EXHIBIT 10.16
PARTICIPATION AGREEMENT
dated February 7, 1996
XXXXXX COMMUNICATIONS GALAXY, INC.
LEVERAGED LEASE FINANCING OF
8 WIDE XX-XXXX XXX 00 XXXXXX XX-XXXX TRANSPONDERS
ABOARD GALAXY III-R COMMUNICATIONS SATELLITE
TABLE OF CONTENTS
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PAGE
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ARTICLE I
Definitions............................................................ 2
SECTION 1.01. Terms Defined in this Agreement....................... 2
ARTICLE II
Participation in Payment for Property................................... 2
SECTION 2.01. Agreement to Participate.............................. 2
SECTION 2.02. Commencement Date and Commencement Date
Notice................................................ 3
SECTION 2.03. Commencement Date; Payment of Purchase Price
for the Transponders.................................. 3
SECTION 2.04. Expiration of Obligations of Participants............. 5
SECTION 2.05. Closing Date Appraisal; Commencement Date
Appraisal; Commencement Date Adjustments.............. 5
SECTION 2.06. Defaulting Participant................................ 6
SECTION 2.07. Deferred Equity Amount................................ 6
SECTION 2.08. Pricing Assumptions................................... 7
ARTICLE III
Conditions Precedent.................................................... 7
SECTION 3.01. Conditions Precedent to the Obligations of
Owner Participant and Loan Participants............... 7
SECTION 3.02. Conditions Precedent to HCG's Obligations............. 14
ARTICLE IV
Representations and Warranties.......................................... 14
SECTION 4.01. Representations and Warranties of HCG................. 14
SECTION 4.02. Representations and Warranties of Owner
Participant........................................... 18
SECTION 4.03. Representations and Warranties of Loan
Participants.......................................... 20
SECTION 4.04. Representations and Warranties of Trust
Company............................................... 20
SECTION 4.05. Representations and Warranties of Trust
Company and Owner Trustee............................. 22
SECTION 4.06. Representations and Warranties of Agent............... 24
SECTION 4.07. Representations and Warranties by Parties
Concerning Offerings.................................. 25
ARTICLE V
Covenants............................................................... 26
SECTION 5.01. Covenants of HCG...................................... 26
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SECTION 5.02. Covenants of Owner Participant........................ 28
SECTION 5.03. Covenants of Trust Company............................ 30
SECTION 5.04. Covenants of Agent.................................... 31
SECTION 5.05. Additional Covenants.................................. 31
SECTION 5.06. Delivery of Certain Information to Agent.............. 33
SECTION 5.07. Lessee's Instructions to Owner Trustee................ 33
SECTION 5.08. Tax Indemnification Agreement......................... 33
ARTICLE VI
General Indemnity....................................................... 34
SECTION 6.01. Payment of Expenses by Lessee......................... 34
SECTION 6.02. Exceptions............................................ 37
ARTICLE VII
General Indemnity for Taxes............................................. 39
SECTION 7.01. Indemnity............................................. 39
SECTION 7.02. Exceptions from Indemnity............................. 40
SECTION 7.03. Calculation of Indemnity Payments..................... 44
SECTION 7.04. Contest............................................... 44
SECTION 7.05. Reports............................................... 46
SECTION 7.06. Payment............................................... 47
SECTION 7.07. Consolidated or Combined Return....................... 48
ARTICLE VIII
Nature and Manner of Payment of Indemnities............................. 48
SECTION 8.01. Effect of Other Indemnities........................... 48
SECTION 8.02. Payments and Survival of Indemnities.................. 48
SECTION 8.03. No Guarantees, etc. .................................. 49
ARTICLE IX
Payment of Transaction Costs............................................ 49
SECTION 9.01. Transaction Costs..................................... 49
SECTION 9.02. Amendments, Waivers, etc.: Ongoing Fees.............. 50
ARTICLE X
Certain Purchase Option and Purchase Obligation......................... 50
SECTION 10.01. Rental Adjustment Purchase Option.................... 50
SECTION 10.02. Purchase Obligation.................................. 51
SECTION 10.03. Purchase Closing..................................... 51
ARTICLE XI
Beneficial Interest Purchase Option..................................... 51
SECTION 11.01. Option to Purchase................................... 51
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SECTION 11.02. Notice of Election; Manner of Purchase;
Transfer After Purchase.............................. 52
SECTION 11.03. Notice of Election to Assume the Notes............... 54
ARTICLE XII
Optional Refunding...................................................... 55
SECTION 12.01. Refunding of Notes................................... 55
SECTION 12.02. Cooperation; Conditions.............................. 55
SECTION 12.03. Notice............................................... 56
SECTION 12.04. Rights of Parties.................................... 57
ARTICLE XIII
Reoptimization of Rent.................................................. 57
SECTION 13.01. Lease Rental and other Adjustments on the
Commencement Date.................................... 57
SECTION 13.02. Lease Rental and other Adjustments
Subsequent to Commencement Date...................... 58
SECTION 13.03. Confirmation of Adjustments; Further
Assurances........................................... 59
SECTION 13.04. Compliance with Code................................. 60
ARTICLE XIV
Transfer of Owner Participant's Interest................................ 60
SECTION 14.01. Restrictions on Transfers............................ 60
SECTION 14.02. Effect of Transfer................................... 62
SECTION 14.03. Cooperation.......................................... 63
SECTION 14.04. Bankruptcy Code Section 1111(b)(2)................... 63
ARTICLE XV
Additional Rights and Obligations of Parties............................ 64
SECTION 15.01. Rights Following Lease Term.......................... 64
SECTION 15.02. Xxxxxx Agreements Liability.......................... 64
SECTION 15.03. Final Term Liabilities............................... 66
ARTICLE XVI
Miscellaneous........................................................... 67
SECTION 16.01. Confidentiality...................................... 67
SECTION 16.02. Publicity............................................ 69
SECTION 16.03. Notices.............................................. 71
SECTION 16.04. Counterparts......................................... 71
SECTION 16.05. Amendments........................................... 71
SECTION 16.06. Parties in Interest.................................. 72
SECTION 16.07. Governing Law........................................ 72
SECTION 16.08. Method of Payment.................................... 72
SECTION 16.09. Severability......................................... 72
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SECTION 16.10. Complete Agreement................................... 72
SECTION 16.11. Limitation of Liability of Trust Company............. 72
SECTION 16.12. Remedies............................................. 73
SECTION 16.13. Survival of Agreement................................ 73
SECTION 16.14. Commitment Letter.................................... 73
SECTION 16.15. Intention of the Parties............................. 74
SIGNATURE PAGES
SCHEDULE 3.01(f)
SCHEDULE I - List of Participants and Addresses
SCHEDULE II - Commitments, Equity Cap, Equity Percentage
and Debt Percentage
SCHEDULE III - Payment Instructions of Owner Trustee
SCHEDULE IV - Annex 1 Pricing Assumptions
Annex 2 Scheduled Rent
Annex 3 Debt Amortization Schedule
Annex 4A Stipulated Loss Values
Annex 4B Termination Values
Annex 5 EBO Amount and EBO Date
SCHEDULE V - Address of Lessee and Guarantor
APPENDIX A - Construction; Definition of Terms
EXHIBIT A - Consent and Agreement
EXHIBIT B - Guaranty Agreement
EXHIBIT C - GMAC Xxxx of Sale
EXHIBIT D - Lease Agreement
EXHIBIT E - Purchase Agreement
EXHIBIT F - Service Agreement
EXHIBIT G - Loan Agreement
EXHIBIT H - Trust Agreement
EXHIBIT I - Certificate of Acceptance
EXHIBIT J - Trust Assignment
EXHIBIT K - Receipt of Owner Trustee for Loan Proceeds
EXHIBIT L - Receipt of Agent for Notes
EXHIBIT M - Receipt of Seller for Lessor's Cost
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PARTICIPATION AGREEMENT (as amended from time to time, this "Agreement"),
dated as of February 7, 1996, among XXXXXX COMMUNICATIONS GALAXY, INC., a
California corporation, as Seller and Lessee, GENERAL MOTORS ACCEPTANCE
CORPORATION, a New York corporation, as Owner Participant, WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual capacity,
except as otherwise expressly set forth herein (and in such capacity,
"Trust Company"), but solely in its capacity as Owner Trustee under the
Trust Agreement, as Owner Trustee and as Lessor, and CHEMICAL BANK, a New
York banking corporation, as Agent and the lending institutions listed on
Schedule I as Loan Participants.
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INTRODUCTION
On the Closing Date, Seller transferred to Owner Participant all
right, title and interest of Seller in and to each of the Transponders pursuant
to the Xxxx of Sale, and Owner Participant purchased each such Transponder from
Seller and unconditionally agreed to pay or cause Owner Trustee to pay Lessor's
Cost for each such Transponder on the Commencement Date, all as contemplated by
that certain Commitment Letter dated December 13, 1995 among GMAC, HCG and HE
(including Exhibits A and B thereto, the "Commitment Letter"). Pursuant to the
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Commitment Letter, GMAC, HCG and HE agreed that the applicable parties would
enter into this Agreement, the Purchase Agreement, the Service Agreement, the
Lease and the Guarantee Agreement, in each case in substantially the form
attached hereto, on or prior to the Commencement Date.
Owner Participant and Loan Participants propose to participate as
provided in this Agreement in the payment of the purchase price by Owner Trustee
of the Transponders and, with respect to Owner Participant, of certain related
costs.
Concurrently with the execution of this Agreement, Owner Participant
and Trust Company are entering into the Trust Agreement providing, among other
things, for the transfer by Owner Participant to Owner Trustee on the
Commencement Date of all right, title and interest of Owner Participant in and
to each of the Transponders pursuant to the GMAC Xxxx of Sale and of all rights
and obligations of Owner Participant as buyer under the Purchase Agreement and
the Xxxx of Sale pursuant to the Trust
Assignment, and for beneficial ownership of Lessor's Estate by Owner
Participant.
On the Commencement Date, (a) Seller and GMAC will enter into the
Purchase Agreement, (b) Owner Participant and Owner Trustee will enter into the
GMAC Xxxx of Sale and the Trust Assignment, (c) Owner Trustee, Agent and the
Loan Participants will enter into the Loan Agreement providing (i) for the
issuance of Notes to Loan Participants and (ii) security for the performance of
the obligations of Owner Trustee to Agent and to the Noteholders, (d) Lessee and
Lessor will enter into the Lease providing for the lease of the Transponders by
Lessor to Lessee from and after the Commencement Date, (e) Guarantor will enter
into the Guarantee Agreement providing for the guarantee by Guarantor of certain
payment obligations of Seller, Lessee and Contractor under the Operative
Documents, (f) the parties to the Consent and Agreement will enter into the
Consent and Agreement, and (g) Xxxxxx Services and Owner Trustee will enter into
the Service Agreement providing for the furnishings of certain services by
Xxxxxx Services to Owner Trustee with respect to each Transponder.
On the Commencement Date, (a) any necessary adjustments to Lessor's
Cost will be made pursuant to the Commencement Date Appraisal and (b) certain
adjustments to the purchase price of the Transponders may be made.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
Definitions
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SECTION 1.01. Terms Defined in this Agreement. Except as otherwise
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defined herein, capitalized terms used herein, for all purposes hereof, shall
have the respective meanings assigned thereto in Appendix A, which also contains
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rules as to usage that shall be applicable herein.
ARTICLE II
Participation in Payment for Property
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SECTION 2.01. Agreement to Participate. Subject to the terms and
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conditions of this Agreement and in reliance on the representations and
warranties contained herein or made pursuant hereto:
(a) Participation by Loan Participants. On the Commencement Date,
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each Loan Participant shall participate in the
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payment of the purchase price for the Transponders by making a secured loan to
Owner Trustee in the amount of its respective Commitment for such Transponders
as set forth on Schedule II (each, a "Loan" and collectively, the "Loans"),
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each Loan to be evidenced by a Note issued by Owner Trustee in the principal
amount of such Loan.
(b) Participation by Owner Participant. (i) On the Commencement Date,
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Owner Participant shall participate in the payment of the purchase price for the
Transponders by making an equity investment in such Transponders through the
trust created by the Trust Agreement in an amount equal to its Commitment
therefor as set forth on Schedule II. On the Commencement Date, Owner
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Participant shall also pay certain Transaction Costs as provided in Article IX
by making available for such purpose to Owner Trustee an amount equal to the
Transaction Costs due and payable by it on such date.
(ii) Notwithstanding anything to the contrary contained herein, the
aggregate amount for all Transponders of (i) Owner Participant's Commitment,
plus (ii) the Deferred Equity Amount, plus (iii) Transaction Costs to be paid by
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Owner Participant shall in no event exceed the aggregate dollar amount set forth
on Schedule II as the equity cap (the "Equity Cap").
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SECTION 2.02. Commencement Date and Commencement Date Notice. Seller
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will furnish Owner Trustee, Owner Participant, Agent and Loan Participants with
at least one Business Day's prior written notice of the anticipated Commencement
Date (unless the anticipated Commencement Date shall be the date of this
Agreement, in which case such notice may be given on the Commencement Date),
which notice shall also include (i) the amount of the aggregate Commitments to
be made available by the Participants to Owner Trustee and payable to Seller
(which shall constitute the purchase price payable to Seller in respect of the
Transponders under the Purchase Agreement), (ii) the method of payment to
Seller, and (iii) the amount of Transaction Costs payable on the Commencement
Date. The parties may waive the requirement of the foregoing notice in whole or
in part and the closing of the transactions contemplated hereby shall constitute
conclusive evidence of such waiver.
SECTION 2.03. Commencement Date; Payment of Purchase Price for the
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Transponders. (a) On the Commencement Date proposed by Seller in accordance
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with Section 2.02, Owner Participant shall make its Commitment available to
Owner Trustee, and Agent shall make the Commitments of the Loan Participants
available to Owner Trustee, in each case through wire transfer, to the account
of the Owner Trustee designated in Schedule III, of immediately available funds
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by 11:00 a.m., New York City time.
(b) If the Commencement Date does not occur by 6:00 p.m., New York
City time on the anticipated date, all funds which
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have been made available by the Participants shall, until disbursement thereof
on the actual Commencement Date in accordance with the terms of this Agreement,
or until returned by Owner Trustee to such Participants (at such time as Seller
shall direct, subject to the provisions of the next sentence), be invested in
such Permitted Investments as are directed by Seller and are then available for
investment. If the Commencement Date has not occurred within two Business Days
of the anticipated Commencement Date, all funds previously made available by the
Participants shall be returned to the Participants by Owner Trustee.
(c) Each Participant hereby authorizes and directs Owner Trustee to
make payment on the Commencement Date (and from time to time thereafter, in the
case of clause (y) below) of (x) Lessor's Cost for the Transponders to Seller,
and (y) Transaction Costs due and payable on the Commencement Date, to the
Persons to whom such Transaction Costs are owed in accordance with Section 9.01;
provided that (i) in the case of Owner Participant, upon payment of the purchase
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price of the Transponders, all conditions precedent to the obligations of Owner
Participant specified in Section 3.01 shall have been satisfied (or waived) to
the satisfaction of Owner Participant and Owner Participant shall have so
notified Owner Trustee (it being understood, however, that, and Initial Owner
Participant hereby acknowledges that, there are no conditions precedent to the
obligation of Owner Participant to pay Lessor's Cost for the Transponders under
the Commitment Letter if the transactions contemplated herein are not
consummated in accordance with the terms of this Agreement); (ii) in the case of
Loan Participants, upon payment of the purchase price of the Transponders, all
conditions precedent to the obligations of Loan Participants specified in
Section 3.01 shall have been satisfied (or waived) to the satisfaction of Loan
Participants and Agent shall have so notified Owner Trustee; and (iii) the
Commencement Date is a day no later than the Expiration Date. If Owner
Participant and Agent notify Owner Trustee and Seller orally or in writing on
such day that Lessor's Cost for the Transponders and Transaction Costs may be
paid, such conditions shall be deemed satisfied or waived with respect to Owner
Participant and Loan Participants, respectively, for purposes hereof.
(d) On the Commencement Date, Owner Trustee, Loan Participants and
Agent shall execute the Loan Agreement, Owner Trustee shall execute and deliver
the Notes to Agent and Agent shall deliver the Notes to Loan Participants, which
Notes (i) shall be issued in the aggregate amount of the Loans and in such
maturities as are provided in the Loan Agreement, (ii) shall bear interest at
such rates as are specified in the Loan Agreement, (iii) shall be issued in such
form and on such terms as are specified in the Loan Agreement, (iv) shall be
dated as of the Commencement Date and shall bear interest therefrom and (v)
shall be issued in the names of Loan Participants.
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(e) On the Commencement Date, (i) Owner Trustee shall take title to
the Transponders from Owner Participant pursuant to the GMAC Xxxx of Sale, and
enter into the Trust Assignment, (ii) using the proceeds of the Participants'
Commitments, Owner Trustee will pay the purchase price for such Transponders in
an amount equal to 100% of Lessor's Cost therefor and (iii) using the funds
provided by Owner Participant therefor, Owner Trustee will pay all Transaction
Costs due and payable on the Commencement Date with respect to the Transponders.
(f) The closings for the transactions contemplated hereby shall take
place at the offices of Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or such other place as the parties hereto shall agree.
SECTION 2.04. Expiration of Obligations of Participants. If the
-----------------------------------------
Commencement Date shall not have occurred on or prior to the Expiration Date, on
the Expiration Date Owner Participant shall transfer all of its right, title and
interest in and to the Transponders to Seller, free of any and all Liens, and
Owner Participant's obligation to pay Lessor's Cost for the Transponders shall
be cancelled, all as contemplated by Section 10.02. In such event, and
notwithstanding any provision to the contrary contained herein, the obligation
of the parties hereto to enter into the Operative Documents and the Xxxxxx
Agreements and to consummate the transactions contemplated hereby and thereby
shall expire.
SECTION 2.05. Closing Date Appraisal; Commencement Date Appraisal;
----------------------------------------------------
Commencement Date Adjustments.
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(a) Closing Date Appraisal. HCG has caused to be delivered to Owner
----------------------
Participant an appraisal, dated as of the Closing Date, by Independent
Appraiser, addressed to Owner Participant and in a form and substance
satisfactory to Owner Participant, which appraisal contained (i) the
determination of Independent Appraiser of the anticipated fair market value of
each Transponder as of the anticipated Commencement Date, (ii) an estimate of
the remaining useful economic life of each Transponder as of the anticipated
Commencement Date, (iii) the conclusion that each Transponder shall have a
residual value of not less than 20% of Lessor's Cost (without taking into
account the effect of inflation or deflation) at the end of the Basic Term, (iv)
the conclusion that no Transponder is "limited use property" and (v) a statement
that the fees payable under the Service Agreement are equal to the fair market
value of the services to be provided thereunder (the "Closing Date Appraisal").
----------------------
The Closing Date Appraisal also stated Independent Appraiser's estimate as of
the Closing Date of the expected fair market value of each Transponder on the
EBO Date (taking into account a reasonable estimate of the effect of inflation
and deflation). Owner Participant acknowledges receipt of the Closing Date
Appraisal.
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(b) Commencement Date Appraisal. (i) As promptly as practicable but
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in no event later than the Commencement Date, HCG shall cause to be delivered to
Owner Participant and HCG an amendment by Independent Appraiser to the Closing
Date Appraisal, dated the Commencement Date, reasonably satisfactory in form and
substance to Owner Participant and HCG (the "Commencement Date Appraisal")
---------------------------
stating whether or not, on the Commencement Date, the conclusions of the Closing
Date Appraisal are true or whether there are necessary amendments to the
conclusions of the Closing Date Appraisal. Such amendments, if any, to the
conclusions of the Closing Date Appraisal shall be based solely on changes in
the assumptions regarding the physical characteristics (including defects) of
the Satellite and the Transponders manifesting themselves following the launch
(which characteristics are referred to in Appendix D to the Closing Date
Appraisal), and may not take into account any factors or conditions whatsoever
other than the physical characteristics described above; in particular, all
other assumptions and methodologies will remain constant. If there are
adjustments to the Closing Date Appraisal conclusions, then Lessor's Cost, the
Basic Term, and Fair Market Sales Value on the EBO Date shall be adjusted, as
appropriate; provided that Lessor's Cost derived from the Commencement Date
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Appraisal for the Transponders collectively will not exceed $300 million and the
Lease Term (exclusive of any Renewal Term) will not be extended beyond eight
years.
(ii) On or prior to the proposed Commencement Date, HCG shall have
caused to be delivered to each Loan Participant a copy of the relevant sections
of the opinion referred to in clause (i) of Section 3.02, reasonably
satisfactory in form and substance to the Agent, which set forth Independent
Appraiser's estimate of the fair market value of each Transponder as of the
anticipated Commencement Date.
SECTION 2.06. Defaulting Participant. In case Owner Participant
----------------------
shall fail to make any amount of its Commitment available on the Commencement
Date (a "Defaulting Participant"), no Loan Participant shall have any obligation
----------------------
to make any amount of its Commitment available on such date or to increase any
amount of its Commitment. If, for any reason, any one or more of the Loan
Participants shall fail to pay all or any portion of its Commitment on the
Commencement Date (a "Defaulting Participant"), Chemical Bank shall increase the
----------------------
amount of its Commitment by the amount which such Defaulting Participant failed
to pay (without prejudice to any rights Chemical Bank may have against such
Defaulting Participant). If, for any reason, Chemical Bank shall fail to pay
(or cause to be paid) the aggregate Commitments of the Loan Participants (a
"Defaulting Participant"), the transactions contemplated hereby shall not be
-----------------------
consummated (without prejudice to any rights Owner Participant and Lessee may
have against such Defaulting Participant or Participants).
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SECTION 2.07. Deferred Equity Amount.
----------------------
(a) Subject to Section 2.07(b), on any date between the Commencement
Date and the Basic Term Commencement Date on which a payment of interest on any
of the Notes is due as referred to in Section 3(b)(i) of the Lease, Owner
Participant shall provide Owner Trustee with the Deferred Equity Amount equal to
the amount of principal of and interest on such Notes due and payable on such
date or dates
(b) To the extent any funding of the Deferred Equity Amount by Owner
Participant, when combined with the other amounts actually funded by Owner
Participant pursuant to Section 2.01(b)(i) and 9.01(a) would exceed the Equity
Cap, Lessee shall pay the amount of such excess to Lessor as Supplemental Rent
on an After-Tax Basis.
SECTION 2.08. Pricing Assumptions. The pricing assumptions,
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Scheduled Rent, Stipulated Loss Values, Termination Values, Deferred Equity
Amount, EBO Amount and the EBO Date shall be as set forth on Annexes 1 through 5
to Schedule IV hereto, as in effect on the Commencement Date and as the same may
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be modified thereafter pursuant to the provisions of this Agreement and the
Lease.
