1
Exhibit 10.3
MEMORANDUM OF AGREEMENT
Between Astrolink International LLC and ViaSat, Inc.
This Memorandum of Agreement ("MOA") is made and entered into this 20th day of
October, 2000, by and between:
Astrolink International LLC, a limited liability company organized under the
laws of the State of Delaware and having its principal place of business at 6701
Democracy Boulevard, Suite 1000, Bethesda, Maryland 20817, (hereinafter referred
to as "Astrolink");
and
ViaSat, Inc., a Delaware corporation having its principal place of business at
6155 El Camino Real, Carlsbad, California 92009 (hereinafter referred to as
"ViaSat");
(individually referred to as a Party and collectively referred to herein as the
"Parties"),
WITNESSETH
WHEREAS, Astrolink is creating and will deploy a worldwide two-way broadband
communications network utilizing a geostationary orbit, Ka-Band satellite
system, to deliver a full complement of two-way data and multimedia
communications services (and related applications), with the Ka-Band satellite
service planned to be available in 2003;
WHEREAS, ViaSat builds state-of-the-art two-way earth terminals ("User
Terminals"), specifically designed for "mesh" and "hub" data communications
networks, has negotiated initial contracts for capacity on existing satellites
and has begun deployment of a network services business addressing the same
market segments as Astrolink;
WHEREAS, Astrolink and ViaSat have entered into an agreement on October 20, 2000
for ViaSat to design, develop and produce User Terminals for the Astrolink
Ka-Band system (the "Terminal Contract");
WHEREAS, Astrolink intends to authorize ViaSat to offer Astrolink's satellite
services and applications to customers as an Astrolink Service Provider;
WHEREAS, Astrolink and ViaSat intend to establish the terms for provision of
such services in accordance with this MOA; and
WHEREAS, Astrolink and ViaSat intend to implement this MOA though a definitive
agreement (the "Master Agreement") to be developed based on the terms of this
MOA;
1 of 7
2
NOW, THEREFORE, the Parties hereto, intending to be bound, do hereby agree as
follows:
1. Satellite Service. Astrolink shall provide and ViaSat shall purchase (for
resale to end user customers) satellite services, e.g., access,
transport, application and content, on each of Astrolink's first four
satellites ("Satellite Service(s)"). Such Satellite Service shall include
a full range of services offered by Astrolink to comparable resellers
(such as Service Providers and/or Service Partners) for comparable class
and volume of service to the end-user (subject to applicable laws and
regulation) for provision by ViaSat to end-user customers during the
first [*] (which may be extended up to an additional [*] if ViaSat cannot
utilize $25,750,000 of Satellite Services during the first [*]) of
operational service on each of the first four satellites. Operational
service for each satellite commences upon such satellite being ready for
commercial service with a fully-operational Regional Network Control
Center ("Operational Date").
- ----------
* Certain confidential information has been omitted and filed with the
Securities and Exchange Commission pursuant to a Request for Confidential
Treatment.
2. Effective Date; Term. This MOA shall be effective upon the Astrolink
Board of Directors' approval of this MOA as executed by the Parties ("MOA
Effective Date"). The term of this MOA shall be for one (1) year from the
MOA Effective Date or until it is succeeded by the execution of a Master
Agreement, whichever occurs first; the term may be renewed for succeeding
one (1) year periods at the mutual agreement of both Parties prior to the
execution of the Master Agreement ("MOA Term"). The term of the Master
Agreement will be from Master Agreement execution through a period of [*]
(or such later period as provided in paragraph 1 above) after the
Operational Date of Astrolink's fourth satellite (as mutually adjusted to
accommodate changes in satellite launch plans), plus any exercised option
periods in the Master Agreement ("Master Agreement Term").
3. Use of Satellite Services. ViaSat (or, with Astrolink's written consent
which will not be unreasonably withheld, ViaSat's affiliates) will resell
various Astrolink-branded services using the Astrolink satellite system
with approved Astrolink-branded terminals. Such terminals are not part of
the terminals ordered by Astrolink under the Terminal Contract and,
therefore, are not included as part of the Seed Order of that Contract
(but are included in calculating the Minimum Quantity Purchase Commitment
Shortfall Liability under that Contract).
