EXHIBIT 10.25
PHASE 2 INFORMATION TECHNOLOGY PRODUCT
AND SERVICE AGREEMENT
BETWEEN
ELECTRONIC DATA SYSTEMS CORPORATION
AND
SPECTRADYNE, INC.
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS
ARE INDICATED IN THIS AGREEMENT WITH BRACKETS ([ ]).
TABLE OF CONTENTS
Page
----
ARTICLE I AGREEMENT, TERM AND DEFINITIONS..................... 1
1.1 Agreement and Term.................................. 1
1.2 Certain Definitions................................. 2
ARTICLE II DEVELOPMENT OF DIGITALLY BASED VIDEO ON
DEMAND SYSTEM....................................... 5
2.1 Digitally Based Video On Demand System Development
Schedule............................................ 5
2.2 Provision of DBVODS Hardware........................ 5
2.3 Development of Software............................. 6
ARTICLE III PROVISION OF PRODUCTS AND SERVICES.................. 6
3.1 Purchase Orders..................................... 6
3.2 Cancellation and Change of Purchase Orders.......... 8
3.3 Inspection, Integration, and Testing................ 8
3.4 Transportation of Products.......................... 8
3.5 Title and Risk of Loss.............................. 8
3.6 Unpacking and Installation.......................... 9
3.7 Acceptance of Products.............................. 9
3.8 On-Site Service..................................... 9
ARTICLE IV PROPRIETARY RIGHTS AND WARRANTIES................... 12
4.1 Vendor Software..................................... 12
4.2 EDS Software........................................ 12
4.3 Spectradyne Software................................ 13
4.4 Cross-License of Patent Rights...................... 13
4.5 Warranties.......................................... 15
4.6 Spectradyne's Remedies.............................. 16
4.7 Exclusivity......................................... 16
ARTICLE V CHARGES AND PAYMENTS TO EDS......................... 16
5.1 Charges for Products and Services................... 16
5.2 Bonus............................................... 17
5.3 Payment............................................. 17
5.4 Taxes............................................... 17
ARTICLE VI DISPUTE RESOLUTION, TERMINATION AND
LIMITATION OF LIABILITY............................. 18
6.1 Dispute Resolution.................................. 18
6.2 Termination for Cause............................... 18
6.3 Termination for Failure to Obtain Unconditional
Approvals or Waivers................................ 18
6.4 Termination for Insolvency and Related Events....... 18
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6.5 Termination for Nonpayment.......................... 18
6.6 Proprietary Rights Indemnification.................. 20
6.7 Liquidated Damages.................................. 20
6.8 Limitation of Liability............................. 21
ARTICLE VII MISCELLANEOUS....................................... 21
7.1 Binding Nature and Assignment....................... 21
7.2 Relationship of Parties............................. 21
7.3 Confidentiality and Media Releases.................. 22
7.4 Export.............................................. 22
7.5 Notices............................................. 22
7.6 Force Majeure....................................... 22
7.7 Severability........................................ 22
7.8 Waiver.............................................. 22
7.9 Cumulative Remedies................................. 23
7.10 Counterparts........................................ 23
7.11 Certain Construction Rules.......................... 23
7.12 Survival of Certain Provisions...................... 23
7.13 Governing Law....................................... 24
7.14 No Third Party Beneficiaries........................ 24
7.15 Approvals and Similar Actions....................... 24
7.16 Entire Agreement 24
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PHASE 2 INFORMATION TECHNOLOGY PRODUCT
AND SERVICE AGREEMENT
THIS PHASE 2 INFORMATION TECHNOLOGY PRODUCT AND SERVICE AGREEMENT (the
"Agreement") is between Spectradyne Inc., a Delaware corporation
("Spectradyne"), and Electronic Data Systems Corporation, a Texas corporation
("EDS") and is effective as of August 27, 1993 (the "Effective Date").'
RECITALS:
Spectradyne and EDS have entered into that certain Agreement for Phase I
Information Technology Services dated July 28, 1993 (the "Phase I Agreement")
under Section 1.4 of which Spectradyne and EDS agreed to continue negotiating in
good faith to reach and enter into an agreement under which EDS will provide a
Digitally Based Video On Demand System.
Spectradyne and EDS agree that EDS will provide such Digitally Based Video
On Demand System, and that Spectradyne will purchase such Digitally Based Video
On Demand System from or through EDS, in accordance with the terms and
conditions set forth in this Agreement.
This Agreement sets forth the terms and conditions under which EDS will
provide, sell, install and maintain Digitally Based Video On Demand Systems to
and for Spectradyne in North America (meaning for the purposes of this Agreement
the continental United States, Alaska, Hawaii, Canada, Mexico, the Virgin
Islands and Puerto Rico (and such other sites within the caribbean as are
covered by the footprint of satellite implemented under the Phase I Agreement))
for the purpose of distributing in-room video entertainment programming and
Spectradyne-developed interactive services, all of which are described below.
In consideration of these premises and the mutual covenants set forth in
this Agreement, and for other good and valuable consideration, the sufficiency
and receipt of which is hereby acknowledged, Spectradyne and EDS hereby agree to
undertake all rights and obligations under the terms and conditions of this
Agreement.
ARTICLE I
AGREEMENT, TERM AND DEFINITIONS
1.1 Agreement and Term. EDS will (a) provide and sell DBVODS Hardware, (b)
develop and license DBVODS Software to Spectradyne and (c) install and
maintain the Digitally Based Video On Demand System for Spectradyne, and
Spectradyne will obtain such Video On Demand Systems and related services
from EDS all in accordance with the terms and conditions set forth in this
Agreement. The term of this Agreement will commence on the Effective Date
and will continue thereafter until the expiration date set forth in
Section 1.2 of the Phase I Agreement, unless earlier terminated by either
party as set
forth in Article VI of this Agreement. From the Effective Date until the
expiration date, or such earlier date that this Agreement is terminated as
provided for in Article VI, Spectradyne will use EDS exclusively as its
provider of Digitally Based Video On Demand Systems.
1.2 Certain Definitions. As used in this Agreement, the terms set forth below
have the following respective meanings, and such meanings are equally
applicable to both the singular and plural forms of the terms defined.
(a) "Confidential Information" will have the meaning set forth in Section
7.3 of this Agreement.
(b) "Coverage Time" will have the meaning set forth in Section 3.8(a) of
this Agreement.
(c) "CDVRO System" will have the meaning set forth in Section 3.1(b) of
this Agreement.
(d) "DBVODS Hardware" means that Hardware (as such term is defined in
Section 1.3 (am) of the Phase I Agreement) used in the Digitally Based
Video On Demand System.
(e) "DBVODS Software" means that Vendor Software, EDS Software and any
other Software resident on DBVODS Hardware.
(f) "Delivery Date" means the first anniversary of the Effective Date.
(g) "Digitally Based Video On Demand System" means a system of Hardware
and Software to be provided by EDS under this Agreement that (i) will
store [ ] full length video programs, consisting of [ ] data sets, [ ]
data sets and [ ] data sets, (ii) will provide simultaneous viewing
for [ ] viewers while sustaining a data transmission rate of [ ]
kilobytes per second or greater, (iii) will contain the functionality
set forth in Schedule 1.2(g) and (iv) such other functionality as
Spectradyne and EDS may mutually agree.
(h) "Developed Software" will have the meaning set forth in Section 2.3 of
this Agreement.
(i) "EDS Hardware" means any Hardware developed by EDS and, through a
Vendor, manufactured by EDS and provided to Spectradyne under this
Agreement.
