SALES CONTRACT


                                     BETWEEN


                           SPACE SYSTEMS/LORAL (SS/L)

                                       AND

                 SPACE TECHNOLOGY DEVELOPMENT CORPORATION (STDC)












                       CONTRACT NUMBER: STDC-98-NEMO-0001

                              Dated: 21 January 1999

<PAGE>

                                TABLE OF CONTENT
                                STDC-98-NEMO-0001


<TABLE>
<CAPTION>
<S>                                                                                                      <C>
RECITALS.................................................................................................1


1.   SCOPE & CONTRACT TYPE...............................................................................1


2.   SCHEDULE............................................................................................2


3.   DELIVERIES..........................................................................................2


4.   GOVERNMENT FLOW DOWN CLAUSES........................................................................2

   4.2.   ADMINISTRATION AND ACCOUNTING PROCEDURES.......................................................2
   4.3.   DATA RIGHTS....................................................................................3
   4.4.   SECURITY.......................................................................................6
   4.5.   REPORTING REQUIREMENTS.........................................................................7
   4.6.   PATENTS........................................................................................8
   4.7.   FOREIGN ACCESS TO TECHNOLOGY..................................................................17
   4.8.LIABILITY........................................................................................19

5.   MILESTONE PAYMENT SCHEDULE.........................................................................21


6.   SHIPPING, ACCEPTANCE, and TITLE TRANSFER...........................................................21


7.   TECHNICAL SUPPORT (CLIN 006).......................................................................23


8.   ADDITIONAL RIGHTS IN DATA..........................................................................24


9.   DISCLOSURE AND PROTECTION OF INFORMATION...........................................................24


10.     FORCE MAJEURE...................................................................................25


11.     CONFORMITY TO THE SPECIFICATION.................................................................25


12.     WARRANTY........................................................................................25


13.     LIMITATION OF LIABILITY.........................................................................27


14.     RESOLUTION OF DISPUTES..........................................................................27


15.     GOVERNING LAW...................................................................................28


16.     SEVERABILITY....................................................................................28


17.     NOTICES.........................................................................................28


18.     ASSIGNMENT......................................................................................29


19.     TAXES AND TARIFFS...............................................................................29

<PAGE>

20.     CHANGES.........................................................................................29


21.     TERMINATION FOR CAUSE...........................................................................30


22.     TERMINATION FOR CONVENIENCE.....................................................................31


23.     WAIVER..........................................................................................31


24.     NEWS RELEASES...................................................................................31


25.     INCORPORATION BY REFERENCE......................................................................32


26.     ENTIRE AGREEMENT AND ORDER OF PRECEDENCE........................................................32


ATTACHMENT 1


ATTACHMENT 2


ATTACHMENT 3


ATTACHMENT 4
</TABLE>

<PAGE>



THIS SALES  CONTRACT  FOR SERVICES TO BE PERFORMED IN SUPPORT OF THE NAVAL EARTH
MAP  OBSERVER  (NEMO)  hereinafter  referred to as the  "Contract")  is made and
entered  into this 21st day of January, 1999, by and between  Space  Technology
Development  Corporation  (hereinafter  referred  to as  "STDC" or  "Buyer"),  a
Virginia  Corporation,  having its offices at 100 North Pitt Street,  Suite 403,
Alexandria, VA 22314, and Space Systems/Loral (hereinafter referred to as "SS/L"
or  "Seller"),  a Delaware  Corporation,  having its offices at 3825 Fabian Way,
Palo Alto, CA 94303.

                                    RECITALS

This agreement is made with reference to the following facts and objectives:

WHEREAS,  STDC has been awarded a Government contract pursuant to 10 U.S.C. Sec.
1.2371 (Other  Transaction) as a result of its proposal in response to the Broad
Area  Announcement  for  the  Dual  Use  Application  Program,   Topic  Area  1,
Hyperspectral  Remote Sensing  Technology  (HRST) in Space. The objective of the
Other Transaction agreement is to conduct research in the area of remote sensing
satellites and space-based  sensors.  Such research shall be carried out through
the design, development,  testing, demonstration and operation of a satellite to
be called "NEMO". This effort is hereinafter referred to as the "NEMO Program".

WHEREAS, STDC has a requirement a satellite in support of its Other  Transaction
agreement for the NEMO Program;

WHEREAS, SS/L is producing satellites named  Globalstar(TM),  and the commercial
derivative satellite bus specifically known as the LS-400S;

NOW THEREFORE,  In consideration of the covenants and mutual promises  contained
herein, intending to be legally bound, the parties agree as follows:

1.   SCOPE & CONTRACT TYPE
1.1.     STDC has been awarded a Government  contract pursuant to 10 U.S.C. Sec.
         1.2371 (Other  Transaction)  as a result of its proposal in response to
         the Broad Area Announcement for the Dual Use Application Program, Topic
         Area 1;  Hyperspectral  Remote Sensing Technology (HRST) in Space. STDC
         will manage the  execution  of the Other  Transaction  and the business
         relationship  of each  of its  industry  partners.  STDC  will  provide
         overall program management for NEMO.
1.2.     SS/L shall perform work under this contract to provide a Globalstar(TM)
         bus to STDC for use in the NEMO Program in accordance with the attached
         Statement of Work (Attachment 1), which is hereby incorporated and made
         a binding part of this contract.

1.3.     SS/L shall  perform work under this  contract as follows:  o CLIN 001,
         002, 003, and 004will be performed on a Firm Fixed Price basis. o CLIN
         006 will be performed on a Time and Materials reimbursable basis.

<PAGE>
<TABLE>
<CAPTION>

2.   SCHEDULE
          <S>            <C>                                      <C>                <C>
         -----------------------------------------------------------------------------------------------
             CLIN                     DESCRIPTION                      QUANTITY             PRICE
         -----------------------------------------------------------------------------------------------
             001           LS-400S bus                                    1                9,765,000
         ------------- ------------------------------------------ ------------------- ------------------
             002           Loan of Mechanical Ground Support            (Lot)             $        0
         ------------- ------------------------------------------ ------------------- ------------------
             003           Electronic Ground Support Equipment          (Lot)             $  370,000
         ------------- ------------------------------------------ ------------------- ------------------
             004           Technical Data for CLINs 001-003             (Lot)               NSP
         ------------- ------------------------------------------ ------------------- ------------------
             005           Reserved
         ------------- ------------------------------------------ ------------------- ------------------
             006           Technical Support (T&M)                      (Lot)            See Article 7
         ------------- ------------------------------------------ ------------------- ------------------
</TABLE>

3.   DELIVERIES
<TABLE>
<CAPTION>

3.1.  SS/L shall  deliver  the  products  and  services in  accordance  with the
following schedule:
          <S>            <C>                                          <C>
         -----------------------------------------------------------------------------------------------
         CLIN            DESCRIPTION                                 DATE
         -----------------------------------------------------------------------------------------------
          001            LS-400S bus                                 2/22/99
         -------------- ------------------------------------------- ------------------------------------
          002            Loan of Mechanical Ground Support           See Statement of Work (Attachment
                                                                     1, paragraph 1.3.2)
         -------------- ------------------------------------------- ------------------------------------
          003            Electronic Ground Support Equipment         2/22/99
         -------------- ------------------------------------------- ------------------------------------
          004            Technical Data for CLINs 001-003            See schedule of data deliverables
                                                                     (Attachment 5)
         -------------- ------------------------------------------- ------------------------------------
          005            Reserved
         -------------- ------------------------------------------- ------------------------------------
         006            Technical Support                           As needed
         -----------------------------------------------------------------------------------------------
</TABLE>

4.   GOVERNMENT FLOW DOWN CLAUSES
4.1.     SS/L agrees that the following  terms and conditions  will flow down to
         them   from   STDC's   agreement   with   the   ONR   under   Agreement
         N00014-98-3-0001.  Any change to these terms and  conditions  as stated
         below requires the  concurrence and approval of the ONR. STDC agrees to
         forward  to ONR any  and  all  SS/L-requested  modifications  to  these
         clauses for their review.

4.2. ADMINISTRATION AND ACCOUNTING PROCEDURES
         4.2.1.Administration
         SS/L shall implement administrative  procedures,  accounting procedures
         and  financial  management  systems  which provide the data required by
         Section  21 -  Standards  for  Financial  Management  Systems  - of OMB

<PAGE>

         Circular A-110,  "Uniform  Administrative  Requirements  for Grants and
         Agreements with Institutions of Higher Learning  Education,  Hospitals,
         and Other Non-Profit  Organizations," dated 93 Nov 19.  Notwithstanding
         the above  requirement,  SS/L shall provide the  requisite  data in its
         monthly  report to STDC.  For the  purpose of this  Contract,  the term
         "allowable  expenditures" refers only to those expenditures  considered
         to be allowable in accordance with the Federal  Acquisition  Regulation
         Part 31, Contract Cost Principles,  as regards  for-profit,  commercial
         businesses.  As appropriate,  the terms "contractor",  "contract",  and
         "subcontract"  in the FAR  provision  shall  be  read  as  "Recipient",
         "Agreement", and "subcontract", respectively. Further, the allowability
         of any  expenditures  incurred  in  the  performance  of  any  subaward
         conducted  on a  cost-reimbursement  basis  shall be  subject  to those
         Federal  cost   principles   applicable  to  the  particular   type  of
         organization concerned.  For the purposes of this Article, the ONR/STDC
         Agreement,  the Orasis License  Agreement  between STDC and NRL and any
         other  agreement  between STDC and NRL are separate  agreements  from a
         contract, grant, cooperative agreement, or other transaction.

         4.2.2.Accounting System
         SS/L shall  maintain an  established  accounting  system which complies
         with   generally   accepted   accounting   principles,   and  with  the
         requirements of this Contract.  Appropriate arrangements must have been
         made for receiving, distributing and accounting for Federal funds. This
         paragraph  shall not be construed as  requiring  SS/L to establish  any
         other systems extending beyond its current systems to account for costs
         in accordance with generally accepted accounting principles.

         4.2.3.Applicability
         Federal  entities  shall  not be  subject  to the  provisions  of  this
         Article.

