Exhibit 10.39
Information contained herein, marked with [***], is being filed pursuant to a
request for confidential treatment.
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TRANSPONDER SUBLEASE AGREEMENT
FOR GALAXY III-R
BETWEEN
XXXXXX COMMUNICATIONS GALAXY, INC.
AND
CALIFORNIA BROADCAST CENTER, LLC
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TABLE OF CONTENTS
1. The Satellite............................................................. 2
1.01 Satellite........................................................... 2
1.02 Orbital Position.................................................... 2
1.03 Certain Transponder-Related Definitions............................. 2
1.04 Hybrid Satellite.................................................... 2
1.05 Transponders Components and Certain Specifications.................. 2
2. Lease of Transponders; Lease Term......................................... 2
2.01 Term................................................................ 2
2.02 [***]............................................................... 3
2.03 Redelivery of Transponders.......................................... 3
3. Lease Rate................................................................ 3
3.01 Lease Price Components Description.................................. 3
3.02 Monthly Base Lease Rate............................................. 3
3.03 Place of Payment.................................................... 4
4. Conditions; Acceptance.................................................... 4
4.01 Condition to Lessee's Right to Lease................................ 4
4.02 Acceptance.......................................................... 4
5. Representations and Warranties............................................ 4
5.01 Authority, No Breach................................................ 4
5.02 Corporate Action.................................................... 4
5.03 Consents............................................................ 5
5.04 Litigation.......................................................... 5
5.05 No Broker........................................................... 5
6. Additional Representations, Warranties and Obligations of HCG............. 5
6.01 Authorization Description........................................... 5
6.02 Transponder Performance Specifications.............................. 6
6.03 Right to Lease...................................................... 6
6.04 Government Regulations.............................................. 6
6.05 Not a Common Carrier................................................ 6
6.06 TT&C................................................................ 6
6.07 Outage Allowance.................................................... 7
6.08 [***]............................................................... 7
6.09 Insurance Provisions................................................ 8
6.10 [***]............................................................... 8
6.11 [***]............................................................... 9
7. Additional Representations, Warranties and Obligations of Lessee.......... 9
7.01 Compliance by Customers............................................. 9
7.02 Non-Interference.................................................... 9
7.03 Laws............................................................... 10
7.04 Additional Usage Representations and Obligations................... 10
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
i
8. Preemptive Rights........................................................ 10
9. Transponder Spares....................................................... 10
9.01 Use of Transponder Spares.......................................... 10
9.02 Simultaneous Failure-- Priority with Respect to the Use of Transponder
Spares............................................................. 11
9.03 HCG's Ownership of Transponders.................................... 11
10. Termination Rights....................................................... 11
10.01 Termination by Lessee.............................................. 11
10.02 Termination by HCG................................................. 12
10.03 HCG's Right to Transfer............................................ 12
10.04 Prompt Repayment................................................... 12
10.05 Termination by Lessee or HCG....................................... 12
10.06 Right to Deny Access............................................... 12
11. Force Majeure............................................................ 15
11.01 Failure of Performance............................................. 15
12. Limitation of Liability/Breach of Warranty............................... 15
12.01 Liability of HCG................................................... 15
12.02 Confirmed Failure.................................................. 15
12.03 Repayment for Failed Transponder................................... 15
12.04 Limitation of Liability............................................ 16
12.05 Obligations of Lessee to Cooperate................................. 17
13. Limitations on Transfer by Lessee........................................ 18
14. Utilization of Transponders for Services................................. 18
15. Monthly Satellite Reports................................................ 18
15.01 Reports............................................................ 18
15.02 Anomalous Operation Notification................................... 18
15.03 Maneuver Notification.............................................. 19
16. Confidentiality and Press Releases....................................... 19
16.01 Confidential Information........................................... 19
16.02 Notice Proceeding; Compelled Disclosure............................ 19
16.03 Press Releases..................................................... 20
17. Disposition of Satellite................................................. 20
18. Documents................................................................ 20
19. Conflicts................................................................ 20
20. Miscellaneous............................................................ 20
20.01 Interest........................................................... 20
20.02 Applicable Law and Entire Agreement................................ 20
ii
20.03 Notices............................................................ 21
20.04 Severability....................................................... 23
20.05 Taxes.............................................................. 23
20.06 Successors......................................................... 23
20.07 Rules of Construction.............................................. 23
20.08 Survival of Representations and Warranties......................... 23
20.09 No Third-Party Beneficiaries....................................... 24
20.10 Non-Waiver of Breach............................................... 24
20.11 Amendments......................................................... 24
20.12 Counterparts....................................................... 24
EXHIBIT A Description of Transponders
EXHIBIT B Transponder Performance Specifications
EXHIBIT C Transponder Priority List
EXHIBIT D Payment Schedule
iii
GALAXY III-R TRANSPONDER SUBLEASE AGREEMENT
THIS GALAXY III-R TRANSPONDER SUBLEASE AGREEMENT (as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms set forth herein, this "Agreement") is made and entered into as of
April 21, 1997, by and between XXXXXX COMMUNICATIONS GALAXY, INC., a California
corporation ("HCG"), and CALIFORNIA BROADCAST CENTER, LLC, a Delaware limited
liability company ("Lessee").
RECITALS
A. HCG owns a communications satellite, model HS-601, known as Galaxy
III-R, which carries a payload of (i) twenty-four (24) Ku-Band
transponders (comprised of eight (8) wide-band (54 MHz) Ku-Band
Transponders and sixteen (16) narrow-band (27 MHz) Ku-Band
Transponders) (the Ku-Band Transponders are more specifically defined
in Section 1.05 and are referred to hereinafter as the "Transponders");
(ii) twenty-four (24) C-Band transponders (the "C-Band Transponders");
and (iii) certain redundant equipment.
B. Pursuant to authority granted by the Federal Communications Commission
(the "FCC"), HCG had the satellite known as Galaxy III-R launched on
December 14, 1995 and has caused such satellite to be placed in the
95(Degree) West Longitude orbital location.
C. On December 20, 1995, General Motors Acceptance Corporation ("GMAC")
purchased from HCG, and HCG sold to GMAC, the Transponders.
D. On February 7, 1996, HCG entered into the Participation Agreement (the
"Participation Agreement"), dated as of February 7, 1996, among HCG,
GMAC, Wilmington Trust Company, as Owner Trustee, Chemical Bank and
certain lending institutions, pursuant to which (i) GMAC sold the
Transponders to Owner Trustee and (ii) Owner Trustee, as lessor,
entered into a Lease of the Transponders (the "Main Lease") with HCG,
as lessee.
E. The Main Lease provides HCG with the rights necessary for it to enter
into this Agreement.
F. Certain of the Transponders are capable of providing signals to Mexico,
Central America, South America and the Caribbean (collectively, the
"Territory").
G. Lessee desires to sublease from HCG and HCG desires to sublease to
Lessee the Transponders upon the terms and conditions set forth in this
Agreement.
H. HCG and Lessee desire this Agreement to become effective as of April
21, 1997 (the "Effective Date").
AGREEMENT
In consideration of the mutual promises set forth below and other
valuable consideration the receipt and adequacy of which are hereby
acknowledged, HCG and Lessee hereby mutually agree as follows:
1
1. The Satellite
1.01 Satellite. HCG has constructed and launched the satellite which is
referred to hereinafter as "Galaxy III-R." The term "Satellite" shall mean the
satellite or satellites on which Lessee's Transponders (as defined in Section
2.01) are located at any given time.
1.02 Orbital Position. The orbital position of Galaxy III-R is 95(Degree)
West Longitude.
1.03 Certain Transponder-Related Definitions. As used in this Agreement,
(i) "Owner" shall include the actual owner of a Transponder, including HCG if
there remain any unsold Transponders, or any permitted assignee of such owner's
Transponder, or any lessee or licensee of HCG's (including, without limitation,
Lessee), or any entity to which HCG (or any affiliate of HCG) provides service
using the Transponders; (ii) the term "purchase" shall include the execution of
an agreement with HCG for a lease of Transponders for a term equal to at least
75% of the Satellite's useful commercial life; and (iii) "affiliate" shall mean,
with respect to any entity, any corporation or other entity controlling or
controlled by or under common control with such entity.
