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EXHIBIT 10.12
SUPPLY AGREEMENT
This Supply Agreement ("Agreement") is being entered into and is
effective as of August 12, 1999 (the "Effective Date"), by and between NOVATEL
WIRELESS, INC., a Delaware corporation ("Novatel" or "Seller"), having its
principal place of business at 0000 Xxxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx
and OPENSKY CORPORATION, a Delaware corporation ("OpenSky" or "Buyer"), having
its principal place of business at 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxx,
Xxxxxxxxxx.
WHEREAS, Seller is engaged in, among other things, the development and
manufacture of the Minstrel III(TM) wireless modem cradle ("Minstrel III") and
the Minstrel V(TM) wireless modem cradle ("Minstrel V"), for the Palm III and
Palm V connected organizers, respectively (the Minstrel III and the Minstrel V
are referred to herein collectively as the "Modems");
WHEREAS, Buyer desires to purchase certain quantities of such Modems
from Seller, and Seller is willing to supply such quantities of such Modems to
Buyer, subject to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants set forth below, the parties agree as follows:
1. SALE AND PURCHASE OF PRODUCTS.
1.1 Sale and Purchase. Buyer shall purchase from Seller, and Seller
shall supply to Buyer, an aggregate of 100,000 Modems pursuant to the schedule
of payment and delivery in Annex A, for an 22,770,000, subject to any
adjustments to the Mix (as described in Section 1.3) made in accordance with
Section 1.3 hereof.
1.2 Payments. Buyer shall make payments due to Seller for Deliverable
Items either directly to Seller or to such bank as Seller may designate in
writing. Payments for Modems shall be due and payable in full, in cash, by Buyer
thirty (30) days prior to each scheduled delivery of Modems into Seller's
Distribution Facility in San Diego, California (the "Novatel Distribution
Facility"). Each delivery of specification compliant Modems in accordance with
Annex D for which a pre-payment by Buyer has been received may not be canceled.
Payments for Deliverable Items (other than Modems), shall be due and payable in
full, in cash, by Buyer within thirty (30) days following the date of shipment
to end-users on behalf of Buyer. For purposes of this Agreement, "Deliverable
Items" shall mean any item, or parts thereof, that Seller is obligated to
provide under this Agreement including but not limited to Modems, documentation,
know-how and information. Payment for shipping and configuration and activation
shall be due and payable in full, in cash, as set forth in Sections 1.8 and 2.1,
respectively.
1.3 Prices and Mix. The Modems shall be supplied to Buyer at a price per
unit equal to $218.50 for the Minstrel III and $230.00 for the Minstrel V.
Pricing is based on 100,000 units to be purchased during the term of this
Agreement. During the term of this Agreement, unless changed in accordance with
this Section 1.3, the number of each type of Modem to be purchased in each
delivery and in the aggregate under this Agreement shall be 80%
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Minstrel V and 20% Minstrel III (the "Mix"). Buyer may change the Mix (i) by 10%
upon 30-days' advance written notice to Seller; (ii) by 30% upon 60-days'
advance written notice to Seller or (iii) in its entirety upon 90-days' advance
written notice to Seller. Buyer may change the delivery schedule set forth on
Annex A as to the total monthly quantity of Modems shipped upon sixty (60) days
prior written notice to Seller; provided, however, that (i) any increase in the
monthly quantity of Modems shall not exceed 20% of the monthly quantity of
Modems set forth on Annex A for the relevant month; (ii) any decrease in the
monthly quantity of Modems shall not exceed 30% of the monthly quantity of
Modems set forth on Annex A for the relevant month and (iii) the total quantity
of Modems purchased under this Agreement shall remain unchanged. If Buyer
reduces the monthly quantity of Modems during the Exclusivity Period pursuant to
the previous sentence, then notwithstanding anything to the contrary in this
Agreement, the exclusivity provided for in Section 1.9 shall not apply with
respect to the number of Modems by which such monthly quantity of Modems was so
reduced.
1.4 Advance. The parties hereto acknowledge and agree that in order to
ensure the prompt availability of the Modems of the initial scheduled delivery
hereunder as provided in Annex A, Seller must make an initial commitment to its
suppliers of components. On the dates set forth below, Buyer shall advance an
aggregate amount of $3,780,000 (the "Advance") to Seller in cash against future
payments to be made by Seller on deliveries purchased. Deliveries made after
November 1, 1999 under this Agreement, for the specific purpose of facilitating
the procurement of components as follows:
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Date of Buyer's Advance Amount of Buyer's Advance
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$2,520,000
August 3, 1999 (40K units at $63 per unit)
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$1,260,000
October 15, 1999 (27K units at $63 per unit)
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All deliveries of modems made after November 1, 1999 pursuant to this
Agreement shall be invoiced at the actual prices provided in Section 1.2 above
minus $63 per modem until the advance is fully recovered by Buyer.
1.5 Accessories. During the Shipping Period (as defined in Section 1.8
below), Seller shall hold for Buyer 1,000 Minstrel III batteries in reserve
inventory and shall make available accessories for the Modems at such prices
listed in Annex B.
1.6 Acceptance Criteria. The Modems shall be run through an acceptance
test prior to delivery. The acceptance test will be based on an agreed to
statistical sampling of the Modems and will demonstrate that the Modems meet all
of the Product Specifications outlined in Annex D. If there is a statistical
failure rate of greater than *** for any Product Specifications, then every
modem shall be tested prior to acceptance by Buyer. Seller shall provide Buyer
notice of when acceptance test will be performed. Buyer shall have the right to
witness each such test. Upon completion of the acceptance test, Seller shall
provide Buyer with the results of such test and Buyer shall indicate acceptance
by signing the acceptance test documentation.
