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EXHIBIT 10.2
TERMINAL DEVELOPMENT, PRODUCTION AND PURCHASE AGREEMENT
BY AND BETWEEN
ASTROLINK INTERNATIONAL LLC
AND
VIASAT, INC.
EFFECTIVE AS OF OCTOBER 20, 2000
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TABLE OF CONTENTS
1. BACKGROUND AND OBJECTIVES.............................................................. 1
1.1 Background.......................................................................... 1
1.2 Objectives.......................................................................... 1
1.3 Construction and Interpretation..................................................... 2
2. DEFINITIONS............................................................................ 3
2.1 Certain Definitions................................................................. 3
2.2 Other Terms......................................................................... 8
3. SCOPE AND STRUCTURE.................................................................... 10
3.1 General Scope....................................................................... 10
3.2 Unique Requirements................................................................. 10
3.3 Coordination with AIL Project Teams................................................. 10
3.4 Co-Exclusivity...................................................................... 10
3.5 Replacement of Co-Exclusive Vendor.................................................. 11
3.6 Non-Exclusivity..................................................................... 11
3.7 Strategic Relationship.............................................................. 12
4. TERM................................................................................... 13
5. TERMINAL DEVELOPMENT................................................................... 13
5.1 AIL Responsibilities................................................................ 13
5.2 Contractor Responsibilities......................................................... 13
5.3 Milestone and Payment Schedule...................................................... 13
5.4 Failure to Achieve Milestones....................................................... 13
5.5 * * *............................................................................... 14
5.6 Permits............................................................................. 14
5.7 Cost-Reduction Developments......................................................... 14
5.8 Sale of Reduced-Cost Modules........................................................ 14
6. ACCEPTANCE AND PRODUCTION.............................................................. 15
6.1 Contractor Responsibilities......................................................... 15
6.2 Acceptance Testing.................................................................. 15
6.3 Acceptance Testing Failures, Cure Periods and Remedies.............................. 16
6.4 Quality Assurance................................................................... 16
6.5 Certification....................................................................... 17
6.6 Type Approval....................................................................... 17
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6.7 Production Commitments; Manufacturing Capacity...................................... 18
6.8 * * *............................................................................... 18
6.9 Optimal In-Country Manufacture and Assembly......................................... 19
6.10 Spare Parts....................................................................... 19
7. MARKETING AND BRANDING................................................................. 19
7.1 Marketing Programs.................................................................. 19
7.2 AIL Marks........................................................................... 19
7.3 Contractor Marks.................................................................... 20
8. ORDERING............................................................................... 20
8.1 Orders Generally.................................................................... 20
8.2 Orders from Service Providers....................................................... 20
8.3 Seed Order.......................................................................... 21
8.4 Minimum Quantity Purchase Commitment (MQPC)......................................... 21
8.5 MQPC Shortfall Liability............................................................ 21
8.6 Forecasts and Reporting............................................................. 21
8.7 Delivery Dates...................................................................... 22
8.8 Cancellation and Rescheduling of AIL Orders......................................... 22
8.9 Termination of Orders............................................................... 23
8.10 Terminal Financing Program........................................................ 23
9. DISTRIBUTION, SHIPPING AND INSTALLATION................................................ 24
9.1 Distribution........................................................................ 24
9.2 Packing............................................................................. 24
9.3 Shipping............................................................................ 24
9.4 Risk of Loss........................................................................ 24
9.5 Title............................................................................... 25
10. LICENSES, PROPRIETARY RIGHTS AND ESCROW................................................ 25
10.1 Grants of Licenses to Contractor.................................................. 25
10.2 Grants of Licenses to AIL......................................................... 25
10.3 Software Licenses and Rights...................................................... 26
10.4 Proprietary Rights................................................................ 27
10.5 Documentation..................................................................... 28
10.6 Technical Materials Escrow........................................................ 29
11. TRAINING; MAINTENANCE.................................................................. 30
11.1 Training.......................................................................... 30
11.2 Maintenance....................................................................... 31
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12. CHANGE PROCEDURES AND CONTRACT MANAGEMENT.............................................. 31
12.1 Development Phase Change Procedures............................................... 31
12.2 Production Phase Change Procedures................................................ 31
12.3 Contractor-Proposed Changes....................................................... 32
12.4 Contract Management............................................................... 33
12.5 Contractor Personnel.............................................................. 34
12.6 Replacement, Qualifications, and Retention of Contractor Personnel................ 34
12.7 AIL Third Party Services and Products............................................. 35
12.8 Prime Contractor.................................................................. 35
12.9 Contractor's Use of Subcontractors................................................ 35
12.10 On-Site Representatives........................................................... 36
13. SERVICE STANDARDS...................................................................... 36
13.1 General........................................................................... 36
13.2 Contractor's Failure to Perform................................................... 37
13.3 Periodic Reviews.................................................................. 37
13.4 Measurement and Monitoring Tools.................................................. 37
13.5 AIL's Failure to Perform.......................................................... 37
13.6 AIL's Suspension of Work.......................................................... 37
13.7 General Performance Award......................................................... 38
14. TERMINAL PRICES........................................................................ 38
14.1 General........................................................................... 38
14.2 Determination of Wholesale Prices; Adjustments.................................... 39
14.3 Most Favored Customer and Benchmarking............................................ 39
14.4 Taxes............................................................................. 40
15. AIL PAYMENTS TO CONTRACTOR AND INVOICING............................................... 41
15.1 Initial Payment................................................................... 41
15.2 Payments.......................................................................... 41
15.3 Invoicing......................................................................... 42
15.4 Payment Due....................................................................... 43
15.5 Accountability.................................................................... 43
15.6 Proration......................................................................... 43
15.7 Set Off........................................................................... 43
15.8 Disputed Charges.................................................................. 43
15.9 Encumbrances...................................................................... 44
16. INFORMATION; CONFIDENTIALITY........................................................... 44
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16.1 Contractor Information............................................................ 44
16.2 AIL Information................................................................... 44
16.3 Confidentiality................................................................... 45
17. EXAMINATION AND AUDIT OF INFORMATION; RECORDKEEPING.................................... 47
17.1 Examination and Audit Rights...................................................... 47
17.2 Recordkeeping Obligations......................................................... 47
18. REPRESENTATIONS AND WARRANTIES......................................................... 47
18.1 Pass-Through Warranties........................................................... 47
18.2 Work Standards.................................................................... 47
18.3 Terminal and Services Warranties.................................................. 48
18.4 Documentation..................................................................... 51
18.5 Efficiency and Cost Effectiveness................................................. 51
18.6 Inducements....................................................................... 52
18.7 Ownership or Use.................................................................. 52
18.8 Authorization..................................................................... 52
18.9 Viruses........................................................................... 52
18.10 Disabling Code.................................................................... 52
18.11 Year 2000......................................................................... 53
18.12 Disclaimer........................................................................ 53
19. INSURANCE.............................................................................. 53
20. INDEMNITIES............................................................................ 53
20.1 Indemnity by Contractor........................................................... 53
20.2 Indemnity by AIL.................................................................. 54
20.3 Infringement...................................................................... 55
20.4 Indemnification Procedures........................................................ 55
20.5 Subrogation....................................................................... 56
21. LIABILITY.............................................................................. 56
21.1 General Intent.................................................................... 56
21.2 Liability Restrictions............................................................ 56
21.3 Force Majeure..................................................................... 57
21.4 Excusable Delay................................................................... 58
22. DISPUTE RESOLUTION..................................................................... 58
22.1 Informal Dispute Resolution....................................................... 58
22.2 Arbitration....................................................................... 59
22.3 Injunctive Relief................................................................. 59
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22.4 Continued Performance............................................................. 59
22.5 Venue and Jurisdiction............................................................ 60
23. TERMINATION............................................................................ 60
23.1 Termination for Cause............................................................. 60
23.2 Termination for Convenience....................................................... 61
23.3 Effect of Termination for Cause................................................... 62
23.4 Termination/Expiration Assistance................................................. 62
23.5 Appropriate Remedies.............................................................. 63
24. GENERAL................................................................................ 64
24.1 Binding Nature and Assignment..................................................... 64
24.2 Conditional Assignment of Subcontracts............................................ 64
24.3 Entire Agreement.................................................................. 64
24.4 Compliance with Laws and Standards................................................ 64
24.5 Notices........................................................................... 65
24.6 Counterparts...................................................................... 65
24.7 Relationship of Parties........................................................... 65
24.8 Severability...................................................................... 66
24.9 Consents and Approval............................................................. 66
24.10 Waiver of Default; Cumulative Remedies............................................ 66
24.11 Survival.......................................................................... 66
24.12 Public Disclosures................................................................ 66
24.13 Third Party Beneficiaries......................................................... 67
24.14 Amendment......................................................................... 67
24.15 Incorporation by Reference and Order of Precedence................................ 67
24.16 Covenant Against Pledging......................................................... 67
24.17 Security Interest................................................................. 68
24.18 Governing Law..................................................................... 68
24.19 Covenant of Good Faith............................................................ 68
24.20 Lender Assurances................................................................. 68
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*** Certain confidential information has been omitted and filed with the
Securities and Exchange Commission pursuant to a Request for Confidential
Treatment.
LIST OF SCHEDULES
1. Target Countries
2. Milestone and Payment Schedule
3. Statement of Work
4. Wholesale Prices for Terminals
5. Development Termination Liability
6. Installed Terminal Quantity
7. Marketing Obligations
8. Form of Service Provider Agreement
9. Countries that contain Contractor and Subcontractor Facilities
10. Escrow Agreement
11. Key Contractor Personnel
12. List of Approved Subcontractors
13. Service Standards
14. Contractor Rates
15. Extended Warranty Option
16. Warranty Procedures
17. Post-Warranty Support and Repair Obligations
18. Seed Order Delivery Requirements
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TERMINAL DEVELOPMENT, PRODUCTION AND PURCHASE AGREEMENT
BY AND BETWEEN
ASTROLINK INTERNATIONAL LLC
AND
VIASAT, INC.
This Terminal Development Production and Purchase Agreement (including
those Schedules and Attachments attached hereto, the "Agreement"), effective as
of the Effective Date, is entered into by and between Astrolink International
LLC, a Delaware corporation with offices located at 6701 Democracy Boulevard,
Suite 1000, Bethesda, MD 20817 ("AIL"), and ViaSat, Inc., a Delaware corporation
with offices located at 6155 El Camino Real, Carlsbad, California 92009
("Contractor"). As used in this Agreement, "Party" means either AIL or
Contractor, as appropriate, and "Parties" means AIL and Contractor. The Parties
agree that the following terms and conditions shall apply to the products and
services to be provided by Contractor under this Agreement in consideration of
certain payments to be made by AIL.
The Parties, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, agree as follows:
1. BACKGROUND AND OBJECTIVES
1.1 BACKGROUND.
This Agreement is being made and entered into with reference to the
following:
(a) AIL has determined to implement a Ka-band, switched-processor
payload, digital, multichannel, satellite switched networking
system that includes various classes of ground Terminals (as
defined below) satisfying the Acceptance Criteria (as defined
below), and other terms and conditions of this Agreement to
provide satellite telecommunications network services in various
markets.
(b) Contractor is an established and well-known global electrical
engineering, manufacturing and systems integration company
(together with its Subcontractors), has particular expertise in
telecommunications and terminal technology and desires to
develop, produce and provide AIL with the Terminals for the AIL
System (as defined below) and related services as specified in
this Agreement.
1.2 OBJECTIVES.
AIL and Contractor have agreed upon certain goals and objectives for
this Agreement, including the following:
(a) Designing, developing, manufacturing and distributing the * * *
Terminals in accordance with the terms hereof;
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(b) Bringing the Terminals, which incorporate and meet the
requirements of the SOW and the Acceptance Criteria, quickly and
reliably to market;
(c) Establishing AIL and its Service Providers (as defined below) as
recognized providers of services utilizing the AIL System and
the Terminals;
(d) Ensuring that Contractor and Contractor's Subcontractors have in
place all the research, development, manufacturing,
technological and management skills necessary to design,
develop, fabricate, assemble, install, integrate, support and
maintain the Terminals;
(e) Creating a contractual relationship that is flexible and highly
responsive to the needs of the Parties and provides a
competitive solution in light of changes in the business
environment, and advances in technology and methods of using
technology;
(f) Aligning the capabilities and performance of the Terminals with
the AIL System specifications, AIL's business requirements and
Contractor's (including its Subcontractors') capabilities; and
(g) Establishing Contractor as a supplier of Terminals for use with
the AIL System.
1.3 CONSTRUCTION AND INTERPRETATION.
(a) The provisions of Sections 1.1 and 1.2 are intended to be a
general introduction to this Agreement and are not intended to
expand the scope of the Parties' obligations under this
Agreement or to alter the plain meaning of the terms and
conditions of this Agreement and shall be used only as guidance
to the Parties.
(b) Terms other than those defined in this Agreement shall be given
their plain English meaning, and those terms, acronyms and
phrases known in the satellite telecommunications technology
products and services industries shall be interpreted in
accordance with their generally known meanings.
(c) Unless the context otherwise requires, words importing the
singular include the plural and vice-versa.
(d) References to an "Article," "Section" and "Subsection" shall be
references to an article, Section, or subsection of this
Agreement, unless otherwise specifically stated.
(e) References to this Agreement and the words "herein," "hereof,"
"hereto," and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular
Article, Section or Subsection.
(f) The Article, Section and Subsection headings in this Agreement
are intended to be for reference purposes only and shall in no
way be construed to modify or restrict any of the terms or
provisions of this Agreement.
(g) The word "including" and words of similar import (such as
"include" and "includes") mean "including, but not limited to."
(h) A reference to "days" means calendar days, unless otherwise
specifically stated in a reference.
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2. DEFINITIONS
2.1 CERTAIN DEFINITIONS.
As used in this Agreement, the following defined terms shall have the
meanings set forth below. Other capitalized terms used in this Agreement
are defined in the context in which they are used and shall have the
meanings there indicated.
(a) "Acceptance" or "Accepted" means, with respect to any Milestone
or Terminal, written notification (except where AIL approval is
not required by Section 6.2) from the AIL Contract Manager to
the Contractor Contract Manager stating that such Milestone or
Terminal has satisfied the applicable requirements set forth in
Section 6.2.
(b) "Acceptance Criteria" means the criteria used to confirm that
the Terminals, Documentation and Services meet the requirements
of the Acceptance Test Plan or the SOW as appropriate.
(c) "Acceptance Testing" means the acceptance tests to be conducted
in accordance with the procedures and timeframes set forth in
the mutually agreed upon Acceptance Test Plan.
(d) "Affiliate" means, with respect to any entity, any other entity
Controlling, Controlled by or under common Control with such
entity. "Affiliate" does not include any Competitor.
(e) "AIL Background Information" means all Confidential Information
and Joint Confidential Information of AIL or its licensors, in
any form, furnished or made available directly or indirectly to
Contractor by AIL or otherwise obtained by Contractor from AIL,
including, without limitation, the SOW and AIL's market
analysis, certification procedures, business model and
AIL-proprietary algorithms and all Intellectual Property Rights
related to any of the foregoing, developed prior to the
Effective Date.
(f) "AIL Foreground Information" means all Confidential Information
of AIL or its licensors, and any Joint Confidential Information,
in any form, furnished or made available directly or indirectly
to Contractor by AIL or otherwise obtained by Contractor from
AIL and Confidential Information jointly owned by AIL and
Contractor and all Intellectual Property Rights related to any
of the foregoing, developed or acquired by AIL on or after the
Effective Date.
(g) "AIL System" means the Ka-band satellites to be constructed,
launched and successfully deployed in orbit together with the
ground segment required to deliver broadband services, and as
further described in the Statement of Work.
(h) * * *.
(i) * * *.
(j) * * *.
(k) "Comparable Terminal" means any ground-based terminal, both
outdoor units and indoor units, developed and/or manufactured by
Contractor or another AIL-authorized manufacturer for use with
the AIL System that are substantially similar to or derivatives
of the Terminals, and the associated equipment, software and
documentation therefor.
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(l) "Competitor" means a provider of a substantially comparable
geosynchronous Ka-band, switched processor satellite system that
provides services substantially comparable to those offered over
the AIL System.
(m) "Contract Year" means any calendar year during the Term hereof.
(n) "Contractor Background Information" means all Confidential
Information and Joint Confidential Information of Contractor or
its licensors (excluding AIL's Confidential Information), in any
form, furnished or made available directly or indirectly to AIL
by Contractor or incorporated in or otherwise necessary to use
or maintain the Terminals and Comparable Terminals, including
the related Intellectual Property Rights.
(o) "Contractor Foreground Information" means the Confidential
Information (and the Intellectual Property Rights appurtenant
thereto) developed by Contractor hereunder and any Joint
Confidential Information acquired by Contractor after the
Effective Date, which shall not include any AIL Confidential
Information or any Contractor Background Information.
(p) "Contractor Personnel" means employees of Contractor, including
(1) any temporary-duty personnel and Key Contractor Personnel,
and (2) Contractor's Subcontractors performing under this
Agreement.
(q) "Control" and its derivatives means (i) with regard to any
entity the legal or beneficial ownership, directly or
indirectly, of such entity ordinarily having voting rights or
(ii) with regard to any entity, the management control over such
entity.
(r) "Dead on Arrival" means where any Terminal or component thereof
is inoperative or fails to operate in accordance with the SOW at
the time it is initially installed or fails to so operate during
the * * * day period immediately following such initial
installation.
(s) "Defect" means any failure of a Terminal, including any
components thereof, to operate in conformance with the SOW and
applicable Standards.
(t) "Documentation" shall include User Documentation,
specifications, manuals, programmatic and test plans and
procedures, reports, minutes and other media and documents
pertaining to the performance, installation, training, use,
operation and maintenance of each class of Terminal, all of the
above as set forth in the Statement of Work.
(u) "Effective Date" means the date that this Agreement, as executed
by the Parties, is approved the Board of Directors of AIL. AIL
shall use all reasonable efforts to obtain such approval as soon
as practicable after execution of this Agreement by the Parties,
and AIL shall provide prompt written notice to Contractor of
such approval.
(v) "Equipment" means the ground-based hardware, cabling, spare or
replacement parts for Terminals and other non-Software
components associated with the Terminals that may be purchased
by AIL from Contractor under this Agreement.
(w) "Firmware" means the computer programs that are stored in
machine executable form within non-volatile memory and operate
embedded processes within the equipment.
(x) "IDU" means the indoor component of Terminal, as described in
the SOW.
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(y) "Intellectual Property Rights" means any and all rights in and
with respect to patents, copyrights, Confidential Information,
know-how, trade secrets, moral rights, contract or licensing
rights, confidential and proprietary information protected under
contract or otherwise under law, and other similar rights or
interests in intellectual or industrial property and all
registrations and applications for registration therefor.
(z) "Joint Confidential Information" means information that has been
independently developed, licensed or otherwise acquired by each
Party without breach of this Agreement, and excluding
Confidential Information of a Party that is provided to the
other Party or its agents or Subcontractors hereunder, that
would qualify as Confidential Information of each Party, but for
the exclusions to Confidential Information set forth in
Subsections 16.3(c)(3), (4) or (5) below.
(aa) "Lien" means any lien (including subcontractor and other
mechanic liens), imperfection in title, security interest,
claim, charge, restriction or other encumbrance.
(bb) * * *.
(cc) "Losses" means all costs, expenses, liabilities and damages
reasonably incurred and payable under any settlement, litigation
or final judgment, and all related reasonable costs and
expenses, including legal fees and disbursements and costs of
investigation, expert fees, fines, interest and penalties.
(dd) "Mark" means any trademark, service mark, trade name, domain
name, logo or other indicia of source or origin of a product or
service.
(ee) "Material Subcontract" and "Material Subcontractor" have the
respective meanings given in Section 12.9(b).
(ff) "Milestone Payment" means a payment made by AIL to Contractor in
accordance with Section 15.2 below upon Acceptance by AIL of the
corresponding Milestone.
(gg) "Milestone and Payment Schedule" has the meaning given in
Section 5.3 and is attached hereto as Schedule 2.
(hh) "ODU" means the outdoor component of Terminal, as described in
the SOW.
(ii) "Order" means a purchase order issued to Contractor for the
purchase of Terminals.
(jj) "Prime Rate" means the rate identified as the prime rate offered
by The Chase Manhattan Bank (or its successor), as published in
the Wall Street Journal from time to time.
(kk) "Principal Subcontractor" means each of * * * and * * *.
(ll) "Seed Order" means the first group of production Terminals
ordered by AIL from Contractor hereunder, as described in
Section 8.3 below.
(mm) "Service Provider" means persons or entities that pursuant to
written agreement with AIL resell the Terminals and Comparable
Terminals, and/or services provided by the AIL System, Terminals
and other related software and equipment to Users thereof.
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(nn) "Services" means (i) the services provided by Contractor
pursuant to this Agreement, and (ii) services described in any
Order, and (iii) any services not specifically described in (i)
or (ii) that are required or appropriate for the proper
performance and provision of those services described in (i) or
(ii).
(oo) "Software" means the machine readable computer code used to
instruct a processor to perform a task or series of tasks in
object code form, including Firmware, files, databases,
interfaces, documentation and other materials related thereto)
necessary to make the Terminals achieve applicable requirements
of the SOW, which computer code shall be supplied and licensed
by Contractor to AIL for use pursuant to this Agreement
(including any third party Software sublicensed by Contractor
hereunder), as such Software is revised, updated, corrected and
enhanced from time-to-time and provided to AIL pursuant to this
Agreement.
(pp) "Source Code" means the human readable code written in a high
level language, including source code listings as then
commented, system and program flowcharts, and such other
components, programs and documents to fully utilize, modify and
maintain the Software consistent with standards set forth
herein, including all necessary support routines, all of which,
where applicable, shall be on media able to be read and
processed.
(qq) "Specifications" means those functional, performance and other
requirements and documents set forth or referenced (as
applicable) in the Statement of Work, as may be amended from
time to time.
(rr) "Standards" shall include:
(i) all applicable federal, state, local and foreign laws,
regulations, ordinances and codes, including export and
foreign controls, the Foreign Corrupt Practices Act, the
U.S. Export Administration Act, EPA, OSHA, ETSI, ITU,
and foreign import and export laws and regulations, as
well as any applicable requirements of the FCC,
including the FCC Blanket Licensing Rules (as to * * *
Terminals only), and all applicable telecommunications
and safety regulations (including RF human exposure
emission requirements, harmful interference standards,
labeling and suppression of radio frequencies and
radiation to specified levels, and ITU Recommendations
and Radio Regulations of governing bodies of the
countries set forth in Schedule 1), all of which as may
be amended from time to time. Outside the U.S., this
further includes compliance with applicable ETSI
standards and any other applicable domestic or regional
regulations.
(ii) all applicable industry standards, domestic and foreign,
including (A) Underwriters Laboratory, CE, EIA/TIA,
ANSI, National Electrical Code and NEBS (1, 2 and 3),
all as may be amended from time to time; and (B) other
standards as may be set forth in the Statement of Work.
(iii) In addition, the * * * Terminals shall comply with the
ERC Decisions for blanket licensing.
(ss) "Statement of Work" or "SOW" means the documents attached hereto
as Schedule 3, which shall include by this reference all
documents, specifications and tables, including without
limitation the Specifications, contained therein and referenced
thereby, as may be amended from time to time by mutual agreement
of the Parties.
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(tt) "Subcontractor" means the Principal Subcontractors and those
other contractors consultants, suppliers and providers used by
Contractor under this Agreement.
(uu) "Technical Materials" means the technical, engineering and
design information and specifications of any kind relating to
the Terminals, whether written or non-written, including Source
Code, Software, Software specifications, functional
specifications, interface specifications, hardware and circuit
diagrams, mask works, schematic diagrams, vellums, third party
supplier information (including name, address, and parts
numbers), and associated documentation.
(vv) "Terminal" means any ground-based terminal, both the ODU and the
IDU, designed, developed and/or manufactured in accordance with
the SOW and applicable Standards, for use with the AIL System
and the associated Equipment, Software and Documentation, and
all as updated, revised or improved from time-to-time and
provided by Contractor to AIL, its Service Providers and/or
Users.
(ww) * * * is any country identified as such in Schedule 1.
(xx) * * * is any country identified as such in Schedule 1.
(yy) * * * is any country not identified in Schedule 1 as a * * *.
(zz) "Type Approval" is the process within a country through which it
is determined that radio and technical equipment (including the
Terminals) complies with certain essential technical
requirements and relevant administrative provisions as defined
by cognizant governmental and regulatory agencies and can
therefore be sold on the market of that country. Type Approval
does not include satellite-specific regulatory requirements such
as landing rights or authorization to transmit.
