Exhibit 10.18
RIGHTS AND LICENSE AGREEMENT
DATED AS OF DECEMBER 19, 1996
BY AND AMONG
HOUSTON TRACKER SYSTEMS, INC.
AND
ASIA BROADCASTING AND COMMUNICATIONS NETWORK, LTD.
RIGHTS AND LICENSE AGREEMENT
THIS RIGHTS AND LICENSE AGREEMENT (this "Agreement") is entered into
as of December 19, 1996, by and between Asia Broadcasting and Communications
Network, Ltd., a Bermuda corporation ("ABCN"), and Houston Tracker Systems,
Inc., a company incorporated under the laws of the State of Colorado, United
States of America ("HTS").
WHEREAS, Asia Broadcasting and Communications Network Public
Company Limited, a Thai corporation ("ABCN Thailand"), the predecessor
company to ABCN, and EchoStar International Corporation ("EIC") are parties
to a Memorandum of Understanding dated as of June 15, 1996 (the "MOU"), as
amended, regarding various commercial matters, and ABCN and EIC desire to
incorporate the terms of such MOU into a binding set of agreements;
WHEREAS, the EchoStar Affiliates (as defined below) have developed
expertise in the design, construction and operation of a direct broadcast
satellite ("DBS") transmission system (a "DBS System") in connection with the
DBS System operated in the United States (the "EchoStar System") by the
EchoStar Affiliates and ABCN desires to obtain the benefit of such expertise
of HTS and other EchoStar Affiliates in connection with the design,
construction, implementation and operation of ABCN's proposed DBS System in
Asia (the "ABCN System");
WHEREAS, ABCN desires to license from HTS certain Software (as
defined below) to be used in connection with the operation of the ABCN System;
WHEREAS, ABCN desires HTS to license to certain Acceptable Asian
Manufacturers (as defined below) the right to produce and distribute Licensed
Receiver Products (as defined below) which may be used in connection with the
ABCN System;
WHEREAS, ABCN desires that HTS grant certain other rights to ABCN
in connection with the design, construction, implementation and operation of
the ABCN System; and
WHEREAS, in return for the efforts of EchoStar Communications
Corporation ("ECC") to cause its subsidiary HTS to provide such licenses and
grants of other rights hereunder, ABCN is granting to ECC options (the
"Rights Options") to purchase an aggregate of 14,000,000 shares of ABCN at
price of $1.15 per share on the terms and conditions set forth in those
certain Rights Option Agreements dated as of the date hereof (the "Rights
Option Agreements").
NOW, THEREFORE, in consideration of the foregoing, and the mutual
covenants and agreements hereinafter set forth, the parties hereby agree as
follows:
1. DEFINITIONS.
1.1. ECHOSTAR AFFILIATES. "EchoStar Affiliates" shall mean
EchoStar Communications Corporation and its subsidiaries and Affiliates.
1.2. LICENSED RECEIVER PRODUCTS. "Licensed Receiver Products"
shall mean the MPEG II DVB compliant integrated digital DBS receiver decoder
products, and the satellite dishes, remote controllers, related equipment and
accessories sold by HTS or its Affiliates with such DBS receiver decoder
products as to which HTS or any other EchoStar Affiliate has the right to
license or sublicense, including those set forth on SCHEDULE 1 hereto, (i)
which (a) are currently offered commercially by or on behalf of EchoStar
Affiliates (including HTS) and are identified internally as the "Xxxxx"
platform (as such identification may be changed from time to time), including
any modifications or enhancements to such platform developed and introduced
commercially by or on behalf of EchoStar Affiliates (including HTS), or (b)
during the term of this Agreement are offered commercially by or on behalf of
EchoStar Affiliates (including HTS) and are identified internally as the
"Charlie" platform (as such identification may be changed from time to time),
including any modifications or enhancements to such platform developed and
introduced commercially by or on behalf of EchoStar Affiliates (including
HTS), and (ii) which (x) are capable of reception of programming services
offered by the DBS network presently known as the Dish Network and owned and
operated in the United States by EchoStar Affiliates or (y) have been
modified under this Agreement to receive signals transmitted by one or more
of the BSS, Ku-band direct broadcasting satellites included in ABCN's L-Star
satellite system.
1.3. ECHOSTAR SOFTWARE. "EchoStar Software" shall mean: the
software developed and owned exclusively by EchoStar Affiliates which is
resident in the Licensed Receiver Products or the EchoStar System, including
that set forth on SCHEDULE 2-A hereto.
1.4. SOFTWARE. "Software" shall mean, collectively, the
EchoStar Software and the Third Party Software.
1.5. THIRD PARTY SOFTWARE. "Third Party Software" shall mean
all software which is resident in the Licensed Receiver Products or used or
useful in the ABCN System for which the intellectual property rights do not
belong solely to EchoStar Affiliates, including that set forth on SCHEDULE
2-B hereto.
1.6. SYSTEMS DEVELOPMENT. "Systems Development" shall mean
the systems development and integration matters contemplated in the Systems
Integration Agreement.
1.7. SYSTEMS INTEGRATION AGREEMENT. "Systems Integration
Agreement" shall mean that certain Systems Development and Integration
Agreement dated as of the date hereof by and between ABCN and HTS.
1.8. NON-HTS RECEIVER TECHNOLOGY. "Non-HTS Receiver
Technology" shall mean all proprietary technology, technical data and other
information known to any EchoStar Affiliate contained in or relating to the
Licensed Receiver Products (not including Third Party Software), but which is
not owned by any EchoStar Affiliate or as to which no EchoStar Affiliate has
sufficient rights to license to third parties, including that described more
fully on SCHEDULE 3 hereto.
1.9. NON-HTS SYSTEMS DEVELOPMENT TECHNOLOGY. "Non-HTS Systems
Development Technology" shall have the meaning ascribed to such term in the
Systems Integration Agreement.
1.10. TERRITORY. "Territory" shall mean the countries in
which ABCN operates a DBS System, from time to time, throughout the continent
of Asia, including all geographic and political subdivisions thereof.
-2-
1.11. AFFILIATE. An "Affiliate" shall mean, with respect to a
person or entity, any person or entity which directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with such person or entity, where "control" means possession,
directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of voting securities, by
agreement or otherwise).
2. THE ABCN SYSTEM. HTS acknowledges that ABCN desires to
implement a fully integrated DBS System based in part on certain technology
utilized by the EchoStar System to offer direct broadcast satellite
television services throughout the Territory. Implementing the ABCN System
will involve (a) Systems Development, (b) the use, in connection with such
Systems Development, of the Software, which has been developed or obtained by
HTS or other EchoStar Affiliates for use in the EchoStar System, and (c) the
manufacture and distribution to consumers of Licensed Receiver Products (as
modified for the Territory in accordance with the terms herein) which will
enable such consumers to have access to the signals transmitted using the
systems developed pursuant to the Systems Integration Agreement.
3. ACCESS RIGHTS.
3.1. ACKNOWLEDGMENT. HTS acknowledges the complexity of the
ABCN System and that in order for ABCN to operate a DBS System (and realize
value from the Software and Licensed Receiver Products), ABCN needs to
develop a thorough understanding and working knowledge thereof, including in
particular principles and procedures for operation and maintenance of a
digital broadcast center, which the parties agree shall be obtained through
the implementation of the activities contemplated in Section 3.2 below.
