EXHIBIT 10.1
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Participation Agreement
Dated as of December 27, 1991
among
SATELLITE TRANSPONDER LEASING CORPORATION,
▇▇ ▇▇▇▇▇▇ ELECTRONICS CORPORATION,
SECURITY PACIFIC EQUIPMENT LEASING, INC.
as Owner Participant,
WILMINGTON TRUST COMPANY,
as Owner Trustee,
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Indenture Trustee, and
▇▇▇▇▇▇▇, SACHS & CO.,
as Initial Note Purchaser
8 Ku-band Transponders aboard
SBS 6 Communications Satellite (HS 393 Series)
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TABLE OF CONTENTS
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INTRODUCTION............................................................... 1
ARTICLE I
DEFINITIONS.............................. 2
Section 1.01. Terms Defined in This Agreement........................ 2
ARTICLE II
PARTICIPATIONS IN PAYMENT FOR PROPERTY.................. 2
Section 2.01. Agreement to Participate............................... 2
Section 2.02. Notice of Closing...................................... 3
Section 2.03. Delivery of the Transponders........................... 3
Section 2.04. Expiration of Obligations of
Participants......................................... 5
Section 2.05. Pricing Assumptions; Modifications
to Lease............................................. 6
ARTICLE III
CONDITIONS PRECEDENT......................... 6
Section 3.01. Conditions Precedent to the
Obligations of Owner Participant
and Initial Note Purchaser........................... 6
Section 3.02. Conditions Precedent to Lessees'
Obligations.......................................... 17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES.................... 18
Section 4.01. Representations and Warranties of
Lessees.............................................. 18
Section 4.02. Additional Representations and
Warranties of GMHE................................... 23
Section 4.03. Representations and Warranties of
Owner Participant.................................... 25
Section 4.04. Representations and Warranties of
Trust Company........................................ 27
Section 4.05. Representations and Warranties of
Owner Trustee........................................ 29
Section 4.06. Representations and Warranties of
Indenture Trustee.................................... 31
Section 4.07. Representations and Warranties by
Parties Concerning Offerings......................... 32
Section 4.08. Representations and Warranties of
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Initial Note Purchaser............................... 34
ARTICLE V
COVENANTS............................... 34
Section 5.01. Covenants of Lessees................................... 34
Section 5.02. Covenants of Owner Participant......................... 36
Section 5.03. Covenants of Trust Company............................. 40
Section 5.04. Covenants of Indenture Trustee......................... 40
Section 5.05. Additional Covenants................................... 40
Section 5.06. Covenants of Initial Note
Purchaser............................................ 41
ARTICLE VI
GENERAL INDEMNITY............................ 42
Section 6.01. Payment of Expenses by Lessee.......................... 42
Section 6.02. Exceptions............................................. 46
ARTICLE VII
GENERAL INDEMNITY FOR TAXES....................... 47
Section 7.01. Indemnity.............................................. 47
Section 7.02. Exceptions from Indemnity.............................. 49
Section 7.03. Calculation of Indemnity Payments...................... 52
Section 7.04. Contest................................................ 53
Section 7.05. Reports................................................ 55
Section 7.06. Payment................................................ 56
Section 7.07. Consolidated or Combined Return........................ 57
Section 7.08. Coordination........................................... 57
ARTICLE VIII
NATURE AND MANNER OF PAYMENT OF INDEMNITIES............... 57
Section 8.01. Effect of Other Indemnities............................ 57
Section 8.02. Payments and Survival of
Indemnities.......................................... 58
Section 8.03. No Guarantees, etc..................................... 58
ARTICLE IX
PAYMENT OF TRANSACTION COSTS....................... 58
Section 9.01. Transaction Costs...................................... 58
Section 9.02. Amendments, Waivers, etc............................... 59
Section 9.03. On-Going Fees.......................................... 59
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ARTICLE X
RESALE TRANSACTIONS........................... 60
Section 10.01. Resales Within 120 Days of the
Delivery Date....................................... 60
Section 10.02. Resales More than 120 Days After
the Delivery Date................................... 61
Section 10.03. Conditions Precedent to Resale........................ 63
ARTICLE XI
BENEFICIAL INTEREST PURCHASE OPTION................. 64
Section 11.01. Option to Purchase.................................... 64
Section 11.02. Notice of Election; Manner of
Purchase; Transfer After
Purchase............................................ 64
ARTICLE XII
REFUNDING, REOPTIMIZATION AND RENT.................... 67
Section 12.01. Refunding of Notes.................................... 67
Section 12.02. Cooperation; Conditions............................... 67
Section 12.03. Notice................................................ 69
Section 12.04. Rights of Parties..................................... 69
Section 12.05. Owner Participant's Reoptimization
Rights.............................................. 69
ARTICLE XIII
TRANSFER OF OWNER PARTICIPANT'S INTEREST................. 70
Section 13.01. Restrictions on Transfer.............................. 70
Section 13.02. Permitted Transfers................................... 70
Section 13.03. Effect of Transfer.................................... 73
Section 13.04. Cooperation........................................... 74
Section 13.05. Multiple Owner Participants........................... 74
ARTICLE XIV
ADDITIONAL RIGHTS AND OBLIGATIONS OF PARTIES............... 74
Section 14.01. Rights Following Lease Term........................... 74
Section 14.02. ▇▇▇▇▇▇ Agreements Liabilities......................... 75
Section 14.03. Final Term Liabilities................................ 77
Section 14.04. Obligation to Purchase for
Removal............................................... 78
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ARTICLE XV
MISCELLANEOUS.............................. 79
Section 15.01. Confidentiality....................................... 79
Section 15.02. Publicity............................................. 82
Section 15.03. Notices............................................... 84
Section 15.04. Counterparts.......................................... 84
Section 15.05. Amendments............................................ 84
Section 15.06. Parties in Interest................................... 85
Section 15.07. Governing Law......................................... 85
Section 15.08. Method of Payment..................................... 85
Section 15.09. Severability.......................................... 85
Section 15.10. [Intentionally Omitted]............................... 85
Section 15.11. Miscellaneous......................................... 85
Section 15.12. Complete Agreement.................................... 86
Section 15.13. Limitation of Liability of Trust
Company............................................. 86
Section 15.14. Remedies.............................................. 86
Section 15.15. Survival of Agreement................................. 87
Section 15.16. Intention of the Parties.............................. 87
Exhibit A - Form of Trust Agreement
Exhibit B - Form of Purchase Agreement
Exhibit C - Form of ▇▇▇▇ of Sale
Exhibit D - Form of Lease
Exhibit E - Form of Assignment
Exhibit F - Form of Indenture
Exhibit G - Form of Service Agreement
Exhibit H - Form of Guaranty Agreement
Exhibit I - Form of Consent and Agreement
Exhibit J-1 - Owner Trustee Receipt
Exhibit J-2 - Seller Receipt
Exhibit K - Form of Certificate of Acceptance
Schedule I - Information on Lessees
Schedule II - Information on Owner Participant, Owner
Trustee, Indenture Trustee and Initial
Note Purchaser
Schedule III - Pricing Assumptions, etc.
Schedule IV - Existing Leases and Use Agreements
Appendix A - Definitions
Annex A - Repricing and Reset Provisions
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PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT, dated as of December 27, 1991, among
SATELLITE TRANSPONDER LEASING CORPORATION, a Connecticut corporation ("STLC"),
▇▇ ▇▇▇▇▇▇ ELECTRONICS CORPORATION, a Delaware corporation ("GMHE"), SECURITY
PACIFIC EQUIPMENT LEASING, INC., a Delaware corporation, as Owner Participant,
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual
capacity, except as otherwise expressly set forth herein (and in such capacity,
"Trust Company"), but solely in its capacity as Owner Trustee under the Trust
Agreement, as Owner Trustee, and as Lessor, GOLDMAN, SACHS & CO. as Initial Note
Purchaser and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, as Indenture Trustee.
INTRODUCTION
Owner Participant and Initial Note Purchaser propose to participate as
provided in this Agreement in the payment of the costs of the purchase by Owner
Trustee of the Transponders and certain related costs. Concurrently with the
execution of this Participation Agreement, Owner Participant and Trust Company
are entering into the Trust Agreement providing, among other things, for
beneficial ownership of Lessor's Estate by Owner Participant. On or prior to
the Delivery Date, (a) Seller and Owner Trustee will enter into the Purchase
Agreement, providing for the purchase of the Transponders by Owner Trustee from
Seller; (b) Lessees and Lessor will enter into the Lease providing for the lease
of the Transponders by Lessor to Lessees; (c) ▇▇▇▇▇▇ Services and Owner Trustee
will enter into the Service Agreement providing for the furnishing of certain
services by ▇▇▇▇▇▇ Services to Owner Trustee with respect to each Transponder;
(d) Lessees and Owner Participant will enter into the Tax Indemnification
Agreement providing for the indemnification of Owner Participant by Lessees; (e)
Owner Trustee and Indenture Trustee will enter into the Indenture for the
benefit of the Noteholders providing for (i) the issuance by Owner Trustee of a
Note or Notes substantially in the form set forth in the Indenture, in the
amounts and otherwise as provided in the Indenture, as evidence of the
investment of the Noteholders in the debt financing of a portion of Buyer's Cost
for the Transponders, and (ii) the deposit, mortgage and pledge with Indenture
Trustee, as part of the Indenture Estate, of substantially
all of the properties other than Excepted Payments held in trust by Owner
Trustee under the Trust Agreement as security for the performance of the
obligations of Owner Trustee to Indenture Trustee and to the holders of the
Notes; (f) Guarantor will enter into the Guaranty Agreement providing for the
guaranty by Guarantor of certain payment obligations and liabilities for money
damages of Seller and Contractor under the ▇▇▇▇▇▇ Agreements; and (g) the
parties to the Consent and Agreement will enter into the Consent and Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Terms Defined in This Agreement. Except as otherwise
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defined herein, capitalized terms used herein shall have the respective meanings
assigned thereto in Appendix A for all purposes hereof.
ARTICLE II
PARTICIPATIONS IN PAYMENT FOR PROPERTY
Section 2.01. Agreement to Participate. Subject to the terms and
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conditions of this Agreement and in reliance on the representations and
warranties contained herein or made pursuant hereto:
(a) Participation by Initial Note Purchaser. On the Delivery Date,
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Initial Note Purchaser shall participate in the financing of Buyer's Cost
for each Transponder by purchasing Notes issued by Owner Trustee in the
aggregate principal amount of the Debt Commitment; provided, however, that
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in case Owner Participant shall fail to make its Commitment for any
Transponder available on the Delivery Date, Initial Note Purchaser shall
have no obligation to make any amount of its Debt Commitment for such
Transponder available on such Date or to increase any amount of its Debt
Commitment.
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(b) Participation by Owner Participant. On the Delivery Date Owner
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Participant shall participate in the payment of Buyer's Cost for each
Transponder by making an equity investment in each such Transponder in an
amount equal to its Commitment therefor; provided, however, that, in case
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Initial Note Purchaser shall fail to make available the Debt Commitment for
any Transponder on or before the Delivery Date, Owner Participant shall
have no obligation to make any amount of its Commitment for such
Transponder available on such Date or to increase any amount of such
Commitment; and provided further that, notwithstanding the foregoing, the
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sum of (i) the aggregate amount of the Owner Participant's Commitments for
all Transponders plus (ii) an amount equal to (A) the sum of Lessor Interim
Amount and Lessor Payment Amount, less (B) Interim Rent, plus (iii)
Transaction Costs paid by the Owner Participant, shall not exceed the
amount stated in Schedule III hereof as the Commitment Limit.
Section 2.02. Notice of Closing. STLC will furnish Owner Trustee,
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Owner Participant and Initial Note Purchaser with at least three Business Days
prior written notice of the date on which Owner Participant shall make its
Commitments available to Owner Trustee, Initial Note Purchaser shall make its
Debt Commitments available to Owner Trustee and Owner Trustee shall purchase the
Transponders from Seller (the "Delivery Date"), which notice shall also include
(i) the Transponder(s) to be purchased by Owner Trustee pursuant to the Purchase
Agreement, (ii) Buyer's Cost for each such Transponder, (iii) the amount of the
Commitment to be made available by Owner Participant and the amount of the Debt
Commitment to be made available by Initial Note Purchaser for each such
Transponder and (iv) an estimate of the Transaction Costs to be payable by Owner
Trustee pursuant to Section 9.01 hereof. The parties may waive the requirement
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of the foregoing notice and the closing of the transactions contemplated hereby
shall constitute conclusive evidence of such waiver.
Section 2.03. Delivery of the Transponders.
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(a) Owner Participant shall make the Commitments available to Owner
Trustee through wire transfer of immediately available funds by 12 Noon New York
time on the Delivery Date proposed by STLC in accordance with Section 2.02 to
the account specified by Owner Trustee. Initial Note Purchaser shall make the
Debt Commitments available to
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Owner Trustee through wire transfer of immediately available funds by 12 Noon
New York time on the Delivery Date proposed by STLC in accordance with Section
2.02.
(b) If the delivery of the Transponders does not occur by 11:59 P.M.
New York time on the proposed Delivery Date, all funds which have been made
available by Owner Participant and Initial Note Purchaser to Owner Trustee
shall, until disbursement thereof in accordance with the terms of this Agreement
upon delivery of the Transponders, or until returned, be invested by Owner
Trustee in such Permitted Investments as are directed by Owner Participant, with
respect to the amount of the Commitments, and Lessee with respect to the amount
of the Debt Commitments. The parties hereto may agree to any other arrangement
mutually satisfactory to such parties as to how funds will be made available and
disbursed.
(c) Owner Participant and Initial Note Purchaser hereby authorize and
direct Owner Trustee to make payment of Buyer's Cost for the Transponders to
Seller on the Delivery Date by transfer of immediately available funds from the
aggregate amount of the Commitments and the Debt Commitments received by Owner
Trustee at such time as the Seller shall tender delivery of the Transponders;
provided that (A) in the case of Owner Participant, upon delivery, all
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conditions precedent to the participation in the payment of Buyer's Cost for the
Transponders by Owner Participant specified in Section 3.01 hereof shall have
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been satisfied (or waived) to the satisfaction of Owner Participant and Owner
Participant shall have so notified Owner Trustee and (B) in the case of Initial
Note Purchaser, upon delivery of the Transponders, all conditions precedent to
the participation in the payment of Buyer's Cost for the Transponders by Initial
Note Purchaser specified in Section 3.01 hereof shall have been satisfied (or
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waived) to the satisfaction of Initial Note Purchaser and Initial Note Purchaser
shall have so notified Owner Trustee and (C) such delivery is effected not later
than 11:59 P.M. New York time on the Cut-off Date. If Owner Participant and
Initial Note Purchaser notify Owner Trustee and STLC either orally or in writing
on such day that Buyer's Cost for the Transponders may be paid, such conditions
shall be deemed satisfied or waived with respect to Owner Participant and
Initial Note Purchaser, respectively, for purposes hereof.
(d) On the Delivery Date, Owner Trustee shall execute, and Indenture
Trustee shall authenticate and
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deliver to the Initial Note Purchaser, the Notes, which (A) shall be issued in
the aggregate amount of the Debt Commitments and in such maturities as are
provided in the Indenture, (B) shall bear interest at such rate or rates as are
specified in the Indenture, (C) shall be issued in such form and on such terms
as are specified in the Indenture, (D) shall be dated and authenticated as of
the Delivery Date and shall bear interest therefrom, and (E) shall be issued in
such denominations and in such names as the Initial Note Purchaser may request.
(e) On the Delivery Date, Owner Trustee shall take title to, and
accept delivery of, each Transponder from Seller upon delivery thereof by Seller
pursuant to the Purchase Agreement (Owner Trustee hereby appointing STLC as its
representative to accept such delivery on its behalf).
(f) On the Delivery Date, STLC shall accept each Transponder by
delivery of a Certificate of Acceptance in the form of Exhibit K.
(g) The closings for the transactions contemplated hereby shall take
place at the offices of Weil, Gotshal & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇ or such other place as the parties hereto shall agree.
Section 2.04. Expiration of Obligations of Participants.
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(a) Notwithstanding any provision to the contrary contained herein,
the obligation of (i) Owner Participant to make available or release any amount
of any Commitment, (ii) Initial Note Purchaser to make available or release any
amount of any Debt Commitment, (iii) Seller to sell any Transponder pursuant to
the Purchase Agreement and (iv) Lessees to accept any Transponder under the
Lease, shall expire 11:59 P.M. New York time on the Cut-off Date.
(b) If Owner Participant shall for any reason wrongfully fail or
refuse to make the full amount of its Commitment in respect of any Transponder
available to Owner Trustee hereunder on or before the Delivery Date (Owner
Participant, for the purpose of this paragraph, being called the "Defaulting
Participant"), Owner Trustee shall promptly give each party hereto telephonic
notice (to be confirmed promptly in writing) of such wrongful failure or
refusal. In such event the Defaulting Participant will have no further right to
participate in the payment of Buyer's Cost
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for such Transponder. Lessees shall have the right to designate any banking or
financial institution, institutional investor or fund which is not affiliated
with either Lessee or with Owner Participant to be substituted for the
Defaulting Participant. Such substituted institution or institutions (the
"Substituted Participant") shall sign and deliver an amendment to this
Agreement, in form and substance satisfactory to Owner Trustee and Indenture
Trustee, whereby the Substituted Participant agrees to be a party to this
Agreement, agrees to make the same representations and warranties as the
Defaulting Participant and agrees to be bound by all the terms hereof and to
undertake all the obligations of the Defaulting Participant contained herein,
other than obligations, if any, arising from the aforesaid failure or refusal by
such Defaulting Participant.
(c) If any Transponder shall not have been delivered on or before the
Cut-off Date, the Owner Trustee will return funds in an amount equal to the
Commitment therefor and any interest, income or profits thereon to the Owner
Participant on the first Business Day after the Cut-off Date, and an amount
equal to the Debt Commitment therefor to the Initial Note Purchaser.
Section 2.05. Pricing Assumptions; Modifications to Lease. The
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pricing assumptions, the basis for the calculation of Scheduled Rent, Stipulated
Loss Value, Termination Value and the EBO Amounts, and the amounts thereof,
shall be as set forth in Schedule III hereto.
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ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent to the Obligations of Owner
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Participant and Initial Note Purchaser. The obligation of Owner Participant to
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make available to Owner Trustee its Commitment and of Initial Note Purchaser to
make available its Debt Commitment and of Owner Participant and Initial Note
Purchaser to participate in the purchase and financing, respectively, of any
Transponder shall be subject to the fulfillment to the satisfaction of, or
waiver by, such Person prior to or on the Delivery Date, of the following
conditions precedent (except that (i) the obligation of any party shall not be
subject to such party's own performance or compliance, (ii) the conditions
specified in clause (iii) of Section 3.01(i) and in Section 3.01(l)
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(other than the last sentence thereof), Sections 3.01(v) and (x) hereof need be
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fulfilled only to the satisfaction of, or waiver by, Owner Participant and (iii)
the conditions specified in the last sentence of Section 3.01(l) and in Section
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3.01(z) hereof need be fulfilled only to the satisfaction of, or waiver by,
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Initial Note Purchaser):
(a) Notice. Receipt of the notice referred to in Section 2.02.
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(b) Receipts. Receipts, substantially in the form of Exhibits J-1,
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J-2 and K hereto, dated the Delivery Date, shall have been duly executed
and delivered by (i) Owner Trustee evidencing receipt of the Commitments of
Owner Participant and the Debt Commitments from Initial Note Purchaser,
(ii) Seller to Owner Trustee evidencing payment to Seller of Buyer's Cost
for the Transponders and (iii) Lessees certifying acceptance pursuant to
the Certificate of Acceptance of the Transponders.
(c) Legality. No change shall have occurred under Applicable Law
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since the date hereof which, in the opinion of Initial Note Purchaser,
Owner Participant or either Lessee, as the case may be, shall or would make
it illegal or unduly burdensome for such Person to participate in any of
the transactions contemplated by the Operative Documents and the ▇▇▇▇▇▇
Agreements.
(d) Insurance. Receipt of evidence reasonably satisfactory to Owner
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Participant and Initial Note Purchaser of the liability and casualty or
life insurance in effect on the Delivery Date; provided that a certificate
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of an officer of either Lessee to that effect shall constitute such
satisfactory evidence.
(e) Material Adverse Change. Since September 30, 1991, there has
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been no material adverse change in GMHE's consolidated financial condition,
operations, business, or properties.
(f) Litigation. No action, proceeding or investigation shall have
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been instituted nor shall governmental action before any Governmental Body
be threatened, nor shall any Order have been issued or proposed to be
issued by any Governmental Body at the time of the Delivery Date to set
aside, restrain,
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enjoin or prevent the consummation of any of the transactions contemplated
by this Agreement or by the other Operative Documents and the ▇▇▇▇▇▇
Agreements.
(g) Consents and Approvals. All actions, approvals, consents,
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waivers, exemptions, variances, franchises, orders, permits,
authorizations, rights and licenses required to be taken, given or
obtained, as the case may be, by or from any Governmental Body or by or
from any trustee or holder of indebtedness or obligations of the Seller or
either Lessee, that are necessary or, in the opinion of Owner Participant
or Initial Note Purchaser or their respective special counsel or their
respective special FCC counsel, advisable in order that the Transponders
may be operated for their intended purpose in connection with the
transactions contemplated by the Operative Documents and the ▇▇▇▇▇▇
Agreements shall have been duly taken, given or obtained, as the case may
be, shall be in full force and effect on the Delivery Date, shall not be
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be
taken or review thereof may be obtained shall have expired or no review may
be obtained or appeal there from taken and shall be adequate to authorize
the consummation of the transactions contemplated by the Operative
Documents and the ▇▇▇▇▇▇ Agreements, and the performance by the parties of
their respective obligations thereunder. STLC shall have received due
authorization from the FCC to operate the Satellite, which authorization
shall not be subject to any pending proceedings (administrative, judicial
or otherwise) and shall not contain any restrictions therein, other than
those relating to STLC's application from time to time to the FCC for a
different orbital position for the Satellite, as contemplated by the
Operative Documents and the ▇▇▇▇▇▇ Agreements, and those which in the
opinion of special FCC counsel for each of Owner Participant and Initial
Note Purchaser are customary for authorizations of such kind.
