[Execution Copy]
GUARANTY
THIS GUARANTY (this "Guaranty") dated as of June 28, 1996, is made by
Hughes Electronics Corporation, a Delaware corporation, (Guarantor"), to Toronto
Dominion (Texas), Inc., as Administrative Agent (in such capacity, the "Agent")
for the financial institutions ("Lenders") parties to the Revolving Credit
Agreement and the Term Loan Agreement (each as defined below), for its own
benefit and for the benefit of the Lenders (collectively, the "Guaranteed
Parties" and individually, a "Guaranteed Party").
R E C I T A L S:
WHEREAS, Guarantor is, directly or indirectly, a shareholder of American
Mobile Satellite Corporation, a Delaware corporation ("AMSC"), the parent
corporation of AMSC Subsidiary Corporation, a Delaware corporation (the
"Company");
WHEREAS, the Company proposes to enter into that certain $150,000,000
Credit Agreement (the "Term Loan Agreement") and that certain $75,000,000
Revolving Credit Agreement (the "Revolving Credit Agreement'), each among the
Company, the Lenders, Morgan Guaranty Trust Company of New York as Documentation
Agent and the Agent (such agreements, together with the related promissory
notes, are collectively referred to herein as the "Documents");
WHEREAS, the Guaranteed Parties are unwilling to extend credit to the
Company under the Documents without credit support from shareholders of AMSC;
WHEREAS, it is in the best interests of Guarantor that Guaranteed Parties
extend credit to the Company, and therefore Guarantor has agreed to enter into
this Guaranty.
WHEREAS, concurrently herewith, certain other shareholders of AMSC (each,
an "Other Guarantor") are executing and delivering guaranties on substantially
the same terms (other than amounts) as this Guaranty (each, an "Other
Guaranty");
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WHEREAS, Guarantor, the Other Guarantors, AMSC and the Company have entered
into that certain Guaranty Issuance Agreement dated of even date herewith (as
amended, waived, supplemented or otherwise modified from time to time, the
"Guaranty Issuance Agreement");
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, receipt of which is hereby acknowledged, Guarantor
hereby agrees with Agent for the benefit of each of the Guaranteed Parties, as
follows:
1. Guaranty.
(a) Guarantor hereby guarantees to each Guaranteed Party (i) the punctual
payment when due of each and every obligation of the Company for the payment of
principal, interest or fees owing by the Company to such Guaranteed Party under
the Documents and (ii) expenses and fees owing by the Company under Section
10.3(a) of the Term Loan Agreement and Section 10.3(a) of the Revolving Credit
Agreement (together with the amounts due under clause (i), the "Guaranteed
Obligations") and (iii) any and all reasonable fees and expenses (including,
without limitation, reasonable attorneys' fees) incurred by Agent in
successfully enforcing any rights of the Guaranteed Parties under this Guaranty;
provided, however, that (x) the liability of Guarantor on any day with respect
to outstanding and unpaid principal amounts under the Documents shall not exceed
$150,000,000, less seventy-five percent (75%) of the amount of principal repaid
to Guaranteed Parties under the Term Loan Agreement and seventy-five percent
(75%) of any reduction of the commitments under the Revolving Credit Agreement
prior to such day pursuant to Sections 2.7 or 2.9(b) of the Revolving Credit
Agreement (provided that such reduction shall not reduce the liability of
Guarantor to the extent the principal amount of loans outstanding under the
Revolving Credit Agreement exceeds the amount of the commitments under the
Revolving Credit Agreement as so reduced), and (y) the liability of Guarantor
under clauses (i) and (ii) hereof shall not exceed seventy-five percent (75%) of
the outstanding principal amount of loans made under the Documents plus interest
accrued thereon plus seventy-five percent (75%) of the fees owing under the
Documents plus seventy-five percent (75%) of the expenses owing by the Company
under Section 10.3(a) of the Term Loan Agreement and Section 10.3(a) of the
Revolving Credit Agreement (the "Maximum Amount"). The Guaranteed Parties may
permit the Guaranteed Obligations to exceed the Maximum Amount without impairing
the obligations of Guarantor hereunder; provided, however, that if the
Guaranteed Parties make loans under the Term Loan Agreement in principal amounts
greater than $150,000,000 (whether by waiving a required payment or prepayment
or making additional loans) or increase the commitments under the Revolving
Credit Agreement (including any waiver of the condition in Section 3.3(c) of the
Revolving Credit Agreement), or increase the interest rate or fees payable by
the Company under the Documents, such increased amounts shall not be part of the
Guaranteed Obligations without the prior written consent of Guarantor, and all
payments received by the Guaranteed Parties with respect to the obligations of
the Company under the Documents (including any proceeds of insurance) shall be
deemed to be first applied to the guaranteed portion of such obligations,
thereby reducing Guarantor's liability hereunder (pro rata with the reduction of
liability under any Other Guaranty). In the event that any of the foregoing
obligations shall not be paid when due or if a "Guarantor Event" (as defined in
the Credit Agreements) occurs, Guarantor will pay such obligations within five
(5) Business Days after Guarantor's receipt of demand therefor; provided that
demand for payment of any Guaranteed Obligations shall constitute demand for
payment of all interest under the Documents accrued and unpaid from the date of
such demand through the date of payment by Guarantor, and provided further that
Guarantor may cause such obligation or liability to be paid on its behalf by any
corporation affiliated with it. The payments made by Guarantor of any Guaranteed
Obligations, whether on behalf of the Company prior to a default or after demand
on Guarantor, shall be deemed to cure any related payment default under the
Documents and any such payments of principal of the Guaranteed Obligations shall
reduce Guarantor's liability under this Section 1(a) with respect to principal.
(b) This Guaranty is a guaranty of payment and not of performance or
collection and is in no way conditioned or contingent upon any attempt to
collect from the Company.
(c) Guarantor shall be subrogated to all rights of the applicable
Guaranteed Party against the Company, and any collateral security or guarantees
therefor, in respect of any amounts paid by Guarantor pursuant to the provisions
of this Guaranty; provided that Guarantor shall not exercise any rights of
subrogation, reimbursement or contribution from or against the Company with
respect to payments made under this Guaranty until Guarantor has satisfied its
obligations under this Guaranty or all of the Guaranteed Obligations have been
paid in full.
(d) The liability of Guarantor and the liability of any Other Guarantor
under any Other Guaranty shall be independent and several obligations, and
Guarantor shall have no liability whatsoever with respect to the obligations
under any Other Guaranty. Any payments with respect to the principal portion of
the Guaranteed Obligations by the Company (whether paid by the Company or from
insurance proceeds) shall be applied ratably to reduce the liabilities of
Guarantor and any Other Guarantor under any Other Guaranty with respect to such
principal portion.
(e) Guarantor may, at its option, satisfy its obligations hereunder with
respect to principal, interest and fees by purchasing notes issued to the
Lenders under the Documents in amounts up to the limits of Guarantor's liability
under Section 1(a) above with respect to the principal portion of the Maximum
Amount. Upon payment of such principal portion as provided under either of the
preceding sentences, together with accrued and unpaid interest thereon, each
Lender shall assign to Guarantor the notes so purchased, and shall execute and
deliver to Guarantor (at Guarantor's expense) such other documents as Guarantor
may reasonably request to assign the purchased notes, together with all
collateral security therefor and any guaranties, and for Guarantor to assume the
rights and obligations of Lenders under the Documents to the extent of the notes
so purchased.
