Contract for On-Orbit Delivery of CD Radio DARS Satellites - CD Radio Inc. and Space Systems/Loral Inc.
AMENDED AND RESTATED
CONTRACT BETWEEN
CD RADIO INC.
AND
SPACE SYSTEMS/LORAL, INC.
FOR
ON-ORBIT DELIVERY OF
CD RADIO DARS SATELLITES*
This document contains data and information proprietary to SPACE SYSTEMS/LORAL
and CD RADIO. This data shall not be disclosed or disseminated, or reproduced in
whole or in part without the express prior written approval of SPACE
SYSTEMS/LORAL and CD RADIO, except to the extent permitted by Article 20.
* This agreement is subject to a confidential treatment request.
The confidential portions have been omitted from this Form
10-Q and have been replaced by asterisks (*). The confidential
portions have been filed separately with the Commission as
provided pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
<PAGE>
TABLE OF CONTENTS
Page
----
Article 1. DEFINITIONS.....................................................2
Article 2. SCOPE OF WORK...................................................5
Article 3. DELIVERABLE ITEMS AND DELIVERY SCHEDULE.........................6
Article 4. PRICE...........................................................8
Article 5. PAYMENTS.......................................................10
Article 6. PURCHASER FURNISHED ITEMS......................................13
Article 7. LAUNCH SERVICES................................................14
Article 8. INSPECTION, INTERIM AND FINAL ACCEPTANCE.......................15
Article 9. CIP POINT, TITLE, AND RISK OF LOSS.............................16
Article 10. ACCESS TO WORK IN PROGRESS.....................................17
Article 11. TAXES AND DUTIES...............................................18
Article 12. IN-ORBIT CHECK-OUT FOR FM-1, FM-2 and FM-3.....................19
Article 13. SATISFACTORY OPERATION.........................................20
Article 14. ADDITIONAL SATELLITE OPTION....................................20
Article 15. SUCCESSFUL INJECTION...........................................21
Article 16. INSURANCE OPTION...............................................21
Article 17. U.S. GOVERNMENT LICENSES FOR FM-1, FM-2 OR FM-3................22
Article 18. FORCE MAJEURE..................................................23
Article 19. PURCHASER'S DELAY OF WORK......................................23
Article 20. RIGHTS IN DATA.................................................24
i
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Page
----
Article 21. PATENT INDEMNITY...............................................25
Article 22. INDEMNITY - PERSONAL INJURY/PROPERTY DAMAGE....................26
Article 23. RESERVED.......................................................27
Article 24. DEFAULT........................................................27
Article 25. WARRANTY.......................................................30
Article 26. DISPUTES AND ARBITRATION.......................................32
Article 27. CHANGES........................................................32
Article 28. MISCELLANEOUS PROVISIONS.......................................33
Article 29. RESERVED.......................................................34
Article 30. INTER-PARTY WAIVER OF LIABILITY................................34
Article 31. AUTHORITY OF THE PURCHASER'S REPRESENTATIVE....................34
Article 32. PUBLIC RELEASE OF INFORMATION..................................35
Article 33. FUNCTIONS NOT THE RESPONSIBILITY
OF THE CONTRACTOR..............................................35
Article 34. RESERVED.......................................................36
Article 35. SATELLITE GROUND STORAGE OPTION................................36
Article 36. NOTICES........................................................38
Article 37. ASSIGNMENT.....................................................40
Article 38. RESERVED.......................................................40
Article 39. RESERVED.......................................................40
Article 40. RESERVED.......................................................40
ii
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Page
----
Article 41. SUPPORT FOR INVESTIGATION OF SATELLITE ANOMALIES...............41
Article 42. INSURANCE......................................................41
Article 43. MISSION OPERATIONS SUPPORT.....................................42
Article 44. DARS LICENSE...................................................42
Article 45. STANDARD OF CONDUCT............................................43
Article 46. ORDER OF PRECEDENCE............................................43
iii
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Page
----
APPENDICES AND ATTACHMENTS
Attachment A Payment Plans
B Milestone Achievement Certification
C Non-disclosure Agreement
D Deferred Financing Term Sheet
iv
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
PREAMBLE
AMENDED AND RESTATED CONTRACT, dated as of June 30, 1998, between CD Radio Inc.,
a corporation organized and existing under the laws of the State of Delaware,
having its principal place of business at 1180 Avenue of the Americas, 14th
Floor, New York, New York 10036 (hereinafter referred to as the "Purchaser"),
and Space Systems/Loral, Inc., a corporation organized and existing under the
laws of the State of Delaware, having a place of business at 3825 Fabian Way,
Palo Alto, California, 94303 (hereinafter referred to as the "Contractor").
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
1
<PAGE>
WITNESSETH:
WHEREAS, the Purchaser and the Contractor are parties to a Contract
dated as of March 2, 1993 (as amended, supplemented or otherwise modified prior
to the date hereof, the "Existing Contract"), pursuant to which, among other
things, the Contractor agreed to construct and deliver three (3) Satellites for
use in the digital audio radio system ("DARS") being developed by the Purchaser
(such system, as modified or expanded from time to time, the "CD Radio DARS
System");
WHEREAS, the Purchaser and the Contractor are parties to a Memorandum
of Agreement, dated as of March 27, 1998 (the "MOA"), pursuant to which the
Purchaser and the Contractor agreed to amend the Existing Contract to, among
other things, provide for the construction, Launch and on-orbit, checked-out
delivery of three (3) Satellites with a fourth Satellite delivered to Ground
Storage for use in the CD Radio DARS System;
WHEREAS, the Contractor and the Purchaser desire to execute and deliver
this Contract to (i) supersede both the Existing Contract and the MOA and (ii)
provide for the construction, Launch and on-orbit, checked-out delivery of three
(3) Satellites with a fourth Satellite delivered to Ground Storage for use in
the CD Radio DARS System;
*
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the Purchaser and the Contractor hereby agree as
follows:
2
Use or disclosure of the data contained on this page is
subject to the restriction on the title page of this Contract.
<PAGE>
Article 1.
DEFINITIONS
The following terms shall have the meanings assigned to them below:
1.1 The "Purchaser" means CD Radio Inc., a Delaware corporation, and
its successors and assigns.
1.2 The "Contractor" means Space Systems/Loral, Inc.
1.3 The "Parties" means the Purchaser and the Contractor.
1.4 "Contract" means this Amended and Restated Contract, its Exhibits
and Attachments plus any amendments hereto or thereto, to which the Parties
agree in writing.
1.5 "Satellite" or "Spacecraft" shall mean a CD Radio DARS Satellite
contemplated by and to be supplied to the Purchaser under this Contract.
1.6 "Mission Operations Support Services" shall mean the services
performed by the Contractor including orbit raising of FM-1. FM-2 and FM-3 and
In-Orbit Testing of such Satellites.
1.7 "Terminated Ignition" shall mean, when, for each Satellite
separately of FM-1, FM-2 and FM-3, Intentional Ignition has occurred and is not
followed by liftoff.
1.8 "Launch Vehicle" means one of the expendable Launch Vehicles used
for the Launch of the CD Radio DARS Satellites, as described in Article 7.
1.9 "Launch Agency" means that organization which is responsible for
the Launch Site and conducting the applicable Launch.
1.10 "Launch Site" means the facility used by a Launch Agency for
purposes of Launching a Satellite.
1.11 "Launch Support" means those services provided by the Contractor,
pursuant to the Statement of Work hereto, in support of a Launch by a Launch
Agency.
1.12 "Launch" of a Satellite means Intentional Ignition.
3
Use or disclosure of the data contained on this page is subject to
the restriction on the title page of this Contract.
<PAGE>
1.13 "Launch Services Agreement" means the Contract(s) between the
Contractor and the Launch Agency which provides the terms and conditions for
Launching one or more Satellites which are being constructed under this
Contract.
1.14 "Ground Storage" of a Satellite means a condition where the
Satellite or its component parts are secured in a controlled environment for
preservation on the ground.
1.15 "Effective Date of Contract" or "EDC" means March 2, 1993.
1.16 "Affiliate" with respect to any person or entity, shall mean any
person or entity directly or indirectly controlling, controlled by or under
common control with such person or entity.
1.17 "Intentional Ignition" means the ignition of the first stage main
engine(s) of the Launch Vehicle. 1.18 "Launch Pad" shall mean the designated
area at the Launch Site from which the Satellite will be Launched.
