As filed with the Securities and Exchange Commission on August 10, 1999.
AMENDMENT NO. 1 TO
Delaware 4899 54-1878819
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
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1250 23rd Street, N.W., Suite 57
Washington, D.C. 20037-1100
(202) 969-7100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Joseph M. Titlebaum
Senior Vice President, General
Counsel and Secretary
XM Satellite Radio Holdings Inc.
1250 23rd Street, N.W., Suite 57
Washington, D.C. 20037-1100
(202) 969-7100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
With Copies To:
David B.H. Martin, Esq. Gregory A. Ezring, Esq.
Steven M. Kaufman, Esq. LATHAM & WATKINS
HOGAN & HARTSON L.L.P. 885 Third Avenue
555 13th Street, N.W. Suite 1000
Washington, D.C. 20004 New York, New York 10022
(202) 637-5600 --------------- (212) 906-1200
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (as defined below), check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
EXPLANATORY NOTE TO AMENDMENT NO. 1
This Amendment No. 1 to the XM Satellite Radio Holdings, Inc. Registration Statement on Form S-1 has been filed solely for the purpose of filing certain exhibits to the Registration Statement.
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
Exhibit
No. Description
------- -----------
1.1+ Underwriting Agreement.
3.1+ Restated Certificate of Incorporation of XM Satellite Radio Holdings
Inc.
3.2+ Amended and Restated Bylaws of XM Satellite Radio Holdings Inc.
4.1+ Form of Certificate for our Class A common stock.
5.1+ Opinion of Hogan & Hartson L.L.P. with respect to the common stock
being registered.
10.1 Shareholders' Agreement, dated as of July 7, 1999, by and among XM
Satellite Radio Holdings Inc., American Mobile Satellite Corporation,
Baron Asset Fund, Clear Channel Investments, Inc., Columbia XM Radio
Partners, LLC, DIRECTV Enterprises, Inc., General Motors Corporation,
Madison Dearborn Capital Partners III, L.P., Special Advisors Fund I,
LLC, Madison Dearborn Special Equity III, L.P., and Telcom-XM
Investors, L.L.C.
10.2 Registration Rights Agreement, dated July 7, 1999, by and among XM
Satellite Radio Holdings Inc., American Mobile Satellite Corporation,
the Baron Asset Fund series of Baron Asset Fund, and the holders of
Series A subordinated convertible notes of XM Satellite Radio
Holdings Inc.
10.3 Note Purchase Agreement, dated June 7, 1999, by and between XM
Satellite Radio Holdings Inc., XM Satellite Radio Inc., Clear Channel
Communications, Inc., DIRECTV Enterprises, Inc., General Motors
Corporation, Telcom-XM Investors, L.L.C., Columbia XM Radio Partners,
LLC, Madison Dearborn Capital Partners III, L.P., Madison Dearborn
Special Equity III, L.P., and Special Advisors Fund I, LLC (including
form of Series A subordinated convertible note of XM Satellite Radio
Holdings Inc. attached as Exhibit A thereto).
10.4* Technology Licensing Agreement by and among XM Satellite Radio Inc.,
XM Satellite Radio Holdings Inc., WorldSpace Management Corporation
and American Mobile Satellite Corporation, dated as of January 1,
1998, amended by Amendment No. 1 to Technology Licensing Agreement,
dated June 7, 1999.
10.5* Technical Services Agreement between XM Satellite Radio Holdings Inc.
and American Mobile Satellite Corporation, dated as of January 1,
1998, as amended by Amendment No. 1 to Technical Services Agreement,
dated June 7, 1998.
10.6* Satellite Purchase Contract for In-Orbit Delivery, by and between XM
Satellite Radio Inc. and Hughes Space and Communications
International, Inc., dated , 1999.
10.7+ Agreement by and between XM Satellite Radio, Inc. and
STMicroelectronics Srl, dated November 2, 1998.
10.8* Distribution Agreement, dated June 7, 1999, between OnStar, a division
of General Motors Corporation, and XM Satellite Radio Inc.
10.9* Operational Assistance Agreement, dated as of June 7, 1999, between XM
Satellite Radio Inc. and DIRECTV, INC.
10.10* Operational Assistance Agreement, dated as of June 7, 1999, between XM
Satellite Radio Inc. and Clear Channel Communications, Inc.
10.11* Operational Assistance Agreement, dated as of June 7, 1999, between XM
Satellite Radio Inc. and TCM, LLC.
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II-1
Exhibit
No. Description
------- -----------
10.12+ Agreement, dated as of , 1999 between XM Satellite Radio Holdings
Inc. and Gary Parsons.
10.13+ Employment Agreement, dated as of June 1, 1998, between XM Satellite
Radio Holdings Inc. and Hugh Panero.
10.14+ Letter Agreement with Lee Abrams date May 22, 1998.
10.15+ Letter Agreement with Stelios Patsiokas dated September 14, 1998.
10.16+ Letter Agreement with Heinz Stubblefield dated May 22, 1998.
10.17 Form of Indemnification Agreement between XM Satellite Radio Holdings
Inc. and each of its directors and executive officers.
10.18 1998 Shares Award Plan.
10.19 Form of Non-Qualified Stock Option Agreement.
21.1+ Subsidiaries of XM Satellite Radio Holdings Inc.
23.1+ Consent of Hogan & Hartson L.L.P. (contained in their opinion filed as
Exhibit 5.1).
23.2++ Consent of KPMG LLP.
24.1 Powers of Attorney (included with signature page to registration
statement).
27.1++ Financial Data Schedule.
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++ Previously filed.
+ To be filed by amendment.
* Certain confidential portions of this Exhibit were omitted by means of
redacting a portion of the text. This Exhibit has been filed separately with
the Secretary of the Commission without such text pursuant to our
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
(b) Financial Statement Schedules included separately in the Registration Statement.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this Amended Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the District of Columbia, on the 9th day of August, 1999.
XM Satellite Radio Holdings Inc.
By: *
Name: Hugh Panero
Title: President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amended Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
* President, Chief Executive August 9, 1999
______________________________________ Officer, and Director
Hugh Panero (Principal Executive
Officer)
* Senior Vice President and August 9, 1999
______________________________________ Chief Financial Officer
Heinz Stubblefield (Principal Financial and
Accounting Officer)
* Chairman of the Board of August 9, 1999
______________________________________ Directors
Gary M. Parsons
* Director August 9, 1999
______________________________________
Randall T. Mays
* Director August 9, 1999
______________________________________
Randy S. Segal
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II-3
Signature Title Date
--------- ----- ----
* Director August 9, 1999
______________________________________
Jack Shaw
* Director August 9, 1999
______________________________________
Dr. Rajendra Singh
* Director August 9, 1999
______________________________________
Ronald L. Zarrella
*By: Joseph M. Titlebaum
______________________________________
Joseph M. Titlebaum
Attorney-in-Fact
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II-4
SHAREHOLDERS AGREEMENT
by and among
XM SATELLITE RADIO HOLDINGS INC.
AMERICAN MOBILE SATELLITE CORPORATION
BARON ASSET FUND
COLUMBIA XM RADIO PARTNERS, LLC
CLEAR CHANNEL INVESTMENTS, INC.
DIRECTV ENTERPRISES, INC.
GENERAL MOTORS CORPORATION
MADISON DEARBORN CAPITAL PARTNERS III, L.P.
MADISON DEARBORN SPECIAL EQUITY III
, L.P.
SPECIAL ADVISORS FUND I, LLC
and
TELCOM-XM INVESTORS, L.L.C.
Dated July 7, 1999
Table of Contents
-----------------
Page
----
ARTICLE I. DEFINITIONS 3
Section 1.1 Definitions 3
ARTICLE II. CONDUCT OF BUSINESS; NON-COMPETITION;
COOPERATION OF SHAREHOLDERS 8
Section 2.1 Conduct of Business 8
Section 2.2 Non-Competition 8
Section 2.3 Cooperation of Shareholders 8
ARTICLE III. RESTRICTIONS ON TRANSFER
9
Section 3.1 Initial Transfer Restrictions for Investors 9
Section 3.2 Notice of Proposed Transfer 9
Section 3.3 Transfers and Assignment by American Mobile 10
Section 3.4 Transfers and Assignment by Telcom, Columbia
and Madison 11
Section 3.5 Permitted Transfers 11
Section 3.6 Endorsement of Stock Certificates 11
Section 3.7 Regulatory Approvals; Opinions 12
ARTICLE IV. SHAREHOLDER DEBT AND RECAPITALIZATION AT PUBLIC
OFFERING 13
Section 4.1 Share and Debt Conversion 13
Section 4.2 Conversion of Class B Common Stock into Class A
Common Stock 13
Section 4.3 Submission of Proposal for Conversion to Public
Stockholders 14
ARTICLE V. CORPORATE
GOVERNANCE; VOTING AGREEMENT 14
Section 5.1 Board of Directors 14
Section 5.2 Observation Rights 16
Section 5.3 Removal of Directors 17
Section 5.4 Operational Involvement of Clear Channel,
DIRECTV and the TCM Group 17
Section 5.5 Shareholder Actions 17
ARTICLE VI. CERTAIN REPRESENTATIONS 18
Section 6.1 Existence and Power 18
Section 6.2 Due Authorization; No Contravention 18
Section 6.3 Binding Effect 18
2
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ARTICLE VII. TAG-ALONG RIGHTS; RIGHT OF FIRST REFUSAL 18 Section 7.1 Tag Along Rights 18 Section 7.2 Right of First Refusal 19 ARTICLE VIII. MISCELLANEOUS 20 Section 8.1 Notices 20 Section 8.2 Waiver and Amendment 21 Section 8.3 Specific Performance 21 Section 8.4 Governing Law 21 Section 8.5 Parties In Interest 21 Section 8.6 Severability of Provisions 22 Sect ion 8.7 Plural, Singular 22 Section 8.8 Counterparts 22 Section 8.9 Descriptive Headings 22 Section 8.10 Future Assurances 22 Section 8.11 Termination 22 |
SHAREHOLDERS AGREEMENT
WHEREAS, American Mobile is the holder of one hundred percent (100%) of the issued and outstanding shares of the Company's common stock;
WHEREAS, the Company desires to receive financing for capital expenditures and for working capital;
(i) The Company's common stock held by WorldSpace;
(ii) That certain Convertible Note dated April 1, 1998 in the principal amount of $54,536,112 convertible into 62.3270 shares of the Company's Common Stock, and any interest accrued or capitalized with respect thereto;
(iv) Options to purchase (A) 97.2222 shares of the Company's Common Stock pursuant to the Bridge Option, (B) 128.8876 shares of the Company's Common Stock pursuant to the Additional Amounts Option, and (C) 3.5111 shares of the Company's Common Stock pursuant to the Working Capital Option, each of which is dated as of May 16, 1997 between the Company and WorldSpace; and
(v) The 80.9389 shares of XM common stock pledged under the Security Agreement, dated as of May 16, 1997 between the Company and WorldSpace; and
WHEREAS, pursuant to the WSI Exchange Agreement, XM Ventures has agreed to transfer the XM Interest to American Mobile;
WHEREAS, the Company, American Mobile, and each of the Investors believe it to be in the best interests of the Company, American Mobile, and the mutual
best interests of each of the Investors to set forth herein their agreements with respect to certain matters related to the ownership and corporate governance of the Company.
NOW, THEREFORE, in consideration for the mutual covenants contained herein, the adequacy, receipt, and sufficiency of which are hereby acknowledged, the undersigned hereby agree as follows:
(t) Commission: means the Securities and Exchange Commission or any other
liquidating dividends after the payment of dividends and distributions of any shares entitled to preference.
financing or underwritten High Yield Debt financing pursuant to a registered public offering under the Securities Act or pursuant to Rule 144A thereunder.
(qq) Participation Notice: has the meaning specified in Section 3.3(c).
ARTICLE III.
Prior to the date which is one year after the later of the date of
original issue of the Series A Subordinated Convertible Notes and the last date
that the Company or any Affiliate of the Company was the owner of such
Securities (or any predecessor thereto) (the "Resale-Restriction Termination
Date"), each Investor, except for Baron, may transfer any shares of Capital
Stock held by it only (i) to the Company, (ii) pursuant to a Registration
Statement that has been declared effective
under the Securities Act, (iii) for
so long as such Capital Stock is eligible for resale pursuant to Rule 144A under
the Securities Act, to a person it reasonably believes is a Qualified
Institutional Buyer that purchases for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the transfer is being
made in reliance on Rule 144A under the Securities Act, (iv) pursuant to offers
and sales that occur outside the United States within the meaning of Regulation
S under the Securities Act, (v) commencing only with the period which is six
months after the date of the issuance of such Capital Stock, to an Accredited
Investor purchasing for its own account or for the account of such an Accredited
Investor, or (vi) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of its property
or the property of any investor account or accounts be a
t all times within its
or their control. The foregoing restrictions on resale will not apply
subsequent to the Resale-Restriction Termination Date. If any resale or other
transfer of any Capital Stock is proposed to be made pursuant to clause (v)
above prior to the Resale-Restriction Termination Date, the transferor shall
deliver a letter from the transferee to the Company in form and substance
reasonably satisfactory to the Company, which shall provide, among other things,
that the transferee is an Accredited Investor that is acquiring such Capital
Stock for investment and not for resale or distribution in violation of the
Securities Act. Each Investor acknowledges that the Company reserves the right
prior to any offer, sale or other transfer of the Capital Stock pursuant to
clauses, (iii), (iv), (v) or (vi) above to require the delivery to the Company
of an opinion of counsel to the Investor, certifications and/or other
information reasonably satisfactory to the Company.
(a) Until an Initial Public Offering, except for transfers to Affiliates permitted under this Agreement, each Holder of Capital Stock shall be required to furnish at least 30 days prior written notice to the Company of any proposed transfer of Capital Stock.
(b) During the 30-day period referred to in Section 3.2 (a), any proposed sale, assignment or transfer may be disallowed if the Board of Directors reasonably determines, and provides notice to such requesting Holder, that any such proposed sale, assignment or transfer to the proposed transferee would:
(i) result in a sale, assignment or transfer to a competitor of the Company for SDARS service in the United States;
(ii) be reasonably likely to materially adversely affect the Company's prospects for obtaining from the FCC or other regulatory bodies any necessary licenses or consents for the Company's SDARS system; or
(iii) be reasonably likely to materially adversely affect the Company's ability or prospects for successfully implementing or operating its SDARS system.
(c) Upon any such disallowance by the Board of Directors of a proposed sale, assignment or transfer by a Holder pursuant to Section 3.2(b), counsel to the Company shall be available to discuss with such Holder the reasons for s uch disallowance.
(b) Notwithstanding Section 3.3(a) and subject to Section 3.5, American
Mobile shall have the right to (i) assign or transfer its interest in the
Company to any Person (1) if such Person is an Affiliate of American Mobile or
(2) if such Person owns
10% or more of the outstanding Common Stock of American
Mobile (not including WorldSpace or any Affiliate of WorldSpace); provided that
such assignment or transfer complies with applicable law and, in the case of an
assignment or transfer to a 10% or more holder, American Mobile's right to
effect such assignment or transfer shall be subject to the notice requirement of
Section 3.2(a), compliance with the provisions of Section 3.3(c) and Section 7.1
and any such assignment or transfer may be subject to disallowance pursuant to
Section 3.2(b), and (ii) pledge or hypothecate, in connection with its customary
bona fide financing arrangements (including under its current guaranteed bank
facilities),Capital Stock and any other interest in the Company.
(b) Transfers and encumbrances of Capital Stock may only be made in strict compliance with all applicable terms of this Agreement. Any purported transfer or encumbrance of Capital Stock that does not so comply with all applicable provisions of this Agreement shall be void and ineffective and the Company shall not recognize nor be bound by any such purported transfer or encumbrance and any such purported transfer shall have no effect on the stock transfer books of the Company.
(c) Any assignment or transfer of an interest in the Company pursuant to the terms of this Agreement, other than in a public offering of the Company's Common Stock or an offering pursuant to Rule 144 or 145 under the Securities Act, shall be subject to the assumption by the transferee of the terms and conditions set forth in this Agreement applicable to the transferor.
have determined otherwise, an officer of the Company shall endorse each certificate representing the Capital Stock heretofore or hereafter issued by the Company to any Holder by causing to be placed on the back thereof the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE THE SUBJECT OF A
CERTAIN SHAREHOLDERS AGREEMENT WHICH, AMONG OTHER THINGS, CONTAINS RESTRICTIONS ON THE TRANSFER OF SUCH SECURITIES. A COPY OF THE SHAREHOLDERS AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY.
Upon registration of any Capital Stock under the Securities Act, the Company shall remove such legend from the certificate(s) representing such Capital Stock promptly upon request of the Holder thereof and delivery of such certificate(s) to the Company.
The Company shall, upon presentation of a certificate representing
shares of the Company's Capital Stock with respect to which one or both of the
foregoing restrictions have expired or are not applicable, together with such
evidence (including, when such an opinion would customarily be required by the
Company of its stockholders, an opinion of counsel obtained at the Holder's
expense and reasonably satisfactory
to the Company) of such lapse or
nonapplicability as the Company would reasonably request of stockholders who are
similarly situated, promptly cause to be issued a replacement certificate for
such shares of the Company's Capital Stock without the applicable restrictive
legend.
(a) To the extent that any regulatory approval, notification or other submission or procedure is required or customarily provided in connection with the exercise of any right or obligations as set forth in this Agreement with respect to the transfer or assignment of Capital Stock (including, but not limited to, FCC approvals (if required) and applicable
securities laws), such transfer or assignment of Capital Stock pursuant to this Agreement will be delayed and will only take place after such approval, notification or other submission or procedure has been obtained, submitted or completed.
(b) Prior to the transfer of any Capital Stock, the Company at its option may require an opinion of counsel reasonably satisfactory to the Company to the effect that such transfer is in compliance with, or exempt from, the registration requirements of the Securities Act.
(a) From the date hereof until the completion of the Company's Initial Public Offering, the Board of Directors and the boards of directors of XM and any other material subsidiary, (collectively, the "Boards of Directors") shall consist of seven (7) members (unless the constitution of the board of directors of any material subsidiary other than XM shall be otherwise approved by unanimous vote of the members of the Board of Directors designated, pursuant to this Section 5.1, by the Holders of Series A Subordinated Convertible Notes (or the holders of securities into which such Series A Convertible Notes may be converted), of whom:
(i) three (3) members shall be designated by the Holders of Series A Subordinated Convertible Notes (or the holders of securities into which such Series A Convertible Note s may be converted), (x) one (1) of whom shall be a designee of Clear Channel, (y) one (1) of whom shall be a designee of GM or DIRECTV, as those two Parties may agree, and (z) one (1) of whom shall be a designee of a majority in interest of the TCM Group; and
(ii) four (4) members shall be designated by American Mobile, who shall include (x) the Chairman and (y) the President and CEO of the Company (who shall be selected by American Mobile).
(b) Following the completion of the Company's Initial Public Offering but prior to the receipt of FCC Approval, the Boards of Directors shall consist of nine (9) members, of whom:
(i) three (3) members shall be designated by the Holders of Series A
Subordinated Convertible Notes (or the holders of securities into which
such Series A Subordinated Convertible Notes may be converted), (x) one (1)
of whom shall be a designee of Clear Channel, (y) one (1) of whom shall be
a designee of GM or DIRECT
V, as those two Parties may agree, and (z) one
(1) of whom shall be a designee of a majority in interest of the TCM Group;
(ii) four (4) members shall be designated by American Mobile, who shall include (x) the Chairman and (y) the President and the CEO of the Company (who shall be selected by American Mobile); and
(iii) two (2) of whom shall be independent directors of recognized industry expertise and stature, of whom (x) one (1) member shall be approved by American Mobile and (y) the other of whom shall be approved by the Investors who hold a majority of the Common Stock Deemed Outstanding (excluding Baron) held by Investors (excluding Baron).
(c) Following the completion of the Company's Initial Public Offering and
upon receipt of the FCC Approval, the Boards of Directors shall consist of nine
(9) members, of whom:
(i) three (3) members shall be designated by the Holders of Series A
Subordinated Convertible Notes (or the holders of the securities into which
such Series A Subordinated Convertible Notes may
be converted), (x) one (1)
of whom shall be a designee of Clear Channel, (y) one (1) of whom shall be
a designee of GM or DIRECTV, as those two Parties may agree, and (z) one
(1) of whom shall be a designee of a majority in interest of the TCM Group;
(ii) three (3) members shall be designated by American Mobile;
(iii) one (1) member shall be the President and CEO of the Company; and
(iv) two (2) members shall be independent directors of recognized industry expertise and stature both of whom shall be approved by American Mobile and the Investors who hold a majority of the Common Stock Deemed Outstanding (excluding Baron) held by Investors (excluding Baron).
(d) Each Holder agrees to vote its Common Stock in favor of the persons
nominated in accordance with the provisions herein. The rights of each of (i)
Clear Channel, (ii) GM or DIRECTV, and (iii) the TCM Group to designate a
director and, if applicable, approve the appointment
of independent directors
pursuant to this Section 5.1 shall continue for so long as such Party (or GM and
DIRECTV together) holds (A) in excess of 5% of the Common Stock Deemed
Outstanding or (B) the full amount of such Party's original investment in the
Company (whether or not converted into shares of Series A Convertible Preferred
Stock, if applicable, or Class A Common Stock). Similarly, following the
Company's receipt of FCC Approval, the right of American Mobile to designate
directors and approve the appointment of independent directors pursuant to this
Section 5.1 shall continue for so long as American Mobile holds (A) in excess of
15% of the Common Stock Deemed Outstanding or (B) the full amount of American
Mobile's investment in the Company on the date of this Agreement excluding the
portion of its investment contemplated in the January 15 Letter Agreements
(whether or not converted into shares of Class A Common Stock) (the "Initial
AMSC Investment"); provided that, if American Mobile holds less
than 15% of the
Common Stock Deemed Outstanding and less than the Initial AMSC Investment, (x)
American Mobile shall be entitled to designate two (2) directors (pursuant to
Section 5.1(a)(ii) and (c)(ii)) and approve the appointment of two (2)
independent directors (pursuant to Section 5.1(c)(iv)) for so long as American
Mobile owns Capital Stock in excess of 10% of the
Common Stock Deemed Outstanding, and (y) American Mobile shall be entitled to designate one (1) director (pursuant to Section 5.1(a)(ii) and (c)(ii)) and approve the appointment of two (2) independent directors (pursuant to Section 5.1(c)(iv)) for so long as American Mobile owns excess of 5% of the Common Stock Deemed Outstanding.
(e) The right of each Investor to designate a director pursuant to Sections 5.1(a)(i), 5.1(b)(i) and 5.1(c)(i) also shall terminate, and any director designated by such Investor shall promptly resign from the Boards of Directors:
(i) in the case of Clear Channel, if a majority of the ownership interests of Clear Channel cease to be owned, directly or indirectly, by Clear Channel Communications, Inc.;
(ii) in the case of DIRECTV, if a majority of the ownership interests of DIRECTV cease to be owned, directly or indirectly, by DIRECTV, Inc. (provided that the loss of DIRECTV's right to designate directors shall not affect GM's rights under this Section 5.1); and
(iii) in the case of the TCM Group, if a majority of the ownership interests of both Telcom and Columbia cease to be owned, directly or indirectly, by Telcom Ventures, L.L.C. and the existing members of Columbia (one of which is Columbia Capital, LLC).
(a) Following the Closing and for such time as GM and DIRECTV (i) continue to hold, in the aggregate, in excess of 5% of the Common Stock Deemed Outstanding, or (ii) each retains the full amount of its original investment in the Company (whether or not converted into shares of Series A Convertible Preferred Stock or Class A Common Stock), GM or DIRECTV shall be al lowed one observer at Board of Directors meetings to represent whichever company does not designate a member of the Board of Directors at that time.
(b) Following the Closing and for such time as any of Telcom, Columbia and Madison (i) continues to hold, in the aggregate, in excess of 5% of the Common Stock Deemed Outstanding , or (ii) such Investor retains the full amount of its original investment in the Company, such Investor shall be allowed to have an observer at Board of Directors meetings so long as such company(ies) does not have an Affiliate serving as a member of the Board of Directors at that time.
(c) Following the Closing and for such time as Clear Channel (i) continues to hold in excess of 5% of the Common Stock Deemed Outstanding, or (ii) retains the full
amount of its original investment in the Company, Clear Channel shall be allowed an observer at Board of Directors meetings.
(b) Following the Closing and for such time as DIRECTV (i) continues to hold in excess of 5% of the Common Stock Deemed Outstanding, or (ii) retains the full amount of its original investment in the Company (whether or not converted into shares of Series A Convertible Preferred Stock or Class A Common Stock), the Company agrees that DIRECTV shall have operational rights and involvement as set forth in the DIRECTV Operational Assistance Agreement.
(c) Following the Closing and for such time as Telcom, Columbia and Madison
(i) continue to hold, in the aggregate, in excess of 5% of the Common Stock
Deemed Outstanding, or (ii) each retains the full amount of its original
investment in the Company, the Company agrees that the TCM Group shall have
operational rights and involvement as set forth in the TCM Operational
Assistance Agreement.
(a) Each Party acknowledges that the Company's bylaws provide for certain notice, quorum and voting requirements for actions taken thereby to be valid and agrees not to take any action inconsistent with such provisions.
(c) In the event of any conflict between the terms of this Agreement and the bylaws of the Company, the terms of this Agreement shall prevail.
Each Party hereby represents and warrants on behalf of itself to each other Party that:
(a) It is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of formation;
(b) It has the power and authority to own its assets, carry on its business and execute, deliver, and perfo rm its obligations under this Agreement; and
(c) It is duly qualified to do business and is licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification or license.
(a) Breach or violate the terms of its certificate of incorporation (or similar constituent document) or bylaws (or similar constituent document);
(b) Breach or violate the terms of any material agreement to which it is party; or
(c) Violate any law or regulation applicable to it, including but not limited to the rules and regulations promulgated from time to time by the FCC.
Section 6.3 Binding Effect. This Agreement has been duly authorized,
sale or transfer (without paying any portion of the transaction costs associated with such sale except for their own legal expense and selling commission), in one transaction or in a series of transactions, to any Person not an Affiliate of such transferor, of Capital Stock (including the Series A Subordinated Convertible Notes) representing, at the time of such sale, more than 5% of the Common Stock Deemed Outstanding, such participation to be shared pro rata with each other Holder of Convertible Securities desiring to participate and/or the Holders of securities into which such Convertible Securities may be converted.
(b) During the thirty (30) consecutive day period commencing on the date the Company delivers to all of the Buyers the Notice of Proposed Issuance (the
(d) Each Buyer shall have a right of oversubscription such that if any other Buyer fails to elect to purchase his or its full Proportionate Share of the Offered Capital Stock, the other Buyer(s) shall, among them, have the right to purchase up to the balance of such Offered Capital Stock not so purchased. The Buyers may exercise such right of oversubscription by electing to purchase more than their Proportionate Share of the
Offered Capital Stock by so indicating in their written notice given during the Thirty Day Period. If, as a result thereof, such oversubscription elections exceed the total number of the Offered Capital Stock available in respect to such oversubscription privilege, the oversubscribing Buyers shall be cut back with respect to oversubscriptions on a pro rata basis in accordance with their respective Proportionate Share or as they may otherwise agree among themselves.
(e) If all of the Offered Capital Stock has not been purchased by the Buyers pursuant to the foregoing provisions, then the Company shall have the right, until the expiration of one-hundred eighty (180) consecutive days commencing on the first day immediately following the expiration of t he Thirty Day Period, to issue the Offered Capital Stock not purchased by the Buyers at not less than, and on terms no more favorable in any material respect to the purchaser(s) thereof than, the price and terms specified in the Notice of Proposed Issuance. If such remaining Offered Capital Stock is not issued within such period and at such price and on such terms, the right to issue in accordance with the Notice of Proposed Issuance shall expire and the provisions of this Agreement shall continue to be applicable to the Offered Capital Stock.
(f) The Company may proceed with the issuance of Capital Stock without first following the foregoing procedures provided that (i) the purchaser of such Capital Stock agrees in writing to be bound by this Section 7, and (ii) within ten (10) days following the issuance of such Capital Stock, the Company or the purchaser of the Capital Stock undertakes steps substantially similar to those described above to offer to all Buyers the right to purchase f rom such purchaser or from the Company such amount of such Capital Stock at the same price and terms applicable to the purchaser's purchase thereof as is necessary to provide the Buyers with substantially the same antidilution protection offered by this Section 7 as if the procedures set forth above had been followed prior to the issuance of such Capital Stock.
(g) Notwithstanding the foregoing, the Right of First Refusal described in this Section 7 shall not apply with respect to the issuance of Excluded Securities.
delivered, or (iv) the next succeeding Business Day after transmission by facsimile with confirmation of receipt.
EACH OF THE PARTIES ACKNOWLEDGES THAT (i) IT IS A KNOWLEDGEABLE,
INFORMED, SOPHISTICATED BUSINESS ENTITY CAPABLE OF UNDERSTANDING AND EVALUATING
THE PROVISIONS SET FORTH IN THIS AGREEMENT, INCLUDING THIS SE
CTION 8.4, AND
(ii) IT HAS BEEN REPRESENTED BY SUCH COUNSEL AND OTHER ADVISORS OF ITS CHOOSING
AS IT HAS DEEMED APPROPRIATE IN CONNECTION WITH ITS DECISION TO ENTER INTO THIS
AGREEMENT.
Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any Person other than the Parties hereto and their respective successors and assigns any legal or equitable right, remedy or claim under or in or in respect of this Agreement or any provision herein contained.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly signed as of the date first above written.
XM SATELLITE RADIO HOLDINGS INC. AMERICAN MOBILE SATELLITE CORPORATION
/s/ Hugh Panero /s/ Gary M. Parsons
By: _______________________________________________ By: ________________________________
Name: Hugh Panero Name: Gary M. Parsons
Title: President & CEO Title: Chairman of the Board of Directors
BARON ASSET FUND CLE
AR CHANNEL INVESTMENTS, INC.
on behalf of BARON ASSET FUND SERIES
/s/ Ronald Baron /s/ Randall R. Mays
By: _____________________________________________ By: _____________________________________________
Name: Ronald Baron Name: Randall R. Mays
Title: Chairman & CEO Title: Executive VP/CEO
COLUMBIA XM RADIO PARTNERS, LLC DIRECTV ENTERPRISES, INC.
By Columbia Capital LLC, its Managing Member
/s/ James B. Fleming /s/ Steven J. Cox
By: _____________________________________________ By: _____________________________________________
Name: Name:
Title: Title:
GENERAL MOTORS CORPORATION MADISON DEARBORN CA
PITAL PARTNERS III, L.P.
By Madison Dearborn Partners III, L.P., its general partner
/s/ Mark Gibbens By Madison Dearborn Partners, LLC, its general partner
By: _____________________________________________
Name: Mark Gibbens /s/ James N. Perry
Title: Director, Business Development By: _____________________________________________
As Attorney-in-fact for Eric Feldstein Name: James N. Perry
Vice President and Treasurer Title: Managing Director
MADISON DEARBORN SPECIAL EQUITY III, L.P. SPECIAL ADVISORS FUND I, LLC
By Madison Dearborn Partners III, L.P., its general partner By Madison Dearborn Partners III, L.P., its manager
By Madison Dearborn Partners, LL
C, its general partner BY MADISON DEARBORN PARTNERS, LLC, ITS GENERAL PARTNER
/s/ James N. Perry /s/ James N. Perry
By: _____________________________________________ By: _____________________________________________
Name: Name:
Title: Title:
|
TELCOM--XM INVESTORS, L.L.C.
/s/ Rahul Prakash
By: _____________________________________________
Name: Rahul Prakash
Title: President
|
NAMES, ADDRESSES AND FACSIMILE NUMBERS OF PARTIES
The Company: XM Satellite Radio Holdings Inc. 202-969-7124
1250 23rd Street, N.W., Suite 57
Washington, DC 20037
Attention: Joseph M. Titlebaum, Esq.
American Mobile: American Mobile Satellite Corporation 703-758-6134
10802 Parkridge Blvd.
Reston, VA 220
91
Attention: Randy S. Segal, Esq.
Baron: Baron Asset Fund 212-583-2014
767 Fifth Avenue, 49th Floor
New York, NY 10153
Attention: Linda Martinson, Esq.
Clear Channel: Clear Channel Investments, Inc. 210-822-2299
200 Concord Plaza, Suite 600
San Antonio, TX 78216
Attention: Mr. Mark Hubbard
Columbia: Columbia XM Radio Partners, L.L.C. 703-519-3904
201 North Union Street, Suite 300
Alexandria, Virginia 22314
Attention: Mr. James B. Fleming
DIRECTV: DIR
ECTV Enterprises, Inc. 310-964-4114
2230 East Imperial Highway
El Segundo, CA 90245
Attention: Mr. Steven J. Cox
GM: General Motors Corporation 212-418-6258
100 Renaissance Center
Detroit, MI 48265 1000
Attention: Mr. Mark Gibbens
Telcom: TelcomXM Investors, L.L.C. 703-706-3801
211 North Union Street, Suite 300
Alexandria, VA 22314
Attention: Hal B. Perkins, Esq.
Madison: Madison Dearborn Partners, Inc. 312-895-1221
Three First National Plaza
Chicago, Illinois 60602
Attention: Mr. James N. Perry
|
Exhibit 10.2
XM SATELLITE RADIO HOLDINGS INC.
July 7, 1999
TABLE OF CONTENTS
Article I. DEFINITIONS................................................. 2
Section 1.1 Definitions....................................... 2
Article II. REGISTRATION RIGHTS........................................ 6
Section 2.1 Demand Registrations.............................. 6
Section 2.2 Shelf Registration................................ 9
Section 2.3 Piggyback Registration Rights..................... 10
Section 2.4 Registration Procedures........................... 11
Section 2.5 Hold-Back Agreements.............................. 14
Section 2.6
Black-Out Periods for Registration Statements..... 14
Section 2.7 American Mobile Rights............................ 15
Article III. INDEMNIFICATION AND CONTRIBUTION.......................... 16
Section 3.1 Indemnification by the Company.................... 16
Section 3.2 Indemnification by Holders........................ 16
Section 3.3 Conduct of Indemnification Proceedings............ 17
Section 3.4 Contribution...................................... 17
Article IV. MISCELLANEOUS.............................................. 18
Section 4.1 Rule 144.......................................... 18
Section 4.2 Specific Performance.............................. 18
Section 4.3 Amendments and Waivers............................ 18
Section 4.4 Notices........................................... 19
Section 4.5 Transfers......................................... 19
Section 4.6 Execution in Counterparts.
........................ 19
Section 4.7 GOVERNING LAW; CHOICE OF FORUM; JURY TRIAL WAIVER. 20
Section 4.8 Severability...................................... 20
Section 4.9 Headings.......................................... 20
Section 4.10 No Inconsistent Agreement......................... 20
Section 4.11 Further Assurances................................ 21
Section 4.12 Entire Agreement.................................. 21
|
REGISTRATION RIGHTS AGREEMENT
WHEREAS, the Investors (other than Baron) have agreed to make an investment in the Company through the purchase of Series A Subordinated Convertible Notes (the "Convertible Notes" or the "Notes") pursuant to a certain Note Purchase Agreement, dated June 7, 1999, by and among the Company and the Investors (other than Baron) (the "Note Purchase Agreement");
WHEREAS, the Company has agreed to execute this Agreement to provide the Investors with certain rights to cause the registration of the Class A Common Stock (as hereafter defined) issuable upon conversion of the Notes or upon conversion of shares of Series A Convertible Preferred Stock;
WHEREAS, American Mobile is a shareholder of the Company;
WHEREAS, the Company has agreed to execute this Agreement to provide American Mobile with rights to cause the registration of shares of Class A Common Stock held by it;
WHEREAS, the Company, American Mobile, WorldSpace, Inc. and Baron have
entered into the January 15 Let
ter Agreements, which provide that, from and
after the completion of a substantial public or private equity financing by the
Company of $100 million or more, Baron shall benefit, on a "most favored nation"
basis, from any reduction in the restrictions on transfer, improvements in
rights to receive information regarding the Company and any
registration rights accepted by any other investor in the Company pursuant to the terms of such financing;
WHEREAS, the Investors hereby acknowledge the rights granted to Baron under the January 15 Letter Agreements, and the Parties desire that this Agreement constitute the sole evidence of such rights from the date hereof;
WHEREAS, Baron hereby acknowledges that the rights granted to it under this Agreement constitute the sole evidence of such rights from the date hereof, and that the January 15 Letter Agreements shall terminate as of the date hereof; and
WHEREAS, the Parties desire herein to provide certain registration rights to each Investor and to American Mobile.
NOW, THEREFORE, in consideration of the fo
regoing and the promises and
covenants contained herein, the Parties agree as follows:
ARTICLE I.
DEFINITIONS
other day on which commercial banks are authorized or required by law to be closed in New York City or the District of Columbia.
"End of Suspension Notice" has the meaning specified in Section
------------------------
2.6(b).
|
"Holders" means each of Baron, Clear Channel, Columbia, DIRECTV, GM,
dated on or about the date hereof, by and among the Parties hereto.
"Suspension Event" has the meaning specified in Section 2.6(a). ---------------- "Suspension Notice" has the meaning specified in Section 2.6(b). ----------------- |
ARTICLE II.
REGISTRATION RIGHTS
the Company shall use reasonable efforts to keep the Shelf Registration continuously effective until the date on which all of the Registrable Securities registered thereunder from time to time are sold.
(a) perform its obligations with respect to a Registration Statement
pursuant to Section 2.1, Section 2.2 or Section 2.3 hereof and effect or cause
to be effected the registration of the Registrable Securities under the
Securities Act to permit the sale of such Registrable Securities by the Holders
in accordance with their intended method or methods of distribution, and that it
shall prepare and file with the Commission a Registration Statement with respect
to such Registrable Securities and use its best efforts t
o cause such
Registration Statement to become effective (provided that, before filing a
Registration Statement or prospectus or any amendments or supplements thereto,
it will furnish to one counsel selected by each Holder participating in such
registration (each of Baron, Clear Channel, DIRECTV, GM and the TCM Group
shall, for such purposes, be considered a single "Holder") copies of all such
documents proposed to be filed, which documents will be subject to the review of such counsel) and it will incorporate in such Registration Statement the reasonable comments of such counsel not inconsistent with the Company's disclosure obligations under applicable securities laws;
(b) prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for the period required hereunder (or if no period is so required, a period of not less than one hundred eighty (180) days or such shorter period which is sufficient to complete the distribution of the securities registered under the Registration Statement) a nd comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement;
(c) furnish to each seller of Registrable Securities, the Managing Underwriters, if any, and their respective counsel, prior to the filing thereof with the Commission, such number of copies of such Registration Statement, each amendment and supplement thereto, the prospectus included in such Registration Statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller and to use its best efforts to reflect in each such document, when so filed with the Commission, such comments as the sellers of Registrable Securities or their counsel shall reasonably propose;
(e) notify each seller of such Registrable Securities as promptly as practicable in any of the following circumstances: (i) at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such seller, the Company will prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading; (ii) when a Registration Statement and any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; (iii) of any request by the Commission for amendment or supplements to the Registration Statement or the prospectus included therein or for additional information; (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the in itiation of any proceedings for that purpose; and (v) the receipt by the Company of any notification with respect to the suspension of the
qualification of the securities included therein for sale in any jurisdiction or the initiation of any proceeding for such purpose;
(f) cause all such Registrable Securities to be listed on each securities exchange or quoted in each quotation system on which similar securities issued by the Company are then listed or quoted;
(g) enter into such agreements on terms reasonably acceptable to the Company (including underwriting agreements) in form, scope and substance as are customary in underwritten offerings, and take all other reasonable actions necessary to facilitate the registration or the disposition of the Registrable Securities included in any Registration Statement including, without limitation, the participation of senior management in " road shows" and similar activities, provided that such activities do not interfere with the duties of senior management in a manner that would likely be detrimental to the best interests of the Company;
(h) take such action as may be necessary so that: (i) any Registration Statement and any amendment thereto and any prospectus forming part thereof and any amendment or supplement thereto (and each report or other document incorporated therein by reference in each case) complies in all material respects with the Securities Act and the Exchange Act and the respective rules and regulations thereunder; (ii) any Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and (iii) any prospectus forming part of any Registration Statement, and any amendment or supplement to such prospectus, does not include an un true statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
(i) use its best efforts to prevent the issuance, and if issued to obtain the withdrawal, of any order suspending the effectiveness of any Registration Statement at the earliest possible time;
(j) cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to any Registration Statement free of any restrictive legend and registered in such names as the Holders may request in connection with the sale of Registrable Securities pursuant to such Registration Statement; and
(k) obtain and furnish to each selling Holder, immediately prior to the effectiveness of the Registration Statement (and, in the case of an Underwritten Offering, at the time of delivery of any Registrable Securities sold pursuant thereto) a cold comfort letter from the Company's independent public accountants in the same form and covering the same matters as is typically delivered to underwriters and, in the event that an underwriter or underwriters have been retained in connection with such registration, such cold comfort letter to be provided to the selling Holders shall be the same cold comfort letter delivered to such underwriter or underwriters.
Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.4(e) hereof, such Holder will immediately discontinue disposition of Registrable Securities
pursuant to a Registration Statement until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 2.4(e) hereof,
and, if so directed by the Company, such Holder will deliver to the Company (at
the expense of the Company) all copies in its possession, other than permanent
file copies then in such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. If the
Company shall give any such notice to suspend the disposition of Registrable
Securities pursuant to a Registration Statement, the Company shall extend the
period during which the Registration Statement shall be maintained effective
pursuant to this Agreement by the number of days during the
period from and
including the date of the giving of such notice to and including the date when
the Holders shall have received copies of the supplemented or amended prospectus
necessary to resume such dispositions.
(a) Notwithstanding anything to the contrary in this Agreement, commencing ninety (90) days after the effectiveness of a Registration Statement, the Company may, not more than once in any 12-month period, and one additional time during the term of this Agreement (but not during any other Suspension Event or within ninety (90) days after termination of any other
Suspension Event), direct the Holders to suspend sales of Registrable Securities
registered thereunder, as provided herein, if one or more of the following
events (a "Suspension Event") occurs pending negotiations relating to, or
consummation of, a material corporate transaction (i) that would require
additional disclosure of material information by the Company in the Registration
Statement (or such filings), (ii) as to which the Company has a bona fide
business purpose for preserving confidentiality and (iii) which renders the
Company unable to comply with Commission requirements, in each case under
circumstances that would make it impractical or inadvisable to cause the
Registration Statement (or such filings) to become effective or to promptly
amend or
supplement the Registration Statement on a post-effective basis, as
applicable.
(b) In the case of a Suspension Event, the Company may give notice (a "Suspension Notice") to the Holders to suspend sales of the Registrable Securities so that the Company may correct or update the Registration Statement (or such filings). Each such suspension shall continue only for so long as the Suspension Event or its effect is continuing, and in no event will any such suspension exceed ninety (90) days. The Holders agree that they will not effect any sales of the Registrable Securities pursuant to such Registration Statement (or such filings) at any time after they have received a Suspension Notice from the Company and prior to the termination of such Suspension Event. If so directed by the Company, the Holders will deliver to the Company all copies of the prospectus covering the Registrable Securities held by them at the time of receipt of the Suspension Notice. The Holders may recommence effecting sales of t he Registrable Securities pursuant to the Registration Statement (or such filings) following further notice to such effect (an "End of Suspension Notice") from the Company, which End of Suspension Notice shall, in the case of a Suspension Event, be given by the Company not later than five (5) days after the conclusion of any Suspension Event and shall be accompanied by copies of the supplemented or amended prospectus necessary to resume such sales.
(c) If the Company shall give a Suspension Notice pursuant to this Section 2.6, the Company shall extend the period during which the Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from the date of the giving of the Suspension Notice to and including the date when the Holders shall have received the End of Suspension Notice and copies of the supplemented or amended prospectus necessary to resume sales.
American Mobile Rights. Except as otherwise expressly provided herein, all
ARTICLE III.
INDEMNIFICATION AND CONTRIBUTION
or prospectus or any amendment or supplement thereto which corrected or made not misleading, information previously furnished to the Company, and the Company failed to include such information therein. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds (net of payment of all expenses) received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party.
amount paid or payable by a party as a result of any Losses shall be deemed to
include any legal or other fees or expenses incurred by such party in connection
with any proceeding, to the extent such party would have been indemnified for
such expenses under Section 3.3, if the indemnification provided for in Section
3.1 or Section 3.2 was available to such party. The Parties agree that it would
not be just and equitable if contribution pursuant to this Section 3.4 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the second
sentence of this paragraph. Notwithstanding the provisions of this Section 3.4,
an indemnifying party that is a selling Holder of Regist
rable Securities shall
not be required to contribute any amount in excess of the amount by which the
net proceeds received by such indemnifying party exceeds the amount of any
damages that such indemnifying party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person adjudged guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
ARTICLE IV.
MISCELLANEOUS
effected in accordance with this Section 4.3 shall be binding upon each future Holder and the Company.
(b) Any assignment or transfer of any registration rights set forth herein shall be subject to the assumption by the transferee of the terms and conditions set forth in this Agreement applicable to the transferor, and any proposed transferee shall execute such documents and instruments that the Company may reasonably require to evidence that such transferee is bound by the terms and conditions of this Agreement.
THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PROVISIONS THEREOF OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402.
IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM
FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE
SUPREME COURT OF THE STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK OR THE
FEDERAL COURTS LOCATED IN SUCH STATE AND COUNTY, AND RELATED APPELLATE COURTS.
THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION
OF SUCH COURTS AND
AGREE TO SAID VENUE.
THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
(a) The Company will not after the date of this Agreement enter into any agreement with respect to its securities or any amendment to such an agreement that is inconsistent with the rights granted to the Holders in this Agreement, or otherwise conflicts with the provisions hereof.
(b) The Company shall not grant to any person the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable or exercisable for such securities, or grant any rights for additional demand registrations of the Company's securities other than as provided in this Agreement, without t he prior written consent of the Holders of the Registrable Securities if such right is inconsistent with the terms of this Agreement (including without limitation the priorities for registration set forth herein); provided, however, that the foregoing restrictions shall not apply in the case of any registration for public
sale or public distribution of any securities for High Yield Debt (regardless of whether or not coupled with warrants, options, or other equity equivalents) by the Company.
[Signatures begin on next page]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly signed as of the date first above written.
XM SATELLITE RADIO HOLDINGS INC. AMERICAN MOBILE SATELLITE CORPORATION
By: /s/ Hugh Panero By: /s/ Gary M. Parsons
---------------------------- ----------------------------
Name: Hugh Panero Name: Gary M. Parsons
Title: President and CEO Title: Chairman of the Board of Directors
BARON ASSET FUND CLEAR CHANNEL INVESTMENTS, INC.
on behalf of BARON ASSET FUND SERIES
By: /s
/ Ronald Baron By: /s/ Randall Mays
---------------------------- ----------------------------
Name: Ronald Baron Name: Randall Mays
Title: Chairman and CEO Title: Exec VP/CFO
COLUMBIA XM RADIO PARTNERS, LLC DIRECTV ENTERPRISES, INC.
By Columbia Capital LLC, its Managing Member
By: /s/ James B. Fleming By: /s/ Steven J. Cox
---------------------------- ----------------------------
Name: Name:
Title: Title:
GENERAL MOTORS CORPORATION MADISON DEARBORN CAPITAL PARTNERS III, L.P.
By Madison Dearborn Partners III, L.P., its
By: /s/ Mark Gibbens general partner
----------------------------
By Madison Dearborn Partners LLC, its general
Name: Mark Gibbens partner
Title: Director, Business Development
As Attorney-in-Fact for Eric Feldstein, By: /s/ James N. Perry
Vice President and Treasurer ------------------------------
Name:
Title:
MADISON DEARBORN SPECIAL EQUITY III, L.P. SPECIAL ADVISORS FUND I, LLC
By Madison Dearborn Partners III, L.P., its general By Madison Dearborn Partners III, L.P., its
partner manager
By Madison Dearborn Partners LLC, its general By Madison Dearborn Partners LLC, its general
partner partner
By: /s/ James N. Perry By: /s/ James N. Perry
---------------------------- --------------------------
--
Name: Name:
Title: Title:
|
TELCOM--XM INVESTORS, L.L.C.
By: /s/ Rahul Prakash ---------------------------- Name: Rahul Prakash Title: President |
SCHEDULE 4.4
Schedule of Holders
Name Address Facsimile
---- ------- ---------
American Mobile Satellite 10802 Parkridge Blvd. 703-758-6134
Corporation Reston, VA 20191-5416
Attn: Randy S. Segal, Esq.
Baron Asset Fund 767 Fifth Avenue 212-583-2014
49th Floor
New York, NY 10153
Attn: Linda Martinson, Esq.
Clear Channel Investments, Inc. 200 Concord Plaza 210-822-2299
Suite 600
San Antonio, TX 78216-6940
Attn: Mr. Mark Hubbard
Columbia XM Radio Partners LLC 201 North Union Street 703-519-3904
Suite 300
Alexandria, VA 22314
Attn: Mr. James B. Fleming
DIRECTV Enterprises, Inc. 2230 E. Imperial Hwy. 310-964-4114
El Segundo, CA 90245
Attn: Mr. Steven J. Cox
General Motors Corporation 767 Fifth Avenue 212-418-6258
14th Floor
New York, NY 10153
Attn: Mr. Mark Gibbens
Madison Dearborn Capita
l Partners Three First National Plaza 312-895-1221
III, L.P., Chicago, IL 60602
Madison Dearborn Special Equity Attn: Mr. James N. Perry, Jr.
III, L.P.,
Special Advisors Fund I, LLC
Telcom-XM Investors LLC 211 North Union Street 703-706-3801
Suite 300
Alexandria, VA 22314
Attn: Hal B. Perkins, Esq.
|
Exhibit 10.3
XM SATELLITE RADIO HOLDINGS INC.
