1
EXHIBIT 10.4
Certain portions of this document have been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
AGREEMENT
This Agreement (the "Agreement"), is made and effective as of this 22nd day of
February, 2000, by and between EchoStar Orbital Corporation, with a place of
business at 0000 Xxxxx Xxxxx Xx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 ("EchoStar")
and Loral Skynet, a division of Loral SpaceCom Corporation, with a place of
business at 000 Xxxxx Xxxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000 ("Skynet"). EchoStar
and Skynet are hereinafter referred to collectively as the "Parties" and
individually as a "Party".
WHEREAS, EchoStar is in the business of providing commercial satellite-based
broadcast services and is interested in operating such a service in the Ku-Band
and Ka-Band frequencies from the 121(Degree) X.X. orbital location;
WHEREAS, Skynet is in the business of providing commercial satellite services
and is interested in operating such a service in the C-Band frequencies from the
121(Degree) X.X. orbital location; and
WHEREAS, EchoStar and Skynet are interested in the construction, purchase and
operation of a hybrid C/Ku/Ka-Band satellite to be placed in the 121(Degree)
X.X. orbital location, with EchoStar owning and operating the Ka-Band and
Ku-Band payloads, Skynet owning and operating the C-Band payload, and EchoStar
and Skynet jointly owning and operating the elements that are common to and/or
shared by the Ka-Band, Ku-Band and C-Band payloads;
NOW THEREFORE, the Parties agree as follows:
1. Purchase of the Satellite. Contemporaneously with the execution of this
Agreement, EchoStar shall enter into the contract attached as Exhibit A hereto
(the "Satellite Contract") with Space Systems/Loral, Inc. ("SS/L") for the
construction and purchase of a hybrid C/Ku/Ka-Band satellite to be delivered
in-orbit to the 121(Degree) X.X. orbital location (hereinafter referred to as
"EchoStar 9"). Capitalized terms used and not otherwise defined herein shall
have the meanings as defined in the Satellite Contract.
2. Ownership, Title, and Operation. EchoStar shall exclusively own and operate
the Ka-Band and Ku-Band payloads on the EchoStar 9 satellite. Skynet shall
exclusively own and operate the C-Band payload on the EchoStar 9 satellite.
EchoStar and Skynet shall jointly own, as tenants in common on a 58.11/41.89
percent basis in favor of EchoStar (the "Ownership Ratio"), the elements of the
EchoStar 9 satellite that are common to and/or shared by the Ka-Band, Ku-Band
and C-Band payloads (the "Common Elements"). Title to the C-Band payload and to
Skynet's ownership interest in the Common Elements shall automatically and
immediately pass from EchoStar to Skynet upon transfer of title to the EchoStar
9 satellite from SS/L to EchoStar pursuant to the Satellite
1
2
Contract; provided, however, that following such passage of title to Skynet, in
the event of a partial or total loss of the C-Band payload and/or Skynet's
ownership interest in the Common Elements, Skynet's title shall be subject to
release obligations as described in Article 10.4.3 of the Satellite Contract and
to any salvage value remedies included in the applicable risk management
insurance policies for the EchoStar satellite procured by SS/L pursuant to
Article 39 of the Satellite Contract. EchoStar and Skynet shall mutually agree
upon all operational decisions affecting the Common Elements. Each Party may
grant security interests in and otherwise encumber its payload(s) and its
ownership interest in the Common Elements, provided that in the event of
foreclosure upon any security interest in or other encumbrance upon a Party's
ownership interest in the Common Elements, the foreclosing entity shall take
such interest subject to the terms and conditions of this Agreement, and
provided further that following such foreclosure the Party whose interest was
not foreclosed upon shall have the right to make all operational decisions
regarding the Common Elements. In the event that a payload design change made by
either Party pursuant to Section 5 of this Agreement results in an adjustment to
the Firm Fixed Price, then the Ownership Ratio shall be adjusted accordingly.
3. Payment of the Purchase Price. EchoStar shall be responsible for paying XXX
for the EchoStar 9 satellite subject to and upon the terms and conditions set
forth in the Satellite Contract. Skynet shall be responsible for paying XXX
subject to and upon the terms and conditions of this Agreement and of a separate
agreement(s) to be mutually agreed upon between Skynet and SS/L. Design changes
made pursuant to Section 5 of this Agreement shall result in an adjustment to
the Firm Fixed Price and the Ownership Ratio as and to the extent set forth in
Section 5. Notwithstanding the foregoing, the failure of either Party to pay its
respective portion of the Firm Fixed Price shall not be deemed to constitute a
breach of this Agreement.
4. Insurance.
4.1 Within six (6) months after the date first set forth above or within five
(5) days after EchoStar receives notice from SS/L pursuant to Article 29.2 of
the Satellite Contract that SS/L intends to purchase the risk insurance
described in Article 39.1 of the Satellite Contract following the occurrence of
an event (or events) which is reasonably likely to cause the cost of the
insurance described in Article 39.1 of the Satellite Contract to increase by
more than 3% of the sum insured, whichever occurs earlier, the Parties shall
mutually agree upon whether EchoStar should exercise its option pursuant to
Article 29.2 of the Satellite Contract to direct SS/L not to procure risk
insurance for the EchoStar 9 satellite (the "Insurance Option"). In the event
that the Parties mutually agree that EchoStar should exercise the Insurance
Option, any Firm Fixed Price reductions received by it as a result of such
election shall be shared by the Parties in accordance with the Ownership Ratio.