(aaa) "United States" or "U.S." means the United States of America.
(bbb) "User" means a person or entity that purchases or utilizes a
Terminal or Comparable Terminal for its own purposes and not for
resale or distribution.
(ccc) "User Documentation" means the Documentation provided with each
Terminal and Comparable Terminal, such as manuals, guides and
instructions relating to the use, operation and installation of
the applicable Terminal or Comparable Terminal.
(ddd) "Virus" means: (i) program code, programming instruction or set
of instructions intentionally constructed with the ability to
damage, interfere with or otherwise adversely affect computer
programs, data files or operations; or (ii) other code typically
designated to be a virus (including worms, Trojan horses and
similar items).
(eee) "Warranty" means any of the representations, covenants and
warranties set forth in this Agreement.
(fff) "Wholesale Price" means the maximum price of a Terminal to AIL
and its Service Providers during the applicable Contract Year,
FOB Contractor's designated site, as set forth in Schedule 4
attached hereto.
(ggg) "Year 2000 Compliant" means the ability of Terminals, when used
in accordance with its associated documentation, to be capable
of correctly and unambiguously processing,
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recognizing, providing, recording and receiving date data within
and between the twentieth and twenty-first centuries, including
proper identification of the century and leap years, without
resulting in or causing logical or mathematical inconsistencies,
processing errors, loss of functionality or performance or other
failures.
2.2 OTHER TERMS.
Other terms used in this Agreement are defined in the context in which
they are used and have the meanings there indicated. A cross-reference
for such terms is set forth below:
DEFINED TERM LOCATION
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Acceptance Test Plan Section 6.2(a)
AIL Contract Manager Section 12.4(a)
Annual Forecast Number Section 14.2(a)
Annual Minimum Capacity Section 6.7(b)
Confidential Information Section 16.3(a)
Contractor Contract Manager Section 12.4(a)
Cost-Reduction Development Section 5.7
Development License Section 10.1(a)
* * * Section 5.5
Development Phase Liability Date Section 23.2(b)
Disabling Code Section 18.10
Early Default Section 5.5
Escrow Agreement Section.6(a)
Escrowed Material Section 10.6(a)
Evaluating Vendor Section 12.3(a)
Excusable Delay Section 21.4
Extended Warranty Period Section 18.3
Final Statement Section 23.2(c)
Force Majeure Event Section 21.3(a)
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General Performance Award Section 13.7
Initial Payment Section 15.1
Initial Term Section 4
Key Contractor Personnel Section 12.5(a)
Material Subcontract Section 12.9(b)
Material Subcontractor Section 12.9(b)
Milestone Section 5.3
Milestone Date Section 5.3
Minimum Quantity Purchase Commitment (MQPC) Section 8.4
Notice of Election Section 20.4
NRE Payments Section 15.2
On-Site Representative Section 12.10
Pattern Defect Section 18.3(c)(x)
Production Acceptance Test Plan Section 6.2
* * * Section 6.8
Proposing Vendor Section 12.3(a)
Quality Assurance Program Section 6.4
Reduced-Cost Module Section 5.7
Release Conditions Section 10.6(a)
Service Provider Terms Section 8.2
Service Standard Section 13.1
Term Section 4
Terminal IP Section 23.3(a)
Termination Date Section 23.2(a)
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Termination/Expiration Assistance Section 23.4
Warranty Period Section 18.3
3. SCOPE AND STRUCTURE
3.1 GENERAL SCOPE.
This Agreement (including the SOW and other schedules hereto) provides
the terms and conditions under which Contractor will design, develop,
document, test, manufacture, deliver and support the Terminals and
market, sell, distribute, and deliver such Terminals to AIL and Service
Providers, and under which AIL and Service Providers may receive
Terminals and Services from Contractor for use with the AIL System
including Services associated with the Warranty Period and Extended
Warranty Period, from Contractor. For Services outside of the U.S.,
Contractor shall provide Services on a country-by-country basis as
requested by AIL. AIL shall from time to time provide Contractor with
its projected schedule of introduction of the AIL Service into the
countries set forth in Schedule 1.
3.2 UNIQUE REQUIREMENTS.
The Parties acknowledge and agree that AIL has unique requirements and
Contractor has solutions regarding the Terminals and Services to be
provided by Contractor hereunder. In this regard, to the extent not
already provided for in this Agreement, the Parties agree to negotiate
in good faith in accordance with the procedures provided in Sections
12.1 and 12.2 hereof to provide the maximum flexibility in meeting AIL's
particular Terminal and Service requirements, as proposed by AIL during
the Term.
3.3 COORDINATION WITH AIL PROJECT TEAMS.
Contractor agrees, as a part of the work under this Agreement, to
coordinate with all other members of AIL's Integrated Product Team or
Teams (e.g., Space Segment, Ground Segment, and Systems Engineering and
Integration), as the case may be, as described in Section 3.4.4 of the
SOW to support the development and fielding of a fully functional AIL
System. Contractor acknowledges that it bears the responsibility to
design and construct completely integrated and functioning Terminals
based on information as set forth in the SOW provided by AIL to
Contractor under this Agreement. If Contractor becomes aware of any
material information during the Term which differs from such information
provided to Contractor under this Agreement, Contractor shall promptly
notify AIL in writing.
3.4 CO-EXCLUSIVITY.
(a) For each of the * * * Terminal, AIL shall be entitled to provide
no more than one additional vendor with a right and license to
manufacture or have manufactured, such Terminal for use in
connection with the AIL System. AIL may exercise the right to
authorize such additional co-exclusive vendor at any time. Such
restriction on AIL's right to procure and/or license such
manufacturing rights from additional vendors with respect to the
Terminals shall expire upon the later to occur of (1) the
purchase from Contractor and the other co-exclusive vendor by
and delivery to AIL, its Service
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Providers and/or Users of 200,000 Terminals (including the Seed
Order of * * * Terminals and * * * Terminals or Comparable
Terminals) or (2) the * * * anniversary of the commencement of
commercial service of the second AIL satellite.
(b) In the event AIL terminates its contractual relationship with
such other co-exclusive vendor for a particular class of
Terminals or for all classes of Terminals during the
Co-Exclusivity Period, AIL shall be permitted to license not
more than one additional vendor to manufacture such class of
Terminal or all classes of Terminals, as the case may be, during
the remainder of the Co-Exclusivity Period.
(c) In the event such replacement vendor receives design and/or
manufacturing data prepared by the terminated vendor, (i) such
replacement vendor will be required to pay AIL a commercially
reasonable amount for the AIL Foreground Information and
Confidential Information, foreground information and background
information from the terminated vendor required to manufacture
the Terminals, and/or (ii) AIL shall provide a commercially
appropriate increase in the amount payable to Contractor so as
to avoid putting Contractor at a material competitive
disadvantage with respect to the replacement vendor.
(d) The rights and obligations described in this Section 3.4 shall
be known as the "Co-Exclusivity Right" and the term of
Contractor's Co-Exclusivity Right shall be known as the
"Co-Exclusivity Period". AIL may terminate Contractor's
Co-Exclusivity Right upon the occurrence of certain events as
provided herein. If AIL elects to terminate Contractor's
Co-Exclusivity Right in accordance herewith, AIL may terminate
the Co-Exclusivity Right as to any class or all classes of
Terminals, in its sole discretion.
3.5 REPLACEMENT OF CO-EXCLUSIVE VENDOR.
If, prior to the expiration or termination of the Co-Exclusivity Period,
AIL is released from its exclusivity obligation with the other
co-exclusive vendor of a class of Terminal, Contractor shall have right
of first offer to provide the estimated lost volume to meet the
production needs of AIL, Service Providers and Users in accordance with
the terms of this Agreement. AIL's obligation to award Contractor such
estimated lost volume shall be contingent on Contractor demonstrating to
AIL's reasonable satisfaction that Contractor has production capacity
and capability sufficient for the timely production of such estimated
lost volume and Contractor's satisfactory performance of its obligations
hereunder. If Contractor does not exercise such right of first offer or
demonstrate such production capacity and capability to AIL's reasonable
satisfaction or has not satisfactorily performed its obligations
hereunder, AIL may add a third * * * Terminal manufacturing licensee, as
the case may be, to replace the terminated co-exclusive vendor.
3.6 NON-EXCLUSIVITY.
(a) It is expressly understood and agreed that other than the
purchase commitments made by AIL in Sections 8.3 and 8.4
hereunder, this Agreement does not require AIL to purchase or
order any Terminal, including any components thereof, or
Services from Contractor and, except as provided in Section 3.4
and Section 3.5 above, does not grant to Contractor an exclusive
privilege to sell or otherwise provide to AIL, its Service
Providers or Users any or all of the Terminals, including any
components thereof or Services of the type described in this
Agreement.
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(b) Notwithstanding the foregoing, AIL agrees not to enter into an
agreement without Contractor's written consent with any vendor
of CSP gateways that would preclude Contractor from developing
and/or selling CSP gateways for use with the AIL System;
provided, however, that Contractor responds to AIL's request for
proposal or information for such CSP gateways and Contractor's
response is determined by AIL to be satisfactory and
competitive.
(c) Contractor agrees that purchases by AIL under this Agreement
shall not require AIL to continue any level of such purchases,
except as expressly provided herein. AIL assumes no liability
for Terminals or Services produced, processed, rendered or
shipped in excess of the amounts specified in an Order submitted
pursuant to this Agreement. Estimates or forecasts furnished by
AIL or its Service Providers to Contractor shall not constitute
commitments.
3.7 STRATEGIC RELATIONSHIP.
The Parties have agreed to the following:
(a) Additional Products and Services. If AIL wishes to procure
products or services from Contractor during the Term in addition
to the Terminals and Services hereunder, Contractor shall in
good faith consider the development and manufacture of new
products and services, including without limitation, terminals
for residential use, and give due consideration in the pricing
thereof to existing and future volumes of business between AIL
and Contractor.
(b) Roof Rights. If requested by AIL, Contractor shall grant to AIL,
where possible, roof and interior space and conduit rights for
deployment of Terminals pursuant to industry standard roof right
lease terms. In addition, Contractor shall assist AIL in
obtaining such rights. Nothing in this Subsection shall obligate
Contractor to violate any of its existing real property or roof
right lease agreements.
(c) Executive Involvement. For the first six (6) months after the
Effective Date, principal senior executives of each Party and of
each Principal Subcontractor (and thereafter senior management
(levels and titles to be agreed)) shall meet monthly to discuss
issues affecting work hereunder, including key issues affecting
work under this Agreement, such as design, development, testing
and production of Terminals, development and implementation of
new technologies and products, proposed regulatory and/or
industry changes, marketing efforts and such other issues as the
Parties may desire. Quarterly after the Effective Date and
during the Term, the Parties shall meet to discuss their plans
and objectives with respect to enhancing the Terminals and the
development of new Terminal-related and AIL System-related
solutions. As part of such discussion (i) AIL shall share with
Contractor its plans for potential future service offerings,
potential market demand and anticipated product needs and (ii)
Contractor shall share with AIL its plans regarding product
enhancements and evaluations as well as new products under
development. Contractor agrees that it will give due
consideration to AIL's requirements in evolving the Terminals
and other products and will give due consideration to
reprioritizing scheduled product enhancements to be consistent
with AIL's business needs.
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4. TERM
The term of this Agreement shall begin upon the Effective Date and shall
expire upon the * * * anniversary of in-orbit acceptance of the fourth
satellite of the AIL System or * * *, whichever is sooner, (the "Initial
Term"), unless earlier terminated or extended in accordance with this
Agreement. Prior to the expiration of the Initial Term, the Parties may
agree to extend the term of this Agreement, upon mutually agreeable
terms, in * * * renewal periods. The Initial Term, as earlier terminated
or extended, shall be known as the "Term".
5. TERMINAL DEVELOPMENT
5.1 AIL RESPONSIBILITIES.
In the SOW, AIL has provided Contractor with SOW describing the * * *
Terminals, including interface specifications for the AIL System. AIL
agrees to provide such other AIL Background Information and AIL
Foreground Information to Contractor, as set forth in Section 10.1, as
may be reasonably required for Contractor to perform its obligations
hereunder.
5.2 CONTRACTOR RESPONSIBILITIES.
Contractor shall be responsible for the performance of the work
described in the SOW, and shall perform such work in accordance with the
SOW, for the design and development of Terminals, including services,
responsibilities, equipment and other products and materials not
specifically described in the SOW that are incidental to and reasonably
required for the proper provision of such work, all in accordance with
this Agreement. Based on the information contained in the SOW and
elsewhere in this Agreement, Contractor shall produce detailed design
documents for the Terminals, and such design documents shall fully
describe the Terminals. Contractor also shall develop, publish and
provide to AIL, and as applicable its Service Providers and Users,
appropriate, accurate and complete Documentation as set forth in Section
10.5 herein. In addition, Contractor shall provide copies of all
Documentation to AIL in electronic form.
5.3 MILESTONE AND PAYMENT SCHEDULE.
The Parties have agreed upon a detailed critical milestone schedule and
payment plan (the "Milestone and Payment Schedule") based on the SOW.
Contractor will meet all milestones set forth in the Milestone and
Payment Schedule, including meeting the milestones (each, a "Milestone")
within the corresponding dates set forth therein (each, a "Milestone
Date").
5.4 FAILURE TO ACHIEVE MILESTONES.
If (i) Contractor fails to achieve, or (ii) AIL has a reasonable basis
to believe Contractor will be unable to achieve, a Milestone by the
corresponding Milestone Date, (1) Contractor will be required to develop
a correction plan demonstrating Contractor can recover from Contractor's
failure to achieve such Milestone and present said plan to AIL within
ten (10) business days after AIL's request for such a correction plan;
(2) the Parties will work in good faith to devise a plan of action to
achieve the Milestone by the specified Milestone Date or arrive at a
mutually acceptable revised schedule within ten (10) business days after
AIL's receipt of Contractor's plan; and (3) Contractor's performance
will be measured against the schedule in such plan of action. If the
Parties fail to arrive at a mutually acceptable revised schedule within
ten (10) business days after AIL's receipt of Contractor's correction
plan or if Contractor fails to make adequate progress towards the agreed
revised schedule, AIL may at its sole discretion
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(x) terminate the Co-Exclusivity Right described in Section 3.4 above
following notice to Contractor and a thirty (30) day cure period or (y)
terminate this Agreement in accordance with Section 23.1(a) hereof.
5.5 * * *
Contractor acknowledges that time is of the essence with respect to the
Milestone Dates and timely delivery and implementation of the Seed Order
Terminals. If Contractor fails to meet the Milestone Date for Milestone
Event 10 (* * *), except in the case of Excusable Delay, AIL will incur
substantial damages which are and will be difficult to determine. Any
such failure with respect to Milestone Event 10 is referred to herein as
an "Early Default". Therefore, in addition to the termination rights
reflected in Article 23.1(a), upon AIL's written demand, Contractor will
* * *.
5.6 PERMITS.
Contractor shall identify, procure and maintain throughout the Term all
applicable federal, state, county, local and foreign licenses,
approvals, inspections, permits and certificates necessary to perform
its obligations under this Agreement, including all export and import
licenses and permits. AIL will provide Contractor with reasonable
assistance in procuring and maintaining such permits. Notwithstanding
the foregoing, AIL shall be responsible for procuring and maintaining
those export licenses and other applicable licenses and permits required
for the export of technical data and other information related to AIL's
satellites and the provision of the services offered through the AIL
System. Contractor will provide AIL reasonable assistance in procuring
and maintaining such licenses.
5.7 COST-REDUCTION DEVELOPMENTS.
The Parties acknowledge and agree that the retail price of the Terminals
is fundamental to market acceptance thereof and key to the Parties'
mutual profitability hereunder. To that end, Contractor will identify,
develop and produce specific Terminal cost reduction techniques,
technologies and methods that may be used across * * * Terminals to
reduce the wholesale cost of the Terminals (each such technique,
technology or method, a "Cost-Reduction Development"). As set forth in
Section 15.2 below, AIL will pay to Contractor NRE Payments upon
Contractor's achievement of various Milestones, including delivery of
the Cost-Reduction Developments identified in the Milestone and Payment
Schedule. AIL shall have full visibility and approval rights over
payments made in respect of Cost-Reduction Developments. The modules
that shall be the subject of the Cost-Reduction Developments are the * *
* and the * * * (each, a "Reduced-Cost Module").
5.8 SALE OF REDUCED-COST MODULES.
Contractor agrees to offer for sale to AIL Reduced-Cost Modules at a
wholesale price per module that is commensurate with the then-current
wholesale price to AIL of such Terminal. AIL may purchase such
Reduced-Cost Modules * * *. AIL's ability to purchase Reduced-Cost
Modules shall survive the termination or expiration of this Agreement
for any reason, for so long as Contractor continues to manufacture the
Reduced-Cost Modules. If Contractor elects to discontinue manufacturing
any Reduced-Cost Module, Contractor agrees to license to AIL or AIL's
designated manufacturer, all Intellectual Property Rights reasonably
necessary or appropriate to manufacture such Reduced-Cost Modules. In
addition, Contractor agrees to
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provide any and all such Confidential Information of Contractor and its
licensors as may be reasonably required or appropriate to manufacture
such Reduced-Cost Modules.
6. ACCEPTANCE AND PRODUCTION
6.1 CONTRACTOR RESPONSIBILITIES.
Contractor shall be responsible for performing and shall perform the
Production Work in accordance herewith. The "Production Work" is the
Work described in the SOW and herein, as the case may be, for the
manufacturing and delivery of Terminals, including production setup;
production cycle; interface with Service Providers; obtaining Type
Approval as set forth in Section 6.6; low rate and high rate production
runs; software support; drawings and documentation; quality program
(including product assurance program; parts, materials and processes
management; and test and material discrepancy reviews), and logistics,
training, manuals and operations support.
6.2 ACCEPTANCE TESTING.
(a) Acceptance of Development Deliverables. Acceptance of
deliverable items required by the SOW shall be in accordance
with the following.
(i) For brassboard, prototype and preproduction Terminals,
Contractor shall provide an Acceptance Test Plan to AIL
for approval at least sixty (60) days prior to scheduled
commencement of testing. Contractor shall be obligated
to conduct acceptance tests in accordance with the
approved Acceptance Test Plan which demonstrate that the
deliverable item meets the SOW and the Acceptance
Criteria, and applicable Standards. Each such Acceptance
Test Plan shall include the scope, schedule, test
equipment, Acceptance Criteria, the parameters to be
tested, and the definition of successfully achieving the
test and failing the test, as well as other mutually
agreed-upon parameters. Testing results must be based on
objective criteria. The Acceptance Test Plan for each
class of Terminal shall include the items specified in
Section 3.3 of the SOW and shall demonstrate full
compliance with the applicable provisions of the SOW.
(ii) For deliverable items which are not equipment or
software, such as Documentation, and design reviews, AIL
will base Acceptance upon content of the deliverable
meeting the applicable requirements delineated in the
SOW.
(b) Acceptance of Production Terminals.
(i) First Production Run Acceptance Testing. At least 90
days prior to scheduled completion of the First
Production Run, Contractor shall provide a First
Production Run Acceptance Test Plan to AIL for approval.
Contractor shall be obligated to conduct acceptance
tests which demonstrate that the first production run
units meet the SOW and the Acceptance Criteria and
applicable Standards. The Acceptance Test Plan shall
include the scope, schedule, test equipment, Acceptance
Criteria, the parameters to be tested, and the
definition of successfully achieving the test and
failing the test, as well as other mutually agreed-upon
parameters. Testing results must be based on objective
criteria. The Acceptance Test Plan for each class of
Terminal shall demonstrate full compliance with the
applicable provisions of the SOW.
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(ii) Production Acceptance Testing. At the Production
Readiness Review, Contractor shall present, for AIL
approval, the proposed Acceptance Tests Plan for
Production Terminals (the "Production Acceptance Test
Plan"). Contractor shall be obligated to conduct
acceptance tests which demonstrate that each production
unit meets the SOW and the Acceptance Criteria and
applicable Standards. The Production Acceptance Test
Plan shall include the scope, schedule, test equipment,
Acceptance Criteria, the parameters to be tested, and
the definition of successfully achieving the test and
failing the test, as well as other mutually agreed-upon
parameters. Testing results must be based on objective
criteria. The Production Acceptance Test Plan for each
class of Terminal shall demonstrate compliance with the
applicable provisions of the SOW.
6.3 ACCEPTANCE TESTING FAILURES, CURE PERIODS AND REMEDIES.
(a) For Development Deliverables. Problems and Acceptance Test
Failures of Development Items are to be resolved in accordance
with the SOW, Section 3.5.
(b) For Production Terminals. Terminals that fail testing in
accordance with the Production Acceptance Test Plan will be
rejected by AIL. Contractor shall not ship such Terminals and
Contractor will not be entitled to receive payment for such
Terminals until Contractor corrects all items which failed and
successfully completes a repeat Production Acceptance Test.
(c) AIL System Deficiencies. In the event that Acceptance Testing
demonstrates that the AIL System does not provide the
functionality and performance required by AIL in the SOW,
notwithstanding that such deficiency is not the result of a
defect in the Terminals, the applicable provisions of the SOW or
the Terminal design documentation, Contractor shall cooperate
with AIL to implement, on an accelerated basis, adjustments and
modifications to the design and production of the Terminals to
achieve the required functionality and performance. Such actions
may include retrofits, accelerated second-generation design and
production and such other means as may be required to produce
the required functionality and performance in the most
expeditious and cost-effective manner. The Parties will agree to
a reasonable basis for compensating Contractor for performance
of such activities.
6.4 QUALITY ASSURANCE.
Prior to the start of production of Terminals, the Parties shall develop
and agree upon a written quality assurance program and procedures (the
"Quality Assurance Program"), and Contractor shall implement such
Quality Assurance Program to produce Terminals, such that the Terminals
perform and associated Services are consistently performed in accordance
with the terms of this Agreement and at a level consistent with
generally accepted best industry standards and practices. Contractor
shall maintain compliance with the ISO 9001 series approach to quality
in the performance of its obligations under this Agreement. If
Contractor fails to implement or follow the Quality Assurance Program,
Contractor agrees that AIL may require Contractor to cease production of
Terminals or Comparable Terminals until Contractor meets the
requirements of the Quality Assurance Program. If AIL reasonably
believes that the quality of the Terminals has diminished or that the
Terminals do not comply with the applicable provisions of the SOW or
applicable Standards, AIL will provide written notification to
Contractor reasonably describing the problem and Contractor will
investigate the problem and report its findings and
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conclusions to AIL in writing. If the Parties determine that a problem
exists, Contractor agrees to develop and implement a corrective action
plan to resolve the problem. If the Terminals do not comply with the
applicable Standards solely due to constraints of the AIL System, the
Parties will work together to determine if the Terminals can be modified
to meet the applicable Standards, in accordance with Section 12.3(b)
below. If the Terminals cannot be modified to comply with the applicable
Standards, or if the Parties elect not to modify the Terminals to meet
such Standards, Contractor shall not be responsible for meeting the
Standards to the extent that the AIL System causes the non-compliance.
6.5 CERTIFICATION.
Upon Contractor's satisfactory completion of the First Production Run
Acceptance Tests, including a written statement provided by Contractor
to AIL certifying the compliance of the Terminals with the SOW, AIL
shall certify Contractor as an AIL-certified supplier of Terminals. In
addition, AIL must certify that all Software, Software Updates and other
Terminal upgrades and updates produced by Contractor or any
Subcontractor for use in or with the Terminals or Comparable Terminals
meets the SOW without adverse effect to the Terminals or the AIL System.
At least 30 days prior to introduction of enhancements, including
hardware, software, or changes to recommended operating and installation
practices, Contractor shall provide AIL a request for an updated
certification detailing the requested change and defining any testing
required to ensure compatibility. If the Contractor asserts that no
testing is required due to the nature of the change, AIL may request
testing if it has a reasonable doubt as to the assertion, and Contractor
will perform testing as required to reasonably satisfy AIL's concerns.
If the Contractor has defined test requirements, the change request will
include a test report on tests which Contractor has conducted to ensure
that the Terminal product will interwork with the existing installed
base of Terminals, will not harm AIL's system, and will not contain
defects which adversely affect performance for users. At AIL's request,
Contractor shall provide AIL such proposed software or a limited
quantity of sample hardware for AIL's own use in testing.
6.6 TYPE APPROVAL.
Contractor shall be responsible for, and responsible for all costs and
expenses related to, obtaining Type Approval for each * * * Terminal in
each * * * Country, and for * * * Countries as mutually agreed by the
Parties. The priority of countries in which Type Approval is to be
obtained shall be determined by AIL after consultation with Contractor,
to ensure that Terminals will be available in a manner consistent with
AIL's plans for the introduction into such countries of the AIL Service.
