Exhibit 10.38

Information contained herein, marked with [***], is being filed pursuant to a
                      request for confidential treatment.


                              FIXED PRICE CONTRACT

                                     BETWEEN

                       HUGHES COMMUNICATIONS GALAXY, INC.

                                       AND

                      HUGHES SPACE & COMMUNICATIONS COMPANY

                                       FOR

                              GALAXY XIII/XIV HS702

                 SPACECRAFT, RELATED SERVICES AND DOCUMENTATION



                             CONTRACT No. 97-HCG-001





<PAGE>


                                TABLE OF CONTENTS


                                                                            PAGE



ARTICLE 1.    EXHIBITS AND INCORPORATIONS......................................2

ARTICLE 2.    ORDER OF PRECEDENCE..............................................3

ARTICLE 3.    SPACECRAFT, DOCUMENTATION AND RELATED SERVICES...................4

ARTICLE 4.    DELIVERABLES AND SCHEDULE........................................9

ARTICLE 5.    PRICE...........................................................13

ARTICLE 6.    PAYMENTS........................................................14

ARTICLE 7.    SPACECRAFT LAUNCH DATE..........................................31

ARTICLE 8.    BUYER-FURNISHED ITEMS...........................................33

ARTICLE 9.    INSPECTION AND ACCEPTANCE.......................................36

ARTICLE 10.   ACCESS TO WORK IN PROCESS.......................................38

ARTICLE 11.   TERMINATION FOR DEFAULT; LIMITATION OF LIABILITY................39

ARTICLE 12.   EXCUSABLE DELAYS................................................41

ARTICLE 13.   AMENDMENTS......................................................43

ARTICLE 14.   TERMINATION FOR CONVENIENCE.....................................44

ARTICLE 15.   TITLE AND RISK OF LOSS..........................................47

ARTICLE 16.   SPACECRAFT WARRANTY.............................................50

ARTICLE 17.   INDEMNIFICATION.................................................52


                                      (i)


<PAGE>


ARTICLE 18.   SPACECRAFT NOT LAUNCHED WITHIN SIX MONTHS AFTER ACCEPTANCE......53

ARTICLE 19.   PATENT/COPYRIGHT INDEMNITY......................................54

ARTICLE 20.   RIGHTS IN INVENTIONS............................................56

ARTICLE 21.   INTELLECTUAL PROPERTY RIGHTS....................................58

ARTICLE 22.   FURNISHED DATA AND INFORMATION, DISCLOSURE AND USE..............59

ARTICLE 23.   PUBLIC RELEASE OF INFORMATION...................................61

ARTICLE 24.   TAXES...........................................................62

ARTICLE 25.   GOVERNING LAW...................................................63

ARTICLE 26.   TITLES..........................................................64

ARTICLE 27.   NOTICES AND AUTHORIZED REPRESENTATIVES..........................65

ARTICLE 28.   INTEGRATION.....................................................66

ARTICLE 29.   CHANGES.........................................................67

ARTICLE 30.   EFFECTS OF STORAGE ON BATTERIES.................................72

ARTICLE 31.   INTER-PARTY WAIVER OF LIABILITY.................................73

ARTICLE 32.   SPACECRAFT STORAGE..............................................74

ARTICLE 33.   DISPUTES........................................................75

ARTICLE 34.   ASSIGNMENT......................................................78

ARTICLE 35.   LIMITATION OF LIABILITY.........................................80

ARTICLE 36.   OPTIONS.........................................................81

ARTICLE 37    REPLACEMENT SPACECRAFT .........................................87

ARTICLE 38    EFFECTIVE DATE OF CONTRACT......................................89


                                      (ii)


<PAGE>


THIS CONTRACT is entered into on the 15th day of May, 1997, by and between
HUGHES COMMUNICATIONS GALAXY, INC. (herein called "Buyer" or "HCG"), a
California corporation having a place of business at 1500 Hughes Way, Long
Beach, California 90810 and HUGHES SPACE AND COMMUNICATIONS COMPANY (herein
called "Contractor," "Seller" or "HSC"), a Delaware corporation having a place
of business at 909 North Sepulveda Boulevard, El Segundo, California 90245.


                                   WITNESSETH:


         WHEREAS, HCG desires to purchase, and Contractor desires to provide
communications Spacecraft, Documentation, and Related Services as hereinafter
specified, and the Parties desire to define the terms and conditions under which
the same shall be furnished,

         NOW, THEREFORE, the Parties hereto agree as follows:


                                       1


<PAGE>


 ARTICLE 1.       EXHIBITS AND INCORPORATIONS

       The following documents are hereby incorporated and made a part of this
       Contract with the same force and effect as though set forth herein:

       1.1   Exhibit A - Galaxy XIII/XIV Statement of Work - dated TBD.

       1.2   Exhibit B - Galaxy XIII/XIV Spacecraft Specification - dated TBD.

       1.3   Exhibit C - Galaxy XIII/XIV Spacecraft Integration Test Plan -
             dated TBD.

       1.4   Exhibit D - Galaxy XIII/XIV Product Assurance Plan - dated TBD.

       1.5   Exhibit E - Certain Documentation - dated TBD.

       1.6   Exhibit F - Maximum Termination Liability  - dated TBD.

       1.7   Exhibit G - Replacement Satellite Payment Plan - dated TBD.


                                       2


<PAGE>


 ARTICLE 2.       ORDER OF PRECEDENCE

       In the event of any conflict or inconsistency among the provisions of
       this document and the exhibits attached and incorporated into this
       Contract, such conflict or inconsistency shall be resolved by giving
       precedence to this document, and then to the attached and incorporated
       exhibits in the order listed in Article 1 herein, entitled "Exhibits and
       Incorporations."


                                       3


<PAGE>


 ARTICLE 3.       SPACECRAFT, DOCUMENTATION AND RELATED 
                  SERVICES ("DELIVERABLES")

       HCG shall purchase from Contractor and Contractor shall sell and furnish
       the following:

       3.1   Contractor shall provide the necessary personnel, material,
             services and facilities to design, fabricate, test and deliver as
             required and perform work in accordance with the requirements of
             Exhibits A, B, C and D hereto (all to be completed pursuant to
             Paragraph 3.2), two (2) HS702 type Spacecrafts for Galaxy XIII and
             Galaxy XIV (hereinafter referred to as "Spacecraft" Documentation
             and Related Services (as defined in Article 4).

       3.2   The Parties agree and acknowledge as follows:

             (i) Buyer and Contractor had previously discussed entering into an
             agreement for the construction of two (2) identical Spacecraft with
             Ku-Band (FSS) and Ka-Band payloads (the "Ku/Ka-Band Spacecraft") at
             an aggregate price of [***].

             (ii) Buyer and Contractor agree and acknowledge that Buyer desires
             two non-identical Spacecraft which shall include Ku-Band (FSS) and
             C-Band payloads. Buyer and Contractor agree to work together to
             complete the designs and prices for such Galaxy XIII and Galaxy XIV
             Spacecraft (which may differ from that currently contemplated) and 
             all other TBD items specified in the Contract within sixty (60)days
             following the signing of this Contract. As the design configuration
             and specifications for each of Galaxy XIII and Galaxy XIV are
             completed, technical exhibits to the Contract shall be completed
             accordingly.
                  
             (iii) The Contract Price for each such Spacecraft and any Optional
             or Replacement Spacecraft shall be mutually agreed by the Parties
             and shall be based upon the sum of: (a) a good faith estimate of
             Contractor's costs under Contractor's established accounting
             practices that are fairly attributable to the applicable
             Spacecraft, delivery to the applicable launch base, and 


[***] Filed separately with the Commission pursuant to a request for 
confidential treatment.


                                       4


<PAGE>


             necessary launch support services as fairly determined at the time 
             such Spacecraft's design is determined; plus (b) a profit component
             of [***] of such estimated costs. Such determination shall be made
             without regard to the aggregate price of [***] for the two (2)
             Ku/Ka-Band Spacecraft. Buyer may request to have an independent
             audit performed of Contractor's estimated costs. Such audit shall
             be at the expense of Buyer unless such audit shows Contractor to
             have overstated its estimated costs (in which event Contractor
             shall bear the audit expense).

             (iv) To the extent Contractor has incurred costs for items which
             will not be incorporated into the Galaxy XIII and Galaxy XIV
             Spacecraft, then: (a) in addition to the Contract Price for the
             Galaxy XIII and Galaxy XIV Spacecraft, Buyer shall be required to
             pay such costs plus a [***] component; and (b) the provisions of 
             Paragraph 14.2 and 14.4 shall apply with respect to the disposition
             of tangible work in process that is not to be incorporated into 
             such Spacecraft.

             (v) As of May 12, 1997, Contractor's good faith estimate of Buyer's
             maximum termination liability for the Ka-Band element of the
             Ku/Ka-Band Spacecraft is [***]. At Buyer's request, Contractor
             shall: (a) within seven (7) days of the signing of this Contract,
             provide a definitive statement of such Ka-Band costs; and (b)
             within thirty (30) days of the signing of this Contract, provide a
             detailed accounting of all of Contractor's expenditures and
             commitments on the Ku/Ka-Band Spacecraft to date.

             (vi) If the aggregate Contract Price for the Galaxy XIII and Galaxy
             XIV Spacecraft determined in accordance with clause (iii) above is
             [***], then [***].


[***] Filed separately with the Commission pursuant to a request for 
confidential treatment.


                                       5


<PAGE>


             (vii) Until and unless the Parties reach agreement under
             clauses (ii) and (iii) above, Buyer's termination liability
             shall not exceed [***] Until such agreement is reached, Contractor
             shall use reasonable efforts to focus any continuing work on
             generic items that could be used for different designs and, if this
             Contract is terminated, for other projects; provided, however, that
             before Contractor reaches its decision as to what work it will
             continue, Contractor will invite Buyer to participate in the
             decision process and allow Buyer an opportunity to offer its
             observations and recommendations for Contractor's consideration.
             At such time that Contractor determines in good faith that the
             exposure of ongoing work will exceed the liability cap stated
             above, Contractor may on two (2) business days notice to Buyer stop
             work, pending resolution of design and price issues for the
             Spacecraft.


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


                                       6


<PAGE>


       3.3   All materials and services specified in Exhibit A, entitled
             "Galaxy XIII/XIV Statement of Work," shall meet the
             requirements of Exhibit B, entitled "Galaxy XIII/XIV
             Spacecraft Specification" as such Exhibits are completed in
             accordance with Paragraph 3.2.

       3.4   If Contractor has not made delivery [***] or if, prior to the
             Launch Date, [***] Buyer at its election may:

             [***]


             Any such election shall be made by Buyer in writing. In either case
             (a) or (b) above, [***].

       3.5   [***]in accordance with: (i) current directives and instructions in
             the Hughes Spacecraft Operators Handbook, utilized at either
             Buyer's Operations Control Center (OCC) or Contractor's Mission
             Control Center (MCC); and (ii) any other Documentation utilized,
             including that Documentation which takes into consideration the
             unique or special characteristics of the contracted Spacecraft.
             [***] Contractor has responsibility and liability for the Mission


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


                                       7


<PAGE>


             Control Center. Buyer has responsibility and liability for the
             Operations Control Center and its associated ground station(s).

       3.6   Spacecraft, Documentation and Related Services described above 
             shall be delivered to HCG at the indicated locations on the dates
             set forth in Article 4 entitled, "Deliverables and Schedule"
             herein.


                                       8

<PAGE>


 ARTICLE 4.       DELIVERABLES AND SCHEDULE


       4.1   The following deliverables to be furnished under this Contract
             shall be furnished at the designated location(s) on or before the
             dates specified below:

<TABLE>
<CAPTION>
       
-----------------------------------------------------------------------------------------------------------
                                                                           
                                                                          Location of Delivery       
                                        Date of Delivery                           and
          Deliverable(s)                 or Performance                         Performance
-----------------------------------------------------------------------------------------------------------
<S>                                  <C>                               <C>    
-----------------------------------------------------------------------------------------------------------
                                                                       o Delivery Site to be determined
1A.    One Galaxy XIII Spacecraft    Twenty-four (24) months from        pursuant to Paragraph 4.2.
       ("Spacecraft XIII")           determination of new design (in
                                     accordance with Paragraph 3.2)(1)
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
                                     Twenty-four (24) months from      o Delivery Site to be determined
1B.    One Galaxy XIV Spacecraft     determination of new design (in     pursuant to Paragraph 4.2.
       ("Spacecraft XIV")            accordance with Paragraph 3.2)(1)
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
                                                                       o Performance Site to be
 2A.   Launch Support, Mission       In Accordance with Exhibit A        determined pursuant to Paragraph
       Operations and In-Orbit                                           4.2.
       Testing for Galaxy XIII                                         o Filmore, California
       ("Related Services")                                            o Castle Rock, Colorado
                                                                       o El Segundo, California
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
                                                                       o Performance Site to be
2B.    Launch Support, Mission       In Accordance with Exhibit A        determined pursuant to Paragraph
       Operations and In-Orbit                                           4.2.
       Testing for Galaxy XIV                                          o Filmore, California
       ("Related Services")                                            o Castle Rock, Colorado
                                                                       o El Segundo, California
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------

3A.    Documentation for Galaxy      In Accordance with Exhibit A      1500 Hughes Way
       XIII ("Documentation")                                          Long Beach, California
-----------------------------------------------------------------------------------------------------------


                                       9


<PAGE>


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

 3B.   Documentation for Galaxy      In Accordance with Exhibit A      1500 Hughes Way
       XIV ("Documentation")                                           Long Beach, California
-----------------------------------------------------------------------------------------------------------

</TABLE>

         (1)Delivery date is to the integration facility.

       4.2   Designation of Launch Vehicle.

             4.2.1     The designation of each Spacecraft's Launch Site shall be
                       made by Buyer on such Spacecraft's "Delivery Site
                       Designation Date", which date shall occur at least 12
                       months prior to the scheduled Delivery Date for such
                       Spacecraft (and if such Launch Site differs from that
                       upon which the Contract Price was determined under
                       Paragraph 3.2, then the Contract Price shall be adjusted
                       to account for any differences in costs between the
                       requirements related to such Launch Sites).If, subsequent
                       to such Delivery Site Designation Date, Buyer requests a
                       change in the Launch Site or Approved Storage Facility
                       for such Spacecraft, such request shall be dealt with as
                       a Change Order Request of Buyer under Article 29 (the
                       "Subsequent Delivery Site Change").