2
3
4.2 In the event that the Parties mutually agree that EchoStar should exercise
the Insurance Option, then:
(i) if both Parties desire to insure their payloads, either EchoStar or Skynet,
as agreed upon by the Parties, shall solicit bona fide proposals from a
reasonable number of market leaders in the space insurance marketplace regarding
a single policy for the entire satellite (including both Parties' payloads),
(ii) if both Parties desire to insure their payloads and a policy proposal
satisfactory to both Parties, as determined in each Party's sole judgment, has
not been procured pursuant to Subsection (i) above within thirty (30) days after
completion of all technical presentations made by SS/L in connection with the
solicitation of such proposals, the Parties will coordinate to ensure that they
proceed to market simultaneously and each Party shall have the right to procure
its own insurance for its respective payload(s); or
(iii) if one Party does not desire to insure its payload(s), the other Party
shall have the right to procure its own insurance for its Payload(s).
If the Parties procure insurance pursuant to Subsection (i) above or otherwise
elect to procure insurance coverage for the entire EchoStar 9 satellite in a
single policy, then: (a) the Party procuring the insurance policy shall cause
the other Party to be named as an additional insured on such policy, (b) such
policy shall provide that the policy may not be changed without written
agreement from both Parties or cancelled unless both Parties are given at least
thirty (30) days advance notice, (c) such policy will individually insure the
respective payload(s) of each Party in amounts to be determined by each Party in
its sole judgment, and (d) each party shall bear its proportionate share of the
premium.
4.3 In the event that the Parties mutually agree that EchoStar should not
exercise the Insurance Option, then in the event of any loss of Skynet's payload
or any Common Elements (whether a partial or total loss) during the time period
starting at Intentional Ignition and ending one (1) year after Launch, Skynet
shall look solely and exclusively to SS/L for the payment of any claims arising
out of or relating to any such loss.
4.4 Each Party shall, at its own cost and expense, timely provide the other
Party with all reasonable assistance requested by the other Party in connection
with the procurement of insurance as contemplated under this Section 4.
5. Payload Design Changes.
5.1 Either Party may at any time and from time to time make changes in the
design of its payload(s), provided that such change does not negatively impact:
(i) the scheduled launch date for the EchoStar 9 satellite, (ii) the performance
of the other Party's payload(s), or (iii) the designed operational life of the
other
3
4
Party's payload or the designed orbital maneuver life of the Echostar 9
satellite, unless the other Party has otherwise agreed in writing (which
agreement may be withheld in the other Party's sole judgment).
5.2 All design changes to the Party's respective payloads that are not permitted
under Section 5.1 above and all changes to the Common Elements necessitated by
any design change made to either Party's payload(s), shall be mutually agreed
upon by the Parties.
5.3 The Party making a design change to its payload(s) shall be solely
responsible for paying any increases to the Firm Fixed Price that result from
such change (including changes to the Common Elements necessitated by the design
change made to such Party's payload). Similarly, the Party making a design
change to its payload(s) shall receive the full benefit of any reductions in the
Firm Fixed Price resulting from such change to its payload. In either case, the
Ownership Ratio shall be adjusted accordingly.
6. Satellite Management. Skynet shall, XXX, provide EchoStar with support from
its staff of Loral Skynet Spacecraft and Launch Engineers for oversight of
satellite design, fabrication, testing and integration and for oversight of
launch integration, including without limitation supporting EchoStar at the
launch site during the launch campaign and providing technical consultation
during transfer orbit operations and in orbit testing of the satellite, that is
reasonably acceptable to EchoStar and designed to ensure that SS/L manufactures,
launches and delivers the EchoStar 9 satellite and any Replacement Satellite (as
defined in the Satellite Contract) in accordance with the terms and conditions
of the Satellite Contract (the "Satellite Management Services"). In performing
the Satellite Management Services, Skynet shall assign at least one person to be
dedicated to the EchoStar 9 program and any Replacement Satellite on a full-time
basis, who will be stationed on-site at SS/L's facility in Palo Alto,
California. Such on-site person shall report solely and exclusively to EchoStar
for matters dealing with the Ka-Band and Ku-Band payloads, solely and
exclusively to Skynet for matters dealing with the C-Band payload, and jointly
to both EchoStar and Skynet for matters dealing with the Common Elements. The
Satellite Management Services shall be performed by Skynet under the same terms
and conditions XXX as set forth in that certain Agreement between EchoStar
Satellite Corporation and AT&T Corp. Concerning Technical Support, dated March
25, 1996, and the Statement of Work attached as Exhibit A thereto, as such
Exhibit A was amended on February 12, 1999 (the "Technical Support Agreement");
provided that the license granted to EchoStar with respect to certain Delivered
Information pursuant to Section 17.A of the Technical Support Agreement shall be
expanded to include defined business purposes of designing, constructing and
delivering FSS, DBS and Ka-Band Satellites. EchoStar acknowledges that as of the
date of this Agreement SS/L and Skynet are affiliated companies and that, based
on its prior experience with Skynet's performance of Satellite Management
Services pursuant to the
4
5
Technical Support Agreement, EchoStar again desires to engage Skynet to perform
Satellite Management Services despite the fact that Skynet's relationship with
SS/L might appear to present a conflict of interest.