(h) Exemption from Regulation. Initial Note Purchaser, Indenture
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Trustee, Owner Participant, Owner Trustee and any Affiliate of any thereof
shall have obtained all appropriate regulatory or other governmental
approvals, licenses or permits of any kind required for their participation
in the transactions
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contemplated by the Operative Documents and the ▇▇▇▇▇▇ Agreements and
Initial Note Purchaser, Indenture Trustee, Owner Participant, Owner Trustee
and their respective Affiliates shall not be subject solely by reason of
the transactions contemplated by the Operative Documents and the ▇▇▇▇▇▇
Agreements to regulation (i) under the Communications Act, except for
direct or derivative obligations to furnish nonburdensome information
routinely required of similarly situated Persons or obligations that either
Lessee has undertaken under any of the Operative Documents or ▇▇▇▇▇▇
Agreements, or (ii) as an entity offering common carrier communications
services or engaged in the use or operation of any apparatus for the
transmission of energy, communications or signals by radio by any Federal,
state or local regulatory officer, commission or agency.
(i) Authorization, Execution and Delivery of Documents. The
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following documents shall have been duly authorized, executed and delivered
by the respective parties thereto, shall be in full force and effect on
the Delivery Date without any event or condition having occurred or
existing which constitutes, or with the giving of notice or lapse of time
or both would constitute, a default thereunder or breach thereof or would
give any party thereto the right to terminate any thereof, and an executed
counterpart of each thereof shall have been delivered to Initial Note
Purchaser, Indenture Trustee, Owner Trustee, each Lessee, Owner
Participant, and their respective counsel; provided, however, that the Tax
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Indemnification Agreement shall be delivered to each Lessee and Owner
Participant and their respective counsel only:
(i) this Agreement;
(ii) the Lease;
(iii) the Tax Indemnification Agreement;
(iv) the Indenture;
(v) the Purchase Agreement;
(vi) the Service Agreement;
(vii) the Guaranty Agreement;
(viii) the Trust Agreement;
(ix) the ▇▇▇▇ of Sale; and
(x) the Consent and Agreement.
(j) Transponders. On the Delivery Date, each of the Transponders
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being purchased by Owner Trustee shall
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have been accepted by STLC pursuant to Section 2(a) of the Lease, Owner
Trustee shall have received good and marketable title to each such
Transponder free and clear of all Liens other than Permitted Liens
described in clause (a) of the definition thereof and, in respect of
Indenture Trustee, Liens created by Indenture Trustee, and, in respect of
Owner Participant, Liens created by Owner Participant or Trust Company, in
each case as described in clause (b) of the definition thereof, and Seller
shall have furnished notice of delivery in accordance with the provisions
of the Purchase Agreement.
(k) Filings and Recordings. All Uniform Commercial Code financing
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statements and other documents, if any, or memoranda in respect thereof,
necessary or advisable, in the reasonable opinion of Initial Note Purchaser
and Owner Participant (as specified by such Person or its special counsel),
to establish, confirm and protect the right, title and interest of Owner
Trustee in and to the Transponders, and, in the reasonable opinion of
Initial Note Purchaser and Owner Participant (as specified by such Person)
to perfect (to the extent practicable in the case of the Transponders) for
the benefit of Indenture Trustee and the Noteholders, the security interest
in the Indenture Estate provided for in the Indenture, shall have been
filed or recorded or entrusted to such Person as the Initial Note Purchaser
shall designate for prompt filing or recording.
(l) Appraisal. Owner Participant shall have received an Appraisal,
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by Independent Appraiser, addressed to it in a form and substance
satisfactory to Owner Participant and its special tax counsel and not
inconsistent with the opinion of the Independent Appraiser delivered to
Lessees and referred to in Section 3.02(a)(i) hereof, containing (i) the
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statement that Buyer's Cost of each Transponder is equal to the fair market
value of each Transponder as of the Delivery Date, (ii) an estimate that
not less than 20% of the remaining economic useful life of each Transponder
as of the Delivery Date will remain at the end of the Basic Term, (iii) an
estimate of the residual value of each Transponder at the end of the Basic
Term (without taking into account the effect of inflation or deflation),
which estimate shall be to the effect that each Transponder shall have a
residual value of not
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less than 20% of Buyer's Cost taking into account Section 20(c) of the
Lease and the obligations under the ▇▇▇▇▇▇ Agreements, (iv) the conclusion
that no Transponder is "limited use property" and that it is reasonable to
expect that each Transponder will be useful or usable in a commercially
feasible manner at the end of the Basic Term by Owner Participant or a
Person other than Lessee or an Affiliate thereof and (v) a statement that
the fees payable under the Service Agreement are equal to the fair market
value of the services to be provided thereunder (the "Appraisal"). The
Appraisal will also state the estimate as of the Delivery Date of the
Independent Appraiser of the expected fair market value of each Transponder
at the end of the Basic Term and on the First EBO Date applicable thereto
(taking into account a reasonable estimate of the effect of inflation and
deflation). Initial Note Purchaser shall have received evidence
satisfactory to it (in the form of a copy of the relevant sections of the
opinion referred to in Section 3.02(a)(i)) that Buyer's Cost of each
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Transponder is equal to the fair market value of each Transponder as of the
Delivery Date.
(m) Officer's Certificates. On the Delivery Date, the following
----------------------
statements shall be true and Owner Participant, Owner Trustee, each Lessee,
Initial Note Purchaser and Indenture Trustee shall have received:
(i) an Officer's Certificate of each Lessee, dated the Delivery
Date, stating that (A) the representations and warranties of such
Lessee contained in the Operative Documents to which it is a party are
true on and as of the Delivery Date as though made on and as of the
Delivery Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on
and as of such earlier date); (B) no event or condition has occurred
and is continuing, or would result from the consummation of any
transaction contemplated by the Operative Documents and the ▇▇▇▇▇▇
Agreements which constitutes a Default or an Event of Default, an
Event of Loss or an event which, with the passage of time or giving of
notice or both, would become an Event of Loss, under the Lease; (C)
all covenants and conditions required
11
to be performed or fulfilled by such Lessee prior to or on the
Delivery Date have been performed and fulfilled or waived; and (D)
each Operative Document and the Purchase Agreement to which it is a
party remains in full force and effect with respect to it; and
(ii) an Officer's Certificate of each of Seller and Contractor,
dated the Delivery Date, stating that (A) its representations and
warranties contained herein and in the ▇▇▇▇▇▇ Agreements are true on
and as of the Delivery Date as though made on and as of the Delivery
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations
and warranties shall have been true and accurate on and as of such
earlier date); (B) all covenants and conditions required to be
performed or fulfilled by it prior to or on the Delivery Date have
been performed and fulfilled or waived; and (C) each of the ▇▇▇▇▇▇
Agreements to which it is a party remains in full force and effect;
and
(iii) an Officer's Certificate of Owner Participant, dated the
Delivery Date, stating that (A) the representations and warranties of
Owner Participant contained in the Operative Documents to which it is
a party are true on and as of the Delivery Date as though made on and
as of the Delivery Date, except to the extent that such
representations and warranties relate solely to an earlier date (in
which case such representations and warranties shall have been true
and accurate on and as of such earlier date); (B) no event or
condition attributable to Owner Participant has occurred and is
continuing, or would result from the consummation of any transaction
contemplated by the Operative Documents or the ▇▇▇▇▇▇ Agreements,
which constitutes an Indenture Event of Default; (C) all covenants and
conditions required to be performed or fulfilled by Owner Participant
prior to or on the Delivery Date have been performed and fulfilled or
waived; and (D) each Operative Document to which it is a party
remains in full force and effect with respect to it; and
12
(iv) an Officer's Certificate of Owner Trustee, dated the
Delivery Date, stating that (A) the representations and warranties of
Owner Trustee contained in the Operative Documents to which it is a
party are true on and as of the Delivery Date as though made on and as
of the Delivery Date, except to the extent that such representations
and warranties relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on
and as of such earlier date); (B) no event or condition attributable
to Owner Trustee has occurred and is continuing, or would result from
the consummation of any transaction contemplated by the Operative
Documents or the ▇▇▇▇▇▇ Agreements, which constitutes an Indenture
Event of Default; (C) all covenants and conditions required to be
performed or fulfilled by Owner Trustee prior to or on the Delivery
Date have been performed and fulfilled or waived; and (D) each
Operative Document and ▇▇▇▇▇▇ Agreement to which it is a party remains
in full force and effect with respect to it; and
(v) an Officer's Certificate of Indenture Trustee dated the
Delivery Date, stating that (A) the representations and warranties of
Indenture Trustee contained in the Operative Documents to which it is
a party are true on and as of the Delivery Date as if made on and as
of the Delivery Date, except to the extent that such representations
and warranties relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on
and as of such earlier date); (B) all covenants and conditions
required to be performed or fulfilled by Indenture Trustee prior to or
on the Delivery Date have been performed and fulfilled or waived; and
(C) each Operative Document to which it is a party remains in full
force and effect with respect to it.
(n) Resolutions, Certificates, etc. Owner Participant, each Lessee,
------------------------------
the Initial Note Purchaser, Indenture Trustee and Owner Trustee shall have
received the following, in each case in form and substance reasonably
satisfactory to Owner Participant, each
13
Lessee, Indenture Trustee, the Initial Note Purchaser and Owner Trustee,
respectively:
(i) a copy of resolutions of the respective Boards of Directors
(or committees thereof having power with respect to the matters
covered by such resolutions) of each Lessee, Contractor, Seller,
Guarantor, Owner Participant, Owner Trustee, and Indenture Trustee,
each certified as of the Delivery Date by the Secretary or an
Assistant Secretary thereof, duly authorizing the execution, delivery
and performance by it of each Operative Document, Guaranty Agreement
and ▇▇▇▇▇▇ Agreement to which it is a party, in each case together
with an incumbency certificate as to the officer or officers or other
persons authorized to execute and deliver such documents on its
behalf;
(ii) a good standing certificate of recent date from the
jurisdiction of incorporation of each Lessee, Contractor, Seller,
Guarantor, and, to the extent available, Owner Participant, Trust
Company, and Indenture Trustee;
(iii) a certificate of the Secretary or Assistant Secretary of
each Lessee, Contractor, Seller, and Guarantor, and, to the extent
available, Owner Participant, Trust Company, and Indenture Trustee,
certifying as to such Person's charter and by-laws; and
(iv) such other documents and evidence with respect to each
Lessee, Contractor, Seller, Guarantor, Owner Participant, Indenture
Trustee, and Owner Trustee, as Owner Participant, Owner Trustee,
either Lessee, Indenture Trustee, or Initial Note Purchaser may
reasonably request in order to consummate the transactions
contemplated by the Operative Documents, and to evidence the taking of
all corporate proceedings in connection therewith and compliance with
the conditions herein or therein set forth.
(o) Event of Loss. No Event of Loss, or event which, with the
-------------
passage of time or giving of notice or both, would become an Event of Loss,
shall have occurred with respect to any of the Transponders.
14
(p) Opinions of Counsel and Special Counsel for Lessees and
-------------------------------------------------------
Guarantor. Owner Participant, Owner Trustee, the Initial Note Purchaser
and Indenture Trustee shall have received opinions, dated the Delivery
Date, in form and substance reasonably satisfactory to them, from ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, special counsel for each of the Lessees, Seller and Guarantor,
from Weil, Gotshal & ▇▇▇▇▇▇, special counsel for Lessees and Guarantor, and
from ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq., (or other in-house counsel) as counsel for
Lessees, Seller, Guarantor and Contractor.
(q) Opinion of FCC Counsel for Lessee and Guarantor. Owner
-----------------------------------------------
Participant, Owner Trustee, the Initial Note Purchaser and Indenture
Trustee shall have received an opinion, dated the Delivery Date, in form
and substance reasonably satisfactory to them, from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, FCC
counsel for each of the Lessees and Guarantor.
(r) Opinion of Special Counsel for Owner Participant. Each Lessee,
------------------------------------------------
Owner Participant, Owner Trustee, the Initial Note Purchaser and Indenture
Trustee shall have received an opinion or opinions, dated the Delivery
Date, in form and substance reasonably satisfactory to them, from ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, special counsel for Owner Participant, and from other counsel
or special counsel for Owner Participant.
(s) Opinion of Special Counsel for Owner Trustee. Owner Participant,
--------------------------------------------
Owner Trustee, Indenture Trustee, the Initial Note Purchaser and each
Lessee shall have received an opinion, dated the Delivery Date, in form and
substance reasonably satisfactory to them, from ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger,
special counsel for Owner Trustee.
(t) Opinion of Counsel for Indenture Trustee. Each Lessee, Owner
----------------------------------------
Participant, Owner Trustee Indenture Trustee and the Initial Note Purchaser
shall have received an opinion, dated the Delivery Date, in
15
form and substance reasonably satisfactory to them, from Day, ▇▇▇▇▇ &
▇▇▇▇▇▇, counsel for Indenture Trustee.
(u) Opinion of Special FCC Counsel for Owner Participant. Owner
----------------------------------------------------
Participant, Trust Company, Indenture Trustee and the Initial Note
Purchaser shall have received an opinion, dated the Delivery Date, in form
and substance reasonably satisfactory to them, from Wiley, Rein & Fielding,
special FCC counsel for Owner Participant.
(v) Opinion of Tax Counsel for Owner Participant. Owner Participant
--------------------------------------------
shall have received an opinion, dated the Delivery Date, from ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, special tax counsel for Owner Participant, in form and
substance satisfactory to Owner Participant, as to certain income tax
matters.
(w) Payment of Taxes, etc. All taxes, fees and other charges due and
---------------------
payable in connection with the purchase of the Transponders and the
execution, delivery, recordation and filing of all the documents and
instruments referred to in this Agreement and in connection with the
issuance and sale of the Notes shall have been paid in full.
(x) Tax Law Change. During the period after November 15, 1991 and
--------------
ending on the day immediately preceding the Delivery Date, no change in the
Code shall have been enacted or proposed, or no change in the Regulations
shall have been adopted or proposed, in each case that would adversely
affect Owner Participant's Net Economic Return with respect to the
Transponders; provided, however, that (i) a change in the Regulations shall
-------- -------
be deemed to be proposed for the purposes of this Section 3.01(x) only upon
---------------
publication as proposed regulations in the Federal Register and (ii) a
change in the Code shall be deemed to be proposed for purposes of this
Section 3.01(x) only if it is introduced as a ▇▇▇▇ in the United States
---------------
Congress in the form proposed by the U.S. Department of Treasury or by a
member of the House Ways and Means Committee or the Senate Finance
Committee as sponsor; and provided further that the foregoing shall not
-------- -------
relieve Owner Participant of its obligations hereunder if an adjustment to
Scheduled Rent payable with respect to Transponders is made, or upon
enactment or promulgation would be made, in either case pursuant to
Section 4 of the Lease in respect of such change, or if Lessees agree to
indemnify against such adverse effect in a manner reasonably satisfactory
to Owner Participant.
(y) STLC Contract. On or prior to the Delivery Date, Owner
-------------
Participant, and Initial Note Purchaser shall have received a true and
complete copy of certain
16
portions, as amended, of the STLC Negotiated Contract No. 85-001
dated February 15, 1988 between STLC and ▇▇▇▇▇▇ Aircraft Company.
(z) Opinion of Special Counsel for Initial Note Purchaser. Initial
-----------------------------------------------------
Note Purchaser shall have received an opinion, dated the Delivery Date, in
form and substance reasonably satisfactory to them from ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇, special counsel to Initial Note Purchaser.
Section 3.02. Conditions Precedent to Lessees' Obligations.
--------------------------------------------
(a) The obligations of Lessees to take delivery under the Lease of
the Transponders and consummate the transactions contemplated hereby shall be
subject to (i) receipt by each Lessee of an opinion reasonably satisfactory to
them in form and scope from the Independent Appraiser, not inconsistent with the
Appraisal delivered to Owner Participant pursuant to Section 3.01(l) hereof, (A)
---------------
to the effect that the Transponders will have, at the end of the Basic Term, in
excess of 25% of their economic useful life remaining, measured from the
Delivery Date, (B) to the effect that the fair market value of the Transponders
is equal to Buyer's Cost, and (C) to such other matters as either Lessee shall
reasonably require, (ii) satisfaction of, or waiver by, Lessees (acting directly
or by authorization to counsel), of the conditions contained in Sections
--------
3.01(b), (c), (f), (g), (h), (i), (m)(iii), (m)(iv), (m)(v), (n) (insofar as it
----------------------------------------------------------------
relates to Owner Participant, Owner Trustee, and Indenture Trustee), (o), (r),
---------
(s), (t), and (x) (it being understood that if any such Section specifies that a
-----------------
condition be fulfilled to the satisfaction of a Person, such condition shall be
fulfilled to the satisfaction of each Lessee and that the obligation of each
Lessee shall not be subject to its own or the other Lessee's performance or
compliance) and (iii) sale and lease transactions on substantially identical
terms and conditions shall have been consummated in respect of all of the Other
Transponders on the Satellite that are to be sold to the Other Owner Trustee on
behalf of the Other Owner Participant.
(b) If prior to or on the Delivery Date any adjustment to the amounts
payable as Scheduled Rent required to be made pursuant to Section 4 of the Lease
and in accordance with Section 4 thereof would result in (i) the
17
Lease ceasing to qualify as an Operating Lease or (ii) an increase in the Net
Present Value of Scheduled Rent by more than 200 basis points, Lessees shall
have the option, exercisable by the furnishing of a notice to Owner Trustee and
Indenture Trustee, to terminate their respective obligations hereunder (other
than the obligations pursuant to Sections 6.01 and 7.01 and the obligation to
----------------------
pay Transaction Costs pursuant to Section 9.01).
------------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of Lessees. Each Lessee
-----------------------------------------
represents and warrants to each of the other parties hereto that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, and has all
requisite corporate power and authority to operate and own or hold under
lease the properties it purports to operate and own or hold under lease, to
transact the business it transacts and to otherwise enter into and perform
its obligations under each Operative Document to which it is or will be a
party. Such Lessee is duly qualified to do business as a foreign
corporation and in good standing in each jurisdiction wherein the failure
to do so would have a material adverse effect, in the case of STLC, on the
conduct of its business and operations as presently conducted or on the
ability of STLC to perform its obligations under the Operative Documents
and ▇▇▇▇▇▇ Agreements to which it is a party and, in the case of GMHE, on
the financial condition or operations of GMHE and its subsidiaries taken as
a whole or on the ability of GMHE to perform its obligations under the
Operative Documents and ▇▇▇▇▇▇ Agreements to which it is a party.
(b) Each Operative Document and ▇▇▇▇▇▇ Agreement to which such Lessee
is or will be a party has been duly authorized by all necessary corporate
action on the part of, and has been or on or prior to the Delivery Date
will be duly executed and delivered by, such Lessee and neither the
execution and delivery thereof, nor the consummation by it of the
transactions contemplated thereby (including, without limitation,
18
the operation of the Transponders), nor compliance by such Lessee with any
of the terms and provisions thereof (i) requires any approval of
stockholders or approval or consent of any trustee or holders of any of its
indebtedness or obligations; (ii) contravenes any law, judgment,
governmental rule or regulation or order applicable to or binding on it or
any of its properties, the contravention of which would have a material
adverse effect on the conduct of its business and operations as presently
conducted or the performance of its obligations under the Operative
Documents and the ▇▇▇▇▇▇ Agreements to which it is a party; (iii)
contravenes or results in any breach of, or constitutes any default under,
any indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement for borrowed money, contract or
other agreement or instrument to which it is a party or by which it or any
of its properties may be bound or affected, the contravention, breach or
default of which would have a material adverse effect on the conduct of its
business and operations as presently conducted or the performance of its
obligations under the Operative Documents and the ▇▇▇▇▇▇ Agreements to
which it is a party; (iv) contravenes its corporate charter or by-laws; or
(v) results in the creation of any Lien (other than Permitted Liens
described in clauses (a) and (b) of the definition thereof) upon the
Transponders or any material property of such Lessee.
(c) Neither the execution and delivery by it of the Operative
Documents or ▇▇▇▇▇▇ Agreements to which it is or will be a party, nor the
consummation by it of any of the transactions (including, without
limitation, the operation of the Transponders) contemplated thereby,
requires the consent, approval or authorization of, the giving of notice
to, or the registration with, the recording or filing of any document with,
or the taking of any other action in respect of, any Governmental Body,
except (i) such of the foregoing as have been obtained, given or done, (ii)
the filings and actions described in clause (ii) of Section 4.01(g), and
---------------
(iii) such routine notification from Seller to the FCC as may be required
after the Delivery Date under the laws in existence on the Delivery Date.
As of the Delivery Date, any and all notifications that may be required to
be given by Seller to the FCC pursuant to the foregoing clause (iii) are
routine in nature and
19
for informational purposes only, and no such notice as of the Delivery Date
requires any official action or determination by the FCC as of the Delivery
Date, is subject to approval or disapproval by the FCC or as of the
Delivery Date gives rise to a right by any third party to file a petition
to deny.
(d) Each Operative Document and ▇▇▇▇▇▇ Agreement to which such Lessee
is a party constitutes the legal, valid and binding obligation of such
Lessee, enforceable against such Lessee in accordance with its terms,
except as such enforcement may be subject to bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights generally and
to general principles of equity.
(e) Except as disclosed in writing to Indenture Trustee, Owner
Trustee, Owner Participant and Initial Note Purchaser prior to the
execution of this Agreement, there are no actions, suits or proceedings
pending against such Lessee in any court or before any arbitrator of any
kind or before or by any Governmental Body, or to the knowledge of such
Lessee threatened, which question the legality or validity of any of the
Operative Documents or ▇▇▇▇▇▇ Agreements to which such Lessee is a party or
the transactions contemplated thereby or which, individually or in the
aggregate, if adversely determined, would have a material adverse effect in
the case of STLC, on the conduct of its business and operations as
presently conducted or on the ability of STLC to perform its obligations
under the Operative Documents or the ▇▇▇▇▇▇ Agreements to which it is a
party and, in the case of GMHE, on the financial condition or operations of
GMHE and its subsidiaries taken as a whole or on the ability of GMHE to
perform its obligations under the Operative Documents and ▇▇▇▇▇▇ Agreements
to which it is a party.