1.7 Delivery and Title. The Modems sold to Buyer shall be delivered to
the Novatel Distribution Facility in accordance to the delivery schedule set
forth in Annex A. Title and risk of loss in the Modems shall transfer to Buyer
at such time as Seller ships the Modems to
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
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an end-user on behalf of Buyer or to a third party distributor on behalf of
Buyer. Seller shall warehouse the inventory on behalf of Buyer and ship to
end-users the Modems on behalf of Buyer from the Novatel Distribution Facility
in accordance with Section 1.8 below. Subject to Section 8 below, all Modems
shipped to Buyer or to the end-users on behalf of Buyer shall be non-returnable.
1.8 Shipping.
1.8.1 From the period beginning November 1, 1999 and ending March
1, 2000 (the "Shipping Period") Seller shall make shipments FOB Destination of
the Modems to end-users on behalf of Buyer. In each case, Buyer shall provide to
Seller in writing, by electronic transmission or any other mode of communication
as set forth in Section 13.11, such information as is necessary to complete the
requested shipment, including without limitation, the address or location of
shipment, the number and type of Modem to be shipped and the type of shipment to
be utilized pursuant to Section 1.8.2 below. Seller shall arrange for the
requested shipment FOB Destination within a 24-hour period from receipt by
Seller of Buyer's shipment request pursuant to this Section 1.8.1.
1.8.2 During the Shipment Period, Seller shall arrange, in
coordination with Buyer, for the air carrier insurance and freight from the
Novatel Distribution Facility to end-users on behalf of Buyer, and the CIF cost
shall be borne by Buyer directly. Seller shall provide three (3) shipment
options to Buyer: (i) overnight delivery; (ii) 2-day delivery or (iii) ground
delivery; and for which Buyer shall pay Seller, in cash, fees for shipment of
the Modems pursuant to this Section 1.8.2. As additional shipping options and
volume discounts become available, the fees for shipment paid by Buyer to Seller
may be agreed upon on a case by case basis by Buyer and Seller. Seller shall
deliver monthly invoices to Buyer for the costs and fees in connection with the
shipment of the Modems made to end-users on behalf of Buyer. In addition to such
other amounts as may be due hereunder, Buyer shall pay Seller in full, in cash,
for Seller's costs and fees for such shipments within thirty (30) days following
the date of delivery of such invoice to Buyer pursuant to this Section 1.8.2.
1.9 Exclusivity. The Minstrel V shall be made available for sale and
purchase exclusively to Buyer for the Exclusivity Period. The "Exclusivity
Period" means the four-month period commencing as of the later of (i) such date
Seller has delivered 18,000 Minstrel V units in accordance with this Agreement
on account of Buyer to the Novatel Distribution Facility or (ii) November 30,
1999. In the event that Seller's delivery of field trial Minstrel V Modems is
not made prior to September 30, 1999 or Seller retrofits Modems pursuant to
Section 1.17 or Section 5 hereof, then (i) the initial delivery of Modems into
the Novatel Distribution Facility shall be due on December 31, 1999; (ii) each
subsequent delivery date on Annex A shall be adjusted accordingly; and (iii) the
Exclusivity Period will begin on such date Seller has delivered 18,000 Minsrel V
units in accordance with this Agreement to the Novatel Distribution Facility.
1.10 Warranties. Acceptance of a Modem shall not relieve Seller from its
obligations thereunder with respect to warranties under Section 8 below.
1.11 Title; Risk of Loss. Title to Deliverable Items covered by this
Agreement shall pass to Buyer and risk of loss of or damage to Deliverable Items
shall be assumed by
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Buyer, at such xxxx Xxxxxx ships the Deliverable Items to an end-user on behalf
of Buyer or to a third party distributor on behalf of Buyer.
1.12 Taxes. The prices of all Modems and Deliverable Items hereunder
include all taxes, duties and excises which are directly imposed on the Modems
or Deliverable Items. Notwithstanding the foregoing, Buyer shall bear the
responsibility for any taxes or duties imposed on Deliverable Items in any other
country or state of destination, including without limitation, taxes imposed on
the sale by Buyer of a product that includes Seller products.
1.13 Adverse Results; Government Action. Each party agrees to promptly
notify the other party of any adverse or unexpected results or any actual or
potential government action relevant to a Modem of which it becomes aware.
1.14 Invoices; Errors. Invoices shall be submitted by Seller in
duplicate (original and one copy) for each delivery of Deliverable Items (other
than Modems) and will enclose as an integral part thereof documentary proof of
delivery of such Deliverable Items, according to commercially accepted standards
for exports.
1.15 Additional Supply. Beginning after completion of delivery of
100,000 Modems and for a period of one (1) year. The first option of available
allocation granted to Buyer under this Section 1.15 shall be on such terms and
conditions and at such price as mutually agreed upon between the parties hereto
or as then in effect pursuant to future Modem supply agreements entered into
between Buyer and Seller but at no greater price than Seller would offer to any
other similar buyer for the same Modem on similar volume and other terms.
1.16 Schedule. If Seller fails to deliver the Modems to the Novatel
Distribution Facility as scheduled in Annex A and Buyer waives the delay, Annex
A shall be adjusted by changing the dates in Annex A by an equivalent number of
days. For example, a thirty (30) day delay in delivery will cause a thirty (30)
day delay in every subsequent delivery requirement pursuant to Annex A. If
Seller is only able to deliver a portion of the Modems as scheduled, then the
remaining portion shall be delivered fifteen (15) days after the final delivery
pursuant to Annex A. Any prepayment in accordance with Section 1.2 for
undelivered Modems shall be applied to the prepayment for the next scheduled
delivery of Modems. In the event the Modems are not delivered for field trial by
September 30, 1999 pursuant to Section 1.17 below then the delivery schedule on
Annex A will be adjusted so that the initial delivery shall be due on December
31, 1999 and each subsequent delivery on Annex A shall be adjusted accordingly.
