Exhibit 10.4
AMENDED AND RESTATED PURCHASE AGREEMENT
BETWEEN
ADVANCED RADIO TELECOM CORP.
AND
LUCENT TECHNOLOGIES INC.
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS............................................ 1
ARTICLE 2
PURCHASE OF THE NETWORK AND RELATED SERVICES........... 12
ARTICLE 3
DESIGN AND CONSTRUCTION OF THE NETWORK................. 16
3.1. Configuration of the Network................ 16
3.2. Construction of the Network................. 17
3.3. Forecasts................................... 17
3.4. Best in Class............................... 17
3.5. OEM Products................................ 19
3.6. Reserved.................................... 19
3.7. Radio Technology............................ 19
3.8. Permits and Approvals....................... 20
3.9. Product Development......................... 20
3.10. Availability................................ 21
3.11. Spare Parts................................. 21
3.12. Punchlists.................................. 21
3.13. Facilities Access........................... 21
ARTICLE 4
RELATED SERVICES....................................... 21
4.1. RS Orders for Related Services.............. 21
4.2. Electronic RS Orders........................ 22
4.3. Changes in RS Orders........................ 22
4.4. Cancellation or Postponement of RS Orders... 22
4.5. RS Prices................................... 23
4.6. Terms of Payment............................ 23
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ARTICLE 5
SUBCONTRACTORS......................................... 24
5.1. Subcontractors.............................. 24
5.2. Seller's Liability.......................... 24
5.3. No Effect of Inconsistent Terms in
Subcontracts............................. 24
5.4. Assignability of Subcontracts to Customer... 25
5.5. Removal of Subcontractor or
Subcontractor's Personnel................ 25
5.6. Subcontractor Insurance..................... 25
5.7. Review not Relief of Seller Liability....... 25
5.8. Evaluation of Subcontractors................ 25
5.9. Seller Warranties........................... 26
5.10. Payment of Subcontractors; Indemnity of
Customer................................. 26
ARTICLE 6
NETWORK DESIGN, ORDERS AND INVOICES.................... 26
6.1. Initiation of Phases........................ 26
6.2. Content of Orders........................... 27
6.3. Electronic Orders........................... 28
6.4. Xxxx and Hold Products...................... 28
6.5. Changes in Orders........................... 28
6.6. Cancellation or Postponement of Orders...... 29
6.7. Changes in Products or Licensed Materials... 30
6.8. Invoice Prices.............................. 30
6.9. Terms of Payment............................ 31
6.10. Security Interest........................... 33
6.11. Taxes....................................... 33
6.12. Transportation and Packing.................. 34
6.13. Delivery and Acceptance..................... 34
6.14. Provisional Acceptance...................... 34
ARTICLE 7
TITLE AND RISK OF LOSS................................. 36
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ARTICLE 8
LICENSED MATERIALS..................................... 36
8.1. License for Licensed Materials.............. 36
8.2. Transfer and Relocation..................... 37
8.3. Installation of Software.................... 39
8.4. Backwards Compatibility..................... 39
8.5. Software Support............................ 39
8.6. Reserved.................................... 39
8.7. Annual Release Maintenance.................. 39
8.8. Notice...................................... 40
8.9. Installation and Testing.................... 40
8.10. Software Fixes.............................. 40
ARTICLE 9
WARRANTY............................................... 41
9.1. ****** **********........................... 41
9.2. Product, Software and Service Warranties.... 42
9.3. Scope of Warranties......................... 46
9.4. Effect of Customer Approvals................ 47
ARTICLE 10
PROJECT ADMINISTRATION AND FAILURE RESOLUTION.......... 49
10.1. Appointment of Primary Contact Person....... 49
10.2. Progress Updates............................ 50
10.3. Failure Reports; Response................... 50
ARTICLE 11
OPEN ARCHITECTURE...................................... 50
11.1. Open Architecture........................... 50
ARTICLE 12
INFRINGEMENT........................................... 51
ARTICLE 13
CUSTOMER'S REMEDIES.................................... 52
13.1. EXCLUSIVITY OF REMEDIES..................... 52
13.2. Remedies for Failure to Provide
Point-to-Multipoint Radio Technology..... 53
*This confidential portion has been omitted and filed separately with the
Commission.
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ARTICLE 14
USE OF INFORMATION..................................... 54
ARTICLE 15
INSURANCE.............................................. 55
ARTICLE 16
TERMINATION............................................ 55
16.1. Customer's Right to Terminate............... 55
16.2. Continuation of Work........................ 56
16.3. Costs....................................... 57
16.4. Surviving Obligations....................... 57
16.5. Seller's Right to Terminate................. 57
16.6. Effect on Open Orders....................... 58
16.7. Termination of License...................... 58
16.8. Special Termination Provisions.............. 59
16.9. Financing................................... 59
16.10. Change of Control........................... 59
16.11. Material Adverse Change..................... 60
16.12. Termination Process......................... 60
ARTICLE 17
MISCELLANEOUS.......................................... 60
17.1. Documentation............................... 60
17.2. Notices..................................... 60
17.3. Force Majeure............................... 61
17.4. Assignment.................................. 61
17.5. Arbitration................................. 62
17.6. Independent Contractor...................... 62
17.7. Confidentiality of Agreement................ 62
17.8. Amendments.................................. 63
17.9. Severability................................ 63
17.10. Waiver...................................... 63
17.11. Survival.................................... 63
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17.12. Section Headings............................ 63
17.13. Choice of Law............................... 63
17.14. Counterparts................................ 63
ARTICLE 18
ENTIRE AGREEMENT....................................... 64
18.1. Entire Agreement............................ 64
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AMENDED AND RESTATED PURCHASE AGREEMENT
BETWEEN
ADVANCED RADIO TELECOM CORP.
AND
LUCENT TECHNOLOGIES, INC.
This Amended and Restated Purchase Agreement (hereinafter "Purchase
Agreement" or "Agreement") is made effective as of the 24th day of July, 1998
("Effective Date") by and between Advanced Radio Telecom Corp., a Delaware
corporation, with offices located at 000 000xx Xxxxxx XX, Xxxxx 0000, Xxxxxxxx,
Xxxxxxxxxx 00000 (hereinafter "Customer"), and Lucent Technologies Inc., a
Delaware corporation, with offices located at 000 Xxxxxxxx Xxxxxx, Xxxxxx Xxxx,
Xxx Xxxxxx 00000 (hereinafter "Seller").
WHEREAS Customer and Seller have entered into a Purchase Agreement dated
April 24, 1998 providing for the Seller to design, configure, engineer,
construct and sell to Customer a fully integrated, nationwide, wireless
broadband data network for deployment in the United States which shall require
Seller to design, configure, engineer, equip, install, build, test and service
such network including the utilization of point-to-multipoint radio technology
in accordance with the terms and conditions, and as otherwise set forth herein
pursuant to this Agreement (as it may be amended from time to time);
WHEREAS Seller and Customer wish to amend and restate said Purchase
Agreement dated April 24, 1998 relating to the design, construction and sale of
the above referenced network;
WHEREAS Seller is willing to design, configure, engineer, construct and
sell to Customer the above referenced network on the basis set forth in this
Agreement; and
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, Customer and Seller hereby agree to the following:
ARTICLE 1
DEFINITIONS
For the purpose of this Agreement, the following definitions will apply:
(a) "Acceptance Test Procedures" or "ATP" means the tests of the
Network Infrastructure and the Network which are set out and
administered in accordance with Exhibit A.
(b) "Affected Deliverable" shall have the meaning set forth in
Section 3.4.
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(c) "Affiliate" of a corporation means its Subsidiaries, any company
of which it is a Subsidiary, and other Subsidiaries of such
company.
(d) "Allocation Period" means (i) an initial period commencing on
April 24, 1998 and ending on the first month end after the date
which is one year after Final Acceptance and commercial operation
of at least one Initial Phase meeting Minimum Requirements and
(ii) consecutive one year periods thereafter commencing on the
day after expiration of such initial period.
(e) "Applicable Permits" means any waiver, exemption, zoning,
building, variance, franchise, permit, authorization, approval,
license or similar order of or from any United States, foreign,
federal, state, provincial, county, municipal, regional,
environmental or other governmental body, instrumentality,
agency, authority, court or other body having jurisdiction over
all or any part of the Network or the work to be performed
pursuant to the terms of this Agreement.
(f) "Assignment" shall have the meaning set forth in Section 17.4.
(g) "ATM Switch" shall mean any electronic device using Asynchronous
Transfer Mode protocol to connect an input port or originating
connection to an output port or terminating connection.
(h) "Average Allocation" shall have the meaning set forth in Section
2.8(b).
(i) "Average Allocation Test" means Customer not having two
consecutive Allocation Periods where the Average Allocation does
not total at least ************, calculated in accordance with
Section 2.8(b), including Cure Purchases.
(j) "Backwards Compatible" means (i) with respect to Licensed
Materials, the ability of newer or more advanced versions to
function seamlessly with the two prior older or less advanced
versions of Software or other Licensed Materials and with all
existing in-service Seller Provided Products already installed in
the Network, and (ii) with respect to Seller Provided Products,
the interoperability and compatibility of such Seller Provided
Products with existing infrastructure resulting in no reduction
in the existing level of Functionality of the existing
infrastructure. For the purposes of this definition, any
particular version of
*This confidential portion has been omitted and filed separately with the
Commission.
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Licensed Materials shall mean only a Software Upgrade or Software
Enhancement.
(k) "Best In Class" shall have the meaning set forth in Section 3.4.
(l) "Xxxx and Hold Products" means Products and/or parts thereof,
which the customer requests and Seller agrees in writing to
inventory or warehouse until final delivery into the Network.
(m) "Change of Control" means the occurrence of any of the following
events: (i) any person or group (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934)
becomes the beneficial owner of more than 50% of the securities
entitled to vote for the election of Customer's directors, (ii)
consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of
Customer in one or a series of transactions (a "Business
Combination"), in the case of either (i) or (ii), unless,
following such Business Combination, (x) all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the outstanding customer common stock and
outstanding customer voting securities immediately prior to such
acquisition or Business Combination beneficially own, directly or
indirectly, immediately following such Business Combination more
than 50% of, respectively, the outstanding shares of common stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from
such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns Customer
or all or substantially all of Customer's assets either directly
or through one or more subsidiaries) or (y) at least a majority
of the members of the board of directors of the corporation
resulting from such Business Combination were members of the
incumbent board of directors of Customer at the time of the
execution of the initial agreement, or of the action of the board
of directors, providing for such Business Combination.
(n) "Change Order" shall have the meaning set forth in Section 6.5.
(o) "Characteristics" shall have the meaning set forth in
Section 3.4.
(p) ********** ***** *** ************* ***** ** ****** *********
***** ********* ** ******* **
*This confidential portion has been omitted and filed separately with the
Commission.
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(q) "Commercial Service" means, with respect to any Products or
Licensed Materials, the use of such Products or Licensed
Materials to bring non-trial, for fee services to any customer of
Customer, and with respect to any Phase, the use of a Switching
Center and at least one Hub to bring billable services to at
least one customer of Customer.
(r) "Complete" shall have the meaning set forth in Section 6.9.
(s) "Conditional Acceptance" of a Phase shall mean the point when all
Products and Licensed Materials included in such Phase have been
installed, all Services included in such Phase have been
completed, all applicable Acceptance Test Procedures have been
completed and a Punchlist for such Phase has been created.
(t) "Cure Purchases" shall have the meaning set forth in
Section 2.8(b).
(u) "Customer Comparison" shall have the meaning set forth in
Section 3.4.
(v) "Customer Site" means any location, whether of Customer or of a
customer of Customer, and all Products and Licensed Materials
located there, including endpoint point-to-point or point-to-
multipoint radios and the distribution hardware and software, to
bring service to a Network user.
(w) "Deficiency Notice" shall have the meaning set forth in
Section 3.4.
(x) "Deliverable" shall have the meaning set forth in Section 3.4.
(y) "Delivery Date" shall have the meaning set forth in Section 6.14.
(z) Designated Processor means the type of product, processor or
product line for which licenses to use Licensed Materials are
granted.
(aa) "Effective Date" shall have the meaning set forth in the
Preamble.
(bb) "Escalation Procedures" shall mean the escalation policies and
procedures detailed on Exhibit L.
(cc) "Expansion Phase" means a Phase in the construction of the
Network which improves or increases Customer's data transmission
services available beyond the services based on an existing
Switching Center.
(dd) "Extended Warranty" shall have the meaning set forth in
Section 9.2.
(ee) "Failure Report" shall have the meaning set forth in
Section 10.2.
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(ff) "Final Acceptance " means, with respect to a Phase, when all
Products and Licensed Materials included in such Phase have been
installed, all Services to be performed in such Phase have been
completed, and all items have been eliminated from the Punchlist
for such Phase.
(gg) "Firmware" means a combination of (1) hardware and (2) Software
represented by a pattern of bits contained in such hardware.
(hh) "Fit" means physical size or mounting arrangement (e.g.,
electrical or mechanical connections).
(ii) "Force Majeure" shall have the meaning set forth in Section 17.3.
(jj) "Form" means physical shape.
(kk) "Forecast" shall have the meaning set forth in Section 3.3.
(ll) "Function" means an operation a particular Product performs.
(mm) "Functionality" means the level or standard to which any Product
performs its Function including, but not limited to, speed,
accuracy and reliability.
(nn) "Government Entity" means any nation or government, any state,
province or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
(oo) "Hub" means a central point-to-point or point-to-multipoint radio
location and associated hardware and software. A Hub may also be
referred to as a Node.
(pp) "Information" shall have the meaning set forth in Article 14.
(qq) "Initial Invoice Price" means, with respect to any Product,
Licensed Materials, Services, or Related Services, (i) if such
item is listed on Exhibits I or G as of the date hereof, the
Invoice Price or RS Price, as of the date hereof or (ii) if such
item is added to Exhibits I or G after the date hereof, the
Invoice Price or RS Price at the date such item is added to
Exhibits I or G.
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(rr) "Initial Measurement Period" shall mean the period commencing on
April 24, 1998 and ending on the first month end after the date
which is two years after the Final Acceptance and commercial
operation of at least one Initial Phase meeting Minimum
Requirements.
(ss) "Initial Phase" means a Phase in the construction of the Network
which involves the installation of a new Seller Provided
Switching Center and associated Seller provided Products and
Licensed Materials.
(tt) "Initiation Request" shall have the meaning set forth in
Section 6.1.
(uu) "Invoice Prices" shall have the meaning set forth in Section 6.8.
(vv) "IP Platform" means any electronic device capable of correctly
routing a data stream consisting of data and address packets by
using the Internet Protocol (IP).
(ww) "Licensed Materials" means Software, Firmware and Related
Documentation including Seller's Software, Firmware and Related
Documentation and such Software, Firmware and Related
Documentation as is provided to Seller by its Subcontractors and
suppliers in each case for which perpetual, royalty free licenses
are granted by Seller under this Agreement.
(xx) "Lucent Competitor" means a competitor of Seller in the business
of manufacturing and distributing communications systems, and
related software and products.
(yy) "Metropolitan Area Network" ("MAN") means a portion of the
Network containing a Switching Center and all Hubs, Customer
Sites and other associated Products and Licensed Materials
connected thereto.
(zz) "Minimum Requirements" means, with respect to any Phase, the use
of point-to-multipoint radio technology and the installation of a
Switching Center, at least two Hubs and at least ten Customer
Sites, bringing service to at least twenty users.
(aaa) "Net-Care" means the suite of Seller Services described on
Exhibits E and G.
(bbb) "Network" means a state-of-the-art, fully installed and
integrated nationwide, wireless, packet-based, broadband data
network, to be designed, configured, engineered, equipped, built,
installed, integrated, tested and warranted by the Seller, which
will utilize among other things point-to-multipoint and point-to-
point radio technology and meet the Network Specifications set
forth on Exhibit B
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and can include, among other services, (i) use of ********* for
use in planning and designing the Network, (ii)
********************************** which are used in connection
with the design and construction of the Network, (iii) network
integration, planning and optimization services, (iv)
communications software systems integration, (v) designing
Network capability in the areas of customer care, surveillance,
fault management and billing, (vi) installation, turn-up and a
start-up period of technical and operations support, (vii)
provisioning services related to the design and construction of
the Network and management and provisioning software, (viii) Net-
Care services related to network planning and construction, and
(ix) program management services, including Switching Center, Hub
site and Customer Site acquisition, civil engineering,
construction and zoning services (which may be provided through a
Subcontractor) (x) warranties and Extended Warranties on Products
and Licensed Materials; provided, however, "Network" shall
-------- -------
not include (a) access to Seller's Network Reliability Center and
on-going Network Reliability Center surveillance, fault
management, customer care and data collection services beyond a
defined start-up or Extended Warranty period, (b) technical and
operations support services provided beyond a defined start-up or
Extended Warranty period or (c) Net-Care services unrelated to
the planning and construction of the Network, all of which shall
be available under this Agreement as Related Services.
(ccc) "Network Infrastructure" shall mean all Products and Licensed
Materials comprising the Network.
(ddd) "Network Reliability Center" means a service center performing
surveillance, remote maintenance and diagnostic activities.
