Exhibit 10.1

 

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CONTRIBUTION AND MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

AMONG

 

THE DIRECTV GROUP, INC.,

 

HUGHES NETWORK SYSTEMS, INC.,

 

SKYTERRA COMMUNICATIONS, INC.

 

AND

 

HUGHES NETWORK SYSTEMS, LLC

 

DATED AS OF

 

DECEMBER 3, 2004

 

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TABLE OF CONTENTS

 

              TAB

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1.

 

DEFINITIONS.

   1

2.

 

THE TRANSACTIONS.

   1    

2.1

   Contribution of Assets.    1    

2.2

   Description of Contributed Assets.    1    

2.3

   Excluded Assets.    4    

2.4

   Assumption of Liabilities; Excluded Liabilities.    5    

2.5

   Disposition of Other HNS Businesses.    8    

2.6

   Consents; Assignment of Contracts and Rights; Transition Services; Financial
Support Arrangements.    8    

2.7

   Financing; Payment of Purchase Price; Purchase and Sale of Membership
Interests.    11    

2.8

   Closing; Closing Date.    12    

2.9

   Allocation of Purchase Price.    12    

2.10

   Working Capital Adjustment; Minimum Cash Balance.    13    

2.11

   No Set-Off.    14

3.

 

ADDITIONAL UNDERTAKINGS AND COVENANTS.

   14    

3.1

   Consents and Approvals.    14    

3.2

   Operation of the Business; Cancellation of Certain Intercompany Obligations.
   15    

3.3

   Maintenance of Insurance Policies.    19    

3.4

   Public Announcements.    20    

3.5

   Investor’s Access to Information; Confidentiality.    20    

3.6

   Preservation of Records and HNS’s Access to Information.    21    

3.7

   Agreements Regarding Tax Matters.    22    

3.8

   United Kingdom Value Added Tax.    23    

3.9

   Closing Conditions.    24    

3.10

   Audit; Cooperation.    25    

3.11

   Agreements with Respect to Spaceway and the Boeing Contract.    25    

3.12

   Pre-Closing Payment of Certain Indebtedness.    28    

3.13

   Communications Licenses.    28    

3.14

   ChinaCast.    28    

3.15

   Negotiation with Others; Disposition of Securities.    29

 

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    3.16    No Solicitation.    29

4.

 

REPRESENTATIONS AND WARRANTIES OF HNS.

   30    

4.1

   Organization, Standing; Transferred Subsidiaries.    30    

4.2

   Authorization.    30    

4.3

   Binding Obligation.    31    

4.4

   Noncontravention.    31    

4.5

   Taxes.    31    

4.6

   Financial Statements; Undisclosed Liabilities.    33    

4.7

   Absence of Certain Changes.    34    

4.8

   Real Property Matters.    34    

4.9

   Intellectual Property.    35    

4.10

   Sufficiency of and Title to Assets.    36    

4.11

   Litigation; Compliance with Laws.    36    

4.12

   Insurance.    37    

4.13

   Governmental Approvals.    37    

4.14

   Foreign Benefit Matters.    37    

4.15

   U.S. Employee Benefit Matters.    39    

4.16

   Contracts.    39    

4.17

   Environmental Matters.    41    

4.18

   Licenses and Permits.    42    

4.19

   Labor.    42    

4.20

   Brokers.    43    

4.21

   Affiliate Transactions.    43    

4.22

   Investment Representations.    43    

4.23

   Newco.    43    

4.24

   Earth Stations and Ground Facility Rights.    44

5.

 

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.

   44    

5.1

   Organization, Standing, Qualification.    44    

5.2

   Authorization.    45    

5.3

   Binding Obligation.    45    

5.4

   Noncontravention.    45    

5.5

   Litigation; Compliance with Laws.    45    

5.6

   Financing.    46    

5.7

   Qualifications to Hold Communications Licenses.    46

 

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    5.8    Condition of Business; Independent Investigation.    46     5.9   
SEC Documents; Undisclosed Liabilities.    46     5.10    SkyTerra Stock.    47
    5.11    Brokers.    48     5.12    Purchaser Representations.    48 6.  
FOREIGN EMPLOYEE MATTERS.    48 7.   U.S. EMPLOYEE MATTERS.    48 8.   CLOSING.
   48     8.1    Conditions Precedent to Obligations of Each Party.    48    
8.2    Conditions Precedent to Obligations of the Investor.    49     8.3   
Conditions Precedent to Obligation of Parent and HNS.    50     8.4    Updated
Disclosure Schedule.    51     8.5    Deliveries by HNS.    51     8.6   
Deliveries by the Investor.    53     8.7    Deliveries by Newco.    53 9.  
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION; REMEDIES.    54     9.1   
Survival of Representations; Exclusive Remedy.    54     9.2    Agreement of
Parent to Indemnify.    55     9.3    Agreement of the Investor to Indemnify.   
55     9.4    Limits of Indemnification.    55     9.5    Special
Indemnification by Parent.    56     9.6    Special Indemnification by Newco.   
56     9.7    Conditions of Indemnification.    56     9.8    Tax Controversies;
Assistance and Cooperation.    58     9.9    Notice of Breaches of
Representations and Warranties.    58 10.   TERMINATION.    59     10.1   
Termination.    59     10.2    Effect of Termination.    60 11.   MISCELLANEOUS.
   60     11.1    Additional Actions and Documents.    60     11.2    Expenses.
   60     11.3    Bulk Sales; Transfer Taxes.    60     11.4    Assignment.   
61     11.5    Entire Agreement; Amendment.    61

 

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    11.6    Waiver.    62     11.7    Severability.    62     11.8    Governing
Law.    62     11.9    Notices.    62     11.10    Headings.    64     11.11   
Interpretation; Absence of Presumption.    64     11.12    Execution in
Counterparts.    64     11.13    Limitation on Benefits.    65     11.14   
Binding Effect.    65     11.15    Jurisdiction.    65     11.16    Provisional
Relief; Specific Performance.    65     11.17    Waiver of Jury Trial.    65

 

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CONTRIBUTION AND MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

THIS CONTRIBUTION AND MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Contribution
Agreement”) is entered into as of December 3, 2004 by and among The DIRECTV
Group, Inc., a Delaware corporation (“Parent”), Hughes Network Systems, Inc., a
Delaware corporation (“HNS”), SkyTerra Communications, Inc., a Delaware
corporation (the “Investor”) and Hughes Network Systems, LLC, a newly formed
Delaware limited liability company (“Newco”).

 

WHEREAS, HNS, a wholly-owned subsidiary of Parent, among other things, operates
the Business, and desires to contribute to Newco, and Newco desires to acquire
and accept from HNS, certain assets of the Business, and to assume certain
liabilities associated therewith, for and in consideration of the purchase price
and on the terms and conditions set forth herein;

 

WHEREAS, in connection with the contribution of the assets of the Business by
HNS to Newco, Newco will acquire at Closing (by assignment, license or other
means) rights to certain Intellectual Property attributable to the Business from
Parent that as of the Closing Date are owned by Parent, and Parent will obtain a
license back to the Intellectual Property transferred to Newco, pursuant to an
Intellectual Property Agreement between Newco and Parent to be entered into at
Closing;

 

WHEREAS, the parties desire to obtain debt financing for Newco, a portion of the
proceeds of which will be used by Newco to pay the Purchase Price to HNS on the
Closing Date as more fully set forth herein;

 

WHEREAS, after obtaining such debt financing, HNS desires to sell to the
Investor, and the Investor desires to purchase from HNS, 50% of the membership
interests in Newco; and

 

WHEREAS, the parties desire to enter into certain additional agreements and
arrangements described herein.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements set forth herein, the parties, intending to be legally bound,
hereby agree as follows:

 

1. DEFINITIONS. For all purposes of this Contribution Agreement, certain
capitalized terms not otherwise defined herein shall have the meanings set forth
on Exhibit A.

 

2. THE TRANSACTIONS.

 

2.1 Contribution of Assets. On the terms and subject to the conditions of this
Contribution Agreement, Parent hereby agrees to cause HNS to, and HNS hereby
agrees to, contribute, assign, transfer, convey and deliver, or cause one or
more of Parent’s Affiliates to contribute, assign, transfer, convey and deliver,
to Newco, and Newco hereby agrees to acquire, assume and accept from HNS and one
or more of Parent’s Affiliates, if applicable, the Contributed Assets (as
defined in Section 2.2). The contribution of the Contributed Assets shall be
effected at Closing, as more fully set forth herein.

 

2.2 Description of Contributed Assets. The “Contributed Assets” shall consist of
(except for the Excluded Assets (as defined in Section 2.3)) the following
Assets:

 

(a) All of HNS’s right, title, and interest in the Assets of HNS used, held for
use or intended to be used by HNS primarily in the conduct of the Business
together with all such other Assets acquired by HNS after the date hereof and
used by HNS primarily in the conduct of the Business less any

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such Assets disposed of by HNS after the date hereof in compliance with this
Contribution Agreement, including all of HNS’s right, title and interest in the
following Assets, in each case to the extent used, held for use or intended to
be used by HNS primarily in the conduct of the Business:

 

(i) All cash and cash equivalents included in the calculation of the Closing
Cash Balance;

 

(ii) All Owned Real Property, including all buildings, structures, easements,
appurtenances, improvements (including construction in progress) and fixtures
located thereon;

 

(iii) All Contracts under which HNS leases, subleases, licenses, uses or
occupies or has the right to use, occupy or purchase, now or in the future any
real or personal property (except as listed on Section 2.3(d) of the Disclosure
Schedule);

 

(iv) Other than Intellectual Property, all personal property and interests
therein, including machinery, equipment, furniture, office equipment, computers
and related components, earth stations and other communications equipment,
vehicles, spare and replacement parts, office furnishings, supplies and other
tangible personal property;

 

(v) All inventory (including raw materials, component parts, works-in-progress,
finished goods, returned goods and packaging materials);

 

(vi) All Contracts with third parties, including confidentiality agreements with
parties interested in acquiring the Business which shall be assigned by Parent
to HNS prior to Closing, space segment Contracts, customer and supplier
Contracts, reseller and other distribution Contracts;

 

(vii) All Contracts between HNS and its Affiliates that are for the provision or
receipt of commercial services, including all receivables or other amounts owed
to HNS thereunder provided that such Contracts are identified on Section
2.2(a)(vii) of the Disclosure Schedule;

 

(viii) All Contracts between or exclusively among HNS, HNS Europe, HNS UK and
the Transferred Subsidiaries, to the extent such Contracts are not cancelled or
terminated pursuant to Section 3.2(c);

 

(ix) All accounts, accounts receivable and notes receivable from third parties
which are not Affiliates of HNS, whether or not billed or accrued, together with
any unpaid interest, penalties or fees accrued thereon or other amounts due with
respect thereto, and any security or collateral for any of the foregoing;

 

(x) All expenses (other than in respect of Taxes described in Section 2.4(b)(i))
that have been prepaid by HNS, including lease and rental payments;

 

(xi) All rights, claims, credits, causes of action, recoveries, refunds or
rights of set-off (whether known or unknown, matured or unmatured, accrued or
contingent) against Persons (other than if such right, claim, credit, cause of
action, recovery, refund or right of set-off arises from a Contract between HNS
and its Affiliates which is not identified on Section 2.2(a)(vii) of the
Disclosure Schedule), including unliquidated rights under manufacturers’ and
vendors’ warranties;

 

(xii) Copies of all books, files, catalogs, Documents, sales and promotional
materials, surveys, property records, papers, agreements, correspondence,
databases and records relating

 

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to the Contributed Assets or the Assumed Liabilities (excluding those relating
to Excluded Assets or Excluded Liabilities, which shall remain the sole property
of HNS; provided, however, that to the extent information in documents relating
to Excluded Assets or Excluded Liabilities is reasonably likely to have a
material impact on the future operations of Newco notwithstanding such Excluded
Assets and Excluded Liabilities being retained by HNS (or applicable Affiliate),
Newco shall be entitled to review such documents upon reasonable prior notice to
and in accordance with reasonable procedures specified by HNS);

 

(xiii) All performance and other bonds, security and other deposits, advance
payments, prepaid credits (other than in respect of Taxes), prepaid expenses,
advances and deferred charges that have been prepaid by HNS, including lease and
rental payments;

 

(xiv) To the extent transferable, all Governmental Approvals (and pending
applications therefor), including all Communications Licenses (and pending
applications therefor);

 

(xv) All goodwill (excluding goodwill associated with any trademarks or service
marks of HNS or any of its Affiliates (other than the Transferred Subsidiaries)
that are not part of the Intellectual Property conveyed to Newco pursuant to the
Intellectual Property Agreement) generated by or associated with the Business;

 

(xvi) The rights to Intellectual Property set forth in the Intellectual Property
Agreement;

 

(xvii) All telephone, telex and telecopier numbers used in the Business;

 

(xviii) All of the Assets reflected on the Latest Balance Sheet, other than
those Assets disposed of (A) after June 30, 2004 and prior to the date hereof in
the Ordinary Course of Business and (B) after the date hereof, in compliance
with this Contribution Agreement;

 

(xix) Contributed Spaceway Assets;

 

(xx) The HNS UK Assets; and

 

(xxi) All rights to insurance proceeds, and all rights and claims on the part of
HNS and its Affiliates for recoupment, reimbursement or coverage under insurance
policies covering either (A) the Contributed Assets that have been damaged or
destroyed prior to Closing to the extent such Contributed Assets have not on or
prior to Closing been repaired or replaced with Contributed Assets of
substantially equal value and utility to the Business or (B) any Liability that
is included within the Assumed Liabilities.

 

(b) Additionally, the Contributed Assets shall consist of all of HNS’s and its
Affiliates’ right, title and interest in the capital stock, capital or other
equity interests in the entities listed on Section 2.2(b) of the Disclosure
Schedule (the “Acquired Companies”).

 

(c) Notwithstanding anything to the contrary contained herein, to the extent any
Asset used, held for use or intended to be used by HNS primarily in the conduct
of the Business is owned by any Affiliate of HNS and such Asset would have been
a Contributed Asset if it were owned by HNS (excluding Intellectual Property
which shall be transferred or otherwise dealt with in the Intellectual Property
Agreement), such Asset shall be deemed to be a Contributed Asset for all
purposes of this Contribution Agreement, and each of Parent and HNS shall do,
and shall cause its Affiliates to take, such actions as are necessary to
contribute, assign, transfer, convey and deliver such Asset to Newco in
accordance with the terms hereof, including the actions set forth in Sections
2.6 (a), (b), (i) and 11.1.

 

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2.3 Excluded Assets. The “Excluded Assets,” which shall not be included in the
Contributed Assets, shall consist of the following Assets:

 

(a) Subject to Section 2.10 and except as set forth in Section 2.2(a)(i), all
cash and cash equivalents (including the Purchase Price, the Membership Interest
Purchase Price and the proceeds of the sale of the San Diego Premises) or
similar type investments, bank accounts, certificates of deposit, Treasury bills
and marketable securities held by HNS or any of its Affiliates (other than any
such Assets held by the Transferred Subsidiaries at Closing, but including any
such Assets transferred by the Transferred Subsidiaries to HNS or any of its
Affiliates prior to Closing), including all cash and cash equivalents of HNS and
its Affiliates used as collateral for Financial Support Arrangements and
deposits with utilities, insurance companies and other Persons;

 

(b) All original books and records which otherwise would be included in the
Contributed Assets pursuant to Section 2.2(a)(xii) to the extent that HNS or any
of its Affiliates (excluding the Transferred Subsidiaries) shall be required to
retain the same pursuant to any applicable Law (in which case copies of such
books and records shall be provided to Newco reasonably promptly upon request),
or that contain information primarily relating to any Excluded Asset, Excluded
Liability or any Excluded Business (subject to Newco’s right to review the same
under Section 2.2(a)(xii)), or any employee of HNS or any of its Affiliates that
is not a Transferred Employee (in which case copies of such books and records to
the extent used primarily in the Business (and unrelated to Excluded Assets or
Excluded Liabilities, but subject to Newco’s right to review the same under
Section 2.2(a)(xii)) shall be provided to Newco reasonably promptly upon
request);

 

(c) All real property at 10450 Pacific Center Court, San Diego, California,
including all buildings, structures, easements, appurtenances, improvements
(including construction in progress) and fixtures located thereon (except to the
extent such fixtures owned by HNS have been removed by HNS in compliance with
the lease for such real property) (the “San Diego Premises”)

 

(d) The Contracts under which HNS leases, subleases, licenses, uses or occupies
or has the right to use or occupy real property listed on Section 2.3(d) of the
Disclosure Schedule (the “Excluded Real Property Leases”);

 

(e) All refunds (including, without duplication, any refunds payable to HNS
pursuant to Section 3.7(e))of (or rebates related to) Income Taxes of HNS and
all prepaid Income Taxes of HNS for any Tax year or portion thereof ending on or
before the Closing Date;

 

(f) All insurance policies maintained by Parent or HNS with respect to the
Business or otherwise, and all proceeds, rights or claims under any such
policies (other than as described in Section 2.2(a)(xxi) or Section 3.3(b));

 

(g) All capital stock or other equity interests in each of the Excluded
Subsidiaries, HNS and all of its Affiliates (other than the Transferred
Subsidiaries and the other entities listed on Section 2.2(b) of the Disclosure
Schedule);

 

(h) All intercompany receivables (including intercompany promissory notes)
(whether or not billed or accrued) or other amounts owed to HNS by any of HNS’s
Affiliates (other than receivables or other amounts owed arising out of
Contracts between HNS and its Affiliates for the provision or receipt of
commercial products or services that are included in the Contributed Assets and
other than those described in Section 2.2(a)(viii));

 

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(i) All Assets used, held for use or intended to be used (including Assets
currently in construction or under development) by HNS primarily in the conduct
of the Excluded Businesses (including the Assets set forth on Section 2.3(i) of
the Disclosure Schedule) and all Assets of the Excluded Subsidiaries;

 

(j) Other than the Intellectual Property that is being transferred to Newco
pursuant to the Intellectual Property Agreement, all of the Intellectual
Property of Parent, HNS or the Excluded Subsidiaries;

 

(k) All rights, claims, credits, causes of action or rights of set-off related
to the Transaction Documents;

 

(l) All rights, claims, credits, causes of action or rights of set-off related
to Excluded Liabilities;

 

(m) Excluded Spaceway Assets; and

 

(n) Other Assets of HNS or its Affiliates (other than the Transferred
Subsidiaries and the other entities listed on Section 2.2(b) of the Disclosure
Schedule if such entities would be considered Affiliates) which are not used,
held for use or intended to be used by HNS primarily in the conduct of the
Business or specifically identified as “Contributed Assets” in Section 2.2.

 

2.4 Assumption of Liabilities; Excluded Liabilities.

 

(a) Subject to the terms and conditions of this Contribution Agreement,
effective at Closing, HNS shall transfer, or cause one of Parent’s Affiliates to
transfer to Newco, and Newco shall assume and accept from HNS and one or more of
Parent’s Affiliates, if applicable, the Assumed Liabilities. The “Assumed
Liabilities” shall mean all Liabilities (other than Excluded Liabilities) of HNS
of any kind, character or description, whether liquidated or unliquidated, known
or unknown, fixed or contingent, accrued or unaccrued, absolute, determined,
determinable or indeterminable, or otherwise, whether presently in existence or
arising hereafter, to the extent relating to or arising out of the operation,
affairs or conduct of the Business or the Contributed Assets, including the
following:

 

(i) All Liabilities that (A) are set forth on or reflected in the Latest Balance
Sheet or the notes thereto or are otherwise incurred after June 30, 2004 and
before the date hereof in the Ordinary Course of Business or after the date
hereof in accordance with this Contribution Agreement, but only to the extent
such Liabilities are not Excluded Liabilities, (B) are clearly identified on any
of the Disclosure Schedules delivered hereunder (as opposed to identified within
any Contract referenced therein), but only to the extent such Liabilities are
not Excluded Liabilities, or (C) are otherwise a Liability that Newco expressly
is assuming pursuant to this Contribution Agreement;

 

(ii) All Liabilities relating to or arising under Contributed Assets, including
Contracts (including transition services, procurement and other Contracts which
are listed on Section 2.4(a)(ii) of the Disclosure Schedule but not any
Contracts with any Affiliate of HNS which are not identified on Section
2.2(a)(vii) of the Disclosure Schedule), whether or not the Contracts have been
completed or terminated prior to the Closing Date, whether arising prior to, on
or after the Closing Date, including Liabilities arising from or relating to the
performance or non-performance of Contracts by HNS, any Transferred Subsidiary
or any other Person;

 

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(iii) All Liabilities under Equipment Lease Arrangements;

 

(iv) All accounts, accounts payable and notes payable to third parties which are
not Affiliates of HNS, whether or not billed or accrued, together with any
unpaid interest or fees accrued thereon or other amounts due with respect
thereto;

 

(v) All Liabilities in respect of employees of the Business (except as set forth
in Section 2.4(b)(vii)), and beneficiaries of employees of the Business,
including Liabilities under or relating to the Worker Adjustment and Retraining
Notification Act, as amended (the “WARN Act”), or any similar state or local
Law, except to the extent that the same constitute Excluded Liabilities or as
otherwise provided in Exhibit I or J to be retained by HNS;

 

(vi) All Liabilities relating to errors or omissions or allegations of errors or
omissions or claims of design or other defects with respect to any product sold
or service provided by the Business prior to, on or after the Closing Date;

 

(vii) All Liabilities relating to warranty obligations or services with respect
to any product sold or service provided by the Business prior to, on or after
the Closing Date;

 

(viii) All Legal Compliance Liabilities, to the extent relating to or arising
out of any action of Newco after the Closing Date; provided, however, that Newco
shall have no liability for a Release of a Hazardous Substance that occurred on
or prior to the Closing Date except to the extent it has Knowledge of such
Release and fails to mitigate its damages arising therefrom or is negligent with
respect to such Release;

 

(ix) All Liabilities relating to the Real Property (except Legal Compliance
Liabilities as set forth in the proviso to Section 2.4(a)(viii)) included in the
Contributed Assets, whether arising prior to, on or after the Closing Date;

 

(x) All Liabilities for any Taxes arising from or with respect to the
Contributed Assets or the operations of the Business prior to, on or after the
Closing Date, other than Taxes as set forth in Section 2.4(b)(i);

 

(xi) All Liabilities (except to the extent they constitute Legal Compliance
Liabilities, which shall be governed by Section 2.4(a)(viii)) relating to
applicable Laws and any regulations, decisions or orders promulgated thereunder
arising prior to, on or after the Closing Date;

 

(xii) All Liabilities arising from or relating to Proceedings listed on Section
2.4(a)(xii) of the Disclosure Schedule;

 

(xiii) All Liabilities under Contracts between HNS and its Affiliates that are
for the provision or receipt of commercial products or services, including
payables and other amounts owed thereunder provided that such Contracts are
identified on Section 2.2(a)(vii) of the Disclosure Schedule;

 

(xiv) The HNS UK Liabilities;

 

(xv) All Liabilities incurred between the date hereof and the Closing Date by
HNS at the written request or with the written consent of the Investor; and

 

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(xvi) All Liabilities created or incurred on or after Closing in connection with
the operation of the Business after Closing, including Liabilities relating to
the ownership by Newco or any of its successors or assigns of the Contributed
Assets, or relating to the Transferred Employees, or the conduct of the Business
or any other business, in each case, from and after the Closing Date, including
any and all Proceedings in respect thereof.

 

(b) Notwithstanding any other provision set forth herein, Newco shall not assume
or accept and shall not be liable or responsible for, and HNS shall retain and
be responsible for, any Liability of any kind, character or description, whether
liquidated or unliquidated, known or unknown, identified in any section of the
Disclosure Schedule or not so identified, fixed or contingent, accrued or
unaccrued, existing in HNS, HNS Europe, HNS UK or any Transferred Subsidiary,
absolute, determined, determinable or indeterminable, or otherwise, whether
presently in existence or arising hereafter from, relating to, in connection
with or attributable to the following (collectively, the “Excluded
Liabilities”):

 

(i) All Liabilities for Taxes of HNS, HNS Europe, HNS UK or the Transferred
Subsidiaries, or relating to the Business or the Contributed Assets, for (A) any
Tax period that ends on or prior to the Closing Date and (B) the portion of any
Straddle Period that ends on the Closing Date, in each case, except to the
extent such Taxes are reflected as a liability that is taken into account in the
calculation of the Final Working Capital Amount under Section 2.10;

 

(ii) All Liabilities of the Excluded Businesses and Excluded Assets (including
the Excluded Real Property Leases);

 

(iii) All Legal Compliance Liabilities (including Legal Compliance Liabilities
relating to or arising under Contracts included in the Contributed Assets) other
than those arising under Environmental, Safety and Health Laws, to the extent
relating to or arising out of any action or inaction of Parent, HNS, the
Transferred Subsidiaries and their respective Affiliates on or prior to the
Closing Date;

 

(iv) All Legal Compliance Liabilities arising under Environmental, Safety and
Health Laws on or prior to the Closing Date (but excluding any new or increased
Liabilities to the extent resulting from or arising out of any action of Newco
or any Person other than Parent, HNS or their respective Affiliates after
Closing or failure of such parties to take action with respect to conditions of
which they have Knowledge), provided, however, that Newco shall have no
liability for a Release of a Hazardous Substance that occurred prior to the
Closing Date except to the extent it has Knowledge of such Release and fails to
mitigate its damages arising therefrom or is negligent with respect to such
Release;

 

(v) Other than as contemplated by Section 11.2, all Liabilities, whether
presently in existence or arising after the date of this Contribution Agreement,
relating to fees, commissions or expenses owed to any broker, finder, investment
banker, accountant, attorney or other intermediary or advisor employed by HNS or
its Affiliates in connection with the Contemplated Transactions;

 

(vi) All intercompany payables (including intercompany promissory notes)
(whether or not billed or accrued) or other amounts owed by HNS to any of its
Affiliates (other than payables or other amounts owed arising out of Contracts
between HNS and its Affiliates for the provision or receipt of commercial
products or services or between or exclusively among HNS and the Transferred
Subsidiaries that are included in the Assumed Liabilities);

 

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(vii) All Liabilities (including Taxes and penalties) under, related to or
arising out of (including those imposed by statute) Employee Benefit Plans or
the UK Plan, except to the extent otherwise provided in Exhibit J to be assumed
by Newco;

 

(viii) All Liabilities of HNS and Parent under the Transaction Documents;

 

(ix) All Liabilities arising out of Proceedings against HNS and its Affiliates
involving the Business initiated prior to the Closing Date and not listed on
Section 2.4(a)(xii) of the Disclosure Schedule as being assumed by Newco; and

 

(x) All Liabilities relating to Indebtedness.

 

2.5 Disposition of Other HNS Businesses.

 

The parties hereto acknowledge that (i) the Business does not include the
Excluded Businesses and therefore, the Business does not represent the entire
business and operations of HNS as it previously has been conducted, (ii) the
Financial Statements only reflect the operations of the VSAT Business and do not
reflect the results of operations of the Excluded Businesses, and (iii) HNS and
its Subsidiaries have sold or transferred, certain of their Assets which do not
constitute part of the Business, including the Excluded Businesses.

 

2.6 Consents; Assignment of Contracts and Rights; Transition Services; Financial
Support Arrangements.

 

(a) HNS will use commercially reasonable efforts to obtain, and will cause its
Affiliates to use commercially reasonable efforts to obtain, prior to Closing
all Consents under any Contracts or other agreements that constitute Business
Assets as may be required in connection with the Contemplated Transactions so as
to preserve all rights of and benefits to HNS and its Affiliates thereunder. The
Investor and Newco shall provide HNS with such reasonable assistance and
information as is reasonably requested by HNS to obtain such Consents. All costs
and expenses incurred in obtaining the Consents shall be borne by the party
incurring the costs and expenses.

 

(b) Notwithstanding anything herein to the contrary, this Contribution Agreement
shall not constitute an agreement to assign or otherwise contribute, convey or
transfer any Contributed Asset, or any claim, right or benefit arising
thereunder or resulting therefrom, or to enter into any other agreement or
arrangement with respect thereto, if an attempted assignment, contribution,
conveyance or transfer thereof, or entering into any such agreement or
arrangement, without the Consent of a third party, would constitute a breach of,
or other contravention under, any Contract to which HNS is a party, be
ineffective with respect to any party thereto or violate applicable Law (a
“Transfer Restricted Asset”). In the event that any Contract or Governmental
Approval requiring the Consent of one or more of the other parties thereto to
transfer such Contract or Governmental Approval is not obtained prior to
Closing, Newco and HNS shall use, and HNS shall cause its Affiliates to use,
commercially reasonable efforts from and after Closing to obtain the Consent of
the other parties to any such Contract or Governmental Approval; provided, that
nothing herein shall require the parties hereto to obtain the Consent of the
other parties to any commercial “off-the-shelf” software licenses with an
original acquisition cost to HNS of less than $50,000 and nothing herein shall
require the parties hereto to pay any money or otherwise give value to any
Person from whom Consent is requested to obtain such Consent. Upon receipt of
each such Consent in form and substance reasonably acceptable to Newco, the
corresponding Transfer Restricted Asset shall automatically, without further
action necessary on the part of Newco or HNS, become a Contributed Asset. Newco
and the Investor shall cooperate reasonably with HNS in obtaining such Consents;
provided, that neither Newco nor the Investor shall be required to, as a
condition to HNS’s

 

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obtaining any Consent, (i) agree to any material changes in any Contract or
Contributed Asset, or the imposition of any material condition to the transfer
to Newco of any Contract or other Contributed Assets, or (ii) dispose of or make
any material changes to the Business. If such Consent is not obtained with
respect to any such Contract or Governmental Approval for which HNS is required
by this Contribution Agreement to seek Consent, Newco and HNS shall effect an
alternative arrangement, to the extent permitted by Law (a “Pass Through
Arrangement”), in the form of a license, sublease, operating agreement or other
arrangement which results in Newco’s receiving all the benefits and bearing (and
HNS being reimbursed or made whole for) all third party costs and obligations
with respect to each Transfer Restricted Asset; provided, that to the extent HNS
shall be permitted to pass through any benefit in connection with a Governmental
Approval for which Consent to transfer has not been obtained, HNS shall not be
required to pass through such benefit beyond six months after Closing if such
Governmental Approval is not material to the Business. Upon Newco’s written
request from time to time after Closing, HNS will contribute, convey and
transfer to Newco, and Newco will acquire, assume and accept from HNS those
Transfer Restricted Assets then subject to a Pass Through Arrangement as
specified in Newco’s written request, and upon such contribution, conveyance and
transfer, any remaining obligation of HNS, Parent or their Affiliates to effect
a Pass Through Arrangement with respect to the conveyed items shall cease and
HNS, Parent and their Affiliates shall have no Liability with respect to any
failure to obtain Consent for such contribution, conveyance and transfer.

 

(c) The parties hereto acknowledge and agree that from and after Closing (i)
Newco will need the transition services from HNS and Parent described on Exhibit
B and (ii) Parent and HNS will need the transition services from Newco described
on Exhibit B. The party providing the transition services shall be reimbursed
for its costs of providing such services (including a reasonable allocation of
overhead) plus all reasonable out-of-pocket expenses incurred by such party in
connection with the provision of such transition services, which costs and
expenses shall be paid by the party receiving such services. The parties hereto
agree to enter into a transition services agreement in the form attached hereto
as Exhibit B to provide for the provision of the transition services described
on Exhibit B in accordance with this Section 2.6(c) and Exhibit B (the
“Transition Services Agreement”). The parties agree to negotiate in good faith
to develop a reasonably detailed statement of services to be attached to the
Transition Services Agreement as Schedule A consistent with the outline of
services described on Exhibit B. In the event that the Transition Services
Agreement has not been executed by Closing, (i) the parties agree to continue to
negotiate in good faith and finalize such Schedule A to the Transition Services
Agreement as soon as practicable after Closing, and (ii) Parent, Newco and HNS
will continue to provide the transition services described on Exhibit B that are
currently provided, in each case, in a manner and quality that are substantially
consistent with past practice in performing such services and the party
receiving such services will be obligated to reimburse the party performing the
services consistent with the second sentence of this Section 2.6(c); provided
that the obligation to provide services pursuant to this clause (ii) shall
terminate on the earlier of the time that the Transition Services Agreement has
been entered into and one hundred eighty (180) days after Closing.

 

(d) The parties hereto agree to negotiate in good faith the terms of and enter
into an agreement to provide for the provision of services in accordance with
the terms set forth on Exhibit C (the “DirecWay Agreement”). In the event that
the DirecWay Agreement has not been executed by Closing, (i) the parties agree
to continue to negotiate in good faith such DirecWay Agreement and to execute
the same as soon as practicable after Closing, and (ii) Parent will provide the
services contemplated by Exhibit C which Parent is providing on the date hereof
in a manner and quality that are substantially consistent with past practice in
performing such services for HNS, and Newco will be obligated to pay Parent for
such services consistent with past practice; provided that the obligation of
Parent to provide services pursuant to this clause (ii) shall terminate on the
earlier of the time that the DirecWay Agreement has been entered into and 180
days after Closing.

 

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(e) Parent and HNS shall deliver an updated schedule of the Financial Support
Arrangements outstanding as of Closing. Newco shall use commercially reasonable
efforts to cause the Financial Support Arrangements to be terminated by the date
that is 90 days after the Closing Date. In furtherance of the foregoing, the
parties hereto agree to use commercially reasonable efforts to cause Newco to
provide substitute Financial Support Arrangements, reasonably acceptable to the
Persons for whose benefit the Financial Support Arrangements were made, on or
prior to the 90th day following the Closing Date, to replace guarantees, letters
of support or similar instruments made by HNS for the benefit of the Transferred
Subsidiaries not requiring any cash or other collateral and to provide financial
information concerning Newco reasonably requested by those Persons for whose
benefit the Financial Support Arrangements were made. The obligation to use
commercially reasonable efforts under this Section 2.6(e) shall not require
Newco (i) to make any payment to any Person or (ii) to provide or deliver to any
Person any collateral (including cash, marketable securities or similar
instruments), in each case in support of, or as a condition to, the replacement
termination or release of any Financial Support Arrangements maintained by
Parent, HNS or its Affiliates. All collateral which is not included in the
Contributed Assets that is supporting or securing in whole or in part any
Financial Support Arrangements shall be delivered to Parent promptly upon the
release or termination of such Financial Support Arrangements.

 

(f) If at any time after the Closing Date, (i) any amounts are drawn on or paid
under any Financial Support Arrangement (excluding amounts paid on or prior to
the Closing Date or any amounts which would be an Excluded Liability) pursuant
to which Parent, HNS or any of its Affiliates are obligated to reimburse the
Person making such payment or collateralized by Assets of Parent, HNS or any of
its Affiliates, or (ii) Parent, HNS or any of its Affiliates pay any amounts
under, or any fees, costs or expenses relating to, any Financial Support
Arrangement (excluding amounts paid on or prior to the Closing Date or any
amounts which would be an Excluded Liability), Newco shall reimburse Parent or
HNS for the full amount promptly after receipt from Parent or HNS of notice
thereof accompanied by written evidence of the underlying obligation and amounts
drawn or paid.

