WHEREAS, IS-11 has been successfully launched and placed into position at the 43°W OrbitalLocation, and the parties desire to enter into a new service agreement on the terms set forthherein for additional satellite transmission services on a new Ku-band satellite which willinclude, to the extent practicable, the components of IS-11R (“**IS-16**” or the “**Satellite**”) and whichsatellite Intelsat will procure from Orbital and co-locate with IS-9 at the 58°W Orbital Location;WHEREAS, Intelsat intends to provide expansion capacity to Sky Mexico by using twelve (12)designated transponders on IS-16 that will not interfere with existing services on IS-9;WHEREAS, in addition to providing Sky Mexico with expansion capacity, Customer has requestedthat Intelsat operate (and Intelsat has agreed to operate) IS-16 as an in-orbit spare to provideback-up services for IS-9 and back-up and expansion services for IS-11 and subsequently to allowSky Mexico to use IS-16 to replace IS-9 at the 58°W Orbital Location, all subject to the provisionsstated herein; andWHEREAS, to implement the terms of this Agreement, LLC intends to procure the Satellite, andIntelsat will, in accordance with its normal internal customer distribution structure, structurethe delivery of capacity and services as provided below.NOW, THEREFORE, in consideration of the terms and conditions and mutual promises containedherein, the parties hereby agree as follows:ARTICLE 1. THE CUSTOMER’S TRANSPONDER CAPACITY.1.1 Description of Capacity; Construction and Launch of IS-16.(a) During the Capacity Term (as defined in Section 2.1(a) below), Intelsat agrees to provideto Customer and any Affiliate of either Customer Party in accordance with the terms hereof, andCustomer agrees to accept from Intelsat, on a full-time basis (24 hours a day, seven days a week),in outer space, the satellite transmission services (the “**IS-16 Service**”) using the CustomerTransponder Capacity (defined below) meeting the “**Performance Specifications**” set forth in the"**Technical Appendix**” attached hereto as Appendix B on the terms and conditions set forthherein. For purposes of this Agreement, the “**Customer’s Transponder Capacity**” or “**CustomerTransponders**” shall consist of twenty-four (24),
 
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thirty-six (36) MHz Ku-Band transponders located on IS-16 (as defined below) that meet orexceed the Performance Specifications set forth in the Technical Appendix (Appendix B),which Satellite shall be located in geostationary orbit at the 58°W Orbital Location, or if used asan in-orbit replacement of IS-11, at the 43°W Orbital Location (subject in each case to the orbitaltolerances specified in Appendix B).The Customer Transponders are more particularly identified in Appendix B. As providedin Section 1.2 below, during the period in which IS-16 is co-located with IS-9 at the 58°W OrbitalLocation, Intelsat shall initially make available twelve (12) Customer Transponders on theSatellite for use by Sky Mexico (and any of its Affiliates) (the “**Expansion Transponders**”). Asprovided in Section 1.3 below, Intelsat shall make available an additional twelve (12) ortwenty-four (24) Customer Transponders on IS-16 for Customer’s use as back-up capacity if IS-9 orIS-11, respectively, suffers a failure. Finally, in accordance with the terms of Section 1.4below, Intelsat shall make available all twenty-four (24) Customer Transponders for Sky Mexico’suse as a replacement for IS-9 or twenty-four (24) of the Customer Transponders for Sky Brasil’s useas a replacement for IS-11. If Sky Mexico contracts to procure capacity services from Intelsat onIS-9R pursuant to the IS-9R Agreement, then, in addition to making the IS-16 Customer Transpondersavailable for Customer’s use as backup capacity for IS-9 and IS-11, and effective as of the IS-9RTerm Commencement Date (as defined in Section 1.3(c)(ii) below), Intelsat shall make available alltwenty-four (24) Customer Transponders on IS-16 for Customer’s use as back-up capacity if IS-9Rsuffers a failure. The transponders on IS-16 and the beams in which these transponders are groupedare referred to as “**Transponder(s)**” and the “**Beam(s)**,” respectively. As used in this Agreement,the term “**Affiliate**” means, with respect to any entity, any entity directly or indirectly, throughone or more intermediaries, controlling, controlled by, or under common control with such entity.The term “control” (including, with its correlative meanings, “controlled by” and “under commoncontrol with”) shall mean, with respect to any party, ownership, directly or indirectly, by suchparty of equity securities entitling it to either (i) exercise in the aggregate more than 50% ofthe voting power of the entity in question; or (ii) exercise in the aggregate at least 25% of thevoting power of the entity in question and direct the decisions of the board of directors of theentity in question.(b) LLC shall procure from Orbital a new Ku-band satellite containing all of the IS-16Transponders as follows: LLC shall direct Orbital to re-purpose, to the extent practicable, theIS-11R parts and items for the construction of IS-16. Any existing contract rights with Orbitalat that time existing in favor of Intelsat shall be transferred by Intelsat Corp to LLC for saidre-purpose. In this case, LLC shall use commercially reasonable efforts to cause
 
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IS-16 to be launched within twenty-four (24) months from the Execution Date. Notwithstandinganything contained herein to the contrary, LLC makes no representation or warranty with respect tothe schedule for construction and launch of the IS-16 Satellite, and Customer understands thattechnical issues related to the construction or launch of the Satellite beyond the reasonablecontrol of LLC may occur which could prevent any schedule from being maintained. Notwithstandinganything to the contrary in Appendix B, Intelsat shall secure a launch vehicle for the IS-16Satellite that would be expected to yield an in-orbit mission lifetime of at least 15 years. Inthe event that Intelsat, after using all commercially reasonable efforts to do so, cannot securesuch launch vehicle, it shall promptly notify Customer, which notice shall specify thecircumstances, the extent of any anticipated delay, and the other launch alternatives thenavailable to Intelsat. Within thirty (30) days of receipt of such notice, the Customer shallinstruct Intelsat on the launch vehicle solution to be followed; provided, however, that (a) in anycase where as a result of Customer’s decision the launch is delayed by twelve (12) months or more,Customer shall pay to Intelsat an additional fee equal to eight percent (8%) of the amountpreviously paid by Intelsat to Orbital for the IS-16 Satellite, and (b) compensate Intelsat for anyincreased launch costs occasioned by its instructions or, in the case of lower launch costs,receive a credit against the first Installment Payment of the Fixed Service Fee.1.2 Expansion Transponder Capacity. Intelsat will make the Expansion Transponders (asmore particularly described in Appendix B hereto) available at the 58°W Orbital Locationfor use by Sky Mexico and its Affiliates during the period commencing on the Start of Service Date(as defined in Section 2.1(a) below) and, subject to Sections 1.3 and 1.4 below, continuing untilthe earlier of (a) the expiration or earlier termination of the Capacity Term, or (b) if Sky Mexicohas entered into the IS-9R Agreement, the IS-9R Term Commencement Date (as defined in Section1.3(c)(ii) below). Sky Mexico and its Affiliates may use the Expansion Transponders to meet thesatellite transmission requirements of their own services (but not for resale). Sky Mexico shallcause its Affiliates to comply with the terms of this Agreement, and shall be deemed in materialbreach of this Agreement for any material failure by any such Affiliate to so comply.1.3 In-Orbit Sparing Options.(a) Back-Up for IS-11 In-Orbit Failure. In the event that (x) any transponder onIS-11 suffers, or is reasonably expected to suffer, a failure at any time on or after the“Commencement Date” (as defined in the IS-11 Service Agreement), which failure results, or isreasonably expected to result, in the automatic termination of the IS-11 Service Agreement with
 
