EXHIBIT 10.24
AGREEMENT
FOR
PHASE 1 INFORMATION TECHNOLOGY SERVICES
BETWEEN
SPECTRADYNE, INC.
AND
ELECTRONIC DATA SYSTEMS CORPORATION
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE
INDICATED IN THIS AGREEMENT WITH BRACKETS ([ ]).
TABLE OF CONTENTS
ARTICLE I.
AGREEMENT, TERM AND DEFINITIONS
PAGE
----
1.1 Agreement.................................................... 1
1.2 Term......................................................... 1
1.3 Definitions.................................................. 3
1.4 Phase II Information Technology Services Agreement........... 11
ARTICLE II.
EMPLOYEES OF SPECTRADYNE AND EDS
2.1 Account Manager.............................................. 14
2.2 Designated Representative.................................... 14
2.3 Transition of Spectradyne Personnel.......................... 15
ARTICLE III.
OBLIGATIONS RELATED TO CERTAIN
SOFTWARE AND LEASED HARDWARE
3.1 Assumption of Leases......................................... 15
3.2 Inventory and Inspection..................................... 16
3.3 Obligations Related to Vendor Software....................... 16
3.4 Purchase of Vendor Hardware and Software from EDS............ 17
ARTICLE IV.
FACILITIES MANAGEMENT SERVICES
4.1 General...................................................... 17
4.2 Management of Spectradyne's Existing Operations.............. 18
4.3 Documentation................................................ 18
4.4 Training and Support......................................... 19
4.5 Hardware Maintenance......................................... 19
4.6 Software Maintenance......................................... 19
4.7 Local and Wide Area Network Administration and Availability.. 19
4.8 Safeguarding and Retention of Spectradyne Data............... 19
4.9 Development of Certain Software.............................. 19
4.10 Facilities Management Services Performance Criteria.......... 20
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ARTICLE V.
NETWORK SERVICES
5.1 General...................................................... 20
5.2 Uplink and Tape Playback Services............................ 21
5.3 Transponder Services......................................... 21
5.4 Transmission Monitoring Services............................. 22
5.5 Support Services............................................. 22
5.6 Changes to Network Services.................................. 22
5.7 Network Service Performance Criteria......................... 22
ARTICLE VI.
FIELD SERVICES
6.1 General...................................................... 22
6.2 Field Service Orders......................................... 23
6.3 Changes to and Cancellations of Field Service Orders......... 25
6.4 Provision of Certain Hardware and Software................... 25
6.5 Installation................................................. 26
6.6 Customer Assistance Center and Maintenance Services.......... 26
6.7 Geographic Area Covered by Field Services.................... 26
6.8 Field Service Performance Criteria........................... 27
6.9 Disaster Recovery............................................ 27
ARTICLE VII.
ADDITIONAL SERVICES
7.1 Additional Products and Services............................. 29
7.2 Right of First Refusal Regarding Additional Products and
Additional Services.......................................... 29
ARTICLE VIII.
WARRANTIES, REMEDIES AND QUALITY REVIEW
8.1 Warranties from Vendors...................................... 31
8.3 Remedies..................................................... 32
8.4 Quality Review............................................... 33
ARTICLE IX.
PAYMENT
9.1 Charges...................................................... 33
9.2 Terms of Payment............................................. 34
9.3 Bonus........................................................ 34
9.4 Taxes........................................................ 34
9.5 Distribution of Revenue Related to New Business.............. 35
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ARTICLE X.
SPECTRADYNE OBLIGATIONS
10.1 Obligation to Purchase from EDS.............................. 35
10.2 Spectradyne's Performance Obligations........................ 35
ARTICLE XI.
PROPRIETARY RIGHTS
11.1 EDS Hardware................................................ 36
11.2 Vendor Software............................................. 37
11.3 Spectradyne Software........................................ 37
11.4 EDS Software................................................ 38
11.5 Software Development........................................ 39
11.6 EDS Development Tools....................................... 40
11.7 Software Modifications...................................... 40
11.8 Confidentiality............................................. 40
11.9 Exclusivity................................................. 42
ARTICLE XII.
PERFORMANCE REVIEW AND DISPUTE RESOLUTION
12.1 Performance Review........................................... 43
12.2 Dispute Resolution........................................... 44
ARTICLE XIII.
TERMINATION
13.1 Termination for Cause....................................... 45
13.2 Termination for Spectradyne's Convenience................... 46
13.3 Termination for Reaching Limitation of Liability............ 47
13.4 Termination for Nonpayment.................................. 47
13.5 Termination for Insolvency.................................. 47
13.6 Transition Upon Termination................................. 48
13.7 Rights Upon Termination..................................... 49
13.8 Termination Fee............................................. 49
ARTICLE XIV.
INDEMNITIES AND LIABILITIES
14.1 Indemnification............................................. 49
14.2 Indemnification Procedures.................................. 51
14.3 Risk of Loss................................................ 52
14.4 Liquidated Damages and Limitation of Liability.............. 52
14.5 Contractual Limitation on Actions........................... 56
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ARTICLE XV.
MISCELLANEOUS
15.1 Relationship of the Parties................................. 56
15.2 Excusable Delays............................................ 57
15.3 No Third Party Beneficiary.................................. 57
15.4 Public Disclosures.......................................... 57
15.5 Notices..................................................... 58
15.6 Approvals and Similar Actions............................... 59
15.7 Subcontracting.............................................. 59
15.8 Binding Nature and Assignment............................... 60
15.9 Counterparts................................................ 61
15.10 Certain Construction Rules.................................. 61
15.11 Waiver...................................................... 61
15.12 Governing Law............................................... 61
15.13 Survival of Certain Provisions.............................. 61
15.14 Entire Agreement............................................ 61
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AGREEMENT
FOR
PHASE 1 INFORMATION TECHNOLOGY SERVICES
This Phase 1 Information Technology Services Agreement (the "Agreement"),
dated as of July 28, 1993 (the "Execution Date"), is between Spectradyne, Inc.,
a Texas corporation ("Spectradyne"), and Electronic Data Systems Corporation, a
Texas corporation ("EDS").
RECITALS:
This Agreement, when taken together with the Phase II Information Services
Agreement, the Financial Agreement and the PCFM, forms the basis of a strategic
alliance between Spectradyne and EDS. Each of these agreements creates
distinct, unique rights and obligations in the parties to the agreements, except
to the extent that individual obligations under one agreement are specifically
tied to individual obligations in another agreement as expressly set forth in
the agreements. The agreements do not form one agreement, but rather several
pieces to the strategic alliance.
This Agreement sets forth the terms and conditions under which EDS will (a)
install, operate and manage a compressed digital video network in North America
for the purpose of distributing in-room video entertainment programming and
Spectradyne-developed interactive services, (b) provide Facilities Management
Services, Network Services and Field Services and (c) if requested by
Spectradyne, provide Additional Services, all of which are described below.
In consideration of these premises and the mutual covenants set forth in
this Agreement, and for other good and valuable consideration, the sufficiency
and receipt of which is hereby acknowledged, Spectradyne and EDS hereby agree to
undertake all rights and obligations under the terms and conditions of this
Agreement.
ARTICLE I.
AGREEMENT, TERM AND DEFINITIONS
1.1 Agreement. Subject to and under the terms and conditions of this
Agreement, EDS will provide to Spectradyne, and Spectradyne will purchase
from EDS, the information technology products and Information Technology
Services described in this agreement under the terms and conditions of this
Agreement.
1.2 Term. This Agreement will be executed by Spectradyne and EDS on the
Execution Date, but, with the exception of Spectradyne's obligations under
this Section 1.2, will not become effective until such time as it is
unconditionally approved by the board of directors of Spectradyne and those
banks, lending institutions or other lenders which are parties to the Loan
Documents described in Section 1. 3 (bn) , or in the case of such banks,
lending
institutions or other lenders unconditional waivers of any required
approval, which approvals (except that the board of directors referred to
above in this case is the board of directors of SPI) are also required for
the PCFM and the Financial Agreement. Spectradyne represents that
Spectradyne and SPI both began such approval process prior to the Execution
Date, and that it will use all commercially reasonable efforts to obtain
such approvals or waivers, as the case may be, on or before October 1,
1993. EDS will have no obligation, solely by virtue of this Agreement, to
perform any service, provide any product or to undertake any obligation
under this Agreement or the Financial Agreement until such time as
Spectradyne obtains all such unconditional approvals or waivers, as the
case may be. Further, EDS will have no obligation to accept any condition
or enter into any negotiations with Spectradyne, the board of directors of
Spectradyne (or any individual director of Spectradyne) or any bank,
lending institution or other lender described above of or related to this
Agreement, the Financial Agreement (including for the purposes of this
Section 1.2 all documents ancillary to the Financial Agreement, including
without limitation the warrant agreement, the registration agreement, the
series 1 promissory notes, the series 2 promissory notes, the guaranty
agreement, the security agreement and any other such ancillary agreement)
or the PCFM in an effort to obtain any unconditional approval or waiver, as
the case may be, and EDS will have no obligation, solely by virtue of this
Agreement, to perform any service, provide any product or to undertake any
obligation under this Agreement before, on or after October 1, 1993 if
Spectradyne fails to obtain such unconditional approvals on or before
October 1, 1993.
Spectradyne will notify EDS in writing within one Business Day after
receiving notice from the board of directors of Spectradyne and SPI and
from each such bank, lending institution or other lender of any
unconditional approval or disapproval of this Agreement, and upon receiving
the last unconditional approval or waiver, as the case may be, if such
unconditional approval or waiver is obtained, an officer of Spectradyne
will deliver to EDS copies of all such unconditional approvals or waivers,
as the case may be, and a certificate executed by an officer of Spectradyne
in a form substantially as set forth in Schedule 1.2 and without material
change, exception or qualification, which certificate will include without
limitation a representation that all unconditional approvals or waivers, as
the case may be, have been obtained and are in full force and effect, have
not been amended or rescinded and that the execution, delivery,
consummation and performance of this Agreement by Spectradyne (and of SPI,
in the case of the PCFM and Financial Agreement) does not and will not
conflict with, constitute a breach of or default under or give rise to any
right of termination or acceleration under any material agreement between
Spectradyne, or SPI, as the case may be, and any third party, including
without limitation those banks, lending institutions and other lenders
described above the breach of or default under such material agreement
would cause a material adverse effect on the business or affairs of
Spectradyne or SPI, as the case may be, with regard to each of Spectradyne
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and SPI, taken as a whole. In the alternative, if the agreements between
the banks, lending institutions or other lenders described above and
Spectradyne or SPI, as the case may be, do not require such approval or
waiver, Spectradyne or SPI, as the case may be, will provide to EDS
documentation that establishes to EDS' reasonable satisfaction that no such
approvals or waivers are required.
The date on which such officer's certificate and such copies of all
unconditional approvals, or such alternative documentation described above,
are received by EDS will be the effective date of this Agreement and the
Financial Agreement, and with the exception of Spectradyne's obligations
under this Section 1.2, the date on which all obligations under this
Agreement will commence (the "Effective Date").
The term of this Agreement will begin on the Effective Date and will
continue for a period of 10 years unless earlier terminated in accordance
with the provisions of Article XIII. On or about the ninth anniversary of
the Effective Date, Spectradyne and EDS will meet and discuss whether or
not to extend the term of this Agreement. If either Spectradyne or EDS
desires or intends not to extend this Agreement beyond the tenth
anniversary of the Effective Date, such party will notify the other within
60 days after such meeting, and Spectradyne and EDS will develop a schedule
for the Termination Transition described in Section 13.6, which schedule
will call for the completion of the Termination Transition no later than
the tenth anniversary of the Effective Date. If Spectradyne and EDS both
desire to extend the term of this Agreement, then Spectradyne and EDS will
negotiate in good faith to reach and enter into a new agreement under which
EDS will provide Information Technology Services in accordance with
Spectradyne Is needs at that time. (The effective date of any expiration or
termination of this Agreement is referred to as the "End Date.")
1.3 Definitions. As used in this Agreement, the following terms will have the
respective meaning set forth below:
(a) "Access" has the meaning set forth in Section 3.3(a)(i).
(b) "Accessed Software" has the meaning set forth in Section 3.3 (a) (i).
(c) "Account Manager" has the meaning set forth in Section 2.1.
(d) "Additional Products' has the meaning set forth in Section 7.1.
(e) "Additional Services" has the meaning set forth in Section 7.1.
(f) "Affiliate" means a corporation related to either Spectradyne or EDS
because it is directly or indirectly controlling or controlled by or
under direct or indirect common control with either Spectradyne or
EDS. For
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the purposes of this definition, "control," when used with respect to
any such corporation, means the power to direct the management and
policies of such corporation, directly or indirectly, through the
ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
(g) "Agreement" has the meaning set forth in the Preamble.
(h) "All North American Sites" has the meaning set forth in Section 6.7.
(i) "Annual Plan" has the meaning set forth in Schedule 4.9.
(j) "Authorized Field Service Order" has the meaning set forth in Section
6.2.
(k) "Base Service Charge" has the meaning set forth in Schedule 9.1.
(l) "Business Day" means a day other than (i) Saturday, Sunday and (ii)
any day on which the principal commercial banks located in Texas are
authorized or obligated to close under the laws of Texas.
(m) "CCRM" has the meaning set forth in Schedule 6.5.
(n) "CDVRO System" means a compressed digital video receive only earth
system which receives KU-band satellite signals using CLI
SpectrumSaver(TM) technology, as more specifically described in
Schedule 1.3(n).
(o) "CIG" has the meaning set forth in Section 11.9.
(p) "Confidential Information" has the meaning set forth in Section
11.8(a).
(q) "CRM" has the meaning set forth in Schedule 9.1.
(r) "Customer Assistance Center has the meaning set forth in Schedule 6.6.
(s) "Data General Hardware," has the meaning set forth in Section 14.4
(a).
(t) "Debt" has the meaning set forth in Section 1.3(bn).
(u) "Delivery Date" has the meaning set forth in Section 1.4(b).
(v) "Designated Representative" has the meaning set forth in Section 2.2.
(w) "Developed Software" has the meaning set forth in Section 4.9.
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(x) "Digitally Based Video On Demand System" means a system of Hardware
and Software to be developed by EDS under the definitive agreement for
Phase II information technology services described in Section 1.4 that
(i) will store [ ] full length video programs, [ ] data sets, [ ] data
sets and [ ] data sets, (ii) will provide simultaneous viewing for [ ]
viewers while sustaining a data transmission rate of [ ] kilobytes per
second or greater and (iii) will contain such other functionality as
Spectradyne and EDS may mutually agree.
(y) "EDS" has the meaning set forth in the Preamble.
(z) "EDS Hardware" means any Hardware provided by EDS under this Agreement
where title to such Hardware remains in EDS or a third party.
(aa) "EDS Software" means Developed Software and any Software which is
owned by EDS and provided to Spectradyne under this Agreement.
(ab) "EDS Support Services" has the meaning set forth in the Schedule 6.6.
(ac) "Effective Date" has the meaning set forth in Section 1.2.
(ad) "End Date" has the meaning set forth in Section 1.2.
(ae) "Execution Date" has the meaning set forth in the Preamble.
(af) "Existing Functionality" has the meaning set forth in Section 4.2.
(ag) "Existing Software" means that Software which is set forth in Schedule
1.3 (acr), which Schedule 1.3 (ag) will be developed in accordance
with Section 3.2 which was used by or on behalf of Spectradyne
immediately prior to the Effective Date.
(ah) "Facilities Management Services" has the meaning set forth in Section
4.1.
(ai) "Field Services", has the meaning set forth in Section 6.1.
(ai) "Field Service Charges" has the meaning set forth in Schedule 9.1.
(ak) "Field Service Order" has the meaning set forth in Section 6.2.
(al) "Financial Agreement" means that certain Agreement to Make Secured
Loans by and between SPI Holding, Inc. and EDS dated July 28, 1993
setting forth the terms and conditions under which, among other
things, (i) EDS will loan SPI Holding, Inc. money, from time to time,
to be
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reloaned by SPI Holding, Inc. to Spectradyne, from time to time, for
the purchase of IRDs and CDVRO Systems and (ii) as partial
consideration for such loans, SPI Holding, Inc. will repay such loans
and grant to EDS certain warrants under which EDS will have the right
to purchase shares of Class B Common Stock in SPI Holding, Inc.
(am) "Hardware" means transmitting, receiving and decoding equipment;
computers and related equipment (but not including any satellite or
transponder), including but not limited to, central processing units
and other processors; peripheral devices such as storage devices,
printers, terminals and other input and output devices; IRDS; CDVRO
Systems and mounts; and/or other tangible mechanical and electronic
equipment, such as controllers, modems, communications and
telecommunications equipment (voice, data and video) and networks
intended for the input, storage, manipulation, communication,
transmission and retrieval of information and data.
(an) "Headend Hardware" means that Hardware which resides at the
Spectradyne customer site and which is necessary to distribute and
receive audio and video signals via MATV system at such customer site.
(ao) "Information Technology Services" means the Facilities Management
Services, Network Services, Field Services and Additional Services
provided by EDS to Spectradyne as set forth in this Agreement.
(ap) "Installation Date" has the meaning set forth in Schedule 6.5.
(aq) "Installation Services" means the specifications set forth in Schedule
8.2.
(ar) "IRD" means a compressed digital video integrated receiver decoder.
(as) "IRD System" means the Hardware described in Schedule 1.3 (as), as
amended from time to time upon mutual agreement of Spectradyne and
EDS.
(at) "Leases" has the meaning set forth in Section 3.1.
(au) "Maintained Hardware" has the meaning set forth in Section 4.5.
(av) "Maintained Software" has the meaning set forth in Section 4.6.
(aw) "Network Services" has the meaning set forth in Section 5.1.
(ax) "New Base Sites" means all sites set forth in Schedule 1.3 (ax), as
amended from time to time by Spectradyne upon written notice from
Spectradyne to EDS.
