SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q/A
(MARK ONE)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____________ to ___________
Commission File No. 0-22531
PanAmSat Corporation*
(Exact Name of Registrant as Specified in its Charter)
Delaware 95-4607698
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
One Pickwick Plaza, Greenwich, CT. 06830
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: 203-622-6664
-----------------------------------------------------------------
(Former Name, Former Address and Former
Fiscal Year if Changed Since Last Report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X** NO
As of June 30, 1997, an aggregate of 149,122,807 shares of the Company's Common
Stock were outstanding.
* PanAmSat Corporation ("PanAmSat" or the "Company") is the parent
corporation of PanAmSat International Systems, Inc. ("Old
PanAmSat")(Commission File No. 0-26712; IRS Employer Identification No.
06-1407851), which was known as "PanAmSat Corporation" until May 16, 1997,
when it became a wholly owned subsidiary of PanAmSat as a consequence of the
combination of Old PanAmSat and the commercial satellite business of Hughes
Communications, Inc. (the "Galaxy Business"), as more fully described
herein. The Company has applied the purchase method of accounting to the
transaction with the Galaxy Business as the acquiror.
** PanAmSat became subject to the reporting requirements of the Securities
Exchange Act of 1934 on May 6, 1997, upon the effectiveness of its
Registration Statement on Form 8-A, and has filed all reports required to be
filed since that date.
<PAGE>
EXPLANATORY NOTE
THIS 10-Q/A IS BEING FILED BY THE COMPANY TO AMEND THE FINANCIAL STATEMENTS
TO REFLECT DIVIDENDS ON PREFERRED STOCK OF ITS WHOLLY-OWNED SUBSIDIARY AS
MINORITY INTEREST. THE 10-Q REMAINS UNCHANGED IN ALL OTHER MATERIAL RESPECTS.
PanAmSat Corporation
For the Quarter Ended June 30, 1997
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Consolidated Balance Sheets, June 30, 1997 (unaudited) and December 31, 1996.
Consolidated Statements of Operations for the Six Months Ended June 30, 1997 and
1996(unaudited).
Consolidated Statements of Operations for the Three Months Ended June 30, 1997
and 1996 (unaudited).
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1997 and
1996 (unaudited).
Notes to Consolidated Financial Statements.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II - OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K
Signature
Cautionary Statement For Purposes Of The "Safe Harbor"
Provisions Of The Private Securities Litigation Reform Act of 1995
This Quarterly Report contains historical information and forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for certain forward-looking statements. When used in this Form
10-Q and the documents incorporated by reference herein, the words "estimate,"
"project," "anticipate," "expect," "believe" and other expressions used to
indicate future events are intended to identify forward-looking statements. Such
statements are subject to risks and uncertainties that could cause the Company's
actual results in future periods to be materially different from any future
performance suggested herein. Further, the Company operates in an industry
sector where securities values may be volatile and may be influenced by economic
and other factors beyond the Company's control. In the context of the
forward-looking information provided in this Quarterly Report and in other
reports, please refer to the discussions of risk factors detailed in, as well as
the other information contained in, the Company's other filings with the
Securities and Exchange Commission.
<PAGE>
PanAmSat Corporation
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 335,411 $ 29
Operating lease, sale and contract
receivables 57,657 21,742
Net investment in sales type leases 25,621 20,634
Prepaid expenses and other current assets 24,045 23,313
Deferred income taxes 42,978 46,989
----------- ------------
TOTAL CURRENT ASSETS 485,712 112,707
SATELLITES AND OTHER PROPERTY AND
EQUIPMENT, AT COST 1,601,750 744,610
Less: Accumulated Depreciation and
Amortization (531,115) (340,717)
----------- ------------
1,070,635 403,893
MARKETABLE SECURITIES 330,000 0.00
SATELLITE SYSTEMS UNDER DEVELOPMENT 1,232,696 316,332
NET INVESTMENT IN SALES TYPE LEASES 337,686 320,610
INTANGIBLE ASSETS, NET OF AMORTIZATION 2,537,609 72,896
DEFERRED INCOME TAXES 92,544 0.00
DEFERRED COSTS AND OTHER ASSETS 57,635 49,078
----------- ------------
TOTAL ASSETS $ 6,144,517 $ 1,275,516
----------- ------------
</TABLE>
<PAGE>
PanAmSat Corporation
CONSOLIDATED BALANCE SHEETS - (continued)
(in thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 4,342 $ 0
Accounts payable and accrued liabilities 143,473 24,459
Accrued in-orbit performance insurance 17,711 26,481
Deferred gains on sales and leasebacks 0 42,871
Deferred revenue 14,671 5,424
----------- ------------
TOTAL CURRENT LIABILITIES 180,197 99,235
DUE TO AFFILIATES 1,812,286 0
LONG-TERM DEBT 633,250 0
ACCRUED OPERATING LEASEBACK AND
CONTRACT EXPENSES 87,266 107,841
DEFERRED INCOME TAXES 137,870 0
DEFERRED REVENUE 108,767 31,596
DEFERRED GAINS ON SALES AND LEASEBACKS 256,187 234,751
----------- ------------
TOTAL LIABILITIES $ 3,215,823 $ 473,423
----------- ------------
COMMITMENTS AND CONTINGENCIES
PREFERRED STOCK, 12-3/4% Mandatorily
Exchangeable Senior Redeemable Preferred
Stock, $0.01 par value, 20,000,000 shares
authorized, 352,740 shares issued and
outstanding 9,389 shares for accrued dividend 421,392 0
----------- ------------
PARENT COMPANY'S NET INVESTMENT 0 802,093
STOCKHOLDERS' EQUITY:
Common Stock, $0.01 par value 400,000,000
shares authorized, 149,122,807 shares issued
and outstanding 1,491 0
Additional paid-in-capital 2,498,885 0
Retained earnings 6,926 0
----------- ------------
Total Stockholders' Equity 2,507,302 0
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,144,517 $ 1,275,516
----------- ------------
</TABLE>
<PAGE>
PanAmSat Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Six Months Ended June 30, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
June 30, June 30,
1997 1996
----------- ------------
<S> <C> <C>
REVENUES:
Outright sales and sales type leases $ 52,184 $ 84,210
Operating leases, satellite services and other 209,561 168,336
----------- ------------
261,745 252,546
OPERATING EXPENSES:
Cost of outright sales and sales type leases 20,476 26,520
Leaseback expense, net of deferred gain 30,883 33,643
Depreciation and amortization 45,574 29,854
Direct operating costs 16,347 21,906
Selling, general and administrative expenses 18,856 14,079
----------- ------------
132,136 126,002
----------- ------------
INCOME FROM OPERATIONS 129,609 126,544
INTEREST EXPENSE, NET (16,687) (4,545)
OTHER INCOME 385 2,146
----------- ------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 113,307 124,145
INCOME TAXES 47,737 46,554
MINORITY INTEREST 5,785 0
----------- ------------
NET INCOME $ 59,785 $ 77,591
----------- ------------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statement
<PAGE>
PanAmSat Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended June 30, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
June 30, June 30,
1997 1996
----------- ------------
<S> <C> <C>
REVENUES:
Outright sales and sales type leases $ 11,158 $ 18,423
Operating leases, satellite services and other 123,034 98,864
----------- ------------
134,192 117,287
OPERATING EXPENSES:
Cost of outright sales and sales type leases 4,054 7,357
Leaseback expense, net of deferred gain 15,466 19,475
Depreciation and amortization 30,989 14,718
Direct operating costs 8,189 11,397
Selling, general and administrative expenses 13,396 6,814
----------- ------------
72,094 59,761
----------- ------------
INCOME FROM OPERATIONS 62,098 57,526
INTEREST EXPENSE, NET (14,909) (357)
OTHER INCOME (EXPENSE) (847) 1,325
----------- ------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 46,342 58,494
INCOME TAXES 22,625 18,597
MINORITY INTEREST 5,785 0
----------- ------------
NET INCOME $ 17,932 $ 39,897
----------- ------------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statement
<PAGE>
PanAmSat Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
June 30, June 30,
1997 1996
----------- ------------
<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $ 59,785 $ 77,591
Adjustments to reconcile net income to
net cash provided by operating activities:
Gross profit on sales - type leases (33,572) (47,858)
Depreciation and amortization 45,574 29,854
Deferred income taxes (28,987) (39,880)
Amortization of gains on sales and leasebacks (21,435) (20,123)
Provision for uncollectible receivables (4,534) (2,632)
Accretion of interest on senior subordinated discount notes 5,585 -
Interest expense capitalized (19,139) -
Minority Interest 5,785 -
Changes in assets and liabilities, net of acquired assets and
liabilities:
Collections on investments in sales-type leases 11,509 18,514
(Increase) decrease in operating lease and other
receivables (20,179) 2,919
Increase (decrease) in prepaid expenses and other current assets 16,513 (6,251)
Increase (decrease) in accounts payable and accrued liabilities 8,058 (5,340)
Increase (decrease) in accrued in-orbit performance
insurance (8,770) 3,067
Increase (decrease) in accrued operating lease expense (20,575) 28,610
Increase (decrease) in deferred gains and revenues 3,577 (3,910)
----------- ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (805) 34,561
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Old PanAmSat, net of cash acquired (1,018,669) -
Capital Expenditures (335,215) (130,875)
Proceeds from sale and leaseback of satellite transponders - 252,000
Purchase of marketable securities (36,827) -
Decrease in other assets 2,415 -
----------- ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (1,388,296) 121,125
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
New borrowings 1,725,000 -
Net (distributions to) contributions from Parent Company - (155,686)
Repayments of long-term debt (517) -
----------- ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,724,483 (155,686)
----------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 335,382 -
CASH AND EQUIVALENTS, beginning of period 29 35
----------- ------------
CASH AND EQUIVALENTS, end of period $ 335,411 $ 35
----------- ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash received for interest $ 5,801 $ 1,051
----------- ------------
Cash paid for interest $ 15,616 $ 10,327
----------- ------------
Cash paid for taxes $ 32,898 $ 46,554
----------- ------------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statement
<PAGE>
PanAmSat Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) General.
These unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments which
are of a normal recurring nature necessary to present fairly the
financial position, results of operations and cash flows as of and
for the three and six month periods ended June 30, 1997 and 1996
have been made. Operating results for the six months ended June
30, 1997 and 1996 are not necessarily indicative of the operating
results for the full year. For further information, refer to the
financial statements and footnotes thereto included in
PanAmSat's Registration Statement on Form S-4 filed with the
Securities and Exchange Commission on April 17, 1997.
(2) Business Combination.
Effective May 16, 1997, the combination of Old PanAmSat and the
Galaxy Business was completed (the "Combination"). Pursuant to the
Combination, the aggregate consideration paid to Old PanAmSat
shareholders consisted of approximately $1.5 billion in cash and
approximately 42.5 million shares of PanAmSat Common Stock.
Concurrent with the Combination and as an integral part thereof,
the Company sold its direct-to-home ("DTH") television rights in
certain foreign markets to an affiliate for $225 million (the "DTH
Options").
The Company has applied the purchase method of accounting to the
transaction with the Galaxy Business as the acquiror. The
acquisition value of $3.0 billion (including $225 million related
to the sale of the DTH Options) has been allocated to the assets
acquired and liabilities assumed based on preliminary estimates of
their respective fair values. Assets acquired totaled $1.9 billion
and liabilities assumed were $1.4 billion. A total of $2.5
billion, representing the excess of acquisition value over the
fair value of Old PanAmSat's net tangible assets, has been
allocated to intangible assets and is being amortized over 40
years.
The Company's consolidated results of operations have incorporated
Old PanAmSat's activity commencing upon the effective date of the
Combination. The unaudited pro forma information below presents
combined results of operations as if the Combination had occurred
at the beginning of the respective periods presented (excluding
the impact of the $225 million gain on the sale of the DTH Options
as well as certain professional and advisory fees incurred in
connection with the Combination totaling $31.3 million, both of
which
<PAGE>
PanAmSat Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
are non-recurring items which are not indicative of the Company's
ordinary course of business). The unaudited pro forma information
is not necessarily indicative of the results of operations of the
combined company had the Combination occurred at the beginning of
the respective periods presented, nor is it necessarily indicative
of future results.
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
Revenues $ 184,977 $ 177,571 $ 387,786 $ 363,253
Net income 22,383 15,451 48,117 27,510
Earnings per share 0.15 0.10 0.32 0.18
(3) New Accounting Pronouncement.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share", which will be adopted by the Company in
fiscal 1998 as required by the statement. SFAS No. 128 simplifies
the standards for computing earnings per share required by APB
Opinion No. 15 "Earnings per Share." As the Company does not have
any common stock equivalents as of June 30, 1997, the Company does
not believe the adoption of SFAS No. 128 will have an impact in
the computation of earnings per share to be presented within the
Company's financial statements.
(4) Subsequent Events.
On August 8, 1997, the Company successfully launched its PAS-6
Atlantic Ocean Region satellite, the first communications
satellite ever dedicated for DTH television services in Latin
America. The entire PAS-6 payload, 36 Ku-band transponders, is
fully sold to Sky Latin America, which will use the satellite to
beam hundreds of television channels to its DTH service
subscribers in Latin America. PAS-6 is expected to reach its final
orbital location at 43 degrees West Longitude and commence service
in October 1997 after successful completion of its in-orbit
testing. Additionally, the Company intends to launch another
Atlantic Ocean Region satellite, PAS-5, in late August 1997.
<PAGE>
PanAmSat Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
As a result of Old PanAmSat's financial performance as disclosed herein and
in its Quarterly Report on Form 10-Q for the period ended June 30, 1997, taken
together with all of Old PanAmSat's prior filings with the Securities and
Exchange Commission, Old PanAmSat is required to exchange its 12 3/4% Senior
Redeemable Preferred Stock (the "Preferred Stock") to Exchange Debentures in
accordance with the procedures described in the Certificate of Designation for
the Preferred Stock.
<PAGE>
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations. The Company's results of operations have
incorporated Old PanAmSat's activity commencing upon the effective
date of the Combination. Since this represents only 45 days of
activity for Old PanAmSat, management has determined that for
comparative purposes, it would be more meaningful to present the
information shown below on a "pro forma" basis reflecting the
Combination as though it had occurred at the beginning of the
respective periods presented (excluding the impact of the $225
million gain on the sale of the DTH Options as well as certain
professional and advisory fees incurred in connection with the
Combination totaling $31.3 million, both of which are
non-recurring items which are not indicative of the Company's
ordinary course of business.) The pro forma results are not
necessarily indicative of the combined results that would have
occurred had the Combination actually occurred at the beginning of
fiscal 1996.
<TABLE>
<CAPTION>
(unaudited; in thousands,
except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Outright sales and sales type leases $ 11,158 $ 18,423 $ 52,184 $ 84,210
Operating leases, satellite services and other
173,819 159,148 335,602 279,043
---------- ---------- ---------- -----------
Total Revenue 184,977 177,571 387,786 363,253
---------- ---------- ---------- -----------
Costs and Expenses
Cost of outright sales and sales
type leases 4,054 7,357 20,476 26,520
Leaseback expense, net of deferred
gain 15,466 19,475 30,883 33,643
Direct operating and SG&A costs 29,309 35,144 61,890 66,761
---------- ---------- ---------- -----------
Total 48,829 61,976 113,249 126,924
---------- ---------- ---------- -----------
EBITDA 136,148 115,595 274,537 236,329
Depreciation and amortization 43,491 39,309 83,034 76,446
Interest expense, net 30,350 36,961 64,238 76,160
Other income 847 (1,325) (385) (2,146)
---------- ---------- ----------- ------------
Income before income taxes and
minority interest 61,460 40,650 127,650 85,869
Income tax expense 27,544 15,008 56,871 38,340
Minority interest 11,533 10,191 22,662 20,019
---------- ---------- ---------- -----------
Net income $22,383 $ 15,451 $ 48,117 $27,510
------- ---------- ---------- -------
Earnings per share $ 0.15 $ 0.10 $ 0.32 $ 0.18
</TABLE>
<PAGE>
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Proforma revenues for the three months ended June 30, 1997 were
$185.0 million, an increase of $7.4 million or 4% as compared to
the same period in 1996. Proforma revenues for the six months
ended June 30, 1997 were $387.8 million, an increase of $24.5
million or 7% as compared to the same period in 1996. The increase
in total revenues for the three and six month periods represents
increases in the Company's operating lease/service agreement
revenue due to the addition of several new long-term contracts as
the Company continues to sell its available satellite in-orbit
transponder capacity, offset by a reduction in sales and sales
type lease revenue during 1997 as more customers opted for
operating leases/service agreements.
Proforma earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the three months ended June 30, 1997
was $136.1 million, an increase of $20.5 million or 18% as
compared to the same period in 1996. Proforma EBITDA for the six
months ended June 30, 1997 was $274.5 million, an increase of
$38.2 million or 16% as compared to the same period in 1996. The
increase in EBITDA for the three and six month periods was due
primarily to the increase in total revenues offset by reduced cost
of sales and sales type leases, and lower SG&A costs reflecting
reduced marketing activity on the Company's Global Satellite
System in anticipation of future satellite launches.
Proforma interest expense, net for the three months ended June 30,
1997 was $30.4 million, a decrease of $12.3 million or 29% as
compared to the same period in 1996. Proforma interest expense,
net for the six months ended June 30, 1997 was $64.2 million, a
decrease of $12.0 million or 16% as compared to the same period in
1996. The decrease in interest expense, net for the three and six
month periods was due to interest income earned on the proceeds
from the sale of the DTH options, coupled with reduced interest
expense reflecting larger amounts of interest capitalized on the
growth in the capitalized costs of satellites under construction
which are expected to be launched in 1997 and 1998.
Proforma net income for the three months ended June 30, 1997 was
$22.4 million, an increase of $6.9 million or 45% as compared to
the same period in 1996. Proforma net income for the six months
ended June 30, 1997 was $48.1 million, an increase of $20.6
million or 75% as compared to the same period in 1996. The
increase in net income for the three and six month periods was due
primarily to the increase in EBITDA and the decrease in interest
expense, net.
<PAGE>
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition.
Effective May 16, 1997, the Combination of Old PanAmSat and the
Galaxy Business was completed. Pursuant to the Combination,
aggregate consideration paid to Old PanAmSat shareholders
consisted of approximately $1.5 billion in cash and approximately
42.5 million shares of PanAmSat Common Stock. The cash portion was
funded by a three year term loan in the amount of $1.725 billion
from Hughes Electronics Corporation ("HE"). (The Galaxy Business
was owned and operated by Hughes Communications, Inc. ("HCI")
which itself is an indirect, wholly owned subsidiary of HE). In
addition to the $1.725 billion loan, at June 30, 1997 the Company
also has long-term indebtedness of $720.5 million (including $87.3
million due to affiliates) and Preferred Stock with an aggregate
liquidation preference of approximately $421.4 million. Management
expects that operations going forward will be financed through
cash on hand, cash flow from operations and additional vendor
financing.
For as long as Old PanAmSat's existing indebtedness and Preferred
Stock are outstanding, Old PanAmSat will be subject to provisions
contained in the indentures governing such indebtedness and the
certificate of designation for such preferred stock that will
significantly limit Old PanAmSat's ability to pay dividends or
loan funds to the Company. As a result, the Company will be
restricted from using Old PanAmSat's cash flows to fund the
Company's capital expenditures.
The significant cash outlays for the Company will continue to be
primarily capital expenditures related to the construction and
launch of satellites and debt service costs. With the successful
launch of PAS-6 on August 8, 1997, the Company now has nine
satellites under various stages of development for which the
Company has budgeted capital expenditures. The Company will
require approximately $1.0 billion to complete the construction,
insurance and launch of PAS-5, PAS-7, PAS-8, Galaxy VIII-i, Galaxy
X, Galaxy XI, Galaxy XII, Galaxy XIII-i and Galaxy XIV-i. This
amount is expected to be funded from cash on hand and cash flow
from operations. In addition to funding new satellites, the
Company also expects to exercise its early buy-out options under
certain satellite
<PAGE>
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
sale-leaseback transactions entered into in prior years which will
require the Company to fund additional outlays of approximately
$152 million in 1998 and approximately $366 million in 1999. Such
additional outlays also are expected to be funded from cash flow
from operations.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10.30 Employment Agreement of Frederick A. Landman, dated as of May 15, 1997.
10.31 Amended and Restated Collateral Trust Agreement, dated of May 16,
1997 by and among Magellan International, Inc., Hughes Communications,
Inc., Satellite Company, LLC, Grupo Televisa, S.A. and IBJ Schroder
Bank & Trust Company.
10.32 Pledge and Security Agreement, dated as of May 16, 1997 by and among
Satellite Company, LLC, Grupo Televisa, S.A., in favor of IBJ Schroder
Bank & Trust Company.
10.33 PanAmSat Corporation Long Term Incentive Plan Established in 1997.
10.34 PanAmSat Corporation Annual Incentive Plan, effective January 1, 1997.
10.35 Intellectual Property Cross License Agreement, dated as of May 16, 1997
by and between Magellan International, Inc. and Hughes Electronics
Corporation.
10.36 Leveraged Lease Guaranty Indemnification Agreement, dated as of May 16,
1997 by and between Magellan International, Inc. and Hughes Electronics
Corporation.
10.37 Fixed Price Contract between Hughes Communications Galaxy, Inc. and
Hughes Space & Communications Company for Galaxy XI HS702, Spacecraft,
Related Services and Documentation, Contract No. 96-HCG-002, executed
May 1997. [Portions of this Exhibit have been omitted pursuant to an
application filed with the Securities and Exchange Commission under
separate cover.]
10.38 Fixed Price Contract between Hughes Communications Galaxy, Inc. and
Hughes Space & Communications Company for Galaxy XIII/XIV HS702,
Contract No. 97-HCG-001, executed May 1997. [Portions of this Exhibit
have been omitted pursuant to an application filed with the Securities
and Exchange Commission under separate cover.]
10.39 Transponder Sublease Agreement for Galaxy III-R between Hughes
Communications Galaxy, Inc. and California Broadcast Center, LLC, dated
April 21, 1997. [Portions of this Exhibit have been omitted pursuant to
an application filed with the Securities and Exchange Commission under
separate cover.]
10.40 Transponder Lease Agreement for Galaxy VIII(i) between Hughes
Communications Galaxy, Inc. and California Broadcast Center, LLC, dated
April 21, 1997. [Portions of this Exhibit have been omitted pursuant to
an application filed with the Securities and Exchange Commission under
separate cover.]
10.41 Form of Indemnity Agreement by and between PanAmSat Corporation an each
of its directors and executive officers. [Identical agreements have
been executed by PanAmSat Corporation in favor of Charles H. Noski,
Frederick A. Landman, Patrick J. Costello, Steven D. Dorfman, John J.
Higgins, Ted G. Westerman, Dennis F. Hightower, James M. Hoak, Joseph
R. Wright, Jr., Lourdes Saralegui, Carl A. Brown, Kenneth N. Heintz,
Robert A. Bednarek, James W. Cuminale and David P. Berman.]
27 Financial Data Schedule
<PAGE>
PART II - OTHER INFORMATION
(Continued)
(b) REPORTS ON FORM 8-K
During the quarter ended June 30, 1997, PanAmSat Corporation filed a
Report on Form 8-K dated May 30, 1997 and a Report on Form 8-K/A, dated
June 5, 1997.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
PanAmSat Corporation
Date: January 5, 1998 /s/Kenneth N. Heintz
Kenneth N. Heintz
Chief Financial Officer
and a Duly Authorized
Officer of the Company
Exhibit 10.30
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated
as of May 15, 1997, is by and between Magellan International,
Inc. (the "Company") and Frederick A. Landman (the
"Executive").
In consideration of the promises in this Agreement, the
mutuality and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Employment. The Company hereby employs the
Executive and the Executive hereby accepts employment by the
Company under the terms and conditions set forth in this
Agreement.
2. Term. The term of the Executive's employment under this
Agreement (the "Employment Term") will commence at the Effective Time of the
Merger, as such terms are defined in the Agreement and Plan of Merger (the
"Agreement and Plan of Merger") dated September 20, 1996 between Hughes
Communications Inc., certain of its affiliates, and PanAmSat Corporation, and
will end three years later; unless the Executive's employment is terminated
under Paragraph 7, in which event the Agreement will terminate on the date of
termination pursuant to Paragraph 7. After the expiration of the Employment
Term, it is anticipated that no employment agreement will be required to define
the employment status of
<PAGE>
the Executive. However, if the term of this Agreement is extended by the Company
and the Executive, in writing, the period of time during which the Executive is
actively employed by the Company pursuant to this Agreement shall be referred to
herein as the "Employment Period."
3. Title and Duties. The Executive will serve as the President
and Chief Executive Officer of the Company and be based at the Company's
headquarters in Greenwich, Connecticut. The Executive shall be responsible for,
among other things, the profitability and total performance of the Company,
maintenance of all legal and statutory requirements applicable to the Company,
and, in accordance with the by-laws of the Company, the management of all
personnel of the Company, selection of management staff, outside consultants and
counsel, and such other duties and responsibilities that may be assigned to him
from time to time by the Board of Directors of the Company that are consistent
with his position. The Executive agrees to devote his full business attention,
skill and energy to the duties set forth herein and to the business of the
Company, to use his efforts to promote the success of the Company's business,
and to cooperate with the Board of Directors in the advancement of the best
interests of the Company. The Executive will serve, without additional
compensation, as a director of the Company. Nothing in this Agreement prevents
Executive from engaging in
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additional activities in connection with personal investments and community
affairs that are not inconsistent with the Executive's duties hereunder.
4. Compensation and Benefits. During the Employment Period,
Executive shall receive the following compensation and benefits:
(a) Base Salary. In consideration for Executive's services
to the Company during the Employment Term, Executive shall receive a base salary
at the annual rate of Six Hundred Thousand Dollars (U.S. $600,000) ("Base
Salary"). The Base Salary shall be payable in accordance with the Company's
customary payroll practices for other executive employees, from which the
Company shall withhold and deduct all federal and state income, social security
and disability taxes and other deductions as required by applicable laws. During
the Employment Period, the Base Salary will be reviewed by the Board of
Directors on an annual basis and may be adjusted upward to reflect the
Executive's performance and the scope and success of the Company.
(b) Incentive Bonuses. The Executive shall be eligible to
receive incentive bonuses (the "Incentive Bonus") on an annual basis, based on
meeting financial performance criteria ("Financial and Business Goals") for the
Company with respect to revenue growth, cash flow and other financial criteria
agreed upon in advance each year by the Executive and
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<PAGE>
the Company. The Incentive Bonus shall be based on a target dollar amount. The
target dollar amount for calendar year 1997 shall be $400,000 and shall not be
prorated. The Executive shall receive an Incentive Bonus equal to the target
dollar amount if the Financial and Business Goals are met. To the extent the
Company exceeds the Financial and Business Goals by up to 25%, the Board of
Directors will increase the target dollar amount by up to 50%, or, if the
Company fails to meet the Financial and Business Goals by no more than 20%, the
Board of Directors may reduce the target dollar amount to a number no lower than
80% of such target dollar amount. If more than two of the Financial and Business
Goals are missed by more than 20%, the Company shall not be required to pay any
award. If an award is earned, the Executive shall receive an Incentive Bonus
equal to the adjusted target dollar amount.
(c) Employee Benefits. The Executive shall be entitled to
participate in the Company's employee benefit plans and policies in effect from
time to time, including but not limited to medical benefits, life insurance and
other fringe benefits, as may be in effect from time to time, under the same
terms and conditions as similarly situated executive employees.
(d) Vacation and Holidays. The Executive shall be entitled
to paid vacation time and paid holidays to the same extent as similarly situated
executive employees of
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<PAGE>
the Company may be entitled in accordance with the policies of the Company in
effect from time to time.
(e) Housing Allowance. The Company agrees that, if
Executive's duties require him to spend 30% of his working time in California,
the Company will pay for the costs of renting suitable housing for the Executive
and his family and will provide a reasonable allowance for related expenses.
5. Stock Options.
(a) In addition to the Base Salary and other benefits
provided above, the Company shall promptly grant stock options (the "Options")
to the Executive to purchase 93,750 shares of common stock of the Company at an
exercise price equal to fair market value of the stock of the Company on the
date of the grant pursuant to the Company's Long term Stock Incentive Plan (the
"Stock Option Plan").
(b) The Options shall vest as follows:
o 1/3 of the Options shall vest on the first
anniversary of the date of the Merger, if the
Executive is employed by the Company on such date;
o 1/3 of the Options shall vest on the second
anniversary of the date of the Merger, if the
Executive is employed by the Company on such date;
and
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<PAGE>
o 1/3 of the Options shall vest on the third
anniversary of the date of the Merger, if the
Executive is employed by the Company on such date.
(c) The Company agrees that any shares purchased by the
Executive will be registered for resale on a Registration Statement filed on
Form S-8 or S-3, which Registration Statement will be duly filed with the
Securities and Exchange Commission.
(d) The Executive also shall be eligible for additional stock
options as may be granted to executive employees of the Company from time to
time.
(e) Except as otherwise provided in this Agreement, the
provisions of the Stock Option Plan shall govern in respect of the Executive's
rights and obligations relating to the Options.
6. Reimbursement of Expenses.
During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable and necessary
expenses incurred by him in performing services hereunder, provided that the
Executive properly accounts for such expenses in accordance with the Company's
policy then in effect.
7. Termination of Employment.
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(a) Death. The Executive's employment shall terminate
immediately upon his death.
(b) Disability. The Employment Period shall be deemed to
have expired upon the occurrence of a "Disability." For purposes of this
Agreement, "Disability" means a determination by the Company in accordance with
applicable law that, as a result of a physical or mental illness, the Executive
is unable to perform the essential functions of his job performance with or
without reasonable accommodation. The Company, by action of the Board of
Directors of the Company after giving the Executive and his medical and legal
advisors an opportunity to meet with the Board of Directors, may only render
such determination of disability if (i) the Executive is chemically dependent
and refuses or is unsuccessful in chemical dependency treatment or (ii) the
Executive has been unable to substantially perform his duties for one hundred
and twenty (120) consecutive days or for one hundred and fifty (150) days during
any twelve (12) month period because of physical or mental infirmity.
(c) Termination for Material Breach. Upon delivery of
written notice of termination for "Material Breach" (as defined below) from the
Company to the Executive, the Employment Period shall be deemed to have expired.
Termination for "Material Breach" shall mean termination based on (i) the
Executive's material breach of this Agreement, (ii) the Executive's wilful
contravention of specific written
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<PAGE>
lawful directions from the Board of Directors acting by majority action (and not
through a committee thereof) or (iii) conduct by the Executive in connection
with his employment that is fraudulent, felonious or grossly negligent.
Termination for "Material Breach" shall be by action of the Board of Directors
of the Company after giving the Executive and his legal advisors an opportunity
to meet with the Board of Directors, and, with respect to any termination based
upon clauses (i) or (ii) of the preceding sentence, after giving the Executive
30 days to cure any Material Breach if such Material Breach can be cured. In the
event of any Material Breach of this Agreement, the Executive shall be liable to
the Company for such damages as the law may allow.
(d) Resignation. The Executive may voluntarily resign his
employment hereunder (i) at any time during the first year following the
Effective Date, for any reason or no reason, upon no more than 90 and no fewer
than 60 days prior written notice to the Board of Directors and (ii) during the
second and third years following the Effective Date, (A) upon written notice to
the Board of Directors given at any time with immediate effect, for "Good
Reason" (as defined immediately below) or (B) upon no more than 90 and no fewer
than 60 days prior written notice to the Board of Directors given at any time,
for any reason or no reason, specifying in each case, whether resignation is
pursuant to subsection (A) or (B) above. The Executive shall have "Good
8
<PAGE>
Reason" to terminate his employment with the Company upon the occurrence of
either of the following events:
(x) the Company should fail to continue to employ the
Executive during the Employment Term in a manner consistent with Section 3 and
in the same executive capacity with the Company in which the Executive was
employed by PanAmSat Corporation immediately prior to the Merger, with
materially the same duties and responsibilities with the Company that the
Executive had with PanAmSat Corporation immediately prior to the Merger;
provided, that the Executive shall be required prior to the effectiveness of a
constructive termination pursuant to this subsection (x) to have given the
Company twenty (20) days notice and an opportunity to cure such failure. Without
in any way limiting the right of the Executive to elect to terminate his
services under Section 7(d)(ii)(A), it is understood that any change in the
Executive's job description, offices, perquisites or place of employment by more
than 35 miles, any reduction in the number of officers or other employees or
diminishment in the overall management responsibility of officers and other
employees reporting directly to the Executive, any diminishment in the decision
making authority of the Executive shall each be a change in his duties and
responsibilities that will give the Executive the right to elect to terminate
his services under Section 7(d)(ii)(A); or
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<PAGE>
(y) the Company should reduce or fail to pay or award
to the Executive when due any Base Salary, Incentive Bonus or other amount
payable to the Executive or to provide the Executive with any benefits to which
the Executive is entitled.
(e) Discretionary Termination by the Company. Upon
delivery of written notice of termination of the Executive's employment for a
reason other than Material Breach, death or Disability from the Company to the
Executive, the Employment Period shall be deemed to have terminated 60 days
after the written notice is delivered to the Executive.
(f) Continuation of Salary and Benefits. In the event the
Executive's employment terminates during the Employment Period as of result of
his death as set forth in paragraph 7(a), or as a result of the Executive's
Disability as set forth in paragraph 7(b), the Company shall pay to the
Executive or his estate, as the case may be, his Base Salary and any employee
benefits, including group medical benefits, to which he would otherwise be
entitled under this Agreement, for 12 months from the date of termination of
employment. (g) Termination Payment. If the Executive's employment terminates
during the Employment Term as a result of (i) termination by the Company in
accordance with paragraph (e) of this Section 7; or (ii) Resignation by the
Executive in accordance with paragraph (d)(i) or (ii)(A) of this Section 7,
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<PAGE>
the Executive shall be entitled to a Termination Payment from the Company and
the continuation of certain employee benefits. The term "Termination Payment"
shall mean an amount that is equal to 3 times the sum of (1) Salary (as defined
below), plus (2) the Applicable Bonus (as defined below). The term "Salary"
herein shall mean the annual cash compensation payable to the Executive by the
Company and/or, during the first year hereunder, by PanAmSat Corporation, and
the term "Applicable Bonus" shall mean the annual amount awarded or paid under
any incentive or bonus plan or program of the Company and/or, during the first
year hereunder, by PanAmSat Corporation and any additional amounts (such
aggregate amounts, the "Bonus") paid to the Executive by the Company and/or,
during the first year hereunder, by PanAmSat Corporation, during the fiscal year
ending immediately prior to the fiscal year in which the termination occurred
(excluding, however, the special bonus in lieu of stock option of $950,000 paid
to Executive in September of 1996 by PanAmSat Corporation), or the Bonus
scheduled to be paid to the Executive during the fiscal year in which the
termination occurs, prorated to the date of termination, whichever is greater.
The Termination Payment shall be due and payable ten (10) days after the
Executive is or has been terminated from, or terminates, his employment with the
Company. The Executive and his dependents also shall be entitled to participate,
for a period of three years following termination, in all employee
11
<PAGE>
welfare benefit plans (as that term is defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended), and to receive or
participate in all other benefit arrangements, policies or practice of the
Company to which and in which active executive employees are or shall be
entitled to receive or participate in during this period other than qualified
pension or profit sharing plans in which he would not legally be entitled to
participate.
(i) Vesting of Options. Upon termination of the
Executive's employment during the Employment Period for any reason other than as
a result of termination for Material Breach under Section 7(c) or Resignation by
the Executive under Section 7(d)(i) or (d)(ii)(B), all unvested Options granted
to Executive shall vest immediately and be exercisable for the remainder of
their original term. Upon termination of the Executive's employment for any
reason, all vested Options shall continue to be exercisable for their original
term. The provisions of this Section 7(i) shall survive the expiration of this
Agreement and shall be separately provided for in the relevant option agreement
with Executive provided in connection with the Option grant.
(j) Registration; Stock Repurchase Rights. In the event
the Executive's employment with the Company terminates for any reason during the
Employment Term, the Executive may, by written notice to the Company, demand
that the Company register all or any portion of the Common Stock of
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<PAGE>
the Company held by him, beneficially or otherwise, and the Company shall
promptly (1) enter into a registration rights agreement (the "Registration
Rights Agreement") substantially similar to the amended and restated
registration rights agreement in the form of that attached as Exhibit F to the
Agreement and Plan of Merger; provided, that a demand registration pursuant to
such Registration Rights Agreement shall (i) cover a minimum of one-half of the
shares of Common Stock of the Company held, beneficially or otherwise, by the
Executive immediately following the Merger, and (ii) be effective for one demand
registration requested by the Executive during the first year after the Merger,
and (2) register said Common Stock in accordance with the provisions of the
Registration Rights Agreement; provided, that following any such demand, the
Company shall have the right, by written notice sent to the Executive within ten
(10) days of receipt of a Demand Notice (as defined in the Registration Rights
Agreement), to purchase at the Repurchase Price (as defined below) any or all
shares of Common Stock of the Company covered by the Demand Notice. The Company
shall purchase such shares from the Executive by making a lump sum payment to
the Executive (or his estate), within thirty (30) days of receiving the Demand
Notice. "Repurchase Price" means the average of the closing price of the Common
Stock for the thirty consecutive Trading Days (as defined below) ending the date
following the date on which the Company receives the
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<PAGE>
Demand Notice. A "Trading Day" shall be any day on which the principal national
securities exchange on which the Common Stock is admitted to trading or listed
is open.
(k) Termination Date. The date upon which Executive's
employment with the Company terminates shall constitute the "Termination Date."
8. Confidential Information.
The Executive agrees not to disclose, either
while in the Company's employ or at any time thereafter, to any person not
employed by the Company, or not engaged to render services to the Company, any
confidential information obtained by him while in the employ of the Company,
including, without limitation, information about any of the Company's finances,
costs, profits, markets, software, inventions, data lists, client lists,
operational methods, technical matters, pricing policies, business plans, or
customer or trade secrets; provided, however, that this provision shall not
preclude the Executive from use or disclosure of information which is in the
public domain or from disclosure required by law or court order (after notice to
the Company to permit it to contest the need for disclosure or to seek an
appropriate protective order).
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9. Non-Competition.
(a) Competition. The Executive agrees that for a
period of three years after the Termination Date, the Executive will not,without
the prior written approval of the Board of Directors, participate in the
management of, be employed by or own any interest in any business enterprise
that engages in (A) the sale or lease of, or the provision of satellite services
via, transponder capacity on satellites operating in geostationary earth orbit
in the C-band, Ka-band and Ku-band frequencies for the transmission of video,
audio and data signals; and (B) the provision of telemetry, tracking and control
services for such satellites and for other satellites operating in geostationary
earth orbit in the C- band, Ka-band, Ku-band, L-band and UHF-band frequencies or
other frequency bands that may be utilized in the future; but in each case
excluding the sale or lease of transponder capacity and telemetry, tracking and
control services provided on or for any satellite that has both (x) multiple
(six or more) receive and transmit beams and (y) an on-board satellite payload
processor which can switch uplink signals in one beam to a downlink signal in
one of multiple beams; provided, however, that nothing in this Section 9(a)
shall prohibit the Executive from owning less than 5% of the outstanding equity
securities of any enterprise whose equity securities are publicly traded.
Notwithstanding the above, in the event the Executive's employment ends as a
result of Disability under
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Section 7(b), the restrictions in this Section 9(a) shall continue only for the
period during which the Executive continues to receive salary and benefits from
the Company pursuant to this Agreement.
(b) Interference. The Executive hereby agrees that
until such time as the restrictions contained in Section 9(a) lapse in
accordance with their terms, he will not intentionally interfere with the
Company's relationship with, or endeavor to entice away from the Company, any
employee, person, firm, corporation, or other business organization who or which
was an employee, customer or supplier of, or maintained a business relationship
with, any business of the Company which was conducted at any time prior to the
Termination Date. Nothing in this Section 9(b) prohibits the Executive from
employing or doing business with any employee, person, firm, corporation or
other business organization who, by his or its own choice, seeks to be employed
or do business with the Executive.
(c) The Executive expressly acknowledges and
understands that the remedy of law for any breach by him of this Section 9 will
be inadequate, and that the damages flowing from such breach are not readily
susceptible to being measured in monetary terms. Accordingly, it is acknowledged
that upon the Executive's violation of any provision of this Section 9, the
Company shall be entitled to immediate injunctive relief and may obtain a
temporary order restraining
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<PAGE>
any threatened or further breach. Nothing in this Section 9 shall be deemed to
limit the Company's remedies at law or in equity for any breach by the Executive
of any of the provisions of this Section 9 which may be pursued or availed of by
the Company.
(d) If following termination of the Executive's
employment any of the restrictions pursuant to this Section 9 shall for any
reason be held by to be excessively broad as to duration, geographical scope,
activity or subject, such restrictions shall be construed so as to thereafter be
limited or reduced to the extent required to be enforceable in accordance with
applicable law; it being understood and agreed that by execution of this
Agreement the parties hereto regard such restrictions as reasonable and
compatible with their respective rights.
10. Excise Tax. In the event that the Termination Payment or
any other amounts payable to the Executive, his designated beneficiary or his
dependents under this Agreement or under any plan, program or policy of the
Company, or any benefits provided to Executive or his dependents under this
Agreement or under any option or other plan, program or policy of the Company,
should become subject to the excise tax imposed under Section 4999 of the
Internal Revenue Code or any similar tax or assessment (collectively, "Excise
Taxes"), the Company shall pay to the Executive, his designated beneficiary
17
<PAGE>
or his dependents, as the case may be, on demand, the amount (the "Excise Tax
Reimbursement Amount"), necessary fully to reimburse the Executive, his
designated beneficiary or his dependents for (i) all Excise Taxes that may be
imposed on the Executive, his designated beneficiary or his dependents and (ii)
any and all income and other taxes, including additional Excise Taxes, that may
be imposed on the Executive, his designated beneficiary or his dependents in
respect of any of the amounts to be paid to the Executive, his designated
beneficiary or his dependents under clause (i) above or under this clause (ii).
The determination of the Excise Tax Reimbursement Amount shall initially be made
by the accounting firm that is serving as the Company's independent public
accountants immediately prior to the date of termination of the Executive's
employment, or, if such accounting firm is no longer in existence, by its
successor. All costs and expenses of such accounting firm in connection with
making such determination shall be paid by the Company. If it is subsequently
determined (as a result of an assessment of additional Excise Taxes by the
Internal Revenue Service or otherwise) that the Excise Tax Reimbursement Amount
is not sufficient fully to reimburse the Executive, his designated beneficiary
or his dependents as contemplated above, the Company shall pay to the Executive,
his designated beneficiary or his dependents, as the case may be, on demand, the
amount (the "Additional Excise Tax Reimbursement Amount") necessary
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fully to reimburse the Executive, his designated beneficiary or his dependents
for (i) any and all additional Excise Taxes, income taxes and other taxes that
may be imposed on the Executive, his designated beneficiary or his dependents,
(ii) any and all interest, fines and penalties that may be imposed on the
Executive, his designated beneficiary or his dependents in connection with any
such additional Excise Taxes, income taxes or other taxes, and (iii) any and all
income and other taxes, including additional Excise Taxes, that may be imposed
on the Executive, his designated beneficiary or his dependents in respect of any
of the amounts to be paid to Executive, his designated beneficiary or his
dependents under clause (i) or (ii) above or under this clause (iii). If it is
subsequently determined that the Executive has received a sum greater than
necessary to pay any such Excise Taxes, the Executive shall promptly return such
overage to the Company. The purpose of this paragraph 10 is to place the
Executive, his designated beneficiary and his dependents in the same position on
an after-tax basis that each of them would have been in if the Termination
Payment and all other amounts payable to the Executive, his designated
beneficiary or his dependents under this Agreement or under any plan, program or
policy of the Company, and all benefits provided to the Executive or his
dependents under this Agreement or under any plan, program or
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policy of the Company, had not been subject to any Excise
Taxes.
11. Attorneys' Fees and Other Costs and Expenses. The
Executive, his designated beneficiary and his dependents (and their respective
heirs, executors, administrators and personal representatives) shall each be
entitled to recover from the Company (and shall be reimbursed by the Company
when incurred and upon demand) all attorneys' fees and other costs and expenses,
if any, that may be incurred in connection with enforcing or defending the
rights of the Executive, his designated beneficiary or his dependents under this
Agreement, regardless of the outcome of any litigation or other proceeding
relating to such enforcement or defense. The Executive, his designated
beneficiary and his dependents (and their respective heirs, executors,
administrators and personal representatives) also shall be entitled to recover
from the Company interest on the Termination Payment and any other amounts that
may be payable to the Executive, his designated beneficiary or his dependents
under this Agreement, including, without limitation, amounts required to be
reimbursed under the first sentence of this Section, any Excise Tax
Reimbursement Amount or Additional Excise Tax Reimbursement Amount under
paragraph 10 hereof that are not paid when due, at an annual rate equal to 4%
over the corporate base rate as announced from time to time by Citibank, N.A. or
its successor
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(changing as and when such announced corporate base rate changes), compounded
monthly, from the date due until paid. Payments received by the Executive, his
designated beneficiary or his dependents (or any of their respective heirs,
executors, administrators and personal representatives) shall be credited first
against accrued interest until all accrued interest is paid in full before any
such payment is credited against the Termination Payment or any other amounts
that may be payable to the Executive, his designated beneficiary or his
dependents under this Agreement.
12. Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Connecticut, without
giving effect to the principles of conflicts of laws.
13. Binding Effect; Delegation of Duties Prohibited. This
Agreement will inure to the benefit of and will be binding upon the parties and
their respective successors, heirs and legal representatives. The Executive may
not assign or delegate his performance of this Agreement.
14. Ownership of Company Property. All written materials,
records and documents made by the Executive or coming into his possession during
the Employment Period concerning the Company (other than personal tax and
similar information provided by the Company for personal use by the
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Executive) and all tangible items provided to Executive by the Company during
the Employment Period (other than gifts, fringe benefits and other items of
compensation) shall be the sole property of the Company, and, upon the
Termination Date or upon the request of the Company during the Employment
Period, the Executive shall promptly deliver the same to the Company.
15. Waiver of Breach. The waiver by the Company of a breach of
any provision of this Agreement by the Executive shall not operate or be
construed as a waiver of any subsequent breach by the Executive. The waiver by
the Executive of a breach of any provision of this Agreement by the Company
shall not operate or be construed as a waiver of any subsequent breach by the
Company.
16. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the construction or interpretation
of this Agreement.
17. Severability. The invalidity of all or any part of any
section of this Agreement shall not render invalid the remainder of this
Agreement or the remainder of such section. If any provision of this Agreement
is so broad as to be unenforceable, such provision shall be interpreted to be
only so broad as is enforceable.
18. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall, when
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executed, be deemed to be an original, but all of which together shall
constitute one and the same instrument.
19. Notices. All notices and other communications that are
required or may be given under this Agreement must be in writing and will be
deemed to have been duly given when delivered in person, when received by
telecopy (provided that the sender has retained a copy of the notice showing the
date and time of receipt), upon delivery by a nationally recognized overnight
courier service, or three days after being mailed by registered or certified
first class mail, postage prepaid, return receipt requested, to the party to
whom the notice is being given, as follows:
If to the Company:
Magellan International, Inc.
(Following the Merger, to
PanAmSat Corporation)
One Pickwick Plaza
Suite 270
Greenwich, CT 06830
Telephone: (203) 622-6664
Facsimile: (203) 622-9163
If to the Executive:
Frederick A. Landman
146 Clapboard Ridge Road
Greenwich, CT 06830
Telephone: (203) 625-9667
Facsimile: (203) 861-8682
20. Entire Agreement. This Agreement may be amended only by
an agreement in writing signed by both parties. This Agreement contains the
entire agreement between
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the parties or their affiliates with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, oral or
written, between the parties or their affiliates with respect to the subject
matter of this Agreement including, specifically, the employment agreement
between Executive and PanAmSat Corporation dated December 31, 1992, as amended
and the severance agreement between Executive
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and PanAmSat Corporation dated as of May 15, 1996.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
MAGELLAN INTERNATIONAL, INC.
By:_______________________________
Name:
Title:
FREDERICK A. LANDMAN
By:_______________________________
HUGHES COMMUNICATIONS, INC.
(Waiving any potential
restrictions of applicable
agreements and consenting to the
actions of the Executive and the
obligations of the Company
specified in Section 7(j))
By:_______________________________
PANAMSAT CORPORATION (With
respect to the termination
of the Severance Agreement
and Employment Agreement
described in Section 20)
By:_______________________________
25
Exhibit 10.31
AMENDED AND RESTATED
COLLATERAL TRUST AGREEMENT
This AMENDED AND RESTATED COLLATERAL TRUST AGREEMENT (this
"Agreement"), dated as of June 13, 1997, is entered into by and among PANAMSAT
CORPORATION (formerly known as "Magellan International, Inc."), a Delaware
corporation ("Newco"), HUGHES COMMUNICATIONS, INC., a California corporation
("HCI," and together with Newco, the "Newco Group"), SATELLITE COMPANY, LLC, a
Nevada limited liability company ("Contributor"), GRUPO TELEVISA, S.A., a
corporation (Sociedad Anonima) organized under the laws of Mexico ("Parent"),
and IBJ SCHRODER BANK & TRUST COMPANY, a New York banking corporation with
offices at One State Street, New York, New York 10004, as Collateral Trustee for
Newco Group (the "Trustee").
RECITALS
A. The parties hereto have entered into that certain
Collateral Trust Agreement, dated as of May 16, 1997 (the "Original Trust
Agreement") and Contributor, Parent and the Trustee have entered into that
certain Pledge and Security Agreement, dated as of May 16, 1997 (the "Pledge and
Security Agreement").
B. The Original Trust Agreement was entered into in connection
with that certain Stock Contribution and Exchange Agreement, dated as of
September 20, 1996 by and among Newco Group, Contributor and Parent (the "Stock
Contribution and Exchange Agreement"), which provides, among other things, for
the transfer by Contributor of all of the stock of Univisa, Inc. ("Univisa"), a
Delaware corporation, to Newco.