1.17 Field Trials. Seller will deliver Modems for Buyer to conduct field
trials on or prior to September 30, 1999. If the Modems have mechanical or
electrical failures in excess of *** during Buyer field trial then Seller shall
immediately stop delivery of Modems to the Novatel Distribution Facility. Seller
shall make the necessary changes to rectify the identified failures and all
previously delivered Modems shall be retrofitted to meet the specification
configuration.
2. CONFIGURATION AND ACTIVATION; TRADEMARKS.
2.1 Configuration and Activation.
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
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2.1.1 Seller shall configure and activate each Modem on behalf of
Buyer. Buyer shall provide shipping, configuration and activation instructions
in writing, by electronic transmission or any other mode of communication as set
forth in Section 13.11, to Seller for each Modem to be shipped on behalf of
Buyer. In addition to such other amounts as may be due hereunder, Buyer shall
pay Seller a fee equal to $8.00 for each Modem unit activated. Seller shall
deliver a monthly invoices to Buyer stating the aggregate activation fees due
and payable in connection with the activation of the units. Buyer shall pay such
fee in full, in cash, within thirty (30) days following the delivery date of
such invoice to Buyer.
2.1.2 The parties agree that all Modem units shipped to end-users
on behalf of Buyer shall be activated by Seller in accordance with this Section
2 and in consideration of the fee set forth in Section 2.1.1 hereof. In
activating the Modems, Seller shall undertake the following steps:
- Unpack Minstrel Cradle
- Plug into AC power source
- Attach pre-configured Palm test unit
- Run "Modem Manager" software
- Program Modem parameters and confirm
registration
- Send Test Packet
- Repackage Minstrel in retain box, including
activation/IP documentation
2.1.3 Each Modem shall be shipped to an end-user on behalf of
Buyer with a joint branding configuration consisting of the word "Novatel
Wireless" on the back of the Modem and such name as may be designated by Buyer
in writing, by electronic transmission or any other mode of communication as set
forth in Section 13.11 on the front of the Modem. Such branding configuration
shall extend to the Modem, user documentation and retail packaging. All Modems
will be packaged according to standards of trade generally applicable to similar
products shipped on a global basis.
2.2 Seller's Trademarks. Buyer shall not use the trademark "Novatel" or
"Novatel Wireless" or any other trademark owned or used by Seller or any xxxx
confusingly similar thereto without the prior written consent of Seller in each.
2.2.1 Buyer acknowledges Seller's sole ownership and exclusive
right, title and interest in and to the use of each of its trademarks, and that
any use of any of the trademarks of Seller will inure solely to the benefit of
Seller. Buyer shall not at any time, either during the term hereof or at any
time thereafter, directly contest, or aid others in contesting, or do anything
which might impair the validity of, any or all of Seller's trademarks or the
exclusive ownership thereof by Seller. Buyer shall not acquire any right to or
under any of Seller's trademarks. If any such rights should become vested in
Buyer by operation of law or otherwise, Buyer agrees it will immediately assign
any and all such rights to Seller. Nothing contained herein in any way limit
Seller's rights under its patents or licensing agreements nor grant Buyer any
rights under such patents or licensing agreements.
2.3 Buyer's Trademarks.
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Commission. Confidential treatment has been requested with respect to the
omitted portions.
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2.3.1 Seller shall use the trademarks of Buyer only on or in
connection with the terms of Section 2.1 hereof and shall not use any marks
confusingly similar to Buyer's trademarks on any other goods.
2.3.2 Seller acknowledges Buyer's sole ownership and exclusive
right, title and interest in and to the use of each of its trademarks, and that
any use of any of the trademarks of Buyer will inure solely to the benefit of
Buyer. Seller shall not at any time, either during the term hereof or at any
time thereafter, directly contest, or aid others in contesting, or do anything
which might impair the validity of, any or all of Buyer's trademarks or the
exclusive ownership thereof by Buyer. Seller shall not acquire any right to or
under any of Buyer's trademarks. If any such rights should become vested in
Seller by operation of law or otherwise, Seller agrees it will immediately
assign any and all such rights to Buyer. Nothing contained herein in any way
limit Buyer's rights under its patents or licensing agreements nor grant Seller
any rights under such patents or licensing agreements.
3. KNOW-HOW AND SUPPORT.
Seller shall provide Level II and Level III Technical Support (as
described in Annex C), and training to Buyer's designated service technicians to
enable Buyer to provide Level I Support and engineering support at Buyer's
facilities to enable Buyer to support the Modems, including the details of modem
functionality and design required for detection and correction of bugs or
failures . The parties hereto acknowledge and agree that Seller shall not
provide direct end-user support to any end-user on its own behalf or on behalf
of Buyer (Level I Technical Support). Seller will provide technical support
during the term of this Agreement in accordance with the terms of this Agreement
for so long as Buyer does not request any change in Seller's specifications of
the Modems as set forth in Annex D (the "Product Specifications").
4. AUDIT.
During the term of this Agreement, Seller shall maintain separate,
complete and accurate accounting records, in a form in accordance with generally
accepted accounting principles, to substantiate Seller's invoices hereunder.
Buyer, or any other person designated by it, reserves the right during the term
of this Agreement to audit and review, with reasonable notice to Seller,
Seller's books and records pertaining to such invoices to substantiate the
invoices delivered in connection with this Agreement. Seller shall preserve such
books and records for this purpose for a period of seven (7) years from the
receipt of last payment from Buyer. Buyer shall have the right to visit the
Novatel Distribution Facility to take a physical inventory of Modems that have
been delivered in accordance with Section 1.7.
5. REPRESENTATION AND WARRANTY.
Seller represents and warrants that no Federal Trade Commission
certification of CDPD carrier certification is required for the Modems. If
either certification becomes necessary for the sale of the Modems, Seller shall
immediately stop delivery of the Modems to the Novatel Distribution Facility.
Seller shall make the necessary changes to certify the Modems and all previously
delivered Modems shall be retrofitted to meet the certified configuration.
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6. INSURANCE.