3.2. DISCLOSURE. From and after the execution of this
Agreement, HTS agrees to disclose to ABCN, and to afford ABCN full, complete
and open access (in a manner reasonably designed by HTS to minimize
disruption to its business and maintain the integrity of its files or other
information retention system) to, all information (whether existing or
subsequently created or obtained) reasonably requested by ABCN which
embodies, supplements or is otherwise necessary or helpful in understanding
the EchoStar System, the Non-HTS Systems Development Technology (subject to
any written and binding confidentiality limitations to which HTS or other
EchoStar Affiliates may be subject), the Software and Licensed Receiver
Products and the Non-HTS Receiver Technology (subject to any written and
binding confidentiality limitations to which HTS or other EchoStar Affiliates
may be subject); provided, however, that HTS shall not be required under
this Agreement to provide ABCN with any proprietary technology or other
information except such proprietary technology and information which is
relevant to the ABCN System, based upon the BSS, Ku-band direct broadcasting
satellites included in ABCN's L-Star satellite system. Such access shall
include on-site visits to the digital broadcast center operated by EchoStar
Affiliates in Cheyenne, Wyoming (the "Cheyenne Broadcast Facility") and other
locations where the EchoStar System is deployed (subject to reasonable
restrictions of HTS or other EchoStar Affiliates to physical areas which are
"high security"), access by ABCN personnel, consultants, and other
representatives to relevant documents describing the EchoStar System, the
Non-HTS Systems Development Technology, the Software and Licensed Receiver
Products and the Non-HTS Receiver Technology, and reasonable opportunities to
confer with HTS technical personnel who are knowledgeable in and experienced
with the same, at reasonable times and in such manner as is reasonably
specified by HTS to minimize disruption to its business. HTS shall determine
which information or documents are to be disclosed pursuant to this Section,
using its reasonable judgment, acting in good faith. In the event that HTS
determines that certain documents or information to which ABCN requests
access are not relevant and are not to be disclosed pursuant to this Section,
HTS shall provide to ABCN a written description of the reasons for
non-disclosure.
3.3. USE OF INFORMATION. Subject to Sections 13.3, 13.4 and
14 below, HTS hereby grants to ABCN, and ABCN hereby accepts, a limited,
perpetual, non-transferable, non-exclusive, royalty-free right and license
(or sub-license in the case of information of which HTS is the licensee of
licensors other than EchoStar Affiliates) to copy, use and deal with the
information described in Section 3.2 (except in the case of documents and
information included in the Non-HTS Systems Development Technology and
Non-HTS Receiver Technology, to the extent that HTS and other EchoStar
Affiliates are prohibited from granting such rights) solely for the purposes
of the construction, operation and maintenance of the ABCN System.
Disclosure to ABCN of confidential
-3-
information under this Section may be made subject to ABCN entering into
reasonable confidentiality agreements required by third parties with rights
in portions of the Non-HTS Receiver Technology and Non-HTS Systems
Development Technology.
4. PROPRIETARY SOFTWARE LICENSE.
4.1. ECHOSTAR SOFTWARE LICENSE. Subject to Section 4.2
hereof, HTS hereby grants to ABCN, and ABCN hereby accepts, a limited,
non-transferable, non-exclusive, royalty-free right and license to install,
operate, utilize and administer the EchoStar Software, in the form of machine
readable object code, except as provided below (and a substantially similar
sub-license, in the case of the Third Party Software which HTS is permitted
to sub-license, if any), solely for use in providing DBS service in the
Territory as part of the ABCN System (the "Software License"). Such right
and license shall be for a term from the date hereof through the end of the
useful lives of the satellites comprising ABCN's L-Star satellite system.
4.2. LIMITATIONS ON RIGHTS. The EchoStar Software (including
any derivative works or modifications thereof) shall at all times remain the
exclusive property of HTS, or its licensors, as the case may be, and except
as provided below, ABCN shall not disclose the Software to any third party
(other than with respect to the EchoStar Receiver Software to an Acceptable
Asian Manufacturer with a Receiver License (as defined below) from HTS or
other EchoStar Affiliate) for any purpose whatsoever, or grant or attempt to
grant sub-licenses in respect of the EchoStar Software, without HTS's prior
written consent, which consent may be withheld by HTS in its absolute
discretion. Except as provided below, ABCN shall not copy the EchoStar
Software (other than back-up copies for ABCN's own use), disassemble,
decompile or reverse engineer any of the EchoStar Software, or incorporate
any of the EchoStar Software into any other software or products (except to
the extent permitted under this Agreement or the Receiver Licenses
contemplated hereby) without HTS's prior written consent, which consent may
be withheld by HTS in its absolute discretion.
4.3. NO WARRANTY. ABCN acknowledges and agrees that the
EchoStar Software licensed to ABCN hereunder is licensed on an "as-is" basis,
and that HTS makes no warranty whatsoever as to the usefulness of the
EchoStar Software for any particular purpose.
5. RIGHT TO PURCHASE LICENSED RECEIVER PRODUCTS.
5.1. RIGHT TO PURCHASE. ABCN shall have the right, from time
to time, to purchase Licensed Receiver Products in such quantities as ABCN
may specify and which the EchoStar Affiliates can, in their reasonable
judgment, deliver to ABCN. The price of such purchase shall be no less
favorable than the price of the same goods to other customers of HTS and
other EchoStar Affiliates under like terms and conditions (taken as a whole)
and shall include commercially reasonable terms of delivery to ABCN's
premises or other locations. HTS shall provide to ABCN, from time to time
upon reasonable request, a list of the prices and terms for purchase of
Licensed Receiver Products complying with the foregoing provisions of this
Section.
5.2. PURCHASE ORDERS. Any orders by ABCN for Licensed
Receiver Products manufactured by or on behalf of HTS or any other EchoStar
Affiliates must be evidenced by a written purchase order (a "Purchase
Order"). Each Purchase Order shall be subject to confirmation and acceptance
by HTS or the relevant EchoStar Affiliate, and shall be a binding commitment
by ABCN upon written notice of acceptance by HTS to ABCN in accordance with
the terms of the Purchase Order. Any failure to confirm a Purchase Order
shall not be deemed acceptance by HTS. HTS (or the relevant EchoStar
Affiliate) will use reasonable commercial efforts to fulfill all Purchase
Orders issued by ABCN which meet the requirements of this Section 5.
Purchase Orders shall state only: (i) identity of goods; (ii) quantity of
goods; (iii) purchase price of goods; (iv) requested ship date of goods and
(v) the date by which the Purchase Order must be accepted but in no event
less than 5 business days from receipt of the P.O. by HTS. Any additional
terms stated in a Purchase Order shall not be binding upon HTS unless
expressly agreed to in writing by HTS. In the event of any conflict between
the terms of a Purchase Order and the terms of this Agreement, the terms of
this Agreement shall prevail.
-4-
5.3. PURCHASE OF MODIFIED PRODUCTS. To the extent that ABCN
wishes to order any Licensed Receiver Products from HTS which differ in any
material respect from the same product manufactured by or on behalf of any
EchoStar Affiliate for use in connection with the Dish Network operated by
the EchoStar Affiliates in the United States, HTS shall have no obligation to
provide such Licensed Receiver Products to ABCN unless the parties reach a
mutually satisfactory agreement in writing on any (i) modifications or
enhancements to the Licensed Receiver Products pursuant to this Agreement;
(ii) applicable volume commitments of ABCN, (iii) responsibility for any
non-recurring expenses associated with production; and (iv) other reasonable
commercial terms.
5.4. MANUFACTURE FOR ABCN SYSTEM. ABCN hereby authorizes and
licenses HTS or any other EchoStar Affiliate HTS designates to manufacture
and sell Licensed Receiver Products to distributors, dealers and consumers in
the Territory. HTS and other EchoStar Affiliates shall be entitled to
utilize, for the purposes of such manufacturing, either its own facilities or
the facilities of any third party manufacturer which, at the time HTS or
other EchoStar Affiliate manufactures any Licensed Receiver Product, also
manufactures in the United States or elsewhere Licensed Receiver Products for
HTS and or other EchoStar Affiliates for use in connection with the Dish
Network in the United States. Notwithstanding the foregoing authorization,
HTS and other EchoStar Affiliates shall be under no obligation to manufacture
any Licensed Receiver Products for sale in the Territory unless it chooses to
do so in its sole discretion. In the event HTS or any other EchoStar
Affiliate does manufacture Licensed Receiver Products for sale in the
Territory, ABCN shall provide to HTS or other EchoStar Affiliate marketing
assistance, designed to enhance the sales prospects for such products, of the
same type and on terms (taken as a whole) which are no less favorable than
any such marketing assistance provided by ABCN to the Acceptable Asian
Manufacturers with Receiver Licenses. For purposes of this Section 5.4, the
term "marketing assistance" shall include without limitation any economic
subsidization of the manufacturing costs of the Licensed Receiver Product for
sale in the Territory.