$250,000,000
Series A Subordinated Convertible Notes
Due December 31, 2004
NOTE PURCHASE
AGREEMENT
Dated as of June 7, 1999
Page
----
1. Definitions................................................................................ 2
2. Issuance of the Notes...................................................................... 17
3. Interest and Repayment..................................................................... 18
3.1. Interest on the Notes.............
................................................... 18
3.2. Interest after Maturity.............................................................. 18
3.3. Payments and Computations............................................................ 18
3.4. Payment at Maturity or Conversion.................................................... 18
4. Representations, Warranties and Agreements of the Company.................................. 18
4.1. Incorporation, Standing, etc........................................................ 18
4.2. Subsidiaries........................................................................ 19
4.3. Disclosure.......................................................................... 19
4.4. Qualification....................................................................... 19
4.5. Authorization of Agreement and Notes................................................ 19
4.6. Absence of Defaults and Conflicts........
........................................... 19
4.7. Absence of Proceedings.............................................................. 20
4.8. Possession of Licenses and Permits.................................................. 20
4.9. No Violations of Laws............................................................... 20
4.10. Internal Accounting Controls........................................................ 20
4.11. Tax Returns and Payments............................................................ 20
4.12. Indebtedness........................................................................ 21
4.13. Title to Properties; Liens.......................................................... 21
4.14. Patents, Trademarks, Authorizations, etc............................................ 21
4.15. Governmental Consents............................................................... 21
4.16. Investment Company Act............................
.................................. 21
4.17. Public Utility Holding Company Act.................................................. 21
4.18. Restrictions........................................................................ 21
4.19. Capitalization...................................................................... 22
4.20. Seniority of Notes.................................................................. 22
4.21. Patent Applications................................................................. 22
4.22. Material Events..................................................................... 22
4.23. Financial Statements................................................................ 23
4.24. No Undisclosed Fees................................................................. 23
4.25. No Transactions with Affiliates..................................................... 23
4.26. Satellite Launch...........................................
......................... 23
4.27. Appropriate Technology.............................................................. 24
4.28. CD Radio Litigation................................................................. 24
4.29. Registration Rights................................................................. 24
|
Page
----
5. Representations and Warranties of the Investor............................................. 24
5.1. Risks of Investment.................................................................. 24
5.2. Investment Experience................................................................ 24
5.3. Ability to Bear Risk................................................................. 25
5.4. Receipt and Review of Documentat
ion.................................................. 25
5.5. No General Solicitation by Company................................................... 25
5.6. Organization, Good Standing, Corporate Authority..................................... 25
5.7. Benefit Plan Investor................................................................ 25
5.8. No Public Market..................................................................... 25
5.9. Due Authorization.................................................................... 25
5.10. Qualified Institutional Buyer or Accredited Investor................................. 26
6. Restrictions on Transfer................................................................... 26
6.1. Restrictions; Restrictive Legend..................................................... 26
7. Covenants.................................................................................. 27
7.1. Payment of Note and Maintenance of Offi
ce............................................ 27
7.2. Payment of Taxes and Claims.......................................................... 27
7.3. Maintenance of Properties and Corporate Existence.................................... 27
7.4. Compliance with Law.................................................................. 28
7.5. Notice............................................................................... 28
7.6. Merger and Sale of Assets............................................................ 28
7.7. Limitation on Transactions with Affiliates and Shareholders.......................... 29
7.8. Limitation on Indebtedness........................................................... 29
7.9. Limitation on Restricted Payments.................................................... 29
7.10. Limitation on the Issuance and Sale of Capital Stock................................. 30
7.11. Limitation on Liens.............................
..................................... 30
7.12. Protective Provisions................................................................ 30
7.13. Patents.............................................................................. 30
7.14. Financing Purposes................................................................... 30
7.15. Information Rights................................................................... 30
7.16. XM Radio System Design............................................................... 31
7.17. Indemnification for Patent Claims.................................................... 31
7.18. Filing of Restated Certificate of Incorporation...................................... 31
7.19. Limitation on Grants of Rights....................................................... 31
8. Conversion Provisions...................................................................... 31
8.1. Company's Right of Conversion...........................
............................. 31
8.2. Optional Conversion Right............................................................ 31
8.3. Issuance of Certificates............................................................. 32
8.4. Adjustment to Conversion............................................................. 32
8.5. Treasury Shares...................................................................... 35
8.6. Fractional Shares.................................................................... 35
8.7. Merger of the Company................................................................ 35
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Page
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8.8. Reclassification of Class A Common Stock and/or Class A Convertible Preferred Stock.. 35
8.9. Reservation of Class A Common Stock and Class A Convertible Preferred Stock.......... 36
8.10. Taxes................................................................................ 36
8.11. Certain Events....................................................................... 36
8.12. No Rights or Liabilities as Shar
eholders............................................. 37
8.13. Automatic Conversion of Class A Convertible Preferred Stock Upon Transfer............ 37
8.14. Dividends Paid Between Notice of Conversion and Conversion........................... 37
9. Put Right If No Qualified Initial Public Offering.......................................... 37
10. Registration, Transfer and Substitution of Note............................................ 38
10.1. Note Register........................................................................ 38
10.2. Transfer and Exchange of Note........................................................ 38
10.3. Replacement of Note.................................................................. 38
11. Conditions to Obligations of the Investors................................................. 38
12. Events of Default; Acceleration............................................................ 40
12.1. Nature of Events and Acceleration of
Note............................................ 40
12.2. Default Remedies..................................................................... 42
12.3. Notice of Default.................................................................... 42
13. Seniority of Notes......................................................................... 42
14. Expenses................................................................................... 42
15. Survival................................................................................... 42
16. Amendments and Waivers..................................................................... 42
17. Notices.................................................................................... 43
18. Execution in Counterparts.................................................................. 43
19. Binding Effect............................................................................. 43
20. GOVERNING LAW; CHOICE OF FORUM; JURY TRIAL W
AIVER.......................................... 43
21. Miscellaneous.............................................................................. 44
21.1. Conflict............................................................................. 44
21.2. Severability......................................................................... 44
21.3. No Waiver............................................................................ 44
21.4. Further Assurances................................................................... 44
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ATTACHMENTS:
2(a) Principal Amounts of Notes
5.7 Benefit Plan Investor
17 Notices
EXHIBIT A: Form of Notes
NOTE PURCHASE AGREEMENT
WHEREAS, the Company is engaged in the development of a satellite digital audio radio service in the United States;
WHEREAS, the Company desires to receive financing in the aggregate principal amount of Two Hundred Fifty Million Dollars ($250,000,000) (the "Financing") for (i) capital expenditures, (ii) working capital and (iii) repaying certain loans from WorldSpace, Inc., (collectively, the "Financing Purposes");
WHEREAS, each of the Investors desires to provide the Company the Financing for the Financing Purposes through the purchase of Series A Subordinated Convertible Notes due December 31, 2004 (each as hereinafter defined a "Convertible Note" or a "Note" and collectively the "Convertible Notes" or "Notes"), substantially in the form attached hereto as Exhibit A;
WHEREAS, upon the consummation of the XM Exchange Agreement (as defined below), American Mobile shall be the holder of all the issued and outstanding shares of Capital Stock of the Company;
WHEREAS, the Company, American Mobile, WorldSpace, Inc. and Baron
Asset Fund Series have entered into a certain letter agreement (the "Baron Ass
et
Fund Letter Agreement") dated as of January 15, 1999, pursuant to which Baron
(as defined below), from and after the completion of a substantial public or
private equity financing by the Company of $100 million or more, shall benefit,
on a "most favored nation" basis, from any reduction in the restrictions on
transfer, improvements in rights to receive information regarding the Company
and any registration rights accepted by any other investor in the Company
pursuant to the terms of such financing;
WHEREAS, each Investor is aware of the rights granted to Baron under the Baron Asset Fund Letter Agreement; and
WHEREAS, the Parties desire to set forth the terms and conditions of and to provide for the issuance by the Company of the Convertible Notes described herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:
(i) Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity.
(ii) Any broker or dealer registered pursuant to section 15 of the Exchange Act.
(iii) Any insurance company as defined in Section 2(13) of the Securities A ct.
(iv) Any investment company registered under the Investment Company Act or a business development company as defined in section 2(a)(48) of that Act.
(v) Any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act.
(vi) Any private business development company as defined in section 202(a)(22) of the Advisers Act.
(vii) Any director or executive officer of the Company.
(viii) Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds $1,000,000.
(ix) Any natural person who had an individual income in excess of $200,000 in each of the last two calendar years, or joint income with that person's spouse, in excess of $300,000 in each of those years, and has a reasonable expectation of reaching the same income level in the current calendar year.
(x) Any entity with total assets at the time of purchase of the Note in excess of $5,000,000, which was not formed for the purpose of investing in a Note and which is one of the following:
(A) a corporation; or
(B) a partnership; or
(C) a Massachusetts or similar business trust; or
(D) a tax-exempt organization described in Section 501(c)(3)
of the Internal Revenue Code.
(xi) Any trust with total assets in excess of $5,000,000 which was not formed for the purpose of investing in a Note and whose purchase of a Note has been directed by a person who has such knowledge and experience in financial and business matters that he
is capable of evaluating the merits and risks of the investment.
(xii) Any employee benefit plan within the meaning of Title I of ERISA which satisfies at least one of the following conditions:
(A) it has total assets in excess of $5,000,000; or
(B) the investment decision is being made by a plan fiduciary which is a bank, savings and loan association, insurance company or registered investment adviser; or
(C) it is a self-directed plan (i.e., a tax-qualified defined contribution plan in which a participant may exercise control over the investment of assets credited to his or her account) and the decision to invest is made by those participants investin g, and each such participant qualifies as an accredited investor.
(xiii) Any employee benefit plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions, which has total assets in excess of $5,000,000.
(xiv) Any entity in which all of the equity owners are persons described above.
(i) such Person shall commence a proceeding or make an application or petition to a court or other judicial or administrative forum for an order that such Person be declared bankrupt or insolvent or be wound up or that an order be entered for the liquidation, reorganization or for other relief with respect to the debts of such Person or that a provisional liquidator be appointed;
(ii) any application shall be made or any involuntary case or proceeding shall be commenced against such Person seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian, administrator or othe r similar official of it or any substantial part of its property, (unless the application is withdrawn, struck out or dismissed, or the case or proceeding is dismissed or terminated, within 30 days of it being made); or
(iii) a liquidator is appointed for such Person.
obligations of such Person as lessee, in conformity with GAAP, is required to be capitalized on the balance sheet of such Person; and "Capitalized Lease Obligations" means the discounted present value of the rental obligations under such lease.
of persons acting in concert, other than American Mobile or an Affiliate of American Mobile, of more than 50% of the voting securities of the Company.
Agreements. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation,
other page as may replace the LIBO page on that system for the purpose of displaying London interbank offered rates) (the "Reuters Screen") available to subscribers of the Reuters electronic display terminal, provided that two or more such offered quotations are available on the Reuters Screen; or
(ii) if fewer than two such offered quotations are available on the Reuters Screen, or if the Reuters Screen is unavailable, the arithmetic mean (rounded upwards, if necessary, to the nearest 1/100th of 1%) of the respective rates notified to Citibank, N.A. by at least three money center banks in the London interbank market as the rate at which it is offered Dollar deposits and in an amount equal or comparable to the Note and for the Interest Period at or a bout 11:00 A.M., London time, on the day two London Banking Days prior to the first day of such Interest Period.
and (xviii) Liens in respect of Indebtedness permitted or approved under Section 7.8; (xix) Liens existing on the date hereof and disclosed herein; (xx) Liens granted after the date hereof on any assets or Capital Stock of the Company or its Subsidiaries created in favor of the holder of the Notes; (xxi) Liens with respect to the assets of any Subsidiaries of the Company granted by such Subsidiaries to the Company to secure Indebtedness owing to the Company.
(i) Any of the following entities, acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with the entity:
(A) Any insurance company as defined in section 2(13) of the Securities Act;
(B) Any investment company registered under the Investment Company Act or any business development company as defined in section 2(a)(48) of that act;
(C) Any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958 (the "Small Business Investment Act");
(D) Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees;
(E) Any employee benefit plan within the meaning of Title I of
ERISA;
(F) Any trust fund whose trustee is a bank or trust company and whose participants are exclusively plans of the types identified in paragraph
(a)(i)(D) or (E) above, except trust funds that include as participants individual retirement accounts or H.R. 10 plans;
(G) Any business development company as defined in section 202(a)(22) of the Advisers Act;
(H) Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation (other than a bank as defined in section 3(a)(2) of the Securities Act or a savings and loan association or other institution referenced in section 3(a)(5)(A) of Securities Act or a foreign bank or savings and loan association or equivalent institution), partnership, or Massachusetts or similar business trust; and
(I) Any investment adviser registered under the Advisers Act.
(ii) Any dealer registered pursuant to section 15 of the Exchange Act, acting for its own account or the accounts of other Qualified Institutional Buyers, that in the aggregate owns and invests on a discretionary basis at least $10 million of securities of issuers that are not affiliated with the dealer, provided, however, that securities constituting the whole or a part of an unsold allotment to or subscription by a dealer as a participant in a public offering shall not be deemed to be owned by such dealer.
(iii) Any dealer registered pursuant to section 15 of the Exchange Act acting in a riskless principal transaction on behalf of a Qualified Institutional Buyer.
(A) Each series of a series company (as defined in Rule 18f-2 under the Investment Company Act) shall be deemed to be a separate investment company; and
(B) Investment companies shall be deemed to have the same adviser
(or depositor) if their advisers (or depositors) are majority-owned
subsidiaries of the same parent, or if
one investment company's
adviser (or depositor) is a majority-owned subsidiary of the other
investment company's adviser (or depositor).
(v) Any entity, all of the equity owners of which are Qualified Institutional Buyers, acting for its own account or the accounts of other Qualified Institutional Buyers,
and
(vi) Any bank as defined in section 3(a)(2) of the Securities Act, any savings and loan association or other institution as referenced in section 3(a)(5)(A) of the Securities Act, or any foreign bank or savings and loan association or equivalent institution, acting for its own account or the accounts of other Qualified Institutional Buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with it and that has an audited net worth of at least $25 million as demonstrated in its latest annual financial statements, as of a date not more than 16 months preceding the date of sale of the Notes in the case of a U.S. bank or savings and loan association, and not more tha n 18 months preceding such date of sale for a foreign bank or savings and loan association or equivalent institution.
receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Internal Revenue Code (S) 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.
(b) Each Note shall be governed by, and the rights and the benefits of th e Investor determined in accordance with, the terms and conditions of this Agreement.
(c) Any voluntary or mandatory conversion of the principal amount (including without limitation any Capitalized Interest) of any of the Convertible Notes under the terms of this Agreement, whether or not such Convertible Note is held by the respective Investor or any subsequent Holder, shall be as follows: (i) the Note purchased by Clear Channel shall be convertible solely into Class A Common Stock; (ii) the Note purchased by DIRECTV shall be convertible solely into Class A Convertible Preferred Stock; (iii) the Note purchased by GM shall be convertible solely into Class A Convertible Preferred Stock; and (iv) the Notes purchased by Telcom, Columbia Capital and Madison Dearborn shall be convertible solely into Class A Common Stock;
is a non-Affiliate of DIRECTV or GM, respectively, such Note shall be convertible solely into Class A Common Stock. For purposes of this Agreement, the stock into which any such Convertible Note has been converted in accordance with this Section 2(c) shall be referred to as the "Conversion Stock."
(d) No prepayment of any Note shall be permitted without the approval from the Holders of Notes not being prepaid representing a majority of the aggregate outstanding principal amount of the Notes.
(b) Interest on each Note shall be calculated for the actual number of days (including the first day but excluding the last day of any relevant period) elapsed and shall be computed on the basis of a 360-day year of twelve 30-day months.
(b) Upon any conversion of any Note hereunder, the principal amount of each Note (including without limitation all Capitalized Interest), together with any accrued interest thereon, shall be converted into a number of shares of either Class A Common Stock or Class A Preferred Stock, as appropriate, equal to such principal amount and interest divided by the Conversion Price.
delivery of this Agreement and of the Notes and the performance of its obligations hereunder and under the Notes.
other charter documents of the Company or its Subsidiaries or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or its Subsidiaries or any of their assets or properties.
applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or its Subsidiaries, as the case may be, has established adequate reserves in accordance with GAAP. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of Federal, state and foreign income taxes for all fiscal periods are adequate in the reasonable opinion of the Company and, to the best of the Company's knowledge, there are no additional assessments for such periods or any basis therefor.
(a) any event with respect to their properties, business, prospects, operations, earnings, assets, liabilities or condition (financial or otherwise) which could reasonably be expected to result in a Material Adverse Effect; or
(b) any damages, destruction or loss to the properties or assets of the Company or any o f its Subsidiaries, whether or not covered by insurance, that has or could reasonably be expected to have a Material Adverse Effect or that in the aggregate exceed $100,000; or
(c) any loss or waiver by the Company of any of its Subsidiaries of any right, not in the ordinary course of business, or any material debt owed to it; or
(d) other than the sales of assets in the ordinary course of business (including pursuant to sale leaseback transactions), any sale, transfer or other disposition of, or agreements to sell, transfer or otherwise dispose of, any assets by the Company or any of its Subsidiaries in excess of $100,000 in the aggregate, or any cancellation or agreement to cancel any debt or claims of the Company or any of its Subsidiaries; or
(e) any declaration or setting aside or payment of any dividend (whether in cash, property or stock) or any distribution (whether in cash, property or stock) or other payment with respect to any of the Capital Stock of the Company or any of its Subsidiaries, or any repurchase, purchase or other acquisition of, or agreement to repurchase, purchase or otherwise acquire, any of the Company's or any of its Subsidiaries' Capital Stock; or
(f) any amendment or termination of any contract, agreement or license to which the Company or any of its Subsidiaries is a party or by which it is bound, except where such amendment or termination could not be reasonably expected to have a Material Adverse Effect; or
(g) any resignation or termination or empl oyment of any key employee, and there is no impending or threatened resignation or termination or terminations of employment of any key employee; or
(h) any labor dispute (including, without limitation, any negotiation, or request for negotiation, for any labor representation or any labor contract) affecting the Company or any of its Subsidiaries; or
(i) any application of any existing (or the enactment of any new) environmental law or personnel, product safety law or other governmental regulation that has or which could reasonably be expected to have a Material Adverse Effect.
operations and cash flows of the Company and its consolidated subsidiaries, for the respective periods covered thereby, all in conformity with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
Contract as described in the Confidential Memorandum, except as the Satellite Contract may be amended prior to the Closing.
generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(i) a Qualified Institutional Buyer, or
(ii) an Accredited Investor; and
(b) aware that the sale of Securities to it is being made in reliance on the exemption from the registration requirements provided by Section 4(2) of the Securities Act and the regulations promulgated thereunder; and
(c) acquiring such Securities for its own account or the account of an Accredited Investor or a Qualified Institutional B uyer, as the case may be, and not with a view to any resale or distribution thereof.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDG
ED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION UNDER THE SECURITIES ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE THE SUBJECT OF A CERTAIN SHAREHOLDERS' AGREEMENT WHICH, AMONG OTHER THINGS, CONTAINS RESTRICTIONS ON THE TRANSFER OF SUCH SECURITIES. A COPY OF THE SHAREHOLDERS' AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY.
Upon any registration of any Securities, pursuant to the Registration Rights Agreement, or upon termination of the Shareholders' Agreement, the Company shall remove the applicable legend(s) from the certificate(s) representing such Securities promptly upon request of the Holder thereof and shall promptly deliver replacement certificate(s) to such Holder.
(a) maintain its property in good condition and make all necessary renewals, replacements, additions, betterments and improvements thereto, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be conducted properly and advantageously at all times;
(b) keep adequately insured, by financially sound and reputable insurers, all of its property of a character usually insured by entities engaged in the same or a similar business similarly situated against loss or damage of the kinds and in amounts customarily insured against by such entities and with deductibles or co-insurance no greater than is customary, and carry, with such insurers in customary amounts and with deductibles or co-insurance no greater than is customary, such other insurance, including public liability insurance and liability insurance against claims for any violation of applicable law, as is usually carried by entities engaged in the same or a similar business similarly situated;
(c) keep proper books of record and account in which full, true and correct entries will be made of all its business transactions and generally maintain a system of accounting established and administered in accordance with GAAP;
(d) set aside on its books from its earnings for each fiscal year, beginning with the first such year ending subsequent to the date hereof and for each fiscal year thereafter, in
amounts deemed adequate in the opinion of the Company, all proper accruals and reserves which, in accordance with GAAP, should be set aside from such earnings in connection with its business, including, without limitation, reserves for depreciation, obsolescence and/or amortization and accruals for taxes for such period, including all taxes based on or measured by income or profits; and
(e) except as otherwise permitted or contemplated hereby, do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and such rights, patents, trademarks, copyrights, licenses, permits, franchises and governmental authorizations as the Company determines to be necessary for the present and presently planned future conduct of its business.
(a) violate any laws, ordinances, governmental rules or regulations to which it is, or might become, subject, unless the same are being contested by the Company or such Subsidiaries in good faith and by appropriate proceedings which shall effectively prevent the imposition of any penalty on the Company or such Subsidiaries for such noncompliance; or
(b) fail to use its best efforts to obtain or retain (as applicable) any patents, trademarks, service marks, trade names, copyrights, design patents, licenses, permits, franchises or other governmental authorizations necessary to the ownership of its property or to the conduct of its business.
(a) Except to the extent provided for in the XM Exchange Agreement, the Company will not consolidate or merge with or into any other Person or permit any other Person to consolidate with or merge into it, or sell, lease, transfer or otherwise dispose of all or substantially all of its assets (as an entirety or substantially an entirety in one transaction or a series of related transactions);
(b) No Subsidiary of the Company may consolidate or merge with or into any other Person or permit any other Person to consolidate with or merge into it (unless in either case the Subsidiary is the surviving entity and it remains a wholly-owned Subsidiary of the Company), or sell, lease, transfer or otherwise dispose of all or substantially all of its assets (as an entirety or substantially an entirety in one transaction or a series of related transactions); or
(c) The Company shall not sell, assign, lease, convey, transfer, or otherwise dispose of, nor mort gage, pledge, hypothecate, charge or otherwise encumber any of its interests in XM Satellite Radio Inc., including without limitation, (i) any equity investment in XM Satellite Radio Inc., and (ii) all Indebtedness of XM Satellite Radio Inc. in favor of the Company.
(b) For purposes of determining any particul ar amount of Indebtedness under this Section, (i) Guarantees, Liens or obligations with respect to letters of credit supporting Indebtedness otherwise included in the determination of such particular amount shall not be included, (ii) any Permitted Liens shall not be treated as Indebtedness, and (iii) Indebtedness incurred in respect of the Satellite Contract shall not be included in any determination under this Section.
(c) Notwithstanding any other provision of this Section, (i) the maximum amount of Indebtedness that the Company or its Subsidiaries may Incur shall not be deemed to be exceeded due solely to fluctuations in the exchange rates of currencies, and (ii) except with Requisite Approval, neither the Company nor any of its Subsidiaries may Incur any Indebtedness that is expressly subordinated to any other Indebtedness of the Company or such Subsidiaries, as the case may be, unless such Indebtedness, by its terms or the terms of any agreement or instrument pursuant to which such Indebtedne ss is outstanding, is also expressly made subordinate to the Notes at least to the extent that such Indebtedness is subordinated to such other Indebtedness.
acquisition of Indebtedness in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in any case due within one
(1) year of the date of acquisition); or (iii) make any Investment, other than a
Permitted Investment, in any Person.
(b) The Company, pursuant to the terms of the Baron Asset Fund Letter Agreement, will grant to Baron the same information rights as are granted to the Holder in this Section 7.15. Baron will be subject to the same obligations to maintain the confidentiality of all non-public information received from the Company, and the Company will require Baron to
execute such further documents or instruments as the Holders may reasonably be required by the Company to execute to ensure such confidentiality.
Note or portion thereof to be converted) into shares of the respective class of
Conversion Stock at the Conversion Price, promptly after surrender of such Note,
accompanied by written notice of conversion specifying the principal amount
thereof to be converted duly executed, to the Company at any time during usual
business hours at the office of the Company at, and, if so required by the
Company, accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company, duly executed by such Holder or its attorney duly
authorized in writing. The conversion of all or any portion of the principal and
interest of a Note into Conversion Stock is hereinafter sometimes referred to as
the "conversion" of such Note. Notwithstanding any oth
er provision hereof, if a
conversion of a Note is to be made in connection with a sale of the Company or
other event, such conversion may, at the election of any Holder tendering such
Note for conversion, be expressly conditioned upon the consummation of such
other event, in which case such conversion shall not be deemed to be effective
until the consummation or occurrence of such other event.
(a) In case the Company shall: (i) declare a dividend or make a
distribution o
n outstanding shares of Capital Stock in shares of Common Stock,
(ii) subdivide any of the outstanding shares of Common Stock into a greater
number of shares, or (iii) combine any of
the outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision or combination shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior thereto by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to any such record date for such dividend or distribution or
the effective date of such subdivision or combination and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after the payment of such dividend or distribution or the effective date
of such
subdivision or combination.
(b) In case the Company shall issue or sell shares of Common Stock without consideration or for a consideration per share less than the Conversion Price in effect immediately prior to any such issuance or sale, (excluding any notes issued to American Mobile pursuant to the American Mobile Exchange Agreement) the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior thereto by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to any such issuance plus the number of shares which the aggregate offering price of the total number of shares of Common Stock proposed to be issued would purchase at a price per share equal to the Conversion Price in effect immediately prior to such issuance and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issuance plus the number of additional shares of Common Stock proposed to be issued. Such adjustment shall be made upon the closing with respect to the shares of Common Stock so issued based upon the number of shares of Common Stock actually issued. Subject to the right provided for in Section 8.4(e), the granting of stock options with an exercise price less than the Conversion Price in effect at the time of grant and the award of stock grants for no cash consideration or for cash consideration less than the Conversion Price in effect at the time of award shall be deemed to be an issuance at such time by the Company of the shares of Common Stock covered by such options or grants for consideration less than the Conversion Price and shall result in an adjustment to the Conversion Price as provided above based upon the exercise price under any such stock options and the cash consideration receivable under any such stock grants.
(c) In case the Company shall issue (whether directly or by assumption in a merger or otherw ise) or sell any securities convertible into shares of Common Stock (or any rights, warrants, options to subscribe for or purchase securities convertible into shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock) and the conversion price per share thereunder (or the sum, if greater, of the consideration per share received upon the issuance of any such rights, warrants, options or convertible or exchangeable securities plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise thereof and the conversion price per share under the convertible securities purchasable upon exercise thereof) is less than the Conversion Price in effect immediately prior to any such issuance, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior thereto by a fraction, the numerator of which shall be the number of shares of Common Stock o utstanding immediately prior to any such issuance plus the number of shares which the aggregate conversion price under the convertible securities so issued (or the sum, if greater, of the aggregate consideration received or receivable upon issuance of any
(e) No adjustment in the Conversion Price shall be required with respect to shares issued pursuant to the Stock Plan if: (i) such shares, together with all other shares issued under Stock Plan, do not exceed 10% of the fully diluted shares of Common Stock of the Company giving pro forma effect to the conversion of the Notes, and (ii) such Stock Plan has been approved by a Compensation Committee of the Board of Directors, or an equivalent committee of the Board of Directors, which committee shall include at least one director designated by th e Holders and which approval shall include the approval of such director so designated.
(f) Whenever the Conversion Price is adjusted as provided herein, the Company shall promptly mail to each Holder a certificate signed by the chief financial officer of the Company setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment and the computation thereof.
instrument executed and mailed or delivered to the Holders at the last address of such Holders appearing on the books of the Company, the obligation to deliver to such holders such shares of stock, securities or properties as, in accordance with the foregoing provisions, such Holders may be entitled to acquire. The above provisions of this subparagraph shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers, or other dispositions.
(b) Upon receipt of such notice the Company shall, within one year of the da te of such notice, have the option, at its discretion, with the concurrence of the Holders of a
(a) The representations and warranties made by the Company in Section 4 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects at the Closing Date with the same force and effect as if they had been made on and as of said date, and shall be so certified by a Responsible Officer of the Company.
(b) All covenants, agreements and con ditions contained in this Agreement to be
performed by the Company on or prior to such purchase shall have been performed or complied with in all material respects.
(c) There shall not then be in effect any legal or other order enjoining or restraining the transactions contemplated by this Agreement.
(d) There shall not be in effect any law, rule or regulation prohibiting or restricting such purchase or requiring any consent or approval of any Person which shall not have been obtained to issue the Note (except as otherwise provided in this Agreement).
(e) The XM Exchange Agreement shall close concurrently with the issuance of the Notes in the manner contemplated in such agreement with all of the conditions therein satisfied.
(f) In connection with the issuance and sale of t he Convertible Notes to all of the Investors, the Company shall have received gross proceeds of not less than $125 million.
(g) The Investor shall have received an opinion of counsel to the Company with respect to the Confidential Memorandum and the legality of the Convertible Notes, in form and substance reasonably satisfactory to the Investor.
(h) Each of the Clear Channel Operational Assistance Agreement, the DIRECTV Operational Assistance Agreement, the TCM Group Operational Assistance Agreement and the OnStar Distribution Agreement shall continue in full force and effect.
(i) Each of the Investors and the Company shall have entered into the Registration Rights Agreement and the Shareholders' Agreement.
(j) The Investor shall have received a duly executed copy of the Regulatory Agreement.
(k) No public disclosure related to this Note Purchase Agreement shall have been made prior to Closing, except with Requisite Approval or as required by law.
(l) The Investors sha ll have received assurances from Hughes, to the reasonable satisfaction of the Investors, that upon receipt of sums due, Hughes will amend the Satellite Contract with respect to the construction schedule as reasonably acceptable to the Investors.
(m) American Mobile shall have delivered a letter to the Investors representing that consummation of the transactions contemplated by this Agreement and the Transaction Documents will not result in American Mobile having to file an application with the FCC to effect a change of control.
(n) The Secretary of the Company shall have delivered to the Investors a Secretary's Certificate, dated the date hereof, certifying that the conditions specified in Sections 11(a) and 11(b) have been fulfilled.
(o) XM Satellite Radio Inc. shall have provided to the Investors a Guarantee of the Obligations of the Company in respect of this Agreement and each of the Notes, which
Guarantee shall be subordinated to: (i) any Guarantees issued by XM Satellite
Radio Inc. in connection with any High Yield Debt issued by the Company, and
(ii) any High Yield Debt issued directly by XM Satellite Radio Inc.
(p) The Company shall have filed with the Secretary of State of Delaware a restated Certificate of Incorporation with terms consistent with those set forth in the Term Sheet and with such other terms and conditions not inconsistent with the Term Sheet which are necessary to effect the transactions contemplated by this Agreement.
(a) any payment of principal on the Note is not made when and as such payment becomes due at maturity, upon acceleration, redemption or repurchase, or otherwise;
(b) any payment of interest on the Note (other than Capitalized Interest) is not made when and as such payment becomes due and payable, and such failure to make payment continues and has not been made, waived or extended by the Holders capable of providing Requisite Approval for a period of fifteen (15) days;
(c) the Company fails to comply with or perform any of its covenants set
forth in this Agreement or the Note (other than a default specified in clause
(a) or (b) above), and such failure continues for a period of thirty (30) days
after the day on which written notice thereof is given to the Company by the
H
olders capable of providing Requisite Approval;
(d) any warranty or representation by or on behalf of the Company contained in this Agreement or in any instrument furnished in compliance with this Agreement is false or incorrect in any material respect on the date as of which made;
(e) there occurs with respect to any Indebtedness of the Company or its Subsidiaries in excess of $25 million: (i) an event of default that has caused the holder thereof to, or provided the holder thereof the right to, declare such Indebtedness to be due and payable prior to its Stated Maturity and such Indebtedness has not been discharged in full, and/or (ii) the failure to make a principal payment at the final (but not any interim) fixed maturity and such payment shall not have been made, waived or extended within thirty (30) days of such payment default;
(f) any final judgment or order (not covered by insurance) for the payment of money in excess of $10 million in the aggregate for all such final judgments
or orders against the Company or its Subsidiaries (treating any deductibles, self-insurance or retention as not so covered) shall be rendered against the Company its Subsidiaries and shall not be paid or discharged, and: (i) the final judgment or order that causes the aggregate amount for all such final judgments or orders outstanding and not paid or discharged against all such Persons to exceed $10 million shall remain unsatisfied, unvacated and unstayed pending appeal for a period of 30 consecutive days after the entry thereof, or (ii) enforcement proceedings shall have been commenced by any creditor upon such judgment or order;
(g) the Company or its Subsidiaries shall commence a voluntary case under any chapter of the Federal Bankruptcy Code, or shall consent to (or fail to contest within ten (10) days) the commencement of an involuntary case against the Company or its Subsidiaries under the Federal Bankruptcy Code;
(h) the Company or its Subsidiaries shall institute proceedings for liquidation, rehabilitation, readjustment or composition (or for any related or similar purpose) under any law (other than the Federal Bankruptcy Code) relating to financially distressed debtors, their creditors or property, or shall consent to (or fail to contest within ten (10) days) the institution of any such proceedings against the Company or its Subsidiaries;
(i) a court or oth er governmental authority or agency having jurisdiction in the premises shall enter a decree or order: (i) for the appointment of a receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the Company or its Subsidiaries or of any part of the property of such Person, or for the winding-up or liquidation of the affairs of such Person, and such decree or order shall remain in force and undischarged and unstayed for a period of more than thirty (30) days, or (ii) for the sequestration or attachment of any property of the Company or its Subsidiaries without its unconditional return to the possession of such Person, or its unconditional release from such sequestration or attachment, within thirty (30) days thereafter;
(j) the Company: (i) shall be in default under any of the OnStar Distribution Agreement, the Clear Channel Operational Assistance Agreement, the DIRECTV Operational Assistance Agreement, or the TCM Group Operational Assistance Agreement, and (ii) and shall not have remedied such default within thirty (30) days of receipt of notice thereof; or
(k) the Company shall not have launched its first satellite by December 31, 2003;
then, in the case of any such Event of Default referred to in clause (g), (h), or (i) of this Section 12.1, automatically, or, in the case of any other such Event of Default, at the option of the Holders capable of providing Requisite Approval exercised by written notice to the Company, the Notes, together with the interest accrued thereon, shall forthwith become and be due and payable, without any other presentment, demand, protest or notice of any kind, all of which are hereby expressly waived.
accordance with customary market standards as advised by the Company's investment bankers.
(b) Except to the extent provided in Section 13(a) above or with Requisite Approval, the Company shall not assume or incur any Indebtedness senior in rank to, or on a parity with, any of the Notes.
any modification to Section 2, Section 3 or the Conversion Price, one hundred percent (100%), and (iii) in the case of any other non-material change or technical correction of this Agreement, the Requisite Approval. For the avoidance of doubt, a non-material or technical correction shall mean a change in the terms of this Agreement which has no material adverse effect or consequence to the rights, preferences and obligations of holders of the Convertible Notes or Conversion Stock. Any amendment or waiver effected in accordance with this Section 16 shall be binding upon each future Holder of the Note and the Company.
(b) IN THE EVENT THAT A JUDI CIAL PROCEEDING IS NECESSARY, THE SOLE FORUM FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE SUPREME COURT OF THE STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK OR THE FEDERAL COURTS LOCATED IN SUCH STATE AND COUNTY, AND RELATED APPELLATE COURTS. THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.
(c) THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly signed as of the date first above written.
XM SATELLITE RADIO HOLDINGS INC. XM SATELLITE RADIO INC.
/s/ Hugh Panero /s/ Hugh Panero
By: _______________________________________________ By: ________________________________
Name: Hugh Panero Name: Hugh Panero
Title: President & CEO Title: President & CEO
CLEAR CHANNEL COMMUNICATIONS INC. COLUMBIA XM RADIO PARTNERS, LLC
By Columbia Capital LLC, its Managing Member
/s/ Randall T. Mays /s/ James B. Fleming, Jr.
By: _____________________________________________ By: _____________________________________________
Name: Name: James B. Fleming, Jr.
Title: Title: Managing Member
DIRECTV ENTERPRISES, INC. GENERAL MOTORS CORPORATION
/s/ Steven J. Cox /s/ Mark G. Gibbens
By: _____________________________________________ By: _____________________________________________
Name: Name: Mark G. Gibbens
Title: Title: Director, Business Development
As Attorney-in-fact for Eric Feldstein
Vice President and Treasurer
MADISON DEARBORN CAPITAL PARTNERS III, L.P. MADISON DEARBORN SPECIAL EQUITY III, L.P.
By Madison Dearborn Partners III, L.P., its general partner By Madison Dearborn Partners III, L.P., its general partner
By Madison Dearborn Partners LLC, its general partner By Madison Dearborn Partners LLC, its general partner
/s/ James N. Perry /s/ James N. Perry
By: _____________________________________________ By: _____________________________________________
Name: Name:
Title: Title:
MADISON DEARBORN SPECIAL ADVISORS FUND I, LLC TELCOM--XM INVESTORS, L.L.C.
By Madison Dearborn Partners III, L.P., its manager
By Madison Dearborn Partners LLC, its general partner /s/ Hal B. Perkins
By: _____________________________________________
/s/ James N. Perry Name: Hal B. Perkins
By: _____________________________________________ Title: V.P. & General Counsel
Name:
Title:
Agreed and Accepted by:
AMERICAN MOBILE SATELLITE CORPORATION
By: _____________________________________________
Name:
Title:
|
Attachment 2(a)
---------------
Name of Investor Principal Amount of Note
---------------- ------------------------
Clear Channel................... $75,000,000.00
DIRECTV......................... $50,000,000.00
GM.............................. $50,000,000.00
Telcom.......................... $25,000,000.00
Columbia Capital................ $25,000,000.00
Madison Dearborn................ $25,000,000.00
|
(Check appropriate box):
(a) It is not, nor are any of the underlying assets with respect to which the purchase is being made, a Benefit Plan Investor.
(b) It, or one or more of the underlying assets with respect to which the purchase is being made, is a Benefit Plan Investor.
Party Address Fax No.
-------------------------------------- ------------------------------------- --------------------
XM Satellite Radio Holdings Inc. 1250 23rd Street, N.W. 202-969-7050
Suite 57
Washington, D.C. 20037-1100
XM Satellite Radio Inc. 1250 23rd Street, N.W.
202-969-7050
Suite 57
Washington, D.C. 20037-1100
Clear Channel Communications, Inc. 200 Concord Plaza 210-822-2299
Suite 600
San Antonio, TX 78216-6940
Columbia XM Radio Partners LLC 201 North Union Street 703-519-3904
Suite 300
Alexandria, VA 22314
DIRECTV Enterprises, Inc. 2230 E. Imperial Hwy. 310-964-4114
El Segundo, CA 90245
General Motors Corporation 767 Fifth Avenue 212-418-6258
14th Floor
New York, NY 10153
Madison Dearborn Capital Partners Three First National Pla
za 312-895-1225
III, L.P., Chicago, IL 60602
Madison Dearborn Special Equity III,
L.P.,
Special Advisors Fund I, LLC.
Telcom-XM Investors L.L.C. 211 North Union Street 703-706-3837
Suite 300
Alexandria, VA 22314
|
EXHIBIT A
[Form of Note]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE THE SUBJECT OF A CERTAIN NOTE
PURCHASE AGREEMENT AND A CERTAIN SHAREHOLDERS' AGREEMENT WHICH, AMONG OTHER
THINGS, CONTAIN RESTRICTIONS ON THE TRANSFER OF S
UCH SECURITIES. A COPY OF THE
NOTE PURCHASE AGREEMENT AND THE SHAREHOLDERS' AGREEMENT ARE AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY.
U.S. $[ ] Dated: _______, 1999
FOR VALUE RECEIVED, the undersigned, XM SATELLITE RADIO HOLDINGS INC.,
a Delaware corporation with its principal office located at 1250 23rd Street
N.W., Suite 57, Washington, D.C. 20037 (the "Company"), promises to pay to the
order of [INVESTOR], a [ ] corporation with its principal office
located at [ ] or its assignee (collectively, the "Holder"), the
principal amount of $[ ], in the lawful currency of the United States
of America, or such lesser or greater amount as shall then remain outstanding
under this Note, at the times and in the manner provided in that certain Note
Purchase Agreement dated as of June 7, 1999, by and among the Company, the
Holder and the other Parties thereto, to which reference is hereby made and
which i
s incorporated herein by reference, no later than December 31, 2004, or
such other date upon which this Note shall become due and payable pursuant to
the Note Purchase Agreement, whether by reason of extension, acceleration or
otherwise (the "Maturity Date"). Capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Note Purchase Agreement.
The Company promises also to pay interest on the unpaid principal
amount hereof at a rate equal to the Interest Rate, as provided in the Note
Purchase Agreement, computed on the basis of the actual number of days
(including the first day but excluding the last day of any relevant period)
elapsed over a 360 day year, in accordance with the provisions of the Note
Purchase Agreement. Interest shall be calculated on the outstanding principal
amount of this Note for the period commencing on the Closing Date, and
continuing through the Maturity Date, or the date of any permitted Conversion
thereof. Interest on any pas
t due amount of interest or principal, accruing on
a daily basis, shall be payable on demand at a per annum rate equal to the
Interest Rate plus 1%.
This Note is convertible into shares of [Class A Common Stock] [Class A Convertible Preferred Stock] of the Company at the Conversion Price as provided for in the Note Purchase Agreement, subject to the terms, conditions and restrictions contained or referred to therein.
As provided for in the Note Purchase Agreement, any and all interest payments accrued on the unpaid principal amount of this Note shall (unless otherwise paid) be capitalized on a quarterly basis and added to such unpaid principal amount, as of the respective Interest Capitalization Date, as additional principal amounts upon which future interest payments shall accrue at the Interest Rate.
This Note is the Note referred to in the Note Purchase Agreement amon
g
the Company, the Holder and the other Investors and in the Registration Rights
Agreement among the Company, the Holder, the other Investors, Baron and American
Mobile dated on or about the date hereof and is entitled to the benefits
thereof. In case an Event of Default shall occur and be continuing, the
principal of and accrued interest on this Note may be declared, at the option of
the Holder, to be due and payable in the manner and with the effect provided in
the Note Purchase Agreement.
Any payments made hereunder shall be applied first against costs and expenses of the Holder hereunder; then against default interest, if any; then against interest due hereunder; and then against principal due hereunder.
All notices and other communications hereunder shall be in writing and, for purposes of this Note, shall be delivered in accordance with, and effective as provided in, the Note Purchase Agreement.
The Company hereby waives presentment, demand, protest or notice of
an
y kind in connection with this Note.
This Note shall be construed in accordance with, and be governed by the laws of, the State of New York without giving effect to any conflicts of law provisions of such laws (other than New York General Obligations Law Sections 5- 1401 and 5-1402). The Company hereby irrevocably submits to the exclusive jurisdiction of the New York Supreme Court and the United States District Court located in the County of New York, State of New York, with respect to any action or proceeding arising out of or relating to this Note and irrevocably agrees that service of process in any such action or proceeding may be effectuated in any manner permitted by law, including by mailing or delivering a copy of such process to the Company at its address set forth above.
This Note shall be binding upon the Company and inure to the benefit
of the Holder and its respective successors and permitted assigns. The Holder
may assign all, or any part of, or any interest in, the
Holder's rights and
benefits hereunder only to the extent and in the manner permitted in the Note
Purchase Agreement and the Shareholders' Agreement. To the extent of any such
assignment, such assignee shall have the same rights and benefits against the
Company and shall agree to be bound by and to comply with the terms and
conditions of the Note Purchase Agreement and the Shareholders' Agreement as it
would have had if it were the Holder hereunder.
Neither any failure nor any delay on the part of the Holder in exercising any right, power or privilege under this Note shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any other right, power or privilege.
The Company agrees to pay on demand all losses, costs and expenses, if any, including attorneys' fees, incurred by the Holder in connection with the enforcement of this Note in the event default occurs in the payment of any amounts due hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by its officer thereunto duly authorized as of the date first above written.
XM SATELLITE RADIO HOLDINGS IN
C.
Title:
GUARANTY
XM Satellite Radio Inc. hereby unconditionally guarantees the full and timely payment when due of all amounts payable under this Note and the performance by the Company of all of its obligations hereunder.
XM SATELLITE RADIO INC.
Title:
EXHIBIT 10.4
***Confidential treatment has been requested for portions of this agreement. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*****]. A complete version of this agreement has been filed separately with the Securities and Exchange Commission.
TECHNOLOGY LICENSING AGREEMENT
NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:
[*****] Pages 1-2
***** 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.
(ii) [*****]
(iii) technology owned by AMSC or licensable by AMSC relating to the Seavey low-profile omnidirectional L-band antenna developed by AMSC as part of its low-rate codec project;
(iv) all other technologies now or from time to time used in the AMSC System and which have practical application to the AMRC System and which AMSC owns, acquires or licenses and is permitted to sublicense to AMRC, subject to the provisions of Section 7 hereof; and
(v) all improvements made from time to time by AMSC to any of the items set forth in Subsections (i) through (iv) above.
(b) AMSC hereby grants to AMRC a license to use the AMSC Licensed Technology for the development, implementation and commercialization of the AMRC System for transmission in and over the geographic area of the United States and its territories.
(c) The licenses granted under Subsections (a) and (b) of this
Section shall include the right for AMRC to incorporate the WorldSpace Licensed
Technology or the AMSC Licensed Technology, as the case may be, in AMRC's own
technology and exploit all such rights granted to AMRC herein with respect to
the Licensed Technology without obligation to make any payment of any kind to
WorldSpace, AMSC or any third party except to the extent expressly set forth in
Section 4 of this Agreement.
***** 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.
[*****]
***** 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.
In the event that WorldSpace shall be required to pay to Thomson any additional fees relating to AMRC's use of the WorldSpace Licensed Technology, then WorldSpace shall promptly give notice of such fees to AMRC and AMRC shall be liable for and pay such fees.
Any such royalties payable to WorldSpace that are not paid when due as aforesaid shall accrue interest from the date on which payment becomes due at nine percent (9%) per annum, compounded quarterly, with any payments received being applied first to the oldest quarterly installments and accumulated interest thereon.
(b) [*****] In connection with the use of the [*****], AMRC shall make the following payments to WorldSpace: [*****] per year, payable on January 1 of each year, with the payment for 1998 payable upon signing of this Agreement.
Any such royalties payable to WorldSpace that are not paid when due as aforesaid shall accrue interest from the date on which payment becomes due at nine percent (9%) per annum, compounded quarterly, with any payments received being applied first to the oldest annual installments and accrued interest thereon.
(c) [*****] In connection with the development of the [*****], AMRC shall make the following payments to WorldSpace, regardless of the success or failure of the development of the [*****], as follows:
(i) [*****], payable upon delivery of such portion of the [*****] as shall be embodied in the [*****] to be supplied to AMRC at or around September 30, 1998
(ii) [*****] per fiscal quarter beginning with the first quarter following such delivery until such time that the sum of such quarterly royalty fees equals [*****]; and
***** 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.
(b) WorldSpace hereby grants to AMRC a royalty-free, non-exclusive and irrevocable license to use and sublicense all improvements made by the WorldSpace Group to
such AMRC-Developed Technology for the development, implementation and commercialization of the AMRC System.
(c) AMSC hereby grants to AMRC a royalty-free, non-exclusive and irrevocable license to use and sublicense all improvements made by AMSC to such AMRC-Developed Technology for the development, implementation and commercialization of the AMRC System.
(b) In the event that WorldSpace or AMSC obtains from any third party the right to use any technology which could be used in connection with the development, implementation and commercialization of a DARS satellite system for transmission in and over the geographic area of the United States or its territories, WorldSpace or AMSC, as the case may be, shall make all reasonable efforts to obtain for AMRC the right to use such technology in the United States and its territories in connection with the development, implementation and commercialization of the AMRC System.
(i) it is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation;
(ii) it has the corporate power and authority to own its assets, carry on its business and execute and deliver this Agreement and to perform its obligations hereunder, including without limitation to grant to the other Parties the rights granted hereunder in accordance with the terms hereof;
(iii) it has taken all appropriate and necessary action to authorize the execution, delivery and performance of this Agreement;
(iv) all consents, approvals, licenses and authorizations of, and all filings and registrations with, any governmental or regulatory authority or other third party necessary for the due execution, delivery, performance and enforceability of this Agreement, have been obtained and are in full force and effect; and
(v) this Agreement constitutes a legal, valid and binding obligation, enforceable in accordance with its terms; the execution, delivery and performance of this Agreement will not violate any provision of any laws or regulations applicable to it.
(b) WorldSpace hereby represents and warrants that:
(i) it has valid and enforceable ownership rights in and to, or has the rights from the appropriate third parties to license rights in and to, the WorldSpace Licensed Technology, including but not limited to any and all patents, copyrights, trade secrets, designs, software, and any and all other technology therein;
(ii) it has not previously assigned, pledged or otherwise encumbered any rights to the WorldSpace Licensed Technology in a manner that conflicts with the rights granted herein;
(iii) to the best knowledge of WorldSpace, no element of the WorldSpace Licensed Technology violates or infringes any patent, copyright, trademark, trade secret or other proprietary right of any third party; and
(iv) there are no judgments, orders, injunctions, decrees, awards or settlements outstanding (whether rendered by a court, tribunal, administrative agency or arbitral tribunal) against WorldSpace or referencing WorldSpace by name or by which WorldSpace is bound which affects the WorldSpace Licensed Technology or the use of the WorldSpace Licensed Technology in any manner material to the transactions contemplated hereby; and there is no litigation, judicial or arbitral action, or claim involving the WorldSpace Licensed Technology or the transaction contemplated by this Agreement which is pending or, to the knowledge of WorldSpace, threatened against WorldSpace.
(c) AMSC hereby represents and warrants that:
(i) it has valid and enforceable ownership rights in and to, the AMSC Licensed Technology, including but not limited to any and all patents, copyrights, trade secrets, designs, software, and any and all other technology therein;
(ii) it has not previously assigned, pledged or otherwise encumbered any rights to the AMSC Licensed Technology in a manner that conflicts with the rights granted herein;
(iii) to the best knowledge of AMSC, no element of the AMSC Licensed Technology violates or infringes any patent, copyright, trademark, trade secret or other proprietary right of any third party; and
(iv) there are no judgments, orders, injunctions, decrees, awards or settlements outstanding (whether rendered by a court, tribunal, administrative agency or arbitral tribunal) against AMSC or referencing AMSC by name or by which AMSC is bound which affects the AMSC Licensed Technology or the use of the AMSC Licensed Technology in any manner material to the transactions contemplated hereby; and there is no litigation, judicial or arbitral action, or claim involving the AMSC Licensed Technology or the
transaction contemplated by this Agreement which is pending or, to the knowledge of AMSC, threatened against AMSC.
(d) THE PARTIES ACKNOWLEDGE THAT THE WARRANTIES EXPRESSED HEREIN ARE THE SOLE WARRANTIES AND ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WHICH ARE HEREBY EXPRESSLY DISCLAIMED.
(b) Each Party agrees to make available to the other Parties any detailed specifications required for such other Party to make use of the technology licensed hereunder.
(c) WorldSpace agrees not to sell, assign or transfer to any third- party any element of, or interest in, the WorldSpace Licensed Technology for transmission in and over the geographic area of the United States and its territories in a manner inconsistent with the licenses granted under this Agreement.
(d) AMSC agrees not to sell, assign or transfer to any third-party any element of, or interest in, the AMSC Licensed Technology for transmission in and over the geographic area of the United States and its territories in a manner inconsistent with the licenses granted under this Agreement.
(e) AMRC agrees not to sell, assign or transfer to any third-party any element of, or interest in, the AMRC-Developed Technology in a manner inconsistent with the licenses granted under this Agreement.
(f) Until such time as may otherwise be agreed by the Parties hereto, WorldSpace shall provide to AMRC, promptly after the end of each fiscal quarter, information regarding the costs incurred for, and the status of, any and all technologies developed in connection with the MCM Technology.
the time it was disclosed to the Receiving Party; (iii) is disclosed to the Receiving Party by a third party who is not under any legal obligation prohibiting such disclosure; or (iv) is required to be disclosed by law.
(b) The Parties acknowledge that they may be required to disclose Confidential Information to governmental agencies or authorities by law or in connection with the obtaining of approvals for the Company, and each shall endeavor to limit disclosure to that purpose. If either Party is required to disclose Confidential Information pursuant to this Section, such Party will immediately give the other Party written notice of any such disclosure, which notice shall specify the substance of the disclosure. The Party making such a disclosure shall take all reasonable steps to prevent further disclosure of such Confidential Information.
(c) The provisions of this Section 10 shall survive the termination of this Agreement for any reason whatsoever. Upon such termination, the Parties shall return or destroy any Confidential Information which may have been transmitted by the other Party, as well as any copy or other reproduction, including without limitation, electronic data reproductions or representations.
(b) If any of WorldSpace or AMSC, on the one hand, or AMRC on the other hand, shall:
(i) breach any of the terms and conditions of this Agreement, and shall fail to remedy such breach within ninety (90) days after an arbitrator duly appointed in accordance with Section 13 hereof determines that any of WorldSpace or AMSC, on the one hand, or AMRC, on the other hand, has breached or violated any of its material obligations hereunder, unless such breach is so remedied; or
(ii) become insolvent or go into liquidation or receivership or be admitted to the benefits of any procedures for the settlement or postponement of debts or be declared bankrupt; or
(iii) become a party to dissolution proceedings;
then (except as otherwise expressly provided herein), by providing written
notice, (A) AMRC may terminate this Agreement (1) with respect to WorldSpace to
the extent WorldSpace is the subject of any matter covered by Subsection (i),
(ii) or (iii) above or (2) with respect to AMSC to the extent AMSC is the
subject of any matter covered by Subsection (i), (ii) or (iii) above; (B)
WorldSpace may terminate its obligations under this Agreement, to the extent
AMRC is the subject of any matter covered by Subsection (i), (ii) or (iii) above
or (C) AMSC may terminate its obligations under this Agreement, to the extent
AMRC is the subject of any matter covered by Subsection (i), (ii) or (iii)
above.
(c) After termination of this Agreement, AMRC shall return all documents (and copies thereof) and other embodiments of the Licensed Technology to WorldSpace or AMSC, as appropriate, or shall certify that such documents have been destroyed.
(b) Each Party hereby submits to the jurisdiction of any arbitral tribunal referred to above, agrees that any award rendered by the arbitrators against it may be executed against its assets in any jurisdiction and submits to the jurisdiction of the courts in such jurisdiction in any legal proceedings relating to the execution of such award.
(1) ARISING FROM THE WILLFUL MISCONDUCT OF SUCH PARTY, OR
(b) In the event of a claim of infringement of a third party's intellectual property rights arising from the WorldSpace Licensed Technology, WorldSpace will, to the extent consistent with its contractual, fiduciary, regulatory and other obligations, cooperate with AMRC as may be reasonably requested in the defense of such claim.
(c) In the event of a claim of infringement of a third party's intellectual property rights arising from the AMSC Licensed Technology, AMSC will, to the extent consistent with its contractual, fiduciary, regulatory and other obligations, cooperate with AMRC as may be reasonably requested in the defense of such claim.
(d) In the event of a claim of infringement of a third Party's intellectual property rights arising for the AMRC Developed Technology, AMRC will, to the extent consistent with its contractual, fiduciary, regulatory and other obligations, cooperate with WorldSpace and/or AMSC, as the case may be, as may be reasonably requested in the defense of such claim.
Notices to AMRC shall be sent to:
AMRC Holdings, Inc.
1250 23rd Street, N.W.
