form of written
undertaking, promise or financial guarantee with respect to the date of
completion of manufacturing or of delivery of satellites, receipt of
necessary export permits, date of preliminary or final acceptance,
commencement date of services provided by satellites, date of
29
<PAGE>
launch services for satellite, on-orbit performance of satellites, or
operable life or effectiveness of satellites.
(c) Except for the launch service agreements listed on Schedule 5.29
and for classified government contracts, there have been made available to the
Purchaser true, correct and complete copies of all of the Material Contracts.
Except as set forth on Schedule 5.15(b), each of the Material Contracts is in
full force and effect and is the legal, valid and binding obligation of the
Company and/or its Subsidiaries, enforceable against them in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and, to the Seller's
Knowledge, of any third party thereto. Except as set forth on Schedule 5.15(b),
neither the Company nor any of its Subsidiaries nor, to the Seller's Knowledge,
any other party thereto, is in default in any material respect under any
Material Contracts.
5.16 Employee Benefits.
-----------------
(a) Schedule 5.16(a) sets forth a complete and correct list of all
"employee benefit plans," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and any severance pay,
vacation pay, company awards, salary continuation, sick leave, excess benefit,
supplemental retirement, deferred compensation, bonus or other incentive
compensation, stock purchase, life insurance and scholarship plans, programs or
policies to which the Company or any of its Subsidiaries contributes or is
obligated to contribute thereunder with respect to employees of the Company (the
"Employee Benefit Plans").
(b) Each of the Employee Benefit Plans intended to qualify under
Section 401 of the Code (the "Qualified Plans") so qualify and the trusts
maintained pursuant thereto are exempt from federal income taxation under
Section 501 of the Code, and, except as disclosed on Schedule 5.16(b), nothing
has occurred with respect to the operation of any such plan which would be
reasonably likely to cause the loss of such qualification or exemption.
(c) All contributions and premiums required by Law or by the terms of
any Employee Benefit Plan which is a defined benefit plan or money purchase plan
have been timely made (without regard to any waivers granted with respect
thereto) to any funds or trusts established thereunder or in connection
therewith, and no accumulated funding deficiencies exist in any of such plans.
(d) The benefit liabilities, as defined in Section 4001(a)(16) of
ERISA, of each of the Employee Benefit Plans subject to Title IV of ERISA using
the actuarial assumptions that would be used by the Pension Benefit Guaranty
Corporation in the event it terminated each such plan do not exceed the fair
market value of the Assets of each such plan. The Liabilities of each Employee
Benefit Plan subject to Title IV of
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ERISA that has been terminated or otherwise wound up have been fully discharged
in full compliance with applicable Law.
(e) True, correct and complete copies of the following documents,
with respect to each of the Employee Benefit Plans, have been delivered or made
available to the Purchaser: (i) any plans and related trust documents, and all
amendments thereto; (ii) the most recent Forms 5500 and schedules thereto; (iii)
the most recent financial statements and actuarial valuations; (iv) the most
recent Internal Revenue Service determination letter; and (v) the most recent
summary plan descriptions (including letters or other documents updating such
descriptions).
(f) There are no pending Legal Proceedings which have been asserted
or instituted against any of the Employee Benefit Plans, the Assets of any such
plans or the Company, or the plan administrator of the Employee Benefit Plans
with respect to the operation of such plans (other than routine benefit claims)
which would have a Material Adverse Effect and, except as disclosed on Schedule
5.16(f), to the Seller's Knowledge, there are no facts or circumstances which
could reasonably be expected to form the basis for any such Legal Proceeding.
(g) Except as set forth on Schedule 5.16(g), each of the Employee
Benefit Plans has been maintained, in all material respects, in accordance with
its terms and all provisions of applicable Law except for such non-compliance
which would not have a Material Adverse Effect. All amendments and actions
required to bring each of the Employee Benefit Plans into conformity in all
material respects with all of the applicable provisions of ERISA and other
applicable Laws have been made or taken except to the extent that such
amendments or actions are not required by Law to be made or taken until a date
after the Closing Date and are disclosed on Schedule 5.16(g).
(h) Except as disclosed on Schedule 5.16(h), neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any material payment becoming due to any
employee of Company or any of its Subsidiaries; (ii) materially increase any
benefits otherwise payable under any Employee Benefit Plan; or (iii) result in
the acceleration of the time of payment or vesting of any material compensation
or employee benefits.
(i) No employee benefit plan maintained by any company affiliated
with the Company pursuant to Code Section 414 of the Code that is not an
Employee Benefit Plan can reasonably be expected to cause the imposition of any
Liability on the Company pursuant to Title IV of ERISA or Section 4980B of the
Code.
(j) No "reportable event," as such term is defined in Section 4043(b)
of ERISA, has occurred with respect to any Employee Benefit Plan which would
reasonably be expected to result in any Liability under Title IV of ERISA.
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<PAGE>
5.17 Labor.
-----
(a) Except as set forth on Schedule 5.17(a), neither the Company nor
any of its Subsidiaries is party to any labor or collective bargaining agreement
and there are no labor or collective bargaining agreements which pertain to
employees of the Company or any of its Subsidiaries. There is no labor strike,
dispute, slowdown or stoppage actually pending, or to the Knowledge of the
Seller, threatened against the Company or any of its Subsidiaries. Except as set
forth on Schedule 5.17, since January 1, 1997, no labor organization or group of
employees of the Company or any of its Subsidiaries has made a demand for
recognition, and there have been no representation proceedings or petitions
seeking a representation proceeding or, to the Knowledge of the Seller, is any
such proceeding or petition threatened to be brought or filed, with the National
Labor Relations Board or other labor relations tribunal.
(b) Except as set forth on Schedule 5.17(b), neither the Company nor
any of its Subsidiaries has received any written notice of any, and to the
Seller's Knowledge there is no pending or threatened material labor or
employment dispute, grievance or claim, or action with respect to claims of or
obligations to, any employees of the Company or any of its Subsidiaries which is
disputed or contested by the Company or any of its Subsidiaries.
5.18 Litigation. Except as set forth on Schedule 5.18, there is no
----------
Legal Proceeding pending or, to the Knowledge of the Seller, threatened against
the Company or any of its Subsidiaries, or to which the Seller or the Company or
any of the Company's Subsidiaries is otherwise a party, before any Governmental
Body which, if adversely determined, would individually or in the aggregate have
a Material Adverse Effect. To the Seller's Knowledge, except as otherwise
disclosed herein or in any schedule to this Agreement, there are no facts or
circumstances as of the date hereof that are reasonably likely to result in a
Legal Proceeding which if adversely determined would, individually or in the
aggregate, have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is subject to any Order of any Governmental Body except to the
extent the same would not individually or in the aggregate have a Material
Adverse Effect.
5.19 Compliance With Laws. Except as set forth on Schedule 5.19:
--------------------
(a) The Company and each of its Subsidiaries are in material
compliance with all material Laws applicable to the Company and its Subsidiaries
or to the conduct of the business or operations of the Company and its
Subsidiaries. The Company and each of its Subsidiaries have all material Permits
from Governmental Bodies which are required for the Company and each of its
Subsidiaries to operate its business in all material respects.
(b) None of the Seller, the Company nor any of the Company's
Subsidiaries has received any written notice as of the date hereof of any
administrative, civil or criminal investigation or audit by any Governmental
Body relating to the Satellite Business (including any qui tam action brought
-------
under the Civil False Claims Act alleging
32
<PAGE>
any material irregularity, misstatement or omission arising under or relating to
any Contract) which have not been resolved.
(c) To the Seller's Knowledge, each of the Seller, the Company and
the Company's Subsidiaries is in compliance in all material respects with all
United States and all foreign export control Laws. The Company has all necessary
authority under the export control Laws to conduct the Satellite Business as
presently conducted in all material respects including (i) necessary licenses
for any export transactions pending as of the date hereof, (ii) necessary
licenses and clearances for the disclosure of information to foreign persons and
(iii) necessary registrations with United States Governmental Bodies with
authority to implement applicable export control Laws. None of the Seller, in
relation to the Satellite Business, the Company or the Company's Subsidiaries
have participated directly or indirectly in any boycotts or other similar
practices in violation of the regulations of the United States Department of
Commerce or Section 999 of the Code.
(d) As of the date hereof, (i) no suspension or debarment or
equivalent proceeding action has been commenced against the Company or any of
its Subsidiaries for which the Company or any of its Subsidiaries have received
notice thereof, and (ii) to the Seller's Knowledge, there are no facts or
circumstances which would reasonably be likely to result in a suspension or
debarment proceeding. Neither the Seller, in respect of the Satellite Business,
nor the Company or any its Subsidiaries, have made as of the date hereof, a
voluntary disclosure initiative to any agency of the United States Government
that, as of the date hereof, remains unresolved.
(e) To the Seller's Knowledge, the Company and each of its
Subsidiaries have complied in all material respects with all applicable federal
procurement laws and regulations, including the Truth in Negotiations Act, the
Procurement Integrity Act, the Cost Accounting Standards and the Foreign Corrupt
Practices Act.
(f) To the Seller's Knowledge, the Company has complied in all
material respects with facilities and personnel security clearance requirements
of the United States, including those set forth in the Industrial Security
Regulation (DOD 5220.22-R) and the National Industrial Security Program
Operating Manual (DOD 5220.22-M).
(g) To the Seller's Knowledge, the Company has complied in all
material respects with all of its obligations under applicable United States
Contracts relating to any government furnished property or similar property or
equipment owned by the United States.
5.20 Environmental Matters. Except as set forth on Schedule 5.20 and
---------------------
except for facts, circumstances or conditions that would not have, individually
or in the aggregate, a Material Adverse Effect:
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(a) the Company and each of its Subsidiaries has obtained, currently
maintains and, to the Knowledge of the Seller, at all times has maintained all
Permits required under all applicable Environmental Laws which are material to
the operation of its business;
(b) the Company and each of its Subsidiaries are presently, and to
the Knowledge of the Seller have at all times been, in material compliance with
all applicable Environmental Laws and all Permits issued pursuant to
Environmental Laws or otherwise;
(c) neither the Company nor any of its Subsidiaries is subject to any
pending, notice, letter, claim, or request for information asserting the
possibility of the violation of or Liability under any Environmental Law or, to
the Seller's Knowledge, threats thereof, and there are no proceedings, actions,
orders, decrees, injunctions, or other claims pending, or to the Knowledge of
the Seller, threatened, relating to or otherwise alleging liability under any
Environmental Law;
(d) to the Knowledge of the Seller, there are no pending
investigations of the business, operations, or currently or previously owned,
operated or leased property of the Company or any of its Subsidiaries which
could reasonably be expected to result in the imposition against the Company of
any Liability pursuant to Environmental Law;
(e) the Seller has made available to the Purchaser all material
environmental audits, studies, reports, analyses, and results of investigations
that have been performed with respect to the currently or previously owned,
leased or operated properties of the Company or any of its Subsidiaries and that
are in the Seller's possession, custody or control;
(f) to the Knowledge of the Seller, there have been no releases of
Hazardous Substances to the soil or groundwater of any properties presently or
formerly owned or operated by the Company or any of its Subsidiaries that would
reasonably be expected to result in the Company or its Subsidiaries incurring
Liability under any Environmental Law;
(g) to the Knowledge of the Seller, the Company and each of its
Subsidiaries have sent Hazardous Substances for storage, recycling, treatment
and/or disposal to offsite locations indicated on Schedule 5.20(g);
(h) except as permitted by applicable Permits and Environmental Laws,
to the Knowledge of the Seller, neither the Seller nor any of its Subsidiaries
have knowingly exposed any employee or third party to any Hazardous Substance
that could reasonably be expected to subject the Company or any of its
Subsidiaries to Liability under any Environmental Law, which Liability is not or
would not be covered by any insurance available to the Company or its
Subsidiaries, including workers' compensation and applicable general liability
insurance;
34
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(i) to the Knowledge of the Seller, none of the currently owned,
leased or operated properties of the Company or any of its Subsidiaries,
presently contain asbestos-containing material, polychlorinated biphenyls,
underground or above-ground storage tanks used for storage of Hazardous
Substances;
(j) to the Knowledge of the Seller, there have been no underground
storage tanks on currently owned or previously owned, leased or operated
properties of the Company or any of its Subsidiaries which have created material
Liability on the part of the Company or its Subsidiaries;
(k) neither the Company nor any of its Subsidiaries has agreed to
assume, undertake or provide indemnification for any Liability of any other
person under any Environmental Law, including any obligation for corrective or
remedial action;
(l) the Company and its Subsidiaries are not required as of the date
hereof to make any capital expenditures in excess of $500,000 to achieve or
maintain compliance with current Environmental Laws and to the Knowledge of the
Seller, no Governmental Body has proposed any Environmental Laws as of the date
hereof that would reasonably be expected to result in the Company or its
Subsidiaries having to make such capital expenditures;
(m) to the Knowledge of the Seller, the list of solid waste
management units ("SWMUs") and areas of environmental concern ("AECs") and the
associated attribution to Defense or the Seller as having created, operated or
used those SWMUs and AECs contained in the Environmental Assessment Report for
the Building S25 complex and prepared by Environ, dated August 12, 1997, is
correct. To the Knowledge of the Seller, the Company and its Subsidiaries have
not taken any action or failed to take any action or are not otherwise under any
disability that would prevent the Master Separation Agreement, dated as of
December 16, 1997, by and among GM, Hughes, Delco Electronics Corporation and
Defense (the "MSA") and the Environmental Matters Agreement, dated as of
December 17, 1997, by and among GM, Hughes, Delco Electronics Corporation and
Defense (the "EMA") from being enforced; and
(n) in the event that the Company or its Subsidiaries incurs any
environmental Loss at a Company Property or elsewhere which the Purchaser can
reasonably demonstrate that Hughes has a right to bring a claim for
indemnification of such loss under the MSA and the EMA, Hughes agrees to use its
commercially reasonable efforts to assign its rights thereunder to the Purchaser
to bring such claim or, if Hughes is unable to assign such rights, Hughes agrees
to bring such claim on behalf of the Purchaser using counsel selected and
directed by the Purchaser and acceptable to Hughes, which approval Hughes shall
not unreasonably withhold. If Hughes pursues such claim on the Purchaser's
behalf or otherwise assigns such claim to the Purchaser, the Purchaser will be
responsible for all costs and expenses related thereto and will indemnify and
hold harmless Hughes and its Affiliates from and against any and all Losses that
Hughes or its Affiliates incur in connection therewith.
35
<PAGE>
5.21 Insurance. (a) Schedule 5.21(a) sets forth, as of the date
---------
hereof, a complete and accurate list of all policies of insurance of any kind or
nature covering the Company or any of its Subsidiaries or any of their
respective employees, properties or Assets, including policies of life,
disability, fire, theft, workers' compensation, employee fidelity and other
casualty and liability insurance. All such policies are in full force and effect
and the Seller shall use its commercially reasonable efforts to ensure that such
policies continue in full force and effect through the Closing Date. The Seller
shall use its commercially reasonable efforts to ensure that through the Closing
Date no action will be taken to modify such policies in any way which would
adversely affect coverage for liabilities assumed by the Purchaser.
(b) Schedule 5.21(b) sets forth, as of the date hereof, a complete
and accurate list of all current policies of insurance of any kind or nature
covering the Company, the Company's Subsidiaries or customers of the Company
(where the Company has acted to procure such policy for the benefit of a
Subsidiary or other customer), against any risks (including liability to third
persons) uniquely associated with, or arising from, the launch, preparation for
launch, delivery to orbit, or on-orbit operation, or on-orbit failure, of
satellites. For purposes of this Section 5.21, such policies are referred to
collectively as "Launch and Space Insurance Policies." To the Seller's
Knowledge, all such Launch and Space Insurance Policies are in full force and
effect.
(c) Schedule 5.21(c) sets forth, as of the date hereof, all claims
made by the Company under any Launch and Space Insurance Policy which are
pending and unresolved and all claims that are pending and unresolved, as of the
date hereof that have been made or threatened in writing by or on behalf of any
insurer against it, for refund, credit, reimbursement, offset, repayment, or
other form of compensation, in respect to risks or Liabilities as are or were
covered by Launch and Space Insurance Policies or subjects of claims made under
such policies.
5.22 Inventories; Receivables; Payables.
----------------------------------
(a) The inventories of the Company and its Subsidiaries are in good
and marketable condition, and are of a quality and quantity saleable in the
ordinary course of business at normal profit margins, except to the extent
reserves therefor have been established in the Interim Statement of Assets and
Liabilities or that will be established in the Closing Statement of Assets and
Liabilities. Adequate reserves have been reflected in the Interim Statement of
Assets and Liabilities for obsolete, defective or otherwise unusable inventory,
which reserves were calculated in a manner consistent with past practice and in
accordance with the accounting practices detailed on Schedule 5.8(b).
(b) All accounts receivable of the Company and its Subsidiaries have
arisen from bona fide transactions in the ordinary course of business consistent
with past practice. All accounts receivable of the Company and its Subsidiaries
reflected on the Interim Statement of Assets and Liabilities are good and, to
the Seller's Knowledge, collectible at the aggregate recorded amounts thereof,
net of any applicable reserve for
36
<PAGE>
returns or doubtful accounts reflected thereon, which reserves are adequate and
were calculated in a manner consistent with past practice and in accordance with
the accounting practices detailed on Schedule 5.8(b). All accounts receivable
arising after the Interim Date are good and collectible at the aggregate
recorded amounts thereof, net of any applicable reserve for returns or doubtful
accounts, which reserves are adequate and were calculated in a manner consistent
with past practice and in accordance with the accounting practices detailed on
Schedule 5.8(b).
(c) All accounts payable of the Company and its Subsidiaries
reflected in the Interim Statement of Assets and Liabilities or arising after
the date thereof are the result of bona fide transactions in the ordinary course
of business and have been paid or are not yet due and payable.
5.23 Intercompany Indebtedness. Except as set forth on Schedule 5.23
-------------------------
and except with respect to obligations under satellite-related contracts between
Hughes and its Subsidiaries (other than the Company and its Subsidiaries), on
the one hand, and the Company and its Subsidiaries, on the other hand, none of
Hughes or any of its Affiliates (other than the Company or its Subsidiaries) has
outstanding any borrowed moneys from or outstanding indebtedness or other
similar obligations to the Company or any of its Subsidiaries and none of the
Company or any of its Subsidiaries has outstanding any borrowed moneys from or
outstanding indebtedness or other similar obligations to Hughes or any of its
Subsidiaries.
5.24 United States Contracts. Except as set forth on Schedule 5.24,
-----------------------
(a) To the Seller's Knowledge, no suspension or debarment action has
been commenced against the Company.
(b) The Company has not, with respect to any United States Contract,
received a final decision of a contracting officer asserting any material claim
or material equitable adjustment against the Company by any agency of the United
States Government.
(c) The Company has not, with respect to any material United States
Contract, received any written notice of the intention of any party to terminate
the Contract, whether as a termination for convenience or for default, nor any
cure notice or "show cause" order advising the Company that it was in default,
or would, if it failed to take remedial action, be in default under such
Contract.
(d) The Company has not, with respect to any material United States
Contract, asserted any claim or request for equitable adjustment requesting
money, interpretation of Contract terms, or other relief.
(e) To the Seller's Knowledge, the Company has fully complied in all
material respects with the Truth in Negotiations Act (10 U.S.C. (S)2306a, 41
U.S.C.
37
<PAGE>
(S)254(d)) and submitted where required cost or pricing data that was accurate,
complete and current.
(f) To the Seller's Knowledge, the Company has fully complied in all
material respects with all of its obligations under applicable United States
Contracts relating to any government furnished property or similar property or
equipment owned by the United States.
(g) To the Seller's Knowledge, the Company has complied in all
material respects with all United States Cost Accounting Standards and has
accounted for all United States Contracts in accordance with disclosure
statements approved by the United States Government, and has not received
written notice from the Defense Contract Management Command of any intent to
suspend, disapprove or disallow any material costs.
5.25 Banks. Schedule 5.25 contains a complete and correct list of the
-----
names and locations of all banks in which the Company or any of its Subsidiaries
has accounts or safe deposit boxes and the names of all persons authorized to
draw thereon or to have access thereto.
5.26 Clearances. Except to the extent prohibited by the National
----------
Industrial Security Program Operating Manual, Schedule 5.26 hereto sets forth
all facility security clearances held by the Company or any of its Subsidiaries
and the number of personnel holding security clearances at each such facility.
5.27 Year 2000 Issues.
----------------
Except as disclosed in Schedule 5.27 and except for matters which
would not reasonably be likely to result in a Material Adverse Effect, all date-
related output, calculations or results before, during or after the calendar
year 2000 that are produced or used by any material hardware, software, firmware
or facilities systems relating to the Satellite Business ("Computer Systems")
owned or, to the Seller's Knowledge, used by the Seller are Year 2000 Compliant.
For purposes of this section, "Year 2000 Compliant" means:
(a) all dates receivable by the Computer Systems, as well as
calculations, output and results will (i) include a consistent-length century
indicator of at least two base ten digits, and (ii) have date elements in
interfaces and data storage that will permit specifying the century to eliminate
date ambiguity;
(b) when any date data is represented without a century, either in an
interface or in data storage, the correct century will be unambiguous for all
manipulations involving that data;
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<PAGE>
(c) data calculations involving either a single century or multiple
centuries will neither (i) cause an abnormal ending or operation nor (ii)
generate incorrect results or results inconsistent with output or results from
any other century;
(d) when sorting by date, all records will be sorted in accurate
chronological sequence, and when the date is used as a key, records will be read
and written in accurate chronological sequence; and
(e) leap years will be determined by the following standard: (i) if
dividing the year by 4 yields an integer, it is a leap year, except for years
ending in 00, but (ii) a year ending in 00 is a leap year if dividing it by 400
yields an integer.
5.28 Financial Advisors. Except as set forth on Schedule 5.28, no
------------------
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for the Seller or the Company in connection with the transactions
contemplated by this Agreement and no Person is entitled to any fee or
commission or like payment in respect thereof.
5.29 Launch Service Agreements. Schedule 5.29 contains a list of all
-------------------------
existing launch services agreements to which the Company or any of its
Subsidiaries is a party or by which any of them is bound, other than any such
agreements with the Purchaser or its Affiliates, that permit the Company or any
of its Subsidiaries to terminate the launch services provided therein without
cause, and describes the penalties for the termination of such launch services
agreements.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to Hughes and the Seller
that:
6.1 Organization and Good Standing. The Purchaser is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
6.2 Authorization of Agreement. The Purchaser has all requisite
--------------------------
corporate power, authority and legal capacity to execute and deliver this
Agreement, the Definitive Agreements to which it is a party and each other
agreement, document, instrument or certificate to be executed by the Purchaser
in connection with the consummation of the transactions contemplated by this
Agreement (such other agreements, documents, instruments or certificates,
together with this Agreement and such Definitive Agreements are collectively
referred to herein as the "Purchaser Documents"), and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement has been, and each of the other Purchaser Documents will be at or
prior to Closing, and the performance of the Purchaser's obligations hereunder
and thereunder
39
<PAGE>
have been duly authorized by all necessary corporate action by the board of
directors and no stockholder approval or other corporate proceedings on the part
of the Purchaser are necessary to authorize such execution, delivery and
performance. This Agreement has been, and each of the other Purchaser Documents
will be at or prior to the Closing, duly and validly executed and delivered by
the Purchaser and (assuming the due authorization, execution and delivery by the
other parties hereto and thereto) this Agreement constitutes, and each of the
other Purchaser Documents when so executed and delivered will constitute, legal,
valid and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
6.3 Conflicts; Consents of Third Parties.
------------------------------------
(a) Except as set forth on Schedule 6.3(a) hereto, neither of the
execution and delivery by the Purchaser of the Purchaser Documents, nor the
compliance by the Purchaser with any of the provisions hereof or thereof will
(i) conflict with, or result in the breach of, any provision of the certificate
of incorporation or by-laws of the Purchaser, (ii) conflict with, violate,
result in the breach of, or entitle any other party thereto to terminate, or
accelerate or assert additional material rights under, any Contract to which the
Purchaser is a party or by which the Purchaser or its properties or assets are
bound or (iii) conflict with or violate any Law of any Governmental Body by
which the Purchaser is bound, except, in the case of clauses (ii) and (iii), for
such conflicts, violations, breaches or defaults as would not have, individually
or in the aggregate, a material adverse effect on the business, properties,
results of operations or conditions (financial or otherwise) of the Purchaser
and its Subsidiaries taken as a whole.
(b) Except for the novation of any United States Contract, filings as
may be required under the HSR Act and except as otherwise set forth on Schedule
6.3(b), no Consent of any Person or Governmental Body is required on the part of
the Purchaser in connection with the execution and delivery of this Agreement or
the other Purchaser Documents, or the compliance by the Purchaser with any of
the provisions hereof or thereof.
6.4 Litigation. There are no Legal Proceedings pending or, to the
----------
knowledge of the Purchaser, threatened that are reasonably likely to prohibit or
restrain or delay the ability of the Purchaser to enter into this Agreement or
consummate the transactions contemplated hereby.
6.5 Investment Intention. The Purchaser is acquiring the Shares for
--------------------
its own account, for investment purposes only and not with a view to the
distribution (as such term is used in Section 2(11) of the Securities Act of
1933, as amended (the "Securities Act") thereof. The Purchaser understands that
the Shares have not been
40
<PAGE>
registered under the Securities Act and cannot be sold unless subsequently
registered under the Securities Act or an exemption from such registration is
available.
6.6 Financial Capability. The Purchaser will have on the Closing
--------------------
Date sufficient funds to purchase the Shares and to consummate the transactions
contemplated by this Agreement.
6.7 Financial Advisors. Except as set forth on Schedule 6.7, no
------------------
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for the Purchaser in connection with the transactions contemplated by
this Agreement and no Person is entitled to any fee or commission or like
payment in respect thereof.
ARTICLE VII
COVENANTS
7.1 Access to Information.
---------------------
(a) Without limiting its obligations under any other agreement
between or among the parties hereto and/or any of their respective Affiliates
relating to confidentiality, each of the parties hereto agrees that it shall
not, and shall not permit any of its Affiliates or representatives to, disclose
any Confidential Information to any Person, other than to such Affiliates or
representatives on a need-to-know basis in connection with the purpose for which
the Confidential Information was originally disclosed. Notwithstanding the
foregoing, each of the parties hereto and its respective Affiliates and
representatives may disclose such Confidential Information to the extent that
such party can demonstrate that such Confidential Information is or was (i)
available to such party outside the context of the Prior Relationship on a
nonconfidential basis prior to its disclosure by the other party, (ii) in the
public domain other than by the breach of this Agreement or by breach of any
other agreement between or among the parties hereto and/or any of their
respective Affiliates relating to confidentiality, or (iii) lawfully acquired
outside the context of the Prior Relationship on a nonconfidential basis or
independently developed by, or on behalf of, such party by Persons who do not
have access to, or description of, any such Confidential Information. The Seller
agrees that from and after the date hereof to the Closing Date, it shall
maintain any policies and procedures regarding the sharing by the Company's
employees of confidential pricing information relating to launch services and
the manufacture of satellites with Affiliates of the Company which purchase
satellites or launch services from the Company.
(b) Each of the parties hereto shall maintain, and shall cause their
respective Subsidiaries to maintain, policies and procedures, and develop such
further reasonable policies and procedures as shall from time to time become
necessary or appropriate, to ensure compliance with this Section 7.1.
41
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(c) If any of the parties to this Agreement or any of their
respective Affiliates or representatives becomes legally required to disclose
any Confidential Information, such disclosing party shall promptly notify the
party owning the Confidential Information (the "Owning Party") and shall use all
commercially reasonable efforts consistent with such disclosing party's legal
requirements to cooperate with the Owning Party so that the Owning Party may
seek a protective order or other appropriate remedy and/or waive compliance with
this Section 7.1. All expenses incurred by the disclosing party in seeking a
protective order or other remedy shall reasonably be borne by the Owning Party.
If such protective order or other remedy is not obtained, or if the Owning Party
waives compliance with this Section 7.1, the disclosing party or its Affiliate
or representative, as applicable, shall (i) disclose only that portion of the
Confidential Information which its legal counsel advises it is compelled to
disclose consistent with such disclosing party's legal requirements, (ii) use
all commercially reasonable efforts to obtain reliable assurance requested by
the Owning Party that confidential treatment will be accorded such Confidential
Information, and (iii) promptly provide the Owning Party with a copy of the
Confidential Information so disclosed, in the same form and format so disclosed,
together with a description of all Persons to whom such Confidential Information
was disclosed.
(d) The Seller agrees that, prior to the Closing Date, the Purchaser
shall be entitled, through its officers, employees and representatives to make
such investigation of the properties, businesses and operations of the Company
and its Subsidiaries, and such examination of the books, records and financial
condition of the Company and its Subsidiaries, as it reasonably requests and to
make extracts and copies of such books and records. Any Confidential
Information provided pursuant to this Section 7.1(d) shall be kept confidential
by the Purchaser and shall be subject to the terms of the Confidentiality
Agreement. Any such investigation and examination shall be conducted during
regular business hours and under reasonable circumstances after appropriate
advance notice to the Seller, and the Seller shall cooperate, and shall cause
the Company and its Subsidiaries to cooperate, fully therein.
7.2 Conduct of the Business Pending the Closing.
-------------------------------------------
(a) Except as otherwise expressly contemplated by this Agreement or
with the prior written Consent of the Purchaser, from and after the date hereof
to the Closing Date, the Seller shall cause the Company and its Subsidiaries to
conduct the business of the Company and its Subsidiaries and the Satellite
Business in the ordinary course of business and use commercially reasonable
efforts to preserve the present business operations, organization (including
management and the sales force) and goodwill of the Company and its
Subsidiaries, and the Company will use commercially reasonable efforts to keep
available the services of key employees and to preserve the relationships with
key customers, suppliers and others having material business dealings with the
Company and its Subsidiaries. Moreover, the Seller shall confer at such times as
the Purchaser may reasonably request with one or more representatives of the
Purchaser to report material operational matters and the general status of
ongoing operations (to the extent the Purchaser reasonably requires such
information) and shall notify the Purchaser
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of any material emergency or other material change in the normal course of the
Company's or its Subsidiaries' respective businesses or in the operation of the
Company's or its Subsidiaries' respective properties and of any material
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) of any Governmental Body. Without limiting the
generality of the foregoing, except as otherwise expressly contemplated by this
Agreement or as set forth on Schedule 7.2, from and after the date hereof to the
Closing Date, the Seller shall not cause the Company and its Subsidiaries to:
(i) other than in the ordinary course of business, declare, set
aside, make or pay any dividend or other distribution in respect of the
Capital Stock of the Company or any of its Subsidiaries or repurchase,
redeem or otherwise acquire any outstanding Capital Stock of the Company or
any of its Subsidiaries;
(ii) transfer, issue, sell or dispose of any Capital Stock or other
securities of the Company or any of its Subsidiaries or grant options,
warrants, calls or other rights to purchase or otherwise acquire Capital
Stock of the Company or any of its Subsidiaries (other than option grants
in the ordinary course of business consistent with past practice);
(iii) effect any recapitalization, reclassification, stock split or
like change in the capitalization of the Company or any of its
Subsidiaries;
(iv) propose to amend or amend the certificate of incorporation or
by-laws of the Company or any of its Subsidiaries;
(v) except in the ordinary course of business (as to employees other
than officers of the Company or its Subsidiaries), or as required to comply
with applicable Law as set forth in the Employee Matters Agreement attached
hereto as Exhibit E (A) materially increase the annual level of
compensation of any employee of the Company or any of its Subsidiaries, (B)
enter into any new Employee Benefit Plan or amend any Employee Benefit
Plan, (C) grant any bonus to any employee, director or consultant or (D)
enter into any employment, deferred compensation, severance, retention,
consulting, non-competition or similar agreement (or amend any such
agreement) to which the Company or any of its Subsidiaries is a party;
(vi) except for trade payables and for indebtedness for borrowed
money incurred in the ordinary course of business, borrow monies for any
reason or draw down on any line of credit or debt obligation, or become the
guarantor, surety, endorser or otherwise liable for any Liability
(contingent or otherwise) of any other Person (except with respect to
performance and financial guarantees, letters of credit or similar credit
enhancement rendered by the Company on behalf of its Subsidiaries and
except as provided in Section 7.2(a)(xi));
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(vii) subject to any Lien (except for Permitted Exceptions and Leases
that do not materially impair the use of the property subject thereto in
their respective businesses as presently conducted), any of the material
assets (whether tangible or intangible) of the Company or any of its
Subsidiaries (other than any Lien on work-in-progress assets under any
customer finance facility of the Company or any of its Subsidiaries);
(viii) acquire any material assets or sell, assign, transfer, convey,
lease or otherwise dispose of any of the material assets (except, in each
case, for fair consideration in the ordinary course of business consistent
with past practice or pursuant to existing contractual obligations) of the
Company and its Subsidiaries;
(ix) enter into any commitment for capital expenditures of the
Company and any of its Subsidiaries not contemplated by the capital
expenditure budget of the Company and its Subsidiaries heretofore provided
to the Purchaser in excess of $5,000,000;
(x) enter into, modify or terminate any labor or collective
bargaining agreement of the Company or any of its Subsidiaries or, through
negotiation or otherwise, make any commitment or incur any Liability to any
labor organization with respect to the Company or any of its Subsidiaries,
except in the ordinary course of business;
(xi) permit the Company or any of its Subsidiaries to enter into any
transaction or to make or enter into any Contract which by reason of its
size or otherwise is not in the ordinary course of business (which shall
not be deemed to prohibit customary equity investments not exceeding $5
million in the aggregate in customers of the Company or any of its
Subsidiaries relating to bidding activities and guarantees entered into in
the ordinary course of business);
(xii) permit the Company or any of its Subsidiaries to authorize,
propose, enter into or agree to enter into any merger, consolidation or
business combination with any Person or any acquisition of a material
amount of assets or securities, any disposition of a material amount of
assets or securities or any release or relinquishment of any material
contract rights not in the ordinary course of business;
(xiii) commence any litigation or proceeding with respect to any
material Tax liability of the Company and its Subsidiaries or settle or
compromise any such material Tax liability, in each case, other than Income
Tax liabilities, without the Purchaser's consent (which consent shall not
be unreasonably withheld);
(xiv) change any of its accounting principles, policies, practices or
procedures unless required by GAAP;
44
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(xv) prepare or file any Tax Return of the Company and its
Subsidiaries inconsistent with past practice in preparing or filing similar
Tax Returns in prior periods or, on any such Tax Return, take any position,
make any election, or adopt any method that is inconsistent with positions
taken, elections made or methods used in preparing or filing similar Tax
Returns in prior periods, without the Purchaser's consent (which consent
shall not be unreasonably withheld), in each case (x) other than with
respect to Income Tax Returns, (y) only if and to the extent that any such
inconsistent preparation or filing or inconsistent position, election or
method would have a material and adverse impact on the Tax liabilities
(other than Income Tax liabilities) of the Company and its Subsidiaries for
a Post-Closing Taxable Period and (z) except to the extent required by Law;
(xvi) make or rescind any express or deemed material election
relating to Taxes of the Company and its Subsidiaries without the
Purchaser's consent (which consent shall not be unreasonably withheld),
other than any such election (x) which relates to an Income Tax liability,
(y) which, if made or rescinded, would have a material and adverse impact
on the Tax liabilities (other than Income Tax liabilities) of the Company
and its Subsidiaries for a Post-Closing Taxable Period or (z) the making or
recission of which is required by Law;
(xvii) enter into or amend in any material respect any Contract with
an Affiliate (other than a Subsidiary) of the Company (except as otherwise
contemplated herein); or
(xviii) agree in writing or otherwise to do anything prohibited by
this Section 7.2 or anything which would make any of the representations
and warranties of the Seller in this Agreement or the other Seller
Documents untrue or incorrect in any material respect as of any time
through and including the Closing Date.
7.3 Consents. Except as contemplated in Section 7.4, the Purchaser
--------
and the Seller shall each use its commercially reasonable efforts to obtain all
Consents required to consummate the transactions contemplated by this Agreement,
including the Consents referred to in Section 5.6(b) hereof; provided, however,
-------- -------
that neither the Purchaser nor the Seller shall be obligated to pay any
consideration therefor to any Person from whom Consent is requested. In
addition to the foregoing, the Seller shall use commercially reasonable efforts
to obtain from the landlords under the Leases estoppel certificates from such
landlords in form and substance reasonably satisfactory to the Purchaser.
7.4 Filings with Governmental Bodies. As promptly as practicable
--------------------------------
after the execution of this Agreement, each party shall, in cooperation with the
other, file or cause to be filed any reports, notifications or other information
that may be required under the HSR Act, the laws of the European Union and any
other Governmental Bodies and shall furnish or cause to be furnished to the
other all such information in its possession as may be reasonably necessary for
the completion of the reports, notifications
45
<PAGE>
or submissions to be filed by the other. Each party hereto agrees to use its
best efforts to comply and cause its Affiliates to comply in a full and timely
manner with any request from a Governmental Body for additional information.
Without limiting the generality of the foregoing, each party will promptly
notify the other of the receipt and content of any inquiries or requests for
additional information made by any Governmental Body in connection therewith and
will promptly (i) comply with any such inquiry or request and (ii) provide the
other with a description of the information provided to any Governmental Body
with respect to any such inquiry or request. In addition, each party will keep
the other apprised of the status of any such inquiry or request. In furtherance
of the foregoing, the Purchaser agrees to use its best efforts to take all
necessary and proper steps (including any reasonable divestitures) as may be
required for securing the termination of any applicable waiting period under the
HSR Act or other antitrust Laws in order to permit the consummation of the
transactions contemplated hereby prior to the date specified in Section 4.3(a)
except to the extent such steps are reasonably likely to materially and
adversely affect (x) the reasonably foreseeable benefits to the Purchaser of the
transactions contemplated hereby or (y) the existing material business
operations of the Purchaser and its Subsidiaries. Each party also agrees to take
any action reasonably necessary to vigorously defend, litigate, mitigate and
rescind the effect of any litigation or administrative proceeding brought by the
Federal Trade Commission or the United States Department of Justice adversely
affecting this transaction, including appealing promptly any adverse court of
administrative order or injunction or effecting divestitures under the
circumstances contemplated above.
7.5 Insurance.
---------
(a) From and after the Closing Date, the Company shall be responsible
for obtaining and maintaining its own insurance program for operations
associated with the Satellite Business. Notwithstanding the foregoing, (i)
Hughes, upon the request of the Company, shall use its commercially reasonable
efforts to assist the Company in the transition to its own separate insurance
coverage from and after the Closing Date, and shall provide the Company with any
information that is in the possession of Hughes, which is reasonably available
and necessary to either obtain such insurance coverage or to assist the Company
in preventing gaps in its insurance coverage; (ii) Hughes, upon the Company's
request, shall cooperate with and use its commercially reasonable efforts to
assist the Company in the assertion, perfection and collection of any proceeds
to which it, or any of its Subsidiaries, may be entitled under any insurance
policy in effect prior to the Closing Date, including causing the Company and
the Purchaser to be named as additional insureds on all policies identified on
Schedules 5.21(a) and (b) in order that the Company may directly assert claims
under and collect proceeds of any insurance policy in effect prior to the
Closing Date; (iii) the Seller shall provide the Purchaser and the Company
complete and unlimited access to insurance policies listed on Schedules 5.21(a)
and (b) to the extent such insurance policies apply to liabilities which
occurred prior to the Closing Date; (iv) Hughes shall not intentionally take any
affirmative action that would jeopardize or otherwise interfere with the
Company's ability to collect any proceeds payable pursuant to any insurance
policy in effect prior to the Closing Date and
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<PAGE>
(v) the Seller agrees to use commercially reasonable efforts to assist the
Purchaser in asserting, defending or perfecting claims with insurers where such
claims relate to the events, acts or omissions of the Company which occurred
prior to or on the Closing Date. The Purchaser acknowledges and agrees that with
respect to any Liabilities relating to the Satellite Business that are covered
by insurance, whether or not such Liabilities arose out of events, acts or
omissions which occurred prior to the Closing Date, the Company shall have
responsibility for all claims arising thereunder.
(b) The Company or its Subsidiaries shall provide Hughes and its
Subsidiaries with insurance underwriting assistance (including obtaining or
maintaining insurance coverage, responding to inquiries from insurance
underwriters and obtaining any consents or approvals required to provide such
insurance underwriting assistance) in connection with any launch, on-orbit or
similar services provided or approved by Hughes and its Subsidiaries for
satellites manufactured by the Company or any of its Subsidiaries. Subject to
the terms of the transition services agreement to be entered into as a
Definitive Agreement on the Closing Date, such assistance shall be consistent
with that which would be provided to other customers for satellites manufactured
by the Company or any of its Subsidiaries.
(c) Hughes shall use commercially reasonable efforts to deliver to
the Purchaser prior to the Closing Date, and to the extent they are available,
complete, true and accurate copies of all policies listed on Schedule 5.21(a),
and Schedule 5.21(b) where the Company is the named insured.
7.6 Novations and Other Transfers.
-----------------------------
(a) As promptly as practicable after the execution of this Agreement,
the Purchaser and the Seller shall apply for any novations (the "Novations")
that may be required with respect to the United States Contracts applicable to
the Satellite Business. The Purchaser and the Seller shall act diligently and
reasonably, and shall cooperate with each other, to secure the Novations, if
required, and shall cooperate so that the Purchaser receives the benefit of such
United States Contracts pending the receipt of such Novations. With respect to
such United States Contracts in the name of Hughes Aircraft Company and related
entities that were part of Hughes' former defense business, Purchaser shall
execute any necessary Novations directly with the United States Government and
Raytheon Company.
(b) Each party shall exercise its commercially reasonable efforts to
effectuate a transfer of the Permits listed on Schedule 5.6(b). In furtherance
of the foregoing, each party shall prepare the required transmittal letters to
the United States Department of State and shall concurrently submit the letters
to the Department of State within the time periods required by law.
7.7 Other Actions. (a) Each of the Seller and the Purchaser shall
-------------
use its commercially reasonable efforts to (i) take all actions necessary or
appropriate to consummate the transactions contemplated by this Agreement and
(ii) cause the
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<PAGE>
fulfillment at the earliest practicable date of all of the conditions to their
respective obligations to consummate the transactions contemplated by this
Agreement.
(b) With respect to those representations and warranties contained in
Sections 5.10, 5.11(c), 5.19(b) and 5.19(d) that are expressly made only as of
the date hereof, the Seller agrees that if to the Seller's Knowledge, events
have occurred after the date hereof and prior to the Closing Date that the
Seller would have been required to include on the applicable schedule referred
to in the section containing such representation if such event had occurred
prior to the date hereof, the Seller shall advise the Purchaser thereof. The
parties agree that neither the occurrence of any such event nor the advising of
the Purchaser thereof will be deemed to be a breach of the applicable
representation or warranty.
7.8 No Solicitation.
---------------
(a) The Seller shall not, and shall not cause or permit the Company
or any of its Subsidiaries, or any of their directors, officers, employees,
representatives or agents (collectively, the "Representatives") to, directly or
indirectly, (i) discuss, negotiate, undertake, authorize, assist, participate
in, recommend, propose or enter into, either as the proposed surviving, merged,
acquiring or acquired corporation, any transaction involving a merger,
consolidation, business combination, purchase or disposition of any amount of
the Assets or Capital Stock or other equity interest in the Company or any of
its Subsidiaries other than the transactions contemplated by this Agreement (an
"Acquisition Transaction"), (ii) facilitate, encourage, solicit or initiate
discussions, negotiations or submissions of proposals or offers in respect of an
Acquisition Transaction, (iii) furnish or cause to be furnished, to any Person,
any information concerning the business, operations, properties or Assets of the
Company or any of its Subsidiaries in connection with an Acquisition
Transaction, or (iv) otherwise assist or participate in, facilitate or
encourage, any effort or attempt by any other Person to do or seek any of the
foregoing. The Seller shall promptly inform the Purchaser following the receipt
by the Seller, the Company or any Representative thereof of any proposal in
respect of any Acquisition Transaction.
(b) Beginning as of the date hereof and continuing through the date
that is one year following the Closing Date, the Purchaser and its Subsidiaries
shall not directly or indirectly, except by means of a general public
solicitation, or by retaining an executive recruiting firm that it has not
directed to approach employees of Hughes or its Subsidiaries, solicit,
encourage, entice or induce any Person who is an employee of Hughes or its
Subsidiaries to terminate his or her employment with Hughes or such Subsidiary.
The Purchaser agrees that money damages will not be an adequate remedy and that
the Seller shall be entitled to equitable relief, including injunction, in the
event of any breach by the Purchaser or its Subsidiaries of this Section 7.8(b),
in addition to any other remedies available to the Seller at Law; provided,
--------
however, that nothing in this Section 7.8(b) shall restrict the Purchaser or its
- -------
Subsidiaries from soliciting employees of Hughes or its Subsidiaries on the date
hereof or at any time hereafter who are terminated by their respective
employers, or have voluntarily resigned prior to any such solicitation.
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<PAGE>
Notwithstanding the foregoing, the Purchaser and its Subsidiaries shall be
permitted to offer employment to those employees consented to by Hughes which
consent will not be unreasonably withheld.
(c) Beginning as of the date hereof and continuing through the date
that is one year following the Closing Date, Hughes and its Subsidiaries shall
not directly or indirectly, except by means of a general public solicitation or
by retaining an executive recruiting firm that it has not specifically directed
to approach employees of the Purchaser or its Subsidiaries, solicit, encourage,
entice or induce any Person who is an employee of the Purchaser or its
Subsidiaries to terminate his or her employment with the Purchaser or its
Subsidiaries. Hughes agrees that money damages will not be an adequate remedy
and that the Purchaser shall be entitled to equitable relief, including
injunction, in the event of any breach by Hughes or its Subsidiaries of this
Section 7.8(c), in addition to any other remedies available to the Purchaser at
Law; provided, however, that nothing in this Section 7.8(c) shall restrict
-------- -------
Hughes or its Subsidiaries from soliciting employees of the Purchaser or its
Subsidiaries on the date hereof or at any time hereafter who are terminated by
their respective employers or have voluntarily resigned prior to any such
solicitation. Notwithstanding the foregoing, Hughes or its Subsidiaries shall
be permitted to offer employment to those employees consented to by the
Purchaser, which consent will not be unreasonably withheld.
7.9 Preservation of Records. Subject to Section 11.5(c) hereof
-----------------------
(relating to the preservation of Tax records), the Seller and the Purchaser
agree that each of them shall preserve and keep the records held by it relating
to the business of the Company and its Subsidiaries for a period of ten years
from the Closing Date in accordance with their respective corporate records
retention policies; provided, however, that prior to disposing of any such
-------- -------
records in accordance with such policies, the parties hereto shall provide
written notice to the other party of its intent to dispose of such records and
shall provide such other party the opportunity to take ownership and possession
of such records (at such other party's sole expense) within 90 days after such
notice is delivered. If such other party does not confirm its intention in
writing to take ownership and possession of such records within such 90-day
period, the party who possesses the records may proceed with the disposition of
such records. Written notice of intent to dispose of records shall include a
description of the records in detail sufficient to allow the other party to
reasonably assess its potential need to retain such records. At a minimum, the
description shall include the organization that generated or received the
records, the type of records, the contract number or program name to which the
records pertain (if applicable), and the dates of the records. The Seller and
the Purchaser shall make such records available to the other as may be
reasonably required by such party in connection with, among other things, any
insurance claims by, Legal Proceedings against or governmental investigations of
the Seller or the Purchaser or any of their Affiliates or in order to enable the
Seller or the Purchaser to comply with their respective obligations under this
Agreement and each other agreement, document or instrument contemplated hereby
or thereby.
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7.10 Publicity. Neither the Seller nor the Purchaser shall issue any
---------
press release or public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
the other party hereto, which approval will not be unreasonably withheld or
delayed, unless, in the reasonable judgment of the Purchaser or the Seller,
disclosure is otherwise required by applicable Law or by the applicable rules of
any stock exchange on which the Purchaser, Hughes or Hughes' parent corporation
lists its securities; provided that, to the extent required by applicable Law or
--------
by the rules of any stock exchange, the party intending to make such release or
announcement shall use its commercially reasonable efforts consistent with such
applicable Law to consult with the other party with respect to the text thereof.
7.11 Non-Competition Agreements.
--------------------------
(a) Except for those activities currently contemplated in the
Purchaser's business plan, as identified on Schedule 7.11, the Purchaser agrees
that for a period of three years from and after the Closing Date, neither it nor
its Subsidiaries will (1) themselves develop, own or make any financial
investments in (directly or indirectly) a Competitive Commercial Satellite
--
System (defined as a system that would be in direct competition with the
PanAmSat and/or Spaceway systems, a "Competitive Commercial Satellite System"),
or (2) manage, control or operate any Competitive Commercial Satellite System
except as part of an integrated product offering to a customer where the
commercial satellite services component represents less than 20% of the total
revenues to the Purchaser for such integrated product from such customer and is
not supplied by Purchaser or its Affiliates (but instead is procured from an
unrelated third party) ; provided, however, that nothing herein shall prohibit:
-------
(i) any investment of less than 5% of the equity securities (as
determined at the time of investment) in a Person if the Purchaser does not
actively participate in the management, supervision or conduct of such
Person, whether through membership or participation in such Person's board
of directors, governing committee, management or otherwise;
(ii) any acquisition by the Purchaser of another Person which is
engaged in a Competitive Commercial Satellite System, if such Competitive
Commercial Satellite System represents less than one-fifth of such Person's
revenues and less than one-fifth of such Person's Assets, and if the
Purchaser either (i) acts diligently to divest such Competitive Commercial
Satellite System in a commercially reasonable manner; or (ii) enters into
appropriate arrangements reasonably satisfactory to Hughes to assure that
it will not participate in the management, supervision or conduct of such
Person in any manner referred to in clause (i) above; or
(iii) any investment of up to 20% in another Person if the Purchaser
(i) determines in good faith that such investment is primarily motivated by
the receipt by the Purchaser or one of its Affiliates, or a reasonable
expectation that
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the Purchaser or one of its Affiliates will receive, a contract of
significance (in relation to the amount of the investment) for the
provision of goods and/or services, to such Person and (ii) enters into
appropriate arrangements reasonably satisfactory to Hughes to assure that
it will not participate in the management, supervision or conduct of the
business of such Person; provided that no such arrangement shall be
--------
necessary if the Purchaser's participation is limited to activities that
directly affect the Purchaser's performance as a provider of goods and/or
services to such Person and the Purchaser maintains appropriate firewalls
and similar measures designed to ensure that any information that the
Purchaser receives from such participation is not used by the Purchaser to
engage, directly or indirectly, in a Competitive Commercial Satellite
System.
Except for any existing commitments, where a commercial satellite can
be employed in pursuit of those activities currently contemplated in the
Purchaser's business plan as identified on Schedule 7.11, Purchaser agrees that
for a period of three years from and after the Closing Date, it will and it will
use its commercially reasonable efforts to cause its Subsidiaries to consider
contracting with Hughes or its Affiliates as supplier of such commercial
satellite services, which consideration would take into account such matters as
the relevant party's fiduciary duties, as well as customary commercial
considerations as to price, delivery schedule, quality and other appropriate
matters. The final determination in each case shall be subject to the approval
of the board of directors or appropriate officers of such entity.
In addition, except for those activities currently contemplated in the
Purchaser's business plan, as identified on Schedule 7.11, the Purchaser
acknowledges those certain non-competition provisions binding on the Company and
its subsidiaries that are included in the contract with Hughes' HNS division
regarding the establishment of the Spaceway system.
(b) Hughes agrees that for a period of three years from and after the
Closing Date, neither Hughes nor its Subsidiaries will engage or participate in,
or make any financial investments in (directly or indirectly) any Person which
engages directly or indirectly in the business of, manufacturing satellites for
commercial customers or government agencies; provided, however, that nothing
-------- -------
herein shall prohibit:
(i) any investment of less than 5% of the equity securities (as
determined at the time of investment) in a Person if Hughes does not
actively participate in the management, supervision or conduct of such
Person, whether through membership or participation in such Person's board
of directors, governing committee, management or otherwise; or
(ii) any acquisition by Hughes of another Person which is engaged in a
business of manufacturing satellites for commercial customers or government
agencies, if such activities represents less than one-fifth of such
Person's revenues and less than one-fifth of such Person's assets, and if
Hughes either (i) acts diligently to divest such activities in a
commercially reasonable manner; or
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(ii) enters into appropriate arrangements reasonably satisfactory to the
Purchaser to assure that it will not participate in the management,
supervision or conduct of such Person in any manner referred to in clause
(i) above.
(c) Each party hereto acknowledges that in the event of its or its
Subsidiaries' breach of the covenants contained in this Section 7.11, money
damages would be an inadequate remedy. Accordingly, without prejudice to the
rights of any party also to seek such damages or other remedies available to it,
any party may seek, and the other party shall not contest the appropriateness of
the availability of, injunctive or other equitable relief in any proceeding
which such first party may bring to enforce the covenants contained in this
Section 7.11.
(d) Hughes and the Purchaser agree that, if any provision of this
Section 7.11 should be adjudicated to be invalid or unenforceable, such
provision shall be deemed deleted herefrom with respect, and only with respect,
to the operation of such provision in the particular jurisdiction in which such
adjudication was made. To the extent any such provision may be valid and
enforceable in such jurisdiction by limitations on the scope of the activities,
geographical area or time period covered, the Purchaser and Hughes agree that
such provision instead shall be deemed limited to the extent, and only to the
extent, necessary to make such provision enforceable to the fullest extent
permissible under the Laws and public policies in such jurisdiction.
7.12 Guarantees and Letters of Credit. The Purchaser shall (i)
--------------------------------
substitute itself or an Affiliate for Hughes with respect to (and cause Hughes
to be released from) the financial and performance guarantees delivered by
Hughes prior to the Closing Date in connection with the operation of the
Satellite Business, including those identified on Schedule 7.12, and (ii) cause
to be issued letters of credit as replacement letters of credit for ones issued
by Hughes prior to the Closing Date in connection with the operation of the
Satellite Business, including those letters of credit in the amount and for the
beneficiaries identified on Schedule 7.12. Schedule 7.12 sets forth all of such
financial performance guarantees and letters of credit that are outstanding as
of the date hereof.
7.13 Sublease for Shared Facilities. The parties hereto agree to
------------------------------
execute and deliver on or prior to the Closing Date a sublease for the facility
identified on Schedule 7.13. Pursuant to the sublease, Hughes will sublease from
the Company the space currently occupied by Hughes employees for a term of two
years after the Closing Date. The subtenant may terminate the sublease at any
time upon not less than 90 days prior written notice. The subtenant will pay a
pro rata share, based on the number of square feet occupied, of the rent and
operating expenses paid by the Company. Otherwise, the sublease will contain
mutually agreeable terms and conditions consistent with the prime lease.
7.14 Guarantee of Performance.
------------------------
(a) With respect to those Contracts existing as of the Closing Date
between Hughes and its Subsidiaries, on the one hand, and Subsidiaries of the
Company,
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<PAGE>
on the other hand, including those Contracts listed on Schedule 7.14, the
Purchaser agrees that from and after the Closing Date, it shall cause the
Company to guarantee the performance of such Subsidiaries under such Contracts.
(b) With respect to all of the obligations of the Seller hereunder,
Hughes agrees that it shall cause the Seller to perform such obligations and it
hereby further agrees to guarantee the performance by the Seller of such
obligations, and to be liable as a primary obligor thereon.
7.15 Access. Upon reasonable advance notice from the Purchaser, the
------
Seller shall (i) during ordinary business hours and as long as it would not
cause undue business interruption, permit the Purchaser and its authorized
representatives to have access to the Company Properties in order to make such
reasonable inspections and investigations as the Purchaser shall deem
appropriate, and (ii) furnish as soon as reasonably practicable to the Purchaser
or its authorized representatives such other reasonable information as may be
reasonably available with respect to the Company Properties as the Purchaser may
from time to time reasonably request. The Purchaser shall not be entitled to
perform any invasive action, testing or drilling without prior notice to and
consent of the Seller, which Consent is not to be unreasonably withheld or
delayed. The Purchaser shall immediately repair any and all damage resulting
from the acts or omissions of the Purchaser or its agents, employees,
contractors or representatives relating to such inspections, tests and
investigations of the Company Properties.
7.16 Certain Notices. If required under the Workers Adjustment and
---------------
Retraining Notification Act or other applicable state Law regulating plant
closing or mass layoffs, the Company and each of its Subsidiaries shall cause
there to be filed or distributed, as appropriate, all required filings and
notices with respect to employment Losses occurring through the Closing Date.
7.17 Preferred Provider. Hughes agrees that for a period of five years
------------------
from and after the Closing Date, it will, and it will use its commercially
reasonable efforts to cause its Subsidiaries to consider contracting with the
Company as supplier with respect to the satellite manufacturing requirements of
such entity, which consideration would take into account such matters as the
relevant party's fiduciary duties, as well as customary commercial
considerations as to price, delivery schedule, quality and other appropriate
matters. The final determination in each case shall be subject to the approval
of the board of directors or appropriate officers of such entity.
7.18 On Orbit Incentives. Not more than 60 days prior to the Closing
-------------------
Date, Hughes shall cause to be performed a "monte carlo analysis" using the most
recently available data (the "Closing Analysis") to determine the appropriate
level of reserves with respect to on-orbit incentives of the Company and its
Subsidiaries. The Closing Analysis will be conducted using methods and
assumptions consistent with those used in the most recently completed monte
carlo closing analysis. The Closing Statement of Assets and Liabilities will
reflect the level of reserves established by the Closing Analysis.
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7.19 Thuraya. Hughes and the Seller agree to cause to be executed and
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delivered on or prior to the Closing Date a definitive agreement that
incorporates the existing memorandum of understanding (the "MOA") between
Hughes' HNS division ("HNS") and the Company regarding the existing contract
between Thuraya and a Subsidiary of the Company (the "Thuraya Contract"),
modified in order to reflect changes needed to convert the responsibilities of
HNS to those appropriate for a subcontractor and to convert the responsibilities
of the Company and its Subsidiaries to those appropriate for the prime
contractor. The material modifications contemplated by the preceding sentence
are described on Schedule 7.19. The definitive agreement shall be consistent
with Schedule 7.19 and in all other respects in form and substance reasonably
satisfactory to the Purchaser and the Seller.
7.20 Spaceway. (a) Hughes and the Seller agree to cause to be
--------
executed and delivered on or prior to the Closing Date an amendment to the
Spaceway contract between HNS and the Company (the "Spaceway Contract") that
implements the following modifications to the non-competition provisions set
forth therein:
(i) If the Company contracts with Hughes to manufacture satellites
for a non-U.S. regional Spaceway system, the non-competition provisions set
forth therein will expire on April 1, 2006, as currently provided therein;
(ii) If the Company is not selected by Hughes to manufacture
satellites for a non-U.S. regional Spaceway system or if Hughes elects not
to proceed with a non-U.S. regional Spaceway system, the non-competition
provisions set forth therein will expire on the later of (y) April 1, 2005
and (z) 24 months from final acceptance of the Spaceway constellation, but
in no event later than April 1, 2006.
(b) In addition, the non-competition provisions set forth in the
Spaceway Contract will be amended to provide that such provisions are
inapplicable to those activities currently contemplated in the Purchaser's
business plan as identified on Schedule 7.11.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions Precedent to Obligations of Each Party. The respective
-------------------------------------------------
obligations of the Purchaser and the Seller to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, on or prior to
the Closing Date, of each of the following conditions:
(a) any required waiting period (including any extension thereof)
applicable to the purchase and sale of the Shares to the Purchaser under the HSR
Act and the laws of the European Union shall have terminated or expired;
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(b) there shall not be in effect any Order by a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(c) the Transfers shall have been consummated in accordance with the
terms of the Transfer Documents;
(d) the Definitive Agreements shall have been duly executed and
delivered;
(e) the sublease contemplated in Section 7.13 shall have been duly
executed and delivered;
(f) the definitive agreement incorporating the MOA, modified as
contemplated in Section 7.19 , shall have been duly executed and delivered; and
(g) the amendment to the Spaceway Contract as contemplated in Section
7.20 shall have been duly executed and delivered.
8.2 Conditions Precedent to Obligations of the Purchaser. The
----------------------------------------------------
obligation of the Purchaser to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, on or prior to the Closing Date, of
each of the following conditions (any or all of which may be waived by the
Purchaser in whole or in part to the extent permitted by applicable Law):
(a) all representations and warranties of the Seller contained herein
shall be true and correct at and as of the Closing Date with the same effect as
though those representations and warranties had been made again at and as of
that time, unless the failure of such representations to be true and correct,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect, except with respect to those representations and
warranties made as of a particular time which must be true and correct in the
manner contemplated above as of such time;
(b) the Seller shall have performed and complied with all obligations
and covenants required by this Agreement to be performed or complied with by it
on or prior to the Closing Date unless the failure to perform or comply with
such obligations and covenants individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect;
(c) the Purchaser shall have been furnished with a certificate (dated
the Closing Date and in form and substance reasonably satisfactory to the
Purchaser) executed by a principal executive officer and the chief financial
officer of the Seller certifying as to the fulfillment of the conditions
specified in Sections 8.2(a) and 8.2(b) hereof;
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(d) certificates representing the Shares shall have been, or shall at
the Closing be, validly delivered and transferred to the Purchaser, free and
clear of any and all Liens;
(e) there shall not have been or occurred any Material Adverse
Change;
(f) the Seller shall have provided the Purchaser with an affidavit of
non-foreign status that complies with Section 1445 of the Code (a "FIRPTA
Affidavit");
(g) the Seller shall have obtained all Consents referred to on
Schedule 8.2(g) (the "Seller Necessary Consents"), in a form reasonably
satisfactory to the Purchaser, with respect to the transactions contemplated by
this Agreement and the Seller Documents;
8.3 Conditions Precedent to Obligations of the Seller. The
-------------------------------------------------
obligations of the Seller to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, prior to or on the Closing Date, of
each of the following conditions (any or all of which may be waived by the
Seller in whole or in part to the extent permitted by applicable Law):
(a) all representations and warranties of the Purchaser contained
herein qualified as to materiality or material adverse effect shall be true and
correct, and all representations and warranties of the Purchaser contained
herein not qualified as to materiality shall be true and correct in all material
respects, at and as of the Closing Date with the same effect as though those
representations and warranties had been made again at and as of that date;
(b) the Purchaser shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Purchaser on or prior to the Closing Date; and
(c) the Seller shall have been furnished with a certificate (dated
the Closing Date and in form and substance reasonably satisfactory to the
Seller) executed by a principal executive officer and the chief financial
officer of the Purchaser certifying as to the fulfillment of the conditions
specified in Sections 8.3(a) and 8.3(b).
ARTICLE IX
DOCUMENTS TO BE DELIVERED
9.1 Documents to be Delivered by the Seller. At the Closing, the
---------------------------------------
Seller shall deliver, or cause to be delivered, to the Purchaser the following:
(a) stock certificates representing the Shares, duly endorsed in
blank or accompanied by stock transfer powers;
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(b) the certificate referred to in Section 8.2(c) hereof;
(c) copies of all Seller Necessary Consents;
(d) copies of the Transfer Documents, duly executed by the parties
thereto;
(e) copies of the Definitive Agreements and the sublease contemplated
by Section 7.13, duly executed by the Seller and/or the Company, as the case may
be;
(f) a duly executed FIRPTA Affidavit for the Seller;
(g) certificates of good standing with respect to the Company issued
by the Secretary of State of the State of Delaware and for each state in which
the Company is qualified to do business as a foreign corporation; and
(h) such other customary closing documents as the Purchaser shall
reasonably request.
9.2 Documents to be Delivered by the Purchaser. At the Closing, the
------------------------------------------
Purchaser shall deliver to the Seller the following:
(a) evidence of the wire transfers referred to in Section 3.1 hereof;
(b) the certificate referred to in Section 8.3(c) hereof;
(c) copies of the Definitive Agreements and the sublease contemplated
by Section 7.13, duly executed by the Purchaser;
(d) evidence of the issuance of the guarantees (and release of
Hughes) and the letters of credit contemplated by Section 7.14; and
(e) such other customary closing documents as the Seller shall
reasonably request.
ARTICLE X
INDEMNIFICATION
10.1 Non-Income Tax Indemnification.
------------------------------
(a) Subject to the other provisions of this Article X, and the
provisions of Article XII and, except as otherwise provided by Article XI, the
Seller and Hughes hereby agree to jointly and severally indemnify and hold the
Purchaser, the Company, and their respective directors, officers, employees,
Affiliates, agents, successors and
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assigns (collectively, the "Purchaser Indemnified Parties") harmless from and
against any and all Losses based upon, attributable to or resulting from:
(i) the failure of any representation or warranty of the Seller or
Hughes set forth in Article V hereof or in the Definitive Agreements, or
the agreement contained in Section 7.7(b), or any representation or
warranty contained in any certificate delivered by or on behalf of the
Seller pursuant to this Agreement, to be true and correct in all respects
as of the date made;
(ii) the breach of any covenant or other agreement on the part of the
Seller under any of the Seller Documents (other than the agreement
contained in Section 7.7(b));
(iii) the Excluded Assets; or
(iv) any claim arising from the litigation currently pending between
(x) Raytheon Company and Towers, Perrin and (y) Hughes and Towers, Perrin.
(b) Subject to the other provisions of this Article X, and the
provisions of Article XII, the Purchaser hereby agrees to indemnify and hold the
Seller and its directors, officers, employees, Affiliates, agents, successors
and assigns (collectively, the "Seller Indemnified Parties") harmless from and
against any and all Losses based upon, attributable to or resulting from:
(i) the failure of any representation or warranty of the Purchaser
set forth in Article VI hereof or in the Definitive Agreements, or any
representation or warranty contained in any certificate delivered by or on
behalf of the Purchaser pursuant to this Agreement, to be true and correct
as of the date made;
(ii) the breach of any covenant or other agreement on the part of the
Purchaser under any of the Purchaser Documents;
(iii) the breach of any covenant or other agreement on the part of the
Company under any of the Definitive Agreements to which it is a party;
(iv) all Liabilities of the Company and its Subsidiaries (including
all Liabilities relating to the Satellite Business) and all Liabilities
relating to or associated with the Shares, in each case, whether such
Liabilities arose prior to or arise on or after the Closing Date; or
(v) the Additional Satellite Liabilities, whether such Liabilities
arose prior to or arise on or after the Closing Date.
(c) The parties hereto acknowledge and agree that any matter that is
subject to, or a matter considered for, resolution by the Accounting Arbitrator
pursuant to Section 3.2 (which, for purposes of clarity, shall include all
matters reflected on the Closing Statement of Net Assets) shall not be the basis
of an indemnification claim under
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Articles X or XI, to the extent, but only to the extent, that such matter did
result in, or assuming such matter was valid and was properly raised in the
course of the purchase price adjustment provision of Section 3.2, could have
resulted in, an adjustment in the Closing Net Assets.
10.2 Certain Limitations.
-------------------
(a) An indemnifying party shall not have any liability under Section
10.1(a)(i) or Section 10.1(b)(i) hereof, as the case may be (other than with
respect to the representations and warranties in Sections 5.3, 5.7(a), 5.28 and
6.7) until the aggregate amount of Losses actually incurred by the indemnified
parties with respect to all claims shall exceed $30,000,000 (the "Basket"), in
which event, the indemnifying party shall be required to pay the entire amount
of such Losses in excess of the Basket. Claims made pursuant to the
representations and warranties contained in or made pursuant to Sections 5.3,
5.7(a), 5.28 and 6.7 hereof will not be subject to the Basket. In addition to
the foregoing, except for Losses arising out of, attributable to or resulting
from any breach of the representations and warranties in Sections 5.3, 5.7(a),
5.28 and 6.7, the maximum aggregate amount of Losses for which indemnity with
respect to breaches of representations and warranties may be sought shall be
$1,800,000,000.
(b) Subject to the provisions of Section 3.2 and Article XI, in each
case with respect to the matters covered thereby, the parties hereto agree that
except as expressly set forth to the contrary in any Definitive Agreement the
indemnification and other provisions set forth in this Article X shall be the
sole and exclusive remedy of the Purchaser against the Seller arising out of
this Agreement or the Definitive Agreements, including with respect to any
dispute that may arise under any Definitive Agreement. Notwithstanding the
foregoing, nothing herein shall eliminate the availability to the parties of any
equitable remedies or the availability of Section 14.3 for a declaration of the
rights of the parties with respect to any dispute that may arise under this
Agreement or the Definitive Agreements.
10.3 Non-Income Tax Indemnification Procedures.
-----------------------------------------
(a) In the event that any Legal Proceedings shall be instituted or
that any claim or demand ("Claim") shall be asserted by any Person in respect of
which payment may be sought under Section 10.1 hereof (regardless of the Basket
referred to above), the indemnified party shall reasonably and promptly cause
written notice of the assertion of any Claim of which it has knowledge which is
covered by this indemnity to be forwarded to the indemnifying party; provided,
--------
however, that delay or failure in the giving of any such notice shall not
- -------
relieve the indemnifying party of its obligations hereunder, except to the
extent that it suffers actual prejudice as the result of such failure or delay.
The indemnifying party shall have the right, at its sole option and expense, to
be represented by counsel of its choice, which must be reasonably satisfactory
to the indemnified party, and to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder.
If the indemnifying party elects to defend against, negotiate, settle or
otherwise deal with any Claim which
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relates to any Losses indemnified against hereunder, it shall within ten days
from receipt of the indemnified party's written notice notify the indemnified
party of its intent to do so. If the indemnifying party elects not to defend
against, negotiate, settle or otherwise deal with any Claim which relates to any
Losses indemnified against hereunder, fails to notify the indemnified party of
its election as herein provided or contests its obligation to indemnify the
indemnified party for such Losses under this Agreement, the indemnified party
may defend against, negotiate, settle or otherwise deal with such Claim. If the
indemnified party defends any Claim, then the indemnifying party shall reimburse
the indemnified party for the reasonable expenses of defending such Claim upon
submission of periodic bills. If the indemnifying party shall assume the defense
of any Claim, the indemnified party may participate, at his or its own expense,
in the defense of such Claim; provided, however, that such indemnified party
-------- -------
shall be entitled to participate in any such defense with separate counsel at
the expense of the indemnifying party if (i) so requested by the indemnifying
party to participate or (ii) in the reasonable opinion of counsel to the
indemnified party, a conflict or potential conflict exists between the
indemnified party and the indemnifying party that would make such separate
representation advisable; and provided, further, that the indemnifying party
-------- -------
shall not be required to pay for more than one such counsel for all indemnified
parties in connection with any Claim. The parties hereto agree to cooperate
fully with each other in connection with the defense, negotiation or settlement
of any such Claim.
(b) After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction and
the expiration of the time in which to appeal therefrom, or a settlement shall
have been consummated, or the indemnified party and the indemnifying party shall
have arrived at a mutually binding agreement with respect to a Claim hereunder,
the indemnified party shall forward to the indemnifying party notice of any sums
due and owing by the indemnifying party pursuant to this Agreement with respect
to such matter and the indemnifying party shall be required to pay all of the
sums so due and owing to the indemnified party by wire transfer of immediately
available funds within 10 Business Days after the date of such notice.
(c) The failure of the indemnified party to give reasonably prompt
notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.
10.4 Employee Benefits and Labor Indemnity. The Seller and Hughes
-------------------------------------
hereby agree to jointly and severally indemnify and hold the Purchaser
Indemnified Parties harmless from and against any and all Losses arising out of
or based upon or with respect to any Employee Benefit Plan subject to Title IV
of ERISA and solely by reason of the Company being included as a member of a
group under common control or treated as a single employer with the Seller prior
to the Closing Date.
10.5 China Investigation.
-------------------
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(a) Prior to the Closing, Hughes shall endeavor in good faith to
reach a final settlement with the United States Government (or applicable
Governmental Body) with regard to the investigation involving the Company's
activities in the People's Republic of China publicly disclosed by Hughes prior
to the date hereof together with any other compliance matters related to exports
by the Company to China prior to the Closing (all such matters being
collectively referred to as the "China Investigation") on such basis as Hughes
determines to be appropriate, provided, however, that (i) Hughes shall bear
responsibility for the full amount of any monetary fines and/or penalties agreed
to by the Company and (ii) in connection with any such settlement (whether or
not such settlement includes a guilty plea by the Company to one or more
criminal charges), the Satellite Business shall be deemed to have suffered a
Material Adverse Change if such settlement involves a debarment (as regards
sales to the United States Government) or material suspension of export licenses
or other material limitation on the future business activities of the Satellite
Business provided, however, that the Satellite Business shall be deemed not to
have suffered a Material Adverse Change if such settlement only involves a
suspension of licenses or other limitation on business activity restricting
sales to the People's Republic of China or to any other customer or country for
which material sales are not included in the current business plan of the
Company (as heretofore provided to the Purchaser).
(b) If Hughes is unable to reach a settlement of the China
Investigation prior to the Closing, then Hughes will provide Purchaser and its
legal counsel with a full briefing pursuant to the common interest and joint
defense privilege of Purchaser as to the status of the matter. Hughes shall also
consult with Purchaser on a regular basis concerning strategy and tactics being
considered by Hughes in connection with the resolution of the matter and will
advise Purchaser on a regular basis regarding developments and progress toward
settlement. Purchaser shall have full rights to participate in all external
proceedings, meetings and conferences, including all meetings or communications
with representatives of the U. S. Government related to this matter. It is the
intent of both parties to work closely together for a prompt and mutually
satisfactory resolution of all issues. Hughes is aware of Purchaser's
significant interests in the resolution of this matter and assumes the
responsibility to closely involve Purchaser in all aspects. Hughes shall
continue to have sole responsibility and authority to settle or otherwise
conclude such investigation on and after the Closing, provided that Hughes shall
be required to obtain the consent of Purchaser to any such conclusion or
settlement, such consent not to be unreasonably withheld or delayed, except that
the consent of Purchaser shall not be required in connection with any
settlement, whether or not such settlement fully resolves the matter, solely
involving the payment of monetary penalties or fines. To the extent that such
settlement does not fully resolve the matter, Hughes shall continue to be
responsible as to the remaining portions of the China Investigation as provided
herein until such time as there is a full and final resolution of all criminal,
civil and administrative aspects of the China Investigation. Purchaser shall
cause the Company and its Subsidiaries (including the employees of each) to
cooperate with and assist Hughes in such settlement efforts and otherwise in
resolving the China Investigation. Notwithstanding anything hereto to the
contrary, no consent of Purchaser
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shall be required for the settlement of any portion of this matter which is
limited to a resolution of the personal liability of any officer, director or
employee of Hughes or its Subsidiaries. Hughes shall retain sole liability for
payment of and shall indemnify and hold harmless Purchaser from the full amount
of any monetary fines and penalties resulting from the China Investigation,
whether in connection with a settlement or not, except to the extent provided
otherwise in section (d) below.
(c) In the event that Purchaser shall consent to a settlement
involving an agreement or (subject to Section 10.5(d)) shall otherwise become
subject to a debarment, suspension or limitation as a result of the China
Investigation which (in either case) would be deemed to constitute a Material
Adverse Change to the Company as defined in Section (a) above, Hughes shall
indemnify and hold harmless Purchaser from any and all Losses as the result of
such Material Adverse Change. Hughes and Purchaser shall endeavor to determine
whether damages are owed by Hughes to Purchaser in respect thereof, and if so,
the amount thereof. If Hughes and Purchaser shall be unable to agree upon
whether any such amount is payable by Hughes to Purchaser, or agree upon the
amount thereof, such dispute shall be resolved pursuant to the dispute
resolution provisions of Section 14.3 herein and specifically, such arbitration
shall serve to fix the damages suffered by Purchaser as a result of such
Material Adverse Change. Any arbitration findings shall be binding, and Hughes
shall be liable to the Purchaser for the damages so established.
(d) If, following the Closing, Hughes shall request Purchaser's
consent to a settlement of the China Investigation which Hughes can reasonably
demonstrate would be acceptable to the United States Government (or applicable
Governmental Body), and Purchaser withholds or unreasonably delays its consent
following such request, then at Hughes' election, Hughes shall be entitled to
pay to Purchaser the amount which would have been payable by Hughes to the
Government (and is not otherwise paid by Hughes to the Government), together
with the amount which would have been payable by Hughes to Purchaser had such
settlement been effected (either as agreed by Purchaser and Hughes or as
determined pursuant to arbitration as contemplated in Section 10.5(c) above) in
full satisfaction and discharge of Hughes' obligations to Purchaser in respect
of the China Investigation. If, following the date on which Purchaser refuses to
consent to such settlement, the United States Government (or other applicable
Governmental Body) continues to pursue or otherwise implicate Hughes or its
Subsidiaries in connection with the China Investigation, Purchaser shall
indemnify and hold harmless Hughes and any such Subsidiary for any and all fines
and penalties incurred in excess of the amount of fines and penalties which
would have been incurred had Purchaser agreed to accept the settlement proposed
by Hughes.
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ARTICLE XI
TAX MATTERS
11.1 Filing of Income Tax Returns; Payment of Income Taxes.
-----------------------------------------------------
(a) Income Tax Returns for Pre-Closing Taxable Periods.
(i) The Seller shall (A) include the Company and (where applicable)
any of its Subsidiaries in, or cause the Company and (where applicable) any
of its Subsidiaries to be included in, (1) the U.S. consolidated federal
Income Tax Returns of the GM Consolidated Group required to be filed after
the date hereof for all Pre-Closing Taxable Periods, including the taxable
period ending on the Closing Date and (2) where applicable, all other
Combined Returns for Pre-Closing Taxable Periods that are required to be
filed by a member of the GM Group, including the taxable period ending on
the Closing Date and (B) file or cause to be filed all other Income Tax
Returns of or which include one or more members of the Company Group that
are required to be filed (taking into account any extensions) on or prior
to the Closing Date. The Seller shall pay or cause to be paid any and all
Income Taxes due with respect to such Income Tax Returns. The Purchaser
shall, and shall cause each member of the Company Group to, execute such
documents and take such actions as shall be reasonably requested by GM or
the Seller to cause those members of the Company Group designated by GM or
the Seller to be included in any Combined Return (whether it relates to a
Pre-Closing Taxable Period or a Straddle Period). Without limiting the
foregoing, the Purchaser shall cause each member of the Company Group to
file a Combined Return with GM or any member of the GM Group wherever
required to do so by applicable law or wherever the option to do so is
elected by any member of the GM Group.
(ii) The Seller shall prepare, and the Purchaser shall file or cause
to be filed (in the form and manner so prepared by the Seller), any Income
Tax Return which (A) includes one or more members of the Company Group for
a Pre-Closing Taxable Period, (B) is not required to be, and is not, filed
on or prior to the Closing Date and (C) is required to be filed by a member
of the Company Group. The Seller shall provide the Purchaser with each such
Income Tax Return at least 30 days prior to the due date for filing
thereof.
(iii) The Seller shall prepare any documentation required to be filed
in connection with the making of estimated Income Tax payments due in
respect of Pre-Closing Taxable Periods for which the Seller (or another
member of the GM Group) is obligated to prepare an Income Tax Return
hereunder and shall make any such estimated Income Tax payments, whether
due before, on or after the Closing Date.
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(b) Income Tax Returns for Post-Closing Taxable Periods. The
Purchaser shall be responsible for (i) preparing and filing or causing to be
prepared and filed all Income Tax Returns required to be filed by the Company or
any member of the Company Group for any Post-Closing Taxable Period and (ii)
paying the Income Tax Liability due with respect to such Income Tax Returns.
(c) Income Tax Returns for Straddle Periods.
(i) For U.S. federal Income Tax purposes, the taxable year of the
Company Group shall end as of the close of the Closing Date and, with
respect to all other Income Taxes, the Seller and the Purchaser shall,
unless prohibited by applicable law, take or cause to be taken all action
necessary or appropriate to close the taxable period of the members of the
Company Group as of the close of the Closing Date. None of the Seller, the
Purchaser or any member of the Company Group shall take any position
inconsistent with the preceding sentence on any Income Tax Return.
(ii) The Purchaser shall prepare and file or cause to be filed, all
Income Tax Returns of or which include the Company Group or any member
thereof for a Straddle Period. The Purchaser shall provide the Seller with
each such Income Tax Return at least 45 days prior to the due date for
filing thereof. The Purchaser shall prepare or cause to be prepared such
Income Tax Returns in a manner consistent with the past practice of the
Company and its Subsidiaries to the extent that to do otherwise would
result in a material adverse effect on the Income Tax Liability of the
Company Group in a Pre-Closing Taxable Period (after giving effect to any
inconsistency with past practice which has a beneficial effect on the
Income Tax Liability of the Company Group in a Pre-Closing Taxable Period),
except (A) to the extent that such Income Tax Return is consistent with the
U.S. consolidated federal Income Tax Return of the GM Consolidated Group or
(B) as required by applicable Law, or as a result of a Final Determination
or (C) where the Seller has approved, or been deemed to have approved, an
inconsistency with past practice having an adverse effect on the Company
Group. The Seller shall have the right to review and approve (which
approval shall not be unreasonably withheld) each such Income Tax Return
within 15 Business Days following receipt thereof; provided, however, that
-------- -------
the Seller shall be deemed to have unreasonably withheld its approval of
such Income Tax Return unless, as the basis for withholding such approval,
the Seller demonstrates (by means of a written explanation in sufficient
detail to permit such conclusion to be verified) that the Purchaser has
failed to comply with the requirements of the preceding sentence. The
failure of the Seller to propose any changes to any such Income Tax Return
within such 15-Business Day period shall be deemed to constitute the
Seller's approval thereof. The Seller and the Purchaser shall attempt in
good faith mutually to resolve any disagreements regarding such Income Tax
Returns prior to the due date for filing thereof; provided, however, that
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the failure to resolve all disagreements prior to such date shall not
relieve the Purchaser of its obligation to file (or cause to be filed) any
such Income Tax Return in accordance with the first
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sentence of this Section 11.1(c)(ii). Any disagreements regarding such
Income Tax Returns which are not resolved prior to the filing thereof shall
be resolved pursuant to Section 11.6 hereof.
(iii) An Income Tax Liability in respect of an Income Tax Return for
a Straddle Period shall be (A) allocated to the Seller to the extent such
Income Tax Liability is attributable to a member of the Company Group for
the period up to and including the Closing Date and (B) allocated to the
Purchaser to the extent such Income Tax Liability is attributable to a
member of the Company Group for the period subsequent to the Closing Date.
The allocation of any Income Tax Liability between the portion of any
Straddle Period ending on the Closing Date and the portion of such Straddle
Period after the Closing Date shall be made by means of a closing of the
books and records of the members of the Company Group as of the close of
the Closing Date, as if such taxable period ended as of the close of the
Closing Date; provided that exemptions, allowances or deductions that are
calculated on an annual basis (including, depreciation and amortization
deductions) shall be allocated between the period ending on the Closing
Date and the period after the Closing Date in proportion to the number of
days in each such period. In the case of any Income Tax Liability of any
member of the Company Group which is attributable to the ownership by such
member of an equity interest in a partnership or other "flowthrough" entity
for Income Tax purposes, such allocation shall be made as if the taxable
period of such partnership or other "flowthrough" entity ended as of the
close of the Closing Date; provided, however, that to the extent that the
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information necessary to compute such allocation on the basis of an interim
closing of the books of such "flowthrough" entity is not available to the
Seller or the Purchaser, such allocation shall be made between the period
ending on the Closing Date and the period after the Closing Date in
proportion to the number of days in each such period.
(iv) The Purchaser shall pay or cause to be paid the Income Tax
Liability due with respect to any Straddle Period. No later than five
Business Days prior to the due date for filing any such Income Tax Return
(taking into account extensions), either (A) the Seller shall pay to the
Company the excess, if any, of (1) the portion of the Income Tax Liability
for such Straddle Period which is allocable to the Seller pursuant to
Section 11.1(c)(iii) hereof over (2) the estimated Income Tax payments
(including payments made in connection with an application for an
extension) made in respect of such Straddle Period by a member of the GM
Consolidated Group on or prior to the Closing Date, or (B) the Purchaser
shall pay to the Seller the excess, if any, of (1) the amount described in
clause (A)(2) of this sentence over (2) the amount described in clause
(A)(1) of this sentence.
(v) The Seller shall prepare any documentation required to be filed
in connection with the making of estimated Income Tax payments due in
respect of Straddle Periods for which the Purchaser (or any member of the
Company Group) is obligated to file an Income Tax Return hereunder. The
Purchaser shall make
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any such estimated Income Tax payments which are due on or after the
Closing Date.
(d) Flowthrough Entities. If the Income Tax Liability of any
member of the Company Group for a Post-Closing Taxable Period is increased or
decreased as a result of the ownership by such member of an equity interest in a
partnership or other "flowthrough" entity for Income Tax purposes and, in
accordance with the principle set forth in the last sentence of Section
11.1(c)(iii) hereof, such increase or decrease is allocable to a Pre-Closing
Taxable Period, (i) the Seller shall pay or cause to be paid to the Purchaser
the amount of any such increase in Income Tax Liability, and (ii) the Purchaser
shall pay or cause to be paid to the Seller the amount of any such decrease in
Income Tax Liability. If the Purchaser files or causes to be filed, or any
member of the Company Group is included in, an Income Tax Return setting forth
an amount described in the preceding sentence, the Purchaser shall deliver to
the Seller, no later than 45 Business Days prior to the due date for filing of
such Income Tax Return, a schedule setting forth in reasonable detail the
calculation of such amount. The Seller shall have the right to review and
approve (which approval shall not be unreasonably withheld) such calculation for
30 Business Days. The failure of the Seller to propose any change to such
calculation within such 30-Business Day period shall be deemed to constitute the
Seller's approval thereof. The Seller shall pay to the Purchaser, or the
Purchaser shall pay to the Seller (as the case may be), the amount required by
this Section 11.1(d), no later than five Business Days prior to the due date for
filing any such Income Tax Return (taking into account extensions).
11.2 Indemnification for Income Taxes.
--------------------------------
(a) The Seller and Hughes shall jointly and severally be liable
for, and the Purchaser and its Affiliates (including the Company and its
Subsidiaries), shall be indemnified, and held harmless from and against any and
all Income Taxes imposed upon the Company and its Subsidiaries (i) for any Pre-
Closing Taxable Period, (ii) for any Straddle Period, but only with respect to
Income Taxes allocated to the Seller in accordance with Section 11.1(c)(iii)
hereof, and (iii) under Treasury Regulation (S)1.1502-6 (or any comparable
provision under state, local or foreign law imposing several liability upon
members of a consolidated, combined, affiliated, or unitary group) for the
taxable periods ending on or before the Closing Date.
(b) Without limiting the foregoing and notwithstanding anything to
the contrary contained in this Agreement, the Seller and Hughes shall jointly
and severally be liable for, and the Purchaser and its Affiliates (including the
Company and its Subsidiaries) shall be indemnified, defended and held harmless
from and against any and all federal, state and local Income Taxes resulting
from, imposed on, sustained, or incurred by the Purchaser and its Affiliates
(including the Company and its Subsidiaries) as a result of the Section
338(h)(10) Election.
(c) From and after the Closing, the Purchaser shall be liable for,
and shall indemnify the Seller and hold it harmless from and against any and all
Income
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Taxes imposed upon the Company or any of its Subsidiaries for (i) any Post-
Closing Taxable Period of the Company or any of its Subsidiaries, and (ii) any
Straddle Period, but only with respect to Income Taxes allocated to the
Purchaser in accordance with Section 11.1(c)(iii) hereof.
(d) Payment. Subject to the following two sentences, the
indemnifying party shall pay to the indemnified party, no later than 45 Business
Days after the indemnifying party receives from the indemnified party
calculations thereof (in sufficient detail so as to permit the indemnifying
party to understand such calculations), the amount that the indemnifying party
is required to pay the indemnified party under this Section 11.2 by reason of a
Final Determination. The failure of the indemnifying party to notify the
indemnified party in writing of its disagreement with such calculations within
20 Business Days of receiving such calculations shall be deemed to constitute
the indemnifying party's agreement therewith. Any dispute regarding such
calculations shall be resolved in accordance with Section 11.6 hereof.
11.3 Refunds. The Seller shall be entitled to all Refunds (and any
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interest thereon received from the applicable taxing authority) in respect of
Income Taxes for all Pre-Closing Taxable Periods and the portion of any Straddle
Period ending on the Closing Date. The Purchaser shall be entitled to all
Refunds (and any interest thereon received from the applicable taxing authority)
in respect of Income Taxes for all Post-Closing Taxable Periods and the portion
of any Straddle Period beginning after the Closing Date. A party receiving a
Refund to which another party is entitled pursuant to this Section 11.3 shall
pay the amount to which such other party is entitled within 10 days after such
Refund is Actually Realized. The Seller shall be permitted to file, and the
Purchaser shall fully cooperate with the Seller in connection with, any claim
for Refund in respect of an Income Tax for which the Seller is responsible
pursuant to Section 11.1 hereof. In the event that a member of the Company
Group is on notice that it will receive a Refund in respect of a Pre-Closing
Period or the pre-Closing portion of a Straddle Period, the Purchaser shall, and
shall cause the members of the Company Group to, take such other actions as
shall be necessary or appropriate to cause the taxing authority to remit such
Refund directly to the Seller.
11.4 Income Tax Contests.
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(a) Notification. The Purchaser shall, promptly upon receipt of
notice thereof by any member of the Company Group, notify the Seller in writing
of any communication with respect to any pending or threatened Proceeding in
connection with an Income Tax Liability (or an issue related thereto) for which
the Seller may be responsible pursuant to this Article XI. The Purchaser shall
include with such notification a true, correct and complete copy of any written
communications, and an accurate and complete written summary of any oral
communications, so received by a member of the Company Group. The failure of the
Purchaser timely to forward such notification in accordance with the immediately
preceding sentence shall not relieve the Seller of its obligation to pay such
Income Tax Liability or indemnify the Company Group therefor, except and to the
extent that the failure timely to forward such
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notification actually prejudices the ability of the Seller to contest such
Income Tax Liability or increases the amount of such Income Tax Liability.
(b) Pre-Closing Taxable Periods. The Seller (or such member of the
GM Group as the Seller shall designate) shall have the sole right to represent
the interests of the members of the Company Group in any Proceeding relating to
Pre-Closing Taxable Periods and to employ counsel of its choice at its expense.
(c) Straddle Periods. The Seller and the Purchaser jointly shall
represent the interests of the Company Group (or any member thereof) in any
Proceeding relating to any Straddle Period. Neither party shall settle any
dispute relating to an Income Tax Liability attributable to a member of the
Company Group for a Straddle Period without the consent of the other party
(which consent shall not be unreasonably withheld); provided, however, that if
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the Seller proposes to accept a settlement of such an Income Tax Liability, and
the Purchaser does not consent thereto, the liability of the Seller under this
Article XI in respect of such Income Tax Liability shall be limited to the
portion of the proposed settlement amount attributable to the portion of the
Straddle Period ending on the Closing Date. Any disputes regarding the conduct
or resolution of any such Proceeding shall be resolved pursuant to Section 11.6;
provided that no such resolution shall affect the limitation on the liability of
- --------
the Seller set forth in the immediately preceding sentence. All costs, fees and
expenses paid to third parties in the course of such Proceeding shall be borne
by the Seller and the Purchaser in the same ratio as the ratio in which,
pursuant to the terms of this Article XI, the Seller and the Purchaser would
share the responsibility for payment of the Income Taxes asserted by the taxing
authority in its claim or assessment if such claim or assessment were sustained
in its entirety; provided, however, that in the event that any party hereto
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retains its own advisors or experts in connection with any such Proceeding, the
costs and expenses thereof shall be borne solely by such party.
(d) Post-Closing Taxable Periods. The Purchaser shall have the
sole right to represent the interests of the Company Group (or any member
thereof) in any Proceedings relating to a Post-Closing Taxable Period.
11.5 Cooperation and Exchange of Information.
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(a) Preparation of Income Tax Returns.
(i) The Purchaser shall, and shall cause each member of the Company
Group to, prepare and submit to the Seller, at the Purchaser's expense, all
information that the Seller shall request, in such form as the Seller shall
reasonably request, by the time specified by the Seller (which time shall
be consistent with the timing of requests made by the Seller or other
members of the GM Group to any member of the Company Group in prior taxable
periods), (A) to enable the Seller (or the designated Subsidiary of the
Seller) to prepare the Income Tax Returns described in Sections 11.1(a)(i),
11.1(a)(ii) and 11.1(c) hereof, and (B) to enable the Seller to determine
the amounts of estimated tax due
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and to prepare any related documentation in respect of the taxable periods
covered by the Income Tax Returns described in clause (A) of this sentence.
In the event that the Purchaser (x) does not timely provide such
information or (y) provides information that is incomplete or otherwise not
reasonably satisfactory to the Seller and does not cure such defect within
30 days after the Seller gives notice thereof, the Seller shall be entitled
to require the Purchaser to engage, at the Purchaser's expense, a
nationally recognized independent accounting firm reasonably acceptable to
the Seller to gather and provide, in the manner set forth in the preceding
sentence, the information which the Purchaser is required to provide under
this Section 11.5(a).
(ii) The Seller shall prepare and submit to the Purchaser, at the
Seller's expense, all information that the Purchaser shall request to
enable the Purchaser to prepare any Income Tax Returns which the Purchaser
is responsible to prepare in accordance with Section 11.1(b) hereof. In
the event that the Seller (A) does not timely provide such information or
(B) provides information that is incomplete or otherwise not reasonably
satisfactory to the Purchaser and does not cure such defect within 30 days
after the Purchaser gives notice thereof, the Purchaser shall be entitled
to require the Seller to engage, at the Seller's expense, a nationally
recognized independent accounting firm reasonably acceptable to the
Purchaser to gather and provide, in the manner set forth in the preceding
sentence, the information which the Seller is required to provide under
this Section 11.5(a).
(b) Cooperation and Exchange of Information. Each party hereto, on
behalf of itself and each of its Subsidiaries, agrees to provide each other
party with such cooperation and information as such other party shall request in
connection with the preparation or filing of any Income Tax Return or claim for
Refund, the determination of the basis for such a claim for Refund, the
determination and payment of estimated Income Taxes, or the conduct of any
Proceeding. Such cooperation and information shall include, without limitation,
upon reasonable notice (i) promptly forwarding copies of appropriate notices and
forms or other communications (including information document requests, revenue
agent's reports and similar reports, notices of proposed adjustments and notices
of deficiency) received from or sent to any taxing authority or any other
administrative, judicial or Governmental Body, (ii) providing copies of all
relevant Income Tax Returns, together with accompanying schedules and related
workpapers, documents relating to rulings or other determinations by taxing
authorities, and such other records concerning the ownership and tax basis of
property, or other relevant information which such party or its Subsidiaries may
possess, (iii) the provision of such additional information and explanations of
documents and information provided under this Article XI (including statements,
certificates and schedules delivered by either party) as shall be requested by
the other party, (iv) the execution of any document that may be necessary or
helpful in connection with the filing of an Income Tax Return, a claim for a
Refund, or in connection with any Proceeding, including such waivers, consents
or powers of attorney as may be reasonably required by such party so as to
exercise its rights under this Article XI, and (v) the use of the parties'
efforts to obtain any
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documentation from a Governmental Body or a third party that may be necessary or
reasonably helpful in connection with any of the foregoing. It is expressly the
intention of the parties to this Agreement to take all actions reasonably
requested by the Seller that shall be necessary to establish the Seller as the
sole agent for Income Tax purposes (to the extent that GM is not otherwise the
sole agent for such purpose) of each member of the Company Group with respect to
all Income Tax Returns of the Company Group for Pre-Closing Taxable Periods and
for any Combined Return for a Straddle Period. Upon reasonable notice, the
parties hereto shall make their, or shall cause their Subsidiaries to make
their, employees and facilities available on a mutually convenient basis to
provide explanation of any documents or information provided hereunder. Any
information obtained under this Section 11.5 shall be kept confidential, except
as otherwise reasonably may be necessary in connection with the filing of Income
Tax Returns or claims for Refund or in conducting any Proceeding.
(c) Record Retention. The Seller and the Purchaser agree to retain
all Income Tax Returns, related schedules and workpapers, and all material
records and other documents as required under Section 6001 of the Code and the
regulations promulgated thereunder (and any similar provision of state or local
Income Tax Law) existing on the date hereof or created in respect of (i) any
taxable period that ends on or before or includes the Closing Date or (ii) any
taxable period which may be subject to a claim hereunder, until the later of (A)
the expiration of the statute of limitations (including extensions) for the
taxable periods to which such Income Tax Returns and other documents relate and
(B) the Final Determination of any payments which may be required in respect of
such taxable periods under this Article XI. From and after the end of the period
described in the preceding sentence of this Section 11.5(c), if a member of the
GM Group or a member of the group which includes the Purchaser or any member of
the Company Group wishes to dispose of any such records and documents, then the
Seller or the Purchaser (as the case may be) shall provide written notice
thereof to the other party and shall provide such other party (at such other
party's sole expense) the opportunity to take possession of any such records and
documents within 90 days after such notice is delivered; provided, however, that
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if such other party does not, within such 90-day period, confirm its intention
to take possession of such records and documents, the Seller or the Purchaser
(as the case may be) may destroy or otherwise dispose of such records and
documents.
(d) Remedies.
(i) The Purchaser hereby acknowledges and agrees that (A) the
failure of the Purchaser or any member of the Company Group to comply with
the provisions of this Section 11.5 may result in substantial harm to the
GM Group, including the inability to determine or appropriately
substantiate an Income Tax Liability (or a position in respect thereof) for
which the GM Group (or a member thereof) would be responsible, or a Refund
to which the GM Group (or a member thereof) would be entitled, under this
Article XI or appropriately defend against an adjustment thereto by a
taxing authority, and (B) the remedies available to the GM Group for the
breach by the Purchaser or a member of the Company Group
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of its obligations hereunder shall include (without limitation) the
indemnification by the Purchaser of the GM Group for any Income Tax
Liability incurred or any Refund or Income Tax benefit lost or postponed by
reason of such breach and the forfeiture by the Company Group of any
related rights to indemnification by the Seller. In addition, if any member
of the Company Group fails to provide (x) any cooperation or information
requested pursuant to Section 11.5(a) by the dates specified therein or (y)
any other information requested pursuant to this Article XI within a
reasonable period, as determined in good faith by the party requesting such
information, then, without limiting any other remedy available to any
member of the GM Group for breach of the Purchaser's obligations under this
Article XI, the Seller shall have the right to engage a nationally
recognized accounting firm of its choice to gather such information. The
Purchaser agrees to permit any such nationally recognized accounting firm
full access to all appropriate records or other information in the
possession of the Purchaser, any member of the Company Group or any of
their respective Affiliates during normal business hours, and promptly to
reimburse or pay directly all costs and expenses in connection with the
engagement of such accountants.
(ii) The Seller hereby acknowledges and agrees that (A) the failure
of the Seller to comply with the provisions of this Section 11.5 may result
in substantial harm to the Company Group, including the inability to
determine or appropriately substantiate an Income Tax Liability (or a
position in respect thereof) for which the Company Group (or a member
thereof) would be responsible, or a Refund to which the Company Group (or a
member thereof) would be entitled, under this Article XI or appropriately
defend against an adjustment thereto by a taxing authority, and (B) the
remedies available to the Company Group for the breach by the Seller of its
obligations hereunder shall include (without limitation) the
indemnification by the Seller of the Company Group for any Income Tax
Liability incurred or any Refund or Income Tax benefit lost or postponed by
reason of such breach and the forfeiture by the Seller of any related
rights to indemnification by the Purchaser. In addition, if the Seller
fails to provide any information requested pursuant to this Article XI
within a reasonable period, as determined in good faith by the party
requesting such information, then, without limiting any other remedy
available to any member of the Company Group for breach of the Seller's
obligations under this Article XI, the Purchaser shall have the right to
engage a nationally recognized accounting firm of its choice to gather such
information. The Seller agrees to permit any such nationally recognized
accounting firm full access to all appropriate records or other information
in its possession during normal business hours, and promptly to reimburse
or pay directly all costs and expenses in connection with the engagement of
such accountants.
(e) Reliance.
(i) If any member of the Company Group supplies information to a
member of the GM Group in connection with an Income Tax Liability and an
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officer of a member of the GM Group signs a statement or other document
under penalties of perjury in reliance upon the accuracy of such
information, then upon the written request of such member of the GM Group
identifying the information being so relied upon, the chief financial
officer of such member of the Company Group shall certify in writing the
accuracy and completeness of the information so supplied. The Purchaser
agrees to indemnify and hold harmless each member of the GM Group and its
directors, officers and employees from and against any fine, penalty, or
other cost or expense of any kind (other than a liability for Income Tax)
attributable to a member of the Company Group having supplied a member of
the GM Group with inaccurate or incomplete information in connection with
an Income Tax Liability.
(ii) If the Seller supplies information to a member of the Company
Group in connection with an Income Tax Liability and an officer of a member
of the Company Group signs a statement or other document under penalties of
perjury in reliance upon the accuracy of such information, then upon the
written request of such member of the Company Group identifying the
information being so relied upon, the chief financial officer of the Seller
(or such other member of the GM Group as the Seller designates) shall
certify in writing the accuracy and completeness of the information so
supplied. The Seller agrees to indemnify and hold harmless each member of
the Company Group and its directors, officers and employees from and
against any fine, penalty, or other cost or expense of any kind (other than
a liability for Income Tax) attributable to the Seller having supplied a
member of the Company Group with inaccurate or incomplete information in
connection with an Income Tax Liability.
11.6 Resolution of Disputes.
----------------------
(a) Negotiation. The Seller and the Purchaser shall attempt in
good faith promptly to resolve any dispute arising in connection with this
Article XI. In the event of any such dispute, either party may deliver a Tax
Dispute Notice to the other party, and within 20 Business Days of the receipt of
such Tax Dispute Notice, the appropriate representatives of the Seller and the
Purchaser shall meet to attempt to resolve the dispute. If the dispute has not
been resolved within the Negotiation Period, or if one of the parties fails or
refuses to negotiate the dispute, the issue shall be settled by arbitration
pursuant to this Section 11.6, which shall be final and binding on the parties.
Nothing in this Section 11.6 shall be construed to extend the time periods set
forth in this Article XI during which any party may make a payment, deliver a
notice, provide information, grant or withhold approval or consent or take any
other action. "Negotiation Period" shall mean the period of 20 Business Days
following the initial meeting of the representatives of Seller and Purchaser
following the receipt of a Tax Dispute Notice. "Tax Dispute Notice" shall mean a
written notice of a dispute between Seller and Purchaser with respect to the
subject matter of this Article, which shall set forth in reasonable detail the
nature of the dispute.
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(b) Arbitration Procedure. Either party may initiate arbitration
by giving the other party a written notice (the "Tax Arbitration Notice") either
(i) within one year following the end of the Negotiation Period, or (ii) if the
parties do not meet within 20 Business Days of the receipt of the Tax Dispute
Notice, within one year thereafter. The arbitration shall be in accordance with
the CPR Rules, except as otherwise provided in this Section 11.6. The
arbitrators shall allow all discovery permitted by the Federal Rules of Civil
Procedure. The arbitration shall be governed by the United States Arbitration
Act, 9 U.S.C. (S) 1-14. The place of arbitration shall be Los Angeles,
California or such other location as shall be mutually agreed by the parties.
Any deadlines specified in this Section 11.6 may be extended by mutual agreement
of the parties.
(c) Selection of Arbitrators. The Seller and the Purchaser shall
make every reasonable effort to jointly select the arbitrator. If the Seller and
the Purchaser are unable to agree on the designated arbitrator within 20
Business Days after either party gives the Tax Arbitration Notice, then the
arbitration shall be by a panel of three arbitrators. The Seller and the
Purchaser shall each appoint one arbitrator. The two arbitrators so appointed
shall appoint the third arbitrator. If either the Seller or the Purchaser shall
fail to appoint an arbitrator within such 20-Business Day period, the
arbitration shall be by the sole arbitrator appointed by the other party.
Whether jointly selected by the Seller and the Purchaser or otherwise, each
arbitrator shall be an attorney who is generally recognized in the tax community
as a qualified and competent tax practitioner with experience in the tax area
involved in the issue or issues to be resolved.
(d) Settlement Proposal. Each party shall present an overall
settlement proposal to the arbitrator which shall encompass all issues to be
resolved. The two proposals shall set the outer limits of the range within which
the arbitrator can make a determination as to the appropriate settlement result.
All costs of the arbitration process shall be borne by the party determined by
the arbitrator to have lost the arbitration. In the event the arbitrator makes a
determination which reflects a 50-50 settlement, the Seller and the Purchaser
shall share equally the costs of the arbitration. In the event the arbitrator
makes a determination which reflects a divided settlement, the arbitrator shall
determine the proportion in which the parties shall share the costs of
arbitration.
(e) Time and Method of Making Payments Determined by Arbitration.
All amounts determined by arbitration to be payable by one party to the other
shall be due and payable on or before the 90th calendar day following the
determination that such amount is payable.
11.7 Payments.
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(a) Method of Payment. All payments required by this Article XI
shall be made by (i) wire transfer to the appropriate bank account as may from
time to time be designated by the parties for such purpose; provided that on the
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date of such wire transfer notice of the transfer is given to the recipient
thereof, or (ii) any other method agreed to
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by the parties. All payments due under this Article XI shall be deemed to be
paid when available funds are actually received by the payee.
(b) Interest. Any payment required by this Article XI that is not
made on or before the date required hereunder shall bear interest, from and
after such date through the date of payment, at the Underpayment Rate.
(c) Characterization of Payments. For all tax purposes, the
parties hereto agree to treat, and to cause their respective Subsidiaries to
treat, (i) except as required by applicable law, any payment required by Article
X or this Article XI as an adjustment to the Purchase Price and (ii) any payment
of interest or non-federal Income Taxes by or to a taxing authority as taxable
or deductible, as the case may be, to the party entitled under this Article XI
to retain such payment or required under this Article XI to make such payment,
in either case except as otherwise mandated by applicable law; provided that in
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the event it is determined as a result of a Final Determination that any such
treatment is not permissible, the payment in question shall be adjusted to place
the parties in the same after-tax position they would have enjoyed absent such
Final Determination.
11.8 Existing Tax Allocation Agreements. The Tax Allocation
----------------------------------
Agreements shall be amended as of the Closing Date to exclude the members of the
Company Group and to provide that any rights or obligations of the members of
the Company Group existing thereunder shall be fully and finally settled without
any payment by or to any member of the Company Group.
11.9 Section 338(h)(10) Election.
---------------------------
(a) The Purchaser and the Seller shall, or shall cause their
respective Affiliates to, make an election under Section 338(h)(10) of the Code
and the Treasury Regulations promulgated thereunder and any corresponding or
similar elections under state, local or foreign tax Law (collectively, the
"Section 338(h)(10) Election") with respect to the purchase and sale of the
Shares (other than the ICO Shares) hereunder.
(b) The Purchaser and the Seller shall file, and shall cause their
Affiliates to file, all Tax Returns and statements, forms and schedules in
connection therewith in a manner consistent with the Section 338(h)(10)
Election, the Modified Aggregate Deemed Sales Price (as defined below) and the
Deemed Sales Price Allocation (as defined below) and shall take no position
contrary thereto unless required to do so by applicable tax Laws.
(c) As soon as practicable after the Closing Date, the Purchaser
shall deliver to the Seller, the Purchaser's proposed allocation of the Purchase
Price among the shares of the Company, Spectrolab and the ICO Shares and its
calculation of (i) the Modified Aggregate Deemed Sales Price and (ii) the
allocation thereof among the Assets of the Company and its Subsidiaries in
accordance with the principles of Treasury Regulation (S) 1.338(h)(10)-
1(f)(1)(ii) (the "Deemed Sales Price Allocation"). The term
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"Modified Aggregate Deemed Sales Price" shall mean an amount resulting from the
Section 338(h)(10) Election determined pursuant to Treasury Regulation (S)
1.338(h)(10)-1(f) without regard to items described in Treasury Regulation (S)
1.338(h)(10)-1(f)(4) (provided that the Seller may take such items into account
in filing Tax Returns). The Seller shall have the right to review and approve
(which approval shall not be unreasonably withheld) such allocations and
calculations for 60 days following receipt thereof. The Seller and the Purchaser
shall attempt in good faith mutually to resolve any disagreements regarding such
calculations. Any disagreements regarding such calculations which are not
resolved 30 days prior to the due date for making the Section 338(h)(10)
Election shall be promptly resolved pursuant to Section 11.6, which resolution
shall be binding on the parties.
(d) To the extent permitted by state or local tax Laws, the
principles and procedures of this Section 11.9 shall also apply with respect to
a Section 338(h)(10) Election or equivalent or comparable provision under state
or local Law, including an election under Section 338(g) of the Code or
equivalent or comparable provision under state or local Law. The Seller and the
Purchaser shall make or cause to be made any election similar to a Section
338(h)(10) Election that is optional under any state or local Law so as to treat
the sale of the Shares (other than the ICO Shares) contemplated herein as a sale
of assets for state and local Income Tax purposes.
11.10 Transfer Taxes. The Seller and the Purchaser each shall be
--------------
liable for and shall pay (and shall indemnify and hold harmless the other party
against) 50% of all sales, use, stamp, documentary, filing, recording, transfer
or similar fees or taxes or governmental charges (including real property
transfer gains taxes, UCC-3 filing fees, FAA, ICC, DOT, real estate and motor
vehicle registration, title recording or filing fees and other amounts payable
in respect of transfer filings) as levied by any taxing authority or
governmental agency in connection with the transactions contemplated by this
Agreement (other than Income Taxes imposed on the Seller or its Subsidiaries).
The Purchaser hereby agrees to file all necessary documents (including, but not
limited to, all Tax Returns) with respect to all such amounts in a timely
manner.
11.11 Sole Remedy. The indemnification provided for in this Article
-----------
XI shall be the sole remedy for any claim in respect of Income Taxes and the
provisions of Sections 10.1 through 10.3 hereof shall not apply to such claims.
ARTICLE XII
SURVIVAL
12.1 Survival. The respective representations and warranties of the
--------
Seller and the Purchaser contained in this Agreement (other than the
representations and warranties contained in Sections 5.3, 5.7(a), 5.28 and 6.7)
or on any related schedule hereto or in any certificate or document delivered
pursuant hereto (including the Definitive Agreements) and the agreement
contained in Section 7.7(b) will survive the
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execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the Closing Date and will continue in full force and
effect for eighteen months after the Closing Date, and then terminate and expire
with respect to any theretofore unasserted claims arising out of or otherwise in
respect of any falsity, breach or inaccuracy of such representations and
warranties or breach of Section 7.7(b). The representations and warranties
contained in Sections 5.3, 5.7(a), 5.28 and 6.7 will survive the execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the Closing Date until expiration of all applicable statutes of
limitation and then expire with respect to any theretofore unasserted claims
arising out of or otherwise in respect of any falsity, breach or inaccuracy of
such representations and warranties, but each of such representations and
warranties will terminate if this Agreement terminates prior to the Closing
Date.
ARTICLE XIII
LIMITATION OF LIABILITY DISCLAIMER
13.1 Liabilities. Under no circumstances will any party be liable
-----------
to any other party for (a) punitive or exemplary damages arising from breach of
this Agreement or any of the Definitive Agreements, or arising out of any other
provisions of this Agreement or any Definitive Agreement, (b) damage to business
reputation or (c) any damages that were not proximately caused by a breach of
this Agreement or any of the Definitive Agreements (in each case, even if that
party has been advised of the possibility of such damages) (collectively,
"Disclaimed Damages"); provided that each party will remain liable to the other
party to the extent any Disclaimed Damages are claimed by a third party and are
subject to indemnification pursuant to Articles X and XI hereof or under any
indemnification provisions of any of the Definitive Agreements contemplated
hereby.
ARTICLE XIV
MISCELLANEOUS
14.1 Certain Definitions.
-------------------
For purposes of this Agreement, the following terms shall have the
meanings specified in this Section 14.1:
"AAA Rules" shall have the meaning ascribed to such term in Section
---------
14.3.
"Accounting Arbitrator" shall have the meaning ascribed to such term
---------------------
in Section 3.2(e).
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"Acquisition Transaction" shall have the meaning ascribed to such term
-----------------------
in Section 7.8(a).
"Actually Realized" or "Actually Realizes" shall mean, for purposes of
----------------- -----------------
determining the timing of the incurrence of any Income Tax Liability or the
realization of a Refund (or any related Income Tax cost or benefit) by a Person
in respect of any payment, transaction, occurrence or event, the time at which
the amount of Income Taxes paid by such Person is increased above or reduced
below the amount of Income Taxes that such Person would have been required to
pay but for such payment, transaction, occurrence or event or the time at which
such Person receives cash in respect thereof.
"Additional Satellite Assets" shall mean the Assets of HED and those
---------------------------
other Assets identified on Schedule 5.7(a), including the leases, deeds, export
licenses and Company Intellectual Property (as defined in Exhibit A) identified
thereon.
"Additional Satellite Assets Transfer" shall have the meaning ascribed
------------------------------------
to such term in the recitals.
"Additional Satellite Liabilities" shall mean all Liabilities relating
--------------------------------
to or arising out of the Additional Satellite Assets, including those allocated
corporate liabilities identified on Schedule 5.7(a).
"AECs" shall have the meaning ascribed to such term in Section
----
5.20(m).
"Agreement" shall have the meaning ascribed to such term in the
---------
recitals.
"Affiliate" shall mean, with respect to any Person, any other Person
---------
controlling, controlled by or under common control with such Person.
"Assets" shall mean any and all Assets, properties and rights, whether
------
tangible or intangible, whether real, personal or mixed, whether fixed,
contingent or otherwise, and wherever located, including the following:
(i) real property interests (including Leases), land, plants,
buildings and improvements and all rights, privileges and easements which are
appurtenant to such real estate;
(ii) machinery, equipment, vehicles, furniture and fixtures,
leasehold improvements, supplies, repair parts, tools, plant, laboratory and
office equipment and other tangible personal property, together with any rights
or claims arising out of the breach of any express or implied warranty by the
manufacturers or sellers of any of such assets or any component part thereof;
(iii) inventories, including raw materials, work-in-process, finished
goods, parts, accessories;
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<PAGE>
(iv) notes, loans and accounts receivable (whether current or not
current), interests as beneficiary under letters of credit, advances and
performance and surety bonds;
(v) banker's acceptances, shares of stock, bonds, debentures,
evidences of indebtedness, certificates of interest or participation in profit-
sharing agreements, collateral-trust certificates, investment contracts, voting
trust certificates, puts, calls, straddles, options, swaps, collars, caps and
other securities or hedging arrangements of any kind;
(vi) financial, accounting and operating data and records including
books, records, electronic data, notes, sales and sales promotional data,
advertising materials, credit information, cost and pricing information,
customer and supplier lists, reference catalogs, payroll and personnel records,
minute books, stock ledgers, stock transfer records and other similar property,
rights and information;
(vii) domestic and foreign patents and patent applications, together
with any continuations, continuations-in-part or divisional applications
thereof, and all patents issuing thereon (including reissues, renewals and re-
examinations of the foregoing); invention disclosures; mask works; net lists;
copyrights, and copyright applications and registrations; trademarks, service
marks, service names, trade names, and trade dress, in each case together with
any applications and registrations therefor and all appurtenant goodwill
relating thereto; trade secrets, commercial and technical information, know-how,
proprietary or confidential information, including engineering, production and
other designs, notebooks, processes, drawings, specifications, formulae, and
technology; computer and electronic data processing programs and software
(object and source code), data bases and documentation thereof; inventions
(whether patented or not); and all other Intellectual Property under the Laws of
any country throughout the world;
(viii) Contracts and all rights therein;
(ix) prepaid expenses, deposits and retentions held by third
parties;
(x) claims, causes of action, choses in action, rights under
insurance policies, rights under express or implied warranties, rights of
recovery, rights of set-off, and rights of subrogation;
(xi) Permits; and
(xii) goodwill and going concern value.
"Basket" shall have the meaning ascribed to such term in Section
------
10.2(a).
"Business Day" shall mean a day other than a Saturday, a Sunday or a
------------
day on which banking institutions located in the State of New York are
authorized or obligated by Law or executive order to close.
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<PAGE>
"Capital Stock" of any Person shall mean any and all shares, interests
-------------
(including partnership interests), warrants, rights, options or other interests,
participations or other equivalents of or interests in (however designated)
equity of such Person, including common or preferred stock, but excluding any
debt securities convertible into or exchangeable for such equity.
"Challenger Litigation" shall mean that certain litigation matter
---------------------
entitled Hughes Communications Galaxy Inc. v. United States of America for
-------------------------------------------------------------
breach of contract relating to the use of the space shuttle for commercial
launches.
"China Investigation" shall have the meaning ascribed to such term in
-------------------
Section 10.5(a).
"Claim" shall have the meaning ascribed to such term in Section
-----
10.3(a).
"Closing" shall have the meaning ascribed to such term in Section 4.1.
-------
"Closing Analysis" shall have the meaning ascribed to such term in
----------------
Section 7.18.
"Closing Date" shall have the meaning ascribed to such term in Section
------------
4.1.
"Closing Net Assets" shall mean the net difference between the sum of
------------------
the assets and the sum of the liabilities included in the Closing Statement of
Net Assets.
"Closing Statement of Assets and Liabilities" shall have the meaning
-------------------------------------------
ascribed to such term in Section 3.2(a).
"Closing Statement of Net Assets" shall have the meaning ascribed to
-------------------------------
such term in Section 3.2(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Combined Return" shall mean a consolidated, combined or unitary
---------------
Income Tax Return that includes, or is permitted to include, one or more members
of the GM Group and one or more members of the Company Group.
"Company" shall have the meaning ascribed to such term in the
-------
recitals.
"Company Group" shall mean the Company and its Subsidiaries.
-------------
"Common Stock" shall have the meaning ascribed to such term in Section
------------
5.3.
"Company Property" shall have the meaning ascribed to such term in
----------------
Section 5.12(b).
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<PAGE>
"Company Shares" shall have the meaning ascribed to such term in the
--------------
recitals.
"Competitive Commercial Satellite System" shall have the meaning
---------------------------------------
ascribed to such term in Section 7.11(a).
"Computer Systems" shall have the meaning ascribed to such term in
----------------
Section 5.27.
"Confidential Information" shall mean with respect to any party
------------------------
hereto, (a) any Information concerning such party, its business or any of its
Affiliates that was obtained by another party hereto prior to the Closing Date,
and (b) any other Information obtained by, or furnished to, another party hereto
that (i) is marked "Proprietary" or "Company Private" or words of similar import
by the party owning such Information, or any Affiliate of such party, or (ii)
the party owning such Information has notified such other party in writing is
confidential or secret; provided, however, that any Information provided by
-------- -------
Hughes to the Company regarding the Satellite Business shall not be deemed
Confidential Information with respect to the use of such Information in its
businesses by the Company.
"Confidentiality Agreement" shall mean that certain Confidentiality
-------------------------
Agreement, dated as of November 15, 1999, by and between Hughes and the
Purchaser.
"Consent" shall mean consents, waivers, approvals, allowances,
-------
declarations, novations, authorizations, permits, filings, orders, registrations
and notifications.
"Contaminant" shall have the meaning ascribed to such term in Section
-----------
5.14(j).
"Contract" shall mean any contract, agreement, Lease, license, sales
--------
order, purchase order, indenture, note, bond, loan, instrument, lease,
commitment or other arrangement or agreement that is binding on any Person or
any part of its property under applicable Law.
"Copyrights" shall have the meaning ascribed to such term in Section
----------
5.14(a).
"COTS" shall have the meaning ascribed to such term in Section
----
5.14(f).
"CPR Rules" shall mean the current version of the Rules for Non-
---------
Administered Arbitration of Business Disputes promulgated by the Center for
Public Resources.
"Deemed Sales Price Allocation" shall have the meaning ascribed to
-----------------------------
such term in Section 11.9(c) hereof.
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<PAGE>
"Defense" shall mean HE Holdings, Inc.
-------
"Definitive Agreements" shall have the meaning ascribed to such term
---------------------
in Section 1.5 hereof.
"Demand" shall have the meaning ascribed to such term in Section 14.3.
------
"Disabling Code" shall have the meaning ascribed to such term in
--------------
Section 5.14(j).
"Disclaimed Damages" shall have the meaning ascribed to such term in
------------------
Section 13.1.
"Dispute Notice" shall have the meaning ascribed to such term in
--------------
Section 14.3.
"Disputes" shall have the meaning ascribed to such term in Section
--------
14.3.
"EMA" shall have the meaning ascribed to such term in Section 5.20(m).
---
"Employee Benefit Plans" shall have the meaning ascribed to such term
----------------------
in Section 5.16(a).
"Environmental Law" shall mean any applicable foreign, federal, state
-----------------
or local Law or rule of common law as in effect as of the Closing Date relating
to the protection of the environment, noise, odor, pollution, health and safety
and contamination from Hazardous Substances, including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. (S) 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. (S) 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.),
the Clean Water Act (33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42 U.S.C.
(S) 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. (S) 2601 et
seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. (S) 136
et seq.), and the regulations promulgated pursuant thereto.
"Environmental Managers" shall mean those persons at the Company
----------------------
having direct oversight and responsibility for environmental, health and safety
matters for the Company and its Subsidiaries.
"ERISA" shall have the meaning ascribed to such term in Section
-----
5.16(a).
"Escrow Agreement" shall have the meaning ascribed to such term in
----------------
Section 3.1(b).
"Estimated Closing Net Assets" shall have the meaning ascribed to such
----------------------------
term in Section 3.1(a).
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<PAGE>
"Excluded Assets" shall mean all of the outstanding capital stock of
---------------
Hughes Global Services, Inc., all of the Company's or its Subsidiaries' rights
in the capital stock of PT Pasifik Satelit Nusantara and Hughes do Brasil-
Electronicae Communicacoes S.A., the equity interests in the venture capital
funds known as Medical Science Partners and Technology for Information and
Entertainment and all of the Company's or its Subsidiaries' claims, rights and
obligations relating to the Challenger Litigation.
"Excluded Assets Transfer" shall have the meaning ascribed to such
------------------------
term in the recitals.
"Final Determination" shall mean the final resolution of Liability for
-------------------
any Tax, which resolution may be for a specific issue or adjustment or for a
taxable period, (i) by IRS Form 870 or 870-AD (or any successor forms thereto),
on the date of acceptance by or on behalf of the taxpayer, or by a comparable
form under the Laws of a state or local taxing jurisdiction, except that a Form
870 or 870-AD or comparable form shall not constitute a Final Determination to
the extent that it reserves (whether by its terms or by operation of law) the
right of the taxpayer to file a claim for refund or the right of the taxing
authority to assert a further deficiency in respect of such issue or adjustment
or for such taxable period (as the case may be); (ii) by a decision, judgment,
decree, or other order by a court of competent jurisdiction, which has become
final and unappealable; (iii) by a closing agreement or accepted offer in
compromise under Sections 7121 or 7122 of the Code, or a comparable agreement
under the Laws of a state or local taxing jurisdiction; (iv) by any allowance of
a refund or credit in respect of an overpayment of Tax, but only after the
expiration of all periods during which such refund may be recovered (including
by way of offset) by the jurisdiction imposing such Income Tax; or (v) by any
other final disposition, including by reason of the expiration of the applicable
statute of limitations or by mutual agreement of the parties.
"Financial Statements" shall have the meaning ascribed to such term in
--------------------
Section 5.8.
"FIRPTA Affidavit" shall have the meaning ascribed to such term in
----------------
Section 8.2(f).
"GAAP" shall mean generally accepted United States accounting
----
principles as of the date hereof.
"GM" shall mean General Motors Corporation, a Delaware corporation.
--
"GM Consolidated Group" shall mean GM and the other members of the
---------------------
affiliated group of corporations (within the meaning of Section 1504(a) of the
Code) of which GM is the common parent.
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<PAGE>
"GM Group" shall mean, solely for purposes of this Agreement, GM and
--------
each of the other members of the GM Consolidated Group, other than any member of
the Company Group.
"Governmental Body" shall mean any government or governmental or
-----------------
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency, instrumentality or authority thereof, or
any court or arbitrator (public or private).
"Hazardous Substance" shall mean any substance, material or waste
-------------------
which is regulated as hazardous, toxic, a contaminant, a pollutant or words of
similar meaning by any Governmental Body with jurisdiction over environmental
matters and the operations of the Company including petroleum and its by-
products.
"HED" shall mean Hughes Electronics Dynamics, a division of the
---
Seller.
"HNS" shall have the meaning ascribed to such term in Section 7.19.
---
"HSR Act" shall have the meaning ascribed to such term in Section
-------
5.6(b).
"Hughes" shall have the meaning ascribed to such term in the recitals.
------
"ICO" shall mean ICO Global Communications (Operations) Ltd., a Cayman
---
company, together with its successors and assigns.
"ICO Closing Downward Adjustment" shall have the meaning ascribed
-------------------------------
thereto in Section 3.1(b)(ii) hereof.
"ICO Closing Upward Adjustment" shall have the meaning ascribed
-----------------------------
thereto in Section 3.1(b)(ii) hereof.
"ICO Contract" shall mean (collectively) each contract between ICO or
------------
its Affiliates and the Company or its Affiliates.
"ICO Contract Closing Net Asset Value" shall mean the amount reflected
------------------------------------
as an asset in respect of all ICO Contracts, less any liabilities or reserves
recorded in respect of the ICO Contracts, in the computation of Closing Net
Assets, provided that for this purpose there shall not be included in such
assets any claims of the Company against ICO for which payment has been assured
to the reasonable satisfaction of Purchaser
"ICO Contract Estimated Net Asset Value" shall mean the amount
--------------------------------------
reflected as an asset in respect of all ICO Contracts, less any liabilities or
reserves recorded in respect of all ICO Contracts, in the computation of
Estimated Closing Net Assets, provided that for this purpose there shall not be
included in such assets any claims of the Company against ICO for which payment
has been assured to the reasonable satisfaction of Purchaser.
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<PAGE>
"ICO Contract Material Modification" shall mean a modification to any
----------------------------------
ICO Contract or the entry into a new ICO Contract, in either case which under
GAAP requires a material reduction in the net carrying value of the assets
(i.e., less any liabilities or reserves) relating to ICO on the financial
statements of the Company.
"ICO Escrow Amount" shall have the meaning ascribed thereto in Section
-----------------
3.1(b)(ii).
"ICO Holdings" shall mean ICO Global Communications (Holdings) Ltd., a
------------
Bermuda corporation, together with its successors and assigns.
"ICO Post-Closing Resolution" shall mean: (i) substantial
---------------------------
consummation of a plan of reorganization (or similar restructuring of the assets
and liabilities of ICO) in connection with which (a) all ICO Contracts are
either assumed or replaced with one or more new ICO Contracts; or (b) Purchaser
or its Affiliate enters into a material new contract with ICO , or (ii) all ICO
Contracts are either assumed or replaced with one or more new ICO Contracts or
Purchaser or its Affiliate enters into a material new contract with ICO (other
than a new contract: (x) for the maintenance or preservation of the ICO assets,
or (y) for the furnishing of technical information to ICO, in furtherance of a
possible ICO plan of reorganization), and receipt of bankruptcy court (or the
equivalent) approval of: (a) such assumption or replacement or new contract and
(b) funding commitments from investors in or lenders to ICO sufficient in amount
to provide for full payment under such contract.
"ICO Pre-Closing Resolution" shall mean: (i) substantial consummation
--------------------------
of a plan of reorganization (or similar restructuring of the assets and
liabilities of ICO) in connection with which all ICO Contracts are either
assumed or replaced with one or more new ICO Contracts; or (ii) all ICO
Contracts are either assumed or replaced with one or more new ICO Contracts, and
receipt of bankruptcy court (or the equivalent) approval of: (a) such assumption
or replacement and (b) funding commitments from investors in or lenders to ICO,
sufficient in amount to provide for full payment under such contracts.
"ICO Shares" shall have the meaning ascribed to such term in the
----------
recitals.
"Income Tax" (i) shall mean (A) any United States federal, state,
----------
local or foreign tax, charge, fee, impost, levy or other assessment which is
based upon, measured by, or calculated with respect to (1) net income or profits
(including, but not limited to, the Michigan Single Business Tax and any capital
gains, gross receipts, value added or minimum tax and any tax on items of tax
preference, but not including sales, use, real property gains, real or personal
property, transfer or similar taxes), or (2) multiple bases (including, but not
limited to, corporate franchise, doing business or occupation taxes), if one or
more of the bases upon which such tax may be based, by which it may be measured,
or with respect to which it may be calculated is described in clause (i)(A)(1)
of this definition, together with (B) any interest and any penalties, fines,
additions to tax or additional amounts imposed by any taxing authority with
respect thereto and (ii) shall
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<PAGE>
include any transferee liability in respect of an amount described in clause (i)
of this definition.
