OEM MANUFACTURING, MARKETING AND LICENSING AGREEMENT
This OEM Manufacturing, Marketing and Licensing Agreement ("Agreement") is
entered into as of this 17th day of February, 1998, by and among Houston Tracker
Systems, Inc. ("HTS"), EchoStar Satellite Corporation ("ESC"), both with their
principal places of business at 00 Xxxxxxxxx Xxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx
00000 (HTS and ESC are collectively referred to herein as the "EchoStar
Parties"), and Philips Electronics North America Corporation ("Philips"),
Digital Video Systems Division, having a principal place of business at 0000
Xxxxx Xxxxxx Xxxx Xxxxxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000.
INTRODUCTION
A. HTS has developed a proprietary Digital Satellite Receiver (as defined
in Section 1.11 below) for use in conjunction with the DISH Network, a digital
direct broadcast satellite ("DBS") programming service network owned and
operated by ESC in the United States (the "HTS System", as defined in Section
1.14 below).
B. Philips is a manufacturer and distributor of consumer electronics
products and desires to distribute OEM Products (as defined in Section 1.19
below) and Philips Products (as defined in Section 1.23 below) in the Territory
(as defined in Section 1.35 below) in connection with the DISH Network.
C. Philips desires to obtain certain non-exclusive rights to the
Technology (as defined in Section 1.33 below) in order to manufacture the
Philips Products and DISH Branded Philips Products (as defined in Section 11.5.1
below) solely for distribution and sale in connection with the DISH Network in
the Territory.
D. HTS is willing to grant a non-exclusive license to Philips with
respect to the Technology, subject to and in accordance with the terms and
conditions set forth below.
E. Until such time as Philips commences full-scale commercial production
of a Philips Product, Philips desires to purchase OEM Products from HTS solely
for distribution and sale in connection with the DISH Network in the Territory.
F. HTS is willing to sell OEM Products to Philips for such purposes,
subject to and in accordance with the terms and conditions set forth below.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
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1. DEFINITIONS
In addition to any other defined terms in this Agreement and except as
otherwise expressly provided for in this Agreement, the following terms shall
have the following meanings:
1.1 "Accessories" means an antenna, LNB, feedhorn, feedarm and related
components listed on Exhibit A hereto, as such components may change from time
to time in HTS' sole discretion.
1.2 "Activation" means the authorization of a Smart Card to permit an OEM
Product, Philips Product or DISH Branded Philips Product, as the case may be, to
access the Programming.
1.3 "Affiliate" means, with respect to a party to this Agreement, any
person or entity directly or indirectly controlling, controlled by or under
common control with such party.
1.4 "Approved DISH Brand Name" means those HTS Marks, which have been
approved in writing by Philips (which approval shall not be unreasonably
withheld), for placement on the bezel (front panel) of Philips Products and
packaging in accordance with the trademark usage guidelines (or as otherwise
mutually agreed) of both Philips and HTS. The initial Approved DISH Brand Names
are attached hereto as Exhibit Q.
1.5 "Approved OEM Brand Name" means those Philips Marks, which have been
approved in writing by HTS (which approval shall not be unreasonably withheld),
for placement on the bezel (front panel) of OEM Products, Philips Products and
packaging therefor in accordance with the trademark usage guidelines (or as
otherwise mutually agreed) of both Philips and HTS. The initial Approved OEM
Brand Names are attached hereto as Exhibit B.
1.6 "Xxxxx Platform" means the HTS System identified internally within HTS
and its Affiliates as the "Xxxxx" platform (or any new identification for the
same platform), including any modifications or enhancements to such platform
(excluding "Charlie", later and other platforms) developed by HTS or its
Affiliates and introduced commercially in the U.S. for use in connection with
the Dish Network.
1.7 "Catastrophic Failure" means that: (i) 10% or more of all OEM Products
sold by HTS to Philips during any given calendar quarter; (ii) 10% or more of
all Smart Cards sold by HTS to Philips during any given calendar quarter; or
(iii) 10% or more of all Philips Products and/or DISH Branded Philips Products
sold by Philips during any given calendar quarter are returned by end-users due
to a failure of the OEM Products, Smart Cards, Philips Products, or DISH Branded
Philips Products, as the case may be, to operate in accordance with their
specifications.
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1.8 "Charlie Platform" means the HTS System identified internally within
HTS and its Affiliates as the "Charlie" platform (or any new identification for
the same platform), including any modifications or enhancements to such platform
(excluding later and other platforms) developed by HTS or its Affiliates and
introduced commercially in the U.S. for use in connection with the Dish Network
1.9 "Commissionable Programming" means the Programming packages for which
ESC pays a monthly commission to retailers. A current list of Commissionable
Programming is attached hereto as Exhibit C, which list may change from time to
time in the sole discretion of ESC.
1.10 "Current Wholesale Price" means, as determined at the time HTS accepts
the applicable Purchase Order from Philips, the lowest wholesale price at which
Echosphere Corporation ("Echosphere"), an Affiliate of the EchoStar Parties,
sells a product performing substantially the same functions as the relevant OEM
Product to national and regional retailers, as the case may be, in lots of not
less than 20, which price Echosphere may change from time to time in its sole
discretion.
1.11 "Digital Satellite Receiver" means a digital satellite
receiver/decoder for use in connection with direct to home satellite programming
services, whether stand alone or incorporated into another product (i.e., a
television or VCR), which may include Accessories.
1.12 "HTS Marks" means those trademarks, service marks or trade names owned
by HTS or for which HTS has the right to grant a sublicense, as listed on
Exhibit D, as such HTS Marks may change from time to time in HTS' discretion.
1.13 "HTS Software" means the software developed and owned exclusively by
HTS and its Affiliates which is resident in the HTS System, including without
limitation the software listed in attached Exhibit E hereto.
1.14 "HTS System" means an MPEG-2/DVB compliant Digital Satellite Receiver
manufactured by or on behalf of HTS for use in connection with the DISH Network.
1.15 "Improvements" means any and all modifications, enhancements and
derivative works to the Technology created by, or on behalf of, Philips or HTS
in accordance with the terms of this Agreement.
1.16 "Intellectual Property" means all patents, copyrights, design rights,
trademarks, service marks, trade secrets, know-how and any other intellectual or
industrial property rights (whether registered or unregistered) and all
applications for the same owned or controlled by HTS or Philips, as the case may
be, anywhere in the world, but does not include patents, copyrights, design
rights, trademarks, service marks, trade secrets, know-how or any other
intellectual or industrial property rights
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(whether registered or unregistered) or applications for the same owned or
controlled by Affiliates of either HTS or Philips.
1.17 "License" means the rights granted to Philips by HTS under this
Agreement, as specified in Section 11 below.
1.18 "Location(s)" means a facility operated by Philips, an Affiliate of
Philips or a Permitted Subcontractor in which Philips Products and/or DISH
Branded Philips Products are or will be manufactured, assembled, tested and/or
developed.
1.19 "OEM Product" means a Primary or Secondary Digital Satellite Receiver:
(i) manufactured by or on behalf of HTS; (ii) branded with an Approved OEM Brand
Name; and (iii) which is capable of receiving, decoding and descrambling DBS
satellite transmitted signals for the Programming services provided by the DISH
Network for subscribers in the U.S.
1.20 "Permitted Subcontractor" shall have the meaning given to such term in
Section 11.7 below.
1.21 "Philips Distributor" means a distribution entity (including network
marketers, but excluding Affiliates of Philips) that purchases OEM Products
and/or Philips Products from Philips and resells the same directly to Philips
Retailers.
1.22 "Philips Marks" means the trademarks or trade names owned by Philips,
or for which Philips has a license to use or the right to grant a sublicense
sufficient for the purposes of this Agreement.
1.23 "Philips Product" means a Primary or Secondary Digital Satellite
Receiver incorporating the Specifications set forth in Exhibit F and
manufactured by Philips or for Philips by a Permitted Subcontractor for resale
by Philips in the Territory in connection with the DISH Network. Philips
Products shall specifically include Digital Satellite Receivers that are
combined with or incorporated into another product, i.e., a television or VCR,
("Integrated Products"), but shall specifically exclude Digital Satellite
Receivers that are combined with or incorporated into another product that has
the independent potential to generate subscription revenues or other additional
revenue streams from end users ("Additional Revenue Products"). For purposes of
this Agreement, references to Philips Products shall not be construed as
including DISH Branded Philips Products.
1.24 "Philips Retailer" means a retail entity (excluding Affiliates of
Philips) that purchases OEM Products and/or Philips Products from Philips or a
Philips Distributor and resells the same directly to end users.
1.25 "Primary Digital Satellite Receiver" means a Digital Satellite
Receiver with Accessories.
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1.26 "Programming" means the video and audio signals transmitted by DBS
satellite transponders that are owned or controlled by ESC or an Affiliate and
are part of the DISH Network's regular programming services. A current list of
Programming and the current retail prices therefor is attached hereto as Exhibit
G, as such Exhibit may be changed from time to time in ESC's sole discretion.
1.27 "Qualifying Residential Subscriber" means an individual at a
Residential Location who orders Programming from ESC for reception in connection
with an OEM Product or Philips Product, who pays for the Programming in full,
and who has never received any audio, video or any other digital programming
services from ESC or any Affiliate of ESC. A Qualifying Residential Subscriber
shall not include any individual who would otherwise qualify, but whose
equipment ESC, in its reasonable discretion, declines to activate.
1.28 "Residential Location" means a single family residential dwelling
(i.e. single family houses, apartments, condominiums or other dwellings used
primarily for residential purposes), located in the Territory; provided,
however, in no case shall any satellite master antenna television system or
private cable system in a residential multiple dwelling unit or any similar
programming reception system (i.e., dormitories, etc.) be considered a
Residential Location. ESC shall have the right to determine, in its reasonable
discretion (taking into consideration, among other relevant factors, the
provisions of ESC's Programming contracts), whether a location constitutes a
Residential Location, or is more appropriately considered a commercial location
or other non-residential location.
1.29 "Secondary Receiver" means a stand alone Digital Satellite Receiver
without Accessories.
1.30 "Smart Card" means the card, which, through the use of a secure
microprocessor, controls the ability of the OEM Product, Philips Product or DISH
Branded Philips Product, as the case may be, to access the Programming.
1.31 "Specifications" means the functional and operational aspects of the
HTS System which must be incorporated in the OEM Products, Philips Products and
DISH Branded Philips Products in order to ensure compatibility with the HTS
System, as set forth in attached Exhibit F, as such exhibit may be modified from
time to time upon reasonable prior notice to Philips, in accordance with the
terms of this Agreement, including for the purpose of incorporating
Improvements.
1.32 "Subscriber Account" means the account set up and maintained by ESC
for a Qualifying Residential Subscriber who purchased an OEM Product or Philips
Product and for whom Commissionable Programming has been activated by ESC and
which account remains active and in good standing.
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1.33 "Technology" means all confidential information, data, designs, xxxx
of materials, lists of components and suppliers thereof, schematics, technical
specifications, the Specifications, and all other written documentation provided
by HTS hereunder relating to the design, development and manufacture of the HTS
System, and shall include the HTS Software. Technology does not include Philips
Intellectual Property.
1.34 "Term" means the duration of this Agreement as specified in Section
18.1 hereof.
1.35 "Territory" means the geographic boundaries of the United States of
America, its territories, possessions and commonwealths; provided, however, that
the parties agree to negotiate in good faith towards expanding the Territory in
the event that ESC obtains the right to broadcast Programming outside the
Territory.
1.36 "Third Party Software" means the software which is resident in the HTS
System, for which the intellectual property rights do not belong, in whole or
part, to HTS or any Affiliate thereof, including but not limited to the software
listed in attached Exhibit H, as such Exhibit may change from time to time in
HTS' sole discretion upon not less than sixty (60) days notice to Philips.
2. MANUFACTURE AND SALE OF OEM PRODUCTS BY HTS
2.1 MANUFACTURE.
2.1.1 Commencing in the first calendar quarter of 1998 and until
Philips commences full-scale commercial production of a Philips Product as
contemplated hereunder (but in no event beyond December 31, 1998), HTS agrees to
manufacture and sell OEM Products to Philips, and Philips agrees to purchase OEM
Products from HTS, in accordance with and subject to the terms of this
Agreement. HTS may select and authorize any third party to manufacture OEM
Products on HTS' behalf.