(f) Such Lessee is not in violation of any Order of any Governmental
Body, which violation would have a material adverse effect on the conduct
of its business and operations as conducted on the date hereof.
(g) On the Delivery Date, upon delivery of the ▇▇▇▇ of Sale to Owner
Trustee and payment of Buyer's Cost for the Transponders by Owner Trustee
to Seller (i) Seller will deliver to Owner Trustee good and marketable
title to the Transponders free and clear of
20
all Liens other than Permitted Liens described in clauses (a) and (b) of
the definition thereof and (ii) except for the filing of a Uniform
Commercial Code financing statement or statements covering the Indenture
Estate and naming Owner Trustee as debtor and Indenture Trustee as secured
party (which have been filed or received or delivered to counsel for
Indenture Trustee for filing or recording), and except for the taking by
Indenture Trustee of possession of the executed original counterpart of the
Lease, no further action, including any filing or recording of any
document, is necessary or advisable in order to establish, confirm and
protect Owner Trustee's right, title and interest in and to the
Transponders or to perfect for the benefit of the Noteholders the security
interest in the Indenture Estate provided for in the Indenture (other than
any part of the Indenture Estate located on the Satellite).
(h) No Default or Event of Default has occurred and is continuing
under the Lease and no Event of Loss or event or condition which, with
notice or lapse of time or both, would become an Event of Loss has
occurred.
(i) Such Lessee is not an "investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(j) None of the execution and delivery of this Participation
Agreement and the Operative Documents, the purchase by the Initial Note
Purchaser of the Notes, and the acquisition by Owner Participant of its
beneficial interest in the Lessor's Estate will involve any prohibited
transaction within the meaning of Section 406(a) of ERISA or Sections
4975(c)(1)(A) through (D) of the Code (such representation being made in
reliance upon and subject to the accuracy of the representations contained
in Sections 4.07(e) and 4.08(b) hereof, and in the Notes).
---------------- -------
(k) As of the Delivery Date, none of Owner Participant, Indenture
Trustee and Initial Note Purchaser will become, solely by reason of
entering into the Operative Documents and the ▇▇▇▇▇▇ Agreements or the
consummation of any of the transactions contemplated thereby, subject to
regulation under
21
(i) the Communications Act as in effect on the Delivery Date (except for
direct or derivative obligations to furnish nonburdensome information
routinely required of similarly situated Persons or obligations that either
Lessee has undertaken in any of the Operative Documents), or (ii) any other
Federal, state or local law relating to communications services or the use
or operation of apparatus for the transmission of energy, communications or
signals by radio.
(l) The chief executive office (as such term is used in Article 9 of
the Uniform Commercial Code) of STLC is located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The chief executive office of GMHE is
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. The
only earth station facilities employed on the date hereof to provide
tracking, telemetry, and control of the Satellite are located in El
Segundo, California, Castle Rock, Colorado and Spring Creek, New York.
(m) Other than Argent Group Ltd. and ▇▇▇▇▇▇▇ Sachs & Co. (each of
whose fees shall be paid as set forth in Article IX of this Agreement or by
----------
Lessees for their own account), no Persons acting on behalf of such Lessee
or any Affiliate thereof is or will be entitled, directly or indirectly, to
any brokerage fee, commission, or finder's fee from any of the other
parties hereto in connection with the transactions contemplated hereby.
(n) Such Lessee has filed all Federal tax returns required to be
filed by it, and all other required tax returns in respect of which the
failure to file would have a material adverse effect on the financial
condition of GMHE and its subsidiaries taken as a whole or on the ability
of such Lessee to perform its obligations hereunder and, in the case of
GMHE, under the Guaranty Agreement, and has paid, or made provision for the
payment of, all taxes shown to be due and payable on such returns before
they have become delinquent, except for any taxes of which the amount,
applicability or validity is currently being contested in good faith by
appropriate proceedings and for which adequate reserves have been provided.
(o) Schedule IV hereto contains a list of all of the leases and use
agreements with respect to the
22
Transponders in existence on the date of this Agreement (but not including
Occasional Use Service Contracts), which, as to all such agreements on or
prior to the Delivery Date, will be duly and validly (as between STLC and
Owner Trustee) assigned to Owner Trustee as security for Lessees'
obligations under the Lease, pursuant to an assignment agreement
substantially in the form of Exhibit E (other than the Existing Lease with
Chevron and any Occasional Use Service Contracts); provided that no notice
--------
shall have been given to the lessees or users thereunder. STLC has provided
Owner Participant with true and correct copies of such leases and use
agreements.
(p) HAC shall have no claim against the Satellite, the Transponders,
the Transponder Spares, Owner Participant, Lessor, Indenture Trustee, the
Lessor Estate, or the Indenture Estate or any of the Operative Documents or
the ▇▇▇▇▇▇ Agreements for any amount payable or performance required
pursuant to the contract known as STLC Contract No. 85-001 between HAC and
STLC, as amended to date.
(q) The information furnished to the Independent Appraiser by Lessees
in writing on or before the Delivery Date and attached to the Appraisal
concerning the amount of fuel on board the Satellite at the time specified
therein, the deployment of the Transponder Spares on board the Satellite,
and any anomalous conditions that have occurred on the Satellite on or
before the Delivery Date, is true and correct in all material respects as
of the Delivery Date subject, in the case of the amount of fuel on board
the Satellite, to the best of Seller's knowledge; provided that nothing
--------
contained in this clause (q) shall have any impact on the rights or
obligations of any party under the Tax Indemnification Agreement.
Section 4.02. Additional Representations and Warranties of GMHE.
-------------------------------------------------
GMHE represents and warrants to each of the other parties that:
(a) The Guaranty Agreement has been duly authorized by all necessary
corporate action on the part of, and has been or on or prior to the
Delivery Date will be duly executed and delivered by, GMHE, and neither the
execution and delivery thereof nor the consummation of the transactions
contemplated thereby,
23
nor compliance by GMHE with any of the terms and provisions hereof or
thereof (i) requires any approval of stockholders or approval or consent of
any trustee or holders of any indebtedness or obligations of GMHE other
than such approvals or consents as have been obtained or will have been
obtained prior to the Delivery Date; (ii) contravenes any law, judgment,
governmental rule or regulation or order applicable to or binding on GMHE
or any of its properties, the contravention of which would have a material
adverse effect on the financial condition of GMHE and its subsidiaries
taken as a whole or on the ability of GMHE to perform any of its
obligations hereunder or under the Guaranty Agreement; (iii) contravenes or
results in any breach of or constitutes any default under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, bank
loan or credit agreement for borrowed money, contract or other agreement
or instrument to which GMHE is a party, the contravention, breach or
default of which would have a material adverse effect on the financial
condition of GMHE and its subsidiaries taken as a whole or on the ability
of GMHE to perform any of its obligations hereunder or under the Guaranty
Agreement; (iv) contravenes its corporate charter or by-laws; or (v)
results in the creation of any Lien (other than expressly permitted by the
Operative Documents) upon the Transponders or any material property of
Guarantor.
(b) Neither the execution, delivery and performance by GMHE of the
Guaranty Agreement nor the consummation of any of the transactions
contemplated hereby or thereby requires the consent, approval or
authorization of, the giving of notice to, or the registration, recording
or filing of any document with, or the taking of any other action in
respect of any Governmental Body.
(c) The Guaranty Agreement constitutes the legal, valid and binding
obligation of GMHE, enforceable against GMHE in accordance with its terms,
except as such enforcement may be subject to bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights generally and
to general principles of equity.
(d) (i) GMHE has delivered to Owner Trustee, Indenture Trustee, Owner
Participant and Initial Note
24
Purchaser copies of the consolidated balance sheet of GMHE and its
consolidated subsidiaries as of December 31, 1990, and related statements
of consolidated income and cash flow and stockholders' equity for the
fiscal year then ended, accompanied by the report of Deloitte & Touche,
independent accountants. Such statements fairly present, in accordance with
GAAP, the financial position of GMHE and its consolidated subsidiaries as
of such date and the results of their operations and changes in their
financial position for such fiscal year.
(ii) GMHE has delivered to Owner Trustee, Indenture Trustee, Owner
Participant and Initial Note Purchaser copies of the unaudited consolidated
balance sheet of GMHE and its consolidated subsidiaries as of September 30,
1991, and the related unaudited statements of consolidated income and cash
flow and stockholders' equity for the nine month period then ended. Such
statements have been prepared on a basis consistent with that employed in
preparation of the financial statements described in subparagraph (i)
above, except as may otherwise be noted therein, and in the opinion of
management reflect all adjustments which are necessary for a fair
presentation of the results for the interim periods presented.
(iii) Since September 30, 1991, there has been no material adverse
change in GMHE's consolidated financial condition, operations, business or
properties.
Section 4.03. Representations and Warranties of Owner Participant.
---------------------------------------------------
Owner Participant represents and warrants to each of the other parties hereto
that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and
has all requisite corporate power and authority to enter into and perform
its obligations under this Agreement and the other Operative Documents to
which it is a party.
(b) Each Operative Document to which Owner Participant is or will be
a party has been duly authorized by all necessary corporate action on the
part of, and has been or on or prior to the Delivery Date will have been
duly executed and delivered by,
25
Owner Participant and neither the execution and delivery thereof, nor the
consummation by it of the transactions contemplated thereby, nor compliance
by Owner Participant with any of the terms and provisions thereof, subject
to and in reliance upon the accuracy of the representations made by the
Lessee in Sections 4.01(j) and 4.01(k) and by the Initial Note Purchaser
---------------- -------
set forth in Sections 4.08(a) and 4.08(b) and in the Notes (i) requires any
---------------- -------
approval of its stockholders, or approval or consent of any trustee or
holders of any of its indebtedness or obligations; (ii) contravenes any
law, judgment, governmental rule, regulation or order applicable to or
binding on it or on any of its properties (except, however, that no
representation is made as to communications law or other Applicable Law
relating to transponders or satellites); (iii) contravenes or results in
any breach of or constitutes any default under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, bank loan or
credit agreement, contract or other agreement or instrument to which it is
a party or by which it or any of its properties may be bound or affected;
(iv) contravenes its corporate charter or by-laws; or (v) results in the
creation of any Lien (other than the Lien of the Lease, the Lien of the
Trust Agreement and the Lien under the Indenture) upon any of its property.
(c) Neither the execution and delivery by it of the Operative
Documents to which it is or will be a party, nor the consummation by it of
any of the transactions contemplated thereby, requires the consent,
approval or authorization of, the giving of notice to, or the registration
with, the recording or filing of any document with, or the taking of any
other action in respect of, any Governmental Body, except for such of the
foregoing as have been obtained, given or done (except, however, that no
representation is made as to communications law or other Applicable Law
relating to transponders or satellites or as to the matters referred to in
clause (ii) of Section 4.01(g)).
---------------
(d) Each Operative Document to which Owner Participant is a party
constitutes its legal, valid and binding obligation, enforceable against
Owner Participant in accordance with its terms, except as enforcement may
be subject to bankruptcy, insolvency,
26
moratorium or other similar laws affecting creditors' rights generally, and
to general principles of equity.
(e) No Person acting on behalf of Owner Participant or any Affiliate
thereof is or will be entitled to any brokerage fee, commission or finder's
fee directly or indirectly from Lessee or any Affiliate thereof in
connection with the transactions contemplated hereby.
(f) There are no actions, suits or proceedings pending (nor, to the
knowledge of Owner Participant, threatened) against or affecting Owner
Participant or any property of Owner Participant in any court or before any
arbitrator of any kind or before or by any Governmental Body which question
the legality or validity of any of the Operative Documents to which Owner
Participant is a party or the transactions contemplated thereby (except,
however, that no representation is made as to communications law or other
Applicable Law relating to transponders or satellites).
(g) The Transponders, as of the Delivery Date, will be free and clear
of Owner Participant Liens.
(h) No Indenture Event of Default attributable to Owner Participant
has occurred and is continuing.
(i) Each of the trust created by the Trust Agreement and Owner
Participant are United States Persons, within the meaning of Section
7701(a)(30) of the Code.
(j) Neither the trust created by the Trust Agreement nor Owner
Participant are exempt organizations within the meaning of Subchapter F,
Chapter I of Subtitle A of the Code.
Section 4.04. Representations and Warranties of Trust Company. Trust
-----------------------------------------------
Company represents and warrants to each of the other parties hereto that:
(a) Trust Company is a banking corporation duly organized and validly
existing in good standing under the laws of the state of Delaware, and has
all requisite corporate power and authority to execute, deliver and
perform its obligations under the Trust Agreement.
27
(b) Trust Company has taken all corporate action necessary to
authorize the execution and delivery by it of the Operative Documents and
▇▇▇▇▇▇ Agreements to which it is or will be a party, and each such
Operative Document and ▇▇▇▇▇▇ Agreement has been or on or prior to the
Delivery Date will be duly executed and delivered by it.
(c) Neither the execution and delivery by Trust Company of any of the
Operative Documents or ▇▇▇▇▇▇ Agreements to which it is or will be a party,
nor the consummation by it of the transactions contemplated thereby nor
compliance by it with any of the terms or provisions thereof (i) requires
any approval of the stockholders of Trust Company; (ii) contravenes any
law, judgment, governmental rule, regulation or order applicable to or
binding on it or on any of its properties governing the banking or trust
powers of Trust Company; (iii) contravenes or results in any breach of or
constitutes any default under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit agreement,
contract or other agreement or instrument to which Trust Company is a party
or by which any of its properties may be bound or affected; (iv)
contravenes Trust Company's charter or by-laws; or (v) results in the
creation of any Lien upon any of Trust Company's property.
(d) Neither the execution and delivery by Trust Company of any
Operative Documents or ▇▇▇▇▇▇ Agreements to which it is or will be a party,
nor the consummation by it of the transactions contemplated thereby, nor
compliance by it with any of the terms or provisions thereof, will
contravene any Applicable Law of the United States or the State of Delaware
governing the Trust Company's banking or trust powers.
(e) Neither the execution and delivery by Trust Company of each of
the Operative Documents and ▇▇▇▇▇▇ Agreements to which it is or will be a
party, requires the consent, approval or authorization of or the giving
of notice to, the registration with, or the taking of any other action in
respect of, any Federal or Delaware Governmental Body governing Trust
Company's banking or trust powers.
28
(f) Each Operative Document and ▇▇▇▇▇▇ Agreement to which Trust
Company is a party constitutes (to the extent the Trust Company is a party
thereto) its legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, moratorium or
other similar laws affecting creditors' rights generally, and to general
principles of equity.
(g) Trust Company is a United States Person, within the meaning of
Section 7701(a)(30) of the Code.
(h) Trust Company is not an exempt organization within the meaning of
Subchapter F, Chapter I of Subtitle A of the Code.
(i) On the Delivery Date, Owner Trustee will have whatever title to
the Transponders and the remainder of Lessor's Estate as was granted or
conveyed to it on the Delivery Date, free and clear of any Lessor Liens
attributable to Trust Company.
Section 4.05. Representations and Warranties of Owner Trustee. Owner
-----------------------------------------------
Trustee represents and warrants to each of the other parties hereto that:
(a) Assuming due authorization, execution and delivery of the Trust
Agreement by Owner Participant, Owner Trustee has all requisite power and
authority as Owner Trustee to execute and deliver this Agreement and the
other Operative Documents and ▇▇▇▇▇▇ Agreements to which it is or is to be
a party.
(b) Assuming due authorization, execution and delivery of the Trust
Agreement by Owner Participant, Owner Trustee has taken all corporate
action necessary to authorize the execution and delivery by it of the
Operative Documents and ▇▇▇▇▇▇ Agreements to which it is or will be a
party, and each such Operative Document and ▇▇▇▇▇▇ Agreement has been or on
or prior to the Delivery Date will be duly executed and delivered by it.
(c) Assuming due authorization, execution and delivery of the Trust
Agreement by the Owner Participant, neither the execution and delivery by
Owner Trustee of any of the Operative Documents or ▇▇▇▇▇▇ Agreements to
which it is or will be a party,
29
nor the consummation by it of the transactions contemplated thereby, nor
compliance by it with any of the terms or provisions thereof (i) requires
any approval of the stockholders of Trust Company; (ii) contravenes any
law, judgment, governmental rule, regulation or order applicable to or
binding on it or on any of its properties governing the banking or trust
powers of Owner Trustee; (iii) contravenes or results in any breach of or
constitutes any default under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit agreement,
contract or other agreement or instrument to which Owner Trustee is a party
or by which any of its properties may be bound or affected; (iv)
contravenes Trust Company charter or by-laws; or (v) results in the
creation of any Lien (other than the Lien of the Lease the Lien of the
Trust Agreement and the Lien under the Indenture) upon any of Owner
Trustee's property.
(d) Assuming due authorization, execution and delivery of the Trust
Agreement by Owner Participant, neither the execution and delivery by Owner
Trustee of any Operative Documents or ▇▇▇▇▇▇ Agreements to which it is or
will be a party, nor the consummation by it of the transactions
contemplated thereby, nor compliance by it with any of the terms or
provisions thereof will contravene any Applicable Law of the United States
or the State of Delaware governing the Trust Company's banking or trust
powers.
(e) Assuming due authorization, execution and delivery of the Trust
Agreement by Owner Participant, neither the execution and delivery by Owner
Trustee of each of the Operative Documents and ▇▇▇▇▇▇ Agreements to which
it is or will be a party, requires the consent, approval or authorization
of or the giving of notice to, the registration with, or the taking of any
other action in respect of, any Federal or Delaware Governmental Body
governing Trust Company's banking or trust powers.
(f) Assuming the due authorization, execution and delivery of the
Trust Agreement by Owner Participant, each Operative Document and ▇▇▇▇▇▇
Agreement to which Owner Trustee is a party constitutes its legal, valid
and binding obligation, enforceable against Owner Trustee in accordance
with its terms, subject to bankruptcy, insolvency, moratorium or other
similar
30
laws affecting creditors' rights generally, and to general principles of
equity.
(g) The chief executive office (as such term is used in Article 9 of
the Uniform Commercial Code) of Owner Trustee is at ▇▇▇▇▇▇ Square North,
Wilmington, County of New Castle, State of Delaware (and it hereby agrees
to notify Lessee, Indenture Trustee and Owner Participant promptly after
any change in such location).
(h) On the Delivery Date, Owner Trustee will have whatever title to
the Transponders and the remainder of Lessor's Estate as was granted or
conveyed to it on the Delivery Date, free and clear of any Lessor Liens
attributable to Trust Company.
(i) No Indenture Event of Default attributable to Owner Trustee has
occurred and is continuing.
(j) Owner Trustee is a United States Person, within the meaning of
Section 7701(a)(30) of the Code.
(k) Owner Trustee is not an exempt organization within the meaning of
Subchapter F, Chapter I of Subtitle A of the Code.
(l) Owner Trustee is not an "investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
Section 4.06. Representations and Warranties of Indenture Trustee.
---------------------------------------------------
Indenture Trustee represents and warrants to each of the other parties hereto,
that:
(a) Indenture Trustee is a national banking association duly
organized and validly existing under the laws of the United States of
America and has all requisite corporate power and authority to execute,
deliver and perform its obligations as Indenture Trustee under this
Agreement and the other Operative Documents to which it is a party.
(b) Each Operative Document to which Indenture Trustee is a party has
been duly authorized by all necessary corporate action on the part of
Indenture Trustee and has been or on or prior to the Delivery
31
Date will be duly executed and delivered by Indenture Trustee, and neither
the execution and delivery thereof, nor the consummation by it of the
transactions contemplated thereby, nor compliance by Indenture Trustee with
any of the terms and provisions thereof, (i) requires any approval of the
stockholders of Indenture Trustee; (ii) contravenes any existing law,
governmental rule, regulation or order, or any judgment or order of any
court, applicable to or binding on it or any of its properties governing
its banking or trust powers; (iii) contravenes or results in any breach of
or constitutes any default under any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit agreement,
contract or other agreement or instrument to which it is a party or by
which any of its properties may be bound or affected; (iv) contravenes the
corporate charter or by-laws of Indenture Trustee; or (v) results in the
creation of any Lien (other than the Lien of the Lease or the Lien under
the Indenture) upon any of its property.
(c) Neither the execution nor delivery by it, either in its
individual capacity or as Indenture Trustee, as the case may be, of each of
the Operative Documents to which it is or will be a party, requires the
consent, approval or authorization of or the giving of notice to, the
registration with, or the taking of any other action in respect of, any
Federal or Connecticut Governmental Body governing its banking or trust
powers.
(d) Each Operative Document to which it is a party constitutes the
legal, valid and binding obligations of Indenture Trustee enforceable
against Indenture Trustee in accordance with its respective terms, subject
to bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally, and to general principles of equity.
(e) The Transponders, as of the Delivery Date, will be free and clear
of Indenture Trustee Liens.
Section 4.07. Representations and Warranties by Parties Concerning
----------------------------------------------------
Offerings.
---------
(a) Each Lessee hereby represents and warrants to each other party
hereto that neither such Lessee nor anyone
32
authorized to act on its behalf has directly or indirectly offered any interest
in the Notes, Lessor's Estate or any similar interests, for sale to, or
solicited any offer to acquire any of the same from, any Person other than
offers (i) in respect of Lessor's Estate, by Argent Group Ltd. and ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co. on Lessees' behalf to not more than 45 financial institutions or
corporations and (ii) in respect of the Notes, by ▇▇▇▇▇▇▇, Sachs & Co. on such
Lessee's behalf to "qualified institutional buyers" as defined in Rule 144A
under the Securities Act. Assuming that Initial Note Purchaser's representations
and warranties in Section 4.08 and the representations and warranties of Owner
------------
Participant, Owner Trustee and Indenture Trustee in Sections 4.07(b), (c), and
---------------------
(d), respectively, are true and assuming compliance by Initial Note Purchaser
---
with its covenants in Annex A, it will not be necessary in connection with the
offer, sale and delivery of the Notes by Initial Note Purchaser in the manner
contemplated by this Agreement (including Annex A) to register the Notes under
the Securities Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended.