ARTICLE III
Conditions Precedent
--------------------
SECTION 3.01. Conditions Precedent to the Obligations of Owner
------------------------------------------------
Participant and Loan Participants. The obligation of Owner Participant on or
---------------------------------
prior to the Commencement Date to enter into and to cause Owner Trustee to enter
into the Operative Documents to be entered into by such Persons on or prior to
the Commencement Date, of Loan Participants to make available their respective
Commitments with respect to the Transponders on the Commencement Date and of
Owner Participant to cause Owner Trustee to issue the Notes on the Commencement
Date shall be subject to the fulfillment to the satisfaction of, or waiver by,
each Participant (acting through Agent in the case of Loan Participants) prior
to or on the Commencement Date, of the following conditions precedent (except
that (i) the obligation of any party shall not be subject to such party's own
performance or compliance, and (ii) the conditions specified in Section 3.01(i)
and in clause (ii) of Section 3.01(k) need be fulfilled only to the satisfaction
of, or waiver by, Loan Participants) provided, that notwithstanding anything to
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the contrary herein set forth, the obligation of Initial Owner Participant to
pay or cause to be paid Lessor's Cost for the Transponders is unconditional, and
not subject to any condition precedent.
(a) Notice. Receipt of the notice referred to in Section 2.02.
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(b) Receipts. Receipts, substantially in the form of Exhibits K, L
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and M hereto, dated the Commencement Date, shall have been duly executed and
delivered by (i) Owner Trustee to Agent evidencing receipt of the Loan proceeds
with respect to the Transponders from Loan Participants, (ii) Agent to Owner
Trustee evidencing receipt of the Notes in the principal amount of the Loans and
(iii) Seller to Owner Trustee evidencing payment to Seller of Lessor's Cost for
the Transponders.
(c) Legality. No change shall have occurred under Applicable
--------
Law since the date hereof which, in the opinion of Owner Participant, any Loan
Participant, HCG, Xxxxxx Services or Guarantor, as the case may be, shall or
would make it illegal or unduly burdensome for such Person to participate in any
of the transactions contemplated by the Operative Documents and the Xxxxxx
Agreements.
(d) Insurance. Receipt of evidence reasonably satisfactory to Owner
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Participant and Agent of the liability and casualty or life insurance, if any,
in effect on the Commencement Date; provided that a certificate of an officer of
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HCG to that effect shall constitute such satisfactory evidence.
(e) Litigation. No action, proceeding or investigation shall have
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been instituted nor shall governmental action before any Governmental Body be
threatened, nor shall any Order have been issued or proposed to be issued by any
Governmental Body at the time of the Commencement Date to set aside, restrain,
enjoin or prevent the consummation of any of the transactions contemplated by
this Agreement or by the other Operative Documents and the Xxxxxx Agreements.
(f) Consents and Approvals. Except as set forth in Schedule 3.01(f):
----------------------
All actions, approvals, consents, waivers, exemptions, variances, franchises,
orders, permits, authorizations, rights and licenses required to be taken, given
or obtained, as the case may be, by or from any Governmental Body or by or from
any trustee or holder of indebtedness or obligations of HCG, Xxxxxx Services or
Guarantor, that are necessary or, in the opinion of Owner Participant or Agent
or their respective special counsel or their respective special FCC counsel,
advisable in order that the Transponders may be operated for their intended
purpose in connection with the transactions contemplated by the Operative
Documents and the Xxxxxx Agreements shall have been duly taken, given or
obtained, as the case may be, shall be in full force and effect on the
Commencement Date, shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained shall have
expired or no review may be obtained or appeal therefrom taken and shall be
adequate to authorize the consummation of the transactions contemplated by the
Operative Documents and the Xxxxxx Agreements, and the performance by the
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parties of their respective obligations thereunder; and HCG shall have received
due authorization from the FCC to operate the Satellite, which authorization
shall not be subject to any pending proceedings (administrative, judicial or
otherwise) and shall not contain any restrictions therein, other than those
which in the opinion of special FCC counsel for each of Owner Participant and
Agent are customary for authorizations of such kind.
(g) Exemption from Regulation. Agent, each Loan Participant, Owner
-------------------------
Participant, Owner Trustee and any Affiliate of any thereof shall have obtained
all appropriate regulatory or other governmental approvals, licenses or permits
of any kind required for their participation in the transactions contemplated by
the Operative Documents and the Xxxxxx Agreements and Agent, each Loan
Participant, Owner Participant, Owner Trustee and their respective Affiliates
(other than HCG and Xxxxxx Services) shall not be subject solely by reason of
the transactions contemplated by the Operative Documents and the Xxxxxx
Agreements to regulation (i) under the Communications Act, except for direct or
derivative obligations to furnish nonburdensome information routinely required
of similarly situated Persons or obligations that Lessee has undertaken under
any of the Operative Documents or Xxxxxx Agreements or (ii) as an entity
offering common carrier communications services or engaged in the use or
operation of any apparatus for the transmission of energy, communications or
signals by radio by any Federal, state or local regulatory office, commission or
agency.
(h) Authorization, Execution and Delivery of Documents. The following
--------------------------------------------------
documents shall have been duly authorized, executed and delivered by the
respective parties thereto, shall be in full force and effect on the
Commencement Date without any event or condition having occurred or existing
which constitutes, or with the giving of notice or lapse of time or both would
constitute, a default thereunder or breach thereof or would give any party
thereto the right to terminate any thereof, and an executed counterpart of each
thereof shall have been delivered to Agent, each Loan Participant, Owner
Participant, Owner Trustee, Lessee, Seller, Xxxxxx Services, Guarantor, and
their respective counsel:
(i) this Agreement;
(ii) the Loan Agreement;
(iii) the Purchase Agreement;
(iv) the Guarantee Agreement;
(v) the Trust Agreement;
(vi) the GMAC Xxxx of Sale and the Trust Assignment;
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(vii) the Service Agreement;
(viii) the Lease;
(ix) the Certificate of Acceptance; and
(x) the Consent and Agreement.
(i) Transponders. On the Commencement Date, Owner Trustee shall have
------------
received from Owner Participant good and marketable title to the Transponders,
in each case free and clear of all Liens other than Permitted Liens described in
clause (a) of the definition thereof, and the rights of Seller to payment of
Lessor's Cost therefor, and, in respect of Agent, Liens created by Agent and, in
respect of Owner Participant, Liens created by Owner Participant or Trust
Company, in each case as described in clause (b) of the definition thereof.
(j) Filings and Recordings. All Uniform Commercial Code financing
----------------------
statements and other documents, if any, or memoranda in respect thereof,
necessary or advisable, in the reasonable opinion of Agent and Owner Participant
(as specified by such Person or its special counsel), to establish, confirm and
protect the right, title and interest of Owner Trustee in and to the
Transponders, and, in the reasonable opinion of Agent and Owner Participant (as
specified by such Person or its special counsel), to perfect (to the extent
practicable in the case of the Transponders) for the benefit of Agent and Loan
Participants the security interest in the Collateral Security, shall have been
filed or recorded or entrusted to such Person as the Agent shall designate for
prompt filing or recording.
(k) Commencement Date Appraisal. (i) Owner Participant shall have
---------------------------
received the Commencement Date Appraisal and (ii) Agent (on behalf of Loan
Participants) shall have received the evidence of the fair market value of the
Transponders as of the anticipated Commencement Date, as specified in Section
2.05(b)(ii).
(l) Officer's Certificate. On the Commencement Date, the following
---------------------
statements shall be true and Agent, Loan Participants, Owner Participant, Owner
Trustee, Lessee, Seller, Xxxxxx Services and Guarantor shall have received:
(i) an Officer's Certificate of each of Lessee and Guarantor,
dated the Commencement Date, stating that (A) the representations and
warranties of such Person contained in the Operative Documents to
which it is a party on the Commencement Date are true and accurate on
and as of the Commencement Date, except to the extent that such
representations and warranties relate solely to an earlier date (in
which case such representations and warranties shall have been true
and accurate on and
10
as of such earlier date); (B) no event or condition has occurred and
is continuing, or would result from the consummation of any
transaction contemplated by the Operative Documents to which it is a
party that constitutes a Default or an Event of Default related to
Lessee or Guarantor, as the case may be; (C) all covenants and
conditions required to be performed or fulfilled by such Person prior
to or on the Commencement Date have been performed and fulfilled or
waived; and (D) each Operative Document to which it is a party on the
Commencement Date is in full force and effect with respect to it; and
(ii) an Officer's Certificate of each of Seller and Contractor,
dated the Commencement Date, stating that (A) its representations and
warranties contained herein and in the Xxxxxx Agreements to which it
is a party are true and accurate on and as of the Commencement Date as
though made on and as of the Commencement Date, except to the extent
that such representations and warranties relate solely to an earlier
date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date); (B) all
covenants and conditions required to be performed or fulfilled by it
prior to or on the Commencement Date have been performed and fulfilled
or waived; and (C) each of the Xxxxxx Agreements to which it is a
party is in full force and effect with respect to it; and
(iii) an Officer's Certificate of Owner Participant dated the
Commencement Date, stating that (A) the representations and warranties
of Owner Participant contained in the Operative Documents to which it
is a party are true and accurate on and as of the Commencement Date as
though made on and as of the Commencement Date, except to the extent
that such representations and warranties relate solely to an earlier
date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date); (B) no event
or condition attributable to such Person has occurred and is
continuing, or would result from the consummation of any transaction
contemplated by the Operative Documents or the Xxxxxx Agreements,
which constitutes a Loan Default or a Loan Event of Default; (C) all
covenants and conditions required to be performed or fulfilled by such
Person prior to or on the Commencement Date have been performed and
fulfilled or waived; and (D) each Operative Document to which it is a
party is in full force and effect with respect to such Person; and
11
(iv) an Officer's Certificate of Owner Trustee, dated the
Commencement Date, stating that (A) the representations and warranties
of such Person contained in the Operative Documents or Xxxxxx
Agreements to which it is a party on the Commencement Date are true on
and as of the Commencement Date as though made on and as of the
Commencement Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on
and as of such earlier date); (B) no event or condition attributable
to such Person has occurred and is continuing, or would result from
the consummation of any transaction contemplated by the Operative
Documents or the Xxxxxx Agreements, which constitutes a Loan Default
or a Loan Event of Default; (C) all covenants and conditions required
to be performed or fulfilled by such Person prior to or on the
Commencement Date have been performed and fulfilled or waived; and (D)
each Operative Document and Xxxxxx Agreement to which it is a party on
the Commencement Date is in full force and effect with respect to it;
and
(v) an Officer's Certificate of Agent dated the Commencement
Date, stating that (A) the representations and warranties of Agent
contained in the Operative Documents to which it is a party are true
and accurate on and as of the Commencement Date as though made on and
as of the Commencement Date, except to the extent that such
representations and warranties relate solely to an earlier date (in
which case such representations and warranties shall have been true
and accurate on and as of such earlier date); (B) all covenants and
conditions required to be performed or fulfilled by Agent prior to or
on the Commencement Date have been performed and fulfilled or waived;
and (C) each Operative Document to which it is a party is in full
force and effect with respect to it.
(m) Resolutions, Certificates, etc. Each of Agent, Loan
-------------------------------
Participants, Owner Participant, Owner Trustee, Lessee, Guarantor, Seller and
Xxxxxx Services shall have received the following, in each case in form and
substance reasonably satisfactory to such Person:
(i) a copy of resolutions of the respective Boards of Directors
(or committees thereof having power with respect to the matters
covered by such resolutions) of Lessee, Contractor, Seller, Guarantor,
Owner Participant, Trust Company and Agent, each certified as of the
Commencement Date by the Secretary or an Assistant Secretary thereof,
duly authorizing the execution, delivery and performance by it of each
12
Operative Document and Xxxxxx Agreement to which it is a party, in
each case together with an incumbency certificate as to the officer or
officers or other persons authorized to execute and deliver such
documents on its behalf;
(ii) a good standing certificate of recent date from the
jurisdiction of incorporation of Lessee, Contractor, Seller,
Guarantor, and, to the extent available, Owner Participant, Trust
Company and Agent;
(iii) a certificate of the Secretary or Assistant Secretary of
Lessee, Contractor, Seller, Guarantor, and, to the extent available,
Owner Participant, Trust Company and Agent, certifying as to such
Person's charter and by-laws; and
(iv) such other documents and evidence with respect to Lessee,
Contractor, Seller, Guarantor, Owner Participant, Agent, Owner Trustee
and Trust Company, as Lessee, Agent, Guarantor, Seller or Xxxxxx
Services may reasonably request in order to consummate the
transactions contemplated by the Operative Documents and the Xxxxxx
Agreements, and to evidence the taking of all corporate proceedings in
connection therewith and compliance with the conditions herein or
therein set forth.
(n) Payment of Taxes, etc. All taxes, fees and other charges due and
----------------------
payable in connection with the purchase of the Transponders and the execution,
delivery, recordation and filing of all the documents and instruments referred
to in this Agreement and in connection with the issuance and sale of the Notes
shall have been paid in full.
(o) Opinions of Counsel and Special Counsel for Seller, Lessee,
-----------------------------------------------------------
Guarantor and Contractor. Owner Participant, Owner Trustee, Loan Participants
------------------------
and Agent shall have received opinions, dated the Commencement Date, in form and
substance reasonably satisfactory to them, from Xxxxxx & Xxxxxxx, special
counsel for Seller, Lessee and Guarantor and from Xxxxx X. Xxxxxxxxx, Esq. (or
other in-house counsel), as counsel for Lessee, Seller, Guarantor and
Contractor.
(p) Opinion of FCC Counsel for Lessee and Guarantor. Owner
-----------------------------------------------
Participant, Owner Trustee, Loan Participants and Agent shall have received an
opinion, dated the Commencement Date in form and substance reasonably
satisfactory to them, from Xxxxxx & Xxxxxxx, FCC counsel for Lessee and
Guarantor.
(q) Opinion of Special Counsel for Owner Participant. Lessee,
------------------------------------------------
Guarantor, Seller, Xxxxxx Services, Owner Participant, Owner Trustee, Loan
Participants and Agent shall have received
13
opinions, dated the Commencement Date, in form and substance reasonably
satisfactory to them, from Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx, special counsel
for Owner Participant and from in-house counsel for Owner Participant.
(r) Opinion of Special Counsel for Owner Trustee. Owner Participant,
--------------------------------------------
Owner Trustee, Agent, Loan Participants, Lessee, Guarantor, Seller and Xxxxxx
Services shall have received an opinion, dated the Commencement Date, in form
and substance reasonably satisfactory to them, from Xxxxxxxx, Xxxxxx & Finger,
special counsel for Owner Trustee.
SECTION 3.02. Conditions Precedent to HCG's Obligations. The
-----------------------------------------
obligations of HCG to enter into the Operative Documents and Xxxxxx Agreements
to which it will be a party on the Commencement Date shall be subject to the
fulfillment to the satisfaction of, or waiver by, HCG prior to or on the
Commencement Date, of the following conditions: (i) receipt by HCG of an
opinion reasonably satisfactory to it in form and scope from Independent
Appraiser on the Commencement Date, not inconsistent with the Commencement Date
Appraisal: (A) to the effect that the Transponders will have, at the end of the
Basic Term, in excess of 25% of their economic useful life remaining measured
from the Commencement Date, (B) stating the anticipated fair market value of the
Transponders as of the Commencement Date and (C) to such other matters as HCG
shall reasonably require, and (ii) satisfaction of, or waiver by, HCG (acting
directly or by authorization to counsel), prior to or on the Commencement Date,
of the conditions contained in Xxxxxxxx 0.00(x), (x), (x), (x), (x), (x)(xxx),
(x)(xx), (x)(x), (x) (insofar as it relates to Owner Participant, Owner Trustee
and Agent), (n), (q), (r) and (s).
ARTICLE IV
Representations and Warranties
------------------------------
SECTION 4.01. Representations and Warranties of HCG. HCG represents
-------------------------------------
and warrants to each of the other parties hereto that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, and has all requisite
corporate power and authority to operate and own or hold under lease the
properties it purports to operate and own or hold under lease, to transact the
business it transacts and to otherwise enter into and perform its obligations
under each Operative Document to which it is or will be a party. HCG is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction wherein the failure to do so would have a material adverse
effect on the conduct of its business and operations as presently conducted or
on its ability to perform its obligations under the
14
Operative Documents and Xxxxxx Agreements to which it is or will be a party.
(b) Each Operative Document and Xxxxxx Agreement to which HCG is or
will be a party has been duly authorized by all necessary corporate action on
the part of, and has been or on or prior to the Commencement Date will be duly
executed and delivered by it and neither the execution and delivery thereof, nor
the consummation by it of the transactions contemplated thereby (including,
without limitation, the sale to Owner Trustee, and the operation, of the
Transponders) nor compliance by it with any of the terms and provisions thereof
(i) requires any approval of stockholders or approval or consent of any trustee
or holders of any of its indebtedness or obligations, (ii) contravenes any law,
judgment, governmental rule or regulation or order applicable to or binding on
it or any of its properties, the contravention of which would have a material
adverse effect on the conduct of its business and operations as presently
conducted or the performance of its obligations under the Operative Documents
and the Xxxxxx Agreements to which it is or will be a party, (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 it or any of its properties may be bound or affected, the
contravention, breach or default of which would have a material adverse effect
on the conduct of its business and operations as presently conducted or the
performance of its obligations under the Operative Documents and the Xxxxxx
Agreements to which it is or will be a party, (iv) contravenes its corporate
charter or by-laws or (v) results in the creation of any Lien (other than
Permitted Liens described in clauses (a) and (b) of the definition thereof) upon
the Transponders.
(c) Neither the execution and delivery by it of the Operative
Documents or Xxxxxx Agreements to which it is or will be a party, nor the
consummation by it of any of the transactions (including, without limitation,
the sale of the Transponders pursuant to the Xxxx of Sale and the Purchase
Agreement and the operation of the Transponders pursuant to the Lease from and
after the Commencement Date) contemplated thereby, nor the sale of the
Transponders by Owner Participant to Owner Trustee, requires the consent,
approval or authorization of, the giving of notice to, or the registration with,
the recording or filing of any document with, or the taking of any other action
in respect of, any Governmental Body, including any requirement to file
notifications under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
except (i) such of the foregoing as have been obtained, given or done (each of
which is in full force and effect and adequate for its purpose), (ii) the
filings and actions described in clause (ii) of Section 4.01(g), and (iii) such
routine notification from HCG to the FCC as may be required after the
Commencement Date under the laws in existence on the
15
Commencement Date. Except as set forth in Schedule 3.01(f), as of the
Commencement Date, any and all notifications that may be required to be given by
HCG to the FCC pursuant to the foregoing clause (iii) are routine in nature and
for informational purposes only, and no such notice as of the Commencement Date
requires any official action or determination by the FCC as of the Commencement
Date, is subject to approval or disapproval by the FCC or as of the Commencement
Date gives rise to a right by any party to file a petition to deny.
(d) Each Operative Document and Xxxxxx Agreement to which HCG is or
will be a party constitutes or, when executed, will constitute the legal, valid
and binding obligation of HCG, enforceable against HCG 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) Except as disclosed in writing to Agent, Owner Trustee, Owner
Participant and Loan Participants prior to the execution of this Agreement,
there are no actions, suits or proceedings pending against HCG in any court or
before any arbitrator of any kind or before or by any Governmental Body, or to
the knowledge of HCG threatened, which question the legality or validity of any
of the Operative Documents or Xxxxxx Agreements to which HCG is or will be a
party or the transactions contemplated thereby or which, individually or in the
aggregate, if adversely determined, would have a material adverse effect on the
conduct of its business and operations as presently conducted or on its ability
to perform its obligations under the Operative Documents or the Xxxxxx
Agreements to which it is or will be a party on or prior to the Commencement
Date.
(f) HCG is not in violation of any Order, which violation would have
a material adverse effect on the conduct of its business and operations as
conducted on the date hereof.
(g) On the Closing Date, Seller was the owner of all the Transponders
free and clear of all Liens and was entitled to sell the Transponders to Owner
Participant and, on the Closing Date, Seller conveyed to Owner Participant good
and marketable title to the Transponders, free and clear of all Liens other
than, until receipt of such payment by Seller, the right of Seller to payment of
the purchase price for the Transponders in the amount of Lessor's Cost therefor.
Subject to the execution and delivery of the Consent and Agreement by GMAC and
Owner Trustee, the GMAC Xxxx of Sale and the Trust Assignment are in the
appropriate forms for the effective conveyance by GMAC to Owner Trustee of all
of its right, title and interest in the Transponders and the assignment by GMAC
to Owner Trustee of all of its rights and obligations (to the extent therein
stated) as "buyer" under the Purchase Agreement and under the Xxxx of Sale. On
the Commencement Date, after giving effect to the sale of the
16
Transponders by Owner Participant to Owner Trustee, (i) all Uniform Commercial
Code financing statements and other documents (other than any Operative
Documents or Xxxxxx Agreements), if any, necessary in order to establish and
protect the Owner Trustee's right, title and interest (other than any security
that may be deemed to be created by the Lease) in and to the Transponders will
have been duly filed or recorded (or delivered to counsel for Agent for filing
or recording); and (ii) all Uniform Commercial Code financing statements and
other documents (other than any Operative Documents or Xxxxxx Agreements)
necessary in order to create and perfect for the benefit of Agent and the
holders of the Notes the first priority security interest in the Collateral
Security (other than the perfection of such security interest in the
Transponders as to which no representation is made and except for the taking by
Agent of possession of the executed original counterpart of the Lease) provided
for in the Loan Agreement will have been duly filed or recorded (or delivered to
counsel for Agent for filing or recording).
(h) HCG is not an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
(i) None of the execution and delivery of this Agreement, the other
Operative Documents and the Xxxxxx Agreements, the extension by Loan
Participants of the Loans, and the acquisition by Owner Participant of its
beneficial interest in the Lessor's Estate will involve any prohibited
transaction within the meaning of Section 406(a) of ERISA or Sections
4975(c)(1)(A) through (D) of the Code (such representation being made in
reliance upon and subject to the accuracy of the representations contained in
Sections 4.02(k) and 4.03(b) hereof) and of the ERISA representations to be made
by holders of the Notes pursuant to such Notes.
(j) As of the Commencement Date, none of Owner Participant, Owner
Trustee, Loan Participants or Agent will become, solely by reason of entering
into the Operative Documents and the Xxxxxx Agreements to which it is a party or
the consummation of any of the transactions contemplated thereby, subject to
regulation under (i) the Communications Act as in effect on the Commencement
Date (except for direct or derivative obligations to furnish nonburdensome
information routinely required of similarly situated Persons or obligations that
HCG has undertaken in any of the Operative Documents) or (ii) any other Federal,
state or local law relating to communications services or the use or operation
of apparatus for the transmission of energy, communications or signals by radio.