C. The Stock Contribution and Exchange Agreement provides that
Contributor and Parent, jointly and severally, shall indemnify, save and hold
harmless Newco Group, its affiliates and Subsidiaries, with respect to certain
matters upon the terms and subject to the conditions provided in the Stock
Contribution and Exchange Agreement and that as security therefor (and not in
lieu thereof) a trust estate shall be established for the protection of Newco
Group, its affiliates and Subsidiaries. This trust estate was established
pursuant to the Original Trust Agreement, and is continued pursuant to this
Agreement.
D. Contributor has requested that it be permitted to
substitute Approved Letters of Credit (as defined herein) for cash deposited
pursuant to the Original Trust Agreement. The parties hereto are willing to
amend and restate the Original Trust Agreement in accordance with the terms and
provisions contained herein.
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AGREEMENT
In consideration of the foregoing and the mutual promises
contained herein and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties, intending to be legally
bound, hereby agree as follows:
1. Defined Terms.
(a) For purposes of this Agreement:
"Affiliate" means any person or entity that is certified by
the Indemnitees' Agent, in a certificate delivered to the Trustee, (i) to be the
owner, directly or indirectly, of at least 25% of the outstanding equity or
ownership interests (on a primary basis and not on a fully diluted basis) in the
issuer of any Letter of Credit or (ii) to be owned, directly or indirectly, in
whole or in any part constituting 25% or more of its outstanding equity or
ownership interests (on a primary basis and not on a fully diluted basis), by
any person or entity described in clause (i) herein.
"Approved Letter of Credit" means (i) any Initial Letter of
Credit or (ii) any Letter of Credit that (A) conforms to the requirements in
Section 4(e)(i) hereof and (B) has been approved in writing by the Indemnitees'
Agent (which approval shall not be unreasonably withheld).
"cash" means United States Dollars in such form as may, at the
time, be legal tender for the payment of debts in the United States.
"Cash Equivalents" means Short-Term Treasuries or Joint
Approval Cash Equivalents.
"Event of Default" has the meaning assigned in the Pledge and
Security Agreement.
"Expiration Date" means the last day in the 91-day period
following the expiration of the statutes of limitations applicable to the
assessment of any tax against Univisa or USHI (or any affiliate or Subsidiary of
either of them) with respect to all Pre-Closing Periods taking into account any
waivers, extensions or tollings of any such statutes of limitation; provided,
however, that if as of the last day of such 91-day period there are any Tax
Claims, then, notwithstanding the foregoing, the Expiration Date shall not occur
until the day immediately following the day on which there are no Tax Claims.
"Fair Market Value" means, as of any date of determination,
the average of the Quoted Prices of Newco Common Stock for the 20 consecutive
trading days prior to such date of determination.
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"Final Tax Amount" means, as of any date of determination, the
amount, if any, of a Liability or Damages in respect of taxes of Univisa or USHI
(or any affiliate or Subsidiary of either of them) for which Contributor and
Parent would be liable under Section 8.2(a)(ii) of the Stock Contribution and
Exchange Agreement, which taxes (a) are determined to be due and payable as of
such date pursuant to (i) a final determination made by, or settlement concluded
with, the applicable taxing authority with respect to such taxes or (ii) a
final, binding and nonappealable judgment rendered with respect to such taxes
and (b) are unpaid as of such date.
"First Tier United States Bank" means (a) any commercial bank
which (i) is organized under the laws of the United States or any state thereof,
(ii) accepts deposits insured by the Federal Deposit Insurance Corporation,
(iii) has a combined capital and surplus greater than $500 million and (iv) has
a long term senior debt rating of at least AA from Standard & Poor's Corporation
or Aa2 from Moody's Investors Service, Inc.; provided that for purposes of
satisfying the requirement set forth in this clause (iv), such rating shall not
be less than A from Standard & Poor's Corporation or less than A from Moody's
Investors Service, Inc. (or, if at any time, either of such rating services
shall not be rating such obligations, then equivalent ratings under this clause
(iv) from such other nationally recognized rating services as may be acceptable
to Newco); or (b) even if it does not meet the criteria set forth in clause (a),
from the date of this Agreement until the Indemnitees' Agent delivers to the
Trustee and the Representative a notice to the effect that it is no longer
acceptable as a First Tier United States Bank, Citibank, N.A.
"Initial Letters of Credit" means letters of credit in the
form attached as Annex 2 hereto issued on the date hereof.
"Joint Approval Cash Equivalents" means United States Dollar
indebtedness in any of the following forms, if and to the extent the Trustee has
been directed to invest in such indebtedness in a joint written investment
direction signed both by the Representative and by the Indemnitees' Agent: (i)
marketable direct obligations guaranteed by the United States Government and
backed by the full faith and credit of the United States, issued after July 18,
1984 and maturing within 90 days from the date of acquisition thereof, (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof, issued after July 18, 1984 maturing within 90 days from
the date of acquisition thereof and, at the time of acquisition, having a rating
in one of the two highest rating categories obtainable from either Standard &
Poor's Corporation or Moody's Investors Service, Inc. (or, if at any time,
neither of such rating services shall be rating such obligations, then from such
other nationally recognized rating services as may be acceptable to Newco),
(iii) certificates of deposit maturing within 90 days from the date of
acquisition thereof and issued by any commercial bank which accepts deposits
insured by the Federal Deposit Insurance Corporation and which has a combined
capital and surplus greater than $500 million and a long term certificate of
deposit rating in one of the two highest rating categories obtainable from
either Standard & Poor's Corporation or Moody's Investors Service, Inc. (or, if
at any time, neither of such rating services shall be rating such
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obligations, then from such other nationally recognized rating services as may
be acceptable to Newco) (any such commercial bank, an "Acceptable Bank"); (iv)
repurchase agreements, Eurodollar deposits and bankers acceptances maturing
within 90 days from the date of acquisition thereof and issued by an Acceptable
Bank; (v) investments in money market funds that invest solely in (x) Short-Term
Treasuries or repurchase agreements secured by Short-Term Treasuries or (y)
Joint Approval Cash Equivalents of the type described in clauses (i) and (ii)
above or repurchase agreements secured by such Joint Approval Cash Equivalents;
or (vi) any other instrument that is specifically approved in writing by
Contributor, Parent and Newco Group, if the Trustee receives opinions of counsel
reasonably satisfactory to it stating that such writing has been duly
authorized, executed and delivered by each of them and is binding upon and
enforceable against each of them.
"Known Liabilities" means Liabilities or Damages which are
Indemnification Obligations that are now or hereafter included as Scheduled
Liabilities or are the subject of a Liabilities Claim.
"Letter of Credit Expiry Date means the date set forth in any
Letter of Credit as the day on which such letter of credit will expire.
"Letters of Credit" means the Initial Letters of Credit and
any and all Approved Letters of Credit at any time delivered to the Trustee
pursuant to Sections 5(d) or 8(a) hereof, any and all Approved Letters of Credit
issued in extension thereof or replacement or substitution therefor, and any and
all other Approved Letters of Credit at any time delivered to and accepted by
the Trustee.
"Liabilities Claim" means a claim (other than a Tax Claim) by
any party that a Liability or Damages which are Indemnification Obligations
exist, but only to the extent that such claimed Liability or Damages are not
included as Scheduled Liabilities.
"Maintenance Level" means (i) prior to the third anniversary
of the date hereof, $5 million, (ii) on and after the third and prior to the
tenth anniversary of the date hereof, $2 million, and (iii) -0- thereafter.
"Newco Common Stock" means Common Stock, $.01 par value, of
Newco.
"Pending Amounts" means, at any time, the aggregate amount of
all Liabilities Claims, except Liabilities Claims in respect of a Liability or
Damages for which both (i) it has been and remains agreed or determined, in
accordance with Section 6 hereof, that a reserve should or should not be
maintained as part of the Scheduled Liabilities and (ii) no claim, dispute,
arbitration or proceeding is pending as to the amount of any such reserve.
"Quoted Price" means the last reported sale price of Newco
Common Stock as reported by NASDAQ or, if Newco Common Stock is listed on a
national securities exchange, the last reported sale price on such exchange
(which shall be for consolidated trading if
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applicable to such exchange), or if neither so reported or listed, the last
reported bid price of Newco Common Stock.
"Scheduled Liabilities" means Known Liabilities listed on the
Schedule of Liabilities to be maintained pursuant to Section 6 hereof.
"Short-Term Treasuries" means United States Dollar
indebtedness consisting of marketable direct obligations issued by the United
States Government or any agency thereof and backed by the full faith and credit
of the United States, in the form of Book-entry Securities maintained by the
Trustee or any nominee acting for it, solely in its name, in an account at the
Federal Reserve Bank of New York under the Treasury/Reserve Automated
Debt Entry System, issued after July 18, 1984 and maturing within 90 days from
the date of acquisition thereof.
"Tax Claim" means, as of any date of determination, a claim
asserted or assessed in any (i) revenue agent's report, (ii) notice of proposed
adjustment, (iii) notice of deficiency, (iv) notice of assessment, (v) judicial
pleading, (vi) other written document of similar import received from a taxing
authority or (vii) potential claim relating to an applicable requirement or
obligation to notify a state or local taxing authority with respect to a federal
income tax adjustment involving a claim described in clauses (i) - (vi),
involving, in any case, a Liability or Damages in respect of taxes of Univisa or
USHI (or any affiliate or Subsidiary of either of them) for which Contributor
and Parent would be liable under Section 8.2(a)(ii) of the Stock Contribution
and Exchange Agreement but only to the extent that such claim has not been
resolved pursuant to either (a) a final determination made by, or settlement
concluded with, the applicable taxing authority with respect to such claim, or
(b) a final, binding and nonappealable judgment rendered with respect to such
claim.
"Tax Reserve" means 100% of the amount of any Tax Claim or
Final Tax Amount, as applicable.
"Unknown Liabilities" means Liabilities or Damages which are
Indemnification Obligations but are not Known Liabilities.
(b) Capitalized terms used herein without definition
shall have the meanings ascribed to them in the Stock Contribution and
Exchange Agreement.
2. Declaration of Trust. To secure the payment,
observance and performance by Contributor and Parent of each and all of their
present and future indemnities, liabilities and obligations at any time arising
under, pursuant to or in respect of Article VIII of the Stock Contribution and
Exchange Agreement (collectively, the "Indemnification Obligations"), and the
covenants and conditions of this Agreement and the Pledge and Security Agreement
(collectively, including the Indemnification Obligations, the "Secured
Obligations"), Newco grants and transfers to the Trustee to hold, and the
Trustee is hereby authorized and directed by the Contributor and Parent to
accept, and the Trustee hereby
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accepts, in trust under this Agreement, for the benefit of Newco Group, its
affiliates, Subsidiaries and all other present and future holders of any of the
Secured Obligations and each and all of their members, successors and assigns,
all right, title and interest in the following property:
(a) an amount equal to the aggregate amount of the
Scheduled Liabilities set forth on the Statement of Liabilities
attached hereto as Annex 1, in cash or Short-Term Treasuries or Initial
Letters of Credit (as such amount may be increased or decreased
hereafter pursuant to the provisions hereof, "Fund A"); and
(b) $25 million in cash or Short-Term Treasuries or
Initial Letters of Credit (the "Liquid Collateral") plus 5,000,000
shares of Newco Common Stock, represented by certificate number TP00018
issued for such number of shares in the name of Contributor,
accompanied by an assignment thereof duly executed in blank by
Contributor (as such Liquid Collateral amount or number of shares may
be increased or decreased hereafter pursuant to the provisions hereof,
"Fund B")
(collectively, the "Initial Trust Estate," and together with (i) all rights and
interests of the Trustee under the Pledge and Security Agreement, (ii) any and
all Letters of Credit at any time hereafter delivered to the Trustee, (iii) any
and all other property at any time hereafter transferred to the Trustee in trust
under this Agreement, and (iv) any and all present and future income,
distributions, substitutions, replacements and proceeds of or from the Initial
Trust Estate and any other such property, the "Trust Estate"). The Trustee, its
successors in trust under this Agreement and its assigns and the assigns of its
successors and assigns in trust shall have and hold the foregoing Trust Estate
until released to Newco Group or Contributor in accordance with the terms
hereof, in trust under and subject to the terms and conditions set forth herein
for the benefit of Newco Group and as security for and for the enforcement of
the payment, observance and performance of all Secured Obligations (it being
understood that, while all of the Trust Estate secures all Secured Obligations,
Fund A shall be allocated for administrative purposes to Scheduled Liabilities
and Fund B shall be allocated for administrative purposes to Unknown
Liabilities, Liabilities Claims, Final Tax Amounts and Tax Claims). Newco Group,
Contributor and Parent hereby consent to the foregoing declaration of trust and
agree that the Trust Estate is to be held and applied by the Trustee subject to
the further covenants, conditions and trust set forth herein.
3. Appointment of Representative and Indemnitees' Agent.
(a) Contributor and Parent hereby designate Jaime
Davila, Lawrence W. Dam, Charles Steinberg, Guillermo Canedo White,
Javier Mondragon, Raul Lopez Martinez, and Emilio Romano, each of whom
shall be authorized to act alone, as their duly appointed agents and
attorneys-in-fact, with full power of substitution, in any and all
capacities, for all purposes of this Agreement (each, the
"Representative"). Actions and inactions by such Representatives under
this Agreement shall be binding and conclusive on Contributor and
Parent and may be conclusively relied upon by the other parties hereto.
Contributor and/or Parent, upon 10 days' written notice to the other
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parties, may remove any person appointed as Representative or appoint
another person as Representative. No Representative shall be liable for
any action taken or omitted by it, or any action suffered by it to be
taken or omitted, in good faith, and in the exercise of its own best
judgment.
(b) Newco and HCI hereby appoint Kenneth H. Heintz
and James W. Cuminale, each of whom shall be authorized to act alone,
as their duly appointed agents and attorneys-in-fact, with full power
of substitution, in any and all capacities, for all purposes of this
Agreement (each, the "Indemnitees' Agent"). Actions and inactions by
the Indemnitees' Agent under this Agreement shall be binding and
conclusive on Newco Group and may be conclusively relied upon by the
other parties hereto. HCI or Newco, upon 10 days' written notice to the
other parties, may remove any person appointed as Indemnitees' Agent or
appoint another person as Indemnitees' Agent. No Indemnitees' Agent
shall be liable for any action taken or omitted by it, or any action
suffered by it to be taken or omitted, in good faith, and in the
exercise of its own best judgment.
4. Investment and Valuation of Trust Estate; Letters of
Credit.
(a) The Trustee hereby acknowledges receipt of the
Initial Trust Estate.
(i) The Trustee shall keep all cash at any
time held by it as part of the Trust Estate, from whatever
source such cash may be derived, in a non-interest-bearing
account in United States Dollars maintained by the Trustee
solely in the name of the Trustee, as Trustee hereunder,
except that:
(1) Such cash shall be invested and
reinvested by the Trustee in Short-Term Treasuries,
(i) if the Trustee is so directed in writing by the
Indemnitees' Agent and if the Indemnitees' Agent
states in such writing that an Event of Default has
occurred and is continuing, and (ii) after the
Trustee receives written directions from the
Representative, stating that any and all cash held by
the Trustee as part of the Trust Estate shall be kept
invested in Short-Term Treasuries, and
(2) Notwithstanding the foregoing,
such cash shall be invested by the Trustee in Joint
Approval Cash Equivalents if and to the extent so
directed by the Representative and the Indemnitees'
Agent, acting jointly, but only if the Trustee has
received an opinion of counsel approved in writing by
the Indemnitees' Agent, confirming to the reasonable
satisfaction of the Indemnitees' Agent that on the
date of such investment, if such investment is made
in the manner directed by the Representative and the
Indemnitees' Agent, the Trustee will have a valid
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and perfected security interest in such investment
and the proceeds thereof, free from any adverse
claim, if the Trustee makes such investment in good
faith and without notice of an adverse claim; and
(ii) Such cash and Cash Equivalents shall
be invested and reinvested solely:
(1) at the risk of Contributor and
Parent; and
(2) in the name of the Trustee or
its nominee.
(b) The Trustee shall be entitled to sell or redeem
any such investment as necessary to make any distributions required
under this Agreement and shall not be liable or responsible for any
loss resulting from any such sale or redemption or from any investment
or failure to invest made in accordance with this Agreement.
(c) Income, if any, resulting from the investment of
the Trust Estate shall be for the account of Contributor, but shall be
held as part of the Trust Estate, subject to the provisions of this
Agreement.
(d) For purposes of this Agreement, as of any date of
valuation, and unless otherwise expressly provided herein, (i) Newco
Common Stock shall be valued at Fair Market Value, (ii) cash shall be
valued at face value, (iii) Cash Equivalents shall be valued at the
principal amount outstanding thereon and (iv) Letters of Credit shall
be valued at the amount available to be drawn thereunder, except that:
(i) Any Cash Equivalent consisting of an
investment in a fund having a readily ascertainable market
value or surrender value shall be valued at such value,
(ii) Any Cash Equivalent that has matured
and has not been paid shall be valued at zero,
(iii) Any Letter of Credit that is not an
Approved Letter of Credit shall be valued at zero,
(iv) Any Letter of Credit issued by a bank
which no longer is a First Tier United States Bank shall be
valued at zero effective on the 45th day after the
Indemnitees' Agent delivers to the Trustee and the
Representative a notice to such effect, requesting that an
Approved Letter of Credit issued by a First Tier United States
Bank for at least the same amount as such Letter of Credit be
substituted for such Letter of Credit (and if such substitute
Approved Letter of Credit is delivered to and accepted by the
Trustee prior to such day,
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the Trustee is hereby authorized and directed to surrender
such Letter of Credit to Contributor and Parent against
delivery of such substitute Approved Letter of Credit),
(v) Any Letter of Credit on which any
payment demand was made in conformity with such Letter of
Credit and was not honored by payment in full of the amount
demanded within one business day after demand, and all other
Letters of Credit issued by the issuer of such Letter of
Credit or by any Affiliate of such Issuer, shall be valued at
zero,
(vi) Any Cash Equivalent on which any
partial payment of principal or any interest payment is more
than three days past due shall be valued at zero, and
(vii) Any Cash Equivalent or Letter of
Credit as to which the Indemnitees' Agent has notified the
Trustee, Contributor and Parent in writing that Newco Group
reasonably believes the obligor is (or more probably than not
is) unable to pay the Cash Equivalent at maturity or to pay
the full amount available under such Letter of Credit upon
demand in conformity with the terms thereof shall be valued at
such amount, including zero, as the Indemnitees' Agent may set
forth in such notice. The valuation set forth in a notice
given pursuant to this Section 4(d)(vii) shall become
effective on the eleventh day after receipt of such notice by
the Trustee, unless prior to such eleventh day the
Representative gives the Trustee and the Indemnitees' Agent
written notice of objection to such valuation, in which event
the Cash Equivalent or Letter of Credit subject to such
valuation shall be valued at face value until the Trustee
receives notice reasonably acceptable to the Trustee of any
different value that has been determined in accordance with
Section 7 hereof and shall thereafter be valued at the value
so determined; provided that during such interim period, the
Cash Equivalent or Letter of Credit may be given a different
value pursuant to any other subclause of this Section 4(d).
(e) In the case of any and all Letters of Credit at
any time held by the Trustee as part of the Trust Estate:
(i) Each Letter of Credit shall:
(1) be issued by a First Tier United
States Bank through any foreign or domestic branch
and shall constitute the lawful commitment and
obligation of such issuer to pay United States
Dollars up to the amount set forth therein upon one
or more demands made in conformity with the terms set
forth therein prior to an expiry date set forth
therein;
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(2) be issued for the benefit of
the Trustee and name the Trustee as the sole
beneficiary thereof;
(3) be available for payment in
United States Dollars on the first business day after
the business day of demand made upon the issuer by
presentation at the issuer's office prior to 11:00
a.m. (local time in the jurisdiction of the office of
the issuer where draws on such Letter of Credit are
to be presented) of a certificate, in the form set
forth in the Letter of Credit, demanding a drawing on
the Letter of Credit and presented in compliance with
the terms of the Letter of Credit (whether made by
manual delivery or by any form of teletransmission),
and on the second business day after any such demand
made after 11:00 a.m., as follows:
A) the issuer will pay to
the Trustee the full amount of such Letter
of Credit at any time during the period that
commences on the 30th day prior to the
Expiry Date set forth in such Letter of
Credit, if demand for such payment is made
either (i) by the Trustee, acting alone
through any officer of the Trustee, or (ii)
by the Indemnitees' Agent;
B) subject to Section 7 of
this Agreement, the issuer will pay to the
Trustee the full amount of such Letter of
Credit on the first business day after the
45th day after the Indemnitees' Agent
delivers to the Trustee and the
Representative a notice to the effect that
the issuer is no longer a First Tier United
States Bank, requesting that an Approved
Letter of Credit issued by a First Tier
United States Bank for at least the same
amount as such Letter of Credit be
substituted for such Letter of Credit, if a
substitute Approved Letter of Credit has not
been delivered to the Trustee and if demand
for such payment is made by the Trustee,
acting alone through any officer of the
Trustee; and
C) the issuer will pay to
the Trustee the amount set forth in any
demand at any time made by the Trustee,
acting alone through any officer of the
Trustee, up to the amount of such Letter of
Credit; provided that, prior to presentation
of such demand pursuant to this subclause
(C), all required notices have been given
and any objections have been resolved
pursuant to the terms of this Agreement;
provided that, for purposes of this subclause (3), a
"business day" shall mean, for any Letter of Credit,
any day other than a Saturday, Sunday
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or other day on which banks in New York City or in
the jurisdiction of the office of the issuer where
draws on such Letter of Credit are to be presented
are authorized to close;
(4) be transferable solely to a
successor Trustee which succeeds to the Trustee
pursuant to Section 13 hereof;
(5) be available for an unlimited
number of demands for payment, specifically stating
that the failure to make demand for payment on any
occasion shall not affect, impair or limit the
availability of the credit or the right to make an
unlimited number of payment demands at any later time
or on any other occasion;
(6) not require presentation of any
draft, submission of any certificate, proof of fact,
proof of claim or any other document whatsoever, as a
condition to the honor of such Letter of Credit or
for any other purpose, except as otherwise set forth
in this Section;
(7) not require presentation of such
Letter of Credit as a condition to the honor of such
Letter of Credit or for any other purpose, whether
for exhibition, notation, or surrender or otherwise;
and
(8) either (a) be in the form, in
all material respects, of an Initial Letter of
Credit, (b) comply, in all material respects, with
the foregoing provisions of this Section 4(e)(i), as
determined by Newco and the Trustee, or (c) be, in
all respects, both as to form and as to substance,
satisfactory to Newco in its reasonable discretion
and to the Trustee in its reasonable discretion, and
the Trustee shall have received notice from the
Indemnitees' Agent as to Newco's acceptance of a
Letter of Credit pursuant to subclauses (b) or (c) of
this subclause (8); provided that the parties hereto
agree without limitation that (I) any change in the
proposed substance of any proposed Letter of Credit
from that of the Initial Letters of Credit or the
substance of the requirements of this Section 4(e)(i)
shall be deemed to be "material" for purposes of this
subclause (8) and (II) any change which could
reasonably be expected to have an adverse effect on
the ability of the Trustee or the Indemnitees' Agent,
as the case may be, to draw under a Letter of Credit,
or that could reasonably be expected to make any such
draw more difficult or time consuming, shall be
deemed to be "material" for purposes of this
subclause (8).
Newco and the Trustee hereby confirm their approval of the
Initial Letters of Credit.
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(ii) No later than the 20th day prior to the
Letter of Credit Expiry Date of each Letter of Credit, the
Trustee shall demand payment of the full amount available
under such Letter of Credit from the issuer thereof in
conformity with the terms of such Letter of Credit unless an
Approved Letter of Credit in at least the same amount has been
delivered to and accepted by the Trustee in substitution for
such Letter of Credit no later than the 30th day prior to such
Letter of Credit Expiry Date (and if such substitute Approved
Letter of Credit is delivered to and accepted by the Trustee
prior to such day, the Trustee is hereby authorized and
directed to surrender such Letter of Credit to Contributor and
Parent against delivery of such substitute Approved Letter of
Credit).
(iii) The Trustee shall demand payment of
amounts available under Letters of Credit if, as, when and to
the extent required to fund any payment or distribution
required to be made by the Trustee from the Trust Estate
pursuant to this Agreement (including, without limitation,
after all required notices have been given and any objections
have been resolved pursuant to the terms of this Agreement),
but only to the extent the cash and Cash Equivalents then held
by the Trustee as part of the Trust Estate are not sufficient
to fund such payment or distribution.
(iv) The Trustee shall demand payment of all
amounts available under any and all Letters of Credit in
conformity with the terms thereof, promptly upon the Trustee's
receipt of written directions to do so from the Indemnitees'
Agent, if either (i) a Make-Whole Breach has occurred and is
then continuing or (ii) the Indemnities' Agent certifies in
such written directions that an Event of Default has occurred
and is continuing.
(v) The Trustee shall demand payment of
amounts available under Letters of Credit if, as, when and to
the extent the Trustee at any time receives written directions
to do so from the Representative.
(vi) The Trustee's obligations under this
Section 4(e) may be waived or modified only by joint written
directions signed by the Representative and the Indemnitees'
Agent, but such waiver or modification shall be effective (i)
only if and to the extent specifically set forth in such joint
written directions, (ii) only on the specific occasion and for
the specific purpose for which such joint written directions
were given, without in any manner impairing the rights and
obligations of the parties (as set forth herein) as to any
other occasion, even if identical to such occasion, or for any
other purpose, and (iii) in the case of any modification, only
if the Trustee is willing to consent thereto in its sole
discretion.
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(vii) Subject to subclause (vi) above, the
Trustee's obligations to demand such payment as set forth in
this Section 4(e) shall be absolute and unconditional and
shall not be affected or diminished by any contrary notice or
demand delivered to the Trustee by or on behalf of Contributor
or Parent or any other person except as specifically provided
for in this Agreement.
(viii) All proceeds of any demand for
payment under any Letter of Credit shall be remitted to the
Trustee and shall be held by it as part of the Trust Estate.
5. Required Trust Estate Values.
(a) The Trust Estate shall be valued by the Trustee
at the end of each calendar quarter (a "quarterly valuation"). The
Trustee shall send the other parties hereto written notice of such
quarterly valuation within 10 days after the end of such quarter.
(b) The value of Fund B shall be as follows:
(i) After the date hereof and prior to the
date which is 16 months after the date hereof, at any
quarterly valuation the value of Fund B shall be no less than
$175 million, of which no less than $25 million shall be cash
or Cash Equivalents.
(ii) After the date which is 16 months after
the date hereof and prior to the termination of this
Agreement, at any such quarterly valuation, the value of Fund
B shall be no less than $100 million, of which no less than
$25 million shall be cash or Cash Equivalents.
(iii) After the Expiration Date, the value
of Fund B may be reduced to the Maintenance Level, all of
which may be maintained in Newco Common Stock.
Notwithstanding the foregoing, while there is any Tax Claim, Final Tax
Amount or pending Liabilities Claim, Fund B shall be maintained in an
amount equal to the sum of all Tax Reserves for all Tax Claims, Final
Tax Amounts, the Maintenance Level, all Pending Amounts, and all other
amounts required to be paid out from or maintained in Fund B.
(c) At any quarterly valuation, the value of Fund A
shall be no less than the then amount of Scheduled Liabilities.
(d) If the values of Funds A and B as determined by
the Trustee in accordance with this Agreement in any quarterly
valuation are less than the values then
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required to be maintained under Sections 5(b) and 5(c) hereof (a
"deficiency"), the Trustee shall notify the parties and, within 15 days
from the date such quarterly valuation is sent by the Trustee to the
other parties hereto, Contributor and Parent shall cause to be
deposited with the Trustee, as part of the Trust Estate, (i) cash,
Short-Term Treasuries or Approved Letters of Credit in an aggregate
amount equal to the deficiency in Fund A and (ii) cash, Short-Term
Treasuries, Approved Letters of Credit or Newco Common Stock in an
aggregate amount equal to the deficiency in Fund B, provided that no
less than $25 million of Fund B shall at all times consist of cash or
Cash Equivalents or Approved Letters of Credit (such deposits, a "Make-
Whole Payment"). Notwithstanding the foregoing, if the deficiency in
Fund B would be eliminated if the value of the Newco Common Stock
increased 11.1 % or less from the value used in the quarterly
valuation, the deficiency in Fund B need not be deposited.
(e) If the values of Funds A and B as determined by
the Trustee in any quarterly valuation are more than the values then
required to be maintained under Sections 5(b) and (c) hereof (a
"surplus"), the Trustee shall notify the parties and, within 15 days
from the date such quarterly valuation is sent by the Trustee to the
other parties hereto, the Trustee shall cause, at the request of
Contributor, either (i) the surplus of cash or Cash Equivalents in Fund
A to be released to Contributor or (ii) at the request of Contributor,
either (1) the amount available to be drawn under a Letter of Credit in
Fund A to be reduced by an amount equal to the surplus or (2) a Letter
of Credit in Fund A with an amount available to be drawn equal to the
surplus released to Contributor, and shall cause, at the request of
Contributor, either (i) the surplus of cash or Cash Equivalents or
Newco Common Stock in Fund B to be released to Contributor or (ii) at
the request of Contributor, either (1) the amount available to be drawn
under a Letter of Credit in Fund B to be reduced by an amount equal to
the surplus or (2) a Letter of Credit in Fund B with an amount
available to be drawn equal to the surplus released to Contributor,
provided that no less than $25 million of Fund B shall at all times
consist of cash or Cash Equivalents or Approved Letters of Credit.
Notwithstanding the foregoing, if the surplus in Fund B would be
eliminated if the value of the Newco Common Stock decreased by 10% or
less from the value used in the quarterly valuation, the surplus in
Fund B shall not be released. Further, no amount shall be released to
Contributor pursuant to this Section 5(e) while an Event of Default is
continuing.
(f) Contributor and Parent may deliver a Make-Whole
Payment consisting of cash or Cash Equivalents or Approved Letters of
Credit or (to the extent permitted under Section 5(d) hereof) Newco
Common Stock owned by Contributor or Parent or by any Subsidiary of
Parent, if, in the case of Newco Common Stock owned by any such
Subsidiary, (i) such Subsidiary executes and delivers to the Trustee an
agreement reasonably satisfactory to the Trustee and Newco Group by
which such Subsidiary agrees to join in and be bound by this Agreement
and the Pledge and Security Agreement on the same terms and conditions
as those by which Parent is bound, together with such financing
statements, assignments and transfer instruments
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requested as to such Subsidiary by the Trustee or Newco Group, and (ii)
Parent executes and delivers to the Trustee an instrument reasonably
satisfactory to the Trustee warranting the due authorization,
execution, delivery, legality and enforceability of such agreement,
financing statements, assignments and transfer instruments and
guaranteeing due and punctual payment and performance of all
liabilities and obligations of such Subsidiary thereunder.
6. Trust Estate Scheduled Liabilities - Determination
and Payment.
(a) The Trustee shall maintain on an ongoing basis a
schedule of Known Liabilities (the "Schedule of Liabilities")
determined as provided in this Section 6. The initial Schedule of
Liabilities is the Statement of Liabilities attached hereto as Annex 1.
Each Scheduled Liability shall be stated at an amount equal to its
liquidated amount if it is a Known Liability which is liquidated (i.e.,
in an amount certain) or at its related reasonable reserve if it is a
Known Liability which is unliquidated (i.e., in an amount which is
uncertain or contingent). The liquidated amount or the reserve, as the
case may be, with respect to any Known Liability is its "Scheduled
Amount." Amounts claimed under Tax Claims and Final Tax Amounts shall
not be Scheduled Liabilities.
(b) The Schedule of Liabilities shall also include
for Known Liabilities which are liquidated their respective discrete
(one or more) or periodic due dates and the names and addresses of the
persons entitled to payment. Unless the Representative or Indemnitees'
Agent shall give notice to the Trustee at least 10 days prior to the
due date of any Known Liability which is liquidated that payment should
not be made on such due date, the Trustee shall pay from Fund A Known
Liabilities which are liquidated when due, and the related Known
Liability shall be deemed satisfied and removed (to the extent
satisfied) from the Schedule of Liabilities.
(c) If any party (other than the Trustee) becomes
aware that any Known Liabilities which are liquidated have arisen after
the date hereof, such party shall (through the Representative or the
Indemnitees' Agent, as the case may be) give notice, and provide
relevant documentation, if any, to the other parties. The notice shall
contain the information called for by the first sentence of Section
6(b) hereof. If no party (other than the trustee) object to such notice
within 10 days of the notice, the subject Known Liabilities shall be
added to the Schedule of Liabilities.
(d) If any party (other than the Trustee) becomes
aware that any Known Liabilities which are unliquidated have arisen
after the date hereof, such party shall (through the Representative or
the Indemnitees' Agent, as the case may be) give notice, and provide
relevant documentation, if any, to the other parties and shall propose
a reasonable reserve therefor. If no party (other than the Trustee)
objects to such notice within 10 days of the notice, the subject Known
Liabilities shall be added to the Schedule of Liabilities at the amount
of the proposed reserve.
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(e) If there shall occur any developments or events
which cause any party (other than the Trustee) reasonably to believe
that the reserve for a Known Liability which is unliquidated or the
scheduled amount of a Known Liability which is liquidated should be
adjusted, such party shall (through the Representative or the
Indemnitees' Agent, as the case may be) give notice to the other
parties of the proposed adjustment and the basis therefor. If no party
(other than the trustee) objects to such notice within 10 days of the
notice, the reserve or Scheduled Amount for such Known Liability shall
be adjusted as proposed.
(f) If Known Liabilities which are unliquidated
become liquidated through final resolution or settlement, the party
responsible for the resolution shall give notice to the other parties
of the nature and amount of the resolution and present evidence thereof
in the form of a release, receipt, or otherwise. If no party (other
than the trustee) objects to such notice within 10 days of the notice,
the subject Known Liability shall be deemed liquidated at the amount of
the resolution and, up to the Scheduled Amount, shall be paid as
provided in Section 6(b) hereof.
(g) In addition, if the Representative shall give
notice to the other parties hereto at least 15 days prior to a
quarterly valuation that Parent or Contributor has satisfied, or caused
to be satisfied, any Known Liability and shall present evidence thereof
in the form of a receipt, release or other proof of its claim, then if
the Indemnitees' Agent does not give notice of objection within 10 days
of the Representative's notice, the Trustee shall, at the request of
Contributor, either (i) reimburse Contributor or Parent (as the case
may be) out of the Trust Estate for the amount paid in satisfaction of
the Known Liability up to its Scheduled Amount or (ii) at the request
of Contributor, cause either (1) the amount available to be drawn under
a Letter of Credit in Fund A or Fund B, as the case may be, to be
reduced by an amount equal to the amount paid in satisfaction of the
Known Liability up to its Scheduled Amount or (2) a Letter of Credit in
Fund A or Fund B, as the case may be, with an amount available to be
drawn equal to the amount paid in satisfaction of the Known Liability
up to its Scheduled Amount to be released to Contributor. Such Known
Liability shall thereafter be deemed satisfied and removed (to the
extent satisfied) from the Schedule of Liabilities.
(h) In addition, if the Indemnitees' Agent shall give
notice to the other parties hereto at least 15 days prior to a
quarterly valuation that HCI or Newco has incurred or has satisfied, or
caused to be satisfied, any Known Liability and shall present evidence
thereof in the form of a receipt, release or other proof of its claim,
then if the Representative does not give notice of objection within 10
days of the Indemnitees' Agent's notice, the Trustee shall reimburse
HCI or Newco (as the case may be) out of the Trust Estate for the
amount paid in satisfaction of the Known Liability up to its Scheduled
Amount. Such Known Liability shall thereafter be deemed satisfied and
removed (to the extent satisfied) from the Schedule of Liabilities.
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(i) When so directed in writing by the Representative
upon at least 10 days' prior written notice, if (and only if) no
Make-Whole Breach is then continuing under Section 8(c) hereof, the
Indemnitees' Agent shall direct the Trustee (x) to sell or otherwise
liquidate (in any commercially reasonable manner set forth in the
Representative's notice) Cash Equivalents or Newco Common Stock held by
the Trustee in Fund B as necessary to pay and discharge a Tax Claim or
Final Tax Amount and (y) to pay directly to the taxing authority
certified in the Representative's notice to be entitled to payment of
such Tax Claim or Final Tax Amount, on account and in satisfaction of
such Tax Claim or Final Tax Amount, such amount as is set forth in the
Representative's notice. The Trustee shall not take any action under
this Section 6(i) unless it receives such notice from the Indemnitees'
Agent, regardless of the Trustee's receipt of any notice from the
Representative.
(j) The Trustee (i) shall not be obligated to give
any notice under any of the foregoing provisions in this Section 6,
(ii) shall not be entitled to object to any notice given under any such
provisions, (iii) shall not be obligated to make any adjustment in the
Schedule of Liabilities, unless and until it receives notice thereof in
accordance with such provisions and either (x) the time for objection
thereto, as set forth in such provisions, has expired or (y) any such
objection that was timely given has been resolved pursuant to Section 7
hereof, and (iv) shall give notice to the other parties hereto if it
believes in good faith that any liquidated Known Liability has arisen,
but shall not have any liability for (or suffer any diminution in its
rights under Section 14 hereof on account of) any such notice given or
not given by it in good faith.
7. Certain Disputes. In the event that either the
Representative or the Indemnitees' Agent shall give notice of objection to any
notice given under any of the provisions of Sections 4(d), 4(e) (other than
Section 4(e)(i)(3)(A)), 6 or 9 hereof, the parties (other than the Trustee)
shall promptly meet and confer and attempt to resolve the objection. If they
succeed, they shall promptly and jointly notify the Trustee and the Trustee
shall act in accordance with the notice. If they shall not succeed within 15
days or, in the case of an objection with respect to Section 4(e)(i)(3)(B), 5
days of the notice of objection, they shall, within an additional 45 days or, in
the case of an objection with respect to Section 4(e)(i)(3)(B), 15 days,
commence and complete an arbitration proceeding in accordance with the
provisions of Section 24 hereof. Unless the parties shall otherwise jointly
instruct the Trustee, the Trustee shall act with respect to the subject
valuation (as to notice of objection under Section 4(d) hereof) or the subject
Known Liability (as to notice of objection under Section 6 hereof) in accordance
with the arbitrator's award when received. A party must have a reasonable basis
in giving any such notice of objection and shall set forth the basis of its
objection in the notice.
8. Certain Releases, Substitutions; Consequences of
Make-Whole Breach.
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(a) When so directed in writing by the Representative
upon at least 10 days' prior written notice (with a copy to the
Trustee), the Indemnitees' Agent shall instruct the Trustee to release
from Fund A and/or Fund B and deliver to Contributor, at the election
of the Representative, any or all cash, Cash Equivalents and Newco
Common Stock then held by the Trustee in Fund A and/or Fund B, as the
case may be, but only if prior to any such release and delivery there
is deposited with the Trustee, to be held as part of the Trust Estate
and as part of Fund B, an Approved Letter of Credit in an amount at
least equal to the then value of the cash, Cash Equivalents and the
Fair Market Value of the Newco Common Stock so to be released. If any
Letter of Credit to be delivered pursuant to this Section 8(a) is not
in the form of an Initial Letter of Credit, then Newco shall be given
at least 30 days' advance notice of the proposed issuance of such
Letter of Credit, with copies of such Letter of Credit and all
documents pertaining thereto. The Trustee shall not take any action
under this Section 8(a) unless it receives the notice herein required
from the Indemnitees' Agent (which notice shall not be unreasonably
withheld), regardless of the Trustee's receipt of any notice from the
Representative.
(b) When so directed in writing by the Representative
upon at least five days prior written notice, the Indemnitees' Agent
shall instruct the Trustee to release from Fund B and deliver to
Contributor the number of shares of Newco Common Stock specified in
such notice, but only if Contributor transfers to the Trustee, to be
held as part of the Trust Estate, cash in an amount equal to the Fair
Market Value of such shares of Newco Common Stock, concurrently with
and in exchange for delivery of such shares of Newco Common Stock. The
Trustee shall not take any action under this Section 8(b) unless it
receives the notice herein required from the Indemnitees' Agent (which
notice shall not be unreasonably withheld), regardless of the Trustee's
receipt of any notice from the Representative.
(c) If Contributor and Parent at any time fail to
deposit any Make- Whole Payment required to be deposited by them
pursuant to Section 5(d) hereof (a "Make-Whole Breach"), then at all
times thereafter until the full amount of such Make-Whole Payment is
received by the Trustee, in cash and as part of the Trust Estate, (i)
the Indemnitees' Agent shall have the sole power to direct and control
the application of the Trust Estate to the settlement, payment and
satisfaction of any and all Scheduled Liabilities, Liabilities Claims,
Final Tax Amounts and Tax Claims (whether or not disputed or
liquidated), at such times and in such amounts, manner and order and on
such conditions as the Indemnitees' Agent from time to time, in its
sole discretion, may determine and (ii) subject to applicable laws,
regulations, orders, judgments and decrees and the provisions of
Section 13 hereof, the Trustee shall honor all instructions received by
it in writing from the Indemnitees' Agent to collect any or all Cash
Equivalents, sell any or all Newco Common Stock and otherwise liquidate
any and all property of the Trust Estate and pay, from cash in the
Trust Estate, any or all such Scheduled Liabilities, Liabilities
Claims, Final Tax Amounts and Tax Claims, in such amount, manner and
order as the Indemnitees' Agent in its sole discretion may elect
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and direct, in each case (x) whether or not any claim so paid has then
been settled or liquidated or is then binding upon Contributor or
Parent under any judgment or award, (y) whether or not Contributor or
Parent has participated in or approved any settlement or payment of any
claim, and (z) whether or not Parent or Contributor has given the
Trustee notice of objection to any such instructions or notice of any
demand for arbitration or judicial relief in respect thereof. No such
action by the Indemnitees' Agent shall be determinative of any
liability of Parent or Contributor for or as to any Liability or
Damages pursuant to the provisions of the Stock Contribution and
Exchange Agreement.
9. Termination of Agreement.
(a) Ninety (90) days after the 10th anniversary of
the date hereof (the "Cut-off Date"), (i) the Trustee shall determine,
by a valuation in accordance with Sections 4 and 6 hereof, the excess,
if any, (the "Excess Amount") of (A) all property then held in the
Trust Estate over (B) the amount required to pay the sum of all
Scheduled Liabilities, all Tax Reserves for all Tax Claims and Final
Tax Amounts, all Pending Amounts, and all other amounts required to be
paid from Fund B, and (ii) the Trustee shall release such Excess Amount
to Contributor, unless at such time the statute of limitations
applicable to the assessment of United States federal income tax
against Univisa or USHI (or any affiliate or Subsidiary of either of
them) with respect to any Pre-Closing Period shall not have expired, in
which event any Excess Amount shall be determined and released to
Contributor upon the day following the earliest to occur of (x) the
expiration of such statute of limitations, (y) a final determination by
the Internal Revenue Service to the effect that neither Univisa nor
USHI (nor any affiliate or Subsidiary of either of them) has any
unsatisfied liability for taxes for which Parent and Contributor would
be liable pursuant to Section 8.2(a)(ii) of the Stock Contribution and
Exchange Agreement, and (z) the assertion of a Tax Claim by the
Internal Revenue Service.
(b) After the Cut-off Date, no Known Liabilities
shall be added to the Schedule of Liabilities other than as a result of
the determination of Pending Amounts.
(c) After satisfaction and discharge of all remaining
Scheduled Liabilities and Final Tax Amounts, determination of all
Pending Amounts, final, indefeasible nonappealable satisfaction and
discharge of all Tax Claims and Liabilities Claims, and payment or
satisfaction of all previously unpaid amounts to which the Trustee may
be entitled under Section 14 hereof, and after the Excess Amount
(if any) is released in accordance with Section 9(a) hereof, all
amounts remaining in the Trust Estate shall be delivered to
Contributor.
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(d) Upon the final distribution of all of the Trust
Estate in accordance with the terms of this Agreement, this Agreement
shall terminate, except that the provisions of Sections 13 and 14
hereof shall survive such termination.
(e) The Trustee shall not be obligated to release or
deliver any assets of the Trust Estate pursuant to this Section 9
except if and to the extent (i) the Trustee receives joint written
instructions from the Representative and the Indemnitees' Agent,
directing such release or delivery, (ii) the Trustee (x) receives
notice from the Representative directing that such release or delivery
be made on any date occurring after the Cut-Off Date, (y) has given the
Indemnitees' Agent notice of the Trustee's receipt of such direction
from the Representative, and at least 60 days have elapsed since such
notice was given to the Indemnitees' Agent, and (z) has not received
notice of objection to such release or delivery from the Indemnitees'
Agent, or (iii) in accordance with an arbitrator's award, directing
that such release or delivery be made on any date occurring after the
Cut-Off Date, delivered in an arbitration proceeding conducted in
accordance with the provisions of Section 24 hereof.
10. Directions to Trustee. Both prior to and after the
occurrence of any Event of Default, the Trustee shall (subject to Sections 12
and 13 hereof) exercise and enforce its rights and remedies under the Pledge and
Security Agreement in accordance with such instructions as the Trustee from time
to time may receive from Newco Group, so long as such instructions do not, in
the good faith opinion of the Trustee, require it to engage in any action which
would violate any applicable law, regulation, judgment, order or decree or
expose it to liability for which it has not received indemnification from Newco
Group pursuant to Section 14 hereof.
11. Tax Matters. Each party to this Agreement shall provide a
completed IRS Form W-8 or Form W-9 to the Trustee upon request of the Trustee.
Subject to Section 14, Contributor and Parent, jointly and severally, covenant
and agree to indemnify and hold the Trustee harmless against all liability for
tax withholding and/or reporting for any payments made by the Trustee pursuant
to this Agreement.
12. Duties of the Trustee. The Trustee shall have no duties or
responsibilities other than those expressly set forth in this Agreement and the
Pledge and Security Agreement, and no implied duties or obligations shall be
read into this Agreement or the Pledge and Security Agreement against the
Trustee. The Trustee shall have no duty to enforce any obligation of any person,
other than as provided herein. The Trustee shall be under no liability to anyone
by reason of any breach or failure on the part of any party hereto or any maker,
endorser or other signatory of any document or any other person to perform such
person's obligations under any such document.
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13. Liability of the Trustee; Withdrawal.
(a) The Trustee shall not be liable for any action
taken or omitted by it, or any action suffered by it to be taken or
omitted, in good faith (except as provided in the immediately
succeeding sentence), and may rely conclusively and shall be protected
in taking or omitting to take any action based upon any order, notice,
demand, certificate, opinion or advice of counsel (including counsel
chosen by the Trustee), statement, instrument, report or other paper or
document (not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth and
acceptability of any information therein contained) which is believed
by the Trustee to be genuine and to be signed or presented by the
proper person(s). The Trustee shall not be held liable for any error in
judgment made in good faith by an officer of the Trustee unless it
shall be proved that the Trustee was grossly negligent in ascertaining
the pertinent facts or acted intentionally in bad faith. The Trustee
shall not be bound by any notice of demand, or any waiver,
modification, termination or rescission of this Agreement or any of the
terms hereof, unless evidenced by a writing delivered to the Trustee
signed by the proper party or parties and, if the duties or rights of
the Trustee are affected, unless it shall give its prior written
consent thereto.
(b) Without limitation of any other provision of this
Agreement, the Trustee shall not be responsible for and may
conclusively rely upon and shall be protected, indemnified and held
harmless by Contributor and Parent, acting jointly and severally, for
the sufficiency or accuracy of the form of, or the execution, validity,
value or genuineness of any document or property received (from any
party), held or delivered by it hereunder, or of the signature or
endorsement thereon, or for any description therein; nor shall the
Trustee be responsible or liable in any respect on account of the
identity, authority or rights of the persons executing or delivering or
purporting to execute or deliver an document, property or this
Agreement.
(c) No provision of this Agreement or the Pledge and
Security Agreement shall require the Trustee to expend or risk its own
funds or incur any liability. The Trustee may refuse to perform any
duty or exercise any right or power hereunder or thereunder unless it
receives indemnity reasonably satisfactory to it against any loss,
liability or expense.
(d) The Trustee makes no statement, promise,
representation or warranty whatsoever, and shall have no liability
whatsoever, to Newco Group or its successors or assigns as to the
authorization, execution, delivery, legality, enforceability or
sufficiency of this Agreement or the Pledge and Security Agreement or
as to the creation, perfection, priority or enforceability of any
security interest granted hereunder or thereunder or as to the
existence, ownership, quality, condition, value or sufficiency of any
of the Trust Estate or as to any other matter whatsoever, except only
that the Trustee represents and warrants to the other parties hereto
that (i) it
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has the right, power and authority, and all required licenses and
consents, to execute, deliver and perform its duties under this
Agreement and the Pledge and Security Agreement, and (ii) this
Agreement and the Pledge and Security Agreement have been duly executed
and delivered by it, upon due authorization, and (without representing
as to the legality, binding effect or sufficiency of any provision
herein or therein) are binding upon and legally enforceable against it,
subject to laws generally affecting the enforcement of creditors'
rights and the effect of equitable principles, whether considered in a
court of law or equity.
(e) In the event that the Trustee shall become
involved in any arbitration or litigation relating to the Trust Estate,
the Trustee is authorized to comply with any final, binding and
nonappealable decision reached through such arbitration or litigation.
(f) The Trustee may resign at any time and be
discharged from its duties and obligations hereunder and under the
Pledge and Security Agreement, by giving notice to the other parties.
Such resignation shall not discharge or otherwise affect the Trust
Estate or any property comprising part of the Trust Estate or any
beneficial interest therein or the rights, powers and liens created by
or arising under this Agreement and the Pledge and Security Agreement.
Such resignation shall take effect when a successor Trustee has been
appointed by Newco and has accepted the trusts herein provided. If a
successor Trustee does not take office within 60 days after the
retiring Trustee resigns, the retiring Trustee may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
(g) A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to Newco
Group. Thereupon, the resignation of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Agreement and all of the rights,
powers and liens granted to the Trustee under the Pledge and Security
Agreement. The successor Trustee shall mail a notice of its succession
to Contributor and Parent. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee provided
all sums owing to the retiring Trustee have been paid.
(h) Notwithstanding the replacement of the Trustee
pursuant to this Section 13, the resigning Trustee shall continue to be
entitled to the rights, immunities and benefits provided under Sections
12, 13, 14 and 24 hereof.
