EXHIBIT 10.17
CONFIDENTIAL
------------
--------------------------------------------------------------------------------
LEASE AGREEMENT
Dated as of February 7, 1996
by and between
XXXXXX COMMUNICATIONS GALAXY, INC.
as Lessee,
and
WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Owner Trustee, Lessor
----------------------------
Transponders aboard
Galaxy III-R
Communications Satellite
--------------------------------------------------------------------------------
NOTE: THIS LEASE AGREEMENT HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY
INTEREST IN FAVOR OF CHEMICAL BANK, AS AGENT, UNDER AND TO THE EXTENT SET FORTH
IN THE LOAN AGREEMENT, DATED AS OF FEBRUARY 7, 1996, BY AND BETWEEN LESSOR AND
CHEMICAL BANK, AS AGENT. TO THE EXTENT, IF ANY, THAT THIS LEASE AGREEMENT
CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL
CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS
LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY
COUNTERPART OTHER THAN THE ORIGINAL EXECUTED COUNTERPART, WHICH SHALL BE
IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY
CHEMICAL BANK, AS AGENT, ON THE SIGNATURE PAGE THEREOF.
TABLE OF CONTENTS
-----------------
Page
SECTION 1. Definitions............................................................... 2
SECTION 2. Acceptance of the Transponders by Lessor; Lease of the Transponders....... 2
SECTION 3. Term and Rent............................................................. 2
(a) Term...................................................................... 2
(b) Base Rent................................................................. 2
(c) Supplemental Rent......................................................... 3
(d) Method of Payment......................................................... 3
(e) Late Payment.............................................................. 4
(f) Minimum Payment........................................................... 4
(g) Net Lease; No Setoff, etc................................................. 4
(h) Repayment of Advance Amount............................................... 5
(i) Place of Payment.......................................................... 6
SECTION 4. Recomputation of Rent, Stipulated Loss Value, Termination Value, and EBO
Amount.................................................................... 6
SECTION 5. Representations, Warranties and Agreements as to the Transponders......... 6
(a) Disclaimer of Warranties.................................................. 6
(b) Exercise of Certain Rights under the Xxxxxx Agreements.................... 7
SECTION 6. Liens; Quiet Enjoyment; Assignment and Sublease........................... 9
(a) Liens..................................................................... 9
(b) Quiet Enjoyment........................................................... 9
(c) Use Agreements............................................................ 9
(d) GLA Sublease.............................................................. 10
(e) Return of Transponders.................................................... 11
SECTION 7. Operation; Maintenance; Compliance with Law; Location of Satellite;
Substitution of Transponders.............................................. 11
(a) Operation................................................................. 11
(b) Maintenance............................................................... 12
(c) Compliance with Law....................................................... 13
(d) Location of Satellite..................................................... 14
(e) Substitution of Transponder............................................... 14
SECTION 8. Termination............................................................... 15
(a) Early Termination......................................................... 15
(b) Termination Payments...................................................... 17
(c) Retention of Transponders by Lessor....................................... 17
(d) No Duplication of Rent Differential Amount................................ 18
i
SECTION 9. Insurance................................................................. 18
(a) Non-Discrimination........................................................ 18
(b) Additional Insureds....................................................... 18
(c) Separate Insurance........................................................ 19
SECTION 10. Redelivery................................................................ 19
(a) Redelivery Terms.......................................................... 19
(b) Decreased Value........................................................... 20
SECTION 11. Cooperation............................................................... 20
(a) Lessor's Efforts to Sell or Lease......................................... 20
(b) Value and Useful Life Determinations...................................... 21
SECTION 12. Loss, Destruction, Condemnation or Damage................................. 21
(a) Payment of Stipulated Loss Value.......................................... 21
(b) Application of Payments upon an Event of Loss............................. 22
(c) Application of Payments Not Relating to an Event of Loss.................. 22
(d) Applications During Default............................................... 22
(e) No Duplication of Rent Differential Amount................................ 23
SECTION 13. Merger, Consolidation..................................................... 23
SECTION 14. Reports................................................................... 24
(a) Condition and Operation................................................... 24
(b) Liens..................................................................... 24
SECTION 15. Events of Default......................................................... 24
SECTION 16. Remedies.................................................................. 26
SECTION 17. Right to Perform for Lessee............................................... 30
(a) Right to Cure............................................................. 30
(b) Lessor is Lessee's Agent and Attorney..................................... 30
SECTION 18. Renewal................................................................... 30
(a) Notice of Renewal or Purchase............................................. 30
(b) Fair Market Value Renewal Option.......................................... 31
(c) Renewal Rent.............................................................. 31
SECTION 19. Purchase Options.......................................................... 32
(a) Purchase Option Events.................................................... 32
(b) Notice of Election; Manner of Purchase; Transfer After Purchase........... 33
(c) Assumption of Notes....................................................... 34
(d) No Duplication of Rent Differential Amount................................ 34
ii
SECTION 20. Further Assurances; Default Notice........................................ 35
(a) Further Assurances........................................................ 35
(b) Notice of Default......................................................... 35
(c) Subsequent Appraisal...................................................... 35
SECTION 21. Collateral Security for Lessor's Obligations to Agent..................... 35
SECTION 22. Counterparts; Uniform Commercial Code..................................... 36
SECTION 23. Notices................................................................... 36
SECTION 24. Miscellaneous............................................................. 36
(a) Severability.............................................................. 36
(b) Amendment................................................................. 37
(c) Headings, etc............................................................. 37
(d) Successors and Assigns.................................................... 37
(e) Governing Law............................................................. 37
(f) Limitation of Liability of the Trust Company.............................. 37
LIST OF SCHEDULES:
Schedule A to Lease Agreement - Scheduled Rent
Schedule B to Lease Agreement - Stipulated Loss Values
Schedule C to Lease Agreement - Termination Values
Schedule D to Lease Agreement - EBO Amount and EBO Date
Schedule E to Lease Agreement - Miscellaneous Information
Item 1 - Owner Participant
Item 2 - Last Day of Interim Term
Item 3 - Basic Term Period
Item 4 - Last Day of Basic Term
Item 5 - Agent's Account
Item 6 - Lessor's Account
Item 7 - Present Value (Scheduled Rent)
Item 8 - Present Value (EBO Amount)
LIST OF EXHIBITS:
Exhibit A - Redelivery of Transponder
LIST OF APPENDICES
APPENDIX A - List of Transponders Subject to Lease
iii
This LEASE AGREEMENT (as the same may be amended from time to time, the
"Lease"), dated as of February 7, 1996, by and between WILMINGTON TRUST COMPANY,
a Delaware banking corporation, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement ("Lessor"), and XXXXXX COMMUNICATIONS
GALAXY, INC., a California corporation ("Lessee").
RECITALS
--------
WHEREAS, Lessee and Lessor have entered into that certain Participation
Agreement, dated as of February 7, 1996 (the "Participation Agreement"), with
the other parties named therein, including the Owner Participant identified on
Item 1 to Schedule E hereto, with respect to the transactions of which this
----------
Lease is a part;
WHEREAS, Lessee desires to enter into a lease of transponders aboard that
certain communications satellite known as Galaxy III-R (which transponders are
described in Appendix A hereto and Appendix A to the Purchase Agreement and have
----------
been identified in the certificate delivered by Seller pursuant to Section 3.2
of the Purchase Agreement as having met the Transponder Performance
Specifications therefor as of the date of such certificate) (individually a
"Transponder" and collectively the "Transponders"), and Lessor desires to lease
------------ ------------
such Transponders to Lessee at the rentals and upon the terms hereinafter
provided and as provided hereafter in any supplement to this Lease;
WHEREAS, HCG is an indirectly wholly-owned subsidiary of HE;
WHEREAS, Guarantor has executed a Guarantee Agreement, dated as of the
Commencement Date, pursuant to which Guarantor unconditionally guarantees
certain financial obligations of HCG, Seller, Lessee and Contractor under the
Operative Documents and Xxxxxx Agreements;
WHEREAS, Independent Appraiser has prepared the Closing Date Appraisal and
the Commencement Date Appraisal of the Transponders to the satisfaction and
agreement of the Owner Participant and Lessee; and
WHEREAS, Lessor has assigned for security purposes certain of its rights in
this Lease to Agent, pursuant to the Loan Agreement, dated as of the
Commencement Date, between Lessor and Agent.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein and other good and valuable
consideration, receipt of which is hereby acknowledged, Lessor and Lessee hereby
agree as follows:
1
AGREEMENT
---------
SECTION 1. Definitions. Capitalized terms used but not defined
-----------
herein shall for all purposes hereof have the respective meanings assigned
thereto in Appendix A to the Participation Agreement, which also contains rules
as to usage that shall be applicable herein.
SECTION 2. Acceptance of the Transponders by Lessor; Lease of the
-------------------------------------------------------
Transponders.
-----------
(a) Upon execution of this Lease by Lessee and Lessor, Lessor shall be
deemed to have delivered, and Lessee shall be deemed to have accepted, each of
the Transponders for lease hereunder, and this Lease shall commence as provided
in Section 2(b).
(b) Effective immediately upon the acceptance of each Transponder by
Lessee pursuant to Section 2(a), (i) such Transponder shall be deemed for all
purposes to be leased by Lessor to Lessee hereunder and accepted by Lessee
hereunder for all purposes, and (ii) the Lease Term for such Transponder shall
commence. Lessor hereby agrees to lease to Lessee hereunder, and Lessee hereby
agrees to lease from Lessor hereunder, each Transponder during the Lease Term
applicable to such Transponder.
SECTION 3. Term and Rent.
-------------
(a) Term. As to any Transponder, the lease term (the "Lease Term")
---- ----------
shall be equal to the Interim Term, the Basic Term and any Renewal Term. The
interim term (the "Interim Term") shall commence on the Commencement Date and
------------
run to and including the date set forth on Item 2 to Schedule E hereto, unless
----------
earlier terminated pursuant to the terms hereof. The basic term (the "Basic
-----
Term") shall commence on the last day of the Interim Term (the "Basic Term
---- ----------
Commencement Date") and run for the period set forth in Item 3 to Schedule E
----------------- ----------
hereto, and shall expire on the date set forth in Item 4 to Schedule E hereto,
----------
unless earlier terminated pursuant to the terms hereof.
(b) Base Rent.
---------
(i) On each date on or prior to the Interim Rent Payment Date on
which a payment of interest is due on the Notes, if and to the extent that
on or prior to any such date, Lessor shall not have remitted funds to Agent
in an amount equal to the amount of interest due and payable on the Notes
on such date (such amount being referred to as the "Lessor Interim
--------------
Amount"), Lessee shall loan to Lessor an amount equal to any portion of the
------
Lessor Interim Amount not paid by Lessor. Lessor shall give notice to
Lessee and Agent at least five Business Days prior to such interest payment
date if funds equal to the Lessor Interim Amount will not be paid by Lessor
on such date, provided, however, that Lessor's failure to deliver such
-------- -------
notice shall not affect Lessee's obligation under this Section 3(b)(i).
(ii) Subject to adjustment as provided in Section 13.01 or 13.02,
subject to Sections 13.03 and 13.04, of the Participation Agreement, as
applicable, Lessee shall pay to Lessor installments of Base Rent during the
Basic Term on each Rent Payment Date during the Basic Term, each such
installment to be in an amount equal to the sum of (A) the percentage set
forth in Schedule A hereto opposite the applicable Rent Payment Date,
----------
multiplied by Lessor's Cost for such Transponder, and (B) the Rent
Differential Amount for such Transponder, if any,
2
with respect to such date; provided, however, that if the Rent Payment Date
-------- -------
is also a Termination Date, Casualty Payment Date or EBO Date as of which
Termination Value, Stipulated Loss Value or the EBO Amount is required to
be calculated or paid, on such Rent Payment Date Lessee shall be obligated
to pay, in lieu of the payments specified in clauses (A) and (B) of this
clause (ii), an amount equal to the sum of (x) the percentage set forth in
Schedule A hereto opposite the applicable Rent Payment Date designated as
----------
"arrears rent", multiplied by Lessor's Cost for such Transponder, and (y)
subject to the provisions of Section 8(d), 12(e), 16(II)(e) or 19(d), as
applicable, the Rent Differential Amount for such Transponder, if any, with
respect to such date. In addition, in the event that any interest on the
Notes becomes due and payable during the Basic Term on a date other than on
a Rent Payment Date, Lessee shall pay to Lessor, on such date, Base Rent in
an amount equal to the amount of such interest.
(iii) Base Rent with respect to any Transponder during any
Renewal Term shall be payable as provided in Section 18.
(c) Supplemental Rent.
-----------------
(i) Lessee shall pay to Lessor, for its own account, or to any
Person entitled thereto, as provided herein or in any other Operative
Document, any and all Supplemental Rent promptly as the same shall become
due and payable.
(ii) As Supplemental Rent, Lessee shall pay, when due, on behalf
of Lessor, (A) to Contractor (or the Substitute Service Provider, if
applicable), an amount equal to any amounts due from Lessor to Contractor
under the Service Agreement (or any Substitute Service Agreement) and (B)
to Seller an amount equal to any amounts due from Buyer to Seller under the
Purchase Agreement, other than Buyer's Cost, in each case with respect to
any Transponder for the period that such Transponder is subject to this
Lease.
(iii) As Supplemental Rent, Lessee shall pay, when due, on behalf
of Lessor, to Agent, for its own account or for the account of the
Noteholder entitled thereto, any amounts due under Section 2.16, 2.17, 2.18
or 3 of the Loan Agreement, unless paid by Lessee directly to Agent or the
applicable Noteholder pursuant to clause (i) above.
(d) Method of Payment. Subject to Section 21, all Rent (other than
-----------------
Excepted Payments) payable to Lessor shall be paid to Agent (to its account as
set forth on Item 5 to Schedule E hereto, or such other account as Agent may
----------
hereafter designate in writing) for so long as the Lien of the Loan Agreement
shall remain in effect and thereafter to Lessor. All Supplemental Rent
including any Excepted Payment payable to any Person pursuant to any Operative
Document or any Xxxxxx Agreement shall be paid to such Person as provided in
such Operative Document or Xxxxxx Agreement. Each payment of Rent shall be made
by Lessee in immediately available funds, prior to 1:00 p.m. (New York City
time, at the place of payment as designated in Section 3(i) hereof), on the
scheduled date on which such payment shall be due, unless such scheduled date
shall not be a Business Day, in which case such payment shall be due and payable
on the immediately succeeding Business Day with the same force and effect as if
made on such scheduled date, and (provided such payment is made on such next
succeeding Business Day) no interest shall accrue on the amount of such payment
from and after such scheduled date.
3
(e) Late Payment. If any Rent shall not be paid when due, Lessee
------------
shall pay to Lessor or to Agent, as the case may be (or, in the case of
Supplemental Rent, to any Person entitled thereto as provided herein or in any
other Operative Document or Xxxxxx Agreement), as Supplemental Rent, interest
(to the extent permitted by law) on such overdue amount from and including the
due date thereof to but excluding the date of payment thereof (unless payment is
made after 1:00 p.m. (local time, at the place of payment as designated in
Section 3(i) hereof), in which event such date of payment shall be included) at
the Overdue Rate.
(f) Minimum Payment. Notwithstanding any other provision of the Lease
---------------
(including, without limitation, Section 3(h)) or any other Operative Document or
Xxxxxx Agreement, (1) for any Transponder, the amount of Base Rent and Deferred
Equity Amount, as the same may be adjusted pursuant to Section 13.01 or 13.02,
subject to Sections 13.03 and 13.04, of the Participation Agreement, as
applicable, which is payable on any day specified in this Lease (or a Schedule
thereto) for the making of such payment, shall be at least equal to an amount
sufficient to make all payments of scheduled principal, if any, and accrued
interest due and payable on such day (or the next Business Day, if such day is
not a Business Day) on the Notes then outstanding in respect of such Transponder
and (2) for any Transponder, the amount of Stipulated Loss Value, Termination
Value and the EBO Amount, as each such amount may be adjusted pursuant to
Section 13.01 or 13.02, subject to Sections 13.03 and 13.04, of the
Participation Agreement, as applicable, together with Base Rent payable under
this Lease on any day specified in this Lease (or Schedule thereto) for the
making of such payment in respect of such Transponder shall be at least equal to
an amount sufficient to make all payments of principal and accrued interest
which would be due and payable on such day (or the next Business Day, if such
day is not a Business Day) on the Notes then outstanding in respect of such
Transponder, assuming such day or the EBO Date, as the case may be, was the date
such payment was due on the Notes in respect of such Transponder in connection
with any payment by Lessee of such Stipulated Loss Value, Termination Value or
EBO Amount.
