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Sample Business ContractsHome: Sample Business Contracts:
CONTRACT NO. L0634
THIRD AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT
FOR IN-ORBIT DELIVERY
BY AND BETWEEN
XM SATELLITE RADIO INC.
AND
BOEING SATELLITE SYSTEMS INTERNATIONAL, INC.
MAY 15, 2001
<Page>
CONFIDENTIAL
THIRD AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT
FOR IN-ORBIT DELIVERY
BY AND BETWEEN
XM SATELLITE RADIO INC.
AND
BOEING SATELLITE SYSTEMS INTERNATIONAL, INC.
PROPRIETARY NOTICE
THE ATTACHED CONTRACT AND THE INFORMATION CONTAINED THEREIN ARE CONFIDENTIAL
AND PROPRIETARY TO XM SATELLITE RADIO INC. AND BOEING SATELLITE SYSTEMS
INTERNATIONAL, INC., AND SHALL NOT BE PUBLISHED OR DISCLOSED TO ANY THIRD PARTY
WITHOUT THE EXPRESS WRITTEN CONSENT OF A DULY AUTHORIZED REPRESENTATIVE OF XM
SATELLITE RADIO INC. AND BOEING SATELLITE SYSTEMS INTERNATIONAL, INC.
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TABLE OF CONTENTS
THIRD AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY
TERMS AND CONDITIONS
EXHIBIT A - SPACECRAFT PERFORMANCE SPECIFICIATIONS
EXHIBIT B - STATEMENT OF WORK (FLOW)
EXHIBIT C - PRODUCT ASSURANCE PLAN
EXHIBIT D - TEST PLAN REQUIREMENTS [ON GROUND AND IN-ORBIT]
EXHIBIT E - RADIATION ENVIRONMENT SPECIFICATIONS
EXHIBIT F - LONG-LEAD ACTIVITIES AND ITEMS
EXHIBIT G - PAYMENT PLAN AND TERMINATION LIABILITY AMOUNTS
EXHIBIT G-1 - PAYMENT PLAN FOR INTEREST ON IN-ORBIT
INCENTIVE AMOUNTS
EXHIBIT G-2 - GROUND SPARE SATELLITE PAYMENT PLAN,
TERMINATION LIABLITY AMOUNTS AND INCENTIVE AMOUNTS
EXHIBIT G-3 - 4TH AND 5TH OPTIONAL SATELLITES PAYMENT PLAN
AND TERMINATION LIABILITY AMOUNTS
EXHIBIT H - INITIAL SATELLITE OPERATIONS PHASE AND CRITERIA FOR
FINAL HANDOVER STATEMENT OF WORK (SOW)
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THIRD AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY
BY AND BETWEEN
XM SATELLITE RADIO INC.
AND
BOEING SATELLITE SYSTEMS INTERNATIONAL, INC.
TERMS AND CONDITIONS
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ATTACHMENTS, ANNEXES AND SCHEDULES
ATTACHMENTS AND ANNEXES
Attachment A Form of Request for Payment
Annex I to Attachment A Form of Contractor Certificate
Schedule I to Annex I to Attachment A List of Exceptions
Schedule II to Annex I to Attachment A List of Disputes
Attachment B Key Personnel
SCHEDULES
Schedule 19.3 Capitalization and Subsidiaries
Schedule 19.4 Litigation
Schedule 19.5 Title to Properties and Assets
Schedule 19.6 Financial Statements
Schedule 19.7 Certain Actions
Schedule 19.8 Disclosed Liabilities
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***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
TABLE OF CONTENTS
TERMS AND CONDITIONS
<Table>
<S> <C>
1. DEFINITIONS AND CONSTRUCTION..................................................3
1.1 CERTAIN DEFINITIONS........................................................3
1.2 OTHER TERMS...............................................................14
1.3 INTEGRATION AND CONSTRUCTION..............................................14
1.4 HEADINGS; NUMBER AND GENDER...............................................15
2. SCOPE OF WORK................................................................16
2.1 GENERAL...................................................................16
2.2 LONG-LEAD ACTIVITIES AND ITEMS............................................16
3. EFFECTIVE DATE OF CONTRACT (EDC); [***]......................................18
3.1 EFFECTIVE DATE OF CONTRACT (EDC)..........................................18
3.2 CONTRACTOR WORK COMMITMENT................................................18
3.3 [***]; EXPIRATION THEREOF; REMEDIES.......................................19
4. CONTRACT PRICE...............................................................21
4.1 CONTRACT PRICE............................................................21
4.2 CHANGES IN CONTRACT PRICE.................................................22
4.3 TAXES AND DUTIES..........................................................22
5. PAYMENT......................................................................23
5.1 REQUESTS FOR PAYMENT AND INVOICES.........................................23
5.2 PAYMENT...................................................................24
5.3 DISPUTED AMOUNTS..........................................................25
5.4 SET OFF...................................................................27
5.5 LATE PAYMENT..............................................................27
5.6 PAYMENTS CURRENT AT LAUNCH................................................27
5.7 SECURITY INTEREST.........................................................27
6. ACCESS TO WORK...............................................................30
6.1 FACILITIES................................................................30
6.2 OFFICE SPACE..............................................................30
6.3 SECURITY..................................................................30
6.4 DATA AND DOCUMENTATION....................................................31
6.5 ELECTRONIC ACCESS.........................................................31
6.6 MEETINGS AND REVIEWS......................................................32
6.7 LAWS......................................................................32
6.8 NO RELIEF.................................................................32
6.9 MAJOR SUBCONTRACTS........................................................33
6.10 CONSULTANT ACCESS.........................................................33
7. DELIVERY AND DELIVERY INCENTIVES.............................................34
8. INSPECTION AND FINAL ACCEPTANCE..............................................37
8.1 PRELIMINARY INSPECTIONS...................................................37
8.2 SHIPMENT READINESS REVIEW.................................................37
8.3 FLIGHT READINESS REVIEW...................................................39
8.4 LAUNCH READINESS REVIEW...................................................40
8.5 IN-ORBIT TESTING AND FINAL ACCEPTANCE OF SATELLITES.......................40
8.6 FINAL ACCEPTANCE OF GROUND SPARE SATELLITE................................41
8.7 SATELLITE CONTROL SOFTWARE AND GROUND ENCRYPTORS..........................41
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8.8 DYNAMIC SPACECRAFT SIMULATOR AND COMMUNICATIONS PAYLOAD SIMULATOR.........42
8.9 DATA AND DOCUMENTATION....................................................42
8.10 LAUNCH AND EARLY OPERATIONS (LEOP)........................................43
8.11 RESERVED..................................................................43
8.12 TRAINING..................................................................43
9. TITLE AND RISK OF LOSS.......................................................44
9.1 TRANSFER OF TITLE.........................................................44
9.2 TRANSFER OF RISK OF LOSS..................................................44
10. LIQUIDATED DAMAGES FOR LATE DELIVERY.........................................45
10.1 LIQUIDATED DAMAGES.....................................................45
10.2 REMEDY.................................................................46
10.3 TERMINATION FOR UNEXCUSED DELAY........................................47
11. EXCUSABLE DELAY..............................................................48
11.1 EXCUSABLE DELAY DEFINED................................................48
11.2 EQUITABLE ADJUSTMENTS..................................................48
11.3 MAXIMUM EXCUSABLE DELAY; TERMINATION...................................49
12. IN-ORBIT PERFORMANCE INCENTIVE PAYMENTS......................................50
12.1 TOTAL AMOUNT AT RISK...................................................50
12.2 IN-ORBIT PERFORMANCE INCENTIVES........................................50
12.3 CALCULATION AND EARNING OF INCENTIVE AMOUNTS...........................50
12.4 DISPUTED PERFORMANCE...................................................52
12.5 ROLL-OVER OF INCENTIVE AMOUNTS.........................................52
12.6 PAYMENT AND INTEREST...................................................53
12.7 INTEREST ON ROLL-OVER INCENTIVE AMOUNTS................................54
12.8 SECURITY FOR PERFORMANCE INCENTIVE PAYMENTS............................55
12.9 EXCLUSIVE REMEDY.......................................................56
13. CORRECTIVE MEASURES IN UNLAUNCHED SATELLITES AND OTHER DELIVERABLE ITEMS.....57
13.1 NOTICE OF DEFECTS......................................................57
13.2 DUTY TO CORRECT........................................................57
14. CHANGES IN SCOPE OF WORK.....................................................59
14.1 CHANGES REQUESTED BY CUSTOMER..........................................59
14.2 CHANGES REQUESTED BY CONTRACTOR........................................59
14.3 PRICING OF CHANGES.....................................................60
14.4 STORAGE................................................................60
15. PERMITS AND LICENSES; COMPLIANCE WITH LAWS...................................63
15.1 UNITED STATES PERMITS, LICENSES, AND LAWS..............................63
15.2 NON-UNITED STATES PERMITS, LICENSES, AND LAWS..........................63
15.3 REVIEW OF APPLICATIONS.................................................64
15.4 CONTRACTOR VIOLATION OF LAW............................................64
16. SUBCONTRACTS.................................................................65
16.1 MAJOR SUBCONTRACTS.....................................................65
16.2 SELECTION OR REPLACEMENT OF MAJOR SUBCONTRACTORS.......................65
16.3 NO PRIVITY OF CONTRACT.................................................65
16.4 SUBCONTRACTOR RELATIONS................................................65
17. PERSONNEL AND KEY PERSONNEL..................................................67
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17.1 PERSONNEL QUALIFICATIONS...............................................67
17.2 KEY PERSONNEL POSITIONS................................................67
17.3 ASSIGNMENT OF KEY PERSONNEL............................................67
18. CONTRACTOR'S REPRESENTATIONS, COVENANTS, AND WARRANTIES......................69
18.1 ORGANIZATION; GOOD STANDING AND QUALIFICATION..........................69
18.2 AUTHORIZATION..........................................................69
18.3 WARRANTIES FOR DELIVERABLE ITEMS.......................................69
19. CUSTOMER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.........................73
19.1 ORGANIZATION; GOOD STANDING AND QUALIFICATION..........................73
19.2 AUTHORIZATION..........................................................73
19.3 CAPITALIZATION AND SUBSIDIARIES........................................73
19.4 LITIGATION.............................................................73
19.5 TITLE TO PROPERTIES AND ASSETS.........................................74
19.6 FINANCIAL STATEMENTS...................................................74
19.7 CERTAIN ACTIONS........................................................74
19.8 UNDISCLOSED LIABILITIES................................................74
19.9 COMPLIANCE WITH OTHER INSTRUMENTS......................................75
19.10 CUSTOMER'S FINANCIAL STRENGTH..........................................75
19.11 CROSS-DEFAULTS.........................................................75
19.12 CODE...................................................................75
19.13 INTELLECTUAL PROPERTY..................................................76
19.14 OTHER CONTRACTS........................................................76
19.15 NON-MISLEADING STATEMENTS..............................................76
19.16 CONTROL OF CUSTOMER....................................................76
19.17 CUSTOMER FINANCIAL COVENANT............................................76
20. INTELLECTUAL PROPERTY RIGHTS.................................................77
20.1 OWNERSHIP OF IP AND IP RIGHTS..........................................77
20.2 LICENSE RIGHTS.........................................................77
20.3 JOINT PROGRAM INVENTIONS...............................................78
20.4 SURVIVAL OF INTELLECTUAL PROPERTY RIGHTS...............................79
21. INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION...........................80
21.1 CONTRACTOR INTELLECTUAL PROPERTY INDEMNIFICATION.......................80
21.2 CUSTOMER INTELLECTUAL PROPERTY INDEMNIFICATION.........................80
21.3 TOTAL LIABILITY........................................................81
22. CONFIDENTIAL INFORMATION.....................................................82
22.1 CONFIDENTIALITY OBLIGATIONS............................................82
22.2 EXCEPTIONS.............................................................82
22.3 NO LICENSE.............................................................83
22.4 RETURN OF CONFIDENTIAL INFORMATION.....................................83
22.5 INCONSISTENT LEGENDS...................................................83
22.6 SURVIVAL OF CONFIDENTIALITY OBLIGATIONS................................83
23. NON-COMPETITION OBLIGATION...................................................84