6. LICENSE TO THIRD PARTY MANUFACTURERS.
6.1. LICENSE FOR LICENSED RECEIVER PRODUCTS. HTS or the
relevant EchoStar Affiliate shall grant, to two Acceptable Asian
Manufacturers (as defined below) selected by ABCN as provided in Section 6.3,
a limited, non-exclusive right and license to manufacture, sell and
distribute any or all of the Licensed Receiver Products intended solely for
use within the Territory, each of which licenses shall be governed by and
subject to a License Agreement described in Section 6.2 (each, a "Receiver
License"). Each Receiver License shall be for a term of not less than
[CONFIDENTIAL MATERIAL REDACTED] following execution of the License Agreement
for such Receiver License, and shall provide for options for the Acceptable
Asian Manufacturer to extend the Receiver License (i) for an additional
[CONFIDENTIAL MATERIAL REDACTED] term and (ii) from the end of such
additional term through the end of the useful lives of the satellites
comprising ABCN's L-Star satellite system, in each case subject to the right
of HTS or the relevant EchoStar Affiliate to refuse to extend the Receiver
License in good faith, for good commercial reasons. To the extent that the
Licensed Receiver Products contain Third Party Software or Non-HTS Receiver
Technology that none of the EchoStar Affiliates have the right to sub-license
to ABCN, HTS will use reasonable commercial efforts to assist ABCN in
obtaining a license or agreement to license that will entitle the two
Acceptable Asian Manufacturers to manufacture, sell and distribute any or all
of the Licensed Receiver Products including such Third Party Software or
Non-HTS Receiver Technology within the Territory.
6.2. LICENSE AGREEMENT. Each Receiver License shall be on
substantially the terms and conditions set forth in the License Agreement
attached as EXHIBIT A hereto, the terms of which shall provide for a royalty
of [CONFIDENTIAL MATERIAL REDACTED] of Licensed Receiver Products packaged
for sale or delivery to a single consumer in the Territory where ABCN
provides DBS services. In the event that HTS or any other EchoStar
Affiliate: (i) grants a license to another manufacturer (other than pursuant
to this Agreement) to manufacture, sell and distribute MPEG II DVB compliant
integrated digital DBS receiver decoders ("DBS IRDs") within the Territory;
and (ii) receives a [CONFIDENTIAL MATERIAL REDACTED] royalty from any such
manufacturer of less than [CONFIDENTIAL MATERIAL REDACTED] (the "Lower
Royalty") for the manufacture, sale and distribution of DBS IRD's intended
solely for use within the Territory, then each Acceptable Asian
Manufacturer's [CONFIDENTIAL MATERIAL REDACTED] royalty of
[CONFIDENTIAL MATERIAL REDACTED] shall be reduced to the same amount as the
Lower Royalty; provided, however, that if the Lower Royalty only becomes due
to HTS or other EchoStar Affiliate from the third
-5-
party manufacturer after the manufacture and sale of a certain number of
units [CONFIDENTIAL MATERIAL REDACTED], the Acceptable Asian Manufacturers
shall not be entitled to the Lower Royalty unless and until the Lower Royalty
becomes payable to HTS or other EchoStar Affiliate. The two Receiver
Licenses collectively may include an aggregate up-front fee of
[CONFIDENTIAL MATERIAL REDACTED]. HTS shall use reasonable commercial
efforts to enter into the Receiver Licenses with the two Acceptable Asian
Manufacturers as soon as practicable after such companies have been selected
by ABCN as provided in Section 6.4.
6.3. TERMINATION RIGHT. If HTS does not enter into any
Receiver License, despite its efforts under Section 6.1 and 6.2, within 180
days after the first Acceptable Asian Manufacturer is selected by ABCN, and
ABCN determines in its reasonable judgment acting in good faith that such
failure prevents ABCN from realizing any significant benefit from this
Agreement, ABCN shall have the right, by written notice to HTS, to terminate
this Agreement and the Rights Options. In the event of such termination,
each party shall have the right (unilaterally), by written notice to the
other party, to terminate the Systems Integration Agreement and the Systems
Development Option. HTS shall be entitled to retain amounts paid under any
agreements so terminated to the extent that such payments are for services
performed or costs incurred by HTS, and shall be entitled to receive any
further amounts which it has earned, and shall refund any other amounts
received thereunder. ABCN shall be entitled to retain any benefits from
services received prior to such termination, and shall return any property of
HTS in ABCN's possession, and continue to abide by all confidentiality
provisions in the terminated agreements. These obligations under this
section shall survive termination of this Agreement.
6.4. ACCEPTABLE ASIAN MANUFACTURER. "Acceptable Asian
Manufacturer" shall include (i) the companies described on SCHEDULE 4 to this
Agreement, and (ii) any other manufacturer located in the Territory that is
competent and capable of manufacturing consumer electronic products to world
market specifications as demonstrated, INTER ALIA, by the presence of such
manufacturer in world or regional markets for consumer electronic products;
provided that any Acceptable Asian Manufacturer under (i) or (ii) above is
approved by HTS in accordance with the remaining provisions of this Section
6.4, which approval shall not be unreasonably withheld or delayed. To select
Acceptable Asian Manufacturers under this Agreement, ABCN shall notify HTS in
writing of an initial designation of one or more Acceptable Asian
Manufacturers pursuant to this Section. HTS shall have a reasonable
opportunity (not to exceed 60 days), with the assistance of ABCN (if
requested by HTS), to investigate the operations and capabilities of each
such Acceptable Asian Manufacturer. HTS may, at any time during such
investigation period, reject the designation of such entity, provided that
such rejection is made in good faith for good commercial reasons. If any
such Acceptable Asian Manufacturer is not rejected by HTS and does not have
its designation withdrawn by ABCN during such investigation period, such
Acceptable Asian Manufacturer shall be deemed to have been "selected" by ABCN
for purposes of this Agreement.
6.5. SUB-LICENSE FOR ASSEMBLY PURPOSES. Subject to the terms
and conditions of the Receiver Licenses, the Acceptable Asian Manufacturers
with Receiver Licenses shall have the right to sub-license to third parties
the rights to assemble the Licensed Receiver Products for sale or
distribution in the Territory by ABCN or such Acceptable Asian Manufacturers.
6.6. UNRESTRICTED RIGHTS. Notwithstanding anything to the
contrary contained herein, it is understood and agreed that HTS shall not be
restricted from and shall retain unlimited rights to, among other things,
manufacture, assemble, distribute, lease and sell the Licensed Receiver
Products within the Territory during the term of this Agreement. Such
retained rights shall include without limitation the rights to distribute,
lease and sell the Licensed Receiver Products to ABCN, Acceptable Asian
Manufacturers, distributors, dealers and subscribers to ABCN's System, but
ABCN, Acceptable Asian Manufacturers and subscribers to ABCN's System shall
have no obligation to purchase, lease or otherwise obtain Licensed Receiver
Products from HTS except as otherwise agreed.
7. MODIFICATION OF SOFTWARE AND LICENSED RECEIVER PRODUCTS.
7.1. MODIFICATIONS AND ENHANCEMENTS OF THE ECHOSTAR RECEIVER
SOFTWARE.
