Exhibit 10.6
***Confidential treatment has been requested for portions of this contract.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as [*****]. A complete version of this
contract has been filed separately with the Securities and Exchange Commission.
SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT
FOR IN-ORBIT DELIVERY
By and Between
XM SATELLITE RADIO INC.
and
XXXXXX SPACE AND COMMUNI
CATIONS
INTERNATIONAL, INC.
July 21, 1999
SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT
FOR IN-ORBIT DELIVERY
By and Between
XM SATELLITE RADIO INC.
and
XXXXXX SPACE AND COMMUNICATIONS INTERNATIONAL, INC.
PROPRIETARY NOTICE
------------------
The attached Contract and the information contained therein are
confidential and proprietary to XM Satellite Radio Inc. and Xxxxxx Space and
Communications International, Inc., and shall not be published or disclosed to
any third party without the express written consent of a duly
authorized
representative of XM Satellite Radio Inc. and Xxxxxx Space and Communications
International, Inc.
TABLE OF CONTENTS
SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY
TERMS AND CONDITIONS
EXHIBIT A - SPACECRAFT PERFORMANCE SPECIFICATIONS
EXHIBIT B - STATEMENT OF WORK (FLOW)
EXHIBIT C - PRODUCT ASSURANCE PLAN
EXHIBIT D - TEST PLAN REQUIREMENTS [ON GROUND AND IN-ORBIT]
EXHIBIT E - RADIATION ENVIRONMENT SPECIFICATIONS
EXHIBIT F - LONG-LEAD ACTIVITIES AND ITEMS
EXHIBIT G - PAYMENT PLAN AND TERMINATION LIABILITY AMOUNTS
EXHIBIT G-1 -- PAYMENT PLAN FOR INTEREST ON IN-ORBIT
INCENTIVE AMOUNTS
EXHIBIT G-2 -- GROUND SPARE SATELLITE PAYMENT PLAN AND
TERMINATION LIABILITY AMOUNTS
EXHIBIT G-3 -- 4TH AND 5TH OPTIONAL SATELLITES PAYMENT
PLAN AND TERMINATION LIABILITY AMOUNTS
SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY
By and Between
XM SATELLITE RADIO INC.
And
XXXXXX SPACE AND COMMUNICATIONS INTERNATIONAL, INC.
TERMS AND CONDITIONS
ATTACHMENTS, ANNEXES AND SCHEDULES
ATTACHMENTS AND ANNEXES
-----------------------
Attachment A Form of Request for Payment
Annex I to Attachment A Form of Contractor Certificate
Schedule I to Annex I to Attachment A List of Exceptions
Schedule II to Annex I to Attachment A List of Disputes
Attachment B Key Personnel
SCHEDULES
---------
Schedule 19.3 Capitalization and Subsidiaries
Schedule 19.4 Litigation
Schedule 19.5 Title to Properties and Assets
Schedule 19.6 Financial Statements
Schedule 1
9.7 Certain Actions
Schedule 19.8 Disclosed Liabilities
****** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
TABLE OF CONTENTS
TERMS AND CONDITIONS
1. DEFINITIONS AND CONSTRUCTION.................................................................... 3
1.1 Certain Definitions..................................................................... 3
1.2 Other Terms............................................................................. 14
1.3 Integra
tion and Construction............................................................ 14
1.4 Headings; Number and Gender............................................................. 15
2. SCOPE OF WORK................................................................................... 16
2.1 General................................................................................. 16
2.2 Long-Lead Activities and Items.......................................................... 16
3. EFFECTIVE DATE OF CONTRACT (EDC); [*****]....................................................... 17
3.1 Effective Date of Contract (EDC)........................................................ 17
3.2 Contractor Work Commitment.............................................................. 17
3.3 [*****]; Expiration Thereof; Remedies................................................... 20
4. CONTRACT PRICE.........................................................
......................... 22
4.1 Contract Price.......................................................................... 22
4.2 Changes in Contract Price............................................................... 23
4.3 Taxes and Duties........................................................................ 23
5. PAYMENT......................................................................................... 24
5.1 Requests for Payment and Invoices....................................................... 24
5.2 Payment................................................................................. 25
5.3 Disputed Amounts........................................................................ 26
5.4 Set Off................................................................................. 28
5.5 Late Payment............................................................................ 28
5.6 Payments Cur
rent at Launch.............................................................. 28
5.7 Security Interest....................................................................... 28
6. ACCESS TO WORK.................................................................................. 30
6.1 Facilities.............................................................................. 30
6.2 Office Space............................................................................ 30
6.3 Security................................................................................ 30
6.4 Data and Documentation.................................................................. 31
6.5 Electronic Access....................................................................... 31
6.6 Meetings and Reviews.................................................................... 32
6.7 Laws................................................................
.................... 32
6.8 No Relief............................................................................... 32
6.9 Major Subcontracts...................................................................... 33
6.10 Consultant Access....................................................................... 33
7. DELIVERY AND DELIVERY INCENTIVES................................................................ 34
8. INSPECTION AND FINAL ACCEPTANCE................................................................. 37
8.1 Preliminary Inspections................................................................. 37
8.2 Shipment Readiness Review............................................................... 37
i
8.3 Flight Readiness Review................................................................. 39
8.4 Launch Readiness Review................................................................. 40
8.5 In-Orbit Testing and Final Acceptance of Satellites..................................... 40
8.6 Final Acceptance of Ground Spare Satellite.............................................. 41
8.7 Satellite Control Center (SCC) Equipment and Software................................... 41
8.8 Dynamic Spacecraft Simulator and Communications Payload Simulator....................... 42
8.
9 Data and Documentation.................................................................. 42
8.10 Launch and Early Operations (LEOP)...................................................... 43
8.11 Operations Support Services (OSS)....................................................... 43
8.12 Training................................................................................ 43
9. TITLE AND RISK OF LOSS.......................................................................... 45
9.1 Transfer of Title....................................................................... 45
9.2 Transfer of Risk of Loss................................................................ 45
10. LIQUIDATED DAMAGES FOR LATE DELIVERY............................................................ 46
10.1 Liquidated Damages...................................................................... 46
10.2 Remedy..............................................
.................................... 47
10.3 Termination for Unexcused Delay......................................................... 47
11. EXCUSABLE DELAY................................................................................. 49
11.1 Excusable Delay Defined................................................................. 49
11.2 Equitable Adjustments................................................................... 49
11.3 Maximum Excusable Delay; Termination.................................................... 50
12. IN-ORBIT PERFORMANCE INCENTIVE PAYMENTS......................................................... 51
12.1 Total Amount At Risk.................................................................... 51
12.2 In-Orbit Performance Incentives......................................................... 51
12.3 Calculation and Earning of Incentive Amounts............................................ 51
12.4 D
isputed Performance.................................................................... 53
12.5 Roll-Over of Incentive Amounts.......................................................... 53
12.6 Payment and Interest.................................................................... 54
12.7 Interest on Roll-Over Incentive Amounts................................................. 55
12.8 Security for Performance Incentive Payments............................................. 56
12.9 Exclusive Remedy........................................................................ 57
13. CORRECTIVE MEASURES IN UNLAUNCHED SATELLITES AND OTHER DELIVERABLE ITEMS........................ 58
13.1 Notice of Defects....................................................................... 58
13.2 Duty to Correct......................................................................... 58
14. CHANGES IN SCOPE OF WORK.........................................
............................... 60
14.1 Changes Requested by Customer........................................................... 60
14.2 Changes Requested by Contractor......................................................... 60
14.3 Pricing of Changes...................................................................... 61
14.4 Storage................................................................................. 61
15. PERMITS AND LICENSES; COMPLIANCE WITH LAWS...................................................... 64
15.1 United States Permits, Licenses, and Laws............................................... 64
15.2 Non-United States Permits, Licenses, and Laws........................................... 64
15.3 Review of Applications.................................................................. 64
15.4 Contractor Violation of Law............................................................. 65
16. SUBCONTRACTS..
.................................................................................. 66
16.1 Major Subcontracts...................................................................... 66
16.2 Selection or Replacement of Major Subcontractors........................................ 66
ii
16.3 No Privity of Contract.................................................................. 66
16.4 Subcontractor Relations................................................................. 66
17. PERSONNEL AND KEY PERSONNEL..................................................................... 68
17.1 Personnel Qualifications................................................................ 68
17.2 Key Personnel Positions................................................................. 68
17.3 Assignment of Key Personnel............................................................. 68
18. CONT
RACTOR'S REPRESENTATIONS, COVENANTS, AND WARRANTIES......................................... 70
18.1 Organization; Good Standing and Qualification........................................... 70
18.2 Authorization........................................................................... 70
18.3 Warranties for Deliverable Items........................................................ 70
19. CUSTOMER'S REPRESENTATIONS, WARRANTIES AND COVENANTS............................................ 74
19.1 Organization; Good Standing and Qualification........................................... 74
19.2 Authorization........................................................................... 74
19.3 Capitalization and Subsidiaries......................................................... 74
19.4 Litigation.............................................................................. 74
19.5 Title to Properties and Assets......................
.................................... 75
19.6 Financial Statements.................................................................... 75
19.7 Certain Actions......................................................................... 75
19.8 Undisclosed Liabilities................................................................. 75
19.9 Compliance with Other Instruments....................................................... 76
19.10 Customer's Financial Strength........................................................... 76
19.11 Cross-Defaults.......................................................................... 76
19.12 Code.................................................................................... 76
19.13 Intellectual Property................................................................... 77
19.14 Other Contracts......................................................................... 77
19.15 N
on-Misleading Statements............................................................... 77
19.16 Control of Customer..................................................................... 77
19.17 Customer Financial Covenant............................................................. 77
20. INTELLECTUAL PROPERTY RIGHTS.................................................................... 78
20.1 Ownership of IP and IP Rights........................................................... 78
20.2 License Rights.......................................................................... 78
20.3 Joint Program Inventions................................................................ 79
20.4 Survival of Intellectual Property Rights................................................ 80
21. INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION.............................................. 81
21.1 Contractor Intellectual Property Indemnification.........
............................... 81
21.2 Customer Intellectual Property Indemnification.......................................... 81
21.3 Total Liability......................................................................... 82
22. CONFIDENTIAL INFORMATION........................................................................ 83
22.1 Confidentiality Obligations............................................................. 83
22.2 Exceptions.............................................................................. 83
22.3 No License.............................................................................. 84
22.4 Return of Confidential Information...................................................... 84
22.5 Inconsistent Legends.................................................................... 84
22.6 Survival of Confidentiality Obligations................................................. 84
23. NON-COMPETITIO
N OBLIGATION...................................................................... 85
24. INDEMNIFICATION................................................................................. 86
24.1 Contractor's Indemnification............................................................ 86
24.2 Customer's Indemnification.............................................................. 86
iii
24.3 Cross-Indemnification For Inter-Party Waiver of Liability............................... 87
24.4 Indemnification Procedures.............................................................. 87
24.5 Waiver of Subrogation................................................................... 88
24.6 Survival of Indemnifications............................................................ 88
25. INSURANCE....................................................................................... 89
25.1 General Obligations..................................................................... 89
25.2
Launch Insurance........................................................................ 89
25.3 Preparation of Claims................................................................... 90
26. LIMITATIONS OF LIABILITY........................................................................ 91
27. DISPUTE RESOLUTION.............................................................................. 93
27.1 Informal Dispute Resolution............................................................. 93
27.2 Arbitration............................................................................. 93
27.3 Litigation.............................................................................. 95
28. LAUNCH SERVICES................................................................................. 97
29. CUSTOMER'S RESPONSIBILITIES..................................................................... 102
30. OPTIONS......................................................
................................... 103
30.1 Options Granted......................................................................... 103
30.2 Option to Delay Frequency Specification Beyond Two (2) Months........................... 103
30.3 Ground Spare Satellite.................................................................. 103
30.4 Launch Campaign and LEOP Services for Ground Spare Satellite and/or 4th and 5th
Optional Satellites................................................................... 106
30.5 4th and 5th Optional Satellites......................................................... 107
30.6 [RESERVED].............................................................................. 108
30.7 Reflectors for the Ground Spare Satellite............................................... 108
30.8 Optional Launch Vehicles................................................................ 108
30.9 Contract Adjus
tments.................................................................... 109
31. FAILURE TO MAKE ADEQUATE PROGRESS............................................................... 109
32. TERMINATION..................................................................................... 110
32.1 Termination for Customer's Convenience.................................................. 110
32.2 Termination For Contractor's Default.................................................... 112
32.3 Termination for Customer's Default...................................................... 114
32.4 Termination for Excusable Delay......................................................... 117
32.5 Time of the Essence..................................................................... 118
33. INTER-PARTY WAIVER OF LIABILITY................................................................. 119
34. GENERAL.......................................................................
.................. 120
34.1 Assignment.............................................................................. 120
34.2 Entire Agreement........................................................................ 120
34.3 Amendments.............................................................................. 121
34.4 Waiver of Breach of Contract............................................................ 121
34.5 Severability............................................................................ 121
34.6 Applicable Law.......................................................................... 121
34.7 Notices................................................................................. 121
34.8 Parties Not Agents...................................................................... 122
34.9 Release of Information.................................................................. 122
34.10 Calculation of Inte
rest................................................................. 123
iv
34.11 Survival................................................................................ 123
34.12 No Third-Party Beneficiaries............................................................ 124
34.13 Consents and Approvals.................................................................. 124
34.14 Lender Requirements..................................................................... 124
34.15 Covenant of Good Faith.................................................................. 125
34.16 Counterparts............................................................................ 125
35. OTHER
BUSINESS.................................................................................. 126
v
SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY
THIS SECOND AMENDED AND RESTATED SATELLITE PURCHASE CONTRACT (this
"Contract") is made and entered into as of the 21st day of July, 1999, by and
between XM SATELLITE RADIO INC., a Delaware corporation with its principal
offices located at 0000 00xx Xxxxxx, Xxxxx 00, X.X., Xxxxxxxxxx, X.X. 00000
(formerly named American Mobile Radio Corporation and hereinafter referred to as
"Customer"), and XXXXXX SPACE AND COMMUNICATIONS INTERNATIONAL, INC., a Delaware
corporation with its principal offices located at 0000 X. Xxxxxxxx Xxx, Xx
Xxxxxxx, Xxxxxxxxxx 00000, X.X.X. (hereinafter "Contractor"). As used in this
Contract, "Party" means eit
her Customer or Contractor, as appropriate, and
"Parties" means Customer and Contractor.
WHEREAS, Customer is implementing a Digital Audio Radio Satellite ("DARS")
system designed to provide digital audio radio services to the continental
United States; AND
WHEREAS, Customer anticipates providing the business referred to above
through two (2) geostationary satellites; AND
WHEREAS, Contractor is a space technology company that designs,
manufactures, and integrates a range of space products, including satellites and
facilities for managing and controlling satellites; AND
WHEREAS, the Parties have reached agreement on the terms and conditions of
procurement by Customer from Contractor of two Xxxxxx 702 Satellites, to be
delivered in-orbit, and related items, services and activities, including
satellite control center equipment and software, launch services, and long-lead
items for a Ground Spare Satellite, and options to purchase other additional
equipment and services, including add
itional satellite(s), as set forth and
further defined in this Contract; AND
WHEREAS, Customer and Contractor entered into a Satellite Purchase Contract
for In-Orbit Delivery dated March 20, 1998 (the "Original Satellite Purchase
Contract"), as amended by Amendment No. 1 dated May 6, 1998 and Amendment No. 2
dated June 5, 1998, and as amended and restated by the Amended and Restated
Satellite Purchase Contract dated June 17, 1999 (the "First Amended and Restated
Satellite Purchase Contract"; AND
WHEREAS, Customer officially changed its name from American Mobile Radio
Corporation to XM Satellite Radio Inc. on October 7, 1998, its office location,
points of contact and authorized representatives; AND
WHEREAS, the Parties have reached agreement on additional changes to the
First Amended and Restated Satellite Purchase Contract; AND
WHEREAS, this document amends and restates the First Amended and Restated
Satellite Purchase Contract and shall be the sole agreement between the Parties
as to the Work to be performed hereunder by Contractor.
1
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and intending to be legally bound hereby, the Parties agree as
follows:
2
1. DEFINITIONS AND CONSTRUCTION
1.1 Certain Definitions.
In this Contract, the following terms shall have the meaning stated
hereunder:
(a) "Affiliate" means, with respect to an entity, any other entity
Controlling or Controlled by or under common Control with such entity.
(b) "Amendment to this Contract" or "Amendment" means a written agreement
modifying the terms of this Contract in accordance with Article 34.3
(Amendments).
(c) "Approval" means written approval. This term is as defined, whether or
not capitalized in this Contract.
(d) "ARP" or "After Receipt of Payment" means July 7, 1999, the date upon
which Contractor received Program Calendar Payment No. 1 in the amount of Sixty-
Eight Million Dollars ($68,000,0
00).
(e) "Associates" means, with respect to an entity, its directors, officers,
employees agents, consultants, and assigns.
(f) "Available for Shipment" means that a Spacecraft has successfully
passed all in-plant acceptance tests, has successfully undergone a Shipment
Readiness Review and has been declared ready to be shipped to the Designated
Launch Site.
(g) "Background Intellectual Property" means Intellectual Property first
made, developed, or created prior to the negotiation or performance of this
Contract and necessary to the use of any Deliverable Item.
(h) "Back-Up Satellite Control Center" means Customer's back-up satellite
control center, in addition to Customer's Primary Satellite Control Center,
located in the Washington, D.C. area.
(i) "Business Day" means any day other than the following: a Saturday,
Sunday, and any other day on which national banks are authorized to be closed in
New York City, New York.
(j) "Calendar Day" means any day.
(k) "Cal
endar Payment" means any of those payments listed as specific
calendar payments in Exhibit G (Payment Plan and Termination Liability Amounts).
(l) "Communications Payload Simulator" means the equipment, software, and
interfaces required to simulate a single Time Division Multiplexed (TDM) chain,
pursuant to the requirements of Exhibit B (SOW).
3
****** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
(m) "Conduct Spacecraft Critical Design Review (SCDR)" means that ten (10)
Business Days prior to the date Contractor is ready to perform the SCDR,
Contractor shall provide to Customer (i) written notice that Contractor has
completed all necessary activities in order to proceed to SCDR, and (ii) the
Design Review Package, as further described in Exhibit B (SOW). Customer shall
then have five (5) Business Days upon receipt of such notice and Design Review
Package to review same and provide specific comments to Contractor. At the
Spacecraft Critica
l Design Review meeting, Contractor shall (i) identify,
compile, and maintain a uniform program listing of all action items through
closure, including identification of new items to be developed or items to be
modified in order to meet the requirements of this Contract, (ii) establish
detailed action plans to address and carry out all action items identified,
including timetables for performance and identification of responsible
personnel, and (iii) prepare and distribute SCDR minutes and action item
assignments, all of which demonstrate that each Spacecraft shall be Available
for Shipment to the Designated Launch Site no later than [*****] (with respect
to the first Spacecraft) and [*****] (with respect to the second
Spacecraft).
(n) "Conduct Spacecraft Preliminary Design Review (SPDR)" means that ten
(10) Business Days prior to the date Contractor is ready to perform the SPDR,
Contractor shall provide to Customer (i) written notice that Contractor has
completed all necessary activities in order t
o proceed to SPDR and (ii) the
Design Review Package, as further described in Exhibit B (SOW). Customer shall
then have five (5) Business Days upon receipt of such notice and Design Review
Package, to review same and provide specific comments to Contractor. At the
Spacecraft Preliminary Design Review meeting, Contractor shall (i) identify,
compile, and maintain a uniform program listing of all action items through
closure, including identification of new items to be developed or items to be
modified in order to meet the requirements of this Contract, (ii) establish
detailed action plans to address and carry out all action items identified,
including timetables for performance and identification of responsible
personnel, and (iii) prepare and distribute SPDR minutes and action item
assignments, all of which demonstrate that each Spacecraft shall be Available
for Shipment to the Designated Launch Site at no later than [*****] (with
respect to the first Spacecraft) and [*****] (with respect to the second
Sp
acecraft).
(o) "Confidential Information" means all information, of any nature and in
any form, whether written, oral or recorded or transmitted electronically or by
tape or other similar manner, regarding the business, finances, operations,
prospects, plans, or affairs of the Furnishing Party (including its Affiliates,
Subcontractors, or Consultants), and all data, processes, materials, and
software in source code and object code form, related documentation, and other
technical data that is confidential and embodies trade secrets and other
proprietary information of the Furnishing Party, which information is designated
in writing by the Furnishing Party as confidential, provided, however, that if
disclosed orally, such information must be confirmed and designated in writing
in summary form as confidential within thirty (30) Calendar Days of the time at
which oral disclosure took place. Confidential Information shall also include
Data and Documentation.
4
****** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
(p) "Constructive Total Loss" and "Total Loss" shall have the meaning
ascribed to them in the policy for Launch Insurance.
(q) "Consultant" means a person or organization retained by Customer to
provide Customer with technical advice and related services and identified by
Customer to Contractor as such in accordance with Article 6 (Access to Work).
(r) "Contract" or "Second Amended and Restated Satellite Purchase Contract"
means the written instrument herein dated the day and year first written above,
including any Amendments made pur
suant to Article 34.3 (Amendments), embodying
the agreement between Contractor and Customer and including the Terms and
Conditions, Exhibits (and Appendices thereto), Attachments, Annexes, and
Schedules annexed hereto and made a part of this Contract.
(s) "Contract Price" means the firm fixed price set forth in Article 4.1
(Contract Price).
(t) "Control" and its derivatives mean, with respect to an entity, the
legal, beneficial, or equitable ownership, directly or indirectly of fifty
percent (50%) or more of the capital stock (or other ownership interest if not a
corporation) of such entity ordinarily having voting rights or the power to
direct the management policies of such entity, whether through the ownership of
voting stock, by contract, or otherwise.
(u) "Correction Plan" means a plan submitted by Contractor that details the
means by which Contractor shall correct a failure to make adequate progress
toward completion of any Work under this Contract in accordance with Article 31
(F
ailure to Make Adequate Progress).
(v) "Customer Coverage Area" means the United States.
(w) "Cure Period" shall have the meaning set forth in Article 3.3 ([*****];
Expiration Thereof; Remedies).
(x) "Customer Personnel" means Customer employees, Consultants or
representatives, or Customer's Consultants' employees.
(y) "Data and Documentation" means that data and documentation to be
supplied by Contractor pursuant to the requirements of Exhibit B (SOW).
(z) "Defect" means (i) with respect to any Deliverable Item, and any and
all components thereof, any material defect or nonconformance in design,
material or workmanship, or failure to perform in accordance with the
specifications and requirements set out or referred to in this Contract; (ii)
with respect to services, a failure to meet any material specification or
requirement set forth in this Contract or to conform to a high standard
consistent with industry practice; (iii) any material error, omission or
inconsistency in
Data and Documentation,
5
including specifications and drawings, set forth in or required by this
Contract; and (iv) with respect to Training, a material procedural error.
(aa) "Deliverable Item" means the items listed in Table 7.1 of Article 7
(Delivery), and other items so identified in Exhibit B (Statement of Work) or
any Amendment to this Contract.
(bb) "Deliver" or "Delivery" or "Delivered" means, with respect to a
Deliverable Item, delivery by Contractor of a Deliverable Item in accordance
with the requirements of this Contract.
(cc) "Delivery Date(s)" means, with respect to a Deliverable Item, the
delivery date set forth in Table 7.1 of Article 7 (Delivery), as such date may
be extended, as appropriate, to reflect all periods during which an Excusable
Delay
exists or any similar extension of time as may be agreed to by the Parties
in accordance with Article 34.3 (Amendments).
(dd) "Delivery Schedule" means the schedule for Delivery of the Work as set
forth in Table 7.1 of Article 7 (Delivery).
(ee) "Demand" means, in the context of Article 31 (Failure to Make Adequate
Progress), a demand made by Customer to Contractor for Contractor to provide a
Correction Plan in the event Contractor is failing to make adequate progress in
the performance of this Contract.
(ff) "Designated Launch Site" means, with respect to a Satellite, the
Launch facility provided by the Launch Agency.
(gg) "Dispute" has the meaning set forth in Article 27 (Dispute
Resolution).
(hh) "Dollars" means United States Dollars.
(ii) "Dynamic Spacecraft Simulator" has the meaning ascribed to it in
Exhibit B (SOW).
(jj) "Effective Date of Contract" or "EDC" means March 23, 1998, the date
set forth in Article 3.1 (Effective Date of Contract (EDC)).
(kk) "Excusable Delay" has the meaning set forth in Article 11 (Excusable
Delay).
(ll) "Exhibit" or "Exhibits" means any and all exhibits, and any appendices
thereto, to this Contract, which are attached hereto and incorporated herein.
****** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
(mm) "[*****] Payment" means that Milestone Payment that Customer shall pay
to Contractor on or before the final day of the [*****], plus any applicable
Cure Period, as such payment is further described in Exhibit G (Payment Plan and
Termination Liability Amounts).
(nn) "Final Acceptance" of a Deliverable Item has the meaning set forth in
Article 8 (Inspection and Final Acceptance).
(oo) "Financing Agreements" means any and all documents and agreements
evidencing and/or securing monies provided on a full or partial debt basis by
any F
inancing Entity to Customer to fund the construction, delivery, or Launch
of the Satellites or the purchase of Long-Lead Items for the Ground Spare
Satellite.
(pp) "Financing Entity" means any entity (other than Contractor, or parties
related to Contractor, or competitors of Contractor), e.g., commercial bank,
merchant bank, investment bank, commercial finance organization, corporation, or
partnership, providing money on a full or partial debt basis to Customer to fund
the construction, Delivery, or Launch of the Satellites or purchase of Long-Lead
Items for an Ground Spare Satellite.
(qq) "First Milestone Payment" means the first Milestone Payment identified
in Exhibit G (Payment Plan and Termination Liability Amounts), equaling [*****].
(rr) "Flight Readiness Review" or "FRR" shall have the meaning ascribed to
it in Article 8.3 (Flight Readiness Review).
(ss) "Foreground Intellectual Property" means Intellectual Property first
made, developed, or created in connection with this
Contract that is embodied or
reflected in this Contract, in any Amendment thereto, or in any annexed Parts,
and incorporated into or employed in the use of any Deliverable Item.
(tt) "Furnishing Party" means the Party who furnishes Confidential
Information to the other Party.
(uu) "Ground Spare Satellite" shall refer to the satellite that Customer
may elect to purchase for on-ground Delivery pursuant to Article 30 (Options).
(vv) "Handover" shall have the meaning set forth in Article 8.5 (In-Orbit
Testing and Final Acceptance of Satellites).
(ww) "Incentive Amount" means any amount required to be paid pursuant to
Article 12 (In-Orbit Performance Incentive Payments).
(xx) "Including" and its derivatives (such as "include" and "includes")
shall mean including without limitation. This term is as defined, whether or not
capitalized in this Contract.
7
(yy) "In-Orbit Testing" means the in-orbit tests and analyses Contractor
shall perform in accordance with Exhibit D (Test Plan Requirements).
(zz) "Insurers" means those entities providing Launch Insurance.
(aaa) "Intellectual Property" means all designs, methods, concepts,
layouts, software, inventions (whether or not patented or patentable),
processes, technical data and documentation, technical information and drawings,
and similar matter in which an Intellectual Property Right may subsist.
(bbb) "Intellectual Property Rights" means all common law and statutory
proprietary rights, including patent, patent application, patent registration,
copyright, trademark, service xxxx, trade secret, mask work rights, moral
rights, data rights
and similar rights existing from time to time under the
intellectual property Laws of the United States, any state or foreign
jurisdiction or international treaty regime.
(ccc) "Intentional Ignition" means, with respect to a Satellite, the
meaning attributed to the term "Launch" in the Launch Agreement between
Contractor and Sea Launch; provided, however, where a Launch Vehicle other than
Sea Launch is used, the term "Intentional Ignition" shall have the meaning
attributed to it in the applicable Launch Agreement.
(ddd) "Launch" means, with respect to a Satellite, the meaning attributed
to it in the Launch Agreement between Contractor and Sea Launch, i.e., the point
in time when an electronic signal is sent to command the opening of any first
stage propellant valves. A Launch is deemed to have occurred even if there is a
Total Failure, Total Constructive Failure or Partial Failure of the Launch
Vehicle (as such terms are defined in the Launch Agreement).
(eee) "Launch Agency" means the
entity selected by Contractor to perform
Launch Services, which entity shall be Sea Launch, provided Customer does not
exercise its option to select an alternate Launch Agency as provided in Article
28 (Launch Services) or paragraph (b) of Article 10.3 (Termination for Unexcused
Delay).
(fff) "Launch Agreement" means any Subcontract between Contractor and a
Launch Agency to perform the Launch Services for one or both of the Satellites.
(ggg) "Launch Campaign" means, with respect to a Satellite, those services
provided by Contractor in support of each Launch mission prior to Launch,
including packing and shipping the Satellite in an environmentally controlled
container to the Designated Launch Site, procuring and maintaining all-risk
ground insurance up to, but not including, Launch (as required by Article 25
(Insurance)), providing high-pressure injection of propellant into the
Satellite's fuel tanks, configuring the Satellite so as to render it Ready for
Launch, Launch Vehicle Interface Act
ivities, and assisting the Launch Agency in
assuring the Satellite is properly integrated with the Launch Vehicle, all as
further defined in Exhibit B (SOW).
(hhh) "Launch Date" means the specific day within the Launch Period or
Launch Slot on which a Launch shall occur.
8
(iii) "Launch Insurance" means, with respect to a Satellite, insurance that
covers the Satellite from the period beginning at Launch and ending no sooner
than determination of acceptability of the Satellite for insurance purposes or
determination of Constructive Total Loss or Total Loss. Such insurance shall
cover, with respect to such Satellite, all unpaid Milestone Payments, the
Incentive Amounts (except, in the case of Incentive Amounts, where Customer
elects to purchase an additional Satellite pursuant to Article 30 (Options)),
and all interest required to be paid on the foregoing.
(jjj) "Launch and Early Operations" or "LEOP" means, with respect to a
Satellite, those services provided by Contractor in support of each launch
mission after La
unch and through Final Acceptance of the Pre-Eclipse Test Report
and Post-Eclipse Test Report, such as providing telemetry, tracking and control
to direct the Satellite into its Specified Orbital Location, positioning and
stabilizing the Satellite to hold its pointing position to the Earth, conducting
in-orbit tests (including payload In-Orbit Testing) and furnishing the Pre-
Eclipse Test Report and Post-Eclipse Test Report, pursuant to the requirements
of Exhibit B (SOW) and Exhibit D (Test Plan Requirements).
(kkk) "Launch Period" means the three-month period from November 1, 2000
through February 1, 2001, with respect to the first Satellite, and the three-
month period from February 15, 2001 through May 15, 2001, with respect to the
second Satellite, during which such periods the Launch of each Satellite is
scheduled to occur.
(lll) "Launch Readiness Review" shall have the meaning ascribed to it in
Article 8.4 (Launch Readiness Review).
(mmm) "Launch Services" means the Launch of a L
aunch Vehicle and related
services provided by a Launch Agency, including furnishing the Launch Vehicles,
launch support, and equipment and facilities, for the purpose of launching the
Satellites into orbit.
(nnn) "Launch Slot" means, with respect to a Satellite, the thirty (30)
Calendar Day period within its applicable Launch Period or prior to such Launch
Period that is selected by Contractor and Customer, and mutually agreed upon by
Contractor and the Launch Agency on or before twelve (12) months prior to the
Launch Period for such Satellite, during which such thirty (30) Calendar Day
period the Launch of such Satellite is scheduled to occur.
(ooo) "Launch Vehicle" means a launch vehicle provided by the Launch Agency
to Launch either of the Satellites, which Launch Vehicle shall be a Sea Launch,
or, in the event Customer exercises its option to select an alternate Launch
Vehicle for either or both Satellites, pursuant to Article 28 (Launch Services),
or in accordance with paragraph (b) of
Article 10.3 (Termination for Unexcused
Delay), the Launch Vehicle shall be the alternate Launch Vehicle selected by
Customer.
(ppp) "Launch Vehicle Interface Activities" means, with respect to a
Satellite, those services to be provided by Contractor, prior to Launch, in
support of each Launch, including analysis support, interface drawing support,
and technical meeting support, required by the Launch Vehicle Agency, and launch
pad activity support, pursuant to the requirements of Exhibit B (SOW).
9
****** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
(qqq) "Law" or "Laws" means any laws, including rules, regulations, codes,
injunctions, judgments, orders, ordinances, decrees, rulings, and charges
thereunder, of any federal, state, local or municipal government of any country
(and all agencies thereof) having jurisdiction over any portion of the Work.
(rrr) "London Inter-Bank Offer Rate" or "LIBOR" means the rate per annum
shown, on the third (3rd) London Business Day preceding the day of commencement
of an interest calculation period, on page 3750 of the Dow Xxxxx & Company
Telerate scr
een or any successor page as the composite offered rate for London
interbank deposits in an amount approximately equal to the amount on which the
interest is to be applied for a three-month period (the "Rate Base"), as shown
under the heading "USD" as of 11:00 a.m. (London Time); provided that in the
event no such rate is shown, LIBOR shall be the rate per annum (rounded to the
nearest 1/100th of one percent) based on the rates at which U.S. dollar deposits
approximately equal in principal amount to the Rate Base and for a three-month
period are displayed on page "LIBO" of the Reuters Monitor Money Rates Service
or such other page as may replace the LIBO page on that service for the purpose
of displaying London interbank offered rates of major banks as of 11:00 a.m.
(London time) (it being understood that if at least two such rates appear on
such page, the rate will be the arithmetic mean of such displayed rates);
provided that in the event fewer than two such rates are displayed, or if no
such rate is r
elevant, LIBOR shall be the rate per annum equal to the rate
offered by Credit Suisse, New York Branch, at approximately 11:00 a.m. (London
Time) to prime banks in the London interbank market on deposits in U.S. dollars
in an amount approximately equal in principal amount to the aggregate principal
balance of the Rate Base for a three-month period.
(sss) "Long-Lead Activities" means those activities to be performed by
Contractor, a list of which is to be set forth in Exhibit F (Long-Lead
Activities and Items), in accordance with the requirements of Article 2.2 (Long-
Lead Activities and Items).
(ttt) "Long-Lead Items" means the Satellite components, materials,
hardware, equipment and other related items that Contractor shall procure in
performance of the Long-Lead Activities.
(uuu) "Losses" means all losses, liabilities, damages, royalty payments and
claims, and all related costs and expenses (including reasonable legal fees and
disbursements and costs of investigation, expert fees, lit
igation, settlement,
judgment, interest, and penalties).