2.1.2 Following commencement of full-scale commercial production
of a Philips Product by Philips, HTS agrees to continue to manufacture and sell
only Model 1000 Secondary Digital Satellite Receivers (or, at HTS' option,
Secondary Digital Satellite Receivers performing substantially similar functions
as the present Model 1000) to Philips, and Philips shall only have the right to
continue to purchase Model 1000 Secondary Digital Satellite Receivers (or, at
HTS' option, Secondary Digital Satellite Receivers performing substantially
similar functions as the present Model 1000) from HTS, in accordance with and
subject to the terms and conditions of this Agreement.
2.1.3 Notwithstanding Section 2.1.2 above, following commencement
of full-scale commercial production of a particular Philips Product by Philips,
in the event that, and for so long as (or such other period as the parties
mutually agree), Philips is
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unable to manufacture that particular Philips Product due to an event of
Force Majeure (as defined in Section 22.8 below), HTS agrees to manufacture
and sell to Philips, and Philips shall be entitled to purchase from HTS, the
Comparable Model (as defined in Section 11.4 below) OEM Product or such other
OEM Product as the parties mutually agree, in accordance with and subject to
the terms and conditions of this Agreement.
2.1.4 HTS undertakes and agrees to incorporate the Specifications
in the manufacture of the OEM Products and agrees to comply with any and all
industry and governmental standards and regulations, including, without
limitation, product safety standards, which may apply to the manufacture, sale
and use of the OEM Products in the Territory.
2.2 AUTHORIZATION; TERRITORY. Philips shall be authorized to resell OEM
Products within the Territory solely to: (i) Philips Retailers that have a valid
Retailer Commission Agreement in full force and effect with ESC; (ii) Philips
Distributors that have a valid Distributor Commission Agreement in full force
and effect with ESC; and (iii) directly to end-users, in each case solely for
use in conjunction with the DISH Network by end users in the Territory. Philips
agrees that it shall not sell any OEM product to: (a) any person or entity other
than: (1) a Philips Retailer that has a valid Retailer Commission Agreement in
full force and effect with ESC; (2) a Philips Distributor that has a valid
Distributor Commission Agreement in full force and effect with ESC; or (3) an
end user; (b) any person or entity who Philips knows or has reason to know
intends to use it, or resell it for use, in Canada or at any other location
outside of the Territory; or (c) any person or entity who Philips knows or has
reason to know intends to use it, or resell it for use, in conjunction with a
DBS service other than the DISH Network. The parties agree to discuss the
possibility of entering into a relationship pursuant to which HTS would
distribute OEM Products to Philips Retailers
[CONFIDENTIAL MATERIAL REDACTED].
2.3 APPROVED OEM BRAND NAMES. Upon request by Philips, HTS shall
manufacture the OEM Product with any of the Approved OEM Brand Names which are
listed on Exhibit B affixed to the bezel (front panel) of the OEM Products in
accordance with Section 10 below; provided, however, that HTS shall have no
obligation under this Section 2.3 unless at the time of such request Philips
issues and delivers to HTS a firm Purchase Order [CONFIDENTIAL MATERIAL
REDACTED] of an OEM Product with an Approved OEM Brand Name requested by Philips
which has not been previously manufactured by HTS hereunder. At the request of
Philips, new Approved OEM Brand Names may be added to the list set forth in
Exhibit B hereto upon prior written approval of HTS (which approval shall not be
unreasonably withheld). The provisions of Section 10.1 shall apply to the use
of HTS Marks on or in connection with OEM Product delivered hereunder which
include any Approved OEM Brand Name.
2.4 CUSTOM BEZELS. Upon request by Philips, HTS agrees to manufacture OEM
Products with custom bezels; provided, however, that HTS shall have no
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obligation under this Section 2.4 unless at the time of such request Philips
issues and delivers to HTS a firm Purchase Order [CONFIDENTIAL MATERIAL
REDACTED] of OEM Product with a customized bezel requested by Philips which
has not been previously manufactured by HTS hereunder.
2.5 COSTS. Philips shall be responsible, and shall pay HTS in
advance, for all costs of labor and materials anticipated as reasonable and
necessary by HTS for the customization of an OEM Product with: (i) a custom
bezel; or (ii) any Approved OEM Brand Name hereunder, including without
limitation: (a) any tooling required; (b) silk-screening front panels of the
satellite receivers; and (c) all costs in connection with the customization of
any packaging for OEM Products.
2.6 IDENTICAL PRODUCTS. All OEM Products delivered hereunder to Philips
shall be identical in functionality and technical specifications to HTS Systems,
and shall be identical in appearance to the HTS Systems except as otherwise
expressly provided herein for the placement of Approved OEM Brand Names or
customs bezels on OEM Products.
2.7 FREEDOM OF ACTION. Philips acknowledges and agrees that this
Agreement is non-exclusive in nature and that nothing in this Agreement shall
prohibit or otherwise restrict the EchoStar Parties from entering into an
agreement with any third party concerning activities which are the same or
similar activities to those contemplated in this Agreement, or any other
activity.
2.8 MOST FAVORED NATION STATUS. HTS shall grant "Most Favored Nation
Status" to Philips with respect to OEM Product pricing, and Philips shall grant
"Most Favored Nation Status" to HTS with respect to DISH Branded Philips Product
pricing. For purposes of this Agreement, "Most Favored Nation Status" shall
mean that HTS will grant Philips pricing for OEM Products no less favorable than
what is provided to other entities for which HTS OEM manufactures substantially
the same products under like terms and conditions in the Territory, and that
Philips will grant HTS pricing for DISH Branded Philips Products no less
favorable than what is provided to other purchasers of products performing
substantially the same functions as the DISH Branded Philips Products under like
terms and conditions in the Territory.
2.9 HTS acknowledges and understands that manufacture of the OEM Products
may require compliance with MPEG 2, DVB and other industry standard technologies
and the use of a range of other third party intellectual property rights.
Except with respect to the technology and entities listed on Exhibit O hereto,
HTS acknowledges and understands that it, and not Philips, is responsible for:
(i) determining those entities with which it must negotiate and enter into
licensing agreements; (ii) negotiating license rights from all those third
parties; and (iii) paying (and represents and warrants that it will pay as and
when due) any and all applicable license fees to any and all entities to which a
royalty or license fee is required to be paid for a unit of the OEM
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Products manufactured and/or sold by HTS. Philips shall promptly inform HTS
of any royalties of which it becomes aware will become due with respect to
the OEM Products
3. [CONFIDENTIAL MATERIAL REDACTED]
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6. WARRANTY
6.1 WARRANTY OF OEM PRODUCTS.
6.1.1 GENERAL WARRANTY.
(a) HTS warrants that each OEM Product will conform
to the Specifications and will be free from defects in materials and
workmanship for a period of thirteen (13) months from date of shipment (the
"Warranty") by HTS or a third party on HTS' behalf to Philips or its
designee. The materials portion of this Warranty shall not apply to: (i) any
OEM Product that is abused, damaged by external causes, altered or misused;
or (ii) OEM Product damaged due to improper installation or use. OEM Products
shall be considered free from defects in workmanship if they are manufactured
in accordance with HTS' manufacturing workmanship standards (or those of any
third party which manufactures the OEM Product on HTS' behalf), conform to
the product specifications, and successfully complete product acceptance
tests for the product.
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(b) HTS shall repair or replace and otherwise treat in
accordance with its then current standard consumer warranty, as may be
modified from time to time by HTS upon reasonable notice to Philips, all OEM
Products returned directly to HTS by retail consumers who have obtained valid
Return Authorization Numbers from the DISH Network Service Center by calling
(800) 333-DISH; provided, however, that HTS shall be entitled, at its option,
to replace all defective OEM Product with refurbished OEM Product during the
entire ninety (90) day period following the original date of purchase, and
thereafter.
6.1.2 DEADLINE FOR CLAIMS; DISCLAIMER. ALL CLAIMS FOR
WARRANTY FULFILLMENT MUST BE RECEIVED BY HTS (OR ITS DESIGNEE) NO LATER THAN
THIRTY (30) DAYS AFTER THE EXPIRATION OF THE WARRANTY PERIOD FOR THE PRODUCT.
THIS WARRANTY IS THE ONLY WARRANTY GIVEN BY HTS. HTS MAKES, AND PHILIPS
RECEIVES, NO OTHER WARRANTY EITHER EXPRESS OR IMPLIED. ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, ARE EXPRESSLY
DISCLAIMED AND EXCLUDED HEREFROM.
6.2 PHILIPS' WARRANTY OBLIGATIONS. In addition to the obligations of
Philips elsewhere in this Article 6, with respect to any OEM Product returned
to any entity other than HTS, Philips shall:
6.2.1 receive at a Philips' facility all OEM Products returned
for both in-warranty and out-of-warranty repair;
6.2.2 submit a daily report to ESC listing the serial number of
each OEM Product and corresponding Smart Card number which have been received
by Philips and for which the subscriber has received a replacement OEM
Product and/or Smart Card;
6.2.3 for in-warranty and out-of-warranty returns, conduct, at
its own expense, an initial review of the OEM Product to verify the existence
of a defect;
6.2.4 in the case of OEM Products for which no defect is found,
or a defect is found which is not covered by the warranty, take such actions
as it deems appropriate and HTS shall have no liability hereunder;
6.2.5 in the case of in warranty OEM Products with defects
verified by Philips, ship such OEM Products at Philips' expense, to an HTS or
third party facility, as designated by HTS, for repair or replacement in
accordance with the Warranty in Section 6.1.1(a) above, with HTS responsible
for all costs associated with the shipment of conforming OEM Products to
Philips' facility to replace failed units covered by the Warranty, except
that if Philips does not authorize refurbished OEM Product to be shipped by
HTS in fulfillment of its warranty obligation, then Philips sole right shall
be to
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have HTS credit the purchase price of the defective OEM Product less: (i)
HTS' actual out-of-pocket costs to replace the custom Philips bezel on the
defective OEM Product with an HTS bezel and to otherwise retrofit the OEM
Product for sale as an HTS, EchoStar or other DISH brand product; (ii) the
loss HTS incurs upon resale of the product into the retail chain; and (iii) a
reasonable charge for overhead;
6.2.6 in the case of out-of-warranty OEM Products with defects
verified by Philips (including in warranty OEM Products with defects not
covered by the warranty), ship such OEM Products at Philips' expense, to an
HTS or third party facility, as designated by HTS, for treatment in
accordance with HTS' then current standard operating procedures, including
without limitation the assessment of a reasonable charge for the repair or
replacement of the OEM Product, and return shipping and insurance. Except as
expressly set forth in this Section 6.2.6, HTS shall have no obligations
whatsoever with respect to out of warranty OEM Products; and
6.2.7 reimburse HTS, within 30 days from the date of HTS'
invoice, for a screening fee of [Confidential Material Redacted], and
any out of pocket expenses of HTS to third parties, including but not
limited to the costs of returning the OEM Product to Philips, in relation
to OEM Products returned by Philips under the preceding subsections for which
there was no problem found upon testing by HTS, or with respect to which
problems were identified which are not covered by the warranty.
6.3 PHILIPS WARRANTY.
6.3.1 Philips shall extend to the end user of the OEM Products
purchased from HTS hereunder Philips' standard consumer warranty which will
be competitive in the consumer electronics industry.
6.3.2 Philips shall maintain at all times during the Term and
for a period of five (5) years following expiration or termination of this
Agreement the service capacity to perform its obligations and duties under
Section 6.3.1 above.
7. EXPORT RESTRICTIONS
Philips acknowledges and understands that U.S. export laws relating to
the OEM Products and Smart Cards provided therewith may change from time to
time in the future. Philips acknowledges that it is Philips' sole
responsibility to be and remain informed of all U.S. laws relating to the
export of OEM Products and Smart Cards outside of the U.S. Philips further
acknowledges and agrees that HTS has absolutely no obligation to update
Philips regarding the status of U.S. export laws or any other U.S. laws
relating to the export of OEM Products or Smart Cards outside of the U.S.