24. INDEMNIFICATION..............................................................85
24.1 CONTRACTOR'S INDEMNIFICATION...........................................85
24.2 CUSTOMER'S INDEMNIFICATION.............................................85
24.3 CROSS-INDEMNIFICATION FOR INTER-PARTY WAIVER OF LIABILITY..............86
24.4 INDEMNIFICATION PROCEDURES.............................................86
24.5 WAIVER OF SUBROGATION..................................................87
24.6 SURVIVAL OF INDEMNIFICATIONS...........................................87
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25. INSURANCE....................................................................88
25.1 GENERAL OBLIGATIONS....................................................88
25.2 LAUNCH INSURANCE.......................................................88
25.3 PREPARATION OF CLAIMS..................................................89
26. LIMITATIONS OF LIABILITY.....................................................90
27. DISPUTE RESOLUTION...........................................................92
27.1 INFORMAL DISPUTE RESOLUTION............................................92
27.2 ARBITRATION............................................................92
27.3 LITIGATION.............................................................94
28. LAUNCH SERVICES..............................................................96
29. CUSTOMER'S RESPONSIBILITIES.................................................101
30. OPTIONS.....................................................................103
30.1 OPTIONS GRANTED.......................................................103
30.2 OPTION TO DELAY FREQUENCY SPECIFICATION BEYOND TWO (2) MONTHS.........103
30.3 GROUND SPARE SATELLITE................................................103
30.4 LAUNCH CAMPAIGN AND LEOP SERVICES FOR GROUND SPARE SATELLITE AND/OR
4TH AND 5TH OPTIONAL SATELLITES.......................................103
30.5 4TH AND 5TH OPTIONAL SATELLITES.......................................104
30.6 [RESERVED]............................................................105
30.7 REFLECTORS FOR THE GROUND SPARE SATELLITE.............................105
30.8 OPTIONAL LAUNCH VEHICLES..............................................105
30.9 CONTRACT ADJUSTMENTS..................................................106
31. FAILURE TO MAKE ADEQUATE PROGRESS...........................................107
32. TERMINATION.................................................................108
32.1 TERMINATION FOR CUSTOMER'S CONVENIENCE................................108
32.2 TERMINATION FOR CONTRACTOR'S DEFAULT..................................110
32.3 TERMINATION FOR CUSTOMER'S DEFAULT....................................112
32.4 TERMINATION FOR EXCUSABLE DELAY.......................................115
32.5 TIME OF THE ESSENCE...................................................116
33. INTER-PARTY WAIVER OF LIABILITY.............................................117
34. GENERAL.....................................................................118
34.1 ASSIGNMENT............................................................118
34.2 ENTIRE AGREEMENT......................................................118
34.3 AMENDMENTS............................................................119
34.4 WAIVER OF BREACH OF CONTRACT..........................................119
34.5 SEVERABILITY..........................................................119
34.6 APPLICABLE LAW........................................................119
34.7 NOTICES...............................................................119
34.8 PARTIES NOT AGENTS....................................................120
34.9 RELEASE OF INFORMATION................................................120
34.10 CALCULATION OF INTEREST...............................................121
34.11 SURVIVAL..............................................................121
34.12 NO THIRD-PARTY BENEFICIARIES..........................................122
34.13 CONSENTS AND APPROVALS................................................122
34.14 LENDER REQUIREMENTS...................................................122
34.15 COVENANT OF GOOD FAITH................................................122
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34.16 COUNTERPARTS..........................................................123
35. OTHER BUSINESS..............................................................124
</Table>
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THIRD AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY
THIS THIRD AMENDED AND RESTATED SATELLITE PURCHASE CONTRACT (this
"Contract") is made and entered into as of the 15th day of May 2001, by and
between XM SATELLITE RADIO INC., a Delaware corporation with its principal
offices located at 1500 Eckington Place, NE, Washington, D.C. 20002 (formerly
named American Mobile Radio Corporation and hereinafter referred to as
"Customer"), and BOEING SATELLITE SYSTEMS INTERNATIONAL, INC., a Delaware
corporation with its principal offices located at 2260 E. Imperial Way, El
Segundo, California 90245, U.S.A. (formerly named Hughes Space and
Communications International, Inc. and hereinafter "Contractor"). As used in
this Contract, "Party" means either Customer or Contractor, as appropriate, and
"Parties" means Customer and Contractor.
WHEREAS, Customer is implementing a Digital Audio Radio Satellite
("DARS") system designed to provide digital audio radio services to the
continental United States; AND
WHEREAS, Customer anticipates providing the business referred to above
through two (2) geostationary satellites; AND
WHEREAS, Contractor is a space technology company that designs,
manufactures, and integrates a range of space products, including satellites and
facilities for managing and controlling satellites; AND
WHEREAS, the Parties have reached agreement on the terms and conditions
of procurement by Customer from Contractor of two Boeing 702 Satellites, to be
delivered in-orbit, and related items, services and activities, including
satellite control center equipment and software, launch services, and long-lead
items for a Ground Spare Satellite, and options to purchase other additional
equipment and services, including additional satellite(s), as set forth and
further defined in this Contract; AND
WHEREAS, Customer and Contractor entered into a Satellite Purchase
Contract for In-Orbit Delivery dated March 20, 1998 (the "Original Satellite
Purchase Contract"), as amended by Amendment No. 1 dated May 6, 1998 and
Amendment No. 2 dated June 5, 1998, and as amended and restated by the Amended
and Restated Satellite Purchase Contract dated June 17, 1999 (the "First Amended
and Restated Satellite Purchase Contract"); AND
WHEREAS, Customer and Contractor entered into the Second Amended and
Restated Satellite Purchase Contract dated July 21, 1999 (the "Second Amended
and Restated Satellite Purchase Contract"), as amended by Amendment No. 1 dated
January 17, 2001; AND
WHEREAS, Contractor officially changed its name from Hughes Space and
Communications International, Inc. to Boeing Satellite Systems International,
Inc. on October 6, 2000, AND
WHEREAS, the Parties have reached agreement on additional changes to
the Second
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Amended and Restated Satellite Purchase Contract; AND
WHEREAS, this document amends and restates the Second Amended and
Restated Satellite Purchase Contract and shall be the sole agreement between the
Parties as to the Work to be performed hereunder by Contractor.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and intending to be legally bound hereby, the Parties agree as
follows:
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1. DEFINITIONS AND CONSTRUCTION
1.1 CERTAIN DEFINITIONS.
In this Contract, the following terms shall have the meaning stated
hereunder:
(a) "AFFILIATE" means, with respect to an entity, any other entity
Controlling or Controlled by or under common Control with such entity.
(b) "AMENDMENT TO THIS CONTRACT" OR "AMENDMENT" means a written
agreement modifying the terms of this Contract in accordance with Article 34.3
(Amendments).
(c) "APPROVAL" means written approval. This term is as defined, whether
or not capitalized in this Contract.
(d) "ARP" or "AFTER RECEIPT OF PAYMENT" means July 7, 1999, the date
upon which Contractor received Program Calendar Payment No. 1 in the amount of
Sixty-Eight Million Dollars ($68,000,000).
(e) "ASSOCIATES" means, with respect to an entity, its directors,
officers, employees agents, consultants, and assigns.
(f) "AVAILABLE FOR SHIPMENT" means that a Spacecraft has successfully
passed all in-plant acceptance tests, has successfully undergone a Shipment
Readiness Review and has been declared ready to be shipped to the Designated
Launch Site.
(g) "BACKGROUND INTELLECTUAL PROPERTY" means Intellectual Property
first made, developed, or created prior to the negotiation or performance of
this Contract and necessary to the use of any Deliverable Item.
(h) "BACK-UP SATELLITE CONTROL CENTER" means Customer's back-up
satellite control center located at 1500 Eckington Place, NE, Washington, DC
20002.
(i) "BUSINESS DAY" means any day other than the following: a Saturday,
Sunday, and any other day on which national banks are authorized to be closed in
New York City, New York.
(j) "CALENDAR DAY" means any day.
(k) "CALENDAR PAYMENT" means any of those payments listed as specific
calendar payments in Exhibit G (Payment Plan and Termination Liability Amounts).
(l) "COMMUNICATIONS PAYLOAD SIMULATOR" means the equipment, software,
and interfaces required to simulate a single Time Division Multiplexed (TDM)
chain, pursuant to the requirements of Exhibit B (SOW).
(m) "CONDUCT SPACECRAFT CRITICAL DESIGN REVIEW (SCDR)" means that ten
(10) Business Days prior to the date Contractor is ready to perform the SCDR,
Contractor shall
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***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
provide to Customer (i) written notice that Contractor has completed all
necessary activities in order to proceed to SCDR, and (ii) the Design Review
Package, as further described in Exhibit B (SOW). Customer shall then have
five (5) Business Days upon receipt of such notice and Design Review Package
to review same and provide specific comments to Contractor. At the Spacecraft
Critical Design Review meeting, Contractor shall (i) identify, compile, and
maintain a uniform program listing of all action items through closure,
including identification of new items to be developed or items to be modified
in order to meet the requirements of this Contract, (ii) establish detailed
action plans to address and carry out all action items identified, including
timetables for performance and identification of responsible personnel, and
(iii) prepare and distribute SCDR minutes and action item assignments, all of
which demonstrate that each Spacecraft shall be Available for Shipment to the
Designated Launch Site no later than [***] (with respect to the first
Spacecraft) and [***] (with respect to the second Spacecraft).
(n) "CONDUCT SPACECRAFT PRELIMINARY DESIGN REVIEW (SPDR)" means that
ten (10) Business Days prior to the date Contractor is ready to perform the
SPDR, Contractor shall provide to Customer (i) written notice that Contractor
has completed all necessary activities in order to proceed to SPDR and (ii)
the Design Review Package, as further described in Exhibit B (SOW). Customer
shall then have five (5) Business Days upon receipt of such notice and Design
Review Package, to review same and provide specific comments to Contractor.
At the Spacecraft Preliminary Design Review meeting, Contractor shall (i)
identify, compile, and maintain a uniform program listing of all action items
through closure, including identification of new items to be developed or
items to be modified in order to meet the requirements of this Contract, (ii)
establish detailed action plans to address and carry out all action items
identified, including timetables for performance and identification of
responsible personnel, and (iii) prepare and distribute SPDR minutes and
action item assignments, all of which demonstrate that each Spacecraft shall
be Available for Shipment to the Designated Launch Site at no later than [***]
(with respect to the first Spacecraft) and [***] (with respect to the second
Spacecraft).
(o) "CONFIDENTIAL INFORMATION" means all information, of any nature and
in any form, whether written, oral or recorded or transmitted electronically or
by tape or other similar manner, regarding the business, finances, operations,
prospects, plans, or affairs of the Furnishing Party (including its Affiliates,
Subcontractors, or Consultants), and all data, processes, materials, and
software in source code and object code form, related documentation, and other
technical data that is confidential and embodies trade secrets and other
proprietary information of the Furnishing Party, which information is designated
in writing by the Furnishing Party as confidential, provided, however, that if
disclosed orally, such information must be confirmed and designated in writing
in summary form as confidential within thirty (30) Calendar Days of the time at
which oral disclosure took place. Confidential Information shall also include
Data and Documentation.