(k) The chief executive office (as such term is used in Article 9 of
the Uniform Commercial Code) of HCG is located at 0000 Xxxx Xxxxx Xxxxxx, Xx
Xxxxxxx, Xxxxxxxxxx 00000. The chief
17
executive office of Guarantor is located at 0000 Xxxxxx Xxxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000. The only earth station facilities employed on the date hereof
to provide tracking, telemetry, and control of the Satellite are located in El
Segundo, California, Castle Rock, Colorado, Spring Creek, New York, and
Fillmore, California.
(l) Other than Argent Group Ltd. and Chemical Securities Inc. (whose
fees shall be paid as set forth in Article IX), no Person acting on behalf of
HCG is or will be entitled, directly or indirectly, to any brokerage fee,
commission, or finder's fee from any of the other parties hereto in connection
with the transactions contemplated hereby.
(m) HCG or an affiliate of HCG has filed all Federal tax returns
required to be filed by it, and all other required tax returns in respect of
which the failure to file would have a material adverse effect on the financial
condition of Guarantor and its subsidiaries taken as a whole or on the ability
of HCG to perform its obligations under the Operative Documents and Xxxxxx
Agreements to which it is or will be a party, and has paid, or made provision
for the payment of, all taxes shown to be due and payable on such returns before
they have become delinquent, except for any taxes of which the amount,
applicability or validity is currently being contested in good faith by
appropriate proceedings and for which adequate reserves have been provided.
SECTION 4.02. Representations and Warranties of Owner Participant.
---------------------------------------------------
Owner Participant represents and warrants to each of the other parties hereto
that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
all requisite corporate power and authority to enter into and perform its
obligations under this Agreement and the other Operative Documents to which it
is or will be a party.
(b) Each Operative Document to which Owner Participant is or will be a
party has been duly authorized by all necessary corporate action on the part of,
and has been or on or prior to the Commencement Date will have been duly
executed and delivered by, Owner Participant and neither the execution and
delivery thereof, nor the consummation by it of the transactions contemplated
thereby, nor compliance by Owner Participant with any of the terms and
provisions thereof, subject to and in reliance upon the accuracy of the
representations made by Lessee in Sections 4.01(i) and 4.01(j) and by Loan
Participants set forth in Section 4.03, (i) requires any approval of its
stockholders, or approval or consent of any trustee or holders of any of its
indebtedness or obligations, (ii) contravenes any law, judgment, governmental
rule, regulation or order applicable to or
18
binding on it or on any of its properties (except, however, that no
representation is made as to communications law or other Applicable Law relating
to transponders or satellites), (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, contract or
other agreement or instrument to which it is a party or by which it or any of
its properties may be bound or affected, (iv) contravenes its corporate charter
or by laws or (v) results in the creation of any Lien (other than a Permitted
Lien of the type specified in clause (a) of the definition thereof) upon any of
its property.
(c) Neither the execution and delivery by it of the Operative
Documents to which it is or will be a party, nor the consummation by it of any
of the transactions contemplated thereby, requires the consent, approval or
authorization of, the giving of notice to, or the registration with, the
recording or filing of any document with, or the taking of any other action in
respect of, any Governmental Body, except for such of the foregoing as have been
obtained, given or done (except, however, that no representation is made as to
communications law or other Applicable Law relating to transponders or
satellites).
(d) Each Operative Document to which Owner Participant is or will be a
party constitutes or will constitute, its legal, valid and binding obligation,
enforceable against Owner Participant in accordance with its terms, except as
enforcement may be subject to bankruptcy, insolvency, moratorium or other
similar laws affecting creditors' rights generally, and to general principles of
equity.
(e) No Person acting on behalf of Owner Participant or any Affiliate
thereof is or will be entitled to any brokerage fee, commission or finder's fee
directly or indirectly from HCG in connection with the transactions contemplated
hereby.
(f) There are no actions, suits or proceedings pending (nor, to the
knowledge of Owner Participant, threatened) against or affecting Owner
Participant or any property of Owner Participant in any court or before any
arbitrator of any kind or before or by any Governmental Body which question the
legality or validity of any of the Operative Documents to which Owner
Participant is a party or the transactions contemplated thereby (except,
however, that no representation is made as to communications law or other
Applicable Law relating to transponders or satellites).
(g) Subject to the accuracy of Seller's representation set forth in
the first and second sentences of Section 4.01(g), on the Commencement Date,
Initial Owner Participant will be the owner of all the Transponders, will have
all corporate power and authority necessary to sell the same to Owner Trustee
and, upon
19
execution and delivery of the GMAC Xxxx of Sale, Owner Trustee will have
received from Initial Owner Participant, to the same extent received by it from
Seller, good and marketable title to the Transponders, in each case free and
clear of all Liens other than Permitted Liens described in clause (a) of the
definition thereof, Lessor Liens, Agent Liens and (until receipt of such payment
by Seller) the right of Seller to payment of Lessor's Cost therefor.
(h) No Loan Event of Default or Loan Default attributable to Owner
Participant has occurred and is continuing.
(i) Each of the trust created by the Trust Agreement and Owner
Participant is a United States Person, within the meaning of Section 7701(a)(30)
of the Code.
(j) Neither the trust created by the Trust Agreement nor Owner
Participant is an exempt organization within the meaning of Subchapter F,
Chapter I of Subtitle A of the Code.
(k) Owner Participant hereby represents and warrants that it is not
acquiring any of its interest in the Lessor's Estate and did not acquire the
Transponders on the Closing Date with the assets of any employee benefit plan
(or its related trust) which is subject to Title I of ERISA or Section 4975 of
the Code (a "Benefit Plan") or of an account or entity whose assets constitute
------------
assets of a Benefit Plan.
SECTION 4.03. Representations and Warranties of Loan Participants.
---------------------------------------------------
Each Loan Participant severally represents and warrants to each of the other
parties hereto that:
(a) It will not directly or indirectly offer any interest in the Notes
for sale to, or solicit any offer to acquire any of the same from, any Person so
as to bring any of the transactions contemplated hereby within Section 5 of the
Securities Act, provided that the disposition of its property shall at all times
be and remain within its control.
(b) No part of the funds to be used by it to purchase the Notes or to
make or maintain the Loans constitutes or will constitute assets of any Benefit
Plan or of an account or entity whose assets constitute assets of a Benefit
Plan.
SECTION 4.04. Representations and Warranties of Trust Company. Trust
-----------------------------------------------
Company represents and warrants to each of the other parties hereto that:
(a) Trust Company is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to execute, deliver and perform
its obligations under the Trust Agreement.
20
(b) Trust Company has taken all corporate action necessary to
authorize the execution and delivery by it of the Operative Documents and
Xxxxxx Agreements to which it is or will be a party, and each such
Operative Document and Xxxxxx Agreement has been or on or prior to the
Commencement Date will be duly executed and delivered by it.
(c) Neither the execution and delivery by Trust Company of any of the
Operative Documents or Xxxxxx Agreements to which it is or will be a party,
nor the consummation by it of the transactions contemplated thereby nor
compliance by it with any of the terms or provisions thereof (i) requires
any approval of the stockholders of Trust Company, (ii) contravenes any
law, judgment, governmental rule, regulation or order of the United States
or the State of Delaware applicable to or binding on it or on any of its
properties governing the banking or trust powers of Trust Company, (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, contract or other agreement or
instrument to which Trust Company is a party or by which any of its
properties may be bound or affected, (iv) contravenes Trust Company's
charter or by-laws or (v) results in the creation of any Lien upon any of
Trust Company's property.
(d) Neither the execution and delivery by Trust Company of any
Operative Documents or Xxxxxx Agreements to which it is or will be a party,
nor the consummation by it of the transactions contemplated thereby, nor
compliance by it with any of the terms or provisions thereof, will
contravene any Applicable Law of the United States or the State of Delaware
governing Trust Company's banking or trust powers.
(e) Neither the execution and delivery by Trust Company of each of the
Operative Documents and Xxxxxx Agreements to which it is or will be a
party, nor the consummation by it of the transactions contemplated thereby,
nor compliance by it with any of the terms or provisions thereof requires
the consent, approval or authorization of or the giving of notice to, the
registration with, or the taking of any other action in respect of, any
Federal or Delaware Governmental Body governing Trust Company's banking or
trust powers.
(f) Assuming each Operative Document and Xxxxxx Agreement to which
Trust Company is or is to be a party constitutes or will constitute the
legal, valid and binding obligation of all parties thereto (other than
Trust Company and Owner Trustee), enforceable against such parties in
accordance with its terms, each Operative Document and
21
Xxxxxx Agreement to which the Trust Company is or will be a party
constitutes or will constitute its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, and to general principles of equity.
(g) Trust Company is a United States Person, within the meaning of
Section 7701(a)(30) of the Code.
(h) Trust Company is not an exempt organization within the meaning of
Subchapter F, Chapter I of Subtitle A of the Code.
(i) On the Commencement Date, Owner Trustee will have whatever title
to the Transponders and the remainder of Lessor's Estate as was granted or
conveyed to it by Owner Participant on or prior to the Commencement Date,
free and clear of any Lessor Liens attributable to Trust Company.
SECTION 4.05. Representations and Warranties of Trust Company and
---------------------------------------------------
Owner Trustee. Trust Company further represents and warrants (with respect to
-------------
paragraphs (a) through (i) below) to each of the other parties hereto and Owner
Trustee represents and warrants (with respect to paragraphs (i) through (l)
below) that:
(a) Assuming due authorization, execution and delivery of the Trust
Agreement by Owner Participant, Owner Trustee has all requisite power and
authority as Owner Trustee to execute and deliver this Agreement and the
other Operative Documents and Xxxxxx Agreements to which it is or is to be
a party.
(b) Assuming due authorization, execution and delivery of the Trust
Agreement by Owner Participant, Owner Trustee has taken all action
necessary to authorize the execution and delivery by it of the Operative
Documents and Xxxxxx Agreements to which it is or will be a party, and each
such Operative Document and Xxxxxx Agreement has been or on or prior to the
Commencement Date will be duly executed and delivered by it.
(c) Assuming due authorization, execution and delivery of the Trust
Agreement by Owner Participant, neither the execution and delivery by Owner
Trustee of any of the Operative Documents or Xxxxxx Agreements to which it
is or will be a party, nor the consummation by it of the transactions
contemplated thereby, nor compliance by it with any of the terms or
provisions thereof (i) requires any approval of the stockholders of Trust
Company, (ii) contravenes any law, judgment, governmental rule, regulation
or order applicable to or binding on it or on any of its properties
governing the banking or trust powers of Owner
22
Trustee, (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, contract or
other agreement or instrument to which Owner Trustee is a party or by which
any of its properties may be bound or affected, (iv) contravenes Trust
Company's charter or by-laws or (v) results in the creation of any Lien
(other than a Permitted Lien of the type specified in clause (a) of the
definition thereof) upon any of Owner Trustee's property.
(d) Assuming due authorization, execution and delivery of the Trust
Agreement by Owner Participant, neither the execution and delivery by Owner
Trustee of any Operative Documents or Xxxxxx Agreements to which it is or
will be a party, nor the consummation by it of the transactions
contemplated thereby, nor compliance by it with any of the terms or
provisions thereof will contravene any Applicable Law of the United States
or the State of Delaware governing Trust Company's banking or trust powers.
(e) Assuming due authorization, execution and delivery of the Trust
Agreement by Owner Participant, neither the execution and delivery by Owner
Trustee of each of the Operative Documents and Xxxxxx Agreements to which
it is or will be a party, nor the consummation by it of the transactions
contemplated thereby, nor compliance by it with any of the terms or
provisions thereof requires the consent, approval or authorization of or
the giving of notice to, the registration with, or the taking of any other
action in respect of, any Federal or Delaware Governmental Body governing
Trust Company's banking or trust powers.
(f) Assuming the due authorization, execution and delivery of the
Trust Agreement by Owner Participant, and assuming each Operative Document
and Xxxxxx Agreement is, or upon execution thereof will be, the legal,
valid and binding obligation of all other parties thereto (other than Owner
Trustee and Trust Company), enforceable against such parties in accordance
with its terms, each Operative Document and Xxxxxx Agreement to which Owner
Trustee is or is to be a party constitutes, or upon execution thereof will
constitute its legal, valid and binding obligation, enforceable against
Owner Trustee in accordance with its terms, subject to bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, and to general principles of equity.
(g) The chief executive office (as such term is used in Article 9 of
the Uniform Commercial Code) of Owner Trustee is at County of Newcastle,
State of Delaware (and it hereby agrees to notify Lessee, Agent and Owner
Participant promptly after any change in such location).
23
(h) On the Commencement Date, Owner Trustee will have whatever title
to the Transponders and the remainder of Lessor's Estate as was granted or
conveyed to it by Owner Participant on or prior to the Commencement Date,
free and clear of any Lessor Liens attributable to Trust Company.
(i) No Loan Event of Default or Loan Default attributable to Owner
Trustee or Trust Company has occurred and is continuing.
(j) Owner Trustee is a United States Person, within the meaning of
Section 7701(a)(30) of the Code.
(k) Owner Trustee is not an exempt organization within the meaning of
Subchapter F, Chapter I of Subtitle A of the Code.
(l) Owner Trustee is not an investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 4.06. Representations and Warranties of Agent. Agent
---------------------------------------
represents and warrants to each of the other parties hereto that:
(a) Agent is a banking corporation duly organized and validly
existing under the laws of New York and has all requisite corporate power
and authority to execute, deliver and perform its obligations as Agent
under this Agreement and the other Operative Documents to which it is or
will be a party.
(b) Each Operative Document to which Agent is or will be a party has
been duly authorized by all necessary corporate action on the part of Agent
and has been or on or prior to the Commencement Date will be duly executed
and delivered by Agent and neither the execution and delivery thereof, nor
the consummation by it of the transactions contemplated thereby, nor
compliance by Agent with any of the terms and provisions thereof, (i)
requires any approval of the stockholders of Agent, (ii) contravenes any
existing law, governmental rule, regulation or order, or any judgment or
order of any court, applicable to or binding on it or any of its properties
governing its banking or trust powers, (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, contract or other agreement or instrument to which it is a party
or by which any of its properties may be bound or affected, (iv)
contravenes the corporate charter or by-laws of Agent or (v) results in the
creation of any Lien (other than a Permitted Lien of the type specified in
24
clause (a) of the definition thereof) upon any of its property.
(c) Neither the execution nor delivery by it, either in its
individual capacity or as Agent, as the case may be, of each of the
Operative Documents to which it is a party, requires the consent, approval
or authorization of or the giving of notice to, the registration with, or
the taking of any other action in respect of, any Federal or New York
Governmental Body governing its banking or trust powers.
(d) Each Operative Document to which it is or will be a party
constitutes the legal, valid and binding obligation of Agent enforceable
against Agent in accordance with its terms, subject to bankruptcy,
insolvency, moratorium or other similar laws affecting creditors rights
generally, and to general principles of equity.
(e) As of the Commencement Date, the Transponders will be free and
clear of Agent Liens.
SECTION 4.07. Representations and Warranties by Parties Concerning
----------------------------------------------------
Offerings. (a) HCG hereby represents and warrants to each other party hereto
---------
that neither HCG, Guarantor nor anyone authorized to act on its behalf has
directly or indirectly offered any interest in the Notes, Lessor's Estate or any
similar interests, for sale to, or solicited any offer to acquire any of the
same from, or has otherwise approached or negotiated with any Person with
respect thereto so as to bring any of the transactions contemplated hereby
within Section 5 of the Securities Act.
(b) Owner Participant hereby represents and warrants to each other party
hereto that it is not acquiring its interest in Lessor's Estate with a view to
the distribution thereof within the meaning of Section 2(ll) of the Securities
Act and that neither it nor anyone authorized to act on its behalf has directly
or indirectly offered any interest in the Notes, Lessor's Estate or any similar
interests, for sale to, or solicited any offer to acquire any of the same from,
any Person so as to bring any of the transactions contemplated hereby within
Section 5 of the Securities Act.
(c) Owner Trustee hereby represents and warrants to each other party
hereto that neither it nor anyone authorized to act on its behalf has directly
or indirectly offered any interest in the Notes, Lessor's Estate or the Trust
Agreement or any similar interests for sale to, or solicited any offer to
acquire any of the same from, any Person so as to bring any of the transactions
contemplated hereby within Section 5 of the Securities Act.
(d) Agent hereby represents and warrants to each other party hereto that
neither it nor anyone authorized to act on its
25
behalf has directly or indirectly offered any interest in the Notes, Lessor's
Estate or any similar interests, for sale to, or solicited any offer to acquire
any of the same from, any Person so as to bring any of the transactions
contemplated hereby within Section 5 of the Securities Act.
ARTICLE V
Covenants
---------
SECTION 5.01. Covenants of HCG. Lessee agrees that, during the Lease
----------------
Term (but not thereafter), unless Owner Participant, Owner Trustee and a
Majority in Interest of Noteholders otherwise consent in writing:
(a) Quarterly Financial Statements. Lessee will furnish to Owner
------------------------------
Participant and Owner Trustee, upon the written request of the applicable
Person, and to Agent so long as any Notes are outstanding, provided such
delivery need not be made before the 90th day after the close of each of
the first three quarterly accounting periods in each fiscal year of
Guarantor, the consolidated balance sheet of Guarantor and its consolidated
subsidiaries as at the end of such quarterly period and the related
statements of income, cash flow and stockholder's equity for such quarterly
period for that portion of the fiscal year ending with such quarterly
period, all of which shall be certified by the President, a Vice President
or a senior financial officer of Guarantor as fairly presenting the
financial condition of Guarantor and its consolidated subsidiaries as of
the end of the applicable quarterly period and the results of their
operations and changes in their financial position for the applicable
quarterly period, subject to year-end audit adjustments.
(b) Annual Financial Statements. Lessee will furnish to Owner
---------------------------
Participant and Owner Trustee, upon the written request of the applicable
Person, and to Agent so long as any Notes are outstanding, provided such
delivery need not be made before the 120th day after the close of each
fiscal year of Guarantor, the consolidated balance sheet of Guarantor and
its consolidated subsidiaries as at the end of such fiscal year and the
related statements of income, cash flow and stockholder's equity, certified
by Deloitte & Touche or other independent certified public accountants of
recognized national standing, accompanied by a certificate of the
President, a Vice President, the Chief Financial Officer or principal
accounting officer of Lessee certifying that to such officer's Actual
Knowledge no Default or Event of Default has occurred and is then
continuing or if a Default or an Event of Default has occurred and is then
continuing, containing a statement describing such Default or Event of
Default and setting forth, as appropriate, what
26
actions Lessee is taking in respect thereof. All financial statements
delivered pursuant to paragraph (a) above or this paragraph (b) shall be
prepared in accordance with GAAP applied on a basis consistent with that of
the previous year, except as disclosed in the notes thereto, and may be
stamped with Guarantor's or Lessee's customary confidentiality legend. It
is a condition of the delivery of said financial statements that Owner
Participant, Owner Trustee or Agent, as the case may be, shall not be in
breach of Section 16.01.
(c) Additional Public Information. Lessee will promptly furnish to
-----------------------------
Owner Participant and Owner Trustee, and to Agent so long as any Notes are
outstanding, upon the written request of the applicable Person, (i) all
such reports and financial statements as General Motors Corporation shall
send or make available to the holders of General Motors Class H common
stock, (ii) all public filings made with the SEC in respect of such Class H
common stock and (iii) any of the foregoing that may be sent or made
directly by Guarantor or Lessee with respect to any capital stock of
Guarantor or Lessee in the future.
(d) No Note Purchase. HCG will not purchase or acquire any Note or
----------------
any interest therein.
(e) Insurance Certificate. On or before April 30 of each year during
---------------------
the Lease Term, Lessee will deliver to Owner Participant, Owner Trustee and
Agent a certificate of Lessee, signed by the President, a Vice President,
the Chief Financial Officer or the principal accounting officer of Lessee
describing any liability and casualty or life insurance in effect on such
date for the Transponders, which certificate shall state that any such
insurance complies with Section 9 of the Lease.
(f) Notice of Change of Place of Business. Lessee shall promptly
-------------------------------------
give notice of any change in or relocation of its chief executive office or
chief place of business during the Lease Term (i) to Owner Trustee so long
as Owner Trustee has title to any Transponder and (ii) to Agent so long as
any Notes are outstanding.
(g) Defense of Title. Lessee hereby covenants for the benefit of the
----------------
Noteholders that, while such Notes are outstanding during the Lease Term
with respect to any Transponder, it will, at its own cost and expense,
defend the Owner Trustee's title to such Transponder against the claims of
any and all Persons whomever, other than with respect to Permitted Liens.
27
SECTION 5.02. Covenants of Owner Participant. Owner Participant
------------------------------
further covenants to and with each of the other parties hereto that:
(a) No Liens. (i) It will keep the Transponders, Lessor's Estate and
--------
the Collateral Security free and clear of Owner Participant Liens. Owner
Participant shall pay, and shall indemnify and hold harmless each other
Indemnitee and Lessee (and each of Lessee's successors, assigns, officers,
directors, servants, employees and agents) from, any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, costs,
expenses and disbursements, including legal fees and expenses, of
whatsoever kind and nature, imposed on, incurred by or asserted against any
such Person solely as the result of the failure of Owner Participant to
comply with this Section 5.02(a).
(b) No Prepayment. Unless an Event of Default under the Lease shall
-------------
have occurred and be continuing under Section 15 thereof, without the prior
written consent of Lessee, Owner Participant will not, and will not cause,
authorize or permit Owner Trustee to, directly or indirectly prepay,
redeem, refund or refinance any Note other than pursuant to Section 2.10 of
the Loan Agreement and other than in the event of a purchase of the Notes
pursuant to Section 16.5 of the Loan Agreement. This Section 5.02(b) shall
not be deemed to permit prepayment of the Notes except as permitted by the
Loan Agreement.
(c) Selection of Interest Rates. Unless an Event of Default under the
---------------------------
Lease shall have occurred and be continuing under Section 15 thereof,
without the prior written consent of Lessee, Owner Participant will not,
and will not cause, authorize or permit Owner Trustee to, select interest
rates or periods under the Loan Agreement.
(d) Successor Owner Trustee. Owner Participant shall not appoint or
-----------------------
cause or allow to be appointed a successor to Owner Trustee or an
additional or separate trustee under the Trust Agreement without giving
prior written notice of such appointment (including notification of the
principal place of business of each such successor, additional or separate
trustee) to Lessee and, so long as the Notes are outstanding, Agent. Owner
Participant shall cause any such successor, additional or separate trustee,
simultaneously with its assumption of duties in such capacity, to take all
actions as may be reasonably requested by Agent or Lessee (including,
without limitation, the filing of financing statements), at Lessee's
expense (except as otherwise provided below in this Section 5.02(d)), in
order to establish, preserve, protect and perfect (to the extent
practicable in the case of the Transponders) Lessee's
28
interest in and to the Transponders and Lessee's rights under this
Agreement, the other Operative Documents and the Xxxxxx Agreements and to
execute and deliver to Lessee a counterpart of the Consent and Agreement
and, so long as any Notes are outstanding, the security interest of Agent
in the Collateral Security granted or intended to be created under the Loan
Agreement and Agent's rights under this Agreement, the other Operative
Documents, and the Xxxxxx Agreements, subject only to Permitted Liens. In
the event of Trust Company's resignation, bankruptcy or insolvency, or
disqualification unrelated to its relationship, if any, with Owner
Participant, the expenses incurred in connection with the appointment of a
successor Owner Trustee as a result thereof shall be paid by Lessee.