 

(g) In no event shall Parent, HNS or its Affiliates have any obligation to
extend or renew or post any additional collateral for any Financial Support
Arrangements after the Closing Date, or to keep any Financial Support
Arrangements or collateral supporting such arrangements in place after the
expiration of such Financial Support Arrangement. In the event that Newco fails
to cause such Financial Support Arrangements to be terminated, Newco shall
continue to use commercially reasonable efforts to cause such Financial Support
Arrangements to be terminated in a manner reasonably acceptable to Parent as
soon as possible after Closing.

 

(h) Promptly following execution of this Contribution Agreement, HNS and the
Investor shall, and HNS shall cause its Affiliates to, negotiate in good faith
to agree upon the terms of any further transfer documents and agreements as may
be required to consummate the Contemplated Transactions. In the event that at
any time after Closing, (i) any of Parent, HNS or Newco becomes aware that any
Contributed Asset was not transferred to Newco at Closing, such party shall
promptly notify the other parties to that effect and shall cooperate with the
other parties to cause such Contributed Asset to be transferred to Newco, or
(ii) any of Parent, HNS or Newco becomes aware that any Assumed Liability was
not transferred to and assumed by Newco at Closing, such party shall promptly
notify the other parties to that effect and shall cooperate with the other
parties to cause Newco to assume such Assumed Liability.

 

(i) If the FCC consent to the Contemplated Transactions does not become a Final
Order on or prior to the Closing Date and the FCC subsequently rescinds its
consent and requires the parties to unwind the Contemplated Transactions at
Closing by an Order whose effectiveness has not been stayed, the parties shall,
to the extent permitted by Law, reconstitute the transactions by effectuating a

 

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mutually acceptable alternative arrangement, which allows Newco to operate the
Business, but allows HNS to retain the requisite control over the operation of
the facilities authorized under any Governmental Approvals that constitute
Contributed Assets.

 

2.7 Financing; Payment of Purchase Price; Purchase and Sale of Membership
Interests.

 

(a) The parties acknowledge that as of the date hereof, HNS has executed a
Limited Liability Company Agreement of Newco in the form attached hereto as
Exhibit D (the “Original LLC Agreement”) evidencing the 100% membership interest
in Newco held by HNS.

 

(b) HNS and the Investor shall use their commercially reasonable efforts to
secure, as soon as possible following the date of this Contribution Agreement,
debt financing for Newco of at least Three Hundred Seventy Five-Million Dollars
($375,000,000) with principal terms that are not materially less favorable,
taken as a whole, to Newco than the terms outlined in the commitment letters
attached hereto as Exhibit E and otherwise on such terms and conditions as are
customary for debt financings of such type (the “Financing”).

 

(c) At Closing, the Investor shall purchase from HNS, and HNS shall sell to the
Investor, free and clear of all Encumbrances (except for any restrictions
imposed by applicable securities Laws), a 50% membership interest in Newco (the
“Investor Interest”) in consideration of (the “Membership Interest Purchase
Price”) (x) a payment in cash of Fifty Million Dollars ($50,000,000) and (y)
300,000 shares of SkyTerra Stock. The number of shares of SkyTerra Stock to be
issued to HNS pursuant to Section 2.7(c)(y) shall be adjusted proportionately to
reflect any stock splits, combinations, reverse splits, recapitalizations or the
like consummated after the date hereof and on or prior to the Closing Date. At
Closing, (i) the cash portion of the Membership Interest Purchase Price shall be
delivered by the Investor to HNS by wire transfer of immediately available funds
to an account or accounts which shall be designated by HNS at least two (2)
business days prior to the Closing Date and (ii) the shares of SkyTerra Stock
shall be issued to HNS, free and clear of all Encumbrances (except for any
restrictions imposed by applicable securities Laws).

 

(d) At Closing, immediately after the purchase and sale of the Investor
Interest, HNS and the Investor each shall deliver to the other an executed
counterpart copy of the Amended and Restated Limited Liability Company Agreement
of Newco (the “Restated LLC Agreement”) in substantially the form attached
hereto as Exhibit F evidencing the 50% membership interest held by HNS and the
50% membership interest held by the Investor.

 

(e) At Closing, for and in consideration of the conveyances described herein,
Newco agrees to pay to HNS (using the proceeds of the Financing), and HNS agrees
to accept from Newco, the amount of Two Hundred One Million Dollars
($201,000,000), (i) plus or minus, as applicable, the Severance Cap Adjustment,
if any, (ii) plus the Prepaid Spaceway Amounts, if any, and (iii) plus or minus,
as applicable, the amount, if any, as determined under Section 2.10 (the
“Purchase Price”). At Closing, the Purchase Price shall be delivered by Newco to
HNS by wire transfer of immediately available funds to an account or accounts
which shall be designated by HNS at least two (2) business days prior to the
Closing Date.

 

(f) Any and all payments under this Contribution Agreement, including the
payment of the Purchase Price and the cash portion of the Membership Interest
Purchase Price, shall be paid in United States Dollars.

 

(g) The parties (i) acknowledge that, for tax structuring reasons, to assist in
the Financing and for other reasons, Newco will need to establish Subsidiaries
to acquire and hold certain of the Business Assets and Transferred Subsidiaries
and (ii) shall cooperate to determine and implement the corporate structure of
Newco and such Subsidiaries.

 

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2.8 Closing; Closing Date.

 

(a) The closing of the Contemplated Transactions (“Closing” and the date thereof
being sometimes hereinafter referred to as the “Closing Date”) shall take place
as soon as reasonably practicable (and in any event no later than three (3)
business days) after the satisfaction or waiver of the conditions precedent set
forth in Section 8.1 through Section 8.3 (other than conditions which, by their
nature, are to be satisfied on the Closing Date). Closing shall be held at the
offices of Parent’s counsel in Washington, D.C., or at such other location as
the parties may mutually agree upon.

 

(b) At Closing, the following transactions shall be deemed to occur in the
following order:

 

  (1) The conveyances contemplated by Section 2.1 and Section 2.4 hereof;

 

  (2) The consummation of the Financing (including the funding of the
Financing);

 

  (3) The purchase and sale of the Investor Interest pursuant to Section 2.7(c);
and

 

  (4) The payment of the Purchase Price to HNS.

 

2.9 Allocation of Purchase Price.

 

(a) As of the Closing Date, and pursuant to Revenue Ruling 99-5, the following
shall be deemed to occur: the Investor shall purchase a percentage (the
“Percentage”) of the Business Assets equal to the quotient of the sum of (x)
$50,000,000 plus (y) the value of the SkyTerra Stock Consideration on the
Closing Date (and, if applicable, the amount of the reduction in the Severance
Cap by the SkyTerra Stock Shortfall Amount), divided by the value of Newco’s
assets on the Closing Date, for an amount equal to (x) $50,000,000 plus (y) the
SkyTerra Stock Consideration (and, if applicable, the amount of the reduction in
the Severance Cap by the SkyTerra Stock Shortfall Amount), the Investor shall
contribute its purchased portion of the Business Assets, and HNS shall
contribute to Newco the Percentage of the Business Assets and shall sell the
remainder of the Business Assets (subject to Liabilities) to Newco, which will
constitute a newly formed partnership for Federal income tax purposes, as
described in Section 721 of the Code, and Treas. Reg. § 1.707-3. Each party
hereto agrees to make all Tax filings consistent with such treatment.

 

(b) The purchase price of the Business Assets (and those assumed liabilities
treated as purchase price for Tax purposes) shall be allocated to the portion of
the Business Assets deemed purchased by Newco as set forth in this Section 2.9.

 

(c) The parties agree to allocate the Purchase Price (and all other capitalized
costs) under the principles of Section 1060 of the Code, and shall cooperate in
making such allocation and executing such forms as are reasonably necessary in
connection therewith.

 

(d) Except as otherwise agreed by the Investor and Parent, the parties agree to
work together in good faith prior to Closing to structure the ownership of any
Assets acquired from HNS UK in a manner that is Tax efficient to Newco and its
members.

 

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2.10 Working Capital Adjustment; Minimum Cash Balance.

 

(a) Within five (5) business days prior to the Closing Date, HNS shall deliver
to the Investor a reasonable, good faith written estimate of (i) the Working
Capital of the VSAT Business as calculated in accordance with Exhibit G-1(the
“Estimated Working Capital Amount”) as of the Closing Date (the “Estimated
Working Capital Statement”) and (ii) the amount of cash and cash equivalents of
the Transferred Subsidiaries and any cash and cash equivalents otherwise
included in the Business Assets (which, for this purpose, does not include any
Assets included in the calculation of Working Capital) (the “Closing Cash
Balance”) as of the Closing Date. HNS shall cause at least Five Million Dollars
($5,000,000) of the Closing Cash Balance to be in accounts in banks located in
the United States.

 

(b) If (A) the Estimated Working Capital Amount is more than (B) the sum of the
applicable amount specified in Exhibit G-2 (the “Working Capital Target Amount”)
plus $15,000,000 (such sum, the “Upper Collar Amount”), then the difference
between the Estimated Working Capital Amount and the Upper Collar Amount shall
be added to the Purchase Price. If (A) the Estimated Working Capital Amount is
less than (B) the result of the Working Capital Target Amount minus $15,000,000
(such result, the “Lower Collar Amount”), then the difference between the Lower
Collar Amount and the Estimated Working Capital Amount shall be subtracted from
the Purchase Price.

 

(c) If the Closing Cash Balance is less than Ten Million Dollars ($10,000,000)
(the “Cash Target Amount”), the difference between the Cash Target Amount and
the Closing Cash Balance shall be subtracted from the Purchase Price.

 

(d) As promptly as practicable following the Closing Date (but in no event later
than ninety (90) days following the Closing Date), HNS shall prepare and deliver
to Newco, or cause to be prepared and delivered to Newco, an unaudited statement
setting forth the Working Capital of the VSAT Business as calculated in
accordance with Exhibit G-1 (the “Final Working Capital Amount”) as of the close
of business on the Closing Date (such statement, the “Final Working Capital
Statement”).

 

(e) If by using the Final Working Capital Amount (as finally determined
following any dispute resolution process initiated under Section 2.10(f))
instead of the Estimated Working Capital Amount for purposes of the Purchase
Price adjustment pursuant to Section 2.10(b), the Purchase Price paid to HNS at
Closing would have increased, then the amount of such increase shall be paid to
HNS by Newco. If by using the Final Working Capital Amount (as finally
determined following any dispute resolution process initiated under Section
2.10(f)) instead of the Estimated Working Capital Amount for purposes of the
Purchase Price adjustment pursuant to Section 2.10(b), the Purchase Price paid
to HNS at Closing would have decreased, then the amount of such decrease shall
be paid to Newco by HNS. Any such payment shall be made in immediately available
funds not later than five (5) business days after the final determination of the
Final Working Capital Amount by wire transfer to a bank account designated in
writing by the party entitled to receive the payment.

 

(f) In the event Newco believes the proposed Final Working Capital Statement as
delivered by HNS is incorrect, Newco shall notify HNS in writing of its
objections within sixty (60) days after receipt of the Final Working Capital
Statement, and shall set forth, in writing and in reasonable detail, (i) the
reasons for Newco’s objections, (ii) the items in dispute described with
reasonable specificity, and (iii) the amount in dispute and the basis for the
calculation of such amount. To the extent Newco does not object in writing and
in reasonable detail as required and within such sixty (60) day period to the
proposed Final Working Capital Statement as delivered by HNS, Newco shall be
deemed to have accepted such Final Working Capital Statement and the Final
Working Capital Amount set forth therein shall be deemed the finally determined
Final Working Capital Amount. HNS and Newco shall

 

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endeavor, and shall, if requested, cause their respective accountants to
endeavor, in good faith to resolve any dispute regarding the Final Working
Capital Statement within thirty (30) days after HNS’s receipt of Newco’s notice
of objections. If HNS and Newco are unable to resolve the disputed matters
within such thirty (30) day period, HNS and Newco shall select a nationally
known independent accounting firm (which firm shall not be the then-regular
auditors of Parent, HNS, Newco or the Investor) to resolve the matters in
dispute (in a manner consistent with this Section 2.10 and consistent with any
matters not in dispute), and the determination of such firm in respect of the
correctness of each matter remaining in dispute shall be conclusive and binding
on Parent, HNS, Newco and the Investor. The fees and expenses, if any, of the
accounting firm selected to resolve any disputes between HNS and Newco in
accordance with this Section 2.10(f) shall be paid one-half by HNS and one-half
by Newco.

 

(g) HNS shall make available to Newco and, upon request, to the independent
accountants selected pursuant to Section 2.10(f), the books, records and
Documents used or created in the preparation of the Final Working Capital
Statement. Newco shall make available to HNS and, upon request, to the
independent accountants selected pursuant to Section 2.10(f), the books, records
and Documents used, created or prepared by or for Newco in connection with the
review of the Final Working Capital Statement.

 

2.11 No Set-Off. No party hereto shall have the right to set off any amount to
which such party is entitled hereunder for indemnification or otherwise against
any payment such party is required to make hereunder or under any other
Transaction Documents.

 

3. ADDITIONAL UNDERTAKINGS AND COVENANTS. The parties hereto hereby covenant and
agree as follows:

 

3.1 Consents and Approvals.

 

(a) The parties hereto shall use commercially reasonable efforts to, as promptly
as practicable, make the filings, if any, required under Hart-Scott-Rodino and
shall as promptly as practicable make the filings required under any other
Antitrust Laws (and not later than thirty (30) days after the date hereof in the
case of any filings required under the Antitrust Laws of the Republic of Korea).
In addition, as promptly as practicable, Newco shall use commercially reasonable
efforts to make an application with the Department of State relating to
registration as an exporter under International Traffic in Arms Regulations, 22
C.F.R. Parts 120-130 (“ITAR”). Subject to Section 11.2(b), each party shall pay
any filing fees associated with such filings made by such party (other than fees
associated with Hart-Scott-Rodino which shall be payable solely by the Investor
and reimbursed by Newco at Closing). The parties hereto shall comply at the
earliest practicable date with any request for additional information,
documents, or other materials received from the Federal Trade Commission or the
Department of Justice or any other Governmental Authority, including
international competition authorities.

 

(b) The parties hereto shall as promptly as practicable and in any event within
fifteen (15) business days after the date hereof, and HNS shall cause its
Affiliates to, file the necessary Communications Applications at the FCC, make
the other filings, if any, required under the Communications Act, and within
thirty (30) days after the date hereof, shall make the filings required under
any other Communications Laws. The parties shall cooperate with one another in
filing the Communications Applications and such other filings required under any
other Communications Laws. Subject to Section 11.2(b), the cost of any fees
payable to a Governmental Authority associated with such filings shall be borne
equally by the Investor and HNS. The parties hereto also shall comply at the
earliest practicable date with any request for additional information,
documents, or other materials received from the FCC or from any other
Governmental Authority responsible for communications matters.

 

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(c) The parties hereto shall: (i) use their commercially reasonable efforts to
obtain prompt termination of any waiting period under Hart-Scott-Rodino
(including any extension of the initial thirty (30) day waiting period with
respect to the Contemplated Transactions); (ii) furnish to the other parties
such information and assistance as such parties reasonably may request as may be
reasonably necessary in connection with the preparation of any submissions to,
or agency proceedings by, any Governmental Authority under any applicable
Antitrust Law; (iii) keep the other parties promptly apprised of any material
communications with, and inquiries or requests for information from, such
Governmental Authorities in connection therewith; (iv) permit the other parties
to review any material communication given by it to, and consult with the other
parties in advance of any meeting or conference with any such Governmental
Authority or, in connection with any Proceeding by a private party, with any
other Person; and (v) use their commercially reasonable efforts to cause the
condition set forth in Section 8.1(a) to be satisfied.

 

(d) The parties hereto shall: (i) use their commercially reasonable efforts to
provide all requisite filings and notifications to the FCC and foreign
Governmental Authorities, (ii) furnish to the other parties such information and
assistance as such parties reasonably may request as may be reasonably necessary
in connection with the preparation or prosecution of any such filings and
notifications, (iii) keep the other parties promptly apprised of any
communications with, and inquiries or requests for information from, such
Governmental Authorities with respect to the Contemplated Transactions, (iv)
keep the other parties apprised of the status of all applications filed with the
FCC and all other Governmental Authorities responsible for communications
matters, (v) permit the other parties to review any material communication given
by it to, and consult with the other parties in advance of any meeting or
conference with any such Governmental Authority and (vi) use its commercially
reasonable efforts to cause the condition set forth in Section 8.1(c) and
Section 8.1(e) of this Contribution Agreement to be satisfied.

 

(e) The Investor and HNS shall, and HNS shall cause its Affiliates to, use their
commercially reasonable efforts to secure all such other Consents of any
Governmental Authority required in order to consummate the Contemplated
Transactions.

 

(f) In furtherance and not in limitation of the covenants of the parties
contained in Section 3.1(c), the Investor shall use its commercially reasonable
efforts to resolve objections, if any, which may be asserted by any Governmental
Authority with respect to the Contemplated Transactions under Hart-Scott-Rodino
and any other Antitrust Laws.

 

(g) In addition to the obligations set forth in Section 3.1(a), the parties
shall promptly, but in no event later than sixty (60) days prior to Closing,
make the filings required under the ITAR to notify the State Department
regarding the Contemplated Transactions. The parties hereto shall also use
commercially reasonable efforts to comply at the earliest practicable date with
any request for additional information, documents, or other materials received
from the State Department with respect to such filings.

 

3.2 Operation of the Business; Cancellation of Certain Intercompany Obligations.

 

(a) Except as otherwise contemplated by this Contribution Agreement, from the
date of this Contribution Agreement until Closing, HNS shall, and shall cause
HNS Europe, HNS UK and each Transferred Subsidiary to, unless the Investor
otherwise consents in writing (such consent not to be unreasonably withheld):

 

(i) to the extent affecting the Business, Business Assets or Assumed
Liabilities, operate and conduct the Business in all material respects in the
Ordinary Course of Business

 

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including: (A) using its commercially reasonable efforts to keep available the
services of its present officers and key employees of the Business generally;
(B) using its commercially reasonable efforts to maintain the Business Assets in
accordance with historic practices of the Business; (C) using its commercially
reasonable efforts to maintain and preserve all relationships with suppliers,
customers and other Persons, in each case having material business relationships
with the Business; and (D) continuing to make capital expenditures in the
Ordinary Course of Business and consistent with the current budget for the
Business;

 

(ii) use all commercially reasonable efforts to (A) maintain Governmental
Approvals and Communications Licenses necessary for the conduct of the Business
as presently conducted and the operation of the Business Assets and (B)
diligently prosecute all pending applications for Communications Licenses before
Governmental Authorities and Proceedings with the FCC, except in each case for
actions taken in the Ordinary Course of Business that would not reasonably be
expected to have a Material Adverse Effect on the Business;

 

(iii) use all commercially reasonable efforts to maintain the Material Contracts
in the Ordinary Course of Business;

 

(iv) continue to maintain and, to the extent necessary, pursue coordination and
negotiation with respect to its ITU filings identified in Section 4.18 of the
Disclosure Schedule and associated frequency registrations and intersystem
coordination agreements in the Ordinary Course of Business; and

 

(v) pay or otherwise satisfy all of their Liabilities and Taxes with respect to
the Business and the Business Assets when due, except to the extent contested in
good faith by appropriate proceedings.

 

(b) Except as otherwise contemplated by this Contribution Agreement, from the
date of this Contribution Agreement until Closing, HNS shall not, and shall
cause HNS Europe, HNS UK and each Transferred Subsidiary not to, unless the
Investor otherwise consents in writing (such consent not to be unreasonably
withheld):

 

(i) take any action that would constitute a breach of the representations and
warranties of HNS set forth herein or in another Transaction Document (the
operation of this section shall in no way impair or affect the representations
and warranties herein);

 

(ii) (A) except in the Ordinary Course of Business, transfer, lease, or license
to any other party, or otherwise dispose of, any single Business Asset having a
book value in excess of $50,000 or any Business Assets having an aggregate book
value in excess of $500,000, or (B) take any action that would violate any
applicable Law, which violation would reasonably be expected to have a material
adverse impact on the operations of the Business;

 

(iii) except in the Ordinary Course of Business, enter into any Contract that is
expected by HNS to have aggregate revenue or aggregate obligations valued in
excess of $250,000 (other than a customer Contract) which is or would be a
Business Asset or Assumed Liability, or terminate, materially amend or
intentionally fail to renew or default under (or intentionally take or
intentionally omit to take any actions that, with or without the giving of
notice or the passage of time or both, would constitute a default under), any
Material Contract which is or would be a Business Asset or Assumed Liability;

 

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(iv) create any Encumbrance on any Business Assets other than Permitted
Encumbrances and such other Encumbrances which will be released on or prior to
Closing;

 

(v) make any material change in its policies or practices with respect to
collection of accounts receivable or payment of accounts payable of the Business
and the Business Assets;

 

(vi) reduce the amount of inventory below those amounts maintained by HNS, HNS
Europe, HNS UK or any Transferred Subsidiary in the Ordinary Course of Business;

 

(vii) fail to use commercially reasonable efforts to maintain the
confidentiality of all Confidential Information related to the Business, the
Business Assets and the Assumed Liabilities in accordance with its historic
practices;

 

(viii) (A) increase the rate of compensation payable or to become payable to or
any benefits provided to or on behalf of, any Prospective Newco Employee other
than in the Ordinary Course of Business; (B) materially amend any employment,
severance or similar or related agreement with any Prospective Newco Employee;
(C) adopt any new foreign benefit plan if such plan would result in new or
increased costs to Newco or constitute a Business Asset or Assumed Liability;
(D) allow any Prospective Newco Employee to be eligible for any newly adopted
Employee Benefit Plan, except as required by Law; (E) amend any existing Foreign
Employee Benefit Plan or Employee Benefit Plan, except as otherwise required by
Law, if such amendment would result in new or increased costs to Newco; or (F)
enter into any new collective bargaining agreement, employment Contract or other
Contract with any labor union or similar organization that applies to or covers
Prospective Newco Employees, in any such case, that will be an Assumed
Liability; provided, however, that with respect to clauses (C) and (E), HNS
shall consult with the Investor prior to such action and HNS and the Investor
shall have discussed in good faith desirable communications with Prospective
Newco Employees with respect to such action;

 

(ix) (A) permit any Transferred Subsidiary to merge or consolidate with any
Person, (B) acquire any material interest in any Person which will be part of
the Business Assets or Assumed Liabilities, (C) acquire a substantial portion of
the Assets of any Person which will be part of the Business Assets or Assumed
Liabilities, (D) acquire any division or line of business of any Person which
will be part of the Business Assets or Assumed Liabilities, or (E) otherwise
acquire any material Asset outside the Ordinary Course of Business that is
accompanied by an Assumed Liability in excess of $1,000,000;

 

(x) issue, deliver, pledge, encumber or sell, or authorize the issuance,
delivery, encumbrance or sale, to any Person any capital stock or other equity
securities of any Transferred Subsidiary, or any option, warrant or other right
to acquire equity securities in any Transferred Subsidiary;

 

(xi) take or omit to take any action which would reasonably be expected have a
Material Adverse Effect on the Business, the Business Assets or any Transferred
Subsidiary;

 

(xii) take any action that would prevent it from performing or cause it not to
perform its agreements, covenants or other obligations hereunder or under the
other Transaction Documents or fail to satisfy its Closing conditions;

 

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(xiii) effectuate a “plant closing” or “mass layoff” as those terms are defined
in the WARN Act or any similar Law, with respect to the Business, without
complying with the notice requirements and all other provisions of the WARN Act
and any similar Law;

 

(xiv) make any material Tax election, other than in the Ordinary Course of
Business, that could reasonably be expected to effect any Tax Liability related
to the Business in any period after the Closing Date or settle, or cause HNS
Europe, HNS UK or any Transferred Subsidiary to settle, any Tax Liability or
controversy;

 

(xv) settle or cause HNS Europe, HNS UK or any Transferred Subsidiary to settle
any material litigation which is an Assumed Liability or relates to the Business
Assets, if such settlement would reasonably be expected to have a material
adverse impact on the operations of the Business following Closing;

 

(xvi) other than investments in the Transferred Subsidiaries, enter into or make
investments in any Persons (including through joint venture relationships) in
excess of $500,000 in the aggregate; and

 

(xvii) enter into any Contract to or otherwise agree to, in writing or
otherwise, take any of the actions described above in this Section 3.2(b).

 

(c) Notwithstanding the provisions of this Section 3.2, HNS and its Affiliates
(including the Excluded Subsidiaries) are permitted to repay, offset, cancel or
otherwise eliminate all intercompany accounts and intercompany obligations
(including accounts payable, accounts receivable, and profit and loss sharing
obligations) in existence between HNS (or any of its Affiliates, including the
Excluded Subsidiaries) and any of the Transferred Subsidiaries, on or before the
Closing Date; provided that the foregoing shall not apply to accounts and
obligations that arise out of the Contracts between HNS and any of its
Affiliates listed on Section 2.2(a)(vii) of the Disclosure Schedule that are for
the provision or receipt of commercial products or services (which Contracts
shall remain in place). Notwithstanding the provisions of this Section 3.2, HNS
and its Affiliates shall, if and to the extent requested by the Investor, repay,
offset, cancel or otherwise eliminate all intercompany accounts and intercompany
obligations (including accounts payable, accounts receivable, and profit and
loss sharing obligations) in existence between or exclusively among HNS, HNS
Europe, HNS UK and the Transferred Subsidiaries, on or before the Closing Date.
Notwithstanding the provisions of this Section 3.2, HNS is permitted to cause
any and all of the Transferred Subsidiaries to transfer to HNS or its Affiliates
(as directed by HNS) all cash and cash equivalents or similar type investments,
bank accounts, certificates of deposit, Treasury bills, and marketable
securities held by the Transferred Subsidiaries, through and until the Closing
Date. Such transfers may be effected by a cash dividend or distribution or
repayment of intercompany indebtedness or similar means. The parties hereto
agree that, effective from and after Closing, (i) Newco and the Transferred
Subsidiaries shall be released automatically and without any further action from
any and all (A) Liabilities under each Contract with HNS and its Affiliates
other than the Contracts set forth on Section 2.2(a)(vii) of the Disclosure
Schedule, (B) Liabilities for breach of contract claims of HNS and its
Affiliates existing as of the Closing Date, whether known or unknown, with
respect to the Contracts set forth on Section 2.2(a)(vii) of the Disclosure
Schedule (except with respect to claims for rights to payment for services
thereunder) and (C) tort claims of HNS and its Affiliates existing as of the
Closing Date, whether known or unknown; and (ii) HNS and its Affiliates shall be
released automatically and without any further action from any and all (A)
Liabilities under each Contract with the Transferred Subsidiaries other than the
Contracts set forth on Section 2.2(a)(vii) of the Disclosure Schedule, (B)
Liabilities for breach of contract claims of the Transferred Subsidiaries
existing as of the Closing Date, whether known or unknown, with respect to the
Contracts set forth on Section 2.2(a)(vii) of the Disclosure Schedule (except
with respect to claims for rights to payment for services thereunder) and (C)
tort claims of the Transferred Subsidiaries existing as of the Closing Date,
whether known or unknown.

 

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(d) Prior to Closing, Parent shall cause Newco not to (i) conduct any business
operations whatsoever or (ii) enter into any Contract of any kind or acquire any
Asset or incur any Liability, except as may be specifically contemplated by this
Contribution Agreement or as the parties may otherwise agree.

 

3.3 Maintenance of Insurance Policies.

 

(a) Prior to Closing, Parent has maintained insurance programs which provide
certain coverage for HNS and its Affiliates. From and after Closing, Newco shall
be responsible for obtaining and maintaining its own insurance programs
separately from Parent and/or HNS insurance programs. Notwithstanding the
foregoing, (i) Parent and HNS, upon the request of Newco, shall cooperate with
and use commercially reasonable efforts to assist Newco in the transition to its
own separate insurance coverage from and after Closing, and shall provide Newco
with any information that is in the possession of Parent and is reasonably
available and necessary to obtain such insurance coverage, (ii) each of the
parties hereto, upon the request of one party, shall cooperate with and use
commercially reasonable efforts to assist the other in the collection of
proceeds from insurance claims made under any Insurance Policy (as defined
below) for the benefit of any insured party and (iii) each of the parties hereto
shall use commercially reasonable efforts not to take any action that would
jeopardize or otherwise interfere with any party’s ability to collect any
proceeds payable pursuant to any Insurance Policy.

 

(b) With respect to any claims in respect of the Business Assets arising out of
events, acts or omissions occurring prior to Closing, for which Newco or other
covered parties may be entitled to assert a claim for recovery under any policy
of insurance maintained by Parent or HNS prior to Closing, other than a
directors & officers liability insurance policy (an “Insurance Policy”), in
accordance with the terms thereof, Parent and HNS, at the request of Newco,
shall use commercially reasonable efforts in asserting, or assisting Newco in
asserting, such claims under any such Insurance Policy; provided that in all
cases (except with respect to insurance proceeds included in the Business Assets
pursuant to Section 2.2(a)(xxi)): (i) Newco shall promptly pay or reimburse
Parent or HNS, as the case may be, for all reasonable costs and expenses
incurred by Parent or HNS in connection with such claims (whether such claims
were made before or are made after Closing), (ii) Newco shall be obligated to
pay or reimburse Parent or HNS for any obligations with respect to any
retrospective premium adjustments to the extent but only to the extent that such
premiums are actually paid and directly result from claims made post-Closing by
Newco for pre-Closing Assumed Liabilities under “claims made” insurance
policies, (iii) to the full extent permitted by Contract and Law, the control
and administration of such Insurance Policies shall remain with Parent, (iv)
such claims shall be subject to (and recovery thereon shall be reduced by the
amount of) any applicable deductibles, retentions, self-insurance provisions or
any payment or reimbursement obligations (including out-of-pocket legal and
administrative costs and attorney’s fees under such Insurance Policies) of
Parent or HNS in respect thereof, (v) with respect to claims made Insurance
Policies, such claims must have been reported within the time frames required by
such policies, and (vi) Newco shall promptly report to Parent and HNS any such
claims and keep Parent and HNS reasonably informed with regard to the status
thereof. Parent (or, in the event that the primary economic burden is to be
borne by Newco by virtue of deductibles, retentions and retrospective premium
adjustments, Parent and Newco) and Parent’s insurers shall have the right to
control the investigation, defense and settlement of all claims, but no such
settlement may be effected without the consent of Newco, which consent shall not
unreasonably be withheld or delayed. Notwithstanding anything to the contrary
contained herein, Newco shall have the right to assert claims under Insurance
Policies at any time to the extent that such claim arises from, relates to or is
otherwise in connection with the Business Assets or the Assumed Liabilities.
Notwithstanding anything to the contrary herein, in no event shall Parent or any
of its Affiliates be obligated to maintain or extend any Insurance Policy or
coverage after Closing or purchase any supplemental or tail coverage.

 

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3.4 Public Announcements. From the date hereof, Parent, HNS, Newco and the
Investor shall cooperate in good faith to jointly prepare all press releases and
public announcements pertaining to this Contribution Agreement and the
Contemplated Transactions, and none of Parent, HNS, Newco, the Investor nor
their respective Affiliates, shall issue or otherwise make any public
announcement or communication pertaining to this Contribution Agreement or the
Contemplated Transactions without the prior consent of the Investor (in the case
of Parent, Newco, HNS and their Affiliates) or Parent (in the case of the
Investor and its Affiliates), except as required by Law or by any U.S.
Governmental Authority (including the FCC) or by the rules and regulations of,
or pursuant to any agreement with, any stock exchange. None of the foregoing
parties shall unreasonably withhold approval from the other with respect to any
such press release or public announcement. If any party determines, with the
advice of counsel, that it is required by Law to make this Contribution
Agreement, the other Transaction Documents or any terms hereof or thereof public
or otherwise issue a press release or make a similar public disclosure with
respect thereto, it shall, at a reasonable time before making any public
disclosure, consult with the other parties regarding such disclosure, seek
confidential treatment for such terms or portions of this Contribution Agreement
or the other Transaction Documents as may be requested by the other parties
(other than in connection with the filings with the FCC) and disclose only such
information as is legally compelled to be disclosed. For the avoidance of doubt,
the restrictions set forth in this section shall not apply to communications by
any party to employees, customers, potential customers and other third parties
of the Business in connection with performance of this Contribution Agreement
and the Transaction Documents.

 

3.5 Investor’s Access to Information; Confidentiality.

 

(a) From the date hereof until Closing and as permitted by Law, HNS shall, and
HNS shall cause its Affiliates to: (i) provide the Investor and its
Representatives with prompt and reasonable access during regular business hours,
and in a manner so as not to interfere with the normal business operations of
HNS or its Affiliates, to all premises, properties, key personnel, accountants
and auditors, books, records (including Tax records), Contracts, and Documents
of or pertaining to the Business, the Business Assets and the Assumed
Liabilities to the extent that the same do not relate to the Excluded Assets or
Excluded Liabilities (except to the extent that information in documents
relating to Excluded Assets or Excluded Liabilities is reasonably likely to have
a material impact on the future operations of Newco notwithstanding such
Excluded Assets and Excluded Liabilities being retained by HNS (or applicable
Affiliate)), including with respect to any Transferred Subsidiary; (ii) furnish
the Investor and its Representatives with all financial, operating and other
data and information related to the Business, the Business Assets and the
Assumed Liabilities (including copies thereof) to the extent that the same do
not relate to the Excluded Assets or Excluded Liabilities (except to the extent
that information in documents relating to Excluded Assets or Excluded
Liabilities is reasonably likely to have a material impact on the future
operations of Newco notwithstanding such Excluded Assets and Excluded
Liabilities being retained by HNS (or applicable Affiliate)), as the Investor
may reasonably request; and (iii) otherwise cooperate and assist, to the extent
reasonably requested by the Investor, with the Investor’s investigation of the
Business, the Business Assets and the Assumed Liabilities, and to the extent
that it would have a material impact on the future operations of Newco, the
Excluded Assets and Excluded Liabilities. Parent and HNS shall, and shall cause
their respective Representatives to, provide the potential sources of the
Financing with the same access to information as is afforded the Investor
hereunder. Parent and HNS shall assist and cooperate with the potential sources
of Financing, which assistance and cooperation shall include using their
respective commercially reasonable efforts to cause (i) HNS or its legal counsel
to provide customary legal opinions to the extent requested by the Persons
providing the Financing, (ii) HNS’s auditors to (x) cooperate generally with the
Investor and, to the extent

 

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provided by auditors under applicable accounting practices, to provide “cold
comfort” letters to the extent requested by Persons providing the Financing and
(y) consent to the inclusion of HNS’s VSAT Business audit reports in any
offering or private placement memorandum and (iii) HNS’s senior management
employees to participate in the marketing of any debt or equity securities,
including going on a “road show.”

