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Exhibit 4.4
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement"), dated as of July 31, 1998,
is entered into by and among State Street Bank and Trust Company of Missouri,
N.A., as escrow agent (in such capacity, the "Escrow Agent"), State Street Bank
and Trust Company of Missouri, N.A., as trustee (in such capacity, the
"Trustee") under the Indenture (as defined herein) and Golden Sky Systems, Inc.,
a Delaware corporation (the "Company").
R E C I T A L S :
A. Pursuant to the Indenture, dated as of July 31, 1998 (the
"Indenture"), between the Company and the Trustee, the Company is issuing
$195,000,000 aggregate principal amount of its 12 3/8% Senior Subordinated Notes
due 2006, Series A (the "Series A Securities"), and authorizing the issuance of
12 3/8% Senior Subordinated Notes due 2006, Series B (the "Series B Securities"
and, together with the Series A Securities, the "Securities").
B. As security for its obligations under the Securities and the
Indenture, the Company hereby grants to the Trustee, for the benefit of the
Trustee, any successor Trustee under the Indenture and the holders of the
Securities, a security interest in and lien upon the Escrow Account (as defined
herein) on the terms and conditions set forth herein.
C. The parties have entered into this Agreement in order to set forth
the conditions upon which, and the manner in which, funds will be disbursed from
the Escrow Account and released from the security interest and lien described
above.
A G R E E M E N T :
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. All capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Indenture. In addition to any
other defined terms used herein, the following terms shall constitute defined
terms for purposes of this Agreement and shall have the meanings set forth
below:
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"Available Escrow Proceeds" has the meaning set forth in Section 3(a).
"Beneficiaries" has the meaning set forth in Section 2(b).
"Collateral" has the meaning set forth in Section 6(a).
"Escrow Account" shall mean the escrow account established pursuant to
Section 2.
"Escrow Account Statement" has the meaning set forth in Section 2(f).
"Escrow Proceeds Offer" has the meaning set forth in the Indenture.
"Escrow Proceeds Offer Purchase Date" has the meaning set forth in the
Indenture.
"Financial Information Condition" has the meaning set forth in Section
3(a)(i).
"Government Securities" means (i) securities that are direct
non-callable obligations of the United States of America or securities the
timely payment of whose principal and interest is unconditionally guaranteed by
the full faith and credit of the United States of America and (ii) securities
that are issued by the United States treasury pursuant to 31 CFR Part 357.
"Initial Escrow Amount" has the meaning set forth in Section 2(b).
"Interest Payment Date" means February 1 and August 1 of each year,
commencing on February 1, 1999 until the Securities are paid in full.
"Interest Reserve Amount" has the meaning set forth in Section 3(a).
"Investment Instructions" means the written instructions delivered by
the Company designating Government Securities in which funds held in the Escrow
Account, after giving effect to any authorized release pursuant to Section 3(a),
shall be invested that mature in an amount sufficient to and/or generate
interest income sufficient to, when added to the balance of funds held in the
Escrow Account, provide for the payment of interest on the outstanding
Securities on each Interest Payment Date beginning on and including February 1,
1999 and through and including the Interest Payment Date on August 1, 2000;
provided, however, that any such written instruction shall specify the
particular investment to be made, shall state that such investment is authorized
to be made by this Agreement and in particular satisfies the requirements of
this definition and Section 2(d)(v), shall contain the certification referred to
in Section 2(d)(ii), if required, and shall be executed by an Officer of the
Company. Such written instructions shall be accompanied by a report by an
independent accounting firm reflecting the calculations referred to above as
evidence that such written instructions conform to the requirements of Section
2(d)(v).
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"Issue Date" means July 31, 1998.
"Payment Notice and Disbursement Request" means a notice sent by the
Trustee to the Escrow Agent requesting a disbursement of funds in connection
with an Interest Payment Date from the Escrow Account in substantially the form
of Exhibit A hereto. Each Payment Notice and Disbursement Request shall be
signed by an Assistant Vice President or a Vice President of the Trustee.
"Permitted Investments" means a demand deposit account held at State
Street Bank and Trust Company in the Commonwealth of Massachusetts in the name
of and subject to the exclusive control of the Trustee, which is not represented
by (and as to which no person is entitled to be issued) an "indispensable
instrument" evidencing or entitling the holder to rights of ownership in,
transfer of or payment or withdrawal from such account (such as a passbook or
certificate of deposit or similar instrument) unless such instrument is in the
continuous and exclusive possession and control of the Trustee, and as to which
account no person other than the Trustee has any right of access thereto or
power of withdrawal, transfer or payment therefrom, or power to make third-party
payments from (whether by check, draft, negotiable order of withdrawal or
similar means) such account.
"Release Date" has the meaning set forth in Section 3(a).
"Required Filing Date" means the 60th day following the Issue Date.
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2. Escrow Account; Escrow Agent.
(a) Appointment of Escrow Agent. The Company and the Trustee hereby
appoint the Escrow Agent, and the Escrow Agent hereby accepts appointment, as
escrow agent, under the terms and conditions of this Agreement.
