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EXHIBIT 10.7.1
MASTER PURCHASE AGREEMENT
BETWEEN
TELERGY NETWORK SERVICES, INC.
AND
NORTHERN TELECOM INC.
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TABLE OF CONTENTS
Articles:
Article 1 - Definitions
Article 2 - Scope of Agreement
Article 3 - Placement of Orders
Article 4 - Price and Payment
Article 5 - Shipment, Title and Risk of Loss
Article 6 - Testing, Turnover and Acceptance
Article 7 - Order Cancellation
Article 8 - Warranty
Article 9 - Nortel Networks' Additional Obligations
Article 10 - Software License
Article 11 - Liability for Bodily Injury, Property Damage and Patent
Infringement
Article 12 - Remedies and Limitation of Liability
Article 13 - Term and Termination
Article 14 - Confidentiality
Article 15 - Miscellaneous
Exhibits:
Exhibit A - Product Annexes including lists of Product and Prices
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MASTER PURCHASE AGREEMENT
This Master Purchase Agreement ("Agreement"), effective as of the 1st day
of March, 1999, is entered into by and between Telergy Network Services, Inc.
(hereinafter "Company") with offices located at Xxx Xxxxxxx Xxxxxxx, Xxxxxxxx,
Xxx Xxxx 00000 and Northern Telecom Inc. (hereinafter "Nortel Networks"), with
offices located at 0000 Xxxx Xxxxxx Xxxx-Xxxxxx Xxxxxxx, Xxxxxxxx Xxxxxxxx Xxxx,
Xxxxx Xxxxxxxx 00000.
WHEREAS, Company is engaged in providing communication data services and
products, and providing and maintaining public and private communication and
data networks; and
WHEREAS, Nortel Networks, in conjunction with Nortel Networks Affiliates, is
engaged in the design, development, manufacture and sale of various products and
offers services associated with such products, which can be used in connection
with the communication services, products and networks of Company; and
WHEREAS, Company wishes to be able to purchase and/or license various products
and services for delivery and installation in the United States from Nortel
Networks, which Company will use for its own internal use and not for resale or
as stock in trade and Nortel Networks is willing to sell and/or license such
products to Company, subject to the terms and conditions of this Agreement; and
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein set forth, the parties agree as follows:
ARTICLE 1. DEFINITIONS
The following words shall have the meanings set forth below. Words in the
singular shall be held to include the plural and vice versa and words of gender
shall be held to include the other gender as the context requires.
1.1 "Acceptance" shall mean that either (i) Company has indicated that
an ordered Product is operating substantially in accordance with the applicable
Specification; or (ii) an ordered Product has been deemed to be accepted
pursuant to criteria set forth in Article 6.
1.2 "Applications" shall mean any program, product, service,
development or invention developed by a party using the Building Blocks,
including any modified or created Building Blocks, created by Company.
1.3 "Building Block(s)" shall mean those Software files provided by
Nortel Networks with Modifiable Software that are manipulatable or which may be
created by Company with such Modifiable Software and which can be used, created
or manipulated by Company to create Applications.
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1.4 "Confidential Information" shall mean all information, including
without limitation, specifications, drawings, documentation, know-how, customers
and services and pricing information, of every kind or description which may be
disclosed by one party to the other party in connection with this Agreement.
1.5 "Credit Agreement" (and related loan documents as defined in Credit
Agreement) shall mean the agreement between the parties and Telergy, Inc.
executed simultaneously with this Agreement.
1.6 "Customer" shall mean entities to whom Company provides
communication services as a result of Company's internal use of the Products.
1.7 "Customer Information" or "CI" shall mean the information provided
by Company to Nortel Networks in order for Nortel Networks to engineer and/or
provide the components of Systems.
1.8 "Documentation" shall mean the documents which Nortel Networks
generally makes available to its customers containing descriptive, operating,
installation, engineering and maintenance information for Products, including
Specifications, as such documents may be amended from time to time.
1.9 "Effective Date" shall mean the date this Agreement becomes
effective which shall be the date first identified above.
1.10 "Extension" shall mean Hardware and/or Software which is
engineered by Nortel Networks and added to an Initial System after the Turnover
Date of the Initial System.
1.11 "Hardware" shall mean, individually and collectively, the Nortel
Networks equipment listed in the Product Annexes of Exhibit A, and shall be
deemed to include any equipment which Nortel Networks adds to its generally
available Hardware price lists or so identifies to Company in a Quotation.