4.3.     DATA RIGHTS
         Rights in Technical Data (including Computer Software)

         4.3.1.Definitions
              4.3.1.1.   "Government purpose" means any activity  in which  the
                      United States Government is a party, including cooperative
                      agreements with  international or  multi-national  defense
                      organizations,  or sales or transfers by the United States
                      Government  to  foreign   governments  or   non-commercial
                      international  organizations  for distribution only within
                      such foreign  governments  and  organizations.  Government
                      purposes  include  competitive  procurement,  but  do  not
                      include  the rights to use,  modify,  reproduce,  release,
                      perform,   display,   or  disclose   technical   data  for
                      commercial purposes or authorize others to do so.

              4.3.1.2.   "Government purpose rights" means  the  rights  to use,
                      modify, reproduce,  release, perform, display, or disclose

<PAGE>

                      technical data within the Government without  restriction;
                      and  release  or  disclose   technical  data  outside  the
                      Government  and  authorize  persons  to  whom  release  or
                      disclosure  has  been  made  to  use,  modify,  reproduce,
                      release,  perform,  display,  or disclose  that data for a
                      Government purpose.

              4.3.1.3.   "Imagery Data" means subject technical data generated
                      as a result of the imaging operations of a spacecraft
                      after it is on orbit.

              4.3.1.4.   "Non-imagery data" means all subject technical data
                      that is not imagery data.

              4.3.1.5.   "Non-subject technical data" means all technical data
                      produced outside of this Agreement.

              4.3.1.6.   "Subject technical data" means all technical data first
                      produced in the performance of work under this Agreement.

              4.3.1.7.   "Technical data" means recorded information, regardless
                      of the form or method of the recording, of a scientific or
                      technical   nature   (including   all  forms  of  computer
                      software,  programs and documentation).  The term does not
                      include  computer  software or data incidental to contract
                      administration,    such   as   financial   or   management
                      information.   Technical  data  is  divided  into  subject
                      technical data and  non-subject  technical  data.  Subject
                      technical  data is further  divided  into imagery data and
                      non-imagery data.

              4.3.1.8.   "Agreement Purpose Rights" means the  rights  to  use,
                      modify, reproduce,  release, perform, display, or disclose
                      technical  data within the  Government  for the purpose of
                      this Agreement only; and to release or disclose  technical
                      data outside the Government and authorize  persons to whom
                      release  or  disclosure  has  been  made to  use,  modify,
                      reproduce,  release,  perform,  display,  or disclose that
                      data for the Agreement purpose only,  provided that SS/L's
                      written   permission  to  release  the  data  outside  the
                      Government has been granted.

         4.3.2.Government Rights in Subject Technical Data and Copyright
              4.3.2.1.   The Government shall have government purpose rights in
                      non-imagery data.
              4.3.2.2.   Copyright license. SS/L   grants   a   nonexclusive,
                      nontransferable,   irrevocable,   royalty-free   copyright
                      license  throughout  the world in the exclusive  rights in
                      copyrighted  works of authorship  (17 U.S.C.  Section 106)
                      prepared  pursuant to this Agreement to the Government for
                      government purposes.

<PAGE>

         4.3.3.Government Rights in Non-Subject Technical Data
                  The  Government   shall  have  agreement   purpose  rights  in
                  non-subject  technical  data  that  is  furnished  under  this
                  Agreement;  provided that the Government does not have greater
                  rights in the non-subject technical data from other contracts,
                  grants, or agreements.

         4.3.4.SS/L Rights in Technical Data and Copyright
              4.3.4.1.   SS/L may copyright works of authorship prepared under
                         this Agreement that may be copyrighted under Title 17,
                         U.S. Code.
              4.3.4.2.   All rights not granted to the Government in  technical
                         data,  whether subject data or non-subject  data,  are
                         retained by SS/L.

         4.3.5.Release From Liability
                  SS/L agrees to release the  Government  from liability for any
                  release or  disclosure  of technical  data made in  accordance
                  with paragraph  4.3.7. of this clause below and to seek relief
                  solely  from the  party  who has  improperly  used,  modified,
                  reproduced,  released, performed, displayed, or disclosed SS/L
                  data marked with restrictive legends.

         4.3.6.Lower Tier Agreements
                  Whenever  any  technical   data  is  to  be  obtained  from  a
                  subcontractor or supplier for delivery to the Government under
                  this Agreement,  SS/L shall use reasonable efforts to use this
                  same  article  in  the   subcontract   or  other   contractual
                  instrument,  and require its subcontractors or suppliers to do
                  so, without alteration, except to identify the parties.

         4.3.7.Use and Non-Disclosure Agreement
                  The  Government  shall not release or disclose  technical data
                  outside  the  Government  in  which it has  agreement  purpose
                  rights  unless  SS/L has  given  permission  and the  intended
                  recipient has signed a non-disclosure agreement with SS/L.

                  The original of the Non-Disclosure Agreement to be provided to
                  SS/L at:

                  Space Systems Loral
                  3825 Fabian Way
                  Palo Alto, CA 94303

                  Copy to be provided to the Government at:

                  Associate Counsel (Intellectual Property)
                  Attn: ONR/OOCC
                  Ballston Tower One
                  800 North Quincy Street
                  Arlington VA 22217-5660

<PAGE>

         4.3.8.Markings
              4.3.8.1.   SS/L  may only  assert restrictions on the Government's
                         rights in the technical data to be delivered under this
                         contract by  marking the deliverable data or software
                         subject to restriction.
              4.3.8.2.   SS/L shall conspicuously and legibly mark the
                         appropriate legend on all  technical  data and computer
                         software that qualify for such  markings.  The legend
                         shall be place on the  transmittal  document or storage
                         container and, for printed material, each  page of the
                         printed material containing technical data for which
                         restrictions are asserted.

         4.3.9.The following legends shall be used:
                  (Beginning of Legend)

                  AGREEMENT PURPOSE RIGHTS

                  Contract Number: STDC-97-NEMO-0001 (Prime: N00014-98-3-0001)
                  Contractor Name: Space Systems/Loral, Inc.
                  Contractor Address: 3825 Fabian Way, Palo Alto, CA  94303

                  The  Office  of  Naval  Research's   rights  to  use,  modify,
                  reproduce,   release,  perform,  display,  or  disclose  these
                  technical  data are  restricted by the Data Rights  clauses in
                  the referenced contracts Any reproduction of technical data or
                  portions  thereof  marked with this legend must also reproduce
                  the markings.

                  (End of Legend)

                  (Beginning of Legend)

                  GOVERNMENT PURPOSE RIGHTS

                  Contract Number: STDC-97-NEMO-0001 (Prime:  N00014-98-3-0001)
                  Contractor Name: Space Systems/Loral, Inc.
                  Contractor Address:  3825 Fabian Way, Palo Alto, CA  94303

                  The  Office  of  Naval  Research's   rights  to  use,  modify,
                  reproduce,   release,  perform,  display,  or  disclose  these
                  technical  data are  restricted by the Data Rights  clauses in
                  the above  contracts.  Any  reproduction  of technical data or
                  portions  thereof  marked with this legend must also reproduce
                  the markings.

                  (End of Legend)

4.4.      SECURITY
         4.4.1.SS/L's personnel will not have access to classified United States
               Government   information   under  this   Contract.   If  security
               restrictions  should  happen to apply to  certain  aspects of the
               ONR/STDC Agreement,  the Grants Officer will inform STDC and STDC

<PAGE>

               will inform SS/L.  SS/L shall promptly  notify STDC and STDC will
               inform  SS/L  if  information  is  developed   which  might,   if
               disclosed,  affect  the  national  security  adversely.   Written
               concurrence  from the Grants  Officer  must be obtained  prior to
               disclosure of such  information.  Do not discuss the  information
               over the telephone.

         4.4.2.The parties  agree to confer and consult with each other prior to
               publication  or other  public  disclosure  of the results of work
               permitted  under  this  Contract  to ensure  that no  classified,
               proprietary  information,  military critical  technology or other
               controlled  information  is  released.   Prior  to  submitting  a
               manuscript for publication or before any other public disclosure,
               each party will offer the other party ample opportunity to review
               such proposed  publication or disclosure,  to submit  objections,
               and to file applications for patents in a timely manner.

         4.4.3.Controlled Information.
                The parties  understand that information and materials  provided
                pursuant  to or  resulting  from  this  agreement  may be export
                controlled,  classified, or unclassified sensitive and protected
                by law, executive order or regulation. Each party is responsible
                for compliance with all applicable laws and regulations. Nothing
                in this Contract  shall be construed to permit any disclosure in
                violation of those restrictions.

         4.4.4.Lower Tier Agreements
                SS/L shall use reasonable efforts to include this Article,
                suitably modified to identify the Parties, in all U. S.
                subcontracts or lower tier agreements (exclusive of teaming
               agreements), regardless of tier.

4.5.      REPORTING REQUIREMENTS
         4.5.1.SS/L shall submit reports as set forth in Attachment 3 "Reporting
               Requirements" to this Contract.

         4.5.2.All  reports and  correspondence  submitted  under this  Contract
               shall include the Contract Number.  The complete address for Data
               Rights and Intellectual Property Issues is as follows:

               Space Technology Development Corporation
               100 North Pitt Street, Suite 403
               Alexandria, VA  22314

         4.5.3.Lower Tier Agreements
               SS/L  shall use  reasonable  efforts  to  include  this  Article,
               suitably modified to identify the Parties, in all subcontracts or
               lower  tier   agreements   (exclusive  of  teaming   agreements),
               regardless of tier.

<PAGE>

4.6.      PATENTS
         The parties agree that, in this clause only, the term "the  Contractor"
         refers  to SS/L.  The  term  "Contracting  Officer"  refers  to  STDC's
         Contracts Administrator, 4.6.1.Definitions.
              4.6.1.1."Invention"  means any invention or discovery  which is or
                      may be patentable or otherwise  protectable under title 35
                      of the United  States  Code or any novel  variety of plant
                      that is or may be  protectable  under  the  Plant  Variety
                      Protection Act (7 U.S.C.2321, et seq.).

              4.6.1.2."Made" when used in relation  to any  invention  means the
                      conception  or first actual  reduction to practice of such
                      invention.

              4.6.1.3."Nonprofit  organization"  means a domestic  university or
                      other  institution of higher  education or an organization
                      of the type described in section 501(c)(3) of the Internal
                      Revenue  Code of 1954 (26  U.S.C.501(c))  and exempt  from
                      taxation under section 501(a) of the Internal Revenue Code
                      (26   U.S.C.501(a))   or  any   nonprofit   scientific  or
                      educational organization qualified under a state nonprofit
                      organization statute.