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respect to such transponder in accordance with Section 7.2 thereof, or (y) Intelsat takesIS-11 out of commercial operation pursuant to Section 7.3 of the IS-11 Service Agreement, and ineach case Intelsat is unable to promptly provide, from the same or another Intelsat satelliteoperating at the 43°W Orbital Location, replacement transponder capacity with materially the sameor better coverage and performance (each of the foregoing events described in clauses (x) and (y)hereinafter being referred to as an “**IS-11 In-Orbit Failure**”), then in either case Sky Brasil andSky Mexico may, through a joint written notice to Intelsat signed by both Customer Parties, electto relocate IS-16 to the 43°W Orbital Location and for each IS-11 transponder the use of which isterminated by DIRECTV in accordance with Section 7.2 and/or Section 7.3 of the IS-11 ServiceAgreement (each, a “**Terminated IS-11 Transponder**”), DIRECTV may commence using (either directly orthrough any Affiliate) a Customer Transponder on IS-16 (each, an “**IS-11 Replacement Transponder**”)in lieu of such Terminated IS-11 Transponder, together with the six (6) additional IS-16 CustomerTransponders that will not interfere with existing services on IS-11 (the “**Sky Brasil ExpansionTransponders**”) (the parties acknowledging that if DIRECTV terminated its use of all IS-11transponders in accordance with Section 7.2 and/or Section 7.3 of the IS-11 Service Agreement, SkyBrasil would be entitled to use a total of twenty-four (24) Customer Transponders on IS-16).Notwithstanding the foregoing, if Intelsat is unable to provide the “Minimum Complement” (as thatterm is defined in the IS-11 Service Agreement) of IS-11 transponders pursuant to the IS-11 ServiceAgreement (hereinafter, an “**IS-11 Minimum Complement Failure**,” which term does not include thenormal end-of-life process for IS-11; i.e., the satellite has insufficient fuel to maintain itslicensed orbital position, but such circumstance is not caused by a satellite malfunction or anyextraordinary event), or is reasonably expected to be unable to do so (as indicated in the mostrecent Intelsat satellite health report) within 12 months, such written notice need be signed bySky Brasil only. For the avoidance of doubt, the parties acknowledge that the provision of anyIS-11 Replacement Transponder(s) for the Terminated IS-11 Transponder(s) shall be on a one-for-onebasis, along with the six (6) Sky Brasil Expansion Transponders that shall be made available toDIRECTV, such that DIRECTV (or its Affiliate, as applicable) is not using, at any given time whileIS-16 is located at the 43°W Orbital Location, transponder capacity on more than an aggregate oftwenty-four (24) transponders from IS-11 and IS-16. As long as Intelsat makes the CustomerTransponders available to Customer, the IS-11 Service Agreement shall remain in full force andeffect (notwithstanding the termination rights of DIRECTV pursuant to Sections 7.2 and 7.3thereof), except with respect to the Terminated IS-11 Transponders and any IS-11 transponders theuse of which DIRECTV terminates pursuant to the proviso in clause (ii) of this sentence below, andDIRECTV’s use of the Customer Transponders shall be governed by, and shall be subject to, all ofthe applicable terms and conditions of the IS-11 Service Agreement (other than
 
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Article 5 thereof), provided that (i) DIRECTV shall not be required to pay Intelsatthe “Monthly Fee” payable under Article 3 of such agreement with respect to the IS-11 ReplacementTransponders or the six (6) additional Customer Transponders (subject to Customer’s performance ofits obligations hereunder) but shall be required to continue to pay such “Monthly Fee” only for theremaining IS-11 transponders that were not terminated in accordance with the terms of the IS-11Service Agreement (or pursuant to the proviso in clause (ii) of this sentence), and (ii) if anIS-11 Minimum Complement Failure occurred, Customer may elect, by written notice from Sky Brasilonly, to discontinue further use of any IS-11 transponders and use all twenty-four (24) CustomerTransponders on IS-16. In addition to the payments of such “Monthly Fee” under the IS-11 ServiceAgreement, if any, following an IS-11 Minimum Complement Failure Customer shall continue to payIntelsat the Fixed Service Fees and (in lieu of the Variable Service Fees) the Reduced VariableService Fees as stated in Article 3 below.DIRECTV may continue to use the IS-11 Replacement Transponders and the Sky Brasil ExpansionCustomer Transponders on IS-16 until the earliest of (i) the expiration or earlier termination ofthe Capacity Term under this Agreement, or (ii) if directed by Customer pursuant to a writtennotice executed by Sky Brasil and Sky Mexico, the date on which LLC (at Intelsat’s directionpursuant to instructions from Customer) relocates the IS-16 Satellite to the 58°W Orbital Location,or (iii) the date on which Intelsat has placed a “Replacement Satellite” (as defined insubparagraph (c) below) at the 43°W Orbital Location with at least twelve (12) customertransponders meeting the applicable performance specifications set forth in the IS-11 ServiceAgreement, provided that if the Replacement Satellite at the 43°W Orbital Location provides DIRECTVwith less than twenty-four (24) customer transponders meeting the applicable performancespecifications (as set forth in the IS-11 Service Agreement or, in the case of the Sky BrasilExpansion Transponders, as set forth in the Technical Appendix hereto), then Customer may continueusing certain of the IS-11 Replacement Transponders on IS-16, and in any circumstance, Customer maycontinue using the six (6) additional Sky Brasil Expansion Transponders on IS-16, so that there arean aggregate of twenty-four (24) transponders available to Customer on the Replacement Satelliteand IS-16 combined (DIRECTV agreeing that it shall be required to make payment for any of theReplacement Satellite transponders, up to a maximum of twenty-four (24), that meet their applicableperformance specifications).(b) Back-Up for IS-9 In-Orbit Failure. In the event that (x) any transponder on IS-9suffers, or is reasonably expected to suffer, a failure which results, or is reasonably expected toresult, in the automatic termination of the IS-9 Service Agreement with respect to such transponderin accordance with Section 7.3 thereof, or (y) Intelsat takes IS-9 out of
 
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commercial operation pursuant to Section 7.4 of the IS-9 Service Agreement, and in each caseIntelsat is unable to immediately provide, from the same or another Intelsat satellite operating atthe 58°W Orbital Location, replacement transponder capacity with materially the same or bettercoverage and performance (each of the foregoing events described in clauses (x) and (y) hereinafterbeing referred to as an “**IS-9 In-Orbit Failure**”), then in either case Sky Brasil and Sky Mexicomay, through a joint written notice to Intelsat signed by both Customer Parties, elect to haveIS-16 continue operating at the 58°W Orbital Location (or relocated to the 58°W Orbital Location asthe case may be) and for each IS-9 transponder the use of which is terminated by Sky Mexico inaccordance with Section 7.3 and/or Section 7.4 of the IS-9 Service Agreement (each, a “**TerminatedIS-9 Transponder**”), Sky Mexico may commence using (either directly or through any Affiliate) anIS-16 Customer Transponder (each, an “**IS-9 Replacement Transponder**”) in lieu of such TerminatedIS-9 Transponder. Notwithstanding the foregoing, if Intelsat is unable to provide the applicable“Minimum Complement” (as such term is defined in the IS-9 Service Agreement) of IS-9 transponderspursuant to the IS-9 Service Agreement (hereinafter, an “**IS-9 Minimum Complement Failure**,” whichterm does not include the normal end-of-life process for IS-9; i.e., the satellite has insufficientfuel to maintain its licensed orbital position, but such circumstance is not caused by a satellitemalfunction or other extraordinary event), or is reasonably expected to be unable to do so (asindicated in the most recent Intelsat satellite health report) within 12 months, such writtennotice need be signed by Sky Mexico only. For the avoidance of doubt, the parties acknowledge thatthe provision of any IS-9 Replacement Transponder(s) for the Terminated IS-9 Transponder(s) shallbe on a one-for-one basis such that Customer is not using, at any given time while IS-16 is locatedat the 58°W Orbital Location, transponder capacity on more than an aggregate of twenty-four (24)transponders from IS-9 and IS-16. As long as Intelsat makes the Customer Transponders available toCustomer, the IS-9 Service Agreement shall remain in full force and effect (notwithstanding thetermination rights of Sky Mexico pursuant to Sections 7.3 and 7.4 thereof), except with respect tothe Terminated IS-9 Transponders and any IS-9 transponders the use of which Sky Mexico terminatespursuant to the proviso in clause (ii) of this sentence below, and Sky Mexico’s use of the CustomerTransponders shall be governed by, and shall be subject to, all of the applicable terms andconditions of the IS-9 Service Agreement (other than Article 5 thereof), provided that (i)Sky Mexico shall not be required to pay Intelsat the “Monthly Service Fee” payable under Article 3of such agreement with respect to the IS-9 Replacement Transponders (subject to Customer’sperformance of its obligations hereunder) but shall be required to continue to pay such “MonthlyService Fee” only for the remaining IS-9 transponders that were not terminated in accordance withthe terms of the IS-9 Service Agreement (or pursuant to the proviso in clause (ii) of thissentence), and (ii) if an IS-9 Minimum Complement
 