Without HTS giving any consent for export of the OEM Products or Smart Cards
and subject to territorial limitations of this Agreement, Philips represents
and agrees that: (i) prior to exporting or selling any OEM Products or Smart
Cards outside of the U.S., it will investigate all applicable U.S. laws
relating to the export of OEM Products and Smart
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Cards outside of the U.S.; (ii) it will not export or reexport any OEM
Product or Smart Card to Cuba, Iran, Iraq, Libya, North Korea, Sudan or Syria
without the prior approval of the United States Government; and (iii) it will
not use any OEM Product or Smart Card directly or indirectly to support the
design, development, production or use of nuclear, chemical or biological
weapons or ballistic missiles. Philips is strictly prohibited from violating
any U.S. law relating to the export or sale of OEM Products or Smart Cards
outside of the U.S. Should Philips export or sell any OEM Product or Smart
Card outside of the U.S. in violation of this Agreement and/or U.S. law, this
Agreement shall automatically terminate. Subject to Section 15.4.1(a), HTS is
willing to share with Philips any non-privileged information in its
possession with Philips regarding U.S. export laws relating to Smart Cards
and its products performing substantially the same functions as the OEM
Products; provided, however, that such sharing of information shall not be
construed to modify Philips' obligations set forth above or to impose upon
HTS any obligation to update Philips regarding the status of U.S. export
laws or any other U.S. laws relating to the export of OEM Products or Smart
Cards outside of the U.S.
8. [CONFIDENTIAL MATERIAL REDACTED]
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10. TRADEMARKS
10.1 HTS' MARKS.
10.1.1 In addition to the Approved OEM Brand Names affixed to the
OEM Products under this Agreement, HTS shall have the right to affix such of
the HTS Marks as specified in Exhibit D on or in connection with the OEM
Products, including, but not limited to, on the Accessories and packaging and
on the electronic on screen guide, in accordance with the usage guidelines
for the HTS Marks as set forth in attached Exhibit K or the User Interface
Specification, as such guidelines may change from time to time in HTS' sole
discretion. HTS agrees that Philips shall not be required to accept the use
of the HTS Marks on the OEM Products in any manner inconsistent with the
usage guidelines for the Philips Marks and the terms of this Section 10.1
without the prior written consent of Philips, which consent shall not be
unreasonably withheld.
10.1.2 Notwithstanding Section 10.1.1 above and Section
10.1.3 below, Philips acknowledges and agrees that the HTS Marks currently
attached hereto
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in Exhibit D and the minimum size and manner of placement requirements for
the HTS Marks currently set forth in: (i) Exhibit K; (ii) the User Interface
Specification; and (iii) this Section 10.1.2 are consistent with Philips'
usage guidelines for use in connection with the Philips Marks, and may
continue to be applied by HTS in the size and manner set forth in Exhibits D
and K and the User Interface Specification respectively and this Section
10.1.2 for the term of this Agreement, including any extensions thereto.
Specifically, and without limitation of the foregoing, Philips agrees that
HTS shall have the right for the duration of the term and any extensions
thereof to: (a) affix the HTS Marks set forth in Exhibit D and K and the User
Interface Specification in the center of, and above all Philips Marks and
Third Party Marks affixed to, all dish antennas provided to Philips by HTS
hereunder; and (b) affix the HTS Marks set forth in Exhibit D on or in
connection with the OEM Products, including without limitation on the
Accessories and packaging and on the electronic program guide, such that the
HTS Marks are displayed in a manner which is at least equally as prominent as
the Approved OEM Brand Names affixed to the same. In the event that Philips
desires to change its usage guidelines in a manner that would effect the
rights granted to HTS by Philips under this Section 10.1.2, the parties agree
to discuss the possibility of altering the application of the HTS Marks,
Philips Marks and Third Party Marks to the OEM Products in such a manner as
will be consistent with the new usage guidelines proposed by Philips and
insure to HTS as nearly as possible the same results to which HTS is entitled
under this Section 10.1.2.
10.1.3 Philips agrees not to use any of the HTS Marks in any
manner inconsistent with the usage guidelines for the HTS Marks and without
the prior written consent of HTS, and, subject to Section 10.1.2 above, HTS
agrees that Philips shall not be required to use the HTS Marks in any manner
inconsistent with the usage guidelines for the Philips Marks without the
prior written consent of Philips which consent shall not be unreasonably
withheld. Philips shall not use any of the HTS Marks without the prior
written consent of HTS, which consent HTS may withhold in its sole
discretion. Philips expressly acknowledges and understands that HTS and its
Affiliates claim to have the absolute ownership of, or right to allow Philips
to use, the HTS Marks.
10.1.4 Regardless of whether HTS grants Philips permission to use
any HTS Xxxx, Philips agrees that it will not in any way dispute or impugn
the validity of any of the HTS Marks or registrations of the HTS Marks, nor
the sole proprietary right of HTS and its Affiliates thereto, nor the right
of HTS and its Affiliates to use or license the use of the HTS Marks in the
Territory or elsewhere, either during the Term or at any time thereafter.
Philips further agrees not to perform, either during the Term or at any time
thereafter, any act or deed either of commission or of omission which is
inconsistent with HTS or its Affiliates proprietary rights in and to the HTS
Marks, whether or not the HTS Marks are registered.
10.2 PHILIPS' MARKS.
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10.2.1 HTS agrees not to use any of the Philips Marks in any
manner inconsistent with the usage guidelines for the Philips Marks and
without the prior written consent of Philips, and Philips agrees that HTS
shall not be required to use the Philips Marks in any manner inconsistent
with the usage guidelines for the HTS Marks without the prior written consent
of HTS which consent shall not be unreasonably withheld. HTS shall not use
any of the Philips Marks without the prior written consent of Philips, which
consent Philips may withhold in its sole discretion; provided however, that
no consent shall be required for HTS or an Affiliate to sell Excess Inventory
under Section 5.7 above, for which Philips hereby grants to HTS and its
Affiliates a license to the Philips Marks and any Approved OEM Brand names
only as necessary for the marketing and sale of such Excess Inventory. HTS
expressly acknowledges and understands that Philips and its Affiliates claim
to have the absolute ownership of, or right to allow HTS to use, the Philips
Marks.
10.2.2 Regardless of whether Philips grants HTS permission to use
any Xxxxxxx Xxxx, HTS agrees that it will not in any way dispute or impugn
the validity of any of the Philips Marks or registrations of the Philips
Marks, nor the sole proprietary right of Philips and its Affiliates thereto,
nor the right of Philips and its Affiliates to use or license the use of the
Philips Marks in the Territory or elsewhere, either during the Term or at any
time thereafter. HTS further agrees not to perform, either during the Term
or at any time thereafter, any act or deed either of commission or of
omission which is inconsistent with Philips or its Affiliates proprietary
rights in and to the Philips Marks, whether or not the Philips Marks are
registered.
10.3 THIRD PARTY TRADEMARKS. Philips may also request that HTS affix to
the OEM Products the "DVB" and "MPEG 2" standard trademarks, provided that no
third party trademarks shall be more than half as large as the Philips and
HTS trademarks. Philips recognizes and understands that HTS has no authority
to grant Philips any rights to affix the "DVB" and "MPEG 2" standard
trademarks to an OEM Product. Should Philips desire to do so, Philips must
negotiate the entitlement of such rights with the applicable rights holders.
Philips hereby acknowledges that, in the future, HTS may be obligated to
affix the trademarks, service marks or trade names of the owners of third
party technology that is presently, or at some time in the future,
incorporated into the OEM Product, and Philips hereby grants its approval for
HTS to affix any such trademarks, service marks or trade names to the OEM
Product subject to the size requirements set forth above, unless the parties
mutually agree otherwise.
11. GRANT OF LICENSE
11.1 [CONFIDENTIAL MATERIAL REDACTED]
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11.2 APPROVED DISH BRAND NAMES. Upon request by HTS, Philips shall
manufacture the Philips Product with any of the Approved DISH Brand Names
which are listed on Exhibit Q affixed to the bezel (front panel) of the
Philips Products and onto the electronic program guide and any Accessories or
packaging in accordance with Section 16 below. At the request of HTS, new
Approved DISH Brand Names may be added to the list set forth in Exhibit Q
hereto upon prior written approval of Philips (which approval shall not be
unreasonably withheld). The provisions of Section 16.2 shall apply to the use
of Philips Marks on or in connection with Philips Product delivered hereunder
which include any Approved DISH Brand Name.
11.3 [CONFIDENTIAL MATERIAL REDACTED]
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[CONFIDENTIAL MATERIAL REDACTED]
11.4 [CONFIDENTIAL MATERIAL REDACTED]
11.5 [CONFIDENTIAL MATERIAL REDACTED]
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[CONFIDENTIAL MATERIAL REDACTED]
31
[CONFIDENTIAL MATERIAL REDACTED]
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[CONFIDENTIAL MATERIAL REDACTED]
33
[CONFIDENTIAL MATERIAL REDACTED]
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[CONFIDENTIAL MATERIAL REDACTED]
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[CONFIDENTIAL MATERIAL REDACTED]
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11.6 LICENSE LIMITATION. Philips shall use the Technology for the sole
purpose of manufacturing the Philips Products and the DISH Branded Philips
Products and not for any other purpose. Subject to the limitations set forth
below, Philips shall have the right to incorporate all or part of the
Technology into Integrated Products (as defined in Section 1.23 above), but
shall have no right to incorporate the Technology into a particular
Additional Revenue Product (as defined in Section 1.23 above) unless and
until such time as Philips, HTS and the licensor(s), if any, of the
technology necessary to generate the additional revenue streams agree upon
their respective rights to, and obligations regarding, that technology and
the aggregate revenue stream generated by the Additional Revenue Product.
In limitation of the foregoing, Philips will manufacture and assemble the
Philips Products and the DISH Branded Philips products so that they are only
compatible with the DISH Network (as defined in Section A of the
Introduction) and cannot be used to receive signals transmitted by third
party providers of DBS programming. In limitation of the foregoing, Philips
is expressly prohibited from incorporating all or any part of the Technology
into any product which also incorporates technology enabling the product to
receive and/or decode signals transmitted by satellite transponders that are
neither owned nor controlled by ESC or an ESC Affiliate. Philips is
prohibited from using or distributing all or any part of the Technology for
the purpose of manufacturing, or having manufactured, any other Digital
Satellite Receiver or for any purpose not expressly set forth in this
Agreement without HTS' prior written consent, which consent may be withheld
in HTS' sole discretion.
11.7 SUBCONTRACTING. Philips has no right under this Agreement to
grant sublicenses with respect to the License or any of the Technology,
without the prior written consent of HTS. Philips may subcontract the
manufacture of Philips Products or DISH Branded Philips Products upon HTS'
prior written approval of the subcontract manufacturer suggested by Philips
(a "Permitted Subcontractor"). HTS will not unreasonably withhold its
approval of a subcontract manufacturer suggested by Philips; provided,
however, Philips recognizes and acknowledges that HTS may withhold its
approval of a subcontract manufacturer to which HTS has reasonable commercial
concerns, including without limitation: (i) adequate protection of the
Technology or HTS Confidential Information (as defined in Section 14.1.1
below); (ii) proper use of the Technology; or (iii) the subcontract
manufacturer (at the finished goods level) is a competitor (in HTS'
reasonable judgment) of HTS or ESC, or manufactures Digital Satellite
Receivers for a competitor of HTS or ESC.
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11.8 [CONFIDENTIAL MATERIAL REDACTED]
11.9 RESPONSIBILITY FOR PERMITTED SUBCONTRACTOR. Philips acknowledges
and agrees that it shall bear full responsibility for all acts and omissions
of any Permitted Subcontractor (including any employee or agent thereof,
whether or not such acts or omissions are with the scope of employment of
such employees or agents) relating to the manufacture of the Philips Products
and/or the DISH Branded Philips products under this Agreement, to the same
extent as if any such act or omission were committed by Philips.