1.04 Hybrid Satellite. Galaxy III-R is a hybrid satellite (i.e., a
satellite containing both Ku-Band and C-Band capacity). Ownership or lease of
the Ku-Band capacity on Galaxy III-R shall not give the Owner or user the right
to use or preempt use of any part of the C-Band-specific payload on Galaxy
III-R. Ownership or lease of the C-Band Transponders shall not give an Owner the
right to use or preempt use of any Ku-Band-specific capacity on Galaxy III-R.
1.05 Transponders Components and Certain Specifications. Exhibit A to this
Agreement sets forth the specific equipment that comprises the Transponders.
Exhibit B to this Agreement sets forth the "Transponder Performance
Specifications," which are certain technical specifications for the
Transponders, including values for each Transponder for polarization isolation,
interference between Transponders, frequency response, group delay, amplitude
non-linearity, spurious outputs, phase shift, cross talk, stability, transmit
EIRP, uplink saturation flux density, and G/T. HCG shall make copies of the
antenna range gain contour test data available to Lessee promptly after the
tests related thereto are completed.
2. Lease of Transponders; Lease Term
2.01 Term. Unless otherwise terminated earlier in accordance with
this Agreement, including, without limitation, pursuant to Sections 5.03, 6.01,
10 or 17, this Agreement shall be for the following term (the "Term"):
(a) on and as of the Effective Date (the "Galaxy
III-R Lease Commencement Date"), HCG shall lease to Lessee, and Lessee
shall lease from HCG, all of the Transponders (each Transponder then
being leased to Lessee is a "Lessee Transponder" and, collectively,
such Transponders are the "Lessee's Transponders") for the period
commencing as set forth above and terminating on the earlier of the
date of Permanent Satellite Delivery (as defined in Section 2.01(b)) or
on the fifth (5th) anniversary of the Galaxy III-R Lease Commencement
Date;
(b) It is the intention of parties that Lessee use the Lessee's
Transponders only until a replacement satellite constructed solely for
use on a collocated basis at the 95(Degree) West Longitude orbital
position to transmit programming to the Territory (the "Permanent
Satellite") has been successfully constructed, launched and located in
such orbital position (or other orbital position
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to which it may be assigned by the FCC) (the "Permanent Satellite
Delivery"). Except as otherwise specified herein, this Agreement shall
automatically terminate upon the occurrence of Permanent Satellite
Delivery.
2.02 [***]
(a) HCG agrees that if (i) HCG terminates this Agreement,
desires to Transfer the Transponders to a third party or accelerates
remaining payments pursuant to Section 10.02 due to Lessee's breach or
default of the terms hereof; and (ii) [***].
(b) Nothing in this Section 2.02, [***], shall prevent HCG and
Lessee from modifying or amending this Agreement at any time or in any
manner (an "Amendment"); provided, however, that (i) [***].
2.03 Redelivery of Transponders. Subject to Section 2.02, upon the
expiration, termination, or cancellation of this Agreement as to any Lessee
Transponder for any reason whatsoever (including, without limitation, expiration
of this Agreement in accordance with its terms or cancellation of this Agreement
by HCG as a result of a breach by Lessee), such Lessee Transponder shall be
deemed, without any further action by any party, to be redelivered to HCG and
HCG shall be entitled to immediate possession thereof. HCG shall thereafter have
the right to utilize such redelivered Transponder in any manner it determines.
3. Lease Rate
3.01 Lease Price Components Description. The monthly lease rate for each
of Lessee's Transponders shall be the "Monthly Base Lease Rate" set forth in
Section 3.02 (which includes payment of [***] per month per Transponder for
tracking, telemetry and control service (the "TT&C Fee")). The services
described in Section 6.06 will be provided in consideration of the TT&C Fee.
3.02 Monthly Base Lease Rate. The Monthly Base Lease Rate for each of
Lessee's Transponders shall be [***] per month and, subject to the following
proviso, shall be due and payable in advance on the Galaxy III-R Lease
Commencement Date and the first day of each month thereafter through the last
day of the Term; provided, however, that the Monthly Base Lease Rate payments
shall be made in accordance with Exhibit D to this Agreement, [***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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[***]; provided further, however, if this Agreement is terminated, Lessee shall,
within 10 days after the termination of this Agreement, pay to HCG the
applicable amount set forth in [***] of Exhibit D, unless prior to the
termination of this Agreement Lessee has executed the lease between HCG and
Lessee with respect to the communications satellite, model HS-601 HP, known as
Galaxy VIII(i), in which case Lessee shall pay to HCG the applicable amount set
forth in [***] of Exhibit D [***], together with the interest on the unpaid
balance thereof at [***]. If one of Lessee's Transponders becomes a Failed
Transponder (as defined in Section 12.01), Lessee's rights and obligations to
continue making Monthly Base Lease Rate payments with respect to such Failed
Transponder shall be governed by Sections 12.01 and 12.03. Payments for any
partial month shall be pro-rated.
3.03 Place of Payment. All payments by Lessee (i) shall be made in
immediately available funds to HCG at its principal place of business, as
designated in Section 20.03, or by wire transfer to the account of HCG
designated by HCG pursuant to written notice given as set forth in Section 20.03
and (ii) shall be deemed to be made only upon actual receipt by HCG. Any refunds
by HCG (a) shall be made in immediately available funds to Lessee at its
principal place of business as designated in Section 20.03, or by wire transfer
to the account of Lessee designated by Lessee pursuant to written notice given
as set forth in Section 20.03 and (b) and shall be deemed to be made only upon
actual receipt by Lessee.
4. Conditions; Acceptance
4.01 Condition to Lessee's Right to Lease. A condition to HCG's obligation
to lease Lessee's Transponders to Lessee, and of Lessee's right to lease
Lessee's Transponder from HCG, shall be Lessee's timely payment, on or before
the Galaxy III-R Lease Commencement Date, of the Monthly Base Lease Rate for the
first month hereof.
4.02 Acceptance. HCG has tested each of Lessee's Transponders in
accordance with the acceptance test plan prepared by HCG prior to the launch of
Galaxy III-R, a copy of which has been provided to Lessee. Lessee agrees that
such tests indicate that Lessee's Transponders (i) have passed all tests set
forth in the aforementioned acceptance test plan, (ii) meet the Transponder
Performance Specifications and (iii) are available for service. Therefore,
acceptance of Lessee's Transponders by Lessee shall be deemed to occur on the
Effective Date.
5. Representations and Warranties
HCG and Lessee each, except as expressly indicated herein, represent
and warrant to, and agree with, the other that:
5.01 Authority, No Breach. It has the corporate or other organizational
right, power and authority to enter into, and perform its obligations under,
this Agreement. The execution, delivery and performance of this Agreement will
not result in the breach or non-performance of any agreements it has with third
parties.
5.02 Corporate Action. It has taken all requisite corporate or other
organizational action necessary to approve execution, delivery and performance
of this Agreement, and this Agreement constitutes a legally valid and binding
obligation upon itself in accordance with its terms.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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5.03 Consents. The fulfillment of its obligations hereunder will not
constitute a material violation of any existing applicable law, rule, regulation
or order of any governmental authority. Except as set forth in Section 6.01, all
material necessary or appropriate public or private consents, permissions,
agreements, licenses, or authorizations to which it or any Transponder or, in
the case of HCG, the Satellite may be subject have been or shall be obtained in
a timely manner; provided, however, that it shall be HCG's sole responsibility
to obtain any regulatory approvals needed to enable it to lease Transponders as
provided for in this Agreement, other than the regulatory approvals described in
Section 6.01(b) below. Notwithstanding the preceding sentence, HCG and Lessee
acknowledge that the transactions set forth in this Agreement may be challenged
before the FCC or a court of competent jurisdiction by other persons or entities
not parties hereto. In such event, HCG and Lessee agree that HCG shall use its
best efforts, and, at the reasonable request of HCG, Lessee shall use reasonable
efforts, before the FCC, and the courts if an appeal from an FCC order is taken,
to support HCG's right to lease and Lessee's right to lease the Transponders and
that they shall fully cooperate with each other in these endeavors. Lessee alone
shall have the right to determine whether and to whom it will incur legal
expenses in connection with any proceeding arising out of its obligations under
this Section 5.03. If, however, by written order, the FCC or a court of
competent jurisdiction shall determine that HCG may not lease to Lessee and
Lessee may not lease from HCG the Transponders on the terms and conditions set
forth herein, then HCG and Lessee shall seek immediate review of such order
before the FCC or an appellate court or shall, if possible, reconstitute the
transaction to comply with such order. If an appellate court issues a written
order, which is no longer subject to further judicial rehearing or review,
upholding the determination of the FCC or a court or competent jurisdiction that
HCG may not lease and Lessee may not lease the Transponders, then HCG and Lessee
shall, if possible, reconstitute the transaction as set out herein and, if they
are unable to do so, either party shall thereafter have the right to terminate
this Agreement (upon written notice to the other party) as set forth in Section
10.05, without liability to the other, except for obligations arising prior to
the date thereof.