Seller shall maintain sufficient general liability insurance for the
Novatel Distribution Facility to cover the Modems stored at the site.
7. TERM; TERMINATION; RIGHTS AND OBLIGATIONS UPON TERMINATION.
7.1 Except as otherwise provided for herein, the term of this Agreement
shall be for the period commencing on the Effective Date and ending on April 1,
2000, unless terminated earlier by either party pursuant to the provisions of
this Section 7 or extended by mutual written agreement of the parties.
7.2 Notwithstanding the foregoing, the following provisions shall
continue in effect after termination of this Agreement in accordance with their
terms:
(a) All payment provisions, and any payment due at the
time of termination shall be paid in accordance with the terms of this
Agreement.
(b) All warranties specified in the Agreement.
(c) All Patent Indemnity obligations.
(d) Section 1.14 (Additional Supply).
(e) Sections 2.2 and 2.3 (Trademarks).
(f) Section 7.6 (Commitment Termination Event).
(g) Section 11.3 (Spare Parts).
(h) Sections 13.l and 13.2 (Confidentiality and
Advertising).
(i) Section 13.3 (Confidential Information).
(j) Section 13.8 (Applicable Law), which shall govern any
dispute between the parties under the Agreement that may subsequently arise.
7.3 Buyer's Right to Terminate. Buyer shall have the right, by providing
Seller with thirty (30) days' prior written notice, to terminate this Agreement
upon the occurrence of any of the following events, any one of which shall be
considered a "Seller Default:"
(a) Seller discontinues the Modems;
(b) Seller is adjudged bankrupt;
(c) Seller files a voluntary petition in bankruptcy or
liquidation or for the appointment of a receiver;
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(d) Filing of an involuntary petition to have Seller
declared bankrupt, or subject to receivership, provided that such petition is
not vacated or set aside within ninety (90) days from the date of filing;
(e) The execution by Seller of any assignment for the
benefit of creditors; or
(f) Seller breaches any material provision of this
Agreement and fails to cure such material breach within thirty (30) days from
receipt of written notice describing the breach.
7.4 Seller's Right to Terminate. Seller shall have the right, by
providing Buyer with written notice, to immediately terminate this Agreement
upon the occurrence of any of the following events, any one of which shall be
considered a "Buyer Default:"
(a) Buyer fails to make payments as provided in this
Agreement, unless such failure is cured within thirty (30) days from receipt of
written demand for such payment. Any late payments shall bear interest at the
annual rate of LIBOR plus 2%;
(b) Buyer is adjudged bankrupt;
(c) Buyer files a voluntary petition in bankruptcy or
liquidation or for the appointment of a receiver;
(d) Filing of an involuntary petition to have Buyer
declared bankrupt, or subject to receivership, provided that such petition is
not vacated or set aside within ninety (90) days from the date of filing;
(e) The execution by Buyer of any assignment for the
benefit of creditors; or
(f) Buyer breaches any material provision of this
Agreement and fails to cure such material breach within thirty (30) days from
receipt of written notice describing the breach.
7.5 Remedy Upon Seller Default. In the event that this Agreement is
terminated pursuant to Section 7.3 above, Buyer shall have the right to exercise
any and all rights surviving such termination pursuant to Section 7.2.
7.6 Commitment Termination Event. In the event of a Commitment
Termination Event, Buyer shall, as soon as practicable and in no event later
than five (5) days after the occurrence of such Commitment Termination Event,
pay Seller, in cash an amount equal to twenty percent (20%) of the aggregate
amount which otherwise would have been owed to Seller under this Agreement had
the Commitment Termination Event not occurred and Seller fully performed its
obligations under this Agreement less any pre-payment made for undelivered
Modems in accordance with Section 1.2. "Commitment Termination Event" means (i)
the failure by Buyer to purchase Modems in the amounts set forth in Section 1.1
("Sale and Purchase") hereof pursuant to the schedule of payment and delivery
set forth in Annex A (giving effect to any adjustments made in accordance with
Section 1.3 hereof); (ii) termination of this Agreement by Buyer for any reason
whatsoever other than pursuant to a breach by Seller of the provisions of
Section 8.1 hereof (Product Warranty) or failure by Seller to make the scheduled
deliveries in accordance with Section 1.7 hereof; (iii) any breach by Buyer
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
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of any representation, covenant or agreement on the part of Buyer set forth in
this Agreement or (iv) Buyer's use of another CDPD modem vendor for the Palm III
and Palm V during the term of this Agreement.
8. PRODUCT WARRANTY.
8.1 Product Warranty. The following Sections 8.l through 8.6 refer only
to Product Warranty.
(a) Seller warrants (i) that all Modems, including
components thereof, to be delivered hereunder, will conform to the Product
Specifications, be free from defects in material and workmanship and (ii) that
the "Modem Manager" software installed pursuant to Section 2.1 hereof shall be
free from errors which materially affect performance. The foregoing warranty is
given provided Buyer gives written notice of any defect, deficiency or
non-conformance of any Modem, or parts thereof, within: (i) twelve (12) months
from the shipment date to the end-user, or (ii) fifteen (15) months from the
date the Modems are delivered to Buyer at the Novatel Distribution Facility (the
"Warranty Period"). Seller shall, at no cost to Buyer, and within the
"Turn-Around Time" as defined in Section 8.2(a) below, repair or furnish
replacements for all such defective, deficient or non-conforming items or parts
thereof; provided, however, the Modems have been maintained in accordance with
Seller's specifications and have not been modified by any party other than
Seller except as expressly permitted by Seller in writing.
(b) The foregoing warranties do not extend to:
(i) defects, errors or nonconformities in a Modem
due to accident, abuse, misuse or negligent use of such Modem or use in other
than a normal and customary manner, environmental conditions not conforming to
Seller's specifications, or failure to follow prescribed operating maintenance
procedures;
(ii) defects, errors or nonconformities in the
Modem due to modifications, alterations, additions or changes in the Modem not
made or authorized to be made by Seller in writing;
(iii) normal wear and tear; or
(iv) damage caused by force of nature or act of any
third party.