(b) Owner Participant hereby represents and warrants to each other
party hereto that it is acquiring its interest in the Lessor's Estate for its
own account and not with a view to the distribution or sale thereof and that
neither it nor anyone authorized to act on its behalf has directly or indirectly
offered any interest in the Notes, Lessor's Estate or any similar interests, for
sale to, or solicited any offer to acquire any of the same from, any Person
except for the offer of Notes by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. in respect of which Owner
Participant makes no representation.
(c) Owner Trustee hereby represents and warrants to each other party
hereto that neither it nor anyone authorized to act on its behalf has directly
or indirectly offered any Notes or any interest in and to Lessor's Estate or the
Trust Agreement or any similar interests for sale to, or solicited any offer to
acquire any of the same from, any Person, except for the offer and sale of the
Notes by ▇▇▇▇▇▇▇, Sachs & Co., in respect of which Owner Trustee makes no
representation.
(d) Indenture Trustee hereby represents and warrants to each other
party hereto that neither it nor anyone authorized to act on its behalf has
directly or indirectly offered any interest in the Notes, Lessor's
33
Estate or any similar interests, for sale to, or solicited any offer to acquire
any of the same from, any Person.
(e) Owner Participant hereby represents and warrants that it is not
acquiring any of its interest in the Lessor's Estate with the assets of any
employee benefit plan (or its related trust) subject to Title I of ERISA or
Section 4975 of the Code.
Section 4.08. Representations and Warranties of Initial Note
----------------------------------------------
Purchaser. Initial Note Purchaser represents and warrants to each of the other
---------
parties hereto that:
(a) It is an "accredited investor" within the meaning of Rule 501
under the Securities Act and in respect of the Notes purchased by Initial
Note Purchaser, neither it, nor anyone authorized to act on its behalf, has
directly or indirectly offered to sell or solicit any offer to acquire the
Notes by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act or offered to
sell the Notes to any Person other than those Persons who Initial Note
Purchaser reasonably believes are "qualified institutional buyers" within
the meaning of Rule 144A in a transaction meeting the requirements of Rule
144A. Initial Note Purchaser is purchasing the Notes for its own account.
(b) It is not acquiring any of its interest in the Notes with the
assets of any employee benefit plan (or its related trust) subject to Title
I of ERISA or Section 4975 of the Code.
ARTICLE V
COVENANTS
Section 5.01. Covenants of Lessees. During the Lease Term, each
--------------------
Lessee agrees that, unless Owner Participant, Owner Trustee and Indenture
Trustee otherwise consent in writing:
(a) Quarterly Financial Statements. Either Lessee will furnish to
------------------------------
Owner Participant and Owner Trustee (and Indenture Trustee, so long as the
Lien of the Indenture remains in effect), within 45 days after
34
the close of each of the first three quarterly accounting periods in each
fiscal year of GMHE, the consolidated balance sheet of GMHE and its
consolidated subsidiaries as at the end of such quarterly period and the
related statements of income, cash flow and stockholders' equity for such
quarterly period for that portion of the fiscal year ending with such
quarterly period, all of which shall be certified by the President, a Vice
President or the Chief Financial Officer of GMHE as fairly presenting the
financial condition of GMHE and its consolidated subsidiaries as of the end
of the applicable quarterly period and the results of their operations and
changes in their financial position for the applicable quarterly period,
subject to year-end audit adjustments.
(b) Annual Financial Statements. Either Lessee will furnish to Owner
---------------------------
Participant and Owner Trustee (and Indenture Trustee so long as the Lien of
the Indenture remains in effect), within 90 days after the close of each
fiscal year of GMHE, the consolidated balance sheet of GMHE and its
consolidated subsidiaries as at the end of such fiscal year and the related
statements of income, cash flow and stockholders' equity, certified by
Deloitte & Touche or other independent certified public accountants of
recognized national standing, accompanied by a certificate of the
President, a Vice President, Chief Financial Officer or principal
accounting officer of STLC certifying that to such officer's Actual
Knowledge no Default or Event of Default has occurred and is then
continuing or if a Default or an Event of Default has occurred and is then
continuing, containing a statement describing such Default or Event of
Default and setting forth, as appropriate, what actions Lessees are taking
in respect thereof. All financial statements delivered pursuant to
paragraph (a) above or this paragraph (b) shall be prepared in accordance
with generally accepted accounting principles applied on a basis consistent
with that of the previous year, except as disclosed in the notes thereto,
and may be stamped with GMHE's or STLC's customary confidentiality legend.
It is a condition of the delivery of said financial statements that Owner
Participant, Owner Trustee and Indenture Trustee, as the case may be, shall
not be in breach of Section 15.01.
-------------
(c) [Intentionally Omitted]
35
(d) Additional Public Information. Either Lessee will promptly
-----------------------------
furnish to Owner Participant and Owner Trustee (and Indenture Trustee so
long as the Lien of the Indenture remains in effect), all such reports and
financial statements as General Motors Corporation shall send or make
available to the holders of General Motors Class H common stock and all
public filings made with the SEC in respect of such Class H common stock.
(e) No Note Purchase. Neither Lessee will, or will permit any
----------------
subsidiary of such Lessee to, purchase or acquire any Note or interest
therein.
(f) Authorized Orbital Location. On or before the second anniversary
---------------------------
of the Delivery Date, STLC will apply to the FCC for, and in good faith
will use commercially reasonable efforts to obtain, a license or other
authorization to permit the orbital location of the Satellite to be within
the Authorized Range for its remaining economic useful life.
(g) No Alternative Location. Neither Lessee nor any Affiliate
-----------------------
thereof will seek, or cause any other Person to seek, approval from the FCC
for a new permanent location for the Satellite in any Alternative Location,
and Lessee will in good faith use commercially reasonable efforts to
contest an assignment to any such new location.
(h) Insurance Certificate. On or before April 30 of each year during
---------------------
the Lease Term, either Lessee will deliver to Owner Participant, Owner
Trustee and Indenture Trustee a certificate of such Lessee, signed by the
President, a Vice President, the Chief Financial Officer or the principal
accounting officer of such Lessee of any liability and casualty or life
insurance in effect on such date.
Section 5.02. Covenants of Owner Participant. Owner Participant
------------------------------
further covenants to and with each of the other parties hereto that:
(a) No Liens. It will keep the Transponders, Lessor's Estate and the
--------
Indenture Estate free and clear of Owner Participant Liens. Owner
Participant shall pay, and shall indemnify and hold harmless each other
Indemnitee, and each Lessee (and each of such Lessee's respective
successors, assigns, officers, directors,
36
servants, employees and agents) from, any and all liabilities, obligations,
losses, damages, penalties, claims, actions, suits, costs, expenses and
disbursements, including legal fees and expenses, of whatsoever kind and
nature, imposed on, incurred by or asserted against any such Person solely
as the result of the failure of Owner Participant to comply with this
Section 5.02(a).
---------------
(b) No Prepayment. Unless an Event of Default under the Lease shall
-------------
have occurred and be continuing under Section 15 thereof, without the prior
written consent of STLC, Owner Participant will not, and will not cause,
authorize or permit Owner Trustee to, directly or indirectly prepay,
redeem, refund or refinance any Note other than pursuant to Section 2.6 or
2.7 of the Indenture and other than in the event of a purchase of the Notes
pursuant to Section 2.11 of the Indenture (but nothing herein shall
prohibit the Owner Participant from purchasing the Notes on the open
market). This Section 5.02(b) shall not be deemed to permit prepayment of
---------------
the Notes except as permitted by the Indenture.
(c) Successor Owner Trustee. Owner Participant shall not appoint or
-----------------------
cause or allow to be appointed a successor to Owner Trustee or an
additional or separate trustee under the Trust Agreement without giving
prior written notice of such appointment (including notification of the
principal place of business of each such successor, additional or separate
trustee) to each Lessee and Indenture Trustee. Owner Participant shall
cause any such successor, additional or separate trustee, simultaneously
with its assumption of duties in such capacity, to take all actions as may
be reasonably requested by Indenture Trustee or either Lessee (including,
without limitation, the filing of financing statements), at either Lessee's
expense, in order to establish, preserve, protect and perfect (to the
extent practicable in the case of the Transponders) Lessees' interest in
and to the Transponders and Lessees' rights under this Agreement, the other
Operative Documents and the ▇▇▇▇▇▇ Agreements and, so long as any Notes are
outstanding, the mortgage and security interest of Indenture Trustee in the
Indenture Estate granted or intended to be created under the Indenture and
Indenture Trustee's rights under this Agreement, the other Operative
Documents, and the
37
▇▇▇▇▇▇ Agreements, subject only to Permitted Liens. In the event of Trust
Company's resignation, bankruptcy or insolvency, or disqualification
unrelated to its relationship with Owner Participant, the expenses incurred
in connection with the appointment of a successor Owner Trustee as a result
thereof shall be paid by Lessee. Otherwise, in connection with Owner
Participant's appointment of a successor Owner Trustee, the expenses
incurred in connection therewith and any incremental increase in fees
payable to the successor Owner Trustee shall be paid by Owner Participant.
(d) Performance of Obligations. Owner Participant will perform and
--------------------------
comply with all obligations imposed on Owner Participant pursuant to the
provisions of the Operative Documents in accordance with the terms and
conditions of each thereof and for the benefit and only for the benefit of
the parties to whom such obligations are owed.
(e) Instructions to Owner Trustee. Owner Participant will not
-----------------------------
instruct or otherwise direct Owner Trustee to take, or omit to take, any
action in violation of the express covenants and agreements of Owner
Trustee in any Operative Document or any of the ▇▇▇▇▇▇ Agreements. Owner
Participant will not unreasonably withhold its consent to or authorization
of any consent requested by Owner Trustee under the terms of any Operative
Document or any of the ▇▇▇▇▇▇ Agreements which by its terms may not be
unreasonably withheld by Owner Trustee.
(f) Termination of Trust Agreement. Prior to the expiration or
------------------------------
earlier termination of the Lease pursuant to its terms, Owner Participant
will not terminate or revoke, or consent to the termination or revocation
of, the Trust Agreement, or, prior to the release of the Lien of the
Indenture on the Indenture Estate, amend or modify the Trust Agreement in
any manner that would materially adversely affect the Indenture Estate or
limit in any material manner the rights of Indenture Trustee set forth in
the Indenture (except as may be expressly permitted by the Indenture).
(g) [Intentionally Omitted]
(h) Repayment Amount. Owner Participant shall cause Owner Trustee to
----------------
provide to Lessees and Indenture
38
Trustee the notice contemplated by Section 3(c)(ii) of the Lease in the
----------------
circumstances specified therein.
(i) Owner Participant as Competitor. If either Lessee shall have
-------------------------------
notified Owner Participant of any merger, acquisition or other similar
event or condition that would be reasonably likely to cause Owner
Participant to become a Competitor, or if Owner Participant has become a
Competitor, or if Owner Participant has Actual Knowledge of any such event
or condition that might be reasonably likely to cause it to become a
Competitor, Owner Participant will promptly deliver to Lessees an Officer's
Certificate of Owner Participant confirming or denying such event or
condition and whether Owner Participant has become a Competitor. If Owner
Participant confirms such event or condition, Owner Participant shall take
all reasonable measures with respect to all confidential and Proprietary
Information necessary to protect Lessees from any adverse competitive
impact that could arise from disclosure of such information. Owner
Participant acknowledges that Lessees will suffer irreparable harm in the
event Owner Participant does not comply with its obligations under this
Section 5.02(i) and agrees that Lessees shall be entitled to specific
---------------
performance of such obligations.
(j) Election to Retain Title. If Owner Trustee shall elect or shall
------------------------
be deemed to have elected to retain title to the Transponders pursuant to
Section 8(a) or 8(c) of the Lease, Owner Participant will make the required
amount of funds available to Owner Trustee and will otherwise cause Owner
Trustee to perform its obligations under such Section 8(a) or 8(c) in
accordance with the terms thereof.
(k) Notice of Indenture Event of Default. Promptly after Owner
------------------------------------
Participant has Actual Knowledge that any Indenture Event of Default
attributable to Owner Participant has occurred and is continuing, Owner
Participant shall deliver to Indenture Trustee and Lessees a notice of such
Indenture Event of Default describing the same in reasonable detail and,
together with such notice or as soon thereafter as possible, a description
of the action that Owner Participant has taken, is taking and proposes to
take with respect thereto.
39
Section 5.03. Covenants of Trust Company. Trust Company further
--------------------------
covenants to and with each of the other parties hereto that Trust Company will
keep the Transpon ders, Lessor's Estate and the Indenture Estate free and clear
of Lessor Liens attributable to it, and Trust Company shall pay, and shall
indemnify and hold harmless each other Indemnitee, and each Lessee (and each of
such Lessee's respective successors, assigns, officers, directors, servants,
employees and agents) from, any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, costs, expenses and disbursements,
including legal fees and expenses, of whatsoever kind and nature, imposed on,
incurred by or asserted against any such Person as the result of the failure of
Trust Company to comply with this Section 5.03.
------------
Section 5.04. Covenants of Indenture Trustee. Indenture Trustee will
------------------------------
keep Lessor's Estate, the Indenture Estate, and the Transponders free and clear
of Indenture Trustee's Liens. Indenture Trustee shall pay, and indemnify and
hold harmless each other Indemnitee, and each Lessee (and each of such Lessee's
respective successors, assigns, officers, directors, servants, employees and
agents) from, any and all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs, expenses and disbursements, including legal fees
and expenses, of whatever kind and nature, imposed on, incurred by or asserted
against any such Person as the result of the failure of Indenture Trustee to
comply with this Section 5.04.
------------
Section 5.05. Additional Covenants.
--------------------
(a) Each of Owner Participant, Owner Trustee, and Indenture Trustee
agrees that if, pursuant to Section 19(a)(ii) or (iii) of the Lease, either
Lessee elects to purchase all (but not less than all) of the Transponders, such
Lessee shall have the right to either (i) elect to assume jointly and severally
with the other Lessee (in the case of both Lessees on a full recourse basis) the
obligations of Owner Trustee under the Notes applicable to such Transponders and
under the Indenture in respect of such Notes by giving notice of such election
in its notice given pursuant to Section 19(b) of the Lease, in accordance with,
subject to the conditions of and with the effect provided in Section 2.13 of the
Indenture (an "Assumption Event") or (ii) prepay all amounts under the Notes
including any Premium, pursuant to Section 2.7(a)(iii) of the Indenture.
40
(b) Each party hereto covenants with the other parties hereto that
neither it nor anyone authorized to act on its behalf will take any action which
would subject the offering or delivery of the Notes or Lessor's Estate to the
registration requirements under the Securities Act or which would require the
qualification of the Indenture under the Trust Indenture Act.
(c) Lessor agrees that it shall have no claim against HAC or STLC
whether for any amount payable or performance required or otherwise pursuant to
the contract known as STLC Contract 85-001 between HAC and STLC, as amended to
date.
(d) If Lessee reasonably requests and provides timely instructions and
forms, Owner Participant will timely file, and will timely request the Owner
Trustee and the Trust Company to file, any applicable forms necessary to avoid
the imposition of any withholding obligation under the Code and Regulations
thereunder with respect to the payment of Rent, and shall not effect any
transfer of the Transponders, the Lease or any interest therein that would
result in the imposition of any such withholding obligation.
(e) If reasonably and timely requested and pursuant to timely
instructions provided by Owner Participant, Trust Company will timely file any
applicable forms necessary to avoid the imposition of any withholding obligation
under the Code and Regulations thereunder with respect to the payment of Rent,
if any.
(f) If reasonably and timely requested and pursuant to timely
instructions provided by Owner Participant, Owner Trustee will timely file any
applicable forms necessary to avoid the imposition of any withholding obligation
under the Code and Regulations thereunder with respect to the payment of Rent,
if any, and shall not effect any transfer of the Transponders, the Lease or any
interest therein that would result in the imposition of any such withholding
obligation.
Section 5.06. Covenants of Initial Note Purchaser. Initial Note
-----------------------------------
Purchaser further covenants to and with each of the other parties hereto that
Initial Note Purchaser will perform and comply with all obligations imposed on
Initial Note Purchaser pursuant to the provisions of this Agreement in
accordance with the terms and conditions of each thereof and for the benefit and
only for
41
the benefit of the parties to whom such obligations are owed.
ARTICLE VI
GENERAL INDEMNITY
Section 6.01. Payment of Expenses by Lessee.
-----------------------------
(a) Lessees jointly and severally shall pay (except to the extent
that any of the items hereinafter described are expressly made payable by Owner
Participant pursuant to Section 9.01), and shall indemnify and hold harmless
------------
each Indemnitee, which, solely for the purposes of this Article VI, shall
----------
include the Initial Note Purchaser (whether or not any of the transactions
contemplated hereby shall be consummated) on an After-Tax Basis from, any and
all liabilities, obligations, losses, damages, reasonable attorneys' fees,
penalties, claims, actions, suits, costs, expenses and disbursements (other
than, as to any particular Indemnitee, any of those specifically provided for in
Article VII hereof and the Tax Indemnification Agreement), including, without
-----------
limitation, any reasonable expenses incurred by any Indemnitee in furnishing any
reports required pursuant to the Communications Act or any other provision of
Applicable Law with respect to this Agreement or the transactions contemplated
hereby (herein collectively referred to as "Expenses" and individually as an
"Expense"), imposed on, incurred by or asserted against any Indemnitee (whether
because of an action or omission by such Indemnitee or otherwise), in any way
relating to or arising out of (i) any of the Satellite, the earth stations
related thereto, or the Transponders or any part thereof or any interest
therein, (ii) the Operative Documents, or the ▇▇▇▇▇▇ Agreements or payments made
pursuant thereto or any other transactions contemplated thereby, and (iii) the
manufacture, launching, financing, refinancing, construction, purchase,
acceptance, rejection, delivery, nondelivery, ownership, acquisition, lease,
sublease, preparation, installation, assembly, storage, maintenance, repair,
transportation, abandonment, possession, repossession, use, operation,
condition, sale, return, replacement, redelivery, modification, transfer of
title, rebuilding, rental, importation, exportation or other application or
disposition of all or any part of or any interest in any of the Transponders or
the Satellite or the earth stations related thereto, including, without
limitation, (A) claims or
42
penalties arising from any violation of law or regulatory requirements of any
kind relating solely to Indemnitee's interest in the Transponders or the
Satellite or liability in tort, strict or otherwise, (B) loss of or damage to
any property, the environment or death or injury to any Person, (C) latent or
other defects, whether or not discoverable, (D) any claim for patent or
trademark or copyright infringement, libel, or slander, including any such claim
arising from transmissions to or from the Satellite or any Transponder, (E)
imposition of any Lien (other than Lessor Liens, with respect to Owner Trustee
(and its successors, assigns, officers, directors, servants, employees and
agents), Owner Participant Liens, with respect to Owner Participant (and its
successors, assigns, officers, directors, servants, employees and agents),
Indenture Trustee Liens, with respect to Indenture Trustee (and its successors,
assigns, officers, directors, servants, employees and agents), (F) any claim
arising out of the transactions contemplated by Article X or Annex A hereto and
---------
(G) claims, penalties or liabilities in respect thereof based on any other
theory of liability. Upon payment in full of any indemnity pursuant to this
Section 6.01, the Lessee who has made such payment shall, to the extent
------------
permitted by Applicable Law, be subrogated to any right of such Indemnitee in
respect of the matter against which such indemnity has been paid to the extent
of such payment. Owner Trustee shall be subrogated to any rights of Indenture
Trustee or the holder of any Note (other than any security interest) to the
extent any amount otherwise payable to Owner Trustee under the Indenture shall
be reduced by the failure of such Lessee to have paid any indemnity to Indenture
Trustee or such Noteholder.
(b) Without limitation of the foregoing, Lessees jointly and
severally shall pay on an After-Tax Basis (except to the extent such amounts are
payable by Owner Participant as part of its Commitment, or by Owner Participant
pursuant to Section 9.01 (unless specified otherwise in such Section 9.01)) all
------------ -------------
the out-of-pocket costs and expenses (including, without limitation, reasonable
legal fees and expenses) reasonably incurred by Owner Participant, Owner Trustee
or Indenture Trustee in connection with (A) the entering into or giving or
withholding of any future amendments, supplements, waivers or consents (whether
or not they become effective) with respect to any Operative Document or the
▇▇▇▇▇▇ Agreements (other than those that are made at the request of such
Indemnitee unless pursuant to Section 4(a) of the Lease or in
43
connection with the transfer of Owner Participant's interest in accordance with
Article XIII hereof), (B) the taking of any action under the Lease or the
------------
Indenture at the request of either Lessee or as a result of an Event of Default,
or (C) any Event of Loss, any redemption, prepayment or refunding of Notes
(including, without limitation, any prepayment, proposed refunding and refunding
contemplated by Section 12.01, whether or not consummated), in each case as
-------------
permitted by the terms of the Operative Documents, subject, in the case of
Indenture Trustee to the provisions of the Indenture.
(c) If either Lessee or any Indemnitee has knowledge of any action,
suit, proceeding or claim hereby indemnified against under this Section 6.01 or
------------
any action, suit, proceeding or claim seeking incidental or consequen tial
damages against Indemnitee with respect to a Transponder subject to the Lease
whether or not indemnified against under this Section 6.01, it shall give prompt
------------
written notice thereof to the other and Lessee may assume the defense thereof,
and, at such Indemnitee's request, shall assume the defense thereof with counsel
reasonably acceptable to such Indemnitee. Such Indemnitee shall fully cooperate
with such Lessee in all ways reasonably requested by such Lessee in said defense
by such Lessee. In any such action, any Indemnitee shall have the right to
employ separate counsel in such action and participate therein, subject to the
preceding sentence, but the fees and expenses of such counsel shall be at the
expense of such Indemnitee, unless (i) the employment of such counsel has been
specifically authorized by either Lessee, (ii) the named parties to such action
(including any impleaded parties) include both such Indemnitee and one or both
Lessees and representation of such Indemnitee and such Lessee(s) by the same
counsel would be unethical under the applicable standards of professional
conduct due to actual or potential conflicting interests between them, (iii)
such action involves an act that involves or is alleged to involve criminal
activity undertaken in compliance with or as contemplated by the Operative
Documents or ▇▇▇▇▇▇ Agreements or involves the risk of criminal penalties,
unless such action does not lead to the commencement (including, without
limitation, the impanelling of a grand jury or similar investigatory proceeding)
of a criminal proceeding. Lessees shall not be liable for any settlement of any
action, suit, proceeding or claim effected without their written consent and no
Indemnitee will agree to any such settlement without the prior written consent
of Lessees.