Suite 57
Washington, D.C. 20037
Attn: Chief Financial Officer
Telephone: 202-969-6000
Facsimile: 202-969-6001
Notices to AMSC should be sent to:
American Mobile Satellite Corporation
10802 Parkridge Boulevard
Reston, VA 20191
Attn: General Counsel
Telephone: 703-758-6130
Facsimile: 703-758-6134
Notices to WorldSpace shall be sent to:
WorldSpace Management Corporation
2400 N Street, N.W.
Washington, D.C. 20037
Attn: Assistant General Counsel
Telephone: 202-969-6000
Facsimile: 202-969-6001
The date of giving of any such notice shall be the date of delivery when delivered by hand or by overnight courier, or three days following the posting of the mail.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized directors, officers or representatives as of the date and year first above written.
WORLDSPACE MANAGEMENT CORPORATION
By /s/ Noah Samara
----------------------------
Name: Noah Samara
Title: Chairman & CEO
|
AMERICAN MOBILE SATELLITE CORPORATION
By /s/ Gary Parsons
----------------------------
Name: Gary Parsons
Title: Chairman & CEO
|
AMRC HOLDINGS, INC.
By /s/ Hugh Panero
----------------------------
Name: Hugh Panero
Title: President & CEO
|
AMERICAN MOBILE RADIO CORPORATION
By /s/ Hugh Panero
----------------------------
Name: Hugh Panero
Title: President & CEO
|
Attachments:
Annex 1 - Illustration of Royalty Payments contemplated under Section 4(c)
***** 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.
[*****]
AMENDMENT NO. 1 TO TECHNOLOGY LICENSING AGREEMENT
WHEREAS, XM is employing various technologies developed by WorldSpace (and its affiliates) and AMSC in connection with the development and implementation of XM's satellite digital audio radio system pursuant to a license granted in October 1997 by the U.S. Federal Communications Commission and
WHEREAS, XM is taking steps to commence the establishment of a Digital Audio Radio Service ("DARS") satellite system in the United States and other nations in North America in the footprint of XM's satellites under the license granted to XM in October 1997 by the U.S. Federal Communications Commission (the "XM System"), as such license may from time to time be modified or amended and such other licenses as may be required by appropriate governmental agencies in such other nations in North America in the footprint of XM's satellites; and
WHEREAS, the Parties have determined that it is desirable and appropriate to clarify and amend certain provisions of the Technology Agreement in connection with the
entering into of the Exchange Agreement by American Mobile, WorldSpace, Inc. and the other parties thereto;
NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:
(b) For the avoidance of doubt, the Technology Agreement is hereby amended by the addition of new Section 18 thereto as follows:
(c) XM hereby confirms that it understands that it may be required to enter into technical assistance agreements that meet the requirements of the U.S. export control laws, including the Export Administration Regulations and the International Traffic in Arms Regulations, in connection with access by foreign nationals to data subject to U.S. export control regulations. XM further understands that the export of certain information required for (i) the development of its payload by Alcatel S.A. in France and (ii) the export of its satellites for launch on the Sea Launch System are subject to the export control licensing requirements imposed by applicable U.S. law and regulation, including the Export Administration Regulations and the International Traffic in Arms Regulations. In this connection, XM agrees to obtain, and will enable the appropriate third parties to obtain, all necessary U.S. governmental approvals for such technical assistance agreements and export licenses in a time frame consistent with the scheduled launch of the XM Satellite Radio system.
(d) XM hereby covenants that any technical information it has in its possession which is subject to the requirements of the U.S. export control laws, including the Export Administration Regulations and the International Traffic in Arms Regulations, will be retained in accordance with the XM Satellite Radio Inc. Export Control Management Policy.
(b) The phrase "and other nations in North America in the footprint of AMRC's satellites launched for the XM System (as defined in Amendment No. 1 hereto)" is hereby inserted after the words "United States" in the second line of the first recital on page one of the Technology Agreement and the phrase "and such other licenses as may be required by appropriate governmental agencies in such other nations in North America in the footprint of AMRC's satellites launched for the XM System " is hereby inserted after the word "amended" in the fourth line of the first recital on page one of the Technology Agreement.
(c) The phrase "and other nations in North America in the footprint of AMRC's satellites launched for the XM System" is hereby inserted after the word "territories" appearing the fourth line of Section 2(a) of the Technology Agreement.
(d) The phrase "and other nations in North America in the footprint of AMRC's satellites launched for the XM System" is hereby inserted after the word "territories" appearing the fourth line of Section 2(b) of the Technology Agreement.
(e) The following proviso is hereby added to the end of Section 5(a) of the Technology Agreement:
(f) The following parenthetical phrase is hereby added following the words "AMSC Licensed Technology" in Section 5(b) of the Technology Agreement:
(other than in connection with any DARS satellite system)
(g) The following parenthetical phrase is hereby added following the words "WorldSpace System" in clause (ii)(A) of Section 6(a) of the Technology Agreement :
(solely to the extent such technology (and improvements) is used in the U.S.-based facilities for the WorldSpace Group's satellite DARS systems outside the United States.)
(a) Section 6(a) of the Technology Agreement is hereby amended by striking the word "hereafter" and inserting in its place "within five years after the date of this Agreement"
(b) The following phrase is hereby added following the phrase "AMRC System" in the second line of Section 1(a)(iv)
(which technologies shall have been developed within five years after the effective date of this Agreement)
(c) The Technology Agreement is hereby amended by the addition of new
Section 19 thereto as follows:
19. AMRC and the WorldSpace Group shall, to the extent mutually desirable, enter into licensing arrangements on commercially reasonable terms with respect to AMRC-Developed Technology and technology developed by the WorldSpace Group, in each case developed after the fifth anniversary of the effective date of this Agreement.
to money damages only; accordingly equitable relief shall not be available and XM's irrevocable right to use the technology licensed thereunder shall not be terminated; provided however that this restriction on the application of equitable relief as a remedy shall not apply to any breach relating to XM's obligations to license technology or improvements to WorldSpace and AMSC
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed and delivered by their proper and duly authorized directors, officers or representatives as of the date and year first above written.
WORLDSPACE MANAGEMENT CORPORATION
By /s/ James R. Laramie ------------------------------------ Name: James R. Laramie Title: Secretary |
AMERICAN MOBILE SATELLITE CORPORATION
By /s/ Randy Segal
-------
-----------------------------
Name: Randy Segal
Title: Senior Vice President
|
XM SATELLITE RADIO HOLDINGS, INC.
By /s/ Joseph M. Titlebaum ------------------------------------- Name: Joseph M. Titlebaum Title: SVP General Counsel and Secretary |
XM SATELLITE RADIO INC.
By /s/ Joseph M. Titlebaum ------------------------------------- Name: Joseph M. Titlebaum Title: SVP General Counsel and Secretary |
EXHIBIT 10.5
*** Confidential treatment has been requested for portions of this agreement.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as [*****]. A complete version of this
agreement has been filed separately with the Securities and Exchange
Commission.
WHEREAS, the Service Provider possesses, inter alia, technical expertise and know-how in the areas of engineering, satellite system design and development, ground segment infrastructure design and development, and similar areas related to the development of a DARS system;
WHEREAS, the Company has selected the Service Provider, and the Service Provider is willing, to perform the Services specified herein on the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the mutual obligations a
nd benefits set
forth in this Agreement, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Service Provider agree to the following terms
and conditions:
1.1 (a) The Service Provider shall, at the request of the Company, provide
certain technical, engineering, marketing and strategic planning, or
any other services as may be requested by the Company in connection
with the establishment or operation of the Business (the "Services").
--------
The Services may be provided to the Company, or to its subsidiary,
American Mobile Radio Corporation. Nothing in this Agreement shall
obligate the Company to purchase a minimum or specific amount of
Services.
(b) The Board of Directors of the Company or one or more of its authorized
designees shall meet no later than the 30th day before the beginnin
g
of each calendar quarter in order to determine the goals which the
Company must achieve in the following quarter, including the Company's
support needs in achieving those goals. No later than the 15th day
before the beginning of each calendar quarter, the Company shall
inform the Service Provider of the Services to be provided by the
Service Provider in the furtherance of achieving those goals. No
later than the 10th day before the beginning of each calendar quarter,
the Service Provider shall submit to the Company an itemization (each,
an "Itemization")
-----------
|
confirming the Service Provider will provide the Services specified by
the Company for the coming quarter, broken down by employee, rate per
hour and total cost estimates.
(c) The Company and the Service Provider shall agree upon the amount of
compensation for the Services in accordance with Section 2.1, in a
written addendum to this Agreement, which shall attach the related
Itemization (the "Addendum," and collectively the "Addenda").
-------- -------
(d) The Service Provider shall monitor the actual costs of the Services
provided on a monthly basis (and may, if it elects do so, on a more
frequent basis) and shall provide a written notice (the "Initial Cost
------------
Notice") to the Company during any quarter prior to the incurrence or
------
expenditure of one hundred percent (100%) of the cost estimates for
such quarter, as set forth in the Itemization to the Addendum for such
quarter, or as promptly thereafter as may be practicable.
Notwithstanding the foregoing, no failure or delay in providing any
such notice shall relieve the Company of the obligation to make
payment for services as provided herein. In addition, in the event
that the actual cost of the Services provided by the Service Provider
during any quarter exceeds or is expected to exceed one hundred twenty
percent (120%) of the cost estimates for such Services as set forth in
the Itemization attached to the related Addendum, the Service Provider
shall provide notice to the Company of any such excess (the "Excess
------
Cost Notice") as promptly as practicable after the Service Provider
-----------
determines that the actual cost is expected to exceed one hundred
twenty percent (120%) of the cost estimates.
At the Company's request, the Service Provider shall modify the
Services to be provided in any calendar quarter, subject to the
Service Provider's ability to provide the Services effectively and
efficiently; the Service Provider shall then provide Services as if
such modification had appeared on the Itemization attached to the
related Addendum; and such modification shall in due course be
reflected in an amendment of such Addendum in accordance with Section
12.5.
(e) The Parties agree that Addendum No. 1 entered into simultaneously
herewith sets forth the Services rendered and to be rendered during
the first quarter of 1998.
|
1.2 The Service Provider shall use its best efforts to ensure that the Services provided hereunder are consistent with accepted industry standards. Such Services shall be provided by the Service Provider as described in this Agreement when and where required by the Company, in a timely and professionally competent manner.
1.3 The Service Provider shall render Services in compliance with all applicable federal, state and local requirements, including, without limitation, all equal employment opportunity, compensation, benefit plan, disability, workers' compensation, anti-discrimination, and safety and health laws.
1.4 In order for the Service Provider to provide the Services hereunder, the Company shall disclose to the Service Provider such information and data which is reasonably requested by the Service Provider. The Service Provider shall use such information and data exclusively in the performance of its obligations hereunder, and such disclosure shall be subject to the terms and conditions of this Agreement, including Section 7, if such disclosure is of Confidential Information as defined herein.
1.5 Technology and the intellectual property rights therein owned by the Service Provider and provided to the Company in connection with the provision of Services herewith shall be subject to a Technology Licensing Agreement between and among the Parties.
(a) Unless agreed otherwise, the Service Provider shall be compensated at the rates set forth in Annex I for Services performed, plus reimbursement of reasonable out-of-pocket expenses. Such rates shall be determined by the Service Provider and shall not be changed without the prior written consent of the Company. The Company shall pay the Service Provider for such Services as set forth below:
(iii) in the event that (x) the actual cost of the Services provided
by the Service Provider during any quarter is expected to exceed one
hundred twenty percent (120%) of the cost estimates for such Services
as set forth in the Itemization attached to the related Addendum and
(y) the Service Provider has provided
(A) the Initial Cost Notice, the Company shall be authorized to modify the Services being provided during such quarter, in consultation with the Service Provider, in order to reduce the cost of Services for such quarter, or
(B) the Excess Cost Notice, the Company shall be authorized to direct the Service Provider to modify or suspend providing Services for the remainder of such quarter after the incurrence or expenditure of one hundred twenty percent (120%) of such cost estimates;
in the event the Company does not provide to the Service Provider notice of modification or suspension of Services as provided above, the Service Provider shall continue to perform the Services for the duration of such quarter and the Company shall be obligated to pay for the actual cost of the Services, which cost shall in due course be reflected in an amendment of such Addendum in accordance with Section 12.5.
(c) The Company shall be under no obligation to make any payments other than those contemplated by this Agreement.
(a) The Company shall have the right to dispute all or a portion of any invoice rendered by the Service Provider for which the Company has reasonable cause. The Company shall inform the Service Provider in writing of the basis for such dispute and the amount withheld within thirty (30) days of the Company's receipt of the relevant invoice.
(b) In the event it is determined, either by agreement of the Parties or by dispute resolution pursuant to Section 8 hereof, that the disputed amount is properly due and payable, the Service Provider shall be entitled to the interest earned on such disputed amount for each day after payment of the invoice was due until the day the disputed portion is paid by the Company. Interest shall be calculated at the rate equal to nine percent (9%) per annum.
(c) Any payment made by the Company, or failure of the Company to provide written notice of the dispute within the above thirty (30) day period, shall not prejudice the Company's right to contest its liability for any payment under this Agreement, unless such failure to give notice materially prejudices the Service Provider.
With effect from January 1, 1998, the Service Provider shall perform the Services as instructed by the Company and as from time to time agreed in the Addenda. However, the Service Provider shall not be obligated to devote its full-time efforts to the performance of the Services.
4.1. On or after the date of the commencement of commercial operation of the Business following the launch of the Company's first satellite, either Party may, at any time, for its convenience and at its sole option, after giving the other Party thirty (30) days written notice, terminate this Agreement. The termination of this Agreement, or of any renewal thereof, shall discharge any further obligation of either Party hereto with respect to this Agreement, or any renewal thereof, provided however that the obligations set forth in Section 12.6 shall survive.
4.2. Upon termination, the Service Provider shall be entitled to compensation and disbursements for Services rendered up to the date of termination and the Company shall be entitled to receive any work product for which full payment has been made, or in the alternative (at the sole discretion of the Company) to be reimbursed the amount paid for such Services and/or work product not returned or not completed.
5.1 Each Party hereby represents and warrants to the other Party as follows:
(a) It is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation;
(b) It has the corporate power and authority to own its assets, carry on its business and execute and deliver this Agreement and to perform its obligations hereunder;
(c) It has taken all appropriate and necessary action to authorize the execution, delivery and performance of this Agreement;
(d) All consents, approvals, licenses and authorizations of, and all filings and registrations with, any governmental authority necessary for the due execution, delivery, performance and enforceability of this Agreement, have been obtained and are in full force and effect; and
(e) This Agreement constitutes a legal, valid and binding obligation, enforceable in accordance with its terms. The execution, delivery and performance of this Agreement will not violate any provision of any applicable laws or regulations.
5.2 The Company hereby represents and warrants that, but for the description of services to be provided, it has entered into a substantially identical agreement with WorldSpace.
5.3 The Service Provider hereby represents and warrants that it has, or has unfettered access to, the technical, engineering, marketing and strategic planning and other necessary knowledge and skills necessary to render satisfactorily the Services as provided herein.
This Agreement does not constitute or create a joint venture, pooling arrangement, partnership, or formal business organization of any kind between and among any of the Parties and the rights and obligations of the Parties shall be only those expressly set forth herein. The Service Provider will perform the Services as an independent contractor and shall not be considered, for any purpose, to be an employee, agent or servant of the Company or its affiliated companies. Neither the Service Provider nor the Service Provider's personnel shall be entitled to workers' compensation, medical coverage or similar benefits, or any life, disability or other insurance protection provided by the Company or any of its affiliated companies for their respective employees. The Service Provider shall be solely responsible for the payment of social security benefits, unemployment insurance, pension benefits, withholding any required amounts for income and other employment-related taxes and benefits of its employees, for providing its own transportation, and shall make its own arrangements for injury, illness or other insurance coverage to protect itself, its affiliated companies, its subcontractors and personnel from any costs, expenses, damages, loss and/or liability arising out of performance of the Services, or any transportation associated therewith. The Service Provider has no power or authority to act for, represent, or bind the Company or its affiliated companies in any manner. Any attempt by the Service Provider to act on behalf of or to bind the Company shall be void and grounds for immediate termination of this Agreement.
7.1 (a) The Parties recognize that in the course of performance of the
Agreement, either of them may disclose to the other information about
the disclosing Party's business or activities which such Party
considers proprietary and confidential including, without limitation,
trade secrets, marketing and business plans, customer lists, and
information concerning the operations of the Parties (all of such
proprietary and confidential information is hereinafter referred to as
the "Confidential Information"). The Party who receives any
Confidential Information (the "Receiving Party") agrees to maintain a
confidential status for such Confidential Information, to treat such
Confidential Information in the same manner as it treats its own
Confidential Information, not to use any such Confidential Information
for any purpose other than the purpose for which it was originally
disclosed to the Receiving Party, and not to disclose any of such
Confidential Information to any third party, unless such information:
(i) is or has become available to the public from a source other
than the Receiving Party;
(ii) was already known to the Receiving Party from sources other than
the other Party at the time it was disclosed to the Receiving
Party;
(iii) is disclosed to the Receiving Party by a third party who is
not under any legal obligation prohibiting such disclosure; or
(iv) is required to be disclosed by law.
(b) The Parties acknowledge that they may be required to disclose
Confidential Information to governmental agencies or authorities by
law or in connection with the obtaining of approvals for the Company,
and each shall endeavor to limit disclosure to that purpose. If
either Party is required to disclose Confidential Information pursuant
to this paragraph, such Party will immediately give the other Party
written notice of any such disclosure,
6
|
which notice shall specify the substance of the disclosure. The Party
making such a disclosure shall take all reasonable steps to prevent
further disclosure of such Confidential Information.
|
8.1. In the event of any dispute between the Parties arising out of or in connection with this Agreement or the interpretation hereof, the Parties shall, in the first instance, make a good faith effort to settle such dispute amicably.
8.2. If amicable settlement cannot be reached within thirty (30) days following written notice by one Party to the other Party of the existence of any such dispute, the matter will be referred to binding arbitration in Washington, D.C. in accordance with the Expedited Arbitration Rules of JAMS/Endispute. The award of the arbitrator, JAMS/Endispute, shall be binding upon the parties hereto.
8.3. Each Party hereby submits to the jurisdiction of any arbitral tribunal referred to above, agrees that any award rendered by the arbitrators against it may be executed against its assets in any jurisdiction, and submits to the jurisdiction of the courts in such jurisdiction in any legal proceedings relating to the execution of such award.
All notices and other communications required or permitted hereunder shall be given in writing by hand delivery, by facsimile, or by registered or certified mail, return receipt requested, postage prepaid, addressed to the Party to receive the same at its respective address set forth below, or at such other address as may from time to time be designated by either Party to the other Party hereunder in accordance with this Section 9:
To the Service Provider:
American Mobile Satellite Corporation
10802 Parkridge Boulevard
Reston, VA 22091
Attn: General Counsel
Telephone: 703-758-6130
Facsimile: 703-758-6134
To the Company:
AMRC Holdings, Inc.
1250 23rd Street, N.W.
Suite 57
Washington, D.C. 20037
Attn: Chief Financial Officer
Telephone: 202-969-6000
Facsimile: 202-969-6001
All notices shall be effective when received. A notice is considered received if a written confirmation of receipt appears thereon or there exists a written fax confirmation. Either Party may by notice to the other Party designate a new address for notices, such new address to be effective ten (10) days after receipt of designation.
All customs, duties, taxes of any kind, charges, fees and assessments of any nature whatsoever ("Assessments") which may be imposed by any local or other governmental body with respect to the Services (other than taxes on the income of the Service Provider or employment-related taxes paid by the Service Provider pursuant to Section 6) shall be borne by the Company. The Company shall indemnify and hold harmless the Service Provider against any Assessments made against it and any costs incurred by the Service Provider in defending against such Assessments. Any Assessments incurred in the performance of this Agreement shall be treated as an out-of-pocket expense under Section 2.1.
11.1 Each Party hereby agrees to indemnify and hold the other Party harmless against any and all costs, losses, claims, actions, demands, damages and liabilities (including attorneys' fees) incurred by the indemnifying Party arising out of or in respect of (i) any act, failure to act, or any assumption of any obligation or responsibility by the indemnifying Party, or by any of its directors, officers or employees, which is in contravention or violation of or in conflict with any of the terms or provisions of this Agreement, or (ii) any breach of any of the representations or warranties made by the indemnifying Party under this Agreement. The Service Provider further agrees to indemnify and hold harmless the Company against any and all costs, losses, claims, actions, demands, damages and liabilities (including attorneys' fees) arising out of or in respect of the gross negligence or willful misconduct of the Service Provider in providing the Services.
11.2 THE SERVICE PROVIDER MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE AGREEMENT OR THE PERFORMANCE OF THE SERVICES
PROVIDED HEREUNDER OR THE WORK FURNISHED HEREUNDER, WHETHER ARISING UNDER
LAW OR AT EQUITY.
11.3 IN NO EVENT SHALL EITHER PARTY OR A PARTY'S AFFILIATES AND ITS OR THEIR SUBCONTRACTORS AND ITS OR THEIR OFFICERS, EMPLOYEES AND AGENTS, BE LIABLE, IN CONTRACT, IN TORT, OR OTHERWISE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY NATURE ARISING AT ANY TIME OR FROM ANY CAUSE WHATSOEVER, INCLUDING SPECIFICALLY, BUT WITHOUT LIMITATION, LOSS OF PROFITS OR REVENUE, LOSS OF FULL OR PARTIAL USE OF ANY EQUIPMENT, DELAYS, COST OF REPLACEMENTS, COST OF CAPITAL, LOSS OF GOODWILL, OR OTHER SUCH DAMAGES.
IN WITNESS WHEREOF, this Agreement has been executed by the Parties, effective as of the date above indicated.
AMRC HOLDINGS, INC. AMERICAN MOBILE SATELLITE
CORPORATION
By /s/ Hugh Panero By /s/ Gary Parsons ----------------- ------------------ Name: Hugh Panero Name: Gary Parsons Title: President & CEO Title: Chairman & CEO |
Attachments:
Annex 1 - Rates for Services
Addendum No. 1 to the Technical Services Agreement
****** 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.
ANNEX 1
Rates for Services
The billable rates for the Service Provider are as follows:
Hourly
Rate
------
[*****]
|
ADDENDUM NO. 1 TO
TECHNICAL SERVICES AGREEMENT
This Addendum No. 1 to the Technical Services Agreement (the "Agreement") dated as of January 1, 1998, is entered into by and among AMRC Holdings, Inc. (the "Company") and American Mobile Satellite Corporation (the "Service Provider"), each of which may be referred to individually as a "Party" or collectively as the "Parties."
Capitalized terms used herein without definition shall have the respective meanings set forth in the Agreement.
IN WITNESS WHEREOF, this Addendum No. 1 to the Agreement has been executed by the Parties, on the date above first written.
AMRC HOLDINGS, INC. AMERICAN MOBILE SATELLITE
CORPORATION
By /s/ Hugh Panero By /s/ Gary Parsons
----------------- ------------------
Name: Hugh Panero Name: Gary Parsons
Title: President & CEO Title: Chairman & CEO
|
****** 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.
Form of Itemization
(AMSC - AMRC)
Hourly Total
Rate Jan. Feb. March April Billings
------ ----- ----- ----- ----- --------
|
[*****]
AMENDMENT NO. 1 TO TECHNICAL SERVICES AGREEMENT
WHEREAS, the Parties have determined that it is desirable and appropriate to clarify and amend certain provisions of the AMSC TSA in connection with the entering into of the Exchange Agreement by American Mobile and the other parties thereto;
NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:
(a) It was and remains the intent of XM and American Mobile that no transfer of equipment or technology from XM to American Mobile will be made pursuant to the AMSC TSA or otherwise unless the transfer is consistent with the requirements of the U.S. export control laws, including the Export Administration Regulations and the International Traffic in Arms Regulations.
(b) For the avoidance of doubt, the AMSC TSA is hereby amended by the addition of new Section 12.10 thereto as follows:
(c) XM hereby confirms that it understands that it may be required to enter into technical assistance agreements that meet the requirements of the U.S. export control laws, including the Export Administration Regulations and the International Traffic in Arms Regulations, in connection with access by foreign nationals to data subject to U.S. export control
regulations. XM further understands that the export of certain information
required for (i) the development of its payload by Alcatel S.A. in France and
(ii) the export of its satellites for launch on the Sea Launch System are
subject to the export control licensing requirements imposed by applicable U.S.
law and regulation, including the Export Administration Regulations and the
International Traffic in Arms Regulations. In this connection, XM agrees to
obtain, and will enable the appropriate third parties to obtain, all necessary
U.S. governmental approvals for such technical assistance agreements and export
licenses in a time frame consistent with the scheduled launch of the XM
Satellite Radio system.
(d) XM hereby covenants that any technica l information it has in its possession which is subject to the requirements of the U.S. export control laws, including the Export Administration Regulations and the International Traffic in Arms Regulations, will be retained in accordance with the XM Satellite Radio Inc. Export Control Management Policy.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized directors, officers or representatives as of the date and year first above written.
AMERICAN MOBILE SATELLITE CORPORATION
By /s/ Randy Segal ------------------------------------ Name: Randy Segal Title: Senior Vice President |
XM SATELLITE RADIO HOLDINGS, INC.
By /s/ Joseph
M. Titlebaum
-------------------------------------
Name: Joseph M. Titlebaum
Title: SVP General Counsel and Secretary
|
Exhibit 10.6
***Confidential treatment has been requested for portions of this contract. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*****]. A complete version of this contract has been filed separately with the Securities and Exchange Commission.
SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT
FOR IN-ORBIT DELIVERY
By and Between
XM SATELLITE RADIO INC.
and
HUGHES SPACE AND COMMUNI
CATIONS
INTERNATIONAL, INC.
July 21, 1999
SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT
FOR IN-ORBIT DELIVERY
By and Between
XM SATELLITE RADIO INC.
and
HUGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC.
The attached Contract and the information contained therein are
confidential and proprietary to XM Satellite Radio Inc. and Hughes Space and
Communications 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 Hughes Space and Communications
International, Inc.
TABLE OF CONTENTS
SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY
TERMS AND CONDITIONS
EXHIBIT A - SPACECRAFT PERFORMANCE SPECIFICATIONS
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 AND
TERMINATION LIABILITY AMOUNTS
EXHIBIT G-3 -- 4TH AND 5TH OPTIONAL SATELLITES PAYMENT
PLAN AND TERMINATION LIABILITY AMOUNTS
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SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY
By and Between
XM SATELLITE RADIO INC.
And
HUGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC.
TERMS AND CONDITIONS
ATTACHMENTS, ANNEXES AND SCHEDULES
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 |
Schedule 19.3 Capitalization and Subsidiaries Schedule 19.4 Litigation Schedule 19.5 Title to Properties and Assets Schedule 19.6 Financial Statements Schedule 1 9.7 Certain Actions Schedule 19.8 Disclosed Liabilities |
****** 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
1. DEFINITIONS AND CONSTRUCTION.................................................................... 3
1.1 Certain Definitions..................................................................... 3
1.2 Other Terms............................................................................. 14
1.3 Integra
tion 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); [*****]....................................................... 17
3.1 Effective Date of Contract (EDC)........................................................ 17
3.2 Contractor Work Commitment.............................................................. 17
3.3 [*****]; Expiration Thereof; Remedies................................................... 20
4. CONTRACT PRICE.........................................................
......................... 22
4.1 Contract Price.......................................................................... 22
4.2 Changes in Contract Price............................................................... 23
4.3 Taxes and Duties........................................................................ 23
5. PAYMENT......................................................................................... 24
5.1 Requests for Payment and Invoices....................................................... 24
5.2 Payment................................................................................. 25
5.3 Disputed Amounts........................................................................ 26
5.4 Set Off................................................................................. 28
5.5 Late Payment............................................................................ 28
5.6 Payments Cur
rent at Launch.............................................................. 28
5.7 Security Interest....................................................................... 28
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
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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 Center (SCC) Equipment and Software................................... 41
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 Operations Support Services (OSS)....................................................... 43
8.12 Training................................................................................ 43
9. TITLE AND RISK OF LOSS.......................................................................... 45
9.1 Transfer of Title....................................................................... 45
9.2 Transfer of Risk of Loss................................................................ 45
10. LIQUIDATED DAMAGES FOR LATE DELIVERY............................................................ 46
10.1 Liquidated Damages...................................................................... 46
10.2 Remedy..............................................
.................................... 47
10.3 Termination for Unexcused Delay......................................................... 47
11. EXCUSABLE DELAY................................................................................. 49
11.1 Excusable Delay Defined................................................................. 49
11.2 Equitable Adjustments................................................................... 49
11.3 Maximum Excusable Delay; Termination.................................................... 50
12. IN-ORBIT PERFORMANCE INCENTIVE PAYMENTS......................................................... 51
12.1 Total Amount At Risk.................................................................... 51
12.2 In-Orbit Performance Incentives......................................................... 51
12.3 Calculation and Earning of Incentive Amounts............................................ 51
12.4 D
isputed Performance.................................................................... 53
12.5 Roll-Over of Incentive Amounts.......................................................... 53
12.6 Payment and Interest.................................................................... 54
12.7 Interest on Roll-Over Incentive Amounts................................................. 55
12.8 Security for Performance Incentive Payments............................................. 56
12.9 Exclusive Remedy........................................................................ 57
13. CORRECTIVE MEASURES IN UNLAUNCHED SATELLITES AND OTHER DELIVERABLE ITEMS........................ 58
13.1 Notice of Defects....................................................................... 58
13.2 Duty to Correct......................................................................... 58
14. CHANGES IN SCOPE OF WORK.........................................
............................... 60
14.1 Changes Requested by Customer........................................................... 60
14.2 Changes Requested by Contractor......................................................... 60
14.3 Pricing of Changes...................................................................... 61
14.4 Storage................................................................................. 61
15. PERMITS AND LICENSES; COMPLIANCE WITH LAWS...................................................... 64
15.1 United States Permits, Licenses, and Laws............................................... 64
15.2 Non-United States Permits, Licenses, and Laws........................................... 64
15.3 Review of Applications.................................................................. 64
15.4 Contractor Violation of Law............................................................. 65
16. SUBCONTRACTS..
.................................................................................. 66
16.1 Major Subcontracts...................................................................... 66
16.2 Selection or Replacement of Major Subcontractors........................................ 66
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16.3 No Privity of Contract.................................................................. 66
16.4 Subcontractor Relations................................................................. 66
17. PERSONNEL AND KEY PERSONNEL..................................................................... 68
17.1 Personnel Qualifications................................................................ 68
17.2 Key Personnel Positions................................................................. 68
17.3 Assignment of Key Personnel............................................................. 68
18. CONT
RACTOR'S REPRESENTATIONS, COVENANTS, AND WARRANTIES......................................... 70
18.1 Organization; Good Standing and Qualification........................................... 70
18.2 Authorization........................................................................... 70
18.3 Warranties for Deliverable Items........................................................ 70
19. CUSTOMER'S REPRESENTATIONS, WARRANTIES AND COVENANTS............................................ 74
19.1 Organization; Good Standing and Qualification........................................... 74
19.2 Authorization........................................................................... 74
19.3 Capitalization and Subsidiaries......................................................... 74
19.4 Litigation.............................................................................. 74
19.5 Title to Properties and Assets......................
.................................... 75
19.6 Financial Statements.................................................................... 75
19.7 Certain Actions......................................................................... 75
19.8 Undisclosed Liabilities................................................................. 75
19.9 Compliance with Other Instruments....................................................... 76
19.10 Customer's Financial Strength........................................................... 76
19.11 Cross-Defaults.......................................................................... 76
19.12 Code.................................................................................... 76
19.13 Intellectual Property................................................................... 77
19.14 Other Contracts......................................................................... 77
19.15 N
on-Misleading Statements............................................................... 77
19.16 Control of Customer..................................................................... 77
19.17 Customer Financial Covenant............................................................. 77
20. INTELLECTUAL PROPERTY RIGHTS.................................................................... 78
20.1 Ownership of IP and IP Rights........................................................... 78
20.2 License Rights.......................................................................... 78
20.3 Joint Program Inventions................................................................ 79
20.4 Survival of Intellectual Property Rights................................................ 80
21. INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION.............................................. 81
21.1 Contractor Intellectual Property Indemnification.........
............................... 81
21.2 Customer Intellectual Property Indemnification.......................................... 81
21.3 Total Liability......................................................................... 82
22. CONFIDENTIAL INFORMATION........................................................................ 83
22.1 Confidentiality Obligations............................................................. 83
22.2 Exceptions.............................................................................. 83
22.3 No License.............................................................................. 84
22.4 Return of Confidential Information...................................................... 84
22.5 Inconsistent Legends.................................................................... 84
22.6 Survival of Confidentiality Obligations................................................. 84
23. NON-COMPETITIO
N OBLIGATION...................................................................... 85
24. INDEMNIFICATION................................................................................. 86
24.1 Contractor's Indemnification............................................................ 86
24.2 Customer's Indemnification.............................................................. 86
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24.3 Cross-Indemnification For Inter-Party Waiver of Liability............................... 87
24.4 Indemnification Procedures.............................................................. 87
24.5 Waiver of Subrogation................................................................... 88
24.6 Survival of Indemnifications............................................................ 88
25. INSURANCE....................................................................................... 89
25.1 General Obligations..................................................................... 89
25.2
Launch Insurance........................................................................ 89
25.3 Preparation of Claims................................................................... 90
26. LIMITATIONS OF LIABILITY........................................................................ 91
27. DISPUTE RESOLUTION.............................................................................. 93
27.1 Informal Dispute Resolution............................................................. 93
27.2 Arbitration............................................................................. 93
27.3 Litigation.............................................................................. 95
28. LAUNCH SERVICES................................................................................. 97
29. CUSTOMER'S RESPONSIBILITIES..................................................................... 102
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................................................................... 106
30.5 4th and 5th Optional Satellites......................................................... 107
30.6 [RESERVED].............................................................................. 108
30.7 Reflectors for the Ground Spare Satellite............................................... 108
30.8 Optional Launch Vehicles................................................................ 108
30.9 Contract Adjus
tments.................................................................... 109
31. FAILURE TO MAKE ADEQUATE PROGRESS............................................................... 109
32. TERMINATION..................................................................................... 110
32.1 Termination for Customer's Convenience.................................................. 110
32.2 Termination For Contractor's Default.................................................... 112
32.3 Termination for Customer's Default...................................................... 114
32.4 Termination for Excusable Delay......................................................... 117
32.5 Time of the Essence..................................................................... 118
33. INTER-PARTY WAIVER OF LIABILITY................................................................. 119
34. GENERAL.......................................................................
.................. 120
34.1 Assignment.............................................................................. 120
34.2 Entire Agreement........................................................................ 120
34.3 Amendments.............................................................................. 121
34.4 Waiver of Breach of Contract............................................................ 121
34.5 Severability............................................................................ 121
34.6 Applicable Law.......................................................................... 121
34.7 Notices................................................................................. 121
34.8 Parties Not Agents...................................................................... 122
34.9 Release of Information.................................................................. 122
34.10 Calculation of Inte
rest................................................................. 123
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34.11 Survival................................................................................ 123
34.12 No Third-Party Beneficiaries............................................................ 124
34.13 Consents and Approvals.................................................................. 124
34.14 Lender Requirements..................................................................... 124
34.15 Covenant of Good Faith.................................................................. 125
34.16 Counterparts............................................................................ 125
35. OTHER
BUSINESS.................................................................................. 126
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SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT FOR IN-ORBIT DELIVERY
THIS SECOND AMENDED AND RESTATED SATELLITE PURCHASE CONTRACT (this
"Contract") is made and entered into as of the 21st day of July, 1999, by and
between XM SATELLITE RADIO INC., a Delaware corporation with its principal
offices located at 1250 23rd Street, Suite 57, N.W., Washington, D.C. 20037
(formerly named American Mobile Radio Corporation and hereinafter referred to as
"Customer"), and HUGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC., a Delaware
corporation with its principal offices located at 2260 E. Imperial Way, El
Segundo, California 90245, U.S.A. (hereinafter "Contractor"). As used in this
Contract, "Party" means eit
her 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 Hughes 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 add
itional 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 officially changed its name from American Mobile Radio Corporation to XM Satellite Radio Inc. on October 7, 1998, its office location, points of contact and authorized representatives; AND
WHEREAS, the Parties have reached agreement on additional changes to the First Amended and Restated Satellite Purchase Contract; AND
WHEREAS, this document amends and restates the First 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:
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 ($68,000,0 00).
(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, in addition to Customer's Primary Satellite Control Center, located in the Washington, D.C. area.
(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) "Cal
endar 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).
****** 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.
(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 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 Critica l 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 t
o 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
Sp
acecraft).
(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.
****** 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.
(p) "Constructive Total Loss" and "Total Loss" shall have the meaning ascribed to them in the policy for Launch Insurance.
(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 "Second Amended and Restated Satellite Purchase Contract" means the written instrument herein dated the day and year first written above, including any Amendments made pur suant 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 (F ailure 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.
(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.
****** 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.
(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 F inancing 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.
(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) "Flight Readiness Review" or "FRR" shall have the meaning ascribed to it in Article 8.3 (Flight Readiness Review).
(ss) "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.
(tt) "Furnishing Party" means the Party who furnishes Confidential Information to the other Party.
(uu) "Ground Spare Satellite" shall refer to the satellite that Customer may elect to purchase for on-ground Delivery pursuant to Article 30 (Options).
(vv) "Handover" shall have the meaning set forth in Article 8.5 (In-Orbit Testing and Final Acceptance of Satellites).
(ww) "Incentive Amount" means any amount required to be paid pursuant to Article 12 (In-Orbit Performance Incentive Payments).
(xx) "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.
(yy) "In-Orbit Testing" means the in-orbit tests and analyses Contractor shall perform in accordance with Exhibit D (Test Plan Requirements).
(zz) "Insurers" means those entities providing Launch Insurance.
(aaa) "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.
(bbb) "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.
(ccc) "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.
(ddd) "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 an electronic signal is sent to command the opening of any first stage propellant valves. A Launch is deemed to have occurred even if there is a Total Failure, Total Constructive Failure or Partial Failure of the Launch Vehicle (as such terms are defined in the Launch Agreement).
(eee) "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).
(fff) "Launch Agreement" means any Subcontract between Contractor and a Launch Agency to perform the Launch Services for one or both of the Satellites.
(ggg) "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 Act ivities, and assisting the Launch Agency in assuring the Satellite is properly integrated with the Launch Vehicle, all as further defined in Exhibit B (SOW).
(hhh) "Launch Date" means the specific day within the Launch Period or Launch Slot on which a Launch shall occur.
(iii) "Launch Insurance" means, with respect to a Satellite, insurance that covers the Satellite from the period beginning at Launch and ending no sooner than determination of acceptability of the Satellite for insurance purposes or determination of Constructive Total Loss or Total Loss. 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.
(jjj) "Launch and Early Operations" or "LEOP" means, with respect to a Satellite, those services provided by Contractor in support of each launch mission after La unch 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).
(kkk) "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.
(lll) "Launch Readiness Review" shall have the meaning ascribed to it in Article 8.4 (Launch Readiness Review).
(mmm) "Launch Services" means the Launch of a L aunch 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.
(nnn) "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.
(ooo) "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.
(ppp) "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).
****** 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.
(qqq) "Law" or "Laws" means any laws, including rules, regulations, codes, injunctions, judgments, orders, ordinances, decrees, rulings, and charges thereunder, of any federal, state, local or municipal government of any country (and all agencies thereof) having jurisdiction over any portion of the Work.
(rrr) "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 scr een 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 r elevant, 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.
(sss) "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).
(ttt) "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.
(uuu) "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, lit igation, settlement, judgment, interest, and penalties).
(vvv) "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).
(www) "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.
****** 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.
(xxx) "Major Subcontractor" means a Subcontractor who is a party to a Major Subcontract.
(yyy) "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.
(zzz) "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).
(aaaa) "Milestone Payment" means any of thos e payments listed as specific milestone payments in Exhibit G (Payment Plan and Termination Liability Amounts).
(bbbb) "Mission Support Services" 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).
(cccc) "[*****]" means the period of [*****] Calendar Days commencing the day after EDC.
(dddd) "Operations Support Services" or "OSS" means, with respect to a Satellite, those support services to be provided by Contractor, as requested by Customer, beginning upon Handover of each Satellite and ending three (3) months after Handover, which services shall be provided concurrently with LEOP through Final Acceptance of the Post-Eclipse Test Report.
(eeee) "Orbital Design Life" means, with respect to a Satellite, the contracted for de sign and performance life of fifteen (15) years for each Satellite, commencing upon Handover.
(ffff) "Partial Loss" shall have the meaning ascribed to it in the policy of Launch Insurance.
(gggg) "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.
(hhhh) "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).
(iiii) "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).
(jjjj) "Primary Satellite Control Center" means Customer's satellite control facility located in Washington, D.C.
(kkkk) "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.
(llll) "Properly Operated Satellite" means a Satellite which is being monitored and commanded by Customer 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.
(mmmm) "Quarterly Incen
tive Payment Amount" means, with respect to each
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) (that is, 15 years
x 4 quarters per year)), as may be adjusted in accordance with the terms of this
Contract.
(nnnn) "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.
(oooo) "Receiving Party" means the Party who receives Confidential Information from the Furnishing Party.
(pppp) "Request for Payment" means a request for payment from Contractor in the form of Attachment A hereto.
(qqqq) "Satellite" means each of the two (2) Hughes 702 satellites to be Delivered by Contractor to Customer pursuant to this Contract and that conforms to all the requirements of this Contract.
(rrrr) "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.
(ssss) "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).
(tttt) "Satellite Control Centers (SCC) Equipment and Software" means the equipment and 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).
(uuuu) "Shipment Readiness Review" shall have the meaning ascribed to it in Article 8.2 (Shipment Readiness Review).
(vvvv) "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).
(wwww) "Similar Satellite Service" means digital audio broadcasting satellite service provided by a Similar Satellite System.
(xxxx) "Spacecraft" means Satellite.
(yyyy) "Spacecraft Performance Specifications" means the technical specifications set forth in Exhibit A (Spacecraft Performance Specifications), as may be amended pursuant to this Contract.
(zzzz) "Specified Orb ital Location" means, with respect to each Satellite, the geostationary synchronous orbital location specified in Exhibit A (Spacecraft Performance Specifications).
(aaaaa) "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.
(bbbbb) "Subcontract" means a contract awarded by Contractor to a Subcontractor or a contract awarded by a Subcontractor.
(ccccc) "Subcontractor" means a person, firm, corporation, or business entity that has been awarded a Subcontract.
(ddddd) "Termination Liability Amounts" means the amounts listed as Termination Liability Amounts in Exhibit G (Payment Plan and Termination Liability Amounts) of this Contract, as may be amended pursuant to this Contract.
(eeeee) "Test Plan" means the test plans set forth in Exhibit D (Test Plan Requirements), as may be amended pursuant to this Contract.
(fffff) "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.
(ggggg) "Total Amount at Risk" means a total firm-fixed sum of Twenty-Five
Million Dollars ($25,000,0000) eligible to be earned by Contractor as
performance incentive payments ($12,500,000 per Satellite) pursuant to Article
12 (In-Orbit Performance Incentive Payments), as such Total Amount at Risk may
be adjusted in accordance with Article 12.1 (Total Amount at Risk).
(hhhhh) "Training" means the training to be provided under this Contract, including training for operation of the Satellites in geostationary orbit, as more fully described in Exhibit B (SOW).
(iiiii) "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 Center Equipment and Software, Dynamic Spacecraft Simulator, Communications Payload Simulator, Long-Lead Activities and Items, Data and Documentation, Launch Campaign, Launch Services, LEOP services, OSS, 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
use
d 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 and Termination Liability Amounts
(e) Exhibit G-3 - 4th and 5th Optional Satellites Payment Plan and Te rmination Liability Amounts
(f) Exhibit B - Statement of Work (SOW)
(g) Exhibit A - Spacecraft Performance Specifications
(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
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.
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 Enviro
nment
(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 and Termination
Liability Amounts
(11) Exhibit G-3 - 3rd and 4th Optional Satellites Payment Plan and Termination
Liability Amounts
|
(c) Exhibits A, B, C, D, E, F, G, G-1, G-2, and G-3 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). The final list shall be provided by Contractor on or before September 31, 1999.
****** 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.
3. EFFECTIVE DATE OF CONTRACT (EDC; [*****])
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 a nd Items for the Ground Spare Satellite.
****** 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.
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 u
nder 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 3.3(b)
Contract Price Increases
----------------------------------------------------------------------------
Following [*****] Increase (USD)
(Cure Period)
----------------------------------------------------------------------------
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 [*****])
----------------------------------------------------------------------------
|
****** 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.
For example, if Contractor receives the [*****] Payment on the fortieth
(40th) Calendar Day after expiration of the [*****], the Contract Price shall be
increased by [*****] (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
T
ermination 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 exp ressly set forth in Article 22 (Confidential Information).
****** 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.
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 4.1
Contract Price
--------------------------------------------------------------------------------
--------------------------------------
Item (USD)
----------------------------------------------------------------------------------------------------------------------
1. 1st and 2nd Satellites
$ [*****]
----------------------------------------------------------------------------------------------------------------------
2. Launch Services for the 1st and 2nd Satellites $ [*****]
----------------------------------------------------------------------------------------------------------------------
3. Operations Support Services for 1st Satellite $ [*****]
-----------------------------------
-----------------------------------------------------------------------------------
4. Operations Support Services for 2nd Satellite $ [*****]
----------------------------------------------------------------------------------------------------------------------
5. Communications Payload Simulator, Satellite Control Centers Equipment and
Software, Dynamic Spacecraft Simulator $ [*****]
----------------------------------------------------------------------------------------------------------------------
6. Long-Lead Activities and Items for Ground Spare Satellite
$ [*****]
----------------------------------------------------------------------------------------------------------------------
CONTRACT PRICE $
447,513,000
----------------------------------------------------------------------------------------------------------------------
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(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 up to, but not including, Launch of the Launch Vehicles;
(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;
(7) pre-Launch deferred payments; and
(8) Incentive Amounts.
(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; and
(4) Ground Software source code license.
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 app
licable 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.
****** 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.
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).
(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 (Eff ective 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 requ ired 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
[*****] 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
****** 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.
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.
(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.
1250 23rd Street, N.W., Suite 57
Washington, DC
20037
Attention: Mr. Heinz Stubblefield
Sr. Vice President and CFO
Fax Number: 202-969-7113
5.2 Payment.
(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), 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 Calen dar 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.
(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.
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 b e 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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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 E
scrow
Account
-----------------------------------------------------------------------------------------------------------------
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)
-----------------------------------------------------------------------------------------------------------------
|
(d) To t
he 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 purs
uant 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, 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) Until Contractor's receipt of the Major Calendar Payments, or as provided in paragraph (c) below, whichever occurs first, Customer hereby grants Contractor a first priority security interest in any right, title, or in terest Customer may have or be deemed to have in the Work to secure Customer's obligations to Contractor under this Contract. Until Contractor's receipt of the Major Calendar Payments, 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).
(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) Subject to Article 5.6 (Payments Current at Launch), Contractor agrees to release and terminate its security interest, and to terminate any related financing statements, in accordance with the following:
(1) with respect to the first Satellite, Contractor's security interest therein shall be released and terminated upon Launch of the first Satellite;
(2) 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; and
(3) 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, with respect to the first Satellite, only prior to Launch of the first Satellite, and, with respect to the second Satellite and all other Deliverable Items, only prior to Launch of the second Satellite. 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.
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
identifyi
ng 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) Custo
mer
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 a
ll 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,
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 documen tation 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 co mpatible 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 establishin g 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.
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. Accordingl y, 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 r
espect 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.
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 representativ
es 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 di
sapproval.
****** 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 7.1
Delivery Schedule
-----------------------------------------------------------------------------------
-------------------------------------
Deliverable Item Delivery Date or Performance Date Place of Delivery
------------------------------------------------------------------------------------------------------------------------
1. 1st Satellite, Launch December 31, 2000* Specified Orbital Location for
Campaign, Launch Services, the Satellite, and other
and LEOP (1st Satellite locations for the provision of
through Handover) services as 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
Campaign, Launch Services, the Satellite, and other
and LEOP (2nd Satellite locations for the provision of
thro
ugh Handover) services as 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
------------------------------------------------------------------------------------------------------------------------
|
****** 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
------------------------------------------------------------------------------------------------------------------------
7. Operations Support Services [*****] Primary Satellite Control Center,
Washington, DC or Back-Up
Satellite Control Center
------------------------------------------------------------------------------------------------------------------------
8. Mission Support Services [*****] Contractor's Facilities
------------------------------------------------------------------------------------------------------------------------
9. Communications Payload [*****] Customer's facilities in
Simulator** Washington, DC
------------------------------------------------------------------------------------------------------------------------
10. Satellite Control Centers [*****] Customer's Primary and Back-Up
Equipment and Software*** Satellite Control Centers in
Washington, DC area
------------------------------------------------------------------------------------------------------------------------
11. Dynamic Spacecraft Simulator [*****] Primary Satellite Control Center,
Software and Hardware Washington, D.C.
------------------------------------------------------------------------------------------------------------------------
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
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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.
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.
(d) Contractor's obligation to Deliver the Work in accordance with the
Delivery Schedule set forth in Table 7.1 above is conditio
ned 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
r
equirements contained in Exhibit B (SOW) and Exhibit D (Test Plan Requirements)
at Contractor's plant. The Shipment Readiness Review shall consist of reviewing
the Satellite's ground test results in accordance with Exhibit D (Test Plan
Requirements). Contractor shall provide Customer at least fifteen (15) Business
Days advance written notice of the first Shipment Readiness Review for each
Satellite. Customer shall have the right to witness such review and the right to
either concur or not concur that the Satellite under review meets the
requirements of this Contract and is ready for shipment.
(b) The Shipment Readiness Review shall verify:
(1) the Satellite's ground testing has been completed in accordance
with Exhibit D ( Test Plan Requirements); and
(2) except as provided in paragraph (c) below, all Defects have
been corrected; and
(3) the Satellite, ground support equipment for handling and/or
transporting the Satellite
in preparation for Launch, and
supporting documentation are ready for shipment based on an
inspection of the Satellite and such ground support equipment and
an examination of such supporting documentation; and
(4) all ground equipment, consisting of the Satellite Control Center
Equipment and Software, Dynamic Spacecraft Simulator, and
Communications Payload Simulator, have been Delivered.
(c) It is the intent of the Parties that all Work that can be accomplished
at Contractor's facility will be completed prior to shipment to the Designated
Launch Site. Notwithstanding that intent, Contractor may, with respect to
certain limited Defects, conclude that such Defects can be effectively remedied
after shipment, in which case Contractor may, after receipt of written approval
from Customer, ship a Satellite to the Designated Launch Site where such Defects
shall be remedied.
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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) Successful completion of the Shipment Readiness Review for each
Satellite shall arise upon the occurrence of any of the following:
(1) The Shipment Readiness Review demonstrates compliance in all
respects with the provisions of paragraph (b) above; Customer
shall notify Contractor of its acceptance of the Shipment
Readiness Review within a maximum of three (3) Business Days
following completion of such review; or
(2) The Shipment Readiness Review complies in a
ll respects with
paragraph (b) above, save for minor non-conformances or
discrepancies that have not been corrected but which Contractor
demonstrates to Customer's satisfaction at the review have no
adverse effect upon the performance of the Satellite; Customer
shall notify Contractor of its acceptance of the Shipment Readiness
Review and the waiver of its right to compel correction within
three (3) Business Days following completion.
(e) If the Shipment Readiness Review reveals any Defects that require
correction, Customer shall, within three (3) Business Days after such review,
notify Contractor in writing of its rejection of the Shipment Readiness Review
and request correction of such Defects. Contractor shall, at its expense,
promptly correct the Defects referred to therein and, promptly following such
correction, shall notify Customer that the corrections have been made and shall
invite Customer to send
Customer Personnel to attend an inspection at which they
will be entitled to verify such corrections have been satisfactorily made
(second round Shipment Readiness Review). Customer shall be given at least three
(3) Business Days written notice of such inspection. The provisions of this
Article 8.2 (Shipment Readiness Review) shall thereafter apply similarly to that
inspection as if that inspection was the original Shipment Readiness Review. In
the event of any disagreement between Customer and Contractor relating to the
second round Shipment Readiness Review, the Senior Executive Level
representatives of the Parties shall use best reasonable efforts promptly to
resolve such dispute.
(f) In the event of any waiver by Customer of its right to compel
correction of a Defect, Contractor shall nevertheless provide Customer with a
written price proposal for the cost of correction of such Defect at the time of
waiver ("Baseline Correction Cost").
(g) Notwithstanding anything to the contrary her
ein, Contractor shall
correct any Defects previously waived by Customer, if requested by Customer and
if time permits consistent with the Launch schedule. In such event, Contractor
and Customer agree that the cost of such correction shall be shared as follows:
Contractor shall be solely responsible for the cost of correction of the
previously waived Defect up to the Baseline Correction Cost. If the cost of
correction of the previously waived Defect exceeds the Baseline Correction Cost,
Contractor and Customer [*****] above and beyond the Baseline
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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.