(g) Net Lease; No Setoff, etc. This Lease is a net lease and,
--------------------------
notwithstanding any other provision of this Lease to the contrary (except as
expressly provided in Section 3(h) hereof), the obligation of Lessee to pay Rent
hereunder and under any other Operative Document shall be absolute and
unconditional and shall not be affected by any circumstance of any character,
including, without limitation: (1) any counterclaim, setoff, recoupment,
interruption, deduction, defense, abatement, suspension, deferment, diminution
or reduction; (2) any defect in the condition, design, quality, operation or
fitness for use or purpose of the Transponders, or any part thereof or interest
therein; (3) any damage to, removal, abandonment, salvage, loss, scrapping or
destruction of, or any requisition or taking of, the Transponders, or any part
thereof or interest therein; (4) any restriction, prevention, interruption or
curtailment of or interference with any use, operation or possession of the
Transponders, or any part thereof or interest therein; (5) any defect in, or any
Lien on, title to the Transponders, or any part thereof or interest therein or
any other restriction thereon; (6) any change, waiver, extension, indulgence or
other action or omission in respect of any obligation or liability of Seller,
Guarantor, Lessee or Lessor; (7) any bankruptcy, insolvency, reorganization,
discharge or forgiveness of indebtedness, composition, adjustment, dissolution,
liquidation or other like proceeding relating to Seller, Guarantor, Lessee,
Agent, Lessor, Owner Participant, any Noteholder or any other Person, or any
action taken with respect to this Lease by any trustee or receiver of any Person
mentioned above, or by any court; (8) any claim that Lessee or Guarantor has or
might have against any Person, including, without limitation, Agent, any
Noteholder, Lessor or Owner Participant (but this Section 3(g) shall not
constitute a waiver of any such claims); (9) any failure on the part of Lessor,
Agent, Owner Participant or any Noteholder to perform
4
or comply with any of the terms hereof or of any other Operative Document or
Xxxxxx Agreement; (10) any invalidity or unenforceability or impossibility of
performance, or disaffirmance, of any provision of this Lease or any of the
other Operative Documents or Xxxxxx Agreement, whether against or by Seller,
Lessee or Guarantor or otherwise; (11) any Applicable Laws now or hereafter in
force; (12) any failure to obtain or to have obtained any required governmental
consent for a transfer of rights or title by Seller to Owner Participant on the
Closing Date or by Owner Participant to Owner Trustee on the Commencement Date;
(13) any amendment or other change (except as to the subject matter of any such
amendment or change), or any assignment of, any rights under any Operative
Document or Xxxxxx Agreement, or any waiver or other action or inaction under or
in respect of any Operative Document or Xxxxxx Agreement, or any exercise or
nonexercise of any right or remedy under or in respect of any Operative Document
or Xxxxxx Agreement, including, without limitation, any foreclosure or other
remedy under the Loan Agreement or this Lease or the sale, pursuant to any such
foreclosure or such exercise of other remedy, of any Transponder or any portion
thereof or interest therein; or (14) any other occurrence whatsoever, whether
similar or dissimilar to the foregoing, whether or not Lessee shall have notice
or knowledge of any of the foregoing. Except as expressly provided herein,
Lessee, to the extent permitted by law, waives all rights now or hereafter
conferred by statute or otherwise to quit, terminate or surrender this Lease, or
to any diminution or reduction of Rent payable by Lessee hereunder. If this
Lease shall be terminated in whole or in part for any reason whatsoever except
as expressly provided in this Lease, Lessee shall nonetheless pay to Lessor (or,
in the case of Supplemental Rent, to Lessor for its own account or to any Person
entitled to such Supplemental Rent as specified herein or in the appropriate
Operative Document or the Xxxxxx Agreement), an amount equal to each Rent
payment at the time and in the manner that such payment would have become due
and payable under the terms of this Lease if it had not been terminated in whole
or in part. Except with respect to payment of any Advance Amount and as
otherwise provided in Section 3(h) hereof, each payment of Rent shall be final,
and Lessee agrees not to seek to recover all or any part of any such payment
from Lessor, Agent or Owner Participant for any reason under any circumstance
whatsoever; provided, however, that nothing contained in this Section 3(g) shall
-------- -------
prevent Lessee from bringing an action for damages suffered by Lessee as a
result of the breach by any Person of any obligation of such Person expressly
stated in any Operative Document or Xxxxxx Agreement or for equitable relief to
obtain compliance with any such obligation, or for the return of mistakenly paid
amounts of any Rent or from exercising the rights set forth in Section 3(h)
hereof. Nothing contained in this Section 3(g) shall be construed as: (1) a
guaranty of (i) the value of the Transponders upon termination of the Basic Term
or any Renewal Term or (ii) the useful life of the Transponders or (iii) payment
of any of the Notes; or (2) a prohibition of assertion of any claim against any
manufacturer, supplier, dealer, vendor, contractor, subcontractor or installer
with respect to the Transponders; or (3) a waiver by Lessee of its right to
assert and xxx upon any claims it may have against any other Person in one or
more separate actions.
(h) Repayment of Advance Amount. Lessee shall be repaid, in the
---------------------------
manner provided in the next sentence, any amounts constituting Advance Amount
(which shall mean any portion of the Deferred Equity Amount advanced by Lessee
pursuant to Section 3(b)(i) hereof (excluding any portion thereof required to be
paid by Lessee pursuant to Section 2.07(b) of the Participation Agreement) plus
interest thereon at a simple interest rate of 14% per annum from the date that
any portion of such Deferred Equity Amount is advanced by Lessee to but not
including the date such amounts are repaid by Lessor). In order to effect a
repayment of the Advance Amount, Lessee shall be entitled to offsets (without
duplication) against any payments of Rent (other than as limited by the three
provisos to this sentence) due from Lessee to Lessor (including, without
limitation, Base Rent, Supplemental Rent, Stipulated Loss Value, Termination
Value or the EBO Amount and all other amounts payable to Lessor
5
in connection with any termination of this Lease, but excluding Excepted
Payments payable to the Trust Company) until Lessee has received the full amount
of the Advance Amount, whether by cash payment, offsets as herein provided, or
any combination thereof; provided, however, that, in case of any payment due to
-------- -------
Lessor from Lessee, Lessee's right of offset shall be limited to the portion of
such payment, if any, distributable to Lessor under the Loan Agreement; provided
--------
further, however, that, no such offset or aggregate combined effect of separate
------- -------
offsets shall reduce the amount of any installment of Base Rent, amounts due
under Section 3(b)(i), Stipulated Loss Value, Termination Value or the EBO
Amount as of any date payable under this Lease to an amount that would be in
contravention of the minimum payment requirements of Section 3(f) or reduce the
amount of any Break Funding Costs that may be payable to the Noteholders; and
provided further, however, that Lessee shall have no right of offset so long as
-------- ------- -------
any Payment Default, Bankruptcy Default or Event of Default has occurred and is
continuing.
(i) Place of Payment. All Rent (other than Rent payable to Persons
----------------
other than Lessor as provided in any of the Operative Documents or Xxxxxx
Agreements, which shall be payable to such other Persons in accordance with
written instructions furnished to Lessee by such Persons) shall, subject to
Section 3(d) hereof, be paid by Lessee to Lessor to its account specified in
Item 6 to Schedule E hereto, or such other account as Lessor may hereafter
----------
designate in writing. All Rent shall be paid by Lessee by wire transfer of
immediately available funds in Dollars.
SECTION 4. Recomputation of Rent, Stipulated Loss Value, Termination
---------------------------------------------------------
Value, and EBO Amount. Adjustments to Rent and other Factors shall be made in
---------------------
accordance with Section 13.01 or 13.02, subject to Sections 13.03 and 13.04, of
the Participation Agreement, as applicable. Upon each such adjustment, Schedule
--------
A, B, C or D, as applicable, as originally attached hereto on the Commencement
- - - -
Date, shall be replaced by a new schedule reflecting such adjustment.
SECTION 5. Representations, Warranties and Agreements as to the
---------- ----------------------------------------------------
Transponders.
------------
(a) Disclaimer of Warranties. AS BETWEEN LESSEE AND LESSOR, THE
------------------------
DEEMED DELIVERY AND ACCEPTANCE OF EACH TRANSPONDER BY LESSOR AND LESSEE,
RESPECTIVELY, PURSUANT TO SECTION 2 SHALL BE CONCLUSIVE PROOF OF SUCH
TRANSPONDER'S COMPLIANCE WITH ALL REQUIREMENTS OF THIS LEASE, AND LESSOR LEASES
AND LESSEE TAKES SUCH TRANSPONDER AND ANY PART THEREOF AS IS, WHERE IS, WITH ALL
FAULTS, AND LESSEE ACKNOWLEDGES THAT NONE OF LESSOR, THE TRUST COMPANY, OWNER
PARTICIPANT, ANY NOTEHOLDER AND AGENT HAS MADE, NOR SHALL BE DEEMED TO HAVE
MADE, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, MERCHANTABILITY, DESIGN,
QUALITY, DURABILITY, OPERATION OR FITNESS FOR USE OR PURPOSE OF SUCH TRANSPONDER
OR ANY PART THEREOF, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO SUCH TRANSPONDER OR ANY PART THEREOF OR
OTHERWISE, IT BEING AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY
LESSEE IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN SUCH TRANSPONDER OR ANY PART
THEREOF, OF ANY NATURE WHETHER PATENT OR LATENT, AND THAT NONE OF LESSOR, THE
TRUST COMPANY, OWNER PARTICIPANT, ANY NOTEHOLDER AND AGENT SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO, except that Lessor hereby
represents, warrants and covenants that (A) on the Commencement Date, Lessor
shall have
6
whatever title to such Transponder, subject to Permitted Liens (other than those
referred to in clause (b) of the definition thereof), that was conveyed to it by
Owner Participant under the GMAC Xxxx of Sale on the Commencement Date, and (B)
during the Lease Term (so long as no Event of Default shall have occurred and be
continuing) Lessor will not, through its own actions or inactions, interfere
with the quiet enjoyment of any Transponder by Lessee and Lessor further agrees
that it will not directly or indirectly create, incur, assume or suffer to exist
any Lessor Lien on or with respect to any Transponder. The provisions of this
Section 5(a) have been negotiated, and except as expressly provided in the
Operative Documents, the foregoing provisions are intended to be a complete
exclusion and negation of any warranties by Lessor, the Trust Company, Owner
Participant, any Noteholder and Agent, express or implied, with respect to such
Transponder, whether arising pursuant to the Uniform Commercial Code or any
other law now or hereafter in effect, or otherwise. Nothing contained herein
shall in any way diminish or otherwise affect any right Lessee may have with
respect to any Transponder against any other third person. None of Lessor, the
Trust Company, Owner Participant, any Noteholder and Agent shall at any time be
required to inspect such Transponder, nor shall any inspection by Owner
Participant, Lessor, the Trust Company, any Noteholder or Agent be deemed to
affect or modify the provisions of this Section 5(a).
(b) Exercise of Certain Rights under the Xxxxxx Agreements.
------------------------------------------------------
(i) HCG, in its capacity as Seller under the Xxxx of Sale and the
Purchase Agreement, is making certain representations and warranties and
undertaking certain payment obligations to Lessor in its capacity as Buyer
under the Purchase Agreement and as assignee of the Xxxx of Sale with
respect to the Transponders. None of the provisions of the Xxxx of Sale or
the Purchase Agreement is, as such, incorporated in this Lease and LESSOR
ACKNOWLEDGES THAT LESSEE, IN ITS CAPACITY AS LESSEE, HAS NOT MADE NOR SHALL
BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
WITH RESPECT TO ANY TRANSPONDER, OR ANY PART THEREOF, IN THIS LEASE, THE
XXXX OF SALE OR ANY OF THE OTHER OPERATIVE DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, AS TO THE TITLE, VALUE, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OR PURPOSE OF SUCH TRANSPONDER, AS TO THE ABSENCE OF LATENT
OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO
SUCH TRANSPONDER OR ANY PART THEREOF, EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED IN THE OPERATIVE DOCUMENTS. The foregoing is not in any way
intended to, nor shall it be deemed to, limit or otherwise affect the
obligations or representations or warranties of HCG under Section 4.01 of
the Participation Agreement or Lessee under Article VI of the Participation
Agreement, of Seller under the Purchase Agreement or of Contractor under
the Service Agreement.
(ii) Lessor hereby agrees that so long as no Event of Default
shall have occurred and be continuing with respect to a Transponder, Lessor
shall not exercise, during the Lease Term for such Transponder, any of its
rights under the Xxxxxx Agreements in respect of such Transponder,
including any of its rights to any indemnity or other payments with respect
to such Transponder; provided that Lessee cannot waive the obligations of
--------
Seller or Contractor,
7
and Lessor may exercise any rights and remedies it might have, under
Sections 5.1, 5.3, 5.5, 8.1, 14.2, 15.10, 15.12 and the last sentence of
15.16 of the Purchase Agreement and under Article 7 and Sections 2.1(b),
4.1, 4.2, 4.5, 4.7, 6.3, 6.4, 12.10 and 12.12 of the Service Agreement;
provided, in addition that, notwithstanding anything to the contrary in the
-------- -- --------
foregoing, Lessor shall, at all times, retain the right to defend its title
to the Transponders and to enforce its rights under the Lease or the
Purchase Agreement or the Participation Agreement to cause Lessee or Seller
or Owner Participant, as applicable, to defend such title in accordance
with the provisions hereof or thereof. Lessee may consent to the
preemption or interruption of any Transponder by Seller under Section 7.1
of the Purchase Agreement, without regard to the Transponder Priority List
set forth in Appendix E thereto, and such preemption or interruption shall
not constitute a Confirmed Failure (if it would otherwise constitute a
Confirmed Failure) only if: (a) such preemption or interruption will not
adversely affect the ability (1) of Lessee to meet its obligations under
this Lease or any of the Operative Documents or Xxxxxx Agreements to which
it is a party or (2) of such preempted or interrupted Transponder to meet
the Transponder Performance Specifications upon the cessation of such
preemption or interruption or otherwise cause an Adverse Effect to
Lessor's (or to Owner Participant's) interest in such Transponder upon the
expiration or termination of the Lease; (b) at the time such preemption or
interruption ceases, such Transponder meets the applicable Transponder
Performance Specifications; and (c) Lessee (and Seller, if the two parties
shall be different entities) shall deliver to Lessor an Officer's
Certificate (or Officer's Certificates, if applicable) prior to such
preemption or interruption confirming (A) the statement set forth in clause
(a) above and (B) that, based on information available to Lessee at such
time, Lessee reasonably believes that the Transponder will be capable of
meeting the Transponder Performance Specifications therefor upon cessation
of such preemption or interruption. At such time as any of the foregoing
conditions is not met, then the Confirmed Failure of such Transponder
shall, if the other conditions for a Confirmed Failure are met, be deemed
then to have occurred. Lessor hereby authorizes Lessee, for so long as this
Lease shall be in effect with respect to any Transponder and so long as no
Event of Default shall have occurred and be continuing, to exercise in the
name of and on behalf of Lessor, the right and power to deal with the
Seller and Xxxxxx Services under the Xxxxxx Agreements and any other
manufacturer or supplier of such Transponder or any other users of the
transponders on the Satellite including, without limitation, the right to
demand, receive, accept and retain all services, tests, inspection rights,
reports and other data and services with respect to such Transponder as
provided in the Purchase Agreement and the Service Agreement, and the right
to enforce (by legal action or otherwise) or to elect not to enforce
(except in such manner as would have a material adverse effect on Lessor's
interest in the Transponders upon expiration or termination of the Lease)
against such Seller, Xxxxxx Services, other manufacturer or supplier or
other user all rights, powers and privileges of Lessor, and to receive all
benefits (subject to Sections 12(b), 12(c) and 12(d) of Lessor with respect
to Seller, Xxxxxx Services, such other manufacturer or such supplier or
such other user, under any express or implied warranty or indemnity or
other provisions of the Xxxxxx Agreements or substitute agreements in
effect, pursuant to Section 7(b) or otherwise, including, without
limitation, the right to enforce (or not enforce (except in such manner as
would have a material adverse effect on Lessor's interest in the
Transponders upon the expiration or termination of the Lease)) and the
right to obtain and retain the benefits of, all rights and claims of Buyer
under the Purchase Agreement or of Owner under the Service Agreement;
provided that, notwithstanding any term or provision of this Section
--------
5(b)(ii) to the contrary, Lessor and Owner Participant shall retain the
right to any Excepted Payment owing to either of them, respectively.