7. TT&C Services. Skynet shall, XXX, provide telemetry, tracking, and control
("TT&C") services for the EchoStar 9 satellite and for any Replacement Satellite
(as defined in the Satellite Contract), but not any replacements thereof,
beginning at Acceptance of each satellite and continuing for the actual orbital
maneuver life of the EchoStar 9 satellite or until Skynet begins providing TT&C
services for a Replacement Satellite (in the case of the EchoStar 9 satellite)
and for the actual orbital maneuver life of the Replacement Satellite (in the
case of a Replacement Satellite), under the same terms and conditions XXX as set
forth in that certain Amended and Restated Tracking, Telemetry and Control
Services Agreement between EchoStar Satellite Corporation and AT&T Corp.,
effective as of March 26, 1996, as amended and assigned to Skynet (the "TT&C
Agreement"); provided that the license granted to EchoStar with respect to
certain Delivered Information pursuant to Sections 8.A and 8.D of the TT&C
Agreement shall be expanded to include the defined business purpose of providing
services to Customer's FSS, DBS and Ka-Band satellite(s)). Provided, however:
(i) if EchoStar elects to launch a Substitute Satellite as provided in Section
12 of this Agreement, Skynet shall have no obligation to provide TT&C services
for the EchoStar 9 satellite or Replacement Satellite after the acceptance by
Skynet of the Substitute Satellite, and (ii) if Skynet elects to launch a
Substitute Satellite, it shall only be obligated to provide TT&C services for
such Substitute Satellite for the remainder of the expected operational life of
the EchoStar 9 satellite or Replacement Satellite, whichever is then in service,
as measured on the first day following acceptance by EchoStar of the Substitute
Satellite. Upon the expiration of Skynet's obligations to provide TT&C services
with respect to a particular satellite under this Section 7, if EchoStar desires
Skynet to continue providing TT&C services for such satellite, Skynet agrees to
do so pursuant to the terms and conditions of the TT&C Agreement XXX. XXX The
Parties agree that (a) in-orbit testing ("IOT") for the Ka-Band and Ku-Band
payloads will be conducted at EchoStar's uplink facility in Cheyenne, Wyoming or
Gilbert, Arizona, at EchoStar's option, with support from Skynet facilities as
reasonably needed, (b) IOT for the C-Band payload shall be performed at Skynet's
uplink facility in Hawley, Pennsylvania, (c) IOT for the Common Elements shall
be performed at a facility to be mutually agreed upon by the Parties after
consultation with SS/L, (d) the Satellite Acceptance Review shall be held at a
single location to be mutually agreed upon by the Parties after consultation
with SS/L, and (e) each Party shall be entitled to have representatives present
at each of the events described in Subsections (a) through (d) above.
8. Decision-Making Authority. Each Party shall have final decision-making
authority with respect to all matters regarding the construction and operation
of the EchoStar 9 satellite that solely and exclusively impact its
5
6
respective payload(s). The Parties shall mutually agree upon all matters
regarding the launch of the EchoStar 9 satellite and all matters regarding the
construction and operation of the EchoStar 9 satellite that involve the Common
Elements or otherwise impact the payloads of both Parties. Skynet, as provider
of the Satellite Management Services, shall be the sole point of contact with
SS/L for technical and design issues; provided, however, that: (i) EchoStar
shall have identical rights to information and to attend meetings regarding the
EchoStar 9 satellite, and (ii) Skynet shall not make any communications or
otherwise convey to SS/L decisions impacting the EchoStar 9 satellite unless
such communication or decision was reached in compliance with the
decision-making requirements of this Agreement. For the avoidance of doubt,
EchoStar shall remain the sole point of contact with SS/L for contractual
issues. Neither Party shall be liable to the other as a result of delays in the
construction of its respective payload(s) or the Common Elements. Within thirty
(30) days after the EchoStar 9 satellite becomes a Total Loss (determined on the
basis of all Ku-Band, Ka-Band and C-Band Transponders, as opposed to just the
Ku-Band and Ka-Band Transponders), the Parties shall mutually agree upon whether
EchoStar should exercise its option for a Replacement Satellite pursuant to
Article 10.4 of the Satellite Contract. In the event that the Parties mutually
agree that EchoStar should exercise that option, then the terms and conditions
of this agreement shall apply mutatis mutandis to the Replacement Satellite.
9. Power Sharing. The following procedure shall be adhered to in the event of a
loss of primary power that impacts the payloads of both Parties:
(i) First, components of the EchoStar 9 satellite will be powered down as
necessary to protect the overall health of the EchoStar 9 satellite;
(ii) Second, bus components of the EchoStar 9 satellite will be powered down to
the extent possible without affecting either Party's payload(s) ;
(iii) Third, the Parties will enter into good faith discussions to determine the
next components to be powered down; and
(iv) In the event that the Parties are unable to mutually agree upon the next
components to be powered down within forty-eight (48) hours after the relevant
loss of primary power, then the residual amount of primary power required to be
shed will be allocated between the payloads of EchoStar and Skynet based on the
ratio of the nominal full-power operation of the Parties' respective payloads.
