Exhibit 10.64
OPERATOR TO OPERATOR
SATELLITE SERVICES AGREEMENT
BETWEEN
DBS INDUSTRIES, INC., NEWSTAR LTD.,
AND
IRIDIUM SATELLITE LLC
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TABLE OF CONTENTS
1. Definitions...............................................................3
2. Usage of Iridium Capacity.................................................4
3. Load Curtailment Service..................................................4
4. Additional Services and Common Solutions..................................6
5. Service Pricing...........................................................7
6. Service Standards and Ongoing support.....................................8
7. Profit-sharing and Exclusivity Period for Load Curtailment Service........8
8. Term......................................................................9
9. Confidentiality..........................................................10
10. Joint Marketing, Publicity, and Trademarks...............................10
11. Indemnification and Limit of Liability...................................10
12. Miscellaneous............................................................11
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THIS AGREEMENT is made and entered into as of May 24, 2001 by and between
Iridium Satellite , LLC, a Delaware limited liability company having a principal
place of business at 00000 Xxxxxxxxx Xxxxxxx, Xxxxxxxx XX 00000 ("Iridium") and
DBS Industries, Inc., a Delaware corporation having a principal place of
business at 000 Xxxxxxxxx Xxxxxxx, Xxxxx 000X, Xxxx Xxxxxx, XX 00000 ("DBSI")
and Newstar Ltd., a Bermuda subsidiary corporation of DBSI (together, "DBSI").
WHEREAS,
Iridium is a satellite communications system operator and the beneficial
owner of a Non-geostationary Mobile Satellite Service license above 1 ghz
issued by the Federal Communications Commission of the United States ("
FCC"), that uses the international satellite L-band for primarily real-time
telephony; and
DBSI, by and through DBSI's subsidiary E-SAT, Inc., is a satellite operator
and the holder of a Non-Voice, Non-geostationary Mobile Satellite Service
license below 1 ghz issued by the Federal Communications Commission of the
United States (" FCC"), that uses the international satellite VHF band for
store-and-forward data applications in short messaging services (SMS)
targeted to the energy industry; and
DBSI has identified a potential business application to address the
electricity crisis in California, and other parts of the United States, and
other potential applications that cannot currently be deployed via E-SAT.
The initial application may utilize Iridium satellite capacity, capability
and services in the provision of load management and load curtailment
services. DBSI and Iridium intend to perform these applications using DBSI
and Iridium technology; and
Now, therefore, the parties agree as follows:
1. Definitions
1.1 "Iridium System" means the telecommunications system operated by Iridium. As
of the date of this Agreement, this system includes a U.S. satellite network and
operations center, approximately 66 operational low- earth-orbiting spacecraft,
as well as terrestrial ground and support infrastructure. For purposes of this
Agreement, the Iridium System includes future replacements, enhancements and
additions, both terrestrial- and space-based.
1.2 "Load Curtailment Service" means direct telecommunications to
electric-utilizing devices to turn on and off air conditioning units for the
purpose of reducing electricity usage using the Iridium System.
1.3 "Additional Services" are defined in Paragraph 4.1 of this Agreement.
1.4 "Services" mean both the Load Curtailment Service and any Additional
Services.
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2. Usage of Iridium Capacity
2.1 Iridium agrees to make capacity on the Iridium System available to DBSI for
usage in Services. The initial capacity is estimated in the Schedule attached as
Attachment A at approximately 5000 telephone numbers and 15,000 calls per day.
Iridium will make available capacity at the service pricing detailed in Section
5 sufficient to meet DBSI's business requirements beyond the requirements listed
in Attachment A, provided that DBSI gives Iridium sufficient notice of any
increase greater than 100% of those requirements, and provided that Iridium has
unallocated capacity available that in its reasonable judgment could provide the
required service.
2.2 With respect to Iridium's reserving 5000 model 9500 telephones for DBSI
hereunder, should DBSI purchase less than 2500 of these telephones during 2001,
then DBSI agrees that the remaining phones will be freed up for use by other
clients.