              4.6.1.4."Practical  application"  means to manufacture in the case
                      of a composition or product,  to practice in the case of a
                      process or method,  or to operate in the case of a machine
                      or system;  and, in each case, under such conditions as to
                      establish  that the  invention is being  utilized and that
                      its  benefits  are,  to  the  extent  permitted  by law or
                      Government   regulations,   available  to  the  public  on
                      reasonable terms.

              4.6.1.5."Small  business firm" means a small  business  concern as
                      defined at section 2 of  Pub.L.85-536  (15  U.S.C.632) and
                      implementing regulations of the Administrator of the Small
                      Business  Administration.  For the purpose of this clause,
                      the size standards for small business concerns involved in
                      Government   procurement  and  subcontracting  at  13  CFR
                      121.3-8 and 13 CFR 121.3-12, respectively, will be used.

              4.6.1.6."Subject  invention" means any invention of the Contractor
                      conceived  or first  actually  reduced to  practice in the
                      performance of work under this contract; provided, that in
                      the case of a variety of plant,  the date of determination
                      (as  defined  in  section   41(d)  of  the  Plant  Variety
                      Protection  Act, 7  U.S.C.2401(d))  must also occur during
                      the period of contract performance.

         4.6.2.Allocation  of  principal  rights.  The  Contractor  may elect to
               retain the entire right, title, and interest throughout the world
               to each  subject  invention  subject  to the  provisions  of this
               clause and 35 U.S.C.203. With respect to any subject invention in
               which  the  Contractor   elects  to  retain  title,  the  Federal
               Government   shall   have   a   nonexclusive,    nontransferable,
               irrevocable, paid-up license to practice or have practiced for or
               on behalf of the United States the subject  invention  throughout
               the world.

<PAGE>

         4.6.3.Invention disclosure, election of title, and filing of patent
               applications by Contractor.

              4.6.3.1.The Contractor  shall  disclose each subject  invention to
                      the Contracting Officer within 2 months after the inventor
                      discloses   it  in   writing   to   Contractor   personnel
                      responsible  for patent  matters or within 6 months  after
                      the Contractor  becomes aware that a subject invention has
                      been made,  whichever is earlier.  The  disclosure  to the
                      Contracting  Officer  shall  be in the  form of a  written
                      report and shall  identify  the  contract  under which the
                      invention  was  made  and the  inventor(s).  It  shall  be
                      sufficiently  complete  in  technical  detail  to convey a
                      clear  understanding,  to the extent  known at the time of
                      the disclosure,  of the nature,  purpose,  operation,  and
                      physical,    chemical,     biological,    or    electrical
                      characteristics  of the invention.  The  disclosure  shall
                      also identify any  publication,  on sale, or public use of
                      the  invention  and whether a  manuscript  describing  the
                      invention has been submitted for  publication  and, if so,
                      whether it has been accepted for  publication  at the time
                      of  disclosure.  In  addition,  after  disclosure  to  the
                      Contracting  Officer, the Contractor shall promptly notify
                      the   Contracting   Officer  of  the   acceptance  of  any
                      manuscript  describing the invention for publication or of
                      any on sale or public use planned by the Contractor.

              4.6.3.2.The  Contractor  shall elect in writing  whether or not to
                      retain  title  to any  such  invention  by  notifying  the
                      Federal  agency  at the  time of  disclosure  or  within 8
                      months of disclosure, as to those countries (including the
                      United States) in which the Contractor  will retain title;
                      provided, that in any case where publication,  on sale, or
                      public  use has  initiated  the  1-year  statutory  period
                      wherein valid patent  protection  can still be obtained in
                      the United States,  the period of election of title may be
                      shortened  by the agency to a date that is no more than 60
                      days prior to the end of the statutory period.

              4.6.3.3.The Contractor  shall file its initial patent  application
                      on an elected  invention  within 1 year after election or,
                      if  earlier,  prior  to the  end of any  statutory  period
                      wherein  valid  patent  protection  can be obtained in the
                      United States after a publication, on sale, or public use.
                      The   Contractor   shall  file  patent   applications   in
                      additional countries (including the European Patent Office
                      and under the Patent Cooperation  Treaty) within either 10
                      months of the corresponding  initial patent application or
                      6 months  from  the  date  permission  is  granted  by the
                      Commissioner  of Patents and  Trademarks  to file  foreign
                      patent  applications where such filing has been prohibited
                      by a Secrecy Order.

              4.6.3.4.Requests for  extension of the time for  disclosure to the
                      Contracting  Officer,  election,  and filing  may,  at the
                      discretion of the funding Federal agency, be granted,  and
                      will normally be granted  unless the  Contracting  Officer
                      has reason to believe  that a particular  extension  would
                      prejudice the Government's interest.

<PAGE>

         4.6.4.Conditions when the Government may obtain title.  The Contractor
               shall convey to the Federal agency, upon written
               request, title to any subject invention --

              4.6.4.1.If the Contractor elects not to retain title to a subject
                      invention;

              4.6.4.2.If the  Contractor  fails to disclose or elect the subject
                      invention   within  the  times   specified   in  paragraph
                      4.6.3above  (the agency may only  request  title within 60
                      days after learning of the Contractor's  failure to report
                      or elect within the specified times);

              4.6.4.3.In those  countries in which the Contractor  fails to file
                      patent applications within the time specified in paragraph
                      4.6.3above;  provided, however, that if the Contractor has
                      filed a patent  application  in a country  after the times
                      specified  in  paragraph  4.6.3above,  but  prior  to  its
                      receipt of the written request of the Federal agency,  the
                      Contractor shall continue to retain title in that country;
                      or

              4.6.4.4.In any  country  in which the  Contractor  decides  not to
                      continue the  prosecution of any  application  for, to pay
                      the  maintenance  fees on, or defend in  reexamination  or
                      opposition proceeding on, a patent on a subject invention.

         4.6.5.Minimum rights to Contractor.

              4.6.5.1.The Contractor  shall retain a nonexclusive,  royalty-free
                      license  throughout the world in each subject invention to
                      which  the   Government   obtains   title  except  if  the
                      Contractor fails to disclose the subject  invention within
                      the  times   specified   in  paragraph   4.6.3above.   The
                      Contractor's license extends to its domestic  subsidiaries
                      and affiliates,  if any, within the corporate structure of
                      which the  Contractor  is a part and includes the right to
                      grant  sublicenses  of the same  scope to the  extent  the
                      Contractor was legally  obligated to do so at the time the
                      contract was  awarded.  The license is  transferable  only
                      with the  approval of the funding  Federal  agency  except
                      when  transferred  to the  successor  of that  part of the
                      Contractor's business to which the invention pertains.

<PAGE>

              4.6.5.2.The  Contractor's  domestic  license  may  be  revoked  or
                      modified  by the  funding  Federal  agency  to the  extent
                      necessary to achieve expeditious  practical application of
                      the subject  invention  pursuant to an application  for an
                      exclusive  license submitted in accordance with applicable
                      provisions in the Federal Property Management  Regulations
                      and agency  licensing  regulations  (if any). This license
                      shall  not  be  revoked  in  that  field  of  use  or  the
                      geographical  areas in which the  Contractor  has achieved
                      practical  application  and continues to make the benefits
                      of the invention reasonably  accessible to the public. The
                      license in any foreign  country may be revoked or modified
                      at the  discretion  of the funding  Federal  agency to the
                      extent the  Contractor,  its  licensees,  or its  domestic
                      subsidiaries   or   affiliates   have  failed  to  achieve
                      practical application in that foreign country.

              4.6.5.3.Before  revocation  or  modification  of the license,  the
                      funding  Federal  agency  shall  furnish the  Contractor a
                      written  notice of its  intention  to revoke or modify the
                      license,  and the Contractor  shall be allowed 30 days (or
                      such  other  time  as may  be  authorized  by the  funding
                      Federal  agency  for good cause  shown by the  Contractor)
                      after the notice to show cause why the license  should not
                      be revoked or modified.  The  Contractor  has the right to
                      appeal,  in accordance  with applicable  agency  licensing
                      regulations  and 37 CFR 404  concerning  the  licensing of
                      Government-owned  inventions,  any decision concerning the
                      revocation or modification of its license.

         4.6.6.Contractor action to protect the Government's interest.

              4.6.6.1.The Contractor agrees to execute or to have executed and
                      promptly deliver to the Federal agency all instruments
                      necessary to --

                  4.6.6.1.1.Establish or confirm the rights the  Government  has
                            throughout the world in those subject  inventions to
                            which the Contractor elects to retain title; and

                  4.6.6.1.2.Convey  title to the Federal  agency when  requested
                            under   paragraph    4.6.4above   and   subparagraph
                            4.6.14.2below,  and  to  enable  the  Government  to
                            obtain  patent  protection  throughout  the world in
                            that subject invention.

              4.6.6.2.The Contractor  agrees to require,  by written  agreement,
                      its  employees,   other  than  clerical  and  nontechnical
                      employees,  to disclose  promptly in writing to  personnel
                      identified as responsible for the administration of patent
                      matters and in a format  suggested by the Contractor  each
                      subject  invention  made under  contract in order that the
                      Contractor  can comply with the  disclosure  provisions of

<PAGE>

                      paragraph 4.6.3above,  and to execute all papers necessary
                      to file patent  applications on subject  inventions and to
                      establish   the   Government's   rights  in  the   subject
                      inventions.  This disclosure  format should require,  as a
                      minimum,   the   information   required  by   subparagraph
                      4.6.3.1above. The Contractor shall instruct such employees
                      through employee agreements or other suitable  educational
                      programs on the  importance  of  reporting  inventions  in
                      sufficient   time  to   permit   the   filing   of  patent
                      applications prior to U.S. or foreign statutory bars.

              4.6.6.3.The  Contractor  shall  notify the  Federal  agency of any
                      decision  not to  continue  the  prosecution  of a  patent
                      application,   pay  maintenance   fees,  or  defend  in  a
                      reexamination or opposition proceeding on a patent, in any
                      country,  not less than 30 days before the  expiration  of
                      the  response  period  required  by  the  relevant  patent
                      office.