For each * * * Country, Contractor shall obtain Type Approval prior to
the scheduled launch of the applicable satellite (with timing subject to
applicable Standards and subject to AIL System constraints that cannot
be ameliorated by modifications in the Terminals to meet the applicable
Standards), with priority of the countries as mutually agreed by the
Parties. For each * * * Country, Contractor shall obtain Type Approval
no later than * * * following the * * * (subject to AIL System
constraints that cannot be ameliorated by modifications in the Terminals
to meet the applicable Standards), with priority of the countries as
mutually agreed by the Parties. For each * * * Country, Contractor shall
obtain Type Approval * * * or more following the * * *, with priority of
the countries as determined by AIL after review of the Parties' analyses
of economic, market and other factors for selected countries. AIL shall
report to Contractor the status of obtaining landing rights and
regulatory approvals, and Contractor shall report to AIL the progress of
obtaining Type Approvals, all on a monthly basis commencing in * * * or
such other date as may be mutually agreed by the Parties. The costs and
expenses associated with obtaining Type Approval in a given country will
be considered in the decision to offer service for * * * Countries.
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6.7 PRODUCTION COMMITMENTS; MANUFACTURING CAPACITY.
(a) Contractor agrees to manufacture and deliver the Terminals,
following Acceptance, in accordance with this Agreement.
(b) Contractor's initial minimum terminal capability and capacity
for Terminal production (including for the Seed Order) shall be
the greater of (i) * * * Terminals for the Contract Year * * *
(ii) or one-half of the Annual Forecast Number of Terminals as
provided to Contractor in accordance with Section 14.2 below
(the "Annual Minimum Capacity"). For each Contract Year,
Contractor shall establish and maintain the capability and
capacity (including production facilities and Contractor
Personnel) required to manufacture and ship, in each Contract
Year, at least the Annual Minimum Capacity.
(c) The Parties agree to renegotiate Contractor's manufacturing
capacity commitment for the following year if AIL and its
Service Providers and Users, collectively, do not purchase from
all vendors of Terminals and Comparable Terminals at least * * *
of the number of Terminals and Comparable Terminals set forth in
Schedule 6 for the applicable Contract Year. In such event,
Contractor's required capacity commitment for the following year
will not exceed the lesser of (i) the amount set forth on
Schedule 6 for such year or (ii) * * * the amount actually
purchased in the current year.
(d) If AIL, Service Providers and Users purchase in any Contract
Year more than the number of Terminals set forth in Schedule 6
for that Contract Year, Contractor agrees to increase its Annual
Minimum Capacity to a mutually agreed level to maintain capacity
and capability commensurate with the actual number of Terminals
purchased and the number of Terminals forecasted by AIL, Service
Providers and Users, in the aggregate, to be purchased in the
next Contract Year.
6.8 * * *
If AIL, Service Providers and Users order Terminals scheduled for
delivery in a given Contract Year (by mutual agreement of Contractor and
the ordering party) up to the Annual Forecast Number of Terminals and
Comparable Terminals as provided to Contractor in accordance with
Section 14.2 below for such Contract Year, and Contractor fails to
manufacture and deliver the ordered number of Terminals or Comparable
Terminals as scheduled because of Contractor's failure to maintain the
Annual Minimum Capacity for that Contract Year (unless such failure is
the result of an Excusable Delay), Contractor shall, upon AIL's request,
* * * , if Contractor fails to deliver Terminals to AIL, Service
Providers or Users in accordance with the Annual Minimum Capacity
requirement for a period of * * * during the Co-Exclusivity Period, AIL
may terminate the Co-Exclusivity Right upon written notice to Contractor
thirty days after Contractor's receipt of a cure notice. After the
Co-Exclusivity Period * * *, if Contractor commits a material breach of
Section 6.7, AIL may terminate this Agreement in accordance with Section
23.1(a) and cancel its outstanding Orders in accordance with Section
8.8. If AIL so terminates this Agreement for Contractor's material
breach of Section 6.7, (i) AIL shall be entitled to have the work
completed by another party or parties, and (ii) Contractor shall not be
liable to AIL for damages pursuant to Section 23.3(b) below or
otherwise, provided that Contractor reasonably fulfills its obligations
under Sections 23.3(a) and 23.4 and reasonably performs its other
post-termination obligations hereunder. Notwithstanding the foregoing,
AIL may not terminate this Agreement for Cause as provided above if AIL,
at the time of termination, has two or more active vendors of Terminals
(excluding Contractor). The foregoing remedies shall be AIL's sole
remedies for breach of Section 6.7 above.
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6.9 OPTIMAL IN-COUNTRY MANUFACTURE AND ASSEMBLY.
Contractor shall use its reasonable commercial efforts to minimize
customs, duties, transportation costs and potential barriers to trade so
that Terminals are available in the markets set forth on Schedule 1 at
competitive prices. Periodically, Contractor will report to AIL on its
progress to achieve the goal of optimal in-country manufacture and
assembly. When production volumes justify foreign manufacture of the
Terminals, to minimize customs duties, transportation costs and
potential barriers to trade, production will be localized to the extent
commercially reasonable taking into account applicable markets
including, but not limited to, within the European Union, the NAFTA, and
Mercosur to serve those markets. If local production will be
supplemented with imported components, Contractor will use commercially
reasonable efforts to determine that the finished product complies with
the applicable rules of origin, so that preferential treatment will be
afforded to products originating within each of the applicable trading
blocks (e.g., equipment manufactured in the United States complies with
the NAFTA's rules of origin, so that it will be entitled to preferential
NAFTA treatment when imported into Mexico). Contractor will use
commercially reasonable efforts to identify the production locations
from which Contractor will serve the major Asian markets (such as Japan,
Taiwan, South Korea, and Australia) and the Middle East, and if use of
such production locations is commercially reasonable, Contractor shall
begin to produce Terminals in such locations, as Contractor deems
appropriate. With regard to Israel, Contractor will use commercially
reasonable efforts to confirm that it will be able to serve that market
from a country with which Israel has a free trade agreement.
6.10 SPARE PARTS.
Contractor will maintain or have maintained an inventory of spare parts
for the Terminals for the life of the AIL System or the Term whichever
is sooner, adequate to maintain all such Terminals sold and, following
expiration of warranty, will sell such parts to AIL, its Service
Providers, Users and third party maintenance providers on commercially
reasonable terms and at prices comparable to those at which Contractor
sells similar parts to other purchasers on similar terms for similar
quantities.
7. MARKETING AND BRANDING
7.1 MARKETING PROGRAMS.
Contractor agrees to provide, at its sole expense, marketing, sales and
distribution support as set forth in Schedule 7 attached hereto. In
addition, Contractor and its Subcontractors shall mutually agree with
AIL on additional marketing and advertising support of AIL's system,
including the Terminals, including, without limitation, lead generation
and management. Contractor and its Subcontractors shall undertake
reasonable efforts to (1) introduce AIL to potential AIL customers from
their existing and future customer set, (2) market AIL's services to
potential AIL customers from their existing and future customer set, and
(3) maintain and provide AIL with periodic information on market needs
for the Terminals and related services.
7.2 AIL MARKS.
The Marks under which the AIL System and the AIL service are offered
shall be in AIL's sole and absolute discretion, provided such Marks do
not conflict with any of Contractor's Marks. Contractor shall affix to
each Terminal (on both the indoor and outdoor components of the
Terminal) the AIL Mark, as designated by AIL, in a form and location to
be mutually agreed
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upon. AIL shall designate a space on the Terminals in which its Mark is
to be affixed. The Parties agree to enter into appropriate royalty-free,
Mark licensing agreements in furtherance of the foregoing.
7.3 CONTRACTOR MARKS.
Unless otherwise mutually agreed, the Terminals shall be "co-branded"
with the respective Marks of AIL, Contractor, and its Subcontractors
subject to reasonable written approval of each Party as to how its brand
is used. "Co-branding" means the Terminals will be marketed, promoted,
advertised and sold with such Marks in ways that maintain the identity
of the Marks of AIL, Contractor, and its Subcontractors, respectively.
The Marks of Contractor, and its Subcontractors may be used by AIL on a
royalty-free basis; provided, however, that the party owning the Mark
shall have prior written approval for each form of use of its Mark(s)
and the Marks may be used only in connection with the AIL System
services and the Terminals.
8. ORDERING
8.1 ORDERS GENERALLY.
(a) During the Term of this Agreement and in accordance with Section
3.1, purchases of Terminals by AIL or its Service Providers
shall be made by means of an Order in the English language
issued to Contractor as provided in this Agreement or, as to
Service Providers and Users, pursuant to separate agreement with
Contractor. Orders may be issued by mail, fax or, upon mutual
agreement of the Parties, electronic data interchange. All
Orders issued by AIL hereunder shall reference this Agreement
and will be deemed to incorporate and be governed by the terms
and conditions of this Agreement as applicable to the purchase
of Terminals. Any term or condition set forth in an Order or
other document submitted by either Party that is inconsistent
with or in addition to this Agreement will be of no force or
effect, unless mutually and expressly agreed by the Parties in
writing. Neither AIL nor any Service Provider will be liable to
Contractor for any charges, additional or otherwise, for
Terminals or Services provided by Contractor unless set forth in
an Order, or otherwise mutually agreed upon by the contracting
parties in writing. Each Order shall be deemed to be accepted by
Contractor upon receipt of the Order, unless Contractor notifies
AIL or the ordering party, if not AIL, of its objection to any
Order within five (5) business days of Contractor's receipt of
such Order.
(b) Each Order shall specify the following: ship to address,
purchase order number, shipping instructions, part and model
number, quantity, price, statement that the Order is being
placed under this Agreement and requested delivery dates which
must be within * * * days of acceptance of an Order, but in no
event may a delivery date be requested beyond * * * from the end
of the Term. Requested delivery dates are subject to
Contractor's lead times (as provided in Section 8.7(a) below)
and approval of credit. Contractor will use commercially
reasonable efforts to meet agreed upon delivery dates within a
permissible delivery window of * * * prior to the scheduled
delivery date and * * * following the scheduled delivery date,
unless otherwise agreed by the contracting parties. Delivery
shall occur upon delivery to the carrier at Contractor's
shipping point. Delivery schedule changes must be mutually
agreed to in writing.
8.2 ORDERS FROM SERVICE PROVIDERS.
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Within sixty (60) days from the Effective Date, the Parties will
negotiate and agree to a form of contract that Contractor will offer to
Service Providers ordering Terminals. Such form of contract will be
attached hereto as Schedule 8 and will include certain agreements
reached by the Parties herein, such as pricing, taxes, passage of title
and risk of loss, warranties, Service Standards, indemnifications and
other provisions that expressly apply to Service Providers herein (the
"Service Provider Terms"). Notwithstanding the foregoing, Contractor and
any Service Provider may enter into an agreement to purchase Terminals
upon terms that differ from the Service Provider Terms. Acceptance by
Contractor of any Service Provider Order shall depend on the Service
Provider (1) ordering the Terminals a pre-agreed number of days in
advance; (2) ordering certain pre-agreed volumes; and (3) meeting
pre-agreed financial requirements (such as satisfactory assurance of
payment or adequate vendor financing, or a combination of the foregoing
or otherwise).
8.3 SEED ORDER.
AIL hereby purchases from Contractor * * *. The delivery of the Seed
Order shall be in accordance with Schedule 18.
8.4 MINIMUM QUANTITY PURCHASE COMMITMENT (MQPC).
AIL hereby commits to Contractor that prior to * * *, as such date may
be extended pursuant to the terms of this Agreement, that AIL, Service
Providers and Users shall have purchased and taken delivery from
Contractor and all other suppliers of Terminals and Comparable Terminals
no less than * * * Terminals and Comparable Terminals (which amount
includes the number of Terminals and Comparable Terminals purchased
under the Seed Order) (the "Minimum Quantity Purchase Commitment" or
"MQPC"). If the MQPC is not achieved by * * *, AIL shall pay Contractor
the MQPC termination liability payment described in Section 8.5 below.
8.5 MQPC SHORTFALL LIABILITY.
(a) If AIL, its Service Providers and Users do not purchase at least
* * * Terminals or Comparable Terminals (including the Seed
Order quantities) as specified in the MQPC, AIL agrees to pay
Contractor a termination liability payment equal to * * * per
Terminal or Comparable Terminal multiplied by one-half of the
positive difference between * * * and the number of Terminals or
Comparable Terminals actually sold by Contractor and all other
suppliers of Terminals and Comparable Terminals (including the
Seed Order quantities) as of * * *. In no event, however, shall
AIL's maximum liability under this Section 8.5 exceed * * * in
the aggregate. The remedy provided in this Subsection 8.5(a)
shall be Contractor's sole remedy for AIL's breach of Sections
8.3 and 8.4.
(b) If Contractor fails to sell Terminals and Comparable Terminals
due to Contractor's inability to manufacture or distribute
Terminals and/or Comparable Terminals or due to Contractor's
failure to comply with Sections 6.7 and 14.3(c), the foregoing
Subsection 8.5(a) shall not apply.
8.6 FORECASTS AND REPORTING.
Prior to the beginning of Contract Year * * * and for each Contract Year
thereafter, AIL shall provide Contractor with the Annual Forecast Number
(as defined in Section 14.2(a) below). In addition, AIL shall provide
Contractor with an annual forecast of the number of Terminals and
Comparable Terminals that AIL expects to order from Contractor in the
subject Contract Year
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(the "AIL Order Forecast"). AIL shall provide updates to the AIL Order
Forecast to Contractor on a quarterly basis or as otherwise agreed by
the Parties. Contractor shall provide AIL with a report of the number of
Terminals and Comparable Terminals ordered and shipped for each calendar
month during the Term, within fifteen (15) days of the end of such
calendar month.
8.7 DELIVERY DATES.
(a) Unless otherwise agreed by Contractor and the ordering party as
set forth in an Order or other writing, Contractor shall deliver
Terminals to AIL and Service Providers within * * * of
Contractor's receipt of an Order from AIL or such Service
Provider, to the extent practicable and subject to Excusable
Delay and further subject to Contractor's receipt of reasonably
accurate order forecasts from AIL and Service Providers. Agreed
delivery dates shall be firm. Time is of the essence for the
Seed Order deliveries and for any Orders scheduled for delivery
four (4) months prior to the scheduled date of introduction of
AIL System service in any country and for eight (8) months
thereafter and for Orders placed from time to time that state in
bold type (or other manner reasonably intended to call
Contractor's attention to such statement) that late delivery
will materially impact AIL's business or the business of its
Service Providers. Early deliveries (except as provided in
Section 8.1(b) above or authorized in writing by the ordering
party) may be refused due to space or security considerations
and returned or stored at Contractor's expense and risk of loss.
(b) AIL shall be responsible for site availability for Terminals
shipped to AIL and will advise Contractor within a reasonable
time if there is going to be a delay involving site availability
that would impact Contractor's delivery. In the case of Services
ordered by AIL, Contractor shall provide AIL with reasonable
prior written notice of its need to access any AIL site, and AIL
shall be responsible for providing access to such site as
reasonably necessary for Contractor to perform such Services
including extending access beyond normal business hours, if
required.
(c) If Contractor discovers any potential delay that threatens the
timely or full delivery of an Order as scheduled or the
performance of Services, Contractor shall immediately notify AIL
of such delay. If requested by AIL, Contractor shall provide a
written plan for correction of such delay.
(d) If an Order prohibits partial shipments of any scheduled
delivery of Terminals and Contractor is unable to ship the full
quantity of Terminals for such delivery date per the agreed-upon
schedule, Contractor shall inform the ordering party of its
ability (if any) to make a partial shipment of Terminals against
the scheduled quantity. The ordering party may then elect, by
providing written notice to Contractor, (i) to terminate the
entire Order and return to Contractor for a full refund all
unused Terminals already shipped under such Order, or (ii) to
accept such partial shipment(s) per Contractor's revised
delivery schedule.
8.8 CANCELLATION AND RESCHEDULING OF AIL ORDERS.
(a) For Orders excluding the Seed Order, AIL can cancel an Order in
whole or in part by providing written notice to Contractor,
without reducing AIL's liability for the MQPC Shortfall
Liability as set forth in Section 8.5 above, subject to the
following restrictions and charges:
CANCELLATION NOTICE RECEIVED PRIOR TO CHARGE AS A % OF
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ORIGINAL SCHEDULED DELIVERY DATE WHOLESALE PRICE
-------------------------------- ---------------
More than 90 days ***
60-89 days ***
30-59 days ***
(b) AIL may change the "ship to" destination of any Order by
submitting notice to Contractor in writing at least five (5)
business days prior to shipment. If such change is requested by
AIL with less than five (5) business days of notice prior to
shipment, Contractor will use all reasonable efforts to
implement such change. Contractor has the right at its cost and
expense to adjust the previously scheduled delivery date by up
to ten (10) days in the event AIL changes the "ship to"
destination within the five (5) business days; provided,
however, Contractor shall use all commercially reasonable
efforts to limit such delay. Otherwise, the original delivery
date shall remain in effect.
(c) Subject to Section 8.3 and Section 8.7(a), AIL may reschedule
any scheduled delivery contained in an Order at no cost, expense
or liability at least ten (10) business days prior to the
scheduled delivery date, up to two (2) times per scheduled
delivery; provided, however that the rescheduled delivery date
may not be more than ninety (90) days following the originally
scheduled delivery date. If the new delivery date is within
thirty (30) days of the scheduled delivery date, then Contractor
shall arrange and pay for all additional storage costs and
expenses for the Order. If the new delivery date is more than
thirty (30) days after the scheduled delivery date, then such
reasonable additional transportation and storage costs and
expenses incurred by Contractor shall be payable by AIL. Payment
for Terminals delivered pursuant to a rescheduled delivery date
shall be paid in accordance with Article 15 as of the revised
delivery date; provided, however that payment for scheduled
delivery of Terminals shall be due no later than ninety (90)
days following the originally scheduled delivery date.
8.9 TERMINATION OF ORDERS.
In the event that Contractor:
(a) Fails to correct Terminal deficiencies or failures as set forth
in 18.3(c)(x) hereof; or
(b) Fails to make delivery in a timely fashion as set forth in
Section 8.7;
then AIL may, by giving written notice to Contractor as provided in this
Agreement terminate the corresponding Order, in whole or in part, for
cause as of a date specified in the notice of termination. In such
event, AIL may return any deficient Terminals and uninstalled
non-deficient Terminals and associated Equipment, Software or
Documentation to Contractor, in which case Contractor shall promptly
refund to AIL all charges paid by AIL to Contractor for such items, and
AIL shall have no further payment obligations to Contractor with respect
to such items. Such returned Terminals shall count as "delivered"
Terminals with respect to the Seed Order and MQPC.
8.10 TERMINAL FINANCING PROGRAM.
Contractor agrees to provide, or assist in arranging financing for, AIL,
Service Providers and Users on competitive commercial terms at least as
favorable as the terms customarily provided by Contractor to its other
customers in the geographic regions in which AIL, the Service Providers
or Users are located, as such terms may evolve during the term of the
Agreement
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based upon specific credit worthiness of AIL or such Service Provider or
User and appropriate security provisions. Indicative terms for such
financing program are as follows:
Direct Financing
- * * * year financing term
- Amounts of * * * to * * *
- Interest rate at * * * based on credit review of
end-user customer
- Monthly or quarterly payments
- Facility to be secured by equipment, non-recourse to AIL
for Service Provider and User financing
- Extension of credit subject to standard credit and
financial review of end-user customer
9. DISTRIBUTION, SHIPPING AND INSTALLATION
9.1 DISTRIBUTION.
Contractor shall provide worldwide distribution of Terminals, initially
to the countries listed on Schedule 1, which shall be expanded from
time-to-time as agreed to by the Parties, provided Contractor will agree
to expand distribution into countries where it has existing distribution
capability, subject to commercial viability. AIL will obtain landing
rights to provide its service in a * * * before Contractor is required
to distribute Terminals in such country. AIL will obtain landing rights
to provide its service in a * * * before Contractor is required to
distribute Terminals in such country. Contractor agrees to use
commercially reasonable efforts to establish its distribution network
and begin distributing Terminals in a country in less than the
applicable time period after landing rights are secured if required by
AIL. Absent a written agreement of the Parties to the contrary,
Contractor shall not be obligated to begin distribution of Terminals in
any country prior to AIL obtaining landing rights in such country. A
list of countries in which Contractor and the Principal Subcontractors
have existing facilities or distribution capability is set forth in
Schedule 9.
9.2 PACKING.
All deliveries to AIL pursuant to this Agreement shall be preserved,
packaged and packed to ensure safe delivery to their destinations
without damage. All Terminal packages shipped to AIL, Service Providers
and Users shall contain the items required in Section 1.7 of the SOW,
plus any optional items if ordered.
9.3 SHIPPING.
Unless otherwise specified in an Order accepted by Contractor, all
shipments hereunder shall be FOB Contractor's designated site.
9.4 RISK OF LOSS.
Risk of loss to any Terminal, Equipment or Software shipped to AIL or
Service Provider shall vest in AIL, or such Service Provider, as the
case may be, upon acceptance of delivery of such Terminal by the
authorized agent or carrier of the purchasing party if designated by
such party in the corresponding Order and if not so designated, upon
delivery to the carrier at Contractor's
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shipping point, unless otherwise mutually agreed in writing by
Contractor and the purchasing party. If Contractor obtains insurance on
behalf of or for the benefit of AIL, AIL shall be responsible for
filing, processing and pursuing all claims under such insurance policy.
9.5 TITLE.
Title, free and clear of all Liens, to any Terminal or Equipment shipped
to AIL or Service Providers shall vest in such recipient upon acceptance
of delivery of such Terminals by the authorized agent or carrier of the
purchasing party as designated by such party in the corresponding Order,
and if not so designated, upon delivery of the carrier at the
Contractor's shipping point, unless otherwise mutually agreed in writing
by Contractor and the purchasing party. Notwithstanding the foregoing,
if title must be maintained by Contractor in order to perfect a purchase
money security interest as described in Section 24.17 below, then title
may not pass until the security interest has been released.
10. LICENSES, PROPRIETARY RIGHTS AND ESCROW
10.1 GRANTS OF LICENSES TO CONTRACTOR.
(a) Development License to use AIL Confidential Information. AIL
hereby grants Contractor a worldwide, royalty-free, limited,
non-exclusive, non-transferable (except in accordance with
Section 24.1 hereof) development license to use and reproduce
the AIL Background Information and AIL Foreground Information
(including AIL's System and Terminal background Intellectual
Property related thereto) provided by AIL and required by
Contractor or its Subcontractors for the sole purpose of
designing and developing the Terminals (the "Development
License"). The term of the Development License will be
coterminous with the Term (as defined in Article 4 above).
(b) Production License. During the Term, AIL grants to Contractor a
worldwide, royalty-free, limited, non-exclusive,
non-transferable (except in accordance with Section 24.1 hereof)
production license to use the AIL Background Information and AIL
Foreground Information to manufacture and support the Terminals
and Comparable Terminals and to reproduce, market, sell (except
in the case of the Software), license (in the case of Software)
and distribute the AIL Background Information and AIL Foreground
Information solely as contained in the Terminals and Comparable
Terminals (the "Production License"). Following the Initial
Term, the Parties mutually may agree to extend the Production
License on commercially reasonable terms. In any case, the
Production License shall be coterminous with the Term.
(c) Term of Licenses. Notwithstanding anything to the contrary in
Subsections 10.1(a) and 10.1(b), the term of the foregoing
Development and Production Licenses shall continue in effect as
long as and to the extent required by Contractor to fulfill its
obligations hereunder, including those for support, maintenance
and provision of parts.
10.2 GRANTS OF LICENSES TO AIL.
Subject to Section 10.3, Contractor hereby grants to AIL, its Service
Providers and Users a worldwide, perpetual, fully-paid-up, royalty-free,
limited, non-exclusive, non-transferable (subject to Section 24.1
hereof) right and license to use, operate, display, demonstrate, market,
distribute, lease and sell, and authorize others to perform the
foregoing, the Contractor
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Background Information and Contractor Foreground Information as
incorporated with and into the Terminals.
10.3 SOFTWARE LICENSES AND RIGHTS.
Commencing upon delivery of Software, Contractor grants to AIL, Service
Providers and Users a perpetual, nontransferable (except as permitted
pursuant to Subsection (g)), nonexclusive, fully-paid, royalty-free,
irrevocable, and a world-wide right and license (or sublicense for third
party software) to use, copy, access, display, operate and process the
Software in connection with AIL's intended use of the Terminals and the
intended use by the Service Providers and Users to which AIL supplies
Terminals.
(a) AIL and each Service Provider and User to which AIL supplies
Terminals may make only one (1) copy per Terminal (or as
otherwise required by applicable law) of the Software for
back-up purposes and for operation of the Terminals. Any such
reproduction shall include any copyright or similar proprietary
notices contained in the Software being reproduced.
(b) Neither AIL nor any Service Provider or User to which AIL
supplies Terminals shall attempt to decompile or reverse
assemble all or any portion of the Software in an effort to
obtain the Source Code for the Software, nor shall it authorize
others to do so, nor rent, lease, grant a security interest in,
or otherwise transfer rights to the Software except as set forth
herein.
(c) Neither AIL nor any Service Provider or User to which AIL
supplies Terminals shall, except as provided in Section 10.6,
create a derivative work of the Software or modify the code to
the Software; provided, however, the foregoing shall not in any
manner whatsoever limit AIL's, its Service Providers and User's
rights to use the Software in accordance with the Documentation
or Contractor's instructions or otherwise limit AIL's rights to
use any tools provided with the Software.
(d) AIL shall require by written agreement with the Service
Providers and Users to which AIL supplies Terminals that such
Service Providers and Users agree to comply with the provisions
of Subsections (a) through (c) above, subject to the
requirements of applicable law.
(e) In connection with AIL's maintenance and support of the Software
following a release from escrow as provided in Section 10.6, AIL
may add to, delete from, or modify and create derivative works
of the Software as provided in Section 10.6; provided, however,
that no changes, however extensive, shall alter Contractor's or
its suppliers' title to the original Software. Title to any such
additions or enhancements to the Software shall vest in
Contractor or the supplier of the Software and AIL shall have
the same license to such modifications as it had in the original
Software, except in case where Contractor fails to provide
support, in which case, title to the enhancements lies with AIL.
Both Parties agree not to assert their respective Intellectual
Property Rights in such enhancements against the other.
Contractor shall not have any support or maintenance obligations
with respect to such additions or enhancements made by AIL to
the Software.
(f) AIL shall have the right to permit its officers, employees,
agents, advisors, third party consultants, Users and Service
Providers to use the Software on behalf of AIL or its
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Service Providers or Users, as the case may be, to the same
extent AIL is permitted hereunder, subject to the restrictions
hereof.
(g) AIL shall have the right to transfer any of the licenses granted
to AIL herein in the event AIL sells a Terminal or component
thereof or in the event of an assignment or change in Control in
accordance with Section 24.1.
(h) During the Warranty Period and the Extended Warranty Period (if
any), AIL, Service Providers and Users shall be entitled to
receive from Contractor, at no additional charge, all Software
error corrections, bug fixes, patches and mandatory updates
(collectively, "Software Corrections"). Following the Warranty
Period and any Extended Warranty Period, Contractor agrees to
provide Software Corrections to AIL, Service Providers and Users
for commercially reasonable fees. In addition, Contractor may
make available to AIL, Service Providers and Users from time to
time during the Warranty Period and Extended Warranty Period, if
applicable, at prices determined by Contractor, certain updates,
upgrades, enhancements and releases (collectively, "Software
Updates"). Such Software Corrections and Software Updates shall
be considered to be Software hereunder. Ownership of the
Software Corrections and Software Updates as between AIL and
Contractor shall be determined in accordance with Section 10.4
hereof. Software Corrections and Software Updates shall be
tested as provided in Section 6.5 prior to release.
10.4 PROPRIETARY RIGHTS.
(a) Assignment of Rights.
(i) Prior to permitting any Contractor Personnel to perform
work hereunder, Contractor and its Subcontractors will
enter into appropriate agreements with their respective
employees, contractors and consultants that properly
assign Intellectual Property Rights developed by such
employees, contractors and consultants so that the
provisions of this Agreement may be validly implemented
without infringement.
(ii) Prior to permitting any employee, contractor or
consultant to perform work hereunder, AIL will enter
into appropriate agreements with such persons and
entities that properly assign Intellectual Property
Rights developed by such employees, contractors and
consultants so that the provisions of this Agreement may
be validly implemented without infringement.
(b) Jointly-Developed Works of Authorship. Copyrights and other
rights of authorship in any written materials or other works of
authorship (including maskworks, schematics, diagrams and
flowcharts) produced by a joint collaboration of AIL and
Contractor, will be jointly owned except for a Party's
Confidential Information contained therein (which shall remain
the sole property of that Party or its licensors) without any
appropriate right or obligation of accounting to the other Party
for profits from exploitation of the rights.
(c) Contractor Foreground Information. Subject to Subsection (a)
above, any Contractor Foreground Information produced by
Contractor and its Subcontractors under this Agreement, except
for any AIL Confidential Information (which shall remain the
sole property of AIL or its licensors) and Joint Confidential
Information contained therein,
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shall be the sole property of Contractor, the Subcontractors or
their respective licensors. Contractor agrees that it will
negotiate in good faith to license the Intellectual Property
Rights contained in such Contractor Foreground Information to
AIL's authorized second source(s) on commercially reasonable
terms and fees acceptable to Contractor, to the extent such
second source is in need of such Intellectual Property Rights
related to the Contractor Foreground Information to fulfill its
obligations to AIL related to the AIL System.
(d) Patent Rights. Patent rights and rights in inventions first
created or reduced to practice in the course of performance
under this Agreement will be owned as follows:
(i) Solely by Contractor if created solely by Contractor
Personnel and to the extent they do not incorporate any
AIL Confidential Information (Intellectual Property
Rights related to such patent rights and rights of
invention also shall constitute Contractor Foreground
Information);
(ii) Solely by AIL if created solely by AIL personnel and to
the extent they do not incorporate any Contractor
Confidential Information; and
(iii) Jointly without any appropriate right or obligation of
accounting to the other Party for profits from
exploitation of the rights, if created jointly by
Contractor Personnel and AIL personnel to the extent
they do not incorporate Confidential Information of
either Contractor or AIL. With respect to jointly owned
patent rights and rights in inventions, the Parties will
provide reasonable cooperation and assistance to one
another in the preparation, filing and prosecution of
any patent applications, and the execution of all
associated applications, assignments and other
instruments. The Parties will divide any costs and
expenses incurred by the Parties in preparing, filing
and prosecuting any such patent applications. However,
if a Party does not wish to the pay costs and expenses
associated with preparing, filing and prosecuting a
particular patent application, it may notify the other
Party in writing. In such case, the notified Party may
either abandon the patent application in question or may
proceed with the application, in which event the other
Party will not be a joint owner of any resulting patent.
(e) Remedies for Violation of Contractor Rights. * * * In such case,
Contractor shall be entitled at its election to royalties on
commercially reasonable terms pursuant to a license agreed to by
the Parties or by an arbitrator in the event the Parties are
unable to agree upon the terms of such license, in addition to
all other damages and remedies available to Contractor at law,
in equity or otherwise, subject to Contractor's * * * as
provided in this Subsection.
10.5 DOCUMENTATION.
(a) In accordance with the SOW, Contractor agrees to furnish and
convey to AIL (and Service Providers and Users in the case of
User Documentation), at no additional charge, such Documentation
in the English language covering the Terminals delivered under
this Agreement. Contractor shall develop, publish and provide to
AIL, Service Providers and Users as appropriate, accurate and
complete Documentation, written in a manner reasonably
understood by AIL, Service Providers and Users, for each such
Terminal produced hereunder. Contractor shall make available to
AIL, on an as-ordered basis, additional copies of such
Documentation at commercially reasonable prices. Unless
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otherwise specified in an Order therefor and agreed to by
Contractor, all Documentation shall be in the English language
and Contractor agrees to have such Documentation translated as
necessary to support AIL's international sites subject to
agreement on the cost responsibility thereof.
(b) In addition to the rights set forth in Subsection (a),
Contractor hereby grants AIL the right to reproduce, modify,
distribute and enhance the Documentation. AIL also has the right
to make copies of such modifications and enhancements and
distribute the same. In the event AIL modifies the Documentation
in a manner not directed or approved by Contractor, Contractor
will not be responsible for AIL's use of such Documentation to
the extent it is modified by AIL. Contractor may review and
approve AIL's proposed modifications and enhancements to the
Documentation.
10.6 TECHNICAL MATERIALS ESCROW.
(a) Within thirty (30) days following the Effective Date,
Contractor, AIL and Fort Knox Escrow Services, Inc. will enter
into a written escrow agreement substantially in the form
attached hereto in Schedule 10 (the "Escrow Agreement") pursuant
to which Contractor will deposit with the escrow agent
applicable Technical Materials available at that time related to
such Terminals (the "Escrowed Materials"). Contractor shall
update the Escrowed Materials following the conclusion of Alpha
and Beta testing, upon delivery of the Seed Order and at the end
of each calendar quarter thereafter. The Parties shall share the
fees payable to Fort Knox Escrow Services, Inc. equally.
Contractor represents and warrants that the Escrowed Materials
shall, at all times, be sufficient for an individual reasonably
experienced in satellite telecommunications technology to
understand and utilize such materials to manufacture and support
the Terminals as contemplated herein. During the Term,
Contractor will maintain such Escrow Materials current with
respect to the Terminals then utilized by AIL. Subject to the
restrictions set forth in the Escrow Agreement, the escrow agent
will make the Escrow Materials available to AIL upon AIL's
notice to the Contractor and the escrow agent that one of the
following has occurred if Contractor does not, within ten (10)
days thereafter, notify AIL and the escrow agent that it objects
to the release of the Escrow Material:
(i) the institution by Contractor of insolvency,
receivership or bankruptcy proceedings;
(ii) a general assignment by Contractor for the benefit of
creditors,
(iii) the appointment of a receiver for Contractor,
(iv) the filing by creditors of Contractor of a petition in
bankruptcy against Contractor which is not stayed or
dismissed within sixty (60) days;
(v) Contractor ceasing to manufacture or to deal in the
Terminals;
(vi) Contractor's failure to reasonably correct or cure any
material Defects in the Terminals in accordance with
this Agreement following Contractor's receipt of a
written notice thereof from AIL; or
(vii) AIL's termination of this Agreement for Cause in
accordance with Section 23.1
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(items (i) through (vii) hereinafter referred to as the
"Release Conditions").
(b) In accordance with the Escrow Agreement, the escrow agent will
give written notice to Contractor contemporaneously with the
delivery of the Escrow Materials to AIL. In the event it is
determined that a Release Condition did not occur or is cured to
AIL's reasonable satisfaction, AIL will be required to promptly
return the Escrow Materials to the escrow agent.
(c) AIL shall be entitled to use the Escrow Materials as necessary
to support and maintain its purchased Terminals as well as to
manufacture, or have manufactured, Terminals only to fulfill
Contractor's obligations hereunder, including obligations that
may arise in the future or at Contractor's election in
accordance with the terms hereof. Notwithstanding the foregoing,
in the case of Subsection 10.6(a)(vi) above, AIL may use the
Escrow Materials only to cure or resolve such Defect. Such use
shall include the right to copy, disclose, modify, enhance,
upgrade, revise, and create derivative works of such Escrow
Materials. AIL shall be entitled to permit its officers,
employees, agents, advisors, third party consultants and Service
Providers to use the Escrow Materials on behalf of AIL. With
respect to AIL disclosures to third parties, AIL agrees to only
disclose the Escrow Materials to third parties that are working
for AIL under a confidentiality arrangement. AIL will
immediately return the Escrow Materials, including all copies
thereof, to the Escrow Agent when AIL no longer requires the
Escrow Materials for the purposes permitted hereunder.
11. TRAINING; MAINTENANCE
11.1 TRAINING.
Contractor will provide AIL and its Service Providers training in
accordance with the following:
(a) During a twelve month period, as mutually agreed by the Parties,
Contractor shall provide training on agreed-upon terms and
prices on a worldwide regional basis to AIL, Service Providers,
and their designated third party maintenance providers on
Terminal installation procedures, including software loading,
antenna polarization, antenna mounting, terminal initialization,
antenna pointing, satellite acquisition, software use and
maintenance, special installation procedures for harsh
environment and high-rise buildings, and any other subjects
necessary to provide first level maintenance and to install the
Terminals. These courses will be available at
Contractor-designated facilities or at AIL-designated facilities
when mutually agreed. This training will consist of formal and
informal classroom instruction and actual hands-on training in
laboratory environments. Contractor also reserves the right to
subcontract the training to designated third party vendor.
Contractor will have the option to enroll AIL or Service
Provider students into training classes held at either third
party or Contractor's training facilities.
(b) Contractor shall provide AIL (or its Service Providers at AIL's
sole discretion), * * * , two training courses (with content
consistent with the content and topics described in Subsection
(a) above) for attendance by up to twenty-five (25) AIL
designated individuals per course. Additional training desired
by AIL or its Service Providers will be mutually agreed upon.
(c) Contractor shall develop and furnish all training materials.
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(d) Contractor shall, at commercially reasonable prices and terms,
provide all remedial training and training on any changes,
updates and enhancements to the Terminals or as otherwise
necessary for AIL and its Service Providers to be capable of
performing all necessary services, including installation,
operation, maintenance, provisioning, monitoring and control of
the Terminals.
11.2 MAINTENANCE.
Contractor will have the ability to service or will have an agreement
with others to service Terminals in each country where Terminals are
distributed. Contractor shall create service manuals and maintenance
documents, in the English language, for all versions and generations of
the Terminals, which shall be provided to AIL and Service Providers for
use by them and their designated third party maintenance providers.
During the Warranty Period and Extended Warranty Period, Contractor
shall provide second-tier customer support to the help desk of
designated maintenance providers of AIL, its Service Providers or Users
on a 24 x 7 x 365 basis to answer such maintenance providers'
maintenance-related questions with respect to the Terminals. The Parties
agree to develop and agree to appropriate standards for promptness of
help desk support (responsiveness, resolution and escalation), which
shall constitute part of the Service Standards as described in Section
13.1 below. At AIL's request, Contractor shall provide to AIL the costs
and fees associated with translating and providing non-English language
service manuals and maintenance documents.
12. CHANGE PROCEDURES AND CONTRACT MANAGEMENT
12.1 DEVELOPMENT PHASE CHANGE PROCEDURES.
During the Term, AIL may require changes in this Agreement, including
the applicable provisions of the SOW. Within fifteen (15) days of AIL's
requested change, Contractor shall provide AIL with a summary of the
effect of such changes on the price (recurring and non-recurring) and
time required for performance, and AIL shall elect whether to pursue
such change. Should any such change increase or decrease the price of or
time required for performance of Contractor's or its Subcontractors'
obligations hereunder, Contractor shall be entitled to a reasonable
adjustment in the Milestone Payments, Wholesale Price or delivery
schedule, as applicable. Price adjustments shall account only for the
net cost impact incurred by Contractor as a result of the change plus a
reasonable profit thereon not to exceed * * *. Contractor will provide
reasonably detailed back-up cost data to support its claim for
adjustment. All AIL-proposed Changes developed under this Section shall
be warranted and supported by Contractor as if part of the Terminal when
first deployed.
12.2 PRODUCTION PHASE CHANGE PROCEDURES.
(a) Contractor shall also develop and provide for sale to AIL
Terminal modifications and enhancements and new commercially
available products in accordance with the following:
(i) From time to time during the Term, AIL may provide to
Contractor a proposed change in or addition to the
Terminals or a written idea for a new product (an
"AIL-proposed Change"). All such AIL-proposed Changes
shall be considered AIL Background Information for
purposes hereof; provided, however, that this will not
restrict the Parties making the AIL-proposed Change
subject of the proposal an agreed upon commercial
product as provided herein.
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(ii) Within thirty (30) days of receipt of an AIL-proposed
Change, Contractor shall propose a price for the
AIL-proposed Change and applicable delivery schedule. In
determining such price, if the AIL-proposed Change
includes a request for Contractor to correspondingly
reduce or eliminate any components of the Terminals it
is then providing, such components shall be considered
"Replacements." In that event, the Parties shall
determine the costs and expenses required to provide the
Replacements and the reduction in the costs and expenses
related to the components being replaced, and there
shall be an appropriate adjustment in the applicable
price for such costs and expense being replaced.
(iii) If AIL in its sole discretion accepts such price with
respect to items and delivery schedule (A) Contractor,
at its sole cost and expense, shall design, develop
and/or manufacture or have manufactured such
AIL-proposed Change in accordance with the proposed
delivery schedule and (B) AIL shall grant Contractor
(including its Subcontractors, if necessary) all rights
it has as necessary to permit Contractor (including its
Subcontractors, if necessary) to design, develop and/or
manufacture such AIL-proposed changes.
(iv) All AIL-proposed Changes developed under this Subsection
(a) shall be warranted and supported by Contractor as if
part of the Terminal when first deployed.
(v) To the extent that any AIL-proposed Change effects a
delivery schedule hereunder, the Parties will
appropriately adjust Contractor's delivery obligations
hereunder.
(b) No changes in or additions to any Terminal, Equipment, Software
or new products provided herein, or additional charges
therefore, shall be made unless approved in writing by the AIL
Contract Manager. Notwithstanding anything to the contrary
herein, Contractor is authorized, without AIL's prior approval,
to make changes that do not affect a Terminal's compliance with
applicable Standards and the applicable provisions of the SOW,
including applicable interface specifications, in a manner
consistent with Section 6.5 above.
12.3 CONTRACTOR-PROPOSED CHANGES.
(a) All Contractor-proposed changes to the SOW shall be submitted to
AIL in a written proposal that describes in reasonable detail
the proposed change and the technical, performance and economic
effects on the Terminals and the AIL System of such change. To
maintain the viability of AIL-approved sources of each class of
Terminals, all changes to the SOW proposed by Contractor or
co-exclusive vendor (either, the "Proposing Vendor") for any
Terminal shall be evaluated by AIL, and may be evaluated at
AIL's discretion by the other co-exclusive vendor (the
"Evaluating Vendor") for such Terminal to determine that such
change will not have a substantial negative effect on the
Evaluating Vendor's continued ability to produce such Terminal
competitively. If AIL determines that such change will have a
substantial negative effect, AIL may decline to change the SOW,
or AIL may direct the Proposing Vendor to license to the
Evaluating Vendor such Intellectual Property Rights of the
Proposing Vendor as may be required to reasonably enable the
Evaluating Vendor to be able to manufacture Terminals to meet
the revised SOW, all at a commercially reasonable terms and
royalty or license fee. The
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foregoing provision shall not be enforceable against Contractor
unless AIL's other co-exclusive terminal vendor is bound by a
substantially similar provision.
(b) If changes to any Standard from time to time after the Effective
Date require material changes to be made to the Terminals (or
any configuration of Terminals being shipped to a particular
country) that would result in a material impact on either the
applicable Wholesale Prices, non-recurring costs and expenses or
delivery schedule of such Terminals, the Parties agree to
negotiate in good faith and to reasonably adjust Contractor's
applicable Wholesale Price, non-recurring payments and delivery
schedules to accommodate such Standards change. Each Party will
advise the other Party at such time as it becomes aware of any
such changes or proposed changes to any Standard.
12.4 CONTRACT MANAGEMENT.
(a) As of the Effective Date, each Party shall appoint an executive
to act as contract manager having the primary responsibility for
performance of its company's obligations hereunder and for
managing the relationship between the Parties (the "Contractor
Contract Manager" or the "AIL Contract Manager", as the case may
be). Each Contract Manager shall devote the necessary time and
efforts to managing its company's responsibilities under this
Agreement, and have authority to escalate all unresolved
problems to its senior management. Each Party also shall
identify a primary contact who shall serve as the point of
contact for all day-to-day and operational issues.
(b) Beginning on the Effective Date and pursuant to the SOW,
Contractor shall provide monthly reports (the format and content
of which shall be mutually agreed by the Parties and which shall
include new issues, resolutions of previously identified issues,
status, management, performance to SOW and to applicable
Standards, schedules, change control, Terminal failures,
shipment reports, purchase order reports, remediation and
repair, quality assurance, technology reports and project
schedule charts) and such other information as AIL may
reasonably request and shall meet with AIL as necessary to
inform AIL on the status of the Terminals and Services.
(c) Beginning with the quarter-ending after the first production
Terminal shipments, Contractor shall provide, in accordance with
the SOW, quarterly - reports as required by the SOW (the format
and content of which shall be mutually agreed by the Parties)
and regarding (1) orders and shipment, including a detailed
itemized description of Terminals ordered and/or shipped during
the reporting period, the ship-to location and date of delivery,
and aggregate dollar value of Terminals shipped during the
reporting period; (2) Terminal failure rate and causes/pattern
of such failures, and Terminal repairs and replacements; (3)
status of Type Approvals; and (4) such other information as AIL
may reasonably request.
(d) Contractor agrees to maintain open and collaborative dialogue
with AIL and offer full disclosure with respect to:
(i) the Milestone and Payment Schedule milestones and
decisions made by Contractor on an on-going basis
throughout the design process and the remainder of the
term;
(ii) the status of delivery of Terminals and Services
provided hereunder;
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(iii) the state of affairs regarding any aspect of the
Terminals;
(iv) all pertinent limitations and problems with the
Terminals; and
(v) its known limitations of its work or the Terminals.
12.5 CONTRACTOR PERSONNEL.
(a) "Key Contractor Personnel" shall be the Contractor and
Subcontractor personnel filling the positions identified in
Schedule 11 hereto.
(b) The Key Contractor Personnel shall be located at the site(s)
that the Parties believe will permit the most effective
performance of Contractor's obligations hereunder.
(c) Before assigning an individual to any position described in
Schedule 11, whether as an initial assignment or a subsequent
assignment, Contractor shall notify AIL of the proposed
assignment, shall introduce the individual to appropriate AIL
representatives, and shall provide AIL with a biography and
other information about the individual as reasonably requested
by AIL. If AIL in good faith objects to the proposed assignment,
the Parties shall attempt to resolve AIL's concerns on a
mutually agreeable basis. If the Parties have not been able to
resolve AIL's concerns within five (5) business days, Contractor
shall not assign the individual to that position and shall
propose to AIL the assignment of another individual of suitable
ability and qualifications. The Key Contractor Personnel that
have been approved as of the Effective Date are listed in
Schedule 11. Key Contractor Personnel may not be transferred or
re-assigned, except in the case of termination of employment,
until a suitable replacement has been approved by AIL, such
approval not to be unreasonably withheld. In no event shall any
Key Contractor Personnel be transferred or re-assigned by
Contractor to perform work for a Competitor of AIL deploying
satellite switched networking technology for a period of * * *
following the date such individual terminates work related to
this Agreement. Contractor shall conduct an exit interview with
all Key Contractor Personnel who terminate their employment with
Contractor to review their confidentiality and non-disclosure
obligations as provided herein.
12.6 REPLACEMENT, QUALIFICATIONS, AND RETENTION OF CONTRACTOR PERSONNEL.
(a) In the event that AIL determines in good faith that the
continued assignment to work performed hereunder of a Contractor
employee is not in the best interest of AIL, then AIL shall give
Contractor written notice to that effect requesting that the
employee be replaced. Promptly after Contractor's receipt of
such a request by AIL, Contractor shall investigate the matters
stated in the request and discuss its findings with AIL. If AIL
still in good faith requests replacement of the employee, the
Parties shall negotiate in good faith the resolution of this
matter.
(b) The personnel Contractor assigns to perform its obligations
hereunder shall be properly educated, trained and qualified for
the services they are to perform.
(c) AIL and Contractor both agree that it is in their best interests
to keep the turnover rate of the Contractor Personnel performing
its obligations hereunder to a reasonably low level.
Accordingly, if AIL determines that turnover rate of the
Contractor Personnel is excessive and so notifies Contractor,
Contractor shall meet with AIL to discuss the
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general reasons for the turnover rate. If appropriate,
Contractor shall submit to AIL its proposals for reducing the
turnover rate, and the Parties shall mutually agree on a program
to bring the turnover rate down to an acceptable level. In any
event, notwithstanding transfer or turnover of Contractor
Personnel, Contractor remains obligated to perform its
obligations hereunder without degradation.
12.7 AIL THIRD PARTY SERVICES AND PRODUCTS.
(a) Contractor agrees to provide all reasonable cooperation with the
agents, consultants, subcontractors and third party suppliers of
AIL as requested by AIL to achieve functional compatibility of
the Terminals with the AIL System.
(b) Third parties retained by AIL shall comply with Contractor's
reasonable security and confidentiality requirements, and shall,
to the extent performing work on Contractor-owned, licensed or
leased Software, Terminals or Equipment, comply with
Contractor's reasonable work standards, methodologies and
procedures. Contractor shall immediately notify AIL if an act or
omission of such a third party may cause a problem or delay in
providing the Terminals or Services and shall work with AIL to
prevent or circumvent such problem or delay.