8
(iii) If, notwithstanding the foregoing, Lessor receives any payment
of any kind whatsoever under the Purchase Agreement or the Service
Agreement during the Lease Term to which Lessee is entitled pursuant to
Section 5(b)(ii), Lessor shall upon receipt remit to Lessee the full amount
of the payment received by it under the Purchase Agreement, or the Service
Agreement, as the case may be; provided that no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing; provided
--------
further, however, that Lessor shall promptly remit such amounts to Lessee
------- -------
at such time as no Payment Default, Bankruptcy Default or Event of Default
is continuing.
SECTION 6. Liens; Quiet Enjoyment; Assignment and Sublease.
-----------------------------------------------
(a) Liens. Lessee shall not directly or indirectly create, incur,
-----
assume or suffer to exist any Lien on or with respect to any Transponder, the
Lessor's Estate or the Collateral Security, or title thereto or any interest
therein, except Permitted Liens. Lessee's obligations under this Section 6(a)
with respect to any Lien, other than Owner Participant Liens or Lessor Liens, on
any Transponder arising prior to the termination of this Lease shall survive
such termination.
(b) Quiet Enjoyment. So long as no Event of Default shall have
---------------
occurred and be continuing, as between Lessee and Lessor, Lessee shall have the
exclusive rights to possession and control of each Transponder and Lessor shall
not take any action that interferes with the quiet enjoyment of the use or non-
use of any Transponder by Lessee, and Lessee shall have the right to use or not
use such Transponder in its sole discretion.
(c) Use Agreements. So long as no Lease Rental Payment Default,
--------------
Bankruptcy Default or Event of Default shall have occurred and be continuing,
Lessee may, without the consent of or prior notice to Lessor, (x) assign its
leasehold interest in this Lease, in whole or in part, including any of Lessee's
rights or options hereunder (a "Lease Assignment"), and (y) sublease, license,
----------------
enter into short term or long term service contracts with any Person (including,
without limitation, to a "tax-exempt" entity as defined in Section 168(h) of the
Code), transfer Control of, or permit Seller or any other such Person
(including, without limitation, to a "tax-exempt" entity as defined in Section
168(h) of the Code) to use all or any part of any Transponder or Transponders
during the Lease Term (collectively, the "Use Agreements"; such Use Agreements
--------------
not including for the purposes of Sections 6(c)(i) and 6(c)(iv) any occasional
use service contract for the provision of part-time, occasional use transponder
capacity on available Ku-band or C-band transponders on satellites, including
the Satellite, owned or operated by Lessee or any Affiliate thereof and not
expressly required to be made available using any of the Transponders leased
hereunder (an "Occasional Use Service Contract")), on and subject to the
-------------------------------
following terms and conditions:
(i) except as otherwise provided in Section 6(d), such Use
Agreements shall expressly provide that the rights of any sublessee,
assignee, user or operator thereunder (collectively, "User") are subject
----
and subordinate to all the terms and conditions of this Lease, including,
without limitation, Lessor's right to repossess any Transponder and
terminate such Use Agreements upon the occurrence of an Event of Default or
other termination of this Lease, except that any Use Agreement with a term
of one (1) year or less shall not be required to be so subject and
subordinate, so long as, if entered into during the last year of the Basic
Term or Renewal Term (as applicable), the term of such Use Agreement does
not extend beyond such Basic Term or Renewal Term (as applicable);
9
(ii) Lessee shall remain primarily liable to Lessor for the
performance of all of the terms of this Lease to the same extent as if such
Use Agreements had not occurred;
(iii) the terms and conditions of such Use Agreements (A) shall
not be in violation of Applicable Law and (B) shall not be inconsistent
with the terms of this Lease, provided that the term thereof may extend
--------
beyond the expiration of the Lease Term, subject to (except as otherwise
provided in Section 6(d)) the provisions of Section 6(c)(i) above and
Section 6(e); and
(iv) except as otherwise provided in Section 6(d), such Use Agreements
shall prohibit the User from entering into any Further Use Agreements
without obtaining (x) the written consent of Lessee and (y) an agreement by
any such User further transferring its rights to comply with the terms and
conditions of this Section 6(c), including, without limitation, the
requirement that any such Further Use Agreement be expressly subject and
subordinate to this Lease to the same extent as such Use Agreement.
No Lease Assignment shall be made unless: (i) assignee executes an
assignment and assumption agreement reasonably satisfactory to Lessor, which
agreement shall include the agreement therein that references in the Lease to
"Lessee" shall include, where appropriate, HCG, assignee or both, including,
without limitation, in the context of provisions concerning Events of Default;
(ii) with respect to the assignment of any of Lessee's technical obligations
hereunder, assignee shall be technically qualified to perform such obligations,
as reasonably determined by Lessee; (iii) a financing statement or statements
with respect to any assignment agreement entered into with respect to such Lease
Assignment shall be filed in such place or places as reasonably requested by
Agent and all other action as is reasonably requested by Agent in order to
perfect the security interest therein (and with respect to the Transponders
only, only to the extent such security interest was capable of perfection prior
to such Lease Assignment) created by or pursuant to the Loan Agreement shall be
taken and an executed chattel paper original counterpart of any such assignment
agreement shall be delivered by Lessee to Agent; (iv) Lessee shall cause to be
delivered to Agent and Lessor an opinion of counsel to the assignee to the
effect that the Lease Assignment is a valid and binding obligation of the
assignee (subject to customary exceptions), such opinion to be in form and
substance reasonably satisfactory to Lessor and Agent; and (v) Guarantor shall
have confirmed that the Guarantee Agreement shall remain in full force and
effect.
Subject to the provisions of this Section 6(c) and the Xxxxxx
Agreements, Lessee may render any communications service, so long as the
foregoing provisions of this Section 6(c) shall apply, and Lessee or any
Affiliate thereof may provide Transponder or Transponders capacity by Lessee or
any Affiliate of Lessee to any of their respective customers in the ordinary
course of their respective businesses; provided that no rendering of any such
communications service or the providing of Transponder or Transponders capacity,
and neither the entering into or performing of any agreement related thereto,
shall operate to reduce, excuse or in any way affect the obligations of Lessee
hereunder and under the other Operative Documents or the Xxxxxx Agreements to
which it is a party; and as to which Lessee will remain primarily liable.
(d) GLA Sublease. Notwithstanding any provision of Sections 6(c) and
------------
6(e) to the contrary, at Lessee's election, clauses (i), (iii)(B) and (iv) of
Section 6(c) and Section 6(e) shall not apply to the GLA Sublease, the GLA
Sublease shall not be subject and subordinate to this Lease (and may
10
contain a provision granting quiet enjoyment to GLA (and its successors and
permitted assigns) under the GLA Sublease during the term thereof), if and so
long as:
(i) the rental payments provided for the Transponders under the
GLA Sublease are determined by Lessee, at the time the GLA Sublease is
entered into, in good faith, after consultation with an independent third
party to represent the then fair market value to Lessee of the lease of
such Transponders; and such determination by Lessee shall be conclusive as
to such market value;
(ii) effective upon the occurrence of an Event of Default, the
GLA Sublease is assigned by Lessee to Lessor and collaterally assigned by
Lessor to Agent as additional Collateral Security within 10 days after the
occurrence of such Event of Default (and the original copy of the GLA
Sublease is delivered by Lessee or GLA to Agent during said 10-day period,
provided that the GLA Sublease being "Proprietary Information" within the
--------
meaning of Section 16.02 of the Participation Agreement, Agent (or Lessor,
as applicable) shall hold it subject to the confidentiality requirements of
Section 16.01 of the Participation Agreement); and
(iii) at the effective time of such assignment, (A) GLA is not in
default of its obligations under the GLA Sublease and (B) either the
creditworthiness of GLA (or its applicable successor or assign) is
reasonably satisfactory to Owner Participant and a Majority In Interest of
Noteholders or GLA (or its applicable successor or assign) secures a letter
of credit for the benefit of Lessor, which letter of credit is collaterally
assigned by Lessor to Agent as additional Collateral Security, and is in an
amount and on terms and conditions reasonably satisfactory to Owner
Participant and a Majority In Interest of Noteholders.
Lessor agrees that it shall take any and all actions reasonably
requested by Lessee or Agent to cause the collateral assignments to Agent
contemplated by clauses (ii) and (iii)(B) above to be timely effected in a
manner reasonably satisfactory to Agent.
Except as specifically provided in this Section 6(d), Lessee shall not
have any obligation to assign the User Agreements to Lessor.
(e) Return of Transponders. Subject to Section 6(c)(i), any Use
----------------------
Agreement may by its terms extend, or be extended by the User, beyond the Lease
Term, provided that each Transponder shall, at the time of Redelivery to Lessor
pursuant to Section 10, be free and clear of any continuing rights of or
obligations to any User unless Lessor shall otherwise expressly agree in writing
at the request of Lessee; provided that the provisions of this Section 6(e)
--------
shall not apply to the GLA Sublease.
SECTION 7. Operation; Maintenance; Compliance with Law; Location of
--------------------------------------------------------
Satellite; Substitution of Transponders.
---------------------------------------
During the Lease Term with respect to any Transponder:
(a) Operation. Subject to Section 5(b)(ii), Lessee shall observe and
---------
perform each and every obligation (and shall exercise all rights where failure
to do so would have a material adverse effect on Lessor's interest in the
Transponders upon the expiration or termination of the Lease) of Buyer under the
Purchase Agreement and Owner under the Service Agreement to the extent the same
relate to such
11
Transponder, and shall keep the same in full force and effect. Lessee shall not
use any Transponder during the Lease Term or authorize any third party to use
such Transponder in breach of the Purchase Agreement, the Service Agreement or
any Applicable Laws applicable to Lessee, Lessor (in its capacity as such
Transponder owner without regard to Applicable Laws applicable to Lessor solely
because of its being engaged in a regulated activity of any type other than the
owning and leasing of the Transponder), Owner Participant (in its capacity as
such Transponder owner without regard to Applicable Laws applicable to Owner
Participant solely because of its being engaged in a regulated activity of any
type other than the owning and leasing of the Transponder), such third party or
such Transponder (in each case, other than Applicable Laws as to which
noncompliance would not have an Adverse Effect), or in violation of any
authorization relating to such Transponder or the Satellite or Lessee issued by
any Governmental Authority having jurisdiction over such Transponder, the
Satellite or Lessee other than (i) any provision of such Applicable Law,
authorization or insurance as to which noncompliance would not have an Adverse
Effect or (ii) unless the validity of such Applicable Law or authorization is
being contested in good faith and by appropriate proceedings (but only so long
as such proceedings do not involve any risk of civil or criminal liability to
Lessor, Owner Participant or Agent, and do not involve any material danger of
the sale, forfeiture, loss or diminution in value of such Transponder or the
rights or interests of Lessor or Owner Participant or Agent under any Xxxxxx
Agreement or any Operative Document and adequate reserves with respect thereto
shall have been established in accordance with GAAP). As used herein, "Adverse
-------
Effect" shall mean that which would materially adversely affect the business,
------
operations or properties of Guarantor on a consolidated basis or involve any
material danger (x) of the loss of any FCC authorization to operate the
Satellite or maintain it in the orbital location permitted by Section 7(d), (y)
of any material adverse effect on the ability of Lessee to perform its
obligations hereunder and under the Purchase Agreement or of the sale,
forfeiture, loss or diminution in value of any Transponder, or (z) of the
imposition of criminal or civil liability on Lessor, Owner Participant, any Loan
Participant or Agent.
(b) Maintenance. Lessee hereby agrees to require Xxxxxx Services to
-----------
fulfill all of its obligations under the Service Agreement. Lessee, as Seller,
shall fulfill all of its obligations under the Purchase Agreement. Lessee will
pay to Xxxxxx Services on behalf of Lessor an amount equal to all payments
required to be made by Lessor during the Lease Term to Xxxxxx Services under the
Service Agreement as Supplemental Rent pursuant to Section 3(c)(ii), and will on
behalf of Lessor perform all other obligations thereunder required to be
performed by Lessor, with respect to such Transponder during the Lease Term. So
long as during the Lease Term the Service Agreement or a Substitute Service
Agreement shall have remained in full force and effect and Xxxxxx Services (or a
Substitute Service Provider (as defined below), if applicable) or Lessee shall
have performed all of its obligations, if any hereunder and thereunder, as
applicable, with respect to such Transponder, all maintenance, management and
monitoring responsibilities of Lessee in connection with such Transponder shall
be deemed fulfilled, and Lessee shall have no additional independent obligations
hereunder relating thereto.
In the event that at any time during the Lease Term the Service
Agreement shall no longer be in full force and effect or Xxxxxx Services shall
fail to perform its obligations thereunder with respect to such Transponder,
Lessee, at its expense, shall maintain, manage and monitor, or cause to be
maintained, managed and monitored, the Satellite and such Transponder in good
working order and repair, ordinary wear and tear excepted, (i) in accordance
with the higher of (A) customary industry standards employed by owners of Ku-
Band transponders on domestic communications satellites or (B) standards at
least equal to those used by Xxxxxx Services or any of its Affiliates prior to
such failure of performance for other transponders on the Satellite or on
another similar satellite owned, leased or
12
operated by Xxxxxx Services or any of its Affiliates (if at the time Xxxxxx
Services or any Affiliate thereof maintains, manages or monitors satellites
similar to the Satellite for similar commercial purposes); (ii) in compliance
with all Applicable Laws (other than Applicable Laws as to which noncompliance
would not have an Adverse Effect); and (iii) in accordance with all applicable
requirements of any insurance policy then in effect that is required by Section
9 hereof. The foregoing notwithstanding, if, with respect to any Transponder,
Contractor or Substitute Service Provider is unable temporarily to perform its
maintenance obligations under the Service Agreement or any Substitute Service
Agreement due to any Force Majeure Event, then, provided such temporary failure
to perform does not cause a permanent material diminution in the value of such
Transponder and is capable of cure before any such permanent diminution in value
would result, such failure shall not constitute a breach of Lessee's obligations
under this Lease.
Without limiting the generality of the foregoing, at any time during
the Lease Term, if the Service Agreement shall not be in effect, Lessee will
arrange for Lessor to enter into and Lessee will keep in full force and effect
for the remainder of the Lease Term an agreement for the provision of services
(the "Substitute Service Agreement") comparable to those to be provided by
----------------------------
Xxxxxx Services under the Service Agreement at a reasonable cost with a sound
and reputable service provider, which may or may not be an Affiliate of Xxxxxx
Services (the "Substitute Service Provider"), and which such provider shall be
---------------------------
reasonably acceptable to Lessor and, for so long as the Loan Agreement shall be
in effect, Agent. If Lessor enters into a Substitute Service Agreement, it will
assign its rights under such agreement to Lessee during the Lease Term on the
terms and conditions contained in Section 5(b)(ii).