              4.6.6.4.The Contractor agrees to include, within the specification
                      of any United  States  patent  application  and any patent
                      issuing  thereon   covering  a  subject   invention,   the
                      following   statement:   "This  invention  was  made  with
                      Government  support under (identify the contract)  awarded
                      by  (identify  the Federal  agency).  The  Government  has
                      certain rights in this invention."

              4.6.6.5.The  Contractor  shall  establish and maintain  active and
                      effective procedures to assure that subject inventions are
                      promptly identified and disclosed to Contractor  personnel
                      responsible   for  patent   matters  within  6  months  of
                      conception  and/or  first  actual  reduction  to practice,
                      whichever  occurs first in  performance of work under this
                      contract.  These  procedures shall include the maintenance
                      of laboratory  notebooks or  equivalent  records and other
                      records  as  are  reasonably  necessary  to  document  the
                      conception  and/or the first actual  reduction to practice
                      of  subject  inventions,  and  records  that show that the
                      procedures for  identifying  and disclosing the inventions
                      are followed.  Upon request,  the Contractor shall furnish
                      the  Contracting  Officer a description of such procedures
                      for   evaluation  and  for   determination   as  to  their
                      effectiveness.

              4.6.6.6.The Contractor agrees, when licensing a subject invention,
                      to  arrange  to  avoid  royalty  charges  on  acquisitions
                      involving   Government  funds,   including  funds  derived
                      through Military  Assistance  Program of the Government or
                      otherwise  derived through the  Government,  to refund any
                      amounts   received  as  royalty  charges  on  the  subject
                      invention  in  acquisitions  for,  or on  behalf  of,  the
                      Government,   and  to  provide  for  such  refund  in  any
                      instrument  transferring  rights in the  invention  to any
                      party.

<PAGE>

              4.6.6.7.The Contractor shall furnish the Contracting Officer the
                    following:

                  4.6.6.7.1.Interim  reports  every 12  months  (or such  longer
                            period  as  may  be  specified  by  the  Contracting
                            Officer)  from  the  date of the  contract,  listing
                            subject  inventions  during  that period and stating
                            that all subject  inventions  have been disclosed or
                            that there are no such inventions.

                  4.6.6.7.2.A final report,  within 3 months after completion of
                            the contracted work,  listing all subject inventions
                            or stating that there were no such  inventions,  and
                            listing all  subcontracts  at any tier  containing a
                            patent  rights  clause or stating that there were no
                            such subcontracts.

              4.6.6.8.The  Contractor  shall  promptly  notify  the  Contracting
                      Officer in writing  upon the award of any  subcontract  at
                      any tier  containing a patent rights clause by identifying
                      the  subcontractor,  the applicable  patent rights clause,
                      the work to be performed  under the  subcontract,  and the
                      dates of award and estimated  completion.  Upon request of
                      the Contracting  Officer,  the Contractor  shall furnish a
                      copy of such  subcontract,  and no  more  frequently  than
                      annually,  a listing  of the  subcontracts  that have been
                      awarded.

              4.6.6.9.In the event of a refusal by a  prospective  subcontractor
                      to accept  one of the  clauses in  subparagraph  4.6.7.1or
                      4.6.7.2below, the Contractor --

                  4.6.6.9.1.Shall  promptly  submit  a  written  notice  to  the
                            Contracting     Officer     setting     forth    the
                            subcontractor's  reasons for such  refusal and other
                            pertinent  information that may expedite disposition
                            of the matter; and

                  4.6.6.9.2.Shall not proceed with such  subcontracting  without
                            the  written   authorization   of  the   Contracting
                            Officer.

              4.6.6.10. The Contractor shall provide,  upon request,  the filing
                      date,  serial  number  and  title,  a copy  of the  patent
                      application  (including  an  English-language  version  if
                      filed in a language other than English), and patent number
                      and issue  date for any  subject  invention  for which the
                      Contractor has retained title.

<PAGE>

              4.6.6.11.  Upon  request,   the   Contractor   shall  furnish  the
                      Government an irrevocable power to inspect and make copies
                      of the patent application file.

         4.6.7.Subcontracts.
              4.6.7.1.The  Contractor  shall  include the clause at 52.227-11 of
                      the  Federal   Acquisition   Regulation  (FAR),   suitably
                      modified to identify  the  parties,  in all  subcontracts,
                      regardless of tier, for  experimental,  developmental,  or
                      research work to be performed by a small  business firm or
                      nonprofit organization. The subcontractor shall retain all
                      rights provided for the Contractor in this clause, and the
                      Contractor  shall not,  as part of the  consideration  for
                      awarding   the   subcontract,   obtain   rights   in   the
                      subcontractor's subject inventions.

              4.6.7.2.The Contractor  shall include this clause (FAR  52.227-12)
                      in  all  other  subcontracts,   regardless  of  tier,  for
                      experimental, developmental, or research work.

              4.6.7.3.In the case of  subcontracts,  at any tier, when the prime
                      award with the  Federal  agency was a contract  (but not a
                      grant   or    cooperative    agreement),    the    agency,
                      subcontractor,  and the  Contractor  agree that the mutual
                      obligations   of  the  parties   created  by  this  clause
                      constitute a contract  between the  subcontractor  and the
                      Federal  agency with respect to those  matters  covered by
                      this clause.

         4.6.8.Reporting  utilization  of  subject  inventions.  The  Contractor
               agrees to submit on request  periodic  reports no more frequently
               than  annually on the  utilization  of a subject  invention or on
               efforts at obtaining such  utilization that are being made by the
               Contractor  or its  licensees or  assignees.  Such reports  shall
               include information regarding the status of development,  date of
               first  commercial  sale or use, gross  royalties  received by the
               Contractor, and such other data and information as the agency may
               reasonably  specify.   The  Contractor  also  agrees  to  provide
               additional   reports  as  may  be  requested  by  the  agency  in
               connection with any march-in proceedings undertaken by the agency
               in accordance with paragraph 4.6.10 of this clause. To the extent
               data or  information  supplied under this paragraph is considered
               by the Contractor,  its licensee or assignee to be privileged and
               confidential  and is so marked,  the agency  agrees that,  to the
               extent  permitted by law, it shall not disclose such  information
               to persons outside the Government.

         4.6.9.Preference for United States industry.  Notwithstanding any other
               provision of this clause,  the Contractor  agrees that neither it
               nor any assignee will grant to any person the exclusive  right to
               use or sell any subject  invention  in the United  States  unless
               such  person  agrees  that any  products  embodying  the  subject
               invention  will  be  manufactured  substantially  in  the  United
               States. However, in individual cases, the requirement for such an
               agreement  may be waived by the Federal  agency upon a showing by
               the Contractor or its assignee that  reasonable but  unsuccessful
               efforts  have been made to grant  licenses  on  similar  terms to
               potential   licensees   that  would  be  likely  to   manufacture
               substantially   in  the   United   States   or  that   under  the
               circumstances domestic manufacture is not commercially feasible.

<PAGE>

         4.6.10. March-in rights. The Contractor agrees that with respect to any
               subject  invention  in which it has acquired  title,  the Federal
               agency has the right in  accordance  with the  procedures  in FAR
               27.304-1(g) to require the Contractor,  an assignee, or exclusive
               licensee  of  a  subject   invention  to  grant  a  nonexclusive,
               partially exclusive,  or exclusive license in any field of use to
               a  responsible  applicant  or  applicants,  upon  terms  that are
               reasonable  under  the  circumstances,  and  if  the  Contractor,
               assignee,  or  exclusive  licensee  refuses  such a request,  the
               Federal  agency has the right to grant  such a license  itself if
               the Federal agency determines that --

              4.6.10.1. Such  action is  necessary  because  the  Contractor  or
                      assignee has not taken,  or is not expected to take within
                      a reasonable  time,  effective steps to achieve  practical
                      application of the subject invention in such field of use;

              4.6.10.2. Such action is necessary  to alleviate  health or safety
                      needs   which  are  not   reasonably   satisfied   by  the
                      Contractor, assignee, or their licensees;

              4.6.10.3. Such action is necessary to meet requirements for public
                      use specified by Federal regulations and such requirements
                      are not reasonably satisfied by the Contractor,  assignee,
                      or licensees; or

              4.6.10.4Such action is necessary because the agreement required by
                      paragraph4.6.9  of this  clause has not been  obtained  or
                      waived or because a licensee of the exclusive right to use
                      or sell any subject  invention in the United  States is in
                      breach of such agreement.

         4.6.11Other  inventions.  Nothing  contained  in this  clause  shall be
               deemed to grant to the  Government any rights with respect to any
               invention other than a subject invention.

4.6.12   Examination of records relating to inventions.
              4.6.12.1     The    Contracting    Officer   or   any   authorized
                           representative  shall,  until  3  years  after  final
                           payment  under  this  contract,  have  the  right  to
                           examine any books (including  laboratory  notebooks),
                           records,  and documents of the Contractor relating to
                           the  conception  or first  reduction  to  practice of
                           inventions  in the same  field of  technology  as the
                           work under this contract to determine whether-

<PAGE>

                  4.6.12.1.1 Any such inventions are subject inventions.

                  4.6.12.1.2 The Contractor has established and maintains the
                             procedures required by sub-paragraphs 4.6.6.2 and
                             4.6.6.3 of this clause; and

                  4.6.12.1.3 The Contractor and its inventors have complied with
                             the procedures.

             4.6.12.2      If  the  Contracting   Officer   determines  that  an
                           inventor has not disclosed a subject invention to the
                           Contractor in accordance with the procedures required
                           by   sub-paragraph   4.6.6.5  of  this  clause,   the
                           Contracting  Officer  may,  within 60 days  after the
                           determination,    request    in    accordance    with
                           sub-paragraphs  4.6.4.2 and  4.6.4.3 of this  clause.
                           However,  if  the  Contractor  establishes  that  the
                           failure  to   disclose   did  not  result   from  the
                           Contractor's  fault or  negligence,  the  Contracting
                           Officer shall not request title.

             4.6.12.3      If the  Contracting  Officer  learns of an unreported
                           Contractor  invention which the  Contracting  Officer
                           believes may be a subject  invention,  the contractor
                           may be  required  to disclose  the  invention  to the
                           agency for a determination of ownership rights.

             4.6.12.4      Any examination of records under this paragraph shall
                           be subject to  appropriate  conditions to protect the
                           confidentiality of the information involved.