(eee) "Network Specifications" means the technical specifications for
Function and Functionality of the Network, which specifications
shall include the representations set forth on Exhibit B.
(fff) "Node" means a Hub.
(ggg) "Notice of Completion" shall have the meaning set forth in
Section 6.14.
(hhh) "OEM Products" means third party Products and/or related
components purchased by Seller for the purpose of incorporation
into the Network other than Vendor Items.
(iii) "OEM Supplier" means a supplier to Seller of OEM Products.
*This confidential portion has been omitted and filed separtely with the
Commission.
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(jjj) "Optional Software Features" means Software features for Products
available to Seller's customers on an optional, separate fee,
basis.
(kkk) "Order" shall have the meaning set forth in Section 6.2.
(lll) "PMP Solution" shall have the meaning set forth in
Section 13.2(a).
(mmm) "Phase" means either an Initial Phase or an Expansion Phase.
(nnn) "Phase Plan" shall have the meaning set forth in Section 6.1.
(ooo) "Phase Proposal" shall have the meaning set forth in Section 6.1.
(ppp) "Phase Specifications" shall have the meaning set forth in
Section 6.1.
(qqq) "Primary Build" shall have the meaning set forth in Section 6.14.
(rrr) "Primary Contact Person" shall have the meaning set forth in
Section 10.1.
(sss) "Product" means individual items of equipment hardware, and parts
thereof to be included in the Network, but the term does not mean
Software whether or not such Software is part of Firmware.
(ttt) "Product ATP" means those Acceptance Test Procedures related to
the performance and Function of an individual Product.
(uuu) "Product Developments" shall have the meaning set forth in
Section 3.9.
(vvv) "Product Specifications" means technical specifications for Form,
Fit, Function and Functionality of particular Products or
Licensed Materials, which specifications shall include the
applicable representations regarding capacity and Functionality
set forth on Exhibits C and D (as amended from time to time by
mutual consent).
(www) "Provisional Acceptance" shall have the meaning set forth in
Section 6.14.
(xxx) "Provisional Acceptance Standards" means the criteria for
performance of Network Infrastructure and the Network which such
criteria are set out along with the procedures and tests for
determining compliance with such criteria on Exhibit Q.
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(yyy) "Punchlist" means a list of the remaining, non-service affecting
adjustments, additions, replacements and corrections, if any, to
be made to a Phase or to Products or Licensed Materials used in a
Phase at no cost to Customer, which list shall be negotiated in
good faith by Seller and Customer after (i) such Phase has been
installed and (ii) all applicable ATP's have been completed.
(zzz) "Purchase Price" shall have the meaning set forth in Section 2.2.
(aaaa) "Related Documentation" means materials useful in connection with
Software such as, but not limited to, flowcharts, logic diagrams
and listings, program descriptions and Specifications.
(bbbb) "Related Services" means any services performed by Seller under
this Agreement which are not performed in connection with the
design or construction of the Network or in accordance with
Sections 2.4 or 2.5. and are not included in the definition of
the Network. Related Services include services described on
Exhibit G and such other services agreed to by the parties from
time to time.
(cccc) "Responsibility Matrix" shall mean a comprehensive representation
of the major responsibilities of Customer and Seller as
determined for each Phase, the form of Responsibility Matrix
being set forth in Exhibit F.
(dddd) "RS Change Order" shall have the meaning set forth in
Section 4.3.
(eeee) "RS Prices" shall be the prices for Related Services as set forth
in Exhibit G.
(ffff) "RS Orders" shall have the meaning as set forth in Section 4.1.
(gggg) "Secondary Contact Person" shall have the meaning set forth in
Section 10.1.
(hhhh) "Seller Provided Product" means a Product manufactured by Seller
or a Product supplied by Seller or its Subcontractors as an OEM
Product.
(iiii) "Services" means Seller provided services, including but not
limited to, engineering, installation, warranty and/or extended
warranty repair services, design, site acquisition, architectural
and civil engineering services, provisioning, program management
and integration to be performed by Seller under this Agreement in
connection with the construction of the Network.
(jjjj) "Short Term Note" means the Promissory Note of Customer payable
to Seller dated June 10, 1998 in the stated principal amount of
$10,000,000.
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(kkkk) "Software" means individual computer programs which are included
in the Network consisting of a set of logical instructions and
tables of information that guide the functioning of a processor.
Such program may be contained in any medium whatsoever, including
hardware containing a pattern of bits, representing such program;
provided the term "Software" does not mean or include such
medium.
(llll) "Software Combined Release" means a Software Upgrade which is at
any time combined with any Software Enhancement.
(mmmm) "Software Enhancements" means modifications or improvements made
to the Software relating to Products which improve performance,
capabilities or capacity of the Software Revision Level with
which it is associated. A Software Enhancement may also correct
defects in earlier versions of the Software.
(nnnn) "Software Maintenance Releases" means issues of Software which
correct defects in preceding versions of the Software.
(oooo) "Software Revision Level" means each version of Software that
reflects any amendment, modification or change from the
immediately preceding version.
(pppp) "Software Upgrades" shall mean issues of Software which add to,
improve or enhance existing Software Features and capabilities
involving more extensive changes to the underlying source code or
the user interface than is the case in a Software Enhancement. A
Software Upgrade may also correct defects in earlier releases.
(qqqq) "Source Code" means any version of Software incorporating high-
level or assembly language that generally is not directly
executable by a processor.
(rrrr) "Specifications" means Network Specifications and Product
Specifications.
(ssss) "Standard Delivery Intervals" shall mean that Seller shall be
capable of shipping Customer Site equipment, shipping Switching
Center and Hubs, and supplying minimum defined amounts of
Customer Sites, Hubs and Switching Centers within minimum amounts
and in minimum time periods as defined on Exhibit 0.
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(tttt) "System ATP" means those Acceptance Test Procedures related to
how a set of Products and Licensed Materials in a Phase
integrates and functions together and with other portions of the
Network.
(uuuu) "Subcontractor" means a contractor, seller, supplier, licensor or
other person, having a direct or indirect contract with Seller or
with any other Subcontractor of Seller who has been hired
specifically to assist Seller in certain specified areas of its
performance of its obligations under this Agreement including,
without limitation, the design and/or construction of the
Network.
(vvvv) "Subsidiary" means a corporation the majority of whose shares or
other securities entitled to vote for election of directors is
now or hereafter owned or controlled by such company either
directly or indirectly, but such corporation shall be deemed to
be a Subsidiary of such company only as long as such ownership or
control exists.
(wwww) "Switching Center" shall mean the major point of presence (POP)
in a market, which may include a core ATM switching platform, IP
platforms and other associated Products and Licensed Materials
necessary to conduct data packet switching.
(xxxx) "Termination Notice" shall have the meaning set forth in
Section 16.10.
(yyyy) "Total Contract Value" means $240,000,000; provided, however, if
Seller provides or arranges financing of at least $600,000,000 on
or before the date which is eighteen months from the date hereof
on terms acceptable to Customer, the Total Contract Value shall
equal $1,200,000,000.
(zzzz) "United States" means United States of America, the District of
Columbia and Puerto Rico.
(aaaaa) "Vendor Item" means any Product or licensed material furnished by
Seller to Customer under this Agreement but neither manufactured
by Seller nor purchased by Seller pursuant to its procurement
specifications. Notwithstanding anything to the contrary in this
Agreement, no Product or licensed material shall be designated a
Vendor Item hereunder if Seller or any of its Affiliates (i)
manufactures such Product or licensed material, (ii) provides
such Product or licensed material to any other customer as, or
generally offers such products or licensed materials as, an "OEM"
product, or (iii) provides the Product or licensed material to
any other customer with a warranty of the Seller.
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ARTICLE 2
PURCHASE OF THE NETWORK AND RELATED SERVICES
2.1. Upon the terms and subject to all of the conditions contained herein,
Seller will configure, design, engineer, equip, construct, install, test,
service and sell to Customer, and Customer will purchase from Seller, the
Network in exchange for Customer's payment of the Purchase Price as provided in
(S) 2.2.
2.2. Upon the terms and subject to all of the conditions contained herein,
Customer will pay to Seller a total purchase price (the "Purchase Price") for
the Network that is not expected to exceed $1.2 billion. The actual Purchase
Price will be determined by the parties based on the final design and
specifications of the Network. The Purchase Price will be paid to Seller during
the course of the construction of the Network in accordance with Article 6.
2.3. In addition to the purchase of Network, Customer may purchase and the
Seller may provide Related Services for prices which are specified in Exhibit G.
2.4. In addition to the Network and Related Services provided under this
Agreement, the Seller will provide to the Customer the following marketing
support services at no cost to the Customer, so long as Customer is meeting the
Average Allocation Test:
(a) *** *** ******* *************** ******* ********** throughout the term
of this Agreement,
(b) *** ** ******** ********* ******* ********* ******* ********* for
activities related to the Seattle, Washington and Phoenix, Arizona
portions of the Network during the first year of this Agreement, and
(c) access to and use of ******** ******* ****** ******* ***********
****** **** *** ** ********* ********** ******* ******** ** *** ***
*** ** ******* ********** **** ******* ********* ********* ******
******** ********** ******* *** **** ******** *********, and other
Seller facilities mutually agreed upon throughout the term of this
Agreement, provided however that each party will be responsible for
the costs of transporting, maintaining and compensating its own
personnel and any invitees.
2.5. In addition to the Network and Related Services provided under this
Agreement, Seller will, throughout the term of this Agreement and so long as
Customer is meeting the Average Allocation Test, provide to Customer the support
services of the following personnel in accordance with the descriptions of
responsibilities set forth below ** ** **** ** ********:
*This confidential portion has been omitted and filed separtely with the
Commission.
-12-
(a) *** *** ******* ******* **** **************,
(b) *** ** **** ********* ********* ********** ***********, as required,
(c) *** *** **** **** ***** **************, and
(d) *** *** ********* ******* ********* for Network support.
The above personnel shall provide support in accordance with the following
responsibilities:
(e) ******* **** ***************
(i) ******* **** ******** *** ************ ********** ***** **
****** *** *********** ********* **** ****** *** ******* ***
********;
(ii) **** ** * ***** ** ********** ** ******* *** ******** **
*********;
(iii) ******** ******** **** ******* *** ******** *********** **
******** *** ********.
(f) ********* ********** ********:
(i) ******** ********* *** ******** ***** ** ************ ********
** ********;
(ii) *********** *** ********* **** *** ******* ****** ******
************* ** ********* *********;
(iii) ********* ********* *** ******** ************* *** ******** **
*****.
(g) **** **** ***** **************:
(i) ******* ******* ******** *** **** **** *** ****** ** **** ****
********** ******** *******;
(ii) ********** *** ********* ************** **** **** **** *** ***
********** ***********;
(iii) ********** *** ******* ******** ** ************ ******** ** ***
********** ***** ** *** ***** ****** ** ***********.
(h) ****** ********:
(i) ******* ******** **** *********** ******* *** ******** *******;
*This confidential portion has been omitted and filed separtely with the
Commission.
-13-
(ii) ******** ******** ******* ** ********* ******** *********
************ *** ********** ************* ******.
All on-site personnel will be located, from time to time, in such cities
and offices that Customer reasonably requests, provided that Customer will make
available office space in cities or locations where Seller does not have
available facilities. In the event that Seller's on-site personnel cannot
timely accomplish their responsibilities described in this Section 2.5 without
assistance from off-site Seller personnel, the on-site personnel shall request,
and Seller shall timely provide, such additional temporary personnel and
assistance as may be necessary to reasonably support Sellers obligations. The
on-site personnel shall be directly responsive to Customer's reasonable requests
for assistance, and shall not be required to seek approval or instruction from
off-site Seller personnel prior to providing requested assistance. Customer has
the right at any time to require the removal and replacement of a member of the
on-site personnel upon reasonable grounds and with reasonable prior notice to
Seller. The cost of transporting, maintaining and compensating on-site
personnel shall be borne by Seller.
2.6. ****** ****** **** ****** ** ** ******* ** *** ******** ** *
********* ***** ** ** *** *** ******* ********* ***** ********** ** *******
***** **** ** ******** ** ****** *** **** *** ***** ******** **** ** ******** **
****** ****** *** ******* ******* ***** **** ********* *** *** ****** *********
******** ********** ******** ******* ******** ** ***** ***** ******** ***
******* ***** **** ********** ************ *** ***** ********** ******* **
********* ******** ** *** ************ **** ********** ** *********
**** *** ********* **** ** **** ********** *** **** **** *** *****
********** ** ** ******** ***** *** *** ***** ******** ******* * ******** **
************* ****** ***** ******* ******** **** * ****** ** *** ******* *******
************ ** ** ******* ******* *** ********* ******* ** ** ****** **
******** ***** **** ******* **** **** **** ******** ** ******* ******* ***** **
****** ** ******* ** ******** ******** **** ** ******** ** ****** ****** ***
**** ********* ** ************* ** **** **** *** ******* ***** ** ********* ***
****** ***** ******* ******** **** *** **** ****** ** *** ******* *******
*************
2.7. Customer, at no charge to Seller, may suggest enhancements or provide
other intellectual property which may be utilized by Seller in the development
of Products for use in the Network and for sale by Seller. Customer agrees that
Seller shall have exclusive and sole ownership of any Products developed by
Seller using such information provided by Customer. If Seller utilizes
Customer's intellectual property in the development of Products for sale to
persons other than Customer, the parties agree to negotiate appropriate
consideration for use of such intellectual property.
*This confidential portion has ben omitted and filed separately with the
Commission.
-14-
2.8. Total Contract Value.
--------------------
(a) Customer agrees that, subject to (i) the timely performance of
Seller's material design and delivery obligations under this
Agreement, (ii) the integration of point-to-multipoint technology
into the Network, in accordance with Exhibit H, (iii) the
availability of Seller's committed or arranged financing on terms
acceptable to Customer, and (iv) the availability to Customer
from Seller of a Network substantially all of which is comprised
of Seller Provided Products, Licensed Materials and Services
which are Best in Class at the time provided, with associated
Invoice Prices which are competitive with market prices of
similar products, licensed materials and services available from
third parties, the sum of (w) all Orders placed (calculated as
the sum of the Initial Invoice Prices of all Products, Licensed
Materials and Services ordered thereunder, plus all other fees
and charges paid under such Orders, excluding taxes and delivery
costs), (x) all RS Prices on Related Services ordered, (y) the
amount paid by Customer on Cure Purchases, and (z) any other
payments by Customer under this Agreement, shall equal or exceed
the Total Contract Value.
(b) The parties expect that, in connection with realizing such Total
Contract Value, Customer will place RS Orders and Orders which,
calculated at the Initial Invoice Prices, would result in an
Average Allocation of ************ of the Purchase Price for each
Allocation Period. For purposes of this Agreement, the "Average
Allocation" for any Allocation Period shall be calculated by
averaging such RS Orders and Orders for that Allocation Period
and all previous Allocation Periods, except that if during any
Allocation Period Seller does not provide Customer with Products
and Licensed Materials which are Best-In-Class and Customer
purchases substitute products or licensed materials from a party
other than Seller ("Cure Purchases"), the amount paid by Customer
on Cure Purchases shall be included in the calculation of Average
Allocation for that and all subsequent Allocation Periods,
******** **** *** ****** *** ******* *********** *******
******************* ******** ******* *** ****** **************
******** ** ******* * ***** ** ****** ** ** **** ** ***** ***
**** *** ********* **** *** *********** ** ****** ****** ****
******** ***** *** ** ******* *** ********* **** ********* ** ***
******* ********** ****** *** ******* *********** ******,
provided that Customer shall at all times have the right to
purchase products and licensed materials from vendors other than
Seller;
(c) Notwithstanding the foregoing, in light of the expectations noted
above and subject to (i) the timely performance of Seller's
material design and delivery obligations under this Agreement,
(ii) the availability of Seller's committed or
*This confidential portion has ben omitted and filed separately with the
Commission.
-15-
arranged financing for **** ******* on terms acceptable to
Customer, (iii) the provision of Best in Class Products, Licensed
Materials and Services at the associated Invoice Prices on
Exhibit I, Customer commits to place RS Orders and Orders that
will result in an Average Allocation of at least
************(calculated in accordance with Section 2.8(b),
including Cure Purchases) by the end of the Initial Measurement
Period.
2.9. International Orders. The parties agree that if the parties agree
--------------------
upon the provision by Seller of products, licensed materials or services to
Customer or its Subsidiaries in any territories outside the United States, the
amount of any orders placed for such products, licensed materials and services
shall be included in the calculation of Average Allocation pursuant to Section
2.8(b) hereof and Total Contract Value pursuant to Section 2.8(a) hereof.
ARTICLE 3
DESIGN AND CONSTRUCTION OF THE NETWORK
3.1. Configuration of the Network. Seller will configure and engineer a
----------------------------
state of the art Network to provide wireless, packet-based, broadband data
services in 80 to 100 major metropolitan areas throughout the United States, in
accordance with the Specifications and Responsibility Matrix which may be
updated or amended from time to time by mutual written agreement. In designing
the Network, in order to accommodate the ultimate demands on the Network, Seller
will assist Customer in evaluating the size and potential requirements of the
market for wireless, broadband data services and in planning and structuring the
Network to best realize such potential.