3. Load Curtailment Service
3.1 During 2001, it is projected that DBSI will provide Load Curtailment
Service. This will utilize the Iridium telephone unit (model 9500), located on
the roof of approximately 5000 building sites throughout California (see Figure
I). These Iridium phones will be used to initiate a control signal to interrupt
the thermostat control system of air conditioning units to reduce electric load
during peak usage periods (estimated at 12-8 pm weekdays). The cumulative
reduction in electrical load could approximate 1100 megawatts. The Iridium
network would be utilized to place a currently expected average of 3 satellite
connections to each building, once per day, beginning during the summer months
of 2001. See Attachment A for projected rollout schedule as of the date of this
Agreement.
3.2 It is projected that this utilization of the Iridium System in this Load
Curtailment Service will not require the use of the public switched network to
reach the Iridium network. Both parties project that, provided that DBSI
develops the interface technology and software, service could be offered within
60 days of commencement of Iridium pre-service engineering support. Iridium
makes no representation that the Load Curtailment Service will operate as
contemplated to curtail and manage energy load.
3.3 Performance by DBSI and Iridium will be subject to applicable laws and any
required permits , including any Section 214 authorization that may be required
of DBSI by the Federal Communications Commission.
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FIGURE I.
The follow diagram provides an overview of the intended key system elements,
which are further detailed by number following the diagram:
[FLOW CHART OF LOAD CURTAILMENT PROGRAM]
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(1) Load Curtailment I/F and radio: The radio set for the initial 5000 units is
Iridium Satellite Series Motorola Model 9500 unit and will be supplied through
Iridium. The warranty for each unit is provided by Motorola per Attachment B.
The load curtailment mechanisms and all aspects of the interface will be
proprietary to and the responsibility of DBSI.
(2) Iridium satellite, earth station, network operations center, and call detail
records: All satellite and network operations (including any foreground
intellectual property developed by Iridium as a result of the activities
hereunder) are proprietary to and the responsibility of Iridium. Initial service
will be provided by the Iridium U.S. gateway earth station in Tempe, Arizona.
Call detail records will be transmitted daily on weekdays via Telnet to the DBSI
application CPU.
(3) DBSI application CPU: This computer including all database information and
application software will be proprietary to and the responsibility of DBSI. If
mutually agreed, the computer may be co-located and maintained in Iridium's
operations center in Tempe, Arizona under terms to be agreed upon.
(4) Load aggregator and billing: This service includes billing and collections,
load aggregation and curtailment, and customer service, and is the
responsibility of DBSI.
4. Additional Services and Common Solutions
4.1 "Additional Services" are any applications and services other than the Load
Curtailment Service provided by DBSI which utilize the Iridium system. Such
services will be available at the service pricing detailed in Section 5. The
parties intend to, but have no obligation to, explore potential synergies
between Iridium's real-time system and international satellite L-Band radio
frequencies, and DBSI's store-and-forward system and international satellite VHF
Band radio frequencies. Such services, may involve cost and service improvements
to the mutual benefits of both parties, e.g., utilization of the page/control
channel system for SMS. There is no obligation on the part of either party to
engage in engineering development efforts other than for Load Curtailment
Services.
4.2 If the parties agree that such implementations require development or
engineering work by Iridium and Iridium agrees to provide such work, the parties
will utilize a formal Statement of Work document which shall be signed by both
parties and serve as an amendment to this Agreement. Should Iridium desire to
charge DBSI for engineering support, Iridium will supply DBSI with a written
estimated budget in advance, and DBSI will reimburse Iridium for its mutually
agreed expenses in such budget including an up to 25% contingency of such
budget.
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5. Service Pricing
5.1 Service and support pricing elements follow for the Services:
5.1.1Pre-service engineering support: Equipment and subcontractor expenses
at cost to Iridium. Iridium internal expenses on time and materials
basis. Total cost not to exceed budget mutually agreed prior to
support start plus an up to 25% contingency of such budget. In order
to meet the service standards set forth in Section 6.1, this may
require additional data modems which would be included in such at DBSI
expense.