Such allocation will initially be computed based on the final design
specification for each Parties' respective payload(s), and shall be subject to
adjustment when actual saturated power and efficiency data is determined during
IOT. Each Party will determine in its sole judgment the appropriate actions to
be taken with respect to its payload(s) to shed the power allocated to it
pursuant to this Subsection (iv).
6
7
10. Cooperation.
10.1 Each Party shall, at its own cost and expense, timely provide the other
Party with all reasonable assistance requested by the other Party in connection
with: (i) the preparation, coordination and filing of any and all applications
required to be filed by the other Party for licenses with the Federal
Communications Commission, or any successor agency thereto (the "FCC") and any
other governmental agencies in connection with the construction, launch and
operation of the EchoStar 9 satellite, the Replacement Satellite, and/or the
Substitute Satellite; (ii) the filing of any technical filings required to be
made by the other Party with the FCC or any other governmental agency; and (iii)
all filings required to be made by the other Party with the International
Telecommunication Union (or any successor agency thereto) regarding radio
frequency and orbital position coordination.
10.2 Skynet shall give all reasonable assistance requested by EchoStar, at
Skynet's cost and expense, necessary for EchoStar to perform under the Satellite
Contract with respect to the C-Band payload and Skynet's interest in the Common
Elements, including without limitation the timely provision of all
purchaser-furnished equipment, facilities and services applicable to the C-Band
payload described in the Statement of Work in good working condition and
adequate for the required purpose.
11. Taxes. EchoStar shall be responsible for the payment of any and all sales,
use, gross receipts, excise and other taxes (collectively "Taxes") assessed
solely and exclusively on the construction, use and operation or addition of
value to the Ka-Band or Ku-Band payloads on the EchoStar 9 satellite, and
EchoStar shall indemnify Skynet from any such Taxes in accordance with the
provisions of Section 17 below. Skynet shall be responsible for the payment of
any and all Taxes assessed solely and exclusively on the construction, use and
operation or addition of value to the C-Band payload on the EchoStar 9
satellite, and Skynet shall indemnify EchoStar from any such Taxes in accordance
with the provisions of Section 17 below. The Parties shall share responsibility,
in direct proportion to the Ownership Ratio, for any and all Taxes assessed on
the construction, use and operation or addition of value to any and all Common
Elements, and each Party shall indemnify the other Party from its respective
portion of such Taxes in accordance with the provisions of Section 17 below.
12. Sale, Abandonment and Substitute Satellite.
12.1 In the event that either Party (i) is for any reason unable to operate its
EchoStar 9 payload(s) as contemplated by this Agreement, (ii) for any reason
desires to separate its operations on the EchoStar 9 satellite from those of the
other Party, or (iii) desires for any reason to move the EchoStar 9 satellite to
any orbital location other than the 121(degree) X.X. orbital location, then such
Party may, at its sole discretion:
7
8
(a) sell its entire ownership interest in its payload(s) and in the Common
Elements to a third party, subject to the limitations set forth in Section 19.3
of this Agreement and the other Party's right of first offer and first refusal
described in Section 12.2 below,
(b) turn off its payload and abandon its usage thereof, provided that the other
Party shall have the right to continue to operate any and all portions of the
first Party's payload(s) and the Common Elements as may be necessary for the
other Party to continue to use its payload(s) during any such period of
abandonment, or
(c) in cooperation and consultation with the other Party contract with SS/L or
any other spacecraft manufacturer reasonably acceptable to the other Party for
the construction and delivery on orbit to the 121(Degree) X.X. orbital location
of another satellite having payload capabilities and a designed operational life
which are the same or better than the payload(s) of the other Party on and the
designed operational life of the EchoStar 9 satellite (a "Substitute
Satellite").
Upon acceptance of such Substitute Satellite by the other Party and successful
completion of the transfer of the other Party's traffic from EchoStar 9 to the
Substitute Satellite: (i) the Party providing the Substitute Satellite shall
cause the EchoStar 9 satellite to vacate the 121(Degree) X.X. orbital location;
(ii) title to the entire EchoStar 9 satellite shall automatically vest in the
Party providing the Substitute Satellite; (iii) title to the entire Substitute
Satellite shall automatically vest in the other Party; and (iv) this Agreement
shall automatically terminate. Each Party agrees to provide, at the cost and
expense of the Party providing the Substitute Satellite, all assistance
reasonably necessary to ensure that title is transferred pursuant to Subsections
(ii) and (iii) above free and clear of any and all liens and encumbrances that
do not arise from or relate to the actions of the Party receiving title to the
relevant satellite. It is the intention of the Parties that the guiding
principle governing any Party's provision to the other Party of a Substitute
Satellite shall be that the Party receiving the Substitute Satellite shall be
made whole and shall continue the operation of its business uninterrupted and
with the minimum possible inconvenience.
