Exhibit 10.55
FIXED PRICE CONTRACT
BETWEEN
PANAMSAT CORPORATION
AND
XXXXXX SPACE AND COMMUNICATIONS COMPANY
FOR
DOMESTIC 1, DOMESTIC 2 AND OPTION
SPACECRAFT, RELATED SERVICES AND DOCUMENTATION
CONTRACT No. 98-PAS-002
This Contract (including Exhibits) contains information that is proprietary to
PanAmSat Corporation and Xxxxxx Space and Communications Company. All
information contained herein is deemed to be Proprietary Information (as such
term is defined in Article 22 of this Contract) of both Parties, and disclosure
thereof is governed by Article 22.
TABLE OF CONTENTS
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PAGE
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ARTICLE 1. EXHIBITS AND INCORPORATIONS 2
ARTICLE 2. ORDER OF PRECEDENCE 3
ARTICLE 3. SPACECRAFT, DOCUMENTATION AND RELATED SERVICES ("DELIVERABLES") 4
ARTICLE 4. DELIVERABLES AND SCHEDULE 7
ARTICLE 5. PRICE 11
ARTICLE 6. PAYMENTS 13
ARTICLE 7. SPACECRAFT LAUNCH DATE 35
ARTICLE 8. BUYER-FURNISHED ITEMS 37
ARTICLE 9. INSPECTION AND ACCEPTANCE 41
ARTICLE 10. ACCESS TO WORK IN PROCESS 45
ARTICLE 11. TERMINATION FOR DEFAULT; LIMITATION OF LIABILITY 46
ARTICLE 12. EXCUSABLE DELAYS 50
ARTICLE 13. AMENDMENTS 52
ARTICLE 14. TERMINATION FOR CONVENIENCE 53
ARTICLE 15. TITLE AND RISK OF LOSS 58
ARTICLE 16. SPACECRAFT WARRANTY 62
ARTICLE 17. INDEMNIFICATION 64
ARTICLE 18. SPACECRAFT NOT LAUNCHED WITHIN SIX MONTHS AFTER ACCEPTANCE 65
ARTICLE 19. PATENT/COPYRIGHT INDEMNITY 66
PANAMSAT AND XXXXXX PROPRIETARY INFORMATION
SUBJECT TO RESTRICTIONS ON CONTRACT TITLE PAGE
ARTICLE 20. RIGHTS IN INVENTIONS 70
ARTICLE 21. INTELLECTUAL PROPERTY RIGHTS 73
ARTICLE 22. FURNISHED DATA AND INFORMATION, DISCLOSURE AND USE 74
ARTICLE 23. PUBLIC RELEASE OF INFORMATION 77
ARTICLE 24. TAXES 78
ARTICLE 25. GOVERNING LAW 80
ARTICLE 26. TITLES 81
ARTICLE 27. NOTICES AND AUTHORIZED REPRESENTATIVES 82
ARTICLE 28. INTEGRATION 84
ARTICLE 29. CHANGES 85
ARTICLE 30. EFFECTS OF STORAGE ON BATTERIES 91
ARTICLE 31. INTER-PARTY WAIVER OF LIABILITY 92
ARTICLE 32. SPACECRAFT STORAGE 93
ARTICLE 33. DISPUTES 94
ARTICLE 34. ASSIGNMENT 97
ARTICLE 35. LIMITATION OF LIABILITY 99
ARTICLE 36. CORRECTIVE MEASURES; OPERATIONAL DEFICIENCIES 100
ARTICLE 37. LIQUIDATED DAMAGES FOR LATE PERFORMANCE 102
ARTICLE 38. OPTION SPACECRAFT 104
ARTICLE 39. NO THIRD PARTY RIGHTS 108
ARTICLE 40. INDEX OF DEFINED TERMS 109
ARTICLE 41. EFFECTIVE DATE OF CONTRACT 112
PANAMSAT AND XXXXXX PROPRIETARY INFORMATION
SUBJECT TO RESTRICTIONS ON CONTRACT TITLE PAGE
This FIXED PRICE CONTRACT (the "Contract") is entered into as of the 9th day of
October, 1998, by and between PANAMSAT CORPORATION (herein called "Buyer"), a
Delaware corporation having a place of business at Xxx Xxxxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxxxx 00000, and XXXXXX SPACE AND COMMUNICATIONS COMPANY
(herein called "Contractor"), a Delaware corporation having a place of business
at 000 Xxxxx Xxxxxxxxx Xxxxxxxxx, Xx Xxxxxxx, Xxxxxxxxxx 00000.
WITNESSETH:
WHEREAS, the Parties now desire to enter into this Contract for Buyer to
purchase and Contractor to manufacture, deliver and perform (as applicable) the
Domestic 1 & Domestic 2 Spacecraft, Documentation and Related Services with
options for additional Spacecraft, Documentation and Related Services, as
provided and defined herein below;
NOW, THEREFORE, the Parties hereby agree as follows:
PANAMSAT AND XXXXXX PROPRIETARY INFORMATION
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ARTICLE 1. EXHIBITS AND INCORPORATIONS
The following documents are hereby incorporated and made a part of this
Contract with the same force and effect as though set forth herein:
1.1 Exhibit A - Statement of Work - dated October 9, 1998.
1.2A Exhibit B1 - Domestic 1 Spacecraft Specification - dated October 9,
1998.
1.2B Exhibit B2 - Domestic 2 Spacecraft Specification - dated October 9,
1998 (subject to completion in accordance with Paragraph 8.6).
1.3 Exhibit C - Spacecraft Integration Test Plan - dated October 9, 1998
1.4 Exhibit D - Product Assurance Plan - dated October 9, 1998.
1.5 Exhibit E - Maximum Termination Liability Schedule.
1.6 Exhibit F - Option Spacecraft Payment Plan.
1.7 Exhibit G - Sample Incentives Obligations Payment Schedule.
1.8 Exhibit H - Certain Documentation.
[***]FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
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ARTICLE 2. ORDER OF PRECEDENCE
In the event of any conflict or inconsistency among the provisions of this
document and the exhibits attached and incorporated into this Contract,
such conflict or inconsistency shall be resolved by giving precedence to
this document, and then to the attached and incorporated exhibits in the
order listed in Article 1 herein, entitled "Exhibits and Incorporations."
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ARTICLE 3. SPACECRAFT, DOCUMENTATION AND RELATED SERVICES ("DELIVERABLES")
3.1 Contractor shall sell and provide, and Buyer shall purchase, the items
and services referred to in Section 4.1. Contractor shall provide the
necessary personnel, material, services and facilities to design,
fabricate, test and deliver two (2) Spacecraft. One (1) HS601HP type
Spacecraft for Domestic 1 (hereinafter referred to as "Domestic 1" or
the "Spacecraft") and One (1) HS601HP type Spacecraft for Domestic 2
(hereinafter referred to as "Domestic 2" or as the "Spacecraft"),
including Documentation and Related Services (as defined in Article 4)
in accordance with the provisions of this Contract and in the manner
specified under Exhibits A, B, C and D hereto.
3.2 All materials and services specified in Exhibit A, "Statement of
Work," shall meet the requirements of the Exhibit B, entitled
"Spacecraft Specification," for the applicable Spacecraft.
3.3 If Contractor has not made delivery [*****************************
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prior to the Launch Date, [*****************************
**************************************************] Buyer may at its
election:
[*****************************************************
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[*****************************************************
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Any such election shall be made by Buyer in writing. [*************
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3.4 [***********************************************************
******************************************] in accordance with: (i)
current directives and instructions in the Xxxxxx Spacecraft Operators
Handbook, utilized at Buyer's Operations Control Center (OCC); and
(ii) any other Documentation utilized, including that Documentation
which takes into consideration the unique or special characteristics
of such Spacecraft. [************************************************
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TREATMENT.
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************************************************************
**************************************************] Buyer has
responsibility and liability for the Operations Control Center and its
associated ground station(s).
3.5 Spacecraft, Documentation and Related Services described above shall
be delivered to Buyer at the indicated locations on the dates set
forth in Article 4 entitled, "Deliverables and Schedule" herein.
[***]FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
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ARTICLE 4. DELIVERABLES AND SCHEDULE
4.1 The following deliverables to be furnished under this Contract shall
be furnished at the designated location(s) on or before the dates
specified below:
Date of Shipment Location of Shipment
Delivery Delivery or
Deliverables or Performance Performance
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1A. One Domestic 1 Spacecraft September 25, 1999 (the . Shipped from Contractor's
"Shipment Date")/1/ facility.
. Delivery Site at Launch Site/2/.
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1B. One Domestic 2 Spacecraft October 25, 1999 (the . Shipped from Contractor's
"Shipment Date")/1/ facility.
. Delivery Site at Launch Site/2/.
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2A. Launch Support, Mission Operations In Accordance with Exhibit A . Performance Site to be
and In-Orbit Testing for Domestic 1 determined pursuant to
("Related Services") Paragraph 4.2.
. Fillmore, California
. Castle Rock, Colorado
. El Segundo, California
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2B. Launch Support, Mission Operations In Accordance with Exhibit A . Performance Site to be
and In-Orbit Testing for Domestic 2 determined pursuant to
("Related Services") Paragraph 4.2.
. Fillmore, California
. Castle Rock, Colorado
. El Segundo, California
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3A. Documentation for Domestic 1 In Accordance with Exhibit A 0000 Xxxxxx Xxx
("Xxxxxxxxxxxxx") Xxxx Xxxxx, Xxxxxxxxxx
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3B. Documentation for Domestic 2 In Accordance with Exhibit A 0000 Xxxxxx Xxx
("Xxxxxxxxxxxxx") Xxxx Xxxxx, Xxxxxxxxxx
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/1/Contractor agrees to ship the Spacecraft from its facility on or before
such date as may be necessary to support the launch of the Spacecraft on
the Launch Date in accordance with the requirements of this Contract and
the Exhibits hereto.
[*******************************************************************
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*****************]. Notwithstanding anything herein to the contrary,
Contractor shall not be required to ship any Spacecraft earlier than its
applicable Shipment Date (as such Shipment Date may be adjusted by mutual
agreement of the Parties).
/2/Delivery Site to be the Launch Integration Facility (Port of Long Beach)
in the event Buyer uses Sea Launch.
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TREATMENT.
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4.2 Designation of Launch Vehicle.
4.2.1 Buyer shall designate a Spacecraft's Launch Vehicle on or
before [*****] months prior to the scheduled Launch Date for such
Spacecraft, in which event the Contract Price shall be increased
or decreased by the applicable amount specified in Paragraph 5.3.
If, subsequent to the date that is [*******] months prior to such
Launch Date, Buyer requests a change in the Launch Vehicle or
Approved Storage Facility for such Spacecraft, such request shall
be dealt with as a Change Order Request of Buyer under Article
29.
4.2.2 Contractor shall not be obligated to spend in excess of a total
cumulative amount of [***************************
***********************************************] In the event
that (i) Buyer has designated [*********************
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[*****************************************************
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then the Parties shall negotiate (a) [***********
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*******************] or (b) responsibility for any additional
costs to make such Spacecraft [*********************** *******]
4.2.3 Buyer shall pay the costs of delivering each Spacecraft to the
Launch Site, which costs are included in the Contract Price.
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TREATMENT.
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Contractor shall arrange and provide transportation required for
the deliverables specified in Section 4.1.
4.3 Contractor shall be responsible for obtaining: (i) all U.S. Government
export licenses to enable export of each Spacecraft, related test and
support equipment to the Launch Site and disclosure of information
reasonably requested by Buyer's foreign insurers and (ii) all
authorizations required for Contractor to perform this Contract.
Notwithstanding the foregoing, (i) the failure or refusal of the U.S.
Government to issue a required export license or (ii) the
authorization by the U.S. Government of the export (a) of only a
portion of the information requested by Buyer's foreign insurers or
(b) to fewer than all of Buyer's foreign insurers (provided in the
case of both (i) and (ii) that Contractor has used its reasonable best
efforts to obtain such export license) shall be deemed under Paragraph
12.1 to be an act beyond the control of Contractor and therefore shall
constitute a Force Majeure Event.
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ARTICLE 5. PRICE
5.1 The total price (the "Contract Price") for Contractor to provide the
Spacecraft, Documentation and Related Services shall be as follows:
(a) For Domestic 1, [***********************************************]
(b) For Domestic 2, [***********************************************]
5.2 Buyer shall pay Contractor the Contract Price stated in Paragraph 5.1
above in accordance with Article 6, Paragraph 6.2 of this Contract.
5.3 The Contract Price for a Spacecraft shall be adjusted in accordance
with the following table, based upon the Launch Vehicle designated by
Buyer for such Spacecraft pursuant to Paragraph 4.2.1. If Buyer
changes the designated Launch Vehicle for the Spacecraft in accordance
with Paragraph 4.2.1 (as opposed to Article 29), the Contract Price
shall be adjusted in accordance with the following table:
Table 5.3.1
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Adjustment to Contract Price
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Launch Vehicle Adjustment
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Sea Launch [*********]
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Delta III [*********]
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Atlas IIAS/IIAR/III [*********]
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Ariane 4/5 [*********]
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Proton [*********]
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Note: Price adjustments are applicable to Domestic 1 and/or
Domestic 2.
5.4 Any adjustment to the Contract Price under Paragraph 5.3 shall be
allocated pro rata over the entire Payment Plan for such Spacecraft
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(including In-Orbit Performance Incentive Obligations). Adjustments
allocated to payments already made shall be promptly paid by Buyer or
refunded by Contractor, as the case may be.
5.5 In the event that [***************************************
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delivery incentive (the "Delivery Incentive") as follows:
5.5.1 [****************************************************
**************] Buyer shall pay to Contractor a Delivery
Incentive equal to:
(i) with respect to Domestic 1 or Domestic 2, [******
*****************************] and
(ii) with respect to any other Spacecraft purchased under
this Contract, [********************* **************]
and
5.5.2 [****************************************************
*******************************************] Buyer shall pay to
Contractor an additional Delivery Incentive equal to:
(i) with respect to Domestic 1 or Domestic 2, [*****
********************************] and
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(ii) with respect to any other Spacecraft purchased under
this Contract, [********************* ***************]
5.6 Contractor shall submit an invoice for any Delivery Incentive after
such amount is earned under Paragraph 5.5, and Buyer shall pay such
Delivery Incentive within thirty (30) days of receipt by Buyer of such
invoice. In the event of [**************************************] the
amounts specified in Paragraphs 5.5.1 and 5.5.2 shall be
[*************** ********************************************] The
Parties agree that the provisions of Paragraph 5.5 shall apply
separately to each Spacecraft, and that the maximum Delivery Incentive
for a Spacecraft under Paragraph 5.5 is: (i) with respect to Domestic
1 or Domestic 2, [***
************************************************] and (ii) with
respect to any other Spacecraft purchased under this Contract, [******
**************************************]
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ARTICLE 6. PAYMENTS
6.1 Pursuant to the terms set forth in this Article 6, and subject to
Buyer's rights, defenses and remedies as expressly stated in this
Contract, Buyer shall pay to Contractor the Contract Price as stated
in Article 5 herein for the applicable Spacecraft, Documentation, and
Related Services under this Contract.