Otherwise, in connection with Owner Participant's appointment of a
successor Owner Trustee, the expenses incurred in connection therewith and
any incremental increase in fees payable to the successor Owner Trustee
shall be paid by Owner Participant.
(e) Performance of Obligations. Owner Participant will perform and
--------------------------
comply with all obligations imposed on Owner Participant pursuant to the
provisions of the Operative Documents in accordance with the terms and
conditions of each thereof and for the benefit and only for the benefit of
the parties to whom such obligations are owed.
(f) Instructions to Owner Trustee. Owner Participant will not
-----------------------------
instruct or otherwise direct Owner Trustee to take, or omit to take, any
action in violation of the express covenants and agreements of Owner
Trustee in any Operative Document or any of the Xxxxxx Agreements. Owner
Participant will not unreasonably withhold its consent to or authorization
of any consent requested by Owner Trustee under the terms of any Operative
Document or any of the Xxxxxx Agreements which by its terms may not be
unreasonably withheld by Owner Trustee.
(g) Termination of Trust Agreement. Without the prior written consent
------------------------------
of Agent, prior to the expiration or earlier termination of the Lease
pursuant to its terms and the payment of the Notes in full (unless Assumed
by Lessee), Owner Participant will not terminate or revoke, or consent to
the termination or revocation of, the Trust Agreement, or, prior to the
release of the Lien of the Loan Agreement on the Collateral Security, amend
or modify the Trust Agreement in any manner that would adversely affect the
Collateral Security or limit in any material manner the rights of Agent or
Loan Participants set forth in the Loan Agreement (except as may be
expressly permitted by the Loan Agreement). If the Trust Agreement is
revoked or terminated, any transfer of the Transponders in connection
therewith shall comply with the applicable provisions of
29
Section 11.1 of the Purchase Agreement. Owner Participant and Owner Trustee
shall comply in all respects with the provisions of Article IX and Section
10.1 of the Trust Agreement.
(h) Owner Participant as Competitor. If Lessee shall have notified
-------------------------------
Owner Participant of any merger, acquisition or other similar event or
condition that would be reasonably likely to cause Owner Participant to
become a Competitor, or if Owner Participant has become a Competitor, or if
Owner Participant has Actual Knowledge of any such event or condition that
might be reasonably likely to cause it to become a Competitor, Owner
Participant will, as promptly as practicable (taking into account the
effect of Applicable Laws on whether or not any such event or condition has
been previously publicly disclosed), deliver to Lessee an Officer's
Certificate of Owner Participant confirming or denying such event or
condition and whether Owner Participant has become a Competitor. If Owner
Participant confirms such event or condition, Owner Participant shall take
all reasonable measures with respect to all confidential and Proprietary
Information necessary to protect Lessee from any adverse competitive impact
that could arise from disclosure of such information. Owner Participant
acknowledges that Lessee will suffer irreparable harm in the event Owner
Participant does not comply with its obligations under this Section 5.02(h)
and agrees that Lessee shall be entitled to specific performance of such
obligations.
(i) Election to Retain Title. If Owner Trustee shall elect or shall
------------------------
be deemed to have elected to retain title to the Transponders pursuant to
Section 8(a) or 8(c) of the Lease, Owner Participant will make the required
amount of funds available to Owner Trustee and will otherwise cause Owner
Trustee to perform its obligations under such Section 8(a) or 8(c) in
accordance with the terms thereof.
(j) Notice of Loan Event of Default. Promptly after Owner Participant
-------------------------------
has Actual Knowledge that any Loan Event of Default or Loan Default
attributable to Owner Participant has occurred and is continuing, Owner
Participant shall deliver to Agent and Lessee a notice of such Loan Event
of Default or Loan Default describing the same in reasonable detail and,
together with such notice or as soon thereafter as possible, a description
of the action that Owner Participant has taken, is taking and proposes to
take with respect thereto.
SECTION 5.03. Covenants of Trust Company. Trust Company further
--------------------------
covenants to and with each of the other parties hereto that Trust Company will
keep the Transponders, Lessor's Estate and the Collateral Security free and
clear of Lessor Liens
30
attributable to it, and Trust Company shall pay, and shall indemnify and hold
harmless each other Indemnitee, Guarantor, HCG and Lessee (and each of
Guarantor's, HCG's and Lessee's respective successors, assigns, officers,
directors, servants, employees and agents) from, any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, costs, expenses
and disbursements, including reasonable legal fees and expenses, of whatsoever
kind and nature, imposed on, incurred by or asserted against any such Person as
the result of the failure of Trust Company to comply with this Section 5.03.
SECTION 5.04. Covenants of Agent. Agent will keep Lessor's Estate,
------------------
the Collateral Security, and the Transponders free and clear of Agent's Liens.
Agent shall pay, and indemnify and hold harmless each other Indemnitee,
Guarantor, HCG and Lessee (and each of Guarantor's, HCG's and Lessee's
respective successors, assigns, officers, directors, servants, employees and
agents) from, any and all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs, expenses and disbursements, including reasonable
legal fees and expenses, of whatever kind and nature, imposed on, incurred by or
asserted against any such Person as the result of the failure of Agent to comply
with this Section 5.04.
SECTION 5.05. Additional Covenants. (a) Each of Owner Participant,
--------------------
Owner Trustee, and Agent agrees that if, pursuant to any provision of this
Agreement, the Lease, the Purchase Agreement or the Loan Agreement, Lessee
elects to purchase, or causes Lessor to sell, all (but not less than all) of the
Transponders, Lessee shall have the right to either (i) Assume the Notes then
outstanding by giving notice of such Assumption pursuant to Section 11.03, in
accordance with, subject to the conditions of and with the effect provided in
Section 2.20 of the Loan Agreement or (ii) provide to Owner Trustee an amount
sufficient to prepay the Notes then outstanding, including interest thereon and
Break Funding Costs, if any, pursuant to the applicable provisions of Section
2.10(b)(ii) of the Loan Agreement, and Owner Trustee agrees to timely apply such
amount for such purpose.
(b) Each party hereto covenants with the other parties hereto that
neither it nor anyone authorized to act on its behalf will take any action which
would subject the offering or delivery of the Notes or Lessor's Estate to the
registration requirements under the Securities Act.
(c) If Lessee reasonably requests and provides timely instructions and
forms, to the extent permitted by law, Owner Participant will timely file, and
will timely request Owner Trustee and Trust Company to file, any applicable
forms necessary to avoid the imposition of any withholding obligation under the
Code and Regulations thereunder with respect to the payment of Rent, and shall
not effect any transfer of the Transponders, the
31
Lease or any interest therein that would result in the imposition of any such
withholding obligation.
(d) If reasonably and timely requested and pursuant to timely
instructions provided by Owner Participant, to the extent permitted by law,
Trust Company will timely file any applicable forms necessary to avoid the
imposition of any withholding obligation under the Code and Regulations
thereunder with respect to the payment of Rent, if any.
(e) If reasonably and timely requested and pursuant to timely
instructions provided by Owner Participant, to the extent permitted by law,
Owner Trustee will timely file any applicable forms necessary to avoid the
imposition of any withholding obligation under the Code and Regulations
thereunder with respect to the payment of Rent, if any, and shall not effect any
transfer of the Transponders, the Lease or any interest therein that would
result in the imposition of any such withholding obligation.
(f) Each of Owner Participant and Owner Trustee and, so long as no
Loan Event of Default shall have occurred and be continuing, Agent and the Loan
Participants agrees not to (i) initiate against Owner Trustee (in its capacity
as such), the trust created by the Trust Agreement, or Lessor's Estate, any
case, proceeding or other action under any existing or future law of any
jurisdiction, domestic or foreign, which seeks a bankruptcy, insolvency,
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or similar relief with respect to Owner Trustee (in its capacity as
such or in its individual capacity), the trust created by the Trust Agreement,
or Lessor's Estate or their respective debts, or (ii) seek appointment of a
receiver, trustee, custodian or other similar official for Owner Trustee (in its
capacity as such or in its individual capacity), the trust created by the Trust
Agreement, or Lessor's Estate or for all or any substantial part of their
respective assets, or make a general assignment for the benefit of their
respective creditors; and none of Owner Participant, Trust Company or Owner
Trustee shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth above. In addition,
Owner Participant covenants and agrees that, so long as the Loan Agreement has
not been discharged (A) it will make no claim on Owner Trustee (in its capacity
as such or in its individual capacity), the trust created by the Trust
Agreement, or Lessor's Estate (arising pursuant to the Operative Documents or
otherwise) if such claim would result in the bankruptcy of Owner Trustee (in its
capacity as such or in its individual capacity) the trust created by the Trust
Agreement, or Lessor's Estate, as the case may be, and (B) it will not permit
Owner Trustee to make a claim on the trust created pursuant to the Trust
Agreement or Lessor's Estate in respect of amounts owed to Owner Trustee or
Trust Company by the trust created pursuant to the Trust Agreement or
Lessor's Estate (arising pursuant to the Operative Documents or
32
otherwise) if such claim would result in the bankruptcy of the trust created
pursuant to the Trust Agreement or Lessor's Estate.
SECTION 5.06. Delivery of Certain Information to Agent. To the
----------------------------------------
extent Xxxxxx Services has any obligation to provide information to "Owner"
under the Service Agreement or Seller has any obligation to provide information
to "Buyer" under the Purchase Agreement, Seller shall provide, or cause Xxxxxx
Services to provide, such information to Agent, at Agent's written request,
subject to the provisions of Section 16.01.
SECTION 5.07. Lessee's Instructions to Owner Trustee. Owner Trustee
--------------------------------------
hereby agrees, so long as no Lease Event of Default shall have occurred and be
continuing, (a) to follow Lessee's written requests as soon as practicable (and
not to take any action not so requested) with respect to (i) selecting interest
rates and interest periods to be applicable to the Notes under the Loan
Agreement and prepayments of the Notes in connection with Sections 2.9 and 2.10
of the Loan Agreement and (ii) giving any and all notices under the Loan
Agreement to Agent or the Noteholders necessary or appropriate in order to
effectuate such selection of interest periods and such prepayment of the Notes,
provided that any such prepayment is effected in connection with a refinancing
pursuant to this Agreement or a prepayment contemplated by Section 2.9 or 2.10
of the Loan Agreement, and (b) to allow Lessee, to the exclusion of Owner
Trustee, to deliver Instruction Certificates under Section 19 of the Loan
Agreement.
SECTION 5.08 Tax Indemnification Agreement. Owner Participant and
-----------------------------
Lessee hereby covenant that if, during the Interim Term or the Basic Term, an
event occurs that results in Owner Participant's and Lessee's failing to remain
members of the same consolidated group for United States income tax purposes,
Owner Participant and Lessee shall negotiate in good faith the terms of and
enter into a Tax Indemnification Agreement pursuant to which Lessee will
indemnify the Owner Participant for certain losses of United States income tax
benefits caused by certain acts or omissions of Lessee. If a dispute arises
between Owner Participant and Lessee regarding the proposed terms of the Tax
Indemnification Agreement, such dispute shall be resolved by the Tax Arbitrator,
whose decision will be final, binding, non-appealable, fully enforceable and
subject to being reduced to judgment by any court of competent jurisdiction. In
no event will Lessee's obligations under the Tax Indemnification Agreement
result in a decrease in the amount of the Base Rent payable on any Rent Payment
Date to a level below the amount of scheduled principal repayment on the Notes,
together with accrued and unpaid interest thereon, on such Rent Payment Date.
The provisions of this Section 5.08 are not assignable by Initial Owner
Participant to any Person, other than a Person which is a member of General
Motors' Affiliated (without giving effect to the last sentence of the definition
thereof) group for United
33
States income tax purposes, without the prior written consent of Lessee.
ARTICLE VI
General Indemnity
-----------------
SECTION 6.01. Payment of Expenses by Lessee. (a) Lessee shall pay
-----------------------------
(except to the extent that any of the items hereinafter described are expressly
made payable by Owner Participant pursuant to Section 9.01), and shall indemnify
and hold harmless each Indemnitee (whether or not any of the transactions
contemplated hereby shall be consummated) on an After-Tax Basis from, any and
all liabilities, obligations, losses, damages, reasonable attorneys' fees,
penalties, claims, actions, suits, costs, expenses and disbursements (other
than, as to any particular Indemnitee, any of those specifically provided for in
Article VII hereof and the Tax Indemnification Agreement, if any), including,
without limitation, any reasonable expenses incurred by any Indemnitee in
furnishing any reports required pursuant to the Communications Act or any other
provision of Applicable Law with respect to this Agreement or the transactions
contemplated hereby (herein collectively referred to as "Expenses" and
--------
individually as an "Expense") imposed on, incurred by or asserted against any
-------
Indemnitee (whether because of an action or omission by such Indemnitee or
otherwise), in any way relating to or arising out of (i) any of the Satellite,
the earth stations related thereto, or the Transponders or any part thereof or
any interest therein, (ii) the Operative Documents, or the Xxxxxx Agreements or
payments made pursuant thereto or any other transactions contemplated thereby
and (iii) the manufacture, launching, financing, refinancing, construction,
purchase, acceptance, rejection, delivery, nondelivery, ownership, acquisition,
lease, sublease, preparation, installation, assembly, storage, maintenance,
repair, transportation, abandonment, possession, repossession, use, operation,
condition, sale, return, replacement, redelivery, modification, transfer of
title, rebuilding, rental, importation, exportation or other application or
disposition of all or any part of or any interest in any of the Transponders or
the Satellite or the earth stations related thereto, including, without
limitation, (A) claims or penalties arising from any violation of law or
regulatory requirements of any kind relating solely to Indemnitee's interest in
the Transponders or the Satellite or liability in tort, strict or otherwise, (B)
loss of or damage to any property, the environment or death or injury to any
Person, (C) latent or other defects, whether or not discoverable, (D) any claim
for patent or trademark or copyright infringement, libel or slander, including
any such claim arising from transmissions to or from the Satellite or any
Transponder, (E) imposition of any Lien (other than Lessor Liens, with respect
to Owner Trustee (and its successors, assigns, officers, directors, servants,
employees and agents), Owner Participant Liens, with respect to Owner
34
Participant (and its successors, assigns, officers, directors, servants,
employees and agents), and Agent Liens, with respect to Agent (and its
successors, assigns, officers, directors, servants, employees and agents)) and
(F) claims, penalties or liabilities in respect thereof based on any other
theory of liability. Upon payment in full of any indemnity pursuant to this
Section 6.01, Lessee shall, to the extent permitted by Applicable Law (except
with respect to Additional Insurance maintained by such Indemnitee at its own
expense pursuant to Section 9(c) of the Lease), be subrogated to any right of
such Indemnitee in respect of the matter against which such indemnity has been
paid to the extent of such payment. Owner Trustee shall be subrogated to any
rights of Agent or the holder of any Note (other than any security interest) to
the extent any amount otherwise payable to Owner Trustee under the Loan
Agreement shall be reduced by the failure of Lessee to have paid any indemnity
to Agent or such Noteholder.
(b) Without limitation of the foregoing, Lessee shall pay on an After-
Tax Basis (except to the extent such amounts are payable by Owner Participant as
part of its Commitment, or by Owner Participant pursuant to Section 9.01 (unless
specified otherwise in such Section 9.01)) all the out-of-pocket costs and
expenses (including, without limitation, reasonable legal fees and expenses)
reasonably incurred by Owner Participant, Owner Trustee or Agent in connection
with (A) the entering into or giving or withholding of any future amendments,
supplements, waivers or consents (whether or not they become effective) with
respect to any Operative Document or the Xxxxxx Agreements, other than those
that are made at the request of such Indemnitee or in connection with the
transfer of Owner Participant's interest in accordance with Article XIV hereof,
(B) the taking of any action under the Lease or the Loan Agreement at the
request of Lessee or as a result of an Event of Default or (C) any Event of
Loss, any redemption, prepayment or refunding of Notes, whether or not
consummated, in each case as permitted by the terms of the Operative Documents
subject, in the case of Agent, to the provisions of the Loan Agreement.
(c) If Lessee or any Indemnitee has knowledge of any action, suit,
proceeding or claim hereby indemnified against under this Section 6.01 or any
action, suit, proceeding or claim seeking incidental or consequential damages
against such Indemnitee with respect to a Transponder subject to the Lease
whether or not indemnified against under this Section 6.01, it shall give prompt
written notice thereof to the other and Lessee may assume the defense thereof,
and, at such Indemnitee's request, shall assume the defense thereof with counsel
reasonably acceptable to such Indemnitee. Such Indemnitee shall fully cooperate
with Lessee in all ways reasonably requested by Lessee in said defense by
Lessee. In any such action, any Indemnitee shall have the right to employ
separate counsel in such action and participate therein, subject to the
preceding sentence, but
35
the fees and expenses of such counsel shall be at the expense of such
Indemnitee, unless (i) the employment of such counsel has been specifically
authorized by Lessee, (ii) the named parties to such action (including any
impleaded parties) include both such Indemnitee and Lessee and representation of
such Indemnitee and Lessee by the same counsel would be unethical under the
applicable standards of professional conduct due to actual or potential
conflicting interests between them or (iii) such action involves an act that
involves or is alleged to involve criminal activity undertaken in compliance
with or as contemplated by the Operative Documents or Xxxxxx Agreements or
involves the risk of criminal penalties, unless such action does not lead to the
commencement (including, without limitation, the impanelling of a grand jury or
similar investigatory proceeding) of a criminal proceeding. Lessee shall not be
liable for any settlement of any action, suit, proceeding or claim effected
without its written consent and (subject to clause (I) of the next following
sentence) no Indemnitee will agree to any such settlement without the prior
written consent of Lessee. Notwithstanding the foregoing, Lessee shall not be
entitled to assume responsibility for and control of any such judicial or
administrative proceedings, (I) unless Lessee has acknowledged responsibility
under this Section 6.01 for the Expense, provided that such acknowledgement
--------
shall not be binding upon Lessee in the event of a final determination in any
judicial or administrative proceedings that Lessee was not responsible under
this Section 6.01 for the Expense or (II) while an Event of Default under the
Lease shall have occurred and be continuing, unless the Lessee posts a bond or
other security reasonably acceptable in form and substance to such Indemnitee.
(d) Notwithstanding the provisions of the immediately preceding
paragraph, the omission by any Indemnitee to notify Lessee of any Expense shall
not relieve Lessee from any liability which it may have hereunder in respect of
any such Expense or other Expense; provided, however, that nothing herein
-------- -------
contained shall prevent Lessee from bringing a subsequent action against such
Indemnitee for damage suffered by Lessee as a result of such omission.
(e) If, by reason of any Expense payment made to or for the account of
an Indemnitee by Lessee pursuant to this Section 6.01, such Indemnitee
concurrently or subsequently realizes a tax deduction or credit not previously
taken into account in computing such payment, such Indemnitee shall promptly pay
to Lessee (but only after Lessee shall have made all payments then due and owing
to such Indemnitee under the Operative Documents), an amount equal to the sum of
(i) the actual reduction in Taxes realized by such Indemnitee which is
attributable to such deduction or credit plus (ii) the actual reduction in Taxes
----
realized by such Indemnitee as a result of any payment made by such Indemnitee
pursuant to this sentence; provided, however, that such Indemnitee shall not be
-------- -------
obligated to
36
make any payment to Lessee pursuant to this sentence if and for so long as a
Payment Default, Bankruptcy Default or any Event of Default shall have occurred
and be continuing, but shall promptly make such payment once all such Payment
Defaults, Bankruptcy Defaults and Events of Default shall no longer be
continuing; and provided further, however, that such Indemnitee shall not be
-------- ------- -------
obligated to make any payment pursuant to this Section 6.01 to the extent that
the amount calculated pursuant to (i) above would exceed (x) the amount of all
prior payments received by such Indemnitee from Lessee pursuant to this Section
6.01 with respect to such Expense (determined without regard to any amount paid
in respect of Taxes required to be paid by such Indemnitee in respect of the
receipt or accrual of such amounts) less (y) the portion of all prior payments
----
computed pursuant to (i) above paid by such Indemnitee to Lessee hereunder. Any
Taxes that are imposed on any Indemnitee as a result of a disallowance or
reduction of any tax benefit taken into account in the prior sentence shall be
treated as a Tax for which Lessee is obligated to indemnify such Indemnitee
pursuant to the provisions of Article VII hereof without regard to Section 7.02
(other than subsections (f) and (g) thereof) or Section 7.04 thereof.
(f) In the event of a conflict between the provisions of Article 14 of
the Purchase Agreement or Article 6 of the Service Agreement and the provisions
of this Agreement, the provisions of this Agreement shall prevail.
SECTION 6.02. Exceptions. The indemnity contained in Section 6.01
----------
with regard to any particular Indemnitee shall not extend to any Expense (a)
resulting from the willful misconduct or gross negligence of such Indemnitee
(other than willful misconduct or gross negligence imputed to such Indemnitee
solely by reason of its interest in the Transponders) or its respective
corporate successors, officers, directors, servants, agents or employees, (b) to
the extent resulting from the breach by such Indemnitee of any of its
representations, warranties or covenants in any of the Operative Documents or
the Xxxxxx Agreements, (c) to the extent (i) attributable solely to acts or
events occurring after the end of the Lease Term which are not attributable to
Events of Default that were in existence during the Lease Term and were not
cured prior thereto or (ii) resulting from, in the case of Owner Participant
(and its successors, assigns, officers, directors, servants, employees and
agents), an Owner Participant Lien, in the case of Owner Trustee or Trust
Company (and its successors, assigns, officers, directors, servants, employees
and agents), a Lessor's Lien, and in the case of Agent (and its successors,
assigns, officers, directors, servants, employees and agents), an Agent Lien,
(d) which is a Tax, it being understood that all Tax indemnities are governed by
the Tax Indemnification Agreement, if any, or Article VII, and it being further
understood that this clause (d) shall not affect any express requirement in the
Operative Documents that any payments otherwise be made on an After-Tax Basis,
(e) as to Owner
37
Participant or Owner Trustee, resulting at any time directly or indirectly from
a voluntary disposition or transfer by Owner Participant or Owner Trustee of all
or any part of its right, title and interest in any of the Transponders or
Lessor's Estate or as to any Indemnitee, resulting at any time from such
Indemnitee's voluntary disposition of all or any part of such Indemnitee's
right, title and interest in and to any of the Transponders or any Operative
Document (except that this clause (e) shall not affect Lessee's obligations
under Section 6.01 in respect of any such disposition following the exercise of
remedies under Section 16 of the Lease in connection with an Event of Default
under Section 15 of the Lease or in connection with any disposition under
Section 8, 10, 11, 12 or 19 of the Lease except as otherwise expressly provided
in such Sections, the foregoing exception being referred to below as the "clause
(e) exception"), (f) expressly required under any Operative Document to be paid
by a party to this Agreement other than Lessee or as to which Lessee is
expressly exempted from liability under any Operative Document or (g) any
Expense of Agent arising out of or related to or in connection with any sale or
offer to sell to any Person, directly or indirectly, any interest in the
Lessor's Estate, the Transponders, or any of the Operative Documents (except
that this clause (g) shall not affect Lessee's obligations specified in the
clause (e) exception).
