Telstar 5 Transponder Sublease - Fifth Dimension Communications Holdings Inc. and Colorado Satellite Broadcasting Inc.
TRANSPONDER SUBLEASE AGREEMENT BETWEEN Fifth Dimension Communications Holdings, Inc. AND Colorado Satellite Broadcasting, Inc. CONCERNING SKYNET TRANSPONDER SERVICE ON TELSTAR 5 THIS SUBLEASE is made on this _______ day of_______________ 1997 by and between Fifth Dimension Communications Holdings, Inc., a corporation organized and existing under the laws of the State of Delaware and having its primary Canadian place of business at 2500 Don Reid Drive, Ottawa, Ontario K1H 8P5 (hereinafter referred to as "5D") and Colorado Satellite Broadcasting, Inc., a corporation organized and existing under the laws of Colorado and having its primary place of business at 1050 Walnut Street, Suite 301, Boulder, Colorado 80302 (hereinafter referred to as "CSB"). RECITALS: A. LORAL SKYNET, (hereinafter referred to as "SKYNET") operates a domestic satellite system and offers services on such system in accordance with FCC Tariff No. 7 ("Tariff") filed with the Federal Communications Commission ("FCC"). B. Fifth Dimension Communications (Barbados) Inc. entered into an Agreement with SKYNET dated July 1, 1997 (hereinafter "Master Lease"), for SKYNET satellite service and is entitled to transponder service consisting of service on three (3) Preemptible C-Band 36MHz 20 Watt transponders on Telstar 5 for service which began on In-Service date of Telstar 5 and terminates on the five year anniversary of such In-Service date. C. Fifth Dimension Communications (Barbados) has assigned its rights and interest in the Master Lease to 5D. D. 5D wishes to sublease to CSB and CSB wishes to sublease from 5D all rights and obligations 5D has in the Master Lease dated July 1, 1997. ACCORDINGLY, 5D, in consideration of the payment by CSB to SKYNET for the satellite and transponder services and such other adequate consideration which is hereby acknowledge, 5D agrees to sublease its rights under the Master Lease as follows: 1 <PAGE> AGREEMENT 1. AGREEMENT. 5D subleases its rights in the SKYNET satellite and Transponder Service as granted to 5D pursuant to the Master Lease and according to the terms and conditions set forth therein to CSB. The provisions of the Master Lease, all amendments thereto and all applicable FCC Tariffs filed with the Federal Communications Commission are incorporated into this Agreement between 5D, as sublessor, and CSB, as sublessee as though 5D was SKYNET and as though CSB was lessee under the Master Lease. 5D shall not be liable for breaches of the Master Lease by SKYNET, subject to paragraph 6 herein. 2. TERM. The term of this sublease shall begin on the closing date of the Asset Purchase Agreement dated September 5, 1997 between New Frontier Media, Inc., and Colorado Satellite Broadcasting, Inc., as first parties, and Fifth Dimension Communications (Barbados) Inc. and Merlin Sierra, Inc., as second parties, ("Asset Purchase Agreement") and shall end on December 31, 1999, unless renewed at CSB's option according to the terms and conditions of the Master Lease. 3. PAYMENT. CSB shall pay for the Transponder Service in accordance with the following: Quantity Service Satellite Term Monthly Rate -------------------------------------------------------------------------------- 1 C-Band 36 MHz Telstar 5 I.S. for 5 Years $125,000.00 Preemptible transponder Payment under this Agreement shall be made, according to the terms and conditions associated with SKYNET's billing for the services, directly to SKYNET which shall receive payment at least five (5)days before the beginning of each month. Confirmation of such payment shall be made to 5D simultaneously with the payment to SKYNET at the following address: Fifth Dimension Communications Holdings, Inc. Stuart K. Duncan - President 2500 Don Reid Drive Ottawa, Ontario K1H 8P5 4. DEPOSIT. CSB shall provide to 5D no later than the closing date of the Asset Purchase Agreement a letter of credit on terms reasonably acceptable to 5D in the amount of $USD375,000.00 to be used and applied as a security in the event of a default by CSB under any of the terms and conditions of this Agreement. 5. LIABILITY OF 5D. 5D's liability shall be limited to the extent it acts as sublessor of the Master Lease. 5D shall not be liable for breaches of the Master Lease by SKYNET, subject to paragraph 6 herein. 2 <PAGE> 6. AUTHORITY TO PROSECUTE CLAIMS. For so long as this Agreement shall remain in effect, 5D hereby appoints CSB as attorney-in-fact of 5D for the purpose of pursuing and prosecuting any claim deemed by CSB to be worthy of pursuit or prosecution against SKYNET for any breach or potential breach of the Master Lease or other conduct by SKYNET which, in the opinion of CSB adversely or may adversely affect the interests of CSB hereunder. CSB, as attorney-in-fact may prosecute or bring such action before any court, agency, arbitral body or other entity which may have jurisdiction over such matter, for and in the name of 5D, and such power, being coupled with an interest, is irrevocable. Notice of any such prosecution or action by CSB must be given to 5D pursuant to section 10 herein. CSB agrees to indemnify and hold harmless 5D for any and all costs and attorneys fees directly incurred by or assessed against 5D as a result of such prosecution or action brought by CSB. 5D acknowledges that any breach or the Master Lease by SKYNET or other conduct by SKYNET which adversely or may adversely affect the interests of