11.10 ACKNOWLEDGMENT OF RIGHTS.
11.10.1 HTS' RIGHTS. Philips acknowledges and understands
that HTS or any of its Affiliates may, directly or through any third party,
manufacture, assemble, distribute and sell Digital Satellite Receivers in the
Territory and anywhere else in the world for use by end users in the
Territory and anywhere else in the world in connection with the DISH Network
(as defined in Section A of the Introduction) or any other satellite or other
programming delivery system. Philips further acknowledges and understands
that HTS and its Affiliates may at any time license or sublicense the
Technology in the Territory or elsewhere, in whole or in part, for the
manufacture of Digital Satellite Receivers or for any other purpose.
11.10.2 PHILIPS' RIGHTS. Subject to Philips' duties and
obligations hereunder with respect to the Technology (including any
Improvements, modifications and enhancements thereof, but not including
Philips Technology) and Third Party Software sublicensed to Philips by HTS
under Section 11.1 above, HTS acknowledges
38
and understands that Philips or any of its Affiliates may, directly or
through any third party, manufacture, assemble, distribute and sell Digital
Satellite Receivers in the Territory and anywhere else in the world for use
by end users in the Territory and anywhere else in the world in connection
with any DBS (or other programming delivery system) programming service other
than the DISH Network (as defined in Section A of the Introduction). Subject
to Philips' duties and obligations hereunder with respect to the Technology
(including any Improvements, modifications and enhancements thereof, but not
including Philips Technology) and Third Party Software sublicensed to Philips
by HTS under Section 11.1 above, HTS further acknowledges and understands
that Philips may at any time license or sublicense Philips Intellectual
Property in the Territory or elsewhere, in whole or in part, for the
manufacture of Digital Satellite Receivers or for any other purpose.
11.11 Philips acknowledges and understands that manufacture of the
Philips Products and DISH Branded Philips Products may require compliance
with MPEG 2, DVB and other industry standard technologies and the use of a
range of other third party intellectual property rights. Philips
acknowledges and understands that it, and not HTS, is responsible for: (i)
determining those entities with which it must negotiate and enter into
licensing agreements; (ii) negotiating license rights from all those third
parties; and (iii) paying (and represents and warrants that it will pay as
and when due) any and all applicable license fees to any and all entities to
which a royalty or license fee is required to be paid for a unit of the
Philips Products or DISH Branded Philips Product manufactured and/or sold by
Philips. HTS shall promptly inform Philips of any royalties of which it
becomes aware will become due with respect to the Philips Products or DISH
branded Philips Products.
11.12 Philips understands and acknowledges that HTS has designed a
specific electronic on screen programming guide, which may be incorporated by
Philips into the Philips Products. Philips may substitute another on screen
programming guide in the Philips Products; provided that such substitute on
screen programming guide meets the Specifications as set forth in attached
Exhibit F and the User Interface Guidelines. Philips acknowledges and agrees
that, to the extent Philips incorporates the electronic programming guide
used in the HTS System (the "EPG") into the Philips Products or the DISH
Branded Philips Products, it does so at its sole risk and liability. Philips
further acknowledges and agrees that the EchoStar Parties make no
representations or warranties, either express or implied, statutory or
otherwise, with respect to the EPG and all such warranties are hereby
excluded except to the extent such exclusion is absolutely prohibited by law.
Without limitation of the foregoing, Philips acknowledges and agrees that no
warranty whatsoever is given regarding HTS' ownership of the EPG or any
requirements to make royalty and/or other license fee payments to third
parties. Philips acknowledges and understands that the use of the EPG or an
electronic programming guide other than the EPG which meet the Specifications
and is compatible with the Technology in the Philips Products or DISH Branded
Philips Products may require licenses from third parties, and that Philips
and not HTS is responsible for: (i) determining those entities with which it
must negotiate and enter into licensing agreements; (ii)
39
negotiating license rights form all those third parties; and (iii) paying
(and represents and warrants that Philips will pay as and when due) any and
all applicable license fees to any and all entities to which a royalty or
license fee is required to be paid for a unit of the Philips Products or the
DISH Branded Philips Products manufactured and/or sold by or for Philips.
Philips further acknowledges and agrees that Philips hall be solely
responsible for the payment, and the EchoStar Parties shall have no
obligation to indemnify Philips for, any costs, losses, liabilities, damages,
lawsuits, judgments, claims, actions, penalties, fines and expenses
(including, without limitation, interest, penalties, reasonable attorneys'
fees and all monies paid in the investigation, defense or settlement of any
or all of the foregoing), that arise out of, or are incurred in connection
with the incorporation of the EPG or any other electronic programming guide
into the Philips Products or the DISH Branded Philips Products.
11.13 SERIAL NUMBERS AND SMART CARD NUMBERS. For the purpose of
facilitating the Activation of Philips Products and DISH Branded Philips
Products by ESC, Philips will provide ESC with a list, on paper and
electronic media in the format requested by ESC, which includes the serial
number of each Philips Product, DISH Branded Philips Product and
corresponding Smart Card number prior to: (i) delivery of the Philips Product
to a Philips Retailer, or the DISH Branded Philips Product to HTS or its
Affiliates; or (ii) placement of the Philips Products into Philips' inventory
utilized for the fulfillment of orders submitted to Philips directly from
end-users. The implementation of this Section 11.13 will be mutually agreed
upon in a writing signed by both parties; provided, however, that Philips
acknowledges and agrees that no Philips Products will be Activated by ESC
until such time as a mutual agreement on implementation is reached by the
parties.
11.14 RESIDENTIAL CUSTOMER AGREEMENT. Philips agrees that it will
include a copy of ESC's standard Residential Customer Agreement, as amended
from time to time in ESC's sole discretion, (the "RCA") with each OEM
Product, Philips Product and DISH Branded Philips Product packaged by
Philips. Philips agrees to include the RCA in the same manner as the then
current method used to include the RCA with each Digital Satellite Receiver
packaged by HTS and its Affiliates, as such method may change from time to
time in HTS' sole discretion, or such other manner as the parties may agree
to in a writing signed by both parties.
12. [CONFIDENTIAL MATERIAL REDACTED]
40
[CONFIDENTIAL MATERIAL REDACTED]
13. QUALITY CONTROL
13.1 MANUFACTURE OF PHILIPS PRODUCTS
13.1.1 INCORPORATION OF SPECIFICATIONS. Philips undertakes and
agrees to incorporate the Specifications in the manufacture of the Philips
Products and DISH Branded Philips Products and agrees to comply with any and
all industry and governmental standards and regulations, including, without
limitation, product safety standards, which may apply to the manufacture,
sale and use of the Philips Products
41
and DISH Branded Philips Products in the Territory. Subject to the terms and
conditions of Sections 15.3.1 and 15.3.2 below, Philips may make product
feature changes to the Philips Products and DISH Branded Philips Products or
make changes which do not adversely affect the function or performance of the
Philips Products and DISH Branded Philips Products, without HTS' consent.
Philips agrees that in the manufacture of the Philips Products and DISH
Branded Philips Products pursuant to this Agreement, manufacturing operations
shall at all times be conducted to ensure that the Philips Products and DISH
Branded Philips Products manufactured by Philips or Permitted Subcontractors
shall be in strict conformance with the Specifications, as defined in Exhibit
F. EchoStar does not warrant that Philips Products or DISH Branded Philips
Products manufactured by or on behalf of Philips will perform in accordance
with the performance requirements of the Specifications. Changes to the
Specifications shall be made in accordance with HTS' standard Engineering
Change Request ("ECR") procedure, as such ECR procedure may change from time
to time in HTS' sole discretion. HTS current ECR procedure is set forth in
Exhibit R attached hereto.
13.1.2 MARKING PHILIPS PRODUCTS. Philips agrees to individually
xxxx each unit of Philips Product and DISH Branded Philips Product
manufactured by Philips pursuant to this Agreement with a unique serial
number and a clear and distinct designation of the country of manufacture
and/or assembly origin in accordance with applicable laws.
13.1.3 COMPLIANCE WITH IMPORT LAWS. Philips will, at Philips'
sole cost and expense, comply with all laws, rules and regulations relating
to the importation by Philips of machinery, equipment, parts, components and
materials required or used in the manufacture, assembly and testing of the
Philips Products and DISH Branded Philips Products, without any
responsibility or liability on the part of HTS with respect to such import
licenses or imports.
13.2 LOCATION(S); INSPECTION OF LOCATION(S) AND PHILIPS PRODUCTS
13.2.1 LOCATION. The Philips Products and DISH Branded Philips
Products will be manufactured, assembled and tested at the Location(s)
operated by Philips or an Affiliate of Philips or by a Permitted
Subcontractor listed in Exhibit L.
13.2.2 LOCATION INSPECTION. Philips will permit HTS to enter
Location(s) upon reasonable prior notice during normal business hours to
inspect the facilities, equipment and materials used in manufacturing,
assembling and testing the Philips Products and DISH Branded Philips
Products, to check operations and methods, and to take with them reasonable
samples of the Philips Products and DISH Branded Philips Products as provided
in Section 13.2.3 and reasonable samples of the materials and supplies used
in manufacturing, assembling and testing the Philips Products and DISH
Branded Philips Products.
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13.2.3 APPROVAL OF PHILIPS PRODUCTS. Philips shall, at Philips'
cost, provide HTS up to thirty-six (36) (as determined by HTS) production
intent (pre-pilot) samples of each model Philips Product and DISH Branded
Philips Product prior to their full-scale manufacture by Philips; provided,
however, that HTS provides Philips with a list identifying HTS' intended use
for each such sample. HTS will notify Philips in writing of the conformity
or otherwise of that Philips Product or DISH Branded Philips Product to the
Specifications within thirty (30) days of receipt by HTS of the Philips
Product or DISH Branded Philips Product. Philips also shall, at Philips'
cost, provide HTS up to thirty-six (36) (as determined by HTS) production
samples of each model Philips Products and DISH Branded Philips Product prior
to its full-scale manufacture by Philips; provided, however, that HTS
provides Philips with a list identifying HTS' intended use for each such
sample. HTS will notify Philips in writing of the conformity or otherwise of
that Philips Product or DISH Branded Philips Product to the Specifications
within fifteen (15) days of receipt by HTS of the Philips Product or DISH
Branded Philips Product. The written test procedures and test plan that is
used to determine conformity of the Philips Products and DISH Branded Philips
Products to the Specifications ("Test Procedures and Plan"), a copy of which,
in written form, will be attached hereto as Exhibit N) shall be furnished to
Philips by HTS at least one hundred and twenty (120) days prior to the start
of full-scale manufacture of the first Philips Products by Philips. If HTS
reasonably determines that any of Philips' samples fail to meet the quality,
performance and compatibility standards in the Test Procedures and Plan, then
Philips shall promptly correct the deficiency before continuing the
manufacture of the Philips Products and DISH Branded Philips Products. The
examination by HTS of the conformity of the Philips Products and DISH Branded
Philips Products to the Test Procedures and Plan shall not be construed as
constituting a certification or warranty. Philips shall not be authorized to
refer to HTS' examination in connection with the sale of the Philips
Products or DISH Branded Philips Products as a certification or warranty by
HTS, unless expressly agreed by HTS. HTS shall have no liability whatsoever
arising from its examination of the Philips Products and DISH Branded Philips
Products. Should HTS fail to provide to Philips the Test Procedures and Plan
at least one hundred and twenty (120) days prior to the start of full-scale
manufacture of a particular Philips Product or DISH Branded Philips Product
by Philips, Philips shall not be limited or restrained in any way from
beginning production of that particular Philips Product or DISH Branded
Philips Product, and HTS will waive its rights under this Section with
respect to the first full-scale manufacture of that particular Philips
Product or DISH Branded Philips Product; provided that in any event Philips'
or its Permitted Subcontractors' manufacture of that particular Philips
Products or DISH Branded Philips Product must be in compliance with the
Specifications. Notwithstanding the immediately preceding sentence, it shall
not be necessary for Philips to commence production of Philips Products less
than one hundred and twenty (120) days after receipt of the Test Procedures
and Plan in order to exercise "reasonable commercial efforts" to commence
production of commercial quantities of a full product line of HTS
System-compatible Philips Products no later than the fourth quarter of 1998
as required under Sections 11.1 and 18.3(ii).