(j) "EDS Software" means that Software developed under Section 2.3 of this
Agreement and any other Software that is owned by EDS and provided to
Spectradyne under this Agreement.
EMPTY BRACKETS ([ ]) ON THIS PAGE DENOTE CONFIDENTIAL INFORMATION, WHICH
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
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(k) "Employee" means those employees, agents, subcontractors or
representatives of EDS provided or to be provided by EDS to perform
services pursuant to this Agreement.
(l) "Field Service Order" will have the meaning set forth in Section
3.1(b) of this Agreement.
(m) "North America" will have the meaning set forth in the Preamble.
(n) "On-Site Service" means any warranty or maintenance service provided
by EDS under Section 3.8 of this Agreement.
(o) "Other Patent Rights" will have the meaning set forth in Section
4.4(a) of this Agreement.
(p) "Patent Rights" will have the meaning set forth in Section 4.4(a) of
this Agreement.
(q) "Phase I Agreement" means that certain Phase I Information Technology
Services Agreement between Spectradyne and EDS dated as of July 28,
1993.
(r) "Products" means DBVODS Hardware, DBVODS Software and Digitally Based
Video On Demand Systems.
(s) "Purchase Orders" will have the meaning set forth in Section 3.1 of
this Agreement.
(t) "Request" will have the meaning set forth in Section 4.4(b) of this
Agreement.
(u) "Service Request" will have the meaning set forth in Section 3.8 of
this Agreement.
(v) "Services" means, but is not limited to, consulting, development,
installation, integration, maintenance or other services, as the case
may be, provided or to be provided by EDS pursuant to this Agreement.
(w) "Software" means computer programs in object code (except when source
code is expressly called for as set forth herein, in which case the
term "Software" includes source code and object code) together with
interface specifications, input and output formats, program listings,
narrative descriptions, operating instructions and supporting
documentation and will include the tangible media upon which such
programs and documentation are recorded. The term "Software"
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does not include Spectradyne Programming (as such term is defined in
the Phase I Agreement)
(x) "Software Enhancement" means:
(i) any changes or modifications to a function or functions of the
Software that, with respect to EDS Software, existed as of the
Delivery Date, and, with respect to Vendor Software, existed as
of the date the Vendor Software was implemented and
(ii) all of those tasks performed throughout the development cycle
starting with the analysis and requirements definition and
continuing until acceptance by Spectradyne (in accordance with
Schedule 4.9 to the Phase I Agreement), including without
limitation analysis, design, programming and testing, which are
associated with the development of new Software, new Software
modules or new functions for the Software (which new Software
modules and functions did not exist as of the date implemented
with respect to Vendor Software and EDS Software).
(y) "Software Maintenance" means:
(i) with respect to EDS Software, changes or corrections to such EDS
Software required to keep EDS Software operational in the same
manner as it operated on the Delivery Date;
(ii) with respect to Vendor Software for which the Vendor provides
maintenance, (1) any tasks required to apply maintenance supplied
by a Vendor, (2) reporting to and assisting Vendors in resolving
Vendor Software errors or deficiencies and (3) determining
whether and in what time frame new releases from the Vendor will
be installed and
(iii) with respect to Vendor Software for which the Vendor no longer
provides maintenance or for which the Vendor has provided EDS all
source code and documentation sufficient for a reasonably skilled
programmer to customize, maintain and enhance the Software,
changes or corrections to the Software required to keep the
Software operational in the same manner as it operated as of the
Delivery Date or as of the date on which the applicable revision
was implemented, as the case may be.
(z) "Spectradyne Software" means the Software owned by Spectradyne
identified in Schedule 1.2(z), as amended from time to time by
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Spectradyne with written notice to EDS; provided, that, no such
additions or deletions adversely affect EDS' obligations under this
Agreement.
(aa) "Vendor" means (i) any person or entity that manufactures, publishes,
distributes or licenses, as the case may be, Hardware or Software and
(ii) any person or entity (other than EDS or an affiliate of EDS) that
provides services to Spectradyne and any person or entity that
provides services to EDS.
(ab) "Vendor Hardware" means any Hardware provided to EDS or Spectradyne by
a Vendor.
(ac) "Vendor Software" means that operating system Software and/or
utilities Software, the rights to which are licensed or owned by a
Vendor.
ARTICLE II
DEVELOPMENT OF DIGITALLY BASED VIDEO ON DEMAND SYSTEM
2.1 Digitally Based Video On Demand System Development Schedule. EDS will
provide a Digitally Based Video On Demand System for beta testing (meaning
limited use and testing in five hotels selected by Spectradyne) within
eight months after the Effective Date.
EDS will provide a Digitally Based Video On Demand System, which Digitally
Based Video On Demand System will pass an acceptance test mutually agreed
to by Spectradyne and EDS and be available for wide-scale use within four
months after the commencement of the beta test. If EDS makes the Digitally
Based Video On Demand System available for delivery to Spectradyne before
the Delivery Date (meaning for the purposes of this Agreement that if
Spectradyne (i) submits a purchase order for a Digitally Based Video On
Demand System before the Delivery Date and EDS accepts such purchase order
or (ii) does not submit a purchase order for a Digitally Based Video On
Demand System before the Delivery Date, but the Digitally Based Video On
Demand System passes the acceptance test developed under Schedule 4.9 to
the Phase I Agreement before the Delivery Date, and EDS is ready, willing
and able to accept a purchase order (meaning without adding any terms and
conditions beyond those set forth in this Agreement) before the Delivery
Date), Spectradyne will pay to EDS the bonus described in Section 5.2 of
this Agreement. If EDS makes the Digitally Based Video On Demand System
available for delivery to Spectradyne after the Delivery Date, EDS will pay
to Spectradyne the liquidated damages described in Section 6.7 of this
Agreement.
2.2 Provision of DBVODS Hardware. EDS will provide DBVODS Hardware to
Spectradyne when requested by Spectradyne in accordance with Section 3.1
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of this Agreement. The DBVODS Hardware will comply with all applicable
codes, permits and certifications (including without limitation UL
certification). Except as provided in Section 4.4 of this Agreement, with
regard to DBVODS Hardware, EDS or the applicable Vendor, as the case may
be, will retain all right, title and interest in and to any and all United
States letters patent, or any copyright, trademark, service mark, trade
name, trade secrets or other intellectual property rights relating to or
arising out of any and all DBVODS Hardware, subject to any licensing or
other rights in favor of Spectradyne necessary to provide Spectradyne with
the unfettered right to own and use such DBVODS Hardware as part of the
Digitally Based Video On Demand System provided by EDS.
2.3 Development of Software. EDS will develop certain Software to be used in
the Digitally Based Video On Demand System (the "EDS Software", except that
such term does not include the interface protocol specifications), and
Spectradyne will provide approvals of each of the deliverables in the EDS
Software development process, in accordance with the Software development
procedures set forth in Schedule 4.9 of the Phase I Agreement.
Spectradyne and EDS will meet two times each year to determine what changes
in functionality (meaning Software Maintenance or Software Enhancements, as
the case may be) Spectradyne desires. Spectradyne and EDS will mutually
agree on such changes and on a schedule for EDS' development and delivery
of such changes. EDS will perform such modifications in accordance with
the Software development procedures set forth in Schedule 4.9 of the Phase
I Agreement. All charges for such changes are included in the annual
license fee set forth in Section 5.1 of this Agreement. To the extent that
Spectradyne desires additional changes made to the EDS Software which would
exceed the amounts for which EDS has budgeted under the license fee, EDS
will perform such modifications subject to a charge to be mutually agreed
to by Spectradyne and EDS prior to EDS' performance of any such Software
development services.
All Software developed under this Section 2.3 and provided to Spectradyne
under this Agreement will be construed as "Developed Software" (as such
term is defined in the Phase I Agreement), and Spectradyne and EDS will
have the rights and obligations set forth in Section 4.4 of this Agreement,
and in Section 11.4 and Section 11.5 of the Phase I Agreement; except that,
notwithstanding such provisions in the Phase I Agreement (a) each copy of
EDS Software will be subject to the license fee set forth in Section 5.1 of
this Agreement and (b) the term of the license will be specific to each
copy licensed by Spectradyne from EDS, which term will begin on the date
EDS installs such copy of EDS Software in the Digitally Based Video on
Demand System and will continue for so long as Spectradyne pays license
fees set forth in Schedule 5.1, unless terminated as set forth in Section
11.4 or Section 11.5 of the Phase I Agreement.
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ARTICLE III
PROVISION OF PRODUCTS AND SERVICES
3.1 Purchase Orders. Spectradyne will procure DBVODS Hardware, DBVODS
Software and Digitally Based Video On Demand Systems from or through EDS
by issuing, and EDS' accepting, purchase orders in accordance with the
following:
(a) Spectradyne may issue to EDS one or more written purchase orders
identifying the Products Spectradyne desires to purchase from EDS.
(b) EDS will accept purchase orders if (i) EDS agrees to deliver the
Products or perform the services on or before the date specified on
the purchase order (but EDS will not reject a purchase order for
reasons related to the timing of the delivery if the date for delivery
specified in the purchase order is 90 or more days after the date on
which EDS receives such purchase order); provided, however, that
nothing set forth in this Section 3.1 is intended to modify or alter
EDS' obligations as to the time of the initial delivery of Digitally
Based Video On Demand Systems as set forth in Section 2.1 of this
Agreement and (ii) if the purchase order does not establish terms and
conditions which are new or which conflict with those set forth in
this Agreement. EDS will not unreasonably reject any purchase order.
If EDS does not agree to deliver the Products on the delivery date set
forth on the purchase order, then EDS and Spectradyne will promptly
negotiate a mutually agreeable delivery date in good faith.
(c) Spectradyne will either (i) include on each purchase order a request
that EDS install such Product or (ii) contemporaneous with the
issuance of the applicable purchase order, issue a Field Service Order
(as such term is defined in the Phase I Agreement) which includes a
request that EDS install such Product in accordance with the
provisions of Section 6.3 of the Phase I Agreement. EDS will be
obligated to install or deliver any Products at those locations that
have the capability of receiving compressed digital video data in a
manner consistent with a CDVRO System (as such term is defined in the
Phase I Agreement).
(d) Spectradyne agrees, subject to the provisions of Section 6.3, to
purchase a minimum of [ ] Digitally Based Video On Demand Systems
between the Delivery Date and the second anniversary of the Delivery
Date (subject to delays occasioned by (i) force majeure or (ii) delays
in the production or delivery of the Digitally Based Video On Demand
Systems not caused by Spectradyne). If Spectradyne fails to purchase
a minimum of [ ] Digitally Based Video On Demand Systems between the
Effective Date and the second anniversary of the Effective Date, then
Spectradyne will pay
EMPTY BRACKETS ([ ]) ON THIS PAGE DENOTE CONFIDENTIAL INFORMATION, WHICH
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
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to EDS, as liquidated damages and not as a penalty, an amount equal to
[ ] percent times the price of a Digitally Based Video On Demand
System times result of [ ] less the number of Digitally Based Video On
Demand Systems actually purchased.
At any time after Spectradyne has purchased the [ ] Digitally Based
Video On Demand System, Spectradyne may request that EDS provide
different Hardware containing similar and, if appropriate, more
advanced functionality to that contained in the DBVODS Hardware.
Spectradyne and EDS will meet and negotiate in good faith to modify
this Agreement to include such Hardware; provided, that, if EDS elects
not to provide such Hardware or is unwilling to provide such Hardware
at a price within [ ] percent of the price offered by the most
competitive Vendor providing similar quality products and/or
performing similar quality services (in each case meaning similar
quality to that of EDS), Spectradyne may purchase such Hardware from
such most competitive Vendor, and Spectradyne and EDS will mutually
agree on each party's rights and obligations under this Agreement
affected by Spectradyne's purchase of such Hardware from or through
such Vendor.
Purchase orders accepted in accordance with this Agreement are referred to
herein as "Purchase Orders."
3.2 Cancellation and Change of Purchase Orders. Except as otherwise agreed
upon by the parties, Spectradyne may change the delivery location set forth
in a Purchase Order without charge. Purchase Orders may be cancelled at
any time after acceptance by EDS, provided that, Spectradyne pays to EDS as
a cancellation fee an amount equal to [ ] percent times the aggregate price
of the Products in such Purchase Order.
3.3 Inspection, Integration, and Testing. Spectradyne and EDS will cooperate
in good faith to jointly develop reasonable procedures for the inspection
and testing of Products, and EDS will perform such inspection and testing
in accordance with such procedures at no additional charge to Spectradyne.
In addition, Spectradyne will provide EDS with specifications for the
integration of Products. EDS will perform such inspection, integration,
and testing in accordance with the applicable procedures and specifications
at no cost to Spectradyne.
3.4 Transportation of Products. Products will be delivered to the location
designated on the applicable Purchase Order. Subject to the provisions of
Section 2.1 of this Agreement regarding the initial delivery of the
Digitally Based Video On Demand System, any delivery date specified on the
Purchase Order or in EDS' acceptance of Spectradyne's Purchase Order is
approximate; provided, however, that such delivery will in any event (other
than to the extent affected by a force majeure) be effected within five
days of such
EMPTY BRACKETS ([ ]) ON THIS PAGE DENOTE CONFIDENTIAL INFORMATION, WHICH
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
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delivery date. Reasonably documented charges for transportation (including
charges relating to the insurance of Products being transported), rigging
and drayage will be paid by Spectradyne. Spectradyne and EDS will mutually
agree on one or more methods of transportation, rigging and drayage.
3.5 Title and Risk of Loss. Title to DBVODS Hardware will pass to Spectradyne
upon payment in full of the applicable charge for such DBVODS Hardware, and
EDS will provide all documentation reasonably requested by Spectradyne
to evidence EDS' passage of clear title in such DBVODS Hardware to
Spectradyne. Except for loss of, or damage to, DBVODS Hardware
attributable solely to the negligence or wilful misconduct of EDS (which
loss or damage to DBVODS Hardware will, subject to the limitations set
forth in Section 6.8, be borne by EDS), all risk of loss of, or damage to,
DBVODS Hardware will be borne by Spectradyne after delivery of such
Hardware by EDS to a common carrier.
3.6 Unpacking and Installation. EDS will use commercially reasonable efforts
to install the Products in accordance with the installation procedures set
forth in Schedule 3.6 of this Agreement (which Schedule will be developed
after the conclusion of the beta test of the Digitally Based Video On
Demand System and incorporated into this Agreement at that time). Subject
to the limitations set forth in Section 3.1(c), Spectradyne will choose
where the Products will be installed; except that EDS will not be required
to install the Products in a location that may cause material risk of
physical injury to an Employee or any third party or the property of EDS,
such Employee or any third party. Spectradyne will comply with all local,
state, and federal laws, rules and regulations with regard to such
installation in obtaining any and all permits and licenses required for
such installation (which permits will be obtained by EDS under the Phase I
Agreement and paid for by Spectradyne under the Phase I Agreement).
