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ESAT-GTL-CT0098R
Prime Contract
for
ESAT Communications System
between
DBS Industries
and
Alcatel Space Industries
REDACTED VERSION
CONFIDENTIAL TREATMENT REQUESTED
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TABLE OF CONTENTS
1. DEFINITIONS.............................................................4
2. SCOPE OF WORK...........................................................8
3. DBSI'S UNDERTAKINGS.....................................................9
4. PRICE..................................................................11
5. DELIVERY SCHEDULE......................................................14
6. PAYMENT................................................................15
7. INSPECTION AND ACCEPTANCE..............................................22
8. OPTIONS................................................................25
9. ACCESS TO WORK IN PROGRESS.............................................27
10. TRANSFER OF TITLE AND RISK.............................................28
11. RIGHTS IN DATA.........................................................29
12. PROPRIETARY AND/OR CONFIDENTIAL INFORMATION............................32
13. PUBLIC RELEASE OF INFORMATION..........................................33
14. LIMITATION OF LIABILITY................................................34
15. PATENTS, TRADEMARKS AND COPYRIGHTS.....................................35
16. EXTENSIONS FOR EXCUSABLE DELAYS........................................37
17. LIQUIDATED DAMAGES FOR LATE DELIVERY...................................39
18. TERMINATION FOR DEFAULT................................................41
19. TERMINATION FOR CONVENIENCE............................................44
20. OPPORTUNITY TO CURE A DEFECT...........................................46
21 THE CONTRACTOR'S RIGHT TO SUSPEND OR TERMINATE THE WORK................48
22. CHANGES................................................................50
23. SUBCONTRACTS...........................................................52
24. ASSIGNMENTS............................................................54
25. WARRANTY...............................................................55
26. INDEMNIFICATION........................................................56
27. APPLICABLE LAW AND ARBITRATION.........................................58
28. SPECIFIC PROVISIONS....................................................59
29. ENTIRE AGREEMENT.......................................................60
30. EFFECTIVE DATE.........................................................61
31. COMMUNICATION AND AUTHORITY............................................62
32. KEY PERSONNEL..........................................................64
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This Contract is made this 8th day of October 1999, as amended by the Parties on
December 22, 1999
Between:
Alcatel Space Industries, a corporation organized under the laws of
France having its principal place of business at 0 xxx Xxxx Xxxx, 00000
Xxxxxxxx, Xxxxx, Xxxxxx (hereinafter "The Contractor")
and
DBS Industries Inc., a corporation organized under the laws of Delaware
USA having its principal place of business at 000 Xxxxxxxxx Xxxxxxx,
Xxxxx 000X, Xxxx Xxxxxx, XX 00000, XXX on its own behalf and on behalf
of its wholly owned subsidiary, Newstar Limited, organized under the
laws of Bermuda (hereinafter collectively "DBSI").
DBSI and the Contractor shall be referred to jointly as the "Parties".
WHEREAS:
DBSI, by and through its subsidiary E-SAT, Inc., is the holder of a
Non-Voice, Non-geostationary Mobil Satellite Service license ( < < XXX
License > > ) issued by the Federal Communications Commission of the
United States ( < < FCC > > ) on March, 31, 1998 and awarded to E-SAT, Inc.
( < < ESAT > > ) upon its November 15, 1994 application N// 26-SAT-P/LA-95 and
subsequent amendments.
DBSI plans to use the XXX License to construct, launch and operate the
Non-Voice, Non-geostationary < < Xxxxxx XXX > > mobile Satellite system (the
< < E-SAT Program > > ).
Within such program, DBSI intends to develop, own, exploit and operate a global
satellite telecommunication system to provide commercial, worldwide, low cost
data collection services commonly referred to herein as the E-SAT Communication
System.
DBSI, for this purpose, has entered into two Subcontracts for the supply of the
Launch Services and the Satellite platform. The Satellite platform Subcontract
( < < Surrey Satellite Technology Limited (SSTL) Subcontract > > ) is assigned
by DBSI to the Contractor for the execution of the Prime Contract, at EDC, and
pursuant to the provisions of a separate Assignment Agreement.
DBSI intends to separately undertake the Launch Services and all insurance
related thereto and the In-Orbit operation of the Satellites of the E-SAT
Communication System.
DBSI desires to purchase and the Contractor desires to provide the ESAT
Communication System in accordance with the provisions of this Contract.
NOW THEREFORE IT IS HEREBY AGREED as follows :
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1. DEFINITIONS
CONSTELLATION
Means six Fully Operational Satellites as more specifically provided
for in Article 7. (Inspection and Acceptance).
CONSTRUCTIVE TOTAL LOSS
Is deemed to have occurred when Satellite IOP is less than 0.5 (If such
definition in the Risk Management insurance policy differs from that
herein, the Parties agree to modify this definition to conform with the
definition used in the applicable Risk Management insurance policy).
CONTRACT PRICE
Means the Firm Fixed Price including the Performance Incentives as
provided for in Article 4 (Price) and Article 6 (Payment).
DAY
Means a calendar day.
DEFECT
Shall have the meaning as ascribed for in Article 20 (Opportunity to
Cure a Defect).
EFFECTIVE DATE OF CONTRACT OR "EDC"
Shall have the meaning ascribed to it in Article 30 (Effective Date).
ESAT COMMUNICATION SYSTEM
Means the aggregate of:
(1) 3 (three) Fully Operational Satellites at SPAR and 3 (three)
more Fully Operational Satellites at SFAR subject to Article 7
Inspection and Acceptance,
(2) THE GROUND CONTROL SEGMENT,
(3) THE GROUND COMMUNICATION NETWORK,
(4) THE TERMINAL SEGMENT AND
(5) THE COMMUNICATIONS CENTER
as such terms are defined in Exhibit A (Statement of Work) and in
Exhibit B, (ESAT Level A Requirements Specification, ESAT-BJT-SP0078).
The E-SAT Communication System is to be supplied to DBSI as part of the
Work.
GROUND SEGMENT
The Ground Segment means the aggregate of : (1) the Ground Control
Segment, (2) the
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Communication Center, and (3) the Ground Communication Network, which
have the meaning ascribed to them in Exhibit B, (ESAT Level A
Requirements Specification, ESAT-BJT-SP0078). The Ground Segment is to
be supplied to DBSI as part of the Work.
FULLY OPERATIONAL SATELLITE
A < < Fully Operational Satellite > > or < < Fully Operational
Satellites > > shall mean one or more Satellites which meets the
Acceptance Criteria set forth in Exhibit C (E-SAT Acceptance Criteria)
relating to a Satellite to be manufactured by the Contractor under this
Contract.
GATEWAY MODE
When in gateway mode, the Satellite sends the stored inbound signals to
the gateway on the feeder downlink and receives the outbound messages
from the gateway on the feeder uplink.
INITIAL SET
Means the first set of three Fully Operational Satellites to be
manufactured, delivered on ground by the contractor under this Contract
as part of the Work .
LAUNCH
Means the intentional ignition of the first stage engines of the Launch
Vehicle, followed by Lift-off of the Launch Vehicle and refers to the
Launch of the Initial Set or the Second Set, as the case may be.
LAUNCH DATE
Means the date of Launch.
LAUNCH SERVICES
Shall mean the Launch Vehicle, payload dispenser system, Launch, Launch
phase mission planning and analysis provided by DBSI and more
particularly described in Exhibit A (Statement of Work).
LAUNCH VEHICLE AGENCY
Means the company selected by DBSI for the Launch of the Satellites
pursuant to the conditions of the Launch Services Agreement.
LAUNCH VEHICLE
Shall mean the Launch vehicle capable of placing the Satellites into
its designated orbit.
LEOP
Means Launch and Early Orbit Phase as described in Exhibit A (Statement
of Work) hereof.
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LIBOR
Means the London Interbank Offered Rate.
LIFT-OFF
Means the intentional ignition and upward acceleration of the first
stage of the Launch Vehicle.
ORBITAL STORAGE
Means any period of time of intentional non-use by DBSI of a Launched
Satellite which is performing in accordance with Article 6 (Payment).
PARTIAL LOSS
Is deemed to have occurred when the Satellite IOP is greater than or
equal to 0.5 but less than 1.0. (If such definition in the Risk
Management insurance policy differs from that herein, the Parties
agree to modify this definition to conform with the definition used
in the applicable Risk Management insurance policy).
SATELLITE
Satellite means a satellite composed of a payload and a platform as
described in Exhibit B, (ESAT Level A Requirements Specification,
ESAT-BJT-SP0078) to be supplied to DBSI as part of the Work.
SATELLITE CONTROL CENTER
Shall have the meaning ascribed to it in Exhibit B, (ESAT Level A
Requirements Specification, ESAT-BJT-SP0078).
SECOND SET
Means the second set of 3 (three) Fully Operational Satellites to be
manufactured, delivered on ground by Contractor, under this Contract
as part of the Work.
SERVICE MODE
When in service mode, the Satellite formats and transmits outbound
messages to the terminals on the service downlink and stores inbound
signals received from the terminals via the service uplink in its
on-board memory.
SET
Means 3 (three) Fully Operational Satellites to be manufactured under
this Contract.
SUBCONTRACT(S)
Means any contract awarded by the Contractor to any third party for
the completion of the
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Work ; Subcontracts include Major Subcontracts.
SUCCESSFUL INJECTION
Means the Satellites have been placed in the mission orbit within
3-sigma accuracy as specified in Exhibit B (ESAT Level A Requirements
Specification, ESAT-BJT SP0078D-September 10, 1999).
SPAR
Means the E-SAT Communication System Preliminary Acceptance Review
which happens after the completion of the Acceptance Tests as defined
in Article 7 (Inspection and Acceptance).
SFAR
Means the E-SAT Communication System Final Acceptance Review which
happens after the completion of the E-SAT Communication System
Preliminary Acceptance Review and Final Acceptance Tests as defined
in Article 7 (Inspection and Acceptance).
SPDR
Means the E-SAT Communications System Preliminary Design Review which
is scheduled to occur at EDC +4.
TOTAL CONTRACT PRICE
Means the Contract price and the Phase 2 Terminal Segment estimated
price as provided for in Article 4 (Price) and in Article 6 (Payment).
TOTAL LOSS
Is deemed to have occurred if a Launched Satellite is lost or
destroyed or its IOP is equal to 0. (If such definition in the Risk
Management insurance policy differs from that herein, the Parties
agree to modify this definition to conform with the definition used
in the applicable Risk Management insurance policy).
TOTAL PRIME CONTRACT PRICE
Means the sum of the Total Contract Price and the price SSTL
Subcontract as referred to in Article 4 (Price) and Article 6
(Payment).
WORK
Means the whole work described in the Contract and its Exhibits and
where the context so permits or requires < < Work > > includes any part
or parts of the Work.
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2. SCOPE OF WORK
2.1. The Contractor shall provide the necessary personnel, material,
equipment, services, facilities and export licenses or authorizations
to perform the Work in accordance with the provisions of this Contract
including the Exhibits listed below, and to make delivery to DBSI as
set forth in Article 5 (Delivery Schedule). The following documents
constitute the > > Contract < < :
- These Terms and Conditions contained in the Articles 1 to 32
of this Contract :
- Exhibit A: Statement of Work for the ESAT Communication
System, ESAT-GTL-SW0097D-September 10, 1999.
- Exhibit B: ESAT Level A Requirements Specification,
ESAT-BJT-SP0078D-September 10, 1999.
- Exhibit C: ESAT Acceptance Criteria, ESAT-MLO-SP0112D-October
7, 1999.
- Exhibit D: Specimen of Certificate of Acceptance
- Exhibit E : Key Personnel
- Exhibit F: Specimen form of Stand-by Letter of Credit
2.2 In the event of any discrepancy or inconsistency between the terms and
conditions of this Contract and the Exhibits, or among the Exhibits,
such discrepancy or inconsistency shall be resolved according to the
order of precedence in which the documents are listed here above.
2.3 Any specifications, events or deliverables identified as "TBD" (meaning
to be determined) or "TBC" (meaning to be confirmed) in the Exhibits to
this Contract shall be replaced by definitive values before EDC +4,
unless mutually agreed otherwise by the Parties. The values will be
proposed by the responsible Party and are subject to the approval of
the other Party.