3.2. Construction of the Network. Seller will construct, install and
---------------------------
integrate the Network in a manner consistent with the Specifications and Phase
Plans approved by the Customer, as they may be amended from time to time as
mutually agreed. Seller's obligations include, among other things, the
obligation to provide, install and integrate all necessary Products and Licensed
Materials into the Network as mutually agreed by the parties. The Products,
Licensed Materials and Services which Seller will make available include, but
are not limited to, those listed on Exhibits C, D and E, respectively, which
such Exhibits may be amended from time to time by mutual written consent or as
otherwise provided herein. Seller shall furnish all drawings of Products and
Network architecture and all other information reasonably requested in
sufficient detail to indicate that the Network and each portion thereof comply
with the Specifications.
3.3. Forecasts. Customer hereby agrees that within one month after the
---------
Effective Date, Customer shall provide Seller an initial, non-binding forecast
of the portions of the Network to be constructed and delivered during the first
year of this Agreement. Customer shall on a quarterly basis thereafter provide
Seller a 12 month forecast ("Forecast") of the portions of
*This confidential portion has ben omitted and filed separately with the
Commission.
-16-
the Network expected to be constructed and delivered. Such Forecast shall
detail the quantity and network capacity requirements for Hubs, Switching
Centers, Customer Sites and the Services to be included in such portions. To
the extent Customer recognizes that the current Forecast is not accurate within
+/-25%, Customer will update the forecast, whether or not an update is scheduled
under this Section 3.3. The intent is to provide Seller with as much
information regarding Customer's anticipated needs as early as practicable so
that Seller may better respond to Customer's actual needs when they are
finalized and to better enable Seller to meet the required delivery intervals.
3.4. Best in Class. Seller shall provide Products and Licensed Materials
-------------
("Deliverables") that are the Best in Class as of the time any such Deliverable
is ordered by Customer. Each Deliverable shall be deemed to be in a class with
any other comparable products or licensed materials that are commercially
available from Seller or from any other vendors for use in materially similar
broadband services networks and which are compatible with Customer's Network.
*** *********** ******** ** ****** ***** ** ****** ** ** ***** ** ****** ****
*** ** ** ******** *** * *********** ** ***** **** ********* ************* ***
********** ** ******** ***** ******************* *** *** ******** *** **
********* *** *** ******* ************ ******* ******** ************ ********
*** ************** ***** ** *** **** ** **** ** *** *** **** *** ** **** **
****** **** ** ********* **** *** ***** ******** ** ******** ********* ** ***
***** *** **** ** ** ********** ************ ********* ******** ******
************ ******* ******** ************ ********* ************* ** **********
** ******** ***** ********** ******** ** **** ******** ** **** ***********
******** **** ***** ******** ** ******** ********* **** ***** ** ** **** ** ***
******** ******** ******* **** ******* *********** ******* *******************
***** ******** ******* **** ** *****
Customer shall determine (such a determination a "Customer Comparison")
whether each Deliverable made available by Seller under this Agreement is "Best
in Class" in accordance with the preceding paragraph. Customer shall promptly
give Seller written notice (a "Deficiency Notice") of the results of such a
Customer Comparison, including a copy of all tests, if any, performed by
Customer or its delegate, if Customer has concluded that the Deliverable is not
Best in Class (an "Affected Deliverable").
Seller shall, within ten (10) business days of a Deficiency Notice, notify
Customer if it agrees that the Deliverable is not Best in Class. If Seller
disagrees with the Deficiency Notice, it shall notify Customer within the ten
(10) business day period set forth above and the issue shall be mutually decided
by Primary Contact Persons within an additional ten (10) business day period.
Said decision will be binding on both Parties. If the Primary Contact Persons
are unable
*This confidential portion has ben omitted and filed separately with the
Commission.
-17-
to agree, then the matter shall be referred to a panel of three independent
industry experts for resolution within twenty (20) business days, with one
expert selected by each of Seller and Customer and the third to be selected by
the first two.
If Seller agrees with the Deficiency Notice or if the relevant Deliverable
is determined to not be "Best in Class" in accordance with the immediately
preceding paragraph, then (i) Customer may, at its sole option, and without
prior notice or penalties pursuant to Section 6.6 or otherwise cancel any
outstanding but unfilled orders for Products or Licensed Materials determined
not to be Best in Class, and (ii) Seller shall, within ten (10) business days of
a Deficiency Notice, notify Customer if it intends to develop and implement the
changes necessary to regain the Best in Class status of the Affected Deliverable
by, at Seller's option, either (a) providing a firm development plan and
timetable to make the Affected Deliverable Best in Class, or (b) entering into
an OEM arrangement with the manufacturer/supplier of the other comparable
product or licensed materials, or (c) providing the relevant deliverable as a
Vendor Item, or (d) if applicable, adjusting its price. Until (a), (b), (c) or
(d) is fully implemented and completed so that the relevant Deliverable is "Best
in Class," Customer may purchase (or Seller may provide as a Vendor Item (if
such item may be so designated)) the comparable product or licensed materials
and related products or licensed materials directly from another
manufacturer/supplier and apply such purchases to the Average Allocation in
accordance with the provisions of Section 2.8(b) (except for Cure Purchases
during the Initial Measurement Period as provided in Section 2.8(b)(ii)).
If Customer disagrees with the development plan and timetable presented by
Seller, it shall notify Seller in writing within ten (10) business days and the
issue shall be mutually decided by the Primary Contact Persons within an
additional ten (10) business day period. Said decision will be binding on both
parties. If the Primary Contact Persons are in good faith unable to agree, then
the matter shall be referred to a panel of three independent industry experts
for resolution within twenty (20) business days, with one expert selected by
each of Seller and Customer and the third to be selected by the first two.
If Seller fails to meet its Best in Class obligations and such failure
materially and adversely affects the performance of the Network, Customer, as
its sole remedy, may, without liability and at the Customer's election,
terminate this Agreement and shall be entitled to any right under Section 16.2.
3.5. OEM Products. Before Seller requests that any OEM Products be part of
------------
Seller's solution for design or construction of the Network and in all cases
before the inclusion of any OEM Products in any Phase Proposal, Seller will (i)
present test plans to Customer for Customer's reasonable approval or
modification, (ii) give Customer the opportunity to participate in joint testing
of the OEM Products, and (iii) permit Customer to approve or reject the use of
any such OEM Products, provided however that Customer's right to reject a Seller
selected OEM
-18-
Supplier must be based on noncompliance with Specifications, Allocation of
Purchase Price, Form, Fit, Function, Functionality or suitability of the Product
for ART's service offerings, as determined by ART.
3.6. Reserved.
--------
3.7. Radio Technology.
----------------
(a) Seller will provide and have available for integration into the
Network in accordance with the schedule on Exhibit H point-to-
multipoint radio technology capable of meeting the technical
requirements detailed on Exhibit H. The parties agree that the
inclusion of point-to-multipoint radio technology is fundamental
to the success of the Network. If Seller fails to meet the
development schedule on Exhibit H, Buyer will have the remedies
set forth in Section 13.2.
(b) To the extent requested by Customer, Seller will assist Customer
in the integration of Customer's existing supply of equipment
into the Network. Over the ninety (90) days from the date of this
Agreement, or such longer period as determined jointly by the
parties, Seller and Customer will jointly evaluate current point-
to-point technology offerings of suppliers and potential
suppliers. During this evaluation period, the parties will
jointly meet with such suppliers and potential suppliers and
assess the suitability of their capabilities for the needs of the
Network. At the end of such period, Customer and Seller shall
designate a supplier and agree upon radio specifications, ongoing
improvements in specifications and delivery dates for such point-
to-point technology, which will be included on Exhibit C to this
Agreement. Seller will cause such point-to-point technology to be
offered to Customer as an OEM Product as soon as practicable.
3.8. Permits and Approvals. The Responsibility Matrix included in each
---------------------
Phase Plan shall indicate whether or not any Applicable Permits (in connection
with the construction and sale of the Network) required by any Government Entity
relating to the manufacture, importation, safety or use of the Products,
Licensed Materials, or the subject Phase of the Network will be the sole
responsibility of Seller. With respect to Phases for which Seller is
responsible for the Applicable Permits, prior to the commencement of any
activities by Seller or any of its Subcontractors in connection with such Phase,
upon written request of Customer, Seller will furnish Customer with evidence
that such Applicable Permits have been obtained and are in full force and effect
to the extent that Applicable Permits are necessary for the commencement or
undertaking of such activities, and from time to time thereafter Seller, upon
the reasonable written request of Customer, will provide such further evidence
as Customer will deem reasonably necessary.
-19-
3.9. Product Development. Seller shall provide Customer with reasonable
-------------------
notice of any Product or Licensed Materials developments, innovations and/or
technological advances (collectively "Product Developments") relevant to the
Network prior to or concurrent with giving such notice to any other customer or
otherwise making any such Product Development public within the relevant
marketplace; provided that Seller will not be obligated to provide Customer such
notice before any other customer if doing so would breach any contractual
obligation to any other customer; provided further that any such notice pursuant
to this Section 3.9 need not include any information originated by another
customer which is proprietary to such other customer of Seller. For the
purposes of this Section 3.9 the term "Seller" includes Seller and its
Affiliates. Customer is offered the option, (a) with respect to radio Products
Developments to witness and/or participate in any development and /or testing
process to the same extent Seller or its Affiliates participates in such
processes, and (b) with respect to non-radio Product Developments, to witness
and/or participate in any alpha testing, beta testing and, as determined on a
case-by-case basis in Seller's reasonable discretion, initial and early system
testing and/or application of any such Product Development. Customer's option
shall not apply to a Product Development originated by another customer of
Seller which includes information which is proprietary to such other customer;
and any such testing of Product Developments will be subject to (i) scheduling
as reasonably determined by Seller, and (ii) the qualification that the Network
meets the technical requirements for the testing of such Product Development (or
otherwise that Customer is willing to update the Network or a portion thereof to
meet such requirements).
3.10. Availability. Seller shall at all times be capable of meeting its
------------
Standard Delivery Intervals.
3.11. Spare Parts. For a period of three (3) years following the
-----------
discontinuation of availability of any Seller Provided Products or Licensed
Material which such discontinuation shall be preceded by written notice at least
one year prior to discontinuation, Seller shall make spare parts, or their
functional equivalent, available for purchase by Customer, so that Customer may
meet existing obligations relative to the Products or Licensed Materials
included in the Network. The prices charged for the spare parts following the
termination of this Agreement shall be Seller's then current published list
price or, if no list price is then published, its then current pricing policy.
3.12. Punchlists. Seller agrees to resolve any items on any Punchlist as
----------
quickly as practicable. Notwithstanding anything in this Agreement, Seller's
obligation to resolve Punchlist items shall not be subject to any financial
limitation, including without limitation, those limitations set forth in Section
13.
3.13. Facilities Access. Each Party shall provide the other reasonable
-----------------
access to its facilities required in connection with the performance of their
respective obligations under the Agreement. No charge shall be made for such
access. Reasonable prior notification will be
-20-
given when access is required. Neither party shall require releases of any
personal rights in connection with visits to its premises.
ARTICLE 4
RELATED SERVICES
4.1. RS Orders for Related Services. Customer may from time to time submit
------------------------------
orders ("RS Orders") for Related Services, which RS Orders shall incorporate and
be subject to the terms and conditions of this Agreement. All RS Orders,
including electronic Orders, shall contain the information as detailed below:
(i) Complete and correct information regarding the place of
performance of such Related Services;
(ii) Quantity and type of Related Services being ordered;
(iii) Requested Delivery Date (in accordance with Seller's Standard
Delivery Intervals for Related Services); and
(iv) Reference to this Agreement.
RS Orders not rejected in writing within ten (10) days shall be deemed
accepted. Seller shall perform in accordance with any accepted RS Order. Terms
and conditions on Customer's RS Order which are inconsistent with the provisions
of this Agreement shall be ineffective, void and of no force and effect.
Seller reserves the right to place any order on hold or reject an RS Order due
to a payment default by Customer.
RS Orders which are not electronic shall be sent to the following address:
Lucent Technologies Inc.
Customer Service
0000 Xxxxxxx Xxxx
Xxxxxxxx X - 0xx Xxxxx
Xxxxxxx, XX 00000-0000
4.2. Electronic RS Orders. Electronic RS Orders shall be binding on
--------------------
Customer notwithstanding the absence of a signature. Electronic RS Orders shall
be sent in accordance with instructions to be provided by Seller.
-21-
4.3. Changes in RS Orders. Other than changes to the "place of
--------------------
performance" or "xxxx to" addresses which may be changed at any time at least
ten (10) days prior to performance or billing, changes by Customer to an RS
Order which has been previously accepted by Seller (an "RS Change Order"), are
subject to acceptance by Seller. In the event Seller accepts an RS Change Order
and such change affects Seller's ability to meet its obligations under the
original order, any RS Price or RS Services completion date quoted by Seller
with respect to such original order is subject to change. Seller will provide
to Customer written quotations and expected completion dates for any requested
RS Change Orders.
4.4. Cancellation or Postponement of RS Orders. Customer has the right at
-----------------------------------------
any time before relevant RS Services have already been performed to cancel or
postpone any RS Order, in whole or in part, upon advance written notice to
Seller. If such a cancellation or postponement is made at least fifteen (15)
days prior the scheduled performance date for the subject RS Services to be
included in such RS Order (or portion thereof), Customer will not owe any
cancellation or postponement charge in connection with such Order (or portion
thereof). If Customer cancels an RS Order or portion thereof less than fifteen
(15) days prior to the scheduled performance date for RS Services to be
performed thereunder, Customer shall pay to Seller a cancellation charge equal
to Seller's reasonably incurred out of pocket expenses. For RS Services in
process, Customer agrees to pay a cancellation fee equal to the price of all RS
Services rendered to date and not paid for, plus Seller's reasonably incurred
out of pocket expenses for those RS Services ordered by Customer and
subsequently canceled. Notwithstanding the above, the termination provisions
related to maintenance and Extended Warranty type RS Services are as follows:
prior to commencement of maintenance service, Customer may cancel coverage at no
charge and receive a refund for any prepaid amount. After commencement of
maintenance service, Customer may terminate coverage upon 30 days written notice
and upon such termination shall pay a termination charge equal to 10% of the
monthly charges for twelve (12) months or ten percent (10%) of the charges for
the remainder of the maintenance period whichever is less. For prepaid
agreements, Seller will refund or credit the pro rata price for the remainder of
the maintenance period less a termination charge of ten percent (10%) of the
monthly charges for twelve months or ten percent (10%) of the charges for the
remainder of the maintenance period, whichever is less.
4.5. RS Prices. Unless otherwise agreed to by the parties, the prices to
---------
be paid for RS Services ("RS Prices"), shall be as set forth in Exhibit G. For
RS Services to be offered in the future which are not listed on Exhibit G as of
the date hereof, such RS Services will be offered at RS Prices to be mutually
agreed upon by the parties. At least every two years, beginning on the second
anniversary of the date of this Agreement, representatives of Seller and
Customer will negotiate in good faith to agree on amendments to Exhibit G.
Customer has the right to terminate this Agreement without penalty if, acting
reasonably and in good faith, Seller and Customer fail to agree on any scheduled
amendments to Exhibit G within one month of each anniversary.
-22-
4.6. Terms of Payment. Seller shall xxxx Customer and shall submit
----------------
invoices to Customer covering RS Orders, or portions thereof, that became
billable under the terms of this Agreement. Such invoices shall be in
reasonable detail. Delivery of invoices shall be made in accordance with the
notice provisions of Section 17.2. Payment of all invoices shall be net 30 days
from effectiveness of such notice (as set forth in Section 17.2.)]
All amounts due for Related Services shall become billable in accordance
with Exhibit G.
Customer shall pay all amounts due Seller hereunder using Electronic Funds
Transfer ("EFT"). EFT payments by Customer shall be made to the following
account of Seller or such other account as is subsequently designated by Seller
in writing and, concurrent with the EFT payment, Customer shall fax a copy of
the remittal to Seller's Manager of Cash Operations at 000-000-0000.
Chase Manhattan Bank
New York, New York
Account Name: Lucent Technologies Inc.
***** ***********
*** *********
Customer agrees to review all invoices furnished by Seller hereunder upon
receipt and notify Seller of any billing discrepancies within fifteen (15) days
of receipt of the applicable invoice. Notice of such discrepancies can be
directed to Seller in writing or by telephone. Such notices shall be made to
the telephone number or, if in writing, to the address identified on the
invoice. Customer shall not be required to pay Seller on such disputed invoice
items in net 30 days as required by the first paragraph of this Section 4.6.
Irrespective of any failure to provide notice of any billing discrepancies
within the fifteen days provided for in this Section 4.6, Customer shall
maintain its right to seek resolution of billing discrepancies after payment and
lack of notice shall not be deemed a waiver of any rights.
*This confidential portion has ben omitted and filed separately with the
Commission.