6.2 Invoices shall be prepared and submitted by Contractor for each
Spacecraft in a form reasonably acceptable to Buyer. Payments to
Contractor for such Spacecraft shall be made according to the
following payment plans:
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6.3 Incentives Obligations.
6.3.1 The following definitions are applicable to this Section 6.3:
6.3.1.1 "Specified Operation Lifetime" means fifteen (15) years.
6.3.1.2 "Successfully Operating Payload." Each Spacecraft shall
be equipped with one or more Payloads, as specified in
Exhibit B. Each Payload shall be deemed to be Successfully
Operating if at least that number of Transponders that is
one more than one-half of the total number of Transponders
within such Payload are Successfully Operating Transponders
(as defined below).
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6.3.1.3 "Successfully Operating Transponder". A Successfully
Operating Transponder is a Transponder which meets either or
both of the following two criteria:
(a) The Transponder meets or exceeds the performance
specifications set forth in Exhibit B. For the
avoidance of doubt, if the Spacecraft is placed into
inclined orbit, then the Transponders shall be deemed
not to meet the criteria stated in this Paragraph
6.3.1.3(a) at such time as the Spacecraft would have
ceased to have a Useful Commercial Life, (as mutually
determined by the Parties) had it not been placed in
such an orbit.
(b) The Transponder, while not meeting or exceeding the
performance specifications, provides Buyer with no
material loss in its commercial value.
A Transponder shall also be deemed to be a Successfully
Operating Transponder if it meets the performance
specifications through use of any redundant or spare
equipment not already in use by another Transponder.
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******************************************
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6.3.1.4 "Useful Commercial Life". The Useful Commercial Life of
a Spacecraft means the period beginning on the Commencement
Date and ending on the earlier to occur of (i) the date on
which there is just sufficient fuel remaining on board the
Spacecraft only to eject the Spacecraft from its
geostationary orbital location or (ii) the date on which at
least one-half of the Transponders on each Payload are not
Successfully Operating Transponders.
6.3.1.5 "Successfully Injected Spacecraft". A Launched
Spacecraft shall be deemed to be a Successfully Injected
Spacecraft if:
(a) The transfer orbit/spacecraft attitude meets the
following required criteria:
(1) Perigee altitude error is less than or equal to
+-3 sigma;
(2) Apogee Altitude error is less than or equal to
+-3 sigma;
(3) Inclination error is less than or equal to +-3
sigma;
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(4) Argument of perigee error is less than or equal to
+-3 sigma; and
(5) The Spacecraft has been separated with attitude
rate errors of less than or equal to +-3 sigma and
(b) The Spacecraft has not suffered physical damage which
resulted from Launch Vehicle malfunction.
The calculated amount of Useful Commercial Life (the
"Calculated Operational Lifetime") shall be mutually
determined by Buyer and Contractor, based on standard
engineering practices, using measured actuals of the
Spacecraft, existing at the time of the operational hand-off
of the Spacecraft to Contractor from the Launch Vehicle
provider. If the attained transfer orbit/Spacecraft attitude
does not meet the criteria stated in this Section, but the
Calculated Operational Lifetime is greater than or equal to
the Specified Operational Lifetime for the Spacecraft, then
the Spacecraft shall be deemed to have been a Successfully
Injected Spacecraft. If, on the other hand, the attained
transfer orbit/Spacecraft attitude does not meet the
criteria stated above, and the Calculated Operational
Lifetime is less than the Specified Operational Lifetime,
then the Spacecraft shall be deemed not to be a Successfully
Injected Spacecraft. If Buyer and Contractor cannot agree on
the Calculated Operational Lifetime, then the Parties
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shall resolve such disagreement in acceptance with the
dispute resolution procedures set forth in Article 33.
During such dispute resolution procedure, Buyer shall
commence all payments under Section 6.3.2 to Contractor
based on Contractor's calculation of such Calculated
Operational Lifetime, except only the disputed amount(s)
which shall be paid by Buyer in escrow as set forth in
Section 29.4, and the prevailing party shall be entitled to
interest as provided therein.
6.3.1.6 "Incentives Interest Rate". The Incentives Interest Rate
shall be the lesser of (i) the prime rate of Chase
Manhattan, New York, as calculated on the first business day
of each month for which interest is calculated
[************] [***********************] or (ii)
[************] [***************]
6.3.1.7 "Commencement Date". The Commencement Date shall be the
date on which Buyer receives written certification from
Contractor that, based upon the results of completed in-
orbit performance tests, at least one Payload is a
Successfully Operating Payload.
6.3.2 Buyer shall pay to Contractor the Incentives Obligations and
the Change Order Profit Component (if applicable), as follows:
6.3.2.1 Incentives Obligations and Change Order Profit
Component. Subject to Section 6.3.2.3 through 6.3.2.6,
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TREATMENT.
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Buyer shall be obligated to pay to Contractor the Incentives
Obligation and any Change Order Profit Component (if
applicable), as follows: Buyer shall pay Contractor equal
monthly payments that, when summed on a net present value
basis to the Commencement Date using the Incentives Interest
Rate, equals the total amount of Incentives Obligations plus
Change Order Profit Component due hereunder. For example, if
the Domestic 1 Spacecraft is a Successfully Injected
Spacecraft and on the Commencement Date all Transponders on
such Spacecraft are and continue to be Successfully
Operating Transponders for fifteen (15) years, assuming the
maximum [*****] [*********************] for the entire
period, the monthly Incentives Obligations payment would be
[***********] (the "Nominal Payment"). If the Incentives
Interest Rate is less than [**********************] for any
given month, the Incentives Obligations payment will be less
than the Nominal Payment. In such circumstances, the amount
of each month's payment will be calculated on a net present
value basis to the date of the last month's payment using
the remaining unpaid principal as the new principal, the
Incentives Interest Rate, and a term equal to the number of
months remaining in the Incentives period.
[*******************] of the total Incentives Obligations
shall be payable for the C-Band Payload, and [*******]
[****] of the total Incentives Obligations shall be payable
for the Ku-Band Payload. The Incentives
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Obligations, identified above, shall be payable in 180 equal
and consecutive monthly installments over a fifteen (15)
year life of the Spacecraft, except as may be adjusted as
set forth herein. Except as provided in Paragraph 6.3.4, the
first installment of each Incentives Obligations shall be
paid on the Spacecraft's Commencement Date. A sample
schedule matrix showing Incentives Obligations payments for
fifteen years, assuming fully successful operation, and with
a hypothetical interest rate will be attached to this
Contract as Exhibit G.
The foregoing notwithstanding:
(a) If the Spacecraft is not a Successfully Injected
Spacecraft pursuant to Section 6.3.1.4 but is
successfully placed into its on-station orbit by Xxxxxx
during the "Transfer Period" (defined as the period
from separation of the Launch Vehicle through on-
station acquisition) then, subject to Section 6.3.2.3,
Buyer shall pay the Incentives Obligations for the
Spacecraft in equal and consecutive monthly
installments over a period of the Spacecraft's On
Station Operational Lifetime (defined at Section
6.3.2.1(b)).
(b) If the Spacecraft is Successfully Injected, but is not
successfully placed into its on-station orbit by
Contractor during the Transfer Period, then the total
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amount of the Incentives Obligations for the Spacecraft
shall be multiplied by a percentile equal to (i) the
On-Station Operational Lifetime divided by (ii) the
Calculated Operational Lifetime, which percentile
shall, in no event, be greater than one. Subject to
Section 6.3.2.3, Buyer shall pay such Incentives
Obligations for the Spacecraft in equal and consecutive
monthly installments over a period of the Spacecraft's
On-Station Operational Lifetime. The "On Station
Operational Lifetime" shall be mutually determined by
Buyer and Contractor, based on standard engineering
practices, using measured actuals of the Spacecraft,
existing at the end of the Transfer Period. However,
should the Spacecraft continue to operate successfully
beyond the On-Station Operational Lifetime, Contractor
will continue to earn Incentives Obligations at the
same monthly rate up to the Specified Operational
Lifetime.
(c) Finally, if the Spacecraft is not a Successfully
Injected Spacecraft and, in addition, is not
successfully placed into its on-station orbit during
the Transfer Period, then the total amount of the
Incentives Obligations shall be multiplied by the sum
of (A)(i) the Specified Operational Lifetime, plus (ii)
the On-Station Operational Lifetime, minus (iii) the
Calculated Operational Lifetime, divided by
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(B) the Specified Operational Lifetime, which
percentile shall, in no event, be greater than one.
Subject to Section 6.3.2.3, Buyer shall pay such
Incentives Obligations for the Spacecraft in equal and
consecutive monthly installments over a period of the
Spacecraft's On-Station Operational Lifetime.
For purposes of any provision of this Contract, if the
Incentives Obligations or related payment periods are
to be recalculated, the monthly installments due shall
be recalculated to reflect the imputed interest element
that is reflected in the payment plans specified above.
6.3.2.2 Notwithstanding the foregoing, if at any time Buyer
continues to utilize for revenue-producing purposes any
Transponder that is not a Successfully Operating
Transponder, then Buyer shall pay a pro rated amount of the
Incentives Obligation attributable to such Transponder that
is proportionate to the partial benefit that Buyer derives
from such Transponder (the "Partial Incentive Payment"), all
as mutually agreed upon by the Parties in good faith.
6.3.2.3 Except for any Change Order Profit Component (which is
non-contingent), and except as provided in Paragraph
6.3.2.2, payment of any Incentives Obligation shall be
contingent upon the Transponders being Successfully
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Operating Transponders, as set forth herein, on the
applicable Payload and shall be pro-rated, therefore, on a
Transponder equivalent-by-Transponder equivalent basis over
the duration of the applicable term of such Obligation;
provided, however, that beginning on the date, if any, that
any one or more of the Payloads are no longer a Successfully
Operating Payload, as and when ascertained pursuant to
Section 6.3.2.4 (the "Degraded Payload"), then Buyer's then-
remaining Incentives Obligations for such Payload(s)
(exclusive of any Change Order Profit Component, as
applicable) shall be deemed extinguished.
6.3.2.4 Whether any Transponder is not Successfully Operating
shall be mutually determined by Buyer and Contractor, based
on relevant technical data, reports and analyses, and each
Party will make available to the other Party for its review
upon reasonable request all data used in making such
determination. Any disagreements between the Parties shall
be resolved in accordance with the dispute resolution
procedure set forth in Article 33.
6.3.2.5 If the Spacecraft has not been, or is not being,
Properly Operated by the Buyer, and any Transponders thereof
are not Successfully Operating Transponders, then the
Transponders of the Spacecraft which were Successfully
Operating prior to such improper operation of the Spacecraft
shall be deemed to be Successfully Operating Transponders
for purposes of Contractor's entitlement to
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payment of any applicable Incentives Obligations for such
period as such Transponders would have reasonably been
predicted to continue to be Successfully Operating had the
Spacecraft and transponder thereon been Properly Operated by
Buyer; provided, however, that if the failure is the result
of a defect in the deliverable software (except to the
extent that such defect was caused solely by a modification
to such software by Buyer) or if Buyer demonstrates that the
failure of any Transponder to be Successfully Operating was
not caused primarily, directly or indirectly, by any act or
omission of Buyer, its agents, Subcontractors, Consultants
or representatives of any kind, then the foregoing provision
shall not apply with respect to such Transponder.
6.3.2.6 Buyer may prepay any portion of the Incentives
Obligations or the Change Order Profit Component pursuant to
the schedule matrix attached as Exhibit G. Any remaining
Incentives Obligations so prepaid shall be subject to refund
by Contractor to Buyer, in any instance and to the extent
that Buyer's obligation to make such payments is relieved
pursuant to this Article 6, as outlined in the last sentence
of Section 6.3.4.1 hereof.
6.3.3 "Spacecraft Retirement Payment". At any time following the
Spacecraft's Delivery, Buyer may, at its option, cease to utilize
the Spacecraft for any purpose; provided, however, that if Buyer
does cease using the Spacecraft (or if the Spacecraft is rendered
a total
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loss by virtue of Buyer's failure to Properly Operate the
Spacecraft), then, upon the exercise date of such option or the
declaration of the Spacecraft as a total loss as applicable, all
remaining Incentives Obligations payments for any Transponder
(and any Change Order Profit Component, if applicable) (subject
to the provisions of Section 6.3.2.3 through 6.3.2.5) shall
become immediately due and payable, all relative to the
Spacecraft; and Buyer shall pay to Contractor such amounts, in
immediately available funds, along with the outstanding balance
of principal and accrued interest on any other outstanding
payment obligations with respect to the Spacecraft, if any, as of
such date. In determining the amount of principal and interest
due, present value analysis discounted at the Incentives Interest
Rate per annum shall be done for any scheduled payment stream
previously created by the Parties hereunder. Notwithstanding the
foregoing, Buyer shall have the right to cease using the
Spacecraft and remove it from its orbital location at any time
following the expiration of the Spacecraft's Useful Commercial
Life, without payment of such Spacecraft Retirement Payment.