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Failure occurred, Customer may elect, by written notice from Sky Mexico only, to discontinuefurther use of any IS-9 transponders and use all twenty-four (24) IS-9 Replacement Transponders onIS-16. In addition to the payments of such “Monthly Service Fee” under the IS-9 Service Agreement,if any, following an IS-9 Minimum Complement Failure Customer shall continue to pay Intelsat theFixed Service Fees and (in lieu of the Variable Service Fees) the Reduced Variable Service Fees asstated in Article 3 below.Sky Mexico may continue to use the IS-9 Replacement Transponders on IS-16 until the earlier of(i) the expiration or earlier termination of the Capacity Term under this Agreement, or (ii) ifdirected by Customer pursuant to written notice executed by Sky Brasil and Sky Mexico, the date onwhich LLC (at Intelsat’s direction pursuant to instructions from Customer) relocates the IS-16Satellite to the 43°W Orbital Location, or (iii) the date on which Intelsat has placed a“Replacement Satellite” (as described in subparagraph (c) below) at the 58°W Orbital Location withat least nine (9) customer transponders meeting the applicable performance specifications set forthin the IS-9 Service Agreement, provided that if the Replacement Satellite at the 58°W OrbitalLocation provides Customer with less than twenty-four (24) customer transponders meeting theapplicable performance specifications (set forth in this Service Agreement), then Customer maycontinue using certain of the IS-9 Replacement Transponders on IS-16 so that there are an aggregateof twenty-four (24) transponders available to Customer on the Replacement Satellite and IS-16combined (Sky Mexico agreeing that it shall be required to make payment for any of the ReplacementSatellite transponders, up to a maximum of twenty-four (24), that meet their applicable performancespecifications).(c) Replacement Satellite; Disposition of Failed Transponder Capacity.(i) Notwithstanding anything contained herein to the contrary, Intelsat shall have the right(which it may exercise in its sole discretion) to replace IS-9 or IS-11 should either suffer a IS-9Minimum Complement Failure or IS-11 Minimum Complement Failure, as applicable, with anotherIntelsat satellite (a “**Replacement Satellite**”) which includes Ku-band transponders that providematerially the same or better coverage and performance than the “Performance Specifications”applicable to the satellite being replaced under the IS-9 Service Agreement or the IS-11 ServiceAgreement, as applicable (or in the case of the Sky Brasil Expansion Transponders, the “PerformanceSpecifications” applicable thereto in the Technical Appendix), provided that such replacement shallnot operate to extend the applicable “Capacity Term” or “Service Term” of the relevant serviceagreement beyond the date therein specified had the existing satellite remained in service. IfIntelsat elects to provide such Replacement Satellite
 
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for IS-9, the capacity thereon shall be deemed to be “Substitute Capacity,” as that term isdefined and used in the IS-9 Service Agreement, and Sky Mexico shall resume payment for suchcapacity at the monthly per transponder fees set forth in Section 3.1 of the IS-9 ServiceAgreement. Likewise, if Intelsat elects to provide such Replacement Satellite for IS-11, it shallbe deemed to be a “Replacement Satellite,” as that term is defined and used in the IS-11 ServiceAgreement, and DIRECTV shall resume payment for such capacity at the monthly per transponder feesset forth in Section 3.1 of the IS-11 Service Agreement. Sky Brasil agrees that any IS-11Replacement Satellite provided by Intelsat shall be designed to include twenty-four (24)transponders designated for DIRECTV’s use, and DIRECTV shall pay for such capacity at the monthlyper transponder fees set forth in Section 3.1 of the IS-11 Service Agreement, provided that ifDIRECTV did not use all six (6) of the Sky Brasil Expansion Transponders on IS-16, then Intelsatmay not require DIRECTV to use and pay for more than eighteen (18) transponders on the ReplacementSatellite plus an additional number of transponders equal to the number of Sky Brasil ExpansionTransponders that were so used by DIRECTV. For the avoidance of doubt, if Intelsat utilizes IS-9Ras the Replacement Satellite for IS-9 following Sky Mexico’s execution of the IS-9R Agreement, SkyMexico shall not be required to pay the monthly per transponder fees set forth in Section 3.1 ofthe IS-9 Service Agreement for more than twelve (12) of such replacement transponders on IS-9Runtil the IS-9R Term Commencement Date (all as more particularly described in subparagraph (ii)below).(ii) In any case where Sky Mexico and Intelsat have not already entered into an IS-9RAgreement, and either: (y) Sky Mexico (or an Affiliate, as applicable) is utilizing capacity onIS-16 following an IS-9 Minimum Complement Failure, or (z) Intelsat has notified Sky Mexico ofIntelsat’s decision to enter into a procurement contract for a new satellite to replace IS-9 at the58°W Orbital Location, Sky Mexico shall have the option to cause Intelsat to replace IS-9 at the58°W Orbital Location with a new satellite **(**"**IS-9R**"**)**that includes twenty-four (24) Ku-bandtransponders which provide materially the same or better coverage and performance than the“Performance Specifications” applicable to Sky Mexico’s payload on IS-16, subject to andconditioned upon the following:(A) Intelsat shall provide written notice to Sky Mexico of Intelsat’s decision to enter into aprocurement contract for IS-9R (the “**IS-9R Procurement Notice**”), provided that Intelsat shall notgive such notice unless it has determined in its reasonable, good faith discretion that either thethen projected end of orbital maneuver life of IS-9 or an IS-9 Minimum Complement Failure willoccur within the thirty-six (36) month period immediately following the date of such notice. SkyMexico must notify Intelsat of Sky Mexico’s
 
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desire to exercise its option (the “**Sky Mexico Option Exercise Notice**”) on or before the date(the “**IS-9R Determination Date**”) which is the earlier of (x) the 180th day following thedate of an IS-9 Minimum Complement Failure in the case of clause (ii) (y) above, (y) January 1,2012, or (z) the 60th day following its receipt of the IS-9R Procurement Notice fromIntelsat in the case of clause (ii)(z) above;(B) During the 90-day period following Intelsat’s receipt of the Sky Mexico Option ExerciseNotice, each of Intelsat and Sky Mexico shall endeavor in good faith to negotiate and enter into aservice agreement (the “**IS-9R Agreement**”) which (1) provides for a capacity service term thatcommences on 1 September 2015 or, if later, the date on which Intelsat has placed IS-9R intoservice at the 58°W Orbital Location, with at least sixteen (16) transponders meeting theapplicable performance specifications, and Intelsat has so certified to Sky Mexico and made suchtransponders available for its use (the “**IS-9R Term Commencement Date**”), and continues until thesatellite’s end of orbital maneuver life (or if a failed satellite is replaced by Intelsat inaccordance with the terms of the IS-9R Agreement, on the 15th anniversary of theapplicable service commencement date), subject in each case to any applicable earlier terminationprovisions (the “**IS-9R Term**”), (2) commits Sky Mexico to procure services from Intelsat usingtwenty-four (24) transponders on IS-9R at a monthly rate per transponder of One Hundred Twenty-FiveThousand United States Dollars (U.S.$125,000.00), (3) includes other terms and conditions that aresubstantially the same as those set forth in the existing IS-9 Service Agreement, as applicable, asthe same may be modified as appropriate to reflect changes in the service commencement date,changes in technology and equipment employed, legal requirements and other differences incircumstances that reasonably require modification in, or updating from, the terms and conditionsstated therein (provided that (x) subparagraphs (a), (b), (c) and (e) of Section 1.4, Section 1.8,Section 3.2 and Section 17 thereof shall not be included (but provisions substantially similar toSection 16.1 dealing with rights associated with Successor or Collocated Satellites shall beincluded in the IS-9R Agreement), (y) a provision comparable to Section 5.7 of the IS-11 ServiceAgreement shall be included, and (z) Section 7.3 thereof shall be modified to permit restoration ona different satellite that provides materially the same or better coverage and performance), and(4) may require Sky Mexico to post collateral in a form and in an amount as determined by Intelsatreasonably in its good faith discretion based upon Intelsat’s analysis of Sky Mexico’s financialcondition, payment history and other risk factors (e.g., political, contractual enforcement orother risks), which collateral may include the requirement of a satisfactory parent companyguarantee, and in any case, will be subject to negotiation and mutual agreement of the parties.
 