14. Trustee's Fees and Indemnification. All fees (as may
from time to time be agreed in writing by the Trustee, Contributor and Parent)
and reasonable expenses and disbursements of the Trustee for its services
hereunder and under the Pledge and Security Agreement, shall be paid by
Contributor and Parent. Newco Group, Contributor and Parent, jointly and
severally, hereby agree to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without gross negligence or
wilful misconduct
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on the part of the Trustee, including legal or other fees arising out of or in
connection with its entering into this Agreement and the Pledge and Security
Agreement and carrying out its duties hereunder or thereunder, including the
costs and expenses of defending itself against any claim of liability in the
premises or any action for interpleader. The Trustee shall be under no
obligation to institute or defend any action, suit, or legal proceeding in
connection with this Agreement or the Pledge and Security Agreement, unless
first indemnified and held harmless to its satisfaction in accordance with the
foregoing, except that the Trustee shall not be indemnified against any loss,
liability or expense arising out of its bad faith, gross negligence or willful
misconduct. Such indemnity shall survive the termination or discharge of this
Agreement or resignation of the Trustee.
15. Inspection. All funds or other property held as part
of the Trust Estate shall at all times be clearly identified on the Trustee's
accounts as being held by the Trustee hereunder. Any party hereto may at any
time during the Trustee's business hours (with reasonable notice) inspect any
records or reports relating to the Trust Estate.
16. Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given (i) when received if
personally delivered, (ii) when receipt is automatically acknowledged if
transmitted by telecopy, electronic or digital transmission method, (iii) the
day after it is sent, if sent for next day delivery to an address within the
United States and Puerto Rico by recognized overnight delivery service (e.g.
Federal Express), (iv) the third day after it is sent, if sent for next day
delivery to any other address by recognized international delivery service, and
(v) and upon receipt, if sent by certified or registered mail, return receipt
requested. In each case notice shall be sent to:
(a) If to Contributor or the Representative:
SATELLITE COMPANY, LLC
c/o Fonovisa Centroamerica, S.A.
De Popa de Curridabat 25 Mts. Este
Edificio Galerias del Este
Local 8
San Jose, Costa Rica
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Joseph A. Stern, Esq.
Telephone: (212) 859-8000
Telecopy: (212) 859-4000
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(b) If to Parent:
GRUPO TELEVISA, S.A.
Avenida Vasco de Quiroga # 2000
Colonia Santa Fe
Mexico, QF 01210
Attention: Emilio Romano
Telephone: 011-525-261-2414
Telecopy: 011-525-261-2487
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Joseph A. Stern, Esq.
Telephone: (212) 859-8000
Telecopy: (212) 859-4000
(c) If to Newco or Indemnitees' Agent:
PANAMSAT CORPORATION
1 Pickwick Plaza, Suite 270
Greenwich, Connecticut 06830
Attention: James W. Cuminale, Esq.
Telephone: (203) 622-6664
Telecopy: (203) 861-8684
with a copy to:
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Dennis J. Friedman
Telephone: (212) 408-5200
Telecopy: (212) 541-5369
(d) If to HCI:
HUGHES COMMUNICATIONS, INC.
PO Box 9712
Long Beach, California 90810-9928
Attention: Jerald Farrell, President
Telephone: (310) 525-5010
Telecopy: (310) 525-5015
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with a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: Bruce R. Lederman, Esq.
Telephone: (213) 485-1234
Telecopy: (213) 891-8763
(e) If to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Department
Telephone: (212) 858-1234
Telecopy: (212) 858-2952
17. Non-Exclusive Remedy. Newco Group, Contributor and
Parent agree and acknowledge that the Trust Estate shall not be Newco Group's
exclusive method of receiving indemnification from Contributor and Parent
pursuant to Section 8.2 of the Stock Contribution and Exchange Agreement and
Contributor and Parent shall be and remain in all respects personally liable for
all Indemnification Obligations and each liability may be enforced by any lawful
means.
18. Modification; Waiver. Subject to applicable law, this
Agreement may be amended, modified or supplemented, with respect to any of the
terms contained herein, only by written agreement of the parties and the rights,
remedies, immunities and benefits created hereby or arising hereunder in favor
of any person may be waived by it only by and instrument in writing signed by
it. No such right, remedy, immunity or benefit shall be deemed waived by reason
of such person's failure to act, oral statements or course of conduct, including
any grant of a waiver on a different or prior occasion.
19. Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the word "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". This Agreement shall not be construed for or
against either party by reason of the authorship or alleged authorship of any
provision hereof or by reason of the status of the respective parties.
20. Assignment. Except for assignments by a member of the
Newco Group to any affiliate or Subsidiary of such member with respect of some
or all of its rights under this Agreement (which assignment can be made without
the written consent of Contributor or
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Parent), neither this Agreement, nor any of the rights, interests or obligations
hereunder, shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of Contributor, Parent
and Newco Group. The Trustee shall not be bound by any assignment, unless it
receives written notice thereof. No other party hereto may assign its
obligations to the Trustee without the Trustee's written consent. Subject to the
foregoing provisions of this Section 20, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
21. Governing Law. This Agreement shall be construed and
interpreted, and the rights of the parties shall be determined, in accordance
with the laws of the State of New York (without reference to the choice of law
provisions).
22. Interest in Trust Estate. Neither Contributor nor
Parent has any interest in the Trust Estate except only as to any property which
has been released from the Trust Estate and delivered to Contributor or Parent
as herein provided, effective upon such release and delivery.
23. Severability. Each party agrees that, should any
court or other competent authority hold any provision of this Agreement or part
hereof to be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or required
hereby, the validity, legality and enforceability of the remaining provisions
and obligations contained or set forth herein shall not in any way be affected
or impaired thereby. Upon any such holding that any provision of this Agreement
is null, void or unenforceable, the parties will negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are consummated to the extent possible. The
Trustee shall not be obligated to agree to any amendment that adversely affects
its rights or obligations hereunder. Except as otherwise contemplated by this
Agreement, to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent authority, such
party shall incur no liability unless such party did not in good faith seek to
resist or object to the imposition or entering of such order or judgment;
provided, however, that nothing in this Section 23 shall be deemed to limit or
otherwise modify the Trustee's rights under Sections 13, 14 and 24 hereof,
including Section 13(c).
24. Arbitration. Notwithstanding anything in any other
Section of this Agreement to the contrary, in the event that there shall be a
dispute among the parties arising out of or relating to this Agreement, the
parties agree that such dispute shall be resolved by final and binding
arbitration in Los Angeles, California, administered by Judicial Arbitration &
Mediation Services, Inc. ("JAMS"), in accordance with JAMS' rules of practice
then in effect or such other procedures as the parties may agree to prior to the
Closing. Depositions may be taken and other discovery may be obtained during
such arbitration proceedings to the same extent as authorized in civil judicial
proceedings. Any award issued as a result of such arbitration shall be final and
binding between the parties thereto, and shall be enforceable by
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any court having jurisdiction over the party against whom enforcement is sought.
The fees and expenses of such arbitration (including reasonable attorneys' fees)
or any action to enforce an arbitration award shall be paid by the party that
does not prevail in such arbitration.
Notwithstanding anything in the preceding paragraph of this
Section 24 to the contrary, the parties shall have the right to submit to a
court, in accordance with the following provisions of this Section 24, (i) any
claim asserted by the Trustee, in its personal capacity, for the payment of
fees, expenses, disbursements or indemnification due to the Trustee under
Section 14 hereof (or due under any indemnity given to the Trustee pursuant to
Section 14 hereof), (ii) any claim asserted against the Trustee personally,
seeking damages or other relief against the Trustee (and not for purposes of
binding the Trust Estate) based on or relating to any alleged breach of any duty
or other actionable conduct of the Trustee, and (iii) any claim asserted by or
against the Trustee personally (and not for purposes of binding the Trust
Estate) otherwise relating in any manner to the rights, immunities and benefits
granted to the Trustee under Sections 12, 13 and 14 hereof; and, with respect to
solely to such claims:
(a) No party shall be obligated or entitled to submit
such claim to arbitration or be bound by any arbitrator's award that
might in any manner relate to such claim;
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
SUCH CLAIM MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THOSE
COURTS FOR PURPOSES OF ADJUDICATION OF ANY SUCH CLAIM. EACH PARTY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH JURISDICTION FOR PURPOSES OF ADJUDICATION OF ANY SUCH CLAIM.
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS MAY BE MADE BY ANY
MEANS PERMITTED BY NEW YORK LAW.
(c) EACH PARTY HERETO WAIVES ALL RIGHTS TO A TRIAL BY
JURY OF ANY SUCH CLAIM AND AGREES THAT SUCH CLAIM SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH PARTY
FURTHER AGREES THAT ITS RIGHT TO A TRIAL BY JURY IS HEREBY WAIVED AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR
IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE PLEDGE AND SECURITY AGREEMENT OR ANY PROVISION HEREOF OR
THEREOF, INSOFAR AS IT MAY CREATE A DEFENSE TO ANY
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SUCH CLAIM. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE PLEDGE
AND SECURITY AGREEMENT.
25. Remedies Cumulative. All rights and remedies of each
party hereto are cumulative of each other and of every other right or remedy
such party may otherwise have at law or in equity, and the exercise of one or
more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
26. Counterparts. This Agreement may be executed in two
or more counterparts, each of which will be considered one and the same
instrument and shall become effective when executed and delivered by each of the
parties.
27. Specimen Signature. Each person at any time appointed
as Representative or Indemnitees' Agent shall present a specimen signature to
the Trustee promptly upon appointment.
28. Release of Cash or Cash Equivalents in Connection
with Initial Letters of Credit. Upon receipt by the Trustee of the Initial
Letters of Credit, the Trustee shall release to the Contributor (i) cash or Cash
Equivalents from Fund A in an amount equal to the amount available to be drawn
under the Initial Letter of Credit in Fund A and (ii) cash or Cash Equivalents
from Fund B in an amount equal to the amount available to be drawn under the
Initial Letter of Credit in Fund B; provided that any such delivery of cash or
Cash Equivalents shall be made against delivery by Contributor of a receipt for
such cash or Cash Equivalents.
29. Contribution of Trust Estate. The parties hereto
acknowledge that the Trust Estate created pursuant to this Agreement is a
continuation of the "Trust Estate" as defined in the Original Trust Agreement.
[intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this
Collateral Trust Agreement as of the date first written above.
PANAMSAT CORPORATION, a Delaware
corporation
By:_____________________________
Name:
Title:
HUGHES COMMUNICATIONS, INC., a
California corporation
By:_____________________________
Name:
Title:
SATELLITE COMPANY, LLC, a Nevada
limited liability company
By:_____________________________
Name:
Title:
GRUPO TELEVISA, S.A., a corporation
(Sociedad Anonima) organized under
the laws of Mexico
By:_____________________________
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY,
a New York banking corporation
By:_____________________________
Name:
Title:
S-1
Exhibit 10.32
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of May
16, 1997, is entered into by SATELLITE COMPANY, LLC, a Nevada limited liability
company, and GRUPO TELEVISA, S.A., a corporation (Sociedad Anonima) organized
under the laws of Mexico (together, the "Debtors"), in favor of IBJ SCHRODER
BANK & TRUST COMPANY, a New York banking corporation, as Trustee under the
Collateral Trust Agreement described below ("Secured Party").
RECITALS
A. The Debtors and Magellan International, Inc., a Delaware corporation
("Newco"), and Hughes Communications, Inc., a California corporation ("HCI" and,
together with Newco, the "Newco Group") are parties to a Stock Contribution and
Exchange Agreement, dated as of September 20, 1996.
B. Pursuant to the Stock Contribution and Exchange Agreement, (i) the
Debtors and Newco Group have entered into a Collateral Trust Agreement with
Secured Party, as Trustee, dated as of May 16, 1997, under which Secured Party
holds the Trust Estate therein described in trust as set forth therein (as from
time to time amended, the "Collateral Trust Agreement"), and (ii) the Debtors
are executing and delivering this Pledge and Security Agreement to Secured Party
to hold as part of such Trust Estate.
AGREEMENT
In consideration of the foregoing and the mutual promises contained
herein and for other good and valuable consideration the receipt and adequacy of
which are hereby acknowledged, the Debtors, intending to be legally bound,
hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Collateral Trust Agreement Definitions. The following terms
shall have the meanings assigned to them in the Collateral Trust Agreement:
Cash Equivalents
Letter of Credit
Newco Common Stock
Initial Trust Estate
<PAGE>
Stock Contribution and Exchange Agreement
Trust Estate
SECTION 1.2 U.C.C. Definitions. Where applicable and except as
otherwise expressly provided herein, terms used herein (whether or not
capitalized) shall have the respective meanings assigned to them in the Uniform
Commercial Code as in effect in the State of New York on the date of the Stock
Contribution and Exchange Agreement (the "Code").
SECTION 1.3 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Agreement" means this Pledge and Security Agreement.
"Collateral" is defined in Section 2.1.
"Event of Default" means any of the following events: (i) a Debtor
fails to pay any Secured Obligation when due, and such failure continues for 10
calendar days after either (A) it is acknowledged in writing by any Debtor or
(B) such Secured Obligation is determined to be due and payable in arbitration
proceedings conducted in accordance with Section 24 of the Collateral Trust
Agreement or by order of a court of competent jurisdiction; (ii) any
representation or warranty made by any Debtor in the Collateral Trust Agreement
or this Agreement proves to have been inaccurate in any material respect when
made, and such inaccuracy continues for 30 calendar days after written notice
thereof is given to the Debtors by Secured Party or by Newco Group; (iii) any
Debtor fails to perform or observe any term, covenant or agreement contained in
the Collateral Trust Agreement or this Agreement, and such failure continues for
30 calendar days after either (A) it is acknowledged in writing by any Debtor or
(B) such failure is determined to have occurred and such term, covenant or
agreement is determined to be enforceable in arbitration proceedings conducted
in accordance with Section 24 of the Collateral Trust Agreement or by order of a
court of competent jurisdiction; (iv) any Debtor admits in writing its inability
to pay its debts generally or makes a general assignment for the benefit of
creditors; (v) any proceeding is instituted by or against any Debtor seeking an
order for relief under the United States Bankruptcy Code or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property under any law relating to bankruptcy, insolvency, liquidation or
reorganization or relief of debtors and either (A) any such relief in any such
proceeding is sought or consented to by it or an order for any such relief is
entered against it, or (B) any such proceeding instituted against it remains
undismissed and unstayed for a period of 60 calendar days; (vi) any Debtor takes
any corporate action to authorize any of the actions described in clause v
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above; (vii) any provision of the Collateral Trust Agreement or this Agreement
for any reason ceases to be valid and binding on any Debtor in any respect
materially adverse to Secured Party or the holders of Secured Obligations, and a
valid and binding reasonably equivalent substitute is not offered to Secured
Party, to be held in trust as part of the Trust Estate, within 30 calendar days
after written notice thereof is given to the Debtors by Secured Party or by
Newco Group; (viii) any Debtor repudiates or purports to revoke or terminate, in
any material respect, any of its obligations under the Collateral Trust
Agreement or this Agreement, and such event continues for 10 calendar days after
written notice thereof is given to the Debtors by Secured Party or by Newco
Group; or (ix) the Collateral Trust Agreement and this Agreement for any reason
do not create or cease to create a valid and perfected first priority security
interest in any property described herein as part of the Collateral, and such
event continues for 10 calendar days after written notice thereof is given to
the Debtors by Secured Party or by Newco Group.
"Lien" means any mortgage, deed of trust, lien, pledge, charge,
security interest, hypothecation, assignment, deposit arrangement or encumbrance
of any kind in respect of any asset, whether or not filed, recorded or otherwise
perfected or effective under applicable law, as well as the interest of a vendor
or lessor under any conditional sale agreement, capital or finance lease or
other title retention agreement relating to such asset.
"Proceeds" includes (i) any and all payments, dividends, cash, options,
warrants, rights, instruments and other property of any type or nature at any
time received, receivable or otherwise distributed, voluntarily or
involuntarily, on account of, in respect of or in replacement, substitution or
exchange for any item of Collateral or upon the collection, sale, or other
disposition of any item of Collateral; (ii) any and all insurance or payments
under any indemnity, warranty or guaranty now or hereafter payable in respect of
any item of Collateral or any proceeds thereof or any loss relating thereto;
(iii) any and all claims against any person or entity based on or in any respect
relating to or arising from any item of Collateral; (iv) any and all "proceeds"
of any Collateral, as the term "proceeds" is used in the Code; and (v) any and
all property and interests in property acquired with or in exchange for any of
the foregoing.
"Secured Obligations" means each and all present and future
indemnities, liabilities and obligations of every type and description of any or
all of the Debtors at any time arising under, pursuant to or in respect of (i)
Article VIII of the Stock Contribution and Exchange Agreement, (ii) this
Agreement, or (iii) the Collateral Trust Agreement (in each case whether now
outstanding or hereafter arising or incurred, whether sole, joint, several, or
joint and several and, in the case of each Debtor, whether owed by it or by any
other Debtor) and all costs and expenses incurred by Secured Party in asserting,
collecting, enforcing or protecting its security interest in any Collateral in
any bankruptcy case or insolvency proceeding to which any Debtor may be party
and all collection costs
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and enforcement expenses incurred by Secured Party in retaking, holding,
preparing for sale, selling or otherwise disposing of or realizing on any
Collateral or otherwise exercising or enforcing any of its rights or remedies
hereunder, together with Secured Party's reasonable attorneys' fees and
disbursements and court costs related thereto.
"Secured Party" means the person identified as such in the preamble to
this Agreement, acting as Trustee under the Collateral Trust Agreement, and any
successor Trustee thereunder.
ARTICLE II
SECURITY INTEREST AND COLLATERAL
SECTION 2.1 Creation of Security Interest. As security for the due and
punctual payment and performance of each and all of the Secured Obligations,
each Debtor hereby grants Secured Party a security interest in all right, title
and interest of such Debtor in, to, under or derived from the following property
(collectively, the "Collateral"), in each case whether now owned or hereafter
acquired by such Debtor and wherever located:
(a) NEWCO COMMON STOCK: 5,000,000 shares of Newco Common Stock and
all other stock of Newco at any time delivered or transferred to or held by
Secured Party as part of the Trust Estate;
(b) CASH, CASH EQUIVALENTS AND OTHER ASSETS OF THE TRUST ESTATE:
All cash, Cash Equivalents and other property of every type and description
now or at any time hereafter constituting part of the Trust Estate;
(c) INTEREST IN THE TRUST ESTATE OR UNDER THE TRUST AGREEMENT: All
rights and interests of every type and description, whenever and however
arising, in or to the Trust Estate or in, to or under the Collateral Trust
Agreement; and
(d) PROCEEDS: All Proceeds, except Proceeds that have been
released from the Trust Estate and delivered to Contributor pursuant to the
Collateral Trust Agreement.
SECTION 2.2 Delivery of Instruments. All stock certificates, notes,
bonds, debentures and other instruments constituting Collateral shall be
delivered to and held by Secured Party, without any notice from or demand by
Secured Party, in each case in suitable form for transfer by delivery or
accompanied by duly executed instruments of
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<PAGE>
transfer or assignments in blank or with appropriate endorsements, in form and
substance satisfactory to Secured Party.
SECTION 2.3 Further Assurances. Each Debtor will promptly (and in no
event later than five days after request by Secured Party) execute and deliver,
and use its reasonable and diligent best efforts to obtain from others, any and
all instruments, certificated securities and documents (including, without
limitation, assignments, transfer documents and transfer notices, financing
statements and other lien notices), in form and substance satisfactory to
Secured Party, and take all other actions which are necessary or, in the good
faith judgment of Secured Party, desirable or appropriate to create, perfect,
protect, or enforce Secured Party's security interests in the Collateral, to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral, to protect the Collateral against the rights,
claims or interests of third persons, or to effect or to assure further the
purposes and provisions of this Agreement, and the Debtors will pay all costs
related thereto and all reasonable expenses incurred by Secured Party in
connection therewith.
SECTION 2.4 Survival of Security Interest. Except as otherwise required
by law, the security interest granted hereby shall, except as to property
released from the Trust Estate and delivered to or for account of the Debtors by
Secured Party pursuant to the Collateral Trust Agreement, (i) remain enforceable
as security for any and all Secured Obligations, whether now outstanding or
created or incurred at any future time, until all of the Secured Obligations
have been indefeasibly paid, retired and discharged, and (ii) survive any sale,
exchange or other disposition by a Debtor of its interest in any Collateral and
remain enforceable against each transferee and subsequent owner of such interest
(to the fullest extent permitted under applicable law), even if such sale,
exchange or other disposition is permitted at the time under the Collateral
Trust Agreement.
SECTION 2.5 Reinstatement. If at any time any payment on any Secured
Obligation is set aside, avoided, or rescinded or must otherwise be restored or
returned, this Agreement and the security interest created hereby shall remain
in full force and effect and, if previously released or terminated, shall be
automatically and fully reinstated, without any necessity for any act, consent
or agreement of any Debtor, as fully as if such payment had never been made and
as fully as if any such release or termination had never become effective.
ARTICLE III
DEBTORS' REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties. The Debtors represent and
warrant that:
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(a) Schedule A completely and accurately describes the cash and Newco
Common Stock delivered to Secured Party as part of the Initial Trust Estate
pursuant to the Collateral Trust Agreement.
(b) Each Debtor's chief executive office is located at the address
shown as the chief executive office on Schedule B hereto. No Debtor has any
place of business within the United States. All tangible Collateral and all
of each Debtor's records relating to any intangible Collateral owned by it
are kept solely at such chief executive office.
(c) No Debtor does business, or at any time during the five years
preceding the date of this Agreement has done business, within the United
States.
(d) Each Debtor at all times is (or, as to any item of Collateral
acquired after the date hereof, will be) the sole legal and beneficial owner
of all Collateral reflected on its books and records as belonging to it and
has exclusive possession and control thereof free and clear of any and all
Liens, subject to the Collateral Trust Agreement and this Agreement and the
interests, possession and control granted to Secured Party thereunder. No
financing statement, notice of lien, mortgage, deed of trust or instrument
similar in effect covering the Collateral, any portion thereof, or any
proceeds thereof, exists or is on file in any public office, except as may
have been filed in favor of Secured Party.
(e) All originals of all stock certificates, notes, bonds, debentures
and other instruments constituting Collateral have been delivered to Secured
Party with all necessary or appropriate endorsements.
(f) Except as set forth in Schedule C and except for the Code, no
Debtor and no Collateral purported to be granted by it is subject to any
requirement of law or contractual obligation which prohibits, restricts, or
limits the execution, delivery or performance of this Agreement or the
creation, perfection or enforcement of the security interest purported to be
created hereby.
(g) Neither Debtor has a United States federal taxpayer identification
number.
(h) Each Debtor is a corporation or limited liability company
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and is duly qualified to do business
and in good standing in each jurisdiction where its material assets are
located or its material operations are
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conducted, except where the failure to be so qualified could not reasonably
be expected to cause a change that would be material and adverse to such
Debtor.
(i) Each Debtor has the corporate or partnership power to execute,
deliver and perform its obligations under the Collateral Trust Agreement and
this Agreement.
(j) The execution, delivery and performance by each Debtor of the
Collateral Trust Agreement and this Agreement (i) have been duly authorized
by all necessary action of its board of directors or governing authority,
(ii) do not contravene its certificate or articles of incorporation or
by-laws or its members agreement or other governing document, and (iii) do
not and will not result in or require the creation of any Lien (other than
pursuant to the Collateral Trust Agreement and this Agreement) upon any of
its property or assets.
(k) No authorization or approval or other action by, and no notice to
or filing with, any governmental officer, department, agency or authority is
required for the due execution, delivery and performance by each Debtor of
the Collateral Trust Agreement or this Agreement, except the filing of
financing statements to perfect Secured Party's security interest which have
been duly filed.
(l) The Collateral Trust Agreement and this Agreement are legal, valid
and binding obligations of each Debtor, enforceable against each Debtor in
accordance with their respective terms, subject to laws generally affecting
the enforcement of creditors' rights.
(m) The execution, delivery and performance by each Debtor of the
Collateral Trust Agreement and this Agreement (i) do and will comply with
all applicable laws, (ii) do and will comply with, and do not and will not
conflict with, constitute a breach of or give rise to any Lien, default,
event of default or other adverse consequence under, any note, indenture,
undertaking, agreement or other contractual obligation that is binding upon
any Debtor or secured by or enforceable against any property of any Debtor.
(n) Secured Party holds an enforceable and perfected first Lien in the
Collateral. No other Liens are outstanding against the Collateral.
ARTICLE IV
COVENANTS OF THE DEBTORS
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SECTION 4.1 Covenants. Each Debtor covenants and agrees that so long as
the security interest created hereby remains outstanding:
(a) Each Debtor will deliver to Secured Party each instrument and
certificated security included in the Collateral as set forth in Section
2.3.
(b) No Debtor will (i) cause, permit or suffer any voluntary or
involuntary change in its name, identity or corporate structure, or in the
location of its chief executive office, or (ii) keep any tangible Collateral
or any records relating to any Claim owned by it, or permit or suffer any
such Collateral or records to be moved, to any other location unless (in
each case) (x) Schedule B has first been appropriately supplemented with
respect thereto, and (y) an appropriate financing statement has been filed
in the proper office and in the proper form, and all other requisite actions
have been taken, to perfect or continue the perfection (without loss of
priority) of Secured Party's security interest in the Collateral.
(c) Each Debtor will defend the Collateral against all claims and
demands of all persons at any time claiming the same or any interest
therein.
(d) No Debtor will encumber, sell, exchange or otherwise dispose of any
item of Collateral or any interest therein, or permit or suffer any such
item to be encumbered, sold, exchanged or otherwise disposed of, unless (i)
such action is permitted at the time under the Collateral Trust Agreement
and (ii) the Debtors make all payments on account of the Secured Obligations
required to be made therefrom, or in exchange or substitution therefor, and
each Debtor takes all other actions required to be taken in connection
therewith, under the Collateral Trust Agreement.
(e) Secured Party is hereby authorized to file one or more financing
statements or fixture filings, and continuations thereof and amendments
thereto, relative to all or any part of the Collateral, without the
signature of any Debtor where permitted by law. A copy of this Agreement may
be filed as a financing statement wherever permitted by law.
(f) Secured Party may at any time (but shall not be obligated to) (i)
perform any of the obligations of any Debtor under this Agreement if such
Debtor fails to perform such obligation within 30 calendar days after
written demand by Secured Party and (ii) make any payments and do any other
acts Secured Party may deem necessary or desirable to protect its security
interest in the Collateral, including, without limitation, the right to
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<PAGE>
pay, purchase, contest or compromise any Lien that attaches or is asserted
against any Collateral and to appear in and defend any action or proceeding
relating to the Collateral, and the Debtors will promptly reimburse Secured
Party for all payments made by Secured Party in doing so, together with
interest thereon at the judgment rate and all costs and expenses related
thereto as set forth in Section 9.10.
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ARTICLE V
VOTING RIGHTS, DIVIDENDS AND DISTRIBUTIONS
SECTION 5.1 Voting Rights. So long as no Event of Default has occurred
and is continuing or would result from any exercise thereof, the Debtors shall
have and may exercise all voting rights with respect to any and all Newco Common
Stock held in the Trust Estate, except that the Debtors may not and will not act
or vote in favor of any action that would be or cause an Event of Default or any
event which, with the giving of notice or lapse of time (or both), would
constitute an Event of Default. Upon the occurrence of an Event of Default,
Secured Party may (but shall not be obligated to) suspend or terminate the
Debtors' right to exercise voting rights with respect to any or all such Newco
Common Stock, by giving written notice of such suspension or termination to the
Debtors, and Secured Party shall thereupon have the sole right and power to
exercise such voting rights.
SECTION 5.2 Dividends, Distributions and Payments. Secured Party shall
be entitled to receive and hold as part of the Trust Estate, subject to the
Collateral Trust Agreement, all dividends and distributions on the Newco Common
Stock, all income from Cash Equivalents and all Proceeds.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Remedies. Upon and at any time after the occurrence of any
Event of Default, and from time to time on each occasion when an Event of
Default has occurred and is continuing, Secured Party may exercise and enforce
each and all of the rights and remedies available to a secured party upon
default under the Code or other applicable law and each and all of the following
rights and remedies:
(a) Secured Party may notify any or all account debtors and obligors on
any Collateral to make payment directly to Secured Party.
(b) Secured Party may take possession of all items of Collateral that
are not then in its possession and require the person or entity in
possession thereof to deliver such Collateral to Secured Party at one or
more locations designated by Secured Party and reasonably convenient to it
and the Debtors.
(c) Secured Party may cause any or all Newco Common Stock and other
instruments or investment securities constituting part of the Trust Estate
to be transferred into Secured Party's name and exercise and
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enforce any or all of the rights, interests, privileges and remedies of a
holder against the issuer thereof, as freely and fully as if Secured Party
were the absolute owner but as a secured party and as part of the Trust
Estate.
(d) Secured Party may sell or otherwise dispose of any or all of the
Collateral or any part thereof in one or more parcels and from time to time
in any quantity or portion and on any number of occasions, at a public sale
or in a private sale or transaction, on any exchange or market or at Secured
Party's offices or at any other location, for cash, on credit or for future
delivery, and may enter into all contracts necessary or appropriate in
connection therewith, without any notice whatsoever unless required by law,
subject to the following limitations:
(1) Secured Party may sell or otherwise dispose of Newco Common
Stock held in the Trust Estate at any particular time only if the cash
and the immediately realizable net liquidation value of Cash
Equivalents and Letters of Credit then held in the Trust Estate are not
sufficient to pay in full (i) all amounts which Secured Party is then
required or has then been instructed to pay out from the Trust Estate
pursuant to the Collateral Trust Agreement and (ii) all Secured
Obligations which are then payable; and
(2) Secured Party shall not sell or otherwise dispose of shares of
Newco Common Stock at any particular time in excess of a number of
shares (determined on a rounded-up commercially reasonable regular lot
basis) the proceeds of which would be sufficient, when added to the
cash and the immediately realizable net liquidation value of Cash
Equivalents and Letters of Credit then held in the Trust Estate, to pay
in full (i) all amounts which Secured Party is then required or has
then been instructed to pay out from the Trust Estate pursuant to the
Collateral Trust Agreement , (ii) all amounts which Secured Party in
good faith anticipates it will be required or instructed to pay out
from the Trust Estate on account of Known Liabilities and pending Tax
Claims pursuant to the Collateral Trust Agreement within the next 90
calendar days (and for such purpose Secured Party may rely conclusively
on a certificate as to such amounts given to Secured Party by Newco
Group), and (iii) all Secured Obligations which are then payable.
The Debtors agree that at least 10 calendar days' written notice to the
Debtors of the time and place of any public sale or the time after which any
private sale is to be made shall be commercially reasonable. The giving of
notice of any such sale or other disposition shall not obligate Secured
Party to proceed with the sale or
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disposition, and any such sale or disposition may be postponed or adjourned
from time to time, without further notice.
(e) Secured Party may, on a royalty-free basis, use and license use of
any trademark, trade name, trade style, copyright, patent or technical
knowledge or process owned, held or used by any Debtor in respect of any
Collateral as to which any right or remedy of Secured Party is exercised or
enforced.
In addition, but without expanding the duties or limiting the rights, powers and
immunities of Secured Party under this Agreement or the Collateral Trust
Agreement, each holder of any Secured Obligation may exercise and enforce such
rights and remedies for the collection of such Secured Obligation as may be
available to it by law or agreement. Such exercise or enforcement shall not
impose any obligation or liability upon Secured Party.
SECTION 6.2 Remedies Cumulative. Secured Party may exercise and enforce
each right and remedy available to it upon the occurrence of an Event of Default
either before or concurrently with or after, and independently of, any exercise
or enforcement of any other right or remedy of Secured Party or any holder of
any Secured Obligation against any person, entity or property. All such rights
and remedies shall be cumulative, and no one of them shall exclude or preclude
any other.
SECTION 6.3 Surplus; Deficiency. Any surplus proceeds of any sale or
other disposition of Collateral by Secured Party remaining after all the Secured
Obligations are indefeasibly paid in full and discharged shall be paid over to
the Debtors or to whomever may be lawfully entitled to receive such surplus or
as a court of competent jurisdiction may direct, except that if any contingent,
unliquidated or unmatured Secured Obligation then remains outstanding, such
surplus proceeds may be retained by Secured Party and held as Collateral until
such time as all outstanding Secured Obligations have been determined,
liquidated and indefeasibly paid in full and discharged. The Debtors shall be
and remain liable for any deficiency.
SECTION 6.4 Information Related to Collateral. If Secured Party
determines to sell or otherwise dispose of any Collateral, the Debtors shall,
and shall cause any person controlled by any Debtor to, furnish to Secured Party
all information Secured Party may request that pertains or could pertain to the
value or condition of such Collateral or would or might facilitate its sale.
Secured Party may provide such information to any potential purchaser of any or
all of the Collateral, subject to such confidentiality terms as the Debtors may
reasonably request in writing.
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SECTION 6.5 Sale Exempt from Registration. Secured Party shall be
entitled at any such sale, if it deems it advisable to do so, to restrict the
prospective bidders or purchasers to persons who will provide assurances
satisfactory to Secured Party that they may be offered and sold the Collateral
to be sold without registration under the Securities Act of 1933, as amended
(the "Securities Act"), or any other applicable state or federal statute, and
upon the consummation of any such sale, Secured Party shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Secured Party may solicit offers to buy the Collateral, or
any part of it, from a limited number of investors deemed by Secured Party, in
its commercially reasonable judgment, to meet the requirements to purchase
securities under Regulation D promulgated under the Securities Act (or any other
regulation of similar import). If Secured Party solicits such offers from such
investors, then the acceptance by Secured Party of the highest offer obtained
therefrom shall be deemed to be a commercially reasonable method of disposition
of the Collateral.
SECTION 6.6 Registration Rights. If Secured Party determines that
registration of any securities constituting Collateral under the Securities Act
or other applicable law is required or desirable in connection with any
foreclosure sale, each Debtor will use its best efforts to assist and cooperate
in all respects reasonably requested by Secured Party or Newco Group in causing
such registration to become effective and to be kept effective for such time as
may be reasonably necessary in the opinion of Secured Party, except that no
Debtor shall be obligated under this Section 6.6 to exercise any registration
rights that may be available to it with respect to Newco Common Stock.
ARTICLE VII
THE SECURED PARTY
SECTION 7.1 Collateral Trust Agreement Provisions. Secured Party is
executing and delivering this Agreement, and accepting the security interests,
rights, remedies, powers and benefits conferred upon Secured Party hereby, as
Trustee under the Collateral Trust Agreement. The provisions of the Collateral
Trust Agreement and all rights, powers, immunities and indemnities granted to
the Trustee under the Collateral Trust Agreement shall apply in respect of such
execution, delivery and acceptance and in respect of any and all actions taken
or omitted by Secured Party under, in connection with or with respect to this
Agreement.
SECTION 7.2 No Liability. Secured Party makes no statement, promise,
representation or warranty whatsoever, and shall have no liability whatsoever,
to any holder of any Secured Obligations as to the authorization, execution,
delivery, legality, enforceability or sufficiency of this Agreement or as to the
creation, perfection, priority
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or enforceability of any security interest granted hereunder or as to
the existence, ownership, quality, condition, value or sufficiency of any
Collateral or as to any other matter whatsoever.
SECTION 7.3 Holders Bound. Except where the consent of others may be
required pursuant to the express provisions of the Collateral Trust Agreement,
any modification, amendment, waiver, termination or discharge of any security
interest, right, remedy, power or benefit conferred upon Secured Party hereby
that is effectuated in a writing signed by Secured Party shall be binding upon
all holders of Secured Obligations if it is authorized in the Collateral Trust
Agreement or directed in writing by Newco Group.
SECTION 7.4 Duty of Care. Neither Secured Party nor any director,
officer, employee, attorney or agent of Secured Party shall be obligated to care
for the Collateral hereunder or to collect, enforce, vote, or protect the
Collateral or any rights or interests of any Debtor related thereto or to
preserve or enforce any rights which any Debtor or any other Person may have
against any third party, except only that Secured Party shall exercise
reasonable care in physically safekeeping any item of Collateral that was
delivered into Secured Party's possession. Secured Party shall be deemed to have
exercised such reasonable care if the Collateral is accorded treatment
substantially equal to that which Secured Party accords to its own property or
if it selects, with reasonable care, a custodian or agent to hold such
collateral for Secured Party's account.
ARTICLE VIII
EXONERATION WAIVERS
SECTION 8.1 Rights and Interests not Prejudiced, Affected or Impaired.
Neither the security interests granted hereby, nor the trusts and interests
created under the Collateral Trust Agreement nor any power, privilege, right or
remedy of Secured Party relating thereto, nor the beneficial interest of Newco
Group and other holders of Secured Obligations therein and thereunder shall at
any time in any way be prejudiced, affected or impaired by any act or failure to
act on the part of any of the Debtors or by any act or failure to act on the
part of Secured Party or Newco Group or any other holder of Senior Secured
Obligations or by any breach or default by any of them in the performance or
observance of any promise, covenant or obligation enforceable by any Debtor,
regardless of any knowledge thereof that Secured Party or Newco Group and any
such other holder may have or otherwise be charged with.
(a) Without in any way limiting the generality of the foregoing,
Secured Party, Newco Group and each other holder of any Secured Obligations
may at any time and from time to time, without the consent of or notice to
any
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Debtor, without incurring any responsibility or liability to any Debtor and
without in any manner prejudicing, affecting or impairing any such security
interest, trust, interest, power, privilege, right or remedy or the
obligations of the Debtors to Secured Party, Newco Group and the other
holders of Secured Obligations:
(i) Make loans and advances to any one or more of the
Debtors, or issue, guaranty or obtain letters of credit for account of
any one or more of the Debtors or otherwise extend credit to any one or
more of the Debtors, in any amount and without any limitation or
restriction whatsoever, on any terms, whether pursuant to a commitment
or as a discretionary advance and whether or not any default or event
of default or failure of condition is then continuing;
(ii) Change the manner, place or terms of payment or extend
the time of payment of, or renew or alter, compromise, accelerate,
extend, refinance, release or discharge, any Secured Obligation or any
other indebtedness or liability of any of the Debtors or any agreement,
guaranty, lien or obligation of any of the Debtors or any other person
or entity in any manner related thereto, or otherwise amend, supplement
or change in any manner any Secured Obligation or any such indebtedness
or liability or any such agreement, guaranty, lien or obligation;
(iii) In any manner modify, transform, change, refinance,
replace, reclassify, subordinate or recharacterize any such
indebtedness or liability;
(iv) Release or discharge any guaranty or any other lien,
right, remedy or claim against any person or entity;
(v) Take or fail to take any collateral security for any
Secured Obligation or take or fail to take any action which may be
necessary or appropriate to ensure that any lien upon any property
securing any Secured Obligation is duly enforceable or perfected or
entitled to priority as against any other lien or to ensure that any
proceeds of any property subject to any lien are applied to the payment
of any Secured Obligation;
(vi) Release, discharge or permit the lapse of any or all
liens upon any property at any time securing any Secured Obligation;
(vii) Exercise or enforce, in any manner, order or sequence,
or fail to exercise or enforce, any right or remedy against any
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one or more of the Debtors or in respect of the Collateral or the
Trust Estate or any other collateral security or any other person,
entity or property in respect of any Secured Obligation or lien
securing any Secured Obligation or any right under this Agreement or
the Collateral Trust Agreement; or
(viii) Sell, exchange, release, foreclose upon or otherwise
deal with any property that may at any time be subject to any lien
securing any Secured Obligation.
(b) No exercise, delay in exercising or failure to exercise any
right arising under this Agreement or the Collateral Trust Agreement, no act
or omission of Secured Party, Newco Group or any other holder of any Secured
Obligation in respect of any or all of the Debtors or any other person or
entity or the Collateral or the Trust Estate or any other collateral
security for any Secured Obligation or any right arising under this
Agreement or the Collateral Trust Agreement, no change, impairment, or
suspension of any right or remedy of Secured Party, Newco Group or any other
holder of any Secured Obligation, and no other act, failure to act,
circumstance, occurrence or event which, but for this provision, would or
could act as a release or exoneration of the obligations of any Debtor shall
in any way affect, decrease, diminish or impair any of the obligations of
the Debtors under this Agreement or give any Debtor or any other person or
entity any recourse or defense against Secured Party, Newco Group or any
other holder of Secured Obligations in respect of any security interest,
trust, interest, power, privilege, right or remedy arising under this
Agreement or the Collateral Trust Agreement.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1 Notices. All notices, requests, approvals, consents and
other communications required or permitted to be made hereunder shall, except as
otherwise provided, be given in the manner specified and to the addresses set
forth in Section 16 of the Collateral Trust Agreement.
SECTION 9.2 Headings. The various headings in this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provision hereof.
SECTION 9.3 Changes. This Agreement or any provision hereof may be
changed, waived, or terminated only by a statement in writing signed by the
party against
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which such change, waiver or termination is sought to be enforced. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
SECTION 9.4 Debtors Remain Liable. Each Debtor shall remain liable
under all contracts and agreements included in the Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed. The exercise or
enforcement by Secured Party of any of its rights and remedies under this
Agreement or in respect of the Collateral shall not release any Debtor from any
of its duties or obligations under any such contracts or agreements.Secured
Party shall not be obligated to perform any such duties or obligations and shall
not be liable for any breach thereof.
SECTION 9.5 No Waiver. No failure by Secured Party to exercise, or
delay by Secured Party in exercising, any power, right or remedy under this
Agreement shall operate as a waiver thereof. No waiver by Secured Party shall be
effective unless given in a writing signed by it. No waiver so given shall
operate as a waiver in respect of any other matter or in respect of the same
matter on a future occasion. Acceptance of or acquiescence in a course of
performance in respect of this Agreement shall not waive or affect the
construction or interpretation of the terms of this Agreement even if the
accepting or acquiescing party had knowledge of the nature of the performance
and opportunity for objection.
SECTION 9.6 Entire Agreement. This Agreement and the Collateral Trust
Agreement are intended by the parties as a final expression of their agreement
and a complete and exclusive statement of the terms and conditions related to
the subject matter thereof.
SECTION 9.7 Severability. If any provision of this Agreement is
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions hereof, or of such provision in
any other application, shall not be in any way affected or impaired thereby and
such other provisions and applications shall be enforceable to the fullest
extent lawful.
SECTION 9.8 Power of Attorney. Each Debtor hereby appoints and
constitutes Secured Party or any delegate, nominee or agent acting for Secured
Party as such Debtor's attorney-in-fact with the power and authority (but not
the duty), in the name of such Debtor or in the name of Secured Party or such
delegate, nominee or agent, to (i) execute, deliver and file such financing
statements, agreements, deeds and writings as such Debtor is required to
execute, deliver or file hereunder, (ii) endorse, collect or transfer any item
of Collateral which such Debtor is required to endorse, collect or transfer
hereunder or which Secured Party is permitted to endorse, collect or
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transfer hereunder, (iii) make any payments or take any action under
Section 2.3 or Section 4.1(f), (iv) take any other action required of such
Debtor or permitted to Secured Party hereunder, and (v) take any action
reasonably necessary or incidental to any of the foregoing. This power of
attorney is coupled with an interest and is irrevocable as to the Debtors.
Secured Party shall have no duty whatsoever to exercise any power herein granted
it.
SECTION 9.9 Counterparts. This Agreement and any amendments, waivers,
consents or supplements may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but all of
which shall together constitute one and the same agreement.
SECTION 9.10 Costs and Expenses; Indemnification. The Debtors hereby
agree (i) to pay or reimburse Secured Party for all reasonable costs and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements and court costs) incurred in connection with or as a result of the
exercise or enforcement by Secured Party of any right or remedy available to it
or the protection or enforcement of Secured Party's interest in the Collateral
in any bankruptcy case or insolvency proceeding and (ii) to indemnify Secured
Party for, and defend and hold it harmless against, any loss, liability or
expense incurred by it in connection with its entering into this Agreement or
carrying out any of its duties or exercising any of its rights hereunder, on the
terms and subject to the limitations set forth in Section 14 of the Collateral
Trust Agreement.
SECTION 9.11 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; LIMITATION OF LIABILITY; WAIVER OF BOND.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
UNDER THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
PERFECTION OF THE SECURITY INTERESTS HEREUNDER IN RESPECT OF ANY PARTICULAR
COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
(b) SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS.
EACH PARTY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
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OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY
DOCUMENT RELATED HERETO. SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS
MAY BE MADE BY ANY MEANS PERMITTED BY NEW YORK LAW.
(c) WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ALL RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE COLLATERAL TRUST AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE, AND AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED
BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH PARTY
FURTHER AGREES THAT ITS RIGHT TO A TRIAL BY JURY IS HEREBY WAIVED AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE
COLLATERAL TRUST AGREEMENT OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE COLLATERAL TRUST AGREEMENT.
(d) LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY THE DEBTORS
AGAINST SECURED PARTY OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS OR AGENTS OF SECURED PARTY FOR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM (WHETHER BASED
UPON BREACH OF CONTRACT, TORT, BREACH OF STATUTORY DUTY OR ANY OTHER THEORY
OF LIABILITY) ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, AND THE DEBTORS HEREBY WAIVE, RELEASE AND AGREE NOT TO SUE UPON
ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT NOW ACCRUED AND WHETHER OR
NOT KNOWN OR SUSPECTED TO EXIST IN THEIR FAVOR.
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(e) WAIVER OF BOND. THE DEBTORS WAIVE THE POSTING OF ANY BOND OTHERWISE
REQUIRED OF SECURED PARTY IN CONNECTION WITH THE ENFORCEMENT OF ANY OF ITS
REMEDIES HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY ORDER OR WRIT FOR
REPLEVIN OR DELIVERY OF POSSESSION OF ANY COLLATERAL.
SECTION 9.12 Successors and Assigns. This Agreement is binding upon and
enforceable against the Debtors and their respective successors and assigns. It
shall inure to the benefit of and may be enforced by Secured Party and its
successors and assigns, for the benefit of Newco Group and each and every other
person or entity which at any time holds or is entitled to enforce any of the
Secured Obligations and each of their respective heirs, representatives,
successors and assigns. Secured Party reserves the right to resign as Trustee
under the Collateral Trust Agreement, in the manner and with the effect set
forth in Section 13(f) and 13(g) thereof.
SECTION 9.13 Joint and Several Obligation. This Agreement and the
security interest granted by each Debtor hereunder and all obligations of each
Debtor hereunder shall be the joint and several obligation of each Debtor and
may be freely enforced against each Debtor for the full amount of the Secured
Obligations, without regard to whether enforcement is sought or available
against any other Debtor.
[intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Pledge and Security
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
SATELLITE COMPANY, LLC,
a Nevada limited liability company
By:/s/Jorge Suarez Barbosa
------------------------------
Name: Jorge Suarez Barbosa
Title:
GRUPO TELEVISA, S.A.,
a corporation (Sociedad Anonima)
organized under the laws of Mexico
By:/s/Raul Lopez Martinez
------------------------------
Name: Raul Lopez Martinez
Title:
S-1
<PAGE>
IBJ SCHRODER BANK & TRUST COMPANY
a corporation, as Trustee
By:/s/Signature Illegible
------------------------------
Title: Assistant Vice President
S-2
<PAGE>
Index of Schedules
A Description of the Collateral
B Location of Chief Executive Office; Other Locations
C Restrictions Section 3.1(f)
S-2
Exhibit 10.33
PANAMSAT CORPORATION
Long-Term Stock Incentive Plan
Established in 1997
ARTICLE I
GENERAL
1.01. Purpose.
The purposes of this Long-Term Stock Incentive Plan
Established in 1997 (the "Plan") are to: (1) closely associate the interests of
the employees, directors and independent contractors of PanAmSat Corporation and
its subsidiaries (collectively referred to as the "Company") with the
shareholders by reinforcing the relationship between participants' rewards and
shareholder gains; (2) provide employees, directors and independent contractors
with an equity ownership in the Company commensurate with Company performance,
as reflected in increased shareholder value; (3) maintain competitive
compensation levels; and (4) provide an incentive to management for continuous
employment with the Company.
1.02. Definitions.
For the purpose of this Plan the following definitions shall
apply:
(a) "Cause" means: (1) the intentional and continuing refusal
of a Recipient to perform the duties or services for which the
Recipient is compensated by the Company, (2) the Recipient is convicted
of, pleads guilty to, or pleads no contest to, any criminal offense
which, in the good faith determination of the Committee, will result,
or has resulted, in material pecuniary harm to the Company or material
harm to the reputation of the Company or (3) the Recipient engages in
an illegal or fraudulent act or acts which, in the good faith
determination of the Committee, will result or has resulted, in
material pecuniary harm to the Company or material harm to the
reputation of the Company.
(b) "Disability" means any time during which the Recipient is
unable substantially to discharge the responsibilities for which he is
employed or, if not an
<PAGE>
employee, to render the services for which the individual receives
compensation from the Company by reason of physical illness or
incapacity, whether arising out of sickness, accident or otherwise, and
must be evidenced by the written determination of a qualified medical
doctor acceptable to the Committee and the award Recipient (or in the
event of the Recipient's incapacity to designate a doctor, the
Recipient's legal representative), which determination shall specify
the date on which the Disability commenced and that it has continued
uninterrupted for at least 180 days.
(c) "Fair Market Value" as of any date and in respect of any
share of Common Stock means the last trading price on such date or on
the next business day, if such date is not a business day, of a share
of Common Stock as reported by NASDAQ or the principal national
securities exchange on which such shares are listed or admitted to
trading provided that, if shares of Common Stock shall not have been
traded on the NASDAQ or another principal national exchange for more
than 10 days immediately preceding such date or if deemed appropriate
by the Committee for any other reason, the fair market value of shares
of Common Stock shall be as determined by the Committee in such other
manner as it may deem appropriate. In no event shall the fair market
value of any share of Common Stock be less than its par value.
(d) "Option" means a Nonqualified Stock Option or Incentive
Stock Option.
(e) "Option Price" means the purchase price per share of
Common Stock deliverable upon the exercise of a Nonqualified Stock
Option or Incentive Stock Option.