(c) Compliance with Law. During the Lease Term with respect to any
-------------------
Transponder, Lessee or Contractor shall have and maintain all permits, licenses
and approvals required by the FCC or under any Applicable Law to operate the
Satellite and such Transponder and shall satisfy the requirements of the FCC and
any statute, regulation or order applicable to operators, users or lessees of
such Transponder; provided, however, that Lessee shall not be deemed to have
-------- -------
breached the foregoing covenant unless such non-maintenance or non-satisfaction
would have an Adverse Effect. To the extent permitted by law, Lessee or any
Affiliate thereof shall prepare and file in timely fashion, or, where Lessor,
Owner Participant or Agent shall be required so to file, prepare and deliver to
such Person within a reasonable time prior to the date for filing, any reports
with respect to any Transponder which are required to be filed with any
Governmental Body during the Lease Term for such Transponder. Lessor shall
notify Lessee promptly after Lessor has Actual Knowledge of any reports or
filings required of Lessor by law in connection with its ownership of the
Transponders; provided, however, that Lessor shall not incur any liability to
-------- -------
Lessee for failure so to notify Lessee. If Lessee shall fail to timely prepare,
deliver or file any such report solely as a result of the failure of Lessor,
Owner Participant or Agent timely to provide Lessee with (i) any information
required in such report which is in the possession of Lessor, Owner Participant
or Agent and is not reasonably available to Lessee or (ii) notice of the
requirement of such report if such report is required as to Lessor, Owner
Participant or Agent for any reason other than such Person's interest in the
Transponder or Transponders then subject to this Lease, Lessee shall incur no
liability to any such Person failing to provide such information or notice to
the extent such liability is incurred by the failure to provide such information
or notice (unless Lessee already had Actual Knowledge of such requirement,
Lessee fails to request such information from such Person and such failure has
an Adverse Effect). Lessor hereby appoints Lessee its attorney-in-fact, to the
extent permissible by Applicable Law, to execute such reports in the name of
Lessor and to file such reports, and Lessor shall cooperate in furnishing Lessee
such information as is available to it which must be included in such reports.
Upon demand, Lessee shall reimburse Lessor, Owner Participant or Agent on
13
an After-Tax Basis for any reasonable out-of-pocket costs incurred by each such
Person, respectively, in connection with the preparation and filing of any such
reports. Lessee shall, on a periodic basis, furnish Lessor, Owner Participant
or Agent, as applicable, with a copy of all reports filed by Lessee on behalf of
such Person pursuant to this Section 7(c).
(d) Location of Satellite. During the Lease Term, Lessee shall not
---------------------
move (or cause or suffer to be moved) or seek to move the Satellite to an
orbital location different from the Permanent Orbital Location for the remaining
useful commercial life of such Satellite; provided, however, that Lessee (i)
-------- -------
may, and shall be obligated to, move the Satellite at any time or times if
required to comply with a requirement of the FCC (an "FCC Ordered Move") and
----------------
(ii) may seek to move, and may move, the Satellite as part of an overall
industry process which will increase or decrease the number of, or reallocate
the, available orbital locations and which involves a substantial number of
satellites being moved in a coordinated manner. Neither Lessee nor any of its
Affiliates shall seek any order or approval from the FCC requiring or allowing
the movement of the Satellite other than pursuant to clause (ii) of the proviso
to the immediately preceding sentence.
(e) Substitution of Transponder. Lessee shall have the right, in its
---------------------------
discretion, subject to the conditions set forth in this Section 7(e) to
substitute (a "Substitution"), from time to time during the Lease Term, for any
------------
Transponder leased hereunder another transponder of the same type (including,
without limitation, with respect to preemptibility) and power aboard any other
satellite owned by Lessee or an Affiliate of Lessee (a "Replacement
-----------
Transponder"). Upon fulfillment of the conditions specified in this Section
-----------
7(e), such Replacement Transponder shall be conveyed by Lessee to Lessor and
leased to Lessee hereunder.
The Substitution of a transponder pursuant to this Section 7(e) (or
Section 12(a)) shall be subject to fulfillment of the following conditions
precedent on the date of the proposed Substitution at Lessee's sole cost and
expense (and, in the case of clauses (iii), (iv), (v), (vi), (vii), (viii),
(ix), (x) and (xi) to the reasonable satisfaction of Lessor): (i) no Bankruptcy
Default or Event of Default shall have occurred and be continuing or will exist
immediately following the proposed Substitution; (ii) on the date of such
Substitution, the Replacement Transponder (A) shall meet the applicable
Transponder Performance Specifications set forth in Appendix D-1 to the Purchase
Agreement, (B) shall have a remaining useful commercial life equal to or greater
than the Transponder it is replacing, and (C) a Narrow Ku-Band Transponder shall
only be substituted for a Narrow Ku-Band Transponder and a Wide Ku-Band
Transponder for a Wide Ku-Band Transponder, and, in each case, such Replacement
Transponder shall have the same or greater value, utility and estimated residual
value as the Transponder it is replacing (all of (A), (B) and (C) as determined
pursuant to an appraisal performed by an appraiser selected by Lessee within ten
(10) Business Days of written notice from Lessee of a proposed Substitution,
which appraisal shall be performed within 30 days of the selection of the
appraiser); (iii) Lessor shall have received a xxxx of sale substantially in the
form of the Xxxx of Sale conveying title to such Replacement Transponder to
Lessor; (iv) if so requested by Lessor, or for so long as the Loan Agreement
shall be in effect, by Agent, Lessee shall have entered into a Lease Supplement
covering such Replacement Transponder and, if so requested by Agent, Lessor
shall have delivered a Loan Agreement Supplement to Agent; (v) Lessor shall
receive good and marketable title to such Replacement Transponder free and clear
of all Liens other than Permitted Liens of the type specified in clauses (a) and
(b) of the definition thereof; (vi) such Replacement Transponder shall be
covered by an assignment and consent instrument similar in form and substance to
the Consent and Agreement; (vii) Lessee shall have made arrangements reasonably
satisfactory to Lessor for Lessor to enter into the Service Agreement or the
14
Substitute Service Agreement or, if not then in effect, a service agreement
reasonably acceptable in form and substance to Lessor and, for so long as the
Loan Agreement shall be in effect, Agent with respect to the Replacement
Transponder; (viii) Lessee shall have delivered to Lessor and, for so long as
the Loan Agreement shall be in effect, Agent a certificate from an officer of
Lessee that the Replacement Transponder meets the required standards set forth
in (A), (B) and (C) of clause (ii), above; (ix) Lessee and Lessor (with the
consent of Agent, not to be unreasonably withheld, for so long as the Loan
Agreement shall be in effect) shall have entered into a transponder purchase
agreement, transponder service agreement and lease agreement covering such
Replacement Transponder on terms substantially similar to those contained in the
Purchase Agreement, Service Agreement and this Lease, respectively, such
agreements modified only to reflect the differences in the orbital location,
useful commercial life and other attributes unique to such other satellite, the
transponders thereon, and then-existing contractual commitments to owners of any
such transponders on such other satellite, provided that such then-existing
contractual commitments are substantially similar to the contractual commitments
to owners of transponders on the Satellite (each such agreement to be deemed for
all purposes thereafter, a Xxxxxx Agreement or Operative Document, as
applicable); (x) if requested by Owner Participant, Owner Participant shall have
received from tax counsel a tax opinion to the effect that the Owner Participant
is not incurring additional income tax risk as a result of such Substitution or,
in lieu of such tax opinion, and provided there is, in the opinion of tax
counsel, a reasonable basis for taking the reporting position requested by
Lessee, a tax indemnity by Lessee reasonably satisfactory to Owner Participant;
(xi) so long as the Loan Agreement is in effect, the provisions of Sections
15(a) and 15(b) of the Loan Agreement shall have been satisfied; and (xii) an
opinion of counsel delivered to Lessor as to the enforceability of the
agreements referred to in clause (ix) above, subject to customary exceptions.
If requested by Owner Participant, Lessor shall cause tax counsel to determine,
within five (5) Business Days of Lessee's written notice to Lessor of Lessee's
intent to exercise the foregoing Substitution right, whether it can provide the
tax opinion referred to in clause (x), above.
Upon the fulfillment of the foregoing conditions, Lessor will Transfer
to Lessee all of Lessor's right, title and interest in and to the Transponder to
be replaced as is, where is, free and clear of all Lessor Liens and Owner
Participant Liens, but otherwise without warranty, and will deliver to Lessee
such instrument as Lessee shall reasonably request releasing such Transponder
from this Lease. Upon such Substitution for all purposes hereof, such
Replacement Transponder shall be deemed to be a "Transponder" hereunder.
SECTION 8. Termination.
-----------
(a) Early Termination.
-----------------
(i) Provided that no Lease Rental Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, in the
event that Lessee shall in good faith determine that the Transponders, in
the aggregate, have become uneconomic, obsolete or surplus to Lessee's
requirements (as evidenced by a resolution to such effect adopted by the
Board of Directors of Lessee), Lessee shall have the option, during the
Basic Term (but not during any Renewal Term), upon furnishing a notice to
Lessor and Agent at least 180 days prior to the effectiveness thereof to
terminate this Lease with respect to all, but not less than all, of the
Transponders on any Rent Payment Date on or after the fifth anniversary of
the Commencement Date (the "Termination Date"). As a condition to any
----------------
transfer by Lessor of the Transponders or retention by Lessor of the
Transponders (each pursuant to this Section 8), any necessary
15
regulatory approvals in connection therewith shall have been obtained
(Lessee hereby agreeing to use reasonable best efforts to obtain or to
assist Lessor in obtaining such approvals).
During the period from the giving of such notice of termination
for the Transponders until 60 days prior to the Termination Date, Lessee,
as non-exclusive agent for Lessor, shall use commercially reasonable
efforts to solicit unconditional cash bids from Persons other than Lessee
or its Affiliates to purchase such Transponders on the Termination Date,
and Lessee shall, during the period from the giving of such notice of
termination until 60 days prior to the Termination Date (as set forth in
the preceding paragraph), from time to time at the request of Lessor or
Agent, inform Lessor and Agent of the results of its efforts and shall
certify to Lessor and Agent, at least 60 days prior to the Termination
Date, the amount and terms of each such bid which has theretofore been
submitted and the name and address of the party submitting such bid.
Lessor and Owner Participant shall each have the right to solicit bids or
each to make its own bid, provided that any bid by Lessor or Owner
Participant shall be submitted to Lessee prior to the disclosure by Lessee
to Lessor or Owner Participant of any other bids, but shall be under no
duty to solicit bids or to inquire into the efforts of Lessee to obtain
bids. Each such bid (a) shall be for payment in full in cash and (b) shall
not involve any consideration to be received by Lessee or its Affiliates or
be connected, directly or indirectly, with any transaction between the
purchaser and the Lessee or its Affiliates, (collectively, a "Bona Fide
---------
Bid"). On or prior to the 40th day prior to the Termination Date, Lessee
---
may (provided that Lessee has not previously canceled a proposed
termination except for a deemed cancellation as provided in Sections
8(a)(ii) and 8(c) hereto), by notice to Lessor and Agent, cancel the
proposed termination of this Lease for the Transponders, whereupon this
Lease shall continue in full force and effect with respect to the
Transponders.
If Lessee does not cancel such proposed termination as set forth
in the last sentence of the preceding paragraph and any Bona Fide Bids are
received on or prior to the 60th day before the Termination Date, Lessee's
notice of termination shall become irrevocable on the 10th Business Day
prior to the Termination Date and Lessor shall on the Termination Date,
provided that the conditions of subsection (b) have been fulfilled, sell
such Transponders to the bidder which shall have submitted the highest Bona
Fide Bid for such Transponders and which has not defaulted on its bid (or
to the next successively highest bidders, if any, which shall have
submitted Bona Fide Bids, in the case of a default by the prior bidder,
provided such sale shall have been consented to by Lessee if the Bona Fide
Bid related thereto is for an amount less than the applicable Termination
Value for the Transponders) for such Transponders upon receipt in
immediately available funds of the amount specified in such bid. Such
funds shall be paid either to Agent or to Lessor, as required pursuant to
the Loan Agreement. All reasonable out-of-pocket costs and expenses
incurred by Lessor or Agent including, without limitation, attorneys' fees,
in connection with any notice of termination, regardless of whether a sale
is completed or Lessee withdraws its notice of termination, shall be paid
by Lessee on an After-Tax Basis.
(ii) If no sale of the Transponders shall have occurred in
accordance with Section 8(a)(i) on the Termination Date, or if all bidders
having submitted Bona Fide Bids for such Transponders that were for an
amount at least equal to Termination Value for the Transponders (or if for
less than such Termination Value, the sale to such bidder was consented to
by Lessee) have defaulted on such bids, then the Lease shall continue in
full force and effect and the termination notice given by Lessee shall be
deemed to have been canceled by Lessee.
16
If no sale of the Transponders shall have occurred in accordance with
Section 8(a)(i), as a result of a default by Lessor in its obligation to
sell the Transponders in accordance with Section 8(b), then Lessor shall
have been deemed to have exercised its election to retain ownership of the
Transponders pursuant to Section 8(c) hereof.
(iii) Notwithstanding anything to the contrary in this Section
8(a), if the bidder to whom the sale would otherwise have taken place shall
have defaulted on its bid within the ten (10) Business Day-period ending on
the Termination Date, Lessee shall nonetheless make, on the Termination
Date, (A) all the payments specified in the first sentence of Section 8(b)
(but not the payment called for by the second sentence of Section 8(b)),
and (B) payment of Termination Value for the Transponders as of the
Termination Date. Promptly thereafter, Lessor shall use its reasonable
commercial efforts to sell the Transponders to an unaffiliated third party.
Lessor shall retain the net proceeds of any such sale in excess of
Termination Value for such Transponders as of the Termination Date and pay
to Lessee the net proceeds of such sale up to but not exceeding Termination
Value for such Transponders as of the Termination Date within five (5)
Business days of receipt of the proceeds of such sale. Upon payment by
Lessee of all the amounts due pursuant to this Section 8(a)(iii), the
obligation of Lessee to pay Base Rent with respect to the Transponders and
Supplemental Rent, other than to pay Supplemental Rent attributable to
acts, events or conditions occurring or existing on or prior to such
termination with respect to the Transponders or as otherwise expressly
provided in the Tax Indemnification Agreement, if any, shall terminate, the
Transponders shall no longer be subject to this Lease and the Lease Term
with respect to the Transponders shall end.
(b) Termination Payments. As a condition to the obligation of Lessor
--------------------
to terminate the Lease and to sell the Transponders pursuant to Section 8(a) on
the Termination Date therefor, Lessee shall on the Termination Date pay to
Lessor the sum of (A) all unpaid Base Rent due on or before such Termination
Date with respect to the Transponders, if any, and (B) any other Rent with
respect to such Transponders due and unpaid as of such Termination Date
(excluding Termination Value and any Scheduled Rent designated as "advance rent"
on Schedule A hereto with respect to the Termination Date). In addition, Lessor
shall retain the net proceeds of such sale of the Transponders and Lessee shall
pay to Lessor the excess, if any, of Termination Value for the Transponders
(computed as of the Termination Date) over such net sales proceeds. Upon
payment by Lessee of the amounts due pursuant to this Section 8(b), the
obligation of Lessee to pay Base Rent and Supplemental Rent, other than
Supplemental Rent attributable to acts, events or conditions occurring or
existing on or prior to such termination with respect to the Transponders shall
terminate, the Transponders shall no longer be subject to this Lease and the
Lease Term with respect to the Transponders shall end.
(c) Retention of Transponders by Lessor. If Lessee shall elect to
-----------------------------------
terminate this Lease pursuant to Section 8(a), Lessor may, subject to Lessee's
right to cancel the proposed notice of termination, elect to retain rather than
sell the Transponders by giving irrevocable notice to Lessee and Agent no later
than 45 days prior to the Termination Date. If Lessor so elects to retain the
Transponders, on the Termination Date (i) Lessor shall pay to Agent an amount
equal to the unpaid principal amount of and accrued interest on the outstanding
Notes, (ii) Lessee shall pay to Lessor or the Person entitled thereto as
provided in the Operative Documents on the Termination Date (A) all unpaid Base
Rent due on or before such Termination Date with respect to the Transponders, if
any, and (B) any other Rent with respect to the Transponders due and unpaid as
of such Termination Date (excluding Termination Value or, if the Transponders
are sold, any amounts required to be paid by Lessee pursuant to the second
17
sentence of Section 8(b) and any Scheduled Rent designated as "advance rent" on
Schedule A hereto with respect to the Termination Date), (iii) this Lease and
the obligations of Lessee hereunder shall terminate, other than Lessee's
obligation to pay Supplemental Rent attributable to acts, events or conditions
occurring or existing on or prior to such termination or as otherwise expressly
provided in the Tax Indemnification Agreement, if any, and (iv) Lessor shall
execute and deliver to Lessee, at Lessee's reasonable expense, such instruments
as Lessee shall reasonably request to evidence the termination of this Lease.