-23-
ARTICLE 5
SUBCONTRACTORS
5.1. Subcontractors. Seller will select Subcontractors in connection with
--------------
the performance of its obligations hereunder such that all Products, Licensed
Materials and Services provided by any such Subcontractors meet the Customer
Specifications and reliability and performance requirements set forth in this
Agreement. Regardless of whether or not Seller obtains approval from Customer
of a Subcontractor or whether Seller uses a Subcontractor recommended by
Customer, use by Seller of a Subcontractor will not, under any circumstances:
(i) give rise to any claim by Seller against Customer if such Subcontractor
breaches its subcontract or contract with Seller; (ii) give rise to any claim by
such Subcontractor against Customer; (iii) create any contractual obligation by
Customer to the Subcontractor; (iv) give rise to a waiver by Customer of its
rights to reject any Products, Licensed Materials or Services due to
deficiencies therein; or (v) in any way release Seller from being solely
responsible to Customer for the obligations to be performed under this
Agreement.
5.2. Seller's Liability. Seller is the general contractor for the design
------------------
and construction of the Network and remains responsible for all of its
obligations under this Agreement, regardless of whether a subcontract or supply
agreement is made or whether Seller relies upon any Subcontractor to any extent.
Seller's use of Subcontractors for any of the work will in no way increase
Seller's rights against or diminish Seller's liabilities to Customer with
respect to this Agreement, and in all events, except as otherwise expressly
provided for herein, Seller's rights and liabilities hereunder with respect to
Customer will be as though Seller had itself performed such work. Except to the
extent caused by Customer, Seller will be liable for any delays caused by any
Subcontractor as if such delays were caused by Seller.
5.3. No Effect of Inconsistent Terms in Subcontracts. The terms of this
-----------------------------------------------
Agreement will in all events be binding upon Seller regardless of and without
regard to the existence of any inconsistent terms in any agreement between
Seller and any Subcontractor whether or not and without regard to the fact that
Customer may have directly and/or indirectly had notice of any such inconsistent
term.
5.4. Assignability of Subcontracts to Customer. Seller shall use all
-----------------------------------------
reasonable efforts to have each agreement between Seller and a Subcontractor
contain a provision stating that, in the event that Seller is terminated for
cause, convenience, abandonment of this Agreement or otherwise, (i) each
Subcontractor will continue its portion of the work to be performed hereunder as
may be requested by Customer and (ii) such agreement permits assignment thereof
without penalty to Customer at the option of Customer and for the same price and
under the same terms and conditions as originally specified in such
Subcontractor's agreement with Seller.
-24-
5.5. Removal of Subcontractor or Subcontractor's Personnel. Customer has
-----------------------------------------------------
the right at any time to require removal of a Subcontractor and/or any of a
Subcontractor's personnel from work on the Network upon reasonable grounds and
reasonable prior notice to Seller. The exercise of such right by Customer will
have no effect on the provisions of subsections 5.1 and 5.2.
5.6. Subcontractor Insurance. Seller must require its Subcontractors to
-----------------------
obtain, maintain and keep in force during the time they are engaged in providing
Products, Licensed Materials and Services hereunder the following insurance
coverage (1) Worker's Compensation and related insurance as required by law;
and, (2) employer's liability insurance with a limit of at least five hundred
thousand ($500,000.00) dollars for each occurrence; (3) comprehensive general
liability insurance, with a limit of at least one million ($1,000,000.00)
dollars per occurrence; (4) comprehensive motor vehicle liability insurance with
limits of at least one million ($1,000,000.00) dollars for bodily injury
including death, to any one person, three hundred thousand ($300,000.00) dollars
for each occurrence of property damage, and one million ($1,000,000.00) dollars
for any one occurrence. Seller will, upon Customer's request, furnish Customer
with evidence of such insurance in form and substance reasonably satisfactory to
Customer. All such insurance will be subject to Customer's approval. All
Subcontractors must be of bondable financial condition. Nothing herein will be
deemed to bar Seller or any Subcontractor from obtaining such insurance on a
project basis for each of the Subcontractors participating in such project.
5.7. Review not Relief of Seller Liability. Any inspection or review by
-------------------------------------
Customer permitted under this Agreement of any portion of the work by the Seller
or any Subcontractor will not relieve Seller of any duties, liabilities or
obligations under this Agreement, but nothing contained in this Section 5.7 will
be deemed to limit the effect of any express waiver given by Customer to Seller
pursuant to and in accordance with the terms of this Agreement.
5.8. Evaluation of Subcontractors. Seller and Customer agree to develop a
----------------------------
plan to evaluate products and materials provided by Subcontractors (which shall
include product testing and integration testing). Any expenses of such agreed
upon evaluation shall be included in the Purchase Price of the Network.
5.9. Seller Warranties. Except as otherwise expressly provided in Article
-----------------
9, the warranties of Seller pursuant to Article 9 will be deemed to apply to all
Products or Licensed Materials supplied or work performed by any Subcontractor
as though Seller had itself performed such work. The parties agree that all
warranties relating to Products, Licensed Materials and work performed by any
third parties shall, to the extent permitted, be passed through to Customer.
Except as otherwise specifically provided in Article 9, the Parties agree that
such warranties will not be enforceable merely on a "pass-through" basis but
that Customer may proceed directly against Seller with respect to such
warranties. In addition, Customer may,
-25-
but will not be obligated to, enforce such warranties of any Subcontractor to
the extent that Customer determines that Seller is not paying and/or performing
its warranties; provided that any such election by the Customer will not relieve
Seller from any obligations or liability with respect to any such warranty.
5.10. Payment of Subcontractors; Indemnity of Customer. Seller must make
------------------------------------------------
all payments to all Subcontractors (except in the case of legitimate disputes
between Seller and any such Subcontractor arising out of the agreement between
Seller an such Subcontractor) in accordance with the respective agreements
between Seller and its Subcontractors such that Subcontractors will not be in a
position to enforce liens and/or other rights against Customer, the Network or
any part thereof. Seller will indemnify and hold Customer and its Affiliates,
directors, officers, agents and employees (each an "Indemnitee") harmless from
and against all Subcontractor claims, demands, suits, proceedings, damages,
costs, expenses, liabilities or causes of action brought against or incurred by
an Indemnitee; provided, however, Seller shall not indemnify Customer for any
claims or liabilities which arise solely due to Customer's material breach of
this Agreement or gross negligence.
ARTICLE 6
NETWORK DESIGN, ORDERS AND INVOICES
6.1. Initiation of Phases. Phase Plans may be developed under either of
--------------------
the following two processes:
(a) Customer will from time to time initiate requests (an "Initiation
Request") for the design of Phases by delivering to Seller
written notice which may include the geographic area to be
covered or enhanced, traffic capacities, coverage requirements
and the required Functionality of the Phase ("Phase
Specifications"). Upon receipt of an Initiation Request, Seller
will, in cooperation with Customer, prepare a proposal,
incorporating the terms and conditions of this Agreement, for the
design, engineering, equipping, construction, installation,
integration and testing of the Phase required to comply with the
Initiation Request, which proposal will include the proposed
allocation of the Purchase Price, a detailed description of the
Products and Licensed Materials to be utilized and Services to be
provided, confirmation of the Phase Specifications, a
Responsibility Matrix, a development timeline incorporating
intermediate milestones and Delivery Dates (a "Phase Proposal").
Seller shall deliver Phase Proposals to Customer upon receipt of
an Initiation Request in accordance with the following schedule.
For the first 3 Phase
-26-
Proposals, Seller shall deliver a Phase Proposal to Customer
within thirty (30) days of receipt of the Initiation Request. For
all Phase Proposals thereafter, Seller shall deliver the Phase
Proposal to Customer within fifteen (15) days of receipt of the
Initiation Request. Customer may approve of the Phase Proposal,
reject the Phase Proposal, or request modifications in the Phase
Proposal. If Customer rejects the Phase Proposal, Customer shall
provide Seller reason for such rejection. If Customer requests
modifications in the Phase Proposal, Customer and Seller will
cooperate in good faith to promptly revise the Phase Proposal so
that it is acceptable to both parties; or
(b) Customer may develop a Phase Proposal which shall include
intermediate milestones and Delivery Dates that are consistent
with Seller's Standard Delivery Intervals and which shall be
subject to Seller's reasonable acceptance.
If the Parties have been unable to agree on a Phase Proposal within 5
business days of the delivery of the Phase Proposal, the Phase Proposal will
automatically be referred to the Primary Contact Person of both parties in the
department(s) related to the issue(s) in dispute for their review and good faith
negotiation of an acceptable Phase Proposal within 10 business days. An accepted
Phase Proposal shall constitute a "Phase Plan." If a Phase Proposal has not
been agreed to within such 10 business days, such failure to agree shall be
resolved pursuant to Section 17.5.
6.2. Content of Orders. Based upon the Phase Plan and prior to the
-----------------
delivery and installation of any Products or Licensed Materials or performance
of any Services to be used in the construction of any portion of the Network,
the Customer will submit to the Seller an order (each an "Order") for such
items, which Order shall incorporate and be subject to the terms and conditions
of this Agreement. Orders will include all the requirements of either an
Initial Phase or an Expansion Phase in the mutually agreed upon construction
schedule for the portion of the Network subject to the Phase Plan. All Orders,
including electronic Orders, shall contain the information as detailed below:
(a) Complete and correct ship to and xxxx to address;
(b) The quantity and type of Products, Licensed Materials, and
Services being ordered;
(c) The Order completion schedule as defined by the relevant Phase
Plan;
(d) The Allocation of the Purchase Price set forth in the relevant
Phase Plan;
(e) Reference to this Agreement; and
-27-
(f) If an Order includes Xxxx and Hold Products, the phrase "Xxxx and
Hold" will be clearly and conspicuously stated in the Order and
the Products and Licensed Materials to be billed and held will be
clearly identified.
Orders not rejected in writing within ten (10) days shall be deemed
accepted, provided that no order which is consistent with the applicable Phase
Plan may be rejected by Seller. Seller shall perform in accordance with any
accepted Order. Terms and conditions on Customer's Orders which are
inconsistent with the provisions of this Agreement shall be ineffective, void
and of no force and effect. Seller reserves the right to place any Order on
hold, delay shipment or reject an Order due to a payment default by Customer.
Orders which are not electronic shall be sent to the following address:
Lucent Technologies Inc.
Customer Service
0000 Xxxxxxx Xxxx
Xxxxxxxx X - 0xx Xxxxx
Xxxxxxx, XX 00000-0000
6.3. Electronic Orders. Electronic Orders shall be binding on Customer
-----------------
notwithstanding the absence of a signature. Electronic Orders shall be sent in
accordance with instructions to be provided by Seller.
6.4. Xxxx and Hold Products. In the event Customer orders Xxxx and Hold
----------------------
Products, the parties will agree in writing on the terms and timing of the
storage and shipment of such Products.
6.5. Changes in Orders. Other than changes to the "ship to" or "xxxx to"
-----------------
addresses which may be changed at any time at least ten (10) business days prior
to shipment or billing, changes by Customer to an Order which has been
previously accepted by Seller (a "Change Order"), are subject to acceptance by
Seller. In the event Seller accepts a Change Order and such change affects
Seller's ability to meet its obligations under the original order, any Invoice
Price, shipment date or Services completion date quoted by Seller with respect
to such original order is subject to change. Seller will provide to Customer
written quotations and expected completion dates for any requested Change
Orders.
6.6. Cancellation or Postponement of Orders. Customer has the right at any
--------------------------------------
time before affected Products or Licensed Materials have already been shipped or
relevant Services have already been performed to cancel or postpone any Order,
in whole or in part, upon advance written notice to Seller.
-28-
(a) For those Products and Licensed Materials not shipped and
considered stock items:
(i) if such cancellation or postponement is made at least thirty
(30) days' prior to the scheduled shipment date for the
subject Products and Licensed Material, Customer will not
owe any cancellation or postponement charge in connection
with such cancellation; and
(ii) if Customer cancels an Order or portion thereof less than
thirty (30) days prior to the scheduled shipment of Products
and Licensed Materials to be delivered thereunder, Customer
agrees to pay to Seller a cancellation charge equal to ***
******* ***** of the Invoice Prices of such Products and
Licensed Materials.
(b) For those Products and Licensed Materials not shipped and
considered customized or non-stock items, Customer agrees to pay
Seller the amount of Seller's reasonably incurred out of pocket
expenses.
(c) For a cancellation or postponement of Services, if such
cancellation or postponement is made at least fifteen (15) days
prior to the scheduled performance date for the subject Services
to be included in such Order (or portion thereof) Customer will
not owe any cancellation or postponement charge in connection
with such Order (or portion thereof). If Customer cancels an
Order or portion thereof less than fifteen (15) days prior to the
scheduled performance date for Services to be performed
thereunder, Customer shall pay Seller a cancellation charge equal
to Seller's reasonably incurred out of pocket expenses. For
Services in process, Customer agrees to pay a cancellation fee
equal to the price of all Services rendered to date and not paid
for, plus Seller's reasonably incurred out of pocket expenses for
those Services ordered by Customer and subsequently canceled.
Notwithstanding the above, the termination provisions related to
maintenance and Extended Warranty type Services are as follows:
prior to commencement of maintenance service, Customer may cancel
coverage at no charge and receive a refund for any prepaid
amount. After commencement of maintenance service, Customer may
terminate coverage upon 30 days written notice and upon such
termination shall pay a termination charge equal to ***** of the
monthly charges for twelve (12) months or *** ******* ***** of
the charges for the remainder of the maintenance period whichever
is less. For prepaid agreements, Seller will refund or credit the
pro rata price for the remainder of the maintenance period less
*This confidential portion has ben omitted and filed separately with
the Commission.
-29-
a termination charge of *** ******* ***** of the monthly charges
for twelve months or *** ******* ***** of the charges for the
remainder of the maintenance period, whichever is less.
6.7. Changes in Products or Licensed Materials. Prior to shipment and with
-----------------------------------------
notice to Customer, Seller may at any time make changes in Products or Licensed
Materials. Seller may modify the Product(s) or Licensed Materials and
Specifications or substitute Products or Licensed Materials of later design so
long as such modifications do not diminish warranted performance specifications.
Seller agrees that such modifications or substitutions will not impact upon
Form, Fit, Function or Functionality under normal and proper use of the ordered
Product as provided in the Specifications. Seller shall not substitute Products
or Licensed Materials or make changes, modifications, or substitutions that
impact the Form, Fit, Function or Functionality of the ordered Products or
Licensed Materials unless Customer consents to such modifications. Unless
otherwise agreed in writing, such substitution shall not result in any
additional charges to Customer with respect to Products or Licensed Materials
for which Seller has quoted Invoice Prices to Customer.
6.8. Invoice Prices. The Purchase Price of the Network shall be paid
--------------
during the course of construction of the Network on the basis of Orders that
become payable in accordance with Section 6.9. Unless otherwise agreed to by
the parties, portions of the Purchase Price that become payable with respect to
Products, Licensed Materials or Services upon fulfillment of an Order shall be
as set forth in Exhibit I (the "Invoice Prices"), plus any related taxes and
transportation charges. Products, Licensed Materials and Services to be offered
which are not listed on Exhibit I as of the date hereof shall be introduced at
Invoice Prices to be mutually agreed upon by the parties. At least every two
years, beginning on the second anniversary of the date of this Agreement,
representatives of Seller and Customer will negotiate in good faith to agree on
amendments to Exhibit I. The parties agree that such amendments will include
price reductions which provide Customer with the benefit of ***** ******* *****
of the value, if any, of any efficiencies realized by Seller in the production
of point-to-multipoint radio Products over the course of this Agreement. If
Customer becomes aware through verifiable means that previous amendments to
Exhibit I have not given Customer the benefit of such efficiencies, Seller will
*** ****** *** ****** ********* ******** *** *** ******* **** *** *** ******
**** ***** ** ********* *** ********* ******** **** *** ****** ***** ** ***
****** ** ********* ********** *** **** **** **** ******* ***** *** ** **** **
******* ****** ****** ** *** ****** ******* ****** ** *** ************ ********
** ****** ***** ** **** ******* ** ****** ***** ****** ** *** **** ****** ****
*** ****** Customer has the right to terminate this Agreement without penalty
if, acting reasonably and in good faith, Seller and Customer fail to agree on
any scheduled amendments to Exhibit I within one month of each anniversary.
*This confidential portion has ben omitted and filed separately with the
Commission.
-30-
Except as provided pursuant to the Change Order provisions of Section 6.5,
the Initial Invoice Prices for Products and Licensed Materials are the maximum
Invoice Prices Seller can use in allocating the Purchase Price to Products and
Licensed Materials which are generally available during the term of this
Agreement. In addition, with respect to Services, the Invoice Prices agreed to
during each review period described in the immediately preceding paragraph shall
be the maximum Invoice Prices Seller can use in allocating Purchase Price to
Services during the two year period commencing on the conclusion of each such
Invoice Price review.
6.9. Terms of Payment. Seller shall xxxx Customer and shall submit
----------------
invoices to Customer covering Orders, or portions thereof, that became billable
under the terms of this Agreement. Such invoices shall be in reasonable detail.
Delivery of invoices shall be made in accordance with the notice provisions of
Section 17.2, except that Invoices shall be sent to the Controller. Payment of
all invoices shall be net 30 days from effectiveness of such notice (as set
forth in Section 17.2.). Orders for the following Products, Licensed Materials
and Services shall become billable as follows:
(a) Upon the shipment of Products and Licensed Materials, which are
completely manufactured, tested, packed, marked, accompanied by all
necessary documentation (including up to date operating manuals
containing detailed procedures and specifications for the operation of
such portion of the Network) (collectively, "Complete") and included
in any Orders that are not subject to System ATP, the allocation of
Purchase Price related to such Products and Licensed Materials shall
become billable.