8.2 Turn-Around Time.
(a) "Turn-Around Time" for the purposes of this Section 8
means fifteen (15) days from the date on which such defective item, or defective
or non-conforming part thereof, is furnished to Seller, for repair or
replacement until the date on which such replaced or repaired item is returned
to Buyer.
(b) Seller shall bear air shipment costs of the deficient,
repaired or replaced item as well as the risk or loss or damage to the item or
its replacement throughout the period between the shipment of the defective item
and the receipt of the repaired or replaced
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item. Repaired or replaced items shall be subject to the warranty provided on
the original Modem only (the time during which Seller repairs or replaces the
item shall not be considered as part of the Warranty Period), in accordance with
this Section 8. Notwithstanding the foregoing, Buyer shall bear all expenses if
no fault on the part of Seller was found in the items returned for repair or
replacement.
8.3 Extended Warranty. In the event Buyer elects to offer an extended
warranty, Buyer may, up to one (1) year after an order is received from an
end-user, extend the Warranty Period at a cost of $5 per Modem per year.
Discounts in the cost of such extension of warranty may be negotiated between
Seller and Buyer, based on the number of the Modems on which Buyer elects to
extend the Warranty Period.
8.4 Inspection; Acceptance. This warranty shall survive inspection,
acceptance or payments by Buyer and is provided for the sole and exclusive
benefit of Buyer and shall not extend to any third party, including without
limitation, any reseller or end-user.
8.5 Exclusive Remedy. The warranty granted in this Section 8 sets forth
Buyer's sole and exclusive remedy and Seller's sole and exclusive liability for
any claim of warranty for any product delivered by Seller.
8.6 No Authority. Buyer acknowledges that it is not authorized to make
any warranty or representation on behalf of Seller or its suppliers regarding
the Modems, whether express or implied, other than the warranty terms set forth
in this Section 8.
8.7 No Other Warranty. THE WARRANTY MADE UNDER THIS SECTION 8 IS
EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
9. PATENT INDEMNITY.
9.1 Patent Indemnity. Seller shall, at its sole cost and expense,
indemnify, defend and hold Buyer harmless from and against any claims, demands,
liability or suit, including costs and expenses, for or by reason of any actual
or alleged infringement of any third party patent, trademark or copyright
resulting from the design, development, manufacture, use, sale or disposal of
any Modem or Deliverable Items furnished hereunder. Buyer shall promptly notify
Seller in writing of any such infringement claim after Buyer becomes aware of
such claim, and shall provide Seller with such assistance and cooperation as
Seller may reasonably request from time to time in connection with the defense
thereof. In the event Buyer determines that Seller is unable or unwilling to
defend the claim, Buyer may assume control of the defense of any infringement
claim; provided that under such circumstances Buyer shall bear all costs of such
defense (but not of any consequent judgment or liability). If any settlement
requires an affirmative obligation of, results in any ongoing liability to, or
prejudices or detrimentally impacts in any way, Buyer, then such settlement
shall require Buyer's written consent.
9.2 Right to Substitute. Should Buyer be prevented as a result of such
claims, actions or suits regarding infringement, from utilizing the Modems or
Deliverable Items in
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Commission. Confidential treatment has been requested with respect to the
omitted portions.
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question, or if Seller believes such a claim is likely, then Seller shall, at
Seller's expense, either substitute an equivalent non-infringing item, or modify
the item so that same no longer infringes but remains equivalent, or obtain (at
its own expense) for Buyer the right to continue use of the item in accordance
with the terms of this Agreement.
9.3 Procedure. Seller's obligation to indemnify will be subject to the
following terms and conditions:
(a) The obligation will arise only if Seller receives
prompt written notice of the infringement claim.
(b) The obligation will not cover any claim that the
Modems infringe any third party's rights only as used in combination with any
software or hardware not supplied by Seller, if that claim could have been
avoided by the use of the Modems in combination with equivalent other available
software or hardware.
10. LIMITATION OF LIABILITY.
SELLER SHALL NOT BE LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL,
INDIRECT OR PUNITIVE DAMAGES (INCLUDING LOST REVENUES OR PROFITS) OF ANY KIND
DUE TO ANY CAUSE, REGARDLESS OF WHETHER SELLER HAS BEEN ADVISED OR IS AWARE OF
THE POSSIBILITY OF SUCH DAMAGES.
11. POST WARRANTY OBLIGATIONS.
11.1 Support. Seller agrees that for the term of this Agreement, plus
the Warranty Period, it will retain a staff of technical personnel in connection
with the design, manufacture and trouble-shooting of the Modems and Deliverable
Items supplied under this Agreement. This staff will be available to render
technical assistance to Buyer upon Buyer's reasonable request regarding the
Modems or a Deliverable Item and will provide such assistance as may be
reasonably required to support systems integration, system debug, basic
parameter changes in the Modems, modification of the Modems, upgrades in the
Modems, and customer and production support in accordance with the provisions of
Section 6.
11.2 Repair. During the term of this Agreement, in the event that Buyer
requires repair of the Modems, or any part thereof, after the date of completion
of Seller's warranty obligations under this Agreement, Seller will perform such
repairs on terms at and prices in accordance with its standard support and
maintenance fees, or at a fair and reasonable prices if standard fees have not
been set.
11.3 Spare Parts. Seller undertakes, for a period of five years after
the completion Seller's warranty obligations under this Agreement, to supply
Buyer with spare parts for the Modems and the Deliverable Items as Buyer may
reasonably request from time to time, at prices that are fair and reasonable,
considering prevailing market prices at the time said items are ordered.