44
(d) Notwithstanding the provisions of the immediately preceding
paragraph, the omission by any Indemnitee to notify any Lessee of any Expense
shall not relieve such Lessee from any liability which it may have hereunder in
respect of any such Expense or other Expense; provided, however, that nothing
-------- -------
herein contained shall prevent such Lessee from bringing a subsequent action
against such Indemnitee for damage suffered by such Lessee as a result of such
omission.
(e) If, by reason of any Expense payment made to or for the account
of an Indemnitee by a Lessee pursuant to this Section 6.01, such Indemnitee
------------
concurrently or subsequently realizes a tax deduction or credit not previously
taken into account in computing such payment, such Indem ▇▇▇▇▇ shall promptly
pay to such Lessee (but only if Lessees shall have made all payments then due
and owing to such Indemnitee under the Operative Documents), an amount equal to
the sum of (I) the actual reduction in Taxes realized by such Indemnitee which
is attributable to such deduction or credit, and (II) the actual reduction in
Taxes realized by such Indemnitee as a result of any payment made by such
Indemnitee pursuant to this sentence; provided, however, that such Indemnitee
-------- -------
shall not be obligated to make any payment to any Lessee pursuant to this
sentence if and for so long as a Payment Default, Bankruptcy Default or any
Event of Default shall have occurred and be continuing, but shall promptly make
such payment once all such Events of Default shall no longer be continuing; and
provided, further, however, that such Indemnitee shall not be obligated to make
-------- ------- -------
any payment pursuant to this Section 6.01 to the extent that the amount
------------
calculated pursuant to (I) above would exceed (x) the amount of all prior
payments received by such Indemnitee from such Lessee pursuant to this Section
-------
6.01 with respect to such Expense (determined without regard to any amount paid
----
in respect of Taxes required to be paid by such Indemnitee in respect of the
receipt or accrual of such amounts) less (y) the portion of all prior payments
----
computed pursuant to (I) above paid by such Indemnitee to such Lessee hereunder.
Any Taxes that are imposed on any Indemnitee as a result of a disallowance or
reduction of any tax benefit taken into account in the prior sentence shall be
treated as a Tax for which Lessees are obligated to indemnify such Indemnitee
pursuant to the provisions of Article VII hereof without regard to Section 7.02
----------- ------------
(other than subsections (f) and (g) thereof) or Section 7.04 thereof.
------------
45
(f) In the event of a conflict between the provisions of Article 10
of the Purchase Agreement or Article 6 of the Service Agreement and the
provisions of this Agreement, the provisions of this Agreement shall prevail.
Section 6.02. Exceptions. The indemnity contained in Section 6.01
---------- ------------
with regard to any particular Indemnitee shall not extend to any Expense (a)
resulting from the willful misconduct or gross negligence of such Indemnitee
(other than willful misconduct or gross negligence imputed to such Indemnitee
solely by reason of its interest in the Transponders) or its respective
corporate successors, officers, directors, servants, agents or employees, (b) to
the extent resulting from the inten tional breach by such Indemnitee of any of
its represen tations, warranties or covenants in any of the Operative Documents
or the ▇▇▇▇▇▇ Agreements, (c) to the extent (i) attributable solely to acts or
events occurring after the end of the Lease Term or (ii) resulting from, in the
case of Owner Participant (and its successors, assigns, officers, directors,
servants, employees and agents), an Owner Participant Lien, in the case of Owner
Trustee or Trust Company (and its successors, assigns, officers, directors,
servants, employees and agents), a Lessor's Lien, and in the case of Indenture
Trustee (and its successors, assigns, officers, directors, servants, employees
and agents), an Indenture Trustee's Lien, (d) which is a Tax, it being
understood that all Tax indemnities are governed by the Tax Indemnification
Agreement or Article VII, and it being further understood that this clause (d)
-----------
shall not affect any express requirement in the Operative Documents that any
payments otherwise be made on an After-Tax Basis, (e) as to Owner Participant or
Owner Trustee, resulting at any time from a voluntary disposition or transfer by
Owner Participant or Owner Trustee of all or any part of any of the Transponders
or as to any Indemnitee, resulting at any time from such Indemnitee's voluntary
disposition of all or any part of such Indemnitee's right, title and interest in
and to any of the Transponders or any Operative Document (except that this
clause (e) shall not affect either Lessees' obligations under Section 6.01 in
------------
respect of any such disposition following the exercise of remedies under Section
16 of the Lease in connection with an Event of Default under such Section 16 or
in connection with any disposition under Section 8, 10, 12, 19 or 20 of the
Lease except as otherwise expressly provided in such Sections or (f) expressly
required under any Operative Document to which
46
Lessee is a party to be paid by a party to this Agreement other than Lessees or
as to which both Lessees are expressly exempted from liability under any
Operative Document.
Except as expressly provided in this Agreement or in any other
Operative Document, Lessee shall not be liable to any Indemnitee for incidental
or consequential damages suffered by such Indemnitee; provided, however, that
-------- -------
the foregoing shall not be construed to limit recovery by any Indemnitee of any
costs, expenses or liabilities incurred by such Indemnitee as a result of any
third party claim against such Indemnitee based on events occurring and/or
conditions existing any time prior to the expiration or earlier termination of
the Lease, except to the extent incurred by such Indemnitee as a result of
affirmative actions of such Indemnitee to market or otherwise utilize any
Transponders; provided, however, that nothing in this exception shall modify or
-------- -------
limit Lessor's remedies under Section 16 of the Lease.
With respect to any amount which Lessees are requested by an
Indemnitee to pay by reason of this Article VI, the Indemnitee shall, if
----------
requested by either Lessee and prior to any payment, submit such additional
information to such Lessee as such Lessee may reasonably request properly to
substantiate the requested payment. Each Lessee covenants and agrees to pay all
amounts due under this Article VI promptly and in any event within 30 days of
----------
demand. Nothing contained in this Article VI shall increase, decrease or
----------
otherwise affect in any way Seller's or ▇▇▇▇▇▇ Services' obligations under the
▇▇▇▇▇▇ Agreements in their respective capacities as Seller and service provider
thereunder.
ARTICLE VII
GENERAL INDEMNITY FOR TAXES
Section 7.01. Indemnity. All payments of Rent will be free and clear
---------
from the withholding of any Tax imposed by the United States, any state or local
government or taxing authority in the United States, any foreign or
international taxing authority or the taxing authority of any United States
possession or territory, and if any such withholding is required, Lessees shall
pay an additional amount of Rent such that the net amount of Rent actually
received by an Indemnitee will be equal to the amount of
47
Rent that would then be due absent such withholding. Any amounts paid by
Lessees for the payment of any Tax excluded from this Section 7.01 by Section
------------ -------
7.02 shall be promptly repaid to Lessees by the appropriate Indemnitee.
----
Except as provided in Section 7.02, whether or not the transactions
------------
contemplated by the Operative Documents are consummated, Lessees hereby assume
liability for and agree to timely pay, and on written demand shall indemnify and
hold each Indemnitee harmless, on an After-Tax-Basis, from and against any and
all Taxes actually imposed on or with respect to any Indemnitee, either Lessee,
any Transponder or any part thereof or any interest therein, the Satellite, or
otherwise by any federal, state or local government or any taxing authority
thereof or by any foreign government, taxing authority or governmental
subdivision of a foreign country or international taxing authority upon, in any
connection with or in any way relating to (a) the manufacture, financing,
refinancing, construction, purchase, acceptance, rejection, delivery,
nondelivery, ownership, acquisition, lease, sublease, preparation, installation,
assembly, storage, maintenance, repair, transportation, abandonment, possession,
repossession, use, operation, condition, sale, return, replacement, redelivery,
modification, transfer of title, rebuilding, rental, importation, exportation or
other application or disposition of, all or any part of or any interest in any
of the Transponders; (b) the payment of Rent or the receipts or earnings or
profits arising from or received with respect to any Transponder or any part
thereof or any interest therein or any applications or dispositions thereof or
with respect to any Operative Document; (c) any amount paid or payable pursuant
to any of the Operative Documents or the ▇▇▇▇▇▇ Agreements; (d) any Transponder
or any part thereof or any interest therein or the applicability of the Lease to
such transponder or such part thereof or such interest therein; (e) the
Operative Documents, the ▇▇▇▇▇▇ Agreements, or any of them; (f) the property,
the income or other proceeds with respect to the property held by Owner
Participant or by Indenture Trustee under the Indenture; (g) the payment of the
principal of, or interest on, the Notes or other amounts payable under the Notes
or the Indenture; or (h) otherwise with respect to or in connection with the
transactions contemplated by the Operative Documents or the ▇▇▇▇▇▇ Agreements
including, without limitation, the issuance, acquisition or transfer of the
Notes.
48
Section 7.02. Exceptions from Indemnity. The provisions of Section
------------------------- -------
7.01 hereof shall not apply to:
----
(a) (i) any withholding Tax functioning as a final tax in respect of
any Noteholder; and (ii) any Tax on, based on, with respect to, or measured
by net or gross income, capital or receipts of any Noteholder or which is
in the nature of a franchise or conduct of business tax imposed on such
Noteholder or which is in the nature of a minimum tax on tax preferences
imposed on a Noteholder (in each case, other than a tax in the nature of a
sales, use or rental tax; provided, however, that Lessees shall not be
-------- -------
obligated to pay any tax in the nature of a sales, use or rental tax
imposed on any Noteholder that results from or is attributable to the fact
that such Noteholder is a commercial bank or other financial institution
organized under the laws of a jurisdiction other than the United States of
America, or a State or territory thereof);
(b) any Tax on, based on, with respect to, or measured by the net
income or homestate gross income, capital, or net receipts of any
Indemnitee, or which is in the nature of a franchise or conduct of business
tax imposed on any Indemnitee, for the privilege of doing business, or
which is in the nature of a minimum tax on tax preferences imposed on any
Indemnitee, (in each case other than a tax in the nature of a sales, use,
value added, property or rental tax);
(c) in the case of Owner Participant, Owner Trustee or Lessor's
Estate, for so long as no Event of Default shall have occurred and be
continuing, any Tax that is imposed with respect to any Transponder with
respect to any period beginning after the earlier of (i) the expiration of
the Lease Term or other termination of the Lease for such Transponder for
any reason or, if later, the return of the Transponders after such
termination or expiration, or (ii) the discharge by payment in full of
Lessees' obligations to pay the Stipulated Loss Value, the EBO Amount or
the Termina tion Value and all other amounts due in connection therewith
with respect to such Transponder; provided, however, that this exception
-------- -------
shall not apply to Taxes relating to events occurring, or Taxes relating to
matters arising, prior to or contemporaneously with such time;
49
(d) in the case of a Noteholder, for so long as no Event of Default
shall have occurred and be continuing, any Tax imposed with respect to (i)
any period which begins after the payment of all amounts owing to such
Noteholder under the Indenture and (ii) the portion of any period which
begins before such payment to the extent it occurs after such payment;
provided, however, that this exception shall not apply to Taxes relating to
-------- -------
events occurring, or Taxes relating to matters arising, prior to or
contemporaneously with such payment;
(e) any Tax which is being contested in accordance with the
provisions of Section 7.04, during the pendency of such contest; provided,
------------ --------
however, that Owner Trustee, as Lessor under the Lease with respect to each
-------
Transponder, shall be receiving all amounts of Rent when payable, and that
each Noteholder shall be receiving all payments of principal and interest
on the Notes and all other amounts payable under the Notes and the
Indenture when payable, in either case without reduction by reason of such
Tax or any other Tax;
(f) any Tax (i) that is imposed on any Indemnitee or any Affiliate,
or any successor, assign, officer, director, servant, employee or agent
thereof as a result of willful misconduct or gross negligence, or a failure
properly to file returns or statements, whether related or unrelated to the
transactions contemplated by the Operative Documents or the ▇▇▇▇▇▇
Agreements (unless such failure results from a Lessee's failure to provide
timely notice of the requirement of such filing or the failure by a Lessee
to provide information reasonably required in connection with such filing),
of any Indemnitee or any Affiliate thereof, or any successor, assign,
officer, director, servant, employee or agent thereof (other than an act or
failure to act required or contemplated under any of the Operative
Documents or ▇▇▇▇▇▇ Agreements); (ii) that is imposed on any Indemnitee to
the extent that such Tax results from the breach of any representation,
warranty or covenant in the Operative Documents or ▇▇▇▇▇▇ Agreements by
such Indemnitee; (iii) that is imposed on any Indemnitee as a result of a
claim unrelated to the transaction contemplated herein; (iv) that is
imposed on Owner Participant, Owner Trustee or Lessor's Estate because of
or in connection with any Owner Participant or Lessor Lien, respectively;
(v) that is imposed on
50
Indenture Trustee because of or in connection with any Indenture Trustee's
Lien; or (vi) that is imposed on any Noteholder because of or in connection
with any Noteholder's Lien of such Noteholder;
(g) any Tax in connection with or as a direct result of a voluntary
sale, transfer, assignment or other voluntary disposition by Owner
Participant or Owner Trustee, or an involuntary transfer resulting from the
bankruptcy of Owner Participant, of a Transponder or any part thereof or
any interest therein or Lessor's Estate (other than any sale, transfer,
assignment or other disposition of such Transponder, or any part thereof or
interest therein or Lessor's Estate, under Section 8, 12, 16, 19 or 20 of
the Lease);
(h) any Tax imposed on a transferee of an Indemnitee to the extent of
the excess of such Tax over the amount of such Tax which would have been
imposed and otherwise indemnified against under this Article VII by Lessees
-----------
had there not been a voluntary sale, transfer, assignment or other
voluntary disposition by Owner Participant, including, without limitation,
the revocation of the trust created by the Trust Agreement, or an
involuntary transfer resulting from the bankruptcy of Owner Participant,
of a Transponder or any interest therein or part thereof or Lessor's
Estate; provided, however, that this exception shall not apply if any such
-------- -------
sale, transfer, assignment or other disposition shall occur as the result
of any actions re quired pursuant to Section 8, 12, 16, 19 or 20 of the
Lease;
(i) any penalties, fines, additions to Tax and interest (I) resulting
from matters contemplated by the Operative Documents or the ▇▇▇▇▇▇
Agreements in the case where an Indemnitee has notified Lessees that it
intends to file a return in accordance with Section 7.05 and files a return
------------
in a manner materially inconsistent with such notice and as a result of
such filing Lessees' ability to contest is materially impaired (such
impairment to include, for purposes of this Section 7.02(i), the fact, if
applicable, that Lessees elected to waive their contest rights in respect
of such filing on the basis of the information provided by Indemnitee to
Lessees in such notice), or (II) to the extent not attributable to a Tax
indemnified against hereunder;
51
(j) any Tax for which Lessees pay or reimburse Owner Trustee or any
Noteholder pursuant to the Indenture but only to the extent that Owner
Trustee or such Noteholder has been made whole on an After-Tax Basis; and
(k) any Tax to the extent such Tax (i) would have been imposed on an
Indemnitee had it not engaged in activities related to the transaction
contemplated herein, or (ii) is imposed by any United States jurisdiction
that would not have imposed such Tax on the Indemnitee but for activities
conducted by such Indemnitee (or Affiliates controlled by Owner
Participant) in such jurisdiction unrelated to the transactions
contemplated herein;
provided, however, that if and to the extent any Tax referred to in any of the
-------- -------
foregoing clauses would otherwise be indemnified against pursuant to the terms
of both the Tax Indemnification Agreement and this Article VII, the terms of the
-----------
Tax Indemnification Agreement shall control and no payments shall be made under
this Article VII. Notwithstanding anything to the contrary contained in this
-----------
Section 7.02, the exceptions set forth in this Section 7.02 shall not apply,
------------ ------------
with respect to the Owner Trustee, the Owner Participant or the Lessor's Estate,
to any Taxes imposed by way of withholding on payments of principal, interest or
premium on the Notes or imposed by reason of any failure to withhold with
respect to such payments.
Section 7.03. Calculation of Indemnity Payments. If any Indemnitee
---------------------------------
subsequently realizes a tax benefit by reason of any payment of an indemnified
Tax pursuant to this Article VII, which benefit had not previously been taken
-----------
into account in computing such payment, such Indemnitee shall pay Lessees when
such tax benefit is actually utilized (but not before Lessees shall have made
all payments and indemnification theretofore due to such Indemnitee pursuant to
the Operative Documents) an amount equal to the lesser of (a) the sum of (i) an
amount equal to such tax benefit, plus (ii) an amount equal to any other tax
benefit realized and actually utilized by such Indemnitee as the result of any
payment made by such Indemnitee pursuant to this sentence, and (b) the amount of
such payment by Lessees to such Indemnitee and any other payment by Lessees to
such Indemnitee theretofore made pursuant to this Article VII with respect to
-----------
such Tax, reduced by other amounts previously paid by such Indemnitee to Lessees
pursuant to
52
this Article VII; provided, however, that notwithstanding the foregoing
----------- -------- -------
portions of this sentence, such Indemnitee shall not be obligated to make any
payment to Lessees pursuant to this sentence if and for so long as an Event of
Default shall have occurred and be continuing, but shall promptly make such
payment once all Events of Default shall no longer be continuing; it being
intended that such Indemnitee should not realize a net tax benefit pursuant to
this Article VII unless Lessees shall first have been made whole for any
-----------
payments by it to such Indemnitee pursuant to this Article VII. Any Taxes that
-----------
are imposed on any Indemnitee as a result of a disallowance or reduction of any
tax benefit taken into account in the prior sentence shall be treated as a Tax
for which Lessees are obligated to indemnify such Indemnitee pursuant to the
provisions of Article VII hereof without regard to Sections 7.02 (other than
-----------
subsections (f) and (g) thereof) and 7.04.
Section 7.04. Contest. (a) If a claim shall be made against any
-------
Indemnitee for any Tax in excess of $10,000 for which Lessees would be obligated
to indemnify pursuant to this Article VII, such Indemnitee shall promptly notify
-----------
Lessees after such Indemnitee becomes aware of such action and in any event
within 30 days after receipt by such Indemnitee of a written claim (but failure
to notify Lessees within such 30-day period shall not impair such Indemnitee's
right to indemnification under this Article VII except to the extent that
-----------
Lessees' rights to contest such claim shall have been materially impaired by
such failure) and shall, to the extent permitted by applicable law, not pay the
claim before the earlier of (i) 30 days after giving Lessees notice, and (ii)
receipt of Lessees' response. If either Lessee shall so request within 30 days
after receipt of such notice, such Indemnitee shall, at Lessees' expense
reimbursed to such Indemnitee on an After-Tax Basis, contest the imposition,
validity or applicability of such Tax. The ultimate control over the conduct of
such contest (including the right to forego any and all administrative appeals,
proceedings, hearings and conferences in respect of such claim and the right to
select the forum for such contest and determine whether any such contest shall
be by (i) resisting payment of such Tax, (ii) paying such Tax under protest or
(iii) paying such Tax and seeking a refund thereof) shall remain with such
Indemnitee; provided, however, that such Indemnitee shall keep Lessees or their
-------- -------
counsel reasonably informed as to the progress thereof, consult
with Lessees within a reasonable period before any significant action with
respect thereto is taken or omitted and consider in
53
good faith any suggestions made by Lessees or their counsel; provided, further,
-------- -------
that, for so long as there shall not have been a Bankruptcy Default nor shall
Owner Participant have exercised any of its remedies pursuant to Section 16 of
the Lease, no such proceedings or litigation shall be settled or otherwise
compromised without the prior written consent of Lessees. If such Indemnitee so
elects, such contest shall be conducted by Lessees in the name of such
Indemnitee (subject to the preceding proviso) and in no event shall such
Indemnitee be required or Lessees be permitted to contest or to continue to
contest, as the case may be, the imposition of any Tax for which Lessees are
obligated to indemnify pursuant to this Article VII unless (A) Lessees shall
-----------
have agreed to pay such Indemnitee on demand and shall have paid as so demanded
all reasonable costs and expenses that such Indemnitee may incur in connection
with contesting such claim (including, without limitation, all costs, expenses,
losses, reasonable legal and accounting fees and disbursements) on an After-Tax
Basis; (B) such Indemnitee shall have determined in good faith that the action
to be taken will not result in any material danger of sale, forfeiture or loss
of any Transponder or any part thereof or any interest therein (except if
Lessees shall have made provision to protect the interests of such Indemnitee in
a manner satisfactory to such Indemnitee); and (C) if such contest shall be
conducted in a manner requiring the payment of the claim, Lessees shall have
advanced on an interest-free basis an amount equal to the amount of such claim
which such Indemnitee shall have elected to pay and Lessees shall have
indemnified the Indemnitee in a manner satisfactory to the Indemnitee, for any
adverse tax consequences from the receipt, or interest-free nature, of such
advance. If, following a Lessee's exercise of its contest rights pursuant to
Section 7.04 hereof, there is a final determination adverse to Indemnitee and
------------
Lessees and an Indemnitee dispute such Lessee's indemnity obligations hereunder
with respect to such final determination, all fees and expenses incurred during
such lawsuit by the prevailing party will be paid or reimbursed, on an After-Tax
Basis, by the losing party.