In the event Owner Participant fails to make funds available to Owner Trustee to
enable Lessor to pay the amounts specified in clause (i) of this Section 8(c) or
Lessee fails to pay the amounts specified in clause (ii) of such sentence,
Lessee shall be deemed to have canceled its notice of termination and the Lease
shall continue in full force and effect (and in the case of Lessor's failure to
pay the amounts set forth in clause (i), above, Lessee shall have the right to
enforce the obligations of Owner Participant as set forth in Section 5.02(j) of
the Participation Agreement).
(d) No Duplication of Rent Differential Amount. In the event that
------------------------------------------
there is a portion of the Scheduled Rent on any Termination Date that is
designated as "arrears rent" on Schedule A and there is also a portion that is
designated as "advance rent", a portion of the Rent Differential Amount with
respect to such Termination Date shall be added to the Scheduled Rent designated
as an "arrears rent" due on such date and the remainder of such Rent
Differential Amount shall be taken into account in the computation of
Termination Value pursuant to the definition of Termination Value. It is
intended that, whether or not Termination Value is payable on such Termination
Date, the entire amount of the Rent Differential Amount due on such Termination
Date shall be allocated between the Scheduled Rent designated as an "arrears
rent" due on such date and the computation of Termination Value, as appropriate
and without duplication, in such manner as will preserve the Owner Participant's
Net Economic Return and comply with the minimum payment requirement contained in
Section 3(f) (it being understood that the entire amount of such Rent
Differential Amount shall be taken into consideration in making such
allocation).
SECTION 9. Insurance.
---------
(a) Non-Discrimination. Lessee shall maintain general liability
------------------
insurance and/or life or casualty insurance with respect to the Satellite and
the Transponders in such amounts, if any, that Lessee deems prudent and cost-
effective but, in any event, Lessee shall maintain such insurance for not less
than the amounts, and on terms and conditions no less favorable than the terms
and conditions that Lessee and its Affiliates customarily maintain for similar
events or occurrences with respect to similar transponders owned for tax or book
purposes by Lessee or its Affiliates on similar satellites (the "Xxxxxx
------
Customary Terms," which terms may include deductibles customarily maintained by
---------------
Lessee or its Affiliates), provided, however, that the foregoing shall not
-------- -------
require Lessee to maintain life or casualty insurance for the Transponders in an
amount in excess of Stipulated Loss Value for such Transponders.
(b) Additional Insureds. All insurance policies, if any, carried in
-------------------
accordance with this Article 9 and all policies taken out in substitution or
replacement for any such policies (i) shall name Lessor (in its individual
capacity and as Owner Trustee), Owner Participant, and (so long as the Loan
Agreement shall be in effect) Agent, as additional insureds, as their respective
interests may appear (but without imposing upon any such parties any obligation
imposed upon the insured, including without limitation, the liability to pay the
premium for such policies) and in the case of life or casualty insurance
pursuant to Section 9(a), Agent (so long as the Loan Agreement shall be in
effect) and Lessor shall be named as "loss payees," as their interests may
appear; (ii) shall provide that any loss (other than a loss
18
under general liability insurance) shall be adjusted by Lessee with the
insurance carriers and be payable to Lessor (or, so long as the Loan Agreement
shall be in effect, Agent), for application as provided in Section 12 hereof or
Section 5 of the Loan Agreement; and (iii) shall provide that if such insurance
is changed in any material adverse respect in relation to the interests of
Lessor or Owner Participant (and for so long as the Loan Agreement shall be in
effect, Agent), or if such insurance is allowed to lapse for non-payment of
premium, or is invalidated by any action or inaction of Lessee or any other
Person (other than action or inaction by Lessor or Owner Participant or Agent,
as the case may be), such change, lapse or invalidation shall not be effective
as to Lessor, Owner Participant and (so long as the Loan Agreement shall be in
effect) Agent for at least 30 days after receipt by Lessor, Owner Participant
and (so long as the Loan Agreement shall be in effect) Agent of written notice
from such insurers, their agents or Lessee of such lapse. Each insurance policy
provided under this Section 9 shall be primary without right of contribution
from any other insurance which is carried by Lessor and Owner Participant or
Agent with respect to their respective interests as such in the Transponders.
(c) Separate Insurance. Nothing contained in this Lease shall prevent
------------------
Lessor, Owner Participant, Agent or Lessee, each at its own expense and for its
exclusive benefit, from carrying excess life or casualty insurance covering the
Transponders in addition to the life or casualty insurance, if any, carried by
Lessee under Section 9(a) (any such life or casualty insurance being herein
called "Additional Insurance"); provided, however, that Lessee shall not be
-------------------- -------- -------
entitled to obtain any such Additional Insurance for the Transponders unless
Lessee shall then maintain life or casualty insurance for such Transponders in
an amount at least equal to the Stipulated Loss Value for such Transponders from
time to time set forth in Schedule B hereto corresponding to such date. If
----------
there shall be any limitation with respect to the amount of Additional Insurance
that Lessor, Owner Participant, Agent or Lessee may obtain, whether as a result
of market capacity or otherwise, then each such party shall have the right to
purchase an amount of Additional Insurance for the Transponders as its interests
may then appear. Prior to obtaining any Additional Insurance, Lessor, Owner
Participant or Agent shall provide Lessee with reasonable notice of the
Additional Insurance (including the proposed terms thereof) intended to be
obtained by it, including evidence satisfactory to Lessee that such proposed
terms shall be consistent with the terms of such insurance as may be carried by
Lessee under this Article 9.
SECTION 10. Redelivery.
----------
(a) Redelivery Terms. At the expiration or earlier termination
----------------
of the Lease Term with respect to any Transponder, if Lessee does not renew this
Lease with respect to such Transponder and does not purchase such Transponder,
Lessee shall, at Lessee's cost and expense, redeliver such Transponder to Lessor
in the condition required by Section 7 hereof including, without limitation, in
the location permitted by Section 7(d) hereof and, in connection with such
Redelivery, Lessee shall supply Lessor with the name, last known address and
telephone number of the most recent User (other than Users under Occasional Use
Service Contracts) with respect to such Transponder. In the event of any
Redelivery of any Transponder, Lessee shall execute and deliver to Lessor an
instrument substantially in the form of Exhibit A to this Lease that shall
---------
constitute evidence of surrender by Lessee of all of Lessee's rights to such
Transponder under this Lease and the Xxxxxx Agreements applicable thereto;
provided, however, that Lessee's Redelivery of any Transponder hereunder shall
-------- -------
not by itself affect the validity and effectiveness of the Purchase Agreement,
Service Agreement or any Substitute Service Agreement relating to such
Transponder, as applicable. At the time of any Redelivery, such Transponder
shall be free and clear of all Liens (other than Permitted Liens described in
clause (a) or (b) of the definition thereof, excluding Lessor Liens and Agent
Liens, and other than the Lien of the GLA Sublease)
19
and free and clear of any right of any Person to use or access such Transponder
other than GLA under the GLA Sublease, Lessor or Owner Participant, unless Owner
Participant shall consent to a request by Lessee to recognize any right of any
Person to use or access such Transponder other than Lessor and Owner
Participant; and Lessee shall be in compliance with Sections 7(b) and (c).
(b) Decreased Value. If, at the end of the Basic Term, Lessee shall
---------------
return to Lessor any Transponder, and the estimated fuel remaining on the
Satellite at the Redelivery date (as reasonably determined by Lessee using
standard industry procedures) as indicated in an Officer's Certificate delivered
by Lessee to Lessor on such date is less than 50% of the amount of fuel
originally estimated by the Appraiser in the Commencement Date Appraisal as
necessary for the residual value of the Satellite to be as set forth in the
Commencement Date Appraisal (the "In-Service Date Projection"), then Lessee
--------------------------
shall pay to Lessor an amount (the "Decreased Value") equal to the excess of (1)
---------------
the estimated Fair Market Sales Value of such Transponder as of such Redelivery
date, based on the assumption that such Transponder had a remaining useful
commercial life equal to 50% of the In-Service Date Projection over (2) the Fair
Market Sales Value of such Transponder caused by such lower amount of fuel,
determined as of the Redelivery date (the "Decreased Value Payment"). Lessee
-----------------------
shall pay to Lessor the Decreased Value Payment upon the later of the Redelivery
date or five (5) days after the Decreased Value of such Transponder is
determined in accordance with the Appraisal Procedure (which procedure shall
commence not later than 120 days prior to Redelivery if the existence of a
condition requiring a payment of Decreased Value is ascertainable at such time
or as soon thereafter as is reasonably possible if it not so ascertainable).
(c) If, at the end of the Lease Term, Lessee shall return to Lessor
any Transponder that remains subject to the GLA Sublease and the rentals payable
under the GLA Sublease with respect to such Transponder are less than the Fair
Market Rental Value of such Transponder during the balance of the term of the
GLA Sublease (as then in effect), then Lessee shall pay to Lessor from time to
time while the GLA Sublease shall continue in full force and effect, an amount,
if any, equal to the lesser of (i) the amount, if any, by which the Fair Market
Rental Value of such Transponder exceeds the rental payable under the GLA
Sublease and (ii) the amount, if any, by which 50% of the full-time monthly
lease rate contained in the Commencement Date Appraisal exceeds the rental
payable under the GLA Sublease; provided that Lessee's payment obligation under
--------
this paragraph (c) shall cease at such time as the GLA Sublease terminates in
accordance with its terms as in effect on the date the Transponder is returned
to Lessor by Lessee, or earlier expiration of its term for any reason
whatsoever.
SECTION 11. Cooperation.
-----------
(a) Lessor's Efforts to Sell or Lease. Lessee agrees that during
---------------------------------
the last 540 days of the Basic Term or the Renewal Term (unless Lessee has
provided Lessor with the Preliminary Notice stating that it will renew the Lease
or purchase the Transponders pursuant to Section 18 or 19, respectively, and in
such case no Bankruptcy Default or Event of Default shall have occurred and be
continuing), it will cooperate in all reasonable respects with efforts of
Lessor, subject to the provisions of Section 6(d), to lease or sell such
Transponder, including aiding potential lessees or purchasers by providing all
data relating to maintenance and performance for inspection which Owner under
the Service Agreement and Buyer under the Purchase Agreement are entitled to
receive or inspect subject to any confidentiality requirements set forth in such
agreements. Further, Lessee shall notify existing users of such Transponder of
the end of the Lease Term and use reasonable best efforts to assist Lessor in
obtaining any necessary regulatory approvals to operate, lease or sell such
Transponder, at Lessor's
20
reasonable cost and expense and on an After-Tax Basis to Lessee. In addition,
Lessee shall furnish to Lessor such information as it supplies to potential
lessees or purchasers of transponders that it owns or leases on the Satellite or
other similar satellites.
(b) Value and Useful Life Determinations. Lessee shall provide Lessor
------------------------------------
at any time with information which, in the reasonable opinion of Lessor, is
necessary or material for Lessor to negotiate and reach an agreement for any
determination of Fair Market Sales Value, Fair Market Rental Value and estimated
remaining useful commercial life; provided, however, that Lessee shall not be
-------- -------
required to disclose confidential information unrelated to the performance or
maintenance of the Transponders.
SECTION 12. Loss, Destruction, Condemnation or Damage.
-----------------------------------------
(a) Payment of Stipulated Loss Value. If with respect to any
--------------------------------
Transponder an Event of Loss occurs, then Lessee shall forthwith (and, in any
event, within seven (7) days of such occurrence) give Lessor and Agent notice of
such Event of Loss (the "Casualty Notice"), which notice shall include, if
---------------
applicable, Lessee's election to provide a Replacement Transponder in accordance
with the last sentence of this paragraph and shall also state whether the
proviso to this sentence shall be applicable by reason of Lessee's having in
force insurance against loss or damage to the Transponders, pursuant to Section
9 or voluntarily, and on the Casualty Payment Date first occurring not less than
30 days after the date of such notice, Lessee shall pay to Lessor an amount
equal to the sum of (x) the Stipulated Loss Value for such Transponder due on
such Casualty Payment Date and (y) the sum of (A) all unpaid Base Rent due on or
before such Casualty Payment Date with respect to such Transponder, if any, and
(B) any other Rent with respect to such Transponder due and unpaid as of such
Casualty Payment Date (excluding Stipulated Loss Value and any Scheduled Rent
designated as "advance rent" on Schedule A hereto with respect to such Casualty
Payment Date); provided, however, that if, with respect to such Transponder,
-------- -------
Lessee shall have in force insurance against loss or damage to the Transponders,
pursuant to Section 9 or voluntarily, then subject to the provisions of Section
12(b), Lessee shall pay to Lessor in immediately available funds on the Casualty
Payment Date first occurring not less than thirty (30) days after the date of
the Casualty Notice, the amount specified in clause (x) of this Section less the
amount of such insurance with respect to such Transponder and, within ten (10)
days after receipt of any such insurance proceeds (but in no event later than
120 days after the date of such Casualty Notice) the amount specified in clause
(x) of this Section to the extent not previously paid, and to the extent of any
such payment to be made from such insurance proceeds or otherwise after the
Casualty Payment Date referred to above, Lessee shall pay interest from such
Casualty Payment Date on such amount to but excluding the date of payment at the
Applicable Rate borne by the Notes then outstanding as to which the insurance
proceeds shall be applied, and otherwise at the Prime Rate; provided, further
-------- -------
that, in the case of an Event of Loss of the type described in clause (f) of the
definition thereof, the amount due on the applicable Casualty Payment Date in
accordance with clause (x) of this Section 12(a) shall be the higher of
Stipulated Loss Value and the Fair Market Sales Value for the Transponder
(determined pursuant to the Appraisal Procedure based on the assumption that the
Satellite had not been removed from orbit) on such Casualty Payment Date. In
lieu of making the foregoing payment, and so long as, but only so long as, no
Bankruptcy Default or Event of Default has occurred and is continuing, Lessee
may, at its option, notify Lessor and Agent of its intent to, and thereafter
provide Lessor (on the Casualty Payment Date first occurring not less than
thirty (30) days after the date of the Casualty Notice) with a Replacement
Transponder, in accordance with, and subject to, the provisions and the
conditions in Section 7(e).
21
Upon payment in full of all amounts due or the provision of a
Replacement Transponder pursuant to the preceding paragraph, Lessor (as seller)
shall transfer the Transponder suffering such Event of Loss to Lessee, free and
clear of all Lessor Liens and Owner Participant Liens, but otherwise without
warranty, the obligation of Lessee to pay Base Rent with respect to such
Transponder shall terminate, but shall continue as to any Replacement
Transponder, such Transponder shall no longer be subject to this Lease and the
Lease Term with respect to such Transponder shall end, but shall apply to any
Replacement Transponder.
(b) Application of Payments upon an Event of Loss. Subject to the
---------------------------------------------
provisions of Section 12(d), and notwithstanding any rights of Lessor as owner
of the Transponders, any payments received at any time by Lessor from any
Governmental Body or other Person as a result of the occurrence of an Event of
Loss with respect to a Transponder (including proceeds with respect to such
Transponder from insurance, if any, but excluding proceeds from Additional
Insurance with respect to such Transponder carried by Lessor, Owner Participant
or Agent) shall be applied as follows:
(i) so much of such payments as shall not exceed the amount of
Stipulated Loss Value, if any, required to be paid with respect to such
Transponder by Lessee pursuant to Section 12(a) shall be applied in
reduction of Lessee's obligation to pay such amount with respect to such
Transponder if not already paid by Lessee, or, if already paid with respect
to such Transponder by Lessee, shall be applied to reimburse Lessee for its
payment of such amounts, or if Lessee shall have provided Lessor with a
Replacement Transponder pursuant to Section 12(a), shall be paid to Lessee
upon conveyance of such Replacement Transponder to Lessor; and
(ii) the excess, if any, of such payments with respect to such
Transponder remaining thereafter shall be allocated between Lessor and
Lessee as their respective interests may appear (except to the extent
reflecting proceeds of insurance (other than additional insurance
maintained by Owner Participant, Owner Trustee or Agent), which shall be
paid to and retained by Lessee).