"Income Tax Liabilities" shall mean all liabilities for Income Taxes.
----------------------
"Income Tax Return" shall mean any Tax Return.
-----------------
"Information" shall mean all records, books, contracts, instruments,
-----------
computer data and other data and information.
"Intellectual Property Rights" shall have the meaning ascribed to such
----------------------------
term in Section 5.14(a).
"Intended Transferee" shall have the meaning ascribed to such term in
-------------------
Section 1.4.
"Intended Transferor" shall have the meaning ascribed to such term in
-------------------
Section 1.4
"Invention Disclosures" shall have the meaning ascribed to such term
---------------------
in Section 5.14(e).
"Interim Date" shall have the meaning ascribed to such term in Section
------------
5.8.
"Interim Statement of Assets and Liabilities" shall have the meaning
-------------------------------------------
ascribed to such term in Section 5.8 hereof.
"Knowledge of the Seller" or "Seller's Knowledge" shall mean, with
----------------------- ------------------
respect to each applicable representation and warranty made by Hughes and the
Seller in this Agreement, the actual knowledge of the Chief Executive Officer,
Chief Financial Officer or General Counsel of the Company or the officers of
Hughes or the Seller who are directly responsible for overseeing the function of
the Satellite Business that is the subject of such representation or warranty.
In addition, such term shall include the actual knowledge of the Seller's
Director of Real Estate with respect to Section 5.12 and the Environmental
Managers with respect to Section 5.20.
"Law" shall mean any federal, state, local or foreign law (including
---
common law), statute, code, ordinance, rule, regulation, Order or other
requirement.
"Leases" shall have the meaning ascribed to such term in Section
------
5.12(b).
"Leased Property" shall have the meaning ascribed to such term in
---------------
Section 5.12(b).
85
<PAGE>
"Legal Proceeding" shall mean any judicial, administrative or arbitral
----------------
actions, suits, proceedings (public or private), claims, investigations or
governmental proceedings.
"Liability" shall mean any and all debts, liabilities, commitments and
---------
obligations, whether fixed, contingent or absolute, matured or unmatured,
liquidated or unliquidated, accrued or not accrued, known or unknown, whenever
or however arising (including whether arising out of any Contract or tort based
on negligence or strict liability) and whether or not the same would be required
by generally accepted accounting principles to be reflected in financial
statements or disclosed in the notes thereto.
"Licensed Software" shall have the meaning ascribed to such term in
-----------------
Section 5.14(f).
"Licensed Technology Agreements" shall have the meaning ascribed to
------------------------------
such term in Section 5.14(g).
"Lien" shall mean any lien, pledge, mortgage, deed of trust, security
----
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under any shareholder or similar agreement,
encumbrance or any other restriction or limitation whatsoever.
"Losses" shall mean all losses, Liabilities, claims, obligations,
------
demands, judgments, damages, dues, penalties, assessments, fines (civil or
criminal), costs, liens, expenses, forfeitures, settlements or fees, reasonable
attorneys' fees and court costs of any nature or kind, whether or not the same
would be properly reflected on a statement of assets and liabilities or balance
sheet.
"Marks" shall have the meaning ascribed to such term in Section
-----
5.14(a).
"Material Adverse Change" shall mean any material adverse change in
-----------------------
the business, properties, results of operation or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole (and which
shall be deemed not to include any adverse change generally affecting
manufacturing companies engaged in the satellite industry).
"Material Adverse Effect" shall mean any effect that has resulted in,
-----------------------
or is reasonably likely to result in, a Material Adverse Change.
"Material Contracts" shall have the meaning ascribed to such terms in
------------------
Section 5.15.
"MOA" shall have the meaning ascribed to such term in Section 7.19.
---
"Modified Aggregate Deemed Sales Price" shall have the meaning
-------------------------------------
ascribed to such term in Section 11.9(c).
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<PAGE>
"MSA" shall have the meaning ascribed to such term in Section 5.20(m).
---
"Negotiation Period" shall have the meaning ascribed to such term in
------------------
Section 11.6(a).
"Novations" shall have the meaning ascribed to such term in Section
---------
7.6(a).
"Order" shall mean any order, injunction, judgment, decree, ruling,
-----
writ, assessment or arbitration award.
"Overpayment Rate" shall mean the annual rate of interest described in
----------------
Section 6621(a)(1) of the Code (or similar provision of state or local Income
Tax law, as applicable), as determined from time to time.
"Owned Copyrights" shall have the meaning ascribed to such term in
----------------
Section 5.14(d).
"Owned Marks" shall have the meaning ascribed to such term in Section
-----------
5.14(b).
"Owned Patents" shall have the meaning ascribed to such term in
-------------
Section 5.14(c).
"Owned Properties" shall have the meaning ascribed to such term in
----------------
Section 5.12(a).
"Owned Properties Documents" shall have the meaning ascribed to such
--------------------------
term in Section 5.12(a).
"Owned Software" shall have the meaning ascribed to such term in
--------------
Section 5.14(f).
"Owned Trade Secrets" shall have the meaning ascribed to such term in
-------------------
Section 5.14(e).
"Owning Party" shall have the meaning ascribed to such term in Section
------------
7.1(c).
"Panel" shall have the meaning ascribed to such term in Section 14.3.
-----
"Party" shall have the meaning ascribed to such term in Section 14.3.
-----
"Patents" shall have the meaning ascribed to such term in Section
-------
5.14(a).
"Permits" shall mean any approvals, authorizations, consents,
-------
franchises, licenses, permits or certificates.
87
<PAGE>
"Permitted Exceptions" shall mean any of the following (except for a
--------------------
mortgage or deed of trust): (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance which have been made available to the Purchaser; (ii) statutory Liens
for current taxes, assessments or other governmental charges not yet delinquent
or the amount or validity of which is being contested in good faith by
appropriate proceedings, (iii) mechanics', carriers', workers', repairers' and
similar Liens arising or incurred in the ordinary course of business that are
not material to the business, operations and financial condition of the property
so encumbered or the Company; (iv) zoning, entitlement and other land use and
environmental regulations by any Governmental Body, provided that such
regulations have not been violated; and (v) such other imperfections in title,
charges, easements, restrictions and encumbrances which do not materially
detract from the value of or materially interfere with the present use of any
Company Property subject thereto or affected thereby.
"Person" shall mean any individual, corporation, partnership, firm,
------
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Body or other entity.
"Personal Property Leases" shall have the meaning ascribed to such
------------------------
term in Section 5.13(a).
"Post-Closing Taxable Period" shall mean a taxable period that, to the
---------------------------
extent it relates to a member of the Company Group, begins after the Closing
Date.
"Pre-Closing Taxable Period" shall mean a taxable period that, to the
--------------------------
extent it relates to a member of the Company Group, ends on or before the
Closing Date.
"Prior Relationship" shall mean the ownership relationships between
------------------
Hughes and its Subsidiaries (other than the Company and its Subsidiaries) and
the Company and its Subsidiaries at any time prior to the Closing Date.
"Proceeding" shall mean any audit or other examination, judicial or
----------
administrative proceeding relating to liability for or refunds or adjustments
with respect to Income Taxes.
"Purchase Price" shall have the meaning ascribed to such term in
--------------
Section 3.1.
"Purchaser" shall have the meaning ascribed to such term in the
---------
recitals.
"Purchaser Documents" shall have the meaning ascribed to such term in
-------------------
Section 6.2.
"Purchaser Indemnified Parties" shall have the meaning ascribed to
-----------------------------
such term in Section 10.1(a).
88
<PAGE>
"Qualified Plans" shall have the meaning ascribed to such term in
---------------
Section 5.16(b).
"Refund" shall mean any refund of Income Taxes, including any
------
reduction in Income Tax Liabilities by means of a credit, offset or otherwise.
"Registered Copyrights" shall have the meaning ascribed to such term
---------------------
in Section 5.14(d).
"Representatives" shall have the meaning ascribed to such term in
---------------
Section 7.8(a).
"Satellite Business" shall have the meaning ascribed to such term in
------------------
the recitals.
"Section 338(h)(10) Election" shall have the meaning ascribed to such
---------------------------
term in Section 11.9(a).
"Securities Act" shall have the meaning ascribed to such term in
--------------
Section 6.5.
"Seller" shall have the meaning ascribed to such term in the recitals.
------
"Seller Necessary Consents" shall have the meaning ascribed to such
-------------------------
term in Section 8.2(g).
"Seller Documents" shall have the meaning ascribed to such term in
----------------
Section 5.2.
"Seller Indemnified Parties" shall have the meaning ascribed to such
--------------------------
term in Section 10.1(b).
"Shares" shall have the meaning ascribed to such term in the recitals.
------
"Software" shall have the meaning ascribed to such term in Section
--------
5.14(a).
"Spectrolab" shall have the meaning ascribed to such term in the
----------
recitals.
"Spectrolab Shares" shall have the meaning ascribed to such term in
-----------------
the recitals.
"Straddle Period" shall mean a taxable period that, to the extent it
---------------
relates to a member of the Company Group, includes, but does not end on, the
Closing Date.
"Subsidiary" shall mean any Person of which a majority of the
----------
outstanding equity interests or voting securities are owned, directly or
indirectly, by another Person.
89
<PAGE>
For purposes of this Agreement, all references to the Company's Subsidiaries
shall be deemed to include Spectrolab.
"SWMUs" shall have the meaning ascribed to such term in Section
-----
5.20(m).
"System" shall have the meaning ascribed to such term in Section
------
5.14(j).
"Target Amount" shall have the meaning ascribed to such term in
-------------
Section 3.1(a).
"Tax Allocation Agreements" shall mean (i) the Agreement for the
-------------------------
Allocation of United States Federal Income Taxes, by and between GM, Defense,
Hughes and Delco Electronics Corporation, dated as of December 29, 1985, as
amended and (ii) the Agreement for the Allocation of United States Federal
Income Taxes, by and between GM, Defense, Hughes and Delco Electronics
Corporation, dated as of December 17, 1997, as amended.
"Taxes" shall mean (i) all federal, state, local or foreign taxes,
-----
charges, fees, imposts, levies or other assessments, including all net income,
gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes, customs duties, fees, assessments and charges of
any kind whatsoever, whether computed on a separate, consolidated, unitary,
combined, or any other basis, and shall include any transferee or secondary
liability in respect of any tax (whether imposed by law, contractual agreement,
or otherwise) and (ii) all interest, penalties, fines, additions to tax or
additional amounts imposed by any taxing authority in connection with any item
described in clause (i).
"Tax Arbitration Notice" shall have the meaning ascribed to such term
----------------------
in Section 11.6(b).
"Tax Dispute Notice" shall have the meaning ascribed to such term in
------------------
Section 11.6(a).
"Tax Return" shall mean all returns, declarations, reports, estimates,
----------
information returns and statements required to be filed in respect of any Taxes.
"Title Documents" shall have the meaning ascribed to such term in
---------------
Section 5.12(b).
"Trade Secrets" shall have the meaning ascribed to such term in
-------------
Section 5.14(a).
"Transfer Documents" shall mean those certain documents of assignment
------------------
and assumption providing for the Transfers.
90
<PAGE>
"Transferee" shall mean any Person that will receive a transfer of
----------
Assets pursuant to Article I.
"Transferor" shall mean any Person that will make a transfer of Assets
----------
pursuant to Article I.
"Transfers" shall have the meaning ascribed to such term in the
---------
recitals.
"Underpayment Rate" shall mean the annual rate of interest described
-----------------
in Section 6621(c) of the Code for large corporate underpayments of Income Tax
(or similar provision of state or local Income Tax law, as applicable), as
determined from time to time.
"United States Contract" means any Contract with the United States and
----------------------
includes (a) a foreign military sales contract, (b) a United States Subcontract,
and (c) an Inter-organizational Transfer that is associated with any other
United States Contract or United States Subcontract. United States Contract
does not include a contract with any state, local, or foreign government or
instrumentality.
"United States Subcontract" means any Contract with any Person other
-------------------------
than the United States that is entered into under a United States Contract, at
any tier.
14.2 Interpretation. For the purposes of this Agreement, (i) words
--------------
in the singular shall be held to include the plural and vice versa and words of
---- -----
one gender shall be held to include the other gender as the context requires,
(ii) the terms "hereof," "herein," and "herewith" and words of similar import
shall, unless otherwise stated, be construed to refer to this Agreement as a
whole and not to any particular provision of this Agreement, (iii) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless otherwise specified, and (iv) the word
"or" shall not be exclusive.
14.3 Dispute Resolution. Except with respect to the matters
------------------
described in Section 3.2 and Article XI, which shall be resolved in accordance
with the terms thereof, and except as otherwise expressly set forth in the
Definitive Agreements, resolution of any and all disputes arising from or in
connection with this Agreement or the Definitive Agreements, whether based on
contract, tort, or otherwise (collectively, "Disputes"), shall be exclusively
governed by and settled in accordance with the provisions of this Section 14.3.
The parties hereto shall use all commercially reasonable efforts to settle all
Disputes without resorting to mediation, arbitration or otherwise. The party
asserting a Dispute shall deliver to the other party a written notice setting
forth the basis for the issue in detail, and identifying the section of this
Agreement or Definitive Agreement in question (the "Dispute Notice"). Within ten
days of receipt of a Dispute Notice, the issue shall be elevated to a designated
panel of four individuals, two representatives from each party (one who shall be
a business representative, and the other who shall be a technical or accounting
representative, as appropriate). Such representatives shall be empowered and
authorized to bind their respective companies
91
<PAGE>
with respect to the matter in dispute, and to settle the issue on behalf of
their respective companies. These representatives shall, within 30 days of
receipt of the Dispute Notice, confer and in good faith make a reasonable effort
to resolve the issue. If any Dispute remains unsettled, a party hereto may
commence proceedings hereunder by delivering a written notice from a Senior Vice
President or comparable executive officer of such party (the "Demand") to the
other parties providing reasonable description of the Dispute to the others and
expressly requesting arbitration hereunder. Such Dispute shall be submitted to
arbitration under the terms hereof, which arbitration shall be final, conclusive
and binding upon the parties, their successors and assigns. The arbitration
shall be conducted in Los Angeles, California by three neutral arbitrators
acting by majority vote (the "Panel") selected by agreement of the parties not
later than ten (10) days after delivery of the Demand or, failing such
agreement, appointed pursuant to the commercial arbitration rules of the
American Arbitration Association, as amended from time to time (the "AAA
Rules"). If an arbitrator so selected becomes unable to serve, his or her
successors shall be similarly selected or appointed. The arbitration shall be
conducted pursuant to the Federal Arbitration Act and such procedures as the
parties subject to such arbitration (each, a "Party") may agree, or, in the
absence of or failing such agreement, pursuant to the AAA Rules. Notwithstanding
the foregoing: (a) each Party shall have the right to audit the books and
records of the other Party that are reasonably related to the Dispute; (b) each
Party shall provide to the other, reasonably in advance of any hearing, copies
of all documents which a Party intends to present in such hearing; (c) each
Party shall be allowed to conduct reasonable discovery through written document
requests and depositions, the nature and extent of which discovery shall be
determined by the Parties; provided that if the Parties cannot agree on the
terms of such discovery, the nature and extent thereof shall be determined by
the Panel which shall take into account the needs of the Parties and the
purposes of arbitration to make discovery expeditious and cost effective and (d)
each Party shall be entitled to make an oral presentation to the Panel. The
award shall be in writing and shall specify the factual and legal basis for the
award. The Panel shall apportion all costs and expenses of arbitration,
including the Panel's fees and expenses and fees and expenses of experts,
between the prevailing and non-prevailing Party as the Panel deems fair and
reasonable. The parties hereto agree that monetary damages may be inadequate and
that any party by whom this Agreement or Definitive Agreement is enforceable
shall be entitled to seek specific performance of the arbitrators' decision from
a court of competent jurisdiction. Notwithstanding the foregoing, in no event
may the Panel award Disclaimed Damages as defined in Article XIII. Any
arbitration award shall be binding and enforceable against the parties hereto
and judgment may be entered thereon in any court of competent jurisdiction.
14.4 Expenses. Except as otherwise provided in this Agreement, the
--------
Seller and the Purchaser shall each bear its own expenses incurred in connection
with the negotiation and execution of this Agreement and each other agreement,
document and instrument contemplated by this Agreement and the consummation of
the transactions contemplated hereby and thereby, it being understood that in no
event shall the Company bear any of such costs and expenses.
92
<PAGE>
14.5 Further Assurances. The Seller and the Purchaser each agrees
------------------
to execute and deliver such other documents or agreements and to take such other
action as may be reasonably necessary or desirable for the implementation of
this Agreement and the consummation of the transactions contemplated hereby.
14.6 Submission to Jurisdiction; Consent to Service of Process.
---------------------------------------------------------
(a) The parties hereto hereby irrevocably submit to the non-
exclusive jurisdiction of any federal or state court located within the State of
Delaware over any dispute arising out of or relating to this Agreement or any of
the transactions contemplated hereby and each party hereby irrevocably agrees
that all claims in respect of such dispute or any Legal Proceeding related
thereto may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable Law, any
objection that they may now or hereafter have to the laying of venue of any such
dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the parties hereto agrees that a judgment
in any such dispute may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by Law.
(b) Each of the parties hereto hereby consents to process being
served by any party to this Agreement in any Legal Proceeding by the mailing of
a copy thereof in accordance with the provisions of Section 14.10.
14.7 Entire Agreement; Amendments and Waivers. This Agreement
----------------------------------------
(including the schedules and exhibits hereto) and the Definitive Agreements
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by the party against whom
enforcement of any such amendment, supplement, modification or waiver is sought.
No action taken pursuant to this Agreement, including any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representation, warranty, covenant or
agreement contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy.
14.8 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware.
14.9 Table of Contents and Headings. The table of contents and
------------------------------
section headings of this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this Agreement.
93
<PAGE>
14.10 Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by certified mail, return receipt requested, to the parties
(and shall also be transmitted by facsimile to the Persons receiving copies
thereof) at the following addresses (or to such other address as a party may
have specified by notice given to the other party pursuant to this provision):
If to the Seller or Hughes, to:
Hughes Corporation
200 North Sepulveda Boulevard
Los Angeles, California
Facsimile No.: (310) 322-1841
Attention: Roxanne S. Austin, Chief Financial Officer
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Facsimile No.: (212) 310-8007
Attention: Frederick S. Green, Esq.
If to the Purchaser, to:
The Boeing Company
7755 East Marginal Way South
Seattle, Washington 98188
Facsimile No.: (206) 544-4900
Attention: James C. Johnson, Vice President,
Secretary and Assistant General Counsel
With a copy to:
Gibson, Dunn & Crutcher, LLP
333 South Grand Avenue
Los Angeles, California 90071
Facsimile No: (213) 229-7520
Attention: Andrew E. Bogen, Esq.
14.11 Severability. If any provision of this Agreement is invalid or
------------
unenforceable, the balance of this Agreement shall remain in effect.
14.12 Binding Effect; Assignment. This Agreement shall be binding
--------------------------
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party
94
<PAGE>
beneficiary rights in any Person not a party to this Agreement. No assignment of
this Agreement or of any rights or obligations hereunder may be made by either
Hughes, the Seller or the Purchaser (by operation of Law or otherwise) without
the prior written consent of the other parties hereto and any attempted
assignment without the required consents shall be void.
95
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first written above.
THE BOEING COMPANY
By: /s/ James F. Albaugh
---------------------------------------
Name: James F. Albaugh
Title: Senior Vice President, The
Boeing Company, President, Space
and Communications Group
HUGHES ELECTRONICS CORPORATION
By: /s/ Roxanne S. Austin
---------------------------------------
Name: Roxanne S. Austin
Title: Sr. Vice President and CFO
HUGHES TELECOMMUNICATIONS AND SPACE COMPANY
By: /s/ Jennifer A. Smolker
---------------------------------------
Name: Jennifer A. Smolker
Title: Corporate Secretary
96
<PAGE>
EXHIBIT 4.2
________________________________________________________________________________
HUGHES ELECTRONICS CORPORATION
INDENTURE
Dated as of October 22, 1999
THE BANK OF NEW YORK
Trustee
________________________________________________________________________________
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
- ----------- -----------------
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.10
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.05
(b) 10.03
(c) 10.03
313(a) 7.06
(b)(2) 7.07
(c) 7.06; 10.02
314(a) 4.03; 10.02
(c)(1) 10.04
(c)(2) 10.04
(c)(3) N.A.
(e) 10.05
(f) NA
315(a) 7.01
(b) 7.05, 10.02
(c) 7.01
(d) 7.01
(e) 6.11
316(a)(last sentence) 2.09
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
(c) 2.12
317(a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318(a) 10.01
(b) N.A.
(c) 10.01
______________
N.A. means "not applicable".
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE........................... 1
Section 1.01. Definitions................................................. 1
Section 1.02. Other Definitions........................................... 8
Section 1.03. Incorporation by Reference of Trust Indenture Act........... 8
Section 1.04. Rules of Construction....................................... 9
ARTICLE 2. THE NOTES............................................................ 9
Section 2.01. Form and Dating............................................. 9
Section 2.02. Execution and Authentication................................ 10
Section 2.03. Registrar, Paying Agent and calculation agent............... 11
Section 2.04. Paying Agent to Hold Money in Trust......................... 11
Section 2.05. Holder Lists................................................ 12
Section 2.06. Transfer and Exchange....................................... 12
Section 2.07. Replacement Notes........................................... 22
Section 2.08. Outstanding Notes........................................... 22
Section 2.09. Treasury Notes.............................................. 23
Section 2.10. Temporary Notes............................................. 23
Section 2.11. Cancellation................................................ 23
Section 2.12. CUSIP Numbers............................................... 24
ARTICLE 3. REDEMPTION AND PREPAYMENT............................................ 24
Section 3.01. Notices to Trustee.......................................... 24
Section 3.02. Selection of Notes to Be Redeemed........................... 24
Section 3.03. Notice of Redemption........................................ 24
Section 3.04. Effect of Notice of Redemption.............................. 25
Section 3.05. Deposit of Redemption Price................................. 25
Section 3.06. Notes Redeemed in Part...................................... 26
Section 3.07. Optional Redemption......................................... 26
ARTICLE 4. COVENANTS............................................................ 26
Section 4.01. Payment of Notes............................................ 26
Section 4.02. Maintenance of Office or Agency............................. 27
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 4.03. Reports..................................................... 27
Section 4.04. Compliance Certificate...................................... 28
Section 4.05. Taxes....................................................... 29
Section 4.06. Liens....................................................... 29
Section 4.07. Corporate Existence......................................... 30
Section 4.08. Sale and Leaseback Transactions............................. 31
Section 4.09. Repurchase.................................................. 31
ARTICLE 5. SUCCESSORS........................................................... 32
Section 5.01. Merger, Consolidation, or Sale of Assets.................... 32
Section 5.02. Successor Corporation Substituted........................... 32
ARTICLE 6. DEFAULTS AND REMEDIES................................................ 33
Section 6.01. Events of Default........................................... 33
Section 6.02. Acceleration................................................ 34
Section 6.03. Other Remedies.............................................. 34
Section 6.04. Waiver of Past Defaults..................................... 35
Section 6.05. Control by Majority......................................... 35
Section 6.06. Limitation on Suits......................................... 35
Section 6.07. Rights of Holders of Notes to Receive Payment............... 36
Section 6.08. Collection Suit by Trustee.................................. 36
Section 6.09. Trustee May File Proofs of Claim............................ 36
Section 6.10. Priorities.................................................. 36
Section 6.11. Undertaking for Costs....................................... 37
ARTICLE 7. TRUSTEE.............................................................. 37
Section 7.01. Duties of Trustee........................................... 37
Section 7.02. Rights of Trustee........................................... 38
Section 7.03. Individual Rights of Trustee................................ 39
Section 7.04. Trustee's Disclaimer........................................ 40
Section 7.05. Notice of Defaults.......................................... 40
Section 7.06. Reports by Trustee to Holders of the Notes.................. 40
Section 7.07. Compensation and Indemnity.................................. 40
Section 7.08. Replacement of Trustee...................................... 41
Section 7.09. Successor Trustee by Merger, etc............................ 42
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 7.10. Eligibility; Disqualification................................................................. 42
Section 7.11. Preferential Collection of Claims Against Company............................................. 43
Section 7.12. Calculation Agent............................................................................. 43
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE............................................................... 43
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance...................................... 43
Section 8.02. Legal Defeasance and Discharge................................................................ 43
Section 8.03. Covenant Defeasance........................................................................... 44
Section 8.04. Conditions to Legal or Covenant Defeasance.................................................... 44
Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. 46
Section 8.06. Repayment to Company.......................................................................... 46
Section 8.07. Reinstatement................................................................................. 46
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER....................................................................... 47
Section 9.01. Without Consent of Holders of Notes........................................................... 47
Section 9.02. With Consent of Holders of Notes.............................................................. 47
Section 9.03. Compliance with Trust Indenture Act........................................................... 49
Section 9.04. Revocation and Effect of Consents............................................................. 49
Section 9.05. Notation on or Exchange of Notes.............................................................. 49
Section 9.06. Trustee to Sign Amendments, etc............................................................... 49
ARTICLE 10. MISCELLANEOUS......................................................................................... 49
Section 10.01. Trust Indenture Act Controls.................................................................. 49
Section 10.02. Notices....................................................................................... 50
Section 10.03. Communication by Holders of Notes with Other Holders of Notes................................. 51
Section 10.04. Certificate and Opinion as to Conditions Precedent............................................ 51
Section 10.05. Statements Required in Certificate or Opinion................................................. 51
Section 10.06. Rules by Trustee and Agents................................................................... 52
Section 10.07. No Personal Liability of Directors, Officers, Employees and Stockholders...................... 52
Section 10.08. Governing Law................................................................................. 52
Section 10.09. Successors.................................................................................... 52
Section 10.10. Severability.................................................................................. 52
Section 10.11. Counterpart Originals......................................................................... 52
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Section 10.12. Table of Contents, Headings, etc.............................................................. 52
</TABLE>
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
iv
<PAGE>
INDENTURE dated as of October 22, 1999 between Hughes Electronics
Corporation, a Delaware corporation (the "Company"), and The Bank of New York, a
New York banking corporation, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Floating Rate
Notes due October 23, 2000 (the "Initial Notes") and any Additional Notes:
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a Global Note in substantially the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that shall be issued on the date of this Indenture in
a denomination equal to the outstanding principal amount of the Initial Notes
initially sold in reliance on Rule 144A.
"Additional Notes" means any additional notes that the Company may
issue pursuant to Section 2.01(d) of this Indenture.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary that apply to such transfer or exchange.
"Applicable Spread" means, with respect to each Interest Period, a
number of basis points above LIBOR, as calculated from time to time by the
Calculation Agent, and as may be adjusted from time to time as set forth in the
Note.
"Attributable Debt" means, at the time of determination as to any
lease, the present value (discounted at the actual rate, if stated, or, if no
rate is stated, the implicit rate of interest of such lease transaction as
determined by the chief executive officer, president, chief financial officer,
any vice president, the treasurer or any assistant treasurer of the Company),
calculated using the interval of scheduled rental payments under such lease
(excluding any
<PAGE>
subsequent renewal or other extension options held by the lessee). The term "net
rental payments" means, with respect to any lease for any period, the sum of the
rental and other payments required to be paid in such period by the lessee
thereunder, but not including, however, any amounts required to be paid by such
lessee (whether or not designated as rental or additional rental) on account of
maintenance and repairs, insurance, taxes, assessments, water rates, indemnities
or similar charges required to be paid by such lessee thereunder or any amounts
required to be paid by such lessee thereunder contingent upon the amount of
sales, earnings or profits or of maintenance and repairs, insurance, taxes,
assessments, water rates, indemnities or similar charges; provided, however,
that, in the case of any lease which is terminable by the lessee upon the
payment of a penalty in an amount which is less than the total discounted net
rental payments required to be paid from the later of the first date upon which
such lease may be so terminated and the date of the determination of net renal
payments, "net rental payments" shall include the then-current amount of such
penalty from the later of such two dates, and shall exclude the rental payments
relating to the remaining period of the lease commencing with the later of such
two dates.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means (1) in respect of a limited liability
company, the board of advisors of the Company; (2) in respect of a corporation,
the board of directors of the corporation, or any authorized committee thereof;
and (3) in respect of any other Person, the board or committee of that Person
serving a similar function.
"Business Day" means any day other than a Saturday, a Sunday or a
legal holiday in the City of New York on which banking institutions are
authorized or required by law, regulation or executive order to close; provided,
that the day is also a London Business Day.
"Calculation Agent" means the Person appointed by the Company to
calculate the interest rate under the Initial Notes, and any and all successors
thereto.
"Cedel" means Cedelbank, societe anonyme.
"Company" means Hughes Electronics Corporation, a Delaware
corporation, and any and all successors thereto.
"Consolidated Net Tangible Assets" means, at any date, all amounts
that would, in conformity with GAAP, be set forth opposite the caption "total
assets" (or any like caption) on a consolidated balance sheet of the Company and
its consolidated Subsidiaries less (1) all current liabilities and (2) goodwill,
trade names, patents, unamortized debt discount, organization expenses and other
like intangibles of the Company and its consolidated Subsidiaries.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 10.02 hereof or such other address as to which the
Trustee may give notice to the Company.
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"Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Debt" means notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof, in
substantially the form of Exhibit A hereto except that such Note shall not bear
the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"DTV Sale Event" means either (i) a sale, transfer or disposition of a
majority of the voting stock of DIRECTV, Inc. ("DTV") or of assets thereof
representing at least fifty-one percent (51%) of the total fair market value (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive) of the U.S. direct broadcast satellite business of DTV and its
Affiliates engaged in such business to an entity not controlled directly or
indirectly by the Company or (ii) any other transaction that has the result that
the Company no longer controls directly or indirectly the business of DTV.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear systems.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.
"Global Note Legend" means the legend set forth in Section
2.06(f)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes in the form of Exhibit
A hereto issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or
2.06(g) hereof.
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"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Holder" means a Person in whose name a Note is registered.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with Article 9 hereof.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Initial Notes" has the meaning assigned to it in the preamble of this
Indenture.
"Initial Purchaser" means Merrill Lynch & Co.
"Institutional Accredited Investor" means an "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Interest Determination Date" means the second London Business Day
preceding an Interest Reset Date.
"Interest Period" means the period commencing on and including October
22, 1999 or an interest payment date, as the case may be, and ending on and
including the day immediately preceding the next succeeding interest payment
date, or the maturity date, as the case may be.
"Interest Reset Date" means each interest payment date on which LIBOR
and the Applicable Spread are determined by the Calculation Agent, as described
in the Notes.
"LIBOR" means, with respect to each Interest Determination Date
immediately preceding the applicable Interest Period, the rate (expressed as a
percentage per annum) for deposits in United States dollars having a maturity of
three months commencing on the first London Business Day of such Interest
Period, that appears on Telerate Page 3750 as of 11:00 a.m., London time, on
such Interest Determination Date; provided, however, that if Telerate Page 3750
does not include such a rate or is unavailable on such Interest Determination
Date, the Calculation Agent shall request the principal London offices of each
of four major reference banks in the London interbank market, as selected by the
Calculation Agent following consultation with the Company, to provide the
Calculation Agent with its offered quotation (expressed as a percentage per
annum), for deposits in a Representative Amount for a three-month period,
commencing on the first London Business Day of such Interest Period, to prime
banks in the London interbank market as of approximately 11:00 a.m., London
time, on such Interest Determination Date,. If at least two such offered
quotations are so provided, LIBOR on such Interest Determination Date for such
applicable Interest Period shall be the arithmetic mean of such quotations. If
fewer that two quotations are so provided, the Calculation Agent shall request
three major banks in New York City, as selected by the Calculation Agent
following consultation with the Company, to provide such bank's rate (expressed
as a percentage per
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annum), as of approximately 11:00 a.m., New York City time, on such Interest
Determination Date, for loans in a Representative Amount in United States
dollars to leading European banks for a three-month period beginning on the
first London Business Day of such Interest Determination Date; provided,
however, that if such banks are not providing quotations in the manner described
by this sentence, LIBOR determined as of such Interest Determination Date for
such Interest Period shall be LIBOR in effect with respect to the immediately
preceding Interest Period.
"Lien" means any trust deed, mortgage, pledge, hypothecation,
assignment, security interest, lien, charge or encumbrance, or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the lien of an attachment,
judgment or execution, or any conditional sale or other title retention
agreement, any capitalized lease, and the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction, but excluding financing statements filed to give notice of leases
in the ordinary course of business).
"London Business Day" means any day on which dealings in United States
dollars are transacted in the London interbank market.
"Make Whole Spread" means 50 basis points.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"New York Business Day" means any day other than a Saturday, Sunday or
a legal holiday in the City of New York on which banking institutions are
authorized or required by law or regulation or executive order to close.
"Non-Recourse Debt" means all Debt which, in accordance with GAAP, is
not required to be recognized on a consolidated balance sheet of the Company as
a liability.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Notes" mean the Initial Notes and the Additional Notes, if any,
treated together as a single class.
"Offering" means the offering of the Initial Notes by the Company
pursuant to the Offering Circular.
"Offering Circular" means the offering circular of the Company, dated
October 19, 1999, relating to the Initial Notes.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary, any Assistant Secretary or any Vice-President of such
Person.
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"Officers' Certificate" means a certificate signed on behalf of the
Company by at least two Officers of the Company, one of whom must be the
principal executive officer, the principal financial officer or the principal
accounting officer of the Company, that meets the requirements of Sections 10.04
and 10.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel that meets
the requirements of Sections 10.04 and 10.05 hereof. The counsel may be an
employee of or counsel to the Company, any Subsidiary of the Company or the
Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively, and, with respect to the Depository Trust Company, shall include
Euroclear and Cedel.
"Permitted Receivables Financings" means, at any date of
determination, the aggregate amount of any Non-Recourse Debt outstanding on such
date relating to securitizations or other similar off-balance sheet financings
of accounts receivable of the Company or any of its Subsidiaries.
"Person" means any natural person, company, corporation, partnership,
government, agency or instrumentality of a government, or any other entity.
"Private Placement Legend" means the legend set forth in Section
2.06(f)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Rating Agency" means either of the Rating Agencies.
"Rating Agencies" means (i) Moody's and S&P or (ii) if Moody's or S&P
or both shall not make a rating of the Notes publicly available, a nationally
recognized securities rating agency or agencies, as the case may be, selected by
the Company by notice to the Trustee, which shall be substituted for Moody's or
S&P or both, as the case may be.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a Global Note in substantially the
form of Exhibit A hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued on the date of this Indenture in a
denomination equal to the outstanding principal amount of the Initial Notes
initially sold in reliance on Rule 903 of Regulation S.
"Representative Amount" means a principal amount that is
representative for a single transaction in United States dollars in the market
at that time.
"Responsible Officer" means, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee, including any
vice president, assistant vice
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president, assistant secretary, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a 144A Global Note and a Regulation S
Global Note, each of which shall bear the Private Placement Legend.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" means any Subsidiary (1) having assets
exceeding 10% of the Consolidated Net Tangible Assets or (2) having operating
revenues exceeding 10% of the operating revenues of the Company and its
Subsidiaries on a consolidated basis, in each case, with respect to any
determination period between the date of this Indenture and prior to the public
release of the audited consolidated financial statements of the Company and its
Subsidiaries for the fiscal year ending December 31, 1999, as shown on the pro
forma financial statements dated as of June 30, 1999 and, thereafter, as shown
on the audited consolidated financial statements of the Company and its
Subsidiaries; provided, however, that "Restricted Subsidiary" shall not include
any Subsidiary created solely to purchase receivables from the Company or any of
its Subsidiaries, and which would not, in accordance with GAAP, be included in
the consolidated financial statements of the Company.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means a corporation or any other entity of which at the
time of determination the Company, one or more Subsidiaries of the Company, or
the Company and one or more Subsidiaries, directly and/or indirectly, owns at
least a majority of the outstanding stock or other beneficial interests having
general voting power under ordinary circumstances to elect a majority of the
board of directors, managers, trustees or individuals performing similar
functions
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of such corporation or other entity (irrespective of whether or not at the time
stock or other beneficial interests of any other class or classes of such
corporation or other entity shall have or might have voting power by reason of
the happening of any contingency).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA, except as provided in Section 9.03.
"Telerate Page 3750" means the display designated as "Page 3750" on
Bridge Telerate, Inc. or any successor service, for the purpose of displaying
the London interbank rates of major banks for United States dollars.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent Global Note in
substantially the form of Exhibit A attached hereto that bears the Global Note
Legend and that has the "Schedule of Exchanges of Interests in the Global Note"
attached thereto, and that is deposited with or on behalf of and registered in
the name of the Depositary, representing a series of Notes that do not bear the
Private Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"U.S. Person" means a U.S. person as defined in Rule 902(o)
promulgated under the Securities Act.
Section 1.02. Other Definitions.
Defined in
Term Section
"Authentication Order".......................... 2.02
"Covenant Defeasance"........................... 8.03
"DTC"........................................... 2.03
"Event of Default".............................. 6.01
"Legal Defeasance".............................. 8.02
"Paying Agent".................................. 2.03
"Registrar"..................................... 2.03
"Successor Company"............................. 5.01
Section 1.03. Incorporation by Reference of Trust Indenture Act.
(a) Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
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(b) The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
(c) All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
(a) Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) "including" means "including without limitation";
(6) provisions apply to successive events and transactions; and
(7) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement or successor sections or
rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The Notes
may have notations, legends or endorsements required by law, stock exchange rule
or usage. Each Note shall be dated the date
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of its authentication. The Notes shall be in denominations of $500,000 and
integral multiples of $1,000 thereof. The terms and provisions contained in the
Notes shall constitute, and are hereby expressly made, a part of this Indenture.
The Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Form of Notes. Notes issued in global form shall be
substantially in the form of Exhibit A attached hereto (including the Global
Note Legend thereon and the "Schedule of Exchanges of Interests in the Global
Note" attached thereto). Notes issued in definitive form shall be substantially
in the form of Exhibit A attached hereto (but without the Global Note Legend
thereon and without the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Each Global Note shall represent such of the outstanding
Notes as shall be specified therein and each shall provide that it shall
represent the aggregate principal amount of outstanding Notes from time to time
endorsed thereon and that the aggregate principal amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.06 hereof.
(c) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedelbank"
and "Customer Handbook" of Cedelbank shall be applicable to transfers of
beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedelbank.
(d) Subject to compliance with the provisions of Section 9.01, the
Company may issue Additional Notes under this Indenture without limitation as to
the aggregate principal amount thereof.
Section 2.02. Execution and Authentication.
(a) Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal may be reproduced on the Notes and may
be in facsimile form.
(b) If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
(c) A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
(d) The Trustee shall, upon a written order of the Company signed by
at least one Officer (an "Authentication Order"), authenticate Notes for
original issue up to the aggregate principal amount stated in paragraph 4 of the
Notes. The aggregate principal amount of Notes outstanding at any time may not
exceed such amount except as provided in Section 2.07 hereof.
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(e) The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
Section 2.03. Registrar, Paying Agent and Calculation Agent.
(a) The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
(b) The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
(c) The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Custodian with respect to the Global
Notes.
(d) The Company initially appoints the Trustee to act as the
Calculation Agent with respect to the Notes. The Company may change the
Calculation Agent without notice to any Holders.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Notes, and shall notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.
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Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date or such
shorter time as the Trustee may allow, as the Trustee may reasonably require of
the names and addresses of the Holders of Notes and the Company shall otherwise
comply with TIA (S) 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes shall be exchanged
by the Company for Definitive Notes as provided in Section 2.06(c) hereof if (i)
the Company delivers to the Trustee notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 90 days after the
date of such notice from the Depositary, (ii) a Default has occurred and is
continuing or (iii) the Company in its sole discretion determines that the
Global Notes (in whole but not in part) should be exchanged for Definitive Notes
and delivers a written notice to such effect to the Trustee. Upon the occurrence
of either of the preceding events in (i), (ii) or (iii) above, Definitive Notes
shall be issued in such names as the Depositary shall instruct the Trustee.
Global Notes also may be exchanged or replaced, in whole or in part, as provided
in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in
exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to
this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and
delivered in the form of, and shall be, a Global Note. A Global Note may not be
exchanged for another Note other than as provided in this Section 2.06(a),
although beneficial interests in a Global Note may be transferred and exchanged
as provided in Section 2.06(b), (c) or (g) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial
interests in any Restricted Global Note may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in the same
Restricted Global Note in accordance with the transfer restrictions set
forth in the Private Placement Legend. Beneficial interests in
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any Unrestricted Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in the same
Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described
in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global
Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (B)(1) above. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Indenture and the Notes or otherwise applicable
under the Securities Act, the Trustee shall adjust the principal amount of
the relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global Note.
A beneficial interest in any Restricted Global Note may be transferred to a
Person who takes delivery thereof in the form of a beneficial interest in
another Restricted Global Note if the transfer complies with the
requirements of Section 2.06(b)(ii) above and the Registrar receives the
following:
(A) if the transferee shall take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof; and
(B) if the transferee shall take delivery in the form of a
beneficial interest in the Regulation S Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in an Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note if the exchange or transfer complies
with the requirements of Section 2.06(b)(ii) above and the Registrar receives
the following:
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(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Note, a certificate from
such holder in the form of Exhibit C hereto, including the certifications
in item (1)(a) thereof; or
(B) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (5) thereof;
and, in each such case, if the Registrar or the Company so requests or if
the Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the requesting party, if applicable to the
effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected at a time when an Unrestricted Global
Note has not yet been issued, the Company shall issue and, upon receipt
of an Authentication Order in accordance with Section 2.02 hereof, the
Trustee shall authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the aggregate principal amount of
beneficial interests transferred pursuant to this subparagraph (iv).
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the
form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. Restricted Global Notes and beneficial interests therein
shall be exchangeable for Definitive Notes if (A) the Depositary (x) notifies
the Company that it is unwilling or unable to continue as depositary for the
Restricted Global Notes and the Company thereupon fails to appoint a successor
depositary or (y) has ceased to be a clearing agency registered under the
Exchange Act and the Company fails to appoint a successor, (B) the Company, at
its option, notifies the Trustee in writing that it elects to cause the
issuance of the Definitive Notes or (C) there shall have occurred and be
continuing a Default with respect to the Notes. In all cases, Definitive Notes
delivered in exchange for any Restricted Global Note or beneficial interests
therein shall be registered in the names, and issued in any approved
denominations, requested by or on behalf of the Depositary (in accordance with
the Applicable Procedures).
In such event, the Trustee shall cause the Restricted Global Notes to be
canceled accordingly pursuant to Section 2.11 hereof, and the Company shall
execute and upon receipt of an Authentication Order the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive
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Note issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c) shall be registered in such name or names and
in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a beneficial interest
in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the
Private Placement Legend and shall be subject to all restrictions on transfer
contained therein.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive Note
or may transfer such beneficial interest to a Person who takes delivery
thereof in the form of an Unrestricted Definitive Note only if the Registrar
receives the following:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Definitive
Note that does not bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit C hereto, including the certifications
in item (1)(b) thereof; or
(B) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a Definitive Note that does not
bear the Private Placement Legend, a certificate from such holder in the
form of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case, if the Registrar or the Company so requests
or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the requesting party, if applicable to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. Unrestricted Global Notes and beneficial interests therein
shall be exchangeable for Definitive Notes if (A) the Depositary (x) notifies
the Company that it is unwilling or unable to continue as depositary for the
Unrestricted Global Notes and the Company thereupon fails to appoint a
successor depositary or (y) has ceased to be a clearing agency registered
under the Exchange Act and the Company fails to appoint a successor, (B) the
Company, at its option, notifies the Trustee in writing that it elects to
cause the issuance of the Definitive Notes or (C) there shall have occurred
and be continuing a Default with respect to the Notes. In all cases,
Definitive Notes delivered in exchange for any Unrestricted Global Note or
beneficial interests therein shall be registered in the names, and issued in
any approved denominations, requested by or on behalf of the depositary (in
accordance with the Applicable Procedures). In such event, the Trustee shall
cause the Unrestricted Global Notes to be canceled accordingly pursuant to
Section 2.11 hereof, and the Company shall execute
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and the Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iv) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so registered.
Any Definitive Note issued in exchange for a beneficial interest pursuant to
this Section 2.06(c)(iv) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note or to
transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non-
U.S. Person in an offshore transaction in accordance with Rule 903 or Rule
904 under the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant
to an exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications, certificates and Opinion
of Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (3)(b) thereof;
or
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(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A) above,
the appropriate Restricted Global Note, in the case of clause (B) above, the
144A Global Note, and in the case of clause (C) above, the Regulation S Global
Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note or
transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if the Registrar receives the following:
(A) if the Holder of such Definitive Notes proposes to exchange
such Notes for a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(c) thereof; or
(B) if the Holder of such Definitive Notes proposes to transfer
such Notes to a Person who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note, a certificate from
such Holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;
and, in each such case, if the Registrar so requests or if the
Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and
that the restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of this Section 2.06(d)(ii), the
Trustee shall cancel the Definitive Notes and increase or cause to be increased
the aggregate principal amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of an Unrestricted Definitive Note may exchange such
Note for a beneficial interest in an Unrestricted Global Note or transfer such
Definitive Notes to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note at any time. Upon receipt
of a request for such an exchange or transfer, the Trustee shall cancel the
applicable Unrestricted Definitive Note and increase or cause to be increased
the aggregate principal amount of one of the Unrestricted Global Notes.
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If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii) or (iii) above at
a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an Authentication Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of
transfer or exchange, the requesting Holder shall present or surrender to the
Registrar the Definitive Notes duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed by
such Holder or by his attorney, duly authorized in writing. In addition, the
requesting Holder shall provide any additional certifications, documents and
information, as applicable, required pursuant to the following provisions of
this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name of
Persons who take delivery thereof in the form of another Restricted Definitive
Note if the Registrar receives the following:
(A) if the transfer shall be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (1) thereof; and
(B) if the transfer shall be made pursuant to Rule 903 or Rule 904,
then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transfer shall be made pursuant to any other exemption from
the registration requirements of the Securities Act, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if the
Registrar receives the following:
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(A) if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
(B) if the Holder of such Restricted Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the
form of an Unrestricted Definitive Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in item (5)
thereof;
and, in each such case, if the Registrar or the Company so requests, an
Opinion of Counsel in form reasonably acceptable to the requesting party,
if applicable, to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A
Holder of Unrestricted Definitive Notes may transfer such Notes to a Person
who takes delivery thereof in the form of an Unrestricted Definitive Note.
Upon receipt of a request to register such a transfer, the Registrar shall
register the Unrestricted Definitive Notes pursuant to the instructions from
the Holder thereof.
(f) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange therefor
or substitution thereof) shall bear the legend in substantially the
following form
"THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY
NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY SECTION 144A
THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF HUGHES
ELECTRONICS CORPORATION THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED, ONLY (1) IN THE UNITED STATES TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE
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SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(2) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE
WITH RULE 904 UNDER THE SECURITIES ACT, (3) PURSUANT TO ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (IF AVAILABLE) OR
(4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND, IN EACH OF CASES (1) THROUGH (4), IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE
RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(iii), (c)(iv),
(d)(ii), (d)(iii) or (e) to this Section 2.06 (and all Notes issued in
exchange therefor or substitution thereof) shall not bear the Private
Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION
2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE COMPANY.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
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AND ANY CERTIFICATE ISSUED IN REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY
BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC). ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
(g) Cancellation or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who shall take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who shall take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Global Notes and Definitive Notes
upon the Company's order or at the Registrar's request, in each case in
accordance with the provisions of Section 2.02 hereof.
(ii) No service charge shall be made to a holder of a beneficial interest
in a Global Note or to a Holder of a Definitive Note for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 2.10, 3.06 and 9.05
hereof).
(iii) The Registrar shall not be required to register the transfer of or
exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration of
transfer or exchange of Global Notes or Definitive Notes shall be the valid
obligations of the Company,
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evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(v) Neither the Company nor the Trustee shall be required (A) to issue,
to register the transfer of or to exchange any Notes during a period beginning
at the opening of business 15 days before the day of mailing of a notice of
redemption of Notes under Section 3.02 hereof and ending at the close of
business on the day of such mailing, (B) to register the transfer of or to
exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (C) to register the
transfer of or to exchange a Note between a record date and the next
succeeding interest payment date.
(vi) Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes and
for all other purposes, and none of the Trustee, any Agent or the Company
shall be affected by notice to the contrary.
(vii) All certifications, certificates and Opinions of Counsel required to
be submitted to the Registrar pursuant to this Section 2.06 to effect a
registration of transfer or exchange may be submitted by facsimile.
Section 2.07. Replacement Notes.
(a) If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Note
if the Trustee's requirements are met. An indemnity bond must be supplied by the
Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss that any of them may suffer if a Note is replaced. The Company may
charge for its expenses in replacing a Note.
(b) Every replacement Note is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
(a) The Notes outstanding at any time are all the Notes authenticated
by the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a
Note does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; provided, however, that Notes held by the Company or a
Subsidiary of the Company shall not be deemed to be outstanding for purposes of
Section 3.07 hereof.
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(b) If a Note is replaced pursuant to Section 2.07 hereof, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
(c) If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
(d) If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Responsible Officer of the Trustee actually knows are so owned
shall be so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Notes shall be substantially in the form of
certificated Notes but may have variations that the Company considers
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee, upon direction by the Company, and no one else shall cancel all Notes
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall dispose of such cancelled Notes in accordance with its
customary practices (subject to the record retention requirements of the
Exchange Act). The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
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Section 2.12. CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers (if then generally
in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of
redemption as a convenience to Holders; provided, however, that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 45 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed in a redemption at
any time, the Trustee shall select the Notes to be redeemed among the Holders of
the Notes on a pro rata basis, by lot or in accordance with any other method the
Trustee considers fair and appropriate in accordance with methods generally used
at the time of selection by fiduciaries in similar circumstances.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.07 hereof, at least 15 days but
not more than 45 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
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(a) the CUSIP number;
(b) the redemption date;
(c) the redemption price;
(d) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(e) the name and address of the Paying Agent;
(f) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(g) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(h) the paragraph of the Notes or Section of this Indenture pursuant to
which the Notes called for redemption are being redeemed; and
(i) that no representation is made as to the correctness or accuracy of
the CUSIP number, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days, or such shorter
period allowed by the Trustee, prior to the redemption date, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on the redemption date, the
Company shall deposit with the Trustee or with the Paying Agent money sufficient
to pay the redemption price of and accrued interest on all Notes to be redeemed
on that date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Notes to be redeemed.
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If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) The Company may, at its option, redeem the Notes, in whole or in part,
on any interest payment date upon not less than 15 nor more than 45 days' prior
notice mailed to the Holders of the Notes to be redeemed. The redemption price
shall be equal to the sum of the present values of the remaining scheduled
payments of principal and interest on the Notes to be redeemed, determined as
described in subparagraph (b) below, that would be due after the related
redemption date but for such redemption, discounted to the redemption date on a
quarterly basis (on the basis of a 360-day year and the actual number of days
elapsed) at LIBOR, as described in subparagraph (b) below, plus the Make-Whole
Spread.
(b) For purposes of this calculation (i) the remaining scheduled payments
of interest will be based upon LIBOR, as described below, plus the Applicable
Spread which would have been in effect on the date of redemption and (ii) LIBOR
will be LIBOR in effect on the second London Business Day preceding the
redemption date, except that LIBOR will be representative of deposits in United
States dollars equal to the number of months remaining to maturity as of the
redemption date.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes.
(a) The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent (if other than the Company
or a Subsidiary thereof), holds as of 10:00 a.m., Eastern Time, on the due date
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due.
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(b) The Company shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue principal at the rate
equal to 1% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest (without regard to any applicable grace period) at the same rate to the
extent lawful.
Section 4.02. Maintenance of Office or Agency.
(a) The Company shall maintain in the Borough of Manhattan, The City
of New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
(b) The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
(c) The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
Section 4.03. Reports.
(a) Whether or not the Company is required to do so by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
shall furnish to the Trustee on behalf of the Holders of the Notes (i) all
quarterly and annual financial and other information with respect to the Company
and its consolidated Subsidiaries that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if the Company were required
to file such forms, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants, and (ii) all current reports that would be required to be filed
with the Commission on Form 8-K if the Company were required to file such
reports, in each case, within 15 days following the time periods specified in
the SEC's rules and regulations.
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(b) For so long as any Notes remain outstanding, the Company shall furnish
to the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144(d)(4)
under the Securities Act.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, as promptly as practicable
after each March 1, 2000 and September 1, 2000, and in any event prior to April
1, 2000 or October 1, 2000, respectively, an Officers' Certificate stating that
a review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which such officers may have knowledge
and what action the Company is taking or proposes to take with respect thereto)
and that to the best of his or her knowledge no event has occurred and remains
in existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
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Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
Section 4.06. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, issue, incur, guarantee or assume any
Debt secured by a Lien upon any property or assets of the Company or any of its
Restricted Subsidiaries or upon any shares of stock or indebtedness of any
Restricted Subsidiary (whether such property, assets, shares of stock or
indebtedness are now owned or hereafter acquired), without in any such case
effectively providing concurrently with the issuance, incurrence, guarantee or
assumption of any such Debt that the Notes (together, if the Company so elects,
with any other indebtedness of the Company or the Restricted Subsidiary ranking
equally with or senior to the Notes then existing or later created) will be
secured equally and ratably with such Debt.
The foregoing restriction does not, however, apply if the aggregate
amount of Debt that the Company or any Restricted Subsidiary issues, incurs,
guarantees or assumes and so secures by Liens, together with (1) all other Debt
of the Company and its Restricted Subsidiaries which (if originally issued,
incurred, guaranteed or assumed at such time) would otherwise be subject to the
foregoing restrictions, but not including Debt permitted to be secured under
clauses (a) through (g) of the immediately following paragraph and not including
Permitted Receivables Financings, and (2) all Attributable Debt of the Company
and its Restricted Subsidiaries in respect of sale and lease-back transactions,
does not at the time exceed 15% of Consolidated Net Tangible Assets as shown on
the consolidated financial statements for June 30, 1999.
In addition, the covenant described in the first paragraph above does
not apply to:
(a) Liens existing on the date of the Indenture;
(b) Liens on property, assets, shares of stock or indebtedness of any
corporation or other entity existing at the time (1) that the corporation or
other entity becomes a Restricted Subsidiary or (2) of a sale, lease or other
disposition of all or substantially all of the properties of the corporation or
other entity to the Company or a Restricted Subsidiary;
(c) Liens on property that exist at the time the Company or a
Restricted Subsidiary acquires the property; or Liens to secure (1) the payment
of all or part of the purchase price of such property when the Company or a
Restricted Subsidiary acquires it; (2) any Debt incurred prior to, at the time
of, or within 180 days after, the later of the date of acquisition of such
property and the date such property is placed in service for the purpose of
financing all or any part of its purchase price, or (3) any Debt incurred for
the purpose of financing the Company's or a Restricted Subsidiary's cost of
improvements to such acquired property; provided, however, that for purposes of
this clause (b), (x) a satellite will be treated as a newly-acquired asset as of
the date it is placed in service and (y) any satellite transponder acquired
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through the exercise of an early buy-out option will be treated as a newly-
acquired asset as of the date such option is exercised;
(d) Liens securing a Restricted Subsidiary's Debt to the Company or
to another Subsidiary;
(e) Liens on property of a corporation or other entity existing at
the time such corporation or other entity is merged or consolidated with the
Company or a Restricted Subsidiary (in accordance with Section 5.01) or at the
time of a sale, lease or other disposition of the properties of a corporation or
other entity as an entirety or substantially as an entirety to the Company or a
Restricted Subsidiary;
(f) Liens on property of the Company or a Restricted Subsidiary in
favor of:
(1) the United States or any State;
(2) any department, agency or instrumentality or political
subdivision of the United States or any State;
(3) any other country, or any political subdivision of any other
country, in connection with financing arrangements between the Company
or a Restricted Subsidiary and any of the foregoing governmental
bodies or agencies, to the extent that Liens are required by the
governmental programs under which those financing arrangements are
made, to secure partial, progress, advance or other payments under any
contract or statute or to secure any indebtedness incurred for the
purpose of financing all or part of the purchase price or the cost of
construction of the property subject to such Liens; and
(g) Any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Lien referred to in the
foregoing clauses (a) through (f), as long as (1) the principal amount of Debt
secured by any such Lien does not exceed the principal amount of Debt so secured
at the time of such extension, renewal or replacement and (2) the extension,
renewal or replacement is limited to all or a part of the property (including
the improvements) that secured the Lien being extended, renewed or replaced.
Section 4.07. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
its Restricted Subsidiaries, if the Board of
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Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its Restricted Subsidiaries,
taken as a whole.
Section 4.08. Sale and Leaseback Transactions
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any arrangement with any Person in which the Company
or a Restricted Subsidiary leases from such Person any property or assets that
(1) the Company or the Restricted Subsidiary owns on the date that the Initial
Notes are originally issued and (2) the Company or the Restricted Subsidiary has
sold or will sell to such Person (except for (x) leases existing on the date of
the Indenture, (y) temporary leases having a maximum term of three years and (z)
leases between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries), unless either:
(a) the Company or the Restricted Subsidiary could, under the Section
4.06 issue, incur, guarantee, assume, extend, renew or replace Debt secured by a
Lien on the property or assets equal in amount to the Attributable Debt in
respect of such sale and lease-back arrangement without equally and ratably
securing the Notes; however, on and after the date that the sale and lease-back
arrangement becomes effective, the Attributable Debt in respect of such sale and
lease-back arrangement would be deemed for all purposes under Section 4.06 and
this Section 4.08 to be Debt subject to the provisions of Section 4.06 hereof
(which provisions include the exceptions set forth in clauses (a) through (g) of
Section 4.06), or
(b) within 180 days of the effective date of the sale and lease-back
arrangement, the Company applies a cash amount equal to the Attributable Debt in
respect of the arrangement to the retirement (other than any mandatory
retirement or by way of payment at maturity) of Debt of the Company or any
Restricted Subsidiary (other than Debt owed by the Company to any Restricted
Subsidiary or Debt owed by any Restricted Subsidiary to the Company) that, or is
extendible or renewable at the borrower's option, to a date more than twelve
months after the date of the creation of such Debt.
Section 4.09. Repurchase.
Upon the occurrence of a DTV Sale Event, each Holder of the Notes will
have the right to require that the Company repurchase all, but not less than
all, of such Holder's Notes at a purchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase (such date, the "Repurchase Date") in accordance with the
provisions of the next paragraph.
Within 10 calendar days following any DTV Sale Event, the Company will
mail a notice (a "DTV Sale Notice") to each Holder with a copy to the Trustee
stating (i) that a DTV Sale Event has occurred and that such Holder has the
right to require the Company to purchase all, but not less than all, of such
Holder's Notes at a price in cash equal to 100% of the principal amount thereof
plus accrued and unpaid interest, if any, to the Repurchase Date, (ii) that
unless the Company defaults in making payment therefor, any Note accepted for
repurchase pursuant to this offer will cease to accrue interest after the
Repurchase Date, (iii) the circumstances and
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relevant facts regarding such DTV Sale Event, (iv) the Repurchase Date (which
shall be no earlier than 15 nor later than 20 New York Business Days from the
date the DTV Sale Notice is mailed), (v) that a Holder electing to have a Note
purchased pursuant to such offer must notify the Company of his intention to
exercise such right no later than 12:00 noon New York City Time on the fifth New
York Business day preceding the Repurchase Date by surrendering the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse side of
the Note completed, to the Paying Agent at the address specified in the notice
and (vi) that Holders will be entitled to withdraw their election if the Paying
Agent receives, not later than the third New York Business Day prior to the
Repurchase Date, a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of Notes delivered for purchase and a statement
that such Holder is withdrawing his election to have such Notes purchased.
Hughes shall comply with all applicable federal and state securities
laws in connection with each DTV Sale Notice sent in connection with a
repurchase under the circumstances described above.
On or before the Repurchase Date, the Company shall (i) accept for
payment Notes tendered pursuant to the DTV Sale Event offer, (ii) deposit with
the Paying Agent money sufficient to pay the purchase price of all Notes so
tendered and (iii) deliver to the Paying Agent Notes so accepted together with
an Officers' Certificate stating the Notes are being purchased by the Company.
The Paying Agent shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the purchase price. If any Holder has withdrawn their
election, their notes shall be promptly mailed by the Paying Agent to the Holder
thereof.
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company shall not consolidate or merge with or into another Person
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another Person
unless (a) the Company is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (the "Successor Company") is a corporation organized or
existing under the laws of the United States, any state thereof or the District
of Columbia, (b) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the Successor Company
assumes all the obligations of the Company under the Notes and this Indenture
pursuant to a supplemental indenture in a form reasonably satisfactory to the
Trustee, and (c) immediately after such transaction, no Default or Event of
Default exists.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in
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accordance with Section 5.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of any installment of
interest on the Notes, and such default continues for a period of 30 days;
(b) the Company defaults in the payment, when due, of the principal of
(and premium, if any, on) the Notes (whether at maturity, upon redemption, upon
acceleration or otherwise);
(c) the Company fails to perform or observe any other term, covenant or
agreement contained herein for a period of 90 days after written notice as
provided herein;
(d) the default by the Company or by any Restricted Subsidiary on
principal of, or interest on, any Debt which default has resulted in
acceleration of any portion of such Debt and the aggregate amount of such Debt
accelerated is equal to or in excess of $75 million;
(e) the Company or any of its Restricted Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Restricted Subsidiary,
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; and
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(f) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its Restricted
Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Restricted Subsidiary in an
involuntary case; or
(ii) appoints a Custodian of the Company or any of its Restricted
Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Restricted Subsidiary or for all or
substantially all of the property of the Company or any of its
Restricted Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Restricted Subsidiary; or
(iii) orders the liquidation of the Company or any of its Restricted
Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Restricted Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days.
Section 6.02. Acceleration.
If any Event of Default other than an Event of Default specified in
Section 6.01(e) or (f), occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Notes within 10 days
after notice to the Company may declare the principal amount of the Notes to be
due and payable immediately, together with interest, if any, accrued thereon.
If an Event of Default specified in Section 6.01(e) or (f) occurs, the principal
of the Notes, together with interest, if any, shall ipso facto be due and
payable without any declaration or other act on the part of the Trustee or any
Holder. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by written notice to the Trustee may on behalf of all of the
Holders rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
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For purposes of this Section 6.03, the Trustee is hereby designated as
attorney-in-fact for the Holders.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the Notes then outstanding by notice to the Trustee may, on behalf of the
Holders of all of the Notes, waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium, if any, or interest on, the Notes
(provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes (other than actions for payment of overdue principal of interest)
only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
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Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium, if any, and
interest on the Note, on or after the respective due dates expressed in the
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
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First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for
principal, premium, if any, and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture.
However, in the case of any opinions or
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certificates specifically required to be furnished to the Trustee
pursuant to the terms of this Indenture the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts
stated therein).
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), (c), (e) and (f) of this Section and Section 7.02.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
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(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture; provided however, that the Trustee's
conduct does not constitute willful misconduct or negligence.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
might be incurred by it in compliance with such request or direction.
(g) The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney
at the sole cost of the Company and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation.
(h) The Trustee shall not be deemed to have notice of any Default or Event
of Default unless a Responsible Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee, and such
notice references the Securities and this Indenture.
(i) The rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
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Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with May 15, 2000, and for
so long as Notes remain outstanding, the Trustee shall mail to the Holders of
the Notes a brief report dated as of such reporting date that complies with TIA
(S) 313(a) (but if no event described in TIA (S) 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted). The
Trustee also shall comply with TIA (S) 313(b)(2). The Trustee shall also
transmit by mail all reports as required by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA (S) 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange and of any delisting thereof.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed in writing for its acceptance of this Indenture
and services hereunder. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation for
its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee and any predecessor
Trustee against any and all losses, liabilities, damages, claims or expenses,
including taxes (other than taxes based on the income of the Trustee), incurred
by it arising out of or in connection with the
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acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense or a portion thereof may be
attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld. The Company need not reimburse any expense or indemnify
against any loss, liability or expense incurred by the Trustee through the
Trustee's own willful misconduct, negligence or bad faith.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(e) or (f) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to
the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
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(d) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the Holders
and such Holders do not reasonably promptly appoint a successor Trustee, or if a
vacancy exists in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder of a Note
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. Subject to the Lien provided for in Section
7.07 hereof, the retiring Trustee shall promptly transfer all property held by
it as Trustee to the successor Trustee; provided, however, that all sums owing
to the Trustee hereunder shall have been paid. Notwithstanding replacement of
the Trustee pursuant to this Section 7.08, the Company's obligations under
Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trust created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes in the name of the successor to the
Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificate
of the Trustee shall have.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $10 million
as set forth in its most recent published annual report of condition.
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This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
Section 7.12. Calculation Agent.
The Company appoints The Bank of New York to acts as Calculation Agent
and The Bank of New York accepts its obligations set forth herein and in the
Notes upon the terms and conditions hereof and thereof, and subject to the terms
of the Calculation Agency Agreement dated the date hereof, between the Company
and the Calculation Agent. The Company shall, so long as any of the Notes
remain outstanding, maintain under appointment a Calculation Agent to calculate
the rate of interest payable on the Notes in respect of each Interest Period.
If the Calculation Agent is unable or unwilling to continue to act as such, or
if the Calculation Agent fails to establish the applicable rate of interest for
any Interest Period, or if the Company removes the Calculation Agent, the
Company shall appoint the office of another bank to act as the Calculation
Agent; provided, however, that the Calculation Agent shall not resign or be
removed until acceptance of an appointment by a successor as evidenced by
execution of an instrument accepting such appointment.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder:
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(a) the rights of Holders of outstanding Notes to receive solely from
the trust fund described in Section 8.04 hereof, and as more fully set forth in
such Section, payments in respect of the principal of, premium, if any, and
interest, if any, on such Notes when such payments are due,
(b) the Company's obligations with respect to such Notes under Article
2 and Section 4.02 hereof,
(c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company's obligations in connection therewith and
(d) this Article Eight.
Subject to compliance with this Article Eight, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.03 through 4.09, hereof
with respect to the outstanding Notes on and after the date the conditions set
forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and
the Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to
the outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(f) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes. In order to exercise
either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination
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thereof, in such amounts as shall be sufficient without any further reinvestment
thereof, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest, if any, on
the outstanding Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;
(b) in the case of an election under Section 8.02 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes shall not recognize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance and shall be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes shall not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and shall be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall occur under Sections 6.01(e) or
6.01(f) hereof at any time in the period ending on the 91st day after the date
of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel
(which may be subject to customary exceptions) to the effect that on the 121st
day following the deposit, the trust funds shall not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
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Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its written request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Note shall
thereafter, as an unsecured creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Sections 8.01
or 8.02 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture and the
Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Sections 8.01 or 8.02 hereof until such time as the Trustee or Paying Agent
is
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permitted to apply all such money in accordance with Section 8.01 or 8.02
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(a) to secure any Notes;
(b) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5
hereof;
(c) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of the Note;
(d) to cure any ambiguity, defect or inconsistency;
(e) to transfer, assign, mortgage or pledge any property to or with
the Trustee;
(f) to issue Additional Notes in any aggregate principal amount as
contemplated by Section 2.01(e), all of which shall have the same terms,
including interest and maturity date, as the Notes; and
(g) to evidence the acceptance of appointment by a successor trustee.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes including
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Additional Notes, if any, then outstanding voting as a single class and, subject
to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default
(other than a Default or Event of Default in the payment of the principal of,
premium, if any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Indenture or the Notes may be waived with the consent of the Holders of
a majority in principal amount of the then outstanding Notes, including
Additional Notes, if any, voting as a single class.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes, including Additional Notes,
if any, then outstanding voting as a single class may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Notes. However, without the consent of each Holder affected, an amendment or
waiver under this Section 9.02 may not (with respect to any Notes held by a non-
consenting Holder):
(a) extend the final maturity of the Notes ;
(b) reduce the principal amount of or interest on, any Note or alter or
change the manner in which the interest on the Notes is determined;
(c) change the currency in which the principal amount (including any
amount in respect of original issue discount) or interest payable on any Notes
is payable;
(d) impair the right to institute suit for the enforcement of any payment
on any Notes when due; or
(e) reduce the above-stated percentage of outstanding Notes the consent of
whose holders is necessary to modify or amend and to waive provisions of or
defaults hereunder.
48
<PAGE>
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 10.04 hereof, an Officers' Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10.
MISCELLANEOUS
Section 10.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA (S) 318(c), the imposed duties shall control.
49
<PAGE>
Section 10.02. Notices.
Any notice or communication by the Company or the Trustee to the other
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next-day delivery, to the others' address:
If to the Company:
Hughes Electronics Corporation
200 North Sepulveda Boulevard
El Segundo, California 90245
Attention: General Counsel
Telecopy No.: (310) 662-9935
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telecopier No.: (212) 310-8007
Attention: Michael E. Lubowitz, Esq.
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Trustee Administration
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first-class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
50
<PAGE>
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 10.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
Section 10.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA
(S) 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
51
<PAGE>
Section 10.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 10.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the SEC that such a waiver is against
public policy.
Section 10.08. Governing Law.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 10.09. Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 10.10. Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 10.11. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 10.12. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
52
<PAGE>
[Signatures on following page]
53
<PAGE>
HUGHES ELECTRONICS CORPORATION
By:_____________________________________
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By:_____________________________________
Name:
Title:
Dated as of October 22, 1999
<PAGE>
EXHIBIT A
(Face of Note)
A. Floating Rate Notes due October 23, 2000
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE
SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY SECTION 144A THEREUNDER. THE HOLDER
OF THIS NOTE AGREES FOR THE BENEFIT OF HUGHES ELECTRONICS CORPORATION THAT (A)
THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) IN
THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL
A-1-1
<PAGE>
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (2) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (3)
PURSUANT TO ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND, IN EACH OF CASES (1) THROUGH (4), IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF
THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
A-1-2
<PAGE>
Floating Rates Notes due October 23, 2000
CUSIP _____________
No.__ $___________
HUGHES ELECTRONICS CORPORATION
promises to pay to Cede & Co. or registered assigns, the principal sum of
_________________ Dollars ($______________) on October 23, 2000.
Interest Payment Dates: January 23, 2000, April 23, 2000, July 23, 2000 and
October 23, 2000
Record Dates: January 8, 2000, April 8, 2000, July 8, 2000 and October 8, 2000
HUGHES ELECTRONICS CORPORATION
By:___________________________
Name:
Title:
Dated: October __, 1999
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By:______________________________
Authorized Signatory
================================================================================
A-1-3
<PAGE>
(Back of Note)
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Hughes Electronics Corporation, a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at the rate set forth in the following paragraph from October 22, 1999 until
maturity. The Company shall pay interest quarterly in arrears on January 23,
2000, April 23, 2000, July 23, 2000 (each an "Interest Payment Date") and on the
maturity date of each year, or if any such day is not a Business Day, on the
next succeeding Business Day unless the Business Day is in the next succeeding
calendar month, in which case the interest payment date will be the immediately
preceding Business Day. Interest on the Notes will be computed on the basis of
a 360 day year and the actual number of days elapsed.
Interest on the Notes will accrue from, and including October 22,
1999, to, but excluding the first interest payment date and then from, and
including, the immediately preceding interest payment date to which interest has
been paid or duly provided for to, but excluding, the next interest payment date
or the maturity date, as the case may be; provided, however, that if there is no
existing Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; provided, further, that the first Interest Payment Date shall be
January 23, 2000.
Except in the case of the initial interest period, the per annum
interest rate on the Notes will be calculated by the Calculation Agent. The per
annum interest rate for the initial interest period is 7.45063%. The
Calculation Agent will determine the interest rate on each Interest Reset Date.
The interest rate in effect on each day that is not an Interest Reset Date will
be LIBOR as determined as of the Interest Determination Date pertaining to the
immediately preceding Interest Reset Date plus the Applicable Spread (as defined
below). The interest rate in effect on any day that is an Interest Reset Date
will be LIBOR as determined as of the Interest Determination Date pertaining to
that Interest Reset Date plus the Applicable Spread.
The Notes will bear interest a rate per annum equal to LIBOR plus the
Applicable Spread, as adjusted by the Calculation Agent from time to time.
Initially, the Applicable Spread will be 125 basis points. The initial spread
and the spread as adjusted are referred to as the "Applicable Spread." The
Applicable Spread will be determined by the Calculation Agent as of the Interest
Determination Date related to each Interest Reset Date. The Applicable Spread
is subject to adjustment on each Interest Reset Date, as set forth in the chart
below, based on the rating of the Notes (referred to as the "rating") assigned
by the Rating Agencies. The Applicable Spread will be determined by the
Calculation Agent as of the Interest Determination Date related to each Interest
Reset Date. The Applicable Spread will be based on the rating of the Notes
assigned by the Rating Agencies as publicly announced as of the close of
business on such Interest Determination Date in accordance with the chart below.
For purposes of this provision, a public announcement shall occur when a Rating
Agency publishes the revised rating in published or electronically displayed
news sources, including a weekly credit publication or
A-1-4
<PAGE>
rating press release, generally used by such Rating Agency for the purpose of
announcing its ratings.
A-1-5
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Rating Category Ratings Applicable Spread
--------------- ------- -----------------
- ----------------------------------------------------------------------------------------------------
Moody's S&P
------- ---
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Grade Baa3 or above BBB- or above plus 125 basis points
- ----------------------------------------------------------------------------------------------------
Non Investment Grade/Split Rated Any time either one of, or both of, plus 175 basis points
the ratings assigned by the Rating
Agencies does not fall within the
Investment Grade category.
- ----------------------------------------------------------------------------------------------------
</TABLE>
As promptly as practicable after any change in the Applicable Spread,
the Company shall send written notice to the Trustee in the manner provided in
the Indenture stating:
(a) that a change in the Applicable Spread on the Notes has
occurred and the reason for such change in the Applicable Spread;
(b) the Applicable Spread before giving effect to such change;
and
(c) the Applicable Spread after giving effect to such change.
2. Method of Payment. The Company shall pay interest on the Notes
to the Persons who are registered Holders of Notes at the close of business on
the fifteenth calendar day, whether or not a Business Day, immediately preceding
the Interest Payment Date, even if such Notes are cancelled after such record
date and on or before such Interest Payment Date. The Notes shall be payable as
to principal, premium and interest at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest may be made by check
mailed to the Holders at their addresses set forth in the register of Holders;
provided, however, that payment by wire transfer of immediately available funds
shall be required with respect to principal of and interest and premium, if any,
on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
3. Paying Agent, Registrar and calculation agent. Initially, The
Bank of New York, the Trustee under the Indenture, shall act as Paying Agent,
Registrar and Calculation Agent. The Company may change any Paying Agent,
Registrar or Calculation Agent without notice to any Holder. The Company or any
of its Subsidiaries may act as Paying Agent or Registrar.
A-1-6
<PAGE>
4. Indenture. The Company issued the Notes under an Indenture dated
as of October 22, 1999 ("Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling.
5. Optional Redemption. The Company may, at its option, redeem the
Notes, in whole or in part, on any Interest Payment Date upon not less than 15
nor more than 45 days' prior notice mailed to the Holders of the Notes to be
redeemed. The redemption price shall be equal to the sum of the present values
of the remaining scheduled payments of principal and interest on the Notes to be
redeemed, determined as described in the next sentence, that would be due after
the related redemption date but for such redemption, discounted to the
redemption date on a quarterly basis (on the basis of a 360-day year and the
actual number of days elapsed) at LIBOR, as described in the next sentence, plus
the Make-Whole Spread. For purposes of this calculation (i) the remaining
scheduled payments of interest will be based upon LIBOR, as described below,
plus the Applicable Spread which would have been in effect on the date of
redemption and (ii) LIBOR will be LIBOR in effect on the second London Business
Day preceding the redemption date, except that LIBOR will be representative of
deposits in United States dollars equal to the number of months remaining to
maturity as of the redemption date.
6. Notice of Redemption. Notice of redemption shall be mailed at
least 15 days but not more than 45 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
7. Repurchase. Upon the occurrence of a DTV Sale Event, each Holder
of the Notes will have the right to require that the Company repurchase all, but
not less than all, of such Holder's Notes at a purchase price in cash equal to
100% of the principal amount thereof plus accrued and unpaid interest, if any,
to the date of repurchase in accordance with the provisions of Section 4.09 of
the Indenture.
8. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $500,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before the mailing of a notice of redemption of Notes to be redeemed or during
the period between a record date and the corresponding interest payment date.
A-1-7
<PAGE>
9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes voting as a single class, and any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes voting
as a single class. Without the consent of any Holder of a Note, the Indenture
or the Notes may be amended or supplemented (a) to secure any Notes; (b) to
provide for the assumption of the Company's obligations to the Holders of the
Notes by a successor to the Company pursuant to Article 5 of the Indenture; (c)
to make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights
hereunder of any Holder of the Note; (d) to cure any ambiguity, defect or
inconsistency; (e) to transfer, assign, mortgage or pledge any property to or
with the Trustee; (f) to issue additional notes in any aggregate principal
amount as contemplated by Section 2.01(e) of the Indenture all of which shall
have the same terms, including interest and maturity date, as the Notes; and (g)
to evidence the acceptance of appointment by a successor trustee.
11. Defaults and Remedies. Events of Default include: (a) default
for 30 days in the payment when due of interest, if any, on the Notes; (b)
default in payment when due of the principal of or premium, if any, on the
Notes; (c) failure by the Company to comply with any term, covenant or agreement
contained in the Indenture, which failure remains uncured for 90 days after
notice; (d) default by the Company or by any Restricted Subsidiary on principal
of, or interest on, any Debt which default has resulted in acceleration of any
portion of such Debt and the aggregate amount of such Debt accelerated is equal
to or in excess of $75 million; and (e) certain events of bankruptcy or
insolvency with respect to the Company or any of its Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Notes may declare all
the Notes to be due and payable. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee semi-annually a statement regarding compliance with
the Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
12. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company
A-1-8
<PAGE>
or its Affiliates, and may otherwise deal with the Company or its Affiliates, as
if it were not the Trustee.
13. No Recourse Against Others. No director, officer, employee,
incorporator or stockholder, of the Company, as such, shall have any liability
for any obligations of the Company under the Notes or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the SEC that such a
waiver is against public policy.
14. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
15. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
16. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
Hughes Electronics Corporation
200 North Sepulveda Blvd.
El Segundo, California 90245
Attention: Chief Financial Officer
17. Governing Law.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
A-1-9
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:_____________
Your Signature:__________________________
(Sign exactly as your name appears on the
face of this Note)
Signature Guarantee: ____________________
A-1-10
<PAGE>
OPTIONS OF HOLDER TO ELECT PURCHASE
If you want to elect to have all of this Note purchased by the Company
pursuant to Section 4.09 of the Indenture, check the box:
[_]
Your Signature:_______________________________
(Sign exactly as your name appears on the other side of the Security)
A-1-11
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of of this
decrease in increase in Global Note Signature of
Principal Amount Principal Amount following such authorized
Date of of this of this decrease (or Signatory of
Exchange Global Note Global Note increase) Trustee or Note
Custodian
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
A-1-12
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Hughes Electronics Corporation
200 North Sepulveda Blvd.
El Segundo, California 90245
The Bank of New York
New York, New York 10286
Re: Floating Rate Notes due October 23, 2000 of Hughes Electronics
Corporation
Reference is hereby made to the Indenture, dated as of October 22,
1999 (the "Indenture"), between Hughes Electronic Corporation; as issuer (the
---------
"Company"), and The Bank of New York, as trustee. Capitalized terms used but
-------
not defined herein shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
----------
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
--------
to __________ (the "Transferee"), as further specified in Annex A hereto. In
----------
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [_] Check if Transferee shall take delivery of a beneficial interest in the
-----------------------------------------------------------------------
144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is
- -----------------------------------------------------------
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933 (the "Securities Act"), and, accordingly, the
---------- ---
Transferor hereby further certifies that the beneficial interest or Definitive
Note is being transferred to a Person that the Transferor reasonably believed
and believes is purchasing the beneficial interest or Definitive Note for its
own account, or for one or more accounts with respect to which such Person
exercises sole investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Transfer is in compliance with
any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note shall be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the 144A Global Note or the Definitive Note and in the
Indenture and the Securities Act.
2. [_] Check if Transferee shall take delivery of a beneficial interest in the
-----------------------------------------------------------------------
Regulation S Global Note or a Definitive Note pursuant to Regulation S. The
- ----------------------------------------------------------------------
Transfer is being effected pursuant to and in accordance with Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that
(i) the Transfer is not being made to a person in the United States and (x) at
the time the buy order was originated, the Transferee was outside the United
States or such Transferor and any Person acting on its behalf reasonably
believed and believes that the Transferee was outside the United States or (y)
the transaction was executed in, on or through the facilities of a designated
offshore securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was
B-1
<PAGE>
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 904(b) of Regulation
S under the Securities Act, (iii) the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act and (iv) if
the proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of
the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note shall be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Global Note and/or the Definitive Note and in the Indenture and
the Securities Act.
3. [_] Check and complete if Transferee will take delivery of a
beneficial interest in a Definitive Note pursuant to any provision of the
Securities Act other than Rule 144A or Regulation S. The Transfer is being
effected in compliance with the transfer restrictions applicable to beneficial
interests in Restricted Global Notes and Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [_] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [_] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [_] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [_] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904,
and the Transferor hereby further certifies that it has not engaged in any
general solicitation within the meaning of Regulation D under the Securities Act
and the Transfer complies with the transfer restrictions applicable to
beneficial interests in a Restricted Global Note or Restricted Definitive Notes
and the requirements of the exemption claimed, which certification is supported
by (1) a certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) if such Transfer is in respect of a principal amount of Notes
at the time of transfer of less than $250,000, if requested by the Trustee or
the Company, an Opinion of Counsel provided by the Transferor or the Transferee
(a copy of which the Transferor has attached to this certification), to the
effect that such Transfer is in compliance with the Securities Act. Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Definitive Notes and in the Indenture and the Securities
Act.
B-2
<PAGE>
4. [_] Check and complete if Transferee shall take delivery of a
---------------------------------------------------------
beneficial interest in a Definitive Note pursuant to any provision of the
- -------------------------------------------------------------------------
Securities Act other than Rule 144A or Regulation S. The Transfer is being
- ---------------------------------------------------
effected in compliance with the transfer restrictions applicable to beneficial
interests in Restricted Global Notes and Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that it has not engaged in any general solicitation
within the meaning of Regulation D under the Securities Act and the Transfer
complies with the transfer restrictions applicable to beneficial interests in a
Restricted Global Note or Restricted Definitive Notes and the requirements of
the exemption claimed, which certification is supported by (1) if requested by
the Company, or the Trustee, an Opinion of Counsel provided by the Transferor or
the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note shall be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Definitive Notes and in the Indenture and the
Securities Act.
5. [_] Check if Transferee shall take delivery of a beneficial interest in an
----------------------------------------------------------------------
Unrestricted Global Note or of an Unrestricted Definitive Note.
- ---------------------------------------------------------------
B-3
<PAGE>
(a) [_] Check if Transfer is pursuant to Rule 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note shall no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [_] Check if Transfer is Pursuant to Regulation S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note shall no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [_] Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note shall not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
_____________________________________
[Insert Name of Transferor]
By:__________________________________
Name:
Title:
Dated:_______,____
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP _________), or
(ii) [_] Regulation S Global Note (CUSIP _________), or
(iii) [_] a Restricted Definitive Note.
2. After the Transfer the Transferee shall hold:
[CHECK ONE]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP ________), or
(ii) [_] Regulation S Global Note (CUSIP ________), or
(iii) [_] Unrestricted Global Note (CUSIP ________); or
(b) [_] a Restricted Definitive Note; or
(c) [_] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Hughes Electronic Corporation
200 North Sepulveda Blvd.
El Segundo, California 90245
The Bank of New York
New York, New York 10286
Re: Floating Rate Notes due October 23, 2000 of Hughes Electronic
Corporation
(CUSIP______________)
Reference is hereby made to the Indenture, dated as of October 22,
1999 (the "Indenture"), between Hughes Electronics Corporation., as issuer (the
---------
"Company"), and The Bank of New York, as trustee. Capitalized terms used but
-------
not defined herein shall have the meanings given to them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the Note[s]
-----
or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
--------
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a) [_] Check if Exchange is from beneficial interest in a
--------------------------------------------------
Restricted Global Note to beneficial interest in an Unrestricted Global Note. In
- ----------------------------------------------------------------------------
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933 (the "Securities Act"), (iii) the restrictions on transfer contained
--------------
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest in
an Unrestricted Global Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
(b) [_] Check if Exchange is from beneficial interest in a
--------------------------------------------------
Restricted Global Note to Unrestricted Definitive Note. In connection with the
- ------------------------------------------------------
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note
is being acquired for the Owner's own account without
C-1
<PAGE>
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Definitive Note is
being acquired in compliance with any applicable blue sky securities laws of any
state of the United States.
(c) [_] Check if Exchange is from Restricted Definitive Note to
-------------------------------------------------------
beneficial interest in an Unrestricted Global Note. In connection with the
- --------------------------------------------------
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [_] Check if Exchange is from Restricted Definitive Note to
-------------------------------------------------------
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
- ----------------------------
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests
in Restricted Global Notes
(a) [_] Check if Exchange is from beneficial interest in a
--------------------------------------------------
Restricted Global Note to Restricted Definitive Note. In connection with the
- ----------------------------------------------------
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued shall continue to be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
(b) [_] Check if Exchange is from Restricted Definitive Note to
-------------------------------------------------------
beneficial interest in a Restricted Global Note. In connection with the Exchange
- -----------------------------------------------
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] 144A Global Note, Regulation S Global Note, with an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer and (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, and in
C-2
<PAGE>
compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the beneficial interest issued shall be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on the relevant Restricted Global Note and in the Indenture and the Securities
Act.
C-3
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
___________________________________
[Insert Name of Owner]
By: _______________________________
Name:
Title:
Dated: ________________, ____
C-4
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Hughes Electronics Corporation
200 North Sepulveda Blvd.
El Segundo, California 90245
The Bank of New York
New York, New York 10286
Re: Floating Rate Notes due October 23, 2000
----------------------------------------
Reference is hereby made to the Indenture, dated as of October 22,
1999 (the "Indenture"), Hughes Electronics Corporation, as issuer (the
"Company"), and The Bank of New York, as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [_] a beneficial interest in a Global Note, or
(b) [_] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $250,000, if
requested by the Trustee or the Company, an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such
D-1
<PAGE>
transfer is in compliance with the Securities Act, (D) outside the United States
in accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
______________________________________________
[Insert Name of Accredited Investor]
By:___________________________________________
Name:
Title:
Dated:________________
D-2
<PAGE>
EXHIBIT 10.5
HUGHES ELECTRONICS CORPORATION
AMENDMENT AGREEMENT REGARDING
REVOLVING CREDIT AGREEMENT (MULTI-YEAR FACILITY)
This AMENDMENT AGREEMENT REGARDING REVOLVING CREDIT AGREEMENT (MULTI-
YEAR FACILITY) (this "Amendment") is dated as of November 24, 1999 and entered
into by and among HUGHES ELECTRONICS CORPORATION (formerly known as HUGHES
NETWORK SYSTEMS, INC.), a Delaware corporation (the "Borrower"), the financial
institutions listed on the signature pages hereof (the "Banks"), BANK OF
AMERICA, N.A., as the administrative agent for the Banks (in such capacity the
"Administrative Agent"), MORGAN GUARANTY TRUST COMPANY OF NEW YORK as
syndication agent (the "Syndication Agent") and CITICORP USA, INC. and THE CHASE
MANHATTAN BANK as documentation agents (in such capacity the "Documentation
Agents") and is made with reference to that certain Credit Agreement (Multi-Year
Facility) dated as of December 5, 1997, by and among the Borrower, the lending
institutions identified therein, the Administrative Agent, the Syndication Agent
and the Documentation Agents (the "Original Agreement"); and as amended by that
certain First Amendment to Revolving Credit Agreement (Multi-Year Facility)
dated as of December 15, 1998 by and among the Borrower, the lending
institutions identified therein, the Administrative Agent, the Syndication Agent
and the Documentation Agents (the "First Amendment"; the Original Agreement, as
amended by the First Amendment, the "Existing Agreement"). Capitalized terms
used herein without definition shall have the same meanings herein as set forth
in the Existing Agreement.
RECITAL
WHEREAS, Borrower and Banks desire, subject to the terms and
conditions hereinafter set forth, to amend and restate the Existing Agreement
(together with all schedules and exhibits thereto) in its entirety in the form
of the Amended and Restated Credit Agreement:
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
1. AMENDMENT AND RESTATEMENT OF EXISTING AGREEMENT
1.1 Amendment and Restatement of Existing Agreement. On the Amended
-----------------------------------------------
and Restated Credit Agreement Effective Date (as defined below), the Existing
Agreement (including all schedules and exhibits thereto) shall be and is hereby
amended and restated to read in its entirety as set forth in Annex A hereto (as
-------
set forth in such Annex A, the "Amended and Restated Credit Agreement"), and as
-------
so amended and restated is hereby ratified, approved and confirmed in each and
every respect. The rights and obligations of the parties to the Existing
Agreement with respect to the period prior to the Amendment Effective Date shall
not be affected by such amendment and restatement.
-1-
<PAGE>
2. CONDITIONS TO EFFECTIVENESS
The amendments and modifications referred to in Section 1 of this
Amendment Agreement shall become effective only upon the satisfaction on or
prior to December 10, 1999 of all of the following conditions precedent and the
conditions set forth in Section 5D hereof (the date of satisfaction of such
conditions being referred to herein as the "Amended and Restated Credit
Agreement Effective Date")
(A) On or before the Amended and Restated Credit Agreement Effective
Date, Borrower shall deliver to the Banks (or to the Administrative Agent for
the Banks with sufficient originally executed copies, where appropriate, for
each Bank and its counsel) the following, each, unless otherwise noted, dated
the Amended and Restated Credit Agreement Effective Date:
(1) A favorable written opinion, dated the Amended and Restated
Credit Agreement Effective Date, of the General Counsel or Assistant General
Counsel of Borrower in the form set out in Exhibit 1 hereto;
(2) Certificate of the Secretary or an Assistant Secretary of
Borrower dated the Amended and Restated Credit Agreement Effective Date as to
(i) the resolution of the Board of Directors of Borrower or its Executive
Committee in connection with this Agreement, and (ii) the incumbency and
signatures of the person authorized to execute and deliver this Agreement and
any other instrument, document or other agreement required hereunder on the
Amended and Restated Credit Agreement Effective Date; and
(3) A certificate, signed by the treasurer or an assistant treasurer
of Borrower dated the Amended and Restated Credit Agreement Effective Date
certifying: (i) that since June 30, 1999, there has been no change in the
financial condition, business, operations or properties of Borrower and its
Subsidiaries taken as a whole which constitutes a Material Change; and (ii) that
no event has occurred and is continuing which constitutes or would constitute an
Event of Default or an Unmatured Event of Default.
(4) Copies of this Amendment executed by Borrower and Banks
constituting the Majority Banks.
(B) All fees and other amounts then due to the Administrative Agent,
Syndication Agent, Documentation Agent, Arranger and any Bank through the
Amended and Restated Credit Agreement Effective Date (including Banks having no
Commitment on and after the Amended and Restated Credit Agreement Effective
Date) by Borrower shall have been received by such person.
(C) On or before the Amended and Restated Credit Agreement Effective
Date, all corporate and other proceedings taken or to be taken in connection
with the transactions contemplated hereby and all documents incidental thereto
shall be satisfactory in form and substance to the Administrative Agent and such
counsel, and the Administrative Agent and such counsel shall have received all
such counterpart originals or certified copies of such documents as the
Administrative Agent may reasonably request.
-2-
<PAGE>
3. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Banks to enter into this Amendment and to amend the
Existing Agreement in the manner provided herein, Borrower represents and
warrants to each Bank that the following statements are true, correct and
complete:
(A) Corporate Power and Authority. Borrower has all requisite
-----------------------------
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Existing
Agreement as amended by this Amendment (the "Amended Agreement").
(B) Authorization of Agreements. The execution and delivery of this
---------------------------
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Borrower.
(C) No Contravention. There is no charter, by-law, or capital stock
----------------
provision of Borrower and no provision of any indenture or material agreement,
written or oral, to which Borrower is a party or under which Borrower is
obligated, nor is there any statute, rule or regulation, or any judgment, decree
or order of any court or agency binding on Borrower which would be contravened
by the execution, delivery and performance of any provision, condition, covenant
or other term of this Amendment or the Amended Agreement.
(D) Binding Obligation. This Amendment and the Amended Agreement
------------------
are the legal, valid and binding obligation of Borrower, enforceable against it
in accordance with their terms, and any instrument or agreement required
hereunder or by the Amended Agreement, when executed and delivered, will be
similarly valid, binding and enforceable.
(E) Incorporation of Representations and Warranties From Credit
-----------------------------------------------------------
Agreement. The representations and warranties contained in Section 6 (excluding
- ----------
Section 6.6) of the Credit Agreement are and will be true, correct and complete
in all material respects on and as of the Amended and Restated Credit Agreement
Effective Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
(F) Absence of Default. No event has occurred and is continuing or
------------------
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Unmatured Event of
Default.
4. MISCELLANEOUS
(A) Reference to and Effect on the Credit Agreement and the Other
-------------------------------------------------------------
Loan Documents.
- ---------------
(i) On and after the Amended and Restated Credit Agreement Effective
Date, each reference in the Existing Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Existing Agreement,
and each reference in the other documents entered pursuant to the Existing
Agreement to the "Credit Agreement", "thereunder",
-3-
<PAGE>
"thereof" or words of like import referring to the Existing Agreement shall mean
and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the
Existing Agreement and the other documents entered pursuant to the Existing
Agreement shall remain in full force and effect and are hereby ratified and
confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of the
Administrative Agent or any Bank under, the Credit Agreement or any of the other
Loan Documents.
(B) Headings. Section and subsection headings in this Amendment are
--------
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
(C) California Law. The interpretation, enforcement and effect of
--------------
this Agreement, the Loans and any agreements, contracts, indentures, documents
or instruments delivered in accordance herewith, shall be governed and
controlled in all respects by and construed according to the substantive laws of
the State of California, to the jurisdiction of whose courts the parties hereto
hereby agree to submit.
(D) Counterparts; Effectiveness. This Amendment may be executed in
---------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment shall become
effective upon the execution of a counterpart hereof by Borrower and the
Majority Banks and receipt by Borrower and the Administrative Agent of written
or telephonic notification of such execution and authorization of delivery
thereof.
[Remainder of page intentionally left blank]
-4-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
in Los Angeles, California as of the date first hereinabove written.
HUGHES ELECTRONICS
CORPORATION (formerly known as
HUGHES NETWORK SYSTEMS, INC.)
By:___________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-1
<PAGE>
BANK OF AMERICA, N.A., as
Administrative Agent
By:
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-2
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Syndication Agent and a Bank
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-3
<PAGE>
THE CHASE MANHATTAN BANK, as
Documentation Agent, and a Bank
By:__________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-4
<PAGE>
CITICORP USA, INC., as Documentation
Agent and a Bank
By:__________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-5
<PAGE>
ALLFIRST BANK
By:__________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-6
<PAGE>
BANCA DI ROMA - SAN FRANCISCO
By:__________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-7
<PAGE>
BANK OF AMERICA, N.A., as a Bank
By:__________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-8
<PAGE>
THE BANK OF NEW YORK
By:__________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-9
<PAGE>
BANK ONE, NA
By:__________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-10
<PAGE>
CIBC INC.
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-11
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-12
<PAGE>
CREDIT SUISSE FIRST BOSTON
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-13
<PAGE>
DEUTSCHE BANK AG NEW YORK
AND/OR CAYMAN ISLANDS
BRANCHES
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-14
<PAGE>
THE FUJI BANK, LIMITED
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-15
<PAGE>
THE INDUSTRIAL BANK OF JAPAN,
LIMITED LOS ANGELES AGENCY
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-16
<PAGE>
MERCANTILE BANK, NA
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-17
<PAGE>
THE MITSUBISHI TRUST AND
BANKING CORPORATION, NEW YORK
BRANCH
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-18
<PAGE>
SANPAOLO IMI SpA
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-19
<PAGE>
THE TORONTO-DOMINION BANK
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-20
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-21
<PAGE>
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-22
<PAGE>
BANK HAPOALIM B.M.
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-23
<PAGE>
BANKERS TRUST COMPANY
By:_____________________________________
Name:
Title:
(Amendment to Amended and Restated
Revolving Credit Agreement (Multi-Year))
S-24
<PAGE>
EXHIBIT 1
OPINION OF COUNSEL
[_________, __], 1999
To: The Banks listed on Schedule A hereto; Bank
of America, N.A., as Administrative Agent;
Morgan Guaranty Trust Company of New
York, as Syndication Agent; and Citicorp
USA, Inc. and The Chase Manhattan Bank as
Documentation Agents
Re: Hughes Electronics Corporation
Amended and Restated Revolving
Credit Agreement (Multi-Year
Facility)
Ladies and Gentlemen:
I am the Assistant General Counsel of Hughes Electronics Corporation, a
Delaware corporation (the "Borrower"), in connection with the Amended and
Restated Revolving Credit Agreement (Multi-Year Facility) dated as of November
24, 1999 (the "Credit Agreement") by and among Borrower, the banks named therein
(the "Banks"), Bank of America, N.A., as administrative agent for the Banks (in
such capacity "Administrative Agent"), Morgan Guaranty Trust Company of New
York, as Syndication Agent and Citicorp USA, Inc. and The Chase Manhattan Bank
as Documentation Agents; which Credit Agreement is being implemented pursuant to
the Amendment Agreement Regarding Revolving Credit Agreement (Multi-Year
Facility) dated as of November 24, 1999 among the Borrower, Banks constituting
the Majority Banks, the Administrative Agent, the Syndication Agent and the
Documentation Agents (the "Amendment Agreement"). Capitalized terms not
otherwise defined herein shall have the meanings set forth in the Credit
Agreement. This opinion is rendered to you pursuant to Section 2(A)(1) of the
Amendment Agreement.
As Assistant General Counsel to Borrower, I have caused to be made such
legal and factual examinations and inquiries, including an examination of
originals or copies, certified or
<PAGE>
otherwise identified to my satisfaction as authentic, of such corporate records,
agreements, instruments and other documents as I have deemed necessary or
appropriate for the purposes of this opinion. I have caused to be obtained such
certificates and other assurances (copies of which have been delivered to you)
from public officials and officers and other employees of Borrower as I
considered necessary or appropriate for the purpose of rendering this opinion. I
have assumed the genuineness of all signatures (except that of Borrower), the
authenticity of all documents submitted to me as originals, and the conformity
with the originals of all documents submitted to me as copies.
Subject to the limitations herein set forth, I am opining herein as to the
effect on the subject transaction only of United States federal law, the laws of
the State of California and the General Corporation Law of the State of
Delaware. I am licensed to practice law in the State of California. I assume
no responsibility as to the applicability to the subject transaction or the
effect thereon of the laws of any other jurisdiction.
Based upon the foregoing and in reliance thereon, and subject to the
qualifications, limitations and assumptions set forth herein, I am of the
opinion that, as of the date hereof:
1. Borrower has been duly incorporated, and is validly existing in good
standing under the laws of the State of Delaware with corporate power to own its
properties and assets, to enter into the Amendment Agreement and the Credit
Agreement, and to perform its obligations under the Amendment Agreement and the
Credit Agreement.
2. The execution, delivery and performance of the Amendment Agreement and
the Credit Agreement by Borrower have been duly authorized by all necessary
corporate action on the part of Borrower, the Amendment Agreement has been duly
executed and delivered by Borrower, and the Amendment Agreement and the Credit
Agreement constitute the legally valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms.
3. To my knowledge, after causing to be conducted such legal and factual
examination and inquiries and causing to be conducted such discussions with and
obtaining such certificates or other confirmations from officers and other
employees of Borrower as I considered appropriate in the circumstances, no
consent, permission, authorization, order or license of any United States
federal or California governmental authority is necessary in connection with the
execution and delivery of the Credit Agreement by Borrower and Borrower's
performance of its obligations under the Credit Agreement.
4. There is no provision of the Certificate of Incorporation or the By-
laws of Borrower which would be contravened by the execution and delivery of the
Amendment
<PAGE>
Agreement by Borrower or by the performance by Borrower of its obligations under
the Amendment Agreement and the Credit Agreement.
5. To my knowledge, after causing to be conducted such legal and factual
examination and inquiries and causing to be conducted such discussions with and
obtaining such certificates or other confirmations from officers and other
employees of Borrower as I considered appropriate in the circumstances, no
consent or approval of any trustee or holder of any material indebtedness of
Borrower is necessary in connection with the execution and delivery of the
Amendment Agreement by Borrower and Borrower's performance of its obligations
under the Amendment Agreement and the Credit Agreement.
6. There is no provision of any indenture or material agreement for
borrowed money to which Borrower is a party or under which Borrower is
obligated, and of which I am aware, after causing to be conducted such legal and
factual examinations and inquiries and causing to be conducted such discussion
with and obtaining such certificates or other confirmations from officers and
other employees of Borrower as I considered appropriate in the circumstances,
which would be contravened by the execution and delivery of the Amendment
Agreement and the Notes by Borrower or by the performance by Borrower of its
obligations under the Amendment Agreement and the Credit Agreement.
The opinion expressed in paragraph 6 is subject to the following
limitations, qualifications, exceptions and assumptions:
(a) the enforcement of the Amendment Agreement, the Credit Agreement, and
the Notes may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws or by equitable principles relating to or limiting the
rights of creditors generally;
(b) the use of the term enforceable shall not imply any opinion as to the
availability of equitable remedies;
(c) I advise you that a California court may not strictly enforce certain
covenants contained in the Amendment Agreement and the Credit Agreement or allow
acceleration of the maturity of the indebtedness thereunder if it concludes that
such enforcement or acceleration would be unreasonable under the then existing
circumstances. I do believe, however, that subject to the limitations expressed
elsewhere in this opinion, enforcement or acceleration would be available if an
Event of Default occurs as a result of a material breach of a material covenant
contained in the Credit Agreement;
(d) The effect of California court decisions, invoking statutes or
principles of equity, which have held that certain covenants and provisions of
agreements are unenforceable where (i)
<PAGE>
the breach of such covenants or provisions imposes restrictions or burdens upon
the debtor, including the acceleration of indebtedness due under debt
instruments, and it cannot be demonstrated that the enforcement of such
restrictions or burdens is reasonably necessary for the protection of the
creditor, or (ii) the creditor's enforcement of such covenants or provisions
under the circumstances would violate the creditor's implied covenant of good
faith and fair dealing;
(e) The unenforceability under certain circumstances, under California or
federal law or court decisions, of provisions expressly or by implication
waiving broadly or vaguely stated rights, unknown future rights, defenses to
obligations or rights granted by law, where such waivers are against public
policy or prohibited by law;
(f) The unenforceability under certain circumstances of provisions to the
effect that rights or remedies are not exclusive, that every right or remedy is
cumulative and may be exercised in addition to or with any other right or
remedy, that election of a particular remedy or remedies does not preclude
recourse to one or more other remedies or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy;
(g) The effect of Section 1717 of the California Civil Code, which
provides that, where a contract permits one party to the contract to recover
attorneys' fees, the prevailing party in any action to enforce any provision of
the contract shall be entitled to recover its reasonable attorneys' fees;
(h) The unenforceability under certain circumstances of provisions
indemnifying a party against liability for its own wrongful or negligent acts or
where such indemnification is contrary to public policy or prohibited by law;
and
(i) The enforceability under certain circumstances of provisions imposing
penalties, forfeitures, late payment charges or an increase in interest rate
upon delinquency in payment or the occurrence of a default.
To the extent that the obligations of Borrower may be dependent upon such
matters, I assume for purposes of this opinion that each of the Banks is duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization; that each of the Banks is
duly qualified to engage in the transaction covered by this opinion; that the
Amendment Agreement has been duly authorized, executed and delivered by each of
the Banks and that the Amendment Agreement and the Credit Agreement constitute
the valid and binding obligation of each of the Banks, enforceable in accordance
with its terms; and that each of the Banks has the requisite corporate or
organizational and legal power and authority to own its properties, to carry on
its business as now being conducted and to perform its obligations under the
Amendment Agreement and the Credit Agreement, including without limitation, to
make the loans under the Credit Agreement. I am not expressing any opinion as
to
<PAGE>
the effect of or the compliance by any Bank with any state or federal laws or
regulations applicable to the transactions because of the nature of its
respective business.
This opinion is rendered to the Banks and Administrative Agent as of the
date hereof in connection with the above transaction, and may not be relied upon
by any person other than the Administrative Agent and the Banks and their
permitted assignees, or by them in any other context, and may not be furnished
to, quoted to or relied upon by any other person, firm or corporation for any
purpose without my prior written consent; provided that each Bank and its
--------
permitted assignees may provide this opinion (i) to bank examiners and other
regulatory authorities should they so request or in connection with their normal
examination, (ii) to the independent auditors and attorneys of such Bank, (iii)
pursuant to order or legal process of any court or governmental agency, (iv) in
connection with any legal action to which the Bank is a party arising out of the
transactions contemplated by the Amendment Agreement and the Credit Agreement,
or (v) in connection with the assignment of or sale of participations in the
Loans.
Very truly yours,
<PAGE>
SCHEDULE A TO OPINION OF COUNSEL
Bankers Trust Company
Credit Suisse First Boston
The Long-Term Credit Bank of Japan, Ltd., Los Angeles Agency
The Mitsubishi Trust & Banking Corporation, New York Branch
NationsBank of Texas, N.A.
The Toronto-Dominion Bank
Banca di Roma - San Francisco Branch
The Bank of New York
CIBC Inc.
Credit Lyonnais New York Branch
Deutsche Bank AG New York and/or Cayman Islands Branches
The First National Bank of Chicago
First National Bank of Maryland
The Fuji Bank, Limited, Los Angeles Agency
The Industrial Bank of Japan, Limited, Los Angeles Agency
Istituto Bancario San Paolo di Torino SpA
Union Bank of California
<PAGE>
EXHIBIT 10.6
CREDIT AGREEMENT
among
SURFIN LTD.,
certain DESIGNATED SUBSIDIARIES
and
THE BANKS NAMED HEREIN
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Syndication Agent
DEUTSCHE BANK AG, NEW YORK AND CAYMAN ISLANDS BRANCHES,
as Documentation Agent
THE CHASE MANHATTAN BANK
THE FIRST NATIONAL BANK OF CHICAGO
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
and
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK AND CAYMAN ISLANDS BRANCHES,
as Senior Managing Agents
and
CITICORP USA, INC.
as Administrative Agent
Dated as of June 3, 1999
Arranged By
SALOMON SMITH BARNEY INC.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1.................................................................. 1
DEFINITIONS................................................................ 1
1.1 Definitions.......................................................... 1
SECTION 2.................................................................. 11
THE CREDIT................................................................. 11
2.1 The Commitments...................................................... 11
2.2 Loans made to the Borrower and the Designated Subsidiaries........... 12
2.3 Requests for Reference Rate and Eurodollar Loans..................... 12
2.4 Guaranty............................................................. 12
2.5 Interest and Principal on Reference Rate Loans....................... 12
2.6 Interest and Principal on Eurodollar Loans........................... 13
2.7 Loan Accounts........................................................ 13
2.8 Conversion of Loans Between Eurodollar Loans and Reference Rate
Loans and Conversion of Interest Periods of Eurodollar Loans......... 13
2.9 Disbursements and Payments........................................... 14
2.10 Facility Fee......................................................... 15
2.11 Issuance of Letters of Credit and Banks' Purchase of
Participations in Participated Letters of Credit..................... 16
2.12 Letter of Credit Fees................................................ 19
2.13 Drawings and Reimbursement of Amounts Paid Under Letters of Credit... 20
2.14 Obligations Absolute................................................. 23
2.15 Indemnification; Nature of Issuing Banks' Duties..................... 24
2.16 Increased Costs and Taxes Relating to Letters of Credit.............. 26
2.17 Survival of Certain Provisions Relating to Letters of Credit......... 27
SECTION 3.................................................................. 27
PAYMENT OF COSTS AND REDUCTION............................................. 27
3.1 Indemnification Upon Failure to Pay Eurodollar Loan.................. 27
3.2 Increased Costs...................................................... 27
3.3 Taxes................................................................ 29
3.4 Prepayment........................................................... 29
3.5 Pro Rata Reduction of Commitments by Borrower........................ 29
</TABLE>
<PAGE>
<TABLE>
<S> <C>
3.6 Reduction of One Bank's Commitment by Borrower....................... 30
3.7 Notice of Reductions................................................. 30
3.8 Designation of Replacement Bank...................................... 30
3.9 Effect of Reduction of Commitment.................................... 30
3.10 Accrued Fees......................................................... 31
3.11 Survival............................................................. 31
SECTION 4.................................................................. 31
CHANGE IN CIRCUMSTANCES AFFECTING LOANS.................................... 31
4.1 Inability to Determine Eurodollar Rate............................... 31
4.2 Illegality........................................................... 31
SECTION 5.................................................................. 32
CONDITIONS PRECEDENT....................................................... 32
5.1 Initial Conditions Precedent......................................... 32
5.2 Conditions Precedent to Loans........................................ 34
5.3 Conditions to Letter of Credit....................................... 35
SECTION 6.................................................................. 35
REPRESENTATIONS AND WARRANTIES............................................. 35
6.1 Authority of Borrower................................................ 35
6.2 Binding Obligations.................................................. 36
6.3 Incorporation of Subsidiaries........................................ 36
6.4 No Contravention..................................................... 36
6.5 Notices.............................................................. 36
6.6 Financial Statements................................................. 36
6.7 ERISA................................................................ 36
6.8 Use of Proceeds; Margin Regulations; Investment Act.................. 36
6.9 Taxes................................................................ 37
6.10 Insurance............................................................ 37
6.11 Liens................................................................ 37
6.12 Absence of Litigation; Litigation Description........................ 37
6.13 Authorizations and Approvals......................................... 37
6.14 Taxes................................................................ 37
6.15 Enforcement.......................................................... 38
6.16 Authority of Designated Subsidiaries................................. 38
</TABLE>
<PAGE>
<TABLE>
<S> <C>
6.17 Year 2000 Compliance................................................ 38
SECTION 7................................................................. 39
AFFIRMATIVE COVENANTS OF BORROWER......................................... 39
7.1 Use of Proceeds of Loans............................................ 39
7.2 Management of Business.............................................. 39
7.3 Notice of Certain Events............................................ 39
7.4 Records............................................................. 39
7.5 Information Furnished............................................... 40
7.6 Execution of Other Documents........................................ 40
7.7 Administrative Agent's and Arranger's Fees.......................... 40
7.8 Compliance with Law................................................. 40
7.9 Maintenance of Properties, Etc...................................... 41
SECTION 8................................................................. 41
NEGATIVE COVENANTS OF BORROWER............................................ 41
8.1 Liens............................................................... 41
8.2 Mergers, Liquidations and Sales of Assets........................... 42
8.3 Compliance with Margin Regulations.................................. 43
8.4 Compliance with Law, etc............................................ 43
8.5 Change in Business.................................................. 43
8.6 Ownership of Designated Subsidiaries................................ 43
8.7 ERISA............................................................... 43
SECTION 9................................................................. 43
EVENTS OF DEFAULT......................................................... 43
9.1 Events of Default................................................... 43
9.2 Recovery of Amounts Due............................................. 47
9.3 Rights Cumulative.................................................... 47
9.4 Letters of Credit and Accepted Time Drafts.......................... 47
SECTION 10................................................................ 48
THE BANKS................................................................. 48
10.1 Administration of Loan.............................................. 48
10.2 Representations By Banks............................................ 48
SECTION 11................................................................ 49
MISCELLANEOUS PROVISIONS.................................................. 49
</TABLE>
<PAGE>
<TABLE>
<S> <C>
11.1 Amendments and Waivers............................................. 49
11.2 Notices............................................................ 49
11.3 Waiver............................................................. 50
11.4 New York Law....................................................... 50
11.5 Headings........................................................... 50
11.6 Accounting Terms................................................... 50
11.7 Counterparts....................................................... 50
11.8 Written Disclosure................................................. 50
11.9 Singular; Plural................................................... 50
11.10 Illegality......................................................... 50
11.11 Assignments and Participations..................................... 51
11.12 Obligations Several................................................ 54
11.13 Fees and Expenses.................................................. 54
11.14 Indemnity.......................................................... 54
11.15 Confidentiality.................................................... 55
11.16 Right of Set-off................................................... 55
11.17 Judgment........................................................... 55
11.18 No Immunity........................................................ 56
11.19 Proceedings, Etc................................................... 56
11.20 Jury Trial Waiver.................................................. 56
</TABLE>
SCHEDULES
1 Banks and Commitments
EXHIBITS
A Form of Loan Request
B Relations Among the Banks and Administrative Agent
C Addresses and Lending Offices of Banks
D Form of Hughes Guaranty
E Form of Guaranty of Darlene
F-1 Form of Opinion of Bahamas Counsel to Borrower
F-2 Form of Opinion of Netherlands Counsel for White Holding
G Form of Opinion of New York Counsel to Borrower
H-1 Form of Opinion of Assistant General Counsel to Hughes
H-2 Form of Opinion of Counsel to Other Guarantor
<PAGE>
I Form of Opinion of Special Counsel to Administrative Agent
J Form of Assignment and Acceptance
K Form of L/C Request
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of June 3, 1999, (this
Credit Agreement as it may be amended, supplemented or modified from time to
time being referred to herein as this "Agreement") among SurFin Ltd., an
international business company organized and existing under the laws of the
Bahamas ("Borrower"), the Designated Subsidiaries (as defined below), the Banks
(as defined below), Bank of America National Trust and Savings Association, as
syndication agent ("Syndication Agent"), Deutsche Bank, AG, New York and Cayman
Islands Branches, as documentation agent ("Documentation Agent"), and The Chase
Manhattan Bank, The First National Bank of Chicago, Morgan Guaranty Trust
Company of New York and Westdeutsche Landesbank Girozentrale-New York and Cayman
Islands Branches, as senior managing agents ("Senior Managing Agents"), and
Citicorp USA, Inc., as administrative agent for Banks (in such capacity
"Administrative Agent").
SECTION 1
---------
DEFINITIONS
-----------
1.1 Definitions.
-----------
"Accepted Time Draft" means a draft presented under a Usance Letter of
Credit which has been accepted by the Issuing Bank of such Usance Letter of
Credit.
"Adjusted Exposure" means, with respect to any Bank, as at any date of
determination, the sum (without duplication) of (i) the aggregate principal
amount of all outstanding Loans made by such Bank (other than Loans made for the
purpose of reimbursing the applicable Issuing Bank for any amount drawn under
any Participated Letter of Credit but not yet so applied) plus (ii) such Bank's
----
share based on its Percentage of the maximum aggregate amount which is or at any
time thereafter may become available for drawing under all Participated Letters
of Credit then outstanding plus (iii) such Bank's share based on its Percentage
----
of the aggregate amount of all payments in respect of drawing under Participated
Letters of Credit honored by Issuing Banks and payments of Accepted Time Drafts
and not theretofore reimbursed by the Obligors (including any such
reimbursements out of the proceeds of Loans pursuant to Section 2.13(b)) plus
----
(iv) the maximum aggregate amount which is or at any time thereafter may become
available for drawing under all Non-Participated Letters of Credit issued by
such Bank or its Designated Issuer then outstanding plus (v) the aggregate
----
amount of all payments in respect of drawings under all Non-Participated Letters
of Credit honored by such Bank or its Designated Issuer and payments of Accepted
Time Drafts created under such Non-Participated Letters of Credit issued by such
Bank or its Designated Issuer and not theretofore reimbursed by the Obligors.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by, or is under common control with, such
Person.
"Applicable Margin" shall mean with respect to any day in relation to
any Eurodollar Loan, the percentages set forth below correlating to the Total
Utilization of the Commitments and the Level applicable to Long-term Debt on
such day:
<PAGE>
Applicable Margin
(in basis points)
Total Utilization of the Commitments as a Percentage of Total Commitment
<TABLE>
<CAPTION>
Greater than or
equal to 35% but Greater than or
Level Less than 35% less than 65% equal to 65%
----------- ----------------- ------------------ -----------------
<S> <C> <C> <C>
Level 1 27.50 40.00 52.50
Level 2 47.50 60.00 72.50
Level 3 57.50 70.00 82.50
Level 4 62.50 75.00 87.50
</TABLE>
The Applicable Margin shall be adjusted daily to reflect changes in
the Total Utilization of the Commitments and the Level applicable to
Long-term Debt.
The applicable Level shall be determined by the Administrative Agent
on the basis of timely information furnished to it by Borrower,
Hughes, Moody's or S&P with respect to the rating on Long-term Debt;
any change in the Level shall be effective on the earlier of the date
on which such rating change is publicly announced or on the date
written confirmation of a change in the rating on Long-term Debt is
sent to Borrower or Hughes, by Moody's or S&P.
"Approved Bank Affiliate" means a Person that is a subsidiary of a
Bank or of a Person of which a Bank is a subsidiary, and which is either engaged
primarily in the business of lending or, if not so engaged, which has been
approved by Borrower and Administrative Agent; provided that Borrower's approval
--------
shall not be unreasonably withheld.
"Arranger" means Salomon Smith Barney Inc.
"Assignment and Acceptance" means an Assignment and Acceptance
Agreement substantially in the form of Exhibit J.
"Availability Period" means the period commencing on the Effective
Date and ending on the Termination Date.
"Bank" means each financial institution listed on the signature pages
hereof, each Person which becomes a Bank pursuant to Section 3.8 or 11.11 and
their respective successors, provided that for purposes of any determination
made with respect to CUSA under Sections 3.1, 3.2, 3.3, or 4.2, "Bank" shall be
deemed to include Citibank.
"Borrowing Date" means a date on which funds are advanced to an
Obligor by one or more Banks pursuant to a Loan Request.
2
<PAGE>
"Business Day" means a day other than a Saturday or Sunday on which
banks are open for business in both Los Angeles, California and New York, New
York.
"Citibank" means Citibank, N.A.
"Commercial Letter of Credit" means any letter of credit issued for
the purpose of providing the primary payment mechanism, through the presentation
of documentation such as drafts and bills of lading, in connection with the
purchase of materials, goods or services by Borrower or any of its Subsidiaries
in the ordinary course of business of Borrower or such Subsidiary.
"Commitment" of each Bank means the dollar amount set forth opposite
such Bank's name on Schedule 1 hereto as such amount may be reduced or changed
pursuant to Sections 3.5, 3.6 and 11.11. "Total Commitment" means the aggregate
amount of the Commitments.
"CUSA" means Citicorp USA, Inc. in its capacity as a Bank.
"Designated Issuer" means a financial institution which has been
designated by a Bank as such Bank's "Designated Issuer" for purposes of issuing
Letters of Credit and (i) in the case of a Bank which is a party to this
Agreement on the Effective Date, which has executed this Agreement, and (ii) in
each other case shall have executed this Agreement and shall have been consented
to by Borrower, which consent shall not be unreasonably withheld.
"Designated Subsidiary" means each of Dish Placement Services, Ltd.,
an international business company organized and existing under the laws of the
Bahamas, and White Holding, each of which is a wholly-owned Subsidiary of
Borrower, and "Designated Subsidiaries" means both of such entities
collectively.
"Dish Placement" means Dish Placement Services, Ltd., an international
business company organized and existing under the laws of the Bahamas.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"Effective Date" means the date this Agreement shall have been
executed and delivered by the parties hereto and the conditions precedent set
forth in Section 5.1 shall have been satisfied.
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100,000,000; (ii) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
the OECD; or (iii) any Person engaged in the business of lending.
3
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
in effect from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with Borrower or any Subsidiary of Borrower
within the meaning of Section 414(b), 414(c) or 414(m) of Internal Revenue Code
of 1986, as amended.
"Eurodollar Banking Day" means a day on which banks are open for
business in Los Angeles, California, New York, New York and the applicable
offshore dollar interbank market and are dealing in U.S. Dollar deposits.
"Eurodollar Loan" means a Loan at the rate of interest calculated
pursuant to Section 2.6.
"Eurodollar Rate" means for each Interest Period of a Eurodollar Loan
the arithmetic mean of the rates of interest rounded to the nearest 1/100 of one
percent as notified to the Administrative Agent by the Reference Banks at which
U.S. Dollar deposits for such Interest Period and in an amount comparable to the
Principal Amount of such Eurodollar Loan would be offered by such Reference
Banks to major banks in the offshore dollar interbank market upon request of
such banks at approximately 11:00 a.m. London time two (2) Eurodollar Banking
Days prior to the first day of such Interest Period.
"Event of Default" means any event specified in Section 9.1.
"Existing Citibank Agreement" means the Credit Agreement dated as of
September 18, 1996, as amended, among Borrower, the Designated Subsidiaries, the
banks party thereto, and Citicorp USA, Inc. as agent for such banks.
"Facility Fee" has the meaning assigned to such term in Section 2.10.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)." If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds Effective Rate." If
on any relevant day the appropriate rate for such previous day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate
for such day will be the arithmetic mean of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York time) on that
day by each of three leading brokers of Federal funds transactions in New York
City selected by Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto.
4
<PAGE>
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"GLA" means Galaxy Latin America LLC, a limited liability company
organized in Delaware and domiciled in Costa Rica.
"Good Faith" has the meaning assigned to such term in Section 1-201 of
the New York Uniform Commercial Code.
"Guarantor" means each of Hughes, Darlene Investments LLC and any
"Successor Guarantor" (as defined in the Guaranties), and "Guarantors" means
such entities collectively.
"Guarantor Notice Agent" means GLA, as notice agent under the
Guaranties (other than the Hughes Guaranty).
"Guaranty" means any Guaranty in the form of Exhibit D or Exhibit E
hereto, as the case may be, dated as of the date hereof, executed and delivered
by a Guarantor, as it may be amended from time to time, and "Guaranties" means,
collectively, all such Guaranties.
"Hedging Obligations", as applied to any Person, means any and all
indebtedness, liabilities and other monetary obligations of such Person under
any interest rate swap, "cap", "collar" or other hedging agreements.
"Hughes" means Hughes Electronics Corporation, a Delaware corporation.
"Hughes Credit Agreement" means the Revolving Credit Agreement dated
as of December 5, 1997, among Hughes Electronics Corporation, the banks named
therein and Bank of America National Trust and Savings Association, as
Administrative Agent, as amended from time to time; provided that if such
--------
Revolving Credit Agreement is terminated and replaced by another credit
agreement or credit agreements, "Hughes Credit Agreement" shall mean such
replacement credit agreement (or if there is more than one replacement credit
agreement, the replacement credit agreement having the greatest aggregate
lenders' commitments), as amended from time to time, and references herein to
certain provisions of such Revolving Credit Agreement shall be deemed to refer
to equivalent provisions, if any, in such replacement credit agreement; provided
--------
further that if the Hughes Credit Agreement is terminated and is not replaced by
- -------
another credit agreement or credit agreements (including, without limitation, in
connection with the assumption of the Hughes Guaranty pursuant to Section 8(a)
of the Hughes Guaranty by a Successor Guarantor), "Hughes Credit Agreement"
shall mean the Hughes Credit Agreement as in effect immediately prior to such
termination and such Successor Guarantor shall be deemed to be a "Borrower"
thereunder.
5
<PAGE>
"Hughes Guaranty" means the Guaranty in the form of Exhibit D hereto,
dated as of the date hereof, executed and delivered by Hughes as the Guarantor,
as it may be amended from time to time.
"Indebtedness", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to capital
leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligations in respect thereof or (b) evidenced by a note or similar
written instrument, (v) any direct or indirect liability, contingent or
otherwise, of that Person (the "obligor") with respect to the obligor's
reimbursement obligations to any other Person who has provided assurance to the
obligee of obligor's primary obligation that such primary obligation will be
paid or discharged, and (vi) all indebtedness described in clauses (i) through
(v) above secured by any Lien on any property or asset owned or held by that
Person regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is nonrecourse to the credit of that Person.
"Interest Payment Date" means, with respect to each Eurodollar Loan,
the last day of each Interest Period; provided, however, that if any Interest
-------- -------
Period exceeds three (3) months, "Interest Payment Date" shall mean the day that
is three months after the beginning of the relevant Interest Period, as well as
the last day of the relevant Interest Period; and, with respect to each
Reference Rate Loan, means the last day of each March, June, September and
December, and the Termination Date. If any day specified herein is not a
Business Day or, in the case of a Eurodollar Loan, a Eurodollar Banking Day,
then the relevant Interest Payment Date shall be the next succeeding Business
Day or Eurodollar Banking Day, as applicable, except as otherwise provided in
the definition of Interest Period.
"Interest Period" means with respect to each Eurodollar Loan, a period
of one (1), two (2), three (3) or six (6) months as selected by the applicable
Obligor by a Loan Request delivered to Administrative Agent in accordance with
Section 2.3, subject to the following:
(a) The first Interest Period for each Loan shall commence on the
date such Loan is disbursed and each succeeding Interest Period for such Loan
shall commence on the last day of the preceding Interest Period for such Loan;
(b) If the last day of an Interest Period falls on a day that is not
a Eurodollar Banking Day, the Interest Period involved shall be extended to the
next following Eurodollar Banking Day unless as a result thereof it would fall
into the next calendar month, in which case the end of the Eurodollar Interest
Period shall be the preceding Eurodollar Banking Day, and in either case the
next succeeding Eurodollar Interest Period shall be measured from the last day
of the Interest Period as so adjusted;
(c) If an Interest Period for a Eurodollar Loan commences on the last
Eurodollar Banking Day of a calendar month, it shall end on the last Eurodollar
Banking Day of a calendar month;
6
<PAGE>
(d) No Interest Period shall end on a day later than the Termination
Date; and
(e) No more than ten (10) Interest Periods shall be outstanding at
any one time.
"Issuing Bank" means, with respect to any Letter of Credit, the Bank
or Designated Issuer which agrees or is otherwise obligated to issue such Letter
of Credit, determined as provided in Section 2.11(b)(ii).
"L/C Request" means a notice substantially in the form of Exhibit K
---------
hereto delivered by an Obligor to Administrative Agent or the Issuing Bank, as
the case may be, pursuant to Section 2.11(b)(i) with respect to the proposed
issuance of a Letter of Credit.
"Lending Office" means with respect to any Bank as the context shall
require, the branch office of such Bank designated as the Lending Office of such
Bank in Exhibit C attached hereto and incorporated herein by reference; or any
other branch office or affiliate of such Bank hereafter selected and notified to
Borrower and Administrative Agent from time to time by such Bank; provided that
any Bank may from time to time by notice to Borrower and Administrative Agent
designate separate Lending Offices for its Eurodollar Loans and/or its Reference
Rate Loans; and in such case any reference to the Lending Office of such Bank
shall be deemed to refer to any or all of such offices, branches or affiliates
as the context may require.
"Letter Agreement" means that letter agreement among Arranger,
Administrative Agent and Borrower dated May 18, 1999 specifying Arranger's and
Administrative Agent's compensation for services hereunder as such letter
agreement may from time to time be amended, restated, reissued or otherwise
modified.
"Letter of Credit" or "Letters of Credit" means Participated Letters
of Credit and Non-Participated Letters of Credit, in each case which are either
Commercial Letters of Credit or Standby Letters of Credit.
"Letter of Credit Collateral" has the meaning assigned to such term in
Section 9.4(b).
"Letter of Credit Collateral Account" has the meaning assigned to such
term in Section 9.4(a).
"Letter of Credit Obligations" has the meaning assigned to such term
in Section 9.4(a).
"Letter of Credit Usage" means, as at any date of determination, the
sum (without duplication) of (i) the maximum aggregate amount which is or at any
time thereafter may become available for drawing under all Letters of Credit
then outstanding plus (ii) the aggregate amount of all outstanding Accepted Time
----
Drafts plus (iii) the aggregate amount of all payments in respect of drawings
----
under Letters of Credit honored by Issuing Banks and payments of Accepted Time
Drafts and not theretofore reimbursed by the Obligors (including any such
reimbursement out of the proceeds of Loans pursuant to Section 2.13(b)).
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<PAGE>
"Level" means Level 1, Level 2, Level 3 or Level 4, as applicable.