(f) "Recipient" means any individual described in Section 1.04
hereof who has been granted an award of any type described in Section
1.05 hereof.
1.03. Administration.
(a) The Plan shall be administered by a committee of the Board
of Directors of the Company (the "Committee") consisting of at least two
persons. From and after the date (the "Registration Date") that the Company has
a class of equity securities registered pursuant to Section 12 of the Securities
and Exchange Act of 1934, as amended (the "Act"),
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each such person shall be a "non-employee director" within the meaning of Rule
16(b)-3 under the Act and an "outside director" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
(b) Subject to the terms of the Plan, the Committee shall have
the authority in its sole discretion and from time to time to:
(i) designate the employees or classes of employees and
other service providers, including directors and independent
contractors to participate in the Plan from among the class(es)
specified in 1.04;
(ii) grant awards provided in the Plan in such form and
amount as the Committee shall determine;
(iii) impose such limitations, restrictions and conditions
upon any such award as the Committee shall deem appropriate (other than
with respect to a Recipient's exercise rights expressly set forth in
the Plan); and
(iv) interpret the Plan, adopt, amend and rescind rules and
regulations relating to the Plan, and make all other determinations and
take all other action necessary or advisable for the implementation and
administration of the Plan.
(c) No member of the Committee shall be liable for any action,
failure to act, determination or interpretation made in good faith with respect
to the Plan or any transaction hereunder, except for liability arising from his
or her own willful misfeasance, gross negligence or reckless disregard of his or
her duties. The Company hereby agrees to indemnify each member of the Committee
for all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiation for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.
1.04. Eligibility for Participation.
Participants in the Plan shall be selected by the Committee
from among the executive officers, other employees, directors and independent
contractors of the
3
<PAGE>
Company who have the capability of making a substantial contribution to the
success of the Company. In making this selection and in determining the form and
amount of awards, the Committee may consider any factors it deems relevant,
including without limitation the individual's functions, responsibilities, value
of services to the Company and past and potential contributions to the Company's
profitability and sound growth.
1.05. Types of Awards Under Plan.
Awards under the Plan may be in the form of any one or more of
the following:
(i) Nonqualified Stock Options, as described in Article II;
(ii) Incentive Stock Options, as described in Article III;
(iii) Alternate Appreciation Rights, as described in Article
IV;
(iv) restricted stock, on such terms as the Committee may
decide;
(v) performance units, on such terms as the Committee may
decide; and
(vi) performance shares, on such terms as the Committee may
decide.
1.06. Aggregate Limitation on Awards.
(a) Shares of stock which may be issued under the Plan shall
be authorized and unissued or treasury shares of common stock of the Company,
par value of $.01 per share, ("Common Stock"). The maximum number of shares of
Common Stock which may be issued under the Plan shall be 7,456,140 shares. The
maximum number of shares of Common Stock which may be issued to any Recipient
under the Plan shall be 2,000,000.
(b) Any shares of Common Stock subject to a Nonqualified Stock
Option or Incentive Stock Option which for any reason is terminated unexercised
or expires shall again be available for issuance under the Plan.
4
<PAGE>
(c) During the period that any awards remain outstanding under
the Plan, the Committee may make good faith adjustments with respect to the
number of shares of Common Stock attributable to such awards for purposes of
calculating the maximum number of shares of Common Stock available for the
granting of future awards under the Plan.
1.07 Effect of Death, Disability, Retirement or Other
Terminations of Employment on Recipients.
(a) Death or Disability of a Recipient: Upon the death or
Disability of the Recipient during his employment with the Company (or, in the
case of a non-employee, his performance of services for the Company), the
Recipient may exercise any award which was exercisable on the date of death or
Disability within one year of the termination due to death or Disability. After
such one-year period, the award shall terminate. In the case of death, the award
may be exercised by the Recipient's estate or by a person who acquires the right
to exercise such award by bequest or inheritance or by reason of the death of
the Recipient. In the case of Disability, the award may be exercised by the
Recipient (or, if the participant is not capable, by his guardian or legal
representative).
(b) Retirement of a Recipient or Termination of a Recipient
Without Cause: Upon the termination of the employment of the Recipient by reason
of retirement (or, in the case of a non-employee, upon the termination of
services by reason of retirement) or upon the termination of the employment (or,
in the case of a non-employee, the termination of services) of the Recipient by
the Company without Cause, the Recipient may exercise any award which was
exercisable on the date of termination of employment (or, in the case of a
non-employee, the termination of services) within three months from the date of
such termination of employment (or, in the case of a non-employee, the
termination of services). After such three-month period, the award shall
terminate.
(c) Termination for Other Reasons: Except as provided in
paragraphs (a) and (b) above, upon the termination of the employment (or, in the
case of a non-employee, termination of services) of the Recipient, all awards
granted to the Recipient shall terminate.
5
<PAGE>
1.08. Effective Date and Term of Plan.
(a) The Plan shall become effective on the date it is adopted
by the Committee, subject only to the approval by the affirmative vote of the
holders of a majority of the Common Stock.
(b) No awards shall be made under the Plan after the tenth
anniversary of the effective date of the Plan described in (a) above; provided,
however, that the Plan and all awards made under the Plan prior to such date
shall remain in effect until such awards have been satisfied or terminated in
accordance with the Plan and the terms of such awards.
ARTICLE II
NONQUALIFIED STOCK OPTIONS
2.01. Award of Nonqualified Stock Options.
The Committee may from time to time, and subject to the
provisions of the Plan and such other terms and conditions as the Committee may
prescribe, grant to any participant in the Plan one or more options to purchase
for cash or shares of Common Stock the number of shares of Common Stock
("Nonqualified Stock Options") allotted by the Committee. The date a
Nonqualified Stock Option is granted shall mean the date selected by the
Committee as of which the Committee allots a specific number of shares to a
participant pursuant to the Plan.
2.02. Nonqualified Stock Option Agreements.
The grant of a Nonqualified Stock Option shall be pursuant to
a written Nonqualified Stock Option Agreement, executed by the Company and the
holder of a Nonqualified Stock Option (the "optionee") in such form as the
Committee may from time to time determine.
6
<PAGE>
2.03. Nonqualified Stock Option Price.
The Option Price per share of Common Stock deliverable upon
the exercise of a Nonqualified Stock Option shall be 100% of the Fair Market
Value of a share of Common Stock on the date the Nonqualified Stock Option is
granted.
2.04. Manner of Payment.
Each Nonqualified Stock Option Agreement shall set forth the
procedure governing the exercise of the Nonqualified Stock Option granted
thereunder, and shall provide that, upon such exercise in respect of any shares
of Common Stock subject thereto, the optionee shall pay to the Company, in full,
the Option price for such shares and the applicable withholding taxes with (a)
cash, (b) previously owned Common Stock or (c) a combination of cash and
previously owned Common Stock. In addition, each Nonqualified Stock Option
Agreement shall permit the optionee to pay the Option Price and any related
withholding taxes through a cashless exercise program established by the Company
or the Committee with a broker.
2.05. Manner of Delivery and Optionee Rights.
As soon as practicable after receipt of payment and applicable
withholding taxes in connection with the exercise of a Nonqualified Stock
Option, the Company shall deliver to the optionee a certificate or certificates
for shares of Common Stock. The optionee shall become a shareholder of the
Company with respect to Common Stock represented by share certificates so issued
and as such shall be fully entitled to receive dividends, to vote and to
exercise all other rights of a shareholder.
2.06. Effect of Exercise.
The exercise of any Nonqualified Stock Option shall cancel
that number of related Alternate Rights, if any, which is equal to the number of
shares of Common Stock purchased pursuant to said Option.
7
<PAGE>
ARTICLE III
INCENTIVE STOCK OPTIONS
3.01. Award of Incentive Stock Options.
The Committee may from time to time and subject to the
provisions of the Plan and such other terms and conditions as the Committee may
prescribe, grant to any Plan participant who is an employee meeting the
requirements of Section 422 of the Internal Revenue Code one or more Incentive
Stock Options (intended to qualify as such under the provisions of section 422
of the Code ("Incentive Stock Options")) to purchase for cash or shares of
Common Stock the number of shares of Common Stock allotted by the Committee. The
date an Incentive Stock Option is granted shall mean the date selected by the
Committee as of which the Committee allots a specific number of shares to a
participant pursuant to the Plan.
3.02. Incentive Stock Option Agreements.
The grant of an Incentive Stock Option shall be pursuant to a
written Incentive Stock Option Agreement, executed by the Company and the holder
of an Incentive Stock Option in such form as the Committee may from time to time
determine.
3.03. Incentive Stock Option Price.
The Option Price per share of Common Stock deliverable upon
the exercise of an Incentive Stock Option shall be 100% (110% in the case of a
10% shareholder, as provided by Section 422(b)(6) of the Code (a "Ten Percent
Stockholder")) of the Fair Market Value of a share of Common Stock on the date
the Incentive Stock Option is granted.
3.04. Maximum Amount of Incentive Stock Option Grant.
To the extent that the aggregate Fair Market Value (determined
on the date the Option is granted) of Common Stock subject to an Incentive Stock
Option granted to an optionee by the Committee (or by the Company or any of its
parent or subsidiary corporations under any other plans) which are exercisable
for the first time during any calendar year exceeds $100,000, the portion of the
Incentive Stock Option exceeding this $100,000 limitation shall be treated as a
Nonqualified Stock Option.
8
<PAGE>
3.05. Applicability of Stock Options Sections.
Sections 2.04, Manner of Payment; 2.05, Manner of Delivery and
Optionee Rights; and 2.06, Effect of Exercise, applicable to Nonqualified Stock
Options, shall apply mutatis mutandis to Incentive Stock Options. Said Sections
are incorporated by reference in this Article III as if fully set forth herein
and as if the word "Incentive" were substituted for the word "Nonqualified."
ARTICLE IV
ALTERNATE APPRECIATION RIGHTS
4.01. Award of Alternate Rights.
Concurrently with the award of any Nonqualified Stock Option
or Incentive Stock Option to purchase one or more shares of Common Stock, the
Committee may, subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, award to the optionee with respect to
each share of Common Stock, a related alternate appreciation right ("Alternate
Right"), permitting the optionee to be paid the appreciation on the shares
underlying the Option in lieu of exercising the Option.
4.02. Alternate Rights Agreement.
Alternate Rights shall be pursuant to written agreements in
such form as the Committee may from time to time determine.
4.03. Exercise.
An optionee who has been granted Alternate Rights may, from
time to time, in lieu of the exercise of an equal number of Options, elect to
exercise one or more Alternate Rights and thereby become entitled to receive
from the Company payment, in Common Stock (and cash, in the case of fractional
shares), for the number of shares of Common Stock determined pursuant to
Sections 4.04 and 4.05. Unless otherwise set forth herein, Alternate Rights
shall be exercisable only to the same extent and subject to the same conditions
as the Options related thereto are exercisable, as provided in this Plan. The
Committee may, in its discretion, prescribe additional conditions to the
exercise of any Alternate Rights.
9
<PAGE>
4.04. Amount of Payment.
The amount of payment to which an optionee shall be entitled
upon the exercise of each Alternate Right shall be equal to 100% of the amount,
if any, by which the Fair Market Value of a share or shares of Common Stock
related to said Alternate Right on the exercise date exceeds the Option price
related to said Alternate Right.
4.05. Form of Payment.
The number of shares (and fractional shares) to be paid shall
be determined by dividing the amount of payment determined pursuant to Section
4.04 by the Fair Market Value of a share of Common Stock on the exercise date of
such Alternate Rights. As soon as practicable after exercise and payment to the
Company of applicable withholding taxes, the Company shall deliver to the
optionee a certificate or certificates for such shares of Common Stock.
ARTICLE V
MISCELLANEOUS
5.01. General Restriction.
Each award under the Plan shall be subject to the requirement
that, if at any time the Committee shall determine that (i) the listing,
registration or qualification of the shares of Common Stock subject or related
thereto upon any securities exchange or under any state or Federal law, or (ii)
the consent or approval of any government regulatory body, or (iii) an agreement
by the grantee of an award with respect to the disposition of shares of Common
Stock, is necessary or desirable as a condition of, or in connection with, the
granting of such award or the issue or purchase of shares of Common Stock
thereunder, the Committee may elect, in its sole discretion, not to consummate
the award in whole or in part unless such listing, registration, qualification,
consent, approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee.
5.02. Non-Assignability.
No award under the Plan shall be assignable or transferable by
the Recipient thereof, except by will or by the laws of descent and
distribution, unless the Committee
10
<PAGE>
shall elect to permit such an assignment or transfer in its sole discretion.
During the life of the Recipient, such award shall be exercisable only by such
person or by such person's guardian or legal representative.
5.03. Withholding Taxes.
Whenever the Company proposes or is required to issue or
transfer shares of Common Stock or other property under the Plan, the Company
shall require the grantee to remit to the Company an amount sufficient to
satisfy any Federal, state and/or local withholding tax requirements relating to
such issue or transfer prior to the delivery of any certificate or certificates
for such shares or such other property. Alternatively, in the discretion of the
Committee, the Company may issue or transfer such shares of Common Stock net of
the number of shares sufficient to satisfy the withholding tax requirements. For
withholding tax purposes, the shares of Common Stock shall be valued on the date
the withholding obligation is incurred.
5.04. Right to Terminate Employment.
Nothing in the Plan or in any agreement entered into pursuant
to the Plan shall: (i) confer upon any participant the right to continue in the
employment of the Company (ii) affect any right which the Company may have to
terminate the employment of such participant, or (iii) in the case of a service
provider, confer on them the right to continue to provide services to the
Company.
5.05. Non-Uniform Determinations.
The Committee's determinations under the Plan (including
without limitation determinations of the persons to receive awards, the form,
amount and timing of such awards, the terms and provisions of such awards and
the agreements evidencing same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, awards under
the Plan, whether or not such persons are similarly situated.
5.06. Rights as a Shareholder.
The Recipient shall have no rights as a shareholder with
respect thereto unless and until certificates for shares of Common Stock are
issued to him.
11
<PAGE>
5.07. Leaves of Absence.
The Committee shall be entitled to make such rules,
regulations and determinations as it deems appropriate under the Plan in respect
of any leave of absence taken by the Recipient of any award. Without limiting
the generality of the foregoing, the Committee shall be entitled to determine
(i) whether or not any such leave of absence shall constitute a termination of
employment, or the termination of an arrangement to provide services, within the
meaning of the Plan and (ii) the impact, if any, of any such leave of absence on
awards under the Plan theretofore made to any Recipient who takes such leave of
absence.
5.08. Newly Eligible Employees.
The Committee shall be entitled to make such rules,
regulations, determinations and awards as it deems appropriate in respect of any
employee or service provider who becomes eligible to participate in the Plan or
any portion thereof after the commencement of an award or incentive period.
5.09. Adjustments.
In any event of any change in the outstanding Common Stock by
reason of a stock dividend or distribution, recapitalization, merger,
consolidation, split-up, combination, exchange of shares or the like, the
Committee may appropriately adjust the number of shares of Common Stock which
may be issued under the Plan, the maximum number of shares in respect of which
options or other awards may be granted to any individual during the term of the
Plan, the number of shares of Common Stock subject to Options theretofore
granted under the Plan, the Option price of Options theretofore granted under
the Plan, and any and all other matters deemed appropriate by the Committee.
5.10. Amendment of the Plan.
(a) The Committee may, without further action by the
shareholders and without receiving further consideration from the participants,
amend this Plan or condition or modify awards under this Plan in response to
changes in securities or other laws or rules, regulations or regulatory
interpretations thereof applicable to this Plan or to comply with stock exchange
rules or requirements.
12
<PAGE>
(b) The Committee may at any time and from time to time
terminate or modify or amend the Plan in any respect, except that, from and
after the Registration Date, the Committee may not (i) increase the maximum
number of shares of Common Stock which may be issued under the Plan (other than
increases pursuant to Section 5.09), (ii) extend the period during which any
award may be granted or exercised, or (iii) extend the term of the Plan, without
shareholder approval. The termination or any modification or amendment of the
Plan shall not, without the consent of a participant, adversely affect his or
her rights under an award previously granted to him or her.
ARTICLE VI
NON-EXCLUSIVITY OF THE PLAN
The adoption of the Plan by the Board shall not be construed
as amending, modifying or rescinding any previously approved incentive
arrangement or as creating any limitations on the power of the Board to adopt
such other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.
13
Exhibit 10.34
PanAmSat Corporation
Annual Incentive Plan
Effective Date: January 1, 1997
<PAGE>
Section 1: Purpose of the Plan
The purposes of the PanAmSat Corporation Annual Incentive Plan (Plan) are (1) to
motivate and reward a greater degree of excellence and teamwork among the
employees of PanAmSat, Inc. (PanAmSat) by providing incentive compensation award
opportunities, (2) to provide attractive and competitive total cash compensation
opportunities for exceptional corporate, organizational unit, and individual
performance, (3) to reinforce the communication of PanAmSat's mission,
objectives and goals, and (4) to enhance PanAmSat's ability to attract, retain,
and motivate the highest caliber employees.
The purposes of the Plan shall be carried out by the payment to eligible
participants of annual incentive cash awards, subject to the terms and
conditions of the Plan and (with certain limitations described below) the
discretion of the Compensation Committee of the Board of Directors (Committee).
The Plan also is intended to secure the full deductibility of incentive awards
payable to the Company's Chief Executive Officer (CEO) and four highest
compensated executive officers whose compensation is required to be reported in
the Company's proxy statement (Covered Employees). All compensation payable
under this Plan is intended to qualify as "performance-based compensation" as
described in ss.162(m) of the Internal Revenue Code of 1986, as amended (Code).
Section 2: Effective Date, Term, and Plan Year
The Plan, as adopted by the Board of Directors (Board), is effective as of
January 1, 1997 and will continue in effect (as amended from time to time)
until, and should terminate on December 31, 2001.
The Plan Year shall be the Company's fiscal year, running from January 1 to
December 31. The initial Plan Year will commence on January 1, 1997.
The performance period with respect to which awards may be payable under the
Plan shall generally be the Plan Year, provided that the Committee shall have
the authority and discretion to designate different performance periods under
the Plan.
<PAGE>
Section 3: Administration
The Committee shall have full power and authority to administer and interpret
the provisions of the Plan and to adopt such rules, regulations, agreements,
guidelines, and instruments for the administration of the Plan and for the
conduct of its business as the Committee deems advisable. This includes, without
limitation, the authority to determine all matters relating to awards made under
the Plan, including selection of award recipients and the terms, conditions,
limitations, and restrictions applicable to any award.
Except with respect to the matters which under ss.162(m) of the Code are
required to be determined in the sole and absolute discretion of the Committee,
the Committee shall have the power to delegate to any officer or employee of the
Company the authority to administer and interpret the procedural aspects of the
Plan, subject to the Plan's terms, including adopting and enforcing rules to
decide procedural and administrative issues.
The Committee shall consist of two or more directors of the Company, all of whom
shall be persons who qualify as "outside directors" as defined in ss.162(m) of
the Code. The Committee may rely on opinions, reports or statements of officers
or employees of the Company and of Company counsel (inside or retained), public
accountants, and other professional or expert advisors.
The Committee reserves the right to amend or terminate the Plan in whole or in
part at any time, including without limitation the terms of the performance
criteria specified in the Plan, subject to the approval of the Board. Unless
otherwise prohibited by applicable law, any amendment required to conform the
Plan to the requirements of ss.162(m) of the Code may be made by the Committee
in its sole discretion. No amendment may be made to the class of individuals who
are eligible to participate in the Plan, the performance criteria specified in
the Plan, or the maximum bonus payable to any participant.
No member of the Committee shall be liable for any action taken or omitted to be
taken or for any determination made by him or her in good faith with respect to
the Plan, and the Company shall indemnify and hold harmless each member of the
Committee against any cost, expense, or liability arising out of any act or
omission in connection with the administration or interpretation of the Plan,
unless arising out of such person's own fraud or bad faith.
The place of administration of the Plan shall be the State of Connecticut, and
the validity, construction, interpretation, administration, and effect of the
Plan and the rules, regulations, and rights relating to the Plan shall be
determined in accordance with the laws of the State of Connecticut.
Section 4: Eligibility
An individual shall be eligible to be a participant in the Plan if he or she
satisfies the following criteria:
<PAGE>
o There exists a legal and bona fide relationship of employer and employee
between PanAmSat and the individual, and
o The individual is recommended by the CEO, and considered and approved by
the Committee for participation in the Plan.
The determination of eligibility and participation in the Plan shall be made
annually. Eligibility for or participation in the Plan in any given year shall
not entitle any employee to be eligible for or to participate in the Plan in any
other year.
Section 5: Performance Criteria and Evaluation
The Plan provides a target bonus for all participants that is tied to
pre-established corporate financial performance measures and goals designed to
promote shareholder value creation. Performance measures and goals may include,
without limitation, one or more of the performance measures listed below, as
defined by the Committee. Multiple performance measures may be used on an
alternative or cumulative basis for awards.
Performance measures and their relative weight may vary by employee group.
Within the first ninety (90) days of each Plan Year (except the initial Plan
Year), the Committee will approve or establish in writing one or more
performance goals or measures, a specific target objective or objectives with
respect to such performance goals or measures, and an objective formula or
method for computing the amount of incentive compensation payable to each
participant under the Plan if the goals are attained. In the initial Plan Year,
the Committee's approval or establishment of the foregoing shall occur on or
before June 1, 1997. For any performance cycle that is less than 12 months, the
performance measures and objectives will be established before 25% of the
relevant performance period has elapsed. The maximum amount of compensation
payable during any performance period is $1 million for any participant in the
plan.
<PAGE>
Performance measures shall include any of the following:
Group A | Group B
- -----------------------------------------------------|-------------------------
o Earnings before interest, | o Cash value added | o Expense management
taxes, depreciation, and | |
amortization | |
- ------------------------------|----------------------|-------------------------
o Return on investment | o Economic value | o Customer
| added | satisfaction
- ------------------------------|----------------------|-------------------------
o Return on net assets | o Earnings before | o Quality
| interest and taxes |
- ------------------------------|----------------------|-------------------------
o Return on invested capital | o Profit before | o Human resources
| taxes | management
- ------------------------------|----------------------|-------------------------
o Return on equity | o Net operating |
| profit after taxes |
- ------------------------------|----------------------|-------------------------
o Backlog -- value of | o Profit margin |
leases under contract before | |
operation | |
- ------------------------------|----------------------|-------------------------
o Cash-flow return on | o Revenue growth |
investment | |
Applicable measures (and goals with respect to each measure) for each
performance period will be established by the Committee within 90 days after the
beginning of the performance period (except for the initial Plan Year). The
performance measures may be used alone, or in combination, and/or weighted as
the Committee deems appropriate. However, measures from Group B can only be used
in combination with measures from Group A.
Measurement of all performance goals, measures, and awards shall be objectively
determinable, although the Committee may exercise its discretion in making
awards under this Plan to the extent that such discretion is not inconsistent
with the requirements of Code Section 162(m).
<PAGE>
Section 6: Determination of Incentive Awards
As soon as practicable after the end of the Plan Year, the Committee shall
certify in writing the extent to which the Company and the participants have
achieved the performance goals and standards for the Plan year, including the
specific target objective(s) and the satisfaction of any other material terms of
the incentive awards, and the Committee shall calculate the amount of each
participant's incentive award for the relevant period.
The Committee shall have no discretion to increase the amount of any
participant's incentive award as so determined, but may reduce the amount of or
completely eliminate such incentive award if it determines in its absolute and
sole discretion that such a reduction or elimination is appropriate in order to
reflect the participant's performance or unanticipated factors.
Section 7: Payment of Awards
Approved incentive awards shall be payable by the Company in cash to each
participant, or to his or her estate in the case of death, as soon as
practicable after the end of each performance period and after the Committee has
certified in writing that the specified performance goals were achieved.
An incentive award that would be payable but for the fact that the participant
was not employed by the Company on the last day of the performance period shall
be prorated, or not paid, in accordance with rules and regulations adopted by
the Committee for the administration of the Plan. In the event that a
participant's employment with the Company terminates voluntarily or for cause,
no portion of any target award will be paid. If termination is involuntary or on
account of death, disability, or retirement, a pro rata award shall be paid
within a reasonable period of time after the end of the fiscal year in which the
termination occurs.
If it is determined that a portion of any award under this Plan would not be
deductible by the Company on account of Section 162(m) of the Code, if paid when
it would otherwise become payable, payment of the nondeductible portion of the
award shall be deferred until the first year(s) in which the payment will be
deductible by the Company.
<PAGE>
Section 8: Miscellaneous
Unsecured Obligation -- A participant shall have no interest in any fund or
specified asset of the Company. No trust fund shall be created in connection
with the Plan or any award, and there shall be no required funding of amounts
that may become payable under the Plan. Any amounts that are or may be set aside
under the provisions of this Plan shall continue for all purposes to be part of
the general assets of the Company, and no person or entity other than the
Company shall, by virtue of the provisions of this Plan, have any interest in
such assets. No right to receive payments from the Company pursuant to this Plan
shall be greater than the right of any unsecured creditor of the Company.
Non-assignability -- No right or interest in the Plan or to an award is
assignable, transferable, or subject to any lien or encumbrance, either directly
or indirectly, by operation of law or otherwise, including levy, garnishment,
attachment, pledge, or bankruptcy.
No Right to Continued Employment -- Participation in the Plan does not guarantee
or create any right to continued employment by the Company and the Company
reserves the right to dismiss any participant at any time. Participation in any
one performance cycle does not guarantee participation in any other performance
cycle.
Tax Withholding -- All awards to be paid under the Plan shall be subject to all
applicable withholding taxes, including federal and state income taxes and
employment taxes. The Company will withhold such taxes in accordance with
applicable tax regulations.
Binding on Successors -- The obligations of the Company under this Plan shall be
binding upon any organization that shall succeed to all or substantially all of
the Company's assets; the term "Company" whenever used in this Plan shall mean
and include such organization after the succession.
Change-in-Control -- In the event that the Company has a change-in-control, as
that term is defined below, all participants in the Plan shall be entitled to
receive a pro rata incentive award, calculated by multiplying the target
incentive amount for each participant by a fraction, the numerator of which is
the number of days in the performance period that preceded the change-in-control
and the denominator of which is 365.
A "Change of Control of the Company" shall be deemed to have occurred if any of
the following has occurred:
A. Individuals who, as of the date hereof, constitute the entire Board of
Directors of the Company ("Incumbent Directors") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election, by the
<PAGE>
Company's shareholders, was approved by a vote of at least a majority of the
then Incumbent Directors, also shall be an Incumbent Director;
B. The shareholders of the Company shall approve (i) any merger,
consolidation or recapitalization of the Company or any sale, lease, or other
transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of the Company (each of the foregoing being an "Acquisition Transaction")
where the shareholders of the Company immediately prior to such Acquisition
Transaction would not immediately after such Acquisition Transaction
beneficially own, directly or indirectly, shares representing in the aggregate
more than 80 percent of (a) the then outstanding common stock of the corporation
surviving or resulting from such merger, consolidation or recapitalization or
acquiring such assets of the company, as the case may be (the "Surviving
Corporation"), (or of its ultimate parent corporation, if any), and (b) the
Combined Voting Power (as defined below) of the then outstanding Voting
Securities (as defined below) of the Surviving Corporation (or of its ultimate
parent corporation, if any), or (ii) any plan or proposal for the liquidation or
dissolution of the Company; or
C. Any Person (as defined below) shall become the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of securities of the Company representing in the aggregate 20
percent or more of the then outstanding shares of common stock of the Company
("Common Shares"); provided, however, that notwithstanding the foregoing, a
Change of Control of the Company shall not be deemed to have occurred for
purposes of this Subparagraph C solely as the result of:
(1) An acquisition of securities by the Company which, by reducing the
number of Common Shares or other Voting Securities outstanding, increases (i)
the proportionate number of Common Shares beneficially owned by any Person to 20
percent or more of the Common Shares then outstanding;
(2) An acquisition of securities directly from the Company except that this
paragraph shall not apply to any conversion of a security that was not acquired
directly from the Company.
Definition of Terms -- Each term or phrase used in the Plan that is not defined
in the Plan shall have the same meaning as under the PanAmSat Corporation
Long-Term Stock Incentive Plan Established in 1997.
Exhibit 10.35
INTELLECTUAL PROPERTY CROSS LICENSE AGREEMENT
This INTELLECTUAL PROPERTY CROSS LICENSE AGREEMENT (this "Agreement")
is made as of the 16th day of May, 1997 by and between Magellan International,
Inc. ("Magellan") and Hughes Electronics Corporation ("Hughes").
Recitals
WHEREAS, under an Agreement and Plan of Reorganization (the
"Reorganization Agreement") dated September 20, 1996, Hughes Communications Inc.
agreed to contribute certain intellectual property assets of its Galaxy Business
(as defined in the Reorganization Agreement) to Magellan;
WHEREAS, pursuant to an Assurance Agreement entered into on even date
with the Reorganization Agreement, Hughes and Magellan agreed to cross-license
certain intellectual property rights;
WHEREAS, this agreement is entered into by the parties on the Closing
Date (as defined in the Reorganization Agreement);
NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:
DEFINITIONS
1.1 "HE Licensed Intellectual Property" means all domestic, foreign, common law,
registered and pending applications for patents, copyrights, trade secrets,
know-how, confidential information, computer programs (including source code),
documentation, engineering and technical drawings, processes, methodologies, and
technology (excluding any intellectual property owned and developed by the
Galaxy Business which was transferred to Magellan) of Hughes and its Affiliates
(as defined in the Reorganization Agreement) that was used in the Galaxy
Business on or before Closing but not conveyed to Magellan pursuant to the
Reorganization Agreement.
1.2 "Galaxy Licensed Intellectual Property" means all Magellan owned domestic,
foreign, common law, registered and pending applications for patents,
copyrights, trade secrets, know-how, confidential information, computer programs
(including source code), documentation, engineering and technical drawings,
processes, methodologies, and technology that were conveyed to Magellan pursuant
to Section 1.1 of the Reorganization Agreement.
LICENSES
2.1 Hughes and its Subsidiaries hereby grant Magellan and its successors a
nonexclusive, royalty-free, perpetual license to use any HE Licensed
Intellectual Property that was used in the Galaxy Business on or before the
Closing Date. Hughes and its Subsidiaries further grant Magellan and its
successors the right to sublicense the HE Licensed Intellectual Property solely
to their customers in connection with the use of products or services purchased
from Magellan or its successors.
2.2 Magellan hereby grants to Hughes and its Subsidiaries (as defined in the
Reorganization Agreement) and their successors a non-exclusive, royalty-free,
perpetual license to use any Galaxy Licensed Intellectual Property that was used
in the business of Hughes or any of its Subsidiaries on or before the Closing
Date. Magellan further grants Hughes and its Subsidiaries and their successors
the right to sublicense such Galaxy Licensed Intellectual Property solely to
their customers in connection with the use of products or services purchased
from Hughes or its Subsidiaries or their successors.
ASSIGNMENT
3.1 In the event that Magellan transfers its business, or a portion of its
business, to a third party, Magellan may assign its rights under this Agreement
to such third party only to the extent that HE Licensed Intellectual Property is
used in the business being transferred by Magellan.
3.2 In the event that Hughes or one of its Subsidiaries transfers its business,
or a portion of its business, to a third party, Hughes may assign its rights
under this Agreement to such third party only to the extent that Magellan
Licensed Intellectual Property is used in the business being transferred by
Hughes or its Subsidiary.
3.3 Except as provided for in Sections 3.1 and 3.2, neither party may assign any
of its rights under this Agreement without the prior written consent of the
other party.
DISCLAIMERS
4.1 HUGHES AND ITS SUBSIDIARIES EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESS OR
IMPLIED, IN CONNECTION WITH THE HE LICENSED INTELLECTUAL PROPERTY AND THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND AGAINST PATENT,
COPYRIGHT, SEMICONDUCTOR MASK WORK OR TRADEMARK INFRINGEMENT.
4.2 MAGELLAN AND ITS SUBSIDIARIES EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESS OR
IMPLIED, IN CONNECTION WITH THE GALAXY LICENSED INTELLECTUAL PROPERTY AND THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND AGAINST PATENT,
COPYRIGHT, SEMICONDUCTOR MASK WORK OR TRADEMARK INFRINGEMENT.
4.3 Hughes and its Subsidiaries and Affiliates shall have no liability arising
directly or indirectly from the use by Magellan and its Subsidiaries of the HE
Licensed Intellectual Property.
4.4 Magellan and its Subsidiaries and Affiliates shall have no liability arising
directly or indirectly from the use by Hughes and its Subsidiaries of the Galaxy
Licensed Intellectual Property.
4.5 Hughes shall indemnify, defend and hold harmless Magellan from all actions,
claims, liabilities and expenses, including reasonable attorneys' fees and
disbursements, arising out of or in connection with Hughes' use of the Galaxy
Licensed Intellectual Property.
4.6 Magellan shall indemnify, defend and hold harmless Hughes from all actions,
claims, liabilities and expenses, including reasonable attorneys' fees and
disbursements, arising out of or in connection with Magellan's use of the HE
Licensed Intellectual Property.
GENERAL PROVISIONS
5.1 This Agreement is deemed to be executed and delivered within the State of
California and shall be construed, interpreted and applied in accordance with
the laws of the State of California.
5.2 This Agreement sets forth the entire agreement and understanding between the
parties as to the subject matter of this Agreement and merges and supersedes all
prior discussions between them relative to such subject matter, and none of the
parties shall be bound by any conditions, definitions, warranties or
representations other than as expressly provided in this agreement or as duly
set forth or subsequent to the date hereof in writing and signed by a proper and
duly authorized officer of the party to be bound thereby.
5.3 This Agreement inures to the benefit of and is binding upon each party and
their respective Subsidiaries and Affiliates.
5.4 All notices, requests, approvals, consents and other communications required
or permitted under this Agreement shall be in writing and shall be sent by
telecopy to the telecopy number specified below. A copy of any such notice shall
also be sent by registered express air mail on the date such notice is
transmitted by telecopy to the address specified below:
In the case of Magellan to:
PanAmSat Corporation
One Pickwick Plaza
Greenwich, Connecticut 06830
Attention James W. Cuminale
Senior Vice President and General Counsel
Telephone (203) 622-6664
Telecopy (203) 662-9163
In the case of Hughes to:
Hughes Electronics Corporation
7200 Hughes Terrace
Los Angeles, California 90045
Attention: General Patent Counsel
Telephone: (310) 568-6972
Telecopy: (310) 645-3411
Either party may change its address or telecopy number for notification purposes
by giving the other party notice of the new address or telecopy number and the
date upon which it will become effective.
5.5 This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one single agreement between Hughes and
Magellan.
5.6 The article and section headings are for reference and convenience only and
shall not be considered in the interpretation of this Agreement.
5.7 Unless otherwise specified in this Agreement, all consents, approvals,
acceptance or similar actions to be given by either party under this Agreement
shall be in writing and shall not be unreasonably withheld or delayed and each
party shall make only reasonable requests under this Agreement.
5.8 If any provision of this Agreement is held by a court of competent
jurisdiction to be contrary to law, then the remaining provisions of this
Agreement will remain in full force and effect.
5.9 No delay or omission by either party to exercise any right or power it has
under this Agreement shall impair or be construed as a waiver of such right or
power. A waiver by any party of any breach or covenant shall not be construed to
be a waiver of any succeeding breach or any other covenant. All waivers must be
in writing and signed by the party waiving its rights.
5.10 In the event of a conflict between this Agreement and any amendment the
terms of such amendment shall prevail.
5.11 No amendment to, or change, waiver or discharge of, any provision of this
Agreement shall be valid unless in writing and signed by an authorized
representative of the party against which such amendment, change, waiver or
discharge is sought to be enforced.
5.12 The terms of Section 4.1, Section 4.2, Section 4.5, Section 4.6, Section
5.1 and this Section 5.12 shall survive the expiration or termination of this
Agreement for any reason.
5.13 This Agreement shall be binding on each party and their respective
successors.
IN WITNESS WHEREOF, the parties have caused two (2) copies of this
agreement to be executed by their duly authorized officers as of the date first
specified above.
HUGHES ELECTRONICS CORPORATION
By:/s/Charles H. Noski
------------------------------
Charles H. Noski
Vice Chairman and Chief Financial Officer
MAGELLAN INTERNATIONAL,
INC., soon to be known as
PANAMSAT CORPORATION
By:/s/Kenneth N. Heintz
------------------------------
Kenneth N. Heintz
Treasurer
Exhibit 10.36
LEVERAGED LEASE GUARANTY INDEMNIFICATION AGREEMENT
This LEVERAGED LEASE GUARANTY INDEMNIFICATION AGREEMENT (this
"Agreement") is made as of the 16th day of May, 1997 by and between Magellan
International, Inc. ("Magellan") and Hughes Electronics Corporation (formerly
known as GM Hughes Electronics Corporation) ("HE").
RECITALS
A. Hughes Communications Galaxy, Inc. ("HCG"), Hughes Communications
Satellite Services, Inc. ("HCSS") and certain other indirect subsidiaries of HE
previously entered into arrangements whereby HCG sold the Galaxy VII, SBS 6 and
Galaxy III-R communications satellites to various parties and is leasing them
back from such parties pursuant to lease agreements related to such satellites
(the "Sale Leaseback Transactions").
B. As part of the Sale Leaseback Transactions, HE guaranteed certain
payment and performance obligations under the agreements relating to the Sale
Leaseback Transactions.
C. Under an Agreement and Plan of Reorganization (the "Reorganization
Agreement"), dated September 20, 1996, by and among Hughes Communications, Inc.
("HCI"), HCG, HCSS, Hughes Communications Services, Inc., Hughes Communications
Carrier Services, Inc., Hughes Communications Japan, Inc., PanAmSat Corporation
and Magellan International, Inc., HCI and certain of its subsidiaries agreed to
contribute to Magellan certain assets and obligations of the Galaxy Business (as
defined in the Reorganization Agreement), including all of their rights and
obligations in connection with the Sale Leaseback Transactions.
D. Pursuant to an Assurance Agreement entered into on even date with
the Reorganization Agreement, HE agreed to continue to guarantee the leveraged
leases of transponders in connection with the Sale Leaseback Transactions.
E. As a condition to consummation of the transactions contemplated by
the Reorganization Agreement, Magellan has agreed to enter into this Agreement.
AGREEMENT
In consideration of the foregoing and the mutual promises contained in
the Reorganization Agreement and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
INDEMNIFICATION
1.1 Indemnification.
(a) Magellan agrees to perform any obligation, commitment or
undertaking of HE (the "Indemnified Party") required by any third party arising
out of, resulting from or in connection with, any of the Sale Leaseback
Transactions, and Magellan further agrees to indemnify, defend and hold harmless
the Indemnified Party against any losses, claims, costs, expenses (including
reasonable legal expenses), damages or liabilities, joint or several, arising
out of, incurred as a result of or in connection with any such obligation,
commitment or undertaking.
(b) Promptly after an Indemnified Party becomes aware that a claim for
indemnification under this Section 1.1 has arisen, the Indemnified Party shall
notify Magellan in writing of such claim, accompanied by a written statement of
the facts of which the Indemnified Party then is aware constituting the basis
for such claim (in reasonable detail). Failure by any Indemnified Party to so
notify Magellan shall not relieve Magellan of any liability hereunder except to
the extent that such failure prejudices Magellan. The Indemnified Party shall
not pay or settle any claim that is the subject of indemnification during this
notice period without the prior written consent of Magellan.
(c) Within 30 days of receiving the notice required by Section 1.1(b)
Magellan may elect to pay, object to, compromise or defend such claim by
providing the Indemnified Party with written notice of such election, which
notice acknowledges Magellan's obligation to provide indemnification hereunder.
If Magellan so elects and if Magellan is financially capable (based on
Magellan's most recent financial statements) of satisfying when due the amount
to which the claim for indemnification relates, then (i) the Indemnified Party
shall not pay any third-party claim that is the subject of indemnification or
enter into any settlement or other compromise with respect to such claim without
the prior written consent of Magellan and (ii) Magellan shall have the right, in
its sole discretion, to take control of the settlement, defense, investigation
and any other actions with respect to such claim and to employ and engage
attorneys of its own choice reasonably acceptable to HE to handle and defend the
same, at Magellan's cost, risk and expense. Magellan shall not settle any
third-party claim that is the subject of indemnification without the written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld; provided, however, that Magellan may settle a claim without the
Indemnified Party's consent if such settlement (i) makes no admission or
acknowledgment of liability or culpability with respect to such Indemnified
Party, (ii) includes a complete release of the Indemnified Party and (iii) does
not require the Indemnified Party to make any payment or forego or take any
action. The Indemnified Party shall cooperate in all reasonable respects with
Magellan and its attorneys in the investigation, trial and defense of any
lawsuit or action with respect to such claim and any appeal arising therefrom
(including the filing in the Indemnified Party's name of appropriate
cross-claims and counterclaims), provided that Magellan shall pay all of HE's
out-of-pocket expenses of providing such cooperation. The Indemnified Party also
may participate in any investigation, trial and defense of such lawsuit or
action controlled by Magellan and any appeal arising therefrom; provided that,
if and to the extent that the Indemnified Party determines in its reasonable
judgment based on advice of legal counsel that an actual or potential material
conflict of interest exists where it is advisable for the Indemnified Party to
be represented by separate counsel and the Indemnified Party informs Magellan
that it desires to be represented by separate counsel, the Indemnified Party
shall have the right to control its own defense of such claim and the reasonable
fees and expenses of such separate counsel shall be borne by Magellan.
(d) If, after receipt of a claim notice pursuant to Section 1.1(b),
Magellan does not undertake to defend any such claim, the Indemnified Party may,
but shall have no obligation to, at Magellan's expense, contest any lawsuit or
action with respect to such claim and Magellan shall be bound by the result
obtained with respect thereto by the Indemnified Party (including, without
limitation, the settlement thereof without the consent of Magellan).
(e) Should the Indemnified Party receive any refund, in whole or in
part, with respect to any claim paid by Magellan hereunder, it shall promptly
pay the amount refunded (but not an amount in excess of the amount Magellan or
any of its (or any other person's) insurers has paid in respect of such claim)
over to Magellan.
ARTICLE II
GENERAL PROVISIONS
2.1 Governing Law. This Agreement is deemed to be executed and delivered
within the State of New York and shall be construed, interpreted and applied in
accordance with the laws of the State of New York.
2.2 Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter of this Agreement and
merges and supersedes all prior discussions between them relative to such
subject matter, and none of the parties shall be bound by any conditions,
definitions, warranties or representations other than as expressly provided in
this agreement or as duly set forth subsequent to the date hereof in writing and
signed by a proper and duly authorized officer of the party to be bound thereby.
2.3 Binding Effect. This Agreement inures to the benefit of and is binding
upon each party and their respective subsidiaries, affiliates, successors and
assigns.
2.4 Notices. All notices, requests, approvals, consents and other
communications required or permitted under this Agreement shall be in writing
and shall be sent by telecopy to the telecopy number specified below. A copy of
any such notice shall also be sent by registered express air mail or nationally
recognized overnight delivery service on the date such notice is transmitted by
telecopy to the address specified below:
In the case of Magellan to:
PanAmSat Corporation
One Pickwick Plaza
Greenwich, Connecticut 06830
Attention: James W. Cuminale, Esq.
Senior Vice President and General Counsel
Telephone (203) 622-6664
Telecopy (203) 662-9163
In the case of HE to:
Hughes Electronics Corporation
7200 Hughes Terrace
Los Angeles, California 90045
Attention: Robert Hall, Esq.
Telephone: (310) 568-7272
Telecopy: (310) 568-7834
Either party may change its address or telecopy number for notification purposes
by giving the other party notice of the new address or telecopy number and the
date upon which it will become effective.
2.5 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one single agreement
between HE and Magellan.
2.6 Section Headings. The article and section headings are for reference
and convenience only and shall not be considered in the interpretation of this
Agreement.
2.7 Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be contrary to law, then the remaining provisions of
this Agreement will remain in full force and effect.
2.8 Waivers. No delay or omission by either party to exercise any right or
power it has under this Agreement shall impair or be construed as a waiver of
such right or power. A waiver by any party of any breach or covenant shall not
be construed to be a waiver of any succeeding breach or any other covenant. All
waivers must be in writing and signed by the party waiving its rights.
2.9 Conflicts. In the event of a conflict between this Agreement and any
amendment the terms of such amendment shall prevail.
2.10 Amendment. No amendment to, or change, waiver or discharge of, any
provision of this Agreement shall be valid unless in writing and signed by an
authorized representative of the party against which such amendment, change,
waiver or discharge is sought to be enforced.
(Signature Page Follows)
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Leveraged Lease Guaranty
Indemnification Agreement to be executed by their duly authorized officers as of
the date first specified above.
MAGELLAN INTERNATIONAL, INC.
By: /s/Kenneth N. Heintz
-----------------------------
Kenneth N. Heintz
Treasurer
HUGHES ELECTRONICS CORPORATION
By: /s/Charles H. Noski
-----------------------------
Charles H. Noski
Vice Chairman and Chief Financial Officer
Exhibit 10.37
Information contained herein, marked with [***], is being filed pursuant to a
request for confidential treatment.
FIXED PRICE CONTRACT
BETWEEN
HUGHES COMMUNICATIONS GALAXY, INC.
AND
HUGHES SPACE & COMMUNICATIONS COMPANY
FOR
GALAXY XI HS702
SPACECRAFT, RELATED SERVICES AND DOCUMENTATION
CONTRACT No. 96-HCG-002
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1. EXHIBITS AND INCORPORATIONS.......................................2
ARTICLE 2. ORDER OF PRECEDENCE...............................................3
ARTICLE 3. SPACECRAFT, DOCUMENTATION AND RELATED SERVICES....................4
ARTICLE 4. DELIVERABLES AND SCHEDULE.........................................6
ARTICLE 5. PRICE.............................................................9
ARTICLE 6. PAYMENTS.........................................................10
ARTICLE 7. SPACECRAFT LAUNCH DATE...........................................14
ARTICLE 8. BUYER-FURNISHED ITEMS............................................16
ARTICLE 9. INSPECTION AND ACCEPTANCE........................................19
ARTICLE 10. ACCESS TO WORK IN PROCESS........................................20
ARTICLE 11. TERMINATION FOR DEFAULT; LIMITATION OF LIABILITY.................21
ARTICLE 12. EXCUSABLE DELAYS.................................................23
ARTICLE 13. AMENDMENTS.......................................................24
ARTICLE 14. TITLE AND RISK OF LOSS...........................................25
ARTICLE 15. SPACECRAFT WARRANTY..............................................28
ARTICLE 16. INDEMNIFICATION..................................................30
ARTICLE 17. SPACECRAFT NOT LAUNCHED WITHIN SIX MONTHS AFTER ACCEPTANCE.......31
ARTICLE 18. PATENT/COPYRIGHT INDEMNITY.......................................32
ARTICLE 19. RIGHTS IN INVENTIONS.............................................34
ARTICLE 20. INTELLECTUAL PROPERTY RIGHTS.....................................36
ARTICLE 21. FURNISHED DATA AND INFORMATION, DISCLOSURE AND USE...............37
ARTICLE 22. PUBLIC RELEASE OF INFORMATION....................................39
(i)
<PAGE>
ARTICLE 23. TAXES............................................................40
ARTICLE 24. GOVERNING LAW....................................................41
ARTICLE 25. TITLES...........................................................42
ARTICLE 26. NOTICES AND AUTHORIZED REPRESENTATIVES...........................43
ARTICLE 27. INTEGRATION......................................................44
ARTICLE 28. CHANGES..........................................................45
ARTICLE 29. EFFECTS OF STORAGE ON BATTERIES..................................48
ARTICLE 30. INTER-PARTY WAIVER OF LIABILITY..................................49
ARTICLE 31. SPACECRAFT STORAGE...............................................50
ARTICLE 32. DISPUTES.........................................................51
ARTICLE 33. ASSIGNMENT.......................................................54
ARTICLE 34. LIMITATION OF LIABILITY..........................................56
ARTICLE 35. EFFECTIVE DATE OF CONTRACT.......................................57
(ii)
<PAGE>
THIS CONTRACT is entered into on the 7th day of May, 1997, by and between
HUGHES COMMUNICATIONS GALAXY, INC. (herein called "Buyer" or "HCG"), a
California corporation having a place of business at 1500 Hughes Way, Long
Beach, California 90810 and HUGHES SPACE AND COMMUNICATIONS COMPANY (herein
called "Contractor," "Seller" or "HSC"), a Delaware corporation having a place
of business at 909 North Sepulveda Boulevard, El Segundo, California 90245.
WITNESSETH:
WHEREAS, HCG desires to purchase, and Contractor desires to provide
communications Spacecraft, Documentation, and Related Services as hereinafter
specified, and the Parties desire to define the terms and conditions under which
the same shall be furnished,
NOW, THEREFORE, the Parties hereto agree as follows:
1
<PAGE>
ARTICLE 1. EXHIBITS AND INCORPORATIONS
The following documents are hereby incorporated and made a part of this
Contract with the same force and effect as though set forth herein:
1.1 Exhibit A - Galaxy XI Statement of Work - executed on April 30, 1997.
1.2 Exhibit B - Galaxy XI Spacecraft Specification - executed on
December 19, 1996.
1.3 Exhibit C - Galaxy XI Spacecraft Integration Test Plan - executed on
April 30, 1997.
1.4 Exhibit D - Galaxy XI Product Assurance Plan - executed on
April 30, 1997.
1.5 Exhibit E - Certain Documentation - executed on April 30, 1997.
1.6 Exhibit F - Certain Software and/or Documentation - executed on
April 30, 1997.
2
<PAGE>
ARTICLE 2. ORDER OF PRECEDENCE
In the event of any conflict or inconsistency among the provisions of
this document and the exhibits attached and incorporated into this
Contract, such conflict or inconsistency shall be resolved by giving
precedence to this document, and then to the attached and incorporated
exhibits in the order listed in Article 1 herein, entitled "Exhibits
and Incorporations."