(b) Orders that are subject to System ATP, other than Orders for the first
two Initial Phases which use point-to multi-point radio technology,
shall become billable according to the following schedule of events:
(i) Shipment of Product. Upon the shipment of Products and Licensed
Materials included in an Order, which are Complete, ** ******* of
the allocation of Purchase Price related to such Products and
Licensed Materials shall become billable;
(ii) Final Acceptance. The remaining ** ******* of the allocation of
Purchase Price related to Products and Licensed Materials shall
become billable on the earlier of (a) the date when all items are
eliminated from the Punchlist or (b) the placement of such Phase
into Commercial Service.
Notwithstanding the foregoing, with respect to any Order which is subject to
System ATP, other than the first two Initial Phases which use point-to-
multipoint technology, in the event Customer takes any action (excluding any
good faith disputes with Seller regarding such Order or its
*This confidential portion has ben omitted and filed separately with the
Commission.
-31-
Related Punchlist) which results in a delay in the creation of such Punchlist
for more than thirty (30) days after the completion of such System ATP, the
remaining ** ******* of such Order shall become immediately billable.
(c) The Orders for the first two Initial Phases which include point-to-
multipoint radio technology, shall become payable according to the
following schedule of events:
(i) Punchlist. After the Punchlist related to the Order has been
created and such Initial Phase has been operational without
service affecting problems or defects relating to Seller Provided
Products, Licensed Materials and Services for sixty (60) days, **
******* of the allocation of Purchase Price related to Products
and Licensed Materials shall become billable; and
(ii) Final Acceptance. The remaining ** ******* of the allocation of
Purchase Price related to Products and Licensed Materials shall
become billable when all items are eliminated from the Punchlist.
Notwithstanding the foregoing, with respect to the Orders for the Initial Phases
which include point-to-multipoint radio technology (such Orders being subject to
System ATP), in the event Customer takes any action (excluding any good faith
disputes with Seller regarding such Order or its Related Punchlist) which
results in a delay in the creation of such Punchlist for more than thirty (30)
days after the completion of such System ATP, 100 percent of such Orders shall
become immediately billable.
Notwithstanding Sections 6.9(a) - (c) above, the allocation of Purchase
Price related to (i) Services described on Exhibit E to be performed under any
Order or (ii) Services to be performed under any Order which is not subject to
Acceptance Test Procedures, shall become billable upon completion of such
Services. All other Services to be performed under an Order shall become
billable upon Final Acceptance of such Order.
Customer shall pay all amounts due Seller hereunder using Electronic Funds
Transfer ("EFT"). EFT payments by Customer shall be made to the following
account of Seller or such other account as is subsequently designated by Seller
in writing and, concurrent with the EFT payment, Customer shall fax a copy of
the remittal to Seller's Manager of Cash Operations at 000-000-0000.
*This confidential portion has ben omitted and filed separately with the
Commission.
-00-
Xxxxx Xxxxxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx
Account Name: Lucent Technologies Inc.
***** ***********
*** *********
Customer agrees to review all invoices furnished by Seller hereunder upon
receipt and to use good faith efforts to notify Seller of any billing
discrepancies within fifteen (15) days of receipt of the applicable invoice.
Notice of such discrepancies may be directed to Seller in writing or by
telephone to the telephone number or, if in writing, to the address identified
on the invoice. Customer shall not be required to pay Seller on such disputed
invoice items in net 30 days as required by the first paragraph of this Section
6.9. Irrespective of any failure to provide notice of any billing discrepancies
within the fifteen days provided for in this Section 6.9, Customer shall
maintain its right to seek resolution of billing discrepancies after payment and
lack of notice shall not be deemed a waiver of any rights. If Customer fails to
pay any undisputed invoiced amount when due, the invoiced amount will be subject
to a late payment charge at the rate of *** *** *** **** ****** *****per month,
or portion thereof, of the amount due (but limited to the maximum lawful rate)
provided, however, that, if the Short Term Note has not been paid or Seller has
not syndicated or transferred its obligations under the credit agreement
providing the financing between Seller and Customer, such failure to make
payment is not the result of Seller failing to extend credit under such the
Short Term Note or credit agreement in breach of Seller's obligations thereunder
if all the conditions for Customer to borrow thereunder have been fulfilled with
respect to a borrowing under the Short Term Note or credit agreement.
6.10. Security Interest. Seller retains and Customer hereby grants Seller
-----------------
a purchase money security interest in the Network to secure any and all amounts
due Seller under this Agreement for the Purchase Price of the Network. Seller
shall have the right, at any time during the Term, to file in any state or local
jurisdiction such financing statements (e.g., UCC-1 financing statements) as
Seller deems necessary to perfect its purchase money security interest
hereunder, provided Customer is furnished a copy of such financing statements
before filing. Upon Seller's reasonable request, Customer shall execute all
documents necessary or desirable to evidence or perfect Seller's purchase money
security interest in the Network including without limitation, UCC-1 financing
statements. Customer also agrees that this Agreement may be filed by Seller in
any state or local jurisdiction as a financing statement (or as other evidence
of the Seller's purchase money security interest). Seller acknowledges that
Customer will require additional capital in order to finance the Total Contract
Value hereunder to complete the Network and agrees to cooperate with Customer to
obtain such financing, including purchase money financing for portions of the
Network or equipment incorporated into the Network
*This confidential portion has ben omitted and filed separately with the
Commission.
-33-
secured by purchase money security interests which Seller agrees shall
constitute a first lien on such equipment or portions of the Network, senior to
Seller's security interests hereunder.
6.11. Taxes. The Purchase Price shall include and Customer shall be
-----
responsible for all sales and all other taxes and related charges, however
designated, imposed upon, based upon or levied upon sale of the Network or the
provision, license or use of Products, Licensed Materials or Services in
constructing the Network, excluding taxes on Seller's net income, unless
Customer provides Seller with a valid tax exempt certificate.
6.12. Transportation and Packing. The Purchase Price shall also include
--------------------------
all transportation and packing charges incurred in the construction of the
Network. Seller, in accordance with its normal practices, shall arrange for
prepaid transportation to destinations in the contiguous United States and shall
invoice transportation charges to Customer. Premium transportation will be used
only at Customer's request. Seller shall pack Products for delivery in the
contiguous United States in accordance with its standard practices for domestic
shipments.
6.13. Delivery and Acceptance. The parties expect, among other things,
-----------------------
that Seller shall deliver Products and Licensed Materials by the Delivery
Date(s) specified in an Order pursuant to the schedule set forth in such Order.
Delivery Date shall mean the date on which Products and Licensed Materials
arrive at the destination specified Complete. With respect to Orders, or
portions thereof, subject to Acceptance Test Procedures, the Delivery Date is
the date on which the Products and Licensed Materials are delivered Complete and
pass all requisite Acceptance Testing Procedures.
If any item is not delivered in accordance with the terms of the relevant
Order (as it may be amended or changed from time to time), any additional
expenses incurred in delivering it to the correct point of delivery and the risk
of transportation shall be borne by Seller.
Customer's acceptance of and payment for certain Orders or portions of
Orders shall be subject to the Acceptance Test Procedures governing installation
and Final Acceptance set forth on Exhibit A.
6.14. Provisional Acceptance.
----------------------
(a) Acceptance of the Primary Build. At the point Seller has
-------------------------------
installed the following Products and Licensed Materials as part of
its deployment of an Initial Phase: one Switching Center, one Hub,
and 10 Customer Sites ("Primary Build"), Seller will test the Primary
Build in accordance with the Provisional Acceptance Standards and
promptly provide the test results to Customer. Within fourteen (14)
days of the receipt of such test results Customer shall determine and
notify
-34-
Seller whether or not the Primary Build meets the Provisional
Acceptance Standards. If Customer has notified Seller that the
Primary Build meets the Provisional Acceptance Standards, Seller will
provide notice to Customer confirming completion of the Primary Build
(a "Notice of Completion"). If Seller has not received notification
from Customer by the fourteenth day, Seller shall so notify the
Primary Contact Person pursuant to Section 17.2. If within two
business days of Customer's receipt of such notice, Customer has not
notified Seller whether the Primary Build meets Provisional
Acceptance Standards, Seller may issue a Notice of Completion. The
issuance of the Notice of Completion shall be deemed "Provisional
Acceptance." In any event, Customer's placing of the Primary Build
into Commercial Service at any time after installation shall
automatically constitute Provisional Acceptance.
At reasonable times during the course of Seller's installation of the
Primary Build, Customer, at its request may inspect completed
portions of such installation. Seller shall provide Customer with at
least seven (7) days prior written notice before Seller commences
testing in connection with any Primary Build and Customer shall have
the right to observe Seller's testing to determine that such testing
and the test results are in accordance with Provisional Acceptance
Standards. Provided that Seller has given the required advance
notice, if Customer fails to appear (i) to observe or participate in
a test at the scheduled time or to request a rescheduling of such
tests to a mutually convenient time, or (ii) fails to appear at a
rescheduled time, Seller shall be entitled to perform the test and,
if Seller does so, Seller shall so indicate on the test completion
documents.
(b) Installation. After Provisional Acceptance of a Primary Build has
------------
occurred, all other Products and Licensed Materials included in the
same Phase as such Primary Build shall be provisionally accepted as
provided below:
At reasonable times during the course of Seller's installation of
Products or Licensed Materials to a Phase to which Provisional
Acceptance of the Primary Build has occurred, Customer may inspect
completed portions of such installation. Seller shall provide
Customer with at least seven (7) days prior written notice before
Seller commences testing in connection with installation of Products
or Licensed Materials to a Phase after Provisional Acceptance of the
Primary Build of such Phase has occurred and Customer shall have the
right to observe Seller's testing to determine that such testing and
the test results are in accordance with Provisional Acceptance
Standards. Provided that Seller has given the required advance
notice, if Customer fails to appear (i) to observe or
-35-
participate in a test at the scheduled time or to request a
rescheduling of such tests to a mutually convenient time, or (ii)
fails to appear at a rescheduled time, Seller shall be entitled to
perform the test and, if Seller does so, Seller shall so indicate on
the test completion documents.
Seller will test the installation of such Products and Licensed
Materials in accordance with the test procedures for Provisional
Acceptance Standards detailed on Exhibit Q and promptly provide the
test results to Customer. Within fourteen (14) days of the receipt of
such test results Customer shall determine and notify Seller whether
or not such Products and Licensed Materials meet the Provisional
Acceptance Standards. If Customer has notified Seller that such
Products and Licensed Materials meet the Provisional Acceptance
Standards, Seller will provide notice to Customer confirming
completion of the installation of such Products and Licensed
Materials (a "Notice of Completion"). If Seller has not received
notification from Customer by the fourteenth day, Seller shall so
notify the Primary Contact Person pursuant to Section 17.2. If within
two business days of Customer's receipt of such notice, Customer has
not notified Seller whether the Primary Build meets Provisional
Acceptance Standards, Seller may issue a Notice of Completion. The
issuance of the Notice of Completion shall be deemed "Provisional
Acceptance" of such Products and Licensed Materials. In any event,
Customer's placing of the Primary Build into Commercial Service at
any time after installation shall automatically constitute
Provisional Acceptance of Products and Licensed Materials included in
the same Initial Phase.
Provisional Acceptance hereunder shall affect neither Seller's
warranty hereunder nor when Orders become billable. Final Acceptance
and the billing of Orders for Products, Licensed Materials and
Services shall occur as provided in Section 6.9 hereto.
ARTICLE 7
TITLE AND RISK OF LOSS
Title to Products only and risk of loss to Products and Licensed Materials
which are not being installed by Seller shall pass to Customer when such
Products and Licensed Materials arrive at the destination specified in the
relevant Order Complete, unless otherwise specifically agreed to by the parties.
Title to all Licensed Materials (whether or not part of Firmware) furnished by
Seller, and all copies thereof made by Customer, including translations,
compilations and partial copies are, and shall remain the property of Seller.
Title to Products only and risk of loss to Products and Licensed Materials which
are to be installed by Seller shall
-36-
pass upon installation, unless otherwise specifically agreed to in writing by
the parties. Customer shall notify Seller promptly of any claim with respect to
loss which occurs while Seller has the risk of loss and will reasonably
cooperate to facilitate the settlement of any claim. Seller shall transfer
title to all Products made part of the Network, free and clear of all liens and
encumbrances, by appropriate documentation including warranty of title.
ARTICLE 8
LICENSED MATERIALS
8.1. License for Licensed Materials. Upon delivery of Licensed Materials
------------------------------
pursuant to this Agreement, Seller grants to Customer a personal, non-
transferable (except as set forth in Section 8.2), and non-exclusive, multi-site
license to use Licensed Materials on a designated processor in the United States
for its own business operations and specifically to operate Products used in the
Network and the Network itself (as a whole or any portion thereof). As used in
this Section 8.1, "designated processor" shall mean the specific product,
processor or product line for which licenses to use Licensed Materials are
granted. Except as provided in this Section 8.1 or by agreement as provided in
Section 2.9, no license is granted to Customer to use the Licensed Materials
outside the United States or to sublicense such Licensed Materials furnished by
Seller. The license granted hereunder includes and is deemed to cover any
Affiliate of Customer to the extent such Affiliate is developing, constructing
and/or operating a wireless data transmission network and is seeking to access
or use the Network or any portion thereof. Customer may retain an archival copy
of the Software for as long as such Software is relevant to Customer's
operations. Customer shall not reverse engineer, decompile or disassemble
Software furnished as object code to generate corresponding Source Code. Except
as provided below, Customer shall not modify Software furnished by Seller under
this Agreement.
Customer shall not make any copies of any Licensed Materials except as
necessary in connection with the rights granted hereunder. Customer shall
reproduce and include any Seller copyright and proprietary notice on all such
necessary copies of the Licensed Materials. To the extent reasonably possible,
Customer shall also xxxx all media containing such copies with a warning that
the Licensed Materials are subject to restrictions contained in an agreement
between Seller and Customer and that such Licensed Materials are the property of
Seller. Customer shall make reasonably available to Seller Customer's records,
maintained in the ordinary course, describing the number and location of copies
of Licensed Materials included in the Network. Customer shall take appropriate
action, by instruction, agreement, or otherwise, with the persons permitted
access to the Licensed Materials so as to enable Customer to satisfy its
obligations under this Agreement. If Customer's license is canceled or
terminated, or when the Licensed Materials are no longer needed by Customer,
Customer shall return all copies of such Licensed Materials to Seller or follow
written disposition instructions provided by Seller.
-37-
8.2. Transfer and Relocation.
-----------------------
(a) Customer may relocate any Software or Licensed Material and associated
Products or Designated Processors anywhere within the United States at
no charge.
(b) Customer, or any successor to Customer's title in the Network or the
relevant portion thereof, may transfer its right-to-use any Software
and Designated Processor furnished under this Agreement without the
payment of an additional right-to-use fee by transferee, except where
size sensitive units such as additional memory, hard disk space, etc.
are a factor. Such transfer can be made to an end user only under the
following conditions:
(i) Such software and Designated Processor shall be used only
within the United States; however, Seller will not unreasonably
withhold its consent to use outside the United States provided
that, in the sole opinion of the Seller, the proprietary
information associated with the use can be adequately
protected, such transfer will be in compliance with all United
States export laws and regulations and any other reasonable
concerns of Seller are adequately addressed;
(ii) Except as otherwise provided in this agreement, the right to
use such Software and Designated Processor may be transferred
only together with the portion of the Network with which
Customer has a right to use such Software and Designated
Processor, and such right to use the Software and Designated
Processor shall continue to be limited to use with such portion
of the Network;
(iii) Before any such Software and Designated Processor shall be
transferred, Customer shall notify Seller of such transfer and
the transferee shall have agreed in writing (a copy of which
will be provided to Seller at its request) to keep such
Software in confidence and to comply with corresponding
conditions respecting use of Licensed Materials as those
imposed on Customer; and
(iv) The transferee shall have the same right to Software and
Designated Processor warranty or Software maintenance for such
Software as the transferor, provided the transferee continues
to pay the fees, if any, associated with such Software or
Software maintenance.
-38-
(c) If Customer or such successor wishes to transfer a Product included in
the Network for which it does not under this Agreement have the right
to transfer related Software, Seller agrees that upon prior written
request of the transferee of such Product, or of Customer or such
successor, Seller will not without reasonable cause fail to grant its
consent to transfer such a license to use such Software with the
Products, to be located within the United States, upon payment of a
relicensing fee to Seller in an amount equal to fifty percent (50%) of
the Invoice Price for the Software originally paid by Customer to
Seller; provided that such relicensing fee will in no event exceed
fifteen percent (15%) of the price paid by the transferee to the Owner
for the Product with respect to which such Software is used.
(d) Customer may transfer and assign rights to use Software and Licensed
Materials in connection with a sale of all or a portion of the
Network.