 

(b) The parties acknowledge that Apollo Management, L.P. or one of its
Affiliate(s) and HNS and one or more of its Affiliates previously have each
executed a Confidentiality Agreement, which Confidentiality Agreements will
continue in full force and effect in accordance with their terms. Prior to
Closing, the Investor, HNS and Parent will hold, and will use commercially
reasonable efforts to cause its directors, officers, employees, agents and
advisors (including attorneys, accountants, consultants, bankers and financial
advisors) to hold, any Confidential Information confidential in accordance with
the terms of the Confidentiality Agreement; provided, that notwithstanding
anything to the contrary in the Confidentiality Agreement (other than the
provisions thereof relating to compliance with applicable Laws, including export
Laws), the parties hereto shall be permitted to talk to and share Confidential
Information with any Person providing the Financing (including such Person’s
Representatives) and any potential Permitted Person that will take equity,
general or limited partner or member, voting, profit sharing or other form of
co-investment interest in the transaction so long as such Person agrees in
writing to be bound by the terms of the Confidentiality Agreement.

 

(c) Notwithstanding anything to the contrary herein, Parent and HNS, on one
hand, and the Investor, on the other, shall be entitled to seek equitable relief
(including injunctive relief) to protect their interest in any of their
Confidential Information.

 

3.6 Preservation of Records and HNS’s Access to Information.

 

(a) On and after the Closing Date, Newco shall preserve all books and records of
the Business that it receives from HNS at Closing for a period of six (6) years
commencing on the Closing Date (or in the case of books and records relating to
Tax, employment and employee benefits matters, until the expiration of the
applicable statutes of limitations to which such records relate).

 

(b) On and after the Closing Date, if HNS or any of its Affiliates is subject to
a Proceeding with any Person other than the Investor or Newco which is not an
Excluded Liability, Newco shall afford HNS and its Affiliates and their
Representatives reasonable access upon reasonable prior notice during normal
business hours and in a manner so as not to interfere with the normal operations
of Newco to all employees, offices, properties, agreements, records, books and
affairs of Newco and any Transferred Subsidiary reasonably related to the
operations of the Business that are the subject matter of such Proceeding prior
to Closing and provide copies of such information concerning the Business as HNS
or its Affiliates may reasonably request to enable HNS and its Affiliates to
investigate reasonably the subject matter of any such Proceeding and respond to
any claims or discovery requests related thereto; provided, however, that Newco
shall not be required to provide any information to HNS or its Affiliates which
could constitute a waiver of any attorney-client privilege or violate any
contractual obligation of Newco or any Transferred Subsidiary other than any
such contractual obligation entered into after the date of this Contribution
Agreement. Any such access shall be conditioned upon (i) the execution by HNS
and any applicable Affiliates or representatives of a confidentiality agreement
reasonably acceptable to Newco and (ii) the prompt reimbursement by HNS of
reasonable, out-of-pocket fees, costs and expenses (including legal fees)
incurred by Newco to comply with such requests.

 

(c) On and after the Closing Date, with respect to any Proceeding asserted by
any Person other than the Investor or Newco which is an Excluded Liability,
whether pending or arising on or after the Closing Date, Newco shall cooperate
with and reasonably assist HNS in the investigation,

 

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defense, prosecution or settlement of any such Proceeding, including providing
whatever information, support, evidence and witnesses as are reasonably
available and necessary for the investigation, defense, prosecution or
settlement of any such Proceeding. Parent shall reimburse Newco for all
reasonable out-of-pocket fees, costs and expenses incurred by Newco in
connection with such cooperation and assistance.

 

3.7 Agreements Regarding Tax Matters.

 

(a) With respect to the Business Assets, the Transferred Subsidiaries and the
Business, each of HNS, the Investor and Newco shall (i) provide the others with
such assistance as may be reasonably requested in connection with the
preparation of any Tax Return or any audit or other examination by any tax
authority or Proceeding involving any Governmental Authority relating to
liability for Taxes, (ii) retain and provide to the other all records and other
information that may be relevant to any such Tax Return, audit or examination,
Proceeding or determination and (iii) provide the other with any final
determination of any such audit or examination, Proceeding or determination that
affects any amount required to be shown on any Tax Return of the other for any
period. Without limiting the generality of the foregoing, each party shall
retain, until the expiration of the applicable statutes of limitation (including
any extensions thereof), copies of all Tax Returns, supporting work schedules
and other records relating to Tax periods or portions thereof ending on or prior
to the Closing Date.

 

(b) HNS shall be responsible for filing all Tax Returns relating to the Business
Assets, the Transferred Subsidiaries or the Business for periods ending on or
before the Closing Date; provided, that such Tax Returns shall be reasonably
acceptable to Newco, and a copy of such Tax Returns shall be delivered to Newco
when filed. Newco shall be responsible for filing all Tax Returns relating to
the Business Assets, the Transferred Subsidiaries or the Business for periods
beginning after the Closing Date. If permitted by a Governmental Authority,
Newco and HNS shall file separate Tax Returns and separately pay their
respective Taxes for their respective portions of any Straddle Period. If
separate Tax Returns with respect to a Straddle Period are not permitted, Newco
shall prepare and file or cause to be prepared and filed the applicable Tax
Return relating to such Straddle Period. Newco shall provide HNS with a draft of
each Straddle Period Tax Return referred to in the immediately preceding
sentence and shall consider in good faith revisions to such Tax Return that are
reasonably requested by HNS that are in accordance with applicable Law and HNS’s
past practices. Newco and HNS shall be responsible for paying Taxes as set forth
in Section 2.4(a)(x), Section 2.4(b)(i) and Section 3.7(c). HNS shall pay to
Newco the amount of Taxes it is responsible for paying at least ten (10)
business days prior to the date such Taxes are due and payable.

 

(c) For purposes of Section 3.7(b), HNS shall be responsible for paying and
shall indemnify Newco against all Pre-Closing Taxes. “Pre-Closing Taxes” shall
be all Taxes of HNS, HNS Europe, HNS UK or any Transferred Subsidiary or related
to the Business Assets that are not Assumed Liabilities. In the case of a
Straddle Period, “Pre-Closing Taxes” shall include (i) all Income Taxes of such
Straddle Period measured as if such Straddle Period ended as of the end of the
Closing Date (and including the Contemplated Transaction) and (ii) taxes other
than Income Taxes, shall be apportioned on a daily basis, with HNS responsible
for a proportion of such Taxes based on a fraction, the numerator of which shall
be the number of days in the applicable tax period ending on and including the
Closing Date, and the denominator of which shall be the total number of days in
such tax period.

 

(d) Each of Newco and HNS shall provide reimbursement for any Straddle Period
Tax which is the responsibility of such party pursuant to this Section 3.7 and
which is paid by the other party hereto within thirty (30) days following the
receipt of notice of the Tax payable and the portion that is the liability of
such party.

 

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(e) If Newco or any Transferred Subsidiary receives a refund of (or credit or
rebate in lieu of a refund related to) (i) any Tax of HNS or any Transferred
Subsidiary arising in a period ending on or before the Closing Date or (ii) any
prepaid Tax of HNS or any Transferred Subsidiary (including for foreign,
federal, state and local excise, sales, use and value added Taxes paid on a
monthly basis) with respect to sales and operations prior to the Closing Date,
Newco shall pay or cause to be paid, within the thirty (30) days following the
receipt of such Tax refund, the amount of such Tax refund to HNS. If Newco or
any Transferred Subsidiary receives a refund of (or rebate in lieu of a refund
related to) any other Tax of HNS or any Transferred Subsidiary arising in a
Straddle Period, Newco shall pay or cause to be paid, within the thirty (30)
days following the receipt of such Tax refund, the portion of such Tax refund
that relates to Taxes that were the responsibility of HNS pursuant to Section
3.7(c). Newco shall not be obligated to pay any amounts to HNS as a consequence
of the carryback of a Tax loss or other Tax assets generated after the Closing
Date to a period ending on or before the Closing Date.

 

(f) HNS, the Investor and Newco agree, upon request, to use their commercially
reasonable efforts to obtain any certificate or other documentation from any
Governmental Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including with respect to the
Contemplated Transactions).

 

(g) All Tax sharing agreements and similar agreements currently in effect with
respect to or involving the Business Assets, the Transferred Subsidiaries or the
Business shall be terminated as of the Closing Date insofar as they relate to
such Business Assets, Transferred Subsidiaries or the Business. After the
Closing Date, Newco and the Transferred Subsidiaries shall not be bound by any
such Tax sharing agreements or have any liability thereunder.

 

3.8 United Kingdom Value Added Tax.

 

(a) HNS, Newco and the Investor intend that article 5 of the United Kingdom
Value Added Tax (Special Provisions) Order 1995 (“Article 5”) shall apply to the
sale of the Business Assets, so that the sale is treated as neither a supply of
goods nor a supply of services.

 

(b) If nevertheless any United Kingdom Value Added Tax (“UK VAT”) is payable on
any supply by HNS under this Contribution Agreement, Newco shall pay the amount
of that UK VAT in addition to the price (and indemnify HNS for any interest and
penalties imposed by HM Customs & Excise (“Customs”) arising out of the
treatment by HNS and Newco of the sale as described in Section 3.8(a)) and HNS
shall issue to Newco a proper UK VAT invoice in respect of that UK VAT.

 

(c) Without limiting Section 3.8(b), UK VAT shall be treated as payable if
Customs rule that it is payable. If Customs so rule on or before the Closing
Date, the UK VAT shall be payable by Newco at Closing provided that a valid UK
VAT invoice is provided at that time. If Customs so rule on or after the Closing
Date, the UK VAT shall be payable by Newco within five days after HNS gives
Newco written notice of the ruling and issues a valid invoice in respect of such
UK VAT.

 

(d) If Newco fails to pay the amount of UK VAT before the end of the period
specified under Section 3.8(c), it shall pay interest on that amount from the
latest date in that period until actual payment (excluding any period for which
interest indemnified under Section 3.8(b) runs) at a rate equal to the
Adjustment Interest Rate.

 

(e) With a view to procuring that Article 5 applies, the parties hereto (i)
shall ensure that Newco becomes registered for UK VAT not later than the Closing
Date; (ii) warrant that the Business Assets are to be used by Newco in carrying
on the same kind of business as that carried on by HNS; (iii) warrant that Newco
has, or shall by the Relevant Date have, properly made an election to waive

 

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exemption in respect of any United Kingdom freehold or leasehold land being
transferred under this Contribution Agreement, with effect from a day not later
than the Relevant Date (having obtained the written permission of Customs if
necessary) and has, or shall by that date have, duly given to Customs the
written notification of the election required to make the election effective;
(iv) covenant that Newco shall not revoke the election within three months after
the Relevant Date; and (v) warrant that Newco has, or shall by the Relevant Date
have, notified HNS that the election to waive exemption referred to in clause
(iii) of this Section 3.8(e) will not be disapplied as a result of VATA 1994
Schedule 10 paragraph 2(3AA). In this Section 3.8(e), “Relevant Date” shall have
the same meaning as in paragraph 3 of Article 5.

 

(f) In respect of any United Kingdom freehold or leasehold land under this
Contribution Agreement mentioned in Section 3.8(e)(iii), either (i) without
prejudice to that Section, Newco shall on or before the Closing Date give to HNS
evidence reasonably satisfactory to HNS and Parent that the election has been
made and written notification duly given in accordance with that Section; or
(ii) if Newco does not give that evidence, it shall be assumed that those things
have not been done and notwithstanding Section 3.8(e)(iii), Newco shall on the
Closing Date pay to HNS the amount of UK VAT chargeable upon production of a
valid UK VAT invoice in respect of any United Kingdom freehold or leasehold land
being transferred under this Contribution Agreement on that assumption but any
forbearance of HNS to insist on its rights under this Section 3.8(f) shall be
without prejudice to its rights under the preceding provisions of this Section
3.8(f).

 

(g) References in Sections 3.8(e)(i) through 3.8(e)(v) to Newco shall be
construed as references to the transferee within the meaning of the
corresponding provision of Article 5.

 

(h) The parties hereto intend that section 49 of the Value Added Tax Act 1994
shall apply to the sale of the HNS UK Assets under this Contribution Agreement
and accordingly: (i) HNS shall on the Closing Date deliver to Newco all records
referred to in section 49; (ii) HNS shall not make any request to Customs for
those records to be preserved by HNS rather than Newco; (iii) Newco shall
preserve those records for such period as may be required by Law, and shall do
so in the United Kingdom; (iv) Newco shall during that period or such longer
period as it retains the records permit HNS reasonable access to them in the
United Kingdom to inspect or make copies of them; (v) Newco shall not cease to
retain the records without first giving HNS a reasonable opportunity to inspect
and remove such of them as HNS wishes; and (vi) HNS (or any Person for the time
being nominated under this clause) may by written notice to Newco nominate
another Person for the purpose of sub-Sections (iv) and (v) of this Section
3.8(h) in which case the reference in those sub-Sections to HNS shall be read as
a reference to the Person nominated.

 

(i) If any of the UK Assets being transferred are considered to be Capital Items
as defined in Part XV of the Value Added Tax Regulations of 1995 (the “Capital
Items Scheme”) and those Capital Items are within the period of adjustment
specified by the Capital Items Scheme, then HNS shall deliver to Newco all
details of the VAT relating to the original acquisition of those Assets and
details of the Capital Items Scheme calculations and adjustments made during the
period covered by the Capital Items Scheme.

 

(j) Notwithstanding any provision herein to the contrary, this Section 3.8 shall
apply only to a sale of assets within the United Kingdom, if any.

 

3.9 Closing Conditions.

 

From the date of this Contribution Agreement until the earlier of Closing or
termination of this Contribution Agreement pursuant to Section 10, each of HNS,
the Investor and its respective Subsidiaries shall use their respective
commercially reasonable efforts to cause to be fulfilled and satisfied all of
the other party’s (and the mutual) conditions to Closing set forth in Section 8.

 

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3.10 Audit; Cooperation.

 

(a) Promptly following the date hereof, HNS shall use commercially reasonable
efforts to retain Deloitte & Touche to conduct a Statement of Auditing Standards
100 (“SAS 100”) review of the unaudited balance sheet for the VSAT Business at
and as of June 30, 2004, together with statements of operations and cash flows
and notes thereto for the six-month period ended June 30, 2004 (the “Interim
Statements”) and to conduct an audit of the balance sheet for the VSAT Business
at and as of December 31, 2003, December 31 2002 and December 31, 2001, together
with statements of operations and cash flows and notes thereto (the “Annual
Statements”). The Interim Statements and the Annual Statements are to be
prepared by HNS in accordance with GAAP and in conformity with Articles 3-01 and
3-02 of Regulation S-X as well as any other applicable Securities Laws
(together, the “Relevant Accounting Rules”). HNS shall use commercially
reasonable efforts to assist Deloitte & Touche in connection with the SAS 100
review of the Interim Statements and the audit of the Annual Statements,
including providing Deloitte & Touche with such information and assistance as it
may reasonably request in connection with the completion of the SAS 100 review
and audit, subject to compliance with applicable Law and the terms and
conditions of the engagement letter with Deloitte & Touche, if any. HNS shall
deliver to the Investor the Interim Statements and the Annual Statements
together with Deloitte & Touche’s SAS 100 review and audit reports relating
thereto as soon as reasonably practical, but in no event later than February 28,
2005. Similarly, promptly following the date hereof, HNS shall use commercially
reasonable efforts to engage Deloitte & Touche to conduct a SAS 100 review of
the unaudited balance sheet of the VSAT Business at and as of September 30,
2004, December 31, 2004, and, if necessary to consummate the Financing, at and
as of March 31, 2005, together with the related statements of operations and
cash flows and notes thereto for the applicable quarter and year to date
periods, and HNS shall prepare such financial statements in accordance with the
Relevant Accounting Rules. HNS shall deliver to the Investor the applicable
unaudited financial statements and the review report(s) of Deloitte & Touche
with respect to its SAS 100 review(s), subject to compliance with applicable
Law, as soon as reasonably practical. Within 30 days after the end of each full
calendar month between the date hereof and Closing, HNS shall deliver to the
Investor the balance sheet of the VSAT Business as of the end of each such
month, along with the statement of operations for such month, which financial
statements shall be of the type prepared by HNS in the Ordinary Course of
Business (and which will not be in accordance with GAAP).

 

(b) HNS shall be responsible for any and all fees or expenses of Deloitte &
Touche and any other fees or expenses incurred in connection with the
preparation and audit or review of financial statements or otherwise pursuant to
this Section 3.10.

 

(c) As soon as practicable following January 1, 2005, HNS shall use commercially
reasonable efforts to retain Deloitte & Touche to audit and to deliver to the
Investor not later than April 30, 2005 an audited balance sheet for the Business
at and as of December 31, 2004, December 31, 2003 and December 31, 2002,
together with statements of operations and cash flows and notes thereto for the
fiscal years ending on such dates in accordance with GAAP and in conformity with
the Relevant Accounting Rules.

 

3.11 Agreements with Respect to Spaceway and the Boeing Contract.

 

(a) The Investor and Newco acknowledge that HNS and/or Parent is retaining the
following Assets (the “Excluded Spaceway Assets”): (i) all rights to and
associated with Spaceway 1 and Spaceway 2, as and when constructed and launched
pursuant to the Boeing Contract, and (ii) all rights described on Section 2.3(m)
of the Disclosure Schedule.

 

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(b) HNS and Parent acknowledge that Newco is acquiring the following Assets (the
“Contributed Spaceway Assets”) at Closing: (i) all rights to and associated with
Spaceway 3, as and when constructed pursuant to the Boeing Contract, including
the benefit of all payments previously made by HNS and/or Parent to Boeing in
connection with the construction of Spaceway 3, and the option for the launch of
Spaceway 3, (ii) all rights associated with any replacement or additional
satellites ordered by Newco in accordance with the Boeing Contract, including a
proposed additional satellite to be ordered by Newco and to serve as part of the
Spaceway Business as operated by Newco (“Spaceway 4”), (iii) the Ground Facility
Rights described on Section 2.2(a)(xix) of the Disclosure Schedule (the rights
described in clauses (i), (ii) and (iii) of this paragraph being referred to
collectively as the “Assigned Boeing Rights”), and (iv) the other rights
described on Section 2.2(a)(xix) of the Disclosure Schedule.

 

(c) From and after Closing, Newco shall be responsible for all costs and
obligations associated with the Contributed Spaceway Assets, including those
incurred under the Boeing Contract with respect to the remaining payments with
regard to Spaceway 3 and payments with respect to the launch option relating to
Spaceway 3, any replacement or additional satellites such as Spaceway 4 obtained
under the Boeing Contract at Newco’s request and any expansion or extension of
the Ground Facility Rights obtained under the Boeing Contract at Newco’s
request. Newco will be responsible for all continuing software, hardware,
development integration, testing and any other costs associated with Spaceway 3
and any replacement or additional satellites such as Spaceway 4 ordered by
Newco, including payments remaining under the Boeing Contract, costs of
completing manufacture, integration, testing and commencement of service, and
all launch and insurance costs with respect thereto. Newco shall reimburse and
indemnify Parent and HNS against any cost and obligation arising out of the
Assigned Boeing Rights.

 

(d) Unless the modifications to the Boeing Contract referred to in the next
paragraph have been completed by the Closing Date, in order to effect the
transfer of the Contributed Spaceway Assets at Closing to Newco while permitting
HNS and/or Parent to retain the Excluded Spaceway Assets, commencing on the
Closing Date Parent will pass through to Newco the benefit of the Assigned
Boeing Rights and following Closing Newco will bear (and Parent will be
reimbursed or made whole for) all third party costs and obligations associated
therewith. Until the modifications to the Boeing Contract referred to in the
next paragraph have become effective, (A) Parent and HNS will not agree to any
material modifications of the Assigned Boeing Rights, and (B) following Closing,
Parent and HNS will (i) seek approval from Boeing for representatives of Newco
to exercise the rights of the customer with respect to Spaceway 3 and any
replacement or additional satellites such as Spaceway 4 ordered by Newco under
the Boeing Contract, including attending meetings at Boeing facilities,
monitoring progress under the Boeing Contract, receiving copies of reports and
other information and having access to Boeing personnel, and (ii) enforce the
Assigned Boeing Rights against Boeing on behalf of Newco, at Newco’s reasonable
direction and for Newco’s account and at Newco’s expense. If Spaceway 3 is
delivered pursuant to the Boeing Contract while Parent is the only customer
thereunder, Newco (rather than Parent) will take title to Spaceway 3 upon its
delivery in accordance with the terms of the Boeing Contract.

 

The parties shall cooperate in good faith to negotiate with Boeing suitable
modifications and/or new provisions to the Boeing Contract, to be effective on
and after the Closing Date, to effect the intent of the parties hereto set forth
in this Section 3.11 and with respect to the rights to be retained by HNS and
Parent under the Boeing Contract and the Assigned Boeing Rights to be conveyed
to (and Liabilities assumed by) Newco.

 

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(e) At Closing, the parties will enter into the Spaceway Services Agreement in
substantially the form attached hereto as Exhibit H for the provision of the
services described on Exhibit H (the “Spaceway Services Agreement”). The parties
agree to negotiate in good faith to develop a reasonably detailed Statement of
Work to be attached to the Spaceway Services Agreement consistent with the
outline of services described on Exhibit H within forty-five (45) days after the
date hereof, or such longer period as Parent and the Investor shall mutually
agree.

 

(f) If at any time or from time to time following Closing, Parent (or any
Affiliate of Parent then holding the relevant rights thereto) decides to sell,
lease all or substantially all of the capacity on, transfer or otherwise dispose
of, directly or indirectly (collectively, “Transfer”), either (or both) Spaceway
1 or Spaceway 2 (the “Parent Offered Assets”) to a third party who is not an
Affiliate of Parent, then Newco will have the irrevocable option (the “Newco
Purchase Option”) to acquire the Parent Offered Assets upon the following terms
and conditions: Prior to any Transfer of any of the Parent Offered Assets to a
third party who is not an Affiliate of Parent, Parent shall deliver a written
offer notice (the “Parent Offer Notice”) to Newco identifying the price and
other terms and conditions of the proposed Transfer in such detail as to provide
a reasonable person with sufficient information to determine whether to exercise
the Newco Purchase Option and offering (the “Parent Offer”) to Transfer the
Parent Offered Assets to Newco for such price and on such other terms and
conditions. Newco shall have the right, exercisable by delivery of written
notice to Parent within 90 days (the “Newco First Ninety Day Period”) after
delivery of the Parent Offer Notice, to accept or reject the Parent Offer. Newco
shall deliver notice of its acceptance or rejection of the Parent Offer to
Parent prior to the expiration of the Newco First Ninety Day Period. If Newco
fails to deliver notice of its acceptance or rejection of the Parent Offer prior
to the expiration of the Newco First Ninety Day Period, Newco shall be deemed to
have rejected the Parent Offer. If Newco accepts the Parent Offer, subject to
the receipt of any necessary Governmental Approvals, the closing of the Transfer
of the Parent Offered Assets to Newco shall take place on a date mutually
agreeable to the parties but not later than 120 days after Newco’s delivery of
notice of acceptance of the Parent Offer. In the event that Newco does not
exercise the Newco Purchase Option within the Newco First Ninety Day Period,
Parent may, within a period of 90 days commencing upon the expiration of the
Newco First Ninety Day Period, enter into an agreement to Transfer the Parent
Offered Assets to one or more third parties (none of which is a Newco Specified
Person) at a price not less than the price specified in the Parent Offer Notice
and on other terms no less favorable to Parent than the terms and conditions set
forth in the Parent Offer Notice, with closing to occur not later than 120 days
following the parties entering into such agreement. If such an agreement is not
entered into within 90 days after the expiration of the Newco First Ninety Day
Period and the Transfer is not consummated within the 120 days following the
date such agreement is executed, the proposed Transfer of such Parent Offered
Assets shall again be subject to the provisions of this paragraph (f). As a
condition to any Affiliate of Parent acquiring the Parent Offered Assets, such
Affiliate shall, and Parent shall cause such Affiliate to, execute an agreement
with Newco acknowledging the foregoing obligations and agreeing to be bound by
the foregoing obligations as if such Affiliate were “Parent” pursuant to this
Section 3.11(f). Newco shall be permitted to assign its right set forth in this
Section 3.11(f) to any of its Affiliates.

 

(g) If at any time or from time to time following Closing, Newco (or any
Affiliate of Newco then holding the relevant rights thereto) decides to Transfer
any or all of Spaceway 3 or Spaceway 4 (the “Newco Offered Assets”) to a third
party who is not an Affiliate of Newco, then Parent will have the irrevocable
option (the “Parent Purchase Option”) to acquire the Newco Offered Assets upon
the following terms and conditions: Prior to any Transfer of any of the Newco
Offered Assets to a third party who is not an Affiliate of Newco, Newco shall
deliver a written offer notice (the “Newco Offer Notice”) to Parent identifying
the price and other terms and conditions of the proposed Transfer in such detail
as to provide a reasonable person with sufficient information to determine
whether to exercise the Parent Purchase Option and offering (the “Newco Offer”)
to Transfer the Newco Offered Assets to

 

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Parent for such price and on such other terms and conditions. Parent shall have
the right, exercisable by delivery of written notice to Newco within 90 days
(the “Parent First Ninety Day Period”) after delivery of the Newco Offer Notice,
to accept or reject the Newco Offer. Parent shall deliver notice of its
acceptance or rejection of the Newco Offer to Newco prior to the expiration of
the Parent First Ninety Day Period. If Parent fails to deliver notice of its
acceptance or rejection of the Newco Offer prior to the expiration of the Parent
First Ninety Day Period, Parent shall be deemed to have rejected the Newco
Offer. If Parent accepts the Newco Offer, subject to the receipt of any
necessary Governmental Approvals, the closing of the Transfer of the Newco
Offered Assets to Parent shall take place on a date mutually agreeable to the
parties but not later than 120 days after Parent’s delivery of notice of
acceptance of the Newco Offer. In the event that Parent does not exercise the
Parent Purchase Option within the Parent First Ninety Day Period, Newco may,
within a period of 90 days commencing upon the expiration of the Parent First
Ninety Day Period, enter into an agreement to Transfer the Newco Offered Assets
to one or more third parties (none of which is a Parent Specified Person) at a
price not less than the price specified in the Newco Offer Notice and on other
terms no less favorable to Newco than the terms and conditions set forth in the
Newco Offer Notice, with closing to occur not later than 120 days following the
parties entering into such agreement. If such an agreement is not entered into
within 90 days after the expiration of the Parent First Ninety Day Period and
the Transfer is not consummated within the 120 days following the date such
agreement is executed, the proposed Transfer of such Newco Offered Assets shall
again be subject to the provisions of this paragraph (g). As a condition to any
Affiliate of Newco acquiring the Newco Offered Assets, such Affiliate shall, and
Newco shall cause such Affiliate to, execute an agreement with Parent
acknowledging the foregoing obligations and agreeing to be bound by the
foregoing obligations as if such Affiliate were “Newco” pursuant to this Section
3.11(g). Parent shall be permitted to assign its right set forth in this Section
3.11(g) to any of its Affiliates.

 

(h) Notwithstanding the foregoing, the provisions set forth in Section 3.11(g)
shall not apply to a Transfer (i) that would constitute a Drag-Along Transaction
(as defined in the Investor Rights Agreement) or (ii) that is otherwise subject
to the provisions of the Investor Rights Agreement.

 

3.12 Pre-Closing Payment of Certain Indebtedness.

 

Prior to Closing, HNS shall or shall cause one or more of its Affiliates to
repay in full or otherwise discharge, terminate or cancel all outstanding
Indebtedness. Notwithstanding the foregoing, in no event shall HNS or its
Affiliates have any obligation to repay, discharge, terminate or cancel any
Equipment Lease Arrangements.

 

3.13 Communications Licenses. In the event HNS or any Transferred Subsidiary
learns of any Proceeding before any Governmental Authority to revoke, suspend,
cancel, refuse to renew or modify, or impose a forfeiture or other sanction with
respect to, any of the Communications Licenses identified on Section 4.18 of the
Disclosure Schedule, HNS or such Transferred Subsidiary promptly will notify the
Investor of the same in writing and, except for any such Proceeding that would
not reasonably be expected to have a Material Adverse Effect on the Business,
will take all reasonable measures to contest in good faith any such Proceeding.

 

3.14 ChinaCast. The parties acknowledge and agree that the shares of ChinaCast
Communication Holdings Limited held by or on behalf of HNS as of the date hereof
(the “ChinaCast Shares”) will be transferred to Newco at Closing (or as promptly
as practicable thereafter) because of certain commercial advantages available to
Newco as a result of Newco holding the ChinaCast Shares. Newco shall hold the
ChinaCast Shares for the account and for the economic benefit of HNS. During
such time as Newco holds the ChinaCast Shares in trust for HNS, Newco shall (i)
be entitled to register the shares in the name of Newco, (ii) be entitled to
vote the ChinaCast Shares in its discretion, (iii) not pledge or otherwise
permit any Encumbrance to exist with respect to the ChinaCast Shares (except for

 

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restrictions imposed by applicable securities Laws and for Encumbrances existing
on the date hereof) and (iv) not be permitted to sell, transfer, assign or
otherwise dispose of the ChinaCast Shares, except that Newco may sell all or
part of the ChinaCast shares at fair market value to one or more third Persons
(who are not Affiliates of Newco or the Investor) in one or more transactions.
In the event that Newco sells the ChinaCast Shares in accordance with clause
(iv) of the immediately preceding sentence, Newco will deliver the proceeds of
such sale (net of any transaction costs, Taxes required to be withheld, sales
commissions or broker fees) to HNS promptly (and in any event within five (5)
days after the date of any such sale). On the date that is the three (3) year
anniversary of the Closing Date (or the next business day if such date is not a
business day), Newco will assign, transfer, convey and deliver all of the
ChinaCast Shares held by Newco, if any, back to HNS. Newco and HNS agree to
execute all transfer documents, proxies and similar instruments reasonably
requested by the other to implement the provisions of this Section 3.14. For the
avoidance of doubt, the ChinaCast Shares shall be Excluded Assets for all
purposes under this Contribution Agreement.

 

3.15 Negotiation with Others; Disposition of Securities. From the date of this
Contribution Agreement until Closing or earlier termination of this Contribution
Agreement pursuant to the terms hereof, Parent, HNS, Newco and their
Representatives shall, and HNS shall cause its Affiliates to, deal exclusively
with the Investor and its Affiliates and Representatives regarding the
acquisition of or investment in the Business, the Business Assets and the
Investor Interest, whether by way of merger, purchase of equity interests,
purchase of Assets or otherwise (a “Potential Transaction”) and, without the
prior written consent of the Investor, neither Parent, HNS, Newco nor their
respective Representatives shall, and HNS shall cause its Affiliates not to,
directly or indirectly: (i) solicit, initiate discussions with or engage in
negotiations with any Person (whether such negotiations are initiated by Parent,
HNS, Newco or otherwise), other than the Investor or its Affiliates or a party
designated by the Investor, with respect to a Potential Transaction; (ii)
provide information or documentation with respect to Parent, HNS, Newco or their
respective Affiliates to any Person, other than the Investor and its
Representatives and Affiliates or a party designated by the Investor, with
respect to a Potential Transaction; or (iii) enter into an agreement with any
Person, other than the Investor or its Affiliates, providing for any Potential
Transaction. If Parent, HNS, Newco their respective Affiliates or their
respective Representatives receives an inquiry, offer or proposal relating to
any of the above (unsolicited or otherwise), HNS shall immediately notify the
Investor in writing of the identities of the Persons making such inquiry, offer
or proposal and the terms of such inquiry, offer or proposal to the extent that
the same does not violate any contractual obligation or other obligation of
confidentiality existing on the date hereof. Promptly following the execution
and delivery of this Contribution Agreement, Parent, HNS, Newco and their
respective Representatives shall (i) immediately cease all discussions,
negotiations and communications with all other Persons regarding any Potential
Transaction and (ii) use their respective commercially reasonable efforts to
enforce any contractual rights HNS may have to cause to be returned to HNS or
destroyed all materials relating to HNS previously distributed to prospective
purchasers or otherwise in connection with any Potential Transaction.

 

3.16 No Solicitation. From the Closing Date through and including the second
anniversary of the Closing Date, none of Parent, HNS or their Subsidiaries shall
solicit, directly or indirectly, any Transferred Employee then in the employ of
Newco to become employed by Parent, HNS or any of their Subsidiaries; provided,
however, that the following activities of Parent, HNS and their Subsidiaries
shall not be deemed to be direct or indirect solicitation of any Transferred
Employees: (i) placing public advertisements in print, video or electronic media
(including advertisements in trade media) that are not targeted or focused on
Newco specifically, (ii) engaging firms to conduct searches for employees that
are not targeted or focused on Newco specifically, or (iii) offering to employ
or employing any Transferred Employee who (A) initiates discussions regarding
such employment prior to any direct or indirect solicitation by Parent, HNS or
their Subsidiaries, (B) responds to any advertisement of the type identified in
clause (i) or responds to any inquiries from searches of the type identified in
clause (ii), or (C) has been terminated by Newco or its Subsidiaries prior to
commencement of employment discussions between Parent, HNS or their Subsidiaries
and such Transferred Employee.

 

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4. REPRESENTATIONS AND WARRANTIES OF HNS. Except as set forth on the Disclosure
Schedule (or the Updated Disclosure Schedule with respect to representations and
warranties made as of the Closing Date), HNS hereby represents and warrants to
the Investor, as of the date hereof and as of the Closing Date, as follows:

 

4.1 Organization, Standing; Transferred Subsidiaries.

 

(a) HNS is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and each Transferred Subsidiary is duly
organized, validly existing and in good standing (to the extent such concept is
applicable to such Transferred Subsidiary) under the Laws of its jurisdiction of
organization, and, in the case of any Transferred Subsidiary registered in the
United Kingdom, is up to date in respect of all filings required by Law and its
statutory books are true, complete and up to date in all material respects. HNS
and each Transferred Subsidiary are duly qualified to do business in each
jurisdiction where the character of the property owned or leased by them or the
nature of their activities makes such qualification necessary to carry on the
Business as now conducted, except where the failure to be so qualified has not
had, and would not reasonably be expected to have, a Material Adverse Effect on
the Business. Each of Parent and HNS has full corporate power and authority, and
each Transferred Subsidiary has all requisite power and authority to conduct the
Business as presently conducted. Each of Parent and HNS has the full corporate
power and authority to execute and deliver this Contribution Agreement and the
other Transaction Documents to which it is a party and to carry out the
Contemplated Transactions.