(p) "CONSTRUCTIVE TOTAL LOSS" and "TOTAL LOSS" shall have the meaning
ascribed to them in the policy for Launch Insurance.
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***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
(q) "CONSULTANT" means a person or organization retained by Customer to
provide Customer with technical advice and related services and identified by
Customer to Contractor as such in accordance with Article 6 (Access to Work).
(r) "CONTRACT" OR "THIRD AMENDED AND RESTATED SATELLITE PURCHASE
CONTRACT" means the written instrument herein dated the day and year first
written above, including any Amendments made pursuant to Article 34.3
(Amendments), embodying the agreement between Contractor and Customer and
including the Terms and Conditions, Exhibits (and Appendices thereto),
Attachments, Annexes, and Schedules annexed hereto and made a part of this
Contract.
(s) "CONTRACT PRICE" means the firm fixed price set forth in Article
4.1 (Contract Price).
(t) "CONTROL" and its derivatives mean, with respect to an entity, the
legal, beneficial, or equitable ownership, directly or indirectly of fifty
percent (50%) or more of the capital stock (or other ownership interest if not a
corporation) of such entity ordinarily having voting rights or the power to
direct the management policies of such entity, whether through the ownership of
voting stock, by contract, or otherwise.
(u) "CORRECTION PLAN" means a plan submitted by Contractor that details
the means by which Contractor shall correct a failure to make adequate progress
toward completion of any Work under this Contract in accordance with Article 31
(Failure to Make Adequate Progress).
(v) "CUSTOMER COVERAGE AREA" means the United States.
(w) "CURE PERIOD" shall have the meaning set forth in Article 3.3
([***]; Expiration Thereof; Remedies).
(x) "CUSTOMER PERSONNEL" means Customer employees, Consultants or
representatives, or Customer's Consultants' employees.
(y) "DATA AND DOCUMENTATION" means that data and documentation to be
supplied by Contractor pursuant to the requirements of Exhibit B (SOW) .
(z) "DEFECT" means (i) with respect to any Deliverable Item, and any
and all components thereof, any material defect or nonconformance in design,
material or workmanship, or failure to perform in accordance with the
specifications and requirements set out or referred to in this Contract; (ii)
with respect to services, a failure to meet any material specification or
requirement set forth in this Contract or to conform to a high standard
consistent with industry practice; (iii) any material error, omission or
inconsistency in Data and Documentation, including specifications and drawings,
set forth in or required by this Contract; and (iv) with respect to Training, a
material procedural error.
(aa) "DELIVERABLE ITEM" means the items listed in Table 7.1 of Article
7 (Delivery), and other items so identified in Exhibit B (Statement of Work) or
any Amendment to this Contract.
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***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
(bb) "DELIVER" OR "DELIVERY" OR "DELIVERED" means, with respect to a
Deliverable Item, delivery by Contractor of a Deliverable Item in accordance
with the requirements of this Contract.
(cc) "DELIVERY DATE(S)" means, with respect to a Deliverable Item, the
delivery date set forth in Table 7.1 of Article 7 (Delivery), as such date may
be extended, as appropriate, to reflect all periods during which an Excusable
Delay exists or any similar extension of time as may be agreed to by the Parties
in accordance with Article 34.3 (Amendments).
(dd) "DELIVERY SCHEDULE" means the schedule for Delivery of the Work as
set forth in Table 7.1 of Article 7 (Delivery).
(ee) "DEMAND" means, in the context of Article 31 (Failure to Make
Adequate Progress), a demand made by Customer to Contractor for Contractor to
provide a Correction Plan in the event Contractor is failing to make adequate
progress in the performance of this Contract.
(ff) "DESIGNATED LAUNCH SITE" means, with respect to a Satellite, the
Launch facility provided by the Launch Agency.
(gg) "DISPUTE" has the meaning set forth in Article 27 (Dispute
Resolution).
(hh) "DOLLARS" means United States Dollars.
(ii) "DYNAMIC SPACECRAFT SIMULATOR" has the meaning ascribed to it in
Exhibit B (SOW).
(jj) "EFFECTIVE DATE OF CONTRACT" OR "EDC" means March 23, 1998, the
date set forth in Article 3.1 (Effective Date of Contract (EDC)).
(kk) "EXCUSABLE DELAY" has the meaning set forth in Article 11
(Excusable Delay).
(ll) "EXHIBIT" OR "EXHIBITS" means any and all exhibits, and any
appendices thereto, to this Contract, which are attached hereto and incorporated
herein.
(mm) "[***] PAYMENT" means that Milestone Payment that Customer
shall pay to Contractor on or before the final day of the [***], plus any
applicable Cure Period, as such payment is further described in Exhibit G
(Payment Plan and Termination Liability Amounts).
(nn) "FINAL ACCEPTANCE" of a Deliverable Item has the meaning set forth
in Article 8 (Inspection and Final Acceptance).
(oo) "FINANCING AGREEMENTS" means any and all documents and agreements
evidencing and/or securing monies provided on a full or partial debt basis by
any Financing Entity to Customer to fund the construction, delivery, or Launch
of the Satellites or the purchase of Long-Lead Items for the Ground Spare
Satellite.
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***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
(pp) "FINANCING ENTITY" means any entity (other than Contractor, or
parties related to Contractor, or competitors of Contractor), e.g., commercial
bank, merchant bank, investment bank, commercial finance organization,
corporation, or partnership, providing money on a full or partial debt basis to
Customer to fund the construction, Delivery, or Launch of the Satellites or
purchase of Long-Lead Items for an Ground Spare Satellite.
(qq) "FIRST MILESTONE PAYMENT" means the first Milestone Payment
identified in Exhibit G (Payment Plan and Termination Liability Amounts),
equaling [***].
(rr) "FINAL HANDOVER" means handover of the operations of a Satellite
from Contractor to Satellite Operator for Customer's use in accordance with the
requirements set forth in Exhibit H (Initial Satellite Operations Phase and
Criteria for Final Handover Statement of Work (SOW)).
(ss) "FLIGHT READINESS REVIEW" OR "FRR" shall have the meaning ascribed
to it in Article 8.3 (Flight Readiness Review).
(tt) "FOREGROUND INTELLECTUAL PROPERTY" means Intellectual Property
first made, developed, or created in connection with this Contract that is
embodied or reflected in this Contract, in any Amendment thereto, or in any
annexed Parts, and incorporated into or employed in the use of any Deliverable
Item.
(uu) "FURNISHING PARTY" means the Party who furnishes Confidential
Information to the other Party.
(vv) "GROUND ENCRYPTORS" shall refer to the command security hardware
to be Delivered to, and installed by Contractor in the Back-Up Satellite Control
Center in accordance with the requirements of Exhibit B (SOW).
(ww) "GROUND SPARE SATELLITE" shall refer to the satellite that
Customer has purchased for on-ground Delivery.
(xx) "INCENTIVE AMOUNT" means any amount required to be paid pursuant
to Article 12 (In-Orbit Performance Incentive Payments). (yy) "INCLUDING" and
its derivatives (such as "include" and "includes") shall mean including without
limitation. This term is as defined, whether or not capitalized in this
Contract.
(zz) "INITIAL HANDOVER" shall have the meaning set forth in Article 8.5
(In-Orbit Testing and Final Acceptance of the Satellites).
(aaa) "INITIAL SATELLITE OPERATIONS PHASE" means the period of time
commencing upon Initial Handover and ending upon Final Handover.
(bbb) "IN-ORBIT TESTING" means the in-orbit tests and analyses
Contractor shall perform in accordance with Exhibit D (Test Plan Requirements).
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(ccc) "INSURERS" means those entities providing Launch and In-Orbit
Insurance.
(ddd) "INTELLECTUAL PROPERTY" means all designs, methods, concepts,
layouts, software, inventions (whether or not patented or patentable),
processes, technical data and documentation, technical information and drawings,
and similar matter in which an Intellectual Property Right may subsist.
(eee) "INTELLECTUAL PROPERTY RIGHTS" means all common law and statutory
proprietary rights, including patent, patent application, patent registration,
copyright, trademark, service mark, trade secret, mask work rights, moral
rights, data rights and similar rights existing from time to time under the
intellectual property Laws of the United States, any state or foreign
jurisdiction or international treaty regime.
(fff) "INTENTIONAL IGNITION" means, with respect to a Satellite, the
meaning attributed to the term "Launch" in the Launch Agreement between
Contractor and Sea Launch; provided, however, where a Launch Vehicle other than
Sea Launch is used, the term "Intentional Ignition" shall have the meaning
attributed to it in the applicable Launch Agreement.
(ggg) "LAUNCH" means, with respect to a Satellite, the meaning
attributed to it in the Launch Agreement between Contractor and Sea Launch,
i.e., the point in time when the electronic signal sent to command the opening
of any first stage propellant valves is received by the Launch Vehicle, as
verified by either the flow of propellant/oxidizer, or telemetry indicating that
the signal reached the propellant valve. A Launch is deemed not to have occurred
in the event of a Terminated Ignition.
(hhh) "LAUNCH AGENCY" means the entity selected by Contractor to
perform Launch Services, which entity shall be Sea Launch, provided Customer
does not exercise its option to select an alternate Launch Agency as provided in
Article 28 (Launch Services) or paragraph (b) of Article 10.3 (Termination for
Unexcused Delay).
(iii) "LAUNCH AGREEMENT" means any Subcontract between Contractor and a
Launch Agency to perform the Launch Services for one or both of the Satellites.
(jjj) "LAUNCH CAMPAIGN" means, with respect to a Satellite, those
services provided by Contractor in support of each Launch mission prior to
Launch, including packing and shipping the Satellite in an environmentally
controlled container to the Designated Launch Site, procuring and maintaining
all-risk ground insurance up to, but not including, Launch (as required by
Article 25 (Insurance)), providing high-pressure injection of propellant into
the Satellite's fuel tanks, configuring the Satellite so as to render it Ready
for Launch, Launch Vehicle Interface Activities, and assisting the Launch Agency
in assuring the Satellite is properly integrated with the Launch Vehicle, all as
further defined in Exhibit B (SOW).
(kkk) "LAUNCH DATE" means the specific day within the Launch Period or
Launch Slot on which a Launch shall occur.
(lll) "LAUNCH AND IN-ORBIT INSURANCE" OR "LAUNCH INSURANCE" means, with
respect to a Satellite, insurance that covers the Satellite from the period
beginning at Launch and ending no sooner than the earlier of determination of
Terminated Ignition, Constructive Total
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Loss, Total Loss or five (5) years after the date of Launch. Such insurance
shall cover Contractor's and its Subcontractors' operation of the Satellite.
Such insurance shall cover, with respect to such Satellite, all unpaid Milestone
Payments, the Incentive Amounts (except, in the case of Incentive Amounts, where
Customer elects to purchase an additional Satellite pursuant to Article 30
(Options)), and all interest required to be paid on the foregoing.
(mmm) "LAUNCH AND EARLY OPERATIONS" or "LEOP" means, with respect to a
Satellite, those services provided by Contractor in support of each launch
mission after Launch and through Final Acceptance of the Pre-Eclipse Test Report
and Post-Eclipse Test Report, such as providing telemetry, tracking and control
to direct the Satellite into its Specified Orbital Location, positioning and
stabilizing the Satellite to hold its pointing position to the Earth, conducting
in-orbit tests (including payload In-Orbit Testing) and furnishing the
Pre-Eclipse Test Report and Post-Eclipse Test Report, pursuant to the
requirements of Exhibit B (SOW) and Exhibit D (Test Plan Requirements).