(b) Establishment of Escrow Account. On the Issue Date, the Escrow
Agent shall establish an escrow account entitled the "State Street Bank and
Trust Company of Missouri, N.A., as Escrow Agent/Escrow Account pledged by
Golden Sky Systems, Inc. to State Street Bank and Trust Company of Missouri,
N.A., as Trustee, pursuant to the Escrow Agreement dated as of July 31, 1998"
(such account, the "Escrow Account"). The Escrow Account shall be established
and maintained by the Escrow Agent with State Street Bank and Trust Company (the
"Custodian"), a Massachusetts trust company located in Boston, Massachusetts,
and each of the Escrow Agent, the Custodian and the Company shall enter into an
agreement substantially in the form of Exhibit B annexed hereto and made a part
hereof (the "Account Control Agreement"). On the Issue Date, the Company will
deposit with the Custodian $188,150,000 in cash, representing the net proceeds
of the issuance of the Securities (the "Initial Escrow Amount"). The Escrow
Agent will acknowledge in writing receipt of the Initial Escrow Amount. Such
Initial Escrow Amount shall constitute the only deposit by the Company in the
Escrow Account. The funds in the Escrow Account shall be released by the Escrow
Agent only pursuant to Section 3.
All funds accepted by the Escrow Agent pursuant to this Agreement
shall be held for the exclusive benefit of the Trustee, any successor Trustee
under the Indenture and the holders of the Securities, as secured parties
hereunder (collectively, the "Beneficiaries"). All such funds shall be held in
the Escrow Account until disbursed or paid in accordance with the terms hereof.
The Escrow Account, the funds held therein, any Government Securities or
Permitted Investments held by the Escrow Agent shall be held by the Escrow
Agent, for the benefit of the Beneficiaries, in the form required by Section
2(d)(i) and in such a manner as will result in the security interests
contemplated by Section 2(d)(ii) hereof.
(c) Escrow Agent Compensation. The Company shall pay to the Escrow
Agent such compensation for services to be performed by it under this Agreement
as the Company and the Escrow Agent may agree in writing from time to time. The
Escrow Agent shall be paid any compensation owed to it directly by the Company
and shall not disburse from the Escrow Account any such amounts.
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The Company shall reimburse the Escrow Agent upon request for all
reasonable expenses, disbursements and advances incurred or made by the Escrow
Agent in implementing any of the provisions of this Agreement, including
compensation and the reasonable expenses and disbursements of its counsel. The
Escrow Agent shall be paid any such expenses owed to it directly by the Company
and shall not disburse from the Escrow Account any such amounts.
(d) Investment of Funds in Escrow Account. Funds deposited in the
Escrow Account shall be invested and reinvested only upon the following terms
and conditions:
(i) Acceptable Investments. Until the release of Collateral pursuant
to, and in compliance with, Section 3(a)(i) or (ii) (the "Applicable
Time"), funds contained in the Escrow Account shall be held by the Escrow
Agent, within its sole control and dominion, only in the form of cash and
Permitted Investments as directed by the Company in writing and shall be
held in such a manner as will result in the security interests contemplated
by Section 2(d)(ii) hereof. Following the Applicable Time, funds contained
in the Escrow Account shall be invested by the Escrow Agent in Government
Securities in accordance with Investment Instructions. All Government
Securities shall be maintained in book entry form with the Federal Reserve
Bank of Boston (i.e., TRADES), transferred to a book entry account in
the name of the Custodian as a participant in the Federal Reserve Bank of
Boston pursuant to the Account Control Agreement; provided that Government
Securities maintained in book entry form with the Federal Reserve Bank of
Boston shall be transferred to a book entry account in the name of the
Custodian at the Federal Reserve Bank of Boston that includes only
Government Securities held by the Custodian for its customers and
segregated by separate recordation in the books and records of the
Custodian. The Escrow Agent shall not be liable for losses on any
investments made by it pursuant to and in compliance with written
instructions or Investment Instructions given hereunder. In the absence of
written instructions or Investment Instructions, as applicable, from the
Company that meet the requirements of this Agreement, the Escrow Agent
shall have no obligation to invest funds held in the Escrow Account.
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(ii) Security Interest in Investments. No investment of funds in the
Escrow Account shall be made unless the Company has certified to the Escrow
Agent and the Trustee that, upon such investment, the Escrow Agent will
have a first priority perfected security interest in the applicable
investment. If a certificate as to a class of investments has been provided
to the Escrow Agent, a certificate need not be issued with respect to
individual investments in securities in that class if the certificate
applicable to the class remains accurate with respect to such individual
investments, which continued accuracy the Escrow Agent may conclusively
assume. On the Issue Date, and on each anniversary of the Issue Date
thereafter until the date upon which the balance of the funds held in the
Escrow Account shall have been reduced to zero, each of the Trustee and the
Escrow Agent shall receive an Opinion of Counsel to the Company, dated each
such date as applicable, to the effect that the Trustee has a perfected
security interest in the Collateral, which opinion shall meet the
requirements of Section 314(b) of the Trust Indenture Act of 1939, as
amended (the "TIA"), and shall comply with Section 14.02(b) of the
Indenture.