1.19 "FM" means, with respect to any Satellite, Flight Model.
1.20 *
1.21 *
1.22 "Data and Documentation" means the information to be provided by
the Contractor in accordance with Exhibit A, Annex 2, Deliverable Document List.
1.23 "Price" shall have the meaning specified in Article 4 of this
Contract, as reduced or increased from time to time in accordance with the terms
of this Contract.
1.24 *
1.25 "In-Orbit Check Out Amount" shall mean payments numbered 20B, 21E
and 22E for FM's 1, 2 and 3, respectively, (e.g., milestones entitled "Complete
IOT") as shown on Attachment A to this Contract.
1.26 "On-Orbit/Checked Out" shall mean a Satellite that is placed in an
orbital location as defined in Exhibit B, Section 1, (i.e., on-orbit)and which
has been tested in accordance with Exhibit D, Test Plan, to validate the
Satellite's performance as specified in Exhibit B.
4
Use or disclosure of the data contained on this page is subject to
the restriction on the title page of this Contract.
<PAGE>
1.27 "Insurance Management Support Services" shall mean the technical
assistance provided by the Contractor to the Purchaser in support of the
procurement of insurance for the Satellites.
1.28 "Satellite Failure" means (i) a Satellite that has a service life
that, at any point in time, is predicted to be less than six (6) years,
including the number of years that have already occurred since the date of
completion of in-orbit testing or (ii) a Satellite that, at any point in time,
has fewer than fifty percent 50% of its EIRP specified in Exhibit B.
1.29 *
1.30 "In-Orbit Testing" or "IOT" shall have the meaning described in
Exhibit A, Statement of Work.
1.31 *
5
Use or disclosure of the data contained on this page is subject to
the restriction on the title page of this Contract.
<PAGE>
Article 2.
SCOPE OF WORK
2.1 Work Effort. The Contractor shall provide the necessary personnel,
material, services, and facilities, to manufacture, test and deliver
On-Orbit/Checked Out or to Ground Storage as specified in Sub-Article 3.3, four
(4) complete Spacecraft in accordance with the Satellite Performance
Specification, Exhibit B to this Contract, and perform the services described in
Exhibit A, Statement of Work, (except those items of hardware and services
listed as "optional," unless such options are exercised by the Purchaser in
accordance with the terms of this Contract), to the extent specified in this
Contract, and to perform the work required hereunder in accordance with the
Exhibits listed below, which are attached hereto and made a part hereof by
reference:
2.1.1 Exhibit A, Statement of Work (SOW) Revision 5, dated 21 July
1998, SS/L-TP93002-02
2.1.2 Exhibit B, Satellite Performance Specification, Revision 9, dated
21 July 1998, SS/L-TP93002-03
2.1.3 Exhibit C - Product Assurance Program Plan, Revision 2, dated 14
January 1997, SS/L-TP93002-04
2.1.4 Exhibit D - Test Plan, Revision 3C, dated 21 July 1998,
SS/L-TP93002-05
2.1.5 Exhibit E - Dynamic Simulator Specification dated 21 July 1998,
SS/L-TP93002-06
*
6
Use or disclosure of the data contained on this page is subject to
the restriction on the title page of this Contract.
<PAGE>
Article 3.
DELIVERABLE ITEMS AND DELIVERY SCHEDULE
3.1 Satellite Delivery. Each of the Satellites to be delivered
On-Orbit/Checked Out shall be delivered in accordance with the provisions of
Sub-Article 3.3 below and Exhibit A, with such delivery being deemed to have
occurred upon completion of In Orbit Testing of the applicable Satellite which
is conducted to verify that the performance of the Satellite has not degraded
during Launch. For a Satellite delivered into Ground Storage pursuant to
Sub-Article 3.3 or Article 35, delivery shall be deemed to have occurred when
the Satellite arrives at the designated Ground Storage site.
3.2 Delivery of Services. Delivery of services shall be deemed to have
occurred when such services have been completed in accordance with the
requirements of Exhibit A.
3.3 Deliverable Items. The goods and services to be delivered and the
corresponding delivery schedule under this Contract are as follows:
Item Description Delivery Schedule Place of Delivery
---- ----------- ----------------- -----------------
1 First Satellite January 30, 2000, per Exhibit B,
(FM-1) On-Orbit/Checked Out Section 1
2 Second Satellite February 28, 2000, per Exhibit B,
(FM-2) On-Orbit/Checked Out Section 1
3 Third Satellite March 31, 2000, per Exhibit B,
(FM-3) On-Orbit/Checked Out Section 1
4 Fourth Satellite May 31, 2000 Purchaser designated
(FM-4) CONUS Ground
Storage site
5-7 Launch Services for November 1999 (FM-1) Launch Site
FM-1, FM-2 and December 1999 (FM-2)
FM-3 in accordance January 2000 (FM-3)
with the terms of
Article 7
7
Use or disclosure of the data contained on this page is subject to
the restriction on the title page of this Contract.
<PAGE>
Item Description Delivery Schedule Place of Delivery
---- ----------- ----------------- -----------------
8 Optional Satellite Per Sub-Article 14.2 Purchaser designated
CONUS Ground
Storage site
9 Dynamic Simulator September 1, 1999 Purchaser CONUS
(Qty 1) TT&C facility
10 Mission Operations Per Exhibit A Per Exhibit A
Support Services
FM-1, FM-2 and
FM-3
11 Insurance As Required N/A
Management Support
Services for FM-1,
FM-2 and FM-3
12 Data and Per Exhibit A Per Exhibit A
Documentation
13 Training Per Exhibit A Palo Alto, CA
New York, NY
14 Insurance Option Per Article 16 N/A
3.4 Late Delivery Penalties. If all of FM-1, FM-2 and FM-3 Satellites
(including applicable Launch Services and one (1) dynamic simulator) are not
delivered On-Orbit/Checked Out by 31 July 2000 the Price shall, unless such
delays are excusable within the meaning of Article 18 - FORCE MAJEURE, be
reduced by Forty-Five-Thousand dollars ($45,000) per day for each day of delay
starting on August 1, 2000 for up to eighty-nine (89) days thereafter with a
maximum Price reduction of Four-Million-Fifty-Thousand dollars ($4,050,000).
If FM-4 is not delivered to Ground Storage by 30 September 2000, then
the Price shall, unless such delay is excusable within the meaning of Article 18
FORCE MAJEURE, be reduced by Fifteen-Thousand dollars ($15,000) per day for each
day of delay starting on October 1, 2000 for up to eighty-nine (89) days
thereafter with a maximum Price reduction of
One-Million-Three-Hundred-Fifty-Thousand dollars ($1,350,000).
3.5 *
3.6 Limit of Liability. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
HEREIN, THE CONTRACTOR SHALL NOT BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL
OR CONSEQUENTIAL DAMAGES OR FOR LOST REVENUES OR PROFITS DUE TO LATE DELIVERY OF
ANY ITEMS, INCLUDING BUT NOT LIMITED TO THE SATELLITES REQUIRED TO BE DELIVERED
UNDER THIS CONTRACT.
3.7 *
3.8 *
3.9 *
8
Use or disclosure of the data contained on this page is subject to
the restriction on the title page of this Contract.
<PAGE>
Article 4.
PRICE
The price to be paid by the Purchaser to the Contractor for performance
of its obligations under this Contract is
Four-Hundred-Thirty-Eight-Million-Forty- Thousand Dollars ($438,040,000) plus
the price of the Launch Services provided by the Contractor in accordance with
Article 7 (the "Price").
The Price does not include any of the options available to the
Purchaser under the terms of this Contract. *
9
Use or disclosure of the data contained on this page is subject to
the restriction on the title page of this Contract.
<PAGE>
Article 5.
PAYMENTS
5.1 General.
5.1.1 Payments by the Purchaser to the Contractor of the Price shall be
in accordance with the applicable Payment Plan provided in Attachment A.
5.1.2 *
5.1.3 *
5.1.4 *
5.2 *
5.3 Payment Conditions. * All payments to the Contractor from the
Purchaser shall be in United States Dollars and shall be made by electronic
funds transfer (EFT) to the following account:
BANK OF AMERICA, NT & SA
SPACE SYSTEMS/LORAL
ACCOUNT NO. 75-69165
CHICAGO, ILLINOIS
ABA #071-000-039
or other such accounts as the Contractor may specify from time to time in
written notices to the Purchaser.