"Level 1" shall mean that Long-term Debt carries one or both of the
following ratings:
"A-" or higher by S& P
"A3" or higher by Moody's
"Level 2" shall mean that the criteria of Level 1 are not satisfied
and Long-term Debt carries one or both of the following ratings:
"BBB+" or higher by S&P
"Baa1" or higher by Moody's
"Level 3" shall mean that the criteria of neither Level 1 nor Level 2
are satisfied and Long-term Debt carries one or both of the following ratings:
"BBB" or higher by S&P
"Baa2" or higher by Moody's
"Level 4" shall mean that none of the criteria of Level 1, Level 2 or
Level 3 are satisfied.
"Lien" means any trust deed, mortgage, pledge, hypothecation,
assignment, security interest, lien, charge or encumbrance, or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the lien of an attachment,
judgment or execution, or any conditional sale or other title retention
agreement, any capitalized lease, and the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction, but excluding financing statements filed to give notice of leases
in the ordinary course of business).
"Loan" or "Loans" means the loans described in Section 2, any of which
may be at any time Reference Rate Loans or Eurodollar Loans.
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit (and any applications for, or reimbursement agreements or other documents
or certificates executed by the Obligors in favor of an Issuing Bank relating
to, the Letters of Credit), the Accepted Time Drafts, the Guaranties and all
other agreements and documents executed in connection therewith.
"Loan Request" means a notice given by an Obligor pursuant to Section
2.3 hereof.
"LOC" means a company organized and operating in Mexico, the Caribbean
or a country located in Central America or South America which operates a
direct-to-home satellite television system in such country, and "LOC's" means
all such operating companies, collectively.
8
<PAGE>
"Long-term Debt" shall mean senior, unsecured, non-credit-enhanced
public long-term debt securities of Hughes or any Successor Guarantor.
"Majority Banks" means, upon the occurrence and during the continuance
of an Event of Default pursuant to subsection 9.1(a), those Banks whose
aggregate Adjusted Exposure constitutes at least sixty percent (60%) of the
Total Utilization of Commitments at such time; otherwise, those Banks whose
Commitments constitute at least sixty percent (60%) of the Total Commitment as
such Total Commitment may be adjusted from time to time pursuant to the terms of
this Agreement.
"Material Change" means any adverse change which could reasonably be
expected to materially impair the Obligors' ability to timely and fully perform
their obligations under this Agreement or the ability of Hughes or Successor
Guarantor to timely and fully perform its obligations under the Hughes Guaranty.
"Moody's" means Moody's Investors Service, Inc.
"Non-Participated Letter of Credit" has the meaning assigned to such
term in subsection 2.11(a).
"Note" means any promissory note delivered pursuant to Section 2.7
(collectively, the "Notes").
"Obligor" means the Borrower and each of the Designated Subsidiaries.
"Participated Letter of Credit" has the meaning assigned to such term
in subsection 2.11(a).
"Percentage" means, with respect to each Bank, the percentage under
the heading "Percentage" set forth opposite such Bank's name on Schedule 1
hereto, as such Percentage may be adjusted in accordance with the provisions of
Section 3.6 or 11.11.
"Person" means any individual, firm, company, corporation, joint
venture, joint-stock company, limited liability company, trust, unincorporated
organization, governmental or state entity, or any association or partnership
(whether or not having separate legal personality) of two or more of the
foregoing.
"Plan" means any employee benefit pension plan which is subject to the
provisions of Title IV of ERISA and which is maintained for employees of
Borrower or any ERISA Affiliate.
"Principal Amount" means, when used with reference to any Loan, the
amount requested in the Loan Request relating thereto and made available to an
Obligor by the Banks hereunder.
"Principal Repayment Date" means, with respect to each Reference Rate
Loan, the Termination Date, and with respect to each Eurodollar Loan, the last
day of the Interest Period for such Loan.
9
<PAGE>
"Reference Banks" means Citibank, Bank of America National Trust and
Savings Association and Deutsche Bank AG New York and/or Cayman Islands
Branches.
"Reference Rate" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time which rate per annum shall at
all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New York,
New York, from time to time, as Citibank's base rate (which is a rate
set by Citibank based upon various factors including Citibank's costs
and desired return, general economic conditions and other factors, and
is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate);
(b) the sum of (A) 1/2 of one percent per annum, plus (B) the rate
----
obtained by dividing (x) the latest three-week moving average of
--------
secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money
market banks (such three-week moving average being determined weekly
by Citibank on the basis of such rates reported by certificate of
deposit dealers to and published by the Federal Reserve Bank of New
York or, if such publication shall be suspended or terminated, on the
basis of quotations for such rates received by Citibank, in either
case adjusted to the nearest 1/4 of one percent or, if there is no
nearest 1/4 of one percent, to the next higher 1/4 of one percent), by
--
(y) a percentage equal to 100% minus the average of the daily
percentages specified during such three-week period by the Board of
Governors of the Federal Reserve System for determining the maximum
reserve requirement (including, but not limited to, any marginal
reserve requirements for Citibank in respect of liabilities consisting
of or including (among other liabilities) three-month nonpersonal time
deposits of at least $100,000), plus (C) the average during such
----
three-week period of the daily net annual assessment rates estimated
by Citibank for determining the current annual assessment payable by
Citibank to the Federal Deposit Insurance Corporation for insuring
three-month deposits in the United States; or
(c) 1/2 of one percent per annum above the Federal Funds Rate.
"Reference Rate Loan" means a Loan at a rate of interest calculated
pursuant to Section 2.5.
"Register" is defined in Section 11.11(c).
"Reimbursement Date" has the meaning assigned to that term in Section
2.13(b).
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc.
"Standby Letter of Credit" means any letter of credit other than a
Commercial Letter of Credit issued for the purpose of supporting performance,
payment, deposit or surety obligations of GLA, any LOC, Borrower or any of its
Subsidiaries.
10
<PAGE>
"Subsidiaries" (individually a "Subsidiary") means those corporations
or entities of which Borrower owns more than fifty percent (50%) of the voting
securities. If Borrower (i) acquires similar ownership of or control over any
other corporation or entity, such corporation or entity shall thereupon be
deemed a Subsidiary for all purposes hereof, or (ii) subject to the terms
hereof, permits its ownership to fall to fifty percent (50%) or below of
outstanding voting shares or otherwise disposes of control of any Subsidiary,
such Subsidiary shall thereupon cease to be a Subsidiary for all purposes
hereof.
"Successor Guarantor" has the meaning assigned to such term in Section
8(a) of the Hughes Guaranty.
"Tax" and "Taxes" mean (i) all taxes, levies, imposts, duties, fees or
other charges of whatsoever nature however imposed by any country or any
subdivision or authority of or in that country in any way connected with this
Agreement or any instrument or agreement required hereunder, and all interest,
penalties or similar liabilities with respect thereto, except such taxes as are
imposed on or measured by any Bank's net income or capital and franchise taxes,
by the country or any subdivision or authority of or in that country in which
such Bank's principal office or actual Lending Office is located and (ii) any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement.
"Termination Date" means June 3, 2002 or if such day is not a Business
Day, the next preceding Business Day.
"Total Utilization of Commitments" means, as at any date of
determination, the sum of (i) the aggregate principal amount of all outstanding
Loans (other than Loans made for the purpose of reimbursing the applicable
Issuing Bank for any amount drawn under any Letter of Credit but not yet so
applied) plus (ii) the Letter of Credit Usage, plus (iii) the aggregate
---- ----
principal amount of all outstanding loans to any Obligor under any overdraft
facility provided by Citibank to the Obligors.
"Unmatured Event of Default" means an event or condition which with
the passage of time or the giving of notice, or both, would become an Event of
Default.
"Usance Letter of Credit" means a Commercial Letter of Credit pursuant
to which a time draft, payable by its terms not more than 90 days from the date
thereof, is to be presented to the Issuing Bank for acceptance by such Issuing
Bank.
"White Holding" means White Holding B.V., a limited liability company
organized and existing under the laws of The Netherlands.
SECTION 2
---------
THE CREDIT
----------
2.1 The Commitments. (a) From time to time, during the Availability
---------------
Period, each Bank severally agrees to make Loans to each of the Obligors in U.S.
Dollars in the aggregate principal amount for all Loans to all Obligors not to
exceed the amount of such Bank's
11
<PAGE>
Commitment; provided, however, that Loans shall not be made to White Holding
-------- -------
after June 3, 2000.
(b) Each Bank shall make available to the Obligors Reference Rate
Loans and Eurodollar Loans up to the amount of such Bank's Commitment; provided,
--------
however, that Loans shall not be made to White Holding after June 3, 2000. In
- -------
no event shall the Total Utilization of Commitments at any time exceed the Total
Commitment then in effect.
2.2 Loans made to the Borrower and the Designated Subsidiaries. Each
----------------------------------------------------------
Loan made to a Borrower or Designated Subsidiary shall be a Reference Rate Loan
or a Eurodollar Loan and shall be in U.S. Dollars. Other than Loans made
pursuant to Section 2.13(b) for the purpose of reimbursing any Issuing Bank for
the amount of a drawing under a Letter of Credit issued by it, each Loan made to
a Borrower or Designated Subsidiary shall be in the minimum amount of One
Million Dollars ($1,000,000) with any additional amounts in integral multiples
of One Hundred Thousand Dollars ($100,000). This is a revolving credit and the
Obligors and the Designated Subsidiaries may, during the Availability Period,
re-borrow amounts repaid or prepaid; provided, however, that the Banks shall not
-------- -------
be obligated to make Loans to White Holding after June 3, 2000. No Loan nor any
part of any Loan shall be prepaid except at the times and in the manner
expressly provided herein.
2.3 Requests for Reference Rate and Eurodollar Loans. Each Reference
------------------------------------------------
Rate Loan and Eurodollar Loan shall be made upon irrevocable written or
telephonic notice, confirmed promptly in writing, substantially in the form of
Exhibit A hereto, by an Obligor to Administrative Agent received by
Administrative Agent not later than 11:00 a.m. New York time not less than three
(3) Eurodollar Banking Days prior to the Borrowing Date (which must be a
Eurodollar Banking Day) of a Eurodollar Loan and not later than 11:00 a.m. New
York time on the proposed Borrowing Date (which must be a Business Day) of a
Reference Rate Loan. Upon receipt of a request for a Reference Rate Loan and
Eurodollar Loan, Administrative Agent shall promptly notify the Banks of (i) the
name of the entity (Borrower or a Designated Subsidiary) to which such Loan is
to be made; (ii) the amount of such Loan, (iii) the Interest Period(s), if
applicable, and (iv) the Borrowing Date requested.
2.4 Guaranty. The Loans and all other obligations of each Obligor
--------
hereunder shall be irrevocably and unconditionally guaranteed, jointly and
severally, by the Guarantors pursuant to the Guaranties.
2.5 Interest and Principal on Reference Rate Loans. The outstanding
----------------------------------------------
Principal Amount of each Reference Rate Loan shall bear interest until payment
is due in full (computed daily on the basis of a three hundred sixty five or
three hundred sixty six, as the case may be, day year and actual days elapsed)
at the rate per annum equal to the Reference Rate. The Obligor to which such
Loan was made shall pay on each Interest Payment Date all accrued and unpaid
interest to such date on each Reference Rate Loan. Upon the occurrence and
during the continuance of any Event of Default described in Section 9.1(a), such
interest rate shall be increased by 2.0% per annum. The Obligor to which such
Loan was made shall repay in full the Principal Amount of each Reference Rate
Loan on the Termination Date or as provided in Section 2.8(c).
12
<PAGE>
2.6 Interest and Principal on Eurodollar Loans. (a) The outstanding
------------------------------------------
Principal Amount of each Eurodollar Loan shall bear interest until payment is
due in full (computed daily on the basis of a three hundred sixty (360) day year
and actual days elapsed) at a rate per annum equal to the Eurodollar Rate plus
the Applicable Margin. The Obligor to which such Loan was made shall pay
interest on each Eurodollar Loan on each Interest Payment Date for such
Eurodollar Loan. Upon the occurrence and during the continuance of any Event of
Default described in Section 9.1(a), such interest rate shall be increased by
2.0% per annum. The Obligor to which such Loan was made shall repay in full the
Principal Amount of each Eurodollar Loan on the last day of the Interest Period
for such Eurodollar Loan or as provided in Section 2.8(c).
(b) If any Reference Bank's Commitment (or, in the case of Citibank,
CUSA's Commitment) shall terminate (otherwise than on termination of all the
Commitments), or for any reason whatsoever the Reference Bank shall cease to be
a Bank hereunder, that Reference Bank shall thereupon cease to be a Reference
Bank, and the Eurodollar Rate shall be determined on the basis of the rates as
notified by the remaining Reference Banks. Each Reference Bank shall use its
best efforts to furnish quotations of rates to the Administrative Agent as
contemplated hereby. If any of the Reference Banks shall be unable or otherwise
fails to supply such rates to the Administrative Agent upon its request, the
rate of interest shall be determined on the basis of the quotations of the
remaining Reference Banks or Reference Bank.
2.7 Loan Accounts. Each Bank shall open and maintain on its books
-------------
one or more loan accounts in the name of each Obligor; provided that the failure
to open and maintain such loan accounts shall not affect the obligations of any
Obligor hereunder. Each loan account shall show (without duplication) as debits
thereto each Bank's portion of each Reference Rate Loan and/or Eurodollar Loan
and as credits thereto all Reference Rate Loan and/or Eurodollar Loan payments
received by such Bank for the account of such Bank and applied to principal so
that the balance of the loan account(s) at all times reflects the principal
amount due each Bank from each Obligor as Reference Rate Loans and Eurodollar
Loans. All entries in said books shall be presumptive evidence of the making of
each Reference Rate Loan and Eurodollar Loan, the obligation of each Obligor to
repay each Reference Rate Loan and Eurodollar Loan, and all payments received
and disbursed by such Bank. Each Obligor agrees that if, in the opinion of any
Bank, a promissory note or other evidence of debt is required or appropriate to
reflect or enforce any Loans outstanding to or to be made by such Bank, then
such Obligor shall promptly execute and deliver to such Bank one or more
promissory notes payable to such Bank to evidence the Loans outstanding to such
Bank under this Agreement from time to time, together with such documents as
such Bank may reasonably request to evidence the due authorization, execution,
delivery and enforceability of such notes. If any notes are issued hereunder,
Administrative Agent and the Obligors may treat the payee of that note as the
owner of such note for all purposes.
2.8 Conversion of Loans Between Eurodollar Loans and Reference Rate
---------------------------------------------------------------
Loans and Conversion of Interest Periods of Eurodollar Loans. (a) On any
- ------------------------------------------------------------
Eurodollar Banking Day, the Obligor to which a Loan was made may convert on a
pro rata basis among the Banks any outstanding Reference Rate Loans or
Eurodollar Loans into any other type of Loan available to such Obligor
hereunder, or the Obligor to which a Loan was made may change the Interest
13
<PAGE>
Period of any Eurodollar Loan to another Interest Period available under this
Agreement, subject to the following limitations:
(i) No conversion of any Eurodollar Loan into any other Loan and no
conversion of the Interest Period of any Eurodollar Loan may be made except on
the last day of an Interest Period with respect thereto; and
(ii) Any conversion shall be preceded by an irrevocable written or
telephonic notice from the Obligor to which a Loan was made that it elects such
conversion, which notice shall be received by Administrative Agent at least
three (3) Eurodollar Banking Days prior to the date requested for such
conversion from or into a Eurodollar Loan or conversion of the Interest Period
of a Eurodollar Loan.
(b) Banks shall not be obligated to make or continue any Eurodollar
Loan when any Event of Default has occurred and is continuing, but such Loan
shall be automatically converted to a Reference Rate Loan on the last day of the
then current Interest Period, and, unless Section 2.9(f) is applicable, the
Obligor to which such Loan was made shall be obligated to pay interest at the
Reference Rate from the date any Loan is so converted until such Loan is repaid
in full regardless of the date when Administrative Agent obtains knowledge of
such Event of Default. Administrative Agent shall provide written notice of
such conversion to such Obligor.
(c) Each conversion of a Loan into a Reference Rate Loan or a
Eurodollar Loan, as the case may be, shall be effected by each Bank, on behalf
of the applicable Obligor, by making a simultaneous payment of the relevant
Eurodollar Loan, or Reference Rate Loan, as the case may be, from the proceeds
of the new Loans, procedures with respect thereto to be governed by the
provisions of Section 2.3 hereof, except that disbursement shall be made by
means of such payment rather than directly to such Obligor to the extent
applicable with respect to each Bank.
(d) If upon the expiration of any Interest Period applicable to
Eurodollar Loans, the Obligor to which such Loan was made has failed to select a
new Interest Period to be applicable thereto, or if any Event of Default or
Unmatured Event of Default shall then exist, the Obligor to which such Loan was
made shall be deemed to have elected to convert such Eurodollar Loans into
Reference Rate Loans effective as of the expiration date of such current
Interest Period.
2.9 Disbursements and Payments. (a) Each Reference Rate Loan and
--------------------------
Eurodollar Loan shall be made on a pro rata basis by Banks, and each Bank's
portion of each Loan shall be determined by application of its Percentage. Each
Bank's interest in each Loan and each payment to such Bank under this Agreement
shall be for the account of such Bank's applicable Lending Office.
(b) Each Loan and each payment of principal, interest and other sums
under this Agreement shall be made in immediately available funds (or such other
funds as Administrative Agent may require) at Administrative Agent's Loan
Syndications Operations Center at One Court Square, 7th Floor Zone 1, Long
Island City, New York 11120, Acct No.
14
<PAGE>
36852248, Ref: SurFin Ltd., Attn: Kim Coley or such other office designated by
Administrative Agent from time to time.
(c) Each Bank agrees it will make the funds which it is to advance
hereunder available to Administrative Agent at its address set forth in Section
2.9(b) or such other office designated by Administrative Agent from time to time
not later than 2:00 p.m. New York time on the Borrowing date, and except as
provided in Section 2.13(b) with respect to Loans used to reimburse any Issuing
Bank for the amount of a drawing under a Letter of Credit issued by it,
Administrative Agent will thereupon promptly advance to the applicable Obligor
the amount so received from Banks.
(d) Payment of all sums under this Agreement shall be made by the
Obligors to Administrative Agent, and the latter shall promptly distribute to
each Bank its share of such payments. Each payment by the Obligors shall be
made without set-off or counterclaim and not later than 11:00 a.m. New York
time, in the case of Reference Rate Loans, and 2:00 p.m. New York time, in the
case of Eurodollar Loans, in each case on the day such payment is due. All sums
received after such time shall be deemed received on the next Business Day.
(e) If Administrative Agent makes available to an Obligor an amount
due from any Bank which such Bank fails to make available to Administrative
Agent, or if Administrative Agent makes available to any Bank an amount due from
an Obligor which such Obligor fails to make available to Administrative Agent,
such Obligor or such Bank, as the case may be, shall, on demand, refund such
amount to Administrative Agent, together with interest thereon for the period
during which such amount was available to such Obligor or such Bank, as the case
may be, at the Federal Funds Rate.
(f) Any sum of interest payable by an Obligor hereunder if not paid
when due shall bear interest (payable on demand) from its due date until payment
in full (computed daily on the basis of a three hundred sixty-five or three
hundred sixty-six, as the case may be, day year and actual days elapsed) at a
rate per annum equal to the Reference Rate plus two (2) percentage points.
2.10 Facility Fee. Borrower shall pay Administrative Agent for the
------------
account of the Banks, a facility fee (the "Facility Fee") on the Total
Commitment (without regard to the amount of Loans outstanding or Letter of
Credit Usage at any time hereunder) during the Availability Period at the rate
of (a) with respect to each day that Level 1 is applicable, 0.125% per annum,
(b) with respect to each day that Level 2 is applicable, 0.150% per annum, (c)
with respect to each day that Level 3 is applicable, 0.175% per annum, and (d)
with respect to each day that Level 4 is applicable, 0.250% per annum; provided,
--------
however, following any reduction in the Total Commitment pursuant to Section 3.5
- -------
or 3.6 hereof the computation of the Facility Fee shall be based upon such
reduced Total Commitment as of the effective date of such reduction. The
Facility Fee shall be computed on a calendar quarter basis. The Facility Fee
shall be calculated on the basis of a three hundred sixty day year and actual
days elapsed, which results in a higher fee than if a 365/366-day year were
used, and shall be payable on the last day of each March, June, September and
December (for the Facility Fee accrued and unpaid to such date), on the
Termination Date and on the date of the cancellation of any portion of the
Commitments in accordance with Section 3.10. The applicable Level shall be
determined by the Administrative
15
<PAGE>
Agent on the basis of timely information furnished to it by Borrower, Hughes,
Moody's or S&P with respect to the rating on Long-term Debt; any change in the
Facility Fee shall be effective on the earlier of the date on which such rating
change is publicly announced or on the date written confirmation of a change in
the rating on Long-term Debt is sent to Borrower or Hughes by Moody's or S&P.
2.11 Issuance of Letters of Credit and Banks' Purchase of
----------------------------------------------------
Participations in Participated Letters of Credit.
- ------------------------------------------------
(a) Letters of Credit. In addition to each Obligor's ability to
-----------------
request that Banks make Loans pursuant to subsection 2.1(a), each Obligor may
request, in accordance with the provisions of this subsection 2.11, from time to
time during the period from the Effective Date until the date which is 30 days
prior to the Termination Date, that one or more Issuing Banks issue Letters of
Credit for the account of such Obligor for the purposes specified in the
definitions of Commercial Letters of Credit and Standby Letters of Credit. Each
Obligor may, in its sole discretion, determine whether or not each Letter of
Credit so requested will be subject to participation by all the Banks pursuant
to subsection 2.11(c) (each Letter of Credit subject to participation being a
"Participated Letter of Credit" and collectively, the "Participated Letters of
Credit", and such Letter of Credit not subject to participation by all the Banks
pursuant to subsection 2.11(d) being a "Non-Participated Letter of Credit" and
collectively the "Non-Participated Letters of Credit"). Subject to the terms
and conditions of this Agreement and in reliance upon the representations and
warranties of the Obligors herein set forth, any one or more Banks may, but
shall not be obligated to, issue such Letters of Credit in accordance with the
provisions of this subsection 2.11 and in accordance with such Bank's standard
form of application for issuance of letters of credit; provided that no Obligor
--------
shall request that any Issuing Bank issue (and no Issuing Bank shall issue):
(i) any Letter of Credit if, after giving effect to such issuance,
the Total Utilization of Commitments would exceed the Total Commitment then in
effect;
(ii) any Standby Letter of Credit having an expiration date later
than the earlier of (1) the date which is 30 days prior to the Termination Date
and (2) the date which is one year from the date of issuance of such Standby
Letter of Credit; provided that the immediately preceding clause (2) shall not
--------
prevent any Issuing Bank from agreeing that a Standby Letter of Credit will
automatically be extended for one or more successive periods not to exceed one
year each (it being understood that such Standby Letter of Credit shall not be
automatically extended to a date later than 30 days prior to the Termination
Date) unless such Issuing Bank elects not to extend for any such additional
period; and provided, further that such Issuing Bank shall elect not to extend
-------- -------
such Standby Letter of Credit if it has received written notice from
Administrative Agent that an Event of Default has occurred and is continuing
(and has not been waived in accordance with subsection 11.3) at the time such
Issuing Bank must elect whether or not to allow such extension;
(iii) any Commercial Letter of Credit (other than a Usance Letter of
Credit) having an expiration date (1) later than the earlier of (x) the date
which is 30 days prior to the Termination Date and (y) the date which is 180
days from the date of issuance of such
16
<PAGE>
Commercial Letter of Credit or (2) that is otherwise unacceptable to the
applicable Issuing Bank in its reasonable discretion;
(iv) any Usance Letter of Credit (1) having an expiration date later
than (x) the date which is 100 days prior to the Termination Date, or (y) 180
days from the date of issuance of such Usance Letter of Credit or (2) that is
otherwise unacceptable to the applicable Issuing Bank in its reasonable
discretion;
(v) any Letter of Credit denominated in a currency other than
Dollars; or
(vi) any Letter of Credit not governed by the Uniform Customs and
Practice for Documentary Credits (1993 Revision) International Chamber of
Commerce Brochure No. 500, and any subsequent revisions thereto as agreed
between the Obligor for whose account such Letter of Credit is issued and the
applicable Issuing Bank.
In case of any conflict between (i) an Issuing Bank's standard form of
application for issuance of letters of credit and (ii) the terms of this
Agreement, the terms of this Agreement shall govern. Notwithstanding anything
to the contrary contained in an Issuing Bank's standard form of application for
issuance of letters of credit, no lien shall be granted to such Issuing Bank on
any property of Borrower or its Subsidiaries to secure the obligation of an
Obligor with respect to a Letter of Credit, except as otherwise provided in
Section 9.4.
(b) Mechanics of Issuance.
(i) Notice of Issuance. Whenever an Obligor desires the issuance of
------------------
a Letter of Credit, it shall deliver, in case of a Participated Letter of
Credit, to Administrative Agent, or in case of a Non-Participated Letter of
Credit, to the Issuing Bank (with a copy to Administrative Agent), an L/C
Request substantially in the form of Exhibit K hereto, accompanied by an
---------
executed application for issuance of such Letter of Credit in the standard form
then utilized by the Issuing Bank, no later than 11:00 A.M. (New York City time)
at least two Business Days or such shorter period as may be agreed to by the
Issuing Bank in any particular instance, in advance of the proposed date of
issuance. The L/C Request shall specify (a) the proposed date of issuance (which
shall be a Business Day), (b) whether the Letter of Credit is to be a Standby
Letter of Credit or a Commercial Letter of Credit (and, if a Commercial Letter
of Credit, whether such Commercial Letter of Credit is to be a Usance Letter of
Credit), (c) the face amount of the Letter of Credit, which shall be a minimum
of One Million Dollars ($1,000,000) in case of a Participated Letter of Credit
which is a Commercial Letter of Credit, (d) the expiration date of the Letter of
Credit, (e) whether the Letter of Credit is to be a Participated Letter of
Credit or a Non-Participated Letter of Credit, (f) either the verbatim text of
the proposed Letter of Credit or the proposed terms and conditions thereof,
including a precise description of any documents to be presented by the
beneficiary which, if presented by the beneficiary prior to the expiration date
of the Letter of Credit, would require the Issuing Bank to make payment
(including pursuant to an Accepted Time Draft) under the Letter of Credit and
(g) the purpose of the proposed Letter of Credit; provided that the Issuing
--------
Bank, in its reasonable discretion, may require, subject to the consent by the
Obligor that requested such Letter of Credit, changes in the text of the
proposed Letter of Credit or any such documents, and the date of issuance of
such Letter of Credit shall be extended until such changes have been agreed to
by such Obligor (it being understood that the
17
<PAGE>
Issuing Bank shall not be obligated to issue any Letter of Credit if such
changes are not agreed to by such Obligor); and provided, further that no Letter
-------- -------
of Credit shall require payment against (or, in the case of a Usance Letter of
Credit, acceptance of) a conforming draft on the same business day (under the
laws of the jurisdiction in which the office of the Issuing Bank to which such
draft is required to be presented is located) that such draft is presented.
The Obligor requesting any Letter of Credit shall notify the
applicable Issuing Bank (and Administrative Agent, if Citibank is not such
Issuing Bank) prior to the issuance of such Letter of Credit in the event that
any of the matters to which such Obligor is required to certify in the
applicable L/C Request is no longer true and correct as of the proposed date of
issuance of such Letter of Credit, and upon the issuance of any Letter of Credit
such Obligor shall be deemed to have re-certified, as of the date of such
issuance, as to the matters to which such Obligor is required to certify in the
applicable L/C Request.
(ii) Determination of Issuing Bank.
-----------------------------
(A) Upon receipt by Administrative Agent of an L/C Request pursuant to
subsection 2.11(b)(i) requesting the issuance of a Participated Letter of
Credit, in the event Citibank elects to issue such Participated Letter of
Credit, Administrative Agent shall promptly so notify the Obligor
requesting such Letter of Credit, and Citibank shall be the Issuing Bank
with respect thereto. In the event that Citibank in its sole discretion,
elects not to issue such Participated Letter of Credit, Administrative
Agent shall promptly so notify the Obligor requesting such Letter of
Credit, whereupon such Obligor may request any other Bank to issue such
Participated Letter of Credit by delivering to such Bank a copy of the
applicable L/C Request. Any Bank so requested to issue such Participated
Letter of Credit shall promptly notify such Obligor and Administrative
Agent whether or not, in its sole discretion, it has elected to issue such
Participated Letter of Credit, and any such Bank which so elects to issue
such Participated Letter of Credit shall be the Issuing Bank with respect
thereto.
(B) In the event an Obligor desires to request the issuance of a Non-
Participated Letter of Credit, it shall, prior to its delivery of an L/C
Request pursuant to subsection 2.11(b)(i), request any Bank to issue such
Non-Participated Letter of Credit for such fees or other compensation as
may be agreed upon solely between such Obligor and such Bank. Any Bank
may, but shall not be obligated to, issue such Non-Participated Letters of
Credit in accordance with the provisions of this subsection 2.11. Any such
Bank which so elects to issue such Non-Participated Letter of Credit shall
be the Issuing Bank with respect thereto, and such Obligor shall provide an
L/C Request with respect to such Non-Participated Letter of Credit in
accordance with the provisions of subsection 2.11(b)(i), which L/C Request
shall specify that the Letter of Credit requested shall be a Non-
Participated Letter of Credit.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
----------------------------
accordance with subsection 11.3) of the conditions set forth in Section 5.3, the
Issuing Bank shall issue the requested Letter of Credit in accordance with the
Issuing Bank's standard operating procedures.
18
<PAGE>
(iv) Notification to Administrative Agent. Upon the issuance of any
------------------------------------
Letter of Credit the applicable Issuing Bank shall promptly notify
Administrative Agent of such issuance, which notice shall specify whether such
Letter of Credit is a Participated Letter of Credit or a Non-Participated Letter
of Credit and shall be accompanied by a copy of such Letter of Credit. Upon (x)
each payment under a Letter of Credit, (y) each acceptance of a draft under a
Usance Letter of Credit, and (z) any amendment of a Letter of Credit changing
the amount or expiry date thereof, the Issuing Bank of such Letter of Credit
shall promptly notify Administrative Agent of such event.
(v) Monthly Report. Within 15 days after the end of each month, so
--------------
long as any Letter of Credit or Accepted Time Draft shall have been outstanding
during such month, the Administrative Agent shall deliver to each Bank a report
setting forth for such month the daily aggregate amount available to be drawn
under Standby Letters of Credit and Commercial Letters of Credit, the daily
aggregate amount of outstanding Accepted Time Drafts, and the amount such Bank's
participation interest, if any, in each of the foregoing aggregate amounts.
(c) Banks' Purchase of Participations in Participated Letters of
------------------------------------------------------------
Credit and Accepted Time Drafts. Immediately upon the issuance of each
- -------------------------------
Participated Letter of Credit, each Bank shall be deemed to, and hereby agrees
to, have irrevocably purchased from the Issuing Bank a participation in such
Participated Letter of Credit and any drawings honored thereunder and any
Accepted Time Drafts created thereunder in an amount equal to such Bank's share
based on its Percentage of the maximum amount which is or at any time may become
available to be drawn (including by way of presentation of time drafts)
thereunder.
(d) Non-Participated Letters of Credit and Accepted Time Drafts. No
-----------------------------------------------------------
Bank shall be deemed to have purchased from any Issuing Bank a participation in
any Non-Participated Letter of Credit issued by such Issuing Bank and any
drawings honored thereunder and any Accepted Time Drafts created thereunder.
2.12 Letter of Credit Fees.
---------------------
(a) Each Obligor agrees to pay the following amounts with respect to
Participated Letters of Credit issued for its account hereunder:
(i) with respect to each Standby Letter of Credit which is a
Participated Letter of Credit, (1) a fronting fee, payable directly to the
applicable Issuing Bank for its own account, as may be agreed between such
Obligor and the applicable Issuing Bank in a separate fee letter, it being
understood that all payment obligations of such Obligor to any Issuing Bank
pursuant to such fee letter shall be deemed to be obligations of such Obligor
under this Agreement, and (2) a letter of credit fee, payable to Administrative
Agent for the account of Banks, equal to the Applicable Margin per annum of the
daily amount available to be drawn under such Standby Letter of Credit, each
such fronting fee or letter of credit fee to be payable in arrears on and to the
last day of March, June, September and December of each year and on the
Termination Date, and computed on the basis of a 360-day year for the actual
number of days elapsed;
(ii) with respect to each Commercial Letter of Credit which is a
Participated Letter of Credit, such fees (which may include issuance, amendment,
payment and acceptance
19
<PAGE>
fees), payable directly to the applicable Issuing Bank for its own account, as
may be agreed between such Obligor and the applicable Issuing Bank in a separate
fee letter, it being understood that all payment obligations of such Obligor to
any Issuing Bank pursuant to such fee letter shall be deemed to be obligations
of such Obligor under this Agreement;
(iii) with respect to each Accepted Time Draft created under a
Participated Letter of Credit, an Accepted Time Draft fee, payable to
Administrative Agent for the account of Banks, equal to 0.75% per annum of the
daily outstanding amount of such Accepted Time Draft, payable in arrears on and
to the last day of March, June, September and December of each year and on the
Termination Date, and computed on the basis of a 360-day year for the actual
number of days elapsed; and
(iv) with respect to each Participated Letter of Credit and each
payment of a drawing made thereunder (without duplication of the fees payable
under clauses (i) and (ii) above), documentary and processing charges (unless
the applicable Participated Letter of Credit requires the beneficiary thereof to
pay such documentary and processing charges) payable directly to the applicable
Issuing Bank for its own account in accordance with such Issuing Bank's standard
schedule for such charges as disclosed to such Obligor on or prior to the
issuance of such Participated Letter of Credit.
For purposes of calculating any fees payable under clauses (i) and
(ii) of this subsection 2.12(a), the daily amount available to be drawn under
any Letter of Credit shall be determined as of the close of business on any date
of determination. Promptly upon receipt by Administrative Agent of any amount
described in clause (i)(2) or (iii) of this subsection 2.12(a), Administrative
Agent shall distribute to each Bank such Bank's share of such amount based on
such Bank's Percentage.
(b) Each Obligor for whose account a Letter of Credit is issued
hereunder agrees to pay such issuance fee, letter of credit fee, Accepted Time
Draft fee, or such other fees (which may include issuance, drawing, amendment,
payment and acceptance fees) and charges (which may include documentary and
processing charges (unless the applicable Non-Participated Letter of Credit
requires the beneficiary thereof to pay such documentary and processing
charges)) with respect to Non-Participated Letters of Credit issued hereunder,
payable directly to the applicable Issuing Bank for its own account, as may be
agreed between such Obligor and the applicable Issuing Bank in a separate fee
letter, it being understood that all payment obligations of such Obligor to any
Issuing Bank pursuant to such fee letter shall be deemed to be obligations of
such Obligor under this Agreement, each such issuance fee, letter of credit fee
or Accepted Time Draft fee to be payable in arrears on and to the last day of
March, June, September and December of each year and on the Termination Date or
such other times as may be agreed between such Obligor and the applicable
Issuing Bank.
2.13 Drawings and Reimbursement of Amounts Paid Under Letters of
-----------------------------------------------------------
Credit.
- ------
(a) Responsibility of Issuing Bank With Respect to Drawings. In
-------------------------------------------------------
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Bank shall be responsible only to examine the
documents delivered under such Letter of Credit
20
<PAGE>
with reasonable care so as to ascertain whether they appear on their face to be
in accordance with the terms and conditions of such Letter of Credit.
(b) Reimbursement by Obligors of Amounts Paid Under Letters of
----------------------------------------------------------
Credit. In the event an Issuing Bank has determined to honor a drawing under a
- ------
Letter of Credit issued by it (including by way of accepting an Accepted Time
Draft under a Usance Letter of Credit), such Issuing Bank shall immediately
notify Administrative Agent and the Obligor for whose account such Letter of
Credit was issued, and such Obligor shall reimburse such Issuing Bank on or
before the Business Day on which such drawing is honored by payment (or, if the
drawing is honored by accepting an Accepted Time Draft, on or before the
Business Day on which such Accepted Time Draft is payable) (any such date being
the "Reimbursement Date") in an amount in dollars and in same day funds equal to
the amount of such honored drawing or Accepted Time Draft, as the case may be;
provided that anything contained in this Agreement to the contrary
- --------
notwithstanding, (i) unless such Obligor shall have notified Administrative
Agent and such Issuing Bank prior to 10:00 A.M. (New York City time) on the date
such drawing is honored by payment or Accepted Time Draft is payable that such
Obligor intends to reimburse such Issuing Bank for the amount of such honored
drawing or Accepted Time Draft, as the case may be, with funds other than the
proceeds of Loans (it being understood that White Holding must reimburse such
Issuing Bank with funds other than proceeds of Loans after June 3, 2000), such
Obligor shall be deemed to have given a timely Loan Request to Administrative
Agent requesting Banks to make Loans that are Reference Rate Loans on the
Reimbursement Date in an amount in dollars equal to the amount of such honored
drawing or Accepted Time Draft, as the case may be, and (ii) subject to
satisfaction or waiver of the conditions specified in Section 5.2, Banks shall,
on the Reimbursement Date, make Loans that are Reference Rate Loans in the
amount of such honored drawing or Accepted Time Draft, as the case may be, the
proceeds of which shall be applied directly by Administrative Agent to reimburse
such Issuing Bank for the amount of such honored drawing or Accepted Time Draft,
as the case may be; and provided, further that if for any reason proceeds of
-------- -------
Loans are not received by such Issuing Bank on the Reimbursement Date in an
amount equal to the amount of such honored drawing or Accepted Time Draft, as
the case may be, such Obligor shall reimburse such Issuing Bank, on demand, in
an amount in same day funds equal to the excess of the amount of such honored
drawing or Accepted Time Draft, as the case may be, over the aggregate amount of
such Loans, if any, which are so received. Nothing in this Section 2.13(b)
shall be deemed to relieve any Bank from its obligation to make Loans on the
terms and conditions set forth in this Agreement, and each Obligor shall retain
any and all rights it may have against any Bank resulting from the failure of
such Bank to make such Loans under this Section 2.13(b).
(c) Payment by Banks of Unreimbursed Amounts Paid Under Participated
----------------------------------------------------------------
Letters of Credit.
- -----------------
(i) Payment by Banks in case of Participated Letters of Credit. In
----------------------------------------------------------
the event that any Obligor shall fail for any reason to reimburse any Issuing
Bank as provided in Section 2.13(b) in an amount equal to the amount of any
drawing honored by such Issuing Bank under a Participated Letter of Credit
issued by it or the amount of an Accepted Time Draft accepted by it, such
Issuing Bank shall promptly notify each other Bank of the unreimbursed amount of
such honored drawing or Accepted Time Draft, as the case may be, and of such
other Bank's respective participation therein based on such other Bank's
Percentage. Each Bank shall make
21
<PAGE>
available to such Issuing Bank an amount equal to its respective participation,
in dollars and in same day funds, at the office of such Issuing Bank specified
in such notice, not later than 2:00 P.M. (New York City time) on the first
business day (under the laws of the jurisdiction in which such office of such
Issuing Bank is located) after the date notified by such Issuing Bank. In the
event that any Bank fails to make available to such Issuing Bank on such
business day the amount of such Bank's participation in such Participated Letter
of Credit or Accepted Time Draft, as the case may be, as provided in this
Section 2.13(c), such Issuing Bank shall be entitled to recover such amount on
demand from such Bank together with interest thereon at the rate customarily
used by such Issuing Bank for the correction of errors among banks for three
Business Days and thereafter at the Reference Rate. Nothing in this Section
2.13(c) shall be deemed to prejudice the right of any Bank to recover from any
Issuing Bank any amounts made available by such Bank to such Issuing Bank
pursuant to this Section 2.13(c), plus interest thereon at the Reference Rate,
in the event that it is determined by the final judgment of a court of competent
jurisdiction that the payment or acceptance of an Accepted Time Draft with
respect to a Participated Letter of Credit by such Issuing Bank in respect of
which payment or acceptance of an Accepted Time Draft was made by such Bank
constituted gross negligence or willful misconduct on the part of such Issuing
Bank.
(ii) Distribution to Banks of Reimbursements Received From Obligors
--------------------------------------------------------------
with respect to Participated Letters of Credit. In the event any Issuing Bank
- ----------------------------------------------
shall have been reimbursed by other Banks pursuant to Section 2.13(c)(i) for all
or any portion of any drawing honored or Accepted Time Draft accepted by such
Issuing Bank under a Participated Letter of Credit issued by it, such Issuing
Bank shall distribute to each other Bank which has paid all amounts payable by
it under Section 2.13(c)(i) with respect to such honored drawing or Accepted
Time Draft such other Bank's share based on such other Bank's Percentage of all
payments subsequently received by such Issuing Bank from an Obligor in
reimbursement of such honored drawing or Accepted Time Draft when such payments
are received. Any such distribution shall be made to a Bank at its primary
address set forth in Exhibit C or at such other address as such Bank may
request.
(d) Interest on Amounts Paid Under Letters of Credit.
------------------------------------------------
(i) Payment of Interest by Obligors. Each Obligor agrees to pay to
-------------------------------
each Issuing Bank, with respect to drawings honored under any Letters of Credit
issued by such Issuing Bank for such Obligor's account, interest on the amount
paid by such Issuing Bank in respect of each such honored drawing from the date
such drawing is honored (or in the case of drawings honored by accepting an
Accepted Time Draft, the date such Accepted Time Draft is paid) to but excluding
the date such amount is reimbursed by an Obligor (including any such
reimbursement out of the proceeds of Loans pursuant to Section 2.13(b), if
applicable) at a rate equal to (1) for the period from the date such drawing is
honored to but excluding the date that is two Business Days following the date
such drawing is honored, the rate then in effect under this Agreement with
respect to Loans that are Reference Rate Loans and (2) thereafter, a rate which
is 2% per annum in excess of the rate of interest otherwise payable under this
Agreement with respect to Loans that are Reference Rate Loans. Interest payable
pursuant to this subsection 2.13(d)(i) shall be computed on the basis of a 360-
day year for the actual number of days elapsed in the period during which it
accrues and shall be payable on demand or, if no demand is made, on the date on
which the related drawing under a Letter of Credit is reimbursed in full.
22
<PAGE>
(ii) Distribution of Interest Payments by Issuing Bank with respect
--------------------------------------------------------------
to Participated Letters of Credit. Promptly upon receipt by any Issuing Bank of
- ---------------------------------
any payment of interest pursuant to subsection 2.13(d)(i) with respect to a
drawing honored under a Participated Letter of Credit issued by it, (1) such
Issuing Bank shall distribute to each other Bank, out of the interest received
by such Issuing Bank in respect of the period from the date such drawing is
honored (or in the case of drawings honored by accepting an Accepted Time Draft,
the date such Accepted Time Draft is paid) to but excluding the date on which
such Issuing Bank is reimbursed for the amount of such drawing (including any
such reimbursement out of the proceeds of Loans pursuant to subsection 2.13(b)),
the amount that such other Bank would have been entitled to receive in respect
of the letter of credit fee that would have been payable in respect of such
Participated Letter of Credit for such period pursuant to Section 2.12 if no
drawing had been honored under such Participated Letter of Credit, and (2) in
the event such Issuing Bank shall have been reimbursed by other Banks pursuant
to subsection 2.13(c)(i) for all or any portion of such honored drawing, such
Issuing Bank shall distribute to each other Bank which has paid all amounts
payable by it under subsection 2.13(c)(i) with respect to such honored drawing
such other Bank's share of any interest based on such other Bank's Percentage
received by such Issuing Bank in respect of that portion of such honored drawing
so reimbursed by other Banks for the period from the date on which such Issuing
Bank was so reimbursed by other Banks to but excluding the date on which such
portion of such honored drawing is reimbursed by the Obligors. Any such
distribution shall be made to a Bank at its primary address set forth in Exhibit
C or at such other address as such Bank may request.
(e) White Holding hereby acknowledges and agrees that it shall not
request or receive Letters of Credit issued for its account pursuant to this
Agreement until such time as (a) White Holding certifies, in form and substance
satisfactory to Administrative Agent, that it has either obtained or does not
require an authorization from the Netherlands government with respect to its
execution, delivery and performance of the Credit Agreement and that all
representations and warranties as to White Holding set forth in Section 6 of
this Agreement are true and correct; (b) Netherlands counsel for White Holding
delivers to the Administrative Agent and the Banks an opinion covering the
matters set forth in Exhibit F-2 hereto; (c) New York counsel for White Holding
delivers an opinion covering the matters set forth in Exhibit G hereto; and (d)
all corporate and other proceedings taken or to be taken in connection with the
execution, delivery and performance by White Holding of the Credit Agreement and
all documents incidental thereto are satisfactory in form and substance to
Administrative Agent, acting on behalf of the Banks, and its counsel. At such
time, Administrative Agent will notify Borrower, Dish Placement and White
Holding that White Holding may thereafter request and receive Letters of Credit
issued for its account pursuant to the Credit Agreement.
2.14 Obligations Absolute.
--------------------
The obligation of each Obligor to reimburse each Issuing Bank for
drawings honored under the Letters of Credit issued by such Issuing Bank for
such Obligor's account and to repay any Loans made by Banks pursuant to Section
2.13(b) and the obligations of Banks under subsection 2.13(c)(i) shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement and such Issuing Bank's standard form of application for
issuance of letters of credit under all circumstances including, without
limitation, any of the following circumstances:
23
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(i) any lack of validity or enforceability of this Agreement, any
Letter of Credit or any other agreement, application, amendment, guaranty,
document or instrument relating thereto;
(ii) the existence of any claim, set-off, defense or other right
which any Obligor or any Bank may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons for whom any such transferee
may be acting), any Issuing Bank or other Bank or any other Person or, in the
case of a Bank, against any Obligor, whether in connection with this Agreement,
the transactions contemplated herein or any unrelated transaction (including any
underlying transaction between any Obligor or one of its Subsidiaries and the
beneficiary for which any Letter of Credit was procured);
(iii) any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;
(iv) payment of a drawing or acceptance of an Accepted Time Draft by
the applicable Issuing Bank under any Letter of Credit against presentation of a
draft or other document which does not substantially comply with the terms of
such Letter of Credit, unless (A) the applicable Issuing Bank and Administrative
Agent receive from the Obligor for whose account such Letter of Credit was
issued notice in writing of such noncompliance within three Business Days after
such Obligor shall have received such draft or such other document, and (B) such
Obligor takes all reasonable steps to mitigate any loss;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of any Obligor or any of
its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Unmatured Event of
Default shall have occurred and be continuing;
provided, in each case, that payment or acceptance of an Accepted Time
--------
Draft or other draft under a Letter of Credit by the applicable Issuing
Bank under the applicable Letter of Credit shall not have constituted gross
negligence or willful misconduct of such Issuing Bank under the
circumstances in question.
2.15 Indemnification; Nature of Issuing Banks' Duties.
------------------------------------------------
(a) Indemnification. In addition to amounts payable as provided in
---------------
Section 2.16, each Obligor hereby agrees to protect, indemnify, pay and save
harmless each Issuing Bank from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Bank may incur or be subject to as a consequence,
direct
24
<PAGE>
or indirect, of (i) the issuance of any Letter of Credit by such Issuing Bank
for the account of such Obligor, other than as a result of (1) the gross
negligence or willful misconduct of such Issuing Bank or (2) subject to the
following clause (ii), the wrongful dishonor by such Issuing Bank of a proper
demand for payment made under any Letter of Credit issued by it, (ii) the
failure of such Issuing Bank to honor a drawing under any such Letter of Credit
as a result of any act or omission, whether rightful or wrongful, of any present
or future de jure or de facto government or governmental authority (all such
acts or omissions herein called "Governmental Acts") or (iii) the enforcement of
this Agreement.
(b) Nature of Issuing Banks' Duties. As between each Obligor and any
-------------------------------
Issuing Bank, such Obligor assumes all risks of the acts and omissions of, the
solvency of, or misuse of the Letters of Credit issued by such Issuing Bank by,
the respective beneficiaries of such Letters of Credit. In furtherance and not
in limitation of the foregoing, such Issuing Bank shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness or legal effect of
any document submitted by any party in connection with the application for and
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit, it being understood that such Obligor shall
not be required to reimburse or otherwise indemnify the Issuing Bank in respect
of any payments or acceptance of an Accepted Time Drafts by such Issuing Bank
under the applicable Letter of Credit constituting gross negligence or willful
misconduct of such Issuing Bank under the circumstances in question; (iv)
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they be
in cipher; (v) errors in interpretation of technical terms or in translation;
(vi) any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; (viii) any
consequences arising from causes beyond the control of such Issuing Bank,
including without limitation any Governmental Acts, and none of the above shall
affect or impair, or prevent the vesting of, any of such Issuing Bank's rights
or powers hereunder; (ix) the effectiveness or suitability of any Letter of
Credit for such Obligor's purpose, or be regarded as the drafter of such Letter
of Credit regardless of any assistance that the Issuing Bank may, in its
discretion, provide to such Obligor in preparing the text of the Letter of
Credit or amendments thereto; or (x) any consequential or special damages, or
for any damages resulting from any change in the value of any goods or other
property covered by any Letter of Credit.
An Issuing Bank may, without being placed under any resulting
liability, (i) rely upon any oral, telephonic, telegraphic, facsimile,
electronic, written or other communication believed in Good Faith to have been
authorized (in writing) by an Obligor, whether or not given or signed by an
authorized person; (ii) disregard (A) any requirement stated in a Letter of
Credit that any draft, certificate or other document be presented to it at a
particular hour or place and (B) any discrepancies that do not reduce the value
of the beneficiary's performance to any Obligor in any transaction underlying a
Letter of Credit; (iii) accept as a draft any written
25
<PAGE>
demand for payment under a Letter of Credit, regardless of the legal sufficiency
of such demand as a draft; (iv) honor a previously dishonored presentation under
a Letter of Credit, whether pursuant to court order, to settle or compromise any
claim that it wrongfully dishonored, or otherwise, and shall be entitled to
reimbursement to the same extent as if it had initially honored plus
reimbursement of any interest paid by it; or (v) may pay any paying or
negotiating bank (designated or permitted by the terms of a Letter of Credit)
claiming that it rightfully honored under the laws or practices of the place
where it is located.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first two paragraphs of this Section 2.15(b), any
action taken or omitted by any Issuing Bank under or in connection with the
Letters of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in Good Faith, shall not put such Issuing Bank
under any resulting liability to the Obligors.
Notwithstanding anything to the contrary contained in this Section
2.15, each Obligor shall retain any and all rights it may have against any
Issuing Bank for any liability arising out of the gross negligence or willful
misconduct of such Issuing Bank.
2.16 Increased Costs and Taxes Relating to Letters of Credit.
-------------------------------------------------------
Subject to the provisions of Section 3.2 (which shall be controlling
with respect to the matters covered thereby), in the event that any Issuing Bank
or Bank shall determine (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto) that any law, treaty
or governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by any Issuing Bank or
Bank with any guideline, request or directive issued or made after the date
hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Issuing Bank or Bank (or its applicable lending
or letter of credit office) to any additional Tax (other than any Tax on the
overall net income of such Issuing Bank or Bank) with respect to the issuing or
maintaining of any Letters of Credit, accepting an Accepted Time Draft or the
purchasing or maintaining of any participations therein or any other obligations
under this Section 2 with respect to Letters of Credit or Accepted Time Drafts,
whether directly or by such being imposed on or suffered by any particular
Issuing Bank;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by any Issuing Bank or
Accepted Time Drafts or participations therein purchased by any Bank; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Issuing Bank or Bank (or its applicable lending or
letter of credit office) regarding
26
<PAGE>
this Section 2 with respect to Letters of Credit or any Letter of Credit or
Accepted Time Drafts or any participation therein;
and the result of any of the foregoing is to increase the cost to such
Issuing Bank or Bank of agreeing to issue, issuing or maintaining any
Letter of Credit or Accepted Time Drafts or agreeing to purchase,
purchasing or maintaining any participation therein or to reduce any amount
received or receivable by such Issuing Bank or Bank (or its applicable
lending or letter of credit office) with respect thereto; then, in any
case, the Obligor for whose account such Letter of Credit was issued shall
promptly pay to such Issuing Bank or Bank, upon receipt of the statement
referred to in the next sentence, such additional amount or amounts as may
be necessary to compensate such Issuing Bank or Bank for any such increased
cost or reduction in amounts received or receivable hereunder. Such
Issuing Bank or Bank shall deliver to Borrower a written statement, setting
forth in reasonable detail the basis for calculating the additional amounts
owed to such Issuing Bank or Bank under this Section 2.16, which statement
shall be conclusive and binding upon all parties hereto absent manifest
error.
2.17 Survival of Certain Provisions Relating to Letters of Credit.
------------------------------------------------------------
Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of the Obligors set forth in Sections 2.15 and 2.16
shall survive the termination of this Agreement.
SECTION 3
---------
PAYMENT OF COSTS AND REDUCTION
------------------------------
OF THE COMMITMENT
-----------------
3.1 Indemnification Upon Failure to Pay Eurodollar Loan. If an
---------------------------------------------------
Obligor makes any payment of principal with respect to any Eurodollar Loan on a
day other than the last day of the then current Interest Period applicable to
such Loan (including without limitation any payment upon reduction of the
Commitments) or fails to borrow, prepay, continue or convert its Eurodollar Loan
on a date designated to Administrative Agent in a notice pursuant to this
Agreement (if such failure does not result from the application of Sections 4.1
or 4.2), such Obligor shall reimburse each Bank within fifteen (15) days after
receipt of written demand for any loss incurred by it as a result of the timing
of such payment or non-borrowing not reflected in the Eurodollar Rate, including
without limitation any loss incurred in liquidating or employing deposits from
third parties (but not loss of profit) for the period after such payment or non-
borrowing. A certificate of such Bank setting forth the amounts reasonably
necessary so to reimburse it in respect of any loss shall be conclusive and
binding absent manifest error.
3.2 Increased Costs. (a) If after the date hereof, any applicable
---------------
law, rule or regulation or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof or compliance
by any Bank (or its Lending Office) with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency, whether or not having the force of law, shall impose, modify or deem
applicable:
27
<PAGE>
(i) any reserve (including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System), special deposit, compulsory
loan or similar requirements against assets, commitments or deposits or other
liabilities with, of or for the account of, or credit extended by, or any
acquisition of funds by or for the account of any Bank or its Lending Office or
the offshore interbank market or any other condition affecting its obligations
to make, maintain or fund the Loans to the Obligors hereunder;
(ii) any capital or similar requirements against (or against any class
of or change in or the amount of) assets or liabilities of, or commitments,
Letters of Credit, or Accepted Time Drafts, participations therein or extensions
of credit by, such Bank; each Bank which is so affected shall give prompt notice
to Borrower describing such reserves or requirements at least four (4) Business
Days prior to the date such Bank will begin to implement such additional charges
with respect to the Obligors. If the result of any of the foregoing is to
increase the cost or reduce the profit to such Bank (or its Lending Office or
any corporation controlling a Bank) under this Agreement by an amount deemed by
such Bank to be material, then, within fifteen (15) days after written demand by
such Bank, the Obligors will pay to such Bank such additional amount or amounts
as will compensate such Bank for such increased cost incurred or reduction in
profit suffered by such Bank. Such Bank agrees to use reasonable efforts
(consistent with legal and regulatory restrictions) to designate a different
Lending Office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not be otherwise disadvantageous to such Bank in
the sole discretion of such Bank. A certificate of such Bank setting forth the
basis for determining such additional amount or amounts necessary to compensate
the Bank shall be conclusive in the absence of manifest error.
(b) Without limiting the effect of the foregoing (but without
duplication), upon any Bank's prior written request, the Obligors shall pay to
such Bank on the last day of each Interest Period, so long as such Bank may be
required to maintain reserves against "eurocurrency liabilities" under
Regulation D (as at any time amended) of the Board of Governors of the Federal
Reserve System, as additional interest on the unpaid principal amount of each
Eurodollar Loan by such Bank outstanding during such Interest Period, an
additional amount (determined by such Bank and notified to Borrower in writing)
up to but not exceeding such amount as would, together with payments of interest
on such Eurodollar Loan for such Interest Period, result in the receipt by such
Bank of total interest on such Eurodollar Loan, for such Interest Period at a
rate determined by such Bank to be equal to the sum of:
(i) the Eurodollar Rate divided by (a) 1 minus (b) the rate
(expressed as a decimal) of such reserves required by Regulation D, plus (ii)
the Applicable Margin.
In determining the additional amount payable for an Interest Period
pursuant to this Section, such Bank shall take into account any transitional
adjustment or phase-in provisions of such reserve requirements applicable during
such Interest Period, which would reduce the reserve requirement otherwise
applicable to eurocurrency liabilities during such Interest Period; provided,
--------
however, each Bank in its sole discretion may determine the allocation of
- -------
reserve requirements to its Eurodollar Loans. Each such determination made by
such Bank, and each such notification by such Bank to Borrower under this
Section, shall be conclusive as to the matters set forth therein in the absence
of manifest error.
28
<PAGE>
3.3 Taxes. All payments or reimbursements under this Agreement and
-----
any instrument or agreement required hereunder shall be made without set-off or
counterclaim and free and clear of and without deduction for any and all present
and future Taxes. Each Obligor agrees to cause all such Taxes to be paid on
behalf of any Bank or Administrative Agent directly to the appropriate
governmental authority. If an Obligor is legally prohibited from complying with
this subsection, payments due to such Bank or Administrative Agent under this
Agreement and any instrument or agreement required hereunder shall be increased
so that, after provisions for Taxes and all Taxes on such increase, the amounts
received by such Bank or Administrative Agent will be equal to the amounts
required under this Agreement and any instrument or agreement required hereunder
as if no Taxes were due on such payments. Each Obligor shall indemnify each
Bank and Administrative Agent for the full amount of Taxes payable by such Bank
or Administrative Agent and any liabilities (including penalties, interest and
expenses) arising from such Taxes within thirty (30) days from any written
demand by such Bank. Each Obligor shall provide evidence that all applicable
Taxes have been paid to the appropriate taxing authorities by delivering to
Administrative Agent official tax receipts or notarized copies or other evidence
thereof satisfactory to Administrative Agent, within ninety (90) days after the
due date for such Tax payment. Such Bank agrees to use reasonable efforts
(consistent with legal and regulatory restrictions) to designate a different
Lending Office if such designation will avoid the need for, or reduce the amount
of, such payment or reimbursement and will not be otherwise disadvantageous to
such Bank in the sole discretion of such Bank.
3.4 Prepayment. Upon the irrevocable written notice of the Obligor
----------
to which a Loan has been made, received by Administrative Agent by 11:00 a.m.
New York time on the date of the prepayment of a Reference Rate Loan and at
least three (3) Eurodollar Banking Days prior to the prepayment of a Eurodollar
Loan, such Obligor may prepay any Eurodollar Loan or Reference Rate Loan; but
such prepayment shall be in an amount of at least One Million Dollars
($1,000,000) or multiple integrals of One Hundred Thousand Dollars ($100,000) in
excess thereof unless the entire outstanding principal amount of the Loans is
being prepaid. The notice of prepayment shall specify the date of the
prepayment, the amount of the prepayment and the Loan to be prepaid. Each such
prepayment shall be made on the date specified and, in the case of a prepayment
of any Eurodollar Loan shall be accompanied by the payment of accrued interest
on the amount prepaid. Subject to compliance with the foregoing procedures,
Reference Rate Loans may be prepaid at any time without cost or penalty of any
kind. If an Obligor elects to prepay a Eurodollar Loan, such Obligor shall, on
demand by each Bank, pay such Bank the amount (if any) by which (a) the
additional interest which would have been payable on the amount prepaid on such
Bank's portion of such Loan had it not been paid until the last day of the
Interest Period of such Loan exceeds (b) the interest which would have been
recoverable by such Bank by placing such prepaid amount on deposit in the
offshore Dollar interbank markets for a period starting on the date on which it
was prepaid and ending on the last day of the Interest Period for such Loan.
3.5 Pro Rata Reduction of Commitments by Borrower. Borrower may,
---------------------------------------------
upon thirty (30) days' prior written notice (which notice shall be irrevocable)
to Banks through Administrative Agent, reduce the Total Commitment on a pro rata
basis among the Banks in an aggregate amount up to the amount by which the Total
Commitment exceeds the Total Utilization of Commitments at the time of such
proposed reduction. Such a reduction shall be in an integral multiple of Five
Million Dollars ($5,000,000). After the effective date of such
29
<PAGE>
reduction, the Banks' obligations under this Agreement shall be based on the
reduced Commitments.
3.6 Reduction of One Bank's Commitment by Borrower. If the amount of
----------------------------------------------
any payment to be made to or for the account of any Bank is increased under
Section 3.3 or any Bank makes a claim under Section 3.2 then, so long as no
Event of Default then exists or would result therefrom:
(a) Borrower may, within sixty days after the notice thereof and by
not less than five Business Days' written notice to Administrative Agent, cancel
such Bank's Commitment, whereupon such Bank shall cease to be obligated to
participate in further Loans hereunder and its Commitment shall be reduced to
the amount of its outstanding Loans until such Loans are repaid by the Obligors
either on the Principal Repayment Date for such Loans or pursuant to Section
3.6(b), at which time such Bank's Commitment shall be reduced to zero; and
(b) if Borrower cancels such Bank's Commitment pursuant to clause (a)
above and if Borrower so elects by written notice to Administrative Agent given
at the same time as the notice referred to in clause (a) above, the Obligors
shall prepay such Bank's portion of each outstanding Loan together with any
accrued interest thereon plus all costs and expenses (including broken funding
costs in connection with the re-lending, re-borrowing, funding or other
employing of funds) incurred by such Bank as a result of such cancellation or
prepayment on a date other than the Principal Repayment Date for such Loan.
3.7 Notice of Reductions. Each notice of reduction or prepayment
--------------------
given pursuant to Section 3.4, 3.5 or 3.6 shall be irrevocable, shall specify
the date upon which such reduction or prepayment is to be made and, in the case
of a notice of prepayment, shall obligate the Obligors to make such prepayment
on such date. Borrower may not give a notice of reduction of a part of the
Commitment pursuant to Section 3.6 at any time prior to the date so specified in
any previous such notice.
3.8 Designation of Replacement Bank. If the Commitment of any Bank
-------------------------------
is cancelled by Borrower pursuant to Section 3.6 or if any Bank terminates its
Commitment with respect to Eurodollar Loans pursuant to Section 4.2, Borrower,
with the consent of Administrative Agent, may designate an Eligible Assignee
(or, if it deems appropriate, more than one Eligible Assignee) acceptable to
Administrative Agent to act as a Bank hereunder and upon execution of an
Assignment and Acceptance by such Eligible Assignee, such Eligible Assignee
shall be deemed a Bank hereunder to the same extent as if it were a signatory
hereto and, thereafter, such Eligible Assignee shall for all purposes be
considered a "Bank" hereunder; provided that the Commitment assigned to the new
--------
Bank thereby shall not exceed the Commitment of the replaced Bank.
3.9 Effect of Reduction of Commitment. If, at any time:
---------------------------------
(i) the Commitment of any Bank is reduced to zero in accordance with
the terms of this Agreement;
(ii) all indebtedness and other amounts owed to such Bank by the
Obligors hereunder or in connection herewith have been satisfied in full; and
30
<PAGE>
(iii) such Bank is under no further actual or contingent obligation
hereunder,
then such Bank shall cease to be a party hereto and a Bank for the purposes
hereof; provided, however, that the obligations of the Obligors under Sections
-------- -------
2.15, 2.16, 3.1, 3.2, 3.3, 11.13, 11.14 and 11.15 shall survive the cancellation
of the Commitment and the termination of this Agreement.
3.10 Accrued Fees. On the date of the cancellation of any portion of
------------
the Total Commitment in accordance with Section 3.5 or of any Bank's Commitment
under Section 3.6, all accrued Facility Fees for such portion of the Total
Commitment or of such Bank's Commitment shall be paid in full by Borrower.
3.11 Survival. The agreements and obligations of Borrower in this
--------
Section 3 shall survive the termination of this Agreement.
SECTION 4
---------
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
---------------------------------------
4.1 Inability to Determine Eurodollar Rate. If any Reference Bank
--------------------------------------
determines (which determination shall be made in Good Faith and shall be
conclusive and binding upon the Obligors that (i) by reason of circumstances
then affecting the Eurodollar interbank market, adequate and reasonable means do
not or will not exist for ascertaining the interest rate applicable to any
Eurodollar Loans, or (ii) Dollar deposits in the relevant amounts and for the
relevant Interest Period are not available to the Banks in the Eurodollar
interbank market, then it shall notify the Administrative Agent who shall
forthwith give written notice of such determination to Borrower and each Bank at
least one (1) Business Day prior to the first day of any Interest Period so
affected; whereupon, until Administrative Agent shall notify Borrower that the
circumstances giving rise to such suspension no longer exist, (x) the
obligations of the Banks to make Eurodollar Loans shall be suspended and (y) the
Obligors shall repay in full, without premium or penalty, the then outstanding
principal amount of the Eurodollar Loans, together with accrued interest
thereon, on the last day of the then current Interest Period pursuant to the
next sentence. Unless an Obligor notifies Administrative Agent to the contrary
within one (1) Business Day after receiving a notice from Administrative Agent
pursuant to this Section, an Obligor shall, concurrently with repaying the
Eurodollar Loans pursuant to this Section, be deemed automatically without any
further notice to Administrative Agent or the Banks to have requested and
received Reference Rate Loans in an equal principal amount from the Banks, the
proceeds of which are deemed to have been used to repay the other Loans.
4.2 Illegality. If, after the Effective Date, the introduction of
----------
or any change in any applicable law, rule or regulation or in the interpretation
or administration thereof by any governmental authority charged with the
interpretation or administration thereof or compliance by any Bank with any
request or directive (whether or not having the force of law) of any such
authority shall make it unlawful or impossible for such Bank (or its Lending
Office) to make, maintain or fund its Eurodollar Loans, such Bank shall
forthwith give written notice thereof to Administrative Agent and to Borrower.
Before giving any notice pursuant to this Section, such Bank agrees to use
reasonable efforts (consistent with legal and regulatory restrictions) to
31
<PAGE>
designate a different Lending Office if such designation will avoid the need for
giving such notice and will not be otherwise disadvantageous to such Bank in the
sole judgment of such Bank. Upon receipt of such notice (i) if such Bank has
received a request with respect to Eurodollar Loans and has not yet made such
Loan, a Reference Rate Loan shall be deemed to have been designated without any
further notice; (ii) all Loans which would otherwise be made by such Bank as
Eurodollar Loans shall be made instead as Reference Rate Loans; and (iii) the
Obligor to which such Eurodollar Loans were made shall prepay in full, without
premium or penalty, the then outstanding principal amount of such Bank's
Eurodollar Loans, together with accrued interest, on either (x) the last day of
the then-current Interest Period if such Bank may lawfully continue to fund and
maintain such Eurodollar Loans, to such day or (y) immediately if such Bank may
not lawfully continue to fund and maintain such Eurodollar Loans to such day
together with an amount, if any, calculated as set forth in the last sentence of
Section 3.4. Concurrently with prepaying each such Eurodollar Loan such Obligor
shall borrow a Reference Rate Loan from such Bank in an amount equal to the
principal amount of such Bank's Eurodollar Loans, the proceeds of which are
deemed to have been used to repay such Bank's Eurodollar Loans. If circumstances
subsequently change so that such Bank is not further affected, and no Eligible
Assignee has been appointed pursuant to Section 3.8, such Bank shall so notify
Borrower and Administrative Agent and such Bank's obligation to make and
continue Eurodollar Loans shall be reinstated upon written request of Borrower.
SECTION 5
---------
CONDITIONS PRECEDENT
--------------------
5.1 Initial Conditions Precedent. The obligation of Banks to make
----------------------------
the initial Loan hereunder is subject to the condition that on or before the
Effective Date, (a) there shall have been delivered to Administrative Agent with
counterparts for each Bank and in form and substance satisfactory to
Administrative Agent, each dated the Effective Date unless otherwise indicated:
(i) The Guaranties, duly executed and delivered by each of the
Guarantors;
(ii) Certified copies of the resolutions of the Board of Directors of
each Obligor approving this Agreement, and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Agreement;
(iii) A certificate of the Secretary or an Assistant Secretary of
each Obligor certifying the names and true signatures of the officers of such
Obligor authorized to sign this Agreement and the other documents to be
delivered hereunder;
(iv) Certified copies of each Obligor's Certificate of Incorporation
or Deed of Incorporation, together with a good standing certificate from its
jurisdiction of incorporation, each to be dated a recent date prior to the
Effective Date;
(v) Copies of each Obligor's Memorandum of Association and Articles
of Incorporation or Articles of Association and Extract from Commercial
Register, certified as of the Effective Date by its Secretary or an Assistant
Secretary;
32
<PAGE>
(vi) Favorable opinions of (A) Graham Thompson & Company, Bahamas
counsel for the Borrower and Dish Placement, substantially in the form of
Exhibit F-1 hereto, (B) Trenite Van Doorne, counsel for White Holding,
substantially in the Form of Exhibit F-2 hereto, (C) Wilmer, Cutler & Pickering,
New York counsel for the Obligors, substantially in the form of Exhibit G
hereto, (D) the Assistant General Counsel of Hughes, substantially in the form
of Exhibit H-1 hereto, and (E) counsel for each Guarantor (other than Hughes),
substantially in the form of Exhibit H-2 hereto;
(vii) A favorable opinion of O'Melveny & Myers LLP, special counsel
for the Administrative Agent, substantially in the form of Exhibit I hereto;
(viii) Certified copies of the resolutions of the Board of Directors
of each Guarantor, approving the Guaranty to which it is a party, and of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to such Guaranty;
(ix) A certificate of the Secretary or an Assistant Secretary of
each Guarantor (or, in the case of a foreign Guarantor, a similar officer for
companies in such foreign country) certifying the names and true signatures of
the officers of such Guarantor authorized to sign the Guaranty to which it is a
party and the other documents to be delivered hereunder;
(x) Certified copies of the Certificate of Incorporation of each
Guarantor above, together with good standing certificates from the jurisdiction
of its incorporation and its principal place of business, each to be dated a
recent date prior to the Effective Date (or, with respect to foreign Guarantors,
such appropriate similar documents for companies in such foreign country);
(xi) Copies of the Bylaws of each Guarantor (or, with respect to
Darlene Investments LLC, its Memorandum of Association and Articles of
Association), certified as of the Effective Date by its Secretary or an
Assistant Secretary (or, in the case of Darlene Investments LLC, a similar
officer for companies in the Cayman Islands); and
(xii) Such other instruments, information or documents as
Administrative Agent or Majority Banks may reasonably request.
(b) Borrower shall have paid (i) to Administrative Agent, for
distribution (as appropriate) to Administrative Agent and the Arranger the fees
and expenses payable on the Effective Date pursuant to the Letter Agreement and
(ii) to O'Melveny & Myers LLP its fees and expenses payable pursuant to Section
11.13 hereof through the Effective Date.
(c) Administrative Agent shall have received an officers'
certificate from Borrower, dated the Effective Date, in form and substance
satisfactory to Administrative Agent, to the effect that the representations and
warranties in Section 6 hereof are true, correct and complete in all material
respects on and as of the Effective Date to the same extent as though made on
and as of that date.
(d) Administrative Agent shall have received a certificate, signed
by the Treasurer or an Assistant Treasurer of Hughes dated the Effective Date
certifying that (i) since December 31, 1998 there has been no change in Hughes'
financial condition or results of
33
<PAGE>
operations which constitutes a Material Change; and (ii) to the knowledge of
Hughes, that there is no pending or threatened litigation, proceeding or
investigation that is reasonably likely to have a material adverse effect on the
properties, business, operations or conditions (financial or otherwise) of the
Borrower or of Hughes or that purports to affect this Agreement or the
transactions contemplated hereby.
(e) Administrative Agent shall have received evidence in form and
substance satisfactory to it that all commitments under the Credit Agreement
dated as of September 24, 1997, as amended, among Borrower, Dish Placement, the
banks party thereto, and Bank of America National Trust and Savings Association,
as agent for such banks, have been terminated in full, that all letters of
credit issued pursuant to such credit agreement have been terminated and that
all obligations payable to such banks and the agents under such credit agreement
have been paid in full.
(f) All commitments under the Existing Citibank Agreement shall have
been terminated in full, all letters of credit issued pursuant to the Existing
Citibank Agreement shall have been terminated and all obligations payable to the
banks and agents under the Existing Citibank Agreement shall have been paid in
full.
(g) All corporate and other proceedings taken or to be taken in
connection with the transactions contemplated hereby and all documents
incidental thereto not previously found acceptable by Administrative Agent,
acting on behalf of Banks, and its counsel shall be satisfactory in form and
substance to Administrative Agent and such counsel, and Administrative Agent and
such counsel shall have received all such counterpart originals or certified
copies of such documents as Administrative Agent may reasonably request.
5.2 Conditions Precedent to Loans. The obligation of Banks to
-----------------------------
disburse each Loan (including the first Loan) is subject to the following
conditions and by communicating a Loan Request the Obligors, jointly and
severally, are deemed to certify that: (a) the representations and warranties
contained in this Agreement and any other documents delivered pursuant hereto
are true and correct in all material respects on the date of such Loan Request;
(b) the financial statements delivered to Administrative Agent by Borrower
pursuant to Section 7.5 on the date most nearly preceding the Loan Request
present fairly the financial position and results of operation and changes in
financial position of Borrower and its consolidated Subsidiaries as at the end
of, and for the fiscal period to which such statements relate, (subject, in the
case of unaudited financial statements to year end adjustments) and there has
been no Material Change since the date of such financial statements; (c) there
has been no change in Hughes' financial condition or results of operations which
constitutes a Material Change; (d) to the knowledge of Hughes, there is no
pending or threatened litigation, proceeding or investigation that Hughes
believes is reasonably likely to have a material adverse effect on the
properties, business, operations (financial or otherwise) of the Borrower or of
Hughes or that purports to affect this Agreement, the Hughes Guaranty or the
transactions contemplated hereby or thereby; and (e) no Event of Default or
Unmatured Event of Default has occurred and is continuing except such Events of
Default or Unmatured Events of Default as have been expressly waived by or on
behalf of the Banks.
34
<PAGE>
5.3 Conditions to Letter of Credit. The obligation of an Issuing
------------------------------
Bank to issue any Letter of Credit hereunder is subject to the following
conditions precedent:
(a) On or before the date of issuance of such Letter of Credit,
Administrative Agent and the applicable Issuing Bank shall have received, in
accordance with the provisions of subsection 2.11(b)(i), an originally executed
L/C Request and an originally executed application for issuance of letter of
credit in the standard form then utilized by the applicable Issuing Bank, in
each case signed by the chief executive officer, the chief financial officer or
the treasurer of the Obligor requesting such Letter of Credit or by any
executive officer of such Obligor designated by any of the above-described
officers on behalf of such Obligor in a writing delivered to Administrative
Agent, together with all other information specified in subsection 2.11(b)(i)
and such other documents or information as the applicable Issuing Bank may
reasonably require in connection with the issuance of such Letter of Credit.
(b) On the date of issuance of such Letter of Credit, all conditions
precedent described in Section 5.2 shall be satisfied to the same extent as if
the issuance of such Letter of Credit were the making of a Loan and the date of
issuance of such Letter of Credit were a Borrowing Date.
Each Issuing Bank shall be entitled to assume that the conditions
precedent set forth in Sections 5.3(a) and (b) have been satisfied unless such
Issuing Bank has received written notice from Administrative Agent to the
contrary.
SECTION 6
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
6. Borrower (and, with respect to a representation or warranty
relating to a Designated Subsidiary, such Designated Subsidiary jointly and
severally) represents and warrants as follows:
6.1 Authority of Borrower. Borrower (a) is an international business
---------------------
company duly organized and existing under the laws of the Bahamas, with its
principal place of business in the Bahamas, (b) has the corporate power to own
its property and carry on its business as now being conducted, (c) is duly
qualified and authorized to do business, and is in good standing in every state,
country or other jurisdiction where the failure to be so qualified, authorized
and in good standing would have a material adverse effect on Borrower, (d) has
full power and authority to borrow the sums provided for in this Agreement, to
execute, deliver and perform this Agreement and any instrument or agreement
required hereunder, and to perform and observe the terms and provisions hereof
and thereof, (e) has taken all corporate action on the part of Borrower, its
directors or stockholders, necessary for the authorization, execution, delivery
and performance of this Agreement, and any instrument or agreement required
hereunder on the date hereof, (f) requires no consent or approval of any trustee
or holder of any indebtedness or obligation of Borrower to enter into, deliver
or perform its obligations under this Agreement and the Notes, and (g) requires
no consent, permission, authorization, order or license of any governmental
authority in connection with the execution and delivery and performance of this
Agreement and any instrument or agreement required hereunder, or any transaction
contemplated
35
<PAGE>
hereby, except as may have been obtained and certified copies of which have been
delivered to Banks through Administrative Agent.
6.2 Binding Obligations. This Agreement is the legal, valid and
-------------------
binding obligation of Borrower and each Designated Subsidiary, enforceable
against each of them in accordance with its terms, and any instrument or
agreement required hereunder, when executed and delivered, will be similarly
valid, binding and enforceable.
6.3 Incorporation of Subsidiaries. Each Subsidiary of Borrower is a
-----------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and is duly licensed or qualified
as a foreign corporation in all jurisdictions where the failure to be so
qualified, authorized and in good standing would have a material adverse effect
on Borrower and its Subsidiaries taken as a whole.
6.4 No Contravention. There is no charter, by-law, or capital stock
----------------
provision of Borrower or any Designated Subsidiary and no provision of any
indenture or material agreement, written or oral, to which Borrower or any
Designated Subsidiary is a party or under which Borrower or such Designated
Subsidiary is obligated, nor is there any statute, rule or regulation, or any
judgment, decree or order of any court or agency binding on Borrower or any
Designated Subsidiary which would be contravened by the execution, delivery and
performance of this Agreement, or any instrument or agreement required
hereunder, or by the performance of any provision, condition, covenant or other
term hereof or thereof.
6.5 Notices. Except as previously disclosed in writing to
-------
Administrative Agent, no event has occurred which would require Borrower or any
Designated Subsidiary to notify Administrative Agent and the Banks pursuant to
Section 7.3 hereof.
6.6 Financial Statements. All financial statements furnished by
--------------------
Borrower to Banks present fairly the financial position and results of operation
and changes in financial position of Borrower and its consolidated Subsidiaries
as at the end of, and for the fiscal period to which such statements relate,
(subject to normal year-end adjustments), and such financial statements have
been prepared in accordance with GAAP. Since the date of the audited financial
statements most recently furnished by Borrower to Banks, there has been no
change in Borrower's consolidated financial condition or results of operations
sufficient to impair Borrower's ability to repay the Loans in accordance with
the terms hereof. Neither Borrower nor any Subsidiary had any contingent
obligations, liabilities for taxes or other outstanding financial obligations at
that date which are material in the aggregate, except as disclosed in such
statements.
6.7 ERISA. Borrower, any of its Subsidiaries or any other ERISA
-----
Affiliate has never had, does not have, and will not have, any Plans.
6.8 Use of Proceeds; Margin Regulations; Investment Act. Neither
---------------------------------------------------
Borrower nor any Designated Subsidiary is engaged principally, or as one of its
important activities, in the business of extending credit for the purposes of
purchasing or carrying any "margin stock" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System. No portion of the
proceeds of any borrowing under this Agreement has been or will be used by
36
<PAGE>
Borrower or any Designated Subsidiary or any of their respective Subsidiaries in
any manner that might cause the borrowing or the application of such proceeds to
violate Regulation T, Regulation U or Regulation X of the Board of Governors of
the Federal Reserve System in effect on the date or dates of such borrowing and
such use of proceeds. Neither Borrower nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940.
6.9 Taxes. Each of Borrower and the Designated Subsidiaries has
-----
filed all federal, state and foreign tax returns which to the knowledge of the
financial officers of Borrower and the Designated Subsidiaries are required to
have been filed, and has paid prior to delinquency all taxes that have become
due pursuant to said returns or pursuant to any assessment, except as are being
contested in Good Faith by appropriate proceedings and as to which adequate
reserves have been provided on the books of Borrower and the Designated
Subsidiaries in accordance with GAAP.
6.10 Insurance. Borrower and its Subsidiaries will obtain and
---------
maintain insurance with responsible insurance companies, in such amounts and
against such risks as is customarily carried by owners of similar businesses and
property, to the extent such insurance is reasonably available at commercially
reasonable rates, and it will furnish Administrative Agent, upon written
request, with full information as to the insurance carrier; provided, however,
-------- -------
that Borrower and its Subsidiaries may self insure to the extent they reasonably
deem prudent.
6.11 Liens. The properties and assets of Borrower and its
-----
Subsidiaries, real, personal and mixed, are not subject to any Liens, except for
Liens permitted by this Agreement.
6.12 Absence of Litigation; Litigation Description. No actions,
---------------------------------------------
suits, investigations, litigation or proceedings are pending or, to the
knowledge of Borrower, threatened against or affecting Borrower or any of its
Subsidiaries or the properties of Borrower or any such Subsidiary before any
court, arbitrator or governmental agency, department, commission, board, bureau
or instrumentality, domestic or foreign, (a) that could reasonably be expected
to result in a Material Change, or (b) which purports to affect the legality,
validity or enforceability of this Agreement, any of the Guaranties or any other
document delivered hereunder.
6.13 Authorizations and Approvals. No authorization or approval
----------------------------
(including exchange control approval) or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by the Borrower and each Designated
Subsidiary of this Agreement except for such authorizations, approvals or
filings which have been duly obtained or made and are in full force and effect
on the Effective Date.
6.14 Taxes. There is no tax, levy, impost, deduction, charge or
-----
withholding imposed by the Bahamas or The Netherlands or any political
subdivision thereof either (i) on or by virtue of the execution or delivery of
this Agreement or any other document to be furnished hereunder or (ii) on any
payment to be made by the Borrower or a Designated Subsidiary pursuant to this
Agreement.
37
<PAGE>
6.15 Enforcement. This Agreement is in proper legal form under the
-----------
laws of the Bahamas for the enforcement thereof against the Borrower and Dish
Placement under the laws of the Bahamas; and to ensure the legality, validity,
enforceability or admissibility in evidence of this Agreement in the Bahamas, it
is not necessary that this Agreement or any other document be filed or recorded
with any court or other authority in the Bahamas or that any stamp or similar
tax be paid on or in respect of this Agreement or any other document to be
delivered hereunder. This Agreement is in proper legal form under the laws of
The Netherlands for the enforcement thereof against White Holding under the laws
of The Netherlands; and to ensure the legality, validity, enforceability or
admissibility in evidence of this Agreement in The Netherlands, it is not
necessary that this Agreement or any other document be filed or recorded with
any court or other authority in The Netherlands or that any stamp or similar tax
be paid on or in respect of this Agreement or any other document to be delivered
hereunder.
6.16 Authority of Designated Subsidiaries. Each Designated
------------------------------------
Subsidiary (a) is a company duly organized and existing under (x) in the case of
Dish Placement Services, Ltd., the laws of the Bahamas, with its principal place
of business in the Bahamas, and (y) in the case of White Holding, the laws of
the Netherlands, with its principal place of business in The Netherlands, (b)
has the corporate power to own its property and carry on its business as now
being conducted, (c) is duly qualified and authorized to do business, and is in
good standing in every state, country or other jurisdiction where the failure to
be so qualified, authorized and in good standing would have a material adverse
effect on Borrower and its Subsidiaries, taken as a whole, (d) has full power
and authority to borrow the sums provided for in this Agreement, to execute,
deliver and perform this Agreement and any instrument or agreement required
hereunder, and to perform and observe the terms and provisions hereof and
thereof, (e) has taken all corporate action on the part of such Designated
Subsidiary, its directors or stockholders, necessary for the authorization,
execution, delivery and performance of this Agreement, and any instrument or
agreement required hereunder on the date hereof, (f) requires no consent or
approval of any trustee or holder of any indebtedness or obligation of such
Designated Subsidiary to enter into, deliver or perform its obligations under
this Agreement and the Notes, and (g) requires no consent, permission,
authorization, order or license of any governmental authority in connection with
the execution and delivery and performance of this Agreement and any instrument
or agreement required hereunder, or any transaction contemplated hereby, except
as may have been obtained and certified copies of which have been delivered to
Banks through Administrative Agent.
6.17 Year 2000 Compliance. Each of the Obligors has a comprehensive
--------------------
program to address the "year 2000 problem" (that is, the inability of computers,
as well as embedded microchips in non-computing devices, to properly perform
date-sensitive functions with respect to certain dates prior to and after
December 31, 1999). That program has been implemented substantially in
accordance with the timetable for implementation and each of the Obligors
reasonably anticipates that it will substantially avoid the year 2000 problem as
to all computers, as well as embedded microchips in non-computing devices, that
are material to the business of the Borrower and its Subsidiaries. Each of the
Obligors has adequate contingency plans to ensure uninterrupted and unimpaired
business operation in the event of a failure of its own or a third party's
systems or equipment due to the year 2000 problem, including those of vendors,
customers and suppliers, as well as a general failure of or interruption in its
communications and delivery infrastructure.
38
<PAGE>
SECTION 7
---------
AFFIRMATIVE COVENANTS OF BORROWER
---------------------------------
7. Borrower covenants and agrees that so long as the credit hereby
granted shall remain available in whole or in part or until the full and final
payment of all indebtedness incurred hereunder (including with respect to
Accepted Time Drafts) and the cancellation or expiration of all Letters of
Credit, unless Majority Banks waive compliance in writing:
7.1 Use of Proceeds of Loans. It will, and will cause each
------------------------
Designated Subsidiary to, use the proceeds of the Loans made by Banks to
Borrower and such Designated Subsidiary hereunder to finance (i) the purchase of
direct-to-home IRD decoder boxes, disk antennae and related goods for satellite
television in Mexico, the Caribbean, or a country located in Central America or
South America, the payment of duties, value added taxes and other costs
associated with the such purchase and the payment of fees, commissions and
expenses incurred therewith (in compliance with all applicable legal and
regulatory requirements), and (ii) the payment of interest and fees due under
this Agreement. Each Obligor, as a non-bank entity located outside the United
States, by execution of this Agreement, is deemed to have received notice to the
effect that it is the policy of the Board of Governors of the Federal Reserve
System that extensions of credit by international banking facilities may be used
only to finance the non-U.S. operations of a customer (or its foreign
affiliates) located outside the United States. Each Obligor hereby acknowledges
that the proceeds of Loans made to such Obligor from the Banks that are such
international banking facilities will be used solely to finance its operations
outside the United States or that of its foreign affiliates.
7.2 Management of Business. It will manage its business and conduct
----------------------
its affairs such that the representations and warranties contained in Sections
6.1 through 6.3 and 6.7 through 6.10 remain true and correct in all material
respects at all times during the Availability Period.
7.3 Notice of Certain Events. It will, and it will cause each of its
------------------------
Subsidiaries to, give prompt written notice to Administrative Agent (who shall
promptly notify the Banks) of: (a) all Events of Default or Unmatured Events of
Default under any of the terms or provisions of this Agreement, (b) any event of
default under any other agreement, contract, indenture, document or instrument
entered, or which may be entered, into by it that could, if settled unfavorably,
result in a Material Change, (c) all litigation, arbitration or administrative
proceedings involving Borrower or any of its Subsidiaries which could in the
reasonable opinion of Borrower be expected to result in a Material Change; (d)
any other matter which has resulted in, or might in the reasonable opinion of
Borrower result in, a Material Change; and (e) any material change in Borrower's
ownership or ownership structure.
7.4 Records. It will, and it will cause each of its Subsidiaries to,
-------
keep and maintain full and accurate accounts and records of its operations
according to GAAP and will permit Administrative Agent, and its designated
officers, employees, agents and representatives, to have access thereto and to
make examination thereof at all reasonable times, to make audits, and to inspect
and otherwise check its properties, real, personal and mixed; provided, however,
-------- -------
that such examination and access shall be in compliance with security and
confidentiality
39
<PAGE>
requirements of all governmental authorities and, subject to Section 11.15,
Borrower's corporate policies.
7.5 Information Furnished. It will furnish to Banks and Administrative
---------------------
Agent:
(a) Within sixty (60) days after the close of each quarter, except
for the last quarter of each fiscal year, its consolidated balance sheet as of
the close of such quarter and its consolidated profit and loss statement and
cash flow statement for that quarter and for that portion of the fiscal year
ending with such quarter, all prepared in accordance with GAAP, and all
certified by its chief financial officer as presenting fairly the financial
position and results of operations and changes in financial position of Borrower
and its consolidated Subsidiaries as at the end of, and for the fiscal period to
which such statements relate, subject to normal year-end adjustments.
(b) Within one hundred twenty (120) days after the close of each
fiscal year, a complete copy of its annual financial statements, which
statements shall include at least its consolidated balance sheet as of the close
of such fiscal year and its consolidated profit and loss statement and cash flow
statement for such fiscal year, prepared by Deloitte & Touche LLP (or such other
independent certified public accountants of recognized international standing
selected by Borrower) in accordance with GAAP applied on a basis consistent with
that of the previous year, and which statements shall include the opinion of
such accountants, such opinion not to be qualified or limited because of any
restricted or limited nature of examination made by such accountants or because
of a going concerns qualification.
(c) Within sixty (60) days after the close of each quarter, except
for the last quarter of each fiscal year, (and within one hundred twenty (120)
days after the close of each fiscal year) its certificate executed by Borrower's
chief financial officer that (i) the representations and warranties set forth in
Section 6 are true and correct in all material respects; (ii) there has been no
Material Change since the date of the financial statements delivered to
Administrative Agent pursuant to Section 7.5 on the date most nearly preceding
the certificate; and (iii) no Event of Default or Unmatured Event of Default has
occurred and is continuing except such Events of Default or Unmatured Events of
Default as have been expressly waived by or on behalf of the Banks.
(d) Such other information concerning its affairs as Administrative
Agent or the Majority Banks may reasonably request.
7.6 Execution of Other Documents. It will, and will cause each
----------------------------
Designated Subsidiary to, promptly, upon demand by Administrative Agent, execute
all such additional agreements, documents and instruments in connection with
this Agreement as Administrative Agent or Majority Banks may reasonably deem
necessary.
7.7 Administrative Agent's and Arranger's Fees. It will compensate
------------------------------------------
Administrative Agent and Arranger as set forth in the Letter Agreement.
7.8 Compliance with Law. It will, and will cause each of its
-------------------
Subsidiaries to, comply with the requirements of all applicable laws, rules,
regulations, and orders of any
40
<PAGE>
governmental or regulatory authority, a breach of which would result in a
Material Change, except where contested in Good Faith by appropriate proceedings
diligently pursued.
7.9 Maintenance of Properties, Etc. It will, and will cause each of
-------------------------------
its Subsidiaries, to maintain and preserve all of its properties with respect to
which failure to so maintain and preserve would have a Material Change.
SECTION 8
---------
NEGATIVE COVENANTS OF BORROWER
------------------------------
8. Borrower covenants and agrees that so long as the credit hereby
granted shall remain available in whole or in part or until the full and final
payment of all indebtedness incurred hereunder (including with respect to
Accepted Time Drafts) and the cancellation or expiration of all Letters of
Credit, unless Majority Banks waive compliance in writing:
8.1 Liens.
-----
(a) Borrower will not, nor will it permit any Subsidiary to, (i) sell
(with or without recourse) any of its accounts receivable or any asset
consisting of a loan, advance or capital contribution to any Person, or (ii)
issue, incur, guaranty, assume or permit to exist any Indebtedness or Hedging
Obligations secured by a Lien upon any property or assets of Borrower or any
Subsidiary or upon any shares of stock or Indebtedness or Hedging Obligations of
any Subsidiary (whether such property, assets, shares of stock or Indebtedness
or Hedging Obligations are now owned or hereafter acquired) without in any such
case effectively providing concurrently with the issuance, incurrence, guarantee
or assumption of any such Indebtedness or Hedging Obligations that the
Commitments and Loans and any other obligations of Borrower to the Banks
(together with, if Borrower shall so determine, any other Indebtedness or
Hedging Obligations of Borrower or such Subsidiary ranking equally with the
Commitments and Loans and such other obligations and then existing or thereafter
created) shall be secured equally and ratably with or prior to such Indebtedness
or Hedging Obligations by a Lien upon such property, assets, shares of stock or
indebtedness;
(b) The above restrictions shall not apply to Indebtedness or Hedging
Obligations of Borrower or any of its Subsidiaries secured by (1) Liens on
property, assets, shares of stock or indebtedness of any corporation existing at
the time such corporation becomes a Subsidiary; (2) Liens on fixed assets
existing at the time of acquisition of such fixed assets by Borrower or a
Subsidiary, or Liens to secure the payment of all or any part of the purchase
price of fixed assets upon the acquisition of such fixed assets by Borrower or a
Subsidiary or to secure any indebtedness incurred or guaranteed prior to, at the
time of, or within 180 days after, the later of the date of acquisition of such
property and the date such property is placed in service, for the purpose of
financing all or any part of the purchase price thereof, or Liens to secure any
indebtedness incurred or guaranteed for the purpose of financing the cost to
Borrower or a Subsidiary of improvements to such acquired fixed assets; (3)
Liens securing indebtedness of a Subsidiary owing to Borrower or to another
wholly-owned Designated Subsidiary; (4) Liens on property of a corporation
existing at the time such corporation is merged or consolidated with Borrower or
a Subsidiary (in accordance with Section 8.2) or at the time of a sale, lease or
other disposition of the properties of a corporation as an entirety or
substantially as an entirety to
41
<PAGE>
Borrower or a Subsidiary; or (5) any extension, renewal or replacement (or
successive extensions, renewals or replacements) in whole or in part of any
Liens referred to in the foregoing sub-clauses (1) to (4), inclusively;
provided, however, that the principal amount of indebtedness secured thereby
- -------- -------
shall not exceed the principal amount of indebtedness so secured at the time of
the incurrence or guarantee thereof and that such extension, renewal or
replacement shall be limited to all or a part of the property which secured the
Lien so extended, renewed or replaced (plus improvements on such property); and
(c) Notwithstanding the provisions of Section 8.1(a) above, (i) the
Obligors may sell at par for cash (without recourse) to one or more of the
Guarantors, GLA or any shareholder of any LOC who is guaranteeing the
obligations of such LOC to such Obligor, all or any portion of one or more of
the promissory notes issued by any LOC or any Subsidiary of Borrower to the
order of an Obligor to evidence loans and advances made by an Obligor to such
LOC or to such Subsidiary of Borrower (individually a "LOC/Subsidiary Note" and
collectively the "LOC/Subsidiary Notes"), together with the rights of such
Obligor pursuant to any security agreements securing the applicable
LOC/Subsidiary Note so purchased (the "Associated Collateral Rights"), or if
less than the entire amount of a LOC/Subsidiary Note is purchased, the pro rata
portion of the Associated Collateral Rights securing the portion of the
LOC/Subsidiary Note so purchased; provided that Borrower shall apply or cause
--------
the application of the proceeds of any such sales of LOC/Subsidiary Notes to the
payment of principal or interest on the Loans or fees payable hereunder; and
(ii) the Obligors may grant to the Guarantors, or any of them, a second priority
security interest in the LOC/Subsidiary Notes and the Associated Collateral
Rights, provided that (A) Administrative Agent, on behalf of the Banks, shall
have been granted a first priority security interest in the LOC/Subsidiary Notes
and Associated Collateral Rights, (B) the LOC/Subsidiary Notes and documentation
evidencing the Associated Collateral Rights shall be held by a third party
collateral agent reasonably acceptable to Administrative Agent and the Majority
Banks, (C) the Guarantors holding such second priority security interest shall
not be entitled to exercise any rights or remedies with respect thereto
(including foreclosure remedies) until all Loans, interest thereon and all other
amounts payable under this Agreement shall have been indefeasibly paid in full;
(D) all documentation evidencing such first priority security interest of
Administrative Agent, such second priority security interest of the Guarantors,
the appointment and duties of such collateral agent and all other related
matters shall be in form and substance satisfactory to Administrative Agent and
the Majority Banks.
8.2 Mergers, Liquidations and Sales of Assets. Borrower will not,
-----------------------------------------
nor will it permit any of its Subsidiaries to (a) liquidate or dissolve or enter
into any consolidation, merger (except mergers between a Subsidiary and Borrower
in which Borrower is the surviving corporation), partnership, joint venture,
syndicate, pool or other combination which results in a material change in the
nature of Borrower's business taken as a whole, unless in the case of a
consolidation or merger, Borrower is the surviving corporation, and after giving
effect to any such consolidation or merger no Event of Default or Unmatured
Event of Default has occurred and is continuing, or (b) (except assets conveyed,
sold or leased from one Subsidiary to another Designated Subsidiary or from any
Subsidiary to Borrower) convey, sell or lease all or the greater part of its
assets or business; provided that Borrower or any of its Subsidiaries may make
--------
loans and advances to LOC's in the ordinary course of business, or (c) (except
in a transaction which does not result in a Material Change), sell, lease,
transfer or assign any operating rights, licenses or franchises.
42
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8.3 Compliance with Margin Regulations. Borrower will not, and will
----------------------------------
not permit any Designated Subsidiary to, engage principally, or as one of its
important activities, in the business of extending credit for the purposes of
purchasing or carrying any "margin stock" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System; and it will not, and will
not permit any Designated Subsidiary to, use the proceeds of any Loan for the
purpose, directly or indirectly, whether immediate, incidental or ultimate, (a)
to purchase or carry, within the meaning of such Regulation U, any such margin
stock or to extend credit to others for the purpose of purchasing or carrying
any such margin stock, or (b) in a manner which would violate, or result in a
violation of, Regulation T, U or X of the Board of Governors of the Federal
Reserve System.
8.4 Compliance with Law, etc. Borrower shall not (i) violate, or
-------------------------
allow any of its Subsidiaries to violate, any laws, ordinances, government rules
or regulations to which it is or may become subject or (ii) fail, or allow any
of its Subsidiaries to fail, to obtain or maintain any patents, trademarks,
service marks, trade names, copyrights, design patents, licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its property or the conduct of its business, in either case where such failure
could reasonably be expected to have a Material Change.
8.5 Change in Business. Borrower will not and will not permit any
------------------
Subsidiary to make, any material change in the nature or conduct of their
respective businesses as carried on at the date hereof.
8.6 Ownership of Designated Subsidiaries. Borrower will not fail to
------------------------------------
own 100% of the capital stock (other than directors' qualifying shares) of each
of the Designated Subsidiaries.
8.7 ERISA. Borrower will not and will not permit any Subsidiary or
-----
ERISA Affiliate to provide for or establish any Plan.
SECTION 9
---------
EVENTS OF DEFAULT
-----------------
9.1 Events of Default. If one or more of the following described Events
-----------------
of Default shall occur:
(a) Any Obligor shall default in the due and punctual payment of (i)
the principal of any Loan within two (2) Business Days of its due date, (ii) the
interest on any Loan or any fee required to be paid by any Obligor hereunder
within ten (10) Days of its due date, (iii) the amount required to be paid by
any Obligor to an Issuing Bank pursuant to the reimbursement obligations with
respect to any drawing under a Letter of Credit within two (2) Business Days of
the date a demand therefor is made as provided in Section 2.13(b)(ii), or (iv)
any other amount due from it hereunder within thirty (30) Business Days of its
due date; or
(b) (i) Borrower or any of its Subsidiaries shall fail to perform or
observe any of the terms, provisions, covenants, conditions, agreements or
obligations contained in this Agreement (other than those contained in Sections
7.2, 7.3 (except Section 7.3(a) as to notices of immaterial Unmatured Events of
Default), 7.4, 7.8, 7.9, and 8.1 through 8.7) and such failure
43
<PAGE>
shall continue for more than twenty (20) days after written notice from
Administrative Agent to Borrower, Hughes and the Guarantor Notice Agent of the
existence and character of such failure to perform or observe; or (ii) Borrower
or any of its Subsidiaries shall fail to perform or observe any of the terms,
provisions, covenants, conditions, agreements or obligations contained in
Sections 7.2, 7.4, 7.8 and 7.9, and such failure is not remedied within thirty
(30) days (such period being the "Grace Period") after written notice from
Administrative Agent to Borrower, Hughes and Guarantor Notice Administrative
Agent of the existence and character of such failure; provided, however, that
-------- -------
if, upon the expiration of the Grace Period, Borrower or such Subsidiary, as the
case may be, is using its best efforts to remedy such failure and in the
reasonable opinion of Borrower (as certified by Borrower to Administrative
Agent), such failure is capable of being remedied, Borrower or such Subsidiary,
as the case may be, shall have such additional time, not to exceed 30 days after
the expiration of the Grace Period, as shall be reasonably necessary to remedy
such failure; or
(c) Borrower or any of its Subsidiaries shall fail to perform or
observe any of the terms, provisions, covenants, conditions, agreements or
obligations on its part to be performed or observed in Section 7.3 (other than
Section 7.3(a) as to notices of immaterial Unmatured Events of Default) and
Sections 8.1 through 8.7; or
(d) (i) Borrower or any of its Subsidiaries shall become insolvent,
or be unable, or admit in writing its inability, to pay its debts as they become
due; or (ii) Borrower or any Subsidiary shall make an assignment for the benefit
of creditors or to an agent authorized to liquidate any substantial amount of
its properties or assets; or (iii) Borrower or any Subsidiary shall file or have
filed against it a petition in bankruptcy or seeking reorganization or to effect
a plan or other arrangement with creditors or winding up or dissolution, or
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debt under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property, and such filing
against it shall not be dismissed within sixty (60) days after the date of such
filing; or (iv) Borrower or any Subsidiary shall apply for or consent to the
appointment of or consent that an order be made appointing any receiver or
trustee for any of its or their properties, assets or business, or if a receiver
or a trustee shall be appointed for all or a substantial part of its or their
properties, assets or business; or (v) an order for relief shall be entered
against Borrower or any Subsidiary under the United States federal bankruptcy
laws or the bankruptcy laws of the Bahamas or The Netherlands as now or
hereafter in effect; or (vi) Borrower or any Subsidiary shall take any action
indicating its consent to, approval of or acquiescence in, any of the foregoing;
or
(e) Any representation or warranty made by an Obligor herein or in
any certificate or financial or other statement heretofore or hereafter
furnished by Borrower or any Designated Subsidiary or any of their respective
officers to Administrative Agent or the Banks, or by any Guarantor in any
Guaranty, proves to be in any material respect false or misleading as of the
date when made, deemed made or reaffirmed; or
(f) Any final judgment, decrees, writs of execution, attachments or
garnishments or any Liens, or any other legal processes shall be issued or
levied against any of
44
<PAGE>
the assets or property of Borrower or any of its Subsidiaries (and shall not
have been vacated, discharged or stayed) in amounts which in the aggregate would
result in a Material Change (without limiting the generality of the foregoing, a
judgment in excess of $10,000,000 in the aggregate shall, for purposes only of
this Section 9.1 (f), be deemed to result in a Material Change); provided,
--------
however, that such aggregate amount shall include only amounts in excess of (i)
- -------
insurance coverage therefor and (ii) reserves on the books of Borrower or any of
its Subsidiaries therefor; provided, further, that such aggregate amount shall
-------- -------
not include any amounts with respect to matters subject to appeal conducted in
Good Faith and diligently pursued or other further legal process by Borrower or
any of its Subsidiaries or any amounts with respect to any such legal process
which Borrower or any of its Subsidiaries has detached from such property by
posting of a bond or equivalent process; or
(g) Any governmental authority or any Person acting or purporting to
act under governmental authority shall have taken any action to condemn, seize
or appropriate, or to assume custody or control of, all or any substantial part
of the property of the Borrower or of any of its Subsidiaries, or shall have
taken any action to displace the management of the Borrower or of any of its
Subsidiaries or to curtail its authority in the conduct of the business of the
Borrower or of any of its Subsidiaries; or
(h) Borrower or any of its Subsidiaries (i) fails to make any payment
(or otherwise satisfy) in respect of any indebtedness for money borrowed when
due (whether by scheduled maturity, required prepayment, acceleration, demand,
or otherwise) and such failure continues after the applicable grace or notice
period, if any, specified in the document relating thereto on the date of such
failure; or (ii) an event of default shall occur which permits the acceleration
of indebtedness for money borrowed under any other agreement, contract,
indenture, document or instrument executed, or which may be executed, by
Borrower or any of its Subsidiaries, which failure or event of default has not
been waived or cured; provided, however, that no Event of Default shall exist
-------- -------
hereunder if the amount of the indebtedness which is not paid or may be
accelerated with respect to the defaulted obligations shall not exceed in the
aggregate $10,000,000; or
(i) Hughes or any Successor Guarantor fails to beneficially own and
control and to have economic ownership of, directly or indirectly, at least 25%
of the issued and outstanding capital stock of Borrower; or
(j) Hughes or any Successor Guarantor shall fail to perform or
observe any term, covenant or agreement contained in the Hughes Guaranty and
such failure shall continue for more than twenty (20) days after written notice
from Administrative Agent to Borrower of the existence of such failure; or
(k) Any provision of the Hughes Guaranty shall for any reason cease
to be in full force and effect or valid and binding on Hughes or any Successor
Guarantor or Hughes or any Successor Guarantor shall so state; or
(l) An "Event of Default" shall have occurred and be continuing under
the Hughes Credit Agreement; provided that if such "Event of Default" occurs
under Section 9.1(k) or 9.1(l) of the Hughes Credit Agreement and no other
"Event of Default" has occurred and is
45
<PAGE>
continuing thereunder, then such "Event of Default" under Section 9.1(k) or
9.1(l) of the Hughes Credit Agreement shall not constitute an Event of Default
hereunder so long as Hughes and any Successor Guarantor maintains an investment
grade credit rating for its long-term senior unsecured debt from each of S&P and
Moody's; or
(m) The validity of this Agreement shall be contested by any Obligor
or any legislative, executive or judicial body of the Bahamas, The Netherlands
or any other jurisdiction, or any Obligor shall deny liability hereunder or
thereunder (whether by a general suspension of payments or a moratorium on the
payment of any class of indebtedness or otherwise), or any treaty, law,
regulation, communique, decree, ordinance or policy of the Bahamas, The
Netherlands or any other jurisdiction shall purport to render any provision of
this Agreement invalid or unenforceable or shall purport to prevent or
materially delay the performance or observance by any Obligor of its obligations
hereunder;
Then (a) automatically upon the occurrence of an Event of Default
under Section 9.1(d), the Commitments shall immediately terminate, and all
Loans, an amount equal to the maximum amount that may at any time be drawn under
all Letters of Credit then outstanding (whether or not any beneficiary under any
such Letter of Credit shall have presented, or shall be entitled at such time to
present, the drafts or other documents or certificates required to draw under
such Letter of Credit) and other liabilities and obligations outstanding under
this Agreement shall, without presentment, demand, protest, or notice of any
kind, all of which are hereby expressly waived, be forthwith due and payable, if
not herein otherwise then due and payable, together with all costs and expenses
(including broken funding costs and other costs in connection with the re-
lending, re-borrowing, funding or other employing of funds) incurred by the
Banks as a result thereof, anything herein or in any agreement, contract,
indenture, document or instrument contained to the contrary notwithstanding; and
(b) at any time after the occurrence of an Event of Default other than under
Section 9.1(d), and in each and every such case, unless such Event of Default
shall have been remedied by the Obligors to the satisfaction of Majority Banks
or waived in writing by Majority Banks (except in the case of an Event of
Default under Section 9.1(a) or an Event of Default arising from the failure of
Hughes or any Successor Guarantor to make payments under the Hughes Guaranty,
the waiver of which shall require the consent of all the Banks), Administrative
Agent may, with the consent of the Majority Banks, or shall, upon the direction
of Majority Banks, immediately terminate the Commitments, whereupon the same
shall be cancelled and reduced to zero and any Loan Request given in respect of
a Borrowing Date occurring on or after the date of such notice of cancellation
shall cease to have effect, the obligation of Administrative Agent to issue any
Letter of Credit and the right of any Bank to issue any Letter of Credit
hereunder shall thereupon terminate, and all Loans, all accrued interest
thereon, an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), the outstanding amount of all Accepted Time
Drafts and all other liabilities and obligations outstanding under this
Agreement shall, thereupon, without presentment, demand, protest, or notice of
any kind, all of which are hereby expressly waived, be forthwith due and
payable, if not otherwise then due and payable, together with all costs and
expenses (including broken funding costs and other costs in connection with the
re-lending, re-borrowing, funding or other employing of funds) incurred by the
Banks as a result thereof, anything herein or in any other
46
<PAGE>
agreement, contract, indenture, document or instrument contained to the contrary
notwithstanding; provided that the foregoing shall not affect in any way the
--------
obligations of Banks under subsection 2.13(c)(i). Thereafter any Bank or the
Banks may immediately, and without expiration of any period of grace, enforce
payment of all liabilities and obligations of the Obligors under this Agreement
and under any other agreements, contracts, indentures, documents and instruments
between Borrower, and/or any Designated Subsidiary and the Banks.
9.2 Recovery of Amounts Due. If any amount payable hereunder is not
-----------------------
paid as and when due, each Obligor hereby authorizes Administrative Agent, each
Bank and their respective affiliates to proceed, to the fullest extent permitted
by applicable law, without prior notice, by right of set-off, banker's lien or
counterclaim, against any moneys or other assets of such Obligor in any currency
that may at any time be in the possession of Administrative Agent or any of its
affiliates or such Bank or any of its affiliates, at any branch or office
thereof, to the full extent of all amounts payable to Administrative Agent and
the Banks hereunder. Any Bank that so proceeds or that has an affiliate that so
proceeds shall forthwith give notice to Administrative Agent of any action taken
by such Bank or affiliate pursuant to this Section 9.2.
9.3 Rights Cumulative. The rights of Administrative Agent and the
-----------------
Banks provided for herein are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity.
9.4 Letters of Credit and Accepted Time Drafts.
------------------------------------------
(a) With respect to amounts described in the last paragraph of
Section 9.1 with respect to Letters of Credit and Accepted Time Drafts, the
Obligor for whose account each Letter of Credit was issued will immediately pay
to Administrative Agent for its benefit and the ratable (based on the Adjusted
Exposure) benefit of the Banks in same day funds at the Administrative Agent's
office designated by Administrative Agent, for deposit in a special cash
collateral account, which shall be an interest bearing account (the "Letter of
Credit Collateral Account") to be maintained for the benefit of Administrative
Agent and the ratable (based on the Adjusted Exposure) benefit of Banks at such
place as shall be designated by Administrative Agent, an amount in cash equal to
the maximum amount that may at any time be drawn under all Letters of Credit
issued for such Obligor's account outstanding on such date (whether or not any
beneficiary shall have presented, or shall be entitled at such time to present
the drafts and other documents required to draw under such Letter of Credit)
plus the aggregate outstanding amount of all Accepted Time Drafts (the "Letter
of Credit Obligations").
(b) Each Obligor hereby pledges and assigns to Administrative Agent
for its benefit and the ratable (based on the Adjusted Exposure) benefit of
Banks, and grants to Administrative Agent for its benefit and the ratable (based
on the Adjusted Exposure) benefit of Banks, a lien on and a security interest in
the following collateral (the "Letter of Credit Collateral"):
(i) the Letter of Credit Collateral Account, all cash deposited
therein, and all certificates and instruments, if any, from time to time
representing or evidencing the Letter of Credit Collateral Account;
47
<PAGE>
(ii) all notes, certificates of deposit and other instruments from
time to time hereafter delivered to or otherwise possessed by Administrative
Agent for or on behalf of the Obligors in substitution for or in respect of any
or all of the then existing Letter of Credit Collateral;
(iii) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the then existing Letter of Credit Collateral; and
(iv) to the extent not covered by clauses (i) through (iii) above,
all proceeds of any or all of the foregoing Letter of Credit Collateral.
(c) Each Obligor agrees that it will not (i) sell or otherwise
dispose of any interest in the Letter of Credit Collateral or (ii) create or
permit to exist any lien, security interest or other charge or encumbrance upon
or with respect to any of the Letter of Credit Collateral, except for the
security interest created by this Section 9.4.
(d) Administrative Agent may, in its sole discretion, without notice
to any Obligor or any Guarantor except as required by law and at any time from
time to time, charge, set off and otherwise apply all or any part of, first, the
-----
Letter of Credit Obligations relating to Letters of Credit and second, the
------
obligations of the Obligors now or hereafter existing under any of the Loan
Documents, against the Letter of Credit Collateral Account or any part thereof,
in such order as Administrative Agent shall elect. Administrative Agent agrees
promptly to notify Borrower after any such setoff and application made by the
Administrative Agent, provided that the failure to give such notice shall not
--------
affect the validity of such setoff and application. Upon the full and final
payment of all indebtedness incurred hereunder (including with respect to
Accepted Time Drafts) and the cancellation or expiration of all Letters of
Credit, the security interest granted to Administrative Agent in the Letter of
Credit Collateral shall terminate and all rights to the Letter of Credit
Collateral shall revert to the Obligors. The rights of Administrative Agent
under this Section 9.4(d) are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which Administrative
Agent may have.
SECTION 10
----------
THE BANKS
---------
10.1 Administration of Loan. The general administration of the Loans
----------------------
shall be by Administrative Agent and shall be governed by the provisions set
forth in Exhibit B attached hereto and incorporated herein by reference.
10.2 Representations By Banks. Each Bank hereby represents that it
------------------------
will make each Loan hereunder in the ordinary course of its business and not
with a view to engage in any distribution of any evidence of indebtedness to the
public; provided, however, disposition of any evidence of indebtedness held by
-------- -------
such Bank shall at all times be within its exclusive control subject only to the
provisions of Section 11.11 hereof and Section 10 of Exhibit B.
48
<PAGE>
SECTION 11
----------
MISCELLANEOUS PROVISIONS
------------------------
11.1 Amendments and Waivers. No amendment or waiver of any provision
----------------------
of this Agreement, and no consent with respect to any departure by any Obligor
therefrom, shall be effective unless the same shall be in writing and signed by
the Majority Banks (or by the Administrative Agent at the written request of the
Majority Banks) and the Borrower and acknowledged by the Administrative Agent,
and then any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
-------- -------
no such waiver, amendment, or consent shall, unless in writing and signed by all
the Banks and the Borrower and acknowledged by the Administrative Agent, do any
of the following: (a) increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to Section 9.1); (b) postpone or
delay any date fixed by this Agreement for any payment of principal, interest,
fees or other amounts due to the Banks (or any of them) hereunder; (c) reduce
the principal of, or the rate of interest specified herein on any Loan, or any
fees or other amounts payable hereunder; (d) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Loans which is
required for the Banks or any of them to take any action hereunder; (e) provide
for the release or termination of, or any material amendment or waiver of or
modification to, the Hughes Guaranty; (f) reduce the amount payable under the
Hughes Guaranty; (g) change in any manner the obligations of Banks relating to
the purchase of participations in Letters of Credit or Accepted Time Drafts; or
(h) amend this Section or any provision herein providing for consent or other
action by all Banks; provided, further, that no amendment, waiver or consent
-------- -------
shall, unless in writing and signed by the Administrative Agent in addition to
the Majority Banks or all the Banks, as the case may be, affect the rights or
duties of the Administrative Agent under this Agreement or rights or privileges
thereunder.
11.2 Notices. All notices, payments, requests, reports, information,
-------
demands and other communications which any party hereto may desire, or may be
required, to give or make to any other party hereto, shall (unless otherwise
permitted as a telephonic notice or request hereunder) be given by mailing the
same, postage prepaid, or by telex, or rapifax transmission, or by hand delivery
or courier, to each party at its address set forth in Exhibit C attached hereto
and incorporated herein by reference, or to such other address as may, from time
to time, be specified in writing by Borrower or any Bank. Such communications
shall be deemed to have been duly given and received in the case of a telex,
when the telex is sent and the appropriate answer-back is received, in the case
of mail when sent by pre-paid certified or registered mail correctly addressed
to the addressee, in the case of rapifax transmission, when transmission has
been sent, in the case of hand delivery or courier, when received.
Administrative Agent may rely and act upon any Loan Request made by telex or
other telexed, telephonic or facsimile instructions to Administrative Agent by
any Person purporting to be an authorized Person of Borrower (and, in respect to
Loans made to a Designated Subsidiary, such Designated Subsidiary), and Borrower
and the Designated Subsidiary shall be unconditionally and absolutely estopped
from denying the authenticity and validity of any transaction or act made by
Administrative Agent or any Bank in reliance thereon. Each party hereto shall
promptly confirm by telex or rapifax any telephone communication made by it to
another pursuant to this Agreement but the absence of such confirmation shall
not affect the validity of such communication, which shall be effective upon
receipt. If there is any conflict between any
49
<PAGE>
telephonic communication and a written confirmation, the written communication
shall govern, the recipient of such communication shall be held harmless by all
parties hereto with respect to any action taken in reliance on the telephonic
communication prior to the time such recipient receives and has had reasonable
time to review the subsequent written confirmation and initiate such corrective
action as the recipient deems reasonable under the circumstances.
11.3 Waiver. Neither the failure of, nor any delay on the part of,
------
any party hereto in exercising any right, power or privilege hereunder, or under
any agreement, contract, indenture, document or instrument mentioned herein,
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder, or under any agreement, contract,
indenture, document or instrument mentioned herein, preclude other or further
exercise thereof or the exercise of any other right, power or privilege; nor
shall any waiver of any right, power, privilege or default hereunder, or under
any agreement, contract, indenture, document or instrument mentioned herein,
constitute a waiver of any other right, power, privilege or default or
constitute a waiver of any other default of the same or of any other term or
provision. All rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies otherwise provided by law.
11.4 New York Law. The interpretation, enforcement and effect of
------------
this Agreement, the Loans and any agreements, contracts, indentures, documents
or instruments delivered in accordance herewith, shall be governed and
controlled in all respects by and construed according to the substantive laws of
the State of New York (including without limitation Section 5-1401 of the
General Obligations Law of the State of New York), without regard to conflict of
laws principles.
11.5 Headings. The headings set forth herein are solely for the
--------
purpose of identification and shall not be construed as a part of the sections
or subsections which they head.
11.6 Accounting Terms. All accounting terms not otherwise defined
----------------
herein have the meaning assigned to them in accordance with GAAP, provided,
however, any act or condition in accordance herewith and permitted hereunder
when taken, created or occurring, shall not become a violation of any section of
this Agreement as a result of a subsequent change in GAAP.
11.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, and
all of said counterparts taken together shall constitute one and the same
instrument.
11.8 Written Disclosure. Wherever written disclosure by an Obligor
------------------
to Banks is required or permitted by this Agreement, written disclosure to
Administrative Agent by such Obligor shall constitute such disclosure.
11.9 Singular; Plural. Whenever used herein, the singular number
----------------
shall include the plural, the plural the singular, and the use of any gender
shall be applicable to all genders.
11.10 Illegality. The illegality or unenforceability of any
----------
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or
50
<PAGE>
impair the legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
11.11 Assignments and Participations.
------------------------------
(a) The Obligors may not assign their respective rights or obligations
hereunder without the prior written consent of all the Banks.
(b) Each Bank may assign to one or more Eligible Assignees or Approved
Bank Affiliates all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the Loans owing to it and its participations in Letters of Credit); provided,
--------
however, that (i) each such assignment shall be of a constant, and not a
- -------
varying, percentage of all rights and obligations under this Agreement, (ii)
after giving effect to any such assignment, (1) the assigning Bank shall no
longer have any Commitment or (2) the amount of the Commitment of both the
assigning Bank and the Eligible Assignee or Approved Bank Affiliate party to
such assignment (in each case determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall not be less than the lesser of
(A) $10,000,000 and (B) the quotient derived from dividing the product of (x)
$10,000,000 times (y) the aggregate amount of all Commitments (determined as of
-----
the date of the Assignment and Acceptance with respect to such assignment) by
$400,000,000, (iii) Borrower and Administrative Agent shall have consented to
such assignment, which consent shall not be unreasonably withheld, provided that
no consent shall be required for an assignment to a Bank or an Approved Bank
Affiliate and no consent of the Borrower shall be required if, at the time of
such assignment, an Event of Default has occurred and is continuing, and (iv)
the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, and a processing and recordation fee of $3,000. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, (x) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Bank hereunder and (y) the Bank assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Bank's rights and obligations under this Agreement, such Bank shall cease to be
a party hereto; provided that anything contained in any of the Loan Documents to
--------
the contrary notwithstanding, if such Bank is the Issuing Bank with respect to
any outstanding Letters of Credit or Accepted Time Drafts such Bank shall
continue to have all rights and obligations of an Issuing Bank with respect to
such Letters of Credit and Accepted Time Drafts until the cancellation or
expiration of such Letters of Credit, payment or Accepted Time Drafts and the
reimbursement of any amounts drawn thereunder).
(c) By executing and delivering an Assignment and Acceptance, the Bank
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with any of the
51
<PAGE>
Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of any of the Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (ii) such assigning
Bank makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower, any Designated Subsidiary, or
any Guarantor or the performance or observance by Borrower, any Designated
Subsidiary, or any Guarantor of any of its obligations under any of the Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee confirms that it has received a copy of the Loan
Documents, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon Administrative Agent, such assigning Bank or any other Bank and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents; (v) such assignee confirms that it is an Eligible
Assignee or an Approved Bank Affiliate as applicable; (vi) such assignee
appoints and authorizes Administrative Agent to take such action as agent on its
behalf and to exercise such powers under the Loan Documents as are delegated to
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Documents are required to be performed by it as a Bank.
(d) Administrative Agent shall maintain a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation of
the names and addresses of the Banks and the Commitment of and principal amount
of the Loans owing to, each Bank from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and Borrower, the Designated Subsidiaries, the Administrative
Agent and the Banks may treat each Person whose name is recorded in the Register
as a Bank hereunder for all purposes of the Loan Documents. The Register shall
be available for inspection by Borrower, the Designated Subsidiaries or any Bank
at any reasonable time and from time to time upon reasonable prior notice.
(e) Within five days of its receipt of an Assignment and Acceptance
executed by an assigning Bank and an assignee representing that it is an
Eligible Assignee or an Approved Bank Affiliate, as applicable (together with a
processing and recordation fee of $3,000 with respect thereto) and upon consent
of Borrower and Administrative Agent, if required pursuant to Section
11.11(b)(iii), Administrative Agent shall, if such Assignment and Acceptance has
been completed and is in substantially the form of Exhibit J hereto, (1) accept
such Assignment and Acceptance and (2) record the information contained therein
in the Register.
(f) Each Bank may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the Loans owing to it, and its participations in Letters of Credit and Accepted
Time Drafts); provided, however, that (i) such Bank's obligations under this
-------- -------
Agreement (including, without limitation, its Commitment to Borrower hereunder)
shall remain unchanged, (ii) such Bank shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Bank
shall remain the holder of any such Loan, Letters of Credit, Accepted Time
Drafts or participations therein for all purposes of this Agreement, (iv)
Borrower, the Designated Subsidiaries, Administrative Agent and the other
52
<PAGE>
Banks shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under the Loan Documents, and (v) no
Bank shall grant any participation under which the participant shall have rights
to require such Bank to take or omit to take any action hereunder or under the
other Loan Documents or approve any amendment to or waiver of this Agreement or
the other Loan Documents, except to the extent such amendment or waiver would:
(1) extend the Termination Date; or (2) reduce the interest rate, the amount of
principal or fees applicable to Loans or the Commitment or the amounts payable
to such Bank pursuant to Section 2.16 in which such participant is
participating.
(g) Any Bank may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 11.11, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to Borrower, the Designated Subsidiaries, or any Guarantor
furnished to such Bank by or on behalf of Borrower, the Designated Subsidiaries,
or a Guarantor; provided that, prior to any such disclosure, the assignee or
--------
participant or proposed assignee or participant shall agree to preserve in
accordance with Section 11.15 the confidentiality of any confidential
information relating to Borrower, the Designated Subsidiaries, or a Guarantor
received by it from such Bank.
(h) Notwithstanding any other provision set forth in this Agreement,
any Bank may assign any of its rights hereunder to any of its Affiliates and may
at any time create a security interest in all or any portion of its rights under
this Agreement (including, without limitation, the Loans owing to it and any
promissory note or notes executed and delivered by Borrower or any Designated
Subsidiary hereunder and held by such Bank) in favor of any Federal Reserve Bank
in accordance with Regulation A of the Board of Governors of the Federal Reserve
System.
(i) No Bank designated herein as "Syndication Agent," "Documentation
Agent," "Senior Managing Agent" shall have any right, power, obligation,
liability, or duty under this Agreement other than those applicable to all Banks
as such. Without limiting the foregoing, none of the Banks so identified as
Syndication Agent, Documentation Agent, Senior Managing Agent shall have or be
deemed to have any fiduciary relationship with any Banks.
(j) Notwithstanding anything to the contrary contained herein, any
Bank (a "Granting Bank") may grant to a special purpose funding vehicle
organized under the laws of any state of the United States (an "SPC") the option
to fund all or any part of any Loan to the Borrower or Dish Placement that such
Granting Bank would otherwise be obligated to fund pursuant to this Agreement;
provided that (i) nothing herein shall constitute a commitment by any SPC to
fund any Loan, (ii) if an SPC elects not to exercise such option or otherwise
fails to fund all or any part of such Loan, the Granting Bank shall be obligated
to fund such Loan pursuant to the terms hereof, and (iii) the Granting Bank
shall provide prompt notice to the Borrower and the Administrative Agent of its
grant of an option to an SPC to fund all or part of a Loan. The funding of a
Loan by an SPC hereunder shall utilize the Commitment of the Granting Bank to
the same extent, and as if, such Loan were funded by the Granting Bank. No SPC
shall have the right to assign or otherwise transfer its right to fund a Loan to
any other Person, other than the Granting Bank. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or payment under this Agreement
for which a Bank would otherwise be liable, provided that the Granting Bank
shall be fully liable for such indemnity or payment.
53
<PAGE>
Notwithstanding anything to the contrary contained in this Agreement, any SPC
may disclose on a confidential basis non-public information relating to its
funding of Loans to a rating agency, commercial paper dealer or provider of any
surety or guarantee to such SPC, provided that the SPC complies with the terms
of Section 11.15 hereof as if such SPC were a party to this Agreement. This
subsection 11.11(j) may not be amended without the prior written consent or each
Granting Bank, all or part of whose Loan is being funded by an SPC at the time
of such amendment.
11.12 Obligations Several. The obligations of each Bank under this
-------------------
Agreement are several. Neither Administrative Agent nor any Bank shall be
liable for the failure of any other Bank to perform its obligations under this
Agreement.
11.13 Fees and Expenses. Borrower agrees to pay on demand (a) to
-----------------
Administrative Agent all reasonable costs, expenses and attorneys' fees incurred
by Administrative Agent in connection with the preparation and administration of
this Agreement and any documents including any amendments, waivers, or other
modifications and (b) all reasonable costs, expenses and attorneys' fees
incurred by Administrative Agent and Banks in connection with the enforcement of
this Agreement and any instrument or agreement required hereunder and in
connection with any refinancing or restructuring of the Loans in the nature of a
"work-out"; provided, however that, in addition to costs of Administrative
Agent's in-house counsel, Borrower shall be obligated to pay for the costs of no
more than one counsel for Administrative Agent and all Banks (without prejudice
to any Bank's right to engage additional counsel at its own cost and expense)
unless any Bank shall in Good Faith reasonably determine that there is a
conflict of interest that causes it to be reasonably necessary for such Bank to
be represented by separate counsel.
11.14 Indemnity. Borrower agrees to indemnify Administrative Agent,
---------
each Bank and each of their respective Affiliates and each of their respective
directors, officers, agents, advisors, representatives and employees (each, an
"Indemnified Party") from and hold each of them harmless against any and all
losses, liabilities, claims, damages or reasonable expenses, joint or several,
incurred by or asserted or awarded against any of them arising out of or in
connection with or relating to any investigation, litigation or proceeding or
the preparation of any defense with respect thereto, arising out of or in
connection with or relating to any Loan Documents or transactions contemplated
thereby or any use made or proposed to be made with the proceeds of the Loans,
whether or not such investigation, litigation or proceeding is brought by
Borrower, any of its Affiliates, partners, shareholders or creditors, an
Indemnified Party or any other person, or an Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated thereby are
consummated, except to the extent such claim, damage, loss, liability or expense
results from such Indemnified Party's gross negligence or willful misconduct or
from a material breach of such Indemnified Party's obligations under this
Agreement; provided, however, that Borrower shall have no obligation to
-------- -------
indemnify or pay for the costs and expenses of more than one counsel for
Administrative Agent and all Banks, unless Administrative Agent or any Bank
shall in Good Faith reasonably determine that there is a conflict of interest
that causes it to be reasonably necessary for Administrative Agent or such Bank
to be represented by other counsel. Counsel chosen to represent the Banks or
any Bank pursuant to the previous sentence shall be reasonably satisfactory to
Borrower. The obligations of Borrower under this Section shall survive the
termination of this Agreement.