4. User Terminal Volume. ViaSat may deploy up to [*] Astrolink-branded [*]
and [*] terminals (or an equivalent mix, including comparable terminals),
utilizing the Satellite Service during the [*] of operational service on
each of the first four (4) Astrolink satellites (or such later period as
provided in paragraph 1 above) ("Service Period"), for a maximum of [*]
terminals served across the first four (4) satellites
2 of 7
3
("UserTerminals"). In determining the equivalent mix of terminals above,
the Master Agreement will incorporate guidelines for determining how
limited use terminals are accounted for in calculating the total
terminals deployed. The aggregate of such Satellite Services per
satellite across the applicable Service Period shall not exceed [*]
Megabits per second ("Mbps") multiplied by [*]. Calculation of this
aggregate use shall be based upon actual slot assignments as recorded at
the Regional Network Control Center (RNCC) for each satellite. In
addition, should such Satellite Services exceed a peak of [*] Mbps per
satellite averaged over any one hour period, ViaSat will Pay (over and
above the $25,750,000 for the prepaid Satellite Services) for any excess
usage at the Most Favored Customer Rate applicable at the time of the
occurrence. For purposes of the foregoing, the "Most Favored Customer
Rate" shall mean Astrolink's lowest service charge to comparable
resellers (such as Service Providers and/or Service Partners) for
comparable class and volume of service.
If the aggregate Satellite Services (defined above) on a satellite are
consumed prior to the end of the [*], AIL will continue to provide
Satellite Services to ViaSat at the Most Favored Customer Rate for an
additional period of up to [*] beyond the initial [*] period. The
foregoing shall apply to those terminals already deployed by ViaSat at
the time all Satellite Services have been consumed and to the extent
ViaSat has, at the end of the [*] period, ongoing contractual commitments
to provide services to end-user customers exceeding such [*] period.
5. Customer Conversion. At any time during the Master Agreement Term (and
provided Astrolink agrees to accept such customers and their existing
agreements), ViaSat can convert and turnover its customers to Astrolink
or other Astrolink Service Providers and bring on additional customers,
provided the number of terminals served by ViaSat does not exceed [*] at
any given time. After the expiration of the Service Period on each
satellite (as such may be extended up to [*] pursuant to paragraph 1 and
upon notice to Astrolink prior the expiration of the [*]), ViaSat, if
Astrolink so approves, can continue, on a per satellite basis, to be a
Service Provider for its customers and Astrolink will sell Satellite
Services to ViaSat (for resale to such customers) at Astrolink's Most
Favored Customer Rate (defined in paragraph 7 below). Where Astrolink
does not approve, the Parties will work out an orderly transition of the
customer. Where ViaSat end-user customers are converted to Astrolink
customers, such customers will be offered commercially competitive rates
for service.
6. Joint Venture. The Parties intend to negotiate in good faith, on a timely
basis, a joint venture for the provision of Astrolink services (both in
the "pre-Astrolink satellite system" time period and during operations of
the Astrolink satellite system). As part of those joint venture
negotiations, the Parties will seek to establish mutually acceptable
terms for integration, into the joint venture, of the reseller services
performed by ViaSat hereunder and the provision of services to customers
acquired by ViaSat.
3 of 7
4
7. Satellite Services Pricing. For the Satellite Services provided by
Astrolink hereunder, ViaSat shall pay Astrolink the sum of Twenty-five
Million Seven Hundred and Fifty Thousand Dollars ($25,750,000) in
accordance with Attachment 1, Milestone Payment Schedule. Furthermore,
since this $25,750,000 payment is being made in advance of Satellite
Services being received, Astrolink will repay any amounts paid for
Satellite Services not rendered to the extent such failure to render
Satellite Services is due to the fault of Astrolink.
If rates (for an equivalent class and volume of service) lower than the
Master Agreement rates are provided to another comparable Service
Provider during the Master Agreement Term, ViaSat will be offered the
right to receive Satellite Services at such rates in accordance with the
terms applicable to such lower charges effective as of the date such
equivalent service was provided, and an appropriate adjustment in
Satellite Services and/or credit will be made at ViaSat's option.
8. Service Providers. Through a separate agreement, ViaSat will become an
Astrolink Service Provider and/or Service Partner under the terms to be
developed by Astrolink for such path-to-market organizations, provided
that ViaSat shall not be required to accept any provision of such
arrangements that are inconsistent with this MOA (and the implementing
Master Agreement) without its consent, which shall not be unreasonably
withheld.
9. Master Agreement. The Parties will develop and execute in a timely manner
a Master Agreement implementing the terms of this MOA.