2. Guaranty Absolute. Except as otherwise provided in this Guaranty, the
liability of 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:
(a) any waiver, extension, renewal or modification of, or any consent to
departure from, any Document, 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 contained in any Document, but subject to the
provisions of Section 1 above;
(b) any extension of the time for payment by the Company or any other
Person of any Guaranteed Obligation under any Document;
(c) any failure, omission or delay by any Guaranteed Party to enforce,
assert or exercise any right, power or remedy conferred on or available to it
including, without limitation, to enforce any guaranty by AMSC of the Company's
obligations;
(d) 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 the Company, Guarantor, any Guaranteed Party 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;
(e) the existence of any claim, set-off or other rights which the Guarantor
may have at any time against the Company, any Guaranteed Party or any other
corporation or person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion of any
such claim or right by separate suit or counterclaim;
(f) any invalidity or unenforceability relating to or against the Company
for any reason of any Document, or any provision of applicable law or regulation
purporting to prohibit the payment by the Company of any Guaranteed Obligation;
or
(g) any other act or omission to act or delay of any kind by the Company,
any Guaranteed Party or any other person or any other circumstance whatsoever
which might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of or defense to the Guarantor's obligations hereunder.
Notwithstanding the foregoing, the Guaranteed Parties shall not (i) release
the Company or any Other Guarantor from liability for the Guaranteed
Obligations, or (ii) release or otherwise impair any collateral security at any
time held for the Guaranteed Obligations, or (iii) waive any rights to receive
proceeds of any insurance, or (iv) extend the maturity date under the Documents
to a date later than June 30, 2001, or (v) amend or in any way extend the
Release Date (as defined in each of the Term Loan Agreement and Revolving Credit
Agreement as of the date hereof), except in each case as consented to by
Guarantor and if any Guaranteed Party does so release the Company, any Other
Guarantor or any collateral security, or waive any rights to proceeds of
insurance, or extend the maturity date or amend or extend the Release Date,
Guarantor shall be released and discharged from any liability under this
Guaranty.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, with respect to any Guaranteed Party if at any time any payment of any of
the Guaranteed Obligations owed such Guaranteed Party is rescinded or must
otherwise be returned by such Guaranteed Party, as the case may be, upon the
insolvency, bankruptcy or reorganization of the Company, Guarantor (or any
corporation affiliated with Guarantor that makes a payment on Guarantor's behalf
pursuant to Section 1(a) hereof) or otherwise, all as though such payment had
not been made. If the payment of, or the acceleration of the time for payment
of, any sum required to be made by the Company under any Document shall at any
time be prevented by reason of a case or proceeding under bankruptcy, insolvency
or other similar law, 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 such Document, and, subject to the limitations in Section 1
above, Guarantor shall pay such sum and any other amounts guaranteed hereunder
within five (5) Business Days after Guarantor's receipt of demand therefor.
3. Waiver. Except as otherwise provided in this Guaranty, Guarantor hereby
unconditionally waives, as to any Guaranteed Party, to the greatest extent
permitted by applicable law, (a) 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 any Guaranteed Party upon this Guaranty, or acceptance of this
Guaranty, and the Guaranteed Obligations, (b) any requirement that any
Guaranteed Party exhaust any right or take any action against the Company, any
other guarantor or any other person or any collateral, (c) all notices which may
be required by statute, rule of law or otherwise to preserve any rights against
Guarantor hereunder, including, without limitation, any demand, presentment,
protest, proof or notice of nonpayment of any amounts payable under or in
respect of the Documents, and notice of any failure on the part of the Company
to perform and comply with any term or condition of any Document, (d) any rights
to the enforcement, assertion or exercise by any Guaranteed Party of any right,
remedy, power or privilege under or in respect of any of the Documents, (e) any
requirement of diligence and (f) notice of acceptance of this Guaranty. Any
Guaranteed Party that is entitled to receive payments required to be made by
Guarantor hereunder in respect of any Guaranteed Obligation shall have the right
to enforce this Guaranty (by bringing suit or otherwise) directly against
Guarantor with respect to such Guaranteed Obligations without bringing suit
against the Company or any other person, as the case may be.
4. Amendments, Etc. No amendment or waiver of any provision of this
Guaranty shall in any event be effective unless the same shall be in writing and
(a) with respect to its enforcement against any Guaranteed Party, signed by
Agent, or (b) with respect to its enforcement against Guarantor, signed by
Guarantor.