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3. DBSI'S UNDERTAKINGS
3.1. General.
3.1.1. The undertakings of DBSI are enumerated in the Contract, in order to
allow the Contractor to define the limit of his own undertakings and
responsibilities. Within the framework of this Contract they constitute
an obligation for DBSI only insofar as they are necessary for the
successful and timely execution of the Contractor's tasks. The
undertakings of DBSI may be redefined in agreement with the Contractor.
3.1.2. Failure of DBSI to perform in due time its obligations under this
Contract may cause the Contractor to incur additional costs, other
damages and delay for the Contractor to complete its contractual
obligations. All costs incurred by the Contractor due to DBSI's failure
to fulfill its obligations for whatever reasons shall be borne by DBSI.
The Contractor shall use all reasonable endeavors to minimize the
amounts of such additional costs. Any delay incurred by the Contractor
due to DBSI's failure to fulfill its obligations for whatever reasons
shall be considered Excusable Delays as set forth in Article 16.
(Extensions for Excusable Delays) and the Contractor may terminate the
Contract as provided for in Article 21 (Contractor's right to
terminate).
3.1.3. The Contractor shall, within thirty (30) days, of DBSI's failure to
perform an obligation, notify DBSI of the Contractor's preliminary
assessment of the consequences of DBSI's failure to perform its
obligations.
3.2. DBSI's Undertakings and Responsibilities.
3.2.1. DBSI undertakes to fulfill all its obligations as defined in Exhibit A
(Statement of Work), such as but not limited to :
3.2.1.1. DBSI shall obtain, at its own expenses, all necessary authorizations
and approvals, such as but not limited to, for frequency coordination,
for the installation of the Gateway Earth Station at Spitzbergen
(Norway) and for the TTC station at Guildford (United Kingdom) and any
licenses required for the Contractor's performance under this contract
with the exception of (i) the licenses for importation in France of
items to be delivered to the Contractor by the Subcontractors, (ii) the
export licenses needed for export from France of the Deliverable Items
and (iii) the import licenses needed for importation to Norway of the
Gateway Earth Station.
3.2.1.2. DBSI shall provide the Launch Services, in accordance with and as
scheduled in Exhibit A (Statement of Work) and the separate Launch
Services Agreement between DBSI and Eurokot Launch Services GmBH dated
March 29, 1999.
3.2.1.3. DBSI shall, with the support of the Contractor, evaluate the Terminal
Subcontractor proposals according to Exhibit A in sufficient time to
proceed with the Contract.
3.2.2 DBSI shall purchase insurance against the risk of loss during the
launch and early orbit phase ("LEOP") and the initial in-orbit phase
("IOT") of a Satellite's operation. In this respect, DBSI undertakes to
acquire insurance prior to the transfer of risk provided for in Article
10.2
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covering any loss of a Satellite during the period between the Launch
of a Satellite and the System Final Acceptance Review ("SFAR").
Notwithstanding anything else to the contrary, DBSI may purchase
additional insurance coverages for periods prior to SFAR or after SFAR,
as it may from time to time deem advisable.
3.2.3. Prior to EDC +4 months, DBSI shall provide the Contractor with a
stand-by letter of credit in an initial amount of $[Redacted] MUSD on
commercially reasonable terms and conditions substantially similar to
Exhibit F(Specimen Form of Standby Letter of Credit). DBSI shall
provide the Contractor with a preliminary draft of the stand-by letter
of credit to be issued by a bank acceptable to the Contractor prior to
EDC + 2.5 months.
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4. PRICE
4.1. Total Prime Contract Price
Upon the full, satisfactory and timely performance of the Work by the
Contractor, DBSI shall pay to the Contractor the Total Prime Contract
Price of:
Contract Price: $[Redacted]
Phase 2 Terminal Segment (estimated) $[Redacted]
Total Contract Price: $[Redacted]
Platform Subcontract Price: $[Redacted]
Total Prime Contract Price: $88,632,233
4.2. Contract Price Breakdown [Redacted]
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4.3. Conditions
Except for the Phase 2 Terminal Segment estimated price, all prices are
Firm Fixed Prices including all taxes, levies, duties and other charges
of any nature, applicable or to become applicable in any country where
the work is performed with the exception of the Russian taxes and
duties on the Launch Services as well as in connection with the
importation and launch of the Satellites as provided for in the
Launches Services Agreement and of the items identified as VAT
applicable in Section 4.2 (Contract Price Breakdown) above. Items
identified as VAT applicable items are subject to Value Added Tax, at
the rate in force at the date of invoice of milestone 10, in France
which is due by DBSI in addition to the Contract Prices listed above.
Prices are binding on the Contractor and expressed in United States
Dollars.
4.4. Phase 2 Terminal Segment Price
The price of the Phase 2 Terminal Segment is estimated at
[Redacted]MUSD at the date of signature of this contract. The firm
fixed price of the Phase 2 Terminal Segment will be agreed by the
parties at the end of the phase 1 Terminal Segment at the latest (EDC +
7 months).
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5. DELIVERY SCHEDULE
5.1. The System Preliminary Acceptance Review (SPAR) as described in Article
7 (Inspection and Acceptance) and in accordance with provisions of
Exhibit A (Statement of Work) shall occur not later than EDC+29 months,
subject to the provisions of Article 16 (Extensions for Excusable
Delays).
5.2 The ESAT Communication System Final Acceptance Review (SFAR), with the
Second Set of Satellites, as described in Article 7 (Inspection and
Acceptance) and in accordance with provisions of Exhibit A (Statement
of Work) shall occur not later than EDC+31.5 months, subject to the
provisions of Article 16 (Extensions for Excusable Delays).
5.3 Delivery of the Initial Set shall occur at the Launch Readiness Review
1 scheduled for EDC + 22.5 months. Delivery of the Second Set shall
occur at the Launch Readiness Review 2 scheduled for EDC + 26.5 months.
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6. PAYMENT
The Total Prime Contract Price set forth in Article 4 (Price) shall be
paid by DBSI to the Contractor in accordance with the payment schedules
and the conditions set forth below :
6.1. Phase 2 Terminal Segment
[Redacted]
The schedule of payment of such Price will be the object of an
Amendment to the Contract pursuant to the provisions of Article 22
(Changes).
The conditions of payment of such Price will be the same as these
referred to in Article 6.2.3.
6.2. Milestone payment schedule and conditions.
6.2.1. Payment schedule for the Contract Price
[Redacted]
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Each Milestone is deemed to be completed when the Review has been held
and the corresponding Certificate of Acceptance is signed by both
Parties, as provided for in Article 7 (Inspection and Acceptance).
6.2.2. Payment schedule for the SSTL Subcontract.
[Redacted]
6.2.3. Milestone payment conditions
The payments set forth in the payment schedule ( Article 6.2.1 above)
shall occur after
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completion of the Milestone demonstrated by the Contractor at a review
in accordance with Article 7 (Inspection and Acceptance) except for
payment numbers 1 and 2 which shall be paid at EDC. Upon completion of
a Milestone, the following procedure shall apply:
a) The Contractor shall issue to DBSI, as provided for in Article
31. (Communication and Authority) herein, the Invoice, in two
(2) copies, accompanied with the Certificate of Acceptance, as
referred to in Article 7 (Inspection and Acceptance) duly
signed by both Parties (justification of Milestone completion)
for the payment associated with each Milestone (< < Milestone
Payment > > ) as identified in Article 6.2.1 (Payment Schedule
for the Contract Price).
b) If DBSI disputes part or all of the completion of the
Milestone, then the Contractor shall issue a revised invoice
in the amount of the undisputed portion of the Milestone
Payment amount, provided that such undisputed portion of the
Milestone is at least ninety percent (90%) of the related
Milestone.
c) Each Invoice, accompanied by a Certificate of Acceptance,
shall be sent by the Contractor to DBSI by telefax followed by
signed originals sent by registered courier services.
d) DBSI shall pay the invoice by wire transfer within fifteen
(15) days of the date DBSI receives the invoice.
6.2.4. SSTL Milestone payment conditions.
Upon completion of a Milestone, except for Payment numbers 3 and 4
which will be paid at EDC, the following procedure shall apply :
a) At the receipt of an invoice from SSTL, accompanied with
XXXX's evidence of achievement of the Milestone, as referred
to in the SSTL Subcontract, the Contractor will approve such
invoice and evidence.
b) The Contractor will issue an Invoice for such SSTL's Milestone
accompanied with approved SSTL's invoice and evidence of
achievement following 10 (ten) days of receipt of SSTL's
invoice.
c) Each Invoice together with SSTL's evidence of achievement of
the Milestone, shall be sent by the Contractor to DBSI by
xxxxxxx followed by signed originals sent by registered
courier services.
d) DBSI will pay the SSTL invoice by wire transfer within fifteen
(15) days from the date DBSI receives the invoice.
6.3. In-Orbit Performance Incentives.
6.3.1. Performance Incentives conditions.
As referred to in Article 6.2.1. above, the Contractor will receive
[Redacted]MUSD for having successfully achieved SPAR and an additional
[Redacted]MUSD for having successfully achieved SFAR.
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These amounts together with [Redacted]MUSD of the milestone 3.1 payment
represent the Performance Incentives amounts put at stake by the
Contractor and which will be definitively earned by the Contractor or
pay back to DBSI according to the Performance of the Set in orbit
during the Performance period.
The Performance period for the Satellites of the Initial Set is
determined as the five (5) years following the SPAR. One tenth of the
Performance Incentives shall be earned for each six (6) months period
for sixty consecutive months.
The Performance period for the Satellites of the Second Set is
determined as the five (5) years following the SFAR. One tenth of the
Performance Incentives shall be earned for each six (6) months period
for sixty consecutive months.
6.3.2. Performance measurement.
The Performance Incentives earned by the Contractor, will be, for each
Set, a function of the In-Orbit Performance (IOP) of each Satellite
measured as follows :
6.3.2.1. Measurement of the IOP.
1. Each Satellite has [Redacted] seconds of inbound message data
storage capacity. The measure of Satellite in-orbit Measured
Memory (MEM) ranges in value between 0 and 1 and is calculated
using the formula :
MEM = MEASURED MEMORY CAPACITY [SECONDS] DIVIDED BY [Redacted] SECONDS
2. Each Satellite operates in gateway mode for [Redacted] minutes
per day. The measure of Satellite in-orbit Gateway Mode
Performance (GMP) ranges in value between 0 and 1 and is
calculated using the formula :
GMP = MEASURED GATEWAY MODE PERFORMANCE [MINUTES] DIVIDED BY [Redacted] MINUTES
3. Each Satellite operates in Service mode for [Redacted] minutes
per day. The measure of Satellite in-orbit Service Mode
Performance (SMP) ranges in value between 0 and 1 and is
calculated using the formula:
SMP = MEASURED SERVICE MODE PERFORMANCE [MINUTES] DIVIDED BY [Redacted] MINUTES
4. Each Satellite In-Orbit Performance (IOP) ranges in value
between 0 and 1 and is calculated for each payload using the
formula :
IOP = MEM x GMP x SMP
a) For the Initial Set, the Satellite index (i) ranges
between 1 and 3.
b) For the Second Set, the Satellite index (i) ranges
between 4 and 6.
5. The system total In-Orbit Performance (IOP (total))
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a) For the Initial Set the IOP (total) ranges in value
between 0 and 1 and is equal to :
IOP (TOTAL1) = (IOP(1) + IOP(2) + IOP(3)) DIVIDED BY 3
b) For the Second Set the IOP total ranges in value
between 0 and 1 and is equal to :
IOP (TOTAL2) = (IOP(4) + IOP(5) + IOP(6)) DIVIDED BY 3
The relevant measures of Satellite IOP are made once a month,
evenly spaced, during the six months period and shall be
deemed to commence on the first month after SPAR or SFAR. The
IOP will be calculated as an average of these 6 (six)
measurements per Set as described in Article 6.3.2.
(Performance measurement) above.
6.3.2.2. Performance Incentives earning.
The Contractor shall definitively earn, for each six month period and
provided that IOP is equal to 1, for one Set of Satellite, MUSD
[Redacted].
6.3.2.3. Performance Incentives pay back.
Should IOP (TOTAL1) or IOP (TOTAL2) be less than 1 for any Set for a
six month period as calculated under Article 6.3.2.1., then the
Contractor shall pay back to DBSI an amount computed as follows:
PAYMENT FOR INITIAL SET = [(MUSD [Redacted]X [1 - IOP (TOTAL1)])
DIVIDED BY 10] X (1+LIBOR+0.5%)(N)
PAYMENT FOR SECOND SET = [(MUSD [Redacted]X [1 - IOP (TOTAL2)])
DIVIDED BY 10] X (1+LIBOR+0.5%)(N)
n : is the number of years or fraction of years counted from the SPAR
or the SFAR until the Performance Incentives due date.