Correction Cost, up to a maximum aggregate increased cost amount of [*****].
Any cost of correction in excess of the Baseline Correction Cost [*****], shall
be the sole responsibility of Customer.
(h) Upon successful completion of the Shipment Readiness Review, such
Satellite shall be deemed to be Available for Shipment and shall be shipped to
its applicable Designated Launch Site.
8.3 Flight Readiness Review.
(a) Prior to integration of each Satellite with a Launch Vehicle at the
Designated Launch Site, a Flight Readiness Review (FRR)
shall be conducted by
Contractor in accordance with Exhibit B (SOW) and Exhibit D (Test Plan
Requirements). Contractor shall give Customer at least five (5) Business Days
written notice of the FRR. The purpose of the FRR is for Contractor to confirm
that each Satellite is ready to be integrated with a Launch Vehicle. Prior to
integration of such Satellite with a Launch Vehicle, any Defects in such
Satellite or other equipment as may remain from the Shipment Readiness Review,
or resulting from shipment or otherwise discovered during Satellite launch
preparations, shall have been remedied pursuant to the procedures to remedy
Defects as set forth in Article 13 (Corrective Measures in Unlaunched Satellites
and Other Deliverable Items).
(b) Successful completion of the FRR shall arise upon the occurrence of any
of the following:
(1) The FRR demonstrates compliance in all respects with the provisions
of this Contract; Customer shall notify Contractor in writing of
its
acceptance of the FRR at the FRR; or
(2) The FRR demonstrates compliance with the provisions of this
Contract, save for minor non-conformances or discrepancies that
have not been corrected but that Contractor, at the review,
demonstrates to Customer's satisfaction have no adverse effect upon
the performance of the Satellite; Customer shall notify Contractor
in writing of its acceptance of the FRR and the waiver of its right
to compel correction at the FRR.
(c) If the FRR reveals any Defects that require correction, Customer
shall, at the FRR, notify Contractor in writing of its rejection of the FRR and
request correction of such Defects. Contractor shall, at its expense, correct
such Defects and, following such correction, shall notify Customer that the
corrections have taken place and invite Customer to send Customer Personnel to
attend an inspection to verify that such corrections have been satisfactorily
ma
de (second round FRR). Customer shall be given at least three (3) Business
Days written notice of such inspection. Customer shall notify Contractor in
writing of its acceptance or rejection of the second round FRR at the second
round FRR. In the event of any disagreement between Customer and Contractor
relating to the second round FRR, the Senior
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
Executive Level representatives of the Parties shall use reasonable efforts
promptly to resolve such dispute.
(d) In the event of any waiver by Customer of its right to compel
correction of a Defect, Contractor shall nevertheless provide Customer with a
written price proposal for the cost of correction of such Defect at the time of
waiver ("Baseline Correction Cost").
(e) Notwithstanding anything to the contrary herein, Contractor shall
correct any Defects previously waived by Customer, if requested by Customer and
if time permits consistent
with the Launch schedule. In such event, Contractor
and Customer agree that the cost of such correction shall be shared as follows:
Contractor shall be solely responsible for the cost of correction of the
previously waived Defect up to the Baseline Correction Cost. If the cost of
correction of the previously waived Defect exceeds the Baseline Correction Cost,
Contractor and Customer [*****] above and beyond the Baseline Correction Cost,
up to a maximum aggregate increased cost amount of [*****]. Any cost of
correction in excess of the Baseline Correction Cost [*****] shall be the sole
responsibility of Customer.
(f) Upon successful completion of the FRR, the Satellite shall be released
by Customer for integration with the Launch Vehicle.
8.4 Launch Readiness Review.
In accordance with the provisions of Exhibit B (SOW), Contractor shall
support the Launch Agency during the Launch Agency's Launch Readiness Review.
In the event any Defect in the Satellite is discovered during the Launch
Readiness Review, Contractor shall correct such Defects in accordance with
Article 13 (Corrective Measures in Unlaunched Satellites and Other Deliverable
Items).
8.5 In-Orbit Testing and Final Acceptance of Satellites.
(a) In-Orbit Testing.
-----------------
(1) Upon arrival of each Launched Satellite at its Specified Orbital
Location, Contractor shall perform tests and analyses on such
Satellite in accordance with the In-Orbit Test Plan, developed by
Contractor and approved by Customer, pursuant to the requirements of
Exhibit B (SOW) and Exhibit D (Test Plan Requirements) to determine
whether and to what extent such Satellite meets the requirements set
forth in such In-Orbit Test Plan.
(2) For each Satellite, promptly upon completion of Pre-Eclipse In-Orbit
Testing, Contractor shall conduct an in-orbit acceptance review and
provide a documentation package setting forth the in-orbit test data
r
equired by, and in a condition fully conforming to, the requirements
of Exhibit B (SOW) and Exhibit D (Test Plan Requirements). "Handover"
of
40
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a Satellite shall occur upon completion of Pre-Eclipse In-Orbit
Testing and provision of such In-Orbit Acceptance Test Review
documentation package. Customer may begin commercial use of a
Satellite upon Handover of such Satellite.
(3) Subject to Article 8.10 (Launch and Early Operations (LEOP)), promptly
upon completion of Pre-Eclipse In-Orbit Testing, but no later than
sixty (60) Calendar Days after Launch, Contractor shall furnish
Customer with the Pre-Eclipse Test Report in full compliance with the
requirements of this Contract.
(4) Promptly upon completion of In-Orbit Testing and one full eclipse
period, Contractor shall furnish Customer with the Pos
t-Eclipse Test
Report in full compliance with the requirements of this Contract;
provided, however, in the case of a Constructive Total Loss,
Contractor may so furnish such Post-Eclipse Test Report prior to one
full eclipse period.
(b) Final Acceptance of Pre-Eclipse and Post-Eclipse Test Reports and
-----------------------------------------------------------------
Satellites.
------------
(1) Final Acceptance of the Pre-Eclipse Test Report and Post-Eclipse
Test Report shall be in accordance with the provisions of
paragraph (c) of Article 8.9 (Data and Documentation).
(2) Except as provided in Article 14.4(h)(i) (Storage), Final
Acceptance of each Satellite shall occur upon successful
completion of In-Orbit Testing following arrival of the Satellite
at its Specified Orbital Location and confirmed by Contractor
provid
ing to Customer the Pre-Eclipse and Post-Eclipse Test
Reports in a condition fully conforming to the provisions of this
Contract.
(c) In all circumstances in which a Satellite is a Constructive Total Loss
or Total Loss, Contractor shall have no further acceptance obligations with
respect to such Satellite, except to provide a loss investigation report.
8.6 Final Acceptance of Ground Spare Satellite.
Final Acceptance of the Ground Spare Satellite, if the option to
purchase the Ground Spare Satellite is exercised pursuant to Article 30
(Options), shall occur when such Ground Spare Satellite is Available for
Shipment, unless, within a reasonable period of time (to permit Contractor to
conduct the necessary actions to support a Launch of the Ground Spare Satellite)
prior to the Available for Shipment date for the Ground Spare Satellite,
Customer notifies Contractor that it intends to launch the Ground Spare
Satellite. In such event, Final Acceptance of su
ch Ground Spare Satellite
shall be determined in accordance with the appropriate provisions of this
Contract or as otherwise mutually agreed by the Parties.
8.7 Satellite Control Center (SCC) Equipment and Software.
Final Acceptance of SCC Equipment and Software shall occur only upon (i)
Contractor furnishing the SCC Equipment and Software at the places specified in
Table 7.1 of Article 7
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(Delivery), and (ii) completion of acceptance testing in accordance with Exhibit
B (SOW) and a Test Plan to be mutually developed by the Parties and approved by
Customer no later than [*****] demonstrating the SCC Equipment and Software are
furnished in a condition fully conforming to the provisions of this Contract.
The SCC Equipment and Software shall be deemed to be in a condition fully
conforming to the provisions of this Contract unless rejected by Customer in
writing within fifteen (15) Business Days after Delivery of the SCC Equipment
and Software
. If the SCC Equipment and Software are unacceptable, Customer
shall, within the said fifteen (15) Business Days, notify Contractor in writing
in which respects the SCC Equipment and Software contain any Defects.
Contractor shall promptly correct the Defects referred to therein and notify
Customer that the corrections have been made. The provisions of this
Article 8.7 (Satellite Control Center (SCC) Equipment and Software) shall
thereafter apply to the corrected SCC Equipment and Software.
8.8 Dynamic Spacecraft Simulator and Communications Payload Simulator.
Final Acceptance of each of the Dynamic Spacecraft Simulator and
Communications Payload Simulator ("Simulators") shall occur only upon (i)
Contractor furnishing the Simulators at the places specified in Table 7.1 of
Article 7 (Delivery) and (ii) completion of acceptance testing in accordance
with Exhibit B (SOW) and a Test Plan to be mutually developed by the Parties and
approved by Customer no later than [*****] demonstrating eac
h Simulator is
furnished in a condition fully conforming to the provisions of this Contract. A
Simulator shall be deemed to be in a condition fully conforming to the
provisions of this Contract unless rejected by Customer in writing within
fifteen (15) Business Days after receipt of said Simulator. If a Simulator is
unacceptable, Customer shall, within the said fifteen (15) Business Days, notify
Contractor in writing in which respects the Simulator contains any Defects.
Contractor shall promptly correct the Defects referred to therein and notify
Customer that the corrections have been made. The provisions of this Article
8.8 (Dynamic Spacecraft Simulator and Communications Payload Simulator) shall
thereafter apply to the corrected Simulator.
8.9 Data and Documentation.
(a) Final Acceptance of Data and Documentation, or any part thereof, shall
occur only when the Data and Documentation, or such part thereof, have been
furnished to Customer in a condition fully conforming to the provision
s of this
Contract. Any Data and Documentation furnished to Customer shall be accompanied
by written notice from Contractor specifying that portion of the Data and
Documentation being furnished.
(b) Data and Documentation, or any part thereof, other than Data and
Documentation that requires approval and acceptance by Customer in accordance
with (c) below, shall be deemed to be in a condition fully conforming to the
provisions of this Contract unless rejected by Customer in writing within
fifteen (15) Business Days after receipt of said Data and Documentation, or part
thereof. If such Data and Documentation, or part thereof, not requiring approval
and acceptance by Customer, are unacceptable, Customer shall, within the said
fifteen
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(15) Business Days, notify Contractor in writing in which respects the
Data and Documentation, or part thereof, contain any Defects. Contractor shall
promptly correct the Defects referred to therein and shall notify Customer that
the corrections have been made. The provisions of this Article 8.9 (Data and
Documentation) shall thereafter apply to the corrected Data and Documentation.
(c) Final Acceptance of any Data and Documentation requiring approval by
Customer in accordance with Exhibit B (SOW) shall occur when such approval has
been granted by Customer in writing. Customer shall notify Contractor in writing
of its acceptance or rejection of such Data and Documentation within fifteen
(15) Business Days after receipt of such Data and Documentation
by Customer;
failing such response, the Parties shall be deemed forthwith to be in dispute
and their rights shall be determined in accordance with the provisions of
Article 27 (Dispute Resolution).
8.10 Launch and Early Operations (LEOP).
Final Acceptance of LEOP services for each Satellite shall occur upon
Contractor furnishing to Customer LEOP services in accordance with the Delivery
Schedule and in a condition fully conforming to the provisions of this Contract,
including furnishing the Pre-Eclipse Test Report and Post-Eclipse Test Report in
accordance with Article 8.5 (In-Orbit Testing and Final Acceptance of
Satellites). LEOP services shall be deemed to be in a condition fully
conforming to the requirements of this Contract unless rejected by Customer in
writing within ten (10) Business Days after the date Customer has knowledge of
the non-conforming condition. If the LEOP services furnished are unacceptable,
Customer shall, within the said ten (10) Business Days, notify Contractor i
n
writing in which respects the LEOP services contain any Defects. Contractor
shall correct such Defects, to the extent possible, within fifteen (15)
Calendar Days of receipt of notice and shall notify Customer that the
corrections have been made. The provisions of this Article 8.10 (Launch and
Early Operations (LEOP)) shall thereafter apply to the corrected LEOP services.
8.11 Operations Support Services (OSS).
Final Acceptance of OSS shall occur upon Contractor furnishing to Customer
OSS in accordance with the Delivery Schedule and in a condition fully conforming
to the provisions of this Contract. OSS shall be deemed in a condition fully
conforming to the requirements of this Contract unless rejected by Customer in
writing within five (5) Business Days after the date Customer has knowledge of
the non-conforming condition. If the OSS furnished are unacceptable, Customer
shall, within the said five (5) Business Days, notify Contractor in writing in
which respects the OSS contains any D
efects. Contractor shall promptly correct
such Defects and shall notify Customer that the corrections have been made. The
provisions of this Article 8.11 (Operations Support Services (OSS)) shall
thereafter apply to the corrected OSS.
8.12 Training.
Final Acceptance and Delivery of Training, or any part thereof, shall occur
upon Contractor furnishing Training to Customer, or such part thereof, in
accordance with the Delivery Schedule and in a condition fully conforming to the
provisions of this Contract. Any
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Training furnished to Customer shall be accompanied by written notice from
Contractor specifying that portion of the Training being furnished. Training, or
any part thereof, shall be deemed to be in a condition fully conforming to the
requirements of this Contract unless rejected by Customer in writing within five
(5) Business Days after the date Customer has knowledge of the non-conforming
condition. If such Training or part thereof is unacceptable, Customer shall,
within the said five (5) Business Days, notify Contractor in writing in which
respects the Training, or part thereof, contains any Defects. Contractor shall
promptly correct such Defects and shall notify Customer that the corrections
have been made. The provisions of this Article 8.12 (Training
) shall thereafter
apply to the corrected Training.
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9. TITLE AND RISK OF LOSS
9.1 Transfer of Title.
Transfer of title, free and clear of all liens and encumbrances of any
kind, to each Deliverable Item (other than Satellites) shall pass to Customer at
Final Acceptance of such Deliverable Item. Transfer of title, free and clear of
all liens and encumbrances of any kind, to each Satellite shall pass to
Customer at the time of Handover of such Satellite, or, in the event of a
Constructive Total Loss or Total Loss of such Satellite, at the time of such
Constructive Total Loss or Total Loss, or, in the event such Satellite is placed
in storage, as provided in Article 14.4 (Storage).
9.2 Transfer of Risk of Loss.
Risk of loss or damage to each Deliverable Item shall pass to Customer
at
Final Acceptance of such Deliverable Item; provided, however, risk of loss or
damage to each Satellite and its Launch Vehicle shall pass at Launch of such
Launch Vehicle; provided, however, in the event a Satellite is placed in
Storage, risk of loss or damage to such Satellite shall pass in accordance with
Article 14.4 (Storage).
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
10. LIQUIDATED DAMAGES FOR LATE DELIVERY.
10.1 Liquidated Damages.
(a) The Parties acknowledge and agree that failure to meet the Delivery
Dates specified in Article 7 (Delivery) will cause substantial financial loss or
damage being sustained by Customer. The Parties further acknowledge and agree
that the following liquidated damages are believed to represent a genuine
estimate of the loss that would be suffered by Customer by reason of any such
delay (which losses would be difficult or impossible to calculate with
certainty). The liquidate
d damages in this Article 10.1 (Liquidated Damages) are
in addition to the liquidated damages for delay in the launch of the Satellites
described in paragraph (e) of Article 28 (Launch Services).
(b) In the event Contractor fails to deliver any Satellite on or before the
ninety-seventh (97th) Calendar Day following its respective Delivery Date, as
such date may be adjusted in accordance with this Contract (the "Grace Period
Expiration Date"), Contractor agrees to pay Customer with respect to such
Satellite, as liquidated damages and not as a penalty, the following amounts for
the period beginning on the first (1st) day following the Grace Period
Expiration Date and continuing for a period thereafter not to exceed one hundred
eighty (180) Calendar Days (the "Damages Period"):
(1) [*****] for each Calendar Day during the period commencing on the
first (1st) Calendar Day of the Damages Period for such Satellite
and continuing through the one hundred twentieth (12
0th) Calendar
Day of the Damages Period;
(2) [*****] for each Calendar Day during the period commencing on the
one hundred twenty-first (121st) Calendar Day of the Damages
Period for such Satellite and continuing through the one hundred
eightieth (180th) Calendar Day of the Damages Period.
(c) The total amount of liquidated damages for failure to meet the Delivery
Date for a Satellite shall not exceed Eight Million Dollars ($8,000,000); the
total aggregate amount of liquidated damages for failure to meet the Delivery
Dates of the two Satellites shall not exceed Sixteen Million Dollars
($16,000,000).
(d) The liquidated damages amounts (daily and maximum amounts) set forth in
paragraphs (b) and (c) above shall, at Customer's request, be adjusted pro rata
should the Satellite portion of the Contract Price be modified pursuant to an
Amendment to this Contract.
(e) With regard to liquidated damages for late delivery of a Sate
llite
pursuant to this Article 10.1 (Liquidated Damages), a delay caused by a Launch
Agency shall be deemed a Contractor Excusable Delay for the first one hundred
eighty (180) Calendar Days of such delay;
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requested with respect to the omitted portions.
any Launch Agency delay after such one hundred eighty (180) Calendar Days shall
not be deemed an Excusable Delay for the purposes of calculating Contractor's
liquidated damages under this Article 10 (Liquidated Damages for Late Delivery).
10.2 Exclusive Remedy.
Except as otherwise specifically provided in this Contract, the liquidated
damages provided in this Article 10 (Liquidated Damages for Late Delivery) shall
be the sole and exclusive remedy for late Delivery of a Satellite and shall be
in lieu of all monetary damages of any kind, provid
ed Customer may terminate
this Contract in accordance with Article 32.2 (Termination for Contractor's
Default).
10.3 Termination for Unexcused Delay.
(a) In the event the Damages Period for any Satellite has expired and the
maximum total liquidated damages for such Satellite have been levied,
Customer may exercise its right to terminate this Contract, in whole or in
part, for cause pursuant to the provisions of Article 32.2 (Termination for
Contractor's Default), in which case Customer's rights shall be governed by
the provisions of that Article.
(b) If, at [*****], the Launch Agency has failed to establish the Launch
Slot for the first Satellite to begin no later than [*****], then Customer may
exercise its right to terminate this Contract, in whole or in part, for cause
pursuant to Article 32.2 (Termination for Contractor's Default), in which case,
Customer's rights and obligations shall be governed by such Article. The
foregoing shall also apply if, with respect to the second Satell
ite, at [*****],
the Launch Agency has failed to establish the Launch Slot for the second
Satellite to begin no later than [*****]. Provided Contractor is able to
schedule Launch for each Satellite on another Launch Vehicle prior to [*****] as
to the first Satellite and [*****] as to the second Satellite, Contractor shall,
as agreed by Customer, schedule such Launch on either an H-IIA or Long March 3B
Launch Vehicle (at no additional cost to Customer) or on another Launch Vehicle.
If Launch is scheduled on a Launch Vehicle other than an H-IIA or Long March 3B
Launch Vehicle, Customer shall pay the difference between the amount Customer is
required to pay for the Sea Launch Launch Vehicle and the cost of such other
Launch Vehicle, including Contractor's reasonable financing costs. In the event
Customer, in accordance with the provisions of this Contract, terminates the
launch portion of this Contract for either or both of the first Satellite and/or
the second Satellite, then (i) the Parties shall amend th
ose portions of this
Contract related to such termination (e.g., transfer of title and risk of loss,
delivery schedule, acceptance, liquidated damages, termination liability and
this Article 10.3(b)) as appropriate to reflect an on-ground delivery of the
relevant Satellite, (ii) Contractor shall perform, without charge (except to the
extent included in the Contract Price), Launch Campaign, Mission Support and
LEOP Services for any launch services substituted by Customer for the Launch
Services terminated hereunder, provided, however, Customer shall pay Contractor
for those extra costs incurred by Contractor as a result of providing Launch
Campaign, Mission Support and LEOP Services to a
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location other than one contemplated hereunder, (iii) Customer shall pay
Contractor for those extra costs incurred by Contractor as a result of shipping
the applicable Satellite to a launch site other than one contemplated hereunder,
and (iv) if requested by Customer, Contractor shall perform launch management
services for the substituted launch services at a price mutually agreed by the
Parties.
(c) Liquidated damages shall not accrue for the late Delivery of any
portion of the Work after termination of this Contract for Contractor's default,
in accordance with its terms. Notwithstanding the foregoing, Customer's right to
terminate this Contract, as permitted by this Contract, due to Contractor's late
Delivery shall not prejudice Customer's right to
collect those liquidated
damages that accrued to Customer prior to any such termination.
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11. EXCUSABLE DELAY
11.1 Excusable Delay Defined.
(a) With respect to Contractor's performance of its obligations under this
Contract, an "Excusable Delay" shall be any delay in the performance of the
Work, in whole or in part, caused by an event that is beyond the reasonable
control of Contractor, its Subcontractors or their respective Affiliates,
including any acts of government in its sovereign capacity (including the
refusal, suspension, withdrawal, or non-renewal of export or import licenses
essential to the performance of the Contract); any acts of a Launch Agency
(deemed to be an Excusable Delay under paragraph (e) of Article 10.1 (Liquidated
Damages)); war (whether declared or undeclared), outbreak of national
hostilities, invasion o
r sabotage; fire, earthquake, flood, epidemic, explosion,
or quarantine restriction; strike or work slow down (other than at Contractor's
or a Subcontractor's facilities) not reasonably within Contractor's control;
freight embargoes; acts of God; or failure by Customer to meet its
responsibilities under this Contract where such Customer failure inhibits
Contractor's ability to satisfy its Delivery obligations under this Contract;
provided written notice is given to Customer, in writing, within ten (10)
Business Days after Contractor shall have first learned of the occurrence of
such an event. Notwithstanding the foregoing, failure by Contractor to provide
such notice shall not prevent such an event from qualifying as an Excusable
Delay provided Customer's Program Manager has actual notice of such event by
means of publicly and commonly available sources (e.g., national or global
coverage of major natural disaster) prior to Customer suffering any prejudice
from Contractor's failure to provide such notice.
Such notice to be provided by
Contractor, as required by the preceding provisions, shall include a detailed
description of the portion of the Work known to be affected by such delay. In
all cases, Contractor shall use best reasonable efforts to avoid or minimize
and/or work around such delay through the implementation of any work-around
plans, alternate sources, or other means Contractor may utilize or expect to
utilize to minimize a delay in performance of the Work. Contractor shall also
provide Customer prompt written notice when the event constituting an Excusable
Delay appears to have ended.
(b) In the event Customer disputes the Excusable Delay, Customer shall
inform Contractor in writing within ten (10) Business Days from the date of
receipt of written notice of the event constituting an Excusable Delay and, if
the Parties have not resolved the dispute within ten (10) Business Days of
Contractor's receipt of written notice from Customer, the dispute shall be
resolved pursuant to Article 27
(Dispute Resolution).
11.2 Equitable Adjustments.
(a) In the event of an Excusable Delay under Article 11.1 (Excusable Delay
Defined), there shall be an equitable adjustment to the Delivery Schedule and
Delivery Dates set forth in Table 7.1 of Article 7 (Delivery) (unless the
Excusable Delay is caused by Contractor's failure to provide Customer with the
assistance required by the third sentence of paragraph (a) of Article 25.2
(Launch Insurance)); provided, however, Contractor acknowledges and agrees that
the occurrence of an Excusable Delay shall not entitle Contractor to an increase
in the Contract Price unless the Excusable Delay is caused directly by
Customer's failure to meet its responsibilities under this Contract, including
those detailed in Article 29 (Customer's Responsibilities ), in which event
there shall be an equitable adjustment to the Contract Price only for
incremental
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costs incurred by Contractor as a result of such Excusable Delay, such
incremental costs to be invoiced to Customer in reasonable detail.
(b) Any adjustment made pursuant to this Article 11.2 (Equitable
Adjustments) shall be formalized by the execution of an Amendment to this
Contract wherein such adjustments shall be recorded.
(c) In the event of an adjustment in the Delivery Date of any Satellite
due solely to Excusable Delay, there shall be an adjustment in the Delivery Date
of any Satellite or Ground Spare Satellite, if ordered, subsequently to be
Delivered only to the extent such Delivery Date is impacted by the Excusable
Delay and only to the extent necessary to permit at least one hundred twenty
(120) Calendar Days between the Delivery
of the subject Satellite and any
subsequent Satellite or Ground Spare Satellite, if ordered; provided, however,
in the event the Excusable Delay (of either the first or second Satellite) is
caused by a Launch Agency Delay, the Delivery Date for the Ground Spare
Satellite, if ordered, shall not be extended under this paragraph (c).
(d) The occurrence of an Excusable Delay arising from any act or omission
of Customer as set forth herein shall not entitle Customer to an adjustment in
the payment schedule set forth in Exhibit G (Payment Plan and Termination
Liability Amounts).
11.3 Maximum Excusable Delay; Termination.
(a) The maximum total amount of Excusable Delay (not including Excusable
Delay caused directly by Customer's failure to meet its responsibilities under
this Contract) shall be four hundred eighty-five (485) Calendar Days.
(b) Customer may terminate this Contract (in whole or in part as to the
following parts: first Satellite and related Launch Services, second Sate
llite
and related Launch Services, and Long-Lead Items), pursuant to Article 32.4
(Termination for Excusable Delay) if and when it becomes reasonably certain that
the aggregate of Excusable Delays (except those Excusable Delays caused directly
by Customer's failure to perform its responsibilities under this Contract) will
exceed four hundred eighty-five (485) Calendar Days.
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12. IN-ORBIT PERFORMANCE INCENTIVE PAYMENTS.
12.1 Total Amount At Risk.
The Total Amount At Risk shall be placed at risk by Contractor against
failure of the Satellites to meet the criteria set forth or referenced in
Article 12.3 (Calculation and Earning of Incentive Amounts).
12.2 In-Orbit Performance Incentives.
Contractor represents that each Satellite will meet the criteria set forth
or referenced in Article 12.3 (Calculation and Earning of Incentive Amounts)
during the Orbital Design Life of each Satellite. To the extent any Satellite
satisfies the criteria set forth or referenced in Article 12.3 (Calculation and
Earning of Incentive Amounts), Customer shall pay Contractor Incentive Amounts,
to be calculated as specified in
Article 12.3 (Calculation and Earning of
Incentive Amounts). The total aggregate amount of incentives paid by Customer
to Contractor for any and all Satellites shall not exceed the Total Amount At
Risk, plus interest thereon calculated pursuant to Article 12.6(b) of this
Contract.
12.3 Calculation and Earning of Incentive Amounts.
The Total Amount at Risk shall be earned by Contractor and paid by Customer
to Contractor in the manner and to the extent provided in this Article 12.3
(Calculation and Earning of Incentive Amounts) and paid by Contractor to
Customer in accordance with Article 12.6 (Payment and Interest).
(a) Adjustments in Incentive Amounts.
--------------------------------
[Reserved.]
(b) Quarterly Incentive Payment Amounts.
-----------------------------------
(1) For each Satellite during its Orbital Design Life, a daily pro
rata portion of the Quarterly Incentive Payment Amount shall be
earned by Contractor on a daily basis during each calendar
quarter for each day that such Satellite is a Satisfactorily
Operating Satellite, provided that assessment and calculation of
performance shall be performed at the end of each calendar month,
and such earned portion of the Quarterly Incentive Payment Amount
shall be invoiced on a quarterly-in-arrears basis, for, and as of
the last day of, each calendar quarter. Contractor shall begin to
earn Quarterly Incentive Payment Amounts upon Handover of the
Satellite to Customer.
(2) For purposes of this paragraph (b), to the extent during any
quarterly period a Satellite is not a Satisfactorily Operating
Satellite due to Customer's failure to operate a Satellite as a
Properly Operated Satellite, Contractor's entitlement to payment
of the Quarterly Incentive Paymen
t Amount shall not be affected.
Any amounts earned by Contractor under
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Confidential treatment has been requested with respect to the
omitted portions.
this paragraph (b) shall be paid by Customer to Contractor in
accordance with Article 12.6 (Payment and Interest).
(3) Notwithstanding the foregoing, [*****] will result in a
negotiation as to whether Contractor shall earn the entire daily
pro rata portion of the Quarterly Incentive Payment Amount or a
portion thereof. In the event [*****], Contractor shall earn the
daily pro rata portion of the Q
uarterly Incentive Payment Amount
calculated in accordance with paragraph (b)(1) of Article 12.3
(Calculation and Earning of Incentive Amounts) above. [*****],
will result in a negotiated reduction of Incentive Amounts or
such other equitable adjustment as may be agreed to by the
Parties. In arriving at an equitable adjustment, factors to be
considered include [*****]. For example, (A) [*****], Contractor
shall earn no portion of the daily pro rata portion of the
Quarterly Incentive Payment for such day; (B) [*****], the
Parties shall negotiate in good faith an adjustment to the daily
pro rata portion of the Quarterly Incentive Payment Amount for
that day; (C) [*****], the Parties shall negotiate in good faith
an adjustment to the daily pro rata portion of the Quarterly
Incentive Payment Amount that may be earned
[*****]; and (D)
[*****], the Parties shall negotiate in good faith a permanent
adjustment to the daily pro rata portion of the Quarterly
Incentive Payment Amount.
(4) In the event Customer continues to operate a Satellite for
commercial purposes beyond the Orbital Design Life of such
Satellite, Contractor shall be entitled to earn, for each quarter
beyond such Orbital Design Life, a Quarterly Incentive Payment
Amount in accordance with this paragraph (4); provided, however,
in no event shall Contractor be entitled to any Quarterly
Incentive Payment Amount if the cumulative Incentive Amounts,
excluding interest, earned by Contractor exceed the Total Amount
at Risk. Contractor shall not be entitled to interest on any
Incentive Amounts earned pursuant to this paragraph (4).
(c) Constructive Total Loss.
-----------------------
(1) In the event a Satellite is a Constructive Total Loss after
successful injection of the Satellite into its specified orbit by
the Launch Vehicle, Contractor shall not be entitled to be paid
Incentive Amounts pursuant to this Article 12 (In-Orbit
Performance Incentive Payments) with respect to such Satellite.
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12.4 Disputed Performance.
In the event of a dispute as to the performance of a Launched Satellite,
Customer shall provide Contractor with such technical data, reports, analyses,
and records as are available to support Customer's determination and Contractor
shall be given thirty (30) Calendar Days to verify the data. If, following such
thirty (30) Calendar Day period, Contractor continues to disagree with
Customer's determination and is able to present evidence to the contrary, then
Customer shall consider such evidence and consult with Contractor. In the
event the Parties do not reach agreement, the Parties agree to have an
independent determination of the Satellite's technical status performed by a
mutually-acceptable technically-qualified
third party. The costs incurred in
retaining the third party shall be shared equally between Contractor and
Customer. The Parties agree that before reference to such mutually-acceptable
technically-qualified third party, an informal forum between the Parties' Chief
Executive Officers shall take place to attempt resolution of said dispute. In
the event such efforts to resolve the dispute are unsuccessful, the Parties
shall proceed under Article 27.2 (Arbitration). The foregoing independent
determination may be used by either Party in any arbitration under Article 27.2
(Arbitration), but such determination shall not be binding upon the arbitrators.
12.5 Roll-Over of Incentive Amounts.
(a) In the event the first Satellite Launched pursuant to this Contract is
a Constructive Total Loss or Total Loss for reasons not attributable to
Contractor, all Incentive Amounts applicable to such Satellite shall be eligible
to be earned by Contractor following the Launch and In-Orbit Testing of the
Grou
nd Spare Satellite for each quarter during its Orbital Design Life that the
Ground Spare Satellite is a Satisfactorily Operating Satellite. Earning and
payment of such Incentive Amounts shall be in accordance with Article 12.3
(Calculation and Earning of Incentive Amounts), together with interest on such
Incentives Amounts calculated in accordance with Article 12.7 (Interest on Roll-
Over Incentive Amounts).
(b) In the event the second Satellite Launched pursuant to this Contract
is a Constructive Total Loss or Total Loss for reasons not attributable to
Contractor, but the first Satellite Launched was not a Constructive Total Loss
or Total Loss, all Incentive Amounts applicable to such second Satellite shall
be eligible to be earned by Contractor following the Launch and In-Orbit Testing
of the Ground Spare Satellite for each quarter that the Ground Spare Satellite
is a Satisfactorily Operating Satellite. Payment of such Incentive Amounts shall
be in accordance with Article 12.3 (Calculation and E
arning of Incentive
Amounts), together with interest on such Incentives Amounts calculated in
accordance with Article 12.7 (Interest on Roll-Over Incentive Amounts).
(c) In the event both the first and second Satellites Launched pursuant to
this Contract are Constructive Total Losses or Total Losses for reasons not
attributable to Contractor, then Contractor shall be eligible to earn the
Incentive Amounts applicable to the first Satellite in accordance with paragraph
(a) above, and with respect to the second Satellite, Contractor shall receive
payment from Customer of the total Incentive Amount applicable to such second
Satellite (that is, $12,500,000) within thirty (30) Calendar Days following
receipt by Customer of any applicable Launch Insurance proceeds therefor unless
Customer ordered an optional fourth Satellite (pursuant to Article 30 (Options))
prior to Launch of the second Satellite, in which case such Incentive Amounts
shall be rolled-over to such optional fourth Satellite. Earning and p
ayment of
such amounts shall be in accordance with Article 12.3 (Calculation and Earning
of Incentive Amounts), together with interest on such amounts to be calculated
in accordance with Article 12.7 (Interest on Roll-Over Incentive Amounts).
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(d) In the event Customer has not ordered the Ground Spare Satellite or an
Optional Satellite prior to the Launch of a Satellite, Customer shall insure the
Incentive Amounts as part of the Launch Insurance purchased by Customer.
12.6 Payment and Interest.
(a) Payment.
-------
Any payment required to be made by Customer to Contractor in respect of a
Satellite for a Quarterly Incentive Payment Amount shall be invoiced on a
quarterly-in-arrears basis and paid in accordance with Article 5.2 (Payment).
(b) Interest.
--------
(1) Interest shall be paid on any Quarterly Incentive Payment Amount
with respect to a Satellite, such interest to be calculated over
the period commencing upon Handover of such Satellite by Customer
("Quarterly Incentive Commencement Date") and ending on the last
day of the quarter when the Quarterly Incentive Payment Amount is
invoiced, at a rate equal to [*****] compounded annually, as
calculated in accordance with the following formula: I/n/ =
(Quarterly Incentive Payment Amount earned during a quarter) *
[(1+[*****])/n*0.25/ - 1], where "n" = quarter number = 1 to 60.
For example, (A) if a Satellite meets the criteria of a
Satisfactorily Operating Satellite during the entire first
quarter following the Quarterly Incentive Commencement Date for
such Satellite, Contractor shall be entitled to
payment of the
Quarterly Incentive Payment Amount plus interest on such amount
from the Quarterly Incentive Commencement Date to the last day of
the first quarter (that is, the Quarterly Incentive Payment
equals: $208,333 plus the quantity $208,333 times the quantity
[*****], raised to the 1 times 0.25 power, minus 1) resulting in
a quarterly financing charge of [*****], and a total Quarterly
Incentive Payment Amount of [*****]; or (B) if the Satellite
meets the criteria of a Satisfactorily Operating Satellite during
the entire twenty-fifth (25th) quarter following the Quarterly
Incentive Commencement Date for such Satellite, Contractor shall
be entitled to payment of the Quarterly Incentive Payment Amount
plus interest on such amount from the Quarterly Incentive
Commencement Date for such Satellite to the last
day of the
twenty-fifth (25th) quarter (that is, the Quarterly Incentive
Payment Amount equals: $208,333 plus the quantity $208,333 times
the quantity [*****], raised to the twenty-five (25) times 0.25
power, minus 1) resulting in a quarterly financing charge of
[*****], and a total Quarterly Incentive Payment Amount of
[*****].
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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.
(2) Exhibit G-1 (Payment Plan for Interest on In-Obit Incentive
Amounts) sets forth an interest calculation that assumes
Contractor has earned all Quarterly Incentive Payment Amounts.
The actual Quarterly Incentive Payment Amount earned by
Contractor, and the interest thereon, will be calculated in
accordance with this Article 12 (In-Orbit Performance Incentive
Payments).
12.7 Interest on Roll-Over Incentive Amounts.
The Incentive Amounts rolled-over to the Ground Spare Satellite pursuant to
paragraphs (a) and/or (b) of Article 12.5 (Roll-Over of Incentive Amounts) shall
bear interest as calculated in accordance with this Article 12 (In-Orbit
Performance Incentive Payments) from the date of declaration of Constructive
Total Loss or Total Loss and ending on the last day of the quarter when the
Quarterly Incentive Payment Amount is invoiced, as more fully provided in
paragraph (b) of Article 12.6 (Payment and Interest). Interest on rolled-over
Incentive Amounts shall be invoiced and paid on a quarterly-in-arrears basis.
For example, (a) if the first Quarterly Incentive Payment Amount is earned five
(5) quarters after Constructive Total Loss or Total Loss, the Quarterly
Incentive Payment Amount earned during each quarter (QIPA) plus interest thereon
(the sum equals QIPA/n/) is calculated as follows:
QIPA/n/ = QIPA * (1+ [*****]) /(n + x) * 0.25/
where: n = quarter number = 1 to 60 c
ommencing with Quarterly
Incentive Commence Date, and
x = number of days from Constructive Total Loss or Total
Loss to Quarterly Incentive Commencement Date converted into
quarters.
therefore, QIPA/1/ = $208,333 * (1 + [*****]) /(1 + 4) * 0.25/
= [*****];
(b) if the first Quarterly Incentive Payment Amount is earned five (5)
quarters and twenty (20) days after Constructive Total Loss or Total Loss, the
Quarterly Incentive Payment Amount earned during each quarter (QIPA) plus
interest thereon (the sum equals QIPAn) is calculated as follows:
QIPA/n/ = QIPA * (1+ [*****]) /(n + x) * 0.25/
where: n = quarter number = 1 to 60 commencing with Quarterly
Incentive Commence Date, and
x = number of days from Constructive Total Loss or Total
Loss to Quarterly Incentive Commencement Date conve
rted into
quarters.
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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.
therefore, QIPA/1/ = $208,333 * (1 + [*****]) /(1 + 4.22) * 0.25/
= [*****].
12.8 Security for Performance Incentive Payments.
(a) In the event Customer does not order the Ground Spare Satellite,
Contractor and Customer agree that, as assurance of the payment of Incentive
Amounts as such amounts may be earned by Contractor and become payable by
Customer, Customer must demonstrate to Contractor, no later than four (4) months
prior to the Launch of the first Satellite, that Customer has a mi
nimum of
[*****] in liquid assets (e.g., cash, cash equivalents and current receivables),
or, at Contractor's option, non-current assets (e.g., property, plant,
equipment) with a market value of at least [*****] and a reasonable expectation
that such market value can be realized within one hundred eighty (180) Calendar
Days of a decision to liquidate. In the case of non-current assets, Customer
shall also grant to Contractor a perfected security interest in such non-current
assets, up to a maximum interest in the amount of [*****], and shall cause all
appropriate documents and financial statements to be filed in order to give
effect to such security interest. Contractor's perfected security interest in
such non-current assets, if granted, shall be released by Contractor if Customer
performs its obligations with respect to payment of all earned Incentive
Amounts, including interest thereon, in accordance with the terms of this
Contract, for a period of twenty-four (24) months commencing upon the date that
the first Quarterly Incentive Payment Amount is due with respect to the first
Launched Satellite. In the event the first Satellite is a Constructive Total
Loss or Total Loss, the requirements of this paragraph (a) shall apply to the
second Satellite.
(b) In the event Customer Launches the Ground Spare Satellite as an
additional Satellite (not a replacement) within a period of two (2) years
following the date upon which the first Quarterly Incentive Payment Amount is
due with respect to the first Launched Satellite, Customer shall demonstrate to
Contractor, no later than four (4) months prior to the Launch of the Ground
Spare Satellite, that Customer has a minimum of [*****] in liquid assets (e.g.,
cash, cash equivalents and current receivables), or, at Contractor's option,
non-current assets (e.g., property, plant, equipment) with a market value of at
least [*****] and a reasonable expectation that such market value can be
realized within one hundred eighty (180) Calendar Days of a decision to
l
iquidate. In the case of non-current assets, Customer shall also grant to
Contractor a perfected security interest in such non-current assets, up to a
maximum interest in the amount of [*****], and shall cause all appropriate
documents and financial statements to be filed in order to give effect to such
security interest. Contractor's perfected security interest in such non-current
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assets, if granted, shall be released by Contractor if Customer performs its
obligations with respect to payment of all earned Incentive Amounts, including
interest thereon, in accordance with the terms of this Contract, for a period of
twenty-four (24) months commencing upon the date that the first Quarterly
Incentive Payment Amount is due with respect to the first Launched Satellite.
(c) Contractor expressly acknowledges and agrees that Customer shall not
be required, at any time, to provide a stand-by, irrevocable, or other form of
letter of credit, or any equivalent or external guarantees, in order to secure
Customer's payment obligations with respect to Incentive Amounts, as such
amounts are earned by Contractor.
12.9 Exclusive Remedy.
The rights and remedies under this Article 12 (In-Orbit Performance
Incentive Payments) are exclusive for the failure of any Satellite after Launch
to meet the criteria set forth or referenced in Article 12.3 (Calculation and
Earning of Incentive Amounts) and in substitution of any other rights and
remedies either Party may have under this Contract or otherwise at law as a
result of such failure.
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13. CORRECTIVE MEASURES IN UNLAUNCHED SATELLITES AND OTHER DELIVERABLE ITEMS
13.1 Notice of Defects.
(a) Customer may notify Contractor in writing when it in good faith
reasonably demonstrates any Defect exists in any Deliverable Item or component
part thereof. In the event Contractor disagrees with Customer or Customer
Personnel as to the existence or nature of a Defect, Contractor shall so advise
Customer in writing. In such event, the Parties shall negotiate in good faith to
determine what Defect, if any, exists and any action required to remedy such
Defect. Except to the extent written waivers are made pursuant to the provisions
of Article 8 (Inspection and Final Acceptance), Customer's failure to notify
Contractor of any Defect shall no
t constitute a waiver of any rights of Customer
or obligations of Contractor under this Contract with respect to any such
Defects.
(b) Contractor shall advise Customer as soon as practicable by telephone
and confirm in writing any event, circumstance, or development that materially
threatens the quality of any Deliverable Items or component parts thereof,
including any Satellite, or threatens the Delivery Dates established therefor.
(c) Without limiting the generality of the foregoing, if the data
available from any Launched Satellite or from other satellites of a similar
class shows that any Satellite contains a Defect, Contractor shall promptly
inform Customer of such Defect.
13.2 Duty to Correct.
(a) Without limiting the obligations of Contractor or the rights of
Customer under this Contract, prior to Launch of any Satellite or Delivery of
any other Deliverable Item, Contractor shall, at its expense, promptly correct
any Defect related to any Deliverable Item or component t
hereof that Contractor
or Customer discovers during the course of the Work or from other spacecraft of
a class similar to the satellites being built by Contractor, and notwithstanding
that a payment may have been made in respect thereof, and regardless of prior
reviews, inspections, approvals, or acceptances. This provision is subject to
the right of Contractor to have any items containing a Defect returned at
Contractor's expense to Contractor's facility for Contractor to verify and
correct the Defect.
(b) At Contractor's expense, Contractor shall use reasonable efforts to
correct any such Defect in any Launched Satellite delivered in-orbit hereunder,
to the greatest extent that such Defect may be corrected by on-ground means,
including transmission by Contractor of commands to such Satellite(s), to
eliminate or mitigate any adverse impact resulting from any such Defect, to
establish work-around solutions, or to otherwise resolve such Defect. Contractor
shall coordinate and consult with Customer
concerning such on-ground resolution
of Defects in Launched Satellites.
(c) Contractor shall fulfill the foregoing obligations at its own cost and
expense, including all costs arising from charges for packaging, shipping,
insurance, taxes, and other matters associated with the corrective measures,
unless it is reasonably determined after
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investigation that Customer directly caused the Defect in question, in which
case Customer shall pay all such costs.
(d) If Contractor fails to correct any Defect with respect to those
Satellites that have not been Launched or with respect to any other Deliverable
Item within a reasonable time after notification from Customer and after the
Parties have followed the provisions of Article 13.1 (Notice of Defects) above,
Customer may, by separate contract or otherwise, correct or replace such items
or services, and, unless it is reasonably determined after investigation that
Customer directly caused the Defect in question, Contractor shall pay to
Customer the reasonable cost of such correction or replacement. The amount
payable by Contractor shall be v
erified at Contractor's request by an
internationally recognized firm of accountants appointed by Contractor. The
costs of such verification shall be paid by Contractor. The verification of such
correction cost shall be without prejudice to the right of either Party in any
arbitration proceeding and shall not be binding upon the arbitrators.
(e) Contractor acknowledges and agrees that it shall not be entitled to
payment for any additional costs incurred as a consequence of any Defect where
the Defect arises directly from Contractor's fault. If correction of any Defect
causes a delay in the Delivery of any Work, despite the efforts of Contractor to
correct the Defect, the provisions of Article 10 (Liquidated Damages for Late
Delivery) shall apply as appropriate in addition to the remedies in this Article
13 (Corrective Measures in Unlaunched Satellites and Other Deliverable Items)
and Article 31 (Failure to Make Adequate Progress).
(f) After notification of a Defect to Contractor, Customer,
in its sole
discretion, may elect in writing, pursuant to Article 34.4 (Waiver of Breach of
Contract), not to require correction or replacement of such items or services or
to waive the Defects noted for the Satellites that have not been Launched, if
any. In such event, Contractor shall promptly provide Customer with a written
price proposal for the cost of correction of such Defect at the time of waiver.
(g) Subject to the provisions of any applicable Law, Contractor agrees to
enforce any manufacturer's warranty given to it in connection with any Work to
be provided under this Contract, and upon Customer's written request, Contractor
shall assign to Customer such warranty protection to correct any defective Work
not otherwise corrected by Contractor.
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14. CHANGES IN SCOPE OF WORK
14.1 Changes Requested by Customer.
(a) Subject to paragraphs (b), (c), and (d) below, Customer shall be
entitled to direct, during the performance of this Contract, any change within
the general scope of this Contract, including any change that will add, delete,
or change the Work, affect the design of the Satellites, change the method of
shipping or packing, or the place or time of Delivery, or will affect any other
requirement of this Contract.
(b) Any change directed by Customer as described in paragraph (a) above
shall be submitted in writing to Contractor. Contractor shall respond to such
directed change in writing to Customer within thirty (30) Calendar Days after
such directed change and shall incl
ude in such response the details of the
impact of such change on the Contract Price, Delivery Schedule, performance
specifications, or other terms of this Contract.
(c) Customer shall notify Contractor in writing, within thirty (30)
Calendar Days after receipt of Contractor's response, whether or not Customer
agrees with and accepts Contractor's response. If Customer agrees with and
accepts Contractor's response, Contractor shall proceed with the performance of
this Contract as changed immediately upon the execution by both Parties of an
Amendment reflecting such changes.
(d) If the Parties cannot agree on a reasonable price or revised Delivery
Schedule, performance specifications, or other item, as occasioned by Customer's
directed change, and Customer still desires the directed change, Customer shall
direct Contractor to proceed with the change and Customer shall pay Contractor's
proposed price and accept the revised Delivery Schedule or performance
specifications or other item pending an
y decision to the contrary under Article
27 (Dispute Resolution). Contractor shall proceed with the Work as changed and
Customer may dispute the reasonableness of the proposed price, revised Delivery
Schedule, performance specification, or other item under Article 27 (Dispute
Resolution). In the event it is determined pursuant to such dispute resolution
or by the Parties' mutual written agreement that Customer is entitled to a full
or partial refund of amounts paid under this paragraph (d), Customer shall be
entitled to interest on such refunded amounts, such interest running from the
date of payment by Customer to the date of refund at the interest rate set forth
in Article 34.10 (Calculation of Interest).
14.2 Changes Requested by Contractor.
(a) Subject to paragraphs (b) and (c) below, Contractor may request,
during the performance of this Contract, any change within the general scope of
this Contract, including any change that will add or delete Work, affect the
design of the Satellites
, change the method of shipping or packing, or the place
or time of Delivery, or will affect any other requirement of this Contract.
(b) Any changes as described in paragraph (a) above requested by
Contractor shall be submitted in writing to Customer at least sixty (60)
Calendar Days prior to the proposed date of the change. If such Contractor
requested change causes an increase or decrease or other impact
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in the Contract Price, Delivery Schedule, performance specifications, or other
terms of this Contract, Contractor shall submit, with such request, a written
proposal identifying such change and the impact thereof on the Contract Price,
Delivery Schedule, performance specifications, or other terms of this Contract.
(c) Customer shall notify Contractor in writing, within thirty (30)
Calendar Days after receipt of the requested change proposal, whether or not
Customer agrees with and accepts such change and the price/schedule/performance
or other impact thereof. If Customer agrees with and accepts Contractor's
requested change and such impact thereof, Contractor shall proceed with the
performance of this Contract as changed and an Amendment to this Con
tract
reflecting the change proposal shall be executed by the Parties.
14.3 Pricing of Changes.
When calculating the change in the Contract Price caused by changes in the
Work pursuant to this Article 14 (Changes in Scope of Work), such calculation
shall be consistent with Contractor's standard labor rates and general
administrative and overhead rates then in effect at the time of the change.
14.4 Storage.
(a) Storage of a Satellite shall be for a period of either (A) no longer
than six (6) months ( "Short Term Storage") or (B) more than six (6) months but
no longer than three (3) years ("Medium Term Storage"); Short Term Storage shall
be at Contractor's facilities and satisfy the requirements of the storage plan
to be developed by Contractor in accordance with Exhibit B (SOW). Medium Term
Storage will be at a mutually agreed-to facility, and such facility shall be
appropriate for the planned duration of storage.
(b) In the event Contractor places a Satellite in storage,
Contractor
shall pay for any associated costs and expenses of such storage, unless
Contractor places such Satellite in storage due to reasons attributable to
Customer.
(c) In the event Contractor places a Satellite in storage due to reasons
attributable to Customer, Customer shall pay Contractor reasonable storage
costs, and any related costs that increase the Contract Price or extend the
Delivery Schedule shall be addressed in an Amendment pursuant to Article 14.1
(Changes Requested by Customer) above.
(d) For a Satellite placed in storage, Customer shall pay Contractor any
Milestone Payment related to Shipment Readiness Review upon arrival of the
Satellite at the storage site.
(e) In the event Contractor places a Satellite into storage pursuant to
this Article 14.4 (Storage) for reasons not attributable to Contractor for more
than twelve (12) months, Contractor shall be entitled to receive, and Customer
shall pay to Contractor, all payments due and owing, less all costs not incurre
d
with respect to the Launch Campaign, LEOP, In-Orbit Testing, MSS, and OSS for
such Satellite, but including the Incentive Amounts applicable to such
Satellite. In the event such Satellite is Launched, those Incentive Amounts
previously paid by Customer to Contractor shall be retained by Contractor,
subject to the following:
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(1) Contractor shall earn such Incentive Amounts in accordance with
Article 12.3 (Calculation and Earning of Incentive Amounts); and
(2) any Incentive Amounts not earned by Contractor pursuant to
Article 12.3 (Calculation and Earning of Incentive Amounts) shall
be repaid by Contractor to Customer as set forth below.
Repayment by Contractor of any unearned Incentive Amounts under this
paragraph (e) shall be due thirty (30) Calendar Days after the date of receipt
by Contractor of a telefaxed invoice (which shall be followed by the airmailed
original) from Customer. Interest shall be paid (at the rate specified in
Article 34.10 (Calculation of Interest) on any amounts not paid when due
.
Customer's invoice shall be accompanied by sufficient information to support
Customer's claim. Contractor shall be deemed to have accepted the invoice ten
(10) Business Days after receipt of Customer's invoice unless, within such time
period, Contractor notifies Customer of a dispute. Any disputes as to the
performance of a Launched Satellite shall be resolved in accordance with the
provisions of Article 12.4 (Disputed Performance). Contractor shall pay any
undisputed portion of an invoice.
(f) In the event Contractor places any Satellite into storage under this
Article 14.4 (Storage) and such storage is required for reasons attributable to
Contractor, the warranty periods for such Satellite and its batteries (and in
the case of the first Satellite to be Delivered hereunder, the SCC Equipment and
Software, Dynamic Satellite Simulator, and Dynamic Spacecraft Simulator) under
Article 18.3 (Warranties for Deliverable Items) shall be extended on a day-for-
day basis for the length of such storage
period.