(c) Application of Payments Not Relating to an Event of Loss. In the
--------------------------------------------------------
event of any loss, condemnation, confiscation, theft or seizure of, or use of,
or damage to, any portion of any Transponder not constituting an Event of Loss,
Lessee shall promptly notify Lessor and Agent and all of Lessee's obligations
under this Lease with respect to such Transponder shall continue to the same
extent as if such event had not occurred. Subject to the provisions of Section
12(d), and notwithstanding any implicit or express rights of Lessor as owner of
such Transponder, payments received at any time by Lessor or Lessee from any
insurer under insurance carried by Lessee, from any Governmental Body or from
any other Person with respect to any loss, condemnation, confiscation, theft or
seizure of, or use of, or damage to, any Transponder or any part thereof not
constituting an Event of Loss shall be paid to Lessor or Lessee, as their
interests may appear.
(d) Applications During Default. Any amount which may become payable
---------------------------
to Lessee pursuant to this Lease arising out of any insurance, warranty,
governmental award or otherwise shall not be paid to Lessee, or if it shall have
been paid to Lessee shall not be retained by Lessee, but shall be paid to Lessor
or Agent, as the case may be, if at the time of such payment a Payment Default,
Bankruptcy Default or an Event of Default shall have occurred and be continuing.
In such event, all such amounts shall be paid to and held by Lessor or, to the
extent required by the Loan Agreement, Agent, in trust as
22
security for the obligations of Lessee, Seller, Contractor or Guarantor to make
payments under this Lease and any other Operative Document or Xxxxxx Agreement
or to pay Rent hereunder or, at the option of such holder, applied by such
holder toward payment of any such obligations of Lessee, Seller, Guarantor or
Contractor at the time due hereunder or under such other Operative Document or
Xxxxxx Agreement. At such time as there shall not be continuing a Payment
Default, Bankruptcy Default or an Event of Default all such amounts at the time
held by Lessor or Agent, as the case may be, in excess of the amount, if any,
which Lessor or Agent, as the case may be, shall have elected to apply as above
provided shall be paid to Lessee, Seller or Contractor, as appropriate.
(e) No Duplication of Rent Differential Amount. In the event that
------------------------------------------
there is a portion of the Scheduled Rent on any Casualty Payment Date that is
designated as "arrears rent" on Schedule A and there is also a portion that is
designated as "advance rent", a portion of the Rent Differential Amount with
respect to such Casualty Payment Date shall be added to the Scheduled Rent
designated as an "arrears rent" due on such date and the remainder of such Rent
Differential Amount shall be taken into account in the computation of Stipulated
Loss Value pursuant to the definition of Stipulated Loss Value. It is intended
that the entire amount of the Rent Differential Amount due on such Casualty
Payment Date shall be allocated between the Scheduled Rent designated as an
"arrears rent" due on such date and the computation of Stipulated Loss Value, as
appropriate and without duplication, in such manner as will preserve the Owner
Participant's Net Economic Return and comply with the minimum payment
requirement contained in Section 3(f) (it being understood that the entire
amount of such Rent Differential Amount shall be taken into consideration in
making such allocation).
SECTION 13. Merger, Consolidation.
---------------------
Lessee shall not consolidate with or merge into any other Person or
convey, transfer or lease all or substantially all of its assets as an entirety
to any Person, unless:
(i) the successor entity formed by such consolidation or into
which it is merged or the successor entity which acquires by conveyance,
transfer or lease all or substantially all of its assets as an entirety
shall be a corporation organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia which has
a substantial part of its properties and assets located within, and
operates substantially within, the United States of America, and which is
qualified under the requirements of the FCC and any applicable statute,
regulation or order to assume Lessee's obligations with respect to the
Satellite and/or Transponders then subject to this Lease;
(ii) such successor corporation shall expressly assume in writing
by instrument or instruments enforceable against it reasonably satisfactory
in form and substance to Lessor and Owner Participant the due and punctual
payment, performance and observance of all obligations of Lessee under this
Lease and any other Operative Document or Xxxxxx Agreement to which Lessee
is a party in any capacity, with the same effect as if such corporation had
originally been named Lessee herein or had been a party thereto;
(iii) immediately after giving effect to such transaction, no
Bankruptcy Default or Event of Default shall exist and the Guarantee
Agreement (or any successor agreement) shall be in full force and effect;
and
23
(iv) Lessee shall have delivered to Lessor, Owner Participant and
Agent an opinion of counsel in scope and substance reasonably satisfactory
to each stating that such consolidation, merger, conveyance, transfer or
lease complies with the legal requirements of this Section 13, and to the
effect that the Guarantee Agreement constitutes a legal, valid and binding
obligation of Guarantor, enforceable against Guarantor in accordance with
its terms, subject to customary exceptions.
Upon any consolidation or merger, or any conveyance, transfer or lease
of all or substantially all of the assets of Lessee as an entirety in accordance
with this Section 13, the successor corporation formed by such consolidation or
into which Lessee is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, Lessee under the Operative Documents to which Lessee is a party in any
capacity with the same effect as if such successor corporation had been named
Lessee herein and therein. No such conveyance, transfer or lease of all or
substantially all of the assets of Lessee as an entirety shall have the effect
of releasing Lessee or any successor corporation which shall theretofore have
become such in the manner prescribed in this Section 13 from its liability
hereunder or under the other Operative Documents or Xxxxxx Agreement to which
Lessee is a party in any capacity.
SECTION 14. Reports.
-------
(a) Condition and Operation. Lessor, Owner Participant and Agent
-----------------------
shall have the right to obtain and, following any such request by any of them,
Lessee shall provide or request to be provided, information regarding the
condition and state of repair of any Transponder then subject to this Lease,
compliance by Lessee with Sections 7 and 9 and performance of Seller and
Contractor under the Xxxxxx Agreements (it being understood that information
with respect to the performance of Seller and Contractor shall be limited to
that made available pursuant to the Xxxxxx Agreements), and the absence of any
Default or Event of Default or Event of Loss, or event which with the passage of
time or giving of notice or both would become an Event of Loss. Agent shall
neither have any duty to make any inquiry nor incur any liability or obligation
by reason of not making any such inquiry.
(b) Liens. Lessee shall promptly (and in no event later than
-----
five (5) Business Days) notify Lessor and Agent after having obtained Actual
Knowledge of the attachment of any Lien which Lessee shall be obligated to
discharge or eliminate pursuant to Section 6(a) unless the same shall already
have been removed or discharged by Lessee.
SECTION 15. Events of Default.
-----------------
Each of the following events shall constitute an Event of Default
(whether any such event shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Body or otherwise):
(a) Lessee shall fail to make any payment of Base Rent, Supplemental
Rent pursuant to Section 3(b)(i), Termination Value, Stipulated Loss Value or
EBO Amount when due and such failure shall continue for ten (10) Business Days;
or
24
(b) Lessee shall fail to make any other payment of Rent when due and
such failure shall continue for ten (10) Business Days after written notice
thereof by Lessor (or Agent); or
(c) Other than with respect to any covenant of Lessee set forth in
Section 16.02(b) of the Participation Agreement, Lessee shall fail to perform or
observe in any material respect any covenant, condition or agreement to be
performed or observed by it under this Lease or Guarantor shall fail to perform
or observe in any material respect any covenant, condition or agreement to be
performed or observed by it under the Participation Agreement or the Guarantee
Agreement or Lessee, Seller, Contractor or HCG shall fail to perform or observe
in any material respect any other covenant, condition or agreement to be
performed or observed by it under any of the other Operative Documents or Xxxxxx
Agreements to which it is a party (other than any such covenant, condition or
agreement under the Tax Indemnification Agreement, if any, not related to the
payment of money thereunder, provided that the declaration of an Event of
--------
Default hereunder with respect to any such covenant, condition or agreement
shall be only upon the instructions of the Owner Participant) and, in each such
case, such failure shall have continued for ninety (90) days after Lessee's
receipt of written notice thereof from Lessor or Agent; provided, however, that
-------- -------
if such failure is capable of cure but cannot be cured by payment of money and
cannot be cured by diligent efforts within such 90-day period but such diligent
efforts shall be properly commenced within the cure period and Lessee is
diligently pursuing, and shall continue to pursue diligently, a remedy of such
failure, the cure period shall be extended for an additional period of time as
may be necessary to cure, not to exceed an additional 30 days; or
(d) any representation or warranty made by Lessee, Seller, HCG or
Contractor in any of the Operative Documents or Xxxxxx Agreements to which it is
a party or in any written statement, report, schedule, notice or other writing
furnished by Lessee, Seller, HCG or Contractor in connection therewith (other
than any representation or warranty under the Tax Indemnification Agreement, if
any) shall prove to have been inaccurate in any material respect at the time
made; provided, however, that if the representation or warranty was originally
-------- -------
made in good faith, an Event of Default shall not be deemed to exist unless the
inaccuracy materially adversely affects Lessor, Owner Participant or Agent and
if capable of being cured, remains uncured for a period of ninety (90) days
after receipt by Lessee of written notice from Lessor or Agent of such
inaccuracy; provided, however, that if such Default cannot be cured by payment
-------- -------
of money and cannot be cured by diligent efforts within such 90-day period but
such diligent efforts shall be properly commenced within the cure period and
Lessee is diligently pursuing, and shall continue to pursue diligently, a remedy
of such failure, the cure period shall be extended for an additional period of
time as may be necessary to cure, not to exceed an additional 30 days; or
(e) The Guarantee Agreement shall cease to be valid and binding or in
full force or effect; or
(f) Lessee or Guarantor shall consent to the appointment of, or taking
of possession by, a receiver, trustee, custodian or liquidator of itself or of a
substantial part of its property, or shall fail to pay its debts generally as
they become due, or shall make a general assignment for the benefit of
creditors; or
(g) Lessee or Guarantor shall file a voluntary petition in bankruptcy
or a voluntary petition or an answer seeking reorganization in a proceeding
under any applicable bankruptcy or insolvency laws (as now or hereafter in
effect) or an answer admitting the material allegations of a petition filed
against such Person in any such proceeding, or shall by voluntary petition,
answer or
25
consent, seek relief under the provisions of any now existing or future
bankruptcy, insolvency or other similar law providing for the liquidation,
reorganization or winding-up of corporations, or providing for an agreement,
composition, extension or adjustment with its creditors; or
(h) a receiver, trustee, liquidator or custodian of Lessee or
Guarantor for a substantial part of its property shall be appointed by court
order, or any substantial part of its property shall be sequestered by court
order, or a petition shall be filed, or an involuntary case or other proceeding
commenced, against Lessee or Guarantor under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or hereafter in effect, and such order shall
remain in effect for more than ninety (90) days, or such petition, case or
proceeding shall not be dismissed within ninety (90) days after filing; or
(i) Lessee shall fail to obtain any insurance required to be obtained
pursuant to Section 9(a) and such failure shall have continued for 30 days, or
if such insurance required pursuant to Section 9(a) shall lapse and Lessee shall
fail to renew or replace such insurance with the required insurance within 30
days from the date of such lapse and such failure shall continue for 30 days
thereafter.