5.1.2Airtime and subscriber and handset fees for Load Curtailment Service
-
a) For the Load Curtailment Service during the Exclusivity Period
under Section 7 below, * per minute and $*/month/in service
unit);
b) Calls to test Services and to verify appropriate installation for
individual phones strictly for the purpose of implementing and
verifying services will be at no charge.
c) Per unit handset cost (Model 9500 set for the Load Curtailment
Service) - then current wholesale rates, which as of the date of
this agreement are $*/unit
5.1.3Airtime and subscriber and handset fees for Additional Services and
for the Load Curtailment Service on termination of the Exclusivity
Period under Section 7-
a) Iridium's normal wholesale charges for airtime and monthly
subscriber fees (which as of the date of this Agreement are $*
per minute and $*/month in service/unit); and
b) Calls to test Services and to verify appropriate installation for
individual phones strictly for the purpose of implementing and
verifying services will be at no charge.
c) Per unit handset cost - then current * rates
5.2 All amounts owed hereunder will be due and payable within 30 days of the
date the invoice is received, except that handset shall be paid on notice of
ready to ship. In the event payment is based upon accomplishment of pre-defined
milestones, written evidence supporting achievement of each milestone shall be
submitted along with the corresponding invoice.
[* Confidential portion has been omitted and filed separately with the
Commission.]
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6. Service Standards and Ongoing support
6.1 Iridium shall maintain a service standard to be met of:
o Availability of a real-time satellite network with at least one
operational satellite in view over the operating service territory
(for the Load Curtailment Service this is California) 24 hours a day,
7 days a week.
o At least P.01 traffic blockage, i.e., a maximum average of 1 blocked
call per 100 attempts
o Up to 5000 calls completed within 30 minutes, assuming sufficient
circuits as mutually agreed prior to commencement of service
Iridium shall report monthly on this performance.
6.2 Ongoing support will be as mutually agreed.
7. Profit-sharing and Exclusivity Period for Load Curtailment Service
7.1 As compensation for the services provided by Iridium during the Exclusivity
Period (as defined in Paragraph 7.4 below), DBSI will pay to Iridium * percent
(*%) of the "Profits," as defined herein, realized by DBSI resulting from the
provision of Load Curtailment Service using the Iridium System. "Profits" means
all revenue received by DBSI (either during or after the Exclusivity Period)
attributable to providing Load Curtailment Service using the Iridium System
during the Exclusivity Period, including any revenues from the standby
availability of the system during the Exclusivity Period, less "third-party
expenses." Revenues and expenses attributable to service development and
installation and purchase of phones and other equipment (for example, revenues
for engineering/development/installation work) are not included in the Profits
calculation. "Third-party expenses" means (i) payments to Iridium for
pre-service engineering support under Section 5.1.1 above and airtime charges
and subscriber fees under Section 5.1.2(a) above, (ii) payments to customers in
connection with the Load Curtailment Service, and (iii) other ordinary and
necessary expenses paid to nonaffiliated third parties. "Third-party expenses"
specifically excludes DBSI internal overhead, salaries, profit or similar
charges, as well as capital expenditures and depreciation, amortization, and
other noncash charges. Payments to Iridium will be made on a monthly basis
within 60 days of receipt of revenue, and third-party expenses will be
determined on an accrual basis. If third-party expenses have to be estimated,
DBSI will disclose the basis for the estimate and any reconciliation thereof
will be provided within 60 days of when the applicable estimated amounts are
determined.
[* Confidential portion has been omitted and filed separately with the
Commission.]
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7.2 In the event Iridium desires independent verification of these Profits,
Iridium may, no more than once in any twelve-month period, require at its own
expense to have DBSI's then current independent certified public accountant(s)
audit the DBSI's revenue and expenses for the relevant period and report the
results to all parties hereto. This shall be Iridium's exclusive auditing right
under this Agreement.
7.3 During the Exclusivity Period, Iridium itself will not in the United States
directly offer, or support third parties in the development of, Load Curtailment
Services. On its part, DBSI will not utilize any other real-time satellite
system in the United States for such applications.