 

(b) Section 4.1(b) of the Disclosure Schedule sets forth a complete list of the
Transferred Subsidiaries, the portion of the issued and outstanding securities
of each Transferred Subsidiary held by HNS and the jurisdiction of organization
of each such Transferred Subsidiary. HNS directly or indirectly owns the shares
or other equity interests of each Transferred Subsidiary and each other entity
listed on Section 2.2(b) of the Disclosure Schedule free and clear of all
Encumbrances, except for Permitted Encumbrances and except for restrictions
imposed by applicable securities Laws. The Transferred Subsidiaries are direct
or indirect wholly-owned Subsidiaries of HNS (except for qualifying shares held
by employees or directors as required by applicable Law). Section 2.2(b) of the
Disclosure Schedule sets forth the percentage ownership that such shares or
other equity interest represents in such Transferred Subsidiary or, to the
Knowledge of HNS, such other entity. There are no outstanding securities of the
Transferred Subsidiaries convertible into or exchangeable or exercisable for
shares or other equity interests or ownership interests in any Transferred
Subsidiary, or options, warrants or other rights to acquire shares or other
equity interests or ownership interests in any Transferred Subsidiary. All
shares or other equity interests of the Transferred Subsidiaries have been
validly issued and are fully paid and non-assessable (where applicable) and
there has been no violation of any preemptive rights or similar rights with
respect to such shares or equity interests. In respect of any Transferred
Subsidiary organized under the laws of the People’s Republic of China, the full
amount of the registered capital thereof has been duly contributed and such
contribution has been registered with appropriate Governmental Authorities. The
shares of capital stock or other equity interests of the Transferred
Subsidiaries are not subject to any voting trust agreement or any other Contract
relating to the voting, dividend rights or disposition of the capital stock or
other equity interests of the Transferred Subsidiaries, other than this
Contribution Agreement.

 

4.2 Authorization. The execution and delivery of, and performance by HNS and
Parent of the Transaction Documents has been duly authorized by all necessary
corporate action on the part of HNS and Parent, and no other corporate
proceedings on the part of HNS or Parent are necessary to authorize the
Transaction Documents, or to consummate the Contemplated Transactions.

 

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4.3 Binding Obligation. This Contribution Agreement and each other Transaction
Document executed or to be executed by Parent, HNS or their respective
Affiliates pursuant hereto, have been or will be at Closing executed and
delivered in accordance with the provisions thereof, and (assuming such
agreements constitute the legal and binding obligations of the Investor or each
other party thereto other than Parent, HNS and its Affiliates) shall each
constitute a valid and binding obligation of Parent, HNS or such Affiliates
enforceable in accordance with its terms (i) except to the extent that
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or hereinafter in effect relating to or
affecting creditors’ rights generally, including statutory and other Laws
regarding fraudulent conveyances or preferential transfers, and (ii) subject to
the limitations imposed by general equitable principles regardless of whether
such enforceability is considered in a Proceeding at law or in equity.

 

4.4 Noncontravention. Neither the execution and the delivery of this
Contribution Agreement or the other Transaction Documents, nor the consummation
of the Contemplated Transactions, will, in any material respect, (a) violate any
provision of the organizational documents of Parent, HNS, HNS Europe, HNS UK or
any Transferred Subsidiary, (b) violate any provision of applicable Law binding
upon Parent, HNS, HNS Europe, HNS UK or any Transferred Subsidiary that is
applicable to the Business or any of the Business Assets, (c) conflict with,
result in a breach of, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any Material Contract, or (d) give rise
under the requirements of any applicable Laws of the United Kingdom or the terms
or provisions governing any Foreign Employee Benefit Plan operated in the United
Kingdom to (i) any Liability of HNS Europe or HNS UK to pay a debt in respect of
any funding shortfall in any pension scheme under Section 4.14 of the Disclosure
Schedule, or (ii) any right on the part of the trustees of any pension scheme
set forth on Section 4.14 of the Disclosure Schedule to be able to call for
payment of such a debt in respect of a funding shortfall which may exist at
Closing, except with respect to clauses (b), (c) and (d) for such conflicts or
violations which would not reasonably be expected to have a Material Adverse
Effect on the Business or a material adverse effect on the ability of HNS or
Parent to consummate the Contemplated Transactions.

 

4.5 Taxes.

 

(a) All material Tax Returns required to be filed by HNS, its Affiliates or any
of the Acquired Companies by or with respect to the Business or the Business
Assets or with respect to which Newco or an Acquired Company (collectively, the
“Tax Group”) could have liability have been or will be timely filed (taking into
account any extensions validly obtained) and all such Tax Returns are complete
and accurate in all material respects.

 

(b) All Taxes (i) shown to be due on such Tax Returns (or payable pursuant to
any assessments with respect to such Tax Returns) and (ii) that have become due
and for which any member of the Tax Group could be liable have been timely paid.
None of the Business Assets are subject to any lien for Taxes.

 

(c) There is no material action, suit, claim, assessment, investigation or audit
pending against any Acquired Company or with respect to Taxes in respect of the
Business or the Business Assets.

 

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(d) Each member of the Tax Group has complied in all material respects with all
applicable Laws relating to the collection and withholding of Taxes (including
sales Taxes, employee-related Taxes and VAT) for which any member of the Tax
Group could be held liable.

 

(e) Each Acquired Company is not, and has not been, a “personal holding company”
within the meaning of Section 542 of the Code.

 

(f) No material deficiency for any Tax or claim for additional Taxes has been
asserted, assessed or proposed against any Acquired Company in writing, and none
of the Acquired Companies has granted any waiver of any statute of limitations
in respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency. No Acquired Company has incurred any material Taxes
after the date of the Financial Statements, other than in the Ordinary Course of
Business.

 

(g) None of HNS Europe, HNS UK or any Transferred Subsidiary is a party to any
Tax sharing indemnity or similar agreement allocating Tax liability that has not
or will not be terminated on the Closing Date without any future liability.

 

(h) No Acquired Company has incurred any liability to make or possibly make any
payments, either alone or in conjunction with any other payments, that:

 

(i) are non-deductible under, or would otherwise constitute a “parachute
payment” within the meaning of, Section 280G of the Code (or any corresponding
provision of state, local or foreign income Tax law); or

 

(ii) are or may be subject to the imposition of an excise Tax under Section 4999
of the Code.

 

(i) No Acquired Company is, or has ever been, a “United States real property
holding corporation” within the meaning of Section 897(c)(2) of the Code.

 

(j) No Acquired Company will be required to include in income during a taxable
period that ends after the Closing Date any income that economically accrued and
was accounted for prior to the Closing Date by reason of the installment method
of accounting or the completed contract method of accounting. None of the
Parent, HNS nor any Transferred Subsidiary (nor any of their Affiliates) has or
will make any election for U.S. tax purposes that could materially affect the
tax liability of any Transferred Subsidiary, or cause any Transferred Subsidiary
to waive the use of net operating losses or deductions in any foreign
jurisdiction.

 

(k) No Acquired Company has agreed to, and no Acquired Company is required to,
make any adjustments or changes either on, before or after the Closing Date, to
its accounting methods pursuant to Section 481 of the Code (or similar
provisions of state, local or foreign law), and neither the Internal Revenue
Service nor any other Tax authority has proposed any such adjustments or changes
in accounting methods;

 

(l) No Acquired Company has ever been a member of a combined, consolidated,
affiliated or unitary group for Tax filing purposes, other than the group in
which it currently is a member, that can reasonably be expected to affect the
tax liability of Newco;

 

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(m) The Tax Liability for the Transferred Subsidiaries for all tax periods that
end on or prior to the Closing Date, and for the portion of any Straddle Period
that is before the period beginning on the day after the Closing Date, is fully
reserved on the Latest Balance Sheet;

 

(n) Newco is, and at all times since its formation has been, treated as
disregarded for U.S. Federal income tax purposes.

 

4.6 Financial Statements; Undisclosed Liabilities.

 

(a) Section 4.6(a) of the Disclosure Schedule sets forth the consolidated
unaudited balance sheet of the VSAT Business as of June 30, 2004 (the “Latest
Balance Sheet”) and as of December 31, 2003, December 31, 2002 and December 31,
2001 and the related consolidated unaudited statements of operations and cash
flow of the VSAT Business for the six-month period ended June 30, 2004 and for
the three years ended December 31, 2003, December 31, 2002 and December 31, 2001
(collectively, the “Financial Statements”). The Financial Statements have been
prepared from, and are in accordance with, the books and records of HNS on a
basis consistent in all material respects with the manner in which the
businesses of HNS have been reported (other than adjustments relating to the
treatment of Equipment Lease Arrangements, the exclusion of businesses other
than the VSAT Business or the treatment of intercompany transactions) for
inclusion in the consolidated financial statements of Parent, which consolidated
financial statements of Parent were prepared in accordance with GAAP
consistently applied. The Financial Statements (including any related notes or
schedules) present fairly in all material respects the financial position and
results of operations and cash flow of the VSAT Business for the periods set
forth therein.

 

(b) There are no Liabilities of HNS, HNS Europe, HNS UK or the Transferred
Subsidiaries relating to the VSAT Business of any nature, whether accrued,
contingent, absolute, determined, determinable or otherwise, that would be
required to be shown on a balance sheet prepared in accordance with GAAP and
that constitute Assumed Liabilities and that in the aggregate would reasonably
be expected to have a Material Adverse Effect on the Business, other than: (i)
Liabilities disclosed in the Financial Statements or clearly identified in notes
thereto, (ii) Liabilities under any Contract, lease or license disclosed in the
Disclosure Schedule (other than any Liabilities arising out of breaches of
contract required to be disclosed in the Disclosure Schedule and not disclosed)
and (iii) Liabilities incurred in the Ordinary Course of Business since June 30,
2004.

 

(c) The most recently filed audit accounts of the Transferred Subsidiaries
registered in the United Kingdom have been prepared and audited in accordance
with accounting principles, standards and practices which are generally accepted
in the United Kingdom and give a true and fair view of the state of affairs of
each such Transferred Subsidiary and of its profits and losses for the period to
which such accounts relate.

 

(d) Section 4.6(d) of the Disclosure Schedule sets forth all outstanding
Indebtedness of the Business as of the date hereof.

 

(e) When delivered in accordance with the terms hereof, the Final Working
Capital Statement shall have been prepared from, and in accordance with, the
books and records of HNS. The Final Working Capital Statement, when delivered in
accordance with the terms hereof, shall be prepared and calculated in accordance
with Exhibit G-1 and consistent with the preparation of the Estimated Working
Capital Statement. Any disputes relating to the Final Working Capital Statement
shall be governed by Section 2.10(f).

 

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4.7 Absence of Certain Changes. Except for matters that would be permitted in
accordance with Section 3.2 if they occurred after the date of this Contribution
Agreement, since June 30, 2004 to the date of this Contribution Agreement there
has not been:

 

(a) any event or occurrence that would reasonably be expected to have a Material
Adverse Effect on the Business or the Business Assets and has not been rectified
or repaired;

 

(b) any transaction or commitment made, or any Material Contract entered into,
by HNS or any of its Affiliates relating primarily to the Business or any Assets
that would constitute Business Assets, or any termination or amendment by HNS or
its Affiliates of any Material Contract or other right relating primarily to the
Business, in any case, which would reasonably be expected to have a Material
Adverse Effect on the Business, other than commitments in the Ordinary Course of
Business and the Contemplated Transactions;

 

(c) any increase in the compensation of any current employee of the Business at
a vice president level or above, other than compensation increases in the
Ordinary Course of Business or nondiscretionary increases pursuant to Employee
Benefit Plans disclosed in Section 4.15 of the Disclosure Schedule or referenced
in Exhibit J; and

 

(d) any event or occurrence described in Section 3.2(b).

 

4.8 Real Property Matters.

 

(a) Section 4.8(a) of the Disclosure Schedule contains a true and complete list
of all the real property owned in fee by HNS or any of its Affiliates used
primarily in connection with the Business (the “Owned Real Property”). HNS and
its Affiliates, as the case may be, has good, valid, fee simple and marketable
title to each parcel of Owned Real Property, including all buildings,
structures, fixtures and improvements located thereon, in each case, free and
clear of all Encumbrances, except (i) Permitted Encumbrances, (ii) liens for
Taxes and general and special assessments not in default and payable without
penalty and interest or which are being contested in good faith by appropriate
proceedings, and (iii) other Encumbrances which, individually or in the
aggregate, would not reasonably be expected to materially interfere with HNS’s
or the Affiliates’, as the case may be, use and enjoyment of such Owned Real
Property for the Business. There are no outstanding contracts for the sale of
any of the Owned Real Property. There are no leases, subleases, licenses,
concessions or any other Contracts, options or rights of first refusal or
agreements granting to any Person other than HNS, or its Affiliates, as the case
may be, any right to the possession, use, occupancy or enjoyment of any of the
Owned Real Property or any portion thereof. No Owned Real Property is subject to
any pending or, to the Knowledge of HNS, threatened condemnation Proceeding by
any Governmental Authority.

 

(b) Except for the Excluded Real Property Leases, Section 4.8(b) of the
Disclosure Schedule contains a true and complete list of all leases, subleases,
sub-subleases, licenses and other agreements under which HNS or any of its
Affiliates leases, subleases, licenses, uses or occupies (whether as landlord,
tenant, sublandlord, subtenant or by other occupancy arrangement) or has the
right to use, occupy, or purchase, now or in the future, any real property that
is used primarily in connection with the Business (collectively, the “Real
Property Leases,” and the property subject to the Real Property Leases together
with the Owned Real Property, the “Real Property”). HNS has furnished to the
Investor, or otherwise made available for the Investor’s review in HNS’s data
room, true, correct and complete copies of all Real Property Leases or has
furnished the material terms thereof if no true and complete copy is available.
Each Real Property Lease is in full force and effect and constitutes the valid
and legally binding obligation of HNS or one of its Affiliates, as the case may
be, enforceable against HNS or such Affiliate, in accordance with its terms
(except as enforceability may be limited by bankruptcy, insolvency,

 

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reorganization, moratorium or other similar Laws now or hereafter in effect
relating to or affecting creditors’ rights generally, including the effect of
statutory and other Laws regarding fraudulent conveyances and preferential
transfers, and subject to the limitations imposed by general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity). Except as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Business, with respect to each Real Property Lease (i) there is no default or
event which, with notice or lapse of time or both, would constitute a default on
the part of HNS or such Affiliate, as the case may be, or, to the Knowledge of
HNS, any other party thereto and (ii) neither HNS nor such Affiliate, as the
case may be, has assigned, sublet or transferred its leasehold interest. HNS or
the applicable Affiliate has a good and valid leasehold interest in each Real
Property Lease free and clear of all Encumbrances, except (i) Permitted
Encumbrances, (ii) liens for Taxes and general and special assessments not in
default and payable without penalty or interest or which are being contested in
good faith by appropriate proceedings and (iii) other liens which do not
materially interfere with HNS’s or such Affiliate’s use and enjoyment of such
Real Property Lease for the Business.

 

4.9 Intellectual Property.

 

To HNS’s Knowledge, HNS or Parent owns or has adequate licenses or other rights
to use and otherwise exploit the Intellectual Property used or intended to be
used by HNS to conduct the Business (for purposes of this Section 4.9, “intended
to be used” is as of the Closing Date). Parent owns, controls or otherwise has
the right to transfer the Assigned Patents, Assigned Marks and Other
Intellectual Property (as such terms are defined in the Intellectual Property
Agreement), and is free to and has the authority to assign or transfer them to
Newco. To HNS’s Knowledge, each of the Assigned Patents and Licensed Patents (as
defined in the Intellectual Property Agreement) is valid and enforceable. The
Intellectual Property that has been assigned or licensed to Newco pursuant to
this Contribution Agreement or the Intellectual Property Agreement, together
with the Intellectual Property that is subject to the “covenant not to assert”
specified in Section 4.1 of the Intellectual Property Agreement, constitute all
of the Intellectual Property that is owned or controlled by Parent or HNS and
used or intended to be used by HNS to conduct the Business. Parent or HNS or its
Subsidiaries, as applicable, have used commercially reasonable efforts to
maintain and protect their rights in and to the material Intellectual Property
owned or licensed by Parent or HNS or its Subsidiaries that is used or intended
to be used in the Business or intended to be used in that portion of the
Spaceway Business to be transferred to Newco pursuant to this Contribution
Agreement. To the Knowledge of HNS, (i) neither Parent nor HNS nor its
Subsidiaries has infringed or is now infringing on any Intellectual Property
belonging to another Person in connection with the operations of the Business,
(ii) neither Parent nor HNS nor its Subsidiaries has received any written claim
or notice, or otherwise has Knowledge, of infringement, misappropriation or
claims of breach or other violation of the Intellectual Property rights of
others in connection with HNS’s or its Subsidiaries’ operation of the Business,
and (iii) neither HNS nor its Subsidiaries nor Parent has provided any third
party any written claim or notice that such third party has infringed upon,
misappropriated or breached, or otherwise violated their rights in any
Intellectual Property used or intended to be used in connection with the
Business. Other than the Intellectual Property that is assigned, licensed or
otherwise made available to Newco under the Intellectual Property Agreement and
the Contribution Agreement, neither Parent nor HNS nor its Subsidiaries has any
rights in any Intellectual Property (other than certain trademarks or service
marks) that either Parent or HNS or its Subsidiaries currently own or have the
right to grant a sublicense to or other rights in, and that is currently used or
intended to be used by HNS in the Business or that HNS intends to use in that
portion of the Spaceway Business to be transferred to Newco pursuant to this
Contribution Agreement. No Intellectual Property being assigned, licensed or
otherwise made available to Newco in the Intellectual Property Agreement is
subject to any outstanding order, judgment, decree, stipulation or agreement
restricting the use or exploitation thereof in the Business, or restricting the
licensing thereof by HNS, its Subsidiaries or Parent to any Person, other than
such which would not reasonably be expected to have, individually and
collectively, a Material Adverse Effect on the

 

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Business. Neither Parent nor HNS or its Subsidiaries has assigned, licensed or
otherwise made available to a third party any substantial portion of the
Intellectual Property that is assigned, licensed or otherwise made available to
Newco in the Intellectual Property Agreement or Contribution Agreement, that has
the effect of materially enabling such third party to compete with any material
Business of Newco as of the date of the Contribution Agreement. This Section 4.9
contains the only representations and warranties of HNS or Parent in this
Contribution Agreement, or any other Contract executed in connection with this
Contribution Agreement, regarding the Intellectual Property used by HNS in the
Business, and no other provision hereof or thereof shall be construed to contain
any such representation or warranty.

 

4.10 Sufficiency of and Title to Assets.

 

(a) HNS or one or more of its Subsidiaries has good and valid title in and to,
or a valid leasehold interest in, or a valid license for, each of the
Contributed Assets free and clear of any and all Encumbrances, except for
Permitted Encumbrances and such other Encumbrances which will be released on or
prior to Closing. Subject to the receipt of any Consents of the third parties
listed on Section 4.4 of the Disclosure Schedule, HNS and its Subsidiaries, as
applicable, has the right and power to contribute, convey, assign, transfer and
deliver to Newco good and valid title in and to, or a valid leasehold interest
in, or a valid license for, all of the Contributed Assets, free and clear of any
and all Encumbrances, except for Permitted Encumbrances, and except as would not
reasonably be expected to have a Material Adverse Effect on the Business.

 

(b) The Transferred Subsidiaries have good and valid title in and to, or a valid
leasehold interest in, or a valid license for, the Transferred Subsidiary
Assets, free and clear of any and all Encumbrances, except for Permitted
Encumbrances and such other Encumbrances which will be released on or prior to
Closing. None of the Transferred Subsidiary Assets constitutes state-owned
assets as such term is understood under the Laws of the People’s Republic of
China, except for the Assets leased or licensed from state-owned companies.

 

(c) Except for the Financial Support Arrangements and except for Intellectual
Property, the Business Assets, together with the services to be provided under
the Transition Services Agreement and the services to be provided under the
Spaceway Services Agreement, constitute, and on the Closing Date, will
constitute, all of the Assets and services which HNS and its Affiliates,
currently use in connection with the VSAT Business or which are currently being
developed as part of the Spaceway Business, and shall be sufficient to enable
Newco to operate the Business in the same manner as it was operated on the date
hereof and at Closing.

 

4.11 Litigation; Compliance with Laws.

 

(a) Except for rulemaking proceedings or other Proceedings of general
applicability, there are no Proceedings pending, or to the Knowledge of HNS,
threatened, against HNS or any of its Affiliates with respect to the Business,
Business Assets, the Contemplated Transactions, or any Transferred Subsidiary at
law or in equity, or before or by any court or arbitrator, domestic or foreign,
or any other Governmental Authority that would reasonably be expected to have a
Material Adverse Effect on the Business. HNS and the Transferred Subsidiaries
are not operating under, subject to or in default with respect to any material
Order of any court, arbitrator or any other Governmental Authority with respect
to the Business or the Business Assets that would reasonably be expected to have
a Material Adverse Effect on the Business.

 

(b) HNS, HNS Europe, HNS UK and each Transferred Subsidiary have complied and
are in compliance with all applicable Laws to which the Business, the Business
Assets or the Assumed Liabilities are subject, except for any failure to comply
that would not reasonably be expected

 

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to have a Material Adverse Effect on the Business. Neither HNS nor any
Transferred Subsidiary has received any notice from any Person regarding any
actual or alleged violation of any Law with respect to the Business or the
Business Assets, except for any alleged violation that would not reasonably be
expected to have a Material Adverse Effect on the Business.

 

4.12 Insurance.

 

(a) HNS, HNS Europe, HNS UK and the Transferred Subsidiaries maintain or are the
beneficiaries of valid and currently effective insurance policies or binders of
insurance or programs of self-insurance with respect to the Business in such
types and amounts as are consistent with customary practices and standards of
similar companies.

 

(b) Section 4.12(b) of the Disclosure Schedule sets forth a list of the policies
of insurance currently maintained by HNS and its Affiliates with respect to the
Business Assets and the Business, with respect to the products, properties,
Assets and operations of the Business, and all such policies are in full force
and effect. None of the limits or caps on the insurance policies listed on
Section 4.12(b) of the Disclosure Schedule have been exhausted or diminished to
a level that the remaining coverage would not be customary for similarly
situated companies.

 

4.13 Governmental Approvals. The execution, delivery and performance by HNS and
Parent of the Transaction Documents to which such Person is a party requires no
action by or in respect of, or consent or approval of, or filing with, any
Governmental Authority other than:

 

(a) compliance with any applicable requirements of Hart-Scott-Rodino and other
Antitrust Laws and competition Laws and the rules and regulations thereunder;

 

(b) compliance with any applicable requirements of the Communications Act and
other Communications Laws and the rules and regulations thereunder;

 

(c) notifications to, or applications for consent from, Governmental Authorities
required with respect to the HNS Permits; and

 

(d) such other Consents the failure to obtain or make would not have,
individually or in the aggregate, a Material Adverse Effect on the Business or
the Business Assets.

 

4.14 Foreign Benefit Matters.

 

(a) This Section 4.14 relates to employee benefit matters for (i) Acquired
Companies located outside the United States (each a “Foreign Operation”) with
personnel who are directly employed by the applicable Foreign Operation
(“Foreign Employees”) or personnel who are employed by a services company
(“Foreign Services Company”) and who are assigned to work at any Foreign
Operation pursuant to the terms of a services agreement with such Foreign
Operation (“Foreign Contract Employees”) and (ii) personnel directly employed by
HNS UK or personnel who are employed by a services company and who are assigned
to work at HNS UK pursuant to the terms of a services agreement with HNS UK
(“HNS UK Employees”).

 

(b) Except as required by the Laws of Brazil, the People’s Republic of China,
the Czech Republic, France, Germany, India, Indonesia, Italy, Mexico, the
Russian Federation, South Africa, the United Arab Emirates, and the United
Kingdom (collectively, the “Laws of the HNS Countries of Operation”), the
Foreign Operations and HNS UK do not maintain, contribute to or participate in
any material employee benefit plan, program, pension, deferred compensation,
retirement, superannuation,

 

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life assurance or other similar plan, agreement, commitment or arrangement,
whether directly or indirectly (collectively, “Foreign Employee Benefit Plans”).
HNS has furnished or otherwise made available for the Investor’s review in HNS’s
data room true and complete copies of each Foreign Employee Benefit Plan or a
summary of such plan including all material information of each Foreign Employee
Benefit Plan required to permit the Investor to form a reasonably accurate view
of such Foreign Employee Benefit Plan and the benefits (including contingent
benefits) provided or to be provided under them.

 

(c) To HNS’s Knowledge, the Foreign Operations and HNS UK are in compliance, in
all material respects, with the payment to all social insurance, pension, health
care and profit sharing programs required under the Laws of the HNS Countries of
Operation applicable to the employment of the Foreign Employees or HNS UK
Employees. There are no unsatisfied Liabilities with respect to the Foreign
Employees or HNS UK Employees that would have a Material Adverse Effect on
Newco. There are no unsatisfied Liabilities with respect to the UK Plan that
would have an adverse effect on Newco nor will the Contemplated Transactions
result in any Liability with respect to the UK Plan that would have an adverse
effect on Newco.

 

(d) The employee side letter dated the date hereof sets forth for each Foreign
Employee and each HNS UK Employee the location, job title, 2004 annual base
salary, 2003 bonus, years of service and details of those employees on
maternity, paternity or parental leave or who are absent because of disability
or long-term leave of absence and who may have a statutory or contractual right
to return to work. HNS has made available to the Investor complete copies of all
the material written employment agreements and offer letters entered into and
with current Foreign Employees and HNS UK Employees, as set forth in the
employee side letter dated the date hereof.

 

(e) The employee side letter dated the date hereof sets forth a complete list of
all current Foreign Contract Employees. HNS has furnished or otherwise made
available for the Investor’s review in HNS’s data room true, correct and
complete copies of the agreements with each Foreign Services Company (“Foreign
Services Agreements”). Each Foreign Services Company is in material compliance
with (i) its respective Foreign Services Agreement and (ii) all applicable Laws
of the HNS Country of Operation as they apply to services in connection with the
Foreign Services Agreement.

 

(f) (i) The Foreign Operations and HNS UK are in material compliance with all
employment practices, terms and conditions of employment, wages and hours
described in the agreements and contracts entered into with Foreign Employees
and HNS UK Employees; (ii) each Foreign Employee Benefit Plan has been operated
and administered in all material respects in accordance with its terms or
provisions and with the requirements of all applicable Laws of the HNS Countries
of Operation and there are no material practices, agreements or commitments,
undertakings or assurances (whether or not constituting a legally binding
commitment) relating to benefits which are not referred to in the documents
disclosed; (iii) the Foreign Operations and HNS UK have not received written
communication of any intention by any Governmental Authority responsible for the
enforcement of labor or employment Laws to conduct any proceeding affecting the
Foreign Operations or HNS UK; (iv) no labor strike, material slowdown, material
work stoppage, material lockout, or material complaint, claim or petition in any
proceeding is actually pending or, to HNS’s Knowledge, threatened against or
affecting the Foreign Operations or HNS UK; (v) the Foreign Operations and HNS
UK have not experienced any strike, material slowdown or material work stoppage,
lockout or other collective labor action by or with respect to the Foreign
Employees of the Foreign Operations or the HNS UK Employees of HNS UK that could
have, individually or in the aggregate, a Material Adverse Effect on the
Business; (vi) none of the Foreign Operations operates a pension plan which is a
defined benefit plan as such term is defined in section 3(35) of ERISA; (vii) no
HNS UK Employee has transferred to HNS UK under the United Kingdom Transfer of
Undertakings (Protection of Employment) Regulations 1981; and (viii) no Foreign
Employee Benefit Plan operated in the United Kingdom is contracted out within
the meaning of the Pension Schemes Act 1933.

 

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4.15 U.S. Employee Benefit Matters.

 

(a) In this Contribution Agreement, the term “Employee Benefit Plan” means any
of the following: an “employee pension benefit plan,” as defined in Section 3(2)
of ERISA, each material “employee welfare benefit plan,” as defined in Section
3(1) of ERISA, an employment, consulting, severance or similar contract, plan,
program, arrangement or policy and any other plan, program, policy or
arrangement providing for benefits, compensation, retention payments, bonuses,
fees, profit-sharing, stock option, stock purchase or other stock related rights
or other forms of incentive or deferred compensation, change in control
benefits, vacation benefits, insurance (including any self-insured
arrangements), health or medical benefits, employee assistance programs,
disability or sick leave benefits, workers’ compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits that is maintained, administered or contributed to by HNS or any of its
ERISA Affiliates and covers any current or former Business Employee or any
current or former U.S. full-time employee who was employed by HNS or any of its
Affiliates on or after December 22, 2003 and whose services were primarily
related to the Business. Section 4.15(a) of the Disclosure Schedule sets forth a
complete list of each Employee Benefit Plan that is an “employee pension benefit
plan,” as defined in Section 3(2) of ERISA, and each other material Employee
Benefit Plan that covers any current or former employed Business Employee or any
current or former U.S. full time employee who was employed by HNS or any of its
Affiliates on or after December 22, 2003 and whose services were primarily
related to the Business.

 

(b) The employee side letter dated the date hereof sets forth the location, job
title, current annual base salary, 2003 bonus and 2003 commissions provided to
each of the Business Employees whose services are primarily related to the
Business, such Business Employee’s years of service, and whether such Business
Employee is actively at work or on leave of absence, disability or medical
leave.

 

(c) HNS has furnished or otherwise made available for the Investor’s review in
HNS’s data room true and complete copies of each Employee Benefit Plan
disclosed, or required to be disclosed, on Section 4.15(a) of the Disclosure
Schedule or a summary of such plan.

 

(d) Neither HNS nor any ERISA Affiliate has incurred any unsatisfied Liability
(other than Pension Benefit Guaranty Corporation (“PBGC”) premiums) to the PBGC,
the Internal Revenue Service or any other individual or entity under Title IV of
ERISA, Sections 412 or 4980B of the Code or Part 6 of Title I of ERISA and no
event or condition exists that could result in the imposition of any liability
on HNS or any ERISA Affiliate under such provisions that could reasonably have
an adverse effect on Newco.

 

4.16 Contracts.

 

(a) Except for Contracts that do not constitute Assumed Liabilities, HNS, HNS
Europe, HNS UK and the Transferred Subsidiaries, with respect to the Business
and the Business Assets, are not parties to or otherwise bound by or subject to
(such Contracts that fit within the following categories shall be referred to
herein as the “Material Contracts”):

 

(i) any Contracts which would be “material contracts” (as such term is defined
in Item 601(b)(10) of Regulation S-K promulgated under the Exchange Act) of HNS,
HNS Europe, HNS UK and the Transferred Subsidiaries, taken as a whole, if HNS
were a reporting company under the Exchange Act;

 

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(ii) any Contract containing any covenant limiting the freedom of HNS, HNS
Europe, HNS UK or any Transferred Subsidiary, in respect of the Business or the
operations of the Business, to compete with any Person in any geographic area in
any material respect if such Contract will be binding on Newco after Closing;

 

(iii) any Contract in effect on the date of this Contribution Agreement relating
to the disposition or acquisition of any material Assets of, or any interest in,
any business enterprise which forms a part of the Business other than in the
Ordinary Course of Business;

 

(iv) any Indebtedness;

 

(v) any Financial Support Arrangements;

 

(vi) any Contract with a customer, distributor or reseller of the Business that
had aggregate revenue in calendar year 2003 greater than $1,000,000 or is
expected by HNS to have aggregate revenue in calendar year 2004 greater than
$1,000,000;

 

(vii) any Contract with a trade supplier to the Business pursuant to which HNS
or any Transferred Subsidiary made aggregate payments in calendar year 2003
greater than $1,000,000 or pursuant to which HNS or any Transferred Subsidiary
is expected by HNS to make payments in calendar year 2004 greater than
$1,000,000;

 

(viii) any Contract relating to any joint venture or partnership arrangement
with any third party involving an investment requirement for the period
following Closing of greater than $500,000; and

 

(ix) any Contract (other than a commercial Contract) with any U.S. Governmental
Authority that is not subject to an obligation of confidentiality and involves
commitments of HNS greater than $500,000.

 

(b) Each Material Contract is a legal, valid and binding obligation of HNS, HNS
Europe, HNS UK or the applicable Transferred Subsidiary, enforceable against
HNS, HNS Europe, HNS UK or the applicable Transferred Subsidiary, and, to HNS’s
Knowledge, the other party to such contract, in accordance with its terms
(except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to or affecting creditors’ rights generally, including the effect of
statutory and other Laws regarding fraudulent conveyances and preferential
transfers, and subject to the limitations imposed by general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity), and HNS, HNS Europe, HNS UK or the applicable
Transferred Subsidiary is not in default and has not failed to perform any
material obligation thereunder, and, to the Knowledge of HNS, there does not
exist any event, condition or omission which would constitute a breach or
default (whether by lapse of time or notice or both) by any other Person under a
Material Contract, in each case which would reasonably be expected to result in
the termination of such Material Contract or result in a Liability in excess of
$500,000. HNS has furnished to the Investor, or otherwise made available for the
Investor’s review in HNS’s data room, true and complete copies of all Material
Contracts, including all amendments thereto, or has furnished the material terms
thereof if no true or complete copy is available.

 

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(c) For each Contract with a U.S. Governmental Authority being performed in
whole or part by HNS or its Affiliates which is or will be a Business Asset,
neither a U.S. Governmental Authority nor any prime contractor or subcontractor
to HNS or any of its Affiliates has notified HNS or its Affiliates that HNS or
its Affiliates has breached or violated any Laws, and neither an uncured
material breach of contract nor a violation of Laws in connection with such
Contracts with U.S. Governmental Authorities has occurred; no termination for
default, cure notice or show cause notice is in effect; and no U.S. Governmental
Authority has issued any written notice of any material claim against HNS or its
Affiliates. None of HNS, the Transferred Subsidiaries or, to the Knowledge of
HNS, any of their respective officers, directors, employees or consultants are
under criminal or civil investigation by any U.S. Governmental Authority
relating to any activity or obligation under any Contract with a U.S.
Governmental Authority being performed in whole or part by HNS or its
Affiliates. None of HNS, the Transferred Subsidiaries or, to the Knowledge of
HNS, any of their respective officers, directors, employees or consultants have
notice of any qui tam complaint, with respect to any alleged irregularity,
misstatement, omission or any other matter with respect to a Contract with a
U.S. Governmental Authority performed or being performed in whole or part by HNS
or any of its Affiliates. None of HNS and its Affiliates, or, to the Knowledge
of HNS, their officers, directors, employees or consultants, has been debarred
or suspended, or received a notice of proposed debarment or suspension, from any
U.S. governmental procurement programs in the past three years and no such
actions are pending, and none of the foregoing entities or persons are on the
list of parties excluded from procurement programs in the United States, in each
case to the extent the same would reasonably be expected to have a material
adverse impact on the operations of the Business following Closing.