6.3.4 Incentive Obligations and Launch Delay
6.3.4.1 If the Spacecraft has not been launched by the 181st day
after the earlier of (i) the actual date of shipment of the
Spacecraft by Contractor or (ii) Buyer's Preliminary
Acceptance of the Spacecraft, then, except as set forth in
Paragraph 6.3.4.2, the first of the equal and consecutive
monthly installment payments for Incentive Obligations on
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the Spacecraft shall be due and payable and the fifteen year
period shall be deemed to have begun for purposes of this
Paragraph 6.3 and such payments shall commence (the "Pre-
Launch Incentive Payments"). If upon the Commencement Date
or at any time thereafter, any Transponder ceases to be a
successfully Operating Transponder or a Payload becomes a
Degraded Payload, then Contractor shall deliver to Buyer a
refund of that portion of the Pre-Launch Incentive Payment
attributable to such Transponder or Payload (plus interest
thereon calculated at the Incentives Interest Rate), taking
into account the amount of such time such Transponder or
Payload met the performance specifications, and Buyer's
subsequent Incentives Obligations shall be reduced
thereafter on a pro rata basis; provided, if applicable,
Buyer shall receive a credit to the extent of any Pre-Launch
Incentive Payments, to be applied as an offset against
Buyer's consecutive monthly installment payments for the
Incentives Obligations otherwise due and payable for the
months immediately following the Commencement Date.
6.3.4.2 If the Spacecraft has not been Launched due primarily to
(1) Contractor's fault after shipment or (2) Contractor's
failure to timely meet the Spacecraft's scheduled Shipment
Date (where such failure in shipment is not caused by
Buyer's actions or inactions) (or a combination of clauses
(1) and (2) immediately above), then the first of the equal
and consecutive monthly installments of the Incentives
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Obligations on the Spacecraft shall be due and payable on,
and interest shall not accrue until, the earlier to occur of
(i) the Commencement Date or (ii) one year after the earlier
of (a) the actual date of shipment of the Spacecraft by
Contractor or (b) Buyer's Preliminary Acceptance of the
Spacecraft. If upon the Commencement Date, or at any time
thereafter, any Transponder on the Spacecraft (which has
been subject to a Launch delay under this Paragraph 6.3.4.2)
ceases to be a Successfully Operating Transponder or a
Payload becomes a Degraded Payload, then Contractor shall
deliver to Buyer a refund (plus interest thereon calculated
at the Incentives Interest Rate) of that portion of the Pre-
Launch Incentives Payments attributable to such Transponder
or Payload, taking into account the amount of time such
Transponder or Payload met the performance specifications,
and Buyer's subsequent Incentives Obligation for the
affected Payload on the Spacecraft shall be reduced
thereafter on a pro rata basis; provided, however, that
Buyer shall receive a credit to the extent of any Pre-Launch
Incentive Payments, such credit to be applied as an offset
against Buyer's consecutive monthly installment payments for
the Incentives Obligations otherwise due and payable for the
months immediately following the Commencement Date.
6.3.4.3 If, for any reason other than primarily Contractor's
Fault, the Spacecraft has not been Launched within 24 months
following the Spacecraft's actual date of shipment, then the
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full amount of the Incentives Obligations (and any Change
Order Profit Component, if applicable) (including principal
and accrued interest, if any) shall become immediately due
and payable upon the last day of such 24th month. If,
however, the Spacecraft is subsequently Launched within 54
months of its actual date of shipment and any Transponder of
the Spacecraft ceases to be a Successfully Operating
Transponder or a Payload becomes a Degraded Payload, then
Buyer shall be entitled to a proportionate refund (plus
interest thereon calculated at the Incentives Interest Rate)
for any Incentives Obligations (and any Change Order Profit,
if applicable) paid for such Transponder or Payload, taking
into account the amount of time such Transponder or Payload
met the performance specifications. If, for any reason, the
Spacecraft has not been Launched prior to the third
anniversary of its actual date of shipment (the "Third
Anniversary"), then Buyer shall have an option (the
"LOPS/MOPS Option"), exercisable in writing received by
Contractor on or before the Third Anniversary, to extend its
right to utilize the Related Services for the Spacecraft to
the fifth anniversary of the Spacecraft's actual date of
shipment (the "Extension Period"). If Buyer does not timely
exercise the LOPS/MOPS Option, then Buyer shall pay
Contractor the portion of the "Related Services Price" (as
defined below) for the Spacecraft expended by the
Contractor. If Buyer timely exercises the LOPS/MOPS Option,
then the Related Services Price for the Spacecraft during
the Extension
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Period, shall be increased by a [***************] beginning
on the Third Anniversary. Buyer shall be obligated to pay
such escalation amount within 30 days of receipt of invoice
from Contractor. In any case, Contractor's obligation to
provide such services shall terminate on the date which is
fifty-four (54) months (or as early as thirty-six (36)
months) from the actual date of shipment of the Spacecraft.
If Contractor's obligation to provide Related Services is
terminated under the immediately preceding sentence, then
Buyer shall pay the portion of the Related Services Price
expended by the Contractor. For purposes of this Paragraph
6.3.4.3, "Related Services Price" shall mean the amount
payable upon completion of the Related Services pursuant to
Paragraph 6.2.
6.3.4.4 If, for any reason, other than Contractor's fault, a
Launch failure occurs between the time of Launch and the
Commencement Date (or if no Commencement occurs), then the
full amount of the Incentives Obligations (and any Change
Order Profit Component, if applicable) (the "Recoverable
Amount(s)") shall become immediately due and payable upon
the date of such Launch failure. Contractor shall be
entitled to obtain payment of such Recoverable Amounts from
the proceeds of the launch insurance obtained by Buyer and
shall be entitled to a priority in obtaining such proceeds
over Buyer and all other parties or claims; provided,
however, that nothing herein
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shall relieve Buyer of its obligations to pay to Contractor
all such Recoverable Amounts, as set forth herein. Buyer
agrees to name Contractor as a loss payee under Buyer's
launch insurance policy to the extent Contractor is entitled
to payment of Recoverable Amounts. During the six (6) months
immediately following such Launch failure, Buyer shall use
best reasonable efforts to obtain the proceeds of its launch
insurance to pay Contractor the Recoverable Amounts,
hereunder. However, if Contractor does not receive all such
Recoverable Amounts from the proceeds of Buyer's launch
insurance within such six (6) month period, then Buyer shall
be obligated immediately to compensate Contractor for, and
Contractor may also look to Buyer directly for satisfaction
of, all such Recoverable Amounts. For the purposes of this
Paragraph 6.3.4.4, "Launch" shall mean intentional ignition
of any first stage engine of the Launch Vehicle.
6.4 Contractor shall not be obligated to deliver the Spacecraft to the
Launch Site if there are any outstanding Delinquent Payments owed by
Buyer to Contractor with respect to such Spacecraft under this
Contract one month prior to shipment of such Spacecraft from the
Contractor facility. "Delinquent Payments" are defined as those
payments not received by Contractor within thirty (30) days of the
dates due as defined in Paragraphs 6.2.1 and 6.2.2 above. Once Buyer
has paid Contractor for any "Delinquent Payments" and any interest
accrued in accordance with Paragraph 6.6 below, Contractor shall use
its reasonable best efforts to ship such Spacecraft to the Launch Site
so as to enable launch on the
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scheduled Launch Date and in any event to make shipment as soon as
practicable and no later than sixteen (16) weeks after payment by
Buyer of such Delinquent Payments. Buyer will be responsible for and
will pay to Contractor any reasonable costs and [***] profit on such
costs that Contractor may incur as a result of a delay in delivery due
to Buyer's Delinquent Payments. Notwithstanding the foregoing, this
Section 6.4 shall not relieve Contractor of its obligation to deliver
a Spacecraft, and no "Delinquent Payment" shall be deemed to have
occurred, due to any non-payment by Buyer on account of an alleged
breach by Contractor or other dispute as to such payment. In such
event, Buyer shall, within thirty (30) days of the date such payment
is due, pay the full amount of such payment into an interest-bearing
escrow account to be established at Bank of America, Concord,
California. Upon settlement of the dispute as to such payment and
alleged breach in accordance with Article 33, the Party entitled to
the amount in escrow shall receive such amount together with all
accrued interest thereon and the other Party shall pay all costs and
fees associated with the escrow of such amount.
6.5 Invoice
6.5.1 Invoices submitted to Buyer for payment shall contain a cross-
reference to the Contract number and the date specified in the
Payment Plan of Paragraph 6.2. Contractor shall submit one (1)
original invoice for the Spacecraft in each instance to:
PanAmSat Corporation
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
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Attention: Xxxxxx Xxxxxxxx, Senior Vice President and
Chief Technology Officer
cc: Xxxxx Xxxxxxxxxxx, Vice President -- Space Systems
Xxxxxxx X. Xxxxx, Senior Counsel (by fax to
310-525-5800)
6.5.2 Invoice amounts, as specified in Paragraph 6.2, provide for
xxxxxxxx to be submitted by the 15th day of each month and
shall be paid by Buyer within thirty (30) days upon receipt of
the invoice by Buyer.
6.6 Late Payments
In the event of a failure by the Buyer or the Contractor to
make a payment required pursuant to this Contract, the delinquent
Party shall pay interest at the rate of [********************] on the
overdue amount for the number of days that the payment is overdue,
commencing on the date payment is due and terminating on the date the
overdue amount is paid in full. Notwithstanding the foregoing, this
Section 6.6 shall not apply to any payment made into escrow in
accordance with Section 29.4.
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ARTICLE 7. SPACECRAFT LAUNCH DATE
7.1.1 "Launch Date" Defined. The calendar date during which a Launch
will occur. The Launch Date shall be notified by Buyer to
Contractor no later than three (3) months prior to the first day
of the applicable Launch month and once established, shall become
an express term of this Contract, subject to change in accordance
with this Article 7.
7.1.2 "Launch Window" Defined. A period of time within the Launch
Date during which a Launch can occur and meet mission
requirements. The Launch Window shall be established by mutual
agreement of Buyer and Contractor no later than forty-five (45)
days prior to the Launch Date and once established, shall become
an express term of this Contract.
7.1.3 Adjustment of dates. The time periods as delineated in
Sections 7.1.1 and 7.1.2 shall be adjusted to reflect applicable
launch provider contracts, consistent with ordinary practices of
such providers as familiar to the Parties.
7.2 The Contract Price set forth in Paragraph 5.1 includes Contractor
furnished launch support services, post launch support services, in-
orbit test support services, and post title transfer monitoring and
command of the Spacecraft if Buyer invokes the remedial provisions of
Article 3, Paragraph 3.3.
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7.3 If a Spacecraft Launch Date is postponed for any reason other than the
primary fault of Contractor (and/or any of its subcontractors or
suppliers), excluding any postponement due to an Excusable Delay as
defined in Article 12, the Parties shall negotiate in good faith to
determine an equitable adjustment to the price and affected terms of
this Contract, if any. If the cost of supplies or materials made
obsolete or excess as a result of such postponement is included in the
equitable adjustment, Buyer shall have the right to prescribe the
manner of disposition of such supplies or materials. Costs included in
the equitable adjustment shall include but not be limited to: support
personnel standby; extra travel expenses; transport termination or
rescheduling fees and a profit rate of [*****************]
7.4 Notwithstanding the foregoing, if a Spacecraft Launch Date is
postponed by either Party due to an Excusable Delay, as defined in
Paragraph 12.1 herein, the terms of Article 12 herein shall govern
such postponement.
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ARTICLE 8. BUYER-FURNISHED ITEMS
8.1 The following facilities, equipment, and services ("Buyer-Furnished
Items") shall be furnished by Buyer at no cost to Contractor, in a
timely manner, so as to enable Contractor to perform the work
described herein.
1) Reservation and procurement of launch services, launch insurance
(Contractor to be named a loss payee as provided in Paragraph
6.3.4.2), and associated services and facilities as described in
the applicable Launch Vehicle users' manual.
2) Storage of a Spacecraft and related test equipment for all Force
Majeure Events which prevent Buyer from supplying Buyer-Furnished
Items and/or Launch Vehicle delays.
3) Earth station facilities for IOT including appropriate RF
facilities, but not specialized test equipment.
Contractor will provide preliminary requirements of Item 1 above to
Buyer no later than two (2) months after the Effective Date of this
Contract to assist Buyer's compliance with this Article, which shall
be consistent with what Contractor has generally required Buyer to
secure for previous launches with the same launch provider. Subject to
the confidentiality requirements of the applicable agreements,
Contractor will be allowed to review the list of services which Buyer
has procured in Buyer's contract(s) for launch services.
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In the event that the Buyer-Furnished Items set forth above are not
provided in a timely manner, excluding any excusable delay as defined
in Article 12 herein, then Buyer shall be liable to Contractor for all
applicable costs which shall include but not be limited to:
procurement or rental of suitable substitutes for such Buyer Furnished
Items at no higher than market prices, with title and possession of
all such procured items reverting to Buyer after Contractor's use
under this Contract; support personnel standby; extra travel expenses;
transport termination or rescheduling fees; and installation/de-
installation of communication links to the Launch Site and a profit
rate of [****************] In the event that the Buyer-Furnished
Items are not provided in a timely manner and the Contractor must
procure or rent suitable substitutes, and the foregoing process has
materially affected the Contractor's ability to ship the Spacecraft on
or prior to the applicable Shipment Date, the parties agree to adjust
such Shipment Date to account for any delay resulting from the non-
suitability or non-timely provision of such Buyer-Furnished Items.
8.2 Contractor shall maintain a system to ensure the adequate control and
protection of Buyer's Property. For the purposes of this Article,
Buyer Property shall be defined as any item which Buyer provides to
the Contractor or directs Contractor to maintain in storage or an
inventory account under this Contract. Upon receipt of notification
from Buyer, the Contractor shall complete and return within fifteen
(15) working days a Property System Certification describing the
system that will be used to control Buyer's Property. Additionally,
upon prior notice to Contractor Buyer's representative may, at its
option and at no additional cost to Buyer, conduct surveillance of the
Contractor's Property Control System
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during normal business hours as Buyer deems necessary to assure
compliance with the terms and conditions of this Article.
8.3 Contractor shall, commencing with its receipt and during its custody
or the use of any Buyer's Property, accomplish the following:
A. Establish and maintain inventory records and make such records
available for review upon Buyer's request;
B. Provide the necessary precautions to guard against damage from
handling and deterioration during storage;
C. Perform periodic inspection to assure adequacy of storage
conditions; and
D. Ensure that Buyer's Property is used only for performing this
Contract, unless otherwise provided in this Article or approved
by Buyer.
8.4 Contractor shall not modify, add-on, or replace any Buyer Property
without Buyer's prior written authorization. Contractor shall
immediately report to Buyer's contract representative the loss of any
Buyer Property or any such property found damaged, malfunctioning, or
otherwise unsuitable for use. The Contractor shall determine and
report the probable cause and necessity for withholding such property
from use.