12.2 In the event that a Party elects to sell its entire ownership interest in
its payload(s) and in the Common Elements to a third party pursuant to Section
12.1 (a) above, then the other Party shall have the right for a period of up to
thirty (30) days after such Party receives written notice from the first Party
of such election, to make an offer to the first Party to purchase the first
Party's entire interest in its payload(s) and in the Common Elements. In the
event that the first Party is unwilling to accept the other Party's offer, then
the first Party may solicit bona fide offers from third parties to purchase the
first Party's entire interest in its payload(s) and in the Common Elements.
Thereafter, the other Party shall have a period of fifteen (15) days to meet
such bona fide third-party offer, and in the
8
9
event that the other Party makes a matching offer, then the first Party shall be
obligated to promptly accept such matching offer.
13. Termination
13.1 Unless terminated sooner pursuant to Section 13.2 below, this Agreement
shall continue in full force and effect until the later to occur of: (i) the end
of the actual orbital maneuver life of the EchoStar 9 satellite; or (ii) the end
of the actual orbital maneuver life of the Replacement Satellite, if any.
13.2 Notwithstanding anything to the contrary herein, if the Parties are unable
to reach final agreement with SS/L upon: (1) the pricing and schedule for the
options described in Article 29.1 of the Satellite Contract, (2) the TBD terms
of the Satellite Contract, or (3) Exhibit A (Statement of Work), Exhibit B
(Satellite Performance Specification), Exhibit C (Product Assurance Program
Plan), Exhibit D (Satellite Program Test Plan) or the milestones set forth in
Attachment A (Payment Plan) to the Satellite Contract, within thirty (30) days
after the date first set forth above, then either Party may immediately
terminate this Agreement by providing written notice to the other Party, and all
liabilities and obligations of the Parties shall be released, waived and
terminated, except for those set forth in Section 19.11 hereof, which remain in
full force and effect as provided therein.
14. Confidentiality.
14.1 Confidential Information. Each Party will treat as confidential the terms
of this Agreement, together with all information whether of a technical nature
or otherwise relating in any manner to the business, technical, operational,
legal or other affairs of the other Party as may be communicated to it hereunder
or otherwise in connection with this Agreement, both prior and subsequent to its
execution (the "Confidential Information"). Each Party undertakes that except as
authorized in writing by the other Party, it will neither disclose any
Confidential Information to any person, including the media, nor use the
Confidential Information other than for purposes permitted under this Agreement.
Each Party shall use all reasonable efforts and shall take every reasonable
precaution to protect and maintain the confidentiality of the Confidential
Information, which precautions shall be at least equivalent in scope and effect
to the measures taken by that Party to protect its own most confidential
proprietary information. Each Party hereby agrees to limit disclosure of
Confidential Information to those of its employees who need to know such
information in the performance of their duties in relation to the EchoStar 9
satellite and to consultants who (i) require access to the information in the
performance of their duties in relation to the EchoStar 9 satellite and (ii)
have executed a written non-disclosure agreement, the provisions of which are
sufficiently wide to protect the confidentiality of the information being
disclosed. Each Party shall be liable to the other Party for the acts and
omissions of its employees and consultants in breach of the provisions of this
Section 14.
9
10
Notwithstanding the foregoing, the terms of this Agreement and any amendments
thereof may be disclosed to SS/L and to the Parties' respective insurance
brokers and underwriters in connection with any and all bona fide attempts to
place insurance as contemplated by Section 4 above.
14.2 Exclusions. The provisions of this Section 14 shall not apply to any
information that (i) is in the public domain, or which becomes generally known
to the public, other than by default of the recipient Party; (ii) was in the
lawful possession of the recipient Party prior to the disclosure, and was not
obtained either directly or indirectly from the disclosing Party; (iii) is, or
had already been, verifiably independently generated by the recipient Party,
without reference to the disclosing Party's Confidential Information; (iv) is
required to be disclosed by law or the valid order of a court of competent
jurisdiction or the request of any governmental or other regulatory authority or
agency in which event the Party required to disclose such Confidential
Information shall so notify the other Party as promptly as practicable (and if
possible prior to making any disclosure) and shall use reasonable commercial
efforts to seek confidential treatment of such information.
14.3 Injunctive Relief. The Parties agree that any breach of this Section 14 by
the recipient Party will result in the substantial likelihood of irreparable
harm and injury to the disclosing Party and that in the event of such a breach,
monetary damages alone would not be an adequate remedy and which damages are
difficult to accurately measure. Accordingly, in the event of such a breach or
threatened breach by the recipient Party, the disclosing Party shall be entitled
to injunctive relief in any court of competent jurisdiction, without prejudice
to the other remedies available to the disclosing Party at law, in equity or
otherwise for such breach or threatened breach.
14.4 No Implied License. Except as expressly set forth to the contrary herein,
this Agreement shall not be construed as granting or conferring any interests or
rights, by license or otherwise, in any of the Confidential Information,
including, without limitation, any patent or patent application or any copyright
in which the disclosing Party now has or subsequently may obtain any right,
title or interest or any other intellectual property rights. Except as otherwise
expressly contemplated herein or agreed by the Parties, all materials created or
fabricated by the recipient Party, including without limitation evaluations,
based upon the Confidential Information are deemed to be Confidential
Information and are owned by and are the exclusive property of the disclosing
Party, and shall be returned by the recipient Party to the disclosing Party
immediately upon request by the disclosing Party or termination or expiration of
this Agreement.