 

(d) Each of Parent and HNS hereby represents and warrants that the Investor has
been provided copies or reproductions of all provisions (including relevant
specifications) contained in the Boeing Contract or any other Contract between
Parent or one of its Subsidiaries, on the one hand, and Boeing or one of its
Affiliates, on the other hand, that relate to or are otherwise applicable to
Spaceway 3.

 

4.17 Environmental Matters. Except with respect to any Excluded Liabilities: (a)
the Business Assets and HNS’s, HNS Europe’s, HNS UK’s and the Transferred
Subsidiaries’ operation of the Business do not violate any Environmental, Safety
and Health Laws, except for any failure to comply that would not reasonably be
expected to have a Material Adverse Effect on the Business; (b) HNS, HNS Europe,
HNS UK and the Transferred Subsidiaries maintain and comply with all permits
required under Environmental, Safety and Health Laws that are necessary to use
the Business Assets and operate the Business as currently used and operated,
except for any failure to maintain or comply that would not reasonably be
expected to have a Material Adverse Effect on the Business; (c) there are no
past, pending or threatened Environmental Claims against HNS, HNS Europe, HNS UK
and the Transferred Subsidiaries, and, to the Knowledge of HNS, there are no
facts or circumstances that would reasonably be expected to form the basis of an
Environmental Claim against HNS, HNS Europe, HNS UK and the Transferred
Subsidiaries, except in each case as would not reasonably be expected to have a
Material Adverse Effect on the Business; (d) to the Knowledge of HNS, during the
period of its ownership, operation or tenancy, no Releases of Hazardous
Substances have occurred at, from, in, to, on, or under any Site and no
Hazardous Substances are present in, on, about or migrating to or from any Site
that would reasonably be expected to give rise to an Environmental Claim against
HNS, HNS Europe, HNS UK or the Transferred Subsidiaries; (e) none of HNS, HNS
Europe, HNS UK or any of the Transferred Subsidiaries, nor any of their
respective predecessors, nor any entity previously owned by them, has
transported or arranged for the treatment, storage, handling, disposal, or
transportation of any Hazardous Substance to any off-Site location which would
reasonably be expected to result in an Environmental Claim against HNS, HNS
Europe, HNS UK or the Transferred Subsidiaries; (f) there are no underground
storage tanks, active or abandoned, polychlorinated biphenyl containing
equipment, or asbestos containing material (i) at the Owned Real Property, (ii)
at any property subject to a Real Property Lease if HNS has leased a substantial
majority of such property for at least five (5) years and HNS has conducted

 

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manufacturing activities at such property within five (5) years prior to the
date hereof, or (iii) to the Knowledge of HNS, at any property subject to a Real
Property Lease (and not described in the immediately preceding clause (ii)); and
(g) except as have been provided to the Investor or otherwise made available for
the Investor’s review in HNS’s data room, HNS, HNS Europe, HNS UK and the
Transferred Subsidiaries are not in possession of any reports, studies,
analyses, tests or monitoring pertaining to Hazardous Substances in, on or under
any property relating to the Business Assets or pertaining to compliance with
Environmental, Safety and Health Laws.

 

4.18 Licenses and Permits. HNS, HNS Europe, HNS UK and the Transferred
Subsidiaries have all of the Communications Licenses necessary for the lawful
conduct of the Business in substantially the same manner as the Business is
currently conducted, except where the failure to have the same would reasonably
be expected to have a Material Adverse Effect on the Business. Section 4.18 of
the Disclosure Schedule sets forth a list of all material HNS Permits that are
Communications Licenses and all material pending applications related to such
Communications Licenses or related to the acquisition of new HNS Permits that
would be Communications Licenses. HNS or one of its Affiliates is the holder of
the Communications Licenses identified in Section 4.18 of the Disclosure
Schedule. Section 4.18 of the Disclosure Schedule identifies the Communications
Licenses with respect to which Governmental Approval is required in connection
with the consummation of the Contemplated Transactions. Complete and correct
copies of the Communications Licenses identified on Section 4.18 of the
Disclosure Schedule have been delivered or made available to the Investor.

 

Except as would not reasonably be expected to have a Material Adverse Effect on
the Business: (i) each Communications License identified on Section 4.18 of the
Disclosure Schedule is validly issued and in full force and effect; (ii) none of
HNS, HNS Europe, HNS UK or any Transferred Subsidiary is a party to and none of
HNS, HNS Europe, HNS UK or any Transferred Subsidiary has any Knowledge of any
Proceeding before any Governmental Authority to revoke, suspend, cancel, refuse
to renew or modify, or impose a forfeiture or other sanction with respect to,
any of the Communications Licenses identified on Section 4.18 of the Disclosure
Schedule; (iii) HNS has no reason to believe that any of the Communications
Licenses identified in Section 4.18 of the Disclosure Schedule will not be
renewed in the Ordinary Course of Business; (iv) HNS, HNS Europe, HNS UK and the
Transferred Subsidiaries are operating the facilities authorized under the
Communications Licenses set forth in Section 4.18 of the Disclosure Schedule in
accordance with their terms and such operation is in compliance with the
Communications Laws; and (v) no event has occurred which, after notice or lapse
of time or both, reasonably would be expected to result in revocation,
suspension, adverse modification, non-renewal or termination of, or any order of
forfeiture with respect to, any Communications License set forth on Section 4.18
of the Disclosure Schedule. Section 4.18 of the Disclosure Schedule sets forth a
description of certain other licensing matters, which description is accurate
and complete in all material respects.

 

4.19 Labor. None of HNS, HNS Europe, HNS UK or any of the Transferred
Subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to Persons employed by HNS or any of the Transferred
Subsidiaries, nor, to the Knowledge of HNS, HNS Europe or HNS UK are there any
activities or proceedings of any labor union to organize any such employees, or
of employees to join any labor union or commence collective bargaining in any
form.

 

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4.20 Brokers. Except for HNS’s arrangement with Morgan Stanley, none of HNS, any
Transferred Subsidiary or any of their respective Affiliates has retained any
broker or finder or incurred any Liability for any brokerage fees, commissions
or finder’s fees with respect to this Contribution Agreement, the other
Transaction Documents or the Contemplated Transactions.

 

4.21 Affiliate Transactions. Except for compensation paid or payable by HNS or
the Transferred Subsidiaries to bona fide employees of HNS or the Transferred
Subsidiaries in the Ordinary Course of Business, none of (a) HNS, any current
executive officer or shareholder of HNS holding in excess of 5% of the
outstanding share capital of HNS, or any of their respective relatives or
spouses or (b) any Transferred Subsidiary, any current executive officer or
shareholder of any Transferred Subsidiary holding in excess of 5% of the
outstanding share capital of HNS, or any of their respective relatives or
spouses, is now, or has been during the last three (3) years, (x) a party to any
transaction or Contract with HNS, any Transferred Subsidiary, or any of their
respective employees or Affiliates which will be part of the Business, (y) the
direct or indirect owner of an interest in any Person which is a present
competitor, major supplier or major customer of HNS or any Transferred
Subsidiary (other than beneficial holdings of less than 5% in publicly-held
companies) or (z) a recipient of any benefit or payment in excess of $50,000
from HNS or a Transferred Subsidiary.

 

4.22 Investment Representations.

 

(a) HNS acknowledges that the membership interests in Newco and the shares of
SkyTerra Stock to be received hereunder have not been and will not be registered
or qualified under the Securities Act, or any state securities Laws and are
offered in reliance upon an exemption from registration under the Securities Act
and state securities Laws. Except for the transfer to the Investor contemplated
by Section 2.7, the membership interests in Newco and the shares of SkyTerra
Stock to be received by HNS hereunder shall be held by HNS for investment
purposes only for its own account, and not with a view to or for sale in
connection with any distribution of the membership interests in Newco or the
shares of SkyTerra Stock, and HNS acknowledges that the membership interests in
Newco and the shares of SkyTerra Stock that it will retain cannot be sold or
otherwise disposed of unless they are registered under the Securities Act or
pursuant to an exemption therefrom. Except for the transfer to the Investor
contemplated by Section 2.7, HNS has no contract, understanding, agreement or
arrangement with any Person to sell, transfer or grant a participation to such
Person or any other Person, with respect to any or all of the membership
interests in Newco or the shares of SkyTerra Stock it will receive in accordance
with the provisions hereof.

 

(b) HNS is an “accredited investor” within the meaning of Rule 501 promulgated
under the Securities Act and has knowledge and experience in financial and
business matters such that it is capable of evaluating the merits and risks of
receiving and owning the membership interests in Newco and the shares of
SkyTerra Stock, and HNS is able to bear the economic risk of such ownership and
understands that an investment in the membership interests in Newco and the
shares of SkyTerra Stock involves substantial risks.

 

4.23 Newco.

 

Newco is a limited liability company duly organized, validly existing and in
good standing under the Laws of the State of Delaware. Since its formation,
Newco has not engaged in any activity, other than such actions in connection
with (a) its organization and (b) the preparation, negotiation and execution of
this Contribution Agreement, the other Transaction Documents and the other
matters related to the Contemplated Transactions. Newco has no operations, has
not generated any revenues, and has no material Liabilities (other than those
Liabilities incurred in connection with the foregoing). HNS owns all of the
membership interests in Newco free and clear of all Encumbrances,

 

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except those arising under applicable securities Laws or as a result of this
Contribution Agreement. Upon the sale of the Investor Interest to the Investor
against payment therefor in accordance with Section 2.7, the Investor will
acquire a 50% membership interest (on a fully diluted basis) in Newco as
provided in Schedule A of the Restated LLC Agreement free and clear of all
Encumbrances (except for any restrictions imposed by applicable securities Laws,
the Restated LLC Agreement and the Investor Rights Agreement).

 

4.24 Earth Stations and Ground Facility Rights.

 

Section 2.2(a)(xiv) of the Disclosure Schedule and Section 4.18 of the
Disclosure Schedule set forth a list, as of the date hereof, of all material
Network Operation and Control Centers and transmitting and/or receive teleport
earth station facilities located on Real Property (together, the “Earth
Stations”). Except as have not had, and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Business, the improvements to each Earth Station and all items of equipment used
in connection therewith are (a) in good operating condition and repair and are
suitable for their intended purposes and (b) supported by a back-up generator
capable of generating power sufficient to meet the requirements of the
operations conducted at the Earth Station. To the Knowledge of HNS, no other
radio communications facility is causing harmful interference to the
transmission from or the receipt of signals by any Earth Station, except for any
instances of harmful interference that have not had, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Business.

 

5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. Except as set forth on the
Investor Disclosure Schedule (or the Updated Investor Disclosure Schedule with
respect to representations and warranties made as of the Closing Date), the
Investor hereby represents and warrants to Parent and HNS, as of the date hereof
and as of the Closing Date, as follows:

 

5.1 Organization, Standing, Qualification. The Investor is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. The Investor has the full corporate power and authority to carry on
its business as presently conducted and to execute and deliver this Contribution
Agreement and the other Transaction Documents to which it is a party and to
carry out the Contemplated Transactions.

 

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5.2 Authorization. The execution and delivery of, and performance by the
Investor under, this Contribution Agreement and the other Transaction Documents
to which it is a party and the consummation by the Investor of the Contemplated
Transactions have been duly authorized by all necessary corporate action on the
part of the Investor and no other corporate proceedings on the part of the
Investor are necessary to authorize this Contribution Agreement and such other
Transactions Documents, or to consummate the Contemplated Transactions.

 

5.3 Binding Obligation. This Contribution Agreement, and each other Transaction
Document to be executed by the Investor pursuant hereto, have been or will be at
Closing executed and delivered in accordance with the provisions thereof, and
(assuming such agreements constitute the legal and binding obligations of
Parent, HNS, Newco or its Affiliates, as the case may be) shall each constitute
a valid and binding obligation of the Investor enforceable in accordance with
its terms (a) except to the extent that enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or
hereinafter in effect relating to or affecting creditors’ rights generally,
including statutory and other Laws regarding fraudulent conveyances or
preferential transfers, and (b) subject to the limitations imposed by general
equitable principles regardless of whether such enforceability is considered in
a Proceeding at Law or in equity.

 

5.4 Noncontravention. Neither the execution and the delivery of this
Contribution Agreement or the other Transaction Documents, nor the consummation
of the Contemplated Transactions, will, in any material respect, (a) violate any
provision of the organizational documents of the Investor, (b) violate any
provision of applicable Law binding upon the Investor, or (c) conflict with,
result in a breach of, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any material Contract, lease, license,
instrument, note, bond, mortgage or deed of trust to which the Investor is a
party, except with respect to clauses (b) and (c) for such conflicts or
violations which would not reasonably be expected to have a material adverse
effect on the ability of the Investor to consummate the Contemplated
Transactions.

 

5.5 Litigation; Compliance with Laws.

 

(a) Except as set forth in the SEC Documents and except for rulemaking
proceedings or other Proceedings of general applicability, there are no
Proceedings pending, or to the Knowledge of the Investor, threatened, against
the Investor or any of its Subsidiaries at law or in equity, or before or by any
court, arbitrator, domestic or foreign, or any other Governmental Authority that
would reasonably be expected to have a Material Adverse Effect on the Investor.
The Investor and its Subsidiaries are not operating under, subject to or in
default with respect to any Order of any court, arbitrator or Governmental
Authority that would reasonably be expected to have a Material Adverse Effect on
the Investor.

 

(b) The Investor and each of its Subsidiaries have complied and are in
compliance with all applicable Laws to which any of them are subject (including
the Sarbanes-Oxley Act of 2002), except for any failure to comply that would not
reasonably be expected to have a Material Adverse Effect on the Investor.
Neither the Investor nor any of its Subsidiaries has received any notice from
any Person regarding any actual or alleged violation of any Law by the Investor
or any such Subsidiary, except for any alleged violation that would not
reasonably be expected to have a Material Adverse Effect on the Investor.

 

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5.6 Financing. The Investor has, and at Closing will have, sufficient cash,
marketable securities or other investments or available sources of credit to
enable the Investor to consummate the Contemplated Transactions on the terms and
conditions set forth in the Transaction Documents. Simultaneously with the
execution and delivery of this Contribution Agreement, the Investor has
delivered to Parent a true and correct copy of a pro forma balance sheet
demonstrating that the Investor has and will have sufficient funds to allow the
Investor to pay the cash portion of the Membership Interest Purchase Price.

 

5.7 Qualifications to Hold Communications Licenses. The Investor is not aware of
any reason that its ownership interest in Newco as contemplated by this
Contribution Agreement would prevent Newco from being legally, financially and
otherwise qualified under the Communications Act and other applicable U.S. and
foreign Communications Laws to be the licensee of and to own and operate the
Business and to perform its obligations hereunder in all material respects. To
the Investor’s Knowledge, no fact or circumstance exists relating to the
qualifications or otherwise of the Investor as it relates to its proposed
ownership interest in Newco as contemplated by this Contribution Agreement that
(a) would reasonably be expected to prevent or delay, in any material respect,
the FCC or other Governmental Authorities from granting approval of the
Communications Applications; or (b) would reasonably be expected to prevent or
delay, in any material respect, or otherwise disqualify Newco as the licensee,
owner, operator or transferee of the Business in any jurisdiction.

 

5.8 Condition of Business; Independent Investigation. The Investor is an
informed and sophisticated participant in the Contemplated Transactions, and has
engaged expert advisors experienced in the evaluation and purchase of securities
similar to the Investor Interest. The Investor has undertaken an investigation,
has been provided with, has evaluated and has relied upon certain documents and
information to assist it in making an informed and intelligent decision with
respect to the execution of the Transaction Documents. The Investor acknowledges
that neither Parent nor HNS makes any representation or warranty as to the
prospects, financial or otherwise, or future revenues or results of the
Business, and that any projections, estimates or forecasts of future revenues or
results or events provided by or on behalf of Parent or HNS are subject to
uncertainty and to the assumptions used in their preparation. The Investor is
not relying on any representation or warranty of any Person with respect to the
Contemplated Transactions, other than those representations and warranties
specifically set forth in this Contribution Agreement, the other Transaction
Documents and any certificates delivered in connection herewith or therewith
that are made by HNS, Newco or the Parent. The Investor agrees that Newco shall
accept the Contributed Assets and the Assumed Liabilities as they exist on the
Closing Date based on the Investor’s inspection, examination and determination
with respect thereto as to all matters, and without reliance upon any express or
implied representations or warranties of any nature, whether in writing, orally
or otherwise, made by or on behalf of or imputed to Parent, HNS or any of their
Affiliates, except as expressly set forth in the Transaction Documents.

 

5.9 SEC Documents; Undisclosed Liabilities.

 

(a) The Investor has filed all required reports, schedules, statements, forms
and other documents with the Securities and Exchange Commission (the “SEC”)
since January 1, 2002 (the “SEC Documents”). As of their respective dates of
filing with the SEC (or, if amended or superseded by a filing prior to the date
hereof, as of the date of such amendment or superseding filing), the SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such SEC Documents, and none of
the SEC Documents when filed contained any untrue statement of a material fact

 

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or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of the Investor included in
the SEC Documents fairly present in all material respects the consolidated
financial position of the Investor and its consolidated Subsidiaries and the
consolidated results of operations and cash flows of such companies as of the
dates and for the periods shown. As of the date hereof, there are no outstanding
written comments from the SEC with respect to any of the SEC Documents.

 

(b) There are no Liabilities of the Investor or its Subsidiaries of any nature,
whether accrued, contingent, absolute, determined, determinable or otherwise,
that are required to be reflected in the Investor’s financial statements in
accordance with GAAP and that in the aggregate would reasonably be expected to
have a Material Adverse Effect on the Investor, other than (i) Liabilities that
are appropriately reflected or reserved for in the consolidated financial
statements of the Investor included in its Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 2004, as filed with the SEC prior to the date
hereof, (ii) Liabilities incurred since September 30, 2004 in the ordinary
course of business consistent with past practice, (iii) Liabilities incurred
pursuant to the Contemplated Transactions, and (iv) Liabilities discharged or
paid in full prior to the date hereof in the ordinary course of business
consistent with past practice.

 

5.10 SkyTerra Stock.

 

(a) The shares of SkyTerra Stock to be issued to HNS in accordance with the
terms hereof, when issued, shall be duly authorized and validly issued, fully
paid and non-assessable and free of all Encumbrances (except for any
restrictions imposed by applicable securities Laws).

 

(b) The authorized capital stock of the Investor consists of: (i) 200,000,000
shares of Common Stock, par value $.01 per share (the “SkyTerra Common Stock”);
(ii) 100,000,000 shares of Non-voting Common Stock, par value $.01 per share
(the “SkyTerra Non-voting Common Stock”); and (iii) 10,000,000 shares of
Preferred Stock, par value $.01 per share (the “SkyTerra Preferred Stock”). As
of the close of business on September 30, 2004, (A) 6,077,309 shares of SkyTerra
Common Stock were issued and outstanding and 1,301,760 shares of SkyTerra Common
Stock were reserved for issuance upon the exercise or payment of outstanding
stock options, stock units or other awards or pursuant to any plans of the
Investor under which any award, grant or other form of compensation issuable in
the form of, or based in whole or in part on the value of, SkyTerra Common
Stock, has been conferred on any Person (such stock options, units and other
awards and plans, collectively, the “SkyTerra Stock Plans”), (B) 8,990,212
shares of SkyTerra Non-voting Common Stock were issued and outstanding, and (C)
1,199,007 shares of SkyTerra Preferred Stock designated as Series A Convertible
Preferred Stock were issued and outstanding. All outstanding shares of SkyTerra
Common Stock, SkyTerra Non-voting Common Stock and SkyTerra Preferred Stock have
been duly authorized and validly issued and are fully paid and non-assessable
and are not subject to preemptive rights (except in the case of SkyTerra
Preferred Stock).

 

(c) No bonds, debentures, notes or other indebtedness generally having the right
to vote on any matters on which stockholders of the Investor may vote are issued
or outstanding.

 

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5.11 Brokers. Except for the Investor’s arrangement with Bear Stearns, neither
the Investor nor any of its Affiliates has retained any broker or finder or
incurred any Liability or obligation for any brokerage fees, commissions or
finder’s fees with respect to this Contribution Agreement, the other Transaction
Documents to which it is a party or the Contemplated Transactions.

 

5.12 Purchaser Representations. The Investor acknowledges that the membership
interests in Newco to be received hereunder have not been and will not be
registered or qualified under the Securities Act, or any state securities Laws
and are offered in reliance upon an exemption from registration under the
Securities Act and state securities Laws. The membership interests in Newco to
be received by the Investor hereunder shall be held by the Investor for
investment purposes only for its own account, and not with a view to or for sale
in connection with any distribution of the membership interests in Newco, and
the Investor acknowledges that the membership interests in Newco that it will
receive cannot be sold or otherwise disposed of unless they are registered under
the Securities Act or pursuant to an exemption therefrom. The Investor does not
have any contract, understanding, agreement or arrangement with any Person to
sell, transfer or grant a participation to such Person or any other Person, with
respect to any or all of the membership interests in Newco it will receive in
accordance with the provisions hereof.

 

(b) The Investor is an “accredited investor” within the meaning of Rule 501
promulgated under the Securities Act and has knowledge and experience in
financial and business matters such that it is capable of evaluating the merits
and risks of receiving and owning the membership interests in Newco, and the
Investor is able to bear the economic risk of such ownership and understands
that an investment in the membership interests in Newco involves substantial
risks.

 

6. FOREIGN EMPLOYEE MATTERS. Newco and HNS hereby agree as to the foreign
employee and employee benefit matters set forth in Exhibit I.

 

7. U.S. EMPLOYEE MATTERS. Newco and HNS hereby agree as to U.S. employee and
employee benefit matters set forth in Exhibit J.

 

8. CLOSING.

 

8.1 Conditions Precedent to Obligations of Each Party. The obligations of
Parent, HNS and the Investor to consummate Closing are subject to the
satisfaction (or waiver by each of the Investor and Parent) of the following
conditions:

 

(a) Any applicable waiting period under Hart-Scott Rodino relating to the
Contemplated Transactions shall have expired or been terminated;

 

(b) The European Commission shall have taken any applicable decision, whether or
not conditional, that may be required under Article 6(1)(b) or, if the
Commission has initiated proceedings pursuant to Article 6(1)(c), under Article
8(2) of Council Regulation (EC) No. 139/2004 (the “Regulation”) declaring the
Contemplated Transactions compatible with the common market, or being deemed to
have done so under Article 10(6) of the Regulation.;

 

(c) (i) The FCC shall have granted the Communications Applications filed with it
pursuant to this Contribution Agreement and listed such grant in a public notice
issued by the FCC and (ii) five (5) days shall have elapsed from the date of
such public notice;

 

(d) A Financing meeting the requirements of Section 2.7(b) shall have been
consummated, either prior to or concurrently with Closing;

 

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(e) The Governmental Authorities listed on Section 8.1(e) of the Disclosure
Schedule shall have granted the Communications Applications filed with them
pursuant to this Contribution Agreement; and

 

(f) No Order of any U.S. federal or state (but not local) Governmental Authority
or any Governmental Authority identified on Section 8.1(e) of the Disclosure
Schedule that restrains, invalidates or prohibits the Contemplated Transactions
or compels Investor or any of its Affiliates to dispose or hold separate any
portion of the business or Assets of Investor or any of its Affiliates as a
result of the consummation of the Contemplated Transaction shall be in effect.

 

8.2 Conditions Precedent to Obligations of the Investor. The obligation of the
Investor to consummate Closing is subject to the satisfaction (or waiver by the
Investor) of the following conditions:

 

(a) (i) Parent and HNS shall have performed and complied in all material
respects with their respective obligations under this Contribution Agreement
required to be performed or complied with by them at or prior to Closing, except
for such obligations which are qualified by materiality or Material Adverse
Effect in which case such obligations shall have been performed and complied
with in all respects (taking into account any materiality or Material Adverse
Effect qualifier contained therein), (ii) each of the representations and
warranties of HNS and Parent contained in this Contribution Agreement, without
regard to any materiality or Material Adverse Effect qualifier contained
therein, shall be true and correct at and as of the date of this Contribution
Agreement and as of the Closing Date, as if made at and as of each such date,
except that those representations and warranties which by their express terms
are made as of a different date shall be required to be true and correct only as
of such date, in each case except for inaccuracies or omissions that in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
the Business, and (iii) the Investor shall have received a certificate signed by
an officer of HNS and Parent to the foregoing effect;

 

(b) Since the date hereof, there shall not have occurred and there shall not
exist any event or circumstance that has had or is reasonably likely to have a
Material Adverse Effect on the Business or the Business Assets;

 

(c) Newco and each Transferred Subsidiary shall have received all Consents set
forth on Section 8.2(c) of the Disclosure Schedule;

 

(d) Newco and HNS, or an Affiliate of HNS, as the case may be, shall have
executed and delivered, on or before the Closing Date, the Transaction Documents
that are required to be executed by Newco, HNS or such Affiliate, and Newco,
Parent and HNS shall have delivered or caused to be delivered all other closing
deliverables set forth in Section 8.5;

 

(e) Boeing and Parent shall have executed and delivered the Spaceway 3
Amendment;

 

(f) Thirty (30) days shall have elapsed since the date that HNS delivered to the
Investor the Interim Statements and the Annual Statements required by Section
3.10, and the Interim Statements and the 2003 Annual Statements shall evidence
financial or economic performance of the VSAT Business similar to or better
than, in all material respects, the financial or economic performance of the
VSAT Business evidenced by the Financial Statements for the same periods, and no
more than two of the following individual balance sheet, statement of operations
or cash flow items in the Interim Statements and the 2003 Annual Statements
shall differ by more than the corresponding percentages (or dollar amounts in
the case of (iii) below) set forth below from the comparable items in the
Financial Statements for the same periods (after making adjustments to specific
items on the Financial Statements,

 

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if any, necessary to reflect any reclassifications resulting from the SAS 100
review of the Interim Statements or the audit of the Annual Statements, without
regard to any movements between the specific periods to which such items
relate):

 

(i) 10% for (A) a decline in total assets less cash and cash equivalents, (B) an
increase in short-term borrowings and current portion of long-term debt plus
long-term debt, (C) a decline in revenues and (D) an increase in total operating
costs and expenses (exclusive of depreciation and amortization expenses);

 

(ii) 15% for (A) a decline in revenues less cost of products sold and (B) an
increase in expenditures for property; and

 

(iii) (A) $10 million decline for net cash provided by (used in) operating
activities with respect to the Interim Statements and (B) $20 million decline
for net cash provided by (used in) operating activities with respect to the 2003
Annual Statements;

 

provided that to the extent that there are any items of the Spaceway Business on
the Financial Statements, items of such type will be deemed to be included in
the Interim Statements and 2003 Annual Statements in a consistent manner for
this purpose; and

 

(g) The condition set forth on Section 8.2(g) of the Disclosure Schedule has
been satisfied.

 

8.3 Conditions Precedent to Obligation of Parent and HNS. The obligation of
Parent and HNS to consummate Closing is subject to the satisfaction (or waiver
by Parent) of the following conditions:

 

(a) (i) The Investor shall have performed and complied in all material respects
with their respective obligations under this Contribution Agreement required to
be performed or complied with by them at or prior to Closing, except for such
obligations which are qualified by materiality or Material Adverse Effect in
which case such obligations shall have been performed and complied with in all
respects (taking into account any materiality or Material Adverse Effect
qualifier contained therein), (ii) the representations and warranties of the
Investor contained in this Contribution Agreement, without regard to any
materiality or Material Adverse Effect qualifier contained therein, shall be
true and correct at and as of the date of this Contribution Agreement and as of
the Closing Date, as if made at and as of each such date, except that those
representations and warranties which by their express terms are made as of a
different date shall be required to be true and correct only as of such date, in
each case except for inaccuracies or omissions that in the aggregate would not
reasonably be expected to have a Material Adverse Effect on the Investor; and
(iii) Parent and HNS shall have received certificates signed by an officer of
the Investor to the foregoing effect;

 

(b) The Purchase Price shall have been paid to HNS as contemplated by Section
2.7(e); and

 

(c) The Investor or its assignee, as the case may be, shall have executed and
delivered, on or before the Closing Date, the Transaction Documents that are
required to be executed by the Investor; and the Investor shall have delivered
or caused to be delivered all other closing deliverables set forth in Section
8.6.

 

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8.4 Updated Disclosure Schedule.

 

(a) At any time prior to Closing, HNS shall be entitled to deliver to the
Investor updates to, or substitutions of, the Disclosure Schedule solely with
respect to (i) matters related to Section 4 that arise after the date hereof and
(ii) Assumed Liabilities under Section 2.4(a)(xii) arising from or relating to
Proceedings initiated after the date hereof against HNS or any of its
Subsidiaries in the Ordinary Course of Business by any Person who is or was (A)
employed by HNS or such Subsidiary or (B) a direct or indirect customer (or was
associated with such customer) of HNS or such Subsidiary, which updates or
substitutions shall be clearly marked as such (with such updates and
substitutions, the “Updated Disclosure Schedule”). In the event that HNS
delivers an Updated Disclosure Schedule within three (3) days of any scheduled
Closing Date hereunder, the Investor shall be entitled to extend, by written
notice to HNS, the scheduled Closing Date to the third day after it receives the
Updated Disclosure Schedule and any information regarding the updates reasonably
requested by the Investor, or if such day is not a business day, to the next
business day. The delivery by HNS of the Updated Disclosure Schedules shall not
prejudice any rights of any Newco Indemnified Person hereunder, including (i)
the right to claim that the representations and warranties of HNS, when made on
the date hereof, were inaccurate or false, (ii) the right to claim that the
covenants and agreements of HNS and/or Parent contained herein were breached or
(iii) the right to seek indemnification pursuant to Section 9 hereof. The
Updated Disclosure Schedule shall be deemed to qualify the representations and
warranties made as of the Closing Date and replace for such purpose, in whole or
in part as the case may be, the Disclosure Schedule previously delivered
hereunder for such purposes.

 

(b) At any time prior to Closing, the Investor shall be entitled to deliver to
Parent updates to, or substitutions of, the Investor Disclosure Schedule solely
with respect to matters related to Section 5 that arise after the date hereof,
which updates or substitutions shall be clearly marked as such (with such
updates and substitutions, the “Updated Investor Disclosure Schedule”). In the
event that the Investor delivers an Updated Investor Disclosure Schedule within
three (3) days of any scheduled Closing Date hereunder, Parent shall be entitled
to extend, by written notice to the Investor, the scheduled Closing Date to the
third day after it receives the Updated Investor Disclosure Schedule and any
information regarding the updates reasonably requested by Parent, or if such day
is not a business day, to the next business day. The delivery by the Investor of
the Updated Investor Disclosure Schedules shall not prejudice any rights of any
Parent Indemnified Person hereunder, including (i) the right to claim that the
representations and warranties of the Investor, when made on the date hereof,
were inaccurate or false, (ii) the right to claim that the covenants and
agreements of the Investor contained herein were breached or (iii) the right to
seek indemnification pursuant to Section 9 hereof. The Updated Investor
Disclosure Schedule shall be deemed to qualify the representations and
warranties made as of the Closing Date and replace for such purpose, in whole or
in part as the case may be, the Investor Disclosure Schedule previously
delivered hereunder for such purposes.

 

8.5 Deliveries by HNS. At Closing, HNS shall deliver, or cause to be delivered,
to the Investor the following:

 

(a) A bill of sale and assumption agreement in substantially the form attached
hereto as Exhibit K (the “Bill of Sale and Assumption Agreement”), and such
other instruments and agreements customary in any applicable foreign
jurisdiction or required by any foreign Governmental Authority as the Investor
or HNS shall reasonably require to transfer to Newco title to the Contributed
Assets or evidence the assumption by Newco of the Assumed Liabilities
(collectively with the Bill of Sale and Assumption Agreement, the “Transfer
Instruments”));

 

(b) Copies of the board, stockholder (and any equivalent actions for HNS Europe,
HNS UK or any Transferred Subsidiary) and any other corporate resolution
required in order to approve the consummation of the Contemplated Transactions,
certified by an authorized officer of HNS, HNS Europe, HNS UK or the Transferred
Subsidiaries, as applicable;

 

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(c) The certificates contemplated by Section 8.2(a) signed by an executive
officer of HNS and Parent;

 

(d) The Restated LLC Agreement executed by an authorized officer of HNS;

 

(e) The Investor Rights Agreement executed by an authorized officer of HNS;

 

(f) The Transition Services Agreement, if any, that has been agreed pursuant to
Section 2.6(c), executed by an authorized officer of HNS and/or Parent, as
appropriate;

 

(g) Special warranty deed, or comparable Transfer Instrument in favor of Newco,
in customary form for the applicable jurisdiction, with respect to the Owned
Real Property;

 

(h) The Intellectual Property Agreement, the Transition and Back Up Trademark
License Agreement attached thereto as Schedule D, and the Confirmatory
Intellectual Property Sublicense Agreement attached thereto as Schedule E, in
each case, executed by an authorized officer of Parent;

 

(i) A Non-Competition Agreement in substantially the form attached hereto as
Exhibit L (the “Non-Competition Agreement”) executed by an authorized officer of
Parent and HNS;

 

(j) The Spaceway Services Agreement executed by an authorized officer of Parent
and HNS;

 

(k) The DirecWay Agreement, if any, that has been agreed pursuant to Section
2.6(d), executed by an authorized officer of Parent;

 

(l) The Registration Rights Agreement executed by an authorized officer of HNS
or, if applicable, its designee;

 

(m) Share certificates or other evidence representing all of the capital stock
or equity interests in each Transferred Subsidiary and each of the other
entities listed on Section 2.2(b) of the Disclosure Schedule, duly endorsed or
accompanied by duly executed assignments separate from certificates in form
suitable for transfer of such capital stock or equity interests to Newco
effective as of the Closing Date;

 

(n) Duly executed copies of all Consents set forth on Section 8.2(c) of the
Disclosure Schedule reasonably acceptable to the Investor;

 

(o) A certificate of HNS complying with the Code and treasury regulations
promulgated thereunder, in form and substance reasonably acceptable to the
Investor, certifying that the Contemplated Transactions hereby are exempt from
withholding under Section 1445 of the Code; and

 

(p) Such other documents as the Investor may reasonably request in accordance
herewith to consummate the Contemplated Transactions.

 

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8.6 Deliveries by the Investor. At Closing, the Investor or its assignee, as the
case may be, shall deliver to HNS the following:

 

(a) Payment of the cash portion of the Membership Interest Purchase Price in
immediately available funds;

 

(b) Delivery of certificates in the name of HNS or its designee representing the
shares of SkyTerra Stock to be issued pursuant to Section 2.7(c)(y);

 

(c) Copies of the resolutions of the Investor and, if applicable, its assignee,
approving the consummation of the Contemplated Transactions certified by an
authorized officer of the Investor and, if applicable, its assignee;

 

(d) The certificate contemplated by Section 8.3(a) signed by an executive
officer of the Investor;

 

(e) The Restated LLC Agreement executed by an authorized officer of the Investor
or its assignee, as the case may be;

 

(f) The Investor Rights Agreement executed by an authorized officer of the
Investor or its assignee, as the case may be;

 

(g) The Registration Rights Agreement executed by an authorized officer of the
Investor; and

 

(h) Such other documents as HNS or Parent may reasonably request in accordance
herewith to consummate the Contemplated Transactions.