54
<PAGE>
11.15 Confidentiality. Banks, Arranger and Administrative Agent
---------------
agree to maintain the confidentiality of all non-public information disclosed by
Borrower, any Designated Subsidiary or any Guarantor; provided, however, that
-------- -------
any such Person may (a) disclose any confidential information pursuant to a
request or order under applicable laws and regulations or pursuant to a subpoena
or other legal process, and, in such case such Person shall, unless prohibited
by law, give prompt notice to Borrower, such Designated Subsidiary or such
Guarantor, as the case may be; (b) disclose any confidential information to bank
examiners, bank affiliates, auditors, counsel and other advisors, employees,
representatives or agents of such Person; (c) use any confidential information
in connection with the management, supervision and enforcement of this
Agreement, including the enforcement of such Person's rights under any agreement
executed in connection therewith; (d) disclose any confidential information in
connection with any litigation or dispute involving any such Person or the
Borrower or a Designated Subsidiary and related to this Agreement or to any use
of proceeds of the Loans; (e) disclose any confidential information to Banks or
any of their Affiliates; and (f) disclose confidential information to
prospective assignees and participants and assignees and participants pursuant
to Section 11.11; provided, further, that in each of the foregoing cases, such
Person shall use its best efforts to ensure that any such disclosure will be
made under procedures reasonably calculated to maintain the confidentiality of
such information. This Section shall survive termination of the Agreement.
11.16 Right of Set-off. Upon the occurrence and during the
----------------
continuance of any Event of Default, subject to the provisions of Section 3 of
Exhibit B hereto, each Bank is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank or any of its
Affiliate to or for the credit or the account of the Borrower or a Designated
Subsidiary against any and all of the obligations of the Borrower or such
Designated Subsidiary now or hereafter existing under this Agreement, whether or
not such Bank shall have made any demand under this Agreement and although such
obligations may be unmatured. Each Bank agrees promptly to notify the Borrower
after any such set-off and application made by such Bank, provided that the
--------
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Banks under this Section are in addition to
other rights and remedies (including, without limitation, other rights of set-
off) which the Banks may have.
11.17 Judgment. (a) If for the purposes of obtaining judgment in any
--------
court it is necessary to convert a sum due hereunder in Dollars into another
currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the respective Bank or the
Administrative Agent could purchase Dollars with such other currency at New
York, New York, on the Business Day preceding that on which final judgment is
given.
(b) The obligation of each Obligor in respect of any sum due from
it to the Administrative Agent or any Bank hereunder shall, notwithstanding any
judgment in a currency other than Dollars, be discharged only to the extent that
on the Business Day following receipt by the Administrative Agent or such Bank
of any sum adjudged to be so due in such other currency the Administrative Agent
or such Bank may in accordance with normal banking procedures purchase Dollars
with such other currency; if the Dollars so purchased are less than
55
<PAGE>
the sum originally due to the Administrative Agent or such Bank in Dollars, such
Obligor agrees, as a separate obligation and notwithstanding any such judgment,
to indemnify the Administrative Agent or such Bank against such loss, and if the
Dollars so purchased exceed the sum originally due to the Administrative Agent
or such Bank in Dollars, the Administrative Agent or such Bank agrees to remit
to the Borrower or the applicable Designated Subsidiary such excess.
11.18 No Immunity. To the extent that the Borrower or any Designated
-----------
Subsidiary has or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, the Borrower and such Designated Subsidiary
hereby irrevocably waive such immunity in respect of its obligations under this
Agreement and, without limiting the generality of the foregoing, agrees that the
waivers set forth in this Section 11.18 shall have the fullest scope permitted
under the Foreign Sovereign Immunities Act of 1976 of the United States and are
intended to be irrevocable for purposes of such Act.
11.19 Proceedings, Etc. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
-----------------
BORROWER OR ANY DESIGNATED SUBSIDIARY ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH
OF BORROWER AND EACH DESIGNATED SUBSIDIARY ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT. Borrower and each Designated Subsidiary
hereby designates and appoints CT Corporation System, presently located at 1633
Broadway, New York, N.Y. 10019 as its authorized agent to accept and acknowledge
on its behalf service of any and all process which may be served in any suit,
action or proceeding in any New York State or United States Federal Court
sitting in New York. Borrower and each Designated Subsidiary represents and
warrants that such agent has agreed in writing to accept such appointment and
that true copies of such acceptance will be furnished to the Administrative
Agent prior to the Effective Date. Borrower and each Designated Subsidiary
agrees that the failure of such agent to give notice to Borrower or such
Designated Subsidiary of any such service shall not impair the validity of such
service or of any judgment rendered in any action or proceeding based thereon.
Service of all process in any such proceeding in any such court may be made by
hand delivery, overnight courier or by registered or certified mail, return
receipt requested, to such agent, such service being hereby acknowledged by
Borrower and each Designated Subsidiary to be sufficient for personal
jurisdiction in any action against Borrower and each Designated Subsidiary in
any such court and to be otherwise effective and binding service in every
respect. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of the Administrative Agent or
any Bank to bring proceedings against Borrower and any Designated Subsidiary in
the courts of any other jurisdiction.
11.20 Jury Trial Waiver. BORROWER, EACH DESIGNATED SUBSIDIARY,
-----------------
ADMINISTRATIVE AGENT AND EACH BANK EACH HEREBY AGREES TO WAIVE ITS
56
<PAGE>
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. The scope of this waiver is intended to be all-
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Borrower, each Designated Subsidiary, Administrative Agent and
each Bank (i) acknowledges that this waiver is a material inducement for it to
enter into a business relationship, that it has already relied on this waiver in
entering into this Agreement, and that each will continue to rely on this waiver
in their related future dealings, and (ii) further warrants and represents that
each has reviewed this waiver with its legal counsel and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, EXCEPT BY A WRITTEN INSTRUMENT SPECIFICALLY REFERRING TO
THIS SECTION 11.20, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto as of the date first hereinabove written.
57
<PAGE>
BORROWER: SURFIN LTD.
By: __________________________
Name:
Title:
DESIGNATED SUBSIDIARY DISH PLACEMENT SERVICES, LTD.
OBLIGORS:
By: __________________________
Name:
Title:
WHITE HOLDING B.V.
By: __________________________
Name:
Title:
S-1
<PAGE>
ADMINISTRATIVE AGENT: CITICORP USA, INC.
By: __________________________
Name:
Title:
BANKS: CITIBANK, N.A.
By: __________________________
Name:
Title:
S-2
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION (Individually
and as Syndication Agent)
By: __________________________
Name:
Title:
S-3
<PAGE>
DEUTSCHE BANK AG NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
(Individually and as Documentation Agent)
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
S-4
<PAGE>
THE CHASE MANHATTAN BANK
(Individually and as a Senior Managing Agent)
By: __________________________
Name:
Title:
S-5
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
(Individually and as a Senior Managing Agent)
By: __________________________
Name:
Title:
S-6
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK (Individually and as a Senior
Managing Agent)
By: ___________________________
Name:
Title:
S-7
<PAGE>
WESTDEUTSCHE LANDESBANK
GIROZENTRALE-NEW YORK AND
CAYMAN ISLANDS BRANCHES)
(Individually and as a Senior Managing Agent)
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
S-8
<PAGE>
THE BANK OF NEW YORK
By: __________________________
Name:
Title:
S-9
<PAGE>
BANQUE NATIONALE DE PARIS
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
S-10
<PAGE>
PARIBAS
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
S-11
<PAGE>
MELLON BANK, N.A.
By: __________________________
Name:
Title:
S-12
<PAGE>
ISTITUTO BANCARIO SAN PAOLO DI TORINO
ISTITUTO MOBILIARE ITALIANO S.p.A.
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
S-13
<PAGE>
BANK HAPOLIM B.M.
By: __________________________
Name:
Title:
S-14
<PAGE>
BAYERISCHE LANDESBANK
GIROZENTRALE, CAYMAN ISLANDS
BRANCH
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
S-15
<PAGE>
KBC BANK, N.V.
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
S-16
<PAGE>
THE MITSUBISHI TRUST AND BANKING
CORPORATION, NY BRANCH
By: __________________________
Name:
Title:
S-17
<PAGE>
UNI CREDITO ITALIANO S.p.A.
By: __________________________
Name:
Title:
S-18
<PAGE>
SCHEDULE 1
BANKS AND COMMITMENTS
---------------------
Name of Bank Commitment Percentage
- ------------ ----------- ----------
Citibank, N.A. $35,000,000 8.750%
Bank of America National Trust and
Savings Association 32,000,000 8.000%
Deutsche Bank AG New York and
Cayman Islands Branches 32,000,000 8.000%
The Chase Manhattan Bank 27,500,000 6.875%
The First National Bank of Chicago 27,500,000 6.875%
Morgan Guaranty Trust Company of New York 27,500,000 6.875%
Westdeutsche Landesbank Girozentrale
New York and Cayman Islands Branches 27,500,000 6.875%
The Bank of New York 23,000,000 5.750%
Banque Nationale De Paris 23,000,000 5.750%
Paribas 23,000,000 5.750%
Mellon Bank, N.A. 23,000,000 5.750%
San Paolo IMI Bank 23,000,000 5.750%
Bank Hapolim B.M. 15,000,000 3.750%
Bayerische Landesbank Girozentrale
Cayman Islands Branch 15,000,000 3.750%
KBC Bank, N.V. 15,000,000 3.750%
The Mitsubishi Trust and Banking Corporation
New York Branch 15,000,000 3.750%
UniCredito Italiano S.p.A. 15,000,000 3.750%
Total: $400,000,000 100.0%
Schedule 1-1
<PAGE>
EXHIBIT A
---------
LOAN REQUEST
------------
TO: Citicorp USA, Inc., as Administrative Agent for Banks
FROM: [SurFin Ltd.] [Dish Placement Services, Ltd.] [White Holding B.V.]
DATE:
RE: SurFin Ltd. -- Credit Agreement
Ladies and Gentlemen:
1. We refer to the Credit Agreement dated as of June 3, 1999 and made among
SurFin Ltd., the Designated Subsidiaries (as defined therein), Citicorp
USA, Inc., as Administrative Agent, Bank of America National Trust and
Savings Association, as Syndication Agent, Deutsche Bank, AG, New York
and Cayman Islands Branches, as Documentation Agent and Chase Manhattan
Bank, The First National Bank of Chicago, Morgan Guaranty Trust Company
of New York and Westdeutsche Landesbank Girozentrale-New York and Cayman
Island Branches, as Senior Managing Agents, and the certain financial
institutions named therein as Banks (the "Agreement"). Terms defined in
the Agreement shall have the same meaning herein.
2. We hereby request that a [Reference Rate Loan] [Eurodollar Loan] be made
as follows:
(i) Name of Obligor to which Loan is to be made: [Specify either
SurFin Ltd., Dish Placement Services, Ltd. or White Holding B.V.]
(ii) Principal Amount:
(iii) Borrowing Date:
(iv) Interest Period (if a Eurodollar Loan):
3. For the purposes of inducing the Banks to make the Loan requested herein,
we confirm that, pursuant to Section 5.2 of the Agreement, as of the date
hereof:
(i) the representations and warranties set out in Section 6 of the
Agreement are true and correct in all material respects;
(ii) the most current financial statements of Borrower and its
Subsidiaries present fairly the financial position and results of
operation and changes in financial position of Borrower and its
consolidated Subsidiaries as at the end of, and for the fiscal period
to which such statements relate as of the date of the last such
audited financial
A-1
<PAGE>
statements (subject, in the case of unaudited financial statements, to
year end adjustments) and there has been no Material Change since the
date of the last such audited financial statements; and
(iii) no Event of Default or Unmatured Event of Default has occurred
and is continuing.
[SurFin Ltd.] [Dish Placement Services, Ltd.]
[White Holding B.V.]
By:__________________________
Title:_______________________
A-2
<PAGE>
EXHIBIT B
RELATIONS AMONG THE BANKS AND ADMINISTRATIVE AGENT
--------------------------------------------------
1. Administration of the Credit. Payment of interest and principal
----------------------------
on the Loans and the Facility Fees and all other amounts payable by the Obligors
hereunder shall be made by the Obligors in immediately available funds, directly
to each Bank in the case of amounts payable under Sections 3.1, 3.2 and 3.3 and,
in all other cases, to Administrative Agent, and Administrative Agent shall
promptly distribute to the other Banks in immediately available funds their
shares of principal, interest and fees and to each Bank as provided herein such
other amounts as paid by Borrower.
2. Pro Rata Distribution. All Facility Fees will be divided among
---------------------
the Banks in accordance with their Percentage, and interest and principal
payments on each Loan will be divided pro rata among Banks in accordance with
their Percentage.
3. Right of Set-off. Any Bank which shall receive payment of or on
----------------
account of all or part of its share of the Loans or amounts due in respect of
Participated Letters of Credit or Accepted Time Drafts with respect to
Participated Letters of Credit through the exercise of any right of set-off,
counterclaim, or banker's lien, or otherwise in a greater proportion than the
proportionate amount of principal, interest or amounts in respect of
Participated Letters of Credit and Accepted Time Drafts with respect to
Participated Letters of Credit due it under this Agreement immediately prior to
such payment shall purchase a ratable proportion of the portions of the Loans or
participations in the applicable Participated Letters of Credit and Accepted
Time Drafts with respect to Participated Letters of Credit held by the other
Banks so that all recoveries of principal, interest and amounts due in respect
of Participated Letters of Credit and Accepted Time Drafts with respect to
Participated Letters of Credit shall be shared by the Banks in accordance with
their pro rata interests therein.
4. Notice of Event of Default. Upon receipt by Administrative Agent
--------------------------
from an Obligor of any communication calling for an action on the part of Banks,
or upon notice to Administrative Agent of an Event of Default, it will in turn
promptly inform the other Banks in writing of the nature of such communication
or of the Event of Default, as the case may be.
5. Actions by Administrative Agent. Each Bank hereby appoints and
-------------------------------
authorizes CUSA to act as Administrative Agent under this Agreement and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection of
the Loans and other amounts owing hereunder), the Administrative Agent shall be
required to exercise any discretion to take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Banks, and such
instructions shall be binding upon all Banks; provided, however, that the
-------- -------
Administrative Agent shall not be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to any of the
Loan Documents or
B-1
<PAGE>
applicable law. Upon any occasion requiring or permitting an approval, consent,
election or other action on the part of Banks, action shall be taken by
Administrative Agent for and on behalf or for the benefit of all Banks upon the
direction of the required number of Banks and the Administrative Agent, if
applicable, as set forth in Section 11.1 of the Agreement.
6. Several Liability of Banks. The obligation of each Bank hereunder
--------------------------
is several, and the failure of one Bank to perform hereunder shall in no way
relieve the other Banks from performance; provided that no Bank shall be
responsible for any other Bank's failure to perform its obligations under the
Agreement.
7. Liability of Administrative Agent. Administrative Agent shall not
---------------------------------
be liable or answerable for anything whatsoever in connection with this
Agreement except for its willful misconduct or gross negligence, and
Administrative Agent shall have no duties or obligations other than as provided
herein. Administrative Agent shall be entitled to rely on any opinion of
counsel (including counsel for the Obligors) in relation to this Agreement, and
upon statements and communications received from the Obligors, or from any other
person, believed by it to be authentic, and shall not be liable for any action
taken or omitted in Good Faith on such reliance.
8. Indemnification of Administrative Agent. Each Bank agrees to
---------------------------------------
indemnify Administrative Agent (to the extent not reimbursed by Borrower and
without limiting the obligation of Borrower to do so), ratably according to its
Percentage, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Administrative Agent in any way relating to or arising out of
this Agreement or any action taken or omitted by Administrative Agent under this
Agreement except for Administrative Agent's gross negligence or willful
misconduct. The obligations of the Banks under this Section 8 shall survive
termination of the Agreement. Without limitation of the foregoing, each Bank
agrees to reimburse the Administrative Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel fees) incurred by
the Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, to the extent that
the Administrative Agent is not reimbursed for such expenses by the Borrower.
9. Rights of Administrative Agent as Bank. With respect to their
--------------------------------------
respective obligations to lend and to issue Letters of Credit under this
Agreement, the Loans made, the Letters of Credit issued and Accepted Time Drafts
created, CUSA and Citibank, as the Designated Issuer for CUSA, shall have the
same rights and powers hereunder as any other Bank and may exercise the same as
though CUSA were not Administrative Agent; and the term "Banks" shall include
CUSA in its individual capacity. CUSA and its Affiliates may accept deposits
from, lend money to, and generally engage in any kind of banking, trust,
investment banking or other business with any Obligor or any Guarantor as if it
were not Administrative Agent.
B-2
<PAGE>
10. Assignment by Bank of its Obligations. Administrative Agent may
-------------------------------------
deem and treat a Bank party to this Agreement as the owner of such Bank's
portion of the Loans for all purposes hereof unless and until a written notice
of the assignment or transfer of such Bank's obligations otherwise permitted
under the Agreement executed by such Bank shall have been received by
Administrative Agent, together with Borrower's consent to such assignment or
transfer and such other documentation from such Bank and its assignee or
transferee as Administrative Agent may reasonably request, as provided in
Section 11.11 of this Agreement.
11. Representations by Banks. Neither Administrative Agent nor any
------------------------
Bank has made or makes to any other Bank any representation, and neither
Administrative Agent nor any Bank assumes any responsibility, for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement or in respect of the legality, validity,
enforceability, genuineness, sufficiency, execution, construction or enforcement
of this Agreement or any other instrument or agreement executed by any Obligor
or by any other person or entity.
12. Independent Investigation by Banks. Each Bank has made and shall
----------------------------------
continue to make its own independent investigation of the financial condition
and affairs of Borrower in connection with the making and the continuance of the
Loans and the issuance of Letters of Credit and has made and covenants that it
shall continue to make its own appraisal of the credit worthiness of the
Obligors. Each Bank agrees Administrative Agent has no duty or responsibility,
either initially or on a continuing basis, to provide any Bank with any credit
or other information with respect to any Obligor, whether coming into its
possession before the making of the Loans or at any time or times thereafter or
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement on the part of the Borrower or
to inspect the property (including the books and records) of the Borrower, in
each case except as expressly provided in this Agreement.
13. Successor Administrative Agent. Administrative Agent shall have
------------------------------
the right, at any time, to resign as Administrative Agent for the Banks
hereunder. Such resignation shall not be effective until a successor agent
chosen by Majority Banks, and accepted by Borrower, shall accept appointment as
agent for the Banks hereunder. If no successor Administrative Agent shall have
been so appointed by the Majority Banks and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent has given
notice of resignation, the retiring Administrative Agent may, on behalf of the
Banks, appoint a successor Administrative Agent reasonably acceptable to
Borrower, which successor Administrative Agent shall be a commercial bank
organized under the laws of the United States of America or a State thereof
having a combined capital and surplus of at least $100,000,000. Upon the
acceptance by the successor Administrative Agent of its appointment hereunder,
the successor Administrative Agent shall succeed to and become vested with all
the rights and obligations of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its obligations under
this Agreement. The provisions of this Article shall inure to the benefit of
the retiring Administrative Agent as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. After any
retiring Administrative Agent's resignation hereunder as Administrative Agent,
the provisions of this Exhibit B and
B-3
<PAGE>
Section 11.13 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement.
B-4
<PAGE>
EXHIBIT C
LENDING OFFICES OF BANKS AND ADDRESSES FOR NOTICES
--------------------------------------------------
SurFin Ltd.
Notice Address: SurFin Ltd.
c/o SG Hambros
West Bay Street
P.O. Box N7788
Nassau, Bahamas
Attn: James Hoar
With a copy to:
SurFin Ltd.
2400 E. Commercial Blvd., Suite 440
Ft. Lauderdale, FL 33308
Attn: Patrick Fournie
Dish Placement Services Ltd.
c/o SG Hambros
West Bay Street
P.O. Box N7788
Nassau, Bahamas
Attn: James Hoar
With a copy to:
Dish Placement Services Ltd.
2400 E. Commercial Blvd., Suite 440
Ft. Lauderdale, FL 33308
Attn: Patrick Fournie
White Holding B.V.
c/o TMF Management B.V.
Locatellikade 1
Parmassustoren
1076 AZ Amsterdam
The Netherlands
Attn: Maria C. van der Sluijs-Plantz
C-1
<PAGE>
With a copy to:
White Holding B.V.
2400 E. Commercial Blvd., Suite 440
Ft. Lauderdale, FL 33308
Attn: Patrick Fournie
Citibank, N.A.
Domestic Lending office:
c/o Citicorp USA, Inc.
Citibank Agency Services
2 Penns Way, Suite 2000
New Castle, Delaware 19720
Attn: Janet Wallace
Eurodollar Lending office:
c/o Citicorp USA, Inc.
Citibank Agency Services
2 Penns Way, Suite 2000
New Castle, Delaware 19720
Attn: Janet Wallace
Notice Address: c/o Citicorp USA, Inc.
787 West Fifth Street
Los Angeles, CA 90071
Attn: Janet Wallace
Attn: Walter Larsen
J. Greg Davis
Jeff Knowles
C-2
<PAGE>
Bank of America National
Trust and Savings Association
Domestic/Eurodollar Lending Office: Bank of America
1850 Gateway Blvd, Unit #5693
Concord, CA 94520
Notice Office: Bank of America
555 S. Flower Street, 11th Floor
Los Angeles, CA 90071
Attn: Dianne Purst Allen
Tel: (213) 228-2435
Fax: (213) 623-1959
Deutsche Bank AG New York
and/or Cayman Islands Branches
Domestic Lending Office: Deutsche Bank AG New York Branch
31 West 52nd Street
New York, NY 10019
Eurodollar Lending Office: Deutsche Bank AG Cayman Islands Branch
c/o Deutsche Bank AG New York Branch
31 West 52nd Street
New York, NY 10019
Notice Address: Deutsche Bank AG New York Branch and/or
Cayman Island Branches
31 West 52nd Street
New York, NY 10019
Attn: Joel Makowsky
Tel: (212) 469-7896
Fax: (212) 469-8212
C-3
<PAGE>
The Chase Manhattan Bank
Domestic/Eurodollar Lending Office: The Chase Manhattan Bank
140 East 45th Street, 29th Floor
New York, NY 10017-2070
Notice Address: The Chase Manhattan Bank
Global Media & Telecommunications Group
270 Park Avenue, 37th Floor
New York, NY 10017
Attn: Tracey Ewing, Vice President
Tel: (212) 270-8916
Fax: (212) 270-4164
The First National Bank of Chicago
Domestic/Eurodollar Lending Office: The First National Bank of Chicago
One First National Plaza
10th Floor, Suite 0634
Chicago, IL 60670
Attn: Sharon Bosch
Notice Address: The First National Bank of Chicago
777 S. Figueroa Street, 4th Fl.
Los Angeles, CA 90017
Attn: Mark Isley
Tel: (213) 683-4964
Fax: (213) 683-4949
C-4
<PAGE>
Morgan Guaranty Trust Company of New York
Domestic Lending Office: Morgan Guaranty Trust Company of New York
60 Wall Street Branch
c/o J.P. Morgan Services Inc.
500 Stanton-Christiana Road
Loan Operations - 3rd Floor
Eurodollar Lending Office: Morgan Guaranty Trust Company of New York
Nassau, Bahamas Office
c/o J.P. Morgan Services Inc.
Euro-Loan Servicing Unit
500 Stanton-Christiana Road
Newark, DE 19713
Notice Address: Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260
Attn: Robert Osieski
Tel: (212) 648-0342
Fax: (212) 648-5939
Westdeutsche Landesbank Girozentrale
Domestic/Eurodollar Lending Office: Westdeutsche Landesbank Girozentrale
New York Branch
1211 Avenue of the Americas
23rd Floor
New York, NY 10061
Notice Address: Westdeutsche Landesbank Girozentrale
633 West 5th Street, Suite 6750
Los Angeles, CA 90071
Attn: Jonathan Kim
Tel: (213) 623-1517 ex. 14
Fax: (213) 623-4706
C-5
<PAGE>
The Bank of New York
Domestic/Eurodollar Lending Office: The Bank of New York
One Wall Street, 22nd Floor
New York, NY 10286
Attn: Dawn Hertling
Notice Address: The Bank of New York
10990 Wilshire Boulevard, Suite 1125
Los Angeles, CA 90024
Attn: Jonathan Rollins
Tel: (310) 996-8658
Fax: (310) 996-8667
Banque Nationale de Paris
Domestic/Eurodollar Lending Office: Banque Nationale de Paris
725 South Figueroa Street, Suite 2090
Los Angeles, CA 90017
Notice Address: Banque Nationale de Paris
725 South Figueroa Street, Suite 2090
Los Angeles, CA 90017
Attn: Janice Ho
Tel: (213) 488-9120
Fax: (213) 488-6602
Paribas
Domestic/Eurodollar Lending Office: Paribas
2029 Century Park East
Suite 3900
Los Angeles, CA 90067
Attn: Shirley Williams
Notice Address: Paribas
2029 Century Park East
Suite 3900
Los Angeles, CA 90067
Attn: Tom Brandt
Tel: (310) 551-7380
Fax: (310) 556-3762
C-6
<PAGE>
Mellon Bank, N.A.
Domestic/Eurodollar Lending Office: Mellon Bank, N.A.
Three Mellon Bank, Rm 2300
Pittsburgh, PA 15259
Attn: John Kyle
Notice Address: Mellon Bank, N.A.
400 S. Hope Street, Fifth Floor
Los Angeles, CA 90071
Attn: Lawrence Ivey
Tel: (213) 553-9543
Fax: (213) 629-0492
San Paolo IMI Bank
Domestic/Eurodollar Lending Office: San Paolo IMI Bank
245 Park Avenue
New York, NY 10167
Attn: Carmela Romanello-Schaden
Notice Address: San Paolo IMI Bank
245 Park Avenue
New York, NY 10167
Attn: Carmela Romanello-Schaden
Tel: (212) 692-3126
Fax: (212) 692-3178
Bank Hapolim B.M.
Domestic/Eurodollar Lending Office: Bank Hapoalim B.M.
1177 6th Avenue, 12th Fl.
New York, NY 10036
Attn: Marc Bosc
Notice Address: Bank Hapoalim B.M.
1177 6th Avenue, 12th Fl.
New York, NY 10036
Attn: Marc Bosc
Tel: (212) 782-2181
Fax: (212) 782-2187
C-7
<PAGE>
Bayerische Landesbank Girozentrale
Domestic/Eurodollar Lending Office: Bayerische Landesbank Girozentrale
Cayman Island Branch
560 Lexington Avenue, 17th Fl.
New York, NY 10022
Attn: Jim Boyle
Notice Address: Bayerische Landesbank Girozentrale
Cayman Island Branch
560 Lexington Avenue, 22nd Fl.
New York, NY 10022
Attn: Jim Boyle
Tel: (212) 310-9817
Fax: (212) 310-9868
KBC Bank, N.V.
Domestic/Eurodollar Lending Office: KBC Bank, N.V.
125 West 55th Street, 10th Floor
New York, NY 10019
Attn: Christine Park
Notice Address: KBC Bank, N.V.
125 West 55th Street, 10th Floor
New York, NY 10019
Attn: Michael Curran
Tel: (212) 541-0708
Fax: (212) 956-5580
The Mitsubishi Trust and Banking Corporation
Domestic/Eurodollar Lending Office: The Mitsubishi Trust and Banking
Corporation,
New York Branch
520 Madison Avenue
New York, NY 10022
Notice Address: The Mitsubishi Trust and Banking
Corporation,
New York Branch
520 Madison Avenue
New York, NY 10022
Attn: Scott Paige
Tel: (212) 897-8216
Fax: (212) 644-6825
C-8
<PAGE>
UniCredito Italiano S.p.A
Domestic Lending Office: UniCredito Italiano, New York Branch
375 Park Avenue
New York, NY 10152
Attn: Gianfranco Bisagni
Eurodollar Lending Office: UniCredito Italiano, Grand Cayman Branch
c/o UniCredito Italiano, NY Branch
375 Park Avenue
New York, NY 10152
Notice Address: UniCredito Italiano, New York Branch
375 Park Avenue
New York, NY 10152
Attn: Gianfranco Bisagni
Tel: (212) 546-9623
Fax: (212) 546-9675
C-9
<PAGE>
EXHIBIT D
[FORM OF HUGHES GUARANTY]
GUARANTY
--------
THIS GUARANTY, dated as of June 3, 1999, is made by HUGHES ELECTRONICS
CORPORATION, a Delaware corporation (the "Guarantor"), in favor of CITICORP USA,
---------
INC., a Delaware corporation, as Administrative Agent for and representative of
the financial institutions party to the Credit Agreement defined below (together
with its successors and permitted assignees in such capacity, the
"Administrative Agent").
--------------------
RECITALS
--------
A. The Guarantor is an owner, directly or indirectly, of
approximately 59.1% of the equity of SurFin Ltd., an international business
company incorporated under the laws of the Bahamas (the "Borrower"). Pursuant
--------
to that certain Credit Agreement of even date herewith (as it may be amended,
supplemented or otherwise modified from time to time the "Credit Agreement")
----------------
among the Borrower, the Designated Subsidiaries (as defined in the Credit
Agreement), the Banks party thereto and the Administrative Agent, as agent for
the Banks, the Banks have agreed to make available a $400,000,000 revolving
credit facility to the Borrower and the Designated Subsidiaries (each an
"Obligor" and collectively the "Obligors"). The Borrower has advised the
Guarantor, the Administrative Agent and the Banks that the Obligors intend to
use the proceeds of the such revolving credit facility to finance the
development in Mexico and various countries in the Caribbean, Central America
and South America of a satellite television service.
B. The Banks are willing to enter into the Credit Agreement on the
condition that the Guarantor guarantees, jointly and severally with the other
owners (or their affiliates) of the Borrower, the performance and payment of the
Borrower's obligations under the Credit Agreement pursuant to the terms of this
Guaranty.
NOW, THEREFORE, in consideration of the foregoing promises and other
good and valuable consideration, receipt and sufficiency of which are
acknowledged, the Guarantor hereby agrees as follows:
1. Definitions. Capitalized terms not otherwise defined in this
-----------
Guaranty shall have the meanings given them in the Credit Agreement.
2. Guaranty.
--------
(a) The Guarantor hereby irrevocably and unconditionally,
guarantees the punctual payment when due of all payment obligations of the
Obligors under the Credit Agreement, up to a maximum amount as to principal of
US$400,000,000 plus all interest, fees, indemnities and other amounts payable
under the Credit Agreement, including amounts that
D-1
<PAGE>
would become due but for the operation of the automatic stay under Section
362(c) of the United States Bankruptcy Code or similar provisions under the laws
of the Bahamas, The Netherlands or other applicable law (collectively, the
"Guaranteed Obligations"). In the event that any of the Guaranteed Obligations
----------------------
shall not be paid when due within any specified grace period provided for in the
Credit Agreement, the Guarantor agrees to pay such Guaranteed Obligations within
ten Business Days after the giving by the Administrative Agent to the Guarantor
and the Process Agent named in Section 15 hereof of written notice (a "Demand")
demanding payment by the Guarantor, provided that in the event any such payment
--------
is required to be made by the Guarantor hereunder, the Guarantor may cause such
obligation or liability to be paid on its behalf by any corporation affiliated
with it, including the Obligors, provided that the Guarantor shall nevertheless
be unconditionally obligated to pay such obligation or liability if such
affiliate, including the Obligors, shall fail timely to pay such obligation or
liability.
(b) This Guaranty is a guarantee of payment and not of
performance or collection. The obligation of the Guarantor hereunder shall be
independent of the obligation of any other Guarantor (as such term is defined in
the Credit Agreement), all such obligations being joint and several.
(c) The Guarantor shall be subrogated to all rights of the Banks
against the Obligors in respect of any amounts paid by the Guarantor pursuant to
the provisions of this Guaranty; provided, however, that the Guarantor shall not
-------- -------
be entitled to enforce or receive any payments arising out of, or based upon,
such right of subrogation until all the Guaranteed Obligations shall have been
irrevocably and indefeasibly paid in full and no Guaranteed Obligations may
arise in the future.
3. Guaranty Absolute. The liability of the Guarantor under this
-----------------
Guaranty with respect to each and all of the Guaranteed Obligations shall be
irrevocable and shall be absolute and unconditional irrespective of, and shall
not be released, discharged or in any way affected by, any circumstance,
condition or matter (whether or not the Guarantor or any Obligor shall have any
knowledge or notice thereof), including, without limitation:
(a) any amendment, waiver, extension or renewal of, or any
consent to departure from, the Credit Agreement, including, without limitation,
any waiver or consent involving a change in the time, manner or place of payment
of all or any of the Guaranteed Obligations;
(b) any exchange, release or nonperfection of any collateral, or
any release or amendment or waiver of or consent or departure from any other
guaranty or security agreement, for all or any of the Guaranteed Obligations;
(c) any extension of the time for payment by any Obligor or any
other person of any Guaranteed Obligation under the Credit Agreement or any
other document related thereto;
D-2
<PAGE>
(d) any failure, omission or delay by the Administrative Agent
or the Banks to enforce, assert or exercise any right, power or remedy conferred
on or available to it;
(e) any inability, lack of authority or legal disability of any
Obligor to perform any agreement, covenant, term or condition contained in the
Credit Agreement for any reason (whether or not the Guarantor shall have any
knowledge or notice thereof), including, without limitation, provisions of any
law or regulation of any jurisdiction (including the Bahamas and The
Netherlands) purporting to prohibit or excuse payment or performance by any
Obligor of its obligations under the Credit Agreement;
(f) the voluntary or involuntary liquidation, dissolution, sale
of assets, marshalling of assets and liabilities, receivership, conservatorship,
custodianship, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of or similar
proceeding affecting any Obligor, the Guarantor, the Administrative Agent, the
Banks or any other person or any of their respective properties or creditors, or
any action taken by any trustee or receiver or by any court in any such
proceeding;
(g) any merger or consolidation of any Obligor into or with any
person or any sale, lease or transfer of any of the assets of any Obligor to any
other person;
(h) any change in corporate relationship between any Obligor and
the Guarantor or any termination of any such relationship;
(i) any counterclaim, set-off, deduction or defense any Obligor,
the Guarantor or any other Person may have against the Administrative Agent, the
Banks or any other person other than indefeasible payment in full; and
(j) any other circumstance whatsoever, whether similar or
dissimilar to the foregoing, which might otherwise constitute a legal or
equitable defense available to, or a discharge of, the Guarantor in respect of
this Guaranty.
This Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment by any Obligor, the Guarantor or any
other person of any of the Guaranteed Obligations owed hereunder is rescinded or
must otherwise be returned by the Administrative Agent or the Banks upon the
insolvency, bankruptcy or reorganization of any Obligor, the Guarantor or any
other person, all as though such payment had not been made. If the payment of
any sum required to be made by any Obligor under the Credit Agreement shall at
any time be prevented by reason of a case or proceeding under bankruptcy,
insolvency or other similar law, the Guarantor agrees that, for purposes of this
Guaranty and its obligations hereunder, such sum shall be deemed to be payable
in accordance with the terms of the Credit Agreement, and the Guarantor shall
pay such sum and any other amounts guaranteed hereunder.
D-3
<PAGE>
4. Waiver by the Guarantor. The Guarantor hereby unconditionally
-----------------------
waives, to the greatest extent permitted by applicable law, (i) any and all
notice of the creation, renewal, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by the Banks upon this Guaranty,
or acceptance of this Guaranty, and the Guaranteed Obligations, (ii) any
requirement that the Banks exhaust any right or take any action against any
Obligor, any other guarantor or any other person or any collateral, (iii) any
and all rights which the Guarantor may have or which at any time hereafter may
be conferred upon it, by statute (including but not limited to any statute of
limitations), regulation or otherwise, to terminate or cancel this Guaranty,
(iv) all notices which may be required by statute, rule of law or otherwise to
preserve any rights against the Guarantor hereunder, including, without
limitation, any demand, presentment, protest, proof or notice of nonpayment of
any amounts payable under or in respect of the Credit Agreement, and notice of
any failure on the part of any Obligor to perform and comply with any term or
condition of the Credit Agreement, (v) any rights to the enforcement, assertion
or exercise of any right, remedy, power or privilege under or in respect of the
Credit Agreement, (vi) any requirement of diligence and (vii) notice of
acceptance of this Guaranty. The Administrative Agent shall have the right to
bring suit directly against the Guarantor with respect to the Guaranteed
Obligations, either prior to or concurrently with any lawsuit against, or
without bringing suit against, any Obligor.
5. Continuing Guaranty. This Guaranty is a continuing guaranty and
-------------------
shall (a) be irrevocable and remain in full force and effect in accordance with
the terms hereof until all of the Guaranteed Obligations, including those which
might arise at a later date, have been paid in full and are not subject to
rescission or return, (b) be binding upon the Guarantor and its successors and
assigns, and (c) inure to the benefit of and be enforceable by the successors,
transferees and assigns of the Administrative Agent and the Banks permitted by
the Credit Agreement. The Guarantor agrees that in the discharge of its
obligations hereunder no judgment, order, or exhaustion need be obtained, and no
action, suit or proceeding need be brought and no other remedies need be
exhausted against any Obligor or any other person for performance by the
Guarantor of its obligations hereunder
6. Representations. The Guarantor represents and warrants to the
---------------
Administrative Agent as follows:
(a) The Guarantor is a corporation validly existing and in good
standing under the laws of its jurisdiction of incorporation and the execution,
delivery and performance of this Guaranty are within its corporate powers and
are not in contravention of the terms of its charter or bylaws.
(b) The execution, delivery and performance of this Guaranty
have been duly authorized by all requisite corporate action of the Guarantor,
and this Guaranty has been duly executed and delivered by the Guarantor and
constitutes its legal, valid and binding obligation and is enforceable against
the Guarantor in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or other laws now
or hereafter affecting the rights of creditors.
D-4
<PAGE>
(c) The execution, delivery and performance of this Guaranty
will not violate or conflict with (i) any provision of any law or regulation
binding on the Guarantor, or any order, judgment, award or decree of any court,
arbitrator or governmental authority binding on the Guarantor, or any securities
issued by the Guarantor, or any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which the Guarantor is a party or by
which the Guarantor or any of its assets may be bound, the violation of which
would have a material adverse effect on the business, operations, assets or
financial condition of the Guarantor, or (ii) the certificate of incorporation
or bylaws of the Guarantor, and will not result in, or require, the creation or
imposition of any Lien on any of its property, assets or revenues pursuant to
the provisions of any such mortgage, indenture, lease, contract or other
agreement, instrument or undertaking.
7. Financial Information; Access.
-----------------------------
(a) So long as the Credit Agreement remains in effect the
Guarantor agrees (i) to provide to the Administrative Agent a copy of all such
reports and financial information pertaining to the Guarantor as shall be filed
by or on behalf of the Guarantor with the Securities and Exchange Commission,
promptly after the same are so filed, and (ii) to provide to the Administrative
Agent such other financial information as the Administrative Agent may
reasonably request.
(b) The Guarantor further agrees to permit the Administrative
Agent reasonable access, upon prior notice and at reasonable times during normal
business hours, to the Guarantor's books, records, and financial or accounting
personnel, to the extent relevant to this Guaranty or the Credit Agreement;
provided, however, that such access shall be in compliance with security and
confidentiality requirements of applicable governmental authorities and the
Guarantor's corporate policies relating to confidential information
8. Merger, Consolidation or Other Transfers.
----------------------------------------
(a) The Guarantor shall not consolidate with or merge into any
other person or convey, transfer or lease all or substantially all of its assets
as an entirety to any person unless:
(i) such successor entity or such person to whom the conveyance,
transfer or lease is made (such successor entity, together with any successor
entity described in Section 8(b) below, being referred to herein as a "Successor
---------
Guarantor") shall expressly assume in writing by instrument or instruments
- ---------
enforceable against it reasonably satisfactory in form and substance to the
Administrative Agent, the due and punctual payment of all obligations of the
Guarantor under this Guaranty with the same effect as if such Successor
Guarantor had originally been named a Guarantor herein or had been a party
hereto;
(ii) immediately after giving effect to such transaction, no
Event of Default shall exist and this Guaranty shall be in full force and
effect; and
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(iii) the Successor Guarantor shall have delivered to the
Administrative Agent an opinion of counsel in scope and substance reasonably
satisfactory to it stating that such consolidation, merger, conveyance, transfer
or lease and the assumption agreement required by clause (i) above comply with
this Section 8.
(b) Except as provided in subsection 8(a) above, the Guarantor
shall not assign or delegate its obligations under this Guaranty; provided that
--------
the Guarantor may assign and delegate its obligations under this Guaranty to a
successor entity as a part of the transfer of all or substantially all of the
assets of its Direct TV International Division to such successor entity
(including, without limitation, a Subsidiary of the Guarantor) as an entirety as
long as all of the following conditions have been satisfied:
(i) such assignment and delegation shall have been approved by
the Administrative Agent and all of the Banks, which consent shall not be
unreasonably withheld;
(ii) the conditions in clauses (i) through (iii) of subsection
8(a) have been satisfied with respect to such assignment and delegation; and
(iii) the Successor Guarantor to whom such transfer, delegation
and assignment is made shall have a credit rating on its senior unsecured debt,
as determined by each of Moody's Investors Service, Inc. (or any successor
thereto) and Standard & Poor's Ratings Group (or any successor thereto), at
least as favorable as the unsecured debt of the Guarantor at such date after
giving effect to such transfer, assignment and delegation, and the rating of
such Successor Guarantor's senior unsecured debt shall not be under review with
negative implications by such rating agency at such date after giving effect to
such transfer, assignment and delegation.
(c) Upon any such consolidation or merger, conveyance, transfer
or lease in accordance with the provisions of (a) or (b) above, the successor
formed by such consolidation or into which the Guarantor is merged, or the
person to which such conveyance, transfer or lease is made, shall succeed to,
and be substituted for, the Guarantor as a Guarantor, with the same effect as if
such Successor Guarantor had been originally named as a Guarantor.
9. Taxes. All payments or reimbursements under this Guaranty and any
-----
instrument or agreement required hereunder shall be made without set-off or
counterclaim and free and clear of and without deduction for any and all present
and future Taxes (as defined below). The Guarantor agrees to cause all such
Taxes to be paid on behalf of any Bank or Administrative Agent directly to the
appropriate governmental authority. If the Guarantor is legally prohibited from
complying with this Section, payments due to such Bank or Administrative Agent
under this Guaranty and any instrument or agreement required hereunder shall be
increased so that, after provisions for Taxes and all Taxes on such increase,
the amounts received by such Bank or Administrative Agent will be equal to the
amounts required under this Guaranty and any instrument or agreement required
hereunder as if no Taxes were due on such payments. The Guarantor shall
indemnify each Bank and Administrative Agent for the full amount of Taxes
payable by such Bank or Administrative Agent and any liabilities (including
penalties, interest and expenses) arising from such Taxes within thirty (30)
days from any written
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demand by such Bank. The Guarantor shall provide evidence that all applicable
Taxes have been paid to the appropriate taxing authorities by delivering to
Administrative Agent official tax receipts or notarized copies or other evidence
thereof satisfactory to Administrative Agent, within ninety (90) days after the
due date for such Tax payment. Such Bank will designate a different Lending
Office if such designation will avoid the need for, or reduce the amount of,
such payment or reimbursement and will not be otherwise disadvantageous to such
Bank in the sole discretion of such Bank.
For purposes of this Section 9, "Tax" and "Taxes" means (i) all taxes,
levies, imposts, duties, fees or other charges of whatsoever nature however
imposed by any country or any subdivision or authority of or in that country in
any way connected with the Credit Agreement or this Guaranty or any instrument
or agreement required hereunder, and all interest, penalties or similar
liabilities with respect thereto, except such taxes as are imposed on or
measured by the Administrative Agent's or any Bank's net income or capital and
franchise taxes, by the country or any subdivision or authority of or in that
country in which the Administrative Agent's or such Bank's principal office or
actual Lending Office is located, and (ii) any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Guaranty.
10. Amendments, Etc. No amendment or waiver of any provision of this
----------------
Guaranty shall in any event be effective with respect to the Administrative
Agent unless the same shall be in writing and signed by the Administrative
Agent.
11. No Waiver; Remedies. No failure on the part of the
-------------------
Administrative Agent to exercise, and no delay in its exercise of, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right hereunder by the Administrative Agent preclude any other
or further exercise thereof or the exercise of any other right by it. Subject
to Section 11.1 of the Credit Agreement, the Administrative Agent may
specifically waive any breach of this Guaranty by the Guarantor; provided that
--------
no such waiver shall be effective or binding unless in writing, and that no such
waiver shall constitute a continuing waiver of similar or other breaches.
12. Separability of This Guaranty. In case any term or provision of
-----------------------------
this Guaranty or any application hereof to any circumstance shall, in any
circumstances or jurisdiction and to any extent, be invalid, illegal or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity, illegality or unenforceability
without invalidating or rendering unenforceable any remaining terms and
provisions hereof or the application of such term or provision to circumstances
or jurisdictions other than those as to which it is held invalid, illegal or
unenforceable. To the extent permitted by applicable law, the Guarantor hereby
waives any provision of law that renders any term or provision hereof invalid,
illegal or unenforceable in any respect.
13. Headings. The headings contained in this Guaranty are for
--------
convenience of reference only and shall not modify, define or limit any of the
terms or provisions hereof.
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14. Governing Law. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
-------------
THE GUARANTOR, THE ADMINISTRATIVE AGENT AND THE BANKS HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-
1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
15. Proceedings, Etc. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE
-----------------
GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS GUARANTY THE GUARANTOR ACCEPTS FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS GUARANTY. The Guarantor hereby designates and
appoints CT Corporation System, presently located at 1633 Broadway, New York,
N.Y. 10019 as its authorized agent (the "Process Agent") to accept and
acknowledge on its behalf service of any and all process which may be served in
any suit, action or proceeding in any New York State or United States Federal
Court sitting in New York, and to receive and acknowledge on behalf of the
Guarantor any Demands made by the Administrative Agent pursuant to Section 2
hereof. The Guarantor represents and warrants that the Process Agent has agreed
in writing to accept such appointment and that true copies of such acceptance
will be furnished to the Administrative Agent prior to the Effective Date under
the Credit Agreement. The Guarantor agrees that the failure of the Process
Agent to give notice to the Guarantor of any such service or Demand shall not
impair the validity of such service or Demand or of any judgment rendered in any
action or proceeding based thereon. Service of all process in any such
proceeding in any such court and of any Demand under Section 2 hereof may be
made by hand delivery, courier service or by registered or certified mail,
return receipt requested, to the Process Agent, such service being hereby
acknowledged by the Guarantor to be sufficient for personal jurisdiction in any
action against the Guarantor in any such court and to be otherwise effective and
binding service or demand in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of the Administrative Agent or any Bank to bring proceedings against the
Guarantor in the courts of any other jurisdiction.
16. Jury Trial Waiver. THE GUARANTOR AND, BY ITS ACCEPTANCE OF THE
-----------------
BENEFITS HEREOF, THE ADMINISTRATIVE AGENT EACH HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS GUARANTY. The scope of this waiver is intended to be all-
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. The Guarantor and, by its acceptance of the benefits hereof,
the Administrative Agent each (i) acknowledges that this waiver is a material
inducement for the Guarantor and Administrative Agent to enter into a business
relationship, that the Guarantor and Administrative Agent have
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already relied on this waiver in entering into this Guaranty or accepting the
benefits thereof, as the case may be, and that each will continue to rely on
this waiver in their related future dealings, and (ii) further warrants and
represents that each has reviewed this waiver with its legal counsel and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, EXCEPT BY A WRITTEN INSTRUMENT
SPECIFICALLY REFERRING TO THIS SECTION 16, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS GUARANTY.
In the event of litigation, this Guaranty may be filed as a written consent to a
trial by the court.
17. Counterparts. This Guaranty may be executed in any number of
------------
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original for
all purposes; but all such counterparts together shall constitute but one and
the same instrument. This Guaranty shall become effective as to the Guarantor
upon the execution of a counterpart hereof by the Guarantor and receipt by
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
18. Cost and Attorneys Fees. The Guarantor agrees to pay, or cause
-----------------------
to be paid, in addition to the Guaranteed Obligations, on demand, and to save
the Administrative Agent and the Banks harmless against liability for, any and
all costs and expenses (including reasonable fees and disbursements of counsel)
incurred or expended by Administrative Agent or any Bank in connection with the
enforcement of or preservation of any rights under this Guaranty.
19. Effect of Obligor's Bankruptcy. The Guarantor acknowledges and
------------------------------
agrees that any interest on any portion of the Guaranteed Obligations which
accrues after the commencement of any proceeding, voluntary or involuntary,
involving the bankruptcy, insolvency, receivership, reorganization, liquidation
or arrangement of any Obligor (or, if interest on any portion of the Guaranteed
Obligations ceases to accrue by operation of law by reason of the commencement
of said proceeding, such interest as would have accrued on such portion of the
Guaranteed Obligations if said proceeding had not been commenced) shall be
included in the Guaranteed Obligations because it is the intention of the
Guarantor, the Administrative Agent and the Banks that the Guaranteed
Obligations which are guarantied by the Guarantor pursuant to this Guaranty
should be determined without regard to any rule of law or order which may
relieve any Obligor of any portion of such Guaranteed Obligations.
20. Notices. All notices, requests, consents and other
-------
communications under this Guaranty shall be in writing and shall be deemed to
have been given to the Guarantor when received, if hand delivered or sent by
courier service, on the third Business Day after mailing, if mailed by
registered or certified mail, postage prepaid, on the business day of receipt if
telecopied, in each case addressed to the Guarantor at its address set forth
below its signature or to such other address as the Guarantor may designate by
written notice to the Administrative Agent; provided that Demands made by the
Administrative Agent under Section 2 and service of process under Section 15 may
also be given to the Process Agent.
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21. Entire Agreement. This Guaranty represents the final agreement
----------------
of the Guarantor with respect to its obligations to the Banks in connection with
the Credit Agreement and may not be contradicted by evidence of prior written
agreements or prior, contemporaneous or subsequent oral agreements of the
Guarantor or any other person. There are no unwritten oral agreements of the
Guarantor in favor of the Banks.
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<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duty
executed as of the date first above written.
HUGHES ELECTRONICS CORPORATION
By: _________________________
Name: _______________________
Title: ______________________
Address:
Bldg. Cl, M/S A170
200 North Sepulveda Blvd.
El Segundo, CA 90245
Attention: Edward B. Clarkson
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EXHIBIT E
[FORM OF GUARANTY OF DARLENE]
GUARANTY
--------
THIS GUARANTY, dated as of June 3, 1999, is made by DARLENE
INVESTMENTS LLC, an exempted company organized and existing under the laws of
the Cayman Islands, the "Guarantor"), in favor of CITICORP USA, INC., a Delaware
---------
corporation, as Administrative Agent for and representative of the financial
institutions party to the credit Agreement defined below (together with its
successors and permitted assignees in such capacity, the "Administrative
--------------
Agent").
- -----
RECITALS
--------
A. The Guarantor is an owner, directly or indirectly, of
approximately 20.4% of the equity of SurFin Ltd., an international business
company incorporated under the laws of the Bahamas (the "Borrower"). Pursuant
--------
to that certain Credit Agreement of even date herewith (as it may be amended,
supplemented or otherwise modified from time to time the "Credit Agreement")
----------------
among the Borrower the Designated Subsidiaries (as defined in the Credit
Agreement), the Banks party thereto and the Administrative Agent, as agent for
the Banks, the Banks have agreed to make available a $400,000,000 revolving
credit facility to the Borrower and the Designated Subsidiaries (each an
"Obligor" and collectively the "Obligors"). The Borrower has advised the
Guarantor, the Administrative Agent and the Banks that the Obligors intend to
use the proceeds of the such revolving credit facility to finance the
development in Mexico and various countries in the Caribbean, Central America
and South America of a satellite television service.
B. The Banks are willing to enter into the Credit Agreement on the
condition that the Guarantor guarantees, jointly and severally with the other
owners (or their affiliates) of the Borrower, the performance and payment of the
Borrower's obligations under the Credit Agreement pursuant to the terms of this
Guaranty.
NOW, THEREFORE, in consideration of the foregoing promises and other
good and valuable consideration, receipt and sufficiency of which are
acknowledged, the Guarantor hereby agrees as follows:
1. Definitions. Capitalized terms not otherwise defined in this
-----------
Guaranty shall have the meanings given them in the Credit Agreement.
2. Guaranty.
--------
(a) The Guarantor hereby irrevocably and unconditionally,
guarantees the punctual payment when due of all payment obligations of the
Borrower under the Credit
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Agreement, up to a maximum amount as to principal of US$400,000,000 plus all
interest, fees, indemnities and other amounts payable under the Credit
Agreement, including amounts that would become due but for the operation of the
automatic stay under Section 362(c) of the United States Bankruptcy Code or
similar provisions under the laws of the Bahamas, The Netherlands or other
applicable law (collectively, the "Guaranteed Obligations"). In the event that
----------------------
any of the Guaranteed Obligations shall not be paid when due within any
specified grace period provided for in the Credit Agreement, the Guarantor
agrees to pay such Guaranteed Obligations within ten Business Days after the
giving by the Administrative Agent to the Guarantor Notice Agent named in
Section 20 hereof and the Process Agent named in Section 15 hereof of notice (a
"Demand") demanding payment by the Guarantor, provided that in the event any
--------
such payment is required to be made by the Guarantor hereunder, the Guarantor
may cause such obligation or liability to be paid on its behalf by any
corporation affiliated with it, including the Obligors, provided that the
Guarantor shall nevertheless be unconditionally obligated to pay such obligation
or liability if such affiliate, including the Obligors, shall fail timely to pay
such obligation or liability.
(b) This Guaranty is a guarantee of payment and not of
performance or collection. The obligation of the Guarantor hereunder shall be
independent of the obligation of any other Guarantor (as such term is defined in
the Credit Agreement), all such obligations being joint and several.
(c) The Guarantor shall be subrogated to all rights of the Banks
against the Obligors in respect of any amounts paid by the Guarantor pursuant to
the provisions of this Guaranty; provided, however, that the Guarantor shall not
-------- -------
be entitled to enforce or receive any payments arising out of, or based upon,
such right of subrogation until all the Guaranteed Obligations shall have been
irrevocably and indefeasibly paid in full and no Guaranteed Obligations may
arise in the future.
3. Guaranty Absolute. The liability of the Guarantor under this
-----------------
Guaranty with respect to each and all of the Guaranteed Obligations shall be
irrevocable and shall be absolute and unconditional irrespective of, and shall
not be released, discharged or in any way affected by, any circumstance,
condition or matter (whether or not the Guarantor or any Obligor shall have any
knowledge or notice thereof), including, without limitation:
(a) any amendment, waiver, extension or renewal of, or any
consent to departure from, the Credit Agreement, including, without limitation,
any waiver or consent involving a change in the time, manner or place of payment
of all or any of the Guaranteed Obligations;
(b) any exchange, release or nonperfection of any collateral, or
any release or amendment or waiver of or consent or departure from any other
guaranty or security agreement, for all or any of the Guaranteed Obligations;
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(c) any extension of the time for payment by any Obligor or any
other person of any Guaranteed Obligation under the Credit Agreement or any
other document related thereto;
(d) any failure, omission or delay by the Administrative Agent
or the Banks to enforce, assert or exercise any right, power or remedy conferred
on or available to it;
(e) any inability, lack of authority or legal disability of any
Obligor to perform any agreement, covenant, term or condition contained in the
Credit Agreement for any reason (whether or not the Guarantor shall have any
knowledge or notice thereof), including, without limitation, provisions of any
law or regulation of any jurisdiction (including the Bahamas and The
Netherlands) purporting to prohibit or excuse payment or performance by any
Obligor of its obligations under the Credit Agreement;
(f) the voluntary or involuntary liquidation, dissolution, sale
of assets, marshalling of assets and liabilities, receivership, conservatorship,
custodianship, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of or similar
proceeding affecting any Obligor, the Guarantor, the Administrative Agent, the
Banks or any other person or any of their respective properties or creditors, or
any action taken by any trustee or receiver or by any court in any such
proceeding;
(g) any merger or consolidation of any Obligor into or with any
person or any sale, lease or transfer of any of the assets of any Obligor to any
other person;
(h) any change in corporate relationship between any Obligor and
the Guarantor or any termination of any such relationship;
(i) any counterclaim, set-off, deduction or defense any Obligor,
the Guarantor or any other Person may have against the Administrative Agent, the
Banks or any other person other than indefeasible payment in full; and
(j) any other circumstance whatsoever, whether similar or
dissimilar to the foregoing, which might otherwise constitute a legal or
equitable defense available to, or a discharge of, the Guarantor in respect of
this Guaranty.
This Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment by any Obligor, the Guarantor or any
other person of any of the Guaranteed Obligations owed hereunder is rescinded or
must otherwise be returned by the Administrative Agent or the Banks upon the
insolvency, bankruptcy or reorganization of any Obligor, the Guarantor or any
other person, all as though such payment had not been made. If the payment of
any sum required to be made by any Obligor under the Credit Agreement shall at
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any time be prevented by reason of a case or proceeding under bankruptcy,
insolvency or other similar law, the Guarantor agrees that, for purposes of this
Guaranty and its obligations hereunder, such sum shall be deemed to be payable
in accordance with the terms of the Credit Agreement, and the Guarantor shall
pay such sum and any other amounts guaranteed hereunder.
4. Waiver by the Guarantor. The Guarantor hereby unconditionally
-----------------------
waives, to the greatest extent permitted by applicable law, (i) any and all
notice of the creation, renewal, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by the Banks upon this Guaranty,
or acceptance of this Guaranty, and the Guaranteed Obligations, (ii) any
requirement that the Banks exhaust any right or take any action against any
Obligor, any other guarantor or any other person or any collateral, (iii) any
and all rights which the Guarantor may have or which at any time hereafter may
be conferred upon it, by statute (including but not limited to any statute of
limitations), regulation or otherwise, to terminate or cancel this Guaranty,
(iv) all notices which may be required by statute, rule of law or otherwise to
preserve any rights against the Guarantor hereunder, including, without
limitation, any demand, presentment, protest, proof or notice of nonpayment of
any amounts payable under or in respect of the Credit Agreement, and notice of
any failure on the part of any Obligor to perform and comply with any term or
condition of the Credit Agreement, (v) any rights to the enforcement, assertion
or exercise of any right, remedy, power or privilege under or in respect of the
Credit Agreement, (vi) any requirement of diligence and (vii) notice of
acceptance of this Guaranty. The Administrative Agent shall have the right to
bring suit directly against the Guarantor with respect to the Guaranteed
Obligations, either prior to or concurrently with any lawsuit against, or
without bringing suit against, any Obligor.
5. Continuing Guaranty. This Guaranty is a continuing guaranty and
-------------------
shall (a) be irrevocable and remain in full force and effect in accordance with
the terms hereof until all of the Guaranteed Obligations, including those which
might arise at a later date, have been paid in full and are not subject to
rescission or return, (b) be binding upon the Guarantor and its successors and
assigns, and (c) inure to the benefit of and be enforceable by the successors,
transferees and assigns of the Administrative Agent and the Banks permitted by
the Credit Agreement. The Guarantor agrees that in the discharge of its
obligations hereunder no judgment, order, or exhaustion need be obtained, and no
action, suit or proceeding need be brought and no other remedies need be
exhausted against any Obligor or any other person for performance by the
Guarantor of its obligations hereunder
6. Representations. The Guarantor represents and warrants to the
---------------
Administrative Agent as follows:
(a) The Guarantor is an exempted company validly existing and in
good standing under the laws of the Cayman Islands and the execution, delivery
and performance of this Guaranty are within its corporate powers and are not in
contravention of the terms of its Certificate of Incorporation, Memorandum of
Association or Articles of Association.
(b) The execution, delivery and performance of this Guaranty
have been duly authorized by all requisite corporate action of the Guarantor,
and this Guaranty has
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been duly executed and delivered by the Guarantor and constitutes its legal,
valid and binding obligation and is enforceable against the Guarantor in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or other laws now or hereafter affecting
the rights of creditors.
(c) The execution, delivery and performance of this Guaranty
will not violate or conflict with (i) any provision of any law or regulation
binding on the Guarantor, or any order, judgment, award or decree of any court,
arbitrator or governmental authority binding on the Guarantor or any securities
issued by the Guarantor, or any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which the Guarantor is a party or by
which the Guarantor or any of its assets may be bound, the violation of which
would have a material adverse effect on the business, operations, assets or
financial condition of the Guarantor or (ii) the Certificate of Incorporation,
Memorandum of Association or Articles of Association of the Guarantor, and will
not result in, or require, the creation or imposition of any Lien on any of its
property, assets or revenues pursuant to the provisions of any such mortgage,
indenture, lease, contract or other agreement, instrument or undertaking.
7. Financial Information; Access.
-----------------------------
(a) So long as the Credit Agreement remains in effect the
Guarantor agrees (i) to provide to the Administrative Agent a copy of all such
reports and financial information pertaining to the Guarantor as shall be filed
by or on behalf of the Guarantor with the Securities and Exchange Commission,
promptly after the same are so filed, and (ii) to provide to the Administrative
Agent such other financial information as the Administrative Agent may
reasonably request.
(b) The Guarantor further agrees to permit the Administrative
Agent reasonable access, upon prior notice and at reasonable times during normal
business hours, to the Guarantor's books, records, and financial or accounting
personnel, to the extent relevant to this Guaranty or the Credit Agreement;
provided, however, that such access shall be in compliance with security and
confidentiality requirements of applicable governmental authorities and the
Guarantor's corporate policies relating to confidential information.
8. Merger, Consolidation or Other Transfers.
----------------------------------------
(a) The Guarantor shall not consolidate with or merge into any
other person or convey, transfer or lease all or substantially all of its assets
as an entirety to any person unless:
(i) such successor entity or such person to whom the conveyance,
transfer or lease is made (a "Successor Guarantor") shall expressly assume in
-------------------
writing by instrument or instruments enforceable against it reasonably
satisfactory in form and substance to the Administrative Agent, the due and
punctual payment of all obligations of the Guarantor under
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this Guaranty with the same effect as if such Successor Guarantor had originally
been named a Guarantor herein or had been a party hereto;
(ii) immediately after giving effect to such transaction, no
Event of Default shall exist and this Guaranty shall be in full force and
effect; and
(iii) the Successor Guarantor shall have delivered to the
Administrative Agent an opinion of counsel in scope and substance reasonably
satisfactory to it stating that such consolidation, merger, conveyance, transfer
or lease and the assumption agreement required by clause (i) above comply with
this Section 8.
(b) Upon any such consolidation or merger, conveyance, transfer
or lease in accordance with the provisions of (a) above, the successor formed by
such consolidation or into which the Guarantor is merged, or the person to which
such conveyance, transfer or lease is made, shall succeed to, and be substituted
for, the Guarantor as a Guarantor, with the same effect as if such successor had
been originally named as a Guarantor.
9. Taxes. All payments or reimbursements under this Guaranty and any
-----
instrument or agreement required hereunder shall be made without set-off or
counterclaim and free and clear of and without deduction for any and all present
and future Taxes (as defined below). The Guarantor agrees to cause all such
Taxes to be paid on behalf of any Bank or Administrative Agent directly to the
appropriate governmental authority. If the Guarantor is legally prohibited from
complying with this section, payments due to such Bank or Administrative Agent
under this Guaranty and any instrument or agreement required hereunder shall be
increased so that, after provisions for Taxes and all Taxes on such increase,
the amounts received by such Bank or Administrative Agent will be equal to the
amounts required under this Guaranty and any instrument or agreement required
hereunder as if no Taxes were due on such payments. The Guarantor shall
indemnify each Bank and Administrative Agent for the full amount of Taxes
payable by such Bank or Administrative Agent and any liabilities (including
penalties, interest and expenses) arising from such Taxes within thirty (30)
days from any written demand by such Bank. The Guarantor shall provide evidence
that all applicable Taxes have been paid to the appropriate taxing authorities
by delivering to Administrative Agent official tax receipts or notarized copies
or other evidence thereof reasonably satisfactory to Administrative Agent,
within ninety (90) days after the due date for such Tax payment. Such Bank will
designate a different Lending Office if such designation will avoid the need
for, or reduce the amount of, such payment or reimbursement and will not be
otherwise disadvantageous to such Bank in the sole discretion of such Bank.
For purposes of this Section 9, "Tax" and "Taxes" means (i) all taxes,
levies, imposts, duties, fees or other charges of whatsoever nature however
imposed by any country or any subdivision or authority of or in that country in
any way connected with the Credit Agreement or this Guaranty or any instrument
or agreement required hereunder, and all interest, penalties or similar
liabilities with respect thereto, except such taxes as are imposed on or
measured by the Administrative Agent's or any Bank's net income or capital and
franchise taxes, by the country or any subdivision or authority of or in that
country in which the Administrative Agent's or such Bank's principal office or
actual Lending Office is located, and (ii) any present
E-6
<PAGE>
or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to, this
Guaranty.
10. Amendments, Etc. No amendment or waiver of any provision of this
----------------
Guaranty shall in any event be effective with respect to the Administrative
Agent unless the same shall be in writing and signed by the Administrative
Agent.
11. No Waiver; Remedies. No failure on the part of the
-------------------
Administrative Agent to exercise, and no delay in its exercise of, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right hereunder by the Administrative Agent preclude any other
or further exercise thereof or the exercise of any other right by it. Subject
to Section 11.1 of the Credit Agreement, the Administrative Agent may
specifically waive any breach of this Guaranty by the Guarantor; provided that
--------
no such waiver shall be effective or binding unless in writing, and that no such
waiver shall constitute a continuing waiver of similar or other breaches.
12. Separability of This Guaranty. In case any term or provision of
-----------------------------
this Guaranty or any application hereof to any circumstance shall, in any
circumstances or jurisdiction and to any extent, be invalid, illegal or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity, illegality or unenforceability
without invalidating or rendering unenforceable any remaining terms and
provisions hereof or the application of such term or provision to circumstances
or jurisdictions other than those as to which it is held invalid, illegal or
unenforceable. To the extent permitted by applicable law, the Guarantor hereby
waives any provision of law that renders any term or provision hereof invalid,
illegal or unenforceable in any respect.
13. Headings. The headings contained in this Guaranty are for
--------
convenience of reference only and shall not modify, define or limit any of the
terms or provisions hereof.
14. Governing Law. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
-------------
THE GUARANTOR, THE ADMINISTRATIVE AGENT AND THE BANKS HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-
1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
15. Proceedings, Etc. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE
-----------------
GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS GUARANTY THE GUARANTOR ACCEPTS FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS
E-7
<PAGE>
GUARANTY. The Guarantor hereby designates and appoints CT Corporation System,
presently located at 1633 Broadway, New York, NY 10019, as its authorized agent
(the "Process Agent") to accept and acknowledge on its behalf service of any and
all process which may be served in any suit, action or proceeding in any New
York State or United States Federal Court sitting in New York, and to receive
and acknowledge on behalf of the Guarantor any Demands made by the
Administrative Agent pursuant to Section 2 hereof. The Guarantor represents and
warrants that the Process Agent has agreed in writing to accept such appointment
and that true copies of such acceptance will be furnished to the Administrative
Agent prior to the Effective Date under the Credit Agreement. The Guarantor
agrees that the failure of the Process Agent to give notice to the Guarantor of
any such service or Demand shall not impair the validity of such service or
Demand or of any judgment rendered in any action or proceeding based thereon.
Service of all process in any such proceeding in any such court and of any
Demand under Section 2 hereof may be made by hand delivery, courier service or
by registered or certified mail, return receipt requested, to the Process Agent,
such service being hereby acknowledged by the Guarantor to be sufficient for
personal jurisdiction in any action against the Guarantor in any such court and
to be otherwise effective and binding service or demand in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of the Administrative Agent or any
Bank to bring proceedings against the Guarantor in the courts of any other
jurisdiction.
16. Jury Trial Waiver. THE GUARANTOR AND, BY ITS ACCEPTANCE OF THE
-----------------
BENEFITS HEREOF, THE ADMINISTRATIVE AGENT EACH HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS GUARANTY. The scope of this waiver is intended to be all-
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. The Guarantor and, by its acceptance of the benefits hereof,
the Administrative Agent each (i) acknowledges that this waiver is a material
inducement for the Guarantor and Administrative Agent to enter into a business
relationship, that the Guarantor and Administrative Agent have already relied on
this waiver in entering into this Guaranty or accepting the benefits thereof, as
the case may be, and that each will continue to rely on this waiver in their
related future dealings, and (ii) further warrants and represents that each has
reviewed this waiver with its legal counsel and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, EXCEPT BY A WRITTEN INSTRUMENT SPECIFICALLY REFERRING TO
THIS SECTION 16, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS GUARANTY. In the event of
litigation, this Guaranty may be filed as a written consent to a trial by the
court.
17. Counterparts. This Guaranty may be executed in any number of
------------
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original for
all purposes; but all such counterparts together shall constitute but one and
the same instrument. This Guaranty shall become effective as to the Guarantor
upon the execution of a counterpart hereof by the
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<PAGE>
Guarantor and receipt by Administrative Agent of written or telephonic
notification of such execution and authorization of delivery thereof.
18. Cost and Attorneys Fees. The Guarantor agrees to pay, or cause
-----------------------
to be paid, in addition to the Guaranteed Obligations, on demand, and to save
the Administrative Agent and the Banks harmless against liability for, any and
all costs and expenses (including reasonable fees and disbursements of counsel
incurred or expended by Administrative Agent or any Bank in connection with the
enforcement of or preservation of any rights under this Guaranty.
19. Effect of Borrower's Bankruptcy. The Guarantor acknowledges and
-------------------------------
agrees that any interest on any portion of the Guaranteed Obligations which
accrues after the commencement of any proceeding, voluntary or involuntary,
involving the bankruptcy, insolvency, receivership, reorganization, liquidation
or arrangement of the Borrower (or, if interest on any portion of the Guaranteed
Obligations ceases to accrue by operation of law by reason of the commencement
of said proceeding, such interest as would have accrued on such portion of the
Guaranteed Obligations if said proceeding had not been commenced) shall be
included in the Guaranteed Obligations because it is the intention of the
Guarantor, the Administrative Agent and the Banks that the Guaranteed
Obligations which are guarantied by the Guarantor pursuant to this Guaranty
should be determined without regard to any rule of law or order which may
relieve the Borrower of any portion of such Guaranteed Obligations.
20. Notices. All notices, requests, consents and other
-------
communications under this Guaranty shall be in writing and shall be deemed to
have been given to the Guarantor when received, if hand delivered or sent by
courier service, on the third Business Day after mailing, if mailed by
registered or certified mail, postage prepaid, on the business day of receipt if
telecopied, in each case addressed to the Guarantor in care of Galaxy Latin
America, as Guarantor Notice Agent, at Sasson House, Shirley Street & Victoria
Ave., Nassau, Bahamas, Attention: Sean McWeeney (with a copy to Despacho de
Especialistas en Abogacia, S.A., P.O. Box 1884-1000, De la Casa Italia, 100
metros al este y 50 al norte, Numero 685, San Jose, Costa Rica, Attention: Lic.
Olga Marta Mena (with copies to: (i) Galaxy Latin America, LLC, 2400 E.
Commercial Blvd., 10th Floor, Fort Lauderdale, FL 33308, Attention: E.R. Gentile
and (ii) c/o Finser Corporation, 550 Biltmore Way, 9th Floor, Coral Gables, FL
33134, Attention: Ed Hernandez)), or to such other address in the Bahamas or
the United States as the Guarantor may designate by written notice to the
Administrative Agent; provided that Demands made by the Administrative Agent
under Section 2 and service of process under Section 15 may also be given to the
Process Agent. The Guarantor hereby designates and appoints Galaxy Latin
America as its agent (the "Guarantor Notice Agent") to receive and acknowledge
on behalf of the Guarantor any notice, requests, consents and other
communications given under this Guaranty.
21. Judgment. (a) If for the purposes of obtaining judgment in any
--------
court it is necessary to convert a sum due hereunder in Dollars into another
currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the respective Bank or the
Administrative Agent could purchase Dollars with such other currency at New
York, New York, on the Business Day preceding that on which final judgment is
given.
E-9
<PAGE>
(b) The obligation of the Guarantor in respect of any sum due from it
to Administrative Agent or any Bank hereunder shall, notwithstanding any
judgment in a currency other than Dollars, be discharged only to the extent that
on the Business Day following receipt by the Administrative Agent or any Bank of
any sum adjudged to be so due in such other currency the Administrative Agent or
such Bank may in accordance with normal banking procedures purchase Dollars with
such other currency; if the Dollars so purchased are less than the sum
originally due to the Administrative Agent or such Bank in Dollars, the
Guarantor agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Administrative Agent or such Bank against such loss,
and if the Dollars so purchased exceed the sum originally due to the
Administrative Agent or such Bank in Dollars, the Administrative Agent or such
Bank agrees to remit to the Guarantor such excess.
22. No Immunity. To the extent that the Guarantor has or hereafter
-----------
may acquire any immunity from jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, the Guarantor hereby irrevocably waives such immunity in
respect of its obligations under this Guaranty and, without limiting the
generality of the foregoing, agrees that the waivers set forth in this Section
22 shall have the fullest scope permitted under the Foreign Sovereign Immunities
Act of 1976 of the United States and are intended to be irrevocable for purposes
of such Act.
23. Entire Agreement. This Guaranty represents the final agreement
----------------
of the Guarantor with respect to its obligations to the Banks in connection with
the Credit Agreement and may not be contradicted by evidence of prior written
agreements or prior, contemporaneous or subsequent oral agreements of the
Guarantor or any other person. There are no unwritten oral agreements of the
Guarantor in favor of the Banks.
E-10
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duty
executed as of the date first above written.
DARLENE INVESTMENTS LLC
By: _______________________
Name: _____________________
Title: ____________________
E-11
<PAGE>
EXHIBIT F-1
[FORM OF OPINION OF BAHAMIAN COUNSEL]
[THE LETTERHEAD OF BAHAMIAN COUNSEL]
______________, 1999
Citicorp USA, Inc., as Administrative Agent
One Court Square
Long Island City, NY 11120
and
The Banks Listed on
Schedule A Hereto
Re: Credit Agreement dated as of June 3, 1999 among SurFin Ltd., the
Designated Subsidiaries (as defined therein), the Banks named
therein, Bank of America National Trust and Savings Association,
as Syndication Agent, Deutsche Bank AG, New York and Cayman
Islands Branches, as Documentation Agent, and The Chase Manhattan
Bank, The First National Bank of Chicago, Morgan Guaranty Trust
Company of New York and Westdeutsche Landesbank Girozentrale, New
York and Cayman Islands Branches, as Senior Managing Agents, and
Citicorp USA, Inc., as Administrative Agent
Ladies and Gentlemen:
We have acted as Bahamian counsel to SurFin Ltd., an international
business company organized and existing under the laws of the Bahamas (the
"Borrower"), and Dish Placement Services, Ltd., an international business
company organized and existing under the laws of the Bahamas (the "Designated
Subsidiary") in connection with that certain Credit Agreement dated as of June
3, 1999 (the "Credit Agreement") among the Borrower, the Designated Subsidiaries
(as defined therein) the banks named therein ("Banks"), Bank of America National
Trust and Savings Association, as Syndication Agent, Deutsche Bank AG, New York
and Cayman Islands Branches, as Documentation Agent, and The Chase Manhattan
Bank, The First National Bank of Chicago, Morgan Guaranty Trust Company of New
York and Westdeutsche Landesbank Girozentrale, New York and Cayman Islands
Branches, as Senior Managing Agents, and Citicorp USA, Inc., as Administrative
Agent. This opinion is rendered to you in compliance with Section 5(a)(vi)(A)
of the Credit Agreement. Capitalized terms used herein without definition have
the same meanings as in the Credit Agreement.
F1-1
<PAGE>
In our capacity as such counsel, we have examined originals, or copies
identified to our satisfaction as being true copies, of such records, documents
or other instruments as in our judgment are necessary or appropriate to enable
us to render the opinions expressed below. These records, documents and
instruments included the following:
(a) The Certificate of Incorporation of the Borrower and of the
Designated Subsidiary, each as amended to date;
(b) The Memorandum and Articles of Association of the Borrower and of
the Designated Subsidiary, each as amended to date;
(c) All records of proceedings and actions of the Board of Directors
of the Borrower and of the Designated Subsidiary relating to the Credit
Agreement and the transactions contemplated thereby; and
(d) The Credit Agreement.
We have been furnished with, and with Banks' consent have relied upon,
certificates of officers of the Borrower and of the Designated Subsidiary with
respect to certain factual matters, copies of which are attached hereto. In
addition, we have obtained and relied upon such certificates and assurances from
public officials as we have deemed necessary, copies of which have been
delivered to Banks. In all such examinations, we have assumed the genuineness
of all signatures on original and certified documents, and the conformity to
original or certified documents of all documents submitted to us as conformed or
photostatic copies.
We have investigated such questions of law for the purpose of
rendering this opinion as we have deemed necessary. We are opining herein as to
the effect on the subject transactions of only the laws of the Bahamas.
On the basis of the foregoing, and in reliance thereon, and subject to
the limitations, qualifications and exceptions set forth below, we are of the
opinion that:
1. Each of the Borrower and the Designated Subsidiary is an
International Business Company duly organized, validly existing and in good
standing under the laws of the Bahamas and has all requisite corporate power and
authority to own and operate its properties and to carry on its business as now
conducted.
2. Each of the Borrower and the Designated Subsidiary has all
requisite corporate power and authority to execute and deliver the Credit
Agreement and to carry out the transactions contemplated by, and perform its
obligations under, the Credit Agreement.
3. The execution and delivery of the Credit Agreement and the
performance thereof have been duly authorized by all necessary institutional and
legal action, including all corporate action on the part of the Borrower and of
the Designated Subsidiary. The Credit Agreement has been duly executed and
delivered by the Borrower and by the Designated Subsidiary.
F1-2
<PAGE>
4. Neither the execution and delivery of the Credit Agreement by the
Borrower or by the Designated Subsidiary nor the consummation of the
transactions contemplated by the Credit Agreement nor the compliance with the
terms and conditions thereof by the Borrower and the Designated Subsidiary
conflicts with, results in a breach or violation of, or constitutes a default
under, any of the terms, conditions or provisions of the Certificate of
Incorporation or Memorandum or Articles of Association of the Borrower or of the
Designated Subsidiary or of any of their respective Subsidiaries, any term of
any order, writ, judgment or decree known to us of the Bahamas or any
governmental authority thereof or therein to which the Borrower or the
Designated Subsidiary or any of their respective Subsidiaries is a party or by
which any of its properties or assets are bound, or any present statute, law,
rule, regulation, directive, guideline or policy statement of the Bahamas or any
governmental authority thereof or therein binding on the Borrower or the
Designated Subsidiary or any of their respective Subsidiaries.
5. No consents, licenses or approvals of, authorizations by, or
registrations, recordations, declarations or filings with, the Bahamas or any
governmental authority thereof or therein are required by the Borrower or the
Designated Subsidiary in connection with the execution and delivery by the
Borrower and the Designated Subsidiary of the Credit Agreement and the
performance by the Borrower and the Designated Subsidiary of the Credit
Agreement or the extensions of credit thereunder or the payment by the Borrower
or the Designated Subsidiary of its obligations thereunder (including, without
limitation, any governmental authorization, license, approval or consent
required by exchange regulations to enable the Borrower or the Designated
Subsidiary punctually to pay its obligations under the Credit Agreement in U.S.
dollars) or the consummation of any of the other transactions contemplated by
the Credit Agreement.
6. The Credit Agreement is in proper legal form under the laws of
the Bahamas for the enforcement thereof in accordance with its terms against the
Borrower and the Designated Subsidiary under such laws.
7. To the best of our knowledge, there are no actions, suits or
proceedings pending or threatened against the Borrower or the Designated
Subsidiary or any of their respective Subsidiaries.
8. The Borrower and the Designated Subsidiary are, under the laws of
the Bahamas, subject to civil and commercial law with respect to their
obligations under the Credit Agreement.
9. The choice by the parties to the Credit Agreement of the law of
the State of New York is a valid choice of law under Bahamian law, and
accordingly, New York substantive law will be applied by the courts of the
Bahamas if the Credit Agreement or any claim thereunder come under their
jurisdiction.
10. The submission to jurisdiction by the Borrower and the Designated
Subsidiary, the appointment of the agent for service of process by the Borrower
and the Designated Subsidiary and the designation of the agent for service of
process contained in
F1-3
<PAGE>
Section 11.19 of the Credit Agreement are valid and effective under the laws of
the Bahamas and are irrevocably binding on the Borrower and the Designated
Subsidiary.
11. The obligations of the Borrower and the Designated Subsidiary
under the Credit Agreement may be enforced (by judgment and levy) in accordance
with its terms in a proceeding at law in any competent court in the Bahamas at
the suit of the Administrative Agent or the Banks. Any judgment against the
Borrower or the Designated Subsidiary of a state or United States federal court
in the State of New York or United States of America is enforceable subject to
action brought in the courts of the Bahamas in accordance with the laws of the
Bahamas.
12. Under current law, the Borrower and the Designated Subsidiary are
permitted to make all payments under the Credit Agreement free and clear of, and
without deduction or withholding for or on account of, any taxes, levies,
imposts, duties, fees, assessments or other charges of the Bahamian or any
governmental authority thereof or therein or by any federation or association of
or with which the Bahamas may be a member or associated, and all such payments
in the hands of the Banks will not be subject to any such taxes, levies,
imposts, duties, fees, assessments or other charges. The Credit Agreement is
not subject to any stamp or documentary tax or other similar charge, including
but not limited to any registration or stamp tax of the Bahamian or any
governmental authority thereof or therein. None of the Banks is or will be
deemed to be resident, domiciled, carrying on business or subject to taxation in
the Bahamas by reason of the execution, performance or enforceability or
admissibility in evidence of the Credit Agreement. In the Bahamas, it is not
necessary that the Credit Agreement or any other document be filed or recorded,
or that any tax or duty be paid.
13. All obligations of the Borrower and the Designated Subsidiary to
pay the principal of and interest under the Credit Agreement and all other
amounts which may become due under the Credit Agreement constitute direct and
unconditional obligations of the Borrower and the Designated Subsidiary, and
rank at least pari passu in priority of payment with all other unsecured
Indebtedness of the Borrower and the Designated Subsidiary.
Our opinions in paragraphs 4 and 5 above as to compliance with certain
statutes, rules and regulations and as to the lack of any required consents or
approvals of, authorizations by, or registrations, declarations or filings with
certain governmental authorities are based upon a review of those statutes,
rules and regulations which, in our experience, are normally applicable to
transactions of the type contemplated by the Credit Agreement.
Our opinion that an obligation or document is enforceable means that
the obligation or document is of a type and form which courts in the
Commonwealth of The Bahamas will enforce. It does not mean that the obligation
or document can necessarily be enforced in accordance with its terms in all
circumstances. In particular:
(i) equitable remedies, such as injunctions and orders of specific
performance, are discretionary; and
F1-4
<PAGE>
(ii) the enforceability of an obligation, document or security
interest may be affected by statutes of limitation, by estoppel and
similar principles, by laws concerning insolvency, bankruptcy,
liquidation, enforcement of security interests or reorganization, or
by other laws generally affecting creditors' rights.
This opinion is rendered only to Administrative Agent and Banks and is
solely for their benefit in connection with the above transactions. This
opinion may not be relied upon by Administrative Agent or Banks for any other
purpose, or quoted to or relied upon by any other person, firm or corporation
for any purpose without our prior written consent. You may, however, deliver a
copy of this opinion to permitted assignees of all or a portion of a Bank's
rights and obligations under the Credit Agreement in connection with such
assignment and such assignees may rely hereon. This opinion may also be
disclosed to regulatory or other governmental authorities having jurisdiction
over you requesting (or requiring) such disclosure.
Very truly yours,
F1-5
<PAGE>
SCHEDULE A
Citibank, N.A.
Bank of America National Trust and Savings Association
Deutsche Bank AG New York and Cayman Islands Branches
The Chase Manhattan Bank
The First National Bank of Chicago
Morgan Guaranty Trust Company of New York
Westdeutsche Landesbank Girozentrale- New York and Cayman Islands Branches
The Bank of New York
Banque Nationale De Paris
Paribas
Mellon Bank, N.A.
San Paolo IMI Bank
Bank Hapolim B.M.
Bayerische Landesbank Girozentrale, Cayman Islands Branch
KBC Bank, N. V.
The Mitsubishi Trust and Banking Corporation, New York Branch
UniCredito Italino S.p.A.
Schedule A-1
<PAGE>
EXHIBIT F-2
[FORM OF OPINION OF NETHERLANDS COUNSEL]
[THE LETTERHEAD OF NETHERLANDS COUNSEL]
_______________, 1999
Citicorp USA, Inc., as Administrative Agent
One Court Square
Long Island City, NY 11120
and
The Banks Listed on
Schedule A Hereto
Re: Credit Agreement dated as of June 3, 1999, among SurFin Ltd., the
Designated Subsidiaries (as defined therein) the Banks named
therein, Bank of America National Trust and Savings Association,
as Syndication Agent, Deutsche Bank AG, New York and Cayman
Islands Branches, as Documentation Agent, and The Chase Manhattan
Bank, The First National Bank of Chicago, Morgan Guaranty Trust
Company of New York, and Westdeutsche Landesbank Girozentrale,
New York and Cayman Islands Branches, as Senior Managing Agents,
and Citicorp USA, Inc., as Administrative Agent
Ladies and Gentlemen:
We have acted as Netherlands counsel to White Holding B.V., a company
organized and existing under the laws of the Netherlands (the "Designated
Subsidiary") in connection with the Credit Agreement dated as of June 3, 1999
(the "Credit Agreement") among SurFin Ltd., the Designated Subsidiaries (as
defined therein), the banks named therein ("Banks"), and Bank of America
National Trust and Savings Association, as Syndication Agent, Deutsche Bank AG,
New York and Cayman Islands Branches, and The Chase Manhattan Bank, The First
National Bank of Chicago, Morgan Guaranty Trust Company of New York and
Westdeutsche Landesbank Girozentrale, New York and Cayman Islands Branches, as
Senior Managing Agents, and Citicorp USA, Inc., as Administrative Agent. This
opinion is rendered to you in compliance with Section 5(a)(vi)(B) of the Credit
Agreement. Capitalized terms used herein without definition have the same
meanings as in the Credit Agreement.
In our capacity as such counsel, we have examined originals, or copies
identified to our satisfaction as being true copies, of such records, documents
or other instruments as in our judgment are necessary or appropriate to enable
us to render the opinions expressed below. These records, documents and
instruments included the following:
F2-1
<PAGE>
(a) The Certificate of Incorporation of the Designated Subsidiary, as
amended to date;
(b) The Memorandum and Articles of Association of the Designated
Subsidiary, as amended to date;
(c) All records of proceedings and actions of the Board of Directors
of the Designated Subsidiary relating to the Credit Agreement and the
transactions contemplated thereby; and
(d) The Credit Agreement.
We have been furnished with, and with Banks' consent have relied upon,
certificates of officers of the Designated Subsidiary with respect to certain
factual matters, copies of which are attached hereto. In addition, we have
obtained and relied upon such certificates and assurances from public officials
as we have deemed necessary, copies of which have been delivered to Banks. In
all such examinations, we have assumed the genuineness of all signatures on
original and certified documents, and the conformity to original or certified
documents of all documents submitted to us as conformed or photostatic copies.
We have investigated such questions of law for the purpose of
rendering this opinion as we have deemed necessary. We are opining herein as to
the effect on the subject transactions of only the laws of the Netherlands.
On the basis of the foregoing, and in reliance thereon, and subject to
the limitations, qualifications and exceptions set forth below, we are of the
opinion that:
1. The Designated Subsidiary is a company duly organized, validly
existing and in good standing under the laws of the Netherlands and has all
requisite corporate power and authority to own and operate its properties and to
carry on its business as now conducted.
2. The Designated Subsidiary has all requisite corporate power and
authority to execute and deliver the Credit Agreement and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement.
3. The execution and delivery of the Credit Agreement and the
performance of the Credit Agreement have been duly authorized by all necessary
institutional and legal action, including all corporate action on the part of
the Designated Subsidiary. The Credit Agreement has been duly executed and
delivered by the Designated Subsidiary.
4. Neither the execution and delivery of the Credit Agreement by the
Designated Subsidiary nor the consummation of the transactions contemplated by
the Credit Agreement nor the compliance with the terms and conditions thereof by
the Designated Subsidiary conflicts with, results in a breach or violation of,
or constitutes a default under, any of the terms, conditions or provisions of
the Certificate of Incorporation or Memorandum or Articles of Association of the
Designated Subsidiary or of any of its Subsidiaries, any term of any order,
writ, judgment or decree known to us of the Netherlands or any governmental
authority thereof or therein to which the Designated Subsidiary or any of its
Subsidiaries is a
F2-2
<PAGE>
party or by which any of its properties or assets are bound, or any present
statute, law, rule, regulation, directive, guideline or policy statement of the
Netherlands or any governmental authority thereof or therein binding on the
Designated Subsidiary or any of its Subsidiaries.
5. No consents, licenses or approvals of, authorizations by, or
registrations, recordations, declarations or filings with, the Netherlands or
any governmental authority thereof or therein are required by the Designated
Subsidiary in connection with the execution and delivery by the Designated
Subsidiary of the Credit Agreement and the performance by the Designated
Subsidiary of the Credit Agreement or the extensions of credit thereunder or the
payment by the Designated Subsidiary of its obligations thereunder (including,
without limitation, any governmental authorization, license, approval or consent
required by exchange regulations to enable the Designated Subsidiary punctually
to pay its obligations under the Credit Agreement in U.S. dollars) or the
consummation of any of the other transactions contemplated by the Credit
Agreement.
6. The Credit Agreement is in proper legal form under the laws of
the Netherlands for the enforcement thereof in accordance with its terms against
the Designated Subsidiary under such laws.
7. To the best of our knowledge, there are no actions, suits or
proceedings pending or threatened against the Designated Subsidiary or any of
its Subsidiaries.
8. The Designated Subsidiary is, under the laws of the Netherlands,
subject to civil and commercial law with respect to its obligations under the
Credit Agreement.
9. The choice by the parties to the Credit Agreement of the law of
the State of New York is a valid choice of law under Dutch law, and accordingly,
New York substantive law will be applied by the courts of the Netherlands if the
Credit Agreement or any claim thereunder come under their jurisdiction.
10. The submission to jurisdiction by the Designated Subsidiary, the
appointment of the agent for service of process by the Designated Subsidiary and
the designation of the agent for service of process contained in Section 11.19
of the Credit Agreement are valid and effective under the laws of the
Netherlands and are irrevocably binding on the Designated Subsidiary.
11. The obligations of the Designated Subsidiary under the Credit
Agreement may be enforced (by judgment and levy) in accordance with its terms in
a proceeding at law in any competent court in the Netherlands at the suit of the
Administrative Agent or the Banks. Any judgment against the Designated
Subsidiary of a state or United States federal court in the State of New York or
United States of America is enforceable subject to action brought in the courts
of the Netherlands in accordance with the laws of the Netherlands.
12. Under current law, the Designated Subsidiary is permitted to make
all payments under the Credit Agreement free and clear of, and without deduction
or withholding for or on account of, any taxes, levies, imposts, duties, fees,
assessments or other charges of the Dutch or any governmental authority thereof
or therein or by any federation or association of or with which the Netherlands
may be a member or associated, and all such payments in the hands
F2-3
<PAGE>
of the Banks will not be subject to any such taxes, levies, imposts, duties,
fees, assessments or other charges. The Credit Agreement is not subject to any
stamp or documentary tax or other similar charge, including but not limited to
any registration or stamp tax of the Bahamian or any governmental authority
thereof or therein. None of the Banks is or will be deemed to be resident,
domiciled, carrying on business or subject to taxation in the Netherlands by
reason of the execution, performance or enforceability or admissibility in
evidence of the Credit Agreement. In the Netherlands, it is not necessary that
the Credit Agreement or any other document be filed or recorded, or that any tax
or duty be paid.
13. All obligations of the Designated Subsidiary to pay the principal
of and interest under the Credit Agreement and all other amounts which may
become due under the Credit Agreement constitute direct and unconditional
obligations of the Designated Subsidiary, and rank at least pari passu in
priority of payment with all other unsecured Indebtedness of the Designated
Subsidiary.
Our opinions in paragraphs 4 and 5 above as to compliance with certain
statutes, rules and regulations and as to the lack of any required consents or
approvals of, authorizations by, or registrations, declarations or filings with
certain governmental authorities are based upon a review of those statutes,
rules and regulations which, in our experience, are normally applicable to
transactions of the type contemplated by the Credit Agreement.
Our opinion that an obligation or document is enforceable means that
the obligation or document is of a type and form which courts in the Netherlands
will enforce. It does not mean that the obligation or document can necessarily
be enforced in accordance with its terms in all circumstances. In particular:
(i) equitable remedies, such as injunctions and orders of specific
performance, are discretionary; and
(ii) the enforceability of an obligation, document or security
interest may be affected by statutes of limitation, by estoppel and
similar principles, by laws concerning insolvency, bankruptcy,
liquidation, enforcement of security interests or reorganization, or
by other laws generally affecting creditors' rights.
This opinion is rendered only to Administrative Agent and Banks and is
solely for their benefit in connection with the above transactions. This
opinion may not be relied upon by Administrative Agent or Banks for any other
purpose, or quoted to or relied upon by any other person, firm or corporation
for any purpose without our prior written consent. You may, however, deliver a
copy of this opinion to permitted assignees of all or a portion of a Bank's
rights and obligations under the Credit Agreement in connection with such
assignment and such assignees may rely hereon. This opinion may also be
disclosed to regulatory or other governmental authorities having jurisdiction
over you requesting (or requiring) such disclosure.
Very truly yours,
F2-4
<PAGE>
SCHEDULE A
Citibank, N.A.
Bank of America National Trust and Savings Association
Deutsche Bank AG New York and Cayman Islands Branches
The Chase Manhattan Bank
The First National Bank of Chicago
Morgan Guaranty Trust Company of New York
Westdeutsche Landesbank Girozentrale- New York and Cayman Islands Branches
The Bank of New York
Banque Nationale De Paris
Paribas
Mellon Bank, N.A.
San Paolo IMI Bank
Bank Hapolim B.M.
Bayerische Landesbank Girozentrale, Cayman Islands Branch
KBC Bank, N. V.
The Mitsubishi Trust and Banking Corporation, New York Branch
UniCredito Italino S.p.A.
Schedule A-1
<PAGE>
EXHIBIT G
[FORM OF OPINION OF NEW YORK COUNSEL]
[LETTERHEAD OF NEW YORK COUNSEL]
__________, 1999
Citicorp USA, Inc., as Administrative Agent
[Address
of Agent]
and
The Banks Listed on
Schedule A Hereto
Re: Credit Agreement dated as of June 3, 1999 among SurFin Ltd., the
Designated Subsidiaries, the Banks named therein, Bank of America
National Trust and Savings Association, as Syndication Agent,
Deutsche Bank AG, New York and Cayman Islands Branches, as
Documentation Agent, and The Chase Manhattan Bank, The First
National Bank of Chicago, Morgan Guaranty Trust Company of New
York, and Westdeutsche Landesbank Girozentrale, New York and
Cayman Islands Branches, as Senior Managing Agents, and Citicorp
USA, Inc., as Administrative Agent
Ladies and Gentlemen:
We have acted as New York counsel to SurFin Ltd., an international
business company organized and existing under the laws of the Bahamas ("the
Borrower"), Dish Placement Services, Ltd., an international business company
organized and existing under the laws of the Bahamas, and White Holding B.V., a
company organized and existing under the laws of the Netherlands (together the
"Designated Subsidiaries") and Hughes Electronics Corporation, a Delaware
corporation ("Hughes") in connection with that certain Credit Agreement dated as
of June 3, 1999 (the "Credit Agreement") among the Borrower, the Designated
Subsidiaries, the banks named therein ("Banks"), Bank of America National Trust
and Savings Association, as Syndication Agent, Deutsche Bank AG, New York and
Cayman Islands Branches, as Documentation Agent, and The Chase Manhattan Bank,
The First National Bank of Chicago, Morgan Guaranty Trust Company of New York,
and Westdeutsche Landesbank Girozentrale, New York and Cayman Islands Branches,
as Senior Managing Agents, and Citicorp USA, Inc., as Administrative Agent
("Administrative Agent"). This opinion is rendered to you in compliance with
subsection 5.1(a)(vi)(C) of the Credit Agreement. Capitalized terms used herein
without definition have the same meanings as in the Credit Agreement.
G-1
<PAGE>
In our capacity as such counsel, we have examined originals, or copies
identified to our satisfaction as being true copies, of the Credit Agreement and
the Hughes Guaranty and such other records, documents or other instruments as in
our judgment are necessary or appropriate to enable us to render the opinions
expressed below.
We have been furnished with, and with Banks' consent have relied upon,
certificates of officers of the Borrower and Hughes with respect to certain
factual matters, copies of which are attached hereto. In addition, we have
obtained and relied upon such certificates and assurances from public officials
as we have deemed necessary, copies of which have been delivered to Banks. In
all such examinations, we have assumed the genuineness of all signatures on
original and certified documents, and the conformity to original or certified
documents of all documents submitted to us as conformed or photostatic copies.
For purposes of this opinion, we have relied upon the opinion of [NAME OF THE
BAHAMIAN COUNSEL], the Bahamas counsel to the Borrower, dated the date hereof, a
copy of which has been delivered to you.
In rendering the opinion expressed in paragraph 1 below, we have
assumed that:
(i) the Credit Agreement has been duly authorized by, has been duly
executed and delivered by, and (except, to the extent expressly set forth in the
opinions expressed below, as to the Borrower and the Designated Subsidiaries)
constitutes the legal, valid, binding and enforceable obligations of, all of the
parties thereto;
(ii) all signatories to the Credit Agreement have been duly
authorized; and
(iii) all of the parties to the Credit Agreement are duly organized
and validly existing the have the power and authority (corporate, partnership or
other) to execute and deliver and perform their respective obligations under the
Credit Agreement.
In rendering the opinion expressed in paragraph 8 below, we have
assumed that the Hughes Guaranty has been duly authorized, executed and
delivered by Hughes.
We have investigated such questions of law for the purpose of
rendering this opinion as we have deemed necessary. We are opining herein as to
the effect on the subject transactions of only United States Federal law and the
laws of the State of New York.
On the basis of the foregoing, and in reliance thereon, and subject to
the limitations, qualifications and exceptions set forth below, we are of the
opinion that:
1. The Credit Agreement has been duly executed and delivered by the
Borrower and the Designated Subsidiaries and constitutes the legally valid and
binding obligation of the Borrower and the Designated Subsidiaries, enforceable
against the Borrower and the Designated Subsidiaries in accordance with its
terms.
2. Neither the execution and delivery of the Credit Agreement by
the Borrower, nor the execution and delivery of the Credit Agreement by the
Designated Subsidiaries, nor the consummation of the transactions contemplated
by the Credit Agreement nor the compliance with the terms and conditions thereof
by the Borrower and the Designated Subsidiaries (A) conflicts with, results in a
breach or violation of, or constitutes a default under,
G-2
<PAGE>
any of the terms, conditions or provisions of (x) any term of any material
agreement, instrument, order, writ, judgment or decree known to us after due
inquiry to which the Borrower or the Designated Subsidiaries, or any of their
respective Subsidiaries is a party or by which any of its properties or assets
are bound, or (y) any present United States federal or New York statute, rule or
regulation binding on the Borrower or the Designated Subsidiaries or any of
their respective Subsidiaries, or (B) results in the creation of any Lien upon
any of the properties or assets of the Borrower or the Designated Subsidiaries,
or any of their respective Subsidiaries under any agreement or order referred to
in clause (x) above.
3. No consents or approvals of, authorizations by, or registrations,
declarations or filings with, any United States federal or New York governmental
authority are required by the Borrower or the Designated Subsidiaries in
connection with the execution and delivery by the Borrower and the Designated
Subsidiaries of the Credit Agreement or the extensions of credit thereunder or
the payment by the Borrower or the Designated Subsidiaries of its obligations
thereunder.
4. There are no actions, suits or proceedings pending or threatened,
to the best of our knowledge after due inquiry, against the Borrower or the
Designated Subsidiaries or any of their respective Subsidiaries which have a
significant likelihood of materially and adversely affecting either the ability
of the Borrower or the Designated Subsidiaries to perform their obligations
under any Loan Document or the financial condition or operations of the Borrower
or the Designated Subsidiaries and their respective Subsidiaries, taken as a
whole.
5. The making of the Loans and the application of the proceeds
thereof as provided in the Credit Agreement do not violate Regulation T, U or X
of the Board of Governors of the Federal Reserve System.
6. It is not necessary in connection with the execution and delivery
of the Credit Agreement for Banks to register the Credit Agreement or the Loans
under the Securities Act of 1933, as amended, or to qualify any indenture in
respect thereof under the Trust Indenture Act of 1939, as amended.
7. Neither the Borrower nor any of the Designated Subsidiaries is an
"investment company" or company "controlled" by an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended.
8. The Hughes Guaranty constitutes the legally valid and binding
obligation of Hughes, enforceable against Hughes in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting creditors' rights generally (including,
without limitation, fraudulent conveyance laws) and by general principles of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
G-3
<PAGE>
The foregoing opinions are subject to the following comments and
qualifications:
A. With respect to our opinion in paragraph 1 above, the validity,
binding effect and enforceability of the Credit Agreement is subject to all
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting creditors' rights generally and
to the possible judicial application of foreign laws or governmental action
affecting the enforcement of creditors' rights. In addition, we advise you that
the enforceability of the Credit Agreement is subject to the effect of general
principles of equity including concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific performance
or injunctive relief, regardless of whether considered in a proceeding in equity
or at law.
B. The enforceability of Section 11.14 of the Credit Agreement may
be limited by laws limiting the enforceability of provisions exculpating or
exempting a party from, or requiring indemnification of a party for, liability
for its own action or inaction, to the extent the action or inaction involves
gross negligence, recklessness, willful misconduct or unlawful conduct.
C. The enforceability of provisions in the Credit Agreement or the
Hughes Guaranty to the effect that terms may not be waived or modified except in
writing may be limited under certain circumstances.
D. We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Bank is located (other than the State of new York)
that limits the interest, fees or other charges such Bank may impose, (ii)
Section 11.17 of the Credit Agreement, (iii) the first sentence of Section 11.19
of the Credit Agreement and the first sentence of Section 15 of the Hughes
Guaranty insofar as such sentences relate to any United States District Court
sitting in New York or (iv) Section 11.18 of the Credit Agreement to the extent
it purports to be a waiver of immunity acquired after the execution and delivery
of the Credit Agreement.
E. Our opinions in paragraphs 3 and 4 above as to compliance with
certain statutes, rules and regulations and as to the lack of any required
consents or approvals of, authorizations by, or registrations, declarations or
filings with certain governmental authorities are based upon a review of those
statutes, rules and regulations which, in our experience, are normally
applicable to transactions of the type contemplated by the Credit Agreement.
At the request of our clients, this opinion is provided to you by us
in our capacity as New York counsel to the Borrower, the Designated Subsidiaries
and Hughes, and this opinion letter may not be relied upon by any Person or
quoted or reproduced for any purpose other than in connection with the
transactions contemplated by the Credit Agreement (including in connection with
any assignments contemplated by the Credit Agreement and any such permitted
assignee may rely on this opinion as if were addressed and had been delivered to
such assignee on the date hereof) without, in each instance, our prior written
consent, except that this opinion may be disclosed to regulatory or other
governmental authorities having jurisdiction over you requesting (or requiring)
such disclosure.
Very truly yours,
G-4
<PAGE>
SCHEDULE A
Citibank, N.A.
Bank of America National Trust and Savings Association
Deutsche Bank AG New York and Cayman Islands Branches
The Chase Manhattan Bank
The First National Bank of Chicago
Morgan Guaranty Trust Company of New York
Westdeutsche Landesbank Girozentrale- New York and Cayman Islands Branches
The Bank of New York
Banque Nationale De Paris
Paribas
Mellon Bank, N.A.
San Paolo IMI Bank
Bank Hapolim B.M.
Bayerische Landesbank Girozentrale, Cayman Islands Branch
KBC Bank, N. V.
The Mitsubishi Trust and Banking Corporation, New York Branch
UniCredito Italino S.p.A.
Schedule A-1
<PAGE>
EXHIBIT H-1
[FORM OF OPINION OF ASSISTANT GENERAL COUNSEL TO HUGHES]
[Letterhead of Hughes Electronics Corporation]
To: The Banks listed on Schedule A hereto and Citicorp USA, Inc., as
Administrative Agent
Re: SurFin Ltd.
Credit Agreement dated as of June 3, 1999
-----------------------------------------
Gentlemen:
I am the Assistant General Counsel of Hughes Electronics Corporation,
a Delaware corporation ("Hughes"), in connection with the guaranty (the
"Guaranty"), dated the date hereof, executed and delivered by Hughes pursuant to
and in the form or Exhibit D to that certain Credit Agreement dated as of June
3, 1999 (the "Credit Agreement") by and among SurFin Ltd., an international
business company organized and existing under the laws of the Bahamas (the
"Borrower"), the Designated Subsidiaries (the "Designated Subsidiaries"), the
banks named therein (the "Banks"), Bank of America National Trust and Savings
Association, as Syndication Agent, Deutsche Bank AG, New York and Cayman Islands
Branches, as Documentation Agent, and The Chase Manhattan Bank, The First
National Bank of Chicago, Morgan Guaranty Trust Company of New York, and
Westdeutsche Landesbank Girozentrale, New York and Cayman Islands Branches, as
Senior Managing Agents, and Citicorp USA, Inc. as administrative agent for the
Banks (in such capacity "Administrative Agent"). Capitalized terms not
otherwise defined herein shall have the meanings set forth in the Credit
Agreement. This opinion is rendered to you pursuant to Section 5.1(a)(vi)(D) of
the Credit Agreement.
As Assistant General Counsel to Hughes, I have caused to be made such
legal and factual examinations and inquiries, including an examination of
originals or copies, certified or otherwise identified to my satisfaction as
authentic, of such corporate records, agreements, instruments and other
documents as I have deemed necessary or appropriate for the purposes of this
opinion. I have caused to be obtained such certificates and other assurances
(copies of which have been delivered to you) from public officials and officers
and other employees of Hughes as I considered necessary or appropriate for the
purpose of rendering this opinion. I have assumed the genuineness of all
signatures (except that of Hughes), the authenticity of all documents submitted
to me as originals, and the conformity with the originals of all documents
submitted to me as copies.
Based upon the foregoing and in reliance thereon, and subject to the
qualifications, limitations and assumptions set forth herein, I am of the
opinion that, as of the date hereof:
1. Hughes is a corporation duly incorporated and validity existing as
a corporation in good standing under the laws of the State of Delaware, with
full corporate power and authority to own and lease its properties and conduct
its business as presently owned and conducted.
H1-1
<PAGE>
2. Hughes is duly qualified to do business as a foreign corporation
in good standing in the State of California.
3. Hughes has full corporate power and authority to guarantee the
Borrower's and the Designated Subsidiaries' obligations under the Credit
Agreement, to execute and deliver the Guaranty and to perform its obligations
thereunder.
4. All corporate action required to be taken by Hughes for the
authorization, execution and delivery of the Guaranty by Hughes and the
performance by Hughes of its obligations thereunder has been duly taken.
5. The Guaranty has been duly executed and delivered by Hughes and
is a valid and binding agreement of Hughes, enforceable against Hughes in
accordance with its terms, subject to the limitations, qualifications,
exceptions and assumptions set forth below.
6. To my knowledge, after causing to be conducted such legal and
factual examination and inquiries and causing to be conducted such discussions
with and obtaining such certificates or other confirmations from officers and
other employees of Hughes as I considered appropriate in the circumstances, no
consent, permission, authorization, order or license of any United States
federal or New York governmental authority is necessary in connection with the
execution and delivery of the Guaranty by Hughes and Hughes' performance of its
obligations under the Guaranty.
7. There is no provision of the Certificate of Incorporation or the
Bylaws of Hughes which would be contravened by the execution and delivery of the
Guaranty by Hughes or by the performance by Hughes of its obligations under the
Guaranty.
8. Hughes is not an "investment company" as defined in the
Investment Company Act of 1940, as amended.
9. To my knowledge, after causing to be conducted such legal and
factual examination and inquiries and causing to be conducted such discussions
with and obtaining such certificates or other confirmations from officers and
other employees of Hughes as I considered appropriate in the circumstances, no
consent or approval of any trustee or holder of any material indebtedness of
Hughes is necessary in connection with the execution and delivery of the
Guaranty by Hughes and Hughes' performance of its obligations under the
Guaranty.
10. There is no provision of any indenture or material agreement for
borrowed money to which Hughes is a party or under which Hughes is obligated,
and of which I am aware, after causing to be conducted such legal and factual
examinations and inquiries and causing to be conducted such discussion with and
obtaining such certificates or other confirmations from officers and other
employees of Hughes as I considered appropriate in the circumstances, which
would be contravened by the execution and delivery of the Guaranty by Hughes or
by the performance by Hughes of its obligations under the Guaranty.
11. To my knowledge, after causing to be conducted such legal and
factual examinations and inquiries and causing to be conducted such discussions
with and obtaining such certificates or other confirmations from officers and
other employees of Hughes as I
H1-2
<PAGE>
considered appropriate in the circumstances, there is no judgment, decree or
order of any court or governmental agency binding on Hughes which would be
contravened by the execution and delivery of the Guaranty by Hughes and Hughes'
performance of its obligations under the Guaranty.
The opinion expressed in paragraph 5 is subject to the following
limitations, qualifications, exceptions and assumptions:
(a) the enforcement of the Guaranty may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws or by equitable
principles relating to or limiting the rights of creditors generally;
(b) the use of the term enforceable shall not imply any opinion as to
the availability of equitable remedies;
(c) The unenforceability under certain circumstances, under New York
or federal law or court decisions, of provisions expressly or by implication
waiving broadly or vaguely stated rights, unknown future rights, defenses to
obligations or rights granted by law, where such waivers are against public
policy or prohibited by law;
(d) The unenforceability under certain circumstances of provisions to
the effect that rights or remedies are not exclusive, that every right or remedy
is cumulative and may be exercised in addition to or with any other right or
remedy, that election of a particular remedy or remedies does not preclude
recourse to one or more other remedies or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy;
(e) The unenforceability under certain circumstances of provisions
indemnifying a party against liability for its own wrongful or negligent acts or
where such indemnification is contrary to public policy or prohibited by law;
and
(f) The enforceability under certain circumstances of provisions
imposing penalties, forfeitures, late payment charges or an increase in interest
rate upon delinquency in payment or the occurrence of a default.
To the extent that the obligations of Hughes may be dependent upon
such matters, I assume for purposes of this opinion that each of the Banks is
duly incorporated or organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization; that each of the
Banks is duly qualified to engage in the transaction covered by this opinion;
that the Credit Agreement has been duly authorized, executed and delivered by
each of the Banks and that the Credit Agreement constitutes the valid and
binding obligation of each of the Banks, enforceable in accordance with its
terms; and that each of the Banks has the requisite corporate or organizational
and legal power and authority to own its properties, to carry on its business as
now being conducted and to perform its obligations under the Credit Agreement,
including, without limitation, to make the loans under the Credit Agreement. I
am not expressing any opinion as to the effect of or the compliance by any Bank
with any state or federal laws or regulations applicable to the transactions
because of the nature of its respective business.
H1-3
<PAGE>
I am a member of the bar of the State of California. Subject to the
limitations set forth herein, I am opining herein as to the effect on the
subject transaction only of the federal laws of the United States and the
General Corporation Law of the State of Delaware. In this regard, I note that
the Credit Agreement and the Guaranty contain provisions to the effect that the
laws of jurisdictions other than those of the State of California are intended
to be governing. For purposes of the opinions expressed herein I have assumed,
with your consent, without any independent investigation, that the laws of all
jurisdictions that may govern the Credit Agreement and the Guaranty other than
those of the State of California are identical in all relevant respects to the
laws of the State of California. Except as expressly noted, I have not
considered, and express no opinion on, the laws of any other jurisdiction.
This opinion is rendered to the Banks and Administrative Agent and is
solely for their benefit in connection with the above transaction. This opinion
may not be relied upon by the Banks or Administrative Agent for any other
purpose, or furnished to, quoted to or relied upon by any other person, firm or
corporation for any purpose without my prior written consent. You may, however,
deliver a copy of this opinion to permitted assignees of all or a portion of a
Bank's rights and obligations under the Credit Agreement in connection with such
assignment and such assignees may rely on this opinion. This opinion may also
be disclosed to regulatory or other governmental authorities having jurisdiction
over you requesting (or requiring) such disclosure.
Very truly yours,
H1-4
<PAGE>
SCHEDULE A
Citibank, N.A.
Bank of America National Trust and Savings Association
Deutsche Bank AG New York and Cayman Islands Branches
The Chase Manhattan Bank
The First National Bank of Chicago
Morgan Guaranty Trust Company of New York
Westdeutsche Landesbank Girozentrale- New York and Cayman Islands Branches
The Bank of New York
Banque Nationale De Paris
Paribas
Mellon Bank, N.A.
San Paolo IMI Bank
Bank Hapolim B.M.
Bayerische Landesbank Girozentrale, Cayman Islands Branch
KBC Bank, N. V.
The Mitsubishi Trust and Banking Corporation, New York Branch
UniCredito Italino S.p.A.
Schedule A-1
<PAGE>
EXHIBIT H-2
[FORM OF OPINION OF COUNSEL TO DARLENE]
[THE LETTERHEAD OF FOREIGN COUNSEL]
____________, 1999
Citicorp USA, Inc., as Administrative Agent
[Address
of Agent]
and
The Banks Listed on
Schedule A Hereto
Re: Credit Agreement dated as of June 3, 1999 among SurFin Ltd.,
Dish Placement Services, Ltd., White Holding B.V., the Banks
named therein, Bank of America National Trust and Savings
Association, as Syndication Agent, Deutsche Bank AG, New York and
Cayman Islands Branches, as Documentation Agent, and The Chase
Manhattan Bank, The First National Bank of Chicago, Morgan
Guaranty Trust Company of New York, and Westdeutsche Landesbank
Girozentrale, New York and Cayman Islands Branches, as Senior
Managing Agents, and Citicorp USA, Inc., as Administrative Agent
Ladies and Gentlemen:
1. We have acted as Cayman Islands counsel to Darlene Investments
LLC, an exempted company organized and existing under the laws of the Cayman
Islands ("Guarantor"), in connection with that certain Guaranty (the "Guaranty")
dated the date hereof, in the form of Exhibit E to the Credit Agreement. This
opinion is rendered to you in compliance with subsection 5.1(a)(vi)(E) of the
Credit Agreement.
2. Capitalized terms used herein without definition have the same
meanings as in the Credit Agreement.
3. For the purposes of this opinion, we have examined and relied
upon the following documents:
(i) an execution copy of the Credit Agreement;
(ii) a copy of the Guaranty;
(iii) a certified copy of the Certificate of Incorporation of the
Guarantor;
H2-1
<PAGE>
(iv) certified copies of the Memorandum and Articles of Association
of the Guarantor adopted by special resolution on 13th December 1995 and amended
by special resolutions on 14th August 1996 and 28th April 1999 (the "Memorandum
and Articles");
(v) the minute book and statutory registers of the Guarantor
including resolutions of the Directors of the Guarantor (the "Directors") dated
June 3, 1999 and resolutions of the shareholders of the Guarantor dated June 3,
1999;
(vi) the cause list kept at the Clerk of the Courts' office in the
Cayman Islands as at June ___, 1999;
(vii) a certificate of good standing in respect of the Guarantor
dated [____], 1999 and issued by the Registrar of Companies of the Cayman
Islands; and
(viii) a certificate of the Directors dated June 3, 1999 (the
"Directors' Certificate").
4. This opinion is based solely on the facts subsisting at the date
hereof and of which we are aware. We are qualified to advise as to Cayman
Islands law only and our opinion relates solely to the laws of the Cayman
Islands in force at the date hereof and as currently applied by the courts of
the Cayman Islands. We have not, for the purposes of this opinion, made any
investigation of the laws, rules or regulations of any other jurisdiction,
including, but not limited to, the laws of the State of New York and federal
laws of the United States of America.
5. In giving this opinion, we have relied upon the accuracy of the
Directors' Certificate without further verification and upon the following
assumptions which we have not independently verified:
(i) The genuineness of all seals and signatures on all documents
which, or copies of which, were examined by us and the genuineness of all such
documents submitted to us as originals and the conformity with their respective
originals of all such documents submitted to us as copies;
(ii) The Memorandum and Articles reviewed by us are the Memorandum and
Articles of Association of the Guarantor in force on the date hereof;
(iii) The statutory registers and minute books of the Guarantor
examined by us for the purposes of this opinion were true, complete and up to
date at the time of our examination;
(iv) To the extent that any of the matters to which this opinion
relates depend on the capacity, authority or legal right of parties under
relevant laws and regulations, the capacity, power, authority and legal right of
all parties under all relevant laws and regulations (other than, in relation to
the Guarantor only, the laws and regulations of the Cayman Islands) to enter
into, execute and perform their respective obligations under the Credit
Agreement and Guaranty;
H2-2
<PAGE>
(v) To the extent that any of the matters to which this opinion
relates depend on (a) the due authorization, execution and delivery by the other
parties to the Credit Agreement or the Guaranty or (b) the enforceability
thereof in accordance with their respective terms under the laws of New York and
other relevant laws, rules or regulations, each of the Credit Agreement (in the
form of the execution copy examined by us) and Guaranty has been duly
authorized, executed and delivered by or on behalf of each of the parties
thereto (other than in the case of the Guaranty only, the Guarantor) and
constitutes the legal, valid and binding obligations of the parties thereto,
enforceable in accordance with their respective terms under the laws of New York
and all other relevant laws, rules and regulations (other than, in the case of
the Guaranty only, the laws of the Cayman Islands);
(vi) The choice of New York law as the governing law of each of the
Credit Agreement and the Guaranty has, in each case, been made in good faith and
will, in each case, be regarded as a valid and binding selection which be upheld
by the courts of New York, the United States federal courts and the courts of
any other relevant jurisdiction (other than, in the case of the Guaranty only,
the courts of the Cayman Islands);
(vii) There is no applicable provision of the laws or regulations of
any jurisdiction (other than, in relation to the Guaranty only, the Cayman
Islands) or any public policy in any jurisdiction (including the Cayman Islands)
which would be or, as the case may be, has been contravened by the execution or
delivery of the Credit Agreement and the Guaranty and, insofar as any obligation
expressed to be incurred under the Guaranty is to be performed in or is
otherwise subject to any applicable laws of any jurisdiction other than the
Cayman Islands, its performance will not be illegal or ineffective by virtue of
the laws of that jurisdiction;
(viii) All authorizations, approvals, consents, licenses and
exemptions of any government or any agency or department thereof or any other
person required by, and all requirements of, each of the parties to the Credit
Agreement and the Guaranty (other than, in the case of the Guaranty only and in
the case of the laws and regulations of the Cayman Islands only, the Guarantor)
for the legality, validity, enforceability, proper performance and observance
and admissibility in evidence of each of the Credit Agreement and the Guaranty
have been or will have been obtained or fulfilled and are or will remain in full
force and effect and any conditions to which they are subject have been
satisfied or waived by the parties entitled to the benefit thereof; and
(ix) All notarizations, consularizations, filings, recordings,
registrations and enrollments of each of the Credit Agreement and the Guaranty
with any court or authority of or in any jurisdiction outside the Cayman Islands
and all payments outside the Cayman Islands of stamp duty, registration or other
tax on or in relation to the Credit Agreement and the Guaranty that are
necessary in order to ensure the legality, validity, enforceability or
admissibility in evidence of either of the Credit Agreement and the Guaranty
have been made and/or paid in relation to the same.
6. Based upon and subject to the foregoing, and subject to any
matters not disclosed to us and to the assumptions and qualifications
hereinbefore and hereinafter set out, we are of the opinion that:
H2-3
<PAGE>
(i) The Guarantor is an exempted company with limited life duly
incorporated, validly existing and in good standing under the laws of the Cayman
Islands with full corporate power and authority to carry out any object not
prohibited by The Companies Law (1998 Revision) or any other law;
(ii) The Guarantor has full corporate power and authority to
execute, deliver and perform its obligations under the Guaranty;
(iii) The execution, delivery and performance of the Guaranty have
been duly authorized by all necessary corporate action by the Guarantor, and the
Guaranty has been duly executed by the Guarantor.
(iv) No constitutional provision, law, ordinance or decree of the
Cayman Islands or any government agency or department of the Cayman Islands and
no provision of the Memorandum and Articles of Association of the Guarantor is
or will be contravened by the execution and delivery of the Guaranty or the
performance and observance of the terms thereof by the Guarantor;
(v) It is not necessary or advisable to ensure the enforceability
or admissibility in evidence in the Cayman Islands of the Guaranty that it be
notarized, filed, recorded, registered or enrolled in any court, public
authority or elsewhere in the Cayman Islands;
(vi) The choice by the parties to the Guaranty of the laws of the
State of New York as the governing law of the Guaranty would be recognized and
given effect by the courts of the Cayman Islands;
(vii) Nothing under Cayman Islands law prevents the submission to
jurisdiction by the Guarantor, the appointment of the agent for service of
process by Guarantor and the designation of the agent for service of process
being valid and effective and binding on the Guarantor;
(viii) The obligations of the Guarantor under the Guaranty are
enforceable by the Administrative Agent against the Guarantor in accordance with
its terms in a proceeding at law in the courts of the Cayman Islands; and
(ix) There is no statutory enforcement in the Cayman Islands of
judgements obtained in a state or United States federal court in the State of
New York or the United States of America but such a judgment will be actionable
in the courts of the Cayman Islands on the principle that a judgement of a
competent foreign court imposes upon the judgment debtor an obligation to pay
the sum for which judgement has been given, provided that:
(a) the foreign court had jurisdiction to pronounce the judgement;
(b) the judgement is final and conclusive and is for a definite
liquidated sum of money not being in respect of taxes or a fine or other
penalty; and
(c) the judgement was not obtained by fraud or in proceedings
which were contrary to natural justice or in any other manner contrary to
the laws or public policy of
H2-4
<PAGE>
the Cayman Islands and the judgement is not of a kind, the enforcement of
which is contrary to the laws or public policy of the Cayman Islands.
7. The foregoing opinions are subject to the following
qualifications, limitations and reservations:
(i) The term "enforceable" and its cognates, as used in this opinion,
mean that the obligations assumed under the Guaranty are of a type which the
courts of the Cayman Islands enforce. It does not mean that those obligations
will necessarily be enforced in all circumstances. For example:
(a) Enforcement of obligations and the priority of obligations may be
limited by bankruptcy, insolvency, liquidation, reorganization, moratorium,
reconstruction or other similar laws, rules or regulations of general
application relating to or affecting the rights of creditors or by
prescription or lapse of time;
(b) Enforcement may be limited by general principles of equity, and in
particular the availability of certain equitable remedies such as
injunction and specific performance will be at the discretion of the courts
and, for example, a court might make an award of damages where specific
performance of an obligation or some other equitable remedy is sought but
the courts considers damages to be an adequate remedy;
(c) Claims may become barred under the statutes of limitation or may
be or become subject to defences of set off or counterclaim;
(d) Where obligations are to be performed in a jurisdiction outside
the Cayman Islands, they may not be enforceable in the Cayman Islands to
the extent that performance would be illegal under the laws or contrary to
the public policy of that other jurisdiction;
(e) The Cayman Islands court has jurisdiction to give judgement in the
currency of the relevant obligation and statutory rates of interest payable
upon judgements given after 1st June, 1995 will vary according to the
currency of the judgement. In the event that the Guarantor becomes
insolvent and is made subject to a liquidation proceeding, the Cayman
Islands court is likely to require all debts to be proved in a common
currency, which is likely to be the "functional currency" of the Guarantor
determined in accordance with applicable accounting principles; currency
indemnity provisions have not been tested, so far as we are aware, in the
courts of the Cayman Islands;
(f) A certificate, determination or calculation of any party to the
Credit Agreement or the Guaranty as to any matter provided therein might be
held by a Cayman Islands court not to be conclusive, final and binding if,
for example, it could be shown to have an unreasonable or arbitrary basis
or in the event of manifest error;
(g) In principle a Cayman Islands' court will award costs and
disbursements in litigation in accordance with contractual provisions in
this regard but the applicable rule of court (GCR Order 62, rule 2) has
been in force only since 1st June, 1995 and there
H2-5
<PAGE>
remains some uncertainty as to the way in which it will be applicable in
practice. Whilst it is clear that costs incurred prior to judgement can be
recovered in accordance with the contract, it is likely that post-judgement
costs will be recoverable, if at all, in accordance with the scales laid
down in the Grand Court (Taxation of Costs) Rules 1995;
(h) Under Article 70 of the Guarantor's Articles of Association,
all cheques, promissory notes, drafts, bills of exchange, other negotiable
instruments and other obligations of the Guarantor in an amount that
exceeds $2.25 million must be signed, drawn, accepted, endorsed or
otherwise executed, as the case may be, by one signatory designated by the
Bessemer Designees (as defined in the Articles of Association of the
Guarantor);
(ii) The severability of any provisions of the Guaranty which are
illegal, invalid or unenforceable under the laws of any jurisdiction is, as a
matter of Cayman Islands law, at the discretion of the courts;
(iii) Where under the Guaranty any of the parties is vested with a
discretion or may determine a matter in its opinion, Cayman Islands law may
require that such discretion is exercised reasonably or that such opinion is
based on reasonable grounds;
(iv) Stamp duty will be payable if the Credit Agreement or the
Guaranty is executed in, brought to or produced before a court of the Cayman
Islands. At current rates, in such circumstances, stamp duty of CI$2.00 will be
payable on the Credit Agreement and CI$6.00 will be payable on the Guaranty;
(v) Whereas our investigation of the minute book and statutory
registers of the Guarantor did not indicate that any steps had been taken for
the voluntary winding up or reorganization of he Guarantor, and our examination
of the cause list kept at the Clerk of the Court's office in the Cayman Islands
on June __, 1999 revealed no winding up petitions against, or reorganization
proceedings of the Guarantor, our findings must not be taken as conclusive
because minutes of meetings may not have been kept fully up to date and
impending winding up or reorganization proceedings may not have, as at such
date, been included in the cause list;
(vi) Certain provisions, for example, provisions for default
interest, default fines or similar provisions, may be unenforceable to the
extent that they are considered by a Cayman Islands court to be penal in nature
rather than a genuine pre-estimate of loss; and
(vii) The courts of the Cayman Islands will not enforce any
provisions of any of the Guaranty to the extent that the same may be contrary to
public policy in the Cayman Islands.
(viii) Any term of the Guaranty herein referred to may be amended
orally or by a course of conduct by the parties thereto, notwithstanding any
provision to the contrary contained herein;
(ix) We make no comment with regard to the references to foreign
statutes in the Guaranty;
H2-6
<PAGE>
(x) We express reservations regarding the validity of any
expressed undertaking of a company which purports to prevent it from exercising
its statutory powers under The Companies Law (1998 Revision), (such as for
example to prevent it from amending or altering its Memorandum and Articles of
Association or its share capital);
(xi) To maintain the Guarantor in good standing under the laws of
the Cayman Islands, annual filing fees must be paid and returns made to the
Registrar of Companies. A failure to pay annual return fees in respect of the
Guarantor will result in the Guarantor being struck from the Register of
Companies whereupon its assets will vest in the Cayman Islands government and
all unauthorized dealings therewith will become illegal;
(xii) Cayman Islands conflict of law principles are derived from
English common law and in the Cayman Islands, as in England, the concept of
governing law does not imply that all matters pertaining to the contract or
instrument (for example the assignability of choses in action constituted by
another system of law) will necessarily be determined exclusively by the
governing law. A Cayman Islands court may not apply the laws of another
jurisdiction if to do so would be contrary to the laws or public policy of the
Cayman Islands; and
(xiii) A court may stay proceedings if concurrent proceedings are
being brought elsewhere;
(xiv) To the extent that the obligations of the Guarantor under the
Guaranty mentioned herein involve the government of any country which is
currently the subject of United Nations sanctions (namely Iraq, Libya, Rwanda,
Sierra Lcone and parts of former Yugoslavia, and each an "Affected Country"),
any person or body resident in, incorporated in or constituted under the laws of
any Affected Country or exercising public functions in any Affected Country or
any person or body controlled by any of the foregoing or by any person acting on
behalf of any of the foregoing, they may be subject to restrictions pursuant to
such sanctions as implemented under the laws of the Cayman Islands.