43
13.2.4 QUALITY CONTROL PROCEDURES. Philips and its Permitted
Subcontractors shall maintain a quality control program which ensures
compliance with any and all applicable governmental standards, regulations or
certifications. All work undertaken by Philips shall be performed in
accordance with Philips established Quality Control procedures and
guidelines, which Philips shall provide to HTS for HTS' review, at HTS'
request.
13.2.5 FACTORY TESTING. Prior to shipment from Location(s), each
Philips Product and DISH Branded Philips Product shall be factory tested by
Philips or its Permitted Subcontractors, and Philips and its Permitted
Subcontractors shall submit to HTS, upon request of HTS, complete certified
test results. Upon reasonable prior notice, Philips will permit HTS to have
access to all such records for Philips and its Permitted Subcontractors at
Philips Location(s) during normal business hours.
13.3 [CONFIDENTIAL MATERIAL REDACTED]
44
[CONFIDENTIAL MATERIAL REDACTED]
45
[CONFIDENTIAL MATERIAL REDACTED]
14. CONFIDENTIAL AND PROPRIETARY INFORMATION
14.1 CONFIDENTIAL INFORMATION
14.1.1 HTS CONFIDENTIAL INFORMATION. Philips understands that
the Technology, including without limitation, Exhibits E, F, H, and N and all
information relating to it, and information provided by HTS to Philips or
otherwise obtained by Philips relating to the business or operations of HTS
and its Affiliates (except as set forth below in Section 14.1.5) ("HTS
Confidential Information") will be treated by Philips, its Affiliates,
employees, agents and Permitted Subcontractors as strictly confidential.
Philips represents and agrees that it will only use HTS Confidential
Information as expressly permitted under the terms and conditions of this
Agreement, or as otherwise permitted in writing in advance by HTS. Philips
may only disclose HTS Confidential Information to: (i) those of Philips and
its Affiliates officers, directors and employees who have a need to know HTS
Confidential Information in connection with carrying out Philips' obligations
under this Agreement, and only provided that each of such parties agrees in
writing to be bound by the terms and conditions of this Agreement; and (ii)
Permitted Subcontractors as provided in Section 11.7 above. Philips shall not
disclose HTS Confidential Information to any others, or allow any others to
use HTS Confidential Information, during the Term or at any time thereafter,
without the prior written consent of HTS. Philips represents and agrees that
it shall use its best efforts to protect the confidential nature of HTS
Confidential Information, and in all events shall use at least the same
degree of care as it uses to protect its own confidential and proprietary
information. Further, Philips acknowledges and understands that HTS
Confidential Information would be useful to HTS competitors, and would cause
damage to HTS current and prospective business if disclosed without the prior
written consent of HTS or in violation of this Agreement.
14.1.2 PHILIPS CONFIDENTIAL INFORMATION. HTS understands that
the information provided by Philips to HTS or otherwise obtained by HTS relating
to the business or operations of Philips and its Affiliates (except as set forth
below in Section 14.1.5) ("Philips Confidential Information") will be treated by
HTS, its Affiliates,
46
employees, and agents as strictly confidential. HTS represents and agrees
that it will only use Philips Confidential Information as expressly permitted
under the terms and conditions of this Agreement, or as otherwise permitted
in writing in advance by Philips. HTS may only disclose Philips Confidential
Information to those of HTS' or its Affiliates' officers, directors and
employees who have a need to know Philips Confidential Information in
connection with carrying out HTS obligations under this Agreement, and only
provided that each of such parties agrees in writing to be bound by the terms
and conditions of this Agreement. HTS shall not disclose Philips Confidential
Information, during the Term or at any time thereafter, without the prior
written consent of Philips. HTS represents and agrees that it shall use its
best efforts to protect the confidential nature of Philips Confidential
Information, and in all events shall use at least the same degree of care as
it uses to protect its own confidential and proprietary information. Further,
HTS acknowledges and understands that Philips Confidential Information would
be useful to Philips competitors, and would cause damage to Philips current
and prospective business if disclosed without the prior written consent of
Philips or in violation of this Agreement.
14.1.3 GENERAL. At all times during the term of this Agreement
and for a period of five (5) years thereafter, the parties and their
employees will maintain, in confidence, the terms and provisions of this
Agreement, as well as all data, summaries, reports or information of all
kinds, whether oral or written, acquired, devised or developed in any manner
from the another party's personnel or files, or as a direct or indirect
result of a party's actions or performance under this Agreement, and each
party represents that it has not and will not reveal the same to any persons
not employed by such party, except: (i) at the written direction of the party
which is the owner of such information; (ii) to the extent necessary to
comply with law, the valid order of a court of competent jurisdiction or the
valid order or requirement of a governmental agency or any successor agency
thereto, in which event the disclosing party shall notify the owner of the
information in advance, prior to making any disclosure, and shall seek
confidential treatment of such information; (iii) as part of its normal
reporting or review procedure to its parent company, its auditors and its
attorneys, provided such parent company, auditors and attorneys agree to be
bound by the provisions of this paragraph; or (iv) to the extent necessary to
permit the performance of obligations under this Agreement.
14.1.4 SUBSCRIBER INFORMATION. All subscribers who subscribe to
DISH Network programming services shall be deemed customers of ESC for all
purposes relating to direct to home programming services. Philips
acknowledges and agrees that the names, addresses and related information
("Subscriber Information") of DISH Network subscribers are as between Philips
and ESC, with respect to the delivery of direct to home satellite services,
proprietary to ESC, and shall be treated with the highest degree of
confidentiality by Philips. Philips will not directly or indirectly use any
Subscriber Information for the purpose of soliciting, or to permit any others
to solicit, DISH Network subscribers to subscribe to any other programming
services, and Philips shall under no circumstance directly or indirectly
reveal any Subscriber Information to
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any third party for any reason without the express prior written consent of
ESC, which ESC may withhold in its sole and absolute discretion. In
furtherance and without limitation of the foregoing, Philips will not,
directly or indirectly: (i) target, or knowingly assist any other person or
entity to target, any solicitation of programming services to any DISH
Network subscribers; provided, however, that nothing contained herein shall
restrict Philips from being permitted to solicit all of its customers
generally; or (ii) offer, directly or indirectly, an additional economic
incentive (that is not generally offered by a third party provider of
programming services to all of its potential subscribers at the time of such
Philips offer) to DISH Network subscribers, to subscribe to, market,
purchase, or sell any prgramming services; provided, however, that nothing
contained herein shall restrict Philips from offering Philips' normal and
customary economic incentives all of its customers, offered in connection
with Philips products generally. The provisions of this Section 14.1.4 shall
survive termination or expiration of this Agreement indefinitely.
14.1.5 EXCLUSIONS. For the purpose of this Section 14, HTS and
Philips as the case may be, are referred to as the "Recipient" or the
"Discloser". Notwithstanding any provision to the contrary in this Section
14, HTS Confidential Information and Philips Confidential Information
(collectively referred to as the "Confidential Information") shall not
include any information which is:
(i) already in or comes into the public domain other
than through disclosure by the Recipient;
(ii) independently developed or known by the Recipient,
as evidenced by written documentation compiled by the Recipient prior to
receipt by the Recipient the Confidential Information in question; or
(iii) received by the Recipient from a third party without
restriction and without breach of this Agreement.
14.1.6 SCOPE. The Recipient's confidentiality obligation shall
include, but is not limited to, not making more copies of the Confidential
Information than is reasonably necessary for fulfilling its obligations under
this Agreement and security backup purposes, without the prior written
consent of the Discloser. The original and all copies or other reproductions
of the Confidential Information shall contain markings of "Confidential",
"Proprietary" or like import. All materials created or fabricated by the
Recipient, including, without limitation, evaluations, based on the
Confidential Information, are owned by and are the exclusive property of the
Discloser, and shall be returned by the Recipient to the Discloser
immediately upon request by the Discloser or termination or expiration of
this Agreement.
14.1.7 NO IMPLIED LICENSE. Except as expressly set forth in this
Agreement, this Agreement shall not be construed as granting or conferring
any interests or rights, by license or otherwise, in any of the Confidential
Information, including, without limitation, any patent or patent application
or any copyright in which
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the Discloser now has or subsequently may obtain any right, title or interest
or any other intellectual property rights.
14.1.8 EQUITABLE RELIEF. The Recipient recognizes that the
unauthorized use or disclosure by the Recipient, its Affiliates, its
employees, agents or Permitted Subcontractors of any of the Confidential
Information would cause irreparable injury and damage to the Discloser for
which monetary damages alone would be an inadequate remedy, and which damages
are difficult to accurately measure. Accordingly, the Recipient agrees that
the Discloser shall have the right, in addition to and not in limitation of
any other remedies available, to obtain immediate injunctive relief (without
the necessity of posting or filing a bond or other security) to restrain the
threatened or actual violation hereof by the Recipient, its Affiliates, its
employees and agents, as well as other equitable relief allowed by the
federal and state courts. The foregoing remedy of injunctive relief is agreed
to without prejudice to any party to exercise any other rights and remedies
it may have, including without limitation, the right to terminate this
Agreement and seek damages or other legal or equitable relief. All of the
confidentiality obligations set forth in this Agreement, including, without
limitation, Philips' obligations to protect the Technology, shall survive the
termination or expiration of this Agreement.
14.1.9 ECONOMIC BENEFITS DERIVED HELD IN TRUST. In the event
that Philips derives an economic benefit, in any form, from a violation of
its obligations under Section 14.1.4, it is hereby agreed that such economic
benefit is the property of ESC and that Philips shall deliver the cash value
of the economic benefit to ESC immediately upon receipt of the economic
benefit. It is further agreed that Philips shall hold such economic benefit
in trust for the benefit of ESC until such time as its cash value is
delivered to ESC. The foregoing is agreed to without prejudice to ESC to
exercise any other rights and remedies it may have, including without
limitation, the right to terminate this Agreement and seek damages or other
legal or equitable relief.
14.1.10 CONFIDENTIALITY TERM. Recipient shall be obligated to
maintain the Confidential Information in confidence for a period of five (5)
years after disclosure by Discloser.
15. USE OF TECHNOLOGY
15.1 NO REVERSE ENGINEERING. Philips shall not reverse engineer (or
make any other attempt using any method or technique whatsoever to determine
the source code for) any HTS Software, Third Party Software, or other
software provided by HTS in binary form, including, but not limited to, the
interface software and the object code of the conditional access task of the
Technology.
15.2 LOCATIONS. Philips shall not, without the prior written consent
of HTS, which consent shall not be unreasonably withheld, use the Technology
or any derivative thereof at any location other than the Location(s).
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15.3 MODIFICATION OF HTS SOFTWARE.
15.3.1 MODIFICATIONS AND ENHANCEMENTS OF THE HTS SOFTWARE BY
PHILIPS. Nothing in this Agreement shall prohibit Philips (under the terms
and conditions of this License), from developing modifications or
enhancements to the HTS Software which do not require knowledge of, or access
to, the source code for the HTS Software (the "Source Code"). Any and all
intellectual property rights which result from such development of
modifications or enhancements (including without limitation any derivative
works for copyright purposes) to the HTS Software hereunder by Philips and
which are materially related to the HTS Software shall become and remain (at
no cost to HTS) the sole and exclusive property of HTS; provided, however,
that "HTS Software" and "HTS Systems" shall be deemed to include such
software and products as modified or enhanced hereunder and Philips shall
receive a royalty free license to use such modifications and enhancements
during the Term in accordance with the terms and conditions of this
Agreement, including without limitation Sections 11.1 and 11.6 above.