(g) In the event a Satellite has been in such storage for three (3) years,
or Customer decides prior to the end of such three (3) years not to Launch such
Satellite, the following shall apply:
(1) Contractor shall be entitled to receive within thirty (30)
Calendar Days after the earlier of, receipt of destorage
notification from Customer or the end of the three (3) year
period, all payments due and owing, not otherwise paid to
Contractor pursuant to paragraph (e) above, including Incentive
Amounts, less all costs not incurred with respect to the Launch
Campaign, LEOP, In-Orbit Testing, MSS, and OSS for such
Satellite; and
(2) Contractor shall promptly Deliver to Customer, at Customer's
expense, such Satellite to a location specified by Customer in
the State of Florida or the State of Delaware, or in such other
locatio
n as may be mutually agreed upon by the Parties.
Customer's expenses shall include any applicable state sales tax
for such storage.
(h) Final Acceptance shall occur and title and risk of loss shall pass,
with respect to any Satellite placed in storage in accordance with this Article
14.4 (Storage) as follows: (i) if paragraph (g) applies, upon arrival of the
Satellite at the location specified by Customer, in which case, notwithstanding
Article 4.3 (Taxes and Duties) any and all taxes and duties in connection with
such delivery shall be borne and paid by Customer, or (ii) if the Satellite is
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Launched, (x) risk of loss shall pass at Launch and (y) title, free and clear of
any liens and encumbrances shall pass at Final Acceptance and Final Acceptance
shall occur in accordance with Article 8.5(b).
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15. PERMITS AND LICENSES; COMPLIANCE WITH LAWS
15.1 United States Permits, Licenses, and Laws.
(a) Contractor shall, at its own expense, obtain all United States
Government approvals, permits, and licenses, including any required for export
from or import into the United States, as may be required for the performance of
the Work. Customer agrees to cooperate with Contractor in Contractor's efforts
to obtain any such approvals, permits, or licenses.
(b) Contractor shall, at its expense, perform the Work in accordance with
all applicable Laws of the United States and the conditions of all applicable
United States Government approvals, permits, or licenses.
(c) Without limiting the generality of the foregoing, Contractor will not,
directly or indirectly, take any action that would cause Customer to be in
violation of U.S. anti-boycott laws under the U.S. Export Administration Act,
the U.S. Internal Revenue Code, or any regulation thereunder. In its performance
of this Contract, Contractor will not, directly or indirectly, make, offer, or
agree to make or offer any loan, gift, donation, or other payment, whether in
cash or in kind, for the benefit or at the direction of any candidate,
committee, political party, government or its subdivision, or any individual
elected, appointed, or otherwise designated as an employee or officer thereof,
for the purpose of influencing any act or decision of such entity or individual
or inducing such entity or individual to do or omit to do anything, in order to
obtain or retain business or other benefits except as may be expressly permitted
under the Foreign Corrupt Practices Act and the regulations promulgated
thereunder.
15.2 Non-United States Permits, Licenses, and Laws.
(a) Contr
actor shall, at its expense, obtain all non-United States
Government approvals, permits, and licenses, as may be required for the
performance of the Work, including those that may be required for Contractor to
perform the Work in compliance with the Laws of any country from which any
Satellite shall be launched. Customer agrees to cooperate with Contractor in
Contractor's efforts to obtain any such non-United States Government approvals,
permits, or licenses.
(b) Contractor shall, at its expense, perform the Work in accordance with
all applicable Laws of any country, state, territory, or jurisdiction, and the
conditions of all applicable non-United States Government approvals, permits, or
licenses.
15.3 Review of Applications.
Contractor shall review with Customer any application Contractor makes to
any government department, agency, or entity for any approval, permit, license,
or agreement, as may be required for performance of the Work, prior to
submission of such application. Con
tractor shall provide Customer a minimum of
three (3) Business Days to review such application prior to submission to such
governmental entity, and Contractor shall in good faith consider any comments
and proposed revisions made by Customer for incorporation into such application.
Customer shall reasonably cooperate with Contractor in Contractor's efforts to
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procure all such approvals, permits, licenses, and agreements.
15.4 Contractor Violation of Law.
Customer shall not be responsible in any way for the consequences, direct
or indirect, of any violation by Contractor, its Subcontractors, or their
respective Affiliates or Associates of any Law or of any country whatsoever.
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16. SUBCONTRACTS
16.1 Major Subcontracts
(a) Contractor has represented that in the performance of the Work
required by this Contract it will be necessary for Contractor or its
Subcontractors to enter into the Major Subcontracts with certain of the entities
identified in Exhibit D (Test Plan Requirements) hereto. Contractor shall select
the Major Subcontractors only from those entities approved by Customer and
listed in Exhibit D (Test Plan Requirements), and, to the extent permitted by
the Subcontractor agreement, Customer shall be provided with copies of the
technical content and a copy of the full text of any Major Subcontract
(excluding price and payment schedule) promptly upon execution thereof, and upon
Customer's request.
(b) A
s of the Effective Date of Contract, the approved list of Major
Subcontractors is as specified in Exhibit D (Test Plan Requirements). Contractor
shall notify Customer promptly in writing upon selection of a Major
Subcontractor and upon any change in any Major Subcontractor, said change to be
only from the list of alternatives in Exhibit D (Test Plan Requirements).
(c) Customer's acknowledgment or approval of any Major Subcontractor or
Subcontractor shall not relieve Contractor from any obligations or
responsibilities under this Contract.
16.2 Selection or Replacement of Major Subcontractors.
Contractor shall notify Customer if a Subcontractor identified in Exhibit D
(Test Plan Requirements) is substituted for another Major Subcontractor on the
list in Exhibit D (Test Plan Requirements); however, Customer's approval of such
termination or substitution shall not be required. Subcontractors shall be
selected based upon the offering of the best combination of reliability,
quality, price,
and delivery time.
16.3 No Privity of Contract.
Nothing in this Contract shall be construed as creating any contractual
relationship between Customer and any Subcontractor. Contractor is fully
responsible to Customer for the acts or omissions of Subcontractors and all
persons used by Contractor or a Subcontractor in connection with performance of
the Work. Any failure by a Subcontractor to meet its obligations to Contractor
shall not constitute a basis for Excusable Delay, except as provided in Article
11 (Excusable Delay), and shall not relieve Contractor from meeting any of its
obligations under this Contract.
16.4 Subcontractor Relations.
By appropriate written agreement, Contractor shall use commercially
reasonably efforts to require each Major Subcontractor, to the extent of the
Work to be performed by such Major Subcontractor, to be bound to Contractor by
the terms of this Contract and to assume toward
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Contractor all the obligations and responsibilities that Contractor, by this
Contract, assumes toward Customer except to the extent otherwise provided in
Article 6.9 (Major Subcontracts).
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17. PERSONNEL AND KEY PERSONNEL
17.1 Personnel Qualifications.
Contractor shall assign properly qualified and experienced personnel to the
program contemplated under this Contract, and Contractor shall use best
reasonable efforts to retain such personnel on Customer's program for the
duration of such program.
17.2 Key Personnel Positions.
Key personnel ("Key Personnel") shall be the personnel filling the
following or equivalent positions:
(1) Contractor Program Manager;
(2) Contract Manager;
(3) Spacecraft Systems Engineer;
(4) Payload Program Manager;
(5) Payload Chief Systems Engineer;
(6) Production, Integration and Test Manager;
(7) Product Assuranc
e Manager, provided that such Product Assurance
Manager shall not be engaged in more than two (2) programs during
the performance of this Contract; and
(8) Launch Services Manager.
17.3 Assignment of Key Personnel.
(a) Contractor will assign individuals from within Contractor's
organization to the Key Personnel positions to carry out the Work.
(b) Key Personnel will be familiar with programs similar to Customer's
program.
(c) Before assigning an individual to any Key Personnel positions, whether
as an initial assignment or a subsequent assignment, Contractor shall notify
Customer of the proposed assignment, shall introduce the individual to
appropriate Customer representatives and, upon request, provide such
representatives with the opportunity to interview the individual and shall
provide Customer with the individual's resume. If Customer in good faith objects
to the qualifications of the proposed individual within fifteen (15) Busines
s
Days after being notified thereof, then Contractor agrees to discuss such
objections with Customer and resolve such concerns on a mutually agreeable basis
or; if unable to do so, to select another candidate acceptable to Customer. The
Key Personnel that have been approved as of the Effective Date of Contract are
listed in Attachment B (Key Personnel). Should the individuals filling the
positions
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of Key Personnel leave such positions for whatever reason, Contractor shall
follow the procedures set forth in this Article 17.3 (Assignment of Key
Personnel) to select replacement personnel.
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18. CONTRACTOR'S REPRESENTATIONS, COVENANTS, AND WARRANTIES
18.1 Organization; Good Standing and Qualification.
Contractor represents and warrants that:
(a) it is a corporation duly organized, validly existing and in good
standing under the Laws of Delaware;
(b) it has all requisite power and authority to own and operate its
material properties and assets and to carry on its respective business as now
conducted in all material respects; and
(c) it is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect.
18.2 Authorization.
Contractor represents and warrants that:
(a) it has all requisite corporate power
and authority to enter into this
Contract and to carry out the transactions contemplated by this Contract;
(b) the execution, delivery, and performance of this Contract and the
consummation of the transactions contemplated by this Contract have been
authorized by the requisite corporate action of Contractor and do not conflict
with any other agreement or obligation to which it is a party or which binds its
assets; and
(c) this Contract is a valid and binding obligation of Contractor,
enforceable in accordance with its terms, except Contractor makes no
representation or warranty as to the enforceability of remedies due to
applicable bankruptcy, insolvency, moratorium, reorganization, or similar laws
relating to or affecting the enforcement of creditor's rights or by reason of
general principles of equity.
18.3 Warranties for Deliverable Items.
(a) Satellites.
----------
Contractor represents that each Satellite furnished under this Contract
shall be free from D
efects other than Defects waived in writing by Customer.
This representation shall begin on the date of Handover of a Satellite and
Customer's exclusive remedy for breach of this representation is set forth in
Article 12 (In-Orbit Performance Incentive Payments).
(b) SCC Equipment and Software.
---------------------------
Contractor represents and warrants that the SCC Equipment and Software
Delivered under this Contract shall be free from Defects other than Defects
waived in writing by Customer. This warranty shall begin on the date of Final
Acceptance of the respective Deliverable Item and run for one (1) year.
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(c) Communications Payload Simulator and Dynamic Spacecraft Simulator.
-----------------------------------------------------------------
Contractor represents and warrants that each of the Communications Payload
Simulator and Dynamic Spacecraft Simulator Delivered under this Contract shall
be free from Defects other than Defects waived in writing by Customer. This
warranty shall begin on the date of Final Acceptance of the respective
Deliverable Item and run for one (1) year.
(d) Data and Documentation.
----------------------
Contractor represents and warrants that the Data and Documentation to be
furnished hereunder shall be free from Defects. This warranty shall begin on
the date of Final Acceptance of the
last portion of the Data and Documentation
to achieve Final Acceptance and run for a period of one (1) year. A Customer
claim under this warranty clause shall not affect the validity of Final
Acceptance.
(e) Batteries.
---------
Contractor represents and warrants that the batteries to be furnished
hereunder shall be free from Defects. In the event any Satellite is required to
be placed in storage prior to its Launch, Contractor shall, upon removal of such
Satellite from storage, (i) test the batteries to ensure the batteries are free
from Defects, other than Defects waived in writing by Customer, and conform to
the applicable specifications and requirements set forth in Exhibit A (Satellite
Performance Specifications) and (ii) certify to Customer that the Batteries are
so conforming. This warranty shall begin on the date of cell activation and run
for a period of two (2) years or until Launch of the Satellite, whichever occurs
earlier.
(f) Services.
--------
Contractor represents and warrants it will perform the Work in accordance
with the highest professional standards of the commercial aerospace and
satellite communications industry practice for work similar in type, scope, and
complexity to the Work.
(g) Title.
-----
Contractor represents and warrants it shall provide good and salable in
commerce title free and clear of any liens and encumbrances of any kind, at the
time title passes to Customer pursuant to Article 9 (Title and Risk of Loss).
(h) Intellectual Property.
---------------------
Contractor represents and warrants that (i) it is either the owner of, or
authorized to use and incorporate, any Intellectual Property utilized or
incorporated in any Deliverable Item or the manufacture of any Deliverable Item;
(ii) Customer shall not be required to pay any license fees or royalties apart
from those included in the Contract Price for use of any Intellectual Property
utilized or incorporated in any D
eliverable Item or the manufacture of any
Deliverable Item; and (iii) neither the Work nor any Intellectual Property
(other than Customer's Intellectual Property) utilized or incorporated in any
Deliverable Item or the manufacture of any Deliverable Item shall infringe any
Intellectual Property Right of any third party, provided that Contractor makes
no representations as to infringement with respect to (x) any software or item
that is used or
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combined with any other software or item or modified by an entity other than
Contractor or Subcontractor when the infringement would have not occurred but
for such combination, use, or modification, unless such combination, use or
modification was identified in Exhibit A (Technical Specifications), and (y) any
software or item made according to the written requests, instructions or
specifications of Customer to the extent the infringement arises from compliance
with such written requests, instructions or specifications. As of EDC,
Contractor is not aware of any claim or potential claim to the contrary by any
third party. This warranty shall begin upon Final Acceptance of the Work
embodying the subject Intellectual Property and continue for the operating li
fe
of the Satellites and Long-Lead Items, and any optional Satellites which may be
provided hereunder.
(i) Code.
----
Contractor represents and warrants that (i) it shall use commercially
reasonable efforts to ensure that no viruses or similar items are coded or
introduced into the Work; (ii) it shall not introduce into the Work any code
that would have the effect of disabling or otherwise shutting down all or any
portion of the Work; (iii) it shall not develop, or seek to gain access to the
Work through, any special programming devices or methods, including trapdoors or
backdoors, to bypass any Customer security measures protecting the Work; and
(iv) the operation of the Work shall not be affected by the change of date on or
after January 1, 2000. This warranty shall begin upon Final Acceptance of the
Work embodying the code at issue and continue for the operating life of the
Satellites and Ground Spare Satellite, and any optional Satellites which may be
provided hereunder.
(j) Remedies.
--------
(1) Notwithstanding anything to the contrary herein, Customer shall
have the right at any time during the period of the warranties
set forth in this Article 18.3 (Warranties for Deliverable Items)
to require that any Work not conforming in any material respect
to this Contract be promptly corrected or replaced (at
Contractor's option and expense) with conforming Work, subject to
paragraph (g) of Article 8.2 (Shipment Readiness Review) and
paragraph (e) of Article 8.3 (Flight Readiness Review). If
Contractor fails or is unable to correct or replace such
defective Work within a reasonable period after notification from
Customer, Customer may then require Contractor to repay such
portion of the Contract Price as is equitable under the
circumstances in lieu of repairing or replacin
g such defective
Work.
(2) During the operational lifetime of the Satellites, Contractor
shall provide the following for software delivered under this
Contract: with respect to software for ground equipment delivered
hereunder, Contractor shall correct errors, including modifying
code and making operational modifications, in such software as
required for the Satellites to operate in accordance with Exhibit
A (Spacecraft Performance Specifications) for the operating life
of the Satellites; and with respect to flight firmware and
software, Contractor shall, to the extent feasible, correct such
firmware
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and software as required for the Satellites to operate
in accordance with Exhibit A (Spacecraft Performance
Specifications) for the operational lifetime of the Satellites.
During the operational lifetime of the Satellites, Contractor
shall, in a timely manner, provide access to engineering,
software and operations support personnel, including and/or
involving Contractor's Subcontractors and vendors, where
feasible, for the purpose of resolving errors, problems, or
issues relating to the ground equipment, software, data, and
operations products to be Delivered pursuant to this Contract.
(3) In the
event Contractor, for whatever reason, fails to perform
its obligations under paragraph (2) above, with respect to any
flight or ground software delivered under this Contract, which
software Contractor either owns or has rights in, Contractor
agrees to provide Customer access to the source code and related
documentation for such software so as to enable Customer to
perform tasks contemplated by paragraph (2) above. With respect
to other software (that is, software that Contractor does not own
or have rights in), Contractor shall use its reasonable best
efforts to provide Customer with similar access to source code
and related documentation for such software. Contractor shall
ensure that all of Contractor's source code for the flight
firmware and software and ground software is appropriately
maintained, stored, ca
talogued, and archived as necessary to
maintain such source code to object code integrity.
(k) SUBJECT TO ARTICLE 21.1 (CONTRACTOR INTELLECTUAL PROPERTY
INDEMNIFICATION), THE WARRANTIES SET FORTH IN THIS ARTICLE 18.3 (WARRANTIES FOR
DELIVERABLE ITEMS) ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY, AND THE REMEDY
PROVIDED IN PARAGRAPH (j) ABOVE AND ARTICLE 12 (IN-ORBIT PERFORMANCE INCENTIVE
PAYMENTS) ARE THE SOLE REMEDY FOR FAILURE BY CONTRACTOR TO COMPLY WITH
PARAGRAPHS (a) THROUGH (f), (h) AND (i) ABOVE AND TO FURNISH THE ITEMS REQUIRED
TO BE FURNISHED ABOVE FREE FROM MATERIAL DEFECTS IN MATERIAL OR WORKMANSHIP. ALL
OTHER WARRANTIES OR CONDITIONS IMPLIED BY ANY STATUTORY ENACTMENT OR RULE OF LAW
WHATSOEVER ARE EXPRESSLY EXCLUDED AND DISCLAIMED.
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19. CUSTOMER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
19.1 Organization; Good Standing and Qualification.
Customer represents and warrants that:
(a) it is duly organized, validly existing and in good standing under the
Laws of the State of Delaware;
(b) it has all requisite power and authority to own and operate its
material properties and assets and to carry on its respective business as now
conducted in all material respects; and
(c) it is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect.
19.2 Authorization.
Customer represents and warrants that:
(a) it has all requisite corporate power and authorit
y to enter into this
Contract and to carry out the transactions contemplated by this Contract;
(b) the execution, delivery, and performance of this Contract and the
consummation of the transactions contemplated by this Contract have been duly
authorized by the requisite corporate action of Customer and do not conflict
with any other agreement or obligation to which it is a party or which binds its
assets; and
(c) this Contract is a valid and binding obligation of Customer,
enforceable in accordance with its terms, except Customer makes no
representation or warranty as to the enforceability of remedies due to
applicable bankruptcy, insolvency, moratorium, reorganization, or similar laws
relating to or affecting the enforcement of creditor's rights or by reason of
general principles of equity. Notwithstanding the foregoing, in the event of
Customer's bankruptcy, insolvency, moratorium, reorganization, or equity
proceeding, Customer shall use its best efforts to have this Contract confirmed
acco
rding to its terms.
19.3 Capitalization and Subsidiaries.
As of the Effective Date of Contract, Customer does not presently own or
control, directly or indirectly, any interest in any other corporation,
partnership, association or other business entity or have any subsidiaries,
except those listed on Schedule 19.3 attached hereto.
19.4 Litigation.
As of the Effective Date of Contract, except as provided on Schedule 19.4
attached hereto, there are no actions, suits, or proceedings or investigations
Pending, or, to the knowledge of Customer, threatened against Customer in an
amount that would be considered material such that Customer would be required to
disclose if it were subject to the Securities and Exchange Act of 1934, as
amended. In addition, Customer does not currently intend to initiate such an
action.
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19.5 Title to Properties and Assets.
Customer owns its material properties and assets, other than leased
properties, free and clear of all liens, charges, and encumbrances, except for
(i) such encumbrances and liens that arise in the ordinary course of business
and do not materially impair Customer's ownership or use of such property or
assets, (ii) liens created by this Contract, and (iii) liens listed on Schedule
19.5 attached hereto.
19.6 Financial Statements.
Customer has delivered to Contractor the unaudited consolidated statements
of operations, changes in shareholders' equity and cash flows for 1997 (the
"Financial Statements") as set forth in Schedule 19.6. The Financial Statements
have been prepared in accordance with GAA
P consistently applied and present
fairly in all material respects the consolidated financial condition, cash flow,
results of operations and changes in stockholders equity of Customer and its
subsidiaries for such periods. Except as disclosed in Schedule 19.6 attached
hereto, from January 1, 1998 to the Effective Date of Contract, there has not
been (a) any material adverse change to the financial condition of Customer or
any of its subsidiaries, or (b) any damage, destruction, or loss, whether or not
covered by insurance, which has had a Material Adverse Effect. Except as
disclosed in the Financial Statements or in Schedule 19.6, as of the Effective
Date of Contract Customer is not a guarantor or indemnitor of any material
indebtedness of any other person, firm or corporation.
19.7 Certain Actions.
Except as set forth on Schedule 19.7 attached hereto, from January 1, 1998
to the Effective Date of Contract, Customer has not incurred any indebtedness of
Five Hundred Thousand Dollars ($500,
000) or more, or sold, exchanged, or
otherwise disposed of any of its material assets or rights.
19.8 Undisclosed Liabilities.
As of the Effective Date of Contract, except as set forth on Schedule 19.8
or on any other Schedule attached hereto, Customer is not subject to any
liabilities of any nature, whether absolute, contingent, or otherwise (whether
or not required to be accrued or disclosed under the accounting disclosure
standards applicable to Customer or under the Securities and Exchange Act of
1934, as amended) that have had or can reasonably be expected to have a Material
Adverse Effect, except to the extent set forth or provided in the Financial
Statements. Except as set forth in Schedule 19.8 or any other Schedule hereto,
all debts, liabilities, and obligations incurred by Customer, after the date of
the Financial Statements, were incurred in the ordinary course of business and
are in amounts less than Five Hundred Thousand Dollars ($500,000).
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19.9 Compliance with Other Instruments.
As of the Effective Date of Contract, Customer is not in violation of its
Certificate of Incorporation or its By-Laws, or, to the knowledge of Customer,
in material default of any instrument, judgment, order, writ, decree, oral or
written contract, or other agreement to which it is a party or by which it is
bound or of any provision of federal, state, or local law, statute, rule, or
regulation applicable to Customer as of the Effective Date of Contract where
such violation or default will have a Material Adverse Effect. The execution,
delivery, and performance of this Contract and the consummation of the
transactions contemplated hereby will not (i) result in any such violation or be
in conflict with the
Certificate of Incorporation or the By-Laws of Customer,
(ii) be in conflict with any instrument, judgment, order, writ, or decree, (iii)
be in conflict with any contract or other agreement or be an event that results
in the creation of any lien, charge, or encumbrance upon any material asset of
Customer other than as provided in this Contract, where such conflict or
creation would have a Material Adverse Effect, or (iv) cause Customer to violate
any federal, state, or local law, statute, rule, or regulation.
19.10 Customer's Financial Strength.
Contractor and Customer acknowledge and agree that Contractor, in entering
into this Contract, is relying on the separate existence and financial strength
of Customer alone and not of any Affiliate of Customer.
19.11 Cross-Defaults.
(a) Customer represents and warrants that, as of the Effective Date of
Contract, it is not a party to any Financing Agreements that contain a provision
that a default by any third party in such third party's
obligations will be a
default under any of Customer's Financing Agreements where enforcement of such
provision is likely to have a material adverse effect on the ability of Customer
to make any payment required by this Contract or have a material adverse effect
on the security held by Contractor under this Contract.
(b) Customer represents and warrants that, as of EDC, its assets do not
secure the liabilities of any person or entity other than Customer.
(c) Customer agrees that it shall not agree to a provision in any agreement
that a default by any third party's obligations will be a default under any of
Customer's Financing Agreements or grant a security interest in its assets to
secure the obligations of any other parties.
(d) Contractor shall have the power and authority to file financing
statements of public record giving third parties notice of the representations
and warranties of this Article 19.11 (Cross Defaults).
19.12 Code.
Customer represents and warrants that
(i) it shall use commercially
reasonable efforts to ensure that no viruses or similar items are coded or
introduced into the code it provides Contractor; and (ii) it shall not introduce
into any such provided code any code that would have
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the effect of disabling or otherwise shutting down all or any portion of the
Work. This warranty shall begin upon Final Acceptance of the Work embodying the
code at issue and continue for the operating life of the Satellites and the
Long-Lead Items.
19.13 Intellectual Property.
Customer represents and warrants that (i) it is either the owner of, or
authorized to use and incorporate, any Intellectual Property provided by
Customer (or others on behalf of Customer); (ii) Customer shall not require
Contractor to pay any license fees or royalties for the use of any Intellectual
Property of Customer; and (iii) Customer's Intellectual Property and/or any
modifications of Contractor's Intellectual Property by Customer (or any other
entity, other than
Contractor or its Subcontractors, acting on behalf of
Customer) shall not infringe any Intellectual Property Right of any third party.
Customer is not aware of any claim to the contrary by any third party. This
warranty shall begin on the Effective Date of Contract and continue for the
operating life of the Satellites and the Long-Lead Items.
19.14 Other Contracts.
Customer represents and warrants that, as of EDC, it has not entered into
an agreement to purchase goods and services similar to the goods and services to
be provided by Contractor hereunder.
19.15 Non-Misleading Statements.
As of EDC, this Contract (including the representations and warranties in
this Article 19 (Customer's Representations and Warranties) and the related
schedules) does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements, in light of the
circumstances under which they were made, not misleading.
19.16 Control of Customer.
Customer represents and warrants that Customer is not under the Control of
Contractor.
19.17 Customer Financial Covenant.
Customer covenants that it will provide Contractor with financial
information as follows: until the time Customer becomes a public company,
monthly reports on Customer's anticipated available cash for the following
twelve (12) months; thereafter, quarterly status reports (concurrent with
quarterly filings required by the SEC) setting forth Customer's funding to date,
monthly funding plans through the Delivery Date for the second Satellite,
including identification of Customer's principal funding sources and Customer's
anticipated ability to pay its obligations under this Contract as they become
due. Customer shall provide additional information reasonably related to
Customer's anticipated ability to pay its obligations under this Contract as
they become due, as may be reasonably requested by Contractor.
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20. INTELLECTUAL PROPERTY RIGHTS
20.1 Ownership of IP and IP Rights.
(a) Subject to the licenses set forth in Article 20.2 (License Rights), all
Background and Foreground Intellectual Property made, developed, or created by
Customer (or by others, other than Contractor or any Subcontractor, acting on
behalf of Customer), and all Intellectual Property Rights therein, shall be the
sole and exclusive property of Customer. The Parties agree the Statement of Work
and Spacecraft Performance Specifications are the Intellectual Property of
Customer.
(b) Subject to the licenses set forth in Article 20.2 (License Rights), all
Background Intellectual Property and Foreground Intellectual Property made,
developed or created by Contractor (or its Sub
contractors), and all Intellectual
Property Rights therein, shall be the sole and exclusive property of Contractor.
20.2 License Rights.
(a) Subject to the terms and conditions stated herein, Contractor grants to
Customer a fully paid-up, irrevocable, perpetual, worldwide, nonexclusive right
and license to use and have used, for the sole and exclusive purpose of
operating and/or maintaining any Deliverable Item, all Background Intellectual
Property and Foreground Intellectual Property, including, to the extent
necessary for the limited purpose of this license, those associated Intellectual
Property Rights therein, owned by Contractor (and/or its Subcontractors);
provided, however, such license shall only be revocable in the case of
termination in accordance with paragraph (a)(1) or paragraph (a)(2) of Article
32.3 (Termination for Customer's Default) for Customer's failure to make
payment, but only with respect to those Deliverable Items not paid for.
(b) Subject to the terms and condi
tions stated herein, Customer grants to
Contractor a fully paid-up, irrevocable, perpetual, worldwide, non-exclusive
right and license to use and have used for the sole and exclusive purpose of
performing under this Contract, all Background Intellectual Property and
Foreground Intellectual Property, including, to the extent necessary for the
limited purpose of this license, those associated Intellectual Property Rights
therein, owned by Customer (or others acting on behalf of Customer).
(c) All object code, source code, and documentation Delivered ("Delivered
Software") shall be protected as the Confidential Information of Contractor or
its licensor or Subcontractor pursuant to Article 22 (Confidential Information).
Delivered Software may only be used pursuant to the license granted in paragraph
(a) above on the computer hardware Delivered as a Deliverable Item or successors
or back-ups to such hardware. Customer may reproduce the delivered software for
purposes of safe keeping (archives) or back-u
p, provided all copyright notices
and proprietary markings are reproduced.
(d) The license described in paragraph (a) above shall be transferable to
the Financing Entities and, subject to Contractor's prior written approval, any
other entity.
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(e) Contractor shall, unless otherwise authorized or directed in writing by
Customer, use reasonable best efforts to include in each Subcontract hereunder a
license rights clause pursuant to which each Subcontractor will grant to
Customer license rights in Intellectual Property developed by such Subcontractor
and associated Intellectual Property Rights to the same extent as the license
rights granted by Contractor in this Article 20.2 (License Rights).
20.3 Joint Program Inventions.
(a) Notwithstanding anything to the contrary herein, the following shall
apply to Program Inventions conceived jointly by one or more Associates of each
Party:
(1) each Party shall have an equal, undivided one-half interest in
and t
o such joint Program Inventions, as well as in and to patent
applications and patents thereon in all countries.
(2) Contractor shall have the first right of election to file patent
applications in any country, and Customer shall have a second
right of election. Each Party in turn shall make its election at
the earliest practicable time, and shall notify the other Party
of its decision.
(3) The expenses for preparing, filing, and securing each joint
Program Invention patent application, and for issuance of the
respective patent shall be borne by the Party that prepares and
files the application. The other Party shall furnish the filing
Party with all documents or other assistance that may be
necessary for the filing and prosecution of each application.
Where such joint Program Invention application for a patent is
filed by either Party in a country that requires the payment of
taxes, annuities, maintenance fees or other charges on a pending
application or on an issued patent, the Party that files the
application shall, prior to filing, request the other Party to
indicate whether it will agree to pay one-half of such taxes,
annuities, maintenance fees, or other changes. If within sixty
(60) Calendar Days of receiving such request, the non-filing
Party fails to assume in writing the obligation to pay its
proportionate share of such taxes, annuities, maintenance fees,
or other charges, or if either Party subsequently fails to
continue such payments within sixty (60) Calendar Days of demand,
it shall forthwith relinquish to the other Party, providing that
said other Party continues such payments, its interest in such
application and patent and the Program Invention disclosed
therein, subject, however, to retention of an irrevocable, fully
paid-up, non-exclusive, non-assignable license in favor of the
relinquishing Party, its parent, and any subsidiary thereof to
make, use, lease, and sell apparatus and/or methods under said
application and patent.
(b) Each owner of a jointly-owned patent application or patent resulting
therefrom shall, provided that it shall have fulfilled its obligation, if any,
to pay its share of taxes, annuities, maintenance fees, and other charges on
such pending application or patent, have the right to grant non-exclusive
licenses thereunder and to retain any consideration that it may receive
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therefor without obligation to account therefor to the other Party. In
connection therewith, each of the Parties hereby consents to the granting of
such non-exclusive licenses by the other Party and also agrees not to assert any
claim with respect to the licensed application or patent against any licensee of
the Party thereunder during the term of any such license.
20.4 Survival of Intellectual Property Rights.
The provisions of this Article 20 (Intellectual Property Rights) shall
survive the termination or expiration of this Contract, except as expressly set
forth in Article 20.2(a) above.
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21. INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION
21.1 Contractor Intellectual Property Indemnification.
(a) Subject to paragraph (a) of Article 21.2 (Customer's Intellectual
Property Indemnification) and the limitations set forth in paragraph (h) of
Article 18.3 (Warranties for Deliverable Items), Contractor shall indemnify,
defend, and hold harmless Customer from any and all Losses arising from, in
connection with, or based on any allegations made by third parties (including
Subcontractors of Contractor) that Customer's use of the Work, or any part
thereof infringes any third-party Intellectual Property Right, unless such
infringement would not have occurred but for Contractor following the written
requests, instructions, or specificat
ions of Customer.
(b) If the use of the Work or any part thereof is enjoined, Contractor
shall, at its option and expense, either procure for Customer the right to use
the Work or infringing part thereof, as the case may be, or substitute an
equivalent product reasonably acceptable to Customer, or modify the Work or
infringing part thereof to render them non-infringing without affecting their
utility or functionality. If Contractor determines that none of these
alternatives is reasonably available or feasible, Contractor shall meet with
Customer to address the matter and reach an equitable solution reasonably
acceptable to Customer.
(c) Nothing in this Contract shall be construed as requiring Contractor to
defend a suit or pay damages or costs if either (i) the infringement claim or
judgment is based upon the use of any goods or services furnished in combination
with other goods or services not provided by Contractor, unless such combination
was identified in Exhibit A (Spacecraft Performance
Specifications); (ii) the
infringement claim is based on the goods or services being used in other than
their specific operating environment as defined in Exhibit B (SOW); or (iii) the
infringement claim is based on Customer's modification of the Work or part
thereof in a manner not intended or reasonably foreseeable by Contractor.
(d) Contractor's obligations under this Article 21.1 (Contractor
Intellectual Property Indemnification) shall be subject to Article 24.4
(Indemnification Procedures).
21.2 Customer Intellectual Property Indemnification.
(a) Customer shall indemnify, defend, and hold harmless Contractor from any
and all Losses arising from, in connection with, or based on any allegations
made by third parties that the Work or any Deliverable Item or any part thereof
infringes any third-party Intellectual Property Right to the extent such
infringement is based on (i) any Intellectual Property provided by Customer (or
by others, other than Contractor or its Subcontractors, act
ing on behalf of
Customer); or (ii) any modification by Customer (or any entity, other than
Contractor or its Subcontractors, acting on behalf of Customer) of the Work or
any part thereof; or (iii) any written requests, specifications or instructions
provided by Customer to the extent the infringement arises from compliance with
such written requests, instructions or specifications.
(b) Customer's obligations under this Article 21.2 (Customer Intellectual
Property Indemnification) shall be subject to Article 24.4 (Indemnification
Procedures).
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21.3 Total Liability.
(a) In no event shall either Party's aggregate liability to the other Party
for intellectual property indemnification, defense, or any subsequent award of
damages in connection with one or multiple claims exceed Thirty Million Dollars
($30,000,000).
(b) Neither Party shall be liable to the other Party for lost revenues,
profits or other indirect, incidental, special, or consequential damages arising
from any intellectual property infringement claims, except to the extent that
such damages are caused by a Party's willful or intentional acts.
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22. CONFIDENTIAL INFORMATION
22.1 Confidentiality Obligations.
(a) Any Confidential Information shall be maintained in strict confidence
by the Receiving Party. Except as provided in this Article 22 (Confidential
Information), the Receiving Party shall not use, or disclose in any manner to
any third party, Confidential Information without the prior express written
consent of the Furnishing Party. The obligation of confidentiality shall not be
limited in time except to the extent that the Receiving Party can establish one
of the exceptions set forth in Article 22.2 (Exceptions) below by clear and
convincing evidence.
(b) Access to and use of Confidential Information shall be restricted to
those employees and persons within the Receiving
Party's organization (including
its Consultants, attorneys, Subcontractors, shareholders, and representatives),
with a need to use such Confidential Information to perform services
specifically requested by one Party of the other, to fulfill the purposes of
this Contract. The Receiving Party's Consultants or Subcontractors may be
included within the meaning of "persons within the Receiving Party's
organization," provided that such persons have executed a non-disclosure or
confidentiality agreement no less stringent that this Article 22 (Confidential
Information). With respect to Contractor, access may be extended to certain
employees of Hughes Electronics Corporation, Hughes Communications, Inc., and
Hughes Space and Communications Company for the purposes stated herein. In
addition, all information provided is to be subject to the provisions of
paragraph (c) below.
(c) The Parties shall use the Confidential Information solely for the
purpose of developing, constructing, financing, Launching, and o
perating
Contractor-built Satellites for Customer's satellite digital audio radio
service.
22.2 Exceptions.
The obligations set forth in Article 22.1 (Confidentiality Obligations)
shall not apply to information that is:
(a) Already known to or otherwise in the possession of the Receiving Party
at the time of receipt from the Furnishing Party and that was not so known or
received in violation of any confidentiality; or
(b) Publicly available or otherwise in the public domain prior to
disclosure by the Receiving Party or becomes publicly available or otherwise in
the public domain after receipt by the Receiving Party without breach of this
Contract; or
(c) Rightfully obtained by the Receiving Party from any third party without
restriction and without breach of any confidentiality obligation by such third
party; or
(d) Developed by the Receiving Party independent of any disclosure
hereunder, as evidenced by written records; or
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(e) Disclosed pursuant to the order of a court or administrative body of
competent jurisdiction or a government agency or required to be released
pursuant to Law or regulation, provided that the Receiving Party shall notify
the Furnishing Party prior to such disclosure and shall cooperate with the
Furnishing Party in the event the Furnishing Party elects to legally contest,
request confidential treatment, or otherwise avoid such disclosure.
22.3 No License.
Except as expressly provided in this Contract, nothing in this Contract
shall be construed as granting the Receiving Party whether by implication,
estoppel, or otherwise, any license or any right to use any Confidential
Information received from the Furnishing Party, or use any patent,
trademark, or
copyright now or hereafter owned or controlled by the Furnishing Party.
22.4 Return of Confidential Information.
All Confidential Information disclosed pursuant to this Contract is
considered loaned for use solely in connection with this Contract. All
Confidential Information in tangible form of expression which has been disclosed
to or thereafter created, whether by copy or reproduction, by the Receiving
Party shall be and remain the property of the Furnishing Party. All such
Confidential Information and any and all copies and reproductions thereof shall,
within fifteen (15) Calendar Days of written request by the Furnishing Party, be
either promptly returned to the Furnishing Party or destroyed at the Furnishing
Party's direction. In the event of such requested destruction, the Receiving
Party shall provide to the Furnishing Party written certification of compliance
therewith within fifteen (15) Calendar Days of such written request.
22.5 Inconsistent Legends.
This Article 22 (Confidential Information) shall control in lieu of and
notwithstanding any proprietary or restrictive legend or statements inconsistent
with this Article that may be printed on or associated with any particular
information disclosed pursuant to this Contract.
22.6 Survival of Confidentiality Obligations.
The provisions of this Article 22 (Confidential Information) shall survive
the termination or expiration of this Contract for a period of four (4) years
following the date of termination or expiration of 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.
23. NON-COMPETITION OBLIGATION
(a) Except with respect to WorldSpace, Inc. or WorldSpace International
Network, Inc. or Affiliates thereof, or with respect to DirecTV, Contractor
shall refrain, for a period of [*****] from EDC, from the following:
(1) directly or indirectly owning an equity interest of five percent
(5%) or more in an entity that develops or operates a Similar
Satellite System and/or operating a Similar Satellite Service in
any Customer Coverage Area; and/or
(2) p
roviding a payload subsystem meant to be incorporated in a
Similar Satellite System within the Customer Coverage Area.
However, this shall not be construed to restrict Contractor from
selling or providing goods at the equipment level and related
services to any third party.
(b) In the event Customer exercises its options under Article 30 (Options)
to purchase the Ground Spare Satellite and/or 4th and 5th Optional Satellite(s)
the Parties shall negotiate in good faith an extension to the definition of
"Customer Coverage Area" to account for the area covered by the Ground Spare
Satellite and/or such 4th and 5th Optional Satellite(s).
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24. INDEMNIFICATION
24.1 Contractor's Indemnification.
(a) Subject to the indemnification procedures set forth in Article 24.4
(Indemnification Procedures), Contractor shall indemnify, defend, and hold
harmless Customer and its Affiliates and their respective Associates from any
and all Losses arising from, in connection with, or based on any allegations
made by third parties (including Consultants and agents of Customer, Contractor,
or any Subcontractor but not any employee, officer, or director of Customer)
regarding any of the following:
(1) injury to persons (including sickness or death) or damage to real
or tangible personal property, resulting from any act or
omission, negligent or otherwise, of
Contractor or its
Subcontractors in the performance of the Work;
(2) any claims arising out of or related to occurrences Contractor is
required to insure against pursuant to Article 25 (Insurance), to
the extent of the amount of the insurance required under such
Article; or
(3) Contractor's breach of its obligations under this Contract.
(b) Subject to the indemnification procedures set forth in Article 24.4
(Indemnification Procedures), Contractor shall indemnify, defend, and hold
harmless Customer as set forth in Article 18.3 (Warranties on Deliverable
Items), Article 21.1 (Contractor Intellectual Property Indemnification), this
Article 24.1(Contractor's Indemnification), Article 26 (Limitations of
Liability), Article 24.3 (Cross Indemnification for Inter-Party Waiver of
Liability), and as may be required pursuant to Article 33 (Inter-Party Waiver of
Liability).
24.2 Customer's Indemnification.
(a) Su
bject to the indemnification procedures set forth in Article 24.4
(Indemnification Procedures), Customer shall indemnify, defend, and hold
harmless Contractor and its Affiliates and their respective Associates from any
and all Losses arising from, in connection with, or based on any allegations
made by third parties (including Consultants and agents of Contractor, any
Subcontractor, or Customer but not any employee, officer, or director of
Contractor) regarding any of the following:
(1) injury to persons (including sickness or death) or damage to real
or tangible personal property, resulting from any act or
omission, negligent or otherwise, of Customer and its
Consultants;
(2) any claims arising out of or related to occurrences Customer is
required to insure against pursuant to Article 25 (Insurance), to
the extent of the amount of the insurance required under such
Article; or
(3)
Customer's breach of its obligations under this Contract.
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(b) Subject to the indemnification procedures set forth in Article 24.4
(Indemnification Procedures), Customer shall indemnify Contractor as set forth
in Article 21.2 (Customer Intellectual Property Indemnification), this Article
24.2 (Customer's Indemnification), Article 24.3 (Cross Indemnification for
Inter-Party Waiver of Liability), Article 33 (Inter-Party Waiver of Liability)
as may be required.
24.3 Cross-Indemnification For Inter-Party Waiver of Liability.
Each Party shall indemnify the other for, and hold it harmless from, any
liability, loss, or damage suffered by the other Party resulting from the
failure of such Party to comply with its obligations, if any, under Article 33
(Inter-Party Waiver of Liability) to waive or to caus
e its contractors and
Subcontractors at any tier (including suppliers of any kind) or any other entity
required by the Launch Agreement to make no claims under this Contract.
24.4 Indemnification Procedures.
(a) Promptly after receipt by any entity entitled to indemnification under
this Article 24 (Indemnification) of notice of the commencement or threatened
commencement of any civil, criminal, administrative, or investigative action or
proceeding involving a claim in respect of which the indemnified Party will seek
indemnification pursuant to this Article 24 (Indemnification), the indemnified
party shall notify the indemnifying Party of such claim in writing. Failure to
so notify the indemnifying Party shall not relieve the indemnifying Party of its
obligations under this Contract except to the extent it can demonstrate that it
was prejudiced by such failure. Within fifteen (15) Calendar Days following
receipt of written notice from the indemnified Party relating to any claim, but
no later
than ten (10) Calendar Days before the date on which any response to a
complaint or summons is due, the indemnifying Party shall notify the indemnified
Party in writing if the indemnifying Party elects to assume control of the
defense or settlement of that claim (a "Notice of Election").
(b) If the indemnifying Party delivers a Notice of Election relating to any
claim within the required notice period, so long as it is actively defending
such claim, the indemnifying Party shall be entitled to have sole control over
the defense and settlement of such claim; provided that (i) the indemnified
Party shall be entitled to participate in the defense of such claim and to
employ counsel at its own expense to assist in the handling of such claim; (ii)
where the indemnified Party is so represented, the indemnifying Party shall keep
the indemnified Party 's counsel informed of each step in the handling of any
such claim; (iii) the indemnified Party shall provide, at the indemnifying Party
's request and expens
e, such assistance and information as is available to the
indemnified Party for the defense and settlement of such claim; and (iv) the
indemnifying Party shall obtain the prior written approval of the indemnified
Party before entering into any settlement of such claim or ceasing to defend
against such claim. After the indemnifying Party has delivered a Notice of
Election relating to any claim in accordance with the preceding paragraph, the
indemnifying Party shall not be liable to the indemnified Party for any legal
expenses incurred by the indemnified Party in connection with the defense of
that claim. In addition, the indemnifying Party shall not be required to
indemnify the indemnified Party for any amount paid or payable by the
indemnified Party in the settlement of any claim for which the indemnifying
Party has delivered a timely Notice of Election if such amount was agreed to
without the prior written consent of the indemnifying Party.
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(c) If the indemnifying Party does not deliver a Notice of Election
relating to any claim within the required notice period or fails to actively
defend such claim, the indemnified Party shall have the right to defend and/or
settle the claim in such manner as it may deem appropriate, at the cost and
expense of the indemnifying Party. Provided that the indemnified Party acts in
good faith, it may settle such claim on any terms it considers appropriate under
the circumstances without in any way affecting its right to be indemnified
hereunder. The indemnifying Party shall promptly reimburse the indemnified Party
for all such costs and expenses.
24.5 Waiver of Subrogation.
If a Party insures against any loss or damage it may suffer in respect
of
which it is required to indemnify the other Party, its Affiliates and their
respective Associates pursuant to this Article 24 (Indemnification), it shall be
a condition that the insuring Party arrange for the insurer to waive its right
of subrogation against such other Party and such other Party's Affiliates and
their respective Associates. Each Party shall be entitled to require proof from
time to time that the other Party has complied with its obligations under this
Article 24.5 (Waiver of Subrogation). In the event a Party does not comply with
such obligations, the indemnities referred to in Articles 24.1 (Contractor's
Indemnification), 24.2 (Customer's Indemnification), and Article 24.3 (Cross
Indemnification for Inter-Party Waiver of Liability), as applicable, shall
extend to any claim that may be made by an insurer pursuant to an alleged right
of subrogation.
24.6 Survival of Indemnifications.
The provisions of this Article 24 (Indemnification) shall survive the
termination or exp
iration of this Contract.
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25. INSURANCE
25.1 General Obligations.
(a) Contractor represents that it has procured and will maintain at all
times, from EDC to the moment of Launch at the Designated Launch Site of each
Launch Vehicle used to Launch each Satellite pursuant to this Contract,
insurance ("Ground Insurance") against all risks and loss or damage to such
Satellites, and to any and all components purchased for and intended to be
integrated into the Satellite, in an amount not less than the greater of (i) the
replacement value of, or (ii) the amounts paid by Customer with respect to, the
Satellite and components. Contractor shall also maintain public liability
insurance, insurance of employees, and comprehensive automobile insurance, all
in amounts adequate for i
ts potential liabilities under this Contract. In
addition, Contractor shall require each of its Subcontractors to provide and
maintain insurance in amounts for their respective potential liabilities. In
addition, Contractor represents that it has procured and will maintain at all
times, from EDC through Final Acceptance, Ground Insurance for all other Work.
(b) Contractor shall provide a certificate of insurance certified by
Contractor's insurance broker, evidencing such insurance coverage to Customer at
Customer's request.
(c) Contractor shall require its insurers to waive all rights of
subrogation against Customer. Customer shall be named as an additional insured
under Contractor's third-party liability coverages, and as a loss payee as
Customer's interests may appear with respect to property insurance.
25.2 Launch Insurance.
(a) Customer shall be responsible for procuring Launch Insurance for each
Satellite and shall secure a binder for such insurance at least sixty (60)
Calen
dar Days before the applicable Launch Date for such Satellite. Contractor
shall be named as additional insured on such Launch Insurance policy and
Customer shall require its Insurers to waive all rights of subrogation against
Contractor. Contractor shall, at the written request of Customer, provide
Customer with reasonable assistance (such as providing required technical
information) in Customer's efforts to procure Launch Insurance, and support at
Customer's meetings with Insurers, if necessary.
(b) Without limiting any other Contractor obligations under this Article 25
(Insurance) and in order to comply with insurance requirements, Contractor
shall, as part of the Pre-Eclipse Test Report or Post-Eclipse Test Report,
specify the basis for Partial Loss, Constructive Total Loss or Total Loss, the
definition of which shall have been provided by Customer to Contractor.
Notwithstanding Contractor's specifying such basis, Customer shall make the
final determination of whether a Partial Loss, Constructiv
e Total Loss or Total
Loss has occurred.
(c) Such notices of loss shall comply with the provisions of Article 34.7
(Notices), and the foregoing specified time for the provision of notice may be
shortened in compliance with the respective requirements of such Insurers.
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25.3 Preparation of Claims.
(a) Each Party shall provide to the other Party any information that may
reasonably be required to prepare and present an insurance claim at the other
Party's written request.
(b) The Parties warrant and covenant that they will not withhold from each
other any material information either has or will have concerning anomalies,
failures, or non-conformances with or deviations from the requirements of this
Contract, from EDC through Final Acceptance in respect of any of the Satellites.
(c) Upon written request of a Party, the other Party will respond or permit
the first Party to respond to any insurers in relation to all specific and
reasonable questions relating to design, test, quality control, launch, and
orbital information. In addition, in the event of a Launch Insurance claim,
Contractor will permit and assist Customer to:
(1) conduct review sessions with a competent representative selected
by the insurers to discuss any continued issue relating to such
occurrence, including information conveyed to either Party; and
(2) use its best efforts to secure the insurers' access to all
information used in or resulting from any investigation or review
of the cause or effects of such occurrence; and
(3) make available for inspection and copying all information
necessary to establish the basis of such claim.
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26. LIMITATIONS OF LIABILITY
(a) Contractor makes no warranty or agreement, express or implied, to or
for the benefit of any person or entity other than Customer concerning the
performance of the Satellites or any other matters relating to the Work.
(b) THE PARTIES TO THIS CONTRACT EXPRESSLY RECOGNIZE THAT COMMERCIAL SPACE
VENTURES INVOLVE SUBSTANTIAL RISKS AND RECOGNIZE THE COMMERCIAL NEED TO DEFINE,
APPORTION, AND LIMIT CONTRACTUALLY ALL THE RISKS ASSOCIATED WITH THIS COMMERCIAL
SPACE VENTURE. THE PAYMENTS AND OTHER REMEDIES EXPRESSLY SET FORTH IN THIS
CONTRACT FULLY REFLECT THE PARTIES' NEGOTIATIONS, INTENTIONS, AND BARGAINED-FOR
ALLOCATION OF THE RISKS ASSOCIATED WITH COMMERCIAL SPACE VENTURES.
(c) THE WARRANTY OBLIGATIONS OF CONTRAC
TOR AND THE REMEDIES AGAINST
CONTRACTOR THEREFOR THAT ARE EXPRESSLY SET FORTH OR REFERENCED IN ARTICLE 18
(CONTRACTOR'S REPRESENTATIONS, COVENANTS, AND WARRANTIES) ARE EXCLUSIVE AND ARE
IN SUBSTITUTION OF ANY OTHER WARRANTIES, EXPRESS OR IMPLIED (INCLUDING ANY
STATUTORY WARRANTIES SUCH AS IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE), WHICH ARE EXPRESSLY DISCLAIMED.
(d) CUSTOMER'S SOLE AND EXCLUSIVE REMEDIES, AND CONTRACTOR'S SOLE
OBLIGATIONS FOR (I) ANY BREACH OF THIS CONTRACT, INCLUDING DELAY OR DEFAULT;
AND/OR (II) ANY DEFECT, NON-CONFORMANCE OR DEFICIENCY IN ANY WORK UNDER THIS
CONTRACT OR IN ANY INFORMATION, INSTRUCTIONS, SERVICES, OR OTHER CLAIMS
WHATSOEVER ARISING OUT OF OR RELATING TO THIS CONTRACT AND/OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER DENOMINATED AS CONTRACT, TORT, EQUITABLE,
STATUTORY, OR ANY OTHER TYPE OF CLAIM) ARE LIMITED TO THOSE SET FORTH IN
ARTICLES 0 (LIQUIDATED DAMAGES FOR LATE DELIVERY), 12 (IN-ORBIT PERFORMANCE
INCENTIVE PAYMENTS), 18
(CONTRACTOR'S REPRESENTATIONS, COVENANTS, AND
WARRANTIES), 21 (INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION), 24
(INDEMNIFICATION), 25 (INSURANCE), AND 32 (TERMINATION) HEREOF AND ANY OTHER
REMEDIES SPECIFICALLY SET FORTH IN THIS CONTRACT; AND ALL OTHER REMEDIES OR
RECOURSE AGAINST CONTRACTOR OF ANY KIND ARE EXPRESSLY DISCLAIMED AND FOREVER
WAIVED BY CUSTOMER.
(e) CONTRACTOR SHALL NOT, UNDER ANY CIRCUMSTANCES, UNDER ANY WARRANTY
(EXPRESS, IMPLIED, OR STATUTORY) OR UNDER ANY THEORY OF LIABILITY (INCLUDING
NEGLIGENCE, TORT, STRICT LIABILITY, CONTRACT, OR OTHER LEGAL OR EQUITABLE
THEORY) HAVE ANY LIABILITY TO CUSTOMER OR CUSTOMER'S CUSTOMERS FOR ANY SPECIAL,
CONSEQUENTIAL, AND/OR INCIDENTAL DAMAGES, WHETHER OR NOT FORESEEABLE, INCLUDING
LOST REVENUES OR PROFITS, COST OF CAPITAL, OR ANY OTHER FORM OF ECONOMIC
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LOSS RESULTING FROM ANY BREACH OF THIS CONTRACT OR WITH RESPECT TO ANY DEFECT,
NON-CONFORMANCE, OR DEFICIENCY IN ANY INFORMATION, INSTRUCTIONS, SERVICES, OR
OTHER THINGS PROVIDED PURSUANT TO THIS CONTRACT.