This opinion is rendered only to Administrative Agent and Banks and is
solely for their benefit in connection with the above transactions. This
opinion may not be relied upon by Administrative Agent or Banks for any other
purpose, or quoted to or relied upon by any other person, firm or corporation
for any purpose without our prior written consent. You may, however, deliver a
copy of this opinion to permitted assignees of all or a portion of a Bank's
rights and obligations under the Credit Agreement in connection with such
assignment and such assignees may rely hereon. This opinion may also be
disclosed to regulatory or other governmental authorities having jurisdiction
over you requesting (or requiring) such disclosure.
Very truly yours,
H2-7
<PAGE>
SCHEDULE A
Citibank, N.A.
Bank of America National Trust and Savings Association
Deutsche Bank AG New York and Cayman Islands Branches
The Chase Manhattan Bank
The First National Bank of Chicago
Morgan Guaranty Trust Company of New York
Westdeutsche Landesbank Girozentrale- New York and Cayman Islands Branches
The Bank of New York
Banque Nationale De Paris
Paribas
Mellon Bank, N.A.
San Paolo IMI Bank
Bank Hapolim B.M.
Bayerische Landesbank Girozentrale, Cayman Islands Branch
KBC Bank, N. V.
The Mitsubishi Trust and Banking Corporation, New York Branch
UniCredito Italino S.p.A.
Schedule A-1
<PAGE>
EXHIBIT I
[FORM OF OPINION OF O'MELVENY & MYERS LLP
AS OF THE CLOSING DATE]
_____________, 1999
Citicorp USA, Inc., as Administrative Agent
2 Penns Way
Suite 200
New Castle, Delaware 19720
and
The Banks Party to the Credit Agreement
Referred to Below
Re: Credit Agreement dated as of June 3, 1999 among SurFin Ltd., the
Designated Subsidiaries, the Banks named therein, Bank of America
National Trust and Savings Association, as Syndication Agent,
Deutsche Bank AG, New York and Cayman Islands Branches, as
Documentation Agent, and The Chase Manhattan Bank, The First
National Bank of Chicago, Morgan Guaranty Trust Company of New
York, and Westdeutsche Landesbank Girozentrale, New York and
Cayman Islands Branches, as Senior Managing Agents, and Citicorp
USA, Inc., as Administrative Agent
------------------------------
Ladies and Gentlemen:
We have participated in the preparation of the Credit Agreement dated
as of June 3, 1999 (the "Credit Agreement"; capitalized terms defined therein
and not otherwise defined herein are used herein as therein defined) among
SurFin Ltd. (the "Borrower"), the Designated Subsidiaries (the "Designated
Subsidiaries" and together with the Borrower the "Obligors"), the Banks named
therein (the "Banks"), Bank of America National Trust and Savings Association,
as Syndication Agent, Deutsche Bank AG, New York and Cayman Islands Branches, as
Documentation Agent, and The Chase Manhattan Bank, The First National Bank of
Chicago, Morgan Guaranty Trust Company of New York, and Westdeutsche Landesbank
Girozentrale, New York and Cayman Islands Branches, as Senior Managing Agents,
and Citicorp USA, Inc., as Administrative Agent, and have acted as special
counsel for the Administrative Agent for the purpose of rendering this opinion
pursuant to Section 5.1(a)(vii) of the Credit Agreement.
We have participated in various conferences and telephone conferences
with representatives of the Borrower, the Designated Subsidiaries and the
Administrative Agent and conferences and telephone calls with counsel to the
Borrower and Hughes, and with your
I-1
<PAGE>
representatives, during which the Credit Agreement and related matters have been
discussed, and we have also participated in the meeting held on the date hereof
(the "Closing") incident to the effectiveness of the Credit Agreement. We have
reviewed the forms of the Credit Agreement and the exhibits thereto, and the
opinions of Graham, Thompson & Company], Bahamas counsel to the Borrower,
Wilmer, Cutler & Pickering, New York counsel to the Borrower, and Keith U.
Landenberger, Assistant General Counsel of Hughes (the "Opinions"), and
officers' certificates and other documents delivered at the Closing. We have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals or copies, the due authority of all persons
executing the same, and we have relied as to factual matters on the documents
which we have reviewed.
On the basis of such examination, our reliance upon the assumptions
contained herein and our consideration of those questions of law we considered
relevant and subject to the limitations and qualifications in this opinion, we
are of the opinion that:
1. The Credit Agreement and the Hughes Guaranty each constitutes the
legally valid and binding obligations of the Obligors and Hughes, respectively,
enforceable against the Obligors and Hughes, respectively in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws) and by general
principles of equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law. In giving the foregoing opinion, we have
assumed, without independent investigation, that each of the Credit Agreement
and the Hughes Guaranty has been duly authorized by all necessary corporate
action on the part of each of the Obligors and Hughes, respectively, and has
been duly executed and delivered by each of the Obligors and Hughes,
respectively.
2. The Opinions are satisfactory in form to us and, in our opinion,
you are justified in relying thereon.
Our opinions in paragraph 1 above as to the enforceability of the
Credit Agreement and the Hughes Guaranty are subject to:
(a) public policy considerations, statutes or court decisions
that may limit the rights of a party to obtain indemnification against its
own gross negligence, willful misconduct or unlawful conduct; and
(b) the unenforceability under certain circumstances of waivers
of rights granted by law where the waivers are against public policy or
prohibited by law.
We express no opinion as to the effect of non-compliance by you with
any state or federal laws or regulations applicable to the transactions
contemplated by the Credit Agreement because of the nature of your business.
I-2
<PAGE>
The law covered by this opinion is limited to the present federal law
of the United States and the present law of the State of New York. We express no
opinion as to the laws of any other jurisdiction.
This opinion is furnished by us as special counsel for the
Administrative Agent and may be relied upon by you only in connection with the
Credit Agreement. It may not be used or relied upon by you for any other purpose
or by any other person, nor may copies be delivered to any other person, without
in each instance our prior written consent. You may, however, deliver a copy of
this opinion to permitted assignees of all or a portion of a Bank's rights and
obligations under the Credit Agreement in connection with such assignment, and
such assignees may rely on this opinion as if it were addressed and had been
delivered to them on the date of this opinion. This opinion may also be
disclosed to regulatory and other governmental authorities having jurisdiction
over you requesting (or requiring) such disclosure.
Respectfully submitted,
I-3
<PAGE>
EXHIBIT J
ASSIGNMENT AND ACCEPTANCE
-------------------------
Dated ___________, _____
Reference is made to the Credit Agreement dated as of June 3, 1999 (as
amended from time to time, the "Credit Agreement") among SurFin Ltd., a Bahamas
international business company (the "Borrower"), the Designated Subsidiaries (as
defined in the Credit Agreement), the Banks (as defined in the Credit
Agreement), Bank of America National Trust and Savings Association, as
Syndication Agent, Deutsche Bank AG, New York and Cayman Islands Branches, as
Documentation Agent, and The Chase Manhattan Bank, The First National Bank of
Chicago, Morgan Guaranty Trust Company of New York, and Westdeutsche Landesbank
Girozentrale, New York and Cayman Islands Branches, as Senior Managing Agents,
and Citicorp USA, Inc., as Administrative Agent for the Banks (the
"Administrative Agent"). Terms defined in the Credit Agreement and not defined
herein are used herein with the same meaning.
______________ (the "Assignor") and ______________ (the "Assignee") agree
as follows:
1. The Assignor hereby sells and assigns without recourse to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, that
interest in and to all of the Assignor's rights and obligations under the Credit
Agreement as of the Effective Date (defined below) which represents the
percentage interest specified on Schedule 1 of all outstanding rights and
obligations under the Credit Agreement, including, without limitation, such
interest in the Assignor's Commitment and the Loans owing to the Assignor.
After giving effect to such sale and assignment, the Assignee's Commitment, the
amount of the Loans owing to the Assignee, and the Termination Date of the
Assignee will be as set forth in Section 2 of Schedule 1. In consideration of
Assignor's assignment, Assignee hereby agrees to pay to Assignor, on the
Effective Date, the amount of $___________ in immediately available funds by
wire transfer to Assignor's office at ____________________________.
Without limiting the generality of the foregoing, the parties hereto
hereby expressly acknowledge and agree that any assignment of all or any portion
of Assignor's rights and obligations relating to Assignor's Commitment shall
include (i) in the event Assignor is an Issuing Bank with respect to any
outstanding Letters of Credit (any such Letters of Credit being "Assignor
Letters of Credit"), the sale to Assignee of a participation in the Assignor
Letters of Credit and any drawings thereunder as contemplated by Section 2.11(c)
of the Credit Agreement and (ii) the sale to Assignee of a ratable portion of
any participations previously purchased by Assignor pursuant to said subsection
2.11(c) with respect to any Letters of Credit other than the Assignor Letters of
Credit.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit
J-1
<PAGE>
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower, any Designated Subsidiary or any Guarantor or the performance or
observance by the Borrower, any Designated Subsidiary or any Guarantor of any of
its obligations under the Credit Agreement or any other instrument or document
furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Administrative Agent, the Assignor
or any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (iii) confirms that it is an
[Eligible Assignee] [Approved Bank Affiliate]; (iv) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (v) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Bank; and (vi) specifies as its Lending
Office or Lending Offices (and address for notices) the offices set forth
beneath its name on the signature pages hereof.
4. Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, the Assignment and Acceptance will be delivered to
the Administrative Agent for acceptance and recording by the Administrative
Agent. The effective date of this Assignment and Acceptance shall be the date of
acceptance thereof by the Administrative Agent, unless otherwise specified on
Schedule 1 hereto (the "Effective Date").
5. Upon such acceptance and recording by the Administrative Agent, as
of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement
and, to the extent provided in this Assignment and Acceptance, have the rights
and obligations of a Bank thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Administrative Agent,
from and after the Effective Date, the Administrative Agent shall make all
payments under the Credit Agreement in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and fees
with respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement for periods prior
to the Effective Date directly between themselves.
7. The Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of New York.
J-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.
J-3
<PAGE>
Schedule 1
to
Assignment and Acceptance
Dated __________, ____
Section 1.
- ---------
Percentage Interest _____%
Section 2.
- ---------
Assignee's Commitment: $_____
Aggregate Outstanding Principal
Amount of Loans owing to the Assignee: $_____
Loans payable to the Assignee
Principal amount: _____
Loans payable to the Assignor
Principal amount: _____
Termination Date: __________, _____
Section 3.
- ---------
Effective Date**: __________, _____
[NAME OF ASSIGNOR]
By:_________________
Title:
[NAME OF ASSIGNEE]
By:_________________
Title:
Domestic Lending Office (and
address for notices):
[Address]
Eurodollar Lending Office:
[Address]
_______________________
** This date should be no earlier than the date of acceptance by the Agent.
Schedule 1-1
<PAGE>
Accepted this ____ day
of __________, ______
CITICORP USA, INC., as Administrative Agent
By:_________________________
Title:
SURFIN LTD.
By:_________________________
Title:
Schedule 1-2
<PAGE>
EXHIBIT K
[FORM OF L/C REQUEST]
L/C REQUEST
Pursuant to that certain Credit Agreement dated as of June 3, 1999, as
amended, supplemented or otherwise modified to the date hereof (said Credit
Agreement, as so amended, supplemented or otherwise modified, being the "Credit
Agreement", the terms defined therein and not otherwise defined herein being
used herein as therein defined), by and among SurFin Ltd., an international
business company organized and existing under the laws of the Bahamas (the
"Borrower"), the Designated Subsidiaries, the financial institutions listed
therein as Banks, , Bank of America National Trust and Savings Association, as
Syndication Agent, Deutsche Bank AG, New York and Cayman Islands Branches, as
Documentation Agent, and The Chase Manhattan Bank, The First National Bank of
Chicago, Morgan Guaranty Trust Company of New York, and Westdeutsche Landesbank
Girozentrale, New York and Cayman Islands Branches, as Senior Managing Agents,
and Citicorp USA, Inc., as Administrative Agent ("Administrative Agent"), this
represents [name of Obligor]'s request for the issuance of a Letter of Credit as
follows:
1. Name of Obligor for whose account
---------------------------------
Letter of Credit is to be issued: _____________________________
--------------------------------
2. Issuing Bank: _________________________________
------------
3. Date of issuance of Letter of Credit: ________________, ________
------------------------------------
4. Type of Letter of Credit: - a. Commercial Letter of Credit (other than
------------------------
a Usance Letter of Credit)
- b. Usance Letter of Credit
- c. Standby Letter of Credit
5. Face amount of Letter of Credit: $________________________
-------------------------------
6. Expiration date of Letter of Credit: ________________, ________
-----------------------------------
7. Attached hereto is an executed application to issue letter of credit in
-----------------------------------------------------------------------
the Issuing Bank's standard form setting forth the name and address of the
--------------------------------------------------------------------------
beneficiary, together with:
--------------------------
- a. the verbatim text of such proposed Letter of Credit
- b. a description of the proposed terms and conditions of such
Letter of Credit, including a precise description of any
documents to be presented by the beneficiary which, if presented by
the beneficiary prior to the expiration date of such Letter of Credit,
would require the Issuing Bank to make payment (or in the case of a
Usance Letter of Credit, accept a draft) under such Letter of Credit.
K-1
<PAGE>
8. Purpose: The following is a description of the purpose of the proposed
-----------------------------------------------------------------------
Letter of Credit:
----------------
___________________________________________
___________________________________________
___________________________________________
___________________________________________.
We confirm that, pursuant to Section 5.3 of the Credit Agreement, as
of the date hereof:
(i) the representations and warranties set out in Section 6 of the
Credit Agreement are true and correct in all material respects;
(ii) the most current financial statements delivered pursuant to
Section 7.5 of the Credit Agreement present fairly the financial
position and results of operation and changes in financial position of
the Borrower and its consolidated Subsidiaries as at the end of, and
for the fiscal period to which such statements relate as of the date
thereof (subject, in the case of unaudited financial statements, to
year end adjustments) and there has been no Material Change since the
date thereof; and
(iii) no Event of Default or Unmatured Event of Default has occurred
and is continuing.
DATED: ____________________ [Name of Obligor for whose account Letter
of Credit is to be issued]
By: _______________________
Title: ___________________
K-2
<PAGE>
EXHIBIT 10.7
================================================================================
Revolving Credit Agreement
(364-day Facility)
Dated as of November 24, 1999
among
Hughes Electronics Corporation
The Banks named herein
and
Bank of America, N.A.
as Administrative Agent
Citicorp USA, Inc.
as Syndication Agent
Deutsche Bank AG, New York Branch
as Documentation Agent
Lead Arrangers and Book Managers:
Banc of America Securities LLC and
Salomon Smith Barney Inc.
Bank of America [LOGO]
================================================================================
<PAGE>
<TABLE>
<S> <C>
SECTION 1
DEFINITIONS
1.1 Definitions.................................................................................. 1
SECTION 2
THE CREDIT
2.1 The Commitments............................................................................. 11
2.2 The Loans................................................................................... 12
2.3 Requests for Base Rate and Eurodollar Loans................................................. 12
2.4 Requests for Bid Rate Loans................................................................. 12
2.5 Interest and Principal on Base Rate Loans................................................... 13
2.6 Interest and Principal on Eurodollar Loans.................................................. 14
2.7 Interest and Principal on Bid Rate Loans.................................................... 14
2.8 Loan Accounts............................................................................... 14
2.9 Master Bid Rate Notes....................................................................... 15
2.10 Conversion of Loans Between Eurodollar Loans and Base Rate Loans and Conversion of Interest
Periods of Eurodollar Loans................................................................. 15
2.11 Disbursements and Payments.................................................................. 16
2.12 Facility Fee................................................................................ 17
2.13 Extension of Termination Date............................................................... 17
SECTION 3
PAYMENT OF COSTS AND REDUCTION OF THE COMMITMENT
3.1 Indemnification Upon Failure to Pay Eurodollar Loan or Bid Rate Loan........................ 18
3.2 Increased Costs............................................................................. 18
3.3 Taxes....................................................................................... 19
3.4 Prepayment.................................................................................. 20
3.5 Pro Rata Reduction of Commitments by Borrower............................................... 20
3.6 Reduction of One Bank's Commitment by Borrower.............................................. 20
3.7 Notice of Reductions........................................................................ 21
3.8 Designation of Replacement Bank............................................................. 21
3.9 Effect of Reduction of Commitment........................................................... 21
3.10 Accrued Fees................................................................................ 21
3.11 Survival.................................................................................... 21
SECTION 4
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
4.1 Inability to Determine Eurodollar Rate...................................................... 22
4.2 Illegality.................................................................................. 22
SECTION 5
CONDITIONS PRECEDENT
</TABLE>
-1-
<PAGE>
<TABLE>
<S> <C>
5.1 Conditions Precedent to Signing Date........................................................ 23
5.2 Conditions Precedent to Effective Date...................................................... 23
5.3 Conditions Precedent to Loans............................................................... 24
SECTION 6
REPRESENTATIONS AND WARRANTIES
6.1 Authority of Borrower....................................................................... 24
6.2 Binding Obligations......................................................................... 25
6.3 Incorporation of Restricted Subsidiaries.................................................... 25
6.4 No Contravention............................................................................ 25
6.5 Notices..................................................................................... 25
6.6 Financial Statements........................................................................ 25
6.7 ERISA....................................................................................... 25
6.8 Regulation U; Investment Company Act........................................................ 25
6.9 Taxes....................................................................................... 26
6.10 Insurance................................................................................... 26
6.11 Liens....................................................................................... 26
6.12 Litigation.................................................................................. 26
6.13 Environmental Compliance.................................................................... 26
6.14 Year 2000................................................................................... 26
6.15 Disclosure.................................................................................. 27
SECTION 7
AFFIRMATIVE COVENANTS OF BORROWER
7.1 Use of Proceeds of Loans.................................................................... 27
7.2 Management of Business...................................................................... 27
7.3 Notice of Certain Events.................................................................... 27
7.4 Records..................................................................................... 28
7.5 Information Furnished....................................................................... 28
7.6 Execution of Other Documents................................................................ 29
7.7 ERISA....................................................................................... 29
7.8 Administrative Agent's Fees................................................................. 29
7.9 Compliance with Law......................................................................... 29
7.10 Compliance with Agreements.................................................................. 29
7.11 Maintenance of Insurance.................................................................... 30
SECTION 8
NEGATIVE COVENANTS OF BORROWER
8.1 Liens....................................................................................... 30
8.2 Mergers, Liquidations and Sales of Assets................................................... 31
8.3 Defaults.................................................................................... 32
8.4 Compliance with Regulations................................................................. 32
8.5 Financial Covenants......................................................................... 32
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default........................................................................... 33
9.2 Recovery of Amounts Due..................................................................... 36
9.3 Rights Cumulative........................................................................... 36
SECTION 10
THE BANKS
10.1 Administration of Loan...................................................................... 37
10.2 Representations By Banks.................................................................... 37
SECTION 11
MISCELLANEOUS PROVISIONS
11.1 Amendments and Waivers...................................................................... 37
11.2 Notices..................................................................................... 37
11.3 Waiver...................................................................................... 38
11.4 California Law.............................................................................. 38
11.5 Headings.................................................................................... 38
11.6 Accounting Terms............................................................................ 38
11.7 Counterparts................................................................................ 38
11.8 Written Disclosure.......................................................................... 39
11.9 Singular; Plural............................................................................ 39
11.10 Illegality.................................................................................. 39
11.11 Assignments................................................................................. 39
11.12 Obligations Several......................................................................... 40
11.13 Participations.............................................................................. 40
11.14 Fees and Expenses........................................................................... 41
11.15 Indemnity................................................................................... 41
11.16 Confidentiality............................................................................. 42
11.17 Waiver of Right to Trial by Jury............................................................ 43
11.18 New Banks; Increases in Commitments of Banks................................................ 44
</TABLE>
EXHIBITS
A-1 Form of Loan Request
A-2 Form of Loan Request - Bid Rate Loans
B Master Bid Rate Loan Note
C Relations Among the Banks and Agents
D Addresses and Lending Offices of Banks
E Existing Liens
F Form of Opinion of General Counsel
G Form of Extension Request
H Form of Commitment Increase Letter
-3-
<PAGE>
I Compliance Certificate
J Form of Assignment and Acceptance
SCHEDULE
1 Name of Banks and Commitments
-4-
<PAGE>
REVOLVING CREDIT AGREEMENT
(364-DAY FACILITY)
THIS REVOLVING CREDIT AGREEMENT (364-DAY FACILITY) ("Agreement") is entered
into as of November 24, 1999 (the "Signing Date") among HUGHES ELECTRONICS
CORPORATION, a corporation organized and existing under the laws of Delaware
("Borrower"), the banks named herein (collectively, together with any other
lenders that become parties hereto pursuant to Section 3.8 or 11.11, the "Banks"
and individually a "Bank"), Bank of America, N.A., as administrative agent for
the Banks (in such capacity "Administrative Agent"), Citicorp USA, Inc., as
Syndication Agent (in such capacity "Syndication Agent") and Deutsche Bank AG,
New York Branch, as Documentation Agent (in such capacity "Documentation
Agent").
SECTION 1
DEFINITIONS
1.1 Definitions.
-----------
"Aggregate Long-Term and Short-Term Commitments" means the Total Commitment
plus the "Total Commitment" as defined in the Multi-Year Credit Agreement.
"Applicable Amount" means, for the facility fee and Eurodollar Loans, the
amount (expressed in basis points per annum) set forth in the chart below
opposite the Applicable Level then in effect:
<TABLE>
<CAPTION>
============================================================================
Applicable Amount
Applicable Debt Ratings (in basis points per annum)
-------------------------------
Level Eurodollar Rate Facility Fee
+
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1 *A-/A3 29.5 8.0
- ----------------------------------------------------------------------------
2 BBB+/Baa1 40.0 10.0
- ----------------------------------------------------------------------------
3 BBB/Baa2 62.5 12.5
- ----------------------------------------------------------------------------
4 BBB-/Baa3 82.5 17.5
- ----------------------------------------------------------------------------
5 BB+/Ba1 105.0 20.0
- ----------------------------------------------------------------------------
6 **BB/Ba2 150.0 25.0
============================================================================
</TABLE>
* More than or equal to.
** Less than or equal to.
-1-
<PAGE>
Provided that beginning on the Effective Date and continuing so long as the
- --------
actual Applicable Level as set forth in the above table is Level 1, Level 2,
Level 3 or Level 4, the Applicable Level for purposes of calculating the
Applicable Amount shall be deemed to be Level 4 until such time as the principal
amount of the Loans and the principal amount of the "Loans", as defined in the
Multi-Year Credit Agreement, have been reduced to zero, at which time the
Applicable Level shall be determined as set forth in the above table; provided
--------
further that so long as the actual Applicable Level as set forth in the above
- -------
table is Level 5 or Level 6, the Applicable Level shall be determined as set
forth in the above table.
"Applicable Level" means the level set forth opposite the Debt Ratings in
the definition of Applicable Amount then in effect, subject to the provisos to
such definition. Any change in the Applicable Level shall become effective upon
any public announcement of any change in any Debt Rating that requires a change
in the Level in accordance with the above chart.
"Approved Bank Affiliate" means a Person that is a subsidiary of a Bank or
of a Person of which a Bank is a subsidiary, and which is either engaged
primarily in the business of commercial banking or, if not so engaged, which has
been approved by the Borrower and Administrative Agent (provided that Borrower's
--------
consent shall not be unreasonably withheld).
"Arrangers" means BAS and Salomon Smith Barney Inc.
"Attorney Costs" means and includes all fees and disbursements of any law
firm or other external counsel and the allocated cost of internal legal services
and all disbursements of internal counsel.
"Authorized Designee" means the chief executive officer, the vice chairman,
the chief financial officer, treasurer or the assistant treasurer of Borrower,
or any other officer of Borrower specified as being an Authorized Designee in
the certificate delivered pursuant to Section 5.2(c).
"Availability Period" means the period commencing on the Effective Date and
ending on the Termination Date.
"Bank of America" means Bank of America, N.A. in its capacity as a Bank.
"BAS" means Banc of America Securities LLC.
"Base Rate" means the higher of: (a) the rate of interest publicly
announced from time to time by Bank of America as its "reference rate," which is
a rate set by Bank of America based upon various factors including Bank of
America's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate; and (b) one-half percent per
annum above the Federal Funds Rate. Any change in the reference rate announced
by Bank of America shall take effect at the opening of business on the day
specified in the public announcement of such change.
"Base Rate Loan" means a Loan bearing interest based on the Base Rate
calculated pursuant to Section 2.5.
-2-
<PAGE>
"Bid Rate" means an interest rate offered by a Bank in its sole discretion
and in response to the Borrower's Loan Request for a Bid Rate Loan pursuant to
Section 2.4, which interest rate shall include all applicable reserve and other
adjustments when being advised by such Bank to Administrative Agent.
"Bid Rate Loan" means a Loan bearing interest at a Bid Rate.
"Borrowing Date" means a date on which funds are advanced to Borrower by
one or more Banks pursuant to a Loan Request.
"Business Day" means a day other than a Saturday or Sunday on which banks
are open for business in both San Francisco, California and New York, New York.
"Commercial Paper" means short term commercial paper (with a maturity date
not in excess of 270 days from the date of its issuance) issued by Borrower (a)
pursuant to the exemption from registration contained in Section 4(2) of the
Securities Act of 1933, as amended or modified from time to time, or (b)
pursuant to the exemption from registration contained in Section 3(a)(3) of the
Securities Act of 1933, as amended or modified from time to time, with respect
to which a recognized rating agency has taken this Agreement into account in the
rating of such short term commercial paper.
"Commitment" of each Bank means the dollar amount set forth opposite such
Bank's name on Schedule 1 hereto, as such amount may be reduced or changed
pursuant to Sections 3.5 and 3.6.
"Commitment Increase Letter" means a letter notifying the Administrative
Agent of a Bank's desire to increase its Commitment pursuant to Section 11.18
hereof, in substantially the form of Exhibit H hereto.
---------
"Compliance Certificate" means a certificate in the form of Exhibit I,
---------
properly completed and signed by Borrower's Treasurer or an Assistant Treasurer.
"Consolidated Adjusted Net Worth" means, as of the date of determination
thereof, the consolidated stockholders equity of Borrower and its Subsidiaries
in accordance with GAAP adjusted by adding back the amount by which such
consolidated stockholders equity has been reduced (or by subtracting the amount
by which stockholders equity has been increased) on account of (a) changes
subsequent to December 31, 1992 in the long term liability of Borrower and its
Subsidiaries for post-retirement benefits other than pensions and (b) specified
material non-cash adjustments resulting from the adoptions of future
pronouncements of the Financial Accounting Standards Board.
"Consolidated EBITDA" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, an amount equal to the sum of (a)
Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount of
taxes, based on or measured by income, used or included in the determination of
such Consolidated Net Income, (d) the amount of depreciation and amortization
expense deducted in determining such Consolidated Net Income, (e) for each
fiscal quarter in the fiscal year ending December 31, 1999, (i) the amount of
charges taken in connection with the cancellation of contract with Asia Pacific
Mobile Telecommunications, up to
-3-
<PAGE>
an aggregate amount of $92,000,000 for all such fiscal quarters, and (ii) the
amount of charges taken in connection with development costs and schedule delays
at Hughes Space and Communication up to an aggregate amount of $125,000,000 for
all such fiscal quarters, (f) for the last fiscal quarter of the fiscal year
ending December 31, 1999, (i) if a non-cash charge is taken in connection with
the write-off of equity investment in ICO Global Communications, the amount of
such non-cash charge up to an aggregate amount of $62,000,000 and (ii) if a
change in business strategy related to DirecTV Japan, Ltd. results in cash
and/or non-cash charges, the amount of such cash and/or non-cash charges up to
an aggregate amount of $250,000,000, and (g) for each fiscal quarter in the
fiscal year ending December 31, 2000, the amount of non-cash charges taken in
connection with ICO Global Communications, the Hughes Network Systems wireless
business and PanAmSat launch delays, up to an aggregate amount for all such
fiscal quarters of (x) $500,000,000 minus (y) the amount of the charge, if any,
added pursuant to clause (f)(i) above; minus (h) for each fiscal quarter in the
-----
fiscal year ending December 31, 2000, the amount of cash losses (whether or not
accounted for as charges under GAAP) in connection with DirecTV Japan, Ltd., but
only if such cash losses were reflected in the charges, if any, added pursuant
to clause (f)(ii); plus (i) for each fiscal quarter in the fiscal year ending
----
December 31, 2000, if any change in business strategy regarding DirecTV Japan,
Ltd. results in a non-cash charge, the amount of such non-cash charge up to an
aggregate amount of $150,000,000 minus the amount of non-cash charges, if any,
added pursuant to clause (f)(ii) above.
"Consolidated Funded Indebtedness" means, as of any date of determination,
for Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations and liabilities, whether current
or long-term, for borrowed money (including Loans hereunder), and (b) that
portion of obligations with respect to capital leases that are capitalized in
the consolidated balance sheet of Borrower and its Subsidiaries in excess of an
aggregate amount of $25,000,000.
"Consolidated Interest Charges" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, fees, charges and related expenses payable by Borrower and its
Subsidiaries in connection with borrowed money (including capitalized interest)
or in connection with the deferred purchase price of assets and imputed interest
associated with the assumption of liabilities relating to programming contracts
under purchase accounting in accordance with GAAP, in each case to the extent
treated as interest in accordance with GAAP, and (b) the portion of rent payable
by Borrower and its Subsidiaries with respect to such period under capital
leases that is treated as interest in accordance with GAAP.
"Consolidated Net Income" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, the net income of Borrower and its
Subsidiaries from continuing operations after extraordinary items (excluding
gains or losses from Dispositions of assets) for that period.
"Consolidated Tangible Net Worth" means, at any date of determination,
Consolidated Adjusted Net Worth less the consolidated intangible assets of
----
Borrower and its Subsidiaries, determined in accordance with GAAP.
-4-
<PAGE>
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
"Debt Rating" means, as of any date of determination, the rating as
determined by either Standard & Poor's Ratings Group or Moody's Investors
Service, Inc. (collectively, the "Debt Ratings"); of (a) the Borrower's senior
unsecured long-term debt or (b) if the foregoing debt is not outstanding, then
the rating of the Multi-Year Credit Agreement or the implied rating of senior
unsecured and non-credit enhanced debt securities, provided that if both ratings
--------
in this clause (b) have been issued then both shall apply; or (c) if neither (a)
nor (b) apply, then the rating of long-term debt issued by equipment trust
guaranteed by Borrower; provided that if a Debt Rating is issued by both of such
--------
rating agencies, then the lower of such credit ratings shall apply unless the
split in credit ratings is more than one level, in which case the level one
level higher than the lower rating shall apply. Initially, the Debt Ratings
shall be determined from the certificate delivered pursuant to Section 5.2(d).
Thereafter the credit ratings shall be determined from the most recent public
announcement of any changes in such credit ratings.
"Default Rate" means an interest rate equal to the Base Rate plus the
----
Applicable Amount, if any, applicable to Base Rate Loans plus 2% per annum, to
----
the fullest extent permitted by applicable Laws; provided, however, that (i)
-------- -------
with respect to a Eurodollar Loan, the Default Rate shall be an interest rate
equal to the interest rate (including any Applicable Amount) otherwise
applicable to such Loan plus 2% per annum, and (ii) with respect to a Bid Rate
Loan the Default Rate shall be an interest rate equal to the interest rate
otherwise applicable to such Loan plus 2% per annum.
"Effective Date" means the date on or before December 10, 1999 that the
conditions set forth in Section 5.2 are satisfied or waived by the Majority
Banks.
"Eligible Assignee" means a Person which can lawfully fulfill all of the
obligations of a Bank hereunder and is (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100,000,000; (b) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
the OECD; or (c) any Person engaged primarily in the business of commercial
banking and that is a subsidiary of a Bank or of a Person of which a Bank is a
subsidiary.
"Environmental Laws" means all foreign, federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental, health, safety and land use matters
applicable to any property.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in
effect from time to time.
-5-
<PAGE>
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with Borrower or any Subsidiary of Borrower within the
meaning of Section 414(b), 414(c) or 414(m) of Internal Revenue Code of 1986, as
amended.
"Eurodollar Banking Day" means a day on which banks are open for business
in San Francisco, California, New York, New York and the applicable offshore
dollar interbank market and dealing in U. S. Dollar deposits.
"Eurodollar Loan" means a Loan at the rate of interest calculated pursuant
to Section 2.6.
"Eurodollar Rate" means for each Interest Period of a Eurodollar Loan the
arithmetic mean of the rates of interest rounded to the nearest 1/100 of one
percent as notified to the Administrative Agent by the Reference Banks at which
U.S. Dollar deposits for such Interest Period and in an amount comparable to the
Principal Amount of such Eurodollar Loan would be offered by such Reference
Banks to major banks in the London offshore dollar interbank market upon request
of such banks at approximately 11:00 a.m. London time two Eurodollar Banking
Days prior to the first day of such Interest Period.
"Event of Default" means any event specified in Section 9.1.
"Existing Agreements" means (a) the Revolving Credit Agreement (364-Day
Facility) dated as of December 5, 1997, as amended, among Borrower, the banks
party thereto and Bank of America, N.A. (formerly known as Bank of America
National Trust and Savings Association), as agent for such banks; and (b) any
Note (as that term is defined in such credit agreement) issued pursuant to such
credit agreement.
"Extension Request" means a Request for Extension delivered by the Borrower
to the Banks to request an extension of the Termination Date in accordance with
the provisions of Section 2.13, in substantially the form of Exhibit G hereto.
---------
"Federal Funds Rate" means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Board (including any such successor,
"H.15(519)") for such day opposite the caption "Federal Funds (Effective)". If
on any relevant day such rate is not yet published in H.15(519), the rate for
such day will be the rate set forth in the daily statistical release designated
as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m. Quotation") for such day
under the caption "Federal Funds Effective Rate". If on any relevant day the
appropriate rate for such day is not yet published in either H.15(519) or the
Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York time) on that day by each of three leading brokers
of Federal funds transactions in New York City selected by Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any successor thereto.
-6-
<PAGE>
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"Governmental Authority" means (a) any international, foreign, federal,
state, county or municipal government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality, central bank or public body, or (c) any court,
administrative tribunal or public utility.
"Granting Bank" has the meaning specified in Section 11.11(c).
"Interest Payment Date" means, with respect to each Bid Rate Loan and each
Eurodollar Loan, the last day of each Interest Period; provided, however, that
-------- -------
if any Interest Period (a) in the case of a Bid Rate Loan exceeds 90 days and
(b) in the case of a Eurodollar Loan exceeds three months, "Interest Payment
Date" shall mean the 90th day and the last day of the third month of such
Interest Period, respectively, as well as the last day of the relevant Interest
Period; and, with respect to each Base Rate Loan, means the 10th day of each
January, April, July, and October and the Termination Date. If any day
specified herein is not a Business Day or, in the case of a Eurodollar Loan, a
Eurodollar Banking Day, then the relevant Interest Payment Date shall be the
next succeeding Business Day or Eurodollar Banking Day, as applicable, except as
otherwise provided in the definition of Interest Period. Notwithstanding any
other provision herein, interest accruing at the Default Rate shall be payable
from time to time at any time upon demand of Administrative Agent.
"Interest Period" means: (a) with respect to each Bid Rate Loan, a period
of 7 to 180 days as selected by Borrower by a Loan Request delivered to
Administrative Agent in accordance with Section 2.4, and (b) with respect to
each Eurodollar Loan, a period of one, two, three or six months as selected by
Borrower by a Loan Request delivered to Administrative Agent in accordance with
Section 2.3, subject to the following:
(i) If the term of an Interest Period is not designated, a period of
30 days shall be deemed selected for the relevant Bid Rate Loan and a
period of one month shall be deemed selected for the relevant Eurodollar
Loan;
(ii) The first Interest Period for each Loan shall commence on the
date such Loan is disbursed and each succeeding Interest Period for such
Loan shall commence on the last day of the preceding Interest Period for
such Loan;
(iii) In the case of a Bid Rate Loan, if the last day of an Interest
Period falls on a day that is not a Business Day, the Interest Period
involved shall be extended to the next succeeding Business Day, and the
next succeeding Interest Period shall be measured from the last day of the
Interest Period as so adjusted;
-7-
<PAGE>
(iv) In the case of a Eurodollar Loan, if the last day of an Interest
Period falls on a day that is not a Eurodollar Banking Day, the Interest
Period involved shall be extended to the next following Eurodollar Banking
Day unless as a result thereof it would fall into the next calendar month,
in which case the end of the Eurodollar Interest Period shall be the
preceding Eurodollar Banking Day, and in either case the next succeeding
Eurodollar Interest Period shall be measured from the last day of the
Interest Period as so adjusted;
(v) If an Interest Period for a Eurodollar Loan commences on the
last Eurodollar Banking Day of a calendar month, it shall end on the last
Eurodollar Banking Day of a calendar month; and
(vi) No Interest Period shall end on a day later than the Termination
Date.
"Investment Grade" means a Debt Rating by S&P of BBB- or better and Debt
Rating by Moody's of Baa3 or better.
"Lending Office" means with respect to any Bank as the context shall
require, the branch office of such Bank designated as the Lending Office of such
Bank in Exhibit D attached hereto and incorporated herein by reference; or any
other branch office or affiliate of such Bank hereafter selected and notified to
Borrower and Administrative Agent from time to time by such Bank; provided that
--------
any Bank may from time to time by notice to Borrower and Administrative Agent
designate separate Lending Offices for its Bid Rate Loans, its Eurodollar Loans
and/or its Base Rate Loans, in which case any reference to the Lending Office of
such Bank shall be deemed to refer to any or all of such offices, branches or
affiliates as the context may require.
"Letter Agreement" means that letter agreement among BAS, Administrative
Agent and Borrower dated November 3, 1999 specifying Arrangers' and
Administrative Agent's compensation for services hereunder as such letter
agreement may from time to time be amended, restated, reissued or otherwise
modified.
"Leverage Ratio" means, as of the end of any fiscal quarter, for the
Borrower and its Subsidiaries on a consolidated basis, the ratio of (a)
Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for
the period of the four fiscal quarters ended on such date.
"Lien" means any trust deed, mortgage, pledge, hypothecation, assignment,
security interest, lien, charge or encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, the lien of an attachment, judgment or
execution, or any conditional sale or other title retention agreement, any
capitalized lease, and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction, but excluding financing statements filed to give notice of leases
in the ordinary course of business).
"Loan" or "Loans" means the loans described in Section 2, any of which may
be at any time Base Rate Loans, Eurodollar Loans or Bid Rate Loans.
"Loan Request" means a notice given by Borrower pursuant to Section 2.3 or
2.4.
-8-
<PAGE>
"Majority Banks" means those Banks whose Commitments constitute at least
51% of the Total Commitment as such Total Commitment may be adjusted from time
to time pursuant to the terms of this Agreement, or if the Commitments have
terminated, those Banks holding at least 51% of the outstanding Loans (other
than Bid Rate Loans).
"Master Bid Rate Note" means a promissory note of Borrower payable to order
of a Bank in substantially the form of Exhibit B hereto in favor of such Bank
evidencing the indebtedness of the Borrower to such Bank resulting from a Bid
Rate Loan made by such Bank.
"Material Adverse Change" means (a) any adverse change which could
reasonably be expected to materially impair Borrower's ability to timely and
fully perform its obligations under this Agreement or (b) any material adverse
change in the business, assets, liabilities (actual or contingent), operations,
condition (financial or otherwise) or prospects of Borrower and its
Subsidiaries, taken as a whole.
"Moody's" means Moody's Investors Service, Inc.
"Multi-Year Credit Agreement" means the Amended and Restated Revolving
Credit Agreement (Multi-Year Facility) dated as of November 24, 1999 among
Borrower, the banks named therein, Bank of America, as administrative agent,
Morgan Guaranty Trust Company of New York, as syndication agent, and Citicorp
USA, Inc. and The Chase Manhattan Bank, as documentation agents, as amended from
time to time.
"New Bank" or "New Banks" means additional lending institutions added as
Banks in accordance with Section 11.18 hereof.
"Normal Percentage" means, with respect to each Bank, the percentage under
the heading "Normal Percentage" set forth opposite such Bank's name on Schedule
1 hereto, as such amount may be reduced or changed pursuant to Section 3.6 or
Section 11.11.
"Note" means any promissory note delivered pursuant to Section 2.8 or any
Master Bid Rate Note (collectively, the "Notes").
"Notice of Assignment and Acceptance" means a Notice of Assignment and
-----------------------------------
Acceptance substantially in the form of Exhibit J.
---------
"Person" means any individual, firm, company, corporation, joint venture,
joint-stock company, trust, unincorporated organization, Governmental Authority,
or any association or partnership (whether or not having separate legal
personality) of two or more of the foregoing.
"Plan" means any employee benefit pension plan which is subject to the
provisions of Title IV of ERISA and which is maintained for employees of
Borrower or any Subsidiary.
"Principal Amount" means, when used with reference to any Loan, the amount
requested in the Loan Request relating thereto and made available to Borrower by
the Banks hereunder.
-9-
<PAGE>
"Principal Repayment Date" means, with respect to each Base Rate Loan, the
Termination Date, and with respect to each Bid Rate Loan and each Eurodollar
Loan, the last day of the Interest Period for such Loan.
"Reference Banks" means Bank of America and Citibank, N.A.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder excluding those events for which the 30-day
notice requirement is waived, a withdrawal from a Plan described in Section 4063
of ERISA, or a cessation of operations described in Section 4062(e) of ERISA.
"Restricted Subsidiaries" means each Subsidiary (i) having assets exceeding
10% of the Consolidated Tangible Net Worth of Borrower and its Subsidiaries on a
consolidated basis or (ii) having operating revenues exceeding 10% of the
operating revenues of Borrower and its Subsidiaries on a consolidated basis, in
each case as shown on the financial statements dated as of June 30, 1999 and,
thereafter, as shown on the audited consolidated financial statements of
Borrower and its Subsidiaries as of the end of the fiscal year immediately
preceding the date of determination; provided, however, that "Restricted
-------- -------
Subsidiary" shall not include any Subsidiary which is a corporation created
solely to purchase receivables from Borrower or any of its Subsidiaries, and
which would not, in accordance with GAAP, be included in the consolidated
financial statements of Borrower.
"S&P" means Standard & Poor's Ratings Group.
"Shareholders' Equity" means, as of any date of determination for Borrower
and its Subsidiaries on a consolidated basis, shareholders' equity as of that
date determined in accordance with GAAP.
"Signing Date" means the date of this Agreement.
"SPC" has the meaning specified in Section 11.11(c).
"Subsidiaries" (individually a "Subsidiary") means those corporations or
entities of which Borrower owns more than 50% of the voting securities. If
Borrower, subject to the terms hereof, permits its ownership to fall to 50% or
below of outstanding voting shares of any Subsidiary, such Subsidiary shall
thereupon cease to be a Subsidiary for all purposes hereof.
"Tax" and "Taxes" mean all taxes, levies, imposts, duties, fees or other
charges of whatsoever nature however imposed by any country or any subdivision
or authority of or in that country in any way connected with this Agreement or
any instrument or agreement required hereunder, and all interest, penalties or
similar liabilities with respect thereto, except such taxes as are imposed on or
measured by any Bank's net income or capital and franchise taxes, by the country
or any subdivision or authority of or in that country in which such Bank's
principal office or actual Lending Office is located.
"Termination Date" means November 22, 2000; provided, however, that, if any
--------
Bank has consented to an Extension Request in accordance with Section 2.13 with
regard to the then existing Termination Date, then, subject to Section 2.13(b),
the then existing Termination Date
-10-
<PAGE>
as to such Bank shall be automatically extended for 364 days from the then
existing Termination Date; provided further, however, that, notwithstanding any
----------------
other provisions of this Agreement to the contrary, the Termination Date shall
occur upon the earlier termination in whole of the Commitments pursuant to
Section 3.5 or 9.1.
"Total Commitment" means the aggregate amount of the Commitments.
"Unmatured Event of Default" means an event which with the passage of time
or the giving of notice, or both, would become an Event of Default.
"Utilization Fee" means the amount (expressed in basis points per annum)
set forth in the chart below opposite the Applicable Level then in effect:
<TABLE>
<CAPTION>
================================================================================
Applicable Level Utilization Fee
================================================================================
<S> <C>
Level 1 12.5
- --------------------------------------------------------------------------------
Level 2 12.5
- --------------------------------------------------------------------------------
Level 3 12.5
- --------------------------------------------------------------------------------
Level 4 12.5
- --------------------------------------------------------------------------------
Level 5 25.0
- --------------------------------------------------------------------------------
Level 6 25.0
================================================================================
</TABLE>
"Voting Stock" means capital stock of Borrower having voting power under
ordinary circumstances to elect directors of Borrower.
"Withdrawal Liability" means, as of any determination date, the aggregate
amount of the liabilities, if any, pursuant to Section 4201 of ERISA if the
Borrower or any ERISA Affiliate made a complete withdrawal from all Plans and
any increase in contributions pursuant to Section 4243 or ERISA.
SECTION 2
THE CREDIT
2.1 The Commitments. (a) From time to time, during the Availability
---------------
Period, each Bank severally agrees to lend to Borrower in U. S. Dollars the
amount set forth opposite such Bank's name on Schedule 1 hereto, subject to
reduction of such amount at Borrower's option, pursuant to Sections 3.5 and 3.6
or otherwise pursuant to Section 2.1(c).
(b) Except as provided in subsection 2.1(d), each Bank shall make
available to Borrower Base Rate Loans and Eurodollar Loans up to the amount of
such Bank's Commitment. In addition, each Bank may, but shall not be required
under any circumstances whatsoever to, make
-11-
<PAGE>
available to Borrower Bid Rate Loans. Except as provided in subsection 2.1(c),
the Commitment of any Bank making a Bid Rate Loan shall not be reduced by the
amount of any such Loan or Loans made by such Bank or by any other Bank.
(c) The Principal Amount of Bid Rate Loans made by any Bank may exceed
such Bank's Commitment; provided, however, that the aggregate Principal Amount
-------- -------
of all Bid Rate Loans outstanding under this Agreement shall not exceed the
Total Commitment. The Total Commitment shall be reduced by the Principal Amount
of Bid Rate Loans outstanding so long as such Bid Rate Loans remain outstanding;
and the Commitment of each Bank shall be reduced pro rata.
(d) During any period of time when Bid Rate Loans are outstanding,
additional Eurodollar Loans and Base Rate Loans requested by Borrower shall be
allocated among the Banks in accordance with their Normal Percentage as set
forth in Schedule 1 and without regard to any Bid Rate Loans such Bank may have
outstanding to Borrower. In no event shall Eurodollar Loans, Base Rate Loans and
Bid Rate Loans outstanding hereunder exceed the Total Commitment as adjusted
from time to time pursuant to this Section 2.1.
2.2 The Loans. Each Loan shall be a Base Rate Loan, a Eurodollar Loan or
---------
a Bid Rate Loan and shall be in U. S. Dollars. Each Loan shall be in the
minimum amount of $5,000,000 with any additional amounts in integral multiples
of $1,000,000. This is a revolving credit, and Borrower may, during the
Availability Period, reborrow amounts repaid or prepaid. No Loan nor any part
of any Loan shall be repaid except at the times and in the manner expressly
provided herein.
2.3 Requests for Base Rate and Eurodollar Loans. Each Base Rate Loan and
-------------------------------------------
Eurodollar Loan shall be made upon irrevocable written or telephonic notice,
confirmed promptly in writing, substantially in the form of Exhibit A-1 hereto,
by Borrower to Administrative Agent received by Administrative Agent not later
than 9:00 a.m. California time not less than three (3) Eurodollar Banking Days
prior to the Borrowing Date (which must be a Eurodollar Banking Day) of a
Eurodollar Loan and not later than 9:00 a.m. California time on the proposed
Borrowing Date (which must be a Business Day) of a Base Rate Loan. Upon receipt
of a request for a Base Rate Loan and Eurodollar Loan, Administrative Agent
shall promptly notify the Banks of the amount, the Interest Period(s), if
applicable, and the Borrowing Date requested by Borrower. After giving effect
to any borrowing of Eurodollar Loans or any conversion or continuation of
Eurodollar Loans, there shall not be more than 10 different Interest Periods for
Eurodollar Loans and Bid Rate Loans in the aggregate at any time.
2.4 Requests for Bid Rate Loans. (a) Each Bid Rate Loan shall be made
---------------------------
upon irrevocable written or telephonic notice, confirmed promptly in writing,
substantially in the form of Exhibit A-2 hereto, by Borrower and must be
received by Administrative Agent not later than 9:00 a.m. California time one
Business Day prior to the Borrowing Date for such Loan, specifying the Borrowing
Date (which must be a Business Day), the amount, and the Interest Period. In
requesting a Bid Rate Loan, Borrower may specify up to a maximum of three
alternative Interest Periods for the Bid Rate Loan. After giving effect to any
borrowing of Bid Rate Loans, there shall not be more than 10 different Interest
Periods for Bid Rate Loans and Eurodollar Loans in the aggregate at any one
time.
-12-
<PAGE>
(b) Upon receipt of a request for a Bid Rate Loan pursuant to paragraph
(a) above, Administrative Agent shall promptly notify the Banks of the amount,
the Interest Period(s) and the Borrowing Date requested by Borrower. If Bank of
America elects to advance a Bid Rate Loan it shall notify Borrower and
Administrative Agent of the amount, the Interest Period(s) and the Bid Rate
(with any fraction of a percentage expressed as a decimal to the nearest
1/10,000 of one percent) upon which Bank of America desires to advance such a
Bid Rate Loan by 7:00 a.m. California time on such Borrowing Date. By 7:15 a.m.
California time on the Borrowing Date, each other Bank shall notify
Administrative Agent whether or not it will submit an offer in response to
Borrower's request for a Bid Rate Loan and each Bank submitting an offer shall
notify Administrative Agent of the amount, the Interest Period(s) and the Bid
Rate (with any fraction of a percentage expressed as a decimal to the nearest
1/10,000 of one percent) upon which such Bank desires to advance a Bid Rate
Loan. By 7:30 a.m. California time on the Borrowing Date Administrative Agent
shall give notice to Borrower, of the amount, the Interest Period and the Bid
Rate upon which each Bank desires to advance a Bid Rate Loan. Borrower shall,
before 7:45 a.m. California time on such Borrowing Date, elect which of the
offered Bid Rate Loans it desires to accept and notify Administrative Agent of
each offer that is being accepted by Borrower. Such acceptance by Borrower shall
be irrevocable. If Borrower accepts any of the offers for Bid Rate Loans,
Borrower must accept offers strictly based upon pricing and no other criteria.
If two or more Banks submit offers at identical pricing and Borrower accepts any
of such offers but does not wish to borrow the total amount offered by such
Banks, Borrower shall accept offers from all of such Banks on amounts allocated
among them pro rata (in multiples of $1,000,000) according to the amounts
offered by such Banks.
(c) If Borrower accepts one or more of the offers made by any Bank or
Banks pursuant to subsection (b) above, Administrative Agent shall, by 8:15 a.m.
California time on such Borrowing Date, notify each Bank as to the identity of
each Bank which is to make a Bid Rate Loan, the amount of the Loan to be made by
each Bank, the Interest Period, and the Bid Rate applicable to each such Loan.
Administrative Agent shall also notify each Bank by 8:15 a.m. California time on
such Borrowing Date if Administrative Agent has either received no offers in
response to Borrower's Loan Request for a Bid Rate Loan or if Borrower has
elected not to accept any of the offers received.
(d) Each Bank whose offer for a Bid Rate Loan has been accepted pursuant
to Section 2.4(b) shall determine for itself whether the conditions precedent in
Section 5.2 have been or will be satisfied on the Borrowing Date. On or before
11:00 a.m. California time on the Borrowing Date, each such Bank's Lending
Office will make available to Administrative Agent the principal amount of the
Bid Rate Loan in immediately available funds and Administrative Agent shall
promptly credit Borrower's account at Administrative Agent in immediately
available funds.
2.5 Interest and Principal on Base Rate Loans. Subject to Section 2.11(f)
-----------------------------------------
herein, the outstanding Principal Amount of each Base Rate Loan shall bear
interest until payment is due in full (computed daily on the basis of a 365 or
366, as the case may be, day year and actual days elapsed) at the rate per annum
equal to the Base Rate. Borrower shall pay interest on each Base Rate Loan on
each Interest Payment Date for the interest accruing since the previous Interest
Payment Date on such Base Rate Loan. Borrower shall repay in full the Principal
Amount of each Base Rate Loan on the Termination Date or as provided in Section
2.10(c).
-13-
<PAGE>
2.6 Interest and Principal on Eurodollar Loans. (a) Subject to Section
------------------------------------------
2.11(f) herein, the outstanding Principal Amount of each Eurodollar Loan shall
bear interest until payment is due in full (computed daily on the basis of a
three hundred sixty (360) day year and actual days elapsed) at a rate per annum
equal to the Eurodollar Rate plus the Applicable Amount; plus, at all times
---- ----
until such time as the principal amount of the Loans and the principal amount of
the "Loans," as defined in the Multi-Year Credit Agreement, have been reduced to
zero, and thereafter with respect to each day on which the aggregate amount of
outstanding Loans plus the aggregate amount of outstanding "Loans", as defined
in the Multi-Year Credit Agreement, exceeds 33% of the Aggregate Long-Term and
Short-Term Commitments, the Utilization Fee (computed daily on the basis of a
three hundred sixty (360) day year and actual days elapsed). Borrower shall pay
interest and the Utilization Fee on each Eurodollar Loan on each Interest
Payment Date for such Eurodollar Loan. Borrower shall repay in full the
Principal Amount of each Eurodollar Loan on the last day of the Interest Period
for such Eurodollar Loan or as provided in Section 2.10(c).
(b) If any Reference Bank's Commitment shall terminate (otherwise than on
termination of all the Commitments), or for any reason whatsoever the Reference
Bank shall cease to be a Bank hereunder, that Reference Bank shall thereupon
cease to be a Reference Bank, and the Eurodollar Rate shall be determined on the
basis of the rates as notified by the remaining Reference Banks. Each Reference
Bank shall use its best efforts to furnish quotations of rates to the
Administrative Agent as contemplated hereby. If any of the Reference Banks
shall be unable or otherwise fails to supply such rates to the Administrative
Agent upon its request, the rate of interest shall be determined on the basis of
the quotations of the remaining Reference Banks or Reference Bank.
2.7 Interest and Principal on Bid Rate Loans. Subject to Section 2.11(f)
----------------------------------------
herein, the outstanding principal amount of each Bid Rate Loan shall bear
interest until payment is due in full (computed daily on the basis of a 360-day
year and actual days elapsed) at a rate per annum equal to the Bid Rate.
Borrower shall pay interest on each Bid Rate Loan on each Interest Payment Date
for such Bid Rate Loan. Borrower shall repay in full the Principal Amount of
each Bid Rate Loan on the last day of the Interest Period of such Bid Rate Loan.
2.8 Loan Accounts. Each Bank shall open and maintain on its books one or
-------------
more loan accounts in Borrower's name. Each loan account shall show (without
duplication) as debits thereto each Bank's portion of each Base Rate Loan and/or
Eurodollar Loan and as credits thereto all Base Rate Loan and/or Eurodollar Loan
payments received by such Bank for the account of such Bank and applied to
principal so that the balance of the loan account(s) at all times reflect the
principal amount due each Bank from Borrower as Base Rate Loans and Eurodollar
Loans. All entries in said books shall be presumptive evidence of the making of
each Base Rate Loan and Eurodollar Loan, the obligation of Borrower to repay
each Base Rate Loan and Eurodollar Loan, and all payments received and disbursed
by such Bank. Borrower agrees that if, in the opinion of any Bank, a promissory
note or other evidence of debt is required or appropriate to reflect or enforce
any Loans outstanding to or to be made by such Bank, then Borrower shall
promptly execute and deliver to such Bank one or more promissory notes payable
to such Bank to evidence the Loans outstanding to such Bank under this Agreement
from time to time, together with such documents as such Bank may reasonably
request to evidence the due authorization, execution, delivery and
enforceability of such notes. If any notes are issued
-14-
<PAGE>
hereunder, Administrative Agent and Borrower may treat the payee of that note as
the owner of such note for all purposes.
2.9 Master Bid Rate Notes. Borrower shall execute a Master Bid Rate Note
---------------------
in the form of Exhibit B hereto in favor of each Bank. The Master Bid Rate Note
of each Bank shall evidence the outstanding principal amount of Bid Rate Loans
made by such Bank, and shall be dated the first day of the Availability Period.
Each Bank is authorized to indicate upon the grid attached to its Master Bid
Rate Note the principal amount, interest rate and Interest Period of each Bid
Rate Loan and all payments of principal and interest thereon. Such notations
shall be presumptively correct as to the aggregate unpaid principal amount of
the Bid Rate Loan made by such Bank, and interest due thereon, but the failure
by such Bank to make such notations shall not affect the obligations of Borrower
hereunder or under the Master Bid Rate Notes.
2.10 Conversion of Loans Between Eurodollar Loans and Base Rate Loans and
--------------------------------------------------------------------
Conversion of Interest Periods of Eurodollar Loans. (a) On any Eurodollar
- --------------------------------------------------
Banking Day Borrower may convert on a pro rata basis among the Banks any
outstanding Base Rate Loans or Eurodollar Loans (but not Bid Rate Loans) into
any other type of Loan available to Borrower hereunder (but not to a Bid Rate
Loan), or Borrower may change the Interest Period of any Eurodollar Loan to
another Interest Period available under this Agreement, subject to the following
limitations:
(i) No conversion of any Eurodollar Loan into any other Loan and no
conversion of the Interest Period of any Eurodollar Loan may be made except
on the last day of an Interest Period with respect thereto; and
(ii) Any conversion shall be preceded by an irrevocable written or
telephonic notice from Borrower that it elects such conversion, which
notice shall be received by Administrative Agent at least three (3)
Eurodollar Banking Days prior to the date requested for such conversion
from or into a Eurodollar Loan or conversion of the Interest Period of a
Eurodollar Loan.
(b) Banks shall not be obligated to make or continue any Eurodollar Loan
when any Event of Default has occurred and is continuing, but any outstanding
Eurodollar Loan shall be automatically converted to a Base Rate Loan on the last
day of the Interest Period for which a Eurodollar Rate was determined by
Administrative Agent following occurrence of such Event of Default, and, unless
Section 2.11(f) is applicable, Borrower shall be obligated to pay interest at
the Base Rate from the date any Loan is so converted until such Loan is repaid
in full regardless of the date when Administrative Agent obtains knowledge of
such Event of Default.
(c) Each conversion of a Loan into a Base Rate Loan or a Eurodollar Loan,
as the case may be, shall be effected by each Bank, on behalf of Borrower, as
applicable, by making a simultaneous payment of the relevant Eurodollar Loan, or
Base Rate Loan, as the case may be, from the proceeds of the new Loans,
procedures with respect thereto to be governed by the provisions of Section 2.3,
except that disbursement shall be made by means of such payment rather than
directly to Borrower to the extent applicable with respect to each Bank.
-15-
<PAGE>
(d) If upon the expiration of any Interest Period applicable to Eurodollar
Loans, Borrower has failed to select a new Interest Period to be applicable
thereto, or if any Event of Default or Unmatured Event of Default shall then
exist, Borrower shall be deemed to have elected to convert such Eurodollar Loans
into Base Rate Loans effective as of the expiration date of such current
Interest Period.
2.11 Disbursements and Payments. (a) Each Base Rate Loan and Eurodollar
--------------------------
Loan shall be made on a pro rata basis by Banks, and each Bank's portion of each
Loan shall be determined by application of its Normal Percentage. Each Bid Rate
Loan shall be made entirely by the Bank whose offer was accepted by Borrower
pursuant to Section 2.4. Each Bank's interest in each Loan and each payment to
such Bank under this Agreement shall be for the account of such Bank's Lending
Office.
(b) Each Loan and each payment of principal, interest and other sums under
this Agreement shall be made in immediately available funds (or such other funds
as Administrative Agent may require) at Bank of America's Agency Administrative
Services-West, 1850 Gateway Blvd., Concord, California 94520, ABA #111000012,
Acct No. 3750836479, Ref: Hughes Electronics Corporation or such other office
designated by Administrative Agent from time to time.
(c) Each Bank agrees it will make the funds which it is to advance
hereunder available to Bank of America's Agency Administrative Services-West,
1850 Gateway Blvd., Concord, California 94520, ABA #111000012, Acct No.
3750836479, Ref: Hughes Electronics Corporation or such other office designated
by Administrative Agent from time to time not later than 11:00 a.m. California
time on the Borrowing Date, and Administrative Agent will thereupon promptly
advance to Borrower the amount so received from Banks.
(d) Payment of all sums under this Agreement shall be made by Borrower to
Administrative Agent, and the latter shall promptly distribute to each Bank its
share of such payments. Each payment by Borrower shall be made without setoff
or counterclaim and not later than 11:00 a.m. California time on the day such
payment is due. All sums received after such time shall be deemed received on
the next Business Day.
(e) If Administrative Agent makes available to Borrower an amount due from
any Bank which such Bank fails to make available to Administrative Agent, or if
Administrative Agent makes available to any Bank an amount due from Borrower
which Borrower fails to make available to Administrative Agent, Borrower or such
Bank, as the case may be, shall, on demand, refund such amount to Administrative
Agent, together with interest thereon for the period during which such amount
was available to Borrower or such Bank, as the case may be, at the Federal Funds
Rate.
(f) Any sum of principal or interest payable by Borrower hereunder if not
paid when due shall bear interest (payable on demand) from its due date until
payment in full (computed daily on the basis of a 365 or 366, as the case may
be, day year and actual days elapsed) at a rate per annum equal to the Default
Rate.
-16-
<PAGE>
2.12 Facility Fee. Borrower shall pay Administrative Agent for the account
------------
of the Banks, a facility fee at the rate per annum equal to the Applicable
Amount therefor on the Total Commitment (without regard to the amount of Loans
outstanding at any time hereunder and without giving effect to any reduction
pursuant to Section 2.1(c)) during the Availability Period; provided, however,
following any reduction in the Total Commitment pursuant to Section 3.5 or 3.6
(but not a reduction pursuant to Section 2.1(c)) the computation of the facility
fee shall be based upon such reduced Total Commitment as of the effective date
of such reduction. The facility fee shall be computed on a calendar quarter
basis. The facility fee shall be calculated on the basis of a 360-day year and
actual days elapsed, which results in a higher fee than if a 365/366-day year
were used, and shall be payable on the 10th day of each January, April, July and
October (for the facility fee accrued during the previous calendar quarter) and
on the Termination Date.
2.13 Extension of Termination Date. (a) The Borrower may, no earlier than
-----------------------------
60 days and not later than 45 days prior to the then effective Termination Date
(as it may be extended from time to time pursuant hereto), request in writing
that the Termination Date be extended for an additional 364 days by sending to
the Administrative Agent, which will promptly then provide a copy to each Bank,
an Extension Request. After Borrower's request, each Bank may, in its sole
discretion, consent or not consent to such extension by giving written notice
thereof to the Administrative Agent no later than 21 days after its receipt of
such Extension Request. Each Bank's annual decision as to whether to extend the
Termination Date shall be based, in part, on a new credit analysis utilizing
then current information in respect of Borrower's business, financial condition
and operations and other information furnished by Borrower. Failure of any Bank
to respond within such 21 day period shall be deemed to be a refusal of such
request by such Bank. The Administrative Agent shall promptly notify each Bank
and Borrower of any Bank's decision to reject the proposed extension.
(b) If, in accordance with the provisions of this Section 2.13, a Bank
consents to the extension of the Termination Date, the Termination Date for such
Bank shall be extended for 364 days from the then current Termination Date,
without any further action by Borrower or such Bank; provided that no such
--------
extension shall be effective unless the Commitments of Banks agreeing to so
extend the Termination Date plus the Commitments of any New Banks which have
agreed to become party to this Agreement pursuant to Section 11.18 constitute at
least 50% of the Total Commitment existing on the date hereof.
(c) If any Bank does not consent to a request for an extension of the
Termination Date, or is deemed not to have consented to the requested extension,
and the Termination Date has been extended for the other Bank(s): (i) the
Borrower may, prior to the end of the non-extended Termination Date, terminate
such Bank's Commitment under this Agreement upon payment in full of principal
and interest on all Loans made by such Bank together with such other sums, if
any, that may be due by reason of such prepayment and any fees owing to such
Bank and, in connection with such termination, the Borrower may replace such
non-consenting Bank with a New Bank or increase the Commitment of an existing
Bank, in each case pursuant to Section 11.18; and (ii) if the Borrower has not
previously terminated such non-consenting Bank's Commitment under this Credit
Agreement and paid principal and interest on the Loans held by such non-
consenting Bank and other amounts due to such non-consenting Bank as provided
above, then such principal and interest and other amounts due to such non-
consenting
-17-
<PAGE>
Bank shall be due and payable on the non-extended Termination Date and the
Termination Date shall not be extended insofar as such non-consenting Bank is
concerned.
SECTION 3
PAYMENT OF COSTS AND REDUCTION
OF THE COMMITMENT
3.1 Indemnification Upon Failure to Pay Eurodollar Loan or Bid Rate Loan.
--------------------------------------------------------------------
If Borrower makes any payment of principal with respect to any Eurodollar Loan
or Bid Rate Loan on a day other than the last day of the then current Interest
Period applicable to such Loan (including without limitation any payment upon
reduction of the Commitments) or fails to borrow, continue, convert, pay or
prepay its Eurodollar Loan or Bid Rate Loan on a date designated to
Administrative Agent in a notice pursuant to this Agreement (if such failure
does not result from the application of Sections 4.1 or 4.2), Borrower shall
reimburse each Bank within 15 days after receipt of written demand for any loss
incurred by it as a result of the timing of such payment or non-borrowing not
reflected in the Eurodollar Rate or the Bid Rate, including without limitation
any loss incurred in liquidating or employing deposits from third parties and
loss of profit for the period after such payment or non-borrowing. A
certificate of such Bank setting forth the amounts reasonably necessary so to
reimburse it in respect of any loss shall be conclusive and binding absent
manifest error.
3.2 Increased Costs. (a) If after the date hereof, any applicable law,
---------------
rule or regulation or any change therein or in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof or compliance
by any Bank (or its Lending Office) with any request or directive of any such
authority, central bank or comparable agency, whether or not having the force of
law, shall impose, modify or deem applicable:
(i) any reserve (including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System), special deposit,
compulsory loan or similar requirements against assets, commitments or
deposits or other liabilities with, of or for the account of, or credit
extended by, or any acquisition of funds by or for the account of any Bank
or its Lending Office or the London interbank market or any other condition
affecting its obligations to make the Loans to Borrower hereunder;
(ii) any capital or similar requirements against (or against any
class of or change in or the amount of) assets or liabilities of, or
commitments or extensions of credit by, such Bank;
each Bank which is so affected shall give prompt notice to Borrower describing
such reserves or requirements at least four Business Days prior to the date such
Bank will begin to implement such additional charges with respect to Borrower.
If the result of any of the foregoing is to increase the cost or reduce the
profit to such Bank (or its Lending Office) under this Agreement by an amount
deemed by such Bank to be material, then, within 15 days after written demand by
such Bank, Borrower will pay to such Bank such additional amount or amounts as
will compensate such Bank for such increased cost incurred or reduction in
profit suffered by such Bank. Such Bank will designate a different Lending
Office if such designation will avoid the
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<PAGE>
need for, or reduce the amount of, such compensation and will not be otherwise
disadvantageous to such Bank in the sole discretion of such Bank. A certificate
of such Bank setting forth the basis for determining such additional amount or
amounts necessary to compensate the Bank shall be conclusive in the absence of
manifest error.
(b) Without limiting the effect of the foregoing (but without
duplication), upon any Bank's prior written request, Borrower shall pay to such
Bank on the last day of each Interest Period, so long as such Bank may be
required to maintain reserves against "eurocurrency liabilities" under
Regulation D (as at any time amended) of the Board of Governors of the Federal
Reserve System, as additional interest on the unpaid principal amount of each
Eurodollar Loan by such Bank outstanding during such Interest Period, an
additional amount (determined by such Bank and notified to Borrower in writing)
up to but not exceeding such amount as would, together with payments of interest
on such Eurodollar Loan for such Interest Period, result in the receipt by such
Bank of total interest on such Eurodollar Loan, for such Interest Period at a
rate determined by such Bank to be equal to the sum of:
(i) the Eurodollar Rate divided by a sum equal to (a) 1 minus (b)
the rate (expressed as a decimal) of such reserves required by Regulation
D, plus
(ii) the Applicable Amount for Eurodollar Loans.
In determining the additional amount payable for an Interest Period
pursuant to this Section, such Bank shall take into account any transitional
adjustment or phase-in provisions of such reserve requirements applicable during
such Interest Period, which would reduce the reserve requirement otherwise
applicable to eurocurrency liabilities during such Interest Period; provided,
however, each Bank in its sole discretion may determine the allocation of
reserve requirements to its Eurodollar Loans. Each such determination made by
such Bank, and each such notification by such Bank to Borrower under this
Section, shall be conclusive as to the matters set forth therein in the absence
of manifest error.
3.3 Taxes. All payments or reimbursements under this Agreement and any
-----
instrument or agreement required hereunder shall be made without setoff or
counterclaim and free and clear of and without deduction for any and all present
and future Taxes. Borrower agrees to cause all such Taxes to be paid on behalf
of any Bank or Administrative Agent directly to the appropriate Governmental
Authority. If Borrower is legally prohibited from complying with this
subsection, payments due to such Bank or Administrative Agent under this
Agreement and any instrument or agreement required hereunder shall be increased
so that, after provisions for Taxes and all Taxes on such increase, the amounts
received by such Bank or Administrative Agent will be equal to the amounts
required under this Agreement and any instrument or agreement required hereunder
as if no Taxes were due on such payments. Borrower shall indemnify each Bank
and Administrative Agent for the full amount of Taxes payable by such Bank or
Administrative Agent and any liabilities (including penalties, interest and
expenses) arising from such Taxes within 30 days from any written demand by such
Bank. Borrower shall provide evidence that all applicable Taxes have been paid
to the appropriate taxing authorities by delivering to Administrative Agent
official tax receipts or notarized copies or other evidence thereof satisfactory
to Administrative Agent, within 90 days after the due date for such Tax payment.
Such Bank will designate a different Lending Office if such designation will
avoid the
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<PAGE>
need for, or reduce the amount of, such payment or reimbursement and will not be
otherwise disadvantageous to such Bank in the sole discretion of such Bank.
3.4 Prepayment. Upon the irrevocable written notice of Borrower received
----------
by Administrative Agent by 11:00 a.m. California time at least one Business Day
prior to the prepayment of a Base Rate Loan and at least five Eurodollar Banking
Days prior to the prepayment of a Eurodollar Loan, Borrower may prepay any
Eurodollar Loan or Base Rate Loan; but such prepayment shall be in an amount of
at least $5,000,000 or multiple integrals of $1,000,000 in excess thereof. The
notice of prepayment shall specify the date of the prepayment, the amount of the
prepayment and the Loan to be prepaid. Each such prepayment shall be made on
the date specified and, in the case of a prepayment of any Eurodollar Loan shall
be accompanied by the payment of accrued interest on the amount prepaid.
Subject to compliance with the foregoing procedures, Base Rate Loans may be
prepaid at any time without cost or penalty of any kind. If Borrower elects to
prepay a Eurodollar Loan, Borrower shall, on demand by each Bank, pay such Bank
the amount (if any) by which (a) the additional interest which would have been
payable on the amount prepaid on such Bank's portion of such Loan had it not
been paid until the last day of the Interest Period of such Loan exceeds (b) the
interest which would have been recoverable by such Bank by placing such prepaid
amount on deposit in the offshore Dollar interbank markets for a period starting
on the date on which it was prepaid and ending on the last day of the Interest
Period for such Loan. Bid Rate Loans may not be prepaid.
3.5 Pro Rata Reduction of Commitments by Borrower. Borrower may, upon
---------------------------------------------
five Business Days' prior written notice (which notice shall be irrevocable) to
Banks through Administrative Agent, reduce the Total Commitment on a pro rata
basis among the Banks. Such a reduction shall be in an amount of at least
$5,000,000 or multiple integrals of $1,000,000 in excess thereof. Borrower
shall, on the effective date of each such reduction, repay to each Bank through
Administrative Agent that portion of each Loan which exceeds the amount of each
Bank's Commitment as reduced, together with accrued interest on the amount paid
and accrued facility fees subject to such reduction. After the effective date
of each reduction, the Banks' obligations under this Agreement shall be based on
the reduced Commitments.
3.6 Reduction of One Bank's Commitment by Borrower. If the amount of any
----------------------------------------------
payment to be made to or for the account of any Bank is increased under Section
3.3 or any Bank makes a claim under Section 3.2, then:
(a) Borrower may, within 60 days after the notice thereof and by not less
than five Business Days' written notice to Administrative Agent, cancel such
Bank's Commitment, whereupon such Bank shall cease to be obligated to
participate in further Loans hereunder and its Commitment shall be reduced to
the amount of its outstanding Loans until such Loans are repaid by Borrower
either on the Principal Repayment Date for such Loans or pursuant to Section
3.6(b), at which time such Bank's Commitment shall be reduced to zero;
(b) if Borrower cancels such Bank's Commitment pursuant to clause (a)
above and if Borrower so elects by written notice to Administrative Agent given
at the same time as the notice referred to in clause (a) above, Borrower shall
prepay such Bank's portion of each outstanding Loan together with any accrued
interest thereon plus all costs and expenses (including break and funding costs
in connection with the relending, reborrowing, funding or other employing of
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<PAGE>
funds) incurred by such Bank as a result of such cancellation or prepayment on a
date other than the Principal Repayment Date for such Loan; and
(c) Borrower shall repay all Bid Rate Loans from such Bank on the
Principal Repayment Date for such Loans and shall not request any additional Bid
Rate Loans from such Bank.
3.7 Notice of Reductions. Each notice of reduction or prepayment given
--------------------
pursuant to Section 3.4, 3.5 or 3.6 shall be irrevocable, shall specify the date
upon which such reduction or prepayment is to be made and, in the case of a
notice of prepayment, shall obligate Borrower to make such prepayment on such
date. Borrower may not give a notice of reduction of a part of the Commitment
pursuant to Section 3.6 at any time prior to the date so specified in any
previous such notice.
3.8 Designation of Replacement Bank. If the Commitment of any Bank is
-------------------------------
cancelled by Borrower pursuant to Section 3.6 or if any Bank terminates its
Commitment with respect to Eurodollar Loans pursuant to Section 4.2, Borrower,
with the consent of Administrative Agent, may designate an Eligible Assignee
(or, if it deems appropriate, more than one Eligible Assignee) acceptable to
Administrative Agent to act as a Bank hereunder and upon execution of a written
agreement in form satisfactory to Administrative Agent by such Eligible Assignee
in which it agrees to abide by all of the terms, conditions and obligations
applicable to a Bank herein and to have a Commitment as specified in such
agreement, such Eligible Assignee shall be deemed a Bank hereunder to the same
extent as if it were a signatory hereto and, thereafter, such Eligible Assignee
shall for all purposes be considered a "Bank" hereunder.
3.9 Effect of Reduction of Commitment. If, at any time:
---------------------------------
(a) the Commitment of any Bank is reduced to zero in accordance with the
terms of this Agreement;
(b) all indebtedness and other amounts owed to such Bank by Borrower
hereunder or in connection herewith have been satisfied in full; and
(c) such Bank is under no further actual or contingent obligation
hereunder,
then such Bank shall cease to be a party hereto and a Bank for the purposes
hereof; provided, however, that the obligations of Borrower under Sections 3.1,
-------- -------
3.2, 3.3, 11.14, 11.15 and 11.16 shall survive the cancellation of the
Commitment and the termination of this Agreement.
3.10 Accrued Fees. On the date of the cancellation of any portion of the
------------
Total Commitment in accordance with Section 3.5 or of any Bank's Commitment
under Section 3.6, all accrued facility fees for such portion of the Total
Commitment or of such Bank's Commitment shall be paid in full by Borrower.
3.11 Survival. The agreements and obligations of Borrower in this Section
--------
3 shall survive the termination of this Agreement.
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<PAGE>
SECTION 4
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
4.1 Inability to Determine Eurodollar Rate. If any Reference Bank
--------------------------------------
determines (which determination shall be made in good faith and shall be
conclusive and binding upon Borrower) that (a) by reason of circumstances then
affecting the Eurodollar interbank market, adequate and reasonable means do not
or will not exist for ascertaining the interest rate applicable to any
Eurodollar Loans, or (b) Dollar deposits in the relevant amounts and for the
relevant Interest Period are not available to the Banks in the Eurodollar
interbank market, then it shall notify the Administrative Agent who shall
forthwith give written notice of such determination to Borrower and each Bank at
least one Business Day prior to the first day of any Interest Period so
affected; whereupon, until Administrative Agent shall notify Borrower that the
circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Banks to make Eurodollar Loans shall be suspended and (ii)
Borrower shall repay in full, without premium or penalty, the then outstanding
principal amount of the Eurodollar Loans, together with accrued interest
thereon, on the last day of the then current Interest Period pursuant to the
next sentence. Unless Borrower notifies Administrative Agent to the contrary
within one Business Day after receiving a notice from Administrative Agent
pursuant to this Section, Borrower shall, concurrently with prepaying the
Eurodollar Loans pursuant to this Section, be deemed automatically without any
further notice to Administrative Agent or the Banks to have requested and
received Base Rate Loans in an equal principal amount from the Banks, the
proceeds of which are deemed to have been used to repay the other Loans.
4.2 Illegality. If, after the Effective Date, the introduction of or any
----------
change in any applicable law, rule or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof or compliance by any Bank with any
request or directive (whether or not having the force of law) of any such
authority shall make it unlawful or impossible for such Bank (or its Lending
Office) to make, maintain or fund its Eurodollar Loans, such Bank shall
forthwith give written notice thereof to Administrative Agent and to Borrower.
Before giving any notice pursuant to this Section, such Bank shall designate a
different Lending Office if such designation will avoid the need for giving such
notice and will not be otherwise disadvantageous to such Bank in the sole
judgment of such Bank. Upon receipt of such notice (a) if such Bank has
received a request with respect to Eurodollar Loans and has not yet made such
Loan, a Base Rate Loan shall be deemed to have been designated without any
further notice; (b) all Loans which would otherwise be made by such Bank as
Eurodollar Loans shall be made instead as Base Rate Loans; and (c) Borrower
shall prepay in full, without premium or penalty, the then outstanding principal
amount of such Bank's Eurodollar Loans, together with accrued interest, on
either (i) the last day of the then-current Interest Period if such Bank may
lawfully continue to fund and maintain such Eurodollar Loans, to such day or
(ii) immediately if such Bank may not lawfully continue to fund and maintain
such Eurodollar Loans to such day together with an amount, if any, calculated as
set forth in the last sentence of Section 3.4. Concurrently with prepaying each
such Eurodollar Loan Borrower shall borrow a Base Rate Loan from such Bank in an
amount equal to the principal amount of such Bank's Eurodollar Loans, the
proceeds of which are deemed to have been used to repay such Bank's Eurodollar
Loans. If circumstances subsequently change so that such Bank is not further
affected, and no Eligible Assignee has been appointed pursuant to Section 3.8,
such Bank
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<PAGE>
shall so notify Borrower and Administrative Agent and such Bank's obligation to
make and continue Eurodollar Loans shall be reinstated upon written request of
Borrower.
SECTION 5
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Signing Date. The occurrence of the Signing
------------------------------------
Date is subject to the condition that on the Signing Date this Agreement, duly
executed and delivered by the parties hereto, shall have been delivered to
Administrative Agent with counterparts for each Bank and in form and substance
satisfactory to Banks.
5.2 Conditions Precedent to Effective Date. The obligation of Banks to
--------------------------------------
make the initial Loans hereunder is subject to the condition that on the
Effective Date there shall have been delivered to the Administrative Agent with
counterparts for each Bank:
(a) Notes, if any, requested by any Bank pursuant to Section 2.8 prior to
the Effective Date, duly executed and delivered by the Borrower.
(b) The favorable written opinions, dated the Effective Date, of the
General Counsel or Assistant General Counsel of Borrower in the form set out in
Exhibit F.
(c) Certificate of the Secretary or an Assistant Secretary of Borrower
dated the Effective Date as to (i) the Certificate of Incorporation and the By-
laws of Borrower, (ii) the resolution of the Board of Directors of Borrower or
its Executive Committee in connection with this Agreement, and (iii) the
incumbency and signatures of the person authorized to execute and deliver this
Agreement and any other instrument, document or other agreement required
hereunder on the Effective Date.
(d) A certificate, which shall be true and correct, signed by a vice
president of Borrower dated the Effective Date certifying: (i) that since June
30, 1999, there has been no Material Adverse Change; (ii) that the
representations and warranties contained in this Agreement are true and correct
in all material respects; (iii) that no event has occurred and is continuing or
would result from the making of a Loan which constitutes or would constitute an
Event of Default or an Unmatured Event of Default; and (iv) the Debt Ratings as
of the Effective Date.
(e) Certificate of Good Standing in relation to Borrower issued by the
Secretary of the State of Delaware, dated not more than one month prior to the
Effective Date.
(f) Evidence satisfactory to Administrative Agent that all obligations of
Borrower outstanding under the Existing Agreement have been repaid in full and
all commitments thereunder have been terminated, and the Multi-Year Credit
Agreement is effective in accordance with its terms.
(g) A copy of press releases or other evidence of Borrower's Debt Ratings
from both S&P and Moody's.
(h) The Master Bid Rate Notes, as referred to in Section 2.9, duly executed
by Borrower, shall have been delivered by Borrower to Administrative Agent.
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<PAGE>
(i) The Administrative Agent shall have received all fees payable to it
and/or the Banks on the Effective Date under the Letter Agreement.
(j) Unless waived by Administrative Agent, Borrower shall have paid all
Attorney Costs of Administrative Agent to the extent invoiced prior to or on the
Closing Date, including such additional amounts of Attorney Costs as shall
constitute its reasonable estimate of Attorney Costs incurred or to be incurred
by it through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between Borrower and
Administrative Agent).
5.3 Conditions Precedent to Loans. The obligation of Banks to disburse
-----------------------------
each Loan (including the first Loan) is subject to the following conditions and
by communicating a Loan Request Borrower is deemed to certify that: (a)
Borrower's representations and warranties (excluding Section 6.6) contained in
this Agreement and any other documents delivered pursuant hereto are true and
correct in all material respects on the date of such Loan Request; (b) the
financial statements delivered to Administrative Agent by Borrower pursuant to
Section 7.5 on the date most nearly preceding the Loan Request present fairly
the financial position and results of operations and changes in financial
position of Borrower and its consolidated Subsidiaries as at the end of, and for
the fiscal period to which such statements relate, (subject, in the case of
unaudited financial statements to year end adjustments); and (c) no Event of
Default or Unmatured Event of Default has occurred and is continuing except such
Events of Default or Unmatured Events of Default as have been expressly waived
by or on behalf of the Banks.
SECTION 6
REPRESENTATIONS AND WARRANTIES
6. Borrower represents and warrants that as of the Effective Date:
6.1 Authority of Borrower. Borrower (a) is a corporation duly organized
---------------------
and existing under the laws of the State of Delaware, with its principal place
of business in Los Angeles County, California, (b) has the corporate power to
own its property and carry on its business as now being conducted, (c) is duly
qualified and authorized to do business, and is in good standing in every state,
country or other jurisdiction where the failure to be so qualified, authorized
and in good standing would have a material adverse effect on Borrower, (d) has
full power and authority to borrow the sums provided for in this Agreement, to
execute, deliver and perform this Agreement and any instrument or agreement
required hereunder, and to perform and observe the terms and provisions hereof
and thereof, (e) has taken all corporate action on the part of Borrower, its
directors or stockholders, necessary for the authorization, execution, delivery
and performance of this Agreement, and any instrument or agreement required
hereunder on the date hereof, (f) requires no consent or approval of any trustee
or holder of any indebtedness or obligation of Borrower to enter into, deliver
or perform its obligations under this Agreement and the Notes, and (g) requires
no consent, permission, authorization, order or license of any Governmental
Authority in connection with the execution and delivery and performance of this
Agreement and any instrument or agreement required hereunder, or any transaction
contemplated hereby, except as may have been obtained and certified copies of
which have been delivered to Banks through Administrative Agent.
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<PAGE>
6.2 Binding Obligations. This Agreement is the legal, valid and binding
-------------------
obligation of Borrower, enforceable against it in accordance with its terms, and
any instrument or agreement required hereunder, when executed and delivered,
will be similarly valid, binding and enforceable.
6.3 Incorporation of Restricted Subsidiaries. Each Restricted Subsidiary
----------------------------------------
of Borrower is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and, to the
best of Borrower's knowledge, is duly licensed or qualified as a foreign
corporation in all jurisdictions where the failure to be so qualified,
authorized and in good standing would have a material adverse effect on Borrower
and its Restricted Subsidiaries taken as a whole.
6.4 No Contravention. There is no charter, by-law, or capital stock
----------------
provision of Borrower and no provision of any indenture or material agreement,
written or oral, to which Borrower is a party or under which Borrower is
obligated, nor is there any statute, rule or regulation, or any judgment, decree
or order of any court or agency binding on Borrower which would be contravened
by the execution, delivery and performance of this Agreement, or any instrument
or agreement required hereunder, or by the performance of any provision,
condition, covenant or other term hereof or thereof.
6.5 Notices. Except as previously disclosed in writing to Administrative
-------
Agent, no event has occurred which, to the best of its knowledge, would require
Borrower to notify Administrative Agent and the Banks pursuant to Section 7.3
hereof.
6.6 Financial Statements. The audited consolidated financial statements
--------------------
dated December 31, 1998 and the unaudited consolidated financial statements for
the six months ended June 30, 1999 furnished by Borrower to the Administrative
Agent and Banks, present fairly the financial position and results of operation
and changes in financial position of Borrower and its consolidated Subsidiaries
as at the end of, and for the fiscal periods to which such statements relate,
and such financial statements were prepared in accordance with GAAP. Since June
30, 1999, there has been no Material Adverse Change. The Borrower and its
Subsidiaries did not have any contingent obligations, liabilities for taxes or
other outstanding financial obligations at June 30, 1999 which are material in
the aggregate for Borrower and its Subsidiaries, taken as a whole, except as
disclosed in such unaudited consolidated financial statements.
6.7 ERISA. Based upon ERISA and the regulations and published
-----
interpretations thereunder, the Plans of Borrower and its Subsidiaries and, to
the knowledge of Borrower, the Plans of any other ERISA Affiliates, are in
material and substantial compliance in all material respects with the applicable
provisions of ERISA and Borrower and its Subsidiaries are in compliance with
such Plans in all material respects. No Reportable Event which has or could be
reasonably be expected to result in termination thereof by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate United States
District Court of a trustee to administer such Plan has occurred and is
continuing with respect to any Plan.
6.8 Regulation U; Investment Company Act. Borrower is not engaged
------------------------------------
principally, or as one of its important activities, in the business of extending
credit for the purposes of purchasing or carrying any "margin stock" within the
meaning of Regulation U of the Board of
<PAGE>
Governors of the Federal Reserve System; and neither Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940.
6.9 Taxes. Borrower has filed all federal and state tax returns which to
-----
the knowledge of the financial officers of Borrower are required to have been
filed, and has paid prior to delinquency all taxes that have become due pursuant
to said returns or pursuant to any assessment, except as are being contested in
good faith by appropriate proceedings and as to which adequate reserves have
been provided on the books of Borrower in accordance with GAAP.
6.10 Insurance. Borrower and its Restricted Subsidiaries maintain
---------
insurance with responsible insurance companies, in such amounts and against such
risks as is customarily carried by owners of similar businesses and property,
including protection against loss of use and occupancy, to the extent such
insurance is reasonably available at commercially reasonable rates, and it will
furnish Administrative Agent, upon written request, with full information as to
the insurance carrier; provided, however, that Borrower and its Restricted
-------- -------
Subsidiaries may self insure to the extent they deem prudent.
6.11 Liens. The properties and assets of Borrower and its Restricted
-----
Subsidiaries, real, personal and mixed, are not subject to any Liens, except for
Liens permitted by this Agreement.
6.12 Litigation. Except as disclosed in writing to the Banks prior to the
----------
Signing Date, no litigation, investigation or proceeding of or before an
arbitrator or Governmental Authority is pending or, to the knowledge of Borrower
after due and diligent investigation, threatened by or against Borrower or any
of its Subsidiaries or against any of their properties or revenues which could
reasonably be expected to cause a Material Adverse Change.
6.13 Environmental Compliance. Borrower and its Subsidiaries each conduct
------------------------
in the ordinary course of business a review of the effect of existing
Environmental Laws and claims alleging potential liability or responsibility for
violation of any Environmental Law on their respective businesses, operations
and properties, and as a result thereof Borrower has reasonably concluded that
such Environmental Laws and claims could not, individually or in the aggregate,
reasonably be expected to cause a Material Adverse Change.
6.14 Year 2000. Borrower has (a) completed a review and assessment of all
---------
areas within its and each of its Subsidiaries' business and operations
(including those affected by customers and vendors) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications and devices containing imbedded computer chips used by Borrower or
any of its Subsidiaries may be unable to recognize and perform properly date-
sensitive functions involving certain dates prior to and any date after December
31, 1999), (b) developed a plan and timeline for addressing the Year 2000
Problem on a timely basis, and (c) to date, implemented that plan in accordance
with that timetable. Based on the foregoing, Borrower believes that all
computer applications and devices containing imbedded computer chips that are
material to its or any of its Subsidiaries' business and operations are
reasonably expected on a timely basis to be able to perform properly date-
sensitive functions for all dates before and after January 1, 2000 (that is, be
"Year 2000 compliant"), except to the extent that a failure to do so could not
reasonably be expected to cause a Material Adverse Change.
-26-
<PAGE>
6.15 Disclosure. No written statement (or oral statement made by senior
----------
executives of Borrower at the bank meeting held on November 3, 1999, it being
understood that any projections contained in such statements are not to be
viewed as facts but were based on good faith estimates and assumptions believed
by Borrower to be reasonable), written information, report, representation, or
warranty made by Borrower in this Agreement or furnished to Administrative Agent
or any Bank in connection with this Agreement contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading.
SECTION 7
AFFIRMATIVE COVENANTS OF BORROWER
Borrower covenants and agrees that so long as the credit hereby granted
shall remain available in whole or in part or until the full and final payment
of all indebtedness incurred hereunder, unless Majority Banks waive compliance
in writing:
7.1 Use of Proceeds of Loans. It will use the proceeds of the Loans made
------------------------
by Banks to Borrower hereunder for the repayment of Commercial Paper or other
indebtedness of Borrower existing as of the Effective Date and for its general
working capital requirements, including acquisition and improvement of plant,
property and equipment and acquisitions, and other lawful corporate purposes.
7.2 Management of Business. It will manage its business and conduct its
----------------------
affairs such that the representations and warranties contained in Sections 6.1
through 6.3, 6.7 through 6.9 and 6.13 and 6.14 remain true and correct at all
times during the Availability Period.
7.3 Notice of Certain Events. It will, and it will cause each of its
------------------------
Restricted Subsidiaries to, give prompt written notice to Administrative Agent
(who shall promptly notify the Banks) of:
(a) all Events of Default or Unmatured Events of Default under any of the
terms or provisions of this Agreement;
(b) any event of default under any other agreement, contract, indenture,
document or instrument entered, or which may be entered, into by it that could,
if settled unfavorably, result in a Material Adverse Change;
(c) all material changes in senior management publicly announced;
(d) all litigation, arbitration or administrative proceedings involving
Borrower or any of its Subsidiaries which could in the reasonable opinion of
Borrower be expected to result in a Material Adverse Change;
(e) any other matter which has resulted in, or might in the reasonable
opinion of Borrower result in, a Material Adverse Change;
(f) concurrently with the public announcement thereof, any proposed Merger
or Disposition affecting any Restricted Subsidiary;
-27-
<PAGE>
(g) any change in any Debt Rating by S&P or Moody's; and
(h) promptly upon any discovery or determination that any computer
application that is material to Borrower's or any of its Subsidiaries' business
and operations will not be Year 2000 compliant on a timely basis, except to the
extent that such failure could not reasonably be expected to cause a Material
Adverse Change.
7.4 Records. It will, and it will cause each of its Restricted
-------
Subsidiaries to, keep and maintain full and accurate accounts and records of its
operations according to GAAP and will permit Administrative Agent, and its
designated officers, employees, agents, and representatives, to have access
thereto and to make examination thereof at all reasonable times, to make audits,
and to inspect and otherwise check its properties, real, personal and mixed;
provided, however, that such examination and access shall be in compliance with
- -------- -------
security and confidentiality requirements of all Governmental Authorities and,
subject to Section 11.16, Borrower's corporate policies.
7.5 Information Furnished. It will furnish to Banks and Administrative
---------------------
Agent:
(a) Within 60 days after the close of each quarter, except for the last
quarter of each fiscal year, its consolidated balance sheet as of the close of
such quarter and its consolidated profit and loss statement and cash flow
statement for that quarter and for that portion of the fiscal year ending with
such quarter, all prepared in accordance with GAAP, and all certified by its
Treasurer or an Assistant Treasurer as presenting fairly the financial position
and results of operations and changes in financial position of Borrower and its
consolidated Subsidiaries as at the end of, and for the fiscal period to which
such statements relate, subject to normal year-end adjustments.
(b) Within 120 days after the close of each fiscal year, a complete copy of
its annual financial statements, which statements shall include at least its
consolidated balance sheet as of the close of such fiscal year and its
consolidated profit and loss statement and cash flow statement for such fiscal
year, prepared by Deloitte & Touche (or such other independent certified public
accountants of recognized international standing selected by Borrower) in
accordance with GAAP applied on a basis consistent with that of the previous
year, and which statements shall include the opinion of such accountants, such
opinion not to be qualified or limited because of any restricted or limited
nature of examination made by such accountants or because of a "going concern"
qualification.
(c) Within 60 days after the close of each quarter except for the last
quarter of each fiscal year, (and within 120 days after the close of each fiscal
year) its certificate executed by Borrower's Treasurer or an Assistant Treasurer
that (i) the representations and warranties set forth in Section 6 (with the
exception of Section 6.6) are true and correct in all material respects; and
(ii) no Event of Default or Unmatured Event of Default has occurred and is
continuing except such Events of Default or Unmatured Events of Default as have
been expressly waived by or on behalf of the Banks.
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(d) concurrently with the delivery of the financial statements referred to
in clauses (a) and (b), a duly completed Compliance Certificate signed by
--- ---
Borrower's Treasurer or an Assistant Treasurer;
(e) promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to public
securityholders of Borrower, and copies of all annual, regular, periodic and
special reports and registration statements which Borrower may file or be
required to file with the Securities and Exchange Commission under Sections 13
or 15(d) of the Securities Exchange Act of 1934 (as amended), and not otherwise
required to be delivered to Administrative Agent pursuant hereto;
(f) Such other information concerning its affairs as Administrative Agent
or Majority Banks may reasonably request.
7.6 Execution of Other Documents. It will promptly, upon demand by
----------------------------
Administrative Agent, execute all such additional agreements, documents and
instruments in connection with this Agreement as Administrative Agent or
Majority Banks may deem necessary.
7.7 ERISA. It will, and it will cause each of its Subsidiaries to:
-----
(a) At all times, make prompt payment of contributions required to meet the
minimum funding standard set forth in ERISA with respect to its Plans, except to
the extent that waivers are granted by the appropriate Governmental Authority;
(b) Notify Administrative Agent immediately of (i) any Reportable Event
which could reasonably be expected to result in aggregate liability to Borrower
and its Subsidiaries in excess of $75,000,000 and (ii) any other fact arising in
connection with any of its Plans or a Plan of any ERISA Affiliate which has
resulted, or could reasonably be expected to result, in termination thereof by
the Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer such Plan,
in each case together with a statement, if requested by Administrative Agent, as
to the reasons therefor and the action, if any, which Borrower or such ERISA
Affiliate proposes to take with respect thereto; and
(c) Furnish to Administrative Agent, upon its written request, such
information concerning any of its Plans as may be reasonably requested.
7.8 Administrative Agent's Fees. It will compensate Administrative Agent
---------------------------
as set forth in the Letter Agreement.
7.9 Compliance with Law. It will, and will cause each of its Subsidiaries
-------------------
to, comply with the requirements of all applicable laws, rules, regulations, and
orders of any Governmental Authority, a breach of which would result in a
Material Adverse Change, except where contested in good faith by appropriate
proceedings diligently pursued.
7.10 Compliance with Agreements. Promptly and fully comply with all
--------------------------
Contractual Obligations under all material agreements, indentures, leases and/or
instruments to which any one or more of them is a party, except for any such
------
Contractual Obligations (a) the performance of which would cause an Event of
Default, (b) then being contested by any of them in good faith
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by appropriate proceedings, or (c) if the failure to comply therewith could not
reasonably be expected to cause a Material Adverse Change.
7.11 Maintenance of Insurance. Maintain liability and casualty insurance
------------------------
as provided in Section 6.10.
SECTION 8
NEGATIVE COVENANTS OF BORROWER
8. Borrower covenants and agrees that so long as the credit hereby
granted shall remain available in whole or in part or until the full and final
payment of all indebtedness incurred hereunder, unless Majority Banks waive
compliance in writing:
8.1 Liens.
-----
(a) Borrower will not, nor will it permit any Restricted Subsidiary to,
issue, incur, guaranty or assume any indebtedness for money borrowed secured by
a Lien upon any property or assets of Borrower or any Restricted Subsidiary or
upon any shares of stock or indebtedness of any Restricted Subsidiary (whether
such property, assets, shares of stock or indebtedness are now owned or
hereafter acquired) without in any such case effectively providing concurrently
with the issuance, incurrence, guarantee or assumption of any such indebtedness
that the Commitments and Loans and any other obligations of Borrower to the
Banks (together with, if Borrower shall so determine, any other indebtedness of
Borrower or such Restricted Subsidiary ranking equally with the Commitments and
Loans and such other obligations and then existing or thereafter created) shall
be secured equally and ratably with or prior to such indebtedness by a Lien upon
such property, assets, shares of stock or indebtedness, unless the aggregate
amount of such indebtedness for money borrowed secured by such Liens, together
with all other indebtedness for money borrowed of Borrower and its Subsidiaries
which (if originally issued, incurred, guaranteed or assumed at such time) would
otherwise be subject to the foregoing restrictions (but not including
indebtedness for money borrowed permitted to be secured under sub-clauses (1)
through (7) of Section 8.1(b)), does not at the time exceed 5% of Consolidated
Adjusted Net Worth.
(b) The above restrictions shall not apply to indebtedness of Borrower or
any of its Restricted Subsidiaries secured by:
(1) Liens existing as of the date hereof and listed in Exhibit E;
(2) Liens on property, assets, shares of stock or indebtedness of any
corporation existing at the time such corporation becomes a Restricted
Subsidiary;
(3) Liens on property existing at the time of acquisition of such
property by Borrower or a Restricted Subsidiary, or Liens to secure the
payment of all or any part of the purchase price of property upon the
acquisition of such property by Borrower or a Restricted Subsidiary or to
secure any indebtedness incurred or guaranteed prior to, at the time of, or
within 180 days after, the later of the date of acquisition of such
property and the date such property is placed in service, for the purpose
of financing all or any part of the purchase price thereof, or Liens to
secure any indebtedness incurred or guaranteed for
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the purpose of financing the cost to Borrower or a Restricted Subsidiary of
improvements to such acquired property; provided, however, that for
-------- -------
purposes of this clause 3, (i) a satellite will be treated as a newly-
acquired asset as of the date it is placed in service and (ii) any
satellite transponder acquired through the exercise of an early buy-out
option shall be treated as a newly-acquired asset as of the date such
option is exercised;
(4) Liens securing indebtedness of a Restricted Subsidiary owing to
Borrower or to another Restricted Subsidiary;
(5) Liens on property of a corporation existing at the time such
corporation is merged or consolidated with Borrower or a Restricted
Subsidiary (in accordance with Section 8.2) or at the time of a sale, lease
or other disposition of the properties of a corporation as an entirety or
substantially as an entirety to Borrower or a Restricted Subsidiary;
(6) Liens on property of Borrower or a Restricted Subsidiary in favor
of the United States of America or any state thereof, or any department,
agency or instrumentality or political subdivision of the United States of
America or any state thereof, or in favor of any other country, or any
political subdivision thereof, to secure partial, progress, advance or
other payments pursuant to any contract or statute or to secure any
indebtedness incurred for the purpose of financing all or any part of the
purchase price or the cost of construction of the property subject to such
Liens; or
(7) any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Liens referred to in
the foregoing sub-clauses (1) to (6), inclusively; provided, however, that
-------- -------
the principal amount of indebtedness secured thereby shall not exceed the
principal amount of indebtedness so secured at the time of the incurrence
or guarantee thereof and that such extension, renewal or replacement shall
be limited to all or a part of the property which secured the Lien so
extended, renewed or replaced (plus improvements on such property).
8.2 Mergers, Liquidations and Sales of Assets. It will not, nor will it
-----------------------------------------
permit any of its Restricted Subsidiaries to liquidate or dissolve or enter into
any consolidation, merger, partnership, joint venture, syndicate, pool or other
combination (collectively, the "Mergers") or convey, sell or lease all or
substantially all of its assets or business or the stock or all or substantially
all of the assets or business of a Restricted Subsidiary (collectively,
"Dispositions"), except for:
(a) mergers between Subsidiaries, or between Subsidiary and Borrower where
Borrower is the surviving corporation;
(b) mergers where Borrower is the surviving corporation;
(c) transfers of assets from one Restricted Subsidiary to another
Restricted Subsidiary or from any Restricted Subsidiary to Borrower;
(d) sales, leases, transfers or assignments of operating rights, licenses
or franchises in transactions which could not reasonably be expected to result
in a Material Adverse Change; and
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<PAGE>
(e) the Disposition of any Restricted Subsidiary; provided that both Debt
--------
Ratings remain Investment Grade on the effective date of any such Disposition;
provided, however, no Disposition or Merger otherwise permitted by clauses (a)
- -------- -------
through (e) above shall take place if before, or after giving effect to any such
Disposition or Merger, an Event of Default or Unmatured Event of Default exists
or would exist.
8.3 Defaults. It will not, nor will it permit any of its Restricted
--------
Subsidiaries to, commit or do any act or thing which would constitute an event
of default under any of the material terms or provisions of any other material
agreement, contract, indenture, document or instrument executed, or to be
executed by any of them, except those that may be contested in good faith and
would not, if settled unfavorably, result in a Material Adverse Change.
8.4 Compliance with Regulations. Borrower will not engage principally, or
---------------------------
as one of its important activities, in the business of extending credit for the
purposes of purchasing or carrying any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System; and it
will not use the proceeds of any Loan for the purpose, directly or indirectly,
whether immediate, incidental or ultimate, (a) to purchase or carry, within the
meaning of such Regulation U, any such margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock, unless
done in strict compliance with such Regulation U and other applicable law and
Borrower shall have executed and delivered to each Bank prior to such use a Form
U-1 statement evidencing compliance with such Regulation U and such other
documents relating thereto as Administrative Agent or any Bank shall request, or
(b) in a manner which would violate, or result in a violation of, Regulation T,
U, or X of the Board of Governors of the Federal Reserve System.
8.5 Financial Covenants.
-------------------
(a) Shareholders' Equity. Borrower will not permit Shareholders' Equity as
at the end of any fiscal quarter to be less than the sum of (i) $7,125,000,000,
(ii) an amount equal to 50% of Borrower's consolidated net income (as determined
in accordance with GAAP) earned in each fiscal quarter ending after December 31,
1998 (with no deduction for a net loss in any such fiscal quarter) and (iii) an
amount equal to 50% of the aggregate increase in Shareholders' Equity after
December 31, 1998 by reason of the issuance of capital stock of Borrower
(including upon any conversion of debt securities of Borrower into such capital
stock).
(b) Leverage Ratio. Borrower will not permit the Leverage Ratio as at the
end of any fiscal quarter set forth below to be greater than the ratio set forth
below opposite such fiscal quarter:
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Fiscal Quarters Ending Maximum Leverage
Ratio
------------------------------------------------------------
December 31, 1999 4.00
March 31, 2000 4.50
June 30, 2000 4.00
September 30, 2000 4.00
December 31, 2000 3.75
and thereafter
(c) For the purposes of the financial covenants contained in subsections
(a) and (b) herein, the financial statements of Borrower's subsidiary, DirecTV
Japan, Ltd. will be treated as consolidated with the financial statements of
Borrower (whether or not required by GAAP) from the Effective Date through
December 31, 2000, and thereafter (i) if such consolidation is required by GAAP
or (ii) if Borrower or one or more of its Subsidiaries own securities of DirecTV
Japan, Ltd. convertible into equity interests in DirecTV Japan, Ltd., which when
combined with other equity interests owned by Borrower or one or more of its
Subsidiaries, would result in Borrower and its Subsidiaries having more than a
50% interest in the profits or capital of DirecTV Japan, Ltd.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default. If one or more of the following described Events
-----------------
of Default shall occur:
(a) Borrower shall default in the due and punctual payment of (i) the
principal of or the interest on any Loan within two Business Days of its due
date, (ii) any fee due hereunder within 10 Business Days of its due date; or,
(iii) any other amount due from it hereunder within 30 Business Days of its due
date; or
(b) Borrower or any of its Restricted Subsidiaries shall fail to perform or
observe any of the terms, provisions, covenants, conditions, agreements or
obligations contained herein (other than Section 7.3, and Sections 8.1 through
8.5,) and such failure shall continue for more than 20 days after written notice
from Administrative Agent to Borrower of the existence and character of such
failure to perform or observe; or
(c) Borrower or any of its Restricted Subsidiaries shall fail to perform or
observe any of the terms, provisions, covenants, conditions agreements or
obligations contained in Section 7.3 and Sections 8.1 through 8.5; or
(d) (i) Borrower, or any of its Restricted Subsidiaries shall become
insolvent, or be unable, or admit in writing its inability, to pay its debts as
they become due; or (ii) Borrower or any Restricted Subsidiary shall make an
assignment for the benefit of creditors or to an agent authorized to liquidate
any substantial amount of its properties or assets; or (iii) Borrower or any
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<PAGE>
Restricted Subsidiary shall file or have filed against it a petition in
bankruptcy or seeking reorganization or to effect a plan or other arrangement
with creditors or winding up or dissolution and such filing against it shall not
be dismissed within 60 days after the date of such filing; or (iv) Borrower or
any Restricted Subsidiary shall apply for or consent to the appointment of or
consent that an order be made appointing any receiver or trustee for any of its
or their properties, assets or business, or if a receiver or a trustee shall be
appointed for all or a substantial part of its or their properties, assets or
business; or (v) an order for relief shall be entered against Borrower or any
Restricted Subsidiary under the United States federal bankruptcy laws as now or
hereafter in effect; or (vi) Borrower or any Restricted Subsidiary shall take
any action indicating its consent to, approval of or acquiescence in, any of the
foregoing; or
(e) Any representation or warranty made by Borrower herein or in any
certificate or financial or other statement heretofore or hereafter furnished by
Borrower or any of its officers to Administrative Agent or the Banks proves to
be in any material respect false or misleading as of the date when made, deemed
made or reaffirmed; or
(f) Any final judgment, decrees, writs of execution, attachments or
garnishments or any Liens, or any other legal processes shall be issued or
levied against any of the assets or property of Borrower or any of its
Restricted Subsidiaries (and shall not have been vacated, discharged or stayed)
in amounts which in the aggregate would result in a Material Adverse Change
(without limiting the generality of the foregoing, a judgment in excess of
$75,000,000 in the aggregate shall, for purposes only of this Section 9.1(f), be
deemed to result in a Material Adverse Change); provided, however, that such
-------- -------
aggregate amount shall include only amounts in excess of (i) insurance coverage
therefor and (ii) reserves on the books of Borrower or any of its Restricted
Subsidiaries therefore; provided, further, that such aggregate amount shall not
-------- -------
include any amounts with respect to matters subject to appeal conducted in good
faith and diligently pursued or other further legal process by Borrower or any
of its Restricted Subsidiaries or any amounts with respect to any such legal
process which Borrower or any of its Restricted Subsidiaries has detached from
such property by posting of a bond or equivalent process; or
(g) All, or substantially all, of the assets and property of Borrower or
any of its Restricted Subsidiaries shall be condemned, seized or otherwise
appropriated; or
(h) Any fact or circumstance (including without limitation a Reportable
Event), which results in, or which Majority Banks determine in good faith could
reasonably be expected to result in, the termination of any Plan of Borrower,
any of its Subsidiaries or any ERISA Affiliate by the Pension Benefit Guaranty
Corporation or the appointment by an appropriate United States District Court of
a trustee to administer any such Plan, shall occur and shall continue for 30
days after written notice of such determination shall have been given to
Borrower or any of its Subsidiaries by Administrative Agent, or a trustee shall
be appointed by the appropriate United States District Court to administer any
Plan of Borrower or any of its Subsidiaries, or the Pension Benefit Guaranty
Corporation shall institute proceedings to terminate any Plan of Borrower or any
of its Subsidiaries or to appoint a trustee to administer any such Plan and,
upon the occurrence of any of the foregoing, the aggregate amount of the
unfunded vested liability for the benefits guaranteed by the Pension Benefit
Guaranty Corporation under all such Plans and the present value of any
Withdrawal Liability which remains unpaid is reasonably estimated to be in
excess of $75,000,000 and such liability is not covered by insurance; or
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(i) Borrower or any of its Restricted Subsidiaries (i) fails to make any
payment (or otherwise satisfy) in respect of any indebtedness for money borrowed
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the document relating thereto on the date of
such failure; or (ii) an event of default shall occur which permits the
acceleration of indebtedness for money borrowed under any other agreement,
contract, indenture, document or instrument executed, or which may be executed,
by Borrower or any of its Restricted Subsidiaries, which failure or event of
default has not been waived or cured; provided, however, that no Event of
-------- -------
Default shall exist hereunder if the aggregate amount of the indebtedness which
is not paid or may be accelerated with respect to the defaulted obligations
shall not exceed in the aggregate $75,000,000; or
(j) Any disposition of any Restricted Subsidiary shall have occurred, and:
(i) prior to such disposition, either S&P or Moody's shall have
publicly announced that Borrower's Debt Rating will be below Investment
Grade after giving effect to such disposition; or
(ii) as soon as reasonably practicable after its public announcement
of such disposition, Borrower shall not have requested S&P and Moody's to
publicly announce, prior to or no later than concurrently with the
consummation of such disposition, that Borrower's Debt Rating will remain
at least Investment Grade after giving effect to such disposition; or
(iii) notwithstanding clause (ii), either S&P or Moody's shall not
have publicly announced within 10 days after the consummation of such
disposition that Borrower's Debt Ratings will remain at least Investment
Grade after giving effect to such disposition; or
(k) Any sale, spin-off, disposition or other transaction whereby General
Motors Corporation will no longer beneficially own directly or indirectly at
least 51 percent of the issued and outstanding capital stock of Borrower having
voting power under ordinary circumstances to elect directors of Borrower (a
"transaction") shall have occurred and:
(i) prior to such transaction, either S&P or Moody's shall have
publicly announced that its Debt Rating will be below Investment Grade
after giving effect to such transaction; or
(ii) as soon as reasonably practicable after its public announcement
of such transaction, Borrower shall not have requested S&P and Moody's to
publicly announce, prior to or no later than concurrently with the
consummation of such transaction, that Borrower's Debt Rating will remain
at least Investment Grade after giving effect to such transaction; or
(iii) notwithstanding clause (ii), either S&P or Moody's shall not
have publicly announced within 10 days after the consummation of such
transaction that its Debt Ratings will remain at least Investment Grade
after giving effect to such transaction; or
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<PAGE>
(l) This Agreement, at any time after its execution and delivery and for
any reason other than the agreement of all Banks or satisfaction in full of all
the duties and obligations hereunder, ceases to be in full force and effect or
is declared by a court of competent jurisdiction to be null and void, invalid or
unenforceable in any respect; or Borrower denies that it has any or further
liability or obligation under this Agreement, or purports to revoke, terminate
or rescind this Agreement.
Then (a) automatically upon the occurrence of an Event of Default under Section
9.1(d), the Commitments shall immediately terminate, and all Loans and other
liabilities and obligations outstanding under this Agreement shall, without
presentment, demand, protest, or notice of any kind, all of which are hereby
expressly waived, be forthwith due and payable, if not herein otherwise then due
and payable, together with all costs and expenses (including break and funding
costs and other costs in connection with the relending, reborrowing, funding or
other employing of funds) incurred by the Banks as a result thereof, anything
herein or in any agreement, contract, indenture, document or instrument
contained to the contrary notwithstanding; and (b) at any time after the
occurrence of an Event of Default other than under Section 9.1(d), and in each
and every such case, unless such Event of Default shall have been remedied by
Borrower to the satisfaction of Majority Banks or waived in writing by Majority
Banks (except in the case of an Event of Default under Section 9.1(a), the
waiver of which shall require the consent of all the Banks), Administrative
Agent may, with the consent of the Majority Banks, or shall, upon the direction
of Majority Banks, immediately terminate the Commitments, whereupon the same
shall be cancelled and reduced to zero and any Loan Request given in respect of
a Borrowing Date occurring on or after the date of such notice of cancellation
shall cease to have effect and all Loans and all accrued interest thereon and
all other liabilities and obligations outstanding under this Agreement shall,
thereupon, without presentment, demand, protest, or notice of any kind, all of
which are hereby expressly waived, be forthwith due and payable, if not
otherwise then due and payable, together with all reasonable costs and expenses
(including break and funding costs and other costs in connection with the
relending, reborrowing, funding or other employing of funds) incurred by the
Banks as a result thereof, anything herein or in any other agreement, contract,
indenture, document or instrument contained to the contrary notwithstanding.
Thereafter any Bank or the Banks may immediately, and without expiration of any
period of grace, enforce payment of all liabilities and obligations of Borrower
under this Agreement.
9.2 Recovery of Amounts Due. If any amount payable hereunder is not paid
-----------------------
as and when due, Borrower hereby authorizes Administrative Agent, each Bank and
their respective affiliates to proceed, to the fullest extent permitted by
applicable law, without prior notice, by right of set-off, banker's lien or
counterclaim, against any moneys or other assets of Borrower in any currency
that may at any time be in the possession of Administrative Agent or any of its
affiliates or such Bank or any of its affiliates, at any branch or office
thereof, to the full extent of all amounts payable to Administrative Agent and
the Banks hereunder. Any Bank that so proceeds or that has an affiliate that so
proceeds shall forthwith give notice to Administrative Agent of any action taken
by such Bank or affiliate pursuant to this Section 9.2.
9.3 Rights Cumulative. The rights of Administrative Agent and the Banks
-----------------
provided for herein are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity.
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SECTION 10
THE BANKS
10.1 Administration of Loan. The general administration of the Loans shall
----------------------
be by Administrative Agent and shall be governed by the provisions set forth in
Exhibit C attached hereto and incorporated herein by reference.
10.2 Representations By Banks. Each Bank hereby represents that it will
------------------------
make each Loan hereunder in the ordinary course of its business and not with a
view to engage in any distribution of any evidence of indebtedness to the public
and any participation or disposition of the Master Bid Rate Note shall not,
without the consent of Borrower, require Borrower to file a registration
statement with the Securities and Exchange Commission or apply to qualify any
Master Bid Rate Note under the blue sky law of any state; provided, however,
-------- -------
disposition of any evidence of indebtedness held by such Bank shall at all times
be within its exclusive control subject only to the provisions of Section 11.11
and Section 10 of Exhibit C.
SECTION 11
MISCELLANEOUS PROVISIONS
11.1 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement, and no consent with respect to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
Majority Banks (or by the Administrative Agent at the written request of
Majority Banks) and the Borrower and acknowledged by Administrative Agent, and
then any such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no such
-------- -------
waiver, amendment, or consent shall, unless in writing and signed by all the
Banks and Borrower and acknowledged by Administrative Agent, do any of the
following: (a) increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to Section 9.1); (b) postpone or delay any date
fixed by this Agreement for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder; (c) reduce the principal
of, or the rate of interest specified herein on any Loan, or any fees or other
amounts payable hereunder; (d) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Loans which is required for the
Banks or any of them to take any action hereunder; or (e) amend this Section or
any provision herein providing for consent or other action by all Banks;
provided, further, that no amendment, waiver or consent shall, unless in writing
- -------- -------
and signed by Administrative Agent in addition to Majority Banks or all Banks,
as the case may be, affect the rights or duties of Administrative Agent under
this Agreement or rights or privileges thereunder.
11.2 Notices. All notices, payments, requests, reports, information,
-------
demands and other communications which any party hereto may desire, or may be
required, to give or make to any other party hereto, shall (unless otherwise
permitted as a telephonic notice or request hereunder) be given by mailing the
same, postage prepaid, or by telex, or rapifax transmission, or by hand delivery
or courier, to each party at its address set forth in Exhibit D attached hereto
and incorporated herein by reference, or to such other address as may, from time
to time, be specified in writing by Borrower or any Bank. Such communications
shall be deemed to have been duly given and received in the case of a telex,
when the telex is sent and the appropriate answer-back
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is received, in the case of mail when sent by pre-paid certified or registered
mail correctly addressed to the addressee, in the case of rapifax transmission,
when transmission has been sent, and in the case of hand delivery or courier,
when received. Administrative Agent may rely and act upon any Loan Request made
by telex or other telexed, telephonic or facsimile instructions to
Administrative Agent by any Person purporting to be an authorized Person of
Borrower, and Borrower shall be unconditionally and absolutely estopped from
denying the authenticity and validity of any transaction or act made by
Administrative Agent or any Bank in reliance thereon. Each party hereto shall
promptly confirm by telex or rapifax any telephone communication made by it to
another pursuant to this Agreement but the absence of such confirmation shall
not affect the validity of such communication, which shall be effective upon
receipt. If there is any conflict between any telephonic communication and a
written confirmation, the written communication shall govern; provided, however,
-------- -------
that the recipient of such communication shall be held harmless by all parties
hereto with respect to any action taken in reliance on the telephonic
communication prior to the time such recipient receives and has had reasonable
time to review the subsequent written confirmation and initiate such corrective
action as the recipient deems reasonable under the circumstances.
11.3 Waiver. Neither the failure of, nor any delay on the part of, any
------
party hereto in exercising any right, power or privilege hereunder, or under any
agreement, contract, indenture, document or instrument mentioned herein, shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder, or under any agreement, contract,
indenture, document or instrument mentioned herein, preclude other or further
exercise thereof or the exercise of any other right, power or privilege; nor
shall any waiver of any right, power, privilege or default hereunder, or under
any agreement, contract, indenture, document or instrument mentioned herein,
constitute a waiver of any other right, power, privilege or default or
constitute a waiver of any other default of the same or of any other term or
provision. All rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies otherwise provided by law.
11.4 California Law. The interpretation, enforcement and effect of this
--------------
Agreement, the Loans and any agreements, contracts, indentures, documents or
instruments delivered in accordance herewith, shall be governed and controlled
in all respects by and construed according to the substantive laws of the State
of California, to the jurisdiction of whose courts the parties hereto hereby
agree to submit.
11.5 Headings. The headings set forth herein are solely for the purpose of
--------
identification and shall not be construed as a part of the sections or
subsections which they head.
11.6 Accounting Terms. All accounting terms not otherwise defined herein
----------------
have the meaning assigned to them in accordance with GAAP, provided, however,
any act or condition in accordance herewith and permitted hereunder when taken,
created or occurring, shall not become a violation of any section of this
Agreement as a result of a subsequent change in GAAP.
11.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, and
all of said counterparts taken together shall constitute one and the same
instrument.
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11.8 Written Disclosure. Wherever written disclosure by Borrower to Banks
------------------
is required or permitted by this Agreement, written disclosure to Administrative
Agent by Borrower shall constitute such disclosure.
11.9 Singular; Plural. Whenever used herein, the singular number shall
----------------
include the plural, the plural the singular, and the use of any gender shall be
applicable to all genders.
11.10 Illegality. The illegality or unenforceability of any provision of
----------
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
11.11 Assignments. This Agreement shall bind and inure to the benefit of
-----------
the parties hereto and their respective successors and assigns. No party hereto
may assign or transfer all or any part of its rights and obligations hereunder,
except that:
(a) Any Bank may, with the prior written consent of Borrower at all times
other than during the existence of an Event of Default, and Administrative
Agent, which consents shall not be unreasonably withheld, at any time assign and
delegate to one or more Eligible Assignees (provided that no written consent of
--------
Borrower or the Administrative Agent shall be required in connection with any
assignment and delegation by Bank to an Approved Bank Affiliate of such Bank or
another Bank) (each an "Assignee") by execution and delivery to, and acceptance
by, the Administrative Agent of a Notice of Assignment and Acceptance, all, or
any ratable part of all, of the Loans, the Commitments and the other rights and
obligations of such Bank hereunder; provided, however, that any assignment to an
-------- -------
Eligible Assignee which is not a Bank or an Approved Bank Affiliate shall be in
an amount not less than the lesser of $5,000,000 or all, but not less than all,
of the Loans, the Commitment and the other rights and obligations of such Bank
hereunder. Upon execution of a Notice of Assignment and Acceptance by such
Eligible Assignee in which it agrees to abide by all of the terms, conditions
and obligations applicable to a Bank herein and to have a Commitment as
specified in such agreement, such Eligible Assignee shall be deemed a Bank
hereunder to the same extent as if it were a signatory hereto and, thereafter,
such Eligible Assignee shall for all purposes be considered a "Bank" hereunder.
Administrative Agent shall be entitled to a $2,500 processing fee, payable by
the assignor, with respect to any such assignment by a Bank.
(b) Subject to Section 11.16, Borrower authorizes each Bank and the
Arrangers to disclose to any prospective assignee and assignee any and all
information in such Bank's or the Arrangers' possession concerning Borrower,
this Agreement and any collateral.
(c) Notwithstanding anything to the contrary contained herein, any Bank (a
"Granting Bank") may grant to a special purpose funding vehicle (an "SPC"),
------------- ---
identified as such in writing from time to time by the Granting Bank to
Administrative Agent and Borrower, the option to provide to Borrower all or any
part of any Loan that such Granting Bank would otherwise be obligated to make to
the Borrower pursuant to this Agreement; provided that (i) nothing herein shall
--------
constitute a commitment by any SPC to make any Loan, (ii) if an SPC elects not
to exercise such option or otherwise fails to provide all or any part of such
Loan, the Granting Bank shall be obligated to make such Loan pursuant to the
terms hereof. The making of a Loan by an SPC
-39-
<PAGE>
hereunder shall utilize the Commitment of the Granting Bank to the same extent,
and as if, such Loan were made by such Granting Bank. Each party hereto hereby
agrees that no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Bank). In furtherance of the foregoing, each party hereto hereby agrees
(which agreement shall survive the termination of this Agreement) that, prior to
the date that is one year and one day after the payment in full of all
outstanding commercial paper or other senior indebtedness of any SPC, it will
not institute against, or join any other person in instituting against, such SPC
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any State thereof. In
addition, notwithstanding anything to the contrary contained in this Section,
any SPC may (i) with notice to, but without the prior written consent of,
Borrower and Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Bank or to any financial institutions (consented to by Borrower and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii)
subject to the provisions of Section 11.16 hereof, disclose on a confidential
basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This section may not be amended without the
written consent of the SPC.
11.12 Obligations Several. The obligations of each Bank under this
-------------------
Agreement are several. Neither Administrative Agent nor any Bank shall be
liable for the failure of any other Bank to perform its obligations under this
Agreement.
11.13 Participations. Any Bank may at any time sell, or grant
--------------
participations in all or part of its Commitment or any Loan or Loans made to
Borrower under this Agreement to any other Person, other than an individual, (a
"Participant"); provided, however, no Bank may be relieved of its obligations
under this Agreement except with the consent of Borrower and Administrative
Agent. Any such sale or grant of a participation is subject to the following
conditions:
(a) Administrative Agent and Borrower may, for all purposes of this
Agreement, deem and treat a Bank party to this Agreement as the owner of such
Bank's Loans hereunder for all purposes hereof until a written notice of the
sale or participation shall have been received by Administrative Agent, together
with Borrower's consent to treat such Participant as owner of such Loan.
(b) Subject to Section 11.16, Borrower authorizes each Bank and the
Administrative Agent to disclose to any prospective Participant and to any
Participant any and all information in such Bank's or the Administrative Agent's
possession concerning Borrower, this Agreement and any collateral.
(c) Any agreement pursuant to which a Bank grants a participation in its
rights with respect to any Loan or Loans shall provide that, with respect to any
such Loan or Loans, such Bank shall retain the sole right and responsibility to
exercise the rights of a Bank under this Agreement including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement and the right to take action to declare any amount
due
-40-
<PAGE>
and payable pursuant to Section 9; provided that such participation agreement
may provide that such Bank will not agree to any modification, amendment or
waiver of this Agreement without the consent of the Participant if such
modification, amendment or waiver would (i) increase the amount of the Total
Commitment or change the Commitment of such Bank, (ii) reduce interest,
principal or fees owing to such Bank hereunder, (iii) extend the fixed date on
which any sum is due hereunder, or (iv) release or subordinate any material
portion of collateral.
(d) Except as provided in this Section 11.13, no recipient of a
participation in a Loan or Loans of any Bank shall have any rights under this
Agreement other than to receive payment of principal of, and interest on the
Loans and of such other amounts as Banks are entitled to receive pursuant to
Sections 3.1, 3.2, 3.3, and 3.4 of this Agreement; provided, however such
recipients shall be entitled to receive pursuant to Sections 3.1, 3.2 and 3.3
only the lesser of (i) the amount that the Bank from which the recipient
received its participation would have received had such Bank not transferred an
interest in its Loans to such recipient and (ii) the additional costs actually
incurred by such recipient; and any demand by a Participant for payment
hereunder shall certify that the amount demanded does not exceed the amount
Participant is entitled to receive under this subsection (d).
(e) Notwithstanding any other provision set forth in this Agreement, any
Bank may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Loans owing to
it) in favor of any Federal Reserve Bank in accordance with Regulation A of the
Board of Governors of the Federal Reserve System.
11.14 Fees and Expenses. Borrower agrees to pay on demand (a) to
-----------------
Administrative Agent all reasonable costs, expenses and attorneys' fees
(including allocated costs for in-house legal services) incurred by
Administrative Agent and the Arrangers in connection with the preparation and
administration of this Agreement and any documents including any amendments,
waivers, or other modifications and (b) all reasonable costs, expenses and
attorneys' fees (including allocated costs for in-house legal services) incurred
by Administrative Agent and Banks in connection with the enforcement of this
Agreement and any instrument or agreement required hereunder and in connection
with any refinancing or restructuring of the Loans in the nature of a "work-
out"; provided, however that, in addition to costs of Administrative Agent's in-
house counsel, Borrower shall be obligated to pay for the costs of no more than
one counsel for Administrative Agent and all Banks (without prejudice to any
Bank's right to engage additional counsel at its own cost and expense) unless
any Bank shall in good faith reasonably determine that there is a conflict of
interest that causes it to be reasonably necessary for such Bank to be
represented by separate counsel.
11.15 Indemnity. Borrower agrees to indemnify the Administrative Agent,
---------
the Arrangers, the Syndication Agent, the Documentation Agents, each Bank and
their respective directors, officers, agents and employees (collectively, the
"Indemnitees") from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses, including settlement costs) reasonably
incurred by any of them arising out of or by reason of any investigation by
governmental or judicial authorities or being made a party to any litigation or
other similar proceeding related to any use made or proposed to be made by
Borrower of the proceeds of any Loan for the acquisition of any other Person
(other than with respect to a particular Indemnitee's losses, liabilities,
claims, damages or expenses incurred as a result of
-41-
<PAGE>
such Indemnitee's gross negligence or willful misconduct), including, without
limitation, the reasonable fees and disbursements of counsel (including
allocated costs for in-house legal services) incurred in connection with any
such investigation, litigation or other proceeding; provided, however, that
-------- -------
Borrower shall have no obligation to indemnify or pay for the costs and expenses
of more than one counsel for the Indemnitees, unless any Indemnitee shall in
good faith reasonably determine that there is a conflict of interest that causes
it to be reasonably necessary for any Indemnitees to be represented by other
counsel. Counsel chosen to represent any Indemnitee pursuant to the previous
sentence shall be reasonably satisfactory to Borrower. The obligations of
Borrower under this Section shall survive the termination of this Agreement.