5.4 Payments Associated with Options. In the event that the Purchaser
exercises any of the options provided for under this Contract, then the
Purchaser shall make payments for such option(s) in accordance with the
respective Payment Plans which are a subset of Attachment A hereto.
5.5 *
10
Use or disclosure of the data contained on this page is subject to
the restriction on the title page of this Contract.
<PAGE>
Article 6.
PURCHASER FURNISHED ITEMS
6.1 Facilities for IOT. The Purchaser shall make available to the
Contractor the use of the Purchaser's Satellite control facilities for the
purposes of In-Orbit Testing of the Satellites.
6.2 Spacecraft Monthly Reports. The Purchaser shall provide to the
Contractor, no less frequently than monthly during the on-orbit life of each
Satellite, an informal letter report which shall describe the general health and
operating status of the Satellites and specifically identify any defined
anomalies. For the purpose of this Article, a Satellite anomaly means any
occurrence in-orbit that was not anticipated in the Satellite Orbital Operation
Handbook (SOOH) delivered to the Purchaser pursuant to Annex 2 of Exhibit A. In
the event that a Satellite anomaly is encountered, the Purchaser shall provide
and/or give access to such data as the Contractor may require for investigation
and/or correction of such anomaly. Further, the Purchaser shall grant such
reasonable access to ground stations and the Satellites as the Contractor might
require for an investigation of such anomaly. The Contractor shall use its best
efforts to understand the anomaly.
6.3 Purchaser Delays. If the Contractor is delayed due to failure of
the Purchaser to perform its obligations under this Article, the Contractor
shall notify the Purchaser of such delay and failure. If the Purchaser fails to
cure such failure within thirty (30) days thereafter, the Contractor shall have
the option to perform such obligations on behalf of the Purchaser; if the
Contractor does so, it will so notify the Purchaser and the Purchaser shall
reimburse the Contractor by means of an equitable adjustment in the Price,
schedule, and other affected portions of this Contract. Whether or not the
Contractor elects to perform such Purchaser obligations, delays caused by the
Purchaser's failure shall be subject to the provisions of Article 19 - PURCHASER
DELAY OF WORK.
11
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 7.
LAUNCH SERVICES
7.1 Atlas, Sea-Launch and Proton Launch Services. Subject to the
provisions set forth below, the Contractor and the Purchaser agree that Launch
services under this Contract shall consist of three (3) Launches ("Launch
Services") and shall be provided on two (2) Proton Launch Vehicles and an Atlas
IIIA Launch Vehicle. The Contractor agrees that FM-1 and FM-2 shall be Launched
on Proton Launch Vehicles and, subject to the provisions set forth below, that
FM-3 shall be Launched on an Atlas IIIA Launch Vehicle.
In the event that the Contractor, after consultation with the
Purchaser, determines that the Atlas IIIA Launch Vehicle is not suitably
optimized for Launch of FM-3 (which determination shall be made prior to August
27, 1998), then the Purchaser shall, by August 28, 1998 instruct the Contractor
to substitute either a Proton Launch Vehicle (to the extent that a Proton Launch
Vehicle is available), a Sea-Launch Launch Vehicle or an Atlas IIIB Launch
Vehicle (to the extent that an Atlas IIIB Launch Vehicle is available) for such
unsuitable Launch Vehicle. Any such substitution of Launch Vehicles shall not
change the applicable Launch dates or delivery schedule contained in Sub-Article
3.3.
* On or before August 3, 1998, the Contractor shall inform the Purchaser, in
writing, whether a Sea-Launch Launch Vehicle which may be selected by the
Purchaser can be replaced by an additional Proton Launch Vehicle. In the event a
Launch Failure occurs in the industry that causes a postponement of a scheduled
Launch, the Contractor will work with the Purchaser and its Launch Agencies to
obtain the earliest possible Launch date for the affected Satellite.
7.2 Ariane Launch Vehicles. The Contractor shall use reasonable best
efforts, provided they entail no net cost or liability to the Contractor and the
Purchaser, to modify its Multiple Launch Service Agreement ("MLSA") with
Arianespace S.A. ("Arianespace") to add the two (2) Ariane launchers which were
previously under contract between the Purchaser and Arianespace. In this
connection, the Contractor shall use reasonable best efforts, provided they
entail no net cost nor liability to the Contractor and the Purchaser, to secure
Arianespace's agreement to reimburse the Purchaser, fully or partially, for all
amounts paid under the Purchaser/Arianespace agreement. Such efforts will be
made to secure the reimbursement prior to March 31, 2000 although no assurances
can be made. The Contractor agrees to include the Purchaser in (or at least to
consult on a regular basis with the Purchaser regarding) the Arianespace
negotiations that directly affect the Purchaser's interests. Upon reaching
successful agreement with Arianespace, the
12
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Contractor will inform the Purchaser of the terms of the agreement and promptly
pay over to the Purchaser any reimbursement amounts paid by Arianespace in
connection with the Purchaser/Arianespace agreement.
7.3 *
13
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 8.
INSPECTION, INTERIM AND FINAL ACCEPTANCE
8.1 Inspections and Testing of Satellites. The Satellites shall be
subjected to inspection and acceptance testing in accordance with Exhibit A,
Statement of Work, Exhibit C, Product Assurance Plan and Exhibit D, Test Plan.
The Purchaser shall have the right to conduct inspections of the Satellites and
witness acceptance testing in accordance with the paragraph below, and to
examine the test data resulting from such tests. The Contractor will give
reasonable advance notice to the Purchaser, when practicable, as to the time
such tests will be conducted and the nature of the test. Failure of the
Purchaser to witness the tests shall not prevent the tests from proceeding.
8.2 Interim Acceptance of the Satellites. The Satellite(s) will be
inspected and subject to Interim Acceptance by the Purchaser at the Contractor's
Palo Alto facility. Upon completion of the Purchaser's inspection of the
Satellites and upon satisfactory completion of the acceptance testing by the
Contractor, the Purchaser shall provide written notice to the Contractor of its
Interim Acceptance of a Satellite. This written Interim Acceptance shall be
provided at the Satellite Pre-shipment Review, to be held in Palo Alto, prior to
the shipment of the Satellites to the Launch Site for FM-1, FM-2 and FM-3 or to
Ground Storage for FM-4.
8.3 Final Acceptance of FM-1, 2 and 3 Satellites. When each of FM-1,
FM-2 and FM-3 arrive at the Launch Site, inspection and verification testing
will be performed by the Contractor to make sure that no damage occurred to the
Satellites during shipment to the Launch Site. The Contractor shall then conduct
the Satellite Launch Readiness Review in accordance with Exhibit A, Statement of
Work. Final Acceptance of a Satellite shall be deemed to occur upon delivery
On-Orbit/Checked Out. The Parties sole rights and remedies in the event of Final
Acceptance based on Satisfactory; Less Than Satisfactory Operation, or Satellite
Failure, shall be as set forth in Article 12, In-Orbit Check-Out.
8.4 Final Acceptance of the Fourth Satellite. Final Acceptance of FM-4
shall be deemed to occur only upon delivery of such Satellite to the Purchaser's
designated CONUS Ground Storage facility.
14
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 9.
CIP POINT, TITLE, AND RISK OF LOSS
9.1 Title and Risk of Loss. The title for FM-1, FM-2 and FM-3 shall
pass to the Purchaser at the time of delivery of such Satellite On-Orbit/Checked
Out or, in the case of a Satellite delivered for Ground Storage, in accordance
with the requirements of Article 35 hereof. Risk of loss and/or damage for FM-1,
FM-2 and FM-3 shall pass to the Purchaser at the time of Launch of such
Satellite or, in the case of a Satellite delivered for Ground Storage, in
accordance with the requirements of Article 35 hereof. Title and risk of loss
and/or damage for FM-4 shall pass to the Purchaser upon delivery of the
Satellite to the Purchaser designated CONUS Ground Storage site. Neither the
Contractor nor any of its subcontractors or suppliers at any tier shall be
liable to the Purchaser or its agents, representatives, or customers (including
insurers of Satellite(s)) for loss of or damage to a Satellite after Launch
(including if the Contractor furnishes post-Launch mission or operational
support, if any), regardless of the cause or theory. The Contractor's sole
responsibility in the event of such loss or damage arising from or related to
the provision of such support shall be as set forth in Article 25. The Purchaser
agrees to indemnify and hold harmless the Contractor for all costs, expenses and
losses of the Contractor that result from claims or litigation based upon the
Contractor's alleged responsibility, or liability, or the alleged responsibility
of the Contractor's subcontractors or suppliers for loss of, or damage to, the
Satellites occurring after Launch, regardless of the cause or theory.