CSB under this Agreement, would cause 5D direct and actual damages or losses under the terms of the Master Lease insofar as and to the extent CSB would suffer or incur direct and/or actual damages as a result of said breach or adverse conduct. The payment, settlement or other recovery by CSB as attorney-in fact of 5D shall inure to the benefit of CSB. 7. REPRESENTATIONS OF 5D. 5D represents and warrants as follows: a. That it is not currently in default of nor is it aware of any event that with the notice or lapse of time, or both, would constitute a default of any of its obligations, including the obligation of payment, under the Master Lease; b. That it will cooperate and exercise best efforts to obtain the consent, approval and recognition of this Agreement by SKYNET, whether or not required pursuant to the terms of the Master Lease or applicable Tariffs, which consent, approval and recognition shall include consent and approval of direct payment by CSB to SKYNET pursuant to section 3 herein and deposit of the security deposit by CSB to SKYNET pursuant to section 4 herein. c. That 5D does not currently have any other transponder leases or other obligations with SKYNET other than those leases being subleased to CSB and will not obtain any other transponder leases or obligations with SKYNET or a third party which will in any way encumbers or would encumber or affect the rights and obligations now existing under the Master Lease or the rights of CSB under this Agreement. d. That SKYNET has consented and approved of the assignment of the Master Lease from Fifth Dimension Communications (Barbados) Inc. to 5D. 8. RENEWAL. To the extent available, CSB shall have any and all rights and options to renew this Agreement as 5D has under the terms of the Master Lease. 3 <PAGE> 9. MASTER LEASE. This Agreement and sublease is subject to the Master Lease, as that term is defined in the recitals, and all amendments thereto. The provisions of the Master Lease are applicable to this sublease as though SKYNET, as lessor under the Master Lease, were the sublessor under this Agreement and as though 5D as lessee under the Master Lease was sublessee CSB under this Agreement. 5D shall not be liable for breaches of the Master Lease by SKYNET, subject to paragraph 6 herein. CSB acknowledges that it has received a copy of the Master Lease and represents that it will not cause or allow to be caused any default under the Master Lease and that it will indemnify 5D against any loss, liability, and expenses (including reasonable attorneys' fees and costs) arising out of any default under the Master Lease caused by CSB, and 5D will indeMnify CSB against any loss, liability, and expenses (including reasonable attorneys' fees and costs) arising out of any default under the Master Lease caused by 5D. 10. NOTICES. All notices, demands, requests, or other communications which may be or are required to be given, served, or sent by one party to the other party pursuant to this Agreement shall be in writing and shall be delivered by hand or mailed first-class, registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to 5D: Fifth Dimension Communications Holdings, Inc. Stuart K. Duncan - President 2500 Don Ried Drive Ottawa, Ontario K1H 8P5 If to CSB: Colorado Satellite Broadcasting, Inc. Mark R. Kreloff- President 1050 Walnut Street, Suite 301 Boulder, CO 80302 11. INDEPENDENT CONTRACTOR. Except to the limited extent allowed under section 6, nothing herein contained shall create any association, partnership, joint venture, the relationship of principal and agent, or the relationship of employer and employee between the parties hereto, it being understood that 5D shall perform and provide as sublessor, all services hereunder as an independent contractor. 12. GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the State of Colorado. 13. HEADINGS. The headings used throughout this Agreement are for conveniences only and are not a part of this Agreement and shall have no effect upon the construction and interpretation of this Agreement. 14. WAIVER. A waiver by either party of any of the terms and conditions of this Agreement or any term and condition of the Master Lease in any instance shall not be 4 <PAGE> deemed or construed to be a waiver of such term and condition for the future, or any subsequent breach thereof. To the extent any waiver by 5D of any term and condition of the Master Lease will or may adversely affect CSB's rights hereunder, 5D must first obtain the written consent of CSB before any such waiver. 15. SEVERALBILTY. If any provision of this Agreement, as applied to either party or to any circumstance, shall be adjudged to be void or unenforceable by any court, arbitral body, agency or other entity having jurisdiction, the same shall in no way affect any other provision in any other circumstances. 16. ASSIGNMENT AND TRANSFER. Either party may assign and/or transfer its rights, duties and obligations under this Agreement in its entirety: (a) in connection with the sale of all or substantially all of its assets; (b) to its parent corporation, or (c) to any wholly owned affiliate or subsidiary of the respective assignor, PROVIDED, however, that any such assignment or transfer is in accordance with the terms and conditions of Master Lease. IN WITNESS WHEREOF, the parties hereto have entered into this Agreement and sublease as of the day and year above written. Fifth Dimension Communications Holdings, Inc. By: Title: Colorado Satellite Broadcasting, Inc. By: Title: