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EXHIBIT 10.1
*** CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
GATEWAY TERMINAL DEVELOPMENT, PRODUCTION AND PURCHASE AGREEMENT
BY AND BETWEEN
ASTROLINK INTERNATIONAL LLC
AND
VIASAT, INC.
This Gateway Terminal Development Production and Purchase Agreement
(including those Schedules and Attachments attached hereto, the "Agreement"),
effective as of the Effective Date, is entered into by and between Astrolink
International LLC, a Delaware corporation with offices located at 6701 Democracy
Boulevard, Suite 1000, Bethesda, MD 20817 ("AIL"), and ViaSat, Inc., a Delaware
corporation with offices located at 6155 El Camino Real, Carlsbad, California
92009 ("Contractor"). As used in this Agreement, "Party" means either AIL or
Contractor, as appropriate, and "Parties" means AIL and Contractor. The Parties
agree that the following terms and conditions shall apply to the products and
services to be provided by Contractor under this Agreement in consideration of
certain payments to be made by AIL.
The Parties, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, agree as follows:
1. BACKGROUND AND OBJECTIVES
1.1 BACKGROUND.
This Agreement is being made and entered into with reference to the
following:
(a) AIL has determined to implement a Ka-band, switched-processor
payload, digital, multichannel, satellite switched networking
system that utilizes ground terminals and Gateways (as defined
below) satisfying the Acceptance Criteria (as defined below), and
other terms and conditions of this Agreement to provide satellite
telecommunications network services in various markets.
(b) Contractor is an established and well-known global electrical
engineering, manufacturing and systems integration company
(together with its Subcontractors), has particular expertise in
telecommunications and Gateway Terminal technology and desires to
develop, produce and provide AIL with Service Provider Gateway
Terminals
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ASTROLINK AND VIASAT
CONFIDENTIAL AND PROPRIETARY INFORMATION
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for the AIL System (as defined below) and related services as
specified in this Agreement.
1.2 OBJECTIVES.
AIL and Contractor have agreed upon certain goals and objectives for
this Agreement, including the following:
(a) Designing, developing, and manufacturing the Gateway Terminals in
accordance with the terms hereof;
(b) Bringing the Gateway Terminals, which incorporate and meet the
requirements of the SOW and the Acceptance Criteria, quickly and
reliably to market;
(c) Ensuring that Contractor and Contractor's Subcontractors have in
place all the research, development, manufacturing, technological
and management skills necessary to design, develop, fabricate,
assemble, install, integrate, support and maintain the Gateways;
(d) Creating a contractual relationship that is flexible and highly
responsive to the needs of the Parties and provides a competitive
solution in light of changes in the business environment, and
advances in technology and methods of using technology;
(e) Aligning the capabilities and performance of the Gateway
Terminals with the AIL System specifications, AIL's business
requirements and Contractor's (including its Subcontractors')
capabilities; and
(f) Establishing Contractor as a designer and supplier of Service
Provider Gateway Terminals for use with the AIL System.
1.3 CONSTRUCTION AND INTERPRETATION.
(a) The provisions of Sections 1.1 and 1.2 are intended to be a
general introduction to this Agreement and are not intended to
expand the scope of the Parties' obligations under this Agreement
or to alter the plain meaning of the terms and conditions of this
Agreement and shall be used only as guidance to the Parties.
(b) Terms other than those defined in this Agreement shall be given
their plain English meaning, and those terms, acronyms and
phrases known in the satellite telecommunications technology
products and services industries shall be interpreted in
accordance with their generally known meanings.
(c) Unless the context otherwise requires, words importing the
singular include the plural and vice-versa.
(d) References to an "Article," "Section" and "Subsection" shall be
references to an article, section, or subsection of this
Agreement, unless otherwise specifically stated.
(e) References to this Agreement and the words "herein," "hereof,"
"hereto," and "hereunder" and other words of similar import refer
to this Agreement as a whole and not to any particular Article,
Section or Subsection.
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(f) The Article, Section and Subsection headings in this Agreement
are intended to be for reference purposes only and shall in no
way be construed to modify or restrict any of the terms or
provisions of this Agreement.
(g) The word "including" and words of similar import (such as
"include" and "includes") mean "including, but not limited to."
(h) A reference to "days" means calendar days, unless otherwise
specifically stated in a reference.
2. DEFINITIONS
2.1 CERTAIN DEFINITIONS.
As used in this Agreement, the following defined terms shall have the
meanings set forth below. Other capitalized terms used in this Agreement
are defined in the context in which they are used and shall have the
meanings there indicated.
(a) "Acceptance" or "Accepted" means, with respect to any Milestone
or Gateway Terminal that such Milestone or Gateway Terminal has
satisfied the applicable requirements set forth in Section 6.2.
(b) "Acceptance Criteria" means the criteria used to confirm that the
Gateway Terminals, the interfaces of the Gateway Terminals with
the Baseband Equipment and the Element Manager, Documentation and
Services meet the requirements of the Acceptance Test Plan or the
SOW as appropriate.
(c) "Acceptance Testing" means the acceptance tests to be conducted
in accordance with Section 6.2 and the procedures and timeframes
set forth in the mutually agreed upon Acceptance Test Plan.
(d) "Affiliate" means, with respect to any entity, any other entity
Controlling, Controlled by or under common Control with such
entity. "Affiliate" does not include any Competitor.
(e) "AIL Background Information" means all Confidential Information
and Joint Confidential Information of AIL or its licensors, in
any form, furnished or made available directly or indirectly to
Contractor by AIL or otherwise obtained by Contractor from AIL,
including, without limitation, the SOW and AIL's market analysis,
certification procedures, business model and AIL-proprietary
algorithms and all Intellectual Property Rights related to any of
the foregoing, developed prior to the Effective Date.
(f) "AIL Foreground Information" means all Confidential Information
of AIL or its licensors, and any Joint Confidential Information,
in any form, furnished or made available directly or indirectly
to Contractor by AIL or otherwise obtained by Contractor from AIL
and Confidential Information jointly owned by AIL and Contractor
and all Intellectual Property Rights related to any of the
foregoing, developed or acquired by AIL on or after the Effective
Date.
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(g) "AIL System" means the Ka-band satellites to be constructed,
launched and successfully deployed in orbit together with the
ground segment required to deliver broadband services, and as
further described in the Statement of Work.
(h) "ATM Switch" means the asynchronous transfer mode switch which is
supplied to Contractor by AIL as CFE for integration with the
Gateway Terminal.
(i) "Baseband Equipment" or "BBE" means that portion of a Gateway
that is used to perform terrestrial interworking, switching and
other terrestrial networking functions. The Baseband Equipment
includes the ATM Switch.
(j) "CFE" means that equipment, data and documentation set forth in
the SOW for delivery to Contractor in accordance with the SOW
schedule that AIL provides for Contractor's use hereunder, and
unless otherwise agreed by the Parties, in which AIL retains
ownership.
(k) "Comparable Gateway Terminals" means any Gateway Terminals
developed and/or manufactured by Contractor for use with the AIL
System that are substantially similar to or a derivative of the
Gateway Terminals, and the associated equipment, software and
documentation therefor.
(l) "Competitor" means a provider of a substantially comparable
geosynchronous Ka-band, switched processor satellite system that
provides services substantially comparable to those offered over
the AIL System.
(m) "Contract Year" means any calendar year during the Term hereof.
(n) "Contractor Background Information" means all Confidential
Information and Joint Confidential Information of Contractor or
its licensors (excluding AIL's Confidential Information), in any
form, furnished or made available directly or indirectly to AIL
by Contractor or incorporated in or otherwise necessary to use or
maintain the Gateways and Comparable Gateways, including the
related Intellectual Property Rights.
(o) "Contractor-Certified Installer" means a third party installer of
Gateway Terminals of AIL's choice that has been trained and
certified by Contractor using procedures which Contractor follows
for such certifications under similar commercial conditions, in
accordance with reasonable standards set forth by Contractor.
(p) "Contractor Foreground Information" means the Confidential
Information (and the Intellectual Property Rights appurtenant
thereto) developed by Contractor hereunder and any Joint
Confidential Information developed hereunder or acquired by
Contractor after the Effective Date, which shall not include any
AIL Confidential Information or any Contractor Background
Information.
(q) "Contractor Personnel" means employees of Contractor, including
(i) any temporary-duty personnel and Key Contractor Personnel,
and (ii) Contractor's Subcontractors performing under this
Agreement.
(r) "Control" and its derivatives means with regard to any entity (i)
the legal or beneficial ownership, directly or indirectly, of
fifty percent (50%) or more of the capital stock of
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such entity ordinarily having voting rights or (ii) the
management control over such entity.
(s) "Dead on Arrival" means where any Gateway Terminal or component
thereof is inoperative or fails to operate in accordance with the
SOW at the time it is initially installed or fails to so operate
during the *** period immediately following such initial
installation, excluding any Gateway Terminal or component failure
to the extent caused by damage during shipping or installation
(if such installation is not performed by Contractor or a
Contractor-Certified Installer).
(t) "Defect" or "Defective" means any failure of a Gateway Terminal,
including any components thereof, to operate in conformance with
the SOW and applicable Standards.
(u) ***
(v) "Documentation" shall include specifications, manuals,
programmatic and test plans and procedures, reports, minutes and
other media and documents pertaining to the performance,
installation, training, use, operation and maintenance of each
Gateway Terminal, all of the above as set forth or referenced in
the SOW.
(w) "Effective Date" means the date that this Agreement is executed
by the Parties.
(x) "Element Manager" or "EM" means that portion of a Gateway that
provides consolidated control and status capabilities of the
Gateway.
(y) "Equipment" means the ground-based hardware, cabling, spare or
replacement parts for Gateways and other non-Software components
associated with the Gateway Terminals that may be purchased by
AIL from Contractor under this Agreement.
(z) "Firmware" means the computer programs that are stored in machine
executable form within non-volatile memory and operate embedded
processes within the equipment.
(aa) "Gateway" means a major satellite earth station that operates
with an AIL satellite on a designated gateway beam that is used
(i) to interface the AIL network with a local terrestrial network
(including a larger number of users), (ii) to provide high
throughput of data, (iii) to support the management of its
associated customers and (iv) to support AIL's regional network
control center in the management of AIL System resources. A
Gateway means *** Gateway consisting of Baseband Equipment
(including the ATM Switch), an Element Manager and Gateway
Terminal.
(bb) "Gateway Support Facility" means the diagnostic and repair
facility for Gateways established by Contractor pursuant to
Section 14.2 for the Gateway Terminals and located at
Contractor's facility (Atlanta facility for baseline pricing-
other options under study).
(cc) "Gateway Terminal" means that portion of a Gateway that
translates RF (radio frequency) to and from the ATM Switch and
performs the TCP PEP functions and as further defined in the SOW,
that is designed, developed and/or manufactured in accordance
with the SOW and applicable Standards for use with the AIL System
and the associated Equipment, Software and Documentation, as
updated, revised or improved from time-to-time and provided by
Contractor to AIL or its Service Providers.
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(dd) "Initial Warranty Period" means the first to occur of (i) ***
following installation of a Gateway Terminal at a Gateway site by
a Contractor-certified Installer or (ii) *** from the date of
delivery of a Gateway Terminal to AIL or a Service Provider.
(ee) "Intellectual Property" means patents, copyrights, Confidential
Information, Marks, know-how, trade secrets, moral rights,
contract or licensing rights, confidential and proprietary
information protected under contract or otherwise under law and
other similar intellectual or industrial property.
(ff) "Intellectual Property Rights" means any and all rights in and
with respect to patents, copyrights, Confidential Information,
rights in Marks, know-how, trade secrets, moral rights, contract
or licensing rights, confidential and proprietary information
protected under contract or otherwise under law, and other
similar rights or interests in intellectual or industrial
property and all registrations and applications for registration
therefor.
(gg) "Joint Confidential Information" means (A) information that has
been developed pursuant to Section 10.4(c)(iii); and (B)
information that has been independently developed, licensed or
otherwise acquired by each Party without breach of this
Agreement, and excluding Confidential Information of a Party that
is provided to the other Party or its agents or Subcontractors
hereunder, that would qualify as Confidential Information of each
Party, but for the exclusions to Confidential Information set
forth in Subsections 15.3(c)(i)(3), (4) or (5) below.
(hh) "Lien" means any lien (including subcontractor and other mechanic
liens), imperfection in title, security interest, claim, charge,
restriction or other encumbrance.
(ii) ***
(jj) ***
(kk) "Losses" means all costs, expenses, liabilities and damages
reasonably incurred and payable under any settlement, litigation
or final judgment, and all related reasonable costs and expenses,
including legal fees and disbursements and costs of
investigation, expert fees, fines, interest and penalties.
(ll) "Mark" means any trademark, service mark, trade name, domain
name, logo or other indicia of source or origin of a product or
service.
(mm) "Milestone Payment" means a payment made by AIL to Contractor in
accordance with Section 14.2(e) below upon Acceptance by AIL of
the corresponding Milestone.
(nn) "Milestone and Payment Schedule" has the meaning given in Section
5.4 and is attached hereto as Schedule 1.
(oo) ***
(pp) "Order" means a purchase order issued to Contractor for the
purchase of Gateway Terminals.
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(qq) "Preproduction Gateway Terminals" means the *** Gateway Terminals
delivered in accordance with the Milestone and Payment Schedule
that provides a single thread RF-to-ATM and TCP PEP, as described
in the SOW.
(rr) "Prime Rate" means the rate identified as the prime rate offered
by The Chase Manhattan Bank (or its successor), as published in
the Wall Street Journal from time to time.
(ss) "Production Gateway Terminals" means a Gateway Terminal produced
by Contractor following AIL's Acceptance of the Prototype Gateway
Terminals and the Preproduction Gateway Terminals for use by AIL
or a Service Provider with the AIL System.
(tt) "Prototype Gateway Terminal" means a non-Redundant, ***Gateway
Terminal described in the SOW delivered in accordance with the
Milestone and Payment Schedule that provides a single thread
RF-to-ATM.
(uu) "Purchase Price" means the price of a Gateway Terminal to AIL and
its Service Providers, FOB Contractor's designated site, as set
forth in Section 13.2 for the Purchase Commitment and Schedule 2
attached hereto (as may be amended by mutual agreement of the
Parties to include pricing for various Gateway options and
Services) for additional Gateway Terminals Ordered hereunder.
(vv) ***
(ww) "Redundancy" shall have the meaning set forth in the SOW.
(xx) "Service Provider" means entities that pursuant to written
agreement with AIL own and/or operate the Gateways or Comparable
Gateways with the AIL System and other related software and
equipment, and that may purchase Gateway Terminals from
Contractor.
(yy) "Services" means (i) the services provided by Contractor pursuant
to this Agreement, and (ii) services described in any Order, and
(iii) any services not specifically described in (i) or (ii) that
are required or appropriate for the proper performance and
provision of those services described in (i) or (ii).
(zz) "Software" means the machine readable computer code used to
instruct a processor to perform a task or series of tasks in
object code form, including Firmware, files, databases,
interfaces, documentation and other materials related thereto)
necessary to make the Gateway Terminals achieve applicable
requirements of the SOW, which computer code shall be supplied
and licensed by Contractor to AIL for use pursuant to this
Agreement (including any third party Software sublicensed by
Contractor hereunder), as such Software is revised, updated,
corrected and enhanced from time-to-time and provided to AIL
pursuant to this Agreement.
(aaa) "Source Code" means the human readable code written in a high
level language, including source code listings as then commented,
system and program flowcharts, and such other components,
programs and documents to fully utilize, modify and maintain the
Software consistent with standards set forth herein, including
all necessary support routines, all of which, where applicable,
shall be on media able to be read and processed.
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(bbb) "Specifications" means those functional, performance and other
requirements and documents set forth or referenced (as
applicable) in the Statement of Work, as may be amended from time
to time.
(ccc) "Standards" shall have the meaning set forth in the SOW.
(ddd) "Statement of Work" or "SOW" means the document attached hereto
as Schedule 4, which shall include by this reference all
documents, specifications and tables, including without
limitation the Specifications, contained therein and referenced
thereby, as may be amended from time to time by mutual agreement
of the Parties.
(eee) "Subcontractor" means those contractors, consultants, suppliers
and providers used by Contractor under this Agreement.
(fff) "TCP PEP" means equipment providing the performance enhancing
protocol that is used to enhance the performance of using
transmission control protocol over a satellite link.
(ggg) "Technical Materials" means the technical, engineering and design
information and specifications relating to the Gateway Terminals,
whether written or non-written, including Source Code, Software,
Software specifications, functional specifications, interface
specifications, hardware and circuit diagrams, mask works,
schematic diagrams, vellums, third party supplier information
(including name, address, and part numbers), and associated
documentation, in reasonable detail sufficient to permit AIL or
its designees to manufacture, support, maintain and procure
Gateway Terminals as permitted hereunder.
(hhh) "Termination Date" means the date that this Agreement is
terminated by a Party in accordance herewith.
(iii) "United States" or "U.S." means the United States of America.
(jjj) "Virus" means: (i) program code, programming instruction or set
of instructions intentionally constructed with the ability to
damage, interfere with or otherwise adversely affect computer
programs, data files or operations; or (ii) other code typically
designated to be a virus (including worms, Trojan horses and
similar items).
(kkk) "Warranty" means any of the representations, covenants and
warranties set forth in this Agreement.
(lll) "Warranty Period" means the Initial Warranty Period and all
Extended Warranty Periods for any Gateway Terminals.
(mmm) "Year 2000 Compliant" means the ability of Gateway Terminals,
when used in accordance with its associated documentation, to be
capable of correctly and unambiguously processing, recognizing,
providing, recording and receiving date data within and between
the twentieth and twenty-first centuries, including proper
identification of the century and leap years, without resulting
in or causing logical or mathematical inconsistencies, processing
errors, loss of functionality or performance or other failures.
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2.2 OTHER TERMS.
Other terms used in this Agreement are defined in the context in which
they are used and have the meanings there indicated. A cross-reference
for such terms is set forth below:
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DEFINED TERM LOCATION
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Acceptance Test Plan Section 6.2(a)
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AIL Contract Manager Section 12.2
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AIL-proposed Change Section 12.2(a)
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AIL Purchase Commitment Section 8.1
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Annual Forecast Section 8.2
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Confidential Information Section 15.3(a)
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Contractor Program Manager Section 12.4(a)
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Development License Section 10.1(a)
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***
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Disabling Code Section 18.10
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Early Default Section 5.6
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Escrow Agreement Section.10.6(a)
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Escrowed Material Section 10.6(a)
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Excusable Delay Section 20.4
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Extended Warranty Period Section 11.3(b)
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Final Statement Section 22.2(c)
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Force Majeure Event Section 20.3(a)
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Gateway Terminal IP Section 22.3(a)
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Initial Payment Section 14.1
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Initial Term Article 4
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Key Contractor Personnel Section 12.5(a)
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Long Lead Kit Section 8.3(b)
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Material Subcontract Section 12.9(b)
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Material Subcontractor Section 12.9(b)
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Milestone Section 5.4
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Milestone Date Section 5.4
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Notice of Election Section 19.4
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On-Site Representative Section 12.10
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Permit Section 5.7
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Pre-prepared Site Section 9.3(a)
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Production Acceptance Test Plan Section 6.2(b)(ii)
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***
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Purchase Commitment Section 8.1
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Quality Assurance Program Section 6.4
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Release Conditions Section 10.6(a)
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Replacement Vendor Section 22.3
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Scheduled Delivery Date Section 8.5
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Service Provider Terms Section 8.4
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Term Article 4
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Termination/Expiration Assistance Section 22.4
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Updated Forecast Section 8.2
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3. SCOPE AND STRUCTURE
3.1 GENERAL SCOPE.
This Agreement (including the SOW and other schedules hereto) provides
the terms and conditions under which Contractor will design, develop,
document, test, manufacture, deliver and support the Gateway Terminals
to AIL and its Service Providers, and under which AIL and
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its Service Providers may purchase Gateway Terminals and Services from
Contractor for use with the AIL System, including Services associated
with the Warranty Period. For Services not included within the pricing
hereunder and to be performed outside the U.S., Contractor shall provide
Services on a country-by-country basis, as requested by AIL, at
commercially reasonable rates.
3.2 UNIQUE REQUIREMENTS.
The Parties acknowledge and agree that AIL has unique requirements and
Contractor has solutions regarding the Gateway Terminals and Services to
be provided by Contractor hereunder. In this regard, to the extent not
already provided for in this Agreement, the Parties agree to negotiate
in good faith in accordance with the procedures provided in Sections
12.1 and 12.2 hereof to provide the maximum flexibility in meeting AIL's
particular Gateway and Service requirements, as proposed by AIL during
the Term.
3.3 COORDINATION WITH AIL PROJECT TEAMS.
Contractor agrees, as a part of the work under this Agreement and the
support hours set forth in Section 14.2, to coordinate with other
members of AIL's integrated product team to accomplish the work set
forth in the SOW to support the development and fielding of a fully
functional AIL System. Contractor acknowledges that it bears the
responsibility to design and construct Gateway Terminals and to provide
the interfaces for each Gateway Terminal to the Element Manager and
Baseband Equipment in accordance with the SOW. If Contractor becomes
aware of any material information during the Term which differs from
such information provided to Contractor under this Agreement, Contractor
shall promptly notify AIL in writing.
3.4 NON-EXCLUSIVITY.
(a) It is expressly understood and agreed that other than the
purchase commitments made by AIL in Sections 8.1 and 8.2
hereunder, this Agreement does not require AIL to purchase or
order any Gateway Terminals, including any components thereof, or
Services from Contractor and does not grant to Contractor an
exclusive privilege to sell or otherwise provide to AIL or its
Service Providers any or all of the Gateway Terminals, including
any components thereof or Services of the type described in this
Agreement.
(b) Contractor agrees that purchases by AIL under this Agreement
shall not require AIL to continue any level of such purchases,
except as expressly provided herein. AIL assumes no liability for
Gateway Terminals or Services produced, processed, rendered or
shipped in excess of the amounts specified in an Order submitted
pursuant to this Agreement. Estimates or forecasts furnished by
AIL or its Service Providers to Contractor shall not constitute
commitments of any kind.
(c) Notwithstanding the foregoing, during the Term, to the extent
that AIL requires additional Gateway Terminals of similar
functionality to those described in this Agreement (including the
SOW) beyond the Purchase Commitment, and Contractor is materially
performing its obligations hereunder to AIL's reasonable
satisfaction (and Contractor can fulfill AIL's additional
requirements for Gateway Terminals), AIL will order such
additional Gateway Terminals from Contractor through the earlier
to occur of the placement of orders for 24 Gateway Terminals
(without cancellation of such orders), or the termination or
expiration of this Agreement.
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4. TERM
The term of this Agreement shall begin upon the Effective Date and shall
expire ***(the "Initial Term"), unless earlier terminated or extended in
accordance with this Agreement. Prior to the expiration of the Initial
Term, the Parties may agree to extend the term of this Agreement, upon
mutually agreeable terms, in *** renewal periods. The Initial Term, as
earlier terminated or extended, shall be known as the "Term".
5. GATEWAY TERMINAL DEVELOPMENT
5.1 AIL RESPONSIBILITIES.
The Parties have agreed to the SOW, which describes the Gateway
Terminals, including interface specifications for the Gateway and the
AIL System. AIL shall deliver the CFE specified in the SOW in accordance
with the schedule set forth therein. AIL agrees to provide such other
AIL Background Information and AIL Foreground Information to Contractor,
as set forth in Section 10.1, as may be reasonably required for
Contractor to perform its obligations hereunder.
5.2 CONTRACTOR RESPONSIBILITIES.
Contractor shall be responsible for the performance of the work
described in the SOW (including such work implied therein, incidental to
and reasonably required for the proper provision of such work), and
shall perform such work in accordance with the SOW and this Agreement,
for the design, development and production of Gateway Terminals.
5.3 USE OF PROTOTYPE GATEWAY TERMINALS.
AIL shall make the Prototype Gateway Terminal available to Contractor as
CFE one (1) month following Acceptance of the Preproduction Gateway
Terminal for use in Contractor's Gateway Support Facility during the
Term. Upon expiration or termination of the Agreement, Contractor will
make available the Prototype Gateway Terminal to AIL for AIL to pick up
at Contractor's facility in its then-current configuration and condition
which would include normal wear and tear, any refurbishment and use for
various test functions, among other things. Ownership of the Prototype
Gateway Terminal shall remain with AIL.
5.4 MILESTONE AND PAYMENT SCHEDULE.
The Parties have agreed upon a detailed critical milestone schedule and
payment plan (the "Milestone and Payment Schedule") based on the SOW,
attached as Schedule 1. Contractor will satisfy the applicable
Acceptance Criteria for all milestones set forth in the Milestone and
Payment Schedule, including achieving the milestones (each, a
"Milestone") within the corresponding dates set forth therein (each, a
"Milestone Date").
5.5 FAILURE TO ACHIEVE MILESTONES.
If (i) Contractor fails to achieve, or (ii) AIL has a reasonable basis
to believe Contractor will be unable to achieve, a Milestone by the
corresponding Milestone Date, (1) Contractor will be required to develop
a correction plan demonstrating Contractor can recover from Contractor's
failure to achieve such Milestone and present said plan to AIL within
ten (10) business days after AIL's request for such a correction plan;
(2) the Parties will work in good faith to devise a plan
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of action to achieve the Milestone by the specified Milestone Date or
arrive at a mutually acceptable revised schedule (which schedule shall
not affect *** as provided in Section 5.6 below) within ten (10)
business days after AIL's receipt of Contractor's plan; and (3)
Contractor's performance will be measured against the schedule in such
plan of action. If the Parties fail to arrive at a mutually acceptable
revised schedule within ten (10) business days after AIL's receipt of
Contractor's correction plan or if Contractor fails to make adequate
progress towards the agreed revised schedule, AIL may at its sole
discretion terminate this Agreement for Cause in accordance with Section
22.1(a) hereof if the breach is not cured during the applicable period
*** for such breach as provided below.
5.6 FAILURE TO MEET DEVELOPMENT MILESTONE DATES; ***.
(a) Failure to Meet Development Milestone Dates. Contractor
acknowledges that time is of the essence with respect to the
Milestone Dates and timely delivery and implementation of the
Gateway Terminals. If Contractor fails to meet the Milestone Date
for Milestone 4 *** or Milestone 7 ***, except in the case of
Excusable Delay, AIL will incur substantial damages which are and
will be difficult to determine. Such failure will be considered
an "Early Default". Upon such occurrence of an Early Default, AIL
will be entitled to terminate this Agreement for Cause as
provided in Section 22.1(a).
(b) ***Following a fifteen (15) day grace period and subject to
Excusable Delay, Contractor ***
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5.7 PERMITS.
Contractor shall, at Contractor's expense, identify, procure and
maintain throughout the Term all applicable federal, state, county,
local and foreign licenses, approvals, inspections, permits and
certificates (collectively, "Permits") necessary to perform its
obligations under this Agreement, including all export and import
Permits and excluding all Permits related solely to the installation of
Gateway Terminals and Gateways. In the event that AIL requests
Contractor to obtain any Permits on AIL's behalf, AIL shall reimburse
Contractor for the fees paid by Contractor for such Permits and for any
associated work performed to obtain such Permits, in accordance with the
time and material rates set forth in Schedule 9. AIL will provide
Contractor with reasonable assistance in procuring and maintaining such
Permits. Notwithstanding the foregoing, AIL shall be responsible for
procuring and maintaining those export and other applicable Permits
required for the export of technical data and other information related
to AIL's satellites and the provision of the services offered through
the AIL System. Contractor will provide AIL reasonable assistance in
procuring and maintaining such Permits.
6. ACCEPTANCE AND PRODUCTION
6.1 CONTRACTOR RESPONSIBILITIES.
Contractor shall be responsible for timely performing and shall perform
the Production Work in accordance herewith. The "Production Work" is the
work described in the SOW and herein, as the case may be, for the
manufacturing and delivery of Gateway Terminals, including production
setup, production cycle, software support, drawings and documentation,
quality program (including product assurance program, parts management,
materials and processes management, and test and material discrepancy
reviews), logistics, training, manuals and operations support (including
such work implied in the SOW, incidental thereto and reasonably required
for the proper provision of such work).
6.2 ACCEPTANCE TESTING.
(a) Acceptance of Development Deliverables. Acceptance of deliverable
items required by the SOW shall be in accordance with the
following:
(i) For the Prototype Gateway Terminal and Preproduction
Gateway Terminal, Contractor shall provide an Acceptance
Test Plan to AIL for approval prior to scheduled
commencement of testing, as set forth in the SOW.
Contractor shall be obligated to conduct acceptance tests
in accordance with the approved Acceptance Test Plan which
demonstrate that the deliverable item meets the SOW, the
Acceptance Criteria and applicable Standards. Each such
Acceptance Test Plan shall include the scope, schedule,
test equipment, Acceptance Criteria, the parameters to be
tested, and the definition of successfully achieving the
test and failing the test, as well as other mutually
agreed-upon parameters. Testing results must be based on
objective criteria.
(ii) Prior to the scheduled delivery date of the Prototype
Gateway Terminal as set forth in the SOW or as otherwise
agreed by the Parties, AIL shall provide to Contractor, as
CFE for Acceptance Testing of the Prototype Gateway
Terminal and the Preproduction Gateway Terminal, a
standard ATM Switch and an Element Manager as described in
the SOW, for use in the Gateway Support
15
Facility during the Term. Using the support hours set
forth in Section 14.2, Contractor shall develop an
integration control document as specified in the SOW
("ICD") for the ATM Switch and Contractor shall provide to
AIL at Milestone 3 (CDR) the recommended ICD for the ATM
Switch and the date the ATM Switch is required to be
delivered to Contractor. AIL shall arrange on-site support
for Contractor at its design facility by the switch
manufacturer as described in the SOW.
(iii) For deliverable items which are not equipment or software,
such as Documentation, and design reviews, AIL will base
Acceptance upon content of the deliverable meeting the
applicable requirements delineated in the SOW.
(iv) For each Acceptance test performed above, Contractor shall
provide reasonable notice to AIL (as provided in the SOW)
of the date of performance of each Acceptance test so that
an AIL designated representative can attend and witness
each Acceptance test. AIL's designated representative
shall have the opportunity to attend and observe each
Acceptance test, unless AIL waives such right in writing.
Upon the completion of each Acceptance test, Contractor
shall provide to AIL's representative written test results
and, if applicable, a statement that the Gateway Terminal
has passed the applicable Acceptance Tests (the
"Acceptance Test Report"), which AIL's representative
either shall approve by signing such report or shall
disapprove by not signing such report. If AIL's
representative approves and signs an Acceptance Test
Report, then the Gateway Terminal so tested shall be
deemed to be Accepted hereunder. If AIL's representative
does not approve an Acceptance Test Report, Contractor
shall remedy any deficiency in the Gateway Terminal and
retest the applicable Gateway Terminal, at no charge to
AIL. If Contractor disputes in good faith AIL's refusal to
approve any Acceptance Test Report, the Parties shall meet
to discuss the Acceptance tests and Acceptance Test
Report, and the Parties shall resolve such dispute in
accordance with Section 21.
(b) Acceptance of Production Gateway Terminals and Optional Priced
Items.
(i) First Article Acceptance Testing. Prior to Scheduled
Delivery Date of the First Article Gateway Terminal unit
(as defined in the SOW), Contractor shall provide a First
Article Gateway Terminal Acceptance Test Plan to AIL for
approval. Contractor shall be obligated to conduct
acceptance tests which demonstrate that the First Article
Gateway Terminal unit meets the SOW, the Acceptance
Criteria and applicable Standards. The Acceptance Test
Plan shall include the scope, schedule, test equipment,
Acceptance Criteria, the parameters to be tested, and the
definition of successfully achieving the test and failing
the test, as well as other mutually agreed-upon
parameters. Testing results must be based on objective
criteria. The Acceptance Test Plan for the First Article
Gateway Terminal unit shall demonstrate full compliance
with the applicable provisions of the SOW.
(ii) Production Acceptance Testing. At the Production Readiness
Review, Contractor shall present, for AIL approval, the
proposed Acceptance Test Plans for Production Gateway
Terminals after the First Article Gateway Terminal and for
Optional Priced Items in Schedule 2 (the "Production
Acceptance Test Plan"). Contractor shall be obligated to
conduct acceptance tests that
16
demonstrate that each Production Gateway Terminal or
Optional Priced Item meets the SOW, Acceptance Criteria
and applicable Standards. The Production Acceptance Test
Plan shall include the scope, schedule, test equipment,
Acceptance Criteria, the parameters to be tested, and the
definition of successfully achieving the test and failing
the test, as well as other mutually agreed-upon
parameters. Testing results must be based on objective
criteria. Contractor shall demonstrate that each Gateway
Terminal complies with the Acceptance Criteria in the
approved Production Acceptance Test Plan and the
applicable provisions of the SOW.
(iii) Acceptance of Production Gateway Terminals. For each
Acceptance test performed in accordance with the approved
Production Gateway Terminal Acceptance Test Plan on
subassemblies identified in such Acceptance Test Plan,
Contractor shall provide reasonable notice to AIL (as
provided in the SOW) of the date of performance of each
such Acceptance test so that an AIL designated
representative can attend and witness each such Acceptance
test. AIL's designated representative shall have the
opportunity to attend and observe each such Acceptance
test, unless AIL waives such right in writing. Upon the
completion of all Acceptance tests, Contractor shall
provide to AIL test results and a certification that the
Gateway Terminal has passed the applicable Acceptance
Tests. The Gateway Terminal will be deemed Accepted by AIL
after review of the certification and associated data
which will be accomplished by AIL promptly after receipt
of such certification and associated data. If after
review, AIL in its reasonable discretion considers that
the Acceptance Criteria have not been met, AIL will
promptly notify Contractor and the Parties shall meet and
confer to agree on any corrective action and re-testing
required to be successfully performed in order to achieve
Acceptance. Such corrective action and re-testing, if
required, shall be performed by Contractor at no
additional charge to AIL. If Contractor disputes in good
faith AIL's refusal to grant Acceptance, the Parties shall
meet to discuss the disputed Acceptance, and if unable to
reach mutually satisfactory resolution, the Parties shall
resolve such dispute in accordance with Section 21.
6.3 ACCEPTANCE TESTING FAILURES, CURE PERIODS AND REMEDIES.
(a) For Development Deliverables. Problems and Acceptance test
failures of development deliverables are to be resolved in
accordance with the SOW.
(b) For Production Gateway Terminals. Gateway Terminals that fail
testing in accordance with the Production Acceptance Test Plan
will be rejected by AIL. Contractor shall not deliver or ship
such Gateway Terminals and Contractor will not be entitled to
receive payment for such Gateway Terminals until Contractor
corrects all items which failed and successfully completes a
repeat Production Acceptance Test.
(c) AIL System Deficiencies. In the event that Acceptance Testing of
the Gateway Terminal (including Prototype Gateway Terminal and
the Preproduction Gateway Terminal) with the AIL System
demonstrates that the AIL System does not provide the
functionality and performance required by AIL in the SOW,
notwithstanding that such deficiency is not the result of a
Defect in the Gateway Terminals, the applicable provisions of the
SOW or the Gateway Terminal design documentation, Contractor
shall cooperate with AIL to implement, on an accelerated basis,
adjustments and
17
modifications to the design and production of the Gateway
Terminals to achieve the required functionality and performance.
Such actions may include retrofits, accelerated second-generation
design and production and such other means as may be required to
produce the required functionality and performance in the most
expeditious and cost-effective manner. The Parties will agree to
a reasonable basis for compensating Contractor for performance of
such activities.
6.4 QUALITY ASSURANCE.
Prior to the start of production of Gateway Terminals, the Parties shall
develop and agree upon a written quality assurance program and
procedures (the "Quality Assurance Program"), and Contractor shall
implement such Quality Assurance Program to produce Gateway Terminals,
such that the Gateway Terminals perform and associated Services are
consistently performed in accordance with the terms of this Agreement
and at a level consistent with generally accepted best industry
standards and practices. Contractor shall maintain compliance with the
ISO 9001 series approach to quality in the performance of its
obligations under this Agreement. If Contractor fails to implement or
follow the Quality Assurance Program, Contractor agrees that AIL may
require Contractor to cease production of Gateway Terminals until
Contractor meets the requirements of the Quality Assurance Program. If
prior to the expiration of the Initial Warranty Period AIL reasonably
believes that the quality of the Gateway Terminal has diminished or that
the Gateway Terminals do not comply with the applicable provisions of
the SOW or applicable Standards, AIL will provide written notification
to Contractor reasonably describing the problem and Contractor will
investigate the problem and report its findings and conclusions to AIL
in writing. If the Parties determine that a problem exists, Contractor
agrees to develop and implement a corrective action plan to resolve the
problem. If the Gateway Terminals do not comply with the applicable
Standards solely due to constraints of the AIL System, the Parties will
work together to determine if the Gateway Terminals can be modified to
meet the applicable Standards, in accordance with Section 12.3(b) below.
If the Gateway Terminals cannot be modified to comply with the
applicable Standards, or if the Parties elect not to modify the Gateway
Terminals to meet such Standards, Contractor shall not be responsible
for meeting the Standards to the extent that the AIL System causes the
non-compliance.
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6.5 CERTIFICATION.
Upon Contractor's satisfactory completion of the First Article Gateway
Terminal Acceptance Test, including a written statement provided by
Contractor to AIL certifying the compliance of the Gateway Terminals
with the SOW, AIL shall certify Contractor as an AIL-certified supplier
of Gateway Terminals. In addition, as set forth below, Contractor shall
submit for AIL's approval (which shall not be unreasonably withheld or
delayed) all Software, Software Updates and other Gateway Terminal
upgrades and updates produced by Contractor or any Subcontractor for use
in or with the Gateways or Comparable Gateways. All such Software,
Software Updates and other Gateway Terminal upgrades and updates must
meet the SOW without adverse effect to the Gateways or the AIL System.
At least thirty (30) days prior to introduction of enhancements,
including hardware, software, or changes to recommended operating and
installation practices, Contractor shall provide AIL a request for an
updated certification detailing the requested change and defining any
testing required to ensure compatibility. If Contractor asserts that no
testing is required due to the nature of the change, AIL may request
testing if it has a reasonable doubt as to the assertion, and Contractor
will perform testing as required to reasonably satisfy AIL's concerns.
If Contractor has defined test requirements, the change request will
include a test report on tests which Contractor has conducted to ensure
that the Gateway Terminals will interwork with the AIL System, will not
harm the AIL System, and will not contain defects which adversely affect
performance for AIL or Service Providers. At AIL's request, Contractor
shall loan on a limited time basis to AIL such proposed software or a
limited quantity of sample hardware for AIL's own use in testing.
Throughout the above certification process, AIL shall perform its
obligations in a reasonably timely manner, without unreasonable delay.
6.6 MANUFACTURING CAPACITY REQUIREMENTS.
Contractor will at all times during the Term (except in the case of
Excusable Delay, or pursuant to Section 13.2(b), maintain the capacity
and capability to manufacture and timely deliver each Gateway Terminal
and related optional items ordered by AIL or Service Providers hereunder
in accordance with the Annual Forecast and Updated Forecast set forth in
Section 8.2 and in accordance with Section 8.3(b), up to a maximum of
*** Gateway Terminals in any *** period.
6.7 ***
(a) For each Production Gateway Terminal scheduled for
delivery through ***, Contractor will ***
(b) Notwithstanding the requested hardware delivery date per Section
8.5(a) and provided that two (2) Production Gateway Terminals
each having a capability equivalent to the Pre-production Gateway
Terminal are provided to AIL by the requested delivery date to
support Alpha testing with the satellite, the required date of
delivery of each of the first two (2) Production Gateway
Terminals (for this clause) is the date specified by AIL for
final Acceptance of such Gateway Terminal (including the
production Modem Interworking Units) which shall not be required
to be earlier than ***. In the event Contractor needs to install
retrofits to either of the first two production Gateway
Terminals, such retrofits shall be accomplished and tested to
AIL's reasonable satisfaction prior to the commencement of
commercial service using such Gateway(s). In addition, for
purposes of this *** clause, a delay in satellite launch will
constitute a period of Excusable Delay applicable to the
Production Gateway Terminals scheduled for delivery through ***,
which shall not exceed the lesser of (i) the actual delay in the
satellite launch date, or (ii) 60 days in the Scheduled Delivery
Date. In the event of Excusable Delay, the *** provisions set
forth above will apply for each day that such
19
Gateway Terminal is not delivered after the last day of the
Excusable Delay to the date of actual delivery.
(c) For each Production Gateway Terminal scheduled for delivery on or
after ***, Contractor will ***
(d) For Gateway Terminals ordered pursuant to Section 8.3(b), ***
(e) Notwithstanding (a), (b) and (c) above, if AIL requests that a
Gateway Terminal be delivered in less than *** after receipt of
the applicable Order by Contractor and Contractor accepts such
order or proposes an alternate delivery date sooner than ***
after Contractor's receipt of the Order that is acceptable to
AIL*** shall apply to such Gateway Terminal until the day
following *** after receipt of the applicable Order, except for
Orders placed in accordance with Section 8.3(b).
(f) ***
(g) Notwithstanding the ***hereunder, if Contractor commits a
material breach of Section 8.5, AIL may terminate this Agreement
in accordance with Section 22.1(a) and cancel its outstanding
Orders in accordance with Section 8.6 (without incurring
cancellation payment liability). If AIL so terminates this
Agreement for Contractor's material breach of Section 8.5, AIL
shall be entitled to have the work completed by another party or
parties.
6.8 SPARE PARTS.
Contractor shall use reasonable commercial efforts to ensure that spare parts
can be procured for the Gateway Terminals for the life of the AIL System or the
Term, whichever is sooner. At Milestone 3 ***Contractor will provide a list of
recommended spares with then-current pricing and delivery, reasonably adequate
to maintain all Gateway Terminals, including depot-level support of on-site
spares by AIL or Service Providers. Such recommended spares shall take into
account delivery times for limited source and long-lead items. Provided AIL and
Contractor enter into a separate Maintenance Contract, Contractor shall
inventory various spare parts recommended by Contractor and procured from
Contractor by AIL at mutually agreed upon prices for the spare parts and the
storage costs. Periodically, the Parties will meet to review Contractor's spare
parts inventory levels. Contractor will sell spare parts to AIL and/or its
Service Providers on commercially reasonable terms and prices. Spare parts that
are in-stock at the Contractor's storage facility shall be delivered by
Contractor for shipment to the location designated by AIL or a Service Provider
within forty-eight (48) hours from the time Contractor is notified in writing of
the need for the spare part. Except as provided in Section 11.3(a), AIL or a
Service Provider shall pay for the spare part and shipment, customs, duties and
taxes of spare parts to AIL or such Service Provider.
7. BRANDING
7.1 GATEWAY TERMINAL MARKINGS.
The Marks under which the AIL System and the AIL service are offered
shall be in AIL's sole and absolute discretion, provided such Marks do
not conflict with any of Contractor's Marks. Contractor shall affix to
each Gateway Terminal the AIL Mark, in a form and location as designated
by AIL. The Parties agree to enter into appropriate royalty-free, Mark
licensing agreements in furtherance of the foregoing. Unless otherwise
mutually agreed, the Gateway
20
Terminals shall be "co-branded" with the respective Marks of AIL and
Contractor, subject to reasonable written approval of each Party as to
how its brand is used. "Co-branding" means the Gateway Terminals will be
marketed, promoted, advertised and sold with such Marks in ways that
maintain the identity of the Marks of AIL and Contractor, respectively.
The Marks of either Party may be used by the other Party on a
royalty-free basis; provided, however, that the Party owning the Mark
shall have prior written approval for each form of use of its Mark(s)
and the Marks may be used only in connection with the AIL System
services and the Gateways.
8. FORECASTS AND ORDERING
8.1 AIL PURCHASE COMMITMENT.
AIL hereby commits to Contractor that, pursuant to a delivery schedule
mutually agreed upon by the Parties, that AIL and Service Providers
shall purchase and Contractor shall deliver a number of Gateway
Terminals equal to the Purchase Commitment for delivery between ***and
***. The "Purchase Commitment" means any of the following combinations
of ***:
(a) ***Gateway Terminals, or
(b) ***Gateway Terminals, or
(c) ***Gateway Terminals, or
(d) ***Gateway Terminals.
By no later than ***, AIL shall provide Contractor in writing with its
choice of the configuration of the Purchase Commitment from one of the
options set forth above.