9.2 CIP Point. The Contractor will provide Carriage and Insurance Paid
(CIP) to the applicable Launch Pad for FM-1, FM-2 and FM-3 and to the applicable
Purchaser designated CONUS Ground Storage site for FM-4.
9.3 Terminated Ignition Contingency Support. In the event of the
occurrence of a Terminated Ignition of the Launch Vehicle used for the Launch of
the FM-1, FM-2 or FM-3, the Parties agree that the Contractor shall immediately
reacquire risk of loss of the affected Satellite and immediately commence work
subsequently required to ready the Satellite for a Launch Vehicle relaunch
(including, as applicable, demating and defueling of Satellite, procurement of
applicable insurance(s), the Contractor taking re-possession of the Satellite
upon its removal from the Launch Vehicle, storage, shipping of Satellite back to
Palo Alto, refurbishing, retesting, re-shipping, and re-initiation and
performance of a subsequent Launch, and any other related effort). It is agreed
by the Parties that such support shall be provided at the Purchaser's expense
and shall be subject to an equitable adjustment to this Contract for schedule
and the price of such work as mutually agreed to by the Parties. Equitable
adjustment for such work and all affected terms of this Contract, its Exhibits
and Schedule(s), as applicable, shall be negotiated within thirty (30) days of
the Terminated Ignition or as otherwise agreed to by the Parties.
15
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
In such event where the Contractor proceeds with the Terminated
Ignition contingency support as described in this Article 9.3, the application
of Article 25 shall also apply.
In such event where the Contractor proceeds with the Terminated
Ignition contingency support and pending final negotiation of an equitable
adjustment, both as described in this Article 9.3, the Parties agree to perform
their respective obligations described elsewhere in this Contract.
16
Use or disclosure of the data contained on this page is subject to
the restriction on the title page of this Contract.
<PAGE>
Article 10.
ACCESS TO WORK IN PROGRESS
10.1 Work in Progress at Contractor's Plant. For the purpose of
observing the quality of the Contractor's performance of work, a pre-agreed
limited number of the Purchaser's personnel (including its consultants who must
be approved in advance by the Contractor) shall be allowed to observe, on a
non-interference basis, work being performed at the subsystem level and above
for the Satellites, at the Contractor's plant. Such observation shall occur
during normal working hours that are reasonable under the circumstances. The
Contractor shall provide office space and access to telephone, copy and fax
machine services for the Purchaser's personnel, not to exceed four (4), at the
Contractor's facility.
10.2 Work in Progress at Subcontractor's Plants. To the extent
permitted by the Contractor's major subcontractors, and any U.S. Government
restrictions, the Contractor shall allow the Purchaser access to work being
performed pursuant to this Contract in subcontractors' plants for the purpose of
observing the quality of subcontractor's performance of work, subject to the
right of the Contractor to accompany the Purchaser on any visit to a
subcontractor's plant. The Contractor will exert its best efforts in
subcontracting to obtain permission for such access to subcontractors'
facilities.
17
Use or disclosure of the data contained on this page is subject to
the restriction on the title page of this Contract.
<PAGE>
Article 11.
TAXES AND DUTIES
11.1 U.S. Taxes (Excluding Sales Taxes). Tariffs, duties, taxes (except
sales taxes) or other charges levied by any taxing authority within the United
States of America on the goods, equipment, materials or effort covered by this
Contract shall be paid by the Contractor.
11.2 U.S. Sales Taxes. The Purchaser shall be responsible for the
payment of any sales taxes levied against the effort under this Contract by any
taxing authority within the United States.
11.3 Foreign Taxes. The Contractor shall be responsible for all foreign
taxes (including sales taxes, if any) on the goods, equipment, materials or
effort covered by this Contract, including those associated with subcontract
work.
11.4 Contractor Payment of Taxes. In the event that the Contractor is
required to pay or withhold any sales tax imposed by any taxing authority within
the United States in connection with this Contract, which is the responsibility
of the Purchaser under the terms of this Contract, and the Contractor pays such
sales tax for the Purchaser, the Price shall be increased by an amount to
account for such sales tax and the amount shall be invoiced by the Contractor as
an obligation that is immediately due and payable by the Purchaser.
11.5 Survival. The provisions of this Article shall survive the
expiration, completion, or termination of this Contract.
18
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 12.
IN-ORBIT CHECK-OUT FOR FM-1, FM-2 and FM-3
12.1 *
19
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 13.
SATISFACTORY OPERATION
For purposes of calculating the In-Orbit Check-Out Amount, the term
"Satisfactory Operation" means that the applicable Satellite is in conformance
with the requirements set forth in Exhibit B - Satellite Performance
Specification to this Contract, taking into account tolerances for measurement
accuracy; provided, however, that any failure of the applicable Satellite to
meet the performance specified in said Exhibit which is capable of being
corrected by switching to one redundant unit in the Satellite within 30 minutes
after said failure is discovered or which does not have a material impact on
Satellite performance (including broadcast capacity and useful life), shall not
be deemed as causing nonconformance to said Exhibit.
20
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 14.
ADDITIONAL SATELLITE OPTION
14.1 Order for Optional Satellite. The Purchaser may, at its option to
be exercised by written notice delivered to the Contractor at any time on or
before 1 May 2000, order the Contractor to produce and deliver CIP to a
Purchaser designated CONUS Ground Storage site an additional Satellite identical
to those being furnished pursuant to Article 2- SCOPE OF WORK.
14.2 Delivery of Optional Satellite. If the optional Satellite is
ordered on or before 1 November 1998, then the delivery of the optional
Satellite shall be six months following the delivery of FM-4 ordered hereunder.
If the optional Satellite is ordered after 1 November 1998, then the delivery of
this optional Satellite shall be 28 months after the option is exercised, or six
months following the delivery of FM-4 ordered hereunder, whichever is later.
14.3 *
14.4 Payment Plan. A Payment Plan for an optional Satellite ordered
under this Article is included in the Payment Plan, Attachment A.
14.5 Terms and Conditions. In the event that the option provided for
under this Article is exercised by the Purchaser, then the terms and conditions
of this Contract shall be applicable to such option (unless the Parties agree
otherwise), except for the financial and delivery provisions of the Contract
which will be modified to reflect the procurement of the additional optional
Satellite.
21
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 15.
SUCCESSFUL INJECTION
15.1 Definition. Injection of a Satellite shall be considered
successful if both of the following circumstances occur:
a. No damage occurs to the Satellite which can be shown to
have resulted from Launch Failure or malfunction.
b. The elements of the transfer orbit attained by the Launch
Vehicle and Launch Vehicle orientation at the time of separation of the
Satellite from the Launch Vehicle are within the 3-sigma limits of the Launch
Vehicle performance established by the Contractor.
15.2 Unsuccessful Injection. If the transfer orbit attained by the
Launch Vehicle or Launch Vehicle orientation at the time of separation of the
Satellite from the Launch Vehicle are outside the 3sigma limits, the Satellite
injection shall be considered unsuccessful. However, the Contractor shall use
its best efforts to utilize the propulsion capabilities of the Satellite to
achieve a successful final orbit. Notwithstanding achievement of a successful
final orbit, this situation shall be treated as an "Unsuccessful Injection."
Payment of the In-Orbit Check Out Amount for the applicable Satellite shall be
made and the Purchaser shall then have the right to use said Satellite for any
purpose without incurring any obligation to the Contractor (subject to the terms
of the Purchaser's salvage provision of any applicable insurance policy).
22
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 16.
INSURANCE OPTION
16.1 Exercise of Option. The Purchaser may, at its option, to be
exercised by written notice delivered to the Contractor by
March 31, 1999 for FM-1, FM-2 or FM-3 order the Contractor to procure Launch
insurance to cover the risk of loss to the applicable Satellite for the period
of time from Launch (as defined in this Contract) through a period after Launch
which shall be defined by the Purchaser at the time of option exercise.
16.2 Price and Payment Terms. Upon written receipt by the Contractor of
the Purchaser's election to exercise this option, the Contractor shall provide
the Purchaser with the price and payment terms for this option within thirty
(30) days. If the Purchaser accepts the Contractor's price and payment terms,
then the exercise of this option shall be subsequently effected through an
amendment to this Contract.