11
12
12. FORCE MAJEURE.
12.1 Events of Force Majeure. Neither party shall be liable for a
default or delay in the performance under this Agreement if and to the extent
such default or delay is caused, directly or indirectly, by (i) fire, flood,
natural disturbances or other acts of God; (ii) any outbreak or escalation of
hostilities, war, civil commotion, riot or insurrection; (iii) any act or
omission of the other party or any governmental authority or (iv) any other
similar causes beyond the control of such party that arise without the fault or
negligence of such party. Any delay resulting from such events shall be referred
to herein as a "Force Majeure," shall not constitute a default by such party
under this Agreement and shall entitle the delayed party to a corresponding
extension of its delayed obligation. The party whose performance will be delayed
by such events will use its best efforts to notify the other party within three
(3) days after delayed party becomes aware of such event, as well as the
cessation thereof.
12.2 Subcontractor's Default. Any delays in performance by Seller's
subcontractors or suppliers shall be deemed excusable delays with respect to
Seller only if (i) such subcontractor's non-performance is caused by Force
Majeure and (ii) Seller could not have obtained the supplies or services of such
subcontractor from other sources in sufficient time and on customary terms to
prevent interruption of Seller's performance of this Agreement.
12.3 Termination.
(a) If Force Majeure results in a delay to make any
scheduled delivery under this Agreement by more than sixty (60) days, Buyer may
terminate this Agreement in whole or in part and such termination shall not be
deemed a breach of this Agreement.
(b) If Buyer does not terminate within such sixty (60) day
period, and the Force Majeure prevails for further forty-five (45) days, Buyer
may terminate this Agreement, but it shall have no right to claim damages from
Seller for breach of the Agreement. The foregoing expresses Buyer's sole remedy
and Seller's sole liability for such termination resulting from Force Majeure.
13. MISCELLANEOUS.
13.1 Confidentiality of Agreement; Permitted Disclosures. Throughout the
term of this Agreement, each party agrees that the terms of this Agreement shall
be kept confidential. No disclosure of the identity of Buyer's customers or
end-users or other information concerning this Agreement shall be released by
Seller without the prior written consent of Buyer except (i) in Seller's or
Buyer's communication with its respective shareholders, investors or potential
investors, and (ii) as to such advertising or other marketing in which Seller
may engage in the ordinary course of business.
13.2 Required Disclosures; Advertising. Notwithstanding Section 13.1
above:
(a) Each party may divulge information hereunder as is
reasonably required for the performance of the Agreement or as is required by
law; and
12
13
(b) Each party shall have the right to list the other
party as a customer or supplier (as the case may be) in its advertising
material.
13.3 Confidential Information.
(a) In performance of this Agreement, it may be necessary
or desirable for either party to disclose to the other certain business and/or
technical information which the disclosing party regards as proprietary and
confidential (the "Confidential Information"). Any Confidential Information
disclosed shall be reduced to writing and provided to the other party within
twenty (20) days after it was first disclosed. Each of the parties hereto agree
that it shall (i) not make use of or disclose the Confidential Information for
any purpose whatsoever at any time, other than for the purposes of this
Agreement and (ii) limit access to the Confidential Information of the other
party to its employees who shall be advised of and agree to be subject to the
terms of this Section 13.3.
(b) Nothing herein shall be construed as granting to
either party, by implication, estoppel or otherwise, any right, title or
interest in, or any license under, any patent or Confidential Information.
(c) Items shall not be considered Confidential Information
if such information was (i) available to the public other than by a breach of an
agreement with the disclosing party; (ii) rightfully received from a third party
not in breach of any obligation of confidentiality; (iii) independently
developed by one party without access to the Confidential Information of the
other; (iv) known to the recipient at the time of disclosure; or (v) produced in
compliance with applicable law or a court order, provided that other party is
given reasonable notice of such law or order and an opportunity to attempt to
preclude or limit such production.
13.4 Severability. If any provision of this Agreement shall be held
illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.
13.5 Assignment. Neither Seller nor Buyer may assign this Agreement in
whole or in part, or any rights hereunder without the prior written consent of
the other, except to (i) a wholly-owned subsidiary of such party, (ii) a
successor in interest of all or substantially all of such party's assets or
business or (iii) a bank trust company or other financial institution for money
due or to become due under this Agreement. In the event of any assignment, the
assigning party shall promptly supply the other party with two (2) copies of
such assignment and, in the instance of an assignment pursuant to this Section
13.5, shall indicate on each invoice to whom payment is to be made. In the event
of any assignment pursuant to this Section 13.5, the assigning party also shall
provide a written guarantee by such party of the obligations assigned to such
party's subsidiary.
13.6 Relations of the Parties. Nothing in this Agreement shall be
construed as creating relationship of principal and agent or of employer and
employee between the parties. Furthermore, nothing in this Agreement is intended
to constitute, create, give effect to or otherwise contemplate a joint venture,
partnership or formal business entity of any kind. The rights and obligations of
the parties with respect to this Agreement shall not be construed as
13
14
providing for sharing of profits or losses arising out of the effort of either
of the parties. The parties shall not incur any liability on behalf of the
other.
13.7 Waiver. No waiver by either Seller or Buyer of any breach of this
Agreement shall be held to be a waiver of any other subsequent breach. No waiver
or time extension given by either Seller or Buyer shall have effect unless made
expressly and in writing.
13.8 Applicable Law. This Agreement and all matters regarding the
interpretation and/or enforcement hereof, shall be governed exclusively by the
law of the State of California without reference to its choice of law rules.