(iii) Interest and Dividends. All interest earned and dividends paid
on funds contained in the Escrow Account shall remain deposited in the
Escrow Account as additional Collateral for the exclusive benefit of the
Beneficiaries and, if not required to be disbursed in accordance with the
terms hereof, shall be reinvested in accordance with the terms hereof at
the Company's written instruction in conformity with this Agreement.
(iv) Limitation on Escrow Agent's Responsibilities. The Escrow Agent's
sole responsibilities under this Section 2 shall be (A) to retain, or cause
the Custodian to retain, possession of Collateral to the extent necessary
to obtain a first priority perfected security interest therein (except,
however, that the Escrow Agent and the Custodian may surrender possession
to the issuer of any Collateral held by it to effect such perfected
security interest for the purposes of effecting assignment, crediting
interest, reinvesting such security or reducing such security to cash) and
to be the registered or designated owner of the Collateral, (B) to follow
the Company's written instructions or Investment Instructions, as
applicable, given in accordance with Section 2(d)(i), (C) to invest and
reinvest funds pursuant to this Section 2(d) and (D) to use reasonable
efforts to reduce to cash such Government Securities or Permitted
Investments as may be required to fund any disbursement or payment in
accordance with Section 3. In connection with clause (A) above, the
Custodian will maintain continuous possession in the State of Massachusetts
of Collateral and will cause the Collateral to be registered in the
book-entry system of, and transferred to an account of the Custodian at,
the Federal Reserve Bank of Boston or, in the case of Permitted
Investments, other books and records of the issuer thereof maintained in
the State of Massachusetts. Except as provided in Section 6, the Escrow
Agent shall have no other responsibilities with respect to perfecting or
maintaining the perfection of the Trustee's security interest in the
Collateral and shall not be required to file any instrument, document or
notice in any public office at any time or times. In connection with clause
(D) above and subject to the following sentence, the Escrow Agent shall not
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be required to reduce to cash any Government Securities or Permitted
Investments to fund any disbursement or payment in accordance with Section
3 in the absence of written instructions signed by an Officer of the
Company specifying the particular investment to liquidate. If no such
written instructions are received, the Escrow Agent may liquidate, first,
the Permitted Investments, and, second, those Government Securities having
the lowest interest rate per annum or if none such exist, those having the
nearest maturity.
(v) Manner of Investment. Prior to the Applicable Time, the Escrow
Agent shall invest funds only in cash or Permitted Investments. Following
the Applicable Time, funds deposited in the Escrow Account shall be
invested in accordance with the Investment Instructions, which shall be in
a manner such that there will be sufficient funds available without any
further investment by the Company to cover all interest due on the
outstanding Securities, as such interest becomes due, for each Interest
Payment Date occurring from the Issue Date and ending on (and including)
August 1, 2000, provided that such investments shall have such maturities
and/or interest payment dates such that funds will be available with
respect to each such Interest Payment Date no later than the time the
Escrow Agent is required to disburse such funds to the Trustee pursuant to
Section 3(c). The Escrow Agent shall have no responsibility for determining
whether funds held in the Escrow Account shall have been invested in such a
manner so as to comply with the preceding sentence.
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(e) Substitution of Escrow Agent. The Escrow Agent may resign by
giving no less than 30 days prior written notice to the Company and the Trustee.
Such resignation shall take effect upon the later to occur of (i) delivery of
all funds and Government Securities maintained by the Escrow Agent hereunder and
copies of all books, records, plans and other documents in the Escrow Agent's
possession relating to such funds or Government Securities or this Agreement to
a successor escrow agent mutually approved by the Company and the Trustee (which
approvals shall not be unreasonably withheld or delayed) and (ii) the Company,
the Trustee and such successor escrow agent entering into this Agreement or any
written successor agreement no less favorable to the interests of the holders of
the Securities and the Trustee than this Agreement; and the Escrow Agent shall
thereupon be discharged of all obligations under this Agreement and shall have
no further duties, obligations or responsibilities in connection herewith,
except as set forth in Section 4. If a successor escrow agent has not been
appointed or has not accepted such appointment within 20 Business Days after
notice of resignation is given to the Company, the Escrow Agent may apply to a
court of competent jurisdiction for the appointment of a successor escrow agent.
(f) Escrow Account Statement. The Escrow Agent shall deliver to the
Company and the Trustee a statement setting forth with reasonable particularity
the balance of funds then in the Escrow Account and the manner in which such
funds are invested ("Escrow Account Statement"). The Escrow Account Statement
shall be delivered by the Escrow Agent 30 days after the date of this Agreement
and every 30 days thereafter until the Applicable Time, at which point the
Escrow Account Statement shall be delivered at least 30 days prior to each
Interest Payment Date. The parties hereto irrevocably instruct the Escrow Agent
that on the first date upon which the balance in the Escrow Account (including
the holdings of all Government Securities) is reduced to zero, the Escrow Agent
shall deliver to the Company and to the Trustee a notice that the balance in the
Escrow Account has been reduced to zero.