8.5 Upon termination or completion of this Contract, and upon request by
Buyer, the Contractor shall perform a physical inventory, adequate for
accountability and disposition purposes, of all Buyer's Property
applicable to such terminated or completed agreement and shall cause
its subcontractors and suppliers at every tier to do likewise.
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8.6 If Buyer does not approve [*****************************] for Domestic
1 on or before October 9, 1998 or Domestic 2 on or before November 2,
1998, then the Parties shall agree upon a mutually acceptable delay to
the Shipment Date for the applicable Spacecraft; provided, that such
--------
Shipment Date shall not be delayed by more than day-for-day for each
day of delay by Buyer in approving [***********************] [***] for
the applicable Spacecraft; provided, further, that Buyer shall have
-------- -------
the option to subsequently change [**********************]
[**********] of Domestic 2 on or before December 1 with no adjustment
in Contract Price and with the Parties to agree upon a mutually
acceptable delay to the Shipment Date for the applicable Spacecraft
not to exceed one month of delay. Contractor shall reasonably and
promptly respond to Buyer's requests for information and assistance in
preparing and submitting to Buyer such [**************************]
8.7 The use of Buyer's TT&C ground systems at Fillmore (for C-Band
Programs) or Castlerock (for K-Band programs) shall be provided at no
cost to the Contractor for transfer orbit services.
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ARTICLE 9. INSPECTION AND ACCEPTANCE
9.1 Inspection of all Hardware, documentation and Contractor's services
provided hereunder shall take place in accordance with the terms of
Article 10, entitled "Access to Work in Process," herein.
9.2 "Preliminary Acceptance" of the Spacecraft shall occur when all in-
plant tests required to be performed by Contractor for the Spacecraft
and other deliverable Hardware have been completed and the Contractor
has demonstrated at the pre-ship review that the Spacecraft and other
deliverable Hardware and contract deliverables meet the requirements
of this Contract, at which time Buyer shall accept the Spacecraft and
other deliverable Hardware on a Preliminary basis in writing within
five (5) business days. If the Spacecraft or other deliverable
Hardware is unacceptable, Contractor shall promptly and at its
expense, rectify the unsatisfactory Hardware and resubmit such
Hardware for acceptance by Buyer as provided above. In either case,
such Hardware shall be deemed accepted upon failure of Buyer to notify
Contractor in writing within the above five (5) business days that it
is accepted, rejected or that in Buyer's opinion further corrective
action must be taken by the Contractor. In the event that Buyer has
not given Preliminary Acceptance of the Spacecraft, Contractor shall
not ship the Spacecraft from Contractor's facility without Buyer's
prior written consent. Any such Preliminary Acceptance shall not
constitute a "Consent to Fuel" nor a "Final Acceptance", which shall
occur pursuant to Paragraphs 9.3 and 9.4, respectively.
9.3 Buyer shall have access to Launch Integration Facility and/or Launch
Site test results during the launch campaign in accordance with the
provisions
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of Article 10, Paragraph 10.1 "Access to Work in Process."
Contractor shall not fuel Spacecraft at the Launch Site until Buyer
has given its written "Consent to Fuel" notice after satisfactory
completion and Buyer's review of successful launch site test data upon
completion of Launch Integration Facility and/or Launch Site tests
specified in Exhibit C, Spacecraft Integration Test Plan.
9.4 Final Acceptance of the Spacecraft shall occur upon the earlier to
occur of (i) the completion of In-orbit Testing in accordance with
Exhibit A, or (ii) immediately before a Partial Failure, Total Failure
or Total Constructive Failure (as each such term is defined in the
applicable Launch Insurance Contract or successor contract), which
occurs at or after Intentional Ignition.
9.5 With respect to deliverable Hardware which Buyer orders Contractor to
store, the Hardware shall be stored at a location to be negotiated and
Final Acceptance shall occur at the end of the [**********] warranty
period as set forth in Article 16 herein, entitled "Spacecraft
Warranty," or such other event mutually agreed upon between the
Parties.
9.6 Non-Conforming Products.
9.6.1 If (i) the Spacecraft does not meet its weight requirements and
as a result such Spacecraft cannot achieve the Specified
Operational Lifetime on an Ariane 42L Launch Vehicle and (ii)
Buyer will be required to pay for additional weight from the
launch provider in order to achieve the Specified Operational
Lifetime without delaying the placing of the Spacecraft in its
orbital location by
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more than fifteen (15) additional days, then Contractor shall
reimburse Buyer for such additional payments up to a maximum of
[****************************]
9.6.2 Any Preliminary Acceptance or Final Acceptance by Buyer of a
Spacecraft that does not conform to the requirements of this
Contract (whether or not related to weight) shall not affect the
Parties rights and obligations under Paragraph 6.3 ("Incentive
Obligations") with respect to the Spacecraft or other deliverable
that does not perform to the specifications of this Contract.
9.6.3 In the event that (i) Contractor makes a reimbursement to Buyer
with respect to a Spacecraft pursuant to Paragraph 9.6.1, and
(ii) the Useful Commercial Life of such Spacecraft continues
beyond the Specified Operational Lifetime, then Buyer shall pay
to Contractor each month that the Useful Commercial Life of such
Spacecraft continues (not to exceed thirty-six months beyond the
Specified Operational Lifetime) an amount equal to the lesser of
(a)[******************************************* ********] or (b)
[*********************************
******************************************************
****************] All amounts payable by Buyer pursuant to this
Paragraph 9.6.3 shall include interest on the amount payable by
Buyer, calculated at the Incentives Interest Rate from the date
that Contractor reimbursed Buyer pursuant to Paragraph 9.6.1
until the date of the applicable payment by Buyer.
[**************
*****************************************************
***********************************]
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9.7 Until there has been a launch of the Spacecraft that does not result
in a Total Failure, Total Constructive Failure or Partial Failure, (as
defined in the applicable launch insurance contract) prior to the
completion of the Related Services, Contractor shall
[****************************
*********************************************] and shall [****]
[***********************************************************
**********]
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ARTICLE 10. ACCESS TO WORK IN PROCESS
10.1 Contractor shall afford Buyer access to work in progress being
performed at Contractor's plants and (subject to the Buyer's launch
vehicle contract) at the Launch Integration Facility and/or Launch
Site pursuant to this Contract, including technical data,
documentation, and hardware, at all times, subject to Contractor's
approval not to be unreasonably withheld, during the period of
Contract performance, provided such access does not unreasonably
interfere with such work or require the disclosure of Contractor's
proprietary information to third Parties and subject to (i)
Contractor's Security Procedures and (ii) U.S. or foreign government
laws, rules and regulations.
10.2 To the extent that the Contractor's major subcontracts permit,
Contractor shall afford Buyer access to work being performed pursuant
to this Contract in subcontractor's plants during normal business
hours in the company of Contractor's representatives.
Contractor shall exert reasonable effort in subcontracting to obtain
permission for Buyer access to those major subcontractors' plants.
Major subcontracts are defined as those subcontracts in excess of
[******] [****************************]
10.3 Buyer shall have the right to witness on a non-interference basis all
system and subsystem tests scheduled by Contractor in connection with
the performance of work under this Contract. If the system or
subsystem tests are performed by a subcontractor of Contractor,
Contractor shall take all reasonable steps to secure Buyer's access to
the subcontractor's facility or
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facilities. Buyer's right to witness testing shall be on a non-
interference basis with the subcontractor's activities and subject to
(i) any subcontractor security procedures and (ii) U.S. or foreign
government laws, rules, and regulations.
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ARTICLE 11. TERMINATION FOR DEFAULT; LIMITATION OF LIABILITY
11.1 Subject to provisions of Article 3 entitled "Spacecraft,
Documentation and Related Services," Article 5 entitled "Price" and
Article 12 entitled "Excusable Delays" and the final sentence of
Paragraph 4.3, Buyer may issue a written notice of default with
respect to a particular Spacecraft to Contractor if: (i) Contractor
fails [****************************
*********************************************************] as
confirmed in writing by the Contractor's and Buyer's Senior Executives
and such failure may result in a delay in delivery of more than
[****** *****]; or (ii) the delivery of such Spacecraft or
Contractor's performance of any material obligation under the Contract
has been delayed for more than [************] other than due to the
primary fault of Buyer or a Force Majeure Event. Subsequent to the
issuance of said notice, the Buyer may terminate this Contract with
respect to such Spacecraft and thereafter elect remedies as identified
in Paragraph 11.2 below.
11.2 If Buyer terminates this Contract, in whole or in part, as provided
in Paragraph 11.1 herein, Buyer, at its sole option, shall either: (i)
take title to all deliverable hardware, all hardware in process which
ultimately would have been deliverable by Contractor and all drawings
and data produced by Contractor which ultimately would have been
deliverable by Contractor, the cost of which has been charged or
becomes chargeable to any work terminated plus all reasonable
reprocurement costs up to a maximum amount per Spacecraft of: (a)
[*********************] ****************] in the event of a
termination of this Contract solely with respect to Documentation
and/or Related Services for such Spacecraft
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or (b) [************************] with respect to a complete
termination of the Contract with respect to such Spacecraft; or (ii)
receive a refund of all payments submitted to Contractor by the Buyer
for performance of this Contract for the portion terminated by Buyer,
plus [***********************************************************
***********************************************************
**********************************************] and Contractor shall
retain title and possession to all terminated Hardware which
ultimately would have been deliverable by Contractor.
11.3 Notwithstanding the other provisions of this Article, there will be
no termination for default after Intentional Ignition of the Launch
Vehicle for the applicable Spacecraft.
11.4 If, after termination of this Contract (or portion thereof) under the
provisions of this Article, a final determination is made pursuant to
Article 33, entitled "Disputes," that Contractor was not in default
under the provisions of this Article, or that the default was
excusable under the provision of Article 12 entitled "Excusable
Delays," the rights and obligations of the Parties shall be the same
as if notice of termination had been issued pursuant to Article 14,
entitled "Termination for Convenience," or pursuant to Article 12,
Paragraph 12.4, as the case may be.
11.5 Except as otherwise provided in the Contract, the rights and remedies
of the Parties provided in this Article shall be in lieu of any other
rights and remedies provided by law or in equity in the event
Contractor fails to meet its obligations under this Contract. Buyer
shall have no other rights or
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remedies for late delivery of the Spacecraft, Documentation and
Related Services under this Contract except for those rights and
remedies expressly provided for in this Contract.
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ARTICLE 12. EXCUSABLE DELAYS
12.1 If either Party or a subcontractor of either Party is delayed by act
of God, or of the public enemy, fire, flood, earthquake, epidemic,
quarantine restriction, strike, walkout, freight embargo, or any other
event which is beyond their control or does not arise from the acts or
omissions of either Party or its respective subcontractors, said delay
shall constitute an excusable delay ("Force Majeure Events"). In the
event of an excusable delay, there shall be an equitable adjustment to
the time of delivery and/or performance stated in this Contract. The
affected Party shall give notice in writing to the other Party within
10 working days that an excusable delay condition exists after
learning of such delay. Such notification shall include the cause of
the excusable delay, the expected length of the excusable delay, and
alternate plans to mitigate the effect of the excusable delay.
12.2 If the affected Party, as defined in Paragraph 12.1 above, requests
or experiences, on a cumulative basis, excusable delay(s) greater than
[***] [***] days, the Parties shall enter into good faith negotiations
to develop a mutual course of action and/or an equitable adjustment to
the affected terms of this Contract.
12.3 Notwithstanding the foregoing, if the Launch Date for the Spacecraft
defined in Paragraph 7.1 herein is delayed due to a Force Majeure
event affecting Buyer's ability to furnish any item to be supplied by
it under Article 8 hereof, Buyer shall reimburse Contractor for all
reasonable expenses incurred as a result, including without limitation
expenses for:
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support personnel standby; extra travel expenses; and transport
termination or rescheduling fees.
12.4 Notwithstanding anything herein to the contrary, in the event that a
Force Majeure Event occurs and continues to delay or prevent
performance by Contractor of its obligations as to either or both
Spacecraft for a period of [************] or longer from the initial
occurrence of such Force Majeure Event, then Buyer shall have the
right to terminate this Contract with respect to the affected
Spacecraft upon thirty (30) days written notice. In the event of a
termination under this Paragraph 12.4, Buyer shall be entitled to a
refund of [***********************************
***********************************************************
************************************************************
**********] and Contractor shall retain title to all Deliverables
produced by Contractor under this Contract with respect to the
affected Spacecraft.
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ARTICLE 13. AMENDMENTS
The terms and provisions of this Contract shall not be amended or modified
without specific written provision to that effect, signed by the Authorized
Representative(s) of both Parties. These Authorized Representative(s) are
identified in Article 27, "Notices and Authorized Representative(s)." No
oral statement of any person shall in any manner or degree modify or
otherwise affect the terms and provisions of this Contract.
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ARTICLE 14. TERMINATION FOR CONVENIENCE
14.1 Buyer may terminate all or any portion of the work to be performed
pursuant to this Contract upon five (5) days written notice to
Contractor. Buyer shall pay Contractor, in the event of such
termination, termination liability equaling all Costs (as defined in
Paragraph 14.7 below) expended by Contractor for all work done up to
the date of termination on the terminated portion of the Contract,
settlements with subcontractors for work performed prior to
termination on the terminated portion of the Contract, and
Contractor's reasonable costs related to termination which would not
otherwise have been incurred plus a [***] profit for the applicable
termination costs and charges, but in no event more than the maximum
termination liability for the applicable Spacecraft that is set forth
in Exhibit F hereto, as of the date of termination, less amounts
previously paid by Buyer to Contractor pursuant to Article 6; provided
that the Parties agree that Exhibit F sets forth the maximum
termination liability if the entire Contract is terminated under this
Article 14 with respect to the applicable Spacecraft, and that the
maximum termination liability shall be reduced pro rata appropriately
in the event of a termination under this Article 14 of less than all
the work to be performed by Contractor. Buyer shall pay the unpaid
balance of such termination liability within thirty (30) days of
Buyer's receipt of certification of Contractor's costs. In the event
that Buyer has paid to Contractor any amount in excess of such
termination liability, then Contractor shall refund such excess amount
to Buyer within thirty (30) days of certification of costs. In no
event shall the termination liability for a Spacecraft exceed either
the Contract Price defined in Article 5 herein or the amount specified
in Exhibit F for such Spacecraft.