12.8 PRIME CONTRACTOR.
Contractor acknowledges and agrees that it is the prime contractor under
this Agreement and as such, assumes full responsibility and liability
for the performance of all Contractor Personnel and third parties used
by Contractor hereunder to the same extent as if such obligations were
performed by Contractor. Without limiting the generality of the
foregoing, Contractor shall be responsible for discharging any Liens
placed on any Terminals, Equipment or Software purchased by AIL, its
Service Providers or Users hereunder, except for purchase money security
interests as described in Section 24.17 below. Contractor shall be AIL's
sole point of contact regarding the work performed hereunder, including
with respect to payment.
12.9 CONTRACTOR'S USE OF SUBCONTRACTORS.
(a) As of the Effective Date, AIL hereby approves the following
Subcontractors: the Principal Subcontractors and those entities
set forth in Schedule 12. All Subcontractors to which Contractor
discloses AIL Confidential Information must agree in writing to
be bound to the non-disclosure, confidentiality and invention
assignment provisions contained herein.
(b) Except as provided in Subsection (a) of this Section and to the
extent AIL may agree otherwise in writing, Contractor shall not
subcontract any of its obligations under this Agreement, which
shall include the replacement of any previously approved
Subcontractor, if the value of the subcontract is * * * or more
(such subcontract or replacement subcontract, the "Material
Subcontract" and the subcontractor proposed to perform same, the
"Material Subcontractor"), except as follows:
(i) Prior to entering into a Material Subcontract,
Contractor shall give AIL not less than thirty (30)
days' prior written notice specifying the Services
affected, a description of the scope and material terms
(other than price) of such Material Subcontract, and the
identity and qualifications of the proposed Material
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Subcontractor. If AIL reasonably objects to the use of a
proposed Material Subcontractor, the parties shall
discuss AIL's concerns and Contractor will either use a
different Material Subcontractor or provide AIL a
detailed rationale in writing as to why it will use the
proposed Material Subcontractor.
(ii) Contractor shall disclose to the Subcontractor all the
terms and conditions of the Agreement that may impact
the Subcontractor, and the Subcontractor will be
required to comply with the obligations imposed by those
terms and conditions.
(iii) AIL also shall have the right during the Term to revoke
its prior approval of a Material Subcontractor and
direct Contractor to replace such Subcontractor or take
such other action as may be mutually agreed by the
Parties, if the Subcontractor's performance results in
an uncured material breach of this Agreement.
Notwithstanding the foregoing, AIL does not have the
unilateral right to revoke Contractor's use of any
Principal Subcontractor as a Subcontractor hereunder.
(iv) Without limiting the generality of Contractor
obligations set forth in Section 12.6, Contractor shall
remain responsible for obligations performed by
Subcontractors to the same extent as if such obligations
were performed by Contractor employees. Contractor shall
be AIL's sole point of contact regarding the Terminals
and Services, including with respect to payment
Contractor shall not disclose Confidential Information
of AIL or Joint Confidential Information to a
Subcontractor unless and until such Subcontractor has
agreed in writing to protect the confidentiality of such
information in a manner substantially equivalent to that
required of Contractor under this Agreement, and in all
respects, only on a "need-to-know" basis.
12.10 ON-SITE REPRESENTATIVES.
Contractor agrees to provide reasonable office space and telephone and
data line access at Contractor's primary design and manufacturing
site(s) to AIL employees and designated representatives from time to
time (each, an "On-Site Representative"). Each On-Site Representative
shall have access to the work being performed by Contractor hereunder on
a non-interference basis, including:
(a) the ability to move without escort within designated
unrestricted areas within appropriate facilities;
(b) visibility into development and production of Terminals;
(c) right to attend regularly scheduled meetings, reviews and tests;
and
(d) electronic access to Terminal-related documents and a right to
copy same.
13. SERVICE STANDARDS
13.1 GENERAL.
By no later than sixty (60) days after the Effective Date, the Parties
will develop and agree upon meaningful quantitative and qualitative
standards of service governing Contractor's provision of the Terminals
to AIL, Service Providers and Users, including the components thereof,
and
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performance of the Services, in which shall be attached hereto as
Schedule 13 (collectively, the "Service Standards"). Contractor agrees
to perform its applicable obligations hereunder in accordance with the
Service Standards.
13.2 CONTRACTOR'S FAILURE TO PERFORM.
Contractor shall, on each occasion on which it fails to meet any
Service Standard:
(i) Promptly investigate and report on the root causes of
the problem;
(ii) Correct the problem and begin meeting the Service
Standard as soon as possible;
(iii) * * *; and
(iv) Advise AIL of the status of remedial efforts being
undertaken with respect to such failure.
13.3 PERIODIC REVIEWS.
Upon six (6) months after the date of Acceptance of the Terminals, and
at least annually thereafter, AIL and Contractor shall review the
Service Standards and shall make adjustments to them as appropriate to
reflect improved performance capabilities associated with advances in
the technology and methods used to provide the Terminals, including the
components thereof, and Services.
13.4 MEASUREMENT AND MONITORING TOOLS.
Contractor shall utilize the necessary measurement and monitoring tools
and procedures required to measure and report Contractor's provision of
the Terminals, and Services against the applicable Service Standards.
Such measurement and monitoring shall permit reporting at a level of
detail sufficient to verify compliance with the Service Standards, and
shall be subject to review, examine and/or audit by AIL. Contractor
shall provide AIL with information and access to such tools and
procedures upon request, for purposes of verification.
13.5 AIL'S FAILURE TO PERFORM.
AIL's failure to perform any of its responsibilities set forth in this
Agreement (other than AIL's obligations to pay undisputed amounts under
Section 15.4) shall not be grounds for termination by Contractor. The
foregoing sentence shall not limit Contractor's right to claim that
AIL's failure to perform is a material breach for any other purpose
under this Agreement. Contractor's nonperformance of its obligations
under this Agreement shall be excused if and to the extent (i) such
Contractor nonperformance results from AIL's failure to perform its
responsibilities, (ii) Contractor provides AIL with reasonable notice of
such nonperformance, and (iii) Contractor uses commercially reasonable
efforts to perform its obligations notwithstanding AIL's failure to
perform.
13.6 AIL'S SUSPENSION OF WORK.
Notwithstanding the foregoing Section 13.5, AIL, by written notice, may
at any time suspend work (including suspension of production work,
delivery of Terminals and payment therefor, excluding suspensions due to
catastrophic failures of satellites) for a period not to exceed * * *,
and for further periods agreed to by the Parties. The Parties will agree
to appropriate
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adjustments to the Terminal Wholesale Price, delivery schedule and
Milestones, but only to the extent that Contractor demonstrates that
such suspension results in an increase in the cost to Contractor and a
delay in performance hereunder. Such suspension of work shall not be
considered a failure to perform or breach of this Agreement.
Notwithstanding the foregoing, if AIL suspends work more than * * *
period of the Term (excluding suspensions due to catastrophic failures
of satellites), Contractor, at Contractor's election, may require upon
written notice to AIL that AIL terminated this Agreement for its
convenience and in accordance with Section 23.2. The Parties shall work
together to minimize the impact of such suspension on pricing, delivery
schedule and Contractor's performance (and AIL's liability in the event
of termination). Any such suspension does not excuse AIL from paying
undisputed amounts.
13.7 GENERAL PERFORMANCE AWARD.
When Contractor provides exceptional performance (including, without
limitation, meeting delivery requirements of AIL, Service Providers
and/or Users), AIL, in its sole discretion, may pay Contractor a
monetary award under this Agreement (the "General Performance Award").
Such General Performance Award may be in an annual amount to be
determined by AIL within sixty (60) days after the Effective Date.
Contractor has no "right" to receive a Performance Award in a given
year. AIL may at its sole discretion pay the General Performance Award
to Contractor.
14. TERMINAL PRICES
14.1 GENERAL.
Contractor agrees to offer Terminals for sale to AIL's Service Providers
at the prices per Terminal no greater than those Wholesale Prices
offered to AIL hereunder. Accordingly, AIL and it Service Providers may
purchase Terminals, Equipment, Services and Documentation (in addition
to the Terminals covered in the Seed Order and MQPC) at prices that do
not exceed the Wholesale Prices. The Wholesale Price of each Terminal
shall include such Terminal and the items set forth in Section 1.7 of
the SOW. If Contractor fails to offer the Terminals for sale at prices
no greater than the Wholesale Prices specified herein (notwithstanding
the fact that Contractor and the purchasing party (either AIL or a
Service Provider) mutually agree upon a different purchase price), AIL
shall be entitled to terminate the Co-Exclusivity Right, as its sole
remedy during the Co-Exclusivity Period, as to such class of Terminal or
all classes of Terminals after thirty (30) days written notice, unless
in which time Contractor cures the pricing breach. Following the
Co-Exclusivity Period, if Contractor materially fails (after the
applicable cure period) to offer the Terminals for sale at prices no
greater than the Wholesale Prices, as specified herein or determined in
accordance with Section 14.2 (unless otherwise mutually agreed by
Contractor and AIL or a Service Provider, as the case may be), AIL shall
be entitled to terminate this Agreement in accordance with Section
23.1(a) and cancel its outstanding Orders in accordance with Section
8.8. If AIL so terminates this Agreement for Contractor's uncured
material breach of this Section, (i) AIL shall be entitled to have
Contractor's obligations hereunder completed by another party or
parties, and (ii) Contractor shall not be liable to AIL for damages
pursuant to Section 23.3(b) below or otherwise, provided that Contractor
reasonably fulfills its obligations under Sections 23.3(a) and 23.4 and
reasonably performs its other post-termination obligations hereunder.
Notwithstanding the foregoing, AIL may not terminate this Agreement for
Cause as provided above if AIL, at the time of termination, has two or
more active vendors of Terminals (excluding Contractor). The foregoing
remedies shall be AIL's sole remedies for breach of this Section.
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14.2 DETERMINATION OF WHOLESALE PRICES; ADJUSTMENTS.
(a) The applicable Wholesale Prices for Terminals shall be mutually
agreed by the Parties prior to the beginning of Contract Year *
* * and each subsequent Contract Year as follows. AIL and
Contractor shall meet at least three (3) months prior to the
start of the Contract Year and mutually agree upon a forecast
for that Contract Year (on both quarterly and annual bases) of
the approximate number of Terminals and Comparable Terminals
that AIL expects to be sold and delivered into all markets by
all vendors of Terminals and Comparable Terminals (the "Annual
Forecast Number") and establish the Wholesale Price for such
Contract Year in accordance with Schedule 4, as may be amended
by the Parties to provide for additional Terminal configurations
and Contract Years through the end of the Term. This Annual
Forecast Number shall be updated on a quarterly basis against
the actual quantities sold by all Terminal vendors in all
markets and any other factors as agreed by the Parties, and the
Wholesale Price applicable to the remainder of the Contract Year
shall be adjusted up or down in accordance with Schedule 4 based
on the revised Annual Forecast Number. The initial Annual
Forecast Number is set forth in Schedule 6, or such increased
number as the Parties may agree. The Wholesale Price offered to
AIL and Service Providers for that particular Contract Year
shall not exceed the Wholesale Price set forth on Schedule 4
corresponding to the Annual Forecast Number. The Parties shall
mutually agree upon Wholesale Prices for Contract Years * * *
and beyond. If the Terminals (or costs to produce such Terminals
resulting from factors beyond Contractor's reasonable control)
have not substantially changed from Contract Year * * * to
Contract Year * * * and beyond, the Wholesale Prices for
Terminals delivered in Contract Year * * * and beyond shall not
exceed the Wholesale Prices for Contract Year * * *. Wholesale
Prices set forth in Schedule 4 (as of the Effective Date), are
for Terminals complying, without any modifications which would
result in a material impact on Terminal non-recurring
engineering expense, Wholesale Price or delivery schedule, with
relevant FCC, ETSI and EU standards (as in effect as of the
Effective Date), including Type Approval and blanket licensing
requirements (when appropriate), for all * * * Countries. It is
the intent of the Parties that such Terminals are suitable for
similar authorizations including Type Approval and blanket
licensing (if applicable). In the event a * * * Country is
identified which would require a material Terminal modification
that would materially impact Terminal non-recurring engineering
expense, Wholesale Price or delivery schedule, Contractor will
provide AIL a proposal pursuant to Section 12.3(b). The Parties
may amend Schedule 4 from time to time as needed to include
Wholesale Prices for additional Terminal configurations
supporting Standards for * * * Countries or for other Terminal
modifications and enhancements in accordance with Section
12.3(b), on a reasonable price basis.
(b) By no later than January 31 of the year following the subject
Contract Year (unless otherwise agreed by the Parties), AIL
shall report to Contractor the aggregate number of Terminals and
Comparable Terminals actually sold and delivered by Contractor
and all other vendors of Terminals and Comparable Terminals. In
addition, within thirty (30) days of the end of each calendar
quarter, AIL shall update such forecast to Contractor as
described above.
14.3 MOST FAVORED CUSTOMER AND BENCHMARKING.
(a) Most Favored Customer. If Contractor provides Terminals,
Comparable Terminals or terminals that are substantially
functionally similar to Terminals, to a Service Provider
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or User of AIL or to a Competitor of AIL and the prices charged
to such User or Competitor for such terminals are lower than the
prices charged to AIL for similar business terms, quantities and
delivery dates, on a regional basis, the prices charged to AIL
shall be appropriately adjusted to provide to AIL the benefit of
such lower prices. Such adjustment shall be retroactive to the
first date on which the lower charges to such User or Competitor
became effective. Within thirty (30) days after the Effective
Date of this Agreement and each anniversary of the Effective
Date during the Term (as it may be extended), Contractor's chief
financial officer shall certify in writing to AIL that
Contractor is in compliance with Contractor's Most Favored
Customer Status obligations herein and shall provide the
information reasonably requested by AIL to verify such
compliance. AIL shall retain the right to review, examine and/or
audit Contractor using third party independent auditors if (1)
the above certification is not so provided by Contractor or (2)
AIL has reason to believe that information provided by
Contractor is inaccurate.
(b) Benchmarking. If AIL presents Contractor with credible evidence
that terminals for comparable and competitive systems (i.e.,
Competitors of AIL) or for the AIL System are available in a
given country at Prices more than * * * lower ("Substantially
Lower Prices") than those offered by Contractor for comparable
quantities under normalized payment terms (to account for net
present value of the respective payment plans) under similar
terms, conditions and specifications, AIL shall provide
Contractor with the opportunity to match said lower prices. If
Contractor elects not to match said lower prices, AIL shall be
entitled to terminate the Co-Exclusivity Right with Contractor
with respect to that country. This provision shall not apply to
Wholesale Prices offered by AIL's other co-exclusive vendors
during the Co-Exclusivity Period.
(c) Pricing Cooperation. Both Parties shall cooperate to assure that
the price AIL charges for its services and the price Contractor
charges for its Terminals are competitive in each country in
which such services and Terminals are offered for sale by AIL
and Contractor, respectively. Both Parties agree to work
diligently throughout the Term to lower the pricing of the
Terminals to become and remain competitive in the User markets
served by AIL.
14.4 TAXES.
Unless otherwise agreed to by the Parties in an Order, the Parties'
respective responsibilities for taxes arising under or in connection
with this Agreement shall be as follows:
(a) Each Party shall be responsible for any personal property taxes
on property it owns or leases, for franchise and privilege taxes
on its business, and for taxes based on its net income or gross
receipts.
(b) Contractor shall be responsible for any sales, use, excise,
value-added, services, consumption, and other taxes, customs and
duties assessed or otherwise payable by Contractor on any goods
or services that are used or consumed by Contractor in providing
the Terminals and Services where the tax is imposed on
Contractor's acquisition or use of such goods or services and
the amount of tax is measured by Contractor's costs in acquiring
such goods or services.
(c) AIL shall be responsible for any sales, use, excise,
value-added, services, consumption, or other tax, customs and
duties assessed on any particular Terminal or Service
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purchased by AIL and delivered by Contractor to AIL or designee
hereunder. Such taxes are in addition to the prices set forth
herein and shall be identified separately on invoices. AIL shall
also be responsible for taxes on goods and services for those
items AIL has agreed to reimburse Contractor in this Agreement.
(d) The Parties agree to cooperate with each other to enable each to
more accurately determine its own tax liability and to minimize
such liability to the extent legally permissible. Contractor's
invoices shall separately state the amounts of any taxes
Contractor is collecting from AIL. Each Party shall provide and
make available to the other any resale certificates, information
regarding out-of-state or out-of-country sales or use of
equipment, materials or services, and other exemption
certificates or information reasonably requested by either
Party.
(e) Contractor shall promptly notify AIL of, and coordinate with AIL
the response to and settlement of, any claim for taxes asserted
by applicable taxing authorities for which AIL is responsible
hereunder, it being understood that with respect to any claim
arising out of a form or return signed by a Party to this
Agreement, such Party shall have the right to elect to control
the response to and settlement of the claim, but the other Party
shall have all rights to participate in the responses and
settlements that are appropriate to its potential
responsibilities or liabilities. If AIL requests Contractor to
challenge the imposition of any tax, and Contractor agrees to do
so, AIL shall reimburse Contractor for the reasonable legal fees
and expenses it incurs. AIL shall be entitled to any tax refunds
or rebates granted to the extent such refunds or rebates are for
taxes that were paid by AIL.
15. AIL PAYMENTS TO CONTRACTOR AND INVOICING
15.1 INITIAL PAYMENT.
Within ten (10) days after AIL's receipt of an invoice therefor by
Contractor, AIL will pay to Contractor the sum of * * * (the "Initial
Payment") by electronic funds transfer in accordance with Contractor's
wire instructions provided to AIL prior to the Effective Date. The
Initial Payment shall constitute an NRE Payment (for Milestone No. 1) as
described in Section 15.2 below.
15.2 PAYMENTS.
(a) In accordance with the Milestone and Payment Schedule, AIL will
pay Contractor nonrecurring engineering payments in the
aggregate of * * * (the "NRE Payments"). NRE Payments shall be
conditioned on the achievement by Contractor of certain
Milestones, as described in Section 15.3 below. If within sixty
(60) days of the Effective Date, AIL notifies Contractor in
writing that it does not desire Contractor to develop and
produce * * * capability of the Terminal, then AIL's aggregate
NRE Payment obligation hereunder shall be reduced to * * * , and
the Milestone Payment for Milestone 8 shall be reduced by * * *.
The NRE Payments shall cover services provided by Contractor
including, without limitation, Terminal design and development
obligations; the development, integration and production of the
adaptive equalizer capability of the Terminals (as set forth in
the SOW); Terminal prototypes; pre-production Terminals;
Acceptance testing; Support Services (of up to * * *
staff-hours, with the allocation of such hours as approved by
AIL), as defined in Section 3 of the SOW, and Contractor shall
be responsible for such other obligations as are set forth in
the SOW. If AIL
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requests Contractor support hours in excess of * * *
staff-hours, Contractor shall provide such services at rates not
to exceed Contractor's time and materials rates set forth in
Schedule 14. AIL will reimburse Contractor for its reasonable
travel and related expenses required in performing Support
Services, in accordance with Schedule 14. All Milestone Payments
shall be paid in accordance with Section 15.3 and 15.4 below.
The NRE Payment hereunder shall satisfy all AIL's unpaid
financial obligations to Contractor pursuant to that certain
Contract for Engineering Services Agreement dated March 29, 2000
(the "Services Agreement").
(b) Following Contractor's successful completion of Production
Readiness Review as set forth in the SOW and AIL's Acceptance of
same, Contractor shall invoice AIL for an amount equal to * * *
of the Seed Order value. AIL shall pay such invoiced amount at
least one hundred eighty days (180) prior to the initial
scheduled date of delivery of the Seed Order Terminals pursuant
to Schedule 18, provided that (i) Contractor timely invoices
AIL, (ii) Contractor has successfully completed and AIL has
approved Contractor's readiness to deliver the Seed Order in
accordance with Section 3.2.4 of the SOW and (iii) Contractor
certifies to AIL in writing that Contractor continues to meet
the requirements of the Production Readiness Review. The
remaining balance of * * * per Terminal shall be due upon
delivery of each Terminal in accordance with Sections 15.3 and
15.4 below.
15.3 INVOICING.
(a) Following (i) Contractor's successful completion of each
Milestone in accordance with the applicable Milestone Acceptance
Criteria and all other applicable requirements of this Agreement
and (2) Acceptance by AIL that the Milestone is complete,
Contractor may invoice AIL for the applicable Milestone Payment.
Each invoice shall be accompanied by Contractor's written
certification that each Milestone to which the invoice relates
has been fully and successfully completed in accordance with the
Milestone Acceptance Criteria.
(b) Upon shipment of Terminals pursuant to an Order (including the
Seed Order), Contractor will invoice AIL or the applicable
Service Provider for amounts due pursuant to this Agreement for
such Terminals. Such invoice shall include invoice date, Order
number, Terminal part numbers and descriptions, quantities, unit
prices and total amount due.
(c) For deliverables or services provided by Contractor (as mutually
agreed by the Parties and other than those required hereunder or
under the SOW), Contractor will invoice AIL upon delivery or at
such time as otherwise mutually agreed. For Services (other than
those required hereunder or under the SOW), Contractor will
invoice AIL upon completion of the performance of such Services
or at such times as mutually agreed. For annual Extended
Warranty Services, Contractor will invoice AIL quarterly in
advance. For fees and expenses incurred under Section 15.2 (for
travel expenses related to the Support Services) and under
Schedule 14, Contractor will invoice AIL monthly in arrears. All
such invoices shall include invoice date, Order number,
description, quantities, unit prices and total amount due. For
invoices where the prices are not set forth in the Agreement,
Contractor shall provide upon request, the calculations utilized
to establish any charges and supporting details and information
as to charges; provided, however that to the extent that a firm
pricing quotation previously delivered to AIL by Contractor
expressly provides such calculations, details and information,
Contractor may
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cross-reference such quotation in the applicable invoice in lieu
of Contractor including such calculations, details or
information, as applicable.
(d) Invoices shall separately state the amounts of any taxes as set
forth in Section 14.4(c) that Contractor is collecting from AIL.
15.4 PAYMENT DUE.
(a) Subject to Sections 15.8 and 21.3, and the other provisions of
this Article 15, invoices provided for under Section 15.3 and
properly submitted to AIL pursuant to this Agreement shall be
due and payable by AIL within thirty (30) days after receipt by
AIL. Milestone Payments will be considered due and payable when
the corresponding Milestone is deemed Accepted.
(b) All amounts due and payable to Contractor under this Article 15
shall be paid, at AIL's option, either (i) by check payable to
the order of Contractor or (ii) by electronic funds transfer to
Contractor from account(s) designated by AIL.
(c) Invoices for payment of * * * hereunder and any other undisputed
amounts owed by Contractor to AIL shall be due and payable by
Contractor within thirty (30) days after receipt of an invoice
by Contractor.
(d) All undisputed payments made after the due date hereunder will
be subject to an interest charge at an annual interest rate
equal to * * *, for each calendar day the payment is overdue
until the date payment is made.
15.5 ACCOUNTABILITY.
Contractor shall maintain complete and accurate records of and
supporting documentation for the amounts billable to and payments made
by AIL hereunder, in accordance with Article 17 and with generally
accepted accounting principles applied on a consistent basis. Contractor
agrees to provide AIL with documentation and other information with
respect to each invoice as may be reasonably requested by AIL to verify
accuracy of the invoices and compliance with the provisions of this
Agreement.
15.6 PRORATION.
Periodic charges under this Agreement are to be computed on a calendar
month basis, and shall be prorated for any partial month.
15.7 SET OFF.
With respect to any amount to be paid by a Party hereunder, under this
Agreement or any other agreement between the Parties, the Party may set
off against such amount any amount that the other Party is obligated to
pay such Party hereunder or thereunder.
15.8 DISPUTED CHARGES.
Subject to Section 15.7, AIL shall pay undisputed charges when such
payments are due under this Article 15. AIL may withhold payment of
particular charges that AIL disputes in good faith. AIL will notify
Contractor in the event it disputes any charges hereunder within ten
(10) days of receipt of the invoice for such disputed charges and will
set forth its reasons in reasonable detail
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for such dispute in such notification. All disputes under this Section
shall be resolved in accordance with Article 22 below. If AIL is found
liable to make the disputed payment, AIL will pay late payment charges
in accordance with Section 15.4(d).
15.9 ENCUMBRANCES.
Contractor shall not perfect any Lien upon any Terminal, Equipment or
Software provided pursuant to this Agreement except as otherwise
expressly permitted by this Agreement. All Terminals provided to AIL,
its Service Providers and Users shall be free and clear of all Liens in
accordance with Section 18.7, subject to Section 24.17.