11.16 Confidentiality. In consideration of Borrower furnishing Confidential
---------------
Information(as defined below) to the Banks, the Arrangers, Administrative Agent,
Syndication Agent and Documentation Agents, (collectively, the "Recipients") and
their respective directors, officers and employees (collectively, the
"Representatives"), each Recipient agrees for itself that:
(a) Such Recipient shall keep the Confidential Information confidential and
shall not, without Borrower's prior written consent, disclose it in any manner
whatsoever, in whole or in part, and shall not use the Confidential Information
other than in connection with this Agreement. Each Recipient agrees to reveal
the Confidential Information only to its Representatives, bank affiliates,
auditors, counsel and other advisors, representatives or agents who need to know
the Confidential Information for the purpose of this Agreement, who are informed
by such Recipient of the confidential nature of the Confidential Information and
who shall agree to act in accordance with the terms and conditions of this
section. Each Recipient shall be responsible for any breach of this Section by
its Representatives.
(b) Without Borrower's prior written consent, no Recipient shall disclose
to any Person the fact that the Confidential Information has been made available
or any other facts with respect to this Agreement.
(c) Upon payment in full of all obligations owing to a Recipient and
termination of such Recipient's Commitments, if any, hereunder, copies of the
Confidential Information shall be returned by such Recipient to Borrower
immediately upon its request, except for that portion of the information which
consists of analyses, compilations, forecasts, studies or other documents
prepared by such Recipient or its Representatives based on Confidential
Information, which portion shall either be destroyed (as evidenced by a
certificate of destruction signed by a duly authorized offer of such Recipient)
or held by such Recipient and kept confidential and subject to the terms of this
section; provided that such Recipient shall not be required to return or destroy
--------
Confidential Information to the extent such Recipient reasonably determines that
its retention of such Confidential Information is required by applicable law or
regulation.. Any oral Confidential Information shall continue to be subject to
the terms of this Section.
(d) Confidential Information shall not include such portions of the
information furnished to a Recipient which (i) are or become generally available
to the public other than as a result of a disclosure by such Recipient or its
Representatives in violation of this Agreement, (ii) become available to such
Recipient on a non-confidential basis from a source (other than Borrower or its
Representatives) which is not known by such Recipient to be prohibited from
disclosing such information to such Recipient, or (iii) were in such Recipient's
possession prior to being
-42-
<PAGE>
furnished to such Recipient or its Representatives provided that the source of
such information was not known by such Recipient to be prohibited from
disclosing the information to such Recipient.
(e) Subject to Section 6.15 and except as otherwise expressly set forth in
this Agreement. each Recipient acknowledges that neither Borrower nor any of its
Representatives makes any express or implied representation or warranty as to
the accuracy or completeness of the information furnished to such Recipient, and
that neither Borrower nor any of its Representatives shall have any liability
resulting from the use of the information furnished to any Recipient, errors
therein or omissions therefrom.
(f) In the event any Recipient or any person to whom it transmits the
Confidential Information pursuant to this Agreement becomes legally compelled to
disclose any of the information, such Recipient shall, to the extent permitted
by law, provide Borrower with prompt written notice thereof so that the Borrower
may seek a protective order or other appropriate remedy and/or waiver such
Recipient's compliance with the provisions of this section, In the event that
such protective order or other remedy is not obtained, or that Borrower waives
any Recipient's compliance with the provisions of this section, such Recipient
may furnish only that portion of the Confidential Information which it is
advised by written opinion of counsel that the disclosure thereof is legally
required, and shall exercise its best efforts to obtain reliable assurance that
confidential treatment will be accorded the Confidential Information so
disclosed.
(g) Notwithstanding the foregoing, a Recipient may (i) disclose any
Confidential Information to bank examiners; (ii) use any Confidential
Information in connection with the management, supervision and enforcement of
this Agreement, including the enforcement of such Recipient's rights under any
agreement executed in connection therewith; (iii) disclose any Confidential
Information in connection with any litigation or dispute involving any such
Person or the Borrower and related to this Agreement or to any use of proceeds
of the Loans; (iv) disclose any Confidential Information to other Recipients;
and (v) disclose Confidential Information to prospective assignees and
Participants and assignees and Participants pursuant to Sections 3.8, 11.11(b)
and 11.13(b); provided, further, that in each of the foregoing cases, such
Person shall use its best efforts to ensure that any such disclosure will be
made under procedures reasonably calculated to maintain the confidentiality of
such Confidential Information.
For purposes of this Section, "Confidential Information" means information
relating to the business, operation or technology of Borrower or its affiliates
which Borrower has furnished to the Banks, the Arrangers, Administrative Agent,
Syndication Agent, Documentation Agents or their Representatives which is either
non-public, confidential or proprietary in nature, together with copies and
other reproductions thereof, and analyses, compilations, forecasts, studies or
other documents prepared by any Banks or its Representatives which contain or
otherwise reflect such information.
This section shall survive termination of the Agreement.
11.17 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT
--------------------------------
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR
-43-
<PAGE>
IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
11.18 New Banks; Increases in Commitments of Banks. (a) In the event one
--------------------------------------------
or more Banks do not consent to an extension of the Termination Date pursuant to
Section 2.13, if no Event of Default or Unmatured Event of Default has occurred
and is continuing, Borrower may within five days of Borrower's receipt of notice
of such failure to so extend notify Administrative Agent and the Banks (a
"Commitment Replacement Notice") that (i) it desires to add one or more
additional lenders to the Banks hereunder having aggregate Commitments not
exceeding the Commitment of the Bank(s) which have not consented to an
extension, and/or (ii) with the consent of the relevant Bank(s), increase the
Commitment of any one or more of the Banks in an aggregate amount not exceeding
the Commitment of the Bank(s) which have not consented to an extension of the
Termination Date; provided that the existing Bank(s) shall have the right on a
--------
pro rata basis based upon the then existing Commitments to increase their
respective Commitments to replace the terminated Commitments before any New Bank
may be added as a Bank hereunder. The Banks desiring to increase their
Commitments based upon the immediately preceding proviso must give notice to
Administrative Agent of their intention to accept a greater Commitment within
five days of Borrower's Commitment Replacement Notice. Each Commitment
Replacement Notice shall identify each new lender (each a "New Bank") proposed
by Borrower to be added as a Bank and/or each existing Bank which has proposed
to increase its Commitment, the amount of its proposed Commitment and the
proposed effective date of its becoming a Bank hereunder or increasing its
Commitment, as applicable (which shall be the last day of all then current
Interest Periods if there are Eurodollar Advances then outstanding from the
Banks). Any increase in the Commitment of a Bank shall be effective upon the
receipt by Administrative Agent of a commitment increase letter in the form of
Exhibit H hereto which shall identify the proposed effective date (which shall
be the last day of all then current Interest Periods if there are Eurodollar
Advances then outstanding from the Banks). Each New Bank shall, with the
consent of Administrative Agent, become a Bank hereunder for all purposes and to
the same effect as if set forth on the signature pages hereof, subject to its
execution and delivery to Administrative Agent of at least one counterpart of
this Agreement (which shall be deemed to include all amendments thereto) and the
execution and delivery by Administrative Agent and Borrower of each such
counterpart. Each Bank expressly agrees that its obligations arising hereunder
shall not be affected or diminished by the addition or release of any other Bank
hereunder, nor by any election of Administrative Agent not to authorize a lender
to become a New Bank.
11.19 (b) Following any Bank's or Banks' refusal to extend their
Commitments pursuant to Section 2.13 herein and/or any subsequent change in the
Commitments of the existing Banks or the addition of a New Bank, Schedule 1 of
this Agreement shall be deemed
-44-
<PAGE>
amended to reflect (i) the termination of the non-extending Bank's Commitment;
(ii) the addition of any New Bank; (iii) such New Bank's Commitment; and (iv)
any change to the Commitment of an existing Bank.
11.20 (c) Following any Bank or Banks refusal to extend their Commitments
pursuant to Section 2.13 herein and any subsequent change in the Commitments of
the existing Banks or the addition of a New Bank, Borrower agrees to execute
such Notes as necessary to comply with the requirements of Sections 2.8 and 2.9
of this Agreement.
[Remainder of page intentionally left blank]
-45-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
in Los Angeles, California as of the date first hereinabove written.
HUGHES ELECTRONICS CORPORATION
By: __________________________________________
Name:
Title:
S-1
<PAGE>
BANK OF AMERICA, N.A., as
Administrative Agent
By: __________________________________________
Name:
Title:
S-2
<PAGE>
CITICORP USA, INC., as Syndication
Agent and as a Bank
By: __________________________________________
Name:
Title:
S-3
<PAGE>
DEUTSCHE BANK AG, NEW YORK
BRANCH, as Documentation
By: __________________________________________
Name:
Title:
S-4
<PAGE>
ALLFIRST BANK
By: ____________________________________
Name:
Title:
S-5
<PAGE>
BANCA DI ROMA - SAN FRANCISCO
By: ____________________________________
Name:
Title:
S-6
<PAGE>
BANK OF AMERICA, N.A., as a Bank
By: ____________________________________
Name:
Title:
S-7
<PAGE>
THE BANK OF NEW YORK
By: ____________________________________
Name:
Title:
S-8
<PAGE>
BANK ONE, NA
By: ____________________________________
Name:
Title:
S-9
<PAGE>
BARCLAYS BANK PLC
By: ____________________________________
Name:
Title:
S-10
<PAGE>
BANQUE NATIONALE DE PARIS
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
S-11
<PAGE>
BAYERISCHE LANDESBANK
GIROZENTRALE, CAYMAN ISLANDS
BRANCH
By: ____________________________________
Name:
Title:
S-12
<PAGE>
CREDIT SUISSE FIRST BOSTON
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
S-13
<PAGE>
DEUTSCHE BANK AG, NEW YORK
BRANCH AND/OR CAYMAN ISLAND
BRANCHES, as a Bank
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
S-14
<PAGE>
THE FUJI BANK, LIMITED
By: ____________________________________
Name:
Title:
S-15
<PAGE>
MELLON BANK, N.A.
By: ____________________________________
Name:
Title:
S-16
<PAGE>
THE MITSUBISHI TRUST AND
BANKING CORPORATION, NEW
YORK BRANCH
By: ____________________________________
Name:
Title:
S-17
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: ____________________________________
Name:
Title:
S-18
<PAGE>
SOCIETE GENERALE
By: ____________________________________
Name:
Title:
S-19
<PAGE>
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK
BRANCH
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
S-20
<PAGE>
SCHEDULE 1
BANKS AND COMMITMENTS
<TABLE>
<CAPTION>
Bank Commitment Normal Percentage
---- ---------- -----------------
<S> <C> <C>
Bank of America, N.A. $ 44,000,000 12.5714%
Citicorp USA, Inc. $ 44,000,000 12.5714%
Deutsche Bank AG, New York $ 35,000,000 10.0000%
and/or Cayman Islands
Branches
Barclays Bank PLC $ 22,000,000 6.2857%
Bank One, NA $ 22,000,000 6.2857%
Bayerische Landesbank $ 22,000,000 6.2857%
Girozentrale, Cayman Islands
Branch
Societe Generale $ 22,000,000 6.2857%
Credit Suisse First Boston $ 22,000,000 6.2857%
Banque Nationale de Paris $ 22,000,000 6.2857%
Morgan Guaranty Trust Company $ 17,500,000 5.0000%
of New York
Mellon Bank, N.A. $ 15,000,000 4.2857%
Banca di Roma--San Francisco $ 15,000,000 4.2857%
The Mitsubishi Trust and $ 12,500,000 3.5714%
Banking Corporation, New
York Branch
Westdeutsche Landesbank $ 8,750,000 2.5000%
Girozentrale, New York Branch
Bank of New York $ 8,750,000 2.5000%
Allfirst Bank $ 8,750,000 2.5000%
The Fuji Bank, Limited $ 8,750,000 2.5000%
Total $350,000,000 100.0000%
</TABLE>
-1-
<PAGE>
EXHIBIT A-1
LOAN REQUEST
TO: Bank of America, N.A., as
Administrative Agent for Banks
FROM: Hughes Electronics Corporation
DATE:
RE: Hughes Electronics Corporation -
Revolving Credit Agreement (364-day
Facility)
Ladies and Gentlemen:
1. We refer to the Revolving Credit Agreement (364-day Facility) dated as of
November 24, 1999 and made among Hughes Electronics Corporation, the banks
parties thereto ("Banks"), Bank of America, N.A., as administrative agent for
the Banks (in such capacity "Administrative Agent"), Citicorp USA, Inc., as
Syndication Agent and Deutsche Bank AG, New York Branch as Documentation Agent
(the "Agreement"). Terms defined in the Agreement shall have the same meaning
herein.
2. We hereby request that a [Base Rate Loan] [Eurodollar Loan] is made to
us as follows:
(i) Principal Amount:
(ii) Borrowing Date:
(iii) Interest Period (if a Eurodollar Loan):
3. For the purposes of inducing the Banks to make the Loan requested
herein, we confirm that, pursuant to Section 5.3 of the Agreement, as of the
date hereof:
(i) the representations and warranties set out in Section 6 of the
Agreement (with the exception of Section 6.6) are true and
correct in all material respects;
(ii) the most current financial statements delivered pursuant to
Section 7.5 of the Agreement present fairly the financial
position and results of operation and changes in financial
position of Borrower and its consolidated Subsidiaries as at
the end of, and for the fiscal period to which such
A-1-1
LOAN REQUEST
<PAGE>
statements relate as of the date thereof (subject, in the case
of unaudited financial statements, to year end adjustments);
and
(iii) no Event of Default or Unmatured Event of Default has occurred
and is continuing.
HUGHES ELECTRONICS CORPORATION
By:_____________________________
Name:
Title:
A-1-2
LOAN REQUEST
<PAGE>
EXHIBIT A-2
LOAN REQUEST - BID RATE LOANS
TO: Bank of America, N.A., as
Administrative Agent for Banks
FROM: Hughes Electronics Corporation
DATE:
RE: Hughes Electronics Corporation -
Revolving Credit Agreement (364-day
Facility)
Ladies and Gentlemen:
1. We refer to the Revolving Credit Agreement (364-day Facility) dated as
of November 24, 1999 and made among Hughes Electronics Corporation, the banks
parties thereto ("Banks"), Bank of America, N.A., as administrative agent for
the Banks (in such capacity "Administrative Agent"), Citicorp USA, Inc., as
Syndication Agent and Deutsche Bank AG, New York Branch as Documentation Agent
(the "Agreement"). Terms defined in the Agreement shall have the same meaning
herein.
2. We hereby give you notice pursuant to Section 2.4 of the Revolving
Credit Agreement that we request offers for the following proposed Bid Rate
Loans:
(i) Borrowing Date:
(ii) Principal Amount:
(iii) Interest Period(s):
Each Bid Rate Loan offer should specify an amount, the Interest Period and
the Bid Rate upon which each Bank desires to advance a Bid Rate Loan.
3. For the purposes of inducing the Banks to make the Loan requested
herein, we confirm that, pursuant to Section 5.3 of the Agreement, as of the
date hereof:
(i) the representations and warranties set out in Section 6 of the
Agreement (with the exception of Section 6.6) are true and
correct in all material respects;
(ii) the most current financial statements delivered pursuant to
Section 7.5 of the Agreement present fairly the financial
position and results of operation and changes in financial
position of Borrower and its consolidated Subsidiaries as at
the end of, and for the fiscal period to which such
A-2-1
LOAN REQUEST - BID RATE LOANS
<PAGE>
statements relate as of the date thereof (subject, in the case
of unaudited financial statements, to year end adjustments);
and
(iii) no Event of Default or Unmatured Event of Default has occurred
and is continuing.
HUGHES ELECTRONICS CORPORATION
By:__________________________________
Name:
Title:
A-2-2
LOAN REQUEST - BID RATE LOANS
<PAGE>
EXHIBIT B
MASTER BID RATE NOTE
Los Angeles, California [Date]
HUGHES ELECTRONICS CORPORATION, a Delaware corporation (the "Borrower"),
for value received, hereby promises to pay to the order of _____________________
(the "Bank"), at Bank of America, N.A., as Administrative Agent (Attention:
Agency Administrative Services-West), 1850 Gateway Blvd., Concord, California
94520, on the dates specified in the Credit Agreement (as herein defined), in
lawful money of the United States, the total unpaid principal amount of all Bid
Rate Loans made by Bank to Borrower from the date of this Note through the
Termination Date pursuant to the Credit Agreement. This Note shall bear interest
as set forth in the Credit Agreement for Bid Rate Loans. Interest payable under
this Note shall be payable at the times specified in the Credit Agreement.
This Note is one of the Master Bid Rate Notes referred to in the Revolving
Credit Agreement (364-Day Facility) dated as of November 24, 1999 and made among
Hughes Electronics Corporation, the banks parties thereto ("Banks"), Bank of
America, N.A., as administrative agent for the Banks (in such capacity
"Administrative Agent"), Citicorp USA, Inc., as Syndication Agent and Deutsche
Bank AG, New York Branch as Documentation Agent (the "Agreement"), and is
subject to prepayment in whole or in part and its maturity is subject to
acceleration upon the terms provided in the Credit Agreement.
This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of California.
All Bid Rate Loans made by Bank to Borrower pursuant to the Credit
Agreement and all payments of principal thereof may be indicated by Bank upon
the grid attached hereto which is a part of this Note. Such notations shall be
presumptively correct as to the aggregate unpaid principal amount of all Bid
Rate Loans made by Bank pursuant to the Credit Agreement.
HUGHES ELECTRONICS CORPORATION
By: _____________________________
Name:
Title:
B-1
MASTER BID RATE NOTE
<PAGE>
Bid Rate Loans and Payments of Principal
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Unpaid
Amount of Interest Interest Amount of Principal Name of Person
Date Loan Period Rate Principal Paid Balance Marking Notation
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
B-2
MASTER BID RATE NOTE
<PAGE>
EXHIBIT C
RELATIONS AMONG THE BANKS AND AGENTS
1. Administration of the Credit. Payment of interest and principal on
----------------------------
the Loans and the facility fee and all other amounts payable by Borrower
hereunder shall be made by Borrower in immediately available funds, directly to
each Bank in the case of amounts payable under Sections 3.1, 3.2 and 3.3 and, in
all other cases, to Administrative Agent, and Administrative Agent shall
promptly distribute to the other Banks in immediately available funds their
shares of principal, interest and fees and to each Bank as provided herein such
other amounts as paid by Borrower.
2. Pro Rata Distribution. All facility fees will be divided among the
---------------------
Banks in accordance with their Normal Percentage, and interest and principal
payments on each Loan will be divided pro rata among Banks in accordance with
their percentage interest in the Loan.
3. Right of Setoff. Any Bank which shall receive payment of or on
---------------
account of all or part of its share of the Loans through the exercise of any
right of setoff, counterclaim, or banker's lien, or otherwise in a greater
proportion than the proportionate amount of principal and interest due it under
this Agreement immediately prior to such payment shall purchase a ratable
proportion of the portions of the Loan held by the other Banks so that all
recoveries of principal and interest shall be shared by the Banks in accordance
with their pro rata interests in the Loans outstanding hereunder. If all or any
portion of such excess payment is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest. Any sum received by Bank through exercise
of the right of setoff, counterclaim, or banker's lien shall be deemed to be
first applied to such Bank's portion of the indebtedness under this Agreement,
second as herein above provided and any balance remaining thereafter shall be
deemed applied to any other indebtedness of Borrower to such Bank.
4. Notice of Event of Default. Upon receipt by Administrative Agent from
--------------------------
Borrower of any communication calling for an action on the part of Banks, or
upon notice to Administrative Agent of an Unmatured Event of Default or an Event
of Default, it will in turn promptly inform the other Banks in writing of the
nature of such communication or of the Unmatured Event of Default or Event of
Default, as the case may be.
5. Actions by Administrative Agent. Upon any occasion requiring or
-------------------------------
permitting an approval, consent, election or other action on the part of Banks,
action shall be taken by Administrative Agent for and on behalf or for the
benefit of all Banks upon the direction of the required number of Banks and the
Administrative Agent, if applicable, as set forth in Section 11.1 of the
Agreement.
6. Several Liability of Banks. The obligation of each Bank hereunder is
--------------------------
several, and the failure of one Bank to perform hereunder shall in no way
relieve the other Banks from performance.
7. Liability of Administrative Agent. Administrative Agent shall not be
---------------------------------
liable or answerable for anything whatsoever in connection with this Agreement
except for its willful
C-1
RELATIONS AMONG THE BANKS AND THE AGENT
<PAGE>
misconduct or gross negligence, and Administrative Agent shall have no duties or
obligations other than as provided herein. Administrative Agent shall be
entitled to rely on any opinion of counsel (including counsel for Borrower) in
relation to this Agreement, and upon statements and communications received from
Borrower, or from any other person, believed by it to be authentic, and shall
not be liable for any action taken or omitted in good faith on such reliance.
8. Indemnification of Administrative Agent. Each Bank agrees to
---------------------------------------
indemnify Administrative Agent (to the extent not reimbursed by Borrower and
without limiting the obligation of Borrower to do so), ratably according to its
Normal Percentage, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against Administrative Agent in any way relating to or arising
out of this Agreement or any action taken or omitted by Administrative Agent
under this Agreement except for Administrative Agent's gross negligence or
willful misconduct. The obligations of the Banks under this Section 8 shall
survive termination of the Agreement.
9. Rights of Administrative Agent as Bank. With respect to its
--------------------------------------
obligation to lend under this Agreement and the Loans made by it, Bank of
America shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not Administrative Agent; and the term
"Banks" shall include Bank of America in its individual capacity. Bank of
America may accept deposits from, lend money to, and generally engage in any
kind of banking, trust or other business with Borrower as if it were not
Administrative Agent.
10. Assignment by Bank of its Obligations. Administrative Agent may deem
--------------------------------------
and treat a Bank party to this Agreement as the owner of such Bank's portion of
the Loans for all purposes hereof unless and until a written notice of the
assignment or transfer of such Bank's obligations otherwise permitted under the
Agreement executed by such Bank shall have been received by Administrative
Agent, together with Borrower's consent to such assignment or transfer and such
other documentation from such Bank and its assignee or transferee as
Administrative Agent may reasonably request.
11. Representations by Banks. Neither Administrative Agent nor any Bank
------------------------
has made or makes to any other Bank any representation, and neither
Administrative Agent nor any Bank assumes any responsibility, in respect to the
execution, construction or enforcement of this Agreement or any other instrument
or agreement executed by Borrower or by any other person or entity.
12. Independent Investigation by Banks. Each Bank has made and shall
----------------------------------
continue to make its own independent investigation of the financial condition
and affairs of Borrower in connection with the making and the continuance of the
Loans and has made and covenants that it shall continue to make its own
appraisal of the creditworthiness of Borrower. Each Bank agrees Administrative
Agent has no duty or responsibility, either initially or on a continuing basis,
to provide any Bank with any credit or other information with respect to
Borrower, whether coming into its possession before the making of the Loans or
at any time or times thereafter except as expressly provided in this Agreement.
C-2
RELATIONS AMONG THE BANKS AND THE AGENT
<PAGE>
13. Successor Administrative Agent. Administrative Agent shall have the
------------------------------
right, at any time, to resign as Administrative Agent for the Banks hereunder.
Such resignation shall not be effective until a successor Administrative Agent
chosen by Majority Banks, and accepted by Borrower, shall accept appointment as
Administrative Agent for the Banks hereunder. If no successor Administrative
Agent shall have been so appointed by the Majority Banks and shall have accepted
such appointment, within 30 days after the retiring Administrative Agent has
given notice of resignation, the retiring Administrative Agent may, on behalf of
the Banks, appoint a successor Administrative Agent reasonably acceptable to
Borrower, which successor Administrative Agent shall be a commercial bank
organized under the laws of the United States of America or a State thereof
having a combined capital and surplus of at least $100,000,000. Upon the
acceptance by the successor Administrative Agent of its appointment hereunder,
the successor Administrative Agent shall succeed to and become vested with all
the rights and obligations of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its obligations under
this Agreement. The provisions of this Article shall inure to the benefit of
the retiring Administrative Agent as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. After any
retiring Administrative Agent's resignation hereunder as Administrative Agent,
the provisions of this Exhibit C and Section 11.14 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement.
14. Syndication Agent; Documentation Agents. None of the Banks identified
---------------------------------------
on the facing page or signature pages of this Agreement as Syndication Agent or
Documentation Agents shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Banks as such. Without limiting the foregoing, none of the Banks so identified
shall have or be deemed to have any fiduciary relationship with any Bank. Each
Bank acknowledges that it has not relied, and will not rely, on any of the Banks
so identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.
C-3
RELATIONS AMONG THE BANKS AND THE AGENT
<PAGE>
EXHIBIT D
LENDING OFFICES OF BANKS AND ADDRESSES FOR NOTICES
BORROWER
200 North Sepulveda Blvd.
P.O. Box 956
ES, 001, A148
El Segundo, CA 90245-0956
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT
Bank of America N.A.
Mail Code: CA9-706-11-03
555 South Flower Street, 11th Floor
Los Angeles, California 90071
Attention: Gina Meador
Vice President
Agency Management-Los Angeles
Telephone: (213) 228-5245
Facsimile: (213) 228-2299
Administrative Agent's Payment Office:
--------------------------------------
Bank of America N.A.
Mail Code: CA4-706-05-09
1850 Gateway Boulevard, Fifth Floor
Concord, California 94520
Attention: Glenis Croucher
Assistant Vice President
Agency Administrative Services West
Telephone: (925) 675-8447
Facsimile: (925) 675-8500
D-1
<PAGE>
BANK OF AMERICA, N.A., AS A BANK
Domestic and Offshore Lending Office:
-------------------------------------
Bank of America N.A.
Mail Code: CA4-706-05-09
Agency Administrative Services-West
1850 Gateway Blvd., 5th Floor
Concord, CA 94520
Attention: Glenis Croucher
Sr. Account Administrator
Telephone: (925) 675-8447
Facsimile: (925) 969-2807
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
Bank of America N.A.
Mail Code: CA9-706-11-07
555 South Flower Street, 11th Floor
Los Angeles, California 90071
Attention: Dianne J. Prust
Vice President
Credit Products Aerospace/Defense #9848
Telephone: (213) 228-2435
Facsimile: (213) 623-1959
ALLFIRST BANK
Domestic and Offshore Lending Office:
-------------------------------------
Allfirst Bank
25 S. Charles Street
18/th/ Floor
Baltimore, MD 21201
Attention: Jennifer Erickson
Vice President
Telephone: (410) 244-4721
Facsimile: (410) 244-4239
Email: [email protected]
--------------------------------
D-2
<PAGE>
BANCA DI ROMA--SAN FRANCISCO
Domestic and Offshore Lending Office:
-------------------------------------
BANCA DI ROMA--San Francisco
One Market
Steuart Tower, Suite 1000
San Francisco, CA 94105
Attention: Ms. Cecilia Gin
Telephone: (415) 977-7321
Facsimile: (415) 357-9869
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
BANCA DI ROMA--San Francisco
One Market
Steuart Tower, Suite 1000
San Francisco, CA 94105
Attention: Mr. Eric Maubert
Assistant Vice President
Telephone: (415) 977-7315
Facsimile: (415) 357-9869
D-3
<PAGE>
THE BANK OF NEW YORK
Domestic and Offshore Lending Office:
-------------------------------------
The Bank of New York
One Wall Street, 22/nd/ floor
New York, NY 10005
Attention: Dawn Hertling
Telephone: (212) 635-6742
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
The Bank of New York
10990 Wilshire Blvd.
Suite 1125
Los Angeles, CA 90024
Attention: Jonathan Rollins
Telephone: (310) 996-8658
Facsimile: (310) 996-8667
Email: [email protected]
D-4
<PAGE>
BANK ONE, NA
Domestic and Offshore Lending Office:
-------------------------------------
Bank One, NA
1 Bank One Plaza
10/th/ Floor
Chicago, IL 60670
Attention: Sharon Bosch
Telephone: (312) 732-7112
Facsimile: (312) 732-4840
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
Bank One, NA
777 South Figueroa
4/th/ Floor
Los Angeles, CA 90017
Attention: Anthony Mathews
Senior Vice President
Telephone: (213) 683-4957
Facsimile: (213) 683-4999
Email: [email protected]
D-5
<PAGE>
BANQUE NATIONALE DE PARIS
Domestic and Offshore Lending Office:
-------------------------------------
Banque Nationale de Paris
725 South Figueroa Street
Suite 2090
Los Angeles, CA 90017
Attention: Janice Ho
Vice President
Telephone: (213) 488-9120
Direct: (213) 688-6411
Facsimile: (213) 488-9602
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
Banque Nationale de Paris
725 South Figueroa Street
Suite 2090
Los Angeles, CA 90017
Attention: Janice Ho
Vice President
Telephone: (213) 488-9120
Direct: (213) 688-6411
Facsimile: (213) 488-9602
D-6
<PAGE>
BARCLAYS BANK PLC
Domestic and Offshore Lending Office:
------------------------------------
Barclays Bank PLC
222 Broadway
11/th/ Floor
New York, NY 10038
Attention: Paul Edwards
Telephone (212) 412-3730
Facsimile: (212) 412-5306
Email: [email protected]
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
Barclays Bank PLC
222 Broadway
8/th/ Floor
New York, NY 10038
Attention: Richard Smithies
Director
Telephone (212) 412-6884
Facsimile: (212) 412-7580
Email: [email protected]
D-7
<PAGE>
BAYERISCHE LANDESBANK GIROZENTRALE
Domestic and Offshore Lending Office:
-------------------------------------
Bayerische Landesbank Girozentrale
560 Lexington Avenue
New York, NY 10022
Attention: Patricia Sanchez
Vice President
Telephone: (212) 310-9810
Facsimile (212) 310-9930
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
Bayerische Landesbank Girozentrale
560 Lexington Avenue
New York, NY 10022
Attention: James H. Boyle
Vice President
Telephone: (212) 310-9817
Facsimile: (212) 310-9868
Email: [email protected]
CITICORP USA, INC.
Domestic and Offshore Lending Office:
------------------------------------
Citicorp, USA, Inc.
399 Park Ave.
New York, NY 10043
Attention: Alyssa Kawalek
Loan Administrator
Telephone: (302) 894-6055
Facsimile: (302) 894-6120
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
Citicorp USA, Inc.
787 West 5th Street
29th Floor
Los Angeles, CA 90071
Attention: Walter Larsen
Telephone: (213) 239-1501
Facsimile: (213) 623-3592
D-8
<PAGE>
CREDIT SUISSE FIRST BOSTON
Domestic and Offshore Lending Office:
------------------------------------
Credit Suisse First Boston
11 Madison Avenue
New York, NY 10010-3629
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
Credit Suisse First Boston
11 Madison Avenue
New York, NY 10010-3629
Primary Contact
---------------
David Kratovil
Director
Telephone: (212) 325-9155
Facsimile: (212) 325-8615
Email: [email protected]
-----------------------
Back-Up Contact
---------------
Janko Gogolja
Telephone: (212) 325-0699
Facsimile: (212) 325-8319
D-9
<PAGE>
DEUTSCHE BANK AG NEW YORK AND/OR CAYMAN ISLANDS BRANCHES
Domestic and Offshore Lending Office:
------------------------------------
Deutsche Bank AG
31 West 52/nd/ Street
New York, NY 10019
Attention: Noble Samuel/Cheryl H. Mandelbaum
Telephone: (212) 469-4091
Facsimile: (212) 469-4139
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
Deutsche Bank AG
31 West 52/nd/ Street
New York, NY 10019
Attention: Joel Makowsky
Vice President
Telephone: (212) 469-7896
Facsimile: (212) 469-4604
D-10
<PAGE>
THE FUJI BANK, LIMITED
Domestic and Offshore Lending Office:
------------------------------------
The Fuji Bank
333 South Hope Street
39/th/ Floor
Los Angeles, CA 90071
Attention: Wayne Wong
Associate
Telephone: (213) 253-4132
Facsimile: (213) 253-4178
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
The Fuji Bank
333 South Hope Street
39/th/ Floor
Los Angeles, CA 90071
Attention: Jon Bigelow
Vice President
Telephone: (213) 253-4144
Facsimile: (213) 253-4178
Email: [email protected]
D-11
<PAGE>
MELLON BANK, N.A.
Domestic and Offshore Lending Office:
------------------------------------
Mellon Bank, N.A.
3 Mellon Center
Room 1203
Pittsburgh, PA 15259
Attention: John Kyle
Loan Administrator
Telephone: (412) 234-7365
Facsimile: (412) 209-6122
Notices (other than Borrowing notices and Notices of
-----------------------------------------------------
Conversion/Continuation):
------------------------
Mellon Bank, N.A.
400 South Hope Street
Fifth Floor
Los Angeles, CA 90071
Attention: L.C. Ivey
Vice President
Telephone: (213) 553-9543
Facsimile: (213) 629-0492
Email: [email protected]
D-12
<PAGE>
THE MITSUBISHI TRUST AND BANKING CORPORATION
Domestic and Offshore Lending Office:
------------------------------------
The Mitsubishi Trust and Banking Corporation
520 Madison Avenue
New York, NY 10022
Attention: Loan Administration Department
Telephone: (212) 891-8262
Facsimile: (212) 755-2349
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
The Mitsubishi Trust and Banking Corporation
520 Madison Avenue
New York, NY 10022
Attention: Susan Lau
Vice President
Telephone: (212) 891-8419
Facsimile: (212) 644-6825 (direct)
(212) 755-2349 (central)
D-13
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
Domestic Lending Office
-----------------------
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260-0060
Execution Copies to:
-------------------
Jeannie Mattson
Associate
Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
3/OPS2
Newark, DE 19713-2107
Conformed Copies to:
-------------------
Robert Bottamedi
Vice President
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260-0060
Offshore Lending Office
------------------------
Morgan Guaranty Trust Company of New York
Euro-Loan Servicing Department
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
Newark, DE 19713-2107
Execution Copies to:
-------------------
Jeannie Mattson
Associate
Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
3/OPS2
Newark, DE 19713-2107
Conformed Copies to:
-------------------
Robert Bottamedi
Vice President
Morgan Guaranty Trust Company of New York
D-14
<PAGE>
60 Wall Street
New York, NY 10260-0060
Notices (other than Borrowing notices and Notices of Conversion/
----------------------------------------------------------------
Continuation):
--------------
JP Morgan Securities Inc
60 Wall Street
5/th/ Floor
New York, NY 10260-0060
Attention: Robert Bottamedi
Vice President
Telephone: (212) 648-1349
Facsimile: (212) 648-5018
SOCIETE GENERALE
Domestic and Offshore Lending Office:
-------------------------------------
Societe Generale
2001 Ross Avenue #4800
Dallas, TX 75201
Attention: Trina Hoover
Loan Specialist
Telephone: (214) 979-2742
Facsimile: (214) 754-0171
Notices (other than Borrowing notices and Notices of Conversion/
----------------------------------------------------------------
Continuation):
--------------
Societe Generale
181 West Madison
Suite 3400
Chicago, IL 60602
Attention: Editha Paras
Telephone: (312) 578-5166
Facsimile: (312) 578-5099
D-15
<PAGE>
WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domestic and Offshore Lending Office:
-------------------------------------
Westdeutsche Landesbank Girozentrale, New York Branch
1211 Avenue of the Americas
New York, NY 10036
Attention: Philip Green
Vice President
Telephone: (212) 852-6113
Facsimile: (212) 302-7946
Email: [email protected]
Notices (other than Borrowing notices and Notices of Conversion/
----------------------------------------------------------------
Continuation):
--------------
Westdeutsche Landesbank Girozentrale, New York Branch
1211 Avenue of the Americas
New York, NY 10036
Attention: Barry Wadler
Associate
Telephone: (212) 852-6137
Facsimile: (212) 852-6148
Email: [email protected]
D-16
<PAGE>
EXHIBIT E
EXISTING LIENS
PanAmSat
$124,000,000.00 Floating Rate Note secured by transponders of Galaxy III-R
due 2002
Galaxy Latin America
$95,000.00 Capital Lease of AT&T Telephone Switch
E-1
EXISTING LIENS
<PAGE>
EXHIBIT F
OPINION OF COUNSEL
November 24, 1999
To: The Banks listed on Schedule A hereto; Bank
of America, N.A., as Administrative Agent;
Citicorp USA, Inc., as Syndication Agent and
Deutsche Bank AG, New York Branch, as
Documentation Agent
Re: Hughes Electronics Corporation
Revolving Credit Agreement
--------------------------
Ladies and Gentlemen:
I am the Assistant General Counsel of Hughes Electronics Corporation, a
Delaware corporation (the "Borrower"), in connection with the extension to
Borrower of a revolving line of credit extended under and subject to the terms
and provisions of the Revolving Credit Agreement (364-day Facility) dated as of
November 24, 1999 and made among Hughes Electronics Corporation, the banks
parties thereto ("Banks"), Bank of America, N.A., as administrative agent for
the Banks (in such capacity "Administrative Agent"), Citicorp USA, Inc., as
Syndication Agent and Deutsche Bank AG, New York Branch as Documentation Agent
(the "Agreement"). Capitalized terms not otherwise defined herein shall have
the meanings set forth in the Credit Agreement. This opinion is rendered to you
pursuant to Section 5.2(b) of the Credit Agreement.
As Assistant General Counsel to Borrower, I have caused to be made such
legal and factual examinations and inquiries, including an examination of
originals or copies, certified or otherwise identified to my satisfaction as
authentic, of such corporate records, agreements, instruments and other
documents as I have deemed necessary or appropriate for the purposes of this
opinion. I have caused to be obtained such certificates and other assurances
(copies of which have been delivered to you) from public officials and officers
and other employees of Borrower as I considered necessary or appropriate for the
purpose of rendering this opinion. I have assumed the genuineness of all
signatures (except that of Borrower), the authenticity of all documents
submitted to me as originals, and the conformity with the originals of all
documents submitted to me as copies.
Subject to the limitations herein set forth, I am opining herein as to the
effect on the subject transaction only of United States federal law, the laws of
the State of California and the General Corporation Law of the State of
Delaware. I am licensed to practice law in the State of
F-1
OPINION OF COUNSEL
<PAGE>
California. I assume no responsibility as to the applicability to the subject
transaction or the effect thereon of the laws of any other jurisdiction.
Based upon the foregoing and in reliance thereon, and subject to the
qualifications, limitations and assumptions set forth herein, I am of the
opinion that, as of the date hereof:
1. Borrower is a corporation duly incorporated and validity existing as a
corporation in good standing under the laws of the State of Delaware, with full
corporate power and authority to own and lease its properties and conduct its
business as presently owned and conducted.
2. Borrower is duly qualified to do business as a foreign corporation in
good standing in the State of California.
3. Borrower has full corporate power and authority to borrow the sums
provided for in the Credit Agreement, to execute and deliver the Credit
Agreement and to perform its obligations thereunder.
4. All corporate action required to be taken by Borrower for the
authorization, execution and delivery of the Credit Agreement by Borrower and
the performance by Borrower of its obligations thereunder has been duly taken.
5. The officer of Borrower executing the Credit Agreement is duly and
properly in office and duly authorized to execute the same.
6. The Credit Agreement is a valid and binding agreement of Borrower,
subject to the limitations, qualifications, exceptions and assumptions set forth
below.
7. To my knowledge, after causing to be conducted such legal and factual
examination and inquiries and causing to be conducted such discussions with and
obtaining such certificates or other confirmations from officers and other
employees of Borrower as I considered appropriate in the circumstances, no
consent, permission, authorization, order or license of any United States
federal or California governmental authority is necessary in connection with the
execution and delivery of the Credit Agreement by Borrower and Borrower's
performance of its obligations under the Credit Agreement.
8. There is no provision of the Certificate of Incorporation or the By-
laws of Borrower which would be contravened by the execution and delivery of the
Credit Agreement by Borrower or by the performance by Borrower of its
obligations under the Credit Agreement.
9. Borrower is not an "investment company" as defined in the Investment
Company Act of 1940, as amended.
10. To my knowledge, after causing to be conducted such legal and factual
examination and inquiries and causing to be conducted such discussions with and
obtaining such certificates or other confirmations from officers and other
employees of Borrower as I considered appropriate in the circumstances, no
consent or approval of any trustee or holder of any material indebtedness of
Borrower is necessary in connection with the execution and
F-2
OPINION OF COUNSEL
<PAGE>
delivery of the Credit Agreement by Borrower and Borrower's performance of its
obligations under the Credit Agreement.
11. There is no provision of any indenture or material agreement for
borrowed money to which Borrower is a party or under which Borrower is
obligated, and of which I am aware, after causing to be conducted such legal and
factual examinations and inquiries and causing to be conducted such discussion
with and obtaining such certificates or other confirmations from officers and
other employees of Borrower as I considered appropriate in the circumstances,
which would be contravened by the execution and delivery of the Credit Agreement
and the Notes by Borrower or by the performance by Borrower of its obligations
under the Credit Agreement.
12. To my knowledge, after causing to be conducted such legal and factual
examinations and inquiries and causing to be conducted such discussions with and
obtaining such certificates or other confirmations from officers and other
employees of Borrower as I considered appropriate in the circumstances, there is
no judgment, decree or order of any court or governmental agency binding on
Borrower which would be contravened by the execution and delivery of the Credit
Agreement by Borrower and Borrower's performance of its obligations under the
Credit Agreement and the Notes.
13. To my knowledge, after causing to be conducted such legal and factual
examinations and inquiries and obtaining certificates or other confirmations
from officers and employees of Borrower as I considered appropriate in the
circumstances, except as set forth in Attachment 1 hereto, there is no claim,
suit, action or proceeding pending or threatened against Borrower before any
court or governmental agency which could reasonably be expected to result in a
Material Adverse Change.
The opinion expressed in paragraph 6 is subject to the following
limitations, qualifications, exceptions and assumptions:
(a) the enforcement of the Credit Agreement and the Notes may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws or by
equitable principles relating to or limiting the rights of creditors generally;
(b) the use of the term enforceable shall not imply any opinion as to the
availability of equitable remedies;
(c) I advise you that a California court may not strictly enforce certain
covenants contained in the Credit Agreement or allow acceleration of the
maturity of the indebtedness thereunder if it concludes that such enforcement or
acceleration would be unreasonable under the then existing circumstances. I do
believe, however, that subject to the limitations expressed elsewhere in this
opinion, enforcement or acceleration would be available if an Event of Default
occurs as a result of a material breach of a material covenant contained in the
Credit Agreement;
(d) The effect of California court decisions, invoking statutes or
principles of equity, which have held that certain covenants and provisions of
agreements are unenforceable where (i) the breach of such covenants or
provisions imposes restrictions or burdens upon the debtor,
F-3
OPINION OF COUNSEL
<PAGE>
including the acceleration of indebtedness due under debt instruments, and it
cannot be demonstrated that the enforcement of such restrictions or burdens is
reasonably necessary for the protection of the creditor, or (ii) the creditor's
enforcement of such covenants or provisions under the circumstances would
violate the creditor's implied covenant of good faith and fair dealing;
(e) The unenforceability under certain circumstances, under California or
federal law or court decisions, of provisions expressly or by implication
waiving broadly or vaguely stated rights, unknown future rights, defenses to
obligations or rights granted by law, where such waivers are against public
policy or prohibited by law;
(f) The unenforceability under certain circumstances of provisions to the
effect that rights or remedies are not exclusive, that every right or remedy is
cumulative and may be exercised in addition to or with any other right or
remedy, that election of a particular remedy or remedies does not preclude
recourse to one or more other remedies or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy;
(g) The effect of Section 1717 of the California Civil Code, which provides
that, where a contract permits one party to the contract to recover attorneys'
fees, the prevailing party in any action to enforce any provision of the
contract shall be entitled to recover its reasonable attorneys' fees;
(h) The unenforceability under certain circumstances of provisions
indemnifying a party against liability for its own wrongful or negligent acts or
where such indemnification is contrary to public policy or prohibited by law;
and
(i) The enforceability under certain circumstances of provisions imposing
penalties, forfeitures, late payment charges or an increase in interest rate
upon delinquency in payment or the occurrence of a default.
To the extent that the obligations of Borrower may be dependent upon such
matters, I assume for purposes of this opinion that each of the Banks is duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization; that each of the Banks is
duly qualified to engage in the transaction covered by this opinion; that the
Credit Agreement has been duly authorized, executed and delivered by each of the
Banks and that the Credit Agreement constitutes the valid and binding obligation
of each of the Banks, enforceable in accordance with its terms; and that each of
the Banks has the requisite corporate or organizational and legal power and
authority to own its properties, to carry on its business as now being conducted
and to perform its obligations under the Credit Agreement, including without
limitation, to make the loans under the Credit Agreement. I am not expressing
any opinion as to the effect of or the compliance by any Bank with any state or
federal laws or regulations applicable to the transactions because of the nature
of its respective business.
This opinion is rendered to the Banks and Administrative Agent as of the
date hereof in connection with the above transaction, and may not be relied upon
by any person other than the Administrative Agent and the Banks and their
permitted assignees, or by them in any other
F-4
OPINION OF COUNSEL
<PAGE>
context, and may not be furnished to, quoted to or relied upon by any other
person, firm or corporation for any purpose without my prior written consent;
provided that each Bank and its permitted assignees may provide this opinion
- --------
(i) to bank examiners and other regulatory authorities should they so request or
in connection with their normal examination, (ii) to the independent auditors
and attorneys of such Bank, (iii) pursuant to order or legal process of any
court or governmental agency, (iv) in connection with any legal action to which
the Bank is a party arising out of the transactions contemplated by the Credit
Agreement, or (v) in connection with the assignment of or sale of participations
in the Loans.
Very truly yours,
F-5
OPINION OF COUNSEL
<PAGE>
SCHEDULE A TO OPINION OF COUNSEL
Allfirst Bank
Banca di Roma--San Francisco
The Bank of New York
Bank One, NA
Banque Nationale de Paris
Barclays Bank PLC
Bayerische Landesbank Girocentrale
Credit Suisse First Boston
The Fuji Bank
Mellon Bank
Mitsubishi Trust
Morgan Guaranty Trust Company of New York
Societe Generale
Westdeutsche Landesbank Girocentrale
F-6
OPINION OF COUNSEL
<PAGE>
ATTACHMENT A TO OPINION OF COUNSEL
LITIGATION
[None.]
F-7
OPINION OF COUNSEL
<PAGE>
EXHIBIT G
[FORM OF REQUEST FOR EXTENSION OF TERMINATION DATE]
[LETTERHEAD OF HUGHES ELECTRONICS CORPORATION]
_____________________, 200[_]
BANKS PARTY TO THE CREDIT AGREEMENT
REFERRED TO BELOW
Ladies and Gentlemen:
In accordance with Section 2.13 of the Revolving Credit Agreement
dated as of November 24, 1999 (as amended, the "Credit Agreement"; terms defined
therein being used herein as therein defined), among the undersigned, the Banks
parties thereto, Bank of America, N.A. as Administrative Agent, Citicorp USA,
Inc., as Syndication Agent and Deutsche Bank AG, New York Branch, as
Documentation Agent, the undersigned hereby requests that you consent to
extension of the Termination Date to [INSERT DATE 364 DAYS AFTER CURRENT
TERMINATION DATE], or, if such date is not a Business Day, the next preceding
Business Day.
Please indicate your consent to such extension of the Termination Date
by signing the attached copy of this letter in the space provided below and
returning same to the Administrative Agent, if possible by _____________, 20__
but, in any event, not later than ____________, 20___.
Very truly yours,
HUGHES ELECTRONICS CORPORATION
By _________________________
Name:
Title:
The undersigned Lender, party to the Credit
Agreement, consents to the extension of the
Termination Date as requested above.
[NAME OF BANK]
By _________________________
Name:
Title:
G-1
EXTENSION REQUEST
<PAGE>
EXHIBIT H
[FORM OF COMMITMENT INCREASE LETTER]
[LETTERHEAD OF HUGHES ELECTRONICS CORPORATION]
__________, 199_
To Bank of America, N.A. as Administrative
Agent for the Banks party to the Credit
Agreement referred to below
Ladies and Gentlemen:
In accordance with Section 11.18(a) of the Revolving Credit Agreement
(364-Day Facility), dated as of November 24, 1999 (as amended, the "Credit
Agreement"; terms defined therein being used herein as therein defined), among
the undersigned, the Banks parties thereto, Bank of America, N.A. as
Administrative Agent, Citicorp USA, Inc., as Syndication Agent and Deutsche Bank
AG, New York Branch as Documentation Agent, the undersigned hereby requests that
you, the Administrative Agent and [NAME OF INCREASING BANK] consent to the
increase of [$____________] to [NAME OF INCREASING BANK]'S Commitment which
shall result in [NAME OF INCREASING BANK]'s net Commitment equaling
[$___________].
The undersigned hereby certifies, on behalf of Borrower that (i)
representations and warranties contained in Section 6 of the Credit Agreement
are true and accurate as though made on and as of the date hereof (except to the
extent any representation and warranty is expressly made as of a specific date,
in which case such representation and warranty shall be true and correct in all
material respects as of such specific date), and (ii) no event has occurred and
is continuing or would result from such increase in [INCREASING BANK]'s
Commitment which constitutes an Event of Default or an Unmatured Event of
Default under the Credit Agreement.
H-1
COMMITMENT INCREASE LETTER
<PAGE>
Please indicate your consent to such increase of the commitment of [NAME OF
INCREASING BANK] by signing the attached copy of this letter in the space
provided below by __________, 200[_].
Very truly yours,
HUGHES ELECTRONICS CORPORATION
By________________________
Name:
Title:
The undersigned parties consent to the increase of [NAME OF INCREASING
BANK]'s Commitment as requested above.
Accepted this __ day [NAME OF INCREASING BANK]
of _________, 200[_]
By________________________
Name:
Title:
Acknowledged and Agreed:
Bank of America, N.A.
as Administrative Agent
By_______________________
Name:
Title:
H-2
COMMITMENT INCREASE LETTER
<PAGE>
EXHIBIT I
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected [Title] of Hughes Electronics Corporation, a
Delaware corporation ("Borrower");
(2) I have reviewed the terms of that certain Revolving Credit
Agreement (364-Day Facility) dated as of November 24, 1999, as
amended, supplemented or otherwise modified to the date hereof (said
Revolving Credit Agreement, as so amended, supplemented or otherwise
modified, being the "Credit Agreement", the terms defined therein and
not otherwise defined in this Certificate (including Attachment No. 1
annexed hereto and made a part hereof) being used in this Certificate
as therein defined), by and among Borrower, the financial institutions
listed therein as Banks, and Bank of America, N.A., as Administrative
Agent, and I have made, or have caused to be made under my
supervision, a review in reasonable detail of the transactions and
condition of Borrower and its Subsidiaries during the accounting
period covered by the attached financial statements; and
(3) The examination described in paragraph (2) above did not disclose,
and I have no knowledge of, the existence of any condition or event
which constitutes an Event of Default or Unmatured Event of Default
during or at the end of the accounting period covered by the attached
financial statements or as of the date of this Certificate[, except as
set forth below].
[Set forth [below] [in a separate attachment to this Certificate] are all
exceptions to paragraph (3) above listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
Borrower or any of its Subsidiaries, as applicable, has taken, is taking, or
proposes to take with respect to each such condition or event:
- -------------------------------------------------------------------------------]
I-1
COMPLIANCE CERTIFICATE
<PAGE>
The foregoing certifications, together with the computations set forth in
Attachment No. 1 annexed hereto and made a part hereof and the financial
statements delivered with this Certificate in support hereof, are made and
delivered this __________ day of _____________, ____ pursuant to subsection
____7.5(d) of the Credit Agreement.
DATED: ____________________ HUGHES ELECTRONICS CORPORATION
By:__________________________
Name:
Title:
I-2
COMPLIANCE CERTIFICATE
<PAGE>
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a Compliance
Certificate dated as of ____________, ____ and pertains to the period from
____________, ____ to ____________, ____. Subsection references herein relate
to subsections of the Credit Agreement.
A. Maximum Leverage Ratio (for the four-fiscal quarter
period ending _____________, ____)
1. Outstanding principal amount of all obligations
and liabilities for borrowed money: $_____________
2. portion of obligations with respect to capital leases
that are capitalized in excess of $25,000,000: $_____________
3. Consolidated Funded Indebtedness (1+2): $_____________
4. Consolidated Net Income: $_____________
5. Consolidated Interest Charges: $_____________
6. Provisions for taxes, if any, based on income used
or included in determining of 5: $_____________
7. Total depreciation expense deducted in determining 5: $_____________
8. Total amortization expense deducted in determining 5: $_____________
9. Adjustments per clauses (e), (f) and (g) of definition
of Consolidated EBITDA:
(a) Asia Pacific Mobile Telecommunications $_____________
(b) Hughes Space and Communications _____________
(c) ICO Global Communications _____________
(d) Hughes Network Systems wireless business _____________
(e) PanAmSat launch delays _____________
(f) DirecTV Japan, Ltd. _____________
Total $=============
10. Less DirecTV Japan, Ltd. cash losses
per clause (h) of definition of consolidated
EBITDA: $_____________
I-3
COMPLIANCE CERTIFICATE
<PAGE>
11. Non-cash charges resulting from a change
in business strategy regarding DirecTV Japan
Ltd. (only for fiscal quarter ending fiscal year
ending December 31, 2000 $_____________
12. Consolidated EBITDA (4+5+6+7+8+9-10+11): $_____________
13. Leverage Ratio (3):(12): ____:1.00
14. Maximum ratio allowed under subsection 8.5(b): ____:1.00
B. Minimum Shareholders' Equity
1. Base Shareholders' Equity: $7,125,000,000
2. 50% of consolidated net income (as determined in
accordance with GAAP) earned in each fiscal quarter
ending after December 31, 1998 (with no deduction
for a net loss in any such fiscal quarter): $_____________
3. 50% aggregate increase in Equity by reason of
Borrower's issuance of capital stock: $_____________
4. Minimum Shareholders' Equity (1+2+3): $_____________
5. Shareholders' Equity $_____________
I-4
COMPLIANCE CERTIFICATE
<PAGE>
EXHIBIT J
[FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE]
[Date]
To: Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Revolving Credit Agreement (364-Day Facility)
dated as of November 24, 1999 between Hughes Electronics Corporation, a Delaware
corporation ("Borrower"), Lenders from time to time party thereto, and Bank of
--------
America, N.A., as Administrative Agent (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the
"Agreement;" the terms defined therein being used herein as therein defined).
---------
1. We hereby give you notice of, and request your consent to, the assignment
by [_____________________________] (the "Assignor") to [_____________________]
--------
(the "Assignee") of ___________% of the right, title and interest of the
--------
Assignor in and to the Agreement, including the right, title and interest of the
Assignor in and to the Commitment of the Assignor and all outstanding Loans made
by the Assignor. Before giving effect to such assignment:
(a) the aggregate amount of the Assignor's Commitment is $_________; and
(b) the aggregate principal amount of its outstanding Loans is $________.
2. The Assignee hereby represents and warrants that it has complied with the
requirements of Section 11.11 of the Agreement in connection with this
-------------
assignment and acknowledges and agrees that: (a) other than the
representation and warranty that it is the legal and beneficial owner of
the Normal Percentage being assigned thereby free and clear of any adverse
claim, the Assignor has made no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Agreement or the
execution, legality, validity, enforceability, genuineness or sufficiency
of the Agreement; (b) the Assignor has made no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance by Borrower of its obligations under the
Agreement; (c) it has received a copy of the Agreement, together with
copies of the most recent financial statements delivered pursuant to
Section 7.5 thereof and such other documents and information as it has
-----------
deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (d) it will, independently and without
reliance upon Administrative Agent or any Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Agreement; (e) it appoints and authorizes Administrative Agent to
take such action and to exercise such powers under the Agreement as are
delegated to Administrative Agent by the Agreement; and (f) it will perform
in accordance with their terms all of the obligations which by the terms of
the Agreement are required to be performed by it as a Bank.
J-1
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
<PAGE>
3. The Assignee agrees that, upon receiving your consent to such assignment
and from and after [_______, ______], the Assignee will be bound by the terms of
the Agreement, with respect to the interest in the Agreement assigned to it as
specified above, as fully and to the same extent as if the Assignee were a Bank
originally holding such interest in the Agreement.
J-2
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
<PAGE>
4. The following administrative details apply to the Assignee:
(a) Offshore Lending Office:
Assignee name:_____________________________
Address:___________________________________
___________________________________________
Attention:_________________________________
Telephone: (___)__________________________
Telecopier: (___)__________________________
(b) Domestic Lending Office:
Assignee name:_____________________________
Address:___________________________________
___________________________________________
Attention:_________________________________
Telephone: (___)__________________________
Telecopier: (___)__________________________
(c) Notice Address:
Assignee name:_____________________________
Address:___________________________________
___________________________________________
Attention:_________________________________
Telephone: (___)__________________________
Telecopier: (___)__________________________
(d) Payment Instructions: Account No.:
Account No.________________________________
Attention:_________________________________
Reference:_________________________________
J-3
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
<PAGE>
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice of
Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[ASSIGNOR]
By:_____________________________________
Name:
Title:
[ASSIGNEE]
By:_____________________________________
Name:
Title:
We hereby consent to the
foregoing assignment.
HUGHES ELECTRONICS CORPORATION
By:_______________________
Name:
Title:
BANK OF AMERICA, N.A., as Administrative Agent
By:_______________________
Name:
Title:
J-4
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
<PAGE>
EXHIBIT 10.8
HUGHES ELECTRONICS CORPORATION
FIRST AMENDMENT
TO REVOLVING CREDIT AGREEMENT (364 DAY FACILITY)
This FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (364-DAY FACILITY)
(this "Amendment") is dated as of December 31, 1999 and entered into by and
among HUGHES ELECTRONICS CORPORATION, a Delaware corporation (the "Borrower"),
the financial institutions listed on the signature pages hereof (the "Banks"),
BANK OF AMERICA, N.A., as the administrative agent for the Banks (in such
capacity the "Administrative Agent"), CITICORP USA, INC. as the syndication
agent (in such capacity the "Syndication Agent") and DEUTSCHE BANK AG, NEW YORK
BRANCH as documentation agent (the "Documentation Agent") and is made with
reference to that certain Revolving Credit Agreement (364-Day Facility) dated as
of November 24, 1999 (as so amended, the "Credit Agreement"), by and among the
Borrower, the lending institutions identified therein, the Administrative Agent,
the Syndication Agent and the Documentation Agent. Capitalized terms used
herein without definition shall have the same meanings herein as set forth in
the Credit Agreement.
RECITALS
WHEREAS, Borrower and Banks desire to amend the Credit Agreement to
(i) revise the definition of Consolidated EBITDA;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Amendments to Section 1: Definitions
-------------------------------------
Subsection 1.1 of the Credit Agreement is hereby amended by deleting
the definition of Consolidated EBITDA in its entirety, and by replacing it with
the following:
"Consolidated EBITDA" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, an amount equal to the sum of (a)
Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount of
taxes, based on or measured by income, used or included in the determination of
such Consolidated Net Income, (d) the amount of depreciation and amortization
expense deducted in determining such Consolidated Net Income, (e) for each
fiscal quarter in the fiscal year ending December 31, 1999, (i) the amount of
charges taken in connection with the cancellation of contract with Asia Pacific
Mobile Telecommunications, up to an aggregate amount of $92,000,000 for all such
fiscal quarters, and (ii) the amount of charges taken in connection with
development costs and schedule delays at Hughes Space and Communication up to an
aggregate amount of $125,000,000 for all such fiscal quarters, (f) for the last
fiscal quarter of the fiscal year ending December 31, 1999, (i) if a non-cash
charge is taken in connection with the write-off of
<PAGE>
equity investment in ICO Global Communications, the amount of such non-cash
charge up to an aggregate amount of $62,000,000, (ii) if a non-cash charge is
taken in connection with the write-off of equity investment in the Hughes
Network Systems wireless business, the amount of such non-cash charge up to an
aggregate amount of $272,000,000, and (iii) if a change in business strategy
related to DirecTV Japan, Ltd. results in cash and/or non-cash charges, the
amount of such cash and/or non-cash charges up to an aggregate amount of
$250,000,000, and (g) for each fiscal quarter in the fiscal year ending December
31, 2000, the amount of non-cash charges taken in connection with ICO Global
Communications and PanAmSat launch delays, up to an aggregate amount for all
such fiscal quarters of (x) $150,000,000 minus (y) the amount of the charge, if
any, added pursuant to clauses (f)(i) above; minus (h) for each fiscal quarter
-----
in the fiscal year ending December 31, 2000, the amount of cash losses (whether
or not accounted for as charges under GAAP) in connection with DirecTV Japan,
Ltd., but only if such cash losses were reflected in the charges, if any, added
pursuant to clause (f)(iii); plus (i) for each fiscal quarter in the fiscal year
----
ending December 31, 2000, if any change in business strategy regarding DirecTV
Japan, Ltd. results in a non-cash charge, the amount of such non-cash charge up
to an aggregate amount of $150,000,000 minus the amount of non-cash charges, if
any, added pursuant to clause (f)(iii) above.
2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "Amendment
Effective Date"):
(A) On or before the Amendment Effective Date, Borrower shall deliver
to the Banks (or to the Administrative Agent for the Banks with sufficient
originally executed copies, where appropriate, for each Bank and its counsel)
the following, each, unless otherwise noted, dated the Amendment Effective Date:
(1) A certificate, signed by a vice president or assistant treasurer
of Borrower dated the Amendment Effective Date certifying: (i) that the
representations and warranties of Borrower contained in the Credit Agreement are
true and correct in all material respects; and (ii) that, after giving effect to
this Amendment, no event has occurred and is continuing or would result from the
making of a Loan which constitutes or would constitute an Event of Default or an
Unmatured Event of Default; and
(2) Copies of this Amendment executed by Borrower, the Majority Banks
and the Administrative Agent.
(B) All fees and other amounts due to the Administrative Agent,
Syndication Agent, Documentation Agent, Arranger and any Bank through the
Amendment Effective Date from Borrower shall have been received by such person.
3. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Banks to enter into this Amendment and to amend the
Credit Agreement in the manner provided herein, Borrower represents and warrants
to each Bank that the following statements are true, correct and complete:
2
<PAGE>
(A) Corporate Power and Authority. Borrower has all requisite
-----------------------------
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement").
(B) Authorization of Agreements. The execution and delivery of this
---------------------------
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Borrower.
(C) No Contravention. There is no charter, by-law, or capital stock
----------------
provision of Borrower and no provision of any indenture or material agreement,
written or oral, to which Borrower is a party or under which Borrower is
obligated, nor is there any statute, rule or regulation, or any judgment, decree
or order of any court or agency binding on Borrower which would be contravened
by the execution, delivery and performance of any provision, condition, covenant
or other term of this Amendment or the Amended Agreement.
(D) Binding Obligation. This Amendment and the Amended Agreement are
------------------
the legal, valid and binding obligation of Borrower, enforceable against it in
accordance with their terms, and any instrument or agreement required hereunder
or by the Amended Agreement, when executed and delivered, will be similarly
valid, binding and enforceable.
(E) Incorporation of Representations and Warranties From Credit
-----------------------------------------------------------
Agreement. The representations and warranties contained in Section 6 of the
- ---------
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Amendment Effective Date to the same extent as though
made on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case they were true,
correct and complete in all material respects on and as of such earlier date.
(F) Absence of Default. After giving effect to this Amendment, no
------------------
event has occurred and is continuing or will result from the consummation of the
transactions contemplated by this Amendment that would constitute an Event of
Default or a Unmatured Event of Default.
4. MISCELLANEOUS
(A) Reference to and Effect on the Credit Agreement and the Other
Loan Documents.
(i) On and after the Amendment Effective Date, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
of like import referring to the Credit Agreement, and each reference in the
other documents entered pursuant to the Credit Agreement to the "Credit
Agreement", "thereunder", "thereof" or words of like import referring to the
Credit Agreement shall mean and be a reference to the Amended Agreement.
3
<PAGE>
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other documents entered pursuant to the Credit Agreement shall
remain in full force and effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any provision
of, or operate as a waiver of any right, power or remedy of the Administrative
Agent or any Bank under, the Credit Agreement or any of the other Loan
Documents.
(B) Fees and Expenses. Borrower acknowledges that all costs, fees
-----------------
and expenses as described in subsection 11.14 of the Credit Agreement incurred
by the Arranger, the Administrative Agent and their counsel with respect to this
Amendment and the documents and transactions contemplated hereby shall be for
the account of Borrower.
(C) Headings. Section and subsection headings in this Amendment are
--------
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
(D) California Law. The interpretation, enforcement and effect of
--------------
this Amendment shall be governed and controlled in all respects by and construed
according to the substantive laws of the State of California.
(E) Counterparts; Effectiveness. This Amendment may be executed in
---------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment (other than the
provisions of Section 1 hereof, the effectiveness of which is governed by
Section 2 hereof) shall become effective upon the execution of a counterpart
hereof by Borrower and Majority Banks and receipt by Borrower and the
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
HUGHES ELECTRONICS CORPORATION
By: _______________________________
Name:
Title:
S-1
<PAGE>
BANK OF AMERICA, N.A., as
Administrative Agent
By: ______________________________
Name:
Title:
S-2
<PAGE>
CITICORP USA, INC., as Syndication
Agent and as a Bank
By: ________________________________
Name:
Title:
S-3
<PAGE>
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Documentation Agent
By: ________________________________
Name:
Title:
S-4
<PAGE>
ALLFIRST BANK
By:___________________________________
Name:
Title:
S-5
<PAGE>
BANCA DI ROMA - SAN FRANCISCO
By:________________________________________
Name:
Title:
S-6
<PAGE>
BANK OF AMERICA, N.A., as a Bank
By:________________________________________
Name:
Title:
S-7
<PAGE>
THE BANK OF NEW YORK
By:________________________________________
Name:
Title:
S-8
<PAGE>
BANK ONE, NA
By:________________________________________
Name:
Title:
S-9
<PAGE>
BARCLAYS BANK PLC
By:________________________________________
Name:
Title:
S-10
<PAGE>
BANQUE NATIONALE DE PARIS
By:________________________________________
Name:
Title:
By:________________________________________
Name:
Title:
S-11
<PAGE>
BAYERISCHE LANDESBANK
GIROZENTRALE, CAYMAN ISLANDS
BRANCH
By:________________________________________
Name:
Title:
S-12
<PAGE>
CREDIT SUISSE FIRST BOSTON
By:________________________________________
Name:
Title:
By:________________________________________
Name:
Title:
S-13
<PAGE>
DEUTSCHE BANK AG, NEW YORK
BRANCH AND/OR CAYMAN ISLAND
BRANCHES, as a Bank
By:________________________________________
Name:
Title:
By:________________________________________
Name:
Title:
S-14
<PAGE>
THE FUJI BANK, LIMITED
By:________________________________________
Name:
Title:
S-15
<PAGE>
MELLON BANK, N.A.
By:________________________________________
Name:
Title:
S-16
<PAGE>
THE MITSUBISHI TRUST AND BANKING
CORPORATION, NEW YORK BRANCH
By:________________________________________
Name:
Title:
S-17
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By:________________________________________
Name:
Title:
S-18
<PAGE>
SOCIETE GENERALE
By:________________________________________
Name:
Title:
S-19
<PAGE>
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By:________________________________________
Name:
Title:
By:________________________________________
Name:
Title:
S-20
<PAGE>
EXHIBIT 10.9
ANNEX A
================================================================================
- --------------------------------------------------------------------------------
Amended and Restated
Revolving Credit Agreement
(Multi-Year Facility)
Dated as of November 24, 1999
among
Hughes Electronics Corporation
The Banks named herein
and
Bank Of America, N.A.
as Administrative Agent
Morgan Guaranty Trust Company of New York
as Syndication Agent
Citicorp USA, Inc. and
The Chase Manhattan Bank
as Documentation Agents
Arranged by
Banc of America Securities LLC
[LOGO]
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1
DEFINITIONS
1.1 Definitions.............................................................................. 1
SECTION 2
THE CREDIT
2.1 The Commitments.......................................................................... 11
2.2 The Loans................................................................................ 12
2.3 Requests for Base Rate and Eurodollar Loans.............................................. 12
2.4 Requests for Bid Rate Loans.............................................................. 12
2.5 Interest and Principal on Base Rate Loans................................................ 13
2.6 Interest and Principal on Eurodollar Loans............................................... 13
2.7 Interest and Principal on Bid Rate Loans................................................. 14
2.8 Loan Accounts............................................................................ 14
2.9 Master Bid Rate Notes.................................................................... 14
2.10 Conversion of Loans Between Eurodollar Loans and Base Rate Loans and
Conversion of Interest Periods of Eurodollar Loans....................................... 15
2.11 Disbursements and Payments............................................................... 15
2.12 Facility Fee............................................................................. 16
SECTION 3
PAYMENT OF COSTS AND REDUCTION OF THE COMMITMENT
3.1 Indemnification Upon Failure to Pay Eurodollar Loan or Bid Rate Loan..................... 17
3.2 Increased Costs.......................................................................... 17
3.3 Taxes.................................................................................... 18
3.4 Prepayment............................................................................... 19
3.5 Pro Rata Reduction of Commitments by Borrower............................................ 19
3.6 Reduction of One Bank's Commitment by Borrower........................................... 19
3.7 Notice of Reductions..................................................................... 20
3.8 Designation of Replacement Bank.......................................................... 20
3.9 Effect of Reduction of Commitment........................................................ 20
3.10 Accrued Fees............................................................................. 20
3.11 Survival................................................................................. 21
SECTION 4
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
4.1 Inability to Determine Eurodollar Rate................................................... 21
4.2 Illegality............................................................................... 21
SECTION 5
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Signing Date..................................................... 22
5.2 Conditions Precedent to Effective Date................................................... 22
5.3 Conditions Precedent to Loans............................................................ 23
SECTION 6
REPRESENTATIONS AND WARRANTIES
6.1 Authority of Borrower.................................................................... 23
6.2 Binding Obligations...................................................................... 24
6.3 Incorporation of Restricted Subsidiaries................................................. 24
6.4 No Contravention......................................................................... 24
6.5 Notices.................................................................................. 24
6.6 Financial Statements..................................................................... 24
6.7 ERISA.................................................................................... 24
6.8 Regulation U............................................................................. 25
6.9 Taxes.................................................................................... 25
6.10 Insurance................................................................................ 25
6.11 Liens.................................................................................... 25
SECTION 7
AFFIRMATIVE COVENANTS OF BORROWER
7.1 Use of Proceeds of Loans................................................................. 25
7.2 Management of Business................................................................... 25
7.3 Notice of Certain Events................................................................. 26
7.4 Records.................................................................................. 26
7.5 Information Furnished.................................................................... 26
7.6 Execution of Other Documents............................................................. 27
7.7 ERISA.................................................................................... 27
7.8 Administrative Agent's Fees.............................................................. 27
7.9 Compliance with Law...................................................................... 28
SECTION 8
NEGATIVE COVENANTS OF BORROWER
</TABLE>
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<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
8.1 Liens.................................................................................... 28
8.2 Mergers, Liquidations and Sales of Assets................................................ 29
8.3 Defaults................................................................................. 30
8.4 Compliance with Regulations.............................................................. 30
8.5 Financial Covenants...................................................................... 30
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default........................................................................ 31
9.2 Recovery of Amounts Due.................................................................. 34
9.3 Rights Cumulative........................................................................ 35
SECTION 10
THE BANKS
10.1 Administration of Loan................................................................... 35
10.2 Representations By Banks................................................................. 35
SECTION 11
MISCELLANEOUS PROVISIONS
11.1 Amendments and Waivers................................................................... 35
11.2 Notices.................................................................................. 35
11.3 Waiver................................................................................... 36
11.4 California Law........................................................................... 36
11.5 Headings................................................................................. 36
11.6 Accounting Terms......................................................................... 36
11.7 Counterparts............................................................................. 37
11.8 Written Disclosure....................................................................... 37
11.9 Singular; Plural......................................................................... 37
11.10 Illegality............................................................................... 37
11.11 Assignments.............................................................................. 37
11.12 Obligations Several...................................................................... 38
11.13 Participations........................................................................... 38
11.14 Fees and Expenses........................................................................ 39
11.15 Indemnity................................................................................ 39
11.16 Confidentiality.......................................................................... 40
11.17 Termination of Existing Agreements....................................................... 42
11.18 Waiver of Right to Trial by Jury......................................................... 42
</TABLE>
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<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
(MULTI-YEAR FACILITY)
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (MULTI-YEAR FACILITY)
("Agreement") is entered into as of November 24, 1999 (the "Signing Date") among
HUGHES ELECTRONICS CORPORATION, a corporation organized and existing under the
laws of Delaware ("Borrower"), the banks named herein (collectively, together
with any other lenders that become parties hereto pursuant to Section 3.8 or
11.11, the "Banks" and individually a "Bank"), Bank of America, N.A., as
administrative agent for the Banks (in such capacity "Administrative Agent"),
Morgan Guaranty Trust Company of New York, as Syndication Agent (in such
capacity "Syndication Agent"), and Citicorp USA, Inc. and The Chase Manhattan
Bank as Documentation Agents (in such capacity "Documentation Agents").
R E C I T A L S
---------------
WHEREAS, pursuant to the Revolving Credit Agreement (Multi-Year Facility)
dated as of December 5, 1997, among Borrower, the financial institutions listed
on the signature pages thereof, Syndication Agent, Documentation Agents and
Administrative Agent (the "Original Credit Agreement"), Banks agreed to extend
certain credit facilities to Borrower;
WHEREAS, the Original Credit Agreement has been amended pursuant to that
certain First Amendment to Revolving Credit Agreement (Multi-Year Facility)
dated as of December 15, 1998 among Borrower, the lending institutions
identified therein, the Administrative Agent, the Syndication Agent and the
Documentation Agents (the "First Amendment"; the Original Agreement, as amended
by the First Amendment, the "Current Agreement");
WHEREAS, Borrower, the lending institutions that executed the signature
pages thereof (which lenders constituted the Majority Banks), Syndication Agent,
Documentation Agents and Administrative Agent entered into that certain
Amendment Agreement Regarding Revolving Credit Agreement (Multi-Year Facility)
dated as of November 24, 1999 (the "Amendment Agreement"), pursuant to which the
Current Agreement has been amended and restated in its entirety as set forth
herein;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Banks, Documentation Agent,
Syndication Agent and Administrative Agent agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
-----------
"Aggregate Long-Term and Short-Term Commitments" means the Total Commitment
plus the "Total Commitment", as defined in the Short-Term Credit Agreement.
"Applicable Amount" means, for the facility fee and Eurodollar Loans, the
amount (expressed in basis points per annum) set forth in the chart below
opposite the Applicable Level
-1-
<PAGE>
then in effect:
<TABLE>
<CAPTION>
================================================================================================
Applicable Amount
Applicable Debt Ratings (in basis points per annum)
---------------------------------------------------
Level
Eurodollar Rate Facility Fee
+
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 greater than or 27.5 10.0
equal to A-/A3
- ------------------------------------------------------------------------------------------------
2 BBB+/Baa1 37.5 12.5
- ------------------------------------------------------------------------------------------------
3 BBB/Baa2 60.0 15.0
- ------------------------------------------------------------------------------------------------
4 BBB-/Baa3 80.0 20.0
- ------------------------------------------------------------------------------------------------
5 BB+/Ba1 100.0 25.0
- ------------------------------------------------------------------------------------------------
6 less than or 145.0 30.0
equal to BB/Ba2
================================================================================================
</TABLE>
Provided that so long as the actual Applicable Level as set forth in the
--------
above table is Level 1, Level 2, Level 3 or Level 4, the Applicable Level for
purposes of calculating the Applicable Amount shall be deemed to be Level 4
until such time as the principal amount of the Loans and the principal amount of
the "Loans", as defined in the Short-Term Credit Agreement, have been reduced to
zero, at which time the Applicable Level shall be determined as set forth in the
above table; provided further that so long as the actual Applicable Level as set
-------- -------
forth in the above table is Level 5 or Level 6, the Applicable Level shall be
determined as set forth in the above table.
"Applicable Level" means the level set forth opposite the Debt Ratings in
the definition of Applicable Amount then in effect, subject to the provisos to
such definition. Any change in the Applicable Level shall become effective upon
any public announcement of any change in any Debt Rating that requires a change
in the Level in accordance with the above chart.
"Approved Bank Affiliate" means a Person that is a subsidiary of a Bank or
of a Person of which a Bank is a subsidiary, and which is either engaged
primarily in the business of commercial banking or, if not so engaged, which has
been approved by the Borrower and Administrative Agent (provided that Borrower's
--------
consent shall not be unreasonably withheld).
"Arranger" means BAS.
"Authorized Designee" means the chief executive officer, the vice chairman,
the chief financial officer, treasurer or the assistant treasurer of Borrower,
or any other officer of Borrower
-2-
<PAGE>
specified as being an Authorized Designee in the certificate delivered pursuant
to Section 5.2(c).
"Availability Period" means the period commencing on the Effective Date and
ending on the Termination Date.
"Bank of America" means Bank of America, N.A. in its capacity as a Bank.
"BAS" means Banc of America Securities LLC.
"Base Rate" means the higher of: (a) the rate of interest publicly
announced from time to time by Bank of America in San Francisco, California, as
its "reference rate," which is a rate set by Bank of America based upon various
factors including Bank of America's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate; and (b) one-
half percent per annum above the Federal Funds Rate. Any change in the
reference rate announced by Bank of America shall take effect at the opening of
business on the day specified in the public announcement of such change.
"Base Rate Loan" means a Loan bearing interest based on the Base Rate
calculated pursuant to Section 2.5.
"Bid Rate" means an interest rate offered by a Bank in its sole discretion
and in response to the Borrower's Loan Request for a Bid Rate Loan pursuant to
Section 2.4, which interest rate shall include all applicable reserve and other
adjustments when being advised by such Bank to Administrative Agent.
"Bid Rate Loan" means a Loan bearing interest at a Bid Rate.
"Borrowing Date" means a date on which funds are advanced to Borrower by
one or more Banks pursuant to a Loan Request.
"Business Day" means a day other than a Saturday or Sunday on which banks
are open for business in both San Francisco, California and New York, New York.
"Commercial Paper" means short term commercial paper (with a maturity date
not in excess of 270 days from the date of its issuance) issued by Borrower (a)
pursuant to the exemption from registration contained in Section 4(2) of the
Securities Act of 1933, as amended or modified from time to time, or (b)
pursuant to the exemption from registration contained in Section 3(a)(3) of the
Securities Act of 1933, as amended or modified from time to time, with respect
to which a recognized rating agency has taken this Agreement into account in the
rating of such short term commercial paper.
"Commitment" of each Bank means the dollar amount set forth opposite such
Bank's name on Schedule 1 hereto, as such amount may be reduced or changed
pursuant to Sections 3.5 and 3.6.
"Compliance Certificate" means a certificate in the form of Exhibit G,
---------
properly
-3-
<PAGE>
completed and signed by Borrower's Treasurer or an Assistant Treasurer.
"Consolidated Adjusted Net Worth" means, as of the date of determination
thereof, the consolidated stockholders equity of Borrower and its Subsidiaries
in accordance with GAAP adjusted by adding back the amount by which such
consolidated stockholders equity has been reduced (or by subtracting the amount
by which stockholders equity has been increased) on account of (a) changes
subsequent to December 31, 1992 in the long term liability of Borrower and its
Subsidiaries for post-retirement benefits other than pensions and (b) specified
material non-cash adjustments resulting from the adoptions of future
pronouncements of the Financial Accounting Standards Board.
"Consolidated EBITDA" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, an amount equal to the sum of (a)
Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount of
taxes, based on or measured by income, used or included in the determination of
such Consolidated Net Income, (d) the amount of depreciation and amortization
expense deducted in determining such Consolidated Net Income, (e) for each
fiscal quarter in the fiscal year ending December 31, 1999, (i) the amount of
charges taken in connection with the cancellation of contract with Asia Pacific
Mobile Telecommunications, up to an aggregate amount of $92,000,000 for all such
fiscal quarters, and (ii) the amount of charges taken in connection with
development costs and schedule delays at Hughes Space and Communication up to an
aggregate amount of $125,000,000 for all such fiscal quarters, (f) for the last
fiscal quarter of the fiscal year ending December 31, 1999, (i) if a non-cash
charge is taken in connection with the write-off of equity investment in ICO
Global Communications, the amount of such non-cash charge up to an aggregate
amount of $62,000,000 and (ii) if a change in business strategy related to
DirecTV Japan, Ltd. results in cash and/or non-cash charges, the amount of such
cash and/or non-cash charges up to an aggregate amount of $250,000,000, and (g)
for each fiscal quarter in the fiscal year ending December 31, 2000, the amount
of non-cash charges taken in connection with ICO Global Communications, the
Hughes Network Systems wireless business and PanAmSat launch delays, up to an
aggregate amount for all such fiscal quarters of (x) $500,000,000 minus (y) the
amount of the charge, if any, added pursuant to clause (f)(i) above; minus (h)
-----
for each fiscal quarter in the fiscal year ending December 31, 2000, the amount
of cash losses (whether or not accounted for as charges under GAAP) in
connection with DirecTV Japan, Ltd., but only if such cash losses were reflected
in the charges, if any, added pursuant to clause (f)(ii); plus (i) for each
----
fiscal quarter in the fiscal year ending December 31, 2000, if any change in
business strategy regarding DirecTV Japan, Ltd. results in a non-cash charge,
the amount of such non-cash charge up to an aggregate amount of $150,000,000
minus the amount of non-cash charges, if any, added pursuant to clause (f)(ii)
above.
"Consolidated Funded Indebtedness" means, as of any date of determination,
for Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations and liabilities, whether current
or long-term, for borrowed money (including Loans hereunder), and (b) that
portion of obligations with respect to capital leases that are capitalized in
the consolidated balance sheet of Borrower and its Subsidiaries in excess of an
aggregate amount of $25,000,000.
"Consolidated Interest Charges" means, for any period, for Borrower and its
Subsidiaries
-4-
<PAGE>
on a consolidated basis, the sum of (a) all interest, premium payments, fees,
charges and related expenses payable by Borrower and its Subsidiaries in
connection with borrowed money (including capitalized interest) or in connection
with the deferred purchase price of assets and imputed interest associated with
the assumption of liabilities relating to programming contracts under purchase
accounting in accordance with GAAP, in each case to the extent treated as
interest in accordance with GAAP, and (b) the portion of rent payable by
Borrower and its Subsidiaries with respect to such period under capital leases
that is treated as interest in accordance with GAAP.
"Consolidated Net Income" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, the net income of Borrower and its
Subsidiaries from continuing operations after extraordinary items (excluding
gains or losses form Dispositions of assets) for that period.
"Consolidated Tangible Net Worth" means, at any date of determination,
Consolidated Adjusted Net Worth less the consolidated intangible assets of
----
Borrower and its Subsidiaries, determined in accordance with GAAP.
"Debt Rating" means, as of any date of determination, the rating as
determined by either Standard & Poor's Ratings Group or Moody's Investors
Service, Inc. (collectively, the "Debt Ratings"); of (a) the Borrower's senior
unsecured long-term debt or (b) if the foregoing debt is not outstanding, then
the rating of this bank credit facility or the implied rating of senior
unsecured and non-credit enhanced debt securities, provided that if both ratings
-------------
in this clause (b) have been issued then both shall apply; or (c) if neither (a)
nor (b) apply, then the rating of long-term debt issued by equipment trust
guaranteed by Borrower; provided that if a Debt Rating is issued by both of such
-------------
rating agencies, then the more credit worthy of such credit ratings shall apply
unless the split in credit ratings is more than one level, in which case the
level one level higher than the lower rating shall apply. Initially, the Debt
Ratings shall be determined from the certificate delivered pursuant to Section
5.2(d). Thereafter the credit ratings shall be determined from the most recent
public announcement of any changes in such credit ratings.
"Effective Date" means the date the conditions set forth in Section 5.2 are
satisfied or waived by the Banks.
"Eligible Assignee" means a Person which can lawfully fulfill all of the
obligations of a Bank hereunder and is (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100,000,000; (b) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
the OECD; or (c) any Person engaged primarily in the business of commercial
banking and that is a subsidiary of a Bank or of a Person of which a Bank is a
subsidiary.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in
effect from time to time.
-5-
<PAGE>
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with Borrower or any Subsidiary of Borrower within the
meaning of Section 414(b), 414(c) or 414(m) of Internal Revenue Code of 1986, as
amended.
"Eurodollar Banking Day" means a day on which banks are open for business
in San Francisco, California, New York, New York and the applicable offshore
dollar interbank market and dealing in U. S. Dollar deposits.
"Eurodollar Loan" means a Loan at the rate of interest calculated pursuant
to Section 2.6.
"Eurodollar Rate" means for each Interest Period of a Eurodollar Loan the
arithmetic mean of the rates of interest rounded to the nearest 1/100 of one
percent as notified to the Administrative Agent by the Reference Banks at which
U.S. Dollar deposits for such Interest Period and in an amount comparable to the
Principal Amount of such Eurodollar Loan would be offered by such Reference
Banks to major banks in the London offshore dollar interbank market upon request
of such banks at approximately 11:00 a.m. London time two Eurodollar Banking
Days prior to the first day of such Interest Period.
"Event of Default" means any event specified in Section 9.1.
"Existing Agreements" means (a) the Revolving Credit Agreement dated as of
January 4, 1995, as amended, among Borrower, the banks party thereto and Bank of
America National Trust and Savings Association, as agent for such banks; (b) the
Revolving Promissory Note dated June 16, 1997 in favor of Bank of America
National Trust and Savings Association; (c) the Note dated June 30, 1997 in
favor of Morgan Guaranty Trust Company of New York, and (d) the Promissory Note
dated July 1, 1997 in favor of Citicorp USA, Inc.
"Federal Funds Rate" means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Board (including any such successor,
"H.15(519)") for such day opposite the caption "Federal Funds (Effective)". If
on any relevant day such rate is not yet published in H.15(519), the rate for
such day will be the rate set forth in the daily statistical release designated
as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m. Quotation") for such day
under the caption "Federal Funds Effective Rate". If on any relevant day the
appropriate rate for such day is not yet published in either H.15(519) or the
Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York time) on that day by each of three leading brokers
of Federal funds transactions in New York City selected by Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any successor thereto.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting
-6-
<PAGE>
Standards Board (or agencies with similar functions of comparable stature and
authority within the accounting profession), or in such other statements by such
other entity as may be in general use by significant segments of the U.S.
accounting profession, which are applicable to the circumstances as of the date
of determination.
"Granting Bank" has the meaning specified in Section 11.11(c).
"Interest Payment Date" means, with respect to each Bid Rate Loan and each
Eurodollar Loan, the last day of each Interest Period; provided, however, that
-------- -------
if any Interest Period (a) in the case of a Bid Rate Loan exceeds 90 days and
(b) in the case of a Eurodollar Loan exceeds three months, "Interest Payment
Date" shall mean the 90th day and the last day of the third month of such
Interest Period, respectively, as well as the last day of the relevant Interest
Period; and, with respect to each Base Rate Loan, means the 10th day of each
January, April, July, and October and the Termination Date. If any day
specified herein is not a Business Day or, in the case of a Eurodollar Loan, a
Eurodollar Banking Day, then the relevant Interest Payment Date shall be the
next succeeding Business Day or Eurodollar Banking Day, as applicable, except as
otherwise provided in the definition of Interest Period.
"Interest Period" means: (a) with respect to each Bid Rate Loan, a period
of 7 to 180 days as selected by Borrower by a Loan Request delivered to
Administrative Agent in accordance with Section 2.4, and (b) with respect to
each Eurodollar Loan, a period of one, two, three or six months as selected by
Borrower by a Loan Request delivered to Administrative Agent in accordance with
Section 2.3, subject to the following:
(i) If the term of an Interest Period is not designated, a period
of 30 days shall be deemed selected for the relevant Bid Rate Loan and a
period of one month shall be deemed selected for the relevant Eurodollar
Loan;
(ii) The first Interest Period for each Loan shall commence on the
date such Loan is disbursed and each succeeding Interest Period for such
Loan shall commence on the last day of the preceding Interest Period for
such Loan;
(iii) In the case of a Bid Rate Loan, if the last day of an Interest
Period falls on a day that is not a Business Day, the Interest Period
involved shall be extended to the next succeeding Business Day, and the
next succeeding Interest Period shall be measured from the last day of the
Interest Period as so adjusted;
(iv) In the case of a Eurodollar Loan, if the last day of an
Interest Period falls on a day that is not a Eurodollar Banking Day, the
Interest Period involved shall be extended to the next following Eurodollar
Banking Day unless as a result thereof it would fall into the next calendar
month, in which case the end of the Eurodollar Interest Period shall be the
preceding Eurodollar Banking Day, and in either case the next succeeding
Eurodollar Interest Period shall be measured from the last day of the
Interest Period as so adjusted;
-7-
<PAGE>
(v) If an Interest Period for a Eurodollar Loan commences on the
last Eurodollar Banking Day of a calendar month, it shall end on the last
Eurodollar Banking Day of a calendar month; and
(vi) No Interest Period shall end on a day later than the
Termination Date.
"Investment Grade" means a Debt Rating by S&P of BBB- or better and Debt
Rating by Moody's of Baa3 or better.
"Lending Office" means with respect to any Bank as the context shall
require, the branch office of such Bank designated as the Lending Office of such
Bank in Exhibit D attached hereto and incorporated herein by reference; or any
other branch office or affiliate of such Bank hereafter selected and notified to
Borrower and Administrative Agent from time to time by such Bank; provided that
any Bank may from time to time by notice to Borrower and Administrative Agent
designate separate Lending Offices for its Bid Rate Loans, its Eurodollar Loans
and/or its Base Rate Loans, in which case any reference to the Lending Office of
such Bank shall be deemed to refer to any or all of such offices, branches or
affiliates as the context may require.
"Letter Agreement" means that letter agreement among Arranger,
Administrative Agent and Borrower dated October 23, 1997 specifying Arranger's
and Administrative Agent's compensation for services hereunder as such letter
agreement may from time to time be amended, restated, reissued or otherwise
modified.
"Leverage Ratio" means, as of the end of any fiscal quarter, for the
Borrower and its Subsidiaries on a consolidated basis, the ratio of (a)
Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for
the period of the four fiscal quarters ended on such date.
"Lien" means any trust deed, mortgage, pledge, hypothecation, assignment,
security interest, lien, charge or encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, the lien of an attachment, judgment or
execution, or any conditional sale or other title retention agreement, any
capitalized lease, and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction, but excluding financing statements filed to give notice of leases
in the ordinary course of business).
"Loan" or "Loans" means the loans described in Section 2, any of which may
be at any time Base Rate Loans, Eurodollar Loans or Bid Rate Loans.
"Loan Request" means a notice given by Borrower pursuant to Section 2.3 or
2.4.
"Majority Banks" means those Banks whose Commitments constitute at least
60% of the Total Commitment as such Total Commitment may be adjusted from time
to time pursuant to the terms of this Agreement, or if the Commitments have
terminated, those Banks holding at least 60% of the outstanding Loans (other
than Bid Rate Loans).
"Master Bid Rate Note" means a promissory note of Borrower payable to order
of a Bank
-8-
<PAGE>
in substantially the form of Exhibit B hereto in favor of such Bank evidencing
the indebtedness of the Borrower to such Bank resulting from a Bid Rate Loan
made by such Bank.
"Material Change" means any adverse change which could reasonably be
expected to materially impair Borrower's ability to timely and fully perform its
obligations under this Agreement, provided that the Reorganization shall not be
deemed a Material Change.
"Moody's" means Moody's Investors Service, Inc.
"Normal Percentage" means, with respect to each Bank, the percentage under
the heading "Normal Percentage" set forth opposite such Bank's name on Schedule
1 hereto, as such amount may be reduced or changed pursuant to Section 3.6 or
Section 11.11.
"Note" means any promissory note delivered pursuant to Section 2.8 or any
Master Bid Rate Note (collectively, the "Notes").
"Notice of Assignment and Acceptance" means a Notice of Assignment and
-----------------------------------
Acceptance substantially in the form of Exhibit H.
---------
"Person" means any individual, firm, company, corporation, joint venture,
joint-stock company, trust, unincorporated organization, governmental or state
entity, or any association or partnership (whether or not having separate legal
personality) of two or more of the foregoing.
"Plan" means any employee benefit pension plan which is subject to the
provisions of Title IV of ERISA and which is maintained for employees of
Borrower or any Subsidiary.
"Principal Amount" means, when used with reference to any Loan, the amount
requested in the Loan Request relating thereto and made available to Borrower by
the Banks hereunder.
"Principal Repayment Date" means, with respect to each Base Rate Loan, the
Termination Date, and with respect to each Bid Rate Loan and each Eurodollar
Loan, the last day of the Interest Period for such Loan.
"Reference Banks" means Bank of America, Citibank, N.A., Morgan Guaranty
Trust Company of New York and The Chase Manhattan Bank
"Reorganization" means the transactions contemplated by that certain
Agreement and Plan of Merger dated as of January 16, 1997 by and between HE
Holdings and Raytheon Company including, without limitation the "GM
Transactions" defined therein.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder excluding those events for which the 30-day
notice requirement is waived, a withdrawal from a Plan described in Section 4063
of ERISA, or a cessation of operations described in Section 4062(e) of ERISA.
"Restricted Subsidiaries" means each Subsidiary (i) having assets exceeding
10% of the Consolidated Tangible Net Worth of Borrower and its Subsidiaries on a
consolidated basis or (ii)
-9-
<PAGE>
having operating revenues exceeding 10% of the operating revenues of Borrower
and its Subsidiaries on a consolidated basis, in each case as shown on the pro
forma financial statements dated as of June 30, 1997 and, thereafter, as shown
on the audited consolidated financial statements of Borrower and its
Subsidiaries as of the end of the fiscal year immediately preceding the date of
determination; provided, however, that "Restricted Subsidiary" shall not include
any Subsidiary which is a corporation created solely to purchase receivables
from Borrower or any of its Subsidiaries, and which would not, in accordance
with GAAP, be included in the consolidated financial statements of Borrower.
"S&P" means Standard & Poor's Ratings Group.
"Shareholders' Equity" means, as of any date of determination for Borrower
and its Subsidiaries on a consolidated basis, shareholders' equity as of that
date determined in accordance with GAAP.
"Short-Term Credit Agreement" means the Revolving Credit Agreement (364-day
Facility) dated as of November 24, 1999 among Borrower, the banks named therein,
Bank of America, N.A., as administrative agent, Salomon Smith Barney Inc., as
syndication agent, and Deutsche Banc Alex. Brown, as documentation agent, as
amended from time to time.
"Signing Date" means December 5, 1997.
"SPC" has the meaning specified in Section 11.11(c).
"Subsidiaries" (individually a "Subsidiary") means those corporations or
entities of which Borrower owns more than 50% of the voting securities. If
Borrower, subject to the terms hereof, permits its ownership to fall to 50% or
below of outstanding voting shares of any Subsidiary, such Subsidiary shall
thereupon cease to be a Subsidiary for all purposes hereof.
"Tax" and "Taxes" mean all taxes, levies, imposts, duties, fees or other
charges of whatsoever nature however imposed by any country or any subdivision
or authority of or in that country in any way connected with this Agreement or
any instrument or agreement required hereunder, and all interest, penalties or
similar liabilities with respect thereto, except such taxes as are imposed on or
measured by any Bank's net income or capital and franchise taxes, by the country
or any subdivision or authority of or in that country in which such Bank's
principal office or actual Lending Office is located.
"Termination Date" means December 5, 2002 or if such day is not a Business
Day, the next preceding Business Day.
"Total Commitment" means the aggregate amount of the Commitments.
"Unmatured Event of Default" means an event which with the passage of time
or the giving of notice, or both, would become an Event of Default.
-10-
<PAGE>
"Utilization Fee" means the amount (expressed in basis points per annum) set
forth in the chart below opposite the Applicable Level then in effect:
<TABLE>
<CAPTION>
=============================================================
Applicable Level Utilization Fee
- -------------------------------------------------------------
<S> <C>
Level 1 12.5
Level 2 12.5
Level 3 12.5
Level 4 12.5
Level 5 25.0
Level 6 25.0
=============================================================
</TABLE>
"Voting Stock" means capital stock of Borrower having voting power under
ordinary circumstances to elect directors of Borrower.
"Withdrawal Liability" means, as of any determination date, the aggregate
amount of the liabilities, if any, pursuant to Section 4201 of ERISA if the
Borrower or any ERISA Affiliate made a complete withdrawal from all Plans and
any increase in contributions pursuant to Section 4243 or ERISA.
SECTION 2
THE CREDIT
2.1 The Commitments. (a) From time to time, during the Availability
Period, each Bank severally agrees to lend to Borrower in U. S. Dollars the
amount set forth opposite such Bank's name on Schedule 1 hereto, subject to
reduction of such amount at Borrower's option, pursuant to Sections 3.5 and 3.6
or otherwise pursuant to Section 2.1(c).
(b) Except as provided in subsection 2.1(d), each Bank shall make
available to Borrower Base Rate Loans and Eurodollar Loans up to the amount of
such Bank's Commitment. In addition, each Bank may, but shall not be required
under any circumstances whatsoever to, make available to Borrower Bid Rate
Loans. Except as provided in subsection 2.1(c), the Commitment of any Bank
making a Bid Rate Loan shall not be reduced by the amount of any such Loan or
Loans made by such Bank or by any other Bank.
(c) The Principal Amount of Bid Rate Loans made by any Bank may exceed
such Bank's Commitment; provided, however, that the aggregate Principal Amount
-------- -------
of all Bid Rate Loans outstanding under this Agreement shall not exceed the
Total Commitment. The Total Commitment shall be reduced by the Principal Amount
of Bid Rate Loans outstanding so long as such Bid Rate Loans remain outstanding;
and the Commitment of each Bank shall be reduced pro rata.
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<PAGE>
(d) During any period of time when Bid Rate Loans are outstanding,
additional Eurodollar Loans and Base Rate Loans requested by Borrower shall be
allocated among the Banks in accordance with their Normal Percentage as set
forth in Schedule 1 and without regard to any Bid Rate Loans such Bank may have
outstanding to Borrower. In no event shall Eurodollar Loans, Base Rate Loans and
Bid Rate Loans outstanding hereunder exceed the Total Commitment as adjusted
from time to time pursuant to this Section 2.1.
2.2 The Loans. Each Loan shall be a Base Rate Loan, a Eurodollar Loan or
---------
a Bid Rate Loan and shall be in U. S. Dollars. Each Loan shall be in the
minimum amount of $5,000,000 with any additional amounts in integral multiples
of $1,000,000. This is a revolving credit, and Borrower may, during the
Availability Period, reborrow amounts repaid or prepaid. No Loan nor any part
of any Loan shall be repaid except at the times and in the manner expressly
provided herein.
2.3 Requests for Base Rate and Eurodollar Loans. Each Base Rate Loan and
-------------------------------------------
Eurodollar Loan shall be made upon irrevocable written or telephonic notice,
confirmed promptly in writing, substantially in the form of Exhibit A-1 hereto,
by Borrower to Administrative Agent received by Administrative Agent not later
than 9:00 a.m. California time not less than three (3) Eurodollar Banking Days
prior to the Borrowing Date (which must be a Eurodollar Banking Day) of a
Eurodollar Loan and not later than 9:00 a.m. California time on the proposed
Borrowing Date (which must be a Business Day) of a Base Rate Loan. Upon receipt
of a request for a Base Rate Loan and Eurodollar Loan, Administrative Agent
shall promptly notify the Banks of the amount, the Interest Period(s), if
applicable, and the Borrowing Date requested by Borrower. After giving effect
to any borrowing of Eurodollar Loans or any conversion or continuation of
Eurodollar Loans, there shall not be more than 10 different Interest Periods for
Eurodollar Loans and Bid Rate Loans in the aggregate at any time.
2.4 Requests for Bid Rate Loans. (a)Each Bid Rate Loan shall be made upon
---------------------------
irrevocable written or telephonic notice, confirmed promptly in writing,
substantially in the form of Exhibit A-2 hereto, by Borrower and must be
received by Administrative Agent not later than 9:00 a.m. California time one
Business Day prior to the Borrowing Date for such Loan, specifying the Borrowing
Date (which must be a Business Day), the amount, and the Interest Period. In
requesting a Bid Rate Loan, Borrower may specify up to a maximum of three
alternative Interest Periods for the Bid Rate Loan. After giving effect to any
borrowing of Bid Rate Loans, there shall not be more than 10 different Interest
Periods for Bid Rate Loans and Eurodollar Loans in the aggregate at any one
time.
(b) Upon receipt of a request for a Bid Rate Loan pursuant to paragraph
(a) above, Administrative Agent shall promptly notify the Banks of the amount,
the Interest Period(s) and the Borrowing Date requested by Borrower. If Bank of
America elects to advance a Bid Rate Loan it shall notify Borrower and
Administrative Agent of the amount, the Interest Period(s) and the Bid Rate
(with any fraction of a percentage expressed as a decimal to the nearest
1/10,000 of one percent) upon which Bank of America desires to advance such a
Bid Rate Loan by 7:00 a.m. California time on such Borrowing Date. By 7:15 a.m.
California time on the Borrowing Date, each other Bank shall notify
Administrative Agent whether or not it will submit an offer in response to
Borrower's request for a Bid Rate Loan and each Bank submitting an offer shall
-12-
<PAGE>
notify Administrative Agent of the amount, the Interest Period(s) and the Bid
Rate (with any fraction of a percentage expressed as a decimal to the nearest
1/10,000 of one percent) upon which such Bank desires to advance a Bid Rate
Loan. By 7:30 a.m. California time on the Borrowing Date Administrative Agent
shall give notice to Borrower, of the amount, the Interest Period and the Bid
Rate upon which each Bank desires to advance a Bid Rate Loan. Borrower shall,
before 7:45 a.m. California time on such Borrowing Date, elect which of the
offered Bid Rate Loans it desires to accept and notify Administrative Agent of
each offer that is being accepted by Borrower. Such acceptance by Borrower shall
be irrevocable. If Borrower accepts any of the offers for Bid Rate Loans,
Borrower must accept offers strictly based upon pricing and no other criteria.
If two or more Banks submit offers at identical pricing and Borrower accepts any
of such offers but does not wish to borrow the total amount offered by such
Banks, Borrower shall accept offers from all of such Banks on amounts allocated
among them pro rata (in multiples of $1,000,000) according to the amounts
offered by such Banks.
(c) If Borrower accepts one or more of the offers made by any Bank or
Banks pursuant to subsection (b) above, Administrative Agent shall, by 8:15 a.m.
California time on such Borrowing Date, notify each Bank as to the identity of
each Bank which is to make a Bid Rate Loan, the amount of the Loan to be made by
each Bank, the Interest Period, and the Bid Rate applicable to each such Loan.
Administrative Agent shall also notify each Bank by 8:15 a.m. California time on
such Borrowing Date if Administrative Agent has either received no offers in
response to Borrower's Loan Request for a Bid Rate Loan or if Borrower has
elected not to accept any of the offers received.
(d) Each Bank whose offer for a Bid Rate Loan has been accepted pursuant
to Section 2.4(b) shall determine for itself whether the conditions precedent in
Section 5.2 have been or will be satisfied on the Borrowing Date. On or before
11:00 a.m. California time on the Borrowing Date, each such Bank's Lending
Office will make available to Administrative Agent the principal amount of the
Bid Rate Loan in immediately available funds and Administrative Agent shall
promptly credit Borrower's account at Administrative Agent in immediately
available funds.
2.5 Interest and Principal on Base Rate Loans. The outstanding Principal
-----------------------------------------
Amount of each Base Rate Loan shall bear interest until payment is due in full
(computed daily on the basis of a 365 or 366, as the case may be, day year and
actual days elapsed) at the rate per annum equal to the Base Rate. Borrower
shall pay interest on each Base Rate Loan on each Interest Payment Date for the
interest accruing since the previous Interest Payment Date on such Base Rate
Loan. Borrower shall repay in full the Principal Amount of each Base Rate Loan
on the Termination Date or as provided in Section 2.10(c).
2.6 Interest and Principal on Eurodollar Loans. (a) The outstanding
------------------------------------------
Principal Amount of each Eurodollar Loan shall bear interest until payment is
due in full (computed daily on the basis of a three hundred sixty (360) day year
and actual days elapsed) at a rate per annum equal to the Eurodollar Rate plus
----
the Applicable Amount; plus, at all times until such time as the principal
----
amount of the Loans and the principal amount of the "Loans," as defined in the
Short-Term Credit Agreement, have been reduced to zero, and thereafter with
respect to each day on which the aggregate amount of outstanding Loans plus the
aggregate amount of outstanding "Loans", as defined in the Short-Term Credit
Agreement, exceeds 33% of the Aggregate Long-
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<PAGE>
Term and Short-Term Commitments, the Utilization Fee (computed daily on the
basis of a three hundred sixty (360) day year and actual days elapsed). Borrower
shall pay interest on each Eurodollar Loan on each Interest Payment Date for
such Eurodollar Loan. Borrower shall repay in full the Principal Amount of each
Eurodollar Loan on the last day of the Interest Period for such Eurodollar Loan
or as provided in Section 2.10(c).
(b) If any Reference Bank's Commitment shall terminate (otherwise than on
termination of all the Commitments), or for any reason whatsoever the Reference
Bank shall cease to be a Bank hereunder, that Reference Bank shall thereupon
cease to be a Reference Bank, and the Eurodollar Rate shall be determined on the
basis of the rates as notified by the remaining Reference Banks. Each Reference
Bank shall use its best efforts to furnish quotations of rates to the
Administrative Agent as contemplated hereby. If any of the Reference Banks
shall be unable or otherwise fails to supply such rates to the Administrative
Agent upon its request, the rate of interest shall be determined on the basis of
the quotations of the remaining Reference Banks or Reference Bank.
2.7 Interest and Principal on Bid Rate Loans. The outstanding principal
----------------------------------------
amount of each Bid Rate Loan shall bear interest until payment is due in full
(computed daily on the basis of a 360-day year and actual days elapsed) at a
rate per annum equal to the Bid Rate. Borrower shall pay interest on each Bid
Rate Loan on each Interest Payment Date for such Bid Rate Loan. Borrower shall
repay in full the Principal Amount of each Bid Rate Loan on the last day of the
Interest Period of such Bid Rate Loan.
2.8 Loan Accounts. Each Bank shall open and maintain on its books one or
-------------
more loan accounts in Borrower's name. Each loan account shall show (without
duplication) as debits thereto each Bank's portion of each Base Rate Loan and/or
Eurodollar Loan and as credits thereto all Base Rate Loan and/or Eurodollar Loan
payments received by such Bank for the account of such Bank and applied to
principal so that the balance of the loan account(s) at all times reflect the
principal amount due each Bank from Borrower as Base Rate Loans and Eurodollar
Loans. All entries in said books shall be presumptive evidence of the making of
each Base Rate Loan and Eurodollar Loan, the obligation of Borrower to repay
each Base Rate Loan and Eurodollar Loan, and all payments received and disbursed
by such Bank. Borrower agrees that if, in the opinion of any Bank, a promissory
note or other evidence of debt is required or appropriate to reflect or enforce
any Loans outstanding to or to be made by such Bank, then Borrower shall
promptly execute and deliver to such Bank one or more promissory notes payable
to such Bank to evidence the Loans outstanding to such Bank under this Agreement
from time to time, together with such documents as such Bank may reasonably
request to evidence the due authorization, execution, delivery and
enforceability of such notes. If any notes are issued hereunder, Administrative
Agent and Borrower may treat the payee of that note as the owner of such note
for all purposes.
2.9 Master Bid Rate Notes. Borrower shall execute a Master Bid Rate Note
---------------------
in the form of Exhibit B hereto in favor of each Bank. The Master Bid Rate Note
of each Bank shall evidence the outstanding principal amount of Bid Rate Loans
made by such Bank, and shall be dated the first day of the Availability Period.
Each Bank is authorized to indicate upon the grid attached to its Master Bid
Rate Note the principal amount, interest rate and Interest Period of
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<PAGE>
each Bid Rate Loan and all payments of principal and interest thereon. Such
notations shall be presumptively correct as to the aggregate unpaid principal
amount of the Bid Rate Loan made by such Bank, and interest due thereon, but the
failure by such Bank to make such notations shall not affect the obligations of
Borrower hereunder or under the Master Bid Rate Notes.
2.10 Conversion of Loans Between Eurodollar Loans and Base Rate Loans and
--------------------------------------------------------------------
Conversion of Interest Periods of Eurodollar Loans. (a) On any Eurodollar
- --------------------------------------------------
Banking Day Borrower may convert on a pro rata basis among the Banks any
outstanding Base Rate Loans or Eurodollar Loans (but not Bid Rate Loans) into
any other type of Loan available to Borrower hereunder (but not to a Bid Rate
Loan), or Borrower may change the Interest Period of any Eurodollar Loan to
another Interest Period available under this Agreement, subject to the following
limitations:
(i) No conversion of any Eurodollar Loan into any other Loan and no
conversion of the Interest Period of any Eurodollar Loan may be made except
on the last day of an Interest Period with respect thereto; and
(ii) Any conversion shall be preceded by an irrevocable written or
telephonic notice from Borrower that it elects such conversion, which
notice shall be received by Administrative Agent at least three (3)
Eurodollar Banking Days prior to the date requested for such conversion
from or into a Eurodollar Loan or conversion of the Interest Period of a
Eurodollar Loan.
(b) Banks shall not be obligated to make or continue any Eurodollar Loan
when any Event of Default has occurred and is continuing, but any outstanding
Eurodollar Loan shall be automatically converted to a Base Rate Loan on the last
day of the Interest Period for which a Eurodollar Rate was determined by
Administrative Agent following occurrence of such Event of Default, and, unless
Section 2.11(f) is applicable, Borrower shall be obligated to pay interest at
the Base Rate from the date any Loan is so converted until such Loan is repaid
in full regardless of the date when Administrative Agent obtains knowledge of
such Event of Default.
(c) Each conversion of a Loan into a Base Rate Loan or a Eurodollar Loan,
as the case may be, shall be effected by each Bank, on behalf of Borrower, as
applicable, by making a simultaneous payment of the relevant Eurodollar Loan, or
Base Rate Loan, as the case may be, from the proceeds of the new Loans,
procedures with respect thereto to be governed by the provisions of Section 2.3,
except that disbursement shall be made by means of such payment rather than
directly to Borrower to the extent applicable with respect to each Bank.
(d) If upon the expiration of any Interest Period applicable to Eurodollar
Loans, Borrower has failed to select a new Interest Period to be applicable
thereto, or if any Event of Default or Unmatured Event of Default shall then
exist, Borrower shall be deemed to have elected to convert such Eurodollar Loans
into Base Rate Loans effective as of the expiration date of such current
Interest Period.
2.11 Disbursements and Payments. (a) Each Base Rate Loan and Eurodollar
--------------------------
Loan shall be made on a pro rata basis by Banks, and each Bank's portion of each
Loan shall be
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<PAGE>
determined by application of its Normal Percentage. Each Bid Rate Loan shall be
made entirely by the Bank whose offer was accepted by Borrower pursuant to
Section 2.4. Each Bank's interest in each Loan and each payment to such Bank
under this Agreement shall be for the account of such Bank's Lending Office.
(b) Each Loan and each payment of principal, interest and other sums under
this Agreement shall be made in immediately available funds (or such other funds
as Administrative Agent may require) at Bank of America's Agency Administrative
Services-West, 1850 Gateway Blvd., Concord, California 94520, ABA #111000012,
Acct No. 3750836479, Ref: Hughes Electronics Corporation or such other office
designated by Administrative Agent from time to time.
(c) Each Bank agrees it will make the funds which it is to advance
hereunder available to Bank of America's Agency Administrative Services-West,
1850 Gateway Blvd., Concord, California 94520, ABA #111000012, Acct No.
3750836479, Ref: Hughes Electronics Corporation or such other office designated
by Administrative Agent from time to time not later than 11:00 a.m. California
time on the Borrowing Date, and Administrative Agent will thereupon promptly
advance to Borrower the amount so received from Banks.
(d) Payment of all sums under this Agreement shall be made by Borrower to
Administrative Agent, and the latter shall promptly distribute to each Bank its
share of such payments. Each payment by Borrower shall be made without setoff
or counterclaim and not later than 11:00 a.m. California time on the day such
payment is due. All sums received after such time shall be deemed received on
the next Business Day.
(e) If Administrative Agent makes available to Borrower an amount due from
any Bank which such Bank fails to make available to Administrative Agent, or if
Administrative Agent makes available to any Bank an amount due from Borrower
which Borrower fails to make available to Administrative Agent, Borrower or such
Bank, as the case may be, shall, on demand, refund such amount to Administrative
Agent, together with interest thereon for the period during which such amount
was available to Borrower or such Bank, as the case may be, at the Federal Funds
Rate.
(f) Any sum of principal or interest payable by Borrower hereunder if not
paid when due shall bear interest (payable on demand) from its due date until
payment in full (computed daily on the basis of a 365 or 366, as the case may
be, day year and actual days elapsed) at a rate per annum equal to the Base Rate
plus one percentage point.
2.12 Facility Fee. Borrower shall pay Administrative Agent for the account
------------
of the Banks, a facility fee at the rate per annum equal to the Applicable
Amount therefor on the Total Commitment (without regard to the amount of Loans
outstanding at any time hereunder and without giving effect to any reduction
pursuant to Section 2.1(c)) during the Availability Period; provided, however,
following any reduction in the Total Commitment pursuant to Section 3.5 or 3.6
(but not a reduction pursuant to Section 2.1(c)) the computation of the facility
fee shall be based upon such reduced Total Commitment as of the effective date
of such reduction. The facility fee shall be computed on a calendar quarter
basis. The facility fee shall be calculated on
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<PAGE>
the basis of a 360-day year and actual days elapsed, which results in a higher
fee than if a 365/366-day year were used, and shall be payable on the 10th day
of each January, April, July and October (for the facility fee accrued during
the previous calendar quarter) and on the Termination Date.
SECTION 3
PAYMENT OF COSTS AND REDUCTION
OF THE COMMITMENT
3.1 Indemnification Upon Failure to Pay Eurodollar Loan or Bid Rate Loan.
--------------------------------------------------------------------
If Borrower makes any payment of principal with respect to any Eurodollar Loan
or Bid Rate Loan on a day other than the last day of the then current Interest
Period applicable to such Loan (including without limitation any payment upon
reduction of the Commitments) or fails to borrow, continue, convert, pay or
prepay its Eurodollar Loan or Bid Rate Loan on a date designated to
Administrative Agent in a notice pursuant to this Agreement (if such failure
does not result from the application of Sections 4.1 or 4.2), Borrower shall
reimburse each Bank within 15 days after receipt of written demand for any loss
incurred by it as a result of the timing of such payment or non-borrowing not
reflected in the Eurodollar Rate or the Bid Rate, including without limitation
any loss incurred in liquidating or employing deposits from third parties and
loss of profit for the period after such payment or non-borrowing. A
certificate of such Bank setting forth the amounts reasonably necessary so to
reimburse it in respect of any loss shall be conclusive and binding absent
manifest error.
3.2 Increased Costs. (a) If after the date hereof, any applicable law,
---------------
rule or regulation or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof or compliance
by any Bank (or its Lending Office) with any request or directive of any such
authority, central bank or comparable agency, whether or not having the force of
law, shall impose, modify or deem applicable:
(i) any reserve (including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System), special deposit,
compulsory loan or similar requirements against assets, commitments or
deposits or other liabilities with, of or for the account of, or credit
extended by, or any acquisition of funds by or for the account of any Bank
or its Lending Office or the London interbank market or any other condition
affecting its obligations to make the Loans to Borrower hereunder;
(ii) any capital or similar requirements against (or against any class
of or change in or the amount of) assets or liabilities of, or commitments
or extensions of credit by, such Bank;
each Bank which is so affected shall give prompt notice to Borrower describing
such reserves or requirements at least four Business Days prior to the date such
Bank will begin to implement such additional charges with respect to Borrower.
If the result of any of the foregoing is to increase the cost or reduce the
profit to such Bank (or its Lending Office) under this Agreement by an amount
deemed by such Bank to be material, then, within 15 days after written demand by
-17-
<PAGE>
such Bank, Borrower will pay to such Bank such additional amount or amounts as
will compensate such Bank for such increased cost incurred or reduction in
profit suffered by such Bank. Such Bank will designate a different Lending
Office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not be otherwise disadvantageous to such Bank in the
sole discretion of such Bank. A certificate of such Bank setting forth the
basis for determining such additional amount or amounts necessary to compensate
the Bank shall be conclusive in the absence of manifest error.
(b) Without limiting the effect of the foregoing (but without
duplication), upon any Bank's prior written request, Borrower shall pay to such
Bank on the last day of each Interest Period, so long as such Bank may be
required to maintain reserves against "eurocurrency liabilities" under
Regulation D (as at any time amended) of the Board of Governors of the Federal
Reserve System, as additional interest on the unpaid principal amount of each
Eurodollar Loan by such Bank outstanding during such Interest Period, an
additional amount (determined by such Bank and notified to Borrower in writing)
up to but not exceeding such amount as would, together with payments of interest
on such Eurodollar Loan for such Interest Period, result in the receipt by such
Bank of total interest on such Eurodollar Loan, for such Interest Period at a
rate determined by such Bank to be equal to the sum of:
(i) the Eurodollar Rate divided by a sum equal to (a) 1 minus (b) the
rate (expressed as a decimal) of such reserves required by Regulation D,
plus
(ii) the Applicable Amount for Eurodollar Loans.
In determining the additional amount payable for an Interest Period pursuant to
this Section, such Bank shall take into account any transitional adjustment or
phase-in provisions of such reserve requirements applicable during such Interest
Period, which would reduce the reserve requirement otherwise applicable to
eurocurrency liabilities during such Interest Period; provided, however, each
Bank in its sole discretion may determine the allocation of reserve requirements
to its Eurodollar Loans. Each such determination made by such Bank, and each
such notification by such Bank to Borrower under this Section, shall be
conclusive as to the matters set forth therein in the absence of manifest error.
3.3 Taxes. All payments or reimbursements under this Agreement and any
-----
instrument or agreement required hereunder shall be made without setoff or
counterclaim and free and clear of and without deduction for any and all present
and future Taxes. Borrower agrees to cause all such Taxes to be paid on behalf
of any Bank or Administrative Agent directly to the appropriate governmental
authority. If Borrower is legally prohibited from complying with this
subsection, payments due to such Bank or Administrative Agent under this
Agreement and any instrument or agreement required hereunder shall be increased
so that, after provisions for Taxes and all Taxes on such increase, the amounts
received by such Bank or Administrative Agent will be equal to the amounts
required under this Agreement and any instrument or agreement required hereunder
as if no Taxes were due on such payments. Borrower shall indemnify each Bank
and Administrative Agent for the full amount of Taxes payable by such Bank or
Administrative Agent and any liabilities (including penalties, interest and
expenses) arising from such Taxes within 30 days from any written demand by such
Bank. Borrower shall provide evidence that all applicable Taxes have been paid
to the appropriate taxing authorities by
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<PAGE>
delivering to Administrative Agent official tax receipts or notarized copies or
other evidence thereof satisfactory to Administrative Agent, within 90 days
after the due date for such Tax payment. Such Bank will designate a different
Lending Office if such designation will avoid the need for, or reduce the amount
of, such payment or reimbursement and will not be otherwise disadvantageous to
such Bank in the sole discretion of such Bank.
3.4 Prepayment. Upon the irrevocable written notice of Borrower received
----------
by Administrative Agent by 11:00 a.m. California time at least one Business Day
prior to the prepayment of a Base Rate Loan and at least five Eurodollar Banking
Days prior to the prepayment of a Eurodollar Loan, Borrower may prepay any
Eurodollar Loan or Base Rate Loan; but such prepayment shall be in an amount of
at least $5,000,000 or multiple integrals of $1,000,000 in excess thereof. The
notice of prepayment shall specify the date of the prepayment, the amount of the
prepayment and the Loan to be prepaid. Each such prepayment shall be made on
the date specified and, in the case of a prepayment of any Eurodollar Loan shall
be accompanied by the payment of accrued interest on the amount prepaid.
Subject to compliance with the foregoing procedures, Base Rate Loans may be
prepaid at any time without cost or penalty of any kind. If Borrower elects to
prepay a Eurodollar Loan, Borrower shall, on demand by each Bank, pay such Bank
the amount (if any) by which (a) the additional interest which would have been
payable on the amount prepaid on such Bank's portion of such Loan had it not
been paid until the last day of the Interest Period of such Loan exceeds (b) the
interest which would have been recoverable by such Bank by placing such prepaid
amount on deposit in the offshore Dollar interbank markets for a period starting
on the date on which it was prepaid and ending on the last day of the Interest
Period for such Loan. Bid Rate Loans may not be prepaid.
3.5 Pro Rata Reduction of Commitments by Borrower. Borrower may, upon 30
---------------------------------------------
days' prior written notice (which notice shall be irrevocable) to Banks through
Administrative Agent, reduce the Total Commitment on a pro rata basis among the
Banks. Such a reduction shall be in an integral multiple of $5,000,000.
Borrower shall, on the effective date of each such reduction, repay to each Bank
through Administrative Agent that portion of each Loan which exceeds the amount
of each Bank's Commitment as reduced, together with accrued interest on the
amount paid and accrued facility fees subject to such reduction. After the
effective date of each reduction, the Banks' obligations under this Agreement
shall be based on the reduced Commitments.
3.6 Reduction of One Bank's Commitment by Borrower. If the amount of any
----------------------------------------------
payment to be made to or for the account of any Bank is increased under Section
3.3 or any Bank makes a claim under Section 3.2, then:
(a) Borrower may, within 60 days after the notice thereof and by not less
than five Business Days' written notice to Administrative Agent, cancel such
Bank's Commitment, whereupon such Bank shall cease to be obligated to
participate in further Loans hereunder and its Commitment shall be reduced to
the amount of its outstanding Loans until such Loans are repaid by Borrower
either on the Principal Repayment Date for such Loans or pursuant to Section
3.6(b), at which time such Bank's Commitment shall be reduced to zero;
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<PAGE>
(b) if Borrower cancels such Bank's Commitment pursuant to clause (a)
above and if Borrower so elects by written notice to Administrative Agent given
at the same time as the notice referred to in clause (a) above, Borrower shall
prepay such Bank's portion of each outstanding Loan together with any accrued
interest thereon plus all costs and expenses (including break and funding costs
in connection with the relending, reborrowing, funding or other employing of
funds) incurred by such Bank as a result of such cancellation or prepayment on a
date other than the Principal Repayment Date for such Loan; and
(c) Borrower shall repay all Bid Rate Loans from such Bank on the
Principal Repayment Date for such Loans and shall not request any additional Bid
Rate Loans from such Bank.
3.7 Notice of Reductions. Each notice of reduction or prepayment given
--------------------
pursuant to Section 3.4, 3.5 or 3.6 shall be irrevocable, shall specify the date
upon which such reduction or prepayment is to be made and, in the case of a
notice of prepayment, shall obligate Borrower to make such prepayment on such
date. Borrower may not give a notice of reduction of a part of the Commitment
pursuant to Section 3.6 at any time prior to the date so specified in any
previous such notice.
3.8 Designation of Replacement Bank. If the Commitment of any Bank is
-------------------------------
cancelled by Borrower pursuant to Section 3.6 or if any Bank terminates its
Commitment with respect to Eurodollar Loans pursuant to Section 4.2, Borrower,
with the consent of Administrative Agent, may designate an Eligible Assignee
(or, if it deems appropriate, more than one Eligible Assignee) acceptable to
Administrative Agent to act as a Bank hereunder and upon execution of a written
agreement in form satisfactory to Administrative Agent by such Eligible Assignee
in which it agrees to abide by all of the terms, conditions and obligations
applicable to a Bank herein and to have a Commitment as specified in such
agreement, such Eligible Assignee shall be deemed a Bank hereunder to the same
extent as if it were a signatory hereto and, thereafter, such Eligible Assignee
shall for all purposes be considered a "Bank" hereunder.
3.9 Effect of Reduction of Commitment. If, at any time:
---------------------------------
(a) the Commitment of any Bank is reduced to zero in accordance with the
terms of this Agreement;
(b) all indebtedness and other amounts owed to such Bank by Borrower
hereunder or in connection herewith have been satisfied in full; and
(c) such Bank is under no further actual or contingent obligation
hereunder,
then such Bank shall cease to be a party hereto and a Bank for the purposes
hereof; provided, however, that the obligations of Borrower under Sections 3.1,
-------- -------
3.2, 3.3, 11.14, 11.15 and 11.16 shall survive the cancellation of the
Commitment and the termination of this Agreement.
3.10 Accrued Fees. On the date of the cancellation of any portion of the
------------
Total Commitment in accordance with Section 3.5 or of any Bank's Commitment
under Section 3.6, all accrued facility fees for such portion of the Total
Commitment or of such Bank's Commitment shall be paid in full by Borrower.
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<PAGE>
3.11 Survival. The agreements and obligations of Borrower in this Section
--------
3 shall survive the termination of this Agreement.
SECTION 4
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
4.1 Inability to Determine Eurodollar Rate. If any Reference Bank
--------------------------------------
determines (which determination shall be made in good faith and shall be
conclusive and binding upon Borrower) that (a) by reason of circumstances then
affecting the Eurodollar interbank market, adequate and reasonable means do not
or will not exist for ascertaining the interest rate applicable to any
Eurodollar Loans, or (b) Dollar deposits in the relevant amounts and for the
relevant Interest Period are not available to the Banks in the Eurodollar
interbank market, then it shall notify the Administrative Agent who shall
forthwith give written notice of such determination to Borrower and each Bank at
least one Business Day prior to the first day of any Interest Period so
affected; whereupon, until Administrative Agent shall notify Borrower that the
circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Banks to make Eurodollar Loans shall be suspended and (ii)
Borrower shall repay in full, without premium or penalty, the then outstanding
principal amount of the Eurodollar Loans, together with accrued interest
thereon, on the last day of the then current Interest Period pursuant to the
next sentence. Unless Borrower notifies Administrative Agent to the contrary
within one Business Day after receiving a notice from Administrative Agent
pursuant to this Section, Borrower shall, concurrently with prepaying the
Eurodollar Loans pursuant to this Section, be deemed automatically without any
further notice to Administrative Agent or the Banks to have requested and
received Base Rate Loans in an equal principal amount from the Banks, the
proceeds of which are deemed to have been used to repay the other Loans.
4.2 Illegality. If, after the Effective Date, the introduction of or any
----------
change in any applicable law, rule or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof or compliance by any Bank with any
request or directive (whether or not having the force of law) of any such
authority shall make it unlawful or impossible for such Bank (or its Lending
Office) to make, maintain or fund its Eurodollar Loans, such Bank shall
forthwith give written notice thereof to Administrative Agent and to Borrower.
Before giving any notice pursuant to this Section, such Bank shall designate a
different Lending Office if such designation will avoid the need for giving such
notice and will not be otherwise disadvantageous to such Bank in the sole
judgment of such Bank. Upon receipt of such notice (a) if such Bank has
received a request with respect to Eurodollar Loans and has not yet made such
Loan, a Base Rate Loan shall be deemed to have been designated without any
further notice; (b) all Loans which would otherwise be made by such Bank as
Eurodollar Loans shall be made instead as Base Rate Loans; and (c) Borrower
shall prepay in full, without premium or penalty, the then outstanding principal
amount of such Bank's Eurodollar Loans, together with accrued interest, on
either (i) the last day of the then-current Interest Period if such Bank may
lawfully continue to fund and maintain such Eurodollar Loans, to such day or
(ii) immediately if such Bank may not lawfully continue to fund and maintain
such Eurodollar Loans to such day together with an amount, if any, calculated as
set forth in the last sentence of Section 3.4. Concurrently with prepaying each
such Eurodollar Loan Borrower shall borrow a Base Rate Loan from such Bank in an
amount equal to the principal amount of
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<PAGE>
such Bank's Eurodollar Loans, the proceeds of which are deemed to have been used
to repay such Bank's Eurodollar Loans. If circumstances subsequently change so
that such Bank is not further affected, and no Eligible Assignee has been
appointed pursuant to Section 3.8, such Bank shall so notify Borrower and
Administrative Agent and such Bank's obligation to make and continue Eurodollar
Loans shall be reinstated upon written request of Borrower.
SECTION 5
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Signing Date. The occurrence of the Signing
------------------------------------
Date is subject to the condition that on the Signing Date this Agreement, duly
executed and delivered by the parties hereto, shall have been delivered to
Administrative Agent with counterparts for each Bank and in form and substance
satisfactory to Banks.