         4.6.13  Withholding  of  payment  (this  paragraph  does  not  apply to
                 subcontracts).

              4.6.13.1     Any time before final  payment  under this  contract,
                           the  Contracting  Officer  may,  in the  Government's
                           interest,   withhold  payment  until  a  reserve  not
                           exceeding  $50,000  or 5 percent of the amount of the
                           contract,  whichever  is less,  shall  have  been set
                           aside if, in the Contracting  Officer's opinion,  the
                           Contractor fails to-

                  4.6.13.1.1  Establish,   maintain,   and  follow   effectively
                           procedures for  identifying  and  disclosing  subject
                           inventions pursuant to sub-paragraph 4.6.6.5 above;

                  4.6.13.1.2  Disclose any subject invention pursuant to
                          sub-paragraph 4.6.3.1

<PAGE>

                  4.6.13.1.3  Deliver acceptable interim reports pursuant to
                          sub-division 4.6.6.7.1 above, or;

                  4.6.13.1.4  Provide  the  information  regarding  subcontracts
                          pursuant to sub-paragraph 4.6.6.8 of this clause.

              4.6.13.2     Such reserve or balance  shall be withheld  until the
                           Contracting   Officer   has   determined   that   the
                           Contractor has rectified whatever  deficiencies exist
                           and has delivered all reports, disclosures, and other
                           information required by this clause.

              4.6.13.3     Final payment  under this contract  shall not be made
                           before the  Contractor  delivers  to the  Contracting
                           Officer  all   disclosures   of  subject   inventions
                           required   by   sub-paragraph   4.6.3.1   above,   an
                           acceptable  final  report  pursuant  to  sub-division
                           4.6.7.2   above,   and  all  past  due   confirmatory
                           instruments.

              4.6.13.4     The Contracting  Officer may decrease or increase the
                           sums withheld up to the maximum  authorized above. No
                           amount shall be withheld under this  paragraph  while
                           the  amount  specified  by  the  paragraph  is  being
                           withheld is being withheld under other  provisions of
                           the contract.  The  withholding  of any amount or the
                           subsequent  payment thereof shall not be construed as
                           a waiver of any Government right.

         4.6.14.  Notwithstanding  any of the above,  nothing in this  agreement
               grants  any  intellectual  property  rights  of SS/L to any party
               including the Government or STDC.

4.7.      FOREIGN ACCESS TO TECHNOLOGY
         Note:  This Article shall remain in effect during the term of the
         Contract and for two (2) years after the Definitization date.

         4.7.1.Definitions
              4.7.1.1."Foreign Firm or Institution"  means a firm or institution
                      organized  or existing  under the laws of a country  other
                      than the United States,  its territories,  or possessions.
                      The term  includes,  for purposes of this  Agreement,  any
                      agency or  instrumentality  of a foreign  Government;  and
                      firms,  institutions or business  organizations  which are
                      owned or substantially  controlled by foreign Governments,
                      firms, institutions, or individuals.

              4.7.1.2."Know-How"  means  all  information  including,   but  not
                      limited to discoveries,  formulas, materials,  inventions,
                      processes,   ideas,  approaches,   concepts,   techniques,
                      methods, software,  programs,  documentation,  procedures,
                      firmware,   hardware,   technical  data,   specifications,
                      devices,   apparatus  and  machines  first   developed  in
                      performance under this Agreement.

<PAGE>

              4.7.1.3."Technology" means discoveries,  innovations, Know-How and
                      inventions,  whether patentable or not, including computer
                      software,   recognized  under  U.S.  law  as  intellectual
                      creations to which rights of ownership accrue,  including,
                      but not limited to, patents, trade secrets, maskworks, and
                      copyrights  first  developed  in  performance  under  this
                      Agreement.

         4.7.2.General
                  The  Parties  agree  that  research  findings  and  technology
                  developments  in NEMO  technology may constitute a significant
                  enhancement  to the  national  defense,  and  to the  economic
                  vitality  of  the  United  States.   Accordingly,   access  to
                  important  technology  developments  under this  Agreement  by
                  Foreign Firms or  Institutions  must be carefully  controlled.
                  The controls  contemplated in this Article are in addition to,
                  and are not intended to change or supersede, the provisions of
                  the International  Traffic in Arms Regulation (22 CFR Part 121
                  et  seq.),  the  DoD  Industrial   Security   Regulation  (DoD
                  5220.22-R)  and the Department of Commerce  Export  Regulation
                  (15 CFR Part 770 et seq.)

         4.7.3.   Restrictions on Sale or Transfer of Technology to Foreign
                  Firms or Institutions
                  In order to promote the  national  security  interests  of the
                  United States and to effectuate the policies that underlie the
                  regulations    cited   above,   the   procedures   stated   in
                  subparagraphs 2, 3, and 4 below shall apply to any transfer of
                  Technology.   For  purposes  of  this  paragraph,  a  transfer
                  includes  a sale of the  company,  and sales or  licensing  of
                  Technology. Transfers do not include:
              4.7.3.1.sales of products, images or components, or

              4.7.3.2.licenses of software or documentation  related to sales of
              products or components,  or

              4.7.3.3.transfer which provides access to Technology to Alenia,
              DASA, Aerospatiale, or other Foreign Firm or Institution which is
              an approved source of supply or source for the conduct of research
              under this Agreement provided that such transfer shall be limited
              to that necessary to allow the firm or  institution to perform its
              approved role under this Agreement.

<PAGE>

         4.7.4.SS/L  shall  provide  timely  notice  to  the  Government  of any
               proposed  transfers  from  SS/L  of  Technology   developed  with
               Government  funding  under this  Agreement  to  Foreign  Firms or
               Institutions.  If the Government determines that the transfer may
               have adverse  consequences to the national security  interests of
               the United States,  SS/L, its vendors,  and the Government  shall
               jointly  endeavor to find  alternatives to the proposed  transfer
               which obviate or mitigate  potential adverse  consequences of the
               transfer but which provide  substantially  equivalent benefits to
               SS/L.

         4.7.5.In any event,  SS/L shall provide written notice to STDC who will
               notify the ONR Agreement  Technical Manager and Grants Officer of
               any proposed  transfer to a foreign firm or  institution at least
               sixty (60)  calendar days prior to the proposed date of transfer.
               Such notice shall cite this Article and shall state  specifically
               what is to be transferred  and the general terms of the transfer.
               Within  thirty (30)  calendar  days of receipt of STDC's  written
               notification,  the Grants  Officer  shall  advise STDC whether it
               consents to the proposed  transfer and STDC will then notify SS/L
               of the Government's  decision. In cases where the Government does
               not concur or sixty (60)  calendar  days  after  receipt  and the
               Government provides no decision,  SS/L may utilize normal Claims,
               Disputes,  and Appeals  procedures.  No transfer shall take place
               until a decision is rendered.

         4.7.6.Except  as  provided  above  and in the  event  the  transfer  of
               Technology  to Foreign Firms or  Institutions  is approved by the
               Government,  SS/L shall (a) refund to the  Government  funds paid
               for the development of the Technology and (b) negotiate a license
               with  the  Government  to the  Technology  under  terms  that are
               reasonable under the circumstances.

         4.7.7.Lower Tier Agreements
               SS/L shall  include this Article,  suitably  modified to identify
               the  Parties,  in  all  subcontracts  or  lower  tier  agreements
               (exclusive  of  teaming  agreements),  regardless  of  tier,  for
               experimental, developmental, or research work.

LIABILITY
4.8.1.   Hold Harmless
         STDC and SS/L  agree to  indemnify  and hold  harmless  and  defend the
         other, its employees and agents,  against any liability or loss for any
         claim made by an employee or agent of STDC or SS/L or persons  claiming
         through  them,  for death,  injury,  loss or damage to their  person or
         property arising in conjunction with this Contract.

4.8.2.   Other Liability Neither the Government nor STDC shall be liable to SS/L
         whether directly or by way of contribution or indemnity for any claim
         made by any person or other entity for personal injury or death, or for
         property damage or loss, arising in any way from this Agreement,
         including, but not limited  to, the later  use,  sale or other
         disposition of research and technical developments, whether contributed
         by either party,  pursuant to this Agreement, except as provided  under
         the Federal Tort Claims Act (28 U.S.C. 2671 et seq.) or other Federal
         law where sovereign immunity has been waived. SS/L shall indemnify STDC
         and the Government against all such claims or proceedings and shall
         hold the Government harmless for any resulting liabilities and lawsuits
         provided SS/L is reasonably notified of such claims and proceedings.

<PAGE>

4.8.3.   Patent Indemnity

4.8.3.1.      Indemnification.  SS/L, at its own expense, shall defend indemnify
              and hold harmless STDC and the U. S.  Government  from and against
              any claim or suit based on an allegation  that the  manufacture of
              the standard  LS-400S bus offered for sale hereunder or the normal
              intended  use,  lease or sale of such bus infringes  U.S.  letters
              patent   ("Intellectual   Property  Claim"),  and  shall  pay  any
              royalties  and other  liabilities  adjudicated  to be owing to the
              claimant (or, in SS/L's discretion,  provided in settlement of the
              matter) as well as costs  incurred in defending  (including  court
              costs and reasonable  attorneys fees) such  Intellectual  Property
              Claim; provided that STDC promptly notifies SS/L in writing of any
              such Intellectual Property Claim and gives SS/L authority and such
              assistance  and  information  requested  by SS/L s is available to
              STDC for the defense of such Intellectual Property Claim.

4.8.3.2.      Infringing Equipment. If the manufacture of such bus or the normal
              intended  use,  lease or sale of such bus under this  Contract  is
              enjoined  as a  result  of an  Intellectual  Property  Claim or is
              otherwise  prohibited,  SS/L shall (i)  resolve the matter so that
              the injunction or prohibition no longer pertains, (ii) procure for
              the U. S. Government the right to use the infringing item or (iii)
              modify the infringing item so that it becomes  non-infringing,  in
              all respects.  If SS/L is unable to accomplish (i), (ii), or (iii)
              as stated above, STDC shall have right to terminate this Contract,
              return the bus to SS/L (in  space,  with  respect  to an  in-orbit
              Satellite),  and  receive  a refund of the price of such bus (less
              amounts  unpaid  for such item  plus a  reasonable  allowance  for
              depreciation).

4.8.3.3.      Combinations and Modifications. SS/L shall have no liability under
              this Article for any  Intellectual  Property  Claim arising solely
              from (i) use of such bus in combination  with other items,  unless
              SS/L sold them as a combination or (ii)  modifications of such bus
              directed or  authorized  by STDC or the U. S.  Government,  unless
              SS/L made the modification unilaterally.