             4.2.2     Buyer shall pay the costs of delivering the Spacecraft to
                       the Delivery Site, which costs are included in the
                       Contract Price.

       4.3   The Contractor will arrange transportation required for Items 1A
             and 1B, 2A and 2B, and 3A and 3B above. With respect to Deliverable
             Items 1A and 1B and 2A and 2B, in the event that a Sea Launch
             Vehicle is used with respect to either Spacecraft, the following
             allocation of transportation duties for such Spacecraft shall
             apply:


                                       10


<PAGE>


              Such Spacecraft will be mated with a Sea Launch Zenit Vehicle (the
              "Vehicle") at the Sea Launch, L.P. facilities, Port of Long Beach
              (the "Integration Facility"). The Parties contemplate that such
              mated Spacecraft, associated equipment and HSC personnel necessary
              to assist in the monitoring and control of such Spacecraft will be
              transported by Sea Launch, L.P. Command Ship (the "Ship") at the
              expense of Sea Launch, L.P. from the Integration Facility to the
              Launch Site in the vicinity of the Christmas Islands (the "Launch
              Site"). HSC may also utilize the Ship at Sea Launch L.P.'s expense
              for the transportation of other related HSC personnel when
              accommodations are available and such accommodations do not
              interfere with other Sea Launch, L.P. commitments for the launch
              of such Spacecraft.

              4.3.1    If such Spacecraft fails to conform to the warranty
                       provisions set forth in Article 15 and: (i) such mated
                       Spacecraft requires testing, maintenance, replacement
                       and/or corrective actions at the Launch Site or (ii)
                       return to the Integration Facility and/or the El Segundo
                       Plant Site is necessary to accomplish such actions, HSC
                       shall have responsibility and liability as follows:

                       4.3.1.1    If Spacecraft warranty actions can be
                                  performed at the Launch Site, HSC shall be
                                  responsible and liable for [***] to the 
                                  warranty provisions of this Contract.
                                  

                       4.3.1.2    If return of the Spacecraft to the Integration
                                  Facility and/or Plant Site is necessary for
                                  such warranty actions, HSC shall be liable to
                                  Buyer in [***]


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


                                       11
<PAGE>

                                  [***]

        4.4   [***] shall be responsible for obtaining and maintaining: (i)
              all U.S. Government export licenses to enable export of each
              Spacecraft, related test and support equipment to the Launch Site
              and (ii) all authorizations required for the performance of this
              Contract.


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


                                       12


<PAGE>


ARTICLE 5.        PRICE

        5.1   The total price (the "Contract Price") for Contractor to provide
              Spacecraft, Documentation and Related Services as defined in
              Article 3 herein shall be determined for each Spacecraft in
              accordance with Paragraph 3.2.

        5.2   Buyer shall pay Contractor the Contract Price stated in Paragraph
              5.1 above in accordance with Article 6, Paragraphs 6.2 and 6.3 of
              this Contract.


                                       13


<PAGE>


ARTICLE 6.        PAYMENTS


        6.1   Pursuant to the terms set forth in this Article 6, and subject to
              HCG's rights, defenses and remedies as expressly stated in this
              Agreement, HCG shall pay to Contractor the Contract Price as
              stated in Article 5 herein for the applicable Spacecraft,
              Documentation, and Related Services under this Contract.

        6.2   Invoices shall be prepared and submitted by Contractor for each
              Spacecraft in a form reasonably acceptable to Buyer. Payments to
              Contractor for each Spacecraft shall be made as follows:

              (i)  [***] of the Contract Price shall be payable in accordance 
              with the payment plan to be established under Paragraph 6.3; and

              (ii) [***] of the Contract Price shall be payable as "Incentives 
              Obligations" in accordance with Paragraph 6.4.


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


                                       14


<PAGE>


        6.3   Payment Plans: The Parties shall establish a payment plan for each
              Spacecraft at the time that the Contract Price for such Spacecraft
              is determined in accordance with Paragraph 3.2

                                      [***]


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


                                       15


<PAGE>

                                     [***]



        6.4   Incentives Obligations.

              6.4.1     The following definitions are applicable to this Section
                        6.4:

                        6.4.1.1   "Specified Operation Lifetime" means fifteen
                                  (15) years


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


                                       16


<PAGE>


                        6.4.1.2   "Successfully Operating Payload". The
                                  Spacecraft shall be equipped with one or more
                                  Payloads, as specified in Exhibit B upon
                                  definition of all Final Specifications. Each
                                  Payload shall be deemed to be Successfully
                                  Operating if at least that number of
                                  Transponders that is one more than one-half of
                                  the total number of Transponders within such
                                  Payload are Successfully Operating
                                  Transponders (as defined below).

                        6.4.1.3   "Successfully Operating Transponder". A
                                  Successfully Operating Transponder is a
                                  Transponder which meets either or both of the
                                  following two criteria:

                              (a) The Transponder meets or exceeds the
                                  performance specifications set forth in
                                  Exhibit B. For the avoidance of doubt, if the
                                  Spacecraft is placed into inclined orbit, then
                                  the Transponders shall be deemed not to meet
                                  the criteria stated in this Paragraph
                                  6.4.1.3(a) at such time as the Spacecraft
                                  would have ceased to have a Useful Commercial
                                  Life, (as mutually determined by the Parties)
                                  had it not been placed in such an orbit.

                              (b) The Transponder, while not meeting or
                                  exceeding the performance specifications,
                                  provides Buyer with no material loss in its
                                  commercial value.

                                  A Transponder shall also be deemed to be a
                                  Successfully Operating Transponder if it meets
                                  the performance specifications through use of
                                  any redundant or spare equipment.

                        6.4.1.4   "Useful Commercial Life". The Useful
                                  Commercial Life of a Spacecraft means the
                                  period beginning on the Commencement Date and
                                  ending on the earlier to occur of (i) the date
                                  on which there is just sufficient fuel
                                  remaining on board the Spacecraft only to
                                  eject the Spacecraft from its geostationary
                                  orbital location or (ii) the date on which at
                                  least 


                                       17


<PAGE>


                                  one-half  of the Transponders on each Payload
                                  are not Successfully Operating Transponders.

                        6.4.1.5   "Successfully Injected Spacecraft". The
                                  Launched Spacecraft shall be deemed to be a
                                  Successfully Injected Spacecraft if:

                              (a) The transfer orbit/spacecraft attitude meets
                                  the following required criteria:

                                  (1) Perigee altitude error is less than or
                                  equal to +/-3 sigma;

                                  (2) Apogee Altitude error is less than or
                                  equal to +/-3 sigma;

                                  (3) Inclination error is less than or equal to
                                  +/-3 sigma;

                                  (4) Argument of perigee error is less than or
                                  equal to +/-3 sigma; and

                                  (5) The Spacecraft has been separated with
                                  attitude rate errors of less than or equal to
                                  +/-3 sigma and

                              (b) The Spacecraft has not suffered physical
                                  damage which resulted from Launch Vehicle
                                  malfunction.

                              The calculated amount of Useful Commercial Life
                              (the "Calculated Operational Lifetime") shall be
                              mutually determined by Buyer and Contractor, based
                              on standard engineering practices, using measured
                              actuals of the Spacecraft, existing at the time of
                              the operational hand-off of the Spacecraft to
                              Contractor from the Launch Vehicle provider. If
                              the attained transfer orbit/Spacecraft attitude
                              does not meet the criteria stated in this Section,
                              but the Calculated Operational Lifetime is greater
                              than or equal to the Specified Operational
                              Lifetime for the Spacecraft, then the Spacecraft
                              shall be deemed to have been a Successfully
                              Injected 


                                       18


<PAGE>


                        Spacecraft, If, on the other hand, the attained transfer
                        orbit/Spacecraft attitude does not meet the criteria
                        stated above, and the Calculated Operational Lifetime is
                        less than the Specified Operational Lifetime, then the
                        Spacecraft shall be deemed not be a Successfully
                        Injected Spacecraft. If Buyer and Contractor cannot
                        agree on the Calculated Operational Lifetime, then the
                        Parties shall resolve such disagreement in acceptance
                        with the dispute resolution procedures set forth in
                        Article 33. During such dispute resolution procedure,
                        Buyer shall commence all payments under Section 6.4.2 to
                        Contractor based on Contractor's calculation of such
                        Calculated Operational Lifetime, except only the
                        disputed amount(s) which shall be paid by Buyer in
                        escrow as set forth in Section 29.4, and the prevailing
                        party shall be entitled to interest as provided therein.

                        6.4.1.6   "Incentives Interest Rate". The Incentives
                                  Interest Rate shall be the lesser of (i) the
                                  prime rate of Chase Manhattan, New York, as
                                  calculated on the first business day of each
                                  month for which interest is calculated plus
                                  [***] or (ii) [***].

                        6.4.1.7   "Commencement Date". The Commencement Date
                                  shall be the date on which Buyer receives
                                  written certification from Contractor that,
                                  based upon the results of completed in-orbit
                                  performance tests, at least one Payload is a
                                  Successfully Operating Payload.

              6.4.2     Buyer shall pay to Contractor the Incentives Obligations
                        and the Change Order Profit Component (if applicable),
                        as follows:

                        6.4.2.1   Incentives Obligations and Change Order Profit
                                  Component. Subject to Section 6.4.2.3 through
                                  6.4.2.6, Buyer shall be obligated to pay to


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


                                       19


<PAGE>


                                  Contractor the Incentives Obligation and any
                                  Change Order Profit Component (if applicable),
                                  as follows: Buyer shall pay Contractor an
                                  equal monthly payment that, when calculated on
                                  a net present value basis to the Commencement
                                  Date using the Incentives Interest Rate,
                                  equals the total amount of Incentives
                                  Obligations plus Change Order Profit Component
                                  due hereunder. For example, if the Galaxy XIII
                                  Spacecraft is a Successfully Injected
                                  Spacecraft and on the Commencement Date all
                                  Transponders on the Spacecraft are and
                                  continue to be Successfully Operating
                                  Transponders for fifteen (15) years, assuming
                                  the maximum [***] for the entire period, the
                                  monthly Incentives Obligations payment would
                                  be [TBD] (the "Nominal Payment"). If the
                                  Incentives Interest Rate is less than [***]
                                  for any given month, the Incentives
                                  Obligations payment will be less than the
                                  Nominal Payment. In such circumstances, the
                                  amount of each month's payment will be
                                  calculated on a net present value basis to the
                                  date of the last month's payment using the
                                  remaining unpaid principal as the new
                                  principal, the Incentives Interest Rate, and a
                                  term equal to the number of months remaining
                                  in the Incentives period. The Parties shall
                                  agree in writing upon an appropriate
                                  allocation of the portion of the Incentive
                                  Obligations which shall be payable for each
                                  Payload on the Spacecraft. The Incentives
                                  Obligations, identified above, shall be
                                  payable in 180 equal and consecutive monthly
                                  installments over a fifteen (15) year life of
                                  the Spacecraft, except as may be adjusted as
                                  set forth herein. Except as provided in
                                  Paragraph 6.4.4, the first installment of each
                                  Incentives Obligations shall be paid on the
                                  Spacecraft's Commencement Date. A sample
                                  schedule matrix showing Incentives


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


                                       20


<PAGE>


                                  Obligations payments for fifteen years,
                                  assuming fully successful operation, and with
                                  varying hypothetical interests rates will be
                                  attached to this Agreement as Schedule
                                  6.4.2.1.

The foregoing notwithstanding:

                        (a)       If the Spacecraft is not a Successfully
                                  Injected Spacecraft pursuant to Section
                                  6.4.1.4 but is successfully placed into its
                                  on-station orbit by Hughes during the
                                  "Transfer Period" (defined as the period from
                                  separation of the Launch Vehicle through
                                  on-station acquisition), then, subject to
                                  Section 6.4.2.3, Buyer shall pay the
                                  Incentives Obligations for the Spacecraft in
                                  equal and consecutive monthly installments
                                  over a period of the Spacecraft's On Station
                                  Operational Lifetime (defined at Section
                                  6.4.2.1(b)).

                        (b)       If the Spacecraft is Successfully Injected,
                                  but is not successfully placed into its
                                  on-station orbit by Contractor during the
                                  Transfer Period, then the total amount of the
                                  Incentives Obligations for the Spacecraft
                                  shall be multiplied by a percentile equal to
                                  (i) the On-Station Operational Lifetime
                                  divided by (ii) the Calculated Operational
                                  Lifetime, which percentile shall, in no event,
                                  be greater than one. Subject to Section
                                  6.4.2.3, Buyer shall pay such Incentives
                                  Obligations for the Spacecraft in equal and
                                  consecutive monthly installments over a period
                                  of the Spacecraft's On-Station Operational
                                  Lifetime. The "On Station Operational
                                  Lifetime" shall be mutually determined by
                                  Buyer and Contractor, based on standard
                                  engineering practices, using measured actuals
                                  of the Spacecraft, existing at the end of the
                                  Transfer Period. However, should the
                                  Spacecraft continue to operate successfully
                                  beyond the On-Station Operational Lifetime,
                                  Contractor will continue to earn Incentives


                                       21
<PAGE>

                                  Obligations at the same monthly rate up to the
                                  Specified Operational Lifetime.

                        (c)       Finally, if the Spacecraft is not a
                                  Successfully Injected Spacecraft and, in
                                  addition, is not successfully placed into its
                                  on-station orbit during the Transfer Period,
                                  then the total amount of the Incentives
                                  Obligations shall be multiplied by the sum of
                                  (A)(i) the Specified Operational Lifetime,
                                  plus (ii) the On-Station Operational Lifetime,
                                  minus (iii) the Calculated Operational
                                  Lifetime, divided by (B) the Specified
                                  Operational Lifetime, which percentile shall,
                                  in no event, be greater than one. Subject to
                                  Section 6.4.2.3, Buyer shall pay such
                                  Incentives Obligations for the Spacecraft in
                                  equal and consecutive monthly installments
                                  over a period of the Spacecraft's On-Station
                                  Operational Lifetime.

                                  For purposes of any provision of this
                                  Contract, if the Incentives Obligations or
                                  related payment periods are to be
                                  recalculated, the monthly installments due
                                  shall be recalculated to reflect the imputed
                                  interest element that is reflected in the
                                  payment plans specified above.