5.2 Conditions Precedent to Effective Date. The obligation of Banks to
--------------------------------------
make the initial Loans hereunder is subject to the condition that on the
Effective Date there shall have been delivered to the Administrative Agent with
counterparts for each Bank:
(a) The Notes, duly executed and delivered by the Borrower.
(b) The favorable written opinions, dated the Effective Date, of the
General Counsel or Assistant General Counsel of Borrower in the form set out in
Exhibit F.
(c) Certificate of the Secretary or an Assistant Secretary of Borrower
dated the Effective Date as to (i) the Certificate of Incorporation and the By-
laws of Borrower, (ii) the resolution of the Board of Directors of Borrower or
its Executive Committee in connection with this Agreement, and (iii) the
incumbency and signatures of the person authorized to execute and deliver this
Agreement and any other instrument, document or other agreement required
hereunder on the Effective Date.
(d) A certificate, signed by a vice president of Borrower dated the
Effective Date certifying: (i) that since December 31, 1996, there has been no
change in the financial condition, business, operations or properties of
Borrower and its Subsidiaries taken as a whole which constitutes a Material
Change; (ii) the unaudited pro forma condensed combined financial statements for
the nine months ended September 30, 1997 contained in the General Motors
Corporation. Registration Statement on form S-4 dated November 19, 1997, as
amended (the "GMC S-4") give effect to the Reorganization as set forth in the
GMC S-4; (iii) that no event has occurred and is continuing or would result from
the making of a Loan which constitutes or would constitute an Event of Default
or an Unmatured Event of Default; and (iv) the Debt Ratings as of the Effective
Date.
(e) Certificate of Good Standing in relation to Borrower issued by the
Secretary of the State of Delaware, dated not more than one month prior to the
Effective Date.
(f) Evidence satisfactory to Administrative Agent that all obligations of
Borrower outstanding under the Existing Agreement has been repaid in full and
all commitments thereunder have been terminated.
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<PAGE>
(g) Evidence of Borrower's Debt Ratings from both S&P and Moody's.
(h) Evidence satisfactory to Administrative Agent that the Reorganization
has been completed in accordance with the GMC S-4.
(i) The Master Bid Rate Notes, as referred to in Section 2.9, duly
executed by Borrower, shall have been delivered by Borrower to Administrative
Agent.
(j) The Administrative Agent shall have received all fees payable to it on
the Effective Date under the Letter Agreement.
5.3 Conditions Precedent to Loans. The obligation of Banks to disburse
-----------------------------
each Loan (including the first Loan) is subject to the following conditions and
by communicating a Loan Request Borrower is deemed to certify that: (a) to the
best knowledge of the Authorized Designee making such Loan Request, the
representations and warranties (excluding Section 6.6) contained in this
Agreement and any other documents delivered pursuant hereto are true and correct
in all material respects on the date of such Loan Request; (b) the financial
statements delivered to Administrative Agent by Borrower pursuant to Section 7.5
on the date most nearly preceding the Loan Request present fairly the financial
position and results of operation and changes in financial position of Borrower
and its consolidated Subsidiaries as at the end of, and for the fiscal period to
which such statements relate, (subject, in the case of unaudited financial
statements to year end adjustments); and (c) to the best knowledge of the
Authorized Designee making such Loan Request, no Event of Default or Unmatured
Event of Default has occurred and is continuing except such Events of Default or
Unmatured Events of Default as have been expressly waived by or on behalf of the
Banks.
SECTION 6
REPRESENTATIONS AND WARRANTIES
6. Borrower represents and warrants that as of the Effective Date:
6.1 Authority of Borrower. Borrower (a) is a corporation duly organized
---------------------
and existing under the laws of the State of Delaware, with its principal place
of business in Los Angeles, California, (b) has the corporate power to own its
property and carry on its business as now being conducted, (c) is duly qualified
and authorized to do business, and is in good standing in every state, country
or other jurisdiction where the failure to be so qualified, authorized and in
good standing would have a material adverse effect on Borrower, (d) has full
power and authority to borrow the sums provided for in this Agreement, to
execute, deliver and perform this Agreement and any instrument or agreement
required hereunder, and to perform and observe the terms and provisions hereof
and thereof, (e) has taken all corporate action on the part of Borrower, its
directors or stockholders, necessary for the authorization, execution, delivery
and performance of this Agreement, and any instrument or agreement required
hereunder on the date hereof, (f) requires no consent or approval of any trustee
or holder of any indebtedness or obligation of Borrower to enter into, deliver
or perform its obligations under this Agreement and the Notes, and (g) requires
no consent, permission, authorization, order or license of any governmental
authority in connection with the execution and delivery and performance of this
Agreement and
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<PAGE>
any instrument or agreement required hereunder, or any transaction contemplated
hereby, except as may have been obtained and certified copies of which have been
delivered to Banks through Administrative Agent.
6.2 Binding Obligations. This Agreement is the legal, valid and binding
-------------------
obligation of Borrower, enforceable against it in accordance with its terms, and
any instrument or agreement required hereunder, when executed and delivered,
will be similarly valid, binding and enforceable.
6.3 Incorporation of Restricted Subsidiaries. Each Restricted Subsidiary
----------------------------------------
of Borrower is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and, to the
best of Borrower's knowledge, is duly licensed or qualified as a foreign
corporation in all jurisdictions where the failure to be so qualified,
authorized and in good standing would have a material adverse effect on Borrower
and its Restricted Subsidiaries taken as a whole.
6.4 No Contravention. There is no charter, by-law, or capital stock
----------------
provision of Borrower and no provision of any indenture or material agreement,
written or oral, to which Borrower is a party or under which Borrower is
obligated, nor is there any statute, rule or regulation, or any judgment, decree
or order of any court or agency binding on Borrower which would be contravened
by the execution, delivery and performance of this Agreement, or any instrument
or agreement required hereunder, or by the performance of any provision,
condition, covenant or other term hereof or thereof.
6.5 Notices. Except as previously disclosed in writing to Administrative
-------
Agent, no event has occurred which, to the best of its knowledge, would require
Borrower to notify Administrative Agent and the Banks pursuant to Section 7.3
hereof.
6.6 Financial Statements. The financial statements dated December 31,
--------------------
1996 furnished by Hughes Electronics Corporation (as in effect prior to the
Reorganization) to the Administrative Agent and Banks, present fairly the
financial position and results of operation and changes in financial position of
Hughes Electronics Corporation and its consolidated Subsidiaries as at the end
of, and for the fiscal periods to which such statements relate, and such
financial statements were prepared in accordance with GAAP. The unaudited pro
forma condensed combined financial statements for the nine months ended
September 30, 1997 contained in the GMC S-4 give effect to the Reorganization as
set forth therein. Since the date of the unaudited pro forma condensed combined
statements, there has been no Material Change. Neither Borrower nor any
Subsidiary had any contingent obligations, liabilities for taxes or other
outstanding financial obligations at September 30, 1997 on a pro forma basis
which are material in the aggregate, except as disclosed in such unaudited pro
forma condensed combined statements.
6.7 ERISA. Based upon ERISA and the regulations and published
-----
interpretations thereunder, the Plans of Borrower and its Subsidiaries and, to
the knowledge of Borrower, the Plans of any other ERISA Affiliates, are in
material and substantial compliance in all material respects with the applicable
provisions of ERISA and Borrower and its Subsidiaries are in
-24-
<PAGE>
compliance with such Plans in all material respects. No Reportable Event which
has or could be reasonably be expected to result in termination thereof by the
Pension Benefit Guaranty Corporation or for the appointment by the appropriate
United States District Court of a trustee to administer such Plan has occurred
and is continuing with respect to any Plan.
6.8 Regulation U. Borrower is not engaged principally, or as one of its
------------
important activities, in the business of extending credit for the purposes of
purchasing or carrying any "margin stock" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System; and neither Borrower nor
any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940.
6.9 Taxes. Borrower has filed all federal and state tax returns which to
-----
the knowledge of the financial officers of Borrower are required to have been
filed, and has paid prior to delinquency all taxes that have become due pursuant
to said returns or pursuant to any assessment, except as are being contested in
good faith by appropriate proceedings and as to which adequate reserves have
been provided on the books of Borrower in accordance with GAAP.
6.10 Insurance. Borrower and its Restricted Subsidiaries maintain
---------
insurance with responsible insurance companies, in such amounts and against such
risks as is customarily carried by owners of similar businesses and property,
including protection against loss of use and occupancy, to the extent such
insurance is reasonably available at commercially reasonable rates, and it will
furnish Administrative Agent, upon written request, with full information as to
the insurance carrier; provided, however, that Borrower and its Restricted
-------- -------
Subsidiaries may self insure to the extent they deem prudent.
6.11 Liens. The properties and assets of Borrower and its Restricted
-----
Subsidiaries, real, personal and mixed, are not subject to any Liens, except for
Liens permitted by this Agreement.
SECTION 7
AFFIRMATIVE COVENANTS OF BORROWER
7. Borrower covenants and agrees that so long as the credit hereby
granted shall remain available in whole or in part or until the full and final
payment of all indebtedness incurred hereunder, unless Majority Banks waive
compliance in writing:
7.1 Use of Proceeds of Loans. It will use the proceeds of the Loans made
------------------------
by Banks to Borrower hereunder for the repayment of Commercial Paper and for its
general working capital requirements, including acquisition and improvement of
plant, property and equipment and acquisitions.
7.2 Management of Business. It will manage its business and conduct its
----------------------
affairs such that the representations and warranties contained in Sections 6.1
through 6.3 and 6.7 through 6.9 remain true and correct at all times during the
Availability Period.
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<PAGE>
7.3 Notice of Certain Events. It will, and it will cause each of its
------------------------
Restricted Subsidiaries to, give prompt written notice to Administrative Agent
(who shall promptly notify the Banks) of:
(a) all Events of Default or Unmatured Events of Default under any of the
terms or provisions of this Agreement;
(b) any event of default under any other agreement, contract, indenture,
document or instrument entered, or which may be entered, into by it that could,
if settled unfavorably, result in a Material Change;
(c) all material changes in senior management otherwise publicly
announced;
(d) all litigation, arbitration or administrative proceedings involving
Borrower or any of its Subsidiaries which could in the reasonable opinion of
Borrower be expected to result in a Material Change;
(e) any other matter which has resulted in, or might in the reasonable
opinion of Borrower result in, a Material Change;
(f) concurrently with the public announcement thereof, any proposed Merger
or Disposition affecting any Restricted Subsidiary; and
(g) any change in any Debt Rating by S&P or Moody's.
7.4 Records. It will, and it will cause each of its Restricted
-------
Subsidiaries to, keep and maintain full and accurate accounts and records of its
operations according to GAAP and will permit Administrative Agent, and its
designated officers, employees, agents, and representatives, to have access
thereto and to make examination thereof at all reasonable times, to make audits,
and to inspect and otherwise check its properties, real, personal and mixed;
provided, however, that such examination and access shall be in compliance with
- -------- -------
security and confidentiality requirements of all governmental authorities and,
subject to Section 11.16, Borrower's corporate policies.
7.5 Information Furnished. It will furnish to Banks and Administrative
---------------------
Agent:
(a) Within 60 days after the close of each quarter, except for the last
quarter of each fiscal year, its consolidated balance sheet as of the close of
such quarter and its consolidated profit and loss statement and cash flow
statement for that quarter and for that portion of the fiscal year ending with
such quarter, all prepared in accordance with GAAP, and all certified by its
Treasurer or an Assistant Treasurer as presenting fairly the financial position
and results of operation and changes in financial position of Borrower and its
consolidated Subsidiaries as at the end of, and for the fiscal period to which
such statements relate, subject to normal year-end adjustments.
(b) Within 120 days after the close of each fiscal year, a complete copy
of its annual financial statements, which statements shall include at least its
consolidated balance sheet as of
-26-
<PAGE>
the close of such fiscal year and its consolidated profit and loss statement and
cash flow statement for such fiscal year, prepared by Deloitte & Touche (or such
other independent certified public accountants of recognized international
standing selected by Borrower) in accordance with GAAP applied on a basis
consistent with that of the previous year, and which statements shall include
the opinion of such accountants, such opinion not to be qualified or limited
because of any restricted or limited nature of examination made by such
accountants or because of a "going concern" qualification.
(c) Within 60 days after the close of each quarter except for the last
quarter of each fiscal year, (and within 120 days after the close of each fiscal
year) its certificate executed by Borrower's Treasurer or an Assistant Treasurer
that (i) the representations and warranties set forth in Section 6 (with the
exception of Section 6.6) are true and correct in all material respects; and
(ii) no Event of Default or Unmatured Event of Default has occurred and is
continuing except such Events of Default or Unmatured Events of Default as have
been expressly waived by or on behalf of the Banks.
(d) concurrently with the delivery of the financial statements referred to
in clauses (a) and (b), a duly completed Compliance Certificate signed by
--- ---
Borrower's Treasurer or an Assistant Treasurer;
(e) Such other information concerning its affairs as Administrative Agent
or the Majority Banks may reasonably request.
7.6 Execution of Other Documents. It will promptly, upon demand by
----------------------------
Administrative Agent, execute all such additional agreements, documents and
instruments in connection with this Agreement as Administrative Agent or
Majority Banks may deem necessary.
7.7 ERISA. It will, and it will cause each of its Subsidiaries to:
-----
(a) At all times, make prompt payment of contributions required to meet
the minimum funding standard set forth in ERISA with respect to its Plans,
except to the extent that waivers are granted by the appropriate governmental
agencies;
(b) Notify Administrative Agent immediately of (i) any Reportable Event
which could reasonably be expected to result in aggregate liability to Borrower
and its Subsidiaries in excess of $75,000,000 and (ii) any other fact arising in
connection with any of its Plans or a Plan of any ERISA Affiliate which has
resulted, or could reasonably be expected to result, in termination thereof by
the Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer such Plan,
in each case together with a statement, if requested by Administrative Agent, as
to the reasons therefor and the action, if any, which Borrower or such ERISA
Affiliate proposes to take with respect thereto; and
(c) Furnish to Administrative Agent, upon its written request, such
information concerning any of its Plans as may be reasonably requested.
7.8 Administrative Agent's Fees. It will compensate Administrative Agent
---------------------------
as set forth in the Letter Agreement.
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<PAGE>
7.9 Compliance with Law. It will, and will cause each of its Subsidiaries
-------------------
to, comply with the requirements of all applicable laws, rules, regulations, and
orders of any governmental or regulatory authority, a breach of which would
result in a Material Change, except where contested in good faith by appropriate
proceedings diligently pursued.
SECTION 8
NEGATIVE COVENANTS OF BORROWER
8. Borrower covenants and agrees that so long as the credit hereby
granted shall remain available in whole or in part or until the full and final
payment of all indebtedness incurred hereunder, unless Majority Banks waive
compliance in writing:
8.1 Liens.
-----
(a) Borrower will not, nor will it permit any Restricted Subsidiary to,
issue, incur, guaranty or assume any indebtedness for money borrowed secured by
a Lien upon any property or assets of Borrower or any Restricted Subsidiary or
upon any shares of stock or indebtedness of any Restricted Subsidiary (whether
such property, assets, shares of stock or indebtedness are now owned or
hereafter acquired) without in any such case effectively providing concurrently
with the issuance, incurrence, guarantee or assumption of any such indebtedness
that the Commitments and Loans and any other obligations of Borrower to the
Banks (together with, if Borrower shall so determine, any other indebtedness of
Borrower or such Restricted Subsidiary ranking equally with the Commitments and
Loans and such other obligations and then existing or thereafter created) shall
be secured equally and ratably with or prior to such indebtedness by a Lien upon
such property, assets, shares of stock or indebtedness, unless the aggregate
amount of such indebtedness for money borrowed secured by such Liens, together
with all other indebtedness for money borrowed of Borrower and its Subsidiaries
which (if originally issued, incurred, guaranteed or assumed at such time) would
otherwise be subject to the foregoing restrictions (but not including
indebtedness for money borrowed permitted to be secured under sub-clauses (1)
through (7) of Section 8.1(b)), does not at the time exceed 5% of Consolidated
Adjusted Net Worth.
(b) The above restrictions shall not apply to indebtedness of Borrower or
any of its Restricted Subsidiaries secured by:
(1) Liens existing as of the date hereof and listed in Exhibit E;
(2) Liens on property, assets, shares of stock or indebtedness of any
corporation existing at the time such corporation becomes a Restricted
Subsidiary;
(3) Liens on property existing at the time of acquisition of such
property by Borrower or a Restricted Subsidiary, or Liens to secure the
payment of all or any part of the purchase price of property upon the
acquisition of such property by Borrower or a Restricted Subsidiary or to
secure any indebtedness incurred or guaranteed prior to, at the time of, or
within 180 days after, the later of the date of acquisition of such
property and the date such property is placed in service, for the purpose
of financing all or any part of the purchase price thereof, or Liens to
secure any indebtedness incurred or guaranteed for
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<PAGE>
the purpose of financing the cost to Borrower or a Restricted Subsidiary of
improvements to such acquired property; provided, however, that for
-------- -------
purposes of this clause 3, (i) a satellite will be treated as a newly-
acquired asset as of the date it is placed in service and (ii) any
satellite transponder acquired through the exercise of an early buy-out
option shall be treated as a newly-acquired asset as of the date such
option is exercised;
(4) Liens securing indebtedness of a Restricted Subsidiary owing to
Borrower or to another Restricted Subsidiary;
(5) Liens on property of a corporation existing at the time such
corporation is merged or consolidated with Borrower or a Restricted
Subsidiary (in accordance with Section 8.2) or at the time of a sale, lease
or other disposition of the properties of a corporation as an entirety or
substantially as an entirety to Borrower or a Restricted Subsidiary;
(6) Liens on property of Borrower or a Restricted Subsidiary in favor
of the United States of America or any state thereof, or any department,
agency or instrumentality or political subdivision of the United States of
America or any state thereof, or in favor of any other country, or any
political subdivision thereof, to secure partial, progress, advance or
other payments pursuant to any contract or statute or to secure any
indebtedness incurred for the purpose of financing all or any part of the
purchase price or the cost of construction of the property subject to such
Liens; or
(7) any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Liens referred to in
the foregoing sub-clauses (1) to (6), inclusively; provided, however, that
-------- -------
the principal amount of indebtedness secured thereby shall not exceed the
principal amount of indebtedness so secured at the time of the incurrence
or guarantee thereof and that such extension, renewal or replacement shall
be limited to all or a part of the property which secured the Lien so
extended, renewed or replaced (plus improvements on such property).
8.2 Mergers, Liquidations and Sales of Assets. It will not, nor will it
-----------------------------------------
permit any of its Restricted Subsidiaries to liquidate or dissolve or enter into
any consolidation, merger, partnership, joint venture, syndicate, pool or other
combination which results in a Material Change in the nature of Borrower's
business taken as a whole (collectively, the "Mergers") or convey, sell or lease
all or substantially all of its assets or business (collectively,
"Dispositions"), except for:
(a) mergers between Subsidiaries, or between Subsidiary and Borrower where
Borrower is the surviving corporation;
(b) mergers where Borrower is the surviving corporation;
(c) transfers of assets from one Restricted Subsidiary to another
Restricted Subsidiary or from any Restricted Subsidiary to Borrower;
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(d) sales, leases, transfers or assignments of operating rights, licenses
or franchises in transactions which do not result in a Material Change different
from changes heretofore publicly disclosed;
(e) Dispositions of any Restricted Subsidiary provided both Debt Ratings
remain Investment Grade on the effective date of any such dispositions; and
(f) the Reorganization;
provided, however, no Disposition or Merger otherwise permitted by clauses (a)
- -------- -------
through (e) above shall take place if before, or after giving effect to any such
Disposition or Merger, an Event of Default or Unmatured Event of Default exists
is or would exist.
8.3 Defaults. It will not, nor will it permit any of its Restricted
--------
Subsidiaries to, commit or do any act or thing which would constitute an event
of default under any of the material terms or provisions of any other material
agreement, contract, indenture, document or instrument executed, or to be
executed by any of them, except those that may be contested in good faith and
would not, if settled unfavorably, result in a Material Change.
8.4 Compliance with Regulations. Borrower will not engage principally, or
---------------------------
as one of its important activities, in the business of extending credit for the
purposes of purchasing or carrying any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System; and it
will not use the proceeds of any Loan for the purpose, directly or indirectly,
whether immediate, incidental or ultimate, (a) to purchase or carry, within the
meaning of such Regulation U, any such margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock, unless
done in strict compliance with such Regulation U and other applicable law and
Borrower shall have executed and delivered to each Bank prior to such use a Form
U-1 statement evidencing compliance with such Regulation U and such other
documents relating thereto as Administrative Agent or any Bank shall request, or
(b) in a manner which would violate, or result in a violation of, Regulation G,
T, U, or X of the Board of Governors of the Federal Reserve System.
8.5 Financial Covenants.
-------------------
(a) Shareholders' Equity. Borrower will not permit Shareholders' Equity as
at the end of any fiscal quarter to be less than the sum of (i) $7,125,000,000,
(ii) an amount equal to 50% of Borrower's consolidated net income (as determined
in accordance with GAAP) earned in each fiscal quarter ending after December 31,
1998 (with no deduction for a net loss in any such fiscal quarter) and (iii) an
amount equal to 50% of the aggregate increase in Shareholders' Equity after
December 31, 1998 by reason of the issuance of capital stock of Borrower
(including upon any conversion of debt securities of Borrower into such capital
stock).
(b) Leverage Ratio. Borrower shall not permit the Leverage Ratio as at the
--------------
end of any fiscal quarter set forth below to be greater than the ratio set forth
below opposite such fiscal quarter:
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Maximum
Fiscal Quarters Ending Leverage Ratio
-------------------------------------------------------
December 31, 1999 4.00
March 31, 2000 4.50
June 30, 2000 4.00
September 30, 2000 4.00
December 31, 2000 3.75
and thereafter
(c) For the purposes of the financial covenants contained in subsections
(a) and (b) herein, the financial statements of Borrower's subsidiary, DirecTV
Japan, Ltd. will be treated as consolidated with the financial statements of
Borrower (whether or not required by GAAP) from the Effective Date through
December 31, 2000, and thereafter (i) if such consolidation is required by GAAP
or (ii) if Borrower or one or more of its Subsidiaries own securities of DirecTV
Japan, Ltd. convertible into equity interests in DirecTV Japan, Ltd., which when
combined with other equity interests owned by Borrower or one or more of its
Subsidiaries, would result in Borrower and its Subsidiaries having more than a
50% interest in the profits or capital of DirecTV Japan, Ltd.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default. If one or more of the following described Events
-----------------
of Default shall occur:
(a) Borrower shall default in the due and punctual payment of (i) the
principal of or the interest on any Loan within two Business Days of its due
date, (ii) any fee due hereunder within 10 Business Days of its due date; or,
(iii) any other amount due from it hereunder within 30 Business Days of its due
date; or
(b) Borrower or any of its Restricted Subsidiaries shall fail to perform or
observe any of the terms, provisions, covenants, conditions, agreements or
obligations contained herein (other than Section 7.3, and Sections 8.1 through
8.5,) and such failure shall continue for more than 20 days after written notice
from Administrative Agent to Borrower of the existence and character of such
failure to perform or observe; or
(c) Borrower or any of its Restricted Subsidiaries shall fail to perform or
observe any of the terms, provisions, covenants, conditions agreements or
obligations contained in Section 7.3 and Sections 8.1 through 8.5; or
(d) (i) Borrower, or any of its Restricted Subsidiaries shall become
insolvent, or be unable, or admit in writing its inability, to pay its debts as
they become due; or (ii) Borrower or any Restricted Subsidiary shall make an
assignment for the benefit of creditors or to an agent
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authorized to liquidate any substantial amount of its properties or assets; or
(iii) Borrower or any Restricted Subsidiary shall file or have filed against it
a petition in bankruptcy or seeking reorganization or to effect a plan or other
arrangement with creditors or winding up or dissolution and such filing against
it shall not be dismissed within 60 days after the date of such filing; or (iv)
Borrower or any Restricted Subsidiary shall apply for or consent to the
appointment of or consent that an order be made appointing any receiver or
trustee for any of its or their properties, assets or business, or if a receiver
or a trustee shall be appointed for all or a substantial part of its or their
properties, assets or business; or (v) an order for relief shall be entered
against Borrower or any Restricted Subsidiary under the United States federal
bankruptcy laws as now or hereafter in effect; or (vi) Borrower or any
Restricted Subsidiary shall take any action indicating its consent to, approval
of or acquiescence in, any of the foregoing; or
(e) Any representation or warranty made by Borrower herein or in any
certificate or financial or other statement heretofore or hereafter furnished by
Borrower or any of its officers to Administrative Agent or the Banks proves to
be in any material respect false or misleading as of the date when made, deemed
made or reaffirmed; or
(f) Any final judgment, decrees, writs of execution, attachments or
garnishments or any Liens, or any other legal processes shall be issued or
levied against any of the assets or property of Borrower or any of its
Restricted Subsidiaries (and shall not have been vacated, discharged or stayed)
in amounts which in the aggregate would result in a Material Change (without
limiting the generality of the foregoing, a judgment in excess of $75,000,000 in
the aggregate shall, for purposes only of this Section 9.1(f), be deemed to
result in a Material Change); provided, however, that such aggregate amount
-------- -------
shall include only amounts in excess of (i) insurance coverage therefor and (ii)
reserves on the books of Borrower or any of its Restricted Subsidiaries
therefore; provided, further, that such aggregate amount shall not include any
-------- -------
amounts with respect to matters subject to appeal conducted in good faith and
diligently pursued or other further legal process by Borrower or any of its
Restricted Subsidiaries or any amounts with respect to any such legal process
which Borrower or any of its Restricted Subsidiaries has detached from such
property by posting of a bond or equivalent process; or
(g) All, or substantially all, of the assets and property of Borrower or
any of its Restricted Subsidiaries shall be condemned, seized or otherwise
appropriated; or
(h) Any fact or circumstance (including without limitation a Reportable
Event), which results in, or which Majority Banks determine in good faith could
reasonably be expected to result in, the termination of any Plan of Borrower,
any of its Subsidiaries or any ERISA Affiliate by the Pension Benefit Guaranty
Corporation or the appointment by an appropriate United States District Court of
a trustee to administer any such Plan, shall occur and shall continue for 30
days after written notice of such determination shall have been given to
Borrower or any of its Subsidiaries by Administrative Agent, or a trustee shall
be appointed by the appropriate United States District Court to administer any
Plan of Borrower or any of its Subsidiaries, or the Pension Benefit Guaranty
Corporation shall institute proceedings to terminate any Plan of Borrower or any
of its Subsidiaries or to appoint a trustee to administer any such Plan and,
upon the occurrence of any of the foregoing, the aggregate amount of the
unfunded vested liability for the benefits guaranteed by the Pension Benefit
Guaranty Corporation under all such Plans and the
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<PAGE>
present value of any Withdrawal Liability which remains unpaid is reasonably
estimated to be in excess of $75,000,000 and such liability is not covered by
insurance; or
(i) Borrower or any of its Restricted Subsidiaries (i) fails to make any
payment (or otherwise satisfy) in respect of any indebtedness for money borrowed
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the document relating thereto on the date of
such failure; or (ii) an event of default shall occur which permits the
acceleration of indebtedness for money borrowed under any other agreement,
contract, indenture, document or instrument executed, or which may be executed,
by Borrower or any of its Restricted Subsidiaries, which failure or event of
default has not been waived or cured; provided, however, that no Event of
-------- -------
Default shall exist hereunder if the amount of the indebtedness which is not
paid or may be accelerated with respect to the defaulted obligations shall not
exceed in the aggregate $75,000,000; or
(j) [Intentionally omitted];
(k) Any disposition of any Restricted Subsidiary shall have occurred, and:
(i) prior to such disposition, either S&P or Moody's shall have
publicly announced that Borrower's Debt Rating will be below Investment
Grade after giving effect to such disposition; or
(ii) as soon as reasonably practicable after its public
announcement of such disposition, Borrower shall not have requested S&P and
Moody's to publicly announce, prior to or no later than concurrently with
the consummation of such disposition, that Borrower's Debt Rating will
remain at least Investment Grade after giving effect to such disposition;
or
(iii) notwithstanding clause (ii), either S&P or Moody's shall not
have publicly announced within 10 days after the consummation of such
disposition that Borrower's Debt Ratings will remain at least Investment
Grade after giving effect to such disposition; or
(l) Any sale, spin-off, disposition or other transaction whereby General
Motors Corporation will no longer beneficially own directly or indirectly at
least 51 percent of the issued and outstanding capital stock of Borrower having
voting power under ordinary circumstances to elect directors of Borrower (a
"transaction") shall have occurred and:
(i) prior to such transaction, either S&P or Moody's shall have
publicly announced that its Debt Rating will be below Investment Grade
after giving effect to such transaction; or
(ii) as soon as reasonably practicable after its public
announcement of such transaction, Borrower shall not have requested S&P and
Moody's to publicly announce, prior to or no later than concurrently with
the consummation of such transaction, that
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<PAGE>
Borrower's Debt Rating will remain at least Investment Grade after giving
effect to such transaction; or
(iii) notwithstanding clause (ii), either S&P or Moody's shall not
have publicly announced within 10 days after the consummation of such
transaction that its Debt Ratings will remain at least Investment Grade
after giving effect to such transaction.
Then (a) automatically upon the occurrence of an Event of Default under Section
9.1(d), the Commitments shall immediately terminate, and all Loans and other
liabilities and obligations outstanding under this Agreement shall, without
presentment, demand, protest, or notice of any kind, all of which are hereby
expressly waived, be forthwith due and payable, if not herein otherwise then due
and payable, together with all costs and expenses (including break and funding
costs and other costs in connection with the relending, reborrowing, funding or
other employing of funds) incurred by the Banks as a result thereof, anything
herein or in any agreement, contract, indenture, document or instrument
contained to the contrary notwithstanding; and (b) at any time after the
occurrence of an Event of Default other than under Section 9.1(d), and in each
and every such case, unless such Event of Default shall have been remedied by
Borrower to the satisfaction of Majority Banks or waived in writing by Majority
Banks (except in the case of an Event of Default under Section 9.1(a), the
waiver of which shall require the consent of all the Banks), Administrative
Agent may, with the consent of the Majority Banks, or shall, upon the direction
of Majority Banks, immediately terminate the Commitments, whereupon the same
shall be cancelled and reduced to zero and any Loan Request given in respect of
a Borrowing Date occurring on or after the date of such notice of cancellation
shall cease to have effect and all Loans and all accrued interest thereon and
all other liabilities and obligations outstanding under this Agreement shall,
thereupon, without presentment, demand, protest, or notice of any kind, all of
which are hereby expressly waived, be forthwith due and payable, if not
otherwise then due and payable, together with all reasonable costs and expenses
(including break and funding costs and other costs in connection with the
relending, reborrowing, funding or other employing of funds) incurred by the
Banks as a result thereof, anything herein or in any other agreement, contract,
indenture, document or instrument contained to the contrary notwithstanding.
Thereafter any Bank or the Banks may immediately, and without expiration of any
period of grace, enforce payment of all liabilities and obligations of Borrower
under this Agreement.
9.2 Recovery of Amounts Due. If any amount payable hereunder is not paid
-----------------------
as and when due, Borrower hereby authorizes Administrative Agent, each Bank and
their respective affiliates to proceed, to the fullest extent permitted by
applicable law, without prior notice, by right of set-off, banker's lien or
counterclaim, against any moneys or other assets of Borrower in any currency
that may at any time be in the possession of Administrative Agent or any of its
affiliates or such Bank or any of its affiliates, at any branch or office
thereof, to the full extent of all amounts payable to Administrative Agent and
the Banks hereunder. Any Bank that so proceeds or that has an affiliate that so
proceeds shall forthwith give notice to Administrative Agent of any action taken
by such Bank or affiliate pursuant to this Section 9.2.
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<PAGE>
9.3 Rights Cumulative. The rights of Administrative Agent and the Banks
-----------------
provided for herein are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity.
SECTION 10
THE BANKS
10.1 Administration of Loan. The general administration of the Loans shall
----------------------
be by Administrative Agent and shall be governed by the provisions set forth in
Exhibit C attached hereto and incorporated herein by reference.
10.2 Representations By Banks. Each Bank hereby represents that it will
------------------------
make each Loan hereunder in the ordinary course of its business and not with a
view to engage in any distribution of any evidence of indebtedness to the public
and any participation or disposition of the Master Bid Rate Note shall not,
without the consent of Borrower, require Borrower to file a registration
statement with the Securities and Exchange Commission or apply to qualify any
Master Bid Rate Note under the blue sky law of any state; provided, however,
disposition of any evidence of indebtedness held by such Bank shall at all times
be within its exclusive control subject only to the provisions of Section 11.11
and Section 10 of Exhibit C.
SECTION 11
MISCELLANEOUS PROVISIONS
11.1 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement, and no consent with respect to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
Majority Banks (or by the Administrative Agent at the written request of
Majority Banks) and the Borrower and acknowledged by Administrative Agent, and
then any such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no such
-------- -------
waiver, amendment, or consent shall, unless in writing and signed by all Banks
and Borrower and acknowledged by Administrative Agent, do any of the following:
(a) increase or extend the Commitment of any Bank (or reinstate any Commitment
terminated pursuant to Section 9.1); (b) postpone or delay any date fixed by
this Agreement for any payment of principal, interest, fees or other amounts due
to the Banks (or any of them) hereunder; (c) reduce the principal of, or the
rate of interest specified herein on any Loan, or any fees or other amounts
payable hereunder; (d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Banks
or any of them to take any action hereunder; or (e) amend this Section or any
provision herein providing for consent or other action by all Banks; provided,
--------
further, that no amendment, waiver or consent shall, unless in writing and
- -------
signed by Administrative Agent in addition to Majority Banks or all Banks, as
the case may be, affect the rights or duties of Administrative Agent under this
Agreement or rights or privileges thereunder.
11.2 Notices. All notices, payments, requests, reports, information,
-------
demands and other communications which any party hereto may desire, or may be
required, to give or make to any other party hereto, shall (unless otherwise
permitted as a telephonic notice or request hereunder)
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<PAGE>
be given by mailing the same, postage prepaid, or by telex, or rapifax
transmission, or by hand delivery or courier, to each party at its address set
forth in Exhibit D attached hereto and incorporated herein by reference, or to
such other address as may, from time to time, be specified in writing by
Borrower or any Bank. Such communications shall be deemed to have been duly
given and received in the case of a telex, when the telex is sent and the
appropriate answer-back is received, in the case of mail when sent by pre-paid
certified or registered mail correctly addressed to the addressee, in the case
of rapifax transmission, when transmission has been sent, in the case of hand
delivery or courier, when received. Administrative Agent may rely and act upon
any Loan Request made by telex or other telexed, telephonic or facsimile
instructions to Administrative Agent by any Person purporting to be an
authorized Person of Borrower, and Borrower shall be unconditionally and
absolutely estopped from denying the authenticity and validity of any
transaction or act made by Administrative Agent or any Bank in reliance thereon.
Each party hereto shall promptly confirm by telex or rapifax any telephone
communication made by it to another pursuant to this Agreement but the absence
of such confirmation shall not affect the validity of such communication, which
shall be effective upon receipt. If there is any conflict between any telephonic
communication and a written confirmation, the written communication shall
govern; provided, however, that the recipient of such communication shall be
-------- -------
held harmless by all parties hereto with respect to any action taken in reliance
on the telephonic communication prior to the time such recipient receives and
has had reasonable time to review the subsequent written confirmation and
initiate such corrective action as the recipient deems reasonable under the
circumstances.
11.3 Waiver. Neither the failure of, nor any delay on the part of, any
------
party hereto in exercising any right, power or privilege hereunder, or under any
agreement, contract, indenture, document or instrument mentioned herein, shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder, or under any agreement, contract,
indenture, document or instrument mentioned herein, preclude other or further
exercise thereof or the exercise of any other right, power or privilege; nor
shall any waiver of any right, power, privilege or default hereunder, or under
any agreement, contract, indenture, document or instrument mentioned herein,
constitute a waiver of any other right, power, privilege or default or
constitute a waiver of any other default of the same or of any other term or
provision. All rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies otherwise provided by law.
11.4 California Law. The interpretation, enforcement and effect of this
--------------
Agreement, the Loans and any agreements, contracts, indentures, documents or
instruments delivered in accordance herewith, shall be governed and controlled
in all respects by and construed according to the substantive laws of the State
of California, to the jurisdiction of whose courts the parties hereto hereby
agree to submit.
11.5 Headings. The headings set forth herein are solely for the purpose of
--------
identification and shall not be construed as a part of the sections or
subsections which they head.
11.6 Accounting Terms. All accounting terms not otherwise defined herein
----------------
have the meaning assigned to them in accordance with GAAP, provided, however,
any act or condition in
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accordance herewith and permitted hereunder when taken, created or occurring,
shall not become a violation of any section of this Agreement as a result of a
subsequent change in GAAP.
11.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, and
all of said counterparts taken together shall constitute one and the same
instrument.
11.8 Written Disclosure. Wherever written disclosure by Borrower to Banks
------------------
is required or permitted by this Agreement, written disclosure to
Administrative Agent by Borrower shall constitute such disclosure.
11.9 Singular; Plural. Whenever used herein, the singular number shall
----------------
include the plural, the plural the singular, and the use of any gender shall be
applicable to all genders.
11.10 Illegality. The illegality or unenforceability of any provision of
----------
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
11.11 Assignments. This Agreement shall bind and inure to the benefit of
-----------
the parties hereto and their respective successors and assigns. No party hereto
may assign or transfer all or any part of its rights and obligations hereunder,
except that:
(a) Any Bank may, with the prior written consent of Borrower at all times
other than during the existence of an Event of Default, and Administrative
Agent, which consents shall not be unreasonably withheld, at any time assign and
delegate to one or more Eligible Assignees (provided that no written consent of
Borrower or the Administrative Agent shall be required in connection with any
assignment and delegation by Bank to an Approved Bank Affiliate of such Bank or
another Bank) (each an "Assignee"), all, or any ratable part of all, of the
Loans, the Commitments and the other rights and obligations of such Bank
hereunder; provided, however, that any assignment to an Eligible Assignee which
is not a Bank or an Approved Bank Affiliate shall be of all, but not less than
all, of the Loans, the Commitment and the other rights and obligations of such
Bank hereunder. Upon execution of a Notice of Assignment and Acceptance by such
Eligible Assignee in which it agrees to abide by all of the terms, conditions
and obligations applicable to a Bank herein and to have a Commitment as
specified in such agreement, such Eligible Assignee shall be deemed a Bank
hereunder to the same extent as if it were a signatory hereto and, thereafter,
such Eligible Assignee shall for all purposes be considered a "Bank" hereunder.
Administrative Agent shall be entitled to a $2,500 processing fee, payable by
the assignor, with respect to any such assignment by a Bank.
(b) Subject to Section 11.16, Borrower authorizes each Bank and the
Arranger to disclose to any prospective assignee and assignee any and all
information in such Bank's or the Arranger's possession concerning Borrower,
this Agreement and any collateral.
(c) Notwithstanding anything to the contrary contained herein, any Bank (a
"Granting Bank") may grant to a special purpose funding vehicle (an "SPC"),
------------- ---
identified as such in writing from time to time by the Granting Bank to
Administrative Agent and Borrower, the option to
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provide to Borrower all or any part of any Loan that such Granting Bank would
otherwise be obligated to make to the Borrower pursuant to this Agreement;
provided that (i) nothing herein shall constitute a commitment by any SPC to
- --------
make any Loan, (ii) if an SPC elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Granting Bank shall be
obligated to make such Loan pursuant to the terms hereof. The making of a Loan
by an SPC hereunder shall utilize the Commitment of the Granting Bank to the
same extent, and as if, such Loan were made by such Granting Bank. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Bank). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other senior indebtedness of any SPC, it
will not institute against, or join any other person in instituting against,
such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any State thereof. In
addition, notwithstanding anything to the contrary contained in this Section,
any SPC may (i) with notice to, but without the prior written consent of,
Borrower and Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Bank or to any financial institutions (consented to by Borrower and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii)
subject to the provisions of Section 11.16 hereof, disclose on a confidential
basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This section may not be amended without the
written consent of the SPC.
11.12 Obligations Several. The obligations of each Bank under this
-------------------
Agreement are several. Neither Administrative Agent nor any Bank shall be
liable for the failure of any other Bank to perform its obligations under this
Agreement.
11.13 Participations. Any Bank may at any time sell, or grant
--------------
participations in all or part of its Commitment or any Loan or Loans made to
Borrower under this Agreement to any other Person, other than an individual, (a
"Participant"); provided, however, no Bank may be relieved of its obligations
under this Agreement except with the consent of Borrower and Administrative
Agent. Any such sale or grant of a participation is subject to the following
conditions:
(a) Administrative Agent and Borrower may, for all purposes of this
Agreement, deem and treat a Bank party to this Agreement as the owner of such
Bank's Loans hereunder for all purposes hereof until a written notice of the
sale or participation shall have been received by Administrative Agent, together
with Borrower's consent to treat such Participant as owner of such Loan.
(b) Subject to Section 11.16, Borrower authorizes each Bank and the
Administrative Agent to disclose to any prospective Participant and to any
Participant any and all information in such Bank's or the Administrative Agent's
possession concerning Borrower, this Agreement and any collateral.
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<PAGE>
(c) Any agreement pursuant to which a Bank grants a participation in its
rights with respect to any Loan or Loans shall provide that, with respect to any
such Loan or Loans, such Bank shall retain the sole right and responsibility to
exercise the rights of a Bank under this Agreement including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement and the right to take action to declare any amount
due and payable pursuant to Section 9; provided that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement without the consent of the Participant if
such modification, amendment or waiver would (i) increase the amount of the
Total Commitment or change the Commitment of such Bank, (ii) reduce interest,
principal or fees owing to such Bank hereunder, (iii) extend the fixed date on
which any sum is due hereunder, or (iv) release or subordinate any collateral.
(d) Except as provided in this Section 11.13, no recipient of a
participation in a Loan or Loans of any Bank shall have any rights under this
Agreement other than to receive payment of principal of, and interest on the
Loans and of such other amounts as Banks are entitled to receive pursuant to
Sections 3.1, 3.2, 3.3, and 3.4 of this Agreement; provided, however such
recipients shall be entitled to receive pursuant to Sections 3.1, 3.2 and 3.3
only the lesser of (i) the amount that the Bank from which the recipient
received its participation would have received had such Bank not transferred an
interest in its Loans to such recipient and (ii) the additional costs actually
incurred by such recipient; and any demand by a Participant for payment
hereunder shall certify that the amount demanded does not exceed the amount
Participant is entitled to receive under this subsection (d).
(e) Notwithstanding any other provision set forth in this Agreement, any
Bank may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Loans owing to
it) in favor of any Federal Reserve Bank in accordance with Regulation A of the
Board of Governors of the Federal Reserve System.
11.14 Fees and Expenses. Borrower agrees to pay on demand (a) to
-----------------
Administrative Agent all reasonable costs, expenses and attorneys' fees
(including allocated costs for in-house legal services) incurred by
Administrative Agent in connection with the preparation and administration of
this Agreement and any documents including any amendments, waivers, or other
modifications and (b) all reasonable costs, expenses and attorneys' fees
(including allocated costs for in-house legal services) incurred by
Administrative Agent and Banks in connection with the enforcement of this
Agreement and any instrument or agreement required hereunder and in connection
with any refinancing or restructuring of the Loans in the nature of a "work-
out"; provided, however that, in addition to costs of Administrative Agent's in-
house counsel, Borrower shall be obligated to pay for the costs of no more than
one counsel for Administrative Agent and all Banks (without prejudice to any
Bank's right to engage additional counsel at its own cost and expense) unless
any Bank shall in good faith reasonably determine that there is a conflict of
interest that causes it to be reasonably necessary for such Bank to be
represented by separate counsel.
11.15 Indemnity. Borrower agrees to indemnify the Administrative Agent, the
---------
Arranger the Syndication Agent, the Documentation Agents, each Bank and their
respective directors, officers, agents and employees (collectively, the
"Indemnitees") from and hold each of them
-39-
<PAGE>
harmless against any and all losses, liabilities, claims, damages or expenses
reasonably incurred by any of them arising out of or by reason of any
investigation by governmental or judicial authorities or being made a party to
any litigation or other similar proceeding related to any use made or proposed
to be made by Borrower of the proceeds of any Loan for the acquisition of any
other Person including, without limitation, the reasonable fees and
disbursements of counsel (including allocated costs for in-house legal services)
incurred in connection with any such investigation, litigation or other
proceeding; provided, however, that Borrower shall have no obligation to
-------- -------
indemnify or pay for the costs and expenses of more than one counsel for the
Indemnitees, unless any Indemnitee shall in good faith reasonably determine that
there is a conflict of interest that causes it to be reasonably necessary for
any Indemnitees to be represented by other counsel. Counsel chosen to represent
the any Indemnitee pursuant to the previous sentence shall be reasonably
satisfactory to Borrower. The obligations of Borrower under this Section shall
survive the termination of this Agreement.
11.16 Confidentiality. In consideration of Borrower furnishing Confidential
---------------
Information(as defined below) to the Banks, the Arranger, the Administrative
Agent, the Syndication Agent and the Documentation Agents, (collectively, the
"Recipients") and their respective directors, officers and employees
(collectively, the "Representatives"), each Recipient agrees for itself that:
(a) Such Recipient shall keep the Confidential Information confidential and
shall not, without Borrower's prior written consent, disclose it in any manner
whatsoever, in whole or in part, and shall not use the Confidential Information
other than in connection with this Agreement. Each Recipient agrees to reveal
the Confidential Information only to its Representatives, bank affiliates,
auditors, counsel and other advisors, representatives or agents who need to know
the Confidential Information for the purpose of this Agreement, who are informed
by such Recipient of the confidential nature of the Confidential Information and
who shall agree to act in accordance with the terms and conditions of this
section. Each Recipient shall be responsible for any breach of this Section by
its Representatives.
(b) Without Borrower's prior written consent, no Recipient shall disclose
to any Person the fact that the Confidential Information has been made
available, that such Recipient is entering into this Agreement, or any other
facts with respect to this Agreement.
(c) Upon payment in full of all obligations owing to a Recipient and
termination of such Recipient's Commitments, if any, hereunder, copies of the
Confidential Information shall be returned to Borrower immediately upon its
request, except for that portion of the information which consists of analyses,
compilations, forecasts, studies or other documents prepared by a Recipient or
its Representatives based on Confidential Information, which portion shall
either be destroyed (as evidenced by a certificate of destruction signed by a
duly authorized offer of such Recipient) or held by such Recipient and kept
confidential and subject to the terms of this section; provided that such
--------
Recipient shall not be required to return or destroy Confidential Information to
the extent such Recipient reasonably determines that its retention of such
Confidential Information is required by applicable law or regulation. Any oral
Confidential Information shall continue to be subject to the terms of this
Section.
-40-
<PAGE>
(d) Confidential Information shall not include such portions of the
information furnished to a Recipient which (i) are or become generally available
to the public other than as a result of a disclosure by such Recipient or its
Representatives in violation of this Agreement, (ii) become available to such
Recipient on a non-confidential basis from a source (other than Borrower or its
Representatives) which is not known by such Recipient to be prohibited from
disclosing such information to such Recipient, or (iii) were in such Recipient's
possession prior to being furnished to such Recipient or its Representatives
provided that the source of such information was not known by such Recipient to
be prohibited from disclosing the information to such Recipient.
(e) Except as otherwise expressly set forth in this Agreement. each
Recipient acknowledges that neither Borrower nor any of its Representatives
makes any express or implied representation or warranty as to the accuracy or
completeness of the information furnished to such Recipient, and that neither
Borrower nor any of its Representatives shall have any liability resulting from
the use of the information furnished to any Recipient, errors therein or
omissions therefrom.
(f) In the event any Recipient or any person to whom it transmits the
Confidential Information pursuant to this Agreement becomes legally compelled to
disclose any of the information, such Recipient shall, to the extent permitted
by law, provide Borrower with prompt written notice thereof so that the Borrower
may seek a protective order or other appropriate remedy and/or waiver such
Recipient's compliance with the provisions of this section, In the event that
such protective order or other remedy is not obtained, or that Borrower waives
any Recipient's compliance with the provisions of this section, such Recipient
may furnish only that portion of the Confidential Information which it is
advised by written opinion of counsel that the disclosure thereof is legally
required, and shall exercise its best efforts to obtain reliable assurance that
confidential treatment will be accorded the Confidential Information so
disclosed.
(g) Notwithstanding the foregoing, a Recipient may (i) disclose any
Confidential Information to bank examiners; (ii) use any Confidential
Information in connection with the management, supervision and enforcement of
this Agreement, including the enforcement of such Recipient's rights under any
agreement executed in connection therewith; (iii) disclose any Confidential
Information in connection with any litigation or dispute involving any such
Person or the Borrower and related to this Agreement or to any use of proceeds
of the Loans; (iv) disclose any Confidential Information to other Recipients;
and (v) disclose Confidential Information to prospective assignees and
Participants and assignees and Participants pursuant to Sections 3.8, 11.11(b)
and 11.13(b); provided, further, that in each of the foregoing cases, such
Person shall use its best efforts to ensure that any such disclosure will be
made under procedures reasonably calculated to maintain the confidentiality of
such Confidential Information.
For purposes of this Section, "Confidential Information" means information
relating to the business, operation or technology of Borrower or its affiliates
which Borrower has furnished to the Banks, the Arranger, the Administrative
Agent, the Syndication Agent, the Documentation Agents or their Representatives
which is either non-public, confidential or proprietary in nature, together with
copies and other reproductions thereof, and analyses, compilations, forecasts,
studies or other documents prepared by any Banks or its Representatives which
contain or
-41-
<PAGE>
otherwise reflect such information.
This section shall survive termination of the Agreement.
11.17 Termination of Existing Agreements. The parties hereto agree that,
----------------------------------
effective as of the Effective Date, the Existing Agreements, and the commitments
thereunder, are terminated and no party has any outstanding obligations
thereunder.
11.18 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY
--------------------------------
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO THIS AGREEMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
-42-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
in Los Angeles, California as of the date first hereinabove written.
HUGHES ELECTRONICS
CORPORATION
By:_______________________________
Name:
Title:
S-1
<PAGE>
BANK OF AMERICA, N.A., as
Administrative Agent
By:________________________________
Name:
Title:
S-2
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Syndication Agent and a Bank
By:________________________________
Name:
Title:
S-3
<PAGE>
CITICORP USA, INC., as Documentation
Agent and a Bank
By:__________________________________
Name:
Title:
S-4
<PAGE>
THE CHASE MANHATTAN BANK, as
Documentation Agent and a Bank
By:_____________________________
Name:
Title:
S-5
<PAGE>
BANK OF AMERICA, N.A., as a Bank
By:_______________________________
Name:
Title:
S-6
<PAGE>
BANKERS TRUST COMPANY
By:_____________________________
Name:
Title:
S-7
<PAGE>
CREDIT SUISSE FIRST BOSTON
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
S-8
<PAGE>
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES AGENCY
By:___________________________
Name:
Title:
S-9
<PAGE>
THE MITSUBISHI TRUST & BANKING
CORPORATION, NEW YORK BRANCH
By:___________________________
Name:
Title:
S-10
<PAGE>
NATIONSBANK OF TEXAS, N.A.
By:___________________________
Name:
Title:
S-11
<PAGE>
TORONTO-DOMINION (TEXAS), INC.
By:___________________________
Name:
Title:
S-12
<PAGE>
BANCA DI ROMA - SAN FRANCISCO BRANCH
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
S-13
<PAGE>
THE BANK OF NEW YORK
By:___________________________
Name:
Title:
S-14
<PAGE>
CIBC INC.
By:______________________________
Name:
Title:
S-15
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By:______________________________
Name:
Title:
S-16
<PAGE>
DEUTSCHE BANK AG NEW YORK
AND/OR CAYMAN ISLANDS
BRANCHES
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
S-17
<PAGE>
BANK ONE, N.A.
By:______________________________
Name:
Title:
S-18
<PAGE>
ALLFIRST BANK
By:______________________________
Name:
Title:
S-19
<PAGE>
THE FUJI BANK, LIMITED
LOS ANGELES AGENCY
By:______________________________
Name:
Title:
S-20
<PAGE>
THE INDUSTRIAL BANK OF JAPAN,
LIMITED LOS ANGELES AGENCY
By:______________________________
Name:
Title:
S-21
<PAGE>
ISTITUTO BANCARIO SAN PAOLO DI
TORINO SpA
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
S-22
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By:______________________________
Name:
Title:
S-23
<PAGE>
SCHEDULE 1
BANKS AND COMMITMENTS
<TABLE>
<CAPTION>
Bank Commitment Normal Percentage
- ---- ---------- -----------------
<S> <C> <C>
Bank of America, N.A. $ 90,000,000 12.0000%
Allfirst Bank $ 26,250,000 3.5000%
Banca di Roma--San Francisco $ 36,250,000 4.8333%
Bank Hapoalim $ 7,500,000 1.0000%
Bank of New York $ 26,250,000 3.5000%
Bank One $ 26,250,000 3.5000%
Chase Manhattan Bank $ 52,500,000 7.0000%
CIBC Oppenheimer $ 26,250,000 3.5000%
Citicorp USA $ 52,500,000 7.0000%
Credit Lyonnais $ 26,250,000 3.5000%
Credit Suisse First Boston $ 37,500,000 5.0000%
Deutsche Bank AG $ 63,750,000 8.5000%
Fuji Bank, Ltd. $ 26,250,000 3.5000%
Industrial Bank of Japan $ 26,250,000 3.5000%
Mercantile Bank $ 20,000,000 2.6667%
Mitsubishi Trust and Banking $ 37,500,000 5.0000%
Corporation
Morgan Guaranty Trust $ 52,500,000 7.0000%
Sanpaolo IMI SpA $ 26,250,000 3.5000%
Toronto Dominion Bank $ 37,500,000 5.0000%
</TABLE>
-1-
<PAGE>
<TABLE>
<S> <C> <C>
Union Bank of California $ 26,250,000 3.5000%
Westdeutsche Landesbank $ 26,250,000 3.5000%
Total $750,000,000 100.0000%
</TABLE>
-2-
<PAGE>
EXHIBIT A-1
LOAN REQUEST
TO: Bank of America, N.A., as
Administrative Agent for Banks
FROM: Hughes Electronics Corporation
DATE:
RE: Hughes Electronics Corporation -
Revolving Credit Agreement (Multi-Year
Facility)
Gentlemen:
1. We refer to the Amended and Restated Revolving Credit Agreement
(Multi-Year Facility) dated as of November 24, 1999 and made among Hughes
Electronics Corporation, the banks parties thereto ("Banks"), Bank of America,
N.A., as administrative agent for the Banks (in such capacity "Administrative
Agent"), Morgan Guaranty Trust Company of New York, as Syndication Agent and
Citicorp USA, Inc. and The Chase Manhattan Bank as Documentation Agents (the
"Agreement"). Terms defined in the Agreement shall have the same meaning
herein.
2. We hereby request that a [Base Rate Loan] [Eurodollar Loan] is made to
us as follows:
(i) Principal Amount:
(ii) Borrowing Date:
(iii) Interest Period (if a Eurodollar Loan):
3. For the purposes of inducing the Banks to make the Loan requested
herein, we confirm that, pursuant to Section 5.2 of the Agreement, as of the
date hereof:
(i) to the best of the knowledge of the undersigned, the
representations and warranties set out in Section 6 of the
Agreement (with the exception of Section 6.6) are true and
correct in all material respects;
(ii) the most current financial statements delivered pursuant to
Section 7.5 of the Agreement present fairly the financial
position and results of operation and changes in financial
position of Borrower and its consolidated Subsidiaries as at the
end of, and for the fiscal period to which such
A-1-1
LOAN REQUEST
<PAGE>
statements relate as of the date thereof (subject, in the case
of unaudited financial statements, to year end adjustments); and
(iii) to the best of the knowledge of the undersigned, no Event of
Default or Unmatured Event of Default has occurred and is
continuing.
HUGHES ELECTRONICS CORPORATION
By: ___________________________________
Name:
Title:
A-1-2
LOAN REQUEST
<PAGE>
EXHIBIT A-2
LOAN REQUEST - BID RATE LOANS
TO: Bank of America, N.A., as
Administrative Agent for Banks
FROM: Hughes Electronics Corporation
DATE:
RE: Hughes Electronics Corporation -
Revolving Credit Agreement (Multi-Year
Facility)
Gentlemen:
1. We refer to the Amended and Restated Revolving Credit Agreement
(Multi-Year Facility) dated as of November 24, 1999 and made among Hughes
Electronics Corporation, the banks parties thereto ("Banks"), Bank of America,
N.A., as administrative agent for the Banks (in such capacity "Administrative
Agent"), Morgan Guaranty Trust Company of New York, as Syndication Agent and
Citicorp USA, Inc. and The Chase Manhattan Bank as Documentation Agents (the
"Agreement"). Terms defined in the Agreement shall have the same meaning
herein.
2. We hereby give you notice pursuant to Section 2.4 of the Revolving
Credit Agreement that we request offers for the following proposed Bid Rate
Loans:
(i) Borrowing Date:
(ii) Principal Amount:
(iii) Interest Period(s):
Each Bid Rate Loan offer should specify an amount, the Interest Period and
the Bid Rate upon which each Bank desires to advance a Bid Rate Loan.
3. For the purposes of inducing the Banks to make the Loan requested
herein, we confirm that, pursuant to Section 5.2 of the Agreement, as of the
date hereof:
(i) to the best of the knowledge of the undersigned, the
representations and warranties set out in Section 6 of the
Agreement (with the exception of Section 6.6) are true and
correct in all material respects;
(ii) the most current financial statements delivered pursuant to
Section 7.5 of the Agreement present fairly the financial
position and results of operation
A-2-1
LOAN REQUEST - BID RATE LOANS
<PAGE>
and changes in financial position of Borrower and its
consolidated Subsidiaries as at the end of, and for the fiscal
period to which such statements relate as of the date thereof
(subject, in the case of unaudited financial statements, to year
end adjustments); and
(iii) to the best of the knowledge of the undersigned, no Event of
Default or Unmatured Event of Default has occurred and is
continuing.
HUGHES ELECTRONICS CORPORATION
By: __________________________________
Name:
Title:
A-2-2
LOAN REQUEST - BID RATE LOANS
<PAGE>
EXHIBIT B
MASTER BID RATE NOTE
Los Angeles, California December 5, 1997
HUGHES ELECTRONICS CORPORATION, a Delaware corporation (formerly named
Hughes Network Systems, Inc.) (the "Borrower"), for value received, hereby
promises to pay to the order of ________________________ (the "Bank"), at Agency
Administrative Services #5693 of Bank of America National Trust and Savings
Association, as Administrative Agent, for the account of Bank, 1850 Gateway
Blvd., Concord, California 94520, on the dates specified in the Credit Agreement
(as herein defined), in lawful money of the United States, the total unpaid
principal amount of all Bid Rate Loans made by Bank to Borrower from the date of
this Note through the Termination Date pursuant to the Credit Agreement. This
Note shall bear interest as set forth in the Credit Agreement for Bid Rate
Loans. Interest payable under this Note shall be payable at the times specified
in the Credit Agreement. No Loan shall be made under this Note if, as a result
of such Loan, the total aggregate principal amount of Loans outstanding under
the Credit Agreement exceeds the Total Commitment.
This Note is one of the Master Bid Rate Notes referred to in the Revolving
Credit Agreement (Multi-Year Facility) dated as of December 5, 1997 (as in
effect from time to time, the "Credit Agreement"), among Borrower, the banks
parties thereto ("Banks"), Bank of America National Trust and Savings
Association, as administrative agent for the Banks (in such capacity
"Administrative Agent"), Morgan Guaranty Trust Company of New York, as
Syndication Agent and Citicorp USA, Inc. and The Chase Manhattan Bank as
Documentation Agents, and is subject to prepayment in whole or in part and its
maturity is subject to acceleration upon the terms provided in the Credit
Agreement.
This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of California.
All Bid Rate Loans made by Bank to Borrower pursuant to the Credit
Agreement and all payments of principal thereof may be indicated by Bank upon
the grid attached hereto which is a part of this Note. Such notations shall be
presumptively correct as to the aggregate unpaid principal amount of all Bid
Rate Loans made by Bank pursuant to the Credit Agreement.
HUGHES ELECTRONICS CORPORATION
By: _____________________________
Title: __________________________
B-1
MASTER BID RATE NOTE
<PAGE>
Bid Rate Loans and Payments of Principal
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Unpaid
Amount of Interest Interest Amount of Principal Name of Person
Date Loan Period Rate Principal Paid Balance Marking Notation
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
B-2
MASTER BID RATE NOTE
<PAGE>
EXHIBIT C
RELATIONS AMONG THE BANKS AND AGENTS
1. Administration of the Credit. Payment of interest and principal on
----------------------------
the Loans and the facility fee and all other amounts payable by Borrower
hereunder shall be made by Borrower in immediately available funds, directly to
each Bank in the case of amounts payable under Sections 3.1, 3.2 and 3.3 and, in
all other cases, to Administrative Agent, and Administrative Agent shall
promptly distribute to the other Banks in immediately available funds their
shares of principal, interest and fees and to each Bank as provided herein such
other amounts as paid by Borrower.
2. Pro Rata Distribution. All facility fees will be divided among the
---------------------
Banks in accordance with their Normal Percentage, and interest and principal
payments on each Loan will be divided pro rata among Banks in accordance with
their percentage interest in the Loan.
3. Right of Setoff. Any Bank which shall receive payment of or on
---------------
account of all or part of its share of the Loans through the exercise of any
right of setoff, counterclaim, or banker's lien, or otherwise in a greater
proportion than the proportionate amount of principal and interest due it under
this Agreement immediately prior to such payment shall purchase a ratable
proportion of the portions of the Loan held by the other Banks so that all
recoveries of principal and interest shall be shared by the Banks in accordance
with their pro rata interests in the Loans outstanding hereunder. If all or any
portion of such excess payment is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest. Any sum received by Bank through exercise
of the right of setoff, counterclaim, or banker's lien shall be deemed to be
first applied to such Bank's portion of the indebtedness under this Agreement,
second as herein above provided and any balance remaining thereafter shall be
deemed applied to any other indebtedness of Borrower to such Bank.
4. Notice of Event of Default. Upon receipt by Administrative Agent from
--------------------------
Borrower of any communication calling for an action on the part of Banks, or
upon notice to Administrative Agent of an Unmatured Event of Default or an Event
of Default, it will in turn promptly inform the other Banks in writing of the
nature of such communication or of the Unmatured Event of Default or Event of
Default, as the case may be.
5. Actions by Administrative Agent. Upon any occasion requiring or
-------------------------------
permitting an approval, consent, election or other action on the part of Banks,
action shall be taken by Administrative Agent for and on behalf or for the
benefit of all Banks upon the direction of the required number of Banks and the
Administrative Agent, if applicable, as set forth in Section 11.1 of the
Agreement.
6. Several Liability of Banks. The obligation of each Bank hereunder is
--------------------------
several, and the failure of one Bank to perform hereunder shall in no way
relieve the other Banks from performance.
7. Liability of Administrative Agent. Administrative Agent shall not be
---------------------------------
liable or answerable for anything whatsoever in connection with this Agreement
except for its willful
C-1
RELATIONS AMONG THE BANKS AND THE AGENT
<PAGE>
misconduct or gross negligence, and Administrative Agent shall have no duties or
obligations other than as provided herein. Administrative Agent shall be
entitled to rely on any opinion of counsel (including counsel for Borrower) in
relation to this Agreement, and upon statements and communications received from
Borrower, or from any other person, believed by it to be authentic, and shall
not be liable for any action taken or omitted in good faith on such reliance.
8. Indemnification of Administrative Agent. Each Bank agrees to
---------------------------------------
indemnify Administrative Agent (to the extent not reimbursed by Borrower and
without limiting the obligation of Borrower to do so), ratably according to its
Normal Percentage, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against Administrative Agent in any way relating to or arising
out of this Agreement or any action taken or omitted by Administrative Agent
under this Agreement except for Administrative Agent's gross negligence or
willful misconduct. The obligations of the Banks under this Section 8 shall
survive termination of the Agreement.
9. Rights of Administrative Agent as Bank. With respect to its
--------------------------------------
obligation to lend under this Agreement and the Loans made by it, Bank of
America shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not Administrative Agent; and the term
"Banks" shall include Bank of America in its individual capacity. Bank of
America may accept deposits from, lend money to, and generally engage in any
kind of banking, trust or other business with Borrower as if it were not
Administrative Agent.
10. Assignment by Bank of its Obligations. Administrative Agent may deem
--------------------------------------
and treat a Bank party to this Agreement as the owner of such Bank's portion of
the Loans for all purposes hereof unless and until a written notice of the
assignment or transfer of such Bank's obligations otherwise permitted under the
Agreement executed by such Bank shall have been received by Administrative
Agent, together with Borrower's consent to such assignment or transfer and such
other documentation from such Bank and its assignee or transferee as
Administrative Agent may reasonably request.
11. Representations by Banks. Neither Administrative Agent nor any Bank
------------------------
has made or makes to any other Bank any representation, and neither
Administrative Agent nor any Bank assumes any responsibility, in respect to the
execution, construction or enforcement of this Agreement or any other instrument
or agreement executed by Borrower or by any other person or entity.
12. Independent Investigation by Banks. Each Bank has made and shall
----------------------------------
continue to make its own independent investigation of the financial condition
and affairs of Borrower in connection with the making and the continuance of the
Loans and has made and covenants that it shall continue to make its own
appraisal of the creditworthiness of Borrower. Each Bank agrees Administrative
Agent has no duty or responsibility, either initially or on a continuing basis,
to provide any Bank with any credit or other information with respect to
Borrower, whether coming into its possession before the making of the Loans or
at any time or times thereafter except as expressly provided in this Agreement.
C-2
RELATIONS AMONG THE BANKS AND THE AGENT
<PAGE>
13. Successor Administrative Agent. Administrative Agent shall have the
------------------------------
right, at any time, to resign as Administrative Agent for the Banks hereunder.
Such resignation shall not be effective until a successor Administrative Agent
chosen by Majority Banks, and accepted by Borrower, shall accept appointment as
Administrative Agent for the Banks hereunder. If no successor Administrative
Agent shall have been so appointed by the Majority Banks and shall have accepted
such appointment, within 30 days after the retiring Administrative Agent has
given notice of resignation, the retiring Administrative Agent may, on behalf of
the Banks, appoint a successor Administrative Agent reasonably acceptable to
Borrower, which successor Administrative Agent shall be a commercial bank
organized under the laws of the United States of America or a State thereof
having a combined capital and surplus of at least $100,000,000. Upon the
acceptance by the successor Administrative Agent of its appointment hereunder,
the successor Administrative Agent shall succeed to and become vested with all
the rights and obligations of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its obligations under
this Agreement. The provisions of this Article shall inure to the benefit of
the retiring Administrative Agent as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. After any
retiring Administrative Agent's resignation hereunder as Administrative Agent,
the provisions of this Exhibit C and Section 11.14 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement.
14. Syndication Agent; Documentation Agents. None of the Banks identified
---------------------------------------
on the facing page or signature pages of this Agreement as Syndication Agent or
Documentation Agents shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Banks as such. Without limiting the foregoing, none of the Banks so identified
shall have or be deemed to have any fiduciary relationship with any Bank. Each
Bank acknowledges that it has not relied, and will not rely, on any of the Banks
so identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.
C-3
RELATIONS AMONG THE BANKS AND THE AGENT
<PAGE>
EXHIBIT D
LENDING OFFICES OF BANKS AND ADDRESSES FOR NOTICES
BORROWER
200 North Sepulveda Blvd.
P.O. Box 956
ES, 001, A148
El Segundo, CA 90245-0956
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT
Bank of America N.A.
Mail Code: CA9-706-11-03
555 South Flower Street, 11th Floor
Los Angeles, California 90071
Attention: Gina Meador
Vice President
Agency Management-Los Angeles
Telephone: (213) 228-5245
Facsimile: (213) 228-2299
Administrative Agent's Payment Office:
--------------------------------------
Bank of America N.A.
Mail Code: CA4-706-05-09
1850 Gateway Boulevard, Fifth Floor
Concord, California 94520
Attention: Glenis Croucher
Assistant Vice President
Agency Administrative Services West
Telephone: (925) 675-8447
Facsimile: (925) 675-8500
D-1
<PAGE>
BANK OF AMERICA, N.A., AS A BANK
Domestic and Offshore Lending Office:
-------------------------------------
Bank of America N.A.
Mail Code: CA4-706-05-09
Agency Administrative Services-West
1850 Gateway Blvd., 5th Floor
Concord, CA 94520
Attention: Glenis Croucher
Sr. Account Administrator
Telephone: (925) 675-8447
Facsimile: (925) 969-2807
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-----------------------
Bank of America N.A.
Mail Code: CA9-706-11-07
555 South Flower Street, 11th Floor
Los Angeles, California 90071
Attention: Dianne J. Prust
Vice President
Credit Products Aerospace/Defense #9848
Telephone: (213) 228-2435
Facsimile: (213) 623-1959
ALLFIRST BANK
Domestic and Offshore Lending Office:
-------------------------------------
Allfirst Bank
25 S. Charles Street
18/th/ Floor
Baltimore, MD 21201
Attention: Jennifer Erickson
Vice President
Telephone: (410) 244-4721
Facsimile: (410) 244-4239
Email: [email protected]
D-2
<PAGE>
BANCA DI ROMA--SAN FRANCISCO
Domestic and Offshore Lending Office:
-------------------------------------
BANCA DI ROMA--San Francisco
One Market
Steuart Tower, Suite 1000
San Francisco, CA 94105
Attention: Ms. Cecilia Gin
Telephone: (415) 977-7321
Facsimile: (415) 357-9869
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
BANCA DI ROMA--San Francisco
One Market
Steuart Tower, Suite 1000
San Francisco, CA 94105
Attention: Mr. Eric Maubert
Assistant Vice President
Telephone: (415) 977-7315
Facsimile: (415) 357-9869
D-3
<PAGE>
THE BANK OF NEW YORK
Domestic and Offshore Lending Office:
-------------------------------------
The Bank of New York
One Wall Street, 22/nd/ floor
New York, NY 10005
Attention: Dawn Hertling
Telephone: (212) 635-6742
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
The Bank of New York
10990 Wilshire Blvd.
Suite 1125
Los Angeles, CA 90024
Attention: Jonathan Rollins
Telephone: (310) 996-8658
Facsimile: (310) 996-8667
Email: [email protected]
D-4
<PAGE>
BANK HAPOALIM B.M.
Domestic and Offshore Lending Office:
-------------------------------------
Bank of New York
48 Wall Street
New York, NY 10286
Attention: Marc Bosc
Vice President
Telephone: (212) 782-2181
Facsimile: (212) 782-2187
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
------------------------
Bank Hapoalim
1177 Avenue of the Americas
New York, NY 10036-2790
Attention: Marc Bosc
Vice President
Telephone: (212) 782-2181
Facsimile: (212) 782-2187
D-5
<PAGE>
BANK ONE, NA
Domestic and Offshore Lending Office:
-------------------------------------
Bank One, NA
1 Bank One Plaza
10/th/ Floor
Chicago, IL 60670
Attention: Sharon Bosch
Telephone: (312) 732-7112
Facsimile: (312) 732-4840
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
Bank One, NA
777 South Figueroa
4/th/ Floor
Los Angeles, CA 90017
Attention: Anthony Mathews
Senior Vice President
Telephone: (213) 683-4957
Facsimile: (213) 683-4999
Email: [email protected]
THE CHASE MANHATTAN BANK
Domestic and Offshore Lending Office:
-------------------------------------
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Lenora Kiernan
Telephone: (212) 552-7309
Facsimile: (212) 552-5650
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Richard C. Smith
Vice President
Telephone: (212) 270-5435
Facsimile: (213) 270-5100
D-6
<PAGE>
CIBC, INC.
Domestic and Offshore Lending Office:
-------------------------------------
CIBC, Inc.
2727 Park Ferry Road, Suite 1200
Atlanta, Georgia 30339
Attention: Vickie Rollins
Telephone: (770) 319-4802
Facsimile: (770) 319-4950
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
CIBC, Inc.
425 S. Lexington Avenue
New York, New York 10017
Attention: Laura Hom
Telephone: (212) 856-3985
Facsimile: (212) 856-3985
CITICORP USA, INC.
Domestic and Offshore Lending Office:
-------------------------------------
Citicorp, USA, Inc.
399 Park Ave.
New York, NY 10043
Attention: Alyssa Kawalek
Loan Administrator
Telephone: (302) 894-6055
Facsimile: (302) 894-6120
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
Citicorp USA, Inc.
787 West 5th Street
29th Floor
Los Angeles, CA 90071
Attention: Walter Larsen
Telephone: (213) 239-1501
Facsimile: (213) 623-3592
D-7
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
Domestic and Offshore Lending Office:
-------------------------------------
Credit Lyonnais New York Branch
1301 Avenue of the
Americas
New York, New York 10019
Attention: Deborah Sachs
Telephone: (212) 261-7837
Facsimile: (212) 261-3318
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attention: Mark Campellare
Telephone: (212) 261-7306
Facsimile: (212) 261-3288
CREDIT SUISSE FIRST BOSTON
Domestic and Offshore Lending Office:
-------------------------------------
Credit Suisse First Boston
11 Madison Avenue
New York, NY 10010-3629
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
Credit Suisse First Boston
11 Madison Avenue
New York, NY 10010-3629
Primary Contact
---------------
David Kratovil
Director
Telephone: (212) 325-9155
Facsimile: (212) 325-8615
Email: [email protected]
Back-Up Contact
---------------
Janko Gogolja
Telephone: (212) 325-0699
Facsimile: (212) 325-8319
D-8
<PAGE>
DEUTSCHE BANK AG NEW YORK AND/OR CAYMAN ISLANDS BRANCHES
Domestic and Offshore Lending Office:
-------------------------------------
Deutsche Bank AG
31 West 52/nd/ Street
New York, NY 10019
Attention: Noble Samuel/Cheryl H. Mandelbaum
Telephone: (212) 469-4091
Facsimile: (212) 469-4139
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
Deutsche Bank AG
31 West 52/nd/ Street
New York, NY 10019
Attention: Joel Makowsky
Vice President
Telephone: (212) 469-7896
Facsimile: (212) 469-4604
D-9
<PAGE>
THE FUJI BANK, LIMITED
Domestic and Offshore Lending Office:
-------------------------------------
The Fuji Bank
333 South Hope Street
39/th/ Floor
Los Angeles, CA 90071
Attention: Wayne Wong
Associate
Telephone: (213) 253-4132
Facsimile: (213) 253-4178
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
The Fuji Bank
333 South Hope Street
39/th/ Floor
Los Angeles, CA 90071
Attention: Jon Bigelow
Vice President
Telephone: (213) 253-4144
Facsimile: (213) 253-4178
Email: [email protected]
D-10
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LIMITED
LOS ANGELES AGENCY
Domestic and Offshore Lending Office:
-------------------------------------
The Industrial Bank of Japan, Limited
New York Branch
1251 Avenue of the Americas
New York, NY 10020-1104
Attention: Patel Umesh/Richard Emmich
Telephone: (212) 282-4085
Facsimile: (212) 282-4480
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
The Industrial Bank of Japan, Limited
Los Angeles Agency
350 South Grand Avenue, Suite 1500
Los Angeles, CA 90071
Attention: Joan M. Farrell
Telephone: (213) 893-6443
Facsimile: (213) 488-9840
SANPAULO IMI SpA
Domestic and Offshore Lending Office:
-------------------------------------
Sanpaolo IMI Bank
245 Park Avenue
New York, New York 10167
Attention: Carmela Romanello-Schaden
Telephone: (212) 692-3126
Facsimile: (212) 629-3178
Notices (other than Borrowing notices and Notices of:
-----------------------------------------------------
Conversion/Continuation):
Sanpaolo IMI Bank
444 South Flower Street, Suite 4550
Los Angeles, California 90071
Attention: Donald Brown
Telephone: (213) 489-3105
Facsimile: (213) 622-2514
D-11
<PAGE>
MERCANTILE BANK, NATIONAL ASSOCIATION
Domestic and Offshore Lending Office:
-------------------------------------
Mercantile Bank, National Association
Capital Markets Division
Tram 12-3
One Mercantile Center
St. Louis, MO 63101-1643
Attention: Sharon Dent
Senior Commercial Loan Assistant
Telephone: (314) 418-2396
Facsimile: (314) 418-3571
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
Mercantile Bank, National Association
Capital Markets Division
Tram 12-3
One Mercantile Center
St. Louis, MO 63101-1643
Attention: Kirk A. Porter
Vice President, Division Manager
Telephone: (314) 418-2413
Facsimile: (314) 418-3571
D-12
<PAGE>
THE MITSUBISHI TRUST AND BANKING CORPORATION
Domestic and Offshore Lending Office:
-------------------------------------
The Mitsubishi Trust and Banking Corporation
520 Madison Avenue
New York, NY 10022
Attention: Loan Administration Department
Telephone: (212) 891-8262
Facsimile: (212) 755-2349
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
The Mitsubishi Trust and Banking Corporation
520 Madison Avenue
New York, NY 10022
Attention: Susan Lau
Vice President
Telephone: (212) 891-8419
Facsimile: (212) 644-6825 (direct)
(212) 755-2349 (central)
D-13
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
Domestic Lending Office
-----------------------
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260-0060
Execution Copies to:
-------------------
Jeannie Mattson
Associate
Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
3/OPS2
Newark, DE 19713-2107
Conformed Copies to:
-------------------
Robert Bottamedi
Vice President
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260-0060
Offshore Lending Office
------------------------
Morgan Guaranty Trust Company of New York
Euro-Loan Servicing Department
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
Newark, DE 19713-2107
Execution Copies to:
-------------------
Jeannie Mattson
Associate
Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
3/OPS2
Newark, DE 19713-2107
D-14
<PAGE>
Conformed Copies to:
-------------------
Robert Bottamedi
Vice President
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260-0060
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
JP Morgan Securities Inc
60 Wall Street
5/th/ Floor
New York, NY 10260-0060
Attention: Robert Bottamedi
Vice President
Telephone: (212) 648-1349
Facsimile: (212) 648-5018
D-15
<PAGE>
THE TORONTO-DOMINION BANK
Domestic and Eurodollar Lending Office:
---------------------------------------
The Toronto-Dominion Bank
909 Fanin, Suite 1700
Houston, Texas 77010
Attention: Jorge A. Garcia
Manager - Credit Administration
Telephone: (713) 653-8242
Facsimile: (713) 951-9921
Full Money Market Lending Office:
---------------------------------
The Toronto-Dominion Bank
31 West 52/nd/ Street, 21/st/ Floor
New York, New York 10019-6101
Attention: Senior Dealer
Telephone: (212) 468-0400
Facsimile: (212) 974-5283
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
The Toronto-Dominion Bank
31 West 52/nd/ Street, 21/st/ Floor
New York, New York 10019-6101
Attention: Michael Bandziere
Telephone: (212) 468-0713
Facsimile: (212) 262-1928
D-16
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
Domestic and Offshore Lending Office:
-------------------------------------
Union Bank of California, N.A.
445 S. Figueroa Street, 16/th/ Floor
Los Angeles, California 90071
Attention: Gohar Karapetyan
Telephone: (213) 720-2679
Facsimile: (213) 724-6198
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
Union Bank of California, N.A.
445 S. Figueroa Street, 16/th/ Floor
Los Angeles, California 90071
Attention: Scott Jessup
Vice President
Telephone: (213) 236-4023
Facsimile: (213) 236-7814
D-17
<PAGE>
WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domestic and Offshore Lending Office:
-------------------------------------
Westdeutsche Landesbank Girozentrale, New York Branch
1211 Avenue of the Americas
New York, NY 10036
Attention: Philip Green
Vice President
Telephone: (212) 852-6113
Facsimile: (212) 302-7946
Email: [email protected]
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
Westdeutsche Landesbank Girozentrale, New York Branch
1211 Avenue of the Americas
New York, NY 10036
Attention: Barry Wadler
Associate
Telephone: (212) 852-6137
Facsimile: (212) 852-6148
Email: [email protected]
D-18
<PAGE>
EXHIBIT E
EXISTING LIENS
PanAmSat
$124,000,000.00 Floating Rate Note secured by transponders of Galaxy III-R
due 2002
Galaxy Latin America
$95,000.00 Capital Lease of AT&T Telephone Switch
E-1
EXISTING LIENS
<PAGE>
EXHIBIT F
OPINION OF COUNSEL
December 5, 1997
To: The Banks listed on Schedule A hereto; Bank
of America National Trust and Savings
Association, as Administrative Agent; Morgan
Guaranty Trust Company of New York, as
Syndication Agent; and Citicorp USA, Inc.
and The Chase Manhattan Bank as
Documentation Agents
Re: Hughes Electronics Corporation
Revolving Credit Agreement
--------------------------
Gentlemen:
I am the Assistant General Counsel of Hughes Electronics Corporation, a
Delaware corporation (the "Borrower"), in connection with the extension to
Borrower of a revolving line of credit extended under and subject to the terms
and provisions of a Revolving Credit Agreement (Multi-Year Facility) dated as of
December 5, 1997 (the "Credit Agreement") by and among Borrower, the banks named
therein (the "Banks"), Bank of America National Trust and Savings Association,
as administrative agent for the Banks (in such capacity "Administrative Agent"),
Morgan Guaranty Trust Company of New York, as Syndication Agent and Citicorp
USA, Inc. and The Chase Manhattan Bank as Documentation Agents. Capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement. This opinion is rendered to you pursuant to Section 5.1(a) of
the Credit Agreement.
As Assistant General Counsel to Borrower, I have caused to be made such
legal and factual examinations and inquiries, including an examination of
originals or copies, certified or otherwise identified to my satisfaction as
authentic, of such corporate records, agreements, instruments and other
documents as I have deemed necessary or appropriate for the purposes of this
opinion. I have caused to be obtained such certificates and other assurances
(copies of which have been delivered to you) from public officials and officers
and other employees of Borrower as I considered necessary or appropriate for the
purpose of rendering this opinion. I have assumed the genuineness of all
signatures (except that of Borrower), the authenticity of all documents
submitted to me as originals, and the conformity with the originals of all
documents submitted to me as copies.
F-1
OPINION OF COUNSEL
<PAGE>
Subject to the limitations herein set forth, I am opining herein as to the
effect on the subject transaction only of United States federal law, the laws of
the State of California and the General Corporation Law of the State of
Delaware. I am licensed to practice law in the State of California. I assume
no responsibility as to the applicability to the subject transaction or the
effect thereon of the laws of any other jurisdiction.
Based upon the foregoing and in reliance thereon, and subject to the
qualifications, limitations and assumptions set forth herein, I am of the
opinion that, as of the date hereof:
1. Borrower is a corporation duly incorporated and validity existing as a
corporation in good standing under the laws of the State of Delaware, with full
corporate power and authority to own and lease its properties and conduct its
business as presently owned and conducted.
2. Borrower is duly qualified to do business as a foreign corporation in
good standing in the State of California.
3. Borrower has full corporate power and authority to borrow the sums
provided for in the Credit Agreement, to execute and deliver the Credit
Agreement and to perform its obligations thereunder.
4. All corporate action required to be taken by Borrower for the
authorization, execution and delivery of the Credit Agreement by Borrower and
the performance by Borrower of its obligations thereunder has been duly taken.
5. The officer of Borrower executing the Credit Agreement is duly and
properly in office and duly authorized to execute the same.
6. The Credit Agreement is a valid and binding agreement of Borrower,
subject to the limitations, qualifications, exceptions and assumptions set forth
below.
7. To my knowledge, after causing to be conducted such legal and factual
examination and inquiries and causing to be conducted such discussions with and
obtaining such certificates or other confirmations from officers and other
employees of Borrower as I considered appropriate in the circumstances, no
consent, permission, authorization, order or license of any United States
federal or California governmental authority is necessary in connection with the
execution and delivery of the Credit Agreement by Borrower and Borrower's
performance of its obligations under the Credit Agreement.
8. There is no provision of the Certificate of Incorporation or the By-
laws of Borrower which would be contravened by the execution and delivery of the
Credit Agreement by Borrower or by the performance by Borrower of its
obligations under the Credit Agreement.
9. Borrower is not an "investment company" as defined in the Investment
Company Act of 1940, as amended.
10. To my knowledge, after causing to be conducted such legal and factual
examination and inquiries and causing to be conducted such discussions with and
obtaining such
F-2
OPINION OF COUNSEL
<PAGE>
certificates or other confirmations from officers and other employees of
Borrower as I considered appropriate in the circumstances, no consent or
approval of any trustee or holder of any material indebtedness of Borrower is
necessary in connection with the execution and delivery of the Credit Agreement
by Borrower and Borrower's performance of its obligations under the Credit
Agreement.
11. There is no provision of any indenture or material agreement for
borrowed money to which Borrower is a party or under which Borrower is
obligated, and of which I am aware, after causing to be conducted such legal and
factual examinations and inquiries and causing to be conducted such discussion
with and obtaining such certificates or other confirmations from officers and
other employees of Borrower as I considered appropriate in the circumstances,
which would be contravened by the execution and delivery of the Credit Agreement
and the Notes by Borrower or by the performance by Borrower of its obligations
under the Credit Agreement.
12. To my knowledge, after causing to be conducted such legal and factual
examinations and inquiries and causing to be conducted such discussions with and
obtaining such certificates or other confirmations from officers and other
employees of Borrower as I considered appropriate in the circumstances, there is
no judgment, decree or order of any court or governmental agency binding on
Borrower which would be contravened by the execution and delivery of the Credit
Agreement by Borrower and Borrower's performance of its obligations under the
Credit Agreement and the Notes.
13. To my knowledge, after causing to be conducted such legal and factual
examinations and inquiries and obtaining certificates or other confirmations
from officers and employees of Borrower as I considered appropriate in the
circumstances, except as set forth in Attachment 1 hereto, there is no claim,
suit, action or proceeding pending or threatened against Borrower before any
court or governmental agency in which there is a specific claim, including
environmental matters, in excess of $75,000,000.
The opinion expressed in paragraph 6 is subject to the following
limitations, qualifications, exceptions and assumptions:
(a) the enforcement of the Credit Agreement and the Notes may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws or
by equitable principles relating to or limiting the rights of creditors
generally;
(b) the use of the term enforceable shall not imply any opinion as to the
availability of equitable remedies;
(c) I advise you that a California court may not strictly enforce certain
covenants contained in the Credit Agreement or allow acceleration of the
maturity of the indebtedness thereunder if it concludes that such enforcement or
acceleration would be unreasonable under the then existing circumstances. I do
believe, however, that subject to the limitations expressed elsewhere in this
opinion, enforcement or acceleration would be available if an Event of Default
occurs as a result of a material breach of a material covenant contained in the
Credit Agreement.
F-3
OPINION OF COUNSEL
<PAGE>
Further, certain rights, remedies and waivers contained in the Credit Agreement
may be limited or rendered ineffective by applicable California laws or judicial
decisions governing such provisions, but such laws or judicial decisions do not
render the Credit Agreement invalid as a whole;
(d) The effect of California court decisions, invoking statutes or
principles of equity, which have held that certain covenants and provisions of
agreements are unenforceable where (i) the breach of such covenants or
provisions imposes restrictions or burdens upon the debtor, including the
acceleration of indebtedness due under debt instruments, and it cannot be
demonstrated that the enforcement of such restrictions or burdens is reasonably
necessary for the protection of the creditor, or (ii) the creditor's enforcement
of such covenants or provisions under the circumstances would violate the
creditor's implied covenant of good faith and fair dealing;
(e) The unenforceability under certain circumstances, under California or
federal law or court decisions, of provisions expressly or by implication
waiving broadly or vaguely stated rights, unknown future rights, defenses to
obligations or rights granted by law, where such waivers are against public
policy or prohibited by law;
(f) The unenforceability under certain circumstances of provisions to the
effect that rights or remedies are not exclusive, that every right or remedy is
cumulative and may be exercised in addition to or with any other right or
remedy, that election of a particular remedy or remedies does not preclude
recourse to one or more other remedies or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy;
(g) The effect of Section 1717 of the California Civil Code, which
provides that, where a contract permits one party to the contract to recover
attorneys' fees, the prevailing party in any action to enforce any provision of
the contract shall be entitled to recover its reasonable attorneys' fees;
(h) The unenforceability under certain circumstances of provisions
indemnifying a party against liability for its own wrongful or negligent acts or
where such indemnification is contrary to public policy or prohibited by law;
and
(i) The enforceability under certain circumstances of provisions imposing
penalties, forfeitures, late payment charges or an increase in interest rate
upon delinquency in payment or the occurrence of a default.
To the extent that the obligations of Borrower may be dependent upon such
matters, I assume for purposes of this opinion that each of the Banks is duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization; that each of the Banks is
duly qualified to engage in the transaction covered by this opinion; that the
Credit Agreement has been duly authorized, executed and delivered by each of the
Banks and that the Credit Agreement constitutes the valid and binding obligation
of each of the Banks, enforceable in accordance with its terms; and that each of
the Banks has the requisite corporate or organizational and legal power and
authority to own its properties, to carry on its business as now being conducted
and to perform its obligations under the Credit Agreement,
F-4
OPINION OF COUNSEL
<PAGE>
including without limitation, to make the loans under the Credit Agreement. I am
not expressing any opinion as to the effect of or the compliance by any Bank
with any state or federal laws or regulations applicable to the transactions
because of the nature of its respective business.
This opinion is rendered to the Banks and Administrative Agent and is
solely for their benefit in connection with the above transaction. This opinion
may not be relied upon by the Banks or Administrative Agent for any other
purpose, or furnished to, quoted to or relied upon by any other person, firm or
corporation for any purpose without my prior written consent.
Very truly yours,
F-5
OPINION OF COUNSEL
<PAGE>
SCHEDULE A TO OPINION OF COUNSEL
Allfirst Bank
Bankers Trust Company
Credit Suisse First Boston
The Long-Term Credit Bank of Japan, Ltd., Los Angeles Agency
The Mitsubishi Trust & Banking Corporation, New York Branch
NationsBank of Texas, N.A.
The Toronto-Dominion Bank
Banca di Roma - San Francisco Branch
The Bank of New York
CIBC Inc.
Credit Lyonnais New York Branch
Deutsche Bank AG New York and/or Cayman Islands Branches
Bank One, N.A.
The Fuji Bank, Limited, Los Angeles Agency
The Industrial Bank of Japan, Limited, Los Angeles Agency
Istituto Bancario San Paolo di Torino SpA
Union Bank of California
F-6
OPINION OF COUNSEL
<PAGE>
ATTACHMENT 1 TO OPINION OF COUNSEL
F-7
OPINION OF COUNSEL
<PAGE>
LITIGATION
None
F-8
OPINION OF COUNSEL
<PAGE>
EXHIBIT G
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) I am the duly elected [Title] and [Title] of Hughes Electronics
Corporation, a Delaware corporation ("Borrower");
(2) I have reviewed the terms of that certain Amended and Restated
Revolving Credit Agreement (Multi-Year Facility) dated as of November
24, 1999, as amended, supplemented or otherwise modified to the date
hereof (said Revolving Credit Agreement, as so amended, supplemented
or otherwise modified, being the "Credit Agreement", the terms defined
therein and not otherwise defined in this Certificate (including
Attachment No. 1 annexed hereto and made a part hereof) being used in
this Certificate as therein defined), by and among Borrower, the
financial institutions listed therein as Banks, and Bank of America,
N.A. (formerly known as Bank of America national Trust and Savings
Association), as Administrative Agent, and I have made, or have caused
to be made under my supervision, a review in reasonable detail of the
transactions and condition of Borrower and its Subsidiaries during the
accounting period covered by the attached financial statements; and
(3) The examination described in paragraph (2) above did not
disclose, and I have no knowledge of, the existence of any condition
or event which constitutes an Event of Default or Unmatured Event of
Default during or at the end of the accounting period covered by the
attached financial statements or as of the date of this Certificate[,
except as set forth below].
[Set forth [below] [in a separate attachment to this Certificate] are all
exceptions to paragraph (3) above listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
Borrower or any of its Subsidiaries, as applicable, has taken, is taking, or
proposes to take with respect to each such condition or event:
_______________________________________________________________________________]
G-1
FORM OF COMPLIANCE CERTIFICATE
<PAGE>
The foregoing certifications, together with the computations set forth in
Attachment No. 1 annexed hereto and made a part hereof and the financial
statements delivered with this Certificate in support hereof, are made and
delivered this __________ day of _____________, ____ pursuant to subsection
7.5(d) of the Credit Agreement.
DATED: ____________________ HUGHES ELECTRONICS CORPORATION
By:_____________________________
Name:
Title:
G-2
FORM OF COMPLIANCE CERTIFICATE
<PAGE>
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a Compliance Certificate
dated as of ____________, ____ and pertains to the period from ____________,
____ to ____________, ____. Subsection references herein relate to subsections
of the Credit Agreement.
A. Maximum Leverage Ratio (for the four-fiscal quarter period ending
_____________, ____)
1. Outstanding principal amount of all obligations
and liabilities for borrowed money: $____________
2. portion of obligations with respect to capital
leases that are capitalized in excess of
$25,000,000: $____________
3. Consolidated Funded Indebtedness (1+2): $____________
4. Consolidated Net Income: $____________
5. Consolidated Interest Charges: $____________
6. Provisions for taxes, if any, based on income used
or included in determining of 5: $____________
7. Total depreciation expense deducted in determining
5: $____________
8. Total amortization expense deducted in determining 5: $____________
9. Adjustments per clauses (e) and (f) of definition of
Consolidated EBITDA:
(a) Asia Pacific Mobile $____________
(b) Hughes Space and Communication $____________
(c) ICO Global Communications $____________
(d) Hughes Network Systems wireless business $____________
(e) PanAmSat launch delays $____________
(f) DirecTV Japan, Ltd. $____________
Total $============
G-3
FORM OF COMPIANCE CERTIFICATE
<PAGE>
10. Less DirecTV Japan, Ltd. cash losses
per clause (h) of definition of consolidated
EBITDA $_____________
11. Non-cash charges resulting from a change
in business strategy regarding DirecTV Japan
Ltd. (only for fiscal quarter ending fiscal year
ending December 31, 2000) $_____________
12. Consolidated EBITDA (4+5+6+7+8+9-10+11): $_____________
13. Leverage Ratio (3):(12): ____:1.00
14. Maximum ratio allowed under subsection 8.5(b): ____:1.00
B. Minimum Shareholders' Equity
1. Base Shareholders' Equity: $7,125,000,000
2. 50% of consolidated net income (as determined in
accordance with GAAP) earned in each fiscal
quarter ending after December 31, 1998 (with no
deduction for a net loss in any such fiscal
quarter): $_____________
3. 50% aggregate increase in Equity by reason of
Borrower's issuance of capital stock: $_____________
4. Minimum Shareholders' Equity (1+2+3): $_____________
5. Shareholders' Equity $_____________
G-4
FORM OF COMPIANCE CERTIFICATE
<PAGE>
EXHIBIT H
[FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE]
[Date]
To: Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Revolving Credit
Agreement (Multi-Year Facility) dated as of November 24, 1999 between Hughes
Electronics Corporation, a Delaware corporation ("Borrower"), Lenders from time
--------
to time party thereto, and Bank of America, N.A., as Administrative Agent (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the "Agreement;" the terms defined therein being used herein as
---------
therein defined).
1. We hereby give you notice of, and request your consent to, the assignment
by [_________________________] (the "Assignor") to [______________________] (the
--------
"Assignee") of __________% of the right, title and interest of the Assignor in
--------
and to the Agreement, including the right, title and interest of the Assignor in
and to the Commitment of the Assignor and all outstanding Loans made by the
Assignor. Before giving effect to such assignment:
(a) the aggregate amount of the Assignor's Commitment is $___________; and
(b) the aggregate principal amount of its outstanding Loans is $_________.
2. The Assignee hereby represents and warrants that it has complied with the
requirements of Section 11.11 of the Agreement in connection with this
-------------
assignment and acknowledges and agrees that: (a) other than the representation
and warranty that it is the legal and beneficial owner of the Normal Percentage
being assigned thereby free and clear of any adverse claim, the Assignor has
made no representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with the
Agreement or the execution, legality, validity, enforceability, genuineness or
sufficiency of the Agreement; (b) the Assignor has made no representation or
warranty and assumes no responsibility with respect to the financial condition
of Borrower or the performance by Borrower of its obligations under the
Agreement; (c) it has received a copy of the Agreement, together with copies of
the most recent financial statements delivered pursuant to Section 7.5 thereof
-----------
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance; (d) it will, independently and without reliance upon Administrative
Agent or any Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Agreement; (e) it appoints and authorizes
Administrative Agent to take such action and to exercise such powers under the
Agreement as are delegated to Administrative Agent by the Agreement; and (f) it
will perform in accordance with their terms all of the obligations which by the
terms of the Agreement are required to be performed by it as a Bank.
3. The Assignee agrees that, upon receiving your consent to such assignment
and from and
H-1
Assignment and Acceptance Agreement
<PAGE>
after [________, ____], the Assignee will be bound by the terms of the
Agreement, with respect to the interest in the Agreement assigned to it as
specified above, as fully and to the same extent as if the Assignee were a Bank
originally holding such interest in the Agreement.
H-2
Assignment and Acceptance Agreement
<PAGE>
4. The following administrative details apply to the Assignee:
(a) Offshore Lending Office:
Assignee name:________________________________
Address:______________________________________
______________________________________________
Attention:____________________________________
Telephone: (___) ____________________________
Telecopier: (___) ____________________________
(b) Domestic Lending Office:
Assignee name:________________________________
Address:______________________________________
______________________________________________
Attention:____________________________________
Telephone: (___) ____________________________
Telecopier: (___) ____________________________
(c) Notice Address:
Assignee name:________________________________
Address:______________________________________
______________________________________________
Attention:____________________________________
Telephone: (___) ____________________________
Telecopier: (___) ____________________________
(d) Payment Instructions: Account No.:
Account No.___________________________________
Attention:____________________________________
Reference:____________________________________
H-3
Assignment and Acceptance Agreement
<PAGE>
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice of
Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[ASSIGNOR]
By: _________________________________________
Name:
Title:
[ASSIGNEE]
By: _________________________________________
Name:
Title:
We hereby consent to the
foregoing assignment.
HUGHES ELECTRONICS CORPORATION
By: ________________________________
Name:
Title:
BANK OF AMERICA, N.A., as Administrative
Agent
By: ________________________________
Name:
Title:
H-4
Assignment and Acceptance Agreement
<PAGE>
EXHIBIT 10.10
HUGHES ELECTRONICS CORPORATION
FIRST AMENDMENT
TO REVOLVING CREDIT AGREEMENT (MULTI-YEAR FACILITY)
This FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (MULTI-YEAR
FACILITY) (this "Amendment") is dated as of December 31, 1999 and entered into
by and among HUGHES ELECTRONICS CORPORATION, a Delaware corporation (the
"Borrower"), the financial institutions listed on the signature pages hereof
(the "Banks"), BANK OF AMERICA, N.A., as the administrative agent for the Banks
(in such capacity the "Administrative Agent"), MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as the syndication agent (in such capacity the "Syndication Agent")
and CITICORP USA, INC. and THE CHASE MANHATTAN BANK, as documentation agents
(the "Documentation Agents") and is made with reference to that certain Amended
and Restated Revolving Credit Agreement (Multi-Year Facility) dated as of
November 24, 1999 (as so amended, the "Credit Agreement"), by and among the
Borrower, the lending institutions identified therein, the Administrative Agent,
the Syndication Agent and the Documentation Agents. Capitalized terms used
herein without definition shall have the same meanings herein as set forth in
the Credit Agreement.
RECITALS
WHEREAS, Borrower and Banks desire to amend the Credit Agreement to
(i) revise the definition of Consolidated EBITDA;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Amendments to Section 1: Definitions
-------------------------------------
Subsection 1.1 of the Credit Agreement is hereby amended by deleting
the definition of Consolidated EBITDA in its entirety, and by replacing it with
the following:
"Consolidated EBITDA" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, an amount equal to the sum of (a)
Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount of
taxes, based on or measured by income, used or included in the determination of
such Consolidated Net Income, (d) the amount of depreciation and amortization
expense deducted in determining such Consolidated Net Income, (e) for each
fiscal quarter in the fiscal year ending December 31, 1999, (i) the amount of
charges taken in connection with the cancellation of contract with Asia Pacific
Mobile Telecommunications, up to an aggregate amount of $92,000,000 for all such
fiscal quarters, and (ii) the amount of charges taken in connection with
development costs and schedule delays at Hughes Space and Communication up to an
aggregate amount of $125,000,000 for all such fiscal quarters, (f) for the last
fiscal quarter of the fiscal year ending
<PAGE>
December 31, 1999, (i) if a non-cash charge is taken in connection with the
write-off of equity investment in ICO Global Communications, the amount of such
non-cash charge up to an aggregate amount of $62,000,000, (ii) if a non-cash
charge is taken in connection with the write-off of equity investment in the
Hughes Network Systems wireless business, the amount of such non-cash charge up
to an aggregate amount of $272,000,000, and (iii) if a change in business
strategy related to DirecTV Japan, Ltd. results in cash and/or non-cash charges,
the amount of such cash and/or non-cash charges up to an aggregate amount of
$250,000,000, and (g) for each fiscal quarter in the fiscal year ending December
31, 2000, the amount of non-cash charges taken in connection with ICO Global
Communications and PanAmSat launch delays, up to an aggregate amount for all
such fiscal quarters of (x) $150,000,000 minus (y) the amount of the charge, if
any, added pursuant to clauses (f)(i) above; minus (h) for each fiscal quarter
-----
in the fiscal year ending December 31, 2000, the amount of cash losses (whether
or not accounted for as charges under GAAP) in connection with DirecTV Japan,
Ltd., but only if such cash losses were reflected in the charges, if any, added
pursuant to clause (f)(iii); plus (i) for each fiscal quarter in the fiscal year
----
ending December 31, 2000, if any change in business strategy regarding DirecTV
Japan, Ltd. results in a non-cash charge, the amount of such non-cash charge up
to an aggregate amount of $150,000,000 minus the amount of non-cash charges, if
any, added pursuant to clause (f)(iii) above.
2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "Amendment
Effective Date"):
(A) On or before the Amendment Effective Date, Borrower shall deliver
to the Banks (or to the Administrative Agent for the Banks with sufficient
originally executed copies, where appropriate, for each Bank and its counsel)
the following, each, unless otherwise noted, dated the Amendment Effective Date:
(1) A certificate, signed by a vice president or assistant treasurer
of Borrower dated the Amendment Effective Date certifying: (i) that the
representations and warranties of Borrower contained in the Credit Agreement are
true and correct in all material respects; and (ii) that, after giving effect to
this Amendment, no event has occurred and is continuing or would result from the
making of a Loan which constitutes or would constitute an Event of Default or an
Unmatured Event of Default; and
(2) Copies of this Amendment executed by Borrower, the Majority Banks
and the Administrative Agent.
(B) All fees and other amounts due to the Administrative Agent,
Syndication Agent, Documentation Agents, Arranger and any Bank through the
Amendment Effective Date from Borrower shall have been received by such person.
2
<PAGE>
3. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Banks to enter into this Amendment and to amend the
Credit Agreement in the manner provided herein, Borrower represents and warrants
to each Bank that the following statements are true, correct and complete:
(A) Corporate Power and Authority. Borrower has all requisite
-----------------------------
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement").
(B) Authorization of Agreements. The execution and delivery of this
---------------------------
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Borrower.
(C) No Contravention. There is no charter, by-law, or capital stock
----------------
provision of Borrower and no provision of any indenture or material agreement,
written or oral, to which Borrower is a party or under which Borrower is
obligated, nor is there any statute, rule or regulation, or any judgment, decree
or order of any court or agency binding on Borrower which would be contravened
by the execution, delivery and performance of any provision, condition, covenant
or other term of this Amendment or the Amended Agreement.
(D) Binding Obligation. This Amendment and the Amended Agreement are
------------------
the legal, valid and binding obligation of Borrower, enforceable against it in
accordance with their terms, and any instrument or agreement required hereunder
or by the Amended Agreement, when executed and delivered, will be similarly
valid, binding and enforceable.
(E) Incorporation of Representations and Warranties From Credit
-----------------------------------------------------------
Agreement. The representations and warranties contained in Section 6 of the
- ---------
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Amendment Effective Date to the same extent as though
made on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case they were true,
correct and complete in all material respects on and as of such earlier date.
(F) Absence of Default. After giving effect to this Amendment, no
------------------
event has occurred and is continuing or will result from the consummation of the
transactions contemplated by this Amendment that would constitute an Event of
Default or a Unmatured Event of Default.
4. MISCELLANEOUS
(A) Reference to and Effect on the Credit Agreement and the Other
Loan Documents.
(i) On and after the Amendment Effective Date, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
of like import referring to the Credit Agreement, and each reference in the
other documents entered
3
<PAGE>
pursuant to the Credit Agreement to the "Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement shall mean
and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other documents entered pursuant to the Credit Agreement shall
remain in full force and effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any provision
of, or operate as a waiver of any right, power or remedy of the Administrative
Agent or any Bank under, the Credit Agreement or any of the other Loan
Documents.
(B) Fees and Expenses. Borrower acknowledges that all costs, fees
-----------------
and expenses as described in subsection 11.14 of the Credit Agreement incurred
by the Arranger, the Administrative Agent and their counsel with respect to this
Amendment and the documents and transactions contemplated hereby shall be for
the account of Borrower.
(C) Headings. Section and subsection headings in this Amendment are
--------
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
(D) California Law. The interpretation, enforcement and effect of
--------------
this Amendment shall be governed and controlled in all respects by and construed
according to the substantive laws of the State of California.
(E) Counterparts; Effectiveness. This Amendment may be executed in
---------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment (other than the
provisions of Section 1 hereof, the effectiveness of which is governed by
Section 2 hereof) shall become effective upon the execution of a counterpart
hereof by Borrower and Majority Banks and receipt by Borrower and the
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
HUGHES ELECTRONICS CORPORATION
By: _______________________________
Name:
Title:
S-1
<PAGE>
BANK OF AMERICA, N.A., as
Administrative Agent
By: ____________________________
Name:
Title:
S-2
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Syndication Agent and a Bank
By: __________________________________
Name:
Title:
S-3
<PAGE>
CITICORP USA, INC., as Documentation
Agent and a Bank
By: _________________________________
Name:
Title:
S-4
<PAGE>
THE CHASE MANHATTAN BANK, as
Documentation Agent and a Bank
By: ______________________________
Name:
Title:
S-5
<PAGE>
BANK OF AMERICA, N.A., as a Bank
By: _____________________________
Name:
Title:
S-6
<PAGE>
BANKERS TRUST COMPANY
By: ____________________________
Name:
Title:
S-7
<PAGE>
CREDIT SUISSE FIRST BOSTON
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
S-8
<PAGE>
[RESERVED]
S-9
<PAGE>
THE MITSUBISHI TRUST AND BANKING
CORPORATION, NEW YORK BRANCH
By: _______________________________
Name:
Title:
S-10
<PAGE>
[RESERVED]
S-11
<PAGE>
TORONTO-DOMINION (TEXAS), INC.
By: _____________________________
Name:
Title:
S-12
<PAGE>
BANCA DI ROMA - SAN FRANCISCO
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
S-13
<PAGE>
THE BANK OF NEW YORK
By: ____________________________________
Name:
Title:
S-14
<PAGE>
CIBC INC.
By: ____________________________________
Name:
Title:
S-15
<PAGE>
ING LEASE INTERNATIONAL EQUIPMENT
FINANCE B.V.
By: ____________________________________
Name:
Title:
S-16
<PAGE>
DEUTSCHE BANK AG NEW YORK AND/OR CAYMAN
ISLANDS BRANCHES
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
S-17
<PAGE>
BANK ONE, NA
By: ____________________________________
Name:
Title:
S-18
<PAGE>
ALLFIRST BANK
By: ____________________________________
Name:
Title:
S-19
<PAGE>
THE FUJI BANK, LIMITED
By: ____________________________________
Name:
Title:
S-20
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LIMITED
LOS ANGELES AGENCY
By: ____________________________________
Name:
Title:
S-21
<PAGE>
SANPAOLO IMI SpA
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
S-22
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By: ____________________________________
Name:
Title:
S-23
<PAGE>
BANK HAPOALIM B.M.
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
S-24
<PAGE>
THE FUJI BANK, LIMITED
By: ____________________________________
Name:
Title:
S-25
<PAGE>
MERCANTILE BANK NATIONAL ASSOCIATION
By: ____________________________________
Name:
Title:
S-26
<PAGE>
THE MITSUBISHI TRUST AND BANKING
CORPORATION, NEW YORK BRANCH
By: ____________________________________
Name:
Title:
S-27
<PAGE>
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
S-28
<PAGE>
EXHIBIT 10.11
================================================================================
Revolving Credit Agreement
(Bridge Facility)
Dated as of November 24, 1999
among
Hughes Electronics Corporation
The Banks named herein
And
Bank of America, N.A.
as Administrative Agent
Lead Arrangers and Book Managers:
Banc of America Securities LLC and
Salomon Smith Barney Inc.
[LOGO]
================================================================================
<PAGE>
<TABLE>
<S> <C>
SECTION 1
DEFINITIONS
1.1 Definitions................................................................ 1
SECTION 2
THE CREDIT
2.1 The Commitments............................................................ 9
2.2 The Loans.................................................................. 10
2.3 Requests for Base Rate and Eurodollar Loans................................ 10
2.4 Limitations on Borrowing................................................... 10
2.5 Interest and Principal on Base Rate Loans.................................. 10
2.6 Interest and Principal on Eurodollar Loans................................. 10
2.8 Loan Accounts.............................................................. 11
2.10 Conversion of Loans Between Eurodollar Loans and Base Rate Loans and
Conversion of Interest Periods of Eurodollar Loans......................... 11
2.11 Disbursements and Payments................................................. 12
2.12 Facility Fee............................................................... 13
2.13 Prepayments and Reductions in Total Commitment............................. 13
SECTION 3
PAYMENT OF COSTS AND REDUCTION OF THE COMMITMENT
3.1 Indemnification Upon Failure to Pay Eurodollar Loan........................ 14
3.2 Increased Costs............................................................ 14
3.3 Taxes...................................................................... 15
3.4 Prepayment................................................................. 16
3.5 Pro Rata Reduction of Commitments by Borrower.............................. 16
3.6 Reduction of One Bank's Commitment by Borrower............................. 16
3.7 Notice of Reductions....................................................... 17
3.8 Designation of Replacement Bank............................................ 17
3.9 Effect of Reduction of Commitment.......................................... 17
3.10 Accrued Fees............................................................... 17
3.11 Survival................................................................... 17
SECTION 4
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
4.1 Inability to Determine Eurodollar Rate..................................... 18
4.2 Illegality................................................................. 18
SECTION 5
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Signing Date....................................... 19
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
5.2 Conditions Precedent to Effective Date...................................... 19
5.3 Conditions Precedent to Loans............................................... 20
SECTION 6
REPRESENTATIONS AND WARRANTIES
6.1 Authority of Borrower....................................................... 20
6.2 Binding Obligations......................................................... 20
6.3 Incorporation of Restricted Subsidiaries.................................... 21
6.4 No Contravention............................................................ 21
6.5 Notices..................................................................... 21
6.6 Financial Statements........................................................ 21
6.7 ERISA....................................................................... 21
6.8 Regulation U; Investment Company Act........................................ 21
6.9 Taxes....................................................................... 22
6.10 Insurance................................................................... 22
6.11 Liens....................................................................... 22
6.12 Litigation.................................................................. 22
6.13 Environmental Compliance.................................................... 22
6.14 Year 2000................................................................... 22
6.15 Disclosure.................................................................. 22
SECTION 7
AFFIRMATIVE COVENANTS OF BORROWER
7.1 Use of Proceeds of Loans.................................................... 23
7.2 Management of Business...................................................... 23
7.3 Notice of Certain Events.................................................... 23
7.4 Records..................................................................... 24
7.5 Information Furnished....................................................... 24
7.6 Execution of Other Documents................................................ 25
7.7 ERISA....................................................................... 25
7.8 Administrative Agent's Fees................................................. 25
7.9 Compliance with Law......................................................... 25
7.10 Compliance with Agreements.................................................. 25
7.11 Maintenance of Insurance.................................................... 26
SECTION 8
NEGATIVE COVENANTS OF BORROWER
8.1 Liens....................................................................... 26
8.2 Mergers, Liquidations and Sales of Assets................................... 27
8.3 Defaults.................................................................... 28
8.4 Compliance with Regulations................................................. 28
8.5 Financial Covenants......................................................... 28
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.......................................................... 29
9.2 Recovery of Amounts Due.................................................... 32
9.3 Rights Cumulative.......................................................... 32
SECTION 10
THE BANKS
10.1 Administration of Loan..................................................... 33
10.2 Representations By Banks................................................... 33
SECTION 11
MISCELLANEOUS PROVISIONS
11.1 Amendments and Waivers..................................................... 33
11.2 Notices.................................................................... 33
11.3 Waiver..................................................................... 34
11.4 California Law............................................................. 34
11.5 Headings................................................................... 34
11.6 Accounting Terms........................................................... 34
11.7 Counterparts............................................................... 34
11.8 Written Disclosure......................................................... 34
11.9 Singular; Plural........................................................... 35
11.10 Illegality................................................................. 35
11.11 Assignments................................................................ 35
11.12 Obligations Several........................................................ 35
11.13 Participations............................................................. 35
11.14 Fees and Expenses.......................................................... 36
11.15 Indemnity.................................................................. 37
11.16 Confidentiality............................................................ 37
11.17 Waiver of Right to Trial by Jury........................................... 39
</TABLE>
EXHIBITS
A Form of Loan Request
B Relations Among the Banks and Agents
C Addresses and Lending Offices of Banks
D Existing Liens
E Form of Opinion of General Counsel
F Compliance Certificate
G Assignment and Acceptance
SCHEDULE
1 Name of Banks and Commitments
-iii-
<PAGE>
REVOLVING CREDIT AGREEMENT
(BRIDGE FACILITY)
THIS REVOLVING CREDIT AGREEMENT (BRIDGE FACILITY) ("Agreement") is entered
into as of November 24, 1999 (the "Signing Date") among HUGHES ELECTRONICS
CORPORATION, a corporation organized and existing under the laws of Delaware
("Borrower"), the banks named herein (collectively, together with any other
lenders that become parties hereto pursuant to Section 3.8 or 11.11, the "Banks"
and individually a "Bank") and Bank of America, N.A., as administrative agent
for the Banks (in such capacity "Administrative Agent").
SECTION 1
DEFINITIONS
1.1 Definitions.
-----------
"Applicable Amount" means, for the facility fee and Eurodollar Loans, the
amount (expressed in basis points per annum) set forth in the chart below
opposite the applicable period:
<TABLE>
<CAPTION>
===========================================================
Applicable Amount
(in basis points per annum)
-------------------------------------
Period Eurodollar Rate Facility Fee
+
<S> <C> <C>
------------------------------------------------------------
Effective Date 82.5 17.5
through June 30,
2000
------------------------------------------------------------
July 1, 2000 and 107.5 17.5
thereafter
===========================================================
</TABLE>
"Approved Bank Affiliate" means a Person that is a subsidiary of a Bank or
of a Person of which a Bank is a subsidiary, and which is either engaged
primarily in the business of commercial banking or, if not so engaged, which has
been approved by the Borrower and Administrative Agent (provided that Borrower's
--------
consent shall not be unreasonably withheld).
"Arrangers" means BAS and Salomon Smith Barney Inc.
"Attorney Costs" means and includes all fees and disbursements of any law
firm or other external counsel and the allocated cost of internal legal services
and all disbursements of internal counsel.
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<PAGE>
"Authorized Designee" means the chief executive officer, the vice chairman,
the chief financial officer, treasurer or the assistant treasurer of Borrower,
or any other officer of Borrower specified as being an Authorized Designee in
the certificate delivered pursuant to Section 5.2(c).
"Availability Period" means the period commencing on the Effective Date and
ending on the Termination Date.
"Bank of America" means Bank of America, N.A. in its capacity as a Bank.
"BAS" means Banc of America Securities LLC.
"Base Rate" means the higher of: (a) the rate of interest publicly
announced from time to time by Bank of America as its "reference rate," which is
a rate set by Bank of America based upon various factors including Bank of
America's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate; and (b) one-half percent per
annum above the Federal Funds Rate. Any change in the reference rate announced
by Bank of America shall take effect at the opening of business on the day
specified in the public announcement of such change.
"Base Rate Loan" means a Loan bearing interest based on the Base Rate
calculated pursuant to Section 2.5.
"Borrowing Date" means a date on which funds are advanced to Borrower by
one or more Banks pursuant to a Loan Request.
"Business Day" means a day other than a Saturday or Sunday on which banks
are open for business in both San Francisco, California and New York, New York.
"Commercial Paper" means short term commercial paper (with a maturity date
not in excess of 270 days from the date of its issuance) issued by Borrower (a)
pursuant to the exemption from registration contained in Section 4(2) of the
Securities Act of 1933, as amended or modified from time to time, or (b)
pursuant to the exemption from registration contained in Section 3(a)(3) of the
Securities Act of 1933, as amended or modified from time to time, with respect
to which a recognized rating agency has taken this Agreement into account in the
rating of such short term commercial paper.
"Commitment" of each Bank means the dollar amount set forth opposite such
Bank's name on Schedule 1 hereto, as such amount may be reduced or changed
pursuant to Sections 3.5 and 3.6.
"Compliance Certificate" means a certificate in the form of Exhibit F,
---------
properly completed and signed by Borrower's Treasurer or an Assistant Treasurer.
"Consolidated Adjusted Net Worth" means, as of the date of determination
thereof, the consolidated stockholders equity of Borrower and its Subsidiaries
in accordance with GAAP adjusted by adding back the amount by which such
consolidated stockholders equity has been reduced (or by subtracting the amount
by which stockholders equity has been increased) on
-2-
<PAGE>
account of (a) changes subsequent to December 31, 1992 in the long term
liability of Borrower and its Subsidiaries for post-retirement benefits other
than pensions and (b) specified material non-cash adjustments resulting from the
adoptions of future pronouncements of the Financial Accounting Standards Board.
"Consolidated EBITDA" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, an amount equal to the sum of (a)
Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount of
taxes, based on or measured by income, used or included in the determination of
such Consolidated Net Income, (d) the amount of depreciation and amortization
expense deducted in determining such Consolidated Net Income, (e) for each
fiscal quarter in the fiscal year ending December 31, 1999, (i) the amount of
charges taken in connection with the cancellation of the contract with Asia
Pacific Mobile Telecommunications, up to an aggregate amount of $92,000,000 for
all such fiscal quarters, and (ii) the amount of charges taken in connection
with development costs and schedule delays at Hughes Space and Communication up
to an aggregate amount of $125,000,000 for all such fiscal quarters, (f) for the
last fiscal quarter of the fiscal year ending December 31, 1999, (i) if a non-
cash charge is taken in connection with the write-off of equity investment in
ICO Global Communications, the amount of such non-cash charge up to an aggregate
amount of $62,000,000 and (ii) if a change in business strategy related to
DirecTV Japan, Ltd. results in cash and/or non-cash charges, the amount of such
cash and/or non-cash charges up to an aggregate amount of $250,000,000, and (g)
for each fiscal quarter in the fiscal year ending December 31, 2000, the amount
of non-cash charges taken in connection with ICO Global Communications, the
Hughes Network Systems wireless business and PanAmSat launch delays, up to an
aggregate amount for all such fiscal quarters of (x) $500,000,000 minus (y) the
amount of the charge, if any, added pursuant to clause (f)(i) above; minus (h)
for each fiscal quarter in the fiscal year ending December 31, 2000 , the amount
of cash losses (whether or not accounted for as charges under GAAP) in
connection with DirecTV Japan, Ltd., but only if such cash losses were reflected
in the charges, if any, added pursuant to clause (f)(ii); plus (i) for each
fiscal quarter in the fiscal year ending December 31, 2000, if any change in
business strategy regarding DirecTV Japan, Ltd. results in non-cash charges,
the amount of such non-cash charges up to an aggregate amount of $150,000,000,
minus the amount of non-cash charges, if any, added pursuant to clause (f)(ii)
above.
"Consolidated Funded Indebtedness" means, as of any date of determination,
for Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations and liabilities, whether current
or long-term, for borrowed money (including Loans hereunder), and (b) that
portion of obligations with respect to capital leases that are capitalized in
the consolidated balance sheet of Borrower and its Subsidiaries in excess of an
aggregate amount of $25,000,000.
"Consolidated Interest Charges" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, fees, charges and related expenses payable by Borrower and its
Subsidiaries in connection with borrowed money (including capitalized interest)
or in connection with the deferred purchase price of assets and imputed interest
associated with the assumption of liabilities relating to programming contracts
under purchase accounting in accordance with GAAP, in each case to the extent
treated as interest in accordance with GAAP, and (b) the portion of rent payable
by Borrower and its
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<PAGE>
Subsidiaries with respect to such period under capital leases that is treated as
interest in accordance with GAAP.
"Consolidated Net Income" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, the net income of Borrower and its
Subsidiaries from continuing operations after extraordinary items (excluding
gains or losses from Dispositions of assets) for that period.
"Consolidated Tangible Net Worth" means, at any date of determination,
Consolidated Adjusted Net Worth less the consolidated intangible assets of
----
Borrower and its Subsidiaries, determined in accordance with GAAP.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
"Debt Rating" means, as of any date of determination, the rating as
determined by either Standard & Poor's Ratings Group or Moody's Investors
Service, Inc. (collectively, the "Debt Ratings"); of (a) the Borrower's senior
unsecured long-term debt or (b) if the foregoing debt is not outstanding, then
the rating of the Multi-Year Credit Agreement or the implied rating of senior
unsecured and non-credit enhanced debt securities, provided that if both ratings
--------
in this clause (b) have been issued then both shall apply; or (c) if neither (a)
nor (b) apply, then the rating of long-term debt issued by equipment trust
guaranteed by Borrower; provided that if a Debt Rating is issued by both of such
--------
rating agencies, then the lower of such credit ratings shall apply unless the
split in credit ratings is more than one level, in which case the level one
level higher than the lower rating shall apply. Initially, the Debt Ratings
shall be determined from the certificate delivered pursuant to Section 5.2(d).
Thereafter the credit ratings shall be determined from the most recent public
announcement of any changes in such credit ratings.
"Default Rate" means an interest rate equal to the Base Rate plus the
----
Applicable Amount, if any, applicable to Base Rate Loans plus 2% per annum, to
----
the fullest extent permitted by applicable Laws; provided, however, that with
-------- -------
respect to a Eurodollar Loan, the Default Rate shall be an interest rate equal
to the interest rate (including any Applicable Amount) otherwise applicable to
such Loan plus 2% per annum.
"Effective Date" means the date on or before December 10, 1999 that the
conditions set forth in Section 5.2 are satisfied or waived by the Majority
Banks.
"Eligible Assignee" means a Person which can lawfully fulfill all of the
obligations of a Bank hereunder and is (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100,000,000; (b) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
the OECD; or (c) any Person engaged primarily in the business of commercial
banking and that is a subsidiary of a Bank or of a Person of which a Bank is a
subsidiary.
-4-
<PAGE>
"Environmental Laws" means all foreign, federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental, health, safety and land use matters
applicable to any property.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in
effect from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with Borrower or any Subsidiary of Borrower within the
meaning of Section 414(b), 414(c) or 414(m) of Internal Revenue Code of 1986, as
amended.
"Eurodollar Banking Day" means a day on which banks are open for business
in San Francisco, California, New York, New York and the applicable offshore
dollar interbank market and dealing in U. S. Dollar deposits.
"Eurodollar Loan" means a Loan at the rate of interest calculated pursuant
to Section 2.6.
"Eurodollar Rate" means for each Interest Period of a Eurodollar Loan the
arithmetic mean of the rates of interest rounded to the nearest 1/100 of one
percent as notified to the Administrative Agent by the Reference Banks at which
U.S. Dollar deposits for such Interest Period and in an amount comparable to the
Principal Amount of such Eurodollar Loan would be offered by such Reference
Banks to major banks in the London offshore dollar interbank market upon request
of such banks at approximately 11:00 a.m. London time two Eurodollar Banking
Days prior to the first day of such Interest Period.
"Event of Default" means any event specified in Section 9.1.
"Federal Funds Rate" means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Board (including any such successor,
"H.15(519)") for such day opposite the caption "Federal Funds (Effective)". If
on any relevant day such rate is not yet published in H.15(519), the rate for
such day will be the rate set forth in the daily statistical release designated
as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m. Quotation") for such day
under the caption "Federal Funds Effective Rate". If on any relevant day the
appropriate rate for such day is not yet published in either H.15(519) or the
Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York time) on that day by each of three leading brokers
of Federal funds transactions in New York City selected by Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any successor thereto.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute
-5-
<PAGE>
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such other entity as may be in general use by significant
segments of the U.S. accounting profession, which are applicable to the
circumstances as of the date of determination.
"Governmental Authority" means (a) any international, foreign, federal,
state, county or municipal government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality, central bank or public body, or (c) any court,
administrative tribunal or public utility.
"Interest Payment Date" means, with respect to each Eurodollar Loan, the
last day of each Interest Period; provided, however, that if any Interest Period
-------- -------
exceeds three months, "Interest Payment Date" shall mean the 90th day and the
last day of the third month of such Interest Period, respectively, as well as
the last day of the relevant Interest Period; and, with respect to each Base
Rate Loan, means the 10th day of each January, April, July, and October and the
Termination Date. If any day specified herein is not a Business Day or, in the
case of a Eurodollar Loan, a Eurodollar Banking Day, then the relevant Interest
Payment Date shall be the next succeeding Business Day or Eurodollar Banking
Day, as applicable, except as otherwise provided in the definition of Interest
Period. Notwithstanding any other provision herein, interest accruing at the
Default Rate shall be payable from time to time at any time upon demand of
Administrative Agent
"Interest Period" means with respect to each Eurodollar Loan, a period of
one, two, three or six months as selected by Borrower by a Loan Request
delivered to Administrative Agent in accordance with Section 2.3, subject to the
following:
(i) If the term of an Interest Period is not designated, a period of
one month shall be deemed selected for the relevant Eurodollar Loan;
(ii) The first Interest Period for each Loan shall commence on the
date such Loan is disbursed and each succeeding Interest Period for such
Loan shall commence on the last day of the preceding Interest Period for
such Loan;
(iii) In the case of a Eurodollar Loan, if the last day of an Interest
Period falls on a day that is not a Eurodollar Banking Day, the Interest
Period involved shall be extended to the next following Eurodollar Banking
Day unless as a result thereof it would fall into the next calendar month,
in which case the end of the Eurodollar Interest Period shall be the
preceding Eurodollar Banking Day, and in either case the next succeeding
Eurodollar Interest Period shall be measured from the last day of the
Interest Period as so adjusted;
(iv) If an Interest Period for a Eurodollar Loan commences on the
last Eurodollar Banking Day of a calendar month, it shall end on the last
Eurodollar Banking Day of a calendar month; and
(v) No Interest Period shall end on a day later than the Termination
Date.
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<PAGE>
"Investment Grade" means a Debt Rating by S&P of BBB- or better and Debt
Rating by Moody's of Baa3 or better.
"Lending Office" means with respect to any Bank as the context shall
require, the branch office of such Bank designated as the Lending Office of such
Bank in Exhibit C attached hereto and incorporated herein by reference; or any
other branch office or affiliate of such Bank hereafter selected and notified to
Borrower and Administrative Agent from time to time by such Bank; provided that
--------
any Bank may from time to time by notice to Borrower and Administrative Agent
designate separate Lending Offices for its Eurodollar Loans and/or its Base Rate
Loans, in which case any reference to the Lending Office of such Bank shall be
deemed to refer to any or all of such offices, branches or affiliates as the
context may require.
"Letter Agreement" means that letter agreement among BAS, Administrative
Agent and Borrower dated November 3, 1999 specifying Arrangers' and
Administrative Agent's compensation for services hereunder as such letter
agreement may from time to time be amended, restated, reissued or otherwise
modified.
"Leverage Ratio" means, as of the end of any fiscal quarter, for the
Borrower and its Subsidiaries on a consolidated basis, the ratio of (a)
Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for
the period of the four fiscal quarters ended on such date.