4.8.3.4.      Sole  Remedies.  The remedies set forth in this Article are STDC's
              and the Government's sole and exclusive remedies for or related to
              Intellectual Property Claim(s).

<PAGE>

         4.8.4.Environmental Liability
                  Each party to this Agreement  shall be solely  responsible for
                  complying   with  all   applicable   environmental   laws  and
                  regulations,  including the  preparation and submission of all
                  licenses and permit  applications,  applicable to and required
                  by each such party's activities and operations performed under
                  this  Agreement.  No party  shall name any other party to this
                  Agreement on any license or permit application  required under
                  environmental  laws unless  consent is first  obtained from an
                  authorized  agent of the party to be named on the  license  or
                  permit  application.  Each party to this Agreement agrees that
                  it  shall  be   solely   responsible   and   liable   for  any
                  contamination to property,  injury or death to any person, and
                  noncompliance  with any environmental law or regulation caused
                  by or resulting from its activities and operations. Such party
                  agrees to hold harmless,  indemnify and defend any other party
                  to this  Agreement  from and  against  any and all  liability,
                  cost,  claims,  fines,  penalties  and  suites of any kind for
                  natural resources, occurring in connection with, or in any way
                  incident to the release of any  contaminant,  or noncompliance
                  with  any  Federal,  State,  or  local  environmental  laws or
                  regulations  caused by or resulting  from its  activities  and
                  operations.  All  rights,  duties  and  responsibilities,  and
                  obligations of the parties under this paragraph  shall survive
                  the termination of this Agreement.

         4.8.5.Lower Tier Agreements
                  SS/L shall use reasonable efforts to include this Article,
                  suitably modified to identify the Parties, in all U. S.
                  subcontracts or lower tier U. S. agreements (exclusive of
                  teaming agreements), regardless of tier.

5.   MILESTONE PAYMENT SCHEDULE
Payments  shall be made in  accordance  with  the  Milestone  Payment  Schedule,
Attachment  All payments due from STDC,  upon the  completion of each  milestone
described  above,  shall be made thirty (30) days after STDC's receipt of SS/L's
invoice,  with documentation  evidencing that the milestone has been met. In the
event any payment is not made by its due date,  STDC shall be liable to pay SS/L
interest at the rate of LIBOR + 2% (30 day rate) per annum on the unpaid balance
until such time as payment is made by STDC,  or nine months from the date of the
first unpaid  invoice,  after which time the  contract  will be  terminated  for
convenience.



6.   SHIPPING, ACCEPTANCE, and TITLE TRANSFER
As described  in the  Statement  of Work  (Attachment  1),  SS/L  shall be
     responsible for arranging and paying for the following shipping: 6.2.

     6.1.1.  Shipping  the  LS-400S  bus to NRL  in its  shipping  container
             Shipping any bus  component  that is not shipped at the time of the
             bus shipment6.1.3.

     6.1.2   Returning the bus' shipping container to NRL prior to launch.

<PAGE>

6.2      As described in the  Statement  of Work  (Attachment  1), STDC shall be
         responsible  for arranging  and paying for the following  shipping:6.1.

     6.2.1  Returning  the  bus'  shipping  container  to  Alenia  following
            delivery of  the LS-400S  bus at  NRL6.1.5.
     6.2.2  Transport  of the satellite and any loaned ground support equipment
            from NRL to the launch site
     6.2.3  Returning the bus' shipping container plus any loaned ground support
            equipment to Alenia or SS/L after launch.
     6.2.4  MGSE or ESGE hardware from Alenia to NRL that cannot be provided at
            the time of shipping the bus.

6.3      Final  acceptance  of the LS-400S  bus shall occur at Alenia  following
         successful  completion  of acceptance  testing  described in accordance
         with Paragraph 1.6 of Attachment 1,  Statement of Work.  Title and risk
         of loss to the LS-400S bus shall pass from SS/L to STDC upon acceptance
         of the bus at Alenia.  Following  acceptance,  any  non-supplier-caused
         failure or loss is a liability of STDC.

6.4      Final acceptance of the EGSE shall occur at Alenia following successful
         completion  of EGSE  acceptance  testing.  Title and risk of loss shall
         pass from SS/L to STDC upon acceptance at Alenia.

6.5      Preservation,  packing, packaging and marking for shipment of all items
         ordered hereunder shall be in accordance with best commercial  practice
         and  adequate  to ensure  both  acceptance  by common  carrier and safe
         transportation at the most economical rate(s).

6.6      All documentation shall be delivered under cover of a transmittal
         letter and shipped to STDC via common carrier to 100 North Pitt Street,
         Suite 403, Alexandria, VA 22314, Attention: Ms. Nora Rumpf.

6.7      INSPECTIONS
         6.7.1    SS/L will provide and maintain an inspection  system  covering
                  goods and  services  under this  contract and will tender only
                  goods  that have been  inspected  and found to conform to this
                  contract's  requirements.  SS/L will keep  records  evidencing
                  inspections  and their  results  and will make  these  records
                  available to STDC during contract  performance and for two (2)
                  years after final payment.

         6.7.2    All  goods  to be  delivered  hereunder  will  be  subject  to
                  inspections,   examinations   and  the   witnessing  of  final
                  acceptance  tests,  during the period of performance at SS/L's
                  facility,   by  STDC.   STDC  will  perform   inspections  and
                  examinations  in a manner that will not unduly delay the work.
                  Any  delay  due  to  the  STDC's  inspection  and  examination
                  activities shall be added day for day to the delivery dates in
                  the contract. SS/L shall be entitled to recover any reasonable
                  additional costs incurred as a result of such delay.

<PAGE>

         6.7.3    If STDC performs an inspection or examinations on the premises
                  of SS/L, SS/L will furnish,  and require its  subcontractor to
                  furnish,  without additional charge, all reasonable facilities
                  and  assistance  for the safe and  convenient  performance  of
                  these duties.

         6.7.4    SS/L shall  provide ten (10) calendar days notice prior to the
                  start of the scheduled final  acceptance  tests, OR notice can
                  be  provided  via a  separate  section in the  monthly  report
                  entitled  "Notification  of Testing" if the monthly  report is
                  provided  and  received 30 days prior to the  scheduled  final
                  acceptance  test.  SS/L may limit access with respect to areas
                  exposing SS/L's proprietary  processes or Government  contract
                  work. STDC shall comply will all safety  regulations and shall
                  take all  precautions  required  and  necessary to prevent the
                  occurrence  of any injury to persons or  property  during such
                  inspection at SS/L's facility.

     6.8 QUALITY CONTROL
         SS/L will  provide and  maintain a quality  control  system for the
              goods and services  purchased  under this  contract,  and SS/L
              will   permit  STDC  to  review  all   necessary   procedures,
              practices,  processes,  and related  documents  as  reasonably
              requested.

7.   TECHNICAL SUPPORT (CLIN 006)
7.1.     As described in the  Statement of Work  (Attachment  1), SS/L will make
         appropriate personnel available in a timely manner to support requested
         activities   involving   engineering  labor,   consultation,   hardware
         modifications,  and  subcontractor  support.  The cost to support  such
         activities will be limited to a maximum of 7,300 hours up to the launch
         of NEMO,  10  visits  to the NRL  exclusively  for NEMO  purposes,  and
         $100,000  for  travel   expenses.   The  general   definition  of  what
         constitutes charges against the 7,300 hours of program support and what
         is part of the basic  contract is contained  in the  Statement of Work.
         SS/L shall  provide STDC an  accounting of the status of these hours in
         its monthly progress report.
7.2.     Work may be required  to provide  additional  support  beyond the 7,300
         hours as stated in individual delivery orders placed in accordance with
         paragraph  7.3 at  the  fully  burdened  rate  of  $TBD/hour  for  SS/L
         employees.  (It should be noted that  additional  hardware  will not be
         included and Time and Material Orders.)
7.3.     Each delivery order shall:

<PAGE>

          *    be issued as a delivery order on an STDC Standard Form
               (Amendment of Solicitation/Modification of Contract) in the case
               of a modification to an order;
          *    be identified by this contract number;
          *    incorporate the terms and conditions of this contract by
               reference;
          *    set forth a detailed statement of work and the data to be
               provided;
          *    create a subcontract Data Requirements  Lists for the ordering of
               such data requirements;
          *    set forth a delivery  order maximum price;
          *    specify any CFE or CFI applicable to that order;
          *    set forth STDC's required  delivery or performance date and the
               place of performance, indicating therein SS/L's facility to be
               utilized; and, in the event travel is required in the performance
               of the work ordered, the locations at which such performance is
               necessary; and
          *    be signed by the authorized STDC representative.

7.4.     The estimated delivery order dollars for the cost-type items may not be
         exceeded in pursuit of the technical  objective  without prior approval
         of STDC.
7.5.     The ordering  period for this line item will be from date of contract
         award through 60 days past a successful  NEMO launch.

7.6.     SS/L shall promptly notify STDC (Nora Rumpf) thirty (30) days before
         the 7,300 hour limit is likely to be exceeded and request the execution
         of a delivery order as provided for herein.
7.7.     The term  "contract"  and "delivery  order" when used within a delivery
         order are  considered  synonymous  terms.  The ordering  procedures for
         delivery orders placed under CLIN 5 are of a lesser order of precedence
         than the "Schedule" or  "Deliveries"  clauses of the contract.  SS/L is
         not  authorized  to incur  costs  on  delivery  orders  that are not in
         compliance with any of these clauses in the contract.  The Statement of
         Work for the basic  contract  takes  precedence  over the statements of
         work attached to any delivery order, unless otherwise noted.

8.   ADDITIONAL RIGHTS IN DATA
8.1.     STDC will give to SS/L, at SS/L's option,  an  unrestricted  license to
         use all  technology,  designs  and  developments,  whether  hardware or
         software, that are applicable to the Globalstar spacecraft and to which
         STDC has rights  under an  agreement  with NRL.  This  license  will be
         royalty  free if STDC is not  required to pay a royalty to NRL. If STDC
         is required to pay a royalty to NRL (only when a patent  exists),  SS/L
         will pay the royalty on behalf of STDC.