14.5 Prior Agreements. The confidentiality obligations set forth in this
Agreement are in addition to, and not in lieu of, any agreements between the
Parties and/or any of their Affiliates (as defined in Section 19.3
below) respecting confidentiality that were executed on or before the date first
set forth above.
10
11
15. Publicity. Neither Party shall issue a press release regarding this
Agreement or the transactions contemplated hereby, without the express written
consent of the other Party, which consent shall not be unreasonably withheld or
delayed; provided that nothing in this Section 15 shall be construed as limiting
a Party's right to disclose certain information in accordance with Section
14.2(iv) above.
16. Dispute Resolution.
16.1 Internal Resolution. The following procedure shall be adhered to: (i) in
all disputes that arise under this Agreement that the Parties cannot resolve
informally; and (ii) in all instances where the Director of Space Programs for
EchoStar and the Director of Program Management for Skynet are unable to agree
upon the resolution of an issue, which by the express terms of this Agreement is
to be determined by the mutual agreement of the Parties, within (5) business
days after the issue has been referred to both of them, with the sole exception
of the items to be mutually agreed upon in Sections 9(iii) and 4.1 (each, a
"Dispute"). Either Party to this Agreement may notify the other Party in writing
of the existence of a Dispute. The General Counsel of EchoStar and the General
Counsel of Skynet shall meet in person or by telephone within five (5) business
days after the other Party receives such written notification. If those
individuals are unable to resolve the dispute or agree upon a written plan of
corrective action within five (5) business days after such meeting, then the
matter shall automatically be referred to the President of EchoStar and the
President of Skynet, who shall meet in person or by telephone within five (5)
business days after the date of such referral. If mutual agreement still has not
been reached within five (5) business days after the initial meeting of the
respective Presidents of EchoStar and Skynet, either Party may request
arbitration pursuant to Section 16.2 below by delivery of written notice to the
other Party ("Notice of Arbitration"). Neither Party shall initiate arbitration
unless and until the dispute resolution procedure set forth in this Section 16.1
has been employed or waived by both Parties in writing.
16.2 Arbitration. Any dispute arising between the Parties with respect to the
performance of obligations under, or interpretation of, this Contract and all
Disputes that cannot be settled by the Parties pursuant to Section 16.1 above,
shall be determined by submission to binding arbitration in accordance with the
provisions of the "Uniform Arbitration Act of 1975", part 2 of article 22 of
title 13, Colorado Revised Statutes, as amended from time to time, and not by a
lawsuit or resort to court process except as Colorado law provides for judicial
review of arbitration proceedings. Any such arbitration shall be conducted in
the City and County of Denver, Colorado by a panel of three arbitrators who
shall be selected within thirty (30) days of such Notice of Arbitration, as
follows: (i) one arbitrator shall selected by each Party; and (ii) the third
arbitrator shall be selected by the arbitrators chosen by the Parties. In
resolving any dispute, the arbitrators shall apply the substantive laws of the
State of New York (without regard to its conflict
11
12
of law rules), but shall apply the Colorado Rules of Civil Procedure and the
Colorado Rules of Evidence, and shall take into account usages, customs and
practices in the performance of contracts for the purchase and operation of
commercial communications satellites. Notwithstanding anything to the contrary
herein, the Arbitrators shall make their decision based on the overriding
principle that, unless expressly set forth to the contrary herein: (a) economic
disputes impacting the payloads of both Parties shall be resolved such that
gains and losses are shared between the Parties in direct proportion to the
Ownership Ratio, and (b) non-economic disputes affecting the payloads of both
Parties shall be resolved such that impact of gains and losses is shared on a
50/50 percent basis between the Parties. Proceedings and documents provided and
generated in connection with any arbitration hereunder shall be in the English
language. Each Party shall bear its own costs and expenses (including the costs
and expenses of the arbitrator it selected) and one-half of the costs and
expenses of the third arbitrator. The parties agree that, in no event, shall the
arbitrators' decision include a recovery under any theory of liability, or award
in any amount, not expressly allowed under this Contract. In furtherance and
without limitation of the foregoing, any award made by the arbitrators shall be
within the limitations set forth in Section 18 below.
17. Indemnification.
17.1 Each Party shall defend, indemnify and hold harmless the other Party, and
its Affiliates, and their respective directors, officers, employees,
shareholders, agents and representatives from and against all losses, damages,
liabilities, suits and expenses (including, but not limited to, reasonable
attorneys' fees) (collectively "Losses") attributable to third party claims for
bodily injury or property damage, but only to the extent that such Losses were
caused by, or resulted from, negligent acts or omissions, gross misconduct or
willful misconduct by the first Party or its employees, agents, consultants or
representatives.