15.3.2 PHILIPS DEVELOPMENTS. Subject to Section 13.1.1 and
Section 11.6 above, HTS acknowledges that Philips may develop and incorporate
into Philips Products made under this Agreement features that are proprietary
to Philips ("Philips Technology"). For purposes of this Section, "Philips
Technology" shall include only such features which do not: (i) contain any
Technology; and (ii) do not constitute a derivative work for copyright
purposes, modification or enhancement of the Technology. With regard to
Philips Technology, HTS shall have the option to receive a license to use
such Philips Technology for the sole purpose of manufacturing and selling HTS
Systems under the HTS Marks or trademarks of Affiliates at fair market value.
Except to third party manufacturers of HTS Systems under the brand name of
HTS or its Affiliates, HTS shall have no right to license or sublicense
Philips Technology to third parties without the express written permission of
Philips.
15.3.3 THIRD PARTY INTELLECTUAL PROPERTY. Except as relates to:
(i) Improvements; (ii) other modifications or enhancements to the HTS
Software under Sections 15.3.1; or (iii) Philips Technology under Section
15.3.2, neither party shall have any rights to any intellectual property
developed by a third party for or in conjunction with the other party. Each
party understands and acknowledges that it may be restricted from being
permitted to use any intellectual property developed by a third party for or
in conjunction with the other party, including, but not limited to,
intellectual property with regard to HTS Systems. To the extent that the HTS
System contains Third Party Software that neither HTS nor any of its
Affiliates have the right to sublicense to Philips, HTS will use reasonable
commercial efforts to assist Philips in obtaining a license or agreement to
license that will enable Philips to perform the activities contemplated in
this Agreement.
15.4 U.S. EXPORT AND OTHER LAWS
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15.4.1 COMPLIANCE REQUIREMENTS.
(a) Philips understands and acknowledges that HTS'
obligations to Philips under this Agreement, including, without limitation,
any and all obligations of HTS to provide the Technology (including the
Specifications), any technical assistance, any media in which any of the
foregoing is contained and related technical data (collectively referred to
as the "Data") are subject to compliance with all applicable laws and
regulations of the United States of America, and with the terms of any
applicable U.S. export licenses issued in connection with the furnishing of
the Data to Philips under this Agreement, and in the event HTS obligations
should conflict with any law, regulation or export license, HTS shall be
excused from performance of such obligations to the extent required for
compliance therewith.
(b) Philips agrees to comply with all terms of any U.S.
export licenses or regulations affecting Philips' use or disposition of
technical data or the product thereof, or any know-how, technical
information, manufacturing or test equipment, components or software supplied
by HTS under this Agreement. In furtherance and not in limitation of the
foregoing, Philips agrees that it will not export or reexport:: (1) the
Technology; (2) any Smart Cards purchased under Section 13 above; or (3) any
Philips Product, DISH Branded Philips Product or other product designed,
developed or manufactured utilizing the Technology, to Cuba, Iran, Iraq,
Libya, North Korea, Sudan or Syria without the prior approval of the United
States Government; and that it will not use: (i) the Technology; (ii) any
Smart Cards purchased under Section 13 above; or (iii) or any Philips
Product, DISH Branded Philips Product or other product designed, developed or
manufactured utilizing the Technology, to support directly or indirectly the
design, development, production or use of nuclear, chemical or biological
weapons or ballistic missiles.
(c) HTS shall use commercially reasonable efforts to
effect compliance, as soon as practicable, with applicable U.S. export laws
and regulations in connection with the terms of this Agreement which are
applicable to HTS (including obtaining the necessary licenses in connection
with the furnishing of Data to Philips).
15.4.2 COMPLIANCE REPRESENTATION.
Philips represents and warrants that it will comply in all
respects with the export and reexport restrictions set forth in any
applicable U.S. export licenses with respect to any item used in the
manufacture of the Philips Products or DISH Branded Philips Products by
Philips and will otherwise comply with any and all applicable U.S. export
and reexport laws and regulations or other United States laws and regulations
in effect from time to time. In furtherance and not in limitation of the
foregoing, Philips represents and warrants that it will not export or
reexport the Technology or any Philips Product, DISH Branded Philips Product
or other product
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designed, developed or manufactured utilizing the Technology to Cuba, Iran,
Iraq, Libya, North Korea, Sudan or Syria without the prior approval of the
United States Government; and (iii) it will not use the Technology or any
Philips Product, DISH Branded Philips Product or other product designed,
developed or manufactured utilizing the Technology to support directly or
indirectly the design, development, production or use of nuclear, chemical or
biological weapons or ballistic missiles. Philips shall cooperate with HTS
in making application for and securing any required export licenses,
approvals or other authorizations and shall prepare, execute and deliver all
documents that may be required in connection therewith.
15.4.3 Philips acknowledges and understands that U.S. export laws
relating to the Philips Products and DISH Branded Philips Products may change
from time to time in the future. Philips acknowledges that it is Philips'
sole responsibility to be and remain informed of all U.S. laws relating to
the export of Philips Products and DISH Branded Philips Products outside of
the U.S. HTS has absolutely no obligation to update Philips regarding the
status of U.S. export laws or any other U.S. laws relating to the export of
Philips Products and DISH Branded Philips Products outside of the U.S.
Without HTS giving any consent for export of the Philips Products or DISH
Branded Philips Products and subject to territorial limitations of this
Agreement, Philips represents and agrees that prior to exporting and/or
selling any Philips Products or DISH Branded Philips Products outside of the
U.S., it will investigate all applicable U.S. laws relating to the export of
Philips Products and DISH Branded Philips Products outside of the U.S.
Philips is strictly prohibited from violating any U.S. law relating to the
export of Philips Products and DISH Branded Philips Products outside of the
U.S. Should Philips export or sell any Philips Product or DISH Branded
Philips Products outside of the U.S. in violation of this Agreement and/or
U.S. law, this Agreement shall automatically terminate.
16. TRADEMARKS
16.1 PHILIPS MARKS; STANDARDS MARKS. Except as otherwise expressly
provided in Section 16.2 below, Philips may only affix the Philips Marks and
the "MPEG 2" standard and "DVB" standard trademarks on the Philips Product.
Philips recognizes and understands that HTS has no authority to grant Philips
any rights to affix the "MPEG 2" standard and "DVB" standard trademarks to
the Philips Products. Should Philips desire to do so, Philips must negotiate
the entitlement of such rights with the applicable rights holders. Except as
restricted by Section 16.3 below, upon HTS' prior written consent, which
consent shall not be unreasonably withheld, Philips may affix other Philips
brand names to the Philips Products.
16.2 HTS MARKS. Philips shall not affix, use, display or otherwise
incorporate any registered or unregistered HTS Marks or service marks on or
in connection with Philips Products, including, but not limited to, on the
receiver, antenna and packaging, or the electronic on screen guide, except
as: (i) expressly consented to in advance in writing by HTS, which consent
may granted or withheld in HTS' absolute discretion; and
52
(ii) if such consent is granted, strictly in accordance with the usage
guidelines for HTS Marks, as such guidelines may change from time to time in
HTS' sole discretion. In addition, Philips agrees that HTS shall have the
right to require Philips to affix the HTS Marks set forth in Exhibit D and
the User Interface Guidelines on or in connection with the Philips Products,
including without limitation on the Accessories and packaging and on the
electronic program guide, such that the HTS Marks are displayed in a manner
which is at least equally as prominent as the Philips Marks affixed to the
same. Philips also agrees that, for the duration of the term and any
extensions thereof, it will affix the HTS Marks set forth in Exhibit D in the
center of, and above all Philips Marks and Third Party Marks affixed to, all
dish antennas sold to end-users in connection with Philips Products.
16.3 OEM BRANDING AND MANUFACTURE RESTRICTION. Philips shall not
manufacture or assemble the Philips Product under any third party label or
brand for any third party, without HTS' prior written approval, which
approval HTS may withhold in its sole discretion.
17 [CONFIDENTIAL MATERIAL REDACTED]
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18. TERM AND TERMINATION
18.1 [CONFIDENTIAL MATERIAL REDACTED]
18.2 TERMINATION BY EITHER PARTY UPON DEFAULT. This Agreement may be
terminated by a party (the "Affected Party") upon the occurrence of any of
the following with respect to the other party (the "Other Party"):
18.2.1 The Other Party commits a payment default which is not
cured within ten (10) days of receipt of written notice from the Affected
Party.
18.2.2 The Other Party defaults on any obligation or breaches
any representation, warranty or covenant in this Agreement (regardless of
whether breach or default of such obligation, representation, warranty or
Covenant is designated as giving rise to a termination right), and such
default or breach is not cured within thirty (30) days of receipt of written
notice from the Affected Party. The parties agree that all obligations,
representations, warranties and covenants contained in this Agreement,
whether or not specifically designated as such, are material to the agreement
of the parties to enter into and continue this Agreement.
18.3 TERMINATION BY HTS. HTS may terminate this Agreement upon written
notice to Xxxxxxxx at any time in case of: (i) the occurrence of an event
which gives rise to a right of ESC to terminate the payment of Commissions to
Xxxxxxxx pursuant to the provisions of Section 8 above; (ii) Xxxxxxxx fails
to use reasonable commercial efforts to commence production of commercial
quantities of a full product line of HTS System-compatible of Xxxxxxxx
Products no later than the fourth quarter of 1998; (iii) Xxxxxxxx fails to
pay the License Activation Fee within thirty (30) days of execution of this
Agreement by both parties; (iv) acquisition of Xxxxxxxx, directly or
indirectly, by a third party, or the merger of Xxxxxxxx with a third party
which manufactures, distributes or sells Digital Satellite Receivers (this
Section will not apply to an acquisition of Xxxxxxxx by, or the merger of
Xxxxxxxx with an Affiliate of Xxxxxxxx; provided that such Affiliate is not a
direct or indirect provider of direct to home satellite programming); (v)
Phillip's falsification of any material records or reports required
hereunder; or (vi) a material breach, as determined in the EchoStar Parties
reasonable judgement, by Xxxxxxxx of the confidentiality provisions contained
in Section 14 above.
18.4 TERMINATION OF LICENSE. In the event; (i) this Agreement is
terminated pursuant to Sections 18.2 or 18.3; or (ii) HTS loses its right,
title or interest in all of the Technology: (a) the License granted hereunder
shall terminate; (b) all Confidential information shall be returned to the
Discloser; and (c) Xxxxxxxx shall cease using the Technology, including,
without limitation, to manufacture the Xxxxxxxx Products and DISH branded
Xxxxxxxx Products.
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18.6 PAYMENT, FORFEITURE AND CANCELLATION. Upon expiration or
termination of this Agreement for any reason, all sums due the EchoStar
Parties or Philips must be immediately paid. Any credit or allowance under
any cooperative or incentive program or other promotion (including any credit
or allowance against the future purchase of OEM Products or Philips Products)
which has not been applied by such date shall be forfeited unless otherwise
expressly provided in the program or promotion, and all orders in process
shall be deemed canceled unless in transit or paid for in advance by Philips
or the EchoStar Parties. The EchoStar Parties and Philips hereby waive all
claims against each other in connection with such forfeiture and cancellation.
18.7 SURVIVAL OF CERTAIN OBLIGATIONS. Termination or expiration of
this Agreement for any reason shall not terminate any obligation or liability
of one party to the other which is specified in this Agreement to expressly
survive termination or expiration, which arises by operation of law or which
logically is to be performed after termination or expiration, nor preclude or
foreclose recovery of damages or additional remedies available to any party
under applicable law, except as otherwise provided in this Agreement.
18.8 [CONFIDENTIAL MATERIAL REDACTED]
19. REPRESENTATIONS AND WARRANTIES
19.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF PHILIPS. Philips
represents, warrants and covenants, as follows, which representations,
warranties and covenants shall survive the execution of this Agreement:
19.1.1 Philips has the right and authority to enter into this
Agreement and the execution, delivery and performance by Philips of this
Agreement have been duly authorized by all requisite corporate action and
will not violate any provision of Philips articles of incorporation or
bylaws, or any provision of any agreement by which Philips is bound or
affected.
19.1.2 Philips acknowledges the applicability of U.S. export
control regulations which prohibit the sale, export, reexport or diversion of
certain products and technology to certain countries, and will not sell,
export or reexport any of the Philips Products, DISH Branded Philips Products
or OEM Products, in the form received, or as
55
modified or incorporated into other equipment, except as permitted under this
Agreement and authorized by such regulations.