16.3 Risk of Loss and Title. Subsequent to agreement by the Parties on
the price and applicable terms for this option, the Parties agree that risk of
loss of the effected Satellite(s) shall pass at the end of the period covered by
this insurance option.
16.4 Terms and Conditions. In the event that the option provided for
under this Article 16 is procured by the Purchaser, (i) the remaining terms and
conditions of this Contract, as applicable, and, as modified in this Article 16,
shall apply, and (ii) the Purchaser and the Contractor agree to incorporate
appropriate language required to support this effort (e.g., applicable insurance
related definitions and language).
23
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 17.
U.S. GOVERNMENT LICENSES FOR FM-1, FM-2 OR FM-3
17.1 U.S. Government License. The Contractor shall have the
responsibility to obtain export licenses as required for delivery and Launch of
FM-1, FM-2 and FM-3. The Purchaser agrees to use its best efforts to assist the
Contractor in such efforts. The Contractor shall have no liability for costs,
damages or expenses incurred by the Purchaser for any reason whatsoever,
resulting from or in connection with any decision on the part of the U.S.
Government with regard to the issuance of a license, or refusal to issue a
license for export or Launch on a non-U.S. Launch Vehicle. Both Parties agree to
abide by the provisions of any license issued by the U.S. Government.
17.2 Purchaser's Documentation Required for License Application. The
Purchaser agrees to provide the Contractor with the Purchaser's data or
documentation, as may be required for submitting any license request.
24
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 18.
FORCE MAJEURE
It is recognized by the Parties that a Force Majeure event may delay
the performance of the work on the Program or cause non-performance of this
Contract by the Contractor, provided however that the Contractor shall use its
best efforts to avoid or minimize the effects of such late delivery, delay or
non-performance. Such excusable delay shall not be a default hereunder or a
ground for termination hereof.
18.1 Definition. Force Majeure shall include any event beyond the
reasonable control of the Contractor and its subcontractors and shall
include, but will not be limited to, acts of God, acts of a public enemy, acts
of any Government in its sovereign capacity, war and warlike events, unusually
severe weather, fire, mud slides, earthquakes, floods, epidemics, quarantine
restrictions, sabotage, riots and embargoes; which in every case, are beyond the
reasonable control and without the fault or negligence of the Contractor and its
subcontractors. Upon the occurrence of Force Majeure, an equitable adjustment
shall be negotiated in the schedule and other affected portions of this
Contract. In addition , failure to deliver the Launch Services required by this
Contract due to causes beyond the Contractor's control (including prior failures
of the designated Launch Vehicle) will be an excusable delay under this Article
18.
18.2 Delayed Delivery. Accordingly, the Contractor shall not be
responsible for the late delivery, delay of final completion or
non-performance of its contractual obligations due to Force Majeure events to
the extent such events affect the delivery, completion or non-performance under
this Contract.
18.3 Notification. The Contractor shall advise the Purchaser in
writing as soon as possible after the Contractor has learned of a
delay or potential delay but not later than five (5) days after the onset, and
again at the termination, of a Force Majeure event.
25
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 19.
PURCHASER'S DELAY OF WORK
If the performance of all or any part of the work required by this
Contract is delayed or interrupted by (1) any act of the Purchaser in the
administration of this Contract, or (2) by any acts of the Purchaser which are
not expressly or impliedly authorized by this Contract, or (3) by the
Purchaser's failure to perform its contractual obligations within the time
specified in this Contract, or within a reasonable time if no time is specified,
then this Contract shall be equitably adjusted in the Price, performance
requirements, schedule, and/or any other affected terms of this Contract. Such
delay of work does not include that caused by a Force Majeure event.
26
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 20.
RIGHTS IN DATA
The Contractor shall retain all rights, title and interest in any
Contractor data, invention, discovery or improvement utilized or developed by
the Contractor during the performance of this Contract.
20.1 Deliverable Data. The Purchaser's officers, employees,
consultants, representatives and agents shall have the perpetual, paid-up,
royalty-free, world-wide, nonexclusive right to use the deliverable Data and
Documentation for the purpose of establishing, operating, and maintaining the CD
Radio DARS System and for no other purpose. The Purchaser's officers, employees,
consultants, representatives, and agents shall not disclose such Data and
Documentation (or any other data obtained by Purchaser under this Contract) to
other companies, organizations or persons without the express written consent of
the Contractor.
20.2 Other Data. All other Contractor data, or data of its
subcontractors, to which the Purchaser may have access to in the course of the
Contractor's performance of this Contract shall remain the property of the
Contractor or its subcontractors and shall not be duplicated, used, or disclosed
to persons other than the Purchaser's officers, employees, consultants,
representatives or agents and shall be used solely to assist the Purchaser in
establishing, operating and maintaining the CD Radio DARS System including
Satellite/ground equipment interface. This data may only be provided to third
parties with the prior written approval of the Contractor, and, if applicable,
Contractor's subcontractors, in each case which consent will not be unreasonably
withheld or delayed. Nothing contained in this Article shall require the
Contractor to provide any data beyond that set forth in Exhibit A.
20.3 Purchaser's Data. The Contractor and its officers, employees,
consultants, subcontractors and representatives shall not disclose any data or
information obtained from the Purchaser and its officers, employees, consultants
or representatives during the performance of its obligations under this Contract
to other companies, organizations or persons without the express written consent
of the Purchaser.
20.4 Confidentiality. The confidentiality obligations imposed on the
Contractor and Purchaser under this Article 20 with regard to data provided
under this Contract shall survive the termination, for whatever reason, of this
Contract, in accordance with the requirements of Attachment C, Non-Disclosure
Agreement.
27
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 21.
PATENT INDEMNITY
21.1 The Contractor, at its own expense, shall defend, indemnify and
hold the Purchaser harmless against any claim or suit against the Purchaser
based on an allegation that the manufacture of any item in the performance of
this Contract, or the normal intended use, lease or sale of any item delivered
or to be delivered under this Contract, infringes any U.S. letters patent,
copyrights or trade secrets, and shall pay any royalties and other costs of the
settlement of such claim or suit and the costs and damages finally awarded,
including reasonable attorney fees as the result of any suit, provided that the
Purchaser promptly notifies the Contractor in writing of any such claim or suit
and gives the Contractor authority and such assistance and information as is
reasonably available to the Purchaser for the defense of such claim or suit.
21.2 If the manufacture of any item in the performance of this
Contract, or the normal intended use, lease or sale of any item delivered under
this Contract, is enjoined as a result of a suit based on such claim of
infringement, the Contractor shall resolve the matter by negotiating a license
or other agreement so that the injunction no longer pertains; otherwise, the
Contractor shall be liable to the Purchaser for the Purchaser's additional costs
and damages arising as a result of such injunction, subject to the limitation
set forth in Sub-Article 21.6 provided that the conditions of Sub-Article 21.3
herein do not apply.
21.3 The indemnity provided under this Article shall not apply to the
Contractor's delivery of normally non-infringing items and their intended use
which are rendered infringing by the Purchaser's modification of said items or
by a combination of said items with items not provided by the Contractor under
this Contract.
21.4 The indemnity provided under this Article does not extend to any
infringement resulting from a change in method of manufacture of an item to be
delivered, ordered by the Purchaser pursuant to Article 27 - CHANGES, or the
stipulation by the Purchaser of the specific design of an item to be delivered
if infringement would not have occurred but for compliance with such change or
design.
21.5 The indemnity provided under this Article does not extend to any
claim that the placement of any Satellite in any orbit other than
geostationary(e.g., a highly inclined geosynchronous orbit) directed or
stipulated by the Purchaser infringes the intellectual property rights of any
third party.
21.6 *
28
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 22.
INDEMNITY - PERSONAL INJURY/PROPERTY DAMAGE
22.1 Contractor Indemnification of the Purchaser. The Contractor shall
indemnify and hold harmless the Purchaser, its officers, directors, employees,
consultants, representatives and agents from any loss, damage (not including any
lost profits or consequential damages), claims, liability, and causes of action
for injury or death of any third party, or for damage to, or destruction of,
third party property (excluding any Satellite provided under this Contract
following the Launch of such Satellite) arising out of negligent acts or
omissions by the Contractor, its officers, directors, employees, consultants,
representatives, agents or subcontractors in connection with, or relating to,
the manufacture, testing, and delivery of a Satellite occurring at or before the
Launch or, if delivered to Ground Storage, delivery to Ground Storage, of the
last Satellite ordered under this Contract, except to the extent such loss,
damage, claims, liabilities or causes of action arise from the fault or
negligence on the part of the Purchaser, its officers, directors, employees,
consultants, representatives, agents or subcontractors. The Contractor's
responsibility with respect to items delivered hereunder shall be solely
governed by the provisions of Article 25, WARRANTY.