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(ay) "New Non-Satellite Base Sites" means those sites set forth in Section
B of Schedule 1. 3 (ax), as amended from time to time by Spectradyne
upon written notice from Spectradyne to EDS.
(az) "New Satellite Base Sites" means those sites set forth in Section A of
Schedule 1.3 (ax), as amended from time to time by Spectradyne upon
written notice from Spectradyne to EDS.
(ba) "Non-Standard Products" has the meaning set forth in Section
6.2(c)(i).
(bb) "Old Base Sites" means all sites set forth in Schedule 1.3 (bb).
(bc) "Old Non-Satellite Base Sites" means those sites set forth in Section
B of Schedule 1.3 (bb).
(bd) "Old Satellite Base Sites" means those sites set forth in Section A of
Schedule 1.3 (bb).
(be) "On-Site System" means the EDS Hardware, EDS Software, Spectradyne
Hardware, Spectradyne Software and Vendor Software located at a
Spectradyne customer site and utilized by EDS to perform the Network
Services.
(bf) "PCFM" means that certain agreement dated on or about July 28,1993 by
and between SPI Holding, Inc. and EDS Technical Products Corporation
under which EDS Technical Products Corporation will provide personal
computer functionality and certain integration, installation, on-site
warranty, on-site maintenance and other services to SPI Holding, Inc.
(bg) "Personal Computer" has the meaning set forth in Section 6.4.
(bh) "Personal Computer Functionality" has the meaning set forth in Section
6.4.
(bi) "Phase II Default" has the meaning set forth in Section 13.1 (b).
(bj) "Project Plan" has the meaning set forth in Schedule 4.9.
(bk) "Purchase Order" has the meaning set forth in Schedule 3.4.
(bl) "Reset Note indenture" has the meaning set forth in Section 1.3(bn).
(bm) "Review Period" has the meaning set forth in Schedule 4.9.
(bn) "Senior Debt" means all principal, interest, penalties, fees and other
liabilities (current or future), including without limitation
attorneys'
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fees, costs and expenses and obligations with respect to (i) letters
of credit, (ii) foreign exchange contracts, currency swap agreements
or other similar agreements or arrangements designed to protect
against fluctuations in currency values and (iii) obligations with
regard to any interest rate swaps, caps, collars and similar
agreements and arrangements providing protection against fluctuations
in interest rates, in each case arising under or in respect of (x) the
Third Amended and Restated Loan Agreement dated as of November 23,
1992, among SPI Holding, Inc. and Wells Fargo Bank, N.A. ("Wells
Fargo"), as a lender and as agent for other lenders, and the other
financial institutions signatory thereto, together with all related
Loan Documents (as defined therein), (y) the Amended and Restated Loan
Agreement dated as of November 23, 1992, between SPI Holding, Inc. and
Wells Fargo, together with all related Loan Documents (as defined
therein), as (x) and (y) above or either of them may be restated,
amended, supplemented, refinanced or otherwise modified from time to
time, and (z) all other indebtedness, contingent or otherwise, present
or future, in respect of borrowed money or representing the balance
deferred and unpaid of the purchase price of any property (excluding
any trade payables or accrued liabilities arising in the ordinary
course of business and not overdue more than 120 days or being
contested in good faith), if and to the extent that such indebtedness
would appear as a liability upon a balance sheet of the debtor in
accordance with generally accepted accounting principles ("Debt"),
created, assumed, incurred or guaranteed by SPI Holding, Inc. (and all
renewals, extensions o:t refundings thereof), unless the instrument
under which such Debt is created, incurred, assumed or guaranteed
expressly provides that such Debt is not senior or superior in right
of payment to the securities issued pursuant to that certain Indenture
dated as of November 23, 1992, by and among SPI Holding, Inc.,
Spectradyne, SPI Newco, Inc. and U.S. Trust Company of Texas, N.A. as
Trustee, (the Reset Note Indenture"), provided, however, that in no
event may the Senior Debt of SPI Holding, Inc., together with all
other Debt of SPI Holding, Inc. and its subsidiaries, exceed the
amounts set forth in Section 4.07 of the Reset Note Indenture as in
effect on the Effective Date.
(bo) "Site Survey Report" means a report substantially in the form set
forth in Schedule 1.3(bo).
(bp) "Software" means computer programs in object code (except when source
code is expressly called for as set forth herein, in which case the
term "Software" includes source code and object code) together with
input and output formats, program listings, narrative descriptions,
operating instructions and supporting documentation and will include
the tangible media upon which such programs and documentation are
recorded. The term "software,, does not include Spectradyne
Programming.
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(bq) "Software Enhancement" means:
(i) any changes or modifications to a function or functions of the
Software that, with respect to Existing Software, existed as of
the Effective Date or that, with respect to Vendor Software,
existed as of the date the Vendor Software was implemented and
(ii) all of those tasks performed throughout the development cycle
starting with the analysis and requirements definition and
continuing until acceptance by Spectradyne, including without
limitation analysis, design, programming and testing, which are
associated with the development of new Software, new Software
modules or new functions for the Software (which new Software,
Software modules and functions did not exist as of the Effective
Date with respect to Existing Software or did not exist as of the
date implemented with respect to Vendor Software).
(br) "Software Maintenance" means:
(i) with respect to Software which is proprietary to either
Spectradyne or EDS, with the exception of Software developed by
EDS under this Agreement, changes or corrections to the Software
required to keep the Software operational in the same manner as
it operated as of the Effective Date;
(ii) with respect To new Software which is developed by EDS under this
Agreement, changes or corrections to such developed Software
required to keep the Software operational in the same manner as
it operated on the date it was implemented;
(iii) with respect to Vendor Software for which the Vendor provides
maintenance, (a) any tasks required to apply maintenance supplied
by a Vendor, (b) reporting to and assisting Vendors in resolving
Vendor Software errors or deficiencies and (c) determining
whether and in what time frame new releases from the Vendor will
be installed and with respect to Vendor Software for which the
Vendor no longer provides maintenance or for which the Vendor has
provided EDS all source code and documentation sufficient for a
reasonably skilled programmer to customize, maintain and enhance
the Software, changes or corrections to the Software required to
keep the Software operational in the same manner as it operated
as of the Effective Date with respect to Existing Software.
(bs) "Spares" has the meaning set forth in Schedule 6.6.
(bt) "Special Effort" has the meaning set forth in Schedule 6.5.
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(bu) "Special Effort Quote" has the meaning set forth in Schedule 6.5.
(bv) "Spectradyne" has the meaning set forth in the Preamble.
(bw) "Spectradyne Facility" has the meaning set forth in Section 4.1.
(bx) "Spectradyne Hardware" means Headend Hardware, IRDs and any other
Hardware, to which title or all other rights necessary to use are
vested in Spectradyne or any Spectradyne Affiliate.
(by) "Spectradyne Installation Site" means each location designated in an
Authorized Field Service Order where a CDVRO System, IRD Systems and
other Hardware described in such Authorized Field Service Order will
be installed.
(bz) "Spectradyne Installation Site Questionnaire" has the meaning set
forth in Section 6.2.
(ca) "Spectradyne Programming", means the video entertainment and
interactive services offered to hotels and other facilities by
Spectradyne.
(cb) "Spectradyne Software", means the Software owned by Spectradyne
identified in Schedule 1.3 (ag) , as amended from time to time by
Spectradyne with EDS' consent, which consent will not be unreasonably
withheld, delayed or conditioned.
(cc) "Termination Fee" has the meaning set forth in Section 13.8 (b).
(cd) "Termination Transition" has the meaning set forth in Section 13.6.
(ce) "Transfer" has the meaning set forth in Section 3.3(a)(ii)
(cf) "Transferred Software" has the meaning set forth in Section
3.3(a)(ii).
(cg) "Transition Period" has the meaning set forth in Section 3(a) of
Schedule 9.1.
(ch) "Transition Plan" has the meaning set forth in Section 6.1.
(ci) "Transitioned Employees" has the meaning set forth in Section 2.3.
(ci) "Uplink Facility" has the meaning set forth in Schedule 5.2.
(ck) "Vendor" means (i) any person or entity that manufactures, publishes,
distributes or licenses, ac the case may be, Hardware or Software and
(ii) 'any person or entity (other than EDS) that provides services to
Spectradyne and any person or entity that provides services to EDS.
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(cl) "Vendor Hardware" means any Hardware provided to EDS or Spectradyne by
a Vendor.
(cm) "Vendor Software" means that Software the rights to which are licensed
or owned by a Vendor.
(cn) "Wells Fargo 11 has the meaning set forth in Section 1.3(bn).
1.4 Phase II Information Technology Services Agreement. Spectradyne and EDS
have entered into good faith negotiations intending to (i) enter into a
definitive written agreement setting forth each party's specific
obligations related to Phase II information technology services and (ii)
include in such definitive agreement terms and conditions under which
Spectradyne would have the right, which right will be subject to such terms
and conditions mutually agreeable to Spectradyne and EDS, to (x) enforce,
in those markets described in Section 11.9, EDS' intellectual property
rights arising out of intellectual property developed by EDS under such
definitive agreement against third party infringers of such rights in the
event that EDS elects not to so enforce its rights and (y) commercially
exploit EDS' intellectual property rights arising out of intellectual
property developed under such definitive agreement, which negotiations will
continue for a reasonable period after the Effective Date. Notwithstanding
the foregoing, except with regard to EDS' obligation set forth in this
Section 1.4 to include in the definitive agreement for Phase II information
technology services the specifications, delivery schedule and price (which
delivery schedule and price are based upon EDS' assumptions set forth
below) described in this Section 1.4 and in Schedule 1.4, EDS will have no
obligation to perform any services described in this Section 1.4 until such
time as such definitive written agreement is executed by both parties.
Phase II information technology services will include the integration of
Hardware and the development of Software interfaces to SPICE (a Spectradyne
Software product)necessary to support Spectradyne's functional requirements
and SPICE interface specifications, which functional requirements are set
forth in Section 1.4(a) below and which SPICE interface specifications are
set forth in Schedule 1.4, for Digitally Based Video On Demand System
accessible by a number of simultaneous users. Any adjustment to the price
for the Hardware for any such Digitally Based Video On Demand System and
the related EDS support services, as currently set forth in Section 1.4(c),
will be provided to Spectradyne by EDS after Spectradyne's approval of a
prototype Digitally Based Video On Demand System. Each Digitally Based
Video On Demand System will have and be subject to the following:
(a) Digitally Based Video On Demand System Functionality. The Digitally
Based Video On Demand System will store [ ] full length video
programs, [ ] data sets, [ ] data sets and [ ] data sets. The
Digitally Based Video On Demand System will
11
provide simultaneous viewing for [ ] viewers while sustaining a data
transmission rate of [ ] kilobytes per second or greater.
If Spectradyne requests that EDS change the functionality requirements
for the Digitally Based Video On Demand System, EDS will report to
Spectradyne within 10 days after such request EDS' good faith estimate
of (i) the impact on the development schedule described in Section
1.4(b) and (ii) the impact on maximum prices described in Section
1.4(c). if Spectradyne requests that EDS make such changes, EDS will
do so in accordance with such modified schedule and subject to such
modified price.
(b) Digitally Based Video On Demand System Development Schedule. EDS will
provide a Digitally Based Video On Demand System for beta testing
(meaning limited use and testing in one hotel) within eight months
after the date on which Spectradyne and EDS mutually approve all
functional requirements, system requirements, system specifications,
Hardware specifications, Software specifications and user interface
specifications applicable to such systems. EDS will approve or
disapprove such specifications within 20 Business Days after EDS
receives such specifications from Spectradyne.
EDS will provide a Digitally Based Video On Demand System, which
Digitally Based Video On Demand System will pass an acceptance test
mutually agreed to by Spectradyne and EDS and be available for wide-
scale use within four months after the commencement of the beta test
(the "Delivery Date").
(c) Price. Except as changed as a result of (i) a change by Spectradyne
of the functionality requirements or (ii) a change by virtue of
Spectradyne's failure to purchase [ ] Digitally Based Video On
Demand Systems within [ ] months after the Delivery Date (as discussed
below in this Section 1.4(c)), the prices set forth in this Section
1.4(c) are maximum prices.
The price for the Hardware (including the operating system Software
for such Hardware) for the Digitally Based Video On Demand System will
not exceed [ ] (excluding any and all taxes for which Spectradyne
is liable under Section 9.4) and the price for the maintenance of such
Hardware (including the maintenance of the operating system Software
for such Hardware) for a period of [ ] years (subject to Spectradyne
and EDS mutually agreeing on response times and repair times for the
maintenance services notwithstanding the first sentence of this
Section 1.4(c)) will not exceed [ ].
In addition to the prices set forth above in this Section 1.4(c), the
price for the Software will not exceed [ ] per year for each
Digitally Based
12
Video On Demand System and such price will include Software
Maintenance. If Spectradyne or EDS desires to obtain Hardware for the
Digitally Based Video On Demand System from a third party, Spectradyne
and EDS will mutually agree on each party's respective rights and
obligations related to such Hardware prior to Spectradyne obtaining
such Hardware from such third party and the effects of such
acquisition on each party's respective rights and obligations with
respect to each Digitally Based Video On Demand System so affected.
EDS' delivery schedule (as described above in Section 1.4(b)) and
price (as described above in this Section 1.4(c)) are based on the
assumption that Spectradyne will be obligated in the definitive Phase
II information technology services agreement to purchase from EDS all
Hardware and Software for [ ] Digitally Based Video On Demand
Systems and execute Field Service Orders for the installation of all
1,000 Digitally Based Video On Demand Systems within [ ] months after
the Delivery Date. If Spectradyne does not so obligate itself in such
definitive agreement, EDS may revise any of the prices set forth in
this Section 1.4(c).
EDS will use commercially reasonable efforts to identify cost-
effective, reliable products from reliable Vendors and to provide each
Digitally Based Video On Demand System at or below the price set forth
above in this Section 1.4(c).
From and after the date that Digitally Based Video On Demand Systems
are available for wide-scale use, EDS will review its costs and prices
for supplying and maintaining the Digitally Based Video On Demand
System twice a year. If EDS receives cost reductions from Vendors (on
Vendor Hardware, Vendor Software, or services) and if EDS determines
that, after subtracting such savings from the then current price of a
Digitally Based Video On Demand System, the cumulative effect of such
reductions will result in a price reduction equal to or greater than
[ ] of the then current price for a Digitally Based Video On
Demand System, then EDS will reduce its price for each Digitally Based
Video On Demand System to Spectradyne from and after the date on which
EDS makes such determination by an amount equal to [ ] of such
savings. (For example, suppose that EDS determines as a result of its
review that the cost of a widget required in the Digitally Based Video
On Demand System is reduced from [ ] to [ ] and all other costs
remain the same. EDS will then subtract [ ] from the price of the
Digitally Based Video On Demand System. If the result is equal to or
greater than [ ], less than the then current price for a Digitally
Based Video On Demand System, then EDS will reduce the then current
price for the Digitally Based Video On Demand System to an amount
equal to [ ] (an amount equal to [ ] of the savings].)
13
ARTICLE II.
EMPLOYEES OF SPECTRADYNE AND EDS
2.1 Account Manager. EDS will provide an account manager (the "Account
Manager") who will have overall responsibility for the management and
coordination of the delivery by EDS of all Information Technology Services
and will coordinate with and consult with the Designated Representative to
assist Spectradyne in its establishment of appropriate Spectradyne
information technology priorities and its effective use of the Information
Technology Services. The Account Manager will coordinate with the
Designated Representative in establishing priorities for providing
Information Technology Services and conducting performance reviews set
forth in Section 12.1. As reasonably requested by Spectradyne, the Account
Manager will, with regard to EDS' performance of Information Technology
Services under this Agreement, make management decisions, personnel,
information, approvals and acceptances available to Spectradyne in order
that the Information Technology Services may be accomplished in a timely
manner. EDS may replace the Account Manager by providing written notice to
Spectradyne. In addition, the Account Manager may identify in a writing
provided to Spectradyne a substitute account manager who, in the event of
sickness or absence of the Account Manager, will have all rights and
obligations of the Account Manager under this Section 2.1 during such
sickness or absence. If the Account Manager and the substitute account
manager are both sick, absent or otherwise unavailable, the President of
the Visual Services Division of EDS will serve as the account manager
during such sickness, absence or unavailability.
2.2 Designated Representative. Spectradyne will maintain a designated
representative (the "Designated Representative") for the term of this
Agreement who is (i) a senior officer of Spectradyne, (ii) authorized to
act as the primary point of contact for EDS in dealing with Spectradyne
with respect to the Information Technology Services and (iii) authorized to
make management decisions and, within the reasonable limits, if any, set
forth in writing and delivered by Spectradyne to EDS from time to time, to
financially obligate Spectradyne with regard to the Information Technology
Services. The Designated Representative will interface with the Account
Manager on all matters related to the performance of the Information
Technology Services. As reasonably requested by EDS, the Designated
Representative will make management decisions, personnel, information,
approvals and acceptances available to EDS in order that the Information
Technology, Services may be accomplished in a timely manner. Spectradyne
may replace the Designated Representative by providing written notice to
EDS. In addition, the Designated Representative may identify in a writing
provided to EDS a substitute designated representative who, in the event of
sickness or absence of the Designated Representative or with regard to
specific duties (in which case such writing will specify such duties), will
have all rights and obligations of the Designated Representative under this
Section 2.2 during such sickness
14
or absence or with regard to such duties. If such designee with
responsibility for specific duties is sick absent or otherwise unavailable,
the Designated Representative will have all rights and obligations of the
designee. If the Designated Representative and the substitute designated
representative are sick, absent or otherwise unavailable, or in the case of
the designee (with regard to specific duties), the Designated
Representative, the substitute designated representative and the designee
are all sick, absent or otherwise unavailable, the President of the
Spectradyne will serve as the designated representative during such
sickness, absence or unavailability.
2.3 Transition of Spectradyne Personnel. Commencing on the Effective Date, EDS
will offer employment to those employees of Spectradyne identified on
Schedule 2.3 (the "Transitioned Employees") in accordance with EDS' normal
employment policies, including an extension of an offer to accept EDS'
standard employment agreement in effect as of the Effective Date. To the
extent that a Transitioned Employee accepts such offer, such employment
will commence as of the Effective Date. A copy of the form of such
employment agreement is set forth in Schedule 2.3.
Spectradyne will cooperate with EDS in EDS' performance of its obligations
under this Section 2.3. Should EDS request that Spectradyne continue to
make payments and/or provide benefits to the Transitioned Employees after
they are hired by EDS until the Transitioned Employees can be integrated
into the EDS payroll system, Spectradyne will do so as an administrative
convenience until the Transitioned Employees can be integrated into the EDS
payroll system but in no event for more than 45 days after the effective
date of each such employee's employment by EDS. In such event, (a) such
employee will be an EDS employee for the purposes of Section 14. 1 (b)
(ii), (b) Spectradyne will be acting solely as an accommodation to EDS and
(c) EDS will reimburse Spectradyne for all wages, benefits and reasonable,
documented (in accordance with Spectradyne's then existing practices),
reimbursable employee expenses paid by Spectradyne in connection therewith.
EDS will use commercially reasonable efforts to assign to the Oracle
implementation, and keep assigned to the Oracle implementation until such
implementation is complete, those Transitioned Employees that were,
immediately prior to the Effective Date, working on the Oracle
implementation.
ARTICLE III.
OBLIGATIONS RELATED TO CERTAIN
SOFTWARE AND LEASED HARDWARE
3.1 Assumption of Leases. Commencing as of the Effective Date, Spectradyne
will assign to EDS, and EDS will assume all rights and obligations of
Spectradyne in the leases between Spectradyne and the applicable Vendors
set forth in Schedule 3.1 (the "Leases"). Without limiting EDS'
obligations under this
15
Agreement, EDS may, in its sole discretion and in accordance with the terms
and conditions of the Leases or as otherwise agreed by EDS and the
applicable lessor, terminate or extend each Lease.
3.2 Inventory and Inspection. Spectradyne will prepare and submit to EDS the
following within 60 days after the Effective Date:
(a) a list of Existing Software, which list will be incorporated by
reference into this Agreement as a revised Schedule 1.3(ag) on such
list of Existing Software, Spectradyne will specify that Software
which is Spectradyne Software, Vendor Software, Transferred Software
and Accessed Software.
(b) a list of Existing Functionality, which list will be incorporated by
reference into this Agreement as Schedule 4.2. In addition,
Spectradyne will provide EDS with copies of all Spectradyne
procedures which relate to the provision of Existing Functionality.
(c) a list of all Maintained Hardware, which list will be incorporated by
reference into this Agreement as Schedule 4.5. In addition,
Spectradyne will provide EDS with copies of all maintenance agreements
with any third parties which relate to the maintenance of the
Maintained Hardware.
(d) a list of all Maintained Software, which list will be incorporated by
reference into this Agreement as Schedule 4.6. In addition,
Spectradyne will provide EDS with copies of all maintenance agreements
with any third parties which relate to the maintenance of the
Maintained Software.
(e) a list of site diagrams, specifications, electrical and wiring
information, installation procedures, inventory lists and other
information identifying and describing the equipment installed at each
Old Base Site.
3.3 Obligations Related to Vendor Software. In addition to the rights and
obligations set forth in Article XI, Spectradyne will have the following
obligations with respect to Vendor Software licensed or obtained by
Spectradyne from a Vendor:
(a) For all Vendor Software listed in Schedule 1.3 (ag), Spectradyne
will either provide Access to such Vendor Software to EDS as
provided in Section 3.3 (a) (i) below or Transfer such Software
to EDS as provided in Section 3.3(a)(ii) below.
(i) With regard to Spectradyne's obligations to provide EDS with
Access to Vendor Software, Spectradyne will secure and
maintain for EDS the right to access, display, operate,
16
execute, modify and otherwise use (collectively, "Access")
such Vendor Software in connection with the performance of
the Information Technology Services. (All Vendor Software to
which Spectradyne provides EDS Access under this Section
3.3(a)(i) will be referred to as "Accessed Software.") EDS
will, except as provided for in Item 3 of Schedule 4.6, have
no obligation to perform or provide any Software Enhancement
or Software Maintenance of such Accessed Software.
(ii) With regard to Spectradyne's obligations to Transfer Vendor
Software to EDS, Spectradyne will transfer all rights and
obligations it has under any and all licenses related to
each copy of such Vendor Software ("Transfer") -(All Vendor
Software to which Spectradyne Transfers to EDS under this
Section B. 3 (a) (ii) will be referred to as "Transferred
Software.") Commencing with the effective date of any such
Transfer, EDS will pay all fees and costs related to the
license of such Transferred Software and will pay for all
Software Enhancements and Software Maintenance available
from the applicable Vendor.
(b) Spectradyne will be responsible for obtaining any consents from
third parties necessary for Accessed and Transferred Software,
including without limitation the payment of any cost or expense
associated with the applicable Vendor's consent to such Transfer
or Access, such as access fees, transfer fees and upgrade fees.
Spectradyne will either Transfer or provide Access to all Vendor
Software listed in Schedule 1.3 (acr), and all such Vendor
Software will be made available to EDS in such form and on such
media as EDS may reasonably request. If Spectradyne determines
that it is commercially unreasonable to Transfer or provide
Access to any item of Vendor Software, Spectradyne may provide
alternative Vendor Software to EDS in such item's stead with
EDS' prior written consent, which consent will not be
unreasonably withheld, delayed or conditioned.
3.4 Purchase of Vendor Hardware and Software from EDS. Subject to the
provisions of Section 7.2, Vendor Hardware and Vendor Software that
Spectradyne procures from EDS will be procured in accordance with the terms
and conditions set forth in Schedule 3.4.
ARTICLE IV.
FACILITIES MANAGEMENT SERVICES
4.1 General. The services provided by EDS under this Article IV (the
"Facilities Management Services") will support the management and
information service
17
operations conducted at the Spectradyne facilities located in Richardson,
Texas or in any replacement or successor facilities located within 10 miles
of Spectradyne's facility located at 1501 North Plano Road, Richardson,
Texas 75081 (collectively, the "Spectradyne Facility"). Generally, EDS
will operate and manage Spectradyne's IS&S operations in existence
immediately prior to the Effective Date, provide Existing Functionality,
transition certain Spectradyne employees, maintain documentation, provide
training and support, provide certain Hardware maintenance, provide certain
Software maintenance, perform local and wide area network administration,
safeguard and retain Spectradyne's data and (to the extent requested by
Spectradyne) perform certain Software development (including implementation
of Vendor Software), all including such increase in services as may arise
from normal internal growth over the term of this Agreement and can be
performed using the compute environment existing as of the Execution Date
(as benchmarked under Section 4.2). In addition to their obligations in
this Article IV and elsewhere in this Agreement, EDS and Spectradyne will
each perform the facilities management obligations set forth in Schedule
4.1.
4.2 Management of Spectradyne's Existing Operations. EDS will (a) manage the
existing (as of the Execution Date) communication link between local area
networks located in Richardson, Texas and Brampton, Ontario, Canada, (b)
manage the local area networks, Hardware and Software and related
information technology operations of Spectradyne conducted at the
Spectradyne Facility, (c) provide the functionality set forth in Schedule
4.2 (the "Existing Functionality") and (d) provide the compute environment
existing as of the Execution Date (as measured by a benchmark test to be
completed within 10 Business Days after the Effective Date), as modified
from time to time by mutual agreement of the Designated Representative and
the Account Manager. EDS will have no responsibility for any information
technology operations of Spectradyne conducted at any location other than
the Spectradyne Facility, unless requested by Spectradyne under Section
7.1.
4.3 Documentation. Spectradyne will provide to the Account Manager all
documentation for (a) all Hardware subject to Leases, (b) all Maintained
Hardware and (c) all Existing Software. EDS will maintain such
documentation as well as documentation for any Software that is utilized
from time to time by EDS to provide the Facilities Management Services,
Network Services or Field Services. EDS will provide Spectradyne access to
such documentation as reasonably requested by Spectradyne for purposes of
establishing and maintaining procedures for the preparation of input,
operation and utilization of output of such Software, subject, however, to
any applicable confidentiality restrictions respecting any such Software.
All documentation developed by EDS under this Agreement is and will be
owned by EDS, but EDS will provide one copy of such documentation to
Spectradyne for Spectradyne's internal use. In addition, Spectradyne may,
at Spectradyne's cost and expense, reproduce the documentation for, and
distribute such documentation to, each workstation operated by a
Spectradyne employee that
18
is located at a facility other than the Spectradyne Facility.
Spectradyne's use of any and all documentation after the Effective Date is
and will be subject to the limitations set forth in the applicable Software
license.
4.4 Training and Support. Spectradyne will identify to EDS those Spectradyne
employees who will require training from EDS and who will, in turn, train
all other Spectradyne employees. EDS will provide Software training
sessions and a training manual for such trainers, including training in the
preparation of input for and the appropriate use of output from the
Software, at the Spectradyne Facility. EDS will use commercially
reasonable efforts to assist Spectradyne employees in their operation of
the Existing Software and that Software listed on Schedule 4.4.
4.5 Hardware Maintenance. EDS will perform, or obtain from a third party and
assume financial responsibility for, the maintenance of the Hardware
identified on Schedule 4.5 (the "Maintained Hardware"). Any additions to
or substitutions for Maintained Hardware after the Effective Date may be
subject to additional charges, but no additions or substitutions will take
place unless and until the parties mutually agree on any such additional
charges.
4.6 Software Maintenance. EDS will perform, or obtain from a third party, and
assume financial responsibility for the maintenance of, the Software
identified on Schedule 4.6 (the "Maintained Software"). Any additions to
or substitutions for Maintained Software after the Effective Date may be
subject to additional charges, but no additions or substitutions will
take place unless and until the parties mutually agree on any such
additional charges.
4.7 Local and Wide Area Network Administration and Availability. EDS will
perform shared resource utilization analysis, disk utilization analysis,
environment management, domain management, interdomain management,
communication assistance, standardization, preventative maintenance and
such other similar local area network administration tasks at the
Spectradyne Facility as are requested from time to time by the Designated
Representative. In addition to the obligations above in this Section 4.7,
EDS will, working in conjunction with Spectravision of Canada personnel,
provide support for the local area network in Brampton, Ontario, Canada.
4.8 Safeguarding and Retention of Spectradyne Data. EDS will implement
procedures for the backup and protection of Spectradyne's data and will
store all media containing such data in accordance with the safeguards
described on Schedule 4.8.
4.9 Development of Certain Software. EDS will, subject to the provisions of
Section 11.4 and Section 11.5 and in accordance with the provisions of
Schedule 4.9, develop the following:
19
(a) at no additional charge beyond the Base Service Charge, (i) field
service inventory management Software and maintenance tracking system
Software and (ii) an enterprise-wide data model in accordance with
Section I(f) of Schedule 4.1 which will set forth functionality for
certain Software to be developed by EDS under Section 4.9(b) and
(b) to the extent so requested by Spectradyne in accordance with Section
7.2, the Software to be set forth in Schedule 4.9 (b) based on the
results of the enterprisewide data model and containing such
functionality as is mutually agreed by Spectradyne and EDS. EDS will
begin such Software development at such time as is mutually agreed by
Spectradyne and EDS. The charges to be paid by Spectradyne, if any,
for such Software will be set forth in a development budget to be
mutually agreed upon by Spectradyne and EDS. Such charges will be in
addition to all other charges described in this Agreement.
(Spectradyne and EDS will mutually agree as to the specific
applications for which such Software will be developed and implemented
within such budget.) At or about such time as EDS provides the budget
described above to Spectradyne, EDS will also provide any additional
terms and conditions that relate to such development, and Spectradyne
and EDS will mutually agree on such terms and conditions before EDS
commences any such development.
To the extent Spectradyne desires that any other Software be developed
during the term of this Agreement, such Software development will be
an Additional Service under Section 7.1, and EDS will have a right of
first refusal to perform such Software development subject to the
provisions of Section 7.2.
(All Software developed by EDS under this Section 4.9 is referred to
as "Developed Software".)
4.10 Facilities Management Services Performance Criteria. EDS' performance of
the Facilities Management Services described above will be subject to the
performance criteria set forth in Schedule 4.10. If EDS fails to perform
the Facilities Management Services to the extent described in Section
14.4(a), EDS will pay to Spectradyne liquidated damages as described in
Section 14.4(a).
ARTICLE V.
NETWORK SERVICES
5.1 General. EDS will provide the services described in this Article V (the
"Network Services") on an "as scheduled" basis. Generally, Network
Services include uplink services, tape playback services, transponder
services, transmission monitoring services and support services.
20
5.2 Uplink and Tape Playback Services. EDS will provide the uplink and tape
playback services set forth in Schedule 5.2. Spectradyne may obtain
transportable uplink services and special event broadcast, monitoring and
downlink services for special events that Spectradyne desires to broadcast
in accordance with EDS' standard terms and conditions as Additional
Services under Section 7.1, and EDS will have a right of first refusal to
perform such transportable uplink services and other services described in
this Section 5.2 subject to the provisions of Section 7.2.
5.3 Transponder Services. EDS will contract with a Vendor to obtain the
transponder capacity necessary to support (i) the broadcast of [ ]
compressed digital video channels operating at [ ] megabits per second
commencing on October 1, 1993 and continuing for a period of 4 months
thereafter, (ii) the broadcast of [ ] compressed digital video channels
operating at [ ] megabits per second for a period commencing on or about
February 1, 1994 and continuing for a period of approximately 24 months
thereafter and (iii) the broadcast of [ ] compressed digital video channels
operating at [ ] megabits per second or greater for a period commencing on
or about February 1, 1996 and continuing thereafter until such time as
Spectradyne and EDS may otherwise mutually agree. EDS will provide all of
such transponder capacity to Spectradyne under this Agreement.
If Spectradyne and EDS mutually agree that Spectradyne has excess
transponder capacity and Spectradyne requests that EDS sell such capacity
to one or more third parties, EDS will use all commercially reasonable
efforts to sell such capacity to one or more third parties. In such event,
EDS will be reimbursed its actual expenses incurred in effecting such
sale(s) from the proceeds derived from such sale as received. All
remaining proceeds will be shared between Spectradyne and EDS, with
Spectradyne receiving [ ] percent of such proceeds and EDS receiving [ ]
percent of such proceeds.
Nothing in this Agreement will prohibit Spectradyne from selling such
excess capacity itself or through a third party agent; provided, however,
that Spectradyne notifies EDS of such intent to sell and coordinates such
sale with EDS. In such event, EDS will receive no portion of the proceeds
of such sale unless such sale requires EDS to incur any cost or otherwise
expend any resources (other than coordination of the sale), in which event
EDS will be reimbursed its actual expenses from the proceeds of such sale
as received.
If Spectradyne sells such excess capacity itself or through a party other
than EDS and the use, operation or management of such transponder capacity
by the purchaser, the broker or any agent of either party interferes with
EDS' performance of Information Technology Services under this Agreement or
any third party's programming being transmitted off of such satellites, EDS
will have no liability to Spectradyne or any third party for any diminution
in such Information Technology Services, including without limitation any
diminution in the performance of any Hardware, Software, On-Site System,
signal or the
21
network. (For the purpose of Section 14.1(c), any such programming using
such excess capacity will be construed as Spectradyne Programming.) EDS
will not be excused from any such liability under this Agreement if EDS is
the seller, or arranged, through a broker or agent of EDS, for the sale, of
such excess capacity. Notwithstanding the foregoing, if Spectradyne sells
such excess capacity itself or through a party other than EDS and the use,
operation or management of such transponder capacity by the purchaser, the
broker or any agent of either party interferes with EDS' performance of
Information Technology Services under this Agreement, EDS will use
commercially reasonable efforts to notify Spectradyne of any such
interference promptly upon EDS becoming aware of such interference and, to
the extent that EDS is not required to undertake any financial obligation
for which it will not be paid by Spectradyne, cooperate with Spectradyne in
taking any remedial actions.
5.4 Transmission Monitoring Services. EDS will verify the uplink transmission
quality and satellite transmission (or other signal source) quality. EDS
will sample video and audio test signals and check such signals using
waveform monitoring, spectrum analysis, vector analysis and audio analysis
for compliance with the specifications for such signal to which Spectradyne
and EDS have mutually agreed. Abbreviated tests will be performed during
each broadcast, and complete tests will be performed once each calendar
month. EDS will perform all such services at the EDS Information
Management Center located in Plano, Texas.
5.5 Support Services. EDS will provide the engineering and management of
microwave, cable and other telecommunications-based distribution of
Spectradyne Programming.
5.6 Changes to Network Services. From time to time, the parties may agree in
an Authorized Field Service Order to alter the Network Services to be
provided for a particular Spectradyne Installation Site. The description
of the changes to the Network Services and any changes to the charges
therefor will be documented in the Authorized Field Service Order as an
amendment to the Network Services and Network Services charges for that
Spectradyne Installation Site.
5.7 Network Service Performance Criteria. EDS' performance of the Network
Services described above will be subject to the performance criteria set
forth in Schedule 5.7. If EDS fails to perform the Network Services to the
extent described in Section 5, of Schedule 5.7, EDS will pay to Spectradyne
liquidated damages as described in Section 14.4 (b).
ARTICLE VI.
FIELD SERVICES
6.1 General. EDS will perform the field services described in this Article VI
(the "Field Services") from the Effective Date and for the term of this
Agreement
22
for all sites in which EDS installs, or through the use of a subcontractor
causes to be installed, Hardware. EDS' obligations as to any site under
this Section 6.1 will commence on the date that the installation commences
and will end on the End Date. For Field Services related to all other
sites, EDS will perform Field Services at such sites commencing with the
date(s) set forth in the transition plan set forth in Schedule 6.1 (the
"Transition Plan") or as otherwise agreed by EDS and Spectradyne.
Generally, the Field Services include the performance of all Installation
Services, on-site warranty service and on-site maintenance of all video
delivery equipment, including without limitation videocassette players,
racks, frequency agile modulators, CDVRO Systems, IRDs and equipment used
to deliver "free-to-guest" and "interactive" services (including
maintaining delivery of signals at quality levels specified in Schedule 5.7
for "free-to-guest" and compressed digital programming to sites),
supervision of any work subcontracted by EDS to a third party, provision
of the Customer Assistance Center, facilitation of the return of in-room
units to Spectradyne for repair and such other field service obligations as
EDS and Spectradyne may mutually agree.
6.2 Field Service Orders. From time to time, Spectradyne will complete and
issue to EDS service orders (each a "Field Service Order") with respect to
Old Base Sites and New Base Sites in substantially the form set forth in
Schedule 6.2. Each Field Service Order will request EDS to provide
specified Field Services. In those instances where the Field Service Order
requests that EDS perform an installation, Spectradyne will complete and
attach to such Field Service Order a questionnaire (the form of which is
set forth in Appendix to the Transition Plan, the "Spectradyne
Installation Site Questionnaire") for each new Spectradyne Installation
Site (meaning each such site where an installation has not been previously
performed by EDS) set forth in such Field Service Order. A Spectradyne
Installation Site Questionnaire may, but is not required to, accompany each
Field Service Order involving a Spectradyne Installation Site at which
Spectradyne Hardware and/or EDS Hardware has previously been installed.
(a) EDS will accept or reject each Field Service order within five
Business Days of EDS' receipt of such Field Service Order. Any Field
Service Order not rejected by EDS in writing in accordance with
Section 6.2(b) and Section 6.2(c) within five Business Days after EDS
receives such Field Service Order will be deemed accepted.
(b) EDS will accept Field Service Orders by signing and returning the
Field Service Order to Spectradyne (an "Authorized Field Service
Order"). Only Authorized Field Service Orders will be binding on the
parties, and neither party will have any liability or obligation under
this Agreement for any Field Service Order other than Authorized Field
Service Orders.
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(c) EDS will accept all Field Service Orders that comply with the terms
and conditions of this Agreement. ALL Field Service Orders will:
(i) require only the installation or maintenance of Hardware or
Software set forth in Schedule 1.3(n) or Schedule 6.2(c)(i) or
require maintenance of any videocassette players or other video
delivery equipment, which Schedules may be amended at any time
by mutual agreement of Spectradyne and EDS (such Hardware and
Software not set forth Schedule 1.3(n) and Schedule 1.3(ag) is
referred to as "Non-Standard Products"),
(ii) together with all Authorized Field Service Orders, cause EDS to
perform no more than 400 installations (unless otherwise
mutually agreed by Spectradyne and EDS) in any given calendar
month,
(iii) request Network Services and Field Services in accordance with
an installation plan to be developed and mutually agreed to by
Spectradyne and EDS as part of the Transition Plan and
(iv) not require the maintenance by EDS of Non-Standard Products,
unless otherwise agreed by EDS.
If EDS rejects a Field Service Order, EDS will give Spectradyne a
written statement of the reasons for such rejection. If the parties
are unable to mutually agree on a revision of the Field Service Order,
Spectradyne will, by written notice to EDS, withdraw the Field Service
Order and then may issue a revised Field Service Order that complies
with the terms and conditions of this Agreement for the same
Spectradyne Installation Site. Spectradyne will issue any revised
Field Service Order within five Business Days from the date the
previous Field Service Order is rejected. If Spectradyne revises and
resubmits a Field Services order under this Section 6.2, and such
revised and resubmitted Field Service Order is rejected by EDS for
reasons that Spectradyne, in good faith, believes are arbitrary,
Spectradyne may submit the issue of such rejection to review and, if
unresolved to Spectradyne's satisfaction, arbitration under the
provisions of Article XII.
Spectradyne may, subject to the provisions of Section 7.2, make
arrangements with another Vendor for the installation and maintenance
of Non-Standard Products and the performance of the miscellaneous
services described in Section 2 of Schedule 6.6.
(d) If Field Services remain to be performed under a Field Service Order
after any termination or expiration of this Agreement, EDS will have
no
24
obligation to perform and no other liability for any such Field
Services after the End Date.
6.3 Changes to and Cancellations of Field Service Orders. Spectradyne may
(a) change or cancel a Field Service Order at any time without charge,
penalty or other liability.
(b) change or cancel an Authorized Field Service Order at any time before
EDS has commenced work under the Authorized Field Service Order
without charge, penalty or other liability.
(c) change or cancel an Authorized Field Service Order at any time after
EDS has commenced work under the Authorized Field Service Order,
provided, however, in such event, Spectradyne will pay to EDS an
amount equal to EDS' incremental cost, if any, resulting from such
change or cancellation, for such effort plus ten percent (the latter
being an allocation for general administrative costs). EDS will use
commercially reasonable efforts to mitigate such incremental casts
incurred by EDS.
Changes, to (but not cancellations of) an Authorized Field Service Order will be
processed as a new Field Service Order and are subject to the approval of EDS as
provided in Section 6.2.
6.4 Provision of Certain Hardware and Software. EDS will provide to
Spectradyne CDVRO Systems and IRD Systems identified in and ordered
pursuant to Authorized Field Service Orders, subject, however, to the
provisions of, Section 3.4. In addition, after SPI Holding, Inc. has
entered into 2,200 Leases for Personal Computer Functionality under the
PCFM (as such capitalized term is, for the purposes of this Section 6.4,
defined therein), EDS will, if requested by Spectradyne or by SPI Holding,
Inc. if Spectradyne has assigned its rights and obligations under this
Section 6.4 to SPI Holding, Inc. in accordance with Section 15.8, provide
to Spectradyne (or SPI Holding, Inc., as the case may be) Personal Computer
Functionality in accordance with the provisions of Schedule 6.4 in
conjunction with CDVRO Systems and IRD Systems at New satellite Base Sites.
EDS will, in addition to its Field Service obligations related to other
Hardware under this Article VI, maintain each such Personal Computer that
EDS provides under this Agreement in accordance with Schedule 6.4.
Title in all CDVRO Systems, IRD Systems and Personal Computers for New
Satellite Base Sites provided by EDS under this Agreement will remain in
EDS, provided, that (i) title to CDVRO Systems will transfer to
Spectradyne on the fifth anniversary of the date on which each such CDVRO
System is installed or as provided in the Termination Transition if this
Agreement is terminated prior to such fifth anniversary and (ii) title to
the Personal
25
Computers (meaning Personal Computers provided under this Agreement) will
transfer to Spectradyne in accordance with Schedule 6.4 or as provided in
the Termination Transition if this Agreement is terminated prior to the
fifth anniversary of the date on which such Personal Computer is installed.
If Spectradyne adds [ ] New Satellite Base Sites, Spectradyne and EDS
will, within 10 Business Days after the date on which such [ ]
New Satellite Base Site is added, meet and review EDS' costs related to the
CDVRO Systems, IRD Systems and Personal Computers. If the costs for such
CDVRO Systems, IRD Systems and Personal Computers materially increase or
decrease compared to EDS' costs on the effective date of the PCFM, then
Spectradyne and EDS will enter into good faith negotiations for the
purposes of revising the prices for CDVRO Systems, IRD Systems and
Personal Computer Functionality. Upon the completion of such negotiations,
Schedule 9.1 will be amended to reflect such prices (which prices will in
no event increase or decrease by more than [ ] percent), and such pricing
will become effective 30 days after the effective date of such amendment.
6.5 Installation. EDS will provide the installation services (the
"Installation Services") for CDVRO Systems, IRD Systems, Personal Computers
(provided under Section 6.4) and such other Hardware and Software as the
parties may mutually agree at Spectradyne Installation Sites, as each
Spectradyne Installation Site is identified in the applicable authorized
Field Service Order. Notwithstanding the foregoing, Spectradyne may submit
Field Service Orders for more installations than are contemplated in the
installation plan created as part of the Transition Plan, and EDS will, in
accordance with Section 6.2, authorize such Field Service Orders and
perform such Installation Services as an Additional Service under Section
7.1. Schedule 6.5 more particularly sets forth the Installation Services,
including without limitation Special Efforts for Installation Services.
6.6 Customer Assistance Center and Maintenance Services. EDS will provide the
Customer Assistance Center and maintenance support services set forth in
Schedule 6.6.
6.7 Geographic Area Covered by Field Services. Field Services, including, in
addition to the Field Services themselves, all financial obligations
related to vehicle leases, equipment leases and real property leases for
each district, will be transitioned from Spectradyne to EDS in accordance
with the Transition Plan or as otherwise mutually agreed by Spectradyne and
EDS over the term of this Agreement. Spectradyne intends to transfer to
EDS the responsibility for all Field Services for all sites located in
North America, including the continental United States, Alaska, Hawaii,
Canada, Mexico, the Virgin Islands and Puerto Rico and including those
locations commonly referred to by Spectradyne and EDS as "studio sites"
or "studio locations", which number is currently estimated to be 2,500
("All North American Sites").
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Spectradyne represents that Spectradyne is reviewing a proposal from a
third party real estate consultant for the purposes of identifying and
engaging the services of such consultant (at Spectradyne's expense) to
negotiate the termination of real property leases for which EDS would
assume financial responsibility after the applicable district is
transitioned to EDS under the Transition Plan. To the extent that such
consultant is able to terminate any such leases and savings result (meaning
the difference between (i) what Spectradyne and EDS, collectively, would
have paid if such lease had continued through the end of the term of such
lease and (ii) the amount actually paid, if anything (other than the
consultant's fees), Spectradyne and EDS will share in the savings. In
such event, Spectradyne will be reimbursed its actual expenses incurred in
effecting such terminations, including without limitation such consultant's
fee, and all remaining savings will be shared between Spectradyne and EDS,
with EDS receiving [ ] percent of such savings and Spectradyne receiving
[ ] percent of such savings.
6.8 Field Service Performance Criteria. EDS' performance of the Field Services
described above will be subject to the performance criteria set forth in
Schedule 6.8. If EDS fails to perform the Network Services to the extent
described in Section 1 of Schedule 6.8, EDS will pay to Spectradyne
liquidated damages as described in Section 14.4 (c) .
EDS' compliance with the performance criteria described in this Section 6.8
will be measured through reports generated by the Customer Assistance
Center and will be monitored, and corrected to the extent required, as a
part of the quality review process described in Section 8.4. Such reports
will be provided to Spectradyne on a monthly basis, as performance levels
may otherwise require or as Spectradyne and EDS may otherwise mutually
agree. The Customer Assistance Center will be the EDS point of contact for
all trouble reporting and resolution related to Field Services. The
Customer Assistance Center will accumulate data based on the number of
calls, the type of calls, the trouble reported, the response time, the
resolution or repair time and such other information as Spectradyne and EDS
may mutually agree. Spectradyne and EDS will consult with each other on
the format of all reports.
6.9 Disaster Recovery. Generally, if a natural or man made disaster occurs at
or with the EDS uplink facility, the leased transponder, the leased
satellite or one or more of Spectradyne's customer's facilities, EDS will
promptly assess what services have been impacted, the degree of damage to
Hardware located inside and outside of such site and the physical ability
to restore permanent or temporary service based on the condition of the
site and the Hardware. Based on such assessment, EDS will determine what
Hardware and human resources are required to restore service, where the
resources are located, how quickly the resources can be deployed and what
the costs will be as a function of the response time. EDS will notify
Spectradyne immediately of any such disaster and will consult with
Spectradyne at each stage of the implementation of any disaster recovery
plan.
27
More specifically, if a natural or man made disaster affects one or more of
the following pieces of hardware, the following specific procedures will be
implemented:
(a) Transponder Failure. If a transponder provided by a Vendor to EDS to
transmit a signal for Spectradyne is unable to transmit such signal,
then EDS will contact such Vendor and will, at no addition to the
Field Service Charges set forth in Schedule 9.1 (except as set forth
in Section 6. 9 (b) (i)) , use good faith efforts to cause such Vendor
to attempt to restore, and complete such restoration,of, transmission
capability using on-board spares, if available, within 24 hours of
such failure. If the use of on-board spares fails to restore
transmission capability, at no addition to the Field Service Charges
set forth in Schedule 9.1 (except as set forth in Section 6.9 (b)
(i)), EDS will use good faith efforts to cause the applicable Vendor
to make an alternate transponder on the same satellite available for
transmission of the signal within 48 hours of such failure.
(b) Satellite Failure. If the satellite being used by EDS to provide
transmission services for Spectradyne fails, a team including
management personnel of Spectradyne, EDS and the applicable Vendor
will promptly assess the following options and implement the solution
Spectradyne and EDS mutually agree is the most appropriate as soon as
practicable: (i) locate an alternative space segment and repoint each
CDVRO System such that the CDVRO Systems are capable of receiving the
signal from such other satellite within 60 days of such failure, which
solution will involve an addition to the Field Service Charge set
forth in Schedule 9.1 (determined on a time and materials basis, with
no profit factor) or (ii) such other solutions as Spectradyne, EDS and
the applicable Vendor may mutually agree.
(c) Uplink Failure - Outdoor Hardware. If the outdoor earth station
transmission Hardware being used by EDS to transmit a signal for
Spectradyne fails, EDS will, without increasing the Field Service
Charge set forth in Schedule 9.1, use commercially reasonable efforts
to implement one or more of the following: (i) restore all or part of
the service within 8 hours of such failure by rerouting traffic via
terrestrial links to alternate uplink locations, (ii) restore all or
part of the service within 8 hours of such failure using undamaged EDS
Hardware located at such site, (iii) restore all or part of the
service within 48 hours of such failure using transportable earth
stations until such time as the failed hardware is repaired or (iv)
restore all or part of the service within 48 hours of such failure by
moving program replay Hardware to an alternate transmission facility.
(d) Uplink Failure - Indoor Hardware. If the indoor earth station
transmission Hardware being used by EDS to transmit a signal for
28
Spectradyne fails, EDS will, without increasing the Field Service
Charge set forth in Schedule 9.1, use commercially reasonable efforts
to promptly implement one or more of the following: (i) restore all
or part of the service within 8 hours of such failure by rerouting
traffic via terrestrial links to alternate playback/uplink locations,
(ii) restore all or part of the service within 8 hours of such failure
using undamaged EDS Hardware located at such site, (iii) restore all
or part of the service within 48 hours of such failure using
transportable playback facilities until such time as the failed
hardware is repaired or (iv) restore all or part of the service within
24 hours of such failure by moving program replay and/or encoding
hardware to an alternate transmission facility. EDS will provide a
disaster recovery plan for each such eventuality mutually acceptable
to Spectradyne and EDS and incorporate such plan into this Agreement
by adding such plan to this Agreement as Schedule 6.9, which plan will
include the obligations set forth in this Section 6.9 above and the
more specific obligations of EDS, Spectradyne and the applicable
Vendors. Spectradyne will use good faith efforts to promptly review,
modify, if necessary, and approve such disaster recovery plan within
60 days after the Effective Date.
ARTICLE VII.
ADDITIONAL SERVICES
7.1 Additional Products and Services. During the term of this Agreement,
Spectradyne may request and EDS may offer products and services that are
beyond the scope of this Agreement. Additional products are any Non-
Standard Products and any other products that Spectradyne may desire beyond
those contemplated in this Agreement (the "Additional Products") .
Additional services are any services other than the Facilities Management
Services described in Article IV, the Network Services described in Article
V, the Field Services described in Article VI, and those services described
in Sections 7.2(b)-(d) and that relate to Spectradyne's information
technology needs (the "Additional Services"). No Additional Products or
Additional Services will be provided by EDS or charged to Spectradyne
unless the description of the products and/or services to be provided, the
price to be paid and any additional or modified terms and conditions
(meaning additional to or modifications of the terms and conditions of this
Agreement) are mutually agreed to in a writing signed by the Account
Manager and the Designated Representative and then added as an addendum to
this Agreement.
7.2 Right of First Refusal Regarding Additional Products and Additional
Services. During the term of this Agreement, if Spectradyne desires (a)
Additional Products, (b) software development services in addition to those
set forth in Section 4.9(a) and Section 4.9(b), (c) transportable uplink
services described in Schedule 5.2 or (d) miscellaneous on-site support
described in Section 2 of Schedule 6.6, EDS will have a right of first
refusal to provide such products and perform such services. Spectradyne
will notify EDS of such Additional
29
Products and such services in writing on or before the date on which it
notifies any Vendor that Spectradyne may consider for the provision of such
Additional Products or performance of such services. EDS will provide
Spectradyne with written notice of EDS' decision as to whether or not EDS
would like to provide the Additional Products or perform the services
described by Spectradyne within 10 Business Days of EDS, receipt of a
complete, written description of the Additional Products and/or services
Spectradyne desires and the date on which EDS will provide Spectradyne with
a proposal for such Additional Products and/or services.
Spectradyne may obtain bids from Vendors, and to the extent that
Spectradyne obtains such bids, Spectradyne will compare the charges of such
Vendors providing similar quality products and/or performing similar
quality services (in each case meaning similar quality to that of EDS)
against the charges set forth in EDS' written quote. If it is determined
that EDS' charges are more than [ ] percent greater than those of the third
party that Spectradyne would otherwise choose to provide such Additional
Products and/or perform such services, then EDS will have a right of first
refusal to provide such Additional Products and/or to perform such services
and, if EDS so elects by providing written notice to Spectradyne of such
election within 5 Business Days after Spectradyne's notice to EDS of the
amount of such Vendor's quote, Spectradyne will engage EDS to provide such
Additional Products or services for an amount equal to the amount set forth
in such Vendor's quote plus [ ] percent. If EDS elects not to provide such
Additional Products and services, Spectradyne will be free to have such
lower priced Vendor provide such Additional Products or perform such
services. If EDS' charges are less than [ ] percent greater than those of
such Vendor, Spectradyne will engage EDS to provide such Additional
Products and/or perform such services.
To the extent that Spectradyne desires Additional Services that Spectradyne
elects not to use Spectradyne employees to perform, Spectradyne will
provide EDS with notice of such Additional Services and an opportunity to
bid on such Additional Services. Spectradyne may purchase Additional
Services in its sole discretion.
Spectradyne agrees that if it uses a Vendor to provide Additional Products
or perform services related to its information technology needs, EDS will
have no responsibility for any such Additional Products or services
performed or the effects of such Additional Products or services on any
Hardware or Software or related performance criteria. Spectradyne will
use commercially reasonable efforts to prevent such Additional Products and
services from adversely affecting the ability of EDS to perform its
obligations under this Agreement or increase the expense to EDS to perform
its obligations under this Agreement. To the extent that such Additional
Products or services adversely affect EDS' ability to meet a performance
standard set forth under this Agreement or to otherwise perform its
obligations under this Agreement, EDS will be relieved
30
of such obligations, and Spectradyne will, nonetheless, pay EDS for any
such Information Technology Services performed.
ARTICLE VIII.
WARRANTIES, REMEDIES AND QUALITY REVIEW
8.1 Warranties from Vendors. EDS has obtained or will obtain from each
applicable Vendor an agreement that all warranties made by such Vendor
related to Vendor Hardware and Vendor Software procured by Spectradyne from
or through EDS under this Agreement (express or implied, if any) will pass
through or be assigned to Spectradyne. Execution of this Agreement by
Spectradyne or acceptance of this Agreement by EDS will in no manner be
construed to relieve any Vendor of the requirements to fulfill all
obligations of such Vendor to Spectradyne as if Spectradyne were a direct
purchaser from such Vendor. Spectradyne agrees to look solely to the
applicable Vendor for any and all warranty claims with respect to any such
Vendor Hardware and Vendor Software except for the warranties from EDS set
forth in Section 8.2.
(a) EDS Software. EDS warrants that, for a period of one year from the
date on which any particular EDS Software is installed, such EDS
Software will operate in accordance with the applicable
specifications.
(b) Vendor Hardware and Vendor Software. In addition to those warranties
provided by the Vendors, EDS warrants, as to any Vendor Hardware or
Vendor Software acquired by Spectradyne by or through EDS pursuant to
this Agreement, that
(i) EDS has all necessary authority, right and power to convey good,
marketable and unencumbered title to all such Vendor Hardware to
which title will pass to Spectradyne under this Agreement, and
that EDS is authorized by the applicable Vendor to market and
provide such Vendor Software, subject to the applicable license
agreements, to Spectradyne and
(ii) any such conveyance is or will be in accordance with EDS'
agreements with the applicable Vendor of such Vendor Hardware or
Vendor Software and is not in violation of or in conflict with
any law, rule or regulation which, if violated by EDS, the
liability for such violation would flow in part or in whole to
Spectradyne or any other EDS obligation to any third party.
(For the purposes of this Section 8.2 (b), the Vendor may or may not
be the owner of the applicable intellectual property rights but
represented and warranted to EDS that it has, directly or indirectly,
obtained all rights necessary to provide such Vendor Hardware or
Vendor Software, as the case may be, to EDS and EDS is relying, in
good faith and without actual knowledge to the contrary, on such
Vendor's
31
representations and warranties in providing such Vendor Hardware and
Vendor Software to Spectradyne. Because Spectradyne is looking to the
Vendor for all warranties under Section 8.1, nothing in this Agreement
will be construed as EDS making and Spectradyne receiving from EDS any
warranty regarding any Vendor's claim to any intellectual property
right.)
(c) Integration. If EDS performs any integration of Vendor Hardware
and/or Vendor Software, Spectradyne Software or EDS Software, EDS
warrants that such integration will be performed in a good and
workmanlike manner in accordance with EDS' own internal standards for
such integration and in accordance with any written specifications
mutually agreed to by Spectradyne and EDS. In particular, with regard
to CDVRO Systems and, to the extent applicable, Personal Computers,
EDS warrants that each CDVRO System and Personal Computer will be
integrated in accordance with the integration specifications therefor
(such specifications for the integration of the CDVRO System are set
forth in Schedule 8.2(c)). EDS will have no liability for any impact
on any Vendor's warranty from integration by EDS in accordance
herewith.
(d) Disclaimer of Warranties. The warranties contained in Section 8.2 (a)
and Section 8.2 (c) are contingent upon proper use of Vendor Hardware
and Vendor Software and do not cover Vendor Hardware or Vendor
Software on which the original identification marks have been removed
or altered or which have been modified without EDS' approval,
improperly tested by Spectradyne or which have been subjected to
unusual physical or electrical stress (including without limitation
any such stress which would give rise to an excusable delay under
Section 15.2). THE WARRANTIES SET FORTH IN THIS SECTION 8.2 ARE
LIMITED WARRANTIES. EXCEPT AS SPECIFICALLY STATED ABOVE IN THIS
SECTION 8.2, EDS MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, REGARDING ANY MATTER, INCLUDING THE MERCHANTABILITY,
SUITABILITY, ORIGINALITY, FITNESS FOR A PARTICULAR USE OR PURPOSE, OR
RESULTS TO BE DERIVED FROM THE USE OF ANY INFORMATION TECHNOLOGY
SERVICES, CDVRO SYSTEM, HARDWARE, SOFTWARE, SATELLITE, SIGNAL
TRANSMITTED OR OTHER PRODUCTS AND SERVICES PROVIDED UNDER THIS
AGREEMENT. No representation or warranty made by any person,
including any representative of EDS, which is inconsistent or in
conflict with, or in addition to the terms of, the warranties set
forth in this Section 8.2 will be binding upon EDS unless expressed in
a writing signed by a duly authorized representative of EDS.
8.3 Remedies. EDS will, at no additional cost to Spectradyne, assist
Spectradyne in exercising (or, if necessary will exercise on Spectradyne's
behalf) Vendor
32
warranties applicable to any Vendor Hardware and Vendor Software provided
by or through EDS pursuant to this Agreement. Spectradyne's sole and
exclusive remedy and EDS' sole and exclusive liability for any breach of
EDS' warranty provided under Section 8.2, will be:
(a) Warranties under Section 8.2(a). With regard to any breach of EDS'
warranty set forth in Section 8.2(a) regarding EDS Software, EDS will
modify the EDS Software to the extent necessary such that it performs
in accordance with the applicable specifications. If EDS is required
to modify EDS Software under this Section 8.3(a), EDS will have a
reasonable time to complete such modification.
(b) Warranties under Section 8.2 (b) and Section 8.2 (c). Spectradyne's
sole and exclusive remedy and EDS' sole and exclusive liability for
any breach of any EDS warranty set forth in Section 8.2 (b) and
Section 8.2 (c) will be (at EDS' option) to repair, replace or, solely
with regard to EDS' obligations under Section 8.2(b), credit
Spectradyne's account for (i) any Vendor Hardware or Vendor Software
as to which EDS does not have such rights as are warranted and (ii)
any improperly integrated Vendor Hardware or Vendor Software procured
by Spectradyne from or through EDS under this Agreement. If EDS
elects to make a repair or to effect a replacement, EDS will have a
reasonable time to make such repair or replacement. EDS will pay all
reasonable costs for any transportation, rigging, drayage, taxes,
insurance and any other documented reasonable costs related to any
such repair or replacement.
(c) If the sole and exclusive remedy provided in Section 8.3 (a) or
Section 8.3(b) fails of its essential purpose, then, as an alternative
sole and exclusive remedy, Spectradyne may recover from EDS, subject
to the provisions of Section 14.4, direct damages incurred by
Spectradyne.
8.4 Quality Review. Each year during the term of this Agreement, or more
frequently if requested in writing by either party, EDS and Spectradyne
will meet and jointly participate in EDS, quality review program to review
the performance by each party of its obligations under this Agreement. The
performance of each party will be measured against the applicable
performance criteria, as set forth in this Agreement, or as otherwise
mutually agreed by the Designated Representative and the Account Manager.
ARTICLE IX.
PAYMENT
9.1 Charges. Spectradyne will pay EDS the charges set forth in Schedule 9.1.
The charges for any Additional Products procured by Spectradyne from EDS
under Section 3.4 will be as provided under Schedule 3.4. Any charges for
Additional Services will be those to which the parties mutually agree
before the commencement of any such Additional Services.
33
9.2 Terms of Payment. EDS will provide Spectradyne with invoices on a monthly
basis (on or about the 15th day of each month) for all Information
Technology Services performed and all other charges incurred by Spectradyne
under this Agreement during the immediately prior month. Transponder
charges will be paid as provided in the agreement between the Vendor
providing the transponder and EDS, but in no event will EDS agree (without
Spectradyne's prior written consent) to payment terms less favorable than
payment of charges monthly in advance. Except for transponder charges and
unless otherwise agreed by EDS and Spectradyne, all other sums due EDS
hereunder for which a time for payment is not otherwise specified will be
due and payable 30 days after receipt by Spectradyne of an invoice from
EDS. Any sum due EDS hereunder that is not paid when due will thereafter
bear interest until paid at a rate of interest equal to the lesser of (i)
two percent per annum more than the "prime" rate announced as such from
time to time by Citibank N.A., New York, or successor and (ii) the maximum
rate of interest allowed by applicable law.
9.3 Bonus. Spectradyne will pay EDS a bonus, meaning an amount in addition to
any and all other charges under this Agreement, if EDS delivers the
Digitally Based Video On Demand System to Spectradyne prior to the Delivery
Date. The amount of the bonus will equal:
(a) [ ] if EDS delivers the Digitally Based Video On Demand System at
least 1 but less than 31 days prior to the Delivery Date,
(b) the amount set forth in (a) above plus an additional [ ] if EDS
delivers the Digitally Based Video on Demand System between 31 and 60
days prior to the Delivery Date or
(c) the amount set forth in (b) above plus an additional [ ] if EDS
delivers the Digitally Based Video On Demand System more than 60 days
prior to the Delivery Date.
9.4 Taxes. Spectradyne will pay to EDS amounts equal to any sales, use,
privilege, excise or other taxes based on gross receipts, however
designated or levied, imposed on Spectradyne as the acquiring entity but
paid or payable by EDS on the (i) charges imposed under this Agreement,
(ii) this Agreement or (iii) any Information Technology Services, Software,
Hardware (except for property taxes on EDS Hardware), other service or
materials provided under this Agreement or upon their use. However,
Spectradyne is not responsible for (i) any franchise taxes, taxes based on
the net income or payroll of EDS or (ii) property taxes on EDS Hardware
unless and until such EDS Hardware becomes the property of Spectradyne. To
the extent that any taxes are imposed on charges relating to any financed
hardware, such taxes will be included in the amounts financed.
34
9.5 Distribution of Revenue Related to New Business. Spectradyne and EDS
anticipate that certain new business opportunities will arise out of the
infrastructure (meaning the network, Hardware, Software and Information
Technology Services provided by EDS) put in place under this Agreement and
arising out of intellectual property developed by either Spectradyne or EDS
under this Agreement. Spectradyne and EDS agree that any revenues arising
out of or related to new business (other than revenue from the distribution
of video programs (meaning the amount charged for the video program itself)
provided to a hotel, prison, hospital, nursing home or supervised
retirement facility, military installation or time share property on a pay-
for-view basis) (i) that is not conducted solely within the confines of
individual sites and (ii) in which Spectradyne and EDS have participated in
the sale or will participate in the operation will be distributed between
Spectradyne and EDS based upon the allocation of risk, the party selling
the business, the capitalization of the business and such other matters as
Spectradyne and EDS may mutually agree. The distribution of revenue will
be determined by Spectradyne and EDS on a case-by-case basis.
ARTICLE X.
SPECTRADYNE OBLIGATIONS
10.1 Obligation to Purchase from EDS. From the Effective Date until the tenth
anniversary of the Effective Date or such earlier date that this Agreement
is terminated as provided for in Article XIII, Spectradyne will, in
addition to its obligations under Article VII, use EDS exclusively as its
provider of the Facilities Management Services (other than Software
development), Network Services, Field Services (other than miscellaneous
Field Services described in Section 2 of Schedule 6.6), CDVRO Systems and
IRD Systems.
10.2 Spectradyne's Performance Obligations. In addition to its obligations set
forth in Schedule 4.1 and elsewhere in this Agreement, Spectradyne will,
during the term of this Agreement and in order for EDS to meet its
obligations, provide the following on a timely basis:
(a) Support of EDS's Performance. The Information Technology Services to
be provided by EDS require the support and cooperation of Spectradyne.
Spectradyne agrees to cooperate with EDS by, among other things,
setting priorities with respect to EDS' work, providing management
review and approval as reasonably requested by EDS, and making
available information and other resources reasonably requested by EDS.
(b) Compliance with Laws. Spectradyne, in its use and operation of the
On-Site Systems (in whole or in part) and the Spectradyne
communications networks will comply with all applicable statutes,
ordinances, decrees, requirements, orders, judgments, rules or
regulations of, including the terms of any license or permit issued by
any governmental entity or authority, whether federal, state or local.
Spectradyne waives the
35
application of the Texas Deceptive Trade Practices-Consumer Protection
Act to this Agreement and the transactions contemplated herein.
(c) Additional Performance Obligations In addition to its obligations in
this Article X and elsewhere under this Agreement, Spectradyne will
perform the additional performance obligations forth in Schedule 10.2
(c).
ARTICLE XI.
PROPRIETARY RIGHTS
11.1 EDS Hardware. Title to EDS Hardware will remain in EDS or any appropriate
third party, and the EDS Hardware will be and remain the property of EDS or
such third party, regardless of any attachment to real estate, even if it
is deemed to be a fixture. Title and risk of loss or damage to Hardware
purchased by Spectradyne from or through EDS will transfer to Spectradyne
as provided in Schedule 3.4. Spectradyne agrees (a) to keep the EDS
Hardware and all Hardware purchased by Spectradyne from or through EDS free
from all liens, claims and encumbrances (excluding only such liens created
by EDS and such claims created by agreements between Spectradyne and
Spectradyne's creditors executed prior to the Effective Date, all
extensions, renewals or refinancings of such prior obligations and all
other debt denominated as Senior Debt, all of which claims created by
agreements between Spectradyne and Spectradyne's creditors will be junior
to any claim that EDS may have in the Hardware purchased by Spectradyne
from or through EDS) and (b) except for such junior liens, to do nothing to
impair or encumber EDS' title or lien rights to or in (i) the EDS Hardware
or (ii) the Hardware purchased by Spectradyne from or through EDS, in the
case of the Hardware referred to in (ii) for so long as Spectradyne or any
Spectradyne Affiliate owes any purchase money to EDS as to such Hardware.
Spectradyne agrees to execute and deliver UCC financing statements,
estoppel certificates and such other documents as EDS may reasonably
request to document (i) EDS' or any third party's ownership of the EDS
Hardware, (ii) EDS' lien rights in Hardware purchased from or through EDS
by Spectradyne and financed by EDS directly or indirectly through a
Spectradyne Affiliate and (iii) EDS' right to install and use EDS Hardware
at the Spectradyne Installation Sites to perform its obligations under this
Agreement. EDS agrees to execute and deliver to Spectradyne such bills of
sale or other appropriate instruments of conveyance of title to any
Hardware procured by Spectradyne from or through EDS as Spectradyne or its
lenders may reasonably request. Further, within a reasonable time after
Spectradyne has made payment in full for all Hardware purchased by
Spectradyne from or through EDS and upon Spectradyne's request, EDS will
execute and deliver to Spectradyne such documents as Spectradyne may
reasonably request to document the satisfaction or elimination, as the case
may be, of EDS' lien rights in such Hardware purchased by Spectradyne.
36
As an accommodation to Spectradyne and without waiving any of its rights to
EDS Hardware as between EDS and Spectradyne or EDS and Spectradyne's
customers, EDS will not require Spectradyne's customers to execute any such
documents. EDS will pay all fees associated with the delivery and filing
of such documents so executed by Spectradyne, and Spectradyne will pay all
fees associated with the delivery and filing of such documents so executed
by EDS.
11.2 Vendor Software. Vendor Software will remain the property of the
applicable Vendor. All Vendor Software provided and used by EDS under this
Agreement, other than Vendor Software provided through EDS under Section
3.4 and licensed by the Vendor directly to Spectradyne, will be licensed by
the Vendor directly to EDS. All Vendor Software provided under Section 3.4
will be licensed by the Vendor to Spectradyne.
Neither Spectradyne nor EDS will have any obligation to control or audit
the Software resident on any Hardware operated by any employee of the
other, and Spectradyne and EDS are each and will each remain liable to any
Vendor for any unauthorized copies made by any of its employees of any
Vendor Software.
11.3 Spectradyne Software. Spectradyne Software will remain the property of
Spectradyne. Spectradyne hereby grants to EDS a license to access,
install, display, operate, execute, modify, copy and otherwise use the
object code and source code versions of all Spectradyne Software at All
North American Sites and elsewhere in North America, but such license
applies only as reasonably required by EDS in connection with the
performance by EDS of its obligations under this Agreement. The term of
the license set forth in this Section 11.3 will commence with the Effective
Date and end on the End Date. EDS will have no right to transfer or assign
its rights in any Spectradyne Software without the prior written consent of
Spectradyne. In addition, EDS and Spectradyne will have the following
rights and obligations related to the Spectradyne Software:
(a) Operators. Except with the prior written consent of Spectradyne,
which consent will not be unreasonably withheld or delayed, or to the
extent required by natural disaster or similar emergency, the
Spectradyne Software will not be operated, directly or indirectly, by
persons other than bona fide employees, agents or subcontractors of
EDS or Spectradyne.
(b) Spectradyne Work. Except with the prior written consent of
Spectradyne, only Spectradyne work or EDS work directly and
exclusively related to Spectradyne work may be processed using the
Spectradyne Software.
(c) Confidentiality of Spectradyne Software. EDS will keep the
Spectradyne Software confidential, will not at any time allow the
Spectradyne Software or any of the various components thereof or
37
modifications thereto to be used (other than as provided for in this
Agreement), disclosed, sold, copied, reproduced, licensed, assigned,
leased or commercially exploited or marketed to any third party in any
way, with or without charge, by EDS, its employees, agents or
subcontractors.
(d) Irreparable Harm. EDS acknowledges that the Spectradyne Software is
the valuable property of Spectradyne, that violation in any material
respect of any provision of this Section 11.3 would cause Spectradyne
irreparable injury for which it would have no adequate remedy at law,
and that Spectradyne will be entitled to preliminary and other
injunctive relief against any such violation. Such injunctive relief
is in addition to, and in no way in limitation of, any and all other
remedies or rights which Spectradyne has at law or in equity.
11.4 EDS Software. All EDS Software will remain the property of EDS. EDS
hereby grants to Spectradyne a royalty-free license for the term described
in this Section 11.4 and, to the extent applicable, Section 11.5, to
access, install, use, operate, execute and display the object code copy
(only) of EDS Software at All North American Sites and elsewhere in North
America, but such license applies only as reasonably required by
Spectradyne in connection with Spectradyne' IS&S operations providing
services for Spectradyne's internal business operations (which operations
may not use the EDS Software to perform services for a third party only),
the operation of the compressed digital video network and CDVRO Systems,
other Spectradyne-owned video programming delivery equipment and other
field services described in this Agreement. Except with regard to
Developed Software to which the license in this Section 11.4 is extended,
the term of the license set forth in this Section 11.4 will commence with
the date on which the EDS Software is installed and will end on the End
Date.
Spectradyne will have no right to transfer or assign its rights in any
such EDS Software without the prior written consent of EDS. In addition,
Spectradyne and EDS will have the following rights and obligations related
to the EDS Software:
(a) Operators. Except with the prior written consent of EDS, which
consent will not be unreasonably withheld or delayed, or to the extent
required by natural disaster or similar emergency, the EDS Software
will not be operated, directly or indirectly, (i) by persons other
than bona fide employees of SPI Holding, Inc., provided such employees
are subject to obligations of confidentiality substantially similar to
those set forth in this Agreement, and bona fide employees of
Spectradyne at a Spectradyne facility or one of Spectradyne Is
customers' facilities or (ii) on hardware that is not under the
control of Spectradyne or EDS.
38
(b) Spectradyne Work. Except with the prior written consent of EDS, only
Spectradyne work may be processed using the EDS Software.
(c) Confidentiality of EDS Software. Spectradyne will keep the EDS
Software confidential, will not at any time allow the EDS Software, or
any of the various components thereof or any modifications thereto, to
be used (other than as provided for in this Agreement), disclosed to
any party, sold, licensed, assigned, leased or commercially exploited
or marketed to any third party in any way, with or without charge, by
Spectradyne or its employees or agents and, except to the extent
required for normal operation of the EDS Software as permitted herein
in the day-to-day business operations of Spectradyne, will not permit
the EDS Software to be copied or reproduced, in whole or in part, by
any party under its control (and will use commercially reasonable
efforts to prohibit any party from copying or reproducing the EDS
Software where Spectradyne knows such party is attempting to copy or
reproduce the EDS Software but where such party is not under
Spectradyne's control) at any time.
(d) Irreparable Harm. Spectradyne acknowledges that the EDS Software is
the valuable property of EDS, that violation in any material respect
of any provision of the agreement provided in this Section 11.4 would
cause EDS irreparable injury for which it would have no adequate
remedy at law, and that EDS will be entitled to preliminary and other
injunctive relief against any such violation. Such injunctive relief
is in addition to, and in no way in limitation of, any and all other
remedies or rights which EDS has at law or in equity.
11.5 Software Development. Prior to commencing any requirements definition
phase of a Software development project, Spectradyne and EDS will negotiate
in good faith toward a mutually acceptable definitive written agreement
setting forth the respective rights and obligations of each of the parties
related to such Developed Software. Spectradyne and EDS agree that any
Software developed will be owned by EDS as set forth above, and that such
negotiations will address each party's rights and obligations in the use,
disclosure, commercial exploitation of such developed Software (including
the distribution of any revenue resulting from such commercial exploitation
of the developed Software) and such other matters as Spectradyne and EDS
may mutually agree.
To the extent that (i) EDS develops Software under this Agreement, (ii)
such Developed Software is subject to the license set forth in Section 11.4
above, (iii) such license has not been terminated under Section 11.4 as a
result of Spectradyne's breach of any provision of Section 11.4 and (iv)
EDS has not terminated this Agreement under Article XIII, the royalty-free
license granted to Spectradyne under Section 11.4 will be extended by EDS
past the End Date, without need for any further act by Spectradyne, and
continue indefinitely in full force and effect without regard to any
termination of this Agreement;
39
provided, that such license will terminate automatically and without any
further act by EDS if Spectradyne breaches any provision of Section 11.4
after the End Date.
Spectradyne will have no obligation to pay any fee to EDS after the End
Date and will have no right to any Software Maintenance or Software
Enhancements of EDS Software. For so long as the license under Section
11.4 remains in full force and effect, if Spectradyne requests Software
Maintenance or Software Enhancements of Developed Software after the End
Date, EDS will provide such Software Maintenance or Software Enhancements
subject to EDS' then current commercial rates for such Software Maintenance
or Software Enhancements. If EDS ceases or has ceased supporting such
Developed Software, EDS will provide to Spectradyne a copy of the source
code to such Developed Software (but not to any EDS development tools
embedded in Developed Software) and permit Spectradyne to use and modify
such source code solely to maintain such Developed Software. Spectradyne
will have no right to sell, license (other than to an Affiliate under terms
substantially similar to those set forth in Section 11.4) or in any way
commercially exploit any Developed Software, in whole or in part, or any
maintenance or enhancement of or modification to Developed Software,
including such enhancements or modifications as may be developed by
Spectradyne.
11.6 EDS Development Tools. Except to the extent that any intellectual property
described in this Section 11.6 is embedded in, required in the operation of
or otherwise included in EDS Software, in which case the provisions of this
Section 11.6 will be (with regard to such EDS Software) subject to Section
11.4 and Section 11.5, EDS will retain all right, title and interest in and
to any and all Software, Software development tools, know how,
methodologies, processes, technologies or algorithms used in EDS' provision
of services which are based upon trade secrets or proprietary information
of EDS or otherwise owned or licensed by EDS. In addition, all output
(other than data contained in reports generated by EDS at the request of
Spectradyne) from and computer programs generated by EDS' Software
development tools will be deemed proprietary to EDS. Notwithstanding the
provisions of Section 11.4, with the exception of development tools
licensed by Spectradyne from a third party and provided to EDS for use by
EDS in the performance of its obligations under this Agreement, Spectradyne
will have no rights in such EDS development tools.
11.7 Software Modifications. Except under as an Additional Service under
Section 7.1 or as expressly provided in Section 3.3(a)(ii) or Schedule 4.6,
EDS has no obligation to modify, enhance or maintain any Software.
11.8 Confidentiality. Spectradyne and EDS will have the following obligations
with regard to Confidential Information:
(a) "Confidential Information" means the terms and conditions of this
Agreement and that certain Letter of Intent to Al Jerome from J. Keane
40
Taylor dated May 19, 1993 and that information which is: (i) written
information received from the other party which is clearly and
prominently marked or identified as confidential and (ii) oral or
visual information which is identified as confidential in writing to
the receiving party within 30 days after disclosure to the receiving
party and which adequately and clearly identifies such visual or oral
information claimed as confidential ("Confidential Information").
(b) Each party will protect Confidential Information received from the
other party, before or after the Effective Date, using the same degree
of care such party uses to protect its own confidential information,
but in no event less than reasonable care.
(c) Each party will use Confidential Information received from the other
party only for the purpose of performing their obligations under this
Agreement.
(d) It will not be a breach of the obligations of this Section 11.8 to
disclose to any arbitrators Confidential Information required to be
disclosed in connection with the conduct of any binding arbitration
proceeding, provided that such disclosure is made pursuant to and in
accordance with the approval and at the direction of a majority of the
arbitrators conducting such arbitration.
(e) Confidential Information will not include information which is (i)
already known by the recipient party without an obligation of
confidentiality, (ii) publicly known through no unauthorized act of
the recipient party, (iii) rightfully received from a third party,
(iv) independently developed by the recipient party without use of the
other party's Confidential Information, (v) disclosed without similar
restrictions to a third party by the party owning the information or
(vi) approved by the other party for disclosure.
(f) Each party agrees to return any and all of Confidential Information to
its owner upon such owner's request.
(g) If either party is required to disclose any Confidential Information
pursuant to securities laws or any other laws or governmental
regulations, or pursuant to subpoena or other compulsory process, then
the disclosing party will use its best efforts and exercise all rights
available to it (short of risking damages, injunction or contempt
findings) to (i) maintain the confidentiality of the existence, terms
and conditions of this Agreement, (ii) to the extent it may lawfully
do so, inform the other party of any requests for disclosure made
pursuant to the Freedom of Information Act or any other law or
government regulation or of any subpoena or other compulsory process
prior to making such disclosure and (iii) allow the non-disclosing
party to contest
41
such request and, if applicable, participate in any resulting
proceedings through counsel of the non-disclosing party's choosing and
at the non-disclosing party's expense.
11.9 Exclusivity. Spectradyne will have the following rights and obligations
with regard to exclusivity:
(a) North American Markets. EDS, and any subsidiary controlled by EDS or
a subsidiary of EDS, will not, after the Effective Date, contract
with a third party, or itself act, to install, operate or manage a
compressed digital video network in the continental United States,
Alaska, Hawaii, the Virgin Islands, Puerto Rico and Mexico using the
technology to be implemented by EDS under this Agreement or the
Digitally Based Video On Demand System for the purpose of distributing
in-room video entertainment programming or Spectradyne-developed
interactive services to (i) hotels, (ii) prisons, (iii) hospitals,
(iv) nursing homes or supervised retirement facilities or (v) military
installations without Spectradyne's prior written consent in its sole
discretion.
(b) Competitors of Spectradyne. In addition to EDS' obligations under
Section 11.9(a), EDS, and any subsidiary controlled by EDS or a
subsidiary of EDS, will not contract with Lodgenet Entertainment
Corporation, Comsat Video Enterprises Inc., Cable HealthCare
Corporation or On-Command Video Corporation or any entity that EDS
knows is an affiliate of any such company without Spectradyne's prior
written consent in its sole discretion.
(c) Time Share Properties and International Markets. The parties intend
that the relationship described in this Agreement will be expanded to
international markets (in addition to Canada, Mexico, Puerto Rico and
the Virgin Islands mentioned above). Spectradyne understands that the
Communications Industry Group (a division of EDS, "CIG") may not know
of, prevent or effect transactions entered into by other business
units of EDS outside of North America. However, CIG will not
(i) contract with a third party, or itself act, to install, operate
or manage a compressed digital video network outside of North
America using the technology to be implemented by EDS under this
Agreement or the Digitally Based Video On Demand System for the
purpose of distributing in-room video entertainment programming
or Spectradyne developed interactive services to (i) hotels, (ii)
prisons, (iii) hospitals, (iv) nursing homes or supervised
retirement facilities, (v) military installations or (vi) time-
share properties (inside or outside of North America) without
Spectradyne's prior written consent in its sole discretion or
42
(ii) provide the technology to be implemented by EDS under this
Agreement or the Digitally Based Video On Demand System to any
third party or to another business unit within EDS so that such
business unit may use such technology or may provide such
technology to a third party, in either case for the purpose of
distributing in-room video entertainment programming or
Spectradyne-developed interactive services to (i) hotels, (ii)
prisons, (iii) hospitals, (iv) nursing homes or supervised
retirement facilities, (v) military installations or (vi) time-
share properties (inside or outside of North America) without
Spectradyne's prior written consent in its sole discretion.
(d) Obligation to Notify Spectradyne. EDS will use commercially
reasonable efforts to notify Spectradyne of any agreement that any
division of EDS other than CIG enters with a third party to provide
such technology or services within five days after the President of
CIG learns of such agreement.
EDS will use commercially reasonable efforts to provide Spectradyne
with written notice 90 days prior to entering into a binding agreement
with any third party for the installation, management or operation of
a compressed digital video network used to distribute video
entertainment programming or Spectradyne-developed interactive
services, other than those described in (i) through (v) immediately
above. In addition to the notice requirement mentioned immediately
above in this paragraph, CIG will use commercially reasonable efforts
to explore opportunities with such third party which would allow
Spectradyne to commercially exploit Spectradyne's products and
services with or through such relationship between EDS and such third
party, including seeking a waiver under any applicable confidentiality
agreement to permit such notice to Spectradyne.
Notwithstanding anything set forth in the immediately preceding two
paragraphs of this Section 11.9, EDS will have no obligation to breach
any obligation of confidentiality or any other contractual obligation
that EDS may have with a third party and EDS will remain free to
market, sell and provide any information technology services to any
other audio-visual service provider, except as listed above, including
without limitation cable companies, phone companies, healthcare
companies, education providers, high density residential areas or any
other provider or market.
ARTICLE XII.
PERFORMANCE REVIEW AND DISPUTE RESOLUTION
12.1 Performance Review. In the event of any dispute or controversy between the
parties of any kind or nature, upon the written request of either party,
each
43
of the parties will appoint a designated officer whose task it will be to
meet for the purpose of resolving such dispute or controversy or to
negotiate for an adjustment to any provision of this Agreement needed to
resolve such dispute or controversy. Such officers will discuss the
dispute or controversy and negotiate in good faith in an effort to resolve
the dispute or controversy or renegotiate the applicable section or
provision of this Agreement without the necessity of any formal proceeding
relating thereto. No formal proceedings for the judicial or arbitrational
resolution of such dispute or controversy may be commenced until either or
both of the designated officers conclude in good faith that amicable
resolution through continued negotiation of the matter in issue is not
likely to occur.
12.2 Dispute Resolution. Except for those disputes where injunctive relief is
the desired remedy and except for patent, trademark, trade secret or
copyright claims brought by third parties, any dispute, controversy or
claim arising out of or related to this Agreement, or the creation,
validity, interpretation, breach or termination of this Agreement, and not
resolved to the satisfaction of the parties under Section 12.1 will be
settled by binding arbitration governed by the Commercial Arbitration Rules
of the American Arbitration Association. Any arbitration will be commenced
and conducted using the following procedure:
(a) Either party may demand arbitration in writing, stating the nature of
the controversy and naming the arbitrator selected by it.
(b) Within 15 days after such demand, the other party will name its
arbitrator, and the two named arbitrators will, within 15 days
thereafter, select the third arbitrator to serve on the arbitration
panel. The two arbitrators named by the parties may have prior
relationships with the naming party, which in a judicial setting would
be considered a conflict of interest. The third arbitrator, selected
by the first two, should be a neutral participant with no prior
working relationship with either party. If the first 2 arbitrators
are unable to reach agreement as to the third arbitrator within such
15-Day period for any reason, then either of the first 2 arbitrators
will request the American Arbitration Association to select a third
arbitrator meeting the criteria for such arbitrator set forth above in
this Section 12. 2 (b).
(c) The arbitration proceeding will be held in Dallas, Texas.
(d) Each party will bear its own arbitration costs and expenses; provided,
however, that the arbitrators may modify the allocation of fees, costs
and expenses in the award in those cases where fairness dictates other
than an equal allocation between the parties.
(e) The arbitrators will allow such discovery as is appropriate to the
purposes of arbitration in accomplishing fair, speedy and cost
effective
44
resolution of disputes. The arbitrators will reference the rules of
evidence of the Federal Rules of Civil Procedure then in effect in
setting the direction of such discovery.
(f) The award will be final and binding on the parties, and judgment on
the award may be entered in and enforced by any court of competent
jurisdiction.
(g) EDS will continue to provide the Information Technology Services
(including without limitation any services related to the development
of the Digitally Based Video On Demand System) during the arbitration
proceedings and, except for disputed payments that are the subject of
the proceeding (which will be paid into escrow as set forth below),
Spectradyne will continue to make payments to EDS (including without
limitation the payment of any applicable charges for any services
related to the development of the Digitally Based Video On Demand
System) under the terms and conditions of this Agreement during such
period from the date the notice of arbitration is served on one party
until the date of any final award. Any disputed payments from either
party will be paid into an escrow account, structured by agreement of
the parties, or as ordered by the arbitrators if agreement cannot be
reached, for distribution in accordance with the arbitrators' award.
ARTICLE XIII.
TERMINATION
13.1 Termination for Cause. Spectradyne and EDS will have the following rights
in the event of a termination for cause:
(a) Termination by EDS. If (i) Spectradyne materially defaults in any of
its duties or obligations under this Agreement (other than a default
in payment to EDS) , and such default is not cured within 30 days
after written notice specifying the default is delivered to
Spectradyne (or, if such default cannot reasonably be cured within
such 30 days, Spectradyne either fails to commence curing such default
within such 30 days or thereafter fails to proceed diligently to
complete such cure, but in any event if such default is not cured
within 60 days after delivery of such notice) or (ii) SPI Holding,
Inc. materially defaults in any of its duties or obligations under the
Financial Agreement, then, in addition to any claim for damages or
other relief, EDS may terminate this Agreement without penalty to EDS
by delivering to Spectradyne a second written notice specifying the
date of such termination.