Except as expressly provided in this Agreement or in any other
Operative Document, Lessee shall not be liable to any Indemnitee for incidental
or consequential damages suffered by such Indemnitee; provided, however, that
-------- -------
the foregoing shall not be construed to limit recovery by any Indemnitee of any
costs, expenses or liabilities incurred and payable by such Indemnitee to a
third party as a result of any third party claim against such Indemnitee based
on events occurring and/or conditions existing any time prior to the expiration
or earlier termination of the Lease, except to the extent incurred by such
Indemnitee as a result of affirmative actions of such Indemnitee to market or
otherwise utilize any Transponders; provided, however, that nothing in this
-------- -------
exception shall modify or limit Lessor's remedies under Section 16 of the Lease.
In no event shall any party hereto be liable to any other party for punitive or
exemplary damages.
With respect to any amount which Lessee is requested by an Indemnitee
to pay by reason of this Article VI, the Indemnitee shall, if requested by
Lessee and prior to any payment, submit such additional information to Lessee as
Lessee may reasonably request properly to substantiate the requested payment.
Lessee covenants and agrees to pay all amounts due under this Article VI
promptly and in any event within 30 days of demand. Nothing contained in this
Article VI shall increase, decrease or otherwise affect in any way Seller's or
Xxxxxx Services' obligations under the Xxxxxx Agreements in their respective
capacities as Seller and service provider thereunder.
38
ARTICLE VII
General Indemnity for Taxes
---------------------------
SECTION 7.01. Indemnity. All payments by Lessee in connection with
---------
the Operative Documents shall be free of Tax withholdings of any nature
whatsoever (and at the time that Lessee is required to make any payment upon
which any Tax withholding is required Lessee shall pay an additional amount such
that the net amount actually received by the Indemnitee entitled to receive such
payment will, after such withholding, equal the full amount of the payment then
due). If any such Taxes are required to be withheld or deducted, Lessee shall
(A) pay such Taxes to the appropriate taxing authority on behalf of the
Indemnitee, and (B) as promptly as possible thereafter, provide the Indemnitee
(at the expense of Lessee) with an original receipt (or a copy thereof that has
been stamped by the appropriate taxing authority to certify payment) or other
reasonable proof of payment thereof. Any withholding tax paid by Lessee that is
excluded from this Section 7.01 by Section 7.02 shall be promptly repaid to
Lessee by the appropriate Indemnitee.
Except as provided in Section 7.02, whether or not the transactions
contemplated by the Operative Documents are consummated, Lessee hereby assumes
liability for and agrees to timely pay, and on written demand shall indemnify,
defend and hold each Indemnitee harmless, on an After-Tax-Basis, from and
against any and all Taxes actually imposed on or with respect to any Indemnitee,
Lessee, any Transponder or any part thereof or any interest therein, the
Satellite, or otherwise by any Federal, state or local government or any taxing
authority thereof in the United States or any territory or possession of the
United States or by any foreign government, taxing authority or governmental
subdivision of a foreign country or international taxing authority upon, in any
connection with or in any way relating to (a) the manufacture, financing,
refinancing, construction, purchase, acceptance, rejection, delivery,
nondelivery, ownership, acquisition, lease, sublease, preparation, installation,
assembly, storage, maintenance, repair, transportation, abandonment, possession,
repossession, use, operation, condition, sale, return, replacement, redelivery,
modification, transfer of title, rebuilding, rental, use of the point of space
at which the Satellite is located or the frequency spectrum at that point of
space, importation, exportation or other application or disposition of all or
any part of or any interest in any of the Transponders, (b) the payment of Rent
or the receipts or earnings or profits arising from or received with respect to
any Transponder or any part thereof or any interest therein or any applications
or dispositions thereof or with respect to any Operative Document, (c) any
amount paid or payable pursuant to any of the Operative Documents or the Xxxxxx
Agreements, (d) any Transponder or any part thereof or any interest therein or
the applicability of the Lease to such
39
Transponder or such part thereof or such interest therein, (e) the Operative
Documents, the Xxxxxx Agreements, or any of them, (f) the property, the income
or other proceeds with respect to the property held by Owner Trustee or by Agent
under the Loan Agreement, (g) the original issuance of the Notes or any
refinancing thereof or the payment of the principal of, or interest on, the
Notes or other amounts payable under the Notes or the Loan Agreement or (h)
otherwise with respect to or in connection with the transactions contemplated by
the Operative Documents or the Xxxxxx Agreements including, without limitation,
the issuance, acquisition or transfer of the Notes.
SECTION 7.02. Exceptions from Indemnity. The provisions of Section
-------------------------
7.01 hereof shall not apply to:
(a) (i) any withholding Tax functioning as a final tax in respect of
any Noteholder that has not provided a current Internal Revenue Form 1001
or Form 4224, to the extent applicable, and in any case a Form W-8 or W-9,
to the extent applicable and (ii) any Tax on, based on, with respect to, or
measured by net or gross income, capital or receipts of any Noteholder or
which is in the nature of a franchise or conduct of business tax imposed on
such Noteholder or which is in the nature of a minimum tax on tax
preferences imposed on a Noteholder (in each case, other than a tax in the
nature of a sales, use or rental tax); provided, however, that this clause
-------- -------
(ii) of subparagraph (a) shall not apply to any Taxes imposed by any state
or local tax jurisdiction to the extent such Taxes arise in the applicable
jurisdiction (other than with respect to net or gross income taxes,
franchise taxes, conduct of business taxes or minimum taxes on tax
preferences in the Noteholder's state or jurisdiction of incorporation or
domicile or, with respect to a foreign Noteholder, the state in which the
office used by such Noteholder to make or maintain the Loans is located)
solely as a result of the Noteholder having executed, delivered or
performed its obligations under the Operative Documents or having received
a payment under the Operative Documents; provided, further, that with
-------- -------
respect to a foreign Noteholder that is otherwise not a United States
taxpayer, this clause (ii) of subparagraph (a) shall not apply to any Taxes
to the extent such Taxes are United States federal Taxes and are imposed
solely as a result of the Noteholder having executed, delivered or
performed its obligations under the Operative Documents or having received
a payment under the Operative Documents; and provided, still further, that
-------- ----- -------
Lessee shall not be obligated to pay any sales, use or rental tax in the
nature of or imposed in lieu of a net income tax imposed on any Noteholder,
that results from or is attributable to the fact that such Noteholder is a
commercial bank or other financial institution organized under the laws of
a jurisdiction other than the United States of America, or a state or
territory thereof;
40
(b) any Tax imposed by the United States Federal government based upon
or measured by net income and any Tax on, based on, with respect to, or
measured by the net income or gross income, capital, or net receipts of any
Indemnitee (other than a Noteholder or the Agent), or which is in the
nature of a franchise or conduct of business tax imposed on any Indemnitee
(other than a Noteholder or the Agent) for the privilege of doing business,
or which is in the nature of a minimum tax on tax preferences imposed on
any Indemnitee (other than a Noteholder or the Agent) in each case by any
state of the United States or by the United States Virgin Islands (other
than any state in which Lessee or any Affiliate thereof owns or operates
equipment used in connection with the operation of the Satellite or the
Transponders other than, in the case of the Transponders, use by Lessee or
any Affiliate thereof for internal purposes, unless such state is also the
principal place of business of such Indemnitee, it being agreed that for
purposes of this parenthetical clause the United States Virgin Islands
shall be treated as a state) (in each case set forth in this subparagraph
(b) other than a tax in the nature of a sales, use, value added, property,
excise or rental tax); provided, however, that the provisions of
-------- -------
subparagraphs (a) and (b) shall not apply to any Taxes imposed upon any
indemnity payment made pursuant to Section 7.01 hereof, Article VI hereof
or the Tax Indemnification Agreement, if any;
(c) in the case of Owner Participant, Owner Trustee or Lessor's
Estate, for so long as no Event of Default shall have occurred and be
continuing, any Tax that is imposed with respect to any Transponder with
respect to any period beginning after the earlier of (i) the expiration of
the Lease Term or other termination of the Lease for such Transponder for
any reason or, if later and if applicable, the return of the Transponders
after such termination or expiration, or (ii) the discharge of Lessee's
obligations to pay the Stipulated Loss Value or the Termination Value and
all other amounts due under the Lease; provided, however, that this
-------- -------
exception shall not apply to Taxes relating to events occurring, or Taxes
relating to matters arising, prior to or contemporaneously with such time;
(d) in the case of a Noteholder, for so long as no Event of Default
shall have occurred and be continuing, any Tax imposed with respect to (i)
any period which begins after the payment of all amounts owing to such
Noteholder under the Loan Agreement and (ii) the portion of any period
which begins before such payment to the extent it occurs after such
payment; provided, however, that this exception shall not apply to Taxes
-------- -------
relating to events occurring, or Taxes relating to matters arising, prior
to or contemporaneously with such payment;
41
(e) any Tax which is being contested in accordance with the provisions
of Section 7.04, during the pendency of such contest; provided, however,
-------- -------
that Owner Trustee, as Lessor under the Lease with respect to each
Transponder, shall be receiving all amounts of Rent when payable, and that
each Noteholder shall be receiving all payments of principal and interest
on the Notes and all other amounts payable under the Notes and the Loan
Agreement when payable, in either case without reduction by reason of such
Tax or any other Tax;
(f) any Tax (i) that is imposed on any Indemnitee or any Affiliate, or
any successor, assign, officer, director, servant, employee or agent
thereof, as a result of the willful misconduct or gross negligence, or a
failure properly to file returns or statements, whether related or
unrelated to the transactions contemplated by the Operative Documents or
the Xxxxxx Agreements (unless such failure results from Lessee's failure to
provide timely notice of the requirement of such filing or the failure of
Lessee to provide information reasonably required in connection with such
filing or Lessee's failure to comply with its obligations under Section
7.05), of such Indemnitee or such Affiliate thereof, or such successor,
assign, officer, director, servant, employee or agent thereof (other than
an act or failure to act required or contemplated under any of the
Operative Documents or Xxxxxx Agreements), (ii) that is imposed on any
Indemnitee to the extent that such Tax results from the breach of any
representation, warranty or covenant in the Operative Documents or Xxxxxx
Agreements by such Indemnitee, (iii) that is imposed on any Indemnitee as a
result of a claim unrelated to the transaction contemplated herein, (iv)
that is imposed on Owner Participant, Owner Trustee or Lessor's Estate
because of or in connection with any Owner Participant Lien or Lessor Lien,
respectively, (v) that is imposed on Agent because of or in connection with
any Agent Lien (disregarding for such purpose the parenthetical language in
clause (b) of the definition of Agent Lien) or (vi) that is imposed on any
Noteholder because of or in connection with any Noteholder Lien of such
Noteholder (disregarding for such purpose the parenthetical language in
clause (b) of the definition of Noteholder Lien);
(g) any Tax imposed with respect to a voluntary sale, transfer,
assignment or other voluntary disposition by Owner Participant or Owner
Trustee, or an involuntary disposition by Lessor or Owner Participant
resulting from a default under the Operative Documents or the Xxxxxx
Agreements (other than such a default that results from an Event of
Default) by Owner Participant or Lessor, of any Transponder or any part
thereof or any interest therein or Lessor's Estate; provided, however that
-------- -------
this exception shall not
42
apply (i) to the transfer of the Transponders by Initial Owner Participant
to Owner Trustee pursuant to the GMAC Xxxx of Sale or (ii) in the event
that such sale, transfer, assignment or other disposition shall occur as
the result of any acts pursuant to Section 7, 8, 12, 16 or 19 of the Lease
or at any time while an Event of Default, Payment Default or Bankruptcy
Default shall have occurred and be continuing;
(h) any Tax to the extent such Tax (i) would have been imposed on an
Indemnitee had it not engaged in activities related to the transaction
contemplated herein or (ii) is imposed by any jurisdiction that would not
have imposed such Tax on the Indemnitee but for activities conducted by
such indemnitee in such jurisdiction which activities are unrelated to the
transactions contemplated herein (it being understood, however, for
purposes of clause (ii) of this subparagraph (h), that, to the extent such
tax is caused both by such activities of Indemnitee and by activities of a
Lessee Person, such tax will be equitably apportioned between such
Indemnitee and Lessee) or (iii) is a Tax referred to in Section 2.14 of the
Loan Agreement;
(i) any penalties, fines, additions to Tax and interest to the extent
not attributable to a Tax indemnified against hereunder;
(j) any estate, inheritance or succession Tax imposed on any
Indemnitee; and
(k) any Tax on, with respect to or measured by any trustee or agent
fees received by Lessor, Owner Trustee or Agent for services rendered under
the Trust Agreement or the Loan Agreement;
provided, however, that (i) if and to the extent any Tax referred to in any of
-------- -------
the foregoing clauses would otherwise be indemnified against pursuant to the
terms of both the Tax Indemnification Agreement, if any, and this Article VII,
the terms of the Tax Indemnification Agreement, if any, shall control and no
payments shall be made under this Article VII, and (ii) the exclusions set forth
in subparagraphs (a) through (k) shall in no way apply to any Taxes imposed upon
the trust under the Trust Agreement or the Owner Trustee, as the case may be, to
the extent the trust under the Trust Agreement or the Owner Trustee, as the case
may be, as a result of the imposition of such Taxes, would not have sufficient
funds to make full payment on the Notes as and when due and payable.
Notwithstanding anything to the contrary herein or in any other Operative
Document, Lessee acknowledges and agrees to indemnify and hold harmless Owner
Participant and Owner Trustee against any and all withholding Taxes (inclusive
of any interest and penalties imposed for any failure to timely withhold such
Taxes) imposed on or with respect to any amounts paid to any Loan Participant or
any Noteholder or any successor, assign or
43
Affiliate thereof as to which Owner Trustee must indemnify pursuant to Section
2.17 of the Loan Agreement, as an indemnified Tax for purposes of this Section
7. Notwithstanding anything to the contrary contained in this Section 7.02, the
exceptions set forth in this Section 7.02 shall not apply, with respect to Owner
Trustee, Owner Participant or the Lessor's Estate, to any Taxes imposed by way
of withholding on payments of principal, interest or Break Funding Costs on the
Notes or imposed by reason of any failure to withhold with respect to such
payments.
SECTION 7.03. Calculation of Indemnity Payments. If any Indemnitee
---------------------------------
subsequently realizes a tax benefit by reason of any payment of an indemnified
Tax pursuant to this Article VII or by reason of payment of an amount, which
amount was reimbursed to such Indemnitee by Lessee on an After-Tax Basis
pursuant to a provision specifically requiring the payment of such amount on an
After-Tax Basis (other than pursuant to any provision of Article VI or the Tax
Indemnification Agreement, if any), which benefit had not previously been taken
into account in computing such payment, such Indemnitee shall pay Lessee when
such tax benefit is actually utilized (but not before Lessee shall have made all
payments and indemnification theretofore due to such Indemnitee pursuant to the
Operative Documents) an amount equal to the lesser of (a) the sum of (i) an
amount equal to such tax benefit, plus (ii) an amount equal to any other tax
benefit realized and actually utilized by such Indemnitee as the result of any
payment made by such Indemnitee pursuant to this sentence, and (b) the amount of
such payment and any other payment by Lessee to such Indemnitee with respect to
the Tax or other amount that gave rise to such tax benefit, reduced by other
amounts previously paid by such Indemnitee to Lessee with respect to the tax
benefits resulting from such Tax or other amount pursuant to this Article VII;
provided, however, that, notwithstanding the foregoing portions of this
-------- -------
sentence, such Indemnitee shall not be obligated to make any payment to Lessee
pursuant to this sentence if and for so long as an Event of Default shall have
occurred and be continuing, but shall promptly make such payment once all Events
of Default shall no longer be continuing. Any Taxes that are imposed on any
Indemnitee as a result of a disallowance or reduction of any tax benefit taken
into account in the prior sentence shall be treated as a Tax for which Lessee is
obligated to indemnify such Indemnitee pursuant to the provisions of Article VII
hereof without regard to Section 7.02 (other than subsections (c), (d), (e),
(f), (g), (h) and (i) thereof).
SECTION 7.04. Contest. (a) If a claim shall be made against any
-------
Indemnitee for any Tax in excess of $10,000 for which Lessee would be obligated
to indemnify pursuant to this Article VII, such Indemnitee shall promptly notify
Lessee after such Indemnitee becomes aware of such action and in any event
within 30 days after receipt by such Indemnitee of a written claim (but failure
to notify Lessee within such 30-day period shall not impair such Indemnitee's
right to indemnification under this
44
Article VII except to the extent that Lessee's rights to contest such claim
shall have been materially impaired by such failure) and shall, to the extent
permitted by applicable law, not pay the claim before the earlier of (i) 30 days
after giving Lessee notice and (ii) receipt of Lessee's response. If Lessee
shall so request within the period referred to in the foregoing sentence, such
Indemnitee shall, at Lessee's expense reimbursed to such Indemnitee on an After-
Tax Basis, contest the imposition, validity or applicability of such Tax. The
ultimate control over the conduct of such contest (including the right to forgo
any and all administrative appeals, proceedings, hearings and conferences in
respect of such claim and the right to select the forum for such contest and
determine whether any such contest shall be by (i) resisting payment of such
Tax, (ii) paying such Tax under protest or (iii) paying such Tax and seeking a
refund thereof) shall remain with such Indemnitee; provided, however, that such
-------- -------
Indemnitee shall keep Lessee or its counsel reasonably informed as to the
progress thereof, consult with Lessee within a reasonable period before any
significant action with respect thereto is taken or omitted and consider in good
faith any suggestions made by Lessee or its counsel; provided further that
-------- -------
unless (a) remedies under Section 16 of the Lease shall have been, or are being,
exercised in connection with an Event of Default which has occurred and is
continuing or (b) a Bankruptcy Default or Payment Default has occurred and is
continuing, and subject to Indemnitee's waiver rights described in Section
7.04(b) hereof, and provided that all conditions set forth in this Section 7.04
for the continuation of a contest shall then be satisfied, no such proceedings
or litigation shall be settled or otherwise compromised without the prior
written consent of Lessee. If such Indemnitee so elects, such contest shall be
conducted by Lessee in the name of such Indemnitee (subject to the preceding
proviso) and in no event shall such Indemnitee be required or Lessee be
permitted to contest or to continue to contest, as the case may be, the
imposition of any Tax for which Lessee is obligated to indemnify pursuant to
this Article VII unless (A) Lessee shall have agreed to pay such Indemnitee on
demand and shall have paid as so demanded all reasonable costs and expenses that
such Indemnitee may incur in connection with contesting such claim (including,
without limitation, all costs, expenses, losses, reasonable legal and accounting
fees and disbursements) on an After-Tax Basis, (B) Owner Participant shall have
determined in good faith that the action to be taken will not result in any
material risk of a Lien on, or of sale, forfeiture or loss of any Transponder or
any part thereof or any interest therein (except if Lessee shall have made
provision to protect the interests of Owner Participant in a manner satisfactory
to Owner Participant), (C) if such contest shall be conducted in a manner
requiring the payment of the claim, Lessee shall have advanced on an interest-
free basis an amount equal to the amount of such claim which such Indemnitee
shall have elected to pay and Lessee shall have indemnified the Indemnitee in a
manner satisfactory to the Indemnitee, for any adverse tax
45
consequences from the receipt, or interest-free nature, of such advance and (D)
an Event of Default, Payment Default or Bankruptcy Default shall not have
occurred and be continuing unless Lessee has posted adequate security securing
payment of the Tax subject to the contest and expenses of the contest in a
manner reasonably acceptable to such Indemnitee.
(b) An Indemnitee may at any time elect to settle or compromise any
proposed claim or contest or decline to take any action or any further action
with respect to a proposed claim or contest; provided, however, that if Lessee
-------- -------
has properly requested such action pursuant to this Article VII and has
satisfied all conditions set forth in Section 7.04(a) for the continuation of a
contest, such Indemnitee shall notify Lessee that it waives its right to any
indemnity payment by Lessee that would otherwise be payable by Lessee pursuant
to this Article VII in respect of such claim. An election by an Indemnitee to
settle or compromise any proposed claim or contest or decline to take any action
or take any further action with respect to a proposed claim or contest for any
given taxable period shall not affect the rights and obligations of any other
Indemnitee with respect to such proposed claim. An election by an Indemnitee to
settle or compromise any proposed claim or contest or decline to take any action
with respect to a proposed claim or contest (under circumstances where Lessee
shall have properly requested action and satisfied all conditions for the
continuation of a contest set forth in Section 7.04(a)) shall not affect the
rights and obligations of such Indemnitee and Lessee hereunder in respect of any
other taxable period or any other taxing authority except to the extent such
election not to contest materially impairs as a legal or practical matter the
ability of Lessee or an Indemnitee to contest any Tax with respect to such other
taxable period or such other taxing authority for which such Indemnitee is
indemnified pursuant to this Article VII. Upon any such election by an
Indemnitee, if Lessee shall have advanced an amount to an Indemnitee pursuant to
clause (C) of Section 7.04(a), such Indemnitee shall repay the advance to
Lessee, plus interest on such advance from the date of the making of such
advance by Lessee to the day next preceding the day of repayment of such advance
by such Indemnitee calculated at the applicable rate of the tax authority with
respect to the claim to which the advance related; such repayment shall be made
upon the occurrence of the earlier of (x) final adjudication of such contest
(including a settlement thereof) and (y) such time as such Indemnitee shall
elect to discontinue the contest as above provided; provided, however,
-------- -------
notwithstanding the foregoing, such Indemnitee shall not be obligated to make
any repayment to Lessee pursuant to this sentence for so long as an Event of
Default shall have occurred and be continuing but shall promptly make such
payment once all Events of Default shall no longer be continuing.