 

8.7 Deliveries by Newco. At Closing, Parent, HNS and the Investor (and its
assignee, if applicable) shall cause Newco to deliver the following:

 

(a) Payment of the Purchase Price to HNS in immediately available funds;

 

(b) The Intellectual Property Agreement, the Transition and Back Up Trademark
License Agreement attached thereto as Schedule D, and the Confirmatory
Intellectual Property Sublicense Agreement attached thereto as Schedule E, in
each case, executed by an authorized officer of Newco;

 

(c) The Bill of Sale and Assumption Agreement and any other Transfer Instruments
(to the extent required to be executed by Newco);

 

(d) The Investor Rights Agreement executed by an authorized officer of Newco;

 

(e) The Transition Services Agreement, if any, that has been agreed pursuant to
Section 2.6(c), executed by an authorized officer of Newco;

 

(f) The Non-Competition Agreement executed by an authorized officer of Newco;

 

(g) The Spaceway Services Agreement executed by an authorized officer of Newco;

 

(h) The DirecWay Agreement, if any, that has been agreed pursuant to Section
2.6(d), executed by an authorized officer of Newco;

 

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(i) Copies of the board of manager, member and any other limited liability
company resolution required in order to approve the consummation of the
Contemplated Transactions, certified by the sole member of Newco; and

 

(j) Such other documents as Parent, HNS or the Investor may reasonably request
in accordance herewith to consummate the Contemplated Transactions.

 

9. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION; REMEDIES.

 

9.1 Survival of Representations; Exclusive Remedy.

 

(a) All representations and warranties of HNS, on one hand, and the Investor on
the other, in this Contribution Agreement, any other Transaction Document or any
certificate delivered in connection with the Contemplated Transactions (i) shall
survive Closing, any investigation at any time made and the consummation of the
Contemplated Transactions and (ii) shall terminate and expire thirty (30) days
after the receipt by Newco of the final, audited financial statements for the
year ended December 31, 2005, but not later than April 30, 2006, except with
respect to (A) any claims as to which written notice identifying such claim and
the basis thereof with reasonable specificity shall have been delivered pursuant
to the applicable provisions of this Contribution Agreement on or prior to such
date, in which case, such claims shall survive until the final resolution
thereof, (B) any claims related to fraud or willful misconduct, or (C) as set
forth in subsection (d) below.

 

(b) The covenants and agreements (but for the avoidance of doubt, not the
representations and warranties) of the parties set forth herein and in any other
Transaction Document shall survive Closing and any investigation at any time
made and the consummation of the Contemplated Transactions until fully
performed, unless limited by their terms or purpose.

 

(c) Except as set forth in Section 10.2, upon expiration or termination of this
Contribution Agreement, the representations, warranties and covenants set forth
herein shall be of no further force or effect, except with respect to any claim
as to which written notice identifying such claim and the basis thereof with
reasonable specificity shall have been delivered pursuant to the applicable
provisions of this Contribution Agreement on or prior to expiration or
termination.

 

(d) (i) HNS’s representations and warranties with respect to Sections 4.1, 4.2,
4.3, 4.5, 4.10(a), 4.20 and 4.23 (the “Excluded HNS Representations”) and the
Investor’s representations and warranties with respect to Sections 5.1, 5.2,
5.3, 5.10(a) and 5.11 (the “Excluded Investor Representations”) shall survive
until the expiration of the applicable statute of limitations, (ii) HNS’s
representations and warranties with respect to the second sentence of Section
4.9 shall survive until the expiration of the applicable statute of limitations,
and (iii) HNS’s representations and warranties with respect to Sections 4.14,
4.15 and 4.17 shall survive until the earlier of (A) expiration of the
applicable statute of limitations and (B) the date that is the ten (10) year
anniversary of the Closing Date, except in each case with respect to any claim
as to which written notice identifying such claim and the basis thereof with
reasonable specificity shall have been delivered pursuant to the applicable
provisions of this Contribution Agreement on or prior to such date, in which
case, such claim shall survive until the final resolution thereof.

 

(e) Subject to specific performance and other injunctive relief pursuant to
Section 11.16, and subject to the provisions of Section 3.7, indemnification
pursuant to this Section 9 shall be the sole and exclusive remedy for any breach
of representations and warranties or of any covenant or agreement in this
Contribution Agreement by any party or any other matter pertaining to this
Contribution Agreement or the Contemplated Transactions, provided that the
forgoing limitation shall not

 

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apply with respect to claims of fraud or willful misconduct. Without limiting
the generality of the foregoing, the Newco Indemnified Persons shall have no
recourse against HNS or its subsidiaries from and after Closing with respect to
this Contribution Agreement (other than recourse with respect to the remedies
provided in Section 11.16), it being understood that, following Closing, the
sole recourse of any Newco Indemnified Person for any post-Closing Liability
under this Contribution Agreement shall be against Parent.

 

9.2 Agreement of Parent to Indemnify. Subject to Section 9.4, Parent shall
indemnify, defend and hold harmless the Newco Indemnified Persons from and
against any and all Damages incurred or suffered by the Newco Indemnified
Persons arising out of, relating to or in connection with any (a) breach of any
representation or warranty, determined without regard to any materiality or
Material Adverse Effect qualifiers contained therein, or (b) noncompliance with
any covenant or other written agreements, in each case, given or made by HNS or
Parent in this Contribution Agreement, in any other Transaction Document
including HNS’s obligations pursuant to Section 3.7 or in any certificate
delivered in connection herewith or therewith; provided that none of the
Investor, its assignee or Affiliates shall be entitled to seek indemnification
for Damages under this Section 9.2 based on any Damages incurred or suffered by
Newco or any of its Subsidiaries, it being understood that any of the Newco
Indemnified Persons (other than such Persons) shall be entitled to seek such
indemnification.

 

9.3 Agreement of the Investor to Indemnify. The Investor shall indemnify, defend
and hold harmless the Parent Indemnified Persons from and against any and all
Damages incurred or suffered by the Parent Indemnified Persons arising out of,
relating to or in connection with any (a) breach of any representation or
warranty, determined without regard to any materiality or Material Adverse
Effect qualifiers contained therein, or (b) noncompliance with any covenants or
other written agreements, in each case, given or made by the Investor in this
Contribution Agreement, in any other Transaction Document or in any certificate
delivered in connection herewith or therewith.

 

9.4 Limits of Indemnification.

 

(a) HNS and Parent shall not be liable to the Newco Indemnified Persons in
respect of any indemnification pursuant to Section 9.2(a) until the aggregate
Damages of the Newco Indemnified Persons exceed an amount equal to Five Million
Dollars ($5,000,000) (the “Basket Amount”), and then Newco Indemnified Persons
shall only be entitled to the aggregate Damages in excess of the Basket Amount;
provided, however, that the Basket Amount shall not apply to claims for
indemnification based on (i) breaches of Excluded HNS Representations or (ii)
fraud or willful misconduct.

 

(b) The parties acknowledge and agree that the maximum aggregate liability of
HNS and Parent pursuant to Section 9.2(a) shall not exceed an amount equal to
Sixty Million Dollars ($60,000,000) (the “Cap Amount”); provided, however, that
the Cap Amount shall not apply to claims for indemnification based on (i)
breaches of Excluded HNS Representations or (ii) fraud or willful misconduct.

 

(c) The Investor shall not be liable to the Parent Indemnified Persons in
respect of any indemnification pursuant to Section 9.3(a) until the aggregate
Damages of the Parent Indemnified Persons exceed an amount equal to the Basket
Amount, and then Parent Indemnified Persons shall only be entitled to the
aggregate Damages in excess of the Basket Amount; provided, however, that the
Basket Amount shall not apply to claims for indemnification based on (i)
breaches of Excluded Investor Representations or (ii) fraud or willful
misconduct.

 

(d) The parties acknowledge and agree that the maximum aggregate liability of
the Investor pursuant to Section 9.3(a) shall not exceed an amount equal to the
Cap Amount; provided, however, that the Cap Amount shall not apply to claims for
indemnification based on (i) Excluded Investor Representations or (ii) fraud or
willful misconduct.

 

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9.5 Special Indemnification by Parent.

 

(a) Notwithstanding Section 9.4, Parent shall indemnify, defend and hold
harmless, without regard to any limitations or any materiality, Material Adverse
Effect, Knowledge or other qualifications in the representations, warranties,
covenants or other agreements or in the Disclosure Schedule, the Newco
Indemnified Persons from and against any and all Damages, whether or not
involving a Third-Party Claim, arising out of, relating to or resulting from (i)
the Excluded Assets and (ii) the Excluded Liabilities (without duplication for
amounts otherwise provided for in Section 3.7).

 

(b) The special indemnities in this Section 9.5 shall not terminate or expire,
shall survive for an unlimited period, and for the avoidance of doubt shall not
be subject to the limitations set forth in Section 9.4.

 

9.6 Special Indemnification by Newco.

 

(a) Newco shall indemnify, defend and hold harmless, without regard to any
limitations or any materiality, Material Adverse Effect, Knowledge or other
qualifications in the representations, warranties, covenants or other agreements
or in the Disclosure Schedule, the Parent Indemnified Persons from and against
any and all Damages, whether or not involving a Third-Party Claim, arising out
of, relating to or resulting from (i) noncompliance with any covenants or other
written agreements, in each case, given or made by Newco in this Contribution
Agreement, in any other Transaction Document or in any certificate delivered in
connection herewith or therewith, only to the extent such non-compliance occurs
after Closing, (ii) operation of the Contributed Assets from and after Closing,
and (iii) the Assumed Liabilities. The foregoing obligations of Newco shall not
in any way relieve Parent of its obligation to indemnify, defend or hold
harmless the Newco Indemnified Persons under Sections 9.2 and 9.5.

 

(b) The special indemnities in this Section 9.6 shall not terminate or expire,
shall survive for an unlimited period, and for the avoidance of doubt shall not
be subject to the limitations set forth in Section 9.4.

 

9.7 Conditions of Indemnification.

 

(a) Except as provided in Section 9.8, if any Newco Indemnified Person shall
seek indemnification pursuant to Section 9.2 or Section 9.5, or if any Parent
Indemnified Person, shall seek indemnification pursuant to Section 9.3 or
Section 9.6, the party seeking indemnification (the “Indemnified Party”) shall
give written notice to the party from whom such indemnification is sought (the
“Indemnifying Party”) promptly (and in any event within 60 days) after the
Indemnified Party (or, if the Indemnified Party is a corporation, any officer or
director of the Indemnified Party) becomes aware that a claim for
indemnification (an “Indemnified Claim”) may be made, specifying in reasonable
detail the factual basis of the Indemnified Claim, stating the amount of the
Damages, if known, the method of computation thereof, containing a reference to
the provision of this Contribution Agreement in respect of which such
Indemnified Claim arises and demanding indemnification therefor. The failure of
an Indemnified Party to provide notice in accordance with this Section 9.7, or
any delay in providing such notice, shall not constitute a waiver of that
party’s claims to indemnification pursuant to this Section 9, except to the
extent that (i) any such failure or delay in giving notice causes the amounts
paid or to be paid by the Indemnifying Party to be greater than they otherwise
would have been (in which case, only the excess amount of such claim resulting
from such delay shall be waived) or otherwise results in

 

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prejudice to the Indemnifying Party or (ii) if such notice is not delivered to
the Indemnifying Party prior to the expiration of the applicable survival
period, if any, set forth in Section 9.1. If the Indemnified Claim arises from
the assertion of any claim, or the commencement of any Proceeding brought by a
Person that is not a party hereto (a “Third Party Claim”), any such notice to
the Indemnifying Party shall be accompanied by a copy of any Documents
theretofore served on or delivered to the Indemnified Party in connection with
such Third Party Claim (a “Third Party Claim Notice”).

 

(b) The Indemnifying Party shall have 20 days from delivery of the Third Party
Claim Notice to notify the Indemnified Party whether or not the Indemnifying
Party elects to defend the Indemnified Party against such Third Party Claim. In
the event that the Indemnifying Party notifies the Indemnified Party that it
elects to defend the Indemnified Party against such Third Party Claim and
acknowledges its obligations to indemnify the Indemnified Party in full
hereunder in connection with such Third Party Claim, the Indemnifying Party
shall have the right to defend the Indemnified Party by appropriate proceedings
and shall control such defense at the Indemnifying Party’s expense unless (i)
the claim seeks only an injunction or other equitable relief, (ii) the
Indemnified Party shall have been advised by counsel that there are one or more
legal or equitable defenses available to it which are different from or in
addition to those available to the Indemnifying Party and, in the reasonable
opinion of the Indemnified Party, counsel for the Indemnifying Party could not
adequately represent the interests of the Indemnified Party because such
interests could be in conflict with those of the Indemnifying Party, (iii) such
Proceeding could have a material effect on any material matter beyond the scope
of the indemnification obligation of the Indemnifying Party or (iv) the
Indemnifying Party shall not have assumed the defense of the third party claim
within the foregoing 20 day period. After notice to the Indemnified Party of the
Indemnifying Party’s election to assume the defense of such Third Party Claim,
the Indemnifying Party shall not be liable to the Indemnified Party for any
legal expenses subsequently incurred by the Indemnified Party in connection with
the defense thereof unless the Indemnifying Party fails to diligently pursue the
defense of such Third Party Claim; provided that the Indemnified Party shall
have the right to employ counsel to represent it. If the Indemnifying Party
elects not to defend the Indemnified Party against such Third Party Claim, then
the Indemnified Party may (but is not obligated to) defend such Third Party
Claim by appropriate Proceedings and may (but is not obligated to) control such
defense, at the expense of the Indemnifying Party.

 

(c) The parties shall render to each other such assistance as may reasonably be
requested in order to insure the proper and adequate defense of any such Third
Party Claim, including making employees available (with reasonable prior notice)
during normal business hours to provide additional information and explanation
of any relevant materials or to testify at any Proceedings relating to such
Third Party Claim and giving the other party reasonable access to any books,
records and other documents and information relating to the defense of such
Third Party Claim. The Indemnifying Party shall reimburse the out-of-pocket
costs and expenses reasonably incurred by the Indemnified Party in providing
such assistance.

 

(d) The Indemnifying Party will not consent to the entry of any Order or enter
into any settlement with respect to a Third Party Claim without the prior
written consent of the Indemnified Party, unless the Order (x) involves only the
payment of money damages and (y) includes as an unconditional term thereof the
giving by the claimant or plaintiff to the Indemnified Party of an unconditional
release from all Liability in respect of the Third Party Claim.

 

(e) Any obligation by an Indemnifying Party to indemnify an Indemnified Party
shall be satisfied in cash. Parent and HNS hereby waive any right to seek
indemnification or contribution from any Transferred Subsidiary for Damages as a
result of any breach by HNS or any Transferred Subsidiary of any representation,
warranty or any covenant or other agreement to be performed prior to Closing
contained in this Contribution Agreement or any other Transaction Document.

 

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9.8 Tax Controversies; Assistance and Cooperation.

 

(a) In the event any Tax authority informs any Newco Indemnified Person or any
Parent Indemnified Person of any notice of proposed audit, claim, assessment or
other dispute concerning a Tax with respect to which the other party may incur
liability hereunder, the party so informed shall notify the other party of such
matter. Such notice shall contain factual information (to the extent known)
describing any asserted Tax liability in reasonable detail and shall be
accompanied by copies of any notice or other documents received from any Tax
authority with respect to such matter. If an Indemnified Party has Knowledge of
an asserted Tax liability with respect to a matter for which it is to be
indemnified hereunder and such Indemnified Party fails to provide the
Indemnifying Party notice as provided herein, then the obligation of the
Indemnifying Party to indemnify the Indemnified Party under this Section 9.8(a)
shall be reduced or eliminated to the extent such Indemnifying Party is
prejudiced by such failure.

 

(b) The Indemnifying Party shall, at its own expense, control any audits,
disputes, administrative, judicial or other proceedings related to Taxes with
respect to which it may incur liability hereunder. Subject to the immediately
preceding sentence, in the event an adverse determination may result in a party
having responsibility for any increased amount of Taxes hereunder, each party
shall be entitled to fully participate, at its own expense, in that portion of
the proceedings relating to the Taxes with respect to which it may incur
liability hereunder, including participation in conferences, meetings or
proceedings with any Tax authority, participation in appearances before any
court or tribunal, participation in the submission and determination of the
content of the documentation, protests, memoranda of fact and law, briefs, and
the conduct of oral arguments and presentations.

 

(c) No Indemnifying Party shall agree to settle any Tax liability or compromise
any claim with respect to Taxes, which settlement or compromise may affect the
liability for Taxes (or right to tax benefit) of the other party, without such
other party’s consent (which consent shall not be unreasonably withheld or
delayed).

 

9.9 Notice of Breaches of Representations and Warranties.

 

(a) As of the date hereof, the Investor has no Knowledge of any inaccuracy of
any representation or warranty of Parent or HNS contained in this Contribution
Agreement that is sufficient to allow the Investor to bring a claim for
indemnification against Parent pursuant to Section 9.2(a) hereof following
Closing (without taking into account the Basket Amount). For purposes of this
Section, “Knowledge” of the Investor means the actual knowledge of Andrew
Africk, Aaron Stone and Jeffrey Leddy. Nothing set forth in this Section shall
limit or otherwise affect the ability of any Newco Indemnified Person to seek
indemnification pursuant to Section 9.2(a) hereof unless Parent can demonstrate
that, based on information provided by HNS or Parent to the Investor, the
Investor had Knowledge as of the date hereof that such representation and
warranty was not true and correct.

 

(b) As of the date hereof, neither Parent nor HNS has any Knowledge of any
inaccuracy of any representation or warranty of the Investor contained in this
Contribution Agreement that is sufficient to allow Parent or HNS to bring a
claim for indemnification against the Investor pursuant to Section 9.3(a) hereof
following Closing (without taking into account the Basket Amount). Nothing set
forth in this Section shall limit or otherwise affect the ability of any Parent
Indemnified Person to seek indemnification pursuant to Section 9.3(a) hereof
unless the Investor can demonstrate that, based on information provided by the
Investor to Parent or HNS, Parent or HNS had Knowledge as of the date hereof
that such representation and warranty was not true and correct.

 

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10. TERMINATION.

 

10.1 Termination. This Contribution Agreement may be terminated at any time
prior to Closing:

 

(a) by the Investor if (i) a material breach of any provision of this
Contribution Agreement has been committed by Parent, Newco or HNS and such
breach has not been (A) cured by Parent, Newco or HNS within thirty (30) days
after notice thereof given by the Investor to HNS to the extent that such breach
is capable of being cured or (B) waived in writing by the Investor, (ii) there
has been any update to the Disclosure Schedule pursuant to Section 8.4 that
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Business, or (iii) if any of the conditions set
forth in Sections 8.1 or 8.2 shall have been incapable of fulfillment and shall
not have been waived by the Investor;

 

(b) by Parent if (i) a material breach of any provision of this Contribution
Agreement has been committed by the Investor and such breach has not been (A)
cured by the Investor within thirty (30) days after notice thereof given by
Parent to the Investor to the extent that such breach is capable of being cured
or, (B) waived in writing by Parent, (ii) there has been any update to the
Investor Disclosure Schedule pursuant to Section 8.4 that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Investor, or (iii) any of the conditions set forth in Sections 8.1 or 8.3
shall have been incapable of fulfillment and shall not have been waived by
Parent;

 

(c) by mutual written consent of the Investor and Parent;

 

(d) by the Investor, if Closing has not occurred on or before June 30, 2005 or
such later date as the parties may agree upon in writing, unless the Investor is
in material breach of this Contribution Agreement;

 

(e) by Parent, if Closing has not occurred on or before June 30, 2005 or such
later date as the parties may agree upon in writing, unless Parent or HNS is in
material breach of this Contribution Agreement; or

 

(f) by either Parent or the Investor, if:

 

(i) the FCC shall have denied any Communications Application, or shall have
designated any Communications Application for hearing, except any denials or
designations with respect to Governmental Approvals that are immaterial to the
Business taken as a whole; or

 

(ii) five (5) business days shall have elapsed following such time as any
permanent injunction or other similar order of a court of competent jurisdiction
or other competent U.S. federal or state (but not local) Governmental Authority
(other than the FCC) preventing the consummation of the Contemplated
Transactions shall have been entered (so long as such permanent injunction or
similar order is still in effect at the expiration of such five (5) business day
period), regardless of whether such order is appealable or has been appealed
and, prior to such termination, the parties shall have used commercially
reasonable efforts to resist, resolve or lift, as applicable, such injunction or
other similar order.

 

Any party hereto desiring to terminate this Contribution Agreement pursuant to
this Section 10.1 shall give written notice of such termination to the other
parties hereto.

 

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10.2 Effect of Termination. If this Contribution Agreement is terminated as
permitted by Section 10.1, (a) this Contribution Agreement shall forthwith
become void and of no further force and effect, except for the following
provisions, which shall remain in full force and effect: Section 3.4 (Public
Announcements), Section 3.5 (b) and (c) (Confidentiality), Section 10
(Termination) and Section 11 (Miscellaneous); and (b) such termination shall be
without Liability of any party hereto (or any Affiliate, stockholder, consultant
or Representative of such party) to the other parties to this Contribution
Agreement; provided, however, that if the Contemplated Transactions fail to
close as a result of a breach of the provisions of this Contribution Agreement
by any party hereto, such party shall be liable for any and all Damages incurred
or suffered by the other parties as a result of all such breaches. The rights
and remedies provided in this Section 10.2 shall be cumulative and not exclusive
of any rights or remedies provided by applicable Law.

 

11. MISCELLANEOUS.

 

11.1 Additional Actions and Documents. Each party hereto hereby agrees that,
from time to time, whether before, at or after Closing, such party will take or
cause to be taken such further reasonable actions and to execute, deliver and
file or cause to be executed, delivered and filed such further reasonable
documents, in each case, in order to fully effectuate the purposes, intents,
terms and conditions of this Contribution Agreement; provided, however, no party
shall be required to make any additional representations or warranties or incur
any burden or obligation to incur any material expense or potential exposure to
legal liability pursuant to this section.

 

11.2 Expenses.

 

(a) Subject to the indemnity provisions of Section 9 and the provisions of
Section 3.1, Section 11.2(b), Section 11.3(b) and Section 11.3(c), each party
hereto shall pay its own expenses incident to this Contribution Agreement, the
other Transaction Documents and the Contemplated Transactions, including all
legal and accounting fees and disbursements.

 

(b) Any costs, fees or expenses paid or incurred by or on behalf of (i) the
Investor or any of its Affiliates in connection with the preparation and
negotiation of the Transaction Documents and in connection with the Contemplated
Transactions shall be reimbursed by or assumed and paid by Newco at Closing,
(ii) Parent or any of its Affiliates in connection with the preparation and
negotiation of the Transaction Documents and in connection with the Contemplated
Transactions in an amount not to exceed Five Million Dollars ($5,000,000) shall
be reimbursed by or assumed and paid by Newco at Closing, and (iii) Newco in
connection with the Financing shall be the responsibility of Newco, and any
party incurring costs, fees or expenses on behalf of Newco shall be reimbursed
by or assumed and paid by Newco at Closing.

 

11.3 Bulk Sales; Transfer Taxes.

 

(a) Each of Newco and HNS and its Affiliates hereby waive compliance with all
bulk transfer Laws that may be applicable to them in connection with the
Contemplated Transactions.

 

(b) Newco shall bear all sales (including bulk sales), use, value added, stamp,
documentary, filing, gross receipts, registration, excise, license recording,
transfer, conveyance or similar fees or Taxes or governmental charges as levied
by any Governmental Authority in connection with the Contemplated Transactions
(other than Taxes measured by or with respect to income imposed on Newco or HNS
or their respective Affiliates).

 

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(c) HNS shall bear all capital gains tax (if any), to be levied on a withholding
basis under the name of the Foreign Enterprise Income Tax under Chinese Law,
arising from or in connection with the direct transfer to Newco of equity
interests in the Transferred Subsidiaries organized under the under the Laws of
the People’s Republic of China.

 

11.4 Assignment. No party hereto shall assign its rights and obligations under
this Contribution Agreement, in whole or in part, whether by operation of law or
otherwise, without the prior written consent of each of the other parties
hereto, except that (i) the Investor may assign its rights under this
Contribution Agreement and the other Transaction Documents, in whole or in part,
to one or more of its wholly-owned Subsidiaries that has no material Liabilities
and that would not reasonably be expected to result in any additional regulatory
filings (other than ministerial filings) or delay Closing and (ii) HNS may
assign its rights and obligations under this Contribution Agreement to Parent;
provided that no such assignment shall (x) prior to the consummation of the
Contemplated Transactions, relieve the Investor of its obligations hereunder
including its obligation to pay the cash portion of the Membership Interest
Purchase Price and deliver shares of SkyTerra Stock in accordance with the terms
of this Contribution Agreement (it being understood that from and after Closing
the Investor shall have no further obligations under this Contribution Agreement
provided that the assignee Subsidiary of the Investor shall have expressly
assumed in writing the obligations of the Investor hereunder) or (y) relieve HNS
of its obligations hereunder including its obligation to deliver the Contributed
Assets in accordance with the terms of this Contribution Agreement. Any
purported assignment or other disposition, except as permitted herein, shall be
null and void. Except as provided above in clause (x) with respect to the
Investor, in no event shall the assignment by HNS or the Investor of such
party’s respective rights or obligations under this Contribution Agreement,
whether before, at or after Closing, release such party from such party’s
respective liabilities and obligations hereunder.

 

11.5 Entire Agreement; Amendment.

 

(a) All exhibits and schedules (including the Disclosure Schedule and the
Investor Disclosure Schedule and including the covenants contained in the
Exhibits that by their terms are meant to be complied with on or prior to
Closing, including the covenants in Schedule B of the Intellectual Property
Agreement) to this Contribution Agreement are hereby incorporated by reference
into, and made a part of, this Contribution Agreement. This Contribution
Agreement, including the Disclosure Schedule and the Investor Disclosure
Schedule, the exhibits, schedules and other Transaction Documents referred to
herein or furnished pursuant hereto, constitute the entire agreement among the
parties hereto with respect to the Contemplated Transactions and supersede all
prior oral or written agreements, commitments or understandings, including the
Confidentiality Agreement, with respect to the matters provided for herein.

 

(b) THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT NO REPRESENTATION, WARRANTY,
PROMISE, INDUCEMENT, UNDERSTANDING, COVENANT OR AGREEMENT HAS BEEN MADE OR
RELIED UPON BY ANY PARTY HERETO OTHER THAN THOSE EXPRESSLY SET FORTH IN THE
TRANSACTION DOCUMENTS OR ANY CERTIFICATES DELIVERED AT CLOSING HEREUNDER.
WITHOUT LIMITING THE GENERALITY OF THE DISCLAIMER SET FORTH IN THE IMMEDIATELY
PRECEDING SENTENCE, (I) NEITHER HNS NOR ANY OF ITS AFFILIATES HAS MADE OR SHALL
BE DEEMED TO HAVE MADE ANY REPRESENTATIONS OR WARRANTIES, IN ANY PRESENTATION OR
WRITTEN INFORMATION RELATING TO THE BUSINESS GIVEN OR TO BE GIVEN IN CONNECTION
WITH THE CONTEMPLATED TRANSACTIONS, IN ANY FILING MADE OR TO BE MADE BY OR ON
BEHALF OF HNS OR ANY OF ITS AFFILIATES WITH ANY GOVERNMENTAL AUTHORITY, AND NO
STATEMENT MADE IN ANY SUCH PRESENTATION OR WRITTEN MATERIALS, MADE IN ANY SUCH
FILING OR CONTAINED IN ANY SUCH

 

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OTHER INFORMATION SHALL BE DEEMED A REPRESENTATION OR WARRANTY HEREUNDER OR
OTHERWISE, AND (II) NEWCO AND THE INVESTOR, ON THEIR OWN BEHALF AND ON BEHALF OF
THEIR RESPECTIVE AFFILIATES EXPRESSLY DISCLAIM ANY IMPLIED WARRANTIES, INCLUDING
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND WARRANTIES OF
MERCHANTABILITY. THE INVESTOR ACKNOWLEDGES THAT HNS HAS INFORMED IT THAT NO
PERSON HAS BEEN AUTHORIZED BY HNS OR ANY OF ITS AFFILIATES TO MAKE ANY
REPRESENTATION OR WARRANTY IN RESPECT OF THE BUSINESS OR IN CONNECTION WITH THE
CONTEMPLATED TRANSACTIONS, UNLESS IN WRITING AND CONTAINED IN THIS CONTRIBUTION
AGREEMENT OR IN ANY OF THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY.

 

(c) No amendment, modification or discharge of this Contribution Agreement shall
be valid or binding unless set forth in writing and duly executed and delivered
by each of the parties hereto.

 

11.6 Waiver. No delay or failure on the part of any party hereto in exercising
any right, power or privilege under this Contribution Agreement or under any
other Documents furnished in connection with or pursuant to this Contribution
Agreement (including the other Transaction Documents) shall impair any such
right, power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power or privilege,
or the exercise of any other right, power or privilege. No waiver shall be valid
against any party hereto unless made in writing and signed by the party against
whom enforcement of such waiver is sought and then only to the extent expressly
specified therein. To the extent that the consent of Parent, HNS or the Investor
is required pursuant to this Contribution Agreement, such consent may not be
unreasonably withheld, conditioned or delayed; provided that the parties hereto
agree that Parent, HNS and the Investor shall be permitted to make such decision
taking into account its position as a direct or indirect equity owner (or
potential equity owner, in the case of the Investor prior to Closing) of Newco.

 

11.7 Severability. If any part of any provision of this Contribution Agreement
or any other agreement or Document given pursuant to or in connection with this
Contribution Agreement (including the other Transaction Documents) shall be
invalid or unenforceable in any respect, such part shall be ineffective to the
extent of such invalidity or unenforceability only, without in any way affecting
the remaining parts of such provision or the remaining provisions of this
Contribution Agreement or other such Document.

 

11.8 Governing Law. This Contribution Agreement, the rights and obligations of
the parties hereto, and any claims or disputes relating thereto, shall be
governed by and construed in accordance with the Laws of the State of New York
(excluding the choice of law rules thereof, other than Section 5-1401 of the New
York General Obligations Law).

 

11.9 Notices. All notices, demands, requests, or other communications which may
be or are required to be given, served, or sent by any party to any other party
pursuant to this Contribution Agreement or another Transaction Document shall be
in writing and shall be hand delivered, sent by overnight courier or mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

 

  (i) If to HNS or, prior to Closing, Newco:

 

Hughes Network Systems, Inc.

c/o The DIRECTV Group, Inc.

2250 East Imperial Highway

 

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El Segundo, CA 90245

Attn.: Larry D. Hunter, Esq.

Telecopy No.: 310-964-0838

 

with copies (which shall not constitute notice) to:

 

Hughes Network Systems, Inc.

11717 Exploration Lane

Germantown, MD 20876

Attn.: Dean Manson, Esq.

Telecopy No.: 301-428-2818

 

and

 

Hogan & Hartson L.L.P.

8300 Greensboro Drive

McLean, VA 22102

Attn.: Richard K.A. Becker, Esq.

Telecopy No.: 703-610-6200

 

  (ii) If to Parent:

 

The DIRECTV Group, Inc.

2250 East Imperial Highway

El Segundo, CA 90245

Attn.: Larry D. Hunter, Esq.

Telecopy No.: 310-964-0838

 

with a copy (which shall not constitute notice) to:

 

Hogan & Hartson L.L.P.

8300 Greensboro Drive

McLean, VA 22102

Attn.: Richard K.A. Becker, Esq.

Telecopy No.: 703-610-6200

 

  (iii) If to the Investor:

 

SkyTerra Communications, Inc.

19 West 44th Street, Suite 507

New York, New York 10036

Attn.: Jeffrey Leddy

Telecopy No.: 212-730-7541

 

with copies (which shall not constitute notice) to:

 

Apollo Management, L.P.

9 West 57th Street

New York, NY 10019

Attn.: Andy Africk

Telecopy No.: 212-515-3283

 

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and

 

O’Melveny & Myers LLP

Times Square Tower

7 Times Square

New York, NY 10036

Attn.: John J. Suydam

Telecopy No.: 212-408-2420

 

  (iv) If after Closing, to Newco, to each of Parent and the Investor as set
forth above.

 

Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication which shall be hand delivered,
sent or mailed in the manner described above shall be deemed sufficiently given,
served, sent, received or delivered for all purposes at such time as it is
delivered to the addressee (with the return receipt or the delivery receipt
being deemed conclusive, but not exclusive, evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.

 

11.10 Headings. Section headings contained in this Contribution Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Contribution Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.

 

11.11 Interpretation; Absence of Presumption.

 

(a) For the purposes hereof, (i) words in the singular shall be held to include
the plural and vice versa and words of one gender shall be held to include the
other gender as the context requires, (ii) the terms “hereof,” “herein,” and
“herewith” and words of similar import shall, unless otherwise stated, be
construed to refer to this Contribution Agreement as a whole (including all of
the exhibits and schedules hereto) and not to any particular provision of this
Contribution Agreement, and article, section, paragraph, exhibit and schedule
references are to the articles, sections, paragraphs, exhibits and schedules of
this Contribution Agreement unless otherwise specified, (iii) the word
“including” and words of similar import when used in this Contribution Agreement
shall mean “including, without limitation,” unless the context otherwise
requires or unless otherwise specified, (iv) the word “or” shall not be
exclusive, (v) where specific language is used to clarify or illustrate by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict the construction of the general statement
which is being clarified or illustrated and (vi) “the date hereof” means
December 3, 2004.

 

(b) This Contribution Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any agreement, instrument or document to be drafted.

 

11.12 Execution in Counterparts. To facilitate execution, this Contribution
Agreement may be executed in as many counterparts as may be required. It shall
not be necessary that the signatures of, or on behalf of, each party, or that
the signatures of all Persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signature of, or on behalf of,
each party, or that the signatures of the Persons required to bind any party,
appear on one or more of the counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in making proof of this
Contribution Agreement to produce or account for more than a number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties hereto. This Contribution Agreement may be executed through delivery
of duly executed signature pages by facsimile or electronic mail.

 

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11.13 Limitation on Benefits. The covenants, undertakings and agreements set
forth in this Contribution Agreement shall be solely for the benefit of, and
shall be enforceable only by, the parties hereto and their respective
successors, heirs, executors, administrators, legal representatives and
permitted assigns, except that the agreements set forth in Section 9 also shall
be for the benefit of, and enforceable by, Newco Indemnified Persons, Parent
Indemnified Persons and their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns.