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The parties hereby agree that the provisions contained in this Section 1.3(c)(ii) supersedeand replace in their entirety those provisions contained in Section 16.1 of the IS-9 ServiceAgreement that pertain to a “Successor Satellite” as defined therein, and Intelsat and Sky Mexicoshall promptly execute a formal amendment to the IS-9 Service Agreement to acknowledge that suchprovisions are null and void; and(C) If Sky Mexico fails to timely provide the Sky Mexico Option Exercise Notice on or beforethe IS-9R Determination Date, or if the parties fail to execute a binding IS-9R Agreement withinthe 90-day negotiation period, neither party shall have any further obligation to the other partypursuant to this Section 1.3(c)(ii), provided that such 90-day negotiation period shall be extendeduntil the day immediately preceding the date on which Intelsat (or an Affiliate thereof) thereafterenters into an IS-9R procurement contract.(iii) In any case where Sky Brasil and Intelsat have not already entered into an IS-11Replacement Agreement, and either: (y) Sky Brasil (or an Affiliate, as applicable) is utilizingcapacity on IS-16 following an IS-11 Minimum Complement Failure, or (z) Intelsat has notified SkyBrasil of Intelsat’s decision to enter into a procurement contract for a new satellite to replaceIS-11 at the 43°W Orbital Location, Sky Brasil shall have the option to cause Intelsat to replaceIS-11 at the 43°W Orbital Location with a new satellite **(**"**IS-11 Replacement**"**)**that includestwenty-four (24) transponders which provide materially the same or better coverage and performancethan the “Performance Specifications” applicable to IS-11 under the IS-11 Service Agreement (or inthe case of the Sky Brasil Expansion Transponders, the “Performance Specifications” applicablethereto in the Technical Appendix), subject to and conditioned upon the following:(A) Intelsat shall provide written notice to Sky Brasil of Intelsat’s decision to enter into aprocurement contract for the IS-11 Replacement (the “**IS-11 Replacement Procurement Notice**”),provided that Intelsat shall not give such notice unless it has determined in its reasonable, goodfaith discretion that either the then projected end of orbital maneuver life of IS-11 or an IS-11Minimum Complement Failure will occur within the thirty-six (36) month period immediately followingthe date of such notice. Sky Brasil must notify Intelsat of Sky Brasil’s desire to exercise itsoption (the “**Sky Brasil Option Exercise Notice**”) on or before the date (the “**IS-11 ReplacementDetermination Date**”) which is the earlier of (x) the 180th day following the date of anIS-11 Minimum Complement Failure in the case of clause (iii) (y) above, or (y) the 60thday following its receipt of the IS-11 Replacement Procurement Notice from Intelsat in the case ofclause (iii)(z) above;
 
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(B) During the 90-day period following Intelsat’s receipt of the Sky Brasil Option ExerciseNotice, each of Intelsat and Sky Brasil shall endeavor in good faith to negotiate and enter into aservice agreement (the “**IS-11 Replacement Agreement**”) which (1) provides for an “end of life”capacity service term that commences on the date on which Intelsat places the satellite intocommercial service and continues until the satellite’s end of orbital maneuver life (or if a failedsatellite is replaced by Intelsat in accordance with the terms of the IS-11 Replacement Agreement,on the 15th anniversary of the applicable service commencement date), subject in eachcase to any applicable earlier termination provisions (the “**IS-11 Replacement Term**”), (2) commitsSky Brasil to procure services from Intelsat using at least eighteen (18) but no more thantwenty-four (24) transponders on the IS-11 Replacement at a monthly rate per transponder of OneHundred Twenty-Five Thousand United States Dollars (U.S.$125,000.00), provided that if Sky Brasilcommits to less than twenty (20) transponders on the IS-11 Replacement, then the monthly rate pertransponder will be One Hundred Thirty-Nine Thousand, One Hundred Sixty-Six United States Dollarsand Sixty-Seven Cents (US$139,166.67), (3) includes other terms and conditions that aresubstantially the same as those set forth in the existing IS-11 Service Agreement, as applicable,as the same may be modified as appropriate to reflect changes in the service commencement date,changes in technology and equipment employed, legal requirements and other differences incircumstances that reasonably require modification in, or updating from, the terms and conditionsstated therein (provided that subparagraphs (a), (b), (c) and (d) of Section 1.4, Section 1.5, andSection 3.2 thereof shall not be included) (provisions substantially similar to Section 15.1dealing with rights associated with Successor or Collocated Satellites shall be included in theIS-11 Replacement Agreement), and (4) may require Sky Brasil to post collateral in a form and in anamount as determined by Intelsat reasonably in its good faith discretion based upon Intelsat’sanalysis of Sky Brasil’s financial condition, payment history and other risk factors (e.g.,political, contractual enforcement or other risks), which collateral may include the requirement ofa satisfactory parent company guarantee, and in any case will be subject to negotiation and mutualagreement of the parties. The parties agree that Sky Brasil may commit to procure services usingup to twenty-four (24) transponders on the IS-11 Replacement, provided that it shall commit toprocure services using at least eighteen (18) transponders on the IS-11 Replacement, together withsuch additional number of transponders that is equal to the number of Sky Brasil ExpansionTransponders used by DIRECTV (or its Affiliate) on IS-16 following an IS-11 Minimum ComplementFailure. The parties agree that the provisions contained in this Section 1.3(c)(iii) supersede andreplace in their entirety those provisions contained in Section 15.1 of the IS-11 Service Agreementthat pertain to a “Successor Satellite” as defined therein, and Sky Brasil shall cause DIRECTV to execute an amendment to the IS-11 Service Agreement to acknowledge that such provisions arenull and void.
 
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(C) If Sky Brasil fails to timely provide the Sky Brasil Option Exercise Notice on or beforethe IS-11 Replacement Determination Date, or if the parties fail to conclude a binding IS-11Replacement Agreement within the 90-day negotiation period, neither party shall have any furtherobligation to the other party pursuant to this Section 1.3(c)(iii), provided that such 90-daynegotiation period shall be extended until the day immediately preceding the date on which Intelsat(or an Affiliate thereof) thereafter enters into an IS-11 replacement procurement contract.(iv) Intelsat shall use commercially reasonable efforts to place IS-9R or the IS-11Replacement into commercial service within three (3) years of the execution of the IS-9R Agreementor the IS-11 Replacement Agreement, as applicable. Following Intelsat’s provision of service onany such satellite, Customer shall discontinue further use of Customer’s Transponder Capacity onIS-16, and such satellite shall resume its function as an in-orbit spare; provided, however, thatif such replacement satellite provides less than twenty-four (24) Customer Transponders in the caseof IS-9R, or less than twenty-four (24) Customer Transponders in the case of the IS-11 Replacement,then Customer may continue using certain of the IS-16 Transponders so that there are an aggregateof twenty-four (24) transponders available for Customer’s use on the Replacement Satellite andIS-16, and provided further that Customer shall use all of the transponders on the ReplacementSatellite that meet their applicable performance specifications.(v) In any case where either Customer or any of its Affiliates, as applicable, is utilizingcapacity on IS-16 as a back-up following an IS-9 In-Orbit Failure or an IS-11 In-Orbit Failure,Customer and its Affiliates and Intelsat shall cease any further use of the transponders that arebeing replaced. Notwithstanding the foregoing, if Intelsat has provided a Replacement Satellite,Intelsat shall thereafter have the sole and exclusive use of such replaced transponder capacity forany purpose(s), including the use of such capacity to provide satellite transmission services toother customers of Intelsat or its Affiliates (Intelsat and such Affiliates hereinafter sometimesbeing referred to as the “**Intelsat Companies**”); provided, however, that such use by Intelsat or itsother customers shall be on a non-interfering basis to both Customer Parties’ use of capacityhereunder at the 43°W Orbital Location and 58°W Orbital Location.
 
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(d) Sale of Preemptible Capacity. Intelsat and its Affiliates may, with the priorwritten consent of and with a revenue share agreement that is acceptable to Customer (such consentto be withheld or granted in Customer’s sole discretion), use all or any portion of the CustomerTransponders on IS-16 to provide satellite transmission services, on a preemptible butnon-interfering basis, to other third party customers that do not provide direct-to-home servicesto Mexico, Brazil or the “Pan-Americana” region (i.e., the predominately Spanish speaking countriesof South America and Central America) during any period in which Customer is not utilizingCustomer’s Transponder Capacity.(e) Approval for Movement of the Satellite as a Back-Up. Notwithstanding anything inthis Section 1.3 to the contrary, if the Satellite is in use as a back-up due to an IS-9 or IS-11Minimum Complement Failure at either the 43°W Orbital Location or the 58°W Orbital Location, thenthe Satellite shall not be moved by LLC from such Orbital Location unless Customer provides writtennotice, signed by both Sky Mexico and Sky Brasil, directing Intelsat to move the Satellite.(f) The parties acknowledge that: (i) in the event Intelsat provides one or more ReplacementSatellites hereunder or subsequently launches a satellite into either the 43°W Orbital Location orthe 58°W Orbital Location as a replacement therefor, the parties’ rights and obligations specifiedin Sections 1.3(a) and (b) above with respect to IS-16 shall likewise apply to such othersatellite(s); (ii) any Replacement Satellite (including IS-9R and the IS-11 Replacement) located byIntelsat at the 43°W Orbital Location or the 58°W Orbital Location may include payloads thatIntelsat will utilize to provide services to other Intelsat customers, provided that such operationthereof shall be on a non-interfering basis to both Customer Parties’ use of capacity hereunder atthe 43°W Orbital Location and 58°W Orbital Location; and (iii) IS-16 will not include anytransponder capacity other than the Customer Transponders.1.4 Use of IS-16 in Lieu of IS-9R or an IS-11 Replacement Satellite.(a) Subject to subparagraphs (c) and (d) below, and provided that as of September 1, 2015 SkyMexico and Intelsat have not already entered into the IS-9R Agreement and IS-16 has not suffered aTotal Loss (as defined in Appendix F), then commencing on September 1, 2015 and continuinguntil expiration of the Capacity Term (the “**Sky Mexico Exclusive Use Term**”): (i) Intelsat shallmake available all twenty-four (24) Customer Transponders on the IS-16 Satellite for use by SkyMexico and any of its Affiliates; and (ii) Sky Mexico’s primary use of the IS-16 Capacity (asreplacement of its IS-9 capacity) shall thereafter
 