SECTION 16. Remedies. Upon the occurrence of any Event of Default and at
--------
any time thereafter so long as the same shall be continuing, Lessor may at its
option declare this Lease to be in default, and at any time thereafter Lessor
may do any of the following as Lessor in its sole discretion shall elect, to the
extent permitted by, and subject to compliance with any mandatory requirements
of, Applicable Law then in effect and subject to the rights of GLA under the GLA
Sublease:
(I) Proceed by appropriate court action, either at law or in equity,
to enforce performance by Lessee or Guarantor of the applicable covenants of
this Lease or the Guarantee Agreement or to recover damages for the breach
thereof; and/or
(II) By notice in writing terminate or cancel this Lease, whereupon
all rights of Lessee to the use of the Transponders or to purchase the
Transponders (whether or not Lessee shall have theretofore made the EBO
Prepayment) shall absolutely cease and terminate; and/or, whether or not Lessor
shall have exercised any other remedy hereunder (other than a sale under clause
(c) below (provided that Lessor may exercise the remedies set forth in clause
(a) below) and other than pursuant to clause (d)(X) below):
(a) Lessor may, upon written demand and at Lessee's expense,
cause Lessee to return promptly, and Lessee shall return promptly, all or
such part of the Transponders as Lessor may so demand to Lessor or its
order in the manner and condition required by, and otherwise in accordance
with all the provisions of, Section 10, or Lessor, at its option, may take
immediate possession of all Lessee's rights and interests in and to the
same by summary proceedings or otherwise, all without liability accruing to
Lessor for or by reason of such taking of possession subject to, however,
the controlling provisions of the Consent and Agreement; and/or
(b) Lessor, by notice to Lessee specifying a payment date which
must be a Casualty Payment Date no later than 180 days from the date of
such notice, may require Lessee to pay to Lessor, with respect to any
Transponder, and Lessee hereby agrees that it will pay to
26
Lessor, with respect to such Transponder, on the Casualty Payment Date
specified in such notice, as liquidated damages for loss of a bargain, and
not as a penalty, and in lieu of any further payments of Base Rent for any
period after the Casualty Payment Date specified in such notice, an amount
(reduced by any amounts previously paid by Lessee pursuant to Section
16(II)(d)(X)) equal to the sum of the following amounts calculated as of
such Casualty Payment Date: (A) all unpaid Base Rent due on or before such
Casualty Payment Date with respect to such Transponder, if any, and (B) an
amount equal to the excess (the "SLV Excess"), if any, of Stipulated Loss
----------
Value for such Transponder over either the EBO Amount for such Transponder
(if Lessee shall have contemporaneously or previously made the EBO
Prepayment) or zero (if Lessee shall not have contemporaneously or
previously made the EBO Prepayment), together with interest, if any, at the
Overdue Rate on the amounts described in (A) and (B) above from the
Casualty Payment Date as of which such amounts were calculated until the
date of actual payment. Upon such payment of liquidated damages and all
other Rent then due and payable by Lessee hereunder (excluding the SLV
Excess and any Scheduled Rent designated as "advance rent" on Schedule A
hereto with respect to the Casualty Payment Date referred to above), Lessor
shall transfer the Transponders (without any representation, recourse or
warranty whatsoever, other than the absence of Lessor Liens or Owner
Participant Liens) to Lessee and Lessor shall execute and deliver such
documents evidencing such transfer as Lessee shall reasonably request, and
Lessee shall indemnify Lessor on an After-Tax Basis for Lessor's reasonable
expenses incurred in connection with such transfer; and/or
(c) Lessor or its agent may sell the Transponders at public or
private sale, as Lessor may determine, or otherwise may dispose of, hold,
use, operate, keep idle, lease (whether for a period greater or less than
the balance of what would have been the Basic Term or any Renewal Term, as
the case may be) to others (subject to Section 6(d)) the Transponders, all
on such terms and conditions and at such place or places as Lessor may
determine and all free and clear of any rights of Lessee and of any claim
of Lessee, in equity, at law or by statute (including, without limitation,
any right or claim of Lessee that shall arise or shall have arisen in
connection with Lessee's making or having made the EBO Prepayment), whether
for loss or damage or otherwise and Lessee shall use its best efforts to
obtain or assist Lessor in obtaining, any necessary regulatory approvals
for Lessor to take any action pursuant to this Section 16(II)(c); provided,
--------
however, that if Lessor or its agent shall sell any Transponder, Lessee's
-------
obligation to pay Base Rent with respect to such Transponder sold hereunder
for any period after the date of such sale (or if such date is not a
Casualty Payment Date, the next succeeding Casualty Payment Date) shall
terminate and such Transponder shall cease to be subject to this Lease from
and after the date of such sale. In addition, Lessee's obligation to pay
Base Rent for any period after Lessee shall have been deprived of control
of the Transponder pursuant to this Section 16(II)(c) shall be reduced by
the net proceeds, if any, received by Lessor from leasing the Transponder
to, or otherwise permitting its use by, any Person (including pursuant to
the GLA Sublease) other than Lessee fairly attributable to all or any
portion of such period. In the event Lessor shall have sold any
Transponder pursuant to this Section 16(II)(c) (and prior thereto shall not
have exercised its rights under Section 16(II)(d)(X) hereof), Lessor may
demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, as
liquidated damages for the loss of a bargain and not as a penalty, in lieu
of any further payments of Base Rent for any period after the date on which
such sale occurs (or if such date is not a Casualty Payment Date, the next
succeeding Casualty Payment Date), an amount equal to the sum of the
following amounts calculated as of the date on which the sale occurs (or,
if such date is not a Casualty Payment
27
Date, the next succeeding Casualty Payment Date): (A) all unpaid Base Rent
due on or before such Casualty Payment Date with respect to such
Transponder, if any, and (B) the amount, if any, by which the Stipulated
Loss Value for such Transponder exceeds the net proceeds of such sale
(together with interest, if any, at the Overdue Rate on the amounts
described in (A) and (B) above from the Casualty Payment Date as of which
such amounts were calculated until the date of actual payment); provided,
--------
however, that in the event that Lessee shall have theretofore made the EBO
-------
Prepayment, Lessor shall pay to Lessee an amount equal to the EBO Amount
less such excess; and/or
(d)(X) Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its remedies under Section
16(II)(c) hereof (other than a sale under Section 16(II)(c) hereof), Lessor
may, at any time prior to the time that any Transponder shall have been
sold or leased by Lessor pursuant to Sections 16(II)(b) or 16(II)(c)
hereof, by written notice to Lessee requesting that the Fair Market Sales
Value or Fair Market Rental Value of such Transponder be determined, demand
that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the first
Casualty Payment Date occurring at least ten (10) days after the
determination of such Fair Market Sales Value or Fair Market Rental Value,
as the case may be (the "Relevant Date"), each determined on an as is,
-------------
where is basis, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of any further payments of Base Rent with respect to such
Transponder for any period after the Relevant Date), an amount equal to the
sum of (A) all unpaid Base Rent due on or before such Relevant Date with
respect to such Transponder, if any, and (B) whichever of the following
amounts Lessor, in its sole discretion, shall specify in such notice
(together with interest on such amount at the Overdue Rate from the
Relevant Date to the date of actual payment): (x) an amount equal to the
excess, if any, of the Stipulated Loss Value, computed as of such Relevant
Date, over the Fair Market Rental Value of such Transponder, valued on an
as is, where is basis as of the Relevant Date for the remainder of the
Interim Term and the Basic Term or the remainder of the Renewal Term, as
the case may be, after discounting such Fair Market Rental Value semi-
annually (effective on the Rent Payment Dates) to present value as of the
Relevant Date at the rate of interest equal to the Overdue Rate; (y) an
amount equal to the excess, if any, of such Stipulated Loss Value computed
as of such Relevant Date, over the Fair Market Sales Value of such
Transponder valued on an as is, where is basis as of the Relevant Date or
(z) an amount equal to the excess, if any, of (1) the present value
computed as of such Relevant Date of all installments of Scheduled Rent for
the remainder of the Interim Term and Basic Term or Base Rent for the
remainder of the Renewal Term, as the case may be, discounted semi-annually
(effective on the Rent Payment Dates) to present value as of the Relevant
Date at the rate of interest equal to the Overdue Rate over (2) the present
value, computed as of such Relevant Date, of the Fair Market Rental Value
of the Transponder valued on an as is, where is basis as of the Relevant
Date for the remainder of the Interim Term and the Basic Term or the
remainder of the Renewal Term, as the case may be, discounted semi-annually
(effective on the Rent Payment Dates) to present value as of the Relevant
Date at the rate of interest equal to the Overdue Rate; provided, however,
-------- -------
that, in the event that Lessee shall have theretofore made the EBO
Prepayment, Lessor shall pay to Lessee an amount equal to the EBO Amount
less the applicable excess, if any, referred to in clause (x), (y) or (z)
above; and/or
(Y) Lessor may exercise any other right or remedy available to
it under Applicable Law, except for and subject to the limitations and
restrictions (including with respect to damages, rights and remedies) in
favor of Lessee in this Lease, any other Operative Document
28
or any Xxxxxx Agreement, and subject to the parties' intent that Lessor's
recovery shall in no event exceed that set forth in the preceding clauses
(b), (c) and (d)(X) of this Section 16.
(e) For all purposes of this Section 16, in the event that there
is a portion of the Scheduled Rent on any Casualty Payment Date that is
designated as "arrears rent" on Schedule A and there is also a portion that
is designated as "advance rent", a portion of the Rent Differential Amount
with respect to such Casualty Payment Date shall be added to the Scheduled
Rent designated as an "arrears rent" due on such date and the remainder of
such Rent Differential Amount shall be taken into account in the
computation of Stipulated Loss Value pursuant to the definition of
Stipulated Loss Value. It is intended that the entire amount of the Rent
Differential Amount due on such Casualty Payment Date shall be allocated
between the Scheduled Rent designated as an "arrears rent" due on such date
and the computation of Stipulated Loss Value, as appropriate and without
duplication, in such manner as will preserve the Owner Participant's Net
Economic Return and comply with the minimum payment requirement (it being
understood that the entire amount of such Rent Differential Amount shall be
taken into consideration in making such allocation).
All determinations of Fair Market Sales Value and Fair Market Rental Value
pursuant to this Section 16 shall be determined pursuant to the Appraisal
Procedure. No termination of this Lease, in whole or in part, or exercise of
any remedy under this Section 16 shall, except as specifically provided herein,
relieve Lessee of any of its liabilities and obligations hereunder, all of which
shall survive such termination, repossession or exercise of remedy. In
addition, Lessee shall be liable for any and all unpaid Supplemental Rent due
hereunder before, after or during the exercise of any of the foregoing remedies,
including all reasonable legal fees and other costs and expenses reasonably
incurred by Lessor, Owner Participant or Agent by reason of the occurrence of
any Event of Default or the exercise of Lessor's remedies with respect thereto.
At any sale of the Transponders or any part thereof pursuant to this Section 16,
Lessor, Owner Participant or Agent may bid for and purchase such property.
Notwithstanding any provision in this Lease or any other Operative
Document, Lessee shall not cease to have the legal right to access any of the
Transponders unless and until Lessor shall give Lessee and Seller, at the time
when a notice of termination is given under the first sentence of clause (II)
above, 24 hours notice expressly demanding that Lessee surrender such right.
To the extent permitted by, and subject to the mandatory requirements
of, Applicable Law, and except as otherwise specifically provided for in this
Lease, each and every right, power and remedy herein specifically given to
Lessor or otherwise in this Lease shall be cumulative and shall be in addition
to every other right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by Lessor, and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any other right, power or remedy. No delay or
omission by Lessor in the exercise of any right, remedy or power or in the
pursuit of any remedy shall impair any such right, remedy or power or be
construed to be a waiver of any default on the part of Lessee or to be an
acquiescence therein. No express or implied waiver by Lessor of any Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Event of Default.
29
Except to the extent provided for by the express terms of this Lease,
each of Lessor and Agent and any Person claiming through either of them, waives
and agrees not to claim any amount under this Section 16 or otherwise under this
Lease in respect of incidental or consequential damages incurred by it.
To the extent permitted by Applicable Laws, Lessee hereby waives any
rights now or hereafter conferred by statute or otherwise that may require
Lessor, its successors or assigns to mitigate its damages in any particular
manner or that may otherwise limit or modify any of the rights or remedies of
Lessor under this Section 16, but nothing contained herein shall eliminate
Lessor's obligation to mitigate its damages as may be required by Applicable
Law.
SECTION 17. Right to Perform for Lessee.
---------------------------
(a) Right to Cure. If Lessee shall fail to make any payment of
-------------
Rent to be made by it hereunder or shall fail to perform or comply with any of
its other agreements contained herein or in the Xxxxxx Agreements relating to
any of the Transponders, Lessor or Owner Participant may (but shall not have any
duty to do so) itself make such payment or perform or comply with such
agreement; provided that nothing contained in this Section 17(a) shall be deemed
to expand in any way the rights of Lessor or Owner Participant under Section
16.1 of the Loan Agreement. The amount of any such payment and the amount of the
reasonable expenses of Lessor and Owner Participant incurred in connection with
such payment or the performance of or compliance with such agreement, as the
case may be, together with interest thereon at the Overdue Rate, shall be deemed
Supplemental Rent, payable by Lessee upon demand.
(b) Lessor is Lessee's Agent and Attorney. Without in any way
-------------------------------------
limiting the obligations of Lessee or Lessor hereunder, Lessee hereby
irrevocably appoints Lessor as its agent and attorney-in-fact hereunder, with
full power and authority at any time at which Lessee is obligated to deliver any
Transponder to Lessor, to demand and take such Transponder in the name and on
behalf of Lessee from whosoever shall be at the time in control thereof.
SECTION 18. Renewal.
-------
(a) Notice of Renewal or Purchase. Not more than 720 nor less
-----------------------------
than 540 days prior to the expiration of the Basic Term, but in no event before
Lessee shall have received the Subsequent Appraisal (provided Lessee ordered it
as provided in Section 20(c), below) (the "Preliminary Notice Expiration Date"),
----------------------------------
Lessee shall give Lessor notice (the "Preliminary Notice") of Lessee's
------------------
irrevocable intention to either purchase pursuant to Section 19(a)(i), or renew
the Lease pursuant to Section 18(b) in respect of, all but not less than all of
the Transponders.
If Lessee gives the Preliminary Notice, then not less than one hundred
eighty (180) days before the expiration of the Basic Term with respect to a
purchase of Transponders or renewal of the Lease or one hundred eighty (180)
days prior to the end of the Renewal Term with respect to a purchase of
Transponders (the "Final Notice Expiration Date"), Lessee shall give Lessor
----------------------------
notice of its irrevocable election (the "Final Notice") of one of the following
------------
options: (i) to renew this Lease at the end of the Basic Term pursuant to
Section 18(b) for the Renewal Term or (ii) to purchase the Transponders pursuant
to Section 19(a)(i) at the end of the Basic Term or of the Renewal Term.
30
If Lessee shall fail timely to deliver the Preliminary Notice, then
Lessee shall be deemed not to have elected to renew this Lease or purchase the
Transponders, and promptly thereafter, but in any case within 30 days after the
Preliminary Notice Expiration Date, shall provide Lessor with the names, last
known business addresses and telephone numbers of the Persons using any
Transponders pursuant to a Use Agreement (not including any Occasional Use
Service Contract). If Lessee shall fail to deliver the Final Notice as required
above after having delivered the Preliminary Notice, Lessee shall be deemed to
have elected to purchase the Transponders pursuant to Section 19(a)(i). The
notice requirements of this Section 18(a) shall not apply to Lessee's right to
purchase any Transponders pursuant to Sections 19(a)(ii) through 19(a)(iv).
(b) Fair Market Value Renewal Option. If Lessee delivers the Final
--------------------------------
Notice set forth in Section 18(a), above, stating that it will renew the Lease
in respect of the Transponders, and so long as no Bankruptcy Default or Event of
Default has occurred and is continuing at the end of the Basic Term, then this
Lease shall be renewed with respect to the Transponders at a Base Rent equal to
the Fair Market Rental Value of the Transponders (as determined pursuant to the
Subsequent Appraisal) and payable in accordance with Section 18(c), below. The
Renewal Term shall be for the period beginning immediately upon the expiration
of the Basic Term and, unless earlier terminated pursuant to the terms of this
Agreement, ending on the earliest of the last day of the useful commercial life
of the Satellite (as determined pursuant to the Subsequent Appraisal), the date
specified by the Lessee in the Final Notice and the date on which the Satellite
is disposed of pursuant to Section 12.1.1 of the Purchase Agreement. At the end
of the Basic Term, if Lessee has timely elected to renew this Lease with respect
to the Transponders, then the terms and conditions of this Lease with respect to
the Transponders shall continue in full force and effect during the Renewal
Term, except that (x) Lessee shall pay Lessor Base Rent for the Transponders in
the amount of the Fair Market Rental Value thereof as determined by the
Subsequent Appraisal and (y) the Stipulated Loss Values and Termination Values
applicable during such Renewal Term shall initially be the Fair Market Sales
Value (determined pursuant to such Subsequent Appraisal) of the Transponders as
of the commencement of the Renewal Term and, on each Casualty Payment Date
during the Renewal Term, shall decline on a straight line basis by an amount per
Casualty Payment Date obtained by dividing (A) the difference between the Fair
Market Sales Value of the Transponders as of the beginning of the Renewal Term
and the estimated Fair Market Sales Value of the Transponders as of the end of
the Renewal Term by (B) the number of months in such Renewal Term.
(c) Renewal Rent. At the end of the Basic Term, if Lessee shall have
------------
timely elected to renew this Lease as aforesaid and if no Bankruptcy Default or
Event of Default shall then exist and be continuing, Lessee and Lessor shall
execute a lease supplement hereto in form and substance reasonably satisfactory
to Lessor and Lessee to evidence such renewal. Such lease supplement shall
provide for the semi-annual (or shorter period if necessary in case of the last
Lease Period) payment of Base Rent for the Renewal Term, with a final
installment on the last day of the Renewal Term, payable in each case in
arrears, in accordance with the aforesaid determinations of Base Rent and shall
provide for Stipulated Loss and Termination Values for the Transponders covered
thereby with respect to the Renewal Term determined as aforesaid. The
installments of Base Rent during the Renewal Term shall be equal in amount
(except for the last such installment which shall be pro rated, if necessary,
for a Lease Period which is shorter than six months). All other terms of the
Operative Documents and the Xxxxxx Agreements shall continue in effect during
each such Renewal Term in accordance with the provisions thereof and to the
extent provided therein, except as otherwise expressly provided in this Lease.
31
SECTION 19. Purchase Options.
----------------
(a) Purchase Option Events. So long as no Bankruptcy Default or
----------------------
any Event of Default has occurred and is continuing, Lessee shall have the right
to purchase:
(i) all but not less than all of the Transponders, if Lessee
timely delivers or is deemed to have delivered the Final Notice
contemplated by clause (ii) of the second paragraph of Section 18(a)
(stating that it will purchase the Transponders), on the expiration date of
the Basic Term or the Renewal Term, as applicable, at a purchase price
equal to the Fair Market Sales Value of the Transponders as of such date as
determined pursuant to the Subsequent Appraisal;
(ii) all (but not less than all) of the Transponders on the
EBO Date at a purchase price equal to the EBO Amount therefor;
(iii) if Owner Participant has become a Competitor and fails to
transfer all of its right, title and interest in and to the Lessor's Estate
and the Operative Documents in accordance with Article XIV of the
Participation Agreement within three (3) months after the Owner Participant
has become a Competitor, all (but not less than all) of the Transponders on
any Rent Payment Date, at a purchase price equal to the greater of (A) the
Termination Value for such Transponders as of such Rent Payment Date and
(B) the Fair Market Sales Value of such Transponders as of such Rent
Payment Date, as determined by an appraisal obtained in accordance with
Section 19(b)(ii); and
(iv) if the aggregate of all Rental Adjustments, if any, under
the Lease, which occur after the Commencement Date, when combined with all
Rental Adjustments made on or prior to the Commencement Date pursuant to
the Participation Agreement, shall result in (A) 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 set
forth on Item 7 or Item 8 to Schedule E hereto, and, as a result thereof,
----------
in the judgment of Lessee, the lease transaction contemplated herein shall
be economically disadvantageous to the Lessee as compared to a medium term
financing or (B) the Lease not qualifying as an Operating Lease for Lessee,
then Lessee shall have the right to purchase all (but not less than all) of
----
the Transponders on any Rent Payment Date at a price equal to the higher of
(i) the Fair Market Sales Value of the Transponders on such Rent Payment
Date (offset, in the event such Fair Market Sales Value is greater than the
Fair Market Sales Value set forth in the Commencement Date Appraisal, by an
amount equal to the excess of (y) the actual Fair Market Sales Value of the
Transponders on the Commencement Date, as determined by an appraisal
obtained in accordance with Section 19(b)(ii), 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
Sales Value set forth in the Commencement Date Appraisal over (z) Lessor's
Cost for the Transponders set forth in the Commencement Date Appraisal) or
(ii) the Termination Value of the Transponders on such Rent Payment Date.