                        6.4.2.2   Notwithstanding the foregoing, if at any time
                                  Buyer continues to utilize for
                                  revenue-producing purposes any Transponder
                                  that is not a Successfully Operating
                                  Transponder, then Buyer shall pay a pro rated
                                  amount of the Incentives Obligation
                                  attributable to such Transponder that is
                                  proportionate to the partial benefit that
                                  Buyer derives from such Transponder (the
                                  "Incentive Payment"), all as mutually agreed
                                  upon by the Parties in good faith.

                        6.4.2.3   Except for any Change Order Profit Component
                                  (which is non-contingent), payment of any
                                  Incentives Obligation shall be contingent upon
                                  the Transponders being Successfully Operating
                                  Transponders, as set forth herein, on the
                                  applicable Payload and shall be pro-rated,
                                  therefore, on a 


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<PAGE>


                                  Transponder equivalent-by-Transponder
                                  equivalent basis over the duration of the
                                  applicable term of such Obligation; provided,
                                  however, that beginning on the date, if any,
                                  that any one or more of the Payloads are no
                                  longer a Successfully Operating Payload, as
                                  and when ascertained pursuant to in Section
                                  6.4.2.4 (the "Degraded Payload"), then Buyer's
                                  then-remaining Incentives Obligations for such
                                  Payload(s) (exclusive of any Change Order
                                  Profit Component, as applicable) shall be
                                  deemed extinguished.

                        6.4.2.4   Whether any Transponder is not Successfully
                                  Operating shall be mutually determined by
                                  Buyer and Contractor, based on relevant
                                  technical data, reports and analyses, and each
                                  Party will make available the other review
                                  upon reasonable request all data used in
                                  making such determination. If Contractor
                                  disagrees with such determination, then the
                                  Parties shall resolve such disagreement in
                                  accordance with the dispute resolution
                                  procedure set forth in Article 33.

                        6.4.2.5   If the Spacecraft has not been, or is not
                                  being, Properly Operated by the Buyer, and any
                                  Transponders thereof are not Successfully
                                  Operating Transponders, then the Transponders
                                  of the Spacecraft which were Successfully
                                  Operating prior to such improper operation of
                                  the Spacecraft shall be deemed to be
                                  Successfully Operating Transponders for
                                  purposes of Contractor's entitlement to
                                  payment of any applicable Incentives
                                  Obligations for such period as such
                                  Transponders would have reasonably been
                                  predicted to continue to be Successfully
                                  Operating had the Spacecraft and transponder
                                  thereon been Properly Operated by Buyer;
                                  provided, however, that if the failure is the
                                  result of a defect in the deliverable software
                                  or if Buyer demonstrates that the failure of
                                  any Transponder to be Successfully Operating
                                  was not caused primarily, directly or
                                  indirectly, by any act or omission of Buyer,
                                  its agents, Subcontractors, Consultants


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<PAGE>


                                  or representatives of any kind, then the
                                  foregoing provision shall not apply with
                                  respect to such Transponder.

                        6.4.2.6   Buyer may prepay any portion of the Incentives
                                  Obligations or the Change Order Profit
                                  Component pursuant to the schedule matrix
                                  attached as Exhibit 6.4.2.1. Any remaining
                                  Incentives Obligations so prepaid shall be
                                  subject to refund by Contractor to Buyer, in
                                  any instance and to the extent that Buyer's
                                  obligation to make such payments is relieved
                                  pursuant to this Article 6, as outlined in the
                                  last sentence of Section 6.4.4.1 hereof.

              6.4.3     "Spacecraft Retirement Payment". At any time following
                        the Spacecraft's Delivery, Buyer may, at its option,
                        cease to utilize the Spacecraft for any purpose;
                        provided, however, that if Buyer does cease using the
                        Spacecraft (or if the Spacecraft is rendered a total
                        loss by virtue of Buyer's failure to Properly Operate
                        the Spacecraft), then, upon the exercise date of such
                        option or the declaration of the Spacecraft as a total
                        loss as applicable, all remaining Incentives Obligations
                        payments for any Transponder (and any Change Order
                        Profit Component, if applicable) (subject to the
                        provisions of Section 6.4.2.3 through 6.4.2.5) shall
                        become immediately due and payable, all relative to the
                        Spacecraft; and Buyer shall pay to Contractor such
                        amounts, in immediately available funds, along with the
                        outstanding balance of principal and accrued interest on
                        any other outstanding payment obligations with respect
                        to the Spacecraft, if any, as of such date. In
                        determining the amount of principal and interest due,
                        present value analysis discounted at the Incentives
                        Interest Rate per annum shall be done for any scheduled
                        payment stream previously created by the Parties
                        hereunder. Notwithstanding the foregoing, Buyer shall
                        have the right to cease using the Spacecraft and remove
                        it from its orbital location at any time following the
                        expiration of the Spacecraft's Useful Commercial Life,
                        without payment of such Spacecraft Retirement Payment.


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<PAGE>


              6.4.4     Incentive Obligations and Launch Delay

                        6.4.4.1   If the Spacecraft has not been launched by the
                                  121st day after Delivery of the Spacecraft,
                                  then, except as set forth in Paragraph
                                  6.4.4.2, the first of the equal and
                                  consecutive monthly installment payments for
                                  Incentive Obligations on the Spacecraft shall
                                  be due and payable and the fifteen year period
                                  shall be deemed to have begun for purposes of
                                  this Paragraph 6.4 and such payments shall
                                  commence (the "Pre-Launch Incentive
                                  Payments"). If upon the Commencement Date or
                                  at any time thereafter, any Transponder ceases
                                  to be a successfully Operating Transponder or
                                  a Payload becomes a Degraded Payload, then
                                  Contractor shall deliver to Buyer a refund
                                  (without interest) of that portion of the
                                  Pre-Launch Incentive Payment attributable to
                                  such Transponder or Payload, taking into
                                  account the amount of such time such
                                  Transponder or Payload met the performance
                                  specifications, and Buyer's subsequent
                                  Incentives Obligations shall be reduced
                                  thereafter on a pro rata basis; provided, if
                                  applicable, Buyer shall receive a credit to
                                  the extent of any Pre-Launch Incentive
                                  Payments, to be applied as an offset against
                                  Buyer's consecutive monthly installment
                                  payments for the Incentives Obligations
                                  otherwise due and payable for the months
                                  immediately following the Commencement Date.

                        6.4.4.2   Subject to the second sentence below, if on or
                                  before the 121st day following the Satellite's
                                  Delivery Date, the Satellite has not been
                                  Launched, then the first of the equal and
                                  consecutive monthly installments payments for
                                  the Incentives Obligations on the Spacecraft
                                  shall be due and payable on the earlier to
                                  occur of the Spacecraft's Commencement Date or
                                  the 241st following such Spacecraft's Date of
                                  Delivery (except that interest on such
                                  Incentives Obligations shall begin to accrue
                                  on the 


                                       25


<PAGE>


                                  121st day following the Delivery Date, as such
                                  date may be modified herein). If, however, the
                                  Spacecraft has not been Launched due primarily
                                  to (1) Contractor's Fault after Delivery or
                                  (2) Contractor's failure to timely meet the
                                  Spacecraft's scheduled Delivery Date (where
                                  such failure in Delivery is not caused by a
                                  Buyer's Delay) (or a combination of clauses
                                  (1) and (2) immediately above) then the first
                                  of the equal and consecutive monthly
                                  installments of the Incentives Obligations on
                                  the Spacecraft shall be due and payable on,
                                  and interest shall not accrue until, the
                                  Causation Date. If upon Spacecraft
                                  Commencement, or at any time thereafter, any
                                  Transponder on the Spacecraft (which has been
                                  subject to a Launch delay under this Paragraph
                                  6.5.4.2) ceases to be a Successfully Operating
                                  Transponder or a Payload becomes a Degraded
                                  Payload, then Contractor shall deliver to
                                  Buyer a refund (without interest) of that
                                  portion of the Pre-Launch Incentives Payments
                                  attributable to such Transponder or Payload,
                                  taking into account the amount of time such
                                  Transponder or Payload met the performance
                                  specifications, and Buyer's subsequent
                                  Incentives Obligation for the affected Payload
                                  on the Spacecraft shall be reduced thereafter
                                  on a pro rata basis; provided, however, that
                                  Buyer shall receive a credit to the extent of
                                  any Pre-Launch Incentive Payments, such credit
                                  to be applied as an offset against Buyer's
                                  consecutive monthly installment payments for
                                  the Incentives Obligations otherwise due and
                                  payable for the months immediately following
                                  the Commencement Date.

                        6.4.4.3   If, for any reason other than primarily
                                  Contractor's Fault, the Spacecraft has not
                                  been Launched within 24 months following the
                                  Spacecraft's Delivery Date, then the full
                                  amount of the Incentives Obligations (and any
                                  Change Order Profit Component, if applicable)


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<PAGE>


                                  (including principal and accrued interest, if
                                  any) shall become immediately due and payable
                                  upon the last day of such 24th month. If,
                                  however, the Spacecraft is subsequently
                                  Launched within 54 months of the Delivery Date
                                  and any Transponder of the Spacecraft ceases
                                  to be a Successfully Operating Transponder or
                                  a Payload becomes a Degraded Payload, then
                                  Buyer shall be entitled to a proportionate
                                  refund (without interest) for any Incentives
                                  Obligations (and any Change Order Profit, if
                                  applicable) paid for such Transponder or
                                  Payload, taking into account the amount of
                                  time such Transponder or Payload met the
                                  performance specifications. If, for any
                                  reason, the Satellite has not been Launched
                                  prior to the third anniversary of the Delivery
                                  Date (the "Third Anniversary"), then Buyer
                                  shall have an option (the "LOPS/MOPS Option"),
                                  exercisable in writing received by Contractor
                                  on or before the Third Anniversary, to extend
                                  its right to utilize the Related Services for
                                  the Satellite to the fifth anniversary of the
                                  Delivery Date (the "Extension Period"). If
                                  Buyer does not timely exercise the LOPS/MOPS
                                  Option, then Contractor shall credit any
                                  unused portion of the Baseline Launch Costs
                                  for the Spacecraft against any due and unpaid
                                  payment obligations of Customer under this
                                  Contract (the "LOPS/MOPS Refund"). If Buyer
                                  timely exercises the LOPS/MOPS Option, then
                                  the price associated with the Related Services
                                  (pursuant to Paragraph 6.3) for the Spacecraft
                                  during the Extension Period, shall be
                                  increased by a [***] beginning on the Third
                                  Anniversary. Buyer shall be obligated to pay
                                  such Escalation Amount within 30 days of
                                  receipt of invoice from Contractor. In any
                                  case, Contractor's obligation to provide such
                                  services shall terminate on the date which is
                                  fifty-four (54) months (or as early as
                                  thirty-six (36) months) from the Delivery Date
                                  for the


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                                  Spacecraft. If Contractor's obligation to
                                  provide Launch and Mission Operations Services
                                  is terminated under the immediately preceding
                                  sentence, then Buyer shall receive a LOPS/MOPS
                                  Credit or LOPS/MOPS Refund, as applicable.

                        6.4.4.4   If, for any reason, other than Contractor's
                                  Fault, a Launch delay occurs between the time
                                  of Launch and the Commencement Date (or if no
                                  Commencement occurs), then the full amount of
                                  the Incentives Obligations (and any Change
                                  Order Profit Component, if applicable) (the
                                  "Recoverable Amount(s)") shall become
                                  immediately due and payable upon the date of
                                  such Launch delay. Contractor shall be
                                  entitled to obtain payment of such Recoverable
                                  Amounts from the proceeds of the launch
                                  insurance obtained by Buyer and shall be
                                  entitled to a priority in obtaining such
                                  proceeds over Buyer and all other parties or
                                  claims; provided, however, that nothing herein
                                  shall relieve Buyer of its obligations to pay
                                  to Contractor all such Recoverable Amounts, as
                                  set forth herein. During the six (6) months
                                  immediately following such Launch delay, Buyer
                                  shall use best reasonable efforts to obtain
                                  the proceeds of its launch insurance to pay
                                  Contractor the Recoverable Amounts, hereunder.
                                  Provided further, however, that if Contractor
                                  does not receive all such Recoverable Amounts
                                  from the proceeds of Buyer's launch insurance
                                  within such six (6) month period, then Buyer
                                  shall be obligated immediately to compensate
                                  Contractor for, and Contractor may also look
                                  to Buyer directly for satisfaction of, all
                                  such Recoverable Amounts.

        6.5   HSC shall not be obligated to deliver a Spacecraft to the Launch
              Site if there are any outstanding Delinquent Payments owed by HCG
              to HSC with respect to such Spacecraft under this contract one
              month prior to shipment of such Spacecraft from the HSC facility.
              "Delinquent Payments" are


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<PAGE>


              defined as those payments not received by HSC within thirty (30)
              days of the dates due as defined in Paragraphs 6.2.1 and 6.2.2
              above. Once HCG has paid HSC for any "Delinquent Payments" and any
              interest accrued in accordance with Paragraph 6.10 below, HSC
              shall use its reasonable best efforts to ship such Spacecraft to
              the Launch Site so as to enable launch on the scheduled Launch
              Date and in any event to make shipment as soon as practicable and
              no later than sixteen (16) weeks after payment by HCG of such
              Delinquent Payments. HCG will be responsible for and will pay to
              HSC any reasonable costs and [***] profit on such costs that HSC
              may incur as a result of a delay in delivery due to HCG's
              Delinquent Payments. Notwithstanding the foregoing, this Section
              6.6 shall not relieve Contractor of its obligation to deliver a
              Spacecraft, and no "Delinquent Payment" shall be deemed to have
              occurred, due to any non-payment by HCG on account of an alleged
              breach by Contractor or other dispute as to such payment. In such
              event, HCG shall, within thirty (30) days of the date such payment
              is due, pay the full amount of such payment into an
              interest-bearing escrow account to be established at Bank of
              America, Concord, California. Upon settlement of the dispute as to
              such payment and alleged breach in accordance with Article 33, the
              Party entitled to the amount in escrow shall receive such amount
              together with all accrued interest thereon and the other Party
              shall pay all costs and fees associated with the escrow of such
              amount.

        6.6   Invoice

              6.6.1     Invoices submitted to HCG for payment shall contain a
                        cross-reference to the Contract number and the date
                        specified in Payment Plans of Paragraphs 6.3.1 and
                        6.3.2. Contractor shall submit one (1) original invoice
                        for each Spacecraft in each instance to:

                        Hughes Communications Galaxy, Inc. 
                        P.O. Box 9712 Bldg.
                        A01/4B462 
                        Los Angeles, CA 90810-9928 
                        Fax: (310) 525-5140
                        Attention: Accounts Payable - Tony Walden


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              6.6.2     Invoice amounts, as specified in Paragraph 6.3, provide
                        for billings to be submitted by the 15th day of each
                        month and shall be paid by HCG within thirty (30) days
                        upon receipt of the invoice by HCG.