6.3.3. Particular provisions.
6.3.3.1. Pay back conditions.
Upon completion of a six month period and the related Performance
measurement, any payment due to DBSI pursuant to this Article 6.3.
shall be paid by the Contractor within fifteen (15) days from the
Performance measurement as determined here above.
6.3.3.2. Survival of Contractor rights and obligations related to In-Orbit
Performance Incentives.
The Contractor's rights and obligations related to In-Orbit Performance
Incentives under this article for any Satellite that has been delivered
prior to termination of this Contract in accordance with Article 18
(Termination for default), Article 19 (Termination for convenience) or
Article 21 (The Contractor's right to terminate) shall survive such
termination.
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6.3.3.3. Exclusivity of remedies.
The payback of the Performance Incentives set forth in this article
shall be DBSI's exclusive remedies with respect to the Performance of
the Satellites, and shall be in lieu of any other remedies at law or in
equity. In no event shall the Contractor be liable for any incidental,
special, contingent, or consequential damages including lost profits.
6.3.3.4. Degradation or failures through no fault of the Contractor.
If at any time after Launch, through no fault of the Contractor, a
Satellite suffers a Partial Loss, Constructive Total Loss or Total
Loss, then Contractor shall not be liable for the pay back of any
Performance Incentives to DBSI attributable to such cause.
6.3.3.5. Disagreements
If the Contractor disagrees with any Performance measurement by DBSI,
and has evidence to the contrary, DBSI shall consider such evidence. If
any disagreement about any such measurement persists, the Parties may
mutually agree to submit it to a technical expert, or either party may
invoke Article 27 (Applicable law and arbitration) hereof. At the time
that Article 27 is invoked, the Contractor shall immediately place the
full disputed amount in an interest-bearing escrow account at a bank
acceptable to DBSI. Upon presentation of a certificate duly signed by
the authorised representatives of both Parties, or by the arbitrator if
one Party unreasonably refuses to sign the certificate, confirming that
the dispute has been settled, the bank shall distribute the funds in
accordance with the terms of the settlement, and the interest earned
shall be divided in direct proportion to such terms.
6.3.3.6. Financial Interest on Performance Incentives
Each amount of Performance Incentives to be paid by Contractor to DBSI
pursuant to Article 6.3.2.3 above shall bear financial interest, at a
rate equal to 0.5% (one half per cent) per annum over the LIBOR (one
month LIBOR), to be computed from the date of SPAR or SFAR of the ESAT
Communication System until the due date of Performance Incentives pay
back by the Contractor. Such interest shall be paid by the Contractor
to DBSI, in the same six month's instalments as provided for the
Performance payment.
6.3.3.7. Insurance.
It is expressly agreed that the Contractor shall not purchase any
insurance of any nature to protect against loss of Performance
Incentives payback as set forth in this Article 6.3. (In-Orbit
Performance Incentives).
6.4. Early Delivery Bonus
If after the first Launch Success there are a minimum of two Satellites
Performing in orbit, and should the Contractor enable DBSI to operate
on a commercial basis one of these Satellites at EDC + 25 months, the
Contractor will be awarded a [Redacted] (USD [Redacted]) bonus payment.
In the event that the Contractor achieves an early delivery pursuant to
this Article 6.4, the Contractor shall invoice DBSI at SPAR.
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6.5 Extended Life Performance payment.
Provided that DBSI elects to continue operating a Satellite beyond five
(5) years of operation in orbit and such Satellites are generating
revenues during the six (6) month period, then the Contractor shall be
entitled to earn additional Performance Incentives for each six (6)
month period of operation, based on the following formula:
Payment = [MUSD 0. [Redacted] DIVIDED BY 3) X IOP]
6.6. Late Payments Interest
DBSI shall pay an additional amount to the Contractor calculated at
LIBOR (one month LIBOR) + 3 % (three per cent) per year, as applied to
the amount of any undisputed invoices unpaid on their due date, such
amount to be computed on a daily basis commencing on the calendar day
following the payment due date.
6.7. Payment Delivery
All payments shall be made in full, free of any withholding tax and
shall be considered effective when the full related amount has been
received at the Contractor's Bank on the account referenced below :
[Redacted]
6.8 Pre-payment Option
At any time after SPDR, DBSI shall have the option to pre-pay the
entire Total Prime Contract Price, less any payments previously paid to
the Contractor, at a discount of [Redacted]of the total remaining
milestone payments.
Page 22
7. INSPECTION AND ACCEPTANCE
7.1. E-SAT Communication System Preliminary Acceptance
7.1.1. The E-SAT Communication System Preliminary Acceptance will be performed
by the Contractor using the Ground Communication Network, the
Communication Center, the Spitzbergen Gateway Earth station and a
minimum of two Satellites with the Satellite Control Center (SCC), the
Guildford TTC station, the UAS simulator and the Terminal simulator.
7.1.2. The E-SAT Communication System Preliminary Acceptance Review (SPAR)
shall occur when the Contractor establishes by tests, analysis and
documentary evidence that the E-SAT Communication System Acceptance
criteria have been met in accordance with the provisions of Exhibit C
(ESAT Acceptance Criteria).
DBSI shall be preliminary notified 10 calendar days prior to the
beginning of the Preliminary Acceptance Test activity, and will then
have the opportunity to decide upon its participation. The Contractor
shall pursue all Acceptance Tests activities which are to be conducted
by him with DBSI's personnel being present or not and subject to
previous information as above mentioned.
Within 5 (five) calendar days after successful completion of the
Preliminary Acceptance Test, the Contractor will deliver to DBSI the
Test Reports together with the Certificate of Acceptance.
7.1.3. At the receipt of the Certificate, DBSI shall have 10 (ten) Days
(Review period) to issue a notice either confirming E-SAT Communication
System Preliminary Acceptance (Certificate of Preliminary Acceptance)
or indicating the respects in which the E-SAT Communication System
Acceptance criteria have not been met.
In case of rejection by DBSI, the Contractor may either perform the
required corrective actions, or contest the decision and give DBSI
notice of objection.
DBSI shall within 5 (five) Days inform the Contractor of its final
decision.
In the event the Parties cannot agree on the results of the E-SAT
Communication System Preliminary Acceptance, then the provisions of
Article 27 (Applicable Law and Arbitration) will apply.
7.1.4. If, after the elapse of the Review period referred to above, no notice
confirming E-SAT Communication System Preliminary Acceptance has been
signed by DBSI or no rejection report has been issued by DBSI, the
Preliminary Acceptance Review of the E-SAT Communication System shall
be deemed to have occurred successfully on the basis of the Certificate
of Acceptance issued by the Contractor pursuant to Article 7.1.2.
7.1.5. If SPAR or SFAR cannot be achieved because of a Partial Loss,
Constructive Total Loss or Total Loss of a Satellite in orbit and,
within 120 (hundred and twenty) days of such event, DBSI has not placed
an order of Replacement Set of Satellite or additional Satellite
pursuant to Article 8 (Options) of this Contract, both SPAR and SFAR
will be deemed to have occurred successfully at the date as mentioned
in Article 5 (Delivery schedule).
Page 23
7.2. E-SAT Communication System Final Acceptance
7.2.1. The E-SAT Communication System Final Acceptance will be performed by
the Contractor using the E-SAT Communication System with a minimum of 4
(four) Satellites.
7.2.2. The E-SAT Communication System Final Acceptance Review (SFAR) shall
occur when the Contractor establishes by tests, analysis and
documentary evidence that the E-SAT Communication System Acceptance
criteria have been met in accordance with the provisions of Exhibit C
(ESAT Acceptance Criteria).
DBSI shall be preliminary notified 10 (ten) calendar days, prior to the
beginning of the Final Acceptance Tests activities, and will then have
the opportunity to decide upon its participation. The Contractor shall
pursue all Acceptance Tests activities which are to be conducted by him
with DBSI's personnel being present or not and subject to previous
information as above mentioned.
Within 5 (five) calendar days after successful completion of Final
Acceptance Test the Contractor will deliver to DBSI the Test Reports
together with the Certificate of compliance to the Acceptance Criteria
of this Contract.
7.2.3 At the receipt of the Certificate, DBSI shall have 10 (ten) Days
(Review period) to issue a notice either confirming E-SAT Communication
System Final Acceptance (Certificate of Final Acceptance) or indicating
the respects in which the E-SAT Communication System Acceptance
criteria have not been met.
In case of rejection by DBSI, the Contractor may either perform the
required corrective actions, or contest the decision and give DBSI
notice of objection.
DBSI shall within 5 (five) Days inform the Contractor of its final
decision.
In the event the Parties cannot agree on the results of the E-SAT
Communication System Final Acceptance, then the provisions of Article
27 (Applicable Law and Arbitration) will apply.
7.2.4. If, after the elapse of the Review period referred to above, no notice
confirming E-SAT Communication System Final Acceptance (Certificate of
Final Acceptance) has been signed by DBSI or no rejection report has
been issued by DBSI, the Final Acceptance Review of the E-SAT
Communication System shall be deemed to have occurred successfully on
the basis of the certificate issued by the Contractor pursuant to
Article 7.2.2..
7.3. Certificate of Acceptance
Any Review described in this Article and in Exhibit A (Statement of
Work), associated with a Milestone payment, will be deemed completed by
the signature by both Parties of a Certificate of Acceptance. This
Certificate must be signed at the completion of the Review or in a
maximum of 10 (ten) days following such completion. Following such 10
(ten) days, and provided that there is no disputes from DBSI, the
Acceptance Review is deemed to be successful and the Certificate of
Acceptance is deemed to be issued.
In the event DBSI disputes the signature of the Certificate of
Acceptance, DBSI shall so notify the Contractor in writing, within 10
(ten) days of completion of the Review.
If the Contractor and DBSI cannot enter in an agreement about the
disputed Certificate,
Page 24
Article 27 (Applicable law and arbitrage) shall apply.
7.4. DBSI, or its designated representatives, shall have the right to
witness and review the results of the acceptance testing of the ESAT
Communications System at the system level of the deliverable hardware
at the facilities of the Contractor. To allow DBSI to most effectively
schedule the monitoring stated above, the Contractor shall give DBSI
timely notification of the acceptance testing of the deliverable
hardware.
Page 25
8. OPTIONS
8.1. List of the options
-------- ------------------------------------------------------- -------------- ------------------ --------------
No OPTION VALIDITY DATE TYPE OF PRICE PRICE IN MUSD
-------- ------------------------------------------------------- -------------- ------------------ --------------
1 Replacement Set of Satellites SFAR Firm Fixed [Redacted]
-------------- ------------------ --------------
SFAR + 1
year Firm Fixed [Redacted]
-------- ------------------------------------------------------- -------------- ------------------ --------------
2 Additional Satellite SFAR Firm Fixed [Redacted]
-------------- ------------------ --------------
SFAR + 1
year Firm Fixed [Redacted]
-------- ------------------------------------------------------- -------------- ------------------ --------------
3 Second Gateway in Fairbanks January 1, Fixed [Redacted]
2002
-------- ------------------------------------------------------- -------------- ------------------ --------------
4 Civil work in Spitzbergen PDR Estimated [Redacted]
-------- ------------------------------------------------------- -------------- ------------------ --------------
5 Civil work in Fairbanks SFAR Estimated [Redacted]
-------- ------------------------------------------------------- -------------- ------------------ --------------
6 One recurring payload PCU, RFU, antenna and harness SPAR Estimated [Redacted]
-------- ------------------------------------------------------- -------------- ------------------ --------------
7 PCU & RFU (not space qualified) [Redacted]
-------- ------------------------------------------------------- -------------- ------------------ --------------
8.2 Conditions of the options.
8.2.1. General
The provisions of this Contract apply to the exercise of an option
except as otherwise described hereunder.
8.2.2. Work.
The description of the Work concerning these options is made in the
Exhibit A (Statement of Work). For option n DEG. 1, 2 and 6, the design
and configuration would be identical to those procured under this
Contract.
8.2.3. Price and conditions.
The price of these options is fixed price except option 4, 5 & 6 which
are estimated prices. The estimated prices will be converted into firm
fixed prices at the exercise of the option.