SECTION 7.05. Reports. If any report, return or statement is
-------
required to be filed with respect to any Tax which
46
is subject to indemnification under this Article VII, Lessee shall promptly
notify the appropriate Indemnitee of such requirement and shall timely file the
same, except for any such report, return or statement which an Indemnitee has
notified Lessee that such Indemnitee intends to file; provided, however, prior
-------- -------
to the filing by any Indemnitee of any report, return or statement in respect of
which an amount greater than $10,000 is required to be paid by Lessee, such
Indemnitee shall notify Lessee that such report, return or statement and such
Tax is due and such notification shall be within a reasonable amount of time to
enable Lessee to contest such Tax, and, with respect to any report, return or
statement being filed by Lessee, the Indemnitee shall at Lessee's expense be
required to provide Lessee on a timely basis with any information reasonably
requested, provided further, that, without prejudice to any other rights Lessee
-------- -------
may have in connection therewith (including, without limitation, any claim for
damages for a failure to give the notice or reasonably requested information
pursuant to this Section 7.05), the failure to provide any such notice or
reasonably requested information shall not affect Lessee's obligations hereunder
to any Indemnitee unless such failure shall materially impair a contest of such
Tax. Lessee shall either file such report, return or statement so as to show
the ownership of the Transponders in Owner Trustee and send a copy of such
report, return or statement to Owner Trustee or, where not so permitted,
promptly notify Owner Participant of such requirement and prepare and deliver
such report, return or statement to Owner Participant in a manner satisfactory
to Owner Participant within a reasonable time prior to the time such report,
return or statement is to be filed.
SECTION 7.06. Payment. (a) Unless otherwise requested by the
-------
appropriate Indemnitee, Lessee shall pay any Tax for which it is liable pursuant
to this Article VII directly to the appropriate taxing authority when due and,
if so otherwise requested, shall pay such appropriate Indemnitee within 15 days
after demand, in immediately available funds, any amount due such Indemnitee
pursuant to this Article VII with respect to such Tax or such payment, but not
prior to the later of (i) payment of such Tax and (ii) final adjudication
(including settlement consented to by Lessee) in the case of a contest pursuant
to Section 7.04. Any such demand shall specify in reasonable detail the payment
and the facts upon which the right to payment is based. Each Indemnitee shall
promptly forward to Lessee any notice, xxxx or advice received by it concerning
any Tax for which such Indemnitee claims indemnification hereunder. Within 30
days after the date of each payment by Lessee of any Tax, Lessee shall furnish
the appropriate Indemnitee with the original or a certified copy of a receipt
for Lessee's payment of such Tax or such other evidence of payment of such Tax
as is acceptable to such Indemnitee. Lessee shall also furnish promptly upon
request such data as any Indemnitee may require to enable such Indemnitee to
comply with the requirements of any taxing jurisdiction.
47
(b) Lessee agrees that it shall have no right to inspect the books,
records, tax returns or any other document of such Indemnitee or any Affiliate
thereof in order to verify the basis or accuracy of the calculations made
pursuant to this Article VII; provided, however, within 10 days following
-------- -------
Lessee's receipt of any notice or demand involving calculations to be made
pursuant to this Article VII, Lessee may request that the correctness of such
calculations be verified (but such verification shall be limited to calculations
and shall not extend to any interpretation of the scope of any indemnity
provision or the existence of a liability hereunder), at Lessee's expense, by
one of the six largest United States public accounting firms selected by the
relevant Indemnitee and approved by Lessee, which approval will not be
unreasonably withheld, and such Indemnitee shall deliver to Lessee a certificate
of a senior officer together with a statement from such public accounting firm
confirming that the calculations set forth in or supporting the amount set forth
in such notice or demand to which such request relates have been verified as
above provided and that the calculations are accurate and in conformity with the
provisions of this Article VII. The assumptions, the method of calculation and
the other information revealed or made available to such accounting firm shall
be kept confidential and shall not be revealed by it to any other Person.
SECTION 7.07. Consolidated or Combined Return. In the case of any
-------------------------------
Tax for which an Indemnitee claims indemnification hereunder that is reported on
a consolidated or combined basis by such Indemnitee, the rules applicable to the
consolidated or combined return of the Indemnitee shall be taken into account in
computing the amount of any indemnity or payment by or to Lessee under this
Article VII in respect of such Tax.
ARTICLE VIII
Nature and Manner of Payment of Indemnities
-------------------------------------------
SECTION 8.01. Effect of Other Indemnities. Lessee's obligations
---------------------------
under the indemnities provided for in this Agreement shall be those of primary
obligor, whether or not the Person indemnified shall also be indemnified with
respect to the same matter under the terms of any of the other Operative
Documents, the Xxxxxx Agreements or any other document or instrument, and the
Person seeking indemnification from Lessee pursuant to any provisions of this
Agreement may proceed directly against Lessee (subject to the provisions of this
Agreement) without first seeking to enforce any other rights of indemnification.
SECTION 8.02. Payments and Survival of Indemnities. Unless otherwise
------------------------------------
specifically provided for herein, all amounts payable by Lessee pursuant to
Articles VI and VII shall be payable directly to the Person entitled to payment
or indemnification. Unless otherwise specifically provided herein
48
or therein, the indemnities of the parties hereunder shall survive the
termination of this Agreement and the other Operative Documents and shall
survive the transfer of any Note or any interest of Owner Participant in
Lessor's Estate and the payment of any or all of the Notes.
SECTION 8.03. No Guarantees, etc. Nothing herein or in the Tax
-------------------
Indemnification Agreement, if any, shall be construed as a guarantee by Lessee
of any residual or other value in the Transponders or the useful life of the
Transponders or constitute a guarantee by Lessee of payment of principal of or
interest on the Notes or any other amount payable under the Loan Agreement.
ARTICLE IX
Payment of Transaction Costs
----------------------------
SECTION 9.01. Transaction Costs. (a) If the transactions
-----------------
contemplated by this Agreement to be consummated on the Commencement Date are
consummated, Owner Trustee shall as soon as practicable on or after the
Commencement Date(subject to paragraph (b) of this Section 9.01), pay when due,
or reimburse HCG upon request, for, all Transaction Costs not theretofore paid
by Owner Trustee with respect to the Transponders. Owner Participant agrees to
provide to Owner Trustee funds to pay Transaction Costs payable by Owner Trustee
pursuant to the preceding sentence. If the transactions contemplated by this
Agreement to be consummated on the Commencement Date are not consummated, HCG
shall pay when due all Transaction Costs accrued to such failed Commencement
Date, the payment of which is otherwise the obligation of Owner Trustee pursuant
to the first sentence of this Section 9.01(a); provided, however, that if such
-------- -------
transactions shall not be consummated by reason of a breach by Owner Trustee,
Owner Participant, Agent or any Loan Participant of its obligations hereunder or
under any other Operative Document or Xxxxxx Agreement to which such Person is
or will be a party, or, if it shall have become a Defaulting Participant, Lessee
shall not be obligated to pay the Transaction Costs incurred by such Person.
(b) To the extent any Transaction Costs, when combined with the other
amounts actually funded by Owner Participant pursuant to Sections 2.01(b)(i) and
2.07(a) would exceed the Equity Cap, such Transaction Costs will be paid by HCG
or, at HCG's election, reimbursed to Owner Trustee as a payment of Supplemental
Rent, in any case on an After-Tax Basis.
(c) Each of the Transaction Costs and each of the expenses incurred
after the Commencement Date or referred to in Section 9.02 shall be evidenced by
appropriate bills or invoices. HCG shall have the right to (i) receive any
substantiation relating to any such Transaction Costs or ongoing expenses as HCG
may reasonably request and (ii) reasonably approve (which
49
approval shall not be unreasonably withheld or delayed) within 30 days of notice
thereof the payment thereof prior to such payment by Owner Trustee.
SECTION 9.02. Amendments, Waivers, etc.: Ongoing Fees. (a) Lessee
----------------------------------------
will pay all costs and expenses incurred by Owner Trustee, Agent, each Loan
Participant and Owner Participant in connection with the entering into or the
giving or withholding of any future amendments, supplements, waivers or consents
with respect to the Operative Documents or the Xxxxxx Agreements in accordance
with the provisions of Section 6.01(b) hereof (whether or not such amendments,
supplements, waivers or consents become effective); provided that Lessee shall
--------
not be responsible for the fees and expenses of more than (i) one counsel for
Agent and the Loan Participants, collectively, nor for any other costs or
expenses of the Loan Participants, (ii) one counsel for Owner Trustee and (iii)
one counsel for Owner Participant.
(b) Lessee shall pay the reasonable fees and expenses of Owner Trustee
(including without limitation expenses in connection with the preparation and
filing of any reports and tax returns and the reasonable legal fees and expenses
of counsel to Owner Trustee), and Agent, for acting as such to the extent not
included in Transaction Costs; provided that Lessee shall not be liable for such
--------
fees and expenses of Owner Trustee to the extent attributable to expenses in
respect of any period when such Transponder is no longer subject to the Lease.
ARTICLE X
Certain Purchase Option and Purchase Obligation
-----------------------------------------------
SECTION 10.01. Rental Adjustment Purchase Option. If the aggregate
---------------------------------
of all Rental Adjustments, if any, which occur with respect to the Lease on the
Commencement Date pursuant to Article XIII shall result in (i) an increase in
the present value of Scheduled Rent with respect to the Transponders (expressed
as a percentage of Lessor's Cost), either on a full term basis or through the
EBO Date including the EBO Amount (discounted in each case to the Commencement
Date at the Discount Rate), as compared to the analogous present value of
Scheduled Rent set forth in Annex 5 to Exhibit A to the Commitment Letter and,
as a result thereof, in the judgment of HCG, the lease transaction contemplated
by the Lease shall be economically disadvantageous to the Lessee as compared to
a medium term note financing, or (ii) the Lease not qualifying as an Operating
Lease for Lessee, HCG shall have the right, by providing each other party hereto
with irrevocable written notice thereof on the date that would have been the
Commencement Date, to purchase, on the Business Day first occurring on or after
the date of such notice, all (but not less than all) the Transponders, for the
Special Purchase Amount.
50
SECTION 10.02. Purchase Obligation. (a) If (i) the Commencement Date
-------------------
with respect to the Transponders has not occurred on or prior to the Expiration
Date or (ii) any Transponder has been identified in the Performance Certificate
delivered on or prior to the Commencement Date as having failed to meet the
Transponder Performance Specifications as of the date of the Performance
Certificate or (iii) on or prior to the Commencement Date, Seller removes the
Satellite, together with the Transponders pursuant to Section 12.2 of the
Purchase Agreement, HCG shall, on the date specified below in paragraph (b) (the
"Purchase Date"), purchase (A) all but not less than all of the Transponders if
-------------
clause (i) or (iii) applies and (B) the applicable Transponder if clause (ii)
applies, in each case for the Special Purchase Amount.
(b) The Purchase Date shall be: (i) for any purchase obligation of HCG
under Section 10.02(a)(i), October 1, 1996; (ii) for any purchase obligation of
HCG under Section 10.02(a)(ii), the first Business Day occurring on or prior to
the Commencement Date and on or after the delivery of the Performance
Certificate; and (iii) for any purchase obligation of HCG under Section
10.02(a)(iii), the first Business Day occurring after the removal of the
Satellite.
SECTION 10.03. Purchase Closing. (a) On the applicable purchase date
----------------
specified in Section 10.01 or Section 10.02, upon the receipt of the Special
Purchase Amount, Owner Trustee shall (i) not issue any Notes on the date that
would have been the Commencement Date and (ii) transfer all its right, title and
interest to the Transponders, as is and where is, to HCG, free and clear of
Lessor Liens and Owner Participant Liens but otherwise without warranty, and
Owner Trustee shall execute and deliver to HCG, at HCG's reasonable expense, a
xxxx of sale and such other instruments, documents and opinions as HCG may
reasonably request to evidence the valid consummation of such transfer.
(b) Notwithstanding anything to the contrary contained herein, if HCG
exercises its option to purchase or is required to purchase the Transponders
pursuant to Section 10.01 or Section 10.02, then the Lease shall not become
effective on the date which would otherwise have been the Commencement Date or
on any other date.
ARTICLE XI
Beneficial Interest Purchase Option
-----------------------------------
SECTION 11.01. Option to Purchase. In the event and at the time that
------------------
HCG or Lessee has the right or the obligation to purchase all of the
Transponders pursuant to Article X hereof or Section 19(a)(ii), (iii) or (iv) of
the Lease, HCG or Lessee, as applicable, in lieu of exercising such right may
elect to
51
purchase the right, title and interest of Owner Participant in and to the
Lessor's Estate (the "Beneficial Interest") at a purchase price equal to (a) in
-------------------
the case of any purchase pursuant to Section 19(a)(ii) of the Lease, the
aggregate EBO Amounts for all such Transponders, (b) in the case of any purchase
pursuant to Section 19(a)(iii) of the Lease, the greater of (1) Termination
Value for all of the Transponders as of the applicable Rent Payment Date and (2)
the Fair Market Sales Value of all of such Transponders as of such Rent Payment
Date, (c) in the case of a purchase pursuant to Section 19(a)(iv) of the Lease,
the greater of (1) the Fair Market Sales Value of all the Transponders on the
applicable Rent Payment Date (offset, in the event such Fair Market Sales Value
is greater than the fair market value of all Transponders set forth in the
Commencement Date Appraisal, by an amount equal to the excess of (y) the actual
Fair Market Sales Value of such Transponders on the Commencement Date, as
determined by an appraisal obtained in accordance with Section 19(b)(ii) of the
Lease, which appraisal shall take into consideration all factors and conditions
existing on the Commencement Date that were not taken into account in the
determination of fair market value set forth in the Commencement Date Appraisal
over (z) Lessor's Cost for such Transponders set forth in the Commencement Date
Appraisal) and (2) Termination Value for such Transponders on such Rent Payment
Date, and (d) in the case of a purchase pursuant to Article X of this Agreement,
at the price specified therein (collectively, the "Beneficial Interest Purchase
----------------------------
Price").
-----
SECTION 11.02. Notice of Election; Manner of Purchase; Transfer After
------------------------------------------------------
Purchase. (a) In order to exercise its right to purchase the Beneficial
--------
Interest pursuant to Section 11.01, (i) Lessee shall notify Owner Participant in
writing of such election (with a copy to Agent) within 10 days after the giving
of notice by Lessee to Lessor pursuant to Section 19(a) or 19(b) of the Lease
and (ii) HCG shall notify Owner Participant in writing of such election (with a
copy to Agent) at least 10 days prior to the applicable purchase date under
Article X or on the Commencement Date, whichever last occurs. Concurrently with
the giving of such notice to Owner Participant, HCG or Lessee, as applicable,
shall give a copy of such notice to Owner Trustee and Agent.
(b) On the date of purchase, upon receipt by Lessor of (i) the
Beneficial Interest Purchase Price, minus (ii) the principal amount of the Notes
then outstanding (after payment of all Base Rent remaining unpaid that was due
prior to the date of such purchase) and Base Rent due on such Rent Payment Date,
if any, and all other Supplemental Rent due by Lessee on such Rent Payment Date
to or distributable to Owner Participant to and including such date of purchase
(without giving effect to any applicable grace periods), Owner Trustee shall
distribute to Owner Participant all such amounts received by it and all other
cash then held by it (other than cash distributable to Owner
52
Trustee in its individual capacity and other than monies then held by Owner
Trustee that should have been paid to Agent under the Loan Agreement pursuant to
the provisions of any other Operative Document), and immediately thereafter
Owner Participant shall transfer the Beneficial Interest free and clear of all
Owner Participant's Liens to Lessee pursuant to an instrument of conveyance in
form and substance reasonably satisfactory to Lessee; provided that Owner
--------
Participant shall have been released from any obligations under the Operative
Documents arising after such purchase except to the extent that such obligations
are attributable to events or circumstances occurring prior to the purchase of
the Beneficial Interest by Lessee.
(c) Each of Owner Participant, Owner Trustee, and Agent at the cost
and expense of Lessee and on an After-Tax Basis, will cause to be promptly and
duly taken, executed, acknowledged and delivered all such further acts,
documents and assurances as Lessee reasonably may request in order to carry out
the intent and purpose of this Article XI and the transactions contemplated
hereby.
(d) It is a condition to Lessee's right to purchase the Beneficial
Interest pursuant to Section 11.02 that:
(i) Owner Trustee, at Lessee's direction (and Owner Participant hereby
agrees to join in the giving of such direction), will enter into a Loan
Agreement Supplement with Agent, in form and substance reasonably
satisfactory to Agent, for the purpose of deleting from the Loan Agreement
the rights of Owner Participant and Owner Trustee set forth in Sections
16.1, 16.2, 16.3, 16.4 and 16.5, in Section 13.1 (to the extent it provides
for amendments or modifications to the Operative Documents or Xxxxxx
Agreements without Agent's consent) and in clause (vi) of Section 13.2 of
the Loan Agreement;
(ii) No Lease Event of Default shall have occurred and be
continuing; and
(iii) Lessee shall pay the reasonable costs and expenses of
Agent (including the reasonable fees and expenses of one counsel for Agent
and the Loan Participants collectively) incurred in connection therewith.
(e) As a condition to Lessee's right to purchase the Beneficial
Interest pursuant to Section 11.02 (unless there shall occur an Assumption with
respect to the obligations of Owner Trustee pursuant to the next sentence), on
the date of purchase Lessee shall have provided to Agent and Owner Trustee an
opinion of counsel for Lessee, dated the date of purchase, which, subject to
usual or customary exceptions, shall be to the effect that, upon consummation of
such purchase, this Agreement, the Trust Agreement, the Lease and, in the case
of Guarantor, the Guaranty
53
Agreement constitutes the legal, valid and binding obligation of Lessee or, in
the case of the Guaranty Agreement, Guarantor, enforceable against Lessee or
Guarantor, as applicable in accordance with its terms except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by general
principles of equity, and except as limited by applicable laws that may affect
the remedies provided for in the Lease, which laws, however, do not in the
opinion of such counsel make the remedies provided for in the Lease inadequate
for the practical realization of the rights and benefits provided for in the
Lease. In the event Lessee is unable to provide such opinion, concurrently with
the purchase of the Beneficial Interest Lessee shall Assume the obligations of
Owner Trustee under the Notes and under the Loan Agreement in accordance with,
subject to the conditions of and with the effect provided in Section 5.05(a)
hereof and Section 2.20 of the Loan Agreement, and upon such Assumption, Lessee
shall have the right to terminate the Trust Agreement.
(f) Owner Trustee and Lessee acknowledge and agree that the former
Owner Participant which shall have transferred the Beneficial Interest to Lessee
pursuant to this Section 11.02 (the "Transferor") is entitled to all Rent which
----------
by its terms is payable in arrears accrued to and including, or attributable to
events or circumstances occurring prior to, the date of purchase pursuant to
this Section 11.02. Owner Trustee hereby agrees that upon receipt by it of any
amounts in respect of such Rent, it will forthwith pay over such amounts to the
Transferor.
(g) From and after any purchase of the Beneficial Interest pursuant
to this Section 11.02, (i) the Transferor shall be released from its liability
hereunder and under the other Operative Documents to which it is or will be a
party in respect of obligations to be performed after such purchase (but not
obligations that should have been performed, but were not so performed, on or
prior to such purchase) and (ii) Lessee shall be deemed "Owner Participant" for
all purposes of the Operative Documents and each reference herein to Owner
Participant shall thereafter be deemed a reference to Lessee for all purposes.
SECTION 11.03. Notice of Election to Assume the Notes. In order to
--------------------------------------
elect to exercise its right to effect an Assumption, Lessee (in the case of
clause (i) of Section 11.02(a)) or HCG (in the case of clause ii) of Section
11.02(a)) shall irrevocably notify Owner Trustee, Owner Participant and Agent in
writing thereof (i) at the same time Lessee provides irrevocable notice to
Lessor under Section 19(b) or 19(c) of the Lease or (ii) on the date that would
have been the Commencement Date with respect to Section 10.01.
54
ARTICLE XII
Optional Refunding
------------------
SECTION 12.01. Refunding of Notes. Upon compliance with the terms
------------------
and conditions of this Article XII, including without limitation the
satisfaction of the conditions set forth in Section 12.02 hereof, Lessee shall
have the right to request Owner Trustee to, and upon such request Owner
Participant, Owner Trustee, Loan Participants and Agent shall cooperate in good
faith to, take such steps as may be necessary to refund all of the Notes then
outstanding (the "Refunded Notes") on not more than one occasion through the
--------------
issuance and sale in the public or private market of other notes (the "Refunding
---------
Notes") in an aggregate principal amount which shall be equal to the unpaid
-----
principal amount of the Refunded Notes, plus up to two percent (2%) of such
unpaid principal amount to cover expenses, the proceeds of such issuance and
sale to be applied to prepay the principal amount of such outstanding Refunded
Notes and, to the extent available, expenses in connection with such refunding.
Subject to the limitations set forth in Section 12.02, the amortization schedule
for the Refunding Notes may be different from such schedule for the Refunded
Notes. As a condition to such refunding, Lessee will be liable for, and shall
pay, on an After-Tax Basis, the reasonable out-of-pocket expenses incurred by
Owner Trustee, Agent, each Loan Participant and Owner Participant in connection
with such refunding (whether or not such refunding shall be consummated, so long
as the failure to consummate such refunding does not result solely from a
default by Owner Participant in its obligations hereunder); provided that Lessee
--------
shall not be responsible for the fees and expenses of more than one counsel for
Agent and Loan Participants, collectively, nor for any other costs or expenses
of the Loan Participants.
SECTION 12.02. Cooperation; Conditions. Owner Trustee, Agent, each
-----------------------
Loan Participant and Owner Participant agree that each will cooperate with the
others and Lessee in any refunding contemplated by Section 12.01 and negotiate
in good faith to conclude such additional agreements and such supplements or
amendments to or consents or waivers under each of the Operative Documents as
may be reasonably requested by Lessee to effect the transactions contemplated in
connection with any such refunding, subject, however, to the following
conditions:
(i) the refunding results in payment in full to the holder or holders
of the Refunded Notes of the unpaid principal amount of, and accrued and
unpaid interest on, such Refunded Notes (together with any Break Funding
Costs) held by such holder or holders, and of all other amounts then due
and owing by Lessee to such holder or holders pursuant to any other
Operative Document;
55
(ii) no Bankruptcy Default or Event of Default shall have occurred
and be continuing as of the date of such refunding, and the refunding shall
occur on a Rent Payment Date;
(iii) the terms and conditions of such refinancing shall, pursuant to
an adjustment to the Factors as provided in and in accordance with Sections
13.01, 13.02, 13.03 and 13.04, in each case as applicable, preserve Owner
Participant's Net Economic Return as therein provided;
(iv) Owner Participant, Owner Trustee and Agent shall have received
(i) such opinions of counsel as they may reasonably request concerning
compliance with the Securities Act and any other Applicable Law relating to
the sale of securities and (ii) such other opinions of counsel and such
certificates and other documents, each in form and substance reasonably
satisfactory to each of them, as they may reasonably request in connection
with compliance with the terms and conditions of this Article XII;
(v) all necessary authorizations, approval and consents shall have
been obtained;
(vi) if required by Owner Participant, Owner Participant shall have
received from tax counsel, an opinion to the effect that Owner Participant
is not incurring additional income tax risk as a result of the terms and
provisions, as opposed to the existence of, such refinancing or, in lieu of
such tax opinion, and provided that there is, in the opinion of tax
counsel, a reasonable basis for taking the reporting position requested by
Lessee, an indemnity reasonably satisfactory to Owner Participant from
Lessee with respect to any such additional income tax risk; and
(vii) the terms and conditions of such Refunding Notes (excluding the
economic terms thereof) will, in the aggregate, be no less favorable to
Owner Participant than the terms and conditions applicable to the Refunded
Notes, all in the reasonable judgment of Owner Participant.