16. INFORMATION; CONFIDENTIALITY
16.1 CONTRACTOR INFORMATION.
(a) Contractor Background Information and Contractor Foreground
Information shall be and remain the property of Contractor or
its licensors, as the case may be and, subject to Subsection
16.3(c), shall constitute Confidential Information of
Contractor. AIL shall not possess or assert any Lien against or
to Contractor Background Information or Contractor Foreground
Information. No Contractor Background Information or Contractor
Foreground Information, or any part thereof (excluding Joint
Confidential Information), shall be sold, assigned, leased, or
otherwise disposed of to third parties by AIL or commercially
exploited by or on behalf of AIL, its employees, vendors,
contractors or agents, except as expressly provided herein.
16.2 AIL INFORMATION.
(a) AIL Background Information and AIL Foreground Information shall
be and remain the property of AIL or its licensors, as the case
may be and, subject to Subsection 16.3(c), shall constitute
Confidential Information of AIL. Contractor shall not possess or
assert any Lien against or to any AIL Background Information or
AIL Foreground Information. No AIL Background Information or AIL
Foreground Information, or any part thereof (excluding Joint
Confidential Information), shall be sold, assigned, leased, or
otherwise disposed of to third parties by Contractor or
commercially exploited by or on behalf of Contractor, its
employees, vendors, contractors or agents, except as expressly
provided herein.
(b) Upon AIL's request, but subject to any continuing need of
Contractor to fulfill its obligations hereunder, the termination
or expiration of this Agreement (in whole or in part) for any
reason (including termination for cause) or, with respect to any
particular data, on such earlier date that the same shall be no
longer required by Contractor in order to render the Services
hereunder, such AIL Confidential Information (including copies
thereof) shall be promptly returned to AIL by Contractor in a
form reasonably requested by AIL or, if AIL so elects, shall be
destroyed. Contractor shall certify to AIL in writing that
Contractor has fully complied with the letter and the spirit of
this Subsection.
(c) AIL Confidential Information shall not be utilized by Contractor
for any purpose other than that of performing its obligations
hereunder.
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16.3 CONFIDENTIALITY.
(a) Confidential Information. Contractor and AIL each acknowledge
that they may be furnished with, receive, or otherwise have
access to information of or concerning the other Party which
such Party considers to be confidential, proprietary, a trade
secret or otherwise restricted. As used in this Agreement and
subject to Subsection (c)(i) of this Section, "Confidential
Information" means all information, in any form, furnished or
made available directly or indirectly by one Party to the other,
including such information developed by either Party hereunder
and used in or with the Terminals, which is marked confidential,
restricted, proprietary, or with a similar designation,
including all AIL Background Information, AIL Foreground
Information, Contractor Background Information and Contractor
Foreground Information. Confidential Information also shall
include, whether or not designated "Confidential Information",
(i) all specifications, designs, documents, correspondence,
software, documentation, Source Code, Escrowed Materials, data
and other materials and work products produced by either
Contractor or its Subcontractors in the course of performance of
this Agreement, (ii) all information concerning the operations,
affairs and businesses of a Party, the financial affairs of a
Party, and the relations of a Party with its customers,
employees and service providers (including customer lists,
customer information, account information and consumer markets),
(iii) software provided to a Party by or through the other
Party; and (iv) other information, systems designs and
architecture, and data stored on magnetic media or otherwise or
communicated orally by either Party, which a reasonable person
would assume to be confidential, and obtained, received,
transmitted, processed, stored, archived, or maintained by the
other Party under this Agreement.
(b) Obligations.
(i) Each Party's Confidential Information shall remain the
property of that Party or its licensors except as
expressly provided otherwise by the other provisions of
this Agreement. AIL and Contractor shall each use at
least the same degree of care, but in any event no less
than a reasonable degree of care, to prevent disclosing
to third parties the Confidential Information of the
other as it employs to avoid unauthorized disclosure,
publication or dissemination of its own information of a
similar nature; provided that the Parties may disclose
such Confidential Information to entities performing
services required hereunder including subcontractors,
suppliers or agents where (i) use of such entity is
permitted to be used under this Agreement, (ii) such
disclosure is necessary or otherwise naturally occurs in
that entity's scope of responsibility, and (iii) the
entity agrees in writing to assume the obligations
described in this Section 16.3.
(ii) As requested by AIL during the Term and upon expiration
or any termination of this Agreement (in whole or in
part) and completion of Contractor's obligations under
this Agreement subject to Contractor's continuing need
to fulfill its obligations hereunder, Contractor shall
return or destroy, as AIL may direct in writing, all
material in any medium that contains, refers to, or
relates to AIL Confidential Information, and retain no
copies. Contractor shall certify to AIL in writing that
it has compiled with the spirit and the letter of this
Subsection.
(iii) Each Party shall take reasonable steps to ensure that
its employees comply with this Section 16.3.
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(iv) In the event of any disclosure or loss of, or inability
to account for, any Confidential Information of the
furnishing Party, the receiving Party shall notify the
furnishing Party promptly upon becoming aware thereof.
(c) Exclusions.
(i) "Confidential Information" shall exclude any particular
information which Contractor or AIL can demonstrate (1)
was, at the time of disclosure to it, in the public
domain; (2) after disclosure to it, is published or
otherwise becomes part of the public domain through no
fault of the receiving Party; (3) was in the possession
of the receiving Party at the time of disclosure to it;
(4) was received after disclosure to it from a third
party who had a lawful right to disclose such
information to it without any obligation to restrict its
further use or disclosure; or (5) was independently
developed by the receiving Party without reference to
Confidential Information of the furnishing Party. In
addition, a Party shall not be considered to have
breached its obligations by disclosing Confidential
Information of the other Party as required to satisfy
any legal requirement or regulations of a competent
government body provided that, immediately upon
receiving any such request and to the extent that it may
legally do so, such Party advises the other Party
promptly and prior to making such disclosure in order
that the other Party may interpose an objection to such
disclosure, take action to assure confidential handling
of the Confidential Information, or take such other
action as it deems appropriate to protect the
Confidential Information.
(ii) Either Party may disclose the terms and conditions of
this Agreement to third parties that (1) have expressed
a bona fide interest in consummating a significant
financing, merger or acquisition transaction between
such third parties and the disclosing Party, (2) have a
reasonable ability (financial and otherwise) to
consummate such transaction, and (3) have executed a
nondisclosure agreement that includes within its scope
the terms and conditions of this Agreement. Each Party
shall endeavor to delay the disclosure of the terms and
conditions of this Agreement until the status of
discussions concerning such transaction warrants such
disclosure. In addition, either Party may disclose the
terms and conditions of this Agreement to its
subcontractors, suppliers and agents under
confidentiality obligations having a need to know.
(d) Loss of Confidential Information. In the event of any disclosure
or loss of, or inability to account for, any Confidential
Information of the furnishing Party, the receiving Party shall
promptly, at its own expense: (i) notify the furnishing Party in
writing; (ii) take such actions as may be necessary or
reasonably requested by the furnishing Party to minimize the
violation; and (iii) cooperate in all reasonable respects with
the furnishing Party to minimize the violation and any damage
resulting therefrom.
(e) No Implied Rights. Nothing contained in this Section shall be
construed as obligating a Party to disclose its Confidential
Information to the other Party, or as granting to or conferring
on a Party, expressly or impliedly, any rights or license to the
Confidential Information of the other Party.
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17. EXAMINATION AND AUDIT OF INFORMATION; RECORDKEEPING
17.1 EXAMINATION AND AUDIT RIGHTS.
Contractor grants AIL the right to review, examine and/or audit
Contractor's and Subcontractors' business and financial information
relating to this Agreement as necessary to verify Contractor's
performance hereunder, including manufacturing operations, quality
control, production capacity and capability, failure rates, repairs and
replacements, and responsiveness and/or costs and expenses of
termination or changes hereunder, and AIL may employ, at AIL's expense,
a mutually agreed-upon major accounting firm to conduct any review,
examination or audit of costs and expenses. If a review, examination or
audit of financial information reveals overcharges in excess of * * *,
Contractor shall pay the costs and expenses of the review, examination
or audit.
17.2 RECORDKEEPING OBLIGATIONS.
Contractor shall maintain complete and accurate records of and
supporting documentation for all invoices submitted by Contractor under
this Agreement, for out-of-pocket expenses or if AIL has agreed to pay
Contractor and for hours expended for services billable on a rated basis
to AIL, in accordance with generally accepted accounting principles
applied on a consistent basis. Except for costs associated with expenses
AIL has agreed to reimburse Contractor on an out-of-pocket expense
basis, AIL will not be entitled to audit Contractor's cost information
concerning the cost to produce the Terminals and Services provided under
this Agreement. Contractor agrees to provide AIL with documentation and
other information with respect to each such invoice as may be reasonably
requested by AIL to verify accuracy and compliance with the provisions
of this Agreement. Upon AIL's reasonable request, AIL and its authorized
agents and representatives shall have access to such business and
financial records for purposes of review, examination and/or audit
during normal business hours during the Term and for a period of three
(3) years after termination of this Agreement. In the event any
overpayment is made by AIL under this Agreement, either discovered
during a review, examination, audit or otherwise, Contractor shall
promptly pay AIL the amount of such overcharge, along with interest at
Prime Rate from the date such payments were originally made.
18. REPRESENTATIONS AND WARRANTIES
18.1 PASS-THROUGH WARRANTIES.
Contractor will from time to time provide certain Terminal components,
Equipment, Software and other items for which Contractor is entitled to
warranties from the manufacturers, lessors or licensors of such items.
Contractor shall pass through to AIL, its Service Providers and Users
that purchase Terminals, Equipment or Software the benefits of such
warranties to the extent that Contractor is able pursuant to any
agreements between Contractor and such manufacturers, lessors or
licensors.
18.2 WORK STANDARDS.
Contractor warrants that the Services shall be rendered with promptness
and diligence and shall be executed in a workmanlike manner, in
accordance with the practices and high professional standards used in
well-managed operations performing services similar to the Services.
Contractor also warrants that it shall use adequate numbers of qualified
individuals with suitable training, education, experience, and skill to
perform the Services.
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18.3 TERMINAL AND SERVICES WARRANTIES.
"Warranty Period" means * * * from the earlier to occur of (i)
the date of acceptance of delivery of any production Terminal by
AIL or its Service Providers or (ii) * * * from the date of
shipment to any User. AIL, Service Providers or Users may extend
the Warranty Period one or more times in their respective sole
discretion, for additional consecutive one-year periods each
without lapse, upon payment of the Extended Warranty fee set
forth in Schedule 15 (the aggregate of such extensions the
"Extended Warranty Period"). In addition, Contractor shall offer
an Extended Warranty to Users that have allowed a prior Warranty
Period or Extended Warranty Period to lapse, upon payment by
such User of a commercially reasonable fee. Contractor's
procedures for obtaining Warranty services are set forth in
Schedule 16 attached hereto. Contractor warrants to AIL as
follows and AIL may incorporate such warranties into its
agreements with Service Providers and Users to which AIL
supplies Terminals, with AIL as the warranting party. Contractor
will include with each Terminal shipped to AIL appropriate
documentation that sets forth Contractor's warranty policy to
Users.
(a) Contractor warrants that Terminals provided under this Agreement
shall be free from defects in material and workmanship, and
shall operate in accordance with the SOW, Documentation and
applicable Standards (in effect for that Terminal configuration
at the time of delivery) upon delivery and during the Warranty
Period and any Extended Warranty Period. Contractor further
warrants that Terminals provided hereunder shall be free of any
defect in design that results in non-conformance of a Terminal
to the SOW and applicable Standards in effect for that Terminal
configuration at the time of delivery. Contractor further
warrants that the Terminals are built in accordance with the
applicable requirements set forth in the SOW.
(b) Contractor represents, warrants and covenants that all Terminal
components provided hereunder shall be new, not refurbished or
re-manufactured. Notwithstanding the foregoing, Contractor may
use refurbished or re-manufactured parts for warranty repair or
replacement actions.
(c) Contractor warrants that it shall maintain the Terminals such
that the Terminals conform to the SOW during the Warranty Period
and Extended Warranty Period. Such maintenance shall include:
(i) in accordance with the procedures set forth in Schedule
16, perform repairs on Terminals, including any repairs
required by third party manufacturers and any repairs
recommended by third party manufacturers and required
for the intended operation of the Terminals;
(ii) providing any modification or enhancements that are
necessary to maintain the Terminals in compliance with
applicable Standards, as well as Documentation related
to such enhancements;
(iii) providing any release, update, alteration, modification,
enhancement or improvement that is generally available
to Contractor's other customers under warranty or
extended warranty;
(iv) providing code corrections or maintenance patches
(including, all bug fixes, error correction, revisions,
modifications, and maintenance recommended by third
party vendors) will be supplied to correct a Defect in
order to bring the
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Software into conformance with the SOW. Contractor shall
also replace the Software if the media is destroyed or
damaged unless and to the extent the damage is on
account of AIL's or its Service Providers' or Users'
improper use (which shall not be improper use if used in
accordance with the documentation or as instructed by
Contractor's) and as a result such Software are unusable
or fail to operate in accordance with the SOW;
(v) providing all improvements, enhancements, extensions,
upgrades and other changes to the Software that are
released by the Contractor. Contractor shall
concurrently provide updated Documentation reflecting
such changes. Contractor shall also supply, when
necessary, updated Software required to cause the
Software to operate with upgraded Terminals (including
engineering changes) or under new versions or releases
of the operating system or other system software
designed for the Software;
(vi) providing telephone support to AIL and its Service
Providers and Users, at no charge during the Warranty
Period and Extended Warranty Period, in order to assist
such parties to locate and correct functional or
operational problems with the Terminals. Such support
shall be provided on a 24 hour, 7 days per week, 365
days per year basis via Contractor help desk.
Contractor's technical engineering support is available
8:00 a.m. to 8:00 p.m. EST during normal business days
at the rates set forth in Schedule 14. In addition,
Contractor's technical engineering support is available
on a 24 hour, 7 days per week, 365 days per year basis
for major problems as determined by AIL at the rates set
forth in Schedule 14. Contractor shall provide a single
contact number for AIL, its Service Providers and Users
to report problems;
(vii) in the event of problems that cannot be corrected with
telephone support or on a remote basis within the
applicable Performance Standards, Contractor shall
provide on-site assistance at its then-current
commercial rates. However, if the problem is due to
AIL's acts or omissions and on-site assistance is
required, Contractor's personnel rates set forth in
Schedule 14 will apply;
(viii) during the Warranty Period or any Extended Warranty
Period, if Contractor is required under the Agreement to
repair a particular ODU or IDU more than * * * times in
any rolling * * * period, Contractor shall replace such
ODU or IDU, as the case may be, in its entirety at no
charge; provided, however, if any Service Provider or
User would require more than * * * repairs in the
aggregate on a particular Terminal (IDU and ODU) in any
rolling * * * period, Contractor shall replace the
entire Terminal at no charge;
(ix) in the event AIL, a Service Provider or User receives a
Terminal that is Dead on Arrival, promptly replace such
Terminal; and
(x) in the event that any ODU or IDU is determined to have a
"Pattern Defect" during the Warranty Period, Contractor
will promptly modify the design, material and/or
manufacturing process such that the Pattern Defect is
eliminated, and Contractor shall deliver, at its
expense, replacements for all affected ODU or IDU, as
the case may be, or parts thereof to eliminate such
Pattern Defect. A "Pattern Defect" will be determined to
exist in any ODU or IDU when * * * or more of the total
number of Terminals (IDUs and ODUs) (for any Terminal
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configuration or in the aggregate) shipped during any
rolling * * * period fails, due to the same defect in
design, material and/or manufacturing process carried
out by Contractor or its Subcontractors. This warranty
shall be effective for the Term (as it may be extended
or renewed), starting at first shipment and ending upon
the later of the end of the Warranty Period or Extended
Warranty Period (if any) for each Terminal delivered.
(d) Contractor represents and warrants that it shall offer to AIL,
Service Providers and Users the post-warranty support and repair
services set forth in Schedule 17 attached hereto and maintain
the availability of Terminal parts and sub-parts, consistent
with the Terminal redundancy design, for a period of the later
of (i) expiration of all applicable Extended Warranty Periods
plus five years and (ii) seven years following the last delivery
of Terminals under this Agreement. Subject to the foregoing
support periods, Contractor shall provide to AIL written
notification at least six (6) months prior to the
discontinuation of manufacture of any Terminal components
associated with this Agreement to permit AIL a last time
purchase opportunity; provided, however, during the Term, as
long as Contractor continues to manufacture Terminals,
Contractor shall not discontinue any Terminal component if no
replacement exists that will permit the Terminals to continue to
meet or exceed the SOW. Contractor acknowledges and agrees that
it shall not utilize this "discontinuation" provision as a means
to cease supplying Terminals during the Term.
(e) For a period of * * * years following delivery of the initial
production unit of the * * * Terminal, Contractor warrants that
it shall stock spare Terminal and Equipment parts in accordance
with the SOW's Product Support Plan. Periodically, the Parties
will meet to review Contractor's spare parts inventory levels.
(f) Contractor warrants that all Terminals, including all updates,
upgrades and revisions to Terminals and/or Software, shall be
backward compatible to existing production Terminals or prior
releases so that all applications and other items that can be
used in connection with a Terminal at any time can be used in
connection with future Terminals in materially the same manner
and with materially equivalent performance. In addition, all
updates, upgrades and revisions to Terminals and/or Software,
shall be fully integrated, compatible and operational with the
AIL System, and shall be built in accordance with the applicable
Standards. In no event shall AIL be required to upgrade its
Software if such upgrade requires a corresponding Terminal
upgrade. In such event, Contractor shall continue to support the
release of the Software that did not require a corresponding
Terminal upgrade as set forth in this Agreement. Terminal
upgrades to implement Software enhancements or improvements that
AIL desires to implement shall be provided to AIL at mutually
agreed upon rates.
(g) Contractor warrants, to its actual knowledge, that the
Terminals, the Services and the other deliverables provided by
Contractor to AIL hereunder do not and shall not infringe upon
any third party Intellectual Property Rights.
(h) Contractor shall provide access to appropriate technical
resources to AIL's appropriate personnel in order to resolve any
problem that AIL cannot resolve through lower level support,
including help desk support and field service support for errors
that cannot be remotely diagnosed and cured in accordance with
Section 18.3(c)(vi) or, following the applicable Warranty Period
or Extended Warranty Period, if any, in accordance with Schedule
17.
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(i) In the event of a breach of the foregoing representations,
warranties and covenants during the Warranty Period or an
Extended Warranty Period, and upon written notice from AIL
describing the breach, Contractor shall at no charge to AIL: (i)
in the case of Terminals, repair or replace, at Contractor's
discretion, such Terminals so that they are compliant with the
warranty within the time period specified as part of the
Performance Standards, and (ii) in the case of Services,
immediately re-perform the Services. In the event Contractor
fails to repair or replace such Terminals or to perform such
Services, AIL reasonably may do so at Contractor's expense.
(j) The foregoing representations and warranties will not apply if
and to the extent, and so long as not caused by Contractor or
its Subcontractors or agents where:
(i) defects in Terminals delivered hereunder or infringement
of any third party Intellectual Property Right are
caused by alteration, modification, or repair by any
person other than Contractor or its Subcontractors or
agents or due to an act of God; provided, however, the
foregoing exclusion shall not apply with respect to AIL
or AIL's subcontractors' making of minor changes or if
an alteration, modification or repair is authorized by
the Documentation and performed in accordance with such
Documentation or otherwise by Contractor or its
Subcontractors or agents in writing;
(ii) defects are caused by AIL or AIL's suppliers or
subcontractors mishandling or abuse, excluding
specifically Contractor, its Affiliates and their
suppliers and Subcontractors;
(iii) defects are caused from improper operation,
interconnection or installation by any person other than
Contractor or its Subcontractors; or
(iv) infringement of any third party Intellectual Property
Right is caused by the combination of a Terminal or the
Software and technology or software of any other party,
other than software or technology provided or required
by Contractor for use of the Terminals and the AIL
System, where no infringement would have occurred
without such combination, unless (i) AIL did not have
actual knowledge of such infringement, (ii) Contractor
had actual knowledge of such infringement and (iii)
Contractor failed to disclose the infringement to AIL.
18.4 DOCUMENTATION.
Contractor warrants that all Documentation provided by Contractor shall
be accurate, complete and written in a manner specified in the SOW.
18.5 EFFICIENCY AND COST EFFECTIVENESS.
Contractor warrants that it shall use its reasonable efforts to use
efficiently the resources or services necessary to provide the Terminals
and the Services. Contractor warrants that it shall use its reasonable
efforts to perform the Services and develop, manufacture and deliver the
Terminals in the most cost-effective manner consistent with the required
level of quality and performance.
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18.6 INDUCEMENTS.
Neither Party has offered or provided, nor will it offer or provide, any
inducements in violation of law, including the Foreign Corrupt Practices
Act or other corrupt practices laws, or of any written AIL policy
provided to Contractor in connection with this Agreement.
18.7 OWNERSHIP OR USE.
(a) Contractor represents, warrants and covenants that it is either
the owner of, or authorized to distribute, sublicense and use,
the Contractor Confidential Information as provided herein.
(b) Contractor represents, warrants and covenants that AIL shall
receive marketable title to all Terminals provided pursuant to
this Agreement and shall be entitled to the rights of possession
and quiet enjoyment thereto, free of any Liens, except to the
extent otherwise expressly provided by this Agreement.
18.8 AUTHORIZATION.
Each Party represents and warrants to the other that:
(a) it has the requisite corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated by
this Agreement;
(b) the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated by this
Agreement have been duly authorized by the requisite corporate
action on the part of such Party; and
(c) is not subject to any contractual or other obligation that would
prevent it from entering into this Agreement.
18.9 VIRUSES.
Contractor warrants that no Viruses are coded or introduced into any
Terminal. If a Virus is found in a Terminal, Contractor, at no
additional charge to AIL, any Service Provider or User, shall remove
such Virus and use its best efforts to assist AIL in reducing the
effects of the Virus and, if the Virus causes a loss of operational
efficiency or loss of data, to assist AIL to the same extent to mitigate
and restore such losses.
18.10 DISABLING CODE.
Contractor warrants that no code, device or routine (including, without
limitation, time bombs, back doors or drop dead devices) that would have
the effect of disabling or otherwise shutting down all or any portion of
a Terminal are coded or introduced into any Terminal at the time the
Terminal is delivered by Contractor ("Disabling Code"), unless AIL
authorizes Contractor to include any such code. If any such unauthorized
Disabling Code is found in a Terminal, Contractor, at no additional
charge to AIL, any Service Provider or User, shall remove such Disabling
Code and use its best efforts to assist AIL in reducing the effects of
the Disabling Code and, if the Disabling Code causes a loss of
operational efficiency or loss of data, to assist AIL to the same extent
to mitigate and restore such losses. Contractor shall not invoke any
Disabling Code at any time, including upon expiration or termination of
this Agreement (in whole or in part) for any reason, without AIL's prior
written consent.
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18.11 YEAR 2000.
Contractor represents and warrants that the Terminals are Year 2000
Compliant.
18.12 DISCLAIMER.
EXCEPT AS SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY OTHER
WARRANTIES EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE.
19. INSURANCE
Contractor shall during the Term have and maintain in force the
following insurance coverages:
(a) Worker's compensation insurance (including occupational illness
or disease coverage, or other similar social insurance in
accordance with the law of the state exercising jurisdiction
over the employee), and employer's liability insurance with a
minimum limit of the higher of (i) * * * per occurrence, and
(ii) any amount required by law.
(b) Automotive Liability Insurance covering use of all owned,
non-owned, and hired automobiles with a minimum combined single
limit of * * * per occurrence for bodily injury and property
damage liability. This policy shall be endorsed to name AIL as
additional insured.
(c) Commercial general liability insurance, including products,
completed operations liability and personal injury, contractual
liability and broad form property damage liability coverage for
damages to any property with a minimum combined single limit of
* * * per occurrence.
(d) All Risk Property Insurance (with AIL as loss payee as its
interests appear) on equipment, data, media and valuable papers,
including extra expense coverage, with a minimum limit adequate
to cover such risks on a replacement cost basis.
(e) Umbrella Liability Insurance with a minimum limit of * * * in
excess of the insurance under policies indicated in Subsections
(a), (b) and (c).
(f) Professional liability, errors and omissions insurance.
The foregoing insurance coverages shall be primary and non-contributing
with respect to any other insurance or self insurance which may be
maintained by AIL, and shall be endorsed to AIL as an additional insured
with the exception of Subsection 19(f) above and Workers Compensation.