22.2 Purchaser Indemnification of Contractor. The Purchaser shall
indemnify and hold harmless the Contractor, its officers, directors, employees,
consultants, representatives and agents from any loss, damage (not including any
lost profits or consequential damages), claims, liability, and causes of action
for injury or death of any third party, or for damage to or destruction of third
party property arising out of negligent acts or omissions by the Purchaser, its
officers, directors, employees, consultants, representatives, agents, or
subcontractors occurring at or before the Launch (or, if delivered to Ground
Storage, delivery to Ground Storage) of the last Satellite ordered under this
Contract, except to the extent such loss, damage, claims, liabilities or causes
of action, arises from the fault or negligence on the part of the Contractor,
its officers, directors, employees, consultants, representatives, agents, or
subcontractors.
22.3 Property Damage Insurance. The Contractor certifies it has all-
risk property insurance and will maintain such policy through completion of this
Contract. The Contractor will use best efforts to include the Purchaser as a
named beneficiary, at no additional cost to Contractor, under any indemnities or
insurance provided by a Launch Agency against claims by third parties for bodily
or property damage resulting from a Launch.
29
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 23.
RESERVED
30
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 24.
DEFAULT
24.1 Failure to Perform by the Contractor. Subject to the expiration of
the Late Delivery Penalty Periods provided in Article 3.4, if the Contractor (1)
fails to deliver the deliverable items or perform the work under the Contract
within the time specified herein, or any approved extension thereof, or (2)
fails to prosecute the work so as to endanger performance of this Contract, or
(3) fails to perform any of the other material provisions of this Contract, and
in each case does not cure such failure within 30 days (or such longer period as
authorized by the Purchaser) after receipt from the Purchaser of written notice
of such failure, then the Purchaser, at its option, may terminate this Contract
in whole or in part by written notice of default. Upon termination for default,
the Contractor shall be reimbursed for the terminated work as follows: *
24.2 *
24.3 *
24.4 Contractor Termination.
24.4.1 The Contractor may terminate this Contract for the Purchaser's
failure to comply with any material provision of this Contract; provided, that
the right of the Contractor to terminate this Contract upon breach by the
Purchaser of any of its covenants and agreements set forth in Sub-Articles 5.1.2
through 5.1.4 hereof shall be governed by Sub-Article 24.4.2 below. Such
termination, under this Sub-Article 24.4.1, will become effective should the
Purchaser fail to correct such nonperformance within thirty (30) days of receipt
of notice in writing from the Contractor.
24.4.2 (i) The Contractor may immediately terminate this
Contract upon the occurrence of an "Event of Default" (as such term is defined
in the Bank of America Credit Agreement) under the Bank of America Credit
Agreement. Any such termination under this Article 24.4.2 shall become effective
upon delivery to the Purchaser of notice of such termination in writing from the
Contractor.
(ii) The Contractor may immediately terminate this Contract
upon a breach by the Purchaser of any of its covenants and agreements contained
in Sub-Article 5.1.4, such termination to become effective upon delivery to the
Purchaser of notice of such termination in writing from the Contractor.
31
Use or disclosure of the data contained on this page is subject to
the restriction on the title page of this Contract.
<PAGE>
(iii) The Contractor may terminate this Contract upon a breach
by the Purchaser of any of its covenants and agreements contained in Sub-Article
5.1.3. Such termination shall only become effective should the Purchaser fail to
correct such non-performance within thirty (30) days of receipt of notice of
such termination in writing from the Contractor.
(iv) *
24.4.3 *
The Contractor's termination claim under Sub-Article 24.4 (a) through
(d) shall be forwarded to the Purchaser within ninety (90) days of the
Contractor's notice of termination to the Purchaser. The Purchaser may require
at its expense that the Contractor's claim for the above costs be verified by an
independent party. Such verification would exclude Contractor's Proprietary
Data.
24.5 Residual Inventory and Unfurnished Launch Services. Following the
submission of the Contractor's termination claim to the Purchaser, the
Contractor shall dispose of the residual inventory and unfurnished Launch
Services using its best efforts to purchase or sell any parts, components,
boxes, Launch Service(s) or subsystems originally bought or manufactured for
this Contract on the best terms possible in the circumstances, *. In the event
the amount of the Contractor's termination claim exceeds the amounts paid to the
Contractor to the date of termination, *, to the termination claim. In the event
that payments to the Contractor by the Purchaser to the date of termination,
plus the amount received from the disposal of such inventory, is in excess of
the Contractor's termination claim, *. At the conclusion of the Contractor's
claim for lost profits and damages allowed under Sub-Article 24.4.1 (e), any
excess shall be promptly refunded to the Purchaser. In the event that the amount
paid to the Contractor to the date of termination, *, if any, is insufficient to
cover the amount of the Contractor's termination claim, then the Contractor
shall have the right to proceed against the Purchaser for the amount of such
excess.
24.6 LIMITATION OF THE PURCHASER'S LIABILITY. THE RIGHTS AND REMEDIES
SET FORTH IN THIS Article SHALL BE THE SOLE REMEDIES TO WHICH THE CONTRACTOR IS
ENTITLED IF THE PURCHASER FAILS TO MEET OR PERFORM ITS OBLIGATIONS UNDER THIS
CONTRACT. THE PURCHASER SHALL HAVE NO LIABILITY FOR CONSEQUENTIAL DAMAGES.
32
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 25.
WARRANTY
The Contractor warrants that (i) for FM-1, FM-2 and FM-3, from Interim
Acceptance pursuant to Article 8.2 up to Launch or (ii) for FM-4 for a period *
starting from Interim Acceptance pursuant to Article 8.2, each Satellite is in
accordance with the applicable specification and other requirements of this
Contract, and is free from defects in materials and workmanship. This warranty
is subject to the following provisions with respect to such Satellite(s).
25.1 Unlaunched Satellite(s). During the warranty period, either party
may give notice to the other of a defect. The Contractor's sole responsibility
under this warranty shall be either to repair or replace any component which is
discovered during the warranty period to be defective in material or
workmanship, and to retest the repaired or replaced component as is determined
appropriate action by the Parties, in order to place the Satellite in a suitable
condition for Launch. This warranty shall continue for the duration of the
applicable warranty period as stated in this Article 25.
The remedy under this Sub-Article 25.1 shall not apply if adjustment,
repair or parts replacement is required because of accident, unusual physical or
electrical stress, negligence, misuse, failure of environmental control
prescribed in operations and maintenance manuals, repair or alterations by the
Purchaser, its officers, directors, employees, consultants, representatives,
agents or subcontractors, or causes other than ordinary use. If the defect is
not covered by this warranty, the Purchaser shall pay the Contractor the cost of
repairs or replacement, the transportation charges and a reasonable profit. Such
repair cost shall be invoiced to the Purchaser pursuant to the provisions of
Article 5. The remedy stated in this Sub-Article 25.1 is the Purchaser's
exclusive remedy for the Contractor's nonconformance with the warranties set
forth in this Article.
25.2 Transportation Charges. Transportation charges for the repaired or
replaced item shall be at the Contractor's expense only if the Contractor is
found responsible under the terms of this warranty. The Purchaser shall notify
the Contractor in writing of any such defect, relevant information with respect
thereto, and of the intended return of the item sufficiently in advance of the
intended shipment date to arrange shipment should the Contractor so desire.
25.3 Launched Satellite. This warranty shall not apply to a Satellite
after its Launch.