(vvv) "Major Calendar Payment" means, with respect to each Satellite, the
payment of [*****] to be made by Customer to Contractor with respect to each
Launch Vehicle in accordance with paragraph (c)(1) of Article 5.1(Requests for
Payment and Invoices) herein and Exhibit G (Payment Plan and Termination
Liability Amounts).
(www) "Major Subcontract" means a Subcontract related to the performance of
this Contract and valued at Two Million Five Hundred Thousand Dollars
($2,500,000) or more.
10
****** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
(xxx) "Major Subcontractor" means a Subcontractor who is a party to a Major
Subcontract.
(yyy) "Material Adverse Effect" means any material adverse change in (i)
the legality, validity, or enforceability of this Contract or (ii) the ability
of Customer or Contractor to perform this Contract.
(zzz) "Milestone" means a portion of the definitive, measurable Work upon
completion of which a payment is to be made in accordance with Exhibit G
(Payment Plan and Termination Liability Amounts).
(aaaa) "Milestone Payment" means any of xxxx
e payments listed as specific
milestone payments in Exhibit G (Payment Plan and Termination Liability
Amounts).
(bbbb) "Mission Support Services" means, with respect to a Satellite,
twenty-four (24) hour on-call Contractor support services for each day of the
actual operational lifetime of the Satellites (including operation of the
Satellite beyond the Orbital Design Life) delivered hereunder, as such services
are more fully described in Exhibit B (SOW).
(cccc) "[*****]" means the period of [*****] Calendar Days commencing the
day after EDC.
(dddd) "Operations Support Services" or "OSS" means, with respect to a
Satellite, those support services to be provided by Contractor, as requested by
Customer, beginning upon Handover of each Satellite and ending three (3) months
after Handover, which services shall be provided concurrently with LEOP through
Final Acceptance of the Post-Eclipse Test Report.
(eeee) "Orbital Design Life" means, with respect to a Satellite, the
contracted for de
sign and performance life of fifteen (15) years for each
Satellite, commencing upon Handover.
(ffff) "Partial Loss" shall have the meaning ascribed to it in the policy
of Launch Insurance.
(gggg) "Pending" means, with respect to a legal action, lawsuit, proceeding
or investigation, an action, suit, proceeding, or investigation as to which
Customer has knowledge or received written notice.
(hhhh) "Post-Eclipse Test Report" means, with respect to a Satellite, that
so-named document that is a Deliverable Item under Exhibit B (SOW), the
requirements of which are set forth in Exhibit D (Test Plan Requirements).
(iiii) "Pre-Eclipse Test Report" means, with respect to a Satellite, that
so-named document that is a Deliverable Item under Exhibit B (SOW), the
requirements of which are set forth in Exhibit D (Test Plan Requirements).
11
(jjjj) "Primary Satellite Control Center" means Customer's satellite
control facility located in Washington, D.C.
(kkkk) "Program Invention" means any invention, discovery, or improvement
conceived of and first reduced to practice in the performance of the Work under
this Contract. Information relating to Program Inventions shall be treated as
proprietary information in accordance with the provisions of this Contract.
(llll) "Properly Operated Satellite" means a Satellite which is being
monitored and commanded by Customer in accordance with the applicable Data and
Documentation for operations (as such Data and Documentation may be amended by
the Parties) furnished by Contractor to Customer under this Contract.
(mmmm) "Quarterly Incen
tive Payment Amount" means, with respect to each
Satellite, an amount equal to Two Hundred Eight Thousand Three Hundred Thirty-
Three Dollars and Thirty-Three Cents ($208,333.33) (that is, Twelve Million Five
Hundred Thousand Dollars ($12,500,000) divided by sixty (60) (that is, 15 years
x 4 quarters per year)), as may be adjusted in accordance with the terms of this
Contract.
(nnnn) "Ready for Launch" means, with respect to a Satellite, the time of
successful completion by Contractor of the on-ground testing and delivery of
the on-ground preliminary checklist report, including successful completion of
launch site satellite testing and physical integration with the Launch Vehicle,
including Flight Readiness Review and Launch Readiness Review, in accordance
with Exhibit B (SOW) and Exhibit D (Test Plan Requirements), such that the only
activity remaining prior to Launch is the Launch countdown.
(oooo) "Receiving Party" means the Party who receives Confidential
Information from the Furnishing
Party.
(pppp) "Request for Payment" means a request for payment from Contractor in
the form of Attachment A hereto.
(qqqq) "Satellite" means each of the two (2) Xxxxxx 702 satellites to be
Delivered by Contractor to Customer pursuant to this Contract and that conforms
to all the requirements of this Contract.
(rrrr) "Satellite Control Center(s)" means, collectively, the Primary
Satellite Control Center and Back-Up Satellite Control Center, and,
individually, the Primary Satellite Control Center or Back-Up Satellite Control
Center.
(ssss) "Satisfactorily Operating Satellite" means, with respect to a
Satellite, that such Satellite meets or exceeds the performance specifications
set forth in Exhibit A (Satellite Performance Specifications).
(tttt) "Satellite Control Centers (SCC) Equipment and Software" means the
equipment and software to be Delivered to, and installed by Contractor in, the
Primary Satellite Control Center and the Back-Up Satellite Control Center in
accordance
with the requirements of Exhibit B (SOW).
12
(uuuu) "Shipment Readiness Review" shall have the meaning ascribed to it in
Article 8.2 (Shipment Readiness Review).
(vvvv) "Similar Satellite System" means any digital audio broadcasting
satellite system in S-band, using an access mode to the satellite and a digital
format substantially as described in Exhibit A (Spacecraft Performance
Specifications).
(wwww) "Similar Satellite Service" means digital audio broadcasting
satellite service provided by a Similar Satellite System.
(xxxx) "Spacecraft" means Satellite.
(yyyy) "Spacecraft Performance Specifications" means the technical
specifications set forth in Exhibit A (Spacecraft Performance Specifications),
as may be amended pursuant to this Contract.
(zzzz) "Specified Orb
ital Location" means, with respect to each Satellite,
the geostationary synchronous orbital location specified in Exhibit A
(Spacecraft Performance Specifications).
(aaaaa) "Statement of Work" or "SOW" means the Work described in Exhibit B
to this Contract and to be provided by Contractor, as may be amended pursuant to
this Contract.
(bbbbb) "Subcontract" means a contract awarded by Contractor to a
Subcontractor or a contract awarded by a Subcontractor.
(ccccc) "Subcontractor" means a person, firm, corporation, or business
entity that has been awarded a Subcontract.
(ddddd) "Termination Liability Amounts" means the amounts listed as
Termination Liability Amounts in Exhibit G (Payment Plan and Termination
Liability Amounts) of this Contract, as may be amended pursuant to this
Contract.
(eeeee) "Test Plan" means the test plans set forth in Exhibit D (Test Plan
Requirements), as may be amended pursuant to this Contract.
(fffff) "Test Requirements" means the test plans and
test procedures set
forth in Exhibit D (Test Plan Requirements), as may be amended pursuant to this
Contract.
(ggggg) "Total Amount at Risk" means a total firm-fixed sum of Twenty-Five
Million Dollars ($25,000,0000) eligible to be earned by Contractor as
performance incentive payments ($12,500,000 per Satellite) pursuant to Article
12 (In-Orbit Performance Incentive Payments), as such Total Amount at Risk may
be adjusted in accordance with Article 12.1 (Total Amount at Risk).
(hhhhh) "Training" means the training to be provided under this Contract,
including training for operation of the Satellites in geostationary orbit, as
more fully described in Exhibit B (SOW).
13
(iiiii) "Work" means all design, development, construction, manufacturing,
labor, services, and acts, including tests to be performed, and any and all
Deliverable Items, including the Satellites, Satellite Control Center Equipment
and Software, Dynamic Spacecraft Simulator, Communications Payload Simulator,
Long-Lead Activities and Items, Data and Documentation, Launch Campaign, Launch
Services, LEOP services, OSS, MSS, Training, and equipment, materials, articles,
matters, services, and things to be furnished and rights to be transferred under
this Contract, or any Subcontract entered into by Contractor, all as further
described in Exhibit B (SOW).
1.2 Other Terms.
Other terms in this Contract are defined in the context in which they are
use
d and shall have the meanings there indicated.
1.3 Integration and Construction.
The documents listed below in this Article 1.3 (Integration and
Construction), including any Exhibits, Attachments, Schedules, and Annexes, as
amended from time to time in accordance with Article 34.3 (Amendments),
constitute this Contract and shall be deemed to constitute one fully integrated
agreement between the Parties. In the event of any conflict or inconsistency
among the provisions of the various documents of this Contract, such conflict or
inconsistency shall be resolved by giving a descending level of precedence to
the documents in the order set forth below:
(a) Terms and Conditions
(b) Exhibit G - Payment Plan and Termination Liability Amounts
(c) Exhibit G-1 - Payment Plan for Interest on In-Orbit Incentive Amounts
(d) Exhibit G-2 - Ground Spare Satellite Payment Plan and Termination
Liability Amounts
(e) Exhibit G-3 - 4th and 5th Optional Satellites Payment Plan and
Te
rmination Liability Amounts
(f) Exhibit B - Statement of Work (SOW)
(g) Exhibit A - Spacecraft Performance Specifications
(h) Exhibit D - Test Plan Requirements
(i) Exhibit C - Product Assurance Plan
(j) Exhibit E - Radiation Environment
(k) Exhibit F - Long-Lead Activities and Items
14
1.4 Headings; Number and Gender.
The Article headings are for convenience of reference only and shall not be
considered in interpreting the text of this Contract. Words in the singular
include the plural and vice versa, and words imputing the masculine gender
include the feminine and neuter genders where the context so requires.
15
2. SCOPE OF WORK
2.1 General.
(a) In accordance with the requirements of this Contract, Contractor shall
sell and Customer shall purchase the Work.
(b) Contractor shall furnish and perform the Work in accordance with the
provisions of this Contract and in the manner specified in the following
documents:
(1) Terms and Conditions
(2) Exhibit A - Spacecraft Performance Specifications
(3) Exhibit B - Statement of Work (SOW)
(4) Exhibit C - Product Assurance Plan
(5) Exhibit D - Test Plan Requirements (On-Ground and In-Orbit)
(6) Exhibit E - Radiation Enviro
nment
(7) Exhibit F - Long-Lead Activities and Items
(8) Exhibit G - Payment Plan and Termination Liability Amounts
(9) Exhibit G-1 - Payment Plan for Interest on In-Orbit Incentive Amounts
(10) Exhibit G-2 - Ground Spare Satellite Payment Plan and Termination
Liability Amounts
(11) Exhibit G-3 - 3rd and 4th Optional Satellites Payment Plan and Termination
Liability Amounts
(c) Exhibits X, X, X, X, X, X, X, X-0, X-0, and G-3 are attached to and
incorporated into these Terms and Conditions.
2.2 Long-Lead Activities and Items.
The preliminary list of Long-Lead Items is attached to this Contract as
Exhibit F (Long-Lead Activities and Items). The final list shall be provided by
Contractor on or before September 31, 1999.
16
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separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
3. EFFECTIVE DATE OF CONTRACT (EDC; [*****])
3.1 Effective Date of Contract (EDC).
This Contract shall be effective as of, and the effective date of this
Contract (the "Effective Date of Contract" or "EDC") shall be, March 23, 1998.
3.2 Contractor Work Commitment.
Beginning upon EDC and continuing for the term of the [*****], Contractor
shall commence the Work in full compliance with the requirements of this
Contract and perform sufficient Work to maintain the Delivery Dates for the
Satellites. Such Work during the [*****] shall be
comprised of the completion or
provision, as the context indicates, of the following work effort as may be more
fully described in Exhibit B (SOW):
(a) program kickoff meeting;
(b) System Requirements Status Review and release of Satellite Payload and
Bus specifications;
(c) release of performance specifications for: communications receivers, IF
processors, output combiner, TWTA, and frequency generator;
(d) subcontract, or select vendor for, TWTA electronic power converters;
(e) mutually agree upon EIRP requirements and finalize Exhibit A
(Spacecraft Performance Specifications) (that is, close "TBRs," "TBSs," and
"TBDs");
(f) detailed payload block diagram;
(g) payload panel layout;
(h) detailed mass budget;
(i) detailed power budget;
(j) top level propellant budgets for all potential alternate Launch
Vehicles;
(k) preliminary field-of-view drawings for all sensors and all antennas;
and
(l) preliminary list of Long-Lead Activities a
nd Items for the Ground Spare
Satellite.
17
18
****** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
3.3 [*****]; Expiration Thereof; Remedies.
(a) The [*****] shall terminate upon the earlier of (i) receipt of the
[*****] Payment (as more fully described in Exhibit G (Payment Plan and
Termination Liability Amounts)) by Contractor, or (ii) [*****] Calendar Days
from EDC plus any applicable cure period not to exceed sixty (60) Calendar Days
(the "Cure Period"). Prior to expiration of the [*****], Customer shall provide
Contractor with a status report of Customer's funding plans for the first six
(6) months of Milestone Payments u
nder this Contract.
(b) In the event Contractor has not received the [*****] Payment on
or before the date of expiration of the [*****] and Contractor has completed the
work effort required by Article 3.2 (Contractor Work Commitment) above,
the following shall apply during the Cure Period:
(1) Contractor shall be entitled to stop Work;
(2) the Delivery Schedule shall be adjusted on a day-for-day basis,
together with adjustments for associated delays related to
establishment of Launch Periods and Launch Slots;
(3) the Payment Plan set forth in Exhibit G (Payment Plan and
Termination Liability Amounts) shall be adjusted in accordance
with the revised Delivery Schedule; and
(4) the Contract Price shall be increased by an aggregate total of
[*****] during the Cure Period, on a daily pro rata basis in
accordance with the following table:
Table 3.3(b)
Contract Price Increases
----------------------------------------------------------------------------
Following [*****] Increase (USD)
(Cure Period)
----------------------------------------------------------------------------
1st 30 Calendar Days [*****]
(or daily pro-rated portion
thereof (daily rate of [*****])
----------------------------------------------------------------------------
2nd 30 Calendar Days [*****]
(or daily pro-rated portion
thereof (daily rate of [*****])
----------------------------------------------------------------------------
20
****** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
For example, if Contractor receives the [*****] Payment on the fortieth
(40th) Calendar Day after expiration of the [*****], the Contract Price shall be
increased by [*****] (that is, [*****] for the first thirty (30) Calendar Days
plus [*****] for the ten (10) Calendar Days in excess of the first thirty (30)
Calendar Days ([*****] multiplied by 10 for the last ten (10) Calendar Days)).
In the event the above Contract Price increases are incurred, the Parties
shall mutually agree to appropriate amendments to Exhibit G (Payment Plan and
T
ermination Liability Amounts).
(c) In the event Contractor does not receive the [*****] Payment on or
before the expiration of the Cure Period and Contractor has completed the work
specified in Article 3.2 (Contractor Work Commitment) above, the following shall
apply:
(1) Contractor shall be entitled to retain the first [*****]
Milestone Payments and the Calendar Payment for Long-Lead Items
made during such [*****] in full;
(2) With the exception of Contractor's Intellectual Property,
Contractor shall deliver to Customer all inventory, technical
documents and all work in process relating to the Work developed
or produced by Contractor during the [*****], provided that all
payments (other than the [*****] Payment) have been made by
Customer; and
(3) this Contract shall terminate and the Parties shall have no
further obligations to each other, except as exp
ressly set forth
in Article 22 (Confidential Information).
21
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
4. CONTRACT PRICE
4.1 Contract Price.
(a) In accordance with this Contract, Customer shall pay Contractor for
the Work the Contract Price set forth in Table 4.1 below. The Contract Price
shall be paid in accordance with Article 5 (Payment).
(b) The total Contract Price is allocated as follows:
Table 4.1
Contract Price
--------------------------------------------------------------------------------
--------------------------------------
Item (USD)
----------------------------------------------------------------------------------------------------------------------
1. 1st and 2nd Satellites
$ [*****]
----------------------------------------------------------------------------------------------------------------------
2. Launch Services for the 1st and 2nd Satellites $ [*****]
----------------------------------------------------------------------------------------------------------------------
3. Operations Support Services for 1st Satellite $ [*****]
-----------------------------------
-----------------------------------------------------------------------------------
4. Operations Support Services for 2nd Satellite $ [*****]
----------------------------------------------------------------------------------------------------------------------
5. Communications Payload Simulator, Satellite Control Centers Equipment and
Software, Dynamic Spacecraft Simulator $ [*****]
----------------------------------------------------------------------------------------------------------------------
6. Long-Lead Activities and Items for Ground Spare Satellite
$ [*****]
----------------------------------------------------------------------------------------------------------------------
CONTRACT PRICE $
447,513,000
----------------------------------------------------------------------------------------------------------------------
(c) In addition to the Deliverable Items identified in Table 4.1 above, the
Contract Price includes:
(1) all related Training and Data and Documentation;
(2) on-ground insurance covering the Work up to, but not including,
Launch of the Launch Vehicles;
(3) transportation, including air shipment, to the Launch Site and
other related charges;
(4) Launch Campaigns for the first and second Satellites;
22
(5) LEOP for the first and second Satellites;
(6) Mission Support Services for the first and second Satellites;
(7) pre-Launch deferred payments; and
(8) Incentive Amounts.
(d) The Contract Price does not include:
(1) Launch Insurance;
(2) any interest on the pre-Launch deferred payments;
(3) any interest on the Incentive Amounts; and
(4) Ground Software source code license.
4.2 Changes in Contract Price.
This is a firm-fixed price Contract. Except as otherwise expressly
provided in this Contract, the Contract Price is not subject to any escalation
or to any adjustment or revision.
4.3 Taxes and Duties.
The Contract Price includes all app
licable taxes and duties related to the
Work in effect as of the Effective Date of Contract, and thereafter, including
all taxes on the import of any Satellite, or component part thereof, or any
other component of the Work into any United States, French, Chinese and/or
Japanese jurisdictions, if applicable, for Launch or other purpose, personal
property taxes, imposts, sales, use, excise, value added, and all other import
and export taxes levied in connection with the performance of the Work, wherever
the Work is being carried out.
23
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
5. PAYMENT.
5.1 Requests for Payment and Invoices.
(a) Customer shall make Milestone Payments, Major Calendar Payments and
other Calendar Payments to Contractor in accordance with the Payment Plan set
forth in Exhibit G (Payment Plan and Termination Liability Amounts).
(b) With the exception of the First Milestone Payment, which shall have been
paid on or before EDC, and the [*****] Payment, which shall be paid to
Contractor no later than the last day of the [*****] or the last day of
the Cure Period, if any, as required by Article 3 (Eff
ective Date of Contract
(EDC); [*****]), each Milestone Payment shall be due upon Contractor completing
the applicable Milestone and submitting to Customer a Request for Payment,
accompanied by a certificate in the form of Annex I to Attachment A hereto
together with such supporting data as Contractor deems necessary or appropriate.
A Milestone shall not be regarded as completed, and no payment shall be made,
until all the Work relevant to that Milestone has been completed and documented
in accordance with applicable specifications and procedures and all the relevant
documentation and Training required under this Contract for such Milestone has
been provided to Customer.
(c) With the exception of Program Calendar Payment No. 1, which shall be
paid on or before July 9, 1999, Contractor shall, with respect to each Calendar
Payment, provide Customer with a Request for Payment at least ten (10) Calendar
Days but no more than forty-five (45) Calendar Days in advance of the date when
such payment is requ
ired to be made by Customer pursuant to Exhibit G (Payment
Plan and Termination Liability Amounts); provided, however, each Major Calendar
Payment shall be subject to satisfaction by Contractor of the following
conditions precedent:
(1) with respect to the Major Calendar Payment applicable to the first
Launch Vehicle, as specified in Exhibit G (Payment Plan and
Termination Liability Amounts), Contractor will invoice Customer
[*****] Calendar Days prior to the date of the scheduled Launch;
(2) with respect to the Major Calendar Payment applicable to the
second Launch Vehicle, as specified in Exhibit G (Payment Plan and
Termination Liability Amounts), Contractor will invoice Customer
[*****] Calendar Days prior to the date of the scheduled Launch;
(3) with each such invoice for a Major Calendar Payment, Contractor
shall provide certification that the official Launch manifest,
as
established by the Launch Agency, provides that the Launch Date
for such Launch
24
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separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
Vehicle is no more than [*****] Calendar Days from the due date of the
Major Calendar Payment for the first launch and no more than [*****]
Calendar Days from the due date of the relevant Major Calendar Payment
for the second Launch.
(d) Contractor shall telefax and airmail signed copies of each Request for
Payment, invoice and accompanying certificate and any supporting data to:
XM Satellite Radio Inc.
0000 00xx Xxxxxx, X.X., Xxxxx 00
Xxxxxxxxxx, XX
00000
Attention: Xx. Xxxxx Xxxxxxxxxxxx
Xx. Vice President and CFO
Fax Number: 000-000-0000
5.2 Payment.
(a) Milestone Payments, Major Calendar Payments and Other Calendar
--------------------------------------------------------------
Payments.
--------
(1) Customer shall pay Contractor in full each Milestone Payment,
Major Calendar Payment, and other Calendar Payments, as set forth
in Exhibit G (Payment Plan and Termination Liability Amounts),
within thirty (30) Calendar Days after delivery, in accordance
with the procedures and upon satisfaction of the conditions set
forth in Article 5.1 (Requests for Payment and Invoices), of a
Request for Payment, accompanied by a certificate in the form of
Annex I to Attachment A hereto, with respect to a Milestone
Payment, and of an invoice, with respect to any Major Calen
dar
Payment or other Calendar Payment, by wire transfer to the
following bank account:
Bank: Bank of America
Address: Concord, California, U.S.A.
Account No.: [*****]
(2) In no event shall the cumulative Milestone Payments made to
Contractor for the Work at any point in time exceed the
cumulative amounts specified up to that point in time for
Milestone Payments for the Work as set forth in Exhibit G
(Payment Plan and Termination Liability Amounts), as may be
modified from time to time pursuant to Article 34.3 (Amendments).
(3) In the event of early completion by Contractor of a Milestone in
advance of such Milestone completion date as set forth in Exhibit
G (Payment Plan and Termination Liability Amounts), Customer
shall not be obligated to
25
make the corresponding Milestone Payment to Contractor in advance
of the payment due date therefore as set forth in Exhibit G.
(4) Notwithstanding the foregoing, Customer, in its sole discretion,
may agree to make a partial payment to Contractor for the partial
completion of a Milestone event.
(5) Major Calendar Payments are to be made by Customer if the
conditions precedent thereto are met by Contractor
notwithstanding if Contractor is otherwise in default of this
Contract under Article 32.2 (Termination for Contractor's
Default); the Parties intend that Customer's remedy in such event
is termination of this Contract (in which case no payments would
be made) and not withholding of Major Calendar Payments.
(6) Except for disputed amounts under Article 5.3 (Disputed Amounts),
all payments made by Customer to Contractor prior to and
including the Major Calendar Payments and other Calendar Payments
shall be deemed fully earned by Contractor upon receipt of such
payments.
(b) Other Payments. Except as otherwise expressly stated herein, all
--------------
other payments by Customer due Contractor shall be made by wire transfer to the
bank account identified in paragraph (a) above within thirty (30) Calendar Days
after receipt by Customer of a telefaxed Request for Payment (followed by an
airmailed original received by Customer within five (5) Calendar Days of receipt
of such telefaxed request).
5.3 Disputed Amounts.
(a) If
Customer does not agree that the Milestone associated with a
Request for Payment has been satisfactorily completed, Customer shall give
written notice to Contractor within ten (10) Calendar Days after receipt by
Customer of a Request for Payment. Upon receipt of such notice, the Parties'
respective Program Managers shall meet and use good faith efforts to resolve
such disagreement.
(b) If the Parties' Program Managers fail to resolve such disagreement
within thirty (30) Calendar Days after receipt by Customer of the Request for
Payment, Customer shall deposit, subject to paragraph (d) below, within five (5)
Calendar Days after expiration of the aforementioned thirty (30) Calendar Day
period, all or a portion of the disputed Milestone Payment, in accordance with
Table 5.3 below, into a separate, interest-bearing account to be established by
Contractor at Contractor's commercial bank to hold solely and separately from
all other corporate funds ("In-House Escrow Account"), any such amounts that may
b
e disputed hereunder up to the limitations set forth in paragraph (c) below.
(c) In no event shall any disputed amounts deposited into the In-House
Escrow Account exceed the limitations set out below in Table 5.3:
26
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
Table 5.3
Schedule of Disputed Amounts that may be Deposited in the In-House Escrow Account
-----------------------------------------------------------------------------------------------------------------
Period in which Disputed Amounts Arise Limitation on Disputed Amounts that may be Deposited
in the In-House E
scrow
Account
-----------------------------------------------------------------------------------------------------------------
EDC through the last day of the ninth (9th) month [*****]
following EDC
-----------------------------------------------------------------------------------------------------------------
The first day of the tenth (10th) month following EDC [*****]
through the last day of the eleventh (11th) month
following EDC
-----------------------------------------------------------------------------------------------------------------
The first day of the twelfth (12th) month following EDC [*****]
to the date of Launch of the second Satellite (excluding Incentive Amounts)
-----------------------------------------------------------------------------------------------------------------
(d) To t
he extent, if any, the aggregate of disputed Milestone Payment
amounts exceeds the applicable limitation for the period in which the dispute
over the Milestone Payment arises, Customer shall pay to Contractor the excess
over the applicable limitation, pending resolution of the dispute in accordance
with the provisions of this Article 5.3 (Disputed Amounts).
(e) The respective Chief Executive Officers of each Party shall meet to
resolve the dispute within five (5) Calendar Days after the aforementioned
thirty (30) Calendar Days following receipt by Customer of the Request for
Payment.
(f) Withheld amounts shall remain in the In-House Escrow Account, or if any
amounts are paid to Contractor pursuant to paragraph (d) above, Contractor shall
retain such amounts, until the Chief Executive Officers resolve the dispute
relating to such disputed payments. In the event the Chief Executive Officers
cannot resolve such dispute, the Parties may, upon mutual agreement, seek
resolution of such dispute purs
uant to Article 27.2 (Arbitration). In any event,
such unresolved dispute shall be referred to arbitration pursuant to Article
27.2 (Arbitration) after six (6) months following the date upon which such
dispute was referred to the Chief Executive Officers. Contractor agrees that
prior to the resolution of any dispute, including any disputes ultimately
resolved in favor of Contractor, Contractor shall not remove or use any amounts
deposited in the In-House Escrow Account.
(g) In the event it is determined by the Chief Executive Officers or
any arbitral tribunal that the payment deposited in the In-House Escrow Account
or any part thereof is due and payable to Contractor, Contractor may then
release that amount from such Account for Contractor's use and retain all
interest accrued thereon. In the event it is determined by the Chief Executive
Officers or any arbitral tribunal that the withheld payment or any part thereof
is due and payable to Customer, such amount shall be refunded to Customer within
five (5) Calendar Days after such determination, including, to the extent of the
Chief Executive Officers' determination, any amounts paid by Customer, under
paragraph (d) above, in excess of the
27
limitation on disputed amounts otherwise eligible to be placed in the In-House
Escrow Account, together with interest on the total thereof to be calculated in
accordance with Article 34.10 (Calculation of Interest).
5.4 Set Off.
In the event one Party has not paid the second Party any amount that is due
and payable to the second Party under this Contract, such second Party shall
have the right to set off such amount against payments due to the first Party,
provided any amount in dispute pursuant to Article 5.3 (Disputed Amounts) shall
not be considered eligible for setoff while the dispute is being resolved.
5.5 Late Payment.
(a) The Parties acknowledge and agree that, with respect to any Milestone
Payments, Major Calendar Payments
, and other Calendar Payments, Contractor may
suffer damages as the result of any delayed receipt of such payments and the
rapid decrease, over time, of the value of the Work. Accordingly, the Parties
agree that time is of the essence in the receipt by Contractor of Milestone
Payments, Major Calendar Payments, and other Calendar Payments, properly due
Contractor, and, subject to Article 32.3 (Termination for Customer's Default),
Contractor may, upon a default in such payment by Customer, immediately and
without further notice to Customer, exercise all its rights and remedies in
accordance with the terms of this Contract.
(b) For any payment under this Contract that is overdue, the Party entitled
to such payment shall also be entitled to interest on such payment for each day
the payment is overdue until the day payment is made, such interest to be
calculated in accordance with Article 34.10 (Calculation of Interest), unless
expressly provided otherwise in this Contract.
5.6 Payments Current at
Launch.
(a) With respect to any Milestone, Major Calendar Payment, or other
Calendar Payment, Contractor may suspend performance if Customer does not comply
with the provisions of Article 5.3 (Disputed Amounts).
(b) Contractor shall not be required to proceed to Launch of a Satellite
unless (i) Customer is current on all payments due at that point in time with
respect to such Satellite, (ii) any and all disputes related to any Milestone
Payment and pertaining only to such Satellite to be Launched are resolved, and
(iii) any such Milestone Payment amount (related to such Satellite) held in
escrow pursuant to Article 5.3 (Disputed Amounts) is released to Contractor, if
it is ultimately determined that Contractor is entitled to such payments.
5.7 Security Interest.
(a) Until Contractor's receipt of the Major Calendar Payments, or as
provided in paragraph (c) below, whichever occurs first, Customer hereby grants
Contractor a first priority security interest in any right, title, or in
terest
Customer may have or be deemed to have in the Work to secure Customer's
obligations to Contractor under this Contract. Until Contractor's receipt of the
Major Calendar Payments, Customer shall have no interest in the Work, except as
28
specifically provided in this Article 5.7 (Security Interest) and in paragraph
(c) of Article 32.2 (Termination for Contractor's Default).
(b) The Parties agree that, upon Contractor's reasonable request, Customer
shall sign and permit Contractor to file, for precautionary purposes,
appropriate Uniform Commercial Code financing statements or any similar document
having the same effect in foreign countries, reflecting Contractor's right,
title, and interest to the Deliverable Items prior to receipt of the Major
Calendar Payments, provided that Contractor, at its sole expense, shall be
responsible for preparing such financing statements and terminating such
financing statements as required by this Article 5.7 (Security Interest).
(c) Subject to
Article 5.6 (Payments Current at Launch), Contractor agrees
to release and terminate its security interest, and to terminate any related
financing statements, in accordance with the following:
(1) with respect to the first Satellite, Contractor's security
interest therein shall be released and terminated upon Launch of
the first Satellite;
(2) with respect to the second Satellite and all other Deliverable
Items under this Contract, Contractor's security interest in the
second Satellite and all other Deliverable Items comprising the
Work, shall be released and terminated upon Launch of the second
Satellite; and
(3) with respect to a Launch Vehicle, Contractor's security interest
therein shall be released and terminated upon Contractor's receipt
of the Major Calendar Payment applicable to such Launch Vehicle.
(d) Customer represents and warrants that, prior
to release of Contractor's
security interest in accordance with this Article 5.7 (Security Interest),
Customer's assets do not and will not secure the liabilities of any parent
entity, or any other person or other entity.
(e) The preceding representations and warranties of Customer apply, with
respect to the first Satellite, only prior to Launch of the first Satellite,
and, with respect to the second Satellite and all other Deliverable Items, only
prior to Launch of the second Satellite. Such representations and warranties of
Customer shall not apply to any financing entered into by Customer or Customer's
Affiliates to obtain the funding for a Major Calendar Payment required pursuant
to this Contract which results in the Major Calendar Payment being made
substantially concurrently with such financing being obtained for such payment.
29
6. ACCESS TO WORK
6.1 Facilities.
(a) Subject to Article 6.10 (Consultant Access), Contractor shall provide
Customer Personnel reasonable access to all Work (including work-in-progress,
documentation, and testing) at the facilities of Contractor and the
Subcontractors, during regular business hours, or such other times as Work is
being performed under this Contract, provided such access does not unreasonably
interfere with such Work and access to Work is coordinated through Contractor's
program office.
(b) The Parties agree that Customer Personnel shall be provided fifteen
(15) non-escort permanent badges and twenty-five (25) escort permanent badges to
agreed work areas where the Work is being performed, subject to Customer
identifyi
ng such personnel to Contractor and such personnel satisfying
Contractor's normal security clearance requirements.
(c) Contractor shall arrange with the Launch Agency(ies) for Customer VIPs
to attend the Launch of a Satellite, subject to any limitations of
such Launch Agency.
6.2 Office Space.
Contractor shall provide office space and facilities at Contractor's
facilities for the accommodation of up to six (6) Customer Personnel.
Contractor shall make reasonable work space available for such Customer
Personnel at environmental test facilities (if located off site) and shall use
reasonable efforts to ensure that facilities are provided for up to two (2) such
Customer Personnel at other selected Major Subcontractors' plants on a temporary
basis to attend meetings or witness tests, except that (i) with respect to
facilities at a Designated Launch Site, Contractor shall use reasonable efforts
to ensure that office space facilities are provided for up to five (5) Custo
mer
Personnel and, in the case of a Launch by Sea Launch, Contractor shall ensure
that two (2) Customer Personnel are entitled to a berth on a viewing boat for an
extended period of time prior to and during Launch and (ii) the facilities at
the Payload Subcontractor (Alcatel) shall be on a permanent basis. At a
minimum, Contractor shall provide desks, chairs, office supplies, local
telephone service, reasonable long distance telephone usage, car parking
facilities, and access to meeting rooms, copying machines and facsimile
equipment, and, as available, access to and use of video conferencing facilities
at Contractor's facilities. Customer shall reimburse Contractor for all long
distance telecommunications charges, whether incurred in connection with voice
or facsimile transmission or video conferencing.
6.3 Security.
Customer Personnel visiting any facility of Contractor or a Subcontractor
(i) will abide by Contractor's security regulations and/or those of its
Subcontractors and any and a
ll applicable Laws of the jurisdiction in which a
Contractor or Subcontractor facility is located, provided, however, Customer
Personnel are advised in writing of any such security regulations prior to such
visits; (ii) subject to Article 20 (Intellectual Property Rights) and Article 22
(Confidential Information), will use any information received in connection with
the access provided hereunder only in the performance of this Contract; and
(iii) will not remove any documents,
30
materials, or other items from any facility of Contractor or its Subcontractors
(other than Data and Documentation and other documents delivered to Customer
Personnel for Customer's use and with no requirement to return to Contractor)
without the express written consent of Contractor's Program Manager.
6.4 Data and Documentation.
(a) Customer Personnel will have reasonable access at the facilities of
Contractor and the Subcontractors, for evaluation and inspection purposes only,
to (i) Data and Documentation; (ii) Work-in-progress, technical and schedule
data and documentation relevant to the Work; (iii) drawings, circuit diagrams
and schematics, specifications, standards or process descriptions relevant to
the Work; and (iv) data and documen
tation provided to Contractor by its
Subcontractors relevant to the Work. To facilitate Customer's work in this
respect, Contractor will allow Customer Personnel reasonable access to all
indexes related to the materials set forth in this paragraph (a).