5. No Waiver; Remedies. No failure on the part of any Guaranteed Party to
exercise, and no delay in any Guaranteed Party's exercise of, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder by any Guaranteed Party preclude any other or
further exercise thereof or the exercise of any other right by such Guaranteed
Party. Agent (on behalf of Guaranteed Parties) may specifically waive any breach
of this Guaranty by 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.
6. Duration of Guaranty. (a) This Guaranty shall remain in full force and
effect in accordance with the terms hereof until the earliest of (i) payment in
full of all of the Guaranteed Obligations and termination of the commitments of
the lenders to extend financing under the Term Loan Agreement and the Revolving
Credit Agreement, (ii) the date on which Guarantor has satisfied all of its
obligations under this Guaranty, and (iii) the Release Date (as defined in the
Documents). The termination of this Guaranty on the Release Date or otherwise
shall not require any action on the part of Agent or any Guaranteed Party, but
at the request of Guarantor, Agent will execute and deliver to Guarantor such
documents as Guarantor may reasonably request confirming the termination of this
Guaranty. The obligation of Guarantor under Section 1(a)(iii) to pay any fees
and expenses owing in connection with the enforcement of this Guaranty shall
survive such termination.
(b) This Guaranty shall be binding upon Guarantor and its successors, and
inure to the benefit of and be enforceable by the successors, transferees and
assigns of each Guaranteed Party permitted under the Documents. 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 the Company or any other person
for performance by Guarantor of its obligations hereunder.
7. Notices, Etc. All notices, demands, requests, consents, approvals and
other instruments hereunder shall be in writing and shall be deemed to have been
properly given if given as provided for in the Documents, and if to Guarantor,
sent to it at its address or fax number shown on the signature pages of this
Guaranty.
8. Separability of This Guaranty. In case any term or provision of this
Guaranty or any application thereof 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.
9. Further Assurances. Guarantor hereby agrees to execute and deliver all
such instruments and take all such action as any Guaranteed Party may from time
to time reasonably request in order to fully effectuate the purposes of this
Guaranty.
10. 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.
11. GOVERNING LAW AND DAMAGE LIMITATION. THIS GUARANTY SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
THE PARTIES HEREBY IRREVOCABLY WAIVE ANY RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. THE
PARTIES AGREE THAT GUARANTOR SHALL NOT BE LIABLE HEREUNDER FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL OR INCIDENTAL DAMAGES, INCLUDING, WITHOUT LIMITATION,
DAMAGES FOR LOST PROFITS OR BUSINESS.
12. Representations and Warranties of Guarantor. Guarantor represents and
warrants to each Guaranteed Party that:
(a) It is duly organized, validly existing and (to the extent applicable)
in good standing under the laws of the jurisdiction of its organization, and has
all requisite corporate or partnership power and authority to enter into and
perform its obligations under this Guaranty.
(b) This Guaranty has been duly authorized by all necessary corporate or
partnership action on the part of, and has been duly executed and delivered by,
Guarantor, and none of the execution and delivery hereof, the consummation of
the transactions contemplated hereby or compliance by Guarantor with any of the
terms and provisions hereof (i) requires any approval of stockholders or
partners or approval or consent of any trustee or holders of any indebtedness or
obligations of Guarantor other than such approvals or consents as have been
obtained, (ii) contravenes any law, judgment, governmental rule or regulation or
order applicable to or binding on Guarantor or any of its properties, the
contravention of which would have a material adverse effect on the financial
condition of Guarantor and its subsidiaries taken as a whole or on the ability
of Guarantor to perform any of its obligations under this Guaranty, (iii)
contravenes or results in any breach of or constitutes any default under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement for borrowed money, contract or other
agreement or instrument to which Guarantor is a party or by which it or any of
its properties may be bound, the contravention, breach or default of which would
have a material adverse effect on the financial condition of Guarantor and its
subsidiaries taken as a whole or on the ability of Guarantor to perform any of
its obligations under this Guaranty, or (iv) contravenes its corporate charter
or by- laws or other organizational documents.