-6-
(a) ABCN (directly or through an Acceptable Asian
Manufacturer with a Receiver License) shall be entitled to request HTS to
perform, or cause the applicable EchoStar Affiliate to perform, modifications or
enhancements (each a "Request") to the EchoStar Software resident in the
Licensed Receiver Products (the "EchoStar Receiver Software") which (i) are
necessary or desirable (in ABCN's reasonable determination) for the utilization,
sale or marketing of the Licensed Receiver Products by or to consumers in the
Territory in conjunction with the ABCN System, and (ii) require knowledge of and
access to the source code (the "Source Code") for the EchoStar Receiver Software
in order to perform the modification or enhancement which is the subject of the
Request. Upon receipt of each Request, HTS (or other applicable EchoStar
Affiliate) and ABCN (or the Acceptable Asian Manufacturer, as the case may be)
shall in good faith discuss and agree in writing upon an acceptable delivery
date (the "Delivery Date") for the modification or enhancement which is the
subject of the Request. ABCN (or the Acceptable Asian Manufacturer) shall be
responsible, to the extent possible given its lack of knowledge of the Source
Code, for development of the technical specifications for the modification or
enhancement requested. HTS (or other applicable EchoStar Affiliate) shall use
commercially reasonable efforts to effect such modifications and enhancements by
the agreed Delivery Dates. All changes to a Request that may be requested by
ABCN (or the Acceptable Asian Manufacturer) (i) must be submitted in writing to
HTS (or other applicable EchoStar Affiliate) in the form of a change order and
(ii) will extend the original Delivery Date by an amount of time HTS (or other
applicable EchoStar Affiliate) and ABCN (or the Acceptable Asian Manufacturer,
as the case may be) in good faith discuss and agree in writing (or, if they do
not so agree, as reasonably determined by HTS (or other applicable EchoStar
Affiliate) and confirmed to ABCN (or the Acceptable Asian Manufacturer, as the
case may be) in writing (a "Revised Delivery Date").
(b) Notwithstanding any payment to HTS (or other applicable
EchoStar Affiliate) for the services contemplated in this Section 7.1, any and
all intellectual property rights which result from the development of the
modifications or enhancements hereunder shall remain the sole and exclusive
property of HTS (or other applicable EchoStar Affiliate); provided, however,
that "EchoStar Software" and "Licensed Receiver Products" shall include such
software and products as modified or enhanced hereunder and each Acceptable
Asian Manufacturer with a Receiver License shall receive a royalty free license
to use such modifications and enhancements for the sole purpose of manufacturing
and selling Licensed Receiver Products for use with the ABCN System in the
Territory during the term of such Acceptable Asian Manufacturer's Receiver
License.
(c) For the services rendered by HTS or its Affiliates
pursuant to Section 7.1 above, ABCN (or the Acceptable Asian Manufacturers)
shall (i) pay HTS the hourly rates for its personnel set forth on SCHEDULE 5 (as
such Schedule may be amended with the written approval of both parties to
specify rates for new personnel), which rates shall be increased on January 1,
1998 and each anniversary thereof by the increase in the Consumer Price Index
during the preceding year and (ii) to reimburse HTS for its out of pocket costs
(subject to the prior approval requirements set forth in SCHEDULE 5 hereto)
which are reasonably incurred by HTS in connection with providing services
hereunder. All such payments and reimbursements shall be made without any
withholding by ABCN for non-U.S. taxes, as provided in Section 17.7.
7.2. MODIFICATIONS AND ENHANCEMENTS OF THE ECHOSTAR RECEIVER
SOFTWARE BY ABCN OR AN ACCEPTABLE ASIAN MANUFACTURER.
(a) Nothing in this Agreement shall prohibit ABCN, or an
Acceptable Asian Manufacturer (under the terms and conditions of a Receiver
License), from performing modifications or enhancements to the EchoStar Receiver
Software which do not require knowledge of and access to the Source Code. Any
and all intellectual property rights which result from the development of the
modifications or enhancements (including any derivative works of the EchoStar
Software) hereunder by ABCN or an Acceptable Asian Manufacturer shall be
promptly disclosed and delivered to HTS and shall become and remain (at no cost
to HTS or other applicable EchoStar Affiliate) the sole and exclusive property
of HTS (or other applicable EchoStar Affiliate); provided, however, that
"EchoStar Software" and "Licensed Receiver Products" shall include such software
and products as modified or enhanced hereunder and each Acceptable Asian
Manufacturer shall receive a royalty free license to use such modifications and
enhancements for the sole purpose of manufacturing and selling Licensed Receiver
Products for use with the ABCN System in the Territory during the term of such
Acceptable Asian Manufacturer's Receiver License.
-7-
(b) In the event that (i) HTS determines, acting in good
faith, that it will not be able to modify and adapt the EchoStar Receiver
Software in the manner required by Section 7.1 in sufficient time to enable ABCN
and the Acceptable Asian Manufacturers to commence manufacture of the Licensed
Receiver Products by the Delivery Date, or (ii) HTS is more than 90 days late
beyond any of the Delivery Dates or any Revised Delivery Date, ABCN shall have
the right to develop such modifications to the EchoStar Receiver Software
(including the Source Code thereof), either alone or in conjunction with one or
more Acceptable Asian Manufacturers which has a valid Receiver License in
effect.
(c) In the event that HTS (or other applicable EchoStar
Affiliate) determines in good faith that a Request, as submitted to HTS (or
other applicable EchoStar Affiliate), cannot be developed or implemented for
valid technical reasons, or that it would be inadvisable to do so for technical
reasons, ABCN shall discuss in good faith with HTS (or other applicable EchoStar
Affiliate) the reasons for such determination. In no event shall HTS (or other
applicable EchoStar Affiliate) be required to perform a modification or
enhancement which, in its good faith reasonable technical determination, which
has been fully explained to ABCN, is not capable of being performed or would
severely adversely affect the performance of the Licensed Receiver Products in
the Territory.
7.3. SOURCE CODE LICENSE. HTS (or other applicable EchoStar
Affiliate) shall have no obligation to deliver Source Code to ABCN or any
Acceptable Asian Manufacturer except as expressly set forth in this Section 7.3.
Upon the occurrence of the events described in Section 7.2(b)(i) or (ii), HTS
(or other applicable EchoStar Affiliate) shall deliver to ABCN (or the
Acceptable Asian Manufacturer, depending on which entity made the Request for
which the services were not performed under the terms of Section 7), a copy of
such portions of the Source Code as is reasonably required to perform the
Request which HTS (or other applicable EchoStar Affiliate) declined or failed to
perform. Subject to the provisions of Sections 4.1 and 4.2 above, concurrent
with such delivery of Source Code, HTS (or other applicable EchoStar Affiliate)
shall be deemed to have granted to ABCN, and ABCN shall be deemed to have
accepted, a limited, nonexclusive royalty-free right and license, either alone
or (as determined by ABCN) in conjunction with one or more of the Acceptable
Asian Manufacturers, to use a single copy of the Source Code at an ABCN or
Acceptable Asian Manufacturer facility identified to HTS solely for purposes of
developing such modifications. As part of such right and license, ABCN and each
Acceptable Asian Manufacturer assisting with such modifications shall be
authorized to make and maintain one copy of the Source Code for backup and
archival purposes. ABCN shall promptly notify HTS of each modification to the
Source Code developed by or for ABCN or an Acceptable Asian Manufacturer which
is implemented in a Licensed Receiver Product and shall furnish a complete copy
of the modified Source Code to HTS. Such modifications shall be the proprietary
confidential information of HTS, and ABCN and the Acceptable Asian Manufacturer
shall be expressly prohibited from transferring or disclosing the Source Code to
any third party without the prior written authorization of HTS (which may be
withheld in HTS' absolute discretion) and shall disclose the Source Code to its
employees, agents and contractors on a strict need-to-know basis only. ABCN and
each Acceptable Asian Manufacturer assisting with such modifications shall
maintain written records, which shall be available for inspection by HTS on
reasonable notice, of all such persons who have had access to the Source Code
and the period(s) of time for which such access was granted. ABCN and each
Acceptable Asian Manufacturer assisting with such modifications shall expressly
advise each such person of the confidential nature of the Source Code and
applicable prohibitions on copying and disclosure. For purposes hereof, the
term "Source Code" shall mean the Source Code for the EchoStar Receiver Software
related to the particular modifications to be made in accordance with this
Agreement, in the internally documented form actually used for development and
maintenance of the EchoStar Receiver Software, together with all software tools,
development aids and technical documentation possessed and owned by HTS which
are necessary or helpful in the modification and maintenance of the EchoStar
Receiver Software, but not including code subject to confidentiality or license
restrictions (in the case of Third-Party Software) precluding disclosure to
ABCN. For payment as specified in Section 7.1(c), HTS will use commercially
reasonable efforts to support ABCN's and each Acceptable Asian Manufacturer's
efforts to modify the Source Code and will provide ABCN and each Acceptable
Asian Manufacturer assisting with such modifications with the names of persons
knowledgeable about and familiar with such Source Code to assist ABCN and such
Acceptable Asian Manufacturer with questions thereon.