(b) Termination by Spectradyne. If EDS materially defaults in any of its
duties or obligations under this Agreement, including without
limitation (i) EDS' failure to deliver and install in substantial
compliance with the Transition Plan compressed digital video network
Hardware and
45
Software in accordance with the functional specifications for such
Hardware and Software, (ii) EDS' failure to deliver to Spectradyne the
Digitally Based Video on Demand System within 90 days of the due date
specified therefor in Section 1.4(b) at a cost to Spectradyne not
exceeding the prices set forth in Section 1.4(c). (a "Phase II
Default") or (iii) any other material breach by EDS of this Agreement
or of the performance criteria set forth therein, and such default is
not cured within 30 days after written notice specifying the default
is delivered to EDS (or, if such default cannot reasonably be cured
within such 30 days, EDS fails to commence curing such default during
such 30 days or thereafter fails to proceed diligently to complete
such cure, but in any event if such default is not cured within 60
days (90 days in the case of a Phase II Default) after delivery of
such notice), then, in addition to any claim for damages or other
relief, Spectradyne may terminate this Agreement without penalty by
delivering to EDS a second written notice specifying the date of such
termination. In such event there will be no cross-acceleration of any
obligation of Spectradyne or any Spectradyne Affiliate under the
Financial Agreement, and the obligations of EDS under the first three
paragraphs of Section 11.9 will survive for a period of two years from
the effective date of such termination.
13.2 Termination for Spectradyne's Convenience. Spectradyne and EDS agree that
Spectradyne will have the right to terminate this Agreement for
Spectradyne's convenience by providing written notice to EDS on the third,
sixth and eighth anniversary of the Effective Date. Any such termination
will be effective at least six months after such anniversary on which EDS
receives such written notice. Within 30 days of receipt of such written
notice of such termination, EDS will present to Spectradyne a detailed,
auditable list of the expenses described in Section 13.8 (a) to which EDS
reasonably believes it will be subject as a result of such termination and
such expenses will be paid by Spectradyne. In addition to such expenses,
any such termination will be subject to the payment of the Termination Fee
under Section 13.8 (b). Within 30 days after Spectradyne's delivery to EDS
of notice of termination under this Section 13.2, Spectradyne will present
to EDS a detailed, auditable list of credits that Spectradyne reasonably
believes have accrued during the term of this Agreement but which have not
yet been applied against any EDS charges. Such credits will be applied
against any sums due to EDS. Any net credit will be offset against the
next sums due, if any, under the Financial Agreement or the PCFM, or if
there are no such sums due, will be paid in cash to Spectradyne. Upon the
termination of this Agreement under this Section 13.2 or Section 13.1
(a), EDS may, in its sole discretion, accelerate the obligations of
Spectradyne and/or any Spectradyne Affiliate under the Financial Agreement
and, without limiting the foregoing, all sums owed by Spectradyne and/or
any Spectradyne Affiliate under such Financial Agreement will be due and
payable on the effective date of any such termination.
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13.3 Termination for Reaching Limitation of Liability. If either party is
required to pay damages to the other that in the aggregate would equal or
exceed the limitation set forth in Section 14.4(d) or Section 14.4(e), the
injured party may, in its sole discretion and at such time as the
limitation is reached or at any time thereafter, terminate this Agreement
without penalty to the injured party. Any such termination will be subject
to the provisions of Section 13.6, except that, to the extent that
Spectradyne's reaching the limitation of liability constitutes a breach of
this Agreement, EDS will not be excused under Section 13.6 from performing
the Termination Transition; provided, however, that EDS will have no
obligation to perform the Termination Transition if Spectradyne does not
fulfill its payment obligations under Section 13.6, in which case EDS will
give written notice to Spectradyne no less than 30 days prior to the
effective date of such termination, and this Agreement will terminate as of
the date set forth in such notice.
13.4 Termination for Nonpayment. If Spectradyne defaults in the payment when
due of any undisputed amount or, if such amount is disputed, escrowed
amount due to EDS hereunder (including any obligation to place such
disputed amount into escrow) and does not cure such default within 10
Business Days after being given written notice of such default, then EDS
may, by giving written notice thereof to Spectradyne and the lender listed
in Section 15.5 terminate this Agreement as of the date specified in such
notice of termination.
In addition to the rights to cure set forth above in this Section 13.4, any
bank, lending institution or other lender described in Section 1.3 (bn),
or any successor to such bank, lending institution or other lender, may
cure any default under this Section 13.4. If Spectradyne notifies EDS
within three Business Days after the date of EDS' notice of default that
Spectradyne is in active discussions with such a bank, lending institution
or other lender, EDS will extend the cure period set forth above in this
Section 13.4 to 15-Business Days. If such bank, lending institution or
other lender cures such default within such 15-Business Day period, EDS
will, notwithstanding the provisions of Section 13.1(a) with regard to such
default, continue to perform its obligations under this Agreement without
interruption, which continuation will not be construed as a waiver by EDS
of any other right under this Agreement.
13.5 Termination for Insolvency. If at any time either party hereto is declared
insolvent or bankrupt, is the subject of any proceedings relating to its
liquidation, insolvency or for the appointment of a receiver, conservator
or similar officer for it, makes an assignment for the benefit of all or
substantially all of its creditors or enters into an agreement for the
composition, extension or readjustment of all or substantially all of its
obligations, then the liquidator, trustee, receiver, conservator, new
owner, manager or other agent or representative of such party will have 30
days to notify the other party that it is terminating this Agreement
effective as of 30 days after the other party's receipt of the notice of
termination.
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13.6 Transition Upon Termination. In connection with any termination of this
Agreement where Spectradyne is not in breach of this Agreement, EDS will
comply with Spectradyne's reasonable directions, if any, to effect the
orderly transition and migration to Spectradyne or its designee from EDS of
the Information Technology Services then being performed or which EDS is
then responsible for performing under this Agreement, including without
limitation the transition actions described on Schedule 13.6. (All such
efforts described in the first two sentences of this Section 13.6 are
referred to as the "Termination Transition".) In addition, EDS will comply
with Spectradyne's reasonable directions to effect the transfer of
(a) title to all Hardware to Spectradyne for which Spectradyne has paid in
full, including and limited to
(i) Hardware which has been purchased by Spectradyne under this
Agreement,
(ii) Personal Computer Functionality provided by EDS under this
Agreement,
(iii) Personal Computer Functionality provided by EDS under the PCFM
and
(iv) CDVRO Systems provided by EDS under this Agreement, upon EDS'
receipt of payment in full;
(b) all lease agreements (including without limitation any transponder
lease) desired by Spectradyne in order to continue all Information
Technology Services and
(c) license rights to Vendor Software and EDS Software desired by
Spectradyne for such purposes.
EDS will continue to provide Information Technology Services, with no
increase to the Base Service Charge, in connection with the Termination
Transition for a period designated by Spectradyne, which period will be not
less than six months. The transition period will commence with the notice
of termination. EDS will not be obligated to perform the Termination
Transition services unless EDS receives, in addition to the Termination
Fee, Base Service Charges each month for the Termination Transition.
Specifically, EDS will, within 30 days after receipt of Spectradyne's
written request, develop and submit to Spectradyne a transition plan
setting forth the respective tasks to be accomplished by each party in
connection with the orderly transition and a schedule pursuant to which the
tasks are to be completed.
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If EDS is required to perform transition obligations under this Section
13.6, Spectradyne and EDS agree that the effective date of the termination
of this Agreement is the date set forth in the termination transition plan.
If this Agreement is terminated by Spectradyne under Section 13.1(b), then
EDS' continued participation in the Termination Transition will be at
Spectradyne's option.
13.7 Rights Upon Termination. The termination or expiration of this Agreement
will not relieve Spectradyne from paying for any Information Technology
Services performed, or information technology products provided, prior to
the End Date or for any additional amounts which may be due under this
Agreement.
13.8 Termination Fee. In addition to the charges for the Termination
Transition, if Spectradyne terminates this Agreement under Section 13.2
prior to the expiration date, Spectradyne will pay EDS:
(a) All costs and expenses arising out of or related to the termination,
including without limitation all capital costs not yet recovered by
EDS, all transponder costs, all employee relocation and other employee
related costs and
(b) The product of [ ] multiplied times the Base Service Charge for all
remaining months in the term (meaning all months between the effective
date of such termination and the tenth anniversary of the Effective
Date) of this Agreement (the "Termination Fee").
EDS will be required to use commercially reasonable efforts to mitigate
those costs and expenses described in Section 13.8(a).
ARTICLE XIV.
INDEMNITIES AND LIABILITIES
14.1 Indemnification. The indemnities set forth in this Section 14.1 will not
apply unless the party claiming indemnification complies with the
provisions of Section 14.2, and then will apply to the extent set forth in
Section 14-2.
(a) Intellectual Property Indemnity. EDS and Spectradyne each will
indemnify, defend and hold harmless the other and each Affiliate of
the other from any and all claims, actions, damages, liabilities,
costs and expenses, including reasonable attorneys, fees and expenses,
arising out of, under, or in connection with any claims of
misappropriation of a trade secret, or any claims of infringement of
any United States letters patent, or any copyright, trademark, service
mark, trade name or similar proprietary rights conferred by contract
or by common law or by any law of the United States or any state
alleged to have occurred
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because of the Hardware or Software provided by or through the
indemnitor.
(b) Cross Indemnification. EDS and Spectradyne each agree to indemnify,
defend and hold harmless the other from any and all damages,
liabilities, costs and expenses, including without limitation
reasonable attorneys' fees and expenses, arising out of, under or in
connection with any claim, demand, charge, action, cause of action, or
other proceeding (i) for rent, other payments required under leases or
utilities at any location where the indemnitor is financially
responsible under this Agreement for such rent, such other payments or
utilities, (ii) resulting from an act or omission of the indemnitor in
its capacity as an employer of a person and arising out of or relating
to (1) federal, state or other laws or regulations for the protection
of persons who are members of a protected class or category of
persons, (2) sexual discrimination or harassment, (3) work related
injury or death, (4) accrued employee benefits not expressly assumed
by the indemnitee and (5) any other aspect of the employment
relationship or its termination (including without limitation claims
for breach of an express or implied contract of employment and claims
relating to or arising out of any relationship between Spectradyne and
a collective bargaining unit or representative) and which, in all such
cases, arose when the person asserting the claim, demand, charge,
action, cause of action or other proceeding was or purported to be an
employee of the indemnitor or (iii) for license fees payable to a
Vendor with respect to Software licensed by a Vendor to the
indemnitor.
(c) Programming Indemnity. Spectradyne will indemnify, defend and hold
harmless EDS and each Affiliate of EDS from any and all claims,
actions, damages, liabilities, costs and expenses, including
reasonable attorneys' fees and expenses, arising out of, under, or in
connection with the Spectradyne communications networks, Spectradyne
Programming or other services of Spectradyne, including but not
limited to, libel, slander, invasion of privacy, invasion or
alteration of private records or data, or other claims arising from,
relating to or based upon the Spectradyne communications networks,
Spectradyne Programming or other services of Spectradyne.
(d) Indemnifications Related to Hardware, Software and Data. In addition
to their obligations under Section 14.1(a), Section 14.1(b) and
Section 14.1(c), Spectradyne and EDS agree to indemnify each other as
follows with regard to the Hardware, Software and data provided,
assigned or transferred to EDS by Spectradyne under this Agreement:
(ii) Spectradyne agrees to indemnify, defend and hold EDS harmless
from any and all claims, actions, litigation, damages,
liabilities, costs and expenses, including without limitation
reasonable
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attorneys' fees and expenses, arising out of or related to any
Hardware, Software or data provided, assigned or transferred by
Spectradyne to EDS under this Agreement that relates to or arises
out of rights, facts, circumstances, events or obligations
existing on or before the date on which such Hardware, Software
or data was provided to EDS. This indemnification includes
without limitation any costs related to the replacement of
Hardware or Software that can no longer be used by EDS as a
result of litigation between Spectradyne and a third party as
EDS, in its sole discretion, determines.
(ii) EDS agrees to indemnify, defend and hold Spectradyne harmless
from any and all claims, actions, litigation, damages,
liabilities, costs and expenses, including without limitation
reasonable attorneys' fees and expenses, arising out of any
litigation related to any Hardware, Software or data provided,
assigned or transferred by Spectradyne to EDS under this
Agreement, which relates to or arises out of rights, facts,
circumstances, events or obligations existing after the date on
which such Hardware, Software or data was provided to EDS.
14.2 Indemnification Procedures.
(a) Notice and Control. The indemnification obligations set forth in
Section 14.1 will not apply unless the party claiming indemnification:
(i) notifies the other promptly of any matters in respect of which
the indemnity may apply and of which the notifying party has
knowledge, in order to allow the indemnitor the opportunity to
investigate and defend the matter, provided, however, that
failure to so notify will only relieve the indemnitor of its
obligations under this Article XIV if and to the extent that the
indemnitor is prejudiced thereby; and
(ii) gives the other full opportunity to control the response thereto
and the defense thereof, including without limitation, any
agreement relating to the settlement thereof, provided however,
that each indemnitee (A) may have the right to participate in any
legal proceeding to contest and defend in its own name a claim
for indemnification involving a third party and to be represented
by legal counsel of its choosing, all at indemnitee's cost and
expense, and (B) will approve in its sole discretion any
settlement of a claim that either contemplates an admission of
error on behalf of the indemnitee or obligates the indemnitee to
do or not do any act other than the payment of money to be paid
by the indemnitor.
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(b) Settlement. The indemnitor will not be responsible for any settlement
or compromise made without its prior written consent. Subject to the
last sentence of Section 14(a), the indemnitor agrees to cooperate in
good faith with the indemnitor at the request and expense of the
indemnitor.
14.3 Risk of Loss. If any CDVRO System is lost or damaged as a result of any
one of the reasons set forth in Section 3 of Schedule 6.6, then Spectradyne
will be responsible for the repair or replacement of such CDVRO System as
set forth in Section 3 of Schedule 6.6. Spectradyne will bear all risk of
any and all damages, destruction, theft or other loss to the On-Site
System, except to the extent such damages or destruction results from
negligent or wilful damage or destruction by EDS, its employees, agents or
contractors.
14.4 Liquidated Damages and Limitation of Liability. If either party is held
liable to the other for any matter arising out of, under or in connection
with this Agreement, or any provision of this Agreement, whether based on
an action or claim in contract, equity, negligence, intended conduct, tort
or otherwise, the amount of damages recoverable against each party will be
limited and liquidated as set forth below:
(a) Liquidated Damages Related to Facilities Management Services. If, as
a result of any act or omission of EDS, no end user can access or use
any of the applications that run on the Data General computer used by
Spectradyne on the Execution Date or such successor Hardware as
Spectradyne and EDS may mutually agree (the "Data General Hardware")
for seven consecutive days, then EDS will pay liquidated damages in an
amount equal to $50,000 per day beginning with the eighth day and for
each day thereafter during which no end user can access or use any of
the applications that run on the Data General Hardware. Spectradyne
and EDS further agree that, except for Spectradyne's right to
terminate this Agreement under Section 13.1(b) or Section 13.3, the
payment of such damages constitutes Spectradyne's sole and exclusive
remedy for any and all claims arising out of the failure described in
this Section 14.4(a).
(b) Liquidated Damages Related to Network Services. If EDS is required to
pay liquidated damages under Section 5 (a) of Schedule 5.7, then EDS
will pay liquidated damages in an amount equal to $16,500 divided by 8
for each hour that any channel is below the number of hours of uptime
required under Section 5 (a) of Schedule 5.7. If EDS is required to
pay liquidated damages under Section 5 (b) of Schedule 5.7, then EDS
will pay liquidated damages in an amount equal to $16,500 divided by
700,000 times the number of rooms affected by the Spectradyne
Installation Site divided by 8 for each hour that any channel is below
the number of hours of uptime required under Section 5 (b) of Schedule
5.7. Spectradyne and EDS further agree that, except for Spectradyne's
right to terminate this Agreement under Section 13.1(b) or Section
13.3,
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the payment of such damages constitutes Spectradyne's sole and
exclusive remedy for any and all claims arising out of the failure
described in this Section 14.4(b).
(c) Liquidated Damages Related to Field Services. If EDS is required to
pay liquidated damages under Section 1 of Schedule 6.8, then EDS will
pay liquidated damages in an amount equal to $1,500 per affected
hotel site for each such site below the number of sites required under
Section 1 of Section 6.8. Spectradyne and EDS further agree that,
except for Spectradyne's right to terminate this Agreement under
Section 13.1(b) or Section 13.3, the payment of such damages
constitutes Spectradyne's sole and exclusive remedy for any and all
claims arising out of the failure described in this Section 14.4(c).
(d) Liquidated Damages Related to Network Failure and EDS Failure to
Perform EDS' Obligations Under the Disaster Recovery Plan.
Spectradyne and EDS agree that if
(i) the network (meaning for the purposes of, this Section 14.4
the uplink facility, the leased satellite or the leased
transponder) is unavailable for eight or more consecutive hours
and
(ii) EDS fails to perform EDS' obligations under the disaster recovery
plan mutually approved by EDS and Spectradyne,
then EDS will pay Spectradyne an amount equal to $16,500 per hour for
each hour (and any remaining part of an hour) that the network is
unavailable commencing with the time of the failure of the uplink
(meaning for the purposes of this Section 14.4(d) the indoor equipment
and the outdoor equipment), leased transponder or leased satellite, as
the case may be, and until such failure is repaired. Spectradyne and
EDS agree that the actual damages incurred by Spectradyne would be
difficult to determine and that such amount constitutes a liquidated
damage and not a penalty.