        6.7   Late Payments

              In the event of a failure by the Buyer or the Contractor to make a
              payment required pursuant to this Contract, the delinquent Party
              shall pay interest at the rate of [***] on the overdue amount for
              the number of days that the payment is overdue, commencing on the
              date payment is due and terminating on the date the overdue amount
              is paid in full. Notwithstanding the foregoing, this Section 6.9
              shall not apply to any payment made into escrow in accordance with
              Section 29.4.


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ARTICLE 7.        SPACECRAFT LAUNCH DATE

              7.1.1     Launch Semester. A six (6) month period of time in which
                        a launch will occur, the first day of which shall be
                        thirty (30) days after the Delivery Date under Section
                        4.1 herein (forty-five (45) days after Delivery Date if
                        a Sea Launch is utilized).

              7.1.2     Launch Period. A ninety (90) day period of time within a
                        launch Semester during which a launch will be scheduled
                        to occur as shall be notified by Buyer to Contractor.

              7.1.3     Launch Slot Definition. A thirty (30) day period of time
                        within a Launch Period during which a Launch will occur.
                        The Launch Slot within the Launch Period shall be
                        notified by Buyer to Contractor not later than one (1)
                        year prior to the first day of the applicable Launch
                        Period and, once established, shall become an express
                        term of this Contract.

              7.1.4     Launch Date Defined. The calendar date within the Launch
                        Slot during which a Launch will occur. The Launch Date
                        within the Launch Slot shall be notified by Buyer to
                        Contractor no later than six (6) months prior to the
                        first day of the applicable Launch Slot and once
                        established, shall become an express term of this
                        Contract.

              7.1.5     Launch Window Definition. A period of time within the
                        Launch Date during which a Launch can occur and meet
                        mission requirements. The Launch Window shall be
                        established by notified by Buyer or Contractor no later
                        than forty-five (45) days prior to the Launch Date and
                        once established, shall become an express term of this
                        Contract.


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<PAGE>


              7.1.6     Adjustment of dates. The time periods as delineated in
                        Sections 7.1.2 through 7.1.5 shall be adjusted to
                        reflect applicable launch provider contracts, consistent
                        with ordinary practices of such providers as familiar to
                        the Parties.

        7.2   The Contract Price set forth in Paragraph 5.1 includes Contractor
              furnished launch support services, post launch support services,
              in-orbit test support services, and post title transfer monitoring
              and command of each Spacecraft if Buyer invokes the remedial
              provisions of Article 3, Paragraph 3.3.

        7.3   No less than sixteen (16) weeks prior to the launch date, Buyer
              shall order Contractor by notice in writing to commence launch
              campaign preparations.

        7.4   If a Spacecraft Launch Date defined in Paragraph 7.1 is postponed
              for any reason other than the sole fault of Contractor, excluding
              any postponement due to an Excusable Delay as defined in Article
              12, the Parties shall negotiate in good faith to determine an
              equitable adjustment to the price and affected terms of this
              Contract, if any. If the cost of supplies or materials made
              obsolete or excess as a result of a such postponement is included
              in the equitable adjustment, HCG shall have the right to prescribe
              the manner of disposition of such supplies or materials. Costs
              included in the equitable adjustment shall include but not be
              limited to: support personnel standby; extra travel expenses;
              transport termination or rescheduling fees and a profit rate of
              [***].

        7.5   Notwithstanding the foregoing, if a Spacecraft Launch Date defined
              in Paragraph 7.1 is postponed by either Party due to an Excusable
              Delay, as defined in Paragraph 12.1 herein, the terms of Article
              12 herein shall govern such postponement.


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ARTICLE 8.        BUYER-FURNISHED ITEMS

        8.1   The following facilities, equipment, and services
              ("Buyer-Furnished Items") shall be furnished by Buyer at no cost
              to Contractor, in a timely manner, so as to enable Contractor to
              perform the work described herein.

              1)        Facilities (buildings, power, phones and data lines) and
                        enumerated services: (i) transportation of a Spacecraft,
                        Contractor related test equipment and personnel within
                        the Launch Site and if a Sea Launch is provided, between
                        the Integration Facility (Port of Long Beach) and the
                        Launch Site (vicinity of Christmas Islands) unless
                        Article 4, Paragraph 4.2.1 conditions apply (ii) storage
                        of a Spacecraft and related test equipment for all force
                        majeure events (which prevent Buyer from supplying
                        Buyer-Furnished Items) and/or launch vehicle delays
                        (iii) fueling (iv) photographs, (v) interface hardware
                        at the Launch Site and (vi) earth station facilities for
                        IOT including appropriate RF facilities, but not
                        specialized test equipment.

              2)        Reservation and procurement of launch services and
                        associated services.

              Contractor will provide preliminary requirements of Item 1 above
              to Buyer no later than 6 months after the Effective Date of this
              Contract to assist Buyer's compliance with this Article, which
              shall be consistent with what Contractor has generally required
              Buyer to secure for previous launches with the same launch
              provider. Subject to the confidentiality requirements of the
              applicable agreements, Contractor will be allowed to review the
              list of basic and optional service which Buyer has procured in
              Buyer's contract(s) for launch services.

              In the event that the Buyer-Furnished Items set forth above are
              not suitable for the intended purpose or are not provided in a
              timely manner, excluding any excusable delay as defined in Article
              12 herein, then HCG shall be liable to Contractor for all
              applicable costs which shall include but not be limited to;
              procurement or rental of suitable substitutes for such Buyer
              Furnished Items 


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<PAGE>


              at no higher than market prices; with title and possession of all
              such procured items reverting to Buyer after Contractor's use
              under this Agreement; support personnel standby; extra travel
              expenses; transport termination or rescheduling fees; and
              installation/de-installation of communication links to the Launch
              Site and a profit rate of [***].

        8.2   Contractor shall maintain a system to ensure the adequate control
              and protection of HCG's Property. For the purposes of this
              Article, HCG Property shall be defined as any item which HCG
              provides to the Contractor or directs Contractor to maintain in
              storage or an inventory account under this Contract. Upon receipt
              of notification from HCG, the Contractor shall complete and return
              within fifteen (15) working days a Property System Certification
              describing the system that will be used to control HCG's Property.
              Additionally, HCG's representative may, at its option and at no
              additional cost to HCG, conduct surveillance at a reasonable time
              of the Contractor's Property Control System as HCG deems necessary
              to assure compliance with the terms and conditions of this
              Article.

        8.3   Contractor shall, commencing with its receipt and during its
              custody or the use of any HCG's Property, accomplish the
              following:

              A.        Establish and maintain inventory records and make such
                        records available for review upon HCG's request;

              B.        Provide the necessary precautions to guard against
                        damage from handling and deterioration during storage;

              C.        Perform periodic inspection to assure adequacy of
                        storage conditions; and

              D.        Ensure that HCG's Property is used only for performing
                        this Contract, unless otherwise provided in this Article
                        or approved by the cognizant contracting officer.

        8.4   Contractor shall not modify, add-on, or replace any HCG Property
              without 


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              HCG's prior written authorization. Contractor shall immediately
              report to HCG's contract representative the loss of any HCG
              Property or any such property found damaged, malfunctioning, or
              otherwise unsuitable for use. The Contractor shall determine and
              report the probable cause and necessity for withholding such
              property from use.

        8.5   Upon termination or completion of this Contract, and upon request
              by HCG, the Contractor shall perform a physical inventory,
              adequate for accountability and disposition purposes, of all HCG's
              Property applicable to such terminated or completed agreement and
              shall cause its subcontractors and suppliers at every tier to do
              likewise.


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<PAGE>


ARTICLE 9.        INSPECTION AND ACCEPTANCE

        9.1   Inspection of all Hardware, documentation and Contractor's
              services provided hereunder shall take place in accordance with
              the terms of Article 10, entitled "Access to Work in Process,"
              herein.

        9.2   Preliminary Acceptance of a Spacecraft shall occur when all
              in-plant tests required to be performed by Contractor for the
              Hardware have been completed and the Contractor has demonstrated
              at the pre-ship review that the Hardware and contract deliverables
              meet the requirements of this Contract , at which time HCG shall
              accept the Hardware on a Preliminary basis in writing within five
              (5) business days subject to completion of Launch Integration
              Facility and/or Launch Site tests specified in Exhibit C, Galaxy
              XIII/XIV Spacecraft Integration Test Plan. If the Hardware is
              unacceptable, Contractor shall promptly and at its expense,
              rectify the unsatisfactory Hardware and resubmit the Hardware for
              acceptance by HCG as provided above. In either case, the Hardware
              shall be deemed accepted upon failure of HCG to notify Contractor
              in writing within the above five (5) business days that it is
              accepted, rejected or that in HCG's opinion further corrective
              action must be taken by the Contractor.

        9.3   Final Acceptance of a Spacecraft shall occur upon the earliest of
              i) the completion of In-orbit Testing in accordance with Exhibit
              A, ii) fifty (50) days after Intentional Ignition (as defined in
              Article 16, Paragraph 16.2 of this Contract) or iii) immediately
              before a Partial Failure, Total Failure or Total Constructive
              Failure (as each such term is defined in the applicable Hughes
              Communications Galaxy Launch Insurance Contract or successor
              contract), which occurs at or after Intentional Ignition. HCG
              shall have access to Launch Integration Facility and/or Launch
              Site test results during the launch campaign in accordance with
              the provisions of Article 10, Paragraph 10.1 "Access to Work in
              Process."

        9.4   With respect to deliverable Hardware which HCG orders Contractor
              to store, the Hardware shall be stored at a location to be
              negotiated and Final Acceptance shall occur at the end of the 
              [***] warranty period as set 


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              forth in Article 16 herein, entitled "Spacecraft Warranty," or
              such other event mutually agreed upon between the Parties.

        9.5   Non-Conforming Products.

              9.5.1     If (i) the Spacecraft does not meet its weight
                        requirements and (ii) Buyer will be required to pay for
                        additional weight from the launch provider in order to
                        achieve the Specified Operational Lifetime without
                        delaying the placing of the Spacecraft in its orbital
                        location by more than fifteen (15) additional days, then
                        Contractor shall reimburse Buyer for such additional
                        payments up to [***].

              9.5.2     Any Preliminary Acceptance or Final Acceptance by Buyer
                        of Spacecraft that does not conform to the requirements
                        of this Contract (whether or not related to weight)
                        shall not affect the Parties rights and obligations
                        under Paragraph 6.4 ("Incentive Obligations") with
                        respect to a Spacecraft or other deliverable that does
                        not perform to the specifications of this Contract.


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ARTICLE 10.       ACCESS TO WORK IN PROCESS

        10.1  Contractor shall afford HCG access to work in progress being
              performed at Contractor's plants and at the Launch Integration
              Facility and/or Launch Site pursuant to this Contract, including
              technical data, documentation, and hardware, at reasonable times
              during the period of Contract performance, provided such access
              does not unreasonably interfere with such work or require the
              disclosure of Contractor's proprietary information to third
              Parties and subject to (i) HSC's Security Procedures and (ii) U.S.
              or Foreign Government Regulations.

         10.2       To the extent that the Contractor's major subcontracts
                    permit, Contractor shall afford HCG access to work being
                    performed pursuant to this Contract in subcontractor's
                    plants in the company of Contractor's representatives.

                    Contractor shall exert reasonable effort in subcontracting
                    to obtain permission for HCG access to those major
                    subcontractors' plants. Major subcontracts are defined as
                    those subcontracts in excess of [***].

           10.3     HCG shall have the right to witness on a non-interference
                    basis all system and subsystem tests scheduled by Contractor
                    in connection with the performance of work under this
                    Contract. If the system or subsystem tests are performed by
                    a subcontractor of HSC, HSC shall take all reasonable steps
                    to secure HCG's access to the subcontractor's facility or
                    facilities. HCG's right to witness testing shall be on a
                    non-interference basis with the subcontractor's activities
                    and subject to (i) any subcontractor security procedures and
                    (ii) U.S. or Foreign Government Regulations.


[***] Filed separately with the Commission pursuant to a request for
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ARTICLE 11.       TERMINATION FOR DEFAULT; LIMITATION OF LIABILITY

        11.1  Subject to provisions of Article 3 entitled "Spacecraft,
              Documentation and Related Services," Article 5 entitled "Price"
              and Article 12 entitled "Excusable Delays," Buyer may issue a
              written notice of default with respect to a particular Spacecraft
              to Contractor if: (i) Contractor fails [***] as confirmed in
              writing by the Contractor's and Buyer's Senior Executives and such
              failure may result in a delay in delivery of more than [***]; or
              (ii) the delivery of such Spacecraft or Contractor's performance
              of any material obligation under the Contract has been delayed due
              to the primary fault of the Contractor for more than [***].
              Subsequent to the issuance of said notice, the Buyer may terminate
              this Contract with respect to such Spacecraft and thereafter elect
              remedies as identified in Paragraph 11.2 below.

        11.2  If Buyer terminates this Contract, in whole or in part, as
              provided in Paragraph 11.1 herein, Buyer, at its sole option,
              shall either: (i) take title to all deliverable hardware, all
              hardware in process which ultimately would have been deliverable
              by Contractor and all drawings and data produced by Contractor,
              the cost of which has been charged or becomes chargeable to any
              work terminated plus all reasonable reprocurement costs up to a
              maximum amount per Spacecraft of: (a) [***] in the event of a
              termination of this Contract solely with respect to Documentation
              and/or Related Services for such Spacecraft or (b) [***] with
              respect to a complete termination of the Contract with respect to
              such Spacecraft; or (ii) receive a refund of all payments
              submitted to Contractor by the Buyer for performance of this
              Contract for the portion terminated by Buyer and Contractor shall
              retain title and possession to all terminated Hardware which
              ultimately would have been deliverable by Contractor. Contractor
              shall continue the performance of this Contract to the extent not
              terminated under the provisions of this Article.


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        11.3  Notwithstanding the other provisions of this Article, there will
              be no termination for default after Intentional Ignition of the
              Launch Vehicle for the applicable Spacecraft.