8.2 INITIAL, ANNUAL AND UPDATED FORECASTS.
By ***, AIL will provide its initial forecast for Gateway Terminals to
be delivered ***, including the number of Gateway Terminals forecasted
to be purchased in each calendar quarter and the requested delivery
dates therefor (the "Initial Forecast"). The Initial Forecast shall
include no more than (a) *** Gateway Terminals for scheduled delivery
***, and ***Gateway Terminals for scheduled delivery ***At least
***Gateway Terminals or, where the Purchase Commitment contains
***Terminals, ***shall be scheduled for delivery prior to ***thereafter
***, AIL will provide an annual forecast to Contractor for the number of
Gateway Terminals to be delivered in the ***following Contract ***and
the requested delivery dates (the "Annual Forecast"). ***AIL will
provide to Contractor an update of its Annual Forecast to cover the four
(4) calendar quarters following the date of such updated forecast (the
"Updated Forecast"). Beginning with the Gateway Terminal deliveries
scheduled for the ***, AIL will have the option to increase in an Order
the quantity of Gateway Terminals to be delivered in each calendar
quarter by ***as long as an Updated Forecast for such increase is
provided to Contractor at least ***the first requested delivery date for
such increased quantity, except as expressly limited in this Section 8.2
and except as provided in Sections 8.3(b) and 6.6.
8.3 ORDERS GENERALLY.
(a) During the Term of this Agreement, purchases of Gateway Terminals
by AIL shall be made by means of by an Order in the English
language issued to Contractor as provided in this Agreement.
Service Providers shall place Orders pursuant to separate
agreement
21
with Contractor as described in Section 8.4. Orders may be issued
by mail, fax or, upon mutual agreement of the Parties, electronic
data interchange. All Orders issued by AIL hereunder shall
reference this Agreement and will be deemed to incorporate and be
governed by the terms and conditions of this Agreement. Any term
or condition set forth in an Order or other document submitted by
either Party that is inconsistent with or in addition to this
Agreement will be of no force or effect, unless mutually and
expressly agreed by the Parties in writing. Neither AIL nor any
Service Provider will be liable to Contractor for any charges,
additional or otherwise, for Gateway Terminals or Services
provided by Contractor unless set forth in an Order or otherwise
mutually agreed upon by the contracting parties in writing. Each
Order shall be deemed to be accepted by Contractor upon receipt
of the Order, unless Contractor notifies AIL or other purchasing
party of its objection to any Order within five (5) business days
of Contractor's receipt of such Order by Contractor. Subject to
subsection 8.3(b) below, AIL will issue Orders for Gateway
Terminals under this Agreement at least *** prior to the
requested delivery date. Notwithstanding the foregoing, AIL may
request a delivery date ***from receipt of Order by Contractor,
and Contractor shall use commercially reasonable efforts to
deliver such Gateway within the *** leadtime; subject to Section
6.6 and Section 6.7(e).
(b) AIL may Order from Contractor kits of Gateway Terminal components
that typically are long leadtime items (the "Long Lead Kits").
Delivery dates for Long Lead Kits ordered hereunder shall be
***after receipt of the Long Lead Kit Order by Contractor, with a
maximum delivery rate of ***. AIL may increase the quantity of
Gateway Terminals to be delivered in any month (subject to the
capacity limitation set forth in Section 6.6) by up to the amount
of the Long Lead Kits scheduled to be delivered to Contractor
***prior to the requested delivery date for such Order and/or on
hand at Contractor's facilities, as long as the increased order
is placed at least ***prior to the requested delivery date for
such Gateway Terminals and the maximum number of Gateway
Terminals to be delivered is not more than ***per month. The
Scheduled Delivery Date for each such Order shall be ***following
receipt of such an Order by Contractor. All Long Lead Kits, upon
Acceptance, shall become the property of AIL, and AIL shall
direct the disposition of any Long Lead Kits that are not used
for Orders hereunder. For the purpose of this Section 8.3(b),
"Acceptance" shall occur upon satisfactory completion of
Production Acceptance Tests as per Sections 6.2(b)(ii) and
6.2(b)(iii).
(c) Each Order shall specify the following: ship to address, purchase
order number, shipping instructions, part and model number,
quantity, price, statement that the Order is being placed under
this Agreement and requested delivery dates which must be within
***of acceptance and acknowledgement by Contractor of an Order,
but in no event may a delivery date be requested beyond ***from
the end of the Term. Requested delivery dates are subject to
Section 8.5 and approval of credit.
8.4 ORDERS FROM SERVICE PROVIDERS.
Within ninety (90) days from the Effective Date, the Parties will
negotiate and agree to a form of contract that Contractor will offer to
Service Providers ordering Gateway Terminals. Such form of contract will
include certain agreements reached by the Parties herein, such as
pricing, taxes, passage of title and risk of loss, warranties,
indemnifications and other provisions that expressly apply to Service
Providers herein (the "Service Provider Terms"). Notwithstanding the
foregoing, Contractor and any Service Provider may enter into an
agreement to purchase Gateway Terminals upon terms that differ from the
Service Provider Terms. Acceptance by Contractor of any Service Provider
Order shall depend on the Service Provider (a) ordering the
22
Gateway Terminals a pre-agreed number of days in advance; and (b)
meeting pre-agreed financial requirements (such as satisfactory
assurance of payment or adequate vendor financing, or a combination of
the foregoing or otherwise).
8.5 DELIVERY DATES.
(a) Unless otherwise agreed by Contractor and either AIL or a Service
Provider as set forth in an Order or other writing, Contractor
shall deliver Gateway Terminals to AIL and Service Providers by
the Scheduled Delivery Date, within a permissible delivery window
of ***the Scheduled Delivery Date, unless otherwise agreed by the
contracting parties. The "Scheduled Delivery Date" means the
requested date of delivery of a Gateway Terminal as set forth in
an Order; provided however that (i) the Scheduled Delivery Dates
for the Gateway Terminals to be delivered to AIL ***shall be the
delivery dates set forth in the Initial Forecast and (ii) the
Scheduled Delivery Dates for the Gateway Terminals to be
delivered to AIL ***shall be the requested delivery date as set
forth in an Order. Notwithstanding the foregoing, if the
requested delivery date set forth in an Order is less than ***
from the date of receipt thereof by Contractor, the Scheduled
Delivery Date shall be no less than *** from such date of
receipt, except for Orders pursuant to Section 8.3(b), or unless
otherwise agreed by Contractor and AIL or the Service Provider in
writing, as applicable. Scheduled Delivery Dates shall be firm
and time is of the essence for Scheduled Delivery Dates. Early
deliveries (except as provided above or authorized in writing by
the purchasing party (AIL or Service Provider)) may be refused
due to space or security considerations and returned or stored at
Contractor's expense and risk of loss.
(b) Delivery shall occur upon delivery to the carrier at Contractor's
shipping point. Delivery schedule changes must be mutually agreed
to in writing.
(c) If Contractor discovers any potential delay that threatens the
timely or full delivery of an Order as scheduled or the
performance of Services, Contractor shall immediately notify AIL
of such delay. If requested by AIL, Contractor shall provide a
written plan for correction of such delay.
8.6 ORDER CHANGES; CANCELLATION AND RESCHEDULING OF AIL ORDERS.
(a) Following the delivery of the Purchase Commitment and payment
therefor, AIL may cancel a Gateway Terminal or a *** as provided
in this Section 8.6. If AIL desires to cancel any Gateway
Terminal or ***, it shall so notify Contractor of the expected
date of cancellation (the "Cancellation Date") and the number of
Gateway Terminals and/or *** to be cancelled (the "Cancellation
Notice"). The Cancellation Date shall not be less than thirty
(30) days from the date of receipt by Contractor of the
Cancellation Notice. By no later than the Cancellation Date,
Contractor shall provide AIL with a price for cancellation. Such
price shall provide for AIL to pay Contractor for Contractor's
actual costs incurred up to and including the date of termination
or arising from such termination, which shall take into account,
among other things, Contractor's actual termination liability to
its vendors and incurred costs for bulk orders of components
already placed and for component price increases by vendors for
lesser total component quantities ordered by Contractor, plus a
reasonable profit on such costs. The costs and profit paid to
Contractor under this Section shall not exceed the Purchase Price
of any Gateway Terminal or *** so cancelled.
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(b) AIL may change the "ship to" destination of any Order by
submitting notice to Contractor in writing at least fifteen (15)
business days prior to shipment. If such change is requested by
AIL with less than fifteen (15) business days of notice prior to
shipment, Contractor will use all reasonable efforts to implement
such change. Contractor has the right at its cost and expense to
adjust the prior Scheduled Delivery Date by up to fifteen (15)
days in the event AIL changes the "ship to" destination within
the fifteen (15) business days; provided, however, Contractor
shall use all commercially reasonable efforts to limit such
delay. Otherwise, the original delivery date shall remain in
effect.
(c) Subject to Section 8.5, AIL may reschedule any Scheduled Delivery
Date contained in Purchase Commitment at no cost, expense or
liability at least ten (10) business days prior to such Scheduled
Delivery Date, up to two (2) times per Gateway Terminals;
provided, however that the updated Scheduled Delivery Date may
not be more than ninety (90) days following the original
Scheduled Delivery Date. If the new Scheduled Delivery Date is
within thirty (30) days of the prior Scheduled Delivery Date,
then Contractor shall arrange and pay for all additional storage
costs and expenses for the Order. If the new Scheduled Delivery
Date is more than thirty (30) days after the prior Scheduled
Delivery Date, then such reasonable additional transportation and
storage costs and expenses incurred by Contractor shall be
payable by AIL. Payment for Gateway Terminals delivered pursuant
to a new Scheduled Delivery Date shall be paid in accordance with
Article 15 as of the new Scheduled Delivery Date; provided,
however that payment for Gateway Terminals shall be due no later
than ninety (90) days following the original Scheduled Delivery
Date (provided that the Gateway Terminal has delivered to AIL in
accordance with Section 6.3(b)).
8.7 GATEWAY TERMINAL FINANCING PROGRAM.
Contractor agrees to provide, or assist in arranging financing for AIL
and its Service Providers on competitive commercial terms at least as
favorable as the terms customarily provided by Contractor to its other
customers in the geographic regions in which AIL or its Service
Providers are located, as such terms may evolve during the term of the
Agreement based upon specific credit worthiness of AIL or such Service
Provider and appropriate security provisions. Indicative terms for such
financing program are as follows:
- ***financing term
- Amounts of up to ***per Gateway Terminal
- Interest rate ***based on credit review of the purchaser
(AIL or the applicable Service Provider)
- Monthly payments
- Facility to be secured by equipment, and credit rating of
Service Provider on limited or non-recourse basis to AIL
for Service Provider financing
- Extension of credit subject to standard credit and
financial review of AIL or Service Provider, as
applicable.
9. SHIPPING, INSTALLATION AND INTEGRATION
9.1 PACKING.
All deliveries to AIL pursuant to this Agreement shall be preserved,
packaged and packed to ensure safe delivery to their destinations
without damage. All Gateway packages shipped to AIL
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and Service Providers shall contain the items required in Section 1.7 of
the SOW, plus any optional items if ordered.
9.2 SHIPPING.
Unless otherwise specified in an Order accepted by Contractor, all
shipments hereunder shall be delivered to the loading dock FOB
Contractor's designated site in North America.
9.3 INSTALLATION.
(a) The price of installation, excluding the cost of site
preparation, travel and options, of the Gateway Terminals at each
Pre-prepared Site is ***for a ***Gateway Terminal and ***for a
***Gateway Terminal with redundancy at the *** . For purposes of
this Section, a "Pre-prepared Site" is a site where Gateway
Terminal installation is to occur and which meets the following
criteria:
(i) the site is prepared in accordance with the Facility
Requirements Document contained in the SOW;
(ii) all Gateway Terminal equipment is on site and undamaged
prior to the arrival of the installation team;
(iii) the site can be accessed by the heavy equipment (e.g.
crane) needed to assemble the Gateway and readily
available; utilities (including power and telephone) are
available on-site;
(iv) sanitary facilities are available on-site; room and board
is available within 30 minutes of the site;
(v) Contractor personnel and Subcontractors have access to the
site and are permitted to work on-site at least 6 days a
week, 12 hours a day, if reasonable for conditions at such
site;
(vi) an AIL representative is on-site as a liaison between
Contractor and local authorities;
(vii) the weather does not limit the time that installation work
can be performed by more than 10%; and
(viii) there are no hostilities in the region which would
reasonably be considered to place safety or health of
Contractor personnel in jeopardy.
(b) The scope of installation effort is through the checkout of the
Gateway Terminals in accordance with the on-site acceptance test
plan that will be mutually agreed to by AIL and Contractor;
(i) The site is ground based, i.e. it is not on a tower or a
building.
(ii) The site can be reached from the United States within 24
hours total elapsed travel time.
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(iii) Support of other efforts, such as the integration of other
equipment with the Gateway Terminal, testing for
local/national/regional regulatory requirements, and
system level testing, will be performed on a T&M basis.
(c) AIL shall be responsible for site availability for Gateways to be
installed by Contractor and will advise Contractor within a
reasonable time if there is going to be a delay involving site
availability that would impact Contractor's installation.
Contractor shall provide AIL with reasonable prior written notice
of its need to access any AIL site, and AIL shall be responsible
for providing access to such site as reasonably necessary for
Contractor to perform the installation services, in accordance
with the provisions set forth in this Section 9.3.
(d) Contractor shall bill to AIL all travel, living costs, material
and other costs at Contractor's actual, unburdened cost, with
detailed supporting documentation and receipts therefor.
(e) For any installation not meeting the above criteria, the Parties
will work together to negotiate a mutually agreeable installation
solution by separate agreement.
(f) Contractor agrees to certify qualified Installers of AIL's choice
as described in Schedule 12.
9.4 INTEGRATION,
Contractor shall support AIL with the integration of the ATM Switch and
the Element Manager with the Gateway Terminals, testing for
local/national/regional regulatory requirements, and other system level
testing. For the Prototype Gateway, Preproduction Gateway and First
Article Production Gateway, Contractor will perform this effort at the
rates set forth in Schedule 9. For the Production Gateway Terminals,
Contractor, upon AIL's request, will submit a fixed price offer (plus
actual travel and living costs consistent with Schedule 9) to perform
the integration for a particular site.
9.5 RISK OF LOSS.
Risk of loss to any Gateway Terminals, Equipment or Software shipped to
AIL or its Service Provider shall vest in AIL, or such Service Provider,
as the case may be, upon acceptance of delivery of such items by the
authorized agent or carrier of AIL or Service Provider, as applicable,
if designated by such party in the corresponding Order and if not so
designated, upon delivery to the carrier at Contractor's shipping point,
unless otherwise mutually agreed in writing by Contractor and the
purchasing party. If Contractor obtains insurance on behalf of or for
the benefit of AIL, AIL shall be responsible for filing, processing and
pursuing all claims under such insurance policy.
9.6 TITLE.
Title, free and clear of all Liens, to any Gateway Terminal (exclusive
of Software) or Equipment shipped to AIL or its Service Providers shall
vest in such recipient upon acceptance of delivery of such items by the
authorized agent or carrier of AIL or Service Provider, as appropriate,
as designated by such party in the corresponding Order, and if not so
designated, upon delivery of the carrier at Contractor's shipping point,
unless otherwise mutually agreed in writing by Contractor and the
purchasing party. Notwithstanding the foregoing, if title must be
maintained
26
by Contractor in order to perfect a purchase money security interest as
described in Section 23.18 below, then title may not pass until the
security interest has been released.
10. LICENSES, PROPRIETARY RIGHTS AND ESCROW
10.1 GRANTS OF LICENSES TO CONTRACTOR.
(a) Development License to use AIL Confidential Information. AIL
hereby grants Contractor a worldwide, royalty-free, limited,
non-exclusive, non-transferable (except in accordance with
Section 23.1 hereof) development license to use and reproduce the
AIL Background Information and AIL Foreground Information
(including AIL's System and Gateway Terminals background
Intellectual Property related thereto) provided by AIL and
required by Contractor or its Subcontractors for the sole purpose
of designing and developing the Gateway Terminals (the
"Development License"). The term of the Development License will
be coterminous with the Term (as defined in Article 4 above).
(b) Production License. During the Term, AIL grants to Contractor a
worldwide, royalty-free, limited, non-exclusive, non-transferable
(except in accordance with Section 23.1 hereof) production
license to use the AIL Background Information and AIL Foreground
Information to manufacture and support the Gateway Terminals and
to reproduce, market, sell (except in the case of the Software),
license (in the case of Software) and distribute the AIL
Background Information and AIL Foreground Information solely as
contained in the Gateway Terminals and Comparable Gateway
Terminals (the "Production License"). Following the Initial Term,
the Parties mutually may agree to extend the Production License
on commercially reasonable terms. In any case, the Production
License shall be coterminous with the Term.
(c) Term of Licenses. Notwithstanding anything to the contrary in
Subsections 10.1(a) and 10.1(b), the term of the foregoing
Development and Production Licenses shall continue in effect as
long as and to the extent required by Contractor to fulfill its
obligations hereunder, including those for support, maintenance
and provision of parts.
10.2 GRANTS OF LICENSES TO AIL.
Subject to Section 10.3, Contractor hereby grants to AIL and its Service
Providers a worldwide, perpetual, fully-paid-up, royalty-free, limited,
non-exclusive, non-transferable (subject to Section 23.1 hereof) right
and license to use, operate, display, demonstrate, market, distribute,
lease and sell, and authorize others to perform the foregoing, the
Contractor Background Information, the Developed IP and Contractor
Foreground Information as incorporated with and into the Gateway
Terminals.
10.3 SOFTWARE LICENSES AND RIGHTS.
Commencing upon delivery of Software, Contractor grants to AIL and its
Service Providers a perpetual, nontransferable (except as permitted
pursuant to Subsection (g)), nonexclusive, fully-paid, royalty-free,
irrevocable, and a world-wide right and license (or sublicense for third
party software) to use, copy, access, display, operate and process the
Software in connection with AIL's or Service Providers intended use of
the Gateway Terminals.
(a) Back-up Copies. AIL and each Service Provider that purchases a
Gateway Terminal may make a reasonable number of copies per
Gateway Terminals (or as otherwise
27
required by applicable law) of the Software for back-up purposes
and for operation of the Gateways. Any such reproduction shall
include any copyright or similar proprietary notices contained in
the Software being reproduced.
(b) No Reverse Engineering. Neither AIL nor any Service Provider to
which AIL supplies Gateways shall attempt to decompile or reverse
assemble all or any portion of the Software in an effort to
obtain the Source Code for the Software, nor shall it authorize
others to do so, nor rent, lease, grant a security interest in,
or otherwise transfer rights to the Software except as set forth
herein.
(c) No Derivative Works. Neither AIL nor any Service Provider to
which AIL supplies Gateways shall, except as provided in Section
10.6, create a derivative work of the Software or modify the code
to the Software; provided, however, the foregoing shall not in
any manner whatsoever limit AIL's and its Service Providers
rights to use the Software in accordance with the Documentation
or Contractor's instructions or otherwise limit AIL's rights to
use any tools provided with the Software.
(d) Compliance by Service Providers. AIL shall require by written
agreement with the Service Providers to which AIL supplies
Gateways that such Service Providers agree to comply with the
provisions of Subsections (a) through (c) above, subject to the
requirements of applicable law.
(e) Modification of Escrowed Materials. In connection with AIL's
maintenance and support of the Software following a release from
escrow as provided in Section 10.6, AIL may add to, delete from,
or modify and create derivative works of the Software as provided
in Section 10.6; provided, however, that no changes, however
extensive, shall alter Contractor's or its suppliers' title to
the original Software. Title to any such additions or
enhancements to the Software shall vest in Contractor or the
supplier of the Software and AIL shall have the same license to
such modifications as it had in the original Software, except in
case where Contractor fails to provide support, in which case,
title to the enhancements lies with AIL. Both Parties agree not
to assert their respective Intellectual Property Rights in such
enhancements against the other. Contractor shall not have any
support or maintenance obligations with respect to such additions
or enhancements made by AIL to the Software.
(f) Third Party Use. AIL shall have the right to permit its officers,
employees, agents, advisors, third party consultants, and Service
Providers to use the Software on behalf of AIL or its Service
Providers, as the case may be, to the same extent AIL is
permitted hereunder, subject to the restrictions hereof.
(g) Transfer of Rights. AIL shall have the right to transfer any of
the licenses granted to AIL herein in the event AIL sells a
Gateway Terminal or in the event of an assignment or change in
Control in accordance with Section 23.1.
(h) Software Corrections and Updates. During the Warranty Period, AIL
and its Service Providers shall be entitled to receive from
Contractor, at no additional charge, all Software error
corrections, bug fixes, patches and mandatory updates
(collectively, "Software Corrections"). Following the Warranty
Period, Contractor agrees to provide Software Corrections to AIL
and its Service Providers for commercially reasonable fees. In
addition, Contractor may make available to AIL and Service
Providers from time to time during the Warranty Period at prices
determined by Contractor, certain updates,
28
upgrades, enhancements and releases (collectively, "Software
Updates"). Such Software Corrections and Software Updates shall
be considered to be Software hereunder. Ownership of the Software
Corrections and Software Updates as between AIL and Contractor
shall be determined in accordance with Section 10.4 hereof.
Software Corrections and Software Updates shall be tested as
provided in Section 6.5 prior to release.
10.4 PROPRIETARY RIGHTS.
(a) Assignment of Rights.
(i) Prior to permitting any Contractor Personnel to perform
work hereunder, Contractor and its Subcontractors will
enter into appropriate agreements with their respective
employees, contractors and consultants that properly
assign Intellectual Property Rights developed by such
employees, contractors and consultants so that the
provisions of this Agreement may be validly implemented
without infringement.
(ii) Prior to permitting any employee, contractor or consultant
to perform work hereunder, AIL will enter into appropriate
agreements with such persons and entities that properly
assign Intellectual Property Rights developed by such
employees, contractors and consultants so that the
provisions of this Agreement may be validly implemented
without infringement.
(b) Contractor Foreground Information. Subject to Subsections (a) and
(c) of this Section 10.4, any Contractor Foreground Information
produced by Contractor and its Subcontractors under this
Agreement, except for any AIL Confidential Information (which
shall remain the sole property of AIL or its licensors) contained
therein, shall be the sole property of Contractor, the
appropriate Subcontractors or their respective licensors.
Contractor agrees that it will negotiate in good faith to license
the Intellectual Property Rights contained in such Contractor
Foreground Information to AIL's authorized second source(s) on
commercially reasonable terms and fees acceptable to Contractor,
to the extent such second source is in need of such Intellectual
Property Rights related to the Contractor Foreground Information
to fulfill its obligations to AIL related to the AIL System.
(c) Patent Rights. Patent rights and rights in inventions first
created or reduced to practice in the course of performance under
this Agreement will be owned as follows:
(i) Solely by Contractor if created solely by Contractor
Personnel and to the extent they do not incorporate any
AIL Confidential Information (Intellectual Property Rights
related to such patent rights and rights of invention also
shall constitute Contractor Foreground Information);
(ii) Solely by AIL if created solely by AIL personnel and to
the extent they do not incorporate any Contractor
Confidential Information; and
(iii) Jointly without any appropriate right or obligation of
accounting to the other Party for profits from
exploitation of the rights, if created jointly by
Contractor Personnel and AIL personnel to the extent they
do not incorporate Confidential Information of either
Contractor or AIL. With respect to jointly owned patent
29
rights and rights in inventions, the Parties will provide
reasonable cooperation and assistance to one another in
the preparation, filing and prosecution of any patent
applications, and the execution of all associated
applications, assignments and other instruments. The
Parties will divide any costs and expenses incurred by the
Parties in preparing, filing and prosecuting any such
patent applications. However, if a Party does not wish to
pay the costs and expenses associated with preparing,
filing and prosecuting a particular patent application, it
may notify the other Party in writing. In such case, the
notified Party may either abandon the patent application
in question or may proceed with the application, in which
event the other Party will not be a joint owner of any
resulting patent.
(d) Other Proprietary Information. Each Party shall own its
respective Intellectual Property that each Party furnishes with
respect to the performance of its obligations under this
Agreement. Except as provided in subsection (c) above, all
Contractor Foreground Information shall be the property of
Contractor, exclusive of any Joint Confidential Information (and
the Intellectual Property appurtenant thereto, which shall be
owned jointly by the Parties) and any underlying background
Intellectual Property furnished by either Party. In addition,
Contractor shall escrow the Contractor Foreground Information as
Escrowed Materials pursuant to Section 10.6 below and AIL may use
such Escrowed Materials as provided therein.
(e) ***In such case, Contractor shall be entitled at its election to
royalties on commercially reasonable terms pursuant to a license
agreed to by the Parties or by an arbitrator in the event the
Parties are unable to agree upon the terms of such license, in
addition to all other damages and remedies available to
Contractor at law, in equity or otherwise, subject to
Contractor's ***as provided in this Subsection.
10.5 DOCUMENTATION.
(a) In accordance with the SOW, Contractor agrees to furnish and
convey to AIL and Service Providers, at no additional charge,
such Documentation in the English language covering the Gateway
Terminals delivered under this Agreement. Contractor shall
develop, publish and provide to AIL and its Service Providers as
appropriate, accurate and complete Documentation, written in a
manner reasonably understood by AIL and its Service Providers,
for each such Gateway Terminal produced hereunder. Contractor
shall make available to AIL, on an as-ordered basis, additional
copies of such Documentation at commercially reasonable prices.
Unless otherwise specified in an Order therefor and agreed to by
Contractor, all Documentation shall be in the English language
and Contractor agrees to have such Documentation translated as
necessary to support AIL's international sites subject to
agreement on the cost responsibility thereof. In addition,
Contractor shall provide copies of all Documentation to AIL in
electronic form.
(b) In addition to the rights set forth in Subsection (a), Contractor
hereby grants AIL the right to reproduce, modify, distribute and
enhance the Documentation. AIL also has the right to make copies
of such modifications and enhancements and distribute the same.
In the event AIL modifies the Documentation in a manner not
directed or approved by Contractor, Contractor will not be
responsible for AIL's use of such Documentation to the extent it
is modified by AIL. Contractor may review and approve AIL's
proposed modifications and enhancements to the Documentation.
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10.6 TECHNICAL MATERIALS ESCROW.
(a) Within ninety (90) days following the Effective Date, Contractor,
AIL and Fort Knox Escrow Services, Inc. will enter into a written
escrow agreement substantially in the form attached hereto in
Schedule 5 (the "Escrow Agreement") pursuant to which Contractor
will deposit with the escrow agent applicable Technical Materials
available at that time related to such Gateway Terminals (the
"Escrowed Materials"). Contractor shall update the Escrowed
Materials upon delivery of each of the Prototype Gateway
Terminals and the Preproduction Gateway Terminals and following
the conclusion of Alpha and Beta testing, and at the end of each
calendar quarter thereafter. The Parties shall share the fees
payable to Fort Knox Escrow Services, Inc. equally. Contractor
represents and warrants that the Escrowed Materials shall, at all
times, be sufficient for an individual reasonably experienced in
satellite telecommunications technology to understand and utilize
such materials to manufacture and support the Gateway Terminals
as contemplated herein. During the Term, Contractor will maintain
such Escrow Materials current with respect to the Gateway
Terminals then utilized by AIL. Subject to the restrictions set
forth in the Escrow Agreement, the escrow agent will make the
Escrow Materials available to AIL upon AIL's notice to Contractor
and the escrow agent that one of the following has occurred if
Contractor does not, within ten (10) days thereafter, notify AIL
and the escrow agent that it objects to the release of the Escrow
Material:
(i) the institution by Contractor of insolvency, receivership
or bankruptcy proceedings;
(ii) a general assignment by Contractor for the benefit of
creditors,
(iii) the appointment of a receiver for Contractor,
(iv) the filing by creditors of Contractor of a petition in
bankruptcy against Contractor which is not stayed or
dismissed within sixty (60) days;
(v) Contractor ceasing to manufacture or to deal in the
Gateway Terminals;
(vi) Contractor's failure to reasonably correct or cure any
material Defects in the Gateway Terminals in accordance
with this Agreement following Contractor's receipt of a
written notice thereof from AIL;
(vii) AIL's termination of this Agreement for Cause in
accordance with Section 22.1; or
(viii) AIL's termination of this Agreement in accordance with
Section 13.1
(items (i) through (viii) hereinafter referred to as the
"Release Conditions").
(b) In accordance with the Escrow Agreement, the escrow agent will
give written notice to Contractor contemporaneously with the
delivery of the Escrow Materials to AIL. In the event it is
determined that a Release Condition did not occur or is cured to
AIL's reasonable satisfaction, AIL will be required to promptly
return the Escrow Materials to the escrow agent.
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(c) AIL shall be entitled to use the Escrow Materials as necessary to
support and maintain its purchased Gateway Terminals as well as
to manufacture, or have manufactured, Gateway Terminals only to
fulfill Contractor's obligations hereunder, including obligations
that may arise in the future or at Contractor's election in
accordance with the terms hereof. Notwithstanding the foregoing,
in the case of Subsection 10.6(a)(vi) above, AIL may use the
Escrow Materials only to cure or resolve such Defect. Such use
shall include the right to copy, disclose, modify, enhance,
upgrade, revise, and create derivative works of such Escrow
Materials. AIL shall be entitled to permit its officers,
employees, agents, advisors, third party consultants and Service
Providers to use the Escrow Materials on behalf of AIL. With
respect to AIL disclosures to third parties, AIL agrees to only
disclose the Escrow Materials to third parties that are working
for AIL under a confidentiality arrangement. AIL will immediately
return the Escrow Materials, including all copies thereof, to the
Escrow Agent when AIL no longer requires the Escrow Materials for
the purposes permitted hereunder.
11. TRAINING; MAINTENANCE; WARRANTY SERVICES
11.1 TRAINING.
Contractor will provide AIL and its Service Providers training in
accordance with the following:
(a) Contractor will provide, at its designated facility, one (1) five
(5) day training class for each Gateway Terminal purchased, in
accordance with SOW ***. These courses will be available at
Contractor-designated facilities or at AIL-designated facilities
as mutually agreed and priced. Training, which will be scheduled
at least ninety (90) days in advance and will be conducted within
forty-five (45) days of delivery of a Gateway Terminal, will
consist of formal and informal classroom instruction and actual
hands-on training in laboratory environments. Contractor reserves
the right to subcontract the training to a designated third party
vendor; provided that such vendor is trained and qualified by
Contractor and that Contractor shall perform the training at no
charge to AIL or a Service Provider if the third party vendor's
training services are inadequate, in AIL's reasonable
determination. Contractor will have the option to enroll AIL or
Service Provider students into training classes held at either
third party or Contractor's training facilities. Additional
training desired by AIL or its Service Providers will be mutually
agreed upon. Contractor shall develop and furnish all training
materials in accordance with the SOW.
(b) Upon receipt of purchase order, Contractor shall, at commercially
reasonable prices and terms, provide remedial training and
training on any changes, updates and enhancements to the Gateway
Terminals or as otherwise necessary for AIL and its Service
Providers to be capable of performing all necessary services,
including installation, operation, maintenance, provisioning,
monitoring and control of the Gateways.
11.2 MAINTENANCE AND SUPPORT.
During the Term and at prices to be mutually agreed upon, Contractor
will have the ability to service or will have an agreement with others
to have the ability to maintain and service Gateways in each country
where Gateways are installed. Gateway Terminal repairs are to be
effected by Contractor's help desk services, in accordance with this
Agreement. Contractor shall create service manuals and maintenance
documents, in the English language, for all versions and generations of
the Gateway Terminals, which shall be provided with each delivered
Gateway Terminal to AIL and Service
32
Providers, as applicable, for use by them and their designated third
party maintenance providers. At AIL's request, Contractor shall provide
to AIL the costs and fees associated with translating and providing
non-English language service manuals and maintenance documents.
11.3 PRODUCTION WARRANTY AND POST-WARRANTY SERVICES.
(a) Initial Warranty Period. During the Initial Warranty Period,
Contractor shall provide the following warranty services to AIL
and its Service Providers at no additional charge:
(i) telephone and email customer support to the help desk of
designated maintenance providers of AIL or its Service
Providers on a 24 x 7 x 365 basis for trouble logging and
for basic fault isolation assistance as provided for in
Section 17.3(c)(vi) to answer such maintenance providers'
maintenance-related questions with respect to the Gateway
Terminals;
(ii) repair or replace, at Contractor's option, the failed
Gateway Terminal upon receipt of the Defective equipment
and return such upon its repair or replacement. AIL or its
Service Provider is responsible for all handling,
shipping, duties, taxes and insurance associated with
transporting the failed unit to Contractor. Contractor is
responsible for costs of shipping, handling and insurance
associated with transporting the repaired/replaced unit
back to the Gateway site;
(iii) inspection, diagnosis and repair or replacement of failed
equipment at the Gateway Support Facility for
field-replaceable units; and
(iv) inspection, diagnosis and repair or replacement of failed
equipment at the Gateway site for components that are not
field-replaceable units. Contractor shall bear the travel
and labor costs associated with such Warranty inspection,
diagnosis, and repair or replacement of failed equipment
at the Gateway site for the first four (4) of such
Warranty services provided during the Term. Thereafter,
AIL shall pay the travel and labor costs associated with
such Warranty services at Gateway sites at the rates
provided in Schedule 9.
(b) Extended Warranty Period. AIL or its Service Providers may extend
the Initial Warranty Period one or more times in their respective
sole discretion, for additional consecutive one-year periods each
without lapse, upon payment of the Extended Warranty fee set
forth in Schedule 6 (the aggregate of such extensions the
"Extended Warranty Period"). Contractor's procedures for
obtaining Warranty services are set forth in Schedule 7 attached
hereto. During the Extended Warranty Period, Contractor shall
provide the extended warranty services, including the services
described in Subsection 11.3(a) above and any other services as
the Parties may mutually agree to AIL and its Service Providers
at the Extended Warranty price.
(c) Post-warranty Maintenance and Support. Following the applicable
Warranty Period and for the Term, Contractor will provide, in
accordance with mutually agreed upon schedule and prices, depot
level maintenance, telephone support, sustaining engineering
support, sustaining training, sparing, field engineering and
field services (including on-site repair and support services).
11.4 CONTRACTOR ACCESS TO GATEWAY FACILITIES.
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Contractor shall coordinate with AIL to obtain approval for any required
access to Gateway facilities in accordance with mutually agreed upon
procedures to be developed at least six (6) months prior to commencement
of AIL commercial Gateway operations.
11.5 GATEWAY SUPPORT FACILITY.
Contractor shall establish, maintain and use a Gateway Support Facility
for the period from the delivery by AIL to Contractor of the Prototype
Gateway Terminal through the end of the Term. Contractor shall use the
Gateway Support Facility for Gateway Terminals (and component) testing,
diagnostic, support, repair and other services, as set forth in Section
3.4.7 of the SOW.
12. CHANGE PROCEDURES AND CONTRACT MANAGEMENT
12.1 DEVELOPMENT PHASE CHANGE PROCEDURES.
During the Term, AIL may require changes in this Agreement, including
the applicable provisions of the SOW. Within fifteen (15) days of AIL's
requested change, Contractor shall provide AIL with a summary of the
effect of such changes on the price (recurring and non-recurring) and
time required for performance, and AIL shall elect whether to pursue
such change. Should any such change increase or decrease the price of or
time required for performance of Contractor's or its Subcontractors'
obligations hereunder, Contractor shall be entitled to a reasonable
adjustment in the Milestone Payments, Purchase Price or delivery
schedule, as applicable. Price adjustments related to Development Phase
changes shall account only for the net cost impact incurred by
Contractor as a result of the change plus a reasonable profit thereon
***. Contractor will provide reasonably detailed back-up cost data to
support its claim for adjustment. All AIL-proposed Changes developed
under this Section shall be warranted and supported by Contractor as if
part of the Gateway Terminals when first deployed.
12.2 PRODUCTION PHASE CHANGE PROCEDURES.
(a) Contractor shall also develop and provide for sale to AIL Gateway
Terminals modifications and enhancements and new commercially
available products in accordance with the following:
(i) From time to time during the Term, AIL may provide to
Contractor a proposed change in or addition to the Gateway
Terminals or a written idea for a new product (an
"AIL-proposed Change"). All such AIL-proposed Changes
shall be considered AIL Background Information for
purposes hereof.
(ii) Within thirty (30) days of receipt in writing of an
AIL-proposed Change, Contractor shall propose a price for
the AIL-proposed Change and applicable delivery schedule.
In determining such price, if the AIL-proposed Change
includes a request for Contractor to correspondingly
reduce or eliminate any components of the Gateway
Terminals it is then providing, such components shall be
considered "Replacements." In that event, the Parties
shall determine the costs and expenses required to provide
the Replacements and the reduction in the costs and
expenses related to the components being replaced, and
there shall be an appropriate adjustment in the applicable
price for such costs and expense being replaced.
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(iii) If AIL in its sole discretion accepts such price with
respect to items and delivery schedule (A) Contractor, at
its sole cost and expense, shall design, develop and/or
manufacture or have manufactured such AIL-proposed Change
in accordance with the proposed delivery schedule and (B)
AIL shall grant Contractor (including its Subcontractors,
if necessary) all rights it has as necessary to permit
Contractor (including its Subcontractors, if necessary) to
design, develop and/or manufacture such AIL-proposed
changes.
(iv) All AIL-proposed Changes developed under this Subsection
(a) shall be warranted and supported by Contractor as if
part of the Gateway Terminals when first deployed.
(v) To the extent that any AIL-proposed Change effects a
delivery schedule hereunder, the Parties will
appropriately adjust Contractor's delivery obligations
hereunder.
(b) No changes in or additions to any Gateway Terminals, Equipment,
Software or new products provided herein, or additional charges
therefore, shall be made unless approved in writing by the AIL
Contract Manager. Notwithstanding anything to the contrary
herein, Contractor is authorized, without AIL's prior approval
and without charge to AIL, to make changes that do not affect a
Gateway Terminal's compliance with applicable Standards and the
applicable provisions of the SOW, including applicable interface
specifications, in a manner consistent with Section 6.5 above.
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12.3 CONTRACTOR-PROPOSED CHANGES.
(a) All Contractor-proposed changes to the SOW shall be submitted to
AIL in a written proposal that describes in reasonable detail the
proposed change and the technical, performance and economic
effects on the Gateway Terminals and the AIL System of such
change. AIL may decline to change the SOW, or AIL may implement
such change.
(b) If either Party becomes aware of an inconsistency between the
Specifications and the Standards, or if changes to any Standard
from time to time after the Effective Date require material
changes to be made to the Gateway Terminals (or any configuration
of Gateway Terminal being shipped to a particular country) that
would result in a material impact on either the applicable
Purchase Prices, non-recurring costs and expenses or delivery
schedule of such Gateway Terminals, the Parties agree to
negotiate in good faith and to reasonably adjust Contractor's
applicable Purchase Price, non-recurring payments and delivery
schedules to accommodate such Standards change. Each Party will
promptly advise the other Party at such time as it becomes aware
of any inconsistency between the Specifications and the Standards
or of any such changes or proposed changes to any Standard.
(c) Changes required by the obsolescence of components of the Gateway
Terminals shall be made by Contractor at Contractor's sole
expense through December 31, 2005, at which time AIL shall be
responsible for the reasonable costs incurred by Contractor in
making such changes. Contractor agrees to use commercially
reasonable efforts to avoid the need for such changes, including
without limitation, providing AIL the opportunity to procure
last-time buys and identifying sources of alternative components.
12.4 CONTRACT MANAGEMENT.
(a) As of the Effective Date, each Party shall appoint an executive
to act as contract manager having the primary responsibility for
performance of its company's obligations hereunder and for
managing the relationship between the Parties (the "Contractor
Program Manager" or the "AIL Program Manager", as the case may
be). Each Program Manager shall devote the necessary time and
efforts to managing its company's responsibilities under this
Agreement, and have authority to escalate all unresolved problems
to its senior management. Each Party also shall identify a
primary contact who shall serve as the point of contact for all
day-to-day and operational issues.
(b) Contractor agrees to maintain open and collaborative dialogue
with AIL and offer full disclosure with respect to:
(i) the Milestone and Payment Schedule milestones and
decisions made by Contractor on an on-going basis
throughout the design process and the remainder of the
term;
(ii) the status of delivery of Gateway Terminals and Services
provided hereunder;
(iii) the state of affairs regarding any aspect of the Gateway
Terminals;
(iv) all pertinent limitations and problems with the Gateway
Terminals; and
(v) its known limitations of its work on the Gateway
Terminals.
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12.5 CONTRACTOR PERSONNEL.
(a) "Key Contractor Personnel" shall be the Contractor and
Subcontractor personnel filling the positions identified in
Schedule 8 hereto.
(b) The Key Contractor Personnel shall be located at the site(s) that
the Parties believe will permit the most effective performance of
Contractor's obligations hereunder.
(c) Before assigning an individual to any position described in
Schedule 8, whether as an initial assignment or a subsequent
assignment, Contractor shall notify AIL of the proposed
assignment, shall introduce the individual to appropriate AIL
representatives, and shall provide AIL with a biography and other
information about the individual as reasonably requested by AIL.
If AIL in good faith objects to the proposed assignment, the
Parties shall attempt to resolve AIL's concerns on a mutually
agreeable basis. If the Parties have not been able to resolve
AIL's concerns within five (5) business days, Contractor shall
not assign the individual to that position and shall propose to
AIL the assignment of another individual of suitable ability and
qualifications. The Key Contractor Personnel that have been
approved as of the Effective Date are listed in Schedule 8. Key
Contractor Personnel may not be transferred or re-assigned,
except in the case of termination of employment, until a suitable
replacement has been approved by AIL, such approval not to be
unreasonably withheld. In no event shall any Key Contractor
Personnel be transferred or re-assigned by Contractor to perform
work for a Competitor of AIL deploying satellite switched
networking technology for a period of ***following the date such
individual terminates work related to this Agreement. Contractor
shall conduct an exit interview with all Key Contractor Personnel
who terminate their employment with Contractor to review their
confidentiality and non-disclosure obligations as provided
herein.
12.6 REPLACEMENT, QUALIFICATIONS, AND RETENTION OF CONTRACTOR PERSONNEL.
(a) In the event that AIL determines in good faith that the continued
assignment to work performed hereunder of a Contractor employee
is not in the best interest of AIL, then AIL shall give
Contractor written notice to that effect requesting that the
employee be replaced. Promptly after Contractor's receipt of such
a request by AIL, Contractor shall investigate the matters stated
in the request and discuss its findings with AIL. If AIL still in
good faith requests replacement of the employee, the Parties
shall negotiate in good faith the resolution of this matter.
(b) The personnel Contractor assigns to perform its obligations
hereunder shall be properly educated, trained and qualified for
the services they are to perform.
(c) AIL and Contractor both agree that it is in their best interests
to keep the turnover rate of the Contractor Personnel performing
its obligations hereunder to a reasonably low level. Accordingly,
if AIL determines that turnover rate of the Contractor Personnel
is excessive and so notifies Contractor, Contractor shall meet
with AIL to discuss the general reasons for the turnover rate. If
appropriate, Contractor shall submit to AIL its proposals for
reducing the turnover rate, and the Parties shall mutually agree
on a program to bring the turnover rate down to an acceptable
level. In any event, notwithstanding transfer or turnover of
Contractor Personnel, Contractor remains obligated to perform its
obligations hereunder without degradation.
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12.7 AIL THIRD PARTY SERVICES AND PRODUCTS.
(a) Contractor agrees to provide all reasonable cooperation with the
agents, consultants, subcontractors and third party suppliers of
AIL as requested by AIL to achieve functional compatibility of
the Gateway Terminals with the AIL System.
(b) Third parties retained by AIL shall comply with Contractor's
reasonable security and confidentiality requirements, and shall,
to the extent performing work on Contractor-owned, licensed or
leased Software, Gateway Terminals or Equipment, comply with
Contractor's reasonable work standards, methodologies and
procedures. Contractor shall immediately notify AIL if an act or
omission of such a third party may cause a problem or delay in
providing the Gateway Terminals or Services and shall work with
AIL to prevent or circumvent such problem or delay.
12.8 PRIME CONTRACTOR.
Contractor acknowledges and agrees that it is the prime contractor under
this Agreement and as such, assumes full responsibility and liability
for the performance of all Contractor Personnel and third parties used
by Contractor hereunder to the same extent as if such obligations were
performed by Contractor. Without limiting the generality of the
foregoing, Contractor shall be responsible for discharging any Liens
placed on any Gateway Terminals, Equipment or Software purchased by AIL
or its Service Providers hereunder, except for purchase money security
interests as described in Section 23.18 below. Except as required by
Section 3.3, Contractor shall be AIL's sole point of contact regarding
the work performed hereunder, including with respect to payment.
12.9 CONTRACTOR'S USE OF SUBCONTRACTORS.
(a) All Subcontractors to which Contractor discloses AIL Confidential
Information must agree in writing to be bound to the
non-disclosure, confidentiality and invention assignment
provisions contained herein.
(b) As provided in Subsection (a) of this Section and to the extent
AIL may agree otherwise in writing, Contractor shall not
subcontract any of its obligations under this Agreement, which
shall include the replacement of any previously approved
Subcontractor, if the value of the subcontract is *** or more
(such subcontract or replacement subcontract, the "Material
Subcontract" and the subcontractor proposed to perform same, the
"Material Subcontractor"), except as follows:
(i) Prior to entering into a Material Subcontract, Contractor
shall give AIL not less than thirty (30) days' prior
written notice specifying the Services affected, a
description of the scope and material terms (other than
price) of such Material Subcontract, and the identity and
qualifications of the proposed Material Subcontractor. If
AIL reasonably objects to the use of a proposed Material
Subcontractor, the Parties shall discuss AIL's concerns
and Contractor will either use a different Material
Subcontractor or provide AIL a detailed rationale in
writing as to why it will use the proposed Material
Subcontractor.
(ii) Contractor shall disclose to the Subcontractor all the
terms and conditions of the Agreement that may impact the
Subcontractor, and the Subcontractor will be required to
comply with the obligations imposed by those terms and
conditions.
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(iii) AIL also shall have the right during the Term to revoke
its prior approval of a Material Subcontractor and direct
Contractor to replace such Subcontractor or take such
other action as may be mutually agreed by the Parties, if
the Subcontractor's performance results in an uncured
material breach of this Agreement. Notwithstanding the
foregoing, AIL does not have the unilateral right to
revoke Contractor's use of any Material Subcontractor as a
Subcontractor hereunder.
(iv) Without limiting the generality of Contractor obligations
set forth in Section 12.6, Contractor shall remain
responsible for obligations performed by Subcontractors to
the same extent as if such obligations were performed by
Contractor employees. Contractor shall be AIL's sole point
of contact regarding the Gateway Terminals and Services,
including with respect to payment Contractor shall not
disclose Confidential Information of AIL or Joint
Confidential Information to a Subcontractor unless and
until such Subcontractor has agreed in writing to protect
the confidentiality of such information in a manner
substantially equivalent to that required of Contractor
under this Agreement, and in all respects, only on a
"need-to-know" basis.
(c) To the extent commercially reasonable, Contractor shall include
in each contract with a Subcontractor the right to assign such
contract to AIL if AIL terminates this Agreement for breach
pursuant to Section 22.1(a) below.
12.10 ON-SITE REPRESENTATIVES.
Contractor agrees to provide reasonable office space and telephone and
data line access at Contractor's primary design and manufacturing
site(s) to AIL employees and designated representatives from time to
time (each, an "On-Site Representative"). Each On-Site Representative
shall have access to the work being performed by Contractor hereunder on
a non-interference basis, including:
(a) the ability to move without escort within designated unrestricted
areas within appropriate facilities;
(b) visibility into development and production of Gateway Terminals;
(c) right to attend regularly scheduled meetings, reviews and tests;
and
(d) electronic access to Gateway Terminals-related documents
submitted to AIL and a right to copy same.
13. GATEWAY PRICES.
13.1 GENERAL.
Contractor agrees to offer Gateway Terminals for sale to AIL's Service
Providers at the prices per Gateway Terminals no greater than those
Purchase Prices offered to AIL hereunder. Accordingly, AIL and it
Service Providers may purchase Gateway Terminals, Equipment, Services
and Documentation at the Purchase Prices set forth herein. The Purchase
Price of each Gateway Terminal shall include such Gateway Terminals and
the items set forth in Section 1.7 of the SOW. Purchase Prices are FOB
Contractor's designated site. Purchase Prices do not include
39
the costs to AIL of delivery (including freight, insurance, taxes,
duties, warehousing, etc.), travel and other expenses related to System
Engineering Support Services, Permits and licenses for import,
installation or operation of the Gateways, service and maintenance other
than service and maintenance provided for in this Agreement and Gateway
Terminals Installation and Integration (as described in Sections 9.3 and
9.4), which AIL shall pay for in accordance with the prices set forth in
this Agreement. If Contractor materially fails, after the applicable
cure period, to offer the Gateway Terminals for sale at prices no
greater than the Purchase Prices specified herein (unless otherwise
mutually agreed by Contractor and AIL or a Service Provider, as the case
may be), Contractor agrees to pay AIL or the applicable Service Provider
a payment equal to *** of the difference between the actual Gateway
Terminals price charged and the applicable Purchase Price for such
Gateway Terminals(s) or, AIL, in lieu of such payment, shall be entitled
to terminate this Agreement. If AIL so terminates this Agreement for
Contractor's uncured material breach of this Section, AIL shall be
entitled to have Contractor's obligations hereunder completed by another
party or parties, and Contractor reasonably shall fulfill its
obligations under Section 22.3(a). The foregoing remedies shall be AIL's
sole remedies for breach of this Section.
13.2 DETERMINATION OF PURCHASE PRICES.
(a) ***Gateways. For the Purchase Commitment, AIL or its Service
Providers shall pay a firm fixed Purchase Price of ***for each
***Gateway Terminal and ***delivered by Contractor and Accepted
hereunder. Pricing for other Gateway Terminal Orders shall be in
accordance with the price table set forth in Schedule 2.
Notwithstanding the foregoing, if AIL and/or its Service
Providers order additional Gateway Terminals (up to an aggregate
of ***; with ***Gateway Terminal) on or prior to ***, the
Purchase Price for such additional Gateway Terminals shall be
calculated based on the aggregate quantity of the Purchase
Commitment and the additional Gateway Terminals using the price
table contained in Schedule 2. In the foregoing case, the first
*** Gateway Terminals of the total number scheduled for delivery
shall be considered the Purchase Commitment.
(b) Pricing Terms. All pricing set forth in Schedule 2 is in Year
2000 Dollars and such pricing shall be adjusted in accordance
with Schedule 2. If neither AIL nor its Service Providers
schedule any Gateway Terminals orders for delivery and take
delivery for a continuous eighteen month period, the Parties
agree to revise Schedule 2 based on the economic impact of
restarting Contractor's production line for Gateway Terminals. If
the Parties fail to reach mutual agreement on a revised Schedule
2, a revised Schedule 2 shall be established pursuant to Article
21.
13.3 MOST FAVORED CUSTOMER.
(a) Most Favored Customer. If Contractor provides Gateway Terminals
or Comparable Gateway Terminals to a Service Provider of AIL or
to a Competitor of AIL and the prices charged to such Competitor
for such Gateway Terminals are lower than the prices charged to
AIL for similar business terms, quantities and delivery dates, on
a regional basis, the prices charged to AIL shall be
appropriately adjusted to provide to AIL the benefit of such
lower prices. Such adjustment shall be retroactive to the first
date on which the lower charges to such Competitor became
effective. Upon each anniversary of the Effective Date during the
Term, Contractor's chief financial officer shall certify in
writing to AIL that Contractor is in compliance with Contractor's
Most Favored Customer Status obligations herein and shall provide
the information reasonably
40
requested by AIL to verify such compliance. AIL shall retain the
right to review, examine and/or audit Contractor using third
party independent auditors if (i) the above certification is not
so provided by Contractor or (ii) AIL has reason to believe that
information provided by Contractor is inaccurate.
(b) Pricing Cooperation. Both Parties shall cooperate to assure that
the price AIL charges for its services and the price Contractor
charges for its Gateway Terminals are competitive in each country
in which such services and Gateway Terminals are offered for sale
by AIL and Contractor, respectively
13.4 TAXES.
Unless otherwise agreed to by the Parties in an Order, the Parties'
respective responsibilities for taxes arising under or in connection
with this Agreement shall be as follows:
(a) Each Party shall be responsible for any personal property taxes
on property it owns or leases, for franchise and privilege taxes
on its business, and for taxes based on its net income or gross
receipts.
(b) Contractor shall be responsible for any sales, use, excise,
value-added, services, consumption, and other taxes, customs and
duties assessed or otherwise payable by Contractor on any goods
or services that are used or consumed by Contractor in providing
the Gateways and Services where the tax is imposed on
Contractor's acquisition or use of such goods or services and the
amount of tax is measured by Contractor's costs in acquiring such
goods or services.
(c) AIL shall be responsible for any sales, use, excise, value-added,
services, consumption, or other tax, customs and duties assessed
on any particular Gateway Terminals or Service purchased by AIL
and delivered by Contractor to AIL or designee hereunder. Such
taxes are in addition to the prices set forth herein and shall be
identified separately on invoices. AIL shall also be responsible
for taxes on goods and services for those items AIL has agreed to
reimburse Contractor in this Agreement.
(d) The Parties agree to cooperate with each other to enable each to
more accurately determine its own tax liability and to minimize
such liability to the extent legally permissible. Contractor's
invoices shall separately state the amounts of any taxes
Contractor is collecting from AIL. Each Party shall provide and
make available to the other any resale certificates, information
regarding out-of-state or out-of-country sales or use of
equipment, materials or services, and other exemption
certificates or information reasonably requested by either Party.
(e) Contractor shall promptly notify AIL of, and coordinate with AIL
the response to and settlement of, any claim for taxes asserted
by applicable taxing authorities for which AIL is responsible
hereunder, it being understood that with respect to any claim
arising out of a form or return signed by a Party to this
Agreement, such Party shall have the right to elect to control
the response to and settlement of the claim, but the other Party
shall have all rights to participate in the responses and
settlements that are appropriate to its potential
responsibilities or liabilities. If AIL requests Contractor to
challenge the imposition of any tax, and Contractor agrees to do
so, AIL shall reimburse Contractor for the reasonable legal fees
and expenses it incurs. AIL shall be entitled to any tax refunds
41
or rebates granted to the extent such refunds or rebates are for
taxes that were paid by AIL.
14. AIL PAYMENTS TO CONTRACTOR AND INVOICING
14.1 INITIAL PAYMENT.
Within ten (10) days after AIL's receipt of an invoice therefor by
Contractor, AIL will pay to Contractor the sum of ***(the "Initial
Payment") by electronic funds transfer in accordance with Contractor's
wire instructions provided to AIL prior to the Effective Date. The
Initial Payment shall constitute a Milestone Payment (for Milestone No.
1) as described in Section 14.2(c) below.
14.2 PAYMENTS.
(a) Payment Schedule for Purchase Commitment. Payments for Production
Gateways that compose the Purchase Commitment are to be made as
follows:
(i) ***of the Purchase Price for all Gateway Terminals in the
Purchase Commitment is due ***;
(ii) *** of the Purchase Price for all Gateway Terminals in the
Purchase Commitment is due three (3) months prior to the
original Scheduled Delivery Date of the first Gateway
Terminal to be delivered under the Purchase Commitment;
and
(iii) *** of the Purchase Price for each Gateway Terminal is due
upon Acceptance and delivery of the Gateway Terminal (FOB
Contractor's designated site).
(b) Payment Schedule for other Gateway Terminals. Payments for
Production Gateways, other than the Purchase Commitment, and
optional priced items (other than Long Lead Kits and shelters)
are to be made as follows:
(i) ***of the Purchase Price is due upon placement of an
Order;
(ii) ***of the Purchase Price is due three (3) months prior to
the Scheduled Delivery Date; and
(iii) ***of the Purchase Price is due upon Acceptance and
delivery (FOB Contractor's designated site).
(c) Payment Schedule for Long Lead Kits. Payments for Long Lead Kits
are to be made as follows:
(i) ***of the purchase price of each Long Lead Kit, as set
forth in Schedule 2, is due upon placement of the Long
Lead Kit Order;
(ii) ***of such purchase price of each Long Lead Kit is due
three (3) months prior to the scheduled receipt of the
Long Lead Kit at the Contractor's facility; and
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(iii) ***of such purchase price of each Long Lead Kit is due
upon receipt of the Long Lead Kit by Contractor at
Contractor's facility.
(d) Payment Schedule for Optional Shelters. Payments for optional
shelters are to be made as follows:
(i) ***for the purchase price for optional shelters, as set
forth in Schedule 2, is due upon placement of the optional
shelters Order; and
(ii) ***for such purchase price for optional shelters is due
upon Acceptance of the optional shelters;
(e) Milestone Payments. In accordance with the mutually agreed upon
Milestone and Payment Schedule and subject to Contractor's timely
compliance with the terms hereof, AIL will pay Contractor
Milestone Payments for nonrecurring engineering payments in the
aggregate of *** for the work described herein (including the
SOW). Milestone Payments shall not include installation charges,
shipping charges, taxes, duties and insurance. All Milestone
Payments made by AIL to Contractor are subject to satisfaction of
mutually agreed upon Milestone Events as set forth in Schedule 1.
All Milestone Payments shall be paid in accordance with Section
14.3 and 14.4 below.
(f) Support Services. The Milestone Payments shall also cover Support
Services (of up to *** staff-hours, with the allocation of such
hours as approved by AIL), as defined in Section 3 of the SOW,
and Contractor shall be responsible for such other obligations as
are set forth in the SOW. If AIL requests Contractor support
hours in excess of *** staff-hours, Contractor shall provide such
services at rates not to exceed Contractor's time and materials
rates set forth in Schedule 14. AIL will reimburse Contractor for
its reasonable travel and related expenses required in performing
Support Services, in accordance with Schedule 9. None of the
Support Service hours provided hereunder shall have been deemed
to be performed prior to the Effective Date.
14.3 INVOICING.
(a) Following (i) Contractor's successful completion of each
Milestone in accordance with the applicable Milestone Acceptance
Criteria and all other applicable requirements of this Agreement
and (ii) Acceptance by AIL that the Milestone is complete,
Contractor may invoice AIL for the applicable Milestone Payment.
Each invoice shall be accompanied by Contractor's written
certification that each Milestone to which the invoice relates
has been fully and successfully completed in accordance with the
Milestone Acceptance Criteria.
(b) In accordance with the payment schedule set forth in Section
14.2(a), Contractor will invoice AIL or the applicable Service
Provider for amounts due pursuant to this Agreement for such
Gateways. Such invoice shall include invoice date, Order number,
Gateway Terminals part numbers and descriptions, quantities, unit
prices and total amount due.
(c) For deliverables provided by Contractor (as mutually agreed by
the Parties and other than those required hereunder or under the
SOW), Contractor will invoice AIL upon delivery or at such time
as otherwise mutually agreed. For Services (other than those
required hereunder or under the SOW), Contractor will invoice AIL
upon completion of
43
the performance of such Services or at such times as mutually
agreed. For annual Extended Warranty Services, Contractor will
invoice AIL quarterly in advance. For Contractor's fees and
expenses to be reimbursed by AIL hereunder, such as travel and
per diem expenses, Contractor will invoice AIL monthly in
arrears. All such invoices shall include invoice date, Order
number, description, quantities, unit prices and total amount
due. For invoices where the prices are not set forth in the
Agreement, Contractor shall provide upon request, the
calculations utilized to establish any charges and supporting
details and information as to charges; provided, however that to
the extent that a firm pricing quotation previously delivered to
AIL by Contractor expressly provides such calculations, details
and information, Contractor may cross-reference such quotation in
the applicable invoice in lieu of Contractor including such
calculations, details or information, as applicable.
(d) Invoices shall separately state the amounts of any taxes as set
forth in Section 13.4(c) that Contractor is collecting from AIL.
14.4 PAYMENT DUE.
(a) Subject to Section 20.3, and the other provisions of this Article
14, invoices provided for under Section 14.3 and properly
submitted to AIL pursuant to this Agreement shall be due and
payable by AIL within thirty (30) days after receipt by AIL.
Milestone Payments will be considered due and payable when the
corresponding Milestone is Accepted by AIL as evidenced in a
written notification from AIL to Contractor, which notification
shall be issued promptly following AIL's Acceptance of the
applicable Milestone.
(b) All amounts due and payable to Contractor under this Article 15
shall be paid, at AIL's option, either (i) by check payable to
the order of Contractor or (ii) by electronic funds transfer to
Contractor from account(s) designated by AIL.
(c) Invoices for payment ***hereunder and any other undisputed
amounts owed by Contractor to AIL shall be due and payable by
Contractor within thirty (30) days after receipt of an invoice by
Contractor.
(d) All undisputed payments made after the due date hereunder will be
subject to an interest charge at an annual interest rate equal to
***, for each calendar day the payment is overdue until the date
payment is made.
(e) All disputed payments required to be made by AIL (as determined
after resolution of such dispute) shall be made within thirty
(30) days after the dispute is resolved in accordance with
Section 14.8.
14.5 ACCOUNTABILITY.
Contractor shall maintain complete and accurate records of and
supporting documentation for the amounts billable to and payments made
by AIL hereunder, in accordance with Article 17 and with generally
accepted accounting principles applied on a consistent basis. Contractor
agrees to provide AIL with documentation and other information with
respect to each invoice as may be reasonably requested by AIL to verify
accuracy of the invoices and compliance with the provisions of this
Agreement.
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14.6 PRORATION.
Except as expressly provided herein, periodic charges under this
Agreement are to be computed on a calendar month basis, and shall be
prorated for any partial month.
14.7 SET OFF.
With respect to any amount to be paid by a Party hereunder, under this
Agreement or any other agreement between the Parties, the Party may set
off against such amount any amount that the other Party is obligated to
pay such Party hereunder or thereunder.
14.8 DISPUTED CHARGES.
Subject to Section 14.7, AIL shall pay undisputed charges when such
payments are due under this Article 14. AIL may withhold payment of
particular charges that AIL disputes in good faith. AIL will notify
Contractor in the event it disputes any charges hereunder within ten
(10) days of receipt of the invoice for such disputed charges and will
set forth its reasons in reasonable detail for such dispute in such
notification. All disputes under this Section shall be resolved in
accordance with Article 22 below. If AIL is found liable to make the
disputed payment, AIL will pay late payment charges in accordance with
Section 14.4(d).
14.9 ENCUMBRANCES.
Contractor shall not perfect any Lien upon any Gateway Terminals,
Equipment or Software provided pursuant to this Agreement except as
otherwise expressly permitted by this Agreement. All Gateway Terminals
provided to AIL and its Service Providers shall be free and clear of all
Liens in accordance with Section 9.6, subject to Section 23.18.
15. INFORMATION; CONFIDENTIALITY
15.1 CONTRACTOR INFORMATION.
(a) Contractor Background Information and Contractor Foreground
Information shall be and remain the property of Contractor or its
licensors, as the case may be and, subject to Subsection 15.3(c),
shall constitute Confidential Information of Contractor. AIL
shall not possess or assert any Lien against or to Contractor
Background Information or Contractor Foreground Information. No
Contractor Background Information or Contractor Foreground
Information, or any part thereof (excluding Joint Confidential
Information), shall be sold, assigned, leased, or otherwise
disposed of to third parties by AIL or commercially exploited by
or on behalf of AIL, its employees, vendors, contractors or
agents, except as expressly provided herein.
15.2 AIL INFORMATION.
(a) AIL Background Information and AIL Foreground Information shall
be and remain the property of AIL or its licensors, as the case
may be and, subject to Subsection 15.3(c), shall constitute
Confidential Information of AIL. Contractor shall not possess or
assert any Lien against or to any AIL Background Information or
AIL Foreground Information. No AIL Background Information or AIL
Foreground Information, or any part thereof (excluding Joint
Confidential Information), shall be sold, assigned, leased, or
otherwise disposed of to third parties by Contractor or
commercially exploited by or on behalf of
45
Contractor, its employees, vendors, contractors or agents, except
as expressly provided herein.
(b) Upon AIL's request, but subject to any continuing need of
Contractor to fulfill its obligations hereunder, the termination
or expiration of this Agreement (in whole or in part) for any
reason (including termination for Cause as provided in Section
22.1) or, with respect to any particular data, on such earlier
date that the same shall be no longer required by Contractor in
order to render the Services hereunder, such AIL Confidential
Information (including copies thereof) shall be promptly returned
to AIL by Contractor in a form reasonably requested by AIL or, if
AIL so elects, shall be destroyed. Contractor shall certify to
AIL in writing that Contractor has fully complied with the letter
and the spirit of this Subsection.
(c) AIL Confidential Information shall not be utilized by Contractor
for any purpose other than that of performing its obligations
hereunder.
15.3 CONFIDENTIALITY.
(a) Confidential Information. Contractor and AIL each acknowledge
that they may be furnished with, receive, or otherwise have
access to information of or concerning the other Party which such
Party considers to be confidential, proprietary, a trade secret
or otherwise restricted. As used in this Agreement and subject to
Subsection (c)(i) of this Section, "Confidential Information"
means all information, in any form, furnished or made available
directly or indirectly by one Party to the other, including such
information developed by either Party hereunder and used in or
with the Gateway Terminals, which is marked confidential,
restricted, proprietary, or with a similar designation, including
all AIL Background Information, AIL Foreground Information,
Contractor Background Information and Contractor Foreground
Information. Confidential Information also shall include, whether
or not designated "Confidential Information", (i) all
specifications, designs, documents, correspondence, software,
documentation, Source Code, Escrowed Materials, data and other
materials and work products produced by either Contractor or its
Subcontractors in the course of performance of this Agreement,
(ii) all information concerning the operations, affairs and
businesses of a Party, the financial affairs of a Party, and the
relations of a Party with its customers, employees and service
providers (including customer lists, customer information,
account information and consumer markets), (iii) software
provided to a Party by or through the other Party; and (iv) other
information, systems designs and architecture, and data stored on
magnetic media or otherwise or communicated orally by either
Party, which a reasonable person would assume to be confidential,
and obtained, received, transmitted, processed, stored, archived,
or maintained by the other Party under this Agreement.
(b) Obligations.
(i) Each Party's Confidential Information shall remain the
property of that Party or its licensors except as
expressly provided otherwise by the other provisions of
this Agreement. AIL and Contractor shall each use at least
the same degree of care, but in any event no less than a
reasonable degree of care, to prevent disclosing to third
parties the Confidential Information of the other as it
employs to avoid unauthorized disclosure, publication or
dissemination of its own information of a similar nature;
provided that the Parties may disclose such
46
Confidential Information to entities performing services
required hereunder including subcontractors, suppliers or
agents where (i) use of such entity is permitted to be
used under this Agreement, (ii) such disclosure is
necessary or otherwise naturally occurs in that entity's
scope of responsibility, and (iii) the entity agrees in
writing to assume the obligations described in this
Section 15.3.
(ii) As requested by AIL during the Term and upon expiration or
any termination of this Agreement (in whole or in part)
and completion of Contractor's obligations under this
Agreement subject to Contractor's continuing need to
fulfill its obligations hereunder, Contractor shall return
or destroy, as AIL may direct in writing, all material in
any medium that contains, refers to, or relates to AIL
Confidential Information, and retain no copies. Contractor
shall certify to AIL in writing that it has complied with
the spirit and the letter of this Subsection.
(iii) Each Party shall take reasonable steps to ensure that its
employees comply with this Section 15.3.
(iv) In the event of any disclosure or loss of, or inability to
account for, any Confidential Information of the
furnishing Party, the receiving Party shall notify the
furnishing Party promptly upon becoming aware thereof.
(c) Exclusions.
(i) "Confidential Information" shall exclude any particular
information which Contractor or AIL can demonstrate (1)
was, at the time of disclosure to it, in the public
domain; (2) after disclosure to it, is published or
otherwise becomes part of the public domain through no
fault of the receiving Party; (3) was in the possession of
the receiving Party at the time of disclosure to it; (4)
was received after disclosure to it from a third party who
had a lawful right to disclose such information to it
without any obligation to restrict its further use or
disclosure; or (5) was independently developed by the
receiving Party without reference to Confidential
Information of the furnishing Party. In addition, a Party
shall not be considered to have breached its obligations
by disclosing Confidential Information of the other Party
as required to satisfy any legal requirement or
regulations of a competent government body provided that,
immediately upon receiving any such request and to the
extent that it may legally do so, such Party advises the
other Party promptly and prior to making such disclosure
in order that the other Party may interpose an objection
to such disclosure, take action to assure confidential
handling of the Confidential Information, or take such
other action as it deems appropriate to protect the
Confidential Information.
(ii) Either Party may disclose the terms and conditions of this
Agreement to third parties that (1) have expressed a bona
fide interest in consummating a significant financing,
merger or acquisition transaction between such third
parties and the disclosing Party, (2) have a reasonable
ability (financial and otherwise) to consummate such
transaction, and (3) have executed a nondisclosure
agreement that includes within its scope the terms and
conditions of this Agreement. Each Party shall endeavor to
delay the disclosure of the terms and conditions of this
Agreement until the status of discussions concerning such
transaction warrants such disclosure. In addition, either
Party may disclose the terms and conditions
47
of this Agreement to its subcontractors, suppliers and
agents under confidentiality obligations having a need to
know.
(d) Loss of Confidential Information. In the event of any disclosure
or loss of, or inability to account for, any Confidential
Information of the furnishing Party, the receiving Party shall
promptly, at its own expense: (i) notify the furnishing Party in
writing; (ii) take such actions as may be necessary or reasonably
requested by the furnishing Party to minimize the violation; and
(iii) cooperate in all reasonable respects with the furnishing
Party to minimize the violation and any damage resulting
therefrom.
(e) No Implied Rights. Nothing contained in this Section shall be
construed as obligating a Party to disclose its Confidential
Information to the other Party, or as granting to or conferring
on a Party, expressly or impliedly, any rights or license to the
Confidential Information of the other Party.
16. EXAMINATION AND AUDIT OF INFORMATION; RECORDKEEPING
16.1 EXAMINATION AND AUDIT RIGHTS.
Contractor grants AIL the right to review, examine and/or audit
Contractor's and Subcontractors' business and financial information
relating to this Agreement as necessary to verify Contractor's
performance hereunder, including manufacturing operations, quality
control, production capacity and capability, failure rates, repairs and
replacements, and responsiveness and/or costs and expenses of
termination or travel and related living changes hereunder, and AIL may
employ, at AIL's expense, a mutually agreed-upon major accounting firm
to conduct any review, examination or audit of those travel and related
costs and expenses. If a review, examination or audit of financial
information reveals overcharges in excess of ***, Contractor shall pay
the costs and expenses of the review, examination or audit.
16.2 RECORDKEEPING OBLIGATIONS.
Contractor shall maintain complete and accurate records of and
supporting documentation for all invoices submitted by Contractor under
this Agreement, for out-of-pocket expenses or if AIL has agreed to pay
Contractor for hours expended for services billable on a rated basis to
AIL, in accordance with generally accepted accounting principles applied
on a consistent basis. Except for costs associated with expenses AIL has
agreed to reimburse Contractor on an out-of-pocket expense basis, AIL
will not be entitled to audit Contractor's cost information concerning
the cost to produce the Gateway Terminals and Services provided under
this Agreement. Contractor agrees to provide AIL with documentation and
other information with respect to each such invoice as may be reasonably
requested by AIL to verify accuracy and compliance with the provisions
of this Agreement. Upon AIL's reasonable request, AIL and its authorized
agents and representatives shall have access to such business and
financial records for purposes of review, examination and/or audit
during normal business hours during the Term and for a period of three
(3) years after such costs or expenses were incurred and paid for. In
the event any overpayment is made by AIL under this Agreement, either
discovered during a review, examination, audit or otherwise, Contractor
shall promptly pay AIL the amount of such overcharge, along with
interest at Prime Rate from the date such payments were originally made.
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17. REPRESENTATIONS AND WARRANTIES
17.1 PASS-THROUGH WARRANTIES.
Contractor will from time to time provide certain Gateway Terminals,
Equipment and Software for which Contractor is entitled to warranties
from the manufacturers, lessors or licensors of such items. Contractor
shall pass through to AIL and its Service Providers that purchase
Gateway Terminals, Equipment or Software the benefits of such warranties
to the extent that Contractor is able pursuant to any agreements between
Contractor and such manufacturers, lessors or licensors.
17.2 WORK STANDARDS.
Contractor warrants that the Services shall be rendered with promptness
and diligence and shall be executed in a workmanlike manner, in
accordance with the practices and high professional standards used in
well-managed operations performing services similar to the Services.
Contractor also warrants that it shall use adequate numbers of qualified
individuals with suitable training, education, experience, and skill to
perform the Services.
17.3 GATEWAY TERMINAL AND SERVICES WARRANTIES.
Contractor warrants to AIL as follows and AIL may incorporate such
warranties into its agreements with Service Providers to which AIL
supplies Gateway Terminals, with AIL as the warranting Party. Contractor
will include with each Gateway Terminal shipped to AIL appropriate
documentation that sets forth Contractor's warranty policy to Service
Providers.
(a) Contractor warrants that Gateway Terminals provided under this
Agreement shall be free from defects in material and workmanship,
and shall operate in accordance with the SOW, Documentation and
applicable Standards (all in effect at the time of delivery) upon
delivery and during the Warranty Period. Contractor further
warrants that Gateway Terminals provided hereunder shall be free
of any defect in design, during the Warranty Period, that results
in non-conformance of a Gateway Terminal to the SOW and
applicable Standards in effect at the time of delivery.
Contractor further warrants that the Gateway Terminals are built
in accordance with the applicable requirements set forth in the
SOW.
(b) Contractor represents, warrants and covenants that all Gateway
Terminals provided hereunder shall be new, not refurbished or
re-manufactured. Notwithstanding the foregoing, Contractor may
use refurbished or re-manufactured parts for warranty repair or
replacement actions.
(c) Contractor warrants that it shall maintain the Gateway Terminals
such that the Gateway Terminals conform to the SOW (in effect at
the time of delivery) during the Warranty Period. Such
maintenance shall include:
(i) in accordance with the procedures set forth in Schedule 7,
perform repairs on Gateway Terminals, including any
repairs required by third party manufacturers and any
repairs recommended by third party manufacturers and
required for the intended operation of the Gateway
Terminals;
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(ii) providing any release, update, alteration, modification,
enhancement or improvement that is generally available to
Contractor's other customers under warranty or extended
warranty for the same Gateway Terminal;
(iii) providing code corrections or maintenance patches
(including all bug fixes, error correction, revisions,
modifications, and maintenance recommended by third party
vendors) will be supplied to correct a Defect in order to
bring the Software into conformance with the SOW.
Contractor shall also replace the Software if the media is
destroyed or damaged unless and to the extent the damage
is on account of AIL's or its Service Providers' improper
use (which shall not be improper use if used in accordance
with the documentation or as instructed by Contractor's)
or through no fault of Contractor and as a result such
Software are unusable or fail to operate in accordance
with the SOW;
(iv) providing telephone and email support and basic fault
isolation assistance to AIL and its Service Providers, at
no charge during the Warranty Period, in order to document
such parties' functional or operational problems with the
Gateway Terminals and to assist Gateway Terminal
maintenance personnel in isolating faults. Such telephone
logging and email support and basic fault isolation
assistance shall be provided on a 24 hour, 7 days per
week, 365 days per year basis via Contractor's help desk.
To the extent required and requested by AIL for assistance
beyond basic fault isolation, Contractor's technical
engineering support is available 8:00 a.m. to 8:00 p.m.
EST during normal business days at the rates set forth in
Schedule 9. In addition, Contractor's after-hours
technical engineering support is available on a 24 hour, 7
days per week, 365 days per year basis for major problems
as determined by AIL at the rates set forth in Schedule 9.
Contractor shall provide a single contact number for AIL
and its Service Providers to use the telephone and email
support and mutually agreed upon procedures shall be
utilized for AIL to request technical assistance which
will result in charges to AIL;
(v) in the event AIL requests technical assistance be provided
on-site at a Gateway location, Contractor shall provide
such assistance at the rates set forth in Schedule 9,
subject to the provisions of Section 11.3(a)(iv);
(vi) inspection, diagnosis and repair or replacement of failed
equipment at the Gateway site for components that are not
field-replaceable units. Contractor shall bear the travel
and labor costs associated with such Warranty inspection,
diagnosis, and repair or replacement of failed equipment
at the Gateway site for the *** of such Warranty services
provided during the Term. Thereafter, AIL shall pay the
travel and labor costs associated with such Warranty
services at Gateway sites at the rates provided in
Schedule 9; and
(vii) during the Initial Warranty Period, if Contractor is
required under the Agreement to repair a particular
component or subassembly of the Gateway Terminals more
than ***times in any rolling ***period, Contractor shall
replace such component or subassembly, as the case may be,
in its entirety at no charge.
(d) Contractor represents and warrants that it shall offer to AIL and
its Service Providers the post-warranty support and repair
services described in Section 11.3(c) and as set forth in
Schedule 10 attached hereto and maintain the availability of
Gateway Terminals parts
50
and sub-parts, consistent with the Gateway Terminals redundancy
design, for a period of the later of (i) expiration of all
applicable Extended Warranty Periods ***Gateway Terminals under
this Agreement. Subject to the foregoing support periods,
Contractor shall provide to AIL written notification at least six
(6) months prior to the discontinuation of manufacture of any
Gateway Terminals components associated with this Agreement to
permit AIL a last time purchase opportunity. Contractor
acknowledges and agrees that it shall not utilize this
"discontinuation" provision as a means to cease supplying Gateway
Terminals during the Term.
(e) Contractor warrants that all Gateway Terminals, including all
updates, upgrades and revisions to Gateway Terminals and/or
Software, shall be backward compatible to existing Production
Gateway Terminals or prior releases so that all applications and
other items that can be used in connection with the Gateway
Terminals at any time can be used in connection with future
Gateway Terminals in materially the same manner and with
materially equivalent performance. In addition, all updates,
upgrades and revisions to Gateway Terminals and/or Software,
shall be fully integrated, compatible and operational with the
AIL System, and shall be built in accordance with the applicable
Standards. Gateway Terminals upgrades to implement Software
enhancements or improvements that AIL desires to implement shall
be provided to AIL at mutually agreed upon prices, schedules and
rates.
(f) Contractor warrants, to its actual knowledge, that the Gateway
Terminals, the Services and the other deliverables provided by
Contractor to AIL hereunder do not and shall not infringe upon
any third party Intellectual Property Rights.
(g) Contractor shall provide appropriate technical resources to AIL's
or its Service Providers' appropriate personnel in order to
resolve any problem that AIL or a Service Provider cannot resolve
through help desk support, including engineering support, field
engineering, remote on-site repair, - training and field service
support for errors or problems that cannot be remotely diagnosed
and cured in accordance with Section 17.3(c). Such technical
resources shall be provided at Contractor's then-current time and
materials rates, except as provided in Schedule 9.
(h) In the event of a breach of the foregoing representations,
warranties and covenants during the Warranty Period and upon
written notice from AIL describing the breach, Contractor shall
at no charge to AIL: (i) in the case of Gateway Terminals, repair
or replace, at Contractor's discretion, such Gateway Terminals so
that they are compliant with the warranty as set forth in Section
17.3(a), and (ii) in the case of Services, immediately re-perform
the Services. In the event Contractor fails to repair or replace
such Gateway Terminals or to perform such Services, AIL
reasonably may do so at Contractor's expense.
(i) The foregoing representations and warranties will not apply if
and to the extent, and so long as not caused by Contractor or its
Subcontractors or agents, where:
(i) Defects in Gateway Terminals delivered hereunder or
infringement of any third party Intellectual Property
Rights are caused by alteration, modification, or repair
by any person other than Contractor or its Subcontractors
or agents or due to an act of God; provided, however, the
foregoing exclusion shall not apply with respect to AIL or
AIL's subcontractors' making of minor changes or if an
alteration, modification or repair is authorized by the
Documentation and
51
performed in accordance with such Documentation or
otherwise by Contractor or its Subcontractors or agents in
writing;
(ii) Defects are caused by AIL or AIL's suppliers or
subcontractors mishandling or abuse, excluding
specifically Contractor, its Affiliates and their
suppliers and Subcontractors;
(iii) Defects are caused from improper operation,
interconnection or installation by any person other than
Contractor or its Subcontractors; or
(iv) infringement of any third party Intellectual Property
Rights is caused by the combination of a Gateway Terminal
or the Software and technology or software of any other
party, other than software or technology provided or
required by Contractor for use of the Gateway Terminals
with the AIL System, where no infringement would have
occurred without such combination, unless (i) AIL did not
have actual knowledge of such infringement, (ii)
Contractor had actual knowledge of such infringement and
(iii) Contractor failed to disclose the infringement to
AIL.
17.4 REVIEWS.
(a) Periodic Reviews. Upon six (6) months after the date of
Acceptance of the First Article Gateway Terminal, and at least
annually thereafter, AIL and Contractor shall review Contractor's
performance of its warranty obligations hereunder and shall make
adjustments to its performance as may be mutually agreed by the
Parties.
(b) Special Reviews. If AIL determines that there is a recurring
Defect in Gateway Terminals, AIL will notify Contractor of such
Defect and Contractor, along with Subcontractor, if applicable,
shall promptly meet with AIL and propose a mutually acceptable
corrective action plan to correct the Defect at Contractor's
expense.
17.5 MEASUREMENT AND MONITORING TOOLS.
Contractor shall utilize the necessary measurement and monitoring tools
and procedures required to measure and report Contractor's provision of
warranty services hereunder. Such measurement and monitoring shall
permit reporting at a level of detail sufficient to verify compliance
with Contractor's warranty obligations hereunder, and shall be subject
to review, examine and/or audit by AIL. Contractor shall provide AIL
with such information upon request, for purposes of verification and
improvement.
17.6 DOCUMENTATION.
Contractor warrants that all Documentation provided by Contractor shall
be accurate, complete and written in a manner specified in the SOW.
17.7 EFFICIENCY AND COST EFFECTIVENESS.
Contractor warrants that it shall use its reasonable efforts to use
efficiently the resources or services necessary to provide the Gateway
Terminals and the Services. Contractor warrants that it shall use its
reasonable efforts to perform the Services and develop, manufacture and
deliver the Gateway Terminals in a cost-effective manner consistent with
the required level of quality and performance.
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17.8 INDUCEMENTS.
Neither Party has offered or provided, nor will it offer or provide, any
inducements in violation of law, including the Foreign Corrupt Practices
Act or other corrupt practices laws, or of any written AIL policy
provided to Contractor in connection with this Agreement.
17.9 OWNERSHIP OR USE.
(a) Contractor represents, warrants and covenants that it is either
the owner of, or authorized to distribute, sublicense and use,
the Contractor Confidential Information as provided herein.
(b) Contractor represents, warrants and covenants that AIL shall
receive marketable title to all Gateway Terminals provided
pursuant to this Agreement and shall be entitled to the rights of
possession and quiet enjoyment thereto, free of any Liens, except
to the extent otherwise expressly provided by this Agreement.
17.10 AUTHORIZATION.
Each Party represents and warrants to the other that:
(a) it has the requisite corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated by
this Agreement;
(b) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement
have been duly authorized by the requisite corporate action on
the part of such Party; and
(c) it is not subject to any contractual or other obligation that
would prevent it from entering into this Agreement.
17.11 VIRUSES.
Contractor warrants that no Viruses are coded or introduced into any
Software or Gateway Terminals at time of delivery. If a Virus is found
in any Software or a Gateway Terminal, which was present at the time of
delivery, Contractor, at no additional charge to AIL or any Service
Provider, shall remove such Virus and use its best efforts to assist AIL
in reducing the effects of the Virus and, if the Virus causes a loss of
operational efficiency or loss of data, to assist AIL to the same extent
to mitigate and restore such losses.
17.12 DISABLING CODE.
Contractor warrants that no code, device or routine (including, without
limitation, time bombs, back doors or drop dead devices) that would have
the effect of disabling or otherwise shutting down all or any portion of
any Software or Gateway Terminals are coded or introduced into any
Software or Gateway Terminals at the time the Software or Gateway
Terminals is delivered by Contractor ("Disabling Code"), unless AIL
authorizes Contractor to include any such code. If any such unauthorized
Disabling Code is found in any Software or Gateway Terminals,
Contractor, at no additional charge to AIL or any Service Provider,
shall remove such Disabling Code and use its best efforts to assist AIL
in reducing the effects of the Disabling Code and, if the Disabling Code
causes a loss of operational efficiency or loss of data, to assist AIL
to the same extent to mitigate and restore such losses. Contractor shall
not invoke any Disabling Code
53
at any time, including upon expiration or termination of this Agreement
(in whole or in part) for any reason, without AIL's prior written
consent.
17.13 YEAR 2000.
Contractor represents and warrants that the Gateway Terminals are Year
2000 Compliant.
17.14 DISCLAIMER.
EXCEPT AS SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY OTHER
WARRANTIES EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE.
18. INSURANCE
Contractor shall during the Term have and maintain in force the
following insurance coverages:
(a) Worker's compensation insurance (including occupational illness
or disease coverage, or other similar social insurance in
accordance with the law of the state exercising jurisdiction over
the employee), and employer's liability insurance with a minimum
limit of the higher of ***per occurrence, and (ii) any amount
required by law.
(b) Automotive Liability Insurance covering use of all owned,
non-owned, and hired automobiles with a minimum combined single
limit of ***per occurrence for bodily injury and property damage
liability. This policy shall be endorsed to name AIL as
additional insured.
(c) Commercial general liability insurance, including products,
completed operations liability and personal injury, contractual
liability and broad form property damage liability coverage for
damages to any property with a minimum combined single limit of
***per occurrence.
(d) All Risk Property Insurance (with AIL as loss payee as its
interests appear) on equipment, data, media and valuable papers,
including extra expense coverage, with a minimum limit adequate
to cover such risks on a replacement cost basis.
(e) Umbrella Liability Insurance with a minimum limit of *** in
excess of the insurance under policies indicated in Subsections
(a), (b) and (c).
(f) Professional liability, errors and omissions insurance.
The foregoing insurance coverages shall be primary and non-contributing
with respect to any other insurance or self insurance which may be
maintained by AIL, and shall be endorsed to AIL as an additional insured
with the exception of Subsection 18(f) above and Workers Compensation.
Contractor shall cause its insurers to issue certificates of insurance
evidencing that the coverages and policy endorsements required under
this Agreement are maintained in force and that not less than thirty
(30) days written notice shall be given to AIL prior to any
modification, cancellation or non-renewal of the policies. The insurers
selected by Contractor shall have an A.M. Best rating of A-XII or better
or, if such ratings are no longer available, with a comparable rating
from a recognized insurance rating agency.
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19. INDEMNITIES
19.1 INDEMNITY BY CONTRACTOR.
Contractor shall indemnify, defend and hold harmless AIL and its
affiliates and their respective officers, directors, employees, agents,
successors, and assigns from any and all Losses arising out of any of
the following:
(a) third party claims arising out of Contractor's performance
hereunder, including breach of this Agreement;
(b) third party claims arising out of Contractor's failure to observe
or perform any duties or obligations to third parties, including
its Subcontractors;
(c) third party claims arising out of the manufacture, distribution,
or intended use of Gateway Terminals, due to Contractor's
negligence or willful misconduct;
(d) third party claims (including claims by any employee, agent,
customer, business invitee or business visitor or other person)
for death or personal injury caused by the tortious conduct of
Contractor or its Affiliates;
(e) claims for damage to real or tangible property caused by the
tortious conduct of Contractor or its Affiliates;
(f) Contractor's breach of its obligations with respect to AIL
Confidential Information;
(g) third party claims for infringement of Contractor's Intellectual
Property Rights;
(h) governmental claims arising out of Contractor's failure to comply
with applicable law or to obtain those permits it is required to
obtain under the Contract;
(i) any claim, demand, charge, action, cause of action, or other
proceeding asserted against the indemnitee but resulting from an
act or omission of the indemnitor in its capacity as an employer
of a person.
19.2 INDEMNITY BY AIL.
AIL agrees to indemnify, defend and hold harmless Contractor and its
Affiliates and their respective officers, directors, employees, agents,
successors, and assigns, from any and all Losses from claims arising
from, in connection with, or based on allegations of any of the
following:
(a) third party claims arising out of AIL's performance hereunder,
including breach of this Agreement;
(b) third party claims arising out of AIL's failure to observe or
perform any duties or obligations to third parties;
(c) third party claims arising out of AIL's breach of its obligations
with respect to Contractor Confidential Information;
55
(d) third party claims (including claims by any employee, agent,
customer, business invitee or business visitor or other person)
for death or personal injury caused by the tortious conduct of
AIL or its Affiliates;
(e) claims for damage, loss or destruction of any real or tangible
personal property caused by tortious conduct of AIL or its
Affiliates;
(f) third party claims for infringement of AIL's Intellectual
Property Rights;
(g) any claim, demand, charge, action, cause of action, or other
proceeding asserted against the indemnitee but resulting from an
act or omission of the indemnitor in its capacity as an employer
of a person; and
(h) claims of infringement of third party Intellectual Property
Rights, alleged to have occurred because of AIL-furnished
equipment or components, if any, or other resources provided by
AIL directly to Contractor for incorporation into the Gateways or
Gateway Terminals.