(b) An Indemnitee may at any time elect to decline to take any action
or any further action with respect to a proposed claim or contest; provided,
--------
however, that if either Lessee has properly requested such action pursuant to
-------
this Article VII, such Indemnitee shall notify Lessees that it waives its right
-----------
to any indemnity payment by Lessees that would otherwise be payable by Lessees
pursuant to this Article VII in respect of such claim. An election
-----------
54
by an Indemnitee to decline to take any action or take any further action with
respect to a proposed claim or contest for any given taxable period shall not
affect the rights and obligations of any other Indemnitee with respect to such
proposed claim. An election by an Indemnitee to decline to take any action with
respect to a proposed claim or contest shall not affect the rights and
obligations of such Indemnitee and Lessees hereunder in respect of any other
taxable period or any other taxing authority unless such election not to contest
materially impairs as a legal or practical matter the ability of Lessees or an
Indemnitee to contest any Tax for which such Indemnitee is indemnified pursuant
to this Article VII. Upon any such election by an Indemnitee if Lessees shall
-----------
have advanced an amount to an Indemnitee pursuant to clause (C) of this Section
-------
7.04(a), such Indemnitee shall repay the advance to Lessees, plus any net tax
-------
benefit realized by such Indemnitee as a result of the repayment of such
advance; such repayment shall be made upon the occurrence of the earlier of (x)
final adjudication of such contest (including a settlement thereof) and (y) such
time as such Indemnitee shall elect to discontinue the contest as above
provided; provided, however, notwithstanding the foregoing, such Indemnitee
-------- -------
shall not be obligated to make any repayment to Lessees pursuant to this
sentence for so long as an Event of Default shall have occurred and be
continuing but shall promptly make such payment once all Events of Default shall
no longer be continuing.
Section 7.05. Reports. If any report, return or statement is
-------
required to be filed with respect to any Tax which is subject to indemnification
under this Article VII, Lessees shall promptly notify the appropriate Indemnitee
-----------
of such requirement and shall timely file the same, except for any such report,
return or statement which an Indemnitee has notified Lessees that such
Indemnitee intends to file; provided, however, prior to the filing by any
-------- -------
Indemnitee of any report, return or statement in respect of which an amount
greater than $10,000 is required to be paid, such Indemnitee shall notify
Lessees that such report, return or statement and such tax is due and such
notification shall be within a reasonable amount of time to enable Lessees to
contest such tax (it being understood that any failure to so notify Lessees
shall be treated for purposes hereof as a failure by Owner Participant to afford
Lessees its contest rights under Section 7.04) and, with respect to any report,
------------
return or statement being filed by Lessees, the Indemnitee shall at Lessees'
expense be required to provide Lessees on
55
a timely basis with any information reasonably requested. Lessees shall either
file such report, return or statement so as to show the ownership of the
Transponders in Owner Trustee and send a copy of such report, return or
statement to Owner Trustee or, where not so permitted, promptly notify Owner
Participant of such requirement and prepare and deliver such report, return or
statement to Owner Participant in a manner satisfactory to Owner Participant
within a reasonable time prior to the time such report, return or statement is
to be filed.
Section 7.06. Payment. (a) Unless otherwise requested by the
-------
appropriate Indemnitee, Lessees shall pay any Tax for which they are liable
pursuant to this Article VII directly to the appropriate taxing authority and,
-----------
if so otherwise requested, shall pay such appropriate Indemnitee within 15 days
after demand, in immediately available funds, any amount due such Indemnitee
pursuant to this Article VII with respect to such Tax or such payment, but not
-----------
prior to the later of (i) payment of such Tax and (ii) final adjudication
(including settlement consented to by Lessees) in the case of a contest pursuant
to Section 7.04. Any such demand shall specify in reasonable detail the payment
------------
and the facts upon which the right to payment is based. Each Indemnitee shall
promptly forward to Lessees any notice, ▇▇▇▇ or advice received by it concerning
any Tax for which such indemnitee claims indemnification hereunder. Within 30
days after the date of each payment by Lessees of any Tax, Lessees shall furnish
the appropriate Indemnitee with the original or a certified copy of a receipt
for Lessees' payment of such Tax or such other evidence of payment of such Tax
as is accept able to such Indemnitee. Lessees shall also furnish promptly upon
request such data as any Indemnitee may require to enable such Indemnitee to
comply with the require ments of any taxing jurisdiction.
(b) Each Lessee agrees that it shall have no right to inspect the
books, records, tax returns or any other document of such Indemnitee or any
Affiliate thereof in order to verify the basis or accuracy of the calculations
made pursuant to this Article VII; provided, however, within ten days following
----------- -------- -------
Lessees' receipt of any notice or demand involving calculations to be made
pursuant to this Article VII, either Lessee may request that the correctness of
-----------
such calculations be verified, at Lessees' expense, by one of the six largest
United States public accounting firms selected by the relevant Indemnitee and
approved by Lessees, which approval will not be unreasonably withheld, and such
56
Indemnitee shall deliver to Lessees a certificate of a senior officer together
with a statement from such public accounting firm confirming that the
calculations set forth in or supporting the amount set forth in such notice or
demand to which such request relates have been verified as above provided and
that the calculations are accurate and in conformity with the provisions of this
Article VII. The assumptions, the method of calculation and the other
-----------
information revealed or made available to such accounting firm shall be kept
confidential and shall not be revealed by it to any other Person.
Section 7.07. Consolidated or Combined Return. In the case of any
-------------------------------
Tax for which an Indemnitee claims indemnification hereunder that is reported on
a consolidated or combined basis by such Indemnitee, the rules applicable to the
consolidated or combined return of the Indemnitee shall be taken into account in
computing the amount of any indemnity or payment by or to Lessees under this
Article VII in respect of such Tax.
-----------
Section 7.08. Coordination. Any obligation on an Indemnitee to
------------
provide notice to or to make a payment to the Lessees may be satisfied by the
Indemnitee tendering performance of such obligation to STLC. In addition, an
Indemnitee shall comply with the requests or directions of STLC where the
requests or direction of the two Lessees shall be at any variance.
ARTICLE VIII
NATURE AND MANNER OF PAYMENT OF INDEMNITIES
Section 8.01. Effect of Other Indemnities. Each Lessee's obligations
---------------------------
under the indemnities provided for in this Agreement shall be those of primary
obligor, jointly and severally liable for such obligation, whether or not the
Person indemnified shall also be indemnified with respect to the same matter
under the terms of any of the other Operative Documents, the ▇▇▇▇▇▇ Agreement or
any other document or instrument, and the Person seeking indemnification from a
Lessee pursuant to any provisions of this Agreement may proceed directly against
such Lessee (subject to the provisions of this Agreement) without first seeking
to enforce any other rights of indemnification.
57
Section 8.02. Payments and Survival of Indemnities. Unless otherwise
------------------------------------
specifically provided for herein, all amounts payable by any Lessee pursuant to
Articles VI and VII shall be payable directly to the Person entitled to payment
----------- ---
or indemnification. Unless otherwise specifically provided herein or therein,
the indemnities of the parties hereunder shall survive the termination of this
Agreement and the other Operative Documents and shall survive the transfer of
any Note or any interest of Owner Participant in Lessor's Estate and the payment
of any or all of the Notes.
Section 8.03. No Guarantees, etc. Nothing herein or in the Tax
------------------
Indemnification Agreement shall be construed as a guarantee by either Lessee of
any residual or other value in the Transponders or the useful life of the
Transponders or constitute a guarantee by either Lessee of payment of principal
of or interest on the Notes or any other amount payable under the Indenture.
ARTICLE IX
PAYMENT OF TRANSACTION COSTS
Section 9.01. Transaction Costs.
-----------------
(a) If the transactions contemplated by this Agreement to be
consummated on the Delivery Date or on the Reset Date are consummated, Owner
Trustee shall as soon as practicable on or after the Delivery Date or on the
Reset Date, as the case may be (subject to paragraph (b) of this Section 9.01),
pay when due, or reimburse Lessees for, all such Transaction Costs not
theretofore paid by Owner Trustee. Owner Participant agrees to provide to Owner
Trustee funds to pay Transaction Costs payable by Owner Trustee pursuant to the
preceding sentence. If the transactions contemplated by this Agreement to be
consummated on the Delivery Date are not consummated, Lessees shall pay when due
all Transaction Costs accrued to such failed Delivery Date, the payment of which
is otherwise the obligation of Owner Trustee pursuant to the first sentence of
this Section 9.01(a), and Lessees shall reimburse Owner Trustee for the amount
of any such Transaction Costs already paid by Owner Trustee pursuant to the
terms hereof; provided, however, that if such transactions shall not be
-------- -------
consummated by reason of a breach by Owner Trustee, Owner Participant, Indenture
Trustee or Initial Note Purchaser of
58
its obligations hereunder or under any other Operative Document or ▇▇▇▇▇▇
Agreement to which such Person is or will be a party, or, in the case of Owner
Participant by reason of its failure to negotiate in good faith, or if it shall
have become a Defaulting Participant, neither Lessee shall be obligated to pay
the Transaction Costs incurred by such Person for such breach.
(b) If the actual amount of Transaction Costs exceeds the Estimated
Transaction Costs as set forth in Schedule III, Lessees shall promptly pay when
due, or reimburse Owner Trustee for, such excess Transaction Costs, unless
Lessee shall elect to have Owner Trustee pay either excess Transaction Costs by
notice in writing to Owner Trustee, in which case Owner Trustee shall pay such
excess Transaction Costs pursuant to paragraph (a) of this Section 9.01. In no
------------
event shall the aggregate amount of all Transaction Costs paid or reimbursed by
Owner Trustee under this Section 9.01 exceed the amount stated in Schedule III
------------
as the Transaction Cost Limit; any Transaction Costs in excess thereof shall be
paid or reimbursed by the Lessees.
(c) Each of the Transaction Costs and each of the expenses referred
to in Sections 9.02 and 9.03 shall be evidenced by appropriate bills or
----------------------
invoices. Either Lessee shall have the right to (i) receive any substantiation
relating to any Transaction Costs or such ongoing expenses as such Lessee may
reasonably request and (ii) reasonably approve (which approval shall not be
unreasonably withheld or delayed) within 30 days of notice thereof the payment
thereof prior to such payment by Owner Trustee.
Section 9.02. Amendments, Waivers, etc. The Lessees will pay all
------------------------
costs and expenses incurred in connection with the entering into or the giving
or withholding of any future amendments, supplements, waivers or consents with
respect to the Operative Documents, or the ▇▇▇▇▇▇ Agreements in accordance with
the provisions of Section 6.01(b) hereof (whether or not such amendments,
---------------
supplements, waivers or consents become effective).
Section 9.03. On-Going Fees. Lessees shall pay the reasonable fees
-------------
and expenses of Owner Trustee (including without limitation expenses in
connection with the prepara tion and filing of any reports and tax returns
(other than incremental costs attributable to the existence of more than one
Owner Participant)) and Indenture Trustee for acting as such to the extent not
included in Transaction Costs;
59
provided that Lessees shall not be liable for such fees and expenses of Owner
--------
Trustee to the extent attributable to expenses in respect of any period when
such Transponder is no longer subject to the Lease.
ARTICLE X
RESALE TRANSACTIONS
Section 10.01. Resales Within 120 Days of the Delivery Date. Each
--------------------------------------------
Lessee and each of Owner Participant, Initial Note Purchaser, Owner Trustee and
Indenture Trustee agrees to effectuate the resale of the Notes in a transaction
in accordance with Rule 144A under the Securities Act ("Rule 144A") and the
reset of the interest rate on the Notes in connection with such resale, as soon
as commercially feasible after the Delivery Date on the terms and subject to
the conditions set forth herein and in Annex A attached hereto, which is hereby
incorporated by reference and shall be binding upon the parties as if fully set
forth herein, and, to the extent reasonably within its control, to cause the
conditions to such reset and resale herein (including Annex A) to be met. In
connection with such transaction, Initial Note Purchaser shall propose a
Remarketing Date, and Lessees shall use commercially reasonable efforts to
provide the Preliminary Offering Memorandum to Initial Note Purchaser on such
date. After the Remarketing Date, Initial Note Purchaser and Lessees, acting on
behalf of Owner Trustee, shall designate a mutually acceptable Repricing Date
and Reset Rate, which rate, in their respective best judgments, will be
sufficient to allow Initial Note Purchaser to resell the Notes at 100% of the
principal amount thereof in a transaction in accordance with Rule 144A.
On or prior to the Repricing Date, Initial Note Purchaser and Lessees,
acting on behalf of Owner Trustee, shall determine the Reset Date, which date
may be postponed by mutual agreement of Lessees and Initial Note Purchaser.
Initial Note Purchaser and Lessees shall notify Owner Trustee and Owner
Participant of such Reset Rate and Reset Date and any postponements thereof. On
or prior to the Repricing Date, Lessees and Owner Participant shall adjust the
schedules of Scheduled Rent, Lessor Interim Amount, Lessor Payment Amount,
Stipulated Loss Value, Termination Value and EBO Amounts with respect to the
Transponders and the amortization schedule of the Notes in accordance with
60
Section 4 of the Lease. On the Repricing Date Lessees shall deliver the
Offering Memorandum to Initial Note Purchaser, Owner Participant, Owner Trustee
and Indenture Trustee. On the Repricing Date, Owner Trustee shall notify
Indenture Trustee of the Reset Rate and the Reset Date.
On or prior to the Reset Date, Lessees and Owner Trustee shall execute
and deliver a supplement to the Lease reflecting the adjustments described in
the preceding paragraph, and Owner Trustee and Indenture Trustee shall execute
and deliver a supplement to the Indenture reflecting such adjustments and
setting forth the Reset Rate, in each case effective on the Reset Date.
If Initial Note Purchaser and Lessees, acting on behalf of Owner
Trustee, fail to set a Repricing Date within 10 Business Days after an initial
Remarketing Date, then Initial Note Purchaser and Lessees, acting on behalf of
Owner Trustee, may set one or more other Remarketing Dates in the manner
described in the first paragraph of this Section 10.01 until the earlier to
-------------
occur of the Reset Date or the day which is 120 days after the Delivery Date.
Section 10.02. Resales More than 120 Days After the Delivery Date.
--------------------------------------------------
(a) In the event that no Reset Rate has been established on or prior
to the 120th day following the Delivery Date, on any date thereafter Initial
Note Purchaser may in its sole discretion resell some or all of the Notes in one
or more Unilateral Resales that are exempt from the registration requirements of
the Securities Act; provided that only the first such Unilateral Resale shall
--------
result in a reset of the interest rate on the Notes. In connection with the
first such Unilateral Resale, each of the parties to this Participation
Agreement agrees to effectuate the reset of the interest rate upon such
Unilateral Resale on the terms and subject to the conditions set forth in this
Participation Agreement (including Annex A hereto) and, if such resale shall be,
at the request of Initial Note Purchaser, in accordance with Rule 144A, each of
the parties agree, to the extent reasonably within its control, to cause the
conditions to such reset and resale herein (including Annex A) to be met.
Initial Note Purchaser shall designate a Remarketing Date on five Business Days'
notice to Lessees and Owner Trustee. Upon such Remarketing Date, Lessees shall
provide the Preliminary Offering Memorandum to the Initial Note Purchaser. After
the Remarketing Date, Initial
61
Note Purchaser may designate a Repricing Date upon three Business Days' notice
to Lessees, Owner Participant, Owner Trustee and Indenture Trustee. One Business
Day prior to such Repricing Date, Initial Note Purchaser shall notify Lessees,
Owner Participant, Owner Trustee and Indenture Trustee of the Reset Date and
shall confirm the Reset Rate which shall be the GM Equivalent Rate as of such
Business Day. On or prior to the Repricing Date, Lessees and Owner Participant
shall adjust the schedules of Scheduled Rent, Lessor Interim Amount, Lessor
Payment Amount, Stipulated Loss Value, Termination Value and EBO Amounts with
respect to the Transponders and the amortization schedule for the Notes in
accordance with Section 4 of the Lease. On the Repricing Date, Lessees shall
deliver the Offering Memorandum to Initial Note Purchaser.
On or prior to the Reset Date, Lessees and Owner Trustee shall execute
a supplement to the Lease reflecting the adjustments described in the preceding
paragraph, and Owner Trustee and Indenture Trustee shall execute a supplement
to the Indenture reflecting such adjustments and setting forth the Reset Rate,
in each case effective on the Reset Date.
If Initial Note Purchaser does not set a Repricing Date within 10
Business Days after an initial Remarketing Date, then Initial Note Purchaser may
set not more than two subsequent Remarketing Dates in the manner described in
the first paragraph of this Section 10.02 within 30 days after the initial
-------------
Remarketing Date.
(b) In connection with a Unilateral Resale other than a resale made
in accordance with Rule 144A as described in subsection (a) of this Section
-------
10.02, if the Reset Rate has not theretofore been set, Initial Note Purchaser
-----
shall designate, on five Business Days notice to Lessees, Owner Participant,
Owner Trustee and Indenture Trustee, the Reset Date and shall confirm that on
the Reset Date the Reset Rate will be the GM Equivalent Rate. Prior to such
Reset Date, Lessees and Owner Participant shall adjust the schedules of
Scheduled Rent, Stipulated Loss Value, Termination Value and each EBO Amount
with respect to the Transponders and the amortization schedule of the Notes, in
accordance with Section 4 of the Lease.
On or prior to the Reset Date, upon the consummation of the first
such Unilateral Resale, Lessees and Owner Trustee shall execute and deliver a
supplement to the
62
Lease reflecting the adjustments described in the preceding paragraph, and Owner
Trustee and Indenture Trustee shall execute and deliver a supplement to the
Indenture reflecting such adjustments and setting forth the Reset Rate, in each
case effective on the Reset Date.
Section 10.03. Conditions Precedent to Resale.
------------------------------
(a) The participation by Initial Note Purchaser (and Indenture
Trustee) and by Lessees shall be subject to the satisfaction of the conditions
set forth in Annex A hereto.
(b) The participation by Owner Participant and Owner Trustee in a
transaction in accordance with Rule 144A shall be subject to the satisfaction of
the following conditions:
(i) no Bankruptcy Default or Event of Default shall have occurred
and be continuing as of the 144A Closing Date;
(ii) Lessor Interim Amount, Lessor Payment Amount, Interim Rent,
Scheduled Rent, Termination Value, Stipulated Loss Value and the EBO
Amounts shall be adjusted as provided in Section 4 of the Lease;
(iii) Owner Participant, Owner Trustee and Indenture Trustee shall
have received (i) such opinions of counsel as they may reasonably request
concerning compliance with the Securities Act and any other Applicable Law
relating to the sale of securities and (ii) such other opinions of counsel
and such certificates and other documents, each in form and substance
reasonably satisfactory to each of them, as they may reasonably request in
connection with compliance with the terms and conditions of Article X;
---------
(iv) Lessees shall by reasonable advance notice have requested Owner
Trustee and Owner Participant to take any actions required to be taken by
either of them in connection with a transaction in accordance with Rule
144A;
(v) Owner Trustee and Owner Participant shall not be required to
provide any certificates or opinions except those that can be made
available without the taking of any non-ministerial action on the part of
the
63
Owner Participant or Owner Trustee other than com pliance with their
respective obligations under the Operative Documents and ▇▇▇▇▇▇ Agreements;
and
(vi) No additional agreements or amendments to the Operative Documents
shall be required other than the supplements to the Lease and Indenture
described in this Article X except for those which do not alter the
---------
substantive rights of the parties hereto.
ARTICLE XI
BENEFICIAL INTEREST PURCHASE OPTION
Section 11.01. Option to Purchase. In the event and at the time that
------------------
Lessees have the right to purchase all of the Transponders then subject to the
Lease pursuant to Section 19(a)(ii) or (iii) of such Lease, either Lessee, in
lieu of exercising such right may elect to purchase the right, title and
interest of Owner Participant in and to Lessor's Estate (the "Beneficial
Interest") at a purchase price equal to (i) in the case of any purchase pursuant
to Section 19(a)(ii)(A) of the Lease, the aggregate First EBO Amounts for all
such Transponders, (ii) in the case of any purchase pursuant to Section
19(a)(ii)(B) of the Lease, the greater of (a) the Fair Market Sales Value of all
of the Transponders or (b) the aggregate Second EBO Amounts for all of the
Transponders, and (iii) in the case of any purchase pursuant to Section
19(a)(iii) of the Lease, the greater of (a) Termination Value for all of the
Transponders as of the applicable Rent Payment Date and (b) the Fair Market
Sales Value of all of such Transponders as of such Rent Payment Date (the
"Beneficial Interest Purchase Price").
Section 11.02. Notice of Election; Manner of Purchase; Transfer After
------------------------------------------------------
Purchase.
--------
(a) In order to exercise its right to purchase the Beneficial
Interest pursuant to Section 11.01, the applicable Lessee shall notify Owner
-------------
Participant in writing within 15 days after the giving of notice by such Lessee
to Lessor pursuant to Section 19(b) of the Lease of such election. In addition,
in the case of a purchase pursuant to Section 19(a)(ii)(B) or (iii) of the
Lease, such notice shall state that such Lessee desires to obtain an appraisal
of the Fair Market Sales Value of the Transponders as of the Rent Payment Date
on which it desires to purchase the
64
Beneficial Interest. In such case, 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; provided that notwithstanding such acceleration
--------
any appraiser shall have adequate time to make a considered determination). At
least 15 days prior to the applicable Rent Payment Date, such Lessee shall, if
it desires to exercise its right to purchase the Beneficial Interest Pursuant to
Section 11.01, give irrevocable notice to Owner Trustee, Owner Participant and
-------------
Indenture Trustee stating that such Lessee will purchase the Beneficial Interest
pursuant to Section 11.01.
-------------
(b) On the date of purchase, upon receipt by Lessor of (i) the
Beneficial Interest Purchase Price minus (ii) the principal amount of the Notes
then outstanding (after payment of all Interim Rent and Base Rent remaining
unpaid that was due prior to the date of such purchase), and, in the event that
the date of purchase is a Rent Payment Date on which a Scheduled Rent payment
designated as an "arrears rent" on Schedule A is due, upon receipt by Lessor of
all such Scheduled Rent designated as "arrears rent" due on such Rent Payment
Date as set forth on Schedule A to the Lease, and the Rent Differential Amount,
if any, and all other Supplemental Rent due by Lessee on such Rent Payment Date
to or distributable to Owner Participant to and including such date of purchase
(without giving effect to any applicable grace periods), Owner Trustee shall
distribute to Owner Participant all such amounts received by it and all other
cash then held by it (other than cash distributable to Owner Trustee in its
individual capacity), and immediately thereafter Owner Participant shall
transfer the Beneficial Interest free and clear of all Owner Participant's Liens
to Lessees pursuant to an instrument of conveyance in form and substance
reasonably satisfactory to Lessee; provided that, subject to Section 14.15,
-------- -------------
Owner Participant shall have been released from any obligations under the
Operative Documents arising after such purchase except to the extent that such
obligations are attributable to events or circumstances occurring prior to the
purchase of the Beneficial Interest by Lessee.