-8-
8. OPTIONS. Subject to the obligations of HTS hereunder, ABCN is
granting to ECC the Rights Options.
9. UNAUTHORIZED USE OF TECHNOLOGY; INDEMNIFICATION.
9.1. NOTIFICATION. Each party shall notify the other party
promptly in writing of any actual or alleged unauthorized third party use or
misappropriation of the Software or the Licensed Receiver Products and shall
provide any available evidence thereof.
9.2. PROSECUTING MISUSE OR MISAPPROPRIATION.
(a) HTS shall have the right, but shall not be obligated,
to prosecute at its own expense any such misuse or misappropriation of the
Software and Licensed Receiver Products, and HTS hereby agrees that ABCN may
join HTS as a party plaintiff in any such suit, at ABCN's expense. The total
cost of any such action commenced or defended solely by HTS shall be borne by
HTS, and HTS shall keep any recovery or damages derived therefrom.
(b) During the term of this Agreement, if HTS declines to
pursue a claim against a third party for misuse or misappropriation of the
Software and Licensed Receiver Products in the Territory within 60 days after
learning of the same, ABCN shall have the right, but shall not be obligated, to
prosecute at its own expense any such misuse or misappropriation of the Software
and Licensed Receiver Products in the Territory, and ABCN hereby agrees that HTS
may join ABCN as a party plaintiff in any such suit, at HTS's expense. The
total cost of any such action commenced or defended solely by ABCN shall be
borne by ABCN, and ABCN shall keep any recovery or damages derived therefrom.
(c) In the event ABCN and HTS jointly prosecute misuse or
misappropriation of the Software and Licensed Receiver Products in the Territory
by a third party, the parties shall each bear their own expense, and the costs
of any recovery shall be allocated (i) first to the payment of the parties'
expenses, on a proportional basis, and (ii) any award above the expenses shall
be divided fifty percent (50%) to ABCN and fifty percent (50%) to HTS.
9.3. INDEMNIFICATION BY HTS. Subject to the provisions of
Section 10 below, HTS will, at its expense (including all costs of any appeal
bond), defend ABCN against, and pay all costs and damages made in settlement
approved by HTS in writing or awarded (by a final order of a court of
competent jurisdiction) against ABCN resulting from, any and all Claims (as
defined below) based on an allegation that the EchoStar Software or any
component of the Licensed Receiver Products infringes a U.S. patent,
copyright, trademark, trade secret or other proprietary right of any third
party, provided that ABCN (i) gives HTS prompt written notice of any such
Claim, (ii) allows HTS to direct the defense and settlement of the Claim, and
(iii) provides HTS with the information and assistance necessary for the
defense and settlement of the Claim. If a final injunction is obtained in an
action based on any such Claim against ABCN's use of such EchoStar Software or
any such component of the Licensed Receiver Products by reason of such
infringement, or if in HTS's opinion such an injunction is likely to be
obtained, HTS shall either (a) obtain for ABCN the right to continue using the
EchoStar Software or the infringing component, or (b) provide such services as
may be necessary to modify the EchoStar Software or the infringing component
so that it becomes noninfringing. For purposes of this Agreement, "Claims"
shall mean all demands, claims, actions or causes of action by third-parties
(other than Affiliates of ABCN) resulting in assessments, losses, damages
(including, without limitation, diminution in value), liabilities, costs and
expenses to ABCN or its Affiliates, including, without limitation, interest,
penalties and attorneys' fees and disbursements.
9.4. INDEMNIFICATION BY ABCN. ABCN will, at its expense
(including all costs of any appeal bond), defend HTS against, and pay all costs
and damages made in settlement approved by ABCN in writing or awarded (by a
final order of a court of competent jurisdiction) against HTS resulting from,
any Claim based on an allegation that actions taken by ABCN to modify the
EchoStar Software or any component of the Licensed Receiver Products or to
include such EchoStar Software or component in another product produced by or on
behalf of ABCN, infringes an Asian patent, copyright, trademark, trade secret or
other proprietary right of any
-9-
third party, provided that HTS (i) gives ABCN prompt written notice of any
such Claim, (ii) allows ABCN to direct the defense and settlement of the
Claim, and (iii) provides ABCN with the information and assistance necessary
for the defense and settlement of the Claim.
9.5. LIMITATIONS ON INDEMNIFICATION. Notwithstanding the
foregoing provisions of this Section, the parties acknowledge that HTS is aware
of certain potential disputes or Claims of infringement described on SCHEDULE 6
regarding the portions of the EchoStar Software and the components described in
such SCHEDULE 6, and neither HTS nor ABCN shall have any indemnification
obligations with respect to any alleged or actual infringement by the portions
of the EchoStar Software and the components described in such SCHEDULE 6. ABCN
acknowledges that the listing of any entity or technology on SCHEDULE 6 hereto
shall not be considered in any manner an admission by HTS or any Affiliate
thereof with respect to the intellectual property rights of any entity or to any
technology listed on such SCHEDULE 6.
10. LIMITATIONS OF LIABILITY.
HTS's maximum liability to ABCN for violations or breaches of this
Agreement (other than fraud) shall not exceed an amount in U.S. dollars equal to
(i) (A) the lesser of $3.45 and the per share fair market value of one ABCN
share, MULTIPLIED BY (B) the 14,000,000 shares of ABCN that are subject to the
Rights Options (or, in the event that one or none of the Receiver Licenses have
been entered into, 7,000,000 shares of ABCN), LESS (ii) the aggregate exercise
price for such shares under the Rights Option(s), where "fair market value"
shall be deemed for this purpose to equal (x) the average closing price of the
ABCN shares as reported with respect to the principal stock exchange or dealer
quotation system over which such shares have been traded for the then 20 most
recent trading days or (y) if the ABCN shares are not publicly traded, as
determined pursuant to the dispute resolution provisions set forth in Section 12
below. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR LOSS OF PROFITS OR
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES INCURRED BY THE OTHER
PARTY AND ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT. Each party
acknowledges that the limitations of liability set forth in this Agreement form
an essential basis of the bargain between the parties.
11. EXPORT MATTERS
Compliance with the Export Administration Act of 1979, as amended, and
the regulations promulgated thereunder, in connection with the performance of
the terms of this Agreement and the Receiver Licenses, including obtaining the
necessary licenses and approvals for export of technology, shall be the sole
responsibility of HTS, and HTS shall use its best commercially reasonable
efforts to effect such compliance as soon as practicable. ABCN shall reimburse
HTS for the costs of securing the necessary approvals and licenses for HTS's
performance of this Agreement and the Receiver License, and HTS agrees to use
legal counsel selected by ABCN for such efforts.