5.04 Litigation. Except as described in Section 6.01(a), there is no
outstanding, or to the best of its knowledge, threatened, judgment, pending
litigation or proceeding, involving or affecting the transactions provided for
in this Agreement.
5.05 No Broker. It does not know of any broker, finder or intermediary
involved in connection with the negotiations and discussions incident to the
execution of this Agreement, or of any broker, finder or intermediary who might
be entitled to a fee or commission upon the consummation of the transactions
contemplated by this Agreement.
6. Additional Representations, Warranties and Obligations of HCG
6.01 Authorization Description.
(a) In 1992, the FCC authorized HCG to operate the Satellite at the
95(Degree) West Longitude orbital location and to use the Transponders to
provide fixed satellite services to the United States. In 1995, the FCC modified
that authority (the "Modified Authority") to allow the Transponders also to
provide fixed satellite service to Mexico, the Caribbean and Central and South
America. The Modified Authority is conditioned upon the results of a rulemaking
proceeding in which a decision has been issued by the FCC that is not yet a
Final Order (as defined in Section 10.05) because several parties have
petitioned the FCC for reconsideration. The Modified Authority may be modified
based on and after the conclusion of that proceeding if the decision in the
rulemaking is modified or further appealed.
5
(b) Certain authorizations from governmental bodies outside the
United States have not yet been obtained and will need to be obtained from such
governmental bodies prior to the provision of service utilizing the Transponders
to locations outside the United States and prior to uplinking to the
Transponders from locations outside of the United States.
(c) If the FCC [***], then this Agreement shall automatically
terminate at the election of either party (upon written notice to the other
party) and (i) HCG shall have no liability to Lessee, except for prepaid charges
made by Lessee (if any); and (ii) Lessee shall have no liability to HCG, except
for previously incurred obligations.
6.02 Transponder Performance Specifications. Lessee's Transponders,
upon Delivery, shall at least meet the Transponder Performance Specifications.
6.03 Right to Lease. On the Galaxy III-R Lease Commencement Date and
subject to Section 4.01, Lessee shall be entitled to lease each of Lessee's
Transponders free from all liens, charges, claims or encumbrances (collectively,
"Encumbrances"), except: (i) Encumbrances resulting from (a) Lessee's lease of
Lessee's Transponders; (b) any actions taken by Lessee; or (c) the right and
interest of any financing entity pursuant to the transactions entered into in
connection with the Participation Agreement; and (ii) Encumbrances which do not
have an adverse effect on Lessee's rights hereunder. Notwithstanding the
preceding sentence, for so long as this Agreement is in full force and effect
and for so long as Lessee is not in default under this Agreement, HCG shall not
assign (including as security) or otherwise grant any ownership interest in any
Transponders then being leased by Lessee pursuant to this Agreement without
securing the agreement of the party granted such an interest (the "Holder")
that, (y) provided Lessee is not in default under this Agreement, Lessee shall
lawfully and quietly hold and enjoy the benefits of this Agreement without
hindrance or molestation from HCG, Holder or any person claiming through or
under HCG or Holder, and (z) Holder shall not interfere with Lessee's use of any
of Lessee's Transponders in accordance with this Agreement notwithstanding any
default by HCG under its agreement with Holder providing for such an interest.
The parties agree that GLA is an intended third party beneficiary of this
Section 6.03.
6.04 Government Regulations. HCG has used, and until disposition of the
Satellite pursuant to Section 17 will continue to use, its reasonable best
efforts to obtain and maintain, in all material respects, all applicable United
States federal, state and municipal authorizations or permissions to operate the
Satellite, applicable to it and the Satellite, and to comply, in all material
respects, with all such regulations regarding the operation of the Satellite and
Transponders applicable to it.
6.05 Not a Common Carrier. Unless required to do so by the FCC, HCG shall
not hold itself out, publicly or privately, as a provider of common carrier
communications services on the Satellite and is not purporting herein to provide
to Lessee or to any other party any such services with respect to Galaxy III-R.
6.06 TT&C. Tracking, telemetry and control shall be provided by Xxxxxx
Communications Satellite Services, Inc. ("HCSS"), an affiliate of HCG, for the
Term pursuant to a separate "Transponder Service Agreement" which has been
executed by HCSS and Lessee concurrently herewith. The services provided by HCSS
pursuant to the Transponder Service Agreement are more specifically described in
such Transponder Service Agreement. The TT&C Fee for the Satellite is included
in the Monthly Base Lease Rate.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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6.07 Outage Allowance. HCG shall grant Lessee an Outage Allowance as
follows:
If an "Outage Allowance Failure Period" (as defined below) occurs, then
for each hour of such Outage Allowance Failure Period HCG shall grant Lessee a
pro rata Outage Allowance based upon the monthly charge for the Lessee's
Transponder experiencing the Transponder capacity failure, the length of the
Outage Allowance Failure Period, and a standard of 720 hours per month,
calculated pursuant to the equation below. Any such Outage Allowance shall be
applied to the next succeeding monthly billing to Lessee and shall not in any
case exceed one month's standard billing. "Outage Allowance Failure Period"
shall mean the aggregate period--only where such aggregation exceeds one (1)
hour during any consecutive thirty (30) day period on such Transponder--during
which a Transponder capacity failure(s) occurs. A Transponder capacity failure
shall be measured from the time HCG receives notice from Lessee of a claimed
Transponder capacity failure until the time the Transponder has been restored to
operation, but shall not begin in any event until Lessee ceases to use such
Transponder. HCG shall accept or reject such outage claim within twenty-four
(24) hours of notice from Lessee, or else such claim will be deemed accepted.
Outage Allowance Failure (in Hours)
x Monthly Base Lease Rate
Outage Allowance = _______________________________________
720
In no case shall an Outage Allowance be made for any Transponder capacity
failure caused primarily by: (i) any failure on the part of Lessee to perform
its transmission or other material or operational obligations pursuant to this
Agreement; (ii) failure of any facilities provided by Lessee; (iii) reasonable
periodic maintenance; provided, however, that HCG will inform Lessee of any
proposed periodic maintenance in advance and will use best reasonable efforts to
agree upon the times at which such periodic maintenance will be performed on
Lessee's Transponders; (iv) interference from sun outage or from third party
transmissions or usage; (v) cooperative testing, except where trouble or fault
is found in the Lessee's Transponder; or (vi) any other act or failure to act by
Lessee.
6.08 [***].
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
7
6.09 Insurance Provisions. [***]
6.10 [***].
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
8
[***].
6.11 [***].
7. Additional Representations, Warranties and Obligations of Lessee
7.01 Compliance by Customers. Lessee shall not allow any of its customers
or any other third party to utilize, directly or indirectly, any of the Lessee's
Transponders in a manner that would constitute a breach of the terms of this
Agreement had such use been by Lessee on its own behalf.
7.02 Non-Interference. Lessee's radio transmissions (and those of its
uplinking agents) to the Satellite shall comply in all material respects with
all FCC and all other governmental (whether international, federal, state,
municipal, of a Territory Country (as defined in Section 7.04) or otherwise)
statutes, laws, rules, regulations, ordinances, codes, directives and orders, of
any such governmental agency, body, or court (collectively, "Laws") applicable
to it regarding the operation of the Satellite and Lessee's Transponders. Lessee
shall not utilize (or permit or allow any of its uplinking agents to utilize)
any of Lessee's Transponders in a manner that will or may interfere with the use
of any other Transponder or C-Band Transponder or cause physical harm to any
Transponder, any C-Band Transponder, or to the Satellite. Further, Lessee will
coordinate (and will require its uplinking agents to coordinate) with HCG, in
accordance with procedures reasonably established by HCG and uniformly applied
to all users of transponders on the Satellite, its transmissions to the
Satellite, so as to minimize adjacent channel and adjacent satellite
interference. For purposes of this Section 7.02, interference shall also mean
acts or omissions which cause a Transponder to fail to meet its Transponder
Performance Specifications. Without limiting the generality of the foregoing,
Lessee (and its uplinking agents) shall comply with all FCC rules and
regulations regarding use of automatic transmitter identification systems
(ATIS).