(b) Subject to Article 6.3 (Security), where the materials described in
paragraph (a) are necessary for evaluation of designs, performance
considerations, assessment of test plans and test results, or for any other
purpose connected with the design, qualification, testing, Final Acceptance, or
operation of the Work, or any part thereof, and the components thereto,
Contractor will, subject to Article 22 (Confidential Information), make
available to Customer Personnel copies of such documentation on the reasonable
request of Customer Personnel at no charge to Customer.
(c) All Data and Documentation shall be in the English language.
(d) Any data provided by a Party to the other Party in electronic form
shall be embodied in, or in a form co
mpatible with, commercially available
software.
6.5 Electronic Access.
(a) With respect to electronically generated information, Contractor will
provide Customer with a copy of and/or electronic access (via the Internet,
Contractor e-mail, proprietary or otherwise, or as agreed upon) to such
information as is necessary to keep Customer advised, on a current basis, of
program issues, decisions, and problems. Contractor shall provide Customer
Personnel access to Contractor's electronic mail systems through the Internet,
such access to be at Customer's cost. If requested in writing by Customer,
Contractor shall establish secure data links between its and Customer's
facilities such that Customer has remote electronic access to those project-
related documents identified in Exhibit B (SOW); provided, however, Contractor
shall be required to provide such links for a high-data transfer rate (such as
for satellite telemetry) only on an as needed basis, with each Party bearing the
costs of establishin
g the link at its end.
(b) Contractor will also provide Customer Personnel with "real time" access
to all measured data for the Work taken at Contractor's and/or Subcontractors'
facilities on a non-interference, no-cost basis.
31
6.6 Meetings and Reviews.
(a) Customer Personnel shall be entitled to attend the meetings and reviews
(including meetings and reviews held by electronic means) of Contractor and of
Contractor with any Subcontractor(s) where such meetings and reviews (or
portions of such meetings and reviews) are related to Customer's project
schedule, management, engineering, design, manufacturing, integration, testing,
or Launch and shall have the right to participate in and make recommendations,
but not to control, give directions or assign actions, in all meetings and
reviews at the system, subsystem and unit level, as well as in internal program
reviews. Contractor shall (i) submit an agenda at least ten (10) Calendar Days
in advance of the meeting or review
, (ii) take minutes, (iii) maintain an action
items list, and (iv) circulate the minutes and action items to Customer within
five (5) Calendar Days following the meeting or review.
(b) In the event a meeting or review is convened at the facilities of
Contractor or a Subcontractor relating to the Work, Contractor shall, except as
otherwise provided in these Terms and Conditions of this Contract, provide
reasonable advance notice in writing to Customer (e.g., one week for regularly
scheduled meetings) and shall make reasonable and appropriate arrangements to
facilitate the entry of Customer Personnel to the meeting place.
(c) Notwithstanding the foregoing, Customer and Contractor acknowledge and
agree that a large number of meetings, including impromptu meetings, will be
held during the normal course of performance of this Contract and that, in all
instances of meetings relating to this Contract, notice to Customer or
Customer's presence at all such meetings may not be practicable. Accordingl
y,
Contractor is not required to provide notice to Customer of such impromptu,
unscheduled, informal and otherwise casual meetings (informal meetings),
provided that Contractor shall supply to Customer within a reasonable time
following any such informal meeting, any material notes, decisions, actions
items or other such product of such informal meetings that would otherwise be
provided to Customer at meetings Customer would normally attend.
6.7 Laws.
Contractor's obligations under this Article 6 (Access to Work) shall be
subject to any and all applicable Laws of any country, state, or territory
having jurisdiction over the Work, and to Contractor's standard security rules
and regulations; provided, however, Contractor shall use its best efforts to
ensure its internal security rules and regulations do not unduly restrict access
or viewing by Customer Personnel.
6.8 No Relief.
The inspection, examination, observation, agreement to or approval, waiver
or deviation by Customer with r
espect to any design, drawing, specification, or
other documentation produced under this Contract shall not relieve Contractor
from fulfilling its contractual obligations or result in any liability being
imposed on Customer, unless and to the extent such waiver, deviation, agreement,
or approval specifically provides in writing for such relief to Contractor or
such imposition of liability on Customer.
32
6.9 Major Subcontracts.
Contractor shall require that any Major Subcontract entered into
substantially concurrently with or following the execution of this Contract
include a provision substantially similar to this Article 6 (Access to Work) to
ensure Customer's rights under this Contract, but Contractor shall not be
required to amend any bulk procurement contract to include such provision.
6.10 Consultant Access.
Customer shall submit to Contractor the individual name(s) and citizenship
information pertaining to any proposed representatives or Consultants who
require access to any premises and/or any Contractor or Subcontractor
proprietary information, and Contractor shall have the right to approve such
access for such representativ
es or Consultants. Contractor shall approve or
disapprove of any such individual name(s) submitted by Customer for such access
within five (5) Business Days of Customer's submission except in the case of
submissions made during Contractor's end-of year Holiday shutdown, in which case
Contractor shall provide such approval or disapproval within ten (10) Business
Days. Such approval shall not be withheld by Contractor unless (i) Contractor
reasonably believes such representative or Consultant is employed by, or is an
Affiliate of a direct competitor of Contractor, or (ii) Contractor has knowledge
of incidents in which such representative or Consultant demonstrated behavior or
activity that, in Contractor's reasonable judgment, is incompatible with
Contractor's ability to achieve the objectives of this Contract. In the event
Contractor disapproves of a representative or Consultant proposed by Customer,
Contractor shall provide Customer with an explanation, which need not be
written, of its reasons for di
sapproval.
33
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
7. DELIVERY AND DELIVERY INCENTIVES
(a) Deliverable Items, as listed in Table 7.1 below, shall be Delivered by
Contractor to the destinations indicated, on or before the dates
("Delivery Dates") specified in such Table, as such Delivery Dates may
be adjusted in accordance with this Contract.
Table 7.1
Delivery Schedule
-----------------------------------------------------------------------------------
-------------------------------------
Deliverable Item Delivery Date or Performance Date Place of Delivery
------------------------------------------------------------------------------------------------------------------------
1. 1st Satellite, Launch December 31, 2000* Specified Orbital Location for
Campaign, Launch Services, the Satellite, and other
and LEOP (1st Satellite locations for the provision of
through Handover) services as specified in Exhibit
B (SOW)
----------------------------------------------------------------------------------------------------
--------------------
2. Pre-Eclipse Test Report with [*****] following completion of Customer's Facilities
respect to the 1st Satellite In-Orbit Testing
------------------------------------------------------------------------------------------------------------------------
3. Post-Eclipse Test Report [*****] following the end of the Customer's Facilities
with respect to the 1st first full eclipse period after
Satellite Launch
------------------------------------------------------------------------------------------------------------------------
4. 2nd Satellite, Launch April 11, 2001* Specified Orbital Location for
Campaign, Launch Services, the Satellite, and other
and LEOP (2nd Satellite locations for the provision of
thro
ugh Handover) services as specified in Exhibit
B (SOW)
------------------------------------------------------------------------------------------------------------------------
5. Pre-Eclipse Test Report with [*****] following completion of Customer's Facilities
respect to the 2nd Satellite In-Orbit Testing
------------------------------------------------------------------------------------------------------------------------
6. Post-Eclipse Test Report [*****] following the end of the Customer's Facilities
with respect to the 2nd first full eclipse period after
Satellite Launch
------------------------------------------------------------------------------------------------------------------------
34
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
Table 7.1
Delivery Schedule
------------------------------------------------------------------------------------------------------------------------
7. Operations Support Services [*****] Primary Satellite Control Center,
Washington, DC or Back-Up
Satellite Control Center
------------------------------------------------------------------------------------------------------------------------
8. Mission Support Services [*****] Contractor's Facilities
------------------------------------------------------------------------------------------------------------------------
9. Communications Payload [*****] Customer's facilities in
Simulator** Washington, DC
------------------------------------------------------------------------------------------------------------------------
10. Satellite Control Centers [*****] Customer's Primary and Back-Up
Equipment and Software*** Satellite Control Centers in
Washington, DC area
------------------------------------------------------------------------------------------------------------------------
11. Dynamic Spacecraft Simulator [*****] Primary Satellite Control Center,
Software and Hardware Washington, D.C.
------------------------------------------------------------------------------------------------------------------------
12. Training Per Exhibit B (SOW) Per Exhibit B (SOW)
------------------------------------------------------------------------------------------------------------------------
13. Data & Documentation Per Exhibit B (SOW) Per Exhibit B (SOW)
------------------------------------------------------------------------------------------------------------------------
<
/TABLE>
* Assumes (i) Customer makes Program Calendar Payment No.1 on or before July 9,
1999 and (ii) Customer makes timely payment in respect of Engineering Model
Reflector Work Nos. 1, 2 and 3 in accordance with Exhibit G (Payment Plan and
Termination Liability Amount).
** In case of a problem with the Satellite, the engineering models delivered
with the Communications Payload Simulator will be returned to Contractor, at
Contractor's cost, for investigation and testing.
*** If after final definition of the training program provided for in Exhibit B
of this Contract, Customer determines, in its reasonable discretion, that the
[*****] time period available for on-site operator training at Customer's
facilities is not sufficient, Contractor agrees to install, at [*****],
software that is the then current release of the Satellite Control Center
Software to be provided under this Contract in order to provide additional time
for such training.
(b) Contractor understands and agrees that, with respect
to the Delivery
Dates for all Deliverable Items, whether those items are set out in this
Contract or subsequent Amendments to this Contract, time is of the essence under
this Contract. Nothing in the foregoing sentence shall in any way modify either
the specific remedies for default specified elsewhere in this Contract,
including Article 10 (Liquidated Damages for Late Delivery), Article 32.2
(Termination for
35
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
Contractor's Default), or Article 10.3 (Termination for Unexcused Delay), or the
specific dispute resolution requirements specified in this Contract.
(c) Packing and shipping shall be in accordance with standard commercial
practices of the aerospace industry and applicable Laws and shall be
effected in such a manner so as to ensure that the item reaches its
destination undamaged.
(d) Contractor's obligation to Deliver the Work in accordance with the
Delivery Schedule set forth in Table 7.1 above is conditio
xxx upon the
following occurring on or before July 9, 1999: (i) Contractor receives
Program Calendar Payment No. 1 in the amount of Sixty-Eight Million
Dollars ($68,000,000) and (ii) Customer raises a minimum of [*****] in
financing.
(e) If Contractor Launches both the first Satellite and the second
Satellite on or before December 31, 2000, Customer shall pay Contractor
an amount equal to Six Million Dollars ($6,000,000) (in addition to the
Contract Price) on or before thirty (30) Calendar Days after Launch of
the second Satellite.
36
8. INSPECTION AND FINAL ACCEPTANCE
8.1 Preliminary Inspections.
Preliminary inspections of all Work may be made by Customer or its
designated representative at Contractor's or a Subcontractor's facility. All
such inspections shall be made in the presence of a representative of
Contractor. In the event Customer informs Contractor in writing of any Defects
in the Work, Contractor shall remedy such Defects pursuant to the procedures to
remedy Defects as set forth in Article 13 (Corrective Measures in Unlaunched
Satellites and Other Deliverable Items).
8.2 Shipment Readiness Review.
(a) Prior to shipment of each Satellite to the Designated Launch Site,
Contractor shall conduct a Shipment Readiness Review in accordance with the
r
equirements contained in Exhibit B (SOW) and Exhibit D (Test Plan Requirements)
at Contractor's plant. The Shipment Readiness Review shall consist of reviewing
the Satellite's ground test results in accordance with Exhibit D (Test Plan
Requirements). Contractor shall provide Customer at least fifteen (15) Business
Days advance written notice of the first Shipment Readiness Review for each
Satellite. Customer shall have the right to witness such review and the right to
either concur or not concur that the Satellite under review meets the
requirements of this Contract and is ready for shipment.
(b) The Shipment Readiness Review shall verify:
(1) the Satellite's ground testing has been completed in accordance
with Exhibit D ( Test Plan Requirements); and
(2) except as provided in paragraph (c) below, all Defects have
been corrected; and
(3) the Satellite, ground support equipment for handling and/or
transporting the Satellite
in preparation for Launch, and
supporting documentation are ready for shipment based on an
inspection of the Satellite and such ground support equipment and
an examination of such supporting documentation; and
(4) all ground equipment, consisting of the Satellite Control Center
Equipment and Software, Dynamic Spacecraft Simulator, and
Communications Payload Simulator, have been Delivered.
(c) It is the intent of the Parties that all Work that can be accomplished
at Contractor's facility will be completed prior to shipment to the Designated
Launch Site. Notwithstanding that intent, Contractor may, with respect to
certain limited Defects, conclude that such Defects can be effectively remedied
after shipment, in which case Contractor may, after receipt of written approval
from Customer, ship a Satellite to the Designated Launch Site where such Defects
shall be remedied.
37
****** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
(d) Successful completion of the Shipment Readiness Review for each
Satellite shall arise upon the occurrence of any of the following:
(1) The Shipment Readiness Review demonstrates compliance in all
respects with the provisions of paragraph (b) above; Customer
shall notify Contractor of its acceptance of the Shipment
Readiness Review within a maximum of three (3) Business Days
following completion of such review; or
(2) The Shipment Readiness Review complies in a
ll respects with
paragraph (b) above, save for minor non-conformances or
discrepancies that have not been corrected but which Contractor
demonstrates to Customer's satisfaction at the review have no
adverse effect upon the performance of the Satellite; Customer
shall notify Contractor of its acceptance of the Shipment Readiness
Review and the waiver of its right to compel correction within
three (3) Business Days following completion.
(e) If the Shipment Readiness Review reveals any Defects that require
correction, Customer shall, within three (3) Business Days after such review,
notify Contractor in writing of its rejection of the Shipment Readiness Review
and request correction of such Defects. Contractor shall, at its expense,
promptly correct the Defects referred to therein and, promptly following such
correction, shall notify Customer that the corrections have been made and shall
invite Customer to send
Customer Personnel to attend an inspection at which they
will be entitled to verify such corrections have been satisfactorily made
(second round Shipment Readiness Review). Customer shall be given at least three
(3) Business Days written notice of such inspection. The provisions of this
Article 8.2 (Shipment Readiness Review) shall thereafter apply similarly to that
inspection as if that inspection was the original Shipment Readiness Review. In
the event of any disagreement between Customer and Contractor relating to the
second round Shipment Readiness Review, the Senior Executive Level
representatives of the Parties shall use best reasonable efforts promptly to
resolve such dispute.
(f) In the event of any waiver by Customer of its right to compel
correction of a Defect, Contractor shall nevertheless provide Customer with a
written price proposal for the cost of correction of such Defect at the time of
waiver ("Baseline Correction Cost").
(g) Notwithstanding anything to the contrary her
ein, Contractor shall
correct any Defects previously waived by Customer, if requested by Customer and
if time permits consistent with the Launch schedule. In such event, Contractor
and Customer agree that the cost of such correction shall be shared as follows:
Contractor shall be solely responsible for the cost of correction of the
previously waived Defect up to the Baseline Correction Cost. If the cost of
correction of the previously waived Defect exceeds the Baseline Correction Cost,
Contractor and Customer [*****] above and beyond the Baseline
38
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
Correction Cost, up to a maximum aggregate increased cost amount of [*****].
Any cost of correction in excess of the Baseline Correction Cost [*****], shall
be the sole responsibility of Customer.
(h) Upon successful completion of the Shipment Readiness Review, such
Satellite shall be deemed to be Available for Shipment and shall be shipped to
its applicable Designated Launch Site.
8.3 Flight Readiness Review.
(a) Prior to integration of each Satellite with a Launch Vehicle at the
Designated Launch Site, a Flight Readiness Review (FRR)
shall be conducted by
Contractor in accordance with Exhibit B (SOW) and Exhibit D (Test Plan
Requirements). Contractor shall give Customer at least five (5) Business Days
written notice of the FRR. The purpose of the FRR is for Contractor to confirm
that each Satellite is ready to be integrated with a Launch Vehicle. Prior to
integration of such Satellite with a Launch Vehicle, any Defects in such
Satellite or other equipment as may remain from the Shipment Readiness Review,
or resulting from shipment or otherwise discovered during Satellite launch
preparations, shall have been remedied pursuant to the procedures to remedy
Defects as set forth in Article 13 (Corrective Measures in Unlaunched Satellites
and Other Deliverable Items).
(b) Successful completion of the FRR shall arise upon the occurrence of any
of the following:
(1) The FRR demonstrates compliance in all respects with the provisions
of this Contract; Customer shall notify Contractor in writing of
its
acceptance of the FRR at the FRR; or
(2) The FRR demonstrates compliance with the provisions of this
Contract, save for minor non-conformances or discrepancies that
have not been corrected but that Contractor, at the review,
demonstrates to Customer's satisfaction have no adverse effect upon
the performance of the Satellite; Customer shall notify Contractor
in writing of its acceptance of the FRR and the waiver of its right
to compel correction at the FRR.
(c) If the FRR reveals any Defects that require correction, Customer
shall, at the FRR, notify Contractor in writing of its rejection of the FRR and
request correction of such Defects. Contractor shall, at its expense, correct
such Defects and, following such correction, shall notify Customer that the
corrections have taken place and invite Customer to send Customer Personnel to
attend an inspection to verify that such corrections have been satisfactorily
ma
de (second round FRR). Customer shall be given at least three (3) Business
Days written notice of such inspection. Customer shall notify Contractor in
writing of its acceptance or rejection of the second round FRR at the second
round FRR. In the event of any disagreement between Customer and Contractor
relating to the second round FRR, the Senior
39
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
Executive Level representatives of the Parties shall use reasonable efforts
promptly to resolve such dispute.
(d) In the event of any waiver by Customer of its right to compel
correction of a Defect, Contractor shall nevertheless provide Customer with a
written price proposal for the cost of correction of such Defect at the time of
waiver ("Baseline Correction Cost").
(e) Notwithstanding anything to the contrary herein, Contractor shall
correct any Defects previously waived by Customer, if requested by Customer and
if time permits consistent
with the Launch schedule. In such event, Contractor
and Customer agree that the cost of such correction shall be shared as follows:
Contractor shall be solely responsible for the cost of correction of the
previously waived Defect up to the Baseline Correction Cost. If the cost of
correction of the previously waived Defect exceeds the Baseline Correction Cost,
Contractor and Customer [*****] above and beyond the Baseline Correction Cost,
up to a maximum aggregate increased cost amount of [*****]. Any cost of
correction in excess of the Baseline Correction Cost [*****] shall be the sole
responsibility of Customer.
(f) Upon successful completion of the FRR, the Satellite shall be released
by Customer for integration with the Launch Vehicle.
8.4 Launch Readiness Review.
In accordance with the provisions of Exhibit B (SOW), Contractor shall
support the Launch Agency during the Launch Agency's Launch Readiness Review.
In the event any Defect in the Satellite is discovered during the Launch
Readiness Review, Contractor shall correct such Defects in accordance with
Article 13 (Corrective Measures in Unlaunched Satellites and Other Deliverable
Items).
8.5 In-Orbit Testing and Final Acceptance of Satellites.
(a) In-Orbit Testing.
-----------------
(1) Upon arrival of each Launched Satellite at its Specified Orbital
Location, Contractor shall perform tests and analyses on such
Satellite in accordance with the In-Orbit Test Plan, developed by
Contractor and approved by Customer, pursuant to the requirements of
Exhibit B (SOW) and Exhibit D (Test Plan Requirements) to determine
whether and to what extent such Satellite meets the requirements set
forth in such In-Orbit Test Plan.
(2) For each Satellite, promptly upon completion of Pre-Eclipse In-Orbit
Testing, Contractor shall conduct an in-orbit acceptance review and
provide a documentation package setting forth the in-orbit test data
r
equired by, and in a condition fully conforming to, the requirements
of Exhibit B (SOW) and Exhibit D (Test Plan Requirements). "Handover"
of
40
a Satellite shall occur upon completion of Pre-Eclipse In-Orbit
Testing and provision of such In-Orbit Acceptance Test Review
documentation package. Customer may begin commercial use of a
Satellite upon Handover of such Satellite.
(3) Subject to Article 8.10 (Launch and Early Operations (LEOP)), promptly
upon completion of Pre-Eclipse In-Orbit Testing, but no later than
sixty (60) Calendar Days after Launch, Contractor shall furnish
Customer with the Pre-Eclipse Test Report in full compliance with the
requirements of this Contract.
(4) Promptly upon completion of In-Orbit Testing and one full eclipse
period, Contractor shall furnish Customer with the Pos
t-Eclipse Test
Report in full compliance with the requirements of this Contract;
provided, however, in the case of a Constructive Total Loss,
Contractor may so furnish such Post-Eclipse Test Report prior to one
full eclipse period.
(b) Final Acceptance of Pre-Eclipse and Post-Eclipse Test Reports and
-----------------------------------------------------------------
Satellites.
------------
(1) Final Acceptance of the Pre-Eclipse Test Report and Post-Eclipse
Test Report shall be in accordance with the provisions of
paragraph (c) of Article 8.9 (Data and Documentation).
(2) Except as provided in Article 14.4(h)(i) (Storage), Final
Acceptance of each Satellite shall occur upon successful
completion of In-Orbit Testing following arrival of the Satellite
at its Specified Orbital Location and confirmed by Contractor
provid
ing to Customer the Pre-Eclipse and Post-Eclipse Test
Reports in a condition fully conforming to the provisions of this
Contract.
(c) In all circumstances in which a Satellite is a Constructive Total Loss
or Total Loss, Contractor shall have no further acceptance obligations with
respect to such Satellite, except to provide a loss investigation report.
8.6 Final Acceptance of Ground Spare Satellite.
Final Acceptance of the Ground Spare Satellite, if the option to
purchase the Ground Spare Satellite is exercised pursuant to Article 30
(Options), shall occur when such Ground Spare Satellite is Available for
Shipment, unless, within a reasonable period of time (to permit Contractor to
conduct the necessary actions to support a Launch of the Ground Spare Satellite)
prior to the Available for Shipment date for the Ground Spare Satellite,
Customer notifies Contractor that it intends to launch the Ground Spare
Satellite. In such event, Final Acceptance of su
ch Ground Spare Satellite
shall be determined in accordance with the appropriate provisions of this
Contract or as otherwise mutually agreed by the Parties.
8.7 Satellite Control Center (SCC) Equipment and Software.
Final Acceptance of SCC Equipment and Software shall occur only upon (i)
Contractor furnishing the SCC Equipment and Software at the places specified in
Table 7.1 of Article 7
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
(Delivery), and (ii) completion of acceptance testing in accordance with Exhibit
B (SOW) and a Test Plan to be mutually developed by the Parties and approved by
Customer no later than [*****] demonstrating the SCC Equipment and Software are
furnished in a condition fully conforming to the provisions of this Contract.
The SCC Equipment and Software shall be deemed to be in a condition fully
conforming to the provisions of this Contract unless rejected by Customer in
writing within fifteen (15) Business Days after Delivery of the SCC Equipment
and Software
. If the SCC Equipment and Software are unacceptable, Customer
shall, within the said fifteen (15) Business Days, notify Contractor in writing
in which respects the SCC Equipment and Software contain any Defects.
Contractor shall promptly correct the Defects referred to therein and notify
Customer that the corrections have been made. The provisions of this
Article 8.7 (Satellite Control Center (SCC) Equipment and Software) shall
thereafter apply to the corrected SCC Equipment and Software.
8.8 Dynamic Spacecraft Simulator and Communications Payload Simulator.
Final Acceptance of each of the Dynamic Spacecraft Simulator and
Communications Payload Simulator ("Simulators") shall occur only upon (i)
Contractor furnishing the Simulators at the places specified in Table 7.1 of
Article 7 (Delivery) and (ii) completion of acceptance testing in accordance
with Exhibit B (SOW) and a Test Plan to be mutually developed by the Parties and
approved by Customer no later than [*****] demonstrating eac
h Simulator is
furnished in a condition fully conforming to the provisions of this Contract. A
Simulator shall be deemed to be in a condition fully conforming to the
provisions of this Contract unless rejected by Customer in writing within
fifteen (15) Business Days after receipt of said Simulator. If a Simulator is
unacceptable, Customer shall, within the said fifteen (15) Business Days, notify
Contractor in writing in which respects the Simulator contains any Defects.
Contractor shall promptly correct the Defects referred to therein and notify
Customer that the corrections have been made. The provisions of this Article
8.8 (Dynamic Spacecraft Simulator and Communications Payload Simulator) shall
thereafter apply to the corrected Simulator.
8.9 Data and Documentation.
(a) Final Acceptance of Data and Documentation, or any part thereof, shall
occur only when the Data and Documentation, or such part thereof, have been
furnished to Customer in a condition fully conforming to the provision
s of this
Contract. Any Data and Documentation furnished to Customer shall be accompanied
by written notice from Contractor specifying that portion of the Data and
Documentation being furnished.
(b) Data and Documentation, or any part thereof, other than Data and
Documentation that requires approval and acceptance by Customer in accordance
with (c) below, shall be deemed to be in a condition fully conforming to the
provisions of this Contract unless rejected by Customer in writing within
fifteen (15) Business Days after receipt of said Data and Documentation, or part
thereof. If such Data and Documentation, or part thereof, not requiring approval
and acceptance by Customer, are unacceptable, Customer shall, within the said
fifteen
42
(15) Business Days, notify Contractor in writing in which respects the
Data and Documentation, or part thereof, contain any Defects. Contractor shall
promptly correct the Defects referred to therein and shall notify Customer that
the corrections have been made. The provisions of this Article 8.9 (Data and
Documentation) shall thereafter apply to the corrected Data and Documentation.
(c) Final Acceptance of any Data and Documentation requiring approval by
Customer in accordance with Exhibit B (SOW) shall occur when such approval has
been granted by Customer in writing. Customer shall notify Contractor in writing
of its acceptance or rejection of such Data and Documentation within fifteen
(15) Business Days after receipt of such Data and Documentation
by Customer;
failing such response, the Parties shall be deemed forthwith to be in dispute
and their rights shall be determined in accordance with the provisions of
Article 27 (Dispute Resolution).
8.10 Launch and Early Operations (LEOP).
Final Acceptance of LEOP services for each Satellite shall occur upon
Contractor furnishing to Customer LEOP services in accordance with the Delivery
Schedule and in a condition fully conforming to the provisions of this Contract,
including furnishing the Pre-Eclipse Test Report and Post-Eclipse Test Report in
accordance with Article 8.5 (In-Orbit Testing and Final Acceptance of
Satellites). LEOP services shall be deemed to be in a condition fully
conforming to the requirements of this Contract unless rejected by Customer in
writing within ten (10) Business Days after the date Customer has knowledge of
the non-conforming condition. If the LEOP services furnished are unacceptable,
Customer shall, within the said ten (10) Business Days, notify Contractor i
n
writing in which respects the LEOP services contain any Defects. Contractor
shall correct such Defects, to the extent possible, within fifteen (15)
Calendar Days of receipt of notice and shall notify Customer that the
corrections have been made. The provisions of this Article 8.10 (Launch and
Early Operations (LEOP)) shall thereafter apply to the corrected LEOP services.
8.11 Operations Support Services (OSS).
Final Acceptance of OSS shall occur upon Contractor furnishing to Customer
OSS in accordance with the Delivery Schedule and in a condition fully conforming
to the provisions of this Contract. OSS shall be deemed in a condition fully
conforming to the requirements of this Contract unless rejected by Customer in
writing within five (5) Business Days after the date Customer has knowledge of
the non-conforming condition. If the OSS furnished are unacceptable, Customer
shall, within the said five (5) Business Days, notify Contractor in writing in
which respects the OSS contains any D
efects. Contractor shall promptly correct
such Defects and shall notify Customer that the corrections have been made. The
provisions of this Article 8.11 (Operations Support Services (OSS)) shall
thereafter apply to the corrected OSS.
8.12 Training.
Final Acceptance and Delivery of Training, or any part thereof, shall occur
upon Contractor furnishing Training to Customer, or such part thereof, in
accordance with the Delivery Schedule and in a condition fully conforming to the
provisions of this Contract. Any
43
Training furnished to Customer shall be accompanied by written notice from
Contractor specifying that portion of the Training being furnished. Training, or
any part thereof, shall be deemed to be in a condition fully conforming to the
requirements of this Contract unless rejected by Customer in writing within five
(5) Business Days after the date Customer has knowledge of the non-conforming
condition. If such Training or part thereof is unacceptable, Customer shall,
within the said five (5) Business Days, notify Contractor in writing in which
respects the Training, or part thereof, contains any Defects. Contractor shall
promptly correct such Defects and shall notify Customer that the corrections
have been made. The provisions of this Article 8.12 (Training
) shall thereafter
apply to the corrected Training.
44
9. TITLE AND RISK OF LOSS
9.1 Transfer of Title.
Transfer of title, free and clear of all liens and encumbrances of any
kind, to each Deliverable Item (other than Satellites) shall pass to Customer at
Final Acceptance of such Deliverable Item. Transfer of title, free and clear of
all liens and encumbrances of any kind, to each Satellite shall pass to
Customer at the time of Handover of such Satellite, or, in the event of a
Constructive Total Loss or Total Loss of such Satellite, at the time of such
Constructive Total Loss or Total Loss, or, in the event such Satellite is placed
in storage, as provided in Article 14.4 (Storage).
9.2 Transfer of Risk of Loss.
Risk of loss or damage to each Deliverable Item shall pass to Customer
at
Final Acceptance of such Deliverable Item; provided, however, risk of loss or
damage to each Satellite and its Launch Vehicle shall pass at Launch of such
Launch Vehicle; provided, however, in the event a Satellite is placed in
Storage, risk of loss or damage to such Satellite shall pass in accordance with
Article 14.4 (Storage).
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
10. LIQUIDATED DAMAGES FOR LATE DELIVERY.
10.1 Liquidated Damages.
(a) The Parties acknowledge and agree that failure to meet the Delivery
Dates specified in Article 7 (Delivery) will cause substantial financial loss or
damage being sustained by Customer. The Parties further acknowledge and agree
that the following liquidated damages are believed to represent a genuine
estimate of the loss that would be suffered by Customer by reason of any such
delay (which losses would be difficult or impossible to calculate with
certainty). The liquidate
d damages in this Article 10.1 (Liquidated Damages) are
in addition to the liquidated damages for delay in the launch of the Satellites
described in paragraph (e) of Article 28 (Launch Services).
(b) In the event Contractor fails to deliver any Satellite on or before the
ninety-seventh (97th) Calendar Day following its respective Delivery Date, as
such date may be adjusted in accordance with this Contract (the "Grace Period
Expiration Date"), Contractor agrees to pay Customer with respect to such
Satellite, as liquidated damages and not as a penalty, the following amounts for
the period beginning on the first (1st) day following the Grace Period
Expiration Date and continuing for a period thereafter not to exceed one hundred
eighty (180) Calendar Days (the "Damages Period"):
(1) [*****] for each Calendar Day during the period commencing on the
first (1st) Calendar Day of the Damages Period for such Satellite
and continuing through the one hundred twentieth (12
0th) Calendar
Day of the Damages Period;
(2) [*****] for each Calendar Day during the period commencing on the
one hundred twenty-first (121st) Calendar Day of the Damages
Period for such Satellite and continuing through the one hundred
eightieth (180th) Calendar Day of the Damages Period.
(c) The total amount of liquidated damages for failure to meet the Delivery
Date for a Satellite shall not exceed Eight Million Dollars ($8,000,000); the
total aggregate amount of liquidated damages for failure to meet the Delivery
Dates of the two Satellites shall not exceed Sixteen Million Dollars
($16,000,000).
(d) The liquidated damages amounts (daily and maximum amounts) set forth in
paragraphs (b) and (c) above shall, at Customer's request, be adjusted pro rata
should the Satellite portion of the Contract Price be modified pursuant to an
Amendment to this Contract.
(e) With regard to liquidated damages for late delivery of a Sate
llite
pursuant to this Article 10.1 (Liquidated Damages), a delay caused by a Launch
Agency shall be deemed a Contractor Excusable Delay for the first one hundred
eighty (180) Calendar Days of such delay;
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
any Launch Agency delay after such one hundred eighty (180) Calendar Days shall
not be deemed an Excusable Delay for the purposes of calculating Contractor's
liquidated damages under this Article 10 (Liquidated Damages for Late Delivery).
10.2 Exclusive Remedy.
Except as otherwise specifically provided in this Contract, the liquidated
damages provided in this Article 10 (Liquidated Damages for Late Delivery) shall
be the sole and exclusive remedy for late Delivery of a Satellite and shall be
in lieu of all monetary damages of any kind, provid
ed Customer may terminate
this Contract in accordance with Article 32.2 (Termination for Contractor's
Default).
10.3 Termination for Unexcused Delay.
(a) In the event the Damages Period for any Satellite has expired and the
maximum total liquidated damages for such Satellite have been levied,
Customer may exercise its right to terminate this Contract, in whole or in
part, for cause pursuant to the provisions of Article 32.2 (Termination for
Contractor's Default), in which case Customer's rights shall be governed by
the provisions of that Article.
(b) If, at [*****], the Launch Agency has failed to establish the Launch
Slot for the first Satellite to begin no later than [*****], then Customer may
exercise its right to terminate this Contract, in whole or in part, for cause
pursuant to Article 32.2 (Termination for Contractor's Default), in which case,
Customer's rights and obligations shall be governed by such Article. The
foregoing shall also apply if, with respect to the second Satell
ite, at [*****],
the Launch Agency has failed to establish the Launch Slot for the second
Satellite to begin no later than [*****]. Provided Contractor is able to
schedule Launch for each Satellite on another Launch Vehicle prior to [*****] as
to the first Satellite and [*****] as to the second Satellite, Contractor shall,
as agreed by Customer, schedule such Launch on either an H-IIA or Long March 3B
Launch Vehicle (at no additional cost to Customer) or on another Launch Vehicle.
If Launch is scheduled on a Launch Vehicle other than an H-IIA or Long March 3B
Launch Vehicle, Customer shall pay the difference between the amount Customer is
required to pay for the Sea Launch Launch Vehicle and the cost of such other
Launch Vehicle, including Contractor's reasonable financing costs. In the event
Customer, in accordance with the provisions of this Contract, terminates the
launch portion of this Contract for either or both of the first Satellite and/or
the second Satellite, then (i) the Parties shall amend th
ose portions of this
Contract related to such termination (e.g., transfer of title and risk of loss,
delivery schedule, acceptance, liquidated damages, termination liability and
this Article 10.3(b)) as appropriate to reflect an on-ground delivery of the
relevant Satellite, (ii) Contractor shall perform, without charge (except to the
extent included in the Contract Price), Launch Campaign, Mission Support and
LEOP Services for any launch services substituted by Customer for the Launch
Services terminated hereunder, provided, however, Customer shall pay Contractor
for those extra costs incurred by Contractor as a result of providing Launch
Campaign, Mission Support and LEOP Services to a
47
location other than one contemplated hereunder, (iii) Customer shall pay
Contractor for those extra costs incurred by Contractor as a result of shipping
the applicable Satellite to a launch site other than one contemplated hereunder,
and (iv) if requested by Customer, Contractor shall perform launch management
services for the substituted launch services at a price mutually agreed by the
Parties.