13.9 Arbitration. Any dispute arising out of or in connection with this
Agreement, including any question regarding its breach, validity or termination,
or the transactions contemplated hereby, including any dispute based in whole or
in part on tort or other non-contractual principles of law, shall be fully and
finally resolved and settled by arbitration under the Rules of the American
Arbitration Association for Commercial Disputes (the "Rules") (as modified by
this Section 13.9). The number of arbitrators shall be one (1) if all parties to
the dispute agree on the arbitrator. If there is a disagreement on selection of
a sole arbitrator, the number of arbitrators then shall be three (3), with the
arbitrators to be appointed in accordance with the Rules from a panel of
arbitrators in San Diego, California. The place of arbitration shall be San
Diego, California or such other place as the parties to the dispute shall
mutually agree upon in writing. The arbitration proceedings shall state the
reasons for the award. Judgment upon the award rendered by the arbitrator or
arbitrators may be entered in any court having jurisdiction thereof, and shall
be binding on the parties hereto. The costs of arbitration, including reasonable
legal fees and costs, shall be borne by either or both of the parties in
whatever proportion as the arbitrator or arbitrators may award. This Section
13.9 shall not apply to actions seeking enforcement of this Agreement to
arbitrate or to enforce Section 2.2 ("Seller's Trademarks"), Section 2.3
("Buyer's Trademarks"), Section 13.1 ("Confidentiality") or Section 13.3
("Confidential Information") hereof or with respect to any request for
provisional or interim relief brought prior to the appointment of an arbitrator.
The dispute resolution proceedings contemplated by this provision shall
be as confidential and private as permitted by law. To that end, the parties
shall not disclose the existence, content or results of any claims hereunder or
proceedings conducted in accordance with this provision, and materials submitted
in connection with such proceedings shall not be admissible in any other
proceeding; provided, however, that this confidentiality provision shall not
prevent a petition to vacate or enforce an arbitration award, and shall not bar
disclosures required by law. The parties hereto agree that any decision or award
resulting from proceedings in accordance with this dispute resolution provision
shall have no preclusive effect in any other matter involving third parties.
13.10 Entire Agreement. This Agreement constitutes the entire agreement
between the parties, supersedes and cancels any previous understandings or
agreements between all the parties relating to the provisions hereof, and
expresses the complete and final understanding of the parties in respect
thereto. This Agreement may not be changed, modified, amended or supplemented
except by a written instrument signed by the parties.
14
15
13.11 Notices. Any notice contemplated by or made pursuant to this
Agreement shall be in writing and shall be deemed delivered on the date of
delivery if delivered personally or by commercial overnight courier with
tracking capabilities or by fax, or five (5) days after mailing if placed in the
mail, postage prepaid, registered or certified mail, return receipt requested,
addressed to Buyer or Seller (as the case may be) as follows:
Seller: Novatel Wireless, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Chief Executive Officer
Fax: (000) 000-0000
Buyer: OpenSky Corporation
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attn: Chief Executive Officer
Fax: (000) 000-0000
or such other address as each party may designate for itself by notice given in
accordance with this Section 13.11.
13.12 Headings. The headings in this Agreement are for convenience only
and shall not be regarded in the interpretation hereof.
[Signature Page Follows]
15
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the Effective Date written above.
SELLER: NOVATEL WIRELESS, INC.
By: /s/ XXXXX XXXX
-----------------------------------------
Name: Xxxxx Xxxx
Title: Vice President -- Sales/Marketing
BUYER: OPENSKY CORPORATION
By: /s/ XXXXXXX XXXXXX
-----------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President --
Business Development
17
Annex A
SCHEDULE OF PAYMENT AND DELIVERY
***
** Buyer shall pre-pay in full for any forecasted bi-monthly quantity 30 days
prior to delivery into the Novatel Distribution Center in San Diego California
subject to Sections 1.2 and 1.4 of this Agreement.
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
18
ANNEX B
ACCESSORY PRICING
OPENSKY COST** MSRP
--------------------------------------------------------------------
--------------------------------------------------------------------
Battery Pack $21.90 $39.99
--------------------------------------------------------------------
AC Adaptor $9.77 $19.99
--------------------------------------------------------------------
Car Adaptor $30.62 $45.99
--------------------------------------------------------------------
Stylus 3 Pack $5.99 $9.99
--------------------------------------------------------------------
***
ANNEX C
TECHNICAL SUPPORT
Technical Support for the Minstrel III and Minstrel V products delivered to
OpenSky customers will be managed via a three-tier Technical Support
infrastructure and process as follows:
LEVEL I TECHNICAL SUPPORT
Level I Technical Support will be provided by OpenSky to their direct
and indirect customers. Level I Support is defined as calls* originating
from OpenSky customers, resellers or distributors regarding Palm
Products, OpenSky Service, Wireless Service Providers, Minstrel III or
Minstrel V products including but not limited to pre and post sale
inquiries concerning the basic operation of the hardware and software,
functionality, interoperability and capabilities of those products and
services.
For calls regarding the Minstrel III and Minstrel V products, OpenSky
will make every attempt to answer customer questions and resolve issues
using available tools, documentation, test equipment and other materials
used to support the Minstrel III and Minstrel V products (see training
section below). If the customer question/issue regarding the Minstrel
III or Minstrel V product cannot be resolved by OpenSky support
personnel to the customers' satisfaction, the issue will be forwarded to
Novatel Wireless Level II Technical Support for further investigation
and resolution.
*Calls include phone calls, e-mail, web-based inquiries, faxes and
letters.
LEVEL II TECHNICAL SUPPORT
Level II Technical Support will be provided by Novatel Wireless support
staff directly to OpenSky Level I Support personnel to assist in the
resolution of open customer issues that have not been resolved to the
satisfaction of OpenSky customers during a Level I Support call. OpenSky
will have direct access to designated support staff within the Novatel
Wireless support organization for this purpose. A direct line of
communication between the two organizations will be established and
Novatel Wireless support technicians will be available during normal
OpenSky technical support operation hours to assist in
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
19
resolution of customer problems. Novatel Wireless support engineering
will work directly with OpenSky support staff to resolve issues and
answer questions, this may require OpenSky support staff to gather
additional information and provide system information or test results
back to Novatel support staff to aid in the definition and resolution of
the problem. It will be OpenSky support staff's responsibility to
communicate directly with the end-user customer. Problems that are not
resolved within three business days or problems that are flagged as
sensitive/mission critical will be escalated to Level III Technical
Support for final resolution.