Notwithstanding anything in this Section 8.2 to the contrary, under no
circumstances shall Customer have the right to transfer the Software to a
competitor of Seller engaged in the manufacture and distribution of
telecommunications equipment. In the event Customer transfers a Product without
the related Software or Software Independent of Processor, Customer shall bear
all responsibility for returning such related Software to Seller.
8.3. Installation of Software.
------------------------
(a) Where Customer is responsible for Software installation, Seller's sole
responsibility with respect to installation is to deliver the Software
to Customer on or before the scheduled date of delivery set forth in
the relevant Phase Plan. However, if the Order specifies that Seller
is responsible for such installation, Seller shall complete its
installation and associated testing on or before the scheduled
installation date set forth in the relevant Phase Plan.
(b) Where Customer has assumed responsibility for the installation of
newly licensed Software and in the event that Customer encounters
installation difficulties, at Customer's request, Seller will provide
technical assistance at an Invoice Price in effect for such Services
in effect at the time of such request.
8.4. Backwards Compatibility.
-----------------------
(a) In addition to the warranties contained in Article 9, Seller
represents and warrants that Software will be Backwards Compatible
with the two immediately preceding Software Revision Levels and with
all existing in-service Seller Provided Products included in the
Network.
-39-
(b) In the event that Software supplied by Seller for use in any portion
of the Network at any time does not provide Backwards Compatibility
as required by this Section 8.4, then Seller will provide, without
charge to Customer, the most current Software Updates of the Software
to each such portion of the Network, and otherwise take such steps as
may be necessary to achieve Backwards Compatibility.
8.5. Software Support. As long as Customer maintains an effective
----------------
Software Maintenance Agreement, Seller shall provide support services for the
standard version of Software for the Products furnished pursuant to this
Agreement.
8.6. Reserved
--------
8.7. Annual Release Maintenance. During the term of this Agreement,
--------------------------
Seller will provide to Customer at no extra cost, at such times as they become
generally available to Seller's customers, all Software Maintenance Releases
applicable to Software for which Customer has obtained a license pursuant to the
terms of this Agreement and has a Software subscription agreement in place with
Seller, which agreement shall be provided free of charge unless the third party
providing such Maintenance Releases or subscription agreement to Seller charges
Seller a fee therefore, in which case such fees shall be passed through at no
more than such fees. In addition, Seller will make available to Customer, at
agreed Invoice Prices or pursuant to a software maintenance agreement, if
Customer elects to enter into such Agreement, and at such times as they become
generally available to Seller's customers, all Software Upgrades, Software
Enhancements and Software Combined Releases.
8.8. Notice. Seller must give the Customer not less than ninety (90) days
------
prior written notice of the introduction of any Software Enhancement release or
any Software Combined Release or any Optional Software Features release for
Seller Provided Software. In addition, in each June and December of each year
during the term of this Agreement, Seller must provide Customer with a forecast
of future Software Enhancement releases or Software Combined Releases or any
Optional Software Features release, as the case may be, then currently being
developed by or on behalf of Seller.
8.9. Installation and Testing. The installation and testing of the
------------------------
Software by Seller and the acceptance thereof by Customer will be performed in
accordance with the criteria set forth in Exhibit A.
-40-
8.10. Software Fixes.
--------------
In the event that any Software Upgrade, Software Enhancement, Software
Maintenance Release or Software Combined Release supplied by Seller has the
effect of preventing the Network and/or any Phase, as the case may be, or any
part thereof from satisfying, or performing in accordance with the
Specifications, or otherwise adversely affects the Functionality or Features of
the Network, any Phase or any part thereof, then Seller will promptly retrofit
or take such other corrective action (including the installation of any
additional Equipment, at Seller's sole cost and expense) as may be necessary to
assure that the Network or any such affected part thereof, as modified to
include each such Software Upgrade, Software Enhancement or Software Maintenance
Release and Software Combined Release, will satisfy, and perform in accordance
with, the Specifications, and restore all pre-existing Functionality and
Features, in each case without any cost or expense to Customer (other than
payment of the applicable Fees pursuant to the terms of this Contract).
Notwithstanding anything contained in this subsection to the contrary, Customer
will be responsible for the cost of any additional Equipment required to
accommodate additional capacity, memory or processing requirements necessitated
by any new Software feature contained in any such Software Enhancement Software
Combined Release or Software Upgrade.
ARTICLE 9
WARRANTY
9.1. ****** *********** ****** ******** **** *** ******* *** **** ***
***** ******* *** ********* ***** **** ******** *** ************* *** ***** **
*** ************** ****** ***** **** *** ***** ********* **** *** ****** **
****** ****** **** *** ****** ********* *** ** *** ******* ** *** ******* ** ***
******* ************** ***** ** ******* ** ********** **** *** ***************
******* ** *** **** ***** ***** ********** **** *** ********** ********
********* ** ******* *** ******** ********* ****** *** ********* ******* ******
******** ********** ********* ** ****** ******** *** ******** ********* **
********* ********** ************ *** ** ** ****** ** ********* ** *** ******
******* ** ***** ** ******** ******* ******* ****** **** **** ****** **
*********** ******** **** ** ******** ** ********** *** ***** ******** *********
** *** ***** **** ******* *********** ****** **** ** ** ********** ** *** ******
*** ** *** **** **** *** ******* ** ******* ******** ******** ********* *****
*** ** ******** ** ******* ** *** *********** ********** ** *** ******* ******
******** ** ******* **** *******
******** *********** ********** ******** ****** *** **********
*** ***** **** ************ ******** ********* ** ******* **
*This confidential portion has ben omitted and filed separately with the
Commission.
-41-
**** **** ******* *** ******* ************** ******** ** ****** **** ****
*** ********** ** ******* * ******** ****** **** ******** ************* *****
***** ******* ********* ****** ******** **** **** ********* ****** ********
** *** ****** ***** ********** **** * ********** ** * ******** ****** ****
****** ** ******
**** ******* ************** ************* ****** ******** **** *** ***
******** ** **** ********* ********* ******** ********* *** ******** ******** **
****** ** *** ************** **** ******* ** ******* ** ****** ************ ****
*** ******* ****** *** **** *** ******** **** ******** ******** ********
*********** ******** *** ******** *********** ******** ******** ** ****** ***
****** ****** **** * *********** ******** **** ****** ** ******* ********
********* *** ********* *********** *********** *** ****** ********* ** **
****** **** **** ** **** *** ** ***** ****** *** ******** ******* ****** **
******** ** *** ******* ***** ** ******* ** ********** **** *** *** ** *****
********* ******* ** *** **** **** *** ********** ******** ********* ** *******
*** ********
**** ******** **** ************* ****** ******** **** *** *** ******** ***
**** ********* *** ****** ******** *** ********* ******** ******** ********
*********** ******** ** ****** *** ****** ****** **** ************ ******** ****
***** ** ******** ******** ********* *** ********** *********** *********** ***
****** ********* ** ** ****** **** **** ** ***** *** ** ***** ****** ***
******** ******* ****** ** ********* ** *** *** *** *** ******** *******
******** ** * ************ ***** *** **** ** **** ***** *** ***** ** ******* **
**** ********** ** **** **** ********** ****** ***** ******** ******* *** **
********** **** ** ********* ********* ********** ** ******** ********* **
******* *** ******** *** ********* *************
*************** *** ********** ****** ***** **** ** ********** *** ***
******* ** ****** **** *** ********** ** **** ******* *** ****** ******** ** ***
*** ** ******* ** ********* ******** ********* ** ******** ***** *** *** ******
******** ********* ******** ********* ** ******** ** *** **** ** **** ******* **
*******
9.2. Product, Software and Service Warranties. Seller warrants to Customer,
----------------------------------------
that during the applicable Warranty Periods set forth below, (i) Seller Provided
Products included in the Network (exclusive of Software) will be free from
defects which materially affect Functionality and performance in accordance with
the relevant Specifications and deficiencies in material and workmanship, will
conform to the relevant Specifications for such Products, Software and Services,
respectively; and (ii) Seller Provided Software included in the Network will be
free from those defects and deficiencies which materially affect performance in
accordance with relevant Specifications. With respect to Vendor Items, Seller,
to the extent permitted, does hereby assign to Customer the warranties given to
Seller by its vendor(s) of such Vendor Items. Additionally, Seller warrants for
the duration of this Agreement that all Seller
*This confidential portion has ben omitted and filed separately with the
Commission.
-42-
Provided Products and Licensed Materials will meet the performance and capacity
specifications shown in Exhibits C and D.
Seller warrants that all Deliverables comply with all applicable U.S.
Federal, state and local laws, regulations and ordinances then in effect. For
all Products, Licensed Materials and Services, compliance shall be assured as of
the Delivery Date.
For purposes of this Agreement the term "Warranty Period" means the period
of time listed in the table below which, unless otherwise stated, commences (i)
with respect to Products and Licensed Materials to be installed by Customer, on
delivery of such Products or Licensed Materials, (ii) with respect to Products
and Licensed Materials to be installed by Seller which are not subject to
Acceptance Test Procedures, on the earlier of (a) 30 days from the date Seller
submits to Customer notice of completion of its installation, (b) the date on
which Customer first puts such Products or Licensed Materials into Commercial
Service; (iii) with respect to Products and Licensed Materials subject to
Acceptance Test Procedures, the earlier of (x) Final Acceptance or (y) the date
on which Customer first puts such Products or Licensed Materials into Commercial
Service. The Warranty Period for any Product or Software (or part thereof)
repaired or replaced under this Section 9.2 is the period listed in the right
column below (beginning on Final Acceptance of the repaired or replaced item) or
the unexpired portion of the new Product Warranty Period, whichever is longer.
In addition, Customer may order for each Product and Licensed Material an
"Extended Warranty" as described in Exhibit J. The Invoice Price of any such
Product or Licensed Material shall be increased by the amounts set forth on such
Exhibit J if Customer elects to receive an Extended Warranty thereon.
-43-
SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE
WARRANTY PERIOD
-------------------------------------------------------------------------------
PRODUCTS BASE PERIOD REPAIRED PRODUCT
----------------- ----------------
NEW PRODUCT OR PART
----------------- ----------------
-------------------------------------------------------------------------------
Data Networking Systems Products ** ****** * ******
-------------------------------------------------------------------------------
Data Networking Systems Software ** ****** * ******
-------------------------------------------------------------------------------
Switching Systems Products ** ****** * ******
-------------------------------------------------------------------------------
Central Office Power Equipment:
-------------------------------------------------------------------------------
Associated with Switching Systems ** ****** * ******
-------------------------------------------------------------------------------
Not Associated with Switching Systems ** ****** * ******
-------------------------------------------------------------------------------
Transmission Systems Products:
-------------------------------------------------------------------------------
DACS-IV 2000, ** ****** * ******
-------------------------------------------------------------------------------
FT-2000 OC-48 ** ****** * ******
-------------------------------------------------------------------------------
DDM-2000 OC-3/OC-12 ** ****** * ******
-------------------------------------------------------------------------------
DDM-FIBER REACH ** ****** * ******
-------------------------------------------------------------------------------
SLC 2000 Access System ** ****** * ******
-------------------------------------------------------------------------------
SLC 2000 MSDT ** ****** * ******
-------------------------------------------------------------------------------
SLC Series 5 (System and Plug In) ** ****** * ******
-------------------------------------------------------------------------------
Other Transmission Products (i.e. DDM ** ****** * ******
Plus Repeater Cases)
-------------------------------------------------------------------------------
Network Cable Systems Products ** ****** * ******
-------------------------------------------------------------------------------
All Other Products ******* ** ****** ******* * ******
-------------------------------------------------------------------------------
SOFTWARE
-------------------------------------------------------------------------------
Switching System Software ** ****** * ******
-------------------------------------------------------------------------------
Transmission Systems Software ** ****** * ******
-------------------------------------------------------------------------------
Operations Systems Software ** ****** * ******
-------------------------------------------------------------------------------
All other Software ******* ** ****** ******* * ******
-------------------------------------------------------------------------------
*This confidential portion has ben omitted and filed separately with the
Commission.
-44-
If, under normal and proper use, a defect or non-conformity appears in the
Products or Software used in the Network during the applicable Warranty Period
and Customer notifies Seller in writing of such defect or non-conformance and
follows Seller's instructions regarding return of defective or non-conforming
Product or Software, Seller, at its option, will either repair, replace or
correct the same without charge at its manufacturing or repair facility as soon
as reasonably possible after identification or oral notification of such defect
or non-conformity. If, after using its best efforts to repair or replace such
Product or Software and after consultation with and with the consent of
Customer, Seller determines that it is unable to repair, replace or otherwise
correct such defect, Seller may provide a refund or credit of the Invoice Price
paid to Seller for such Product or Licensed Material. Notwithstanding the
foregoing, if defects or non-conformities result in a severity level one or two
problem, as defined in the Escalation Procedures, Seller shall remedy the defect
by whatever means will most quickly restore service (including, if necessary,
shipment of replacement Products or Licensed Materials). No Product or Software
will be accepted for repair or replacement without the written authorization of
and in accordance with instructions of Seller. Removal and reinstallation
expenses as well as transportation expenses associated with returning such
Product or Software to Seller shall be borne by Customer. Seller shall pay the
costs of transportation of the repaired or replacing Product or Software to any
United States destination designated by Customer. If Seller determines that
returned Product or Software is not defective, Customer shall pay Seller's costs
of handling, inspecting, testing and transportation and, if applicable, travel
and related expenses. In repairing or replacing any Product, part of Product or
Software medium under this warranty, Seller may use either new, remanufactured,
reconditioned, refurbished or functionally equivalent Products or parts.
Replaced Products or parts shall become Seller's property. With respect to
Products which Seller has ascertained are not readily returnable for repair,
Seller, at its option, may elect to repair or replace the Products at Customer's
site. Customer, at its expense, shall make the Products accessible for repair
or replacement. If the Seller fails to repair, replace and/or otherwise cure
any defect or deficiency that results in a degradation in or loss of fully
functioned service to Network subscribers in accordance with the Escalation
Procedures set forth on Exhibit L, Customer may, in addition to exercising any
other remedies available to it, cause such repair, replacement and/or cure to be
completed, at its option and at the sole cost and expense of Seller.
Seller agrees to perform Services and Related Services in a workmanlike
manner in accordance with good usage and accepted practices in the community in
which Services are performed and in accordance with the applicable
Specifications and representations set forth in Exhibits E and G (as amended
from time to time by mutual consent), using material free from defects;
provided, however, Seller makes no warranty regarding material provided by
Customer. If Services or Related Services performed by Seller prove not to have
been so performed, and if Customer notifies Seller to that effect within a sixty
(60) day period commencing on the date of completion of the service, Seller will
correct any defects and deficiencies. If Seller fails to cure
-45-
any defect or deficiency that results in a degradation in or loss of fully
functional service to Network subscribers in accordance with the Escalation
Procedures set forth on Exhibit L, Customer may, in addition to exercising any
other remedies available to it, cause such cure to be completed, at its option
and at the sole cost and expense of Seller.
Seller makes no warranty under this Section 9 with respect to defective
conditions or non-conformities resulting from any of the following: Customer's
modifications which are not recommended or approved by Seller, misuse, neglect,
accident or abuse (except in each case to the extent that any such Product or
Software should in accordance with the Specifications be able to withstand any
such events); improper wiring, repairing, splicing, alteration, installation,
storage or maintenance, performed in each case by Customer; use in a manner not
in accordance with Network designs or the Specifications, or operating
instructions or failure of Customer to apply previously applicable Seller's
modifications or corrections. In addition, Seller makes no warranty with
respect to Products which have had their serial numbers or month and year of
manufacture removed, altered and with respect to expendable items, including,
without limitation, fuses, light bulbs, motor brushes and the like. Seller
makes no warranty with respect to defects related to Customer's data base
errors. In addition, no warranty is made that Software will run uninterrupted
or error free; provided, however, this specific exclusion in no way limits
Seller's warranties provided in Section 9.1.
THE FOREGOING WARRANTIES SET FORTH IN SECTIONS 9.1 AND 9.2 ARE EXCLUSIVE
AND ARE IN LIEU OF ALL OTHER EXPRESS AND IMPLIED WARRANTIES, INCLUDING BUT NOT
LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9.3. Scope of Warranties. Unless otherwise stated herein, the Seller's
-------------------
warranties under this Section 9 will not apply to:
(a) damage, defects or non-performance resulting primarily from the
negligence, gross negligence or willful misconduct of the Customer, or
any of its employees, agents, or contractors (other than Seller and
Seller's Subcontractors);
(b) any Products or Licensed Materials damaged due to a Force Majeure
event, other than to the extent that any such Products or Licensed
Materials should in accordance with the Specifications be able to
withstand any such event;
(c) damage, defects or non-performance resulting primarily from Customer's
failure to properly maintain the Network, unless such maintenance is
being provided by Seller;
-46-
(d) damages, defects or non-performance resulting directly from products,
licensed materials, or services other than Seller Provided Products,
Licensed Materials, RS Services or Services; or
(e) damages, defects or nonperformance resulting primarily from Customer's
failure to install Software Maintenance Releases provided by Seller at
no charge.