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
9
7.03 Laws. Lessee shall comply (and shall require its uplinking agents to
comply), in all material respects, with all Laws applicable to it regarding the
operation or use of the Satellite and Lessee's Transponders.
7.04 Additional Usage Representations and Obligations.
(a) Lessee has not been convicted for the criminal violation of, and
has not been found by the FCC or other federal, state or local governmental
authority in the United States or by a Territory Country (as defined below)
with appropriate jurisdiction (a "Governmental Authority") to have violated,
any law or regulation concerning illegal or obscene program material or the
transmission thereof (the "Obscenity/Content Laws"), and Lessee is not aware
of any pending investigation (including, without limitation, a grand jury
investigation) involving Lessee's programming related to the
Obscenity/Content Laws or any pending proceeding against Lessee for the
violation of any Obscenity/Content Laws. As used herein, "Territory Country"
shall mean any country located in the Territory.
(b) Lessee will notify HCG as soon as it receives notification of, or
becomes aware of, any pending investigation by any Governmental Authority,
or any pending criminal proceeding against Lessee, which investigation or
proceeding concerns transmissions by Lessee over the Transponders
potentially in violation of any law, including without limitation,
Obscenity/Content Laws.
(c) Any use of Lessee's Transponders shall comply, in all material
respects, with all applicable laws of the United States and each Territory
Country regarding the operation or use of the Satellite and Lessee's
Transponders (including, but not limited to, any Obscenity/Content Laws).
8. Preemptive Rights
Lessee recognizes that it may be necessary in unusual or abnormal situations
or conditions for HCG deliberately to preempt or interrupt Lessee's use of its
Transponders, in order to protect the overall performance of the Satellite. Such
decisions shall be made by HCG in its sole discretion; provided, however, that,
to the extent it is technically feasible, HCG shall preempt or interrupt the use
of Transponders in the inverse order of their priority as set forth in Exhibit C
hereto. To the extent technically feasible, HCG shall give Lessee at least
forty-eight (48) hours' notice of such preemption or interruption and HCG shall
use its reasonable best efforts to schedule and conduct its activities during
periods of such preemption or interruption so as to minimize the disruption to
the use of Transponders on such Satellite. To the extent that such preemption
results in a loss to Lessee of the use of Lessee's Transponders sufficient to
constitute a breach of HCG's obligations as set forth in Section 12, Lessee
shall have all of the rights and remedies set forth in Sections 9 and 12.
9. Transponder Spares
9.01 Use of Transponder Spares. The Satellite contains certain Ku-Band
redundant equipment units (individually, a "Transponder Spare"), which are
designed as substitutes for equipment units the failure of which could cause a
Transponder to fail to meet the Transponder Performance Specifications. HCG, as
soon as possible and to the extent technically feasible, shall employ a
Transponder Spare in the Satellite as a substitute for Lessee's Transponder
equipment unit that has caused any Lessee Transponder to suffer a Confirmed
Failure (as defined in Section 12.02) in order to enable such Lessee Transponder
10
to meet the Transponder Performance Specifications. To the extent technically
feasible, a Transponder Spare will be substituted for the faulty equipment unit
on a first-needed, first-served basis to satisfy HCG's obligations to Lessee and
to other Owners or users of Transponders on the Satellite, if any, which have
suffered Confirmed Failures; provided, however, that HCG's obligations to
provide Transponder Spares shall continue until such time as all of the
Transponder Spares are committed to use as substitutes for Transponders which
have suffered Confirmed Failures. If HCG furnishes a Transponder Spare to Lessee
as a substitute for an equipment unit that has caused Lessee's Transponder to
suffer a Confirmed Failure, then such Transponder Spare shall become part of the
Transponder which is leased to Lessee hereunder, and Lessee, concurrently, shall
no longer have any right to lease or otherwise use the failed equipment unit.
Lessee's Transponder equipment unit which has been returned shall be made
available by HCG, to the extent technically feasible, to satisfy its obligations
to any other Owners of Transponders on the Satellite. HCG also shall have the
right, until the Transponder Spares are needed, to utilize such Transponder
Spares in any manner HCG determines.
9.02 Simultaneous Failure -- Priority with Respect to the Use of
Transponder Spares. If Transponders of more than one Owner simultaneously suffer
a Confirmed Failure, then the Owner of the Transponder with the highest priority
as set forth on Exhibit C, shall have priority as to the use of Transponder
Spares (provided, however, that Lessee shall have the right at any time from
time to time, by written notice to HCG, to change the priorities between and
among any of Lessee's Transponders), to the extent technically feasible. As used
in this Section 9.02, the term "simultaneously" shall be deemed to mean
occurring within any 24-hour period.
9.03 HCG's Ownership of Transponders. HCG may retain or acquire ownership
of any Transponders or any C-Band Transponders (any Transponders or C-Band
Transponders so retained or acquired by HCG being referred to herein as "HCG's
Transponders"). In such event, HCG shall have the same right to use HCG's
Transponders as any other Owner (taking into account such Owner's rights as set
forth in the relevant transponder purchase agreement, lease agreement or license
agreement) would have, including, without limitation, the right to utilize
Transponder Spares in the event HCG's Transponders do not meet the Transponder
Performance Specifications. HCG also shall have the right, but not the
obligation, to utilize HCG's Transponders to satisfy HCG's obligations (i) to
Lessee under this Agreement, or (ii) to any other Owners. HCG's priority under
the provisions of this Section 9 and other sections of this Agreement shall be
determined in accordance with Exhibit C.
10. Termination Rights
10.01 Termination by Lessee. Provided that Lessee is not in default of any
of its material obligations under the Agreement, Lessee shall have the right to
terminate its obligations under this Agreement upon delivery of written notice
to HCG at least thirty (30) days' prior to the effective date of such
termination, only if and when any of the following events shall have occurred:
(a) If, prior to the last day of the Term, all of Lessee's
Transponders on Galaxy III-R become Failed Transponders (as defined in
Section 12.01); provided that such failure does not result from a force
majeure condition (as set forth in Section 11.01, unless such force majeure
condition continues for longer than one (1) month and during such period all
of such Lessee's Transponders remain Failed Transponders); and
(b) If Lessee terminates its obligations as to Lessee's Transponders
as set forth in this Section 10.01 (the "Terminated Transponders"), then
Lessee shall be entitled to a full refund, without interest, of all lease
prepayments made, if any, for each such Terminated Transponder,
11
less any payments made by HCG to it on account of such Terminated Transponders
pursuant to other provisions of this Agreement, and Lessee and HCG shall have no
further obligations to each other as to each such Terminated Transponder, except
for (i) obligations arising with respect to such Terminated Transponder prior to
its becoming a Failed Transponder, and (ii) Lessee's obligation to pay [***] for
all periods prior to such termination.
10.02 Termination by HCG. Notwithstanding anything else set forth in this
Agreement and in addition to all other remedies HCG may have, HCG may
immediately terminate this Agreement and accelerate all remaining payments due
through the end of the Term if Lessee shall have failed to pay any amount due
and payable pursuant to the provisions of Section 3, and Lessee has been given
written notice by HCG of said failure (and the Chief Financial Officer and
General Counsel of GLA have been given a copy of such notice) and Lessee shall
have failed to pay the amount due and payable (and GLA has not assumed and
performed all of Lessee's obligations pursuant to a GLA Assumption as set forth
in Section 2.02 hereunder) within ten (10) business days after HCG has given
such notice to Lessee. Any late payments by Lessee to HCG shall be with interest
calculated at the rate set forth in Section 20.01, payable with the amount due
and calculated from the date payment was due until the date it is received by
HCG. HCG shall have the obligation to mitigate its damages in connection with
any breach by Lessee of this Agreement only to the extent mandated by the
internal laws of the State of California. As an indication only and not as a
limitation, HCG shall not have any obligation to remarket Lessee's Transponders
prior to leasing or selling all transponders on satellites either launched or
expected to be launched by HCG or any of its affiliates.
10.03 HCG's Right to Transfer. If, for any reason whatsoever, Lessee does
not make the payments in the amounts and on the dates set forth in Section 3 and
Lessee and GLA fails to cure such default as set forth in Section 10.02, then,
in addition to all of its other remedies at law or in equity, HCG shall be
entitled immediately to Transfer (as defined in Section 13) Lessee's
Transponders to whomever HCG sees fit, Lessee shall not be entitled to any
equitable relief as a result thereof, and Lessee's exclusive remedy shall be
limited to recovery of any payments made to it by HCG, without interest, less
any claim HCG has against Lessee by reason of Lessee's default.
10.04 Prompt Repayment. All refunds provided for in this Section 10 to be
made by HCG shall be made within fifteen (15) business days of receipt by HCG of
notice of termination by Lessee, and any late payment by HCG to Lessee shall be
with interest calculated at the rate set forth in Section 20.01, payable with
the amount due and calculated from the date payment was due until the date it is
received by Lessee.
10.05 Termination by Lessee or HCG. Notwithstanding anything else set forth
in this Agreement, either Lessee or HCG may terminate its obligations under this
Agreement as to the Lessee's Transponders, upon written notice to the other
party: (i) if the FCC shall have by Final Order (as defined below), prevented
HCG from using the Satellite or the Transponders to transmit to the Territory;
(ii) on the Satellite Removal Date (as defined in Section 17); or (iii) as
provided under the provisions of Section 5.03. As used herein, an order of the
FCC becomes a "Final Order" when the FCC's action is no longer subject to
administrative or judicial reconsideration, rehearing, review, stay, appeal or
other similar actions which could be filed with the FCC or with any court having
jurisdiction to review said action.
10.06 Right to Deny Access.
(a) If, in connection with using Lessee's Transponders,
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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(i) "User" (as defined below) is indicted or is otherwise charged
as a defendant in a criminal proceeding based upon, or is convicted
under, any Obscenity/Content Law or has been found by any Governmental
Authority to have violated any such law;
(ii) based on any User's use of the Transponders, HCG is indicted
or otherwise charged as a criminal defendant, becomes the subject of a
criminal proceeding or a governmental action seeking a fine, license
revocation or other sanctions, or any Governmental Authority seeks a
cease and desist or other similar order or filing;
(iii) the FCC has issued an order initiating a proceeding to
revoke HCG's authorization to operate the Satellite;
(iv) HCG obtains a court order pursuant to Section 10.06(c) or a
court or Governmental Authority of competent jurisdiction orders HCG to
deny access to User or orders User to cease transmission; or
(v) HCG receives written notice (the "Illegal Programming Notice")
from a Governmental Authority that such authority considers Lessee
and/or any other User's programming to be in violation of
Obscenity/Content Laws (the "Illegal Programming"), and that if HCG
does not cease transmitting such Illegal Programming, then HCG and/or
its affiliates and/or any of their executives will be indicted or
otherwise charged as a criminal defendant, will become the subject of a
criminal proceeding or a governmental action seeking a fine, license
revocation or other sanctions, or that such Governmental Authority will
seek a cease and desist or other similar order or filing (with HCG
being obligated, to the extent permitted by law, to provide Lessee with
a copy of such Illegal Programming Notice);
then, upon notice from HCG to Lessee (the "Denial of Access Notice"), User
shall cease using Lessee's Transponders immediately, in the case of a denial
of access pursuant to subparagraphs (i), (ii), (iii) or (iv) above, or
within 24 hours following receipt of such notice, in the case of a denial of
access pursuant to subparagraph (v), above; and if User does not voluntarily
cease using such capacity at the appropriate time, then HCG shall have the
right to take such steps as HCG deems necessary to prevent User from
accessing Lessee's Transponders. Provided, however, that if User has more
than one programming service, then the denial of access by HCG shall apply
only to the Transponders used to provide the Illegal Programming service;
and provided further, however, that if, upon receipt of the Denial of Access
Notice from HCG, User does not immediately cease transmission of such
Illegal Programming service, then HCG shall have the right to take such
steps as HCG deems necessary to prevent User from accessing the Transponders
used to transmit such Illegal Programming service (and if, thereafter,
Lessee transmits such Illegal Programming service using any of Lessee's
Transponders, then HCG shall have the immediate right, without further
notification, to take such steps as HCG deems necessary to prevent Lessee
from accessing any Lessee's Transponder). As used herein, "User" shall mean
Lessee and any person to whom Lessee Transfers all or part of its right to
use any of Lessee's Transponders, including without limitation, a lessee,
licensee or assignee. Lessee agrees to maintain a properly operating
facsimile machine at all times to receive the Denial of Access Notice from
HCG.
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(b) If HCG denies, or has given Lessee notice of its intent to deny,
access to Lessee's Transponders pursuant to the provisions of this Section
10.06, and if Lessee does not believe the conditions set forth in this
Agreement to HCG's denial of access have been met, then Lessee shall have
the immediate right to seek injunctive relief, including a temporary
restraining order on notice of four (4) hours or more to HCG, to prevent the
denial or continuing denial of such access by HCG.
(c) HCG shall also have the right to seek: (i) injunctive relief,
including a temporary restraining order on notice of four (4) hours or more
to Lessee, to prevent, suspend or otherwise limit User's continued access to
Lessee's Transponders where HCG believes such use has resulted or will
result in a violation of any Obscenity/Content Law; or (ii) declaratory
relief to establish its right to deny User's access to Lessee's Transponders
under this Agreement.
(d) Either party shall be entitled to oppose the other's attempt to
obtain equitable relief. However, in order to enable either party to obtain
a resolution of any such dispute as expeditiously as possible, both parties
hereby agree that: (i) neither party will contest the jurisdiction of, or
the venue of, any action for equitable relief brought by the other party in
the following courts: the U.S. District Court for the Southern District of
New York and the U.S. District Court for the Central District of California;
(ii) the party opposing equitable relief (the "Opposing Party") will make
itself available to accept service by telecopy or personal delivery on a 24
hour-a-day basis for five (5) consecutive days following receipt by the
Opposing Party of the other party's notice of its intent to seek such
equitable relief; and (iii) if either party seeks a temporary restraining
order and provides notice to the Opposing Party at least four (4) hours
before the scheduled court hearing, then the Opposing Party will not
challenge the timeliness of such notice.
(e) If it is determined by final judicial order that HCG prevented
Lessee from accessing any or all of Lessee's Transponders at a time when it
did not have the right to do so pursuant to this Section 10.06, then
Lessee's sole and exclusive remedy shall be HCG's payment to Lessee of
liquidated damages equal to [***] for the terminated capacity, such
pro-ration to be based on the period of time of loss of use of such
capacity.
(f) All remedies of HCG set forth in this Section 10.06 shall be
cumulative and in addition to, and not in lieu of, any other remedies
available to HCG at law, in equity or otherwise, and may be enforced by HCG
concurrently or from time to time.
(g) In addition to any other indemnification obligations found
elsewhere in this Agreement, Lessee shall indemnify and save HCG, its
directors, officers, employees, and its affiliates from any liability or
expense arising out of or related to User's use of Lessee's Transponders in
violation (or alleged violation) of this Section 10.06. Lessee shall pay all
expenses (including reasonable attorneys' fees) incurred by HCG in
connection with all legal or other formal or informal proceedings,
instituted by any private third party or any Governmental Authority, and
arising out of or related to User's use of Lessee's Transponders under this
Section 10.06, and Lessee shall satisfy all judgments, fines, penalties,
costs, or other awards which may be incurred by or rendered against HCG as a
result thereof, as and to the extent permitted by law.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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11. Force Majeure
11.01 Failure of Performance. Any failure in the performance of the
Transponders, once provided, shall not be a breach of this Agreement if such
failure results from acts of God, governmental action or Law (whether in its
sovereign or contractual capacity) or any other circumstances reasonably beyond
the control of HCG, including, but not limited to, earth station sun outage,
weather, or acts or omissions of Lessee or any third parties (excluding Xxxxxx
Telecommunications & Space Company ("HTSC") and all of its direct and indirect
subsidiaries, and any other affiliates of HCG or HTSC with whom HCG or HTSC
contracts for any components of the Satellite or any services with respect
thereto). Nothing in this Section 11.01 shall excuse HCG's obligations to
provide Transponder Spares, to the extent available and technically feasible, to
satisfy its obligations as set forth in Section 9.