(c) Liquidated damages shall not accrue for the late Delivery of any
portion of the Work after termination of this Contract for Contractor's default,
in accordance with its terms. Notwithstanding the foregoing, Customer's right to
terminate this Contract, as permitted by this Contract, due to Contractor's late
Delivery shall not prejudice Customer's right to
collect those liquidated
damages that accrued to Customer prior to any such termination.
48
11. EXCUSABLE DELAY
11.1 Excusable Delay Defined.
(a) With respect to Contractor's performance of its obligations under this
Contract, an "Excusable Delay" shall be any delay in the performance of the
Work, in whole or in part, caused by an event that is beyond the reasonable
control of Contractor, its Subcontractors or their respective Affiliates,
including any acts of government in its sovereign capacity (including the
refusal, suspension, withdrawal, or non-renewal of export or import licenses
essential to the performance of the Contract); any acts of a Launch Agency
(deemed to be an Excusable Delay under paragraph (e) of Article 10.1 (Liquidated
Damages)); war (whether declared or undeclared), outbreak of national
hostilities, invasion o
r sabotage; fire, earthquake, flood, epidemic, explosion,
or quarantine restriction; strike or work slow down (other than at Contractor's
or a Subcontractor's facilities) not reasonably within Contractor's control;
freight embargoes; acts of God; or failure by Customer to meet its
responsibilities under this Contract where such Customer failure inhibits
Contractor's ability to satisfy its Delivery obligations under this Contract;
provided written notice is given to Customer, in writing, within ten (10)
Business Days after Contractor shall have first learned of the occurrence of
such an event. Notwithstanding the foregoing, failure by Contractor to provide
such notice shall not prevent such an event from qualifying as an Excusable
Delay provided Customer's Program Manager has actual notice of such event by
means of publicly and commonly available sources (e.g., national or global
coverage of major natural disaster) prior to Customer suffering any prejudice
from Contractor's failure to provide such notice.
Such notice to be provided by
Contractor, as required by the preceding provisions, shall include a detailed
description of the portion of the Work known to be affected by such delay. In
all cases, Contractor shall use best reasonable efforts to avoid or minimize
and/or work around such delay through the implementation of any work-around
plans, alternate sources, or other means Contractor may utilize or expect to
utilize to minimize a delay in performance of the Work. Contractor shall also
provide Customer prompt written notice when the event constituting an Excusable
Delay appears to have ended.
(b) In the event Customer disputes the Excusable Delay, Customer shall
inform Contractor in writing within ten (10) Business Days from the date of
receipt of written notice of the event constituting an Excusable Delay and, if
the Parties have not resolved the dispute within ten (10) Business Days of
Contractor's receipt of written notice from Customer, the dispute shall be
resolved pursuant to Article 27
(Dispute Resolution).
11.2 Equitable Adjustments.
(a) In the event of an Excusable Delay under Article 11.1 (Excusable Delay
Defined), there shall be an equitable adjustment to the Delivery Schedule and
Delivery Dates set forth in Table 7.1 of Article 7 (Delivery) (unless the
Excusable Delay is caused by Contractor's failure to provide Customer with the
assistance required by the third sentence of paragraph (a) of Article 25.2
(Launch Insurance)); provided, however, Contractor acknowledges and agrees that
the occurrence of an Excusable Delay shall not entitle Contractor to an increase
in the Contract Price unless the Excusable Delay is caused directly by
Customer's failure to meet its responsibilities under this Contract, including
those detailed in Article 29 (Customer's Responsibilities ), in which event
there shall be an equitable adjustment to the Contract Price only for
incremental
49
costs incurred by Contractor as a result of such Excusable Delay, such
incremental costs to be invoiced to Customer in reasonable detail.
(b) Any adjustment made pursuant to this Article 11.2 (Equitable
Adjustments) shall be formalized by the execution of an Amendment to this
Contract wherein such adjustments shall be recorded.
(c) In the event of an adjustment in the Delivery Date of any Satellite
due solely to Excusable Delay, there shall be an adjustment in the Delivery Date
of any Satellite or Ground Spare Satellite, if ordered, subsequently to be
Delivered only to the extent such Delivery Date is impacted by the Excusable
Delay and only to the extent necessary to permit at least one hundred twenty
(120) Calendar Days between the Delivery
of the subject Satellite and any
subsequent Satellite or Ground Spare Satellite, if ordered; provided, however,
in the event the Excusable Delay (of either the first or second Satellite) is
caused by a Launch Agency Delay, the Delivery Date for the Ground Spare
Satellite, if ordered, shall not be extended under this paragraph (c).
(d) The occurrence of an Excusable Delay arising from any act or omission
of Customer as set forth herein shall not entitle Customer to an adjustment in
the payment schedule set forth in Exhibit G (Payment Plan and Termination
Liability Amounts).
11.3 Maximum Excusable Delay; Termination.
(a) The maximum total amount of Excusable Delay (not including Excusable
Delay caused directly by Customer's failure to meet its responsibilities under
this Contract) shall be four hundred eighty-five (485) Calendar Days.
(b) Customer may terminate this Contract (in whole or in part as to the
following parts: first Satellite and related Launch Services, second Sate
llite
and related Launch Services, and Long-Lead Items), pursuant to Article 32.4
(Termination for Excusable Delay) if and when it becomes reasonably certain that
the aggregate of Excusable Delays (except those Excusable Delays caused directly
by Customer's failure to perform its responsibilities under this Contract) will
exceed four hundred eighty-five (485) Calendar Days.
50
12. IN-ORBIT PERFORMANCE INCENTIVE PAYMENTS.
12.1 Total Amount At Risk.
The Total Amount At Risk shall be placed at risk by Contractor against
failure of the Satellites to meet the criteria set forth or referenced in
Article 12.3 (Calculation and Earning of Incentive Amounts).
12.2 In-Orbit Performance Incentives.
Contractor represents that each Satellite will meet the criteria set forth
or referenced in Article 12.3 (Calculation and Earning of Incentive Amounts)
during the Orbital Design Life of each Satellite. To the extent any Satellite
satisfies the criteria set forth or referenced in Article 12.3 (Calculation and
Earning of Incentive Amounts), Customer shall pay Contractor Incentive Amounts,
to be calculated as specified in
Article 12.3 (Calculation and Earning of
Incentive Amounts). The total aggregate amount of incentives paid by Customer
to Contractor for any and all Satellites shall not exceed the Total Amount At
Risk, plus interest thereon calculated pursuant to Article 12.6(b) of this
Contract.
12.3 Calculation and Earning of Incentive Amounts.
The Total Amount at Risk shall be earned by Contractor and paid by Customer
to Contractor in the manner and to the extent provided in this Article 12.3
(Calculation and Earning of Incentive Amounts) and paid by Contractor to
Customer in accordance with Article 12.6 (Payment and Interest).
(a) Adjustments in Incentive Amounts.
--------------------------------
[Reserved.]
(b) Quarterly Incentive Payment Amounts.
-----------------------------------
(1) For each Satellite during its Orbital Design Life, a daily pro
rata portion of the Quarterly Incentive Payment Amount shall be
earned by Contractor on a daily basis during each calendar
quarter for each day that such Satellite is a Satisfactorily
Operating Satellite, provided that assessment and calculation of
performance shall be performed at the end of each calendar month,
and such earned portion of the Quarterly Incentive Payment Amount
shall be invoiced on a quarterly-in-arrears basis, for, and as of
the last day of, each calendar quarter. Contractor shall begin to
earn Quarterly Incentive Payment Amounts upon Handover of the
Satellite to Customer.
(2) For purposes of this paragraph (b), to the extent during any
quarterly period a Satellite is not a Satisfactorily Operating
Satellite due to Customer's failure to operate a Satellite as a
Properly Operated Satellite, Contractor's entitlement to payment
of the Quarterly Incentive Paymen
t Amount shall not be affected.
Any amounts earned by Contractor under
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Confidential treatment has been requested with respect to the
omitted portions.
this paragraph (b) shall be paid by Customer to Contractor in
accordance with Article 12.6 (Payment and Interest).
(3) Notwithstanding the foregoing, [*****] will result in a
negotiation as to whether Contractor shall earn the entire daily
pro rata portion of the Quarterly Incentive Payment Amount or a
portion thereof. In the event [*****], Contractor shall earn the
daily pro rata portion of the Q
uarterly Incentive Payment Amount
calculated in accordance with paragraph (b)(1) of Article 12.3
(Calculation and Earning of Incentive Amounts) above. [*****],
will result in a negotiated reduction of Incentive Amounts or
such other equitable adjustment as may be agreed to by the
Parties. In arriving at an equitable adjustment, factors to be
considered include [*****]. For example, (A) [*****], Contractor
shall earn no portion of the daily pro rata portion of the
Quarterly Incentive Payment for such day; (B) [*****], the
Parties shall negotiate in good faith an adjustment to the daily
pro rata portion of the Quarterly Incentive Payment Amount for
that day; (C) [*****], the Parties shall negotiate in good faith
an adjustment to the daily pro rata portion of the Quarterly
Incentive Payment Amount that may be earned
[*****]; and (D)
[*****], the Parties shall negotiate in good faith a permanent
adjustment to the daily pro rata portion of the Quarterly
Incentive Payment Amount.
(4) In the event Customer continues to operate a Satellite for
commercial purposes beyond the Orbital Design Life of such
Satellite, Contractor shall be entitled to earn, for each quarter
beyond such Orbital Design Life, a Quarterly Incentive Payment
Amount in accordance with this paragraph (4); provided, however,
in no event shall Contractor be entitled to any Quarterly
Incentive Payment Amount if the cumulative Incentive Amounts,
excluding interest, earned by Contractor exceed the Total Amount
at Risk. Contractor shall not be entitled to interest on any
Incentive Amounts earned pursuant to this paragraph (4).
(c) Constructive Total Loss.
-----------------------
(1) In the event a Satellite is a Constructive Total Loss after
successful injection of the Satellite into its specified orbit by
the Launch Vehicle, Contractor shall not be entitled to be paid
Incentive Amounts pursuant to this Article 12 (In-Orbit
Performance Incentive Payments) with respect to such Satellite.
52
12.4 Disputed Performance.
In the event of a dispute as to the performance of a Launched Satellite,
Customer shall provide Contractor with such technical data, reports, analyses,
and records as are available to support Customer's determination and Contractor
shall be given thirty (30) Calendar Days to verify the data. If, following such
thirty (30) Calendar Day period, Contractor continues to disagree with
Customer's determination and is able to present evidence to the contrary, then
Customer shall consider such evidence and consult with Contractor. In the
event the Parties do not reach agreement, the Parties agree to have an
independent determination of the Satellite's technical status performed by a
mutually-acceptable technically-qualified
third party. The costs incurred in
retaining the third party shall be shared equally between Contractor and
Customer. The Parties agree that before reference to such mutually-acceptable
technically-qualified third party, an informal forum between the Parties' Chief
Executive Officers shall take place to attempt resolution of said dispute. In
the event such efforts to resolve the dispute are unsuccessful, the Parties
shall proceed under Article 27.2 (Arbitration). The foregoing independent
determination may be used by either Party in any arbitration under Article 27.2
(Arbitration), but such determination shall not be binding upon the arbitrators.
12.5 Roll-Over of Incentive Amounts.
(a) In the event the first Satellite Launched pursuant to this Contract is
a Constructive Total Loss or Total Loss for reasons not attributable to
Contractor, all Incentive Amounts applicable to such Satellite shall be eligible
to be earned by Contractor following the Launch and In-Orbit Testing of the
Grou
nd Spare Satellite for each quarter during its Orbital Design Life that the
Ground Spare Satellite is a Satisfactorily Operating Satellite. Earning and
payment of such Incentive Amounts shall be in accordance with Article 12.3
(Calculation and Earning of Incentive Amounts), together with interest on such
Incentives Amounts calculated in accordance with Article 12.7 (Interest on Roll-
Over Incentive Amounts).
(b) In the event the second Satellite Launched pursuant to this Contract
is a Constructive Total Loss or Total Loss for reasons not attributable to
Contractor, but the first Satellite Launched was not a Constructive Total Loss
or Total Loss, all Incentive Amounts applicable to such second Satellite shall
be eligible to be earned by Contractor following the Launch and In-Orbit Testing
of the Ground Spare Satellite for each quarter that the Ground Spare Satellite
is a Satisfactorily Operating Satellite. Payment of such Incentive Amounts shall
be in accordance with Article 12.3 (Calculation and E
xxxxxx of Incentive
Amounts), together with interest on such Incentives Amounts calculated in
accordance with Article 12.7 (Interest on Roll-Over Incentive Amounts).
(c) In the event both the first and second Satellites Launched pursuant to
this Contract are Constructive Total Losses or Total Losses for reasons not
attributable to Contractor, then Contractor shall be eligible to earn the
Incentive Amounts applicable to the first Satellite in accordance with paragraph
(a) above, and with respect to the second Satellite, Contractor shall receive
payment from Customer of the total Incentive Amount applicable to such second
Satellite (that is, $12,500,000) within thirty (30) Calendar Days following
receipt by Customer of any applicable Launch Insurance proceeds therefor unless
Customer ordered an optional fourth Satellite (pursuant to Article 30 (Options))
prior to Launch of the second Satellite, in which case such Incentive Amounts
shall be rolled-over to such optional fourth Satellite. Earning and p
ayment of
such amounts shall be in accordance with Article 12.3 (Calculation and Earning
of Incentive Amounts), together with interest on such amounts to be calculated
in accordance with Article 12.7 (Interest on Roll-Over Incentive Amounts).
53
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
(d) In the event Customer has not ordered the Ground Spare Satellite or an
Optional Satellite prior to the Launch of a Satellite, Customer shall insure the
Incentive Amounts as part of the Launch Insurance purchased by Customer.
12.6 Payment and Interest.
(a) Payment.
-------
Any payment required to be made by Customer to Contractor in respect of a
Satellite for a Quarterly Incentive Payment Amount shall be invoiced on a
quarterly-in-arrears basis and paid in accordance with Article 5.2 (Payment).
(b) Interest.
--------
(1) Interest shall be paid on any Quarterly Incentive Payment Amount
with respect to a Satellite, such interest to be calculated over
the period commencing upon Handover of such Satellite by Customer
("Quarterly Incentive Commencement Date") and ending on the last
day of the quarter when the Quarterly Incentive Payment Amount is
invoiced, at a rate equal to [*****] compounded annually, as
calculated in accordance with the following formula: I/n/ =
(Quarterly Incentive Payment Amount earned during a quarter) *
[(1+[*****])/n*0.25/ - 1], where "n" = quarter number = 1 to 60.
For example, (A) if a Satellite meets the criteria of a
Satisfactorily Operating Satellite during the entire first
quarter following the Quarterly Incentive Commencement Date for
such Satellite, Contractor shall be entitled to
payment of the
Quarterly Incentive Payment Amount plus interest on such amount
from the Quarterly Incentive Commencement Date to the last day of
the first quarter (that is, the Quarterly Incentive Payment
equals: $208,333 plus the quantity $208,333 times the quantity
[*****], raised to the 1 times 0.25 power, minus 1) resulting in
a quarterly financing charge of [*****], and a total Quarterly
Incentive Payment Amount of [*****]; or (B) if the Satellite
meets the criteria of a Satisfactorily Operating Satellite during
the entire twenty-fifth (25th) quarter following the Quarterly
Incentive Commencement Date for such Satellite, Contractor shall
be entitled to payment of the Quarterly Incentive Payment Amount
plus interest on such amount from the Quarterly Incentive
Commencement Date for such Satellite to the last
day of the
twenty-fifth (25th) quarter (that is, the Quarterly Incentive
Payment Amount equals: $208,333 plus the quantity $208,333 times
the quantity [*****], raised to the twenty-five (25) times 0.25
power, minus 1) resulting in a quarterly financing charge of
[*****], and a total Quarterly Incentive Payment Amount of
[*****].
54
****** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
(2) Exhibit G-1 (Payment Plan for Interest on In-Obit Incentive
Amounts) sets forth an interest calculation that assumes
Contractor has earned all Quarterly Incentive Payment Amounts.
The actual Quarterly Incentive Payment Amount earned by
Contractor, and the interest thereon, will be calculated in
accordance with this Article 12 (In-Orbit Performance Incentive
Payments).
12.7 Interest on Roll-Over Incentive Amounts.
The Incentive Amounts rolled-over to the Ground Spare Satellite pursuant to
paragraphs (a) and/or (b) of Article 12.5 (Roll-Over of Incentive Amounts) shall
bear interest as calculated in accordance with this Article 12 (In-Orbit
Performance Incentive Payments) from the date of declaration of Constructive
Total Loss or Total Loss and ending on the last day of the quarter when the
Quarterly Incentive Payment Amount is invoiced, as more fully provided in
paragraph (b) of Article 12.6 (Payment and Interest). Interest on rolled-over
Incentive Amounts shall be invoiced and paid on a quarterly-in-arrears basis.
For example, (a) if the first Quarterly Incentive Payment Amount is earned five
(5) quarters after Constructive Total Loss or Total Loss, the Quarterly
Incentive Payment Amount earned during each quarter (QIPA) plus interest thereon
(the sum equals QIPA/n/) is calculated as follows:
QIPA/n/ = QIPA * (1+ [*****]) /(n + x) * 0.25/
where: n = quarter number = 1 to 60 c
ommencing with Quarterly
Incentive Commence Date, and
x = number of days from Constructive Total Loss or Total
Loss to Quarterly Incentive Commencement Date converted into
quarters.
therefore, QIPA/1/ = $208,333 * (1 + [*****]) /(1 + 4) * 0.25/
= [*****];
(b) if the first Quarterly Incentive Payment Amount is earned five (5)
quarters and twenty (20) days after Constructive Total Loss or Total Loss, the
Quarterly Incentive Payment Amount earned during each quarter (QIPA) plus
interest thereon (the sum equals QIPAn) is calculated as follows:
QIPA/n/ = QIPA * (1+ [*****]) /(n + x) * 0.25/
where: n = quarter number = 1 to 60 commencing with Quarterly
Incentive Commence Date, and
x = number of days from Constructive Total Loss or Total
Loss to Quarterly Incentive Commencement Date conve
rted into
quarters.
55
****** Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
therefore, QIPA/1/ = $208,333 * (1 + [*****]) /(1 + 4.22) * 0.25/
= [*****].
12.8 Security for Performance Incentive Payments.
(a) In the event Customer does not order the Ground Spare Satellite,
Contractor and Customer agree that, as assurance of the payment of Incentive
Amounts as such amounts may be earned by Contractor and become payable by
Customer, Customer must demonstrate to Contractor, no later than four (4) months
prior to the Launch of the first Satellite, that Customer has a mi
nimum of
[*****] in liquid assets (e.g., cash, cash equivalents and current receivables),
or, at Contractor's option, non-current assets (e.g., property, plant,
equipment) with a market value of at least [*****] and a reasonable expectation
that such market value can be realized within one hundred eighty (180) Calendar
Days of a decision to liquidate. In the case of non-current assets, Customer
shall also grant to Contractor a perfected security interest in such non-current
assets, up to a maximum interest in the amount of [*****], and shall cause all
appropriate documents and financial statements to be filed in order to give
effect to such security interest. Contractor's perfected security interest in
such non-current assets, if granted, shall be released by Contractor if Customer
performs its obligations with respect to payment of all earned Incentive
Amounts, including interest thereon, in accordance with the terms of this
Contract, for a period of twenty-four (24) months commencing upon the date that
the first Quarterly Incentive Payment Amount is due with respect to the first
Launched Satellite. In the event the first Satellite is a Constructive Total
Loss or Total Loss, the requirements of this paragraph (a) shall apply to the
second Satellite.
(b) In the event Customer Launches the Ground Spare Satellite as an
additional Satellite (not a replacement) within a period of two (2) years
following the date upon which the first Quarterly Incentive Payment Amount is
due with respect to the first Launched Satellite, Customer shall demonstrate to
Contractor, no later than four (4) months prior to the Launch of the Ground
Spare Satellite, that Customer has a minimum of [*****] in liquid assets (e.g.,
cash, cash equivalents and current receivables), or, at Contractor's option,
non-current assets (e.g., property, plant, equipment) with a market value of at
least [*****] and a reasonable expectation that such market value can be
realized within one hundred eighty (180) Calendar Days of a decision to
l
iquidate. In the case of non-current assets, Customer shall also grant to
Contractor a perfected security interest in such non-current assets, up to a
maximum interest in the amount of [*****], and shall cause all appropriate
documents and financial statements to be filed in order to give effect to such
security interest. Contractor's perfected security interest in such non-current
56
assets, if granted, shall be released by Contractor if Customer performs its
obligations with respect to payment of all earned Incentive Amounts, including
interest thereon, in accordance with the terms of this Contract, for a period of
twenty-four (24) months commencing upon the date that the first Quarterly
Incentive Payment Amount is due with respect to the first Launched Satellite.
(c) Contractor expressly acknowledges and agrees that Customer shall not
be required, at any time, to provide a stand-by, irrevocable, or other form of
letter of credit, or any equivalent or external guarantees, in order to secure
Customer's payment obligations with respect to Incentive Amounts, as such
amounts are earned by Contractor.
12.9 Exclusive Remedy.
The rights and remedies under this Article 12 (In-Orbit Performance
Incentive Payments) are exclusive for the failure of any Satellite after Launch
to meet the criteria set forth or referenced in Article 12.3 (Calculation and
Earning of Incentive Amounts) and in substitution of any other rights and
remedies either Party may have under this Contract or otherwise at law as a
result of such failure.
57
13. CORRECTIVE MEASURES IN UNLAUNCHED SATELLITES AND OTHER DELIVERABLE ITEMS
13.1 Notice of Defects.
(a) Customer may notify Contractor in writing when it in good faith
reasonably demonstrates any Defect exists in any Deliverable Item or component
part thereof. In the event Contractor disagrees with Customer or Customer
Personnel as to the existence or nature of a Defect, Contractor shall so advise
Customer in writing. In such event, the Parties shall negotiate in good faith to
determine what Defect, if any, exists and any action required to remedy such
Defect. Except to the extent written waivers are made pursuant to the provisions
of Article 8 (Inspection and Final Acceptance), Customer's failure to notify
Contractor of any Defect shall no
t constitute a waiver of any rights of Customer
or obligations of Contractor under this Contract with respect to any such
Defects.
(b) Contractor shall advise Customer as soon as practicable by telephone
and confirm in writing any event, circumstance, or development that materially
threatens the quality of any Deliverable Items or component parts thereof,
including any Satellite, or threatens the Delivery Dates established therefor.
(c) Without limiting the generality of the foregoing, if the data
available from any Launched Satellite or from other satellites of a similar
class shows that any Satellite contains a Defect, Contractor shall promptly
inform Customer of such Defect.
13.2 Duty to Correct.
(a) Without limiting the obligations of Contractor or the rights of
Customer under this Contract, prior to Launch of any Satellite or Delivery of
any other Deliverable Item, Contractor shall, at its expense, promptly correct
any Defect related to any Deliverable Item or component t
hereof that Contractor
or Customer discovers during the course of the Work or from other spacecraft of
a class similar to the satellites being built by Contractor, and notwithstanding
that a payment may have been made in respect thereof, and regardless of prior
reviews, inspections, approvals, or acceptances. This provision is subject to
the right of Contractor to have any items containing a Defect returned at
Contractor's expense to Contractor's facility for Contractor to verify and
correct the Defect.
(b) At Contractor's expense, Contractor shall use reasonable efforts to
correct any such Defect in any Launched Satellite delivered in-orbit hereunder,
to the greatest extent that such Defect may be corrected by on-ground means,
including transmission by Contractor of commands to such Satellite(s), to
eliminate or mitigate any adverse impact resulting from any such Defect, to
establish work-around solutions, or to otherwise resolve such Defect. Contractor
shall coordinate and consult with Customer
concerning such on-ground resolution
of Defects in Launched Satellites.
(c) Contractor shall fulfill the foregoing obligations at its own cost and
expense, including all costs arising from charges for packaging, shipping,
insurance, taxes, and other matters associated with the corrective measures,
unless it is reasonably determined after
58
investigation that Customer directly caused the Defect in question, in which
case Customer shall pay all such costs.
(d) If Contractor fails to correct any Defect with respect to those
Satellites that have not been Launched or with respect to any other Deliverable
Item within a reasonable time after notification from Customer and after the
Parties have followed the provisions of Article 13.1 (Notice of Defects) above,
Customer may, by separate contract or otherwise, correct or replace such items
or services, and, unless it is reasonably determined after investigation that
Customer directly caused the Defect in question, Contractor shall pay to
Customer the reasonable cost of such correction or replacement. The amount
payable by Contractor shall be v
erified at Contractor's request by an
internationally recognized firm of accountants appointed by Contractor. The
costs of such verification shall be paid by Contractor. The verification of such
correction cost shall be without prejudice to the right of either Party in any
arbitration proceeding and shall not be binding upon the arbitrators.
(e) Contractor acknowledges and agrees that it shall not be entitled to
payment for any additional costs incurred as a consequence of any Defect where
the Defect arises directly from Contractor's fault. If correction of any Defect
causes a delay in the Delivery of any Work, despite the efforts of Contractor to
correct the Defect, the provisions of Article 10 (Liquidated Damages for Late
Delivery) shall apply as appropriate in addition to the remedies in this Article
13 (Corrective Measures in Unlaunched Satellites and Other Deliverable Items)
and Article 31 (Failure to Make Adequate Progress).
(f) After notification of a Defect to Contractor, Customer,
in its sole
discretion, may elect in writing, pursuant to Article 34.4 (Waiver of Breach of
Contract), not to require correction or replacement of such items or services or
to waive the Defects noted for the Satellites that have not been Launched, if
any. In such event, Contractor shall promptly provide Customer with a written
price proposal for the cost of correction of such Defect at the time of waiver.
(g) Subject to the provisions of any applicable Law, Contractor agrees to
enforce any manufacturer's warranty given to it in connection with any Work to
be provided under this Contract, and upon Customer's written request, Contractor
shall assign to Customer such warranty protection to correct any defective Work
not otherwise corrected by Contractor.
59
14. CHANGES IN SCOPE OF WORK
14.1 Changes Requested by Customer.
(a) Subject to paragraphs (b), (c), and (d) below, Customer shall be
entitled to direct, during the performance of this Contract, any change within
the general scope of this Contract, including any change that will add, delete,
or change the Work, affect the design of the Satellites, change the method of
shipping or packing, or the place or time of Delivery, or will affect any other
requirement of this Contract.
(b) Any change directed by Customer as described in paragraph (a) above
shall be submitted in writing to Contractor. Contractor shall respond to such
directed change in writing to Customer within thirty (30) Calendar Days after
such directed change and shall incl
ude in such response the details of the
impact of such change on the Contract Price, Delivery Schedule, performance
specifications, or other terms of this Contract.
(c) Customer shall notify Contractor in writing, within thirty (30)
Calendar Days after receipt of Contractor's response, whether or not Customer
agrees with and accepts Contractor's response. If Customer agrees with and
accepts Contractor's response, Contractor shall proceed with the performance of
this Contract as changed immediately upon the execution by both Parties of an
Amendment reflecting such changes.
(d) If the Parties cannot agree on a reasonable price or revised Delivery
Schedule, performance specifications, or other item, as occasioned by Customer's
directed change, and Customer still desires the directed change, Customer shall
direct Contractor to proceed with the change and Customer shall pay Contractor's
proposed price and accept the revised Delivery Schedule or performance
specifications or other item pending an
y decision to the contrary under Article
27 (Dispute Resolution). Contractor shall proceed with the Work as changed and
Customer may dispute the reasonableness of the proposed price, revised Delivery
Schedule, performance specification, or other item under Article 27 (Dispute
Resolution). In the event it is determined pursuant to such dispute resolution
or by the Parties' mutual written agreement that Customer is entitled to a full
or partial refund of amounts paid under this paragraph (d), Customer shall be
entitled to interest on such refunded amounts, such interest running from the
date of payment by Customer to the date of refund at the interest rate set forth
in Article 34.10 (Calculation of Interest).
14.2 Changes Requested by Contractor.
(a) Subject to paragraphs (b) and (c) below, Contractor may request,
during the performance of this Contract, any change within the general scope of
this Contract, including any change that will add or delete Work, affect the
design of the Satellites
, change the method of shipping or packing, or the place
or time of Delivery, or will affect any other requirement of this Contract.
(b) Any changes as described in paragraph (a) above requested by
Contractor shall be submitted in writing to Customer at least sixty (60)
Calendar Days prior to the proposed date of the change. If such Contractor
requested change causes an increase or decrease or other impact
60
in the Contract Price, Delivery Schedule, performance specifications, or other
terms of this Contract, Contractor shall submit, with such request, a written
proposal identifying such change and the impact thereof on the Contract Price,
Delivery Schedule, performance specifications, or other terms of this Contract.
(c) Customer shall notify Contractor in writing, within thirty (30)
Calendar Days after receipt of the requested change proposal, whether or not
Customer agrees with and accepts such change and the price/schedule/performance
or other impact thereof. If Customer agrees with and accepts Contractor's
requested change and such impact thereof, Contractor shall proceed with the
performance of this Contract as changed and an Amendment to this Con
tract
reflecting the change proposal shall be executed by the Parties.
14.3 Pricing of Changes.
When calculating the change in the Contract Price caused by changes in the
Work pursuant to this Article 14 (Changes in Scope of Work), such calculation
shall be consistent with Contractor's standard labor rates and general
administrative and overhead rates then in effect at the time of the change.
14.4 Storage.
(a) Storage of a Satellite shall be for a period of either (A) no longer
than six (6) months ( "Short Term Storage") or (B) more than six (6) months but
no longer than three (3) years ("Medium Term Storage"); Short Term Storage shall
be at Contractor's facilities and satisfy the requirements of the storage plan
to be developed by Contractor in accordance with Exhibit B (SOW). Medium Term
Storage will be at a mutually agreed-to facility, and such facility shall be
appropriate for the planned duration of storage.
(b) In the event Contractor places a Satellite in storage,
Contractor
shall pay for any associated costs and expenses of such storage, unless
Contractor places such Satellite in storage due to reasons attributable to
Customer.
(c) In the event Contractor places a Satellite in storage due to reasons
attributable to Customer, Customer shall pay Contractor reasonable storage
costs, and any related costs that increase the Contract Price or extend the
Delivery Schedule shall be addressed in an Amendment pursuant to Article 14.1
(Changes Requested by Customer) above.
(d) For a Satellite placed in storage, Customer shall pay Contractor any
Milestone Payment related to Shipment Readiness Review upon arrival of the
Satellite at the storage site.
(e) In the event Contractor places a Satellite into storage pursuant to
this Article 14.4 (Storage) for reasons not attributable to Contractor for more
than twelve (12) months, Contractor shall be entitled to receive, and Customer
shall pay to Contractor, all payments due and owing, less all costs not incurre
d
with respect to the Launch Campaign, LEOP, In-Orbit Testing, MSS, and OSS for
such Satellite, but including the Incentive Amounts applicable to such
Satellite. In the event such Satellite is Launched, those Incentive Amounts
previously paid by Customer to Contractor shall be retained by Contractor,
subject to the following:
61
(1) Contractor shall earn such Incentive Amounts in accordance with
Article 12.3 (Calculation and Earning of Incentive Amounts); and
(2) any Incentive Amounts not earned by Contractor pursuant to
Article 12.3 (Calculation and Earning of Incentive Amounts) shall
be repaid by Contractor to Customer as set forth below.
Repayment by Contractor of any unearned Incentive Amounts under this
paragraph (e) shall be due thirty (30) Calendar Days after the date of receipt
by Contractor of a telefaxed invoice (which shall be followed by the airmailed
original) from Customer. Interest shall be paid (at the rate specified in
Article 34.10 (Calculation of Interest) on any amounts not paid when due
.
Customer's invoice shall be accompanied by sufficient information to support
Customer's claim. Contractor shall be deemed to have accepted the invoice ten
(10) Business Days after receipt of Customer's invoice unless, within such time
period, Contractor notifies Customer of a dispute. Any disputes as to the
performance of a Launched Satellite shall be resolved in accordance with the
provisions of Article 12.4 (Disputed Performance). Contractor shall pay any
undisputed portion of an invoice.
(f) In the event Contractor places any Satellite into storage under this
Article 14.4 (Storage) and such storage is required for reasons attributable to
Contractor, the warranty periods for such Satellite and its batteries (and in
the case of the first Satellite to be Delivered hereunder, the SCC Equipment and
Software, Dynamic Satellite Simulator, and Dynamic Spacecraft Simulator) under
Article 18.3 (Warranties for Deliverable Items) shall be extended on a day-for-
day basis for the length of such storage
period.
(g) In the event a Satellite has been in such storage for three (3) years,
or Customer decides prior to the end of such three (3) years not to Launch such
Satellite, the following shall apply:
(1) Contractor shall be entitled to receive within thirty (30)
Calendar Days after the earlier of, receipt of destorage
notification from Customer or the end of the three (3) year
period, all payments due and owing, not otherwise paid to
Contractor pursuant to paragraph (e) above, including Incentive
Amounts, less all costs not incurred with respect to the Launch
Campaign, LEOP, In-Orbit Testing, MSS, and OSS for such
Satellite; and
(2) Contractor shall promptly Deliver to Customer, at Customer's
expense, such Satellite to a location specified by Customer in
the State of Florida or the State of Delaware, or in such other
locatio
n as may be mutually agreed upon by the Parties.
Customer's expenses shall include any applicable state sales tax
for such storage.
(h) Final Acceptance shall occur and title and risk of loss shall pass,
with respect to any Satellite placed in storage in accordance with this Article
14.4 (Storage) as follows: (i) if paragraph (g) applies, upon arrival of the
Satellite at the location specified by Customer, in which case, notwithstanding
Article 4.3 (Taxes and Duties) any and all taxes and duties in connection with
such delivery shall be borne and paid by Customer, or (ii) if the Satellite is
62
Launched, (x) risk of loss shall pass at Launch and (y) title, free and clear of
any liens and encumbrances shall pass at Final Acceptance and Final Acceptance
shall occur in accordance with Article 8.5(b).