3
<PAGE>
ARTICLE 3. SPACECRAFT, DOCUMENTATION AND RELATED
SERVICES ("DELIVERABLES")
HCG shall purchase from Contractor and Contractor shall sell and
furnish the following:
3.1 Contractor shall provide the necessary personnel, material,
services and facilities to design, fabricate, test and deliver
as required and perform work in accordance with the
requirements of Exhibits A, B, C and D hereto, one (1) HS702
type Spacecraft for Galaxy Flight XI (hereinafter referred to
as "Spacecraft"), Documentation and Related Services (as
defined in Article 4).
3.2 All materials and services specified in Exhibit A, entitled
"Galaxy XI Statement of Work," shall meet the requirements of
Exhibit B, entitled "Galaxy XI Spacecraft Specification."
3.3 If Contractor has not made delivery [***] or if, prior to the
Launch Date, [***] Buyer at its election may:
[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
4
<PAGE>
Any such election shall be made by Buyer in writing. In either
case (a) or (b) above, [***]
3.4 [***] in accordance with: (i) current directives and
instructions in the Hughes Spacecraft Operators Handbook,
utilized at either Buyer's Operations Control Center (OCC) or
Contractor's Mission Control Center (MCC); and (ii) any other
Documentation utilized, including that Documentation which
takes into consideration the unique or special characteristics
of the contracted Spacecraft. [***] Contractor has
responsibility and liability for the Mission Control Center.
Buyer has responsibility and liability for the Operations
Control Center and its associated ground station(s).
3.5 The Spacecraft, Documentation and Related Services described
above shall be delivered to HCG at the indicated locations on
the dates set forth in Article 4 entitled, "Deliverables and
Schedule" herein.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
5
<PAGE>
ARTICLE 4. DELIVERABLES AND SCHEDULE
4.1 The following deliverables to be furnished under this Contract
shall be furnished at the designated location(s) on or before
the dates specified below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Integration Delivery Location and
Date of Delivery Performance Place
Deliverable(s) or Performance
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
o Sea Launch, L.P. Facilities,
1. One Spacecraft ("Spacecraft") Forty-five (45) days prior to Port of Long Beach, California
Launch(1) (the
"Integration Facility")
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
o Sea Launch, L.P. Facilities,
2. Launch Support, Mission In Accordance with Exhibit A Port of Long Beach, California
Operations and In-Orbit (the "Integration Facility")
Testing ("Related Services") then vicinity of Kiritimati,
"Christmas Islands", (the
"Launch Site")
o Filmore, California
o Castle Rock, Colorado
o El Segundo, California
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
3. Documentation In Accordance with Exhibit A 1500 Hughes Way
("Documentation") Long Beach, California
- -----------------------------------------------------------------------------------------------------------
</TABLE>
1 Launch Period is 01 June - 01 September 1998
4.2 The Contractor will arrange transportation required for Items
1, 2 and 3 above. With respect to Deliverable Items 1 and 2,
liability is allocated as follows:
The Launch Vehicle Provider for this Galaxy XI Launch is
Sea Launch, L.P. The Galaxy XI Spacecraft will be mated
with the Sea Launch Zenit Vehicle (the "Vehicle") at the
Sea Launch, L.P. facilities, Port of Long Beach (the
"Integration Facility"). Under the Amended and Restated
Launch Services Agreement dated 17 January 1997 by and
between Hughes Space and Communications International,
Inc. and Hughes Communications Galaxy , Inc., which
allocates one (1) Sea Launch Limited Partnership Sea
Launch Service to Buyer, the mated Spacecraft, associated
equipment and HSC personnel necessary to assist in the
monitoring and control of the Spacecraft will be
transported by the Sea
6
<PAGE>
Launch, L.P. Command Ship (the "Ship") from the
Integration Facility to the Launch Site in the vicinity of
the Christmas Islands (the "Launch Site"). HSC may also
utilize the Ship at Sea Launch L.P.'s expense for the
transportation of other related HSC personnel when
accommodations are available and such accommodations do
not interfere with other Sea Launch, L.P. commitments for
the Galaxy XI Launch.
4.2.1 If the Spacecraft fails to conform to the
warranty provisions set forth in Article 15
and: (i) the mated Spacecraft requires
testing, maintenance, replacement and/or
corrective actions at the Launch Site or
(ii) return to the Integration Facility
and/or the El Segundo Plantsite is necessary
to accomplish such actions, HSC shall have
responsibility and liability as follows:
4.2.1.1 If Spacecraft warranty actions
can be performed at the Launch
Site, HSC shall be responsible
and liable for [***] to the
warranty provisions of this
Contract.
4.2.1.2 If return of the Spacecraft to
the Integration Facility and/or
Plantsite is necessary for such
warranty actions, HSC shall be
liable to Buyer in [***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
7
<PAGE>
[***]
4.3 [***] shall be responsible for obtaining and maintaining:
(i) all U.S. Government export licenses to enable export of
the Spacecraft, related test and support equipment to the
Launch Site and (ii) all authorizations required for the
performance of this Contract.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
8
<PAGE>
ARTICLE 5. PRICE
5.1 The total price (the "Contract Price") for Contractor to
provide the Spacecraft, Documentation and Related Services as
defined in Article 3 herein is [***]
5.2 Buyer shall pay Contractor the Contract Price stated in
Paragraph 5.1 above in accordance with Article 6, Paragraphs
6.2 and 6.3 of this Contract.
5.3 Notwithstanding the foregoing, in the event that any Exhibit F
Certain Software and/or Documentation is delayed beyond the
delivery date (the "Liquidated Damages Date") identified in
this Exhibit, Buyer unless it otherwise agrees, and so
notifies Contractor, is excused from its duty to remit to
Contractor [***] required by Paragraph 6.3 upon timely
delivery of all Exhibit F Software and/or Documentation.
Thereafter, the Contract Price shall mean [***] Buyer and
Contractor agree that this Liquidated Damages sum is a
reasonable pre-estimate of actual loss and free of any
penalty. Contractor's maximum liability under this Paragraph
is [***].
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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ARTICLE 6. PAYMENTS
6.1 Pursuant to the terms set forth in this Article 6, and subject
to HCG's rights, defenses and remedies as expressly stated in
this Agreement, HCG shall pay to Contractor the Contract Price
as stated in Article 5 herein for the Spacecraft,
Documentation, and Related Services under this Contract.
6.2 Invoices shall be prepared and submitted by Contractor in a
form reasonably acceptable to Buyer. Payments to Contractor
shall be made in accordance with the payment plan specified in
subparagraph 6.3 below:
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[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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6.4 Payment Schedule Revision: The payment plan established in
Paragraph 6.3 above is based upon a launch period between 01
June - 01 September 1998. If the Launch Period established in
accordance with Article 7, Paragraph 7.1.2 is later than
September 1998, the payment plan in Paragraph 6.3 of this
Article shall be revised by mutual agreement of the Parties to
reflect the established Launch Period.
6.5 HSC shall not be obligated to deliver the Spacecraft to the
Launch Site if there are any outstanding Delinquent Payments
owed by HCG to HSC under this contract one month prior to
shipment of the Spacecraft from the HSC facility. "Delinquent
Payments" are defined as those payments not received by HSC
within thirty (30) days of the dates due as defined in
Paragraph 6.5.2 below. Once HCG has paid HSC for any
"Delinquent Payments" and any interest accrued in accordance
with Paragraph 6.7 below, HSC shall use its reasonable best
efforts to ship the Spacecraft to the Launch Site so as to
enable launch on the scheduled Launch Date and in any event to
make shipment as soon as practicable and no later than sixteen
(16) weeks after payment by HCG of such Delinquent Payments.
HCG will be responsible for and will pay to HSC any reasonable
costs and [***] profit on such costs that HSC may incur as a
result of a delay in delivery due to HCG's Delinquent
Payments. Notwithstanding the foregoing, this Section 6.5
shall not relieve Contractor of its obligation to deliver the
Spacecraft, and no "Delinquent Payment" shall be deemed to
have occurred, due to any non-payment by HCG on account of an
alleged breach by Contractor or other dispute as to such
payment. In such event, HCG shall, within thirty (30) days of
the date such payment is due, pay the full amount of such
payment into an interest-bearing escrow account to be
established at Bank of America, Concord, California. Upon
settlement of the dispute as to such payment and alleged
breach in accordance with Article 32, the Party entitled to
the amount in escrow shall receive such amount together with
all accrued interest thereon and the other Party shall pay all
costs and fees associated with the escrow of such amount.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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6.6 Invoice
6.6.1 Invoices submitted to HCG for payment shall contain a
cross-reference to the Contract number and the date
specified in the Paragraph 6.3 Payment Plan.
Contractor shall submit one (1) original invoice in
each instance to:
Hughes Communications Galaxy, Inc.
P.O. Box 9712
Bldg. A01/4B462
Los Angeles, CA 90810-9928
Fax: (310) 525-5140
Attention: Accounts Payable - Tony Walden
6.6.2 Invoice amounts, as specified in Paragraph 6.3,
provide for billings to be submitted by the 15th day
of each month and shall be paid by HCG within thirty
(30) days upon receipt of the invoice by HCG.
6.7 Late Payments
In the event of a failure by the Buyer or the Contractor to
make a payment required pursuant to this Contract, the
delinquent Party shall pay interest at the rate of [***] on
the overdue amount for the number of days that the payment is
overdue, commencing on the date payment is due and terminating
on the date the overdue amount is paid in full.
Notwithstanding the foregoing, this Section 6.7 shall not
apply to any payment made into escrow in accordance with
Section 28.4.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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ARTICLE 7. SPACECRAFT LAUNCH DATE
7.1 This Contract is written on the basis that one (1) Spacecraft
supplied hereunder will be Launched on a Sea Launch (Zenit)
vehicle within the Launch Period set forth below and within
which a slot, date and window shall be established in
accordance with Paragraphs 7.1.1, 7.1.2, and 7.1.3 below:
Spacecraft Launch Vehicle Launch Period
---------- -------------- -------------
Galaxy XI Sea Launch 01 June-01 September 1998
(Zenit)
7.1.1 Launch Slot Definition. A thirty (30) day period of
time within a Launch Period during which the Launch
will occur. The Launch Slot within the Launch Period
shall be established by the Parties not later than
one (1) year prior to the first day of the applicable
Launch Period and once established, shall become an
express term of this Contract.
7.1.2 Launch Date Definition. The calendar date within the
Launch Slot during which a Launch will occur. The
Launch Date within the Launch Slot shall be
established by the Parties no later than six (6)
months prior to the first day of the applicable
Launch Slot and once established, shall become an
express term of this Contract.
7.1.3 Launch Window Definition. A daily period of time
within the Launch Date during which the Launch can
occur and meet mission requirements. The Launch
Window shall be established by the Parties no later
than forty-five (45) days prior to the Launch Date
and once established, shall become an express term of
this Contract.
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7.2 The Contract Price set forth in Paragraph 5.1 includes
Contractor furnished launch support services, post launch
support services, in-orbit test support services, and post
title transfer monitoring and command of the Spacecraft if
Buyer invokes the remedial provisions of Article 3, Paragraph
3.3. The Contract Price set forth in Paragraph 5.1 assumes the
launch of the Spacecraft on a Sea Launch vehicle within
forty-five (45) calendar days after delivery of the Spacecraft
to the Port of Long Beach, California (Integration Facility).
7.3 No less than sixteen (16) weeks prior to the launch date,
Buyer shall order Contractor by notice in writing to commence
launch campaign preparations including, but not limited to,
reserving transportation of the Spacecraft and related
equipment for shipment to the Sea Launch L.P. Integration
Facility.
7.4 If the Spacecraft launch date defined in Paragraph 7.1 is
postponed for any reason other than the sole fault of
Contractor, excluding any postponement due to an Excusable
Delay as defined in Article 12, the Parties shall negotiate in
good faith to determine an equitable adjustment to the price
and affected terms of this Contract, if any. If the cost of
supplies or materials made obsolete or excess as a result of a
such postponement is included in the equitable adjustment, HCG
shall have the right to prescribe the manner of disposition of
such supplies or materials. Costs included in the equitable
adjustment shall include but not be limited to: support
personnel standby; extra travel expenses; transport
termination or rescheduling fees; a profit rate of [***].
7.5 Notwithstanding the foregoing, if the Spacecraft Launch Date
defined in Paragraph 7.1 is postponed by either Party due to
an Excusable Delay, as defined in Paragraph 12.1 herein, the
terms of Article 12 herein shall govern such postponement.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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ARTICLE 8. BUYER-FURNISHED ITEMS
8.1 The following facilities, equipment, and services shall be
furnished by HCG at no cost to Contractor, in a timely manner,
so as to enable Contractor to perform the work herein in
accordance with the Spacecraft Launch Dates as described in
Article 7 of this Contract.
1) Facilities (buildings, power, phones and data lines)
and enumerated services: (i) transportation of the
Spacecraft, Contractor related test equipment and
personnel within the Launch Site and between the
Integration Facility (Port of Long Beach) and the
Launch Site (vicinity of Christmas Islands) unless
Article 4, Paragraph 4.2.1 conditions apply (ii)
storage of the Spacecraft and related test equipment
for all force majeure events and/or launch vehicle
delays (iii) fueling (iv) photographs and (v)
interface hardware at the Launch Site.
2) Reservation and procurement of the launch services
and associated services.
Contractor will provide preliminary requirements of Item 1
above to Buyer no later than 6 months after EDC to assist
Buyer's compliance with this Article. Prior to Buyer's
execution of a Launch Services Contract with the Launch
Services provider, Contractor will be allowed to review the
list of basic and optional service which Buyer shall procure.
In the event that the Buyer-Furnished Items set forth above
are not suitable for the intended purpose or are not provided
in a timely manner, excluding any excusable delay as defined
in Article 12 herein, then HCG shall be liable to Contractor
for all applicable costs which shall include but not be
limited to: procurement or rental of suitable substitutes for
such Buyer Furnished Items at no higher than market prices;
with title and possession of all such procured items reverting
to Buyer after Contractor's use under this Agreement; support
personnel standby; extra travel expenses; transport
termination or rescheduling fees; and
installation/de-installation of communication links to the
Launch Site and a profit rate of [***].
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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8.2 Contractor shall maintain a system to ensure the adequate
control and protection of HCG's Property. For the purposes of
this Article, HCG Property shall be defined as any item which
HCG provides to the Contractor or directs Contractor to
maintain in storage or an inventory account under this
Contract. Upon receipt of notification from HCG, the
Contractor shall complete and return within fifteen (15)
working days a Property System Certification describing the
system that will be used to control HCG's Property.
Additionally, HCG's representative may, at its option and at
no additional cost to HCG, conduct surveillance at a
reasonable time of the Contractor's Property Control System as
HCG deems necessary to assure compliance with the terms and
conditions of this Article.
8.3 Contractor shall, commencing with its receipt and during its
custody or the use of any HCG's Property, accomplish the
following:
A. Establish and maintain inventory records and make
such records available for review upon HCG's request;
B. Provide the necessary precautions to guard against
damage from handling and deterioration during
storage;
C. Perform periodic inspection to assure adequacy of
storage conditions; and
D. Ensure that HCG's Property is used only for
performing this Contract, unless otherwise provided
in this Article or approved by the cognizant
contracting officer.
8.4 Contractor shall not modify, add-on, or replace any HCG
Property without HCG's prior written authorization. Contractor
shall immediately report to HCG's contract representative the
loss of any HCG Property or any such property found damaged,
malfunctioning, or otherwise unsuitable for use. The
Contractor shall determine and report the probable cause and
necessity for withholding such property from use.
8.5 Upon termination or completion of this Contract, and upon
request by HCG, the Contractor shall perform a physical
inventory, adequate for accountability and disposition
purposes, of all HCG's Property applicable
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to such terminated or completed agreement and shall cause its
subcontractors and suppliers at every tier to do likewise.
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ARTICLE 9. INSPECTION AND ACCEPTANCE
9.1 Inspection of all Hardware, documentation and Contractor's
services provided hereunder shall take place in accordance
with the terms of Article 10, entitled "Access to Work in
Process," herein.
9.2 Preliminary Acceptance of the Spacecraft shall occur when all
in-plant tests required to be performed by Contractor for the
Hardware have been completed and the Contractor has
demonstrated at the pre-ship review that the Hardware meets
the requirements of this Contract, at which time HCG shall
accept the Hardware on a Preliminary basis in writing within
five (5) business days subject to completion of Launch
Integration Facility and/or Launch Site tests specified in
Exhibit C, Galaxy XI Spacecraft Integration Test Plan. If the
Hardware is unacceptable, Contractor shall promptly and at its
expense, rectify the unsatisfactory Hardware and resubmit the
Hardware for acceptance by HCG as provided above. In either
case, the Hardware shall be deemed accepted upon failure of
HCG to notify Contractor in writing within the above five (5)
business days that it is accepted, rejected or that in HCG's
opinion further corrective action must be taken by the
Contractor.
9.3 Final Acceptance of the Spacecraft shall occur upon the
earliest of i) the completion of In-orbit Testing in
accordance with Exhibit A, ii) fifty (50) days after
Intentional Ignition (as defined in Article 15, Paragraph 15.2
of this Contract) or iii) immediately before a Partial
Failure, Total Failure or Total Constructive Failure (as each
such term is defined in the applicable Hughes Communications
Galaxy Launch Insurance Contract or successor contract), which
occurs at or after Intentional Ignition. HCG shall have access
to Launch Integration Facility and/or Launch Site test results
during the launch campaign in accordance with the provisions
of Article 10, Paragraph 10.1 "Access to Work in Process."
9.4 With respect to deliverable Hardware which HCG orders
Contractor to store, the Hardware shall be stored at a
location to be negotiated and Final Acceptance shall occur at
the end of the [***] warranty period as set forth in
Article 15 herein, entitled "Spacecraft Warranty," or such
other event mutually agreed upon between the Parties.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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ARTICLE 10. ACCESS TO WORK IN PROCESS
10.1 Contractor shall afford HCG access to work in progress being
performed at Contractor's plants and at the Launch
Integration Facility and/or Launch Site pursuant to this
Contract, including technical data, documentation, and
hardware, at reasonable times during the period of Contract
performance, provided such access does not unreasonably
interfere with such work or require the disclosure of
Contractor's proprietary information to third Parties and
subject to (i) HSC's Security Procedures and (ii) U.S. or
Foreign Government Regulations.
10.2 To the extent that the Contractor's major subcontracts
permit, Contractor shall afford HCG access to work being
performed pursuant to this Contract in subcontractor's
plants in the company of Contractor's representatives.
Contractor shall exert reasonable effort in subcontracting
to obtain permission for HCG access to those major
subcontractors' plants. Major subcontracts are defined as
those subcontracts in excess of [***].
10.3 HCG shall have the right to witness on a non-interference
basis all system and subsystem tests scheduled by Contractor
in connection with the performance of work under this
Contract. If the system or subsystem tests are performed by
a subcontractor of HSC, HSC shall take all reasonable steps
to secure HCG's access to the subcontractor's facility or
facilities. HCG's right to witness testing shall be on a
non-interference basis with the subcontractor's activities
and subject to (i) any subcontractor security procedures and
(ii) U.S. or Foreign Government Regulations.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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ARTICLE 11. TERMINATION FOR DEFAULT; LIMITATION OF LIABILITY
11.1 Subject to provisions of Article 3 entitled "Spacecraft,
Documentation and Related Services," Article 5 entitled
"Price" and Article 12 entitled "Excusable Delays," Buyer
may issue a written notice of default to Contractor if: (i)
Contractor fails [***] as confirmed in writing by the
Contractor's and Buyer's Senior Executives and such failure
may result in a delay in delivery of more than [***]; or
(ii) the delivery of the Spacecraft or Contractor's
performance of any material obligation under the Contract
has been delayed due to the primary fault of the Contractor
for more than [***]. Subsequent to the issuance of said
notice, the Buyer may terminate this Contract and thereafter
elect remedies as identified in Paragraph 11.2 below.
11.2 If Buyer terminates this Contract, in whole or in part, as
provided in Paragraph 11.1 herein, Buyer, at its sole
option, shall either: (i) take title to all deliverable
hardware, all hardware in process which ultimately would
have been deliverable by Contractor and all drawings and
data produced by Contractor, the cost of which has been
charged or becomes chargeable to any work terminated plus
all reasonable reprocurement costs up to a maximum amount
of: (a) [***] in the event of a termination of this Contract
solely with respect to Documentation and/or Related Services
or (b) [***] with respect to a termination of the entire
Contract or (ii) receive a refund of all payments submitted
to Contractor by the Buyer for performance of this Contract
for the portion terminated by Buyer, and Contractor shall
retain title and possession to all terminated Hardware which
ultimately would have been deliverable by Contractor.
Contractor shall continue the performance of this Contract
to the extent not terminated under the provisions of this
Article.
11.3 Notwithstanding the other provisions of this Article, there
will be no termination for default after Intentional
Ignition of the Launch Vehicle.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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11.4 If, after termination of this Contract under the provisions
of this Article, it is determined for any reason that
Contractor was not in default under the provisions of this
Article, or that the default was excusable under the
provision of Article 12 entitled "Excusable Delays," then
the Contractor shall be entitled to be paid for its actual
reasonable costs plus [***] profit, less amounts previously
paid by the Buyer and upon making payment in full, the Buyer
shall take title to all tangible work in process inventories
generated under the Contract. For purposes of this Paragraph
11.4, Contractor's "actual reasonable costs" shall mean all
costs expended by Contractor for all work done under this
Contract up to the date of termination, settlements with
subcontractors for work performed prior to termination, and
Contractor's reasonable costs related to termination which
would otherwise not have been incurred.
11.5 Except as otherwise provided in the Contract, the rights and
remedies of the Parties provided in this Article shall be in
lieu of any other rights and remedies provided by law or in
equity in the event Contractor or Buyer fails to meet its
obligations under this Contract. Buyer shall have no other
rights or remedies for late delivery of the Spacecraft,
Documentation and Related Services under this Contract
except for those rights and remedies expressly provided for
in this Contract.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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ARTICLE 12. EXCUSABLE DELAYS
12.1 If either Party or a subcontractor of either Party is
delayed by act of God, or of the public enemy, fire, flood,
earthquake, epidemic, quarantine restriction, strike,
walkout, freight embargo, or any other event which is beyond
their control or does not arise from the acts or omissions
of either Party or its respective subcontractors, said delay
shall constitute an excusable delay ("Force Majeure
Events"). In the event of an excusable delay, there shall be
an equitable adjustment to the time of delivery and/or
performance stated in this Contract. The affected Party
shall give notice in writing to the other Party within 10
working days that an excusable delay condition exists after
learning of such delay. Such notification shall include the
cause of the excusable delay, the expected length of the
excusable delay, and alternate plans to mitigate the effect
of the excusable delay.
12.2 If the affected Party, as defined in Paragraph 12.1 above,
requests or experiences, on a cumulative basis, excusable
delay(s) greater than [***], the Parties shall
enter into good faith negotiations to develop a mutual
course of action and/or an equitable adjustment to the
affected terms of this Agreement.
12.3 Notwithstanding the foregoing, if the Launch Date defined in
Paragraph 7.1 herein is delayed due to a Force Majeure event
affecting either Party or a subcontractor thereof at any
point in time after the shipment of the Spacecraft to the
Launch Site has occurred, HCG shall reimburse Contractor for
all reasonable expenses incurred as a result, including
without limitation expenses for: support personnel standby;
extra travel expenses; transport termination or rescheduling
fees; and installation/de-installation of communication
links to the Launch Site.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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ARTICLE 13. AMENDMENTS
The terms and provisions of this Contract shall not be amended or
modified without specific written provision to that effect, signed by
the Authorized Representative(s) of both Parties. These Authorized
Representative(s) are identified in Article 26, "Notices and Authorized
Representative(s)." No oral statement of any person shall in any manner
or degree modify or otherwise affect the terms and provisions of this
Contract.
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ARTICLE 14. TITLE AND RISK OF LOSS
14.1 Title and risk of loss or damage in respect of all items to be
delivered under this Contract shall pass from Contractor to
HCG as follows:
14.1.1 Risk of loss of the Spacecraft and title
shall pass from Contractor to HCG upon the
earliest of: (i) the completion of In-orbit
Testing in accordance with Exhibit A, (ii)
fifty (50) days after Intentional Ignition
(as defined in Article 15, Paragraph 15.2 of
this contract) or (iii) immediately before a
Partial Failure, Total Failure or Total
Constructive Failure (as each such term is
defined in the applicable Hughes
Communications Galaxy Launch Insurance
Contract or successor contract) which occurs
at or after Intentional Ignition.
14.1.2 In respect to the Spacecraft which HCG
directs Contractor to store, title and risk
of loss shall remain with the Contractor
until Final Acceptance as specified in
Article 9.4 herein.
14.1.3 Notwithstanding Paragraph 14.1.2 above, upon
removal of the Spacecraft from storage, the
Contractor shall not assume risk of loss
relative to a Battery which HCG directs
Contractor to replace after the five-year
storage period which disqualifies the
battery for a 15-year mission. In that
event, Article 29 herein entitled "Effects
of Storage on Batteries," shall apply.
14.1.4 "Risk of Loss" for purposes of this Article
14 is limited to the responsibility and
liability for a Partial Failure, Total
Failure or Total Constructive Failure (as
each such term is as defined in the
applicable Hughes Communications Galaxy
Launch Insurance Contract or successor
contract). Responsibility and liability for
the Spacecraft prior to intentional ignition
is with the Contractor.
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14.2 In the event of damage to or destruction of Hardware when
Contractor shall have risk of loss, Contractor shall repair or
replace (at Contractor's option) said Hardware. The Buyer
shall participate in the decision to repair or replace said
Hardware and the provisions of Article 15 shall apply.
14.3 Insurance Provided By Contractor. The Contractor shall, at its
own expense, provide and maintain the following insurance:
14.3.1 "All Risk" Insurance
(i) The Policy for "All Risks" insurance shall
insure the Contractor and name Buyer as additional
insured and Loss Payee as their interest may
appear.
(ii) The insurance shall cover the Spacecraft while
in or about the Contractor's and subcontractors'
plants, while at other premises which may be used
or operated by the Contractor for construction or
storage purposes, while in transit, or while at the
Designated Launch Site until Intentional Ignition,
or while Spacecraft is stored by the Contractor at
HCG's direction until Final Acceptance as specified
in Article 9.4.
(iii) Such insurance shall be sufficient to cover
the full replacement value or selling price of the
Spacecraft and may be issued with deductibles, for
which losses shall be borne by the Contractor.
(iv) This "All Risk" insurance shall be in force
from the time of the Effective Date of this
Contract and shall continue in effect until
Contractor's liabilities have expired at
intentional ignition.
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14.3.2 Third Party Liability Insurance
(i) The Policy(s) for Third Party Liability
insurance shall be written on forms the Buyer may
review and shall include Buyer as additional
insured.
(ii) This Third Party Liability insurance shall be
in force from the time of the Effective Date of
this Contract and shall continue in effect until
Contractor's liabilities have expired at
intentional ignition.
(iii) The Policy(s) may be issued with deductibles,
for which losses shall be borne by the Contractor.
14.4 General Insurance Requirements
(i) The Contractor shall, upon request, provide to
the Buyer certificates of the Insurance Policy(s)
issued by an agent of the Contractor's Insurer(s)
for coverage which the Contractor is required to
provide pursuant to the provisions of these
Articles.
(ii) All Policies of insurance to be provided and
maintained pursuant to these Articles shall require
the insurer(s) or its authorized agent(s) to give
each insured not less than thirty (30) days prior
written notice in the event of cancellation or any
proposed material change in such policies, except
for ten (10) days prior written notice in the event
of cancellation due to non-payment of premium.
(iii) The Contractor may also acquire and maintain,
at its own expense, other insurance for amounts and
perils, and upon such terms, conditions and
deductibles as it may deem advisable or necessary
to cover any loss or damage to persons or property
that may occur as a result of the performance of
this Contract.
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ARTICLE 15. SPACECRAFT WARRANTY
15.1 Contractor warrants that the Spacecraft, upon successful
completion of Spacecraft in plant Tests pursuant to Article 9
herein, shall be free from any defects in material or
workmanship and shall conform to the applicable specifications
and drawings, as evidenced by the acceptance criteria in
Exhibits A-D herein.
15.2 This warranty shall start from the date of Preliminary
Acceptance of the Spacecraft as stated in Article 9 herein,
entitled "Inspection and Acceptance," and continue for a
period of [***], or until the Intentional Ignition (defined
herein as the "Intentional Ignition of any rocket motor on the
first stage of the launch vehicle") of the applicable launch
vehicle, whichever is earlier. [***] ("Warranty Time Period").
Contractor shall not be liable in Contract or in Tort for any
incidental, special, contingent, or consequential damages.
15.3 HCG shall have the right at any time during the Warranty Time
Period to reject any goods not conforming to this warranty and
require that Contractor, at its expense, correct or replace
(at Contractor's option) such goods with conforming goods. If
any time during the Warranty Time Period Contractor fails to
correct or replace such defective goods and fails to initiate
reasonable efforts to correct or replace such defective goods
within a reasonable period after written notification and
authorization from HCG, HCG may then, by contract or
otherwise, correct or replace such defective goods and
equitably adjust the price.
15.4 Except as otherwise expressly agreed upon in this Contract,
Contractor shall have no liability, or responsibility in
Contract or in Tort with respect to the Spacecraft after
Intentional Ignition (as defined in Paragraph 15.2) of the
launch vehicle.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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15.5 THE ABOVE WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING FITNESS FOR PARTICULAR PURPOSE OR
MERCHANTABILITY AND THE REMEDY PROVIDED HEREIN IS THE SOLE
REMEDY FOR FAILURE BY CONTRACTOR TO FURNISH THE SPACECRAFT
THAT IS FREE FROM MATERIAL DEFECTS IN MATERIAL OR WORKMANSHIP
AS SET FORTH IN PARAGRAPH 15.1 ABOVE. ALL OTHER WARRANTIES OR
CONDITIONS IMPLIED BY ANY OTHER STATUTORY ENACTMENT OR RULE OF
LAW WHATSOEVER ARE EXPRESSLY EXCLUDED AND DISCLAIMED.
CONTRACTOR AND ITS SUBCONTRACTORS SHALL HAVE NO LIABILITY IN
CONTRACT OR IN TORT (INCLUDING NEGLIGENCE) OR IN ANY OTHER
MANNER WHATSOEVER FOR THE SPACECRAFT AFTER INTENTIONAL
IGNITION OTHER THAN AS EXPRESSLY PROVIDED IN THIS CONTRACT.
15.6 Any limitations on warranties, liability or requests for
indemnification from liability for the malfunction of
delivered items which are imposed upon the Contractor by its
various equipment suppliers shall be passed on directly to
Buyer provided, however, nothing therein shall decrease or
invalidate the rights of the Buyer during, or the length of,
the Warranty Time Period as stated in this Article.
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ARTICLE 16. INDEMNIFICATION
16.1 Each Party shall indemnify and hold the other and/or all its
officers, agents, servants, subsidiaries, affiliates, parent
companies and employees, or any of them, harmless from any
liability or expense in connection herewith on account of
damage to property (excepting other Spacecraft in flight)
and injuries, including death, to all persons including but
not limited to employees of the Parties, and their
subcontractors, and of all other persons performing any part
of the work hereunder, arising from any occurrence caused by
an negligent act or omission of the indemnifying Party or
its subcontractors, or any of them in connection with the
work to be performed by such Party under this Contract. The
indemnifying Party shall have the right, but not the
obligation, to participate in any legal or other proceedings
concerning claims for which it is indemnifying under this
Article 16 and to direct the defense of such claims.
However, with respect to such legal or other proceedings,
the indemnifying Party shall pay all expenses (including
attorneys fees incurred by the indemnified Party in
connection with such legal or other proceedings) and satisfy
all judgments, costs or other awards which may be incurred
by or rendered against the indemnified Party. The
indemnifying Party shall not settle any such claim, legal or
other proceeding without first giving thirty (30) days prior
written notice of the Terms and Conditions of such
settlement and obtaining the consent of the indemnified
Party, which consent shall not be unreasonably withheld or
delayed.
16.2 Notwithstanding the foregoing, neither the Contractor nor
its subcontractors shall have any liability in Contract or
in Tort, for damages to or caused by the Spacecraft after
Intentional Ignition (as defined in Paragraph 15.2), and
Buyer shall obtain waivers of subrogation rights from
Buyer's insurers against Contractor, and affiliates and
subcontractors of Contractor.
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ARTICLE 17. SPACECRAFT NOT LAUNCHED WITHIN SIX
MONTHS AFTER ACCEPTANCE
17.1 If the Spacecraft is not launched within six (6) months
after its Preliminary Acceptance per Article 9, entitled
"Inspection and Acceptance," and is subsequently ordered to
be launched within [***] following its Preliminary
Acceptance, it is agreed that such Spacecraft shall be
returned at Contractor's option at Contractor's expense, to
Contractor's facility for inspection and refurbishment. Any
inspection and refurbishment undertaken by Contractor to
meet the requirements of Article 15 entitled, "Spacecraft
Warranty," shall be at Contractor's expense, including
Spacecraft transit insurance.
17.2 If the Spacecraft is not launched within six (6) months
after its Preliminary Acceptance and is subsequently ordered
to be launched later than [***] following its Preliminary
Acceptance, it is agreed that such Spacecraft shall be
returned, at HCG's expense, to Contractor's facility for
inspection and refurbishment. An equitable adjustment to
Contract price for such inspection and refurbishment, to
include a [***] profit component shall be negotiated by the
Parties unless the fact that the launch is scheduled for
later than [***] is due to Contractor's negligent acts or
omissions.
17.3 If the Spacecraft is returned to Contractor's facility for
inspection and refurbishment per the terms of Paragraph 17.2
above, all charges to return such Spacecraft to the Launch
Site shall be borne by HCG.
17.4 If the Spacecraft has not been launched within [***] after
its preliminary Acceptance, neither Party shall be further
obligated to the other with respect to such Spacecraft.
Disposition of such Spacecraft shall be at the option of HCG
with costs of such disposition to be borne by HCG.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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ARTICLE 18. PATENT/COPYRIGHT INDEMNITY
18.1 Contractor shall indemnify and hold HCG harmless against any
liability or expense as a result of claims, actions, or
proceedings against HCG alleging the infringement of any
trademarks, United States Copyright or mask work, United
States Letters Patent, any other intellectual property
rights, by any article fabricated by Contractor and
delivered to HCG pursuant to this Contract as set forth
below.
18.2 Contractor agrees to defend at its own expense any claim,
action, proceeding or request for royalty payments or any
claim for equitable relief or damages against HCG, its
officers, employees, agents, or subsidiaries based on an
allegation that the manufacture of any item under this
Contract or the use, lease, or sale thereof infringes any
United States Letters Patent trademark, United States
Copyright or mask work or any other intellectual property
right, and to pay any royalties and other costs related to
the settlement of such claim, action, proceeding or request
and to pay the costs and damages, including reasonable
attorney's fees finally awarded as the result of any claim,
action or proceeding based on such request, provided that
Contractor is given prompt written notice of such request or
claim by HCG and given authority and such assistance and
information as is available to HCG for resisting such
request or for the defense of such claim, action or
proceeding. Any such assistance or information which is
furnished by HCG at the written request of Contractor is to
be at Contractor's expense.
18.3 In the event that, as a result of any such claim, action,
proceeding or request: a) prior to delivery, the manufacture
of any item is enjoined; or b) after delivery, the use,
lease or sale thereof is enjoined, Contractor agrees to
utilize its best effort to either: (1) negotiate a license
or other agreement with plaintiff so that such item is no
longer infringing; or (2) modify such item suitably or
substitute a suitable item therefore, which modified or
substituted item is not subject to such injunction, and to
extend the provisions of this Article thereto. In the event
that neither of the foregoing alternatives is suitably
accomplished by Contractor, Contractor shall be
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liable to HCG for HCG's additional costs and damages arising
as a result of such injunction; provided however, that in no
event shall Contractor's entire liability under this Article
exceed [***]. The existence of one or more claims, actions,
proceedings or lawsuits shall not extend such amount.
18.4 The foregoing indemnity shall not apply to any infringement
resulting from a modification or addition, by other than
Contractor, to an item after delivery.
18.5 If the infringement results from the compliance by
Contractor with the Buyer's directed designs, specifications
or instructions, the Buyer will defend or settle, at its
expense, any such suit against the Contractor.
18.6 The foregoing constitutes the Parties' entire obligation
with respect to claims for infringement.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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ARTICLE 19. RIGHTS IN INVENTIONS
19.1 As used in this Contract, "Program Invention" shall mean any
invention, discovery or improvement conceived of and first
reduced to practice in the performance of Work under this
Contract. Information relating to Inventions shall be
treated as proprietary information in accordance with the
provisions of this Contract. Rights to inventions conceived
solely by Contractor or its employees shall vest completely
with Contractor.
19.2 Contractor shall be the owner of all Program Inventions
invented solely by Contractor. Contractor grants Buyer a
royalty-free, nonexclusive license in Program Inventions to
use Program Inventions solely for the purposes of
maintenance and operation of the Spacecraft and delivered
Equipment. Contractor agrees that it will not revoke such
license if Buyer is in compliance with the terms of the
license.
19.3.1 In the case of joint Inventions, that is,
inventions conceived jointly by one or more
employees of both Parties hereto, each Party
shall have an equal, undivided one-half
interest in and to such joint Inventions, as
well as in and to patent applications and
patents thereon in all countries.
19.3.2 In the case of such joint Inventions,
Contractor shall have the first right of
election to file patent applications in any
country, and Buyer shall have a second right of
election. Each Party in turn shall make its
election at the earliest practicable time, and
shall notify the other Party of its decision.
19.3.3 The expenses for preparing, filing and securing
each joint Invention patent application, and
for issuance of the respective patent shall be
borne by the Party which prepares and files the
application. The other Party shall furnish the
filing Party with all documents or other
assistance that may be necessary for the filing
and prosecution of each application. Where such
joint Invention application for patent is filed
by either Party in a
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country which requires the payment of taxes,
annuities, maintenance fees or other charges on
a pending application or on an issued patent,
the Party which files the application shall,
prior to filing, request the other Party to
indicate whether it will agree to pay one-half
of such taxes, annuities, maintenance fees or
other charges. If within sixty (60) days of
receiving such request, the non-filing Party
fails to assume in writing the obligation to
pay its proportionate share of such taxes,
annuities, maintenance fees or other charges,
or if either Party subsequently fails to
continue such payments within sixty (60) days
of demand, it shall forthwith relinquish to the
other Party, providing that said other Party
continues such payments, its interest in such
application and patent and the Invention
disclosed therein, subject, however, to
retention of a paid-up, non-exclusive,
non-assignable license in favor of the
relinquishing Party, its parent, and any
subsidiary thereof to make, use, lease and sell
apparatus and/or methods under said application
and patent.
19.4 Each owner of a jointly-owned patent application or patent
resulting therefrom shall, provided that it shall have
fulfilled its obligation, if any, to pay its share of taxes,
annuities, maintenance fees and other charges on such
pending application or patent, have the right to grant
non-exclusive licenses thereunder and to retain any
consideration that it may receive therefor without
obligation to account therefor to the other Party. In
connection therewith, each of the Parties hereby consents to
the granting of such non-exclusive licenses by the other
Party and also agrees not to assert any claim with respect
to the licensed application or patent against any licensee
of the other Party thereunder during the term of any such
license.
19.5 No sale or lease hereunder shall convey any license by
implication, estoppel or otherwise, under any proprietary or
patent rights of Contractor, to practice any process with
such product or part, or, for the combination of such
product or part with any other product or part.
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ARTICLE 20. INTELLECTUAL PROPERTY RIGHTS
Except as provided in Article 19, neither Party shall acquire any
rights with respect to any patent, trademark, trade secret, or any
other intellectual property developed or used by the other Party in the
performance of this Contract.
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ARTICLE 21. FURNISHED DATA AND INFORMATION, DISCLOSURE AND USE
Proprietary Information shall mean any data and information received by
one Party from the other Party, which is identified as proprietary in
accordance with either of the following methods: (i) if in writing, it
shall be marked by the disclosing Party with an appropriate proprietary
legend, or (ii) if disclosed orally, it shall be presented by the
disclosing Party as Proprietary at the time of disclosure and shall be
confirmed by the disclosing Party as Proprietary Information in writing
within fifteen (15) days of its initial oral disclosure.
21.1 The receiving Party agrees to protect such data and
information with the same degree of care which the receiving
Party uses to protect its own confidential data and
information;
21.2 The receiving Party shall not disclose or have disclosed to
third Parties, in any manner or form, or otherwise publish
such data and information so long as it remains proprietary
without the explicit authorization of the other Party;
21.3 The receiving Party agrees that it shall use such data and
information solely in connection with the performance of work
under this Contract, unless otherwise explicitly authorized by
or on behalf of the other Party with the designation of
specific data and information and use;
21.4 The foregoing obligations with regard to such data and
information shall exist unless and until such time as:
21.4.1 Such data and information are to the receiving
Party or otherwise publicly available prior to its
receipt by the receiving Party without the default
of the receiving Party; or
21.4.2 Such data and information have been lawfully
disclosed to the receiving Party by a third Party
which has the right to disclose such data; or
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21.4.3 Such data and information are shown by written
record to have been independently developed by the
receiving Party; or
21.4.4 Such data and information are otherwise available
in the public domain without breach of this
Contract by the receiving Party; or
21.4.5 Such data and information are disclosed by or with
the permission of the disclosing Party to a Third
Party without restriction; or
21.4.6 Such data and information are released for
disclosure in writing by or with the permission of
the disclosing Party.
21.5 Providing HCG shall obtain from its customer(s), a
nondisclosure agreement at least as restrictive as this
Article 21 and furnishes a copy thereof to Contractor, HCG may
disclose any proprietary information to its customer(s) which
shall be necessary for HCG and its affiliates to meet its
contractual commitments with its customer(s).
21.6 Any copyrighted material belonging to a Party to this Contract
may be copied by the other Party as necessary to enable the
receiving Party to perform its obligations under this
Contract, provided always that the copyright legend is
retained on the material.
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ARTICLE 22. PUBLIC RELEASE OF INFORMATION
Neither Party shall issue news releases, articles, brochures,
advertisements, prepared speeches, and other information releases
concerning the work performed or to be performed under this Contract by
Contractor or its subcontractors, or any employee or consultant of
either, without first obtaining the prior written approval of the other
Party concerning the content and timing of such release which approval
shall not be unreasonably withheld. The initiating Party shall provide
such releases to the other Party for review within a reasonable time
prior to the desired release date.
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ARTICLE 23. TAXES
23.1 The price which shall be paid by HCG for the Spacecraft,
Documentation and Related Services provided under this
Contract does not include any state or local sales or use
taxes, or fees or other taxes against real or personal
property, however designated, which may be levied or assessed
against Contractor. With respect to such taxes, HCG shall
either furnish Contractor with an appropriate exemption
certificate applicable thereto or pay Contractor, upon timely
presentation of invoices therefor, such amounts thereof as
Contractor may by law be required to collect or pay. HCG shall
be responsible for the payment of all personal property taxes,
if any, with regard to goods which are levied upon subsequent
to the date of delivery to HCG. HCG shall be responsible for
any inventory taxes, state taxes or any other taxes that are
assessed to Contractor as a result of storage of the
Spacecraft in accordance with Article 31. HSC shall be
relieved of responsibility for any taxes and/or port fees
associated with the Sea Launch Zenit Vehicle except as
provided by Article 4 , Paragraph 4.2.1.2 of this Contract.
23.2 In the event Contractor in the performance of this Contract is
required to pay customs, import duties, value-added or sales
taxes, commercial card fees, port fees, harbor maintenance
tax, other charges, or taxes, or fees, (collectively,
"Assessments") however designated (except for (i) any
Assessment based on Contractor's income and (ii) any
Assessment incurred as a result of or associated with
Contractor's manufacture of the Spacecraft), then HCG will
reimburse Contractor for such Assessments within thirty (30)
days of written notification by Contractor of payment;
provided, however that, Contractor shall use its reasonable
best efforts to obtain waivers, exemptions and/or relief from
such Assessments when practicable, and HCG shall not be
required to pay any Assessment to the extent any such waiver,
exemption or relief is pending or has been obtained.
Notification shall then be supported by an invoice and
attachment(s) evidencing such payment having been made by
Contractor.
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ARTICLE 24. GOVERNING LAW
This Contract shall be deemed made in the State of California and shall
be construed in accordance with the laws of the State of California.
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ARTICLE 25. TITLES
Titles given to the Articles herein are inserted only for convenience
and are in no way to be construed as part of this Contract or as a
limitation of the scope of the particular article to which the title
refers.
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ARTICLE 26. NOTICES AND AUTHORIZED REPRESENTATIVES
Any notice or request required or desired to be given or made hereunder
shall be in writing and shall be effective if delivered in person or
sent by mail or by facsimile as indicated below:
1. Hughes Communications Galaxy Inc.
P.O. Box 9712
Bldg. A01, M/S 4A467
Long Beach, California 90810-9928
Attention: TBD, Contracts Manager
cc: TBD, Director, Systems Engineering &
Technology
Authorized Representative(s): [TBD]
2. Hughes Space and Communications Company
Post Office Box 92919, Airport Station
Bldg. S41, M/S A374
Los Angeles, California 90009
Attention: Samuel C. Tricoli, Contracts Manager
cc: Arthur W. Ackerman, Jr., Program Manager
Authorized Representative(s): [TBD]
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ARTICLE 27. INTEGRATION
This document, with Exhibits, constitutes the entire understanding
between the Parties with respect to the subject matter of this
Agreement and supersedes all previous oral and/or written negotiations,
commitments, and understandings of the Parties.
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ARTICLE 28. CHANGES
28.1 Any changes requested by Contractor during the performance of
this Contract, within the general scope of this Contract,
which will add or delete Work, stop Work, affect the design of
the Spacecraft, change the method of shipment or packing, or
the place or time of delivery, or will affect any other
requirement of this Contract, shall be submitted in writing
("Change Proposal") to Buyer sixty (60) days prior to the
proposed effective date of the change. If such Contractor
requested change causes an increase or decrease in the total
price or other terms of this Contract, Contractor shall submit
a proposal to Buyer detailing the impact of such change.
28.2 Buyer shall notify Contractor in writing within thirty (30)
days after receipt of the requested change and price
adjustment, if any, whether or not it agrees with and accepts
such Change Proposal. If Buyer agrees with and accepts the
Contractor requested Change Proposal, Contractor shall proceed
with the performance of the Contract as changed, or in the
case of a Stop Work Order, suspend the performance of this
Contract, and an amendment to the Contract reflecting the
Change Proposal shall be incorporated into the Contract. If
Buyer does not agree with the Contractor requested Change
Proposal, the Parties shall attempt to reach agreement on such
Change Proposal. If the Parties are unable to agree on the
requested change and price adjustment, then the Parties shall
proceed with the performance of this Agreement, as unchanged.
In the event the Parties are able to reach agreement on the
change, but not on the price adjustment component, then the
Parties shall elevate such dispute to the Senior Executives of
the respective companies for resolution. If resolution can not
be achieved within a reasonable period of time under the
circumstances, Buyer may make a qualified acceptance of the
Change Proposal, accepting all matters other than price, and
issue of price shall be submitted for resolution by
arbitration in accordance with the provisions of Paragraph
32.2 hereof. Pending such resolution of the price issue, the
Parties shall perform their obligations under the Contract, or
in the case of a Stop Work Order, suspend their obligations,
as if the Change Proposal had been accepted; provided,
however, that Buyer shall pay any disputed amount of the price
adjustment
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into an escrow account in accordance with Paragraph 28.4
hereof on the date such amount would have been due and payable
had the Change Proposal been accepted, or if the Change
Proposal could result in a downward adjustment in the Contract
Price in excess of the amount remaining to be paid by the
Buyer, Contractor shall deposit the disputed amount of such
excess into an escrow account in accordance with Paragraph
28.4 hereof. The final change price adjustment achieved either
by the Parties, or through an arbitration award shall be paid
in accordance with the payment plan agreed by the Parties or,
if applicable, by the Arbitrator.
28.3 Buyer may submit to Contractor in writing (a "Change Order
Request") detailing any changes requested by Buyer during the
performance of this Contract, within the general scope of the
Contract, which will add or delete Work, stop Work, affect the
design of the Spacecraft, change the method of shipment or
packing, or the place or time of delivery, or will affect any
other requirement of this Contract. Contractor shall respond
to such Change Order Request in writing to Buyer within thirty
(30) days after such request. If Contractor determines that
the change requested by Buyer is feasible and can be made at
no additional cost and with no associated delays, then
Contractor shall so notify, Buyer and Contractor shall
commence implementing such change. If the Contractor
determines otherwise, then, Contractor shall submit to Buyer,
a proposal detailing the impact of such change and the price
adjustment, if any, (the "Change Order Offer"). Buyer shall
notify Contractor in writing, within thirty (30) days after
receipt of Contractor's Change Order Offer, whether or not it
agrees with and accepts Contractor's Change Order Offer. If
Buyer agrees with and accepts Contractor's Change Order Offer,
Contractor shall immediately proceed with the performance of
this Contract as changed, or in the case of a Stop Work Order,
suspend the performance of this Contract, and an amendment to
the Contract reflecting such change shall be incorporated into
the Contract. If Buyer does not agree with the Contractor's
Change Order Offer, the Parties shall attempt to reach
agreement on such Change Order Offer. In the event the Parties
are able to reach agreement on the change, but not on the
price adjustment component, then the Parties shall elevate
such dispute to the Senior Executives of the respective
companies for resolution. If resolution can not be achieved
within a reasonable period of time under
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the circumstances, Buyer may make a qualified acceptance of
the Change Order Offer, accepting all matters other than
price, and the issue of price shall be submitted for
resolution by arbitration in accordance with the provisions of
Paragraph 32.2 hereof. Pending such resolution of the price
issue, the Parties shall perform their obligations under the
Contract, or in the case of a Stop Work Order, suspend their
obligations, as if the Change Order Offer had been accepted;
provided however, that the Buyer shall pay any disputed amount
of the price adjustment into an escrow account in accordance
with Paragraph 28.4 hereof on the date such amount would have
been due and payable had the Change Order Offer been accepted,
or if the Change Order Request could result in a downward
adjustment in the Contract Price in excess of the amount
remaining to be paid by Buyer, Contractor shall deposit the
disputed amount of such excess into an escrow account in
accordance with Paragraph 28.4 hereof. The dispute shall then
be resolved by arbitration under the provisions of Article 32,
entitled "Disputes." The final change price adjustment
achieved either by the Parties, or through an arbitration
award shall be paid in accordance with the payment plan agreed
by the Parties or, if applicable, by the Arbitrator.