 

11.14 Binding Effect. Subject to Section 11.4, this Contribution Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors, heirs, executors, administrators, legal representatives
and assigns.

 

11.15 Jurisdiction. This Contribution Agreement and the duties and obligations
of the parties hereto and each of the other Transaction Documents referred to
herein shall be enforceable against the parties hereto in the courts of the
United States of America, and of the State of New York, having jurisdiction over
New York County, New York. For such purpose, the parties hereto hereby
irrevocably submit to the non-exclusive jurisdiction of such courts, and agree
that all claims in respect of this Contribution Agreement and such other
Transaction Documents may be heard and determined in any of such courts. The
parties hereto hereby irrevocably agree that a final judgment of any of the
courts specified above in any action or proceeding relating to this Contribution
Agreement or to any of the other Documents referred to herein shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by Law.

 

11.16 Provisional Relief; Specific Performance. Notwithstanding anything to the
contrary herein, the parties agree that irreparable damage would occur in the
event that any of the provisions of this Contribution Agreement or the other
Transaction Documents are not performed in accordance with their specific terms
or were otherwise breached. Accordingly, it is agreed that the parties shall be
entitled to seek an injunction or injunctions to prevent breaches of this
Contribution Agreement or the other Transaction Documents and to enforce
specifically the terms and provisions of this Contribution Agreement or the
other Transaction Documents in any state or federal court of the State of New
York, in addition to any other remedy to which they are entitled at law or in
equity, and the parties hereby submit to the jurisdiction of such courts.

 

11.17 Waiver of Jury Trial.

 

EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER
THIS CONTRIBUTION AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
CONTRIBUTION AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR THE CONTEMPLATED
TRANSACTIONS.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Contribution
Agreement, or have caused this Contribution Agreement to be duly executed on
their behalf, as of the day and year first above written.

 

HNS: HUGHES NETWORK SYSTEMS, INC. By:  

/s/    DEAN MANSON

--------------------------------------------------------------------------------

Name:  

Dean Manson

--------------------------------------------------------------------------------

Title:  

General Counsel

--------------------------------------------------------------------------------

PARENT: THE DIRECTV GROUP, INC. By:  

/s/    J. WILLIAM LITTLE

--------------------------------------------------------------------------------

Name:  

J. William Little

--------------------------------------------------------------------------------

Title:  

Vice President

--------------------------------------------------------------------------------

INVESTOR: SKYTERRA COMMUNICATIONS, INC. By:  

/s/    JEFFREY A. LEDDY

--------------------------------------------------------------------------------

Name:  

Jeffrey A. Leddy

--------------------------------------------------------------------------------

Title:  

Chief Executive Officer

--------------------------------------------------------------------------------

NEWCO: HUGHES NETWORK SYSTEMS, LLC By:  

/s/    J. WILLIAM LITTLE

--------------------------------------------------------------------------------

Name:  

J. William Little

--------------------------------------------------------------------------------

Title:  

President

--------------------------------------------------------------------------------

 

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LIST OF EXHIBITS

 

Exhibit

--------------------------------------------------------------------------------

 

Reference

--------------------------------------------------------------------------------

A   Definitions B-1   List of Transition Services B-2   Form of Transition
Services Agreement C   DirecWay Agreement Term Sheet D   Form of Original LLC
Agreement E   Commitment Letters F   Form of Restated LLC Agreement G  
Calculation of Working Capital G   Working Capital Target Amount H   Form of
Spaceway Services Agreement H   List of Spaceway Services I   Foreign Employee
Matters J   U.S. Employee Matters K   Form of Bill of Sale and Assumption
Agreement L   Form of Non-Competition Agreement M   Form of Intellectual
Property Agreement N   Form of Investor Rights Agreement O   HNS Knowledge
Persons P   Form of Registration Rights Agreement

--------------------------------------------------------------------------------

EXHIBIT A

 

DEFINITIONS

 

“Adjustment Interest Rate” means the per annum interest rate announced as of the
close of business on the day immediately prior to the Closing Date by Citibank,
N.A. as its prime rate.

 

“Affiliate” means, with respect to any Person: (a) with respect to an
individual, any member of such individual’s family; (b) with respect to an
entity, any officer, director, stockholder, partner, member or investor of or in
such entity or of or in any affiliate of such entity; and (c) also with respect
to an entity, any Person which directly or indirectly, through one or more
intermediaries, Controls, is Controlled by, or is under common Control with such
Person or entity; provided that with respect to Newco, only Newco’s Subsidiaries
shall be considered Affiliates of Newco; provided, further, that The News
Corporation Limited and its Subsidiaries (other than Parent and its
Subsidiaries) shall not be considered Affiliates of Parent or HNS.

 

“Antitrust Laws” means all United States federal and state, and any foreign
(including those of the European Union), statutes, rules, regulations, Orders,
administrative and judicial doctrines, and other Laws relating to antitrust or
competition matters, including Hart-Scott-Rodino, the Sherman Act, as amended,
the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and
all other federal, state and foreign (including those of the European Union)
statutes, rules, regulations, Orders, administrative and judicial doctrines and
other Laws that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.

 

“Assets” means assets of every kind, including tangibles and intangibles and
real and personal property.

 

“Boeing Contract” means the HSCII Agreement between Parent and Boeing Satellite
Systems International, Inc., dated December 17, 1999, as amended, and the
related contracts, agreements, schedules and exhibits associated with that
agreement.

 

“Business” means (i) the business, including the operations and assets thereof,
conducted by HNS, whether directly or through its Subsidiaries or other
investments, of providing broadband satellite networks and services to
enterprises, including its and their core enterprise Very Small Aperture
Terminal (or “VSAT”) business, and its and their consumer VSAT, mobile satellite
and carrier network and services ancillary businesses (collectively, the “VSAT
Business”) and (ii) the Spaceway Business; provided that the terms “Business”
and “VSAT Business” do not include (A) any of the Excluded Businesses and (B)
any Excluded Assets or Excluded Liabilities.

 

“Business Assets” means, collectively, the Contributed Assets and the
Transferred Subsidiary Assets.

 

“Business Employee” means any employee who is working in the United States or is
on HNS’s United States payroll, who is employed by, or associated with, HNS or
any of its Subsidiaries in connection with the Business, and (i) whose services
are primarily related to the Business and (ii) who is listed on Section 4.15(b)
of the Disclosure Schedule.

 

A-1

--------------------------------------------------------------------------------

“Capital Lease Obligations” means, as to any Person, the obligations of such
Person under a lease that are required to be classified and accounted for as
capital lease obligations under GAAP.

 

“Code” means the Internal Revenue Code of 1986, as amended, and all Laws
promulgated pursuant thereto or in connection therewith.

 

“Communications Act” means the Communications Act of 1934, as amended.

 

“Communications Applications” means the applications to the FCC and other
Governmental Authorities responsible for communications matters for authority to
assign to Newco each of the communications, earth station and similar licenses
and authorizations of HNS, HNS UK and the Transferred Subsidiaries that are
primarily related to the Business under Titles II and III of the Communications
Act and other Communications Laws, and to transfer control to Newco of the
Transferred Subsidiaries.

 

“Communications Laws” means all United States federal and state, and any foreign
(including those of the European Union), statutes, rules, regulations, Orders,
administrative and judicial doctrines, and other Laws that are designed or
intended to regulate the communications or telecommunications industry,
including the Communications Act, the Telecommunications Act of 1996, as
amended, any rule, regulation or policy of the FCC, and/or any statute, rule,
regulation or policy of any other Governmental Authority with respect to the
operation of channels of radio communication and/or the provision of
communications or telecommunications services.

 

“Communications Licenses” means the communications, earth station and similar
licenses and authorizations of HNS and its Subsidiaries that are related to the
Business under Titles II and III of the Communications Act and other
Communications Laws.

 

“Confidential Information” means all Trade Secrets and other confidential or
proprietary information of a Person, including information derived from reports,
investigations, research, work in progress, codes, marketing and sales programs,
financial projections, cost summaries, pricing formulas, contract analyses,
financial information, projections, confidential filings with any Governmental
Authority, and all other confidential concepts, methods of doing business,
ideas, materials or information prepared or performed for, by or on behalf of
such Person by its Representatives or consultants.

 

“Confidentiality Agreement” means (a) the letter agreement dated May 12, 2004
between Apollo Management, L.P. and HNS and (b) the letter agreement dated as of
November 9, 2004 between Parent, Apollo Management, L.P. and the Investor.

 

“Consent” means any (i) approval, authorization, certificate, concession,
consent, declaration, grant, exemption, license, permit, variance, vote or
waiver, (ii) registration or filing or (iii) report or notice, including all
renewals, amendments and extensions of any of the foregoing and any similar
matters.

 

“Contemplated Transactions” means the transactions contemplated by the
Transaction Documents.

 

“Contract” means any agreement, contract, note, bond, mortgage, indenture,
consensual obligation, promise, understanding, arrangement, commitment or
undertaking of any nature (whether written or oral and whether express or
implied) which is legally binding, and including any amendment, modification,
side letter, supplement or other agreement or change with respect to the
foregoing, whether written or oral; provided that the foregoing shall not
include Governmental Approvals.

 

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“Control” (including as used in the terms “controlling,” “controlled by” and
“under common control with”) means possession, directly or indirectly, of (i)
more than fifty percent (50%) of the securities or other ownership interests in
a Person or the voting power of a Person or (ii) the power to direct or cause
the direction of management or policies (whether through ownership of voting
securities, by agreement or otherwise) of a Person.

 

“Damages” means all claims, actions or causes of action, assessments, losses,
damages, costs, Taxes, expenses, Liabilities, judgments, awards, sanctions,
penalties, charges and amounts paid in settlement, including reasonable costs,
fees and expenses of attorneys, experts, accountants, appraisers, consultants,
witnesses, investigators and any other agents or representatives of such Person,
but specifically excluding (i) any costs incurred by or allocated to an
Indemnified Party with respect to time spent by employees of the Indemnified
Party or any of its Affiliates and (ii) any exemplary or punitive damages and
any special, incidental or consequential damages, losses or expenses, including
lost profits or opportunity costs; provided, that, if such damages, losses or
expenses are assessed in connection with a Third-Party Claim with respect to
which the Person against which such damages are assessed is entitled to
indemnification hereunder, then such damages, losses or expenses shall be
included as Damages.

 

“Disclosure Schedule” means the disclosure schedule identified as the Disclosure
Schedule to this Contribution Agreement.

 

“Documents” means any paper or other material (including computer storage media)
on which is recorded (by letters, numbers or other marks) information that may
be evidentially used, including legal opinions, mortgages, indentures, notes,
instruments, leases, agreements, insurance policies, reports, studies, written
financial information, schedules, certificates, charts, maps, plans,
photographs, letters, memoranda and all similar materials.

 

“Encumbrances” means any lien, encumbrance, hypothecation, charge, mortgage,
equity, trust, equitable interest, claim, preference, right of possession,
lease, tenancy, license, covenant, interference, proxy, right of first refusal,
preemptive right, community property interest, legend, defect, impediment,
exception, limitation, impairment, imperfection of title or restriction of any
nature (including any restrictions on the voting of any security, any
restriction on the transfer of any security or other asset, any restriction on
the receipt of any income derived from any Asset, any restriction on the use of
any Asset and any restriction on the possession, exercise or transfer of any
other attribute of ownership of any Asset).

 

“Environment” means all air, surface water, groundwater, or land, including land
surface or subsurface, including all fish, wildlife, biota and all other natural
resources.

 

“Environmental Claim” means any and all administrative or judicial actions,
suits, orders, claims, liens, notices, notices of violations, investigations,
complaints, requests for information, proceedings, or other communication
(written or oral), whether criminal or civil, pursuant to any applicable
Environmental, Safety and Health Law by any Person (including any Governmental
Authority, private Person and citizens’ group) based upon, alleging, asserting,
or claiming any actual or potential (i) violation of or liability under any
Environmental, Safety and Health Law, (ii) violation of any environmental
permit, or (iii) liability for investigatory costs, cleanup costs, removal
costs, remedial costs, response costs, natural resource damages, property
damage, personal injury, fines, or penalties arising out of, based on or
resulting from the presence, Release, or threatened Release into the
Environment, of any Hazardous Substances at any location, including any off-Site
location to which Hazardous Substances or materials containing Hazardous
Substances were sent for handling, storage, treatment, or disposal.

 

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“Environmental, Safety and Health Laws” means any and all applicable Laws that
relate to protection of the environment, the protection of employees from
exposure to Hazardous Substances or that impose Liability for, or standards of
conduct concerning, the manufacture, processing, generation, distribution, use,
treatment, storage, disposal, Release, cleanup, transport or handling of
Hazardous Substances including the Resource Conservation and Recovery Act of
1976, as amended, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, the Toxic Substances Control Act, as amended,
any other so-called “Superfund” or “Superlien” Laws, and the Occupational Safety
and Health Act of 1970, as amended, to the extent it relates to the handling of
and exposure to hazardous or toxic chemicals, and the state analogues thereto,
and any common law doctrine, including negligence, nuisance, trespass, personal
injury, or property damage related to or arising out of the presence, Release,
or exposure to a Hazardous Substance.

 

“Equipment Lease Arrangements” means the Contracts entered into by HNS and its
Affiliates from time to time pursuant to which HNS and its Affiliates sell
equipment related to the VSAT Business to one or more financing sources and such
equipment related to the VSAT Business subsequently is leased to a customer of
the Business.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” of any entity means any other entity (whether or not
incorporated) that, together with such entity, would be treated as a single
employer under Section 414 of the Code or Section 4001 of ERISA.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Excluded Businesses” means the businesses, joint ventures and investments of
HNS other than the Business, including (i) the Set-Top Box Business and (ii) the
equity and debt interests of HNS in the Excluded Subsidiaries and all other
investments of HNS or any of the Excluded Subsidiaries, including the investment
in Hughes Software Systems Limited and Tata Teleservices (Maharashtra) Limited
(India).

 

“Excluded Subsidiaries” means (a) each Subsidiary identified on Section 2.3(g)
of the Disclosure Schedule and (b) each other Subsidiary or other company in
which HNS or any of its Affiliates owns any equity interests other than: (i) the
Transferred Subsidiaries, (ii) the other entities listed on Section 2.2(b) of
the Disclosure Schedule, (iii) Ukranian Wave Ltd., (iv) Shanghai Hughes Network
Systems, Co., Ltd. and (v) Hughes Escorts Communications Limited.

 

“FCC” means the United States Federal Communications Commission.

 

“Final Order” means a grant by the FCC of the Communications Applications filed
with the FCC at such time as each of the following shall have occurred with
respect thereto (i) the grant shall have been listed in a public notice issued
by the FCC, (ii) the 30-day period following publication of such notice, as
provided for under the Communications Laws, for parties to file petitions for
reconsideration, applications for review or similar filings with respect to such
grant shall have expired without the filing of any petition for reconsideration,
application for review or similar filing and (iii) a further 10-day period shall
have passed without the FCC giving notice to the parties of its intent to review
such grant sua sponte.

 

“Financial Support Arrangements” means the Liabilities of HNS, Parent or any of
their respective Affiliates (other than the Transferred Subsidiaries),
contingent or otherwise, in respect of any indebtedness or Liability (including
assumed indebtedness or contingent obligations or Liabilities) of the

 

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Business, of the following types: letters of credit and standby letters of
credit (including any related reimbursement or indemnity agreements), direct or
indirect guarantees, letters of comfort, performance bonds, indemnity
agreements, recourse agreements, agreements to maintain solvency, assets, level
of income or other financial condition, agreements to make payment other than
for value received and any other financial accommodations of the type listed on
Section 4.16(a)(v) of the Disclosure Schedule.

 

“GAAP” means generally accepted accounting principles in the United States of
America as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as have been approved by a
significant segment of the accounting profession.

 

“Governmental Approval” means any: (a) permit, license, certificate, concession,
approval, Consent, ratification, permission, clearance, confirmation, exemption,
waiver, franchise, certification, designation, rating, registration, variance,
qualification, accreditation or authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Authority
or pursuant to any Law; (b) right under any Contract with any Governmental
Authority, and (c) notice required to be given to any Government Authority.

 

“Governmental Authority” means any foreign (including those of the European
Union), domestic, federal, territorial, state or local governmental authority,
quasi-governmental authority, instrumentality, court, arbitrator, government or
self-regulatory organization, commission, tribunal or organization or any
regulatory, administrative or other agency, or any political or other
subdivision, department or branch of any of the foregoing.

 

“Ground Facility Rights” means all rights (which may include title, rights to
use, or rights to receive service, as the case may be, under the applicable
portion of the Boeing Contract and the Satellite Operations Contract) to and
associated with (other than Intellectual Property rights) the satellite control
facilities, network operations center facilities and other ground facilities to
be constructed and all related Spaceway Business hardware.

 

“Handle” means to use, process, manufacture, produce, generate, handle, store,
treat, recycle, dispose of or transport.

 

“Hart-Scott-Rodino” means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and all Laws promulgated pursuant thereto or in connection
therewith.

 

“Hazardous Substance” means any material, substance, waste, compound, pollutant
or contaminant listed, defined, designated or classified as hazardous, toxic,
flammable, explosive, reactive, corrosive, infectious, carcinogenic, mutagenic
or radioactive or otherwise regulated by any Governmental Authority or under any
Environmental, Safety and Health Law, including petroleum or petroleum products
(including crude oil) and any derivative or by-product thereof, natural gas,
synthetic gas and any mixture thereof, or any substance that is or contains
polychlorinated biphenyls (PCBs), radon gas, urea formaldehyde,
asbestos-containing materials (ACMs) or lead, and for the avoidance of doubt,
excluding radio frequencies.

 

“HNS Permits” means all permits, approvals, authorizations, certificates,
consents, franchises, licenses, concessions and rights issued or authorized by
any Governmental Authority (as amended or modified) to, or held by, HNS, HNS
Europe, HNS UK or any of the Transferred Subsidiaries, in connection with the
Business.

 

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“HNS UK Assets” means (a) all Assets of Hughes Network Systems Limited, a UK
company (“HNS UK”), an indirect wholly-owned Subsidiary of HNS, but excluding
the UK Plan Assets and (b) all Assets of Hughes Network Systems Europe Limited,
a UK company (“HNS Europe”), a direct wholly-owned Subsidiary of HNS.

 

“HNS UK Liabilities” means (a) all Liabilities of HNS UK, but excluding the UK
Plan Liabilities and (b) all Liabilities of HNS Europe.

 

“Income Tax” shall mean any Tax based upon, measured by, or calculated with
respect to net income or profits (including, any alternative minimum, capital
gains, franchise or similar Tax), including any interest, penalties, or
additions to tax imposed thereon or in connection therewith.

 

“Indebtedness” means (A) all outstanding indebtedness for borrowed money of HNS,
HNS Europe, HNS UK and the Transferred Subsidiaries relating to the Business
listed on Section 4.6(d) of the Disclosure Schedule and all indebtedness for
borrowed money of HNS, HNS Europe, HNS UK and the Transferred Subsidiaries
relating to the Business incurred between the date hereof and Closing, in each
case, including interest expense accrued but unpaid, and all prepayment premiums
and penalties, fees and charges on, or relating to, any of such indebtedness,
(B) indebtedness of the type described in clause (A) above guaranteed by HNS,
HNS Europe, HNS UK or the Transferred Subsidiaries or in effect guaranteed,
directly or indirectly, in any manner by HNS, HNS Europe, HNS UK or the
Transferred Subsidiaries through an agreement, contingent or otherwise, to
supply funds to, or in any other manner invest in, the debtor, or to purchase
indebtedness, or to purchase and pay for property if not delivered or pay for
services if not performed, primarily or exclusively, for the purpose of enabling
the debtor to make payment of the indebtedness or to insure the owners of the
indebtedness against loss, but excluding endorsements of checks and other
instruments in the ordinary course, and (C) all Capital Lease Obligations of
HNS, HNS Europe, HNS UK and the Transferred Subsidiaries relating to the
Business listed on Section 4.6(d) of the Disclosure Schedule and any Capital
Lease Obligations of HNS, HNS Europe, HNS UK and the Transferred Subsidiaries
relating to the Business incurred after the date hereof; provided that items
related to Equipment Lease Arrangements shall not be included in Indebtedness.

 

“Intellectual Property” shall have the meaning given such term in the
Intellectual Property Agreement.

 

“Intellectual Property Agreement” means the agreement between Newco and Parent
to be entered into at Closing in the form attached as Exhibit M, pursuant to
which Newco will acquire at Closing certain Intellectual Property that is used
in the Business from Parent and Parent will retain a license under certain
Intellectual Property.

 

“International Trade Laws” shall mean the following statutes and regulations, as
amended: Angola (UNITA) Sanctions Regulations, 31 C.F.R. Part 590;
Anti-Terrorism and Effective Death Penalty Act, Pub. L. 104-132 (Apr. 24, 1996);
Arms Export Control Act, 22 U.S.C. § 2751 et seq.; Burmese Sanctions
Regulations, 31 C.F.R. Part 537; Cuban Assets Control Regulations, 31 C.F.R.
Part 515; Cuban Democracy Act, 22 U.S.C. §§ 6001-6010; Cuban Liberty and
Democratic Solidarity Act, 22 U.S.C. § 6021 et seq.; Export Administration Act,
50 U.S.C. §§ 2401-2420 (2000); Export Administration Regulations, 15 C.F.R.
Parts 730 et seq.; Federal Republic of Yugoslavia (Serbia and Montenegro) and
Bosnian Serb-Controlled Areas of the Republic of Bosnia and Herzegovina
Sanctions Regulations, 31 C.F.R. Part 585; Federal Republic of Yugoslavia
(Serbia and Montenegro) Kosovo Sanctions Regulations, 31 C.F.R. Part 586;
Federal Republic of Yugoslavia (Serbia and Montenegro) Milosevic Sanctions
Regulations, 31 C.F.R. Part 587; Foreign Assets Control Regulation 31 C.F.R.
Part 500; Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1 to 78dd-3; Foreign
Terrorist Organizations Sanctions Regulations, 31 C.F.R. Part 597; Global
Terrorism Sanctions Regulations, 31 C.F.R. Part 594; Highly

 

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Enriched Uranium Agreement Assets Control Regulations, 31 C.F.R. 540; ILSA
Extension Act of 2001, 50 U.S.C. § 1701 note; International Emergency Economic
Powers Act, 50 U.S.C. §§ 1701-1706 (2000); International Traffic in Arms
Regulations, 22 C.F.R. Parts 120-130; Iran and Libya Sanctions Act, Pub. L.
104-172 (Aug. 5, 1996); Iranian Assets Control Regulations, 31 C.F.R. Part 535;
Iranian Transactions Regulations, 31 C.F.R. Part 560; Iran-Iraq Arms
Nonproliferation Act, Pub. L. 102-484 (Oct. 23, 1992); Iraqi Sanctions
Regulations, 31 C.F.R. Part 575; Iraq Sanctions Act, Pub. L. 101-513 (Nov. 5,
1990); Libya Sanctions Regulations, 31 C.F.R. Part 550; Narcotics Trafficking
Sanctions Regulations, 31 C.F.R. Part 536; Nuclear Non-Proliferation Act, 22
U.S.C. §§ 3201 et seq.; Nuclear Proliferation Prevention Act of 1994, Pub. L.
103-236 (Apr. 30, 1994); Rough Diamonds (Sierra Leone and Liberia) Sanctions
Regulations, 31 C.F.R. Part 591; Sudanese Sanctions Regulations, 31 C.F.R. Part
538; Syria Accountability and Lebanese Sovereignty Restoration Act of 2003,
Public Law 108-175; Taliban (Afghanistan) Sanctions Regulations, 31 C.F.R. Part
545; Terrorism List Governments Sanctions Regulations 31 C.F.R. Part 596;
Terrorism Sanctions Regulations, 31 C.F.R. Part 595; Tiananmen Square Sanctions,
Pub. L. 101-246, Title IX (Feb. 16, 1990); Trade Sanctions Reform and Export
Enhancement Act of 2000, 22 U.S.C. §§ 7201-7209; Trading With the Enemy Act, 50
U.S.C. App. 5(b); Weapons of Mass Destruction Trade Control Regulations, 31
C.F.R. 539; Western Balkans Stabilization Regulations, 31 C.F.R. 588; the Money
Laundering Control Act of 1986, 18 U.S.C. §§ 1956-1957; and the Bank Secrecy
Act, 31 U.S.C. §§ 5311-5332, 12 U.S.C. §§ 1818(s), 1829(b) and 1951-1959.

 

“Investor Disclosure Schedule” means the disclosure schedule identified as the
Investor Disclosure Schedule to this Contribution Agreement.

 

“Investor Rights Agreement” means the agreement among Newco, HNS and the
Investor to be entered into at Closing in the form attached as Exhibit N.

 

“Knowledge” means any fact or matter with respect to a Person, the current
actual knowledge of such Person, if such Person is an individual or the current
actual knowledge of any of such Person’s senior executive officers or members of
its board of directors or board of managers if such Person is an entity. With
respect to HNS, Knowledge of HNS shall mean the Knowledge of the employees of
HNS listed on Exhibit O.

 

“Laws” means all foreign, federal, state and local statutes, laws, ordinances,
regulations, principles of law or equity, rules, governmental and regulatory
policies and practices, resolutions and Orders, applicable to the specified
Persons or to the businesses and assets thereof (including any of the foregoing
relating to (i) securities registration and regulation; (ii) the sale, leasing,
ownership or management of real property; (iii) employment practices, terms and
conditions, and wages and hours; building standards, land use and zoning; (iv)
safety, health and fire prevention; (v) environmental protection; and (vi)
operation, marketing, sales and distribution of Products and Services).

 

“Legal Compliance Liabilities” means (a) all Liabilities to the extent arising
in connection with or in any way relating to the Business or Business Assets or
HNS’s or any of its Affiliate’s use or ownership thereof, whether vested or
unvested, contingent or fixed, actual or potential, which arise under or relate
to (i) Environmental, Safety and Health Laws, (ii) Securities Laws or (iii)
International Trade Laws, and (b) all Liabilities to make payments to the FCC
for fines or forfeitures.

 

“Liability” means any debt, obligation, duty or liability of any nature
(including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, implied, vicarious, derivative, joint,
several or secondary liability), regardless of whether such debt, obligation,
duty or liability would be required to be disclosed on a balance sheet prepared
in accordance with generally accepted accounting principles and regardless of
whether such debt, obligation, duty or liability is immediately due and payable.

 

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“Material Adverse Effect” means (i) with respect to the Business or the Business
Assets, any occurrence, event or omission, as applicable, that would reasonably
be expected to have a material adverse effect on the assets, financial condition
or results of operations of the Business and the Business Assets taken as a
whole, or (ii) with respect to any other Person, a material adverse effect on
the assets, financial condition or results of operations of such Person and its
Subsidiaries taken as a whole; provided, however, that the following shall be
deemed not to constitute and shall not be taken into account in determining the
occurrence of a Material Adverse Effect with respect to the Business or the
Business Assets: (i) any effect arising from or relating to general economic,
financial or political conditions or conditions affecting the communications
data networks industry, provided that the effect does not affect the Business or
the Business Assets in a materially disproportionate manner compared to
similarly situated companies in such industry; (ii) any effect arising from or
relating to any change in Law that applies to HNS or its Subsidiaries, (iii) any
effect arising from a change in GAAP or interpretations thereof that apply to
HNS or its Subsidiaries, (iv) any effect arising out of any condition or
conditions to the extent affecting the Excluded Business or any Excluded Assets
or Excluded Liabilities and to the extent not affecting the Contributed Assets
and the Assumed Liabilities; (v) any effect arising out of any actions
specifically required to be taken pursuant to the terms of this Contribution
Agreement in furtherance of the Contemplated Transactions; or (vi) any effect
arising out of the announcement of this Contribution Agreement or the
Contemplated Transactions.

 

“Newco Indemnified Persons” means the Investor, Newco and its Subsidiaries and
Representatives from time to time (including persons who were formerly
employees, officers and directors of HNS or any of its Affiliates).

 

“Newco Specified Person” means one, but not more than one, Person designated as
the “Newco Specified Person” in a notice of rejection of a Parent Offer given
prior to the expiration of the applicable Newco First Ninety Day Period, any
successor (by merger, consolidation, transfer or otherwise, and in one
transaction or a series of transactions) to all or substantially all of the
assets of such Person, or any Affiliate or Subsidiary of such Person or its
successor. For the avoidance of doubt, Newco may not specify more than one Newco
Specified Person.

 

“Order” shall mean any: (a) temporary, preliminary or permanent order, judgment,
injunction, edict, decree, ruling, pronouncement, determination, decision,
opinion, verdict, sentence, stipulation, subpoena, writ or award that is or has
been issued, made, entered, rendered or otherwise put into effect by or under
the authority of any court, administrative agency or other Governmental
Authority or any arbitrator or arbitration panel; or (b) Contract with any
Governmental Authority that is or has been entered into in connection with any
Proceeding.

 

“Ordinary Course of Business” means the historical or customary practices of
HNS, HNS Europe, HNS UK and the Transferred Subsidiaries.

 

“Parent Indemnified Persons” means Parent, HNS and their respective Affiliates
and Representatives from time to time (including persons who were formerly
employees, officers and directors of HNS or any of its Affiliates).

 

“Parent Specified Person” means one, but not more than one, Person designated as
the “Parent Specified Person” in a notice of rejection of a Newco Offer given
prior to the expiration of the applicable Parent First Ninety Day Period, any
successor (by merger, consolidation, transfer or otherwise, and in one
transaction or a series of transactions) to all or substantially all of the
assets of such Person, or any Affiliate or Subsidiary of such Person or its
successor. For the avoidance of doubt, Parent may not specify more than one
Parent Specified Person.

 

A-8

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“Patents” means all United States and foreign patents and utility models and
applications therefor and all reissues, divisions, re-examinations, renewals,
extensions, provisionals, continuations and continuations-in-part thereof, and
equivalent or similar rights anywhere in the world in inventions and
discoveries.

 

“Permitted Encumbrances” means any of the following (i) Encumbrances for Taxes
that (x) are not yet due or delinquent or (y) are being contested in good faith
by appropriate proceedings in accordance with applicable Laws, (ii) statutory
Encumbrances of landlords and Encumbrances of carriers, warehousemen, mechanics,
materialmen and other Encumbrances imposed by Law, in each case, for amounts not
yet due or amounts being contested in good faith by appropriate proceedings in
accordance with applicable Laws, (iii) Encumbrances incurred or deposits made in
the Ordinary Course of Business in connection with worker’s compensation,
unemployment insurance or other types of social security, (iv) leases or
subleases granted to other Persons that do not materially interfere with the
conduct of the Business, (v) Encumbrances in favor of a customer of the Business
arising in the Ordinary Course of Business, (vi) with respect to any of the
properties underlying the Real Property Leases, any Encumbrance affecting the
interest of the landlord thereunder, (vii) Encumbrances that do not materially
interfere with the use by HNS or its Subsidiaries of the Business Assets or the
operation of the Business, (viii) rights of the third party owners or licensors
of software that is licensed from such third parties for use in the Business,
(ix) Encumbrances created by or in favor of Newco, (x) Encumbrances that will be
released prior to or as of Closing, (xi) Encumbrances arising under this
Contribution Agreement or the other Transaction Documents, (xii) Encumbrances
arising out of any Governmental Approvals or HNS Permits and (xiii) Encumbrances
clearly identified in the Disclosure Schedules.

 

“Permitted Person” means any Person that (x) is not in the business of directly
or indirectly owning or operating satellites or providing satellite networks or
satellite services, (y) is not a non-U.S. Person (i.e., a Person that is not a
U.S. citizen or a legal entity established or organized under the Laws of a
State or the United States) and (z) would own, directly or indirectly,
individually or in the aggregate with all other Permitted Persons, a majority of
the equity securities of Newco or any other company holding the Contributed
Assets after Closing.

 

“Person” means an individual, a corporation, a general partnership, a limited
partnership, a limited liability company, a limited liability partnership, an
association, a trust or any other entity or organization, including a
Governmental Authority.

 

“Prepaid Spaceway Amounts” means the aggregate of all amounts paid by Parent or
HNS to Boeing prior to Closing pursuant to the Spaceway 3 Amendment (which
includes any payments made by Parent prior to the date hereof); provided that
Parent provides documentation evidencing such payments.

 

“Proceeding” shall mean any action, suit, litigation, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination
or investigation that is or has been commenced, brought, conducted or heard at
law or in equity or before any Governmental Authority or any arbitrator or
arbitration panel.

 

“Products and Services” means all hardware, Software, integrated systems or
other products or services manufactured, made, designed, maintained, supported,
developed, sold, licensed, marketed, or otherwise distributed or provided (or
planned or envisioned to be manufactured, made, designed, maintained, supported,
developed, sold, licensed, marketed, or otherwise distributed or provided)
(including all versions and releases thereof, whether already distributed or
provided, under development, planned or conceived, or otherwise), together with
any related materials, information or data, including the names, numbers (e.g.,
part numbers) and packaging associated with such products and services.

 

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“Registration Rights Agreement” means the agreement among Parent, HNS and the
Investor to be entered into at Closing in the form attached as Exhibit P.

 

“Release” means any releasing, spilling, leaking, pumping, pouring, placing,
emitting, emptying, discharging, injecting, escaping, leaching, disposing, or
dumping into the environment, whether intentional or unintentional, negligent or
non-negligent, sudden or non-sudden, accidental or non-accidental.

 

“Representatives” shall mean officers, directors, employees, attorneys,
accountants, advisors, agents, distributors, licensees, shareholders,
subsidiaries and lenders of a party and their Affiliates. In addition, all
Affiliates of HNS shall be deemed to be “Representatives” of HNS, all Affiliates
of the Investor shall be deemed to be “Representatives” of the Investor, and all
Affiliates of Newco shall be deemed to be “Representatives” of Newco.

 

“Satellite Operations Contract” means the contract between Parent and The Boeing
Company, dated April 15, 2001, for the satellite control facilities, telemetry
tacking and control equipment, satellite operations and maintenance.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Securities Laws” shall mean the Securities Act and the Exchange Act, and the
rules and regulations promulgated thereunder.

 

“Set-Top Box Business” means the Assets of the set-top box manufacturing,
assembly, production, warehousing, shipping and distribution business of HNS
which were sold to pursuant to the Asset Purchase Agreement dated May 11, 2004
among HNS, Parent and Thomson Inc.

 

“Severance Cap” means an amount equal to Twelve Million Dollars ($12,000,000)
minus the SkyTerra Stock Shortfall Amount, if any.

 

“Severance Cap Adjustment” means the amount by which HNS’ total expenditures for
the Severance Amount and the Foreign Severance Amount through the Closing Date
are greater than or less than the Severance Cap.