(c) Neither the execution, delivery and performance by Guarantor of this
Guaranty nor the consummation of any of the transactions contemplated hereby
requires the consent, approval or authorization of, the giving of prior notice
to, or the prior registration, recording or filing of any document with, or the
taking of any other action in respect of, any governmental agency or authority.
(d) This Guaranty constitutes the legal, valid and binding obligation of
Guarantor, enforceable against Guarantor in accordance with its terms, except as
such enforcement may be subject to bankruptcy, insolvency, moratorium or other
similar laws affecting creditors' rights generally and to general principles of
equity.
(e) Guarantor has delivered copies of the consolidated balance sheet of
Guarantor and its consolidated subsidiaries as of the end of its most recent
fiscal year for which its financial statements are available, and related
statements of consolidated income and cash flow and stockholder's equity for the
fiscal year then ended, accompanied by the report of its independent
accountants. Such statements fairly present, in accordance with generally
accepted accounting principles, the financial position of Guarantor and its
consolidated subsidiaries as of such date and the results of their operations
and cash flows for such fiscal year.
13. Taxes.
(a) For the purposes of this Section 13, the following terms have the
following meanings:
"Taxes" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings with respect to any payment to a Guaranteed
Party by Guarantor pursuant to this Guaranty, and all liabilities with respect
thereto, excluding (i) taxes imposed on its income, and franchise or similar
taxes imposed on it, by a jurisdiction under the laws of which such Guaranteed
Party is organized or in which its principal executive office is located and
(ii) any United States withholding tax imposed on such payments but only to the
extent that such Guaranteed Party is subject to United States withholding tax at
the time such Guaranteed Party first becomes a party to the Documents.
"Other Taxes" means any present or future stamp or documentary taxes and
any other excise or property taxes, or similar charges or levies, which arise
from any payment made to a Guaranteed Party pursuant to this Guaranty or from
the execution or delivery of, or otherwise with respect to, this Guaranty.
(b) Any and all payments by the Guarantor to or for the account of any
Guaranteed Party hereunder shall be made without deduction for any Taxes or
Other Taxes; provided that, if Guarantor shall be required by law to deduct any
Taxes or Other Taxes from any such payments, (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) such
Guaranteed Party receives an amount equal to the sum it would have received had
no such deductions been made, (ii) Guarantor shall make such deductions, (iii)
Guarantor shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) Guarantor shall
furnish to the Guaranteed Party the original or a certified copy of a receipt
evidencing payment thereof.
(c) Guarantor agrees to indemnify each Guaranteed Party for the full amount
of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this Section)
paid by such Guaranteed Party and any liability (including penalties, interest
and expenses, other than those resulting from any act or failure to act by such
Guaranteed Party) arising therefrom or with respect thereto. This
indemnification shall be paid within 15 days after such Guaranteed Party (as the
case may be) makes demand therefor.
(d) For any period with respect to which a Guaranteed Party has failed to
provide Guarantor with the appropriate form evidencing its complete exemption
from United States withholding taxes (unless such failure is due to a change in
treaty, law or regulation occurring subsequent to the date on which such form
originally was required to be provided), such Guaranteed Party shall not be
entitled to indemnification under Section 13(b) or (c) with respect to Taxes
imposed by the United States; provided that if a Guaranteed Party which is
otherwise exempt from or subject to a reduced rate of withholding tax becomes
subject to Taxes because of its failure to deliver a form required hereunder,
Guarantor shall take such steps as such Guaranteed Party shall reasonably
request to assist such Guaranteed Party to recover such Taxes.
[signature page follows]
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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed by
its duly authorized officer.
HUGHES ELECTRONICS CORPORATION
By:
Name:
Title:
Address for notices:
7200 Hughes Terrace
M/S CI/A 700
Los Angeles, California 90045-0066
Attention: Treasurer
Fax:
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ACCEPTED AND AGREED on behalf of Guaranteed Parties:
TORONTO DOMINION (TEXAS), INC.,
as Agent
By:
Name:
Title:
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