(f) THE TOTAL LIABILITY OF CONTRACTOR WITH RESPECT TO ALL CLAIMS OF ANY
KIND, INCLUDING WITHOUT LIMITATION LIQUIDATED DAMAGES, WHETHER AS A RESULT OF
BREACH OF CONTRACT, WARRANTY, STRICT LIABILITY OR OTHERWISE, AND WHETHER ARISING
BEFORE OR AFTER DELIVERY OF ANY DELIVERABLE ITEM, FOR ANY LOSS ARISING FROM OR
RELATING TO THIS CONTRACT, OR FROM THE PERFORMANCE OR BREACH THEREOF, SHALL NOT
EXCEED, EXCEPT AS OTHERWISE SET FORTH IN THIS CONTRACT, THE CONTRACT PRICE.
NOTWITHSTANDING THE FOREGOING, THE LIMITATIONS OF LIABILITY SET FORTH IN THIS
CONTRACT S
HALL NOT APPLY TO CONTRACTOR, ITS AFFILIATES, ASSOCIATES, AND
SUBCONTRACTORS TO THE EXTENT A CLAIM OF ANY KIND RELATED TO OR ARISING OUT OF
THIS CONTRACT IS COVERED BY INSURANCE MAINTAINED BY CONTRACTOR, ITS AFFILIATES,
ASSOCIATES OR SUBCONTRACTORS.
(g) The limitations of liability set forth herein shall also apply to all
Affiliates, Associates, and Subcontractors of Contractor to the same extent as
set forth herein with respect to Contractor.
(h) Each Party shall have a duty to mitigate damages for which the other
Party is responsible.
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27. DISPUTE RESOLUTION
Any dispute, claim, or controversy ("Dispute") between the Parties arising
out of or relating to this Contract, including but not limited to any Dispute
with respect to the interpretation, performance, termination, or breach of this
Contract or any provision thereof shall be resolved as provided in this
Article 27 (Dispute Resolution), provided, however, that (i) disputes as to
payments pursuant to Article 5.3 (Disputed Amounts) concerning whether a
Milestone has been reached and payments therefor have been earned by Contractor,
shall be resolved in accordance with the provisions of Article 5.3 (Disputed
Amounts) and Article 27.2 (Arbitration) and (ii) disputes as to the performance
of a Launched Satellite pursuant to Article
12.4 (Disputed Performance) shall be
resolved in accordance with the provisions of Article 12.4 (Disputed
Performance) and Article 27.2 (Arbitration). All other Disputes concerning
Milestones shall be resolved in accordance with this Article 27 (Dispute
Resolution).
27.1 Informal Dispute Resolution.
Subject to the provisions of Article 27.3 (Litigation), prior to or
concurrent with the initiation of formal dispute resolution procedures, the
Parties shall first attempt to resolve their Dispute informally, in a timely and
cost-effective manner, as follows:
(a) If, during the course of the Work, a Party believes it has a Dispute
with the other Party, the disputing Party shall give written notice thereof,
which notice will describe the Dispute and may recommend corrective action to be
taken by the other Party. The Contractor Program Manager shall promptly consult
with the Customer Program Manager in an effort to reach an agreement to resolve
the Dispute.
(b) In the event agreement
cannot be reached within ten (10) Calendar Days
of receipt of written notice, either Party may request the Dispute be escalated,
and the respective positions of the Parties shall be forwarded to an executive
level higher than that under paragraph (a) above for resolution of the Dispute.
(c) In the event agreement cannot be reached under paragraphs (a) or (b)
above within a total of twenty (20) Calendar Days after receipt of the written
notice described in paragraph (a) above, either Party may request the Dispute be
escalated, and the respective positions of the Parties shall be forwarded to the
Chief Executive Officer (CEO) of each Party, and such executives shall meet
during such time to resolve the Dispute.
(d) In the event agreement cannot be reached under paragraphs (a), (b) or
(c) above within a total of thirty (30) Calendar Days after receipt of the
written notice described in paragraph (a) above, either Party may proceed with
arbitration in accordance with Article 27.2 (Arbitration)
.
27.2 Arbitration.
Subject to the provisions of Article 27.3 (Litigation), any Dispute not
resolved under Article 27.1 (Informal Dispute Resolution) (except Intellectual
Property Disputes ), Article 5.3
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(Disputed Amounts), or Article 12.4 (Disputed Performance) shall be resolved by
mandatory and binding arbitration in accordance with the provisions of this
Article 27.2 (Arbitration).
(a) The arbitration shall be conducted by a tribunal of three (3)
arbitrators (the "Tribunal"), each of whom shall have at least ten (10) years
experience in the aerospace and/or satellite telecommunications industry. Within
thirty (30) Calendar Days after the commencement of the arbitration, each Party
shall appoint one arbitrator, and those two arbitrators shall together appoint
the third neutral arbitrator.
(b) Any controversy or claim arising out of this Contract, including any
Dispute, shall be determined by binding arbitration in accordance with the
Arbitr
ation Rules of JAMS/Endispute (the "JAMS Arbitration Rules") then in
effect, except to the extent modified by this Article 27 (Dispute Resolution).
(c) The Parties shall be permitted to take discovery, if and as needed, by
deposition upon oral examination, requests for production of documents and
things, and requests for entry upon land for inspection and other purposes, as
those discovery methods are described and defined in the Federal Rules of Civil
Procedure; provided, however, that any limitations in the Federal Rules on the
number, timing, or sequence of such discovery requests shall not apply. The
scope of permissible discovery shall generally be as described in the Federal
Rules of Civil Procedure, Rule 26(b)(1), but the Parties shall use their best
efforts to focus and limit their discovery in accordance with the nature of the
dispute and the need for expedited resolution. The arbitral tribunal may expand
or limit the scope of permissible discovery and establish the time period within
whi
ch discovery responses must be served.
(d) Time is of the essence in the initiation and completion of the
arbitration. The arbitral hearing shall be commenced and conducted
expeditiously. Unless the Tribunal orders otherwise, the dispute should be
submitted to the Tribunal for decision within six (6) months after the
commencement of the arbitration, and the final award shall be rendered within
one (1) month thereafter. The Parties and the Tribunal shall use their best
efforts to comply with this schedule, and the Tribunal may impose any remedy it
deems just for any Party's effort to unnecessarily delay, complicate, or hinder
the proceedings.
(e) The arbitration shall be held in Washington, D.C., USA, and shall be
conducted in the English language.
(f) Any arbitration proceeding held pursuant to this Article 27 (Dispute
Resolution) shall be governed by the JAMS Rules and the United States
Arbitration Act, 9 U.S.C. (S)(S) 1 et seq. Judgment upon the award rendered by
-------
the Tribunal may be entered in any court having jurisdiction thereof. The
Tribunal shall apply the law of the State of New York, including the Uniform
Commercial Code (where and if applicable) as adopted by the State of New York.
(g) Pending a decision by the Tribunal, each Party shall, unless directed
otherwise by the other Party in writing, fulfill all its obligations under this
Contract, including the obligation to take all steps necessary during the
pendency of the arbitration to ensure the Work will be Delivered within the time
stipulated or within such extended time as may be allowed under this Contract,
provided Customer shall continue to make payments therefore in accordance with
this
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Contract (including the dispute resolution provisions hereof), and further
provided that, if Customer fails to make such payments, Contractor may stop
Work.
(h) The Tribunal's award may grant any remedy or relief that the Tribunal
deems just and equitable and within the scope of this Contract, including
specific performance or other equitable relief. Notwithstanding the foregoing,
the Tribunal shall have no power or authority to amend or disregard any
provision of this Article 27 (Dispute Resolution) or any other provision of this
Contract. The Tribunal also shall have no power or authority to award punitive
or exemplary damages to any Party.
(i) The non-prevailing Party, as determined by the Tribunal, shall pay the
costs of the arbitration.
In the event of an arbitration involving multiple
claims with different Parties prevailing on each claim, the Tribunal shall
apportion the costs of the arbitration (which shall not include Excluded Costs)
between or among the Parties in such manner as it deems reasonable, taking into
account the circumstances of the case, the nature of the claims, and the result
of the arbitration.
(j) The Tribunal shall award pre-award interest on any sums due (excluding
damages) determined by the Tribunal to be owing from one Party to the other
under this Contract. Any award shall also provide that interest shall continue
to accrue after the date of the award until the amount awarded is paid in full.
Interest shall be calculated at the rate set forth in Article 34.10 (Calculation
of Interest) for each day from forty-five (45) Calendar Days following the date
of loss or the date the arbitration was commenced, whichever is earlier, until
the date full payment is made.
(k) Each Party shall bear the costs of
its own legal representation,
witnesses produced by such Party, document production, and other discovery
expenses.
27.3 Litigation.
(a) Notwithstanding the provisions of Article 27.2 (Arbitration) above, if
the Dispute requires that immediate equitable relief or relief in aid of
arbitration be obtained, either Party shall have the right to bring suit solely
to obtain preliminary or temporary injunctive relief, including specific
performance, solely for Intellectual Property issues. However, the Parties
contractually agree that Customer shall not seek specific performance where
Contractor has not been paid in accordance with the provisions of this Contract.
Requests for permanent injunctive relief shall be arbitrated pursuant to
Article 27.2 (Arbitration).
(1) Any such suit shall be brought in a court of competent
jurisdiction in the State of New York, provided, however, the
exclusive venue for any action brought in a New York state court
shall be the Supreme Court for New York County, and the Parties
hereby waive any objection to that venue. The Parties hereby
irrevocably consent to personal jurisdiction in the state and
federal courts in the State of New York concerning any Dispute
between the Parties. If, for any reason, the state and federal
courts of New York do not have or refuse to exercise jurisdiction
over the Dispute, then litigation as permitted herein may be
brought in any court of competent
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jurisdiction in the State of Delaware, provided, however, the
exclusive venue for any action brought in a Delaware state court
shall be the Superior Court of New Castle County, and the Parties
hereby waive any objection to that venue and the Parties hereby
irrevocably consent to personal jurisdiction in the state and
federal courts in the State of Delaware concerning any dispute
between the Parties. If, for any reason, the state and federal
courts of Delaware do not have or refuse to exercise jurisdiction
over the Dispute, then litigation as permitted herein may be
brought in any court of competent jurisdicti
on in the United
States of America, or, if there is no such court, in any other
nation.
(2) In the event a Party files a lawsuit pursuant to this Article
27.3 (Litigation), the prevailing party shall be entitled to an
award of its costs and fees, including reasonable attorney's
fees, incurred with respect to the lawsuit. The defendant in such
litigation shall be regarded as the prevailing party if either
the court denies the equitable relief sought on the merits or the
court otherwise decides that equitable relief is not warranted or
the matter should be resolved by arbitration.
(b) In the event an entity or person not subject to the provisions of this
Article 27 (Dispute Resolution) commences any litigation or proceeding against
any Party hereto in which the other Party hereto is an indispensable party, the
Party against which the litigation or proceed
ing is brought may join or attempt
to join the other Party in such litigation or proceeding notwithstanding the
provisions of Article 27.2 (Arbitration). For purposes of this provision, the
other Party is an indispensable party in the lawsuit or proceeding if (i) in its
absence complete relief could not be accorded among those already a party to the
lawsuit or proceeding; (ii) its absence may as a practical matter impair or
impede its ability to protect its interests relating to the subject of the
lawsuit or proceeding; or (iii) its absence may leave the Party against which
the litigation or proceeding is brought subject to a substantial risk of
incurring double, multiple, or otherwise inconsistent obligations by reason of
the interest of the other Party relating to the subject of the lawsuit or
proceeding.
(c) Nothing in this Contract precludes a Party prevailing on any claim,
whether in arbitration or litigation, from initiating litigation in any
appropriate forum to enter or enforce a judgment
based on the Tribunal's or
court's award on that claim.
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28. LAUNCH SERVICES
(a) Baseline Launch Vehicle.
--- ------------------------
The baseline Launch Vehicle for the first and second Satellites to be
Delivered pursuant to this Contract shall be the Sea Launch Launch Vehicle.
(b) Alternate Launch Vehicles.
--- -------------------------
In the event that there will be a delay in the schedule of either the first
or second Sea Launch Launch Vehicle, which delay will exceed six (6) months
beyond the last day of the applicable Launch Period, Customer may exercise any
one of the following options for alternate Launch Services subject to the
following conditions:
(1) Option 1
(i) Customer may select an alternate Launch Vehicle(s) from
Contractor's then existing inventory of, H-IIA, or Long
March 3B Launch Vehicles, that, as of the date Customer
exercises the option, have not been sold or otherwise
assigned to other customers of Contractor, or to
Contractor's own satellite programs (for example, DirecTV,
Spaceway, PanAmSat).
(ii) The price for alternate Launch Vehicles shall be the same
as the price for the baseline Sea Launch Launch Vehicles.
(iii) If Customer exercises this option, the payment plan in
Exhibit G (Payment Plan and Termination Liability Amounts)
shall be amended in accordance with Contractor's payment
obligations in Contractor's various agreements with the
Launch Agencies providing the alternate Launch Vehicles,
and to provide that Cust
omer shall make such amended
payment(s) relating to the alternate Launch Vehicle(s) to
Contractor at least thirty (30) Calendar Days in advance
of Contractor's respective payment due date for such
payment to such Launch Agency(ies). The Parties
acknowledge and agree that any deferred or post-Launch
payment terms pursuant to this Contract apply only to the
baseline Launch Vehicles. Accordingly, and depending upon
which alternate Launch Vehicle(s) is/are selected and when
such selection is made, Customer may be obligated to make
a substantial lump sum payment in order to bring current
any retroactive Contractor progress or milestone payment
obligation related to the alternative Launch Vehicle(s).
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(iv) If Customer exercises this option, Customer shall pay
Contractor an additional sum of [*****] as consideration
for Customer's selection of an alternate Launch Vehicle
for each baseline Launch Vehicle. Such payment shall be
made concurrent with the exercise of this option. Upon
such payment, Customer shall have no further termination
or other lia
bility with respect to the specific Sea Launch
Launch Vehicle abandoned by Customer. Notwithstanding the
foregoing, in the event Customer terminates an alternate
Launch Vehicle after Customer has exercised its option to
select such alternate Launch Vehicle in accordance with
this Article 28 (Launch Services), Customer's termination
liabilities related to Launch Services, as defined herein
and in Exhibit G (Payment Plan and Termination Liability
Amounts), shall be applicable to the alternate Launch
Vehicle.
(v) Customer's option to select an alternate Launch Agency may
be exercised by Customer at any time up to the last day of
the [*****] prior to the [*****] or to the [*****], as
applicable. However, the Parties recognize that
Contractor's inventory of Launch Vehicles will likely
diminish as the respective Launch Periods approach,
thereby reducing Customer's selection opportunities for
alternate Launch Vehicles if such option is exercised
later in the option period described herein.
(2) Option 2
(i) Customer may select an alternate Launch Vehicle from other
than Contractor's inventory of Launch Vehicles.
(ii) If Customer exercises this option, Customer shall pay
Contractor an additional sum of [*****] as consideration
for Customer's selection of an alternate Launch Vehicle
outside of Contractor's inventory. This Option 2 Election
Payment shall be made concurrent with the exercise of this
option. In addition, the termination liability schedu
le
for the abandoned Sea Launch vehicle shall be as follows:
[*****] as of March 23, 1998, increasing linearly on a
daily basis to [*****] after March 23, 1998 until Launch
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Confidential treatment has been requested with respect to the
omitted portions.
minus Three (3) Months (L-3), and [*****] after L-3.
Customer shall pay Contractor the full termination
liability amount within thirty (30) Calendar Days after
this Option 2 is exercised (less any payments previously
made); or if Customer has previously made launch vehicle
payments exceeding the termination liability amount,
Customer's terminati
on liability under this paragraph (ii)
shall be offset and Contractor shall refund Customer
launch vehicle payments made exceeding the termination
liability amount within thirty (30) Calendar Days of
Customer's exercise of this Option 3. Upon payment of any
amount due under this paragraph (ii), or in the event no
amount is due under this paragraph (ii), upon exercise of
this Option 2, Customer shall have no further termination
or other liability with respect to the specific Sea Launch
abandoned by Customer.
(iii) If Contractor sells the abandoned Sea Launch launch
vehicle within [*****] after exercise of this Option
2, Contractor shall pay Customer the amount recovered by
Contractor up to the maximum of the termination liability
amount paid by Customer pursuant to paragraph (ii), less
Contractor's reasonable costs (including, but not limited
to, re-programming costs, inventory carrying charges and
unrecoverable costs) incurred in selling the abandoned
launch vehicle.
(iv) Customer may only exercise this option with respect to one
Sea Launch and may not exercise Option 3 below if this
option is exercised.
(3) Option 3
(i) Customer may select an alternate Launch Vehicle from other
than Contractor's inventory of Launch Vehicles.
(ii) If Customer exercises this option, Customer shall pay
Contractor an additional sum [*****] as consideration for
Customer's selection of an alternate Launch Vehicle
outside of Contractor's inventory
concurrent with the
exercise of this option. Notwithstanding the foregoing, if
Customer has previously made launch vehicle payments
exceeding the Option 3 Election Payment, Customer's Option
3 Election Payment shall be offset and Contractor
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requested with respect to the omitted portions.
shall refund Customer payments made exceeding the Option 3
Election Payment within thirty (30) Calendar Days of
Customer's exercise of this Option 3. Upon payment of any
amount due under this paragraph (ii), or in the event no
amount is due under this paragraph (ii), upon exercise of
this Option 3, Customer shall have no further termination
or other liability with respect to the specific Sea Launch
abandoned by Customer.
(iii) Customer may only exercise this option with respect to one
Sea Launch and may not exercise Option 2 above if this
option is exercised.
(c) In the event Customer exercises any of the options set forth in
paragraph (b) above, to select a Launch Vehicle other than the baseline Sea
Launch, the Parties will amend (i) the definitions of the terms "Intentional
Ignition" and "Launch" to conform to the definitions of such terms set forth in
the respective Launch Agreement for such alternate Launch Vehicle, as
appropriate, and (ii) Article 33 (Inter-Party Waiver of Liability) so as to
conform to the relevant requirements of the country or countries having
jurisdiction over the Launch. In addition, in the event Customer exercises
either Option 2 or Option 3 set forth in paragraph (b) above, (i) the Parties
shall negotiate in good faith whether delivery of the relevant Satellite shall
be an in-orbit
or on-ground delivery under this Contract and in the event the
Parties determine it shall be an on-ground delivery, the Parties shall amend
those portions of this Contract related to such determination (e.g. transfer of
title and risk of loss, delivery schedule, acceptance, liquidated damages and
termination liability) as appropriate to reflect an on-ground delivery of the
relevant Satellite, (ii) Contractor shall perform, without charge (except to the
extent included in the Contract Price), Launch Campaign, Mission Support and
LEOP Services for any launch services substituted by Customer for the Launch
Services terminated hereunder, provided, however, Customer shall pay Contractor
for those extra costs incurred by Contractor as a result of providing Launch
Campaign, Mission Support and LEOP Services to a location other than one
contemplated hereunder, (iii) Customer shall pay Contractor for those extra
costs incurred by Contractor as a result of shipping the applicable Satellite to
a launch site other t
han one contemplated hereunder, and (iv) if requested by
Customer, Contractor shall perform launch management services for the
substituted launch services at a price mutually agreed by the Parties.
(d) If a Satellite Launched on a Sea Launch Launch Vehicle is declared a
failure for any reason, within the first three hundred sixty-five (365) Calendar
Days after such failed Launch, Customer shall be entitled to a replacement
Launch on another Sea Launch Launch Vehicle for an identical satellite, [*****].
The scheduling of such replacement Launch shall have priority over other
Launches on the Sea Launch Launch Manifest, except for scientific missions which
are time sensitive in nature.
(e) In the event a Launch fails to occur on or before the last day of the
applicable Launch Period, Contractor shall be liable to Customer for liquidated
damages for the late
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requested with respect to the omitted portions.
delivery of Launch Services in the aggregate total amount of [*****] for each
Launch Vehicle, such liquidated damages to accrue at the daily rate of [*****],
commencing upon the first (1st) Calendar Day following the last day of the
Launch Period, and continuing for a maximum Launch Services damages period of
sixty (60) Calendar Days. Notwithstanding the foregoing, the Launch Services
liquidated damages shall not affect any liquidated damages which may accrue for
late Delivery of any Satellite. For the purpose of determining these Launch
Services liq
uidated damages as provided in this Article 28 (Launch Services), in
no event shall delay attributable to a Launch Agency be deemed an Excusable
Delay.
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29. CUSTOMER'S RESPONSIBILITIES
(a) In addition to Customer's responsibilities identified in this
Contract, Customer shall also discharge those responsibilities, at no cost to
Contractor or to Subcontractors, as set forth in Exhibit B (Statement of Work)
and below.
(b) Customer will provide beneficial access to Contractor and its
Affiliates and Subcontractors at each Satellite Control Center, on a timely
basis, as necessary to permit Contractor to perform its obligations with respect
to such Satellite Control Centers and related services.
(c) In addition to, and without limiting the generality of, the foregoing,
Customer will be responsible for the following:
(1) providing all civil works utilities and environmental contro
ls
associated with any Satellite Control Center; and
(2) obtaining Launch Insurance prior to Launch. Customer shall
provide Contractor a certificate of such insurance coverage at
Contractor's request.
(d) Customer shall provide written notification to Contractor as early as
practicable as to the identity and nationality of its employees and
Consultant(s) for whom access to Contractor's and Subcontractors' facilities are
required, and subsequent changes thereto, if any. It is recognized that certain
United States Government approvals may be required before such employees and
Consultant(s) have access to Work pursuant to the provisions of Article 6
(Access to Work).
(e) Customer is responsible for obtaining the necessary Specified Orbital
Locations, frequency spectrum allocations and other approvals and licenses to
operate its DARS Satellite Program.
(f) Reserved.
(g) Failure of Customer to discharge the responsibilities s
pecified in
this Article 29 (Customer's Responsibilities) may result in an equitable
adjustment to the Delivery Schedule, Delivery Dates, and/or Contract Price as
specified in paragraph (a) of Article 11.2 (Equitable Adjustments).
(h) Customer will make available, for Contractor's use, certain test
equipment and Customer facilities, as set forth in the Exhibit D (Test Plan
Requirements), as Contractor performs the In-Orbit Tests.
(i) Upon mutual agreement, Customer will make available to Contractor
Customer's facilities for use by Contractor during LEOP, as well as provide
technical support to Contractor during LEOP as a primary TT&C site in support
of LEOP.
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requested with respect to the omitted portions.
30. OPTIONS
30.1 Options Granted.
Contractor hereby grants to Customer the options set forth in this
Article 30 (Options) to be exercised at Customer's sole discretion.
30.2 Option to Delay Frequency Specification Beyond Two (2) Months.
(a) Customer shall select six (6) potential telemetry downlink
frequencies, as specified in Exhibit A (Spacecraft Performance Specifications),
within the first two (2) months following EDC for subsequent down-selection to
two (2) final telemetry downlink frequencies. If Customer makes a final
selection of the two (2) telemetry downlink frequencies within the first two (2)
months following EDC, there shall be no adjustment to the Contract Price.
However, should Customer fail to make such final selection of two (2) telemetry
downlink frequencies within the two (2) months following EDC, then Customer may
make the final selection of the two (2) telemetry downlink frequencies up to the
last day of the sixth (6th) month following EDC, provided that Customer shall
pay to Contractor an increase in the Contract Price of [*****] upon notification
by Customer to Contractor of Customer's final selection.
(b) In the event Customer fails to make such final selection of the
telemetry downlink frequencies provided in paragraph (a) above on or before the
last day of the sixth (6th) month after EDC, the Contract Price for such
Frequency Specification shall be adjusted in accordance with Article 14.1
(Changes Requested by Customer).
30.3 Ground Spare Satellite.
Contractor agrees to provide C
ustomer, at Customer's option, one Ground
Spare Satellite, to be delivered on-ground, of a design functionally identical
to Satellites to be delivered in-orbit under this Contract. Such Ground Spare
Satellite shall be used as a replacement, spare, or additional satellite, as the
case may be, in the event of a failed Launch of any Satellite or to accommodate
Customer's satellite system growth or replenishment. The Contract Price
includes Long-Lead Items and Activities to be procured or performed by
Contractor in order to permit delivery of such Ground Spare Satellite, if
ordered, on the expedited schedule set forth below in paragraph (b).
(a) Option Period.
-------------
Customer may order completion of the Ground Spare Satellite at any time
from ARP through the last day of the [*****] ("Option Period"). On or before the
date Customer orders completion of the Ground Spare Satellite, Customer shall
specify the orbital location for the Ground Spare Satellite; however, in the
event
Customer also exercises Customer's option to purchase the additional set
of reflectors pursuant to Article 30.7
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
(Reflectors for Ground Spare Satellite), Customer's notification to Contractor
of the orbital location for such Ground Spare Satellite may be delayed until six
(6) months prior to the Available for Shipment date of such Ground Spare
Satellite. Contractor shall be responsible for storage costs of all Long-Lead
Items from EDC through the last day of the [*****]. In the event of an
Excusable Delay in accordance with Article 11 (Excusable Delay) or a Contractor
unexcused delay, the Option Period shall be extended day-for-day for the period
of such delay.
(b) Delivery.
--------
In the event Customer orders completion of the Ground Spare Satellite on or
before the last day of the twelfth (12/th/) month following ARP, the Ground
Spare Satellite shall be Available for Shipment to its designated Launch site no
later than four (4) months following the date upon which the second Satellite is
Available for Shipment. Subject to the provisions of paragraph (c) of Article
11.2 (Equitable Adjustments), in the event Customer orders completion of the
Ground Spare Satellite on or after the first day of the thirteenth (13/th/)
month following ARP through the last day of the [*****], the Ground Spare
Satellite shall be Available for Shipment to the launch site within twelve (12)
months following the date of such order, or four (4) months following the date
upon which the second Satellite is Available for Shipment, whichever is later.
(c) Price.
-----
(1) The price for completion of the Ground Spare Satellite, including
documentation, taxes, and ground insurance, but not including the
price of Long-Lead Activities and Items, is [*****] if the
Ground Spare Satellite is ordered from EDC through September 22,
2000. When an order is placed by Customer on or after September
23, 2000 through the last day of the [*****], the price stated
above shall be increased at a rate of [*****] per quarter for
each quarter on or after September 23, 2000 until the date of
placement by Customer of such order. For example, if the order
for the Ground Spare Satellite is placed on May 15, 2001,
Customer shall pay the price stated above, plus escalation
computed for two calendar quarters. The price for the Ground
Spare Satellite, together with any applicable price escalation
described in the preceding sentence, shall apply to an order
place
d by Customer for the Ground Spare Satellite through the
last day of the [*****].
(2) Where the Delivery of either Satellite is delayed beyond its
originally scheduled Delivery Date, and such delay is not an
Excusable Delay, incurrence of price escalation described in the
preceding paragraph shall be delayed on a day-for-day basis equal
to the non-Excusable Delay period. Where the Delivery of either
Satellite is delayed beyond its original scheduled Delivery Date
(whether such delay is due to Excusable Delay or Contractor
unexcused delay), the Option Period for ordering completion of
the Ground Spare Satellite shall also be extended on a day-
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separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
for-day basis. For example, if the first Satellite is Delivered one
hundred and twenty (120) Calendar Days after its originally scheduled
Delivery Date for non-Excusable Delay reasons, the first date at which
a price escalation shall apply shall be January 21, 2001 and shall
continue through one hundred and twenty (120) Calendar Days following
the last day of the [*****].
(d) Payment and Deferred Financing.
-------------------------------
(1) 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).
(2) If Customer orders the Ground Spare Satellite, Contractor shall
provide [*****] of deferred financing payable in quarterly
installments of interest only, over five (5) years from the
satisfactory completion of the Ground Spare Satellite (no earlier
than ARP plus twenty-four (24) months), with the principal of
such amount to be paid at the end of such five (5) year period.
In such event, 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.
(3) 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.
(e) Failure to Order Ground Spare Satellite.
---------------------------------------
Where Customer makes the payments for the Long-Lead Activities and Items
for the Ground Spare Satellite, but fails to order completion of the Ground
Spare Satellite within the Option Period, as may be adjusted in accordance with
this
Contract, the option for the Ground Spare Satellite shall no longer be
effective and Contractor shall sell the Long-Lead Items and pay the sale
proceeds, less Contractor's reasonable selling expense, to Customer.
(f) Contract Adjustments.
--------------------
Contractor shall furnish the Ground Spare Satellite in accordance with the
provisions of the documents constituting this Contract. Except as otherwise
required by the terms and
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conditions of this Article 30 (Options), the contract Terms and Conditions for
the Ground Spare Satellite will be identical to the Terms and Conditions of this
Contract; provided, however, (i) liquidated damages for late delivery of the
Ground Spare Satellite shall be [*****] (if the Ground Spare Satellite is used
as a replacement satellite), or [*****] (if the Ground Spare Satellite is used
as an additional satellite); (ii) where the Ground Spare Satellite is ordered as
a replacement satellite, such terms shall not include additional in-orbit
performance incentive payments (other than the rolled-over incentives provided
in Article 12.3 (Calculation and Earning of Incentive Amounts)), (iii) such
terms shall include no other deferred payments, other than specified in this
Article 30.3 (Ground Spare Satellite), unless mutually agreed by the Parties,
and (iv) any other adjustments necessary to reflect an on-ground delivery of the
Ground Spare Satellite, unless Customer also orders an option Launch Vehicle
pursuant to Article 30.8 (Optional Launch Vehicles) below. Where the Ground
Spare Satellite is ordered as an additional satellite (instead of a replacement
satellite), in-orbit performance incentive payments shall be [*****].
30.4 Launch Campaign and LEOP Services for Ground Spare Satellite and/or
4th and 5th Optional Satellites.
Contractor agrees to provide Customer, at Customer's request, Launch
Campaign and LEOP services for the Ground Spare Satellite and/or the 4th and 5th
Optional Satellites, if either or both of these options are exercised by
Customer. In the event Customer elects the High Power Option in accordance
with Article 30.6 (High Power Option), this option for Launch Campaign and LEOP
services shall continue to apply without any change.
(a) Option Period.
-------------
Customer may order Launch Campaign and/or LEOP services for the Ground
Spare Satellite and the 4th and 5th Optional Satellites at any time prior to
[*****] before the scheduled Launch Date for the applicable Ground Spare
Satellite and/or 4th and 5th Optional Satellites.
(b) Price.
-----
The price for Launch Campaign and LEOP services for each of the Ground
Spare Satellite and 4th and 5th Optional Satellites, including taxes and
documentation, is [*****], for each such Satellite ordered by Customer from EDC
through September 22, 2000. Beginning on September 23, 2000, , the price will
escalate at the rate of [*****] per quarter for each quarter after September 23,
2000, until the date the order is placed. The price and the price escalation
described in the preceding sentence, shall apply to orders placed for the Ground
Spare Satellite and the 4th and 5th Optional Satellites through the last day of
the [*****] following ARP.
(c) Payment.
-------
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has been requested with respect to the omitted portions.
The price for Launch Campaign and LEOP services, as such price may be escalated
in accordance with paragraph (b) above, for each the Ground Spare Satellite and
the 4th and 5th Optional Satellites shall be paid as follows:
(1) Fifty percent (50%) of such price at the time Customer places an
order with Contractor for completion of the Ground Spare
Satellite or places an order for the purchase of either or both
of the 4th and 5th Optional Satellites, as applicable; and
(2) Fifty percent (50%) of such price on Final Acceptance of the
Ground Spare Satellite or the 4th and 5th Optional Satellites, as
applicable.
30.5 4th and 5th Optional Satellites.
Contractor agrees to provide Customer with options to purchase up to two
(2) additional satellites ("4th and 5th Optional Satellites") to be delivered
on-ground, and of a design functionally identical to the Satellites.
(a) Option Period.
--------------
Customer may exercise this option to order either or both of the 4th and
5th Optional Satellites at any time through the last day of the [*****]
following ARP. In the event of an Excusable Delay in accordance with Article
11 (Excusable Delay) or a Contractor unexcused delay, the Option Period shall be
extended day-for-day for the period of such delay.
(b) Delivery.
---------
Contractor shall perform the work in connection with the 4th and 5th
Optional Satellites, if one or both are ordered, so the 4th and 5th Optional
Satellites are Available for Shipment within twenty-four (24) months after
order, or four (4) months after the Ground Spare Satellite is Available for
Shipment, if applicable, whichever is later. In the event that the 4th and 5th
Optional Satellites are ordered concurrently, delivery of the 5th Optional
Satellite shall be no earlier than four (4) months following Delivery of the 4th
Optional Satellite.
(c) Price.
------
The price for the 4th and 5th Optional Satellites is [*****] for each such
Optional Satellite. When an order is placed by Customer during the period
beginning on September 23, 2000 through the last day of the [*****] following
ARP, the price stated above shall be increased at a rate of [*****] per
quarter for each quarter during such period
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requested with respect to the omitted portions.
until the date of placement by Customer of such order. For example, if Customer
places an order for an optional Satellite on May 15, 2001, Customer shall pay
the price stated above, plus escalation computed for two calendar quarters. The
price for each of the 4th and 5th Optional Satellites includes design,
manufacture, testing, taxes, and ground insurance for each such ****** 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 omit
ted portions.
Optional Satellite, up to and including Shipment Readiness Review.
(d) Payment.
--------
The price for the 4th and 5th Optional Satellites shall be paid in
accordance with the payment plan set forth in Exhibit G-3 (4th and 5th Optional
Satellite Payment Plan and Termination Liability Amounts). In the event
Customer exercises the option to purchase a 4th and/or 5th Optional Satellite,
the applicable Milestone Payment Plan(s) therefor shall be mutually agreed by
the Parties at such time as the option to purchase the 4th and/or 5th Optional
Satellite is exercised.
(e) Contract Adjustments.
--------------------
Contractor shall furnish the 4th and 5th Optional Satellites in accordance
with the provisions of the documents constituting this Contract. Except as
otherwise required by the terms and conditions of this Article 30.5 (4th and
5th Optional Satellites), the contract terms and conditions for such Optional
Satellite(s) will be identical t
o the Terms and Conditions of this Contract,
except that (i) liquidated damages for late delivery shall be [*****] for each
such Optional Satellite, and (ii) the in-orbit performance incentive payments
shall be [*****] for each such Optional Satellite, and (iii) such terms shall
include no other deferred payments unless mutually agreed by the Parties.
30.6 [RESERVED]
30.7 Reflectors for the Ground Spare Satellite.
Contractor shall provide Customer, at Customer's request, an additional
flight ship set of two (2) reflectors for the Ground Spare Satellite, if
ordered, as more fully described in Exhibit A (Spacecraft Performance
Specifications). The price for such additional set of reflectors shall be
[*****]. Customer shall exercise this option concurrently with any exercise by
Customer of the Ground Spare Satellite option. The price for such additional
set of reflectors shall be paid as follows: (i) [*****] upon placement of order
by Customer, and (ii) [*****] upon completion of t
he manufacturing for such
reflectors.
30.8 Optional Launch Vehicles.
Subject to availability and in accordance with these Terms and Conditions,
except as expressly modified by this Article 30 (Options), Contractor grants
Customer an option to purchase an additional Sea Launch Launch Vehicle and
related services for the Launch of the Ground Spare Satellite or any other
Optional Spacecraft which may be purchased by Customer from Contractor pursuant
to this Contract, in accordance with the following Table 30.8.
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requested with respect to the omitted portions.
Table 30.8
Optional Launch Vehicle - Option Periods and Prices
------------------------------------------------------------------------------
If ordered from: Price:
------------------------------------------------------------------------------
1. EDC through March 22, 1999 [*****]
------------------------------------------------------------------------------
2. March 23, 1999 through March 22, 2001
[*****]
------------------------------------------------------------------------------
30.9 Contract Adjustments.
Should Customer exercise any or all of the options described in this
Article 30 (Options), the Parties shall execute Amendment(s) as soon as is
reasonably possible after option exercise to incorporate the schedule
adjustments, price adjustments, payment schedule adjustments, and changes to the
Exhibits and other Terms and Conditions as made necessary by such exercise.
Except as otherwise provided in this Article 30 (Options), the terms of this
Contract shall apply to any such options.
31. FAILURE TO MAKE ADEQUATE PROGRESS
If, at any time prior to Delivery of a Deliverable Item (but not
thereafter), Contractor has failed to make adequate progress toward the
completion of such Deliverable Item, including where such failure is due to the
Deliverable Item or any component thereof being damaged or destroyed where such
damage or destruction does not constitut
e an Excusable Delay, such that
Contractor, due to causes related to such Deliverable Item, will not be able to
Deliver the Deliverable Item by the applicable Delivery Date (as such date may
have been modified in accordance with this Contract) for such Deliverable Item,
then Customer shall be entitled to deliver to Contractor a Demand for correction
of the failure to make adequate progress. Such Demand shall state full details
of the failure. Within ten (10) Calendar Days after receipt of the Demand, or
such longer time as the Parties may agree, Contractor shall submit to Customer a
Correction Plan (in the level of detail feasible within that timeframe) for
achieving Delivery not later than the one hundred fiftieth (150th) Calendar Day
following the originally scheduled Delivery Date. If such Correction Plan does
not reasonably correct or offset the effect of the failure so as to demonstrate
that Delivery of the Deliverable Item affected thereby can be achieved within
one hundred fifty (150) Calendar
Days after the originally scheduled Delivery
Date, Customer may reject the Correction Plan, and Contractor shall revise the
Correction Plan so as to demonstrate that Delivery for the Deliverable Item
affected thereby can be achieved within one hundred fifty (150) Calendar Days
after the originally scheduled Delivery Date. Nothing herein shall be construed
to release Contractor from its obligation to make Liquidated Damages payments as
applicable in accordance with Article 10 (Liquidated Damages for Late Delivery).
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32. TERMINATION
32.1 Termination for Customer's Convenience.
(a) Customer may, upon written notice to Contractor, at any time terminate
the Work, in whole or in part, in accordance with the terms set forth below, and
Contractor shall immediately cease Work in the manner and to the extent
specified below. Notwithstanding the foregoing, in no event shall there be a
termination for convenience by Customer under this Article 32.1 (Termination for
Customer's Convenience) (i) with respect to any Satellite that has been
Launched, whether or not such Launch is successful and (ii) with respect only to
either or both Launch Vehicles, unless Customer has made the Major Calendar
Payment with respect to such Launch Vehicle or Launch Vehicles, as applicabl
e.
(b) In the event of partial termination of the Work in accordance with
this Article 32.1 (Termination for Customer's Convenience), Customer's notice of
termination will specify the portion of the Work terminated, and the remaining
provisions of this Article 32.1 (Termination for Customer's Convenience) shall
apply to such terminated portion. All other portions of the Work shall continue
unaffected.
(c) Upon receipt of a notice of termination, as provided in (a) above,
Contractor shall take the following actions:
(1) stop Work under this Contract on the date and to the extent
specified in the notice of termination, except those services
that are specifically intended to be provided in connection with
a termination of this Contract;
(2) withhold delivery of any of the items to be supplied hereunder
until Contractor has received full payment under this Article
32.1 (Termination for Customer's
Convenience);
(3) place no further orders or subcontracts for materials, services,
or facilities to the extent they relate to the performance of the
Work terminated;
(4) terminate orders and Subcontracts to the extent they relate to
the performance of the Work terminated;
(5) settle all outstanding liabilities and all claims arising out of
such termination of orders and Subcontracts for materials,
services, or facilities; and
(6) take such action as may be reasonably necessary, or as Customer
may direct, for the protection and preservation of the property
related to this Contract that is in the possession of Contractor
or any Subcontractor and in which Customer has or may acquire an
interest.
(d) In the event of termination under this Article 32.1 (Termination for
Customer's Convenience) and provided the termination is
not due to Contractor's
default under Article 32.2
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(Termination for Contractor's Default), Contractor shall be entitled to payment
of an amount equal to the Termination Liability Amount specified in Exhibit G
(Payment Plan and Termination Liability Amounts), and interest on any other
payment not made when required to be made hereunder, less the sum of all amounts
received by Contractor in cash or cash equivalent under this Contract. In no
event shall the amounts payable pursuant to this Article 32.1 (Termination for
Customer's Convenience) exceed the Contract Price. In the event of a termination
of this Contract in part, as permitted by the terms of this Contract, the
Parties shall negotiate an equitable termination liability amount to be paid to
Contractor for that portion of the Work so terminated.
(e) Contractor shall submit an invoice to Customer in accordance with
paragraph (d) above within sixty (60) Calendar Days after the termination date,
which invoice shall specify the amount due to Contractor from Customer pursuant
to this Article 32.1 (Termination for Customer's Convenience). By notice in
writing received by Contractor no later than fifteen (15) Calendar Days after
receipt of Contractor's invoice pursuant to this Article 32.1 (Termination for
Customer's Convenience), Customer may dispute the amount of interest specified
in said invoice. In the event Customer does not so notify Contractor that it
disputes the interest in Contractor's invoice within fifteen (15) Calendar Days
after receipt thereof, Customer shall be deemed to have accepted such invoice.
Contractor shall be entitled to payment by Customer of undisputed amounts in
such invoice within fifteen (15) Calendar Days after Customer's receipt of the
invoice, and with respect to disputed interest amounts, ten (10) Calendar Days
after
the resolution of such dispute. Payment of such amount by any Financing
Entity on behalf of Customer shall relieve Customer from its obligation to make
such payment.
(f) Payment of the amount payable by Customer to Contractor pursuant to
paragraph (d) above shall constitute a total discharge of Customer's liabilities
to Contractor for termination pursuant to this Article 32.1 (Termination for
Customer's Convenience).
(g) Upon completion of all payments in accordance with this Article 32.1
(Termination for Customer's Convenience), Customer may require Contractor to
transfer to Customer in the manner and to the extent directed by Customer, title
to and possession of any items comprising all or any part of the Work terminated
(including all Work-in-progress, parts and materials, and all inventories and
associated warranties), and Contractor shall, upon direction of Customer,
protect and preserve property at Customer's expense in the possession of
Contractor or its Subcontractors in which Cust
omer has an interest and shall
facilitate access to and possession by Customer of items comprising all or part
of the Work terminated. Alternatively, Customer may request Contractor to make a
reasonable, good faith effort to sell such items and to remit any sales proceeds
to Customer less a deduction for costs of disposition reasonably incurred by
Contractor for such efforts. To the extent Contractor's compliance with this
paragraph (g) requires governmental approvals and Contractor cannot, with the
exercise of commercially reasonable efforts, procure such approvals, Contractor
shall be excused from performing its obligations under this paragraph (g).
(h) If in Contractor's judgment it is feasible for Contractor to utilize
any items of terminated Work, it shall submit to Customer an offer to acquire
such items. If such offer is accepted, Contractor's termination invoice shall be
credited with the agreed acquisition price.
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separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
32.2 Termination For Contractor's Default.
(a) Customer may terminate this Contract, in whole or in part, upon service
of written notice of default to Contractor at any time after the occurrence of
any of the following:
(1) Subject to any schedule adjustments pursuant to Article 11
(Excusable Delay), Contractor fails to meet the following program
Milestone events:
(i) Conduct Spacecraft Preliminary Design Review (PDR) by
[*****];
(
ii) Conduct Spacecraft Critical Design Review (CDR) by [*****];
(iii) Mate Bus and Payload Module for the first Satellite by
[*****];
(iv) first Spacecraft Available for Shipment to Launch site by
[*****];
(v) Mate Bus and Payload Module for the second Satellite by
[*****]; or
(vi) second Spacecraft Available for Shipment to Launch site by
[*****].
(2) A Satellite has not been Delivered on or before the applicable
Delivery Date (as may be extended in accordance with this
Contract) and all applicable liquidated damages for late delivery
that may accrue to Customer's benefit for the late delivery of
said Satellite have been exhausted in accordance with Article 10
(Liquidated Damages for Late Delivery);
(3) If, with respect to the first Satellite, at [**
***], the Launch
Agency has failed to establish the Launch Slot to begin no later
than [*****], or if, with respect to the second Satellite, at
[*****], the Launch Agency has failed to establish the Launch
Slot to begin no later than [*****];
(4) Contractor commences a voluntary proceeding concerning itself
under any applicable bankruptcy, insolvency, reorganization,
adjustment of debt, relief of debtors, or similar law
("Insolvency Law"); or any involuntary proceeding commences
against Contractor under an Insolvency Law and
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filed separately with the Securities and Exchange Commission.
Confidential treatment has been requested with respect to the
omitted portions.
the petition has not been dismissed within ninety (90) Calendar Days
after commencement of the proceeding; or a receiver or custodian is
appointed for or takes charge of all or a substantial portion of the
property of Contractor and such custodian or receiver has not been
dismissed or discharged within sixty (60) Calendar Days; or Contractor
has taken action toward the winding-up, dissolution, or liquidation of
Contractor or its
business; or Contractor has been adjudicated
insolvent or bankrupt or an order for relief or any other order
approving a case or proceeding under any Insolvency Law has been
entered; or Contractor has made a general assignment for the benefit
of creditors or becomes unable to pay its debts generally as they
become due. Should Contractor become a debtor in any bankruptcy
proceeding, Contractor shall move to assume or reject this Contract
within forty-five (45) Calendar Days after the entry of any order for
relief; or
(5) Contractor has purported to assign or transfer this Contract in
violation of the provisions of Article 34.1 (Assignment) and
Contractor fails to cure such unauthorized purported assignment
or transfer within thirty (30) Calendar Days after receiving
written notice from Customer of the unauthorized purported
assignment or tr
ansfer.
(b) In the event Customer terminates this Contract pursuant to paragraph
(a), Customer shall be entitled to, subject to paragraph (d) below, refund of
all payments previously made to Contractor in cash under this Contract and
payment of any liquidated damages for delay levied pursuant to Article 10
(Liquidated Damages for Late Delivery) and, as damages, direct reasonable re-
procurement costs in excess of the Contract Price, such re-procurement costs to
be actually incurred and invoiced to Contractor in reasonable detail and not to
exceed [*****]; provided, however, if Customer terminates this Contract pursuant
to paragraph (a)(2) above for late delivery and such late delivery is caused by
unexcused delay under Article 10.3 (Termination for Unexcused Delay) on which
liquidated damages have been levied, Customer shall not be entitled to such re-
procurement costs.
(c) Upon Contractor's completion of all payments under paragraph (b) above,
Contractor shall be entitled to retain title to
any and all Work, Work-in-
progress, parts or other material, inventories and any associated warranties,
and any subcontracted items Contractor has specifically produced, acquired, or
entered into in accordance with this Contract. Until Contractor has paid to
Customer the payments required under paragraph (b) above, Customer shall have an
interest in the Work, subject to Article 5.7 (Security Interest).
(d) Customer shall submit an invoice to Contractor for the amounts payable
under paragraph (b) no later than one (1) year after the termination date. The
amounts payable by Contractor under paragraph (b) above shall be verified at
Contractor's request and expense by an internationally recognized firm of
accountants appointed by Contractor for that purpose subject to approval of
Customer. Contractor's right to verification shall be without prejudice to the
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rights of either Party under Article 27 (Dispute Resolution). The report issued
by the accountants may be used by either Party during any arbitration
proceedings, but the report shall not be binding on the arbitral tribunal. By
notice in writing received by Customer no later than sixty (60) Calendar Days
after receipt of Customer's invoice pursuant to paragraph (b), Contractor may
dispute the amount of said invoice. In the event Contractor does not so notify
Customer that it disputes Customer's invoice, Contractor shall be deemed to have
accepted said invoice. Customer shall be entitled to payment of such amount
within fifteen (15) Calendar Days after Contractor's receipt of such invoice or,
in the event of dispute, ten (10) Calendar Days after the resolut
ion of such
dispute.
(e) Notwithstanding any other provision of this Article 32 (Termination), a
termination for Contractor's default shall not relieve the Parties of their
obligations with respect to any Launched Satellite and there will be no right of
termination for default with respect to a Launched Satellite.
(f) In the event Customer terminates this Contract as provided in paragraph
(a), Contractor, if requested in writing by Customer, shall assign to Customer
or its designee, such Subcontracts as requested by Customer, to the extent
permitted by such Subcontracts.
(g) If, after termination of this Contract under the provisions of
paragraph (a), it is determined by arbitration, pursuant to Article 27 (Dispute
Resolution), or admitted in writing by Customer, that Contractor was not in
default under the provisions of paragraph (a), or that any delay giving rise to
the default was excusable under the provisions of Article 11 (Excusable Delay),
such termination shall be considered a T
ermination for Convenience by Customer
and the provisions of Article 32.1 (Termination for Customer's Convenience)
shall apply.
(h) Contractor's compliance with this Article 32.2 (Termination for
Contractor's Default) shall constitute Customer's sole and exclusive remedy in
the event of a termination for Contractor's default.
32.3 Termination for Customer's Default.
(a) Contractor may stop work or terminate this Contract in whole or in part
upon service of written notice of default to Customer at any time after the
occurrence of any of the following:
(1) Subject to paragraph (2), if Contractor gives written notice to
Customer of default in the payment of any amount, including
Milestone Payments, Major Calendar Payments, and other Calendar
Payments, when such amount shall have become due and payable; or
(2) Customer fails to cause Contractor to be paid any Milestone
Payment amounts determined to be due a
nd payable under Article
5.3 (Disputed Amounts) within the time period set forth in
Article 5.3 (Disputed Amounts); or
(3) Customer commences a voluntary proceeding concerning itself under
any applicable bankruptcy, insolvency, reorganization, adjustment
of debt,
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and filed separately with the Securities and Exchange Commission.
Confidential treatment has been requested with respect to the
omitted portions.
relief of debtors or similar law ("Insolvency Law"); or any
involuntary proceeding commences against Customer under an
Insolvency Law and the petition has not been dismissed within
ninety (90) Calendar Days after commencement of the proceeding;
or a receiver or custodian is appointed for or takes charge of
all or a substantial portion of the property of Customer and such
custodian or receiver
has not been dismissed or discharged within
sixty (60) Calendar Days; or Customer has taken action toward the
winding-up, dissolution, or liquidation of Customer or its
business; or Customer has been adjudicated insolvent or bankrupt
or an order for relief or any other order approving a case or
proceeding under any Insolvency Law has been entered; or Customer
has made a general assignment for the benefit of creditors or
becomes unable to pay its debts generally as they become due.
Should Customer become a debtor in any bankruptcy proceeding,
Customer shall move to assume or reject this Contract within
forty-five (45) Calendar Days after the entry of any order for
relief; or
(4) Customer has purported to assign or transfer this Contract in
violation of the provisions of Article 34.1 (Assignment) and
Cu
stomer fails to cure such unauthorized assignment or transfer
within thirty (30) Calendar Days after receiving written notice
from Contractor of such unauthorized purported assignment or
transfer by Customer; or
(5) Customer fails to raise [*****] in financing in addition to the
[*****] required by Article 7(d) for a total minimum of the
[*****] in financing within one hundred eighty (180) Calendar
Days after ARP.
(b) Upon the occurrence of an event of default under paragraph (a) above,
and following the expiration of any applicable cure period, Contractor shall
have the following rights (in addition to termination):
(1) Contractor may stop Work immediately under this Contract and all
obligations of Contractor shall terminate hereunder;
(2) Contractor may, at its sole option, terminate its obligations to
cause a Launch Vehicle to be provided for
the benefit of
Customer, without terminating the whole Contract; provided,
however, if Contractor terminates this Contract in part,
Contractor may terminate only the Launch Vehicle obligations
applicable to the portion of this Contract being so terminated
(by way of example, if Contractor terminates this Contract in
part with respect to the first Satellite to be delivered, only
the Launch Vehicle obligations related to the Launch of the first
Satellite may be terminated);
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(3) Contractor shall be entitled to retain possession and title to
the Work, and all items thereof, and all payments received prior
to such termination, unless and until all payments due under the
Contract as a result of any termination by Contractor have been
received by Contractor in immediately available funds;
(4) Contractor may sell the Work, or items thereof to a person other
than Customer, provided the proceeds of such sale of such Work
are applied to off-set any termination liability amounts due to
Contractor by Customer;
(5) Contractor may withhold delivery of any of the items to be
supplied her
eunder until Contractor has received full payment
under this Article 32.3 (Termination for Customer's Default);
(6) Contractor shall place no further orders or subcontracts for
materials, services, or facilities to the extent they relate to
the performance of the Work;
(7) Contractor shall terminate orders and Subcontracts to the extent
they relate to the performance of the Work;
(8) Contractor shall settle all outstanding liabilities and all
claims arising out of such termination of orders and Subcontracts
for materials, services, or facilities;
(9) Contractor shall take such action as may be reasonably necessary
for the protection and preservation of the property related to
this Contract that is in the possession of Contractor or any
Subcontractor and in which Customer has or may acquire an
interest; and
(10) Should Customer become a debtor in any bankruptcy proceeding,
Customer shall move to assume or reject this Contract within
forty-five (45) Calendar Days after the entry of any order for
relief.