Any exercise of these options shall be in writing and shall be made
within their validity dates.
Should the currency exchange rate between USD and Euro fluctuate by
more than 10% from the date of signature and the date of exercise of
the option the prices quoted in 8.1 will be
Page 26
adjusted accordingly.
8.2.4. Payment plan.
The payment plan for the options will be defined by mutual agreement at
the time of the exercise of the option.
There is no Performance payment associated to the options.
8.2.5. Schedule of delivery
Option no 1 : If the request of such option is given to the
Contractor no later than EDC+31.5 months (SFAR), the
Contractor shall deliver the Set of Satellite on
ground at the launch site mutually agreed between the
parties no later than 14 (fourteen) months after such
order and the receipt of the down payment associated.
In the case that the launch site designated by DBSI
is not the same as in this contract, the contractor
will be entitled to any additional costs attributable
to this change.
Option no 2 : If the request of such option is given to the
Contractor no later than EDC+31.5 months (SFAR), the
Contractor shall deliver the additional Satellite on
ground at the launch site mutually agreed between the
parties no later than 12 (twelve) months after such
order and the receipt of the down payment associated.
In the case that the launch site designated by DBSI
is not the same as in this contract, the contractor
will be entitled to any additional costs attributable
to this change.
Option no 3 : If the request of such option is given to the
Contractor before January 1, 2002, the Contractor
shall deliver the second Gateway at Fairbanks no
later than 12 (twelve) months after such order and
the receipt of the down payment associated.
Option no 4 : If the request of such option is given to the
Contractor no later than PDR, the Contractor shall
complete the civil work no later than 12 (twelve)
months after such order and the receipt of the down
payment associated.
Option no 5 : If the request of such option is given to the
Contractor no later than EDC+31.5 months (SFAR), the
Contractor shall complete no later than 12 (twelve)
months after such order and the receipt of the down
payment associated.
Option no 6 : If the request of such option is given to the
Contractor no later than EDC+29 months (SPAR), the
Contractor shall deliver the single payload on ground
no later than 12 (twelve) months after such order and
the receipt of the down payment associated.
Page 27
9. ACCESS TO WORK IN PROGRESS
9.1. DBSI shall be provided access to all Work, including technical data,
test data, drawings, documentation, tooling, and manufacturing
processes, testing, and hardware in progress, being performed at The
Contractor's facilities pursuant to this Contract at all times during
the period of Contract performance, provided that such access does not
interfere unreasonably with such Work. Subject to Article 11 (Rights in
Data) and Article12 (Proprietary and/or Confidential Information),
hereof, and solely in connection with the performance of this Contract,
the Contractor shall, at DBSI's request, within 20 (twenty) days,
deliver to DBSI copies of design test data and other data generated
under this Contract and reasonably necessary to determine compliance
with this Contract. Nothing in this paragraph is intended to nor shall
it create any independent right (other than as specifically set forth
in this Contract) in any third party to require production of such
design, test data or other data.
9.2. DBSI shall be provided access to all Work being performed pursuant to
this Contract in the Subcontractor's facilities to the extent the
Contractor obtains such access, subject to the advance notice has been
received by the Contractor in reasonable time by DBSI, the right of the
Contractor to accompany DBSI on any such visit and subject further to
the execution by DBSI of non-disclosure or similar agreements as may be
required by said Subcontractors. The Contractor shall make best efforts
to obtain access to the work being performed pursuant to this Contract
in its Subcontractor's facilities.
9.3. The rights of DBSI under any of the provisions of this Article shall be
subject to compliance with internal and national security rules and
regulations applicable to the Contractor and its Subcontractors.
9.4 DBSI will be given full access to any part of the work performed under
Section 4 (Terminal Segment) of Exhibit A (Statement of Work).
Page 28
10. TRANSFER OF TITLE AND RISK
10.1. Transfer of title
10.1.1 The title to each Satellite within the Initial Set shall pass to DBSI a
the Launch of the Initial Set together with all other deliverables
under this Contract except for the Second Set and the Documentation.
10.1.2. The title to each Satellite of the Second Set shall pass to DBSI at the
Launch of the Second Set.
10.1.3. Prior to the transfer of title as described above, DBSI has no property
interest in the work in progress.
10.2. Transfer of risk
10.2.1. Transfer of risk of loss of or damage to each Satellite of the Initial
Set shall pass to DBSI at Launch of the Initial Set together with the
risk of loss of all other deliverables under this Contract except for
the Second Set and the Documentation.
10.2.2. Transfer of risk of loss or damage to each Satellite of the Second Set
shall pass to DBSI at Launch of the Second Set.
10.3. The Contractor's responsibility for care of the Work shall exclude all
damage resulting from DBSI's acts or omissions, it is being understood
the aforesaid provisions do not constitute a deviation of Article 25
(Warranty).
10.4 Transfer of title and risk of loss to Documentation shall pass to DBSI
at the time of delivery as defined in Exhibit A (Statement of Work).
Page 29
11. RIGHTS IN DATA
11.1. Rights in Data
11.1.1. Definitions.
< < Technical Data > > means recorded information of a scientific or
technical nature regardless of form or the media on which it may be
recorded. The term includes computer software. The term does not
include information incidental to Subcontract administration, such as
financial or management information.
< < Foreground Data > > means Technical Data owned by the Contractor
which is produced and paid for under this Contract.
< < Background Data > > means Technical Data owned by the Contractor,
other than Foreground Data, which is directly used or applied in the
performance of this Contract, with respect to which the Contractor now
has or may hereafter acquire the right to authorize use by others in
the manner specified by this Article.
11.1.2. Rights in Foreground Data.
a) The Contractor hereby grants to DBSI an irrevocable, non
transferable and with no sublicensing rights, non exclusive,
royalty-free right to use and have used Foreground Data
throughout the world for ESAT Communication System purposes.
Subject to Article 12 (Proprietary and/or Confidential
Information), the Contractor hereby grants to DBSI the right
to disclose such Foreground Data to the Federal Communications
Commission where appropriate and required.
b) DBSI agrees, except under the authority of a) above, that it
shall not disclose Foreground Data to any other person for any
purpose, unless the Contractor consents in writing to such
disclosure.
c) The Contractor agrees that, for a period of four (4) years
from SFAR, it shall not use, or have or permit others to use,
the Foreground Data for the purpose of engaging in business
activity relating to the design or manufacture of a low earth
orbiting satellite system, or elements of a low earth orbiting
satellite system, that would be in direct and material
competition with the E-SAT Communications system in offering
non-voice, non-geostationary mobile satellite services.
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.
11.1.3. Rights in Background Data
a) The Contractor shall, upon written application by DBSI grant
to DBSI an irrevocable, royalty-free, non-exclusive right to
use and have used Background Data throughout the world for
ESAT Communication System purposes to the extent reasonable
and necessary to use of Foreground Data or to the practice of
Subject Inventions.
b) DBSI agrees that it shall not disclose Background Data to any
third party for any purpose without the Contractor's consent
in writing to such disclosure.
Page 30
11.2. Rights in Inventions
11.2.1. Definitions
< < Subject Invention > > means any invention, discovery, improvement
or innovation of more than a trifling or routine nature, whether or not
patentable, conceived or first actually reduced to practice in the
performance of the Work and paid for under this Contract.
< < Background Invention > > means any invention, discovery,
improvement or innovation, other than a Subject Invention, whether or
not patentable, which invention is directly incorporated or utilized in
any work performed under this Contract.
11.2.2. Subject Inventions
The Contractor agrees to and does hereby grant to DBSI an irrevocable,
non transferable and with no sublicensing rights, royalty-free,
non-exclusive license to practice and have practiced Subject Inventions
and patents issued thereon for ESAT Communication System purposes only
throughout the world.
11.2.3. Background Inventions
The Contractor agrees to grant DBSI, upon its request, an irrevocable,
royalty-free, non-exclusive license, with right to practice and have
practice any Background Inventions and patents issued thereon to the
extent that such practice is reasonably necessary to enable DBSI to
practice any Subject Invention or Foreground Data for ESAT
Communication System purposes.
11.2.4. Filing of Patent Applications
Except as otherwise provide in this Article 11 (Rights in Data), the
Contractor shall have the exclusive right, worldwide, to file patent
applications on Subject Inventions. The Contractor shall, within 6
(six) months of its disclosure of a Subject Invention, file or cause to
be filed a patent application in due form. After each filing, The
Contractor shall promptly furnish to DBSI a copy of the patent
application, and shall thereafter promptly notify DBSI of the issuance
of each and every patent on a Subject Invention. Should The Contractor
elect not to file for patent protection of any Subject Invention, title
to such Subject Invention shall be assigned to DBSI at DBSI's request,
provided (i) DBSI agrees to file for patent protection of any Subject
Invention, (ii) DBSI shall grant to The Contractor a paid-up,
worldwide, non-exclusive, irrevocable license, with right of
sub-license, under such Subject Invention to use same in connection
with the performance of Contractor's obligations under this Contract
only, and (iii) the Contractor agrees not to use such Subject
Invention, or permit others to use such Subject Invention, in direct
competition on with the for ESAT Communication System. For that
purpose, The Contractor shall furnish to DBSI a written disclosure of
said Subject Invention, sufficiently complete in technical detail to
convey to one skilled in the art to which the Subject Invention
pertains a clear understanding of the nature, purpose, operation, and,
to the extent known, the physical, chemical or electrical
characteristics of the invention. A copy of the letter of transmittal
of such disclosure shall be simultaneously provided to the Contractor.
11.2.5. Lower-Tier Subcontracts
The Contractor shall use its best effort to include the substance of
this Article, granting license
Page 31
rights directly to DBSI as provided above, in all Subcontracts except
the assigned Subcontracts hereunder that involve research and
development effort.
11.2.6. User Terminal Licensing Rights
In the development of the User Terminal, Application Specific
Integrated Circuits (ASIC) will be required. The Contractor will
provide, to DBSI, ASIC licensing rights.
All information required to manufacture or modify any of the terminal
segment equipment will be transferred to DBSI. Furthermore, DBSI will
own the manufacturing rights to the mass production of the User
Terminals including all custom parts.
DBSI will own the work performed under Section 4 (Terminal Segment) of
Exhibit A (Statement of Work).
Page 32
12. PROPRIETARY AND/OR CONFIDENTIAL INFORMATION
12.1. To the extent that either Party discloses information to the other
which the disclosing Party considers Proprietary and/or Confidential,
said Party shall identify such information as proprietary when
disclosing it to the other Party by marking it clearly and
conspicuously as Proprietary and/or Confidential Information. Any
proprietary disclosure to either Party, if made orally, shall be
confirmed in a writing, delivered by the disclosing party within 21
(twenty one) days of initial disclosure and identified as Proprietary
and/or Confidential Information. Any such Proprietary and/or
Confidential Information disclosed under this Contract shall not be
disclosed to third parties and shall be used by the recipient thereof
only in its performance under this Contract. Neither Party shall be
liable for disclosure or use of such Proprietary and/or Confidential
Information which :
is or becomes available to the public domain without violation
of an obligation of confidence assumed hereunder ;
is lawfully obtained by the receiving Party from a third party
or parties ;
is known as evidenced by written proof to the receiving Party
prior to such disclosure ;
is at any time developed as demonstrated by written records by
the receiving Party completely independently of any such
disclosure or disclosures from the disclosing Party ; or
occurs more than 15 (fifteen) years after initially received.
12.2. Neither Party shall be liable for the disclosure pursuant to judicial
action or decree, or pursuant to any requirement of any Government or
any agency or department thereof, having jurisdiction over such Party
of any Proprietary and/or Confidential Information which it receives
under this Contract.
12.3. No license to the other Party, under any patents or copyrights, is
granted or implied by conveying Proprietary and/or Confidential
Information or other information to that party and none of such
information which may be transmitted or exchanged by the respective
Parties shall constitute any representation, warranty, assurance,
guaranty, or inducement by either Party to the other with respect to
the infringement of patents or other rights of others.
Page 33
13. PUBLIC RELEASE OF INFORMATION
13.1. Except as required by law, no items of publicity of any kind shall be
released, including, without limitation, news releases, articles,
brochures, advertisements, prepared speeches, company reports or other
information releases related to the Work performed or to be performed
by the Contractor, a Subcontractor or an employee, consultant or an
agent of any Party, under this Contract, without DBSI's and the
Contractor's prior written consent, which consent shall not be
unreasonably withheld.