SECTION 12.03. Notice. Lessee shall give Owner Trustee, Agent and
------
Owner Participant at least 45 days' prior written notice of any desired
refunding pursuant to this Article XII, which notice shall set forth to the
extent practicable the proposed terms and conditions of such refunding,
including the desired date therefor. Lessee, Owner Trustee, Owner Participant
and, as necessary, Agent, shall consult thereafter on the negotiation of such
terms and conditions to the end that, subject to the applicable provisions of
this Article XII, the final terms and conditions of such refunding shall be
agreed among the parties thereto in due course thereafter. Lessee will provide
56
notice promptly to such Persons in the event that Lessee determines not to
proceed with such proposed refunding.
SECTION 12.04. Rights of Parties. Notwithstanding anything to the
-----------------
contrary contained herein, in no event shall Owner Participant or Agent have any
right or obligation to initiate or structure any refunding of Notes or to take,
or to cause Owner Trustee to take, any action in connection therewith other than
such as may be requested by Lessee as provided in this Article XII.
ARTICLE XIII
Reoptimization of Rent
----------------------
SECTION 13.01. Lease Rental and other Adjustments on the Commencement
------------------------------------------------------
Date. The following provisions of this Section 13.01 relate to adjustments to
----
the Factors, as set forth in Exhibit A to the Commitment Letter, to be made on
the Commencement Date. On the Commencement Date, the Owner Participant shall
adjust Scheduled Rent, Termination Values, Stipulated Loss Values, the EBO
Amount and, if requested by Lessee, the EBO Date to reflect (a) any changes made
by the Commencement Date Appraisal to the Closing Date Appraisal, and (b)
without duplication of clause (a), discrepancies between the applicable Pricing
Assumption set forth on Annex 1 to Exhibit A to the Commitment Letter and (i)
the actual Commencement Date, (ii) the actual interest rate borne by the Notes
(or in the event the Notes are floating rate notes, the Assumed Interest Rate
that would be applicable to the Notes if the Notes were fixed rate notes) and
the actual principal amount of the Notes and Debt Amortization Schedule for the
Notes (exclusive of any balloon payment if the maturity date of the Notes occurs
prior to the end of the Basic Term), (iii) the actual length of the Lease Term
(exclusive of any Renewal Term) and (iv) the anticipated amount and timing of
payment of Transaction Costs.
Such adjustment will be made in a manner which shall preserve Owner
Participant's Net Economic Return inherent in Exhibit A to the Commitment Letter
and in such a way as to minimize, in a manner reasonably satisfactory to HCG,
the present value (discounted to the Commencement Date using the Discount Rate)
of (x) Scheduled Rent up to and inclusive of the EBO Date and the EBO Amount
(excluding any portion of Scheduled Rent deemed to be "advance rent" on the EBO
Date) (the "PV EBO"), and (y) Scheduled Rent over the Interim Term and the Basic
------
Term (such minimization requirement being referred to as the "PV Minimization
---------------
Requirement").
-----------
Any adjustment pursuant to this Section 13.01 shall be made in the
same manner, and shall employ the same (A) methodology, including among other
things, (i) the "multiple investment sinking fund" method of analysis without
regard to
57
recourse borrowings used to fund any portion of the Commitment, the Deferred
Equity Amount or Transaction Costs, and with the objective of achieving a
targeted nominal after-tax economic yield and not a return on assets or a return
on equity and (ii) an average annual total after-tax cash flow (expressed as a
percentage of Lessor's Cost) calculation and not a total after-tax cash flow
calculation (such methodology being hereinafter referred to as the "OP
--
Methodology"), and (B) assumptions including, without limitation, each of the
-----------
Pricing Assumptions set forth in Exhibit A to the Commitment Letter, except as
such Pricing Assumption shall have been modified by the event giving rise to
such adjustment, in each case as was made and as was employed in the calculation
of the Factors set forth in Exhibit A to the Commitment Letter. The Debt
Amortization Schedule shall be allowed to vary only as directed by Lessee. The
Factors resulting from and the Pricing Assumptions used in any recalculation of
Factors pursuant to this Section 13.01 shall amend Exhibit A to the Commitment
Letter and be attached hereto as Schedule IV.
SECTION 13.02. Lease Rental and other Adjustments Subsequent to
------------------------------------------------
Commencement Date. The following provisions of this Section 13.02 relate to
-----------------
adjustments to the Factors, as set forth in Schedule IV as in effect on the
Commencement Date, to be made after the Commencement Date.
The Factors shall be adjusted by Owner Participant in accordance with
the following provisions of this Section 13.02, to take into account (i) the
actual amount and timing of payment of Transaction Costs, if other than as set
forth in Schedule IV, as amended, (ii) the actual Deferred Equity Amount or the
timing of payment thereof, if other than as set forth in Schedule IV, as
amended, and (iii) any refinancing of the Notes provided for in this Agreement.
Such adjustment will be made in a manner which shall preserve Owner
Participant's Net Economic Return and in such a way as to satisfy the PV
Minimization Requirement. Upon the request of Lessee, the Factors shall be
adjusted as of the Basic Term Commencement Date to take into account any
adjustments required by clause (i) or (ii) that have not previously been taken
into account by any adjustment to the Factors pursuant to this Section 13.02.
Any adjustment pursuant to Section 13.02 shall be made in the same
manner, and shall employ the same (A) OP Methodology, and (B) assumptions
including, without limitation, each of the Pricing Assumptions set forth in
Schedule IV, except as such Pricing Assumptions shall have been modified by the
event giving rise to such adjustment or by previous adjustments under this
Section 13.02, in each case as was made and as was employed in the calculation
of the Factors set forth in Schedule IV as in effect prior to the making of such
adjustment. In making any adjustment to the Factors under this Section 13.02,
the Debt Amortization Schedule shall be allowed to vary as permitted by
58
Section 13.04, subject to any restrictions as may be set forth in the Loan
Agreement and as directed by Lessee.
SECTION 13.03. Confirmation of Adjustments; Further Assurances. (a)
-----------------------------------------------
The adjustment to any of the Factors pursuant to Section 13.01 or 13.02 shall be
determined by Owner Participant. Owner Participant shall provide to Lessee and
Lessor, notice of such adjustment accompanied by an Officer's Certificate of
Owner Participant, which Officer's Certificate shall set forth such adjustment
and which shall confirm that such adjustment was made in accordance with the
provisions of Section 13.01 or 13.02, as applicable, and Section 13.04. Such
adjustment shall, subject to the following provisions of this Section 13.03,
become effective not later than the Commencement Date, or if such adjustment
occurs after the Commencement Date, on the next succeeding Rent Payment Date
which occurs at least 15 days after the date of such adjustment, or, if later,
the date of the conclusion of the verification procedure set forth in Section
13.03(b) (in each case taking into effect the effective date of such
adjustment).
(b) Within five Business Days after receipt of an Officer's
Certificate pursuant to paragraph (a) above in respect of an adjustment pursuant
to Section 13.01 or within 20 Business Days after receipt of an Officer's
Certificate pursuant to paragraph (a) above in respect of an adjustment pursuant
to Section 13.02, if Lessee believes that such adjustment is incorrect, Lessee
may request that such adjustment be verified by one of the six largest U.S.
independent public accounting firms, including Owner Participant's regular
independent accounting firm, as selected by Owner Participant. In such
verification process, such accounting firm shall be given access by Owner
Participant to the assumptions, methods of calculation, computations, computer
programs and files employed by Owner Participant in calculating such proposed
adjustment and employed in the original calculation of the Factors, subject to
the execution of such confidentiality agreements as Owner Participant shall
reasonably request.
Such verification by such accounting firm shall be at the expense of
Lessee unless such verified adjustment results in a readjustment in favor of
Lessee that exceeds five basis points in the PV EBO, in which case verification
shall be at the expense of Owner Participant. Such determination of the
adjustment by Owner Participant, or, if so requested in accordance with this
Section 13.03(b), such verified adjustment, as the case may be, shall be
conclusive and binding on the parties hereto. Owner Participant will not be
liable for verification expenses if the cause of the readjustment that would
otherwise give rise to the liability is the employment of an optimizing
technique which is not known by Owner Participant as of the date of such
readjustment.
59
(c) At the time any adjustment is made pursuant to Section 13.01 or
13.02 or this Section 13.03, the parties hereto shall memorialize such
adjustment as appropriate and shall enter into such amendments to the Operative
Documents (including an amendment to Schedule IV, as then amended, to this
Agreement and a supplement to the Lease) and do such further acts as may be
reasonably required in order to effectuate such adjustment; provided that such
--------
adjustment shall become effective as provided in this Section 13.03 without
regard to the date on which any such document is executed and delivered; and
further provided that any amendment to Schedule IV pursuant to Section 13.01,
------- --------
13.02 or 13.03 may be made by Owner Participant and Lessee.
SECTION 13.04. Compliance with Code. (a) All Rental Adjustments
--------------------
under Section 13.01 or 13.02 will comply with Sections 4.07(l), 4.07(2) and 4.08
of Rev. Proc. 75-28 and Section 467 of the Code (provided Section 4.08 of Rev.
Proc. 75-28 and Section 467 of the Code will be applied on a prospective basis
from the date of such adjustment).
(b) In connection with any recalculation of the Factors pursuant to
Section 13.01 or 13.02, if Lessee so requests, the principal amount of, and Debt
Amortization Schedule for, the Notes then outstanding may be changed, provided
that the Owner Participant's Net Economic Return is maintained in accordance
with Section 13.01 or 13.02, as applicable.
(c) In connection with any recalculation of the Factors pursuant to
Section 13.01 or 13.02, if Lessee so requests, the EBO Date may be changed,
provided that the Owner Participant's Net Economic Return is maintained in
accordance with Section 13.01 or 13.02, as applicable. Owner Participant shall
have the right to consent to any change in the EBO Date that differs by more
than one year.
ARTICLE XIV
Transfer of Owner Participant's Interest
----------------------------------------
SECTION 14.01. Restrictions on Transfers. Owner Participant may
-------------------------
transfer all but not less than all its right, title and interest in and to the
Lessor's Estate (whether or not the same shall then have been pledged or
mortgaged under the Loan Agreement, but subject to the Lien of the Loan
Agreement if then in effect) and in and to this Agreement and the other
Operative Documents to any Person (a "Transferee"), only with the prior written
----------
consents of Lessee (for so long as the Lease shall be in effect) and Agent (for
so long as the Loan Agreement shall be in effect) or in compliance with and upon
satisfaction of the following conditions; provided that in no event shall Owner
--------
Participant be permitted to make any such transfer to any Prohibited Transferee
or Competitor (whether or not the Lease is in effect or the following conditions
are satisfied):
60
(a) the Transferee or an Affiliate thereof guaranteeing the
obligations of the Transferee pursuant to a guarantee agreement in form and
substance reasonably satisfactory to Lessee, Trust Company and, if the Lien
of the Loan Agreement shall then be in effect, Agent shall be (i) a
financial institution, corporation, leasing company or other institutional
investor whose tangible net worth at the time is at least $50,000,000 (a
"Permitted Institution"), (ii) a financial institution, corporation,
----------------------
leasing company or other institutional investor the obligations of which,
as Owner Participant under the Operative Documents, are guaranteed by a
Permitted Institution, pursuant to a guarantee agreement in form and
substance reasonably satisfactory to Lessee, Trust Company and, if the Lien
of the Loan Agreement shall then be in effect, Agent, or (iii) an Affiliate
(including an off-shore Affiliate) of Owner Participant; provided that if
--------
such Affiliate is not a Permitted Institution, Owner Participant shall
guarantee the obligations of such Affiliate as Owner Participant under the
Operative Documents pursuant to a guarantee agreement in form and substance
reasonably satisfactory to Lessee, Trust Company and, if the Lien of the
Loan Agreement shall then be in effect, Agent;
(b) assuming the accuracy of the representations made by HCG in
Sections 4.01(i) and (j) at the time when made and by the Transferee set
forth in Section 14.01(c) below, and assuming compliance by Loan
Participants and all holders of the Notes with the ERISA representation
contained herein or in the Loan Agreement or the Notes, no such transfer
shall violate any provision of, or create a relationship which would be in
violation of, any Applicable Laws, including, without limitation,
applicable securities laws, any agreement to which Owner Participant or the
Transferee is a party or by which it or any of its property is bound and
such transfer to or ownership by such Transferee will not result in a
"prohibited transaction" as defined in Section 406 of ERISA or Section 4975
of the Code, which "prohibited transaction" is not subject to a complete
exemption pursuant to ERISA or the rules, regulations, releases or
bulletins adopted thereunder;
(c) the Transferee shall enter into a substitution agreement, in a
form reasonably satisfactory to Lessee, Trust Company and, if the Lien of
the Loan Agreement shall then be in effect, Agent, whereby the Transferee
shall confirm that it has the requisite power and authority to enter into
and to carry out the transactions contemplated hereby and in each Operative
Document and Xxxxxx Agreement to which Owner Participant is or will be a
party, and that it shall be deemed a party to each of such Operative
Documents and Xxxxxx Agreements and shall agree to be bound by all the
terms of, and to undertake all the obligations of
61
the transferor to be performed on or after the date of such transfer
contained in, each of such Operative Documents and Xxxxxx Agreements
whereby such Transferee (and the Owner Participant Guarantor, if any) shall
make representations and warranties reasonably requested by Lessee, Trust
Company and (if the Lien of the Loan Agreement shall then be in effect)
Agent similar in scope to the representations and warranties contained in
Section 4.03; provided that such Transferee delivers to Lessee, Trust
--------
Company and Agent a written representation and warranty (or an opinion of
counsel reasonably satisfactory to Lessee, Trust Company and Agent) that
(i) it is not acquiring the interest being conveyed with assets subject to
Title I of ERISA or Section 4975 of the Code or (ii) such transfer to or
ownership by such Transferee will not result in a "prohibited transaction"
as defined in Section 406 of ERISA or Section 4975 of the Code, which
"prohibited transaction" is not subject to a complete exemption pursuant to
ERISA or the rules, regulations, releases or bulletins adopted thereunder;
(d) the transferring Owner Participant shall have provided 30 days (or
10 days with respect to a transfer to an Affiliate as contemplated by
Section 14.01(a)(iii)) prior written notice of such transfer to Agent,
Trust Company and Lessee, which notice shall specify (i) such information
and be accompanied by evidence as shall be reasonably necessary to
establish compliance with this Article XIV and (ii) the name and address
(for the purpose of giving notice as contemplated by the Operative
Documents) of the Transferee;
(e) whether or not the transfer actually occurs, the transferring
Owner Participant shall pay or cause to be paid on an After-Tax Basis all
reasonable fees, expenses, disbursements and costs (including, without
limitation, legal and other professional fees and expenses) incurred by
Owner Trustee, Agent or Lessee, in connection with any transfer pursuant to
this Article XIV; and
(f) the transferring Owner Participant or the Transferee shall have
delivered to Lessee, Trust Company and, if the Lien of the Loan Agreement
shall then be in effect, Agent, an opinion of counsel in form and substance
reasonably satisfactory to each of them, as to the due authorization,
execution, delivery and enforceability of the agreement or agreements
referred to in clause (a) or (c) of this Section 14.01, and as to the
matters referred to in clause (b) of this Section 14.01.
SECTION 14.02. Effect of Transfer. From and after any transfer
------------------
effected in accordance with this Article XIV, the Person making such transfer
(and any Person guaranteeing the obligations of such transferor) shall be
released, to the extent of the
62
obligations assumed by the Transferee (and, if required hereunder, guaranteed by
an Affiliate of such Transferee), from their respective liabilities hereunder
and under the other Operative Documents to which either of them is a party in
respect of obligations to be performed on or after the date of such transfer.
Upon any transfer by Owner Participant in accordance with this Article XIV, the
Transferee shall be deemed "Owner Participant" for all purposes of the Operative
Documents (unless otherwise specifically set forth herein) and each reference
herein to Owner Participant making such transfer shall thereafter be deemed a
reference to such Transferee for all purposes, except as provided in the
preceding sentence.
SECTION 14.03. Cooperation. Lessee agrees that it shall, to the
-----------
extent reasonably so requested by Owner Participant and at the expense of Owner
Participant (except to the extent Lessee is obligated to pay such expenses under
other provisions of the Operative Documents, subject to the provisions of
Sections 6.02(e) and 6.02(g), which shall prevail), use good faith efforts to
assist Owner Participant in effecting any transfer of its interest in the
Lessor's Estate pursuant to this Article XIV.
SECTION 14.04. Bankruptcy Code Section 1111(b)(2). If (i) all or any
----------------------------------
part of the Lessor's Estate becomes the property of, or the Owner Participant
becomes, a debtor subject to the reorganization provisions of the Bankruptcy
Reform Act of 1978 or any successor provision, (ii) pursuant to such
reorganization provisions the Trust Company (in its individual capacity) or the
Owner Participant is required, by reason of the Trust Company (in its individual
capacity) or the Owner Participant being held to have recourse liability to the
holder(s) of the Notes or to the Agent, directly or indirectly, to make payment
on account of the principal of or interest on the Notes and (iii) any holder of
a Note or the Agent actually receives any Excess Payment (as hereinafter
defined) which reflects any payment by the Trust Company (in its individual
capacity) or the Owner Participant on account of clause (ii) above, then such
holder of a Note or the Agent, as the case may be, shall promptly refund to the
Trust Company or the Owner Participant (whichever shall have made such payment)
such Excess Payment. For purposes of this Section 14.04, "Excess Payment" means
the amount by which such payment exceeds the amount which would have been
received by the holder(s) of the Notes or the Agent if the Trust Company (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 14.04, shall prevent any holder of a Note or the Agent from enforcing as
a full recourse obligation (and retaining the proceeds thereof) any obligation
under this Agreement or any other Operative Document that is expressed as being
an obligation of the Owner Participant.
63
ARTICLE XV
Additional Rights and Obligations of Parties
--------------------------------------------
SECTION 15.01. Rights Following Lease Term. The parties have agreed
---------------------------
that they will each have the following additional rights, obligations and
limitations set forth in Sections 15.02 and 15.03 following the end of the Lease
Term. In the event of any conflicts, the provisions of Sections 15.02 and 15.03
of this Article XV shall apply regardless of any contrary provisions in any
Xxxxxx Agreement.
SECTION 15.02. Xxxxxx Agreements Liability. Notwithstanding the
---------------------------
provisions of Article VIII or the indemnity limitations set forth in Section
14.3 of the Purchase Agreement and Article 6 of the Service Agreement, if,
during the period beginning after the expiration or earlier termination of the
Lease and ending on the last day of the estimated useful commercial life of the
Transponders as set forth in the Commencement Date Appraisal (the "Post Lease
----------
Term"), there is a breach by Lessee of any representation, warranty or agreement
----
contained in Article 5 (except Section 5.02), 7, 8, 13 or 14 or Section 10.1,
14.3, 15.10 or 15.12 of the Purchase Agreement or there is a breach by
Contractor of any representation, warranty or agreement contained in Article 4,
8, or 10, or Section 1.2, 2.1, 6.2, 9.4, 9.5, 11.4 or 12.10 (to the extent that
Contractor makes an assignment in violation of the terms of Section 12.10) of
the Service Agreement (all such provisions being referred to collectively as the
"Significant Provisions") the Lessor or Owner Participant may proceed to enforce
----------------------
its rights in respect thereof in any manner permitted by law; provided, however,
-------- -------
that:
(a) damages for a wrongful denial of access shall be governed
exclusively by Section 10.5 of the Purchase Agreement and 9.5 of the
Service Agreement, and Owner Trustee, Owner Participant, Lessor, any other
Indemnitee or other Person who is an Affiliate of any of the foregoing
Persons (each such Person referred to in this Article XV as an "Owner
-----
Person" and collectively as "Owner Persons") shall not be entitled to any
------ -------------
other damages as a result thereof;
(b) no damages measured by, based upon or resulting from, directly or
indirectly, any loss, loss of use, or physical damage to, the Transponders,
or damages of any other type based upon any Transponder or Satellite
performance or non-performance ("Transponder Performance Damages") claimed
-------------------------------
as a result of any damage to an Owner Person or any Person deriving rights
from any Owner Person shall exceed, in the aggregate for all Owner Persons,
an amount equal to the Per Day Cost for each day, until the breach shall
have been cured, of such damages up to the last day of the Post Lease Term,
except as set forth in Section 15.02(a) above. "Per Day Cost" shall be an
------------
amount equal to
64
12% of Buyer's Cost of such Transponder divided by the number of days from
the end of the Basic Term to the end of the estimated useful commercial
life of the Transponders as set forth in the Commencement Date Appraisal;
(c) DURING THE POST LEASE TERM, EXCEPT AS EXPRESSLY SET FORTH IN
SECTION 14.1 OF THE PURCHASE AGREEMENT OR IN THE SERVICE AGREEMENT, SELLER
AND CONTRACTOR SHALL HAVE NO LIABILITY, FOR ANY WARRANTY, EXPRESS OR
IMPLIED, IN RESPECT OF THE TRANSPONDERS OR THEIR PERFORMANCE, ALL OF WHICH
ARE EXPRESSLY EXCLUDED, INCLUDING, WITHOUT LIMITATION, ALL RIGHTS AND
REMEDIES UNDER DIVISION 2, CHAPTER 7, SECTIONS 2711 THROUGH 2717 OF THE
CALIFORNIA COMMERCIAL CODE AND THE EQUIVALENT PROVISIONS OF THE UNIFORM
COMMERCIAL CODE OF THE STATE OF NEW YORK;
(d) Lessee and Contractor shall in no event have any liability to an
Owner Person under the terms of the Purchase Agreement and the Service
Agreement or this Agreement for loss of profits or other incidental or
consequential damages claimed by an Owner Person, or as part of an
indemnity claim by an Owner Person, based on costs or damages incurred by
it in connection with claims asserted by third parties against such Owner
Person based on representations, warranties or agreements made by any Owner
Person to such third parties, or on claims made by such third parties
against such Owner Person based on damages incurred by such third party
arising out of their use of the Transponders with the permission of such
Owner Person except (i) as otherwise specifically set forth in this
Agreement, (ii) as to third party indemnifica tion claims, to the extent
that such damages are the result of a violation of any Applicable Law by
Contractor or Lessee but, to the extent the damages consist of Transponder
Performances Damages, the limitations of Section 15.02(b) shall apply or
(iii) for any liability of an Owner Person that may result from damage to
or interference with another satellite or transponders thereon as a result
of a breach by Contractor of its obligations under the Service Agreement or
by Seller of its obligations under the Purchase Agreement; provided,
--------
however, that notwithstanding the above limitations, Seller will indemnify
-------
Buyer for all reasonable litigation costs and other procedural costs and
expenses, including, but not limited to, attorneys' fees claimed by an
Owner Person, or as part of an indemnity claim by an Owner Person, based on
claims against such Owner Person arising from a breach by Lessee or
Contractor of any Significant Provisions;
(e) nothing contained in this Section 15.02 shall limit the exercise
by an Owner Person of any rights or remedies such Owner Person may have
under any other Operative Document or Xxxxxx Agreement (including, without
limitation, the right of Buyer or Owner to obtain damages or
65
equitable relief in connection with any breach by Seller or Contractor of
their respective obligations under the Xxxxxx Agreements), but only if, and
to the extent that, such rights or remedies (including the right to obtain
and the amount of damages) are specifically permitted and not otherwise
limited by the specific provisions of any such Operative Document or Xxxxxx
Agreement, and except that an Owner Person shall not be entitled to
payments pursuant to this Agreement to the extent such Owner Person has
already received payment for the damages resulting from such breach
pursuant to the provisions of any Operative Document or Xxxxxx Agreement;
and
(f) notwithstanding the above, Contractor shall only be liable for a
breach of its obligations under Section 1.2 of the Service Agreement in
respect of the monitoring or management of the Satellite propellant if such
breach is the result of gross negligence of Contractor or an Intentional
Breach.