(c) Each of Owner Participant, Owner Trustee, and Indenture Trustee
at the cost and expense of Lessees and on an After Tax Basis, will cause to be
promptly and duly taken, executed, acknowledged and delivered all such further
acts, documents and assurances as Lessees reasonably may
65
request in order to carry out the intent and purpose of this Section 11 and the
----------
transactions contemplated hereby.
(d) As a condition to such Lessee's right to purchase the Beneficial
Interest pursuant to Section 11.01 (unless such Lessee shall assume the
-------------
obligations of Owner Trustee pursuant to the next sentence), on the date of
purchase such Lessee shall have provided to Indenture Trustee and Owner Trustee
an opinion of counsel for such Lessee, dated the date of purchase, which,
subject to usual or customary exceptions, shall be to the effect that, upon
consummation of such purchase, this Agreement, the Trust Agreement, the Lease
and, in the case of GMHE, the Guaranty Agreement constitutes the legal, valid
and binding obligation of such Lessee, enforceable against such Lessee in
accordance with its terms except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally and by general principles of equity, and
except as limited by applicable laws that may affect the remedies provided for
in the Lease, which laws, however, do not in the opinion of such counsel make
the remedies provided for in the Lease inadequate for the practical realization
of the rights and benefits provided for in the Lease. In the event such Lessee
is unable to provide such opinion, concurrently with the purchase of the
Beneficial Interest Lessees shall assume (on a full recourse basis) the
obligations of Owner Trustee under the Notes and under the Indenture in
accordance with, subject to the conditions of and with the effect provided in
Section 5.05(a) hereof and Section 2.13 of the Indenture, and upon such
---------------
assumption such Lessee shall have the right to terminate the Trust Agreement.
(e) Owner Trustee and Lessees acknowledge and agree that the former
Owner Participant which shall have transferred the Beneficial Interest to a
Lessee pursuant to this Section 11.02 (the "Transferor") is entitled to all Rent
-------------
which by its terms is payable in arrears accrued to and including, or
attributable to events or circumstances occurring prior to, the date of purchase
pursuant to this Section 11.02. Owner Trustee hereby agrees that upon receipt
-------------
by it of any amounts in respect of such Rent, it will forthwith pay over such
amounts to the Transferor.
(f) From and after any purchase of the Beneficial Interest pursuant
to this Section 11.02, (i) the Transferor shall be released from its liability
-------------
hereunder and under the
66
other Operative Documents to which it is or will be a party in respect of
obligations to be performed on or after the date of such purchase, and (ii) such
Lessee shall be deemed "Owner Participant" for all purposes of the Operative
Documents and each reference herein to Owner Participant shall thereafter be
deemed a reference to such Lessee for all purposes.
ARTICLE XII
REFUNDING, REOPTIMIZATION AND RENT
Section 12.01. Refunding of Notes. Upon compliance with the terms
------------------
and conditions of this Article XII, including without limitation the
-----------
satisfaction of the conditions set forth in Section 12.02 hereof, and of
-------------
Section 2.12 of the Indenture, either Lessee shall have the right to request
Owner Trustee to, and upon such request Owner Participant, Owner Trustee and
Indenture Trustee shall cooperate in good faith to, take such steps as may be
necessary to refund all of the Notes then outstanding (the "Refunded Notes")
--------------
through the issuance and sale in the public or private market of one or more
series of notes (the "Refunding Notes"), in an aggregate principal amount which
---------------
shall be equal to the unpaid principal amount of the Refunded Notes, the
proceeds of such issuance and sale to be applied to prepay the principal amount
of such outstanding Refunded Notes. Subject to the limitations set forth in
Section 12.02, the amortization or sinking fund schedules for the Refunding
-------------
Notes may be different from such schedules for the Refunded Notes. As a
condition to such refunding, Lessees will be liable for, and shall pay, on an
After-Tax Basis, the reasonable out-of-pocket expenses incurred by Owner
Trustee, Indenture Trustee and Owner Participant in connection with such
refunding (whether or not such refunding shall be consummated, so long as the
failure to consummate such refunding does not result solely from a default by
Owner Participant in its obligations hereunder).
Section 12.02. Cooperation; Conditions. Owner Trustee, Indenture
-----------------------
Trustee and Owner Participant agree that each will cooperate with the others and
Lessees in any refunding contemplated by this Article XII and negotiate in good
-----------
faith to conclude such additional agreements and such supplements or amendments
to or consents or waivers under each of the Operative Documents as may be
reasonably be requested by either Lessee to effect the transactions
67
contemplated in connection with any such refunding, subject, however, to the
following conditions:
(a) the refunding results in payment in full to the holder or holders
of the Refunded Notes of the unpaid principal amount of, premium, if any,
and accrued and unpaid interest on such Refunded Notes held by such holder
or holders, and of all other amounts then due and owing by the Lessees to
such holder or holders pursuant to any other Operative Document;
(b) no Bankruptcy Default or Event of Default shall have occurred and
be continuing as of the date of such refunding, and the refunding shall
occur on a Rent Payment Date;
(c) without the consent of Owner Participant, there previously shall
not have occurred any refunding with respect to the Notes (other than a
refunding on or prior to December 31, 1992 in the event that a transaction
under Rule 144A as contemplated by Section 10.01 has not been consummated
-------------
on or before such time);
(d) the Refunding Notes issued to refund the Refunded Notes shall
have a final maturity date not later than the final maturity date of the
Refunded Notes;
(e) the average remaining life to maturity of the Refunding Notes
issued to refund the Refunded Notes as of the date of such refunding shall
not be longer or shorter than the average remaining life to maturity of the
Refunded Notes as of the date of such refunding by a period greater than
six months;
(f) Scheduled Rent, Termination Value, Stipulated Loss Value and the
EBO Amounts shall be adjusted as provided in Section 4 of the Lease;
(g) Owner Participant, Owner Trustee and Indenture Trustee shall
have received (i) such opinions of counsel as they may reasonably request
concerning compliance with the Securities Act and any other Applicable Law
relating to the sale of securities and (ii) such other opinions of counsel
and such certificates and other documents, each in form and substance
reasonably satisfactory to each of them, as they may reasonably request in
connection with
68
compliance with the terms and conditions of this Article XII;
-----------
(h) all necessary authorizations, approvals and consents shall have
been obtained;
(i) Owner Participant shall have received from Independent Tax
Counsel, an opinion satisfactory to Owner Participant to the effect that
such refunding (including, but not limited to, any resulting adjustment to
Base Rent) does not have any unindemnified adverse tax consequences to
Owner Participant, or Owner Participant shall have received an indemnity
reasonably acceptable to Owner Participant from Lessees with respect to any
such adverse tax consequences; and
(j) the terms and conditions of such refunding notes or other debt
instrument will be no less favorable to Owner Participant than the terms
and conditions applicable to the Refunded Notes.
Section 12.03. Notice. A Lessee shall give Owner Trustee, Owner
------
Participant and Indenture Trustee at least 45 days' prior written notice of any
desired refunding pursuant to this Article XII, which notice shall set forth to
-----------
the extent practicable the proposed terms and conditions of such refunding,
including the desired date therefor. Lessees, Owner Trustee, Owner Participant
and, as necessary, Indenture Trustee, shall consult thereafter on the
negotiation of such terms and conditions to the end that, subject to the
provisions of this Article XII, the final terms and conditions of such
-----------
refunding shall be agreed among the parties thereto in due course thereafter. A
Lessee will provide notice promptly to such Persons in the event that Lessees
determine not to proceed with such proposed refunding.
Section 12.04. Rights of Parties. Notwithstanding anything to the
-----------------
contrary contained in this Article XII, in no event shall Owner Participant or
-----------
Indenture Trustee have any obligation to initiate or structure any refunding of
Notes or to take, or to cause Owner Trustee to take, any action in connection
therewith other than such as may be requested by Lessee as provided in this
Article XII.
-----------
Section 12.05. Owner Participant's Reoptimization Rights. In the
-----------------------------------------
event of any change in tax law which is not a Covered Tax Law Change that is
enacted after the Delivery Date, Lessees agree to cooperate with Owner
Participant to
69
permit Owner Participant to reoptimize the schedule of Scheduled Rent and, to
the extent that the terms of the Notes (including any Refunding Notes) then
outstanding permit, and in connection with any subsequent refunding of the Notes
to change the amortization schedule with respect to such Notes or adopt an
alternative amortization schedule for any subsequent issue of Refunding Notes.
Any such reoptimization or adoption shall not adversely affect the economic
consequences (including the effect on Scheduled Rent, EBO Amounts, Stipulated
Loss Values and Termination Values) of the transaction to Lessee using the
methodology originally employed by Lessees in evaluating the transaction. Any
reoptimization pursuant to this Section 12.05 shall not affect the definition of
-------------
Owner Participant's Net Economic Return or change the method of making
adjustments for purposes of making subsequent adjustments pursuant to Section 4
of the Lease. In connection with any exercise of rights by Owner Participant
under this Section 12.05, Owner Participant shall pay on an After-Tax Basis all
-------------
out of pocket expenses incurred by Lessees, whether or not any reoptimization
actually occurs.
ARTICLE XIII
TRANSFER OF OWNER PARTICIPANT'S INTEREST
Section 13.01. Restrictions on Transfer. Without the prior written
------------------------
consent of Lessees, for so long as the Lease shall be in effect, and, without
the prior written consent of Indenture Trustee, for so long as the Lien of the
Indenture shall be in effect, Owner Participant shall not, directly or
indirectly, assign, convey or otherwise transfer (whether by consolidation,
merger, sale of assets or otherwise) any of its right, title or interest in and
to any Transponder, the Lessor's Estate, this Agreement, the Trust Agreement or
any other Operative Document or ▇▇▇▇▇▇ Agreement except as and to the extent
permitted by, and in accordance with the terms and conditions of, this Article
-------
XIII or as contemplated in Schedule III.
----
Section 13.02. Permitted Transfers. Owner Participant may transfer
-------------------
all or any portion of its right, title and interest in and to the Lessor's
Estate (whether or not the same shall then have been pledged or mortgaged under
the Indenture, but subject to the Lien of the Indenture if then in effect) and
in and to this Agreement and the other Operative Documents to any Person (a
"Transferee") only in
-----------
70
accordance with Section 13.01 or in compliance with and upon satisfaction of the
-------------
following conditions:
(a) Such transfer shall not result in the number of Owner
Participants exceeding the number of Transponders and shall comply with the
provisions of Section 13.05.
-------------
(b) the Transferee shall be (i) a financial institution, corporation,
leasing company or other institutional investor whose net worth at the time
is at least $50,000,000 or, in the event of a transfer in respect of one or
two Transponders to any one Transferee at any time after the date as of
which, in accordance with Schedule X to the Notes set forth in Section 2.2
of the Indenture as in effect on the Delivery Date, half of the original
principal amount of the Notes would have been repaid, a financial
institution, corporation, leasing company or other institutional investor
whose net worth at the time is at least $25,000,000 (a "Permitted
Institution"), (ii) a financial institution, corporation, leasing company
or other institutional investor the obligations of which, as Owner
Participant under the Operative Documents, are guaranteed by a Permitted
Institution, pursuant to a guarantee in form and substance reasonably
satisfactory to Lessee, Trust Company and Indenture Trustee), or (iii) an
Affiliate of Owner Participant; provided that if such Affiliate is not a
--------
Permitted Institution, Owner Participant shall guarantee the obligations of
such Affiliate as Owner Participant under the Operative Documents pursuant
to a guarantee in form and substance reasonably satisfactory to Lessee,
Trust Company and Indenture Trustee;
(c) the Transferee shall not be a Competitor;
(d) assuming the accuracy of the representations made by the Lessees
in Sections 4.01(j) and (k), and by the Transferee set forth in Section
13.02(e) below, and assuming compliance by all holders of the Notes with
the sixth paragraph of the form of Notes set forth in Section 2.2 of the
Indenture, no such transfer shall violate any provision of, or create a
relationship which would be in violation of, any Applicable Laws,
including, without limitation, applicable securities laws, any agreement to
which Owner Participant or the
71
Transferee is a party or by which it or any of its property is bound;
(e) the Transferee shall enter into an agreement or agreements, in
form and substance reasonably satisfactory to Lessees, Owner Trustee and
(if the Lien of the Indenture shall then be in effect) Indenture Trustee,
whereby the Transferee shall confirm that it has the requisite power and
authority to enter into and to carry out the transactions contemplated
hereby and in each Operative Document to which Owner Participant is or will
be a party, and that it shall be deemed a party to each of such Operative
Documents and shall agree to be bound by all the terms of, and to undertake
all the obligations of the transferor to be performed on or after the date
of such transfer contained in, each of such Operative Documents with
respect to the interest being conveyed, and whereby such Transferee shall
make representations and warranties reasonably requested by Lessees, Owner
Trustee and Indenture Trustee similar in scope to the representations and
warranties contained in Section 4.03; provided that such Transferee
------------ --------
delivers to Lessees and Indenture Trustee a written representation and
warranty (or an opinion of counsel reasonably satisfactory to Lessees and
Indenture Trustee) that (i) it is not acquiring the interest being conveyed
with assets subject to Title I of ERISA or Section 4975 of the Code or (ii)
such transfer to or ownership by such Transferee will not result in a
"prohibited transaction" as defined in Section 406 of ERISA or Section 4975
of the Code, which "prohibited transaction" is not subject to an exemption
contained in ERISA or in the rules, regulations, releases or bulletins
adopted thereunder;
(f) the transferring Owner Participant shall have provided 30 days
(or 10 days with respect to a transfer to an Affiliate as contemplated by
Section 12.02(b)(iii)) prior written notice of such transfer to Indenture
---------------------
Trustee and Lessees, which notice shall specify (i) such information and be
accompanied by evidence as shall be reasonably necessary to establish
compliance with this Article XIII and Section 8.1 of the Trust Agreement,
------------
(ii) the extent of the interest to be transferred, and (iii) the name and
address (for the purpose of giving notice as contemplated by the Operative
Documents) of the Transferee;
72
(g) whether or not the transfer actually occurs, the transferring
Owner Participant shall pay or cause to be paid on an After-Tax Basis all
reasonable fees, expenses, disbursements and costs (including, without
limitation, legal and other professional fees and expenses) incurred by
Owner Trustee, Indenture Trustee or Lessees, in connection with any
transfer pursuant to this Article XIII;
------------
(h) the transferring Owner Participant or the Transferee shall have
delivered to Lessees and, if the Lien of the Indenture shall then be in
effect, Indenture Trustee, an opinion of counsel in form and substance
reasonably satisfactory to each of them, as to the due authorization,
execution, delivery and enforceability of the agreement or agreements
referred to in clause (e) of this Section 13.02, and as to the matters
-------------
referred to in clause (d) of this Section 13.02;
-------------
(i) [Intentionally Omitted]
(j) no such transfer shall be to a Person nor shall such transfer be
executed in a manner that would result in the loss, recapture, offset or
other disallowance, elimination, reduction, or disqualification of all or
any portion of the investment tax credit previously claimed by either
Lessee, which investment tax credit is represented by STLC to fully vest no
later than December 31, 1995; provided that, subject to Owner Participant's
--------
compliance with Section 13.02(f) hereof and Owner Participant furnishing to
----------------
Lessees such information as is reasonably necessary for Lessees to
determine Owner Participant's compliance with this clause (j), either
Lessee shall have given Owner Participant at least seven days prior written
notice of any such result.
Section 13.03. Effect of Transfer. From and after any transfer
------------------
effected in accordance with this Article XIII, Owner Participant making such
------------
transfer shall be released, to the extent of the obligations assumed by the
Transferee, from its liability hereunder and under the other Operative Documents
to which it is or will be a party in respect of obligations to be performed on
or after the date of such transfer. Upon any transfer by Owner Participant in
accordance with this Article XIII, the Transferee shall be deemed "Owner
------------
Participant" for all purposes of the Operative
73
Documents and each reference herein to Owner Participant making such transfer
shall thereafter be deemed a reference to such Transferee for all purposes,
except as provided in the preceding sentence. To the extent permitted by law,
the failure to effect any such transfer in accordance with this Article XIII
------------
shall not make such transfer voidable by the parties hereto; provided that this
--------
sentence shall not constitute a waiver of any other claims any party hereto may
have as a result of such failure.
Section 13.04. Cooperation. Each Lessee agrees that it shall, to the
-----------
extent reasonably so requested by Owner Participant and at the expense of Owner
Participant (except to the extent Lessee is obligated to pay such expenses under
other provisions of the Operative Documents), use good faith efforts to assist
Owner Participant in effecting any transfer of its interest in the Lessor's
Estate pursuant to this Article XIII.
------------
Section 13.05. Multiple Owner Participants. It shall be a condition
---------------------------
to any transfer pursuant to this Article XIII that will result in there being
------------
more than one Owner Participant, that Lessees shall have consented to such
transfer prior to the effective date thereof, provided that no such consent
shall be required if all such Owner Participants shall have agreed in a manner
reasonably satisfactory to Lessees that if the provisions of the Operative
Documents require or contemplate the waiver, consent or direction of Owner
Participant, such provisions shall be deemed satisfied by the waiver, direction
or consent of Owner Participants holding a majority of the beneficial interests
in the Trust Estate, except in the case of any such waiver, direction or consent
affecting less than all of the Transponders, in which case only the action of
Owner Participant having the entire beneficial interest in such Transponders (or
Owner Participants holding a majority of the beneficial interests in such
Transponders, as the case may be) shall be required.
ARTICLE XIV
ADDITIONAL RIGHTS AND OBLIGATIONS OF PARTIES
Section 14.01. Rights Following Lease Term. The parties have agreed
---------------------------
that they will each have the following additional rights, obligations and
limitations set forth in Sections 14.02 and 14.03 following the end of the Lease
------------------------
Term. In the event of any conflicts, the provisions of
74
Sections 14.02 and 14.03 of this Article XIV shall apply regardless of any
------------------------
contrary provisions in any ▇▇▇▇▇▇ Agreement.
Section 14.02. ▇▇▇▇▇▇ Agreements Liabilities. Notwithstanding the
-----------------------------
provisions of Article 9 or the indemnity limitations set forth in Section 10.03
of the Purchase Agreement and Article 6 of the Service Agreement, if, during the
period beginning after the expiration or earlier termination of the Lease and
ending on the last day of the fifteenth year following the Delivery Date (the
"Post Lease Term"), there is a breach by a Lessee of any representation,
warranty or agreement contained in Article 5 (except Section 5.02), 7, 8, 10, 12
or 13 or Section 10.03, 14.02, 14.03, 15.10 or 15.12 of the Purchase Agreement
or there is a breach by Contractor of any representation, warranty or agreement
contained in Article 4, 8, or 10, or Section 1.2, 2.1, 6.2, 9.2, 9.3, 12.4 or
13.10 (to the extent that Contractor makes an assignment in violation of the
terms of Section 13.10) of the Service Agreement (all such provisions being
referred to collectively as the "Significant Provisions"), the Lessor or Owner
Participant may proceed to enforce its rights in respect thereof in any manner
permitted by law; provided, however, that:
-------- -------
(a) damages for a wrongful denial of access shall be governed
exclusively by Section 13.03 of the Purchase Agreement and 9.3 of the
Service Agreement, and Owner Trustee, Owner Participant, Lessor, any other
Indemnitee or other Person who is an Affiliate of any of the foregoing
Persons (each such Person referred to in this Article XIV as an "Owner
-----------
Person" and collectively as "Owner Persons") shall not be entitled to any
other damages as a result thereof;
(b) no damages measured by, based upon or resulting from, directly or
indirectly, any loss, loss of use, or physical damage to, the Transponders,
or damages of any other type based upon any Transponder or Satellite
performance or non-performance ("Transponder Performance Damages"), claimed
as a result of any damage to an Owner Person or any Person deriving rights
from any Owner Person shall exceed, in the aggregate for all Owner Persons,
an amount equal to the Per Day Cost for each day, until the breach shall
have been cured, of such damages up to the last day of the Post Lease Term,
except as set forth in Section 14.02(a)
----------------
75
above. Per Day Cost shall be an amount equal to 12% of Buyer's Cost of
such Transponder divided by 1368;
(c) EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5.03 OF THE PURCHASE
AGREEMENT OR IN THE SERVICE AGREEMENT, SELLER AND CONTRACTOR SHALL HAVE NO
LIABILITY FOR ANY WARRANTY, EXPRESS OR IMPLIED, IN RESPECT OF THE
TRANSPONDERS OR THEIR PERFORMANCE, ALL OF WHICH ARE EXPRESSLY EXCLUDED,
INCLUDING, WITHOUT LIMITATION, ALL RIGHTS AND REMEDIES UNDER DIVISION 2,
CHAPTER 7, SECTIONS 2711 THROUGH 2717 OF THE CALIFORNIA COMMERCIAL CODE;
(d) Lessees and Contractor shall in no event have any liability to an
Owner Person under the terms of the Purchase Agreement and the Service
Agreement or this Participation Agreement for loss of profits or other
incidental or consequential damages claimed by an Owner Person, or as part
of an indemnity claim by an Owner Person, based on costs or damages
incurred by it in connection with claims asserted by third parties against
such Owner Person based on representations, warranties or agreements made
by any Owner Person to such third parties, or on claims made by such third
parties against such Owner Person based on damages incurred by such third
party arising out of their use of the Transponders with the permission of
such Owner Person except (i) as otherwise specifically set forth in this
Agreement, (ii) as to third party indemnification claims, to the extent
that such damages are the result of a violation of any Applicable Law by
Contractor or Lessees but, to the extent the damages consist of
Transponder Performances Damages, the limitations of Section 14.02(b) shall
apply or (iii) for any liability of an Owner Person that may result from
damage to or interference with another satellite or transponders thereon as
a result of a breach by Contractor of its obligations under the Service
Agreement or by Seller of its obligations under the Purchase Agreement;
provided, however, that notwithstanding the above limitations, Seller will
-------- -------
indemnify Buyer for all reasonable litigation costs and other procedural
costs and expenses, including, but not limited to, attorneys' fees claimed
by an Owner Person, or as part of an indemnity claim by an Owner Person,
based on claims against such Owner Person arising from a breach by Lessee
or Contractor of any Significant Provisions.