63
15. PERMITS AND LICENSES; COMPLIANCE WITH LAWS
15.1 United States Permits, Licenses, and Laws.
(a) Contractor shall, at its own expense, obtain all United States
Government approvals, permits, and licenses, including any required for export
from or import into the United States, as may be required for the performance of
the Work. Customer agrees to cooperate with Contractor in Contractor's efforts
to obtain any such approvals, permits, or licenses.
(b) Contractor shall, at its expense, perform the Work in accordance with
all applicable Laws of the United States and the conditions of all applicable
United States Government approvals, permits, or licenses.
(c) Without limiting the generality of the foregoing, Contractor will not,
directly or indirectly, take any action that would cause Customer to be in
violation of U.S. anti-boycott laws under the U.S. Export Administration Act,
the U.S. Internal Revenue Code, or any regulation thereunder. In its performance
of this Contract, Contractor will not, directly or indirectly, make, offer, or
agree to make or offer any loan, gift, donation, or other payment, whether in
cash or in kind, for the benefit or at the direction of any candidate,
committee, political party, government or its subdivision, or any individual
elected, appointed, or otherwise designated as an employee or officer thereof,
for the purpose of influencing any act or decision of such entity or individual
or inducing such entity or individual to do or omit to do anything, in order to
obtain or retain business or other benefits except as may be expressly permitted
under the Foreign Corrupt Practices Act and the regulations promulgated
thereunder.
15.2 Non-United States Permits, Licenses, and Laws.
(a) Contr
actor shall, at its expense, obtain all non-United States
Government approvals, permits, and licenses, as may be required for the
performance of the Work, including those that may be required for Contractor to
perform the Work in compliance with the Laws of any country from which any
Satellite shall be launched. Customer agrees to cooperate with Contractor in
Contractor's efforts to obtain any such non-United States Government approvals,
permits, or licenses.
(b) Contractor shall, at its expense, perform the Work in accordance with
all applicable Laws of any country, state, territory, or jurisdiction, and the
conditions of all applicable non-United States Government approvals, permits, or
licenses.
15.3 Review of Applications.
Contractor shall review with Customer any application Contractor makes to
any government department, agency, or entity for any approval, permit, license,
or agreement, as may be required for performance of the Work, prior to
submission of such application. Con
tractor shall provide Customer a minimum of
three (3) Business Days to review such application prior to submission to such
governmental entity, and Contractor shall in good faith consider any comments
and proposed revisions made by Customer for incorporation into such application.
Customer shall reasonably cooperate with Contractor in Contractor's efforts to
64
procure all such approvals, permits, licenses, and agreements.
15.4 Contractor Violation of Law.
Customer shall not be responsible in any way for the consequences, direct
or indirect, of any violation by Contractor, its Subcontractors, or their
respective Affiliates or Associates of any Law or of any country whatsoever.
65
16. SUBCONTRACTS
16.1 Major Subcontracts
(a) Contractor has represented that in the performance of the Work
required by this Contract it will be necessary for Contractor or its
Subcontractors to enter into the Major Subcontracts with certain of the entities
identified in Exhibit D (Test Plan Requirements) hereto. Contractor shall select
the Major Subcontractors only from those entities approved by Customer and
listed in Exhibit D (Test Plan Requirements), and, to the extent permitted by
the Subcontractor agreement, Customer shall be provided with copies of the
technical content and a copy of the full text of any Major Subcontract
(excluding price and payment schedule) promptly upon execution thereof, and upon
Customer's request.
(b) A
s of the Effective Date of Contract, the approved list of Major
Subcontractors is as specified in Exhibit D (Test Plan Requirements). Contractor
shall notify Customer promptly in writing upon selection of a Major
Subcontractor and upon any change in any Major Subcontractor, said change to be
only from the list of alternatives in Exhibit D (Test Plan Requirements).
(c) Customer's acknowledgment or approval of any Major Subcontractor or
Subcontractor shall not relieve Contractor from any obligations or
responsibilities under this Contract.
16.2 Selection or Replacement of Major Subcontractors.
Contractor shall notify Customer if a Subcontractor identified in Exhibit D
(Test Plan Requirements) is substituted for another Major Subcontractor on the
list in Exhibit D (Test Plan Requirements); however, Customer's approval of such
termination or substitution shall not be required. Subcontractors shall be
selected based upon the offering of the best combination of reliability,
quality, price,
and delivery time.
16.3 No Privity of Contract.
Nothing in this Contract shall be construed as creating any contractual
relationship between Customer and any Subcontractor. Contractor is fully
responsible to Customer for the acts or omissions of Subcontractors and all
persons used by Contractor or a Subcontractor in connection with performance of
the Work. Any failure by a Subcontractor to meet its obligations to Contractor
shall not constitute a basis for Excusable Delay, except as provided in Article
11 (Excusable Delay), and shall not relieve Contractor from meeting any of its
obligations under this Contract.
16.4 Subcontractor Relations.
By appropriate written agreement, Contractor shall use commercially
reasonably efforts to require each Major Subcontractor, to the extent of the
Work to be performed by such Major Subcontractor, to be bound to Contractor by
the terms of this Contract and to assume toward
66
Contractor all the obligations and responsibilities that Contractor, by this
Contract, assumes toward Customer except to the extent otherwise provided in
Article 6.9 (Major Subcontracts).
67
17. PERSONNEL AND KEY PERSONNEL
17.1 Personnel Qualifications.
Contractor shall assign properly qualified and experienced personnel to the
program contemplated under this Contract, and Contractor shall use best
reasonable efforts to retain such personnel on Customer's program for the
duration of such program.
17.2 Key Personnel Positions.
Key personnel ("Key Personnel") shall be the personnel filling the
following or equivalent positions:
(1) Contractor Program Manager;
(2) Contract Manager;
(3) Spacecraft Systems Engineer;
(4) Payload Program Manager;
(5) Payload Chief Systems Engineer;
(6) Production, Integration and Test Manager;
(7) Product Assuranc
e Manager, provided that such Product Assurance
Manager shall not be engaged in more than two (2) programs during
the performance of this Contract; and
(8) Launch Services Manager.
17.3 Assignment of Key Personnel.
(a) Contractor will assign individuals from within Contractor's
organization to the Key Personnel positions to carry out the Work.
(b) Key Personnel will be familiar with programs similar to Customer's
program.
(c) Before assigning an individual to any Key Personnel positions, whether
as an initial assignment or a subsequent assignment, Contractor shall notify
Customer of the proposed assignment, shall introduce the individual to
appropriate Customer representatives and, upon request, provide such
representatives with the opportunity to interview the individual and shall
provide Customer with the individual's resume. If Customer in good faith objects
to the qualifications of the proposed individual within fifteen (15) Busines
s
Days after being notified thereof, then Contractor agrees to discuss such
objections with Customer and resolve such concerns on a mutually agreeable basis
or; if unable to do so, to select another candidate acceptable to Customer. The
Key Personnel that have been approved as of the Effective Date of Contract are
listed in Attachment B (Key Personnel). Should the individuals filling the
positions
68
of Key Personnel leave such positions for whatever reason, Contractor shall
follow the procedures set forth in this Article 17.3 (Assignment of Key
Personnel) to select replacement personnel.
69
18. CONTRACTOR'S REPRESENTATIONS, COVENANTS, AND WARRANTIES
18.1 Organization; Good Standing and Qualification.
Contractor represents and warrants that:
(a) it is a corporation duly organized, validly existing and in good
standing under the Laws of Delaware;
(b) it has all requisite power and authority to own and operate its
material properties and assets and to carry on its respective business as now
conducted in all material respects; and
(c) it is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect.
18.2 Authorization.
Contractor represents and warrants that:
(a) it has all requisite corporate power
and authority to enter into this
Contract and to carry out the transactions contemplated by this Contract;
(b) the execution, delivery, and performance of this Contract and the
consummation of the transactions contemplated by this Contract have been
authorized by the requisite corporate action of Contractor and do not conflict
with any other agreement or obligation to which it is a party or which binds its
assets; and
(c) this Contract is a valid and binding obligation of Contractor,
enforceable in accordance with its terms, except Contractor makes no
representation or warranty as to the enforceability of remedies due to
applicable bankruptcy, insolvency, moratorium, reorganization, or similar laws
relating to or affecting the enforcement of creditor's rights or by reason of
general principles of equity.
18.3 Warranties for Deliverable Items.
(a) Satellites.
----------
Contractor represents that each Satellite furnished under this Contract
shall be free from D
efects other than Defects waived in writing by Customer.
This representation shall begin on the date of Handover of a Satellite and
Customer's exclusive remedy for breach of this representation is set forth in
Article 12 (In-Orbit Performance Incentive Payments).
(b) SCC Equipment and Software.
---------------------------
Contractor represents and warrants that the SCC Equipment and Software
Delivered under this Contract shall be free from Defects other than Defects
waived in writing by Customer. This warranty shall begin on the date of Final
Acceptance of the respective Deliverable Item and run for one (1) year.
70
(c) Communications Payload Simulator and Dynamic Spacecraft Simulator.
-----------------------------------------------------------------
Contractor represents and warrants that each of the Communications Payload
Simulator and Dynamic Spacecraft Simulator Delivered under this Contract shall
be free from Defects other than Defects waived in writing by Customer. This
warranty shall begin on the date of Final Acceptance of the respective
Deliverable Item and run for one (1) year.
(d) Data and Documentation.
----------------------
Contractor represents and warrants that the Data and Documentation to be
furnished hereunder shall be free from Defects. This warranty shall begin on
the date of Final Acceptance of the
last portion of the Data and Documentation
to achieve Final Acceptance and run for a period of one (1) year. A Customer
claim under this warranty clause shall not affect the validity of Final
Acceptance.
(e) Batteries.
---------
Contractor represents and warrants that the batteries to be furnished
hereunder shall be free from Defects. In the event any Satellite is required to
be placed in storage prior to its Launch, Contractor shall, upon removal of such
Satellite from storage, (i) test the batteries to ensure the batteries are free
from Defects, other than Defects waived in writing by Customer, and conform to
the applicable specifications and requirements set forth in Exhibit A (Satellite
Performance Specifications) and (ii) certify to Customer that the Batteries are
so conforming. This warranty shall begin on the date of cell activation and run
for a period of two (2) years or until Launch of the Satellite, whichever occurs
earlier.
(f) Services.
--------
Contractor represents and warrants it will perform the Work in accordance
with the highest professional standards of the commercial aerospace and
satellite communications industry practice for work similar in type, scope, and
complexity to the Work.
(g) Title.
-----
Contractor represents and warrants it shall provide good and salable in
commerce title free and clear of any liens and encumbrances of any kind, at the
time title passes to Customer pursuant to Article 9 (Title and Risk of Loss).
(h) Intellectual Property.
---------------------
Contractor represents and warrants that (i) it is either the owner of, or
authorized to use and incorporate, any Intellectual Property utilized or
incorporated in any Deliverable Item or the manufacture of any Deliverable Item;
(ii) Customer shall not be required to pay any license fees or royalties apart
from those included in the Contract Price for use of any Intellectual Property
utilized or incorporated in any D
eliverable Item or the manufacture of any
Deliverable Item; and (iii) neither the Work nor any Intellectual Property
(other than Customer's Intellectual Property) utilized or incorporated in any
Deliverable Item or the manufacture of any Deliverable Item shall infringe any
Intellectual Property Right of any third party, provided that Contractor makes
no representations as to infringement with respect to (x) any software or item
that is used or
71
combined with any other software or item or modified by an entity other than
Contractor or Subcontractor when the infringement would have not occurred but
for such combination, use, or modification, unless such combination, use or
modification was identified in Exhibit A (Technical Specifications), and (y) any
software or item made according to the written requests, instructions or
specifications of Customer to the extent the infringement arises from compliance
with such written requests, instructions or specifications. As of EDC,
Contractor is not aware of any claim or potential claim to the contrary by any
third party. This warranty shall begin upon Final Acceptance of the Work
embodying the subject Intellectual Property and continue for the operating li
fe
of the Satellites and Long-Lead Items, and any optional Satellites which may be
provided hereunder.
(i) Code.
----
Contractor represents and warrants that (i) it shall use commercially
reasonable efforts to ensure that no viruses or similar items are coded or
introduced into the Work; (ii) it shall not introduce into the Work any code
that would have the effect of disabling or otherwise shutting down all or any
portion of the Work; (iii) it shall not develop, or seek to gain access to the
Work through, any special programming devices or methods, including trapdoors or
backdoors, to bypass any Customer security measures protecting the Work; and
(iv) the operation of the Work shall not be affected by the change of date on or
after January 1, 2000. This warranty shall begin upon Final Acceptance of the
Work embodying the code at issue and continue for the operating life of the
Satellites and Ground Spare Satellite, and any optional Satellites which may be
provided hereunder.
(j) Remedies.
--------
(1) Notwithstanding anything to the contrary herein, Customer shall
have the right at any time during the period of the warranties
set forth in this Article 18.3 (Warranties for Deliverable Items)
to require that any Work not conforming in any material respect
to this Contract be promptly corrected or replaced (at
Contractor's option and expense) with conforming Work, subject to
paragraph (g) of Article 8.2 (Shipment Readiness Review) and
paragraph (e) of Article 8.3 (Flight Readiness Review). If
Contractor fails or is unable to correct or replace such
defective Work within a reasonable period after notification from
Customer, Customer may then require Contractor to repay such
portion of the Contract Price as is equitable under the
circumstances in lieu of repairing or replacin
g such defective
Work.
(2) During the operational lifetime of the Satellites, Contractor
shall provide the following for software delivered under this
Contract: with respect to software for ground equipment delivered
hereunder, Contractor shall correct errors, including modifying
code and making operational modifications, in such software as
required for the Satellites to operate in accordance with Exhibit
A (Spacecraft Performance Specifications) for the operating life
of the Satellites; and with respect to flight firmware and
software, Contractor shall, to the extent feasible, correct such
firmware
72
and software as required for the Satellites to operate
in accordance with Exhibit A (Spacecraft Performance
Specifications) for the operational lifetime of the Satellites.
During the operational lifetime of the Satellites, Contractor
shall, in a timely manner, provide access to engineering,
software and operations support personnel, including and/or
involving Contractor's Subcontractors and vendors, where
feasible, for the purpose of resolving errors, problems, or
issues relating to the ground equipment, software, data, and
operations products to be Delivered pursuant to this Contract.
(3) In the
event Contractor, for whatever reason, fails to perform
its obligations under paragraph (2) above, with respect to any
flight or ground software delivered under this Contract, which
software Contractor either owns or has rights in, Contractor
agrees to provide Customer access to the source code and related
documentation for such software so as to enable Customer to
perform tasks contemplated by paragraph (2) above. With respect
to other software (that is, software that Contractor does not own
or have rights in), Contractor shall use its reasonable best
efforts to provide Customer with similar access to source code
and related documentation for such software. Contractor shall
ensure that all of Contractor's source code for the flight
firmware and software and ground software is appropriately
maintained, stored, ca
talogued, and archived as necessary to
maintain such source code to object code integrity.
(k) SUBJECT TO ARTICLE 21.1 (CONTRACTOR INTELLECTUAL PROPERTY
INDEMNIFICATION), THE WARRANTIES SET FORTH IN THIS ARTICLE 18.3 (WARRANTIES FOR
DELIVERABLE ITEMS) ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY, AND THE REMEDY
PROVIDED IN PARAGRAPH (j) ABOVE AND ARTICLE 12 (IN-ORBIT PERFORMANCE INCENTIVE
PAYMENTS) ARE THE SOLE REMEDY FOR FAILURE BY CONTRACTOR TO COMPLY WITH
PARAGRAPHS (a) THROUGH (f), (h) AND (i) ABOVE AND TO FURNISH THE ITEMS REQUIRED
TO BE FURNISHED ABOVE FREE FROM MATERIAL DEFECTS IN MATERIAL OR WORKMANSHIP. ALL
OTHER WARRANTIES OR CONDITIONS IMPLIED BY ANY STATUTORY ENACTMENT OR RULE OF LAW
WHATSOEVER ARE EXPRESSLY EXCLUDED AND DISCLAIMED.
73
19. CUSTOMER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
19.1 Organization; Good Standing and Qualification.
Customer represents and warrants that:
(a) it is duly organized, validly existing and in good standing under the
Laws of the State of Delaware;
(b) it has all requisite power and authority to own and operate its
material properties and assets and to carry on its respective business as now
conducted in all material respects; and
(c) it is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect.
19.2 Authorization.
Customer represents and warrants that:
(a) it has all requisite corporate power and authorit
y to enter into this
Contract and to carry out the transactions contemplated by this Contract;
(b) the execution, delivery, and performance of this Contract and the
consummation of the transactions contemplated by this Contract have been duly
authorized by the requisite corporate action of Customer and do not conflict
with any other agreement or obligation to which it is a party or which binds its
assets; and
(c) this Contract is a valid and binding obligation of Customer,
enforceable in accordance with its terms, except Customer makes no
representation or warranty as to the enforceability of remedies due to
applicable bankruptcy, insolvency, moratorium, reorganization, or similar laws
relating to or affecting the enforcement of creditor's rights or by reason of
general principles of equity. Notwithstanding the foregoing, in the event of
Customer's bankruptcy, insolvency, moratorium, reorganization, or equity
proceeding, Customer shall use its best efforts to have this Contract confirmed
acco
rding to its terms.
19.3 Capitalization and Subsidiaries.
As of the Effective Date of Contract, Customer does not presently own or
control, directly or indirectly, any interest in any other corporation,
partnership, association or other business entity or have any subsidiaries,
except those listed on Schedule 19.3 attached hereto.
19.4 Litigation.
As of the Effective Date of Contract, except as provided on Schedule 19.4
attached hereto, there are no actions, suits, or proceedings or investigations
Pending, or, to the knowledge of Customer, threatened against Customer in an
amount that would be considered material such that Customer would be required to
disclose if it were subject to the Securities and Exchange Act of 1934, as
amended. In addition, Customer does not currently intend to initiate such an
action.
74
19.5 Title to Properties and Assets.
Customer owns its material properties and assets, other than leased
properties, free and clear of all liens, charges, and encumbrances, except for
(i) such encumbrances and liens that arise in the ordinary course of business
and do not materially impair Customer's ownership or use of such property or
assets, (ii) liens created by this Contract, and (iii) liens listed on Schedule
19.5 attached hereto.
19.6 Financial Statements.
Customer has delivered to Contractor the unaudited consolidated statements
of operations, changes in shareholders' equity and cash flows for 1997 (the
"Financial Statements") as set forth in Schedule 19.6. The Financial Statements
have been prepared in accordance with GAA
P consistently applied and present
fairly in all material respects the consolidated financial condition, cash flow,
results of operations and changes in stockholders equity of Customer and its
subsidiaries for such periods. Except as disclosed in Schedule 19.6 attached
hereto, from January 1, 1998 to the Effective Date of Contract, there has not
been (a) any material adverse change to the financial condition of Customer or
any of its subsidiaries, or (b) any damage, destruction, or loss, whether or not
covered by insurance, which has had a Material Adverse Effect. Except as
disclosed in the Financial Statements or in Schedule 19.6, as of the Effective
Date of Contract Customer is not a guarantor or indemnitor of any material
indebtedness of any other person, firm or corporation.
19.7 Certain Actions.
Except as set forth on Schedule 19.7 attached hereto, from January 1, 1998
to the Effective Date of Contract, Customer has not incurred any indebtedness of
Five Hundred Thousand Dollars ($500,
000) or more, or sold, exchanged, or
otherwise disposed of any of its material assets or rights.
19.8 Undisclosed Liabilities.
As of the Effective Date of Contract, except as set forth on Schedule 19.8
or on any other Schedule attached hereto, Customer is not subject to any
liabilities of any nature, whether absolute, contingent, or otherwise (whether
or not required to be accrued or disclosed under the accounting disclosure
standards applicable to Customer or under the Securities and Exchange Act of
1934, as amended) that have had or can reasonably be expected to have a Material
Adverse Effect, except to the extent set forth or provided in the Financial
Statements. Except as set forth in Schedule 19.8 or any other Schedule hereto,
all debts, liabilities, and obligations incurred by Customer, after the date of
the Financial Statements, were incurred in the ordinary course of business and
are in amounts less than Five Hundred Thousand Dollars ($500,000).
75
19.9 Compliance with Other Instruments.
As of the Effective Date of Contract, Customer is not in violation of its
Certificate of Incorporation or its By-Laws, or, to the knowledge of Customer,
in material default of any instrument, judgment, order, writ, decree, oral or
written contract, or other agreement to which it is a party or by which it is
bound or of any provision of federal, state, or local law, statute, rule, or
regulation applicable to Customer as of the Effective Date of Contract where
such violation or default will have a Material Adverse Effect. The execution,
delivery, and performance of this Contract and the consummation of the
transactions contemplated hereby will not (i) result in any such violation or be
in conflict with the
Certificate of Incorporation or the By-Laws of Customer,
(ii) be in conflict with any instrument, judgment, order, writ, or decree, (iii)
be in conflict with any contract or other agreement or be an event that results
in the creation of any lien, charge, or encumbrance upon any material asset of
Customer other than as provided in this Contract, where such conflict or
creation would have a Material Adverse Effect, or (iv) cause Customer to violate
any federal, state, or local law, statute, rule, or regulation.
19.10 Customer's Financial Strength.
Contractor and Customer acknowledge and agree that Contractor, in entering
into this Contract, is relying on the separate existence and financial strength
of Customer alone and not of any Affiliate of Customer.
19.11 Cross-Defaults.
(a) Customer represents and warrants that, as of the Effective Date of
Contract, it is not a party to any Financing Agreements that contain a provision
that a default by any third party in such third party's
obligations will be a
default under any of Customer's Financing Agreements where enforcement of such
provision is likely to have a material adverse effect on the ability of Customer
to make any payment required by this Contract or have a material adverse effect
on the security held by Contractor under this Contract.
(b) Customer represents and warrants that, as of EDC, its assets do not
secure the liabilities of any person or entity other than Customer.
(c) Customer agrees that it shall not agree to a provision in any agreement
that a default by any third party's obligations will be a default under any of
Customer's Financing Agreements or grant a security interest in its assets to
secure the obligations of any other parties.
(d) Contractor shall have the power and authority to file financing
statements of public record giving third parties notice of the representations
and warranties of this Article 19.11 (Cross Defaults).
19.12 Code.
Customer represents and warrants that
(i) it shall use commercially
reasonable efforts to ensure that no viruses or similar items are coded or
introduced into the code it provides Contractor; and (ii) it shall not introduce
into any such provided code any code that would have
76
the effect of disabling or otherwise shutting down all or any portion of the
Work. This warranty shall begin upon Final Acceptance of the Work embodying the
code at issue and continue for the operating life of the Satellites and the
Long-Lead Items.
19.13 Intellectual Property.
Customer represents and warrants that (i) it is either the owner of, or
authorized to use and incorporate, any Intellectual Property provided by
Customer (or others on behalf of Customer); (ii) Customer shall not require
Contractor to pay any license fees or royalties for the use of any Intellectual
Property of Customer; and (iii) Customer's Intellectual Property and/or any
modifications of Contractor's Intellectual Property by Customer (or any other
entity, other than
Contractor or its Subcontractors, acting on behalf of
Customer) shall not infringe any Intellectual Property Right of any third party.
Customer is not aware of any claim to the contrary by any third party. This
warranty shall begin on the Effective Date of Contract and continue for the
operating life of the Satellites and the Long-Lead Items.
19.14 Other Contracts.
Customer represents and warrants that, as of EDC, it has not entered into
an agreement to purchase goods and services similar to the goods and services to
be provided by Contractor hereunder.
19.15 Non-Misleading Statements.
As of EDC, this Contract (including the representations and warranties in
this Article 19 (Customer's Representations and Warranties) and the related
schedules) does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements, in light of the
circumstances under which they were made, not misleading.
19.16 Control of Customer.
Customer represents and warrants that Customer is not under the Control of
Contractor.
19.17 Customer Financial Covenant.
Customer covenants that it will provide Contractor with financial
information as follows: until the time Customer becomes a public company,
monthly reports on Customer's anticipated available cash for the following
twelve (12) months; thereafter, quarterly status reports (concurrent with
quarterly filings required by the SEC) setting forth Customer's funding to date,
monthly funding plans through the Delivery Date for the second Satellite,
including identification of Customer's principal funding sources and Customer's
anticipated ability to pay its obligations under this Contract as they become
due. Customer shall provide additional information reasonably related to
Customer's anticipated ability to pay its obligations under this Contract as
they become due, as may be reasonably requested by Contractor.
77
20. INTELLECTUAL PROPERTY RIGHTS
20.1 Ownership of IP and IP Rights.
(a) Subject to the licenses set forth in Article 20.2 (License Rights), all
Background and Foreground Intellectual Property made, developed, or created by
Customer (or by others, other than Contractor or any Subcontractor, acting on
behalf of Customer), and all Intellectual Property Rights therein, shall be the
sole and exclusive property of Customer. The Parties agree the Statement of Work
and Spacecraft Performance Specifications are the Intellectual Property of
Customer.
(b) Subject to the licenses set forth in Article 20.2 (License Rights), all
Background Intellectual Property and Foreground Intellectual Property made,
developed or created by Contractor (or its Sub
contractors), and all Intellectual
Property Rights therein, shall be the sole and exclusive property of Contractor.
20.2 License Rights.
(a) Subject to the terms and conditions stated herein, Contractor grants to
Customer a fully paid-up, irrevocable, perpetual, worldwide, nonexclusive right
and license to use and have used, for the sole and exclusive purpose of
operating and/or maintaining any Deliverable Item, all Background Intellectual
Property and Foreground Intellectual Property, including, to the extent
necessary for the limited purpose of this license, those associated Intellectual
Property Rights therein, owned by Contractor (and/or its Subcontractors);
provided, however, such license shall only be revocable in the case of
termination in accordance with paragraph (a)(1) or paragraph (a)(2) of Article
32.3 (Termination for Customer's Default) for Customer's failure to make
payment, but only with respect to those Deliverable Items not paid for.
(b) Subject to the terms and condi
tions stated herein, Customer grants to
Contractor a fully paid-up, irrevocable, perpetual, worldwide, non-exclusive
right and license to use and have used for the sole and exclusive purpose of
performing under this Contract, all Background Intellectual Property and
Foreground Intellectual Property, including, to the extent necessary for the
limited purpose of this license, those associated Intellectual Property Rights
therein, owned by Customer (or others acting on behalf of Customer).
(c) All object code, source code, and documentation Delivered ("Delivered
Software") shall be protected as the Confidential Information of Contractor or
its licensor or Subcontractor pursuant to Article 22 (Confidential Information).
Delivered Software may only be used pursuant to the license granted in paragraph
(a) above on the computer hardware Delivered as a Deliverable Item or successors
or back-ups to such hardware. Customer may reproduce the delivered software for
purposes of safe keeping (archives) or back-u
p, provided all copyright notices
and proprietary markings are reproduced.
(d) The license described in paragraph (a) above shall be transferable to
the Financing Entities and, subject to Contractor's prior written approval, any
other entity.
78
(e) Contractor shall, unless otherwise authorized or directed in writing by
Customer, use reasonable best efforts to include in each Subcontract hereunder a
license rights clause pursuant to which each Subcontractor will grant to
Customer license rights in Intellectual Property developed by such Subcontractor
and associated Intellectual Property Rights to the same extent as the license
rights granted by Contractor in this Article 20.2 (License Rights).
20.3 Joint Program Inventions.
(a) Notwithstanding anything to the contrary herein, the following shall
apply to Program Inventions conceived jointly by one or more Associates of each
Party:
(1) each Party shall have an equal, undivided one-half interest in
and t
o such joint Program Inventions, as well as in and to patent
applications and patents thereon in all countries.
(2) Contractor shall have the first right of election to file patent
applications in any country, and Customer shall have a second
right of election. Each Party in turn shall make its election at
the earliest practicable time, and shall notify the other Party
of its decision.
(3) The expenses for preparing, filing, and securing each joint
Program Invention patent application, and for issuance of the
respective patent shall be borne by the Party that prepares and
files the application. The other Party shall furnish the filing
Party with all documents or other assistance that may be
necessary for the filing and prosecution of each application.
Where such joint Program Invention application for a patent is
filed by either Party in a country that requires the payment of
taxes, annuities, maintenance fees or other charges on a pending
application or on an issued patent, the Party that files the
application shall, prior to filing, request the other Party to
indicate whether it will agree to pay one-half of such taxes,
annuities, maintenance fees, or other changes. If within sixty
(60) Calendar Days of receiving such request, the non-filing
Party fails to assume in writing the obligation to pay its
proportionate share of such taxes, annuities, maintenance fees,
or other charges, or if either Party subsequently fails to
continue such payments within sixty (60) Calendar Days of demand,
it shall forthwith relinquish to the other Party, providing that
said other Party continues such payments, its interest in such
application and patent and the Program Invention disclosed
therein, subject, however, to retention of an irrevocable, fully
paid-up, non-exclusive, non-assignable license in favor of the
relinquishing Party, its parent, and any subsidiary thereof to
make, use, lease, and sell apparatus and/or methods under said
application and patent.
(b) Each owner of a jointly-owned patent application or patent resulting
therefrom shall, provided that it shall have fulfilled its obligation, if any,
to pay its share of taxes, annuities, maintenance fees, and other charges on
such pending application or patent, have the right to grant non-exclusive
licenses thereunder and to retain any consideration that it may receive
79
therefor without obligation to account therefor to the other Party. In
connection therewith, each of the Parties hereby consents to the granting of
such non-exclusive licenses by the other Party and also agrees not to assert any
claim with respect to the licensed application or patent against any licensee of
the Party thereunder during the term of any such license.
20.4 Survival of Intellectual Property Rights.
The provisions of this Article 20 (Intellectual Property Rights) shall
survive the termination or expiration of this Contract, except as expressly set
forth in Article 20.2(a) above.
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21. INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION
21.1 Contractor Intellectual Property Indemnification.
(a) Subject to paragraph (a) of Article 21.2 (Customer's Intellectual
Property Indemnification) and the limitations set forth in paragraph (h) of
Article 18.3 (Warranties for Deliverable Items), Contractor shall indemnify,
defend, and hold harmless Customer from any and all Losses arising from, in
connection with, or based on any allegations made by third parties (including
Subcontractors of Contractor) that Customer's use of the Work, or any part
thereof infringes any third-party Intellectual Property Right, unless such
infringement would not have occurred but for Contractor following the written
requests, instructions, or specificat
ions of Customer.
(b) If the use of the Work or any part thereof is enjoined, Contractor
shall, at its option and expense, either procure for Customer the right to use
the Work or infringing part thereof, as the case may be, or substitute an
equivalent product reasonably acceptable to Customer, or modify the Work or
infringing part thereof to render them non-infringing without affecting their
utility or functionality. If Contractor determines that none of these
alternatives is reasonably available or feasible, Contractor shall meet with
Customer to address the matter and reach an equitable solution reasonably
acceptable to Customer.
(c) Nothing in this Contract shall be construed as requiring Contractor to
defend a suit or pay damages or costs if either (i) the infringement claim or
judgment is based upon the use of any goods or services furnished in combination
with other goods or services not provided by Contractor, unless such combination
was identified in Exhibit A (Spacecraft Performance
Specifications); (ii) the
infringement claim is based on the goods or services being used in other than
their specific operating environment as defined in Exhibit B (SOW); or (iii) the
infringement claim is based on Customer's modification of the Work or part
thereof in a manner not intended or reasonably foreseeable by Contractor.
(d) Contractor's obligations under this Article 21.1 (Contractor
Intellectual Property Indemnification) shall be subject to Article 24.4
(Indemnification Procedures).
21.2 Customer Intellectual Property Indemnification.
(a) Customer shall indemnify, defend, and hold harmless Contractor from any
and all Losses arising from, in connection with, or based on any allegations
made by third parties that the Work or any Deliverable Item or any part thereof
infringes any third-party Intellectual Property Right to the extent such
infringement is based on (i) any Intellectual Property provided by Customer (or
by others, other than Contractor or its Subcontractors, act
ing on behalf of
Customer); or (ii) any modification by Customer (or any entity, other than
Contractor or its Subcontractors, acting on behalf of Customer) of the Work or
any part thereof; or (iii) any written requests, specifications or instructions
provided by Customer to the extent the infringement arises from compliance with
such written requests, instructions or specifications.
(b) Customer's obligations under this Article 21.2 (Customer Intellectual
Property Indemnification) shall be subject to Article 24.4 (Indemnification
Procedures).
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21.3 Total Liability.
(a) In no event shall either Party's aggregate liability to the other Party
for intellectual property indemnification, defense, or any subsequent award of
damages in connection with one or multiple claims exceed Thirty Million Dollars
($30,000,000).
(b) Neither Party shall be liable to the other Party for lost revenues,
profits or other indirect, incidental, special, or consequential damages arising
from any intellectual property infringement claims, except to the extent that
such damages are caused by a Party's willful or intentional acts.
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22. CONFIDENTIAL INFORMATION
22.1 Confidentiality Obligations.
(a) Any Confidential Information shall be maintained in strict confidence
by the Receiving Party. Except as provided in this Article 22 (Confidential
Information), the Receiving Party shall not use, or disclose in any manner to
any third party, Confidential Information without the prior express written
consent of the Furnishing Party. The obligation of confidentiality shall not be
limited in time except to the extent that the Receiving Party can establish one
of the exceptions set forth in Article 22.2 (Exceptions) below by clear and
convincing evidence.
(b) Access to and use of Confidential Information shall be restricted to
those employees and persons within the Receiving
Party's organization (including
its Consultants, attorneys, Subcontractors, shareholders, and representatives),
with a need to use such Confidential Information to perform services
specifically requested by one Party of the other, to fulfill the purposes of
this Contract. The Receiving Party's Consultants or Subcontractors may be
included within the meaning of "persons within the Receiving Party's
organization," provided that such persons have executed a non-disclosure or
confidentiality agreement no less stringent that this Article 22 (Confidential
Information). With respect to Contractor, access may be extended to certain
employees of Xxxxxx Electronics Corporation, Xxxxxx Communications, Inc., and
Xxxxxx Space and Communications Company for the purposes stated herein. In
addition, all information provided is to be subject to the provisions of
paragraph (c) below.
(c) The Parties shall use the Confidential Information solely for the
purpose of developing, constructing, financing, Launching, and o
perating
Contractor-built Satellites for Customer's satellite digital audio radio
service.