(nnn) "LAUNCH PERIOD" means the three-month period from November 1,
2000 through February 1, 2001, with respect to the first Satellite, and the
three-month period from February 15, 2001 through May 15, 2001, with respect to
the second Satellite, during which such periods the Launch of each Satellite is
scheduled to occur.
(ooo) "LAUNCH READINESS REVIEW" shall have the meaning ascribed to it
in Article 8.4 (Launch Readiness Review).
(ppp) "LAUNCH SERVICES" means the Launch of a Launch Vehicle and
related services provided by a Launch Agency, including furnishing the Launch
Vehicles, launch support, and equipment and facilities, for the purpose of
launching the Satellites into orbit.
(qqq) "LAUNCH SLOT" means, with respect to a Satellite, the thirty (30)
Calendar Day period within its applicable Launch Period or prior to such Launch
Period that is selected by Contractor and Customer, and mutually agreed upon by
Contractor and the Launch Agency on or before twelve (12) months prior to the
Launch Period for such Satellite, during which such thirty (30) Calendar Day
period the Launch of such Satellite is scheduled to occur.
(rrr) "LAUNCH VEHICLE" means a launch vehicle provided by the Launch
Agency to Launch either of the Satellites, which Launch Vehicle shall be a Sea
Launch, or, in the event Customer exercises its option to select an alternate
Launch Vehicle for either or both Satellites, pursuant to Article 28 (Launch
Services), or in accordance with paragraph (b) of Article 10.3 (Termination for
Unexcused Delay), the Launch Vehicle shall be the alternate Launch Vehicle
selected by Customer.
(sss) "LAUNCH VEHICLE INTERFACE ACTIVITIES" means, with respect to a
Satellite, those services to be provided by Contractor, prior to Launch, in
support of each Launch, including analysis support, interface drawing support,
and technical meeting support, required by the Launch Vehicle Agency, and launch
pad activity support, pursuant to the requirements of Exhibit B (SOW).
(ttt) "LAW" OR "LAWS" means any laws, including rules, regulations,
codes, injunctions, judgments, orders, ordinances, decrees, rulings, and charges
thereunder, of any
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***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
federal, state, local or municipal government of any country (and all agencies
thereof) having jurisdiction over any portion of the Work.
(uuu) "LONDON INTER-BANK OFFER RATE" OR "LIBOR" means the rate per
annum shown, on the third (3rd) London Business Day preceding the day of
commencement of an interest calculation period, on page 3750 of the Dow Jones &
Company Telerate screen or any successor page as the composite offered rate for
London interbank deposits in an amount approximately equal to the amount on
which the interest is to be applied for a three-month period (the "Rate Base"),
as shown under the heading "USD" as of 11:00 a.m. (London Time); provided that
in the event no such rate is shown, LIBOR shall be the rate per annum (rounded
to the nearest 1/100th of one percent) based on the rates at which U.S. dollar
deposits approximately equal in principal amount to the Rate Base and for a
three-month period are displayed on page "LIBO" of the Reuters Monitor Money
Rates Service or such other page as may replace the LIBO page on that service
for the purpose of displaying London interbank offered rates of major banks as
of 11:00 a.m. (London time) (it being understood that if at least two such rates
appear on such page, the rate will be the arithmetic mean of such displayed
rates); provided that in the event fewer than two such rates are displayed, or
if no such rate is relevant, LIBOR shall be the rate per annum equal to the rate
offered by Credit Suisse, New York Branch, at approximately 11:00 a.m. (London
Time) to prime banks in the London interbank market on deposits in U.S. dollars
in an amount approximately equal in principal amount to the aggregate principal
balance of the Rate Base for a three-month period.
(vvv) "LONG-LEAD ACTIVITIES" means those activities to be performed by
Contractor, a list of which is to be set forth in Exhibit F (Long-Lead
Activities and Items), in accordance with the requirements of Article 2.2
(Long-Lead Activities and Items).
(www) "LONG-LEAD ITEMS" means the Satellite components, materials,
hardware, equipment and other related items that Contractor shall procure in
performance of the Long-Lead Activities.
(xxx) "LOSSES" means all losses, liabilities, damages, royalty payments
and claims, and all related costs and expenses (including reasonable legal fees
and disbursements and costs of investigation, expert fees, litigation,
settlement, judgment, interest, and penalties).
(yyy) "MAJOR CALENDAR PAYMENT" means, with respect to each
Satellite, the payment of [***] to be made by Customer to Contractor with
respect to each Launch Vehicle in accordance with paragraph (c)(1) of Article
5.1(Requests for Payment and Invoices) herein and Exhibit G (Payment Plan and
Termination Liability Amounts).
(zzz) "MAJOR SUBCONTRACT" means a Subcontract related to the
performance of this Contract and valued at Two Million Five Hundred Thousand
Dollars ($2,500,000) or more.
(aaaa) "MAJOR SUBCONTRACTOR" means a Subcontractor who is a party to a
Major Subcontract.
(bbbb) "MATERIAL ADVERSE EFFECT" means any material adverse change in
(i) the legality, validity, or enforceability of this Contract or (ii) the
ability of Customer or Contractor to perform this Contract.
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***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
(cccc) "MILESTONE" means a portion of the definitive, measurable Work
upon completion of which a payment is to be made in accordance with Exhibit G
(Payment Plan and Termination Liability Amounts).
(dddd) "MILESTONE PAYMENT" means any of those payments listed as
specific milestone payments in Exhibit G (Payment Plan and Termination Liability
Amounts).
(eeee) "MISSION SUPPORT SERVICES"OR "MSS" means, with respect to a
Satellite, twenty-four (24) hour on-call Contractor support services for each
day of the actual operational lifetime of the Satellites (including operation of
the Satellite beyond the Orbital Design Life) delivered hereunder, as such
services are more fully described in Exhibit B (SOW).
(ffff) [***] means the period of [***] Calendar Days commencing the
day after EDC.
(gggg) "ORBITAL DESIGN LIFE" means, with respect to a Satellite, the
contracted for design and performance life of fifteen (15) years for each
Satellite, commencing upon Initial Handover.
(hhhh) "PARTIAL LOSS" shall have the meaning ascribed to it in the
policy of Launch Insurance.
(iiii) "PENDING" means, with respect to a legal action, lawsuit,
proceeding or investigation, an action, suit, proceeding, or investigation as to
which Customer has knowledge or received written notice.
(jjjj) "POST-ECLIPSE TEST REPORT" means, with respect to a Satellite,
that so-named document that is a Deliverable Item under Exhibit B (SOW), the
requirements of which are set forth in Exhibit D (Test Plan Requirements).
(kkkk) "PRE-ECLIPSE TEST REPORT" means, with respect to a Satellite,
that so-named document that is a Deliverable Item under Exhibit B (SOW), the
requirements of which are set forth in Exhibit D (Test Plan Requirements).
(llll) "PRIMARY SATELLITE CONTROL CENTER" means Customer's Satellite
Operator's control facility located in Gloucester, Canada.
(mmmm) "PROGRAM INVENTION" means any invention, discovery, or
improvement conceived of and first reduced to practice in the performance of the
Work under this Contract. Information relating to Program Inventions shall be
treated as proprietary information in accordance with the provisions of this
Contract.
(nnnn) "PROPERLY OPERATED SATELLITE" means a Satellite which is being
monitored and commanded by Customer, Contractor and/or Satellite Operator in
accordance with the applicable Data and Documentation for operations (as such
Data and Documentation may be amended by the Parties) furnished by Contractor to
Customer under this Contract.
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(oooo) "QUARTERLY INCENTIVE PAYMENT AMOUNT" means, with respect to the
first and second Satellites (and the Ground Spare Satellite if it is used as a
replacement satellite and the incentives roll-over from either the first or
second Satellite), an amount equal to Two Hundred Eight Thousand Three Hundred
Thirty-Three Dollars and Thirty-Three Cents ($208,333.33) (that is, Twelve
Million Five Hundred Thousand Dollars ($12,500,000) divided by sixty (60)
representing 15 years x 4 quarters per year), as may be adjusted in accordance
with the terms of this Contract. If the Ground Spare Satellite is used as an
additional satellite, this means an amount equal to One Hundred Seventy Thousand
Dollars ($170,000.00) (that is Ten Million Two Hundred Thousand Dollars
($10,200,000.00) divided by sixty (60) representing 15 years x 4 quarters per
year), as may be adjusted in accordance with the terms of this Contract.
(pppp) "READY FOR LAUNCH" means, with respect to a Satellite, the time
of successful completion by Contractor of the on-ground testing and delivery of
the on-ground preliminary checklist report, including successful completion of
launch site satellite testing and physical integration with the Launch Vehicle,
including Flight Readiness Review and Launch Readiness Review, in accordance
with Exhibit B (SOW) and Exhibit D (Test Plan Requirements), such that the only
activity remaining prior to Launch is the Launch countdown.
(qqqq) "RECEIVING PARTY" means the Party who receives Confidential
Information from the Furnishing Party.
(rrrr) "REQUEST FOR PAYMENT" means a request for payment from
Contractor in the form of Attachment A hereto.
(ssss) "SATELLITE" means each of the three (3) Boeing 702 satellites to
be Delivered by Contractor to Customer pursuant to this Contract and that
conforms to all the requirements of this Contract, except where there is a
specific reference or term related to the Ground Spare Satellite, such reference
shall refer to the third Satellite and such specific reference or term shall
apply only to the Ground Spare Satellite.
(tttt) "SATELLITE CONTROL CENTER(S)" means, collectively, the Primary
Satellite Control Center and Back-Up Satellite Control Center, and,
individually, the Primary Satellite Control Center or Back-Up Satellite Control
Center.
(uuuu) "SATISFACTORILY OPERATING SATELLITE" means, with respect to a
Satellite, that such Satellite meets or exceeds the performance specifications
set forth in Exhibit A (Satellite Performance Specifications).
(vvvv) "SATELLITE CONTROL SOFTWARE" means the software to be Delivered
to, and installed by Contractor in, the Primary Satellite Control Center and the
Back-Up Satellite Control Center in accordance with the requirements of Exhibit
B (SOW).
(wwww) "SATELLITE OPERATOR" means Customer's designated operator of the
Satellites, namely Telesat Canada, also referred to herein as "TELESAT".
(xxxx) "SHIPMENT READINESS REVIEW" shall have the meaning ascribed to
it in Article 8.2 (Shipment Readiness Review).
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(yyyy) "SIMILAR SATELLITE SYSTEM" means any digital audio broadcasting
satellite system in S-band, using an access mode to the satellite and a digital
format substantially as described in Exhibit A (Spacecraft Performance
Specifications).
(zzzz) "SIMILAR SATELLITE SERVICE" means digital audio broadcasting
satellite service provided by a Similar Satellite System.
(aaaaa) "SPACECRAFT" means Satellite.
(bbbbb) "SPACECRAFT PERFORMANCE SPECIFICATIONS" means the technical
specifications set forth in Exhibit A (Spacecraft Performance Specifications),
as may be amended pursuant to this Contract.
(ccccc) "SPECIFIED ORBITAL LOCATION" means, with respect to each
Satellite, the geostationary synchronous orbital location specified in Exhibit A
(Spacecraft Performance Specifications).
(ddddd) "STATEMENT OF WORK" or "SOW" means the Work described in
Exhibit B to this Contract and to be provided by Contractor, as may be amended
pursuant to this Contract.