Spectradyne will (through EDS under the Phase I Agreement, the charges for
which will be paid for by Spectradyne under the Phase I Agreement) be
responsible for the preparation of Spectradyne's location and will provide
all necessary communications capabilities, power, power stabilization
measures and other facilities and environmental modifications required for
the effective installation or utilization of the Products. EDS will perform
the installation (which installation will be performed by EDS under the
Phase I Agreement and paid for by Spectradyne under the Phase I Agreement)
and start-up of the Products at Spectradyne's location. EDS will perform
such installation and start-up in accordance with all licenses and permits
obtained by Spectradyne of which EDS is made aware and in accordance with
all local, state and federal laws, rules and regulations regarding such
installation.
3.7 Acceptance of Products. EDS will test the Products on the date of
installation for performance in accordance with the specifications, and
will correct any failure to meet such specifications within 24 hours
thereafter.
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3.8 On-Site Service. If Spectradyne, Spectradyne's customer or an EDS Field
Service representative (performing his or her obligations under this
Agreement or the Phase I Agreement) determines that a Digitally Based Video
On Demand System is not operating properly, the person discovering such
problem may request On-Site Service by calling EDS' Customer Assistance
Center (as such term is defined in the Phase I Agreement) (a "Service
Request"). All Service Requests will include the location of the Digitally
Based Video On Demand System, a description of the problem, a contact name
and corresponding telephone number, and any other pertinent information for
each Digitally Based Video On Demand System.
(a) Time of Performance of Hardware Services. EDS will perform On-Site
Services on the Digitally Based Video On Demand System identified in a
Service Request. On-Site Services will be initiated between the hours
of 7:00 a.m. and 12:00 a.m. (midnight) according to that site's local
time, Monday through Sunday (the "Coverage Time"). If On-Site
Services cannot be initiated during the Coverage Time, or if it is not
commercially reasonable to initiate such On-Site Services within the
Coverage Time (for example and without limitation, the Service Request
is received at 11:45 pm and the distance to the site of the Digitally
Based Video On Demand System is 45 minutes from the field service
office), such On-Site Services will be initiated at 7:00 a.m. the next
day or as soon thereafter as commercially reasonable efforts permit.
(i) Upon EDS' receipt of a Service Request, EDS will use commercially
reasonable efforts to have an authorized EDS representative
arrive at the Digitally Based Video On Demand System requiring
On-Site Services (other than those Digitally Based Video On
Demand Systems located at the sites set forth in Schedule 3.8(a)
(i), as amended from time to time upon the mutual agreement of
Spectradyne and EDS, which Schedule will include the applicable
response times for such sites therein) within four hours after
the authorized EDS representative is notified of such Service
Request.
(ii) EDS will use commercially reasonable efforts to restore the
functionality of the Digitally Based Video On Demand System
within 24 hours after the arrival of the authorized EDS
representative at the Digitally Based Video On Demand System
requiring On-Site Services.
(b) Parts. EDS will maintain, at Spectradyne's cost, a supply of spare
parts inventories in accordance with the failure rates, repair times
and spare part replenishment recommendations published by the
applicable Vendor. To the extent that EDS is the manufacturer of any
component of DBVODS Hardware, EDS will maintain a supply
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of spares in accordance with industry standards for microcomputer
products until such time as EDS can determine a performance-based
standard, at which time EDS will store spare parts in -accordance with
such performance-based standard. All such parts will remain the
property of EDS until incorporated into the Digitally Based Video On
Demand System. If EDS stores spare parts on Spectradyne's premises (or
the premises of a customer of Spectradyne), EDS may remove them at any
time. When a part is removed from Digitally Based Video On Demand
System and another is installed, the part removed will be examined by
EDS to determine whether or not it is, in EDS' sole determination,
commercially practicable to refurbish such part. If EDS determines
that it is commercially practicable to refurbish such part, EDS will
refurbish such part, at Spectradyne's cost, and will return such
refurbished part to the inventory of spare parts for use at a later
time by EDS in repairing DBVODS Hardware. If EDS determines that it is
not commercially practicable to refurbish such part, EDS will return
such part to Spectradyne. Once integrated into DBVODS Hardware, title
to all such spare parts will transfer from EDS to Spectradyne and will
remain in Spectradyne even if removed, refurbished (and reinstalled or
placed in the spare parts inventory) or returned to Spectradyne.
(c) Subcontracting. EDS represents and Spectradyne acknowledges that EDS
may subcontract Service Requests to third parties to perform such
repairs. In such event, EDS will, nonetheless, be responsible for
such subcontractor's compliance with EDS' obligations under this
Agreement.
(d) General Obligations of Spectradyne. To the extent permitted under the
applicable agreements between Spectradyne and Spectradyne's customers,
Spectradyne will (i) provide safe, clean and adequate work spaces in
each location, including heat, light, ventilation, electric current
and outlets for use by EDS and its representatives and (ii) provide or
cause to be provided to EDS and its representatives full and free
access to the Digitally Based Video On Demand System and any other
Hardware or Software or other items pertaining to the Digitally Based
Video On Demand System necessary for EDS to properly perform On-Site
Services (and to the extent that such access is not provided by
Spectradyne, EDS will be relieved of its obligations related to On-
Site Service set forth in this Agreement). Spectradyne will not
perform any other repairs, maintenance, alterations, or adjustments of
or to any Digitally Based Video On Demand System. To the extent that
Spectradyne or a customer of Spectradyne performs any such repairs as
a result of an emergency or as a result of EDS' failure to comply with
the response times set forth in Section 3.8(a) of this Agreement, EDS
will be relieved of all responsibility and liability for any such
DBVODS
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Hardware so repaired from the date of such repair and until EDS
has an opportunity to correct, if necessary, any such repairs (which
correction will be subject to EDS' then current time and materials
charge). After such correction, if any, is made by EDS, EDS'
obligations under this Agreement with regard to such DBVODS Hardware
will resume.
All charges for On-Site Services are for a period of five years
commencing on the date on which the Digitally Based Video On Demand
System is installed and ending on the fifth anniversary of such
installation date (and EDS' obligation to perform On-Site Services on
the Digitally Based Video On Demand System will continue in effect
even if such five-year 'period continues past the expiration of this
Agreement) and are set forth in Schedule 5.1 of this Agreement. On or
before the fifth anniversary of the installation date of each
Digitally Based Video On Demand System, Spectradyne will notify EDS of
Spectradyne's intention to either (i) extend, subject to EDS' then
current charges, the On-Site Services or (ii) refresh, subject to the
applicable charges, the technology by obtaining and installing a new
Digitally Based Video On Demand System. All charges for all On-Site
Services to repair Digitally Based Video On Demand Systems during the
warranty period are included in the On-Site Service charge set forth
in Schedule 5.1 of this Agreement.
ARTICLE IV
PROPRIETARY RIGHTS AND WARRANTIES
4.1 Vendor Software. Spectradyne acknowledges that certain Vendor Software
provided hereunder is proprietary to and the sole property of certain third
parties. Spectradyne agrees to comply with, and to cause Spectradyne's
customers to comply with, any and all licensing agreements that maybe
required by such third parties in order to permit Spectradyne to utilize
such Vendor Software. In addition, Spectradyne agrees that where
Spectradyne requests that EDS load, burn-in or otherwise integrate Vendor
Software or assemble a Digitally Based Video On Demand System, Spectradyne
will comply with any and all applicable shrink wrap licenses. Spectradyne
acknowledges that in certain instances EDS will be loading Licensed
Software from a "golden disk" or "golden tape" and providing archival
copies of the Vendor Software to Spectradyne in the original packaging,
which packaging contains the applicable license agreement between
Spectradyne and the third party owner of such Vendor Software. Such
license may state that a condition precedent to Spectradyne's obligations
under such license is the breaking of such packaging. Spectradyne agrees,
whether or not Spectradyne has broken such packaging, to comply with the
terms and conditions of such license agreement.
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Neither Spectradyne nor EDS will have any obligation to control or audit
the Software resident on any Hardware operated by any employee of the
other, and Spectradyne and EDS are each and will each remain liable to any
Vendor for any unauthorized copies made by any of its employees of any
Vendor Software.
4.2 EDS Software. All Software developed under Section 2.3 of this Agreement
and provided to Spectradyne under this Agreement will be construed as
Developed Software, and Spectradyne and EDS will (with respect to EDS
Software) have the rights set forth in Section 4.4 of this Agreement and in
section 11.4 and Section 11.5 of the Phase I Agreement; except that,
notwithstanding such provisions in the Phase I Agreement (i) each copy of
EDS Software will be subject to 'the license fee set forth in Section 5.1
of this Agreement and (ii) the term of the license will be specific to each
copy licensed by Spectradyne from EDS, which term will begin on the date
EDS installs such copy of EDS Software in the Digitally Based Video on
Demand System and will continue for so long as Spectradyne pays license
fees set forth in Schedule 5.1, unless terminated as set forth in Section
11.4 or Section 11.5 of the Phase I Agreement.
4.3 Spectradyne Software. To the extent that Spectradyne provides Spectradyne
Software to EDS under this Agreement for EDS' use in performing its
obligations under this Agreement, Spectradyne and EDS will have all rights
and obligations regarding such Spectradyne Software set forth in Section
11.3 of the Phase I Agreement.
4.4 Cross-License of Patent Rights. Spectradyne and EDS will each have the
following rights:
(a) Grant of License to Use. Spectradyne and EDS each grant to the other
and their Affiliates (as defined in the Phase I Agreement) an
exclusive license (in the markets described in Section 11.9 of the
Phase I Agreement), other than use by EDS of EDS' Patent Rights or
Other Intellectual Property Rights to comply with its obligations to
Spectradyne under this Agreement and the Phase I Agreement,
transferable (in accordance with Section 4.4(c) of this Agreement) in
and to each other's worldwide Patent Rights, now owned or hereafter
acquired prior to the expiration of this Agreement (defined as all
Letters Patent, patent applications, divisionals, reissues,
continuations and continuations-in-part (i) with regard to
Spectradyne's Patent Rights, related to or arising out the Products
and any hardware or software used in conjunction with Products
provided by EDS under this Agreement and (ii) with regard to EDS'
Patent Rights, related to or arising out of Products provided by EDS
under this Agreement) and Other Intellectual Property Rights, whether
now owned or hereafter acquired prior to the expiration or termination
of this Agreement, (defined as (i) trade secrets, (ii) any
13
registered or unregistered copyrights; provided that attribution is
made to the owner of the registered or unregistered copyright and
(iii) any trade name, trade mark and service mark in accordance with
each party's internal manuals, which use of such trade name, trade
mark and service mark will be subject to the owner's prior written
consent, which consent will not be unreasonably withheld, delayed or
conditioned) to use (and not to make, copy or sell) such hardware,
software (to the extent that such right to use relates to Software
that is patented, such use will be in accordance with Section 4.1,
Section 4.2 or Section 4.3 of this Agreement, as the case may be) and
Products, as the case may be, during the term of this Agreement.
(b) Transfer and Sublicense. If either Spectradyne or EDS desires to
transfer or sublicense the license granted to it hereunder, it will
provide the non-transferring party with a written request (the
"Request"), and such Request will be approved or rejected by the non-
transferring party as follows:
(i) As to transfers of the rights and obligations under Section
4.4(a) of this Agreement other than sublicenses described in
Section 4.4(b)(ii) below, such Request will set forth the name of
the transferee, the transferee's contact person and such other
information as the non-transferring party may reasonably request.
The non-transferring party will approve or reject such Request in
writing within 30 days after the date on which such party
receives such Request in accordance with Section 7.1 of this
Agreement, which writing, in the case of a rejection, will set
forth the reason(s) for such rejection. Neither party will have
the right to pledge, make collateral assignments or
hypothecations of the other party's Patent Rights or Other
Intellectual Property Rights.
(ii) As to sublicenses of the rights and obligations under Section
4.4(a) of this Agreement (meaning for the purposes of this
Agreement an extension to a third party of rights and obligations
mutually agreed to by Spectradyne and EDS and set forth in a
sublicense agreement between the transferring party and such
third party and that does not divest the transferring party of
any of its rights or obligations under this Agreement), such
Request will include the name of the proposed sublicensee, the
rights the transferring party desires to convey to the transferee
in such sublicense, the geographic marketplace, the duration of
such sublicense, the price to be paid to the non-transferring
party as consideration for the non-transferring party's
permission to convey the rights set forth in such sublicense and
all other rights to be conveyed in such
14
sublicense. The non-transferring party will, in its sole
discretion, approve or deny such Request within 30 days after the
date of such Request. No sublicense will be valid without the
prior written consent of the non-transferring party.
Notwithstanding the foregoing, EDS consents to the sublicense of
all rights and obligations under Section 4.4(a) from EDS to
Spectradyne for end users located in North America for use by
such end users in accordance with this Agreement and the Phase I
Agreement.
(c) Initiation of Actions and Distribution of Collected Judgement Amounts.
If a patent owner prosecutes or litigates a claim, demand or other
proceeding and pays all costs and expenses related to such claim, the
patent owner will be entitled to all amounts awarded and collected.
If EDS elects to make a claim, demand or otherwise initiate any
proceeding against a third party named in Section 11.9(b) of the Phase
I Agreement or any other third party in the markets (meaning for the
use described in the geographic areas described) protected in
Section 11.9(a) for an infringement of EDS' Patent Rights or Other
Intellectual Property Rights related to any Product, Spectradyne and
EDS will mutually agree on the amount of the costs that Spectradyne
and EDS will bear in such prosecution or litigations or if no such
agreement is reached or can be reached, Spectradyne may (with regard
only to such markets protected in Section 11.9(a) or such third
parties named in Section 11.9(b)) pursue the claim at its own cost and
expense. If Spectradyne elects not to prosecute or litigate a claim,
demand or other proceeding against a third party for an infringement
of Spectradyne's Patent Rights or Other Intellectual Property Rights
related to any hardware, software or Product, EDS may prosecute or
litigate such claim at EDS' sole cost and expense.
If any judgement is collected as a result of a claim, demand or other
proceeding claiming an infringement of Patent Rights in which both
parties pay some of the out-of-pocket expenses (defined as all costs
of the prosecution or litigation, including all legal and professional
fees, all damages awarded, but will not include future royalties, if
any) related to such claim or which is prosecuted or litigated, and
all out-of-pocket expenses are paid, by the party not the patent
owner, the amount collected will be distributed in the following
priority:
(i) each party will be reimbursed the amount of out-of-pocket
expenses it paid from the amount recovered (unless one party paid
all such costs, in which the other party will be reimbursed no
expenses) and
15
(ii) to the extent that any amounts remain, all such amounts
(including without limitation any future royalties and any
amounts remaining from any lump sum award) will be paid to the
patent owner.
If a party other than the patent owner prosecutes or litigates a
claim, demand or other proceeding under this Section 4.4(c), such
party will not settle any such claim without first giving the patent
owner the right to participate in settlement discussions related to
that party's Patent Rights or Other Intellectual Property Rights and
approve or reject such settlement offers.