10. Miscellaneous.
(a) The Parties have jointly executed a suitable non-disclosure
agreement (Proprietary Information No. 80401 dated 22 December
1998) (the "NDA"), which agreement shall, if deemed necessary by
both Parties, be amended or replaced.
(b) ViaSat acknowledges and agrees to comply with the following
rights in place between Astrolink and certain of its owners:
(i) Lockheed Martin Global Telecommunications, Inc's
("LMGT") exclusive right to deliver and distribute
Astrolink system services to the United States
Government and all branches, divisions or agencies
thereof anywhere in the world (subject to certain
conditions);
(ii) Telespazio Luxembourg S.A. ("TPZ") exclusive right
to deliver and distribute the Astrolink system
service in Italy (subject to certain conditions);
and
4 of 7
5
(iii) Liberty Media and its affiliates' rights of first
refusal to provide installation and maintenance
service for Astrolink terminals of Astrolink Service
Providers in the United States and Canada (where
such service contract is on generally accepted
commercial price and terms).
In the event AIL enters into an agreement(s) (similar to
those set forth in this paragraph 10(b)) in the future
which materially and adversely restricts(s) ViaSat's
ability to sell Astrolink-branded services in markets
served by the first four (4) Astrolink satellites, the
Parties shall negotiate an equitable adjustment to the
Master Agreement.
(c) This MOA does not and shall not be construed as
constituting, creating, or giving effect to a joint
venture, partnership or formal business organization of any
kind, notwithstanding the provisions of paragraph 6 hereof.
(d) The Parties agree that the Master Agreement and this MOA
shall be governed by and construed in accordance with the
laws of the State of New York without regard to its
principles of conflicts of law.
(e) Neither Party will disclose the existence or contents of
this MOA to any third party without the prior written
consent of the other, including without limitation
disclosure in any registration statement, report or other
document filed with the Securities and Exchange Commission
or any other government agency, unless required to do so by
law. If disclosure to a government agency is required in
the future, the Party proposing to make such disclosure
will provide to the other Party reasonable advance notice
of such disclosure, will seek confidential treatment of
such disclosure by the agency, and will provide to the
other Party an opportunity to object to or seek
confidential treatment of such disclosure. The Parties will
mutually agree in writing in advance on the contents of any
press release or other disclosure or statement to any third
party describing this MOA, its contents, or the alliance
described herein, but neither Party is required to agree to
any such press release.
(f) Each Party represents it has the requisite corporate
authority (subject to Board approval, if required) to enter
into this Agreement and to fulfill its terms.
(g) Neither Party may, or shall have the power to, assign this
MOA or delegate such Party's obligations hereunder without
the prior written consent of the other, which consent shall
not be unreasonable 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
5 of 7
6
obligations under this MOA with the approval of ViaSat
(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. The foregoing provision
shall be incorporated into the Master Agreement and related
implementing agreements contemplated hereunder.
IN WITNESS WHEREOF, the Parties hereto have caused this Memorandum of Agreement
to be executed by their duly authorized representatives to be effective as of
the MOA Effective Date:
FOR ASTROLINK: FOR VIASAT:
- ------------- ----------
By: /s/ Celso A. Azevedo By: /s/ Stephen W. Cable
---------------------- -------------------------------------
Name: Celso A. Azevedo Name: Stephen W. Cable
Title: Chief Executive Officer Title: Vice President, Broadband Systems
Date: October 9, 2000 Date: October 9, 2000
6 of 7
7
ATTACHMENT 1
MILESTONE PAYMENT SCHEDULE
In advance of the Satellite Service being available, ViaSat shall pay
Twenty-Five Million Seven Hundred and Fifty Thousand Dollars ($25,750,000) to
Astrolink. The payment of this $25,750,000 shall be made following the
accomplishment of the set of Astrolink system deployment milestones set forth
below ("Milestone Payments").
- ------------------------------------------------------------------------------------------------
CUMULATIVE
PROGRAM MILESTONE MILESTONE DATE MILESTONE AMOUNT MILESTONE AMOUNT
----------------- -------------- ---------------- ----------------
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
- ------------------------------------------------------------------------------------------------
- ----------
* Certain confidential information has been omitted and filed with the
Securities and Exchange Commission pursuant to a Request for Confidential
Treatment.
Note: Milestones, Milestone Achievement Criteria and payment provisions to be
finalized in the Master Agreement.
7 of 7