"Lien" means any trust deed, mortgage, pledge, hypothecation, assignment,
security interest, lien, charge or encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, the lien of an attachment, judgment or
execution, or any conditional sale or other title retention agreement, any
capitalized lease, and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction, but excluding financing statements filed to give notice of leases
in the ordinary course of business).
"Loan" or "Loans" means the loans described in Section 2, any of which may
be at any time Base Rate Loans or Eurodollar Loans.
"Loan Request" means a notice given by Borrower pursuant to Section 2.3 or
2.4.
"Majority Banks" means those Banks whose Commitments constitute more than
51% of the Total Commitment as such Total Commitment may be adjusted from time
to time pursuant to the terms of this Agreement, or if the Commitments have
terminated, those Banks holding at least 51% of the outstanding Loans.
"Material Adverse Change" means (a) any adverse change which could
reasonably be expected to materially impair Borrower's ability to timely and
fully perform its obligations under this Agreement or (b) any material adverse
change in the business, assets, liabilities (actual or contingent), operations,
condition (financial or otherwise) or prospects of Borrower and its
Subsidiaries, taken as a whole.
"Moody's" means Moody's Investors Service, Inc.
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<PAGE>
"Multi-Year Credit Agreement" means the Amended and Restated Revolving
Credit Agreement (Multi-Year Facility) dated as of November 24, 1999 among
Borrower, the banks named therein, Bank of America, as administrative agent,
Morgan Guaranty Trust Company of New York, as syndication agent, and Citicorp
USA, Inc. and The Chase Manhattan Bank, as documentation agents, as amended from
time to time.
"Normal Percentage" means, with respect to each Bank, the percentage under
the heading "Normal Percentage" set forth opposite such Bank's name on Schedule
1 hereto, as such amount may be reduced or changed pursuant to Section 3.6 or
Section 11.11.
"Note" means any promissory note delivered pursuant to Section 2.8
(collectively, the "Notes").
"Notice of Assignment and Acceptance" means a Notice of Assignment and
-----------------------------------
Acceptance substantially in the form of Exhibit G.
---------
"Person" means any individual, firm, company, corporation, joint venture,
joint-stock company, trust, unincorporated organization, Governmental Authority,
or any association or partnership (whether or not having separate legal
personality) of two or more of the foregoing.
"Plan" means any employee benefit pension plan which is subject to the
provisions of Title IV of ERISA and which is maintained for employees of
Borrower or any Subsidiary.
"Principal Amount" means, when used with reference to any Loan, the amount
requested in the Loan Request relating thereto and made available to Borrower by
the Banks hereunder.
"Principal Repayment Date" means, with respect to each Base Rate Loan, the
Termination Date, and with respect to each Eurodollar Loan, the last day of the
Interest Period for such Loan.
"Reference Banks" means Bank of America and Citibank, N.A.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder excluding those events for which the 30-day
notice requirement is waived, a withdrawal from a Plan described in Section 4063
of ERISA, or a cessation of operations described in Section 4062(e) of ERISA.
"Restricted Subsidiaries" means each Subsidiary (i) having assets exceeding
10% of the Consolidated Tangible Net Worth of Borrower and its Subsidiaries on a
consolidated basis or (ii) having operating revenues exceeding 10% of the
operating revenues of Borrower and its Subsidiaries on a consolidated basis, in
each case as shown on the financial statements dated as of June 30, 1999 and,
thereafter, as shown on the audited consolidated financial statements of
Borrower and its Subsidiaries as of the end of the fiscal year immediately
preceding the date of determination; provided, however, that "Restricted
-------- -------
Subsidiary" shall not include any Subsidiary which is a corporation created
solely to purchase receivables from Borrower or any of its Subsidiaries, and
which would not, in accordance with GAAP, be included in the consolidated
financial statements of Borrower.
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<PAGE>
"S&P" means Standard & Poor's Ratings Group.
"Shareholders' Equity" means, as of any date of determination for Borrower
and its Subsidiaries on a consolidated basis, shareholders' equity as of that
date determined in accordance with GAAP.
"Signing Date" means the date of this Agreement.
"Subsidiaries" (individually a "Subsidiary") means those corporations or
entities of which Borrower owns more than 50% of the voting securities. If
Borrower, subject to the terms hereof, permits its ownership to fall to 50% or
below of outstanding voting shares of any Subsidiary, such Subsidiary shall
thereupon cease to be a Subsidiary for all purposes hereof.
"Tax" and "Taxes" mean all taxes, levies, imposts, duties, fees or other
charges of whatsoever nature however imposed by any country or any subdivision
or authority of or in that country in any way connected with this Agreement or
any instrument or agreement required hereunder, and all interest, penalties or
similar liabilities with respect thereto, except such taxes as are imposed on or
measured by any Bank's net income or capital and franchise taxes, by the country
or any subdivision or authority of or in that country in which such Bank's
principal office or actual Lending Office is located.
"Termination Date" means November 22, 2000; provided, however, that,
-------- -------
notwithstanding any other provisions of this Agreement to the contrary, the
Termination Date shall occur upon the earlier termination in whole of the
Commitments pursuant to Section 3.5 or 9.1.
"364-Day Credit Agreement" means the Revolving Credit Agreement (364-day
Facility) dated as of November 24, 1999 among Borrower, the banks parties
thereto, Bank of America, N.A., as administrative agent for such banks, Citicorp
USA, Inc., as Syndication Agent and Deutsche Bank AG, New York Branch, as
Documentation Agent, as amended from time to time.
"Total Commitment" means the aggregate amount of the Commitments.
"Unmatured Event of Default" means an event which with the passage of time
or the giving of notice, or both, would become an Event of Default.
"Voting Stock" means capital stock of Borrower having voting power under
ordinary circumstances to elect directors of Borrower.
"Withdrawal Liability" means, as of any determination date, the aggregate
amount of the liabilities, if any, pursuant to Section 4201 of ERISA if the
Borrower or any ERISA Affiliate made a complete withdrawal from all Plans and
any increase in contributions pursuant to Section 4243 or ERISA.
SECTION 2
THE CREDIT
2.1 The Commitments. From time to time, during the Availability Period,
---------------
each Bank severally agrees to lend to Borrower in U. S. Dollars the amount set
forth opposite such Bank's
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<PAGE>
name on Schedule 1 hereto, subject to reduction of such amount at Borrower's
option, pursuant to Sections 3.5 and 3.6. Each Bank shall make available to
Borrower Base Rate Loans and Eurodollar Loans up to the amount of such Bank's
Commitment.
2.2 The Loans. Each Loan shall be a Base Rate Loan or a Eurodollar Loan
---------
and shall be in U. S. Dollars. Each Loan shall be in the minimum amount of
$5,000,000 with any additional amounts in integral multiples of $1,000,000.
This is a revolving credit, and Borrower may, during the Availability Period,
reborrow amounts repaid or prepaid. No Loan nor any part of any Loan shall be
repaid except at the times and in the manner expressly provided herein.
2.3 Requests for Base Rate and Eurodollar Loans. Each Base Rate Loan and
-------------------------------------------
Eurodollar Loan shall be made upon irrevocable written or telephonic notice,
confirmed promptly in writing, substantially in the form of Exhibit A hereto, by
---------
Borrower to Administrative Agent received by Administrative Agent not later than
9:00 a.m. California time not less than three (3) Eurodollar Banking Days prior
to the Borrowing Date (which must be a Eurodollar Banking Day) of a Eurodollar
Loan and not later than 9:00 a.m. California time on the proposed Borrowing Date
(which must be a Business Day) of a Base Rate Loan. Upon receipt of a request
for a Base Rate Loan and Eurodollar Loan, Administrative Agent shall promptly
notify the Banks of the amount, the Interest Period(s), if applicable, and the
Borrowing Date requested by Borrower. After giving effect to any borrowing of
Eurodollar Loans or any conversion or continuation of Eurodollar Loans, there
shall not be more than 10 different Interest Periods for Eurodollar Loans in the
aggregate at any time.
2.4 Limitations on Borrowing. Borrower may not request any Loans pursuant
------------------------
to Section 2.3 at any time that any amount is available to be borrowed under the
364-Day Credit Agreement or the Multi-Year Credit Agreement; provided that
--------
Borrower may request Loans hereunder if it simultaneously requests the maximum
amount available under the 364-Day Credit Agreement and the Multi-Year
Agreement.
2.5 Interest and Principal on Base Rate Loans. Subject to Section 2.11(f)
-----------------------------------------
herein, the outstanding Principal Amount of each Base Rate Loan shall bear
interest until payment is due in full (computed daily on the basis of a 365 or
366, as the case may be, day year and actual days elapsed) at the rate per annum
equal to the Base Rate. Borrower shall pay interest on each Base Rate Loan on
each Interest Payment Date for the interest accruing since the previous Interest
Payment Date on such Base Rate Loan. Borrower shall repay in full the Principal
Amount of each Base Rate Loan on the Termination Date or as provided in Section
2.10(c).
2.6 Interest and Principal on Eurodollar Loans. (a) Subject to Section
------------------------------------------
2.11(f) herein, the outstanding Principal Amount of each Eurodollar Loan shall
bear interest until payment is due in full (computed daily on the basis of a
three hundred sixty (360) day year and actual days elapsed) at a rate per annum
equal to the Eurodollar Rate plus the Applicable Amount. Borrower shall pay
----
interest on each Eurodollar Loan on each Interest Payment Date for such
Eurodollar Loan. Borrower shall repay in full the Principal Amount of each
Eurodollar Loan on the last day of the Interest Period for such Eurodollar Loan
or as provided in Section 2.10(c).
(b) If any Reference Bank's Commitment shall terminate (otherwise than on
termination of all the Commitments), or for any reason whatsoever the Reference
Bank shall
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<PAGE>
cease to be a Bank hereunder, that Reference Bank shall thereupon cease to be a
Reference Bank, and the Eurodollar Rate shall be determined on the basis of the
rates as notified by the remaining Reference Banks. Each Reference Bank shall
use its best efforts to furnish quotations of rates to the Administrative Agent
as contemplated hereby. If any of the Reference Banks shall be unable or
otherwise fails to supply such rates to the Administrative Agent upon its
request, the rate of interest shall be determined on the basis of the quotations
of the remaining Reference Banks or Reference Bank.
2.7 [Intentionally omitted.]
2.8 Loan Accounts. Each Bank shall open and maintain on its books one or
-------------
more loan accounts in Borrower's name. Each loan account shall show (without
duplication) as debits thereto each Bank's portion of each Base Rate Loan and/or
Eurodollar Loan and as credits thereto all Base Rate Loan and/or Eurodollar Loan
payments received by such Bank for the account of such Bank and applied to
principal so that the balance of the loan account(s) at all times reflect the
principal amount due each Bank from Borrower as Base Rate Loans and Eurodollar
Loans. All entries in said books shall be presumptive evidence of the making of
each Base Rate Loan and Eurodollar Loan, the obligation of Borrower to repay
each Base Rate Loan and Eurodollar Loan, and all payments received and disbursed
by such Bank. Borrower agrees that if, in the opinion of any Bank, a promissory
note or other evidence of debt is required or appropriate to reflect or enforce
any Loans outstanding to or to be made by such Bank, then Borrower shall
promptly execute and deliver to such Bank one or more promissory notes payable
to such Bank to evidence the Loans outstanding to such Bank under this Agreement
from time to time, together with such documents as such Bank may reasonably
request to evidence the due authorization, execution, delivery and
enforceability of such notes. If any notes are issued hereunder, Administrative
Agent and Borrower may treat the payee of that note as the owner of such note
for all purposes.
2.9 [Intentionally omitted.]
2.10 Conversion of Loans Between Eurodollar Loans and Base Rate Loans and
--------------------------------------------------------------------
Conversion of Interest Periods of Eurodollar Loans. (a) On any Eurodollar
- --------------------------------------------------
Banking Day Borrower may convert on a pro rata basis among the Banks any
outstanding Base Rate Loans or Eurodollar Loans into any other type of Loan
available to Borrower hereunder, or Borrower may change the Interest Period of
any Eurodollar Loan to another Interest Period available under this Agreement,
subject to the following limitations:
(i) No conversion of any Eurodollar Loan into any other Loan and no
conversion of the Interest Period of any Eurodollar Loan may be made except
on the last day of an Interest Period with respect thereto; and
(ii) Any conversion shall be preceded by an irrevocable written or
telephonic notice from Borrower that it elects such conversion, which
notice shall be received by Administrative Agent at least three (3)
Eurodollar Banking Days prior to the date requested for such conversion
from or into a Eurodollar Loan or conversion of the Interest Period of a
Eurodollar Loan.
-11-
<PAGE>
(b) Banks shall not be obligated to make or continue any Eurodollar Loan
when any Event of Default has occurred and is continuing, but any outstanding
Eurodollar Loan shall be automatically converted to a Base Rate Loan on the last
day of the Interest Period for which a Eurodollar Rate was determined by
Administrative Agent following occurrence of such Event of Default, and, unless
Section 2.11(f) is applicable, Borrower shall be obligated to pay interest at
the Base Rate from the date any Loan is so converted until such Loan is repaid
in full regardless of the date when Administrative Agent obtains knowledge of
such Event of Default.
(c) Each conversion of a Loan into a Base Rate Loan or a Eurodollar Loan,
as the case may be, shall be effected by each Bank, on behalf of Borrower, as
applicable, by making a simultaneous payment of the relevant Eurodollar Loan, or
Base Rate Loan, as the case may be, from the proceeds of the new Loans,
procedures with respect thereto to be governed by the provisions of Section 2.3,
except that disbursement shall be made by means of such payment rather than
directly to Borrower to the extent applicable with respect to each Bank.
(d) If upon the expiration of any Interest Period applicable to
Eurodollar Loans, Borrower has failed to select a new Interest Period to be
applicable thereto, or if any Event of Default or Unmatured Event of Default
shall then exist, Borrower shall be deemed to have elected to convert such
Eurodollar Loans into Base Rate Loans effective as of the expiration date of
such current Interest Period.
2.11 Disbursements and Payments. (a) Each Base Rate Loan and Eurodollar
--------------------------
Loan shall be made on a pro rata basis by Banks, and each Bank's portion of each
Loan shall be determined by application of its Normal Percentage. Each Bank's
interest in each Loan and each payment to such Bank under this Agreement shall
be for the account of such Bank's Lending Office.
(b) Each Loan and each payment of principal, interest and other sums
under this Agreement shall be made in immediately available funds (or such other
funds as Administrative Agent may require) at Bank of America's Agency
Administrative Services-West, 1850 Gateway Blvd., Concord, California 94520, ABA
# 111000012, Acct No. 3750836479, Ref: Hughes Electronics Corporation or such
other office designated by Administrative Agent from time to time.
(c) Each Bank agrees it will make the funds which it is to advance
hereunder available to Bank of America's Agency Administrative Services-West,
1850 Gateway Blvd., Concord, California 94520, ABA # 111000012, Acct No.
3750836479 , Ref: Hughes Electronics Corporation or such other office designated
by Administrative Agent from time to time not later than 11:00 a.m. California
time on the Borrowing Date, and Administrative Agent will thereupon promptly
advance to Borrower the amount so received from Banks.
(d) Payment of all sums under this Agreement shall be made by Borrower to
Administrative Agent, and the latter shall promptly distribute to each Bank its
share of such payments. Each payment by Borrower shall be made without setoff
or counterclaim and not later than 11:00 a.m. California time on the day such
payment is due. All sums received after such time shall be deemed received on
the next Business Day.
-12-
<PAGE>
(e) If Administrative Agent makes available to Borrower an amount due
from any Bank which such Bank fails to make available to Administrative Agent,
or if Administrative Agent makes available to any Bank an amount due from
Borrower which Borrower fails to make available to Administrative Agent,
Borrower or such Bank, as the case may be, shall, on demand, refund such amount
to Administrative Agent, together with interest thereon for the period during
which such amount was available to Borrower or such Bank, as the case may be, at
the Federal Funds Rate.
(f) Any sum of principal or interest payable by Borrower hereunder if not
paid when due shall bear interest (payable on demand) from its due date until
payment in full (computed daily on the basis of a 365 or 366, as the case may
be, day year and actual days elapsed) at a rate per annum equal to the Default
Rate.
2.12 Facility Fee. Borrower shall pay Administrative Agent for the
------------
account of the Banks, a facility fee at the rate per annum equal to the
Applicable Amount therefor on the Total Commitment (without regard to the amount
of Loans outstanding at any time hereunder and without giving effect to any
reduction pursuant to Section 2.1(c)) during the Availability Period; provided,
--------
however, following any reduction in the Total Commitment pursuant to Section 3.5
- -------
or 3.6 (but not a reduction pursuant to Section 2.1(c)) the computation of the
facility fee shall be based upon such reduced Total Commitment as of the
effective date of such reduction. The facility fee shall be computed on a
calendar quarter basis. The facility fee shall be calculated on the basis of a
360-day year and actual days elapsed, which results in a higher fee than if a
365/366-day year were used, and shall be payable on the 10th day of each
January, April, July and October (for the facility fee accrued during the
previous calendar quarter) and on the Termination Date.
2.13 Prepayments and Reductions in Total Commitment.
----------------------------------------------
(a) Mandatory Prepayments and Commitment Reductions Due to Issuance of
------------------------------------------------------------------
Debt Securities. On the date of receipt by Borrower of the cash proceeds (any
- ---------------
such proceeds, net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including reasonable legal
fees and expenses, being "Net Securities Proceeds") from the issuance of any
debt securities of Borrower in a public offering or a transaction consummated
under Rule 144A promulgated by the Securities and Exchange Commission which
transaction contains the right of the purchasers to register securities issued
under such offering pursuant to the Securities Act of 1933 or to exchange such
securities for securities issued under the Securities Act of 1933, Borrower
shall prepay the Loans (up to the outstanding principal amount thereof) and the
Total Commitment shall be permanently reduced, in each case in an aggregate
amount equal to such Net Securities Proceeds, and the Total Commitment shall be
terminated if such Net Securities Proceeds are equal to or greater than the
Total Commitment.
(b) Calculations of Net Proceeds Amount. Concurrently with any
-----------------------------------
prepayment of the Loans and/or reduction of the Total Commitment pursuant to
Section 2.13(a), Borrower shall deliver to Administrative Agent an officers'
certificate signed by Borrower's treasurer or an assistant treasurer
demonstrating the calculation of the amount of the applicable Net Securities
Proceeds that gave rise to such prepayment and/or reduction.
-13-
<PAGE>
(c) Application of Prepayments to Base Rate Loans and Eurodollar Loans.
------------------------------------------------------------------
Any prepayment of Loans made under Section 2.13(a) shall be applied first to
Base Rate Loans to the full extent thereof before application to Eurodollar
Loans, in each case in a manner which minimizes the amount of any payments
required to be made by Borrower pursuant to Section 3.4.
(d) Borrower hereby agrees to prepay any outstanding Loans hereunder in
full before it prepays on any optional basis any outstanding loans under the
364-Day Credit Agreement or the Multi-Year Credit Agreement.
SECTION 3
PAYMENT OF COSTS AND REDUCTION
OF THE COMMITMENT
3.1 Indemnification Upon Failure to Pay Eurodollar Loan. If Borrower
---------------------------------------------------
makes any payment of principal with respect to any Eurodollar Loan on a day
other than the last day of the then current Interest Period applicable to such
Loan (including without limitation any payment upon reduction of the
Commitments) or fails to borrow, continue, convert, pay or prepay its Eurodollar
Loan on a date designated to Administrative Agent in a notice pursuant to this
Agreement (if such failure does not result from the application of Sections 4.1
or 4.2), Borrower shall reimburse each Bank within 15 days after receipt of
written demand for any loss incurred by it as a result of the timing of such
payment or non-borrowing not reflected in the Eurodollar Rate, including without
limitation any loss incurred in liquidating or employing deposits from third
parties and loss of profit for the period after such payment or non-borrowing.
A certificate of such Bank setting forth the amounts reasonably necessary so to
reimburse it in respect of any loss shall be conclusive and binding absent
manifest error.
3.2 Increased Costs. (a) If after the date hereof, any applicable law,
---------------
rule or regulation or any change therein or in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof or compliance
by any Bank (or its Lending Office) with any request or directive of any such
authority, central bank or comparable agency, whether or not having the force of
law, shall impose, modify or deem applicable:
(i) any reserve (including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System), special deposit,
compulsory loan or similar requirements against assets, commitments or
deposits or other liabilities with, of or for the account of, or credit
extended by, or any acquisition of funds by or for the account of any Bank
or its Lending Office or the London interbank market or any other condition
affecting its obligations to make the Loans to Borrower hereunder;
(ii) any capital or similar requirements against (or against any class
of or change in or the amount of) assets or liabilities of, or commitments
or extensions of credit by, such Bank;
each Bank which is so affected shall give prompt notice to Borrower describing
such reserves or requirements at least four Business Days prior to the date such
Bank will begin to implement
-14-
<PAGE>
such additional charges with respect to Borrower. If the result of any of the
foregoing is to increase the cost or reduce the profit to such Bank (or its
Lending Office) under this Agreement by an amount deemed by such Bank to be
material, then, within 15 days after written demand by such Bank, Borrower will
pay to such Bank such additional amount or amounts as will compensate such Bank
for such increased cost incurred or reduction in profit suffered by such Bank.
Such Bank will designate a different Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will not be
otherwise disadvantageous to such Bank in the sole discretion of such Bank. A
certificate of such Bank setting forth the basis for determining such additional
amount or amounts necessary to compensate the Bank shall be conclusive in the
absence of manifest error.
(b) Without limiting the effect of the foregoing (but without
duplication), upon any Bank's prior written request, Borrower shall pay to such
Bank on the last day of each Interest Period, so long as such Bank may be
required to maintain reserves against "eurocurrency liabilities" under
Regulation D (as at any time amended) of the Board of Governors of the Federal
Reserve System, as additional interest on the unpaid principal amount of each
Eurodollar Loan by such Bank outstanding during such Interest Period, an
additional amount (determined by such Bank and notified to Borrower in writing)
up to but not exceeding such amount as would, together with payments of interest
on such Eurodollar Loan for such Interest Period, result in the receipt by such
Bank of total interest on such Eurodollar Loan, for such Interest Period at a
rate determined by such Bank to be equal to the sum of:
(i) the Eurodollar Rate divided by a sum equal to (a) 1 minus (b) the
rate (expressed as a decimal) of such reserves required by Regulation D,
plus
(ii) the Applicable Amount for Eurodollar Loans.
In determining the additional amount payable for an Interest Period
pursuant to this Section, such Bank shall take into account any transitional
adjustment or phase-in provisions of such reserve requirements applicable during
such Interest Period, which would reduce the reserve requirement otherwise
applicable to eurocurrency liabilities during such Interest Period; provided,
however, each Bank in its sole discretion may determine the allocation of
reserve requirements to its Eurodollar Loans. Each such determination made by
such Bank, and each such notification by such Bank to Borrower under this
Section, shall be conclusive as to the matters set forth therein in the absence
of manifest error.
3.3 Taxes. All payments or reimbursements under this Agreement and any
-----
instrument or agreement required hereunder shall be made without setoff or
counterclaim and free and clear of and without deduction for any and all present
and future Taxes. Borrower agrees to cause all such Taxes to be paid on behalf
of any Bank or Administrative Agent directly to the appropriate Governmental
Authority. If Borrower is legally prohibited from complying with this
subsection, payments due to such Bank or Administrative Agent under this
Agreement and any instrument or agreement required hereunder shall be increased
so that, after provisions for Taxes and all Taxes on such increase, the amounts
received by such Bank or Administrative Agent will be equal to the amounts
required under this Agreement and any instrument or agreement required hereunder
as if no Taxes were due on such payments. Borrower shall indemnify each Bank
and Administrative Agent for the full amount of Taxes payable by such
-15-
<PAGE>
Bank or Administrative Agent and any liabilities (including penalties, interest
and expenses) arising from such Taxes within 30 days from any written demand by
such Bank. Borrower shall provide evidence that all applicable Taxes have been
paid to the appropriate taxing authorities by delivering to Administrative Agent
official tax receipts or notarized copies or other evidence thereof satisfactory
to Administrative Agent, within 90 days after the due date for such Tax payment.
Such Bank will designate a different Lending Office if such designation will
avoid the need for, or reduce the amount of, such payment or reimbursement and
will not be otherwise disadvantageous to such Bank in the sole discretion of
such Bank.
3.4 Prepayment. Upon the irrevocable written notice of Borrower received
----------
by Administrative Agent by 11:00 a.m. California time at least one Business Day
prior to the prepayment of a Base Rate Loan and at least five Eurodollar Banking
Days prior to the prepayment of a Eurodollar Loan, Borrower may prepay any
Eurodollar Loan or Base Rate Loan; but such prepayment shall be in an amount of
at least $5,000,000 or multiple integrals of $1,000,000 in excess thereof. The
notice of prepayment shall specify the date of the prepayment, the amount of the
prepayment and the Loan to be prepaid. Each such prepayment shall be made on
the date specified and, in the case of a prepayment of any Eurodollar Loan shall
be accompanied by the payment of accrued interest on the amount prepaid.
Subject to compliance with the foregoing procedures, Base Rate Loans may be
prepaid at any time without cost or penalty of any kind. If Borrower elects to
prepay a Eurodollar Loan, Borrower shall, on demand by each Bank, pay such Bank
the amount (if any) by which (a) the additional interest which would have been
payable on the amount prepaid on such Bank's portion of such Loan had it not
been paid until the last day of the Interest Period of such Loan exceeds (b) the
interest which would have been recoverable by such Bank by placing such prepaid
amount on deposit in the offshore Dollar interbank markets for a period starting
on the date on which it was prepaid and ending on the last day of the Interest
Period for such Loan.
3.5 Pro Rata Reduction of Commitments by Borrower. Borrower may, upon
---------------------------------------------
five Business Days' prior written notice (which notice shall be irrevocable) to
Banks through Administrative Agent, reduce the Total Commitment on a pro rata
basis among the Banks. Such a reduction shall be in an amount of at least
$5,000,000 or multiple integrals of $1,000,000 in excess thereof. Borrower
shall, on the effective date of each such reduction, repay to each Bank through
Administrative Agent that portion of each Loan which exceeds the amount of each
Bank's Commitment as reduced, together with accrued interest on the amount paid
and accrued facility fees subject to such reduction. After the effective date
of each reduction, the Banks' obligations under this Agreement shall be based on
the reduced Commitments.
3.6 Reduction of One Bank's Commitment by Borrower. If the amount of any
----------------------------------------------
payment to be made to or for the account of any Bank is increased under Section
3.3 or any Bank makes a claim under Section 3.2, then:
(a) Borrower may, within 60 days after the notice thereof and by not less
than five Business Days' written notice to Administrative Agent, cancel such
Bank's Commitment, whereupon such Bank shall cease to be obligated to
participate in further Loans hereunder and its Commitment shall be reduced to
the amount of its outstanding Loans until such Loans are repaid by Borrower
either on the Principal Repayment Date for such Loans or pursuant to Section
3.6(b), at which time such Bank's Commitment shall be reduced to zero;
-16-
<PAGE>
(b) if Borrower cancels such Bank's Commitment pursuant to clause (a)
above and if Borrower so elects by written notice to Administrative Agent given
at the same time as the notice referred to in clause (a) above, Borrower shall
prepay such Bank's portion of each outstanding Loan together with any accrued
interest thereon plus all costs and expenses (including break and funding costs
in connection with the relending, reborrowing, funding or other employing of
funds) incurred by such Bank as a result of such cancellation or prepayment on a
date other than the Principal Repayment Date for such Loan; and
3.7 Notice of Reductions. Each notice of reduction or prepayment given
--------------------
pursuant to Section 3.4, 3.5 or 3.6 shall be irrevocable, shall specify the date
upon which such reduction or prepayment is to be made and, in the case of a
notice of prepayment, shall obligate Borrower to make such prepayment on such
date. Borrower may not give a notice of reduction of a part of the Commitment
pursuant to Section 3.6 at any time prior to the date so specified in any
previous such notice.
3.8 Designation of Replacement Bank. If the Commitment of any Bank is
-------------------------------
cancelled by Borrower pursuant to Section 3.6 or if any Bank terminates its
Commitment with respect to Eurodollar Loans pursuant to Section 4.2, Borrower,
with the consent of Administrative Agent, may designate an Eligible Assignee
(or, if it deems appropriate, more than one Eligible Assignee) acceptable to
Administrative Agent to act as a Bank hereunder and upon execution of a written
agreement in form satisfactory to Administrative Agent by such Eligible Assignee
in which it agrees to abide by all of the terms, conditions and obligations
applicable to a Bank herein and to have a Commitment as specified in such
agreement, such Eligible Assignee shall be deemed a Bank hereunder to the same
extent as if it were a signatory hereto and, thereafter, such Eligible Assignee
shall for all purposes be considered a "Bank" hereunder.
3.9 Effect of Reduction of Commitment. If, at any time:
---------------------------------
(a) the Commitment of any Bank is reduced to zero in accordance with the
terms of this Agreement;
(b) all indebtedness and other amounts owed to such Bank by Borrower
hereunder or in connection herewith have been satisfied in full; and
(c) such Bank is under no further actual or contingent obligation
hereunder,
then such Bank shall cease to be a party hereto and a Bank for the purposes
hereof; provided, however, that the obligations of Borrower under Sections 3.1,
-------- -------
3.2, 3.3, 11.14, 11.15 and 11.16 shall survive the cancellation of the
Commitment and the termination of this Agreement.
3.10 Accrued Fees. On the date of the cancellation of any portion of the
------------
Total Commitment in accordance with Section 3.5 or of any Bank's Commitment
under Section 3.6, all accrued facility fees for such portion of the Total
Commitment or of such Bank's Commitment shall be paid in full by Borrower.
3.11 Survival. The agreements and obligations of Borrower in this Section
--------
3 shall survive the termination of this Agreement.
-17-
<PAGE>
SECTION 4
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
4.1 Inability to Determine Eurodollar Rate. If any Reference Bank
--------------------------------------
determines (which determination shall be made in good faith and shall be
conclusive and binding upon Borrower) that (a) by reason of circumstances then
affecting the Eurodollar interbank market, adequate and reasonable means do not
or will not exist for ascertaining the interest rate applicable to any
Eurodollar Loans, or (b) Dollar deposits in the relevant amounts and for the
relevant Interest Period are not available to the Banks in the Eurodollar
interbank market, then it shall notify the Administrative Agent who shall
forthwith give written notice of such determination to Borrower and each Bank at
least one Business Day prior to the first day of any Interest Period so
affected; whereupon, until Administrative Agent shall notify Borrower that the
circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Banks to make Eurodollar Loans shall be suspended and (ii)
Borrower shall repay in full, without premium or penalty, the then outstanding
principal amount of the Eurodollar Loans, together with accrued interest
thereon, on the last day of the then current Interest Period pursuant to the
next sentence. Unless Borrower notifies Administrative Agent to the contrary
within one Business Day after receiving a notice from Administrative Agent
pursuant to this Section, Borrower shall, concurrently with prepaying the
Eurodollar Loans pursuant to this Section, be deemed automatically without any
further notice to Administrative Agent or the Banks to have requested and
received Base Rate Loans in an equal principal amount from the Banks, the
proceeds of which are deemed to have been used to repay the other Loans.
4.2 Illegality. If, after the Effective Date, the introduction of or any
----------
change in any applicable law, rule or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof or compliance by any Bank with any
request or directive (whether or not having the force of law) of any such
authority shall make it unlawful or impossible for such Bank (or its Lending
Office) to make, maintain or fund its Eurodollar Loans, such Bank shall
forthwith give written notice thereof to Administrative Agent and to Borrower.
Before giving any notice pursuant to this Section, such Bank shall designate a
different Lending Office if such designation will avoid the need for giving such
notice and will not be otherwise disadvantageous to such Bank in the sole
judgment of such Bank. Upon receipt of such notice (a) if such Bank has
received a request with respect to Eurodollar Loans and has not yet made such
Loan, a Base Rate Loan shall be deemed to have been designated without any
further notice; (b) all Loans which would otherwise be made by such Bank as
Eurodollar Loans shall be made instead as Base Rate Loans; and (c) Borrower
shall prepay in full, without premium or penalty, the then outstanding principal
amount of such Bank's Eurodollar Loans, together with accrued interest, on
either (i) the last day of the then-current Interest Period if such Bank may
lawfully continue to fund and maintain such Eurodollar Loans, to such day or
(ii) immediately if such Bank may not lawfully continue to fund and maintain
such Eurodollar Loans to such day together with an amount, if any, calculated as
set forth in the last sentence of Section 3.4. Concurrently with prepaying each
such Eurodollar Loan Borrower shall borrow a Base Rate Loan from such Bank in an
amount equal to the principal amount of such Bank's Eurodollar Loans, the
proceeds of which are deemed to have been used to repay such Bank's Eurodollar
Loans. If circumstances subsequently change so that such Bank is not further
affected, and no Eligible Assignee has been appointed pursuant to Section 3.8,
such Bank
-18-
<PAGE>
shall so notify Borrower and Administrative Agent and such Bank's obligation to
make and continue Eurodollar Loans shall be reinstated upon written request of
Borrower.
SECTION 5
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Signing Date. The occurrence of the Signing
------------------------------------
Date is subject to the condition that on the Signing Date this Agreement, duly
executed and delivered by the parties hereto, shall have been delivered to
Administrative Agent with counterparts for each Bank and in form and substance
satisfactory to Banks.
5.2 Conditions Precedent to Effective Date. The obligation of Banks to
--------------------------------------
make the initial Loans hereunder is subject to the condition that on the
Effective Date there shall have been delivered to the Administrative Agent with
counterparts for each Bank:
(a) Notes, if any, requested by any Bank pursuant to Section 2.8 prior to
the Effective Date, duly executed and delivered by the Borrower.
(b) The favorable written opinions, dated the Effective Date, of the
General Counsel or Assistant General Counsel of Borrower in the form set out in
Exhibit E.
- ---------
(c) Certificate of the Secretary or an Assistant Secretary of Borrower
dated the Effective Date as to (i) the Certificate of Incorporation and the By-
laws of Borrower, (ii) the resolution of the Board of Directors of Borrower or
its Executive Committee in connection with this Agreement, and (iii) the
incumbency and signatures of the person authorized to execute and deliver this
Agreement and any other instrument, document or other agreement required
hereunder on the Effective Date.
(d) A certificate, which shall be true and correct, signed by a vice
president of Borrower dated the Effective Date certifying: (i) that since June
30, 1999, there has been no Material Adverse Change; (ii) that the
representations and warranties contained in this Agreement are true and correct
in all material respects; (iii) that no event has occurred and is continuing or
would result from the making of a Loan which constitutes or would constitute an
Event of Default or an Unmatured Event of Default; and (iv) the Debt Ratings as
of the Effective Date.
(e) Certificate of Good Standing in relation to Borrower issued by the
Secretary of the State of Delaware, dated not more than one month prior to the
Effective Date.
(f) A copy of press releases or other evidence of Borrower's Debt Ratings
from both S&P and Moody's.
(g) The Multi-Year Credit Agreement and the 364-Day Credit Agreement have
become effective in accordance with their terms;
(h) The Administrative Agent shall have received all fees payable to it
and/or the Banks on the Effective Date under the Letter Agreement.
-19-
<PAGE>
(i) Unless waived by Administrative Agent, Borrower shall have paid all
Attorney Costs of Administrative Agent to the extent invoiced prior to or on the
Closing Date, including such additional amounts of Attorney Costs as shall
constitute its reasonable estimate of Attorney Costs incurred or to be incurred
by it through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between Borrower and
Administrative Agent).
5.3 Conditions Precedent to Loans. The obligation of Banks to disburse
-----------------------------
each Loan (including the first Loan) is subject to the following conditions and
by communicating a Loan Request Borrower is deemed to certify that: (a)
Borrower's representations and warranties (excluding Section 6.6) contained in
this Agreement and any other documents delivered pursuant hereto are true and
correct in all material respects on the date of such Loan Request; (b) the
financial statements delivered to Administrative Agent by Borrower pursuant to
Section 7.5 on the date most nearly preceding the Loan Request present fairly
the financial position and results of operations and changes in financial
position of Borrower and its consolidated Subsidiaries as at the end of, and for
the fiscal period to which such statements relate, (subject, in the case of
unaudited financial statements to year end adjustments); and (c) no Event of
Default or Unmatured Event of Default has occurred and is continuing except such
Events of Default or Unmatured Events of Default as have been expressly waived
by or on behalf of the Banks.
SECTION 6
REPRESENTATIONS AND WARRANTIES
6. Borrower represents and warrants that as of the Effective Date:
6.1 Authority of Borrower. Borrower (a) is a corporation duly organized
---------------------
and existing under the laws of the State of Delaware, with its principal place
of business in Los Angeles County, California, (b) has the corporate power to
own its property and carry on its business as now being conducted, (c) is duly
qualified and authorized to do business, and is in good standing in every state,
country or other jurisdiction where the failure to be so qualified, authorized
and in good standing would have a material adverse effect on Borrower, (d) has
full power and authority to borrow the sums provided for in this Agreement, to
execute, deliver and perform this Agreement and any instrument or agreement
required hereunder, and to perform and observe the terms and provisions hereof
and thereof, (e) has taken all corporate action on the part of Borrower, its
directors or stockholders, necessary for the authorization, execution, delivery
and performance of this Agreement, and any instrument or agreement required
hereunder on the date hereof, (f) requires no consent or approval of any trustee
or holder of any indebtedness or obligation of Borrower to enter into, deliver
or perform its obligations under this Agreement and the Notes, and (g) requires
no consent, permission, authorization, order or license of any Governmental
Authority in connection with the execution and delivery and performance of this
Agreement and any instrument or agreement required hereunder, or any transaction
contemplated hereby, except as may have been obtained and certified copies of
which have been delivered to Banks through Administrative Agent.
6.2 Binding Obligations. This Agreement is the legal, valid and binding
-------------------
obligation of Borrower, enforceable against it in accordance with its terms, and
any instrument or agreement
-20-
<PAGE>
required hereunder, when executed and delivered, will be similarly valid,
binding and enforceable.
6.3 Incorporation of Restricted Subsidiaries. Each Restricted Subsidiary
----------------------------------------
of Borrower is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and, to the
best of Borrower's knowledge, is duly licensed or qualified as a foreign
corporation in all jurisdictions where the failure to be so qualified,
authorized and in good standing would have a material adverse effect on Borrower
and its Restricted Subsidiaries taken as a whole.
6.4 No Contravention. There is no charter, by-law, or capital stock
----------------
provision of Borrower and no provision of any indenture or material agreement,
written or oral, to which Borrower is a party or under which Borrower is
obligated, nor is there any statute, rule or regulation, or any judgment, decree
or order of any court or agency binding on Borrower which would be contravened
by the execution, delivery and performance of this Agreement, or any instrument
or agreement required hereunder, or by the performance of any provision,
condition, covenant or other term hereof or thereof.
6.5 Notices. Except as previously disclosed in writing to Administrative
-------
Agent, no event has occurred which, to the best of its knowledge, would require
Borrower to notify Administrative Agent and the Banks pursuant to Section 7.3
hereof.
6.6 Financial Statements. The audited consolidated financial statements
--------------------
dated December 31, 1998 and the unaudited consolidated financial statements for
the six months ended June 30, 1999 furnished by Borrower to the Administrative
Agent and Banks, present fairly the financial position and results of operation
and changes in financial position of Borrower and its consolidated Subsidiaries
as at the end of, and for the fiscal periods to which such statements relate,
and such financial statements were prepared in accordance with GAAP. Since June
30, 1999, there has been no Material Adverse Change. The Borrower and its
Subsidiaries did not have any contingent obligations, liabilities for taxes or
other outstanding financial obligations at June 30, 1999 which are material in
the aggregate for Borrower and its Subsidiaries, taken as a whole, except as
disclosed in such unaudited consolidated financial statements.
6.7 ERISA. Based upon ERISA and the regulations and published
-----
interpretations thereunder, the Plans of Borrower and its Subsidiaries and, to
the knowledge of Borrower, the Plans of any other ERISA Affiliates, are in
material and substantial compliance in all material respects with the applicable
provisions of ERISA and Borrower and its Subsidiaries are in compliance with
such Plans in all material respects. No Reportable Event which has or could be
reasonably be expected to result in termination thereof by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate United States
District Court of a trustee to administer such Plan has occurred and is
continuing with respect to any Plan.
6.8 Regulation U; Investment Company Act. Borrower is not engaged
------------------------------------
principally, or as one of its important activities, in the business of extending
credit for the purposes of purchasing or carrying any "margin stock" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System;
and neither Borrower nor any of its Subsidiaries is an "investment company"
within the meaning of the Investment Company Act of 1940.
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<PAGE>
6.9 Taxes. Borrower has filed all federal and state tax returns which to
-----
the knowledge of the financial officers of Borrower are required to have been
filed, and has paid prior to delinquency all taxes that have become due pursuant
to said returns or pursuant to any assessment, except as are being contested in
good faith by appropriate proceedings and as to which adequate reserves have
been provided on the books of Borrower in accordance with GAAP.
6.10 Insurance. Borrower and its Restricted Subsidiaries maintain
---------
insurance with responsible insurance companies, in such amounts and against such
risks as is customarily carried by owners of similar businesses and property,
including protection against loss of use and occupancy, to the extent such
insurance is reasonably available at commercially reasonable rates, and it will
furnish Administrative Agent, upon written request, with full information as to
the insurance carrier; provided, however, that Borrower and its Restricted
-------- -------
Subsidiaries may self insure to the extent they deem prudent.
6.11 Liens. The properties and assets of Borrower and its Restricted
-----
Subsidiaries, real, personal and mixed, are not subject to any Liens, except for
Liens permitted by this Agreement.
6.12 Litigation. Except as disclosed in writing to the Banks prior to the
----------
Signing Date, no litigation, investigation or proceeding of or before an
arbitrator or Governmental Authority is pending or, to the knowledge of Borrower
after due and diligent investigation, threatened by or against Borrower or any
of its Subsidiaries or against any of their properties or revenues which could
reasonably be expected to cause a Material Adverse Change.
6.13 Environmental Compliance. Borrower and its Subsidiaries each conduct
------------------------
in the ordinary course of business a review of the effect of existing
Environmental Laws and claims alleging potential liability or responsibility for
violation of any Environmental Law on their respective businesses, operations
and properties, and as a result thereof Borrower has reasonably concluded that
such Environmental Laws and claims could not, individually or in the aggregate,
reasonably be expected to cause a Material Adverse Change.
6.14 Year 2000. Borrower has (a) completed a review and assessment of all
---------
areas within its and each of its Subsidiaries' business and operations
(including those affected by customers and vendors) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications and devices containing imbedded computer chips used by Borrower or
any of its Subsidiaries may be unable to recognize and perform properly date-
sensitive functions involving certain dates prior to and any date after December
31, 1999), (b) developed a plan and timeline for addressing the Year 2000
Problem on a timely basis, and (c) to date, implemented that plan in accordance
with that timetable. Based on the foregoing, Borrower believes that all
computer applications and devices containing imbedded computer chips that are
material to its or any of its Subsidiaries' business and operations are
reasonably expected on a timely basis to be able to perform properly date-
sensitive functions for all dates before and after January 1, 2000 (that is, be
"Year 2000 compliant"), except to the extent that a failure to do so could not
reasonably be expected to cause a Material Adverse Change.
6.15 Disclosure. No written statement (or oral statement made by senior
----------
executives of Borrower at the bank meeting held on November 3, 1999, it being
understood that any
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<PAGE>
projections contained in such statements are not to be viewed as facts but were
based on good faith estimates and assumptions believed by Borrower to be
reasonable), written information, report, representation, or warranty made by
Borrower in this Agreement or furnished to Administrative Agent or any Bank in
connection with this Agreement contains any untrue statement of a material fact
or omits to state any material fact necessary to make the statements herein or
therein not misleading.
SECTION 7
AFFIRMATIVE COVENANTS OF BORROWER
Borrower covenants and agrees that so long as the credit hereby granted
shall remain available in whole or in part or until the full and final payment
of all indebtedness incurred hereunder, unless Majority Banks waive compliance
in writing:
7.1 Use of Proceeds of Loans. It will use the proceeds of the Loans made
------------------------
by Banks to Borrower hereunder for the repayment of Commercial Paper or other
indebtedness of Borrower existing as of the Effective Date and for its general
working capital requirements, including acquisition and improvement of plant,
property and equipment and acquisitions, and other lawful corporate purposes.
7.2 Management of Business. It will manage its business and conduct its
----------------------
affairs such that the representations and warranties contained in Sections 6.1
through 6.3, 6.7 through 6.9 and 6.13 and 6.14 remain true and correct at all
times during the Availability Period.
7.3 Notice of Certain Events. It will, and it will cause each of its
------------------------
Restricted Subsidiaries to, give prompt written notice to Administrative Agent
(who shall promptly notify the Banks) of:
(a) all Events of Default or Unmatured Events of Default under any of the
terms or provisions of this Agreement;
(b) any event of default under any other agreement, contract, indenture,
document or instrument entered, or which may be entered, into by it that could,
if settled unfavorably, result in a Material Adverse Change;
(c) all material changes in senior management publicly announced;
(d) all litigation, arbitration or administrative proceedings involving
Borrower or any of its Subsidiaries which could in the reasonable opinion of
Borrower be expected to result in a Material Adverse Change;
(e) any other matter which has resulted in, or might in the reasonable
opinion of Borrower result in, a Material Adverse Change;
(f) concurrently with the public announcement thereof, any proposed Merger
or Disposition affecting any Restricted Subsidiary;
(g) any change in any Debt Rating by S&P or Moody's; and
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<PAGE>
(h) promptly upon any discovery or determination that any computer
application that is material to Borrower's or any of its Subsidiaries' business
and operations will not be Year 2000 compliant on a timely basis, except to the
extent that such failure could not reasonably be expected to cause a Material
Adverse Change.
7.4 Records. It will, and it will cause each of its Restricted
-------
Subsidiaries to, keep and maintain full and accurate accounts and records of its
operations according to GAAP and will permit Administrative Agent, and its
designated officers, employees, agents, and representatives, to have access
thereto and to make examination thereof at all reasonable times, to make audits,
and to inspect and otherwise check its properties, real, personal and mixed;
provided, however, that such examination and access shall be in compliance with
- -------- -------
security and confidentiality requirements of all Governmental Authorities and,
subject to Section 11.16, Borrower's corporate policies.
7.5 Information Furnished. It will furnish to Banks and Administrative
---------------------
Agent:
(a) Within 60 days after the close of each quarter, except for the last
quarter of each fiscal year, its consolidated balance sheet as of the close of
such quarter and its consolidated profit and loss statement and cash flow
statement for that quarter and for that portion of the fiscal year ending with
such quarter, all prepared in accordance with GAAP, and all certified by its
Treasurer or an Assistant Treasurer as presenting fairly the financial position
and results of operations and changes in financial position of Borrower and its
consolidated Subsidiaries as at the end of, and for the fiscal period to which
such statements relate, subject to normal year-end adjustments.
(b) Within 120 days after the close of each fiscal year, a complete copy of
its annual financial statements, which statements shall include at least its
consolidated balance sheet as of the close of such fiscal year and its
consolidated profit and loss statement and cash flow statement for such fiscal
year, prepared by Deloitte & Touche (or such other independent certified public
accountants of recognized international standing selected by Borrower) in
accordance with GAAP applied on a basis consistent with that of the previous
year, and which statements shall include the opinion of such accountants, such
opinion not to be qualified or limited because of any restricted or limited
nature of examination made by such accountants or because of a "going concern"
qualification.
(c) Within 60 days after the close of each quarter except for the last
quarter of each fiscal year, (and within 120 days after the close of each fiscal
year) its certificate executed by Borrower's Treasurer or an Assistant Treasurer
that (i) the representations and warranties set forth in Section 6 (with the
exception of Section 6.6) are true and correct in all material respects; and
(ii) no Event of Default or Unmatured Event of Default has occurred and is
continuing except such Events of Default or Unmatured Events of Default as have
been expressly waived by or on behalf of the Banks.
(d) concurrently with the delivery of the financial statements referred to
in clauses (a) and (b), a duly completed Compliance Certificate signed by
--- ---
Borrower's Treasurer or an Assistant Treasurer;
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<PAGE>
(e) promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to public
securityholders of Borrower, and copies of all annual, regular, periodic and
special reports and registration statements which Borrower may file or be
required to file with the Securities and Exchange Commission under Sections 13
or 15(d) of the Securities Exchange Act of 1934, as amended, and not otherwise
required to be delivered to Administrative Agent pursuant hereto;
(f) Such other information concerning its affairs as Administrative Agent
or Majority Banks may reasonably request.
7.6 Execution of Other Documents. It will promptly, upon demand by
----------------------------
Administrative Agent, execute all such additional agreements, documents and
instruments in connection with this Agreement as Administrative Agent or
Majority Banks may deem necessary.
7.7 ERISA. It will, and it will cause each of its Subsidiaries to:
-----
(a) At all times, make prompt payment of contributions required to meet the
minimum funding standard set forth in ERISA with respect to its Plans, except to
the extent that waivers are granted by the appropriate Governmental Authority;
(b) Notify Administrative Agent immediately of (i) any Reportable Event
which could reasonably be expected to result in aggregate liability to Borrower
and its Subsidiaries in excess of $75,000,000 and (ii) any other fact arising in
connection with any of its Plans or a Plan of any ERISA Affiliate which has
resulted, or could reasonably be expected to result, in termination thereof by
the Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer such Plan,
in each case together with a statement, if requested by Administrative Agent, as
to the reasons therefor and the action, if any, which Borrower or such ERISA
Affiliate proposes to take with respect thereto; and
(c) Furnish to Administrative Agent, upon its written request, such
information concerning any of its Plans as may be reasonably requested.
7.8 Administrative Agent's Fees. It will compensate Administrative Agent
---------------------------
as set forth in the Letter Agreement.
7.9 Compliance with Law. It will, and will cause each of its Subsidiaries
-------------------
to, comply with the requirements of all applicable laws, rules, regulations, and
orders of any Governmental Authority, a breach of which would result in a
Material Adverse Change, except where contested in good faith by appropriate
proceedings diligently pursued.
7.10 Compliance with Agreements. Promptly and fully comply with all
--------------------------
Contractual Obligations under all material agreements, indentures, leases and/or
instruments to which any one or more of them is a party, except for any such
------
Contractual Obligations (a) the performance of which would cause an Event of
Default, (b) then being contested by any of them in good faith by appropriate
proceedings, or (c) if the failure to comply therewith could not reasonably be
expected to cause a Material Adverse Change.
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<PAGE>
7.11 Maintenance of Insurance. Maintain liability and casualty insurance
------------------------
as provided in Section 6.10.
SECTION 8
NEGATIVE COVENANTS OF BORROWER
8. Borrower covenants and agrees that so long as the credit hereby
granted shall remain available in whole or in part or until the full and final
payment of all indebtedness incurred hereunder, unless Majority Banks waive
compliance in writing:
8.1 Liens.
-----
(a) Borrower will not, nor will it permit any Restricted Subsidiary to,
issue, incur, guaranty or assume any indebtedness for money borrowed secured by
a Lien upon any property or assets of Borrower or any Restricted Subsidiary or
upon any shares of stock or indebtedness of any Restricted Subsidiary (whether
such property, assets, shares of stock or indebtedness are now owned or
hereafter acquired) without in any such case effectively providing concurrently
with the issuance, incurrence, guarantee or assumption of any such indebtedness
that the Commitments and Loans and any other obligations of Borrower to the
Banks (together with, if Borrower shall so determine, any other indebtedness of
Borrower or such Restricted Subsidiary ranking equally with the Commitments and
Loans and such other obligations and then existing or thereafter created) shall
be secured equally and ratably with or prior to such indebtedness by a Lien upon
such property, assets, shares of stock or indebtedness, unless the aggregate
amount of such indebtedness for money borrowed secured by such Liens, together
with all other indebtedness for money borrowed of Borrower and its Subsidiaries
which (if originally issued, incurred, guaranteed or assumed at such time) would
otherwise be subject to the foregoing restrictions (but not including
indebtedness for money borrowed permitted to be secured under sub-clauses (1)
through (7) of Section 8.1(b)), does not at the time exceed 5% of Consolidated
Adjusted Net Worth.
(b) The above restrictions shall not apply to indebtedness of Borrower or
any of its Restricted Subsidiaries secured by:
(1) Liens existing as of the date hereof and listed in Exhibit D;
---------
(2) Liens on property, assets, shares of stock or indebtedness of any
corporation existing at the time such corporation becomes a Restricted
Subsidiary;
(3) Liens on property existing at the time of acquisition of such
property by Borrower or a Restricted Subsidiary, or Liens to secure the
payment of all or any part of the purchase price of property upon the
acquisition of such property by Borrower or a Restricted Subsidiary or to
secure any indebtedness incurred or guaranteed prior to, at the time of, or
within 180 days after, the later of the date of acquisition of such
property and the date such property is placed in service, for the purpose
of financing all or any part of the purchase price thereof, or Liens to
secure any indebtedness incurred or guaranteed for the purpose of financing
the cost to Borrower or a Restricted Subsidiary of improvements to such
acquired property; provided, however, that for purposes of this clause 3,
-------- -------
(i) a satellite will be treated as a newly-acquired asset as of the date it
is placed in service and
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<PAGE>
(ii) any satellite transponder acquired through the exercise of an early
buy-out option shall be treated as a newly-acquired asset as of the date
such option is exercised;
(4) Liens securing indebtedness of a Restricted Subsidiary owing to
Borrower or to another Restricted Subsidiary;
(5) Liens on property of a corporation existing at the time such
corporation is merged or consolidated with Borrower or a Restricted
Subsidiary (in accordance with Section 8.2) or at the time of a sale, lease
or other disposition of the properties of a corporation as an entirety or
substantially as an entirety to Borrower or a Restricted Subsidiary;
(6) Liens on property of Borrower or a Restricted Subsidiary in favor
of the United States of America or any state thereof, or any department,
agency or instrumentality or political subdivision of the United States of
America or any state thereof, or in favor of any other country, or any
political subdivision thereof, to secure partial, progress, advance or
other payments pursuant to any contract or statute or to secure any
indebtedness incurred for the purpose of financing all or any part of the
purchase price or the cost of construction of the property subject to such
Liens; or
(7) any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Liens referred to in
the foregoing sub-clauses (1) to (6), inclusively; provided, however, that
-------- -------
the principal amount of indebtedness secured thereby shall not exceed the
principal amount of indebtedness so secured at the time of the incurrence
or guarantee thereof and that such extension, renewal or replacement shall
be limited to all or a part of the property which secured the Lien so
extended, renewed or replaced (plus improvements on such property).
8.2 Mergers, Liquidations and Sales of Assets. It will not, nor will it
-----------------------------------------
permit any of its Restricted Subsidiaries to liquidate or dissolve or enter into
any consolidation, merger, partnership, joint venture, syndicate, pool or other
combination (collectively, the "Mergers") or convey, sell or lease all or
substantially all of its assets or business or the stock or all or substantially
all of the assets or business of a Restricted Subsidiary (collectively,
"Dispositions"), except for:
(a) mergers between Subsidiaries, or between Subsidiary and Borrower where
Borrower is the surviving corporation;
(b) mergers where Borrower is the surviving corporation;
(c) transfers of assets from one Restricted Subsidiary to another
Restricted Subsidiary or from any Restricted Subsidiary to Borrower;
(d) sales, leases, transfers or assignments of operating rights, licenses
or franchises in transactions which could not reasonably be expected to result
in a Material Adverse Change; and
(e) the Disposition of any Restricted Subsidiary; provided that both Debt
--------
Ratings remain Investment Grade on the effective date of any such Disposition;
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<PAGE>
provided, however, no Disposition or Merger otherwise permitted by clauses (a)
- -------- -------
through (e) above shall take place if before, or after giving effect to any such
Disposition or Merger, an Event of Default or Unmatured Event of Default exists
or would exist.
8.3 Defaults. It will not, nor will it permit any of its Restricted
--------
Subsidiaries to, commit or do any act or thing which would constitute an event
of default under any of the material terms or provisions of any other material
agreement, contract, indenture, document or instrument executed, or to be
executed by any of them, except those that may be contested in good faith and
would not, if settled unfavorably, result in a Material Adverse Change.
8.4 Compliance with Regulations. Borrower will not engage principally, or
---------------------------
as one of its important activities, in the business of extending credit for the
purposes of purchasing or carrying any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System; and it
will not use the proceeds of any Loan for the purpose, directly or indirectly,
whether immediate, incidental or ultimate, (a) to purchase or carry, within the
meaning of such Regulation U, any such margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock, unless
done in strict compliance with such Regulation U and other applicable law and
Borrower shall have executed and delivered to each Bank prior to such use a Form
U-1 statement evidencing compliance with such Regulation U and such other
documents relating thereto as Administrative Agent or any Bank shall request, or
(b) in a manner which would violate, or result in a violation of, Regulation T,
U, or X of the Board of Governors of the Federal Reserve System.
8.5 Financial Covenants.
-------------------
(a) Shareholders' Equity. Borrower will not permit Shareholders' Equity as
at the end of any fiscal quarter to be less than the sum of (i) $7,125,000,000,
(ii) an amount equal to 50% of Borrower's consolidated net income (as determined
in accordance with GAAP) earned in each fiscal quarter ending after December 31,
1998 (with no deduction for a net loss in any such fiscal quarter) and (iii) an
amount equal to 50% of the aggregate increase in Shareholders' Equity after
December 31, 1998 by reason of the issuance of capital stock of Borrower
(including upon any conversion of debt securities of Borrower into such capital
stock).
(b) Leverage Ratio. Borrower will not permit the Leverage Ratio as at the
end of any fiscal quarter set forth below to be greater than the ratio set forth
below opposite such fiscal quarter:
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Maximum
Fiscal Quarters Ending Leverage Ratio
-------------------------------------------------------------
December 31, 1999 4.00
March 31, 2000 4.50
June 30, 2000 4.00
September 30, 2000 4.00
December 31, 2000 and thereafter 3.75
(c) For the purposes of the financial covenants contained in subsections
(a) and (b) herein, the financial statements of Borrower's subsidiary, DirecTV
Japan, Ltd. will be treated as consolidated with the financial statements of
Borrower (whether or not required by GAAP) from the Effective Date through
December 31, 2000, and thereafter (i) if such consolidation is required by GAAP
or (ii) if Borrower or one or more of its Subsidiaries own securities of DirecTV
Japan, Ltd. convertible into equity interests in DirecTV Japan, Ltd., which when
combined with other equity interests owned by Borrower or one or more of its
Subsidiaries, would result in Borrower and its Subsidiaries having more than a
50% interest in the profits or capital of DirecTV Japan, Ltd.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default. If one or more of the following described Events
-----------------
of Default shall occur:
(a) Borrower shall default in the due and punctual payment of (i) the
principal of or the interest on any Loan within two Business Days of its due
date, (ii) any fee due hereunder within 10 Business Days of its due date; or,
(iii) any other amount due from it hereunder within 30 Business Days of its due
date; or
(b) Borrower or any of its Restricted Subsidiaries shall fail to perform or
observe any of the terms, provisions, covenants, conditions, agreements or
obligations contained herein (other than Section 7.3, and Sections 8.1 through
8.5,) and such failure shall continue for more than 20 days after written notice
from Administrative Agent to Borrower of the existence and character of such
failure to perform or observe; or
(c) Borrower or any of its Restricted Subsidiaries shall fail to perform or
observe any of the terms, provisions, covenants, conditions agreements or
obligations contained in Section 7.3 and Sections 8.1 through 8.5; or
(d) (i) Borrower, or any of its Restricted Subsidiaries shall become
insolvent, or be unable, or admit in writing its inability, to pay its debts as
they become due; or (ii) Borrower or any Restricted Subsidiary shall make an
assignment for the benefit of creditors or to an agent authorized to liquidate
any substantial amount of its properties or assets; or (iii) Borrower or any
Restricted Subsidiary shall file or have filed against it a petition in
bankruptcy or seeking
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<PAGE>
reorganization or to effect a plan or other arrangement with creditors or
winding up or dissolution and such filing against it shall not be dismissed
within 60 days after the date of such filing; or (iv) Borrower or any Restricted
Subsidiary shall apply for or consent to the appointment of or consent that an
order be made appointing any receiver or trustee for any of its or their
properties, assets or business, or if a receiver or a trustee shall be appointed
for all or a substantial part of its or their properties, assets or business; or
(v) an order for relief shall be entered against Borrower or any Restricted
Subsidiary under the United States federal bankruptcy laws as now or hereafter
in effect; or (vi) Borrower or any Restricted Subsidiary shall take any action
indicating its consent to, approval of or acquiescence in, any of the foregoing;
or
(e) Any representation or warranty made by Borrower herein or in any
certificate or financial or other statement heretofore or hereafter furnished by
Borrower or any of its officers to Administrative Agent or the Banks proves to
be in any material respect false or misleading as of the date when made, deemed
made or reaffirmed; or
(f) Any final judgment, decrees, writs of execution, attachments or
garnishments or any Liens, or any other legal processes shall be issued or
levied against any of the assets or property of Borrower or any of its
Restricted Subsidiaries (and shall not have been vacated, discharged or stayed)
in amounts which in the aggregate would result in a Material Adverse Change
(without limiting the generality of the foregoing, a judgment in excess of
$75,000,000 in the aggregate shall, for purposes only of this Section 9.1(f), be
deemed to result in a Material Adverse Change); provided, however, that such
-------- -------
aggregate amount shall include only amounts in excess of (i) insurance coverage
therefor and (ii) reserves on the books of Borrower or any of its Restricted
Subsidiaries therefore; provided, further, that such aggregate amount shall not
-------- -------
include any amounts with respect to matters subject to appeal conducted in good
faith and diligently pursued or other further legal process by Borrower or any
of its Restricted Subsidiaries or any amounts with respect to any such legal
process which Borrower or any of its Restricted Subsidiaries has detached from
such property by posting of a bond or equivalent process; or
(g) All, or substantially all, of the assets and property of Borrower or
any of its Restricted Subsidiaries shall be condemned, seized or otherwise
appropriated; or
(h) Any fact or circumstance (including without limitation a Reportable
Event), which results in, or which Majority Banks determine in good faith could
reasonably be expected to result in, the termination of any Plan of Borrower,
any of its Subsidiaries or any ERISA Affiliate by the Pension Benefit Guaranty
Corporation or the appointment by an appropriate United States District Court of
a trustee to administer any such Plan, shall occur and shall continue for 30
days after written notice of such determination shall have been given to
Borrower or any of its Subsidiaries by Administrative Agent, or a trustee shall
be appointed by the appropriate United States District Court to administer any
Plan of Borrower or any of its Subsidiaries, or the Pension Benefit Guaranty
Corporation shall institute proceedings to terminate any Plan of Borrower or any
of its Subsidiaries or to appoint a trustee to administer any such Plan and,
upon the occurrence of any of the foregoing, the aggregate amount of the
unfunded vested liability for the benefits guaranteed by the Pension Benefit
Guaranty Corporation under all such Plans and the present value of any
Withdrawal Liability which remains unpaid is reasonably estimated to be in
excess of $75,000,000 and such liability is not covered by insurance; or
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<PAGE>
(i) Borrower or any of its Restricted Subsidiaries (i) fails to make any
payment (or otherwise satisfy) in respect of any indebtedness for money borrowed
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the document relating thereto on the date of
such failure; or (ii) an event of default shall occur which permits the
acceleration of indebtedness for money borrowed under any other agreement,
contract, indenture, document or instrument executed, or which may be executed,
by Borrower or any of its Restricted Subsidiaries, which failure or event of
default has not been waived or cured; provided, however, that no Event of
-------- -------
Default shall exist hereunder if the aggregate amount of the indebtedness which
is not paid or may be accelerated with respect to the defaulted obligations
shall not exceed in the aggregate $75,000,000; or
(j) Any disposition of any Restricted Subsidiary shall have occurred, and:
(i) prior to such disposition, either S&P or Moody's shall have
publicly announced that Borrower's Debt Rating will be below Investment
Grade after giving effect to such disposition; or
(ii) as soon as reasonably practicable after its public announcement
of such disposition, Borrower shall not have requested S&P and Moody's to
publicly announce, prior to or no later than concurrently with the
consummation of such disposition, that Borrower's Debt Rating will remain
at least Investment Grade after giving effect to such disposition; or
(iii) notwithstanding clause (ii), either S&P or Moody's shall not
have publicly announced within 10 days after the consummation of such
disposition that Borrower's Debt Ratings will remain at least Investment
Grade after giving effect to such disposition; or
(k) Any sale, spin-off, disposition or other transaction whereby General
Motors Corporation will no longer beneficially own directly or indirectly at
least 51 percent of the issued and outstanding capital stock of Borrower having
voting power under ordinary circumstances to elect directors of Borrower (a
"transaction") shall have occurred and:
(i) prior to such transaction, either S&P or Moody's shall have
publicly announced that its Debt Rating will be below Investment Grade
after giving effect to such transaction; or
(ii) as soon as reasonably practicable after its public announcement
of such transaction, Borrower shall not have requested S&P and Moody's to
publicly announce, prior to or no later than concurrently with the
consummation of such transaction, that Borrower's Debt Rating will remain
at least Investment Grade after giving effect to such transaction; or
(iii) notwithstanding clause (ii), either S&P or Moody's shall not
have publicly announced within 10 days after the consummation of such
transaction that its Debt Ratings will remain at least Investment Grade
after giving effect to such transaction; or
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<PAGE>
(l) This Agreement, at any time after its execution and delivery and for
any reason other than the agreement of all Banks or satisfaction in full of all
the duties and obligations hereunder, ceases to be in full force and effect or
is declared by a court of competent jurisdiction to be null and void, invalid or
unenforceable in any respect; or Borrower denies that it has any or further
liability or obligation under this Agreement, or purports to revoke, terminate
or rescind this Agreement.
Then (a) automatically upon the occurrence of an Event of Default under Section
9.1(d), the Commitments shall immediately terminate, and all Loans and other
liabilities and obligations outstanding under this Agreement shall, without
presentment, demand, protest, or notice of any kind, all of which are hereby
expressly waived, be forthwith due and payable, if not herein otherwise then due
and payable, together with all costs and expenses (including break and funding
costs and other costs in connection with the relending, reborrowing, funding or
other employing of funds) incurred by the Banks as a result thereof, anything
herein or in any agreement, contract, indenture, document or instrument
contained to the contrary notwithstanding; and (b) at any time after the
occurrence of an Event of Default other than under Section 9.1(d), and in each
and every such case, unless such Event of Default shall have been remedied by
Borrower to the satisfaction of Majority Banks or waived in writing by Majority
Banks (except in the case of an Event of Default under Section 9.1(a), the
waiver of which shall require the consent of all the Banks), Administrative
Agent may, with the consent of the Majority Banks, or shall, upon the direction
of Majority Banks, immediately terminate the Commitments, whereupon the same
shall be cancelled and reduced to zero and any Loan Request given in respect of
a Borrowing Date occurring on or after the date of such notice of cancellation
shall cease to have effect and all Loans and all accrued interest thereon and
all other liabilities and obligations outstanding under this Agreement shall,
thereupon, without presentment, demand, protest, or notice of any kind, all of
which are hereby expressly waived, be forthwith due and payable, if not
otherwise then due and payable, together with all reasonable costs and expenses
(including break and funding costs and other costs in connection with the
relending, reborrowing, funding or other employing of funds) incurred by the
Banks as a result thereof, anything herein or in any other agreement, contract,
indenture, document or instrument contained to the contrary notwithstanding.
Thereafter any Bank or the Banks may immediately, and without expiration of any
period of grace, enforce payment of all liabilities and obligations of Borrower
under this Agreement.
9.2 Recovery of Amounts Due. If any amount payable hereunder is not paid
-----------------------
as and when due, Borrower hereby authorizes Administrative Agent, each Bank and
their respective affiliates to proceed, to the fullest extent permitted by
applicable law, without prior notice, by right of set-off, banker's lien or
counterclaim, against any moneys or other assets of Borrower in any currency
that may at any time be in the possession of Administrative Agent or any of its
affiliates or such Bank or any of its affiliates, at any branch or office
thereof, to the full extent of all amounts payable to Administrative Agent and
the Banks hereunder. Any Bank that so proceeds or that has an affiliate that so
proceeds shall forthwith give notice to Administrative Agent of any action taken
by such Bank or affiliate pursuant to this Section 9.2.
9.3 Rights Cumulative. The rights of Administrative Agent and the Banks
-----------------
provided for herein are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity.
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<PAGE>
SECTION 10
THE BANKS
10.1 Administration of Loan. The general administration of the Loans shall
----------------------
be by Administrative Agent and shall be governed by the provisions set forth in
Exhibit B attached hereto and incorporated herein by reference.
- ---------
10.2 Representations By Banks. Each Bank hereby represents that it will
------------------------
make each Loan hereunder in the ordinary course of its business and not with a
view to engage in any distribution of any evidence of indebtedness to the
public.
SECTION 11
MISCELLANEOUS PROVISIONS
11.1 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement, and no consent with respect to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
Majority Banks (or by Administrative Agent at the written request of Majority
Banks) and Borrower and acknowledged by Administrative Agent, and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
-------- -------
amendment, or consent shall, unless in writing and signed by all Banks and
Borrower and acknowledged by Administrative Agent, do any of the following: (a)
increase or extend the Commitment of any Bank (or reinstate any Commitment
terminated pursuant to Section 9.1); (b) postpone or delay any date fixed by
this Agreement for any payment of principal, interest, fees or other amounts due
to Banks (or any of them) hereunder or revise Section 2.13(d); (c) reduce the
principal of, or the rate of interest specified herein on any Loan, or any fees
or other amounts payable hereunder; (d) change the percentage of Commitments or
of the aggregate unpaid principal amount of the Loans which is required for
Banks or any of them to take any action hereunder; or (e) amend this Section or
any provision herein providing for consent or other action by all Banks;
provided, further, that no amendment, waiver or consent shall, unless in writing
- -------- -------
and signed by Administrative Agent in addition to Majority Banks or all Banks,
as the case may be, affect the rights or duties of Administrative Agent under
this Agreement or rights or privileges thereunder.
11.2 Notices. All notices, payments, requests, reports, information,
-------
demands and other communications which any party hereto may desire, or may be
required, to give or make to any other party hereto, shall (unless otherwise
permitted as a telephonic notice or request hereunder) be given by mailing the
same, postage prepaid, or by telex, or rapifax transmission, or by hand delivery
or courier, to each party at its address set forth in Exhibit C attached hereto
---------
and incorporated herein by reference, or to such other address as may, from time
to time, be specified in writing by Borrower or any Bank. Such communications
shall be deemed to have been duly given and received in the case of a telex,
when the telex is sent and the appropriate answer-back is received, in the case
of mail when sent by pre-paid certified or registered mail correctly addressed
to the addressee, in the case of rapifax transmission, when transmission has
been sent, and in the case of hand delivery or courier, when received.
Administrative Agent may rely and act upon any Loan Request made by telex or
other telexed, telephonic or facsimile instructions to Administrative Agent by
any Person purporting to be an authorized Person of Borrower, and
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<PAGE>
Borrower shall be unconditionally and absolutely estopped from denying the
authenticity and validity of any transaction or act made by Administrative Agent
or any Bank in reliance thereon. Each party hereto shall promptly confirm by
telex or rapifax any telephone communication made by it to another pursuant to
this Agreement but the absence of such confirmation shall not affect the
validity of such communication, which shall be effective upon receipt. If there
is any conflict between any telephonic communication and a written confirmation,
the written communication shall govern; provided, however, that the recipient of
-------- -------
such communication shall be held harmless by all parties hereto with respect to
any action taken in reliance on the telephonic communication prior to the time
such recipient receives and has had reasonable time to review the subsequent
written confirmation and initiate such corrective action as the recipient deems
reasonable under the circumstances.
11.3 Waiver. Neither the failure of, nor any delay on the part of, any
------
party hereto in exercising any right, power or privilege hereunder, or under any
agreement, contract, indenture, document or instrument mentioned herein, shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder, or under any agreement, contract,
indenture, document or instrument mentioned herein, preclude other or further
exercise thereof or the exercise of any other right, power or privilege; nor
shall any waiver of any right, power, privilege or default hereunder, or under
any agreement, contract, indenture, document or instrument mentioned herein,
constitute a waiver of any other right, power, privilege or default or
constitute a waiver of any other default of the same or of any other term or
provision. All rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies otherwise provided by law.
11.4 California Law. The interpretation, enforcement and effect of this
--------------
Agreement, the Loans and any agreements, contracts, indentures, documents or
instruments delivered in accordance herewith, shall be governed and controlled
in all respects by and construed according to the substantive laws of the State
of California, to the jurisdiction of whose courts the parties hereto hereby
agree to submit.
11.5 Headings. The headings set forth herein are solely for the purpose of
--------
identification and shall not be construed as a part of the sections or
subsections which they head.
11.6 Accounting Terms. All accounting terms not otherwise defined herein
----------------
have the meaning assigned to them in accordance with GAAP, provided, however,
any act or condition in accordance herewith and permitted hereunder when taken,
created or occurring, shall not become a violation of any section of this
Agreement as a result of a subsequent change in GAAP.
11.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, and
all of said counterparts taken together shall constitute one and the same
instrument.
11.8 Written Disclosure. Wherever written disclosure by Borrower to Banks
------------------
is required or permitted by this Agreement, written disclosure to
Administrative Agent by Borrower shall constitute such disclosure.
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<PAGE>
11.9 Singular; Plural. Whenever used herein, the singular number shall
----------------
include the plural, the plural the singular, and the use of any gender shall be
applicable to all genders.
11.10 Illegality. The illegality or unenforceability of any provision of
----------
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
11.11 Assignments. This Agreement shall bind and inure to the benefit of
-----------
the parties hereto and their respective successors and assigns. No party hereto
may assign or transfer all or any part of its rights and obligations hereunder,
except that:
(a) Any Bank may, with the prior written consent of Borrower at all times
other than during the existence of an Event of Default, and Administrative
Agent, which consents shall not be unreasonably withheld, at any time assign and
delegate to one or more Eligible Assignees (provided that no written consent of
Borrower or the Administrative Agent shall be required in connection with any
assignment and delegation by Bank to an Approved Bank Affiliate of such Bank or
another Bank) (each an "Assignee") by execution and delivery to, and acceptance
by, the Administrative Agent of a Notice of Assignment and Acceptance, all, or
any ratable part of all, of the Loans, the Commitments and the other rights and
obligations of such Bank hereunder; provided, however, that any assignment to an
-------- -------
Eligible Assignee which is not a Bank or an Approved Bank Affiliate shall be in
an amount not less than the lesser of $10,000,000 or all, but not less than all,
of the Loans, the Commitment and the other rights and obligations of such Bank
hereunder. Upon execution of a Notice of Assignment and Acceptance by such
Eligible Assignee in which it agrees to abide by all of the terms, conditions
and obligations applicable to a Bank herein and to have a Commitment as
specified in such agreement, such Eligible Assignee shall be deemed a Bank
hereunder to the same extent as if it were a signatory hereto and, thereafter,
such Eligible Assignee shall for all purposes be considered a "Bank" hereunder.
Administrative Agent shall be entitled to a $2,500 processing fee, payable by
the assignor, with respect to any such assignment by a Bank.
(b) Subject to Section 11.16, Borrower authorizes each Bank and the
Arrangers to disclose to any prospective assignee and assignee any and all
information in such Bank's or the Arrangers' possession concerning Borrower,
this Agreement and any collateral.
11.12 Obligations Several. The obligations of each Bank under this
-------------------
Agreement are several. Neither Administrative Agent nor any Bank shall be
liable for the failure of any other Bank to perform its obligations under this
Agreement.
11.13 Participations. Any Bank may at any time sell, or grant
--------------
participations in all or part of its Commitment or any Loan or Loans made to
Borrower under this Agreement to any other Person, other than an individual, (a
"Participant"); provided, however, no Bank may be relieved of its obligations
under this Agreement except with the consent of Borrower and Administrative
Agent. Any such sale or grant of a participation is subject to the following
conditions:
-35-
<PAGE>
(a) Administrative Agent and Borrower may, for all purposes of this
Agreement, deem and treat a Bank party to this Agreement as the owner of such
Bank's Loans hereunder for all purposes hereof until a written notice of the
sale or participation shall have been received by Administrative Agent, together
with Borrower's consent to treat such Participant as owner of such Loan.
(b) Subject to Section 11.16, Borrower authorizes each Bank and the
Administrative Agent to disclose to any prospective Participant and to any
Participant any and all information in such Bank's or the Administrative Agent's
possession concerning Borrower, this Agreement and any collateral.
(c) Any agreement pursuant to which a Bank grants a participation in its
rights with respect to any Loan or Loans shall provide that, with respect to any
such Loan or Loans, such Bank shall retain the sole right and responsibility to
exercise the rights of a Bank under this Agreement including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement and the right to take action to declare any amount
due and payable pursuant to Section 9; provided that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement without the consent of the Participant if
such modification, amendment or waiver would (i) increase the amount of the
Total Commitment or change the Commitment of such Bank, (ii) reduce interest,
principal or fees owing to such Bank hereunder, (iii) extend the fixed date on
which any sum is due hereunder, or (iv) release or subordinate any material
portion of collateral.
(d) Except as provided in this Section 11.13, no recipient of a
participation in a Loan or Loans of any Bank shall have any rights under this
Agreement other than to receive payment of principal of, and interest on the
Loans and of such other amounts as Banks are entitled to receive pursuant to
Sections 3.1, 3.2, 3.3, and 3.4 of this Agreement; provided, however such
recipients shall be entitled to receive pursuant to Sections 3.1, 3.2 and 3.3
only the lesser of (i) the amount that the Bank from which the recipient
received its participation would have received had such Bank not transferred an
interest in its Loans to such recipient and (ii) the additional costs actually
incurred by such recipient; and any demand by a Participant for payment
hereunder shall certify that the amount demanded does not exceed the amount
Participant is entitled to receive under this subsection (d).
(e) Notwithstanding any other provision set forth in this Agreement, any
Bank may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Loans owing to
it) in favor of any Federal Reserve Bank in accordance with Regulation A of the
Board of Governors of the Federal Reserve System.
11.14 Fees and Expenses. Borrower agrees to pay on demand (a) to
-----------------
Administrative Agent all reasonable costs, expenses and attorneys' fees
(including allocated costs for in-house legal services) incurred by
Administrative Agent and the Arrangers in connection with the preparation and
administration of this Agreement and any documents including any amendments,
waivers, or other modifications and (b) all reasonable costs, expenses and
attorneys' fees (including allocated costs for in-house legal services) incurred
by Administrative Agent and Banks in connection with the enforcement of this
Agreement and any instrument or agreement required hereunder and in connection
with any refinancing or restructuring of the Loans in the
-36-
<PAGE>
nature of a "work-out"; provided, however that, in addition to costs of
Administrative Agent's in-house counsel, Borrower shall be obligated to pay for
the costs of no more than one counsel for Administrative Agent and all Banks
(without prejudice to any Bank's right to engage additional counsel at its own
cost and expense) unless any Bank shall in good faith reasonably determine that
there is a conflict of interest that causes it to be reasonably necessary for
such Bank to be represented by separate counsel.
11.15 Indemnity. Borrower agrees to indemnify the Administrative Agent,
---------
the Arrangers, each Bank and their respective directors, officers, agents and
employees (collectively, the "Indemnitees") from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses, including
settlement costs) reasonably incurred by any of them arising out of or by reason
of any investigation by governmental or judicial authorities or being made a
party to any litigation or other similar proceeding related to any use made or
proposed to be made by Borrower of the proceeds of any Loan for the acquisition
of any other Person (other than with respect to a particular Indemnitee's
losses, liabilities, claims, damages or expenses incurred as a result of such
Indemnitee's gross negligence or willful misconduct), including, without
limitation, the reasonable fees and disbursements of counsel (including
allocated costs for in-house legal services) incurred in connection with any
such investigation, litigation or other proceeding; provided, however, that
-------- -------
Borrower shall have no obligation to indemnify or pay for the costs and expenses
of more than one counsel for the Indemnitees, unless any Indemnitee shall in
good faith reasonably determine that there is a conflict of interest that causes
it to be reasonably necessary for any Indemnitees to be represented by other
counsel. Counsel chosen to represent any Indemnitee pursuant to the previous
sentence shall be reasonably satisfactory to Borrower. The obligations of
Borrower under this Section shall survive the termination of this Agreement.
11.16 Confidentiality. In consideration of Borrower furnishing Confidential
---------------
Information(as defined below) to Banks, the Arrangers and Administrative Agent
(collectively, the "Recipients") and their respective directors, officers and
employees (collectively, the "Representatives"), each Recipient agrees for
itself that:
(a) Such Recipient shall keep the Confidential Information confidential and
shall not, without Borrower's prior written consent, disclose it in any manner
whatsoever, in whole or in part, and shall not use the Confidential Information
other than in connection with this Agreement. Each Recipient agrees to reveal
the Confidential Information only to its Representatives, bank affiliates,
auditors, counsel and other advisors, representatives or agents who need to know
the Confidential Information for the purpose of this Agreement, who are informed
by such Recipient of the confidential nature of the Confidential Information and
who shall agree to act in accordance with the terms and conditions of this
section. Each Recipient shall be responsible for any breach of this Section by
its Representatives.
(b) Without Borrower's prior written consent, no Recipient shall disclose
to any Person the fact that the Confidential Information has been made available
or any other facts with respect to this Agreement.
(c) Upon payment in full of all obligations owing to a Recipient and
termination of such Recipient's Commitments, if any, hereunder, copies of the
Confidential Information shall be
-37-
<PAGE>
returned by such Recipient to Borrower immediately upon its request, except for
that portion of the information which consists of analyses, compilations,
forecasts, studies or other documents prepared by such Recipient or its
Representatives based on Confidential Information, which portion shall either be
destroyed (as evidenced by a certificate of destruction signed by a duly
authorized offer of such Recipient) or held by such Recipient and kept
confidential and subject to the terms of this section; provided that such
--------
Recipient shall not be required to return or destroy Confidential Information to
the extent such Recipient reasonably determines that its retention of such
Confidential Information is required by applicable law or regulation. Any oral
Confidential Information shall continue to be subject to the terms of this
Section.
(d) Confidential Information shall not include such portions of the
information furnished to a Recipient which (i) are or become generally available
to the public other than as a result of a disclosure by such Recipient or its
Representatives in violation of this Agreement, (ii) become available to such
Recipient on a non-confidential basis from a source (other than Borrower or its
Representatives) which is not known by such Recipient to be prohibited from
disclosing such information to such Recipient, or (iii) were in such Recipient's
possession prior to being furnished to such Recipient or its Representatives
provided that the source of such information was not known by such Recipient to
be prohibited from disclosing the information to such Recipient.
(e) Subject to Section 6.15 and except as otherwise expressly set forth in
this Agreement. each Recipient acknowledges that neither Borrower nor any of its
Representatives makes any express or implied representation or warranty as to
the accuracy or completeness of the information furnished to such Recipient, and
that neither Borrower nor any of its Representatives shall have any liability
resulting from the use of the information furnished to any Recipient, errors
therein or omissions therefrom.
(f) In the event any Recipient or any person to whom it transmits the
Confidential Information pursuant to this Agreement becomes legally compelled to
disclose any of the information, such Recipient shall, to the extent permitted
by law, provide Borrower with prompt written notice thereof so that the Borrower
may seek a protective order or other appropriate remedy and/or waiver such
Recipient's compliance with the provisions of this section, In the event that
such protective order or other remedy is not obtained, or that Borrower waives
any Recipient's compliance with the provisions of this section, such Recipient
may furnish only that portion of the Confidential Information which it is
advised by written opinion of counsel that the disclosure thereof is legally
required, and shall exercise its best efforts to obtain reliable assurance that
confidential treatment will be accorded the Confidential Information so
disclosed.
(g) Notwithstanding the foregoing, a Recipient may (i) disclose any
Confidential Information to bank examiners; (ii) use any Confidential
Information in connection with the management, supervision and enforcement of
this Agreement, including the enforcement of such Recipient's rights under any
agreement executed in connection therewith; (iii) disclose any Confidential
Information in connection with any litigation or dispute involving any such
Person or the Borrower and related to this Agreement or to any use of proceeds
of the Loans; (iv) disclose any Confidential Information to other Recipients;
and (v) disclose Confidential Information to prospective assignees and
Participants and assignees and Participants pursuant to Sections 3.8, 11.11(b)
and 11.13(b); provided, further, that in each of the foregoing cases, such
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<PAGE>
Person shall use its best efforts to ensure that any such disclosure will be
made under procedures reasonably calculated to maintain the confidentiality of
such Confidential Information.
For purposes of this Section, "Confidential Information" means information
relating to the business, operation or technology of Borrower or its affiliates
which Borrower has furnished to Banks, the Arrangers, Administrative Agent or
their Representatives which is either non-public, confidential or proprietary in
nature, together with copies and other reproductions thereof, and analyses,
compilations, forecasts, studies or other documents prepared by any Banks or its
Representatives which contain or otherwise reflect such information.
This section shall survive termination of the Agreement.
11.17 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY
--------------------------------
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO THIS AGREEMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
[Remainder of page intentionally left blank]
-39-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
in Los Angeles, California as of the date first hereinabove written.
HUGHES ELECTRONICS CORPORATION
By:______________________________
Name:
Title:
S-1
<PAGE>
BANK OF AMERICA, N.A., as
Administrative Agent
By:___________________________________
Name:
Title:
S-2
<PAGE>
THE BANK OF NEW YORK
By:___________________________________
Name:
Title:
S-3
<PAGE>
BANK ONE, NA
By:__________________________________
Name:
Title:
S-4
<PAGE>
CITICORP USA, INC.
By:_________________________________
Name:
Title:
S-5
<PAGE>
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLAND BRANCHES
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
S-6
<PAGE>
MERRILL LYNCH CAPITAL CORPORATION
By: _______________________________
Name:
Title:
S-7
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: _______________________________
Name:
Title:
S-8
<PAGE>
BANK OF AMERICA, N.A., as a Bank
By: _______________________________
Name:
Title:
S-9
<PAGE>
SCHEDULE 1
BANKS AND COMMITMENTS
<TABLE>
<CAPTION>
Bank Commitment Normal Percentage
---- ---------- -----------------
<S> <C> <C>
Bank of America, N.A. $100,000,000 20.0000%
Citicorp USA, Inc. $150,000,000 30.0000%
Deutsche Bank AG, New York $ 50,000,000 10.0000%
and/or Cayman Islands
Branches
Merrill Lynch $ 50,000,000 10.0000%
Banc One $ 50,000,000 10.0000%
J.P. Morgan $ 50,000,000 10.0000%
Bank of New York $ 50,000,000 10.0000%
Total $500,000,000 100.0000%
</TABLE>
-1-
<PAGE>
EXHIBIT A
LOAN REQUEST
TO: Bank of America, N.A.,
as Administrative Agent for Banks
FROM: Hughes Electronics Corporation
DATE:
RE: Hughes Electronics Corporation -
Revolving Credit Agreement (Bridge
Facility)
Ladies and Gentlemen:
1. We refer to the Revolving Credit Agreement (Bridge Facility) dated as of
November 24, 1999 and made among Hughes Electronics Corporation, the banks
parties thereto ("Banks") and Bank of America, N.A., as administrative agent for
the Banks (in such capacity "Administrative Agent"). Terms defined in the
Agreement shall have the same meanings herein.
2. We hereby request that a [Base Rate Loan] [Eurodollar Loan] is made to
us as follows:
(i) Principal Amount:
(ii) Borrowing Date:
(iii) Interest Period (if a Eurodollar Loan):
3. For the purposes of inducing the Banks to make the Loan requested
herein, we confirm that, pursuant to Section 5.3 of the Agreement, as of the
date hereof:
(i) the representations and warranties set out in Section 6 of the
Agreement (with the exception of Section 6.6) are true and
correct in all material respects;
(ii) the most current financial statements delivered pursuant to
Section 7.5 of the Agreement present fairly the financial
position and results of operation and changes in financial
position of Borrower and its consolidated Subsidiaries as at
the end of, and for the fiscal period to which such statements
relate as of the date thereof (subject, in the case of
unaudited financial statements, to year end adjustments); and
(iii) no Event of Default or Unmatured Event of Default has occurred
and is continuing.
A-1
LOAN REQUEST
<PAGE>
HUGHES ELECTRONICS CORPORATION
By: ____________________________________
Name:
Title:
A-2
LOAN REQUEST
<PAGE>
EXHIBIT B
RELATIONS AMONG THE BANKS AND AGENTS
1. Administration of the Credit. Payment of interest and principal on
----------------------------
the Loans and the facility fee and all other amounts payable by Borrower
hereunder shall be made by Borrower in immediately available funds, directly to
each Bank in the case of amounts payable under Sections 3.1, 3.2 and 3.3 and, in
all other cases, to Administrative Agent, and Administrative Agent shall
promptly distribute to the other Banks in immediately available funds their
shares of principal, interest and fees and to each Bank as provided herein such
other amounts as paid by Borrower.
2. Pro Rata Distribution. All facility fees will be divided among the
---------------------
Banks in accordance with their Normal Percentage, and interest and principal
payments on each Loan will be divided pro rata among Banks in accordance with
their percentage interest in the Loan.
3. Right of Setoff. Any Bank which shall receive payment of or on
---------------
account of all or part of its share of the Loans through the exercise of any
right of setoff, counterclaim, or banker's lien, or otherwise in a greater
proportion than the proportionate amount of principal and interest due it under
this Agreement immediately prior to such payment shall purchase a ratable
proportion of the portions of the Loan held by the other Banks so that all
recoveries of principal and interest shall be shared by the Banks in accordance
with their pro rata interests in the Loans outstanding hereunder. If all or any
portion of such excess payment is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest. Any sum received by Bank through exercise
of the right of setoff, counterclaim, or banker's lien shall be deemed to be
first applied to such Bank's portion of the indebtedness under this Agreement,
second as herein above provided and any balance remaining thereafter shall be
deemed applied to any other indebtedness of Borrower to such Bank.
4. Notice of Event of Default. Upon receipt by Administrative Agent from
--------------------------
Borrower of any communication calling for an action on the part of Banks, or
upon notice to Administrative Agent of an Unmatured Event of Default or an Event
of Default, it will in turn promptly inform the other Banks in writing of the
nature of such communication or of the Unmatured Event of Default or Event of
Default, as the case may be.
5. Actions by Administrative Agent. Upon any occasion requiring or
-------------------------------
permitting an approval, consent, election or other action on the part of Banks,
action shall be taken by Administrative Agent for and on behalf or for the
benefit of all Banks upon the direction of the required number of Banks and the
Administrative Agent, if applicable, as set forth in Section 11.1 of the
Agreement.
6. Several Liability of Banks. The obligation of each Bank hereunder is
--------------------------
several, and the failure of one Bank to perform hereunder shall in no way
relieve the other Banks from performance.
7. Liability of Administrative Agent. Administrative Agent shall not be
---------------------------------
liable or answerable for anything whatsoever in connection with this Agreement
except for its willful
B-1
RELATIONS AMONG THE BANKS AND THE AGENT
<PAGE>
misconduct or gross negligence, and Administrative Agent shall have no duties or
obligations other than as provided herein. Administrative Agent shall be
entitled to rely on any opinion of counsel (including counsel for Borrower) in
relation to this Agreement, and upon statements and communications received from
Borrower, or from any other person, believed by it to be authentic, and shall
not be liable for any action taken or omitted in good faith on such reliance.
8. Indemnification of Administrative Agent. Each Bank agrees to
---------------------------------------
indemnify Administrative Agent (to the extent not reimbursed by Borrower and
without limiting the obligation of Borrower to do so), ratably according to its
Normal Percentage, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against Administrative Agent in any way relating to or arising
out of this Agreement or any action taken or omitted by Administrative Agent
under this Agreement except for Administrative Agent's gross negligence or
willful misconduct. The obligations of the Banks under this Section 8 shall
survive termination of the Agreement.
9. Rights of Administrative Agent as Bank. With respect to its
--------------------------------------
obligation to lend under this Agreement and the Loans made by it, Bank of
America shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not Administrative Agent; and the term
"Banks" shall include Bank of America in its individual capacity. Bank of
America may accept deposits from, lend money to, and generally engage in any
kind of banking, trust or other business with Borrower as if it were not
Administrative Agent.
10. Assignment by Bank of its Obligations. Administrative Agent may deem
--------------------------------------
and treat a Bank party to this Agreement as the owner of such Bank's portion of
the Loans for all purposes hereof unless and until a written notice of the
assignment or transfer of such Bank's obligations otherwise permitted under the
Agreement executed by such Bank shall have been received by Administrative
Agent, together with Borrower's consent to such assignment or transfer and such
other documentation from such Bank and its assignee or transferee as
Administrative Agent may reasonably request.
11. Representations by Banks. Neither Administrative Agent nor any Bank
------------------------
has made or makes to any other Bank any representation, and neither
Administrative Agent nor any Bank assumes any responsibility, in respect to the
execution, construction or enforcement of this Agreement or any other instrument
or agreement executed by Borrower or by any other person or entity.
12. Independent Investigation by Banks. Each Bank has made and shall
----------------------------------
continue to make its own independent investigation of the financial condition
and affairs of Borrower in connection with the making and the continuance of the
Loans and has made and covenants that it shall continue to make its own
appraisal of the creditworthiness of Borrower. Each Bank agrees Administrative
Agent has no duty or responsibility, either initially or on a continuing basis,
to provide any Bank with any credit or other information with respect to
Borrower, whether coming into its possession before the making of the Loans or
at any time or times thereafter except as expressly provided in this Agreement.
B-2
RELATIONS AMONG THE BANKS AND THE AGENT
<PAGE>
13. Successor Administrative Agent. Administrative Agent shall have the
------------------------------
right, at any time, to resign as Administrative Agent for the Banks hereunder.
Such resignation shall not be effective until a successor Administrative Agent
chosen by Majority Banks, and accepted by Borrower, shall accept appointment as
Administrative Agent for the Banks hereunder. If no successor Administrative
Agent shall have been so appointed by the Majority Banks and shall have accepted
such appointment, within 30 days after the retiring Administrative Agent has
given notice of resignation, the retiring Administrative Agent may, on behalf of
the Banks, appoint a successor Administrative Agent reasonably acceptable to
Borrower, which successor Administrative Agent shall be a commercial bank
organized under the laws of the United States of America or a State thereof
having a combined capital and surplus of at least $100,000,000. Upon the
acceptance by the successor Administrative Agent of its appointment hereunder,
the successor Administrative Agent shall succeed to and become vested with all
the rights and obligations of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its obligations under
this Agreement. The provisions of this Article shall inure to the benefit of
the retiring Administrative Agent as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. After any
retiring Administrative Agent's resignation hereunder as Administrative Agent,
the provisions of this Exhibit B and Section 11.14 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement.
B-3
RELATIONS AMONG THE BANKS AND THE AGENT
<PAGE>
EXHIBIT C
LENDING OFFICES OF BANKS AND ADDRESSES FOR NOTICES
BORROWER
200 North Sepulveda Blvd.
P. O. Box 956
ES, 001, A148
El Segundo, CA 90245-0956
Attention: Treasurer
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT
Bank of America N.A.
Mail Code: CA9-706-11-03
555 South Flower Street, 11th Floor
Los Angeles, California 90071
Attention: Gina Meador
Vice President
Agency Management-Los Angeles
Telephone: (213) 228-5245
Facsimile: (213) 228-2299
Administrative Agent's Payment Office:
--------------------------------------
Bank of America N.A.
Mail Code: CA4-706-05-09
1850 Gateway Boulevard, Fifth Floor
Concord, California 94520
Attention: Glenis Croucher
Assistant Vice President
Agency Administrative Services West
Telephone: (925) 675-8447
Facsimile: (925) 675-8500
C-1
<PAGE>
BANK OF AMERICA, N.A., AS A BANK
Domestic and Offshore Lending Office:
-------------------------------------
Bank of America N.A.
Mail Code: CA4-706-05-09
Agency Administrative Services-West
1850 Gateway Blvd., 5th Floor
Concord, CA 94520
Attention: Glenis Croucher
Sr. Account Administrator
Telephone: (925) 675-8447
Facsimile: (925) 969-2807
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
Bank of America N.A.
Mail Code: CA9-706-11-07
555 South Flower Street, 11th Floor
Los Angeles, California 90071
Attention: Dianne J. Prust
Vice President
Credit Products Aerospace/Defense #9848
Telephone: (213) 228-2435
Facsimile: (213) 623-1959
THE BANK OF NEW YORK
Domestic and Offshore Lending Office:
-------------------------------------
The Bank of New York
One Wall Street, 22/nd/ floor
New York, NY 10005
Attention: Dawn Hertling
Telephone: (212) 635-6742
C-2
<PAGE>
Notices (other than Borrowing notices and Notices of Conversion/
----------------------------------------------------------------
Continuation):
--------------
The Bank of New York
10990 Wilshire Blvd.
Suite 1125
Los Angeles, CA 90024
Attention: Jonathan Rollins
Telephone: (310) 996-8658
Facsimile: (310) 996-8667
Email: [email protected]
BANK ONE, NA
Domestic and Offshore Lending Office:
-------------------------------------
Bank One, NA
1 Bank One Plaza
10/th/ Floor
Chicago, IL 60670
Attention: Sharon Bosch
Telephone: (312) 732-7112
Facsimile: (312) 732-4240
Notices (other than Borrowing notices and Notices of Conversion/
----------------------------------------------------------------
Continuation):
--------------
Bank One, NA
777 South Figueroa
4/th/ Floor
Los Angeles, CA 90017
Attention: Anthony Mathews
Senior Vice President
Telephone: (213) 683-4357
Facsimile: (213) 683-4999
Email: [email protected]
C-3
<PAGE>
CITICORP USA, INC.
Domestic and Offshore Lending Office:
-------------------------------------
Citicorp, USA, Inc.
399 Park Ave.
New York, NY 10043
Attention: Alyssa Kawalek
Loan Administrator
Telephone: (302) 894-6055
Facsimile: (302) 894-6120
Notices (other than Borrowing notices and Notices of Conversion/
----------------------------------------------------------------
Continuation):
--------------
Citicorp USA, Inc.
787 West 5th Street
29th Floor
Los Angeles, CA 90071
Attention: Walter Larsen
Telephone: (213) 239-1501
Facsimile: (213) 623-3592
DEUTSCHE BANK AG NEW YORK AND/OR CAYMAN ISLANDS BRANCHES
Domestic and Offshore Lending Office:
-------------------------------------
Deutsche Bank AG
31 West 52/nd/ Street
New York, NY 10019
Attention: Noble Samuel/Cheryl H. Mandelbaum
Telephone: (212) 469-4091
Facsimile: (212) 469-4139
Notices (other than Borrowing notices and Notices of Conversion/
----------------------------------------------------------------
Continuation):
--------------
Deutsche Bank AG
31 West 52/nd/ Street
New York, NY 10019
Attention: Joel Makowsky
Vice President
Telephone: (212) 469-7896
Facsimile: (212) 469-4604
C-4
<PAGE>
MERRILL LYNCH
Domestic and Offshore Lending Office:
-------------------------------------
Merrill Lynch Capital Corp.--Loan Syndicates
250 Vesey Street
World Financial Center
16/th/ Floor
New York, NY 10281-1316
Attention: Mark Campbell
Telephone: (212) 449-6996
(212) 449-7019
Facsimile: (212) 738-1719
Notices (other than Borrowing notices and Notices of Conversion/
----------------------------------------------------------------
Continuation):
--------------
Merrill Lynch Capital Corp.--Loan Syndicates
250 Vesey Street
World Financial Center
16/th/ Floor
New York, NY 10281-1316
Attention: Cesar Apostol
Telephone: (212) 449-7441
Facsimile: (212) 449-2372
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
Domestic Lending Office
-----------------------
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260-0060
Execution Copies to:
-------------------
Jeannie Mattson
Associate
Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
3/OPS2
Newark, DE 19713-2107
C-5
<PAGE>
Conformed Copies to:
-------------------
Robert Bottamedi
Vice President
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260-0060
Offshore Lending Office
-----------------------
Morgan Guaranty Trust Company of New York
Euro-Loan Servicing Department
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
Newark, DE 19713-2107
Execution Copies to:
-------------------
Jeannie Mattson
Associate
Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
3/OPS2
Newark, DE 19713-2107
Conformed Copies to:
-------------------
Robert Bottamedi
Vice President
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260-0060
Notices (other than Borrowing notices and Notices of
----------------------------------------------------
Conversion/Continuation):
-------------------------
JP Morgan Securities Inc
60 Wall Street
5/th/ Floor
New York, NY 10260-0060
Attention: Robert Bottamedi
Vice President
Telephone: (212) 648-1349
Facsimile: (212) 648-5018
C-6
<PAGE>
EXHIBIT D
EXISTING LIENS
PanAmSat
$124,000,000.00 Floating Rate Note secured by transponders of Galaxy III-R
due 2002
Galaxy Latin America
$95,000.00 Capital Lease of AT&T Telephone Switch
___________
Total $124,095,000.00
D-1
EXISTING LIENS
<PAGE>
EXHIBIT E
OPINION OF COUNSEL
November 24, 1999
To: The Banks listed on Schedule A hereto and Bank of America, N.A., as
Administrative Agent
Re: Hughes Electronics Corporation Revolving Credit Agreement (Bridge Facility)
---------------------------------------------------------------------------
Ladies and Gentlemen:
I am the Assistant General Counsel of Hughes Electronics Corporation, a
Delaware corporation (the "Borrower"), in connection with the extension to
Borrower of a revolving line of credit extended under and subject to the terms
and provisions of the Revolving Credit Agreement (Bridge Facility) dated as of
November 24, 1999 and made among Hughes Electronics Corporation, the banks
parties thereto ("Banks") and Bank of America, N.A., as administrative agent for
the Banks (in such capacity "Administrative Agent") (the "Credit Agreement").
Capitalized terms not otherwise defined herein shall have the meanings set forth
in the Credit Agreement. This opinion is rendered to you pursuant to Section
5.2(b) of the Credit Agreement.
As Assistant General Counsel to Borrower, I have caused to be made such
legal and factual examinations and inquiries, including an examination of
originals or copies, certified or otherwise identified to my satisfaction as
authentic, of such corporate records, agreements, instruments and other
documents as I have deemed necessary or appropriate for the purposes of this
opinion. I have caused to be obtained such certificates and other assurances
(copies of which have been delivered to you) from public officials and officers
and other employees of Borrower as I considered necessary or appropriate for the
purpose of rendering this opinion. I have assumed the genuineness of all
signatures (except that of Borrower), the authenticity of all documents
submitted to me as originals, and the conformity with the originals of all
documents submitted to me as copies.
Subject to the limitations herein set forth, I am opining herein as to the
effect on the subject transaction only of United States federal law, the laws of
the State of California and the General Corporation Law of the State of
Delaware. I am licensed to practice law in the State of California. I assume no
responsibility as to the applicability to the subject transaction or the effect
thereon of the laws of any other jurisdiction.
E-1
OPINION OF COUNSEL
<PAGE>
Based upon the foregoing and in reliance thereon, and subject to the
qualifications, limitations and assumptions set forth herein, I am of the
opinion that, as of the date hereof:
1. Borrower is a corporation duly incorporated and validity existing as a
corporation in good standing under the laws of the State of Delaware, with full
corporate power and authority to own and lease its properties and conduct its
business as presently owned and conducted.
2. Borrower is duly qualified to do business as a foreign corporation in
good standing in the State of California.
3. Borrower has full corporate power and authority to borrow the sums
provided for in the Credit Agreement, to execute and deliver the Credit
Agreement and to perform its obligations thereunder.
4. All corporate action required to be taken by Borrower for the
authorization, execution and delivery of the Credit Agreement by Borrower and
the performance by Borrower of its obligations thereunder has been duly taken.
5. The officer of Borrower executing the Credit Agreement is duly and
properly in office and duly authorized to execute the same.
6. The Credit Agreement is a valid and binding agreement of Borrower,
subject to the limitations, qualifications, exceptions and assumptions set forth
below.
7. To my knowledge, after causing to be conducted such legal and factual
examination and inquiries and causing to be conducted such discussions with and
obtaining such certificates or other confirmations from officers and other
employees of Borrower as I considered appropriate in the circumstances, no
consent, permission, authorization, order or license of any United States
federal or California governmental authority is necessary in connection with the
execution and delivery of the Credit Agreement by Borrower and Borrower's
performance of its obligations under the Credit Agreement.
8. There is no provision of the Certificate of Incorporation or the By-
laws of Borrower which would be contravened by the execution and delivery of the
Credit Agreement by Borrower or by the performance by Borrower of its
obligations under the Credit Agreement.
9. Borrower is not an "investment company" as defined in the Investment
Company Act of 1940, as amended.
10. To my knowledge, after causing to be conducted such legal and factual
examination and inquiries and causing to be conducted such discussions with and
obtaining such certificates or other confirmations from officers and other
employees of Borrower as I considered appropriate in the circumstances, no
consent or approval of any trustee or holder of any material indebtedness of
Borrower is necessary in connection with the execution and delivery of the
Credit Agreement by Borrower and Borrower's performance of its obligations under
the Credit Agreement.
E-2
OPINION OF COUNSEL
<PAGE>
11. There is no provision of any indenture or material agreement for
borrowed money to which Borrower is a party or under which Borrower is
obligated, and of which I am aware, after causing to be conducted such legal and
factual examinations and inquiries and causing to be conducted such discussion
with and obtaining such certificates or other confirmations from officers and
other employees of Borrower as I considered appropriate in the circumstances,
which would be contravened by the execution and delivery of the Credit Agreement
and the Notes by Borrower or by the performance by Borrower of its obligations
under the Credit Agreement.
12. To my knowledge, after causing to be conducted such legal and factual
examinations and inquiries and causing to be conducted such discussions with and
obtaining such certificates or other confirmations from officers and other
employees of Borrower as I considered appropriate in the circumstances, there is
no judgment, decree or order of any court or governmental agency binding on
Borrower which would be contravened by the execution and delivery of the Credit
Agreement by Borrower and Borrower's performance of its obligations under the
Credit Agreement and the Notes.
13. To my knowledge, after causing to be conducted such legal and factual
examinations and inquiries and obtaining certificates or other confirmations
from officers and employees of Borrower as I considered appropriate in the
circumstances, except as set forth in Attachment 1 hereto, there is no claim,
suit, action or proceeding pending or threatened against Borrower before any
court or governmental agency which could reasonably be expected to result in a
Material Adverse Change.
The opinion expressed in paragraph 6 is subject to the following
limitations, qualifications, exceptions and assumptions:
(a) the enforcement of the Credit Agreement and the Notes may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws or
by equitable principles relating to or limiting the rights of creditors
generally;
(b) the use of the term enforceable shall not imply any opinion as to the
availability of equitable remedies;
(c) I advise you that a California court may not strictly enforce certain
covenants contained in the Credit Agreement or allow acceleration of the
maturity of the indebtedness thereunder if it concludes that such enforcement or
acceleration would be unreasonable under the then existing circumstances. I do
believe, however, that subject to the limitations expressed elsewhere in this
opinion, enforcement or acceleration would be available if an Event of Default
occurs as a result of a material breach of a material covenant contained in the
Credit Agreement;
(d) The effect of California court decisions, invoking statutes or
principles of equity, which have held that certain covenants and provisions of
agreements are unenforceable where (i) the breach of such covenants or
provisions imposes restrictions or burdens upon the debtor, including the
acceleration of indebtedness due under debt instruments, and it cannot be
demonstrated that the enforcement of such restrictions or burdens is reasonably
necessary for the
E-3
OPINION OF COUNSEL
<PAGE>
protection of the creditor, or (ii) the creditor's enforcement of such covenants
or provisions under the circumstances would violate the creditor's implied
covenant of good faith and fair dealing;
(e) The unenforceability under certain circumstances, under California or
federal law or court decisions, of provisions expressly or by implication
waiving broadly or vaguely stated rights, unknown future rights, defenses to
obligations or rights granted by law, where such waivers are against public
policy or prohibited by law;
(f) The unenforceability under certain circumstances of provisions to the
effect that rights or remedies are not exclusive, that every right or remedy is
cumulative and may be exercised in addition to or with any other right or
remedy, that election of a particular remedy or remedies does not preclude
recourse to one or more other remedies or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy;
(g) The effect of Section 1717 of the California Civil Code, which
provides that, where a contract permits one party to the contract to recover
attorneys' fees, the prevailing party in any action to enforce any provision of
the contract shall be entitled to recover its reasonable attorneys' fees;
(h) The unenforceability under certain circumstances of provisions
indemnifying a party against liability for its own wrongful or negligent acts or
where such indemnification is contrary to public policy or prohibited by law;
and
(i) The enforceability under certain circumstances of provisions imposing
penalties, forfeitures, late payment charges or an increase in interest rate
upon delinquency in payment or the occurrence of a default.
To the extent that the obligations of Borrower may be dependent upon such
matters, I assume for purposes of this opinion that each of the Banks is duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization; that each of the Banks is
duly qualified to engage in the transaction covered by this opinion; that the
Credit Agreement has been duly authorized, executed and delivered by each of the
Banks and that the Credit Agreement constitutes the valid and binding obligation
of each of the Banks, enforceable in accordance with its terms; and that each of
the Banks has the requisite corporate or organizational and legal power and
authority to own its properties, to carry on its business as now being conducted
and to perform its obligations under the Credit Agreement, including without
limitation, to make the loans under the Credit Agreement. I am not expressing
any opinion as to the effect of or the compliance by any Bank with any state or
federal laws or regulations applicable to the transactions because of the nature
of its respective business.
This opinion is rendered to the Banks and Administrative Agent as of the
date hereof in connection with the above transaction, and may not be relied upon
by any person other than the Administrative Agent and the Banks and their
permitted assignees, or by them in any other context, and may not be furnished
to, quoted to or relied upon by any other person, firm or corporation for any
purpose without my prior written consent; provided that each Bank and its
--------
E-4
OPINION OF COUNSEL
<PAGE>
permitted assignees may provide this opinion (i) to bank examiners and other
regulatory authorities should they so request or in connection with their normal
examination, (ii) to the independent auditors and attorneys of such Bank, (iii)
pursuant to order or legal process of any court or governmental agency, (iv) in
connection with any legal action to which the Bank is a party arising out of the
transactions contemplated by the Credit Agreement, or (v) in connection with the
assignment of or sale of participations in the Loans.
Very truly yours,
E-5
OPINION OF COUNSEL
<PAGE>
SCHEDULE A TO OPINION OF COUNSEL
E-6
OPINION OF COUNSEL
<PAGE>
ATTACHMENT A TO OPINION OF COUNSEL
LITIGATION
[None.]
E-7
OPINION OF COUNSEL
<PAGE>
EXHIBIT F
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected [Title] of Hughes Electronics Corporation,
a Delaware corporation ("Borrower");
(2) I have reviewed the terms of that certain Revolving Credit
Agreement (Bridge Facility) dated as of November 24, 1999, as amended,
supplemented or otherwise modified to the date hereof (said Revolving
Credit Agreement, as so amended, supplemented or otherwise modified,
being the "Credit Agreement", the terms defined therein and not
otherwise defined in this Certificate (including Attachment No. 1
annexed hereto and made a part hereof) being used in this Certificate
as therein defined), by and among Borrower, the financial institutions
listed therein as Banks, and Bank of America, N.A., as Administrative
Agent, and I have made, or have caused to be made under my
supervision, a review in reasonable detail of the transactions and
condition of Borrower and its Subsidiaries during the accounting
period covered by the attached financial statements; and
(3) The examination described in paragraph (2) above did not
disclose, and I have no knowledge of, the existence of any condition
or event which constitutes an Event of Default or Unmatured Event of
Default during or at the end of the accounting period covered by the
attached financial statements or as of the date of this Certificate[,
except as set forth below].
[Set forth [below] [in a separate attachment to this Certificate] are all
exceptions to paragraph (3) above listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
Borrower or any of its Subsidiaries, as applicable, has taken, is taking, or
proposes to take with respect to each such condition or event:
_______________________________________________________________________________]
F-1
COMPLIANCE CERTIFICATE
<PAGE>
The foregoing certifications, together with the computations set forth in
Attachment No. 1 annexed hereto and made a part hereof and the financial
statements delivered with this Certificate in support hereof, are made and
delivered this __________ day of _____________, ____ pursuant to subsection
7.5(d) of the Credit Agreement.
DATED: ____________________ HUGHES ELECTRONICS CORPORATION
By:__________________________
Name:
Title:
F-2
COMPLIANCE CERTIFICATE
<PAGE>
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a Compliance
Certificate dated as of ____________, ____ and pertains to the period from
____________, ____ to ____________, ____. Subsection references herein relate
to subsections of the Credit Agreement.
A. Maximum Leverage Ratio (for the four-fiscal quarter
period ending _____________, ____)
1. Outstanding principal amount of all obligations
and liabilities for borrowed money: $_____________
2. portion of obligations with respect to capital leases
that are capitalized in excess of $25,000,000: $_____________
3. Consolidated Funded Indebtedness (1+2): $_____________
4. Consolidated Net Income: $_____________
5. Consolidated Interest Charges: $_____________
6. Provisions for taxes, if any, based on income used
or included in determining of 5: $_____________
7. Total depreciation expense deducted in determining 5: $_____________
8. Total amortization expense deducted in determining 5: $_____________
9. Adjustments per clauses (e), (f) and (g) of definition
of Consolidated EBITDA:
(a) Asia Pacific Mobile Telecommunications $_____________
(b) Hughes Space and Communication ______________
(c) ICO Global Communications ______________
(d) Hughes Network Systems wireless business ______________
(e) PanAmSat launch delays ______________
(f) DirecTV Japan, Ltd. ______________
Total $
=============
10. Less DirecTV Japan, Ltd. cash losses per
clause (h) of definition of consolidated $_____________
EBITDA:
F-3
COMPLIANCE CERTIFICATE
<PAGE>
11. Non-cash charges resulting from a change in
business strategy regarding DirecTV Japan,
Ltd. (only for fiscal quarters in fiscal year
ending December 31, 2000) $_____________
12. Consolidated EBITDA (4+5+6+7+8+9-10+11): $_____________
13. Leverage Ratio (3):(12): ____:1.00
14. Maximum ratio allowed under subsection 8.5(b): ____:1.00
B. Minimum Shareholders' Equity
1. Base Shareholders' Equity: $7,125,000,000
2. 50% of consolidated net income (as determined
according to GAAP) earned in each fiscal quarter
ending after December 31, 1998 (with no deduction
for a net loss in any such fiscal quarter): $_____________
3. 50% aggregate increase in Equity by reason of
Borrower's issuance of capital stock: $_____________
4. Minimum Shareholders' Equity (1+2+3): $_____________
5. Shareholders' Equity $_____________
F-4
COMPLIANCE CERTIFICATE
<PAGE>
EXHIBIT G
[FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE]
[Date]
To: Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Revolving Credit Agreement (Bridge Facility)
dated as of November 24, 1999 between Hughes Electronics Corporation, a Delaware
corporation ("Borrower"), Lenders from time to time party thereto, and Bank of
--------
America, N.A., as Administrative Agent (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the
"Agreement;" the terms defined therein being used herein as therein defined).
---------
1. We hereby give you notice of, and request your consent to, the assignment
by [____________________ ] (the "Assignor") to [___________________] (the
--------
"Assignee") of _________% of the right, title and interest of the Assignor in
--------
and to the Agreement, including the right, title and interest of the Assignor in
and to the Commitment of the Assignor and all outstanding Loans made by the
Assignor. Before giving effect to such assignment:
(a) the aggregate amount of the Assignor's Commitment is $__________; and
(b) the aggregate principal amount of its outstanding Loans is $_________.
2. The Assignee hereby represents and warrants that it has complied with the
requirements of Section 11.11 of the Agreement in connection with this
-------------
assignment and acknowledges and agrees that: (a) other than the representation
and warranty that it is the legal and beneficial owner of the Normal Percentage
being assigned thereby free and clear of any adverse claim, the Assignor has
made no representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with the
Agreement or the execution, legality, validity, enforceability, genuineness or
sufficiency of the Agreement; (b) the Assignor has made no representation or
warranty and assumes no responsibility with respect to the financial condition
of Borrower or the performance by Borrower of its obligations under the
Agreement; (c) it has received a copy of the Agreement, together with copies of
the most recent financial statements delivered pursuant to Section 7.5 thereof
-----------
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance; (d) it will, independently and without reliance upon Administrative
Agent or any Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Agreement; (e) it appoints and authorizes
Administrative Agent to take such action and to exercise such powers under the
Agreement as are delegated to Administrative Agent by the Agreement; and (f) it
will perform in accordance with their terms all of the obligations which by the
terms of the Agreement are required to be performed by it as a Bank.
G-1
ASSIGNMENT AND ACCEPTANCE AGREEMENT
<PAGE>
3. The Assignee agrees that, upon receiving your consent to such assignment
and from and after [________, ____], the Assignee will be bound by the terms of
the Agreement, with respect to the interest in the Agreement assigned to it as
specified above, as fully and to the same extent as if the Assignee were a Bank
originally holding such interest in the Agreement.
G-2
ASSIGNMENT AND ACCEPTANCE AGREEMENT
<PAGE>
4. The following administrative details apply to the Assignee:
(a) Offshore Lending Office:
Assignee name: ______________________________
Address: ____________________________________
_____________________________________________
Attention: __________________________________
Telephone: (___) ___________________________
Telecopier: (___) ___________________________
(b) Domestic Lending Office:
Assignee name: ______________________________
Address: ____________________________________
_____________________________________________
Attention: __________________________________
Telephone: (___) ___________________________
Telecopier: (___) ___________________________
(c) Notice Address:
Assignee name: ______________________________
Address: ____________________________________
_____________________________________________
Attention: __________________________________
Telephone: (___) ___________________________
Telecopier: (___) ___________________________
(d) Payment Instructions: Account No.:
Account No. _________________________________
Attention: __________________________________
Reference: __________________________________
G-3
ASSIGNMENT AND ACCEPTANCE AGREEMENT
<PAGE>
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice of
Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[ASSIGNOR]
By: _____________________________
Name:
Title:
[ASSIGNEE]
By: _____________________________
Name:
Title:
We hereby consent to the
foregoing assignment.
HUGHES ELECTRONICS CORPORATION
By: _________________________
Name:
Title:
BANK OF AMERICA, N.A., as
Administrative Agent
By: _________________________
Name:
Title:
G-4
ASSIGNMENT AND ACCEPTANCE AGREEMENT
<PAGE>
EXHIBIT 10.12
HUGHES ELECTRONICS CORPORATION
FIRST AMENDMENT
TO REVOLVING CREDIT AGREEMENT (BRIDGE FACILITY)
This FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (BRIDGE FACILITY)
(this "Amendment") is dated as of December 31, 1999 and entered into by and
among HUGHES ELECTRONICS CORPORATION, a Delaware corporation (the "Borrower"),
the financial institutions listed on the signature pages hereof (the "Banks"),
and BANK OF AMERICA, N.A., as the administrative agent for the Banks (in such
capacity the "Administrative Agent") and is made with reference to that certain
Revolving Credit Agreement (Bridge Facility) dated as of November 24, 1999 (as
so amended, the "Credit Agreement"), by and among the Borrower, the lending
institutions identified therein and the Administrative Agent. Capitalized terms
used herein without definition shall have the same meanings herein as set forth
in the Credit Agreement.
RECITALS
WHEREAS, Borrower and Banks desire to amend the Credit Agreement to
(i) revise the definition of Consolidated EBITDA;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Amendments to Section 1: Definitions
-------------------------------------
Subsection 1.1 of the Credit Agreement is hereby amended by deleting
the definition of Consolidated EBITDA in its entirety, and by replacing it with
the following:
"Consolidated EBITDA" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, an amount equal to the sum of (a)
Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount of
taxes, based on or measured by income, used or included in the determination of
such Consolidated Net Income, (d) the amount of depreciation and amortization
expense deducted in determining such Consolidated Net Income, (e) for each
fiscal quarter in the fiscal year ending December 31, 1999, (i) the amount of
charges taken in connection with the cancellation of contract with Asia Pacific
Mobile Telecommunications, up to an aggregate amount of $92,000,000 for all such
fiscal quarters, and (ii) the amount of charges taken in connection with
development costs and schedule delays at Hughes Space and Communication up to an
aggregate amount of $125,000,000 for all such fiscal quarters, (f) for the last
fiscal quarter of the fiscal year ending December 31, 1999, (i) if a non-cash
charge is taken in connection with the write-off of equity investment in ICO
Global Communications, the amount of such non-cash charge up to an aggregate
amount of $62,000,000, (ii) if a non-cash charge is taken in connection with the
write-off of equity investment in the Hughes Network Systems wireless business,
the amount
<PAGE>
of such non-cash charge up to an aggregate amount of $272,000,000, and (iii) if
a change in business strategy related to DirecTV Japan, Ltd. results in cash
and/or non-cash charges, the amount of such cash and/or non-cash charges up to
an aggregate amount of $250,000,000, and (g) for each fiscal quarter in the
fiscal year ending December 31, 2000, the amount of non-cash charges taken in
connection with ICO Global Communications and PanAmSat launch delays, up to an
aggregate amount for all such fiscal quarters of (x) $150,000,000 minus (y) the
amount of the charge, if any, added pursuant to clauses (f)(i) above; minus (h)
-----
for each fiscal quarter in the fiscal year ending December 31, 2000, the amount
of cash losses (whether or not accounted for as charges under GAAP) in
connection with DirecTV Japan, Ltd., but only if such cash losses were reflected
in the charges, if any, added pursuant to clause (f)(iii); plus (i) for each
----
fiscal quarter in the fiscal year ending December 31, 2000, if any change in
business strategy regarding DirecTV Japan, Ltd. results in a non-cash charge,
the amount of such non-cash charge up to an aggregate amount of $150,000,000
minus the amount of non-cash charges, if any, added pursuant to clause (f)(iii)
above.
2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "Amendment
Effective Date"):
(A) On or before the Amendment Effective Date, Borrower shall deliver
to the Banks (or to the Administrative Agent for the Banks with sufficient
originally executed copies, where appropriate, for each Bank and its counsel)
the following, each, unless otherwise noted, dated the Amendment Effective Date:
(1) A certificate, signed by a vice president or assistant treasurer
of Borrower dated the Amendment Effective Date certifying: (i) that the
representations and warranties of Borrower contained in the Credit Agreement are
true and correct in all material respects; and (ii) that, after giving effect to
this Amendment, no event has occurred and is continuing or would result from the
making of a Loan which constitutes or would constitute an Event of Default or an
Unmatured Event of Default; and
(2) Copies of this Amendment executed by Borrower, the Majority Banks
and the Administrative Agent.
(B) All fees and other amounts due to the Administrative Agent,
Syndication Agent, Documentation Agent, Arranger and any Bank through the
Amendment Effective Date from Borrower shall have been received by such person.
3. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Banks to enter into this Amendment and to amend the
Credit Agreement in the manner provided herein, Borrower represents and warrants
to each Bank that the following statements are true, correct and complete:
(A) Corporate Power and Authority. Borrower has all requisite
-----------------------------
corporate power and authority to enter into this Amendment and to carry out the
transactions
2
<PAGE>
contemplated by, and perform its obligations under, the Credit Agreement as
amended by this Amendment (the "Amended Agreement").
(B) Authorization of Agreements. The execution and delivery of this
---------------------------
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Borrower.
(C) No Contravention. There is no charter, by-law, or capital stock
----------------
provision of Borrower and no provision of any indenture or material agreement,
written or oral, to which Borrower is a party or under which Borrower is
obligated, nor is there any statute, rule or regulation, or any judgment, decree
or order of any court or agency binding on Borrower which would be contravened
by the execution, delivery and performance of any provision, condition, covenant
or other term of this Amendment or the Amended Agreement.
(D) Binding Obligation. This Amendment and the Amended Agreement
------------------
are the legal, valid and binding obligation of Borrower, enforceable against it
in accordance with their terms, and any instrument or agreement required
hereunder or by the Amended Agreement, when executed and delivered, will be
similarly valid, binding and enforceable.
(E) Incorporation of Representations and Warranties From Credit
-----------------------------------------------------------
Agreement. The representations and warranties contained in Section 6 of the
- ----------
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Amendment Effective Date to the same extent as though
made on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case they were true,
correct and complete in all material respects on and as of such earlier date.
(F) Absence of Default. After giving effect to this Amendment, no
------------------
event has occurred and is continuing or will result from the consummation of the
transactions contemplated by this Amendment that would constitute an Event of
Default or a Unmatured Event of Default.
4. MISCELLANEOUS
(A) Reference to and Effect on the Credit Agreement and the Other
Loan Documents.
(i) On and after the Amendment Effective Date, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
of like import referring to the Credit Agreement, and each reference in the
other documents entered pursuant to the Credit Agreement to the "Credit
Agreement", "thereunder", "thereof" or words of like import referring to the
Credit Agreement shall mean and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other documents entered pursuant to the Credit Agreement shall
remain in full force and effect and are hereby ratified and confirmed.
3
<PAGE>
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of the
Administrative Agent or any Bank under, the Credit Agreement or any of the other
Loan Documents.
(B) Fees and Expenses. Borrower acknowledges that all costs, fees
-----------------
and expenses as described in subsection 11.14 of the Credit Agreement incurred
by the Arranger, the Administrative Agent and their counsel with respect to this
Amendment and the documents and transactions contemplated hereby shall be for
the account of Borrower.
(C) Headings. Section and subsection headings in this Amendment are
--------
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
(D) California Law. The interpretation, enforcement and effect of
--------------
this Amendment shall be governed and controlled in all respects by and construed
according to the substantive laws of the State of California.
(E) Counterparts; Effectiveness. This Amendment may be executed
---------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment (other than the
provisions of Section 1 hereof, the effectiveness of which is governed by
Section 2 hereof) shall become effective upon the execution of a counterpart
hereof by Borrower and Majority Banks and receipt by Borrower and the
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
HUGHES ELECTRONICS CORPORATION
By:____________________________________
Name:
Title:
S-1
<PAGE>
BANK OF AMERICA, N.A., as
Administrative Agent
By:____________________________________
Name:
Title:
S-2
<PAGE>
THE BANK OF NEW YORK
By:____________________________________
Name:
Title:
S-3
<PAGE>
BANK ONE, NA
By:_____________________________________
Name:
Title:
S-4
<PAGE>
CITICORP USA, INC.
By:_____________________________________
Name:
Title:
S-5
<PAGE>
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLAND BRANCHES
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
S-6
<PAGE>
MERRILL LYNCH CAPITAL CORPORATION
By:_____________________________________
Name:
Title:
S-7
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By:____________________________________
Name:
Title:
S-8
<PAGE>
BANK OF AMERICA, N.A., as a Bank
By:____________________________________
Name:
Title:
S-9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM HUGHES
ELECTRONICS CORPORATION DECEMBER 31, 1997, 1998 and 1999 FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO 1999 FORM 10-K.
</LEGEND>
<CIK> 0000944868
<NAME> HUGHES ELECTRONICS CORPORATION
<MULTIPLIER> 1,000,000
<CURRENCY> U. S. DOLLARS
<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1997 JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1997 DEC-31-1998 DEC-31-1999
<EXCHANGE-RATE> 1 1 1
<CASH> 0 0 111
<SECURITIES> 2,784 1,342 127
<RECEIVABLES> 535 788 1,054
<ALLOWANCES> 15 24 93
<INVENTORY> 498 466 392
<CURRENT-ASSETS> 5,179 4,075 3,858
<PP&E> 4,157 4,869 6,516
<DEPRECIATION> (953) (988) (1,385)
<TOTAL-ASSETS> 12,142 12,617 18,597
<CURRENT-LIABILITIES> 1,007 1,346 2,642
<BONDS> 638 779 1,586
0 0 1,488
0 0 0
<COMMON> 0 0 0
<OTHER-SE> 8,340 8,412 10,193
<TOTAL-LIABILITY-AND-EQUITY> 12,142 12,617 18,597
<SALES> 854 840 1,010
<TOTAL-REVENUES> 2,838 3,481 5,560
<CGS> 538 607 955
<TOTAL-COSTS> 1,451 1,818 3,030
<OTHER-EXPENSES> 1,344 1,709 2,959
<LOSS-PROVISION> 19 39 123
<INTEREST-EXPENSE> 91 18 123
<INCOME-PRETAX> 374 (103) (660)
<INCOME-TAX> 162 (142) (237)
<INCOME-CONTINUING> 237 64 (391)
<DISCONTINUED> 233 196 100
<EXTRAORDINARY> (21) 0 0
<CHANGES> 0 (9) 0
<NET-INCOME> 450 251 (291)
<EPS-BASIC> 0 0 0
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</TABLE>