9.   DISCLOSURE AND PROTECTION OF INFORMATION
9.1.      All data provided during the course of this contract is subject to the
          Non-Disclosure Agreement signed by STDC and SS/L, (Attachment 4 and in
          accordance with Article 25.1 of this Agreement).

<PAGE>

10.  FORCE MAJEURE
10.1.    Neither party shall be liable for delay or damages if prevented from
         fulfilling its obligations by reason of force majeure causes, including
         but not limited to acts of war, (whether declared or undeclared)
         insurrection, terrorism, or acts of Hostilities (such as invasion,
         bombing, etc.), lockouts, strikes, riots, fires, earthquakes, acts of
         God, unusually severe weather, any Government restrictions covering the
         distribution or transport of components, parts or raw materials
         necessary for the completion of the equipment (which includes the U.S.
         Government denial or cancellation of the U.S. export license for the
         bus, EGSE and MGSE, if applicable), priority given to U.S. Government
         work that has been designated as national emergency, mobilization of
         technical personnel in general by reason of any cause beyond either
         party's control, provided that the parties give notice to each other
         according to paragraph 10.4 below.

10.2.    The impact of Force Majeure on SS/L's subcontractors hereunder shall be
         considered to be Force Majeure on SS/L, provided that SS/L gives notice
         to the STDC according to the paragraph below.

10.3.    The contract's  period of performance shall be extended by a reasonable
         period of time  corresponding  to the delay caused by the Force Majeure
         and price may be adjusted based on agreement of the parties.

10.4.    Either party shall inform the other in writing within 45 days after a
         fact or event has been recognized by the affected party to have
         occurred.

11.  CONFORMITY TO THE SPECIFICATION
11.1.    The   LS-400S   bus  will   conform  to  the   Globalstar   performance
         specification (Globalstar Satellite Performance Specification, E038700,
         revision in effect at the time of bus delivery),  with the exception of
         the  following:  NEMO-peculiar  changes  to the  LS-400S  bus  that are
         requested by STDC, the C-band transponder,  the OBPE, the magnetometer,
         and/or the payload systems or components.

12.  WARRANTY
12.1     Terms and Period of Warranty

12.1.1   LS-400S Bus
         SS/L warrants that the LS-400S bus to be delivered  under this Contract
         shall be free from defect in materials and workmanship,  at the time of
         Acceptance pursuant to Article 6.3 and up launch (intentional  ignition
         of the launch vehicle).

12.1.2   Deliverable Items of Hardware Other Than LS-400S Bus
         SS/L warrants that deliverable items of hardware other than the LS-400S
         Bus shall be free from defects in materials and workmanship at the time
         of  Acceptance  pursuant to Article 6.4, and for a period of six months
         thereafter,  but in no case after  intentional  ignition  of the launch
         vehicle.

<PAGE>


12.1.3   Disclaimer
         THIS WARRANTY SHALL NOT APPLY TO ANY DEFECT OR NON-PERFORMANCE  ARISING
         SOLELY OR IN MATERIAL PART FROM PURCHASER'S  INTEGRATION OF THE LS-400S
         BUS WITH A PAYLOAD NOT SUPPLIED BY SS/L, OR FROM ANY ACT OR OMISSION OF
         PURCHASER OR ITS AGENTS.

         NO  OTHER  WARRANTY,  EXPRESS  OR  IMPLIED,  INCLUDING  A  WARRANTY  OF
         MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, SHALL APPLY TO ANY
         BUS (ES) OR OTHER DELIVERABLE ITEM (S) PROVIDED HEREUNDER.

12.2     Repair or Replacement
12.2.1   Bus
         During the warranty  period  prior to launch,  in the event a defect in
         material  and/or  workmanship in the delivered Bus becomes  apparent to
         STDC,  SS/L shall  investigate  the defect and use its best  efforts to
         correct any such defect within a two-week period of notice of defect.

         After the Bus warranty period expires,  NEITHER SS/L NOR ITS SUPPLIERS,
         OWNERS,  EMPLOYEES,  INSURERS,  OR AGENTS  SHALL HAVE ANY  LIABILITY TO
         PURCHASER OR TO THIRD  PARTIES  ARISING FROM ANY  ASSISTANCE  IT OR ITS
         AGENT(S) PROVIDES IN RESPECT OF DELIVERED BUS(ES),  REGARDLESS OF CAUSE
         OR LEGAL THEORY INCLUDING NEGLIGENCE.

12.2.2   Deliverable Items of Hardware Other Than LS-400S
         During the warranty period,  as STDC's sole and exclusive  remedy,  any
         defect in  Deliverable  Items of  hardware  other than the  LS-400S bus
         discovered  by STDC  shall be  remedied  by SS/L at SS/L's  expense  by
         repair or  replacement of the defective  component at SS/L's  election.
         For  such   Deliverable   Items  SS/L  shall  determine  if  repair  or
         replacement  is required to be performed at SS/L's plant.  If required,
         STDC shall ship to SS/L's designated facility any defective Deliverable
         Items requiring repair and  replacement.  SS/L shall be responsible for
         the cost of shipment  (including any taxes and/or duties) for defective
         Deliverable  Items  shipped to SS/L and the cost of shipment for return
         of repaired or replacement equipment shipped to STDC. Title and risk of
         loss for  defective  Deliverable  Items  shall  transfer  to SS/L  upon
         delivery of such Deliverable Items to the shipping carrier by STDC, and
         title and risk of loss shall transfer to STDC for returned  repaired or
         replacement equipment upon receipt of such equipment by STDC.

12.3     Use Conditions Not Covered by Warranty
         The warranty is contingent  upon SS/L being given access,  if required,
         to delivered  equipment at the Purchaser's  facility,  or third party's
         facility  in order to effect  any  repair  and/or  replacement.  If the
         defect is not covered by the warranty, the Purchaser shall pay SS/L the
         cost of repairs or replacement,  transportation charges, and a mutually
         agreed upon profit.
         Such repair costs shall be invoiced to the Purchaser.

<PAGE>

12.4     Items Not Covered By Warranty
          SS/L has  provided  Purchaser  data and  documents  as  identified  in
         Attachment  5  hereof,  relative  to the  NEMO  project  to  assist  in
         understanding  the design of the LS-400S Bus. These data were developed
         for a commercial communications satellite constellation.  SS/L does not
         warrant,  guarantee,  or promise that the information  contained within
         the  submitted  data and  documents  is  suitable  for the  Purchaser's
         intended  purpose  or that the  data is  necessarily  accurate  for the
         overall NEMO project.  The data was provided on a "Best  efforts" basis
         and is as representative of the NEMO bus as can be determined.

12.5     Warranty of Training and Services
         SS/L warrants that the training and other services it provides pursuant
         to this Contract will conform to reasonable industry standards.  In the
         event SS/L breaches this  warranty,  as STDC's sole remedy,  SS/L shall
         apply best efforts to correct the deficiencies  where it is practicable
         to do so.

13.  LIMITATION OF LIABILITY
13.1.    In no event  shall  either  SS/L or STDC be liable to the other for any
         special, indirect, incidental,  consequential,  or economic (including,
         but not limited to lost profits and lost business opportunity) damages,
         regardless of the legal theory under which such damages are sought, and
         even if the  parties  have  been  advised  of the  possibility  of such
         damages.

13.2.    SS/L  shall in no event,  under this  Contract  or as a result of or in
         connection with anything done or omitted  relative  thereto,  be liable
         for indirect  loss,  consequential,  incidental  or special  (including
         multiple or  punitive)  damage  howsoever  caused,  including,  without
         limiting the generality of the foregoing, loss or damage resulting from
         loss of  profits.  In any event SS/L shall not be liable for  aggregate
         claims/damages  in connection with this Contract in excess of the total
         amount paid to SS/L under the Contract.

14.  RESOLUTION OF DISPUTES
14.1.    Should any disputes or  differences  of any kind arise between STDC and
         SS/L,  in  connection  with/or  arising  out of this  Contract,  or the
         performance hereunder,  these will be settled by mutual agreement which
         after  having been written and signed by both parties will become final
         and binding upon both Parties.

<PAGE>

14.2.    If no binding  agreement  can be reached,  then STDC and SS/L will have
         the right to proceed according to the Rules of the American Arbitration
         Association ("AAA") for arbitration in the State of California,  United
         States  of  America  before a panel of three  arbitrators,  to obtain a
         decision which will be final,  binding and  irrevocable  upon both STDC
         and SS/L and not subject to any direct or indirect legal means.

14.3.    Each party shall appoint one member of the arbitration  panel and these
         two members  shall  appoint  the third  member.  The three  Arbitrators
         appointed by the said rules will have full power to review all the data
         they consider necessary for deciding upon the dispute.

14.4.    The  judgment  rendered  by the  Arbitrator(s)  upon the  award  may be
         entered in any court having  jurisdiction for the purposes of obtaining
         an order of  enforcement  or judicial  acceptance of the award,  as the
         case may be.  STDC and SS/L hereby  waive any  immunity,  sovereign  or
         otherwise,  that it would otherwise have to such jurisdiction and agree
         that their  respective  rights,  obligations and liabilities  hereunder
         shall be  determined in the same manner and to the same extent as those
         of a private litigant under like circumstances.

14.5.    The Arbitrator's award may include  compensatory damages against either
         party, but under no circumstances will the Arbitrators be authorized to
         nor shall  they award  punitive  damages or  multiple  damages  against
         either party.

15.  GOVERNING LAW
15.1.    This Contract shall be governed by and construed  under the laws of the
         California without regard to those laws relating to conflict of laws.

16.  SEVERABILITY
16.1.    If any phrase, clause,  sentence, or paragraph,  or combination of same
         in this Contract  contravenes  the applicable laws of the United States
         or of any state or jurisdiction thereof, such phrase, clause, sentence,
         paragraph or  combination of same shall be inoperative in such state or
         jurisdiction and the remainder of this Contract shall remain binding on
         the parties hereto. In such event the parties hereto shall perform this
         Contract  in a manner  which is both  legally  valid  and most  closely
         represents the intent of the phrase, clause,  sentence,  paragraph,  or
         combination of same which was made inoperative.

17.  NOTICES
17.1.    All notices, certificates,  acknowledgments and other reports hereunder
         shall be in writing and shall be deemed  properly  delivered  when duly
         mailed  by  certified  letter  to the  other  party at its  address  as
         follows,  or to such  other  address  as either  party  may by  written
         notice, designate to the other.