3. Disbursements.
(a) Release of Available Escrow Proceeds. The Escrow Agent shall
release the Available Escrow Proceeds to the Company upon receipt of the
following documentation as applicable (the date of such proposed release being
the "Release Date"):
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(i) an Officers' Certificate, dated the Release Date, of the Chief
Executive Officer and Chief Financial Officer of the Company (an "Eligible
Officers' Certificate") to the effect that the Financial Information
Condition set forth in this Section 3(a)(i) has been satisfied on or prior
to the Required Filing Date by (A) the filing of the Exchange Offer
Registration Statement with the SEC that the Company, after due inquiry of
its independent auditors and outside counsel, believes to include all of
the audited, unaudited and pro forma financial statements and other
financial information (including unqualified reports of all of the
independent auditors that have prepared audited financial statements and
signed consents of such auditors) required to be included therein under the
Securities Act and the regulations promulgated thereunder (including Rule
3-05 and Article 11 of Regulation S-X) (it being understood that this
condition shall remain satisfied by the filing of the Exchange Offer
Registration Statement notwithstanding any subsequent determination by the
SEC that such Exchange Offer Registration Statement did not contain the
required financial statements and other information) or (B) the Company
having determined, after due inquiry of its independent auditors and
outside counsel, that (x) the Company has received or prepared all of the
audited, unaudited and pro forma financial statements and other financial
information (including unqualified reports of all of the independent
auditors that have prepared audited financial statements) in the form and
substance required to be included in a registration statement filed with
the SEC under the Securities Act and the regulations promulgated thereunder
(including Rule 3-05 and Article 11 of Regulation S-X) on Form S-4 as of
the Release Date; provided that, to the extent such Eligible Officers'
Certificate is delivered prior to August 15, 1998, the "stub" unaudited and
pro forma financial statements of the Company may be for the three-month
period ended March 31, 1998, rather than the six-month period ended June
30, 1998, if the Eligible Officers have stated that, after due inquiry,
they fully expect to have such information for the such six-month period
prior to August 15, 1998, and (y) the Company having received forms of
consents from each independent auditor that has issued a report referred to
in the preceding clause (x) that are required to be filed with the SEC
under the Securities Act and the regulations promulgated thereunder and an
indication that each such auditor is prepared to deliver such consent as of
the Release Date (the matter described in the preceding clause (A) or (B)
being referred to as the "Financial Information Condition"); or
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(ii) an Eligible Officers' Certificate to the effect that (a) the
Available Escrow Proceeds are being released on the Release Date because it
is also an Escrow Proceeds Offer Purchase Date and that such funds are
being used, upon release, first, to fund the Escrow Proceeds Offer and,
second, as set forth under "Use of Proceeds" in the Final Offering
Memorandum for the Securities and (b) the Company has otherwise complied
with all of its obligations in respect of the Escrow Proceeds Offer
contained in the Indenture.
Notwithstanding anything herein to the contrary, the Company shall not request a
release of funds under Section 3(a) in excess of the Available Escrow Proceeds.
The "Available Escrow Proceeds" shall equal the funds held in the Escrow Account
immediately prior to the release on the Release Date less the Interest Reserve
Amount as determined on the Release Date. The "Interest Reserve Amount" as of
the applicable Release Date shall represent the amount that, together with the
interest received from the investment thereof in Government Securities in which
funds remaining after the release under Section 3(a) contemplated to occur on
such Release Date (after giving effect to the Escrow Proceeds Offer, if
applicable) are to be invested on such Release Date pursuant to Investment
Instructions, will be sufficient to pay when due the first four scheduled
interest payments on the Securities (but in no event more than $48.3 million).
The Interest Reserve Amount will continue to be held in escrow pending
disbursement for the payment of such interest. The Escrow Agent shall disburse
the Interest Reserve Amount in accordance with Section 3(c) and (d).
(b) Failure to Satisfy the Financial Information Condition. In the
event that on or before the Required Filing Date, the Available Escrow Proceeds
have not been released in accordance with the requirements of Section 3(a), the
Company shall, within five Business Days of the Required Filing Date, make the
Escrow Proceeds Offer required by the Indenture. If the Escrow Agent receives a
notice of the Escrow Proceeds Offer, the Escrow Agent shall liquidate the
Available Escrow Proceeds held in the Escrow Account not later than the third
Business Day preceding the Escrow Proceeds Offer Purchase Date.
(c) Payment Notice and Disbursement Request; Disbursements. In
addition to the releases contemplated by Section 3(a)(i) and (ii), the Trustee
shall, at least five Business Days prior to an Interest Payment Date, submit to
the Escrow Agent a completed Payment Notice and Disbursement Request
substantially in the form of Exhibit A hereto.
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The Escrow Agent's disbursement pursuant to any Payment Notice and
Disbursement Request shall be subject to the satisfaction of the applicable
conditions set forth in Section 3(c). Provided such Payment Notice and
Disbursement Request is not rejected by it, the Escrow Agent, as soon as
reasonably practicable on the Interest Payment Date, but in no event later than
12:00 Noon (New York City time) on such Interest Payment Date, shall disburse
the funds requested in such Payment Notice and Disbursement Request by wire or
book-entry transfer of immediately available funds to the account of the Trustee
for the benefit of the Beneficiaries. The Escrow Agent shall notify the Trustee
as soon as reasonably possible (but not later than two Business Days from the
date of receipt of the Payment Notice and Disbursement Request) if any Payment
Notice and Disbursement Request is rejected and the reason(s) therefor. In the
event such rejection is based upon nonsatisfaction of the condition in Section
3(d)(I) below, the Trustee shall thereupon resubmit the Payment Notice and
Disbursement Request with appropriate changes.