17.2 The right to any indemnity specified in this Section 17 shall be subject to
the following conditions:
(i) The Party seeking indemnification shall promptly advise the other Party in
writing of the filing of any suit or of any written or oral claim for
indemnification upon receipt thereof and shall provide the other Party, at its
request, with such assistance and information available to the indemnified party
as is relevant to the defense such suit or claim. Any such assistance or
information that is furnished by the indemnified Party at the request of the
indemnifying Party XXX
(ii) The Party seeking indemnification shall not make any admission nor shall it
reach a compromise or settlement without the prior written approval of the other
Party, which approval shall not be unreasonably withheld or delayed.
12
13
(iii) The indemnifying Party shall assist and shall have the right to assume,
when not contrary to the governing rules of procedure, the defense of any claim
or suit in XXX
(iv) The Party seeking indemnification may participate XXX, using counsel
reasonably acceptable to the indemnifying Party, provided there is no conflict
of interest and that such participation would not and does not adversely affect
the conduct of the proceedings.
(v) XXX: (i) the indemnifying Party and such indemnified Party shall have
mutually agreed to retention of such other counsel; or (ii) the named parties to
any proceeding (including without limitation any impleaded parties) include both
the indemnifying Party and such indemnified Party and representation of both the
indemnifying Party and such indemnified Party by the same counsel would be
inappropriate due to actual or potential conflicts of interest between them.
18. LIMITATION OF LIABILITY. THE LIMITATION OF LIABILITY PROVISION OF THE TT&C
AGREEMENT SHALL EXCLUSIVELY CONTROL LIABILITIES ARISING OUT OF THE PROVISION OF
TT&C SERVICES. THE LIMITATION OF LIABILITY PROVISION OF THE TECHNICAL SUPPORT
AGREEMENT SHALL EXCLUSIVELY CONTROL LIABILITIES ARISING OUT OF THE PROVISION OF
SATELLITE MANAGEMENT SERVICES. EXCEPT WITH RESPECT TO BREACHES OF SECTION 14 OR
15 OF THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE DIRECTLY OR
INDIRECTLY TO THE OTHER PARTY, ITS AFFILIATES, OR THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, SHAREHOLDERS, AGENTS, CUSTOMERS, CONTRACTORS OR
SUBCONTRACTORS AT ANY TIER (INCLUDING WITHOUT LIMITATION SUPPLIERS OF ANY KIND),
OR TO ANY OTHER PERSON OR ENTITY CLAIMING BY OR THROUGH SUCH PARTY FOR ANY
AMOUNTS REPRESENTING LOSS OF PROFITS, LOSS OF BUSINESS, OR ANY INDIRECT,
INCIDENTAL, SPECIAL, EXEMPLARY, CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING FROM
OR RELATING TO THE PERFORMANCE OR NONPERFORMANCE OF THIS AGREEMENT OR ANY ACTS
OR OMISSIONS ASSOCIATED THEREWITH, WHETHER THE BASIS OF THE LIABILITY IS BREACH
OF CONTRACT, TORT, STATUTES OR ANY OTHER LEGAL THEORY. THIS LIMITATION OF
LIABILITY SHALL NOT BE CONSTRUED TO LIMIT A PARTY'S INDEMNIFICATION OBLIGATIONS
PURSUANT TO SECTIONS 11 AND 17.
19. Miscellaneous.
19.1 Relationship of the Parties. This Agreement defines the cooperative
activities of the Parties in the acquisition, manufacture and operation of a
C/Ku/Ka-Band hybrid satellite under the terms contained herein. Except for the
covenants contained herein, no legal entity or relationship of any kind,
including but not limited to a joint venture, pooling arrangement, agency,
partnership or
13
14
other form of business relationship shall be deemed to arise herefrom between
the Parties or between any other individuals, organizations or corporation. Each
Party shall act as an independent contractor and not as an agent for the other
and no Party shall have any authority to bind the other Party except to the
extent specifically provided herein.
19.2 Applicable Law and Construction. This Agreement shall be construed, and the
relations between the Parties determined, in accordance with the laws of the
state of New York, except for its choice of laws provisions. The descriptive
headings contained in this Agreement are included for convenience and reference
only and shall not be held to expand, modify, amplify or aid in the
interpretation, construction or meaning of this Agreement. Skynet and EchoStar
acknowledge and agree that they and their counsel have reviewed, or have been
given a reasonable opportunity to review, this Agreement and that the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments or attachments hereto.
19.3 Assignment. This Agreement shall be binding upon and inure to the benefit
of the Parties and their respective heirs, legal representatives, successors and
permitted assigns. Neither this Agreement nor any rights, duties or obligations
hereunder may be assigned, delegated or otherwise transferred, in whole or in
part, by either Party, nor shall either Party sell its entire ownership interest
in its payload(s) and in the Common Elements to a third party pursuant to
Section 12.1(a) above, without the prior written consent of the other Party,
which consent shall not be unreasonably withheld; provided, however, that,
without securing such prior consent, a Party shall have the right to assign this
Agreement or sell its entire ownership interest in its payload(s) and in the
Common Elements to any person or entity directly or indirectly controlling,
controlled by or under common control with such Party (an "Affiliate"), or to
any successor of such Party by way of merger or consolidation or the acquisition
of substantially all of the assets of such Party relating to the subject matter
of this Agreement, provided, however, that such Affiliate or successor, as the
case may be, shall expressly assume all of the obligations of such Party under
this Agreement. Any attempted assignment, delegation, sale or other transfer in
contravention of the above provisions shall be void ab initio.