28.4 Escrow Provisions - Disputed Amounts
Disputed amounts with respect to any change under this Article
28 shall be paid into an interest bearing escrow account to be
established at Bank of America, Concord, California. Upon
settlement of the dispute as to such payment and alleged
breach in accordance with Article 32, the Party entitled to
the amount or part thereof in escrow, shall receive such
amount together with all accrued interest thereon and the
other Party shall pay all costs and fees associated with the
escrow of said amount. The placement of disputed amounts into
an escrow account shall not relieve either Party of its
remaining obligations under this contract.
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ARTICLE 29. EFFECTS OF STORAGE ON BATTERIES
For Spacecraft batteries to provide the required minimum fifteen (15)
years of in-orbit services per Exhibit B, Galaxy XI Spacecraft
Specification, it is understood that launch must occur within three (3)
years from the date of activation of the first battery cell. In the
event Buyer directs Contractor to store any deliverable Spacecraft and
the period of such storage causes a launch later than three (3) years
from the date of activation of that Spacecraft's first battery cell,
and HCG upon its election to either: (i) install replacement batteries
or (ii) recondition batteries, so directs Contractor, HCG shall pay
Contractor its costs plus a [***] profit rate. In either case (i) or
(ii), the batteries shall meet a fifteen (15) year in-orbit service
requirement.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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ARTICLE 30. INTER-PARTY WAIVER OF LIABILITY
30.1 Prior to the time HCG and the Contractor enter the premises at
the Launch Site, they each agree that they will not make a
claim against each other for an event that occurs at the
Launch Site premises involving damage to, loss of, or loss of
use of their property or the property of others in their
possession, caused by the fault or negligence of the other
Party to this Contract, or otherwise caused by any defect in
any product manufactured or sold by the other Party to this
Contract. Such claims are waived and each Party will bear its
own losses. HCG will include a comparable clause in each of
its contracts with vendors, subcontractors or customers for
services or benefits expected as a result of the launch or
orbiting of this Galaxy Spacecraft. Such comparable clause
shall include a requirement to flow the clause down to
lower-tier contractors.
30.2 Notwithstanding any other provisions of this Contract, prior
to the time any Party, associated with the Galaxy XI launch
activities at the Launch Site, shall enter the premises at the
Launch Site, such Parties shall be required to sign an
Inter-Party Waiver of Liability consistent with that between
HCG and the Contractor as incorporated herein under Paragraph
30.1 of this provision or other similar agreement as may be
required by the launch agency. Each Party shall have the
responsibility to assure that all the Parties associated with
the launch of Galaxy XI Spacecraft (for which they have
control or privity of Contract with hereunder) have executed
said Inter-Party Waiver of Liability.
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ARTICLE 31. SPACECRAFT STORAGE
31.1 Buyer may, at its option, order Contractor to store, in
accordance with the provisions of Exhibit B Galaxy X
Spacecraft Specification, the deliverable Spacecraft
(including separate storage of Batteries, if needed) for a
period of up to two (2) years from the date of their delivery
to Buyer. HCG shall provide written notice to the Contractor
not later than six (6) months prior to the scheduled delivery
of said Spacecraft. Contractor's price for providing storage
shall be provided to Buyer in accordance with Article 29,
"Changes," (and such price shall be deemed a "Change Proposal"
for purposes of Article 29) within 30 days after receipt of
Buyer's notice to store such Spacecraft and Contractor shall
provide storage facilities. If such storage facilities are
unavailable, Contractor and Buyer shall hold discussions to
determine a mutually agreed storage arrangement.
31.2 Six (6) months prior to a stored Spacecraft's scheduled launch
date, Buyer shall, by notice in writing, order the Contractor
to remove said Spacecraft from storage and ship it to a Launch
Site designated by Buyer. The cost for storage and additional
transportation costs exceeding that required to transport the
Spacecraft to the Port of Long Beach (Integration Facility)
point specified herein, shall be borne by Buyer. These will be
in addition to any charges which become the obligation of the
Buyer per Article 17 herein entitled "Spacecraft Not Launched
Within Six Months After Acceptance."
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ARTICLE 32. DISPUTES
32.1 Disputes
32.1.1 In the event any dispute arises between the
Contractor and the Buyer relating to this Contract,
either Party may give written notice to the other
of its objections and reasons therefore. The
Contractor and Buyer shall consult in an effort to
reach a mutual agreement to resolve such dispute.
In the event a mutual agreement cannot be reached
within fifteen (15) days after receipt of this
notice, the respective positions of the Parties
shall be forwarded to Contractor and Buyer's
respective Executive Offices for discussions and
they shall attempt to reach a mutual agreement to
resolve such dispute within another fifteen (15)
day period.
32.2 Arbitration of Disputes
32.2.1 Grounds for Arbitration and Notice Requirement. Any
dispute, disagreement, controversy or claim arising
out of or relating to this Contract or the
interpretation thereof or any arrangements relating
thereto, or the validity or enforceability thereof,
or contemplated therein or the breach, termination
or invalidity thereof which is not settled to the
mutual satisfaction of the Parties in accordance
with Paragraph 32.1 above, then it shall be settled
exclusively and finally by binding arbitration,
after written notice by either Party. Arbitration
of such disputes in accordance with this Article 32
shall be the Parties' exclusive remedy.
32.2.2 Administration and Rules. Arbitration proceedings
in connection with the Agreement shall be
administered by the American Arbitration
Association in accordance with its then in effect
Commercial Arbitration Rules, together with any
relevant supplemental rules including but not
limited to its Supplementary Procedures for Large,
Complex Disputes, as modified by the terms and
conditions of the Agreement. With respect to the
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selection of arbitrators, arbitration proceedings
in connection with this Agreement shall be
conducted before a panel of three (3) arbitrators.
Within fifteen (15) days after the commencement of
arbitration, each Party shall select from a list of
qualified persons one person to serve as an
arbitrator on the panel, and within ten (10) days
of their selection, the two arbitrators shall
select a third arbitrator who is listed as an
active member of the American Arbitration
Association at the time that arbitration
proceedings commence. If the two arbitrators
selected by the respective Parties are unable or
fail to agree upon the third arbitrator in the
allotted time, then the third arbitrator shall be
selected by the American Arbitration Association.
32.2.3 Place of Arbitration. The place of arbitration
shall be in Los Angeles, California, U.S.A.
32.2.4 Discovery. The arbitrators shall have the
discretion to order a pre-hearing exchange of
information by the Parties, including without
limitation, production of requested documents,
exchange of summaries of testimony of proposed
witnesses, and examination by deposition of the
Parties.
32.2.5 Award and Judgment. The arbitrators shall have no
authority to award punitive damages, and may not,
in any event, make any ruling, finding or award
that does not conform to the terms and conditions
of this Agreement. Subject to the foregoing, the
Parties agree that the judgment of the arbitrators
shall be final and binding upon the Parties and
that the judgment upon the award rendered by the
arbitrators may be entered in any court having
jurisdiction thereof.
32.2.6 Confidentiality. No Party or arbitrator may
disclose the existence, content, or results of any
arbitration proceedings in connections with this
Agreement without prior written consent of all
Parties to the arbitration proceeding.
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32.2.7 Fee and Expenses. All fees and expenses of any
arbitration proceedings in connection with this
Agreement shall be borne by the losing Party.
However, each Party shall bear the expense of its
own counsel, experts, witnesses, and preparation
and presentation of evidence.
32.2.8 Performance. Contractor and Seller shall continue
with performance under this Agreement during any
disagreement, negotiation, or arbitration.
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ARTICLE 33. ASSIGNMENT
33.1 Neither Party shall assign, or transfer this Contract or any of its
rights, duties or obligations thereunder to any person or entity, in
whole or part without the prior written consent of the other Party
except that either Party may assign or transfer any of its rights,
duties or obligations under this Contract, either in whole or in part,
to its parent company, subsidiary or affiliate(1) in which the
assigning Party has a controlling interest thereof. In addition,
notwithstanding anything in this Article 33 to the contrary, the
consent of Contractor shall not be required for, and Paragraph 33.2
shall not apply to, any assignment of this Contract from HCG to
Magellan International, Inc. (which currently contemplates changing its
name to PanAmSat Corporation), or an affiliate thereof, in connection
with the consummation of the transactions contemplated by that certain
Agreement and Plan of Reorganization dated as of September 20, 1996 by
and among Buyer, Magellan International, Inc., Pan Am Sat Corporation
and certain affiliates of Buyer.
Neither Party shall unreasonably withhold consent to any assignment or
transfer providing that the requesting Party can demonstrate to the
other Party's satisfaction that:
(1) its successor or assignee possesses the financial resources to
fulfill the obligations of this Contract; and
(2) any such assignment or transfer shall not jeopardize any data
rights or competitive position, or violate laws related to
export or technology transfer, or otherwise increase the other
Party's risks or obligations.
If the requesting Party cannot so demonstrate, both Parties agree to
negotiate in good faith suitable modifications and new provisions to
this Contract which would mitigate the above risks and/or bring this
Contract into conformance with applicable laws.
(1) Affiliate: An "affiliate" of, or a person "affiliated" with, a specified
person, is a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, the person specified.
54
<PAGE>
33.2 The Parties agree that in the event that the ownership or control of
HCG or HSC is changed, the Parties reserve the right to negotiate in
good faith suitable modifications and new provisions to this Contract
which would mitigate any additional risks, financial or otherwise,
which may be brought about by such change in ownership or control.
33.3 This Contract shall be binding upon the Parties hereto and their
successors and permitted assigns.
55
<PAGE>
ARTICLE 34. LIMITATION OF LIABILITY
34.1 The Parties to this Contract expressly recognize that commercial space
ventures involve substantial risks and recognize the commercial need to
define, apportion and limit contractually such risks associated with
this commercial space venture. The payments and other remedies
expressly set forth in this Contract fully reflect the Parties'
negotiations, intentions and bargained-for allocation of such risks
associated with commercial space ventures.
34.2 In no event shall the Parties be liable for any direct, indirect,
incidental, special, contingent or consequential damages (including,
but not limited to, lost revenues or profits), except as expressly
provided for in this Agreement. This Article shall survive the
expiration or termination of this Contract for whatever cause.
56
<PAGE>
ARTICLE 35. EFFECTIVE DATE OF CONTRACT
The effective date of this Contract No. 96-HCG-002 shall be 7th, May 1997.
IN WITNESS WHEREOF, the Parties hereto have executed this Contract No.
96-HCG-002 to become effective upon the date specified in this Article 35,
herein entitled, "Effective Date of Contract."
HUGHES SPACE & COMMUNICATIONS COMPANY
SIGNATURE: /s/ Arthur W. Ackerman Jr.
--------------------------
NAME: ARTHUR W. ACKERMAN JR.
--------------------------
TITLE: GALAXY XI PROGRAM MANAGER
--------------------------
DATE: 5/7/97
--------------------------
HUGHES COMMUNICATIONS GALAXY, INC.
SIGNATURE: /s/ Faye Deborah Siskel
--------------------------
NAME: Faye Deborah Siskel
--------------------------
TITLE: Hughes Communications Galaxy, Inc. Contracts
--------------------------
DATE: May 7, 1997
--------------------------
57
Exhibit 10.38
Information contained herein, marked with [***], is being filed pursuant to a
request for confidential treatment.
FIXED PRICE CONTRACT
BETWEEN
HUGHES COMMUNICATIONS GALAXY, INC.
AND
HUGHES SPACE & COMMUNICATIONS COMPANY
FOR
GALAXY XIII/XIV HS702
SPACECRAFT, RELATED SERVICES AND DOCUMENTATION
CONTRACT No. 97-HCG-001
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1. EXHIBITS AND INCORPORATIONS......................................2
ARTICLE 2. ORDER OF PRECEDENCE..............................................3
ARTICLE 3. SPACECRAFT, DOCUMENTATION AND RELATED SERVICES...................4
ARTICLE 4. DELIVERABLES AND SCHEDULE........................................9
ARTICLE 5. PRICE...........................................................13
ARTICLE 6. PAYMENTS........................................................14
ARTICLE 7. SPACECRAFT LAUNCH DATE..........................................31
ARTICLE 8. BUYER-FURNISHED ITEMS...........................................33
ARTICLE 9. INSPECTION AND ACCEPTANCE.......................................36
ARTICLE 10. ACCESS TO WORK IN PROCESS.......................................38
ARTICLE 11. TERMINATION FOR DEFAULT; LIMITATION OF LIABILITY................39
ARTICLE 12. EXCUSABLE DELAYS................................................41
ARTICLE 13. AMENDMENTS......................................................43
ARTICLE 14. TERMINATION FOR CONVENIENCE.....................................44
ARTICLE 15. TITLE AND RISK OF LOSS..........................................47
ARTICLE 16. SPACECRAFT WARRANTY.............................................50
ARTICLE 17. INDEMNIFICATION.................................................52
(i)
<PAGE>
ARTICLE 18. SPACECRAFT NOT LAUNCHED WITHIN SIX MONTHS AFTER ACCEPTANCE......53
ARTICLE 19. PATENT/COPYRIGHT INDEMNITY......................................54
ARTICLE 20. RIGHTS IN INVENTIONS............................................56
ARTICLE 21. INTELLECTUAL PROPERTY RIGHTS....................................58
ARTICLE 22. FURNISHED DATA AND INFORMATION, DISCLOSURE AND USE..............59
ARTICLE 23. PUBLIC RELEASE OF INFORMATION...................................61
ARTICLE 24. TAXES...........................................................62
ARTICLE 25. GOVERNING LAW...................................................63
ARTICLE 26. TITLES..........................................................64
ARTICLE 27. NOTICES AND AUTHORIZED REPRESENTATIVES..........................65
ARTICLE 28. INTEGRATION.....................................................66
ARTICLE 29. CHANGES.........................................................67
ARTICLE 30. EFFECTS OF STORAGE ON BATTERIES.................................72
ARTICLE 31. INTER-PARTY WAIVER OF LIABILITY.................................73
ARTICLE 32. SPACECRAFT STORAGE..............................................74
ARTICLE 33. DISPUTES........................................................75
ARTICLE 34. ASSIGNMENT......................................................78
ARTICLE 35. LIMITATION OF LIABILITY.........................................80
ARTICLE 36. OPTIONS.........................................................81
ARTICLE 37 REPLACEMENT SPACECRAFT .........................................87
ARTICLE 38 EFFECTIVE DATE OF CONTRACT......................................89
(ii)
<PAGE>
THIS CONTRACT is entered into on the 15th day of May, 1997, by and between
HUGHES COMMUNICATIONS GALAXY, INC. (herein called "Buyer" or "HCG"), a
California corporation having a place of business at 1500 Hughes Way, Long
Beach, California 90810 and HUGHES SPACE AND COMMUNICATIONS COMPANY (herein
called "Contractor," "Seller" or "HSC"), a Delaware corporation having a place
of business at 909 North Sepulveda Boulevard, El Segundo, California 90245.
WITNESSETH:
WHEREAS, HCG desires to purchase, and Contractor desires to provide
communications Spacecraft, Documentation, and Related Services as hereinafter
specified, and the Parties desire to define the terms and conditions under which
the same shall be furnished,
NOW, THEREFORE, the Parties hereto agree as follows:
1
<PAGE>
ARTICLE 1. EXHIBITS AND INCORPORATIONS
The following documents are hereby incorporated and made a part of this
Contract with the same force and effect as though set forth herein:
1.1 Exhibit A - Galaxy XIII/XIV Statement of Work - dated TBD.
1.2 Exhibit B - Galaxy XIII/XIV Spacecraft Specification - dated TBD.
1.3 Exhibit C - Galaxy XIII/XIV Spacecraft Integration Test Plan -
dated TBD.
1.4 Exhibit D - Galaxy XIII/XIV Product Assurance Plan - dated TBD.
1.5 Exhibit E - Certain Documentation - dated TBD.
1.6 Exhibit F - Maximum Termination Liability - dated TBD.
1.7 Exhibit G - Replacement Satellite Payment Plan - dated TBD.
2
<PAGE>
ARTICLE 2. ORDER OF PRECEDENCE
In the event of any conflict or inconsistency among the provisions of
this document and the exhibits attached and incorporated into this
Contract, such conflict or inconsistency shall be resolved by giving
precedence to this document, and then to the attached and incorporated
exhibits in the order listed in Article 1 herein, entitled "Exhibits and
Incorporations."
3
<PAGE>
ARTICLE 3. SPACECRAFT, DOCUMENTATION AND RELATED
SERVICES ("DELIVERABLES")
HCG shall purchase from Contractor and Contractor shall sell and furnish
the following:
3.1 Contractor shall provide the necessary personnel, material,
services and facilities to design, fabricate, test and deliver as
required and perform work in accordance with the requirements of
Exhibits A, B, C and D hereto (all to be completed pursuant to
Paragraph 3.2), two (2) HS702 type Spacecrafts for Galaxy XIII and
Galaxy XIV (hereinafter referred to as "Spacecraft" Documentation
and Related Services (as defined in Article 4).
3.2 The Parties agree and acknowledge as follows:
(i) Buyer and Contractor had previously discussed entering into an
agreement for the construction of two (2) identical Spacecraft with
Ku-Band (FSS) and Ka-Band payloads (the "Ku/Ka-Band Spacecraft") at
an aggregate price of [***].
(ii) Buyer and Contractor agree and acknowledge that Buyer desires
two non-identical Spacecraft which shall include Ku-Band (FSS) and
C-Band payloads. Buyer and Contractor agree to work together to
complete the designs and prices for such Galaxy XIII and Galaxy XIV
Spacecraft (which may differ from that currently contemplated) and
all other TBD items specified in the Contract within sixty (60)days
following the signing of this Contract. As the design configuration
and specifications for each of Galaxy XIII and Galaxy XIV are
completed, technical exhibits to the Contract shall be completed
accordingly.
(iii) The Contract Price for each such Spacecraft and any Optional
or Replacement Spacecraft shall be mutually agreed by the Parties
and shall be based upon the sum of: (a) a good faith estimate of
Contractor's costs under Contractor's established accounting
practices that are fairly attributable to the applicable
Spacecraft, delivery to the applicable launch base, and
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
4
<PAGE>
necessary launch support services as fairly determined at the time
such Spacecraft's design is determined; plus (b) a profit component
of [***] of such estimated costs. Such determination shall be made
without regard to the aggregate price of [***] for the two (2)
Ku/Ka-Band Spacecraft. Buyer may request to have an independent
audit performed of Contractor's estimated costs. Such audit shall
be at the expense of Buyer unless such audit shows Contractor to
have overstated its estimated costs (in which event Contractor
shall bear the audit expense).
(iv) To the extent Contractor has incurred costs for items which
will not be incorporated into the Galaxy XIII and Galaxy XIV
Spacecraft, then: (a) in addition to the Contract Price for the
Galaxy XIII and Galaxy XIV Spacecraft, Buyer shall be required to
pay such costs plus a [***] component; and (b) the provisions of
Paragraph 14.2 and 14.4 shall apply with respect to the disposition
of tangible work in process that is not to be incorporated into
such Spacecraft.
(v) As of May 12, 1997, Contractor's good faith estimate of Buyer's
maximum termination liability for the Ka-Band element of the
Ku/Ka-Band Spacecraft is [***]. At Buyer's request, Contractor
shall: (a) within seven (7) days of the signing of this Contract,
provide a definitive statement of such Ka-Band costs; and (b)
within thirty (30) days of the signing of this Contract, provide a
detailed accounting of all of Contractor's expenditures and
commitments on the Ku/Ka-Band Spacecraft to date.
(vi) If the aggregate Contract Price for the Galaxy XIII and Galaxy
XIV Spacecraft determined in accordance with clause (iii) above is
[***], then [***].
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
5
<PAGE>
(vii) Until and unless the Parties reach agreement under
clauses (ii) and (iii) above, Buyer's termination liability
shall not exceed [***] Until such agreement is reached, Contractor
shall use reasonable efforts to focus any continuing work on
generic items that could be used for different designs and, if this
Contract is terminated, for other projects; provided, however, that
before Contractor reaches its decision as to what work it will
continue, Contractor will invite Buyer to participate in the
decision process and allow Buyer an opportunity to offer its
observations and recommendations for Contractor's consideration.
At such time that Contractor determines in good faith that the
exposure of ongoing work will exceed the liability cap stated
above, Contractor may on two (2) business days notice to Buyer stop
work, pending resolution of design and price issues for the
Spacecraft.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
6
<PAGE>
3.3 All materials and services specified in Exhibit A, entitled
"Galaxy XIII/XIV Statement of Work," shall meet the
requirements of Exhibit B, entitled "Galaxy XIII/XIV
Spacecraft Specification" as such Exhibits are completed in
accordance with Paragraph 3.2.
3.4 If Contractor has not made delivery [***] or if, prior to the
Launch Date, [***] Buyer at its election may:
[***]
Any such election shall be made by Buyer in writing. In either case
(a) or (b) above, [***].
3.5 [***]in accordance with: (i) current directives and instructions in
the Hughes Spacecraft Operators Handbook, utilized at either
Buyer's Operations Control Center (OCC) or Contractor's Mission
Control Center (MCC); and (ii) any other Documentation utilized,
including that Documentation which takes into consideration the
unique or special characteristics of the contracted Spacecraft.
[***] Contractor has responsibility and liability for the Mission
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
7
<PAGE>
Control Center. Buyer has responsibility and liability for the
Operations Control Center and its associated ground station(s).
3.6 Spacecraft, Documentation and Related Services described above
shall be delivered to HCG at the indicated locations on the dates
set forth in Article 4 entitled, "Deliverables and Schedule"
herein.
8
<PAGE>
ARTICLE 4. DELIVERABLES AND SCHEDULE
4.1 The following deliverables to be furnished under this Contract
shall be furnished at the designated location(s) on or before the
dates specified below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Location of Delivery
Date of Delivery and
Deliverable(s) or Performance Performance
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
o Delivery Site to be determined
1A. One Galaxy XIII Spacecraft Twenty-four (24) months from pursuant to Paragraph 4.2.
("Spacecraft XIII") determination of new design (in
accordance with Paragraph 3.2)(1)
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Twenty-four (24) months from o Delivery Site to be determined
1B. One Galaxy XIV Spacecraft determination of new design (in pursuant to Paragraph 4.2.
("Spacecraft XIV") accordance with Paragraph 3.2)(1)
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
o Performance Site to be
2A. Launch Support, Mission In Accordance with Exhibit A determined pursuant to Paragraph
Operations and In-Orbit 4.2.
Testing for Galaxy XIII o Filmore, California
("Related Services") o Castle Rock, Colorado
o El Segundo, California
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
o Performance Site to be
2B. Launch Support, Mission In Accordance with Exhibit A determined pursuant to Paragraph
Operations and In-Orbit 4.2.
Testing for Galaxy XIV o Filmore, California
("Related Services") o Castle Rock, Colorado
o El Segundo, California
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
3A. Documentation for Galaxy In Accordance with Exhibit A 1500 Hughes Way
XIII ("Documentation") Long Beach, California
- -----------------------------------------------------------------------------------------------------------
9
<PAGE>
- -----------------------------------------------------------------------------------------------------------
3B. Documentation for Galaxy In Accordance with Exhibit A 1500 Hughes Way
XIV ("Documentation") Long Beach, California
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1)Delivery date is to the integration facility.
4.2 Designation of Launch Vehicle.
4.2.1 The designation of each Spacecraft's Launch Site shall be
made by Buyer on such Spacecraft's "Delivery Site
Designation Date", which date shall occur at least 12
months prior to the scheduled Delivery Date for such
Spacecraft (and if such Launch Site differs from that
upon which the Contract Price was determined under
Paragraph 3.2, then the Contract Price shall be adjusted
to account for any differences in costs between the
requirements related to such Launch Sites).If, subsequent
to such Delivery Site Designation Date, Buyer requests a
change in the Launch Site or Approved Storage Facility
for such Spacecraft, such request shall be dealt with as
a Change Order Request of Buyer under Article 29 (the
"Subsequent Delivery Site Change").
4.2.2 Buyer shall pay the costs of delivering the Spacecraft to
the Delivery Site, which costs are included in the
Contract Price.
4.3 The Contractor will arrange transportation required for Items 1A
and 1B, 2A and 2B, and 3A and 3B above. With respect to Deliverable
Items 1A and 1B and 2A and 2B, in the event that a Sea Launch
Vehicle is used with respect to either Spacecraft, the following
allocation of transportation duties for such Spacecraft shall
apply:
10
<PAGE>
Such Spacecraft will be mated with a Sea Launch Zenit Vehicle (the
"Vehicle") at the Sea Launch, L.P. facilities, Port of Long Beach
(the "Integration Facility"). The Parties contemplate that such
mated Spacecraft, associated equipment and HSC personnel necessary
to assist in the monitoring and control of such Spacecraft will be
transported by Sea Launch, L.P. Command Ship (the "Ship") at the
expense of Sea Launch, L.P. from the Integration Facility to the
Launch Site in the vicinity of the Christmas Islands (the "Launch
Site"). HSC may also utilize the Ship at Sea Launch L.P.'s expense
for the transportation of other related HSC personnel when
accommodations are available and such accommodations do not
interfere with other Sea Launch, L.P. commitments for the launch
of such Spacecraft.
4.3.1 If such Spacecraft fails to conform to the warranty
provisions set forth in Article 15 and: (i) such mated
Spacecraft requires testing, maintenance, replacement
and/or corrective actions at the Launch Site or (ii)
return to the Integration Facility and/or the El Segundo
Plant Site is necessary to accomplish such actions, HSC
shall have responsibility and liability as follows:
4.3.1.1 If Spacecraft warranty actions can be
performed at the Launch Site, HSC shall be
responsible and liable for [***] to the
warranty provisions of this Contract.
4.3.1.2 If return of the Spacecraft to the Integration
Facility and/or Plant Site is necessary for
such warranty actions, HSC shall be liable to
Buyer in [***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
11
<PAGE>
[***]
4.4 [***] shall be responsible for obtaining and maintaining: (i)
all U.S. Government export licenses to enable export of each
Spacecraft, related test and support equipment to the Launch Site
and (ii) all authorizations required for the performance of this
Contract.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
12
<PAGE>
ARTICLE 5. PRICE
5.1 The total price (the "Contract Price") for Contractor to provide
Spacecraft, Documentation and Related Services as defined in
Article 3 herein shall be determined for each Spacecraft in
accordance with Paragraph 3.2.
5.2 Buyer shall pay Contractor the Contract Price stated in Paragraph
5.1 above in accordance with Article 6, Paragraphs 6.2 and 6.3 of
this Contract.
13
<PAGE>
ARTICLE 6. PAYMENTS
6.1 Pursuant to the terms set forth in this Article 6, and subject to
HCG's rights, defenses and remedies as expressly stated in this
Agreement, HCG shall pay to Contractor the Contract Price as
stated in Article 5 herein for the applicable Spacecraft,
Documentation, and Related Services under this Contract.
6.2 Invoices shall be prepared and submitted by Contractor for each
Spacecraft in a form reasonably acceptable to Buyer. Payments to
Contractor for each Spacecraft shall be made as follows:
(i) [***] of the Contract Price shall be payable in accordance
with the payment plan to be established under Paragraph 6.3; and
(ii) [***] of the Contract Price shall be payable as "Incentives
Obligations" in accordance with Paragraph 6.4.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
14
<PAGE>
6.3 Payment Plans: The Parties shall establish a payment plan for each
Spacecraft at the time that the Contract Price for such Spacecraft
is determined in accordance with Paragraph 3.2
[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
15
<PAGE>
[***]
6.4 Incentives Obligations.
6.4.1 The following definitions are applicable to this Section
6.4:
6.4.1.1 "Specified Operation Lifetime" means fifteen
(15) years
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
16
<PAGE>
6.4.1.2 "Successfully Operating Payload". The
Spacecraft shall be equipped with one or more
Payloads, as specified in Exhibit B upon
definition of all Final Specifications. Each
Payload shall be deemed to be Successfully
Operating if at least that number of
Transponders that is one more than one-half of
the total number of Transponders within such
Payload are Successfully Operating
Transponders (as defined below).
6.4.1.3 "Successfully Operating Transponder". A
Successfully Operating Transponder is a
Transponder which meets either or both of the
following two criteria:
(a) The Transponder meets or exceeds the
performance specifications set forth in
Exhibit B. For the avoidance of doubt, if the
Spacecraft is placed into inclined orbit, then
the Transponders shall be deemed not to meet
the criteria stated in this Paragraph
6.4.1.3(a) at such time as the Spacecraft
would have ceased to have a Useful Commercial
Life, (as mutually determined by the Parties)
had it not been placed in such an orbit.
(b) The Transponder, while not meeting or
exceeding the performance specifications,
provides Buyer with no material loss in its
commercial value.
A Transponder shall also be deemed to be a
Successfully Operating Transponder if it meets
the performance specifications through use of
any redundant or spare equipment.
6.4.1.4 "Useful Commercial Life". The Useful
Commercial Life of a Spacecraft means the
period beginning on the Commencement Date and
ending on the earlier to occur of (i) the date
on which there is just sufficient fuel
remaining on board the Spacecraft only to
eject the Spacecraft from its geostationary
orbital location or (ii) the date on which at
least
17
<PAGE>
one-half of the Transponders on each Payload
are not Successfully Operating Transponders.
6.4.1.5 "Successfully Injected Spacecraft". The
Launched Spacecraft shall be deemed to be a
Successfully Injected Spacecraft if:
(a) The transfer orbit/spacecraft attitude meets
the following required criteria:
(1) Perigee altitude error is less than or
equal to +/-3 sigma;
(2) Apogee Altitude error is less than or
equal to +/-3 sigma;
(3) Inclination error is less than or equal to
+/-3 sigma;
(4) Argument of perigee error is less than or
equal to +/-3 sigma; and
(5) The Spacecraft has been separated with
attitude rate errors of less than or equal to
+/-3 sigma and
(b) The Spacecraft has not suffered physical
damage which resulted from Launch Vehicle
malfunction.
The calculated amount of Useful Commercial Life
(the "Calculated Operational Lifetime") shall be
mutually determined by Buyer and Contractor, based
on standard engineering practices, using measured
actuals of the Spacecraft, existing at the time of
the operational hand-off of the Spacecraft to
Contractor from the Launch Vehicle provider. If
the attained transfer orbit/Spacecraft attitude
does not meet the criteria stated in this Section,
but the Calculated Operational Lifetime is greater
than or equal to the Specified Operational
Lifetime for the Spacecraft, then the Spacecraft
shall be deemed to have been a Successfully
Injected
18
<PAGE>
Spacecraft, If, on the other hand, the attained transfer
orbit/Spacecraft attitude does not meet the criteria
stated above, and the Calculated Operational Lifetime is
less than the Specified Operational Lifetime, then the
Spacecraft shall be deemed not be a Successfully
Injected Spacecraft. If Buyer and Contractor cannot
agree on the Calculated Operational Lifetime, then the
Parties shall resolve such disagreement in acceptance
with the dispute resolution procedures set forth in
Article 33. During such dispute resolution procedure,
Buyer shall commence all payments under Section 6.4.2 to
Contractor based on Contractor's calculation of such
Calculated Operational Lifetime, except only the
disputed amount(s) which shall be paid by Buyer in
escrow as set forth in Section 29.4, and the prevailing
party shall be entitled to interest as provided therein.
6.4.1.6 "Incentives Interest Rate". The Incentives
Interest Rate shall be the lesser of (i) the
prime rate of Chase Manhattan, New York, as
calculated on the first business day of each
month for which interest is calculated plus
[***] or (ii) [***].
6.4.1.7 "Commencement Date". The Commencement Date
shall be the date on which Buyer receives
written certification from Contractor that,
based upon the results of completed in-orbit
performance tests, at least one Payload is a
Successfully Operating Payload.
6.4.2 Buyer shall pay to Contractor the Incentives Obligations
and the Change Order Profit Component (if applicable),
as follows:
6.4.2.1 Incentives Obligations and Change Order Profit
Component. Subject to Section 6.4.2.3 through
6.4.2.6, Buyer shall be obligated to pay to
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
19
<PAGE>
Contractor the Incentives Obligation and any
Change Order Profit Component (if applicable),
as follows: Buyer shall pay Contractor an
equal monthly payment that, when calculated on
a net present value basis to the Commencement
Date using the Incentives Interest Rate,
equals the total amount of Incentives
Obligations plus Change Order Profit Component
due hereunder. For example, if the Galaxy XIII
Spacecraft is a Successfully Injected
Spacecraft and on the Commencement Date all
Transponders on the Spacecraft are and
continue to be Successfully Operating
Transponders for fifteen (15) years, assuming
the maximum [***] for the entire period, the
monthly Incentives Obligations payment would
be [TBD] (the "Nominal Payment"). If the
Incentives Interest Rate is less than [***]
for any given month, the Incentives
Obligations payment will be less than the
Nominal Payment. In such circumstances, the
amount of each month's payment will be
calculated on a net present value basis to the
date of the last month's payment using the
remaining unpaid principal as the new
principal, the Incentives Interest Rate, and a
term equal to the number of months remaining
in the Incentives period. The Parties shall
agree in writing upon an appropriate
allocation of the portion of the Incentive
Obligations which shall be payable for each
Payload on the Spacecraft. The Incentives
Obligations, identified above, shall be
payable in 180 equal and consecutive monthly
installments over a fifteen (15) year life of
the Spacecraft, except as may be adjusted as
set forth herein. Except as provided in
Paragraph 6.4.4, the first installment of each
Incentives Obligations shall be paid on the
Spacecraft's Commencement Date. A sample
schedule matrix showing Incentives
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
20
<PAGE>
Obligations payments for fifteen years,
assuming fully successful operation, and with
varying hypothetical interests rates will be
attached to this Agreement as Schedule
6.4.2.1.
The foregoing notwithstanding:
(a) If the Spacecraft is not a Successfully
Injected Spacecraft pursuant to Section
6.4.1.4 but is successfully placed into its
on-station orbit by Hughes during the
"Transfer Period" (defined as the period from
separation of the Launch Vehicle through
on-station acquisition), then, subject to
Section 6.4.2.3, Buyer shall pay the
Incentives Obligations for the Spacecraft in
equal and consecutive monthly installments
over a period of the Spacecraft's On Station
Operational Lifetime (defined at Section
6.4.2.1(b)).
(b) If the Spacecraft is Successfully Injected,
but is not successfully placed into its
on-station orbit by Contractor during the
Transfer Period, then the total amount of the
Incentives Obligations for the Spacecraft
shall be multiplied by a percentile equal to
(i) the On-Station Operational Lifetime
divided by (ii) the Calculated Operational
Lifetime, which percentile shall, in no event,
be greater than one. Subject to Section
6.4.2.3, Buyer shall pay such Incentives
Obligations for the Spacecraft in equal and
consecutive monthly installments over a period
of the Spacecraft's On-Station Operational
Lifetime. The "On Station Operational
Lifetime" shall be mutually determined by
Buyer and Contractor, based on standard
engineering practices, using measured actuals
of the Spacecraft, existing at the end of the
Transfer Period. However, should the
Spacecraft continue to operate successfully
beyond the On-Station Operational Lifetime,
Contractor will continue to earn Incentives
21
<PAGE>
Obligations at the same monthly rate up to the
Specified Operational Lifetime.
(c) Finally, if the Spacecraft is not a
Successfully Injected Spacecraft and, in
addition, is not successfully placed into its
on-station orbit during the Transfer Period,
then the total amount of the Incentives
Obligations shall be multiplied by the sum of
(A)(i) the Specified Operational Lifetime,
plus (ii) the On-Station Operational Lifetime,
minus (iii) the Calculated Operational
Lifetime, divided by (B) the Specified
Operational Lifetime, which percentile shall,
in no event, be greater than one. Subject to
Section 6.4.2.3, Buyer shall pay such
Incentives Obligations for the Spacecraft in
equal and consecutive monthly installments
over a period of the Spacecraft's On-Station
Operational Lifetime.
For purposes of any provision of this
Contract, if the Incentives Obligations or
related payment periods are to be
recalculated, the monthly installments due
shall be recalculated to reflect the imputed
interest element that is reflected in the
payment plans specified above.
6.4.2.2 Notwithstanding the foregoing, if at any time
Buyer continues to utilize for
revenue-producing purposes any Transponder
that is not a Successfully Operating
Transponder, then Buyer shall pay a pro rated
amount of the Incentives Obligation
attributable to such Transponder that is
proportionate to the partial benefit that
Buyer derives from such Transponder (the
"Incentive Payment"), all as mutually agreed
upon by the Parties in good faith.
6.4.2.3 Except for any Change Order Profit Component
(which is non-contingent), payment of any
Incentives Obligation shall be contingent upon
the Transponders being Successfully Operating
Transponders, as set forth herein, on the
applicable Payload and shall be pro-rated,
therefore, on a
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Transponder equivalent-by-Transponder
equivalent basis over the duration of the
applicable term of such Obligation; provided,
however, that beginning on the date, if any,
that any one or more of the Payloads are no
longer a Successfully Operating Payload, as
and when ascertained pursuant to in Section
6.4.2.4 (the "Degraded Payload"), then Buyer's
then-remaining Incentives Obligations for such
Payload(s) (exclusive of any Change Order
Profit Component, as applicable) shall be
deemed extinguished.
6.4.2.4 Whether any Transponder is not Successfully
Operating shall be mutually determined by
Buyer and Contractor, based on relevant
technical data, reports and analyses, and each
Party will make available the other review
upon reasonable request all data used in
making such determination. If Contractor
disagrees with such determination, then the
Parties shall resolve such disagreement in
accordance with the dispute resolution
procedure set forth in Article 33.
6.4.2.5 If the Spacecraft has not been, or is not
being, Properly Operated by the Buyer, and any
Transponders thereof are not Successfully
Operating Transponders, then the Transponders
of the Spacecraft which were Successfully
Operating prior to such improper operation of
the Spacecraft shall be deemed to be
Successfully Operating Transponders for
purposes of Contractor's entitlement to
payment of any applicable Incentives
Obligations for such period as such
Transponders would have reasonably been
predicted to continue to be Successfully
Operating had the Spacecraft and transponder
thereon been Properly Operated by Buyer;
provided, however, that if the failure is the
result of a defect in the deliverable software
or if Buyer demonstrates that the failure of
any Transponder to be Successfully Operating
was not caused primarily, directly or
indirectly, by any act or omission of Buyer,
its agents, Subcontractors, Consultants
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or representatives of any kind, then the
foregoing provision shall not apply with
respect to such Transponder.
6.4.2.6 Buyer may prepay any portion of the Incentives
Obligations or the Change Order Profit
Component pursuant to the schedule matrix
attached as Exhibit 6.4.2.1. Any remaining
Incentives Obligations so prepaid shall be
subject to refund by Contractor to Buyer, in
any instance and to the extent that Buyer's
obligation to make such payments is relieved
pursuant to this Article 6, as outlined in the
last sentence of Section 6.4.4.1 hereof.
6.4.3 "Spacecraft Retirement Payment". At any time following
the Spacecraft's Delivery, Buyer may, at its option,
cease to utilize the Spacecraft for any purpose;
provided, however, that if Buyer does cease using the
Spacecraft (or if the Spacecraft is rendered a total
loss by virtue of Buyer's failure to Properly Operate
the Spacecraft), then, upon the exercise date of such
option or the declaration of the Spacecraft as a total
loss as applicable, all remaining Incentives Obligations
payments for any Transponder (and any Change Order
Profit Component, if applicable) (subject to the
provisions of Section 6.4.2.3 through 6.4.2.5) shall
become immediately due and payable, all relative to the
Spacecraft; and Buyer shall pay to Contractor such
amounts, in immediately available funds, along with the
outstanding balance of principal and accrued interest on
any other outstanding payment obligations with respect
to the Spacecraft, if any, as of such date. In
determining the amount of principal and interest due,
present value analysis discounted at the Incentives
Interest Rate per annum shall be done for any scheduled
payment stream previously created by the Parties
hereunder. Notwithstanding the foregoing, Buyer shall
have the right to cease using the Spacecraft and remove
it from its orbital location at any time following the
expiration of the Spacecraft's Useful Commercial Life,
without payment of such Spacecraft Retirement Payment.
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6.4.4 Incentive Obligations and Launch Delay
6.4.4.1 If the Spacecraft has not been launched by the
121st day after Delivery of the Spacecraft,
then, except as set forth in Paragraph
6.4.4.2, the first of the equal and
consecutive monthly installment payments for
Incentive Obligations on the Spacecraft shall
be due and payable and the fifteen year period
shall be deemed to have begun for purposes of
this Paragraph 6.4 and such payments shall
commence (the "Pre-Launch Incentive
Payments"). If upon the Commencement Date or
at any time thereafter, any Transponder ceases
to be a successfully Operating Transponder or
a Payload becomes a Degraded Payload, then
Contractor shall deliver to Buyer a refund
(without interest) of that portion of the
Pre-Launch Incentive Payment attributable to
such Transponder or Payload, taking into
account the amount of such time such
Transponder or Payload met the performance
specifications, and Buyer's subsequent
Incentives Obligations shall be reduced
thereafter on a pro rata basis; provided, if
applicable, Buyer shall receive a credit to
the extent of any Pre-Launch Incentive
Payments, to be applied as an offset against
Buyer's consecutive monthly installment
payments for the Incentives Obligations
otherwise due and payable for the months
immediately following the Commencement Date.
6.4.4.2 Subject to the second sentence below, if on or
before the 121st day following the Satellite's
Delivery Date, the Satellite has not been
Launched, then the first of the equal and
consecutive monthly installments payments for
the Incentives Obligations on the Spacecraft
shall be due and payable on the earlier to
occur of the Spacecraft's Commencement Date or
the 241st following such Spacecraft's Date of
Delivery (except that interest on such
Incentives Obligations shall begin to accrue
on the
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121st day following the Delivery Date, as such
date may be modified herein). If, however, the
Spacecraft has not been Launched due primarily
to (1) Contractor's Fault after Delivery or
(2) Contractor's failure to timely meet the
Spacecraft's scheduled Delivery Date (where
such failure in Delivery is not caused by a
Buyer's Delay) (or a combination of clauses
(1) and (2) immediately above) then the first
of the equal and consecutive monthly
installments of the Incentives Obligations on
the Spacecraft shall be due and payable on,
and interest shall not accrue until, the
Causation Date. If upon Spacecraft
Commencement, or at any time thereafter, any
Transponder on the Spacecraft (which has been
subject to a Launch delay under this Paragraph
6.5.4.2) ceases to be a Successfully Operating
Transponder or a Payload becomes a Degraded
Payload, then Contractor shall deliver to
Buyer a refund (without interest) of that
portion of the Pre-Launch Incentives Payments
attributable to such Transponder or Payload,
taking into account the amount of time such
Transponder or Payload met the performance
specifications, and Buyer's subsequent
Incentives Obligation for the affected Payload
on the Spacecraft shall be reduced thereafter
on a pro rata basis; provided, however, that
Buyer shall receive a credit to the extent of
any Pre-Launch Incentive Payments, such credit
to be applied as an offset against Buyer's
consecutive monthly installment payments for
the Incentives Obligations otherwise due and
payable for the months immediately following
the Commencement Date.
6.4.4.3 If, for any reason other than primarily
Contractor's Fault, the Spacecraft has not
been Launched within 24 months following the
Spacecraft's Delivery Date, then the full
amount of the Incentives Obligations (and any
Change Order Profit Component, if applicable)
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(including principal and accrued interest, if
any) shall become immediately due and payable
upon the last day of such 24th month. If,
however, the Spacecraft is subsequently
Launched within 54 months of the Delivery Date
and any Transponder of the Spacecraft ceases
to be a Successfully Operating Transponder or
a Payload becomes a Degraded Payload, then
Buyer shall be entitled to a proportionate
refund (without interest) for any Incentives
Obligations (and any Change Order Profit, if
applicable) paid for such Transponder or
Payload, taking into account the amount of
time such Transponder or Payload met the
performance specifications. If, for any
reason, the Satellite has not been Launched
prior to the third anniversary of the Delivery
Date (the "Third Anniversary"), then Buyer
shall have an option (the "LOPS/MOPS Option"),
exercisable in writing received by Contractor
on or before the Third Anniversary, to extend
its right to utilize the Related Services for
the Satellite to the fifth anniversary of the
Delivery Date (the "Extension Period"). If
Buyer does not timely exercise the LOPS/MOPS
Option, then Contractor shall credit any
unused portion of the Baseline Launch Costs
for the Spacecraft against any due and unpaid
payment obligations of Customer under this
Contract (the "LOPS/MOPS Refund"). If Buyer
timely exercises the LOPS/MOPS Option, then
the price associated with the Related Services
(pursuant to Paragraph 6.3) for the Spacecraft
during the Extension Period, shall be
increased by a [***] beginning on the Third
Anniversary. Buyer shall be obligated to pay
such Escalation Amount within 30 days of
receipt of invoice from Contractor. In any
case, Contractor's obligation to provide such
services shall terminate on the date which is
fifty-four (54) months (or as early as
thirty-six (36) months) from the Delivery Date
for the
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Spacecraft. If Contractor's obligation to
provide Launch and Mission Operations Services
is terminated under the immediately preceding
sentence, then Buyer shall receive a LOPS/MOPS
Credit or LOPS/MOPS Refund, as applicable.
6.4.4.4 If, for any reason, other than Contractor's
Fault, a Launch delay occurs between the time
of Launch and the Commencement Date (or if no
Commencement occurs), then the full amount of
the Incentives Obligations (and any Change
Order Profit Component, if applicable) (the
"Recoverable Amount(s)") shall become
immediately due and payable upon the date of
such Launch delay. Contractor shall be
entitled to obtain payment of such Recoverable
Amounts from the proceeds of the launch
insurance obtained by Buyer and shall be
entitled to a priority in obtaining such
proceeds over Buyer and all other parties or
claims; provided, however, that nothing herein
shall relieve Buyer of its obligations to pay
to Contractor all such Recoverable Amounts, as
set forth herein. During the six (6) months
immediately following such Launch delay, Buyer
shall use best reasonable efforts to obtain
the proceeds of its launch insurance to pay
Contractor the Recoverable Amounts, hereunder.
Provided further, however, that if Contractor
does not receive all such Recoverable Amounts
from the proceeds of Buyer's launch insurance
within such six (6) month period, then Buyer
shall be obligated immediately to compensate
Contractor for, and Contractor may also look
to Buyer directly for satisfaction of, all
such Recoverable Amounts.
6.5 HSC shall not be obligated to deliver a Spacecraft to the Launch
Site if there are any outstanding Delinquent Payments owed by HCG
to HSC with respect to such Spacecraft under this contract one
month prior to shipment of such Spacecraft from the HSC facility.
"Delinquent Payments" are
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defined as those payments not received by HSC within thirty (30)
days of the dates due as defined in Paragraphs 6.2.1 and 6.2.2
above. Once HCG has paid HSC for any "Delinquent Payments" and any
interest accrued in accordance with Paragraph 6.10 below, HSC
shall use its reasonable best efforts to ship such Spacecraft to
the Launch Site so as to enable launch on the scheduled Launch
Date and in any event to make shipment as soon as practicable and
no later than sixteen (16) weeks after payment by HCG of such
Delinquent Payments. HCG will be responsible for and will pay to
HSC any reasonable costs and [***] profit on such costs that HSC
may incur as a result of a delay in delivery due to HCG's
Delinquent Payments. Notwithstanding the foregoing, this Section
6.6 shall not relieve Contractor of its obligation to deliver a
Spacecraft, and no "Delinquent Payment" shall be deemed to have
occurred, due to any non-payment by HCG on account of an alleged
breach by Contractor or other dispute as to such payment. In such
event, HCG shall, within thirty (30) days of the date such payment
is due, pay the full amount of such payment into an
interest-bearing escrow account to be established at Bank of
America, Concord, California. Upon settlement of the dispute as to
such payment and alleged breach in accordance with Article 33, the
Party entitled to the amount in escrow shall receive such amount
together with all accrued interest thereon and the other Party
shall pay all costs and fees associated with the escrow of such
amount.
6.6 Invoice
6.6.1 Invoices submitted to HCG for payment shall contain a
cross-reference to the Contract number and the date
specified in Payment Plans of Paragraphs 6.3.1 and
6.3.2. Contractor shall submit one (1) original invoice
for each Spacecraft in each instance to:
Hughes Communications Galaxy, Inc.
P.O. Box 9712 Bldg.
A01/4B462
Los Angeles, CA 90810-9928
Fax: (310) 525-5140
Attention: Accounts Payable - Tony Walden
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6.6.2 Invoice amounts, as specified in Paragraph 6.3, provide
for billings to be submitted by the 15th day of each
month and shall be paid by HCG within thirty (30) days
upon receipt of the invoice by HCG.
6.7 Late Payments
In the event of a failure by the Buyer or the Contractor to make a
payment required pursuant to this Contract, the delinquent Party
shall pay interest at the rate of [***] on the overdue amount for
the number of days that the payment is overdue, commencing on the
date payment is due and terminating on the date the overdue amount
is paid in full. Notwithstanding the foregoing, this Section 6.9
shall not apply to any payment made into escrow in accordance with
Section 29.4.
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ARTICLE 7. SPACECRAFT LAUNCH DATE
7.1.1 Launch Semester. A six (6) month period of time in which
a launch will occur, the first day of which shall be
thirty (30) days after the Delivery Date under Section
4.1 herein (forty-five (45) days after Delivery Date if
a Sea Launch is utilized).
7.1.2 Launch Period. A ninety (90) day period of time within a
launch Semester during which a launch will be scheduled
to occur as shall be notified by Buyer to Contractor.
7.1.3 Launch Slot Definition. A thirty (30) day period of time
within a Launch Period during which a Launch will occur.
The Launch Slot within the Launch Period shall be
notified by Buyer to Contractor not later than one (1)
year prior to the first day of the applicable Launch
Period and, once established, shall become an express
term of this Contract.
7.1.4 Launch Date Defined. The calendar date within the Launch
Slot during which a Launch will occur. The Launch Date
within the Launch Slot shall be notified by Buyer to
Contractor no later than six (6) months prior to the
first day of the applicable Launch Slot and once
established, shall become an express term of this
Contract.