33
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
25.4 Limit of Liability. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS
CONTRACT TO THE CONTRARY, THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES,
EXPRESSED OR IMPLIED, INCLUDING MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, WHETHER ARISING FROM LAW, CUSTOM OR CONDUCT, AND THE RIGHTS AND
REMEDIES PROVIDED HEREIN ARE EXCLUSIVE AND IN LIEU OF ANY OTHER RIGHTS OR
REMEDIES RELATED TO THE DESIGN, MANUFACTURE, MATERIALS, WORKMANSHIP, OR
CONFORMANCE TO SPECIFICATION REQUIREMENTS OF THE SATELLITE(S) AND ASSOCIATED
ITEMS AS ARE SET FORTH IN EXHIBITS A THROUGH E HERETO, (EXCEPT FOR RIGHTS AND
REMEDIES ARISING UNDER Article 8, "INSPECTION AND ACCEPTANCE", Article 12,
"IN-ORBIT CHECK-OUT" AND Article 24, "DEFAULT"). IN NO EVENT SHALL THE
CONTRACTOR BE LIABLE FOR ANY INDIRECT, SPECIAL, EXEMPLARY, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, OR FOR LOST REVENUES OR PROFITS.
34
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 26.
DISPUTES AND ARBITRATION
Any disputes which may arise between the Parties with respect to
performance of obligations or interpretation of this Contract, which cannot be
settled by negotiation between the Parties themselves, shall upon application of
either of the Parties be submitted for settlement by arbitration by the American
Arbitration Association in New York, New York, in accordance with the rules of
commercial arbitration of the American Arbitration Association using three
arbitrators, whose decision and award shall be final and binding on the Parties
and be enforceable by any Court of competent jurisdiction. In resolving any
dispute, the arbitrators shall apply the laws of the State of New York with
respect to all matters, including the interpretation of the terms and conditions
of this Contract. Of the three arbitrators in the case, one shall be appointed
by the Purchaser, one shall be appointed by the Contractor and the third shall
be appointed by the agreement of both Parties. In the event that the Parties
cannot agree on the third arbitrator, then the third arbitrator shall be
appointed by the President of the American Arbitration Association. Each Party
shall bear the costs of preparing and presenting its own case, unless the
arbitrators' award shall provide otherwise.
A party may, pending resolution of a dispute in an arbitration
proceeding brought under this Article 26, nevertheless seek specific performance
in any court having jurisdiction therefor, of the obligations, undertakings,
agreements and covenants of the other party pursuant to this Contract.
35
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 27.
CHANGES
27.1 Changes in Scope of Work. Purchaser-desired changes to the Scope
of Work may be implemented provided the Parties agree in advance upon a mutually
satisfactory Contract adjustment regarding Price, schedule, and other provisions
of this Contract affected by such changes. Any such change shall become
effective only upon the execution by the Parties of an amendment to this
Contract incorporating such changes and the resulting adjustment. The Contractor
shall have no obligation to proceed with the Purchaser-desired changes prior to
the execution of such an amendment or receipt of a funded Authorization to
Proceed (ATP) wherein the Purchaser assumes the cost of the Contractor's
performance on the desired change.
36
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 28.
MISCELLANEOUS PROVISIONS
28.1 Applicable Law. This Contract shall be construed and interpreted
and the rights of the Parties shall be determined, in all respects, according to
the laws of the State of New York (USA), without regard to any principles of
conflicts of law that would result in a choice of law other than New York.
28.2 Amendments and Supplements. This Contract may be amended or
supplemented by additional written Agreements, Articles or Certificates, as may
be determined by the Parties from time to time to be necessary, appropriate or
desirable to further the purpose hereof, to clarify the intention of the
Parties, or to add to or modify the covenants, terms or conditions hereof or
thereof.
28.3 Headings. The headings in this Contract are for convenience only
and shall not be considered a part of, or affect, the construction or
interpretation of any provisions of this Contract.
28.4 Counterparts. This Contract may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same document.
28.5 Severability. In the event any one or more of the provisions of
this Contract shall, for any reason, be held to be invalid or unenforceable, the
remaining provisions of this Contract shall be unimpaired, and the invalid or
unenforceable provisions shall be replaced, if possible, by a mutually
acceptable provision which, being valid and enforceable, comes nearest to the
intention of the Parties.
28.6 LIMITATION OF LIABILITY. THE CONTRACTOR SHALL NOT BE LIABLE
DIRECTLY OR INDIRECTLY TO THE PURCHASER, TO THE PURCHASER'S OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS OR CUSTOMERS, OR TO PERMITTED ASSIGNEES OR SUCCESSOR OWNERS OF
THE SATELLITE(S) FOR ANY AMOUNTS REPRESENTING LOSS OF PROFITS, LOSS OF BUSINESS,
OR INDIRECT, SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING FROM
THE PERFORMANCE OR NONPERFORMANCE OF THIS CONTRACT OR ANY ACTS OR OMISSIONS
ASSOCIATED THEREWITH OR RELATED TO THE USE OF ANY ITEMS OR SERVICES FURNISHED
HEREUNDER, WHETHER THE BASIS OF THE LIABILITY IS BREACH OF CONTRACT, TORT
(INCLUDING
37
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
NEGLIGENCE AND STRICT LIABILITY), STATUTES OR ANY OTHER LEGAL THEORY. IN NO
EVENT SHALL THE CONTRACTOR'S TOTAL LIABILITY UNDER OR IN CONNECTION WITH THIS
CONTRACT EXCEED THE CONTRACT PRICE.
28.7 Alenia. The Contractor has teamed with Alenia Spazio in the
execution of this program. The Parties agree that the previous sentence does not
create a contractual liability or relationship between the Purchaser and Alenia
Spazio under this Contract.
28.8 No Third Party Beneficiaries. Nothing contained in this Contract,
express or implied, is intended to or shall confer upon anyone other the parties
hereto (and their permitted successors and assigns) any right, benefit or remedy
of any nature whatsoever under or by reason of this Contract.
38
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 29.
RESERVED
39
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 30.
INTER-PARTY WAIVER OF LIABILITY
Notwithstanding any indemnification provisions set forth in this
Contract, the Purchaser agrees, on behalf of itself and its officers, directors,
employees, consultants, representatives, agents, subcontractors, insurers, and
customers, to sign and agree to the no-fault, no-subrogation, inter-party waiver
of liability provisions set forth in any Launch Services Agreement prior to
entering on the Launch Site.
40
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 31.
AUTHORITY OF THE PURCHASER'S REPRESENTATIVE
No request, notice, authorization, direction or order received by the
Contractor and issued either pursuant to an Article of this Contract, to a
provision of any document incorporated in this Contract by reference, or
otherwise, shall be binding upon either the Contractor or the Purchaser, unless
issued or confirmed in writing by the Chief Executive Officer of the Purchaser
or by his authorized representative. Designations of authorized representatives
(1) shall be in writing, signed by the Chief Executive Officer of the Purchaser,
and (2) shall define the scope and limitations of the authorized
representatives' authorities. A copy of each such designation and of each
modification or cancellation thereof, shall be furnished to the Contractor. The
Contractor shall immediately notify, in writing, the Chief Executive Officer of
the Purchaser or his authorized representative whenever a request, notice,
authorization, direction, or order has been received from a representative of
the Purchaser other than the Chief Executive Officer of the Purchaser or his
authorized representative, which, but for the lack of authorization on the part
of the issuing Purchaser's representative, would effect a change within the
meaning of Article 27 - CHANGES, or an increase in the Price or amounts allotted
to this Contract, or which but for such lack of authorization, would otherwise
be the basis for the modification of the Contract Statement of Work, delivery or
performance schedule, Price, or any other terms and conditions of this Contract.
41
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 32.
PUBLIC RELEASE OF INFORMATION
32.1 Within a reasonable time prior to the issuance of news releases,
articles, brochures, advertisements, prepared speeches, and other information
releases concerning the work performed hereunder by the Contractor, a
subcontractor or any employee or a consultant of either, the Contractor shall
obtain the written approval of the Purchaser concerning the content and timing
of such releases. Approval will not be unreasonably delayed or denied.
32.2 The Purchaser may issue news releases, articles, brochures,
advertisements, prepared speeches, or other information concerning the CD Radio
DARS System or the products and services to be provided under this Contract
without the express consent of the Contractor; provided that to the extent such
information relates to * or (ii) the Contractor in any other capacity besides
manufacturer, then such information shall only be released for use with the
prior written approval of the Contractor.
42
Use or disclosure of the data
contained on this page is subject to the restriction on the title page of this
Contract.
<PAGE>
Article 33.
FUNCTIONS NOT THE RESPONSIBILITY OF THE CONTRACTOR
33.1 Radio Frequencies. The Contractor is not responsible for radio
frequencies coordination, or the preparation of filings with the Federal
Communications Commission or the International Telecommunications Union/Radio
Communication Bureau registration. The Contractor shall provide technical
support, when needed, to assist the Purchaser in making the above filings.