SECTION 15.03. Final Term Liabilities. If, during the period
----------------------
beginning at the end of the Post Lease Term and ending on the last day of the
actual useful commercial life of the Satellite (the "Final Term") Owner
----------
Participant is unable as a result of an Intentional Breach to make commercial
use of any Transponder that it owns, then Lessor or Owner Participant shall be
entitled to compensation for its loss of Transponder use as set forth in Section
15.03(a).
(a) Lessor or Owner Participant shall be entitled to be compensated by
Lessee on a per Transponder basis for each day that Lessor or Owner
Participant is unable to make commercial use of any such Transponder as a
result of an Intentional Breach in an amount equal to the Per Day Cost.
Owner Participant and Owner Trustee may enforce their rights in respect of
any other Intentional Breach of the Significant Provisions during the Final
Term subject to the limitations and provisions of Sections 15.02(b), (c),
(d) and (e).
(b) As used herein, "Intentional Breach" shall mean any breach by
------------------
Lessee or Contractor of the Significant Provisions which is the result of
an action by the Board of Directors of Lessee or Contractor or by any of
their officers empowered to take such action or any agent authorized by the
Board or any such officers to take such action to intentionally breach any
of the Significant Provisions.
(c) The provisions of Section 15.02(c), (d), (e) and (f) shall apply
to the Final Term.
66
ARTICLE XVI
Miscellaneous
-------------
SECTION 16.01. Confidentiality. (a) Each of Owner Participant, Owner
---------------
Trustee, Trust Company, Agent and Loan Participants (each, for purposes of this
Section 16.01, a "Recipient") shall keep in strict confidence and not disclose
---------
to any Person not bound by this Agreement any Proprietary Information received
by it except that Recipient shall not be liable for disclosure or use of any
Proprietary Information if the Proprietary Information (i) is in or enters the
public domain, other than by breach of this Section 16.01, prior to such
disclosure by Recipient, (ii) is known to Recipient at the time of first receipt
of such Proprietary Information, or thereafter becomes known to Recipient prior
to or subsequent to such disclosure without similar restrictions from a source
other than Lessee, as evidenced by written records, (iii) is developed by
Recipient independently of any disclosure hereunder as evidenced by written
records or (iv) is disclosed more than five (5) years after the date of first
receipt of the disclosed Proprietary Information; and provided that such
--------
Proprietary Information may be disclosed at any time by Recipient (A) to a bona
fide prospective Loan Participant or permitted transferee thereof, or to a bona
fide prospective purchaser, lessee or transferee, other than, in each case, a
Prohibited Transferee, who shall agree to be bound by this Section 16.01, (B) to
its Affiliates, employees, independent auditors and counsel, to the extent
necessary for any of the foregoing to carry out their functions in connection
with the transaction contemplated by the Operative Documents or the Xxxxxx
Agreements, subject to the further provisions of this Section 16.01, (C) to the
extent reasonably deemed by any Recipient to be appropriate in order to protect
its rights or to exercise its remedies under any Operative Document or Xxxxxx
Agreement, (D) as part of Recipient's normal reporting or review procedure to
its parent company, its officers or its attorneys and to auditors and regulators
of Recipient as required thereby, (E) to the extent necessary to obtain
appropriate insurance, to Recipient's insurance agents, brokers or underwriters
provided that such Person agrees in writing to confidential treatment of the
Proprietary Information disclosed or (F) to the extent required by law or by
order (or direction, in the case of Agent) of a government agency, legislative
body, or court of competent jurisdiction or regulatory examiner or pursuant to
subpoena or other legal process or in connection with any legal proceeding or
tax audit relating to the transaction contemplated by the Operative Documents or
the Xxxxxx Agreements or hereby; provided that in the case of any disclosure
--------
pursuant to clause (B), (C), (D) or (E), Recipient shall advise the Person to
whom the disclosure is made of the confidential nature of any Proprietary
Information disclosed and of the terms of this Section 16.01. If Recipient is
required to disclose Proprietary Information pursuant to clause (F) of this
paragraph, Recipient shall
67
promptly notify Lessee of such disclosure requirement and, upon the request of
Lessee, shall to the extent practicable, at Lessee's sole cost and expense and
with counsel reasonably satisfactory to Recipient, fully cooperate with Lessee
in contesting such disclosure. If after such contest disclosure is still
required, then Recipient shall seek, if practicable, confidential treatment of
such information from the applicable party.
(b) "Proprietary Information" shall be defined as proprietary
-----------------------
information of any nature in any form, including without limitation, all
writings, memoranda, copies, reports, financial statements, papers, surveys,
analyses, drawings, letters, computer printouts, software, specifications, data,
graphs, charts, sound recordings and/or pictorial reproductions which have been
reduced to written form. Proprietary Information shall be marked as proprietary
by Lessee with an appropriate legend, marking, stamp or other obvious written
identification prior to disclosure. In the event that Lessee discloses its
Proprietary Information to Recipient other than in the manner provided for in
this paragraph (b), then Lessee shall promptly inform Recipient that such
information is deemed proprietary and shall provide Recipient with a brief
written description of such information within thirty (30) days of such
disclosure, identifying therein the manner, place, and date of such disclosure
and the names of Recipient's representatives to whom such disclosure was made
whereupon the provisions of this Agreement shall become applicable to such
Proprietary Information. Proprietary Information shall also mean any
information, whether in written form or not, prepared by Recipient or anyone
receiving Proprietary Information from Recipient or incorporating Proprietary
Information.
(c) Recipient shall not use the Proprietary Information, except in
connection with the transactions contemplated by the Operative Documents or the
Xxxxxx Agreements, without prior written approval of Lessee. Recipient shall
not mechanically copy or otherwise reproduce Proprietary Information except to
permit its use consistent with the purposes of the transactions contemplated by
the Operative Documents and the Xxxxxx Agreements and each copy or reproduction
shall contain the same proprietary marking as the original.
(d) All Proprietary Information in tangible form of expression which
has been delivered or thereafter created by copy or reproduction pursuant to
this Section 16.01 shall be and remain the property of Lessee. All such
Proprietary Information (other than the Closing Date Appraisal and the
Commencement Date Appraisal) and any and all copies and reproductions thereof
shall (upon a repurchase of the Transponders by HCG or Lessee), subject to any
retention requirements pursuant to Regulation B of the Federal Reserve Board,
within thirty (30) days of written request by and at HCG's or Lessee's expense
be either promptly returned
68
to HCG or Lessee, as applicable, or destroyed at HCG's or Lessee's direction. In
the event of such requested destruction, Recipient shall provide to HCG or
Lessee, as applicable, written certification of compliance therewith within
thirty (30) days of such written request.
(e) The disclosure of Proprietary Information under this Section 16.01
shall not be construed as granting either a license under any patent, patent
application, or copyright, or any right of ownership in said Proprietary
Information, nor shall such disclosure constitute any representation, warranty,
assurance, guarantee, or inducement by Lessee with respect to infringement of
patents or other rights of others.
(f) This Section 16.01 contains the entire understanding between the
parties with respect to the safeguarding of Proprietary Information, supersedes
all prior communications and understandings with respect thereto, shall inure to
the benefit of each of HCG and Lessee, its Affiliates and its successors and
assigns, and Recipient shall be responsible for insuring that all parent,
subsidiary, affiliated, and successor organizations of Recipient and their
respective directors, officers and employees will keep all such Proprietary
Information confidential. Recipient shall be responsible for any breach of this
Section 16.01 by any of the foregoing and with respect to the commercial or
other confidential terms of the leases, subleases or use agreements relating to
the Transponders or of the Operative Documents, and with respect to confidential
customer information supplied to Recipient in connection with the Overall
Transaction, by its special counsel listed in item 4 to Schedule A to Appendix A
to this Agreement, its auditors and financial advisors (not including the
Independent Appraiser) unless it shall obtain a written agreement from such
Person to be bound by the terms of this Section 16.01, in which case Recipient
shall not be liable for any breach by such Person of the terms thereof. By way
of illustration only and not by way of limitation, the provisions of this
Section 16.01 shall inure to the benefit of HAC, Xxxxxx and General Motors
Corporation.
(g) Recipient shall be responsible only for actual damages, if any,
proved by Lessee as a result of a breach of this Section 16.01 and shall not be
responsible for any consequential or incidental damages or for Lessee's
attorneys' fees incurred in connection with a suit or breach or enforcement of
this Section 16.01.
SECTION 16.02. Publicity. (a) No party to any of the Operative
---------
Documents or Xxxxxx Agreements shall issue or release or permit to be issued or
released for external publication any article or advertising or publicity matter
relating to the transaction contemplated hereby and mentioning or implying the
name of any other party to the Operative Documents or the Xxxxxx
69
Agreements unless prior written consent shall have been given by such party.
(b) Each of Lessee, Owner Trustee, Owner Participant, Agent and Loan
Participants hereby agrees to keep in strict confidence and not disclose to any
Person not bound by this Agreement the contents of the Operative Documents and
the Xxxxxx Agreements and the identity of the parties thereto; provided,
--------
however, that such Persons shall not be liable for disclosure or use of any such
-------
information to the extent the same is not disclosed to a Prohibited Transferee
and (i) if it is in or enters the public domain, other than by breach of this
Section 16.02(b), (ii) to the extent required to be described in the offering
memorandum or related offering materials for potential holders of the Notes or
the materials distributed by Agent in connection with the sale or offer for sale
of any interest, directly or indirectly, in the Transponders, Lessor's Estate or
any Operative Documents or Xxxxxx Agreements; provided, further, that such
-------- -------
information may be disclosed at any time (A) to a bona fide present or
prospective Loan Participant, transferee thereof, user, purchaser, lessee or
transferee or other party contracting with Lessee or its Affiliates, other than
a Prohibited Transferee, (B) in the circumstances contemplated by the applicable
provisions of the Operative Documents or the Xxxxxx Agreements (including,
without limitation, in connection with the offering, issuance, sale or transfer
of the Notes) or to its Affiliates, employees, independent auditors and counsel,
to the extent necessary for any of the foregoing to carry out their functions in
connection with the transactions contemplated by the Operative Documents or the
Xxxxxx Agreements, subject to the further provisions of this Section 16.02(b),
(C) to the extent reasonably deemed by such Person to be appropriate in order to
protect its rights or to exercise its remedies under any Operative Document or
Xxxxxx Agreement, (D) as part of such Person's normal reporting or review
procedure to its parent company, its officers or its attorneys and to auditors
and regulators of any such Person as required thereby, (E) to the extent
necessary to obtain appropriate insurance, to such Person's insurance agent or
(F) to the extent required by law or by order of a government agency,
legislative body, or court of competent jurisdiction or regulatory examiner or
pursuant to subpoena or other legal process or in connection with any legal
proceeding or tax audit relating to the transaction contemplated by the
Operative Documents or the Xxxxxx Agreements or hereby. If any Person is
required to disclose information pursuant to clause (F) of this paragraph, other
than reports or other disclosures required to be made to the FCC, such Person
shall promptly notify the other parties hereto of such disclosure requirement.
This Section 16.02(b) shall inure to the benefit of and be binding upon the
parties hereto, their respective successors and assigns. Each party shall be
responsible for any breach of this Section 16.02(b) by its Affiliates, officers,
directors, employees, agents, counsel, accountants and other
70
representatives to whom it provided such information; provided that if such
--------
Person obtains a written confidentiality agreement substantially to the effect
of this Section 16.02(b), such Person shall not be liable for any such breach. A
breach of this provision shall not constitute a Default, Lease Default or Lease
Event of Default or Loan Default or Loan Event of Default; Lessee, Owner
Trustee, each Loan Participant, Agent and Owner Participant, as the case may be,
shall be responsible only for liquidated damages of One Thousand Dollars
($1,000) as a result of a breach of this Section 16.02(b) and shall not be
responsible for any consequential or incidental or other damages or attorneys'
fees incurred in connection with a suit or breach or enforcement of this Section
16.02(b).
SECTION 16.03. Notices. Unless otherwise specifically provided
-------
herein, all notices, consents, directions, approvals, instructions, requests and
other communications required or permitted by the terms hereof shall be in
writing, and any such notice shall become effective five Business Days after
deposit in the mails, certified or registered, with appropriate postage prepaid
for first class mail or by overnight courier or, if delivered by hand or in the
form of a telecopy, telex, telegram, cable or other electronic means of
communication which produces a written copy shall be effective when received,
and, if mailed, shall be addressed (a) if to Lessee or Guarantor to their
respective addresses as set forth in Schedule V, (b) if to Agent, Owner
----------
Participant, Owner Trustee or initial Loan Participants, to their respective
addresses as set forth in Schedule I, (c) if to any subsequent Owner Participant
----------
or holder of any Note, addressed to such Person at such address as such Person
shall have furnished by notice to the parties hereto in accordance with the
foregoing provisions of this Section 16.03 or (d) in the case of any other
addressee, to such other address as any such addressee may designate by notice
given to the parties hereto in accordance with the foregoing provisions of this
Section 16.03.
SECTION 16.04. Counterparts. This Agreement may be executed by the
------------
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 16.05. Amendments. The terms of this Agreement shall not be
----------
altered, modified, amended, supplemented or terminated in any manner whatsoever
except by written instrument signed by the party against which such alteration,
modification, amendment, supplement or termination is sought. No Operative
Document to which HCG or Lessee is not a party, other than the Trust Agreement,
may be eliminated, amended, supplemented, waived or modified in a manner that
shall increase the obligations or liabilities, or decrease the rights, of HCG or
Lessee, unless consented to in writing by HCG or Lessee, as applicable. No
amendment, termination, supplement, waiver or
71
modification of the Trust Agreement, not consented to in writing by HCG or
Lessee, shall have the effect of increasing the obligations or liabilities or
decreasing the rights of HCG or Lessee, as applicable, under any Operative
Document or Xxxxxx Agreement. Each of the parties hereto will furnish or cause
to be furnished to HCG and Lessee, promptly after the execution and delivery
thereof, an executed copy or a photocopy of an executed copy of each instrument
(whether or not the consent of HCG or Lessee shall be required in connection
therewith) that purports to terminate, amend, supplement, waive or modify any
Operative Document to which HCG or Lessee is not a party.
SECTION 16.06. Parties in Interest. The terms of this Agreement
-------------------
shall be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
SECTION 16.07. Governing Law. This Agreement has been delivered in,
-------------
and shall in all respects 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.
SECTION 16.08. Method of Payment. All amounts required to be paid by
-----------------
any party to any other party hereunder or under any of the other Operative
Documents shall be paid as provided herein and in immediately available funds in
legal tender of the United States of America.
SECTION 16.09. Severability. Any provision of this Agreement which
------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or any
provision in any other Operative Document, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The provisions of this
Agreement shall remain valid and enforceable notwithstanding the invalidity,
unenforceability, impossibility or illegality of performance of the Lease or any
other Operative Document.
SECTION 16.10. Complete Agreement. This Agreement and the other
------------------
Operative Documents and the Xxxxxx Agreements constitute the complete agreement
of the parties with respect to the matters contemplated hereby and thereby.
SECTION 16.11. Limitation of Liability of Trust Company. It is
----------------------------------------
expressly understood and agreed by and among the parties hereto that except as
otherwise expressly provided herein, (i) this Agreement is executed and
delivered by Trust Company not in its individual capacity but solely as Owner
Trustee in the exercise of the power and authority conferred and
72
vested in it as such Owner Trustee, (ii) each of the representations,
undertakings and agreements made herein by Owner Trustee are not personal
representations, undertakings and agreements of the Trust Company, but are
binding only upon the Lessor's Estate and Owner Trustee, as trustee, (iii)
actions to be taken by Owner Trustee pursuant to its obligations hereunder may,
in certain instances, be taken by Owner Trustee only upon specific authority of
Owner Participant and (iv) except as expressly set forth herein or in the other
Operative Documents or the Xxxxxx Agreements, nothing herein contained shall be
construed as creating any liability of Trust Company, individually or
personally, to perform any covenant, expressed or implied, contained herein, or
for the payment of any indebtedness or expense of the trust created by the Trust
Agreement, all such liability, if any, being expressly waived by the other
parties hereto, and by any Person claiming by, through or under them.
SECTION 16.12. Remedies. Upon a breach by any party of its
--------
obligations under any Operative Document or Xxxxxx Agreement, any other party to
such Operative Document or Xxxxxx Agreement may, subject to the provisions
thereof, in its sole discretion proceed by appropriate court action, either at
law or in equity, to enforce performance by the breaching party of any covenants
of such party in any Operative Document or Xxxxxx Agreement or recover damages
for the breach thereof and may exercise every right, power or remedy given
specifically hereunder or in any other Operative Document or Xxxxxx Agreement or
now or hereafter existing at law, in equity or by statute. Each and every
right, power and remedy whether specifically given herein or under any other
Operative Document or Xxxxxx Agreement or otherwise existing may be exercised
from time to time and as often and in such order as may be deemed expedient by
the enforcing party. The exercise of any right, power or remedy shall not be
construed to be a waiver of any other right, power or remedy. No delay or
omission by any party in the exercise of any right, power or remedy or in the
pursuit of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default or to be an acquiescence therein. No
express or implied waiver by any party of any default shall in any way be, or be
construed to be, a waiver of any future or subsequent default.
SECTION 16.13. Survival of Agreement. The representations,
---------------------
warranties, indemnities and agreements of the parties provided for in this
Agreement, and the parties' obligations under any and all thereof, shall survive
the participation by Owner Participant pursuant to its Commitment and the
purchase of the Notes by Loan Participants, the sale of the Transponders and the
expiration or other termination of any of the Operative Documents or Xxxxxx
Agreements and shall be and continue in effect notwithstanding any investigation
made by Owner Participant, Owner Trustee, Agent, or any Loan Participant.
73
SECTION 16.14. Commitment Letter. Upon payment in full of Lessor's
-----------------
Cost for the Transponders by Owner Trustee under this Agreement, the Commitment
Letter shall have no further force or effect and shall be superseded in its
entirety by this Agreement (including the Schedules, Annex and Exhibits hereto).
SECTION 16.15. Intention of the Parties. It is the intention of the
------------------------
parties hereto that for United States Federal, state and local income tax
purposes Lessor will be the owner of the Transponders from and after the Closing
Date, and Lessor will be the lessor of the Transponders to be subject to the
Lease and Lessee will be the lessee of such Transponders from and after the
Commencement Date.
[Balance of this page intentionally left blank]
74
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers on the date first above
written.
XXXXXX COMMUNICATIONS
GALAXY, INC.,
By: /s/ Xxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
GENERAL MOTORS ACCEPTANCE CORPORATION
By: /s/ Xxxxxx X. Cover
-------------------------------
Name: Xxxxxx X. Cover
Title: Assistant Treasurer
WILMINGTON TRUST COMPANY,
Not in its individual capacity, except as
otherwise expressly set forth herein, but
solely in its capacity as Owner Trustee
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
CHEMICAL BANK,
As Agent and Loan Participant
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: VP
75
THE FUJI BANK LIMITED, LOS ANGELES
AGENCY
By: /s/ Xxxxxxxxx Xxxxx
--------------------
Name: Xxxxxxxxx Xxxxx
Title: Joint General Manager
THE INDUSTRIAL BANK OF JAPAN, LIMITED
LOS ANGELES AGENCY
By: /s/ Kazutaka Kiyoto
---------------------
Name: Kazutaka Kiyoto
Title: Senior Vice President
By: /s/ Xxxxx X. Xxxxx
---------------------
Name: Xxxxx X. Clive
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION, NEW YORK BRANCH
By: /s/ Xxxxx X. Xxxxx
---------------------
Name: Xxxxx X. Xxxxx
Title:
XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ Xxxxx X. Xxxxx
---------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Xxxxxx Xxxxxxxxx
---------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
ROYAL BANK OF CANADA
By: /s/ Xxxxxxx Korine
---------------------
Name: Xxxxxxx Korine
Title: Senior Manager
ABN AMRO BANK N.V., LOS ANGELES INT'L
BRANCH
BY: ABN AMRO NORTH AMERICA, INC.
As Agent
By: /s/ Xxxx X. Xxxxxx
---------------------------------
Name: Xxxx X. Xxxxxx
Title: Group Vice President/Director
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Assistant Vice President
THE BANK OF NEW YORK
By: /s/ Xxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
BANKERS TRUST COMPANY
By: /s/ Xxxxxxx X. Xxx
---------------------------------
Name: Xxxxxxx X. Xxx
Title: Vice President
CREDIT SUISSE
By: /s/ Xxxxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Member of Senior Management
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
Title: Associate
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ L. Xxxx Xxxxx
---------------------------------
Name: L. Xxxx Xxxxx
Title: Senior Vice President
SOCIETE GENERALE
By: /s/ X. Xxxxxx Xxxxxxx
----------------------
Name: X. Xxxxxx Xxxxxxx
Title: Vice President
WESTDEUTSCHE LANDESBANK
By: /s/ Xxxxxxxxx Xxxxxxxxxx /s/ X. Xxxxxx
----------------------------------------
Name: Xxxxxxxxx Xxxxxxxxxx X. Xxxxxx
Title: Vice President Assoc.
Credit Department
GREENWICH FUNDING CORPORATION
BY: CREDIT SUISSE, NEW YORK BRANCH,
As Attorney-In-Fact
By: /s/ Xxxxx X. Xxxxxx
---------------------
Name: Xxxxx X. Xxxxxx
Title: Associate
By:
---------------------
Name: Xxxxxxx Xxxxx
Title: Associate