7.1.5 Launch Window Definition. A period of time within the
Launch Date during which a Launch can occur and meet
mission requirements. The Launch Window shall be
established by notified by Buyer or Contractor no later
than forty-five (45) days prior to the Launch Date and
once established, shall become an express term of this
Contract.
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7.1.6 Adjustment of dates. The time periods as delineated in
Sections 7.1.2 through 7.1.5 shall be adjusted to
reflect applicable launch provider contracts, consistent
with ordinary practices of such providers as familiar to
the Parties.
7.2 The Contract Price set forth in Paragraph 5.1 includes Contractor
furnished launch support services, post launch support services,
in-orbit test support services, and post title transfer monitoring
and command of each Spacecraft if Buyer invokes the remedial
provisions of Article 3, Paragraph 3.3.
7.3 No less than sixteen (16) weeks prior to the launch date, Buyer
shall order Contractor by notice in writing to commence launch
campaign preparations.
7.4 If a Spacecraft Launch Date defined in Paragraph 7.1 is postponed
for any reason other than the sole fault of Contractor, excluding
any postponement due to an Excusable Delay as defined in Article
12, the Parties shall negotiate in good faith to determine an
equitable adjustment to the price and affected terms of this
Contract, if any. If the cost of supplies or materials made
obsolete or excess as a result of a such postponement is included
in the equitable adjustment, HCG shall have the right to prescribe
the manner of disposition of such supplies or materials. Costs
included in the equitable adjustment shall include but not be
limited to: support personnel standby; extra travel expenses;
transport termination or rescheduling fees and a profit rate of
[***].
7.5 Notwithstanding the foregoing, if a Spacecraft Launch Date defined
in Paragraph 7.1 is postponed by either Party due to an Excusable
Delay, as defined in Paragraph 12.1 herein, the terms of Article
12 herein shall govern such postponement.
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ARTICLE 8. BUYER-FURNISHED ITEMS
8.1 The following facilities, equipment, and services
("Buyer-Furnished Items") shall be furnished by Buyer at no cost
to Contractor, in a timely manner, so as to enable Contractor to
perform the work described herein.
1) Facilities (buildings, power, phones and data lines) and
enumerated services: (i) transportation of a Spacecraft,
Contractor related test equipment and personnel within
the Launch Site and if a Sea Launch is provided, between
the Integration Facility (Port of Long Beach) and the
Launch Site (vicinity of Christmas Islands) unless
Article 4, Paragraph 4.2.1 conditions apply (ii) storage
of a Spacecraft and related test equipment for all force
majeure events (which prevent Buyer from supplying
Buyer-Furnished Items) and/or launch vehicle delays
(iii) fueling (iv) photographs, (v) interface hardware
at the Launch Site and (vi) earth station facilities for
IOT including appropriate RF facilities, but not
specialized test equipment.
2) Reservation and procurement of launch services and
associated services.
Contractor will provide preliminary requirements of Item 1 above
to Buyer no later than 6 months after the Effective Date of this
Contract to assist Buyer's compliance with this Article, which
shall be consistent with what Contractor has generally required
Buyer to secure for previous launches with the same launch
provider. Subject to the confidentiality requirements of the
applicable agreements, Contractor will be allowed to review the
list of basic and optional service which Buyer has procured in
Buyer's contract(s) for launch services.
In the event that the Buyer-Furnished Items set forth above are
not suitable for the intended purpose or are not provided in a
timely manner, excluding any excusable delay as defined in Article
12 herein, then HCG shall be liable to Contractor for all
applicable costs which shall include but not be limited to;
procurement or rental of suitable substitutes for such Buyer
Furnished Items
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at no higher than market prices; with title and possession of all
such procured items reverting to Buyer after Contractor's use
under this Agreement; support personnel standby; extra travel
expenses; transport termination or rescheduling fees; and
installation/de-installation of communication links to the Launch
Site and a profit rate of [***].
8.2 Contractor shall maintain a system to ensure the adequate control
and protection of HCG's Property. For the purposes of this
Article, HCG Property shall be defined as any item which HCG
provides to the Contractor or directs Contractor to maintain in
storage or an inventory account under this Contract. Upon receipt
of notification from HCG, the Contractor shall complete and return
within fifteen (15) working days a Property System Certification
describing the system that will be used to control HCG's Property.
Additionally, HCG's representative may, at its option and at no
additional cost to HCG, conduct surveillance at a reasonable time
of the Contractor's Property Control System as HCG deems necessary
to assure compliance with the terms and conditions of this
Article.
8.3 Contractor shall, commencing with its receipt and during its
custody or the use of any HCG's Property, accomplish the
following:
A. Establish and maintain inventory records and make such
records available for review upon HCG's request;
B. Provide the necessary precautions to guard against
damage from handling and deterioration during storage;
C. Perform periodic inspection to assure adequacy of
storage conditions; and
D. Ensure that HCG's Property is used only for performing
this Contract, unless otherwise provided in this Article
or approved by the cognizant contracting officer.
8.4 Contractor shall not modify, add-on, or replace any HCG Property
without
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HCG's prior written authorization. Contractor shall immediately
report to HCG's contract representative the loss of any HCG
Property or any such property found damaged, malfunctioning, or
otherwise unsuitable for use. The Contractor shall determine and
report the probable cause and necessity for withholding such
property from use.
8.5 Upon termination or completion of this Contract, and upon request
by HCG, the Contractor shall perform a physical inventory,
adequate for accountability and disposition purposes, of all HCG's
Property applicable to such terminated or completed agreement and
shall cause its subcontractors and suppliers at every tier to do
likewise.
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ARTICLE 9. INSPECTION AND ACCEPTANCE
9.1 Inspection of all Hardware, documentation and Contractor's
services provided hereunder shall take place in accordance with
the terms of Article 10, entitled "Access to Work in Process,"
herein.
9.2 Preliminary Acceptance of a Spacecraft shall occur when all
in-plant tests required to be performed by Contractor for the
Hardware have been completed and the Contractor has demonstrated
at the pre-ship review that the Hardware and contract deliverables
meet the requirements of this Contract , at which time HCG shall
accept the Hardware on a Preliminary basis in writing within five
(5) business days subject to completion of Launch Integration
Facility and/or Launch Site tests specified in Exhibit C, Galaxy
XIII/XIV Spacecraft Integration Test Plan. If the Hardware is
unacceptable, Contractor shall promptly and at its expense,
rectify the unsatisfactory Hardware and resubmit the Hardware for
acceptance by HCG as provided above. In either case, the Hardware
shall be deemed accepted upon failure of HCG to notify Contractor
in writing within the above five (5) business days that it is
accepted, rejected or that in HCG's opinion further corrective
action must be taken by the Contractor.
9.3 Final Acceptance of a Spacecraft shall occur upon the earliest of
i) the completion of In-orbit Testing in accordance with Exhibit
A, ii) fifty (50) days after Intentional Ignition (as defined in
Article 16, Paragraph 16.2 of this Contract) or iii) immediately
before a Partial Failure, Total Failure or Total Constructive
Failure (as each such term is defined in the applicable Hughes
Communications Galaxy Launch Insurance Contract or successor
contract), which occurs at or after Intentional Ignition. HCG
shall have access to Launch Integration Facility and/or Launch
Site test results during the launch campaign in accordance with
the provisions of Article 10, Paragraph 10.1 "Access to Work in
Process."
9.4 With respect to deliverable Hardware which HCG orders Contractor
to store, the Hardware shall be stored at a location to be
negotiated and Final Acceptance shall occur at the end of the
[***] warranty period as set
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forth in Article 16 herein, entitled "Spacecraft Warranty," or
such other event mutually agreed upon between the Parties.
9.5 Non-Conforming Products.
9.5.1 If (i) the Spacecraft does not meet its weight
requirements and (ii) Buyer will be required to pay for
additional weight from the launch provider in order to
achieve the Specified Operational Lifetime without
delaying the placing of the Spacecraft in its orbital
location by more than fifteen (15) additional days, then
Contractor shall reimburse Buyer for such additional
payments up to [***].
9.5.2 Any Preliminary Acceptance or Final Acceptance by Buyer
of Spacecraft that does not conform to the requirements
of this Contract (whether or not related to weight)
shall not affect the Parties rights and obligations
under Paragraph 6.4 ("Incentive Obligations") with
respect to a Spacecraft or other deliverable that does
not perform to the specifications of this Contract.
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ARTICLE 10. ACCESS TO WORK IN PROCESS
10.1 Contractor shall afford HCG access to work in progress being
performed at Contractor's plants and at the Launch Integration
Facility and/or Launch Site pursuant to this Contract, including
technical data, documentation, and hardware, at reasonable times
during the period of Contract performance, provided such access
does not unreasonably interfere with such work or require the
disclosure of Contractor's proprietary information to third
Parties and subject to (i) HSC's Security Procedures and (ii) U.S.
or Foreign Government Regulations.
10.2 To the extent that the Contractor's major subcontracts
permit, Contractor shall afford HCG access to work being
performed pursuant to this Contract in subcontractor's
plants in the company of Contractor's representatives.
Contractor shall exert reasonable effort in subcontracting
to obtain permission for HCG access to those major
subcontractors' plants. Major subcontracts are defined as
those subcontracts in excess of [***].
10.3 HCG shall have the right to witness on a non-interference
basis all system and subsystem tests scheduled by Contractor
in connection with the performance of work under this
Contract. If the system or subsystem tests are performed by
a subcontractor of HSC, HSC shall take all reasonable steps
to secure HCG's access to the subcontractor's facility or
facilities. HCG's right to witness testing shall be on a
non-interference basis with the subcontractor's activities
and subject to (i) any subcontractor security procedures and
(ii) U.S. or Foreign Government Regulations.
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ARTICLE 11. TERMINATION FOR DEFAULT; LIMITATION OF LIABILITY
11.1 Subject to provisions of Article 3 entitled "Spacecraft,
Documentation and Related Services," Article 5 entitled "Price"
and Article 12 entitled "Excusable Delays," Buyer may issue a
written notice of default with respect to a particular Spacecraft
to Contractor if: (i) Contractor fails [***] as confirmed in
writing by the Contractor's and Buyer's Senior Executives and such
failure may result in a delay in delivery of more than [***]; or
(ii) the delivery of such Spacecraft or Contractor's performance
of any material obligation under the Contract has been delayed due
to the primary fault of the Contractor for more than [***].
Subsequent to the issuance of said notice, the Buyer may terminate
this Contract with respect to such Spacecraft and thereafter elect
remedies as identified in Paragraph 11.2 below.
11.2 If Buyer terminates this Contract, in whole or in part, as
provided in Paragraph 11.1 herein, Buyer, at its sole option,
shall either: (i) take title to all deliverable hardware, all
hardware in process which ultimately would have been deliverable
by Contractor and all drawings and data produced by Contractor,
the cost of which has been charged or becomes chargeable to any
work terminated plus all reasonable reprocurement costs up to a
maximum amount per Spacecraft of: (a) [***] in the event of a
termination of this Contract solely with respect to Documentation
and/or Related Services for such Spacecraft or (b) [***] with
respect to a complete termination of the Contract with respect to
such Spacecraft; or (ii) receive a refund of all payments
submitted to Contractor by the Buyer for performance of this
Contract for the portion terminated by Buyer and Contractor shall
retain title and possession to all terminated Hardware which
ultimately would have been deliverable by Contractor. Contractor
shall continue the performance of this Contract to the extent not
terminated under the provisions of this Article.
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11.3 Notwithstanding the other provisions of this Article, there will
be no termination for default after Intentional Ignition of the
Launch Vehicle for the applicable Spacecraft.
11.4 If, after termination of this Contract (or portion thereof) under
the provisions of this Article, it is determined for any reason
that Contractor was not in default under the provisions of this
Article, or that the default was excusable under the provision of
Article 12 entitled "Excusable Delays," the rights and obligations
of the Parties shall be the same as if Notice of Termination had
been issued pursuant to Article 14, entitled "Termination for
Convenience" or pursuant to Article 12, Paragraph 12.4, as the
case may be.
11.5 Except as otherwise provided in the Contract, the rights and
remedies of the Parties provided in this Article shall be in lieu
of any other rights and remedies provided by law or in equity in
the event Contractor or Buyer fails to meet its obligations under
this Contract. Buyer shall have no other rights or remedies for
late delivery of a Spacecraft, Documentation and Related Services
under this Contract except for those rights and remedies expressly
provided for in this Contract.
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ARTICLE 12. EXCUSABLE DELAYS
12.1 If either Party or a subcontractor of either Party is delayed by
act of God, or of the public enemy, fire, flood, earthquake,
epidemic, quarantine restriction, strike, walkout, freight
embargo, or any other event which is beyond their control or does
not arise from the acts or omissions of either Party or its
respective subcontractors, said delay shall constitute an
excusable delay ("Force Majeure Events"). In the event of an
excusable delay, there shall be an equitable adjustment to the
time of delivery and/or performance stated in this Contract. The
affected Party shall give notice in writing to the other Party
within 10 working days that an excusable delay condition exists
after learning of such delay. Such notification shall include the
cause of the excusable delay, the expected length of the excusable
delay, and alternate plans to mitigate the effect of the excusable
delay.
12.2 If the affected Party, as defined in Paragraph 12.1 above,
requests or experiences, on a cumulative basis, excusable delay(s)
greater than [***], the Parties shall enter into good faith
negotiations to develop a mutual course of action and/or an
equitable adjustment to the affected terms of this Agreement.
12.3 Notwithstanding the foregoing, if the Launch Date for a particular
Spacecraft defined in Paragraph 7.1 herein is delayed due to a
Force Majeure event affecting HCG's ability to furnish any item to
be supplied by it under Article 8 hereof, HCG shall reimburse
Contractor for all reasonable expenses incurred as a result,
including without limitation expenses for: support personnel
standby; extra travel expenses; and transport termination or
rescheduling fees.
12.4 Notwithstanding anything herein to the contrary, in the event that
a Force Majeure Event occurs and continues to delay or prevent
performance by Contractor of its obligations as to either or both
Spacecraft for a period of twelve (12) months or longer from the
initial occurrence of such Force Majeure Event, then Buyer shall
have the right to terminate this Contract
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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with respect to the affected Spacecraft upon thirty (30) days
written notice. In the event of a termination under this Paragraph
12.4, Buyer shall be entitled to a refund of all payments made to
Contractor with respect to the affected Spacecraft, and Contractor
shall retain title to all Deliverables produced by Contractor
under this Contract with respect to the affected Spacecraft.
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ARTICLE 13. AMENDMENTS
The terms and provisions of this Contract shall not be amended or
modified without specific written provision to that effect, signed by
the Authorized Representative(s) of both Parties. These Authorized
Representative(s) are identified in Article 27, "Notices and Authorized
Representative(s)." No oral statement of any person shall in any manner
or degree modify or otherwise affect the terms and provisions of this
Contract.
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ARTICLE 14. TERMINATION FOR CONVENIENCE
14.1 Buyer may terminate all or any portion of the work to be performed
pursuant to this Contract with respect to one or both of the
Spacecraft upon five (5) days written notice to Contractor. Buyer
shall pay Contractor, in the event of such termination,
termination liability equaling all costs (as defined in Paragraph
14.5 below) expended by Contractor for all work done up to the
date of termination, settlements with subcontractors for work
performed prior to termination, and Contractor's reasonable costs
related to termination which would not otherwise have been
incurred plus a [***] profit for the applicable termination costs
and charges, but in no event more than the maximum termination
liability that is set forth in Exhibit F hereto, as of date of
termination, less amounts previously paid by Buyer to Contractor
pursuant to the Payment Article. Buyer shall pay the unpaid
balance of such termination liability within thirty (30) days of
Buyer's receipt of certification of Contractor's costs. In the
event that Buyer has paid to Contractor any amount in excess of
such termination liability, then Contractor shall refund such
excess amount to Buyer within thirty (30) days of certification of
costs. In no event shall the termination liability exceed either
the Contract price defined in Article 5 herein or the amount
specified in Exhibit F.
14.2 In the event of termination by Buyer hereunder, and upon payment
in full of all amount due (if any) under 14.1 above, all tangible
work in process inventories generated under this Contract, with
respect to the terminated work, shall become the property of
Buyer. Buyer shall direct disposition of such property within
sixty (60) days from date of termination (which disposition may
include requesting Contractor to undertake mitigation efforts in
accordance with Paragraph 14.4 below) or such other date as agreed
to by the Parties. Final acceptance and transfer of title for all
tangible work in process inventories to be delivered to the Buyer
in the event of termination shall be the subject of separate
negotiations between Buyer and Contractor and shall be subject to
applicable U.S. Government Export Regulations. The expense of
disposition shall be borne by HCG.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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14.3 In the event of partial termination of the Contract, the Contract
Price shall be adjusted accordingly.
14.4 At HCG's request, Contractor shall use reasonable best efforts to
identify an alternate use (i.e. sale to third Parties and/or
internal utilization) for any Hardware affected by a termination
under this Article 14, the Contractor shall submit a proposal to
HCG, which, at a minimum, defines (i) the applicable Hardware,
(ii) the intended use of the Hardware, (iii) the original
acquisition cost/value of the applicable Hardware, as available,
and (iv) the sale/transfer payment(s) to be received by HCG.
Contractor shall use its reasonable best efforts to obtain fair
market value for the applicable Hardware. HCG, at its sole option,
may accept or reject the proposal submitted by Contractor. In the
event that HCG accepts the proposal submitted by Contractor,
payment by Contractor to HCG of the agreed upon payment value
shall occur within thirty (30) days of the sale/transfer of the
applicable Hardware, or such other payment period as mutually
accepted between the Parties. If the Contractor's proposal is
rejected by HCG or if Contractor is unable to find any alternative
use within two (2) years of being requested to do so, then Title
to the applicable Hardware shall be vested as stated in Paragraph
14.2 above.
14.5 As used in this Article 14, Contractor's "Costs" shall mean costs
actually incurred by Contractor in performing its obligations
hereunder (including G&A costs not to exceed [***] of such costs)
all such costs to be determined in accordance with Contractor's
normal accounting practices. Contractor shall provide to Buyer an
invoice certified by a financial officer of the company stating
Contractor claim for costs properly includes only the costs
specified in this paragraph. In the event Buyer desires
independent verification of claim, Buyer may request to have
independent certified public accountants (CPA) audit costs
incurred by Contractor and report to the Parties. Such audit shall
be at Buyer's expense unless such audit shows Contractor's costs
to have been overstated (in which event Contractor shall bear the
audit expense). Such audit shall constitute a final determination
of actual costs notwithstanding the provision of Article 33;
provided that, if the costs determined by such report exceed
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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the amount of Contractor's termination claim, Buyer shall
only be obliged to pay the amount of Contractor's termination
claim.
14.6 Contractor shall use its reasonable best efforts to include in its
subcontracts for work hereunder on terms that will enable
Contractor to terminate such subcontracts in a manner consistent
with this Article 14.
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ARTICLE 15. TITLE AND RISK OF LOSS
15.1 Title and risk of loss or damage in respect of all items to be
delivered under this Contract shall pass from Contractor to HCG as
follows:
15.1.1 Risk of loss of the Spacecraft and title shall pass from
Contractor to HCG upon the earliest of: (i) the
completion of In-orbit Testing in accordance with
Exhibit A, (ii) fifty (50) days after Intentional
Ignition (as defined in Article 15, Paragraph 15.2 of
this contract) or (iii) immediately before a Partial
Failure, Total Failure or Total Constructive Failure (as
each such term is defined in the applicable Hughes
Communications Galaxy Launch Insurance Contract or
successor contract) which occurs at or after Intentional
Ignition.
15.1.2 In respect to a Spacecraft which HCG directs Contractor
to store, title and risk of loss shall remain with the
Contractor until Final Acceptance as specified in
Article 9.4 herein.
15.1.3 Notwithstanding Paragraph 15.1.2 above, upon removal of
the Spacecraft from storage, the Contractor shall not
assume risk of loss relative to a Battery which HCG
directs Contractor to replace after the five-year
storage period which disqualifies the battery for a
15-year mission. In that event, Article 30 herein
entitled "Effects of Storage on Batteries," shall apply.
15.1.4 "Risk of Loss" for purposes of this Article 15 is
limited to the responsibility and liability for a
Partial Failure, Total Failure or Total Constructive
Failure (as each such term is as defined in the
applicable Hughes Communications Galaxy Launch Insurance
Contract or successor contract). Responsibility and
liability for the Spacecraft prior to intentional
ignition is with the Contractor.
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15.2 In the event of damage to or destruction of Hardware when
Contractor shall have risk of loss, Contractor shall repair or
replace (at Contractor's option) said Hardware. The Buyer shall
participate in the decision to repair or replace said Hardware and
the provisions of Article 16 shall apply.
15.3 Insurance Provided By Contractor. The Contractor shall, at its own
expense, provide and maintain the following insurance:
15.3.1 "All Risk" Insurance
(i) The Policy for "All Risks" insurance shall insure
the Contractor and name Buyer as additional insured and
Loss Payee as their interest may appear.
(ii) The insurance shall cover the Spacecraft while in
or about the Contractor's and subcontractors' plants,
while at other premises which may be used or operated by
the Contractor for construction or storage purposes,
while in transit, or while at the Designated Launch Site
until Intentional Ignition, or while Spacecraft is
stored by the Contractor at HCG's direction until Final
Acceptance as specified in Article 9.4.
(iii) Such insurance shall be sufficient to cover the
full replacement value or selling price of the
Spacecraft and may be issued with deductibles, for which
losses shall be borne by the Contractor.
(iv) This "All Risk" insurance shall be in force from
the time of the Effective Date of this Contract and
shall continue in effect until Contractor's liabilities
have expired at intentional ignition.
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15.3.2 Third Party Liability Insurance
(i) The Policy(s) for Third Party Liability insurance
shall be written on forms the Buyer may review and shall
include Buyer as additional insured.
(ii) This Third Party Liability insurance shall be in
force from the time of the Effective Date of this
Contract and shall continue in effect until Contractor's
liabilities have expired at intentional ignition.
(iii) The Policy(s) may be issued with deductibles, for
which losses shall be borne by the Contractor.
15.4 General Insurance Requirements
(i) The Contractor shall, upon request, provide to the
Buyer certificates of the Insurance Policy(s) issued by
an agent of the Contractor's Insurer(s) for coverage
which the Contractor is required to provide pursuant to
the provisions of these Articles.
(ii) All Policies of insurance to be provided and
maintained pursuant to these Articles shall require the
insurer(s) or its authorized agent(s) to give each
insured not less than thirty (30) days prior written
notice in the event of cancellation or any proposed
material change in such policies, except for ten (10)
days prior written notice in the event of cancellation
due to non-payment of premium.
(iii) The Contractor may also acquire and maintain, at
its own expense, other insurance for amounts and perils,
and upon such terms, conditions and deductibles as it
may deem advisable or necessary to cover any loss or
damage to persons or property that may occur as a result
of the performance of this Contract.
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ARTICLE 16. SPACECRAFT WARRANTY
16.1 Contractor warrants that a Spacecraft, upon successful completion
of Spacecraft in plant Tests pursuant to Article 9 herein, shall
be free from any defects in material or workmanship and shall
conform to the applicable specifications and drawings, as
evidenced by the acceptance criteria in Exhibits A-D herein.
16.2 This warranty shall start from the date of Preliminary Acceptance
of a Spacecraft as stated in Article 9 herein, entitled
"Inspection and Acceptance," and continue for a period of [***],
or until the Intentional Ignition (defined herein as the
"Intentional Ignition of any rocket motor on the first stage of
the launch vehicle") of the applicable launch vehicle, whichever
is earlier. [***] ("Warranty Time Period"). Contractor shall not
be liable in Contract or in Tort for any incidental, special,
contingent, or consequential damages.
16.3 Buyer shall have the right at any time during the Warranty Time
Period to reject any goods not conforming to this warranty and
require that Contractor, at its expense, correct or replace (at
Contractor's option) such goods with conforming goods. If any time
during the Warranty Time Period Contractor fails to correct or
replace such defective goods and fails to initiate reasonable
efforts to correct or replace such defective goods within a
reasonable period after written notification and authorization
from Buyer, Buyer may then, by contract or otherwise, correct or
replace such defective goods and equitably adjust the price.
16.4 Except as otherwise expressly agreed upon in this Contract,
Contractor shall have no liability, or responsibility in Contract
or in Tort with respect to a Spacecraft after Intentional Ignition
(as defined in Paragraph 16.2) of the launch vehicle.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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16.5 THE ABOVE WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING FITNESS FOR PARTICULAR PURPOSE OR
MERCHANTABILITY AND THE REMEDY PROVIDED HEREIN IS THE SOLE REMEDY
FOR FAILURE BY CONTRACTOR TO FURNISH A SPACECRAFT THAT IS FREE
FROM MATERIAL DEFECTS IN MATERIAL OR WORKMANSHIP AS SET FORTH IN
PARAGRAPH 16.1 ABOVE. ALL OTHER WARRANTIES OR CONDITIONS IMPLIED
BY ANY OTHER STATUTORY ENACTMENT OR RULE OF LAW WHATSOEVER ARE
EXPRESSLY EXCLUDED AND DISCLAIMED. CONTRACTOR AND ITS
SUBCONTRACTORS SHALL HAVE NO LIABILITY IN CONTRACT OR IN TORT
(INCLUDING NEGLIGENCE) OR IN ANY OTHER MANNER WHATSOEVER FOR A
SPACECRAFT AFTER INTENTIONAL IGNITION OTHER THAN AS EXPRESSLY
PROVIDED IN THIS CONTRACT.
16.6 Any limitations on warranties, liability or requests for
indemnification from liability for the malfunction of delivered
items which are imposed upon the Contractor by its various
equipment suppliers shall be passed on directly to Buyer provided,
however, nothing therein shall decrease or invalidate the rights
of the Buyer during, or the length of, the Warranty Time Period as
stated in this Article.
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ARTICLE 17. INDEMNIFICATION
17.1 Each Party shall indemnify and hold the other and/or all its
officers, agents, servants, subsidiaries, affiliates, parent
companies and employees, or any of them, harmless from any
liability or expense in connection herewith on account of damage
to property (excepting other Spacecraft in flight) and injuries,
including death, to all persons including but not limited to
employees of the Parties, and their subcontractors, and of all
other persons performing any part of the work hereunder, arising
from any occurrence caused by an negligent act or omission of the
indemnifying Party or its subcontractors, or any of them in
connection with the work to be performed by such Party under this
Contract. The indemnifying Party shall have the right, but not the
obligation, to participate in any legal or other proceedings
concerning claims for which it is indemnifying under this Article
17 and to direct the defense of such claims. However, with respect
to such legal or other proceedings, the indemnifying Party shall
pay all expenses (including attorneys fees incurred by the
indemnified Party in connection with such legal or other
proceedings) and satisfy all judgments, costs or other awards
which may be incurred by or rendered against the indemnified
Party. The indemnifying Party shall not settle any such claim,
legal or other proceeding without first giving thirty (30) days
prior written notice of the Terms and Conditions of such
settlement and obtaining the consent of the indemnified Party,
which consent shall not be unreasonably withheld or delayed.
17.2 Notwithstanding the foregoing, neither the Contractor nor its
subcontractors shall have any liability in Contract or in Tort,
for damages to or caused by a Spacecraft after Intentional
Ignition (as defined in Paragraph 16.2), and Buyer shall obtain
waivers of subrogation rights from Buyer's insurers against
Contractor, and affiliates and subcontractors of Contractor.
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ARTICLE 1 SPACECRAFT NOT LAUNCHED WITHIN SIX MONTHS AFTER ACCEPTANCE
18.1 If a Spacecraft is not launched within six (6) months after its
Preliminary Acceptance per Article 9, entitled "Inspection and
Acceptance," and is subsequently ordered to be launched within
[***] following its Preliminary Acceptance, it is agreed that such
Spacecraft shall be returned at Contractor's option at
Contractor's expense, to Contractor's facility for inspection and
refurbishment. Any inspection and refurbishment undertaken by
Contractor to meet the requirements of Article 16 entitled,
"Spacecraft Warranty," shall be at Contractor's expense, including
Spacecraft transit insurance.
18.2 If a Spacecraft is not launched within six (6) months after its
Preliminary Acceptance and is subsequently ordered to be launched
later than [***] following its Preliminary Acceptance, it is
agreed that such Spacecraft shall be returned, at Buyer's expense,
to Contractor's facility for inspection and refurbishment. An
equitable adjustment to Contract price for such inspection and
refurbishment, to include a [***] profit component shall be
negotiated by the Parties unless the fact that the launch is
scheduled for later than [***] is due to Contractor's negligent
acts or omissions.
18.3 If a Spacecraft is returned to Contractor's facility for
inspection and refurbishment per the terms of Paragraph 18.2
above, all charges to return such Spacecraft to the Launch Site
shall be borne by Buyer.
18.4 If a Spacecraft has not been launched within [***] after its
preliminary Acceptance, neither Party shall be further obligated
to the other with respect to such Spacecraft. Disposition of such
Spacecraft shall be at the option of Buyer with costs of such
disposition to be borne by Buyer.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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ARTICLE 19. PATENT/COPYRIGHT INDEMNITY
19.1 Contractor shall indemnify and hold Buyer harmless against any
liability or expense as a result of claims, actions, or
proceedings against Buyer alleging the infringement of any
trademarks, United States Copyright or mask work, United States
Letters Patent, any other intellectual property rights, by any
article fabricated by Contractor and delivered to Buyer pursuant
to this Contract as set forth below.
19.2 Contractor agrees to defend at its own expense any claim, action,
proceeding or request for royalty payments or any claim for
equitable relief or damages against Buyer, its officers,
employees, agents, or subsidiaries based on an allegation that the
manufacture of any item under this Contract or the use, lease, or
sale thereof infringes any United States Letters Patent trademark,
United States Copyright or mask work or any other intellectual
property right, and to pay any royalties and other costs related
to the settlement of such claim, action, proceeding or request and
to pay the costs and damages, including reasonable attorney's fees
finally awarded as the result of any claim, action or proceeding
based on such request, provided that Contractor is given prompt
written notice of such request or claim by Buyer and given
authority and such assistance and information as is available to
Buyer for resisting such request or for the defense of such claim,
action or proceeding. Any such assistance or information which is
furnished by Buyer at the written request of Contractor is to be
at Contractor's expense.
19.3 In the event that, as a result of any such claim, action,
proceeding or request: a) prior to delivery, the manufacture of
any item is enjoined; or b) after delivery, the use, lease or sale
thereof is enjoined, Contractor agrees to utilize its best effort
to either: (1) negotiate a license or other agreement with
plaintiff so that such item is no longer infringing; or (2) modify
such item suitably or substitute a suitable item therefore, which
modified or substituted item is not subject to such injunction,
and to extend the provisions of this Article thereto. In the event
that neither of the foregoing alternatives is suitably
accomplished by Contractor, Contractor shall be
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liable to Buyer for Buyer's additional costs and damages arising
as a result of such injunction; provided however, that in no event
shall Contractor's entire liability under this Article exceed
[***] for each Spacecraft. The existence of one or more claims,
actions, proceedings or lawsuits shall not extend such amount.
19.4 The foregoing indemnity shall not apply to any infringement
resulting from a modification or addition, by other than
Contractor, to an item after delivery.
19.5 If the infringement results from the compliance by Contractor with
the Buyer's directed designs, specifications or instructions, the
Buyer will defend or settle, at its expense, any such suit against
the Contractor.
19.6 The foregoing constitutes the Parties' entire obligation with
respect to claims for infringement.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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ARTICLE 20. RIGHTS IN INVENTIONS
20.1 As used in this Contract, "Program Invention" shall mean any
invention, discovery or improvement conceived of and first reduced
to practice in the performance of Work under this Contract.
Information relating to Inventions shall be treated as proprietary
information in accordance with the provisions of this Contract.
Rights to inventions conceived solely by Contractor or its
employees shall vest completely with Contractor.
20.2 Contractor shall be the owner of all Program Inventions invented
solely by Contractor. Contractor grants Buyer a royalty-free,
nonexclusive license in Program Inventions to use Program
Inventions solely for the purposes of maintenance and operation of
a Spacecraft and delivered Equipment. Contractor agrees that it
will not revoke such license if Buyer is in compliance with the
terms of the license.
20.3.1 In the case of joint Inventions, that is, inventions
conceived jointly by one or more employees of both
Parties hereto, each Party shall have an equal,
undivided one-half interest in and to such joint
Inventions, as well as in and to patent applications and
patents thereon in all countries.
20.3.2 In the case of such joint Inventions, Contractor shall
have the first right of election to file patent
applications in any country, and Buyer shall have a
second right of election. Each Party in turn shall make
its election at the earliest practicable time, and shall
notify the other Party of its decision.
20.3.3 The expenses for preparing, filing and securing each
joint Invention patent application, and for issuance of
the respective patent shall be borne by the Party which
prepares and files the application. The other Party
shall furnish the filing Party with all documents or
other assistance that may be necessary for the filing
and prosecution of each application. Where such joint
Invention application for patent is filed by either
Party in a
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country which requires the payment of taxes, annuities,
maintenance fees or other charges on a pending
application or on an issued patent, the Party which
files the application shall, prior to filing, request
the other Party to indicate whether it will agree to pay
one-half of such taxes, annuities, maintenance fees or
other charges. If within sixty (60) days of receiving
such request, the non-filing Party fails to assume in
writing the obligation to pay its proportionate share of
such taxes, annuities, maintenance fees or other
charges, or if either Party subsequently fails to
continue such payments within sixty (60) days of demand,
it shall forthwith relinquish to the other Party,
providing that said other Party continues such payments,
its interest in such application and patent and the
Invention disclosed therein, subject, however, to
retention of a paid-up, non-exclusive, non-assignable
license in favor of the relinquishing Party, its parent,
and any subsidiary thereof to make, use, lease and sell
apparatus and/or methods under said application and
patent.
20.4 Each owner of a jointly-owned patent application or patent
resulting therefrom shall, provided that it shall have fulfilled
its obligation, if any, to pay its share of taxes, annuities,
maintenance fees and other charges on such pending application or
patent, have the right to grant non-exclusive licenses thereunder
and to retain any consideration that it may receive therefor
without obligation to account therefor to the other Party. In
connection therewith, each of the Parties hereby consents to the
granting of such non-exclusive licenses by the other Party and
also agrees not to assert any claim with respect to the licensed
application or patent against any licensee of the other Party
thereunder during the term of any such license.
20.5 No sale or lease hereunder shall convey any license by
implication, estoppel or otherwise, under any proprietary or
patent rights of Contractor, to practice any process with such
product or part, or, for the combination of such product or part
with any other product or part.
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ARTICLE 21. INTELLECTUAL PROPERTY RIGHTS
Except as provided in Article 20, neither Party shall acquire any
rights with respect to any patent, trademark, trade secret, or any
other intellectual property developed or used by the other Party in the
performance of this Contract.
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ARTICLE 22. FURNISHED DATA AND INFORMATION, DISCLOSURE AND USE
Proprietary Information shall mean any data and information received by
one Party from the other Party, which is identified as proprietary in
accordance with either of the following methods: (i) if in writing, it
shall be marked by the disclosing Party with an appropriate proprietary
legend, or (ii) if disclosed orally, it shall be presented by the
disclosing Party as Proprietary at the time of disclosure and shall be
confirmed by the disclosing Party as Proprietary Information in writing
within fifteen (15) days of its initial oral disclosure.
22.1 The receiving Party agrees to protect such data and information
with the same degree of care which the receiving Party uses to
protect its own confidential data and information;
22.2 The receiving Party shall not disclose or have disclosed to third
Parties, in any manner or form, or otherwise publish such data and
information so long as it remains proprietary without the explicit
authorization of the other Party or except as otherwise permitted
in this Article 22;
22.3 The receiving Party agrees that it shall use such data and
information solely in connection with the performance of Work
under this Contract, unless otherwise explicitly authorized by or
on behalf of the other Party with the designation of specific data
and information and use;
22.4 The foregoing obligations with regard to such data and information
shall exist unless and until such time as:
22.4.1 Such data and information are to the receiving Party or
otherwise publicly available prior to its receipt by the
receiving Party without the default of the receiving
Party; or
22.4.2 Such data and information have been lawfully disclosed
to the receiving Party by a Third Party which has the
right to disclose such data; or
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22.4.3 Such data and information are shown by written record to
have been independently developed by the receiving
Party; or
22.4.4 Such data and information are otherwise available in the
public domain without breach of this Contract by the
receiving Party; or
22.4.5 Such data and information are disclosed by or with the
permission of the disclosing Party to a Third Party
without restriction; or
22.4.6 Such data and information that a Party may be required
by law or government regulation or order to disclose.
22.4.7 Such data and information are released for disclosure in
writing by or with the permission of the disclosing
Party.
22.5 Providing Buyer shall obtain from the recipient a nondisclosure
agreement at least as restrictive as this Article 22, Buyer may
disclose any proprietary information on a need to know basis to
its customer(s), contractors, insurers, agents, counsel and actual
or prospective lenders, investors, or successors in interest.
22.6 Any copyrighted material belonging to a Party to this Contract may
be copied by the other Party as necessary to enable the receiving
Party to perform its obligations under this Contract, provided
always that the copyright legend is retained on the material.
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ARTICLE 23. PUBLIC RELEASE OF INFORMATION
Neither Party shall issue news releases, articles, brochures,
advertisements, prepared speeches, and other information releases
concerning the work performed or to be performed under this Contract by
Contractor or its subcontractors, or any employee or consultant of
either, which contains new information not previously disclosed as
permitted under the Contract, without first obtaining the prior written
approval of the other Party concerning the content and timing of such
release which approval shall not be unreasonably withheld. The
initiating Party shall provide such releases to the other Party for
review within a reasonable time prior to the desired release date and
the other Party shall be required to respond within said time period.
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ARTICLE 24. TAXES
24.1 The price which shall be paid by Buyer for Spacecraft,
Documentation and Related Services [***] any U.S. (federal, state
or local) sales or use taxes, or fees or other U.S. taxes against
real or personal property, however designated, which may be levied
or assessed against Contractor. Buyer shall be responsible for the
payment of all personal property taxes, if any, with regard to
goods which are levied upon subsequent to the date of delivery to
Buyer. Buyer shall be responsible for any inventory taxes, state
taxes or any other taxes that are assessed to Contractor as a
result of storage of a Spacecraft in accordance with Article 32.
If Sea Launch, L. P. is the Launch Vehicle Provider for any such
launch, Contractor shall be relieved of responsibility for any
taxes and/or port fees associated with the Sea Launch Zenit
Vehicle except as provided by Article 4, Paragraph 4.3.1.2 of the
Contract.
24.2 In the event Contractor in the performance of this Contract is
required to pay non-U.S. customs, import duties, value-added or
sales taxes, commercial card fees, port fees, harbor maintenance
tax, other charges, or taxes, or fees, (collectively,
"Assessments") however designated (except for (i) any Assessment
based on Contractor's income and (ii) any Assessment incurred as a
result of or associated with Contractor's manufacture of a
Spacecraft), then Buyer will reimburse Contractor for such
Assessments within thirty (30) days of written notification by
Contractor of payment; provided, however that, Contractor shall
used its reasonable best efforts to obtain waivers, exemptions
and/or relief from such Assessments when practicable, and Buyer
shall not be required to pay any Assessment to the extent any such
waiver, exemption or relief is pending or has been obtained.
Notification shall then be supported by an invoice and
attachment(s) evidencing such payment having been made by
Contractor.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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ARTICLE 25. GOVERNING LAW
This Contract shall be deemed made in the State of California and shall
be construed in accordance with the laws of the State of California.
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ARTICLE 26. TITLES
Titles given to the Articles herein are inserted only for convenience
and are in no way to be construed as part of this Contract or as a
limitation of the scope of the particular article to which the title
refers.
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ARTICLE 27. NOTICES AND AUTHORIZED REPRESENTATIVES
Any notice or request required or desired to be given or made hereunder
shall be in writing and shall be effective if delivered in person or
sent by mail or by facsimile as indicated below:
1. Hughes Communications Galaxy Inc.
P.O. Box 9712
Bldg. A01, M/S 4A467
Long Beach, California 90810-9928
Attention: TBD, Contracts Manager
cc: TBD, Director, Systems Engineering &
Technology
Authorized Representative(s): [TBD]
2. Hughes Space and Communications Company
Post Office Box 92919, Airport Station
Bldg. S41, M/S A374
Los Angeles, California 90009
Attention: Samuel C. Tricoli, Contracts Manager
cc: Arthur W. Ackerman, Jr., Program Manager
Authorized Representative(s): [TBD]
or in each case as a Party may direct by notice to the other Party in
accordance with this Article 27.
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ARTICLE 28. INTEGRATION
This document, with Exhibits, constitutes the entire understanding
between the Parties with respect to the subject matter of this Agreement
and supersedes all previous oral and/or written negotiations,
commitments, and understandings of the Parties, including without
limitation the version of the Agreement dated May 9, 1997.
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ARTICLE 29. CHANGES
29.1 Any changes requested by Contractor during the performance of this
Contract, within the general scope of this Contract, which will
add or delete work, stop work, affect the design of a Spacecraft,
change the method of shipment or packing, or the place or time of
delivery, or will affect any other requirement of this Contract,
shall be submitted in writing ("Change Proposal") to Buyer sixty
(60) days prior to the proposed effective date of the change. If
such Contractor requested change causes an increase or decrease in
the total price or other terms of this Contract, Contractor shall
submit a proposal to Buyer detailing the impact of such change.
29.2 Buyer shall notify Contractor in writing within thirty (30) days
after receipt of the requested change and price adjustment
(downward or upward), if any, whether or not it agrees with and
accepts such Change Proposal. If Buyer agrees with and accepts the
Contractor requested Change Proposal, Contractor shall proceed
with the performance of the Contract as changed or in the case of
a stop work order, suspend the performance of this Contract, and
an amendment to the Contract reflecting the Change Proposal shall
be incorporated into the Contract. If Buyer does not agree with
the Contractor requested Change Proposal, the Parties shall
attempt to reach agreement on such Change Proposal. If the Parties
are unable to agree on the requested change and price adjustment,
then the Parties shall proceed with the performance of this
Agreement, as unchanged. In the event the Parties are able to
reach agreement on the change, but not on the price adjustment
component, then the Parties shall elevate such dispute to the
Senior Executives of the respective companies for resolution. If
resolution can not be achieved within a reasonable period of time
under the circumstances, Buyer may make a qualified acceptance of
the Change Proposal, accepting all matters other than price
adjustment, and the issue of price adjustment shall be submitted
for resolution by arbitration in accordance with the provisions of
Paragraph 33.2 hereof. Pending such resolution of the price issue,
the Parties shall perform their obligations under the Contract, or
in the case of a Stop work order, suspend their obligations, as if
the Change Proposal had been accepted; provided,
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however, that Buyer shall pay any disputed amount of the
price adjustment into an escrow account in accordance with
Paragraph 29.4 hereof on the date such amount would have been due
and payable had the Change Proposal been accepted, or if the
Change Proposal could result in a downward adjustment in the
Contract Price in excess of the amount remaining to be paid by the
Buyer, Contractor shall deposit the disputed amount of such excess
into an escrow account in accordance with Paragraph 29.4 hereof.
29.3 Buyer may submit to Contractor in writing (a "Change Order
Request") detailing any changes requested by Buyer during the
performance of this Contract, within the general scope of the
Contract, which will add or delete work, stop work , affect the
design of a Spacecraft, change the method of shipment or packing,
or the place or time of delivery, or will affect any other
requirement of this Contract. Contractor shall respond to such
Change Order Request in writing to Buyer within thirty (30) days
after such request. If Contractor determines that the change
requested by Buyer is feasible and can be made at no additional
cost and with no associated delays, then Contractor shall so
notify, Buyer and Contractor shall commence implementing such
change. If the Contractor determines otherwise, then, Contractor
shall submit to Buyer, a proposal detailing the impact of such
change and the price adjustment (downward or upward), if any, (the
"Change Order Offer"). Buyer shall notify Contractor in writing,
within thirty (30) days after receipt of Contractor's Change Order
Offer, whether or not it agrees with and accepts Contractor's
Change Order Offer. If Buyer agrees with and accepts Contractor's
Change Order Offer, Contractor shall immediately proceed with the
performance of the Contract as changed, or in the case of a stop
work order, suspend the performance of this Contract, and an
amendment to the Contract reflecting such change shall be
incorporated into the Contract. If Buyer does not agree with the
Contractor's Change Order Offer, the Parties shall attempt to
reach agreement on such Change Order Offer. In the event the
Parties are able to reach agreement on the change, but not on the
price adjustment component, then the Parties shall elevate such
dispute to the Senior Executives of the respective companies for
resolution. If resolution can not be achieved within a reasonable
period of time under the circumstances, Buyer may make a
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qualified acceptance of the Change Order Offer, accepting all
matters other than price, and the issue of price shall be
submitted for resolution by arbitration in accordance with the
provisions of Paragraph 33.2 hereof. Pending such resolution of
the price issue, the Parties shall perform their obligations under
the Contract, or in the case of a Stop work order, suspend their
obligations, as if the Change Order Offer had been accepted;
provided however, that the Buyer shall pay any disputed amount of
the price adjustment into an escrow account in accordance with
Paragraph 29.4 hereof on the date such amount would have been due
and payable had the Change Order Offer been accepted, or if the
Change Order Request could result in a downward adjustment in the
Contract Price in excess of the amount remaining to be paid by
Buyer, Contractor shall deposit the disputed amount of such excess
into an escrow account in accordance with Paragraph 29.4 hereof.
The dispute shall then be resolved by arbitration under the
provisions of Article 33, entitled "Disputes."
29.4 Escrow Provisions - Disputed Amounts
Disputed amounts with respect to any change under this Article 29
shall be paid into an interest bearing escrow account to be
established at Bank of America, Concord, California. Upon
settlement of the dispute as to such payment and alleged breach in
accordance with Article 33, the Party entitled to the amount or
part thereof in escrow, shall receive such amount together with
all accrued interest thereon and the other Party shall pay all
costs and fees associated with the escrow of said amount. The
placement of disputed amounts into an escrow account shall not
relieve either Party of its remaining obligations under this
contract.
29.5 Determination of Price Adjustment of Change
The Parties agree that the change order price adjustment (downward
or upward) for any change shall be equal to the sum of (i) the
"Change Order Cost" plus (ii) the "Change Order Profit Component".
The "Change Order Cost" shall mean those additional or reduced
recurring and non-recurring costs to Contractor to implement such
change ( or which are not required to be implemented), as
determined in accordance with Contractor's normal
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accounting practices, including those general and administrative
costs ("G&A Costs") of such change, as determined in accordance
with Contractor's normal accounting practices, [***] of
Contractor's costs for such change. The "Change Order Profit
Component" shall be equal to [***] of the Change Order Cost. The
Total Change Order Cost shall be payable in accordance with the
payment plan agreed by the Parties or, if applicable, by the
Arbitrator. Unless otherwise agreed by the Parties, the Change
Order Profit Component shall be payable in equal monthly
installments at the same time as the monthly installments of
Incentives Obligations; provided, however, that payment of the
Change Order Profit Component shall not be conditioned upon
performance of the Spacecraft or any component thereof.
29.6 If Contractor makes any improvements to the generic HS-702
Spacecraft design, then Contractor shall provide reports to Buyer
concerning such improvements. Buyer may request that any
improvement to the HS-702 Spacecraft design reported to Buyer be
incorporated into the Spacecraft, and such improvements shall be
considered a Change and shall be dealt with in accordance with the
Change Order process in this Article 29. The foregoing shall not
apply to any changes to the generic HS-702 Spacecraft design, to
correct or mitigate the impact of anomalies with respect to such
design, made by Contractor on its own accord or as necessary in
Contractor's reasonable engineering judgment, which changes shall
not relieve Contractor of its obligations to meet the technical
specifications for the Spacecraft, as set forth in Exhibit B,
hereto. Contractor shall notify Buyer on a periodic basis or as
requested by Buyer from time to time of any anomalies with respect
to such HS-702 Spacecraft design.
29.7 The Change Order Price shall be allocated and payable as follows:
The Change Order Profit Component shall be an independent payment
obligation not contingent upon performance of the Spacecraft and
shall be payable at the same time as the monthly installments of
the Incentives Obligations for the Spacecraft as set forth in
Paragraph 6.4.4 and, in any case, the then-remaining Change Order
Profit Component for the Spacecraft shall be paid in full with the
last Incentives Obligations Payment. The Total Change Order Cost
shall be payable as agreed by the Parties.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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29.8 To the extent that (i) any change agreed under this Article 29
deletes any Hardware already produced by Contractor, then the
provisions of Paragraphs 14.2 and 14.4 shall apply to the
disposition of such Hardware.
29.9 The Spacecraft shall be designed to support the Launch Vehicle
interface requirements issued by the Launch Vehicle provider
(as to Ariane, Proton and Sea Launch launch vehicles) existing
at the time of the "Delivery Site Designation Date" as defined
in Paragraph 4.2.1. If there are any changes to such interface
requirements thereafter, then any such change shall be deemed
to be a Change Order Request by Buyer, and the Change Order
process set forth in Section 29.3 shall apply.
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ARTICLE 30. EFFECTS OF STORAGE ON BATTERIES
For Spacecraft batteries to provide the required minimum fifteen (15)
years of in-orbit services per Exhibit B, it is understood that launch
must occur within three (3) years from the date of activation of the
first battery cell. In the event Buyer directs Contractor to store any
deliverable Spacecraft and the period of such storage causes a launch
later than three (3) years from the date of activation of that
Spacecraft's first battery cell, and Buyer upon its election to either:
(i) install replacement batteries or (ii) recondition batteries, so
directs Contractor, Buyer shall pay Contractor its costs plus a [***]
profit rate. In either case (i) or (ii), the batteries shall meet a
fifteen (15) year in-orbit service requirement.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
72
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ARTICLE 31. INTER-PARTY WAIVER OF LIABILITY
31.1 Prior to the time Buyer and the Contractor enter the Launch
Integration Facility and/or Launch Site, they each agree that they
will not make a claim against each other for an event that occurs
at the Launch Integration Facility and/or Launch Site premises
involving damage to, loss of, or loss of use of their property or
the property of others in their possession, caused by the fault or
negligence of the other Party to this Contract, or otherwise
caused by any defect in any product manufactured or sold by the
other Party to this Contract. Such claims are waived and each
Party will bear its own losses. Buyer will include a comparable
clause in each of its contracts with vendors, subcontractors or
customers for services or benefits expected as a result of the
launch or orbiting of a Galaxy Spacecraft. Such comparable clause
shall include a requirement to flow the clause down to lower-tier
contractors.