19.3 INFRINGEMENT.
If any item used by Contractor to provide the Gateways or Services, or
contained in any Gateway Terminals, becomes, or in Contractor's
reasonable opinion is likely to become, the subject of an infringement
or misappropriation claim or proceeding, in addition to indemnifying AIL
as provided in this Article 20 and to the other rights AIL may have
under this Agreement, Contractor shall, promptly at Contractor's
expense:
(a) secure the right to continue using the item; or
(b) if the action described in Subsection (a) cannot be accomplished
by Contractor, replace or modify the item to make it
non-infringing, provided that any such replacement or
modification will not degrade the performance or quality of the
affected Gateways or Services; or
(c) if the action described in Subsection (b) of this Section cannot
be accomplished by Contractor, and only in such event, provide
AIL with a refund equal to the lesser of (A) AIL's cover costs
and expenses to replace the affected Gateway Terminals or
Services and (B) the total amounts paid hereunder for the
affected Services and Gateway Terminals, less reasonable
depreciation. With respect to Gateway Terminals, such payment
shall be made contemporaneously with AIL's removal of such
Gateway Terminals from AIL's network.
19.4 INDEMNIFICATION PROCEDURES.
With respect to third party claims, the following procedures shall
apply:
(a) Notice. Promptly after receipt by any entity entitled to
indemnification under Sections 19.1 through 19.3 of notice of the
commencement or threatened commencement of any civil, criminal,
administrative, or investigative action or proceeding involving a
claim in respect of which the indemnitee will seek
indemnification pursuant to any such Section, the indemnitee
shall notify the indemnitor of such claim in writing. No failure
to so notify an indemnitor shall relieve it of its obligations
under this Agreement except to the extent that it can demonstrate
damages attributable to such failure. Within fifteen (15)
56
days following receipt of written notice from the indemnitee
relating to any claim, but no later than ten (10) days before the
date on which any response to a complaint or summons is due, the
indemnitor shall notify the indemnitee in writing if the
indemnitor elects to assume control of the defense and settlement
of that claim (a "Notice of Election").
(b) Procedure Following Notice of Election. If the indemnitor
delivers a Notice of Election relating to any claim within the
required notice period, the indemnitor shall be entitled to have
sole control over the defense and settlement of such claim;
provided that (i) the indemnitee shall be entitled to participate
in the defense of such claim and to employ counsel at its own
expense to assist in the handling of such claim, and (ii) the
indemnitor shall obtain the prior written approval of the
indemnitee before entering into any settlement of such claim or
ceasing to defend against such claim. After the indemnitor has
delivered a Notice of Election relating to any claim in
accordance with the preceding paragraph, the indemnitor shall not
be liable to the indemnitee for any legal expenses incurred by
the indemnitee in connection with the defense of that claim. In
addition, the indemnitor shall not be required to indemnify the
indemnitee for any amount paid or payable by the indemnitee in
the settlement of any claim for which the indemnitor has
delivered a timely Notice of Election if such amount was agreed
to without the written consent of the indemnitor.
(c) Procedure Where No Notice of Election Is Delivered. If the
indemnitor does not deliver a Notice of Election relating to any
claim within the required notice period, the indemnitee shall
have the right to defend and/or settle the claim in such manner
as it may deem appropriate, at the cost and expense of the
indemnitor. The indemnitor shall promptly reimburse the
indemnitee for all such Losses.
19.5 SUBROGATION.
In the event that an indemnitor shall be obligated to indemnify an
indemnitee pursuant to Sections 19.1 through 19.3, the indemnitor shall,
upon payment of such indemnity in full, be subrogated to all rights of
the indemnitee with respect to the claims to which such indemnification
relates.
20. LIABILITY
20.1 GENERAL INTENT.
Subject to the specific provisions of this Article 21, it is the intent
of the Parties that each Party shall be liable to the other Party for
any actual damages incurred by the non-breaching Party as a result of
the breaching Party's failure to perform its obligations in the manner
required by this Agreement.
20.2 LIABILITY RESTRICTIONS.
(a) SUBJECT TO SUBSECTIONS (b), (c) AND (d) OF THIS SECTION, IN NO
EVENT, WHETHER IN CONTRACT OR IN TORT (INCLUDING BREACH OF
WARRANTY, AND STRICT LIABILITY IN TORT), SHALL A PARTY BE LIABLE
FOR INDIRECT OR CONSEQUENTIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR
SPECIAL DAMAGES, INCLUDING LOST PROFITS OR REVENUES, EVEN IF
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SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN
ADVANCE.
(b) The limitations set forth in:
(i) Subsection (a) of this Section shall not apply with
respect to claims and damages occasioned by improper or
wrongful termination of this Agreement by Contractor or
improper or wrongful abandonment of the work by Contractor
under this Agreement; and
(ii) Subsection (a) of this Section shall not apply with
respect to claims and damages with respect to (1) claims
that are the subject of indemnification pursuant to
Article 20, (2) willful misconduct, or (3) any breach of
Article 16 hereof.
(c) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY
HEREUNDER, UNDER ANY THEORY OF LIABILITY EXCEPT WILLFUL
MISCONDUCT, FOR LOSSES, CLAIMS, DAMAGES, COSTS AND EXPENSES IN
THE AGGREGATE THAT EXCEED (i) IN THE CASE OF CONTRACTOR'S
LIABILITY, THE AGGREGATE AMOUNTS PAID BY AIL TO CONTRACTOR
HEREUNDER, AND (ii) IN THE CASE OF AIL'S LIABILITY, THE AGGREGATE
AMOUNTS PAID BY AIL, AND UNPAID AMOUNTS WHICH ARE DUE AND OWING
FROM AIL, TO CONTRACTOR HEREUNDER.
(d) Each Party shall have a duty to use commercially reasonable
efforts to mitigate damages for which the other Party is
responsible.
20.3 FORCE MAJEURE.
(a) No Party shall be liable for any failure or delay in the
performance of its obligations under this Agreement if and to the
extent it is caused by fire, flood, lightning, earthquake,
elements of nature or acts of God, riots, civil disorders,
rebellions or revolutions in any country, or any other cause
beyond the reasonable control of such Party, including
import/export issues; provided, however, that the non-performing
Party is without fault in causing such default or delay, and such
default or delay could not have been prevented by reasonable
precautions and cannot reasonably be circumvented by the
non-performing Party through the use of alternate sources,
workaround plans or other means (any of the foregoing, a "Force
Majeure Event").
(b) In such event the non-performing Party shall be excused from
further performance or observance of the obligation(s) so
affected for as long as such circumstances prevail and such Party
continues to use its commercially reasonable efforts to
recommence performance or observance whenever and to whatever
extent possible without delay. Any Party so delayed in its
performance shall immediately notify the Party to whom
performance is due by telephone (to be confirmed in writing
within two (2) business days of the inception of such delay) and
describe at a reasonable level of detail the circumstances
causing such delay.
(c) If any Force Majeure Event substantially prevents, hinders, or
delays Contractor's performance for more than sixty (60)
consecutive days, then at AIL's option, AIL may terminate or
modify any affected portion of any Order, or terminate any
affected portion of this Agreement, and the charges payable
hereunder shall be appropriately adjusted to
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reflect such termination. Further, if any Force Majeure Event
substantially prevents, hinders, or delays Contractor's
performance for more than one hundred fifty (150) consecutive
days, then at AIL's option, AIL may terminate this Agreement
without liability to Contractor as of a date specified by AIL in
a written notice of termination to Contractor. Neither Party
shall have the right to any additional payments from the other
Party for costs or expenses incurred by the other Party as a
result of any Force Majeure Event.
(d) Notwithstanding the foregoing Subsections in this Section 20.3,
if the U.S. Federal Communications Commission or other U.S. or
foreign regulatory or governing body rescinds or otherwise
invalidates AIL's communications license or fails to issue such
license in due course, which substantially impairs the economic
viability of AIL (any of the foregoing, a "Regulatory Force
Majeure Event"), the Parties agree to renegotiate this Agreement
on commercially reasonable and mutually acceptable terms in light
of the effects arising from the Regulatory Force Majeure Event,
to the extent such Regulatory Force Majeure is not caused by the
gross negligence or willful misconduct of AIL.
20.4 EXCUSABLE DELAY.
Either (i) the occurrence of a Force Majeure Event that prevents
Contractor from performing its obligations hereunder, or (ii) the
material adverse effect to Contractor's ability to timely perform its
obligations hereunder caused by AIL's failure to timely meet its
obligations hereunder following the applicable cure period after written
notice is received by AIL describing AIL's failure, shall constitute
"Excusable Delay" hereunder. In the event of Excusable Delay, Contractor
may stop work until Contractor can resume performance following the
Force Majeure Event in accordance with Section 20.3 hereof or AIL
resumes or cures performance, as the case may be. In addition,
Contractor shall be entitled to an appropriate adjustment in the
Milestone Dates or applicable production schedule for any Excusable
Delay and, in the event of an Excusable Delay caused by AIL's failure to
perform its obligations hereunder, an appropriate price adjustment as
mutually agreed by the Parties. Price adjustments shall account only for
the net non-recurring, production and other related cost impact incurred
by Contractor as a result of the change plus a reasonable profit thereon
not to exceed ***. Contractor will provide reasonably detailed proposal
back-up price data to support its claim for such adjustment.
20.5 AIL'S FAILURE TO PERFORM.
AIL's failure to perform any of its responsibilities set forth in this
Agreement (other than AIL's obligations to pay undisputed amounts under
Section 15.4) shall not be grounds for termination by Contractor. The
foregoing sentence shall not limit Contractor's right to claim that
AIL's failure to perform is a material breach for any other purpose
under this Agreement. Contractor's nonperformance of its obligations
under this Agreement shall be excused if and to the extent (i) such
Contractor nonperformance results from AIL's failure to perform its
responsibilities, (ii) Contractor provides AIL with reasonable notice of
such nonperformance, and (iii) Contractor uses commercially reasonable
efforts to perform its obligations notwithstanding AIL's failure to
perform.
20.6 AIL'S SUSPENSION OF WORK.
Notwithstanding the foregoing Section 20.5, AIL, by written notice, may at any
time suspend work (including suspension of production work, delivery of Gateway
Terminals and payment therefor, excluding suspensions due to catastrophic
failures of satellites) for a period not to exceed one hundred
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eighty (180) days, and for further periods agreed to by the Parties. The Parties
will agree to appropriate adjustments to the Purchase Price, delivery schedule
and Milestones, but only to the extent that Contractor demonstrates that such
suspension results in an increase in the cost to Contractor and a delay in
performance hereunder. Such suspension of work shall not be considered a failure
to perform or breach of this Agreement. Notwithstanding the foregoing, if AIL
suspends work more than three (3) times during any five (5) consecutive year
period of the Term (excluding suspensions due to catastrophic failures of
satellites), Contractor, at Contractor's election, may require upon written
notice to AIL that AIL terminated this Agreement for its convenience and in
accordance with Section 22.2. The Parties shall work together to minimize the
impact of such suspension on pricing, delivery schedule and Contractor's
performance (and AIL's liability in the event of termination). Any such
suspension does not excuse AIL from paying undisputed amounts.
21. DISPUTE RESOLUTION
Any dispute between the Parties arising out of or relating to this
Agreement, including with respect to the interpretation of any provision
of this Agreement and with respect to the performance by Contractor or
AIL, shall be resolved as provided in this Article 21. Notwithstanding
any other provision of this Agreement, Contractor shall***, Contractor,
at its election, shall be entitled to royalties on commercially
reasonable terms pursuant to a license agreed to by the Parties or by an
arbitrator in the event the Parties are unable to agree upon the terms
of such license in addition to all damages and remedies available to
Contractor at law, equity or otherwise, ***
21.1 INFORMAL DISPUTE RESOLUTION.
Subject to Subsection 21.3, prior to the initiation of formal dispute
resolution procedures, the Parties shall first attempt to resolve their
dispute informally pursuant to this Section 21.1. Upon the written
request of a Party, each Party shall appoint a designated representative
who does not devote substantially all of his or her time to performance
under this Agreement, whose task it will be to meet for the purpose of
endeavoring to resolve such dispute.
(a) The designated representatives shall meet as often as the Parties
reasonably deem necessary in order to gather and furnish to the
other all information with respect to the matter in issue which
the Parties believe to be appropriate and germane in connection
with its resolution. The representatives shall discuss the
problem and attempt to resolve the dispute without the necessity
of any formal proceeding.
(b) During the course of discussion, all reasonable requests made by
one Party to another for nonprivileged information, reasonably
related to this Agreement, shall be honored in order that each of
the Parties may be fully advised of the other's position.
(c) The specific format for the discussions shall be left to the
discretion of the designated representatives.
(d) If the designated representatives fail to resolve the dispute,
the Parties agree to escalate the dispute resolution process to a
higher executive level, and then to the CEO level. Each level of
informal dispute resolution will be allowed no more than fifteen
(15) days, unless otherwise mutually agreed by the Parties.
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21.2 ARBITRATION.
Subject to Subsection 21.3, if the Parties fail to resolve a dispute
pursuant to Section 21.1 above, the Parties agree to pursue binding
arbitration as the sole remedy of any dispute hereunder. Each Party
shall designate one (1) arbitrator, provided that the arbitrator(s)
selected shall be knowledgeable in the telecommunications field. The two
(2) designated arbitrators shall then choose a third arbitrator, who
shall be the head of the panel of arbitrators, and the panel of three
(3) arbitrators shall hear and resolve the dispute. The rules and
regulations to be followed shall be those of the Center for Public
Resources, or its successor, in effect on the date of delivery of the
demand for arbitration. The Parties expressly agree that the arbitrators
shall have the authority to issue appropriate relief; provided, however,
that the arbitrators shall not have the power to issue punitive or other
special or exemplary damages. The decision of the arbitrators shall be
final and binding on both Parties and their respective successors and
permitted assigns, and such decision may be enforced by any court having
jurisdiction over the Party against whom the award is rendered. Each
Party shall pay the fees of its own attorneys, experts and the expenses
of its witnesses. All other costs and expenses of the arbitration,
including the costs and expenses of recording the transcripts thereof,
if any, administration fees and all other fees, costs and expenses,
shall be borne equally by the Parties. All arbitration proceedings will
be conducted in Washington, D.C. Contractor agrees to be joined in any
other arbitration or proceeding involving another entity under contract
to AIL or Contractor relating to the AIL System where performance of
Contractor under this Agreement or of the Gateway Terminals is at issue
so as to resolve any disputes efficiently. If joined in any such
arbitration or proceeding, Contractor hereby agrees to be subject to the
decisions of the arbitrator(s) already chosen by the original parties to
such arbitration or proceeding, and Contractor hereby waives its right
to choose an arbitrator as provided herein.
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21.3 INJUNCTIVE RELIEF.
Notwithstanding Subsections 21.1 or 21.2, AIL may obtain preliminary or
temporary injunctive relief, including specific performance, or relief
in and of arbitration at any time from a court of competent jurisdiction
where immediate irreparable harm to the AIL System or AIL's business is
threatened by Contractor's acts or omissions, but requests for permanent
injunctive relief shall be arbitrated pursuant to Section 21.2.
21.4 CONTINUED PERFORMANCE.
Each Party agrees to continue performing its obligations under this
Agreement while any dispute is being resolved except to the extent the
issue in dispute precludes performance (dispute over payment shall not
be deemed to preclude performance but a failure to pay undisputed
amounts after notice and an opportunity to cure as provided in
Subsection 22.1(b) shall permit discontinuance of Contractor's
performance obligations solely with respect to the payment failure).
21.5 VENUE AND JURISDICTION.
Each Party consents to the personal jurisdiction and venue of the
Montgomery County Circuit Court, Montgomery County, Maryland, or the
United States District Court for the District of Maryland, Greenbelt
Division, in the event of any dispute between the Parties arising out of
or relating to this Agreement that is permitted under this Article 22 to
be resolved by litigation or in the enforcement of any award granted
pursuant to this Article 22, and each Party agrees that it shall file
any suit against the other Party only in such courts.
22. TERMINATION
22.1 TERMINATION FOR CAUSE.
(a) In the event that Contractor:
(i) commits a material breach of this Agreement, including:
(1) failure to make any undisputed payment to AIL;
(2) failure to achieve a Milestone after written notice
in accordance with Section 5.4;
(3) failure to complete a Milestone or other
agreed-upon material task within the corresponding
Milestone Date or agreed-upon timeframe in
accordance with Section 5.5; or
(4) failure to complete any of its material obligations
hereunder within pre-agreed timeframes;
which breach is not cured within thirty (30) days
after written notice of breach from AIL to Contractor,
unless a different cure period is expressly provided
herein for such breach or such breach is not capable
of being cured within thirty (30) days;
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(ii) commits a material breach of this Agreement which is not
capable of being cured within thirty (30) days and fails
to (i) proceed promptly and diligently to correct the
breach, (ii) develop within thirty (30) days following
written notice of breach from AIL a complete plan for
curing the breach (which plan and cure period shall be
reviewed by AIL and mutually agreed upon by the Parties),
and (iii) cure the breach within the applicable cure
period set forth in the plan;
(iii) commits three (3) breaches of its duties or obligations of
the same type, which taken together would constitute a
material breach hereof, within any twelve (12) month
period for which Contractor has received written notice
from AIL and thirty (30) days following receipt of such
notice to cure such breaches, and Contractor has failed to
cure all such breaches; or
(iv) ceases to carry on its business; a receiver or similar
officer is appointed for Contractor and is not discharged
within thirty (30) days; admits in writing its inability
to pay debts as they mature, is adjudicated bankrupt, or
makes an assignment for the benefit or its creditors or
another arrangement of similar import; or proceedings
under bankruptcy or insolvency laws are commenced by or
against Contractor and are not dismissed within sixty (60)
days;
then AIL may, by giving written notice to Contractor, terminate
this Agreement, in whole or in part, as of a date specified in
the notice of termination. Contractor shall pay *** as provided
in Section 5.6 and Section 6.7, if applicable; shall refund to
AIL all or a portion of the Milestone Payments (for services and
work that have not been performed by the Termination Date or for
services or work that AIL has not Accepted by the Termination
Date or for which AIL elects to revoke its Acceptance due to
Contractor's uncured material breach hereof), if it defaults
during the development phase; shall assign its subcontracts to
AIL (to the extent assignable); shall provide termination
assistance to AIL as provided in Section 22.4 below; and shall
fulfill any other applicable terms as set forth in the Agreement.
In addition, following the Termination Date, Contractor agrees to
license its Gateway Terminal IP (including the Contractor
Background Information and the Gateway Terminal IP for the modem
***) to AIL or its Replacement Vendor as defined in and in
accordance with Section 22.3(a) or, at AIL's election,
manufacture and/or sell the modem and ***to AIL and its
authorized purchasers at commercially reasonable prices.
(b) In the event that AIL:
(i) fails to pay Contractor when due undisputed charges under
the Agreement and fails to make such payment within thirty
(30) days of written notice from Contractor of the failure
to make such payment; or
(ii) ceases to carry on its business; a receiver or similar
officer is appointed for AIL and is not discharged within
thirty (30) days; admits in writing its inability to pay
debts as they mature, is adjudicated bankrupt, or makes an
assignment for the benefit or its creditors or another
arrangement of similar import; or proceedings under
bankruptcy or insolvency laws are commenced by or against
AIL and are not dismissed within sixty (60) days;
Contractor may, by giving written notice to AIL, terminate this
Agreement as of a date specified in such notice of termination
and any such reason for termination shall be
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referred to as "Cause". Contractor will also be eligible to
receive payment for work performed and reasonable wind-down
expenses, as its sole remedy under this Section 22.1(b), not to
exceed ***, less amounts already paid.
22.2 TERMINATION FOR CONVENIENCE.
(a) Termination Date. AIL may terminate this Agreement, in whole or
in part, for convenience and without Cause at any time by giving
Contractor thirty (30) days prior written notice designating the
Termination Date.
(b) Termination Liability for AIL Purchase Commitment. If AIL elects
to terminate this Agreement for convenience in accordance with
this Section 22.2 prior to the delivery and payment of the
Purchase Commitment, AIL agrees to pay Contractor a termination
liability payment in accordance with Schedule 11 less all amounts
paid by AIL to Contractor hereunder to up and including the Date
of Termination. This Subsection (b) shall be of no further effect
after AIL completes the AIL Purchase Commitment. Notwithstanding
anything herein to the contrary, AIL's maximum liability and
Contractor's sole remedy for termination for convenience under
this Section 22.2(b) shall be no greater than ***, less prior
payments made by AIL.
(c) Termination Liability following AIL Purchase Commitment. If AIL
elects to terminate this Agreement for convenience in accordance
with this Section 22.2 following the completion of the AIL
Purchase Commitment, AIL shall be liable to Contractor for all
unpaid amounts due and owing for work performed and Contractor's
expenses for any outstanding Orders cancelled as a result of
termination (determined in accordance with Section 8.6 above). As
soon as practicable following the Termination Date, Contractor
shall provide AIL with a complete statement of all unpaid amounts
due and owing for work performed hereunder and other amounts that
are due to Contractor hereunder as of the Termination Date,
including termination liability payment set forth above (the
"Final Statement"). AIL shall review the Final Statement within
thirty (30) days of receipt thereof and, if reasonably
satisfactory to AIL, shall pay Contractor within thirty (30) days
of approval all or part of the Final Statement, all undisputed
amounts due thereunder. If AIL disputes any amounts set forth in
the Final Statement, the Parties shall resolve such disputes as
provided herein, and following resolution of such disputes, AIL
shall pay Contractor all remaining undisputed amounts, if any,
within thirty (30) days after resolution of such disputes. In the
event that a purported termination for Cause by AIL under Section
22.1 is determined by a competent authority not to be properly a
termination for Cause, then such termination shall be deemed to
be a termination for convenience by AIL under this Section 22.2.
For purposes of calculating termination costs relating to
outstanding Orders cancelled as a result of termination, the
provisions of Section 8.6 apply.