(eeeee) "SUBCONTRACT" means a contract awarded by Contractor to a
Subcontractor or a contract awarded by a Subcontractor.
(fffff) "SUBCONTRACTOR" means a person, firm, corporation, or business
entity that has been awarded a Subcontract.
(ggggg) "TERMINATION LIABILITY AMOUNTS" means the amounts listed as
Termination Liability Amounts in Exhibit G (Payment Plan and Termination
Liability Amounts) and in Exhibit G-2 (Ground Spare Satellite Payment Plan,
Termination Liability Amounts and Incentive Amounts) of this Contract, as may be
amended pursuant to this Contract.
(hhhhh) "TEST PLAN" means the test plans set forth in Exhibit D (Test
Plan Requirements), as may be amended pursuant to this Contract.
(iiiii) "TEST REQUIREMENTS" means the test plans and test procedures
set forth in Exhibit D (Test Plan Requirements), as may be amended pursuant to
this Contract.
(jjjjj) "TOTAL AMOUNT AT RISK" means a total firm-fixed sum of
Thirty-Five Million Two Hundred Thousand Dollars ($35,200,000.00) eligible to be
earned by Contractor as performance incentive payments (Twelve Million Five
Hundred Thousand Dollars ($12,500,000.00) per Satellite) for the first two
satellites and Ten Million Two Hundred Thousand Dollars ($10,200,000.00) for the
Ground Spare Satellite if the Ground Spare Satellite is used as an additional
Satellite pursuant to Article 12 (In-Orbit Performance Incentive Payments).Such
Total Amount at Risk will be adjusted in accordance with Article 12.1 (Total
Amount at Risk) and Article 12.5 (Roll-Over of Incentive Amounts) to reduce this
amount by $10,200,000.00 if the Ground Spare Satellite is used as a replacement
satellite for either the first or second Satellite.
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(kkkkk) "TERMINATED IGNITION" means that, following the time when the
electronic signal is sent to command the opening of any first stage propellant
valves, the first stage engines of the Launch Vehicle are shut down for any
reason before the hold down mechanism is released.
(lllll) "TRAINING" means the training to be provided under this
Contract to Customer and Customer's Satellite Operator, including training for
operation of the Satellites in geostationary orbit, as more fully described in
Exhibit B (SOW).
(mmmmm) "WORK" means all design, development, construction,
manufacturing, labor, services, and acts, including tests to be performed, and
any and all Deliverable Items, including the Satellites, Satellite Control
Software, Ground Encryptors, Dynamic Spacecraft Simulator, Communications
Payload Simulator, Long-Lead Activities and Items, Data and Documentation,
Launch Campaign, Launch Services, LEOP services, MSS, Training, and equipment,
materials, articles, matters, services, and things to be furnished and rights to
be transferred under this Contract, or any Subcontract entered into by
Contractor, all as further described in Exhibit B (SOW).
1.2 OTHER TERMS.
Other terms in this Contract are defined in the context in which they
are used and shall have the meanings there indicated.
1.3 INTEGRATION AND CONSTRUCTION.
The documents listed below in this Article 1.3 (Integration and
Construction), including any Exhibits, Attachments, Schedules, and Annexes, as
amended from time to time in accordance with Article 34.3 (Amendments),
constitute this Contract and shall be deemed to constitute one fully integrated
agreement between the Parties. In the event of any conflict or inconsistency
among the provisions of the various documents of this Contract, such conflict or
inconsistency shall be resolved by giving a descending level of precedence to
the documents in the order set forth below:
(a) Terms and Conditions
(b) Exhibit G - Payment Plan and Termination Liability Amounts
(c) Exhibit G-1 - Payment Plan for Interest on In-Orbit Incentive
Amounts
(d) Exhibit G-2 - Ground Spare Satellite Payment Plan, Termination
Liability Amounts and Incentive Amounts
(e) Exhibit G-3 - 4th and 5th Optional Satellites Payment Plan and
Termination Liability Amounts
(f) Exhibit B - Statement of Work (SOW)
(g) Exhibit A - Spacecraft Performance Specifications
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(h) Exhibit D - Test Plan Requirements
(i) Exhibit C - Product Assurance Plan
(j) Exhibit E - Radiation Environment
(k) Exhibit F - Long-Lead Activities and Items
(l) Exhibit H - Initial Satellite Operations Phase and Criteria
for Final Handover Statement of Work (SOW).
1.4 HEADINGS; NUMBER AND GENDER.
The Article headings are for convenience of reference only and shall
not be considered in interpreting the text of this Contract. Words in the
singular include the plural and vice versa, and words imputing the masculine
gender include the feminine and neuter genders where the context so requires.
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2. SCOPE OF WORK
2.1 GENERAL.
(a) In accordance with the requirements of this Contract, Contractor
shall sell and Customer shall purchase the Work.
(b) Contractor shall furnish and perform the Work in accordance with
the provisions of this Contract and in the manner specified in the following
documents:
(1) Terms and Conditions
(2) Exhibit A - Spacecraft Performance Specifications
(3) Exhibit B - Statement of Work (SOW)
(4) Exhibit C - Product Assurance Plan
(5) Exhibit D - Test Plan Requirements (On-Ground and
In-Orbit)
(6) Exhibit E - Radiation Environment
(7) Exhibit F - Long-Lead Activities and Items
(8) Exhibit G - Payment Plan and Termination Liability
Amounts
(9) Exhibit G-1 - Payment Plan for Interest on In-Orbit
Incentive Amounts
(10) Exhibit G-2 - Ground Spare Satellite Payment Plan,
Termination Liability Amounts and
Incentive Amounts
(11) Exhibit G-3 - 3rd and 4th Optional Satellites Payment
Plan and Termination Liability Amounts
(12) Exhibit H - Initial Satellite Operations Phase and
Criteria for Final Handover SOW
(c) Exhibits A, B, C, D, E, F, G, G-1, G-2, G-3 and H are attached to
and incorporated into these Terms and Conditions.
2.2 LONG-LEAD ACTIVITIES AND ITEMS.
The preliminary list of Long-Lead Items is attached to this Contract as
Exhibit F (Long-Lead Activities and Items). Contractor shall design the
Composite Reflector for the Ground Spare Satellite as part of this effort.
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2.3 INITIAL SATELLITE OPERATIONS PHASE
Contractor shall operate the Satellite(s) from the Contractor's Mission
Control Center from Initial Handover during the Initial Satellite Operations
Phase until Final Handover in accordance with the requirements set forth in
Exhibit H (Initial Satellite Operations Phase and Criteria for Final Handover
SOW). This work shall be performed by Contractor without any increase to the
Contract Price. In the event that the software delivery requirements set forth
in Exhibit H are met for either of the first two Satellites prior to Initial
Handover, Contractor shall not be required to operate such Satellite and Initial
and Final Handover shall be deemed to be the same event.
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
3. EFFECTIVE DATE OF CONTRACT (EDC); ONE HUNDRED TWENTY (120) DAY PERIOD
3.1 EFFECTIVE DATE OF CONTRACT (EDC).
This Contract shall be effective as of, and the effective date of this
Contract (the "Effective Date of Contract" or "EDC") shall be, March 23, 1998.
3.2 CONTRACTOR WORK COMMITMENT.
Beginning upon EDC and continuing for the term of the [***],
Contractor shall commence the Work in full compliance with the requirements
of this Contract and perform sufficient Work to maintain the Delivery Dates
for the Satellites. Such Work during the [***] shall be comprised of the
completion or provision, as the context indicates, of the following work
effort as may be more fully described in Exhibit B (SOW):
(a) program kickoff meeting;
(b) System Requirements Status Review and release of Satellite Payload
and Bus specifications;
(c) release of performance specifications for: communications
receivers, IF processors, output combiner, TWTA, and frequency generator;
(d) subcontract, or select vendor for, TWTA electronic power
converters;
(e) mutually agree upon EIRP requirements and finalize Exhibit A
(Spacecraft Performance Specifications) (that is, close "TBRs," "TBSs," and
"TBDs");
(f) detailed payload block diagram;
(g) payload panel layout;
(h) detailed mass budget;
(i) detailed power budget;
(j) top level propellant budgets for all potential alternate Launch
Vehicles;
(k) preliminary field-of-view drawings for all sensors and all
antennas; and
(l) preliminary list of Long-Lead Activities and Items for the Ground
Spare Satellite.
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
3.3 [***]; EXPIRATION THEREOF; REMEDIES.
(a) The [***] shall terminate upon the earlier of (i) receipt of the
[***] Payment (as more fully described in Exhibit G (Payment Plan and
Termination Liability Amounts)) by Contractor, or (ii) [***] Calendar Days
from EDC plus any applicable cure period not to exceed sixty (60) Calendar
Days (the "Cure Period"). Prior to expiration of the [***], Customer shall
provide Contractor with a status report of Customer's funding plans for the
first six (6) months of Milestone Payments under this Contract.
(b) In the event Contractor has not received the [***] Payment on or
before the date of expiration of the [***] and Contractor has completed the
work effort required by Article 3.2 (Contractor Work Commitment) above, the
following shall apply during the Cure Period:
(1) Contractor shall be entitled to stop Work;
(2) the Delivery Schedule shall be adjusted on a
day-for-day basis, together with adjustments for
associated delays related to establishment of Launch
Periods and Launch Slots;
(3) the Payment Plan set forth in Exhibit G (Payment Plan
and Termination Liability Amounts) shall be adjusted
in accordance with the revised Delivery Schedule; and
(4) the Contract Price shall be increased by an aggregate
total of [***] during the Cure Period, on a daily pro
rata basis in accordance with the following table:
<Table>
<Caption>
---------------------------------------------------------------------------------------
TABLE 3.3(b)
CONTRACT PRICE INCREASES
---------------------------------------------------------------------------------------
FOLLOWING [***] INCREASE (USD)
(CURE PERIOD)
---------------------------------------------------------------------------------------
<S> <C>
1st 30 Calendar Days $[***]
(or daily pro-rated portion thereof
(daily rate of $[***]))
---------------------------------------------------------------------------------------
2nd 30 Calendar Days $[***]
(or daily pro-rated portion thereof
(daily rate of $[***]))
---------------------------------------------------------------------------------------
</Table>
For example, if Contractor receives the [***] Payment on the
fortieth (40th) Calendar Day after expiration of the [***], the Contract
Price shall be increased by
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
[***] (that is, $[***] for the first thirty (30) Calendar Days plus $[***]
for the ten (10) Calendar Days in excess of the first thirty (30) Calendar
Days ($[***] multiplied by 10 for the last ten (10) Calendar Days)).
In the event the above Contract Price increases are incurred, the
Parties shall mutually agree to appropriate amendments to Exhibit G (Payment
Plan and Termination Liability Amounts).
(c) In the event Contractor does not receive the [***] Payment on or
before the expiration of the Cure Period and Contractor has completed the
work specified in Article 3.2 (Contractor Work Commitment) above, the
following shall apply:
(1) Contractor shall be entitled to retain the first
[***] Milestone Payments and the Calendar Payment for
Long-Lead Items made during such [***] in full;
(2) With the exception of Contractor's Intellectual
Property, Contractor shall deliver to Customer all
inventory, technical documents and all work in
process relating to the Work developed or produced by
Contractor during the [***], provided that all
payments (other than the [***] Payment) have been
made by Customer; and
(3) this Contract shall terminate and the Parties shall
have no further obligations to each other, except as
expressly set forth in Article 22 (Confidential
Information).
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
4. CONTRACT PRICE
4.1 CONTRACT PRICE.
(a) In accordance with this Contract, Customer shall pay Contractor
for the Work the Contract Price set forth in Table 4.1 below. The Contract
Price [***] shall be paid in accordance with Article 5 (Payment).