If any such network failure continues for a period of more than 30
days, Spectradyne will notify EDS in writing of those activities which
Spectradyne desires that EDS stop performing and will designate in
such notice the date on which Spectradyne desires that EDS stop
performing such activities. Spectradyne will have no obligation to
pay EDS for any such suspended activities. If Spectradyne notifies
EDS in writing of Spectradyne's desire that EDS resume such
activities, Spectradyne's obligation to pay for such activities will
contemporaneously resume. Spectradyne and EDS further agree that,
except for Spectradyne's right to terminate this Agreement under
Section 13.1(b) or Section 13.3, the payment of such damages
constitutes
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Spectradyne's sole and exclusive remedy for any and all claims arising
out of the failure described in this Section 14.4(d).
(e) Liquidated Damage Related to Delay in Development of the Digitally
Based Video On Demand System. Spectradyne and EDS agree that if
(i) Spectradyne has provided all functional requirements,
system requirements, system specifications, hardware
specifications, software specifications and user interface
specifications for Digitally Based Video on Demand System,
(ii) Spectradyne and EDS mutually agree on such specifications
described in (i) above,
(iii) Spectradyne provides to EDS all approvals within all mutually
agreed time frames,
(iv) Spectradyne does not change the functionality or specifications
described in (i) above after such functionality or
specifications have been mutually agreed to by Spectradyne and
EDS and
(v) EDS fails to deliver an operational Digitally Based Video On
Demand System on the Delivery Date or if Spectradyne fails in
the performance of one or more of its obligations under (i)
through (iv) above and Spectradyne and EDS mutually agree on a
revised delivery date, such other date as Spectradyne and EDS
may mutually agree,
then EDS will pay to Spectradyne liquidated damages as set forth
below.
Spectradyne and EDS agree that EDS will only be liable for any failure
to deliver an operational Digitally Based Video On Demand System if
all conditions set forth in Section 14.4 (e) (i) - (v) above are met
and that such liability will be as set forth below in Section 14.4(e)
(w) - (z). The amount of such liquidated damage will equal
(w) $100,000 if EDS delivers the Digitally Based Video On Demand
System between 1 and 30 days after the Delivery Date,
(x) the amount set forth in (w) above plus $250,000 if EDS delivers
the Digitally Based Video On Demand System between 31 and 60 days
after the Delivery Date,
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(y) the amount set forth in (x) above plus $600,000 if EDS delivers
the Digitally Based Video On Demand System between 61 and 90 days
after the Delivery Date or
(z) the amount set forth in (y) above and EDS will pay all amounts
related to the completion of development of the Digitally Based
Video On Demand System, including any third party charges which
EDS in its sole discretion incurs, if EDS delivers the Digitally
Based Video On Demand System more than 90 days after the Delivery
Date.
Spectradyne and EDS agree that the actual damages incurred by
Spectradyne would be difficult to determine and that such amount
constitutes a liquidated damage and not a penalty. Spectradyne and
EDS further agree that, except for Spectradyne's right to terminate
this Agreement under Section 13.1(b) or Section 13.3, the payment of
such damages constitutes Spectradyne's sole and exclusive remedy for
any and all claims arising out of the failure described in this
Section 14.4(e).
(f) Limitation of Liability for Failure to Provide Digitally Based Video
On Demand System at or Less Than the Amount Set Forth in Section 1.4
(c). If EDS fails to deliver the hardware (including the operating
system software for such hardware) for the Digitally Based Video On
Demand System at or less than the price set forth in Section 1.4 (c),
and if Spectradyne does not elect to terminate this Agreement under
Section 13.1 (b) as a result of such failure, then EDS will in
addition to the amounts set forth in Section 14.4(e) above, pay or
assume responsibility for paying all such amounts between the price
set forth in Section 1.4(c) and the price at which the Digitally Based
Video On Demand System is provided to Spectradyne. Spectradyne and
EDS further agree that, except for Spectradyne's right to terminate
this Agreement under Section 13.1(b) or Section 13.3, the payment of
such damages constitutes Spectradyne's sole and exclusive remedy for
any and all claims arising out of the failure described in this
Section 14.4(f).
(g) Limitation of Liability for Certain Claims. Except for
(i) claims under Section 14.4 (d), Section 14.4 (e), and Section
14.4(f) and
(ii) for claims where EDS commits any act, or fails to commit an act,
and such act or failure to act is deemed to be wilful tortious
misconduct or reckless tortious misconduct, if EDS is held liable
to Spectradyne for any matter arising out of, under or in
connection with this Agreement, or any provision of this
Agreement, whether based on an action or claim in contract,
55
equity, negligence, intended conduct, tort or otherwise, the
amount of damages recoverable against EDS for all events, acts or
omissions will not exceed in the aggregate $8,000,000. Except as
set forth in Section 14.4(a), Section 14.4(b), Section 14.4(c),
Section 14.4(d), Section 14.4(e), and Section 14.4(f) above, in
no event will the measure of damages (other than liquidated
damages) payable by EDS include, nor will EDS be liable for, any
amounts for loss of income, data, prof it or savings or indirect,
incidental, consequential or punitive damages of any party,
including third parties.
(h) Limitations. The total amount of all damages for all events, acts or
omissions recoverable against either party, including without
limitation all claims against EDS under Section 14.4 (a), Section 14.4
(b), Section 14.4 (c), Section 14.4 (d), Section 14.4 (e), Section
14.4 (f), Section 14.4 (cr), and Section 14.4 (h) and wilful tortious
misconduct or reckless tortious misconduct and excluding any payment
obligation for which Spectradyne may be liable, will not exceed in the
aggregate $30,000,000. Except as set forth in Section 14.4 (a),
Section 14.4 (b), Section 14.4 (c), Section 14.4 (d), and Section
14.4(e) above, in no event will the measure of damages (other than
liquidated damages) payable by either party include, nor will either
party be liable for, any amounts for loss of income, data, profit or
savings or indirect, incidental, consequential or punitive damages of
any party, including third parties, without limiting the survivability
of any of the provisions of this Agreement, the provisions of this
Section 14.4 will survive the expiration or termination of this
Agreement for any reason.
14.5 Contractual Limitation on Actions. No claim or demand for arbitration
or cause of action which arose out of an event or events which occurred
more than three years prior to the filing of a demand for arbitration or
suit alleging a claim or cause of action may be asserted by either party
against the other party.
ARTICLE XV.
MISCELLANEOUS
15.1 Relationship of the Parties. Notwithstanding anything to the contrary in
this Agreement, EDS will act only as an independent contractor and under no
circumstances will EDS be deemed to be in any relationship with Spectradyne
carrying with it fiduciary or trust responsibilities, whether through
partnership or otherwise. EDS has the sole right and obligation to
supervise, manage, contract, direct, procure, perform or cause to be
performed the day-to-day work to be performed by EDS under this Agreement
unless otherwise provided in this Agreement or agreed by the parties in
writing.
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15.2 Excusable Delays. Each party is excused from performing its obligations
(other than obligations to make payments and the obligations under the
Disaster Recovery Plan) for the time and to the extent it is prevented from
performance by delays in performance by the other or third parties (other
than subcontractors to EDS performing Field Services for whose acts EDS
will remain liable to Spectradyne as if such acts, omissions or delays were
those of EDS itself), or by a cause beyond its reasonable control, such as
but not limited to, acts of God, war, civil disturbance, court order or a
labor dispute. While delays caused by Vendors are excused under this
Section 15.2, EDS will use commercially reasonable efforts to have
alternative sources from which to procure Hardware and Vendor Software,
except that any such source for Vendor Hardware and Vendor Software
provided to EDS by Compression Labs, Inc. will require a migration path and
additional delay, and EDS will pass on or assign to Spectradyne any right
that EDS has against such Vendor for such delay that EDS is contractually
permitted to pass on or assign.
Delays in performance caused by failures or fluctuations in electrical
power or equipment or services necessary for performance that are not under
the control of the performing party, such as but not limited to,
telecommunications equipment or services, are considered excusable delays.
Excusable delays are not defaults in performance and are not grounds for
termination for cause.
In addition, EDS will be excused from all responsibility or liability,
other than with respect to EDS' obligations under the Disaster Recovery
Plan, for any failure to comply with performance criteria if, and to the
extent that, such failure is as a result of:
(a) transmission difficulties caused by adverse weather or atmospheric
conditions, including but not limited to, sun outages, rain fade, ice
freeze and snow accumulation; provided, however, the Customer
Assistance Center will advise the customers of Spectradyne reporting
trouble, where appropriate, that may be related to such transmission
difficulties,
(b) operation or performance of Hardware or services not provided by or
through EDS (except for maintained Spectradyne Hardware) including but
not limited to,
(c) Hardware or Software that has been improperly tested by Spectradyne or
that has been subjected to unusual physical or electrical stress or
(d) any one of the reasons set forth in Section 3 of Schedule 6.6.
15.3 No Third Party Beneficiary. Nothing in this Agreement may be relied upon
or will benefit any party other than Spectradyne and EDS.
15.4 Public Disclosures. Except as provided in Section 11.8(g), all media
releases, public announcements and public disclosures by either party or
its employees,
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agents or representatives relating to this Agreement, the Financial
Agreement, the PCFM or the subject matter of any of such agreements,
excluding any announcement beyond the control of the disclosing party, will
be approved by the non-disclosing party in writing prior to release.
15.5 Notices. Notices required or permitted under this Agreement will be in
writing and deemed delivered (a) on the date of actual receipt if delivered
by mail, first class, postage prepaid, (b) when received if delivered by
hand or courier service or (c) when confirmed if transmitted by telegraph,
telex, telecopier or facsimile. The addresses of the parties, which may be
changed with written notice, are:
If to EDS, to:
Electronic Data Systems Corporation
5400 Legacy Drive
Plano, Texas 75024
Attention: President, Visual Communications Division
Telecopy: (214) 605-8341
With a copy (not constituting notice) to:
Electronic Data Systems Corporation
5400 Legacy Drive, H3-3A-05
Plano, Texas 75024
Attention: General Counsel
Telecopy: (214) 605-5617
If to Spectradyne, to:
Spectradyne, Inc.
1501 North Plano Road
Richardson, Texas 75081
Attention: Chief Executive Officer
Telecopy: (214) 301-9234
With a copy (not constituting notice) to:
Spectradyne, Inc.
1501 North Plano Road
Richardson, Texas 75081
Attention: General Counsel
Telecopy: (214) 301-9234
with a copy to (not constituting notice):
Williams & Connolly
725 12th Street, N.W.
58
Washington, D.C. 20005
Attention: Jerry L. Shulman
Telecopy: (202) 434-5029
And, with regard to events of default for which EDS issues notice of
termination under Section 13.4 to Spectradyne, to:
Wells Fargo Bank, N.A.
111 Sutter Street
17th Floor
San Francisco, CA 94104
Attention: Christine C. Rotter Vice President
15.6 Approvals and Similar Actions. Except where such action is to be taken in
the sole discrete on of a party, where approval, acceptance, consent or
similar action is required or requested of a party, such action will not be
unreasonably withheld, delayed or conditioned.
15.7 Subcontracting. EDS may subcontract Information Technology Services
subject to the following:
(a) Transponder Services. EDS will use commercially reasonable efforts to
obtain provisions in any agreement between EDS and the applicable
Vendor of transponder services that will (i) permit an unconditional
assignment of all of EDS' rights and obligations under such agreement
from EDS to Spectradyne and (ii) allow EDS to unconditionally
terminate such agreement for any reason upon EDS' receipt of a written
request from Spectradyne directing EDS to terminate such agreement
(which notice will include a statement of the mutually agreed rights
and obligations of Spectradyne and EDS related to the ongoing
relationship between Spectradyne and EDS). If EDS is unable to obtain
the right to assign mentioned immediately above in this paragraph, EDS
will continue providing transponder services to Spectradyne under the
same terms, conditions and for the same charges as are set forth in
this Agreement for the remainder of the transponder lease.
(b) Subcontracting of Field Services. EDS may subcontract any of the
Field Services provided to Spectradyne under this Agreement, but such
subcontract will not relieve EDS from any of its obligations to
Spectradyne under this Agreement. Without limiting EDS' right to
subcontract set forth above, EDS will not assign all or substantially
all of those Field Services which it has assumed from Spectradyne, nor
will EDS assign any of such Field Services for profit, in each case
without the prior written consent of Spectradyne.
In addition to its obligations under Section 11.2, EDS will notify
Spectradyne, and will provide Spectradyne a copy, of any written
notice
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of a subcontractor's intent to terminate a subcontract between EDS and
the subcontractor within five Business Days after EDS receives such
notice from the applicable subcontractor. EDS will use commercially
reasonable efforts to obtain from all subcontractors providing
services to EDS for use in its obligations to Spectradyne a right of
Spectradyne to cure any EDS default giving rise to such termination
and a right of EDS to assign all rights and obligations under such
subcontract (or if the services are rendered under a master agreement
between EDS and such subcontractor, all rights or obligations related
to such services under such master agreement related to Spectradyne)
to Spectradyne. If (i) EDS obtains such right to assign, (ii) either
(A) such subcontractor provides EDS with written notice of its intent
to terminate such subcontract and EDS does not cure the default giving
rise to such termination or (B) this Agreement is terminated other
than as a result of a Spectradyne default and (iii) Spectradyne
provides EDS with written notice of its desire to assume such
obligations, then EDS will comply with the terms and conditions of the
subcontract to effect such assignment of rights and obligations from
EDS to Spectradyne.
(c) Vendor Software. EDS will notify Spectradyne, and will provide
Spectradyne a copy, of any written notice of an intent to terminate a
license between EDS and the Vendor within five Business Days after EDS
receives such notice from the applicable Vendor. EDS will use
commercially reasonable efforts to obtain from all Software Vendors
providing Software to EDS for use in its obligations to Spectradyne a
right of Spectradyne to cure any EDS default giving rise to such
termination and a right of EDS to assign all rights and obligations
under such license (or if the license is under a master license
agreement between EDS and the applicable Vendor, all rights or
obligations under the particular license related to Spectradyne) to
Spectradyne. If (i) EDS obtains such right to assign, (ii) either (A)
such Vendor provides EDS with written notice of its intent to
terminate such license and EDS does not cure the default giving rise
to such termination or (B) this Agreement is terminated other than as
a result of a Spectradyne default and (iii) Spectradyne provides EDS
with written notice of its desire to assume such obligations, then EDS
will comply with the terms and conditions of the license to effect
such assignment of rights and obligations from EDS to Spectradyne.
15.8 Binding Nature and Assignment. This Agreement will be binding on the
parties hereto and their respective successors and assigns, but neither
party may, nor will have the power to, assign this Agreement without the
prior written consent of the other, which consent will not be unreasonably
withheld, conditioned or delayed. Notwithstanding the foregoing, EDS will
have the right to subcontract as set forth in Section 15.7.
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15.9 Counterparts. This Agreement may be executed in multiple counterparts,
each of which will be deemed an original and all of which taken together
will constitute one instrument.
15.10 Certain Construction Rules. The article, section and schedule headings and
the table of contents used in this Agreement are for convenience of
reference only and in no way define, limit, extend or describe the scope
or intent OF any provisions hereof. In addition, as used in this
Agreement, unless otherwise expressly stated to the contrary, (a) other
than references to Business Days, all references to days, months or years
are references to calendar days, months or years, (b) all references,
"Sections" and "Articles" are references to Sections of Articles of this
Agreement, (c) all references to "Schedules" are references to Schedules
attached to this Agreement and (d) all uses of "or" include "and/or". To
the extent that there is any conflict between the text of this Agreement
and any Schedule, the text will control, and to the extent that there is
any conflict between the Transition Plan and any of the text of this
Agreement or any other Schedule, such text or Schedule will control.
15.11 Waiver. No delay or omission by either party hereto to exercise any
right or power under this Agreement will impair such right or power or be
construed to be a waiver thereof. A waiver by either party of any covenant
or breach thereof will not be construed to be a waiver of any succeeding
breach thereof or of any other covenant herein contained.
15.12 Governing Law. This Agreement will be construed in accordance with, and
the rights of the parties will be governed by, the internal laws of the
State of Texas applicable to agreements entered into and intended to be
performed within the state, without regard to any otherwise applicable
principles of conflicts of laws.
15.13 Survival of Certain Provisions. The following provisions will survive
any expiration or termination of this Agreement for any reason: Section
1.3, Article VIII, Article IX, Section 11.1, Section 11.2, Section 11.5,
Section 11. 8, Article XII, Section 13.1, Section 13.3, Section 13.4,
Section 13.5, Article XIV and Article XV.
15.14 Entire Agreement. This Agreement, including any Schedules referred to
herein and attached hereto, and all Authorized Field Service Orders,
supersedes all other agreements including without limitation that certain
Phase 0 Services Agreement dated September 9, 1992, that certain
Confidentiality and Non-Disclosure Agreement dated June 12, 1992, and the
Letter of Intent to Al Jerome from J. Keane Taylor dated May 19, 1993 and
constitutes the entire agreement between the parties with respect to the
subject matter of this Agreement. There are no representations,
understandings or agreements relating to this Agreement which are not
fully expressed herein. No other representations, understandings or
arrangements have been made with respect to this Agreement or the
Information Technology
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Services and no future representations, understandings or arrangements will
bind either party until such time as they are reduced to writing and signed
as an amendment to this Agreement. All changes to this Agreement must be
in writing and signed by the party against whom such change would be
enforced. The parties agree that any other terms or conditions included in
any Purchase Orders, quotes, acknowledgements, bills of lading or other
forms utilized or exchanged by the parties will not be incorporated herein
or be binding unless expressly agreed upon in writing by authorized
representatives of the parties.
IN WITNESS WHEREOF, Spectradyne and EDS have caused their duly authorized
officers to execute and deliver this Agreement as of the day and date first set
forth above.
ELECTRONIC DATA SYSTEMS SPECTRADYNE, INC.
CORPORATION
By:__________________________ By:_________________________
Name: J. Keane Taylor Name: Al Jerome
Title: President, Visual Title: President and
Communications Division Chief Executive Officer
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