13.2. Neither Party shall be liable for :
(i) information that is publicly available from government
agencies and otherwise ;
(ii) information which had been required to be specified in
application for publication by securities filings and other
governmental, administration and judicial filings ;
(iii) publication which has been prohibited even for internal use
(non-public).
Page 34
14. LIMITATION OF LIABILITY
14.1. Neither Party, their officers, directors, employees, agents or
consultants, shall be liable for any incidental or consequential
damages of any nature arising for any breach or default under this
Contract, including specifically but without limitation, loss or
profits or revenue, loss of full or partial use of any equipment,
losses by reason of operation of any deliverable Item at less than
capacity, delays, cost of replacements, cost of capital, loss of
goodwill, claims of customers, or other such damages. However, nothing
in this article shall be construed as to abrogate the provisions of
Articles 17 (Liquidated Damages for Late Delivery) and 25 (Warranty)
herein.
The Contractor makes no warranty or agreement, express or implied, to
or for the benefit of any person or entity other than DBSI concerning
the performance of the E-SAT Communication System or any other matters
relating to the Work hereunder. DBSI shall indemnify and hold harmless
the Contractor and its Affiliates and Subcontractors from and against
any loss, damage, liability or expense (including attorneys' fees and
other expenses of investigating or defending claims) resulting from (i)
any representation made by DBSI to any third party relating to the
Work; (ii) any claim of persons dealing with or through DBSI (including
customers or insurers) or any agency or other governmental authority of
DBSI's country ; or (iii) any other claims relating to the E-SAT
Communication System and arising after System Preliminary Acceptance
Review. DBSI shall obtain from its insurers waivers of any subrogation
rights against the Contractor or its affiliates or Subcontractors, and
shall provide evidence of such waivers to the Contractor prior to
delivery.
Except as specifically provided for in this Contract, the Contractor
makes no warranties, express or implied, with respect to the Contract
or the performance of the Contractor hereunder or the equipment or Work
furnished hereunder, whether arising under law or at equity. Any
implied warranty of merchantability or fitness for a particular purpose
is excluded. The express warranties of the Contractor contained in this
Contract are exclusive.
14.2. The total liability of either Party to the other 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 from the Contract, or from the
performance or breach thereof, shall be limited to the remedies set
forth in the Contract.
14.3 The total liability of the Contractor under Articles 6.3, 17.1.3 and
17.1.4 shall be limited to [Redacted] of the Contract Price.
Page 35
15. PATENTS, TRADEMARKS AND COPYRIGHTS
15.1. The Contractor, at its own expense, shall defend and hold harmless
DBSI, its officers, directors, employees, agents, consultants or
assignees against any claim or suit based on an allegation that the
manufacture of any item in the performance of this Contract, or the
use, lease or sale of any item delivered or to be delivered under this
Contract, or used in the performance of the Work infringes any third
party rights or breaches any confidence, including but without
limitation any trade secrets, intellectual property right and patent
rights, and shall pay any royalties and other costs related to the
settlement of such claim or suit and the costs and damages; provided
that :
(i) DBSI promptly but no later than twenty (20) Days after such
claim or suit notifies the Contractor in writing and,
(ii) DBSI gives the Contractor authority to defend or settle such
claim or suit and, at the Contractor's request, gives such
assistance and information as is reasonably necessary to
defend or settle such claim or suit provided that any
settlement limiting the use of the ESAT Communication System
shall require the prior consent of DBSI, such consent not to
be unreasonably withheld. Any such assistance or information
which is furnished by DBSI at the request of the Contractor is
to be at the Contractor's expense.
DBSI shall not by any act (admission, acknowledgment or omission)
prejudice the Contractor's defense.
15.2. If the manufacture of any item in the performance of this Contract or
the use, lease or sale of any item delivered or to be delivered under
the Contract, is enjoined as a result of a suit based on a claim of
infringement, the Contractor shall:
(i) resolve the matter so that the items are no longer subject to
such injunction, or
(ii) procure for DBSI the right to use the infringing item, or
(iii) replace the item with a functionally-equivalent,
non-infringing item satisfactory to DBSI.
If the Contractor, at its sole discretion determines that none of the
alternatives is available or feasible, The Contractor shall meet with
DBSI to address the matter and reach an equitable solution reasonably
acceptable to DBSI.
15.3. The provision provided under this Article :
(i) shall not apply to the Contractor's delivery of normally non
infringing items which are rendered infringing by DBSI's or
end user's modification of said items or by a combination of
said items with items not provided or approved for use by the
Contractor under this Contract, and without the Contractor's
prior written consent ;
(ii) does not extend to any Items being used in other than their
specified operating environment ;
(iii) does not extend to any infringement resulting from a change in
method of manufacture of an item to be delivered, ordered by
DBSI pursuant to the Article 22 (Changes), or the stipulation
by DBSI of the specific design of an item to be delivered ;
Page 36
(iv) does not apply to the use of any items which were not provided
by the Contractor,
15.4. If the infringement results solely from DBSI's provision of designs,
specifications or instructions to The Contractor, DBSI will indemnify
and defend (including by way of settlement), at its expense, any such
suit against The Contractor, provided DBSI is promptly notified in
writing of the claim of infringement and given authority, information
and assistance by The Contractor, at DBSI's expense, for the defense or
settlement thereof.
15.5. The foregoing constitutes the Parties' entire obligation with respect
to claims for infringement.
Page 37
16. EXTENSIONS FOR EXCUSABLE DELAYS
16.1. The Contractor shall be entitled to extensions of time beyond the
delivery dates set forth in Article 5 (Delivery Schedule) in accordance
with this Article.
16.2. Any delay in the performance of the Work caused by an event which is
beyond the reasonable control of the Contractor, or its Subcontractors
such as but not necessary limited to declarations of war or civil war,
earthquake, fire, flood, acts of God, national strikes, decisions of
any Government such as embargo, expropriation, government cancellation
of the required authorizations as a consequence of the introduction or
application of any laws, regulation or regulations, revocation of
approvals and/or licenses essential to the performance of either the
Contract or the Subcontracts, prohibition of required import licenses,
embargo on transportation of the Satellite or the launcher or any of
their components to the Launch site, prohibitions or limitations of any
kind, or any failure of DBSI to fulfill its undertakings under this
Contract, which delay could not have been avoided by the Contractor
through the exercise of reasonable foresight and precautions or which
could not or cannot be reasonably circumvented by the Contractor
through the use of alternate sources, work-around plans, or other
means, shall constitute an Excusable Delay.
16.3. The Contractor shall promptly and in any event not later than thirty
(30) Days after the occurrence of such event notify DBSI in writing of
event constituting an Excusable Delay. That notice :
(i) shall indicate the circumstances surrounding the Excusable
Delay ;
(ii) shall set forth the extent to which the Excusable Delay
prevents fulfillment of the contractual terms and conditions
within the time specified under the Contract ;
(iii) shall describe, if any, the details of any work-around plans,
alternate sources or other means the Contractor expects to
utilize to minimize the delay in the performance of the Work ;
and
(iv) subject to Article 16.4. below shall propose the appropriate
adjustments to the delivery dates to accommodate the Excusable
Delay.
16.4. In the event of an Excusable Delay, the Contractor shall be entitled to
such extensions of time and adjustment for delivery date as are
reasonable under the circumstances, but in no event shall the extension
of time for the Excusable Delay exceed one Day for each Day of the
Excusable Delay. In the event DBSI disputes the Excusable Delay, DBSI
shall inform the Contractor in writing within 15 (fifteen) Days from
the receipt of the written notice of the event constituting an
Excusable Delay. If the Parties have not resolved the dispute within 15
(fifteen) Days of the Contractor's receipt of that written notice from
DBSI, then the dispute shall be resolved pursuant to Article 27
(Applicable Law and Arbitration) below.
Should the Excusable Delay exceed 12 (twelve) months, the Parties may
terminate the contract pursuant to Article 19 (Termination for
Convenience), except, as far as DBSI is concerned, if such Excusable
Delay is due to DBSI's failure to fulfill its undertakings under this
Contract, then the provisions of Article 21 (Contractor's right to
terminate) shall apply. In
Page 38
case of termination by DBSI under this Article , no penalty shall be
paid by DBSI except for the termination fees.
In any case the corresponding termination costs would not be higher
than the Termination Liability Schedule as provided in Article 19.2.
(Termination for convenience).
16.5. An extension of time granted under this Article shall be formalized by
the execution of an Amendment to the Contract pursuant to Article 22
(Changes) below, which Amendment shall establish new delivery dates for
the deliverables items affected by the Excusable Delay and
modifications, if appropriate, shall be made to the payment conditions
of this Contract.
Page 39
17. LIQUIDATED DAMAGES FOR LATE DELIVERY
17.1. Liquidated damages for late delivery of the ESAT Communication System
17.1.1 The Parties agree that failure of the Contractor to meet the delivery
dates as defined in Article 5 (Delivery Schedule), may cause DBSI to
incur additional costs, loss of anticipated revenues and other damages.
Accordingly, the Contractor and DBSI agree to Liquidated Damages for
Late Delivery under this Contract as provided below, which damages are
intended to be compensatory and do not constitute a penalty.
17.1.2. Such Liquidated Damages shall be applicable if and to the extent such
delay is not due to a default of DBSI in respect of any of its
obligations pursuant to Article 3 (DBSI's Undertaking) or subject to an
extension of time pursuant to Article 16 (Extension for Excusable
Delays).
17.1.3. In case of delay of the SPAR or the SFAR, the amount of liquidated
damages for such delay shall be as follows :
a) ESAT Communication System Preliminary Acceptance Review :
[Redacted]% of the Contract Price for each Day of delay from
the delivery date as set forth in Article 5 (Delivery
Schedule) or in Article 7.1.5 (Inspection and Acceptance) if
these Articles are applied.
b) ESAT Communication System Final Acceptance Review :
[Redacted]% of the Contract Price for each Day of delay from
the delivery date as set forth in Article 5 (Delivery
Schedule) or in Article 7.1.5. (Inspection and Acceptance) if
these Articles are applied.
The maximum amount of the Liquidated Damages to be paid by the
Contractor under this Article 17.1.3. is [Redacted]% of the Contract
Price per day and an aggregate of [Redacted]% (ten percent) of the
Contract Price, subject to the provisions of Article 14.3 (Limitation
of Liability).
17.1.4. In all other situations involving a delay resulting from Defects in the
ESAT Communications System other than in the Satellites which is
discovered after the First Launch and for which the Parties cannot
develop a correction plan which corrects or offsets the effect such
Defect or Defectsthe amount of liquidated damages for such delay shall
be as follows :
a) ESAT Communication System Preliminary Acceptance Review : 0.
[Redacted]% of the Contract Price for each Day of delay from
the delivery date as set forth in Article 5 (Delivery
Schedule) or in Article 7.1.5 (Inspection and Acceptance) if
these Articles are applied
b) ESAT Communication System Final Acceptance Review : 0.
[Redacted]% of the Contract Price for each Day of delay from
the delivery date as set forth in Article 5 (Delivery
Schedule) or in Article 7.1.5. (Inspection and Acceptance) if
these Articles are applied.
The maximum amount of the Liquidated Damages to be paid by the
Contractor under this Article 17.1.4. is 0. [Redacted]% of the Contract
Price per day and an aggregate of [Redacted] ([Redacted]%) of the
Contract Price, subject to the provisions of
Page 40
Article 14.3 (Limitation of Liability).
17.1.5 The liquidated damages due under this Article shall be the sole
compensation to which DBSI shall be entitled for late delivery under
this Contract and the Contractor shall not be subject to any
consequential, special collateral, indirect or incidental damages for
loss of revenues and profit and to any right to terminate the Contract
for default.