Notwithstanding anything else in this Agreement or in the Phase I
Agreement, either party will have the right to seek injunctive relief
under the Patent Rights and Other Intellectual Property Rights of the
other in the markets described in Section 11.9 of the Phase I
Agreement.
4.5 Warranties. EDS warrants the Products as set forth in Section 8.1 and
Section 8.2 of the Phase I Agreement. In addition to such warranties, to
the extent that EDS is the manufacturer of any component of DBVODS
Hardware, EDS warrants that such component will operate in accordance with
the applicable specifications for a period of 12 months from the date on
which such component is installed.
The warranties contained in Section 8.2(a) and Section 8.2(c) of the Phase
I Agreement and set forth above in this Section 4.5 are contingent upon
proper use of Vendor Hardware and Vendor Software and do not cover Vendor
Hardware or Vendor Software on which the original identification marks have
been removed or altered or that have been modified without EDS' approval,
improperly tested by Spectradyne or that have been subjected to unusual
physical or electrical stress (including without limitation any such stress
which would give rise to an excusable delay under Section 15.2 of the Phase
I Agreement). THE WARRANTIES SET FORTH IN SECTION 8.2 OF THE PHASE I
AGREEMENT ARE LIMITED WARRANTIES.
EXCEPT AS SPECIFICALLY STATED IN SECTION 8.2 OF THE PHASE I AGREEMENT AND
AS SET FORTH IN THIS SECTION 4.5, EDS MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, REGARDING ANY MATTER, INCLUDING THE
MERCHANTABILITY, SUITABILITY, ORIGINALITY, FITNESS FOR A PARTICULAR USE OR
PURPOSE, OR RESULTS TO BE DERIVED FROM THE USE OF ANY SERVICES, HARDWARE,
SOFTWARE, SIGNAL TRANSMITTED OR OTHER PRODUCTS OR SERVICES PROVIDED UNDER
THIS AGREEMENT. No representation or warranty made by any person,
including any representative of EDS, that is inconsistent or in conflict
with, or in addition to the terms of, the warranties set forth in Section
8.2 of the
16
Phase I Agreement or as set forth above in this Section 4.5 will be binding
upon EDS unless expressed in a writing signed by a duly authorized
representative of EDS.
4.6 Spectradyne's Remedies. Spectradyne will have the remedies set forth in
Section 8.3 of the Phase I Agreement. If such exclusive remedies, fails of
their essential purpose, then as an alternative sole and exclusive remedy,
Spectradyne may recover from EDS, subject to the limitations of Section 6.8
of this Agreement, direct damages incurred by Spectradyne.
4.7 Exclusivity. With regard to the Digitally Based Video On Demand System,
Spectradyne and EDS will have the rights and obligations set forth in
Section 11.9 of the Phase I Agreement.
ARTICLE V
CHARGES AND PAYMENTS TO EDS
5.1 Charges for Products and Services. All charges for Products and services
will be as set forth in Schedule 5.1, as revised upon the mutual agreement
of Spectradyne and EDS from time to time, or as otherwise agreed upon in
writing by the parties.
From and after the date that Digitally Based Video On Demand Systems are
available for wide-scale use, EDS will review its costs and prices for
supplying and maintaining the Digitally Based Video On Demand system twice
a year. If EDS receives cost reductions from Vendors (on Vendor Hardware,
Vendor Software or services) and if EDS determines that, after subtracting
such savings from the then current price of a Digitally Based Video On
Demand System, the cumulative effect of such reductions will result in a
price reduction equal to or greater than [ ] of the then current
price for a Digitally Based Video On Demand System, then EDS will reduce
its price for each Digitally Based Video On Demand System to Spectradyne
from and after the date on which EDS makes such determination by an amount
equal to [ ] of such savings. (For example, suppose that EDS
determines as a result of its review that the cost of a widget required in
the Digitally Based Video On Demand System is reduced from [ ] to [ ]
and all other costs remain the same. EDS will then subtract [ ] from the
price of the Digitally Based Video On Demand System. If the result is
equal to or greater than [ ] less than the then current price for a
Digitally Based Video On Demand System, then EDS will reduce the then
current price for the Digitally Based Video On Demand System by an amount
equal to [ ] (an amount equal to [ ] of the savings.)
5.2 Bonus. Spectradyne will pay EDS a bonus, meaning an amount in addition to
any and all other charges under this Agreement, if EDS makes the Digitally
Based Video On Demand System available for delivery to Spectradyne prior to
the Delivery Date. The amount of the bonus will be as
EMPTY BRACKETS ([ ]) ON THIS PAGE DENOTE CONFIDENTIAL INFORMATION, WHICH
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
17
set forth in Section 9.3 of the Phase I Agreement and will be paid to EDS
as set forth in Section 5.3 of this Agreement.
5.3 Payment. Except as otherwise set forth herein, all sums due to EDS
pursuant to this Agreement will be payable within 30 days after receipt by
Spectradyne of an invoice therefor from EDS. EDS will invoice Spectradyne
on or after the applicable installation date for the Products covered by
such invoice. EDS will invoice on a monthly basis for all services
approved by Spectradyne in accordance with the applicable approval
procedures and performed during the prior month. Any sum due EDS hereunder
that is not paid when due will thereafter bear interest until paid at a
rate of interest equal to the lesser of (i) two percent per annum more than
the "prime" rate announced as such from time to time by Citibank N.A., New
York, or successor and (ii) the maximum rate of interest allowed by
applicable law.
5.4 Taxes. Spectradyne will pay to EDS amounts equal to any sales, use,
privilege, excise or other taxes based on gross receipts, however
designated or levied, imposed by any state, federal or local government or
other taxing authority paid or payable by EDS on the (i) charges imposed
under this Agreement, (ii) this Agreement or (iii) any information
technology services, Products, Software, Hardware, other service or
materials provided under this Agreement or upon their use. However,
Spectradyne is not responsible for (i) any franchise taxes, taxes based on
the net income or payroll of EDS or (ii) property taxes on EDS Hardware
unless and until such EDS Hardware becomes the property of Spectradyne.
ARTICLE VI
DISPUTE RESOLUTION, TERMINATION AND
LIMITATION OF LIABILITY
6.1 Dispute Resolution. In the event of any dispute or controversy between
the parties of any kind or nature, Spectradyne and EDS will resolve such
dispute or controversy in accordance with the procedures set forth in
Article XII of the Phase I Agreement. To the extent that Spectradyne
claims that EDS is subject to liquidated damages under Section 6.7 of this
Agreement and Spectradyne and EDS submit such issue to arbitration,
Spectradyne and EDS agree that (i) the arbitration proceeding will be
completed and (ii) to the extent EDS is found to have an obligation to pay
such liquidated damages, EDS will pay such liquidated damages in funds
immediately available to Spectradyne, in both cases within 45 days after
the date on which the arbitration panel first convenes.
6.2 Termination for Cause. In the event that either party materially or
repeatedly defaults in the performance of any of its duties or obligations
set forth in this Agreement (other than a default by Spectradyne in payment
to EDS), and such default is not substantially cured within 30 days after
written notice is given to the defaulting party specifying the default,
then the
18
party not in default may, by giving written notice thereof to the
defaulting party, terminate this Agreement as of a date specified in such
notice of termination.
6.3 Termination for Failure to Obtain Unconditional Approvals or Waivers.
Spectradyne's obligations under Section 3.1(d) will become effective only
at such time as Spectradyne obtains the unconditional approvals or waivers,
as the case may be, described in Section 1.2 of the Phase I Agreement. If
Spectradyne is unable to obtain such unconditional approvals or waivers, as
the case may be, on or before October 1, 1993, EDS will have the right to
terminate this Agreement as of October 1, 1993.