22.2 Exceptions.
The obligations set forth in Article 22.1 (Confidentiality Obligations)
shall not apply to information that is:
(a) Already known to or otherwise in the possession of the Receiving Party
at the time of receipt from the Furnishing Party and that was not so known or
received in violation of any confidentiality; or
(b) Publicly available or otherwise in the public domain prior to
disclosure by the Receiving Party or becomes publicly available or otherwise in
the public domain after receipt by the Receiving Party without breach of this
Contract; or
(c) Rightfully obtained by the Receiving Party from any third party without
restriction and without breach of any confidentiality obligation by such third
party; or
(d) Developed by the Receiving Party independent of any disclosure
hereunder, as evidenced by written records; or
83
(e) Disclosed pursuant to the order of a court or administrative body of
competent jurisdiction or a government agency or required to be released
pursuant to Law or regulation, provided that the Receiving Party shall notify
the Furnishing Party prior to such disclosure and shall cooperate with the
Furnishing Party in the event the Furnishing Party elects to legally contest,
request confidential treatment, or otherwise avoid such disclosure.
22.3 No License.
Except as expressly provided in this Contract, nothing in this Contract
shall be construed as granting the Receiving Party whether by implication,
estoppel, or otherwise, any license or any right to use any Confidential
Information received from the Furnishing Party, or use any patent,
trademark, or
copyright now or hereafter owned or controlled by the Furnishing Party.
22.4 Return of Confidential Information.
All Confidential Information disclosed pursuant to this Contract is
considered loaned for use solely in connection with this Contract. All
Confidential Information in tangible form of expression which has been disclosed
to or thereafter created, whether by copy or reproduction, by the Receiving
Party shall be and remain the property of the Furnishing Party. All such
Confidential Information and any and all copies and reproductions thereof shall,
within fifteen (15) Calendar Days of written request by the Furnishing Party, be
either promptly returned to the Furnishing Party or destroyed at the Furnishing
Party's direction. In the event of such requested destruction, the Receiving
Party shall provide to the Furnishing Party written certification of compliance
therewith within fifteen (15) Calendar Days of such written request.
22.5 Inconsistent Legends.
This Article 22 (Confidential Information) shall control in lieu of and
notwithstanding any proprietary or restrictive legend or statements inconsistent
with this Article that may be printed on or associated with any particular
information disclosed pursuant to this Contract.
22.6 Survival of Confidentiality Obligations.
The provisions of this Article 22 (Confidential Information) shall survive
the termination or expiration of this Contract for a period of four (4) years
following the date of termination or expiration of this Contract.
84
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
23. NON-COMPETITION OBLIGATION
(a) Except with respect to WorldSpace, Inc. or WorldSpace International
Network, Inc. or Affiliates thereof, or with respect to DirecTV, Contractor
shall refrain, for a period of [*****] from EDC, from the following:
(1) directly or indirectly owning an equity interest of five percent
(5%) or more in an entity that develops or operates a Similar
Satellite System and/or operating a Similar Satellite Service in
any Customer Coverage Area; and/or
(2) p
roviding a payload subsystem meant to be incorporated in a
Similar Satellite System within the Customer Coverage Area.
However, this shall not be construed to restrict Contractor from
selling or providing goods at the equipment level and related
services to any third party.
(b) In the event Customer exercises its options under Article 30 (Options)
to purchase the Ground Spare Satellite and/or 4th and 5th Optional Satellite(s)
the Parties shall negotiate in good faith an extension to the definition of
"Customer Coverage Area" to account for the area covered by the Ground Spare
Satellite and/or such 4th and 5th Optional Satellite(s).
85
24. INDEMNIFICATION
24.1 Contractor's Indemnification.
(a) Subject to the indemnification procedures set forth in Article 24.4
(Indemnification Procedures), Contractor shall indemnify, defend, and hold
harmless Customer and its Affiliates and their respective Associates from any
and all Losses arising from, in connection with, or based on any allegations
made by third parties (including Consultants and agents of Customer, Contractor,
or any Subcontractor but not any employee, officer, or director of Customer)
regarding any of the following:
(1) injury to persons (including sickness or death) or damage to real
or tangible personal property, resulting from any act or
omission, negligent or otherwise, of
Contractor or its
Subcontractors in the performance of the Work;
(2) any claims arising out of or related to occurrences Contractor is
required to insure against pursuant to Article 25 (Insurance), to
the extent of the amount of the insurance required under such
Article; or
(3) Contractor's breach of its obligations under this Contract.
(b) Subject to the indemnification procedures set forth in Article 24.4
(Indemnification Procedures), Contractor shall indemnify, defend, and hold
harmless Customer as set forth in Article 18.3 (Warranties on Deliverable
Items), Article 21.1 (Contractor Intellectual Property Indemnification), this
Article 24.1(Contractor's Indemnification), Article 26 (Limitations of
Liability), Article 24.3 (Cross Indemnification for Inter-Party Waiver of
Liability), and as may be required pursuant to Article 33 (Inter-Party Waiver of
Liability).
24.2 Customer's Indemnification.
(a) Su
bject to the indemnification procedures set forth in Article 24.4
(Indemnification Procedures), Customer shall indemnify, defend, and hold
harmless Contractor and its Affiliates and their respective Associates from any
and all Losses arising from, in connection with, or based on any allegations
made by third parties (including Consultants and agents of Contractor, any
Subcontractor, or Customer but not any employee, officer, or director of
Contractor) regarding any of the following:
(1) injury to persons (including sickness or death) or damage to real
or tangible personal property, resulting from any act or
omission, negligent or otherwise, of Customer and its
Consultants;
(2) any claims arising out of or related to occurrences Customer is
required to insure against pursuant to Article 25 (Insurance), to
the extent of the amount of the insurance required under such
Article; or
(3)
Customer's breach of its obligations under this Contract.
86
(b) Subject to the indemnification procedures set forth in Article 24.4
(Indemnification Procedures), Customer shall indemnify Contractor as set forth
in Article 21.2 (Customer Intellectual Property Indemnification), this Article
24.2 (Customer's Indemnification), Article 24.3 (Cross Indemnification for
Inter-Party Waiver of Liability), Article 33 (Inter-Party Waiver of Liability)
as may be required.
24.3 Cross-Indemnification For Inter-Party Waiver of Liability.
Each Party shall indemnify the other for, and hold it harmless from, any
liability, loss, or damage suffered by the other Party resulting from the
failure of such Party to comply with its obligations, if any, under Article 33
(Inter-Party Waiver of Liability) to waive or to caus
e its contractors and
Subcontractors at any tier (including suppliers of any kind) or any other entity
required by the Launch Agreement to make no claims under this Contract.
24.4 Indemnification Procedures.
(a) Promptly after receipt by any entity entitled to indemnification under
this Article 24 (Indemnification) of notice of the commencement or threatened
commencement of any civil, criminal, administrative, or investigative action or
proceeding involving a claim in respect of which the indemnified Party will seek
indemnification pursuant to this Article 24 (Indemnification), the indemnified
party shall notify the indemnifying Party of such claim in writing. Failure to
so notify the indemnifying Party shall not relieve the indemnifying Party of its
obligations under this Contract except to the extent it can demonstrate that it
was prejudiced by such failure. Within fifteen (15) Calendar Days following
receipt of written notice from the indemnified Party relating to any claim, but
no later
than ten (10) Calendar Days before the date on which any response to a
complaint or summons is due, the indemnifying Party shall notify the indemnified
Party in writing if the indemnifying Party elects to assume control of the
defense or settlement of that claim (a "Notice of Election").
(b) If the indemnifying Party delivers a Notice of Election relating to any
claim within the required notice period, so long as it is actively defending
such claim, the indemnifying Party shall be entitled to have sole control over
the defense and settlement of such claim; provided that (i) the indemnified
Party shall be entitled to participate in the defense of such claim and to
employ counsel at its own expense to assist in the handling of such claim; (ii)
where the indemnified Party is so represented, the indemnifying Party shall keep
the indemnified Party 's counsel informed of each step in the handling of any
such claim; (iii) the indemnified Party shall provide, at the indemnifying Party
's request and expens
e, such assistance and information as is available to the
indemnified Party for the defense and settlement of such claim; and (iv) the
indemnifying Party shall obtain the prior written approval of the indemnified
Party before entering into any settlement of such claim or ceasing to defend
against such claim. After the indemnifying Party has delivered a Notice of
Election relating to any claim in accordance with the preceding paragraph, the
indemnifying Party shall not be liable to the indemnified Party for any legal
expenses incurred by the indemnified Party in connection with the defense of
that claim. In addition, the indemnifying Party shall not be required to
indemnify the indemnified Party for any amount paid or payable by the
indemnified Party in the settlement of any claim for which the indemnifying
Party has delivered a timely Notice of Election if such amount was agreed to
without the prior written consent of the indemnifying Party.
87
(c) If the indemnifying Party does not deliver a Notice of Election
relating to any claim within the required notice period or fails to actively
defend such claim, the indemnified Party shall have the right to defend and/or
settle the claim in such manner as it may deem appropriate, at the cost and
expense of the indemnifying Party. Provided that the indemnified Party acts in
good faith, it may settle such claim on any terms it considers appropriate under
the circumstances without in any way affecting its right to be indemnified
hereunder. The indemnifying Party shall promptly reimburse the indemnified Party
for all such costs and expenses.
24.5 Waiver of Subrogation.
If a Party insures against any loss or damage it may suffer in respect
of
which it is required to indemnify the other Party, its Affiliates and their
respective Associates pursuant to this Article 24 (Indemnification), it shall be
a condition that the insuring Party arrange for the insurer to waive its right
of subrogation against such other Party and such other Party's Affiliates and
their respective Associates. Each Party shall be entitled to require proof from
time to time that the other Party has complied with its obligations under this
Article 24.5 (Waiver of Subrogation). In the event a Party does not comply with
such obligations, the indemnities referred to in Articles 24.1 (Contractor's
Indemnification), 24.2 (Customer's Indemnification), and Article 24.3 (Cross
Indemnification for Inter-Party Waiver of Liability), as applicable, shall
extend to any claim that may be made by an insurer pursuant to an alleged right
of subrogation.
24.6 Survival of Indemnifications.
The provisions of this Article 24 (Indemnification) shall survive the
termination or exp
iration of this Contract.
88
25. INSURANCE
25.1 General Obligations.
(a) Contractor represents that it has procured and will maintain at all
times, from EDC to the moment of Launch at the Designated Launch Site of each
Launch Vehicle used to Launch each Satellite pursuant to this Contract,
insurance ("Ground Insurance") against all risks and loss or damage to such
Satellites, and to any and all components purchased for and intended to be
integrated into the Satellite, in an amount not less than the greater of (i) the
replacement value of, or (ii) the amounts paid by Customer with respect to, the
Satellite and components. Contractor shall also maintain public liability
insurance, insurance of employees, and comprehensive automobile insurance, all
in amounts adequate for i
ts potential liabilities under this Contract. In
addition, Contractor shall require each of its Subcontractors to provide and
maintain insurance in amounts for their respective potential liabilities. In
addition, Contractor represents that it has procured and will maintain at all
times, from EDC through Final Acceptance, Ground Insurance for all other Work.
(b) Contractor shall provide a certificate of insurance certified by
Contractor's insurance broker, evidencing such insurance coverage to Customer at
Customer's request.
(c) Contractor shall require its insurers to waive all rights of
subrogation against Customer. Customer shall be named as an additional insured
under Contractor's third-party liability coverages, and as a loss payee as
Customer's interests may appear with respect to property insurance.
25.2 Launch Insurance.
(a) Customer shall be responsible for procuring Launch Insurance for each
Satellite and shall secure a binder for such insurance at least sixty (60)
Calen
dar Days before the applicable Launch Date for such Satellite. Contractor
shall be named as additional insured on such Launch Insurance policy and
Customer shall require its Insurers to waive all rights of subrogation against
Contractor. Contractor shall, at the written request of Customer, provide
Customer with reasonable assistance (such as providing required technical
information) in Customer's efforts to procure Launch Insurance, and support at
Customer's meetings with Insurers, if necessary.
(b) Without limiting any other Contractor obligations under this Article 25
(Insurance) and in order to comply with insurance requirements, Contractor
shall, as part of the Pre-Eclipse Test Report or Post-Eclipse Test Report,
specify the basis for Partial Loss, Constructive Total Loss or Total Loss, the
definition of which shall have been provided by Customer to Contractor.
Notwithstanding Contractor's specifying such basis, Customer shall make the
final determination of whether a Partial Loss, Constructiv
e Total Loss or Total
Loss has occurred.
(c) Such notices of loss shall comply with the provisions of Article 34.7
(Notices), and the foregoing specified time for the provision of notice may be
shortened in compliance with the respective requirements of such Insurers.
89
25.3 Preparation of Claims.
(a) Each Party shall provide to the other Party any information that may
reasonably be required to prepare and present an insurance claim at the other
Party's written request.
(b) The Parties warrant and covenant that they will not withhold from each
other any material information either has or will have concerning anomalies,
failures, or non-conformances with or deviations from the requirements of this
Contract, from EDC through Final Acceptance in respect of any of the Satellites.
(c) Upon written request of a Party, the other Party will respond or permit
the first Party to respond to any insurers in relation to all specific and
reasonable questions relating to design, test, quality control, launch, and
orbital information. In addition, in the event of a Launch Insurance claim,
Contractor will permit and assist Customer to:
(1) conduct review sessions with a competent representative selected
by the insurers to discuss any continued issue relating to such
occurrence, including information conveyed to either Party; and
(2) use its best efforts to secure the insurers' access to all
information used in or resulting from any investigation or review
of the cause or effects of such occurrence; and
(3) make available for inspection and copying all information
necessary to establish the basis of such claim.
90
26. LIMITATIONS OF LIABILITY
(a) Contractor makes no warranty or agreement, express or implied, to or
for the benefit of any person or entity other than Customer concerning the
performance of the Satellites or any other matters relating to the Work.
(b) THE PARTIES TO THIS CONTRACT EXPRESSLY RECOGNIZE THAT COMMERCIAL SPACE
VENTURES INVOLVE SUBSTANTIAL RISKS AND RECOGNIZE THE COMMERCIAL NEED TO DEFINE,
APPORTION, AND LIMIT CONTRACTUALLY ALL THE RISKS ASSOCIATED WITH THIS COMMERCIAL
SPACE VENTURE. THE PAYMENTS AND OTHER REMEDIES EXPRESSLY SET FORTH IN THIS
CONTRACT FULLY REFLECT THE PARTIES' NEGOTIATIONS, INTENTIONS, AND BARGAINED-FOR
ALLOCATION OF THE RISKS ASSOCIATED WITH COMMERCIAL SPACE VENTURES.
(c) THE WARRANTY OBLIGATIONS OF CONTRAC
TOR AND THE REMEDIES AGAINST
CONTRACTOR THEREFOR THAT ARE EXPRESSLY SET FORTH OR REFERENCED IN ARTICLE 18
(CONTRACTOR'S REPRESENTATIONS, COVENANTS, AND WARRANTIES) ARE EXCLUSIVE AND ARE
IN SUBSTITUTION OF ANY OTHER WARRANTIES, EXPRESS OR IMPLIED (INCLUDING ANY
STATUTORY WARRANTIES SUCH AS IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE), WHICH ARE EXPRESSLY DISCLAIMED.
(d) CUSTOMER'S SOLE AND EXCLUSIVE REMEDIES, AND CONTRACTOR'S SOLE
OBLIGATIONS FOR (I) ANY BREACH OF THIS CONTRACT, INCLUDING DELAY OR DEFAULT;
AND/OR (II) ANY DEFECT, NON-CONFORMANCE OR DEFICIENCY IN ANY WORK UNDER THIS
CONTRACT OR IN ANY INFORMATION, INSTRUCTIONS, SERVICES, OR OTHER CLAIMS
WHATSOEVER ARISING OUT OF OR RELATING TO THIS CONTRACT AND/OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER DENOMINATED AS CONTRACT, TORT, EQUITABLE,
STATUTORY, OR ANY OTHER TYPE OF CLAIM) ARE LIMITED TO THOSE SET FORTH IN
ARTICLES 0 (LIQUIDATED DAMAGES FOR LATE DELIVERY), 12 (IN-ORBIT PERFORMANCE
INCENTIVE PAYMENTS), 18
(CONTRACTOR'S REPRESENTATIONS, COVENANTS, AND
WARRANTIES), 21 (INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION), 24
(INDEMNIFICATION), 25 (INSURANCE), AND 32 (TERMINATION) HEREOF AND ANY OTHER
REMEDIES SPECIFICALLY SET FORTH IN THIS CONTRACT; AND ALL OTHER REMEDIES OR
RECOURSE AGAINST CONTRACTOR OF ANY KIND ARE EXPRESSLY DISCLAIMED AND FOREVER
WAIVED BY CUSTOMER.
(e) CONTRACTOR SHALL NOT, UNDER ANY CIRCUMSTANCES, UNDER ANY WARRANTY
(EXPRESS, IMPLIED, OR STATUTORY) OR UNDER ANY THEORY OF LIABILITY (INCLUDING
NEGLIGENCE, TORT, STRICT LIABILITY, CONTRACT, OR OTHER LEGAL OR EQUITABLE
THEORY) HAVE ANY LIABILITY TO CUSTOMER OR CUSTOMER'S CUSTOMERS FOR ANY SPECIAL,
CONSEQUENTIAL, AND/OR INCIDENTAL DAMAGES, WHETHER OR NOT FORESEEABLE, INCLUDING
LOST REVENUES OR PROFITS, COST OF CAPITAL, OR ANY OTHER FORM OF ECONOMIC
91
LOSS RESULTING FROM ANY BREACH OF THIS CONTRACT OR WITH RESPECT TO ANY DEFECT,
NON-CONFORMANCE, OR DEFICIENCY IN ANY INFORMATION, INSTRUCTIONS, SERVICES, OR
OTHER THINGS PROVIDED PURSUANT TO THIS CONTRACT.
(f) THE TOTAL LIABILITY OF CONTRACTOR WITH RESPECT TO ALL CLAIMS OF ANY
KIND, INCLUDING WITHOUT LIMITATION LIQUIDATED DAMAGES, WHETHER AS A RESULT OF
BREACH OF CONTRACT, WARRANTY, STRICT LIABILITY OR OTHERWISE, AND WHETHER ARISING
BEFORE OR AFTER DELIVERY OF ANY DELIVERABLE ITEM, FOR ANY LOSS ARISING FROM OR
RELATING TO THIS CONTRACT, OR FROM THE PERFORMANCE OR BREACH THEREOF, SHALL NOT
EXCEED, EXCEPT AS OTHERWISE SET FORTH IN THIS CONTRACT, THE CONTRACT PRICE.
NOTWITHSTANDING THE FOREGOING, THE LIMITATIONS OF LIABILITY SET FORTH IN THIS
CONTRACT S
HALL NOT APPLY TO CONTRACTOR, ITS AFFILIATES, ASSOCIATES, AND
SUBCONTRACTORS TO THE EXTENT A CLAIM OF ANY KIND RELATED TO OR ARISING OUT OF
THIS CONTRACT IS COVERED BY INSURANCE MAINTAINED BY CONTRACTOR, ITS AFFILIATES,
ASSOCIATES OR SUBCONTRACTORS.
(g) The limitations of liability set forth herein shall also apply to all
Affiliates, Associates, and Subcontractors of Contractor to the same extent as
set forth herein with respect to Contractor.
(h) Each Party shall have a duty to mitigate damages for which the other
Party is responsible.
92
27. DISPUTE RESOLUTION
Any dispute, claim, or controversy ("Dispute") between the Parties arising
out of or relating to this Contract, including but not limited to any Dispute
with respect to the interpretation, performance, termination, or breach of this
Contract or any provision thereof shall be resolved as provided in this
Article 27 (Dispute Resolution), provided, however, that (i) disputes as to
payments pursuant to Article 5.3 (Disputed Amounts) concerning whether a
Milestone has been reached and payments therefor have been earned by Contractor,
shall be resolved in accordance with the provisions of Article 5.3 (Disputed
Amounts) and Article 27.2 (Arbitration) and (ii) disputes as to the performance
of a Launched Satellite pursuant to Article
12.4 (Disputed Performance) shall be
resolved in accordance with the provisions of Article 12.4 (Disputed
Performance) and Article 27.2 (Arbitration). All other Disputes concerning
Milestones shall be resolved in accordance with this Article 27 (Dispute
Resolution).
27.1 Informal Dispute Resolution.
Subject to the provisions of Article 27.3 (Litigation), prior to or
concurrent with the initiation of formal dispute resolution procedures, the
Parties shall first attempt to resolve their Dispute informally, in a timely and
cost-effective manner, as follows:
(a) If, during the course of the Work, a Party believes it has a Dispute
with the other Party, the disputing Party shall give written notice thereof,
which notice will describe the Dispute and may recommend corrective action to be
taken by the other Party. The Contractor Program Manager shall promptly consult
with the Customer Program Manager in an effort to reach an agreement to resolve
the Dispute.
(b) In the event agreement
cannot be reached within ten (10) Calendar Days
of receipt of written notice, either Party may request the Dispute be escalated,
and the respective positions of the Parties shall be forwarded to an executive
level higher than that under paragraph (a) above for resolution of the Dispute.
(c) In the event agreement cannot be reached under paragraphs (a) or (b)
above within a total of twenty (20) Calendar Days after receipt of the written
notice described in paragraph (a) above, either Party may request the Dispute be
escalated, and the respective positions of the Parties shall be forwarded to the
Chief Executive Officer (CEO) of each Party, and such executives shall meet
during such time to resolve the Dispute.
(d) In the event agreement cannot be reached under paragraphs (a), (b) or
(c) above within a total of thirty (30) Calendar Days after receipt of the
written notice described in paragraph (a) above, either Party may proceed with
arbitration in accordance with Article 27.2 (Arbitration)
.
27.2 Arbitration.
Subject to the provisions of Article 27.3 (Litigation), any Dispute not
resolved under Article 27.1 (Informal Dispute Resolution) (except Intellectual
Property Disputes ), Article 5.3
93
(Disputed Amounts), or Article 12.4 (Disputed Performance) shall be resolved by
mandatory and binding arbitration in accordance with the provisions of this
Article 27.2 (Arbitration).
(a) The arbitration shall be conducted by a tribunal of three (3)
arbitrators (the "Tribunal"), each of whom shall have at least ten (10) years
experience in the aerospace and/or satellite telecommunications industry. Within
thirty (30) Calendar Days after the commencement of the arbitration, each Party
shall appoint one arbitrator, and those two arbitrators shall together appoint
the third neutral arbitrator.
(b) Any controversy or claim arising out of this Contract, including any
Dispute, shall be determined by binding arbitration in accordance with the
Arbitr
ation Rules of JAMS/Endispute (the "JAMS Arbitration Rules") then in
effect, except to the extent modified by this Article 27 (Dispute Resolution).
(c) The Parties shall be permitted to take discovery, if and as needed, by
deposition upon oral examination, requests for production of documents and
things, and requests for entry upon land for inspection and other purposes, as
those discovery methods are described and defined in the Federal Rules of Civil
Procedure; provided, however, that any limitations in the Federal Rules on the
number, timing, or sequence of such discovery requests shall not apply. The
scope of permissible discovery shall generally be as described in the Federal
Rules of Civil Procedure, Rule 26(b)(1), but the Parties shall use their best
efforts to focus and limit their discovery in accordance with the nature of the
dispute and the need for expedited resolution. The arbitral tribunal may expand
or limit the scope of permissible discovery and establish the time period within
whi
ch discovery responses must be served.
(d) Time is of the essence in the initiation and completion of the
arbitration. The arbitral hearing shall be commenced and conducted
expeditiously. Unless the Tribunal orders otherwise, the dispute should be
submitted to the Tribunal for decision within six (6) months after the
commencement of the arbitration, and the final award shall be rendered within
one (1) month thereafter. The Parties and the Tribunal shall use their best
efforts to comply with this schedule, and the Tribunal may impose any remedy it
deems just for any Party's effort to unnecessarily delay, complicate, or hinder
the proceedings.
(e) The arbitration shall be held in Washington, D.C., USA, and shall be
conducted in the English language.
(f) Any arbitration proceeding held pursuant to this Article 27 (Dispute
Resolution) shall be governed by the JAMS Rules and the United States
Arbitration Act, 9 U.S.C. (S)(S) 1 et seq. Judgment upon the award rendered by
-------
the Tribunal may be entered in any court having jurisdiction thereof. The
Tribunal shall apply the law of the State of New York, including the Uniform
Commercial Code (where and if applicable) as adopted by the State of New York.
(g) Pending a decision by the Tribunal, each Party shall, unless directed
otherwise by the other Party in writing, fulfill all its obligations under this
Contract, including the obligation to take all steps necessary during the
pendency of the arbitration to ensure the Work will be Delivered within the time
stipulated or within such extended time as may be allowed under this Contract,
provided Customer shall continue to make payments therefore in accordance with
this
94
Contract (including the dispute resolution provisions hereof), and further
provided that, if Customer fails to make such payments, Contractor may stop
Work.
(h) The Tribunal's award may grant any remedy or relief that the Tribunal
deems just and equitable and within the scope of this Contract, including
specific performance or other equitable relief. Notwithstanding the foregoing,
the Tribunal shall have no power or authority to amend or disregard any
provision of this Article 27 (Dispute Resolution) or any other provision of this
Contract. The Tribunal also shall have no power or authority to award punitive
or exemplary damages to any Party.
(i) The non-prevailing Party, as determined by the Tribunal, shall pay the
costs of the arbitration.
In the event of an arbitration involving multiple
claims with different Parties prevailing on each claim, the Tribunal shall
apportion the costs of the arbitration (which shall not include Excluded Costs)
between or among the Parties in such manner as it deems reasonable, taking into
account the circumstances of the case, the nature of the claims, and the result
of the arbitration.
(j) The Tribunal shall award pre-award interest on any sums due (excluding
damages) determined by the Tribunal to be owing from one Party to the other
under this Contract. Any award shall also provide that interest shall continue
to accrue after the date of the award until the amount awarded is paid in full.
Interest shall be calculated at the rate set forth in Article 34.10 (Calculation
of Interest) for each day from forty-five (45) Calendar Days following the date
of loss or the date the arbitration was commenced, whichever is earlier, until
the date full payment is made.
(k) Each Party shall bear the costs of
its own legal representation,
witnesses produced by such Party, document production, and other discovery
expenses.
27.3 Litigation.
(a) Notwithstanding the provisions of Article 27.2 (Arbitration) above, if
the Dispute requires that immediate equitable relief or relief in aid of
arbitration be obtained, either Party shall have the right to bring suit solely
to obtain preliminary or temporary injunctive relief, including specific
performance, solely for Intellectual Property issues. However, the Parties
contractually agree that Customer shall not seek specific performance where
Contractor has not been paid in accordance with the provisions of this Contract.
Requests for permanent injunctive relief shall be arbitrated pursuant to
Article 27.2 (Arbitration).
(1) Any such suit shall be brought in a court of competent
jurisdiction in the State of New York, provided, however, the
exclusive venue for any action brought in a New York state court
shall be the Supreme Court for New York County, and the Parties
hereby waive any objection to that venue. The Parties hereby
irrevocably consent to personal jurisdiction in the state and
federal courts in the State of New York concerning any Dispute
between the Parties. If, for any reason, the state and federal
courts of New York do not have or refuse to exercise jurisdiction
over the Dispute, then litigation as permitted herein may be
brought in any court of competent
95
jurisdiction in the State of Delaware, provided, however, the
exclusive venue for any action brought in a Delaware state court
shall be the Superior Court of New Castle County, and the Parties
hereby waive any objection to that venue and the Parties hereby
irrevocably consent to personal jurisdiction in the state and
federal courts in the State of Delaware concerning any dispute
between the Parties. If, for any reason, the state and federal
courts of Delaware do not have or refuse to exercise jurisdiction
over the Dispute, then litigation as permitted herein may be
brought in any court of competent jurisdicti
on in the United
States of America, or, if there is no such court, in any other
nation.
(2) In the event a Party files a lawsuit pursuant to this Article
27.3 (Litigation), the prevailing party shall be entitled to an
award of its costs and fees, including reasonable attorney's
fees, incurred with respect to the lawsuit. The defendant in such
litigation shall be regarded as the prevailing party if either
the court denies the equitable relief sought on the merits or the
court otherwise decides that equitable relief is not warranted or
the matter should be resolved by arbitration.
(b) In the event an entity or person not subject to the provisions of this
Article 27 (Dispute Resolution) commences any litigation or proceeding against
any Party hereto in which the other Party hereto is an indispensable party, the
Party against which the litigation or proceed
ing is brought may join or attempt
to join the other Party in such litigation or proceeding notwithstanding the
provisions of Article 27.2 (Arbitration). For purposes of this provision, the
other Party is an indispensable party in the lawsuit or proceeding if (i) in its
absence complete relief could not be accorded among those already a party to the
lawsuit or proceeding; (ii) its absence may as a practical matter impair or
impede its ability to protect its interests relating to the subject of the
lawsuit or proceeding; or (iii) its absence may leave the Party against which
the litigation or proceeding is brought subject to a substantial risk of
incurring double, multiple, or otherwise inconsistent obligations by reason of
the interest of the other Party relating to the subject of the lawsuit or
proceeding.
(c) Nothing in this Contract precludes a Party prevailing on any claim,
whether in arbitration or litigation, from initiating litigation in any
appropriate forum to enter or enforce a judgment
based on the Tribunal's or
court's award on that claim.
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28. LAUNCH SERVICES
(a) Baseline Launch Vehicle.
--- ------------------------
The baseline Launch Vehicle for the first and second Satellites to be
Delivered pursuant to this Contract shall be the Sea Launch Launch Vehicle.
(b) Alternate Launch Vehicles.
--- -------------------------
In the event that there will be a delay in the schedule of either the first
or second Sea Launch Launch Vehicle, which delay will exceed six (6) months
beyond the last day of the applicable Launch Period, Customer may exercise any
one of the following options for alternate Launch Services subject to the
following conditions:
(1) Option 1
(i) Customer may select an alternate Launch Vehicle(s) from
Contractor's then existing inventory of, H-IIA, or Long
March 3B Launch Vehicles, that, as of the date Customer
exercises the option, have not been sold or otherwise
assigned to other customers of Contractor, or to
Contractor's own satellite programs (for example, DirecTV,
Spaceway, PanAmSat).
(ii) The price for alternate Launch Vehicles shall be the same
as the price for the baseline Sea Launch Launch Vehicles.
(iii) If Customer exercises this option, the payment plan in
Exhibit G (Payment Plan and Termination Liability Amounts)
shall be amended in accordance with Contractor's payment
obligations in Contractor's various agreements with the
Launch Agencies providing the alternate Launch Vehicles,
and to provide that Cust
omer shall make such amended
payment(s) relating to the alternate Launch Vehicle(s) to
Contractor at least thirty (30) Calendar Days in advance
of Contractor's respective payment due date for such
payment to such Launch Agency(ies). The Parties
acknowledge and agree that any deferred or post-Launch
payment terms pursuant to this Contract apply only to the
baseline Launch Vehicles. Accordingly, and depending upon
which alternate Launch Vehicle(s) is/are selected and when
such selection is made, Customer may be obligated to make
a substantial lump sum payment in order to bring current
any retroactive Contractor progress or milestone payment
obligation related to the alternative Launch Vehicle(s).
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omitted portions.
(iv) If Customer exercises this option, Customer shall pay
Contractor an additional sum of [*****] as consideration
for Customer's selection of an alternate Launch Vehicle
for each baseline Launch Vehicle. Such payment shall be
made concurrent with the exercise of this option. Upon
such payment, Customer shall have no further termination
or other lia
bility with respect to the specific Sea Launch
Launch Vehicle abandoned by Customer. Notwithstanding the
foregoing, in the event Customer terminates an alternate
Launch Vehicle after Customer has exercised its option to
select such alternate Launch Vehicle in accordance with
this Article 28 (Launch Services), Customer's termination
liabilities related to Launch Services, as defined herein
and in Exhibit G (Payment Plan and Termination Liability
Amounts), shall be applicable to the alternate Launch
Vehicle.
(v) Customer's option to select an alternate Launch Agency may
be exercised by Customer at any time up to the last day of
the [*****] prior to the [*****] or to the [*****], as
applicable. However, the Parties recognize that
Contractor's inventory of Launch Vehicles will likely
diminish as the respective Launch Periods approach,
thereby reducing Customer's selection opportunities for
alternate Launch Vehicles if such option is exercised
later in the option period described herein.
(2) Option 2
(i) Customer may select an alternate Launch Vehicle from other
than Contractor's inventory of Launch Vehicles.
(ii) If Customer exercises this option, Customer shall pay
Contractor an additional sum of [*****] as consideration
for Customer's selection of an alternate Launch Vehicle
outside of Contractor's inventory. This Option 2 Election
Payment shall be made concurrent with the exercise of this
option. In addition, the termination liability schedu
le
for the abandoned Sea Launch vehicle shall be as follows:
[*****] as of March 23, 1998, increasing linearly on a
daily basis to [*****] after March 23, 1998 until Launch
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Confidential treatment has been requested with respect to the
omitted portions.
minus Three (3) Months (L-3), and [*****] after L-3.
Customer shall pay Contractor the full termination
liability amount within thirty (30) Calendar Days after
this Option 2 is exercised (less any payments previously
made); or if Customer has previously made launch vehicle
payments exceeding the termination liability amount,
Customer's terminati
on liability under this paragraph (ii)
shall be offset and Contractor shall refund Customer
launch vehicle payments made exceeding the termination
liability amount within thirty (30) Calendar Days of
Customer's exercise of this Option 3. Upon payment of any
amount due under this paragraph (ii), or in the event no
amount is due under this paragraph (ii), upon exercise of
this Option 2, Customer shall have no further termination
or other liability with respect to the specific Sea Launch
abandoned by Customer.
(iii) If Contractor sells the abandoned Sea Launch launch
vehicle within [*****] after exercise of this Option
2, Contractor shall pay Customer the amount recovered by
Contractor up to the maximum of the termination liability
amount paid by Customer pursuant to paragraph (ii), less
Contractor's reasonable costs (including, but not limited
to, re-programming costs, inventory carrying charges and
unrecoverable costs) incurred in selling the abandoned
launch vehicle.
(iv) Customer may only exercise this option with respect to one
Sea Launch and may not exercise Option 3 below if this
option is exercised.
(3) Option 3
(i) Customer may select an alternate Launch Vehicle from other
than Contractor's inventory of Launch Vehicles.
(ii) If Customer exercises this option, Customer shall pay
Contractor an additional sum [*****] as consideration for
Customer's selection of an alternate Launch Vehicle
outside of Contractor's inventory
concurrent with the
exercise of this option. Notwithstanding the foregoing, if
Customer has previously made launch vehicle payments
exceeding the Option 3 Election Payment, Customer's Option
3 Election Payment shall be offset and Contractor
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requested with respect to the omitted portions.
shall refund Customer payments made exceeding the Option 3
Election Payment within thirty (30) Calendar Days of
Customer's exercise of this Option 3. Upon payment of any
amount due under this paragraph (ii), or in the event no
amount is due under this paragraph (ii), upon exercise of
this Option 3, Customer shall have no further termination
or other liability with respect to the specific Sea Launch
abandoned by Customer.