Page 41
18. TERMINATION FOR DEFAULT
18.1.1 If, other than by reason of an Excusable Delay as per Article 16
(Extension for Excusable Delays), or any failure, omission, neglect,
undue delay or default by DBSI to perform its undertakings under this
Contract :
A. The Contractor has failed to complete the Launch Readiness
Review 1 by 1 (one) year after the delivery date mentioned in
Article 5 (Delivery Schedule) or has failed to complete the
Launch Readiness Review 2 by 1 (one) year after the delivery
date mentioned in Article 5 (Delivery Schedule), and provided
the Contractor has already paid the ceiling of Liquidated
Damages as stipulated in Article 17 (Liquidated Damages for
Late Delivery) above, as such date may be extended pursuant to
Article 16. (Extensions for Excusable Delays) and/or Article
22. (Changes) and/or Article 8 (Options) hereof;
B. Subject to the provisions of Article 20 (Opportunity to Cure a
Defect), the Contractor, has otherwise failed substantially to
perform the Work in accordance with the relevant provisions of
this Contract and has failed to take corrective actions within
sixty (60) Days from a written notice from DBSI; or
C. The Contractor has failed to cure a Defect as set forth in
Article 20 (Opportunity to Cure a Defect) within the time
periods set forth therein;
then DBSI may terminate this Contract totally (before LRR1) or
partially (between LRR1 and LRR2) by written notice of default.
18.1.2 After LRR 1 the provisions of Article 18.1.1 shall apply only to the
Second Set and DBSI's recourse for all other delivered items shall be
under Article 25 (Warranty).
18.1.3 After LRR 2 the provisions of Article 18.1.1 shall not apply and DBSI's
recourse shall be under Article 25 (Warranty).
18.2. In the event of a partial or complete termination by DBSI under this
Article, DBSI shall, subject to Articles 18.3.1. and 18.3.2., make its
best efforts to have the Work completed by another contractor.
For the purposes of having the Work completed by another contractor,
the Parties shall jointly select the companies capable of completing
the Work, and shall jointly analyze the results of any commercial
competition for the Work. With due consideration of the Contractor's
recommendation, DBSI shall select another contractor best ensuring the
use of the Work completed by the Contractor at the date of termination.
18.3.1. In the event that the < < Cost For Completion > > of the Work by
another contractor results in DBSI incurring direct additional costs or
expenses lower than or equal to 10% (ten per cent) of the Contract
Price, as it may have been adjusted, for the terminated Work, DBSI
shall be obliged to have the Work completed by such other contractor,
and the Contractor shall bear these additional costs.
18.3.2. If the Cost For Completion exceeds 10% (ten per cent) of the Contract
Price, as it may have been adjusted, for the terminated Work, DBSI
shall be obliged to offer the Contractor the option to pay such Cost
for Completion and if the Contractor agrees to reimburse such Cost
Page 42
for Completion to DBSI, DBSI shall not be entitled to reject the
completion of the Work by such other contractor.
18.4. If the Work is completed by another contractor, DBSI shall receive the
Work generated under this Contract at its stage of completion on the
date of termination, subject to payment of the price for such Work by
DBSI to the Contractor. The difference between the total payments made
by DBSI to the Contractor at the date of termination and the amount for
the Work delivered to DBSI by the Contractor in accordance with the
previous sentence shall be refunded by the Contractor to DBSI.
18.5.1. Should the written notice of default mentioned in Article 18.1.1 occur
prior to LRR 1, and despite DBSI's best efforts to have the Work
completed by another contractor, no such other contractor is found or
if the Contractor refuses to pay the Cost for Completion in excess of
[Redacted] as referred to in Article 18.3.2., the Contractor shall
refund DBSI all payments made under this Contract for the terminated
work at the date of termination.
18.5.2. Should the written notice of default mentioned in Article 18.1.1 occur
after LRR 1 but before LRR 2, and despite DBSI's best efforts to have
the Work completed by another contractor, no such other contractor is
found or if the Contractor refuses to pay the Cost for Completion in
excess of [Redacted]% ([Redacted]) as referred to in Article 18.3.2.,
the Contractor shall refund to DBSI [Redacted] MUSD if the terminated
work covers the entire Second Set or [Redacted] MUSD per Satellite
terminated.
18.6. The Contractor shall take all necessary action for the protection and
preservation of the Work in possession of the Contractor, or its
Subcontractors in which DBSI has an interest under this Contract
pursuant to the provisions of Articles 18.4. above.
18.7. The Contractor shall retain title to and the risks associated with such
inventory generated under this Contract at the date of termination, for
which DBSI elects to receive a refund pursuant to Article 18.5. above.
18.8. In the event DBSI terminates the Contractor for default under the
provisions of this Article and it is subsequently determined by mutual
agreement or in accordance with the provisions of Article 27
(Applicable Law and Arbitration) below, that the Contractor was not in
default, said termination shall (i) either by mutual agreement of both
Parties be deemed to have been issued pursuant to Article 19
(Termination for Convenience) below, or ; (ii) by mutual agreement of
both Parties and upon complete consideration to the Contractor of all
associated costs, including actual direct damages but excluding
special, incidental, consequential, indirect damages, be deemed not to
be have been terminated and therefore this Contract shall continue in
full force and effect and shall be binding on the Parties in accordance
with revised price, schedule and other affected terms as mutually
agreed by the Parties, subject to the provisions of Article 5 (Delivery
Schedule) above.
18.9. This Article shall be the sole remedy to which DBSI is entitled in the
event of default of the Contractor provided that the provisions of
Articles 14 (Limitation of Liability), 17 (Liquidated Damages for late
Delivery) 25 (Warranty) and 26 (Indemnification) shall continue to
apply and DBSI shall be entitled to exercise all its rights, remedies
and powers under such Articles after termination and/or delivery in
accordance with the provisions of this Article 18. In no
Page 43
event shall the Contractor be liable to DBSI for any incidental or
consequential damages of any nature including loss of profits or
revenue.
Page 44
19. TERMINATION FOR CONVENIENCE
19.1. DBSI may, upon a 2 (two) months prior written notice sent by registered
letter with acknowledgment of receipt and without giving the reasons or
showing cause, terminate the Contract in whole before SPAR or in part
after SPAR, and the Contractor shall immediately cease work accordingly
and shall similarly direct its Subcontractors.
19.2. The amount payable by DBSI to the Contractor shall constitute a total
discharge of DBSI's liabilities to the Contractor for termination. In
no event will it exceed the termination liability schedule below.
----------------------------------------------------------------------------------------------------------
Termination Liability Schedule
----------------------------------------------------------------------------------------------------------
Termination or suspension notified between Maximum Termination Liability
----------------------------------------------------------------------------------------------------------
Start date Date payment received for: MUSD
----------------------------------------------------------------------------------------------------------
EDC SPDR [Redacted]
----------------------------------------------------------------------------------------------------------
SPDR TPDR [Redacted]
----------------------------------------------------------------------------------------------------------
TPDR GCSCDR [Redacted]
----------------------------------------------------------------------------------------------------------
GCSCDR CDRPCU [Redacted]
----------------------------------------------------------------------------------------------------------
CDRPCU SCDR [Redacted]
----------------------------------------------------------------------------------------------------------
SCDR TMMR [Redacted]
----------------------------------------------------------------------------------------------------------
TMMR MCPAR [Redacted]
----------------------------------------------------------------------------------------------------------
MCPAR LRR1 [Redacted]
----------------------------------------------------------------------------------------------------------
LRR1 LRR2 [Redacted]
----------------------------------------------------------------------------------------------------------
LRR2 SPAR [Redacted]
----------------------------------------------------------------------------------------------------------
SPAR SFAR [Redacted]
----------------------------------------------------------------------------------------------------------
Note 1: DBSI shall be liable for any termination liability relating to
the SSTL Subcontract during this time period.
19.3. (a) In the event of termination under this Article, the Contractor,
shall submit its claim for the Work performed in connection with the
terminated portion of the Work, and for its termination costs. On the
basis of such claim, the Contractor shall invoice , subject to Article
19.5. below, for :
(i) actual costs incurred by the Contractor for Work
carried out prior to the termination, plus a
[Redacted]% ([Redacted]) profit on such costs;
(ii) actual costs incurred by the Contractor in completing
the termination process, plus a [Redacted]%
([Redacted]) profit on such costs;
(iii) actual costs incurred in settling claims of
Subcontractors in connection with the termination,
plus a [Redacted]% ([Redacted]) profit on such costs;
and
(iv) a termination fee of [Redacted]% ([Redacted]) of the
Contract Price associated with the Work not performed
due to termination.
(v) a payment of $[Redacted] MUSD without further
description.
(b) In the event DBSI terminates the Contract after 12 (twelve)
months of an Excusable Delay as set forth in Article 16
(Extensions for Excusable Delays), the [Redacted]% profit as
provided for in Article 19.3. (a) is not applicable.
Page 45
(c) In the event DBSI terminates the whole Contract, the
termination costs calculated in accordance with Article 19.3(a) shall
be less all payments received by the Contractor from DBSI, provided
that where such amount is a negative number, the Contractor shall pay
such amount to DBSI within 30 (thirty) Days.
(d) The Contractor shall submit an invoice to DBSI within 60
(sixty) Days after the termination date which shall specify the amount
due to the Contractor from DBSI pursuant to this Article. The
Contractor shall be entitled to payment by DBSI of such amount within
30 (thirty) Days of receiving such invoice, unless DBSI notifies the
Contractor that it disputes such invoice pursuant to Article 27
(Applicable Law and Arbitration) below. In the event DBSI does not so
notify the Contractor that it disputes such invoice within 30 (thirty)
Days, DBSI shall be deemed to have accepted such invoice.
19.4. If the Contract is terminated as provided in this Article and payment
is made in accordance with this Article, then DBSI may require the
Contractor, subject to any governmental approval and the provisions of
Article 16, to transfer to DBSI, in the manner and to the extent
directed by DBSI, title to and possession of any items comprising all
or any part of the Work (including, without limitation, all
Work-in-progress and all inventories), and the Contractor shall, upon
the direction and at the expense of DBSI, protect and preserve property
in the possession of the Contractor or its Subcontractors in which DBSI
has an interest and shall facilitate access to and possession by DBSI
of items comprising all or any part of the Work. If DBSI has not taken
delivery of property in which it has such interest within 90 (ninety)
Days after termination, the Contractor shall have no further
responsibility therefor and shall be entitled to dispose of such
property.
19.5. In the event DBSI desires independent verification of the claim, DBSI
may require at its own expense to have an independent certified public
accountant(s) audit the costs incurred by the Contractor and report to
the Parties.
Page 46
20. OPPORTUNITY TO CURE A DEFECT
20.1. (a) For purposes of this Article, "Defect" with regard to a Satellite,
including all components thereof, means any failure in design, material
or workmanship, or failure to perform in accordance with the
specifications and requirements set out or referred to in the Contract,
whether occurring as a result of shipping, installation or otherwise,
which may adversely affect the performance of such Satellite. "Defect"
with regard to all other deliverable items including documentation
shall mean failure to meet any specification or technical requirement
set forth in the Contract. With regard to services, "Defect" shall mean
a failure to conform with a high standard consistent with aerospace
industry practice.
(b) The Contractor, at its own expense, shall use best efforts to
correct promptly, any Defect which it or DBSI discovers during the
course of the Work. This shall apply notwithstanding that a payment may
have been made by DBSI in respect thereof and regardless of prior
reviews, inspections, approvals or acceptances. Where such equipment is
portable, the Contractor shall have the right to have any items
asserted by DBSI to contain a Defect returned to the Contractor's
facility, or to premises operated by the Contractor in the performance
of the Work, in order to verify such nonconformance or to correct the
Defect. All transportation costs such as packaging, shipping and
insurance shall be paid by the Contractor.
20.2. Notwithstanding any other provision of this Contract, the Contractor
shall advise DBSI immediately by telefax any event, circumstance or
development which materially threatens the delivery dates established
herein or the quality of any Satellite or component part thereof or of
any other item, service or documentation to be provided by the
Contractor.
20.3. Prior to termination of the Contract for the Contractor's default, the
Parties shall undertake to cure a Defect in the following manner:
(a) DBSI shall deliver to the Contractor a written demand for
correction and cure of the Defect setting forth the basis for
the claim. Said notice shall be sent to the Contractor within
30 (thirty) Days from the time DBSI knows of the Defect.
(b) Within 15 (fifteen) Days after receipt by the Contractor, of
DBSI's written notice or such longer time as may be mutually
agreed between the Parties, the Contractor shall submit to
DBSI a correction plan for curing the Defect, provided that no
correction plan shall ever result in a change to a delivery
date unless the Parties otherwise agree.
(c) If DBSI either accepts the correction plan or does not reject
the correction plan within 30 (thirty) Days after receipt, the
Contract shall be deemed modified in accordance with said
correction plan and the Defect shall be deemed cured, so long
as the Contractor complies with the terms of such correction
plan provided that, the provisions of this Article 20.3. shall
continue to apply to any continuing or further Defect not
cured by such correction plan.