22.3 EFFECT OF TERMINATION FOR CAUSE.
(a) If AIL terminates this Agreement pursuant to Sections 5.4, 5.5,
6.7, 13.1 or 22.1 hereof, Contractor agrees to license to AIL or,
at AIL's election, AIL's designated replacement vendor for
Contractor (the "Replacement Vendor") Contractor's Confidential
Information, Contractor Background Information, Contractor
Foreground Information and the Intellectual Property Rights
appurtenant thereto required to develop, produce, modify,
operate, market, demonstrate, distribute, sell, operate and
maintain the Gateway Terminals (collectively, the "Gateway
Terminal IP") and to authorize others to do any of
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the foregoing. Contractor shall provide such Gateway Terminal IP
to AIL or the Replacement Vendor (at AIL's election) and shall
license to AIL or the Replacement Vendor the Gateway Terminal IP
on a non-exclusive, worldwide, royalty-free and irrevocable basis
(as to the Replacement Vendor only, until the Replacement Vendor
ceases to produce Gateway Terminals), for use only in the
development, production, marketing and sales of Gateway Terminals
for the AIL System and otherwise as necessary or appropriate to
fulfill Contractor's obligations hereunder as if Contractor had
not defaulted hereunder; provided however, that the Parties'
agreement on the terms of such license shall not be a condition
precedent to, or delay in any way, AIL's right or the right of
the Replacement Vendor to use the Gateway Terminal IP to develop,
modify, manufacture, produce, distribute, sell, operate and
maintain the Gateway Terminals. The scope of the license granted
to the Replacement Vendor shall extend only to fulfill
Contractor's obligations hereunder as if the Agreement had not
been terminated.
(b) If AIL terminates this Agreement under Section 22.1(a) above, AIL
shall be entitled to have the work completed by another party or
parties, and Contractor shall be liable to AIL for ***
22.4 TERMINATION/EXPIRATION ASSISTANCE.
(a) Upon termination of this Agreement pursuant to Section 22.1(a),
Contractor shall, upon payment of all undisputed amounts due and
payable to Contractor hereunder, turn over to AIL or its designee
all pending and ongoing work, together with such license rights
and Intellectual Property Rights relating to the work to the
extent and in the manner to which AIL would have been entitled
under this Agreement had there not been a termination, subject
further to Section 22.3(a).
(b) Commencing (6) months prior to expiration of this Agreement or on
such earlier date as AIL may request, but no earlier than twelve
(12) months prior to the expiration of this Agreement, or
commencing upon any notice of termination (in whole or in part)
or of non-renewal of this Agreement (including notice based upon
default by AIL), and continuing for a period not to exceed two
(2) years, Contractor shall provide to AIL, or at AIL's request
to AIL's designee, reasonable termination/expiration assistance
requested by AIL (at AIL's expense except if the termination
results from Contractor's default) to allow the provisioning of
the Gateway Terminals components thereof to continue without
interruption or adverse effect to AIL's operations and business
in connection with AIL's System ("Termination/Expiration
Assistance"). Termination/Expiration Assistance shall include the
following assistance:
(i) Contractor shall, using its good faith efforts, migrate
the support obligations hereunder to a qualified third
party designated vendor acceptable to AIL;
(ii) Contractor shall (to the extent authorized) sublicense to
AIL all third party products utilized with the Gateway
Terminals subject to the use rights set forth in Section
10.6; provided, however, with respect to non-commercially
available third party products utilized with the Gateway
Terminals, if any, Contractor shall provide the foregoing
sublicense to AIL; and
(iii) Contractor shall identify for AIL all third party
suppliers Contractor utilized to manufacture the Gateway
Terminals.
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(c) This Section 22.4 shall survive termination or expiration of this
Agreement. For a period of two (2) years following the effective
date of termination/expiration under other provisions of this
Agreement, Contractor shall provide, at AIL's request, any or all
of the Services being performed by Contractor prior to such
effective date. To the extent Contractor is to perform Services
under Subsection (a) of this Section 22.4, the provisions of this
Agreement shall be applicable as such provisions would have been
applicable to such Services prior to such effective date,
provided the charge therefore shall at Contractor's then current
commercial rates. In the event the Agreement is terminated by
Contractor for AIL's non-payment in accordance with Section
22.1(b), then Contractor may request that AIL pay for such
Services in advance based on a reasonable estimate for such
Services as agreed upon by the Parties. Any overages or underages
of such pre-payments will be accounted for at the end of the
month.
22.5 APPROPRIATE REMEDIES.
Contractor acknowledges that, in the event it breaches (or attempts or
threatens to breach) its obligation to provide Termination/Expiration
Assistance as provided in Section 22.4, AIL will be irreparably harmed
and AIL will not have an adequate remedy at law. In such a circumstance,
AIL may proceed directly to court. If a court of competent jurisdiction
should find that Contractor has breached (or attempted or threatened to
breach) any such obligations, Contractor agrees that without any
additional findings of irreparable injury, inadequate remedy at law or
other conditions to injunctive relief, it shall not oppose the entry of
an appropriate order compelling performance by Contractor and
restraining it from any further breaches (or attempted or threatened
breaches).
23. GENERAL
23.1 BINDING NATURE AND ASSIGNMENT.
This Agreement shall be binding on the Parties hereto and their
respective successors and assigns. Neither Party may, or shall have the
power to, assign this Agreement or delegate such Party's obligations
hereunder without the prior written consent of the other, which consent
shall not be unreasonably withheld or delayed; provided, however, that
the proposed assignee has the resources (financial, technical,
personnel, etc.) to perform the assignor's obligations hereunder.
Notwithstanding the foregoing, AIL may assign its rights and obligations
under this Agreement with the approval of Contractor (which approval
shall not be unreasonably withheld or delayed) to an entity which
acquires all or substantially all of the assets of AIL or to any
subsidiary or Affiliate or successor in a merger or acquisition of AIL.
The assigning Party shall remain responsible for its obligations
hereunder, unless expressly agreed to in writing by the non-assigning
Party.
23.2 CONDITIONAL ASSIGNMENT OF SUBCONTRACTS.
Notwithstanding the terms of Section 23.1 above and subject to the
condition contained in this Section 23.2, Contractor hereby assigns to
AIL its rights and obligations under Contractor's subcontracts with the
Material Subcontractors. Such assignment shall become effective, if at
all, if this Agreement is terminated in accordance with the terms
hereof.
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23.3 ENTIRE AGREEMENT.
This Agreement, including any Schedules and Attachments referred to
herein and attached hereto, constitutes the entire agreement between the
Parties with respect to the subject matter hereof and supersedes all
prior agreements, whether written or oral, with respect to the subject
matter contained in this Agreement.
23.4 ALIGNMENT OF INTERESTS.
Contractor agrees that it will in no way take a position adverse to AIL,
including with respect to the spectrum assigned and designated for use
by AIL, in trade associations, regulatory bodies, the press or
otherwise, unless mutually agreed upon by the Parties in advance.
23.5 COMPLIANCE WITH LAWS AND REGULATIONS.
(a) Each Party shall perform its obligations in a manner that
complies with all applicable U.S. federal, state and local laws,
regulations, ordinances and codes, including export and foreign
controls, the Foreign Corrupt Practices Act, the U.S. Export
Administration Act, EPA, OSHA, and foreign import and export laws
and regulations, as well as any applicable requirements of the
FCC. If either Party is charged with a failure to comply with any
of such laws or regulations, the Party charged shall promptly
notify the other Party of such charges in writing.
(b) Each Party agrees that its execution, delivery, and performance
of this Agreement shall not constitute (i) a violation of any
judgment, order, or decree; (ii) a material default under any
material contract by which it or any of its material assets are
bound; or (iii) an event that would, with notice or lapse of
time, or both, constitute such a default as described in (ii).
(c) Each Party shall be responsible for, and shall coordinate and
oversee compliance with the laws and regulations in respect of
items exported or imported hereunder by it. The Parties
acknowledge that certain Intellectual Property Rights, including
those related to the Software and technical data to be provided
hereunder and certain transactions hereunder, may be subject to
export controls under the laws and regulations of the United
States and other countries. Neither Party shall export or
re-export any such items or any direct product thereof or
undertake any transaction in violation of any such laws or
regulations.
23.6 NOTICES.
All notices, requests, demands, and determinations under this Agreement
(other than routine operational communications), shall be in writing and
shall be deemed duly given (i) when delivered by hand, (ii) one (1) day
after being given for next day delivery to an express, overnight courier
with a reliable system for tracking delivery, or (iii) five (5) days
after the day of mailing, when mailed by United States mail, registered
or certified mail, return receipt requested, postage prepaid, and
addressed as follows:
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If to AIL: If to Contractor:
ASTROLINK International LLC ViaSat, Inc.
6701 Democracy Boulevard 6651 El Camino Real
Suite 1000 Carlsbad, CA 92009
Bethesda, MD 20817
Attn: General Counsel Attn: General Counsel
Facsimile: (301) 581-4001 Facsimile: (760) 929-3926
With a copy to: With a copy to:
Shaw Pittman ViaSat, Inc.
2300 N Street, N.W. 6155 El Camino Real
Washington, DC 20037-1128 Carlsbad, CA 92009
Attn: *** Attn: President
Facsimile: *** Facsimile: (760) 929-3926
A Party may from time to time change its address or designee for
notification purposes by giving the other prior written notice of the
new address or designee and the date upon which it will become
effective.
23.7 COUNTERPARTS.
This Agreement may be executed in several counterparts, all of which
taken together shall constitute one single agreement between the Parties
hereto.
23.8 RELATIONSHIP OF PARTIES.
Contractor, in furnishing Gateway Terminals and Services hereunder, is
acting as an independent contractor, and Contractor has the sole right
and obligation to supervise, manage, direct, procure, perform or cause
to be performed, all work to be performed by Contractor under this
Agreement. Contractor is not an agent of AIL and has no authority to
represent AIL as to any matters, except as expressly authorized in this
Agreement.
23.9 SEVERABILITY.
In the event that any provision of this Agreement conflicts with the law
under which this Agreement is to be construed or if any such provision
is held invalid by an arbitrator or a court with jurisdiction over the
Parties, such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in accordance
with applicable law. The remainder of this Agreement shall remain in
full force and effect.
23.10 CONSENTS AND APPROVAL.
Except where expressly provided as being in the discretion of a Party,
where agreement, approval, acceptance, consent, or similar action by
either Party is required under this Agreement, such action shall not be
unreasonably delayed or withheld. An approval or consent given by a
Party under this Agreement shall not relieve the other Party from
responsibility for complying with the requirements of this Agreement,
nor shall it be construed as a waiver of any rights under
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this Agreement, except as and to the extent otherwise expressly provided
in such approval or consent.
23.11 WAIVER OF DEFAULT; CUMULATIVE REMEDIES.
(a) No waiver or discharge hereof shall be valid unless in writing
and signed by an authorized representative of the Party against
which such amendment, waiver, or discharge is sought to be
enforced. A delay or omission by either Party hereto to exercise
any right or power under this Agreement shall not be construed to
be a waiver thereof. A waiver by either of the Parties hereto of
any of the covenants to be performed by the other or any breach
thereof shall not be construed to be a waiver of any succeeding
breach thereof or of any other covenant herein contained.
(b) Except as otherwise expressly provided herein and subject to
Sections 10.4(e) and 21.2 above, all remedies provided for in
this Agreement shall be cumulative and in addition to and not in
lieu of any other remedies available to either Party at law, in
equity or otherwise.
23.12 SURVIVAL.
Any provision of this Agreement which contemplates performance or
observance subsequent to any termination or expiration of this Agreement
(in whole or in part) shall survive any termination or expiration of
this Agreement (in whole or in part, as applicable) and continue in full
force and effect, but shall not extend the applicable statute of
limitations.
23.13 PUBLIC DISCLOSURES.
Except as may be required by applicable law or in response to an order
of a court of competent jurisdiction or government agency, neither Party
nor its subcontractors will issue a press release or other public
announcement concerning the subject matter of this Agreement without the
prior approval of the other Party, which approval shall not be
unreasonably withheld or delayed. Such approval must be provided (or the
notice that such approval is withheld must be provided) within five (5)
business days after the request of the other Party. In addition, all
media releases, public announcements, and public disclosures relating to
this Agreement or the subject matter of this Agreement, including
promotional or marketing material, but not including announcements
intended solely for internal distribution or disclosures to the extent
required to meet legal or regulatory requirements beyond the reasonable
control of the disclosing Party, shall be coordinated with and approved
in writing by both Parties prior to release. Notwithstanding any
provision to the contrary contained herein or in the Proprietary
Information Agreement by and between the Parties dated December 22,
1998, the Parties agree that if public disclosure of the terms of this
Agreement is required by the U.S. Securities and Exchange Commission
(the "SEC") to be made, the Party required to make such disclosure
shall, prior to making any such disclosure, (i) notify the other Party
of such requirement and (ii) request from the SEC confidential treatment
of the material provisions of this Agreement in accordance with Rule 406
(or any successor rule or regulation) promulgated under the Securities
Act of 1933, as amended, or Rule 24b-2 (or any successor rule or
regulation) promulgated under the Securities Exchange Act of 1934, as
amended, which request shall be prepared in consultation with the other
Party.
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23.14 THIRD PARTY BENEFICIARIES.
Except as specifically provided in this Agreement, this Agreement is
entered into solely between, and may be enforced only by, AIL and
Contractor. This Agreement shall not be deemed to create any rights in
third parties, including suppliers and customers of a Party, or to
create any obligations of a Party to any such third parties.
23.15 AMENDMENT.
This Agreement shall not be modified, amended or in any way altered
except by an instrument in writing signed by both Parties.
23.16 INCORPORATION BY REFERENCE AND ORDER OF PRECEDENCE
(a) The Schedules and Attachments attached hereto are hereby
incorporated by reference into this Agreement. Subject to Section
23.15, any amendments to Schedules and Attachments, and any other
Schedules and Attachments that are agreed upon by the Parties
subsequent to the Effective Date, shall likewise be incorporated
by reference into this Agreement.
(b) Any conflict among or between the documents making up this
Agreement will be resolved in accordance with the following order
of precedence (in descending order of precedence):
(i) Change Orders;
(ii) This Agreement;
(iii) Pricing Schedules;
(iv) SOW;
(v) The Attachments to the Schedules; and
(vi) Orders.
23.17 COVENANT AGAINST PLEDGING.
Contractor agrees that, without the prior written consent of AIL, it
shall not assign, transfer, pledge, hypothecate or otherwise encumber
its rights to receive payments from AIL under this Agreement for any
reason whatsoever, except as otherwise expressly permitted under Section
23.1.
23.18 SECURITY INTEREST.
Contractor reserves a purchase money security interest in each Gateway
Terminal or component thereof delivered under this Agreement in the
amount of the purchase price and in AIL's proceeds from any sale of such
product. This security interest will be satisfied by payment in full of
the purchase price. A copy of the pertinent provisions of this Agreement
may be filed on Contractor's behalf with appropriate state authorities
any time after signature by AIL as a financing statement in order to
prefect Contractor security interest. AIL agrees to sign upon
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request any document necessary to perfect Contractor's security interest
and cooperate in the filing and protection of same.
23.19 GOVERNING LAW.
This Agreement and performance under it shall be governed by and
construed in accordance with the laws of state of New York without
regard to its choice of law principles. The United Nations Convention
for Sale of Goods shall not apply to this Agreement or the Orders placed
hereunder.
23.20 COVENANT OF GOOD FAITH.
Each Party agrees that, in its respective dealings with the other Party
under or in connection with this Agreement, it shall act in good faith.
23.21 LENDER ASSURANCES.
Contractor agrees to work cooperatively with AIL in connection with
AIL's efforts to obtain financing for the AIL System and the work
performed hereunder. Contractor agrees to execute such documents as may
be reasonably required by AIL financing parties.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the undersigned officers, thereunto, duly authorized, as the Effective Date.
ASTROLINK INTERNATIONAL LLC VIASAT, INC.
By:_______________________________ By:_________________________________
Printed:__________________________ Printed:____________________________
Title:____________________________ Title:______________________________
Date: December 28, 2000 Date: December 28, 2000
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SCHEDULE 1
MILESTONE AND PAYMENT SCHEDULE
In accordance with Section 5.4, Contractor shall be paid in accordance with the
below Milestone and Payment Schedule following Acceptance.
***
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SCHEDULE 2
PURCHASE PRICES FOR GATEWAY TERMINALS
***
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SCHEDULE 3
COUNTRY SCHEDULE
***
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SCHEDULE 4
STATEMENT OF WORK
***
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SCHEDULE 5
ESCROW AGREEMENT
[TO BE COMPLETED WITHIN NINETY (90) DAYS AFTER THE EFFECTIVE DATE
AND ATTACHED IN ACCORDANCE WITH SECTION 10.6]
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SCHEDULE 6
EXTENDED WARRANTY OPTION
Extended Warranty shall be provided in accordance with the Section 11.3(b) of
the Agreement. Pricing for this Extended Warranty shall be proposed by
Contractor at the CDR.
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SCHEDULE 7
WARRANTY PROCEDURES
This Schedule summarizes Contractor's standard warranty procedures of its
commercial VSAT Product, StarWire. As a part of the Product Support Plan set
forth in the SOW, Contractor shall tailor this Schedule to reflect AIL's
business and in compliance with the SOW.
1.0 PURPOSE
The Product Support and Service procedure defines the policies,
authority, and responsibility for the support of warranty issues, field
service, customer observations and responses for improvement of
Contractor products.
2.0 SCOPE
All shipped Contractor systems and products governed by the standard
warranty for those products.
3.0 GENERAL POLICIES
3.1 The Product Support group is the primary contact for all
field-related issues.
3.2 The general warranty policy for Contractor products covers
defects in materials and workmanship for one year after shipment.
3.3 Return Material Authorizations (RMA) are issued from Product
Support to process product returns for warranty and
out-of-warranty repair, upgrade, and exchanges.
3.4 All authorized returns are shipped pre-paid to Contractor.
Shipping expenses for products returned to the customer are borne
by Contractor, unless indicated otherwise by contract.
4.0 GENERAL PROCEDURE
4.1 The Product Support group receives, logs, and routes customer
observations and reports of problems. Reports from this process
are distributed to appropriate product groups for disposition.
4.2 Product Support and the product group relative to the product
type and specification investigate customer reports. The results
of this investigation are documented and communicated to the
Customer.
4.3 Where applicable, Product Support and/or Product Engineering
ensure that corrective action is implemented for the appropriate
processes, as required, and the results documented and
communicated to the Customer.
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4.4 As a benefit of continuous improvement, Product Support shall
periodically inform Customers of upgrade, preventive maintenance,
and service opportunities for previously shipped products.
4.5 Customer observations and feedback will be evaluated and the
results presented to management and department heads in order to
identify both constructive and deficient areas of performance.
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SCHEDULE 8
KEY CONTRACTOR PERSONNEL
[CONTRACTOR TO DESIGNATE INDIVIDUALS FOR POSITIONS BELOW WITHIN THIRTY (30) DAYS
OF THE EFFECTIVE DATE OF CONTRACT]
Pursuant to Section 12.5, the following individuals are designated as Key
Contractor Personnel:
- --------------------------------------------------------------------------------
POSITION NAME
- --------------------------------------------------------------------------------
PROGRAM MANAGER
- --------------------------------------------------------------------------------
SATELLITE ACCESS EQUIPMENT LEAD ENGINEER
- --------------------------------------------------------------------------------
MODEM INTERWORKING UNIT LEAD ENGINEER
- --------------------------------------------------------------------------------
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SCHEDULE 9
CONTRACTOR RATES
The rates and guidelines for expenses and travel set forth on this Schedule 9
apply only to those Services identified in the Agreement that refer to Schedule
9.
***
Notes:
1) The rates set forth above are in effect through the Contract Year 2001.
Thereafter, beginning for Contract Year 2002, Contractor may increase the
labor rates at the end of each Contract Year at a percentage rate that does
not exceed the percentage change from one Contract Year to another of the
Bureau of Labor Standards, Table 3, Employment Cost Index for total
compensation for Private Industry workers for Industry, Goods Producing,
White Collar.
2) As set forth in the Agreement and the SOW, Contractor shall also be
reimbursed in accordance with the above in the event that the engineering
support ("Support Services") exceeds ***for support of the AIL System.
3) Contractor shall also be reimbursed for actual unburdened expenses related
to travel, per diem and other related expenses, without any administrative
fee.
4) No more than eight (8) hours per day may be charged during travel.
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SCHEDULE 10
POST-WARRANTY SUPPORT AND REPAIR OBLIGATIONS
In the event that the Warranty or the Extended Warranty has expired, Contractor
will provide the following services and/or support:
* Spares Support and Pricing proposed by Contractor at CDR and mutually
agreed by the Parties.
* Telephone Support at varying levels up to the limits described in the
Warranty with pricing to be determined for each level on a Contract Year basis.
Telephone support must be subscribed to in at least three (3) month increments.
* Factory repair services. Contractor will accept Gateway Terminals
field-replaceable units ("FRUs") returned to factory for repair on a current
repair price basis. Customer assumes the expense and risk of loss for
transportation.
* On-Site Repair and/or Assistance. In accordance with the then current
Field Support Rate plus travel, per diem and other expenses.
A Purchase Order (P.O.) is required from the customer if a Gateway Terminal
component is returned and is out-of-warranty. The Purchase Order must be
received prior to product receipt or customer product returns are held in
Receiving until the P.O. is processed.
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SCHEDULE 11
TERMINATION LIABILITY PAYMENTS
If AIL elects to terminate for its convenience pursuant to Section 22.2
of the Agreement prior to or upon the delivery and payment of the 9 Gateway
Terminals in the AIL Purchase Commitment, AIL's termination liability shall be
determined in accordance with the table set forth below, less the aggregate
amounts paid by AIL hereunder. The following Table sets forth termination points
by quarter for each Contract Year. The actual termination liability payment will
be the amount shown in the table minus all payments received from AIL.
***
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SCHEDULE 12
CERTIFICATION OF THIRD PARTY INSTALLERS
If requested by AIL, Contractor will perform this certification on a
time and materials cost basis using the rates set forth in Schedule 9. The
process for certification is as follows:
- An established ground system integration company which is in the
business of performing satellite ground system installations is
selected by AIL.
- Contractor will develop detailed installation and on-site acceptance
testing (OSAT) procedures that are suitable for use by third
parties.
- The installer sends all personnel who would be involved in the
installation to Contractor's facility to attend a one (1) week
training class on the Gateway Terminals. This course will be
designed to enable the installer to understand the overall function
of the Gateway Terminal and how it interacts with other elements of
the Gateway.
- Contractor will also provide classroom training on the installation
and OSAT.
- The team, under the supervision of Contractor personnel, would
install one of the deliverable ***Gateway Terminals at a site to be
designated by AIL.
- If installers pass the written tests associated with the training
and successfully install the Gateway Terminal, they will be
certified by Contractor.
- If the installers do not meet the required standards, the Parties
will meet and confer to determine a mutually acceptable plan of
action to achieve certifications.
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