        11.4  If, after termination of this Contract (or portion thereof) under
              the provisions of this Article, it is determined for any reason
              that Contractor was not in default under the provisions of this
              Article, or that the default was excusable under the provision of
              Article 12 entitled "Excusable Delays," the rights and obligations
              of the Parties shall be the same as if Notice of Termination had
              been issued pursuant to Article 14, entitled "Termination for
              Convenience" or pursuant to Article 12, Paragraph 12.4, as the
              case may be.

        11.5  Except as otherwise provided in the Contract, the rights and
              remedies of the Parties provided in this Article shall be in lieu
              of any other rights and remedies provided by law or in equity in
              the event Contractor or Buyer fails to meet its obligations under
              this Contract. Buyer shall have no other rights or remedies for
              late delivery of a Spacecraft, Documentation and Related Services
              under this Contract except for those rights and remedies expressly
              provided for in this Contract.


                                       40


<PAGE>


ARTICLE 12.                EXCUSABLE DELAYS

        12.1  If either Party or a subcontractor of either Party is delayed by
              act of God, or of the public enemy, fire, flood, earthquake,
              epidemic, quarantine restriction, strike, walkout, freight
              embargo, or any other event which is beyond their control or does
              not arise from the acts or omissions of either Party or its
              respective subcontractors, said delay shall constitute an
              excusable delay ("Force Majeure Events"). In the event of an
              excusable delay, there shall be an equitable adjustment to the
              time of delivery and/or performance stated in this Contract. The
              affected Party shall give notice in writing to the other Party
              within 10 working days that an excusable delay condition exists
              after learning of such delay. Such notification shall include the
              cause of the excusable delay, the expected length of the excusable
              delay, and alternate plans to mitigate the effect of the excusable
              delay.

        12.2  If the affected Party, as defined in Paragraph 12.1 above,
              requests or experiences, on a cumulative basis, excusable delay(s)
              greater than [***], the Parties shall enter into good faith
              negotiations to develop a mutual course of action and/or an
              equitable adjustment to the affected terms of this Agreement.

        12.3  Notwithstanding the foregoing, if the Launch Date for a particular
              Spacecraft defined in Paragraph 7.1 herein is delayed due to a
              Force Majeure event affecting HCG's ability to furnish any item to
              be supplied by it under Article 8 hereof, HCG shall reimburse
              Contractor for all reasonable expenses incurred as a result,
              including without limitation expenses for: support personnel
              standby; extra travel expenses; and transport termination or
              rescheduling fees.

        12.4  Notwithstanding anything herein to the contrary, in the event that
              a Force Majeure Event occurs and continues to delay or prevent
              performance by Contractor of its obligations as to either or both
              Spacecraft for a period of twelve (12) months or longer from the
              initial occurrence of such Force Majeure Event, then Buyer shall
              have the right to terminate this Contract 


[***] Filed separately with the Commission pursuant to a request for
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<PAGE>


              with respect to the affected Spacecraft upon thirty (30) days
              written notice. In the event of a termination under this Paragraph
              12.4, Buyer shall be entitled to a refund of all payments made to
              Contractor with respect to the affected Spacecraft, and Contractor
              shall retain title to all Deliverables produced by Contractor
              under this Contract with respect to the affected Spacecraft.


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ARTICLE 13.       AMENDMENTS

        The terms and provisions of this Contract shall not be amended or
        modified without specific written provision to that effect, signed by
        the Authorized Representative(s) of both Parties. These Authorized
        Representative(s) are identified in Article 27, "Notices and Authorized
        Representative(s)." No oral statement of any person shall in any manner
        or degree modify or otherwise affect the terms and provisions of this
        Contract.


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ARTICLE 14.       TERMINATION FOR CONVENIENCE

        14.1  Buyer may terminate all or any portion of the work to be performed
              pursuant to this Contract with respect to one or both of the
              Spacecraft upon five (5) days written notice to Contractor. Buyer
              shall pay Contractor, in the event of such termination,
              termination liability equaling all costs (as defined in Paragraph
              14.5 below) expended by Contractor for all work done up to the
              date of termination, settlements with subcontractors for work
              performed prior to termination, and Contractor's reasonable costs
              related to termination which would not otherwise have been
              incurred plus a [***] profit for the applicable termination costs
              and charges, but in no event more than the maximum termination
              liability that is set forth in Exhibit F hereto, as of date of
              termination, less amounts previously paid by Buyer to Contractor
              pursuant to the Payment Article. Buyer shall pay the unpaid
              balance of such termination liability within thirty (30) days of
              Buyer's receipt of certification of Contractor's costs. In the
              event that Buyer has paid to Contractor any amount in excess of
              such termination liability, then Contractor shall refund such
              excess amount to Buyer within thirty (30) days of certification of
              costs. In no event shall the termination liability exceed either
              the Contract price defined in Article 5 herein or the amount
              specified in Exhibit F.

        14.2  In the event of termination by Buyer hereunder, and upon payment
              in full of all amount due (if any) under 14.1 above, all tangible
              work in process inventories generated under this Contract, with
              respect to the terminated work, shall become the property of
              Buyer. Buyer shall direct disposition of such property within
              sixty (60) days from date of termination (which disposition may
              include requesting Contractor to undertake mitigation efforts in
              accordance with Paragraph 14.4 below) or such other date as agreed
              to by the Parties. Final acceptance and transfer of title for all
              tangible work in process inventories to be delivered to the Buyer
              in the event of termination shall be the subject of separate
              negotiations between Buyer and Contractor and shall be subject to
              applicable U.S. Government Export Regulations. The expense of
              disposition shall be borne by HCG.


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        14.3  In the event of partial termination of the Contract, the Contract
              Price shall be adjusted accordingly.

        14.4  At HCG's request, Contractor shall use reasonable best efforts to
              identify an alternate use (i.e. sale to third Parties and/or
              internal utilization) for any Hardware affected by a termination
              under this Article 14, the Contractor shall submit a proposal to
              HCG, which, at a minimum, defines (i) the applicable Hardware,
              (ii) the intended use of the Hardware, (iii) the original
              acquisition cost/value of the applicable Hardware, as available,
              and (iv) the sale/transfer payment(s) to be received by HCG.
              Contractor shall use its reasonable best efforts to obtain fair
              market value for the applicable Hardware. HCG, at its sole option,
              may accept or reject the proposal submitted by Contractor. In the
              event that HCG accepts the proposal submitted by Contractor,
              payment by Contractor to HCG of the agreed upon payment value
              shall occur within thirty (30) days of the sale/transfer of the
              applicable Hardware, or such other payment period as mutually
              accepted between the Parties. If the Contractor's proposal is
              rejected by HCG or if Contractor is unable to find any alternative
              use within two (2) years of being requested to do so, then Title
              to the applicable Hardware shall be vested as stated in Paragraph
              14.2 above.

        14.5  As used in this Article 14, Contractor's "Costs" shall mean costs
              actually incurred by Contractor in performing its obligations
              hereunder (including G&A costs not to exceed [***] of such costs)
              all such costs to be determined in accordance with Contractor's
              normal accounting practices. Contractor shall provide to Buyer an
              invoice certified by a financial officer of the company stating
              Contractor claim for costs properly includes only the costs
              specified in this paragraph. In the event Buyer desires
              independent verification of claim, Buyer may request to have
              independent certified public accountants (CPA) audit costs
              incurred by Contractor and report to the Parties. Such audit shall
              be at Buyer's expense unless such audit shows Contractor's costs
              to have been overstated (in which event Contractor shall bear the
              audit expense). Such audit shall constitute a final determination
              of actual costs notwithstanding the provision of Article 33;
              provided that, if the costs determined by such report exceed 


[***] Filed separately with the Commission pursuant to a request for
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              the amount of Contractor's termination claim, Buyer shall
              only be obliged to pay the amount of Contractor's termination
              claim.

        14.6  Contractor shall use its reasonable best efforts to include in its
              subcontracts for work hereunder on terms that will enable
              Contractor to terminate such subcontracts in a manner consistent
              with this Article 14.


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ARTICLE 15.       TITLE AND RISK OF LOSS

        15.1  Title and risk of loss or damage in respect of all items to be
              delivered under this Contract shall pass from Contractor to HCG as
              follows:

              15.1.1    Risk of loss of the Spacecraft and title shall pass from
                        Contractor to HCG upon the earliest of: (i) the
                        completion of In-orbit Testing in accordance with
                        Exhibit A, (ii) fifty (50) days after Intentional
                        Ignition (as defined in Article 15, Paragraph 15.2 of
                        this contract) or (iii) immediately before a Partial
                        Failure, Total Failure or Total Constructive Failure (as
                        each such term is defined in the applicable Hughes
                        Communications Galaxy Launch Insurance Contract or
                        successor contract) which occurs at or after Intentional
                        Ignition.


              15.1.2    In respect to a Spacecraft which HCG directs Contractor
                        to store, title and risk of loss shall remain with the
                        Contractor until Final Acceptance as specified in
                        Article 9.4 herein.


              15.1.3    Notwithstanding Paragraph 15.1.2 above, upon removal of
                        the Spacecraft from storage, the Contractor shall not
                        assume risk of loss relative to a Battery which HCG
                        directs Contractor to replace after the five-year
                        storage period which disqualifies the battery for a
                        15-year mission. In that event, Article 30 herein
                        entitled "Effects of Storage on Batteries," shall apply.


              15.1.4    "Risk of Loss" for purposes of this Article 15 is
                        limited to the responsibility and liability for a
                        Partial Failure, Total Failure or Total Constructive
                        Failure (as each such term is as defined in the
                        applicable Hughes Communications Galaxy Launch Insurance
                        Contract or successor contract). Responsibility and
                        liability for the Spacecraft prior to intentional
                        ignition is with the Contractor.


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<PAGE>


        15.2  In the event of damage to or destruction of Hardware when
              Contractor shall have risk of loss, Contractor shall repair or
              replace (at Contractor's option) said Hardware. The Buyer shall
              participate in the decision to repair or replace said Hardware and
              the provisions of Article 16 shall apply.

        15.3  Insurance Provided By Contractor. The Contractor shall, at its own
              expense, provide and maintain the following insurance:

              15.3.1    "All Risk" Insurance

                        (i) The Policy for "All Risks" insurance shall insure
                        the Contractor and name Buyer as additional insured and
                        Loss Payee as their interest may appear.

                        (ii) The insurance shall cover the Spacecraft while in
                        or about the Contractor's and subcontractors' plants,
                        while at other premises which may be used or operated by
                        the Contractor for construction or storage purposes,
                        while in transit, or while at the Designated Launch Site
                        until Intentional Ignition, or while Spacecraft is
                        stored by the Contractor at HCG's direction until Final
                        Acceptance as specified in Article 9.4.

                        (iii) Such insurance shall be sufficient to cover the
                        full replacement value or selling price of the
                        Spacecraft and may be issued with deductibles, for which
                        losses shall be borne by the Contractor.

                        (iv) This "All Risk" insurance shall be in force from
                        the time of the Effective Date of this Contract and
                        shall continue in effect until Contractor's liabilities
                        have expired at intentional ignition.


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<PAGE>


              15.3.2    Third Party Liability Insurance

                        (i) The Policy(s) for Third Party Liability insurance
                        shall be written on forms the Buyer may review and shall
                        include Buyer as additional insured.

                        (ii) This Third Party Liability insurance shall be in
                        force from the time of the Effective Date of this
                        Contract and shall continue in effect until Contractor's
                        liabilities have expired at intentional ignition.

                        (iii) The Policy(s) may be issued with deductibles, for
                        which losses shall be borne by the Contractor.

        15.4  General Insurance Requirements

                        (i) The Contractor shall, upon request, provide to the
                        Buyer certificates of the Insurance Policy(s) issued by
                        an agent of the Contractor's Insurer(s) for coverage
                        which the Contractor is required to provide pursuant to
                        the provisions of these Articles.

                        (ii) All Policies of insurance to be provided and
                        maintained pursuant to these Articles shall require the
                        insurer(s) or its authorized agent(s) to give each
                        insured not less than thirty (30) days prior written
                        notice in the event of cancellation or any proposed
                        material change in such policies, except for ten (10)
                        days prior written notice in the event of cancellation
                        due to non-payment of premium.

                        (iii) The Contractor may also acquire and maintain, at
                        its own expense, other insurance for amounts and perils,
                        and upon such terms, conditions and deductibles as it
                        may deem advisable or necessary to cover any loss or
                        damage to persons or property that may occur as a result
                        of the performance of this Contract.


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<PAGE>


ARTICLE 16.       SPACECRAFT WARRANTY

        16.1  Contractor warrants that a Spacecraft, upon successful completion
              of Spacecraft in plant Tests pursuant to Article 9 herein, shall
              be free from any defects in material or workmanship and shall
              conform to the applicable specifications and drawings, as
              evidenced by the acceptance criteria in Exhibits A-D herein.

        16.2  This warranty shall start from the date of Preliminary Acceptance
              of a Spacecraft as stated in Article 9 herein, entitled
              "Inspection and Acceptance," and continue for a period of [***],
              or until the Intentional Ignition (defined herein as the
              "Intentional Ignition of any rocket motor on the first stage of
              the launch vehicle") of the applicable launch vehicle, whichever
              is earlier. [***] ("Warranty Time Period"). Contractor shall not
              be liable in Contract or in Tort for any incidental, special,
              contingent, or consequential damages.

        16.3  Buyer shall have the right at any time during the Warranty Time
              Period to reject any goods not conforming to this warranty and
              require that Contractor, at its expense, correct or replace (at
              Contractor's option) such goods with conforming goods. If any time
              during the Warranty Time Period Contractor fails to correct or
              replace such defective goods and fails to initiate reasonable
              efforts to correct or replace such defective goods within a
              reasonable period after written notification and authorization
              from Buyer, Buyer may then, by contract or otherwise, correct or
              replace such defective goods and equitably adjust the price.

        16.4  Except as otherwise expressly agreed upon in this Contract,
              Contractor shall have no liability, or responsibility in Contract
              or in Tort with respect to a Spacecraft after Intentional Ignition
              (as defined in Paragraph 16.2) of the launch vehicle.