(c) Nothing in this Article 32.3 (Termination for Customer's Default) shall
limit any rights (and associated remedies to enforce these rights) that
Contractor may have in the Work by virtue of its security interest (pursuant to
Article 5.7 (Security Interest)) in the Work and the Ground Spare Satellite, if
elected to be purchased pursuant to Article 30 (Options).
(d) In the event Contractor terminates this Contract, in whole or in part,
as provided above, Contractor shall be entitled to payment of the amounts
specified in Article 32.1 (Termination for Customer's Convenience).
(e) Contractor shall submit an invoice to Customer in accordance with
paragraph (d) above within sixty (60) Calendar Days after the termination date,
which invoice sh
all specify the amount due to Contractor from Customer pursuant
to this Article 32.3 (Termination for Customer's Default). By notice in writing
received by Contractor no later than fifteen (15) Calendar Days after receipt of
Contractor's invoice pursuant to this Article 32.3 (Termination for
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
Customer's Default), Customer may dispute the amount of any interest specified
in said invoice. In the event Customer does not so notify Contractor that it
disputes the interest in Contractor's invoice within fifteen (15) Calendar Days
after receipt thereof, Customer shall be deemed to have accepted such invoice.
Contractor shall be entitled to payment by Customer of undisputed amounts in
such invoice within fifteen (15) Calendar Days after receipt of the invoice, and
with respect to disputed interest amounts, ten (10) Calendar Days after
resolution of s
uch dispute. Payment of such amount by any Financing Entity on
behalf of Customer shall relieve Customer from its obligation to make such
payment.
(f) Payment of the amount payable by Customer pursuant to paragraph (c)
above shall constitute a total discharge of Customer's liabilities to Contractor
for termination pursuant to this Article 32.3 (Termination for Customer's
Default).
(g) Upon completion of all payments to Contractor in accordance with this
Article 32.3 (Termination for Customer's Default), Customer may require
Contractor to transfer to Customer in the manner and to the extent directed by
Customer, title to and possession of any items comprising all or any part of the
Work terminated (including all Work-in-progress, parts and materials, all
inventories, and associated warranties), and Contractor shall, upon direction of
Customer, protect and preserve property at Customer's expense in the possession
of Contractor or its Subcontractors in which Customer has an interest and shall
f
acilitate access to and possession by Customer of items comprising all or part
of the Work terminated. Alternatively, Customer may request Contractor to make a
reasonable, good faith effort to sell such items and to remit any sales proceeds
to Customer less a deduction for costs of disposition reasonably incurred by
Contractor for such efforts on terms agreed to by the Parties at that time.
(h) Except as specified in this Contract, Contractor shall not have the
right to terminate or suspend this Contract.
32.4 Termination for Excusable Delay.
(a) Customer may, upon written notice to Contractor, immediately terminate
this Contract, in whole or in part, if and when it becomes reasonably certain
that the aggregate of Excusable Delays (except those Excusable Delays caused
directly by Customer's failure to perform its responsibilities under this
Contract) will exceed four hundred eighty-five (485) Calendar Days.
(b) In the event of termination under this Article 32.4 (Termination for
Excusable Delay), Customer shall be entitled to, subject to paragraph (c) below,
refund of all payments previously made to Contractor in cash or cash equivalent
under this Contract and payment of any liquidated damages, if any, for delay
levied pursuant to Article 10 (Liquidated Damages for Late Delivery), less
[*****] of all such payments (excluding liquidated damages) (the "Refund
Reduction Amount"), which Refund Reduction Amount shall not exceed a total of
[*****].
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(c) Upon completion of all payments to Customer in accordance with this
Article 32.4 (Termination for Excusable Delay), Contractor shall be entitled to
retain title to any and all Work, Work-in-progress, parts or other material,
inventories, and any associated warranties, and any subcontracted items
Contractor has specifically produced, acquired, or entered into in accordance
with this Contract.
(d) Customer shall submit an invoice to Contractor for the amounts payable
under this Article 32.4 (Termination for Excusable Delay) no later than one (1)
year after the termination date. By notice in writing received by Customer no
later than fifteen (15) Calendar Days after receipt of Customer's invoice
pursuant to this Article 32.4 (Termination for E
xcusable Delay), Contractor may
dispute the amount of said invoice. In the event Contractor does not so notify
Customer that it disputes Customer's invoice, Contractor shall be deemed to have
accepted said invoice. Customer shall be entitled to payment of such amount
within fifteen (15) Calendar Days after Contractor's receipt of such invoice or,
in the event of dispute, ten (10) Calendar Days after the resolution of such
dispute.
(e) In the event it is determined by arbitration pursuant to Article 27
(Dispute Resolution) or by written agreement of the Parties that Customer
wrongfully terminated this Contract under this Article 32.4 (Termination for
Excusable Delay), such termination shall be considered a Termination for
Convenience by Customer and the provisions of Article 32.1 (Termination for
Customer's Convenience) shall apply.
32.5 Time of the Essence.
Time is of the essence in this Contract, including with respect to the
resolution of any disputes between the Parties under this
Article 32
(Termination).
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33. INTER-PARTY WAIVER OF LIABILITY
(a) Prior to commencement of Launch Services, each Party will provide the
other Party with evidence reasonably satisfactory to the other Party that it has
complied with the inter-party waiver of liability and related insurance and
indemnification provisions of any Launch Agreement, including any requirement to
obtain substantially similar waivers and/or indemnifications from other parties
such as entities conducting operations at the launch site, customers,
contractors, subcontractors at any tier, or the United States Government.
(b) Notwithstanding any other term or provision contained in this Contract,
this Article 33 (Inter-Party Waiver of Liability) shall survive the completion
or termination of this Con
tract in any manner whatsoever.
(c) The Parties will take such further actions as may be required to
implement the provisions of this Article 33 (Inter-Party Waiver of Liability),
including the execution of such agreements, waivers, and indemnifications as are
customarily used with respect to operations at the launch site and are
consistent with the provisions of this Article 33 (Inter-Party Waiver of
Liability).
(d) For any Launch subject to the jurisdiction of the United States, the
Launch Agency shall procure and maintain such insurance as required by the
United States Department of Transportation for loss or damage to United States
Government property or for death, bodily injury or property damage or loss to
third parties in connection with the licensed Launch activities provided under
this Contract. For Launches not subject to the jurisdiction of the United
States, the Launch Agency shall procure and maintain such insurance as required
by the government having jurisdiction over such Laun
ch.
(e) The Launch Agency has executed agreements with various United States
Government agencies for the use of Government-owned property and facilities
relating to the production of launch vehicles and launch operations. Customer
agrees that it will comply with the United States Government's Laws as they
relate to Customer-furnished property and personnel, and those agreements
relating directly to the United States expendable launch vehicle program.
Contractor shall request the Launch Agency to furnish copies of such agreements
to Customer upon Customer's request.
(f) Contractor shall require the Launch Agency to indemnify, defend and
hold harmless Contractor and Customer from third-party claims for bodily injury,
including death, property damage and losses, arising from or relating to any
Launch Services provided by the Launch Agency.
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34. GENERAL
34.1 Assignment.
(a) Contractor shall not, without the prior written approval of Customer
and except on such terms and conditions as are determined in writing by
Customer, assign, mortgage, charge, or encumber this Contract or any part
thereof, any of its rights, duties, or obligations hereunder, or the Work to any
person or entity (except to its parent company or a wholly-owned direct or
indirect subsidiary company of Contractor, or any person or entity acquiring all
or substantially all the assets of Contractor (through merger, stock or asset
acquisition, recapitalization, or reorganization) where such merger,
acquisition, recapitalization, or reorganization does not adversely affect
Customer's rights under this Contract); provi
ded, however, Customer shall
provide its approval, if in Customer's reasonable judgment, Customer's rights
under this Contract are not and would not be adversely affected thereby.
(b) Customer shall not, without the prior written approval of Contractor,
assign, mortgage, charge, or encumber this Contract or any part thereof, or
merge with or into or sell all or substantially all its assets to any other
entity (except to its parent company or a wholly-owned direct or indirect
subsidiary company of Customer, or any person or entity acquiring all or
substantially all the assets of Customer (through merger, stock or asset
acquisition, recapitalization, or reorganization) where such merger,
acquisition, recapitalization, or reorganization does not adversely affect
Contractor's rights under this Contract); provided, however, Contractor shall
provide its approval, if in Contractor's reasonable judgment, Contractor's
rights under this Contract are not and would not be adversely affected thereby.
(c)
The assigning Party shall reimburse the other Party for all reasonable
expenses incurred by the other Party (and invoiced in reasonable detail) in
obtaining advice from its external financial and legal advisors relating to the
assigning Party's proposed assignment or transfer.
(d) This Contract shall be binding on the Parties and their successors and
permitted assigns. Assignment of this Contract shall not relieve the assigning
Party of any of its obligations nor confer upon the assigning Party any rights
except as provided in this Contract.
34.2 Entire Agreement.
This Contract contains the entire agreement between the Parties regarding
the Work hereunder and supersedes all communications, negotiations, and other
agreements either written or oral, relating to the Work and made prior to EDC,
unless the same are expressly incorporated by reference into this Contract.
Further, this Second Amended and Restated Satellite Purchase Contract supercedes
the Original Satellite Purchase Contract,
as amended, and the First Amended and
Restated Satellite Purchase Contract, and this Second Amended and Restated
Satellite Purchase Contract constitutes the sole agreement between the Parties
as to the Work to be performed hereunder.
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34.3 Amendments.
This Contract, including any and all its Schedules, Attachments, Annexes,
Exhibits and Appendices thereto, may not be modified except by written
instrument of subsequent date signed by an officer of Contractor, or another
person designated in writing by any such officer to sign such an instrument and
a senior vice president of Customer, or another person designated in writing by
any such Customer senior vice president to sign such an instrument.
34.4 Waiver of Breach of Contract.
A waiver of any provision or any breach of a provision of this Contract
shall not be binding upon either Party unless the waiver is in writing, signed
by a duly authorized representative of the Party to be bound, as applicable, and
such waiver shall not affect the rights of the Party not in breach with respect
to any other or future breach. No course of conduct by a Party shall constitute
a waiver of any provision or any breach of a provision of this Contract unless a
written waiver is executed in accordance with the provisions of this Article
34.4 (Waiver of Breach of Contract).
34.5 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 provision
shall be replaced by a mutually acceptable provision, which, being valid and
enforceable, comes closest to the intention of the Parties underlying the
invalid or unenforceable provision.
34.6 Applicable Law.
Except as provided in Article 27 (Dispute Resolution), this Contract and
performance under it shall be governed by, construed and enforced in accordance
with the Laws in force in the State of New York, without regard to conflict of
laws provisions thereof.
34.7 Notices.
(a) All notices, requests, demands, and determinations under this Contract,
including any required under Article 34.1 (Assignment), (other than routine
operational communications), shall be in writing and shall be deemed duly given
(i) when delivered by hand, (ii) two (2) Business Days after being given to an
express courier with a reliable system for tracking delivery, and (iii) when
sent by facsimile (confirmed by the specific individual to whom the facsimile is
transmitted) with a copy sent by another means specified in this Article 34.7
(Notices), and addressed as follows:
Customer: XM Satellite Radio Inc.
1250 23rd Street, NW, Suite 57
Washington, DC 20037
Attention: Joseph M. Titlebaum, Esq.
Sr. Vice President, General Counsel and Secretary
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Contractor: Hughes Space and Communications International, Inc.
Courier: 1920 E. Walnut Street
El Segundo, CA 90245
Mail: P.O. Box 92919
Los Angeles, CA 90009
Tel. No.: 310/364-5607
Fax No.: 310/364-9644
Attention: Patrice Gray Mitchell
Director, Commercial/International Business
Loc. SC, Bldg S41, M/S A374
(b) A Party may from time to time change its address or designee for
notification purposes by giving the other Party prior written notice of the
new address or designee and the date upon which it will be effective.
34.8 Parties Not Agents.
(a) Contractor, in performing the Work hereunder, is a
cting as an
independent contractor, and Contractor has the sole right and obligation to
supervise, manage, contract, direct, procure, perform, or cause to be performed,
all Work to be performed by Contractor under this Contract.
(b) None of the provisions of this Contract or of any of its Exhibits,
shall be construed to mean that either Party is appointed or is in any way
authorized to act as an agent of the other Party.
34.9 Release of Information.
(a) From and after the Effective Date of Contract, other than disclosures
required by Law or requirements of NASDAQ, the NYSE or any other national
securities exchange, any publicity, news releases, articles, brochures,
advertisements, prepared speeches, and other information releases regarding the
specific financial details of this Contract or proprietary information of the
other Party regarding the Work performed or to be performed hereunder shall be
mutually agreed upon in writing by Contractor and Customer within a reasonable
time prior
to the release of such information. This obligation shall not apply
to Customer's statement or publication of Exhibit B (Statement of Work) or
Exhibit A (Spacecraft Performance Specifications) or parts thereof. This
obligation also shall not apply to information that is publicly available from
any Governmental agency or that is or otherwise becomes publicly available
without breach of this Contract. This Article 34.9 (Release of Information) also
shall not apply to internal publications or releases not intended for the public
at large.
(b) Prior to any disclosure required by Law or requirements of NASDAQ, the
NYSE, or any other national securities exchange, the Party required to disclose
shall inform the other Party and shall consult with such Party regarding its
views as to which portions of such information it should seek to have treated as
confidential. In addition, prior to filing this Contract with any Governmental
or quasi-Governmental agency, Customer shall advise Contractor of such filing
and, as requested by Contractor, redact such terms that Contractor
122
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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.
reasonably determines to be confidential and that could put Contractor at a
competitive disadvantage if publicly disclosed, subject to the requirements
and/or approval of the Government and/or quasi-Governmental agency.
34.10 Calculation of Interest.
Except as otherwise specified in this Contract, any interest due to
Contractor under this Contract shall be calculated at the annual rate equal to
the three (3) month London Interbank Offer Rate (LIBOR) for U.S. Dollars
[*****]. Except as otherwise specified in this Contract, any interest due to
C
ustomer under this Contract shall be calculated at the annual rate equal to the
three (3) month LIBOR for U.S. Dollars [*****].
34.11 Survival.
The following Articles, and the provisions contained therein, shall be
deemed to survive the termination (for any reason) or expiration of this
Contract, and, accordingly, such Articles shall remain applicable and
enforceable in accordance with their terms:
(a) Article 1 (Definitions);
(b) Article 9 (Title and Risk of Loss);
(c) Article 10 (Liquidated Damages for Late Delivery);
(d) Article 11 (Excusable Delay);
(e) Article 12 (In-Orbit Performance Incentive Payments);
(f) Article 18.3 (Warranties for Deliverable Items);
(g) Article 20 (Intellectual Property Rights);
(h) Article 21 (Intellectual Property Infringement Indemnification);
(i) Article 22 (Confidential Information);
(j) Article 23 (Non-Competition Obligation), provided that this Contract
is not terminated for Customer's
convenience, pursuant to Article 32.1
(Termination for Customer's Convenience) or terminated for Customer's default,
pursuant to Article 32.3 (Termination for Customer's Default);
(k) Article 24 (Indemnification);
(l) Article 26 (Limitation of Liability);
123
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(m) Article 27 (Dispute Resolution);
(n) Article 32 (Termination);
(o) Article 33 (Inter-Party Waiver of Liability);
(p) Article 34.6 (Applicable Law);
(q) Article 34.10 (Calculation of Interest); and
(r) Article 34.15 (Covenant of Good Faith).
34.12 No Third-Party Beneficiaries.
This Contract is entered into solely between, and may be enforced only by,
Customer and Contractor and their permitted assigns, and this Contract shall not
be deemed to create any rights in third parties, including suppliers and
customers of a Party, or to create any obligations of a Party to any such third
parties.
34.13 Consents and Approvals.
Except where expressly provided as being in the sole discretion of a Pa
rty,
where agreement, approval, acceptance, consent, or similar action by either
Party is required under this Contract, such action shall not be unreasonably
delayed or withheld. An approval or consent given by a Party under this
Contract shall not relieve the other Party from responsibility for complying
with the requirements of this Contract, nor shall it be construed as a waiver of
any rights under this Contract, except as and to the extent otherwise expressly
provided in such approval or consent.
34.14 Lender Requirements.
(a) The Parties recognize this Contract may be financed through external
sources. Contractor shall provide to any Financing Entity any program
information or certification that such Financing Entity reasonably requires
(subject to confidentiality agreements governing such program information).
(b) Contractor agrees to work cooperatively to negotiate and execute such
documents as may be reasonably required to implement such financing to the
extent such financing
or document does not adversely affect Contractor's
interests under this Contract.
(c) Contractor agrees to execute such documents as may be reasonably
required by any Financing Entity, including a contingent assignment of this
Contract to such Financing Entity, under terms reasonably acceptable to
Contractor and to agree to such modifications to this Contract as such Financing
Entity may reasonably require, provided Contractor's interests under this
Contract are not adversely affected.
124
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34.15 Covenant of Good Faith.
Each Party agrees that, in respective dealings with the other Party under
or in connection with this Contract, it shall act in good faith.
34.16 Counterparts.
This Contract may be executed in two (2) or more counterparts, which taken
together constitute one single contract between the Parties.
125
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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.
35. OTHER BUSINESS
(a) [*****]
(b) [*****]
IN WITNESS WHEREOF, this Contract has been executed on behalf of Customer
by persons authorized to act on Customer's behalf, and has also been executed on
behalf of Contractor by persons authorized to act on Contractor's behalf.
|
HUGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC. XM SATELLITE RADIO INC.
By: /s/ Gregory W. Chapluk By: /s/ John R. Wormington
---------------------------------- ----------------------------------
(Signature) (Signature)
Name: Gregory W. Chapluk Name: John R. Wormington
Title: Vice President, Title: Senior Vice President
Commercial Contracts XM Satellite Radio Inc.
Date: July 21, 1999 Date: July 21, 1999
|
Attachment A
FORM OF REQUEST FOR PAYMENT
[Date]
XM Satellite Radio Inc.
1250 23rd Street NW, Suite 57
Washington, DC 20037
Attention: Treasurer
RE: Terms and Conditions of the Second Amended and Restated Satellite Purchase Contract for In-Orbit Delivery, dated as of July 21, 1999 (as amended, supplemented or modified from time to time, the "XM Satellite Purchase Contract"), between XM Satellite Radio Inc. ("Customer") and Hughes Space and Communications International, Inc. ("Contractor")
Ladies and Gentlemen:
This Request for
Payment is delivered to XM pursuant to Article 5 (Payment) of
the XM Satellite Purchase Contract and constitutes Contractor's request for
payment in the amount of $_________ for Milestone Payment No. ________.
Very truly yours,
HUGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC.
By: _____________________
Title: _____________________
Annex I to Attachment A
Form of Contractor Certificate
Reference: Milestone Payment No. _____
[Date]
XM Satellite Radio Inc.
1250 23rd Street, NW, Suite 57
Washington, DC 20037
Attention: Treasurer
RE: Terms and Conditions of the Second Amended and Restated Satellite Purchase Contract for In-orbit Delivery, dated as of July 21, 1999between XM Satellite Radio Inc. ("Customer") and Hughes Space and Communications International, Inc. ("Contractor") (as amended, supplemented or modified from time to time, the "XM Satellite Purchase Contract")
Ladies and Gentlemen:
This Certificate is d
elivered to you pursuant to Article 5 (Payment) of the
Terms and Conditions of the XM Satellite Purchase Contract. Each capitalized
term used herein and not otherwise defined shall have the meaning assigned
thereto in the Terms and Conditions of the XM Satellite Purchase Contract.
We hereby certify, after due inquiry, that, as of the date hereof:
1. The XM Satellite Purchase Contract is in full force and effect and except as set forth in Schedule I hereto, has not been amended, supplemented or otherwise modified, and attached hereto are true, correct and complete copies of all Amendments to the XM Satellite Purchase Contract or any other modification or amendment to the XM Satellite Purchase Contract not heretofore delivered to the Financing Entity.
2. Except as set forth in Schedule I hereto, we are not aware of any event that has occurred or failed to occur which occurrence or non-occurrence, as the case may be, could reasonably be expected to cause the date of Final Acceptance of any Deliverable Item under the XM Satellite Purchase Contract to occur later than the Delivery Date therefor.
A-I-1
3. Except as set forth in Schedule I hereto, no event or condition exists that permits or requires us to cancel, suspend, or terminate our performance under the XM Satellite Purchase Contract or that could excuse us from liability for non-performance thereunder.
4. Except with respect to amounts that are the subject of a dispute (such amounts and such disputes being described in reasonable detail in Schedule II hereto), all amounts due and owing to us have been paid in full through the date of the immediately preceding Contractor Certificate and are not overdue. To the extent payment to us has been or will be made as specified in this and the immediately preceding Contractor Certificates, there are and wil l be no mechanics' or materialsmen's liens except Permitted Liens (as may be defined in the Financing Agreements) on the Project (as may be defined in the Financing Agreements), the Collateral (as may be defined in the Financing Agreements) or on any other property in respect of the Work which has or will be performed under the Satellite Purchase Contract.
5. a. The amount contained in the Request for Payment delivered to you concurrently herewith in accordance with the terms of Article 5 (Payment) of the Terms and Conditions of the XM Satellite Purchase Contract represents monies owed to us in respect of Milestone Payment No. _____.
b. The amount referred to in paragraph (a) above was computed in accordance with the terms of the XM Satellite Purchase Contract.
c. The Milestone to which Milestone Payment No. ____ relates has been completed in accordance with the XM Satellite Purchase Contract.
Very truly yours,
H
UGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC.
By: _____________________________
Title: _____________________________
A-I-2
SCHEDULE I to
Annex I to Attachment A
List of Exceptions:
Amendments to XM Satellite Purchase Contract:
Exceptions Affecting Final Acceptance Date:
Exceptions Affecting Contractor's Performance:
SI-1
SCHEDULE II to
Annex I to Attachment A
List of Disputes:
SII-1
****** 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.
Attachment B
KEY PERSONNEL AS OF EFFECTIVE DATE OF CONTRACT
[******] [******]
[******] [******]
[******] [******]
[******] [******]
[******] [******]
[******] [******]
[******] [******]
[******]
[******]
|
SCHEDULES
TO
SECOND AMENDED AND RESTATED
SATELLITE PURCHASE CONTRACT
FOR IN-ORBIT DELIVERY
BY and BETWEEN
XM SATELLITE RADIO INC.
and
HUGHES SPACE AND COMMUNICATIONS INTERNATIONAL, INC.
Schedule 19.3
Customer has no interest, direct or indirect, in any other entity.
Schedule 19.4
There are no actions, suits, proceedings or investigations pending or, to the knowledge of Customer, threatened against Customer. There is, however, a filing in Customer's Federal Communications Commission (FCC or Commission) licensing docket which takes a position adverse to Customer.
In re American Mobile Radio Corporation, Application for Authority to construct, Launch and Operate Two Satellites in the Satellite Digital Audio Radio Service, File No. 72-SAT-AMEND-97 et seq., Before the Federal Communications Commission.
Application for Review, filed by Primosphere Limited Partnership
(Primosphere) on November 17, 1997. This fil
ing seeks review by the full
Commission of the International Bureau's Order and Authorization released
October 16, 1997 which: 1) authorized AMRC to launch and operate a
satellite system in order to provide satellite digital audio radio service;
and 2) denied Primosphere's petition to deny AMRC's application.
Customer has no current intention to initiate any such action.
Schedule 19.5
There are no liens on Customer's material property and assets.
Schedule 19.6
AMRC Holdings, Inc.
Unaudited Balance Sheet as of December 31, 1997
Balance Sheet 1997
----------
Cash 544
License 90,030,889
License - Captialized Interest 1,869,427
Total Assets 91,900,860
==========
Interest Payable - BL & AAL 2,370,053
Interest Payable - WC 18,204
Note Payable - BL 22,500,000
Note Payable - AA
L 58,388,889
Note Payable - WC 1,054,190
Note Payable - AMSC 55,435
----------
Total Liabilities 84,386,771
Equity:
Accumulated Deficit (1,628,455)
AMSC (80%; 100 shares)
Common Stock 10
Additional Paid in Capital 1,642,534
WSI (20%; 25 shares)
Common Stock 3
Additional Paid in Capital 7,499,998
----------
Total Stockholders' Equity 7,514,089
Total Liabilities & Equity 91,900,860
==========
Income Statement - BY PERIOD
Outside Services - WSI 568,901
Outside Services - Accrued 390,659
Outside Services
- AMSC 130,451
Other Operating Expenses - AMSC 19,614
Interest Expense - BL & AAL 2,370,053
Interest Expense - WC 18,204
Interest Amort - License (1,869,427)
----------
Net Loss 1,628,455
==========
|
BL = Bridge Loan; AAL = Additional Amounts Loan; WC = Working Capital Loan AMSC = American Mobile Satellite Corporation; WSI = WorldSpace Incorporated
Schedule 19.7
AMRC Holdings, Inc.
Unaudited Balance Sheet as of December 31, 1997
1997
--------------------------------------- P & L
Balance Sheet January February March** Total
---------------------------------------
Cash 544 544 544
License 90,030,889 90,030,889 90,030,
889
License - Captialized Interest 2,438,020 2,951,588 3,520,182
Satellite Construction in Progress 5,000,000
Total Assets 92,469,453 92,983,021 98,551,615
======================================
Interest Payable - BL & AAL 3,132,582 3,821,318 4,600,319
Interest Payable - WC 25,315 33,368 45,020
Management Fee Payable - WMC 102,935 205,870 308,805
Note Payable - BL 22,500,000 22,500,000 22,500,000
Note Payable - AAL 58,388,889 58,388,889 63,388,889
Note Payable - WC 1,029,382 1,089,546 1,604,703
Note Payable - AMSC 84,158 112,880 141,603
--------------------------------------
Total Liabilities 85,263,260 86,151,871 92,589,339
Equity:
Accumulated Deficit (1,628,455) (1,628,455) (1,628,455)
AMSC (80%; 100 shares)
Common Stock 10 10 10
Additional Paid in Capital 1,642,534 1,642,534 1,642,534
WSI (20%; 25 shares)
Common Stock 3 3 3
Additional Paid in Capital 7,499,998 7,499,998 7,499,998
Current Accumulated Deficit (307,897) (682,939) (1,551,813)
--------------------------------------
Total Stockholders' Equity
7,206,192 6,831,150 5,962,276
Total Liabilities & Equity 92,469,453 92,983,021 98,551,615
======================================
Income Statement - BY PERIOD
Outside Services - WSI (24,808) 51,837 256,411 283,471
Outside Services - WSI (Accrued) 233,714 233,714
Management Fees 131,658 131,658 131,659 394,974
Travel & Entertaiment 8,327 25,000 33,327
Interest Expense - BC & AAL 762,529 688,736 779,001 2,230,266
Interest Expense - WC 7,112 8,053 11,653 26,817
Interest Amort - License (568,593) (513,568) (568,593) (1,650,755)
---------------------------------------------------
Net Loss 307,897 375,042 868,874 1,551,813
===================================================
|
**Based on actual amounts as of March 20, 1998 and estimated amounts from March 21, 1998 through March 31, 1998.
BL = Bridge Loan; AAL = Additional Amounts Loan; WC = Working Capital Loan AMSC = American Mobile Satellite Corporation; WSI = WorldSpace Incorporated
Schedule 19.8
Undisclosed Liabilities
Second Amended and Restated Satellite Purchase Contract for In-Orbit Delivery between XM Satellite Radio Inc. and Hughes Space and Communications International, Inc.
[Logo of Xm Satellite Radio Inc. Appears Here]
Exhibit A rev C
Spacecraft Performance Specifications
Last Saved: July 15, 1999 1:08 PM
Document Number: XM-TBD-00001
DOCUMENT RELEASE APPROVALS
--------------------------------------------- Approved by Date John R. Wormington Senior Vice President, XM Satellite Radio Inc. --------------------------------------------- Approved by Date Peter S. Lauenstein (Hughes Space and Communications Company) Program Manager: XM Spacecraft --------- ------------------------------------ |
[*****]
[Logo of Xm Satellite Radio Inc. Appears Here]
Exhibit B rev A
Statement of Work
Last Saved: July 14, 1999 4:20 PM
Document Number: XM-TBD-00002
DOCUMENT RELEASE APPROVALS
--------------------------------------------- Approved by Date John R. Wormington Senior Vice President, XM Satellite Radio Inc. --------------------------------------------- Approved by Date Peter S. Lauenstein (Hughes Space and Communications Company) Program Manager: XM Spacecraft --------------------------- ------------------ |
[*****]
[Logo of Xm Satellite Radio Inc. Appears Here]
Exhibit C Rev A
Product Assurance Plan
--------------------------------------------- Approved by Date John R. Wormington Senior Vice President, XM Satellite Radio Inc. --------------------------------------------- Approved by Date Peter S. Lauenstein (Hughes Space and Communications Company) Program Manager: XM Spacecraft --------------------------------------------- |
[*****]
[Logo of Xm Satellite Radio Inc. Appears Here]
Exhibit D Rev B
Test Plan Requirements
Last Saved: July 14, 1999 4:42 PM
Document Number: XM-TBD-00004
DOCUMENT RELEASE APPROVALS
--------------------------------------------- Approved by Date John R. Wormington Senior Vice President, XM Satellite Radio Inc. --------------------------------------------- Approved by Date Peter S. Lauenstein (Hughes Space and Communications Company) Program Manager: XM Spacecraft ---------------------- ----------------------- |
[*****]
[Logo of Xm Satellite Radio Inc. Appears Here]
Exhibit E
XM Satellite Radio Spacecraft
Radiation Environment Specifications
Last Saved: July 14, 1999 4:29 PM
Document Number: XM-TBD-00005
DOCUMENT RELEASE APPROVALS
--------------------------------------------- Approved by Date John R. Wormington Senior Vice President, XM Satellite Radio Inc. --------------------------------------------- Approved by Date Peter S. Lauenstein (Hughes Space and Communications Company) Program Manage r: XM Spacecraft --------------------------------------------- |
[*****]
[Logo of Xm Satellite Radio Inc. Appears Here]
Exhibit F
Long Lead Activites and Items
CDRL Number B03
--------------------------------------------- Approved by Date John R. Wormington Senior Vice President, XM Satellite Radio Inc. --------------------------------------------- Approved by Date Peter S. Lauenstein (Hughes Space and Communications Company) Program Manager: XM Spacecraft --------------------------------------------- |
To be provided by Hughes no later than EDC + 4 months in accordance with the Statement of Work (Exhibit B)
[Logo of Xm Satellite Radio Inc. Appears Here]
Exhibit G Rev D
PFM and FM1 Payment Plans and
Termination Liability Schedules
--------------------------------------------- Approved by Date Heinz Stubblefield Senior Vice President and Chief Financial Officer, XM Satellite Radio Inc. --------------------------------------------- Approved by Date Peter S. Lauenstein (Hughes Space and Communications Company) Program Manager: XM Spacecraft --------------------------------------------- |
[*****]
EXHIBIT 10.8
EXECUTION COPY
***** Confidential treatment has been requested for portions of this agreement.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this agreement
has been filed separately with the Securities and Exchange Commission.
A. XM has developed and/or obtained licenses for the technology and intellectual property rights necessary to provide an S-band Satellite Digital Audio Radio Service in the Territory pursuant to a license from the FCC.
B. Distributor provides high-technology value-added services for automobile applications, including GPS systems, emergency call systems, and others.
C. XM desires that Distributor include XM Receivers in GM Vehicles.
D. Distributor desires to install XM Receivers in GM Vehicles and to distribute the XM Service exclusively during the Term.
NOW THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
In addition to the terms defined elsewhere in this Agreement, and unless the context otherwise requires, the defined terms set forth below and used in this Agreement shall have the following meanings:
channels referred to by XM as the basic subscription package; it is currently anticipated that, as
of the Commencement Date, the basic subscription package will be available for a monthly subscription fee of $9.95.
"FCC" means the U.S. Federal Communications Commission (or any successor
---
agency).
"GM" means General Motors Corporation, its subsidiaries and affiliates in
--
|
which General Motors Corporation has a controlling interest.
and that are manufactured by Authorized XM Manufacturers and produced for the OEM vehicle radio market.
(c) XM shall have a non-exclusive right to arrange for the installation of XM Receivers included in OnStar systems in non-GM Vehicles sold for use in the Territory. The Parties shall mutually agree on the compensation to be paid to XM for arranging the sale of such OnStar systems (excluding the XM Service).
(a) Unless ear lier terminated pursuant to the terms of this Agreement, the "Term" of this Agreement shall commence as of the date hereof and shall expire twelve (12) years from the Commencement Date.
(b) Notwithstanding anything in this Agreement to the contrary, upon the occurrence of certain events, one or both Parties shall have the rights set forth below to trigger a renegotiation of certain terms of, or be excused from certain obligations under, this Agreement as follows:
***** 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.
Commencement Date if the number of Enabled GM Vehicles by that time is
less than 1.24 million units and every two (2) years during the Term
thereafter, if the number of Enabled GM Vehicles during the prior two
(2) years is inconsistent with the OEM market demand for SDARS radios.
Evidence of consistency with OEM market demand shall be based upon the
concept that GM SDARS radio penetration in new GM Vehicles (expressed
as a percent of new GM Vehicles produced
for the U.S. market in a
given Model Year or across a measurement period) is consistent with
SDARS radio penetration in new vehicles from the balance of non-GM
OEMs (expressed as a percent of non-GM new vehicles produced for the
U.S. market in a given Model Year or across a measurement period).
However, if XM's share of the mobile SDARS aftermarket is below
[*****] percent [*****] across the applicable two (2)-year period,
then the percent install target in new GM Vehicles shall be adjusted
proportionately in accordance with the following table:
Multiplier (times install
XM Share of Mobile target % of new GM Vehicles
SDARS aftermarket across the measurement period)
--------------------------------------------------------------------------------
[*****] [*****]
---------------
-----------------------------------------------------------------
[*****] [*****]
--------------------------------------------------------------------------------
[*****] [*****]
--------------------------------------------------------------------------------
[*****] [*****]
--------------------------------------------------------------------------------
[*****] [*****]
--------------------------------------------------------------------------------
|
(iii) For example, if [*****] percent [*****] of non-GM OEM
vehicles were installed with satellite capable radios in a given Model
Year and XM's share of the mobile SDARS aftermarket were [*****]
percent [*****], then Distributor, for purposes of determining
consistency with OEM market demand, would need to install [*****], or
[*****] percent [*****]
, of GM Vehicles with XM Receivers. For
purposes of this clause (ii), Distributor's new GM Vehicle install
requirement shall be deemed to be satisfied if Distributor installs
the lesser of (A) the number of Enabled GM Vehicles required by this
clause (ii), or (B) 600,000 XM Receivers per year for each of the two
(2) years in the measurement period.
(A) Upon the occurrence of a Regulatory Force Majeure Event, XM and Distributor agree to renegotiate mutually acceptable
terms in light of the changed landscape arising from such Regulatory Force Majeure Event.
(B) XM may trigger a renegotiation of the terms of this Agreement at any time during the term if Distributor elects to install interoperable radios (i.e., radios capable of receiving both the XM Service and the CD Radio service, or other SDARS signals) in the absence of any regulatory requirement.
(c) Upon at least thirty (30) days' prior notice either Party shall have
the right to terminate this Agreement if the other Party has breached any of its
material obligations under this Agreement; provided, however, that if such
breach is of the type that i
s curable, then termination shall not be effective,
and the notifying Party shall not exercise any of its other rights at law or in
equity, unless the notified Party has failed to cure such material breach fully
and to demonstrate to the notifying Party that such material breach has been
cured within the thirty (30)-day period following the notice described in this
Section 3(c).
(d) If the FCC revokes XM's SDARS license as a result of the action(s) or inaction(s) of XM, then Distributor, at its option, shall have the right to declare XM in material breach of this Agreement, and such revocation shall not constitute a force majeure event under Section 10.
***** 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.
Amount Payable
Calendar Year:* (in thousands):
-------------------------------------------------------------------------------
2001 [*****]
-------------------------------------------------------------------------------
2002 [*****]
-------------------------------------------------------------------
------------
2003 [*****]
-------------------------------------------------------------------------------
2004 [*****]
-------------------------------------------------------------------------------
2005 [$33,533]
-------------------------------------------------------------------------------
2006 [*****]
-------------------------------------------------------------------------------
2007 [*****]
-------------------------------------------------------------------------------
2008 [*****]
-------------------------------------------------------------------------------
2009 [$132,889]
-------------------------------------------------------------------------------
|
* I
f Distributor is unable (for reasons not attributable to XM's timely
commencement of service) to install XM Receivers beginning with Model Year 2002,
then the payments set forth in the table above shall be delayed and shall
commence in the calendar quarter immediately following the calendar quarter in
which Distributor first installs reasonable quantities of XM Receivers in GM
Vehicles.
In the event that this Agreement is terminated other than on the last day of a calendar year, then the payment set forth in the table above for such calendar year shall be prorated to reflect the number of days during such calendar year that this Agreement was in effect. The payments set forth in the table above shall be due and payable in four equal installments on or before March 31, June 30, September 30 and December 31 of the pertinent calendar year.
***** 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.
If Number of Enabled GM Vehicles is: Then Distributor's Revenue Share shall be: ---------------------------------------------------------------------------------------------------------------- [*****] [*****] ---------------------------------------------------------------------------------------------------------------- [*****] [*****] ---------------------------------------------------------------------------------------------------------------- [*****] [*****] ---------------------------------------------------------------------------------------------------------------- [*****] [*****] ---------------------------------------------------------------------------------------------------------------- in excess of 8 million [*****] ------------------------------------------------ ---------------------------------------------------------------- |
The Revenue Share percentages set forth in the table above shall apply to a Base Subscription Service price between [*****] and $9.95 per month. If, in response to competitive pressures, the Base Subscription Service price falls below [*****] per month, then the Parties shall negotiate in good faith to modify the Revenue Share in an equitable manner to reflect the realities of the market. If XM fundamentally changes its business model (e.g., employs a more aggressive advertising model), and, as a result of such change, the Base Subscription Service price falls below [*****] per month, then the Revenue Share payable to Distributor shall be determined as if the Base Subscription Service price were $9.95 per month. Likewise, if the Base Subscription Service price is more than $9.95 per month, then the Revenue Share shall be determined as if the Base Subscription Service price were $9.95 per month.
The Revenue Share shall
be due and payable no later than thirty (30) days
after the end of each calendar month during the Term based upon subscriber
revenues collected during such month.
***** 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.
The Spots shall only be used by Distributor to advertise and promote GM products
and services. If Distributor does not use all of the Spots made available to
Distributor during any calendar year, Distributor may not carry such unused
Spots forward into any subsequent calendar year during the Term. Distributor,
at its expense, shall create, produce and deliver the Spots to the location(s)
specified by XM. The Spots shall not be adverse to, or competitive with, XM's
business(es) or require XM to make any payments to a third party or obtain any
consents to insert the Spots on the XM Service. Distributor will indemnify the
XM Indemnitees as pro
vided herein in connection with Distributor's use of the
Spots (including, without limitation, the content thereof), and the Spots cannot
be resold by Distributor to a third party. The dollar value of the Spots will
be priced based on the then-current CPM rate sheets. Placement of the Spots
shall be mutually agreed upon by the Parties.
(d) XM and Distributor shall mutually agree on the implementation of a marketing plan to attract additional subscribers to the XM Service by targeting
***** 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.
Purchasers of Enabled GM Vehicles who have not subscribed to the XM Service. XM agrees to pay Distributor a Revenue Share for subscribers who initially subscribe to the XM Service after twelve (12) months from the initial Purchase of an Enabled GM Vehicle; in consideration therefor, Distributor agrees to pay a portion of the marketing costs associated with targeting such subscribers, with such portion to be equal to the then-applicable Revenue Share percentage.
(b) Distributor agrees to give XM at last ninety (90) days' prior notice of its intent to utilize the bandwidth allocated to Distributor hereunder. Such notice shall set forth the amount of bandwidth to be utilized as wel l as the proposed use of such bandwidth. Until actually utilized by Distributor, XM shall be entitled to use the bandwidth allocated to Distributor hereunder.
(c) To the extent Distributor elects to utilize any or all of the bandwidth allocated to it hereunder, Distributor, at its expense, shall deliver to a location in the Territory designated by XM a complete audio signal and/or data transmission, as the case may be, by transmitting such signal and/or data via a mutually acceptable means and in a form that will not require XM to modify the signal and/or data in order to receive or to transmit such signal and/or data over the XM System. XM, at its expense, shall furnish all other facilities necessary for the receipt of Distributor's transmission and for the retransmission of such signals and/or data to subscribers authorized to receive such signals and/or data.
(d) Distributor agrees that the technical quality of each audio signal and/or data transmission transmitted by Distributor to XM sha ll be at least equal to the technical quality of the audio signals and/or data transmissions delivered to XM by any third party distributor of audio services and/or data transmissions, respectively.
***** 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.
(e) Distributor shall not use the bandwidth allocated to it hereunder to create or transmit music or entertainment radio services that compete with, or otherwise use such bandwidth in a manner that could reasonably be expected to adversely interfere with, the XM business(es). XM shall not use the remainder of the bandwidth to create a service targeting new GM Vehicle Purchasers that packages together the essential features of the current OnStar features as described in Attachment I attached hereto.
(f) Without limiting the provisions of Section
9(c), Distributor shall
indemnify and hold harmless the XM Indemnitees from and against any and all
Costs arising out of Distributor's use of such bandwidth, including, without
limitation, the content of any of Distributor's transmissions via such bandwidth
or the sale or marketing of any products or services via such bandwidth.
(a) Upon the Purchase of an Enabled GM Vehicle, Distributor shall provide XM with a monthly report (the format and content of which shall be mutually agreed upon) that, at a minimum, shall include the following information with respect to each Enabled GM Vehicle sold during such month: (i) the make, model and VIN of such Enabled GM Vehicle, (ii) the XM Receiver identification number of the XM Receiver installed in such Enabled GM Vehicle, and (iii) the name and address of the Purchaser, and, to the extent available and permitted by applicable law, the telephone number and email address of such Purchaser.
(b) [*****] shall be prepared to handle calls for customer care as it pertains to the XM Service for GM/XM Subscribers who are also OnStar customers; provided, however, that [*****]; it being understood, however, that such reimbursable costs shall not include fixed costs, including, without limitation, overhead.
(c) Distributor agrees that in connection with customer calls relating to the XM Service, its customer service representatives shall handle customer requests, questions and complaints promptly and professionally and with the same level of care with which such representatives handle customer requests, questions and complaints regarding the OnStar service.
(d) [*****], at its expense, shall be responsible for the billing of the XM Service purchased by GM/XM Subscribers.
(a) To assist XM with its business planning, Distributor agrees to meet with represent atives from XM on at least a quarterly basis to discuss its projections for
installations of XM Receivers in new GM Vehicles over the following twelve (12)
months, including (i) Distributor's forecast as to the number of XM Receivers it
plans to install in new GM Vehicles over the following twelve (12) months, (ii)
the makes and models in which Distributor is installing or proposing to install
XM Receivers, and (iii) the types of packages in which the XM Service may be
included. XM acknowledges that nothing contained in this Agreement shall be
construed as obligating Distributor to fulfill any of the projections or plans
discussed with XM at such meetings, provided that the provisions of Section
3(b)(ii) shall continue to apply. In addition, from June 1, 1999 through May 30,
2000, XM will provide Distributor monthly reports and ho
ld quarterly meetings to
inform Distributor fully about XM's progress toward the Commencement Date. From
June 1, 2000 through June 30, 2001, XM and Distributor shall hold monthly
meetings and include any suppliers, marketing representatives or other necessary
parties to facilitate the timely commencement of XM's commercial operations.
(b) Distributor shall purchase XM Receivers for installation only from Authorized XM Manufacturers that meet the reasonable requirements of GM's Worldwide Purchasing Organization. Installation of the XM Receivers shall be in accordance with reasonable requirements and quality assurances provided by the Authorized XM Manufacturers or XM, including, without limitation, positioning of the antenna and antenna shape; provided, however, that such requirements and assurances meet the manufacturing requirements of Distributor.
(c) Distributor acknowledges that XM does not manufacture the XM Receivers and cannot guarantee availability or delivery thereof on any specific date. In addition, Distributor acknowledges that XM shall have no liability for any use, property, ad valorem, value added, stamp or other taxes, charges or withholdings arising out of the XM Receivers or the delivery thereof by Authorized XM Manufacturers to Distributor.
(d) The technical specifications for the XM Receivers will be determined by XM in conjunction with the Authorized XM Manufacturers; provided, however, that XM agrees that its internal technology group will work with Distributor and the Authorized XM Manufacturers of Distributor's choice to consult in the development and testing of XM capable OEM radio/communications systems for GM Vehicles.
(e) Distributor acknowledges that the XM names and marks are the exclusive property of XM and that Distributor has not and will not acquire any proprietary rights therein by reason of this Agreement. Distributor agrees to comply with reasonable branding and trademark usage requirements regarding such names and marks that are imposed by XM from time to time and provided in writing to Distributor.
(a) Each Party represents and warrants to the other that (i) it is duly organized, validly existing and in good standing under the laws of the state under which
it is organized, (ii) it has the power and authority to enter into this Agreement and to perform fully its obligations hereunder; (iii) it is under no contractual or other legal obligation that shall in any way interfere with its full, prompt and complete performance hereunder; (iv) the individual executing this Agreement on its behalf has the authority to do so; and (v) the obligations created by this Agreement, insofar as they purport to be binding on it, constitute legal, valid and binding obligations enforceable in accordance with their terms.
(b) XM IS NOT THE MANUFACTURER OF THE XM RECEIVERS AND XM MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, NATURE OR DESCRIPTION, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHA NTABILITY OR FITNESS OF ANY OF THE XM RECEIVERS FOR ANY PARTICULAR PURPOSE, OR ANY OTHER WARRANTY REGARDING THE DESIGN, CONDITION, CAPABILITY OR PERFORMANCE OF THE XM RECEIVERS, AND XM HEREBY DISCLAIMS THE SAME. XM shall not be responsible for any loss or damage resulting from any defect of or in the XM Receivers, latent or otherwise, or resulting from any failure of the XM Receivers to operate or faulty operation of the XM Receivers, nor for any direct, indirect, consequential, incidental or other similar damage (including lost profits) resulting from the transportation, installation, service, operation or use of the XM Receivers, and shall not be responsible for any such loss or damage resulting from the maintenance or repair of the XM Receivers. Rather, warranty claims relating to XM Receivers installed in GM Vehicles shall be handled by the Authorized XM Manufacturers, in accordance with Distributor's standard practices with suppliers. In addition, XM shall not be responsible for any breach of any Au thorized XM Manufacturer's warranties, indemnities or supply agreements, and no breach thereof shall affect the limitation on liabilities, rights and obligations of the Parties set forth in this Agreement.
term of this Agreement or any warranty, covenant or representation contained herein.
(i) If any Distributor Indemnitee is charged with infringement of a third party's intellectual property rights, including patent, trademark, copyright, industrial design right, or other proprietary right, or misuse or misappropriation of trade secret rights, as a result of the installation, use, sale, offer for sale or import of XM Receivers in or for use in GM Vehicles, and if such alleged infringement arises in any way from an aspect or
function of the XM Receiver that meets a requirement or specification of XM
for receipt of the XM Service by the XM Receiver, XM will, at no expense to
Distributor: (i) defend, hold harmless and indemnify the Distributor
Indemnitees against any Costs relating to such charge or claim, including,
but not limited to, Costs for past infringement; and (ii) to the extent
appropriate, either, (A) procure for Distributor the right to continue the
installation, use, sale, offer for sale or import of XM Receivers in GM
Vehicles, or (B) procure for Distributor the availability of XM Receivers
with a modified design such that XM Receivers no longer infringe, provided
that such modification can be done without substanti
ally impairing its
functionality or performance.
(ii) With respect to claims arising under this Section 9(d), Distributor will promptly notify XM in writing of any claim of infringement or indemnification and will provide XM with the authority, information and assistance necessary to defend or settle such claim; provided, however, that Distributor will have the right to participate in such defense and to approve any proposed settlement in advance. Distributor will have the right to take over from XM the defense of a claim at any time, provided that Distributor releases XM in writing from any further obligation of defense or indemnification in connection with such claim unless otherwise mutually agreed.
(iii) The obligations of XM and Distributor under this Section 9(d) will survive termination of this Agreement with respect to XM Receivers installed in GM Vehicles.
(e) A Party claiming indemnity under this Section 9 m ust give the indemnifying party prompt notice of any claim, and the indemnifying party shall have the right to assume the full defense of any claims to which its indemnity applies. The indemnified party, at the indemnifying party's cost, will cooperate fully with the indemnifying party in such defense of any such claim. If the indemnified party compromises or settles any such claim without the prior written consent of the indemnifying party, then the indemnifying party shall be released from its indemnity obligations with respect to the claim so settled.
(f) The representations, warranties and indemnities contained in this
Section 9 shall continue throughout the Term and the indemnities shall survive
the termination of this Agreement, regardless of the reason for such
termination.
Neither XM nor Distributor shall have any rights against the other
Party for the non-operation of facilities, the non-furnishing of the XM Service,
or its inability
to perform its terms and obligations under this Agreement if
such non-operation, non-furnishing or inability is due to an act of God or other
cause beyond such Party's
reasonable control, including, but not limited to, the occurrence of a Regulatory Force Majeure Event.
Any notice or report given under this Agreement shall be in writing, shall be sent postage prepaid by certified mail, return receipt requested, or by hand delivery, or by Federal Express or similar overnight delivery service, or by facsimile transmission, to the other Party, at the following address (unless either Party at any time or times designates another address for itself by notifying the other Party by certified mail, in which case all notices to such Party thereafter shall be given at its most recently so designated address):
To XM: XM Satellite Radio Inc.
250 23rd Street, N.W., Suite 57
Washington, D.C. 20037
Facsimile Number: (202) 969-7110
Attention: President & CEO
cc: General Counsel
To Distributor: OnStar
888 West Big Beaver, Suite 200
Troy, MI 48084
Facsimile Number: (248) 269-1549
Attention: Executive Director,
Product Planning and Alliances
cc: General Counsel
Notice or report given by hand delivery shall be deemed received on
delivery. Notice or report given by mail shall be deemed received on the
earlier to occur of actual receipt or on the fifth day following mailing if sent
in accordance with the notice requirements of this Section 11. Notice or report
given by Federal Express or similar overnight delivery service shall be deemed
received on the nex
t business day following delivery of the notice or report to
such service with instructions for overnight delivery. Notice or report given
by facsimile transmission shall be deemed received when there is personal
confirmation of receipt by the person to whom such notice or report is sent.
Neither XM nor Distributor shall disclose (whether orally or in writing, or by press release or otherwise) to any third party any information with respect to the terms and provisions of this Agreement or any information contained in any data or report required or delivered hereunder or any materials related thereto, except (a) disclosure as may be required by law, regulation, court or government agency of
competent jurisdiction (redacted to the greatest extent possible); (b)
disclosure to each Party's respective officers, directors, employees and
attorneys, in their capacity as such; provided, however, that the disclosing
Party agrees to be responsible for any breach of the provisions of this Section
12 by such officers, directors, employees or attorneys; (c) disclosure by XM in
connection with its bona fide financing activities, (d) disclosure by XM of the
provisions relating to XM's exclusive obligations to Distributor to other
automobile manufacturers, (e) in the event that XM becomes subject to the
information reporting requirements of the Securities Exchange Act of 1934, as
amended, this Agreement may be made publicly available by XM to investors in
ac
cordance with the rules and regulations of the Securities and Exchange
Commission; (f) disclosure in the form of a public statement or press release
approved by the other Party hereto in advance of such statement or release; (g)
general marketing information releases describing the nature of this Agreement
in general terms; and (h) as mutually agreed upon, in writing, by XM and
Distributor in advance of such disclosure. This confidentiality provision shall
survive the termination of this Agreement.
breach. All remedies, whether at law, in equity or pursuant to this Agreement shall be cumulative.
of that certain Exchange Agreement between XM Satellite Radio Holdings Inc., American Mobile Satellite Corporation, and WorldSpace, Inc., dated as of June ___, 1999, in accordance with the terms and conditions contained therein (the "Effective Date").
The Parties hereto have executed this Agreement as of the date first above
written.
ONSTAR, a division of
XM SATELLITE RADIO INC.: General Motors Corporation:
By: /s/ Hugh Panero By: /s/ Frederick H. Cooke
---------------------------------- -------------------------------
Title: President and CEO Title: Executive Director
------------------------------- ----------------------------
- 18 -
|
ATTACHMENT I
to Distribution Agreement between
XM Satellite Radio Inc.
and
OnStar, a division of General Motors Corporation
EXHIBIT 10.9
***** Confidential treatment has been requested for portions of this agreement. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as *****. A complete version of this agreement has been filed separately with the Securities and Exchange Commission.