Contractor shall cause its insurers to issue certificates of insurance
evidencing that the coverages and policy endorsements required under
this Agreement are maintained in force and that not less than thirty
(30) days written notice shall be given to AIL prior to any
modification, cancellation or non-renewal of the policies. The insurers
selected by Contractor shall have an A.M. Best rating of A-XII or better
or, if such ratings are no longer available, with a comparable rating
from a recognized insurance rating agency.
20. INDEMNITIES
20.1 INDEMNITY BY CONTRACTOR.
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Contractor shall indemnify, defend and hold harmless AIL and its
affiliates and their respective officers, directors, employees, agents,
successors, and assigns from any and all Losses arising out of any of
the following:
(a) third party claims arising out of Contractor's performance
hereunder, including breach of this Agreement;
(b) third party claims arising out of Contractor's failure to
observe or perform any duties or obligations to third parties,
including its Subcontractors;
(c) third party claims arising out of the manufacture, distribution,
or intended use of Terminals, due to Contractor's negligence or
willful misconduct;
(d) third party claims (including claims by any employee, agent,
customer, business invitee or business visitor or other person)
for death or personal injury caused by the tortious conduct of
Contractor or its Affiliates;
(e) claims for damage to real or tangible property caused by the
tortious conduct of Contractor or its Affiliates;
(f) Contractor's breach of its obligations with respect to AIL
Confidential Information;
(g) third party claims for infringement of Contractor's Intellectual
Property Rights;
(h) governmental claims arising out of Contractor's failure to
comply with applicable law or to obtain those permits it is
required to obtain under the Contract;
(i) any claim, demand, charge, action, cause of action, or other
proceeding asserted against the indemnitee but resulting from an
act or omission of the indemnitor in its capacity as an employer
of a person.
20.2 INDEMNITY BY AIL.
AIL agrees to indemnify, defend and hold harmless Contractor and its
Affiliates and their respective officers, directors, employees, agents,
successors, and assigns, from any and all Losses from claims arising
from, in connection with, or based on allegations of any of the
following:
(a) third party claims arising out of AIL's performance hereunder,
including breach of this Agreement;
(b) third party claims arising out of AIL's failure to observe or
perform any duties or obligations to third parties;
(c) third party claims arising out of AIL's breach of its
obligations with respect to Contractor Confidential Information;
(d) third party claims (including claims by any employee, agent,
customer, business invitee or business visitor or other person)
for death or personal injury caused by the tortious conduct of
AIL or its Affiliates;
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(e) claims for damage, loss or destruction of any real or tangible
personal property caused by tortious conduct of AIL or its
Affiliates;
(f) third party claims for infringement of AIL's Intellectual
Property Rights;
(g) any claim, demand, charge, action, cause of action, or other
proceeding asserted against the indemnitee but resulting from an
act or omission of the indemnitor in its capacity as an employer
of a person; and
(h) claims of infringement of third party Intellectual Property
Rights, alleged to have occurred because of AIL-furnished
equipment or components, if any, or other resources provided by
AIL directly to Contractor for incorporation into the Terminals.
20.3 INFRINGEMENT.
If any item used by Contractor to provide the Terminals or Services
becomes, or in Contractor's reasonable opinion is likely to become, the
subject of an infringement or misappropriation claim or proceeding, in
addition to indemnifying AIL as provided in this Article 20 and to the
other rights AIL may have under this Agreement, Contractor shall,
promptly at Contractor's expense:
(a) secure the right to continue using the item; or
(b) if the action described in Subsection (a) cannot be accomplished
by Contractor, replace or modify the item to make it
non-infringing, provided that any such replacement or
modification will not degrade the performance or quality of the
affected Terminals or Services; or
(c) if the action described in Subsection (b) of this Section cannot
be accomplished by Contractor, and only in such event, provide
AIL with a refund equal to the lesser of (A) AIL's cover costs
and expenses to replace the affected Terminals or Services and
(B) the total amounts paid hereunder for the affected Services
and Terminals, less reasonable depreciation. With respect to
Terminals, such payment shall be made contemporaneously with
AIL's return of the affected Terminals or, if otherwise directed
by court order, removal from AIL's network.
20.4 INDEMNIFICATION PROCEDURES.
With respect to third party claims, the following procedures shall
apply:
(a) Notice. Promptly after receipt by any entity entitled to
indemnification under Sections 20.1 through 20.3 of notice of
the commencement or threatened commencement of any civil,
criminal, administrative, or investigative action or proceeding
involving a claim in respect of which the indemnitee will seek
indemnification pursuant to any such Section, the indemnitee
shall notify the indemnitor of such claim in writing. No failure
to so notify an indemnitor shall relieve it of its obligations
under this Agreement except to the extent that it can
demonstrate damages attributable to such failure. Within fifteen
(15) days following receipt of written notice from the
indemnitee relating to any claim, but no later than ten (10)
days before the date on which any response to a complaint or
summons is due, the indemnitor shall notify the indemnitee in
writing if the indemnitor elects to assume control of the
defense and settlement of that claim (a "Notice of Election").
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(b) Procedure Following Notice of Election. If the indemnitor
delivers a Notice of Election relating to any claim within the
required notice period, the indemnitor shall be entitled to have
sole control over the defense and settlement of such claim;
provided that (i) the indemnitee shall be entitled to
participate in the defense of such claim and to employ counsel
at its own expense to assist in the handling of such claim, and
(ii) the indemnitor shall obtain the prior written approval of
the indemnitee before entering into any settlement of such claim
or ceasing to defend against such claim. After the indemnitor
has delivered a Notice of Election relating to any claim in
accordance with the preceding paragraph, the indemnitor shall
not be liable to the indemnitee for any legal expenses incurred
by the indemnitee in connection with the defense of that claim.
In addition, the indemnitor shall not be required to indemnify
the indemnitee for any amount paid or payable by the indemnitee
in the settlement of any claim for which the indemnitor has
delivered a timely Notice of Election if such amount was agreed
to without the written consent of the indemnitor.
(c) Procedure Where No Notice of Election Is Delivered. If the
indemnitor does not deliver a Notice of Election relating to any
claim within the required notice period, the indemnitee shall
have the right to defend and/or settle the claim in such manner
as it may deem appropriate, at the cost and expense of the
indemnitor. The indemnitor shall promptly reimburse the
indemnitee for all such Losses.
20.5 SUBROGATION.
In the event that an indemnitor shall be obligated to indemnify an
indemnitee pursuant to Sections 20.1 through 20.3, the indemnitor shall,
upon payment of such indemnity in full, be subrogated to all rights of
the indemnitee with respect to the claims to which such indemnification
relates.
21. LIABILITY
21.1 GENERAL INTENT.
Subject to the specific provisions of this Article 21, it is the intent
of the Parties that each Party shall be liable to the other Party for
any actual damages incurred by the non-breaching Party as a result of
the breaching Party's failure to perform its obligations in the manner
required by this Agreement.
21.2 LIABILITY RESTRICTIONS.
(a) SUBJECT TO SUBSECTIONS (b), (c) AND (d) OF THIS SECTION, IN NO
EVENT, WHETHER IN CONTRACT OR IN TORT (INCLUDING BREACH OF
WARRANTY, AND STRICT LIABILITY IN TORT), SHALL A PARTY BE LIABLE
FOR INDIRECT OR CONSEQUENTIAL, INCIDENTAL, EXEMPLARY, PUNITIVE
OR SPECIAL DAMAGES, INCLUDING LOST PROFITS OR REVENUES, EVEN IF
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES
IN ADVANCE.
(b) The limitations set forth in:
(i) Subsection (a) of this Section shall not apply with
respect to claims and damages occasioned by improper or
wrongful termination of this Agreement by
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Contractor or improper or wrongful abandonment of the
work by Contractor under this Agreement; and
(ii) Subsection (a) of this Section shall not apply with
respect to claims and damages with respect to (1) claims
that are the subject of indemnification pursuant to
Article 20, (2) willful misconduct, or (3) any breach of
Article 16 hereof.
(c) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY
HEREUNDER, UNDER ANY THEORY OF LIABILITY EXCEPT WILLFUL
MISCONDUCT, FOR LOSSES, CLAIMS, DAMAGES, COSTS AND EXPENSES IN
THE AGGREGATE THAT EXCEED (i) IN THE CASE OF CONTRACTOR'S
LIABILITY, THE AGGREGATE AMOUNTS PAID BY AIL TO CONTRACTOR
HEREUNDER, AND (ii) IN THE CASE OF AIL'S LIABILITY, THE
AGGREGATE AMOUNTS PAID BY AIL, AND UNPAID AMOUNTS WHICH ARE DUE
AND OWING FROM AIL, TO CONTRACTOR HEREUNDER.
(d) Each Party shall have a duty to use commercially reasonable
efforts to mitigate damages for which the other Party is
responsible.
21.3 FORCE MAJEURE.
(a) No Party shall be liable for any failure or delay in the
performance of its obligations under this Agreement if and to
the extent it is caused by fire, flood, lightning, earthquake,
elements of nature or acts of God, riots, civil disorders,
rebellions or revolutions in any country, or any other cause
beyond the reasonable control of such Party, including
import/export issues; provided, however, that the non-performing
Party is without fault in causing such default or delay, and
such default or delay could not have been prevented by
reasonable precautions and cannot reasonably be circumvented by
the non-performing Party through the use of alternate sources,
workaround plans or other means (any of the foregoing, a "Force
Majeure Event").
(b) In such event the non-performing Party shall be excused from
further performance or observance of the obligation(s) so
affected for as long as such circumstances prevail and such
Party continues to use its commercially reasonable efforts to
recommence performance or observance whenever and to whatever
extent possible without delay. Any Party so delayed in its
performance shall immediately notify the Party to whom
performance is due by telephone (to be confirmed in writing
within two (2) business days of the inception of such delay) and
describe at a reasonable level of detail the circumstances
causing such delay.
(c) If any Force Majeure Event substantially prevents, hinders, or
delays Contractor's performance for more than sixty (60)
consecutive days, then at AIL's option, AIL may terminate or
modify any affected portion of any Order, or terminate any
affected portion of this Agreement, and the charges payable
hereunder shall be appropriately adjusted to reflect such
termination. Further, if any Force Majeure Event substantially
prevents, hinders, or delays Contractor's performance for more
than one hundred fifty (150) consecutive days, then at AIL's
option, AIL may terminate this Agreement without liability to
AIL or Contractor as of a date specified by AIL in a written
notice of termination to Contractor. Neither Party shall have
the right to any additional payments from the other Party for
costs or expenses incurred by the other Party as a result of any
Force Majeure Event.
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(d) Notwithstanding the foregoing Subsections in this Section 21.3,
if the U.S. Federal Communications Commission or other U.S. or
foreign regulatory or governing body rescinds or otherwise
invalidates AIL's communications license or fails to issue such
license in due course, which substantially impairs the economic
viability of AIL (any of the foregoing, a "Regulatory Force
Majeure Event"), the Parties agree to renegotiate this Agreement
on commercially reasonable and mutually acceptable terms in
light of the effects arising from the Regulatory Force Majeure
Event, to the extent such Regulatory Force Majeure is not caused
by the gross negligence or willful misconduct of AIL.
21.4 EXCUSABLE DELAY.
Either (i) the occurrence of a Force Majeure Event that prevents
Contractor from performing its obligations hereunder, or (ii) the
material adverse effect to Contractor's ability to timely perform its
obligations hereunder caused by AIL's failure to timely meet its
obligations hereunder following the applicable cure period after written
notice is received by AIL describing AIL's failure, shall constitute
"Excusable Delay" hereunder. In the event of Excusable Delay, Contractor
may stop work until Contractor can resume performance following the
Force Majeure Event in accordance with Section 21.3 hereof or AIL
resumes or cures performance, as the case may be. In addition,
Contractor shall be entitled to an appropriate adjustment in the
Milestone Dates or applicable production schedule for any Excusable
Delay and, in the event of an Excusable Delay caused by AIL's failure to
perform its obligations hereunder, an appropriate price adjustment as
mutually agreed by the Parties. Price adjustments shall account only for
the net non-recurring, production and other related cost impact incurred
by Contractor as a result of the change plus a reasonable profit thereon
not to exceed * * *. Contractor will provide reasonably detailed back-up
price data to support its claim for such adjustment.
22. DISPUTE RESOLUTION
Any dispute between the Parties arising out of or relating to this
Agreement, including with respect to the interpretation of any provision
of this Agreement and with respect to the performance by Contractor or
AIL, shall be resolved as provided in this Article 22. Notwithstanding
any other provision of this Agreement, Contractor shall not be entitled
to, and hereby waives, the right to enjoin AIL's use of IP on the AIL
System, even if Contractor believes AIL is using Contractor's IP in
violation of the terms of this Agreement. In such case, Contractor, at
its election, shall be entitled to royalties on commercially reasonable
terms pursuant to a license agreed to by the parties on by an arbitrator
in the event the parties are unable to agree upon the terms of such
license in addition to all damages and remedies available to Contractor
at law, equity or otherwise, subject to Contractor's waiver of its right
to seek an injunction as provided herein.
22.1 INFORMAL DISPUTE RESOLUTION.
Subject to Subsection 22.3, prior to the initiation of formal dispute
resolution procedures, the Parties shall first attempt to resolve their
dispute informally pursuant to this Section 22.1. Upon the written
request of a Party, each Party shall appoint a designated representative
who does not devote substantially all of his or her time to performance
under this Agreement, whose task it will be to meet for the purpose of
endeavoring to resolve such dispute.
(a) The designated representatives shall meet as often as the
Parties reasonably deem necessary in order to gather and furnish
to the other all information with respect to the matter in issue
which the Parties believe to be appropriate and germane in
connection
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with its resolution. The representatives shall discuss the
problem and attempt to resolve the dispute without the necessity
of any formal proceeding.
(b) During the course of discussion, all reasonable requests made by
one Party to another for nonprivileged information, reasonably
related to this Agreement, shall be honored in order that each
of the Parties may be fully advised of the other's position.
(c) The specific format for the discussions shall be left to the
discretion of the designated representatives.
(d) If the designated representatives fail to resolve the dispute,
the Parties agree to escalate the dispute resolution process to
a higher executive level, and then to the CEO level. Each level
of informal dispute resolution will be allowed no more than
fifteen (15) days, unless otherwise mutually agreed by the
Parties.
22.2 ARBITRATION.
Subject to Subsection 22.3, if the Parties fail to resolve a dispute
pursuant to Section 22.1 above, the Parties agree to pursue binding
arbitration as the sole remedy of any dispute hereunder. Each Party
shall designate one arbitrator, provided that the arbitrator(s) selected
shall be knowledgeable in the telecommunications field. The two
designated arbitrators shall then choose a third arbitrator, who shall
be the head of the panel of arbitrators, and the panel of three
arbitrators shall hear and resolve the dispute. The rules and
regulations to be followed shall be those of the Center for Public
Resources, or its successor, in effect on the date of delivery of the
demand for arbitration. The Parties expressly agree that the arbitrators
shall have the authority to issue appropriate relief; provided, however,
that the arbitrators shall not have the power to issue punitive or other
special or exemplary damages. The decision of the arbitrators shall be
final and binding on both Parties and their respective successors and
permitted assigns, and such decision may be enforced by any court having
jurisdiction over the Party against whom the award is rendered. Each
Party shall pay the fees of its own attorneys, experts and the expenses
of its witnesses. All other costs and expenses of the arbitration,
including the costs and expenses of recording the transcripts thereof,
if any, administration fees and all other fees, costs and expenses,
shall be borne equally by the Parties. All arbitration proceedings will
be conducted in Washington, D.C. Contractor agrees to be joined in any
other arbitration or proceeding involving another entity under contract
to AIL or Contractor relating to the AIL System where performance of
Contractor under this Agreement or of the Terminals is at issue so as to
resolve any disputes efficiently. If joined in any such arbitration or
proceeding, Contractor hereby agrees to be subject to the decisions of
the arbitrator(s) already chosen by the original parties to such
arbitration or proceeding, and Contractor hereby waives its right to
choose an arbitrator as provided herein.
22.3 INJUNCTIVE RELIEF.
Notwithstanding Subsections 22.1 or 22.2, AIL may obtain preliminary or
temporary injunctive relief, including specific performance, or relief
in and of arbitration at any time from a court of competent jurisdiction
where immediate irreparable harm to the AIL System or AIL's business is
threatened by Contractor's acts or omissions, but requests for permanent
injunctive relief shall be arbitrated pursuant to Section 22.2.
22.4 CONTINUED PERFORMANCE.
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Each Party agrees to continue performing its obligations under this
Agreement while any dispute is being resolved except to the extent the
issue in dispute precludes performance (dispute over payment shall not
be deemed to preclude performance but a failure to pay undisputed
amounts after notice and an opportunity to cure as provided in
Subsection 23.1(b) shall permit discontinuance of Contractor's
performance obligations solely with respect to the payment failure).
22.5 VENUE AND JURISDICTION.
Each Party consents to the personal jurisdiction and venue of the
Montgomery County Circuit Court, Montgomery County, Maryland, or the
United States District Court for the District of Maryland, Greenbelt
Division, in the event of any dispute between the Parties arising out of
or relating to this Agreement that is permitted under this Article 22 to
be resolved by litigation or in the enforcement of any award granted
pursuant to this Article 22, and each Party agrees that it shall file
any suit against the other Party only in such courts.
23. TERMINATION
23.1 TERMINATION FOR CAUSE.
(a) In the event that Contractor:
(i) commits a material breach of this Agreement, including:
(1) failure to make any undisputed payment to AIL;
(2) failure to achieve a Milestone after written
notice;
(3) failure to complete a Milestone or other
agreed-upon material task within the
corresponding Milestone Date or agreed-upon
timeframe; or
(4) failure to complete any of its material
obligations hereunder within pre-agreed
timeframes;
which breach is not cured within thirty (30) days after
written notice of breach from AIL to Contractor, unless
such breach is not capable of being cured within thirty
(30) days;
(ii) commits a material breach of this Agreement which is not
capable of being cured within thirty (30) days and fails
to (i) proceed promptly and diligently to correct the
breach, (ii) develop within thirty (30) days following
written notice of breach from AIL a complete plan for
curing the breach (which plan and cure period shall be
reviewed by AIL and mutually agreed upon by the
Parties), and (iii) cure the breach within the
applicable cure period set forth in the plan;
(iii) commits three breaches of its duties or obligations of
the same type, which taken together would constitute a
material breach hereof, within any twelve (12) month
period for which Contractor has received written notice
from AIL and thirty (30) days following receipt of such
notice to cure such breaches, and Contractor has failed
to cure all such breaches; or
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(iv) ceases to carry on its business; a receiver or similar
officer is appointed for Contractor and is not
discharged within thirty (30) days; admits in writing
its inability to pay debts as they mature, is
adjudicated bankrupt, or makes an assignment for the
benefit or its creditors or another arrangement of
similar import; or proceedings under bankruptcy or
insolvency laws are commenced by or against Contractor
and are not dismissed within sixty (60) days;
then AIL may, by giving written notice to Contractor, terminate
this Agreement, in whole or in part, as of a date specified in
the notice of termination. If AIL chooses to terminate this
Agreement in part, the charges payable under this Agreement will
be appropriately adjusted to reflect those services that are
terminated. Any of the foregoing reasons for which AIL may
terminate this Agreement shall be referred to as "Cause".
(b) In the event that AIL:
(i) fails to pay Contractor when due undisputed charges
under the Agreement and fails to make such payment
within thirty (30) days of written notice from
Contractor of the failure to make such payment; or
(ii) ceases to carry on its business; a receiver or similar
officer is appointed for AIL and is not discharged
within thirty (30) days; admits in writing its inability
to pay debts as they mature, is adjudicated bankrupt, or
makes an assignment for the benefit or its creditors or
another arrangement of similar import; or proceedings
under bankruptcy or insolvency laws are commenced by or
against AIL and are not dismissed within sixty (60)
days;
Contractor may, by giving written notice to AIL, terminate this
Agreement as of a date specified in such notice of termination
and any such reason for termination shall be referred to as
"Cause".
23.2 TERMINATION FOR CONVENIENCE.
(a) AIL may terminate this Agreement, in whole or in part, for
convenience and without cause at any time by giving Contractor
thirty (30) days prior written notice designating the date of
termination (the "Termination Date").
(b) If AIL elects to terminate this Agreement for convenience in
accordance with this Section 23.2 prior to the delivery of and
payment for all Seed Order Terminals as set forth in Schedule 18
(scheduled as of the Effective Date for * * *) (the "Development
Phase Liability Date"), AIL agrees to pay Contractor a
termination liability payment in accordance with Schedule 5 less
all amounts paid by AIL to Contractor hereunder to up and
including the Development Phase Liability Date. This Subsection
(b) shall be of no further effect after the Development Phase
Liability Date. Notwithstanding anything herein to the contrary,
AIL's maximum liability and Contractor's sole remedy for
termination for convenience through the Development Phase
Liability Date shall be no greater than * * *.
(c) If AIL elects to terminate this Agreement for convenience in
accordance with this Section 23.2 following the Development
Phase Liability Date, as soon as practicable following the
Termination Date, Contractor shall provide AIL with a complete
statement of all unpaid amounts due and owing for work performed
hereunder and other amounts
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that are due to Contractor hereunder as of the Termination Date,
including all cancellation fees, if any, set forth in Section
8.5 and 8.8 above (the "Final Statement"). AIL shall review the
Final Statement within thirty (30) days of receipt thereof and,
if reasonably satisfactory to AIL, shall pay Contractor within
thirty (30) days of approval all or part of the Final Statement,
all undisputed amounts due thereunder. If AIL disputes any
amounts set forth in the Final Statement, the Parties shall
resolve such disputes as provided herein, and following
resolution of such disputes, AIL shall pay Contractor all
remaining undisputed amounts, if any, within thirty (30) days
after resolution of such disputes. In the event that a purported
termination for cause by AIL under Section 23.1 is determined by
a competent authority not to be properly a termination for
cause, then such termination shall be deemed to be a termination
for convenience by AIL under this Section 23.2.
23.3 EFFECT OF TERMINATION FOR CAUSE.
(a) If (i) during the Co-Exclusivity Period AIL terminates this
Agreement for Cause, or (ii) Contractor's Co-Exclusivity Right
is terminated as provided herein, or (iii) AIL terminates this
Agreement pursuant to Section 6.8 or Section 14.1 hereof, to the
extent that AIL reasonably determines that AIL's designated
replacement vendor for Contractor (the "Replacement Vendor") is
in need of any of Contractor's Confidential Information,
Contractor Background Information and/or Contractor Foreground
Information and the Intellectual Property Rights appurtenant
thereto required to develop, produce, operate, market,
demonstrate, distribute and sell the Terminals (collectively,
the "Terminal IP"), Contractor shall provide such Terminal IP to
the Replacement Vendor and shall license on commercially
reasonable terms to AIL or the Replacement Vendor the Terminal
IP on a non-exclusive, worldwide and irrevocable basis (during
the sooner to occur of (i) the end of the Initial Term if
Contractor had not defaulted or (ii) until the Replacement
Vendor ceases to produce Terminals or Comparable Terminals), for
use only in the development, production, marketing and sales of
Terminals for the AIL System and otherwise as necessary or
appropriate to fulfill Contractor's obligations hereunder as if
Contractor had not defaulted hereunder; provided however, that
the Parties' agreement on the terms of such license shall not be
a condition precedent to, or delay in any way, AIL's right or
the right of the Replacement Vendor to use the Terminal IP to
develop, manufacture and produce Terminals. The scope of the
license granted to the Replacement Vendor shall extend only to
fulfill Contractor's obligations hereunder as if the Agreement
had not been terminated. In addition, Contractor agrees to
provide to AIL or AIL's authorized manufacturer the information
and rights related to the Reduced-Cost Modules, as set forth in
Section 5.8 above.
(b) If AIL terminates this Agreement under Section 23.1(a) above,
AIL shall be entitled to have the work completed by another
party or parties, and Contractor shall be liable to AIL for * *
*.
23.4 TERMINATION/EXPIRATION ASSISTANCE.
(a) Upon termination of this Agreement pursuant to Section 23.1(a),
Contractor shall, upon payment of all undisputed amounts due and
payable to Contractor hereunder, turn over to AIL or its
designee all pending and ongoing work, together with such
license rights and Intellectual Property Rights relating to the
work to the extent and in the manner to which AIL would have
been entitled under this Agreement had there not been a
termination, subject further to Section 23.3(a).