76
(e) nothing contained in this Section 14.02 shall limit the exercise
-------------
by an Owner Person of any rights such Owner Person may have under any other
Operative Document or ▇▇▇▇▇▇ Agreement (including, without limitation, the
right of Buyer or Owner to obtain equitable relief in connection with any
breach by Seller or Contractor of their respective obligations under the
▇▇▇▇▇▇ Agreements), except that an Owner Person shall not be entitled to
payments pursuant to this Agreement to the extent such Owner Person has
already received payment for the damages resulting from such breach
pursuant to the provisions of any Operative Document or ▇▇▇▇▇▇ Agreement;
and
(f) notwithstanding the above, Contractor shall only be liable for a
breach of its obligations under Section 1.2 of the Service Agreement in
respect of the monitoring or management of the Satellite propellant if such
breach is the result of gross negligence of Contractor or an Intentional
Breach.
Section 14.03. Final Term Liabilities. If, during the period
----------------------
beginning at the end of the Post Lease Term and ending on the last day of the
useful commercial life of the Satellite (the "Final Term"), Owner Participant is
unable as a result of an Intentional Breach to make commercial use of any
Transponder that it owns, then Lessor or Owner Participant shall be entitled to
compensation for its loss of Transponder use as set forth in Section 14.03(a).
----------------
(a) Lessor or Owner Participant shall be entitled to be compensated by
Lessees on a per Transponder basis for each day that Lessor or Owner
Participant is unable to make commercial use of any such Transponder as a
result of an Intentional Breach in an amount equal to the Per Day Cost.
Owner Participant and Owner Trustee may enforce their rights in respect of
any other Intentional Breach of the Significant Provisions during the Final
Term subject to the limitations and provisions of Section 14.02(b), (c),
---------------------
(d) and (e).
-----------
(b) As used herein, "Intentional Breach" shall mean any breach by
Lessees or Contractor of the Significant Provisions which is the result of
an action by the Boards of Directors of Lessees or Contractor or by any of
their officers empowered to take such action or any agent authorized by the
Board or any such officers
77
to take such action to intentionally breach any of the Significant
Provisions.
(c) The provisions of Section 14.02(c), (d), (e) and (f) shall apply
----------------------------------
to the Final Term.
Section 14.04. Obligation to Purchase for Removal.
----------------------------------
(a) If, at any time following the expiration or earlier termination of
the Lease and prior to the end of the useful commercial life of the Satellite,
STLC elects to exercise its right with respect to a Removal of the Satellite
pursuant to clause (i) of the first sentence of Article 14 of the Purchase
Agreement (a "Voluntary Removal"), then within 5 days of receipt of the
appraisal required hereunder, Lessees shall purchase, and pay to Lessor in
immediately available funds the Removal Purchase Price of all, but not less than
all, Transponders then owned by Lessor or Owner Participant, regardless of
whether any such Transponder, at the time of the Voluntary Removal, failed to
comply with the Transponder Performance Specifications or otherwise was a
Failed Transponder. STLC shall not be required to wait until the appraisal has
been completed and payment made to do the Removal; provided it shall pay
--------
interest on the Removal Purchase Price at the Prime Rate from the date of
removal to, but excluding, the date of payment. In all cases of a Removal other
than a Voluntary Removal, including a Removal pursuant to clause (ii) of the
first sentence of Article 14 of the Purchase Agreement or where Seller is
required to undertake such a Removal after the expiration of the Lease Term due
to actions by the FCC or other Governmental Authority not sought by Lessees
(collectively referred to as "Involuntary Removals"), Lessees shall have no
payment or other obligation to Lessors or Owner Participant as a result of such
removal.
(b) The Removal Purchase Price for each such Transponder purchased
hereunder shall be the Fair Market Sales Value thereof, if any, as determined in
accordance with the Appraisal Procedure, which shall be commenced as soon as is
practicable after STLC determines to make the Voluntary Removal. Any such
determination of Fair Market Sales Value of any removed Transponder shall be
made on the assumption that, but for such Voluntary Removal, such Transponder
would not have been taken out of service pursuant to the Purchase Agreement
except as, and until, an
78
Involuntary Removal occurred or the useful commercial life of the Satellite
would otherwise have ended had Seller not made the Voluntary Removal. The
valuation date will be the Removal Date. Upon compliance by STLC with all the
terms of this Section 14.04, Buyer shall transfer title to such Transponders to
-------------
STLC without any representation, warranty or recourse whatsoever except as to
the absence of Lessor Liens and Owner Participant Liens. After any such
purchase, neither STLC nor any Affiliate thereof shall use any Transponder for
any revenue-producing purpose.
ARTICLE XV
MISCELLANEOUS
Section 15.01. Confidentiality.
---------------
(a) Owner Participant, Owner Trustee, Trust Company, Initial Note
Purchaser and Indenture Trustee (each, for pur poses of this Section 15.01, a
-------------
"Recipient") shall keep in strict confidence and not disclose to any person or
entity not bound by this Agreement any Proprietary Information received by them
except that Recipient shall not be liable for disclosure or use of any
Proprietary Information if the Proprietary Information (i) is in or enters the
public domain, other than by breach of this Section 15.01, prior to such
-------------
disclosure by Recipient; (ii) is known to Recipient at the time of first receipt
of such Proprietary Information, or thereafter becomes known to Recipient prior
to or subsequent to such disclosure without similar restrictions from a source
other than either Lessee, as evidenced by written records; (iii) is developed by
Recipient independently of any disclosure hereunder as evidenced by written
records; or (iv) is disclosed more than five (5) years after the date of first
receipt of the disclosed Proprietary Information and provided, that such
--------
Proprietary Information may be disclosed at any time by Recipient (A) to a bona
fide prospective purchaser, lessee or transferee, who shall agree to be bound by
this Section 15.01, (B) to its affiliates, employees, independent auditors and
-------------
counsel, to the extent necessary for any of the foregoing to carry out their
functions in connection with the transaction contemplated by the Operative
Documents or the ▇▇▇▇▇▇ Agreements, subject to the further provisions of this
Section 15.01, (C) to the extent reasonably deemed by any Recipient to be
-------------
appropriate in order to protect its rights under any Operative Document or
▇▇▇▇▇▇ Agreement, (D) as part of Recipient's normal reporting or review
procedure to its parent company, its officers or its
79
attorneys and to auditors and regulators of Recipient as required thereby, (E)
to the extent necessary to obtain appropriate insurance, to Recipient's
insurance agents, brokers or underwriters provided that such Person agrees in
writing to confidential treatment of the Proprietary Information disclosed, or
(F) to the extent required by law or by order of a government agency,
legislative body, or court of competent jurisdiction or regulatory examiner or
pursuant to subpoena or other legal process or in connection with any legal
proceeding relating to the transaction contemplated by the Operative Documents
or the ▇▇▇▇▇▇ Agreements or hereby; provided that in the case of any disclosure
--------
pursuant to clause (B), (C), (D) or (E), Recipient shall advise the Person to
whom the disclosure is made of the confidential nature of any Proprietary
Information disclosed and of the terms of this Section 15.01. If Recipient is
required to disclose Proprietary Information pursuant to clause (F) of this
paragraph, Recipient shall promptly notify Lessees of such disclosure
requirement and upon the request of Lessees shall to the extent practicable at
the Lessees' sole cost and expense and with counsel reasonably satisfactory to
Recipient, fully cooperate with Lessees, in contesting such disclosure. If after
such contest disclosure is still required, then Recipient shall seek, if
practicable, confidential treatment of such information from the applicable
party.
(b) "Proprietary Information" shall be defined as proprietary
information of any nature in any form, including without limitation, all
writings, memoranda, copies, reports, financial statements, papers, surveys,
analyses, drawings, letters, computer printouts, software, specifications, data,
graphs, charts, sound recordings and/or pictorial reproductions which have been
reduced to written form. Proprietary Information shall be marked as
proprietary by either Lessee with an appropriate legend, marking, stamp or other
obvious written identification prior to disclosure. In the event that either
Lessee discloses its Proprietary Information to Recipient other than in the
manner provided for in this paragraph (b), then such Lessee shall promptly
inform Recipient that such information is deemed proprietary and shall provide
Recipient with a brief written description of such information within thirty
(30) days of such disclosure, identifying therein the manner, place, and date of
such disclosure and the names of Recipient's representatives to whom such
disclosure was made whereupon the provisions of this agreement shall become
applicable to such Proprietary Information. Proprietary Information shall also
mean any information, whether in written form or not, prepared
80
by Recipient or anyone receiving Proprietary Information from Recipient or
incorporating Proprietary Information.
(c) Recipient shall not use the Proprietary Information, except in
connection with the transactions contemplated by the Operative Documents or the
▇▇▇▇▇▇ Agreements, without prior written approval of Lessee. Recipient shall
not mechanically copy or otherwise reproduce Proprietary Information except to
permit its use consistent with the purposes of the transactions contemplated by
the Operative Documents and the ▇▇▇▇▇▇ Agreements and each copy or reproduction
shall contain the same proprietary marking as the original.
(d) All Proprietary Information in tangible form of expression which
has been delivered or thereafter created by copy or reproduction pursuant to
this Section 15.01 shall be and remain the property of the applicable Lessee.
-------------
All such Proprietary Information and any and all copies and reproductions
thereof shall, (upon a repurchase of the Transponders by either Lessee) subject
to any retention requirements pursuant to Regulation B of the Federal Reserve
Board, within thirty (30) days of written request by such Lessee and at Lessee's
expense be either promptly returned to such Lessee or destroyed at such Lessee's
direction. In the event of such requested destruction, Recipient shall provide
to such Lessee written certification of compliance therewith within thirty (30)
days of such written request.
(e) The disclosure of Proprietary Information under this Section
-------
15.01 shall not be construed as granting either a license under any patent,
-----
patent application, or copyright, or any right of ownership in said Proprietary
Information, nor shall such disclosure constitute any representation, warranty,
assurance, guarantee, or inducement by either Lessee with respect to
infringement of patents or other rights of others.
(f) This Section 15.01 contains the entire understanding between the
-------------
parties with respect to the safeguarding of Proprietary Information, supersedes
all prior communications and understandings with respect thereto, shall inure to
the benefit of Lessees, their Affiliates and their respective successors and
assigns, and shall be binding upon all parent, subsidiary, affiliated, and
successor organizations of Recipient and their respective directors, officers
and employees. Recipient shall be responsible for any breach of this Section
-------
15.01 by any of the foregoing and with respect to the commercial or other
-----
confidential terms of the leases, subleases or use agreements relating to the
Transponders or of
81
the Operative Documents, and with respect to confidential customer information
supplied to Recipient in connection with the Overall Transaction, by its special
counsel listed in item 4 to Schedule A to Appendix A to this Agreement, its
auditors and financial advisors (not including the Independent Appraiser) unless
it shall obtain a written agreement from such Person to be bound by the terms of
this Section 15.01, in which case Recipient shall not be liable for any breach
-------------
by such Person of the terms thereof. By way of illustration only and not by way
of limitation, the provisions of this Section 15.01 shall inure to the benefit
-------------
of HAC, GMHE, and General Motors Corporation.
(g) Recipient shall be responsible only for actual damages, if any,
proved by Lessees as a result of a breach of this Section 15.01 and shall not be
responsible for any consequential or incidental damages or for Lessees'
attorneys' fees incurred in connection with a suit or breach or enforcement of
this 15.01.
Section 15.02. Publicity.
---------
(a) No party to the Operative Documents or ▇▇▇▇▇▇ Agreements shall
issue or release or permit to be issued or released for external publication any
article or advertising or publicity matter relating to the transaction
contemplated hereby and mentioning or implying the name of any other party to
the Operative Documents or the ▇▇▇▇▇▇ Agreements unless prior written consent
shall have been given by such party.
(b) Each of Lessees, Owner Trustee, Indenture Trustee, and Owner
Participant hereby agree to keep in strict confidence and not disclose to any
person or entity not bound by this Agreement the contents of the Operative
Documents and the ▇▇▇▇▇▇ Agreements and the identity of the parties thereto;
provided, however, that such Persons shall not be liable for disclosure or use
-------- -------
of any such information (i) if it is in or enters the public domain, other than
by breach of this Section 15.02(b), (ii) to the extent described in the Offering
---------------
Memorandum for potential holders of the Notes or the materials distributed by
Argent Group Ltd. in connection with the selection of Owner Participant (and the
Other Owner Participant for the Other Transponders) and (iii) to the parties to
the Other Overall Transaction and their financial and legal representatives in
connection with the consummation of the Other Overall Transaction; provided,
--------
further, that such information may be disclosed at any time (A) to a bona fide
-------
present or prospective user,
82
purchaser, lessee or transferee or other party contracting with Lessees or their
Affiliates, (B) in the circumstances contemplated by the applicable provisions
of the Operative Documents or the ▇▇▇▇▇▇ Agreements (including, without
limitation, in connection with the offering, issuance, sale or transfer of the
Notes) or to its Affiliates, employees, independent auditors and counsel, to the
extent necessary for any of the foregoing to carry out their functions in
connection with the transactions contemplated by the Operative Document or the
▇▇▇▇▇▇ Agreements, subject to the further provisions of this Section 15.02(b),
---------------
(C) to the extent reasonably deemed by such Person to be appropriate in order to
protect its rights under any Operative Document or ▇▇▇▇▇▇ Agreement, (D) as part
of such Person's normal reporting or review procedure to its parent company, its
officers or its attorneys and to auditors and regulators of any such Person as
required thereby, (E) to the extent necessary to obtain appropriate insurance,
to such Person's insurance agent, or (F) to the extent required by law or by
order of a government agency, legislative body, or court of competent
jurisdiction or regulatory examiner or pursuant to subpoena or other legal
process or in connection with any legal proceeding relating to the transaction
contemplated by the Operative Documents or the ▇▇▇▇▇▇ Agreements or hereby. If
any Person is required to disclose information pursuant to clause (F) of this
paragraph, other than reports or other disclosures required to be made to the
FCC, such Person shall promptly notify the other parties hereto of such
disclosure requirement. This Section 15.02(b) shall inure to the benefit of and
----------------
be binding upon the parties hereto, their respective successors and assigns.
Each party shall be responsible for any breach of this Section 15.02(b) by its
----------------
Affiliates, officers, directors, employees, agents, counsel, accountants and
other representatives to whom it provided such information; provided that if
--------
such Person obtains a written confidentiality agreement substantially to the
effect of this Section 15.02(b), such Person shall not be liable for any such
----------------
breach. A breach of this provision shall not constitute a Default, Lease
Default or Lease Event of Default or Indenture Default or Indenture Event of
Default; Lessees, Owner Trustee, Indenture Trustee and Owner Participant, as the
case may be, shall be responsible only for liquidated damages of One Thousand
Dollars ($1,000) as a result of a breach of this Section 15.02(b) and shall not
----------------
be responsible for any consequential or incidental or other damages or
attorneys' fees incurred in connection with a suit or breach or enforcement of
this Section 15.02(b).
----------------
83
Section 15.03. Notices. Unless otherwise specifically provided
-------
herein, all notices, consents, directions, approvals, instructions, requests and
other communications required or permitted by the terms hereof shall be in
writing, and any such notice shall become effective five Business Days after
deposit in the mails, certified or registered, with appropriate postage prepaid
for first class mail or by overnight courier or, if delivered by hand or in the
form of a telecopy, telex, telegram, cable or other electronic means of
communication which produces a written copy shall be effective when received,
and, if mailed, shall be addressed (a) if to Lessees to their respective
addresses as set forth in Schedule I, (b) if to Owner Participant, Owner
Trustee, Indenture Trustee or Initial Note Purchaser, to its respective address
as set forth in Schedule II, (c) if to any subsequent Owner Participant or
holder of any Note, addressed to such Person at such address as such Person
shall have furnished by notice to the parties hereto or (d) in the case of any
other addressee, to such other address as any such addressee may designate by
notice given to the parties hereto.
Section 15.04. Counterparts. This Agreement may be executed by the
------------
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 15.05. Amendments. The terms of this Agreement shall not be
----------
altered, modified amended, supplemented or terminated in any manner whatsoever
except by written instrument signed by the party against which such alteration,
modification, amendment, supplement or termination is sought. No Operative
Document to which a Lessee is not a party, other than the Trust Agreement, may
be terminated, amended, supplemented, waived or modified in a manner that shall
increase the obligations or liabilities, or decrease the rights, of any Lessee,
unless consented to in writing by Lessees. No amendment, termination,
supplement, waiver or modification of the Trust Agreement, not consented to in
writing by Lessees, shall have the effect of increasing the obligations or
liabilities or decreasing the rights of any Lessee under any Operative Document
or ▇▇▇▇▇▇ Agreement. Each of the parties hereto will furnish or cause to be
furnished to each Lessee, promptly after the execution and delivery thereof, an
executed copy or a photocopy of an executed copy of each
84
instrument (whether or not the consent of Lessees shall be required in
connection therewith) that purports to terminate, amend, supplement, waive or
modify any Operative Document to which a Lessee is not a party.
Section 15.06. Parties in Interest. The terms of this Agreement
-------------------
shall be binding upon, and inure to the benefit of, the parties hereto and
their respective successors and permitted assigns.
Section 15.07. Governing Law. This Agreement, including Annex A
-------------
hereto, has been delivered in, and shall in all respects be governed by, and
construed in accordance with, the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without giving
effect to the conflicts of laws provisions thereof.
Section 15.08. Method of Payment. All amounts required to be paid by
-----------------
any party to any other party hereunder or under any of the other Operative
Documents shall be paid as provided herein and in immediately available funds in
legal tender of the United States of America.
Section 15.09. Severability. Any provision of this Agreement which
------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or any
provision in any other Operative Document, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The provisions of this
Agreement shall remain valid and enforceable notwithstanding the invalidity,
unenforceability, impossibility or illegality of performance of the Lease or any
other Operative Document.
Section 15.10. [Intentionally Omitted]
Section 15.11. Miscellaneous. Unless otherwise specifically provided
-------------
herein, (a) any obligation of either Lessee or both Lessees hereunder, whether
of payment or performance, shall be joint and several obligations of both
Lessees, (b) any notice or documentation or information to be given to or by
Lessees shall be deemed to have been given to or by each Lessee if given to or
by STLC, and (c) whenever payment or performance by Lessees is required
hereunder, Lessees shall determine which of them shall make
85
such payment or so perform, and payment or performance by either of them shall
constitute payment or performance by each of them and shall be binding upon the
other.
Section 15.12. Complete Agreement. This Agreement and the other
------------------
Operative Documents and the ▇▇▇▇▇▇ Agreements constitute the complete agreement
of the parties with respect to the matters contemplated hereby and thereby.
Section 15.13. Limitation of Liability of Trust Company. It is
----------------------------------------
expressly understood and agreed by and among the parties hereto that except as
otherwise expressly provided herein, (i) this Participation Agreement is
executed and delivered by Trust Company not in its individual capacity but
solely as Owner Trustee in the exercise of the power and authority conferred and
vested in it as such owner Trustee, (ii) each of the representations,
undertaking and agreements made herein by Owner Trustee are not personal
representations, undertakings and agreements of the Trust Company, but are
binding only upon the Lessor's Estate and Owner Trustee, as trustee, (iii)
actions to be taken by Owner Trustee pursuant to its obligations hereunder may,
in certain instances, be taken by Owner Trustee only upon specific authority of
Owner Participant, and (iv) except as expressly set forth herein or in the other
Operative Documents or the ▇▇▇▇▇▇ Agreements, nothing herein contained shall be
construed as creating any liability of Trust Company, or any incorporator or any
past, present or future subscriber to the capital stock of, or stockholder,
officer or director of, Trust Company, all such liability, if any, being
expressly waived by the other parties hereto, and by any Person claiming by,
through or under them.
Section 15.14. Remedies. Upon a breach by any party of its
--------
obligations under any Operative Document, any other party may in its sole
discretion proceed by appropriate court action, either at law or in equity, to
enforce performance by the breaching party of any covenants of such party in any
Operative Document or recover damages for the breach thereof and may exercise
every right, power or remedy given specifically hereunder or in any other
Operative Document or now or hereafter existing at law, in equity or by statute.
Each and every right, power and remedy whether specifically given herein or
under any other Operative Document or otherwise existing and every such right,
power or remedy may be exercised from time to time and as often and in such
order as may be deemed expedient by the enforcing party. The exercise of any
right, power or remedy shall
86
not be construed to be a waiver of any other right, power or remedy. No delay
or omission by any party in the exercise of any right, power or remedy or in the
pursuant of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default or to be an acquiescence therein. No
express or implied waiver by any party of any default shall in any way be, or be
construed to be, a waiver of any future or subsequent default.
Section 15.15. Survival of Agreement. The representations,
---------------------
warranties, indemnities and agreements of the parties provided for in this
Agreement, and the parties' obligations under any and all thereof, shall survive
the participation by Owner Participant pursuant to its Commitments and the
purchase of the Notes by Initial Note Purchaser with its Debts Commitments,
delivery of the Transponders and the expiration or other termination of any of
the Operative Documents and shall be and continue in effect notwithstanding any
investigation made by any Owner Participant, Owner Trustee, Initial Note
Purchaser or Indenture Trustee.
Section 15.16. Intention of the Parties. It is the intention of the
------------------------
parties hereto that for United States federal, state and local income tax
purposes the Lessor will be the owner and lessor of the Transponders to be
delivered under the Lease and Lessees will be the lessees thereof.
87
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers on the date first above
written.
SATELLITE TRANSPONDER LEASING
CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇ ▇▇▇▇▇▇ ELECTRONICS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Treasurer
SECURITY PACIFIC EQUIPMENT
LEASING, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
WILMINGTON TRUST COMPANY
(not in its individual capacity,
except as otherwise expressly set
forth herein, but solely in its
capacity as Owner Trustee)
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Cody
Title: Assistant Secretary
/s/ ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
----------------------------------------
▇▇▇▇▇▇▇, SACHS & CO.