(d) Conditions Precedent to Disbursement. The Escrow Agent's payment
of any disbursement shall be made only if: (I) the Trustee shall have submitted,
in accordance with the provisions of Section 3(a) or (c), as applicable, an
Eligible Officers' Certificate or a completed Payment Notice and Disbursement
Request to the Escrow Agent substantially in the form required by Section 3(a)
or Exhibit A with blanks appropriately filled in and (II) the Escrow Agent shall
not have received any notice from the Trustee that as a result of an Event of
Default under the Indenture the indebtedness represented by the Securities has
been accelerated and has become due and payable (in which event the Escrow Agent
shall apply all Collateral as required by Section 6(b)(iii)).
(e) Retired Securities. Following the Applicable Time, in the event a
portion of the Securities has been retired by the Company and submitted to the
Trustee for cancellation and there is no Default or Event of Default under the
Indenture, funds representing the lesser of (A) any funds remaining in the
Escrow Account that are in excess of the amount sufficient to pay interest
through and including August 1, 2000 on the Securities not so retired and (B)
the interest payments that have not previously been made on such retired
Securities for each Interest Payment Date through the Interest Payment Date to
occur on August 1, 2000 shall, upon the written request of the Company to the
Escrow Agent and the Trustee, be paid to the Company upon compliance with the
release of collateral provisions of the TIA and upon receipt by the Escrow Agent
of a notice relating thereto from the Trustee.
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4. Escrow Agent.
(a) Limitation of the Escrow Agent's Liability; Responsibilities of
the Escrow Agent. The Escrow Agent's responsibility and liability under this
Agreement shall be limited as follows: (i) the Escrow Agent does not represent,
warrant or guaranty to the holders of the Securities from time to time the
performance of the Company; (ii) the Escrow Agent shall have no responsibility
to the Company or the holders of the Securities or the Trustee from time to time
as a consequence of performance or non-performance by the Escrow Agent
hereunder, except for any gross negligence or willful misconduct of the Escrow
Agent; (iii) the Company shall remain solely responsible for all aspects of the
Company's business and conduct; and (iv) the Escrow Agent is not obligated to
supervise, inspect or inform the Company or any third party of any matter
referred to above. In no event shall the Escrow Agent be liable (A) for acting
in accordance with or relying upon any instruction, notice, demand, certificate
or document from the Company or any entity acting on behalf of the Company, (B)
for any consequential, punitive or special damages, (C) for the acts or
omissions of its correspondents, designees, subagents or subcustodians chosen in
due care, including the Custodian, (D) for an amount in excess of the value of
the Escrow Account, valued as of the date of deposit or (E) by reason of any
occurrence beyond the control of the Escrow Agent (including but not limited to
any act or provision of any present or future law or regulation or governmental
authority, any act of God or war or the unavailability of the Federal Reserve
Bank of Boston wire or telex or other wire or communication facility).
No implied covenants or obligations shall be inferred from this
Agreement against the Escrow Agent, nor shall the Escrow Agent be bound by the
provisions of any agreement beyond the specific terms hereof. Specifically and
without limiting the foregoing, the Escrow Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the terms hereof, of any funds or Government
Securities or Permitted Investments held by it hereunder, including without
limitation any liability for any delay not resulting from gross negligence or
willful misconduct in such investment, reinvestment or liquidation, or for any
loss of principal or income incident to any such delay.
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The Escrow Agent and its agents shall be entitled to rely upon any
judicial order or judgment, upon any written Opinion of Counsel or upon any
certification, instruction, notice, or other writing delivered to it by the
Company or the Trustee in compliance with the provisions of this Agreement
without being required to determine the authenticity or the correctness of any
fact stated therein or the propriety or validity of service thereof. The Escrow
Agent may act in reliance upon any instrument comporting with the provisions of
this Agreement or signature believed by it to be genuine and may assume that any
person purporting to give notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
At any time the Escrow Agent may request in writing an instruction in
writing from the Company, and may at its own option include in such request the
course of action it proposes to take and the date on which it proposes to act,
regarding any matter arising in connection with its duties and obligations
hereunder; provided, however, that the Escrow Agent shall state in such request
that it believes in good faith that such proposed course of action is consistent
with another identified provision of this Agreement. The Escrow Agent shall not
be liable to the Company for acting without the Company's consent in accordance
with such a proposal on or after the date specified therein if (i) the specified
date is at least two Business Days after the Company receives the Escrow Agent's
request for instructions and its proposed course of action and (ii) prior to so
acting, the Escrow Agent has not received the written instructions requested
from the Company.
At the expense of the Company, the Escrow Agent may act pursuant to
the advice of counsel chosen by it with respect to any matter relating to this
Agreement and (subject to clause (ii) of the first paragraph of this Section
4(a)) shall not be liable for any action taken or omitted in accordance with
such advice.