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(b) Commencing (6) months prior to expiration of this Agreement or
on such earlier date as AIL may request, but no earlier than
twelve (12) months prior to the expiration of this Agreement, or
commencing upon any notice of termination (in whole or in part)
or of non-renewal of this Agreement (including notice based upon
default by AIL), and continuing for a period not to exceed two
(2) years, Contractor shall provide to AIL, or at AIL's request
to AIL's designee, reasonable termination/expiration assistance
requested by AIL (at AIL's expense except if the termination
results from Contractor's default) to allow the provisioning of
the Terminals components thereof to continue without
interruption or adverse effect to AIL's operations and business
in connection with AIL's System ("Termination/Expiration
Assistance"). Termination/Expiration Assistance shall include
the following assistance:
(i) Contractor shall, using its good faith efforts, migrate
the support obligations hereunder to a qualified third
party designated vendor;
(ii) Contractor shall to the extent authorized sublicense to
AIL all third party products utilized with the Terminals
subject to the use rights set forth in Section 10.6;
provided, however, with respect to non-commercially
available third party products utilized with the
Terminals, if any, Contractor shall provide the
foregoing sublicense to AIL; and
(iii) Contractor shall identify for AIL all third party
suppliers Contractor utilized to manufacture the
Terminals.
(c) This Section 23.4 shall survive termination/expiration of this
Agreement. For a period of two (2) years following the effective
date of termination/expiration under other provisions of this
Agreement, Contractor shall provide, at AIL's request, any or
all of the Services being performed by Contractor prior to such
effective date. To the extent Contractor is to perform Services
under Subsection (a) of this Section 23.4, the provisions of
this Agreement shall be applicable as such provisions would have
been applicable to such Services prior to such effective date,
provided the charge therefore shall at Contractor's then current
commercial rates. In the event the Agreement is terminated by
Contractor for AIL's non-payment in accordance with Section
23.1(b), then Contractor may request that AIL pay for such
Services in advance based on a reasonable estimate for such
Services as agreed upon by the Parties. Any overages or
underages of such pre-payments will be accounted for at the end
of the month.
23.5 APPROPRIATE REMEDIES.
Contractor acknowledges that, in the event it breaches (or attempts or
threatens to breach) its obligation to provide Termination/Expiration
Assistance as provided in Section 23.4, AIL will be irreparably harmed
and AIL will not have an adequate remedy at law. In such a circumstance,
AIL may proceed directly to court. If a court of competent jurisdiction
should find that Contractor has breached (or attempted or threatened to
breach) any such obligations, Contractor agrees that without any
additional findings of irreparable injury, inadequate remedy at law or
other conditions to injunctive relief, it shall not oppose the entry of
an appropriate order compelling performance by Contractor and
restraining it from any further breaches (or attempted or threatened
breaches).
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24. GENERAL
24.1 BINDING NATURE AND ASSIGNMENT.
This Agreement shall be binding on the Parties hereto and their
respective successors and assigns. Neither Party may, or shall have the
power to, assign this Agreement or delegate such Party's obligations
hereunder without the prior written consent of the other, which consent
shall not be unreasonably withheld or delayed; provided, however, that
the proposed assignee has the resources (financial, technical,
personnel, etc.) to perform the assignor's obligations hereunder.
Notwithstanding the foregoing, AIL may assign its rights and obligations
under this Agreement with the approval of Contractor (which approval
shall not be unreasonably withheld or delayed) to an entity which
acquires all or substantially all of the assets of AIL or to any
subsidiary or Affiliate or successor in a merger or acquisition of AIL.
The assigning Party shall remain responsible for its obligations
hereunder, unless expressly agreed to in writing by the non-assigning
Party.
24.2 CONDITIONAL ASSIGNMENT OF SUBCONTRACTS.
Notwithstanding the terms of Section 24.1 above and subject to the
condition contained in this Section 24.2, Contractor hereby assigns to
AIL its rights and obligations under Contractor's subcontracts with the
Principal Subcontractors. Such assignment shall become effective, if at
all, if this Agreement is terminated in accordance with the terms
hereof.
24.3 ENTIRE AGREEMENT.
This Agreement, including any Schedules and Attachments referred to
herein and attached hereto, constitutes the entire agreement between the
Parties with respect to the subject matter hereof and supersedes all
prior agreements, whether written or oral, with respect to the subject
matter contained in this Agreement. In particular, this Agreement
supersedes the Services Agreement, and all works of authorship,
Intellectual Property and other deliverables provided by either Party to
the other thereunder or developed by either Party thereunder and all
Services performed by Contractor shall be treated in accordance with the
terms of this Agreement, notwithstanding any conflicting term or
condition contained in the Services Agreement and the Services Agreement
shall be null and void and of no further force or effect.
24.4 COMPLIANCE WITH LAWS AND STANDARDS.
(a) Each Party shall perform its obligations in a manner that
complies with all applicable Standards. If either Party is
charged with the failure to comply with any of such Standards,
the Party charged shall promptly notify the other Party of such
charges in writing.
(b) Each Party agrees that its execution, delivery, and performance
of this Agreement shall not constitute (i) a violation of any
judgment, order, or decree; (ii) a material default under any
material contract by which it or any of its material assets are
bound; or (iii) an event that would, with notice or lapse of
time, or both, constitute such a default as described in (ii).
(c) Each Party shall be responsible for, and shall coordinate and
oversee compliance with the laws and regulations in respect of
items exported or imported hereunder by it. The Parties
acknowledge that certain Intellectual Property Rights, including
those related to
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the Software and technical data to be provided hereunder and
certain transactions hereunder, may be subject to export
controls under the laws and regulations of the United States and
other countries. Neither Party shall export or re-export any
such items or any direct product thereof or undertake any
transaction in violation of any such laws or regulations.
24.5 NOTICES.
All notices, requests, demands, and determinations under this Agreement
(other than routine operational communications), shall be in writing and
shall be deemed duly given (i) when delivered by hand, (ii) one (1) day
after being given for next day delivery to an express, overnight courier
with a reliable system for tracking delivery, or (iii) five (5) days
after the day of mailing, when mailed by United States mail, registered
or certified mail, return receipt requested, postage prepaid, and
addressed as follows:
If to AIL: If to Contractor:
ASTROLINK International LLC ViaSat, Inc.
6701 Democracy Boulevard 6651 El Camino Real
Suite 1000 Carlsbad, CA 92009
Bethesda, MD 20817
Attn: General Counsel Attn: General Counsel
Facsimile: (301) 581-4001 Facsimile: (760) 929-3926
With a copy to: With a copy to:
Shaw Pittman ViaSat, Inc.
2300 N Street, N.W. 6155 El Camino Real
Washington, DC 20037-1128 Carlsbad, CA 92009
Attn: * * * Attn: President
Facsimile: * * * Facsimile: (760) 929-3926
A Party may from time to time change its address or designee for
notification purposes by giving the other prior written notice of the
new address or designee and the date upon which it will become
effective.
24.6 COUNTERPARTS.
This Agreement may be executed in several counterparts, all of which
taken together shall constitute one single agreement between the Parties
hereto.
24.7 RELATIONSHIP OF PARTIES.
Contractor, in furnishing Terminals and Services hereunder, is acting as
an independent contractor, and Contractor has the sole right and
obligation to supervise, manage, direct, procure, perform or cause to be
performed, all work to be performed by Contractor under this Agreement.
Contractor is not an agent of AIL and has no authority to represent AIL
as to any matters, except as expressly authorized in this Agreement.
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24.8 SEVERABILITY.
In the event that any provision of this Agreement conflicts with the law
under which this Agreement is to be construed or if any such provision
is held invalid by an arbitrator or a court with jurisdiction over the
Parties, such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in accordance
with applicable law. The remainder of this Agreement shall remain in
full force and effect.
24.9 CONSENTS AND APPROVAL.
Except where expressly provided as being in the discretion of a Party,
where agreement, approval, acceptance, consent, or similar action by
either Party is required under this Agreement, such action shall not be
unreasonably delayed or withheld. An approval or consent given by a
Party under this Agreement shall not relieve the other Party from
responsibility for complying with the requirements of this Agreement,
nor shall it be construed as a waiver of any rights under this
Agreement, except as and to the extent otherwise expressly provided in
such approval or consent.
24.10 WAIVER OF DEFAULT; CUMULATIVE REMEDIES.
(a) No waiver or discharge hereof shall be valid unless in writing
and signed by an authorized representative of the Party against
which such amendment, waiver, or discharge is sought to be
enforced. A delay or omission by either Party hereto to exercise
any right or power under this Agreement shall not be construed
to be a waiver thereof. A waiver by either of the Parties hereto
of any of the covenants to be performed by the other or any
breach thereof shall not be construed to be a waiver of any
succeeding breach thereof or of any other covenant herein
contained.
(b) Except as otherwise expressly provided herein and subject to
Sections 10.4(e) and 21.2 above, all remedies provided for in
this Agreement shall be cumulative and in addition to and not in
lieu of any other remedies available to either Party at law, in
equity or otherwise.
24.11 SURVIVAL.
Any provision of this Agreement which contemplates performance or
observance subsequent to any termination or expiration of this Agreement
(in whole or in part) shall survive any termination or expiration of
this Agreement (in whole or in part, as applicable) and continue in full
force and effect, but shall not extend the applicable statute of
limitations.
24.12 PUBLIC DISCLOSURES.
Except as may be required by applicable law or in response to an order
of a court of competent jurisdiction or government agency, neither Party
nor its subcontractors will issue a press release or other public
announcement concerning the subject matter of this Agreement without the
prior approval of the other Party, which approval shall not be
unreasonably withheld or delayed. Such approval must be provided (or the
notice that such approval is withheld must be provided) within five (5)
business days after the request of the other Party. In addition, all
media releases, public announcements, and public disclosures relating to
this Agreement or the subject matter of this Agreement, including
promotional or marketing material, but not including announcements
intended solely for internal distribution or disclosures to the extent
required to meet legal or
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regulatory requirements beyond the reasonable control of the disclosing
Party, shall be coordinated with and approved in writing by both Parties
prior to release. Notwithstanding any provision to the contrary
contained herein or in the Proprietary Information Agreement by and
between the Parties dated December 22, 1998, the Parties agree that if
public disclosure of the terms of this Agreement is required by the U.S.
Securities and Exchange Commission (the "SEC") to be made, the Party
required to make such disclosure shall, prior to making any such
disclosure, (i) notify the other Party of such requirement and (ii)
request from the SEC confidential treatment of the material provisions
of this Agreement in accordance with Rule 406 (or any successor rule or
regulation) promulgated under the Securities Act of 1933, as amended, or
Rule 24b-2 (or any successor rule or regulation) promulgated under the
Securities Exchange Act of 1934, as amended, which request shall be
prepared in consultation with the other Party.
24.13 THIRD PARTY BENEFICIARIES.
Except as specifically provided in this Agreement, this Agreement is
entered into solely between, and may be enforced only by, AIL and
Contractor. This Agreement shall not be deemed to create any rights in
third parties, including suppliers and customers of a Party, or to
create any obligations of a Party to any such third parties.
24.14 AMENDMENT.
This Agreement shall not be modified, amended or in any way altered
except by an instrument in writing signed by both Parties.
24.15 INCORPORATION BY REFERENCE AND ORDER OF PRECEDENCE
(a) The Schedules and Attachments attached hereto are hereby
incorporated by reference into this Agreement. Subject to
Section 24.14, any amendments to Schedules and Attachments, and
any other Schedules and Attachments that are agreed upon by the
Parties subsequent to the Effective Date, shall likewise be
incorporated by reference into this Agreement.
(b) Any conflict among or between the documents making up this
Agreement will be resolved in accordance with the following
order of precedence (in descending order of precedence):
(i) Change Orders;
(ii) This Agreement;
(iii) The Schedules;
(iv) The Attachments to the Schedules; and
(v) Orders.
24.16 COVENANT AGAINST PLEDGING.
Contractor agrees that, without the prior written consent of AIL, it
shall not assign, transfer, pledge, hypothecate or otherwise encumber
its rights to receive payments from AIL under this Agreement for any
reason whatsoever, except as otherwise expressly permitted under Section
24.1.
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24.17 SECURITY INTEREST.
Contractor reserves a purchase money security interest in each Terminal
or component thereof delivered under this Agreement in the amount of the
purchase price and in AIL's proceeds from any sale of such product. This
security interest will be satisfied by payment in full of the purchase
price. A copy of the pertinent provisions of this Agreement may be filed
on Contractor's behalf with appropriate state authorities any time after
signature by AIL as a financing statement in order to prefect Contractor
security interest. AIL agrees to sign upon request any document
necessary to perfect Contractor's security interest and cooperate in the
filing and protection of same.
24.18 GOVERNING LAW.
This Agreement and performance under it shall be governed by and
construed in accordance with the laws of state of New York without
regard to its choice of law principles. The United Nations Convention
for Sale of Goods shall not apply to this Agreement or the Orders placed
hereunder.
24.19 COVENANT OF GOOD FAITH.
Each Party agrees that, in its respective dealings with the other Party
under or in connection with this Agreement, it shall act in good faith.
24.20 LENDER ASSURANCES.
Contractor agrees to work cooperatively with AIL in connection with
AIL's efforts to obtain financing for the AIL System and the work
performed hereunder. Contractor agrees to execute such documents as may
be reasonably required by AIL financing parties.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the undersigned officers, thereunto, duly authorized, as the Effective Date.
ASTROLINK INTERNATIONAL LLC VIASAT, INC.
By: By:
---------------------------------- ----------------------------------
Printed: Printed:
----------------------------- -----------------------------
Title: Title:
------------------------------- -------------------------------
Date: Date:
-------------------------------- --------------------------------
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SCHEDULE 1
TARGET COUNTRIES
* * *
- ---------------------
* Certain confidential information has been omitted and filed with the
Securities and Exchange Commission pursuant to a Request for Confidential
Treatment
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SCHEDULE 2
MILESTONE AND PAYMENT SCHEDULE
IN ACCORDANCE WITH SECTION 5.3, CONTRACTOR SHALL BE PAID IN ACCORDANCE WITH THE
BELOW MILESTONE AND PAYMENT SCHEDULE FOLLOWING ACCEPTANCE.
* * *
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SCHEDULE 3
STATEMENT OF WORK
* * *
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SCHEDULE 4
WHOLESALE PRICES FOR TERMINALS
* * *
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SCHEDULE 5
DEVELOPMENT TERMINATION LIABILITY
* * *
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SCHEDULE 6
TOTAL PROJECTED INSTALLED TERMINAL QUANTITY PER YEAR
* * *
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SCHEDULE 7
CONTRACTOR SUPPORT TO AIL MARKETING, SALES AND DISTRIBUTION OF TERMINALS
As a part of this agreement, Contractor will proactively support the
efforts of AIL to market, sell and distribute Terminals and the AIL Service.
Within the guidelines set forth below and as mutually agreed by the Parties,
Contractor will directly support consistent with AIL's general direction, AIL's
marketing and sales initiatives prior to commercial introduction of the AIL
Services ("Pre-Launch Services") and following commercial introduction of AIL
Services ("Post-Launch Services"). The timing of Pre-Launch Services and
Post-Launch Services shall be consistent with introduction of the AIL Service on
a country-by-country basis consistent with the Agreement.
I. PRE-LAUNCH SERVICES SUPPORT PHASE
In order to effectuate support prior to the commercial introduction of
the AIL Services Contractor shall:
- Perform and provide research services consistent with our
capabilities;
- Analyze marketing and distribution research and forecasting efforts
including analysis of AIL Terminal materials, such as countries and
priority forecasts, as well as roll-out, and sharing of relevant
primary and secondary research obtained by Contractor;
- Provide on-site support to AIL marketing efforts at major
telecommunications shows including mock ups, brochures, personnel,
and satellite feed for demonstrations, as appropriate;
- Develop and distribute sales materials and literature, including
but not limited to artwork, product photos and data sheets,
describing the features of the Terminals;
- Provide support to demonstrations for major service providers
and/or major global accounts;
- Implement integrated system sales tools and global distribution
planning targeted to equipping * * * Professional Services for
incorporation of Astrolink Terminals and AIL services into the
total network solutions offered by * * * to its customers;
- Direct service provider and retail customer contacts with existing
and potential customers in the market segments and geographic
regions covered by Contractor and its Principal Subcontractors; and
- Implement any other promotional activities as parties may agree
from time to time.
These activities will be undertaken as needed to support the level and
phase of marketing activity being performed by AIL.
II. POST-LAUNCH SERVICES SUPPORT SHALL INCLUDE, BUT NOT BE LIMITED TO THE
FOLLOWING:
- Continued support to major telecommunications shows as outlined
above;
- Direct selling of AIL services through any applicable broadband
satellite services business operated and/or jointly owned by
Contractor to the extent allowed by its business charter;
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- Provision of product and sales materials on an on-going basis;
- Provision of collateral materials for customers;
- Hosting customer events in addition to trade shows;
- Contractor will profile/educate customers and/or providers on AIL
products and services at applicable seminars/conferences including
those sponsored by * * *; and
- Contractor will conduct press activities to inform the marketplace
and industry of the progress and key successes of AIL Terminal
deployment.
These activities will be undertaken as needed to support the level of
marketing and sales activities commensurate with the market forecasts
established for each year.
III. FUNDING
A. PRE-LAUNCH SERVICES
Contractor activities (as outlined above) during this phase will not be
required to exceed a level of * * * or an equivalent sales value of * * *
including non-labor expenses. The Parties will meet on a quarterly basis to plan
the activities for the next quarter. The Parties will mutually agree to the
expected amount of Contractor effort to be expended in support of that plan. At
the quarterly meetings, the Contractor will report on the level of activity
actually performed during the preceding quarter. At the first such meeting, the
Parties will develop a high-level plan covering the entire phase for initial
resource planning purposes. Up to the maximum levels above, the Contractor
agrees to support reasonable requests from Astrolink for direct marketing and
sales support as a part of these quarterly plans. * * * is recognized by the
Parties to be an important source of market and distribution research and
planning and a potentially powerful distribution channel for Terminals and
services. Consequently, Contractor expects that approximately * * * of this
support effort will be performed by * * *. The nature of the support requested
over time may increase or decrease that anticipated percentage over the course
of this phase.
B. POST-LAUNCH SERVICES
During the period after the launch of services, the Parties will continue to
have quarterly meetings to plan upcoming marketing activities. These plans are
expected to be define marketing and sales activities commensurate with the
market forecasts established for each year. The level of support under this
Agreement over the post-service launch support phase is expected to fall in line
with typical industry averages for wholesale marketing of telecommunications
equipment (* * * of actual wholesale terminal sales). At the quarterly meetings,
ViaSat will report on activities accomplished over the previous quarter.
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SCHEDULE 8
FORM OF SERVICE PROVIDER AGREEMENT
[TO BE COMPLETED WITHIN SIXTY (60) DAYS AFTER THE EFFECTIVE
DATE AND ATTACHED IN ACCORDANCE WITH SECTION 8.2]
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SCHEDULE 9
COUNTRIES WITH CONTRACTOR AND SUBCONTRACTOR FACILITIES
[TO BE PROVIDED BY CONTRACTOR WITHIN THIRTY (30) DAYS AFTER THE EFFECTIVE DATE]
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SCHEDULE 10
ESCROW AGREEMENT
[TO BE COMPLETED WITHIN THIRTY (30) DAYS AFTER THE EFFECTIVE
DATE AND ATTACHED IN ACCORDANCE WITH SECTION 10.6]
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SCHEDULE 11
KEY CONTRACTOR PERSONNEL
Pursuant to Section 12.5, the following individuals are designated as Key
Contractor Personnel:
POSITION NAME
- -------- ----
PROGRAM MANAGER * * *
PROJECT ENGINEER * * *
LEAD SYSTEMS ENGINEER * * *
LEAD SOFTWARE ENGINEER * * *
* * * * is ViaSat's Business Area Director for Ka-Band programs. Until such time
as he appoints a Program Manager to report to him on this project, Mr. * * * is
the Acting Program Manager.
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SCHEDULE 12
LIST OF APPROVED SUBCONTRACTORS
As of the Effective Date of the Agreement, the Principal Subcontractors are the
only approved Subcontractors. In the event that additional Subcontractors are
desired, Contractor shall propose to AIL the addition of Material Subcontractors
in accordance with Section 12.9.
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SCHEDULE 13
SERVICE STANDARDS
Pursuant to Section 13, Service Standards, the Parties will develop and agree
upon meaningful quantitative and qualitative performance standards in accordance
with the following schedule:
- At the PDR, Contractor shall present the basic Service Standard
classes and an overview of the possible metrics for each.
- At the PRR, Contractor shall propose the Service Standard and the
associated metrics. The Parties, upon agreement on the proposed
Service Standards, shall supersede this Schedule 13 with a revised
Schedule 13, which incorporates the agreed upon service standards
and metrics.
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SCHEDULE 14
The rates and guidelines for expenses and travel set forth on this Schedule 14
apply only to those Services identified in the Agreement that refer to Schedule
14.
CONTRACTOR RATES
Grade Category Hourly Rate
----- -------- -----------
E 1 Executive * * *
E 2 Sr./Lead Eng. * * *
E 3 Eng. * * *
E 4 Jr. Eng. * * *
T 1 Field Service Eng. * * *
T Tech * * *
S Support * * *
Notes:
1) The rates set forth above are in effect through the Contract Year 2001.
Thereafter, beginning for Contract Year 2002, Contractor may increase
the labor rates at the end of each Contract Year at a percentage rate
that does not exceed the percentage change from one Contract Year to
another of the Bureau of Labor Standards, Table 3. Employment Cost Index
for total compensation for Private Industry workers for Industry, Goods
Producing, White Collar.
2) As set forth in the Agreement and the SOW, Contractor shall also be
reimbursed in accordance with the above in the event that the
engineering support ("Support Services") exceeds * * * for support of
the AIL System.
3) Contractor shall also be reimbursed for actual unburdened expenses
related to travel, per diem and other related expenses.
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SCHEDULE 15
EXTENDED WARRANTY OPTION
Extended Warranty shall be provided in accordance with the Agreement. Pricing
for this Extended Warranty shall be proposed by Contractor at the CDR.
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SCHEDULE 16
WARRANTY PROCEDURES
This Schedule summarizes Contractor's standard warranty procedures of its
commercial VSAT Product, StarWire. As a part of the Product Support Plan set
forth in the SOW, Contractor shall tailor this Schedule to reflect AIL's
business and in compliance with the SOW.
1.0 PURPOSE
The Product Support and Service procedure defines the policies,
authority, and responsibility for the support of warranty issues, field
service, customer observations and responses for improvement of
Contractor products.
2.0 SCOPE
All shipped Contractor systems and products governed by the standard
warranty for those products.
3.0 GENERAL POLICIES
3.1 The Product Support group is the primary contact for all
field-related issues.
3.2 The general warranty policy for Contractor products covers
defects in materials and workmanship for one year after
shipment.
3.3 Return Material Authorizations (RMA) are issued from Product
Support to process product returns for warranty and
out-of-warranty repair, upgrade, and exchanges.
3.4 All authorized returns are shipped pre-paid to Contractor.
Shipping expenses for products returned to the customer are
borne by Contractor, unless indicated otherwise by contract.
4.0 GENERAL PROCEDURE
4.1 The Product Support group receives, logs, and routes customer
observations and reports of problems. Reports from this process
are distributed to appropriate product groups for disposition.
4.2 Product Support and the product group relative to the product
type and specification investigate customer reports. The results
of this investigation are documented and communicated to the
Customer.
4.3 Where applicable, Product Support and/or Product Engineering
ensure that corrective action is implemented for the appropriate
processes, as required, and the results documented and
communicated to the Customer.
4.4 As a benefit of continuous improvement, Product Support shall
periodically inform Customers of upgrade, preventive
maintenance, and service opportunities for previously shipped
products.
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4.5 Customer observations and feedback will be evaluated and the
results presented to management and department heads in order to
identify both constructive and deficient areas of performance.
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SCHEDULE 17
POST-WARRANTY SUPPORT AND REPAIR OBLIGATIONS
In the event that the Warranty or the Extended Warranty has expired, Contractor
will provide the following services and/or support:
* Spares Support and Pricing proposed by Contractor at CDR and mutually agreed
by the Parties.
* Telephone Support at varying levels up to the limits described in the Warranty
with pricing to be determined for each level on a Contract Year basis. Telephone
support must be subscribed to in at least three (3) month increments.
* Factory repair services. Contractor will accept Terminals returned to factory
for repair on a current repair price basis. Customer assumes the expense and
risk of loss for transportation.
* On-Site Repair and/or Assistance. In accordance with the then current Field
Support Rate plus travel, per diem and other expenses.
A Purchase Order (P.O.) is required from the customer if a Terminal is returned
and is out-of-warranty. The Purchase Order must be received prior to product
receipt or customer product returns are held in Receiving until the P.O. is
processed.
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SCHEDULE 18
SEED ORDER DELIVERY REQUIREMENTS
* * *
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