19.1.3 Philips has the necessary technical knowledge, practical
experience and capacity to manufacture, assemble and test the Philips
Products and the DISH Branded Philips Products under the License granted
hereunder.
19.1.4 Philips is not, nor at any time will it be, in violation
of any applicable Law by entering into and undertaking the performance of
this Agreement and in performing its obligations pursuant to this Agreement.
Philips agrees to comply with any and all applicable Laws.
19.1.5 Philips shall pay, as and when due, any and all applicable
MPEG 2, DVB, Macrovision, programming guide and other royalties and
applicable license fees to any and all applicable entities to which a royalty
or license fee is required to be paid in connection with manufacture or
distribution of the Philips Products and DISH Branded Philips Products.
19.1.6 Philips shall provide to HTS such adequate assurances as
HTS may require from time to time in order to ensure that the requirements of
this Section 19.1 have been met, and will continue to be met on an ongoing
basis, by Philips.
19.1.7 Philips represents and warrants that it will secure
licenses for Third Party Intellectual Property incorporated into DISH Branded
Philips Products to the same extent that it secures licenses for Third Party
Intellectual Property incorporated into Philips Products. Violation of this
provision shall not be subject to the limitations on Philips' indemnification
obligations set forth in Section 21.2.1(i) below.
19.1.8 Except as otherwise expressly stated in this Agreement,
Philips makes no other representations or warranties, either express or
implied, statutory or otherwise, and all such warranties are hereby excluded
except to the extent such exclusion is absolutely prohibited by law.
19.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF HTS. The EchoStar
Parties (or, HTS or ESC as identified below) represent, warrant and covenant
as follows, which representations, warranties and covenants shall survive the
execution of this Agreement:
19.2.1 The EchoStar Parties have the right and authority to
enter into this Agreement and the execution, delivery and performance by the
EchoStar Parties of this Agreement have been duly authorized by all requisite
corporate action and will not violate any provision of articles of
incorporation or bylaws, or any provision of any agreement by which the
EchoStar Parties are bound or affected.
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19.2.2 HTS is the beneficial owner of Intellectual Property
created independently by it, and such Intellectual Property is not subject to
any covenant or other restriction preventing or limiting HTS' right to
manufacture the OEM Products as contemplated by this Agreement.
Notwithstanding the above, but subject to Section 6.1, no warranty whatsoever
is given for any Third Party Intellectual Property (as defined in Section
21.2.2(a)) or industry specific technology used in the manufacture of the OEM
Product, including, without limitation, the requirement to make payment of
applicable royalties or other license fees to others.
19.2.3 The EchoStar Parties are not, nor at any time will it be,
in violation of any applicable Law by entering into and undertaking the
performance of this Agreement and in performing their obligations pursuant to
this Agreement. The EchoStar Parties agree to comply with any and all
applicable Laws.
19.2.4 Except with respect to the technology and entities listed
in Exhibit O hereto, HTS shall pay, as and when due, any and all applicable
MPEG 2, DVB, Macrovision, programming guide and other royalties and
applicable license fees to any and all applicable entities to which a royalty
or license fee is required to be paid in connection with the manufacture or
distribution of the OEM Product.
19.2.5 The EchoStar Parties shall provide to Philips such
adequate assurances as Philips may require from time to time in order to
ensure that the requirements of this Section 19.2 have been met, and will
continue to be met on an ongoing basis, by HTS.
19.2.6 Except with respect to the technology and entities listed
on Exhibit O, HTS represents and warrants that it will secure licenses for
Third Party Intellectual Property incorporated into OEM Products to the same
extent that it secures licenses for Third Party Intellectual Property
incorporated into substantially similar Digital Satellite Receivers
manufactured by HTS. Violation of this provision shall not be subject to the
limitations on HTS' indemnification obligations set forth in Section
21.2.2(f) below.
19.2.7 Except as otherwise expressly stated in this Agreement,
the EchoStar Parties make no other representations or warranties, either
express or implied, statutory or otherwise, and all such warranties are
hereby excluded except to the extent such exclusion is absolutely prohibited
by law.
20. LIMITATION OF LIABILITY
20.1 LIMITATION. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
INDIRECT, SPECIAL, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING,
BUT NOT LIMITED TO, LOSS OF USE OR LOST
57
BUSINESS, REVENUE, PROFITS OR GOODWILL) ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT, THE LICENSE GRANTED HEREUNDER, TERMINATION OR
ANY OTHER MATTER RELATED HERETO. IN ADDITION TO AND WITHOUT LIMITATION OF
THE FOREGOING, HTS SHALL HAVE NO LIABILITY OR RESPONSIBILITY TO PHILIPS OR
ANYONE CLAIMING THROUGH PHILIPS FOR ANY LOSS OR DAMAGE (INCLUDING, GENERAL,
INDIRECT, EXEMPLARY, INCIDENTAL, SPECIAL AND CONSEQUENTIAL DAMAGES) ARISING
OUT OF ANY FAILURE OR DELAY IN SHIPMENT, LATE SHIPMENT, OR DELIVERY OF ALL
OR ANY PART OF ANY ORDER.
20.2 RISK ALLOCATION. The parties agree that each and every provision
of this Agreement which provides for a limitation of liability, disclaimer of
warranties or exclusion of damages is expressly intended to be severable and
independent of any other provision since they represent separate elements of
risk allocation between the parties and shall be separately enforced. This
Section 20.2 shall expressly survive the expiration or termination of this
Agreement.
21. [CONFIDENTIAL MATERIAL REDACTED]
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[CONFIDENTIAL MATERIAL REDACTED]
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[CONFIDENTIAL MATERIAL REDACTED]
60
[CONFIDENTIAL MATERIAL REDACTED]
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[CONFIDENTIAL MATERIAL REDACTED]
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[CONFIDENTIAL MATERIAL REDACTED]
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22. GENERAL
22.1 [CONFIDENTIAL MATERIAL REDACTED]
22.2 REMEDIES CUMULATIVE. It is agreed that the rights and remedies herein
provided in case of default or breach of this Agreement are cumulative and shall
not affect in any manner any other remedies that any 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.
22.3 NOTICE. Any notice to be given hereunder shall be in writing and
shall be sent by facsimile transmission, or by first class certified mail,
postage prepaid, or by overnight courier service, charges prepaid, to the party
notified, addressed to such party at the following address, or sent by facsimile
to the following fax number, or such other address or fax number as such party
may have substituted by written notice to the other parties. The sending of such
notice with confirmation of receipt thereof (in the case of facsimile
transmission) or receipt of such notice (in the case of delivery by mail or by
overnight courier service) shall constitute the giving thereof:
If to Philips: PHILIPS ELECTRONICS NORTH AMERICA CORPORATION
0000 Xxxxx Xxxxxx Xxxx Xxxxxxxxx
00
Xxxx Xxxx Xxxx, Xxxx 00000
ATTN: Xxxxxx Xxxxxx
Fax No.: (000) 000-0000
With a copy to: Philips Business Electronics B.V.
Building SFH 6
P.O. Box 80002
5600 JB Eindhoven
The Netherlands
ATTN: Xxxxx Xxxx
Fax No.: 000-00-00-000-0000
With a copy to: Xxxxxx X. Xxxxxx
Vice President and General Counsel
Fax No.: (000) 000-0000
If to HTS: HOUSTON TRACKER SYSTEMS, INC.
00 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
ATTN: Xxxx Xxxxxxx
Fax No.: (000) 000-0000
With a copy to: Xxxxx X. Xxxxxxxxx, Senior Vice President and
General Counsel
Fax No.: (000) 000-0000
If to ESC: ECHOSTAR SATELLITE CORPORATION
00 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
ATTN: Xxxxx XxXxxxxx
Fax No.: (000) 000-0000
With a copy to: Xxxxx X. Xxxxxxxxx, Senior Vice President and
General Counsel
Fax No.: (000) 000-0000
22.4 INDEPENDENT CONTRACTORS. This Agreement and the transactions
contemplated hereby are not intended to create an agency, partnership or joint
venture relationship between the parties, or confer any benefit on any third
party. All agents and employees of each party shall be deemed to be that party
agents and employees exclusively, and the entire management, direction, and
control thereof shall be vested exclusively in such party. Each party, its
agents and employees, shall not be entitled to any benefits, privileges or
compensation given or extended by the other party to its employees.
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22.5 WAIVER. The failure or delay of either party to exercise any right
hereunder shall not be deemed to be a waiver of such right, and the delay or
failure of either party to give notice of, or to terminate this Agreement
for, breach or default shall not be deemed to be a waiver of the right to do
so for that or any subsequent breach or default or for the persistence in a
breach or default of a continuing nature.
22.6 DISPUTE RESOLUTION, CHOICE OF LAW AND JURISDICTION.
22.6.1 Prior to any party: (i) sending notice of termination
of Commissions under Section 8.6.2; (ii) sending notice of termination of the
Agreement under Section 18.2 or 18.3; or (iii) filing a lawsuit or commencing
any other proceeding arising out of, or in connection with, the interpretation,
performance or the nonperformance of this Agreement or transactions in any way
related to this Agreement and/or the relationship between the parties (including
but not limited to the termination of this Agreement or the relationship or
disputes under rights granted pursuant to statutes or common law, including
those in the country in which Philips is located), the party shall refer (in
accordance with the notice provisions set forth in Section 22.3 above) the
matter in writing to Xxxxxxx Xxxxx, or his designee, on behalf of the EchoStar
Parties, and Rob van Oostenbrugge, or his designee, on behalf of Philips, for
review and discussions regarding the possibility of resolving the matter. In
the event that Messrs. Ergen and van Oostenbrugge, or their respective
designees, are unable to reach a mutually satisfactory resolution within five
(5) business days after referral of the matter to both parties, the referring
party shall have the right to pursue any remedies available to it under the
Agreement, at law or in equity.
22.6.2 This Agreement shall be governed, construed and
enforced in accordance with the laws of the State of Colorado and the United
States of America, without giving effect to the conflict of law provisions
thereof.
22.6.3 Except as expressly provided in Section 22.6.1 above,
any and all disputes arising out of, or in connection with, the interpretation,
performance or the nonperformance of this Agreement or any and all disputes
arising out of, or in connection with, transactions in any way related to this
Agreement and/or the relationship between the parties (including but not limited
to the termination of this Agreement or the relationship or disputes under
rights granted pursuant to statutes or common law, including those in the
country in which Philips is located) shall be litigated solely and exclusively
before the United States District Court for the District of Colorado. The
parties consent to the IN PERSONAM jurisdiction of said court for the purposes
of any such litigation, and waive, fully and completely, any right to dismiss
and/or transfer any action pursuant to 28 U.S.C.A. 1404 or 1406 (or any
successor statute). In the event the United States District Court for the
District of Colorado does not have subject matter jurisdiction of said matter,
then such matter shall be litigated solely and exclusively before the
appropriate state court of competent jurisdiction located in Arapahoe County,
State of Colorado.
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22.7 ENTIRE AGREEMENT. This Agreement sets forth the entire, final and
complete understanding between the parties hereto relevant to the subject matter
of this Agreement, and it supersedes and replaces all previous understandings or
agreements, written, oral, or implied, relevant to the subject matter of this
Agreement made or existing before the date of this Agreement. Except as
expressly provided by this Agreement, no waiver or modification of any of the
terms or conditions of this Agreement shall be effective unless in writing and
signed by both parties.
22.8 FORCE MAJEURE. Neither party shall be liable to the other party for
nonperformance or delay in performance of any of its obligations under this
Agreement due to causes reasonably beyond its control or which cause makes
performance a commercial impracticability, including act of God, fire,
explosion, flood, windstorm, earthquake, trade embargoes, strikes, labor
troubles or other industrial disturbances, accidents, governmental regulations,
riots, and insurrections ("Force Majeure"). Upon the occurrence of a Force
Majeure condition, the affected party shall immediately notify the other party
with as much detail as possible and shall promptly inform the other party of any
further developments. Immediately after the Force Majeure event is removed or
abates, the affected party shall perform such obligations with all due speed.