(b) The total Contract Price is allocated as follows:
<Table>
<Caption>
----------------------------------------------------------------------------------------------------------------
TABLE 4.1
CONTRACT PRICE
----------------------------------------------------------------------------------------------------------------
ITEM (USD)
----------------------------------------------------------------------------------------------------------------
<S> <C>
1. 1st and 2nd Satellites, including incentive amounts
$ [***]
----------------------------------------------------------------------------------------------------------------
2. Launch Services for the 1st and 2nd Satellites $ [***]
----------------------------------------------------------------------------------------------------------------
3. Communications Payload Simulator, Ground Encryptors, Satellite Control $ [***]
Software, and Dynamic Spacecraft Simulator
----------------------------------------------------------------------------------------------------------------
4. Long-Lead Activities and Items for Ground Spare Satellite $ [***]
----------------------------------------------------------------------------------------------------------------
5. Ground Spare Satellite Completion including Incentive Amounts if Satellite
is used as an additional Satellite* $ [***]
----------------------------------------------------------------------------------------------------------------
CONTRACT PRICE $ [***]
----------------------------------------------------------------------------------------------------------------
</Table>
*The Contract Price for the Ground Spare Completion will be reduced by $[***]
if the Ground Spare Satellite is used as a replacement Satellite and
incentives will roll-over from the first or second Satellite in accordance
with Article 12.5.
(c) In addition to the Deliverable Items identified in Table 4.1 above,
the Contract Price includes:
(1) all related Training and Data and Documentation;
(2) on-ground insurance covering the Work as required by
Article 25.1 (General Obligation);
(3) transportation, including air shipment, to the Launch
Site and other related charges;
(4) Launch Campaigns for the first and second Satellites;
(5) LEOP for the first and second Satellites;
(6) Mission Support Services for the first and second
Satellites;
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
(7) pre-Launch deferred payments; and
(8) Incentive Amounts.
(9) Operations of the Satellites pursuant to Article 2.3
(Initial Satellite Operations Phase) hereof.
(d) The Contract Price does not include:
(1) Launch Insurance;
(2) any interest on the pre-Launch deferred payments;
(3) any interest on the Incentive Amounts;
(4) Ground Software source code license;
(5) Transportation costs to either a Medium-term storage
facility or a launch site, Storage costs, LEOP or
Mission Support Services for the Ground Spare
Satellite, and demonstrated compatibility with a
Launch Vehicle other than the baseline Sea Launch;
and
(6) Any taxes, duties or other such fiscal burdens on
Software or equipment or any Deliverable Items
delivered to the Satellite Operator in Canada on
Customer's behalf.
4.2 CHANGES IN CONTRACT PRICE.
This is a firm-fixed price Contract. Except as otherwise expressly
provided in this Contract, the Contract Price is not subject to any escalation
or to any adjustment or revision.
4.3 TAXES AND DUTIES.
The Contract Price includes all applicable taxes and duties related
to the Work in effect as of the Effective Date of Contract, and thereafter,
including all taxes on the import of any Satellite, or component part
thereof, or any other component of the Work into any United States, French,
Chinese and/or Japanese jurisdictions, if applicable, for Launch or other
purpose, personal property taxes, imposts, sales, use, excise, value added,
and all other import and export taxes levied in connection with the
performance of the Work, wherever the Work is being carried out. The Contract
Price does not include any taxes or duties or other such fiscal burdens on
equipment, Software or other Deliverable Items delivered to the Satellite
Operator in Canada. Telesat Canada will be the importer of record for such
deliverable items and pay any such taxes, duties or other fiscal burdens in
accordance with the agreement between Customer and its Satellite Operator.
Nonetheless, if Contractor has to pay such taxes, duties or other such fiscal
burdens, Customer shall reimburse Contractor for such fiscal burdens, [***],
after receipt of an invoice from Contractor.
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
5. PAYMENT.
5.1 REQUESTS FOR PAYMENT AND INVOICES.
(a) Customer shall make Milestone Payments, Major Calendar Payments and
other Calendar Payments to Contractor in accordance with the Payment Plan set
forth in Exhibit G (Payment Plan and Termination Liability Amounts) and Exhibit
G-2 (Ground Spare Satellite Payment Plan, Termination Liability Schedule and
Incentive Amounts).
(b) With the exception of the First Milestone Payment, which shall
have been paid on or before EDC, and the [***] Payment, which shall be paid
to Contractor no later than the last day of the [***] or the last day of the
Cure Period, if any, as required by Article 3 (Effective Date of Contract
(EDC); [***]), each Milestone Payment shall be due upon Contractor completing
the applicable Milestone and submitting to Customer a Request for Payment,
accompanied by a certificate in the form of Annex I to Attachment A hereto
together with such supporting data as Contractor deems necessary or
appropriate. A Milestone shall not be regarded as completed, and no payment
shall be made, until all the Work relevant to that Milestone has been
completed and documented in accordance with applicable specifications and
procedures and all the relevant documentation and Training required under
this Contract for such Milestone has been provided to Customer.
(c) With the exception of Program Calendar Payment No. 1, which shall
be paid on or before July 9, 1999, Contractor shall, with respect to each
Calendar Payment, provide Customer with a Request for Payment at least ten (10)
Calendar Days but no more than forty-five (45) Calendar Days in advance of the
date when such payment is required to be made by Customer pursuant to Exhibit G
(Payment Plan and Termination Liability Amounts); provided, however, each Major
Calendar Payment shall be subject to satisfaction by Contractor of the following
conditions precedent:
(1) with respect to the Major Calendar Payment applicable
to the first Launch Vehicle, as specified in Exhibit
G (Payment Plan and Termination Liability Amounts),
Contractor will invoice Customer one hundred eighty
(180) Calendar Days prior to the date of the
scheduled Launch;
(2) with respect to the Major Calendar Payment applicable
to the second Launch Vehicle, as specified in Exhibit
G (Payment Plan and Termination Liability Amounts),
Contractor will invoice Customer [***] Calendar Days
prior to the date of the scheduled Launch;
(3) with each such invoice for a Major Calendar Payment,
Contractor shall provide certification that the
official Launch manifest, as established by the
Launch Agency, provides that the Launch Date for such
Launch Vehicle is no more than [***] Calendar Days
from the due date of the Major Calendar Payment for
the first launch and no more than [***] Calendar Days
from the due date of the relevant Major Calendar
Payment for the second Launch.
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
(d) Contractor shall telefax and airmail signed copies of each Request
for Payment, invoice and accompanying certificate and any supporting data to:
XM Satellite Radio Inc.
1500 Eckington Place, NE
Washington, DC 20002
Attention: Mr. Heinz Stubblefield
Sr. Vice President and CFO
Fax Number: 202-380-4501
5.2 PAYMENT.
(a) MILESTONE PAYMENTS, MAJOR CALENDAR PAYMENTS AND OTHER CALENDAR
PAYMENTS.
(1) Customer shall pay Contractor in full each Milestone
Payment, Major Calendar Payment, and other Calendar
Payments, as set forth in Exhibit G (Payment Plan and
Termination Liability Amounts) and Exhibit G-2
(Ground Spare Satellite Payment Plan, Termination
Liability Schedule and Incentive Amounts), within
thirty (30) Calendar Days after delivery, in
accordance with the procedures and upon satisfaction
of the conditions set forth in Article 5.1 (Requests
for Payment and Invoices), of a Request for Payment,
accompanied by a certificate in the form of Annex I
to Attachment A hereto, with respect to a Milestone
Payment, and of an invoice, with respect to any Major
Calendar Payment or other Calendar Payment, by wire
transfer to the following bank account:
Bank: Bank of America
Address: Concord, California, U.S.A.
Account No.: [***]
(2) In no event shall the cumulative Milestone Payments
made to Contractor for the Work at any point in time
exceed the cumulative amounts specified up to that
point in time for Milestone Payments for the Work as
set forth in Exhibit G (Payment Plan and Termination
Liability Amounts), as may be modified from time to
time pursuant to Article 34.3 (Amendments).
(3) In the event of early completion by Contractor of a
Milestone in advance of such Milestone completion
date as set forth in Exhibit G (Payment Plan and
Termination Liability Amounts), Customer shall not be
obligated to make the corresponding Milestone Payment
to Contractor in advance of the payment due date
therefore as set forth in Exhibit G.
(4) Notwithstanding the foregoing, Customer, in its sole
discretion, may agree to make a partial payment to
Contractor for the partial completion of a Milestone
event.
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(5) Major Calendar Payments are to be made by Customer if
the conditions precedent thereto are met by
Contractor notwithstanding if Contractor is otherwise
in default of this Contract under Article 32.2
(Termination for Contractor's Default); the Parties
intend that Customer's remedy in such event is
termination of this Contract (in which case no
payments would be made) and not withholding of Major
Calendar Payments.
(6) Except for disputed amounts under Article 5.3
(Disputed Amounts), all payments made by Customer to
Contractor prior to and including the Major Calendar
Payments and other Calendar Payments shall be deemed
fully earned by Contractor upon receipt of such
payments.
(b) OTHER PAYMENTS. Except as otherwise expressly stated herein, all
other payments by Customer due Contractor shall be made by wire transfer to the
bank account identified in paragraph (a) above within thirty (30) Calendar Days
after receipt by Customer of a telefaxed Request for Payment (followed by an
airmailed original received by Customer within five (5) Calendar Days of receipt
of such telefaxed request).
5.3 DISPUTED AMOUNTS.
(a) If Customer does not agree that the Milestone associated with a
Request for Payment has been satisfactorily completed, Customer shall give
written notice to Contractor within ten (10) Calendar Days after receipt by
Customer of a Request for Payment. Upon receipt of such notice, the Parties'
respective Program Managers shall meet and use good faith efforts to resolve
such disagreement.
(b) If the Parties' Program Managers fail to resolve such disagreement
within thirty (30) Calendar Days after receipt by Customer of the Request for
Payment, Customer shall deposit, subject to paragraph (d) below, within five (5)
Calendar Days after expiration of the aforementioned thirty (30) Calendar Day
period, all or a portion of the disputed Milestone Payment, in accordance with
Table 5.3 below, into a separate, interest-bearing account to be established by
Contractor at Contractor's commercial bank to hold solely and separately from
all other corporate funds ("In-House Escrow Account"), any such amounts that may
be disputed hereunder up to the limitations set forth in paragraph (c) below.
(c) In no event shall any disputed amounts deposited into the In-House
Escrow Account exceed the limitations set out below in Table 5.3:
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<Table>
<Caption>
----------------------------------------------------------------------------------------------------------------------
TABLE 5.3
SCHEDULE OF DISPUTED AMOUNTS THAT MAY BE DEPOSITED IN THE IN-HOUSE ESCROW ACCOUNT
----------------------------------------------------------------------------------------------------------------------
PERIOD IN WHICH DISPUTED AMOUNTS ARISE LIMITATION ON DISPUTED AMOUNTS THAT MAY BE DEPOSITED
IN THE IN-HOUSE ESCROW ACCOUNT
----------------------------------------------------------------------------------------------------------------------
<S> <C>
EDC through the last day of the ninth (9th) month following $[***]
EDC
----------------------------------------------------------------------------------------------------------------------
The first day of the tenth (10th) month following EDC $[***]
through the last day of the eleventh (11th) month following
EDC
----------------------------------------------------------------------------------------------------------------------
The first day of the twelfth (12th) month following EDC to $[***]
the date of Launch of the second Satellite (excluding Incentive Amounts)
----------------------------------------------------------------------------------------------------------------------
</Table>
(d) To the extent, if any, the aggregate of disputed Milestone Payment
amounts exceeds the applicable limitation for the period in which the dispute
over the Milestone Payment arises, Customer shall pay to Contractor the excess
over the applicable limitation, pending resolution of the dispute in accordance
with the provisions of this Article 5.3 (Disputed Amounts).