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14.2 In the event of termination by Buyer hereunder, and upon payment in
full of all amount due (if any) under 14.1 above (or, if any amount is
in dispute, payment of such amount into escrow in the manner set forth
in Paragraph 6.4), all tangible work in process inventories generated
under this Contract, with respect to the terminated work, shall become
the property of Buyer. Buyer shall direct disposition of such property
within sixty (60) days from date of termination (which disposition may
include requesting Contractor to undertake mitigation efforts in
accordance with Paragraph 14.6 below) or such other date as agreed to
by the Parties. Final acceptance and transfer of title for all
tangible work in process inventories to be delivered to the Buyer in
the event of termination shall be the subject of separate negotiations
between Buyer and Contractor and shall be subject to applicable U.S.
Government Export Regulations. The expense of disposition shall be
borne by Buyer.
14.3 In the event of a termination pursuant to this Article 14 of either
(but not both) Domestic 1 or Domestic 2, then the Contract Price for
the non-terminated Spacecraft (Domestic 1 or Domestic 2) shall be
[****** ***********************************************************
*******************] and the Contract Price for the first Option
Spacecraft exercised under Article 38 shall be [******************
***********************************************************
***********************************]
14.4 In the event that both Domestic 1 and Domestic 2 are terminated
pursuant to this Article 14 and:
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a) the Option had been exercised for one Option Spacecraft, then
the Contract Price for such Option Spacecraft shall be
[********************************************** **********]
b) the Option had been exercised for two Option Spacecraft, then
the Contract Price for such Option Spacecraft shall be
[**********************************************
***************]
14.5 [*********************************************************
**********************************************************
******************] In addition, in such event the termination
liability of Buyer for the terminated Spacecraft under this Article 14
shall not include any non-recurring Costs (or profit thereon) mutually
beneficial to both the terminated Spacecraft and the non-terminated
Spacecraft.
14.6 At Buyer's request, Contractor shall use reasonable best efforts to
identify an alternate use (i.e. sale to third Parties and/or internal
utilization) for any Hardware affected by a termination under this
Article 14. The Contractor shall submit a proposal to Buyer, which,
at a minimum, defines (i) the applicable Hardware, (ii) the intended
use of the Hardware, (iii) the original acquisition cost/value of the
applicable Hardware, as available, and (iv) the sale/transfer
payment(s) to be received by Buyer. Contractor shall use its
reasonable best efforts to obtain fair market value for the applicable
Hardware. Buyer, at its sole option, may accept or reject the
proposal submitted by Contractor. In the event that Buyer accepts the
proposal submitted by Contractor, payment by Contractor to Buyer of
the agreed upon payment value shall occur within thirty (30) days of
the
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sale/transfer of the applicable Hardware, or such other payment
period as mutually accepted between the Parties. If the Contractor's
proposal is rejected by Buyer, and if Contractor is unable to find any
alternative use within two (2) years of being requested to do so or if
Buyer so directs, then Title to the applicable Hardware shall be
vested as stated in Paragraph 14.2 above.
14.7 As used in this Article 14, Contractor's "Costs" shall mean costs
actually incurred by Contractor in performing its obligations
hereunder (including G&A costs not to exceed [******************] of
such costs) all such costs to be determined in accordance with
Contractor's normal accounting practices. Contractor shall provide to
Buyer an invoice certified by a financial officer of the company
stating Contractor claim for costs properly includes only the costs
specified in this paragraph. In the event Buyer desires independent
verification of claim, Buyer may request to have independent certified
public accountants (CPA) audit costs incurred by Contractor and report
to the Parties. The CPA to perform such audit shall be selected by
the Buyer, subject to the approval of the Contractor, which approval
shall not be unreasonably withheld (and in any event shall not be
withheld if Buyer selects a "Big Six" accounting firm). Contractor
shall cooperate with such CPA and shall provide all data and records
reasonably requested by such CPA. Such audit shall be at Buyer's
expense unless such audit shows Contractor's costs to have been
overstated (in which event Contractor shall bear the audit expense).
Such audit shall constitute a final determination of actual costs
notwithstanding the provision of Article 33; provided that, if the
costs determined by such report exceed the amount of Contractor's
termination claim, Buyer shall only be obliged to pay the amount of
Contractor's termination claim.
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14.8 Contractor shall use its reasonable best efforts to include in its
subcontracts for work hereunder on terms that will enable Contractor
to terminate such subcontracts with a goal of minimizing termination
costs in a manner consistent with this Article 14.
14.9 This Article 14 and Buyer's rights under this Article 14 shall not be
applicable to any Option Spacecraft for which the [*****************]
[*********************************************************** ********]
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ARTICLE 15. TITLE AND RISK OF LOSS
15.1 Title and risk of loss or damage in respect of all items to be
delivered under this Contract shall pass from Contractor to Buyer as
follows:
15.1.1 Risk of loss of the Spacecraft and title shall pass from
Contractor to Buyer upon the earlier to occur of: (i) the
completion of In-orbit Testing in accordance with Exhibit A; or
(ii) immediately before a Partial Failure, Total Failure or Total
Constructive Failure (as each such term is defined in Buyer's
applicable Launch Insurance Contract) which occurs at or after
Intentional Ignition.
15.1.2 In respect to a Spacecraft which Buyer directs Contractor to
store, title and risk of loss shall remain with the Contractor
until Final Acceptance as specified in Article 9.5 herein.
15.1.3 "Risk of Loss" for purposes of this Article 15 is limited to
the responsibility and liability for a Partial Failure, Total
Failure or Total Constructive Failure (as each such term is
defined in Buyer's applicable Launch Insurance Contract).
Responsibility and liability for the Spacecraft prior to
intentional ignition is with the Contractor.
15.2 In the event of damage to or destruction of Hardware when Contractor
shall have risk of loss, Contractor shall repair or replace (subject
to Buyer's consent, not to be unreasonably withheld) said Hardware.
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15.3 Insurance Provided By Contractor. The Contractor shall, at its own
expense, provide and maintain the following insurance:
15.3.1 "All Risk" Insurance
(i) The Policy for "All Risks" insurance shall insure the
Contractor and name Buyer as additional insured and Loss
Payee as their interest may appear.
(ii) The insurance shall cover the Spacecraft while in or about
the Contractor's and subcontractors' plants, while at other
premises which may be used or operated by the Contractor for
construction or storage purposes, while in transit, or while
at the Designated Launch Site until Intentional Ignition, or
while Spacecraft is stored by the Contractor at Buyer's
direction until Final Acceptance as specified in Article
9.4.
(iii) Such insurance shall be sufficient to cover the full
replacement value or selling price of the Spacecraft and may
be issued with deductibles, for which losses shall be borne
by the Contractor.
(iv) This "All Risk" insurance shall be in force from the time of
the Effective Date of this Contract and shall continue in
effect until Contractor's liabilities have expired at
intentional ignition.
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15.3.2 Third Party Liability Insurance
(i) The Policy(s) for Third Party Liability insurance shall be
written on forms the Buyer may review and shall include
Buyer as additional insured.
(ii) This Third Party Liability insurance shall be in force from
the time of the Effective Date of this Contract and shall
continue in effect until Contractor's liabilities have
expired at intentional ignition.
(iii) The Policy(s) may be issued with deductibles, for which
losses shall be borne by the Contractor.
15.4 General Insurance Requirements
(i) The Contractor shall, upon request, provide to the Buyer
certificates of the Insurance Policy(s) issued by an agent
of the Contractor's Insurer(s) for coverage which the
Contractor is required to provide pursuant to the provisions
of these Articles.
(ii) All Policies of insurance to be provided and maintained
pursuant to these Articles shall require the insurer(s) or
its authorized agent(s) to give each insured not less than
thirty (30) days prior written notice in the event of
cancellation or any proposed material change in such
policies, except for
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ten (10) days prior written notice in the event of
cancellation due to non-payment of premium.
(iii) The Contractor may also acquire and maintain, at its own
expense, other insurance for amounts and perils, and upon
such terms, conditions and deductibles as it may deem
advisable or necessary to cover any loss or damage to
persons or property that may occur as a result of the
performance of this Contract.
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ARTICLE 16. SPACECRAFT WARRANTY
16.1 Contractor warrants that the Spacecraft, upon successful completion
of Spacecraft in plant Tests pursuant to Article 9 herein, shall be
free from any defects in material or workmanship and shall conform to
the applicable specifications and drawings, as evidenced by the
acceptance criteria in Exhibits A-D herein.
16.2 This warranty shall start from the date of Preliminary Acceptance of
the Spacecraft as stated in Article 9 herein, entitled "Inspection and
Acceptance," and continue for a period of [********] or until the
"Intentional Ignition" (defined herein as the Intentional Ignition of
any rocket motor on the first stage of the Launch Vehicle) of the
applicable Launch Vehicle, whichever is earlier.
[***********************
************************************************************
************************************************************
************************************************************
************************************************] ("Warranty Time
Period"). Contractor shall not be liable in Contract or in Tort for
any incidental, special, contingent, or consequential damages.
16.3 Buyer shall have the right at any time during the Warranty Time
Period to reject any goods not conforming to this warranty and require
that Contractor, at its expense, correct or replace (at Contractor's
option) such goods with conforming goods. If any time during the
Warranty Time Period Contractor fails to correct or replace such
defective goods and fails to initiate reasonable efforts to correct or
replace such defective goods within a reasonable period after written
notification and authorization from
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Buyer, Buyer may then, by contract or otherwise, correct or replace
such defective goods and equitably adjust the price.
16.4 Except as otherwise expressly agreed upon in this Contract,
Contractor shall have no liability, or responsibility in Contract or
in Tort with respect to the Spacecraft after Intentional Ignition (as
defined in Paragraph 16.2) of the Launch Vehicle.
16.5 THE ABOVE WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING FITNESS FOR PARTICULAR PURPOSE OR MERCHANTABILITY
AND THE REMEDY PROVIDED HEREIN IS THE SOLE REMEDY FOR FAILURE BY
CONTRACTOR TO FURNISH A SPACECRAFT THAT IS FREE FROM MATERIAL DEFECTS
IN MATERIAL OR WORKMANSHIP AS SET FORTH IN PARAGRAPH 16.1 ABOVE. ALL
OTHER WARRANTIES OR CONDITIONS IMPLIED BY ANY OTHER STATUTORY
ENACTMENT OR RULE OF LAW WHATSOEVER ARE EXPRESSLY EXCLUDED AND
DISCLAIMED. CONTRACTOR AND ITS SUBCONTRACTORS SHALL HAVE NO LIABILITY
IN CONTRACT OR IN TORT (INCLUDING NEGLIGENCE) OR IN ANY OTHER MANNER
WHATSOEVER FOR A SPACECRAFT AFTER INTENTIONAL IGNITION OTHER THAN AS
EXPRESSLY PROVIDED IN THIS CONTRACT.
16.6 Any limitations on warranties, liability or requests for
indemnification from liability for the malfunction of delivered items
which are imposed upon the Contractor by its various equipment
suppliers shall be passed on directly to Buyer provided, however,
nothing therein shall decrease or
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invalidate the rights of the Buyer during, or the length of, the
Warranty Time Period as stated in this Article.
ARTICLE 17. INDEMNIFICATION
17.1 Each Party shall indemnify and hold the other and/or all its
officers, agents, servants, subsidiaries, affiliates, parent companies
and employees, or any of them, harmless from any liability or expense
in connection herewith on account of damage to property (excepting
other Spacecraft in flight) and injuries, including death, to all
persons including but not limited to employees of the Parties, and
their subcontractors, and of all other persons performing any part of
the work hereunder, arising from any occurrence caused by a negligent
act or omission of the indemnifying Party or its subcontractors, or
any of them in connection with the work to be performed by such Party
under this Contract. The indemnifying Party shall have the right, but
not the obligation, to participate in any legal or other proceedings
concerning claims for which it is indemnifying under this Article 17
and to direct the defense of such claims. However, with respect to
such legal or other proceedings, the indemnifying Party shall pay all
expenses (including attorneys fees incurred by the indemnified Party
in connection with such legal or other proceedings) and satisfy all
judgments, costs or other awards which may be incurred by or rendered
against the indemnified Party. The indemnifying Party shall not settle
any such claim, legal or other proceeding without first giving thirty
(30) days prior written notice of the Terms and Conditions of such
settlement and obtaining the consent of the indemnified Party, which
consent shall not be unreasonably withheld or delayed.
17.2 Notwithstanding the foregoing, neither the Contractor nor its
subcontractors shall have any liability in Contract or in Tort, for
damages
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to or caused by the Spacecraft after Intentional Ignition (as defined
in Paragraph 16.2), and Buyer shall obtain waivers of subrogation
rights from Buyer's insurers against Contractor, and affiliates and
subcontractors of Contractor.
ARTICLE 18. SPACECRAFT NOT LAUNCHED WITHIN SIX MONTHS AFTER ACCEPTANCE
18.1 If the Spacecraft is not launched within six (6) months after its
Preliminary Acceptance per Article 9, entitled "Inspection and
Acceptance," and is subsequently ordered to be launched within
[*******] following its Preliminary Acceptance, it is agreed that the
Spacecraft shall be returned at Contractor's option and at
Contractor's expense, to Contractor's facility for inspection and
refurbishment. Any inspection and refurbishment undertaken by
Contractor to meet the requirements of Article 16 entitled,
"Spacecraft Warranty," shall be at Contractor's expense, including
Spacecraft transit insurance. After completion of inspection and
refurbishment, Contractor shall not re-ship such Spacecraft without
the consent of Buyer, which shall be governed by Paragraph 9.2.
18.2 If the Spacecraft is not launched within six (6) months after its
Preliminary Acceptance and is subsequently ordered to be launched
later than [***] [***] following its Preliminary Acceptance, it is
agreed that the Spacecraft shall be returned, at Buyer's expense, to
Contractor's facility for inspection and refurbishment. An equitable
adjustment to Contract price for such inspection and refurbishment, to
include a [***] profit component shall be negotiated by the Parties
unless the fact that the launch is scheduled for later than
[*********] is due to Contractor's negligent acts or omissions. After
completion of inspection and refurbishment,
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Contractor shall not re-ship such Spacecraft without the consent of
Buyer, which shall be governed by Paragraph 9.2.
18.3 If the Spacecraft is returned to Contractor's facility for inspection
and refurbishment per the terms of Paragraph 18.2 above, all charges
to return the Spacecraft to the Launch Site shall be borne by Buyer.
18.4 If the Spacecraft has not been launched within [******] after its
preliminary Acceptance, neither Party shall be further obligated to
the other with respect to the Spacecraft. Disposition of the
Spacecraft shall be at the option of Buyer with costs of such
disposition to be borne by Buyer.