9.4. Effect of Customer Approvals. If in the performance of Seller's
----------------------------
obligations hereunder, Customer implicitly or explicitly approves or accepts
(i) the use by Seller of Products, Licensed Materials, OEM Suppliers, or
Subcontractors, or (ii) the performance of Services, or the scope or manner of
the performance of Services, identified, defined or recommended by Seller,
Seller shall not thereby be relieved of its warranty obligations hereunder.
Notwithstanding the foregoing, Seller's warranty obligations hereunder will be
--------------- --- ---------
limited to the extent Customer has expressly waived in writing its right to
enforce Seller's warranty obligations or Customer has requested Seller (a) to
use Vendor Items, or (b) to (i) use suppliers or Subcontractors, or (ii) to
perform Services or perform Services with such a scope or in such a manner
after, in the case of (i) or (ii) above, Seller has given Customer its express
prior good faith recommendation in writing against the use of such supplier or
Subcontractor or the performance or scope or manner of such Services requested
by Customer, stating the reason, and express prior notice in writing that such
use or performance will limit Seller's warranty obligations. In the case of
Vendor Items or subcontractors requested by Customer against Seller's contrary
recommendation, Seller shall use best efforts to obtain or negotiate the best
warranty practicable under the circumstances for such Products, Licensed
Materials and Services and shall pass such warranty protection through to
Customer directly.
9.5. Year 2000 Compliance Warranty.
-----------------------------
(a) The Seller represents and warrants that during period beginning on the
warranty start date and for the Warranty Periods set forth in Section
9.2, but in no event ending prior to December 31, 2001, any Seller
Provided Products and Licensed Materials delivered by the Seller to
the Customer under this Contract will:
(i) accurately and fully record, store, present and process
calendar dates falling on or after January 1, 2000, with
substantially the same functionality as such products record,
store, present and process calendar dates falling on or before
December 31, 1999; and
(ii) provide substantially the same functionality with respect to
the introduction of records containing dates falling on or
after January 1, 2000, as it provides
-47-
with respect to the introduction of records containing dates
falling on or before December 31, 1999. All of the foregoing
functionality shall be known as "Year 2000 Capable."
(b) When Customer purchases more than one version of Year 2000 Capable
software, if they are intended by Seller to interoperate, all such
versions of Year 2000 Capable Software will be compatible and
interoperate in such manner as to process between them, as applicable,
date related data correctly as described in Section (a) above.
(c) The foregoing sets forth an additional warranty for Seller's Products
and Software. The failure of the Products and Software to meet the
foregoing requirements during the warranty period set forth in
subsection 9.2 entitles Customer to the remedies set forth therein.
(d) Nothing in the foregoing shall be deemed to make Seller responsible
for the Year 2000 capability of any third party Software
interoperating or intending to operate with Seller's Software.
Customer and/or the manufacturer or other supplier of such third party
Software shall be responsible for any Year 2000 compliance and
assuring the ability of such third party Software to successfully
operate while interoperating with Seller's Software.
ARTICLE 10
PROJECT ADMINISTRATION AND FAILURE RESOLUTION
10.1. Appointment of Primary Contact Person. As of the date hereof, and
-------------------------------------
until Final Acceptance of the last Order under this Agreement, both Customer and
Seller shall appoint "Primary Contact Persons" who shall oversee the management
of this Agreement and the execution of the obligations set out herein. In
addition, the parties will each appoint two "Secondary Contact Persons" who
shall assist their supervising Primary Contact Persons in the performance of the
responsibilities hereunder. Each Primary Contact Person shall work directly
with his or her counterpart in the other party's organization. The
responsibilities of these Contact Persons shall include the following:
(a) Customer Primary Contact Person.
-------------------------------
(i) Serve as Primary Seller contact.
(ii) Serve as focal point for all Customer internal and field issues
related to this Agreement.
(iii) Schedule, oversee, review and approve accomplishment of
Customer project responsibilities and milestones, as set out in
the Phase Plans or as otherwise may be necessary and/or
appropriate to fulfill Customer's obligations under this
Agreement.
-48-
(iv) Establish, disseminate and maintain project reports and
measurement procedures within Customer's organization.
(v) Approve all modifications to Specifications.
(vi) Meet at least monthly with the Seller Contact Persons, either
by telephone or as necessary in person, to review progress and
project issues.
(b) Seller Primary Contact Person.
------ ----------------------
(i) Serve as primary Customer contact.
(ii) Serve as focal point for all Seller internal and field issues
related to this Agreement.
(iii) Establish Seller project team structure and staffing.
(iv) Schedule, oversee, review and approve accomplishment of Seller
project milestones, as set out in the Phase Plans or as
otherwise may be necessary and/or appropriate to fulfill
Seller's obligations under this Agreement.
(v) Establish, disseminate and maintain project reports and
measurement procedures within Seller's organization.
(vi) Oversee deliveries, subcontracts, installation, testing and
optimization, documentation, training and all duties required
to coordinate the work of the Seller team members.
(vii) Ensure fulfillment of all Customer and project requirements.
(viii) Meet at least monthly with the Customer Contact Persons, either
by telephone or as necessary in person, to review progress and
project issues.
10.2. Progress Updates. Commencing as of the date hereof, the Primary
----------------
Contact Person at each of Seller and Customer will meet at least as often as
monthly to discuss Seller's progress in developing and being able to timely
deliver Phase Proposals and all deliverables under pending Orders, including the
development and availability of point-to-multipoint radios.
10.3. Failure Reports; Response. In the event of failures in Products or
-------------------------
the Network, Seller will be required to provide emergency assistance or
technical assistance in order to cure such failure. Critical service outages,
and other problems in the functions or features of the Network, or any Software
or Product component thereof, will be reported to Seller in a failure report
("Failure Report"). The parties agree that Failure Reports shall be addressed
pursuant to the Escalation Policies detailed on Exhibit L, as amended by mutual
agreement from time to time.
-49-
ARTICLE 11
OPEN ARCHITECTURE
11.1. Open Architecture. Seller agrees that the Network and Seller Provided
-----------------
Products and Licensed Materials provided hereunder will facilitate and support
open architecture to the extent required to ensure such open architecture, and
Seller will make best efforts to comply, within a reasonable period of time,
with all applicable industry recognized standards. Customer and Seller will
agree, in writing, which standards bodies, and standards issued by said
standards bodies, are applicable, and will continue to amend such list of
applicable standards and standards bodies from time to time as necessary.
Seller shall work with such standards bodies to create (to the degree necessary
hereunder) and maintain industry recognized standards for the Network and Seller
Provided Products and Licensed Materials provided to Customer under this
Agreement.
ARTICLE 12
INFRINGEMENT
In the event of any claim, action, proceeding or suit by a third party
against Customer alleging an infringement of any United States patent, United
States copyright, or United States trademark, or a violation in the United
States of any trade secret or proprietary rights by reason of the use, in
accordance with the design of the Network, of the Network or any Product or
Licensed Materials furnished by Seller to construct the Network pursuant to this
Agreement, Seller, at its expense, will defend Customer, subject to certain
conditions and exceptions set forth below (an "Infringement Claim"). Seller will
reimburse Customer for any cost, expense or attorneys' fees incurred prior to
Seller's assumption of such defense or at Seller's written request or
authorization, and will indemnify Customer against any liability assessed
against Customer by final judgment or in settlement of any suit or claim on
account of such infringement or violation arising out of such use.
If Customer's use of any Product, Licensed Materials or any portion of the
Network shall be enjoined or in Seller's opinion is likely to be enjoined,
Seller will, at its expense and at its option, either (1) replace the enjoined
Product or Licensed Materials furnished pursuant to this Agreement with a
suitable substitute free of any infringement; (2) modify it so that it will be
free of the infringement; or (3) procure for Customer a license or other right
to use it. If none of the foregoing options are practical, Seller will refund to
Customer any amounts paid to Seller therefor.
Customer shall give Seller prompt written notice of all such claims,
actions, proceedings or suits alleging infringement or violation and Seller
shall have full and complete authority to assume the sole defense thereof,
including appeals, and to settle same; provided that Seller will
-50-
have no right to agree to injunctive relief against Customer, and; provided
further that Seller will notify Customer of any proposed settlement condition
prior to Seller's acceptance of such settlement. Customer shall, upon Seller's
request and at Seller's expense, cooperate in every reasonable way to facilitate
the defense and/or settlement of any such claim, action, proceeding or suit.
No undertaking of Seller under this clause shall extend to any such alleged
infringement or violation to the extent: (i) that it arises because the Product
or Licensed Materials provided by Seller are used in combinations with other
products furnished either by third parties where such combination was not
installed, recommended or otherwise approved (explicitly or by implication) by
Seller, or (ii) that it is caused by modification of the Product, Licensed
Materials, the Network or any component thereof by Customer, or any infringement
caused solely by Customer's use and maintenance of the Products other than in
accordance with the Specifications and the purposes contemplated by this
Agreement, except as expressly authorized or permitted by Seller. Customer will
indemnify Seller against all liabilities and costs, including reasonable
attorneys' fees, for defense and settlement (consented to by Customer) of any
and all claims against Seller for infringements or violations based upon this
paragraph.
ARTICLE 13
CUSTOMER'S REMEDIES
13.1. EXCLUSIVITY OF REMEDIES. CUSTOMER'S EXCLUSIVE REMEDIES AND THE ENTIRE
-----------------------
LIABILITY OF SELLER, ITS AFFILIATES AND THEIR EMPLOYEES, AND AGENTS, AND ITS
SUPPLIERS FOR ANY CLAIM, LOSS, DAMAGE OR EXPENSE OF CUSTOMER OR ANY OTHER ENTITY
ARISING OUT OF THIS AGREEMENT, OR THE USE OR PERFORMANCE OF ANY PRODUCT,
LICENSED MATERIALS, OR SERVICES, WHETHER IN AN ACTION FOR OR ARISING OUT OF
BREACH OF CONTRACT, TORT, INCLUDING NEGLIGENCE, INDEMNITY, OR STRICT LIABILITY,
SHALL BE EXPRESSLY SET FORTH HEREIN AND AS FOLLOWS:
(a) FOR INFRINGEMENT -- THE REMEDIES SET FORTH IN ARTICLE 12;
(b) FOR THE NON-PERFORMANCE OF PRODUCTS, SOFTWARE, AND SERVICES DURING THE
WARRANTY PERIOD -- THE REMEDIES SET FORTH IN THE APPLICABLE CLAUSE OF
ARTICLE 8 OR ARTICLE 9;
(c) FOR TANGIBLE PROPERTY DAMAGE AND PERSONAL INJURY CAUSED BY SELLER'S
NEGLIGENCE -- THE AMOUNT OF THE PROVEN DIRECT DAMAGES;
-51-
(d) FOR CLAIMS OF SUBCONTRACTORS -- THE REMEDIES SET FORTH IN THE
APPLICABLE CLAUSE OF ARTICLE 5;
(e) FOR CLAIMS UNDER SECTIONS 16.3 OR REIMBURSEMENTS UNDER 16.6, THE
AMOUNT OF THE COSTS OR AMOUNTS CONTEMPLATED BY SUCH SECTIONS.
(f) FOR EVERYTHING OTHER THAN AS SET FORTH ABOVE -- THE AMOUNT OF PROVEN
DIRECT DAMAGES NOT TO EXCEED $1,000,000 PER OCCURRENCE, INCLUDING
AWARDED COUNSEL FEES AND COSTS. THE TOTAL AMOUNT OF SUCH OCCURRENCES
SHALL NOT EXCEED 5% OF THE PAID PORTION OF THE PURCHASE PRICE AT THE
TIME OF PAYMENT, INCLUDING AWARDED COUNSEL FEES AND COSTS.
(g) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER PARTY,
THEIR AFFILIATES AND THEIR EMPLOYEES, AGENTS AND SUPPLIERS SHALL BE
LIABLE FOR ANY INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR LOST
PROFITS, REVENUES OR SAVINGS ARISING OUT OF THIS AGREEMENT OR THE USE
OR PERFORMANCE OF ANY PRODUCT, LICENSED MATERIALS, OR SERVICES,
WHETHER IN AN ACTION FOR OR ARISING OUT OF BREACH OF CONTRACT, TORT,
INCLUDING NEGLIGENCE, OR STRICT LIABILITY. THIS CLAUSE 13.1 SHALL
SURVIVE FAILURE OF AN EXCLUSIVE OR LIMITED REMEDY.
13.2. Remedies for Failure to Provide Point-to-Multipoint Radio Technology.
--------------------------------------------------------------------
(a) In the event of Seller's failure to make point-to-multipoint radios
meeting the Specifications of Exhibit H (the "PMP Solution")
commercially available by the date specified in Exhibit H, Seller and
Buyer shall consult and agree on an interim solution which may involve
either the purchase of other commercially available point-to-
multipoint radios or continued deployment of point-to-point radios.
The terms and conditions relating to such interim solution shall be
mutually agreed;
(b) In the event of Seller's failure to make the PMP Solution commercially
available by the date which is six months from the date specified in
Exhibit H for the delivery of the PMP Solution, Buyer, in its sole
discretion, may elect to terminate this agreement for convenience;
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(c) In the event of Seller's failure to make the PMP Solution commercially
available by the date which is six months from the date specified in
Exhibit H for the delivery of the PMP Solution, Buyer and Seller may
agree to amend the provisions of Exhibit H so it will conform with the
specifications of the commercially available point-to-multipoint
radio. In such case, Seller shall use its best efforts to provide such
radios as a Seller Provided Product.
ARTICLE 14
USE OF INFORMATION
All technical and business information in whatever form recorded which
bears a legend or notice restricting its use, copying, or dissemination or, if
not in tangible form, is described as being proprietary or confidential at the
time of disclosure and is subsequently summarized in a writing so marked and
delivered to the receiving party within thirty (30) days of disclosure to the
receiving party (all hereinafter designated "Information") shall remain the
property of the furnishing party. The furnishing party grants the receiving
party the right to use such information only for purposes expressly permitted in
this Section. Such Information (1) shall not be reproduced or copied, in whole
or in part, except for use as authorized in this Agreement; and (2) shall,
together with any full or partial copies thereof, be returned or destroyed when
no longer needed. Moreover, when Seller is the receiving party, Seller shall use
such information only for the purpose of performing under this Agreement, and
when Customer is the receiving party, Customer shall use such information only
(1) to order; (2) to evaluate the Network, including Seller's Products, Licensed
Materials and Services used therein; or (3) to install, operate and maintain the
particular Products and Licensed Materials used in the Network for which it was
originally furnished. Unless the furnishing party consents in writing, such
information, except for that part, if any, which is known to the receiving party
free of any confidential obligation, or which becomes generally known to the
public through acts not attributable to the receiving party, shall be held in
confidence by the receiving party. The receiving party may disclose such
Information to other persons, upon the furnishing party's prior written
authorization, but solely to perform acts which this clause expressly authorizes
the receiving party to perform itself and further provided such other person
agrees in writing (a copy of which writing will be provided to the furnishing
party at its request) to the same conditions respecting use of Information
contained in this clause and to any other reasonable conditions requested by the
furnishing party.
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ARTICLE 15
INSURANCE
Both parties shall maintain during the term of this Agreement the following
insurance coverage as well as all other insurance required by law in the
jurisdictions where the work is performed: (1) Worker's Compensation and
related insurance as required by law; and, (2) employer's liability insurance
with a limit of at least one million ($1,000,000.00) dollars for each
occurrence; (3) comprehensive general liability insurance, with a limit of at
least one million ($1,000,000.00) dollars per occurrence; (4) comprehensive
motor vehicle liability insurance with limits of at least one million
($1,000,000.00) dollars for bodily injury including death, to any one person,
one million ($1,000,000.00) dollars for each occurrence of property damage, and
one million ($1,000,000.00) dollars for any one occurrence. Each party shall
furnish the other prior to the start of the work, if requested by the other,
certificates or adequate proof of the insurance required by this clause. Each
party shall notify the other in writing at least thirty (30) days prior to
cancellation of or any material change in the policy. Notwithstanding the
above, each party shall have the option where permitted by law to self-insure
any or all of the foregoing risks.
ARTICLE 16
TERMINATION
16.1. Customer's Right to Terminate. Customer shall have the option to
-----------------------------
terminate this Agreement in all respects, without penalty and without prejudice
to any other rights or remedies of Customer herein or at law or equity, and to
be relieved of all obligations hereunder upon the occurrence of any of the
following:
(a) Seller files a voluntary petition in bankruptcy or has an involuntary
petition in bankruptcy filed against it that is not dismissed within
forty-five days of such involuntary filing; Seller admits the material
allegations of any petition in bankruptcy filed against it; Seller is
adjudged bankrupt; or Seller makes a general assignment for the
benefit of its creditors, or if a receiver is appointed for all or a
substantial portion of its assets and is not discharged within sixty
days after his appointment; or
(b) Seller commences any proceeding for relief from its creditors in any
court under any state insolvency statutes; or
-54-
(c) Seller materially disregards or materially violates material
applicable laws and such breach recurs, continues or remains uncured
after thirty days written notice; or
(d) Seller fails to provide Products, Services or Licensed Materials in
accordance with the Phase Plans agreed to pursuant to Section 6.1
hereof and such failure recurs, continues or remains uncured after
thirty days written notice; or
(e) Seller fails to promptly cure any material defects or non-conformities
(or defects or non-conformities which in the aggregate are material)
in accordance with Article 9 or to promptly and adequately cure any
failures which are the subject of Failure Reports, and such breach
recurs, continues or remains for thirty (30) days uncured after
written notice; or
(f) Seller fails to materially comply with any Change Order and such
failure recurs, continues or remains uncured after thirty days written
notice;
(g) an Infringement Claim occurs which materially adversely affects the
Network and Seller is unable to take within a reasonable time any of
the actions described in items (1), (2) and (3) of the second
paragraph of Article 12; or
(h) Seller otherwise materially breaches this agreement and such breach
recurs, continues or remains uncured after thirty days written notice.