LEVEL III TECHNICAL SUPPORT (ESCALATION)
Level III Technical Support will be provided by the Novatel Wireless
support and system engineering staff to resolve issues that cannot be
satisfactorily resolved by Level I and Level II Support personnel. Level
III Technical Support will handle all OpenSky product escalations issues
including unresolved support calls and will work directly with Novatel
Wireless engineering staff to resolve those issues.
TECHNICAL SUPPORT TRAINING
Technical Support training and documentation for the Minstrel III and
Minstrel V will be provided to OpenSky Level I Support staff by Novatel
Wireless. OpenSky support staff will receive training on the general
use, functionality, operation and compatibility of the Minstrel III and
Minstrel V products. In addition, all support related documentation,
training materials, notes, FAQ's, and web based support materials will
be made available to OpenSky for their use in supporting these products.
20
FIRST AMENDMENT TO SUPPLY AGREEMENT
This First Amendment to Supply Agreement (this "Amendment") is made as
of October ___, 1999 by and among Novatel Wireless, Inc., a Delaware corporation
("Novatel") and OpenSky Corporation, a Delaware corporation ("OpenSky").
WHEREAS, Novatel and OpenSky entered into that certain Supply Agreement,
dated and effective as of August 12, 1999 (the "Supply Agreement"); and
WHEREAS, pursuant to Section 13.10 of the Supply Agreement, Novatel and
OpenSky desire to amend certain terms and provisions of the Supply Agreement;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties hereto agree as follows (all capitalized
terms not otherwise defined herein shall have the meanings therefor set forth in
the Supply Agreement):
1. Pursuant to Section 1.3, OpenSky hereby changes the Mix and delivery
schedule in accordance with Exhibit A hereto.
2. Section 1.2 is amended in its entirety to read as follows:
"1.2 Payments. Buyer shall make payments due to
Seller for Deliverable Items either directly to Seller or to such bank
as Seller may designate in writing. Payments for Modems shall be due and
payable in full, in cash, by Buyer thirty (30) days prior to each
scheduled delivery of Modems into Seller's Distribution Facility in San
Diego, California (the "Novatel Distribution Facility") with respect to
any delivery scheduled in Annex A to be made on or before December 31,
1999. Payments for Modems shall be due and payable in full, in cash, by
Buyer within thirty (30) days following the date of each scheduled
delivery of Modems into the Novatel Distribution Facility with respect
to any delivery scheduled in Annex A to be made on or after January 1,
2000. Each delivery of specification compliant Modems in accordance with
Annex D for which a pre-payment by Buyer has been received may not be
canceled. Payments for Deliverable Items (other than Modems), shall be
due and payable in full, in cash, by Buyer within thirty (30) days
following the date of shipment to end-users on behalf of Buyer. For
purposes of this Agreement, "Deliverable Items" shall mean any item, or
parts thereof, that Seller is obligated to provide under this Agreement
including but not limited to Modems, documentation, know-how and
information. Payment for shipping and configuration and activation shall
be due and payable in full, in cash, as set forth in Sections 1.8 and
2.1, respectively."
3. Section 1.7 is amended in its entirety to read as follows:
"1.7 Delivery and Title. The Modems sold to Buyer
shall be delivered to the Novatel Distribution Facility in accordance to
the delivery schedule set forth in Annex A. Title and risk of loss in
the Modems shall transfer to Buyer FOB Manufacturer, as determined by
Seller. Seller shall warehouse the inventory on behalf of Buyer and ship
to end-users the Modems on behalf of Buyer from the Novatel Distribution
Facility in accordance with Section 1.8 below. Subject to Section 8
below, all Modems delivered to Buyer shall be non-returnable."
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4. Section 1.8.1 is amended by deleting the date "March 1, 2000" in the
first sentence and replacing it with the date "May 1, 2000", so that the
Shipping Period ends on May 1, 2000.
5. Section 7.1 is amended by deleting the date "April 1, 2000" in the
first sentence and replacing it with the date "May 1, 2000", so that the term of
the Supply Agreement ends on May 1, 2000.
6. In all other respects, the Supply Agreement, as herein amended, shall
remain in full force and effect, including Section 1.3 of the Supply Agreement
without giving effect to this Amendment. Subject to the foregoing, to the extent
that any provisions of the Supply Agreement and any provisions of this Amendment
are in conflict, the provisions of this Amendment shall govern. In the event any
one or more of the provisions contained in this Amendment or any instrument
entered into in connection herewith is for any reason held to be invalid or
unenforceable in any respect, that event shall not affect any other provision of
this Amendment or such other instrument.
7. This Amendment shall be governed by, and construed and enforced in
accordance with, the substantive laws of the State of California, without regard
to its principles of conflicts of laws.
8. This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, legal
representatives and heirs.
9. This Amendment may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which take together shall
constitute one and the same instrument.
22
IN WITNESS WHEREOF, this Amendment has been duly executed as of the date
first written above.
NOVATEL WIRELESS, INC.
/s/
--------------------------------
By:
-----------------------------
Its:
----------------------------
OPENSKY CORPORATION
/s/
--------------------------------
By:
-----------------------------
Its:
----------------------------
23
EXHIBIT A
SCHEDULE OF PAYMENT AND DELIVERY
***
** Buyer shall pre-pay in full for any forecasted bi-monthly
quantity 30 days prior to delivery into the Novatel Distribution Facility in
Calgary, Canada with respect to any shipments scheduled for delivery on or
before December 31, 1999 in accordance with Sections 1.2 and 1.4 of this
Agreement.
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
24
ANNEX D
PRODUCT SPECIFICATIONS
DESCRIPTION
***
DIMENSIONS
***
MODEM FEATURES
***
BUILT-IN FEATURES
***
POWER SUPPLY
***
TEMPERATURES
***
POWER REQUIREMENTS
***
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