(iii) Customer may only exercise this option with respect to one
Sea Launch and may not exercise Option 2 above if this
option is exercised.
(c) In the event Customer exercises any of the options set forth in
paragraph (b) above, to select a Launch Vehicle other than the baseline Sea
Launch, the Parties will amend (i) the definitions of the terms "Intentional
Ignition" and "Launch" to conform to the definitions of such terms set forth in
the respective Launch Agreement for such alternate Launch Vehicle, as
appropriate, and (ii) Article 33 (Inter-Party Waiver of Liability) so as to
conform to the relevant requirements of the country or countries having
jurisdiction over the Launch. In addition, in the event Customer exercises
either Option 2 or Option 3 set forth in paragraph (b) above, (i) the Parties
shall negotiate in good faith whether delivery of the relevant Satellite shall
be an in-orbit
or on-ground delivery under this Contract and in the event the
Parties determine it shall be an on-ground delivery, the Parties shall amend
those portions of this Contract related to such determination (e.g. transfer of
title and risk of loss, delivery schedule, acceptance, liquidated damages and
termination liability) as appropriate to reflect an on-ground delivery of the
relevant Satellite, (ii) Contractor shall perform, without charge (except to the
extent included in the Contract Price), Launch Campaign, Mission Support and
LEOP Services for any launch services substituted by Customer for the Launch
Services terminated hereunder, provided, however, Customer shall pay Contractor
for those extra costs incurred by Contractor as a result of providing Launch
Campaign, Mission Support and LEOP Services to a location other than one
contemplated hereunder, (iii) Customer shall pay Contractor for those extra
costs incurred by Contractor as a result of shipping the applicable Satellite to
a launch site other t
han one contemplated hereunder, and (iv) if requested by
Customer, Contractor shall perform launch management services for the
substituted launch services at a price mutually agreed by the Parties.
(d) If a Satellite Launched on a Sea Launch Launch Vehicle is declared a
failure for any reason, within the first three hundred sixty-five (365) Calendar
Days after such failed Launch, Customer shall be entitled to a replacement
Launch on another Sea Launch Launch Vehicle for an identical satellite, [*****].
The scheduling of such replacement Launch shall have priority over other
Launches on the Sea Launch Launch Manifest, except for scientific missions which
are time sensitive in nature.
(e) In the event a Launch fails to occur on or before the last day of the
applicable Launch Period, Contractor shall be liable to Customer for liquidated
damages for the late
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delivery of Launch Services in the aggregate total amount of [*****] for each
Launch Vehicle, such liquidated damages to accrue at the daily rate of [*****],
commencing upon the first (1st) Calendar Day following the last day of the
Launch Period, and continuing for a maximum Launch Services damages period of
sixty (60) Calendar Days. Notwithstanding the foregoing, the Launch Services
liquidated damages shall not affect any liquidated damages which may accrue for
late Delivery of any Satellite. For the purpose of determining these Launch
Services liq
uidated damages as provided in this Article 28 (Launch Services), in
no event shall delay attributable to a Launch Agency be deemed an Excusable
Delay.
101
29. CUSTOMER'S RESPONSIBILITIES
(a) In addition to Customer's responsibilities identified in this
Contract, Customer shall also discharge those responsibilities, at no cost to
Contractor or to Subcontractors, as set forth in Exhibit B (Statement of Work)
and below.
(b) Customer will provide beneficial access to Contractor and its
Affiliates and Subcontractors at each Satellite Control Center, on a timely
basis, as necessary to permit Contractor to perform its obligations with respect
to such Satellite Control Centers and related services.
(c) In addition to, and without limiting the generality of, the foregoing,
Customer will be responsible for the following:
(1) providing all civil works utilities and environmental contro
ls
associated with any Satellite Control Center; and
(2) obtaining Launch Insurance prior to Launch. Customer shall
provide Contractor a certificate of such insurance coverage at
Contractor's request.
(d) Customer shall provide written notification to Contractor as early as
practicable as to the identity and nationality of its employees and
Consultant(s) for whom access to Contractor's and Subcontractors' facilities are
required, and subsequent changes thereto, if any. It is recognized that certain
United States Government approvals may be required before such employees and
Consultant(s) have access to Work pursuant to the provisions of Article 6
(Access to Work).
(e) Customer is responsible for obtaining the necessary Specified Orbital
Locations, frequency spectrum allocations and other approvals and licenses to
operate its DARS Satellite Program.
(f) Reserved.
(g) Failure of Customer to discharge the responsibilities s
pecified in
this Article 29 (Customer's Responsibilities) may result in an equitable
adjustment to the Delivery Schedule, Delivery Dates, and/or Contract Price as
specified in paragraph (a) of Article 11.2 (Equitable Adjustments).
(h) Customer will make available, for Contractor's use, certain test
equipment and Customer facilities, as set forth in the Exhibit D (Test Plan
Requirements), as Contractor performs the In-Orbit Tests.
(i) Upon mutual agreement, Customer will make available to Contractor
Customer's facilities for use by Contractor during LEOP, as well as provide
technical support to Contractor during LEOP as a primary TT&C site in support
of LEOP.
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30. OPTIONS
30.1 Options Granted.
Contractor hereby grants to Customer the options set forth in this
Article 30 (Options) to be exercised at Customer's sole discretion.
30.2 Option to Delay Frequency Specification Beyond Two (2) Months.
(a) Customer shall select six (6) potential telemetry downlink
frequencies, as specified in Exhibit A (Spacecraft Performance Specifications),
within the first two (2) months following EDC for subsequent down-selection to
two (2) final telemetry downlink frequencies. If Customer makes a final
selection of the two (2) telemetry downlink frequencies within the first two (2)
months following EDC, there shall be no adjustment to the Contract Price.
However, should Customer fail to make such final selection of two (2) telemetry
downlink frequencies within the two (2) months following EDC, then Customer may
make the final selection of the two (2) telemetry downlink frequencies up to the
last day of the sixth (6th) month following EDC, provided that Customer shall
pay to Contractor an increase in the Contract Price of [*****] upon notification
by Customer to Contractor of Customer's final selection.
(b) In the event Customer fails to make such final selection of the
telemetry downlink frequencies provided in paragraph (a) above on or before the
last day of the sixth (6th) month after EDC, the Contract Price for such
Frequency Specification shall be adjusted in accordance with Article 14.1
(Changes Requested by Customer).
30.3 Ground Spare Satellite.
Contractor agrees to provide C
ustomer, at Customer's option, one Ground
Spare Satellite, to be delivered on-ground, of a design functionally identical
to Satellites to be delivered in-orbit under this Contract. Such Ground Spare
Satellite shall be used as a replacement, spare, or additional satellite, as the
case may be, in the event of a failed Launch of any Satellite or to accommodate
Customer's satellite system growth or replenishment. The Contract Price
includes Long-Lead Items and Activities to be procured or performed by
Contractor in order to permit delivery of such Ground Spare Satellite, if
ordered, on the expedited schedule set forth below in paragraph (b).
(a) Option Period.
-------------
Customer may order completion of the Ground Spare Satellite at any time
from ARP through the last day of the [*****] ("Option Period"). On or before the
date Customer orders completion of the Ground Spare Satellite, Customer shall
specify the orbital location for the Ground Spare Satellite; however, in the
event
Customer also exercises Customer's option to purchase the additional set
of reflectors pursuant to Article 30.7
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
(Reflectors for Ground Spare Satellite), Customer's notification to Contractor
of the orbital location for such Ground Spare Satellite may be delayed until six
(6) months prior to the Available for Shipment date of such Ground Spare
Satellite. Contractor shall be responsible for storage costs of all Long-Lead
Items from EDC through the last day of the [*****]. In the event of an
Excusable Delay in accordance with Article 11 (Excusable Delay) or a Contractor
unexcused delay, the Option Period shall be extended day-for-day for the period
of such delay.
(b) Delivery.
--------
In the event Customer orders completion of the Ground Spare Satellite on or
before the last day of the twelfth (12/th/) month following ARP, the Ground
Spare Satellite shall be Available for Shipment to its designated Launch site no
later than four (4) months following the date upon which the second Satellite is
Available for Shipment. Subject to the provisions of paragraph (c) of Article
11.2 (Equitable Adjustments), in the event Customer orders completion of the
Ground Spare Satellite on or after the first day of the thirteenth (13/th/)
month following ARP through the last day of the [*****], the Ground Spare
Satellite shall be Available for Shipment to the launch site within twelve (12)
months following the date of such order, or four (4) months following the date
upon which the second Satellite is Available for Shipment, whichever is later.
(c) Price.
-----
(1) The price for completion of the Ground Spare Satellite, including
documentation, taxes, and ground insurance, but not including the
price of Long-Lead Activities and Items, is [*****] if the
Ground Spare Satellite is ordered from EDC through September 22,
2000. When an order is placed by Customer on or after September
23, 2000 through the last day of the [*****], the price stated
above shall be increased at a rate of [*****] per quarter for
each quarter on or after September 23, 2000 until the date of
placement by Customer of such order. For example, if the order
for the Ground Spare Satellite is placed on May 15, 2001,
Customer shall pay the price stated above, plus escalation
computed for two calendar quarters. The price for the Ground
Spare Satellite, together with any applicable price escalation
described in the preceding sentence, shall apply to an order
place
d by Customer for the Ground Spare Satellite through the
last day of the [*****].
(2) Where the Delivery of either Satellite is delayed beyond its
originally scheduled Delivery Date, and such delay is not an
Excusable Delay, incurrence of price escalation described in the
preceding paragraph shall be delayed on a day-for-day basis equal
to the non-Excusable Delay period. Where the Delivery of either
Satellite is delayed beyond its original scheduled Delivery Date
(whether such delay is due to Excusable Delay or Contractor
unexcused delay), the Option Period for ordering completion of
the Ground Spare Satellite shall also be extended on a day-
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for-day basis. For example, if the first Satellite is Delivered one
hundred and twenty (120) Calendar Days after its originally scheduled
Delivery Date for non-Excusable Delay reasons, the first date at which
a price escalation shall apply shall be January 21, 2001 and shall
continue through one hundred and twenty (120) Calendar Days following
the last day of the [*****].
(d) Payment and Deferred Financing.
-------------------------------
(1) The price for the Ground Spare Satellite will be paid in
accordance with the payment plan attached hereto as Exhibit G-2
(Ground Spare Satellite Payment Plan and Termination Liability
Amounts).
(2) If Customer orders the Ground Spare Satellite, Contractor shall
provide [*****] of deferred financing payable in quarterly
installments of interest only, over five (5) years from the
satisfactory completion of the Ground Spare Satellite (no earlier
than ARP plus twenty-four (24) months), with the principal of
such amount to be paid at the end of such five (5) year period.
In such event, Contractor shall retain title to, and store (in
accordance with Article 14.4 (Storage)), the Ground Spare
Satellite prior to Launch or other disposition by Customer and
repayment of principal by Customer. In the event of a Launch
or
other disposition of the Ground Spare Satellite by Customer,
Customer shall either repay the outstanding principal balance
prior to Launch Readiness Review, or provide alternative security
reasonably acceptable to Contractor.
(3) Such quarterly installments of interest shall be calculated at a
rate equal to [*****] compounded annually, computed beginning on
the date that the Ground Spare Satellite is Available for
Shipment to its designated Launch site, and continuing for five
(5) years or until repayment of the outstanding principal.
(e) Failure to Order Ground Spare Satellite.
---------------------------------------
Where Customer makes the payments for the Long-Lead Activities and Items
for the Ground Spare Satellite, but fails to order completion of the Ground
Spare Satellite within the Option Period, as may be adjusted in accordance with
this
Contract, the option for the Ground Spare Satellite shall no longer be
effective and Contractor shall sell the Long-Lead Items and pay the sale
proceeds, less Contractor's reasonable selling expense, to Customer.
(f) Contract Adjustments.
--------------------
Contractor shall furnish the Ground Spare Satellite in accordance with the
provisions of the documents constituting this Contract. Except as otherwise
required by the terms and
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conditions of this Article 30 (Options), the contract Terms and Conditions for
the Ground Spare Satellite will be identical to the Terms and Conditions of this
Contract; provided, however, (i) liquidated damages for late delivery of the
Ground Spare Satellite shall be [*****] (if the Ground Spare Satellite is used
as a replacement satellite), or [*****] (if the Ground Spare Satellite is used
as an additional satellite); (ii) where the Ground Spare Satellite is ordered as
a replacement satellite, such terms shall not include additional in-orbit
performance incentive payments (other than the rolled-over incentives provided
in Article 12.3 (Calculation and Earning of Incentive Amounts)), (iii) such
terms shall include no other deferred payments, other than specified in this
Article 30.3 (Ground Spare Satellite), unless mutually agreed by the Parties,
and (iv) any other adjustments necessary to reflect an on-ground delivery of the
Ground Spare Satellite, unless Customer also orders an option Launch Vehicle
pursuant to Article 30.8 (Optional Launch Vehicles) below. Where the Ground
Spare Satellite is ordered as an additional satellite (instead of a replacement
satellite), in-orbit performance incentive payments shall be [*****].
30.4 Launch Campaign and LEOP Services for Ground Spare Satellite and/or
4th and 5th Optional Satellites.
Contractor agrees to provide Customer, at Customer's request, Launch
Campaign and LEOP services for the Ground Spare Satellite and/or the 4th and 5th
Optional Satellites, if either or both of these options are exercised by
Customer. In the event Customer elects the High Power Option in accordance
with Article 30.6 (High Power Option), this option for Launch Campaign and LEOP
services shall continue to apply without any change.
(a) Option Period.
-------------
Customer may order Launch Campaign and/or LEOP services for the Ground
Spare Satellite and the 4th and 5th Optional Satellites at any time prior to
[*****] before the scheduled Launch Date for the applicable Ground Spare
Satellite and/or 4th and 5th Optional Satellites.
(b) Price.
-----
The price for Launch Campaign and LEOP services for each of the Ground
Spare Satellite and 4th and 5th Optional Satellites, including taxes and
documentation, is [*****], for each such Satellite ordered by Customer from EDC
through September 22, 2000. Beginning on September 23, 2000, , the price will
escalate at the rate of [*****] per quarter for each quarter after September 23,
2000, until the date the order is placed. The price and the price escalation
described in the preceding sentence, shall apply to orders placed for the Ground
Spare Satellite and the 4th and 5th Optional Satellites through the last day of
the [*****] following ARP.
(c) Payment.
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The price for Launch Campaign and LEOP services, as such price may be escalated
in accordance with paragraph (b) above, for each the Ground Spare Satellite and
the 4th and 5th Optional Satellites shall be paid as follows:
(1) Fifty percent (50%) of such price at the time Customer places an
order with Contractor for completion of the Ground Spare
Satellite or places an order for the purchase of either or both
of the 4th and 5th Optional Satellites, as applicable; and
(2) Fifty percent (50%) of such price on Final Acceptance of the
Ground Spare Satellite or the 4th and 5th Optional Satellites, as
applicable.
30.5 4th and 5th Optional Satellites.
Contractor agrees to provide Customer with options to purchase up to two
(2) additional satellites ("4th and 5th Optional Satellites") to be delivered
on-ground, and of a design functionally identical to the Satellites.
(a) Option Period.
--------------
Customer may exercise this option to order either or both of the 4th and
5th Optional Satellites at any time through the last day of the [*****]
following ARP. In the event of an Excusable Delay in accordance with Article
11 (Excusable Delay) or a Contractor unexcused delay, the Option Period shall be
extended day-for-day for the period of such delay.
(b) Delivery.
---------
Contractor shall perform the work in connection with the 4th and 5th
Optional Satellites, if one or both are ordered, so the 4th and 5th Optional
Satellites are Available for Shipment within twenty-four (24) months after
order, or four (4) months after the Ground Spare Satellite is Available for
Shipment, if applicable, whichever is later. In the event that the 4th and 5th
Optional Satellites are ordered concurrently, delivery of the 5th Optional
Satellite shall be no earlier than four (4) months following Delivery of the 4th
Optional Satellite.
(c) Price.
------
The price for the 4th and 5th Optional Satellites is [*****] for each such
Optional Satellite. When an order is placed by Customer during the period
beginning on September 23, 2000 through the last day of the [*****] following
ARP, the price stated above shall be increased at a rate of [*****] per
quarter for each quarter during such period
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
until the date of placement by Customer of such order. For example, if Customer
places an order for an optional Satellite on May 15, 2001, Customer shall pay
the price stated above, plus escalation computed for two calendar quarters. The
price for each of the 4th and 5th Optional Satellites includes design,
manufacture, testing, taxes, and ground insurance for each such ****** Certain
information on this page has been omitted and filed separately with the
Securities and Exchange Commission. Confidential treatment has been requested
with respect to the omit
xxx portions.
Optional Satellite, up to and including Shipment Readiness Review.
(d) Payment.
--------
The price for the 4th and 5th Optional Satellites shall be paid in
accordance with the payment plan set forth in Exhibit G-3 (4th and 5th Optional
Satellite Payment Plan and Termination Liability Amounts). In the event
Customer exercises the option to purchase a 4th and/or 5th Optional Satellite,
the applicable Milestone Payment Plan(s) therefor shall be mutually agreed by
the Parties at such time as the option to purchase the 4th and/or 5th Optional
Satellite is exercised.
(e) Contract Adjustments.
--------------------
Contractor shall furnish the 4th and 5th Optional Satellites in accordance
with the provisions of the documents constituting this Contract. Except as
otherwise required by the terms and conditions of this Article 30.5 (4th and
5th Optional Satellites), the contract terms and conditions for such Optional
Satellite(s) will be identical t
o the Terms and Conditions of this Contract,
except that (i) liquidated damages for late delivery shall be [*****] for each
such Optional Satellite, and (ii) the in-orbit performance incentive payments
shall be [*****] for each such Optional Satellite, and (iii) such terms shall
include no other deferred payments unless mutually agreed by the Parties.
30.6 [RESERVED]
30.7 Reflectors for the Ground Spare Satellite.
Contractor shall provide Customer, at Customer's request, an additional
flight ship set of two (2) reflectors for the Ground Spare Satellite, if
ordered, as more fully described in Exhibit A (Spacecraft Performance
Specifications). The price for such additional set of reflectors shall be
[*****]. Customer shall exercise this option concurrently with any exercise by
Customer of the Ground Spare Satellite option. The price for such additional
set of reflectors shall be paid as follows: (i) [*****] upon placement of order
by Customer, and (ii) [*****] upon completion of t
he manufacturing for such
reflectors.
30.8 Optional Launch Vehicles.
Subject to availability and in accordance with these Terms and Conditions,
except as expressly modified by this Article 30 (Options), Contractor grants
Customer an option to purchase an additional Sea Launch Launch Vehicle and
related services for the Launch of the Ground Spare Satellite or any other
Optional Spacecraft which may be purchased by Customer from Contractor pursuant
to this Contract, in accordance with the following Table 30.8.
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
Table 30.8
Optional Launch Vehicle - Option Periods and Prices
------------------------------------------------------------------------------
If ordered from: Price:
------------------------------------------------------------------------------
1. EDC through March 22, 1999 [*****]
------------------------------------------------------------------------------
2. March 23, 1999 through March 22, 2001
[*****]
------------------------------------------------------------------------------
30.9 Contract Adjustments.
Should Customer exercise any or all of the options described in this
Article 30 (Options), the Parties shall execute Amendment(s) as soon as is
reasonably possible after option exercise to incorporate the schedule
adjustments, price adjustments, payment schedule adjustments, and changes to the
Exhibits and other Terms and Conditions as made necessary by such exercise.
Except as otherwise provided in this Article 30 (Options), the terms of this
Contract shall apply to any such options.
31. FAILURE TO MAKE ADEQUATE PROGRESS
If, at any time prior to Delivery of a Deliverable Item (but not
thereafter), Contractor has failed to make adequate progress toward the
completion of such Deliverable Item, including where such failure is due to the
Deliverable Item or any component thereof being damaged or destroyed where such
damage or destruction does not constitut
e an Excusable Delay, such that
Contractor, due to causes related to such Deliverable Item, will not be able to
Deliver the Deliverable Item by the applicable Delivery Date (as such date may
have been modified in accordance with this Contract) for such Deliverable Item,
then Customer shall be entitled to deliver to Contractor a Demand for correction
of the failure to make adequate progress. Such Demand shall state full details
of the failure. Within ten (10) Calendar Days after receipt of the Demand, or
such longer time as the Parties may agree, Contractor shall submit to Customer a
Correction Plan (in the level of detail feasible within that timeframe) for
achieving Delivery not later than the one hundred fiftieth (150th) Calendar Day
following the originally scheduled Delivery Date. If such Correction Plan does
not reasonably correct or offset the effect of the failure so as to demonstrate
that Delivery of the Deliverable Item affected thereby can be achieved within
one hundred fifty (150) Calendar
Days after the originally scheduled Delivery
Date, Customer may reject the Correction Plan, and Contractor shall revise the
Correction Plan so as to demonstrate that Delivery for the Deliverable Item
affected thereby can be achieved within one hundred fifty (150) Calendar Days
after the originally scheduled Delivery Date. Nothing herein shall be construed
to release Contractor from its obligation to make Liquidated Damages payments as
applicable in accordance with Article 10 (Liquidated Damages for Late Delivery).
109
32. TERMINATION
32.1 Termination for Customer's Convenience.
(a) Customer may, upon written notice to Contractor, at any time terminate
the Work, in whole or in part, in accordance with the terms set forth below, and
Contractor shall immediately cease Work in the manner and to the extent
specified below. Notwithstanding the foregoing, in no event shall there be a
termination for convenience by Customer under this Article 32.1 (Termination for
Customer's Convenience) (i) with respect to any Satellite that has been
Launched, whether or not such Launch is successful and (ii) with respect only to
either or both Launch Vehicles, unless Customer has made the Major Calendar
Payment with respect to such Launch Vehicle or Launch Vehicles, as applicabl
e.
(b) In the event of partial termination of the Work in accordance with
this Article 32.1 (Termination for Customer's Convenience), Customer's notice of
termination will specify the portion of the Work terminated, and the remaining
provisions of this Article 32.1 (Termination for Customer's Convenience) shall
apply to such terminated portion. All other portions of the Work shall continue
unaffected.
(c) Upon receipt of a notice of termination, as provided in (a) above,
Contractor shall take the following actions:
(1) stop Work under this Contract on the date and to the extent
specified in the notice of termination, except those services
that are specifically intended to be provided in connection with
a termination of this Contract;
(2) withhold delivery of any of the items to be supplied hereunder
until Contractor has received full payment under this Article
32.1 (Termination for Customer's
Convenience);
(3) place no further orders or subcontracts for materials, services,
or facilities to the extent they relate to the performance of the
Work terminated;
(4) terminate orders and Subcontracts to the extent they relate to
the performance of the Work terminated;
(5) settle all outstanding liabilities and all claims arising out of
such termination of orders and Subcontracts for materials,
services, or facilities; and
(6) take such action as may be reasonably necessary, or as Customer
may direct, for the protection and preservation of the property
related to this Contract that is in the possession of Contractor
or any Subcontractor and in which Customer has or may acquire an
interest.
(d) In the event of termination under this Article 32.1 (Termination for
Customer's Convenience) and provided the termination is
not due to Contractor's
default under Article 32.2
110
(Termination for Contractor's Default), Contractor shall be entitled to payment
of an amount equal to the Termination Liability Amount specified in Exhibit G
(Payment Plan and Termination Liability Amounts), and interest on any other
payment not made when required to be made hereunder, less the sum of all amounts
received by Contractor in cash or cash equivalent under this Contract. In no
event shall the amounts payable pursuant to this Article 32.1 (Termination for
Customer's Convenience) exceed the Contract Price. In the event of a termination
of this Contract in part, as permitted by the terms of this Contract, the
Parties shall negotiate an equitable termination liability amount to be paid to
Contractor for that portion of the Work so terminated.
(e) Contractor shall submit an invoice to Customer in accordance with
paragraph (d) above within sixty (60) Calendar Days after the termination date,
which invoice shall specify the amount due to Contractor from Customer pursuant
to this Article 32.1 (Termination for Customer's Convenience). By notice in
writing received by Contractor no later than fifteen (15) Calendar Days after
receipt of Contractor's invoice pursuant to this Article 32.1 (Termination for
Customer's Convenience), Customer may dispute the amount of interest specified
in said invoice. In the event Customer does not so notify Contractor that it
disputes the interest in Contractor's invoice within fifteen (15) Calendar Days
after receipt thereof, Customer shall be deemed to have accepted such invoice.
Contractor shall be entitled to payment by Customer of undisputed amounts in
such invoice within fifteen (15) Calendar Days after Customer's receipt of the
invoice, and with respect to disputed interest amounts, ten (10) Calendar Days
after
the resolution of such dispute. Payment of such amount by any Financing
Entity on behalf of Customer shall relieve Customer from its obligation to make
such payment.
(f) Payment of the amount payable by Customer to Contractor pursuant to
paragraph (d) above shall constitute a total discharge of Customer's liabilities
to Contractor for termination pursuant to this Article 32.1 (Termination for
Customer's Convenience).
(g) Upon completion of all payments in accordance with this Article 32.1
(Termination for Customer's Convenience), Customer may require Contractor to
transfer to Customer in the manner and to the extent directed by Customer, title
to and possession of any items comprising all or any part of the Work terminated
(including all Work-in-progress, parts and materials, and all inventories and
associated warranties), and Contractor shall, upon direction of Customer,
protect and preserve property at Customer's expense in the possession of
Contractor or its Subcontractors in which Cust
omer has an interest and shall
facilitate access to and possession by Customer of items comprising all or part
of the Work terminated. Alternatively, Customer may request Contractor to make a
reasonable, good faith effort to sell such items and to remit any sales proceeds
to Customer less a deduction for costs of disposition reasonably incurred by
Contractor for such efforts. To the extent Contractor's compliance with this
paragraph (g) requires governmental approvals and Contractor cannot, with the
exercise of commercially reasonable efforts, procure such approvals, Contractor
shall be excused from performing its obligations under this paragraph (g).
(h) If in Contractor's judgment it is feasible for Contractor to utilize
any items of terminated Work, it shall submit to Customer an offer to acquire
such items. If such offer is accepted, Contractor's termination invoice shall be
credited with the agreed acquisition price.
111
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separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
32.2 Termination For Contractor's Default.
(a) Customer may terminate this Contract, in whole or in part, upon service
of written notice of default to Contractor at any time after the occurrence of
any of the following:
(1) Subject to any schedule adjustments pursuant to Article 11
(Excusable Delay), Contractor fails to meet the following program
Milestone events:
(i) Conduct Spacecraft Preliminary Design Review (PDR) by
[*****];
(
ii) Conduct Spacecraft Critical Design Review (CDR) by [*****];
(iii) Mate Bus and Payload Module for the first Satellite by
[*****];
(iv) first Spacecraft Available for Shipment to Launch site by
[*****];
(v) Mate Bus and Payload Module for the second Satellite by
[*****]; or
(vi) second Spacecraft Available for Shipment to Launch site by
[*****].
(2) A Satellite has not been Delivered on or before the applicable
Delivery Date (as may be extended in accordance with this
Contract) and all applicable liquidated damages for late delivery
that may accrue to Customer's benefit for the late delivery of
said Satellite have been exhausted in accordance with Article 10
(Liquidated Damages for Late Delivery);
(3) If, with respect to the first Satellite, at [**
***], the Launch
Agency has failed to establish the Launch Slot to begin no later
than [*****], or if, with respect to the second Satellite, at
[*****], the Launch Agency has failed to establish the Launch
Slot to begin no later than [*****];
(4) Contractor commences a voluntary proceeding concerning itself
under any applicable bankruptcy, insolvency, reorganization,
adjustment of debt, relief of debtors, or similar law
("Insolvency Law"); or any involuntary proceeding commences
against Contractor under an Insolvency Law and
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filed separately with the Securities and Exchange Commission.
Confidential treatment has been requested with respect to the
omitted portions.
the petition has not been dismissed within ninety (90) Calendar Days
after commencement of the proceeding; or a receiver or custodian is
appointed for or takes charge of all or a substantial portion of the
property of Contractor and such custodian or receiver has not been
dismissed or discharged within sixty (60) Calendar Days; or Contractor
has taken action toward the winding-up, dissolution, or liquidation of
Contractor or its
business; or Contractor has been adjudicated
insolvent or bankrupt or an order for relief or any other order
approving a case or proceeding under any Insolvency Law has been
entered; or Contractor has made a general assignment for the benefit
of creditors or becomes unable to pay its debts generally as they
become due. Should Contractor become a debtor in any bankruptcy
proceeding, Contractor shall move to assume or reject this Contract
within forty-five (45) Calendar Days after the entry of any order for
relief; or
(5) Contractor has purported to assign or transfer this Contract in
violation of the provisions of Article 34.1 (Assignment) and
Contractor fails to cure such unauthorized purported assignment
or transfer within thirty (30) Calendar Days after receiving
written notice from Customer of the unauthorized purported
assignment or tr
ansfer.
(b) In the event Customer terminates this Contract pursuant to paragraph
(a), Customer shall be entitled to, subject to paragraph (d) below, refund of
all payments previously made to Contractor in cash under this Contract and
payment of any liquidated damages for delay levied pursuant to Article 10
(Liquidated Damages for Late Delivery) and, as damages, direct reasonable re-
procurement costs in excess of the Contract Price, such re-procurement costs to
be actually incurred and invoiced to Contractor in reasonable detail and not to
exceed [*****]; provided, however, if Customer terminates this Contract pursuant
to paragraph (a)(2) above for late delivery and such late delivery is caused by
unexcused delay under Article 10.3 (Termination for Unexcused Delay) on which
liquidated damages have been levied, Customer shall not be entitled to such re-
procurement costs.
(c) Upon Contractor's completion of all payments under paragraph (b) above,
Contractor shall be entitled to retain title to
any and all Work, Work-in-
progress, parts or other material, inventories and any associated warranties,
and any subcontracted items Contractor has specifically produced, acquired, or
entered into in accordance with this Contract. Until Contractor has paid to
Customer the payments required under paragraph (b) above, Customer shall have an
interest in the Work, subject to Article 5.7 (Security Interest).
(d) Customer shall submit an invoice to Contractor for the amounts payable
under paragraph (b) no later than one (1) year after the termination date. The
amounts payable by Contractor under paragraph (b) above shall be verified at
Contractor's request and expense by an internationally recognized firm of
accountants appointed by Contractor for that purpose subject to approval of
Customer. Contractor's right to verification shall be without prejudice to the
113
rights of either Party under Article 27 (Dispute Resolution). The report issued
by the accountants may be used by either Party during any arbitration
proceedings, but the report shall not be binding on the arbitral tribunal. By
notice in writing received by Customer no later than sixty (60) Calendar Days
after receipt of Customer's invoice pursuant to paragraph (b), Contractor may
dispute the amount of said invoice. In the event Contractor does not so notify
Customer that it disputes Customer's invoice, Contractor shall be deemed to have
accepted said invoice. Customer shall be entitled to payment of such amount
within fifteen (15) Calendar Days after Contractor's receipt of such invoice or,
in the event of dispute, ten (10) Calendar Days after the resolut
ion of such
dispute.
(e) Notwithstanding any other provision of this Article 32 (Termination), a
termination for Contractor's default shall not relieve the Parties of their
obligations with respect to any Launched Satellite and there will be no right of
termination for default with respect to a Launched Satellite.
(f) In the event Customer terminates this Contract as provided in paragraph
(a), Contractor, if requested in writing by Customer, shall assign to Customer
or its designee, such Subcontracts as requested by Customer, to the extent
permitted by such Subcontracts.
(g) If, after termination of this Contract under the provisions of
paragraph (a), it is determined by arbitration, pursuant to Article 27 (Dispute
Resolution), or admitted in writing by Customer, that Contractor was not in
default under the provisions of paragraph (a), or that any delay giving rise to
the default was excusable under the provisions of Article 11 (Excusable Delay),
such termination shall be considered a T
ermination for Convenience by Customer
and the provisions of Article 32.1 (Termination for Customer's Convenience)
shall apply.
(h) Contractor's compliance with this Article 32.2 (Termination for
Contractor's Default) shall constitute Customer's sole and exclusive remedy in
the event of a termination for Contractor's default.
32.3 Termination for Customer's Default.
(a) Contractor may stop work or terminate this Contract in whole or in part
upon service of written notice of default to Customer at any time after the
occurrence of any of the following:
(1) Subject to paragraph (2), if Contractor gives written notice to
Customer of default in the payment of any amount, including
Milestone Payments, Major Calendar Payments, and other Calendar
Payments, when such amount shall have become due and payable; or
(2) Customer fails to cause Contractor to be paid any Milestone
Payment amounts determined to be due a
nd payable under Article
5.3 (Disputed Amounts) within the time period set forth in
Article 5.3 (Disputed Amounts); or
(3) Customer commences a voluntary proceeding concerning itself under
any applicable bankruptcy, insolvency, reorganization, adjustment
of debt,
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and filed separately with the Securities and Exchange Commission.
Confidential treatment has been requested with respect to the
omitted portions.
relief of debtors or similar law ("Insolvency Law"); or any
involuntary proceeding commences against Customer under an
Insolvency Law and the petition has not been dismissed within
ninety (90) Calendar Days after commencement of the proceeding;
or a receiver or custodian is appointed for or takes charge of
all or a substantial portion of the property of Customer and such
custodian or receiver
has not been dismissed or discharged within
sixty (60) Calendar Days; or Customer has taken action toward the
winding-up, dissolution, or liquidation of Customer or its
business; or Customer has been adjudicated insolvent or bankrupt
or an order for relief or any other order approving a case or
proceeding under any Insolvency Law has been entered; or Customer
has made a general assignment for the benefit of creditors or
becomes unable to pay its debts generally as they become due.
Should Customer become a debtor in any bankruptcy proceeding,
Customer shall move to assume or reject this Contract within
forty-five (45) Calendar Days after the entry of any order for
relief; or
(4) Customer has purported to assign or transfer this Contract in
violation of the provisions of Article 34.1 (Assignment) and
Cu
stomer fails to cure such unauthorized assignment or transfer
within thirty (30) Calendar Days after receiving written notice
from Contractor of such unauthorized purported assignment or
transfer by Customer; or
(5) Customer fails to raise [*****] in financing in addition to the
[*****] required by Article 7(d) for a total minimum of the
[*****] in financing within one hundred eighty (180) Calendar
Days after ARP.