(e) The respective Chief Executive Officers of each Party shall meet to
resolve the dispute within five (5) Calendar Days after the aforementioned
thirty (30) Calendar Days following receipt by Customer of the Request for
Payment.
(f) Withheld amounts shall remain in the In-House Escrow Account, or if
any amounts are paid to Contractor pursuant to paragraph (d) above, Contractor
shall retain such amounts, until the Chief Executive Officers resolve the
dispute relating to such disputed payments. In the event the Chief Executive
Officers cannot resolve such dispute, the Parties may, upon mutual agreement,
seek resolution of such dispute pursuant to Article 27.2 (Arbitration). In any
event, such unresolved dispute shall be referred to arbitration pursuant to
Article 27.2 (Arbitration) after six (6) months following the date upon which
such dispute was referred to the Chief Executive Officers. Contractor agrees
that prior to the resolution of any dispute, including any disputes ultimately
resolved in favor of Contractor, Contractor shall not remove or use any amounts
deposited in the In-House Escrow Account.
(g) In the event it is determined by the Chief Executive Officers or
any arbitral tribunal that the payment deposited in the In-House Escrow Account
or any part thereof is due and payable to Contractor, Contractor may then
release that amount from such Account for Contractor's use and retain all
interest accrued thereon. In the event it is determined by the Chief Executive
Officers or any arbitral tribunal that the withheld payment or any part thereof
is due and payable to Customer, such amount shall be refunded to Customer within
five (5) Calendar Days after such determination, including, to the extent of the
Chief Executive Officers' determination, any amounts paid by Customer, under
paragraph (d) above, in excess of the limitation on disputed amounts otherwise
eligible to be placed in the In-House Escrow Account,
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together with interest on the total thereof to be calculated in accordance with
Article 34.10 (Calculation of Interest).
5.4 SET OFF.
In the event one Party has not paid the second Party any amount that is
due and payable to the second Party under this Contract, such second Party shall
have the right to set off such amount against payments due to the first Party,
provided any amount in dispute pursuant to Article 5.3 (Disputed Amounts) shall
not be considered eligible for setoff while the dispute is being resolved.
5.5 LATE PAYMENT.
(a) The Parties acknowledge and agree that, with respect to any
Milestone Payments, Major Calendar Payments, and other Calendar Payments,
Contractor may suffer damages as the result of any delayed receipt of such
payments and the rapid decrease, over time, of the value of the Work.
Accordingly, the Parties agree that time is of the essence in the receipt by
Contractor of Milestone Payments, Major Calendar Payments, and other Calendar
Payments, properly due Contractor, and, subject to Article 32.3 (Termination for
Customer's Default), Contractor may, upon a default in such payment by Customer,
immediately and without further notice to Customer, exercise all its rights and
remedies in accordance with the terms of this Contract.
(b) For any payment under this Contract that is overdue, the Party
entitled to such payment shall also be entitled to interest on such payment for
each day the payment is overdue until the day payment is made, such interest to
be calculated in accordance with Article 34.10 (Calculation of Interest), unless
expressly provided otherwise in this Contract.
5.6 PAYMENTS CURRENT AT LAUNCH.
(a) With respect to any Milestone, Major Calendar Payment, or other
Calendar Payment, Contractor may suspend performance if Customer does not comply
with the provisions of Article 5.3 (Disputed Amounts).
(b) Contractor shall not be required to proceed to Launch of a
Satellite unless (i) Customer is current on all payments due at that point in
time with respect to such Satellite, (ii) any and all disputes related to any
Milestone Payment and pertaining only to such Satellite to be Launched are
resolved, and (iii) any such Milestone Payment amount (related to such
Satellite) held in escrow pursuant to Article 5.3 (Disputed Amounts) is released
to Contractor, if it is ultimately determined that Contractor is entitled to
such payments.
5.7 SECURITY INTEREST.
(a) Customer hereby grants Contractor a first priority security
interest in any right, title, or interest Customer may have or be deemed to have
in the Work to secure Customer's obligations to Contractor under this Contract.
Customer shall have no interest in the Work, except as specifically provided in
this Article 5.7 (Security Interest) and in paragraph (c) of Article 32.2
(Termination for Contractor's Default).
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
(b) The Parties agree that, upon Contractor's reasonable request,
Customer shall sign and permit Contractor to file, for precautionary purposes,
appropriate Uniform Commercial Code financing statements or any similar document
having the same effect in foreign countries, reflecting Contractor's right,
title, and interest to the Deliverable Items prior to receipt of the Major
Calendar Payments, provided that Contractor, at its sole expense, shall be
responsible for preparing such financing statements and terminating such
financing statements as required by this Article 5.7 (Security Interest).
(c) Contractor agrees to release and terminate its security interest,
and to terminate any related financing statements, in accordance with the
following:
(1) Subject to Article 5.6 (Payments Current at Launch),
with respect to the first Satellite, Contractor's
security interest therein shall be released and
terminated upon Launch of the first Satellite;
(2) Subject to Article 5.6 (Payments Current at Launch),
with respect to the second Satellite and all other
Deliverable Items under this Contract, Contractor's
security interest in the second Satellite and all
other Deliverable Items comprising the Work, shall be
released and terminated upon Launch of the second
Satellite;
(3) with respect to the Ground Spare Satellite,
Contractor's security interest therein shall be
released and terminated upon payment of [***]
in deferred financing and any applicable interest
thereon or Launch (whichever occurs earlier); and
(4) with respect to a Launch Vehicle, Contractor's
security interest therein shall be released and
terminated upon Contractor's receipt of the Major
Calendar Payment applicable to such Launch Vehicle.
(d) Customer represents and warrants that, prior to release of
Contractor's security interest in accordance with this Article 5.7 (Security
Interest), Customer's assets do not and will not secure the liabilities of any
parent entity, or any other person or other entity.
(e) The preceding representations and warranties of Customer apply
(i) with respect to the first Satellite, only prior to Launch of the first
Satellite; (ii) with respect to the second Satellite and all other
Deliverable Items, only prior to Launch of the second Satellite; and (iii)
with respect to the Ground Spare Satellite, only prior to payment of [***] in
deferred financing and any applicable interest thereon or Launch (whichever
occurs earlier). Such representations and warranties of Customer shall not
apply to any financing entered into by Customer or Customer's Affiliates to
obtain the funding for a Major Calendar Payment required pursuant to this
Contract which results in the Major Calendar Payment being made substantially
concurrently with such financing being obtained for such payment.
5.8 PAYMENT AND DEFERRED FINANCING FOR THE GROUND SPARE SATELLITE.
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
(a) The price for the Ground Spare Satellite will be paid in accordance
with the payment plan attached hereto as Exhibit G-2 (Ground Spare Satellite
Payment Plan, and Termination Liability Amounts, and Incentive Amounts).
(b) Contractor shall provide [***] of deferred financing payable in
quarterly installments of interest only, over five (5) years from the date
that the Ground Spare Satellite is Available for Shipment (no earlier than
[***]), with the principal of such amount to be paid at the end of such five
(5) year period. Contractor shall retain title to, and store (in accordance
with Article 14.4 (Storage)), the Ground Spare Satellite prior to Launch or
other disposition by Customer and repayment of principal by Customer. In the
event of a Launch or other disposition of the Ground Spare Satellite by
Customer, Customer shall either repay the outstanding principal balance prior
to Launch Readiness Review, or provide alternative security reasonably
acceptable to Contractor.
(c) Such quarterly installments of interest shall be calculated at a
rate equal to [***] compounded annually, computed beginning on the date that
the Ground Spare Satellite is Available for Shipment to its Designated Launch
Site, and continuing for five (5) years or until repayment of the outstanding
principal.
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6. ACCESS TO WORK
6.1 FACILITIES.
(a) Subject to Article 6.10 (Consultant Access), Contractor shall
provide Customer Personnel reasonable access to all Work (including
work-in-progress, documentation, and testing) at the facilities of Contractor
and the Subcontractors, during regular business hours, or such other times as
Work is being performed under this Contract, provided such access does not
unreasonably interfere with such Work and access to Work is coordinated through
Contractor's program office.
(b) The Parties agree that Customer Personnel shall be provided fifteen
(15) non-escort permanent badges and twenty-five (25) escort permanent badges to
agreed work areas where the Work is being performed, subject to Customer
identifying such personnel to Contractor and such personnel satisfying
Contractor's normal security clearance requirements.
(c) Contractor shall arrange with the Launch Agency(ies) for Customer
VIPs to attend the Launch of a Satellite, subject to any limitations of such
Launch Agency.
6.2 OFFICE SPACE.
Contractor shall provide office space and facilities at Contractor's
facilities for the accommodation of up to six (6) Customer Personnel. Contractor
shall make reasonable work space available for such Customer Personnel at
environmental test facilities (if located off site) and shall use reasonable
efforts to ensure that facilities are provided for up to two (2) such Customer
Personnel at other selected Major Subcontractors' plants on a temporary basis to
attend meetings or witness tests, except that (i) with respect to facilities at
a Designated Launch Site, Contractor shall use reasonable efforts to ensure that
office space facilities are provided for up to five (5) Customer Personnel and,
in the case of a Launch by Sea Launch, Contractor shall ensure that two (2)
Customer Personnel are entitled to a berth on a viewing boat for an extended
period of time prior to and during Launch and (ii) the facilities at the Payload
Subcontractor (Alcatel) shall be on a permanent basis. At a minimum, Contractor
shall provide desks, chairs, office supplies, local telephone service,
reasonable long distance telephone usage, car parking facilities, and access to
meeting rooms, copying machines and facsimile equipment, and, as available,
access to and use of video conferencing facilities at Contractor's facilities.
Customer shall reimburse Contractor for all long distance telecommunications
charges, whether incurred in connection with voice or facsimile transmission or
video conferencing.
6.3 SECURITY.
Customer Personnel visiting any facility of Contractor or a
Subcontractor (i) will abide by Contractor's security regulations and/or those
of its Subcontractors and any and all applicable Laws of the jurisdiction in
which a Contractor or Subcontractor facility is located, provided, however,
Customer Personnel are advised in writing of any such security regulations prior
to such visits; (ii) subject to Article 20 (Intellectual Property Rights) and
Article 22 (Confidential Information), will use any information received in
connection with the access provided hereunder only in the performance of this
Contract; and (iii) will not remove any documents,
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materials, or other items from any facility of Contractor or its Subcontractors
(other than Data and Documentation and other documents delivered to Customer
Personnel for Customer's use and with no requirement to return to Contractor)
without the express written consent of Contractor's Program Manager.
6.4 DATA AND DOCUMENTATION.
(a) Customer Personnel will have reasonable access at the facilities of
Contractor and the Subcontractors, for evaluation and inspection purposes only,
to (i) Data and Documentation; (ii) Work-in-progress, technical and schedule
data and documentation relevant to the Work; (iii) drawings, circuit diagrams
and schematics, specifications, standards or process descriptions relevant to
the Work; and (iv) data and documentation provided to Contractor by its
Subcontractors relevant to the Work. To facilitate Customer's work in this
respect, Contractor will allow Customer Personnel reasonable access to all
indexes related to the materials set forth in this paragraph (a).