31.2 Notwithstanding any other provisions of this Contract, prior to
the time any Party, associated with the Galaxy XIII and/or Galaxy
XIV launch activities at the Launch Integration Facility and/or
Launch Site, shall enter the Launch Integration Facility and/or
Launch Site, such Parties shall be required to sign an Inter-Party
Waiver of Liability consistent with that between Buyer and the
Contractor as incorporated herein under Paragraph 31.1 of this
provision or other similar agreement as may be required by the
launch agency. Each Party shall have the responsibility to assure
that all the Parties associated with the launch of Galaxy XIII
and/or Galaxy XIV Spacecrafts (for which they have control or
privity of Contract with hereunder) have executed said Inter-Party
Waiver of Liability.
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ARTICLE 32. SPACECRAFT STORAGE
32.1 Buyer may, at its option, order Contractor to store, in accordance
with the provisions of Exhibit B Galaxy XIII/XIV Spacecraft
Specification, each deliverable Spacecraft (including separate
storage of Batteries, if needed) for a period of up to two (2)
years from the date of their delivery to Buyer. Buyer shall
provide written notice to the Contractor not later than six (6)
months prior to the scheduled delivery of said Spacecraft.
Contractor's price for providing storage shall be provided to
Buyer in accordance with Article 29, "Changes," (and such price
shall be deemed a "Change Proposal" for purposes of Article 29)
within 30 days after receipt of Buyer's notice to store such
Spacecraft and Contractor shall provide storage facilities. If
such storage facilities are unavailable, Contractor and Buyer
shall hold discussions to determine a mutually agreed storage
arrangement.
32.2 Six (6) months prior to a stored Spacecraft's scheduled launch
date, Buyer shall, by notice in writing, order the Contractor to
remove said Spacecraft from storage and ship it to a Launch Site
designated by Buyer. In the case of a Sea Launch, the cost for
storage and additional transportation costs exceeding that
required to transport a Spacecraft to the Port of Long Beach
(Integration Facility) point specified herein, shall be borne by
Buyer. These will be in addition to any charges which become the
obligation of the Buyer per Article 18 herein entitled "Spacecraft
Not Launched Within Six Months After Acceptance."
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ARTICLE 33. DISPUTES
33.1 Disputes
33.1.1 In the event any dispute arises between the Contractor
and the Buyer relating to this Contract, either Party
may give written notice to the other of its objections
and reasons therefore. The Contractor and Buyer shall
consult in an effort to reach a mutual agreement to
resolve such dispute. In the event a mutual agreement
cannot be reached within fifteen (15) days after receipt
of this notice, the respective positions of the Parties
shall be forwarded to Contractor and Buyer's respective
Executive Offices for discussions and they shall attempt
to reach a mutual agreement to resolve such dispute
within another fifteen (15) day period.
33.2 Arbitration of Disputes
33.2.1 Grounds for Arbitration and Notice Requirement. Any
dispute, disagreement, controversy or claim arising out
of or relating to this Contract or the interpretation
thereof or any arrangements relating thereto, or the
validity or enforceability thereof, or contemplated
therein or the breach, termination or invalidity thereof
which is not settled to the mutual satisfaction of the
Parties in accordance with Paragraph 33.1 above, then it
shall be settled exclusively and finally by binding
arbitration, after written notice by either Party.
Arbitration of such disputes in accordance with this
Article 33 shall be the Parties' exclusive remedy.
33.2.2 Administration and Rules. Arbitration proceedings in
connection with the Agreement shall be administered by
the American Arbitration Association in accordance with
its then in effect Commercial Arbitration Rules,
together with any relevant supplemental rules including
but not limited to its Supplementary Procedures for
Large, Complex Disputes, as modified by the terms and
conditions of the Agreement. With respect to the
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selection of arbitrators, arbitration proceedings in
connection with this Agreement shall be conducted before
a panel of three (3) arbitrators. Within fifteen (15)
days after the commencement of arbitration, each Party
shall select from a list of qualified persons one person
to serve as an arbitrator on the panel, and within ten
(10) days of their selection, the two arbitrators shall
select a third arbitrator who is listed as an active
member of the American Arbitration Association at the
time that arbitration proceedings commence. If the two
arbitrators selected by the respective Parties are
unable or fail to agree upon the third arbitrator in the
allotted time, then the third arbitrator shall be
selected by the American Arbitration Association.
33.2.3 Place of Arbitration. The place of arbitration shall be
in Los Angeles, California, U.S.A.
33.2.4 Discovery. The arbitrators shall have the discretion to
order a pre-hearing exchange of information by the
Parties, including without limitation, production of
requested documents, exchange of summaries of testimony
of proposed witnesses, and examination by deposition of
the Parties.
33.2.5 Award and Judgment. The arbitrators shall have no
authority to award punitive damages, and may not, in any
event, make any ruling, finding or award that does not
conform to the terms and conditions of this Agreement.
Subject to the foregoing, the Parties agree that the
judgment of the arbitrators shall be final and binding
upon the Parties and that the judgment upon the award
rendered by the arbitrators may be entered in any court
having jurisdiction thereof.
33.2.6 Confidentiality. No Party or arbitrator may disclose the
existence, content, or results of any arbitration
proceedings in connections with this Agreement without
prior written consent of all Parties to the arbitration
proceeding.
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33.2.7 Fee and Expenses. All fees and expenses of any
arbitration proceedings in connection with this
Agreement shall be borne by the losing Party. However,
each Party shall bear the expense of its own counsel,
experts, witnesses, and preparation and presentation of
evidence.
33.2.8 Performance. Contractor and Seller shall continue with
performance under this Agreement during any
disagreement, negotiation, or arbitration.
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ARTICLE 34. ASSIGNMENT
34.1 Neither Party shall assign, or transfer this Contract or any of
its rights, duties or obligations thereunder to any person or
entity, in whole or part without the prior written consent of the
other Party except that either Party may assign or transfer any of
its rights, duties or obligations under this Contract, either in
whole or in part, to its parent company, subsidiary or
affiliate(1). In addition, notwithstanding anything in this
Article 34 to the contrary, the consent of Contractor shall not be
required for, and Paragraph 34.2 shall not apply to: (i) any
assignment of this Contract from HCG to Magellan International,
Inc. (which currently contemplates changing its name to PanAmSat
Corporation), or an affiliate thereof, in connection with the
consummation of the transactions contemplated by that certain
Agreement and Plan of Reorganization dated as of September 20,
1996 by and among HCG, Magellan International, Inc., PanAmSat
Corporation and certain affiliates of HCG; or (ii) any assignment
by Buyer of its rights, duties and/or obligations hereunder as
security for any indebtedness of Buyer or its subsidiaries or
affiliates.
Neither Party shall unreasonably withhold consent to any
assignment or transfer providing that the requesting Party can
demonstrate to the other Party's satisfaction that:
(1) its successor or assignee possesses the financial
resources to fulfill the obligations of this Contract;
and
(2) any such assignment or transfer shall not jeopardize any
data rights or competitive position, or violate laws
related to export or technology transfer, or otherwise
increase the other Party's risks or obligations.
If the requesting Party cannot so demonstrate, both Parties agree
to negotiate in good faith suitable modifications and new
provisions to this Contract which would mitigate the above risks
and/or bring this Contract into conformance with applicable laws.
(1) Affiliate: An "affiliate" of, or a person "affiliated" with, a specified
person, is a person that directly, or indirectly through one or more
intermediaries, controls, or is
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controlled by, or is under common control with, the person specified.
34.2 The Parties agree that in the event that the ownership or control
of HCG or HSC is changed, the Parties reserve the right to
negotiate in good faith suitable modifications and new provisions
to this Contract which would mitigate any additional risks,
financial or otherwise, which may be brought about by such change
in ownership or control.
34.3 This Contract shall be binding upon the Parties hereto and their
successors and permitted assigns.
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ARTICLE 35. LIMITATION OF LIABILITY
35.1 The Parties to this Contract expressly recognize that commercial
space ventures involve substantial risks and recognize the
commercial need to define, apportion and limit contractually such
risks associated with this commercial space venture. The payments
and other remedies expressly set forth in this Contract fully
reflect the Parties' negotiations, intentions and bargained-for
allocation of such risks associated with commercial space
ventures.
35.2 In no event shall the Parties be liable for any direct, indirect,
incidental, special, contingent or consequential damages
(including, but not limited to, lost revenues or profits), except
as expressly provided for in this Agreement. This Article shall
survive the expiration or termination of this Contract for
whatever cause.
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[ARTICLE 36. OPTIONS
36.1 HCG may, in its sole discretion, exercise on or before 30 June
1998, the Option provisions of this Contract to request Contractor
to deliver to Buyer up to two (2) additional Spacecraft,
hereinafter referred to as Galaxy XV and XVI. Upon exercise of
this Option, Buyer shall make the first payment of [TBD] for each
Spacecraft ordered. The configuration and performance of Galaxy XV
and/or XVI shall be substantially similar to Galaxy XIII and
Galaxy XIV.
36.2 The Contract Price for Galaxy XV is [TBD]. The Contract Price for
Galaxy XVI is [TBD].
36.3 Delivery to the Launch Site Integration Facility and/or Launch
Site will be as required to meet the established Launch Schedule
(consistent with the Galaxy XIII and Galaxy XIV delivery schedule
span).
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36.2.1 Payment Plan: June 1998 -
<TABLE>
<CAPTION>
Table 36.2.1
Galaxy XV - Payment Plan
- ----------------------------------------------------------------------
Amount Cumulative
Month $M Amount $M
- ----------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Milestone Payments
TBD
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
</TABLE>
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[***}
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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36.2.2 Payment Plan: TBD
<TABLE>
<CAPTION>
Table 36.2.2
Galaxy XVI - Payment Plan
- ----------------------------------------------------------------------
Amount Cumulative
Month $M Amount $M
- ----------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Milestone Payments TBD
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
</TABLE>
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[***}
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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36.3 The Galaxy XV and XVI Option prices provide for the following:
(a) Up to two spacecraft substantially similar to Galaxy
XIII and XIV in configuration and performance
(b) Documentation
(c) Program Management
(d) Insurance up to the Intentional Ignition of Launch Vehicle
(e) Launch and Mission Operations Services (Baselined with a
Zenit Vehicle) ("Related Services").
(f) Storage for a Spacecraft on similar terms as Galaxy XIII and
Galaxy XIV
(g) The terms of Galaxy XV and/or XVI are pursuant to the terms
of this Contract
36.4 In the even that exercise of this Option does not occur on or
prior to the date stated in Paragraph 36.1, this Option shall
expire unless (i) the Parties otherwise agree or (ii) this Option
is superseded by a definitive Spacecraft Acquisition Agreement.]
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ARTICLE 37. REPLACEMENT SPACECRAFT
Buyer shall have the right to purchase Replacement Spacecraft for one or
both of Galaxy XIII or Galaxy XIV in the event that one or both of these
Spacecraft suffers a launch failure (including any total or constructive
total loss that occurs prior to the placement of a Spacecraft into
commercial operations). Each Replacement Spacecraft shall have the same
configuration and performance of the Spacecraft being replaced. The
price for each such Replacement Spacecraft, if ordered, shall be [TBD],
which price covers all associated deliverables as specified in this
Contract and which shall be adjusted accordingly with the changes to the
Contract Price under Paragraph 3.2. Except as expressly specified in
this Article, the terms and conditions of this Contract shall apply in
context to any Replacement Spacecraft that is ordered under this
Article.
A Replacement Spacecraft may be ordered at any time through ninety (90)
days after the launch of the applicable Spacecraft. Unless long lead
items are purchased, as provided below, the Spacecraft shall be
constructed and all associated deliverable provided to support a launch
within eighteen (18) months of the day ordered.
Buyer shall also have the option to require Contractor to purchase long
lead items sufficient to enable Contractor to have Replacement
Spacecraft, which could be configured as either Galaxy XIII or Galaxy
XIV (to be specified by Buyer if and when Buyer orders the Spacecraft to
be completed) and shall be ready to be launched with the later of
eighteen (18) months after a long lead option is exercised or twelve
(12) months after the go ahead is given by Buyer to complete
construction of the Spacecraft. The price for the long lead items shall
be [TBD], with the remaining portion of such Replacement Spacecraft's
price to be payable if (and only if) such Replacement Spacecraft is
ordered by Buyer to be completed.
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Payment schedules for the eighteen (18) months without long lead items
and long lead item and completion payment options are attached hereto as
Exhibit G.
If Buyer has purchased long lead items, within ninety (90) days of the
successful launch of both Galaxy XIII and Galaxy XIV, Buyer shall direct
disposition of such long lead items either: (a) to build an identical
Spacecraft (at the same price and schedule as a twelve-month Replacement
Spacecraft); or (b) direct the disposition of such long lead items
pursuant to Paragraphs 14.2 and 14.4.
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ARTICLE 38. EFFECTIVE DATE OF CONTRACT
The "Effective Date" of this Contract No. 97-HCG-001 shall be 15, May 1997.
IN WITNESS WHEREOF, the Parties hereto have executed this Contract No.
97-HCG-001 to become effective upon the date specified in this Article 38,
herein entitled, "Effective Date of Contract."
HUGHES SPACE & COMMUNICATIONS COMPANY
SIGNATURE: /s/H.E. McDonnell
-----------------------
NAME: H.E. McDonnell
---------------------------
TITLE: Vice President
---------------------------
DATE: May 15, 1997
---------------------------
HUGHES COMMUNICATIONS GALAXY, INC.
SIGNATURE: /s/J.F. Farrell
-----------------------
NAME: J.F. Farrell
---------------------------
TITLE: President
---------------------------
DATE: May 15, 1997
---------------------------
89
Exhibit 10.39
Information contained herein, marked with [***], is being filed pursuant to a
request for confidential treatment.
================================================================================
TRANSPONDER SUBLEASE AGREEMENT
FOR GALAXY III-R
BETWEEN
HUGHES 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.
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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
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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
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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 HUGHES 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:
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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.
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(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 Hughes
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.
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6.09 Insurance Provisions. [***]
6.10 [***].
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
8
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[***].
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.
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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
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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,
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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 Hughes
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.
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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
HUGHES 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.
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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.
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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, Hughes 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.
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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
<PAGE>
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
<PAGE>
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: Hughes Communications Galaxy, Inc.
Post Office Box 9712
Long Beach, California 90818-9928
Attention: Senior Vice President --
Galaxy Satellite Services
cc: Associate General Counsel
If by FAX: Hughes Communications Galaxy, Inc.
Attention: Senior Vice President --
Galaxy Satellite Services
(310) 525-5450
cc: Associate General Counsel
(310) 525-5175
If by personal
delivery to its
principal place
of business at: Hughes Communications Galaxy, Inc.
1500 Hughes Way
Long Beach, California 90810
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.
2230 E. Imperial Hwy.
Bldg. R8, M/S N340
El Segundo, California 90245
Attention: General Counsel
21
<PAGE>
If by FAX: California Broadcast Center, LLC
c/o DIRECTV International, Inc.
Attention: General Counsel
(310) 535-5220
If by personal
delivery to its
principal place
of business at: California Broadcast Center, LLC
c/o DIRECTV International, Inc.
2230 E. Imperial Hwy.
Bldg. R8, M/S N340
El Segundo, California 90245
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 685
San Jose, Costa Rica
Attn: Lic. Olga Marta Mena
If by FAX: (+) 506-234-7122
Attn: Lic. Olga Marta Mena
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 685
San Jose, Costa Rica
Attn: Lic. Olga Marta Mena
with a copy to:
If by mail: Galaxy Latin America, LLC
2400 East Commercial Blvd.
Ft. Lauderdale, Florida 33308
Attn: James G. Naro, Esq.
If by FAX: Galaxy Latin America, LLC
Attn: James G. Naro, Esq.
Fax: (954) 958-3307
22
<PAGE>
If by personal
delivery to: Galaxy Latin America, LLC
2400 East Commercial Blvd.
Ft. Lauderdale, Florida 33308
Attn: James G. Naro, 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
<PAGE>
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
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has duly
executed and delivered this Agreement as of the day and year first written
above.
HUGHES COMMUNICATIONS GALAXY, INC.
By: /s/ Scott B. Tollefson
---------------------------
Name: Scott B. Tollefson
Title: Vice President
CALIFORNIA BROADCAST CENTER, LLC
By: DTVI One, Inc., its Managing Member
By: /s/ Larry D. Hunter
---------------------------
Name: Larry D. Hunter
Title: Senior Vice President
S-1
Exhibit 10.40
Information contained herein, marked with [***], is being filed pursuant to a
request for confidential treatment.
================================================================================
TRANSPONDER LEASE AGREEMENT
FOR GALAXY VIII(i)
BETWEEN
HUGHES COMMUNICATIONS GALAXY, INC.
AND
CALIFORNIA BROADCAST CENTER, LLC
================================================================================
<PAGE>
TABLE OF CONTENTS
1. The Satellite.........................................................1
1.01 Satellite....................................................1
1.02 Orbital Position.............................................1
1.03 Certain Transponder-Related Definitions......................1
1.04 Transponders Components and Certain Specifications...........2
2. Lease of Transponders; Lease Term.....................................2
2.01 Term.........................................................2
2.02 [***]........................................................2
2.03 Redelivery of Transponders...................................3
3. Lease Rate............................................................3
3.01 Lease Price Components Description...........................3
3.02 Monthly Base Lease Rate; TT&C Fee............................3
3.03 Place of Payment.............................................3
3.04 Deposit......................................................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.....................................................4
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.............................................6
6.08 [***]........................................................7
6.09 [***]........................................................7
6.10 [***]........................................................8
7. Additional Representations, Warranties and Obligations of Lessee......8
7.01 Compliance by Customers......................................8
7.02 Non-Interference.............................................8
7.03 Laws.........................................................9
7.04 Additional Usage Representations and Obligations.............9
[***] The Company has requested confidential treatment for certain information
identified in this exhibit
i
<PAGE>
8. Preemptive Rights.....................................................9
9. Transponder Spares....................................................9
9.01 Use of Transponder Spares....................................9
9.02 Simultaneous Failure -- Priority with Respect to the Use of
Transponder Spares..........................................10
9.03 HCG's Ownership of Transponders.............................10
10. Termination Rights...................................................10
10.01 Termination by Lessee.......................................10
10.02 Termination by HCG..........................................11
10.03 HCG's Right to Transfer.....................................11
10.04 Prompt Repayment............................................11
10.05 Termination by Lessee or HCG................................11
10.06 Right to Deny Access........................................12
11. Force Majeure........................................................14
11.01 Failure of Performance......................................14
12. Limitation of Liability/Breach of Warranty...........................14
12.01 Liability of HCG............................................14
12.02 Confirmed Failure...........................................14
12.03 Repayment for Failed Transponder............................14
12.04 Limitation of Liability.....................................15
12.05 Obligations of Lessee to Cooperate..........................16
13. Limitations on Transfer by Lessee....................................17
14. Utilization of Transponders for Services.............................17
15. Monthly Satellite Reports............................................17
15.01 Reports.....................................................17
15.02 Anomalous Operation Notification............................17
15.03 Maneuver Notification.......................................18
16. Confidentiality and Press Releases...................................18
16.01 Confidential Information....................................18
16.02 Notice Proceeding; Compelled Disclosure.....................18
16.03 Press Releases..............................................19
17. Disposition of Satellite.............................................19
18. Documents............................................................19
19. Conflicts............................................................19
20. Miscellaneous........................................................19
20.01 Interest....................................................19
20.02 Applicable Law and Entire Agreement.........................20
ii
<PAGE>
20.03 Notices.....................................................20
20.04 Severability................................................21
20.05 Taxes.......................................................22
20.06 Successors..................................................22
20.07 Rules of Construction.......................................22
20.08 Survival of Representations and Warranties..................22
20.09 No Third-Party Beneficiaries................................22
20.10 Non-Waiver of Breach........................................23
20.11 Amendments..................................................23
20.12 Counterparts................................................23
Exhibit A Transponder Equipment
Exhibit B Transponder Performance Specifications
Exhibit C Transponder Priority List
Exhibit D Payment Schedule
iii
<PAGE>
GALAXY VIII(i) TRANSPONDER LEASE AGREEMENT
THIS GALAXY VIII(i) TRANSPONDER LEASE 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 HUGHES COMMUNICATIONS GALAXY, INC., a California
corporation ("HCG"), and CALIFORNIA BROADCAST CENTER, LLC, a Delaware limited
liability company ("Lessee").
RECITALS
A. HCG plans to construct a communications satellite, model HS-601 HP,
known as Galaxy VIII(i), carrying a payload of thirty-two (32) Ku-Band
transponders, as more specifically described in Section 1.04 (the
"Transponders"), and certain redundant equipment.
B. Subject to the approval of the Federal Communications Commission (the
"FCC"), HCG intends to have the satellite known as Galaxy VIII(i)
launched during the fourth quarter of 1997 and to cause such satellite
to be co-located in the 95(Degree) West Longitude orbital location
along with the satellite known as Galaxy III-R.
C. The Transponders are capable of providing signals to Mexico,
Central America, South America and the Caribbean (collectively, the
"Territory").
D. Lessee desires to lease from HCG and HCG desires to lease to Lessee
the Transponders upon the terms and conditions set forth in this
Agreement.
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. The Satellite
1.01 Satellite. Subject to the approval of the FCC, HCG plans to
construct and launch the satellite which is referred to hereinafter as "Galaxy
VIII(i)" or the "Satellite."
1.02 Orbital Position. Subject to the approval of the FCC, the
orbital position of Galaxy VIII(i) will be 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) 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 (as Defined
in Section 2.01 below); 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
<PAGE>
1.04 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 Delivery (as defined in Section 4.02) of
Galaxy VIII(i) (the "Galaxy VIII(i) 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 (the "Base Term") commencing as set forth
above and terminating immediately after 74.0% of the Satellite's
anticipated Useful Commercial Life has expired. "Useful Commercial
Life" means the Satellite's estimated useful economic life as of the
date on which the Satellite is ready to be placed in service as
indicated by the acceptance test plan more fully is described in
Section 4.02, as determined by HCG in its reasonable discretion.
(b) provided that Lessee has performed all of its obligations
hereunder, Lessee may, at its option, not less than 540 days prior to
the anticipated expiration of the Base Term, give HCG notice (the
"Renewal Notice") of Lessee's irrevocable intention to renew this
Agreement in respect of all, but not less than all, of the Transponders
for a period commencing upon the expiration of the Base Term and
extending through the last day of the Useful Commercial Life of the
Satellite (the "Renewal Term"). If Lessee shall fail timely to deliver
the Renewal Notice, then Lessee shall be deemed to have elected not to
renew this Agreement. Galaxy Latin America, LLC, a Delaware limited
liability company ("GLA"), shall be deemed to be an intended third
party beneficiary of this Section 2.01(b).
2.02 [***]
(a) HCG agrees that if (i) HCG terminates this Agreement
pursuant to Sections 10.02 or 10.05 hereof, 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) [***].
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
2
<PAGE>
(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) [***]; and (ii)
[***].
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
Lessee's Transponders shall be the "Monthly Base Lease Rate" set forth in
Section 3.02. In addition, Lessee shall pay to HCG a fee (the "TT&C Fee") for
the tracking, telemetry and control services described in Section 6.06.
3.02 Monthly Base Lease Rate; TT&C Fee. During the Base Term, the
Monthly Base Lease Rate for Lessee's Transponders shall be [***] per month and,
subject to the following proviso, shall be due and payable in advance on (i) the
later of the Galaxy VIII(i) Lease Commencement Date or January 1, 1998, and (ii)
the first day of each month thereafter through the last day of the Base Term;
provided, however, that the Monthly Base Lease Rate payments shall be made in
accordance with Exhibit D to this Agreement, [***]; provided further, however,
if this Agreement is terminated, Lessee shall, within ten (10) days after the
termination of this Agreement, pay to HCG the applicable amount set forth in
[***] of Exhibit D, less the amount of any deposit paid to HCG pursuant to
Section 3.04. During the Renewal Term, if any, the Monthly Base Lease Rate for
Lessee's Transponders shall be [***] for such Transponders and shall be due and
payable in advance on the first day of the Renewal Term and the first day of
each month thereafter through the last day of the Term. 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. "[***]"
means [***]. The TT&C Fee shall initially be [***] per month and the TT&C Fee
for each subsequent year shall be adjusted at a rate equal to [***].
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
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
3
<PAGE>
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.
3.04 Deposit. Lessee shall pay to HCG a deposit in the amount of
[***] in immediately available funds on or before [***]. Except as set forth in
Sections 6 and 10 hereof, such deposit is non-refundable and Lessee shall not be
entitled to interest on any portion thereof. HCG shall apply such deposit in
partial or in full satisfaction (as the case may be) of Lessee's Monthly Base
Lease Rate payments for the last [***] of the Base Term (if Lessee fails to
timely give a Renewal Notice), the Renewal Term, or as required to meet any
delinquent Monthly Base Lease Rate payments, as determined by HCG in its sole
discretion.
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 VIII(i) Lease Commencement Date, of the Monthly Base Lease
Rate and the TT&C Fee for the first month hereof and the deposit referred to in
Section 3.04.
4.02 Acceptance. HCG will test each of Lessee's Transponders in
accordance with the acceptance test plan prepared by HCG prior to the launch of
Galaxy VIII(i), a copy of which shall be provided to Lessee. Lessee agrees that
if 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, then acceptance
and Delivery of Lessee's Transponders by Lessee shall be deemed to occur on the
later of HCG's delivery to Lessee of the results of the acceptance test plan and
the date on which HCG makes the Transponders available to Lessee for Lessee's
commercial use. HCG shall keep Lessee reasonably informed of the expected date
of such delivery. To the extent any Transponders are not deemed accepted, the
amounts of the Monthly Base Lease Rate payments will be proportionately reduced
(based on the assumption that all of the Transponders have equal value) and
Lessee's Transponders shall be deemed to be comprised of only the accepted
Transponders.
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.
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
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
4
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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. 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) HCG has filed with the FCC an application, and will
promptly file any necessary amendments to such application (collectively, the
"Application") to construct, launch and operate the Satellite at the 95(Degree)
West Longitude orbital location and to permit the Transponders to be used to
provide fixed satellite services to the Territory.
(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 fails to approve the Application within [***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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[***], then this Agreement shall 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 VIII(i) 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 any transactions entered into in
connection with a sale and leaseback transaction involving the Satellite; 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 and other third party 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
VIII(i).
6.06 TT&C. Tracking, telemetry and control shall be provided by
Hughes 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
shall be as set forth in Section 3.01 hereof.
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
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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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 = Outage Allowance Failure (in Hours) x N
________________________________________
720
where N = the Monthly Base Lease Rate then in effect divided by the number of
Transponders in operation immediately prior to such Outage Allowance
Failure Period.
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 [***]. If there is a [***] during the Term [***]. If Lessee [***].
6.09 [***]. If Lessee has elected to extend the term of this
Agreement through the Renewal Term pursuant to Section 2.01(b), then [***]. If
Lessee[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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[***] in this Agreement, then HCG shall [***]. [***] shall specify that [***]
shall be equal to [***]. "[***]" means (a) [***] or (b) [***]. Notwithstanding
anything to the contrary contained herein, [***].
6.10 [***]. HCG agrees that, [***]. HCG further agrees that so long
as this provision is in force and effect, each lease or agreement for
transponder capacity [***], and upon receipt of written notice from Lessee that
[***].
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 cause physical harm to any 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.
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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
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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 (any 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, seventeen (17) or
more of Lessee's Transponders on Galaxy VIII(i) 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,
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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 fail 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.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
11
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10.06 Right to Deny Access.
(a) If, in connection with using Lessee's Transponders,
(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
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maintain a properly operating facsimile machine at all times to
receive the Denial of Access Notice from HCG.
(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 and the amount of capacity affected.
(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
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
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be incurred by or rendered against HCG as a result thereof, as and
to the extent permitted by law.
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 Hughes
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 VIII(i) 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
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
14
<PAGE>
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 applicable
Monthly Base Lease Rate actually paid by Lessee for such Transponders for the
calendar month in 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 HUGHES
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
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
15
<PAGE>
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 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.
16
<PAGE>
(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
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, Hughes Electronics
Corporation; provided, however, that the affiliate to which the HCG's
obligations are assigned shall have the technical capability to perform such
obligations. Nothing herein shall preclude HCG or its affiliates from engaging
in a transaction with respect to the Satellite commonly referred to as a
"sale-leaseback" provided that commercially reasonable steps are taken to
protect the interests of Lessee hereunder. 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 VIII(i) in the form of the Galaxy satellite status reports
similar to the Galaxy III-R 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
17
<PAGE>
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.
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
18
<PAGE>
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.
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
VIII(i) 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 capable of meeting their respective Transponder Performance
Specifications; or (iii) [***], HCG, in its sole discretion, may remove the
Satellite from its 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 VIII(i) pursuant to this Section 17. Notwithstanding the
foregoing, until HCG so removes Galaxy VIII(i) 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.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
19
<PAGE>
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 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: Hughes Communications Galaxy, Inc.
Post Office Box 9712
Long Beach, California 90818-9928
Attention: Senior Vice President --
Galaxy Satellite Services
cc: Associate General Counsel
If by FAX: Hughes Communications Galaxy, Inc.
Attention: Senior Vice President --
Galaxy Satellite Services
(310) 525-5450
cc: Associate General Counsel
(310) 525-5175
If by personal
delivery to its
principal place
of business at: Hughes Communications Galaxy, Inc.
1500 Hughes Way
Long Beach, California 90810
Attention: Senior Vice President --
Galaxy Satellite Services
cc: Associate General Counsel
20
<PAGE>
TO LESSEE:
If by mail: California Broadcast Center, LLC
c/o DIRECTV International, Inc.
2230 E. Imperial Hwy.
Bldg R8, M/S N340
El Segundo, California 90245
Attention: General Counsel
If by FAX: California Broadcast Center, LLC
c/o DIRECTV International, Inc.
Attention: General Counsel
(310) 535-5220
If by personal
delivery to its
principal place
of business at: California Broadcast Center, LLC
c/o DIRECTV International, Inc.
2230 E. Imperial Hwy.
Bldg. R8, M/S N340
El Segundo, California 90245
Attention: General Counsel
TO GLA:
If by mail: Galaxy Latin America, LLC
2400 East Commercial Blvd.
Ft. Lauderdale, Florida 33308
Attn: James G. Naro, Esq.
If by FAX: Galaxy Latin America, LLC
Attn: James G. Naro, Esq.
Fax: (954) 958-3307
If by personal
delivery to: Galaxy Latin America, LLC
2400 East Commercial Blvd.
Ft. Lauderdale, Florida 33308
Attn: James G. Naro, 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
21
<PAGE>
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.
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 [***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
22
<PAGE>
[***].
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.
23
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has duly
executed and delivered this Agreement as of the day and year first written
above.
HUGHES COMMUNICATIONS GALAXY, INC.
By: /s/Scott B. Tollefson
---------------------------
Name: Scott B. Tollefson
Title: Vice President
CALIFORNIA BROADCAST CENTER, LLC
By: DTVI One, Inc., its Managing Member
By: /s/Larry D. Hunter
---------------------------
Name: Larry D. Hunter
Title: Senior Vice President
S-1
Exhibit 10.41
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of May 6, 1997 by and among
MAGELLAN INTERNATIONAL, INC., a Delaware corporation (the "Company"), and the
director and/or officer of the Company whose name appears on the signature page
of this Agreement ("Indemnitee").
RECITALS
A. Highly competent persons are becoming more reluctant to serve as
directors or officers or in other capacities unless they are provided with
reasonable protection through insurance or indemnification against risks of
claims and actions against them arising out of their service to and activities
on behalf of the corporations.
B. The Board of Directors of the Company (the "Board" or the "Board of
Directors") has determined that the Company should act to assure its directors
and officers of such protection.
C. It is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified.
D. Indemnitee is willing to serve, to continue to serve and to take on
additional service for or on behalf of the Company on the condition that
Indemnitee be so indemnified.
AGREEMENT
In consideration of the premises and the covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Affiliate" shall mean any corporation, partnership, joint
venture, trust or other enterprise in
<PAGE>
respect of which the Indemnitee is or was or will be serving as a director,
officer, advisory director, trustee, employee, agent, Board Committee member or
in other similar capacity (herein, "Officer or Director of the Company or of an
Affiliate") at the request of the Company, and including, but not limited to,
any employee benefit plan of the Company or any of the foregoing.
(b) "Disinterested Director" shall mean a director of the Company who
is not or was not a party to the Proceeding in respect of which indemnification
is being sought by Indemnitee.
(c) "Expenses" shall include all attorneys' fees and costs, retainers,
court costs, transcripts, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone and facsimile charges,
postage, delivery service fees and all other disbursements or expenses incurred
in connection with asserting or defending claims.
(d) "Independent Counsel" shall mean a law firm or lawyer that neither
presently nor in the past five years has been retained to represent: (i) the
Company or Indemnitee in any matter material to any such party or (ii) any other
party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any firm or person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing any of the
Company or Indemnitee in an action to determine Indemnitee's right to
indemnification under this Agreement. All Expenses of the Independent Counsel
incurred in connection with acting pursuant to this Agreement shall be borne by
the Company.
(e) "Losses" shall mean all losses, costs, claims, damages,
liabilities, judgments, fines, penalties and amounts paid in settlement in
connection with any Proceeding.
(f) "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding whether civil, criminal, administrative or investigative; provided,
however, that the term "Proceeding" shall include any action instituted by an
Indemnitee (other than an action to enforce indemnification rights under this
2
<PAGE>
Agreement) only if such action is authorized by the Board of Directors.
2. Service by Indemnitee. Indemnitee agrees to begin or continue to
serve the Company and/or its Affiliates as a director and/or officer.
Notwithstanding anything contained herein, this Agreement shall not create a
contract of employment between the Company or its Affiliates and Indemnitee, and
the termination of Indemnitee's relationship with the Company or an Affiliate by
either party hereto shall not be restricted by this Agreement.
3. Indemnification. The Company agrees to indemnify Indemnitee for, and
save, defend and hold Indemnitee harmless from and against, any Losses or
Expenses at any time incurred by or assessed against Indemnitee arising out of
or in connection with the service of Indemnitee as an Officer or Director of the
Company or of an Affiliate to the fullest extent permitted by the laws of the
State of Delaware in effect on the date hereof or as such laws may from time to
time hereafter be amended to increase the scope of such permitted
indemnification. Without diminishing the scope of the indemnification provided
by this Section 3, the rights of indemnification of Indemnitee provided
hereunder shall include but shall not be limited to those rights set forth
hereinafter.
4. Action or Proceeding Other Than an Action by or in the Right of the
Company. Indemnitee shall be entitled to the indemnification rights provided
herein if Indemnitee is a person who was or is made a party or is threatened to
be made a party to any pending, completed or threatened Proceeding, other than
an action by or in the right of the Company, by reason of (a) the fact that
Indemnitee is or was an Officer or Director of the Company or of an Affiliate or
(b) anything done or not done by Indemnitee in any such capacity. Pursuant to
this Section, Indemnitee shall be indemnified against Losses or Expenses
actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection with any Proceeding, if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company and, with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful.
5. Actions by or in the Right of the Company. Indemnitee shall be
entitled to the indemnification rights
3
<PAGE>
provided herein if Indemnitee is a person who was or is made a party or is
threatened to be made a party to any pending, completed or threatened Proceeding
brought by or in the right of the Company to procure a judgment in its favor by
reason of (a) the fact that Indemnitee is or was an Officer or Director of the
Company or of an Affiliate or (b) anything done or not done by Indemnitee in any
such capacity. Pursuant to this Section, Indemnitee shall be indemnified against
Losses or Expenses actually and reasonably incurred by Indemnitee or on
Indemnitee's behalf in connection with any Proceeding if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company. Notwithstanding the foregoing
provisions of this Section, no such indemnification shall be made in respect of
any claim, issue or matter as to which Delaware law expressly prohibits such
indemnification by reason of an adjudication of liability of Indemnitee to the
Company; provided, however, that in such event such indemnification shall
nevertheless be made by the Company to the extent that the Court of Chancery of
the State of Delaware or the court in which such action or suit was brought
shall determine equitable under the circumstances.
6. Indemnification for Losses and Expenses of Party Who is Wholly or
Partly Successful. Notwithstanding any provision of this Agreement, to the
extent that Indemnitee has been wholly successful on the merits or otherwise
absolved in any Proceeding on any claim, issue or matter, Indemnitee shall be
indemnified against all Losses or Expenses actually and reasonably incurred by
Indemnitee or on Indemnitee's behalf in connection therewith. If Indemnitee is
not wholly successful in such Proceeding but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or matters in such
Proceeding, the Company shall indemnify Indemnitee to the maximum extent
permitted by law, against all Losses and Expenses incurred by Indemnitee in
connection with each successfully resolved claim, issue or matter. In any review
or Proceeding to determine the extent of indemnification, the Company shall bear
the burden of proving any lack of success and which amounts sought in indemnity
are allocable to claims, issues or matters which were not successfully resolved.
For purposes of this Section and without limitation, the termination of any such
claim, issue or matter by dismissal with or without prejudice shall be deemed to
be a successful resolution as to such claim, issue or matter.
4
<PAGE>
7. Payment for Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of the
fact that Indemnitee is or was an Officer or Director of the Company or of an
Affiliate, a witness in any Proceeding, the Company agrees to pay to Indemnitee
all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee's
behalf in connection therewith.
8. Advancement of Expenses and Costs. All Expenses incurred by or on
behalf of Indemnitee (or reasonably expected by Indemnitee to be incurred by
Indemnitee within three months) in connection with any Proceeding shall be paid
by the Company in advance of the final disposition of such Proceeding within
twenty (20) days after the receipt by the Company of a statement or statements
from Indemnitee requesting from time to time such advance or advances, whether
or not a determination to indemnify has been made under Section 9. Indemnitee's
entitlement to such advancement of Expenses shall include those Expenses
incurred in connection with any Proceeding by Indemnitee seeking an adjudication
or award in arbitration pursuant to this Agreement. Such statement or statements
shall evidence such Expenses incurred (or reasonably expected to be incurred) by
Indemnitee in connection therewith and shall include or be accompanied by a
written undertaking by or on behalf of Indemnitee to repay such amount if it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
therefor pursuant to the terms of this Agreement.
9. Procedure for Determination of Entitlement to Indemnification. (a)
When seeking indemnification under this Agreement (which shall not include in
any case the right of Indemnitee to receive payments pursuant to Section 7 and
Section 8 hereof, which shall not be subject to this Section 9), Indemnitee
shall submit a written request for indemnification to the Company. Such request
shall include documentation or information which is reasonably necessary for the
Company to make a determination of Indemnitee's entitlement to indemnification
hereunder and which is reasonably available to Indemnitee. Determination of
Indemnitee's entitlement to indemnification shall be made promptly, but in no
event later than thirty (30) days after receipt by the Company of Indemnitee's
written request for indemnification. The Secretary of the Company shall,
promptly upon receipt of Indemnitee's request for
5
<PAGE>
indemnification, advise the Board that Indemnitee has made such request for
indemnification.
(b) The entitlement of Indemnitee to indemnification under this
Agreement in respect of any pending, contemplated or threatened Proceeding shall
be determined in the specific case by (i) the Board of Directors by a majority
vote of those directors who were not party to such Proceeding, whether or not
they constitute a quorum of the Board of Directors, or (ii) if such a quorum is
not obtainable, or if a quorum of disinterested directors so directs, by
Independent Counsel in a written opinion, or (iii) by the stockholders.
(c) In the event the determination of entitlement is to be made by
Independent Counsel, such Independent Counsel shall be selected by the Board and
approved by Indemnitee. Upon failure of the Board and the Board of Directors so
to select such Independent Counsel or upon failure of Indemnitee so to approve,
such Independent Counsel shall be selected by the President of the Association
of the Bar of the City of New York.
(d) If the determination made pursuant to Section 9(b) is that
Indemnitee is not entitled to indemnification to the full extent of Indemnitee's
request, Indemnitee shall have the right to seek entitlement to indemnification
in accordance with the procedures set forth in Section 10 hereof.
(e) If the person or persons empowered pursuant to Section 9(b) hereof
to make a determination with respect to entitlement to indemnification shall
have failed to make the requested determination within sixty (60) days after
receipt by the Company of such request, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be absolutely entitled to such indemnification, absent (i)
misrepresentation by Indemnitee of a material fact in the request for
indemnification or (ii) a final judicial determination that all or any part of
such indemnification is expressly prohibited by law.
(f) The termination of any Proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, adversely affect the rights of Indemnitee to indemnification hereunder
except as may be specifically provided herein, or
6
<PAGE>
create a presumption that Indemnitee did not act in good faith and in a manner
that Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company or create a presumption that (with respect to any
criminal action or Proceeding) Indemnitee had reasonable cause to believe that
Indemnitee's conduct was unlawful.
(g) For purposes of any determination of good faith hereunder,
Indemnitee shall be deemed to have acted in good faith if in taking such action
Indemnitee relied on the records or books of account of the Company or an
Affiliate, including financial statements, or on information supplied to
Indemnitee by the officers of the Company or an Affiliate in the course of their
duties, or on the advice of legal counsel for the Company or an Affiliate or on
information or records given or reports made to the Company or an Affiliate by
an independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Company or an Affiliate. The Company shall
have the burden of establishing the absence of good faith. The provisions of
this Section 9(g) shall not be deemed to be exclusive or to limit in any way the
other circumstances in which the Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Agreement.
(h) The knowledge and/or actions, or failure to act, of any director,
officer, agent or employee of the Company or an Affiliate shall not be imputed
to Indemnitee for purposes of determining the right to indemnification under
this Agreement.
10. Remedies in Cases of Determination not to Indemnify or to Advance
Expenses. (a) In the event that (i) a determination is made that Indemnitee is
not entitled to indemnification hereunder, (ii) advances are not made pursuant
to Section 8 hereof or (iii) payment has not been timely made following a
determination of entitlement to indemnification pursuant to Section 9 hereof,
Indemnitee shall be entitled to seek an adjudication in an appropriate court of
the State of Delaware or any other court of competent jurisdiction as to
Indemnitee's entitlement to such indemnification or advance.
(b) In the event a determination has been made in accordance with the
procedures set forth in Section 9 hereof, in whole or in part, that Indemnitee
is not entitled to indemnification, any judicial proceeding or arbitration
referred to in paragraph (a) of this Section 10 shall be de
7
<PAGE>
novo and Indemnitee shall not be prejudiced by reason of any such prior
determination that Indemnitee is not entitled to indemnification, and the
Company shall bear the burdens of proof specified in paragraphs 6 and 9 hereof
in such proceeding.
(c) If a determination is made or deemed to have been made pursuant to
the terms of Section 9 or 10 hereof that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration in the absence of (i) a misrepresentation of
a material fact by Indemnitee or (ii) a final judicial determination that all or
any part of such indemnification is expressly prohibited by law.
(d) The Company and Indemnitee agree that they shall be precluded from
asserting that the procedures and presumptions of this Agreement are not valid,
binding and enforceable. The Company and Indemnitee further agree to stipulate
in any such court that the Company and Indemnitee are bound by all of the
provisions of this Agreement and are precluded from making any assertion to the
contrary.
(e) To the extent deemed appropriate by the court, interest shall be
paid by the Company to Indemnitee at a reasonable interest rate for amounts
which the Company indemnifies or is obliged to indemnify the Indemnitee for the
period commencing with the date on which Indemnitee requested indemnification
(or reimbursement or advance of an Expense) and ending with the date on which
such payment is made to Indemnitee by the Company.
11. Expenses Incurred by Indemnitee to Enforce this Agreement. All
Expenses incurred by Indemnitee in connection with the preparation and
submission of Indemnitee's request for indemnification hereunder shall be borne
by the Company. In the event that Indemnitee is a party to or intervenes in any
proceeding in which the validity or enforceability of this Agreement is at issue
or seeks an adjudication to enforce Indemnitee's rights under, or to recover
damages for breach of, this Agreement, Indemnitee, if Indemnitee prevails in
whole in such action, shall be entitled to recover from the Company, and shall
be indemnified by the Company against, any Expenses incurred by Indemnitee. If
it is determined that Indemnitee is entitled to indemnification for part (but
not all) of the indemnification so requested, Expenses incurred in seeking
enforcement of such partial indemnification shall be
8
<PAGE>
reasonably prorated among the claims, issues or matters for which the Indemnitee
is entitled to indemnification and for claims, issues or matters for which the
Indemnitee is not so entitled.
12. Non-Exclusivity. The rights of indemnification and to receive
advances as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under or by reason
of applicable law, any certificate of incorporation or by-laws, any agreement,
any vote of stockholders or any resolution of directors or otherwise. To the
extent Indemnitee would be prejudiced thereby, no amendment, alteration,
rescission or replacement of this Agreement or any provision hereof shall be
effective as to Indemnitee with respect to any action taken or omitted by such
Indemnitee in Indemnitee's position with the Company or an Affiliate or any
other entity which Indemnitee is or was serving at the request of the Company
prior to such amendment, alteration, rescission or replacement.
13. Duration of Agreement. This Agreement shall apply to any claim
asserted and any Losses and Expenses incurred in connection with any claim
asserted on or after the effective date of this Agreement and shall continue
until and terminate upon the later of: (a) 10 years after Indemnitee has ceased
to occupy any of the positions or have any of the relationships described in
Sections 3, 4 or 5 of this Agreement; or (b) one year after the final
termination of all pending or threatened Proceedings of the kind described
herein with respect to Indemnitee. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's spouse, assigns, heirs, devisee, executors,
administrators or other legal representatives.
14. D&O Insurance. (a) From and after the time that the Corporation
shall have first issued shares of capital stock to the public pursuant to a
registration statement under the Securities Act of 1933, and so long as
Indemnitee shall continue to serve as an Officer or Director of the Company or
Affiliate and thereafter so long as Indemnitee shall be subject to any possible
claim or threatened, pending or completed Proceeding, whether civil, criminal or
investigative, by reason of the fact that Indemnitee was an Officer or Director
of the Company or Affiliate, the Company shall use its best efforts to maintain
in full force and effect (i) the directors' and
9
<PAGE>
officers' liability insurance issued by the insurer and having the policy amount
and deductible as deemed appropriate by the Board of Directors and (ii) any
replacement or substitute policies issued by one or more reputable insurers
providing in all respects coverage at least comparable to and in the same amount
as that currently provided under such existing policy (collectively, "D&O
Insurance").
(b) In all policies of D&O Insurance, Indemnitee shall be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits,
subject to the same limitations, as are accorded to the Company's directors or
officers most favorably insured by such policy.
(c) Notwithstanding anything to the contrary set forth in (a) above,
the Company shall have no obligation to maintain D&O Insurance if the Company
determines in good faith that such insurance is not reasonably available, the
premium cost for such insurance is disproportionate to the amount of coverage
provided or the coverage provided by such insurance is limited by exclusions so
as to provide an insufficient benefit.
15. Severability. Should any part, term or condition hereof be declared
illegal or unenforceable or in conflict with any other law, the validity of the
remaining portions or provisions of this Agreement shall not be affected
thereby, and the illegal or unenforceable portions of the Agreement shall be and
hereby are redrafted to conform with applicable law, while leaving the remaining
portions of this Agreement intact.
16. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
17. Headings. Section headings are for convenience only and do not
control or affect meaning or interpretation of any terms or provisions of this
Agreement.
18. Modification and Waiver. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by each of the
parties hereto.
10
<PAGE>
19. No Duplicative Payment. The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder if
and to the extent that Indemnitee has otherwise actually received such payment
(net of Expenses incurred in collecting such payment) under this Agreement, any
insurance policy, contract, agreement or otherwise.
20. Notices. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing (including telecopier or
similar writing) and shall be deemed to have been given at the time when mailed
in a registered or certified postpaid envelope in any general or branch office
of the United States Postal Service, or sent by Federal Express or other similar
overnight courier service, addressed to the address of the parties stated below
or to such changed address as such party may have fixed by notice or, if given
by telecopier, when such telecopy is transmitted and the appropriate answer back
is received.
(a) If to Indemnitee, to the address appearing on the signature page
hereof.
(b) If to the Company to:
Magellan International, Inc.
c/o PanAmSat Corporation
One Pickwick Plaza
Greenwich, Connecticut 06830
Attention: President
21. GOVERNING LAW. THE PARTIES AGREE THAT THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
22. Entire Agreement. Subject to the provisions of Section 12 hereof,
this Agreement constitutes the entire understanding between the parties and
supersedes all proposals, commitments, writings, negotiations and
understandings, oral and written, and all other communications between the
parties relating to the subject matter of this Agreement. This Agreement may not
be amended or otherwise modified except in writing duly executed by all
11
<PAGE>
of the parties. A waiver by any party of any breach or violation of this
Agreement shall not be deemed or construed as a waiver of any subsequent breach
or violation thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MAGELLAN INTERNATIONAL, INC.
By __________________________
Name:
Title:
INDEMNITEE:
_____________________________
Name:
Title:
Address:
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the PanAmSat
Form 10-Q for the quarterly period ended June 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 335,411
<SECURITIES> 330,000
<RECEIVABLES> 58,681
<ALLOWANCES> (1,024)
<INVENTORY> 0
<CURRENT-ASSETS> 485,712
<PP&E> 1,601,750
<DEPRECIATION> (531,115)
<TOTAL-ASSETS> 6,144,517
<CURRENT-LIABILITIES> 180,197
<BONDS> 633,250
421,392
0
<COMMON> 1,491
<OTHER-SE> 2,507,302
<TOTAL-LIABILITY-AND-EQUITY> 6,144,517
<SALES> 134,192
<TOTAL-REVENUES> 134,192
<CGS> 0
<TOTAL-COSTS> 72,094
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (14,909)
<INCOME-PRETAX> 46,342
<INCOME-TAX> 22,625
<INCOME-CONTINUING> 23,717
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,932
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