16.2. Continuation of Work. If this Agreement is terminated for any reason
--------------------
set forth under Section 16.1 or pursuant to Section 3.4 or 3.7, Seller shall,
without prejudice to any other rights or remedies of Customer herein or at law
or equity, do the following:
(a) At Customer's request, work with Customer, at no additional charge, in
completing, causing the completion, or assisting others in the
completion of all ordered but unfinished Phases of the Network. Such
assistance shall, at Customer's discretion, include assistance with
the integration of another vendor's products and where necessary or
desirable for the completion of such unfinished Phases, the sharing
with Customer or other vendors or integrators of engineering and
design data, procurement data, manufacturing data, construction and
installation data, start-up and testing data, installation equipment,
machinery and tools; each under reasonably appropriate non-disclosure
agreements; and
(b) At Customer's request, assign its Subcontractor agreements which are
assignable to Customer without any change of price or conditions
therein or penalty or payment therefor
-55-
and will use its best efforts to have the benefits of all other
Subcontractor agreements assigned to Customer.
16.3. Costs. In the event of a termination pursuant to Section 16.1,
-----
Customer will be entitled to the costs in connection with finishing open Orders.
16.4. Surviving Obligations. Notwithstanding any other provision herein,
---------------------
termination of this Agreement for any reason (i) will not relieve either party
of its obligations under Sections 3.11, 16.2 and 17.7 and its obligations under
Articles 8, 9, 12 and 14, (ii) will not relieve either party of any obligation
which applies to it and which expressly or by implication survives termination
and (iii) except as otherwise provided in any provision of this Agreement
expressly limiting the liability of either party, will not relieve either party
of any obligations or liabilities for loss or damage to the other party arising
out of or caused by acts or omissions of such party prior to the effectiveness
of such termination or arising out of its obligations as to portions of the work
already performed or of obligations assumed by the Seller prior to the date of
such termination.
16.5. Seller's Right to Terminate. Seller shall have the option to
---------------------------
terminate this Agreement in all respects, without penalty and without prejudice
to any other rights or remedies of Seller herein or at law or equity, and to be
relieved of all obligations hereunder upon the occurrence of any of the
following:
(a) Customer files a voluntary petition in bankruptcy or has an
involuntary petition in bankruptcy filed against it that is not
dismissed within forty-five days of such involuntary filing; Customer
admits the material allegations of any petition in bankruptcy filed
against it; Customer is adjudged bankrupt; or Customer makes a general
assignment for the benefit of its creditors, or if a receiver is
appointed for all or a substantial portion of its assets and is not
discharged within sixty days after his appointment; or
(b) Customer commences any proceeding for relief from its creditors in any
court under any state insolvency statutes; or
(c) Customer persistently and materially breaches Article 8 and Article 14
notwithstanding the fact that Seller will have provided Customer with
prior written notice describing the alleged material breaches and will
have given Customer a reasonable time, and in no event less than
thirty days, to cure any such breaches; or
(d) Customer fails to make payments of undisputed amounts due to Seller
under this Agreement which are more than sixty days overdue, provided
that such failure has
-56-
continued for at least thirty days after Seller has notified Customer
of its right and intent to so terminate on account of such overdue
amount and provided that if the Short Term Note has not been paid or
Seller has not syndicated or transferred its obligations under the
credit agreement providing the financing between Seller and Customer,
such failure to make payment is not the result of Seller failing to
extend credit under the Short Term Note or such credit agreement in
breach of Seller's obligations thereunder if all the material
conditions for Customer to borrow thereunder have been fulfilled with
respect to a borrowing under the Short Term Note or credit agreement
which would enable payment in full of all amounts for which Seller is
exercising its right to terminate this Agreement.
16.6. Effect on Open Orders. If this Agreement is terminated for any reason
---------------------
other than those set forth under Section 16.1, Customer shall, at its option,
either return all Products and Licensed Materials delivered to Customer for
which the Invoice Prices have not been paid and which are in new or unused
condition, or pay to Seller the portion of the Purchase Price attributable to
such Products and Licensed Materials and as yet unpaid; provided, however, if
termination is effected pursuant to Section 16.5(d), Customer must return all
Products and Licensed Materials the non-payment for which is the reason for
termination. If any portion of the Invoice Prices for Products and Licensed
Materials returned to Seller pursuant to this Section 16.6 has already been paid
by Customer, Seller shall reimburse Customer for such amounts.
16.7. Termination of License. In the event that Seller terminates this
----------------------
Agreement pursuant to Section 16.5 (c), Seller may terminate Customer's right to
use the Software. In the event that Seller terminates this Agreement pursuant
to Section 16.5(d) for failure by Customer to pay software service fees under
Section 8.7, Seller may terminate Customer's right to use the Software to which
such fees apply. In no event other than as set forth in this Section 16.7 may
Seller terminate Customer's right to use the Software. Notwithstanding any
other provision of this Agreement, if there is a dispute, pending the final
resolution of any dispute between Seller and Customer, all of Customer's rights
under this Agreement shall continue in full force and effect, and Seller will
not terminate the license to use the Software, so long as Customer continues to
pay Seller customary and usual support service fees, and will not terminate,
suspend, interrupt or delay maintenance and support of the Software. Seller
acknowledges that the license of the Software is a strategic asset of Customer
and that consequently any violation of this provision will result in irreparable
harm to Customer and that Customer is entitled to an order of specific
performance.
16.8. Special Termination Provisions. Customer may by written notice to
------------------------------
Seller terminate this Agreement without penalty and without prejudice to any
other rights or remedies of Customer herein or at law or equity, and shall be
relieved of all obligations hereunder in the event that any law, statute,
regulation, rule, order, decision, or other action of any Governmental Entity
(i) materially adversely impacts the Customer's licenses or authorizations (ii)
makes the provision of services by Customer materially more burdensome to
Customer or (iii) makes Customer's compliance with applicable law materially
more burdensome.
-57-
16.9. Financing. Neither the Seller nor the Customer shall be obligated to
---------
perform under this Agreement if financing for the purpose of acquiring Network
Products, Licensed Materials and Services sufficient to cover the Customer's
current payment obligations hereunder, on terms that are acceptable to the
Customer, has not been secured. Unless acceptable financing is available,
either Party may terminate this Agreement without recourse, except as noted
below, by notifying the other party in writing. Further, the Parties agree that
the delivery and performance schedules shall be extended by the period of time
required to secure acceptable financing. In the event of a termination of this
Agreement pursuant to this provision, the Customer will remain liable for
reasonable amounts due to the Seller for all Services performed or Products
delivered by the Seller pursuant to the terms and conditions of this Agreement
which had been delivered to or performed for the Customer in connection with the
design and construction of the Network.
16.10. Change of Control. In the event of a Change of Control of Customer
-----------------
(a) that results in a Lucent Competitor owning or controlling more than 50% of
the securities entitled to vote for Customer's Board of Directors, or (b) that
involves a recapitalization of Customer that materially and adversely affects
Customer's ability to pay indebtedness to Seller as such indebtedness comes due,
Seller shall have the right, within twenty-one (21) days of the earlier of (i)
such Change of Control or (ii) written notice of a proposed Change of Control
setting forth the name of the party which proposes to control Customer after the
Change of Control, to terminate this Agreement by giving written notice (a
"Termination Notice"). A termination pursuant to this Section 16.10(a) shall be
effective on the later of (x) such Change of Control, or (y) receipt of the
Termination Notice. A Termination Notice shall only be effective if the Change
of Control to which it relates occurs. At least three (3) days prior to any
Change of Control of which Customer has prior knowledge, Customer shall give
Seller written notice of such expected Change of Control.
16.11. Material Adverse Change. Customer may terminate this Agreement
-----------------------
without prejudice or penalty in the event of a material adverse change in
Customer's business which materially diminishes Customer's demand for Products,
Licensed Materials and Services.
16.12. Termination Process. In the event of a termination of this
-------------------
Agreement, Customer and Seller shall cooperate in good faith to manage the
termination process, the compliance with covenants and agreements which by their
nature survive termination and all public relations and disclosure regarding
such termination.
-58-
ARTICLE 17
MISCELLANEOUS
17.1. Documentation. Seller shall furnish to Customer, at no additional
-------------
charge, one (1) copy of the documentation for Products and/or one (1) copy of
the Related Documentation for Software used in the construction of the Network.
Such documentation shall be that which is customarily provided by Seller to its
Customers at no additional charge. Such documentation shall be sufficient to
enable Customer to operate and maintain such Products and Software in accordance
with Seller's specifications. Such documentation shall be provided either prior
to, included with, or shortly after shipment of Products and/or Software from
Seller to Customer.
17.2. Notices. Any notice, demand or other communication (other than an
-------
order) required, or which may be given, under this Agreement shall, unless
specifically otherwise provided in this Agreement, be in writing and shall be
given or made by personal delivery, mail (postage prepaid), nationally
recognized overnight courier service or confirmed facsimile and shall be
addressed to the respective parties as follows:
If to Customer: If to Seller:
President Sales Vice President
Advanced Radio Telecom Corp. Lucent Technologies Inc.
000-000xx Xxx. XX., Xxx. 0000 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000-0000
Tel: 000.000.0000 Tel: 000.000.0000
Fax: 000.000.0000 Fax: 000.000.0000
with a copy to: with a copy to:
General Counsel Lucent Technologies Inc.
Advanced Radio Telecom, Corp. Global Commercial Markets
000 - 000xx Xxx. XX, Xxx. 0000 0000 Xxxxxxxxxx Xx., X@X00
Xxxxxxxx, XX 00000 XxXxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Contract Management
Tel: 000.000.0000 Tel: 000.000.0000
Fax: 000.000.0000 Fax: 000.000.0000
Any such notice shall be effective as follows: (i) four days after deposit
in the mail, (ii) upon personal delivery, (iii) two days after delivery to an
overnight courier service (for one day service), and (iv) when sent by
facsimile, upon receipt. Each party may change its designated representative who
is to receive communications and notices and/or the applicable address for such
communications and notices by giving notice thereof to the other party provided
herein.
-59-
17.3. Force Majeure. Neither party shall be held responsible for any delay
-------------
or failure in performance to the extent that such delay or failure is caused by
fires, strikes, embargoes, explosions, earthquakes, floods, wars, water, the
elements, labor disputes, government requirements, civil or military
authorities, acts of God or by the public enemy, inability to secure raw
materials or transportation facilities, acts or omissions of carriers or
suppliers, or other causes beyond its control whether or not similar to the
foregoing (each a "Force Majeure").
17.4. Assignment. Except as provided in this clause, neither party shall
----------
assign this Agreement or any right or interest under this Agreement, nor
delegate any work or obligation to be performed under this Agreement, (an
"Assignment") without the other party's prior written consent. Any attempted
assignment in contravention of this shall be void and ineffective. Requests for
authorization to assign rights and obligations should be directed in writing to:
If to Customer: If to Seller:
General Counsel Senior Contract Specialist
Advanced Radio Telecom Corp. Lucent Technologies Inc.
000-000xx Xxx. XX., Xxx. 0000 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000-0000
Tel: 000.000.0000 Tel: 000.000.0000
Fax: 000.000.0000 Fax: 000.000.0000
with a copy to: with a copy to:
President Assistant Vice President - Sales
Advanced Radio Telecom, Corp. Lucent Technologies Inc.
000 - 000xx Xxx. XX, Xxx. 0000 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000-0000
Tel: 000.000.0000 Tel: 000.000.0000
Fax: 000.000.0000 Fax: 000.000.0000
17.5. Arbitration. If a dispute arises out of or relates to this Agreement,
-----------
or its breach, the parties agree to escalate such dispute to their respective
senior executives for good faith negotiations seeking a mutually agreeable
resolution. This demand for escalation shall be in writing and notice shall be
served in accordance with the notice provision of this Agreement. If the
dispute is not resolved through such escalation within fifteen (15) days after
the date of escalation, the parties shall in good faith submit the dispute to a
sole mediator selected by the
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parties or, at any time at the option of a party, to mediation by the American
Arbitration Association ("AAA"). If the dispute is not resolved within thirty
(30) days of the date of escalation or such longer period as may be agreed by
the parties, it shall be referred to a sole arbitrator selected by the parties
or, in the absence of such selection, to AAA arbitration which shall be governed
by the United States Arbitration Act, and judgment on the award may be entered
in any court having jurisdiction. The arbitrator may determine issues of
arbitrability, but may not award punitive damages or limit, expand or otherwise
modify the terms of this Agreement. The parties, their representatives, other
participants and the mediator and arbitrator shall hold the existence, content
and result of mediation and arbitration in confidence, except as such disclosure
may be necessary for the purpose of recording or otherwise acting upon the
arbitrator's award or as may be required to comply with applicable law.
17.6. Independent Contractor. All work performed by either party under
----------------------
this Agreement shall be performed as an independent contractor and not as an
agent of the other, and no persons furnished by the performing party shall be
considered the employees or agents of the other.
17.7. Confidentiality of Agreement. Notwithstanding the obligations
----------------------------
contained in Article 12 (Use of Information) of this Agreement the parties shall
keep all provisions of this Agreement, all Network designs and plans and any
Order submitted hereunder (including, without limitation, Invoice Prices and
related information) confidential except as reasonably necessary for performance
by the parties hereunder and except to the extent disclosure may be required by
applicable laws or regulations, in which latter case, the party required to make
such disclosure shall promptly inform the other prior to such disclosure in
sufficient time to enable such other party to make known any objections it may
have to such disclosure. The disclosing party shall take all reasonable steps
in compliance with applicable law and exercise all reasonable efforts directed
by the non-disclosing party to secure a protective order, seek confidential
treatment, or otherwise assure that this Agreement and/or any order will be
withheld from the public record.
17.8. Amendments. Any supplement, modification or waiver of any provision
----------
of this Agreement must be in writing and signed by authorized representatives of
both parties.
17.9. Severability. If any portion of this Agreement is found to be
------------
invalid or unenforceable, the parties agree that the remaining portions shall
remain in effect. The parties further agree that in the event such invalid or
unenforceable portion is an essential part of this Agreement, they will
immediately begin negotiations for a replacement.
17.10. Waiver. If either party fails to enforce any right or remedy
------
available under this Agreement, that failure shall not be construed as a waiver
of any right or remedy with respect to any other breach or failure by the other
party.
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17.11. Survival. The rights and obligations of the parties which by their
--------
nature would continue beyond the termination, cancellation, or expiration of
this Agreement, shall survive such termination, cancellation or expiration.
17.12. Section Headings. The section headings in this Agreement are
----------------
inserted for convenience only and are not intended to affect the meaning or
interpretation of this Agreement.
17.13. Choice of Law. The construction and interpretation of, and the
-------------
rights and obligations of the parties pursuant to this Agreement, shall be
governed by the laws of the State of New York without regard to its conflict of
laws provision.
17.14. Counterparts. This agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
ARTICLE 18
ENTIRE AGREEMENT
18.1. Entire Agreement. The terms and conditions contained in this
----------------
Purchase Agreement supersede all prior oral or written understandings between
the parties with respect to the subject matter hereof (including the General
Agreement dated March 30, 1998) and constitute the entire agreement between the
parties with respect to such subject matter. The preprinted terms and conditions
on Customer's Orders or Seller's sales forms are deleted. The typed or
handwritten provisions of an Order which are consistent with the terms of this
Purchase Agreement along with the terms of this Purchase Agreement shall
constitute the entire Agreement between the parties relating to said order.
Notwithstanding the foregoing, the Co-Marketing Agreement attached hereto as
Exhibit N remains in full force and effect.
[Remainder of Page Intentionally Blank]
-62-
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives on the date(s) indicated.
LUCENT TECHNOLOGIES, INC. ADVANCED RADIO TELECOM CORP.
By: ____________________________ By: _________________________________
Name: __________________________ Name: _______________________________
Title: _________________________ Title: ______________________________
Date: __________________________ Date: _______________________________
-63-
Schedule of Exhibits
--------------------
Exhibit A Acceptance Test Procedures
Exhibit B Network Specifications
Exhibit C Products
Exhibit D Licensed Materials
Exhibit E Services
Exhibit F Form of Responsibility Matrix
Exhibit G Related Services
Exhibit H Design Program for Point-to-Multipoint Radio Technology
Exhibit I Invoice Prices
Exhibit J Extended Warranties
Exhibit K [Reserved]
Exhibit L Escalation Procedures
Exhibit M *********
Exhibit N Co-Marketing Agreement
Exhibit O Standard Delivery Intervals
Exhibit P Form of Order
Exhibit Q Provisional Acceptance Standards
*This confidential portion has been omitted and filed separately with the
Commission.
-64-