[***] Filed separately with the Commission pursuant to a request for
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<PAGE>


        16.5  THE ABOVE WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
              IMPLIED, INCLUDING FITNESS FOR PARTICULAR PURPOSE OR
              MERCHANTABILITY AND THE REMEDY PROVIDED HEREIN IS THE SOLE REMEDY
              FOR FAILURE BY CONTRACTOR TO FURNISH A SPACECRAFT THAT IS FREE
              FROM MATERIAL DEFECTS IN MATERIAL OR WORKMANSHIP AS SET FORTH IN
              PARAGRAPH 16.1 ABOVE. ALL OTHER WARRANTIES OR CONDITIONS IMPLIED
              BY ANY OTHER STATUTORY ENACTMENT OR RULE OF LAW WHATSOEVER ARE
              EXPRESSLY EXCLUDED AND DISCLAIMED. CONTRACTOR AND ITS
              SUBCONTRACTORS SHALL HAVE NO LIABILITY IN CONTRACT OR IN TORT
              (INCLUDING NEGLIGENCE) OR IN ANY OTHER MANNER WHATSOEVER FOR A
              SPACECRAFT AFTER INTENTIONAL IGNITION OTHER THAN AS EXPRESSLY
              PROVIDED IN THIS CONTRACT.

        16.6  Any limitations on warranties, liability or requests for
              indemnification from liability for the malfunction of delivered
              items which are imposed upon the Contractor by its various
              equipment suppliers shall be passed on directly to Buyer provided,
              however, nothing therein shall decrease or invalidate the rights
              of the Buyer during, or the length of, the Warranty Time Period as
              stated in this Article.


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<PAGE>


 ARTICLE 17.      INDEMNIFICATION

        17.1  Each Party shall indemnify and hold the other and/or all its
              officers, agents, servants, subsidiaries, affiliates, parent
              companies and employees, or any of them, harmless from any
              liability or expense in connection herewith on account of damage
              to property (excepting other Spacecraft in flight) and injuries,
              including death, to all persons including but not limited to
              employees of the Parties, and their subcontractors, and of all
              other persons performing any part of the work hereunder, arising
              from any occurrence caused by an negligent act or omission of the
              indemnifying Party or its subcontractors, or any of them in
              connection with the work to be performed by such Party under this
              Contract. The indemnifying Party shall have the right, but not the
              obligation, to participate in any legal or other proceedings
              concerning claims for which it is indemnifying under this Article
              17 and to direct the defense of such claims. However, with respect
              to such legal or other proceedings, the indemnifying Party shall
              pay all expenses (including attorneys fees incurred by the
              indemnified Party in connection with such legal or other
              proceedings) and satisfy all judgments, costs or other awards
              which may be incurred by or rendered against the indemnified
              Party. The indemnifying Party shall not settle any such claim,
              legal or other proceeding without first giving thirty (30) days
              prior written notice of the Terms and Conditions of such
              settlement and obtaining the consent of the indemnified Party,
              which consent shall not be unreasonably withheld or delayed.

        17.2  Notwithstanding the foregoing, neither the Contractor nor its
              subcontractors shall have any liability in Contract or in Tort,
              for damages to or caused by a Spacecraft after Intentional
              Ignition (as defined in Paragraph 16.2), and Buyer shall obtain
              waivers of subrogation rights from Buyer's insurers against
              Contractor, and affiliates and subcontractors of Contractor.


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<PAGE>


ARTICLE 1         SPACECRAFT NOT LAUNCHED WITHIN SIX MONTHS AFTER ACCEPTANCE

        18.1  If a Spacecraft is not launched within six (6) months after its
              Preliminary Acceptance per Article 9, entitled "Inspection and
              Acceptance," and is subsequently ordered to be launched within
              [***] following its Preliminary Acceptance, it is agreed that such
              Spacecraft shall be returned at Contractor's option at
              Contractor's expense, to Contractor's facility for inspection and
              refurbishment. Any inspection and refurbishment undertaken by
              Contractor to meet the requirements of Article 16 entitled,
              "Spacecraft Warranty," shall be at Contractor's expense, including
              Spacecraft transit insurance.

        18.2  If a Spacecraft is not launched within six (6) months after its
              Preliminary Acceptance and is subsequently ordered to be launched
              later than [***] following its Preliminary Acceptance, it is
              agreed that such Spacecraft shall be returned, at Buyer's expense,
              to Contractor's facility for inspection and refurbishment. An
              equitable adjustment to Contract price for such inspection and
              refurbishment, to include a [***] profit component shall be
              negotiated by the Parties unless the fact that the launch is
              scheduled for later than [***] is due to Contractor's negligent
              acts or omissions.

        18.3  If a Spacecraft is returned to Contractor's facility for
              inspection and refurbishment per the terms of Paragraph 18.2
              above, all charges to return such Spacecraft to the Launch Site
              shall be borne by Buyer.

        18.4  If a Spacecraft has not been launched within [***] after its
              preliminary Acceptance, neither Party shall be further obligated
              to the other with respect to such Spacecraft. Disposition of such
              Spacecraft shall be at the option of Buyer with costs of such
              disposition to be borne by Buyer.


[***] Filed separately with the Commission pursuant to a request for
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ARTICLE 19.       PATENT/COPYRIGHT INDEMNITY

        19.1  Contractor shall indemnify and hold Buyer harmless against any
              liability or expense as a result of claims, actions, or
              proceedings against Buyer alleging the infringement of any
              trademarks, United States Copyright or mask work, United States
              Letters Patent, any other intellectual property rights, by any
              article fabricated by Contractor and delivered to Buyer pursuant
              to this Contract as set forth below.

        19.2  Contractor agrees to defend at its own expense any claim, action,
              proceeding or request for royalty payments or any claim for
              equitable relief or damages against Buyer, its officers,
              employees, agents, or subsidiaries based on an allegation that the
              manufacture of any item under this Contract or the use, lease, or
              sale thereof infringes any United States Letters Patent trademark,
              United States Copyright or mask work or any other intellectual
              property right, and to pay any royalties and other costs related
              to the settlement of such claim, action, proceeding or request and
              to pay the costs and damages, including reasonable attorney's fees
              finally awarded as the result of any claim, action or proceeding
              based on such request, provided that Contractor is given prompt
              written notice of such request or claim by Buyer and given
              authority and such assistance and information as is available to
              Buyer for resisting such request or for the defense of such claim,
              action or proceeding. Any such assistance or information which is
              furnished by Buyer at the written request of Contractor is to be
              at Contractor's expense.

        19.3  In the event that, as a result of any such claim, action,
              proceeding or request: a) prior to delivery, the manufacture of
              any item is enjoined; or b) after delivery, the use, lease or sale
              thereof is enjoined, Contractor agrees to utilize its best effort
              to either: (1) negotiate a license or other agreement with
              plaintiff so that such item is no longer infringing; or (2) modify
              such item suitably or substitute a suitable item therefore, which
              modified or substituted item is not subject to such injunction,
              and to extend the provisions of this Article thereto. In the event
              that neither of the foregoing alternatives is suitably
              accomplished by Contractor, Contractor shall be 


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<PAGE>


              liable to Buyer for Buyer's additional costs and damages arising
              as a result of such injunction; provided however, that in no event
              shall Contractor's entire liability under this Article exceed
              [***] for each Spacecraft. The existence of one or more claims,
              actions, proceedings or lawsuits shall not extend such amount.

        19.4  The foregoing indemnity shall not apply to any infringement
              resulting from a modification or addition, by other than
              Contractor, to an item after delivery.

        19.5  If the infringement results from the compliance by Contractor with
              the Buyer's directed designs, specifications or instructions, the
              Buyer will defend or settle, at its expense, any such suit against
              the Contractor.

        19.6  The foregoing constitutes the Parties' entire obligation with
              respect to claims for infringement.


[***] Filed separately with the Commission pursuant to a request for
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ARTICLE 20.       RIGHTS IN INVENTIONS


        20.1  As used in this Contract, "Program Invention" shall mean any
              invention, discovery or improvement conceived of and first reduced
              to practice in the performance of Work under this Contract.
              Information relating to Inventions shall be treated as proprietary
              information in accordance with the provisions of this Contract.
              Rights to inventions conceived solely by Contractor or its
              employees shall vest completely with Contractor.

        20.2  Contractor shall be the owner of all Program Inventions invented
              solely by Contractor. Contractor grants Buyer a royalty-free,
              nonexclusive license in Program Inventions to use Program
              Inventions solely for the purposes of maintenance and operation of
              a Spacecraft and delivered Equipment. Contractor agrees that it
              will not revoke such license if Buyer is in compliance with the
              terms of the license.

              20.3.1    In the case of joint Inventions, that is, inventions
                        conceived jointly by one or more employees of both
                        Parties hereto, each Party shall have an equal,
                        undivided one-half interest in and to such joint
                        Inventions, as well as in and to patent applications and
                        patents thereon in all countries.

              20.3.2    In the case of such joint Inventions, Contractor shall
                        have the first right of election to file patent
                        applications in any country, and Buyer shall have a
                        second right of election. Each Party in turn shall make
                        its election at the earliest practicable time, and shall
                        notify the other Party of its decision.

              20.3.3    The expenses for preparing, filing and securing each
                        joint Invention patent application, and for issuance of
                        the respective patent shall be borne by the Party which
                        prepares and files the application. The other Party
                        shall furnish the filing Party with all documents or
                        other assistance that may be necessary for the filing
                        and prosecution of each application. Where such joint
                        Invention application for patent is filed by either
                        Party in a 


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<PAGE>


                        country which requires the payment of taxes, annuities,
                        maintenance fees or other charges on a pending
                        application or on an issued patent, the Party which
                        files the application shall, prior to filing, request
                        the other Party to indicate whether it will agree to pay
                        one-half of such taxes, annuities, maintenance fees or
                        other charges. If within sixty (60) days of receiving
                        such request, the non-filing Party fails to assume in
                        writing the obligation to pay its proportionate share of
                        such taxes, annuities, maintenance fees or other
                        charges, or if either Party subsequently fails to
                        continue such payments within sixty (60) days of demand,
                        it shall forthwith relinquish to the other Party,
                        providing that said other Party continues such payments,
                        its interest in such application and patent and the
                        Invention disclosed therein, subject, however, to
                        retention of a paid-up, non-exclusive, non-assignable
                        license in favor of the relinquishing Party, its parent,
                        and any subsidiary thereof to make, use, lease and sell
                        apparatus and/or methods under said application and
                        patent.

        20.4  Each owner of a jointly-owned patent application or patent
              resulting therefrom shall, provided that it shall have fulfilled
              its obligation, if any, to pay its share of taxes, annuities,
              maintenance fees and other charges on such pending application or
              patent, have the right to grant non-exclusive licenses thereunder
              and to retain any consideration that it may receive therefor
              without obligation to account therefor to the other Party. In
              connection therewith, each of the Parties hereby consents to the
              granting of such non-exclusive licenses by the other Party and
              also agrees not to assert any claim with respect to the licensed
              application or patent against any licensee of the other Party
              thereunder during the term of any such license.

        20.5  No sale or lease hereunder shall convey any license by
              implication, estoppel or otherwise, under any proprietary or
              patent rights of Contractor, to practice any process with such
              product or part, or, for the combination of such product or part
              with any other product or part.


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ARTICLE 21.       INTELLECTUAL PROPERTY RIGHTS

         Except as provided in Article 20, neither Party shall acquire any
         rights with respect to any patent, trademark, trade secret, or any
         other intellectual property developed or used by the other Party in the
         performance of this Contract.


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ARTICLE 22.       FURNISHED DATA AND INFORMATION, DISCLOSURE AND USE

        Proprietary Information shall mean any data and information received by
        one Party from the other Party, which is identified as proprietary in
        accordance with either of the following methods: (i) if in writing, it
        shall be marked by the disclosing Party with an appropriate proprietary
        legend, or (ii) if disclosed orally, it shall be presented by the
        disclosing Party as Proprietary at the time of disclosure and shall be
        confirmed by the disclosing Party as Proprietary Information in writing
        within fifteen (15) days of its initial oral disclosure.

        22.1  The receiving Party agrees to protect such data and information
              with the same degree of care which the receiving Party uses to
              protect its own confidential data and information;

        22.2  The receiving Party shall not disclose or have disclosed to third
              Parties, in any manner or form, or otherwise publish such data and
              information so long as it remains proprietary without the explicit
              authorization of the other Party or except as otherwise permitted
              in this Article 22;

        22.3  The receiving Party agrees that it shall use such data and
              information solely in connection with the performance of Work
              under this Contract, unless otherwise explicitly authorized by or
              on behalf of the other Party with the designation of specific data
              and information and use;

        22.4  The foregoing obligations with regard to such data and information
              shall exist unless and until such time as:

              22.4.1    Such data and information are to the receiving Party or
                        otherwise publicly available prior to its receipt by the
                        receiving Party without the default of the receiving
                        Party; or

              22.4.2    Such data and information have been lawfully disclosed
                        to the receiving Party by a Third Party which has the
                        right to disclose such data; or


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              22.4.3    Such data and information are shown by written record to
                        have been independently developed by the receiving
                        Party; or

              22.4.4    Such data and information are otherwise available in the
                        public domain without breach of this Contract by the
                        receiving Party; or

              22.4.5    Such data and information are disclosed by or with the
                        permission of the disclosing Party to a Third Party
                        without restriction; or

              22.4.6    Such data and information that a Party may be required
                        by law or government regulation or order to disclose.

              22.4.7    Such data and information are released for disclosure in
                        writing by or with the permission of the disclosing
                        Party.

        22.5  Providing Buyer shall obtain from the recipient a nondisclosure
              agreement at least as restrictive as this Article 22, Buyer may
              disclose any proprietary information on a need to know basis to
              its customer(s), contractors, insurers, agents, counsel and actual
              or prospective lenders, investors, or successors in interest.

        22.6  Any copyrighted material belonging to a Party to this Contract may
              be copied by the other Party as necessary to enable the receiving
              Party to perform its obligations under this Contract, provided
              always that the copyright legend is retained on the material.


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ARTICLE 23.       PUBLIC RELEASE OF INFORMATION

        Neither Party shall issue news releases, articles, brochures,
        advertisements, prepared speeches, and other information releases
        concerning the work performed or to be performed under this Contract by
        Contractor or its subcontractors, or any employee or consultant of
        either, which contains new information not previously disclosed as
        permitted under the Contract, without first obtaining the prior written
        approval of the other Party concerning the content and timing of such
        release which approval shall not be unreasonably withheld. The
        initiating Party shall provide such releases to the other Party for
        review within a reasonable time prior to the desired release date and
        the other Party shall be required to respond within said time period.