20.4. In the event that :
(i) the Contractor does not submit a correction plan to DBSI
within 15 (fifteen) Days after
Page 47
receipt of a written demand therefor, or
(ii) the Parties cannot develop a correction plan which corrects or
offsets the effect of the Defect or which otherwise is
satisfactory to both the Contractor and DBSI, within 20
(twenty) Days after the rejection of the proposed correction
plan,
then DBSI may elect to terminate the Contract in whole or in part
pursuant to Article 18 (Termination for Default) and the Contractor
shall forthwith notify DBSI of completed work and all work-in-progress
relating to the Work in respect of which DBSI exercises its rights.
Page 48
21 THE CONTRACTOR'S RIGHT TO SUSPEND OR TERMINATE THE WORK
21.1. The Contractor shall begin the Work when all amounts due and payable at
the EDC shall have been fully paid.
If, at any time, any portion of the Total Prime Contract Price due and
payable as a Milestone Payment shall not have been fully paid within 20
(twenty) days of the Invoice date on which such payment was due, the
Contractor shall be entitled to cease and suspend all Work (the
"Stoppage Date") until after all due and overdue amounts payable by
DBSI have been received, including interest payable under Article 6.6.
The Contractor shall be obligated to resume its Work no later than 15
(fifteen) Days after the date on which DBSI shall have paid all
outstanding amounts due or overdue and payable, provided that the
Contractor shall be entitled to an extension in the Delivery date for
all Milestones occurring after the Stoppage Date equal to one Day for
each Day on which any payment amount was overdue. In the event that any
portion of a Milestone Payment remains unpaid 60 (sixty) days after the
date on which such payment was due, the Contractor shall be entitled to
give notice of the exercise of its right to terminate under this
Article.
21.2. The Contractor may suspend working on the Work or terminate this
Contract by giving written notice to DBSI of termination if DBSI :
(i) fails to pay any undisputed Invoice within 20 (twenty) Days
from the date of Invoice as provided for in Article 6.
(Payment), or,
(ii) has not provided the stand-by letter of credit provided for by
Article 3.2.3, prior to EDC + 4 months.
(iii) DBSI refuses or fails to observe or perform any material duty
and obligation of the Contract and any of its undertakings
under this Contract and DBSI fails to remedy such default
within sixty (60) days of receipt of the Contractors written
notice, or,
(iv) DBSI has assigned or transferred the Contract in violation of
Article 24 (Assignments),
(v) the Excusable Delay, due to DBSI's failure to fulfill its
undertakings, exceeds 12 (twelve) months pursuant to Article
16. (Excusable Delay),
(vi) or has not made and Contractor has not received and accepted,
as of the date of written notice of termination, the Calendar
Payment No. 2.2 provided for in Article 6.2.1 and milestone
payment No. 4 provided for in Article 6.2.2 on or before 5:00
p.m. Pacific Standard Time January 31, 2000. . In case of
termination under this subsection (vi), termination will be
effective immediately upon written notice.
21.3. In the event of such termination by the Contractor, the Contractor
shall be entitled to take any or all of the following actions :
(i) treat the Contract as terminated as to all the items then
undelivered or services unperformed and cease or suspend
manufacture or supply of any of the items or services to be
supplied under the Contract,
(ii) withhold delivery of any of the items or services to be
supplied under the Contract until the Contractor has received
full payment of undisputed amounts,
Page 49
(iii) cease or suspend performance of any of the services to be
provided to DBSI under the Contract,
(iv) have the right to retain possession of and title to the Work,
(v) have right to sell Work or items without notice to or consent
of DBSI,
(vi) demand and promptly be paid all amounts born by the Contractor
in accordance with Articles 19.2 and 19.3. except 19.3. (b) ,
19.4. and 19.5. less the amounts already paid by DBSI at the
date of Termination.
21.4. This Article does not limit other rights to which otherwise the
Contractor may be entitled under applicable law.
21.5. Notwithstanding anything else to the contrary in this Agreement, if the
Contractor elects to terminate this Agreement after EDC under Article
21.2.(vi), the down payments represented by payments Nos. 1 and 2.1
provided for in Article 6.2.1 and milestone payment No. 3 provided for
in Article 6.2.2 shall become non-refundable payments. Contractor and
DBSI agree that, other than the non-refundable payments represented by
payments Nos. 1 and 2.1 provided for in Article 6.2.1 and milestone
payment No. 3 provided for in Article 6.2.2, the Parties shall have no
further liabilities for costs and expenses incurred under this. In
addition, in the event that DBSI attempts to terminate this Agreement
for convenience under Article 19 between EDC and the time DBSI has made
payment No. 2.2 provided for in Article 6.2.1 and payment No. 4
provided for in Article 6.2.2, then the Contractor may immediately
terminate this Agreement under Article 21.2(vi) and the Agreement shall
be deemed to have been terminated by the Contractor under Article
21.2(vi) and not by DBSI under Article 19.
Page 50
22. CHANGES
22.1. The Contract shall not be modified except by a written agreement signed
by duly authorized representatives of the Parties as identified in
accordance with the provisions of Article 31 (Communication and
Authority) hereof. Such written agreement shall state that it is an
Amendment to the Contract. No oral agreement or conversation with any
officer, agent or employee of DBSI or the Contractor, either before or
after execution of the Contract, shall affect or modify any of the
terms or obligations contained in the Contract. No purchase order,
acknowledgement, quotation, or other similar document issued by either
Party with respect to the subject matter of the Contract, nor any
directive of DBSI, shall be deemed to be a part of the Contract or to
modify the Contract in any respect relating to the Work unless executed
in conformance with this Article 22.
22.2. Changes requested by DBSI
At any time prior to System Final Acceptance under the Contract, DBSI
may, by written Contract Change Request, request the Contractor to (i)
make changes within the general scope of the Contract, such a change in
drawings, designs, specifications, method of shipment or packing,
delivery date(s) or place of delivery, (ii) request additional work
within the general scope of the Contract or (iii) request the deletion
of portions of the Work.
If any such Contract Change Request causes an increase or decrease in
Contractor' cost or in the time required to complete all or portions of
the Work, or change in the specifications of any Deliverable Item, the
Contractor will prepare within one month a Change Proposal describing
impacts on cost, deliverables and program schedule and submit it to
DBSI for approval. DBSI shall notify the Contractor in writing, within
15 (fifteen) days after receipt of such Change Proposal, whether or not
it agrees with and accepts the Contractor's Change Proposal. If DBSI
agrees, an Amendment to the Contract reflecting such change and price
adjustment or specifications and/or delivery date or schedule, if any,
shall be issued and the Contractor shall proceed with the performance
of the Contract as changed.
The Contractor shall not implement such variation, and DBSI shall not
be liable for any change in the Total Contract Price or delivery dates
pursuant to such variation, until and unless the Parties have entered
into a written Amendment to this Contract.
22.3. Changes requested by the Contractor.
Any Contract Change Request issued by the Contractor during the
performance of the Contract, which will add or delete Work, affect the
design of any Deliverable items, change the method of shipment or
packing, delivery date(s) or place of delivery, or will affect any
requirement of the Contract, shall be submitted to DBSI through a
Change Proposal one month prior to the proposed date of change, unless
otherwise agreed.
DBSI shall notify the Contractor in writing within 15 (fifteen) days
from receipt of the Change Proposal whether or not it agrees with and
accepts such change. If DBSI agrees, an Amendment to the Contract
reflecting such change and price adjustment or specifications and/or
delivery date or schedule, if any, shall be issued and the Contractor
shall proceed with the performance of the Contract as changed. The
Contractor shall not implement such
Page 51
variation, and DBSI shall not be liable for any change in the Total
Contract Price or delivery dates pursuant to such variation, until and
unless the Parties have entered into a written Amendment to this
Contract.
Page 52
23. SUBCONTRACTS
23.1. The Contractor will enter and maintain Subcontracts which are referred
to as < < Major Subcontracts > > .
< < Major Subcontracts > > are defined as those Subcontracts which are
important or critical in nature to the work and are listed below.
List of key Subcontracts:
- Platform and part of the Ground Control Segment : SSTL,
Guildford, United Kingdom
- Payload:
- - [Redacted]
- Terminal Subcontractors:
The Terminal Subcontractors shall be selected by mutual
agreement of the Parties prior to EDC+1. In the event that the
Parties are unable to agree on the selection of the Terminal
Subcontractors prior to EDC+1, then the selection of the
Terminal Subcontractor shall be made by the mutual agreement
of a senior executive from each party.
- Communications Center Subcontractor : [Redacted]
23.2. In the event that the Contractor needs to terminate or substitute a
Major Subcontractor, the Contractor shall consult with DBSI and shall
replace such a Major Subcontractor with an entity with substantially
equal qualifications and capabilities.
23.3. In the event that the Contractor or any Major Subcontractor has reason
to change in any manner the technical requirements or specifications of
the Work, such change shall require DBSI's prior approval after full
disclosure of the impact on price, performance and delivery under the
Contract and shall not become effective unless and until the Parties
agree to the change in a formal written Amendment to the Contract in
accordance with Article 22. (Changes).
23.4. Nothing in the Contract shall be construed as creating any contractual
relationship between DBSI and any Subcontractor. The Contractor is
fully responsible to DBSI for the acts and omissions of the
Subcontractors, and of all persons used by the Contractor or
Subcontractors in connection with the performance of the Work under the
Contract. Except as provided for in Article 16 (Extensions for
Excusable Delay), any failure by a Subcontractor to meet its
obligations to the Contractor shall not constitute a basis for
Excusable Delay, and shall not relieve the Contractor from meeting any
of its obligations under the Contract.
23.5. Unless otherwise agreed to in writing by DBSI, the Contractor shall use
its best efforts to ensure that :
(i) the Major Subcontracts include provisions under which the
Major Subcontractors agree not to assign or delegate the Major
Subcontracts or any of their rights, duties or obligations
thereunder without the prior written consent of the
Contractor, after consultation with DBSI, and that any
attempted assignment or delegation without such
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consent shall be void and without effect and,
(ii) that the Major Subcontracts will include provisions complying
with the provisions of Article 9 (Access to Work in Progress),
12 (Proprietary and/or Confidential Information) and 13
(Public Release of Information).
23.6. Platform Subcontract Assignment
The Purchase and Sale Contract between Surrey Satellite Technology
Limited and DBS Industries Incorporated, of March 31, 1999 as amended
is assigned by these parties to the Contractor as provided for in the
Assignment Agreement to be executed by these parties and the
Contractor.
The Satellite Platform Subcontract has been assigned to the Contractor
by DBSI and the Subcontractor pursuant to the Assignment Agreement
executed by all the parties.
The original Subcontract price, between DBSI and the Subcontractor
(SSTL), was [Redacted] MUSD. Only [Redacted] $ will be assigned to the
Contractor and [Redacted] $ will remain with DBSI to continue for the
Subcontractor to provide engineering support and will be handled with a
purchase order issued by DBSI. [Redacted] MUSD have already been paid
by DBSI to the Subcontractor.
In the event that the Contractor needs to terminate or substitute the
Satellite Platform Subcontract, the Contractor shall consult with DBSI
and, subject to DBSI's approval, which shall not be unreasonably
withheld or unduly delayed, shall replace such Subcontractor with an
entity with substantially equal qualifications and capabilities.
Notwithstanding anything else to the contrary, if Contractor elects to
terminate this Agreement pursuant to Article 21.2(vi), then the
Assignment Agreement for the Satellite Platform Subcontract shall
revert back to DBSI.
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24. ASSIGNMENTS
24.1. Prime Contract Assignment
Neither Party shall assign or delegate this Contract or any of its
rights, duties, or obligations hereunder to any third party or legal
entity, without the prior express written approval of the other Party,
which consent shall not be unreasonably withheld, except to any
successors of either Party by merger or consolidation provided such
successor or assignee shall comply with the rights and obligations of
such replaces Party as unchanged.
24.2. The Contractor hereby accepts that DBSI may assign this Contract to
DBSI's wholly owned subsidiaries < < Newstar > > , provided that DBSI
shall remain jointly and severally liable on the Contract and Newstar
shall comply with all rights and obligations of DBSI's set forth
herein. DBSI shall promptly notify the Contractor when DBSI desires to
have Newstar designated as the primary customer under the Contract.