The Escrow Agent shall not be called upon to advise any party as to
selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
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In the event of any ambiguity in the provisions of this Agreement with
respect to any funds or property deposited hereunder, the Escrow Agent shall be
entitled to refuse to comply with any and all claims, demands or instructions
with respect to such funds or property, and the Escrow Agent shall not be or
become liable for its failure or refusal to comply with conflicting claims,
demands or instructions. The Escrow Agent shall be entitled to refuse to act
until either any conflicting or adverse claims or demands shall have been
finally determined by a court of competent jurisdiction or settled by agreement
between the conflicting claimants as evidenced in a writing, satisfactory to the
Escrow Agent, or the Escrow Agent shall have received security or an indemnity
satisfactory to the Escrow Agent sufficient to save the Escrow Agent harmless
from and against any and all loss, liability or expense that the Escrow Agent
may incur by reason of its acting. The Escrow Agent may in addition elect in its
sole option to commence an interpleader action or seek other judicial relief or
orders as the Escrow Agent may deem necessary. The costs and expenses incurred
in connection with such proceedings shall be paid by, and shall be deemed an
obligation of, the Company.
No provision of this Agreement shall require the Escrow Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder.
5. Indemnity. The Company shall indemnify, hold harmless and defend
the Escrow Agent and its directors, officers, agents, employees and controlling
persons, from and against any and all claims, actions, obligations, liabilities
and expenses, including defense costs and expenses, investigative fees and
costs, legal fees and expenses and claims for damages, arising from the Escrow
Agent's performance or non-performance, or in connection with its acceptance or
appointment, as Escrow Agent, under this Agreement, except to the extent that
such liability, expense or claim is solely and directly attributable to the
gross negligence or willful misconduct of any of the foregoing persons. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of the law or
public policy, the Company shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all indemnified liabilities incurred by any of the persons
indemnified hereunder. The provisions of this Section 5 shall survive any
termination, satisfaction or discharge of this Agreement as well as the
resignation or removal of the Escrow Agent.
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6. Grant of Security Interest; Instructions to Escrow Agent.
(a) The Company hereby irrevocably grants a first priority security
interest in and lien on, and pledges, assigns and sets over to the Trustee for
the ratable benefit of the Beneficiaries, all of the Company's right, title and
interest in the Escrow Account, and all property now or hereafter placed or
deposited in, or delivered to the Escrow Agent for placement or deposit in, the
Escrow Account, including, without limitation, all funds held therein, all
Government Securities and Permitted Investments held by (or otherwise maintained
in the name of) the Escrow Agent pursuant to Section 2, and all security
entitlements thereto and therein, and all proceeds thereof as well as all rights
of the Company under this Agreement (collectively, the "Collateral"), in order
to secure the Secured Obligations (as defined below). As used herein, "Secured
Obligations" shall mean (i) until the Applicable Time, all of the Company's
Indenture Obligations and any other obligation, now or hereafter arising
(whether upon acceleration, consummation of an Escrow Proceeds Offer or
otherwise), of every kind and nature, owed by the Company under the Indenture
and the Securities to the Beneficiaries and (ii) following the Applicable Time,
the obligations of the Company under the Indenture and the Securities to pay
interest (including post-petition interest) on the Securities scheduled to be
paid through and including August 1, 2000, whether arising following an
acceleration or otherwise. The Escrow Agent hereby acknowledges the Trustee's
security interest and lien as set forth above. The Company shall take all
actions necessary on its part to ensure the continuance of a first priority
security interest in the Collateral in favor of the Trustee in order to secure
the Secured Obligations.
(b) The Company and the Trustee hereby irrevocably instruct the Escrow
Agent to, and the Escrow Agent shall: (i)(A) maintain sole dominion and control
over the funds and other Collateral in the Escrow Account for the benefit of the
Beneficiaries to the extent specifically required herein, (B) maintain, or cause
the Custodian to maintain, possession of all Collateral purchased hereunder that
to the extent needed to be physically possessed by the Custodian in order for
the Beneficiaries to enjoy a continuous perfected first priority security
interest therein under the law of the State of Massachusetts (the Company hereby
agreeing that in the event any Collateral is in the possession of the Company or
a third party, the Company shall use its best efforts to deliver all such
Collateral to the Custodian), (C) take all steps specified by the Company
16
pursuant to paragraph (a) of this Section 6 to cause the Trustee to enjoy a
continuous perfected first priority security interest under any applicable
Federal and State of Massachusetts law in all Collateral purchased hereunder (D)
take all steps specified by the Company pursuant to paragraph (a) of this
Section 6 to cause the Trustee to enjoy a continuous perfected first priority
security under any applicable Federal and State of Massachusetts law in all
Collateral in the Escrow Account and (E) maintain the Collateral free and clear
of all liens, security interests, safekeeping or other charges, demands and
claims against the Escrow Agent of any nature now or hereafter existing in favor
of anyone other than the Trustee; (ii) promptly notify the Trustee if the Escrow
Agent receives written notice that any Person other than the Trustee has a lien
or security interest upon any portion of the Collateral; and (iii) in addition
to disbursing amounts held in escrow pursuant to Section 3, upon receipt of
written notice from the Trustee of the acceleration of the maturity of the
Securities, and direction from the Trustee to disburse all Collateral or
proceeds thereof to the Trustee, as promptly as practicable, after following, if
it so chooses, the procedures set forth in the fourth paragraph of Section 4(a),
disburse all funds held in the Escrow Account to the Trustee and transfer title
to all Collateral held by the Escrow Agent hereunder to the Trustee. The lien
and security interest provided for by this Section 6 shall automatically
terminate and cease as to, and shall not extend or apply to, and the Trustee
shall have no security interest in, any funds disbursed by the Escrow Agent to
the Company pursuant to this Agreement to the extent not inconsistent with the
terms hereof. Notwithstanding any other provision contained in this Agreement,
the Escrow Agent shall act solely as the Trustee's agent in connection with its
duties under this Section 6 or any other duties herein relating to the Escrow
Account or any funds or Government Securities or Permitted Investments held
thereunder. The Escrow Agent shall not have any right to receive compensation
from the Trustee and shall have no authority to obligate the Trustee or to
compromise or pledge its security interest hereunder. Accordingly, the Escrow
Agent is hereby directed to cooperate with the Trustee in the exercise of its
rights in the Collateral provided for herein.