(b) Upon the occurrence of an event of default under paragraph (a) above,
and following the expiration of any applicable cure period, Contractor shall
have the following rights (in addition to termination):
(1) Contractor may stop Work immediately under this Contract and all
obligations of Contractor shall terminate hereunder;
(2) Contractor may, at its sole option, terminate its obligations to
cause a Launch Vehicle to be provided for
the benefit of
Customer, without terminating the whole Contract; provided,
however, if Contractor terminates this Contract in part,
Contractor may terminate only the Launch Vehicle obligations
applicable to the portion of this Contract being so terminated
(by way of example, if Contractor terminates this Contract in
part with respect to the first Satellite to be delivered, only
the Launch Vehicle obligations related to the Launch of the first
Satellite may be terminated);
115
(3) Contractor shall be entitled to retain possession and title to
the Work, and all items thereof, and all payments received prior
to such termination, unless and until all payments due under the
Contract as a result of any termination by Contractor have been
received by Contractor in immediately available funds;
(4) Contractor may sell the Work, or items thereof to a person other
than Customer, provided the proceeds of such sale of such Work
are applied to off-set any termination liability amounts due to
Contractor by Customer;
(5) Contractor may withhold delivery of any of the items to be
supplied her
eunder until Contractor has received full payment
under this Article 32.3 (Termination for Customer's Default);
(6) Contractor shall place no further orders or subcontracts for
materials, services, or facilities to the extent they relate to
the performance of the Work;
(7) Contractor shall terminate orders and Subcontracts to the extent
they relate to the performance of the Work;
(8) Contractor shall settle all outstanding liabilities and all
claims arising out of such termination of orders and Subcontracts
for materials, services, or facilities;
(9) Contractor shall take such action as may be reasonably necessary
for the protection and preservation of the property related to
this Contract that is in the possession of Contractor or any
Subcontractor and in which Customer has or may acquire an
interest; and
(10) Should Customer become a debtor in any bankruptcy proceeding,
Customer shall move to assume or reject this Contract within
forty-five (45) Calendar Days after the entry of any order for
relief.
(c) Nothing in this Article 32.3 (Termination for Customer's Default) shall
limit any rights (and associated remedies to enforce these rights) that
Contractor may have in the Work by virtue of its security interest (pursuant to
Article 5.7 (Security Interest)) in the Work and the Ground Spare Satellite, if
elected to be purchased pursuant to Article 30 (Options).
(d) In the event Contractor terminates this Contract, in whole or in part,
as provided above, Contractor shall be entitled to payment of the amounts
specified in Article 32.1 (Termination for Customer's Convenience).
(e) Contractor shall submit an invoice to Customer in accordance with
paragraph (d) above within sixty (60) Calendar Days after the termination date,
which invoice sh
all specify the amount due to Contractor from Customer pursuant
to this Article 32.3 (Termination for Customer's Default). By notice in writing
received by Contractor no later than fifteen (15) Calendar Days after receipt of
Contractor's invoice pursuant to this Article 32.3 (Termination for
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
Customer's Default), Customer may dispute the amount of any interest specified
in said invoice. In the event Customer does not so notify Contractor that it
disputes the interest in Contractor's invoice within fifteen (15) Calendar Days
after receipt thereof, Customer shall be deemed to have accepted such invoice.
Contractor shall be entitled to payment by Customer of undisputed amounts in
such invoice within fifteen (15) Calendar Days after receipt of the invoice, and
with respect to disputed interest amounts, ten (10) Calendar Days after
resolution of s
uch dispute. Payment of such amount by any Financing Entity on
behalf of Customer shall relieve Customer from its obligation to make such
payment.
(f) Payment of the amount payable by Customer pursuant to paragraph (c)
above shall constitute a total discharge of Customer's liabilities to Contractor
for termination pursuant to this Article 32.3 (Termination for Customer's
Default).
(g) Upon completion of all payments to Contractor in accordance with this
Article 32.3 (Termination for Customer's Default), Customer may require
Contractor to transfer to Customer in the manner and to the extent directed by
Customer, title to and possession of any items comprising all or any part of the
Work terminated (including all Work-in-progress, parts and materials, all
inventories, and associated warranties), and Contractor shall, upon direction of
Customer, protect and preserve property at Customer's expense in the possession
of Contractor or its Subcontractors in which Customer has an interest and shall
f
acilitate access to and possession by Customer of items comprising all or part
of the Work terminated. Alternatively, Customer may request Contractor to make a
reasonable, good faith effort to sell such items and to remit any sales proceeds
to Customer less a deduction for costs of disposition reasonably incurred by
Contractor for such efforts on terms agreed to by the Parties at that time.
(h) Except as specified in this Contract, Contractor shall not have the
right to terminate or suspend this Contract.
32.4 Termination for Excusable Delay.
(a) Customer may, upon written notice to Contractor, immediately terminate
this Contract, in whole or in part, if and when it becomes reasonably certain
that the aggregate of Excusable Delays (except those Excusable Delays caused
directly by Customer's failure to perform its responsibilities under this
Contract) will exceed four hundred eighty-five (485) Calendar Days.
(b) In the event of termination under this Article 32.4 (Termination for
Excusable Delay), Customer shall be entitled to, subject to paragraph (c) below,
refund of all payments previously made to Contractor in cash or cash equivalent
under this Contract and payment of any liquidated damages, if any, for delay
levied pursuant to Article 10 (Liquidated Damages for Late Delivery), less
[*****] of all such payments (excluding liquidated damages) (the "Refund
Reduction Amount"), which Refund Reduction Amount shall not exceed a total of
[*****].
117
(c) Upon completion of all payments to Customer in accordance with this
Article 32.4 (Termination for Excusable Delay), Contractor shall be entitled to
retain title to any and all Work, Work-in-progress, parts or other material,
inventories, and any associated warranties, and any subcontracted items
Contractor has specifically produced, acquired, or entered into in accordance
with this Contract.
(d) Customer shall submit an invoice to Contractor for the amounts payable
under this Article 32.4 (Termination for Excusable Delay) no later than one (1)
year after the termination date. By notice in writing received by Customer no
later than fifteen (15) Calendar Days after receipt of Customer's invoice
pursuant to this Article 32.4 (Termination for E
xcusable Delay), Contractor may
dispute the amount of said invoice. In the event Contractor does not so notify
Customer that it disputes Customer's invoice, Contractor shall be deemed to have
accepted said invoice. Customer shall be entitled to payment of such amount
within fifteen (15) Calendar Days after Contractor's receipt of such invoice or,
in the event of dispute, ten (10) Calendar Days after the resolution of such
dispute.
(e) In the event it is determined by arbitration pursuant to Article 27
(Dispute Resolution) or by written agreement of the Parties that Customer
wrongfully terminated this Contract under this Article 32.4 (Termination for
Excusable Delay), such termination shall be considered a Termination for
Convenience by Customer and the provisions of Article 32.1 (Termination for
Customer's Convenience) shall apply.
32.5 Time of the Essence.
Time is of the essence in this Contract, including with respect to the
resolution of any disputes between the Parties under this
Article 32
(Termination).
118
33. INTER-PARTY WAIVER OF LIABILITY
(a) Prior to commencement of Launch Services, each Party will provide the
other Party with evidence reasonably satisfactory to the other Party that it has
complied with the inter-party waiver of liability and related insurance and
indemnification provisions of any Launch Agreement, including any requirement to
obtain substantially similar waivers and/or indemnifications from other parties
such as entities conducting operations at the launch site, customers,
contractors, subcontractors at any tier, or the United States Government.
(b) Notwithstanding any other term or provision contained in this Contract,
this Article 33 (Inter-Party Waiver of Liability) shall survive the completion
or termination of this Con
tract in any manner whatsoever.
(c) The Parties will take such further actions as may be required to
implement the provisions of this Article 33 (Inter-Party Waiver of Liability),
including the execution of such agreements, waivers, and indemnifications as are
customarily used with respect to operations at the launch site and are
consistent with the provisions of this Article 33 (Inter-Party Waiver of
Liability).
(d) For any Launch subject to the jurisdiction of the United States, the
Launch Agency shall procure and maintain such insurance as required by the
United States Department of Transportation for loss or damage to United States
Government property or for death, bodily injury or property damage or loss to
third parties in connection with the licensed Launch activities provided under
this Contract. For Launches not subject to the jurisdiction of the United
States, the Launch Agency shall procure and maintain such insurance as required
by the government having jurisdiction over such Laun
ch.
(e) The Launch Agency has executed agreements with various United States
Government agencies for the use of Government-owned property and facilities
relating to the production of launch vehicles and launch operations. Customer
agrees that it will comply with the United States Government's Laws as they
relate to Customer-furnished property and personnel, and those agreements
relating directly to the United States expendable launch vehicle program.
Contractor shall request the Launch Agency to furnish copies of such agreements
to Customer upon Customer's request.
(f) Contractor shall require the Launch Agency to indemnify, defend and
hold harmless Contractor and Customer from third-party claims for bodily injury,
including death, property damage and losses, arising from or relating to any
Launch Services provided by the Launch Agency.
119
34. GENERAL
34.1 Assignment.
(a) Contractor shall not, without the prior written approval of Customer
and except on such terms and conditions as are determined in writing by
Customer, assign, mortgage, charge, or encumber this Contract or any part
thereof, any of its rights, duties, or obligations hereunder, or the Work to any
person or entity (except to its parent company or a wholly-owned direct or
indirect subsidiary company of Contractor, or any person or entity acquiring all
or substantially all the assets of Contractor (through merger, stock or asset
acquisition, recapitalization, or reorganization) where such merger,
acquisition, recapitalization, or reorganization does not adversely affect
Customer's rights under this Contract); provi
ded, however, Customer shall
provide its approval, if in Customer's reasonable judgment, Customer's rights
under this Contract are not and would not be adversely affected thereby.
(b) Customer shall not, without the prior written approval of Contractor,
assign, mortgage, charge, or encumber this Contract or any part thereof, or
merge with or into or sell all or substantially all its assets to any other
entity (except to its parent company or a wholly-owned direct or indirect
subsidiary company of Customer, or any person or entity acquiring all or
substantially all the assets of Customer (through merger, stock or asset
acquisition, recapitalization, or reorganization) where such merger,
acquisition, recapitalization, or reorganization does not adversely affect
Contractor's rights under this Contract); provided, however, Contractor shall
provide its approval, if in Contractor's reasonable judgment, Contractor's
rights under this Contract are not and would not be adversely affected thereby.
(c)
The assigning Party shall reimburse the other Party for all reasonable
expenses incurred by the other Party (and invoiced in reasonable detail) in
obtaining advice from its external financial and legal advisors relating to the
assigning Party's proposed assignment or transfer.
(d) This Contract shall be binding on the Parties and their successors and
permitted assigns. Assignment of this Contract shall not relieve the assigning
Party of any of its obligations nor confer upon the assigning Party any rights
except as provided in this Contract.
34.2 Entire Agreement.
This Contract contains the entire agreement between the Parties regarding
the Work hereunder and supersedes all communications, negotiations, and other
agreements either written or oral, relating to the Work and made prior to EDC,
unless the same are expressly incorporated by reference into this Contract.
Further, this Second Amended and Restated Satellite Purchase Contract supercedes
the Original Satellite Purchase Contract,
as amended, and the First Amended and
Restated Satellite Purchase Contract, and this Second Amended and Restated
Satellite Purchase Contract constitutes the sole agreement between the Parties
as to the Work to be performed hereunder.
120
34.3 Amendments.
This Contract, including any and all its Schedules, Attachments, Annexes,
Exhibits and Appendices thereto, may not be modified except by written
instrument of subsequent date signed by an officer of Contractor, or another
person designated in writing by any such officer to sign such an instrument and
a senior vice president of Customer, or another person designated in writing by
any such Customer senior vice president to sign such an instrument.
34.4 Waiver of Breach of Contract.
A waiver of any provision or any breach of a provision of this Contract
shall not be binding upon either Party unless the waiver is in writing, signed
by a duly authorized representative of the Party to be bound, as applicable, and
such waiver shall not affect the rights of the Party not in breach with respect
to any other or future breach. No course of conduct by a Party shall constitute
a waiver of any provision or any breach of a provision of this Contract unless a
written waiver is executed in accordance with the provisions of this Article
34.4 (Waiver of Breach of Contract).
34.5 Severability.
In the event any one or more of the provisions of this Contract shall for
any reason be held to be invalid or unenforceable, the remaining provisions of
this Contract shall be unimpaired and the invalid or unenforceable provision
shall be replaced by a mutually acceptable provision, which, being valid and
enforceable, comes closest to the intention of the Parties underlying the
invalid or unenforceable provision.
34.6 Applicable Law.
Except as provided in Article 27 (Dispute Resolution), this Contract and
performance under it shall be governed by, construed and enforced in accordance
with the Laws in force in the State of New York, without regard to conflict of
laws provisions thereof.
34.7 Notices.
(a) All notices, requests, demands, and determinations under this Contract,
including any required under Article 34.1 (Assignment), (other than routine
operational communications), shall be in writing and shall be deemed duly given
(i) when delivered by hand, (ii) two (2) Business Days after being given to an
express courier with a reliable system for tracking delivery, and (iii) when
sent by facsimile (confirmed by the specific individual to whom the facsimile is
transmitted) with a copy sent by another means specified in this Article 34.7
(Notices), and addressed as follows:
Customer: XM Satellite Radio Inc.
0000 00xx Xxxxxx, XX, Xxxxx 00
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Sr. Vice President, General Counsel and Secretary
121
Contractor: Xxxxxx Space and Communications International, Inc.
Courier: 0000 X. Xxxxxx Xxxxxx
Xx Xxxxxxx, XX 00000
Mail: X.X. Xxx 00000
Xxx Xxxxxxx, XX 00000
Tel. No.: 310/000-0000
Fax No.: 310/000-0000
Attention: Xxxxxxx Xxxx Xxxxxxxx
Director, Xxxxxxxxxx/Xxxxxxxxxxxxx Xxxxxxxx
Xxx. XX, Xxxx X00, M/S A374
(b) A Party may from time to time change its address or designee for
notification purposes by giving the other Party prior written notice of the
new address or designee and the date upon which it will be effective.
34.8 Parties Not Agents.
(a) Contractor, in performing the Work hereunder, is a
cting as an
independent contractor, and Contractor has the sole right and obligation to
supervise, manage, contract, direct, procure, perform, or cause to be performed,
all Work to be performed by Contractor under this Contract.
(b) None of the provisions of this Contract or of any of its Exhibits,
shall be construed to mean that either Party is appointed or is in any way
authorized to act as an agent of the other Party.
34.9 Release of Information.
(a) From and after the Effective Date of Contract, other than disclosures
required by Law or requirements of NASDAQ, the NYSE or any other national
securities exchange, any publicity, news releases, articles, brochures,
advertisements, prepared speeches, and other information releases regarding the
specific financial details of this Contract or proprietary information of the
other Party regarding the Work performed or to be performed hereunder shall be
mutually agreed upon in writing by Contractor and Customer within a reasonable
time prior
to the release of such information. This obligation shall not apply
to Customer's statement or publication of Exhibit B (Statement of Work) or
Exhibit A (Spacecraft Performance Specifications) or parts thereof. This
obligation also shall not apply to information that is publicly available from
any Governmental agency or that is or otherwise becomes publicly available
without breach of this Contract. This Article 34.9 (Release of Information) also
shall not apply to internal publications or releases not intended for the public
at large.
(b) Prior to any disclosure required by Law or requirements of NASDAQ, the
NYSE, or any other national securities exchange, the Party required to disclose
shall inform the other Party and shall consult with such Party regarding its
views as to which portions of such information it should seek to have treated as
confidential. In addition, prior to filing this Contract with any Governmental
or quasi-Governmental agency, Customer shall advise Contractor of such filing
and, as requested by Contractor, redact such terms that Contractor
122
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
reasonably determines to be confidential and that could put Contractor at a
competitive disadvantage if publicly disclosed, subject to the requirements
and/or approval of the Government and/or quasi-Governmental agency.
34.10 Calculation of Interest.
Except as otherwise specified in this Contract, any interest due to
Contractor under this Contract shall be calculated at the annual rate equal to
the three (3) month London Interbank Offer Rate (LIBOR) for U.S. Dollars
[*****]. Except as otherwise specified in this Contract, any interest due to
C
ustomer under this Contract shall be calculated at the annual rate equal to the
three (3) month LIBOR for U.S. Dollars [*****].
34.11 Survival.
The following Articles, and the provisions contained therein, shall be
deemed to survive the termination (for any reason) or expiration of this
Contract, and, accordingly, such Articles shall remain applicable and
enforceable in accordance with their terms:
(a) Article 1 (Definitions);
(b) Article 9 (Title and Risk of Loss);
(c) Article 10 (Liquidated Damages for Late Delivery);
(d) Article 11 (Excusable Delay);
(e) Article 12 (In-Orbit Performance Incentive Payments);
(f) Article 18.3 (Warranties for Deliverable Items);
(g) Article 20 (Intellectual Property Rights);
(h) Article 21 (Intellectual Property Infringement Indemnification);
(i) Article 22 (Confidential Information);
(j) Article 23 (Non-Competition Obligation), provided that this Contract
is not terminated for Customer's
convenience, pursuant to Article 32.1
(Termination for Customer's Convenience) or terminated for Customer's default,
pursuant to Article 32.3 (Termination for Customer's Default);
(k) Article 24 (Indemnification);
(l) Article 26 (Limitation of Liability);
123
(m) Article 27 (Dispute Resolution);
(n) Article 32 (Termination);
(o) Article 33 (Inter-Party Waiver of Liability);
(p) Article 34.6 (Applicable Law);
(q) Article 34.10 (Calculation of Interest); and
(r) Article 34.15 (Covenant of Good Faith).
34.12 No Third-Party Beneficiaries.
This Contract is entered into solely between, and may be enforced only by,
Customer and Contractor and their permitted assigns, and this Contract shall not
be deemed to create any rights in third parties, including suppliers and
customers of a Party, or to create any obligations of a Party to any such third
parties.
34.13 Consents and Approvals.
Except where expressly provided as being in the sole discretion of a Pa
rty,
where agreement, approval, acceptance, consent, or similar action by either
Party is required under this Contract, such action shall not be unreasonably
delayed or withheld. An approval or consent given by a Party under this
Contract shall not relieve the other Party from responsibility for complying
with the requirements of this Contract, nor shall it be construed as a waiver of
any rights under this Contract, except as and to the extent otherwise expressly
provided in such approval or consent.
34.14 Lender Requirements.
(a) The Parties recognize this Contract may be financed through external
sources. Contractor shall provide to any Financing Entity any program
information or certification that such Financing Entity reasonably requires
(subject to confidentiality agreements governing such program information).
(b) Contractor agrees to work cooperatively to negotiate and execute such
documents as may be reasonably required to implement such financing to the
extent such financing
or document does not adversely affect Contractor's
interests under this Contract.
(c) Contractor agrees to execute such documents as may be reasonably
required by any Financing Entity, including a contingent assignment of this
Contract to such Financing Entity, under terms reasonably acceptable to
Contractor and to agree to such modifications to this Contract as such Financing
Entity may reasonably require, provided Contractor's interests under this
Contract are not adversely affected.
124
34.15 Covenant of Good Faith.
Each Party agrees that, in respective dealings with the other Party under
or in connection with this Contract, it shall act in good faith.
34.16 Counterparts.
This Contract may be executed in two (2) or more counterparts, which taken
together constitute one single contract between the Parties.
125
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
35. OTHER BUSINESS
(a) [*****]
(b) [*****]
IN WITNESS WHEREOF, this Contract has been executed on behalf of Customer
by persons authorized to act on Customer's behalf, and has also been executed on
behalf of Contractor by persons authorized to act on Contractor's behalf.
XXXXXX SPACE AND COMMUNICATIONS INTERNATIONAL, INC. XM SATELLITE RADIO INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxxxxx
---------------------------------- ----------------------------------
(Signature) (Signature)
Name: Xxxxxxx X. Xxxxxxx Name: Xxxx X. Xxxxxxxxxx
Title: Vice President, Title: Senior Vice President
Commercial Contracts XM Satellite Radio Inc.
Date: July 21, 1999 Date: July 21, 1999
126
Attachment A
FORM OF REQUEST FOR PAYMENT
[Date]
XM Satellite Radio Inc.
0000 00xx Xxxxxx XX, Xxxxx 00
Xxxxxxxxxx, XX 00000
Attention: Treasurer
RE: Terms and Conditions of the Second Amended and Restated Satellite
Purchase Contract for In-Orbit Delivery, dated as of July 21, 1999 (as
amended, supplemented or modified from time to time, the "XM Satellite
Purchase Contract"), between XM Satellite Radio Inc. ("Customer") and
Xxxxxx Space and Communications International, Inc. ("Contractor")
Ladies and Gentlemen:
This Request for
Payment is delivered to XM pursuant to Article 5 (Payment) of
the XM Satellite Purchase Contract and constitutes Contractor's request for
payment in the amount of $_________ for Milestone Payment No. ________.
Very truly yours,
XXXXXX SPACE AND COMMUNICATIONS INTERNATIONAL, INC.
By: _____________________
Title: _____________________
A-1
Annex I to Attachment A
Form of Contractor Certificate
Reference: Milestone Payment No. _____
[Date]
XM Satellite Radio Inc.
0000 00xx Xxxxxx, XX, Xxxxx 00
Xxxxxxxxxx, XX 00000
Attention: Treasurer
RE: Terms and Conditions of the Second Amended and Restated Satellite
Purchase Contract for In-orbit Delivery, dated as of July 21,
1999between XM Satellite Radio Inc. ("Customer") and Xxxxxx Space and
Communications International, Inc. ("Contractor") (as amended,
supplemented or modified from time to time, the "XM Satellite Purchase
Contract")
Ladies and Gentlemen:
This Certificate is d
elivered to you pursuant to Article 5 (Payment) of the
Terms and Conditions of the XM Satellite Purchase Contract. Each capitalized
term used herein and not otherwise defined shall have the meaning assigned
thereto in the Terms and Conditions of the XM Satellite Purchase Contract.
We hereby certify, after due inquiry, that, as of the date hereof:
1. The XM Satellite Purchase Contract is in full force and effect and except
as set forth in Schedule I hereto, has not been amended, supplemented or
otherwise modified, and attached hereto are true, correct and complete
copies of all Amendments to the XM Satellite Purchase Contract or any other
modification or amendment to the XM Satellite Purchase Contract not
heretofore delivered to the Financing Entity.
2. Except as set forth in Schedule I hereto, we are not aware of any event
that has occurred or failed to occur which occurrence or non-occurrence, as
the case may be, could reasonably be expected to cause the date
of Final
Acceptance of any Deliverable Item under the XM Satellite Purchase Contract
to occur later than the Delivery Date therefor.
A-I-1
3. Except as set forth in Schedule I hereto, no event or condition exists that
permits or requires us to cancel, suspend, or terminate our performance
under the XM Satellite Purchase Contract or that could excuse us from
liability for non-performance thereunder.
4. Except with respect to amounts that are the subject of a dispute (such
amounts and such disputes being described in reasonable detail in Schedule
II hereto), all amounts due and owing to us have been paid in full through
the date of the immediately preceding Contractor Certificate and are not
overdue. To the extent payment to us has been or will be made as specified
in this and the immediately preceding Contractor Certificates, there are
and wil
l be no mechanics' or materialsmen's liens except Permitted Liens
(as may be defined in the Financing Agreements) on the Project (as may be
defined in the Financing Agreements), the Collateral (as may be defined in
the Financing Agreements) or on any other property in respect of the Work
which has or will be performed under the Satellite Purchase Contract.
5. a. The amount contained in the Request for Payment delivered to you
concurrently herewith in accordance with the terms of Article 5
(Payment) of the Terms and Conditions of the XM Satellite Purchase
Contract represents monies owed to us in respect of Milestone Payment
No. _____.
b. The amount referred to in paragraph (a) above was computed in
accordance with the terms of the XM Satellite Purchase Contract.
c. The Milestone to which Milestone Payment No. ____ relates has been
completed in accordance with the XM Satellite Purchase Contract.
Very truly yours,
H
UGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC.
By: _____________________________
Title: _____________________________
A-I-2
SCHEDULE I to
Annex I to Attachment A
List of Exceptions:
Amendments to XM Satellite Purchase Contract:
Exceptions Affecting Final Acceptance Date:
Exceptions Affecting Contractor's Performance:
SI-1
SCHEDULE II to
Annex I to Attachment A
List of Disputes:
SII-1
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
Attachment B
KEY PERSONNEL AS OF EFFECTIVE DATE OF CONTRACT
[******] [******]
[******] [******]
[******] [******]
[******] [******]
[******] [******]
[******] [******]
[******] [******]
[******]
[******]
B-1
SCHEDULES
TO
SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT
FOR IN-ORBIT DELIVERY
BY and BETWEEN
XM SATELLITE RADIO INC.
and
XXXXXX SPACE AND COMMUNICATIONS INTERNATIONAL, INC.
Schedule 19.3
Customer has no interest, direct or indirect, in any other entity.
Schedule 19.4
There are no actions, suits, proceedings or investigations pending or, to
the knowledge of Customer, threatened against Customer. There is, however, a
filing in Customer's Federal Communications Commission (FCC or Commission)
licensing docket which takes a position adverse to Customer.
In re American Mobile Radio Corporation, Application for Authority to
construct, Launch and Operate Two Satellites in the Satellite Digital Audio
Radio Service, File No. 72-SAT-AMEND-97 et seq., Before the Federal
Communications Commission.
Application for Review, filed by Primosphere Limited Partnership
(Primosphere) on November 17, 1997. This fil
ing seeks review by the full
Commission of the International Bureau's Order and Authorization released
October 16, 1997 which: 1) authorized AMRC to launch and operate a
satellite system in order to provide satellite digital audio radio service;
and 2) denied Primosphere's petition to deny AMRC's application.
Customer has no current intention to initiate any such action.
Schedule 19.5
There are no liens on Customer's material property and assets.
Schedule 19.6
AMRC Holdings, Inc.
Unaudited Balance Sheet as of December 31, 1997
Balance Sheet 1997
----------
Cash 544
License 90,030,889
License - Captialized Interest 1,869,427
Total Assets 91,900,860
==========
Interest Payable - BL & AAL 2,370,053
Interest Payable - WC 18,204
Note Payable - BL 22,500,000
Note Payable - AA
L 58,388,889
Note Payable - WC 1,054,190
Note Payable - AMSC 55,435
----------
Total Liabilities 84,386,771
Equity:
Accumulated Deficit (1,628,455)
AMSC (80%; 100 shares)
Common Stock 10
Additional Paid in Capital 1,642,534
WSI (20%; 25 shares)
Common Stock 3
Additional Paid in Capital 7,499,998
----------
Total Stockholders' Equity 7,514,089
Total Liabilities & Equity 91,900,860
==========
Income Statement - BY PERIOD
Outside Services - WSI 568,901
Outside Services - Accrued 390,659
Outside Services
- AMSC 130,451
Other Operating Expenses - AMSC 19,614
Interest Expense - BL & AAL 2,370,053
Interest Expense - WC 18,204
Interest Amort - License (1,869,427)
----------
Net Loss 1,628,455
==========
BL = Bridge Loan; AAL = Additional Amounts Loan; WC = Working Capital Loan
AMSC = American Mobile Satellite Corporation; WSI = WorldSpace Incorporated
Schedule 19.7
AMRC Holdings, Inc.
Unaudited Balance Sheet as of December 31, 1997
1997
--------------------------------------- P & L
Balance Sheet January February March** Total
---------------------------------------
Cash 544 544 544
License 90,030,889 90,030,889 90,030,
889
License - Captialized Interest 2,438,020 2,951,588 3,520,182
Satellite Construction in Progress 5,000,000
Total Assets 92,469,453 92,983,021 98,551,615
======================================
Interest Payable - BL & AAL 3,132,582 3,821,318 4,600,319
Interest Payable - WC 25,315 33,368 45,020
Management Fee Payable - WMC 102,935 205,870 308,805
Note Payable - BL 22,500,000 22,500,000 22,500,000
Note Payable - AAL 58,388,889 58,388,889 63,388,889
Note Payable - WC 1,029,382 1,089,546 1,604,703
Note Payable - AMSC 84,158 112,880 141,603
--------------------------------------
Total Liabilities 85,263,260 86,151,871 92,589,339
Equity:
Accumulated Deficit (1,628,455) (1,628,455) (1,628,455)
AMSC (80%; 100 shares)
Common Stock 10 10 10
Additional Paid in Capital 1,642,534 1,642,534 1,642,534
WSI (20%; 25 shares)
Common Stock 3 3 3
Additional Paid in Capital 7,499,998 7,499,998 7,499,998
Current Accumulated Deficit (307,897) (682,939) (1,551,813)
--------------------------------------
Total Stockholders' Equity
7,206,192 6,831,150 5,962,276
Total Liabilities & Equity 92,469,453 92,983,021 98,551,615
======================================
Income Statement - BY PERIOD
Outside Services - WSI (24,808) 51,837 256,411 283,471
Outside Services - WSI (Accrued) 233,714 233,714
Management Fees 131,658 131,658 131,659 394,974
Travel & Entertaiment 8,327 25,000 33,327
Interest Expense - BC & AAL 762,529 688,736 779,001 2,230,266
Interest Expense - WC 7,112 8,053 11,653 26,817
Interest Amort - License (568,593) (513,568) (568,593) (1,650,755)
---------------------------------------------------
Net Loss 307,897 375,042 868,874 1,551,813
===================================================
**Based on actual amounts as of March 20, 1998 and estimated amounts from March
21, 1998 through March 31, 1998.
BL = Bridge Loan; AAL = Additional Amounts Loan; WC = Working Capital Loan
AMSC = American Mobile Satellite Corporation; WSI = WorldSpace Incorporated
Schedule 19.8
Undisclosed Liabilities
Second Amended and Restated Satellite Purchase Contract for In-Orbit
Delivery between XM Satellite Radio Inc. and Xxxxxx Space and Communications
International, Inc.
[Logo of Xm Satellite Radio Inc. Appears Here]
--------------------------------------------------------------------------------
Exhibit A rev C
--------------------------------------------------------------------------------
Spacecraft Performance Specifications
Last Saved: July 15, 1999 1:08 PM
Document Number: XM-TBD-00001
DOCUMENT RELEASE APPROVALS
---------------------------------------------
Approved by Date
Xxxx X. Xxxxxxxxxx
Senior Vice President,
XM Satellite Radio Inc.
---------------------------------------------
Approved by Date
Xxxxx X. Xxxxxxxxxx (Xxxxxx Space and
Communications Company)
Program Manager: XM Spacecraft
---------
------------------------------------
***** Confidential treatment has been requested for this ENTIRE exhibit. The
------
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated [*****]. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
[*****]
[Logo of Xm Satellite Radio Inc. Appears Here]
--------------------------------------------------------------------------------
Exhibit B rev A
--------------------------------------------------------------------------------
Statement of Work
Last Saved: July 14, 1999 4:20 PM
Document Number: XM-TBD-00002
DOCUMENT RELEASE APPROVALS
---------------------------------------------
Approved by Date
Xxxx X. Xxxxxxxxxx
Senior Vice President,
XM Satellite Radio Inc.
---------------------------------------------
Approved by Date
Xxxxx X. Xxxxxxxxxx (Xxxxxx Space and
Communications Company)
Program Manager: XM Spacecraft
---------------------------
------------------
***** Confidential treatment has been requested for this ENTIRE exhibit. The
------
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated [*****]. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
[*****]
[Logo of Xm Satellite Radio Inc. Appears Here]
--------------------------------------------------------------------------------
Exhibit C Rev A
--------------------------------------------------------------------------------
Product Assurance Plan
---------------------------------------------
Approved by Date
Xxxx X. Xxxxxxxxxx
Senior Vice President,
XM Satellite Radio Inc.
---------------------------------------------
Approved by Date
Xxxxx X. Xxxxxxxxxx (Xxxxxx Space and
Communications Company)
Program Manager: XM Spacecraft
---------------------------------------------
***** Confidential treatment has been requested for this ENTIRE exhibit. The
------
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated [*****]. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
[*****]
[Logo of Xm Satellite Radio Inc. Appears Here]
--------------------------------------------------------------------------------
Exhibit D Rev B
--------------------------------------------------------------------------------
Test Plan Requirements
Last Saved: July 14, 1999 4:42 PM
Document Number: XM-TBD-00004
DOCUMENT RELEASE APPROVALS
---------------------------------------------
Approved by Date
Xxxx X. Xxxxxxxxxx
Senior Vice President,
XM Satellite Radio Inc.
---------------------------------------------
Approved by Date
Xxxxx X. Xxxxxxxxxx (Xxxxxx Space and
Communications Company)
Program Manager: XM Spacecraft
----------------------
-----------------------
***** Confidential treatment has been requested for this ENTIRE exhibit. The
------
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated [*****]. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
[*****]
[Logo of Xm Satellite Radio Inc. Appears Here]
--------------------------------------------------------------------------------
Exhibit E
--------------------------------------------------------------------------------
XM Satellite Radio Spacecraft
Radiation Environment Specifications
Last Saved: July 14, 1999 4:29 PM
Document Number: XM-TBD-00005
DOCUMENT RELEASE APPROVALS
---------------------------------------------
Approved by Date
Xxxx X. Xxxxxxxxxx
Senior Vice President,
XM Satellite Radio Inc.
---------------------------------------------
Approved by Date
Xxxxx X. Xxxxxxxxxx (Xxxxxx Space and
Communications Company)
Program Manage
r: XM Spacecraft
---------------------------------------------
***** Confidential treatment has been requested for this ENTIRE exhibit. The
------
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated [*****]. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
[*****]
[Logo of Xm Satellite Radio Inc. Appears Here]
--------------------------------------------------------------------------------
Exhibit F
--------------------------------------------------------------------------------
Long Lead Activites and Items
CDRL Number B03
---------------------------------------------
Approved by Date
Xxxx X. Xxxxxxxxxx
Senior Vice President,
XM Satellite Radio Inc.
---------------------------------------------
Approved by Date
Xxxxx X. Xxxxxxxxxx (Xxxxxx Space and
Communications Company)
Program Manager: XM Spacecraft
---------------------------------------------
--------------------------------------------------------------------------------
To be provided by Xxxxxx no later than EDC + 4 months in accordance with the
Statement of Work (Exhibit B)
--------------------------------------------------------------------------------
[Logo of Xm Satellite Radio Inc. Appears Here]
--------------------------------------------------------------------------------
Exhibit G Rev D
--------------------------------------------------------------------------------
PFM and FM1 Payment Plans and
Termination Liability Schedules
---------------------------------------------
Approved by Date
Xxxxx Xxxxxxxxxxxx
Senior Vice President and
Chief Financial Officer,
XM Satellite Radio Inc.
---------------------------------------------
Approved by Date
Xxxxx X. Xxxxxxxxxx (Xxxxxx Space and
Communications Company)
Program Manager: XM Spacecraft
---------------------------------------------
***** Confidential treatment has been requested for this ENTIRE exhibit. The
------
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated [*****]. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
[*****]