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ARTICLE 24.       TAXES

        24.1  The price which shall be paid by Buyer for Spacecraft,
              Documentation and Related Services [***] any U.S. (federal, state
              or local) sales or use taxes, or fees or other U.S. taxes against
              real or personal property, however designated, which may be levied
              or assessed against Contractor. Buyer shall be responsible for the
              payment of all personal property taxes, if any, with regard to
              goods which are levied upon subsequent to the date of delivery to
              Buyer. Buyer shall be responsible for any inventory taxes, state
              taxes or any other taxes that are assessed to Contractor as a
              result of storage of a Spacecraft in accordance with Article 32.
              If Sea Launch, L. P. is the Launch Vehicle Provider for any such
              launch, Contractor shall be relieved of responsibility for any
              taxes and/or port fees associated with the Sea Launch Zenit
              Vehicle except as provided by Article 4, Paragraph 4.3.1.2 of the
              Contract.

        24.2  In the event Contractor in the performance of this Contract is
              required to pay non-U.S. customs, import duties, value-added or
              sales taxes, commercial card fees, port fees, harbor maintenance
              tax, other charges, or taxes, or fees, (collectively,
              "Assessments") however designated (except for (i) any Assessment
              based on Contractor's income and (ii) any Assessment incurred as a
              result of or associated with Contractor's manufacture of a
              Spacecraft), then Buyer will reimburse Contractor for such
              Assessments within thirty (30) days of written notification by
              Contractor of payment; provided, however that, Contractor shall
              used its reasonable best efforts to obtain waivers, exemptions
              and/or relief from such Assessments when practicable, and Buyer
              shall not be required to pay any Assessment to the extent any such
              waiver, exemption or relief is pending or has been obtained.
              Notification shall then be supported by an invoice and
              attachment(s) evidencing such payment having been made by
              Contractor.


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


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ARTICLE 25.       GOVERNING LAW

        This Contract shall be deemed made in the State of California and shall
        be construed in accordance with the laws of the State of California.


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ARTICLE 26.       TITLES

        Titles given to the Articles herein are inserted only for convenience
        and are in no way to be construed as part of this Contract or as a
        limitation of the scope of the particular article to which the title
        refers.


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ARTICLE 27.       NOTICES AND AUTHORIZED REPRESENTATIVES

        Any notice or request required or desired to be given or made hereunder
        shall be in writing and shall be effective if delivered in person or
        sent by mail or by facsimile as indicated below:

        1.    Hughes Communications Galaxy Inc.
              P.O. Box 9712
              Bldg. A01, M/S 4A467
              Long Beach, California  90810-9928

              Attention:    TBD, Contracts Manager
                     cc:    TBD, Director, Systems Engineering &
                            Technology

              Authorized Representative(s): [TBD]

        2.    Hughes Space and Communications Company
              Post Office Box 92919, Airport Station
              Bldg. S41, M/S A374
              Los Angeles, California  90009

              Attention:    Samuel C. Tricoli, Contracts Manager
                     cc:    Arthur W. Ackerman, Jr., Program Manager

              Authorized Representative(s): [TBD]

        or in each case as a Party may direct by notice to the other Party in
        accordance with this Article 27.


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ARTICLE 28.       INTEGRATION

        This document, with Exhibits, constitutes the entire understanding
        between the Parties with respect to the subject matter of this Agreement
        and supersedes all previous oral and/or written negotiations,
        commitments, and understandings of the Parties, including without
        limitation the version of the Agreement dated May 9, 1997.


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ARTICLE 29.       CHANGES

        29.1  Any changes requested by Contractor during the performance of this
              Contract, within the general scope of this Contract, which will
              add or delete work, stop work, affect the design of a Spacecraft,
              change the method of shipment or packing, or the place or time of
              delivery, or will affect any other requirement of this Contract,
              shall be submitted in writing ("Change Proposal") to Buyer sixty
              (60) days prior to the proposed effective date of the change. If
              such Contractor requested change causes an increase or decrease in
              the total price or other terms of this Contract, Contractor shall
              submit a proposal to Buyer detailing the impact of such change.


        29.2  Buyer shall notify Contractor in writing within thirty (30) days
              after receipt of the requested change and price adjustment
              (downward or upward), if any, whether or not it agrees with and
              accepts such Change Proposal. If Buyer agrees with and accepts the
              Contractor requested Change Proposal, Contractor shall proceed
              with the performance of the Contract as changed or in the case of
              a stop work order, suspend the performance of this Contract, and
              an amendment to the Contract reflecting the Change Proposal shall
              be incorporated into the Contract. If Buyer does not agree with
              the Contractor requested Change Proposal, the Parties shall
              attempt to reach agreement on such Change Proposal. If the Parties
              are unable to agree on the requested change and price adjustment,
              then the Parties shall proceed with the performance of this
              Agreement, as unchanged. In the event the Parties are able to
              reach agreement on the change, but not on the price adjustment
              component, then the Parties shall elevate such dispute to the
              Senior Executives of the respective companies for resolution. If
              resolution can not be achieved within a reasonable period of time
              under the circumstances, Buyer may make a qualified acceptance of
              the Change Proposal, accepting all matters other than price
              adjustment, and the issue of price adjustment shall be submitted
              for resolution by arbitration in accordance with the provisions of
              Paragraph 33.2 hereof. Pending such resolution of the price issue,
              the Parties shall perform their obligations under the Contract, or
              in the case of a Stop work order, suspend their obligations, as if
              the Change Proposal had been accepted; provided,


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              however, that Buyer shall pay any disputed amount of the
              price adjustment into an escrow account in accordance with
              Paragraph 29.4 hereof on the date such amount would have been due
              and payable had the Change Proposal been accepted, or if the
              Change Proposal could result in a downward adjustment in the
              Contract Price in excess of the amount remaining to be paid by the
              Buyer, Contractor shall deposit the disputed amount of such excess
              into an escrow account in accordance with Paragraph 29.4 hereof.

        29.3  Buyer may submit to Contractor in writing (a "Change Order
              Request") detailing any changes requested by Buyer during the
              performance of this Contract, within the general scope of the
              Contract, which will add or delete work, stop work , affect the
              design of a Spacecraft, change the method of shipment or packing,
              or the place or time of delivery, or will affect any other
              requirement of this Contract. Contractor shall respond to such
              Change Order Request in writing to Buyer within thirty (30) days
              after such request. If Contractor determines that the change
              requested by Buyer is feasible and can be made at no additional
              cost and with no associated delays, then Contractor shall so
              notify, Buyer and Contractor shall commence implementing such
              change. If the Contractor determines otherwise, then, Contractor
              shall submit to Buyer, a proposal detailing the impact of such
              change and the price adjustment (downward or upward), if any, (the
              "Change Order Offer"). Buyer shall notify Contractor in writing,
              within thirty (30) days after receipt of Contractor's Change Order
              Offer, whether or not it agrees with and accepts Contractor's
              Change Order Offer. If Buyer agrees with and accepts Contractor's
              Change Order Offer, Contractor shall immediately proceed with the
              performance of the Contract as changed, or in the case of a stop
              work order, suspend the performance of this Contract, and an
              amendment to the Contract reflecting such change shall be
              incorporated into the Contract. If Buyer does not agree with the
              Contractor's Change Order Offer, the Parties shall attempt to
              reach agreement on such Change Order Offer. In the event the
              Parties are able to reach agreement on the change, but not on the
              price adjustment component, then the Parties shall elevate such
              dispute to the Senior Executives of the respective companies for
              resolution. If resolution can not be achieved within a reasonable
              period of time under the circumstances, Buyer may make a 


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              qualified acceptance of the Change Order Offer, accepting all
              matters other than price, and the issue of price shall be
              submitted for resolution by arbitration in accordance with the
              provisions of Paragraph 33.2 hereof. Pending such resolution of
              the price issue, the Parties shall perform their obligations under
              the Contract, or in the case of a Stop work order, suspend their
              obligations, as if the Change Order Offer had been accepted;
              provided however, that the Buyer shall pay any disputed amount of
              the price adjustment into an escrow account in accordance with
              Paragraph 29.4 hereof on the date such amount would have been due
              and payable had the Change Order Offer been accepted, or if the
              Change Order Request could result in a downward adjustment in the
              Contract Price in excess of the amount remaining to be paid by
              Buyer, Contractor shall deposit the disputed amount of such excess
              into an escrow account in accordance with Paragraph 29.4 hereof.
              The dispute shall then be resolved by arbitration under the
              provisions of Article 33, entitled "Disputes."

        29.4  Escrow Provisions - Disputed Amounts

              Disputed amounts with respect to any change under this Article 29
              shall be paid into an interest bearing escrow account to be
              established at Bank of America, Concord, California. Upon
              settlement of the dispute as to such payment and alleged breach in
              accordance with Article 33, the Party entitled to the amount or
              part thereof in escrow, shall receive such amount together with
              all accrued interest thereon and the other Party shall pay all
              costs and fees associated with the escrow of said amount. The
              placement of disputed amounts into an escrow account shall not
              relieve either Party of its remaining obligations under this
              contract.

        29.5  Determination of Price Adjustment of Change

              The Parties agree that the change order price adjustment (downward
              or upward) for any change shall be equal to the sum of (i) the
              "Change Order Cost" plus (ii) the "Change Order Profit Component".
              The "Change Order Cost" shall mean those additional or reduced
              recurring and non-recurring costs to Contractor to implement such
              change ( or which are not required to be implemented), as
              determined in accordance with Contractor's normal 


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<PAGE>


              accounting practices, including those general and administrative
              costs ("G&A Costs") of such change, as determined in accordance
              with Contractor's normal accounting practices, [***] of
              Contractor's costs for such change. The "Change Order Profit
              Component" shall be equal to [***] of the Change Order Cost. The
              Total Change Order Cost shall be payable in accordance with the
              payment plan agreed by the Parties or, if applicable, by the
              Arbitrator. Unless otherwise agreed by the Parties, the Change
              Order Profit Component shall be payable in equal monthly
              installments at the same time as the monthly installments of
              Incentives Obligations; provided, however, that payment of the
              Change Order Profit Component shall not be conditioned upon
              performance of the Spacecraft or any component thereof.

        29.6  If Contractor makes any improvements to the generic HS-702
              Spacecraft design, then Contractor shall provide reports to Buyer
              concerning such improvements. Buyer may request that any
              improvement to the HS-702 Spacecraft design reported to Buyer be
              incorporated into the Spacecraft, and such improvements shall be
              considered a Change and shall be dealt with in accordance with the
              Change Order process in this Article 29. The foregoing shall not
              apply to any changes to the generic HS-702 Spacecraft design, to
              correct or mitigate the impact of anomalies with respect to such
              design, made by Contractor on its own accord or as necessary in
              Contractor's reasonable engineering judgment, which changes shall
              not relieve Contractor of its obligations to meet the technical
              specifications for the Spacecraft, as set forth in Exhibit B,
              hereto. Contractor shall notify Buyer on a periodic basis or as
              requested by Buyer from time to time of any anomalies with respect
              to such HS-702 Spacecraft design.

        29.7  The Change Order Price shall be allocated and payable as follows:
              The Change Order Profit Component shall be an independent payment
              obligation not contingent upon performance of the Spacecraft and
              shall be payable at the same time as the monthly installments of
              the Incentives Obligations for the Spacecraft as set forth in
              Paragraph 6.4.4 and, in any case, the then-remaining Change Order
              Profit Component for the Spacecraft shall be paid in full with the
              last Incentives Obligations Payment. The Total Change Order Cost
              shall be payable as agreed by the Parties.


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


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<PAGE>


         29.8     To the extent that (i) any change agreed under this Article 29
                  deletes any Hardware already produced by Contractor, then the
                  provisions of Paragraphs 14.2 and 14.4 shall apply to the
                  disposition of such Hardware.

         29.9     The Spacecraft shall be designed to support the Launch Vehicle
                  interface requirements issued by the Launch Vehicle provider
                  (as to Ariane, Proton and Sea Launch launch vehicles) existing
                  at the time of the "Delivery Site Designation Date" as defined
                  in Paragraph 4.2.1. If there are any changes to such interface
                  requirements thereafter, then any such change shall be deemed
                  to be a Change Order Request by Buyer, and the Change Order
                  process set forth in Section 29.3 shall apply.


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<PAGE>


 ARTICLE 30.      EFFECTS OF STORAGE ON BATTERIES

        For Spacecraft batteries to provide the required minimum fifteen (15)
        years of in-orbit services per Exhibit B, it is understood that launch
        must occur within three (3) years from the date of activation of the
        first battery cell. In the event Buyer directs Contractor to store any
        deliverable Spacecraft and the period of such storage causes a launch
        later than three (3) years from the date of activation of that
        Spacecraft's first battery cell, and Buyer upon its election to either:
        (i) install replacement batteries or (ii) recondition batteries, so
        directs Contractor, Buyer shall pay Contractor its costs plus a [***]
        profit rate. In either case (i) or (ii), the batteries shall meet a
        fifteen (15) year in-orbit service requirement.


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


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<PAGE>


ARTICLE 31.       INTER-PARTY WAIVER OF LIABILITY

        31.1  Prior to the time Buyer and the Contractor enter the Launch
              Integration Facility and/or Launch Site, they each agree that they
              will not make a claim against each other for an event that occurs
              at the Launch Integration Facility and/or Launch Site premises
              involving damage to, loss of, or loss of use of their property or
              the property of others in their possession, caused by the fault or
              negligence of the other Party to this Contract, or otherwise
              caused by any defect in any product manufactured or sold by the
              other Party to this Contract. Such claims are waived and each
              Party will bear its own losses. Buyer will include a comparable
              clause in each of its contracts with vendors, subcontractors or
              customers for services or benefits expected as a result of the
              launch or orbiting of a Galaxy Spacecraft. Such comparable clause
              shall include a requirement to flow the clause down to lower-tier
              contractors.

        31.2  Notwithstanding any other provisions of this Contract, prior to
              the time any Party, associated with the Galaxy XIII and/or Galaxy
              XIV launch activities at the Launch Integration Facility and/or
              Launch Site, shall enter the Launch Integration Facility and/or
              Launch Site, such Parties shall be required to sign an Inter-Party
              Waiver of Liability consistent with that between Buyer and the
              Contractor as incorporated herein under Paragraph 31.1 of this
              provision or other similar agreement as may be required by the
              launch agency. Each Party shall have the responsibility to assure
              that all the Parties associated with the launch of Galaxy XIII
              and/or Galaxy XIV Spacecrafts (for which they have control or
              privity of Contract with hereunder) have executed said Inter-Party
              Waiver of Liability.