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be governed by the terms and conditions set forth in this Agreement. In this event, SkyBrasil shall still be entitled to use the IS-16 capacity at the 43°W Orbital Location as backup forIS-11 (or any replacement(s) thereof) during the Sky Mexico Exclusive Use Term in accordance withthe provisions of Section 1.3(a) upon written notice to Intelsat following an IS-11 or IS-11RMinimum Complement Failure, but only if Sky Mexico was not otherwise using IS-9 ReplacementTransponders on IS-16 at the 58°W Orbital Location following an IS-9 Minimum Complement Failure.Notwithstanding the foregoing, Sky Brasil’s right to so use the IS-16 capacity as backup for IS-11(or any replacement(s) thereof) at the 43°W Orbital Location in this case is conditioned upon SkyBrasil entering into an IS-11 Replacement Agreement with Intelsat on the terms described in Section1.3(c)(iii)(B) above within sixty (60) days of the date on which Intelsat commences the drift ofthe Satellite to the 43°W Orbital Location, or in the absence of such agreement, Sky Brasil shall,from and after the date of the Satellite’s relocation to the 43°W Orbital Location, be obligated topay Intelsat each Sky Mexico MRC payment as the same is due (or as the same would have been due ifIntelsat terminates this Agreement as to Sky Mexico) from Sky Mexico from and after the date ofsuch relocation for the provision of such capacity if and to the extent each such payment is notmade by Sky Mexico for the period in question (each of such payments owed by Sky Brasil hereinafterbeing referred to as a “**Sky Brasil Substitute MRC Payment**”).(b) During each month of the Sky Mexico Exclusive Use Term, in addition to any Service Feespayable pursuant to Section 3.1, but subject to the outage/restoration provisions of Article 5, SkyMexico shall pay Intelsat a monthly recurring charge (the “**Sky Mexico MRC**”) of Sixty-Two Thousand,Five Hundred United States Dollars (US$62,500) per month for each of the twenty-four (24) CustomerTransponders on the IS-16 Satellite made available by Intelsat for Sky Mexico’s use. During theSky Mexico Exclusive Use Term, any Transponder that suffers, or had previously suffered, aConfirmed Failure shall, unless restored to its Performance Specifications within thirty (30) daysof such Confirmed Failure, cease to be a Customer Transponder or be subject to this Agreement andmay be used exclusively by Intelsat for any non-interfering purpose(s), including the use of suchcapacity to provide satellite transmission services to other customers of Intelsat or itsAffiliates.(c) Notwithstanding subparagraph (a) above, if (i) as of September 1, 2015 Sky Brasil is usingIS-11 Replacement Transponders on IS-16 at the 43°W Orbital Location following an IS-11 MinimumComplement Failure, and (ii) prior to September 1, 2015 Intelsat and Sky Brasil entered into theIS-11 Replacement Agreement or Intelsat otherwise provided written notice to Sky Brasil ofIntelsat’s decision to provide a Replacement Satellite at the 43°W
 
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Orbital Location pursuant to Section 1.3(c) above, then the commencement of the Sky MexicoExclusive Use Term will be delayed, and Sky Mexico’s obligation to commence payment of the SkyMexico MRC to Intelsat will be deferred, until such time as LLC has moved IS-16 back to the 58°WOrbital Location for Sky Mexico’s use following deployment of an IS-11 Replacement Satellite at the43°W Orbital Location with at least twelve (12) customer transponders meeting the applicableperformance specifications set forth in the IS-11 Service Agreement. If the condition in thepreceding clause (i) is met, but the condition in the preceding clause (ii) is not met, thencommencing on September 1, 2015 and continuing until expiration of the Capacity Term (the “**SkyBrasil Exclusive Use Term**”), Intelsat shall make available twenty-four (24) Customer Transponderson the IS-16 Satellite for use by Sky Brasil. During the Sky Brasil Exclusive Use Term, SkyBrasil’s primary use of the IS-16 Capacity (as replacement of its IS-11 capacity) shall thereafterbe governed by the terms and conditions set forth in this Agreement.(d) During each month of the Sky Brasil Exclusive Use Term, in addition to any Service Feespayable pursuant to Section 3.1, but subject to the outage/restoration provisions of Article 5, SkyMexico shall pay Intelsat an MRC of Sixty-Two Thousand, Five Hundred United States Dollars(US$62,500) per month (the “**Sky Brasil MRC**”) for each of the twenty-four (24) Customer Transponderson the IS-16 Satellite made available by Intelsat for Sky Brasil’s use. During the Sky BrasilExclusive Use Term, any Transponder that suffers, or previously had suffered, a Confirmed Failureshall, unless restored to its Performance Specifications within thirty (30) days of such ConfirmedFailure, cease to be a Customer Transponder or be subject to this Agreement and may be usedexclusively by Intelsat for any non-interfering purpose(s), including the use of such capacity toprovide satellite transmission services to other customers of Intelsat or its Affiliates.(e) Notwithstanding anything to the contrary in this Agreement, (i) under no circumstanceswill the Sky Mexico MRC and the Sky Brasil MRC be due and payable for the same period of time, (ii)neither the Sky Mexico MRC nor the Sky Brasil MRC shall be due if Sky Mexico and Intelsat haveentered into the IS-9R Agreement prior to September 1, 2015, and (iii) the Sky Mexico MRC and theSky Brasil MRC shall cease to be due and payable upon the execution of an IS-9R Agreement if suchexecution occurs after September 1, 2015.1.5 Transmission Plan for Transponders. Customer’s transmissions to the Satellite(which may be performed by one or more third party uplink providers, as provided in Section 4.4below) shall conform to digital transmission plans to be submitted by Customer to Intelsat and thatshall be subject to Intelsat’s prior written approval, not to be unreasonably withheld. Thetransmission plan shall include such information as called for in Customer’s current transmission
 
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plan approved by Intelsat for Customer’s transmissions to IS-9 and such other technicalinformation as Intelsat may require in its reasonable engineering judgment to manage the operationof its satellites. Customer shall be permitted to modify these transmission plans from time totime, subject to Intelsat’s prior written approval. Intelsat shall not unreasonably withhold ordelay its approval of a transmission plan or modification to such a plan, which approval shall bebased solely upon the considerations identified in Section 4.1 below. Intelsat makes norepresentation, warranty, or covenant regarding the efficacy of the use of any number of carriersor other alternative uses of capacity provided under this Agreement. If not otherwise provided byIntelsat pursuant to separate agreement, Customer will provide Intelsat, at no cost to Intelsat,with equipment necessary to decode its signals.1.6 Covenants on Use. Subject to the provisions of this Agreement, if the FixedService Fees have been paid in full, the Customer Parties (other than a defaulting Customer Partyto whom Intelsat is entitled to deny access in accordance with Section 7.5) and their respectiveAffiliates may use the IS-16 Satellite for any lawful purpose related to their own transmissionsneeds and services of whatever nature. In any circumstances in which Customer is permitted aboveto allow the Customer Transponders to be used by other Affiliates, Customer shall remain ultimatelyresponsible to Intelsat for all such use. In such circumstances, Customer’s responsibilities toIntelsat with respect to Customer’s use of Customer Transponders, Customer’s transmissions to theSatellite, Customer’s programming and the responsibilities of Customer to Intelsat for otheractivities hereunder shall be read to include the use, transmissions, programming, and activitiesof any such other entity.1.7 TT&C Services. During the Capacity Term, Intelsat shall perform tracking,telemetry, control, command, monitoring and other related services (collectively, the “**TT&CServices**”) to operate and control the Satellite at the 58°W Orbital Location or, as applicable, atthe 43°W Orbital Location. The TT&C Services shall be performed at all times in a mannerconsistent with Intelsat’s standard operating procedures and processes for its own fleet. SkyBrasil and Sky Mexico may jointly request Intelsat to relocate the IS-16 Satellite to any othernon-Intelsat orbital location **(**an “**Alternative Location**"**)**and to continue provision of the TT&CServices from such location, provided that such relocation shall be subject to Intelsat’s priorconsent, which it may withhold in its reasonable discretion on the basis of FCC licensing, ITU orother similar regulatory concerns. In addition, any such relocation at the request of Sky Brasiland Sky Mexico to an Alternative Location shall be subject to: (a) Intelsat’s receipt of any andall necessary or appropriate governmental authorizations (the parties acknowledging that Intelsatwill not be required to assign any regulatory authorizations to Customer related to operation of
 