12. DISPUTE RESOLUTION
12.1. GOOD FAITH NEGOTIATIONS. ABCN and HTS agree to attempt to
resolve any question or dispute that arises regarding or under this Agreement
through prompt good faith discussions between their respective officers with
decision-making authority. The parties expressly acknowledge and agree that all
their respective obligations and responsibilities shall continue in full force
and effect during and despite the discussion of any dispute (other than any
dispute which has resulted in an attempt to terminate this Agreement as
evidenced by written notice of termination). If the parties are unable to
resolve the dispute in a mutually satisfactory manner within thirty (30) days
from the date of the beginning of discussions, the matter may be submitted by
either party to arbitration as provided below.
12.2. BINDING ARBITRATION. Any and all claims, disputes or
controversies arising under, out of, or in connection with this Agreement, which
have not been resolved by good faith negotiations between the parties, shall be
resolved exclusively by final and binding arbitration in Washington, D.C. USA,
under then current rules of the International Chamber of Commerce (the "ICC"),
by a three person arbitration panel.
-10-
ABCN and HTS shall each have the right to choose one of the arbitrators, and
the third arbitrator shall be mutually chosen from a list of arbitrators in
accordance with the ICC rules. The arbitrators shall have no power to add to,
subtract from or modify any of the terms or conditions of this Agreement.
12.3. AWARD. Any award made (i) shall be in writing and state
the arbitration panel's findings of fact and conclusions of law; (ii) shall be
made promptly, and in any event within sixty (60) days after the conclusion of
the arbitration hearing; and (iii) may contain an award of attorneys' fees for
the prevailing party in the interest of justice. The costs of any arbitration
proceeding shall be equally divided between or among the involved parties, and
each party shall bear its own expenses, including attorneys' fees, unless
otherwise awarded by the arbitration panel.
13. TERM AND TERMINATION; REMEDIES.
13.1. TERM. The term of this Agreement shall commence on the
date first written above and shall continue until terminated in accordance
with this Section 13 or elsewhere in this Agreement.
13.2. TERMINATION BY EITHER PARTY. If either party shall cease
to carry on its business, this Agreement shall terminate effective upon
written notice by the party continuing in business to the party ceasing to
carry on its business. All licenses and similar rights granted to ABCN in
this Agreement shall survive any termination of this Agreement by reason of
cessation of business by HTS and any other EchoStar Affiliate responsible for
development of the Software and Licensed Receiver Products.
13.3. WAIVER OF TERMINATION RIGHT. In consideration of the
substantial investment required of ABCN in order to establish a DBS System in
the Territory, HTS hereby waives any right or remedies that HTS may have to
terminate this Agreement by reason of any material breach or default of this
Agreement by ABCN and acknowledges that HTS's sole and exclusive remedy shall be
recovery of damages by reason of any material breach or default of this
Agreement and equitable relief (including but without limitation temporary and
permanent injunctions); provided, however, that HTS may terminate this Agreement
and the Licenses granted herein upon written notice to ABCN in the event, and
only in the event, of the breach by ABCN or any Affiliate of its obligations
under the provisions of Sections 3.3, 4.1, 4.2, 7.3 and 14 which has or may be
reasonably expected to have a material adverse effect on HTS or the EchoStar
Affiliates.
13.4. TERMINATION RIGHTS OF HTS UPON A COMPETITOR ACQUISITION OF
ABCN. Notwithstanding any of the foregoing provisions of this Section 13, in
the event of a Competitor Acquisition of ABCN (as defined below), HTS shall be
entitled upon thirty (30) days' written notice to ABCN, to terminate (a) the
Licenses granted to ABCN under Sections 3.3, 4.1, 7.2 and 7.3 hereof with
respect to EchoStar Software which is resident in the Licensed Receiver
Products, and (b) the access rights granted to ABCN under Section 3.2 hereof
with respect to information, documents and opportunities to confer with HTS
personnel which relate to Licensed Receiver Products. The provisions of this
Section 13.4 shall not be construed to require any disassembly of hardware or
software resident in the ABCN System upon any termination of rights pursuant to
this Section 13.4 and shall not affect any License granted to an Acceptable
Asian Manufacturer under Section 6. For purposes of this Section, a "Competitor
Acquisition of ABCN" shall mean an entity which is one of the principal direct
competitors of HTS or other EchoStar Affiliates in (i) producing Licensed
Receiver Products for use in the United States or (ii) providing direct to home
satellite services in the United States becoming the entity with the greatest
power, directly or indirectly, to direct the management and policies of ABCN on
a day-to-day basis (through the ownership of voting securities, by agreement or
otherwise).
14. CONFIDENTIALITY. All information transmitted in writing, orally
or electronically, whether marked or indicated as "Confidential," received by
either party under this Agreement that is not known by, or generally available
to the public at large shall be deemed "Confidential Information" hereunder.
The recipient of Confidential Information will not, without the prior written
consent of the providing party, use any portion of the Confidential
Information for any purpose other than those contemplated by this Agreement,
and (i) will hold the Confidential Information in the strictest confidence,
(ii) will exercise the same care with respect thereto as it exercises with
respect to its own proprietary and confidential information, and will not,
without the providing
-11-
party's prior written consent, copy or disclose any portion thereof to any
third party other than as contemplated by this Agreement. The foregoing shall
not prohibit or limit the recipient's use of information (including, but not
limited to, ideas, concepts, know-how, techniques, and methodologies) that
(which can be shown by written evidence): (a) is already known to it; (b) is
independently developed by it; (c) was received by the recipient on a
nonconfidential basis, prior to receipt from the providing party, from a third
party lawfully possessing and lawfully entitled to disclose such information
without restriction or obligation of confidentiality; or (d) becomes part of
the public domain through no breach by the recipient of this Agreement. This
Agreement shall not be construed as granting or conferring any rights by
license or otherwise, expressly or implicitly, to the Confidential
Information, or any invention, discovery or improvement to the Confidential
Information, made, conceived or acquired prior to or after the date of this
Agreement. The terms of the existing Confidentiality Agreement between
Affiliates of the parties to this Agreement are hereby incorporated herein as
if the Confidentiality Agreement had been signed by the parties to this
Agreement, and the scope of that Confidentiality Agreement is hereby extended
to include the matters contemplated by this Agreement. Notwithstanding the
foregoing, each of the parties hereto shall be entitled to make any
disclosure: (a) required by any governmental authority, the stock exchange or
interdealer quotation system (such as Nasdaq), by law or regulations or at
court proceedings; (b) to the auditors, lawyers, investment bankers or other
representatives of the parties to this Agreement; (c) to the directors,
officers or employees of ABCN or HTS for the purpose of enabling them to
perform their duties; or (d) with the written consent of other party hereto.
15. REPRESENTATIONS AND WARRANTIES OF ABCN. ABCN hereby represents
and warrants to HTS as follows:
15.1. ORGANIZATION AND STANDING. ABCN is a corporation duly
organized, validly existing and in good standing under the laws of Bermuda, and
has the full corporate power and corporate authority to carry on its business as
it is now being conducted, to execute and deliver this Agreement and the other
documents referred to herein, including without limitation the Systems
Integration Agreement, the Systems Development Option Agreement (as defined in
the Systems Integration Agreement), the Rights Option Agreement, an agreement
regarding programming and a general agreement regarding the transactions
contemplated by the other agreements (collectively, the "Transaction
Documents"), and to consummate the transactions contemplated hereby or thereby.
ABCN is qualified as a foreign corporation in every jurisdiction in which the
failure to so qualify would have a material adverse effect on its business.