32
(b) Notice of Election; Manner of Purchase; Transfer After Purchase.
---------------------------------------------------------------
(i) (1) In order to exercise its right to purchase the
Transponders pursuant to Section 19(a)(ii), Lessee shall, at least ninety
(90) (but not more than 360) days prior to the EBO Date, give irrevocable
notice to Lessor in writing stating that Lessee will purchase the
Transponders pursuant to Section 19(a)(ii). (2) In order to exercise its
right to purchase the Transponders pursuant to Section 19(a)(iii), Lessee
shall give tentative notice to Lessor in writing within 90 days after (A)
Owner Participant shall have confirmed to Lessee pursuant to Section
5.02(h) of the Participation Agreement that it is a Competitor, or (B)
Lessee shall have notified Owner Participant that Owner Participant has
become a Competitor, and Owner Participant shall have become a Competitor,
whichever of (A) or (B) shall first occur. (3) In order to exercise its
right to purchase the Transponders pursuant to Section 19(a)(iv), Lessee
shall give tentative notice to Lessor in writing within forty-five (45)
days after making the determination pursuant to Section 19(a)(iv). For so
long as the Loan Agreement shall be in effect, Lessee shall provide Agent
with a courtesy copy of each notice given Lessor pursuant to this clause
(b)(i), provided such notices shall have no legal effect under Section 2.10
of the Loan Agreement.
(ii) In the case of any tentative or irrevocable notice pursuant
to Sections 19(b)(i)(2) or 19(b)(i)(3), Lessee shall further specify that
it desires to obtain an appraisal of the Fair Market Sales Value of the
Transponder(s) as of the Rent Payment Date (which Rent Payment Date shall
be the next succeeding Rent Payment Date no earlier than 30 days following
the date of such tentative notice) or other permitted date specified in
such notice, as applicable. Promptly after Lessee shall have given such
notice, such Fair Market Sales Value shall be determined pursuant to the
Appraisal Procedure (provided that the timetable for the Appraisal
Procedure shall be appropriately accelerated to meet the deadlines set
forth in the next sentence, so long as notwithstanding such acceleration,
the appraiser shall have adequate time to make a considered determination).
Lessee shall give irrevocable notice to Lessor not later than ten (10)
Business Days after the completion of the Appraisal Procedure if it desires
to consummate the purchase of the Transponders pursuant to Sections
19(a)(iii) or 19(a)(iv), but in no event later than fifteen (15) days prior
to the Rent Payment Date or other permitted date specified in the tentative
notice referred to in this Section 19(b)(ii), which Rent Payment Date shall
be the next succeeding Rent Payment Date no earlier than 30 days following
the date of such tentative notice.
(iii) Subject to Section 19(b)(iv), on the date of purchase,
Lessee shall pay the purchase price for the Transponders, together with (A)
all unpaid Base Rent due on or before such date of purchase with respect to
the Transponders, if any, and (B) any other Rent due and unpaid as of the
date of such purchase (excluding the relevant amount specified in Section
19(a) and any Scheduled Rent designated as "advance rent" on Schedule A
hereto with respect to the date of such purchase). Upon receipt of the
payments set forth in the preceding sentence, Lessor shall transfer all
right, title and interest of Lessor in and to the applicable Transponders,
as is and where is, to Lessee, free and clear of Lessor Liens and Owner
Participant Liens, but otherwise without warranty, and Lessor shall execute
and deliver to Lessee, at Lessee's reasonable expense, a xxxx of sale or
assignment and such other instruments, documents and opinions as Lessee may
reasonably request to evidence the valid consummation of such transfer and
shall take such actions under Section 9.12 of the Loan Agreement as Lessee
may reasonably request.
33
(iv) Subject to Section 19(a), if Lessee shall provide the
irrevocable notice pursuant to Section 19(b)(i)(1) to purchase the
Transponders on the EBO Date, then Lessee may, at its option, pay the EBO
Amount therefor on a date not earlier than the same calendar day in the
fourth month prior to the EBO Date (e.g., if the EBO Date is July 2, 1999,
----
not earlier than March 2, 1999), but in any event such payment must occur
within the same taxable year of the Owner Participant as the EBO Date shall
occur (the "EBO Prepayment"), and shall pay all other amounts pursuant to
--------------
Section 19(b)(iii) due and owing as of the EBO Date on the EBO Date, and,
upon receipt of all such amounts, Lessor shall on the EBO Date comply with
the last sentence of Section 19(b)(iii). If Lessee shall make the EBO
Prepayment pursuant to the immediately preceding sentence, then (i) from
and after the making of the EBO Prepayment, the Stipulated Loss Value for
each Transponder for all purposes in this Lease shall be reduced by an
amount equal to the prepaid EBO Amount therefor, except that Stipulated
Loss Value, as used in Section 16 hereof shall not be so reduced, except as
provided therein, (ii) upon request of Lessee, if the Lien of the Loan
Agreement shall have been fully discharged, Lessor shall grant to Lessee a
security interest in the Transponders, securing Lessor's obligation to
comply with the last sentence of Section 19(b)(iii), subject to receipt of
the payment specified in Section 19(b)(iii) on the EBO Date, subject to and
as provided in Section 19(b)(iii), and Lessee shall pay all reasonable
expenses in connection with the granting of such security interest as
Supplemental Rent on an After-Tax Basis.
(c) Assumption of Notes. Notwithstanding the provisions of Sections
-------------------
19(a) and (b) and subject to compliance with Section 2.20 of the Loan Agreement,
in connection with a purchase by Lessee of the Transponders pursuant to any of
Sections 19(a)(ii) through 19(a)(iv) or a transfer pursuant to Section 8(a)(i),
as the case may be, at Lessee's option, the Applicable Principal Amount of the
Notes may be Assumed by Lessee pursuant to Sections 5.05(a) and 11.03 of the
Participation Agreement. Once Lessee has elected to exercise its option to
Assume the Notes by giving notice of such election in its notice given pursuant
to Section 19(b) hereof, such Notes shall be mandatorily Assumed by Lessee in
accordance with Section 2.20 of the Loan Agreement. The obligation of Lessee to
pay the purchase price pursuant to the applicable clause of Section 19(a) or
Lessee's election to Assume the Notes in connection with a transfer pursuant to
Section 8(a)(i) shall be satisfied by such Assumption of the Notes to the extent
of the principal amount of the Notes so assumed (after payment of Base Rent, if
any, due on or before the date of purchase), by complying with the applicable
provisions of the Lease, the Participation Agreement and the Loan Agreement and
by taking all such other acts as are reasonably necessary to permit such
Assumption by Lessee.
(d) No Duplication of Rent Differential Amount. In the event that
------------------------------------------
there is a portion of the Scheduled Rent on any date of purchase that is
designated as "arrears rent" on Schedule A and there is also a portion that is
designated as "advance rent", a portion of the Rent Differential Amount with
respect to such date of purchase shall be added to the Scheduled Rent designated
as an "arrears rent" due on such date and the remainder of such Rent
Differential Amount shall be taken into account in the computation of the EBO
Amount or the computation of Termination Value, as appropriate. It is intended
that the entire amount of the Rent Differential Amount due on such date of
purchase shall be allocated between the Scheduled Rent designated as an "arrears
rent" due on such date and the computation of the EBO Amount or the Termination
Value, as appropriate and without duplication, in such manner as will preserve
the Owner Participant's Net Economic Return and comply with the minimum payment
requirement (it being understood that the entire amount of such Rent
Differential Amount shall be taken into consideration in making such
allocation).
34
SECTION 20. Further Assurances; Default Notice.
----------------------------------
(a) Further Assurances. Lessee, at its reasonable expense, shall
------------------
promptly and duly execute and deliver to Lessor, Owner Participant and Agent
such documents and assurances and take such further action as Lessor (or Agent)
may from time to time reasonably request in order to carry out more effectively
the intent and purpose of this Lease, the other Operative Documents and the
Xxxxxx Agreements and to establish and protect the rights and remedies created
or intended to be created in favor of Lessor hereunder and thereunder, to
establish, perfect (to the extent practicable, in the case of the Transponders),
and maintain Lessor's right, title and interest in and to the Transponders and
the Collateral Security and, for the benefit of Agent, the lien and security
interest in the Collateral Security provided for in the Loan Agreement, subject
to no Lien other than Permitted Liens, including, without limitation, if
requested by Lessor, Owner Participant or Agent, at the expense of Lessee, the
recording or filing of appropriate memoranda hereof, or of such financing
statements or other documents with respect hereto as any of Lessor, Owner
Participant or Agent may from time to time reasonably request, and Lessor agrees
promptly to execute and deliver such of the foregoing financing statements or
other documents as may require execution by Lessor and to the extent permitted
by Applicable Laws, Lessee hereby authorizes any such financing statements to be
filed without the necessity of signature by Lessee; provided, however, no
-------- -------
counterparts hereof shall be filed, unless Lessor or Agent shall determine that
it is advisable, in the reasonable opinion of the counsel of Lessor or Agent, as
the case may be, to file such counterpart in order to protect its interest under
this Lease; then, upon 30 days' prior notice and delivery to Lessee of such
opinion of counsel of Lessor or Agent, as the case may be, Lessor or Agent, as
the case may be, may file such counterpart.
(b) Notice of Default. Promptly after obtaining Actual
-----------------
Knowledge of the occurrence or existence of any Default or Event of Default,
Lessee shall so notify Lessor (and Agent) and set forth in reasonable detail the
circumstances surrounding such Default or Event of Default and shall specify
what actions Lessee has taken or intends to take to cure such Default or Event
of Default.
(c) Subsequent Appraisal. No earlier than 760 days and no later
--------------------
than 720 days prior to the end of the Basic Term, Lessee shall have the option
to initiate the Appraisal Procedure, and at Lessee's cost and expense, to cause
an appraisal of the Transponders to determine, as appropriate, the remaining
useful commercial life and residual value of the Transponders, the Fair Market
Sales Value of the Transponders as of the end of the Basic Term and as of the
end of the Renewal Term, and the Fair Market Rental Value of the Transponders as
of the end of the Basic Term. Any appraisal pursuant to this Section 20(c) is
herein referred to as a "Subsequent Appraisal."
--------------------
SECTION 21. Collateral Security for Lessor's Obligations to Agent.
-----------------------------------------------------
(a) In order to secure the indebtedness evidenced by the Notes and all
obligations secured by the Loan Agreement, Lessor provides in the Loan
Agreement, among other things, for the assignment (to the extent provided
therein) by Lessor to Agent of all of Lessor's right, title and interest to this
Lease and for the creation of a Lien and security interest in favor of Agent for
the benefit of the Noteholders in and to the Collateral Security as described in
the Granting Clause of the Loan Agreement. Lessee hereby (a) consents to such
assignment pursuant to the terms of the Loan Agreement, and (b) agrees to pay
directly to Agent for so long as the Lien of the Loan Agreement shall remain in
effect (without counterclaim, set-off or other defense that Lessee may be able
to assert against Owner Participant, Trust Company, Lessor or any other Person,
except for and after giving effect to any and
35
all set-off and other rights that Lessee has the right to exercise pursuant to
Section 3(h) of this Lease; provided however, that nothing contained in this
-------- -------
Section 21(a) shall (x) prevent Lessee from bringing an action for damages
suffered by Lessee as a result of the breach by any Person of any obligation of
such Person expressly stated in any Operative Document or Xxxxxx Agreement or
for equitable relief to obtain compliance with any such obligation, or for the
return of mistakenly paid amounts of any Rent or from exercising the rights set
forth in Section 3(h) hereof, or (y) be construed as: (1) a guaranty of (i) the
value of the Transponders upon termination of the Basic Term or any Renewal Term
or (ii) the useful life of the Transponders or (iii) payment of any of the
Notes; or (2) a prohibition of assertion of any claim against any manufacturer,
supplier, dealer, vendor, contractor, subcontractor or installer with respect to
the Transponders; or (3) a waiver by Lessee of its right to assert and xxx upon
any claims it may have against any other Person in one or more separate actions)
and thereafter to Lessor, all amounts (other than Excepted Payments) due and to
become due to or for the account of Lessor and payable by Lessee hereunder or
under any other Operative Document or Xxxxxx Agreement to which Lessee in any
capacity is a party which have been assigned or required to be assigned to Agent
pursuant to the Loan Agreement or this Agreement. Lessee acknowledges that, so
long as any Notes are outstanding, all rights of Lessor under this Lease shall
be exercised only by Agent, as assignee of Lessor's rights under this Lease
pursuant to the Loan Agreement, subject, however, to Sections 13.1 and 16.4 of
the Loan Agreement and subject to Lessor's rights in respect of Excepted
Payments.
(b) Notwithstanding anything to the contrary hereinabove, Agent shall
not have any greater rights under the Xxxxxx Agreements than Lessor shall have
pursuant to Section 5(b)(ii) and (iii) of this Agreement or than the Lessor
otherwise has under this Lease.
SECTION 22. Counterparts; Uniform Commercial Code.
-------------------------------------
This Lease and each Lease Supplement 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. To the extent, if any, that this Lease constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in this Lease may
be created through the transfer or possession of any counterpart hereof other
than the original executed counterpart which shall be identified as the
counterpart containing the receipt therefor executed by Agent on the signature
page thereof.
SECTION 23. Notices.
Unless otherwise specifically provided herein, any notice, request or
other communication hereunder shall be in writing and shall be deemed duly given
or made when sent in accordance with Section 16.03 of the Participation
Agreement.
SECTION 24. Miscellaneous.
-------------
(a) Severability. Any provision of this Lease 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 of any provision in any other
Operative Document or Xxxxxx Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The
36
provisions of this Lease shall remain valid and enforceable notwithstanding the
invalidity, unenforceability, impossibility or illegality of performance of any
other Operative Document.
(b) Amendment. Neither this Lease nor any of the terms hereof may be
---------
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought and, unless
and until Lessee and Lessor shall have received written notice from Agent that
the Lien of the Loan Agreement on the Collateral Security has been released by
Agent, no amendment, supplement or waiver by Lessor or Lessee shall be effective
without the prior written consent of Agent, except as expressly provided in the
Loan Agreement.
(c) Headings, etc. The Table of Contents and headings of the various
--------------
Sections of this Lease are for convenience of reference only and shall not
modify, define or limit any of the terms or provisions hereof.
(d) Successors and Assigns. This Lease shall be binding upon and
----------------------
inure to the benefit of Lessor and Lessee and their respective successors and
permitted assigns.
(e) Governing Law. This Lease shall in all respects be governed by,
-------------
and construed in accordance with, the substantive laws of the State of New York.
(f) Limitation of Liability of the Trust Company. It is expressly
--------------------------------------------
understood and agreed by and among the parties hereto that, (i) this Agreement
is executed and delivered by Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee in the exercise of the power and authority
conferred and vested in it as such Owner Trustee, (ii) each of the
representations, undertakings and agreements made herein by the Owner Trustee
are not personal representations, undertakings and agreements of the Trust
Company, but are binding only on the Lessor's Estate and the Owner Trustee, as
Trustee, (iii) actions to be taken by the Owner Trustee pursuant to its
obligations hereunder may, in certain instances, be taken by the Owner Trustee
only upon specific authority of the 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 the Trust Company, including with respect to 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.
[balance of this page intentionally left blank]
37
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee, Lessor
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
XXXXXX COMMUNICATIONS GALAXY, INC.,
as Lessee
By /s/ Xxxxxx Xxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
38