 

“Site” means any of the real properties currently or previously owned, leased or
operated by HNS or the Transferred Subsidiaries, any of their respective
predecessors, or any entities previously owned by HNS or the Transferred
Subsidiaries, including all soil, subsoil, surface waters and groundwater
thereat.

 

“SkyTerra Stock” means the common stock of the Investor, $0.01 par value per
share.

 

“SkyTerra Stock Average Trading Price” means the closing price of one share of
SkyTerra Stock quoted on the OTC Bulletin Board, which trades are reported by
the National Quotation Bureau, Incorporated or a similar successor organization,
or, if not reported thereby, as reported in another authoritative source
selected by Parent and the Investor, averaged over a period of twenty Trading
Days ending two Trading Days prior to the Closing Date and beginning on the
twenty-third Trading Day prior to the Closing Date.

 

“SkyTerra Stock Consideration” means an amount equal to the product of (x) the
SkyTerra Stock Average Trading Price and (y) the number of shares of SkyTerra
Stock to be issued to HNS pursuant to Section 2.7(c)(y).

 

A-10

--------------------------------------------------------------------------------

“SkyTerra Stock Shortfall Amount” means the difference between (x) $4,500,000
and (y) the SkyTerra Stock Consideration; provided that in no case may the
SkyTerra Stock Shortfall Amount be less than zero.

 

“Spaceway 1” means the planned geostationary Ka-Band satellite known as Spaceway
1 (or SW1) currently under construction that is intended to be the first
satellite to be provided under the Boeing Contract (or any replacement satellite
ordered by Parent or HNS under the Boeing Contract due to the failure to
successfully launch the original Spaceway 1 or the inability to make the
original Spaceway 1 suitable for commercial operation).

 

“Spaceway 2” means the planned geostationary Ka-Band satellite known as Spaceway
2 (or SW2) currently under construction that is intended to be the second
satellite to be provided under the Boeing Contract (or any replacement satellite
ordered by Parent or HNS under the Boeing Contract due to the failure to
successfully launch the original Spaceway 2 or the inability to make the
original Spaceway 2 suitable for commercial operation).

 

“Spaceway 3” means the planned geostationary Ka-Band satellite known as Spaceway
3 (or SW3) currently under construction that is intended to be the third
satellite to be provided under the Boeing Contract or the first satellite to be
provided under the Boeing Contract Separation Amendment (or any replacement
satellite ordered by Newco under the Boeing Contract or Boeing Contract
Separation Amendment due to the failure to successfully launch the original
Spaceway 3 or the inability to make the original Spaceway 3 suitable for
commercial operation).

 

“Spaceway 3 Amendment” means Amendment No. 11, dated December 3, 2004, to the
Boeing Contract.

 

“Spaceway Business” is the developmental stage business of HNS, HNS Europe, HNS
UK and the Transferred Subsidiaries known as Spaceway for the designing,
developing, operating, and providing communications services in North America
via a Ka-band satellite telecommunications system.

 

“Straddle Period” means a taxable period beginning prior to and ending after the
Closing Date.

 

“Subsidiary” of a specified Person means a Person Controlled by such Person
directly, or indirectly through one or more intermediaries.

 

“Tax Liabilities” means any Proceeding or claim pending or threatened in respect
of any Taxes for which HNS is or may become liable, or any deficiency or claim
for any such Taxes that has been to HNS’s Knowledge proposed, asserted or
threatened.

 

“Tax Returns” means all federal, state, local, foreign and other applicable tax
returns, declarations of estimated tax reports required to be filed by such
Person.

 

“Taxes” means all federal, state, local and foreign taxes (including income,
profit, franchise, sales, use, real property, personal property, ad valorem,
excise, employment, social security and wage withholding taxes) and installments
of estimated taxes, assessments, deficiencies, levies, imposts, duties,
withholdings, or other similar charges of every kind, character or description
imposed by any Governmental Authority, and any interest, penalties or additions
to tax imposed thereon or in connection therewith.

 

A-11

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“Trademarks” means any and all U.S. and foreign trademarks, service marks,
logos, trade names, corporate names, and Internet domain names and addresses,
and all goodwill associated therewith throughout the world.

 

“Trade Secrets” means all trade secrets under applicable Law and other rights in
know-how and confidential or proprietary information, processing, manufacturing
or marketing information, including new developments, inventions, processes,
ideas or other proprietary information that provides advantages over competitors
who do not know or use it and documentation thereof (including related papers,
blueprints, drawings, chemical compositions, formulae, diaries, notebooks,
specifications, designs, methods of manufacture and data processing Software and
compilations of information) and all claims and rights related thereto.

 

“Trading Day” means a day during which trading in the SkyTerra Stock generally
occurs and trades are reported on the OTC Bulletin Board or a similar successor
organization, or, if not reported thereby, as reported in another authoritative
source selected by Parent and the Investor (provided that the following will not
count as a Trading Day: (x) a day on which trading of the SkyTerra Stock is
suspended; (y) a day on which no closing price is reported, and (z) a day on
which the Investor (or any of its Affiliates) buys or sells any shares of
SkyTerra Stock).

 

“Transaction Documents” means this Contribution Agreement, the Intellectual
Property Agreement, the Restated LLC Agreement, the Transition Services
Agreement, the DirecWay Agreement, the Investor Rights Agreement, the Spaceway
Services Agreement, the Non-Competition Agreement, the Registration Rights
Agreement, the Transfer Instruments, any related agreements and documents, and
any exhibits or attachments to any of the foregoing, as the same may be amended
from time to time.

 

“Transferred Subsidiaries” means each direct or indirect subsidiary of HNS or
other company in which HNS owns shares or other equity interests listed on
Section 4.1(b) of the Disclosure Schedule.

 

“Transferred Subsidiary Assets” means all Assets of the Transferred Subsidiaries
as of the date hereof, and anything which becomes (in accordance with the terms
of this Contribution Agreement) an Asset of the Transferred Subsidiaries between
the date hereof and the Closing Date.

 

“UK Plan” means the Hughes Network Systems Ltd. Pension and Life Assurance
Scheme.

 

“UK Plan Assets” means all Assets relating to the UK Plan.

 

“UK Plan Liabilities” means all Liabilities relating to the UK Plan.

 

Each of the following terms is defined in the Section of this Contribution
Agreement set forth opposite each such term below:

 

Term

--------------------------------------------------------------------------------

   Section

--------------------------------------------------------------------------------

Acquired Companies

   2.2

Annual Statements

   3.10

Article 5

   3.8

Assigned Boeing Rights

   3.11

Assumed Liabilities

   2.4

Basket Amount

   9.4

Bill of Sale and Assumption Agreement

   8.5

Cap Amount

   9.4

 

A-12

--------------------------------------------------------------------------------

Capital Items Scheme

   3.8

Cash Target Amount

   2.10

ChinaCast Shares

   3.14

CIC Agreements

   Ex. J

CIC Continued Welfare Coverage

   Ex. J

CIC Outplacement Services

   Ex. J

CIC Severance Amount

   Ex. J

Closing

   2.8

Closing Cash Balance

   2.10

Closing Date

   2.8

Contributed Assets

   2.2

Contributed Spaceway Assets

   3.11

Contribution Agreement

   Preamble

Customs

   3.8

DirecWay Agreement

   2.6

Earth Stations

   4.24

Employee Benefit Plans

   4.15

Enhanced Pension Benefit

   Ex. J

Estimated Working Capital Amount

   2.10

Estimated Working Capital Statement

   2.10

ETA Plan

   Ex. J

ETA COBRA Benefit

   Ex. J

ETA Outplacement Services

   Ex. J

ETA Severance Amount

   Ex. J

ETA Tuition Reimbursement

   Ex. J

Excluded Assets

   2.3

Excluded HNS Representations

   9.1

Excluded Investor Representations

   9.1

Excluded Liabilities

   2.4

Excluded Real Property Leases

   2.3

Excluded Spaceway Assets

   3.11

Final Working Capital Amount

   2.10

Final Working Capital Statement

   2.10

Financing

   2.7

Financial Statements

   4.6

Foreign Contract Employees

   4.14

Foreign Employee Benefit Plans

   4.14

Foreign Employees

   4.14

Foreign Operations

   4.14

Foreign Services Agreements

   4.14

Foreign Services Company

   4.14

Foreign Severance Amount

   Ex. J

HNS

   Preamble

HNS Europe

   Ex. A

HNS UK

   Ex. A

Indemnified Claim

   9.7

Indemnified Party

   9.7

Indemnifying Party

   9.7

Insurance Policy

   3.3

Interim Statements

   3.10

Investor Interest

   2.7

 

A-13

--------------------------------------------------------------------------------

ITAR

   3.1

Latest Balance Sheet

   4.6

Laws of the HNS Countries of Operation

   4.14

Lower Collar Amount

   2.10

Material Contracts

   4.16

Membership Interest Purchase Price

   2.7

Newco

   Preamble

Newco First Ninety Day Period

   3.11

Newco Offer

   3.11

Newco Offer Notice

   3.11

Newco Offered Assets

   3.11

Newco Purchase Option

   3.11

Non-Competition Agreement

   8.5

Original LLC Agreement

   2.7

Owned Real Property

   4.8

Parent

   Preamble

Parent First Ninety Day Period

   3.11

Parent Offer

   3.11

Parent Offer Notice

   3.11

Parent Offered Assets

   3.11

Parent Purchase Option

   3.11

Pass Through Arrangement

   2.6

PBGC

   4.15

Percentage

   2.9

Potential Transaction

   3.15

Pre-Closing Taxes

   3.7

Prospective Newco Employee

   Ex. J

Purchase Price

   2.7

Real Property Leases

   4.8

Real Property

   4.8

Regulation

   8.1

Relevant Accounting Rules

   3.10

Restated LLC Agreement

   2.7

Relevant Date

   3.8

San Diego Premises

   2.3

SAS 100

   3.10

SEC

   5.9

SEC Documents

   5.9

Severance Amount

   Ex. J

SkyTerra Common Stock

   5.10

SkyTerra Non-voting Common Stock

   5.10

SkyTerra Preferred Stock

   5.10

SkyTerra Stock Plans

   5.10

South Africa Manpower Agreement

   Ex. I

Spaceway 4

   3.11

Spaceway Services Agreement

   3.11

Tax Group

   4.5

Terminated Employee

   Ex. J

Transfer

   3.11

Third Party Claim

   9.7

Third Party Claim Notice

   9.7

 

A-14

--------------------------------------------------------------------------------

Transfer Instruments

   8.5

Transfer Restricted Asset

   2.6

Transferred Employee

   Ex. J

Transition Services Agreement

   2.6

UK VAT

   3.8

Updated Disclosure Schedule

   8.4

Updated Investor Disclosure Schedule

   8.4

Upper Collar Amount

   2.10

VSAT

   Ex. A

VSAT Business

   Ex. A

WARN Act

   2.4

Working Capital

   Ex. G

Working Capital Target Amount

   2.10

 

A-15

--------------------------------------------------------------------------------

EXHIBIT B

 

LIST OF TRANSITION SERVICES

 

B-1

--------------------------------------------------------------------------------

EXHIBIT B

 

FORM OF TRANSITION SERVICES AGREEMENT

 

B-2

--------------------------------------------------------------------------------

EXHIBIT C

 

DIRECWAY AGREEMENT TERM SHEET

 

C-1

--------------------------------------------------------------------------------

EXHIBIT D

 

FORM OF ORIGINAL LLC AGREEMENT

 

D-1

--------------------------------------------------------------------------------

EXHIBIT E

 

COMMITMENT LETTERS

 

E-1

--------------------------------------------------------------------------------

EXHIBIT F

 

FORM OF RESTATED LLC AGREEMENT

 

F-1

--------------------------------------------------------------------------------

EXHIBIT G

 

CALCULATION OF WORKING CAPITAL

 

G-1

 

“Working Capital” as of the Closing Date shall be determined in accordance with
this Exhibit G-1 and shall be equal to (i) current assets of the VSAT Business
as of the Closing Date; minus (ii) current liabilities of the VSAT Business as
of the Closing Date. Working Capital shall be calculated consistent with the
Interim Statements and Annual Statements, subject to the exceptions noted below.
In no event shall any items related to any of the following be taken into
account in the calculation of Working Capital: (a) ChinaCast Shares, (b) Assets
included in the Closing Cash Balance, (c) Assets supporting the Financial
Support Arrangements (d) Equipment Lease Arrangements, (e) Indebtedness
(including for this purpose current portions thereof), (e) any intercompany
receivables or payables to the extent that the same are to be cancelled pursuant
to Section 3.2(c) or are to be transferred to Newco pursuant to Section
2.2(a)(viii), (f) accrued liabilities for year-end bonuses (or other incentive
compensation) to officers and employees of the Business, (g) accrued liabilities
for severance and related amounts payable to former employees of HNS, HNS
Europe, HNS UK or the Transferred Subsidiaries whose employment was terminated
with approval or consent of the Investor at or prior to the Closing Date and (h)
Income Taxes. In addition, to the extent that there are any Assets or
Liabilities of the Spaceway Business on the current portion of the Latest
Balance Sheet, Assets or Liabilities of such type will be included in Working
Capital in a consistent manner.

 

Subject to the above, “current assets” and “current liabilities” of Newco shall
be determined in accordance with GAAP consistently applied using the same
accounting methods, policies, practices and procedures, with consistent
classifications, and estimation methodologies as were used in the preparation of
the Latest Balance Sheet, and will not include any changes in assets or
liabilities as a result of purchase accounting adjustments or adjustments
otherwise arising from or resulting as a consequence of the Contemplated
Transactions on the Closing Date.

 

The Estimated Working Capital Statement and the Final Working Capital Statement
(and any proposed adjustments thereto) shall be prepared so as to remove the
effects, if any, resulting from any change in Working Capital, or the components
thereof, caused by a change in GAAP required to be implemented by HNS or Parent
between June 30, 2004 and the Closing Date.

 

For the avoidance of doubt, the attachment to this Exhibit G-1 illustrates the
methodology for calculating the Working Capital Target Amount as of June 30,
2004.

 

G-2

 

The Working Capital Target Amount is One Hundred Ninety-Five Million Dollars
($195,000,000).

 

G-1

--------------------------------------------------------------------------------

EXHIBIT H

 

FORM OF SPACEWAY SERVICES AGREEMENT

 

H-1

--------------------------------------------------------------------------------

EXHIBIT I

 

FOREIGN EMPLOYEE MATTERS

 

I-1. Foreign Employees, Foreign Contract Employees and HNS UK Employees

 

Newco and HNS acknowledge and agree that all Foreign Employees, Foreign Contract
Employees and HNS UK Employees shall be employed by Newco on and after Closing
and that both parties shall comply with all applicable Laws of the HNS Countries
of Operation in connection with such employment, including the giving of any
required notices to such employees or to the applicable government and honoring
the terms and conditions of the Foreign Employees’, the Foreign Contract
Employees’ and the HNS UK Employees’ employment, including the assumption of any
contracts of employment with the Foreign Employees or HNS UK Employees or any
Foreign Services Agreements through which Foreign Contract Employees are
employed; provided, however, that unless required by Law, Newco or its
Affiliates shall have no obligation to provide HNS UK Employees with retirement
benefits after the Closing Date in the manner provided before the Closing Date
under the UK Plan. Prior to Closing, Newco agrees to use commercially reasonable
efforts to cooperate in good faith with HNS regarding employee benefit matters
for the Foreign Operations and HNS UK, including the provision of information
about Newco’s intentions with regards to the Foreign Employees, Foreign Contract
Employees and HNS UK Employees on or after the Closing Date or to facilitate HNS
or its Affiliates’ compliance with its obligations under the Laws of the HNS
Countries of Operation. Newco acknowledges and agrees that, on and after the
Closing Date, Newco shall credit Foreign Employees with their applicable years
of service with the applicable Foreign Operation and credit HNS UK Employees
with their applicable years of service with HNS UK for all purposes under any
Newco employee benefit plan, to the extent permissible under the Laws of the HNS
Countries of Operation. If Newco or its Affiliates terminates an employment
relationship with a Foreign Employee, a Foreign Contract Employee or an HNS UK
Employee on or after the Closing Date, (1) Newco and its Affiliates shall be
solely responsible for and shall make all payments and provide all benefits
required under the Laws of the HNS Countries of Operation and the contractual
arrangements with such employees and (2) Newco shall indemnify HNS for all
claims made by Foreign Employees, Foreign Contract Employees and HNS UK
Employees with respect to all such matters arising on or after Closing except
for matters relating to the UK Plan.

 

I-2. South Africa Manpower Agreement

 

HNS shall assign to Newco and its Affiliates the Services Agreement by and
between Hughes Network Systems, Inc. and Manpower SA (PTY), Limited, dated as of
June 28, 2004 (the “South Africa Manpower Agreement”) and Newco shall accept
such assignment. Newco and its Affiliates further acknowledges and agrees that
the covenants set forth in Exhibit I-1 related to Foreign Services Agreements
and Foreign Contract Employees shall be fully applicable to the South Africa
Manpower Agreement.

 

I-3. HNS UK Employee Benefits

 

HNS shall transfer to Newco and Newco shall accept such transfer of all benefit
plans, policies and arrangements listed on Section I-3 of the Disclosure
Schedule, including all Assets and Liabilities with respect to such plans,
policies and arrangements; provided, however, that HNS and its Affiliates shall
have sole responsibility for any obligations or Liabilities with respect to the
UK Plan and all obligations and Liabilities with respect to the UK Plan shall be
Excluded Liabilities; provided, further, that unless required by Law, Newco or
its Affiliates shall have no obligation to provide HNS UK Employees with
retirement benefits after the Closing Date under a defined benefit pension plan
or to provide credit for any HNS UK Employee’s service with HNS UK prior to
Closing for purposes of benefit accruals under such a defined benefit pension
plan.

 

I-1

--------------------------------------------------------------------------------

EXHIBIT J

 

U.S. EMPLOYEE MATTERS

 

J-1. Business Employees

 

(a) (i) All Business Employees, whether such Business Employee is actively at
work or on leave of absence, disability or medical leave, in each case, of less
than 6 months (each a “Prospective Newco Employee”) whose employment with HNS is
not terminated, whether voluntarily or involuntarily, on or before the Closing
Date shall become a Newco employee as of the Closing Date (each a “Transferred
Employee”). The Investor and Parent shall determine the terms and conditions of
employment for each Transferred Employee.

 

(ii) (A) If a Business Employee is terminated by HNS prior to Closing or a
Transferred Employee is terminated by Newco on or after Closing, but before
December 23, 2005, and such termination is not due to either the voluntary
resignation of such employee or the termination of such employee for cause by
HNS or Newco as applicable (a “Terminated Employee”), the Terminated Employee
shall be entitled to receive, consistent with the terms of The DIRECTV Group
Employment Transition Assistance Plan (the “ETA Plan”), (1) a lump sum payment
equal to the Terminated Employee’s Special Severance Benefit (as such term is
described under the ETA Plan) under the ETA Plan, unless such Terminated
Employee is subject to a CIC Agreement (the “ETA Severance Amount”); (2) payment
by HNS or a refund by HNS of the Terminated Employee’s premiums under the
Consolidated Omnibus Budget Reconciliation Act of 1985 for medical coverage up
to a maximum of three months or until the Terminated Employee obtains coverage
by another employer, whichever comes first (the “ETA COBRA Benefit”); (3)
reimbursement for tuition expenses of up to $1,000 (the “ETA Tuition
Reimbursement”); and (4) outplacement services to assist with career
re-orientation, job search, interviewing skills and resume preparation (the “ETA
Outplacement Services”). If the Terminated Employee is subject to a Change in
Control Severance Agreement (each, a “CIC Agreement”), instead of receiving
benefits under the ETA Plan, the Terminated Employee shall be entitled to
receive, consistent with the terms of the applicable CIC Agreement, (1) a lump
sum payment equal to the accrued compensation owed pursuant to sections 2.2.b
and 2.2.c. of the CIC Agreement plus the Severance Compensation (as such term is
defined under the CIC Agreement) (collectively, the “CIC Severance Amount”); (2)
reimbursement for actual payments made for professional outplacement services,
not to exceed 15% of base salary at the date of termination of employment (the
“CIC Outplacement Services”); and (3) continued participation in HNS’ group
health, dental and vision plans (or participation in plans with comparable
benefits) for a period of time following termination of employment as set forth
in the applicable CIC Agreement, except that such coverage shall expire if the
Terminated Employee becomes eligible for coverage under a plan of another
employer (the “CIC Continued Welfare Coverage”). A Terminated Employee shall be
entitled to receive an enhanced pension benefit under the DIRECTV Pension Plan
and the DIRECTV Employees’ Excess Benefit Plan if such Terminated Employee (1)
is a participant in the contributory portion of the DIRECTV Pension Plan, (2)
has not yet reached Magic 75 (as such term is defined under the DIRECTV Pension
Plan) and (3) is eligible for the Pension Window Lump Sum Benefit (as such term
is defined under the DIRECTV Pension Plan) pursuant to Section 6.1-A of the
DIRECTV Pension Plan (the “Enhanced Pension Benefit”). Nothing in this paragraph
shall be interpreted to entitle any Terminated Employee to any rights to an ETA
Severance Amount, ETA COBRA Benefit, ETA Outplacement Services, CIC Severance
Amount, CIC Outplacement Services, CIC Continued Welfare Coverage or an Enhanced
Pension Benefit beyond those granted to such Terminated Employee under the ETA
Plan, any applicable CIC Agreement and the DIRECTV Pension Plan.

 

J-1

--------------------------------------------------------------------------------

(B) The determination as to whether a termination of an employee has been “for
cause” shall be made in good faith solely by HNS or Newco, as applicable. HNS
shall provide written notice to the Investor of HNS’s intent to terminate any
Business Employee without cause no less than twenty (20) business days prior to
the expected termination date. If the Investor objects in writing to such
termination within fifteen (15) business days of the Investor’s receipt of HNS’s
notice, HNS and the Investor shall negotiate in good faith to find a mutually
acceptable solution with respect to whether such Business Employee should be
terminated prior to Closing. The failure to object to a planned termination by
the Investor within fifteen (15) business days of receipt of notice of such
planned termination by HNS shall be deemed prior approval of such termination.

 

(C) HNS shall (a) pay 100% of the total cost of the ETA Severance Amount, the
ETA COBRA Benefit, the ETA Tuition Reimbursement, the ETA Outplacement Services,
the CIC Severance Amount, the CIC Outplacement Services, the CIC Continued
Medical Coverage, and the Enhanced Pension Benefit applicable to a Terminated
Employee plus the withholding Taxes and employer Taxes related to the payment of
any of these benefits (collectively, the “Severance Amount”) for any Terminated
Employees terminated prior to Closing and (b) pay 100% of the total cost of the
severance payments to which a Foreign Employee, a Foreign Contract Employee or
an HNS UK Employee is entitled under Law or a Foreign Employee Benefit Plan if
such Foreign Employee, Foreign Contract Employee or HNS UK Employee is
terminated prior to Closing, so long as Parent, HNS, and Investor agree to
terminate such employment relationship (the “Foreign Severance Amount”). The
total cost of the Severance Amount and the Foreign Severance Amount expended by
HNS with the Investor’s approval on or prior to the Closing Date shall be
charged against the Severance Cap. After Closing, Newco shall pay 100% of the
Severance Amount and the Foreign Severance Amount. HNS, for terminations
occurring prior to Closing, or Newco, for terminations occurring on or after
Closing, shall pay the applicable withholding Taxes and employer Taxes in
connection with the Severance Amount or the Foreign Severance Amount to the
applicable Governmental Authorities in a timely manner. Notwithstanding anything
to the contrary in any provision of this Agreement, HNS shall pay 100% of the
Severance Amount with respect to any Business Employee terminated prior to
Closing if a mutually acceptable solution is not found by the parties after the
Investor objects pursuant to Section J-1(a)(ii)(B) and the costs of the
Severance Amount with respect to such Business Employee shall not apply toward
the Severance Cap. All payments and obligations owed to a Terminated Employee
with respect to the Severance Amount shall be conditioned upon the execution and
delivery, and the expiration of any applicable revocation period, of a general
release by the applicable Terminated Employee that is satisfactory to Newco and
HNS and its Affiliates. Newco shall within twenty (20) business days of receipt
of a written request by HNS provide such other information as is reasonably
requested by HNS for the purpose of monitoring Newco and its respective
Subsidiaires’ compliance with this Exhibit J-1(a)(ii).

 

(D) Section J-1(a) of the Disclosure Schedule shall set forth the ETA Severance
Amount, CIC Severance Amount, ETA COBRA Benefit, ETA Tuition Reimbursement, ETA
Outplacement Services, CIC Continued Welfare Coverage, CIC Outplacement Services
and Enhanced Pension Benefit applicable to any Business Employee assuming a
termination date of July 1, 2005. HNS shall update the applicable ETA Severance
Amount, CIC Severance Amount, ETA COBRA Benefit, ETA Tuition Reimbursement, ETA
Outplacement Services, CIC Continued Welfare Coverage, CIC Outplacement Services
and Enhanced Pension Benefit on Section J-1(a) of the Disclosure Schedule for
any Terminated Employee within a commercially reasonable amount of time after a
decision has been made as to the actual termination date for such Terminated
Employee. The cost of the ETA COBRA Benefit and the CIC Continued Welfare
Coverage shall be determined based on the actual cost of the applicable coverage
for all Business Employees. The value of the Enhanced Pension Benefit shall be
determined in accordance with the actuarial assumptions used by the DIRECTV
Pension Plan and the DIRECTV Employees’ Excess Benefit Plan in their most recent
actuarial reports. If the Investor in good faith disagrees with such
calculations, the Investor and HNS shall negotiate in good faith to find a
mutually acceptable calculation.

 

J-2

--------------------------------------------------------------------------------

(E) Notwithstanding anything to the contrary contained herein, in no event shall
the costs of the Severance Amount for any Terminated Employee, the costs of the
Foreign Severance Amount for any Foreign Employee or the costs of the Foreign
Severance Amount for any HNS UK Employee be charged against the Severance Cap
unless such Terminated Employee’s employment with HNS, such Foreign Employee’s
employment with the applicable Foreign Operation or such HNS UK Employee’s
employment with HNS UK is terminated with the prior approval of the Investor.

 

(b) HNS shall use its commercially reasonable efforts to make the Prospective
Newco Employees available to Newco, and HNS hereby authorizes Newco to enter
into discussions with the Prospective Newco Employees regarding employment with
Newco after the execution of this Contribution Agreement. Neither Parent nor HNS
shall engage in any activity intended to discourage any Prospective Newco
Employee from accepting an offer of employment from Newco and shall use its best
efforts to provide that Prospective Newco Employees (other than Prospective
Newco Employees who have applied for a position outside the Business prior to
the date hereof with HNS) will not be offered employment by HNS, Parent or its
Affiliates prior to the Closing Date; provided, however, that HNS and its
Affiliates shall be permitted to (x) take any action they reasonably believe
they are legally required to take in order to comply with applicable employment
Laws, and (y) one year after the Closing Date offer employment to, and employ,
any Business Employee who does not, on or prior to the Closing Date, accept an
offer of employment from Newco. Except as otherwise set forth herein, neither
HNS nor any of its Affiliates shall have any liability to any Transferred
Employee relating to such Person’s employment with Newco or termination thereof
on or after the Closing Date.

 

(c) Nothing in this Exhibit J, whether express or implied, is intended to or
shall confer any rights, benefits or remedies under or by reason of this Exhibit
J on any Persons other than the parties to this Contribution Agreement and their
respective successors and permitted assigns, nor is anything in this
Contribution Agreement intended to relieve or discharge the obligation or
Liability of any third party to any party to this Contribution Agreement, nor
shall any provisions give any third party any right of subrogation over or
action against any party to this Contribution Agreement.

 

J-2. HNS’s Employee Benefit Plans

 

(a) Except as set forth in this Exhibit J, HNS and its respective Affiliates
shall retain all obligations and Liabilities (including Taxes) (i) under or in
any way relating to the Employee Benefit Plans or (ii) otherwise in respect of
each current or former participant in the Employee Benefit Plans (including any
beneficiary thereof) with respect to obligations and liabilities incurred in
respect of such participant or his or her covered dependents prior to the
Closing Date, and neither Newco nor any of its Affiliates shall have any
liability with respect thereto. Except as expressly provided in this Exhibit J
or otherwise provided in the Contribution Agreement, Newco shall be liable for
all obligations and liabilities in respect of each Transferred Employee
(including any beneficiary thereof) with respect to obligations and liabilities
incurred in respect of such Transferred Employee or his or her covered
dependents on or after the Closing Date, and neither HNS nor any of its
Affiliates shall have any liability with respect thereto. Except as provided in
this Exhibit J-2, no assets or liabilities of any Employee Benefit Plan shall be
transferred to, or assumed by, Newco or any plan of Newco.

 

(b) Effective as of the Closing Date, the Transferred Employees shall cease to
be covered by the Employee Benefit Plans. HNS and Parent shall retain
responsibility for and continue to pay all medical and dental plan expenses and
benefits for each Transferred Employee with respect to claims incurred by such
Transferred Employee or his or her covered dependents prior to the Closing Date.

 

J-3

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Newco shall be responsible for all expenses and benefits with respect to claims
incurred by Transferred Employees or their covered dependents on or after the
Closing Date including medical, dental, short-term disability, long-term
disability, life insurance benefits and worker’s compensation, to the extent
such benefits are provided by Newco. For purposes of this paragraph, a claim is
deemed incurred (i) in the case of medical or dental benefits, when the services
that are the subject of the claim are performed, (ii) in the case of life
insurance, when the death occurs, (iii) in the case of short-term and long-term
disability benefits, when the disability occurs and (iv) in the case of worker’s
compensation benefits, when the event giving rise to the benefit occurs.

 

(c) With respect to any plan that is a “welfare benefit plan” (as defined in
Section 3(1) of ERISA) maintained by Newco, Newco shall (i) provide coverage for
Transferred Employees under its medical, dental and welfare plans on and after
the Closing Date, (ii) cause there to be waived any pre-existing condition,
actively at work requirements and waiting periods, except pre-existing
conditions, actively at work requirements and waiting periods currently provided
under HNS’s medical, welfare and dental plans and (iii) cause such plans to
honor any expenses incurred by the Transferred Employees and their beneficiaries
under similar plans of HNS and its respective Affiliates during the portion of
the calendar year in which the Closing Date occurs for purposes of satisfying
applicable deductible, co-insurance and maximum out-of-pocket expenses.

 

(d) Transferred Employees shall receive credit for such Transferred Employee’s
past service with HNS or any of its Affiliates or predecessors as reflected in
Section J-2(d) of the Disclosure Schedule for purposes of vesting and any period
of service requirements for commencement of participation in any employee
benefit or compensation plan, program or arrangement that Newco sponsors or
maintains on or after the Closing Date, and in which Transferred Employees are
eligible to participate, Transferred Employees shall not receive credit for such
past service for the purposes of (i) benefit accruals under a defined benefit
plan of Newco or its Affiliates or (ii) calculating the amount of a Transferred
Employee’s severance benefits under Newco’s and its Affiliates’ severance
plan(s).

 

(e) HNS shall be responsible for satisfying obligations under Section 601 et
seq. of ERISA and Section 4980B of the Code (or any similar state Law), with
respect to any Business Employee that is not a Transferred Employee in
accordance with applicable Law with respect to any “qualifying event” occurring
prior to, on or after the Closing Date. HNS shall also be responsible for
satisfying obligations under Section 601 et seq. of ERISA and Section 4908B of
the Code (or any similar state Law), with respect to any Business Employee who
is a Transferred Employee in accordance with applicable Law with respect to any
“qualifying event” occurring prior to or on the Closing Date. Newco shall be
responsible for satisfying obligations under Section 601 et seq. of ERISA and
Section 4980B of the Code (or any similar state Law), with respect to any
Transferred Employee in accordance with Law with respect to any “qualifying
event” which occurs after the Closing Date. Newco shall not entice or encourage
any Transferred Employee to elect continued group health plan coverage under
Section 601 et seq. of ERISA and Section 4980B of the Code (or any similar state
Law) with respect to plans maintained by HNS and its Affiliates.

 

(f) Except as otherwise provided in this Exhibit J, Newco shall be responsible
for, and neither HNS nor its Affiliates shall have any liability or obligation
with respect to any severance, termination or comparable payments or benefits
with respect to any Transferred Employee who is subsequently terminated by Newco
on or after the Closing Date.

 

(g) HNS shall be responsible for, and neither Newco nor its Affiliates shall
have, any liability or obligation with respect to any retention payments or
retention awards granted by HNS or its Affiliates to the Business Employees.

 

J-4

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(h) Unless applicable Law requires a cash out of accrued but unused vacation,
personal time, sick time and extended pay time off upon termination of
employment, Newco shall recognize, honor and assume the liability for each such
Transferred Employee’s accrued but unused vacation, personal time, sick time and
extended pay time off with HNS and its Affiliates, as accrued as of the Closing
Date, as set forth on a schedule that will be provided to Newco on or before
five (5) business days prior to the Closing Date.

 

(i) Prior to Closing, Newco and HNS shall negotiate in good faith to determine
whether, and to what extent, Newco shall assume, adopt, succeed to, honor and
continue to perform all obligations of HNS and its Affiliates under all
outsourcing and independent contractor arrangements set forth in Section J-2(i)
of the Disclosure Schedule.

 

(j) Newco shall take all steps necessary to permit each Transferred Employee who
has received an eligible rollover distribution (as defined in Section 402(c)(4)
of the Code), if any, to roll such eligible rollover distribution as part of any
lump sum distribution to the extent permitted under the Law into an account
under Newco’s 401(k) Plan.

 

Business Employees with vested stock options with respect to Parent stock shall
be entitled to exercise such stock options until the earlier of the normal
expiration of the option or five (5) years from the Closing Date.

 

J-5

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EXHIBIT K

 

FORM OF BILL OF SALE AND ASSUMPTION AGREEMENT

 

K-1

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EXHIBIT L

 

FORM OF NON-COMPETITION AGREEMENT

 

L-1

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EXHIBIT M

 

FORM OF INTELLECTUAL PROPERTY AGREEMENT

 

M-1

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EXHIBIT N

 

FORM OF INVESTOR RIGHTS AGREEMENT

 

N-1

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EXHIBIT O

 

HNS KNOWLEDGE PERSONS

 

Pradman Kaul, Chairman and Chief Executive Officer

 

James Lucchese, Executive Vice President and Chief Financial Officer

 

Paul Gaske, Executive Vice President and General Manager, North America Division

 

Bahram Pourmand, Executive Vice President and General Manager, HNS International

 

Adrian Morris, Senior Vice President, Engineering

 

Tom McElroy, Vice President Finance, Controller

 

Dean Manson, General Counsel

 

John Whelan, Associate General Counsel – Intellectual Property

 

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EXHIBIT P

 

FORM OF REGISTRATION RIGHTS AGREEMENT

 

P-1