THIS AGREEMENT, made as of the 7th day of June, 1999, is by and between
DIRECTV, Inc. ("DIRECTV"), having its principal offices at 2230 E. Imperial
Hwy., El Segundo, CA 90245, and XM Satellite Radio Inc. ("XM Radio"), having its
principal off
ices at 1250 23rd Street, NW, Suite 57, Washington, D.C. 20037.
WHEREAS, DIRECTV is a leading digital satellite broadcaster and service operator in the United States;
WHEREAS, XM Radio has developed and/or obtained licenses for the technology and intellectual property rights necessary to provide S-band Satellite Digital Audio Radio Service ("SDARS") in the Territory pursuant to a license from the FCC;
WHEREAS, concurrently with entering into this Agreement, DIRECTV intends to make a capital investment in XM Radio (the "Original Investment") pursuant to the terms of that certain Investment Agreement (the "Investment Agreement"), dated as of the same date as this Agreement, among XM Radio, DIRECTV and American Mobile Satellite Corporation ("AMSC"); and
WHEREAS, in connection with entering into the Investment Agreement, the
Parties desire to establish a strategic business relationship between the
m that
will allow both Parties to benefit from the operational arrangements described
in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein, the parties, intending to be legally bound, hereby agree as follows:
The following COMMITMENTS are not assignable to third parties:
1. XM Radio shall make available to DIRECTV 204.8 kbps of SDARS transmission capacity ("bandwidth") for programming (e.g., talk, music, special events, etc.) reasonably acceptable to XM Radio and provided by DIRECTV. XM Radio shall make such bandwidth available to DIRECTV at the same time as or before it is made available to any other commercial programmer on terms (either
***** 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.
(a) Use of such bandwidth shall be subject to compliance with applicable law, including without limitation, rules and regulations of the FCC ("FCC Rules"). If requested by DIRECTV and permitted under FCC rules, XM will make the programming provided by DIRECTV available to all XM customers.
(b) DIRECTV agrees to us e reasonable efforts to give XM at least ninety (90) days' prior notice, but in no case will give less than sixty (60) days prior notice of its intent to utilize any bandwidth allocated to DIRECTV hereunder. Such notice shall set forth the amount of bandwidth to be utilized as well as the proposed use of such bandwidth. Until actually utilized by DIRECTV, XM shall be entitled to use the bandwidth allocated to DIRECTV hereunder.
(c) To the extent DIRECTV elects to utilize any or all of the bandwidth allocated to it hereunder, DIRECTV, at its expense, shall deliver to a location in the continental United States designated by XM a complete audio signal and/or data transmission, as the case may be, by transmitting such signal and/or data via a mutually acceptable means and in a form that is not encrypted or digitally compressed and that will not require XM to modify the sign al and/or data in order to receive or to transmit such signal and/or data over the XM System. XM, at its expense, shall furnish all other facilities necessary for the receipt of DIRECTV's transmission and for the retransmission of such signals and/or data to subscribers authorized to receive such signals and/or data.
***** 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) DIRECTV agrees that the technical quality of each audio signal and/or data transmission transmitted by DIRECTV to XM shall meet the minimum technology standards established by XM and provided to other similar third party program providers.
(e) DIRECTV shall not use the bandwidth allocated to it hereunder in a manner that could reasonably be expected to adversely interfere with the XM business(es) or cause XM to be in breach of its existing obligations to oth er third-party content providers.
(f) DIRECTV shall indemnify and hold harmless XM Indemnitees from and against any and all Loss and Expense (as defined below) arising out of the content of any of DIRECTV's transmissions via such bandwidth or the sale or marketing by DIRECTV of any products or services via such bandwidth.
2. Within thirty (30) days of the execution of this Agreement, a Technology Advisory Committee (the "Committee") will be formed by XM. The Committee will have no more than five (5) members (or such other number as may be mutually agreed for efficient management of XM technology programs) and at least one DIRECTV representative will serve as a member of the Committee. Appropriate protections will be included to ensure that the recommendations of the Committee and of the DIRECTV representative(s) are accorded significant weight by XM Radio's Board of Directors. The Committee will direct the analysis and selection of appropri ate billing, customer service and conditional access systems for XM, as well as the overall systems integration effort.
3. Within thirty (30) days of the execution of this Agreement, a Technical Services Agreement between DIRECTV and XM will be executed pursuant to which, among other things, at DIRECTV'S option, up to the equivalent of five full time DIRECTV technical personnel or technical personnel designated by DIRECTV will assist with implementation of customer service, billing and conditional access capabilities at XM Radio, as well as the overall systems integration effort. XM Radio will make every reasonable effort to accommodate the needs of such technical personnel in performing their duties under this Technical Services Agreement, including providing such technical personnel with the same access to technology and facilities and with office space, telephone and computer access and, administrative services reasonably comparable to that which would be provided to employees of XM Radio wit h similar skills and experience. XM Radio will reimburse DIRECTV on a [*****] under this Technical Services Agreement.
4. To the extent made available by DIRECTV to XM on competitive terms and conditions, XM will as soon as practicable use DIRECTV's billing, customer service and conditional access architecture if technically feasible.
5. XM Radio will grant DIRECTV access as soon as practicable to XM Radio advertising at the lowest available commercial rates (without taking into account any of the terms of or arrangements under the GM Distribution Agreement or other OEM agreements with major automobile manufacturers). In addition, DIRECTV will as soon as practicable receive access to XM Radio customer lists for direct mail solicitation for the DIRECTV service at no cost for the first 5 years following the commencement of XM Radio's commercial operations and thereafter on commercially reasonable terms. DIRECTV shall not resell such customer lists and shall not use the customer lists for direct mail solicitations or other purposes that could reasonably be expected to compete with o r adversely interfere with the XM business(es) (it being acknowledged by each party that the audio service component of the DIRECTV service does not compete with or adversely interfere with the XM business(es)).
6. XM Radio agrees that, for the term of this Agreement and any mutually agreed extensions of such term, it will not (a) invest in equity securities (or securities convertible into (i) equity securities or (ii) other securities convertible into equity securities) of any present or future competitor of DIRECTV in the DBS business, such as (a "DBS Competitor"), or (b) enter into marketing, distribution, customer list usage or other similar arrangements with any DBS Competitor or any affiliate of any DBS Competitor. DIRECTV agrees that, for the term of this Agreement and any mutually agreed extensions of such term, it will not (a) invest in equity securities (or securities convertible into (i) equity securities or (ii) other securities convertible into equity securities) of any present or fu ture competitor of XM Radio in the SDARS business (an "SDARS Competitor"), or (b) enter into marketing, distribution, customer list usage or other similar arrangements with any SDARS Competitor.
7. XM will make good faith efforts to negotiate DBS broadcast rights for DIRECTV as part of its ongoing programming negotiations. To the extent such DBS broadcast rights are acquired, DIRECTV will be the exclusive DBS distributor under reasonably competitive terms and conditions for any and all related programming; to the extent, after notice to XM, DIRECTV elects not to distribute such programming, XM will be relieved of the programming exclusivity obligations with respect to the programming DIRECTV has elected not to distribute. DIRECTV will continue to have rights to distribute such programming on a non-exclusive basis.
8. DIRECTV will make good faith efforts to jointly represent XM in obtaining distribution of XM service through DIRECTV's existing retail distribution network.
The following DESIRED ARRANGEMENTS are subject to further good faith negotiation:
10. An agency agreement to allow DIRECTV to market XM Radio services to DIRECTV subscribers with commercially reasonable Authorized Sales Agent compensation.
11. Jointly determined advertising barter arrangements to provide access to unused advertising slots (avails) on each other party's satellite distribution systems .
12. Technology cooperation between XM Radio, DIRECTV and DIRECTV's consumer electronic manufacturers to:
(a) Include DIRECTV manufacturers in XM Radio's portfolio of authorized manufacturers as permitted by e xisting agreements.
(b) Integrate XM Radio capability into DIRECTV set-top boxes and systems.
The indemnification obligations of the parties under the foregoing provisions shall survive the expiration or termination of this Agreement.
any persons not employed by the other party except: (i) (a) at the written
direction of the other party; (b) to the extent necessary to comply with the law
(including required filings with the Securities and Exchange Commission) or the
valid order of a court of competent jurisdiction or in connection with any
arbitration proceeding, in which event the disclosing party shall so notify the
other party as promptly as practicable (and, if possible, prior to making any
disclosure) and shall seek confidential treatment of such information; (c) as
part of its normal reporting or review procedure to any of its affiliates, its
auditors and its attorneys, if such affiliates, auditors and attorneys agree to
be bound by the provisions of this Section; (d) in order to
enforce any of its
rights pursuant to this Agreement; and (e) to potential investors, insurers and
financing entities, if any such person agrees to be bound by the provisions of
this Section; or (ii) (a) if, prior to the time of disclosure to the recipient,
the Confidential Information is in the public domain, or is otherwise validly
known to the recipient, as evidenced by written record or (b) if, after
disclosure to the recipient the Confidential Information becomes part of the
public domain by written publication through no fault of the recipient. The
parties further agree to maintain any oral information which would be
Confidential Information if reduced to writing as confidential in accordance
with standard industry practice (subject to the foregoing exceptions for
Confidential Information). Each party agrees to use the same degree of care to
protect the other party's Confidential Information as it uses with its own
proprietary information, but in no event with less than reasonable care.
Immediately
upon the written request of the party providing the other party with
Confidential Information (which request the providing party may make, as a
specific or general request, in its sole discretion at any time up to one year
after the termination or expiration of this Agreement), the receiving party
shall provide to the providing party (or destroy if the providing party so
requests) all requested Confidential Information provided by the providing
party.
the compliance with all such laws (including, without limitation, consumer disclosure and privacy laws).
phone numbers and facsimile number for purposes of giving notice are as follows:
XM Satellite Radio, Inc.
1250 23rd Street, NW, Suite 57
Washington, DC 20037
Attn: President & CEO Fax: 202-969-7096 cc: General Counsel |
DIRECTV, Inc.
2230 East Imperial Highway
El Segundo, CA 90245
Attn: Senior Vice President, New Ventures
Fax: (310) 964-4106
cc: Senior Vice President, Business Affairs
and General Counsel
|
26. This Agreement, and the rights and obligations of the parties hereunder, are subject to all applicable federal, state and local laws, rules and regulations (including without limitation, the Communications Act of 1934, as amended, and the rules and regulations of the FCC) and shall be construed in accordance with and shall be governed by the laws of the State of New York, without giving effect to the principles of conflict of laws thereof.
27. In case of any controversy or claim arising out of or related to this Agreement, the parties agree to meet to resolve such dispute in good faith. Should such a resolution not be reached, the parties further agree that the matter shall be settled by arbitration administered by JAMS/Endispute (or such other alternative dispute resolution service provider as may be mutually agreed upon by the parties) in accordance with such entity's expedited arbitration rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitration shall be conducted in Washington, D.C. unless another location is agreed upon by the parties.
28. No amendment of or modification to this Agreement shall be valid unless made in writing and signed by the authorized representative(s) of the parties. As to XM, the authorized representatives means both (a) XM's President or any Vice President and (b) its General Counsel.
29. The headings and numbering of paragraphs in this Agreement are for convenience only and shall not be construed to define or limit any of the terms herein or affect the meaning or interpretation hereof.
30. This Agreement, including all appendices hereto, constitutes the entire agreement between the parties hereto and supersedes all prior oral or written agreements, representations, statements, negotiations, understandings, proposals, and undertakings with respect to the subject matter hereof. All appendices hereto are expressly incorporated herein by reference and made a material part of this Agreement.
31. This agreement shall be effective upon the closing under that certain Exchange Agreement dated as of June 7, 1999 between American Mobile Satellite Corporation, WorldSpace, Inc. and XM Satellite Radio Holdings, Inc.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written.
XM SATELLITE RADIO INC.
By: /s/ Hugh Panero
----------------------------
Hugh Panero
|
DIRECTV
By: /s/ Steven Cox
----------------------------
Steven Cox
|
EXHIBIT 10.10
**** Confidential treatment has been requested for portions of this agreement. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as *****. A complete version of this agreement has been filed separately with the Securities and Exchange Commission.
THIS AGREEMENT, made as of the 7th day of June, 1999, is by and between
Clear Channel Communications Inc. ("Clear Channel"), having its principal
offices at 200 Concord Plaza, Suite 600, San Antonio, Texas 90245, and XM
Satellite Radio Inc. ("XM Ra
dio"), having its principal offices at 1250 23rd
Street, NW, Suite 57, Washington, D.C. 20037.
WHEREAS, Clear Channel is a leader in the "out-of-home" advertising segment with significant radio station and outdoor advertising holdings.
WHEREAS, XM Radio has developed and/or obtained licenses for the technology and intellectual property rights necessary to provide S-band Satellite Digital Audio Radio Service ("SDARS") in the Territory pursuant to a license from the FCC;
WHEREAS, concurrently with entering into this Agreement, Clear Channel intends to make a capital investment in XM Radio (the "Original Investment") pursuant to the terms of that certain Investment Agreement (the "Investment Agreement"), dated as of the same date as this Agreement, among XM Radio, Clear Channel and American Mobile Satellite Corporation ("AMSC"); and
WHEREAS, in connection with entering into the Investment Agree
ment, the
Parties desire to establish a strategic business relationship between them that
will allow both Parties to benefit from the operational arrangements described
in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein, the parties, intending to be legally bound, hereby agree as follows:
The following COMMITMENTS are not assignable to third parties:
1. XM Radio shall make available to Clear Channel 409.6 kbps of SDARS transmission capacity ("bandwidth") for programming (e.g., talk, music, special events or other services, etc.) reasonably acceptable to XM Radio and provided by Clear Channel. XM Radio shall make such bandwidth available to Clear Channel at the same
***** 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.
and any renewal, extension or amendment hereof, each person making a capital investment in XM Radio pursuant to the Investment Agreement, including Clear Channel, shall be entitled to terms no less attractive than a [*****] of revenues (net of agency commissions, sales expenses and license fees where applicable) for content provided by such person to XM Radio In connection with offering or accepting such terms, neither party shall take into account any of the terms of, or arrangements under, that certain Distribution Agreement by and between XM Radio and OnStar, a division of General Motors Corporation to be signed concurrently with entering into this agreement or other future OEM agreements with major automobile manufacturers. Clear Channel may at its option use all or only a portion of such bandwidth.
(a) Use of such bandwidth shall be subject t
o compliance with
applicable law, including without limitation, rules and regulations of
the FCC ("FCC Rules"). If requested by Clear Channel and permitted
under FCC rules, XM will make the programming provided by Clear
Channel available to all XM customers.
(b) Clear Channel agrees to use reasonable efforts to give XM at least ninety (90) days prior notice, but in no case will give less than sixty (60) days prior notice of its intent to utilize any bandwidth allocated to Clear Channel hereunder. Such notice shall set forth the amount of bandwidth to be utilized as well as the proposed use of such bandwidth. Until actually utilized by Clear Channel, XM shall be entitled to use the bandwidth allocated to Clear Channel hereunder.
(c) To the extent Clear Channel elects to utilize any or all of the bandwidth allocated to it hereunder, Clear Channel, at its
expense, shall deliver to a location in the continental United States designated by XM a complete audio signal and/or data transmission, as the case may be, by transmitting such signal and/or data via a mutually acceptable means and in a form that is not encrypted or
digitally compressed and that will not require XM to modify the signal and/or data in order to receive or to transmit such signal and/or data over the XM System. XM, at its expense, shall furnish all other facilities necessary for the receipt of Clear Channel's transmission and for the retransmission of such signals and/or data to subscribers authorized to receive such signals and/or data.
(b) Clear Channel agrees that the technical quality of each audio signal and/or data transmission transmitted by Clear Channel to XM shall meet the minimum technology standards established by XM and provided to other similar third party program providers.
(c) Clear Channel shall not use the bandwidth allocated to it hereunder in a manner that could reasonably be expected to adversely interfere with the XM business(es) or cause XM to be in breach of its existing obligations to other third-party content providers.
(d) Clear Channel agrees that the technical quality of each audio signal and/or data transmission transmitted by Clear Channel to XM shall meet the minimum technology standards established by XM and provided to other similar third party program providers.
(e) Clear Channel shall not use the bandwidth allocated to it hereunder in a manner that could reasonably be expected to adversely interfere with the XM business(es) or cause XM to be in breach of its existing obligations to other third-party content providers.
(f) Clear Channel shall indemnify and hold harmless XM Indemnit ees from and against any and all Loss and Expense (as defined below) arising out of the content of any of Clear Channel's transmissions via such bandwidth or the sale or marketing by Clear Channel of any products or services via such bandwidth.
2. Within thirty (30) days of the execution of this Agreement, a Technology Advisory Committee (the "Committee") will be formed by XM. The Committee will have no more than five (5) members (or such other number as may be mutually agreed for efficient management of XM technology programs) and at least one Clear Channel representative will serve as a member of the Committee. Appropriate protections will be included to ensure that the recommendations of the Committee and of the Clear Channel representative(s) are accorded significant weight by XM Radio's Board of Directors. The Committee will direct the analysis and selection of appropriate billing, customer service and conditional access systems for XM, as well as the overall s ystems integration effort.
3. XM Radio will grant Clear Channel access as soon as practicable to XM Radio advertising at the lowest available commercial rates (without taking into account any of the terms of or arrangements under the GM Distribution Agreement
***** 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.
or other OEM agreements with major automobile manufacturers). In addition,
Clear Channel will as soon as practicable receive access to XM Radio customer
lists for direct mail solicitation for the Clear Channel service at no cost for
the first 5 years following the commencement of XM Radio's commercial operations
and thereafter on commercially reasonable terms. Clear Channel shall not resell
such customer lists and shall not use the customer lists for direct mail
solicitations or other purposes that could r
easonably be expected to compete
with or adversely interfere with the XM business(es)
4. Clear Channel will make good faith efforts to grant XM Radio access to Clear Channel advertising at the lowest available commercial rates (except for rates governed under political advertising guidelines).
The following DESIRED ARRANGEMENTS are subject to further good faith negotiation:
6. Jointly determine advertising barter arrangements between the companies to provide access to unused advertising slots (avails) and outdoor billboards.
7. [*****]
8. Explore the use of Clear Channel advertising sales force and expertise to sell XM inventory based on competitive agency/compensation terms and conditions.
9. [*****]
The indemnification obligations of the parties under the foregoing provisions shall survive the expiration or termination of this Agreement.
13. Each of the parties agrees that, except with respect to certain other persons acknowledging receipt and review of this Agreement, such party and its
not violate, and are not and will not be subject to restraint or curtailment under, the terms of any contract or agreement by which the other party is bound.
XM
Satellite Radio, Inc.
1250 23rd Street, NW, Suite 57
Washington, DC 20037
Attn: President & CEO
Fax: 202-969-7096
cc: General Counsel
Clear Channel Communication Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 90245
Attn: Randall Mays, CFO
Fax: (210) 822-2828
cc: Senior Vice President, Corporate Development
Agreement shall be modified to the minimum extent necessary to permit compliance with such law and all other provisions shall continue in full force and effect.
23. This Agreement, and the rights and obligations of the parties hereunder, are subject to all applicable federal, state and local laws, rules and regulations (including without limitation, the Communications Act of 1934, as amended, and the rules and regulations of the FCC) and shall be construed in accordance with and shall be governed by the laws of the State of New York, without giving effect to the principles of conflict of laws thereof.
24. In case of any controversy or claim arising out of or related to this Agreement, the parties agree to meet to resolve such dispute in good faith. Should such a resolution not be reached, the parties further agree that the matter shall be settled by arbitration administered by JAMS/Endispute (or such other alternative dispute resolution service provider as may be mutually agreed upon by the parties) in accordance with such entity's expedited arbitration rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitration shall be conducted in Washington, D.C. unless another location is agreed upon by the parties.
25. No amendment of or modification to this Agreement shall be valid unless made in writing and signed by the authorized representative(s) of the parties. As to XM, the authorized representatives means both (a) XM's President or any Vice President and (b) its General Counsel.
26. The headings and numbering of paragraphs in this Agreement are for convenience only and shall not be construed to define or limit any of the terms herein or affect the meaning or interpretation hereof.
27. This Agreement, including all appendices hereto, constitutes the entire agreement between the parties hereto and supersedes all prior oral or written agreements, representations, statements, negotiations, understandings, proposals, and undertakings with respect to the subject matter hereof. All appendices hereto are expressly incorporated herein by reference and made a material part of this Agreement.
28. This agreement shall be effective upon the closing under that certain Exchange Agreement dated as of June 7, 1999 between American Mobile Satellite Corporation, WorldSpace, Inc. and XM Satellite Radio Holdings, Inc.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written.
XM SATELLITE RADIO INC.
By: /s/ Hugh Panero
--------------------------------
Hugh Panero
|
Clear Channel Communications
By: /s/ Mark Hubbard
--------------------------------
Mark Hubbard
|
EXHIBIT 10.11
*** Confidential treatment has been requested for portions of this agreement. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as *****. A complete version of this agreement has been filed separately with the Securities and Exchange Commission.
THIS AGREEMENT, made as of the 7th day of July, 1999, is by and between
TCM, LLC, having its principal offices at 211 N. Union Street, Suite 300,
Alexandria, VA 22314, and XM Satellite Radio Inc. ("XM Radio"), having its
principal offices at 1250 23rd
Street, NW, Suite 57, Washington, D.C. 20037.
WHEREAS, TCM, LLC is part of an investment group comprised of affiliates of Columbia Capital Corporation, Telcom Ventures L.L.C. and Madison Dearborn Partners ("the Investor Group");
WHEREAS, XM Radio has developed and/or obtained licenses for the technology and intellectual property rights necessary to provide S-band Satellite Digital Audio Radio Service ("SDARS") in the Territory pursuant to a license from the FCC;
WHEREAS, concurrently with entering into this Agreement, the Investor Group intends to make a capital investment in XM Radio (the "Original Investment") pursuant to the terms of that certain Investment Agreement (the "Investment Agreement"), dated as of the same date as this Agreement, among XM Radio, American Mobile Satellite Corporation ("AMSC") and the investors named therein; and
WHEREAS, in connection with entering into the Inves
tment Agreement, the
Parties desire to establish a strategic business relationship between them that
will allow both Parties to benefit from the operational arrangements described
in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein, the parties, intending to be legally bound, hereby agree as follows:
The following COMMITMENTS are not assignable to third parties:
1. XM Radio shall make available to TCM, LLC 64 kbps of SDARS transmission capacity ("bandwidth") to develop differentiated programming reasonably acceptable to XM Radio and provided by TCM, LLC. XM Radio shall make such bandwidth available to TCM, LLC at the same time as or before it is
****** 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.
(a) Use of such bandwidth shall be subject to compliance with applicable law, includ ing without limitation, rules and regulations of the FCC ("FCC Rules"). If requested by TCM, LLC and permitted under FCC rules, XM will make the programming provided by TCM, LLC available to all XM customers.
(a) TCM, LLC agrees to use reasonable efforts to give XM at least ninety (90) days' prior notice, but in no case will give less than sixty (60) days prior notice of its intent to utilize any bandwidth allocated to TCM, LLC hereunder. Such notice shall set forth the amount of bandwidth to be utilized as well as the proposed use of such bandwidth. Until actually utilized by TCM, LLC, XM shall be entitled to use the bandwidth allocated to TCM, LLC hereunder.
(c) To the extent TCM, LLC elects to utilize any or all of the bandwidth allocated to it hereunder, TCM, LLC, at its expense, shall deliver to a location in the continental United States designated by XM a complete audio signal and/or data transmission, as th e case may be, by transmitting such signal and/or data via a mutually acceptable means and in a form that is not encrypted or digitally compressed and that will not require XM to modify the signal and/or data in order to receive or to transmit such signal and/or data over the XM System. XM, at its expense, shall furnish all other facilities necessary for the receipt of TCM, LLC's transmission and
for the retransmission of such signals and/or data to subscribers authorized to receive such signals and/or data.
(b) TCM, LLC agrees that the technical quality of each audio signal and/or data transmission transmitted by TCM, LLC to XM shall meet the minimum technology standards established by XM and provided to other similar third party program providers.
(c) TCM, LLC shall not use the bandwidth allocated to it hereunder in a manner that could reasonably be expected to adversely interfere with the XM business(es) or cause XM to be in breach of its existing obligations to other third-party content providers.
(d) TCM, LLC shall indemnify and hold harmless XM Indemnitees from and against any and all Loss and Expense (as defined below) arising out of the content of any of TCM, LLC's transmissions via such bandwidth or the sale or marketing by TCM, LLC of any products or services via such bandwidth.
2. Within thirty (30) days of the execution of this Agreement, a Technology Advisory Committee (the "Committee") will be formed by XM. The Committee will have no more than five (5) members (or such other number as may be mutually agreed for efficient management of XM technology programs) and at least one Investor Group representative will serve as a member of the Committee. Appropriate protections will be included to ensure that the recommendations of the Committee and of the Investor Group representative(s) are accorded significant weight by XM Radio's Board of Directors. The Committee will direct the analysis and selection of appropriate billing, customer service and conditional access systems for XM, as well as the overall systems integration effort.
The indemnification obligations of the parties under the foregoing provisions shall survive the expiration or termination of this Agreement.
any persons not employed by the other party except: (i) (a) at the written
direction of the other party; (b) to the extent necessary to comply with the law
(including required filings with the Securities and Exchange Commission) or the
valid order of a court of competent jurisdiction or in connection with any
arbitration proceeding, in which event the disclosing party shall so notify the
other party as promptly as practicable (and, if possible, prior to making any
disclosure) and shall seek confidential treatment of such information; (c) as
part of its normal reporting or review procedure to any of its affiliates, its
auditors and its attorneys, if such affiliates, auditors and attorneys agree to
be bound by the provisions of this Section; (d) in order to
enforce any of its
rights pursuant to this Agreement; and (e) to potential investors, insurers and
financing entities, if any such person agrees to be bound by the provisions of
this Section; or (ii) (a) if, prior to the time of disclosure to the recipient,
the Confidential Information is in the public domain, or is otherwise validly
known to the recipient, as evidenced by written record or (b) if, after
disclosure to the recipient the Confidential Information becomes part of the
public domain by written publication through no fault of the recipient. The
parties further agree to maintain any oral information which would be
Confidential Information if reduced to writing as confidential in accordance
with standard industry practice (subject to the foregoing exceptions for
Confidential Information). Each party agrees to use the same degree of care to
protect the other party's Confidential Information as it uses with its own
proprietary information, but in no event with less than reasonable care.
Immediately
upon the written request of the party providing the other party with
Confidential Information (which request the providing party may make, as a
specific or general request, in its sole discretion at any time up to one year
after the termination or expiration of this Agreement), the receiving party
shall provide to the providing party (or destroy if the providing party so
requests) all requested Confidential Information provided by the providing
party.
the compliance with all such laws (including, without limitation, consumer disclosure and privacy laws).
phone numbers and facsimile number for purposes of giving notice are as follows:
Attn: Chairman
Fax: 703-706-3837
cc: [General Counsel]
cc: James B. Fleming, Managing Director
Columbia Capital L.L.C.
201 N. Union Street, Suite 300
Alexandria, VA 22314
Fax: 703-519-5870
cc:
James N. Perry, Jr.
Madison Dearborn Partners, Inc.
Three First National Plaza, Suite 3800
Chicago, IL 60602
Fax: 312-895-1221
Agreement shall survive and remain in effect. All other rights and obligations of TCM, LLC and XM Radio under this Agreement shall cease upon termination.
17. This Agreement, and the rights and obligations of the parties hereunder, are subject to all applicable federal, state and local laws, rules and regulations (including without limitation, the Communications Act of 1934, as amended, and the rules and regulations of the FCC) and shall be construed in accordance with and shall be governed by the laws of the State of New York, without giving effect to the principles of conflict of laws thereof.
18. In case of any controversy or claim arising out of or related to this Agreement, the parties agree to meet to resolve such dispute in good faith. Should such a resolution not be reached, the parties further agree that the matter shall be settled by arbitration administered by JAMS/Endispute (or such other alternative dispute resolution service provider as may be mutually agreed upon by the parties) in accordance with such entity's expedited arbitration rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitration shall be conducted in Washington, D.C. unless another location is agreed upon by the parties.
19. No amendment of or modification to this Agreement shall be valid unless made in writing and signed by the authorized representative(s) of the parties. As to XM, the authorized representatives means both (a) XM's President o r any Vice President and (b) its General Counsel.
20. The headings and numbering of paragraphs in this Agreement are for convenience only and shall not be construed to define or limit any of the terms herein or affect the meaning or interpretation hereof.
21. This Agreement, including all appendices hereto, constitutes the entire agreement between the parties hereto and supersedes all prior oral or written agreements, representations, statements, negotiations, understandings, proposals, and undertakings with respect to the subject matter hereof. All appendices hereto are expressly incorporated herein by reference and made a material part of this Agreement.
22. This agreement shall be effective upon the closing under that certain Exchange Agreement dated as of June 7, 1999 between American Mobile Satellite Corporation, WorldSpace, Inc. and XM Satellite Radio Holdings, Inc.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written.
XM SATELLITE RADIO INC.
By: /s/ Hugh Panero
--------------------------------------
Hugh Panero
|
TCM, LLC
By: Telcom Ventures, L.L.C., its Manager
By: /s/ Rahul Prakash
--------------------------------------
Rahul Prakash
|
EXHIBIT 10.17
This Agreement, dated as of ______ __, ____, is made by and between XM Satellite Radio Holdings Inc., a Delaware corporation, on its own behalf and on behalf of its subsidiaries including XM Satellite Radio Inc., a Delaware corporation, (together, the "Company"), and the undersigned director or officer of any entity comprising the Company (the "Indemnitee").
W I T N E S S E T H:
WHEREAS, the Indemnitee is currently serving as a director or officer of
one or more of the entities comprising the Company, and the Company wishes
the
Indemnitee to continue in such a capacity;
WHEREAS, the Indemnitee is willing, under certain conditions, to continue serving as a director or officer of the applicable entity(ies) comprising the Company;
WHEREAS, in order to induce the Indemnitee to continue to serve as a director or officer of the Company and in consideration of his continued service, the Company wishes to indemnify the Indemnitee against the risks associated with the Indemnitee's service to the Company to the full extent permitted by applicable law;
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereby agree as follows:
(a) The Company hereby indemnifies Indemnitee and holds him harmless with respect to any Expenses, actually and reasonably incurred by him in connection with any action, suit or proceeding (whether civil, criminal, administrative or investigative) threatened or brought against Indemnitee , or in which Indemnitee is or would be a witness or other participant, by reason of the fact that he is or was a director or officer of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including without limitation any subsidiary of the Company, to the fullest extent now or hereafter permitted by applicable law. With regard to any such matter, it shall be presumed that Indemnitee was acting in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, that the Indemnitee had no reasonable cause to believe that his conduct was unlawful, unless a judicial finding is made to the contrary that is not reversed on appeal. Termination of any proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent, shall not, of
to the best interests of the Company, or, with respect to any criminal action or proceeding, that the Indemnitee had reasonable cause to believe that his conduct was unlawful.
(b) The Company agrees to pay all Expenses incurred by Indemnitee in participating in or preparing to participate in an action, suit or proceeding (whether civil, criminal, administrative, or investigative) in advance of the final disposition of such action, suit or proceeding upon request of the Indemnitee that the Company pay such Expenses. Indemnitee hereby pledges to repay to the Company any such Expenses theretofore paid by the Company to the extent that it is ultimately determined that such Expenses were not reasonable or that Indemnitee was not acting in compliance with the standards enumerated in Paragraph (a) above.
(c) As used in this Agreement, the term "Expenses" shall include, without limitation: damages, judgments, fines, penalties and settlements in connection with a threatened or actual action, suit or proceeding; all reasonable attorneys fees at both trial and appellate levels, retainers, court costs, costs of attachment or similar bonds, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in an action, suit or proceeding; and any expenses of establishing a right to indemnification under this Agreement.
(d) If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
(e) In the event that any action or proceeding is instituted by Indemnitee to enforce or interpret Indemnitee's right to indemnification or contribution or advancement of Expenses hereunder, such Indemnitee shall be entitled to be paid all Expenses incurred by the Indemnitee with respect to such action or proceeding, unless the court determines that the material assertions made by the Indemnitee as a basis for such action or proceeding were not made in good faith or were frivolous. In any event, where Indemnitee is successful in a court claim against the Company for indemnification, contribution, or advancement of Expenses, the Company shall pay to Indemnitee all Expenses incurred in obtaining court ordered relief.
(f) In the event of payment of a claim to indemnification under this Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.
(g) The indemnification, contribution and advancement of Expenses provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may be entitled under the Certificate of Incorporation or the Bylaws of the Company, applicable law, insurance policies, any agreement, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. However, Indemnitee shall reimburse the Company for amounts paid to him pursuant to such other rights to the extent such payments duplicate any payments received pursuant to this Agreement.
(h) Neither the Company on the one hand nor Indemnitee on the other hand may settle or compromise any claim covered by the indemnification set forth herein without the prior written consent of the other party, provided that consent to such settlement or compromise shall not be unreasonably withheld by either party.
(i) If any action or proceeding shall be brought or asserted against Indemnitee in respect of which indemnification may be sought hereunder, Indemnitee shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to Indemnitee and the payment of all Expenses. Indemnitee shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of Indemnitee unless (i) the Company agrees to pay such fees and expenses, (ii) the Company shall have failed promptly to assume the defense of such action or proceeding and employ counsel satisfactory to Indemnitee in any such action or proceeding, or (iii) the named parties to any such action or proceeding include both Indemnitee and the Company or any affiliate of the Company and Indemnitee has been advised by counsel that there may be one or more legal defenses available to him which are different from or additional to those available to the Company, in which case, if Indemnitee notifies the Company in writing that he elects to employ separate counsel at the expense of the Company, the Company shall not have the right to assume the defense of such action or proceeding on behalf of Indemnitee and shall pay all Expenses incurred by Indemnitee in such defense.
indemnifying Indemnitee, shall contribute to the Expenses actually and reasonably incurred by Indemnitee in connection with any action, suit or proceeding (whether civil, criminal, administrative, or investigative) threatened or brought against Indemnitee, or in which Indemnitee is or would be a witness or other participant, by reason of the fact that he is or was a director or officer of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including without limitation any subsidiary of the Company. Contribution by the Company shall be in such proportion as is deemed fair and reasonable in light of all of the circumstances of such action, suit or proceeding by the Company's Board of Directors or by the court before such action, suit or proceeding was brought, in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) or transaction(s) giving rise to such action, suit or proceeding, and/or (ii) the relative fault of the Company (and its other directors, officers, employees and agents) and Indemnitee in connection with such event(s) or transaction(s).
number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document. Any term or provision of this Agreement may be waived in writing at any time by the party or parties that are entitled to the benefits thereof and any term or provision of this Agreement may be amended or supplemented at any time by a written instrument signed by each party hereto.
IN WITNESS WHEREOF, the undersigned have executed this Indemnification Agreement as of the date and year first written above.
XM SATELLITE RADIO HOLDINGS INC.
By:____________________________
Name:__________________________
Title:_________________________
INDEMNITEE.
By:____________________________
Name:__________________________
Title:_________________________
Exhibit 10.18
XM SATELLITE RADIO HOLDINGS INC.
1998 SHARES AWARD PLAN
Effective as of June 1, 1998
XM Satellite Radio Holdings Inc. 1998 Shares Award Plan
INTRODUCTION
XM Satellite Radio Holdings Inc., a Delaware corporation (hereinafter referred to as the "Corporation"), hereby establishes an incentive compensation plan to be known as the "XM 1998 Shares Award Plan" (hereinafter referred to as the "Plan"), as set forth in this document. The Plan permits the grant of Incentive Stock Options, Non-Qualified Stock Options, Phantom Stock Awards, Stock Appreciation Rights, Restricted Stock Awards and Other Stock-Based Awards. Subject to the terms of the Plan, the Plan shall become effective on June 1, 1998.
The purpose of the Plan is to promote the success and e
nhance the value of
the Corporation by linking the personal interests of Participants to those of
the Corporation's shareholders by providing Participants with an incentive for
outstanding performance. The Plan is further intended to assist the Corporation
in its ability to motivate, and retain the services of, Participants upon whose
judgment, interest and special effort the successful conduct of its operations
is largely dependent.
DEFINITIONS
For purposes of this Plan, the following terms shall be defined as follows unless the context clearly indicates otherwise:
make a market in the Common Shares selected from time to time by the Corporation for that purpose. In addition, for purposes of this definition, a "Trading Day" shall mean, if the Common Shares are listed on any national securities exchange, a business day during which such exchange was open for trading and at least one trade of Common Shares was effected on such exchange on such business day, or, if the Common Shares are not listed on any national securities exchange but are traded in the over-the-counter market, a business day during which the over-the- counter market was open for trading and at least one "broker-dealer" quoted both a bid and asked price for the Common Shares (if a broker-dealer quoted only a bid or only an asked price for such day, such day will not be a Trading Day). In the event the Corporation's Common Shares are not publicly traded, the Fair Market Value of such Common Shares shall be determined by the Committee in good faith and in its sole discretion.
SECTION 1 ADMINISTRATION
The Plan shall be administered by the Committee. Subject to the provisions of the Plan, the Committee may establish from time to time such regulations, provisions, proceedings and conditions of awards which, in its sole opinion, may be advisable in the administration of the Plan. A majority of the Committee shall constitute a quorum, and, subject to the provisions of Section 4 of the Plan, the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the Committee, shall be the acts of the Committee as a whole.
SECTION 2 SHARES AVAILABLE
Subject to the adjustments provided in Section 7 of the Plan, the aggregate number of Shares with respect to which Awards may be granted under the Plan shall
be twenty-five (25) shares. The Shares underlying Awards shall be counted against the limitation set forth in the immediately preceding sentence and may be reused to the extent that the related Award to any individual is settled in cash, expires, is terminated unexercised, or is forfeited without the delivery of Shares. Shares granted to satisfy Awards under the Plan may be authorized and unissued shares, issued Shares held in the Corporation's treasury or Shares acquired on the open market. The maximum number of Shares with respect to which Awards may be granted under the Plan to any individual in any calendar year shall be equal to five (5) Shares.
SECTION 3 ELIGIBILITY
All (i) Employees who are regularly employed, (ii) Consultants and (iii) Non-Employee Directors shall be eligible to participate in the Plan.
SECTION 4 AUTHORITY OF COMMITTEE
The Plan shall be administered by, or under the direction of, the Committee, which shall administer the Plan so as to comply at all times with applicable law, and shall otherwise have the sole and exclusive authority to interpret the Plan and to make all determinations specified in or permitted by the Plan or deemed necessary or desirable for its administration or for the conduct of the Committee's business. Subject to the provisions of Section 12 hereof, all interpretations and determinations of the Committee may be made on an individual or group basis and shall be final, conclusive and binding on all persons. Subject to the express provisions of the Plan, the Committee shall have authority, in its discretion, to determine, without limitation, the persons to whom Awards shall be granted, the times when Awards shall be granted, the number of Shares subject to any Awards, the terms of Awards, any other restrictions, including any vesting requirements, and the other provisions thereof (which need not be identical with respect to each Award). In addition, the authority of the Committee shall include, without limitation, the following with respect to an Award of an Option:
Option exercise price of the total number of Shares to be acquired, (B) to exercise all or a portion of an Option by delivering that number of Shares already owned by him or her having a Fair Market Value which shall equal the Option exercise price for the portion exercised and, in cases where an Option is not exercised in its entirety, and subject to the requirements of the Code, to permit the Participant to deliver the Shares thus acquired by him or her in payment of Shares to be received pursuant to the exercise of additional portions of such Option, the effect of which shall be that a Participant can in sequence utilize such newly acquired shares of Common Shares in payment of the exercise price of the entire Option, together with such cash as shall be paid in respect of fractional shares or (C) to engage in any form of "cashless" exercise.
SECTION 5 SHARE OPTIONS
SECTION 6 STOCK APPRECIATION RIGHTS
(a) Grant. Subject to the provisions of the Plan, the Committee shall have sole and complete discretion and authority to determine the eligible persons to whom Stock Appreciation Rights shall be granted, the number of Shares to be covered by each Stock Appreciation Right Award, the grant price thereof and the conditions and limitations applicable to the exercise thereof. Stock Appreciation Rights may be granted in tandem with another Award, in addition to another Award or freestanding and unrelated to another Award. Stock Appreciation Rights granted in tandem with or in addition to an Award may be granted either at the same time as the Award or at a later
time. Stock Appreciation Rights shall not be exercisable earlier than six months after grant and shall have a grant price as determined by the Committee on the date of grant.
SECTION 7 RESTRICTED STOCK
such Shares of Restricted Stock, the Corporation shall deliver such certificates to the Participant or the Participant's legal representative.
SECTION 8 PHANTOM SHARES
SECTION 9 OTHER STOCK-BASED AWARDS
The Committee shall have the discretion and authority to grant to eligible
persons an "Other Stock-Based Award," which shall consist of any right that is
(i) not an Award described in Sections 5 through 8 above and (ii) an Award of
Shares or an Award denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares (including, without
limitation, securities or rights convertible into Shares), as deemed by the
Committee to be consistent with the purposes of the Plan. Subject to the terms
of the Plan and any applicable Award Agreement, the Committee shall determine
the terms and conditions of any such Other Stock-Based Award.
SECTION 10 TERMINATION OF SERVICES
The following provisions shall apply in the event that the Participant ceases to provide services to the Corporation or any Affiliate, either as an Employee, a Consultant or a Non-Employee Director, unless the Committee shall have provided otherwise, either at the time of the grant of the Award or thereafter.
(ii) For purposes of determining whether a Participant's employment or consulting relationship has terminated, a Participant who is both an Employee (or Consultant) and a director of the Corporation or any Affiliate shall be considered to have terminated his or her employment or consulting relationship only upon his or her termination of service both as an Employee (or Consultant) and as a director.
(i) Except as otherwise determined by the Committee at the time
of grant, if the Participant's employment with the Corporation
terminates for any reason, the Participant shall have the right to
exercise any Incentive Stock Option and any related Stock Appreciation
Right during the 90 days after such termination of employment to the
extent it was exercisable at the date of such termination, but in no
event later than the date the Option would have expired had it not
been for the termination of such employment. If the Participant does
not exercise such Option or related Stock Appreciation Right to the
full extent permitted by the preceding sentence, the remaining
exercisable portion of such Option automatically will be deemed a Non-
Qualified Stock Option (except to the extent otherwise provided by
Section 421 or Section 422 of the Code), and such Option and any
related Stock Appreciation Right will be exercisable during the period
set forth in Section 10(a) of the Plan, provided that in the event
that employment terminates because of death or the Participant dies in
such 90-day period, the option will continue to be an Incentive Stock
Option to the extent provided by Section 421 or Section 422 of the
Code,
or any successor provisions, and any regulations promulgated thereunder. Notwithstanding the forgoing, if a Participant's employment is terminated by the Corporation or by any Affiliate for Good Cause or as otherwise set forth in the Award Agreement, then the Participant shall immediately forfeit his or her rights to exercise any and all of outstanding Options or Stock Appreciation Rights theretofore granted to him or her.
(ii) For purposes of determining whether a Participant's employment or consulting relationship has terminated, a Participant who is both an Employee (or Consultant) and a director of the Corporation or any Affiliate shall be considered to have terminated his or her employment or consulting relationship only upon his or her termination of service both as an Employee (or Consultant) and as a director.
SECTION 11
ADJUSTMENT OF SHARES; MERGER OR
CONSOLIDATION, ETC. OF THE CORPORATION
securities into which each outstanding Share shall be so changed or for which each such Share shall be exchanged, or to which each such Share be entitled, as the case may be, and the per share price thereof also shall be appropriately adjusted.
Award may be exercised by the Participant in full beginning on the date two weeks before such Change of Control. If the Participant receives an Equivalent Award in connection with a Change of Control, and the Optionee's employment with the Corporation or an Affiliate is terminated within one year following the Change of Control by reason of involuntary termination, the Equivalent Award may be exercised in full beginning on the date of such termination if and for such period as the Committee, in its sole discretion, shall determine.
SECTION 12 MISCELLANEOUS PROVISIONS
(ii) Except for their own gross negligence or willful misconduct regarding the performance of the duties specifically assigned to them under, or their willful breach of the terms of, the Plan, the Corporation, each Affiliate and the Committee shall be held harmless by the Participants, former Participants, beneficiaries and their representatives against liability or losses occurring by reason of any act or omission. Neither the Corporation, any Affiliate, the Committee, nor any agents, employees, officers, directors or shareholders of any of them, nor any other person shall have any liability or responsibility with respect to the Plan, except as expressly provided herein.
or Participant, as a right of any Employee or Participant to be continued in the employment of (or in a consulting relationship with) the Corporation (or any Affiliate), or as a limitation on the right of the Corporation or any Affiliate to discharge any of its Employees or Consultants, at any time, with or without cause.
SECTION 13 AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Corporation shall have the right to amend, suspend or terminate the Plan at any time except that no amendment, suspension or termination of the Plan shall alter or impair any Award previously granted under the Plan without the consent of the holder thereof. Any provision of the Plan or any Award Agreement notwithstanding, the Committee may cause any Award granted hereunder to be cancelled in consideration of a cash payment or alternative Award made to the holder of such cancelled Award equal to the Fair Market Value of such cancelled Award.
SECTION 14 TERM OF PLAN
The Plan shall automatically terminate on the day immediately preceding the tenth anniversary of the date the Plan was adopted by the Board of Directors, unless sooner terminated by the Board of Directors. No Award may be granted under the Plan subsequent to the termination of the Plan.
SECTION 15 EFFECTIVE DATE
The Plan shall become effective as of June 1, 1998, the date as of which it was approved by the Board of Directors.
EXHIBIT 10.19
OPTION NO.
OPTIONEE:
DATE OF GRANT:
OPTION PRICE:
XM SATELLITE RADIO HOLDINGS INC.
1998 SHARE AWARD PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
A. "A
greement" means this Non-Qualified Stock Option Agreement.
B. "XM" means XM Satellite Radio Holdings Inc., a Delaware corporation.
C. "Committee" means the committee appointed by the XM Board of Directors to administer the Plan.
D. "Covered Shares" means the Shares subject to the Option.
E. "Date of Exercise" means the date on which XM receives notice of the exercise, in whole or in part, of the option pursuant to Section 5.A. of this Agreement.
F. "Date of Expiration" means, subject to the provisions of Section 3.C and D of this Agreement, ten (10) years after the Date of Grant.
G. "Date of Grant" means the date set forth as the "Date of Grant" on page 1 of this Agreement.
H. "In-Orbit Acceptance of XM's Second Satellite" shall mean that the second satellite determined by XM to be a "Satisfactorily Operating Satellite" as defined in Section 1.1(sss) of the "Satellite Purchase Contract for In-Orbit Delivery by and between American Mobile Radio Corporation [XM Sat ellite Radio Inc.] and Hughes Space and Communication International, Inc." dated as of March 20, 1998, as may be amended from time to time.
I. "Option" means the non-qualified stock option granted to the Optionee in Section 2 of this Agreement.
J. "Option Period" means the period beginning on the Date of Grant and terminating on the Date of Expiration.
K. "Option Price" means the dollar amount per Share set forth as the Option Price on page 1 of this Agreement.
L. "Optionee" means the person identified as the "Optionee" on page 1 of this Agreement.
M. "Plan" means the XM 1998 Shares Award Plan, as the same may be amended from time to time.
N. "Public Offering" has the meaning set forth in Section 6.B of this Agreement.
O. "Securities Act" means the Securities Act of 1933, as amended.
P. "Shares" means shares of common stock of XM.
(a) no portion of the Covered Shares may be exercised during the first year following the Date of Grant;
(b) during the second year following the Date of Grant, the Option may be exercised to a maximum of 33 1/3 % of the Covered Shares;
(c) during the third year following the Date of Grant, the Option may be exercised to a cumulative maximum of 66 2/3% of the Covered Shares;
(d) thereafter the Option with respect to the Covered Shares may be exercised in full.
(a) full payment in cash or readily available funds or in Shares in the amount of the Option Price with respect to that portion of the Option being exercised or pursuant to a cashless exercise program to be established by the Committee in accordance with Section 4(b) of the Plan; and
(b) any amount that must be withheld by XM for Federal, State, and/or local tax purposes, payable either in cash or in Shares, including through withholding of Shares upon exercise; and
(c) such representations and documents as the corporation, in its absolute discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other Federal or State securities laws or regulations. XM may, in its absolute discretion, also take whatever additional actions it deems appropriate to effect such compliance, including, without limitation placing legends on share certificates and issuing stop-transfer orders to transfer agents and registrars; and
(d) if the Option or portion thereof shall be exercised pursuant to this provisions of Section 3.C of this Agreement by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option or portion thereof.
Until the Committee notifies the Optionee to the contrary, the form attached to this Agreement as Exhibit A shall be used to exercise the Option.
and it may, in its sole discretion, undertake to have such valuations made more frequently than yearly intervals. From and after the date that any valuation is made and until it is superseded by a subsequent valuation, XM shall purchase for cash, from the holder of Common Stock issued upon exercise of the Option such number of shares as may be requested by such holder from time to time at a price per share equal to the then-current value, provided, that XM shall not be obligated to so purchase such shares if by the date of such request XM has completed a Public Offering.
A. The Optionee has made such investigations as the Optionee deems necessary and appropriate of the business and/or financial prospects of XM.
B. The Option is being exercised and the Covered Shares are being acquired for investment for the Optionee's own account and not with the view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act, and the certificate for such stock may be legended to that effect, that such stock is not registered under federal or state securities laws and that the registration exemptions being relied on are the federal and state private or limited offering exemptions and the Optionee has no reason to believe that such exemptions are not applicable to the Optionee.
C. The Optionee acknowledges that XM has made available to the Optionee the opportunity to obtain information to evaluate the merits and risks associated with this Agreement and the transactions contemplated thereby. The Optionee acknowledges that the investment contemplated by the Option involves a high degree of risk, including risks associated with XM's business operations and prospects including competition and the dependence on XM's technology and events beyond XM's control, the limits on transferability of the Option and Covered Shares, and the absence of a public market for the Covered Shares.
B. If any term or provision of this Agreement is determined by a court of competent jurisdiction to be illegal, invalid, or unenforceable, the legality, validity, or enforceability of the remainder of this Agreement shall not thereby be affected, and this Agreement shall be deemed to be amended to the extent necessary to delete such provision.
IN WITNESS WHEREOF, the parties have caused this Non-Qualified Stock Option Agreement to be signed effective as of the Date of Grant.
ATTEST: XM SATELLITE RADIO HOLDINGS INC.
_____________________ By: ________________________________________
Accepted and agreed to as of the Date of Grant:
"EXHIBIT A"
EXERCISE OF OPTION
Chairman, Board of Directors
XM Satellite Radio Holdings Inc.
10802 Parkridge Boulevard
Reston, Virginia 20191-5416
To the Board:
The undersigned, the Optionee under the Non-Qualified Stock Option
Agreement identified as Option No. __________, granted pursuant to the XM
Satellite Radio Holdings Inc. 1998 Share Award Plan, hereby irrevocably elects
to exercise the Option granted in the Agreement to purchase _______ shares of
common stock of XM Satellite Radio Holdings Inc. ("XM"), par value $0.10 per
share ("Shares"), and herewith makes payment of $__________ in the form of
[cash, Common Stock, cash plus Common Stock, through the exercise of the
cashless exercise program] for the shares purchased and $_________ in the form
of _________________ [cash, Common Stock, cash plus Common Stock, through the
exercise of the cashless exercise program] to cover the Corporation's
withholding tax liability in respect of the purchase. (Please complete, and
complete separate cashless exercise form as appropriate.)
The Optionee hereby represents, warrants and acknowledges the following:
A. The Optionee has made such investigations as the Optionee feels necessary and appropriate of the business and/or financial prospects of XM.
B. The Shares are being acquired for investment for the Optionee's own account and not with the view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended, and the certificate for such stock may be legended to that effect, that such stock is not registered under federal or state securities laws and that the registration exemptions being relied on are the federal and state private or limited offering exemptions and the Optionee has no reason to believe that such exemptions are not applicable to the Optionee.
C. The Optionee acknowledges that XM has made available to the Optionee the opportunity to obtain information to evaluate the merits and risks associated with this Agreement and the transactions contemplated thereby. The Optionee acknowledges that the investment contemplated by the Option involves a high degree of risk, including risks associated with XM's business operations and prospects including competition and the dependence on XM's technology and events beyond XM's control, the limits on transferability of the Shares, and the absence of a public market for the Shares.
[Note: Shares of Common Stock being delivered in payment of all or any part of the exercise price must be represented by certificates registered in the name of the Optionee and duly endorsed by the Optionee and by each and every other co- owner in whose name the shares may also be registered.]
Dated: ________________ ____________________________________
(Signature of Optionee)
Date Received by
XM Satellite Radio Holdings Inc.:____________________________
Received by:______________________________