12. Limitation of Liability/Breach of Warranty
12.01 Liability of HCG. If (i) after the Galaxy III-R Lease Commencement
Date, a Lessee Transponder fails to meet the Transponder Performance
Specifications prior to the last day of the Term, (ii) such failure is deemed to
be a Confirmed Failure, and (iii) HCG is unable to furnish the necessary
Transponder Spare as a substitute for the Lessee Transponder pursuant to Section
9, then such Transponder shall be deemed to be a "Failed Transponder," then,
notwithstanding the fact that such failure of the Lessee's Transponder is
excused by an event set forth in Section 11.01, Lessee shall be entitled to
cease making the Monthly Base Lease Rate payments as to such Failed Transponder
for so long as the event set forth in Section 11.01 continues.
12.02 Confirmed Failure. A Lessee Transponder shall be deemed to have
suffered a "Confirmed Failure" if (a) it fails to meet the Transponder
Performance Specifications for a cumulative period of more than [***] during any
consecutive [***] period, (b) [***] or more "outage units" (as defined below)
occur within a consecutive [***] period, or (c) it fails to meet the Transponder
Performance Specifications for any period of time under circumstances that make
it clearly ascertainable or predictable technically that the failure set forth
in either (a) or (b) of this Section 12.02 will occur. An "outage unit" shall
mean the failure of Lessee's Transponders to meet the Transponder Performance
Specifications for a [***] period in one day (with each such [***] period in the
same day constituting a separate outage unit). As used herein, the term "day"
shall mean a 24-hour period of time commencing on 12:00 Midnight Eastern Time.
Lessee shall give HCG immediate notification of any such failure, as soon after
commencement of any such failure as is reasonably possible, and of the relevant
facts concerning such failure. Upon HCG's verification that Lessee's
Transponders have suffered a Confirmed Failure, such failure shall be deemed to
have commenced upon receipt by HCG of notification from Lessee, or HCG's actual
knowledge, whichever first occurs, of the Confirmed Failure. If HCG has actual
knowledge that one of Lessee's Transponders has suffered a failure which is
certain to become a Confirmed Failure with the passage of time, then HCG shall
so notify Lessee and such Lessee Transponder shall be deemed to have suffered a
Confirmed Failure upon such notification.
12.03 Repayment for Failed Transponder. For each Lessee Transponder that
has become a Failed Transponder, for which Lessee is entitled to cease making
Monthly Base Lease Rate payments, and for which Lessee has ceased making Monthly
Base Lease Rate payments, Lessee shall be entitled to a refund equal to the
product of a fraction, the numerator of which is the number of days from the
date of such failure until the end of the calendar month in which such failure
occurred and the denominator of which is the total number of days in the
calendar month in which such failure occurred, multiplied by the Monthly Base
Lease Rate actually paid by Lessee for such Transponders for the calendar month
in
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
15
which such failure occurred. HCG may offset against any refund due to Lessee
pursuant to this Section 12.03 any amounts due from Lessee to HCG under this
Agreement (including, without limitation, any [***]. In addition, if the
performance of a Lessee Transponder is such that, while it fails to meet the
Transponder Performance Specifications, its performance is nonetheless of some
value to Lessee, then prior to accepting repayment calculated as aforesaid,
Lessee shall have the right to negotiate with HCG to determine if there is a
mutually agreeable reduced lease rate upon which Lessee is willing to continue
leasing such Transponder.
12.04 Limitation of Liability.
(a) ANY AND ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING, BUT NOT
LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE OR USE,
ARE EXPRESSLY EXCLUDED AND DISCLAIMED EXCEPT TO THE EXTENT SPECIFICALLY AND
EXPRESSLY PROVIDED FOR IN SECTION 6.02. IT EXPRESSLY IS AGREED THAT HCG'S
SOLE OBLIGATIONS AND LIABILITIES RESULTING FROM A BREACH OF THIS AGREEMENT,
AND LESSEE'S EXCLUSIVE REMEDIES FOR ANY CAUSE WHATSOEVER (INCLUDING, WITHOUT
LIMITATION, LIABILITY ARISING FROM NEGLIGENCE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY, ARE LIMITED TO
THOSE SET FORTH IN SECTIONS 9, 10 AND 12, HEREOF, AND ALL OTHER REMEDIES OF
ANY KIND ARE EXPRESSLY EXCLUDED, INCLUDING, WITHOUT LIMITATION, ALL RIGHTS
AND REMEDIES OF LESSEE UNDER DIVISION 10, CHAPTER 5, ARTICLE 2 AND SECTIONS
10209, 10406 AND 10504 OF THE CALIFORNIA UNIFORM COMMERCIAL CODE.
(b) IN NO EVENT SHALL HCG BE LIABLE FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING BUT, NOT LIMITED TO, LOST PROFITS), WHETHER
FORESEEABLE OR NOT, OCCASIONED BY ANY DEFECT IN THE TRANSPONDERS, DELAY IN
DELIVERY OR PROVISION OF THE TRANSPONDERS, FAILURE OF THE TRANSPONDERS TO
PERFORM OR ANY OTHER CAUSE WHATSOEVER. HCG MAKES NO WARRANTY, EXPRESS OR
IMPLIED, TO ANY OTHER PERSON OR ENTITY CONCERNING THE TRANSPONDERS OR THE
SATELLITES AND LESSEE SHALL DEFEND AND INDEMNIFY HCG FROM ANY CLAIMS MADE
UNDER ANY WARRANTY OR REPRESENTATION BY LESSEE TO ANY THIRD PARTY. THE
LIMITATIONS OF LIABILITY SET FORTH HEREIN SHALL ALSO APPLY TO HCSS, THE
XXXXXX AIRCRAFT COMPANY (THE MANUFACTURER OF THE SATELLITE AND TRANSPONDERS)
AND ALL AFFILIATES THEREOF.
(c) Lessee shall indemnify and save HCG harmless from all liability
disclaimed by HCG, as specified in Sections 12.04(a) and (b) above, to the
extent such liability arises in connection with the Services provided
pursuant to this Agreement, including, without limitation, Lessee's
violation or alleged violation of any Laws (including without limitation,
any Obscenity/Content Laws). Lessee shall pay all expenses (including
attorneys' fees) incurred by HCG in connection with all legal or other
formal or informal proceedings concerning claims of third parties described
in the preceding sentence, and Lessee shall satisfy all judgments, costs, or
other awards which may be incurred by or rendered against HCG in such
proceeding. Lessee shall have the right to defend any legal or other formal
or informal proceedings concerning claims of third parties; provided,
however, that Lessee shall conduct such defense with legal counsel
reasonably satisfactory to HCG. Lessee shall pay any settlement of any such
claim or legal or
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
16
other formal or informal proceeding, but Lessee shall not agree to any
settlement of any third party claim without first giving thirty (30) days
prior written notice of the terms and conditions of such settlement to HCG
and obtaining HCG's written consent to such settlement, which consent shall
not be unreasonably withheld or delayed.
(d) Notwithstanding the limitations of the second sentence of Section
12.04(a), Lessee and HCG each shall have the right to obtain injunctive
relief, if necessary, in order to prevent the other party from willfully
breaching its obligations under this Agreement or to compel the other party
to perform its obligations under this Agreement. In this regard, both
parties acknowledge and agree that Lessee's Transponders to be provided
hereunder are unique and not readily available on the open market and that,
if Lessee's Transponders are not available to Lessee because the terms of
the Agreement are not fulfilled through no fault of Lessee and for reasons
attributable to a breach of this Agreement by HCG, then Lessee's remedies at
law would not be adequate. The parties further acknowledge and agree that if
Lessee breaches the terms of this Agreement, then HCG's remedies at law
would not be adequate.
(e) [***]. For purposes of this Agreement, [***].
12.05 Obligations of Lessee to Cooperate. If any of Lessee's Transponders
fail to meet the Transponder Performance Specifications, then Lessee shall use
reasonable efforts to cooperate and aid HCG in curing such failure; provided
that such efforts can be done at minimal or no cost to Lessee.
(a) These obligations of Lessee shall include, but not be limited
to, the following:
(i) If there is a problem which can be compensated for by
increasing the power of its transmission to Lessee's Transponders,
then Lessee shall do so, at HCG's cost and expense, to the extent it
can with existing equipment; provided, however, that HCG shall not be
able to require Lessee to increase the power of its transmission if,
by doing so, it would cause interference with other Transponders on
the Satellite which is prohibited by Section 7.02 of this Agreement,
or interference with any other satellite; and
(ii) Permitting HCG, at HCG's cost and expense, to upgrade
Lessee's equipment; provided that Lessee shall be entitled to select
and install such equipment and determine its configuration in
accordance with its own existing operating procedures and technical
requirements, and in accordance with applicable laws and regulations.