(c) Any money and other Collateral collected by the Trustee pursuant
to Section 6(b)(iii) shall be applied as provided in Section 5.06 of the
Indenture. Any surplus of such cash or cash proceeds held by the Trustee and
remaining after indefeasible payment in full of the then Secured Obligations
under the Indenture shall be paid over to the Company or as a court of competent
jurisdiction may direct.
17
(d) Upon demand, the Company will execute and deliver to the Trustee
such instruments and documents as the Trustee may deem necessary or advisable to
confirm or perfect the rights of the Trustee under this Agreement and the
Trustee's interest in the Collateral, including, but not limited to, (i) UCC-1
financing statements in the Company's principal place of business (and will
notify the Trustee and the Escrow Agent of any change in such place of business)
and (ii) UCC-3 financing statements with respect to any other financing
statements previously filed by third parties to the extent necessary to clarify
the interests of the beneficiaries in the Collateral. The Trustee shall be
entitled to take all necessary action to preserve and protect the security
interest created hereby as a lien and encumbrance upon the Collateral. The
Company will pay all costs and expenses incurred in connection with any of the
foregoing. It being understood that neither the Trustee nor the Escrow Agent has
a duty to determine whether to file or record any document or instrument
relating to the Collateral.
(e) The Company hereby appoints the Trustee as its attorney-in-fact
with full power of substitution to do any act that the Company is obligated
hereunder to do, and the Trustee may exercise such rights as the Company might
exercise with respect to the Collateral and take any action in the Company's
name to protect the Trustee's security interest hereunder.
7. Termination. This Agreement shall terminate automatically following
disbursement of all funds remaining in the Escrow Account (including Government
Securities), unless sooner terminated by agreement of the parties hereto (in
accordance with the terms hereof and not in violation of the Indenture);
provided, however, that the obligations of the Company under Section 2(c) and
Section 5 (and any existing claims thereunder) shall survive termination of this
Agreement and the resignation of the Escrow Agent; provided, further, that until
such disbursement, the Company will cause this Agreement (or any permitted
successor agreement) to remain in effect and will cause there to be an escrow
agent (including any permitted successor thereto) acting hereunder (or under any
such permitted successor agreement).
8. Miscellaneous.
(a) Waiver. Any party hereto may specifically waive any breach of this
Agreement by any other party, but no such waiver shall be deemed to have been
given unless such waiver is in writing, signed by the waiving party and
specifically designating the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
18
(b) Invalidity. If for any reason whatsoever any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
(c) Assignment. This Agreement is personal to the parties hereto, and
the rights and duties of any party hereunder shall not be assignable except with
the prior written consent of the other parties. Notwithstanding the foregoing,
this Agreement shall inure to and be binding upon the parties and their
successors and permitted assigns.
(d) Benefit. The parties hereto and their successors and permitted
assigns, but no others, shall be bound hereby and entitled to the benefits
hereof; provided, however, that the Beneficiaries (including holders of the
Securities) and their assigns shall be entitled to the benefits hereof and to
enforce this Agreement.
(e) Time. Time is of the essence with respect to each provision of
this Agreement.
(f) Entire Agreement; Amendments. This Agreement, the Account Control
Agreement and the Indenture contain the entire agreement among the parties with
respect to the subject matter hereof and supersede any and all prior agreements,
understandings and commitments, whether oral or written. This Agreement may be
amended only in accordance with Article Nine of the Indenture and further by a
writing signed by a duly authorized representative of each party hereto.
(g) Notices. All notices and other communications required or
permitted to be given or made under this Agreement shall be in writing and shall
be deemed to have been duly given and received when actually received,
including: (a) on the day of hand delivery; (b) 3 Business Days following the
day sent, when sent by United States certified mail, postage and certification
fee prepaid, return receipt requested, addressed as set forth below; (c) when
transmitted by facsimile with confirmation of receipt; or (d) 1 Business Day
following the day timely delivered to a next-day air courier addressed as set
forth below:
19
To the Escrow Agent or to the Trustee:
State Street Bank and Trust Company of Missouri, N.A.
One ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Division
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To the Company:
Golden Sky Systems, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) Captions. Captions in this Agreement are for convenience only and
shall not be considered or referred to in resolving questions of interpretation
of this Agreement.
(j) Choice of Law. The existence, validity, construction, operation
and effect of any and all terms and provisions of this Agreement shall be
determined in accordance with and governed by the laws of the State of New York,
without regard to principles of conflicts of laws; provided that the creation,
attachment, validity and perfection of the liens on and security interests in
and to the Collateral and the exercise of remedies with respect thereto shall be
determined in accordance with the laws of the Commonwealth of Massachusetts,
without regard to principles of conflicts of laws, except to the extent United
States federal law is applicable to the perfection and priority of security
20
interests in Government Securities. The parties to this Agreement hereby agree
that jurisdiction over such parties and over the subject matter of any action or
proceeding arising under this Agreement may be exercised by a competent court of
the State of New York or the Commonwealth of Massachusetts, as applicable, or by
a United States Court, sitting in New York or the Commonwealth of Massachusetts,
as applicable. The Company hereby submits to the personal jurisdiction of such
courts, hereby waives personal service of process upon it and consents that any
such service of process may be made by certified or registered mail,
return-receipt requested, directed to the Company at its address last specified
for notices hereunder, and service so made shall be deemed completed 5 days
after the same shall have been so mailed, and hereby waives the right to a trial
by jury in any action or proceeding with the Escrow Agent. All actions and
proceedings brought by the Company against the Escrow Agent relating to or
arising from, directly or indirectly, this Agreement shall be litigated only in
courts within the State of New York or the Commonwealth of Massachusetts.
(k) Representations and Warranties. (i) The Company hereby represents
and warrants that this Agreement has been duly authorized, executed and
delivered on its behalf and constitutes the legal, valid and binding obligation
of the Company. The execution, delivery and performance of this Agreement by the
Company does not violate any applicable law or regulation to which the Company
is subject and does not require the consent of any governmental or other
regulatory body to which the Company is subject, except for such consents and
approvals as have been obtained and are in full force and effect.
(ii) The Company is the beneficial owner of the Collateral, free and
clear of any lien or claims of any person or entity (except for the security
interest granted under this Agreement).
(iii) Each of the Escrow Agent and the Trustee hereby represents and
warrants that this Agreement has been duly authorized, executed and delivered on
its behalf and constitutes its legal, valid and binding obligation.
21
IN WITNESS WHEREOF, the parties have executed and delivered this
Escrow Agreement as of the day first above written.
STATE STREET BANK AND TRUST
COMPANY OF MISSOURI, N.A.,
as Escrow Agent
By: /s/ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇. ▇▇▇▇▇▇▇▇
Title: Asst.Vice President
STATE STREET BANK AND TRUST
COMPANY OF MISSOURI, N.A.,
as Trustee
By: /s ▇.▇▇▇▇▇▇▇▇
--------------------------
Name: ▇.▇▇▇▇▇▇▇▇
Title: Asst.Vice President
GOLDEN SKY SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
22
EXHIBIT A
Form of Payment Notice and Disbursement Request
State Street Bank and Trust Company
of Missouri, N.A.
One ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[Date]
State Street Bank and Trust Company
of Missouri, N.A.
One ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Disbursement Request No. ____
[indicate whether revised]
Ladies and Gentlemen:
We refer to the Escrow Agreement, dated as of July 31, 1998 (the
"Escrow Agreement") among you (the "Escrow Agent"), the undersigned as Trustee
and Golden Sky Systems, Inc., a Delaware corporation (the "Company").
Capitalized terms used herein shall have the meaning given in the Escrow
Agreement.
This letter constitutes a Payment Notice and Disbursement Request
under the Escrow Agreement.
[choose one of the following, as applicable]
[The undersigned hereby notifies you that a scheduled interest payment
in the amount of $__________ is due and payable on ____________, ____ and
requests a disbursement of funds contained in the Escrow Account in such amount
to the Trustee.]
[The undersigned hereby notifies you that Securities equaling
$__________ in aggregate principal amount have been retired and authorizes you
to release $__________ of funds in the Escrow Account to the Company (to an
account designated by the Company in writing), which amount represents the
amount permitted to be released in accordance with Section 3(e) of the Escrow
Agreement.]
23
[The undersigned hereby notifies you that there has been an
acceleration of the maturity of the Securities. Accordingly, you are hereby
requested to disburse all remaining funds contained in the Escrow Account to the
Trustee such that the balance in the Escrow Account is reduced to zero.]
In connection with the requested disbursement, the undersigned hereby
notifies you that:
1. [The Securities have not, as a result of an Event of Default (as
defined in the Indenture), been accelerated and become due and payable.]
2. All prior disbursements from the Escrow Account pursuant to Section
3(c) of the Escrow Agreement have been applied to pay interest on the Securities
on an Interest Payment Date.
3. [add wire instructions]
The Escrow Agent is entitled to rely on the foregoing in disbursing
funds relating to this Payment Notice and Disbursement Request.
State Street Bank and Trust
Company of Missouri, N.A.,
as Trustee
By:
Name:
Title:
24
EXHIBIT B
Account Control Agreement