15.2. AUTHORIZATION; ENFORCEABILITY. ABCN will cause its Board
of Directors to approve the Transaction Documents and the transactions
contemplated thereby in the manner prescribed by law and authorize the
execution, delivery and performance of the Transaction Documents. The
Transaction Documents, when executed, will constitute valid and binding
obligations of ABCN, enforceable in accordance with their respective terms,
except as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by the application of general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
15.3. NO VIOLATIONS; CONSENTS. Neither the execution and
delivery of the Transaction Documents, nor the consummation of the
transactions contemplated thereby, will violate any law, rule, regulation,
judgment, injunction, decree, determination, award or order of any court or
governmental agency or instrumentality, domestic or foreign, or conflict with
or result in any breach of any of the terms of or constitute a default under
or result in the termination of or the creation or imposition of any mortgage,
lien, security interest or other charge or encumbrance of any nature under
ABCN's Memorandum of Association or Bye-Laws or the terms of any contract or
agreement to which ABCN is a party or by which ABCN or any of the assets and
properties of ABCN is bound. Neither the execution and delivery by ABCN of
this Agreement, nor the consummation by ABCN of any of the transactions
contemplated herein, requires any consent, approval, order or authorization
of, or registration with, or the giving of notice to, any governmental or
public body or authority or any other person.
16. REPRESENTATIONS AND WARRANTIES OF HTS. HTS hereby
represents and warrants to ABCN as follows:
-12-
16.1. ORGANIZATION AND STANDING. HTS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado, and has the full corporate power and corporate authority to carry on
its business as it is now being conducted, to execute and deliver the
Transaction Documents and to consummate the transactions contemplated thereby.
16.2. AUTHORIZATION; ENFORCEABILITY. HTS will cause its Board of
Directors to approve the Transaction Documents and the transactions contemplated
thereby in the manner prescribed by law and authorize the execution, delivery
and performance of the Transaction Documents. The Transaction Documents, when
executed, will constitute valid and binding obligations of HTS, enforceable in
accordance with their respective terms, except as the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by the application
of general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
16.3. NO VIOLATIONS; CONSENTS. Neither the execution and
delivery of the Transaction Documents, nor the consummation of the
transactions contemplated thereby, will violate any law, rule, regulation,
judgment, injunction, decree, determination, award or order of any court or
governmental agency or instrumentality, domestic or foreign, or conflict with
or result in any breach of any of the terms of or constitute a default under
or result in the termination of or the creation or imposition of any mortgage,
lien, security interest or other charge or encumbrance of any nature under
HTS's Certificate of Incorporation or By-Laws or the terms of any contract or
agreement to which HTS is a party or by which HTS or any of the assets and
properties of HTS is bound. Neither the execution and delivery by HTS of this
Agreement, nor the consummation by HTS of any of the transactions contemplated
herein, requires any consent, approval, order or authorization of, or
registration with, or the giving of notice to, any governmental or public body
or authority or any other person (except such approvals relating to export of
technology which HTS may be required to obtain under this Agreement and the
Systems Integration Agreement).
17. MISCELLANEOUS PROVISIONS.
17.1. ADDITIONAL ACTIONS AND DOCUMENTS. Each of the parties
hereto shall take or cause to be taken such further actions, shall execute,
deliver, and file or cause to be executed, delivered, and filed such further
documents and instruments, and shall obtain such consents as may be necessary or
as the other party may reasonably request in order fully to effectuate the
purposes, terms, and conditions of this Agreement.
17.2. ASSIGNMENT; AFFILIATES. Neither party may assign its
rights under this Agreement or any interest therein, or attempt to have any
other person or entity assume its obligations under this Agreement, without
the prior written consent of the other party hereto. However, the parties
agree that all rights granted to ABCN hereunder are also applicable, in whole
or in part, to Affiliates of ABCN for use in connection with the ABCN System.
The parties also agree that HTS shall draw upon the resources of the other
EchoStar Affiliates as it deems reasonably necessary to perform its
obligations hereunder. HTS represents and warrants to ABCN that among the
various EchoStar Affiliates, HTS is the EchoStar Affiliate with the ownership
of or other rights to the EchoStar Software, Licensed Receiver Products, and
other matters which are the subject of this Agreement or, to the extent HTS is
not the owner or rights holder, HTS has obtained access to the personnel and
resources of the applicable EchoStar Affiliates necessary for HTS to perform
fully the obligations of HTS hereunder. To the extent that HTS is the
possessor of the personnel, assets or knowledge necessary to perform any other
EchoStar Affiliate's obligations under any of the other Transaction Documents,
HTS shall make the same available to such other EchoStar Affiliate (without
any cost to or obligation by ABCN) as necessary or appropriate for such other
EchoStar Affiliate to perform such other obligations under such other
Transaction Documents. Each of ABCN and HTS may assign its rights and
liabilities to an Affiliate, provided that ABCN and HTS shall remain
responsible for their respective obligations hereunder, notwithstanding any
such assignment.
17.3. NOTICES. All notices, demands, requests, or other
communications which may be or are required to be given, served, or sent by any
party to any other party pursuant to this Agreement shall be in writing and
shall be faxed and mailed by first-class mail, postage prepaid, or transmitted
by hand delivery, overnight or express mail, addresses as follows:
-13-
(i) If to ABCN: Asia Broadcasting and Communications
Network, Ltd.
0000 Xxxxxxxxxxxx Xxxx, Xxxxxx Xxxxxx Xxx,
Xxxx Phyathai, Bangkok
Attention: Vorathep Chotinuchit
Facsimile No.: (000) 000-0000
(ii) If to HTS: Houston Tracker Systems, Inc.
00 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
X.X.X.
Attention: Xxxxxxx Xxxxx
Facsimile No.: (000) 000-0000
with a copy to: Xxxxx X. Xxxxxxxxx, Senior Vice President and
General Counsel
00 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
X.X.X.
Facsimile No.: (000) 000-0000
Each party may designate by notice in writing a new address or person to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request or communication which shall be mailed,
delivered or transmitted in the manner described above shall be deemed
sufficiently given, served, sent or received for all purposes at such time as it
is delivered to the addressee (with the return receipt, the delivery receipt, or
affidavit of messenger being deemed conclusive evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.
17.4. SEVERABILITY. If fulfillment of any provision of this
Agreement or performance of any transaction related thereto, at the time such
fulfillment or performance shall be due, shall involve transcending the limit of
validity prescribed by law, then the obligation to be fulfilled or performed
shall be reduced to the limit of such validity; and if any clause or provision
contained in any Transaction Document operates or would operate prospectively to
invalidate any Transaction Document, in whole or in part, then such clause or
provision only shall be held ineffective, as though not herein or therein
contained, and the remainder of the Transaction Document shall remain operative
and in full force and effect.
17.5. WAIVERS. No waiver by any party of, or consent by any
party to, a variation from the requirements of any provision of this Agreement
shall be effective unless made in a written instrument duly executed by or on
behalf of such party, and any such waiver shall be limited solely to those
rights or conditions expressly waived.
17.6. ENTIRE AGREEMENT; MODIFICATION; PRIORITY; BENEFIT. This
Agreement and the other Transaction Documents constitute the entire agreement of
the parties hereto with respect to the matters contemplated herein, supersede
all prior oral and written memoranda and agreements with respect to the matters
contemplated herein (including without limitation the MOU), and may not be
modified, deleted or amended except by written instrument executed by the
parties. All provisions of this Agreement shall be binding upon, and shall
inure to the benefit of and be enforceable by, the parties hereto and their
respective successors and permitted assigns.