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the Satellite at any orbital location) and, where reasonably required, its ability to lease orotherwise secure new equipment and/or facilities necessary to accommodate such request; (b)Customer’s reimbursement to Intelsat (within 30 days of invoice) of its incremental costs as andwhen they are incurred in completing such effort, whether or not successful, including (withoutlimitation) for additional internal labor, at Intelsat’s then-current labor rates, associated withthe operation of the Satellite at the Alternative Location. Customer acknowledges that Intelsatshall, in its reasonable discretion, determine the drift rate with respect to any relocationhereunder.ARTICLE 2. CAPACITY TERM.2.1 Capacity Term.(a) This Agreement shall be effective as of the Execution Date. The “**Capacity Term**” shallcommence on the date (the “**Start of Service Date**”) that: (i) IS-16 has been placed in the 58°WOrbital Location (or the 43°W Orbital Location, as applicable), and (ii) Intelsat has so certifiedto Customer in writing and made one or more Transponders that meet the Performance Specificationsavailable to Customer for its use; provided, however, that if IS-16 suffers a “Total Loss” (asdefined below) prior to the Start of Service Date, Intelsat shall promptly deliver notice thereofto Customer, and either party shall have the right to terminate this Agreement as provided inSection 7.1 below upon written notice to the other party, which notice must be given no later thansixty (60) days following the date of Intelsat’s Total Loss notice, or notice of delay to launch.The term “Total Loss” is defined in Appendix F attached hereto. Intelsat shall give thecertification to Customer required for the Start of Service Date to occur, if it would be true andcorrect, when the Satellite is ready to be placed into commercial service. Subject to theforegoing, if one or more, but not all, of the Transponder(s) that constitute the CustomerTransponder Capacity meet the Performance Specifications, Intelsat shall so state in itscertification, and the Capacity Term shall commence. If any Transponder fails to meet thePerformance Specifications, and is therefore not a Customer Transponder, then: (i) during theperiod prior to 1 September 2015 (and if Sky Mexico contracts to procure capacity services fromIntelsat on IS-9R pursuant to the IS-9R Agreement, then during the period after the date of suchagreement), such Transponder shall remain available for Customer’s use as provided herein, subjectto any applicable salvage rights under the “Launch Insurance Policy,” as defined below (such rightsbeing shown in Appendix F hereto); and (ii) during the Sky Mexico Exclusive Use Term or theSky Brasil Exclusive Use Term (as applicable), such Transponder shall (unless the Parties otherwiseagree upon an alternative payment arrangement) be reserved for Intelsat’s exclusive use for anypurpose(s), including the use of such capacity to provide satellite transmission services to othercustomers of Intelsat or its Affiliates.
 
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(b) Subject to the early termination provisions of this Agreement, the Capacity Term shallcontinue until the Satellite is taken out of commercial service and permanently de-orbited pursuantto Section 7.2(a).2.2 Pre-Start of Service Date Testing. LLC shall have its manufacturer conduct thepre-Start of Service Date testing of the Satellite in a manner that does not interfere with theoperations of IS-9 or IS-11, as applicable. Intelsat shall use all reasonable efforts tocoordinate with Customer to allow Customer, in consultation with Intelsat, to test Customer’stransmit and receive equipment to be used with the Satellite on a noncommercial basis prior to theStart of Service Date, provided that such tests do not interfere with any in-orbit testing,maneuvers, or other related activities that are being conducted or with any operations of IS-9.Customer shall comply with all of the provisions of this Agreement regarding such transmissions andany other additional restrictions of which it may be notified *vis-a-vis*the requirement not tointerfere with the in-orbit tests or related activities relative to the Satellite or with theoperations of IS-9.2.3 Insurance. LLC shall procure, at its own expense, launch risk managementinsurance coverage (the “**Launch Insurance Policy**”) to insure against a “Partial Loss” or “TotalLoss” (as defined in Appendix F) affecting the IS-16 Customer Transponders that may occurduring the period commencing at the time of “Intentional Ignition” of IS-16 (as such term will bedefined in the Launch Insurance Policy (and such definition is provided to Customer) followingIntelsat’s execution of the launch services agreement and which definition will coincide with thetime at which attachment of risk occurs under the Launch Insurance Policy) and continuing for aperiod that expires at 12:01 A.M. on the first anniversary thereof (the “**Insurance Term**”).ARTICLE 3. SERVICE FEE PAYMENTS.3.1 Service Fees. Sky Brasil and Sky Mexico shall be apportioned liability pursuantto this Agreement in the amount of 40% and 60%, respectively (such percentages hereinafter referredto as such Customer Party’s “**Allocated Share**”). In accordance with their respective AllocatedShares, Sky Brasil and Sky Mexico each agrees to pay a service fee to Intelsat as follows:(a) As partial consideration for Intelsat’s provision of the IS-16 Service, Sky Brasil and SkyMexico shall pay Intelsat a one-time fixed service fee in the aggregate amount of Two Hundred,Thirty-One Million, Forty-One Thousand United States Dollars (US$231,041,000) (the “**Fixed Service Fee**”), payable in two lump sum payments (each, an"**Installment Payment**”) as follows:
 
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(i) The first Installment Payment shall be in the amount of Forty-Six Million, One HundredSixty-Two Thousand United States Dollars (US$46,162,000) and shall be due and payable within ten(10) days of the Start of Service Date; and(ii) The second Installment Payment shall be in the amount of One Hundred, Eighty-FourMillion, Eight Hundred Seventy-Nine Thousand United States Dollars (US$184,879,000) and shall bedue and payable on the last day of the Insurance Term; and(b) As further consideration for Intelsat’s provision of the IS-16 Service and its provisionof the TT&C Services, during the period commencing on the Start of Service Date hereunder andcontinuing until 1 September 2015 (such period of time to be referred to herein as the “**VariableFee Period**”), Customer shall pay Intelsat a variable monthly service fee (the “**Variable ServiceFee**”) of Two-Hundred Fifty Thousand U.S. Dollars (US$250,000) (with partial months pro-rated).Notwithstanding the foregoing, during any portion of the Variable Fee Period in which either SkyMexico or Sky Brasil is using additional Transponder Capacity on IS-16 following an IS-9 MinimumComplement Failure or an IS-11 Minimum Complement Failure, or fewer than nine (9) of the ExpansionTransponders meet the Performance Specifications and are available to Sky Mexico as described inSection 1.1(a) above, Customer shall pay Intelsat a reduced Variable Service Fee (the “**ReducedVariable Service Fee**”) of One-Hundred Sixty-Six Thousand, Six Hundred and Sixty-Six U.S. Dollars(US$166,666) (with partial months pro-rated) per month. The Variable Service Fee, or the ReducedVariable Service Fee, if applicable, is inclusive of all IS-16 FCC fees (including, but not limitedto, registration fees, filing fees, regulatory fees, annual fees, etc.), other than fees that areassociated with the nature of Customer’s usage (e.g., universal service fund fees) or as may beassociated with any relocation, or effort to relocate the Satellite to an Alternative Location atCustomer’s direction in accordance with Section 1.7 above. For the avoidance of doubt, Customershall continue to pay Intelsat the Fixed Service Fee in full notwithstanding any reduction of theVariable Service Fees. The Fixed Service Fee and the Variable Service Fee (or the Reduced VariableService Fee, as applicable) are hereinafter referred to collectively as the “**Service Fee.**” Subjectto Sections 1.4 and 1.7 above, at the conclusion of the Variable Fee Period, Intelsat shallcontinue to provide the IS-16 Service and TT&C Services free of charge to Customer (i.e., noadditional Service Fee shall be due or payable).
 