         Space Systems/Loral                 Space Technology Development Corp.
         3825 Fabian Way                     100 North Pitt Street, Suite 403
         Palo Alto, CA  94303                Alexandria, VA  22314
         Attn: Mr. Alan G. Sheveland         Attn: Ms. Nora Rumpf

<PAGE>

17.2.    All  notices,  requests and demands  given or made under this  Contract
         shall be in writing and shall be delivered either in person or shall be
         sent by facsimile or by registered air mail or equivalent  with postage
         prepaid.   Confirmation   is  required  only  when   requested  by  the
         originator.  Notice  shall be deemed to have been given on the day when
         mailed or sent by facsimile, addressed to the other party.

17.3.    Either  party may change its  address  for  purpose of this  Article by
         giving the other party  notice of such change in writing and  delivered
         by registered air mail or other means confirmed by both parties.

18.  ASSIGNMENT
18.1.    This Contract shall not be assigned by either party,  without the prior
         written  consent of the other,  except  that SS/L,  may,  upon  written
         notification  to  STDC,  assign  that  portion  of  work  which  may be
         scheduled  to be  performed by SS/L in whole or in part to a subsidiary
         or affiliate of SS/L who performs work in the same industry,  or to any
         of SS/L's subcontractors and "Partners" used for the Globalstar/LS-400S
         bus production.

19.  TAXES AND TARIFFS
19.1.    Each party shall be responsible  for its respective  present and future
         taxes, duties,  tariffs,  fees, imports, and other charges,  including,
         but not limited to,  income,  excise,  import,  purchase,  sales,  use,
         turnover,  added value,  consular,  gross  receipts,  gross wages,  and
         similar  assessments  imposed upon the responsible  party by any taxing
         authority as a result of the  performance  of the  responsible  party's
         duties and responsibilities hereunder.

20.  CHANGES
20.1.    Either party may, at any time,  request a change or modification to the
         specifications,   work  or  services   required  under  this  Contract,
         including  but not limited to  increases or decrease in  quantities  of
         deliverable items, or changes to the method of shipment.

20.2.    STDC shall make  written  requests to SS/L for all changes  proposed by
         STDC.  Within 10 days of receipt of notice from STDC,  SS/L will advise
         STDC if a requested  change  affects the delivery  schedule or cost. In
         the case of a change with impact on schedule or cost, SS/L shall submit
         a change proposal within 45 days of the original  notification  and the
         parties shall negotiate in good faith any equitable adjustment required
         to  the  Contract  price,   delivery   schedule  and  other  terms  and
         conditions.  Such requested  changes shall not become binding until the
         changes have been negotiated and the contract  modified by both parties
         accordingly.  In no event  will SS/L be  required  to  perform a change
         prior to contract modification.

<PAGE>

20.3.    SS/L shall be entitled to an equitable adjustment in the contract price
         and/or  schedule in the event actions or inactions by STDC require SS/L
         to expend  additional  effort to perform the work  required  under this
         Contract.

20.4.    SS/L has the  right to  request  an  adjustment  in  contract  price or
         delivery schedule based upon STDC's action(s) as stated in 20.1 or 20.2
         above.  However,  SS/L must assert its right to an adjustment within 30
         days from the date of receipt of the written order.  Should STDC decide
         that the facts  justify  it,  STDC may  receive and act upon a proposal
         submitted before final payment of the contract.

20.5.    SS/L  may  make   changes   which  do  not  degrade   the   usefulness,
         effectiveness,  quality,  performance or  manufacturing  process of the
         items,  and does not  adversely  affect the  utility of the  particular
         equipment  being  changed with other  equipment of the Contract and for
         which there is no impact on Contract price or delivery.

20.6.    No  modification,  amendment,  supplement to or waiver of this Contract
         shall be binding upon the parties  unless made in writing and signed by
         duly authorized representatives of both parties.

20.7.    Failure to agree to any adjustment shall be a dispute under Article 14.
         However,  nothing in this clause shall excuse the SS/L from  proceeding
         with the contract as changed.

21.  TERMINATION FOR CAUSE
21.1.    Either party may terminate this Contract in whole or in part, for cause
         due to an Event of Default as defined in this Clause, by giving written
         notice  thirty  (30) days in  advance of the date of  termination.  The
         notice shall specify the extent to which performance of work under this
         Contract is terminated and the reasons therefor.

21.2.    The following  definitions  of an "Event of Default"  should be used to
         establish the criteria  under which a  termination  for cause becomes a
         fair and reasonable action to mitigate damage:

         21.2.1. SS/L (1) fails to  materially  perform in  accordance  with the
               terms of this Contract,  or (2) commits a default in violation of
               this Contract which is not remedied within thirty (30) days after
               actual  receipt  of  written  notice  thereof,   or  (3)  becomes
               insolvent or has a  bankruptcy  petition  filed  against it which
               petition it is unable to have dismissed within sixty (60) days of
               such filing,  or (4) executes an assignment of a majority or more
               of its assets for the benefit of creditors, or (5) has a receiver
               appointed for any reason.

<PAGE>

21.2.2.       STDC (1) fails to  materially  perform those actions in accordance
              with the terms of this contract  which are necessary to allow SS/L
              to perform its  obligations  under this Contract,  or (2) fails to
              make  payment when due as provided  for in this  Contract,  or (3)
              commits a  default  in  violation  of this  Contract  which is not
              remedied  within thirty (30) days after actual  receipt of written
              notice  thereof,  or  (4)  either  STDC  or its  partners  becomes
              insolvent or have a bankruptcy petition filed against either which
              petition  neither STDC or its partners are able to have  dismissed
              within  sixty  (60)  days of such  filing,  or (5) has a  receiver
              appointed for any reason.

         21.2.3. In the event of termination pursuant to Article 21 hereof, SS/L
         shall be reimbursed  for  deliverable  items for which  Acceptance  has
         occurred,  or which are retained by Purchaser,  as follows:  (i) at the
         price set forth in this Contract for  completed  items for which a line
         item price exists and (ii) at the cost incurred for (a) completed items
         for  which  no line  item  price  exists  and (b)  partially  completed
         items/services, or work in-process.

22.  TERMINATION FOR CONVENIENCE
22.1.    It is mutually agreed that STDC shall not terminate this Contract for
         its convenience, in whole or in part, unless the Other Transaction has
         been correspondingly terminated for convenience by the Government. Any
         such termination of the Contract, in whole or in part, shall parallel
         the Government's whole or partial termination for convenience of the
         Other Transaction. In the event, however, the Other Transaction is
         extended, reorganized, restructured or placed under another Government
         contract or subcontract, to be performed by STDC or successor in
         interest, so that the work to be performed by SS/L is nevertheless
         required by the Government although in an extended, reorganized or
         restructured form, SS/L shall continue to participate in
         such performance and the parties shall negotiate in good faith to
         arrive at mutually acceptable price, schedule, terms and conditions.
         In the event, a termination occurs under this paragraph, the provision
         of FAR Part 49 shall apply.

23.  WAIVER
23.1.    No covenant,  term,  or condition of this Contract may be waived except
         by written  consent of the party  against who the waiver is claimed and
         the waiver of any other term,  covenant or condition  of this  Contract
         shall not be deemed a waiver  of any  subsequent  breach of the same or
         any other term, covenant or condition of this Contract.

24.  NEWS RELEASES
24.1.    Any news  release,  public  announcement,  advertisement  or  publicity
         released by either party concerning this Agreement,  any proposals, any
         resulting  contracts,  or any  subcontracts to be carried out hereunder
         will be subject to prior  approval of the other  party  which  approval
         shall not  unreasonably be withheld,  except that this Contract and the
         terms  thereof  may be made  known  to the  U.S.  Government.  Any such
         publicity shall give due credit to the contribution of each party.

<PAGE>

24.2.    However,  this  provision  shall not prohibit SS/L from  disclosing the
         existence or substance of this Agreement to other  potential  customers
         of SS/L  services or products,  provided  that such  disclosure is made
         pursuant to  non-disclosure  terms which are generally  consistent with
         the  level  of  protection   afforded  in  Article  8,  Disclosure  and
         Protection of Information.

25.  INCORPORATION BY REFERENCE
25.1.    The following  attachments  referred to herein and attached  hereto are
         hereby  incorporated  by  reference  and made an integral  part of this
         Contract:

         Attachment 1      Statement of Work
         Attachment 2      Milestone Payment Schedule
         Attachment 3      Reporting Requirements
         Attachment 4      Non-Disclosure Agreement
         Attachment 5      Technical Data for CLINS 001-003


26. ENTIRE AGREEMENT AND ORDER OF PRECEDENCE
26.2.    This document sets forth the entire agreement between the parties as to
         the subject matter hereof and supersedes all prior discussions  between
         them,  and  neither of the  parties  shall be bound by any  conditions,
         definitions,  warranties, or representations with respect to any of the
         terms or conditions  hereof other than as expressly  provided herein or
         as duly  set  forth  on or  subsequent  to the  effective  date of this
         Contract  duly  signed  by the  party  to be  bound  thereby  by a duly
         authorized officer or representative of such party.

26.2.    The following  documents  are listed in descending  order of precedence
         and this order of  precedence  shall apply should there be any conflict
         in terms of performance under this Contract.

          *    Contract Terms and Conditions contained herein
          *    Attachment 1, Statement of Work
          *    Attachment 2, Milestone Payment Schedule
          *    Attachment 3, Reporting Requirements
          *    Attachment 4, Non-Disclosure Agreement
          *    Attachment 5, Technical Data for CLINS 001-003

26.3.    This document has been prepared  jointly by the parties.  Any ambiguity
         that  may be  discovered  in  this  Contract  shall  not  be  summarily
         determined to the benefit of any one particular party.

<PAGE>


IN WITNESS WHEREOF,  the parties have caused this Contract to be duly signed and
executed in duplicate originals by its duly authorized representative.

SPACE SYSTEMS/LORAL                     SPACE TECHNOLOGY
                                        DEVELOPMENT CORPORATION

/S/ R. A. HALEY                          /S/ LENORE M. RUMPF
-------------------------------         --------------------------------
Signature                               Signature


R. A Haley                              Lenore M. Rumpf
Vice President & CFO                    Contracts Administrator
Name and Title:                         Name and Title:

Date: January 26, 1999                  Date: January 26, 1999