Neither party shall be deemed in default of this Agreement if a delay or other
breach is caused by a Force Majeure event. If a Force Majeure event is expected
to continue for more than three (3) months, any party may terminate this
Agreement by providing thirty (30) days prior written notice to the other
parties. Such termination shall be without any continuing liabilities or
obligations on the part of one party to the other of any kind except as
expressly set forth herein.
22.9 SEVERABILITY. If any term or provision herein, or the application
thereof to any person, entity, or circumstances shall to any extent be invalid
or unenforceable in any pertinent jurisdiction, the remainder hereof shall not
be affected thereby but shall be valid and enforceable as if the invalid term or
provision were not a part hereof.
22.10 HEADINGS. The descriptive headings contained in this Agreement
are included for convenience and reference only and shall not be held to expand,
modify, amplify or aid in the interpretation, construction or meaning of this
Agreement.
22.11 ASSIGNMENT. The EchoStar Parties may assign their rights and
delegate its duties under this Agreement in whole or in part at any time;
provided, however, that, in the event the EchoStar parties assign this Agreement
to a non-Affiliate, the assignee must be at least as creditworthy as the
EchoStar Parties at the time they originally executed this Agreement. Philips
may not assign any rights or delegate any duties under this Agreement without
the EchoStar Parties' prior written consent, which consent shall not be
unreasonably withheld, except to an Affiliate of Philips; provided, however,
that, such Affiliate is: (i) at least as creditworthy as Philips at the time it
originally executed this Agreement; (ii) is not a direct or indirect provider of
direct to home programming; and (iii) Philips North America Corporation
unconditionally guarantees the full and timely payment and performance of the
Affiliate's obligations under the
67
Agreement. Any attempt to do so without such consent shall be void. This
Agreement will bind, and inure to the benefit of, the parties and their
respective successors and permitted assigns.
22.12 COMPLIANCE WITH LAW. The parties shall comply with, and agree
that this Agreement is subject to, all applicable federal, state, and local
laws, rules and regulations, and all amendments thereto, now enacted or
hereafter promulgated in force during the term of this Agreement.
22.13 GENERAL PROVISIONS. The terms and conditions attached as
exhibits hereto are fully incorporated into this Agreement.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized officers or representatives as of the date
first written above.
ECHOSTAR SATELLITE CORPORATION
/s/ XXXXXXX XXXXX
------------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
HOUSTON TRACKER SYSTEMS, INC.
/S/ XXXX XXXXX
------------------------------------
Name: Xxxx Xxxxx
Title: President
PHILIPS ELECTRONICS NORTH AMERICA CORPORATION, DIGITAL VIDEO SYSTEMS DIVISION
/S/ XXXXXX X. XXXXX
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
68
EXHIBIT LIST
EXHIBIT A ACCESSORIES
EXHIBIT B APPROVED OEM BRAND NAMES
EXHIBIT C COMMISSIONABLE PROGRAMMING
EXHIBIT D HTS MARKS
EXHIBIT E HTS SOFTWARE
EXHIBIT F SPECIFICATIONS
EXHIBIT G PROGRAMMING AND PRICING
EXHIBIT H THIRD PARTY SOFTWARE
EXHIBIT I RETAILER COMMISSION AGREEMENT
EXHIBIT J CURRENT WHOLESALE PRICE LIST
EXHIBIT K USAGE GUIDELINES FOR HTS MARKS
EXHIBIT L PERMITTED SUBCONTRACTORS
EXHIBIT M STANDARD HOURLY RATES FOR TECHNICAL ASSISTANCE
EXHIBIT N TEST PROCEDURES AND PLAN
EXHIBIT O TECHNOLOGY AND ENTITIES
EXHIBIT P TRADEMARK LICENSE AGREEMENT
EXHIBIT Q APPROVED DISH BRAND NAMES
EXHIBIT R ENGINEERING CHANGE REQUEST PROCEDURE
69
EXHIBIT A
ACCESSORIES
70
EXHIBIT B
APPROVED OEM BRAND NAMES
71
EXHIBIT C
COMMISSIONABLE PROGRAMMING
[CONFIDENTIAL MATERIAL REDACTED]
72
EXHIBIT D
HTS MARKS
73
EXHIBIT E
HTS SOFTWARE
74
EXHIBIT F
SPECIFICATIONS
75
EXHIBIT G
PROGRAMMING AND PRICING
[CONFIDENTIAL MATERIAL REDACTED]
76
EXHIBIT H
THIRD PARTY SOFTWARE
77
EXHIBIT I
RETAILER COMMISSION AGREEMENT
[CONFIDENTIAL MATERIAL REDACTED]
78
EXHIBIT J
CURRENT WHOLESALE PRICE LIST
[CONFIDENTIAL MATERIAL REDACTED]
79
EXHIBIT K
USAGE GUIDELINES FOR HTS MARKS
80
EXHIBIT L
PERMITTED SUBCONTRACTORS
[CONFIDENTIAL MATERIAL REDACTED]
81
EXHIBIT M
STANDARD HOURLY RATES FOR TECHNICAL ASSISTANCE
[CONFIDENTIAL MATERIAL REDACTED]
82
EXHIBIT N
TEST PROCEDURES AND PLAN
83
EXHIBIT O
TECHNOLOGY AND ENTITIES
84
EXHIBIT P
TRADEMARK LICENSE AGREEMENT
[CONFIDENTIAL MATERIAL REDACTED]
85
EXHIBIT Q
APPROVED DISH BRAND NAMES
86
EXHIBIT R
ENGINEERING CHANGE REQUEST PROCEDURE
87
EXHIBIT A
Accessories (within system pack-out): Single or Dual output LNBF
IR or UHF remote control
18" DISH antenna and hardware
RCA, SVHS, RJ-11, and RG-59 cables
UHF antenna
User/installation guide
Batteries
Packaging
Accessories (sold separately): Wireless Phone Xxxx
Single or Dual LNBF
18" or 24" DISH antenna and hardware
IR/UHF Universal Remote Control kit
DISH Network Self-Installation kit
EXHIBIT B
Approved OEM Brand Names: Philips, Philips-Magnavox, Magnavox, Marantz
Exhibit D
---------
HTS XXXX TO BE PLACED ON PRODUCTS
DISH
DISH NETWORK LOGO SHEET
The TM version of the DISH Network logo is to be used when any mention or
representation of DISH Network systems/hardware is made. (The SM logo may
only be used when talking about DISH Network programming only, and not when
there is any mention of systems/hardware.) The DISH Network logo must appear
in either all back or black and pantone 186 red as separated below. The
tagline may be reversed to white from a black background of necessary,
however this is not preferred.
[LOGOS]
EXHIBIT K
USAGE GUIDELINES FOR HTS' MARKS
RECEIVER APPLICATION
Minimum size for
application on receiver
is 1" horizontal
DISH
two color application
on light color
DISH
one color application
on dark color
DISH
two color application
on dark color
EXHIBIT K
USAGE GUIDELINES FOR HTS' MARKS
GENERAL APPLICATION
[LOGOS]
EXHIBIT K
USAGE GUIDELINES FOR HTM'S MARKS
DISH
BASIC GUIDELINES FOR ECHOSTAR/DISH NETWORK
DISH NETWORK (If headline is in all caps)
DISH Network (headline or body copy with caps as indicated)
ECHOSTAR (if headline is in all caps)
EchoStar (headline or body copy with caps as indicated)
Nothing Else Xxxxxxxx.xx (caps as indicated for headline or in body copy)
"A DISH IN EVERY HOME." (if headline is all caps)
"A Dish in Every Home." (headline or body copy with caps as indicated)
In a list, there is no comma before the "and" (e.g., lions, tigers and bears.).
REGISTERED TRADEMARK, TRADEMARK AND SERVICE XXXX USAGE
(All sm and xx xxxxx are raised off the baseline as superscript and must be used
the first time only that it appears in any piece)
"A Dish in Every Home." Sm
DISH Network logo is tm or sm depending upon whether it's software/services
(sm) or hardware (tm) with tm for the generic hardware and software
DISH Networktm & DISH Networksm (depends on whether it's hardware(sm) or
Software/services(sm) with tm when we're speaking about both generically)
EAC (r)
Echonet (r)
Echosphere (r)
EchoStar (r)
EchoStar (r) Revolving Charge Plan
Nothing Else Xxxxxxxx.xx
Smart Cardtm
FrontLoadertm
Houston Tracker Systems (r)
HTStm
Trackertm
Tracker Premiertm
America's Top 40sm (our $19.99 programming package)
America's Top 40 CDsm (our $24.99 programming package)
America's Top 40 Premium Plussm (our $29.99 programming package)
America's Top 40 Deluxe Plussm (our $39.99 programming package)
America's Top 40 Ultimate Plussm (our $49.99 programming package)
America's Top 50 CD (our new upgraded $300 a year package ($25 a month)
DISH-on-Demandsm (pay-per-view)
DISH Pixsm (choose your own programming package)
DISH Network Credit Corporation
DISH CDsm
(Samples of trademark copy)
DISH Network is a service xxxx of EchoStar Communications Corporation.
(for logo and when written out - programming and services only)
DISH Network is a trademark of EchoStar Communications Corporation. (for
logo and when written out - hardware and generically)
EAC is a registered trademark of EchoStar Acceptance Corporation
Echonet is a registered service xxxx of Echonet Business Network, Inc.
Echosphere is a registered trademark of Echosphere Corporation.
EchoStar is a registered trademark of Echosphere Corporation.
DISH Network is a trademark and service xxxx of EchoStar Communications
Corporation. (combining legal copy)
DISH Network is a trademark and DISH-On-Demand is a service xxxx of
EchoStar Communications Corporation. (combining legal copy)
Houston Tracker Systems is a registered trademark of Houston Tracker
Systems, Inc.
HTS, Excellence By Design, Tracker and Tracker Premier are trademarks of
Houston Tracker Systems, Inc.
SPELLINGS AND TERMS FOR ECHOSTAR/DISH NETWORK
big-screen (adj.)
C-band (adj.)
CD-quality (adj.)
CONUS (all caps) - contiguous United States
cost-effective (adj.)
database
DBS - Direct Broadcast Satellites
DBS - Digital Broadcast System (DBS satellites)
dealer base
DISH Network Credit Corporation
DSS - direct satellite service
DTH - direct-to-home (adj.)
DVB - digital video broadcast (European standard like MPEG-2 in U.S.)
18-inch (adj.)
FCC - Federal Communications Commission
full-featured (adj.)
full-service (adj.)
HDTV - high-definition television
high-power (adj.)
high-powered (adj.)
high-quality (adj.)
high-tech (adj.)
high-yield (adj.)
in-house (adj.)
IRDs (plural) - integrated receiver descramblers
Ku-band (adj.)
laserdisc
lineup (1 word)
LNBF - low noise block converter with integrated feed
long-term (adj.)
low-cost (adj.)
MPEG-2 - motion pictures expert group (set digital pictures transmission
standard for U.S.)
MPEG-2/DVB compatible
OEM - original equipment manufacturer
110-volt and 240-volt (adj.)
one-stop (adj.)
on-line (adj.)
on-screen (adj.)
predetermined
real time -- instantly available information
QC - quality control
remote control (adj.)
RF - radio frequency
same-day (adj.)
SBCA - Satellite Broadcasting and Communications Association
short-term (adj.)
signal-splitting (noun)
single-family (adj.)
startup (1 word)
state-of-the-art (adj.)
surround sound (adj.)
toll-free (adj.)
trade-off (adj.)
TVRO - television receive only
2-year and two year (adj.), etc.
UHF -- ultra high frequency
VHF -- very high frequency
videodisc
American Division (of EchoStar - initial caps)
DIRECTV
DISH Network Credit Corporation
Xxxxxx/Xxxxxxx
International Division (of EchoStar - initial caps)
Primestar
Satellite Source (no (r) or tm)
The Company (initial cap C in copy when talking about EchoStar)
The Echosphere Group (initial caps)
USSB - U.S. Satellite Broadcasting
Exhibit Q
Approved DISH brand names: DISH
-------------------------- DISH Network