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TREATMENT.
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ARTICLE 19. PATENT/COPYRIGHT INDEMNITY
19.1 Contractor shall indemnify and hold Buyer harmless against any
liability or expense as a result of claims, actions, or proceedings
against Buyer alleging the infringement of any trademarks, United
States Copyright or mask work, United States Letters Patent, any other
intellectual property rights, by any article fabricated by Contractor
and delivered to Buyer pursuant to this Contract as set forth below.
19.2 Contractor agrees to defend at its own expense any claim, action,
proceeding or request for royalty payments or any claim for equitable
relief or damages against Buyer, its subsidiaries, and the officers,
employees, consultants and advisors of Buyer and its subsidiaries
(each such party entitled to indemnification being referred to herein
as a "Buyer Indemnitee") based on an allegation that the manufacture
of any item under this Contract or the use, lease, or sale thereof
infringes any United States Letters Patent trademark, United States
Copyright or mask work or any other intellectual property right, and
to pay any royalties and other costs related to the settlement of such
claim, action, proceeding or request and to pay the costs and damages,
including reasonable attorney's fees finally awarded as the result of
any claim, action or proceeding based on such request, provided that
Contractor is given prompt written notice of such request or claim by
Buyer and given authority and such assistance and information as is
available to Buyer for resisting such request or for the defense of
such claim, action or proceeding, and provided that such Buyer
Indemnitee has not intentionally done and shall not intentionally do
anything to prejudice materially the defense of such claim, action or
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proceeding. Any such assistance or information which is furnished by
Buyer at the written request of Contractor is to be at Contractor's
expense.
19.3 In the event that, as a result of any such claim, action, proceeding
or request: a) prior to delivery, the manufacture of any item is
enjoined; or b) after delivery, the use, lease or sale thereof is
enjoined, Contractor agrees to utilize its best effort to either: (1)
negotiate a license or other agreement with plaintiff so that such
item is no longer infringing; or (2) modify such item suitably or
substitute a suitable item therefore, which modified or substituted
item is not subject to such injunction, and to extend the provisions
of this Article thereto. In the event that neither of the foregoing
alternatives is suitably accomplished by Contractor, Contractor shall
be liable to Buyer for Buyer's additional costs and damages arising as
a result of such injunction; provided however, that in no event shall
Contractor's entire liability under this Article exceed
[*********************] [******] for each Spacecraft. The existence
of one or more claims, actions, proceedings or lawsuits shall not
extend such amount.
19.4 The foregoing indemnity shall not apply to any infringement resulting
from a modification or addition, by other than Contractor, to an item
after delivery.
19.5 To the extent that an infringement of an intellectual property right
results solely from the compliance by Contractor with an express
direction of Buyer in a Change Order Request to employ a particular
design not provided in the original Spacecraft Specification for such
Spacecraft, then Buyer shall defend or settle, at its expense, any
such suit against Contractor, subject to the same conditions,
liability cap and other
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limitations provided in this Article 19 that are applicable to
Contractor's indemnification obligations.
19.6 The foregoing constitutes the Parties' entire obligation with respect
to claims for infringement described in this Article 19.
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ARTICLE 20. RIGHTS IN INVENTIONS
20.1 As used in this Contract, "Program Invention" shall mean any
invention, discovery or improvement conceived of and first reduced to
practice in the performance of Work under this Contract. Information
relating to Inventions shall be treated as proprietary information in
accordance with the provisions of this Contract. Rights to inventions
conceived solely by Contractor or its employees shall vest completely
with Contractor.
20.2 Contractor shall be the owner of all Program Inventions invented
solely by Contractor. Contractor grants Buyer a royalty-free,
nonexclusive license in Program Inventions to use Program Inventions
solely for the purposes of maintenance and operation of the Spacecraft
and delivered Equipment. Contractor agrees that it will not revoke
such license if Buyer is in compliance with the terms of the license.
20.2.1 In the case of joint Program Inventions, that is, inventions
conceived jointly by one or more employees of both Parties
hereto, each Party shall have an equal, undivided one-half
interest in and to such joint Program Inventions, as well as in
and to patent applications and patents thereon in all countries.
20.2.2 In the case of such joint Program Inventions, Contractor shall
have the first right of election to file patent applications in
any country, and Buyer 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.
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20.2.3 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 which 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 patent is
filed by either Party in a country which requires the payment of
taxes, annuities, maintenance fees or other charges on a pending
application or on an issued patent, the Party which 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 charges. If within sixty
(60) 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) 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 Invention disclosed therein, subject, however, to
retention of a 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 the apparatus and/or methods
under said application and patent.
20.3 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
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such pending application or patent, have the right to grant non-
exclusive licenses thereunder and to retain any consideration that it
may receive 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 other Party
thereunder during the term of any such license.
20.4 No sale or lease hereunder shall convey any license by implication,
estoppel or otherwise, under any proprietary or patent rights of
Contractor, to practice any process with such product or part, or, for
the combination of such product or part with any other product or
part.
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ARTICLE 21. INTELLECTUAL PROPERTY RIGHTS
Except as provided in Article 20, neither Party shall acquire any rights
with respect to any patent, trademark, trade secret, or any other
intellectual property developed or used by the other Party in the
performance of this Contract.
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ARTICLE 22. FURNISHED DATA AND INFORMATION, DISCLOSURE AND USE
"Proprietary Information" shall mean any data and information received by
one Party from the other Party, which is identified as proprietary in
accordance with either of the following methods: (i) if in writing, it
shall be marked by the disclosing Party with an appropriate proprietary
legend, or (ii) if disclosed orally, it shall be presented by the
disclosing Party as Proprietary at the time of disclosure and shall be
confirmed by the disclosing Party as Proprietary Information in writing
within thirty (30) days of its initial oral disclosure.
22.1 The receiving Party agrees to protect such data and information with
the same degree of care which the receiving Party uses to protect its
own confidential data and information;
22.2 The receiving Party shall not disclose or have disclosed to third
Parties, in any manner or form, or otherwise publish such data and
information so long as it remains proprietary without the express
written authorization of the other Party or except as otherwise
permitted in this Article 22;
22.3 The receiving Party agrees that it shall use such data and
information solely in connection with the performance of Work under
this Contract, unless otherwise expressly authorized in writing by or
on behalf of the other Party with the designation of specific data and
information and use;
22.4 The foregoing obligations with regard to such data and information
shall exist unless and until such time as:
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22.4.1 Such data and information are previously known to the
receiving Party or otherwise publicly available prior to its
receipt by the receiving Party without the default of the
receiving Party; or
22.4.2 Such data and information have been lawfully disclosed to the
receiving Party by a Third Party which has the right to disclose
such data; or
22.4.3 Such data and information are shown by written record to have
been independently developed by the receiving Party; or
22.4.4 Such data and information are otherwise available in the
public domain without breach of this Contract by the receiving
Party; or
22.4.5 Such data and information are disclosed by or with the
permission of the disclosing Party to a Third Party without
restriction; or
22.4.6 Such data and information are disclosed by the receiving Party
as required by law or government regulation or order (as long as
the receiving Party provides reasonable notice to the disclosing
Party prior to such disclosure); or
22.4.7 Such data and information are released for disclosure in
writing by or with the express written permission of the
disclosing Party.
22.5 Providing Buyer shall obtain from the recipient a nondisclosure
agreement at least as restrictive as this Article 22, Buyer may
disclose any proprietary information on a need to know basis to its
customer(s), contractors,
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insurers, consultants, advisors, counsel and actual or prospective
lenders, investors, or successors in interest. In no event shall
either Party disclose any proprietary information of the other Party
to any competitor of the other Party without first obtaining written
consent from the other Party.
22.6 Any copyrighted material belonging to a Party to this Contract may be
copied by the other Party as necessary to enable the receiving Party
to perform its obligations under this Contract, provided always that
the copyright legend is retained on the material.
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ARTICLE 23. PUBLIC RELEASE OF INFORMATION
Neither Party shall issue news releases, articles, brochures,
advertisements, prepared speeches, and other information releases
concerning the work performed or to be performed under this Contract by
Contractor or its subcontractors, or any employee or consultant of either,
which contains new information not previously disclosed as permitted under
the Contract, without first obtaining the prior written approval of the
other Party concerning the content and timing of such release which
approval shall not be unreasonably withheld. The initiating Party shall
provide such releases to the other Party for review within a reasonable
time prior to the desired release date and the other Party shall be
required to respond within said time period.
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ARTICLE 24. TAXES
24.1 The price which shall be paid by Buyer for Spacecraft, Documentation
and Related Services [****************************] any U.S. (federal,
state or local) sales or use taxes, or fees or other U.S. taxes
against real or personal property, however designated, which may be
levied or assessed against Contractor. Buyer shall be responsible for
the payment of all personal property taxes, if any, with regard to
goods which are levied upon subsequent to the date of delivery to
Buyer. Buyer shall be responsible for any inventory taxes, state taxes
or any other taxes that are assessed to Contractor as a result of
storage of a Spacecraft in accordance with Article 32.
24.2 In the event Contractor in the performance of this Contract is
required to pay non-U.S. customs, import duties, value-added or sales
taxes, commercial card fees, port fees, harbor maintenance tax, other
charges, or taxes, or fees, (collectively, "Assessments") however
designated (except for (i) any Assessment based on Contractor's income
and (ii) any Assessment incurred as a result of or associated with
Contractor's manufacture of a Spacecraft), then Buyer will reimburse
Contractor for such Assessments within thirty (30) days of written
notification by Contractor of payment; provided, however that,
Contractor shall use its reasonable best efforts to obtain waivers,
exemptions and/or relief from such Assessments when practicable, and
Buyer shall not be required to pay any Assessment to the extent any
such waiver, exemption or relief is pending or has been obtained.
Notification shall then be supported by an invoice and attachment(s)
evidencing such payment having been made by Contractor.
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ARTICLE 25. GOVERNING LAW
This Contract shall be deemed made in the State of California and shall be
construed in accordance with the laws of the State of California without
resort to its conflicts of law principles.
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ARTICLE 26. TITLES
Titles given to the Articles herein are inserted only for convenience and
are in no way to be construed as part of this Contract or as a limitation
of the scope of the particular article to which the title refers.
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ARTICLE 27. NOTICES AND AUTHORIZED REPRESENTATIVES
Any notice or request required or desired to be given or made hereunder
shall be in writing and shall be effective if delivered in person or sent
by mail or by facsimile as indicated below:
1. PanAmSat International Systems, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx, Senior Vice President and
Chief Technology Officer
cc: Xxxxx Xxxxxxxxxxx
Vice President - Space Systems
and
cc: Xxxxxxx X. Xxxxx
Senior Counsel
0000 Xxxxxx Xxx
Xxxx Xxxxx, Xxxxxxxxxx 00000
Authorized Representative(s): Xxxxxxxxx Xxxxxxx,
President and Chief Executive Officer
Xxxxxx Xxxxxxxx
Senior Vice President and
Chief Technology Officer
Xxxxx Xxxxxxxxxxx
Vice President - Space Systems
2. Xxxxxx Space and Communications Company
Xxxx Xxxxxx Xxx 00000, Xxxxxxx Xxxxxxx
Xxxx. X00, M/S A374
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Contracts Manager
cc: Xxxxxx Xxxxxxxxx, Program Manager
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Authorized Representative(s): Xxxxxx XxXxxxxxx
Vice President
Xxxx Xxxxxxxxx
Vice President
or in each case as a Party may direct by notice to the other Party in
accordance with this Article 27.
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ARTICLE 28. INTEGRATION
This document, with Exhibits, constitutes the entire understanding between
the Parties with respect to the subject matter of this Contract and
supersedes all previous oral and/or written negotiations, commitments, and
understandings of the Parties, including that certain Authorization to
Proceed dated as of August 25, 1998 (the "ATP") between the Parties.
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ARTICLE 29. CHANGES
Subject to Paragraphs 4.2.1 and 5.3:
29.1 Any changes requested by Contractor during the performance of this
Contract, within the general scope of this Contract, which will add or
delete work, stop work, affect the design of the Spacecraft, change
the method of shipment or packing, or the place or time of delivery,
or will affect any other requirement of this Contract, shall be
submitted in writing ("Change Proposal") to Buyer [***************]
days prior to the proposed effective date of the change. If such
Contractor requested change causes an increase or decrease in the
total price or other terms of this Contract, Contractor shall submit a
proposal to Buyer detailing the impact of such change.
29.2 Buyer shall notify Contractor in writing within ten (10) calendar
days after receipt of the requested change and price adjustment
(downward or upward), if any, whether or not it agrees with and
accepts such Change Proposal. If Buyer agrees with and accepts the
Contractor requested Change Proposal, Contractor shall proceed with
the performance of the Contract as changed or in the case of a stop
work order, suspend the performance of this Contract, and an amendment
to the Contract reflecting the Change Proposal shall be incorporated
into the Contract. If Buyer does not agree with the Contractor
requested Change Proposal, the Parties shall attempt to reach
agreement on such Change Proposal. If the Parties are unable to agree
on the requested change and price adjustment, then the Parties shall
proceed with the performance of this Contract, as unchanged. In the
event the Parties are able to reach agreement on the change, but not
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on the price adjustment component, then the Parties shall elevate such
dispute to the Senior Executives of the respective companies for
resolution. If resolution cannot be achieved within a reasonable
period of time under the circumstances, Buyer may make a qualified
acceptance of the Change Proposal, accepting all matters other than
price adjustment, and the issue of price adjustment shall be submitted
for resolution by arbitration in accordance with the provisions of
Paragraph 33.2 hereof. Pending such resolution of the price issue, the
Parties shall perform their obligations under the Contract, or in the
case of a Stop work order, suspend their obligations, as if the Change
Proposal had been accepted; provided, however, that Buyer shall pay
any disputed amount of the price adjustment into an escrow account in
accordance with Paragraph 29.4 hereof on the date such amount would
have been due and payable had the Change Proposal been accepted, or if
the Change Proposal could result in a downward adjustment in the
Contract Price in excess of the amount remaining to be paid by the
Buyer, Contractor shall deposit the disputed amount of such excess
into an escrow account in accordance with Paragraph 29.4 hereof.