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(c) If one or more of the Customer Transponder(s) does not meet the Performance Specifications(each, a “**Failed Transponder**”) such that Intelsat has a claim for a Partial Loss or a Total Lossunder the Launch Insurance Policy (and provided that notice of such failure is given to Intelsat bySky Brasil or Sky Mexico as soon as practicable, but in event within fifteen (15) days, aftereither of such parties learns of the occurrence of such failure to meet such PerformanceSpecifications), then Sky Brasil’s and Sky Mexico’s obligations to pay the Installment Payment(s)shall be reduced or refunded (x) pro rata based upon the same proportion that the number of FailedTransponders bears to the total number of Customer Transponders (i.e., 24); or (y) in full if thereis a Total Loss. With respect to each Failed Transponder, any such adjustment to the InstallmentPayment(s) shall be reduced to take into account any period in which such transponder was availablefor Customer’s use prior to its becoming a Failed Transponder in the same manner that any claimmade by LLC under its Launch Insurance Policy would be limited to the actual loss in operationalcapability based on an orbital design life of 15 years (or, if less, the applicable mission lifeunder the Launch Insurance Policy). By way of example, if ten (10) of the Customer Transpondersare Failed Transponders as of the Start of Service Date (i.e., prior to the first InstallmentPayment date), then each Installment Payment would be reduced by 41.66%. Similarly, if ten (10) ofthe Customer Transponders become Failed Transponders eleven (11) months after the Start of ServiceDate (but prior to the second Installment Payment date), then the second Installment Payment wouldbe reduced by $90,383,239 resulting in a Second Installment payment of $94,495,761 (seemethodology for calculating such reduction in Appendix E hereto).Provided that LLC is not in breach of its insurance obligations as stated in Section 2.3, eachof Sky Brasil and Sky Mexico acknowledges that it shall not be entitled to any refund or reductionof the Fixed Service Fees if a Customer Transponder becomes a Failed Transponder such that the lossis not covered by the Launch Insurance Policy.(d) The Service Fee shall be apportioned between Sky Brasil and Sky Mexico so that Sky Brasiland Sky Mexico shall pay a percentage of each fee that shall equal its Allocated Share thereof.Sky Brasil’s and Sky Mexico’s obligation to pay its Allocated Share of such Service Fee shall beseveral and not joint.(e) If LLC receives any liquidated damage payment(s) from the Satellite contractor or launchvehicle services provider for late delivery or mass penalties related to the Satellite, the FixedService Fee shall be reduced by the amount of suchpayment(s); provided,
 
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however, that Sky Mexico and Sky Brasil acknowledge that LLC may, subject to receipt of theirprior consent (not to be unreasonably withheld, conditioned or delayed), waive any liquidateddamages in connection with its oversight and management of the IS-16 procurement program.Likewise, if LLC is required to pay the Satellite contractor and/or launch vehicle servicesprovider any incentive fee(s) for early delivery of the IS-16 spacecraft, the Fixed Service Feeshall be increased by the amount of such incentive payment(s), but not by more than shown in thecontractual excerpts setting forth these incentives that are set forth in Appendix Ghereto. In the case of any adjustment of the Fixed Service Fee hereunder, the Installment Paymentsshall be adjusted on a pro rata basis.3.2 Manner of Payment. Sky Mexico and Sky Brasil shall make all payments of theirAllocated Shares of the Variable Service Fee (or, as applicable, the Reduced Variable Service Fee)no later than the first business day of each month of the Capacity Term and Sky Mexico shall makeall payments of the applicable MRC as set forth in Section 1.4, in advance, no later than the firstbusiness day of each month during the Sky Mexico Exclusive Use Term or the Sky Brasil Exclusive UseTerm, as applicable, in each case following receipt by such Customer Party of Intelsat’s invoice atleast thirty (30) days in advance of payment (it being acknowledged that each Customer Party shallhave thirty (30) days following receipt of the relevant invoice to remit payment); provided thatthe first Variable Service (or Reduced Variable Service Fee) payment shall be due and payablewithin five (5) business days following the Start of Service Date and the first MRC payment shallbe due and payable within five (5) business days following the commencement of the Sky MexicoExclusive Use Term or the Sky Brasil Exclusive Use Term, as applicable (in each case as the sameshall be proportional (i.e., prorated) for a partial calendar month). In the case of Sky Mexicoinvoicing, each invoice shall include the corporate name of Sky Mexico as stated in this Agreement(including punctuation), Mexican tax identification number and correct billing address and theamount due. Any other payments required to be made hereunder shall be due and payable thirty (30)days from invoice. Sky Mexico and Sky Brasil shall make all payments (i) in U.S. dollars withoutoffset, deduction or withholding and (ii) by bank wire transfer to such bank account as Intelsatmay designate by written notice to Sky Mexico and Sky Brasil, or by cashier’s or certified check,from a U.S. bank, delivered to Intelsat at such address as Intelsat may designate by written noticeto Sky Mexico and Sky Brasil. In addition, Sky Mexico and Sky Brasil shall be responsible fortheir Allocated Shares of any and all transfer, or other similar charges. All payments shall bedeemed to be made only upon Intelsat’s receipt of collected funds. For the avoidance of doubt andexcept as set forth in Sections 1.3(d) and 3.1(c) and (e) above, each of Sky Mexico and Sky Brasilacknowledges that it shall not be entitled to any credits, deductions or other form of set off
 
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against any payment of the Service Fee (including any component thereof) due to the failure ofa Customer Transponder or any service degradation during the Capacity Term, provided that SkyMexico shall be entitled to outage credits against payments of the applicable MRC in accordancewith the provisions set forth in Article 5 below. At the beginning of every calendar year,Intelsat shall, at the Sky Mexico’s request, send Sky Mexico a U.S. resident certificate for taxpurposes.3.3 Late Payment. Any payments due from any party and not received within five (5)days after the due date shall be subject to a delinquency charge (liquidated damages) at the rateof one percent (1%) per month, or the highest rate permitted by law, if less, on such overdueamount from the due date until it is actually received by the party that is owed. The partiesacknowledge that such delinquency charge is reasonable under all the circumstances existing as ofthe Execution Date.3.4 Taxes. With the exception of any Excluded Income Tax (as defined below), FCC feesexcluded under 3.1(b) above, property tax (but not including property taxes on the Satelliteitself) or employment tax imposed on Intelsat or any Affiliate of Intelsat (defined as an “**IntelsatCompany**”), each of Sky Mexico and Sky Brasil shall pay for and indemnify and hold harmless Intelsatand any Intelsat Company from their respective Allocated Shares of any taxes, charges, levies,duties, usage (for spectrum or otherwise) or other fees (including, without limitation, value addedtaxes, universal service fund contribution charges, landing rights, non-U.S. income, and othersimilar taxes and charges, if any) which may be asserted against Intelsat, any Intelsat Company, orthe Customer by any governmental entity with respect to or arising out of this Agreement(collectively, “**Taxes**”). If any Taxes are so asserted, Sky Mexico and Sky Brasil agree to payIntelsat that amount, if any, which ensures that Intelsat receives the same amount, after reductionfor, or payment of, such Taxes, as it would have received had such Taxes not been asserted(“**Customer Indemnified Taxes**”). If any Taxes are asserted with respect to the Satellite itself,the point of space that it occupies or the frequencies employed, and such Taxes are notspecifically attributable to the Customer’s Transponder Capacity, then Sky Mexico and Sky Brasilshall be responsible only for its proportional allocation of such Taxes as determined by Intelsatacting in good faith.Notwithstanding the foregoing, each Customer Party shall be solely responsible for, and shallpay for and indemnify and hold harmless Intelsat and any Intelsat Company from 100% of any Taxesthat relate solely to a payment made by such Customer Party to Intelsat hereunder and are notlevied in connection with or as a result of the other Customer Party’s payments hereunder. Any Taxes related to payments of the Sky Mexico MRC or the Sky Brasil MRCshall be paid by Sky Mexico.
 