6.4 Termination for Insolvency and Related Events. Each party will have the
right to terminate this Agreement in accordance with the provisions of
Section 13.5 of the Phase I Agreement.
6.5 Termination for Nonpayment. In the event that Spectradyne defaults by not
paying when due any amount due to EDS hereunder and does not cure such
default within 10 days after being given written notice of such default,
then EDS may, by giving written notice thereof to Spectradyne, terminate
this Agreement as of the date specified in such notice of termination. In
any event, the obligation of Spectradyne to pay amounts due to EDS in
accordance with the terms and conditions contained herein will survive any
termination of this Agreement.
IN THE EVENT OF A TERMINATION FOR NONPAYMENT PURSUANT TO THIS SECTION 6.5
AND IN ADDITION TO ALL OTHER REMEDIES AVAILABLE TO EDS, EDS WILL HAVE THE
RIGHT TO ENTER UPON THE PREMISES WHERE THE PRODUCTS ARE LOCATED, TAKE
POSSESSION OF SUCH PRODUCTS AND REMOVE SUCH PRODUCTS WITH OR WITHOUT
JUDICIAL PROCESS (IF SUCH TAKING WITHOUT JUDICIAL PROCESS CAN BE DONE
REASONABLY AND WITHOUT BREACH OF THE PEACE AND IS PERMITTED BY THE LAWS OF
THE JURISDICTION IN WHICH THE PRODUCTS ARE RESIDENT). SUBJECT TO
SPECTRADYNE'S HAVING RECEIVED ALL NOTICES PROVIDED IN THE FIRST GRAMMATICAL
PARAGRAPH OF THIS SECTION 6.5, SPECTRADYNE DOES HEREBY EXPRESSLY WAIVE ANY
RIGHT TO ANY FURTHER NOTICE, LEGAL PROCESS OR JUDICIAL HEARING PRIOR TO
SUCH REPOSSESSION BY EDS. SPECTRADYNE UNDERSTANDS THAT THE RIGHT TO PRIOR
NOTICE AND HEARING IS A VALUABLE RIGHT AND AGREES TO THE WAIVER THEREOF AS
A PART OF THE CONSIDERATION FOR AND AS AN INDUCEMENT TO EDS TO EXTEND
CREDIT NOW AND HEREAFTER TO SPECTRADYNE. IN CONNECTION WITH SUCH ACTION BY
EDS IN TAKING POSSESSION OF PRODUCTS, EDS MAY TAKE POSSESSION OF ANY
PRODUCTS LOCATED ON SPECTRADYNE'S PREMISES AND HOLD OR STORE SUCH PRODUCTS
FOR SPECTRADYNE AT SPECTRADYNE'S
19
EXPENSE. In addition, EDS may at its option sell, lease or otherwise
dispose of all or any portion of such Products, with the privilege of
becoming the purchaser thereof, at public or private sale, for cash or on
credit and without notice of its intention to do so or of its doing so, in
which event EDS will apply the cash proceeds from any sale or other
disposition less all costs and expenses incurred in connection with the
recovery, repair or storage of such Products or the transaction itself,
against all sums due from Spectradyne to EDS under this Agreement.
In addition to the rights to cure set forth above in this Section 6.5, any
bank, lending institution or other lender described in Section 1.3(bn) of
the Phase I Agreement, or any successor to such bank, lending institution
or other lender, may cure any default under this Section 6.5. If
Spectradyne notifies EDS within three Business Days after the date of EDS'
notice of default that Spectradyne is in active discussions with such a
bank, lending institution or other lender, EDS will extend the cure period
set forth above in this Section 6.5 to 15 Business Days. If such bank,
lending institution or other lender cures such default within such 15-
Business Day period, EDS will, notwithstanding the provisions of Section
6.2 with regard to such default, continue to perform its obligations under
this Agreement without interruption, which continuation will not be
construed as a waiver by EDS of any other right under this Agreement.
6.6 Proprietary Rights Indemnification. EDS and Spectradyne each will, in
accordance with the provisions of Section 14.1(a) and Section 14.2 of the
Phase I Agreement, indemnify, defend and hold harmless the other and each
Affiliate (as such term is defined in Section 1.3(f) of the Phase I
Agreement) of the other from any and all claims, actions, damages,
liabilities, costs and expenses finally awarded by a court of competent
jurisdiction, including reasonable attorneys' fees and expenses, arising
out of, under, or in connection with any claims of misappropriation of a
trade secret, or any claims of direct infringement of any United States
letters patent, or any copyright, trademark, service mark, trade name or
similar proprietary rights alleged to have occurred because of the Hardware
or Software provided by or through the indemnitor. Notwithstanding the
foregoing, EDS will have no such liability if:
(a) Spectradyne uses any Product provided by EDS under this Agreement in a
manner other than for which it was designed,
(b) Spectradyne uses any Product provided by EDS under this Agreement in
combination with hardware or software not provided by EDS under this
Agreement and such infringement would not have occurred but for such
combination,
20
(c) Spectradyne modifies any Product provided by EDS under this Agreement
and such infringement would not have occurred but for such
modification,
(d) Spectradyne uses the Product in the practice of a patented process and
there would be no infringement in the absence of such practice,
(e) such claim arises out of Spectradyne's use of such Products outside of
the scope of the license granted to Spectradyne by EDS,
(f) such claim arises out of EDS' compliance with specifications provided
by Spectradyne to EDS and such infringement would not have occurred
but for such compliance or
(g) such claim for restriction of a business opportunity or alleging
infringement in any country of importation where one does not have to
be an inventor in order to obtain a patent.
Notwithstanding any other provision of this Agreement or the Phase I
Agreement, neither party will have the right to seek an indemnity from the
other more than the three years the expiration or termination of this
Agreement.
6.7 Liquidated Damages. EDS will pay Spectradyne liquidated damages if (a) EDS
makes the Digitally Based Video On Demand System available for delivery to
Spectradyne (as set forth in Section 2.1) after the Delivery Date or (b) if
(i) EDS fails to deliver the DBVODS Hardware (including the operating
system software for such DBVODS Hardware) for the Digitally Based Video On
Demand System at or less than the price set forth in Schedule 5.1 and (ii)
Spectradyne does not elect to terminate the Phase I Agreement under Section
13.1(b) of the Phase I Agreement as a result of such failure. The amount of
the liquidated damages will be as set forth in Section 14.4(e) and Section
14.4(f), respectively, of the Phase I Agreement.
6.8 Limitation of Liability. Except to the extent included in liquidated
damages under Section 6.7 of this Agreement, EDS will not be liable to
Spectradyne, whether based on an action or claim in contract, equity, tort,
negligence, intended conduct or otherwise, for any amounts representing
loss of income, data, profits or savings or indirect, incidental,
consequential or punitive damages of Spectradyne or any third party, and in
no event (other than as provided under Section 6.7 of this Agreement) will
the amount of damages recoverable against EDS for all events, acts or
omissions exceed the total dollar amount paid by Spectradyne to EDS for the
particular services, Product or Products that are the subject matter of or
are directly related to the cause of action. All amounts paid as damages
under this Agreement will be included in the calculations of limitations of
liability described in Section 14.4(a) and Section 14.4(h) of the Phase I
Agreement. Further, any cause of
21
action must be asserted against either party in accordance with the
provisions of Section 14.5 of the Phase I Agreement. EDS and Spectradyne
expressly acknowledge that the limitations contained in this Section 6.8
have been the subject of active and complete negotiation between EDS and
Spectradyne and represent the parties' agreement based upon the level of
risk to EDS associated with the performance of obligations pursuant to this
Agreement and the payments made by Spectradyne to EDS for such performance.