17.7. TAXES. Any and all payments required under this Agreement
to be made by one party (the "Paying Party") to the other party (the "Receiving
Party") shall be made free and clear of and without deduction or withholding for
any and all present or future non-U.S. taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto (all such
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes") unless such Taxes are required by law or the
-14-
administration thereof to be deducted or withheld. If the Paying Party shall be
required by law or administration thereof to be deducted or withhold any Taxes
from or in respect of any sum payable hereunder, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions or
withholdings (including deductions or withholdings applicable to additional
amounts paid under this Section) the Receiving Party receives an amount equal to
the sum it would have received if no such deduction or withholding had been
made, (ii) the Paying Party shall make such deductions or withholdings; and
(iii) the Paying Party shall forthwith pay the full amount deducted or withheld
to the relevant taxation or other authority in accordance with applicable law.
Within 30 days after the date of any payment of Taxes, the Paying Party will
furnish to the Receiving Party a copy of a receipt evidencing payment thereof.
The provisions of this section shall also apply to any amounts payable to any
Affiliate of HTS.
17.8. FORCE MAJEURE. (a) If by reason of a Force Majeure (as
defined below), HTS or ABCN is unable, wholly or in part, to perform or comply
with its respective obligations hereunder, then both parties shall be relieved
of liability and shall suffer no prejudice for failing to perform or comply
during the continuance and to the extent of the inability so caused from and
after the happening of the event of Force Majeure, provided that the party
invoking the Force Majeure gives to the other party prompt notice, written or
oral (but if oral, promptly confirmed in writing) of such inability and
reasonably full particulars of the cause thereof. If notice is not promptly
given then the parties shall only be relieved from such performance or
compliance from and after the giving of such notice. The party invoking Force
Majeure shall use all reasonable efforts to remedy the situation and remove, so
far as possible and with reasonable dispatch, the cause of its inability to
perform or comply, provided, however, that settlement of strikes, lockouts and
other industrial disturbances shall be wholly within the discretion of the party
involved. The party invoking Force Majeure shall give prompt notice of the
cessation thereof. For greater certainty, if a party invokes Force Majeure to
excuse it from performance of an obligations hereunder, the other party shall be
relieved of its obligation to make any payment to the party invoking Force
Majeure on account of such obligation which is not being performed.
(b) The term "Force Majeure" shall mean any cause of any kind
whatsoever not within the control of a party and which such party could not, by
reasonable diligence, have foreseen or avoided, which may include without
limitation the following: acts of God and the public enemy; the elements; fire;
accidents; breakdowns; vandalism; sabotage; breakage or accident to equipment;
satellite or equipment failure; the necessity of making repairs to equipment;
strikes; lockouts and any other industrial, civil or public disturbances; any
laws, orders, rules, regulations, acts or restraints of any government or
governmental body or authority, civil or military, including the orders and
judgment of courts; provided, however, that the term "Force Majeure" shall not
include the revocation or modification of any necessary governmental consent,
authorization or approval caused by a violation of the terms thereof or
consented to by the party holding such consent, authorization or approval.
17.9. GOVERNING LAW. This Agreement, the rights and obligations
of the parties hereto, and any claims or disputes relating thereto shall be
governed by and construed in accordance with the laws of the State of New York
(but not including the choice of law rules thereof or the United Nations
Convention on Contracts for the International Sale of Goods).
17.10. EXECUTION. To facilitate execution, this Agreement and
any of the other Transaction Documents may be executed in as many counterparts
as may be required; and it shall not be necessary that the signatures of, or
on behalf of, each party, or the signatures of all persons required to bind
any party, appear on each counterpart; but it shall be sufficient that the
signature of, or on behalf of, each party, or the signatures of the persons
required to bind any party, appear on one or more of the counterparts. All
counterparts shall collectively constitute a single agreement.
[Signatures commence on next page]
-15-
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed on their behalf, as of the
date first written above.
HOUSTON TRACKER SYSTEMS, INC.
By: /s/ XXXXXXX XXXXX
------------------------------
Name: Xxxxxxx Xxxxx
----------------------------
Title: CEO
---------------------------
ASIA BROADCASTING AND
COMMUNICATIONS NETWORK, LTD.
By: /s/ SURADET MUKYANGKOON
------------------------------
Name: Suradet Mukyangkoon
----------------------------
Title: President
---------------------------
-16-
SCHEDULE 1
LICENSED RECEIVER PRODUCTS
Licensed Receiver Products currently produced by HTS, or anticipated to be in
production within the next two years.
XXXXX: A cost reduced version of HTS's initial product development,
including software improvements incorporated by HTS. SEE ATTACHED
SPECIFICATION SHEET FOR PRODUCT FEATURES.
CHARLIE: The Charlie receiver, present in the initial stages of
development, but anticipated to be available in timeframes complementary to
ABCN's service. Capabilities and features have not yet been finalized.
REMOTE CONTROL: Certain IR and UHF remote control technology developed
and/or implemented by HTS for use in conjunction with the HTS receiver
family.
LNBF: Certain LNBF technology developed and/or implemented by HTS for use
in conjunction with the HTS receiver family.
DISH: Certain dish (antenna) technology developed and/or implemented by
HTS for use in conjunction with the HTS receiver family.
MANUAL: User Manual text and graphics implemented by HTS to describe the
installation and operation of the DISH Satellite system.
SCHEDULE 2-A
ECHOSTAR SOFTWARE
Primary categories of EchoStar software include the following areas:
1. Receivers: Software to support receiver products described in Schedule 1
excluding Conditional Access task/verification source code.
2. Uplink Facility: HTS will determine if there exists any software developed
by HTS or Affiliates to support the Uplink Facility that may be applicable
to the support of the ABCN facility in Thailand and, if so, will provide
such software to ABCN in accordance with the Agreement.
3. Nucleus Plus OS (Operating System) Shell.
SCHEDULE 2-B
THIRD PARTY SOFTWARE
Listed below is Third Party software likely to be required for use in the
ABCN system, along with the supplier of the software.
[CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 3
NON-HTS RECEIVER TECHNOLOGY
1. Hardware Technology
[CONFIDENTIAL MATERIAL REDACTED]
2. Software Technology
[CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 4
ACCEPTABLE ASIAN MANUFACTURER
[CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 5
REIMBURSABLE EXPENSES AND HOURLY RATES
Invoices for Reimbursable Expenses shall be supported by relevant documentary
evidence, which shall consist of a copy of bills for each expense which is in
excess of US $50.00. ABCN shall not be responsible for reimbursement of
expenses, of any nature, in excess of [CONFIDENTIAL MATERIAL REDACTED]
without prior approval by ABCN.
CATEGORY RATE PER HOUR MAXIMUM DAILY CHARGE
-------- ------------- --------------------
Executive Management
Sr. Engineering Management [CONFIDENTIAL [CONFIDENTIAL
Sr. Engineering MATERIAL MATERIAL
Engineering REDACTED] REDACTED]
SCHEDULE 6
CLAIMS OF INFRINGEMENT
- Any and all technology, intellectual property rights of, or obligation to
pay royalties to, Starsight Telecast, Inc. or any Affiliate thereof.
- Any and all technology, intellectual property rights of, or obligation to
pay royalties relating to, the MPEG2 standard.
- Any and all technology, intellectual property rights of, or obligation to
pay royalties relating to, the DVB standard and its implementation by HTS.
- Any and all technology or intellectual property rights of, or obligation to
pay royalties relating to, Personalized Media Corp or any Affiliate
thereof.
- Any and all technology or intellectual property rights of, or obligation to
pay royalties relating to, Accelerated Technologies, Inc. (Nuclear Plus).
- Any and all technology or intellectual property rights of, or obligation to
pay royalties relating to, Mitel Corporation.
- Any and all technology or intellectual property rights of, or obligation to
pay royalties relating to, the Smart Cards and the reading of the Smart
Cards by the Digital Satellite Receiver System.
- Any and all technology or intellectual property rights of, or obligation to
pay royalties relating to, Feature Film Services, Inc.