19.4 Notices. All notices and other communications that may be or are required
to be given hereunder shall be in writing and shall be sent via first-class
registered or certified mail, return receipt requested and postage prepaid, or
via overnight courier service, charges prepaid, to the party to be notified at
the following address(es), or sent by facsimile transmission to the party to be
notified at the following fax number(s), or to such other persons, address(es)
or fax number(s) as such party may have substituted by written notice to the
other parties in accordance with the provisions of this Section 19.4:
14
15
In the case of EchoStar:
Echostar Orbital Corporation
0000 X. Xxxxx Xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxx, Director of Space Programs
Fax: (000) 000-0000
With a copy to:
Echostar Orbital Corporation
0000 X. Xxxxx Xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Senior Vice President and General Counsel
Fax: (000) 000-0000
In the case of Skynet:
Loral Skynet
000 Xxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx XxXxxxxxx, Director, Supplier Relations
Facsimile Number: (000) 000-0000
With a copy to:
Loral Skynet
000 Xxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx, Director, Program Management
Fax: (000) 000-0000
The sending of such notice with confirmation of successful receipt of the
complete transmission (in the case of facsimile transmissions) or receipt of
such notice (in the case of delivery by first class registered or certified mail
or by overnight courier service) shall constitute the giving thereof.
19.5 Unrestricted Activities. Nothing contained herein shall be deemed to
restrict a Party from quoting, offering to sell, selling to, receiving quotes,
offering XXX
19.6 Entire Agreement. This Agreement constitutes the entire understanding and
agreement between the Parties with respect to the subject matter hereof, and
supersedes all such prior representations and agreements, oral or written.
15
16
This Agreement shall not be modified or altered, except in a writing executed by
a duly authorized representative of each Party.
19.7 Compliance with Export Control and Other Laws and Regulations. The Parties
shall comply with all United States Export Control Regulations and all other
laws and regulations which apply to this Agreement; and further will not
directly or indirectly perform or fail to perform any act which will constitute
a violation of such laws or regulations in the performance of the Agreement.
19.8 Waiver. The failure or delay of either Party at any time to exercise or
enforce any right or remedy available to it under this Agreement with respect to
any breach or default by the other Party shall not be construed to be a waiver
of such right or remedy with respect to any other breach or default by the other
Party. The delay or failure of either Party to give notice of breach or default
shall not be deemed to be a waiver of the right to do so for that or any
subsequent breach or default or for the persistence in a breach or default of a
continuing nature.
19.9 Counterparts. This Agreement may be signed in counterparts, each of which
shall constitute an original and all of which together shall constitute one and
the same agreement.
19.10 Severability. The Parties agree that each provision of this Agreement
shall be construed as separable and divisible from every other provisions and
that the enforceability of any one provision shall not limit the enforceability,
in whole or in part, of any other provision hereof. In the event that a court of
competent jurisdiction or a panel of arbitrators selected pursuant to Section
16.2 above determines that any term or provision herein, or the application
thereof to any person, entity or circumstance, shall to any extent be invalid or
unenforceable, then such term or provision shall be enforced to the maximum
extent deemed by such court or panel of arbitrators to be permissible, and the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.
19.11 Survival of Obligation. The obligations of the Parties under this
Agreement, which by their nature logically would be expected to survive
termination, cancellation, or expiration of this Agreement, including without
limitation those set forth in Sections 7 (regarding Skynet's obligation to
provide TT&C services on a Substitute Satellite), 14, 15, 16, 17, 18, 19.2 and
19.4, shall survive termination, cancellation or expiration of this Agreement
for the applicable time period specified in such section or, if no time period
is specified, for a reasonable period of time under the circumstances.
19.12 Remedies Cumulative. Except as otherwise expressly set forth herein, it is
agreed that the rights and remedies herein provided in case of default or breach
of this Agreement are cumulative and shall not affect in any manner any other
remedies that any Party may have by reason of such default or breach,
16
17
except as expressly limited in this Agreement. Except as otherwise expressly set
forth herein, the exercise of any right or remedy herein provided shall be
without prejudice to the right to exercise any other right or remedy provided
herein, at law, or in equity.
19.13 Order of Precedence. Any conflict between the terms of this Agreement and
those of any document attached hereto as an Exhibit shall be resolved by
precedence to the provisions of this Agreement.
19.14 Marketing Name. Each Party shall have the right to market and promote its
payload under any name to which it has intellectual property rights, without the
consent or prior approval of the other Party, provided that such marketing and
promotion does not create a likelihood of confusion as to which Party owns the
payload at issue. For the avoidance of doubt, the provisions of this Section
19.14 are without any prejudice to any rights that a Party may have to a
particular name at law, in equity or otherwise.
17
18
IN WITNESS WHEREOF, the Parties have caused their duly authorized
representatives to execute this Agreement as of the date first set forth above.
LORAL SPACECOM CORPORATION
By:
--------------------------------------
Name:
Title:
ECHOSTAR ORBITAL CORPORATION
By:
---------------------------------------
Name:
Title:
18