29.3 Buyer may submit to Contractor in writing (a "Change Order Request")
[****************] days prior to the proposed effective date of the
change detailing any changes requested by Buyer during the performance
of this Contract, within the general scope of the Contract, which will
add or delete work, stop work, affect the design of the Spacecraft,
change the method of shipment or packing, or the place or time of
delivery, or will affect any other requirement of this Contract.
Contractor shall respond to such Change Order Request in writing to
Buyer within [************] days after such request. If Contractor
determines that the change requested
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by Buyer is feasible and can be made at no additional cost and with no
associated delays, then Contractor shall so notify, Buyer and
Contractor shall commence implementing such change. If the Contractor
determines otherwise, then, Contractor shall submit to Buyer, a
proposal detailing the impact of such change and the price adjustment
(downward or upward), if any, (the "Change Order Offer"). Buyer shall
notify Contractor in writing, within ten (10) calendar days after
receipt of Contractor's Change Order Offer, whether or not it agrees
with and accepts Contractor's Change Order Offer. If Buyer agrees with
and accepts Contractor's Change Order Offer, Contractor shall
immediately proceed with the performance of the Contract as changed,
or in the case of a stop work order, suspend the performance of this
Contract, and an amendment to the Contract reflecting such change
shall be incorporated into the Contract. If Buyer does not agree with
the Contractor's Change Order Offer, the Parties shall attempt to
reach agreement on such Change Order Offer. In the event the Parties
are able to reach agreement on the change, but not on the price
adjustment component, then the Parties shall elevate such dispute to
the Senior Executives of the respective companies for resolution. If
resolution cannot be achieved within a reasonable period of time under
the circumstances, Buyer may make a qualified acceptance of the Change
Order Offer, accepting all matters other than price, and the issue of
price shall be submitted for resolution by arbitration in accordance
with the provisions of Paragraph 33.2 hereof. Pending such resolution
of the price issue, the Parties shall perform their obligations under
the Contract, or in the case of a Stop work order, suspend their
obligations, as if the Change Order Offer had been accepted; provided
however, that the Buyer shall pay any disputed amount of the price
adjustment into an escrow account in accordance with Paragraph 29.4
hereof on the date such amount would
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have been due and payable had the Change Order Offer been accepted, or
if the Change Order Request could result in a downward adjustment in
the Contract Price in excess of the amount remaining to be paid by
Buyer, Contractor shall deposit the disputed amount of such excess
into an escrow account in accordance with Paragraph 29.4 hereof. The
dispute shall then be resolved by arbitration under the provisions of
Article 33, entitled "Disputes."
29.4 Escrow Provisions - Disputed Amounts
Disputed amounts with respect to any change under this Article 29
shall be paid into an interest bearing escrow account to be
established at Bank of America, Concord, California. Upon settlement
of the dispute as to such payment and alleged breach in accordance
with Article 33, the Party entitled to the amount or part thereof in
escrow, shall receive such amount together with all accrued interest
thereon and the other Party shall pay all costs and fees associated
with the escrow of said amount. The placement of disputed amounts into
an escrow account shall not relieve either Party of its remaining
obligations under this contract.
29.5 Determination of Price Adjustment of Change
The Parties agree that the change order price adjustment (downward or
upward) for any change shall be equal to the sum of (i) the "Change
Order Cost" plus (ii) the "Change Order Profit Component". The "Change
Order Cost" shall mean those additional or reduced recurring and non-
recurring costs to Contractor to implement such change (or which are
not required to be implemented), as determined in accordance with
Contractor's normal accounting practices, including those general and
administrative costs ("G&A Costs") of such change, as determined in
accordance with
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Contractor's normal accounting practices, [*********************]
[****] of Contractor's costs for such change. The "Change Order Profit
Component" shall be equal to [**************] of the Change Order
Cost. The Total Change Order Cost shall be payable in accordance with
the payment plan agreed by the Parties or, if applicable, by the
Arbitrator. Unless otherwise agreed by the Parties, the Change Order
Profit Component shall be payable in equal monthly installments at the
same time as the monthly installments of Incentives Obligations;
provided, however, that payment of the Change Order Profit Component
-------- -------
shall not be conditioned upon performance of the Spacecraft or any
component thereof.
29.6 If Contractor makes any improvements to the generic HS601HP
Spacecraft design, then Contractor shall provide reports to Buyer
concerning such improvements. Buyer may request that any improvement
to the HS601HP Spacecraft design reported to Buyer be incorporated
into the Spacecraft, and such improvements shall be considered a
Change and shall be dealt with in accordance with the Change Order
process in this Article 29. The foregoing shall not apply to any
changes to the generic HS601HP Spacecraft design, to correct or
mitigate the impact of anomalies with respect to such design, made by
Contractor on its own accord or as necessary in Contractor's
reasonable engineering judgment, which changes shall not relieve
Contractor of its obligations to meet the technical specifications for
each Spacecraft, as set forth in the applicable Exhibit B, hereto.
Contractor shall notify Buyer on a periodic basis or as requested by
Buyer from time to time of any anomalies with respect to such HS601HP
Spacecraft design.
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29.7 The Change Order Price shall be allocated and payable as follows: The
Change Order Profit Component shall be an independent payment
obligation not contingent upon performance of the Spacecraft and shall
be payable at the same time as the monthly installments of the
Incentives Obligations for the Spacecraft as set forth in Paragraph
6.3.4 and, in any case, the then-remaining Change Order Profit
Component for the Spacecraft shall be paid in full with the last
Incentives Obligations Payment. The Total Change Order Cost shall be
payable as agreed by the Parties.
29.8 To the extent that (i) any change agreed under this Article 29
deletes any Hardware already produced by Contractor, then the
provisions of Paragraphs 14.2 and 14.6 shall apply to the disposition
of such Hardware.
29.9 The Spacecraft shall be designed to support the Launch Vehicle
interface requirements issued by the Launch Vehicle provider (as to
Ariane 4 and 5, Proton, Delta III, Atlas IIAS, IIAR and III, and Sea
Launch Launch Vehicles) existing at the time of the date on which a
Launch Vehicle designation is made under Paragraph 4.2.1. If there are
any material changes to such interface requirements thereafter, then
any such change shall be deemed to be a Change Order Request by Buyer,
and the Change Order process set forth in Section 29.3 shall apply.
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ARTICLE 30. EFFECTS OF STORAGE ON BATTERIES
For Spacecraft batteries to provide the required minimum fifteen (15) years
of in-orbit services per Exhibit B, it is understood that launch must occur
within three (3) years from the date of activation of the first battery
cell. In the event Buyer directs Contractor to store any deliverable
Spacecraft and the period of such storage causes a launch later than three
(3) years from the date of activation of that Spacecraft's first battery
cell, and Buyer upon its election to either: (i) install replacement
batteries or (ii) recondition batteries, so directs Contractor, Buyer shall
pay Contractor its costs plus a [***] profit rate. In either case (i) or
(ii), the batteries shall meet a fifteen (15) year in-orbit service
requirement.
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ARTICLE 31. INTER-PARTY WAIVER OF LIABILITY
31.1 Buyer and Contractor each agree not to make a claim against the other
for an event that occurs at the Launch Integration Facility and/or
Launch Site premises involving damage to, loss of, or loss of use of
their property or the property of others in their possession, caused
by the fault or negligence of the other Party to this Contract, or
otherwise caused by any defect in any product manufactured or sold by
the other Party to this Contract. Such claims are waived and each
Party will bear its own losses. Buyer will include a comparable clause
in each of its contracts with vendors, subcontractors or customers for
services or benefits expected as a result of the launch or orbiting of
the Spacecraft. Such comparable clause shall include a requirement to
flow the clause down to lower-tier contractors.
31.2 Notwithstanding any other provisions of this Contract, prior to the
time any Party, associated with launch activities at the Launch
Integration Facility and/or Launch Site, shall enter the Launch
Integration Facility and/or Launch Site, such Parties shall be
required to sign an Inter-Party Waiver of Liability consistent with
that between Buyer and the Contractor as incorporated herein under
Paragraph 31.1 of this provision or other similar agreement as may be
required by the launch agency. Each Party shall have the
responsibility to assure that all the Parties associated with the
launch of the Spacecraft (for which they have control or privity of
Contract with hereunder) have executed said Inter-Party Waiver of
Liability.
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ARTICLE 32. SPACECRAFT STORAGE
32.1 Buyer may, at its option, order Contractor to store, in accordance
with the provisions of Exhibit B Spacecraft Specification, the
deliverable Spacecraft (including separate storage of Batteries, if
needed) for a period of up to two (2) years from the date of their
delivery to Buyer. Buyer shall provide written notice to the
Contractor not later than six (6) months prior to the scheduled
delivery of the Spacecraft. Contractor's price for providing storage
shall be provided to Buyer in accordance with Article 29, "Changes,"
(and such price shall be deemed a "Change Proposal" for purposes of
Article 29) within 30 days after receipt of Buyer's notice to store
the Spacecraft and Contractor shall arrange for such storage
facilities. If such storage facilities are unavailable, Contractor and
Buyer shall hold discussions to determine a mutually agreed storage
arrangement.
32.2 No later than six (6) months and three (3) months prior to a stored
Spacecraft's scheduled Launch Month and Launch Date, Buyer shall
notify Contractor in writing of such Launch Month and Launch Date,
respectively. Contractor shall take such steps as may be necessary to
remove such Spacecraft from storage and ship it to the Launch Site
designated by Buyer so as to support such Launch Date.
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ARTICLE 33. DISPUTES
33.1 Disputes
33.1.1 In the event any dispute arises between the Contractor and the
Buyer relating to this Contract, either Party may give written
notice to the other of its objections and reasons therefore. The
Contractor and Buyer shall consult in an effort to reach a mutual
agreement to resolve such dispute. In the event a mutual
agreement cannot be reached within fifteen (15) days after
receipt of this notice, the respective positions of the Parties
shall be forwarded to Contractor and Buyer's respective Executive
Offices for discussions and they shall attempt to reach a mutual
agreement to resolve such dispute within another fifteen (15) day
period.
33.2 Arbitration of Disputes
33.2.1 Grounds for Arbitration and Notice Requirement. Any dispute,
----------------------------------------------
disagreement, controversy or claim arising out of or relating to
this Contract or the interpretation thereof or any arrangements
relating thereto, or the validity or enforceability thereof, or
contemplated therein or the breach, termination or invalidity
thereof which is not settled to the mutual satisfaction of the
Parties in accordance with Paragraph 33.1 above, then it shall be
settled exclusively and finally by binding arbitration, after
written notice by either Party. Arbitration of such disputes in
accordance with this Article 33 shall be the Parties' exclusive
remedy.
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33.2.2 Administration and Rules. Arbitration proceedings in
------------------------
connection with the Contract shall be administered by the
American Arbitration Association in accordance with its then in
effect Commercial Arbitration Rules, together with any relevant
supplemental rules including but not limited to its Supplementary
Procedures for Large, Complex Disputes, as modified by the terms
and conditions of the Contract. With respect to the selection of
arbitrators, arbitration proceedings in connection with this
Contract shall be conducted before a panel of three (3)
arbitrators. Within fifteen (15) days after the commencement of
arbitration, each Party shall select from a list of qualified
persons one person to serve as an arbitrator on the panel, and
within ten (10) days of their selection, the two arbitrators
shall select a third arbitrator who is listed as an active member
of the American Arbitration Association at the time that
arbitration proceedings commence. If the two arbitrators selected
by the respective Parties are unable or fail to agree upon the
third arbitrator in the allotted time, then the third arbitrator
shall be selected by the American Arbitration Association.
33.2.3 Place of Arbitration. The place of arbitration shall be in Los
--------------------
Angeles, California, U.S.A.
33.2.4 Discovery. The arbitrators shall have the discretion to order
---------
a pre-hearing exchange of information by the Parties, including
without limitation, production of requested documents, exchange
of
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summaries of testimony of proposed witnesses, and examination by
deposition of the Parties.
33.2.5 Award and Judgment. The arbitrators shall have no authority to
------------------
award punitive damages, and may not, in any event, make any
ruling, finding or award that does not conform to the terms and
conditions of this Contract. Subject to the foregoing, the
Parties agree that the judgment of the arbitrators shall be final
and binding upon the Parties and that the judgment upon the award
rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
33.2.6 Confidentiality. No Party or arbitrator may disclose the
---------------
existence, content, or results of any arbitration proceedings in
connections with this Contract without prior written consent of
all Parties to the arbitration proceeding.
33.2.7 Fee and Expenses. All fees and expenses of any arbitration
----------------
proceedings in connection with this Contract shall be borne by
the losing Party. However, each Party shall bear the expense of
its own counsel, experts, witnesses, and preparation and
presentation of evidence.
33.2.8 Performance. Contractor and Buyer shall continue with
-----------
performance under this Contract during any disagreement,
negotiation, or arbitration.
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ARTICLE 34. ASSIGNMENT
34.1 Neither Party shall assign, or transfer this Contract or any of its
rights, duties or obligations thereunder to any person or entity, in
whole or part without the prior written consent of the other Party
except that either Party may assign or transfer any of its rights,
duties or obligations under this Contract, either in whole or in part,
to its parent company, subsidiary or affiliate./1/ In addition,
notwithstanding anything in this Article 34 to the contrary, the
consent of Contractor shall not be required for, and Paragraph 34.2
shall not apply to any assignment by Buyer of its rights, duties
and/or obligations hereunder as security for any indebtedness of Buyer
or its subsidiaries or affiliates.
Neither Party shall unreasonably withhold consent to any
assignment or transfer providing that the requesting Party can
demonstrate to the other Party's satisfaction prior to such assignment
that:
(1) its successor or assignee possesses the financial resources to
fulfill the obligations of this Contract; and
(2) any such assignment or transfer shall not jeopardize any data
rights or competitive position, or violate laws related to export
or technology transfer, or otherwise increase the other Party's
risks or obligations.
If the requesting Party cannot so demonstrate, both Parties agree
to negotiate in good faith suitable modifications and new provisions
to this Contract which would mitigate the above risks and/or bring
this Contract into conformance with applicable laws. As used in this
Agreement,
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"Affiliate" of, or a person "affiliated" with, a specified person,
shall mean a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, the person specified.
34.2 The Parties agree that in the event that the ownership or control of
Buyer or Contractor is changed, the Parties reserve the right to
negotiate in good faith suitable modifications and new provisions to
this Contract which would mitigate any additional risks, financial or
otherwise, which may be brought about by such change in ownership or
control.
34.3 This Contract shall be binding upon the Parties hereto and their
successors and permitted assigns.