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ARTICLE 32.       SPACECRAFT STORAGE

        32.1  Buyer may, at its option, order Contractor to store, in accordance
              with the provisions of Exhibit B Galaxy XIII/XIV Spacecraft
              Specification, each deliverable Spacecraft (including separate
              storage of Batteries, if needed) for a period of up to two (2)
              years from the date of their delivery to Buyer. Buyer shall
              provide written notice to the Contractor not later than six (6)
              months prior to the scheduled delivery of said Spacecraft.
              Contractor's price for providing storage shall be provided to
              Buyer in accordance with Article 29, "Changes," (and such price
              shall be deemed a "Change Proposal" for purposes of Article 29)
              within 30 days after receipt of Buyer's notice to store such
              Spacecraft and Contractor shall provide storage facilities. If
              such storage facilities are unavailable, Contractor and Buyer
              shall hold discussions to determine a mutually agreed storage
              arrangement.

        32.2  Six (6) months prior to a stored Spacecraft's scheduled launch
              date, Buyer shall, by notice in writing, order the Contractor to
              remove said Spacecraft from storage and ship it to a Launch Site
              designated by Buyer. In the case of a Sea Launch, the cost for
              storage and additional transportation costs exceeding that
              required to transport a Spacecraft to the Port of Long Beach
              (Integration Facility) point specified herein, shall be borne by
              Buyer. These will be in addition to any charges which become the
              obligation of the Buyer per Article 18 herein entitled "Spacecraft
              Not Launched Within Six Months After Acceptance."


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ARTICLE 33.       DISPUTES

        33.1  Disputes

              33.1.1    In the event any dispute arises between the Contractor
                        and the Buyer relating to this Contract, either Party
                        may give written notice to the other of its objections
                        and reasons therefore. The Contractor and Buyer shall
                        consult in an effort to reach a mutual agreement to
                        resolve such dispute. In the event a mutual agreement
                        cannot be reached within fifteen (15) days after receipt
                        of this notice, the respective positions of the Parties
                        shall be forwarded to Contractor and Buyer's respective
                        Executive Offices for discussions and they shall attempt
                        to reach a mutual agreement to resolve such dispute
                        within another fifteen (15) day period.

        33.2  Arbitration of Disputes

              33.2.1    Grounds for Arbitration and Notice Requirement. Any
                        dispute, disagreement, controversy or claim arising out
                        of or relating to this Contract or the interpretation
                        thereof or any arrangements relating thereto, or the
                        validity or enforceability thereof, or contemplated
                        therein or the breach, termination or invalidity thereof
                        which is not settled to the mutual satisfaction of the
                        Parties in accordance with Paragraph 33.1 above, then it
                        shall be settled exclusively and finally by binding
                        arbitration, after written notice by either Party.
                        Arbitration of such disputes in accordance with this
                        Article 33 shall be the Parties' exclusive remedy.

              33.2.2    Administration and Rules. Arbitration proceedings in
                        connection with the Agreement shall be administered by
                        the American Arbitration Association in accordance with
                        its then in effect Commercial Arbitration Rules,
                        together with any relevant supplemental rules including
                        but not limited to its Supplementary Procedures for
                        Large, Complex Disputes, as modified by the terms and
                        conditions of the Agreement. With respect to the


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                        selection of arbitrators, arbitration proceedings in
                        connection with this Agreement shall be conducted before
                        a panel of three (3) arbitrators. Within fifteen (15)
                        days after the commencement of arbitration, each Party
                        shall select from a list of qualified persons one person
                        to serve as an arbitrator on the panel, and within ten
                        (10) days of their selection, the two arbitrators shall
                        select a third arbitrator who is listed as an active
                        member of the American Arbitration Association at the
                        time that arbitration proceedings commence. If the two
                        arbitrators selected by the respective Parties are
                        unable or fail to agree upon the third arbitrator in the
                        allotted time, then the third arbitrator shall be
                        selected by the American Arbitration Association.

              33.2.3    Place of Arbitration. The place of arbitration shall be
                        in Los Angeles, California, U.S.A.

              33.2.4    Discovery. The arbitrators shall have the discretion to
                        order a pre-hearing exchange of information by the
                        Parties, including without limitation, production of
                        requested documents, exchange of summaries of testimony
                        of proposed witnesses, and examination by deposition of
                        the Parties.

              33.2.5    Award and Judgment. The arbitrators shall have no
                        authority to award punitive damages, and may not, in any
                        event, make any ruling, finding or award that does not
                        conform to the terms and conditions of this Agreement.
                        Subject to the foregoing, the Parties agree that the
                        judgment of the arbitrators shall be final and binding
                        upon the Parties and that the judgment upon the award
                        rendered by the arbitrators may be entered in any court
                        having jurisdiction thereof.

              33.2.6    Confidentiality. No Party or arbitrator may disclose the
                        existence, content, or results of any arbitration
                        proceedings in connections with this Agreement without
                        prior written consent of all Parties to the arbitration
                        proceeding.


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              33.2.7    Fee and Expenses. All fees and expenses of any
                        arbitration proceedings in connection with this
                        Agreement shall be borne by the losing Party. However,
                        each Party shall bear the expense of its own counsel,
                        experts, witnesses, and preparation and presentation of
                        evidence.

              33.2.8    Performance. Contractor and Seller shall continue with
                        performance under this Agreement during any
                        disagreement, negotiation, or arbitration.


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ARTICLE 34.       ASSIGNMENT

        34.1  Neither Party shall assign, or transfer this Contract or any of
              its rights, duties or obligations thereunder to any person or
              entity, in whole or part without the prior written consent of the
              other Party except that either Party may assign or transfer any of
              its rights, duties or obligations under this Contract, either in
              whole or in part, to its parent company, subsidiary or
              affiliate(1). In addition, notwithstanding anything in this
              Article 34 to the contrary, the consent of Contractor shall not be
              required for, and Paragraph 34.2 shall not apply to: (i) any
              assignment of this Contract from HCG to Magellan International,
              Inc. (which currently contemplates changing its name to PanAmSat
              Corporation), or an affiliate thereof, in connection with the
              consummation of the transactions contemplated by that certain
              Agreement and Plan of Reorganization dated as of September 20,
              1996 by and among HCG, Magellan International, Inc., PanAmSat
              Corporation and certain affiliates of HCG; or (ii) any assignment
              by Buyer of its rights, duties and/or obligations hereunder as
              security for any indebtedness of Buyer or its subsidiaries or
              affiliates.

              Neither Party shall unreasonably withhold consent to any
              assignment or transfer providing that the requesting Party can
              demonstrate to the other Party's satisfaction that:

              (1)       its successor or assignee possesses the financial
                        resources to fulfill the obligations of this Contract;
                        and

              (2)       any such assignment or transfer shall not jeopardize any
                        data rights or competitive position, or violate laws
                        related to export or technology transfer, or otherwise
                        increase the other Party's risks or obligations.

              If the requesting Party cannot so demonstrate, both Parties agree
              to negotiate in good faith suitable modifications and new
              provisions to this Contract which would mitigate the above risks
              and/or bring this Contract into conformance with applicable laws.


 (1) Affiliate: An "affiliate" of, or a person "affiliated" with, a specified
   person, is a person that directly, or indirectly through one or more
   intermediaries, controls, or is 


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   controlled by, or is under common control with, the person specified.

        34.2  The Parties agree that in the event that the ownership or control
              of HCG or HSC is changed, the Parties reserve the right to
              negotiate in good faith suitable modifications and new provisions
              to this Contract which would mitigate any additional risks,
              financial or otherwise, which may be brought about by such change
              in ownership or control.

        34.3  This Contract shall be binding upon the Parties hereto and their
              successors and permitted assigns.


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ARTICLE 35.       LIMITATION OF LIABILITY

        35.1  The Parties to this Contract expressly recognize that commercial
              space ventures involve substantial risks and recognize the
              commercial need to define, apportion and limit contractually such
              risks associated with this commercial space venture. The payments
              and other remedies expressly set forth in this Contract fully
              reflect the Parties' negotiations, intentions and bargained-for
              allocation of such risks associated with commercial space
              ventures.

        35.2  In no event shall the Parties be liable for any direct, indirect,
              incidental, special, contingent or consequential damages
              (including, but not limited to, lost revenues or profits), except
              as expressly provided for in this Agreement. This Article shall
              survive the expiration or termination of this Contract for
              whatever cause.


                                       80


<PAGE>


[ARTICLE 36.      OPTIONS

        36.1  HCG may, in its sole discretion, exercise on or before 30 June
              1998, the Option provisions of this Contract to request Contractor
              to deliver to Buyer up to two (2) additional Spacecraft,
              hereinafter referred to as Galaxy XV and XVI. Upon exercise of
              this Option, Buyer shall make the first payment of [TBD] for each
              Spacecraft ordered. The configuration and performance of Galaxy XV
              and/or XVI shall be substantially similar to Galaxy XIII and
              Galaxy XIV.

        36.2  The Contract Price for Galaxy XV is [TBD]. The Contract Price for
              Galaxy XVI is [TBD].

        36.3  Delivery to the Launch Site Integration Facility and/or Launch
              Site will be as required to meet the established Launch Schedule
              (consistent with the Galaxy XIII and Galaxy XIV delivery schedule
              span).


                                       81


<PAGE>


         36.2.1   Payment Plan: June 1998 -
<TABLE>
<CAPTION>

                                  Table 36.2.1
                         Galaxy XV - Payment Plan 
----------------------------------------------------------------------
                                   Amount         Cumulative 
            Month                    $M           Amount $M
----------------------------------------------------------------------
<S>                        <C>                    <C>
----------------------------------------------------------------------

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

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                               Milestone Payments
                                      TBD

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</TABLE>


                                       82


<PAGE>


                                     [***}


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


                                         83

<PAGE>


        36.2.2 Payment Plan: TBD

<TABLE>
<CAPTION>

                                  Table 36.2.2
                            Galaxy XVI - Payment Plan
----------------------------------------------------------------------
                                   Amount         Cumulative 
            Month                    $M           Amount $M

----------------------------------------------------------------------
<S>                       <C>                     <C>
----------------------------------------------------------------------

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

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

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----------------------------------------------------------------------
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----------------------------------------------------------------------
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----------------------------------------------------------------------
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----------------------------------------------------------------------
----------------------------------------------------------------------
                             Milestone Payments TBD

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

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

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


</TABLE>


                                       84


<PAGE>


                                     [***}


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.


                                         85


<PAGE>


        36.3  The Galaxy XV and XVI Option prices provide for the following:

              (a)  Up to two  spacecraft  substantially  similar  to  Galaxy  
                   XIII  and  XIV in  configuration  and  performance
              (b)  Documentation
              (c)  Program Management
              (d)  Insurance up to the Intentional Ignition of Launch Vehicle
              (e)  Launch and Mission Operations Services (Baselined with a 
                   Zenit Vehicle) ("Related Services").
              (f)  Storage for a Spacecraft on similar terms as Galaxy XIII and
                   Galaxy XIV
              (g)  The terms of Galaxy XV and/or XVI are pursuant to the terms 
                   of this Contract

        36.4  In the even that exercise of this Option does not occur on or
              prior to the date stated in Paragraph 36.1, this Option shall
              expire unless (i) the Parties otherwise agree or (ii) this Option
              is superseded by a definitive Spacecraft Acquisition Agreement.]


                                       86


<PAGE>


ARTICLE 37.       REPLACEMENT SPACECRAFT

        Buyer shall have the right to purchase Replacement Spacecraft for one or
        both of Galaxy XIII or Galaxy XIV in the event that one or both of these
        Spacecraft suffers a launch failure (including any total or constructive
        total loss that occurs prior to the placement of a Spacecraft into
        commercial operations). Each Replacement Spacecraft shall have the same
        configuration and performance of the Spacecraft being replaced. The
        price for each such Replacement Spacecraft, if ordered, shall be [TBD],
        which price covers all associated deliverables as specified in this
        Contract and which shall be adjusted accordingly with the changes to the
        Contract Price under Paragraph 3.2. Except as expressly specified in
        this Article, the terms and conditions of this Contract shall apply in
        context to any Replacement Spacecraft that is ordered under this
        Article.

        A Replacement Spacecraft may be ordered at any time through ninety (90)
        days after the launch of the applicable Spacecraft. Unless long lead
        items are purchased, as provided below, the Spacecraft shall be
        constructed and all associated deliverable provided to support a launch
        within eighteen (18) months of the day ordered.

        Buyer shall also have the option to require Contractor to purchase long
        lead items sufficient to enable Contractor to have Replacement
        Spacecraft, which could be configured as either Galaxy XIII or Galaxy
        XIV (to be specified by Buyer if and when Buyer orders the Spacecraft to
        be completed) and shall be ready to be launched with the later of
        eighteen (18) months after a long lead option is exercised or twelve
        (12) months after the go ahead is given by Buyer to complete
        construction of the Spacecraft. The price for the long lead items shall
        be [TBD], with the remaining portion of such Replacement Spacecraft's
        price to be payable if (and only if) such Replacement Spacecraft is
        ordered by Buyer to be completed.


                                       87


<PAGE>


        Payment schedules for the eighteen (18) months without long lead items
        and long lead item and completion payment options are attached hereto as
        Exhibit G.


        If Buyer has purchased long lead items, within ninety (90) days of the
        successful launch of both Galaxy XIII and Galaxy XIV, Buyer shall direct
        disposition of such long lead items either: (a) to build an identical
        Spacecraft (at the same price and schedule as a twelve-month Replacement
        Spacecraft); or (b) direct the disposition of such long lead items
        pursuant to Paragraphs 14.2 and 14.4.


                                       88


<PAGE>



ARTICLE 38.       EFFECTIVE DATE OF CONTRACT


The "Effective Date" of this Contract No. 97-HCG-001 shall be 15, May 1997.


IN WITNESS WHEREOF, the Parties hereto have executed this Contract No.
97-HCG-001 to become effective upon the date specified in this Article 38,
herein entitled, "Effective Date of Contract."


HUGHES SPACE & COMMUNICATIONS COMPANY


SIGNATURE: /s/H.E. McDonnell
          -----------------------

NAME: H.E. McDonnell
      ---------------------------

TITLE: Vice President
      ---------------------------

DATE: May 15, 1997
      ---------------------------


HUGHES COMMUNICATIONS GALAXY, INC.


SIGNATURE: /s/J.F. Farrell
          -----------------------

NAME: J.F. Farrell
      ---------------------------

TITLE: President
      ---------------------------

DATE: May 15, 1997
      ---------------------------


                                       89