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25. WARRANTY
25.1. The Contractor warrants for the period specified herein below, that
items delivered under the Contract shall be free from any defects in
design, material or workmanship and shall conform to the requirements
of Exhibit A, and B (Statement of Work, Level A Specification,) and on
the basis and subject to the assumptions defined in Exhibit C (ESAT
Acceptance Criteria).
DBSI shall have the right, at any time during the period of this
warranty set forth herein to require that any Work not conforming in
any material respect to the Exhibits to the Contract be promptly
corrected or replaced (at The Contractor's expense) with conforming
Work.
25.2. For items other than the Satellites, the warranty period shall be two
(2) years after Launch. If the Launch is postponed through no fault of
the Contractor, the warranty period shall cease no later than EDC 46.5
months.
This warranty shall not apply to any item that :
- has been subjected to misuse, neglect, accident or abuse by
DBSI or end-user,
- has not been maintained in accordance with instructions
furnished by the Contractor,
- has been modified after delivery without the Contractor's
prior written consent,
The Contractor's warranty regarding software does not include
rectification of anomalies on software due to DBSI or a third party
having carried out modification on the software delivered by the
Contractor.
The Contractor shall warrant repaired or replaced items, under the same
conditions as above, for a period of time equal to the period during
which the items have been unavailable.
Labor costs (travels, board and lodging of personnel) relating to the
reinstallation under the Contractor's responsibility of equipment
repaired or replaced under the above warranty shall be borne by DBSI.
25.3. Any defect found on a Satellite that has been Launched shall be
corrected on other Satellite which have not been Launched.
25.4. The Contractor shall not, under any circumstances, under any warranty
(express, implied, or statutory) have any liability to DBSI or DBSI's
customers or to anyone else for any special, consequential and/or
incidental damages, whether or not foreseeable, including but not
limited to lost revenues or profits, resulting from any breach to this
Contract or with respect to any defect, non-conformance or deficiency
in any information, instructions, services or other things provided
pursuant to the Contract.
Except as is otherwise expressly provided in this Contract, no other
warranties, whether statutory, express or implied, including but not
limited to those of merchantability and fitness for any particular
purpose shall apply to the goods and services furnished hereunder.
25.5 Any defect effecting the Satellites not launched will be corrected by
the Contractor, at its own expense, during a one year period following
its flight readiness review as provided for in Exhibit A.
25.6. There will be no warranty on the Satellites after Launch.
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26. INDEMNIFICATION
26.1. The Contractor shall indemnify and hold DBSI, its officers, directors
employees, agents, consultants, assignees and successors (< < the
Indemnities > >), harmless from any loss, damage, liability or expense,
including reasonable attorneys fees, resulting from any loss or damage
to property or injury, or death, arising from any occurrence associated
with the Work before the transfer of title and risk to DBSI in
accordance with the provisions of Article 10 (Transfer of Title and
Risk), to the extent caused by any act or omission of the Contractor,
its Subcontractors, or their employees, agents, and others arising out
of the performance of the Work except to the extent caused by the Gross
Negligence or willful misconduct of the Indemnities who suffered the
damage and subject to the stipulations of Article 26.5.
26.2. The Contractor shall at its sole expense defend any suits or other
proceedings, whether in law or equity, brought against said
Indemnities, on account thereof, and shall pay damages and costs
associated with settlements or judgments which may be incurred by or
rendered against them, or any of them, in connection therewith,
provided that DBSI notifies the Contractor within 15 (fifteen) calendar
days, in writing, after it receives notice of any suit or within 20
(twenty) calendar days of such claim and permits the Contractor to
answer the claim or suit and defend the same and gives the Contractor
authority and such assistance and information as is available to DBSI
for the defense of such claim or suit. Notwithstanding the foregoing,
in no event shall the Contractor have any indemnification liability
regarding any claims or suits of any customers of DBSI or third parties
asserting claims against DBSI, not related to the Work.
26.3. The Contractor shall take all reasonable measures to ensure at all
times the safety of DBSI's personnel upon the Contractor's or
Subcontractor's premises.
26.4. DBSI shall have a reciprocal obligation, subject to the same exceptions
and provisions applied mutatis mutandis, to indemnify and hold harmless
the Contractor, its Subcontractors, and the officers, employees,
agents, with respect to loss of or damage to property, or personal
injury or death, caused by any act or omission of DBSI, its officers,
directors employees, agents, consultants, assignees and successors,
arising out of the performance of the Work.
26.5. After Final Acceptance of the ESAT Communication System and subject to
the provisions of Article 14 (Limitation of Liability) above, the
following shall apply :
26.5.1. DBSI shall indemnify and hold harmless the Contractor and its
Subcontractors, their employees and/or representatives from any and all
liabilities which may arise from losses or damages of any kind suffered
by third parties including but not limited to those suffered by
employees, and representatives of such third parties and Customers of
DBSI in connection with the operation of the ESAT Communication System.
26.5.2. Any liability insurance or property insurance taken by DBSI to cover
its exposure hereunder shall include a waiver of subrogation against
the Contractor and its Subcontractors and their employees and/or
representatives.
DBSI shall indemnify the Contractor, its Subcontractors, their
employees and/or
Page 57
representatives, as the case may be against the consequence of its
failure to include such a provision.
Page 58
27. APPLICABLE LAW AND ARBITRATION
27.1. The Parties shall endeavor to amicably resolve any dispute arising out
of the performance of this Contract within 30 (thirty) Days of receipt
of a written notice from the claiming Party. If the Parties are unable
to resolve the dispute within a 30 (thirty) Day period, then they may
refer the dispute to an independent third party who will, within a
further 30 (thirty) Days, review the dispute and recommend a resolution
thereto. If the Parties cannot mutually agree on said third party, or
either Party disagrees with the recommendation of said third party,
then Article 27.2. below shall apply.
27.2. If the dispute is not resolved pursuant to the provisions of Article
27.1. above then the dispute shall be finally settled under the Rules
of Conciliation and Arbitration of the International Chamber of
Commerce (< < ICC > > ) by 3 (three) arbitrators appointed in
accordance with the Rules.
27.3. The arbitration proceedings shall take place in Paris, France and the
language of such proceedings, including arguments and briefs shall be
in English.
27.4. Each Party shall bear the costs of its legal representation, witnesses
produced by such Party, document production and other discovery
expenses.
27.5. This Contract shall be governed by and construed in accordance with
French Law.
27.6. The arbitral award shall be final and binding on the Parties and
judgement may be entered thereon, upon the application of either Party,
by any court having jurisdiction.
27.7 In the event that Contractor draws upon the stand-by letter of credit
provided for in Article 3.2.3 during a period in which the Parties are
resolving a dispute under this Article 27, then the Contractor shall
have the funds drawn on the stand-by letter of credit deposited
directly into a third party interest bearing escrow account where such
funds shall remain until the dispute is finally resolved in accordance
with this Article 27.
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28. SPECIFIC PROVISIONS
Regarding the ESAT Terminal, the Contractor liability is limited to the
delivery of prototypes in conformance with the provisions of this
Contract. The Contractor shall not incur any liability regarding the
design, manufacturing, sale, use, and production of the ESAT Terminal
which shall be subject to a separate agreement between the Parties or
between DBSI and such other third party manufacturer(s) as DBSI may
select.
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29. ENTIRE AGREEMENT
This Contract constitutes the entire agreement between the Parties and
supersedes all prior understandings, commitments and representations,
whether oral or written whether express or implied, between the Parties
with respect to the subject matter hereof. It may not be amended,
modified or terminated and none of its provisions may be waived, except
by a writing signed by an authorized representative of the Party
against which the amendment, modification, termination or waiver is
sought to be enforced. No addition to, deletion or deviation from the
provisions of this Contract shall be binding against any Party unless
agreed in writing and signed by the Parties.
The paragraph headings herein shall not be considered in interpreting
the text of this Contract.
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30. EFFECTIVE DATE
30.1. This Contract shall become effective on the Day all of the following
conditions have been met :
1. signature of this Contract by the Parties,
2. receipt by the Contractor of the Payment Nos. 1 and No 2.1
referred to in Article 6.2.1 (Payment), and Payment No 3
referred to in Article 6.2.2 by December 31, 1999.
Execution by the Parties of a Stock Purchase Agreement on or before December 24,
1999, wherein the Contractor agrees to purchase from DBSI a total of $5
MUSD of newly issued DBSI convertible preferred stock at the same price
and on such other terms as DBSI is generally making available to its
private placement investors in December 1999. 30.2. If this Contract
does not become effective by December 31, 1999, this Contract shall be
declared to be null and void unless the Parties otherwise agree in
writing.
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31. COMMUNICATION AND AUTHORITY
Any notice or other communication required or permitted under this
Contract, including invoices shall be made to the following persons :
31.1. In the case of DBSI to :
XXXX XXXXXXXX for contractual and commercial matters as well as press
release notification
DBS Industries
000 Xxxxxxxxx Xxxxxxx, Xxxxx 000X,
Xxxx Xxxxxx,
XX 00000, XXX
Tel : 0 000 000 0000
Fax : 0 000 000 0000
XXXXXXX XXXXX for technical and programmatic matters;
ESAT Project Office
0, xxxxxxxxx Xxxxxxx Xxxxxxxxxx, XX 000
00000 XXXXXXXX XXXXX 0
Xxxxxx
Tel: 00 00 00 00 00
Fax: 00 00 00 00 00
XXXXX XXXXXX for legal matters
to
000 Xxxxxxx Xxxx, Xxxxx 0000
XXXXXXXXXX, XX 00000, XXX
Tel : 00 0 000 000 00 00
Fax : 00 0 000 000 00 00
With a carbon copy telefaxed to;
DBS Industries
000 Xxxxxxxxx Xxxxxxx, Xxxxx 000X,
Xxxx Xxxxxx,
XX 00000, XXX
Tel : 0 000 000 0000
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Fax : 0 000 000 0000
31.2. In the case of the Contractor to :
XXXXXX XXXXXXX for contractual and commercial matters and public
release of information.
Tel : 0 00 00 00 00
Fax : 0 00 00 00 00
XXXX XXXXXX for technical and programmatic matters
Tel : 0 00 00 00 00
Fax : 0 00 00 00 00
XXXXX XXXXXXX for invoices matters
Tel : 0 00 00 00 00
Fax : 0 00 00 00 00
XXXXXXX XXXXXX for any public release of information
Tel : 0 00 00 00 00
Fax : 0 00 00 00 00
to
Alcatel Space Industries
00, xxxxxx Xxxx-Xxxxxxxx Xxxxxxxxxxx
00000 XXXXXXXX Xxxxx (Xxxxxx)
Excepted as provided in Article 6. (Payment), all notices, demands,
reports, orders and requests hereunder by one Party to the other
shall be in writing and deemed to be duly given on the same business
day if sent by electronic means (i.e., telex, electronic mail or
facsimile) or delivered by hand during the receiving Party's regular
business hours, or on the date of actual receipt if sent by pre-paid
overnight, registered or certified mail.
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32. KEY PERSONNEL
32.1. The Work related to this Contract shall be performed by such Key
Personnel as defined in Exhibit E (Prime Contractor Key Personnel),
such personnel to be available for the Work throughout this Contract.
32.3. Any replacement of such Key Personnel requires the prior written
information to DBSI mentioned in Article 31 (Communication and
Authority). Key Personal Replacement requests shall be accompanied by
a justification for the change and by a written comprehensive resume
of the qualifications of successor Key Personnel.
Page 65
IN WITNESS WHEREOF,
The Parties hereto have set their hands on
On behalf of: ALCATEL SPACE INDUSTRIES
Name:
On this day:
On behalf of: DBS INDUSTRIES INC.
Name:
On this day:
Page 66
EXHIBIT A
STATEMENT OF WORK
FOR THE ESAT COMMUNICATION
SYSTEM
[Redacted]
Page 67
EXHIBIT B
ESAT LEVEL A REQUIREMENT
SPECIFICATION
[Redacted]
Page 68
EXHIBIT C
ESAT ACCEPTANCE CRITERIA
[Redacted]
Page 69
EXHIBIT D
SPECIMEN OF CERTIFICATE OF
ACCEPTANCE
[Redacted]
Page 70
EXHIBIT E
KEY PERSONNEL
[Redacted]
Page 71
EXHIBIT F
SPECIMEN OF LETTER OF CREDIT
[Redacted]