(b) Subject to Article 6.3 (Security), where the materials described in
paragraph (a) are necessary for evaluation of designs, performance
considerations, assessment of test plans and test results, or for any other
purpose connected with the design, qualification, testing, Final Acceptance, or
operation of the Work, or any part thereof, and the components thereto,
Contractor will, subject to Article 22 (Confidential Information), make
available to Customer Personnel copies of such documentation on the reasonable
request of Customer Personnel at no charge to Customer.
(c) All Data and Documentation shall be in the English language.
(d) Any data provided by a Party to the other Party in electronic form
shall be embodied in, or in a form compatible with, commercially available
software.
6.5 ELECTRONIC ACCESS.
(a) With respect to electronically generated information, Contractor
will provide Customer with a copy of and/or electronic access (via the Internet,
Contractor e-mail, proprietary or otherwise, or as agreed upon) to such
information as is necessary to keep Customer advised, on a current basis, of
program issues, decisions, and problems. Contractor shall provide Customer
Personnel access to Contractor's electronic mail systems through the Internet,
such access to be at Customer's cost. If requested in writing by Customer,
Contractor shall establish secure data links between its and Customer's
facilities such that Customer has remote electronic access to those
project-related documents identified in Exhibit B (SOW); provided, however,
Contractor shall be required to provide such links for a high-data transfer rate
(such as for satellite telemetry) only on an as needed basis, with each Party
bearing the costs of establishing the link at its end.
(b) Contractor will also provide Customer Personnel with "real time"
access to all measured data for the Work taken at Contractor's and/or
Subcontractors' facilities on a non-interference, no-cost basis.
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6.6 MEETINGS AND REVIEWS.
(a) Customer Personnel shall be entitled to attend the meetings and
reviews (including meetings and reviews held by electronic means) of Contractor
and of Contractor with any Subcontractor(s) where such meetings and reviews (or
portions of such meetings and reviews) are related to Customer's project
schedule, management, engineering, design, manufacturing, integration, testing,
or Launch and shall have the right to participate in and make recommendations,
but not to control, give directions or assign actions, in all meetings and
reviews at the system, subsystem and unit level, as well as in internal program
reviews. Contractor shall (i) submit an agenda at least ten (10) Calendar Days
in advance of the meeting or review, (ii) take minutes, (iii) maintain an action
items list, and (iv) circulate the minutes and action items to Customer within
five (5) Calendar Days following the meeting or review.
(b) In the event a meeting or review is convened at the facilities of
Contractor or a Subcontractor relating to the Work, Contractor shall, except as
otherwise provided in these Terms and Conditions of this Contract, provide
reasonable advance notice in writing to Customer (e.g., one week for regularly
scheduled meetings) and shall make reasonable and appropriate arrangements to
facilitate the entry of Customer Personnel to the meeting place.
(c) Notwithstanding the foregoing, Customer and Contractor acknowledge
and agree that a large number of meetings, including impromptu meetings, will be
held during the normal course of performance of this Contract and that, in all
instances of meetings relating to this Contract, notice to Customer or
Customer's presence at all such meetings may not be practicable. Accordingly,
Contractor is not required to provide notice to Customer of such impromptu,
unscheduled, informal and otherwise casual meetings (informal meetings),
provided that Contractor shall supply to Customer within a reasonable time
following any such informal meeting, any material notes, decisions, actions
items or other such product of such informal meetings that would otherwise be
provided to Customer at meetings Customer would normally attend.
6.7 LAWS.
Contractor's obligations under this Article 6 (Access to Work) shall be
subject to any and all applicable Laws of any country, state, or territory
having jurisdiction over the Work, and to Contractor's standard security rules
and regulations; provided, however, Contractor shall use its best efforts to
ensure its internal security rules and regulations do not unduly restrict access
or viewing by Customer Personnel.
6.8 NO RELIEF.
The inspection, examination, observation, agreement to or approval,
waiver or deviation by Customer with respect to any design, drawing,
specification, or other documentation produced under this Contract shall not
relieve Contractor from fulfilling its contractual obligations or result in any
liability being imposed on Customer, unless and to the extent such waiver,
deviation, agreement, or approval specifically provides in writing for such
relief to Contractor or such imposition of liability on Customer.
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6.9 MAJOR SUBCONTRACTS.
Contractor shall require that any Major Subcontract entered into
substantially concurrently with or following the execution of this Contract
include a provision substantially similar to this Article 6 (Access to Work) to
ensure Customer's rights under this Contract, but Contractor shall not be
required to amend any bulk procurement contract to include such provision.
6.10 CONSULTANT ACCESS.
Customer shall submit to Contractor the individual name(s) and
citizenship information pertaining to any proposed representatives or
Consultants who require access to any premises and/or any Contractor or
Subcontractor proprietary information, and Contractor shall have the right to
approve such access for such representatives or Consultants. Contractor shall
approve or disapprove of any such individual name(s) submitted by Customer for
such access within five (5) Business Days of Customer's submission except in the
case of submissions made during Contractor's end-of year Holiday shutdown, in
which case Contractor shall provide such approval or disapproval within ten (10)
Business Days. Such approval shall not be withheld by Contractor unless (i)
Contractor reasonably believes such representative or Consultant is employed by,
or is an Affiliate of a direct competitor of Contractor, or (ii) Contractor has
knowledge of incidents in which such representative or Consultant demonstrated
behavior or activity that, in Contractor's reasonable judgment, is incompatible
with Contractor's ability to achieve the objectives of this Contract. In the
event Contractor disapproves of a representative or Consultant proposed by
Customer, Contractor shall provide Customer with an explanation, which need not
be written, of its reasons for disapproval.
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***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
7. DELIVERY AND DELIVERY INCENTIVES
(a) Deliverable Items, as listed in Table 7.1 below, shall be Delivered
by Contractor to the destinations indicated, on or before the dates ("Delivery
Dates") specified in such Table, as such Delivery Dates may be adjusted in
accordance with this Contract.
<Table>
<Caption>
-------------------------------------------------------------------------------------------------------------------
TABLE 7.1
DELIVERY SCHEDULE
-------------------------------------------------------------------------------------------------------------------
DELIVERABLE ITEM DELIVERY DATE OR PERFORMANCE DATE PLACE OF DELIVERY
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. 1st Satellite, Launch December 31, 2000* Specified Orbital Location for the
Campaign, Launch Services, Satellite, and other locations for
and LEOP (1st Satellite to the provision of services as
Initial Handover) specified in Exhibit B (SOW)
-------------------------------------------------------------------------------------------------------------------
2. Pre-Eclipse Test Report with [***] following completion of Customer's Facilities
respect to the 1st Satellite In-Orbit Testing
-------------------------------------------------------------------------------------------------------------------
3. Post-Eclipse Test Report [***] following the end of the Customer's Facilities
with respect to the 1st first full eclipse period after
Satellite Launch
-------------------------------------------------------------------------------------------------------------------
4. 2nd Satellite, Launch April 11, 2001* Specified Orbital Location for the
Campaign, Launch Services, Satellite, and other locations for
and LEOP (2nd Satellite to the provision of services as
Initial Handover) specified in Exhibit B (SOW)
-------------------------------------------------------------------------------------------------------------------
5. Pre-Eclipse Test Report with [***] following completion of Customer's Facilities
respect to the 2nd Satellite In-Orbit Testing
-------------------------------------------------------------------------------------------------------------------
6. Post-Eclipse Test Report [***] following the end of the Customer's Facilities
with respect to the 2nd first full eclipse period after
Satellite Launch
-------------------------------------------------------------------------------------------------------------------
7. Ground Spare Satellite [***] FOB Contractor's Facilities
-------------------------------------------------------------------------------------------------------------------
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***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-------------------------------------------------------------------------------------------------------------------
TABLE 7.1
DELIVERY SCHEDULE
-------------------------------------------------------------------------------------------------------------------
8. Mission Support Services [***] Contractor's Facilities
-------------------------------------------------------------------------------------------------------------------
9. a. Communications Payload [***] Customer's facilities in
Simulator** Washington, DC
b. Ground Encryptors
-------------------------------------------------------------------------------------------------------------------
10. Satellite Control Software*** [***] Customer's Primary and Back-Up
Satellite Control Centers
-------------------------------------------------------------------------------------------------------------------
11. Dynamic Spacecraft Simulator [***] Primary Satellite Control Center
Software and Hardware
-------------------------------------------------------------------------------------------------------------------
12. Training Per Exhibit B (SOW) Per Exhibit B (SOW)
-------------------------------------------------------------------------------------------------------------------
13. Data & Documentation Per Exhibit B (SOW) Per Exhibit B (SOW)
-------------------------------------------------------------------------------------------------------------------
</Table>
* Assumes (i) Customer makes Program Calendar Payment No.1 on or before July 9,
1999 and (ii) Customer makes timely payment in respect of Engineering Model
Reflector Work Nos. 1, 2 and 3 in accordance with Exhibit G (Payment Plan and
Termination Liability Amount).
** In case of a problem with the Satellite, the engineering models delivered
with the Communications Payload Simulator will be returned to Contractor, at
Contractor's cost, for investigation and testing.
*** If after final definition of the training program provided for in Exhibit
B of this Contract, Customer determines, in its reasonable discretion, that
the [***] time period available for on-site operator training at Customer's
facilities is not sufficient, Contractor agrees to install, at [***],
software that is the then current release of the Satellite Control Center
Software to be provided under this Contract in order to provide additional
time for such training.
(b) Contractor understands and agrees that, with respect to the
Delivery Dates for all Deliverable Items, whether those items are set out in
this Contract or subsequent Amendments to this Contract, time is of the essence
under this Contract. Nothing in the foregoing sentence shall in any way modify
either the specific remedies for default specified elsewhere in this Contract,
including Article 10 (Liquidated Damages for Late Delivery), Article 32.2
(Termination for Contractor's Default), or Article 10.3 (Termination for
Unexcused Delay), or the specific dispute resolution requirements specified in
this Contract.
(c) Packing and shipping shall be in accordance with standard
commercial practices of the aerospace industry and applicable Laws and shall be
effected in such a manner so as to ensure that the item reaches its destination
undamaged.
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***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
(d) Contractor's obligation to Deliver the Work in accordance with
the Delivery Schedule set forth in Table 7.1 above is conditioned upon the
following occurring on or before July 9, 1999: (i) Contractor receives
Program Calendar Payment No. 1 in the amount of Sixty-Eight Million Dollars
($68,000,000) and (ii) Customer raises a minimum of [***] in financing.
(e) If Contractor Launches both the first Satellite and the second
Satellite on or before December 31, 2000, Customer shall pay Contractor an
amount equal to Six Million Dollars ($6,000,000) (in addition to the Contract
Price) on or before thirty (30) Calendar Days after Launch of the second
Satellite.
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8. INSPECTION AND FINAL ACCEPTANCE
8.1 PRELIMINARY INSPECTIONS.
Preliminary inspections of all Work may be made by Customer or its
designated representative at Contractor's or a Subcontractor's facility. All
such inspections shall be made in the presence of a representative of
Contractor. In the event Customer informs Contractor in writing of any Defects
in the Work, Contractor shall remedy such Defects pursuant to the procedures to
remedy Defects as set forth in Article 13 (Corrective Measures in Unlaunched
Satellites and Other Deliverable Items).
8.2 SHIPMENT READINESS REVIEW.
(a) Prior to shipment of each Satellite to the Designated Launch Site,
Contractor shall conduct a Shipment Readiness Review in accordance with the
requirements contained in Exhibit B (SOW) and Exhibit D (Test Plan Requirements)
at Contractor's plant. The Shipment Readiness Review shall cons |