(b) HCG shall give notice to Lessee if and when it requires the
increase of power of the transmission of any other Owner pursuant to such
Owner's obligation equivalent to this Section 12.05. HCG shall also give
notice to Lessee when it acquires knowledge of any other
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
17
Transponder user uplinking at power levels which might cause interference
with Lessee's Transponders. If, after such increase in power, any of
Lessee's Transponders no longer meet its Transponder Performance
Specifications, HCG shall promptly take steps to reduce interference, if
any, prohibited by Section 7.02.
(c) Lessee's priority for the use of Transponder Spares under Section
9 shall be determined at the time that any of its Transponders would
otherwise have become a Failed Transponder without Lessee's cooperation
under this Section 12.05. Regardless of Lessee's cooperation under this
Section 12.05, Lessee shall have the right to exercise its right to the use
of a Transponder Spare to which it would have been entitled at the time that
Lessee's Transponder was initially determined to have failed had Lessee not
taken such action.
13. Limitations on Transfer by Lessee
Except as specifically provided for in this Agreement, neither Lessee nor
HCG shall assign or otherwise Transfer (as defined below) its rights under this
Agreement except with the written consent of the other, which consent may be
given or withheld in such party's sole and absolute discretion, except that HCG
shall have the right to assign any or all of its rights or obligations hereunder
to any affiliate of HCG or its parent corporation, Xxxxxx Electronics
Corporation; provided, however, that the affiliate to which the HCG's
obligations are assigned shall have the technical capability to perform such
obligations. Lessee shall not be permitted to Transfer any of its rights under
this Agreement to the Lessee's Transponders to any third party except as
otherwise specified in this Agreement or with the written consent of HCG, which
consent may be given or withheld in HCG's sole and absolute discretion;
provided, however, that Lessee shall have the right to assign its rights
hereunder to GLA (or its successor in interest conducting the direct-to-home
business currently conducted by GLA) without HCG's consent provided that GLA
agrees to be bound by this Agreement as if the original Lessee hereunder.
"Transfer" shall mean to grant, sell, assign, encumber, permit the utilization
of, license, lease, sublease or otherwise convey, directly or indirectly, in
whole or in part.
14. Utilization of Transponders for Services
HCG acknowledges that Lessee may utilize the Transponders to provide
services to third parties, including, without limitation, to GLA. HCG further
acknowledges that as long as such utilization does not conflict with any of the
other provisions of this Agreement, such utilization shall not constitute a
Transfer.
15. Monthly Satellite Reports
15.01 Reports. Lessee shall receive monthly reports on the overall
performance of Galaxy III-R in the form of the Galaxy satellite status reports
similar to the Galaxy VII satellite services monthly report, plus information
furnished to insurers.
15.02 Anomalous Operation Notification. HCG shall notify Lessee as
soon as possible by telephone, with prompt written confirmation thereafter, of
any significant anomalous condition of which it has been informed by HCSS has
been detected in the Transponders or associated Satellite supporting subsystems
and which have a material effect or potential material effect on the Satellite.
HCG shall also notify Lessee promptly of any circumstances that make it clearly
ascertainable or predictable that any of the incidents described in this Section
15.02 will occur.
18
15.03 Maneuver Notification. To the extent operationally feasible, HCG
shall notify Lessee of all Satellite maneuvers, except for routine
station-keeping, at least three (3) days in advance of their scheduled
initiation and, if such maneuver will result in a change of the Satellite's
assigned orbital position, promptly following HCG's receipt of FCC authorization
or direction of such maneuver.
16. Confidentiality and Press Releases
16.01 Confidential Information. HCG and Lessee shall hold in confidence
this Agreement and all its Exhibits, including the financial terms and
provisions hereof and all information received pursuant to this Agreement,
including, without limitation, Section 15, and all other information related to
this Agreement not otherwise known to the public (collectively, "Confidential
Information"), and HCG and Lessee hereby acknowledge and agree that the
Confidential Information is confidential and proprietary and is not to be
disclosed to third persons without the prior written consent of both HCG and
Lessee. Neither HCG, nor Lessee, shall disclose such Confidential Information to
any third party (other than to officers, directors, employees and agents of HCG,
Lessee or GLA, each of whom shall be bound by this Section 16.01) except:
(a) to the extent necessary to comply with applicable law or the
valid order of a governmental agency or court of competent jurisdiction, or
to satisfy its obligations to other Owners of Transponders; provided,
however, that the party making such disclosure shall seek confidential
treatment of said information;
(b) as part of its normal reporting or review procedure to regulatory
agencies, its parent company, its auditors and its attorneys; provided, that
the party making such disclosure to any such regulatory agency shall seek
confidential treatment of such information; and, provided, further, that any
other third party to whom disclosure is made agrees to the confidential
treatment of such information;
(c) in order to enforce its rights and perform its obligations
pursuant to this Agreement;
(d) to the extent necessary to obtain appropriate insurance, to its
insurance agent; provided that such agent agrees to the confidential
treatment of such information; and
(e) to the extent necessary to negotiate clauses that will be common
to all transponder lease agreements.
16.02 Notice Proceeding; Compelled Disclosure. In the event that either
party is requested (the "Disclosing Party") pursuant to, or becomes compelled
by, applicable law, regulation or legal process to disclose any Confidential
Information, the Disclosing Party will provide the other party with prompt
written notice so that the other party may seek a protective order or other
appropriate remedy or, in the other party's sole discretion, waive compliance
with the terms of this Agreement. In the event that no such protective order or
other remedy is obtained, or that the other party waives compliance with the
terms of this Agreement, the Disclosing Party will furnish only that portion of
the Confidential Information which the Disclosing Party is advised by counsel is
legally required and cooperate, at the other party's sole cost and expense, with
the other party's efforts to obtain reliable assurance that confidential
treatment will be accorded the Confidential Information.
19
16.03 Press Releases. The parties agree that no press release
relating to this Agreement shall be issued without the approval of both
parties.
17. Disposition of Satellite
At the earlier of the time as (i) the remaining fuel on board Galaxy III-R
is less than [***] prior to launch, including uncertainty in estimate of fuel,
as determined by HCG in its sole discretion; (ii) there are fewer than [***]
Transponders or [***] C-Band Transponders capable of meeting their respective
Transponder Performance Specifications; or (iii) [***], HCG, in its sole
discretion, may remove the Satellite from its assigned orbital location;
provided, however, that, unless HCG is required to do so by the FCC, HCG may not
remove the Satellite due to the failure of C-Band Transponders to meet their
Transponder Performance Specifications unless HCG has Ku-Band transponder
capacity equivalent to that of Lessee's Transponders available to be placed into
the Satellite's assigned orbital location. In such event, this Agreement shall
terminate, HCG shall have no further obligations to Lessee under this Agreement,
and Lessee's Transponders shall be deemed, without any further action by any
party, to be redelivered to HCG and HCG shall be entitled to immediate
possession thereof and HCG, in its sole discretion, may remove the Satellite
from its assigned orbital location. HCG shall thereafter have the right to
utilize such redelivered Transponders in any manner it determines. HCG will, to
the extent practicable, provide Lessee with ninety (90) days notice prior to the
disposition of Galaxy III-R pursuant to this Section 17. Notwithstanding the
foregoing, until HCG so removes Galaxy III-R or this Agreement is terminated or
expires in accordance with its provisions, HCG shall continue to make available
to Lessee the Lessee Transponders and Transponder Spares (subject to the
priority provisions contained herein) the use of Transponders and Transponder
Spares on the Satellite on operational and payment terms no less favorable than
HCG has offered to other lessees at such time. The "Satellite Removal Date"
shall mean the date on which HCG removes the Satellite from its assigned orbital
location in accordance with this Section 17.
18. Documents
Each party hereto agrees to execute and, if necessary, to file with the
appropriate governmental entities, such documents as the other party hereto
shall reasonably request in order to carry out the purpose of this Agreement.
19. Conflicts
In the case of a conflict between the provisions of this Agreement and any
Exhibit, the provisions of this Agreement will prevail.
20. Miscellaneous
20.01 Interest. The rate of interest referred to herein shall be equal to
the lower of (i) the rate per annum equal to [***] or (ii) the highest legally
permissible rate of interest. All interest or discounting shall be compounded on
a yearly basis. "Pro rata" shall mean an allocation on a straight line basis
based on number of days. All present value analyses shall use an annual discount
rate equal to the interest rate on the applicable date.
20.02 Applicable Law and Entire Agreement. The existence, validity,
construction, operation and effect of this Agreement and the Exhibits hereto
shall be determined in accordance with and be
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
20
governed by the laws of the State of California, without reference to the
conflicts of laws principles thereof. This Agreement and the Exhibits hereto,
along with the Transponder Service Agreement dated as of April 21, 1997,
constitutes the entire agreement between the parties, and supersedes all
previous understandings, commitments or representations concerning the subject
matter hereof. The parties each acknowledge that the other party has not made
any representations other than those which are contained herein.
20.03 Notices. All notices and other communications from either party to
the other hereunder (or copies of any such notices or other communications to be
delivered to GLA, the delivery of which (or failure to deliver) shall not
affect, in any manner, notice by or to either of the parties hereto) shall be in
writing and shall be deemed received upon actual receipt when personally
delivered, upon acknowledgement of receipt (electronically or otherwise) if sent
by facsimile or upon the expiration of the third business day after being
deposited in the United States mails, postage prepaid, certified or registered
mail, addressed to the other party as follows:
TO HCG:
If by mail: Xxxxxx Communications Galaxy, Inc.
Xxxx Xxxxxx Xxx 0000
Xxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Senior Vice President --
Galaxy Satellite Services
cc: Associate General Counsel
If by FAX: Xxxxxx Communications Galaxy, Inc.
Attention: Senior Vice President --
Galaxy Satellite Services
(000) 000-0000
cc: Associate General Counsel
(000) 000-0000
If by personal
delivery to its
principal place
of business at: Xxxxxx Communications Galaxy, Inc.
0000 Xxxxxx Xxx
Xxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Senior Vice President --
Galaxy Satellite Services
cc: Associate General Counsel
TO LESSEE:
If by mail: California Broadcast Center, LLC
c/o DIRECTV International, Inc.
0000 X. Xxxxxxxx Xxx.
Xxxx. X0, M/S X000
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
21
If by FAX: California Broadcast Center, LLC
c/o DIRECTV International, Inc.
Attention: General Counsel
(000) 000-0000
If by personal
delivery to its
principal place
of business at: California Broadcast Center, LLC
c/o DIRECTV International, Inc.
0000 X. Xxxxxxxx Xxx.
Xxxx. X0, M/S X000
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
TO GLA:
If by mail: Despacho de Especialistas en Abogacia, S.A.
P.O. Box 1884-1000
De la Casa Italia, 100 metros al este y 50
al norte
Numero 000
Xxx Xxxx, Xxxxx Xxxx
Attn: Lic. Xxxx Xxxxx Xxxx
If by FAX: (+) 000-000-0000
Attn: Lic. Xxxx Xxxxx Xxxx
If by personal
delivery to its
principal place of
business at: Despacho de Especialistas en Abogacia, S.A.
P.O. Box 1884-1000
De la Casa Italia, 100 metros al este y 50
al norte
Numero 000
Xxx Xxxx, Xxxxx Xxxx
Attn: Lic. Xxxx Xxxxx Xxxx
with a copy to:
If by mail: Galaxy Latin America, LLC
0000 Xxxx Xxxxxxxxxx Xxxx.
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
If by FAX: Galaxy Latin America, LLC
Attn: Xxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
22
If by personal
delivery to: Galaxy Latin America, LLC
0000 Xxxx Xxxxxxxxxx Xxxx.
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
All payments to be made under this Agreement, if made by mail, shall be deemed
to have been made on the date of receipt thereof. The parties hereto may change
their addresses by giving notice thereof in conformity with this Section 20.03.
20.04 Severability. Nothing contained in this Agreement shall be construed
so as to require the commission of any act contrary to law, and wherever there
is any conflict between any provision of this Agreement and any statute, law,
ordinance, order or regulation, such statute, law, ordinance, order or
regulation shall prevail; provided, however, that in such event the provisions
of this Agreement so affected shall be curtailed and limited only to the extent
necessary to permit compliance with the minimum legal requirement, and no other
provisions of this Agreement shall be affected thereby and all such other
provisions shall continue in full force and effect.
20.05 Taxes. If any property or sales taxes are asserted against HCG after,
or as a result of, Delivery, by any local, state, national or international,
public or quasi-public governmental entity, in respect of Lessee's Transponders
or the lease thereof to Lessee, Lessee shall be solely responsible for such
taxes. At Lessee's expense, HCG shall cooperate with Lessee in contesting in
good faith any such taxes. If any taxes, charges or other levies are asserted by
reason of the use of the point in space or the frequency spectrum at that point
in space in which the Satellite containing Lessee's Transponders are located, or
the use or ownership of such Satellite (excluding any FCC license fee imposed on
the Satellite itself, as compared to the Transponders, which license fee shall
be paid by HCG), and such taxes are not specifically allocated among the various
components of such Satellite, then HCG, Lessee and any other Owners of such
transponders shall each pay a proportionate amount of such taxes based on the
number of transponders each of them owns or leases.
20.06 Successors. Subject to Section 13, this Agreement shall be binding on
and shall inure to the benefit of any successors and assigns of the parties;
provided that no Transfer of this Agreement shall relieve either party hereto of
its obligations to the other party. Any purported Transfer by either party not
in compliance with the provisions of this Agreement shall be null and void and
of no force and effect.
20.07 Rules of Construction. Any ambiguities shall be resolved without
reference to which party may have drafted this Agreement. All Article or Section
titles or captions contained in this Agreement are for convenience only, and
they shall not be deemed part of this Agreement and in no way define, limit,
extend or describe the scope or limit of any provisions hereof. Unless the
context otherwise requires: (i) a term has the meaning assigned to it; (ii) "or"
is not exclusive; (iii) words in the singular include the plural, and words in
the plural include the singular; (iv) provisions apply to successive events and
transactions; (v) "herein," "hereof" and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision; (vi) all references to "Sections" refer to Sections of this
Agreement unless otherwise specifically indicated; and (vii) any pronoun used in
this Agreement shall include the corresponding masculine, feminine and neuter
forms.
20.08 Survival of Representations and Warranties. All representations and
warranties contained herein or made by HCG or Lessee in connection herewith
shall survive any independent investigation made by HCG or Lessee.
23
20.09 No Third-Party Beneficiaries. The provisions of this Agreement are for
the benefit only of the parties hereto, and no third party may seek to enforce,
or benefit from, these provisions, except that both parties acknowledge and
agree that the provisions of Sections 7.02, 8, 9.01 and 9.02 are intended for
the benefit of both HCG and all other Owners. Both parties agree that any other
such Owner shall have the right to enforce, as a third-party beneficiary, the
provisions of Sections 7.02, 8, 9.01 and 9.02, against Lessee directly, in an
action brought solely by such other Owner, or may join with HCG or any other
Owner, in bringing an action against Lessee for violation of such Sections.
Notwithstanding the preceding sentence, both parties agree that the provisions
of [***]. In addition, if (i) HCG ceases to provide to Lessee use of the
Lessee's Transponders in breach of the terms of this Agreement, (ii) Lessee is
not in breach of its obligations under this Agreement and (iii) Lessee has
refused to take any action to attempt to restore its use of the Lessee's
Transponders, then [***].
20.10 Non-Waiver of Breach. Either party hereto may specifically waive any
breach of this Agreement by the other party, provided that no such waiver shall
be binding or effective unless in writing and no such waiver shall constitute a
continuing waiver of similar or other breaches. A waiving party, at any time,
and upon notice given in writing to the breaching party, may direct future
compliance with the waived term or terms of this Agreement, in which event the
breaching party shall comply as directed from such time forward.
20.11 Amendments. This Agreement may not be amended or modified in any way,
and none of its provisions may be waived, except by a writing signed by an
authorized officer of the party against whom the amendment, modification or
waiver is sought to been enforced.
20.12 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and all such counterparts together
shall constitute but one and the same instrument.
(signature page follows)
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
24
IN WITNESS WHEREOF, each of the parties hereto has duly
executed and delivered this Agreement as of the day and year first written
above.
XXXXXX COMMUNICATIONS GALAXY, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
CALIFORNIA BROADCAST CENTER, LLC
By: DTVI One, Inc., its Managing Member
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
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