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As used herein, the term “**Excluded Income Tax**” means any Taxes on Intelsat’s or any IntelsatCompany’s net income that are imposed because of a connection between Intelsat or such IntelsatCompany and the jurisdiction imposing such Taxes other than a connection arising in respect of thisAgreement or the implementation thereof.ARTICLE 4. CUSTOMER’S OBLIGATIONS.4.1 Non-interference and Use Restrictions. Customer’s transmissions to and from theSatellite and its use of the IS-16 Service shall comply in all material respects with allapplicable governmental laws, rules and regulations. Customer will follow established practicesand procedures for frequency coordination and will not use the IS-16 Service in a manner whichwould or could be expected to, under standard engineering practices, harm the Customer’sTransponder Capacity or interfere with the use of or harm any portion of the Transponder from whichthe Customer’s Transponder Capacity is provided that is not assigned to Customer, any otherTransponder, the Satellite, or any other in-orbit satellite or transponder on such satellite.Customer shall also comply with the “**Operational Requirements**” set forth in Appendix C, asthe same may be modified from time to time by Intelsat, in its reasonable discretion and on priornotice to Customer.4.2 Terrestrial Facilities. Customer shall be responsible for the provision,installation, operation, maintenance of, and for securing all necessary licenses and/orauthorizations for all earth station facilities and equipment (“**Customer-Provided Facilities**”), fortransmitting signals to, or receiving signals from, the Satellite in accordance with therequirements set forth in this Agreement. Any provision by Intelsat to Customer of earth stationor other terrestrial facilities or services shall be the subject of a separate agreement.Subject to Intelsat’s right to control its own costs, Intelsat shall provide reasonableconsultative assistance to Customer in evaluating data, setting test criteria, assessing possiblecauses, and addressing associated regulatory issues that Customer may encounter with respect to anywidespread (over any particular area) terrestrial RF interference that Customer may find isaffecting the use of the Customer Transponders within Mexico (or Brazil). The foregoingnotwithstanding, it is understood and agreed that the absence of terrestrial interference is not aPerformance Specification under this Agreement.
 
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4.3 Customer’s Transmitting Stations. Customer will configure, equip and operate itstransmit facilities so that the interface of these facilities, in outer space, with the Satelliteshall conform to the characteristics and technical parameters of the Satellite as specified inAppendix B. Customer will follow Intelsat’s procedures for initiating, or terminating anytransmission to the Satellite. Customer will operate all transmit facilities in a manner thatallows for cessation of, and will cease, transmission immediately upon receiving notice fromIntelsat under Section 14.5(a) (“**Telephone Notices**”). Customer will furnish such informationregarding the technical parameters of its transmissions as may be required by Intelsat in its goodfaith engineering judgment prior to commencing, during, and upon the conclusion of any transmissionto the Satellite.For the purpose of implementing this Agreement, Intelsat shall have the right, but not theobligation, to inspect any Customer-Provided Facilities together with associated facilities andequipment used by Customer, or by a third party under the authority of Customer, to transmit to anyof the Customer’s Transponder Capacity. Intelsat will comply with all reasonable Customer rulesand requirements associated with such facilities, and will use all reasonable efforts to scheduleinspections to minimize the disruption of the operation of the facilities, and Customer shall makethe facilities available for inspection at all reasonable times during normal business hours.4.4 Customer Uplink Providers. Customer shall be permitted to contract with otherparties to transmit its signals to, or receive its signals from the Satellite; provided, thatCustomer requires its contractors to comply with all of the requirements of this Agreementregarding transmissions to, or reception from, the Satellite. If Customer retains third parties aspermitted by the previous sentence, these third parties’ facilities shall be deemed to beCustomer-Provided Facilities and the acts and omissions of these third parties in connection withthe transmission or reception of Customer’s signals shall be deemed to be the acts and omissions ofsuch third parties and of Customer.4.5 Third Party Use. Without implying any right of Customer to permit any third partyuse of the Customer’s Transponder Capacity other than as provided herein, Customer shall beresponsible to Intelsat for any third party use or transmissions that is/are permitted by Customerto the same extent as it would be for Customer’s own use or transmissions and references in thisAgreement with respect to Customer’s responsibilities to Intelsat regarding Customer’s use ortransmissions shall be interpreted accordingly.
 
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4.6 Consistent Application of Satellite Operating Procedures. Without implying anyright of Intelsat to permit any third party use of the Satellite other than as provided herein,Intelsat shall have similar (but not necessarily identical) restrictions not to interfere with orcause physical harm to the Satellite, its Transponders, and other satellites and theirtransponders, as contained in this Agreement with all other customers, including any of itsAffiliates, having a right to uplink to the Satellite and shall enforce these restrictions (and, tothe extent it may use them for its own services, follow these restrictions itself) in a consistentand nondiscriminatory manner *vis-a-vis*Customer and the other customers with a right to uplink tothe Satellite. Allowing for the fact (understood and accepted by Customer) that technicalvariations in the kinds of transmissions that different customers may employ, different performancecharacteristics of different Transponders, differences in the use of adjacent frequencies or thesame frequencies on other satellites, other technical factors, and the use of different uplinkproviders and facilities may require the application of different restrictions to achieve the samenon-interference and satellite protection goals, Intelsat shall not require Customer to followOperational Requirements or transmission procedures that are more stringent than those imposed uponother customers on the same Satellite in comparable technical circumstances.ARTICLE 5 RESTORATION.5.1 Certain Outage Definitions. For purposes of determining Customer’s and Intelsat’srespective rights and responsibilities in the event of a failure of Customer’s TransponderCapacity, the following definitions apply:(a) "**Confirmed Failure**” means Measured Failure(s) of Customer’s Transponder Capacity to meetthe Performance Specifications for any of the following periods:(i) six (6) consecutive hours;(ii) ten (10) cumulative hours in any consecutive thirty (30)-day period;(iii) ten (10) or more Outage Units within any consecutive thirty (30)-day period; or(iv) any period of time following a catastrophic event that makes it clearly ascertainablethat a failure described in any of clauses (i), (ii), or (iii) will occur.
 
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(b) "**Measured Failure**” means a failure of Customer’s Transponder Capacity to meet thePerformance Specifications that is confirmed by Intelsat in good faith, based uponobjective engineering evidence available to it. Such a failure, if so confirmed, shall be deemedto (i) commence when Customer notifies Intelsat or Intelsat otherwise has actual knowledge,recorded at Intelsat’s network operations center, of the occurrence of such a failure, and (ii) endwhen Intelsat notifies Customer or Customer has actual knowledge (where applicable, recorded atCustomer’s facilities responsible for outage monitoring) that the Customer’s Transponder Capacityhas been restored and is meeting the Performance Specifications. For purposes of determining aConfirmed Failure, any period during which Customer continues to use Customer’s TransponderCapacity after being notified by Intelsat to discontinue use to allow for testing or other remedialmeasures shall not count as a period of Measured Failure.(c) "**Outage Unit**” means the Measured Failure of Customer’s Transponder Capacity to meet itsPerformance Specifications for a period of two (2) consecutive minutes or more; provided that anysuch failure that occurs within the same one (1) hour period shall constitute but one and the samefailure; provided further that the foregoing exception shall not be applied to count multiplefailures that occur over a period of greater than one (1) hour, but each within one (1) hour ofanother, as a single failure (e.g., three (3) failures, each otherwise meeting the definition of anOutage Unit, that occur over ninety (90) minutes would constitute two (2) Outage Units, regardlessof the timing of the middle failure).(d) “**Spare Equipment**” means certain spare power component equipment units on the Satellite.(e) "**Substitute Capacity**” means capacity that is equivalent to Customer’s Transponder Capacityon another Transponder meeting the Performance Specifications in the same Beam(s) of the Satelliteas such Customer’s Transponder Capacity.5.2 Exclusions. A Confirmed Failure shall not be deemed to have occurred if suchfailure is due to: (a) the failure or non-performance of any Customer-Provided Facility; (b) thefault, negligent act, a failure to act of Customer, its employees, or agents; or (c) intermittentfailures due to sun outages, meteorological, or astronomical disturbances.5.3 Restoration. If, after the Start of Service Date, the Customer’s TransponderCapacity suffers a Confirmed Failure, Intelsat shall, as soon as possible and to the extenttechnically feasible, employ Spare Equipment or Substitute Capacity, if available.
 
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5.4 Confirmed Outage. During the Sky Mexico Exclusive Use Term or the Sky BrasilExclusive Use Term, if any, there shall be deemed to have occurred a “**Confirmed Outage**” of a Customer Transponder if it fails to meet the Performance Specifications for acontinuing and uninterrupted period of thirty (30) minutes (or, if failure is intermittent, acumulative period of thirty (30) minutes or more during any one-hour period) and such failure isconfirmed by Intelsat. Any “Outage Credit” (as defined below) shall be measured in accordance withthe procedures set forth in Section 5.5.5.5 Outage Credit. If there is a Confirmed Outage of a Customer Transponder duringthe Sky Mexico Exclusive Use Term or the Sky Brasil Exclusive Use Term, Intelsat shall credit toSky Mexico its next applicable MRC payment an “**Outage Credit**” that shall be determined by thefollowing formula:Outage Credit equals:   N