TNAG-2857-FCO40-4110-Satellite-Licensing-and-Asia-Satellite-Telecommunications-Co-1993 — Page 8

" merica :33 14:30 SENT BY UK SIGNATORY-INTELSAT

I

L SAT RESTRICTED

BG-96-54E (Rev. 1) W/3/93 Page 3

the decision not to hold the authorizing Signatory liable, INTELSAT Management proposes that new policies be adopted concerning sanctions for non-payment of utilization charges for all users and vetting the creditworthiness of such authorized entities.

8.

Sanctions. The new sanctions policy would go beyond the existing policy of denying requests for new service. Under this proposed new policy, additional service would automatically be denied the delinquent user if it does not pay within 30 days after the due date. Further, all service would be subject to suspension if payment was not made within 150 days after the due date. However, INTELSAT Management would be authorized to use its discretion in the application of this suspension sanction in exceptional circumstances and report all cases to the next meeting of the Board of Governors. Neither the denial of additional service nor suspension of service to a delinquent user would affect other users in the same country. Details of the existing and proposed sanctions are set forth in Attachment No. 1.

9. Creditworthiness. While the proposed new policy on suspension of service would tend to encourage prompt payment, it does not protect INTELSAT if non-payment nevertheless occurs. While this risk is not deemed to be great, the potential loss of revenue resulting from non-payment of utilization charges should be recognized as a normal cost of doing business. As such, the risk of non-payment can be mitigated by suitable business practices such as conducting credit reviews of non-Signatory users and requiring, as appropriate, greater financial assurances or protection. Such protection could take the form of performance bonds, security deposits, letters of credit, up-front payments, parent guarantees, and assignment of international settlements. The need for such requirements would be determined by INTELSAT Management based on the creditworthiness of the customer. If INTELSAT Management should decide in a particular case that a prospective non-Signatory user is not creditworthy, then INTELSAT Management could decide not to provide service. Such a decision would be reviewable by the Board.

Liability for Earth Stations

10. INTELSAT Management proposes that

that INTELSAT refrain from holding a Signatory liable, if the Signatory so requests, for damage to the

the INTELSAT space segment caused by an authorized entity's mis-operation of its earth station only if the Party agrees to assumes responsibility for the proper operation of these earth stations, e.g., by closing them down in the event of serious mis-operation.