7.4 This Section 7 has a term that may be less than the term of the Agreement.
The term of this Section 7 shall be referred to as the "Exclusivity Period".The
initial term of the Exclusivity Period will be twelve (12) months (subject to
adjustment by Iridium under Paragraph 7.5 below) and will thereafter continue
until terminated by either party on sixty (60) days notice. For the three year
period following termination of the Exclusivity Period of this Section and any
renewal thereof, DBSI will continue to pay to Iridium profit-sharing from usage
of the Load Curtailment Service by customers using the service at the time of
such termination. Profit-sharing percentages will not be * percent and instead
will be as follows -
o First 12 months following termination: * percent
o Next 12 months: * percent
o Next 12 months: * percent
o Thereafter: *
7.5 Iridium may adjust the initial term of the Exclusivity Period as follows:
7.5.1If DBSI has not placed at least 100 phones in service by November 24,
2001, then Iridium can terminate the Exclusivity Period effective
November 24, 2001 by delivering notice of same to DBSI no later than
December 24, 2001.
7.5.2Iridium may in its sole discretion extend the initial term of the
Exclusivity Period from twelve to eighteen months by delivering
written notice of same to DBSI no later than May 24, 2002.
8. Term
8.1 The term of this Agreement (other than the Exclusivity Period in Section 7)
is seven years and will continue thereafter unless and until terminated by
either party on one hundred and eighty (180) days advance notice.
[* Confidential portion has been omitted and filed separately with the
Commission.]
8.2 If DBSI utilizes, in all Services, less than 5000 calls in any 12 month
period, then either party may terminate on one hundred and eighty (180) days
notice delivered within thirty (30) days of the end of the 12 month period.
8.3 This Agreement and the performance of work hereunder may also be terminated
for cause by either Party if the other Party breaches any service standard or
other material covenant or representation in this Agreement, which breach
remains uncured for a period of time equal to thirty (30) days following receipt
of written notice of such breach from the non-breaching Party. However, if the
breaching Party has reasonably notified the non-breaching Party during the
thirty day period that such breach is not curable using reasonable efforts
within the thirty day period, then such period shall be extended an additional
sixty days provide that the breaching Party has commenced and continues to
diligently proceed with the cure.
8.4 Effective on the date of termination, each party shall return to the other
all confidential materials. Existing customer relationships on termination
belong to DBSI except as otherwise mutually agreed in writing, for 12 months
after termination.
9. Confidentiality
9.1 The existing February 27, 2001 Joint Non-Disclosure Agreement between the
parties (the "NDA") has a term of two years under Section 7 of the NDA. The term
is hereby extended for the duration of this Agreement and any extensions or
renewals thereof.
10. Joint Marketing, Publicity, and Trademarks
10.1 Both parties will cooperate in the coordinated release of information to
the public describing the services offered hereunder. In such regard, each party
will bear its own costs. Neither party shall make a release to the news media or
to the general public identifying the other party without its prior written
approval.
10.2 DBSI recognizes Iridium's worldwide ownership of the trademark and trade
name, "Iridium", and Iridium recognizes DBSI's worldwide ownership of the
trademarks and trade names, "NewStar", "DBS Industries, Inc.", and "E-Sat". Each
party permits the other to use its trademarks and trade names in marketing
literature and materials, press releases, advertisements, and press contacts
provided that advance written approval is obtained.
10.3 Written approval as required by this Section may be via email.
11. Indemnification and Limit of Liability
11.1 Each party (the "Indemnifying Party") agrees to indemnify, defend and hold
the other party, their affiliates, predecessors, successors, insurers, assigns,
heirs, executors, administrators, agents, officers, directors, employees,
shareholders, members, attorneys, and legal representatives (an "Indemnitee")
harmless from and against, any loss, liability, damage or expense (including
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reasonable attorney's fees and costs) to third parties which any Indemnitee may
suffer, sustain or become subject to the extent arising from negligent or
unauthorized act by the Indemnifying Party, or its Affiliates, their
predecessors, successors, insurers, assigns, heirs, executors, administrators,
agents, officers, directors, employees, shareholders, members, attorneys, and
legal representatives relating to the services provided under this Agreement.
Neither party's officers, directors, employees, shareholders, or members shall
have any liability under this Agreement.
11.2 Each party shall perform their respective services with that degree of
skill and judgment normally exercised by recognized satellite operators
performing services of a similar nature.