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ARTICLE 35. LIMITATION OF LIABILITY
35.1 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 such 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 such
risks associated with commercial space ventures.
35.2 In no event shall the Parties be liable for any direct, indirect,
incidental, special, contingent or consequential damages (including,
but not limited to, lost revenues or profits), except as expressly
provided for in this Contract. This Article shall survive the
expiration or termination of this Contract for whatever cause.
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ARTICLE 36. CORRECTIVE MEASURES; OPERATIONAL DEFICIENCIES
36.1 Without limiting the obligations of Contractor under other provisions
of this Contract, if the data available from another satellite
manufactured or under manufacture or design by Contractor (a
"Contractor Satellite") indicates that there is or may be a material
deficiency in the design or manufacture of such Contractor Satellite
which, in the reasonable opinion of Contractor, will or may adversely
affect the Spacecraft produced under this Contract, or the operations
of such Spacecraft, then Contractor shall notify Buyer of any such
material deficiency. Contractor shall promptly take appropriate
corrective measures, at Contractor's expense, with respect to the
Spacecraft so as to satisfactorily eliminate from such Spacecraft
prior to its shipment all the material deficiencies discovered in
Contractor Satellite(s), subject to the provisions of Paragraph 36.5.
36.2 In the event that the corrective measures performed pursuant to this
Article 36 cause a delay, then: (i) Contractor shall [***********]
[**********************] in accordance with Paragraph 4.1; (ii) the
time periods provided in Paragraph 5.5 and 37.1 [*************] and
(iii) Buyer and Contractor shall discuss the impact (if any) to the
construction and delivery of the Spacecraft.
36.3 If Contractor, in performing corrective measures in accordance with
this Article 36, replaces any equipment or part determined to be
deficient, such deficient equipment or part shall remain or become the
property of Contractor.
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36.4 Contractor shall disclose to Buyer sufficient technical and
operational information regarding a material deficiency
[***********************] to enable Buyer to make an informed decision
regarding the taking of corrective measures.
Notwithstanding the foregoing, Contractor shall not be obligated by
this Article 36 to disclose the identity (or any identifying
information) of any such satellite, or the owners or customers of such
Contractor Satellite, on which a material deficiency is discovered.
36.5 Contractor shall be obligated to notify Buyer promptly if Contractor
proposes to resolve technical deficiencies (arising during the design
and/or manufacturing process of the Spacecraft) through the imposition
of operational constraints. The Parties agree promptly to enter into
good faith negotiations to resolve any such deficiency and, if
appropriate, agree to adjust equitably the Contract Price and/or
schedule, subject to Paragraph 36.2. In the event that the Parties
cannot reach an agreement within five (5) business days as to the
resolution of such deficiency or its adjustment (if any) to Contract
Price and/or schedule, then the unresolved issues shall be submitted
to the Contractor's and Buyer's senior executives for resolution. If
such senior executives cannot reach agreement within ten (10) business
days thereafter, then the remaining unresolved issues shall be
submitted for resolution by arbitration pursuant to Paragraph 33.2.
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ARTICLE 37. LIQUIDATED DAMAGES FOR LATE PERFORMANCE
37.1 In the event that (i) the shipment of a Spacecraft is delayed due to
the fault of Contractor (and/or Contractor's subcontractors or
suppliers) and is not shipped on or before the applicable Shipment
Date identified under Article 4 (as such date may be adjusted by
mutual agreement of the Parties) or (ii) Contractor does not timely
deliver the Exhibit H Certain Documentation required to be delivered
prior to launch, Contractor shall pay liquidated damages for such
Spacecraft as follows:
37.1.1 For [************] of delay, Contractor shall pay to Buyer
liquidated damages equal to:
(i) with respect to Domestic 1 or Domestic 2, [*****
********************************] and
(ii) with respect to any other Spacecraft purchased under
this Contract, [********************* **************]
and
37.1.2 For each of the next [**************************] of delay,
Contractor shall pay to Buyer additional liquidated damages equal
to:
(i) with respect to Domestic 1 or Domestic 2 [*****
*********************************] and
(ii) with respect to any other Spacecraft purchased under
this Contract, [********************** **************]
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37.2 In the event of any delay of a partial month, the amounts specified
in Paragraphs 37.1.1 and 37.1.2, as applicable, shall be pro rated on
a day-for-day manner based upon the number of days in such month.
37.3 Contractor shall pay to Buyer the liquidated damages owed pursuant to
Paragraphs 37.1.1 and 37.1.2 within thirty (30) days of invoice from
Buyer.
37.4 The Parties understand and agree that the liquidated damages provided
under this Article 37 shall be in lieu of all other remedies of any
kind except for Buyer's rights and remedies under Articles 11 and 14.
The amounts presented in Paragraph 37.1 shall constitute liquidated
damages for such late shipment and shall not constitute a penalty.
The Parties acknowledge and agree that such liquidated damages are
believed to represent a genuine estimate of the losses that would be
suffered by reason of any such delay (which losses would be difficult
or impossible to calculate with certainty).
37.5 The Parties agree that the provisions of this Article 37 shall apply
separately to each Spacecraft, and that the maximum liquidated damages
for a Spacecraft under this Article 37 is: (i) with respect to
Domestic 1 or Domestic 2,
[**********************************************]; and (ii) with
respect to any other Spacecraft purchased under this Contract,
[***********************************************]
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ARTICLE 38. OPTION SPACECRAFT
38.1 Buyer shall have the option (the "Option") to purchase from
Contractor additional HS601HP spacecraft (the "Option Spacecraft") in
accordance with this Article 38. Buyer shall exercise this Option by
written notice to Contractor, and shall approve
[*************************] for such Option Spacecraft on or before
the later to occur of (i) the date of Option exercise or (ii) the date
that is [****************] prior to the applicable Shipment Date.
Upon Buyer's exercise of the Option for an Option Spacecraft,
Contractor shall construct and deliver such Option Spacecraft, perform
all Related Services and deliver all Documentation therefor, in
accordance with the terms and provisions of this Contract (except as
expressly provided otherwise in this Article 38 and subject to
Paragraph 14.9, to the extent applicable), and all references in the
Contract to "Spacecraft" shall thereafter be deemed to include such
Option Spacecraft.
38.2 Subject to the last sentence of this Paragraph 38.2, the "Shipment
Date" for an Option Spacecraft purchased by Buyer shall be the date
that is [**] [*********] after the later to occur of:
(a) Exercise by Buyer of the Option for such Option Spacecraft;
or
(b) As applicable,
(i) With respect to the first Option Spacecraft, [**]
[*******]
(ii) With respect to the second Option Spacecraft,
[*********]
(iii) With respect to the third Option Spacecraft, the
date that is [******] after the exercise of the Option to
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purchase the first Option Spacecraft, but in no event
earlier than [*********] or
(iv) With respect to the fourth Option Spacecraft, the
date that is [********] after the exercise of the Option to
purchase the second Option Spacecraft, but in no event
earlier than [***********]
Notwithstanding the foregoing, in the event that the Option is
exercisable for one or two Option Spacecraft on the date that is
[****] after the completion of in-orbit testing of the last Spacecraft
purchased by Buyer under this Contract [********] then the Option
shall remain exercisable for such number of Option Spacecraft subject
to Paragraph 38.3, and upon exercise the Shipment Date for such
Spacecraft shall be the date that is seven months after the later to
occur of (i) exercise by Buyer of the Option for such Option
Spacecraft or (ii) the date that is [********] after [********]
38.3 The Options shall expire upon the earlier to occur of (i) the
exercise of the Option for a fourth Option Spacecraft, (ii)
[*********] or (iii) the termination pursuant to Article 14 of both
Domestic 1 and Domestic 2.
38.4 Upon exercise of the Option to purchase an Option Spacecraft, the
Option shall continue to be an Option to purchase two Option
Spacecraft, up to a maximum of six spacecraft purchased under this
Contract (including Domestic 1 and Domestic 2). By way of example:
(i) if Buyer has exercised the Option to purchase a total of two
Option Spacecraft, the Option may be exercised for two additional
Option Spacecraft; (ii) if Buyer has exercised the Option to purchase
a total of three Option Spacecraft, the Option may only be exercised
for one additional Option
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Spacecraft; and (iii) if Buyer has exercised the Option to purchase a
total of four Option Spacecraft, the Option shall expire.
38.5 The Contract Price for the first Option Spacecraft and the second
Option Spacecraft shall be [******************************************
*********************] each, subject to adjustment in accordance with
Paragraphs 14.3 and 14.4. The Contract Price for all other Option
Spacecraft purchased under this Contract shall be [****************
**************************************************] each. The
Contract Price shall include all Related Services and Documentation,
and shall be based upon use of an Ariane 4 or 5 Launch Vehicle. For
any Option Spacecraft purchased by Buyer, the Contract Price will be
paid in accordance with the payment plan attached hereto as Exhibit F
(subject to pro rata adjustment in the event of a change in the
Contract Price). [****
***********************************************************
************************************************************
*****************]
38.6 In the event that a Spacecraft suffers a launch failure or one or
more Payloads are not Successfully Operating Payloads on the
Commencement Date, then the total number of Option Spacecraft for
which the Option is exercisable over the life of this Contract shall
be increased by one. In such event: (a) the Shipment Date for such
additional Option Spacecraft shall be determined in the same manner as
the Shipment Date for the third and fourth Option Spacecraft under
Paragraph 38.2; (b) the number of Option Spacecraft upon which
expiration of the Option may occur under clause (i) of Paragraph 38.3
shall be increased by one; (c) the date in clause (ii) of Paragraph
38.3 shall be extended to [*******] and (d) the maximum
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number of Spacecraft that may be purchased by Buyer under Paragraph
38.4 shall be increased by one and the examples in Paragraph 38.4
shall be deemed to be adjusted accordingly. Notwithstanding the
foregoing, the Option shall not be exercisable for more than two (2)
Option Spacecraft simultaneously.
38.7 In the event that Buyer terminates either (but not both) Domestic 1
or Domestic 2 pursuant to Article 14, then the total number of Option
Spacecraft for which the Option is exercisable over the life of this
Contract shall be increased by one. In such event: (a) the Shipment
Date for such additional Option Spacecraft shall be determined in the
same manner as the Shipment Date for the third and fourth Option
Spacecraft under Paragraph 38.2; (b) the number of Option Spacecraft
upon which expiration of the Option may occur under clause (i) of
Paragraph 38.3 shall be increased by one; (c) the date in clause (ii)
of Paragraph 38.3 shall be extended to [***********] and (d) the
maximum number of Spacecraft that may be purchased by Buyer under
Paragraph 38.4 shall be increased by one and the examples in Paragraph
38.4 shall be deemed to be adjusted accordingly. Notwithstanding the
foregoing, the Option shall not be exercisable for more than two
Option Spacecraft simultaneously.
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ARTICLE 39. NO THIRD PARTY RIGHTS
39.1 Contractor represents and warrants that neither Contractor nor any
third party has any continuing rights or obligations with respect to
any Deliverable under this Contract (except as to Contractor as
expressly provided herein) or with respect to any parts or materials
incorporated into any such Deliverable. Contractor agrees to
indemnify Buyer for, and hold Buyer harmless from, any and all
liability, loss, claim or damage to which Buyer or its affiliates (or
any director, officer, employee or agent of Buyer or one of its
affiliates) may become subject, arising from any claim by any such
third party or any breach of the representations and warranties made
by Contractor in this Article 39.
39.2 This Article shall survive delivery of the Spacecraft and the
Documentation, the performance of the Related Services, and any
termination of this Contract.
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ARTICLE 40. INDEX OF DEFINED TERMS
Each of the following capitalized terms has the meaning ascribed to such
term in the applicable Paragraph.
Defined Terms Paragraph
------------- ---------
Affiliate 34
Assessments 24.2
Authorized Representatives 27
Buyer Introduction
Buyer-Furnished Items 8.1
Buyer Indemnitee 19.2
Calculated Operational Lifetime 6.3.1.5
Certain Documentation Exhibit E
Change Order Cost 29.5
Change Order Offer 29.3
Change Order Profit Component 29.5
Change Order Request 29.3
Change Proposal 29.1
Commencement Date 6.3.1.7
Contract Introduction
Contract Price 5.1
Contractor Introduction
Contractor Satellite 36.1
Costs 14.7
Degraded Payload 6.3.2.3
Delinquent Payments 6.4
Deliverables 3
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Documentation 4.1
Effective Date 42
Extension period 6.3.4.3
G&A Costs 29.5
Incentive Interest Rate 6.3.2.2
Intentional Ignition 16.2
Launch Date 7.1.1
Launch Vehicle 4.2.1
Launch Window 7.1.2
OCC 3.3
On-Station Operational Lifetime 6.3.2.1(b)
Pre-Launch Incentives Payment 6.3.4.1
Program Invention 20.1
Properly Operated 3.4
Proprietary Information 22
Recoverable Amount 6.3.4.4
Related Services 4.1
Related Services Price 6.3.4.3
Risk of Loss 15.1.4
Shipment Date 4.1
Spacecraft 3.1
Spacecraft Retirement Payment 6.3.3
Specified Operational Lifetime 6.3.1.1
Successfully Injected Spacecraft 6.3.1.5
Successfully Operating Payload 6.3.1.2
Successfully Operating Transponder 6.3.1.3
Third Anniversary 6.3.4.3
Useful Commercial Life 6.3.1.4
Warranty Time Period 16.2
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ARTICLE 41. EFFECTIVE DATE OF CONTRACT
The "Effective Date" of this Contract No. 98-PAS-002 shall be October 9, 1998.
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IN WITNESS WHEREOF, the Parties hereto have executed this Contract No. 98-PAS-
002 to become effective upon the date specified in Article 41, herein entitled,
"Effective Date of Contract."
XXXXXX SPACE & COMMUNICATIONS COMPANY
SIGNATURE: /s/ Xxxxx Xxxxxxxxx
-------------------------------------
NAME: Xxxxx Xxxxxxxxx
---------------------------------------
TITLE: Executive Vice President
-------------------------------------
DATE: October 9, 1998
--------------------------------------
PANAMSAT CORPORATION
SIGNATURE: /s/ Xxxxxxxxx X. Xxxxxxx
-----------------------------------
NAME: Xxxxxxxxx X. Xxxxxxx
--------------------------------------
TITLE: President and Chief Executive Officer
-------------------------------------
DATE: October 12, 1998
--------------------------------------
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