33.2 General. The Contractor shall not be responsible for any
undertakings not expressly and specifically set forth in this Contract as being
the assigned responsibility of the Contractor.
Article 34.
RESERVED
43
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 35.
SATELLITE GROUND STORAGE OPTION
35.1 Notification. The Purchaser may, at its option to be exercised no
later than September 1, 1999 (for FM-1, FM-2 or FM-3) order the Contractor to
store a Satellite for a period of up to two (2) years after Interim Acceptance
of the Satellite. In the case of FM-4, the Purchaser may, also at its option to
be exercised no later than three (3) months prior to Satellite Pre-Shipment
Review as defined in Exhibit A, order the Contractor to provide Ground Storage
for the Satellite up to two (2) years after Final Acceptance of such Satellite.
35.2 Storage Location. Such Ground Storage shall be performed at a
Contractor controlled facility and shall be conducted in accordance with the
Satellite Storage Plan described in Section 8 of Exhibit D, Program Test Plan.
35.3 *
For a Satellite stored for two (2) years, the Purchaser shall notify
the Contractor of its desire to have such Satellite refurbished or to continue
Ground Storage of a Satellite for up to an additional twelve (12) months beyond
the period specified in Article 35.1. Within ninety (90) days after the
Contractor's receipt of the Purchaser's notice electing refurbishment or
continued Ground Storage, the Contractor shall provide the Purchaser with (i) a
plan for refurbishment and retesting to recertify the Satellite as Launchworthy
or (ii) a plan for continued Ground Storage, in either case together with
proposed adjustments to applicable provisions.
35.4 Payments. Any monthly storage charge referred to in Sub-Article
35.3 shall be paid commencing thirty (30) days from the date the Satellite is
stored and continuing each month until the Purchaser directs the Contractor to
remove the Satellite from storage, conduct the verification tests and ship the
Satellite to the Launch Site. Payment for the verification testing shall be made
30 days after the Contractor issues an invoice for such testing. Payments shall
be made by wire transfer as set forth in Article 5 - PAYMENTS.
35.5 Title and Risk of Loss. Title and risk of Loss to a Satellite
delivered for Ground Storage shall remain with the Contractor at the Storage
Site and notwithstanding the provisions of Article 9 - CIP POINT, TITLE, AND
RISK OF LOSS and/or Article 25, WARRANTY, the Contractor shall assume full
responsibility for any loss or damage to the Satellite during storage and
transportation
44
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
to the Launch Site and while the Satellite is at the Launch Site up to the time
of Launch. *
35.6 Launch Services for a Stored Satellite. In the event that the
Purchaser exercises the option to store a Spacecraft, and subsequent to a period
of storage directs the Contractor to prepare the Spacecraft for Launch, then the
Contract shall be equitably adjusted to cover *.
35.7 Escalation. The Prices quoted in this Article for the storage of a
Satellite shall be escalated in accordance with the formula in Article 5, from
the Effective Date of Contract to the option exercise date.
35.8 Storage at the Contractor's Site. In the event that the Purchaser
directs the Contractor to deliver one or more Satellites for Ground Storage in
accordance with this Article 35, then *.
35.9 Delivery of the Satellite to a Location Named by the Purchaser. In
the event that the Purchaser directs the Contractor to deliver a Satellite to a
location other than one controlled and operated by the Contractor, then *.
35.10 *.
35.11 Maximum Storage Period. In no event shall a Satellite procured
hereunder remain in storage at a location owned and operated by the Contractor
for a period in excess of * of such Satellite by the Purchaser. At the
conclusion of the storage period provided for hereunder, the Purchaser shall
direct the Contractor to deliver the Satellite to a location designated by the
Purchaser. At the time the Contractor receives direction as to the delivery of
such Satellite from storage, the Purchaser shall *.
45
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 36.
NOTICES
Any notices or correspondence required or desired to be given or made
hereunder shall be in writing and shall be effective when delivered to an
authorized recipient party at the address indicated below:
PURCHASER: CD Radio Inc.
1180 Avenue of the Americas, 14th Floor
New York, New York 10036
Phone: (212) 899-5031
Fax: (212) 899-5050
Attention: General Counsel
Phone: (212) 899-5031
Fax: (212) 899-5050
and
CD Radio Inc.
2175 K Street, NW
Washington, CD 20037
Attention: Rob Briskman
Phone: (202) 296-6192
Fax: (202) 296-6265
CONTRACTOR: Space Systems/LORAL, Inc.
3825 Fabian Way
Palo Alto, California 943034697
*
Either party may change the above notice addresses by giving written notice to
the other party of said change.
46
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 37.
ASSIGNMENT
37.1 This Contract may not be assigned other than to an Affiliate,
either in whole or in part, by either party without the express written approval
of the other party (which approval shall not be unreasonably withheld or
delayed); provided however, this clause does not restrict the Contractor from
utilizing subsidiaries or other divisions of its company to manufacture
subsystems or components of the Satellite(s) or other hardware; * assignee with
respect to other satellites.
37.2 Notwithstanding the above, in the event either party is sold to or
merged into another company, its responsibilities under this Contract shall not
be altered, and the successor shall remain liable for performance of this
Contract.
Article 38.
RESERVED
Article 39.
RESERVED
Article 40.
RESERVED
47
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 41.
SUPPORT FOR INVESTIGATION OF SATELLITE ANOMALIES
In the event that a Launched Satellite experiences anomalies during its
operational life, the Contractor will provide reasonable support by qualified
personnel to investigate said anomalies from Palo Alto, CA. * The above effort
shall be provided on the verbal request of the Purchaser which shall be
confirmed in writing within 24 hours of the time of the verbal request.
48
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 42.
INSURANCE
42.1 The Purchaser agrees to obtain any insurer's written agreement to
waive all rights of subrogation against the Contractor and against the
Contractor's subcontractors and suppliers at any tier. The Purchaser agrees to
indemnify and hold the Contractor harmless from and against all costs, expenses
or losses of the Contractor directly or indirectly resulting from any
subrogation action brought by the Satellite insurers.
42.2 The Contractor agrees to provide the Purchaser with quotes to
obtain insurance for FM-1, FM-2, and FM-3 applicable from Launch and orbit
raising through placement of the Satellites in their orbit locations *.
49
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 43.
MISSION OPERATIONS SUPPORT
The Mission Operations Support Services to be provided by the
Contractor under this Contract is as provided for in Exhibit A, Statement of
Work. The Contractor shall not be liable to the Purchaser or any third party for
loss of, or damage to the Satellite(s) resulting from any Contractor acts in
furnishing services to the Purchaser (including any act or failure to act
alleged to be negligent in any degree). The Purchaser agrees to indemnify and
hold the Contractor harmless from and against all costs, expenses and losses
resulting from any claim or litigation directly or indirectly premised on loss
of or damage to any Satellite after Launch.
50
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 44.
*
51
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 45.
STANDARD OF CONDUCT
Both Parties agree that all their actions in carrying out the
provisions of this Contract shall be in compliance with applicable laws and
regulations, and neither party will pay or accept bribes, kickbacks, or other
illegal payments, or engage in unlawful conduct.
52
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.
<PAGE>
Article 46.
ORDER OF PRECEDENCE
In the event of conflict between this Contract, its Exhibits and the
Annexes thereto, the following order of decreasing precedence shall follow:
1. Contract (excluding Exhibits)
2. Exhibit A
3. Exhibit B
4. Exhibit C
5. Exhibit D
6. Exhibit E
IN WITNESS THEREOF, the Parties have executed this Contract as of
the date se t forth below:
SPACE SYSTEMS/LORAL, INC.
SIGNATURE: /s/ C. Patrick DeWitt
-----------------------------------
NAME: C. Patrick DeWitt
-----------------------------------
TITLE: Executive Vice President, Business
-----------------------------------
DATE: July 28, 1998
-----------------------------------
CD RADIO INC.
SIGNATURE: /s/ Andrew J. Greenbaum
-----------------------------------
NAME: Andrew J. Greenbaum
-----------------------------------
TITLE: Executive Vice President and Chief
Financial Officer
-----------------------------------
DATE: July 28, 1998
-----------------------------------
53
Use or disclosure of the data contained on this page is subject to the
restriction on the title page of this Contract.