11.3 There are no implied or other standards of performance, guarantees or
warranties which extend beyond those expressly stated in this Agreement. In no
event shall either party be liable for any incidental, special, contingent, or
consequential damages including lost profits. Iridium's sole responsibility is
to provide the satellite services, and Iridium has no responsibility or
liability with respect to the installation or operation of the Load Curtailment
Service. In no event will Iridium be liable for damages in excess of the
payments made to Iridium under this Agreement.
12. Miscellaneous
12.1 Entire Agreement; Modification. This Agreement constitutes the entire
agreement among the parties and no party shall be liable or bound to any other
party in any manner by any warranties, representations, or covenants except as
specifically set forth herein. This Agreement may be amended only in a writing
signed by both parties.
12.2 Survival of Warranties. The warranties, representations, and covenants of
each party, jointly and severally, contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement.
12.3 No Further Relationships. This Agreement shall not constitute a formal
business organization of any kind, including but not limited to an exclusive
agency, a joint venture, pooling arrangement, or partnership.
12.4 Assignment; Successors and Assigns. No rights or obligations of, or
services to be rendered under this Agreement shall be assigned, transferred or
subcontracted to any third party without the prior written consent of the other,
which consent shall not be unreasonably withheld; and any attempted assignment
without this consent will be void. Provided however, that this Agreement and any
rights and obligations hereunder may be assigned, transferred or subcontracted
by one party (the "Assigning Party") without approval of the other party in the
context of a merger, consolidation, adjustment, recapitalization, reorganization
or other similar capital or financial transaction. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of each party. Nothing
in this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
12.5 Notices. Any notice required or permitted to be given hereunder shall be in
writing (which may not be email unless specifically permitted) and shall be
deemed duly given when received by delivery in person, by facsimile or by an
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overnight courier service, or three days after deposit in the U.S. Mail,
certified with postage prepaid, addressed as follows:
[The remainder of this page is intentionally left blank.]
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To Iridium:
Iridium Satellite LLC
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxxx XX 00000
Attn: Chief Executive Officer and General Counsel
To DBSI:
DBS Industries, Inc.
000 Xxxxxxxxx Xxxxxxx, Xxx. 000X
Xxxx Xxxxxx, XX 00000
Attn: President and General Counsel
Phone 000.000.0000 Fax 000.000.0000
or to such other addresses as a party may designate by five (5) days prior
written notice to the other party.
12.6 Waiver. Any waiver by either Party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this
Agreement. The failure of a Party to insist upon strict adherence to any term of
this Agreement on one or more occasions will not be considered a waiver or
deprive that Party of the right thereafter to insist upon adherence to that term
of any other term of this Agreement.
12.7 Severability. If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
12.8 Remedies Cumulative. It is agreed that the rights and remedies herein
provided in case of default or breach by any party to this Agreement are
cumulative and shall not affect in any manner any other remedies that any other
party may have by reason of such default or breach. The exercise of any right or
remedy herein provided shall be without prejudice to the right to exercise any
other right or remedy provided herein, at law, or in equity.
12.9 Disagreements. Any dispute or other disagreement arising from or out of
this Agreement shall be submitted to arbitration under the rules of the American
Arbitration Association and the decision of the arbiter(s) shall be enforceable
in any court having jurisdiction thereof. Arbitration shall occur only in
Washington, DC. The interpretation and the enforcement of this Agreement shall
be governed by California Law as applied to residents of the State of California
relating to contracts executed in and to be performed solely within the State of
California. In the event any dispute is arbitrated, the prevailing Party (as
determined by the arbiter(s)) shall be entitled to recover that Party's
reasonable attorney's fees incurred (as determined by the arbiter(s)).
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12.10 Counterparts. This Agreement may be executed in two or more counterparts
(including by facsimile), each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
12.11 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
day and year set forth above.
IRIDIUM SATELLITE, LLC
By: /s/ Xxxx Xxxxxxx
----------------------------------------------------
Xxxx Xxxxxxx
CEO & President
DBS INDUSTRIES, INC.
By: /s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
CEO & President