ARTICLE VII
MISCELLANEOUS
7.1 Binding Nature and Assignment. This Agreement will be binding on the
parties hereto and their respective successors and permitted assigns, but
neither party may, nor will have the power to, assign this Agreement
without the prior written consent of the other, which consent will not be
unreasonably withheld, conditioned or delayed. Notwithstanding the
foregoing, EDS will have the right to subcontract as set forth in Section
3.8(c).
7.2 Relationship of Parties. EDS is performing pursuant to this Agreement
only as an independent contractor. EDS has the sole obligation to
supervise, manage, contract, direct, procure, perform or cause to be
performed its obligations set forth in this Agreement, except as otherwise
agreed upon in writing by the parties. Nothing set forth in this Agreement
will be construed to create the relationship of principal and agent between
EDS and Spectradyne. EDS will not act or attempt to act or represent
itself, directly or by implication, as an agent of Spectradyne or
Spectradyne's customer(s) or in any manner assume or create, or attempt to
assume or create, any obligation on behalf of, or in the name of,
Spectradyne or Spectradyne's customer(s).
7.3 Confidentiality and Media Releases. "Confidential Information" (as such
term is defined in Section 11.8 of the Phase I Agreement and including the
terms and conditions of this Agreement) received under this Agreement will
be subject to the rights and obligations set forth in Section 11.8 of the
Phase I Agreement. All media releases, public announcements and public
disclosures by either party or its employees, agents or representatives
relating to this Agreement will be made in accordance with the provisions
of Section 15.4 of the Phase I Agreement.
7.4 Export. Spectradyne will not export any Products from the United States,
either directly or indirectly, without first obtaining a license as
required from the U.S. Department of Commerce or other agency or department
of the United States Government and the prior written consent of EDS, which
consent will not be unreasonably withheld, delayed or conditioned.
Spectradyne will bear all costs of international transportation from EDS to
the international destination and all costs of compliance with all
applicable
22
export laws and regulations. In addition, Spectradyne will indemnify,
defend and hold EDS harmless from and against any and all claims, actions,
losses, damages, costs, expenses (including without limitation attorneys'
fees) or other liability arising out of the direct or indirect violation of
any export laws or regulations and for the direct or indirect breach of any
EDS or third party license agreement.
7.5 Notices. Wherever one party is required or permitted to give notice to
the other party pursuant to this Agreement, such notice will be given and
deemed received as set forth in Section 15.5 of the Phase I Agreement.
7.6 Force Majeure. Each party will be excused from performance hereunder for
the reasons and for the time periods described in Section 15.2 of the Phase
I Agreement.
7.7 Severability. If, but only to the extent that, any provision of this
Agreement is declared or found to be illegal, unenforceable or void, then
both parties will be relieved of all obligations arising under such
provision, it being the intent and agreement of the parties that this
Agreement will be deemed amended by modifying such provision to the extent
necessary to make it legal and enforceable while preserving its intent. If
that is not possible, another provision that is legal and enforceable and
achieves the same objective will be substituted. If the remainder of this
Agreement is not affected by such declaration or finding and is capable of
substantial performance, then the remainder will be enforced to the extent
permitted by law.
7.8 Waiver. No delay or omission by either party to exercise any right or
power will impair any such right or power or be construed to be a waiver
thereof. A waiver by either of the parties of any of the covenants,
conditions or agreements to be performed by the other will not be construed
to be a waiver of any succeeding breach thereof or of any other covenant,
condition or agreement herein contained. No change, waiver or discharge
hereof will be valid unless in writing and signed by an authorized
representative of the party against which such change, waiver or discharge
is sought to be enforced.
7.9 Cumulative Remedies. Except when a remedy is deemed under this Agreement
to be "sole and exclusive", all remedies set forth in this Agreement will
be cumulative and in addition to and not in lieu of any other remedies
available to either party at law, in equity or otherwise, and may be
enforced concurrently or from time to time.
7.10 Counterparts. This Agreement may be executed in several counterparts, all
of which taken together will constitute one single agreement between the
parties.
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7.11 Certain Construction Rules. The article, section and schedule headings
and the table of contents used in this Agreement are for convenience of
reference only and in no way define, limit, extend or describe the scope or
intent of any provisions hereof. In addition, as used in this Agreement,
unless otherwise expressly stated to the contrary, (a) other than
references to Business Days, all references to days, months or years are
references to calendar days, months or years, (b) all references to
"Sections" and "Articles" are references to Sections or Articles of this
Agreement, (c) all references to "Schedules" are references to Schedules
attached to this Agreement and (d) all uses of "or" include "and/or". To
the extent that there is any conflict between the text of this Agreement
and any Schedule, the Schedule will control. To the extent that there is
any conflict between the provisions of this Agreement and the provisions of
the Phase I Agreement with regard to each party's rights and obligations
related to the development, provision, sale, license, installation or
Service of Digitally Based Video On Demand Systems or other Products
(including without limitation all rights of or to liquidated damages,
warranties and indemnities pertaining thereto), the provisions of this
Agreement will control. To the extent that there is a conflict between any
other provision of this Agreement, if any, and the provisions of the Phase
I Agreement, the Phase I Agreement will control.
7.12 Survival of Certain Provisions. The following provisions of this
Agreement will survive any expiration or termination of this Agreement for
any reason: Section 1.2, Section 2.2, Section 2.3, Article IV, Article V
and Article VII, Section 6.6, Section 6.7 and Section 6.8. In addition and
to the extent that the Phase I Agreement expires or is terminated prior to
the effective date of any expiration or termination of this Agreement, any
provisions of the Phase I Agreement referenced in this Agreement will
continue to the extent applicable to this Agreement.
7.13 Governing Law. This Agreement will be construed in accordance with, and
the rights of the parties will be governed by, the internal laws of the
State of Texas applicable to agreements entered into and intended to be
performed within the state, without regard to any otherwise applicable
principles of conflicts of laws.
7.14 No Third Party Beneficiaries. Nothing in this Agreement may be relied
upon by or will benefit any party other than Spectradyne and EDS.
7.15 Approvals and Similar Actions. Except where such action is to be taken in
the sole discretion of a party, where approval, acceptance, consent or
similar action is required or requested of a party, such action will not be
unreasonably withheld, delayed or conditioned.
7.16 Entire Agreement. This Agreement, including any Schedules referred to
herein and attached hereto and each Purchase Order (except for preprinted
terms and conditions on a Purchase Order which the parties agree will not
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be binding on the parties), each of which is incorporated herein,
constitutes the entire and exclusive statement of the agreement between the
parties with respect to its subject matter. There are no oral or written
representations, understandings or agreements relating to this Agreement
that are not fully expressed herein. All changes to this Agreement must be
in writing and signed by the party against whom such change would be
enforced. The parties agree that any other terms or conditions included in
any Purchase Orders, quotes, acknowledgements, bills of lading or other
forms utilized or exchanged by the parties will not be incorporated herein
or be binding unless expressly agreed upon in writing by authorized
representatives of the parties.
IN WITNESS WHEREOF, EDS and Spectradyne have each caused this Agreement to
be signed and delivered by its duly authorized officer or representative as of
the Effective Date.
ELECTRONIC DATA SYSTEMS SPECTRADYNE, INC.
CORPORATION
By:______________________________ By:_______________________________
Printed Name:____________________ Printed Name:_____________________
Title:___________________________ Title:____________________________
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