1.12 "Hazardous Material" shall mean any pollutants or dangerous, toxic
or hazardous substances (including without limitation, asbestos) as defined in,
or pursuant to the OSHA Hazard Communication Standard (29 CFR Part 1910, Subpart
Z), the Resource Conservation and Recovery Act (15 USC Section 6901, et seq.),
the Toxic Substances Control Act (15 USC Section 2601, et seq.), the
Comprehensive Environmental Response Compensation and Liability Act (42 USC
Section 9601, et seq.), and any other federal, state or local environmental law,
ordinance, rule or regulation or equivalent law or regulation in the location to
which the Product is shipped by Nortel Networks.
1.13 "Initial System" shall mean Hardware and Software, inclusive of a
central processor unit, included in a configuration which Nortel Networks has
identified as a
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System and which is initially engineered by Nortel Networks and installed at a
specific Installation Site.
1.14 "Installation Site" shall mean the location or facility identified
in an Order at which the applicable Products will be installed.
1.15 "Licensed Software" shall mean the Software which Company has
licensed pursuant to this Agreement.
1.16 "Merchandise" shall mean any Hardware or other parts or components
which are not ordered as part of a System and with respect to which no
engineering, installation or other Services are provided by Nortel Networks.
1.17 "Modifiable Software" shall mean Software, or a portion of
Software that is identified as such by Nortel Networks in its applicable
Documentation, which Company may have certain rights to modify and potentially
create Applications or Building Blocks in accordance with the applicable
Documentation.
1.18 "Non-Licensed Software" shall mean Software for which Company has
not yet obtained a license nor paid applicable right-to-use fees but which
Software may be included with Software loads delivered to Company hereunder.
1.19 "Nortel Networks Affiliate" shall mean Nortel Networks' parent
corporation, Northern Telecom Limited and any corporation controlled directly or
indirectly by Northern Telecom Limited through the ownership or control of
shares or other securities in such corporation.
1.20 "Order" shall mean a numerically controlled purchase authorization
document issued by Company to Nortel Networks specifying the types and
quantities of Products and Services to be furnished by Nortel Networks.
1.21 "Product(s)" shall mean, individually and collectively, the
Hardware, Software, and Documentation.
1.22 "Product Annex" shall mean, with respect to a specific Product,
additional or modified terms and conditions as set forth in Exhibit A, inclusive
of but not limited to those that may apply to any Third Party Hardware or Third
Party Software, unique to such Product.
1.23 "Quotation" shall mean a written budgetary or firm price quotation
issued by Nortel Networks to Company for the supply of any Products or Services
pursuant to this Agreement.
1.24 "Service(s)" shall mean, individually and collectively, any of the
services set forth in this Agreement that Company may acquire from Nortel
Networks, such as but
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not limited to maintenance, engineering, installation, training, data
management, program management, project management, commissioning, testing,
technical assistance Service with respect to Products and installation, and
consulting.
1.25 "Services Software" shall mean that Software and related
documentation made available by Nortel Networks which may be used by Company for
estimation, planning or information purposes.
1.26 "Ship Date" shall mean the date as agreed to by the parties, on
which a Product ordered by Company is scheduled to be shipped from Nortel
Networks' facility or in the case of Software which is downloaded, the date upon
which such Software is to be downloaded to the System; however Ship Date shall
not mean the date on which Non-Licensed Software is activated.
1.27 "Software" shall mean (i) computer programs in object code form or
firmware which (a) are owned by, or licensed to, Nortel Networks, (b) reside
in Product memories, tapes, disks or other media, and (c) provide basic logic
operating instructions and user-related application instructions; and (ii)
documentation associated with such computer programs which may be furnished by
Nortel Networks to Company from time to time, including both Licensed Software
and Non-Licensed Software, but in no event shall Software include source code.
1.28 "Software Release" shall mean Software or revisions to Software
containing problem fixes, new features and/or enhancements.
1.29 "Specifications" shall mean with respect to any Product the
specifications and/or practices set forth in Northern Telecom Practices ("NTPs")
or similar documents published by Nortel Networks which Nortel Networks
identifies as the standard performance specifications and practices for such
Product.
1.30 "System" shall mean a configuration of Hardware and Software
providing a specified functionality and includes an Initial System and its
Extensions, if any.
1.31 "Third Party Hardware" shall mean any hardware not of Nortel
Networks' manufacture which shall be deemed to include any such hardware which
Nortel Networks adds to its generally available Third Party Hardware price lists
or so identifies to Company in a Quotation.
1.32 "Third Party Software" shall mean any Software not owned by Nortel
Networks which is included within Licensed Software or Non-Licensed Software.
1.33 "Turnover" shall mean, with respect to any System installed by
Nortel Networks, that Nortel Networks has completed its standard manufacturing,
verification cycle, installation and/or agreed-upon test procedures, as
applicable, and that the System is ready for acceptance testing by Company.
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1.34 "Turnover Date" shall mean, with respect to any Product installed
by Nortel Networks hereunder, the date on which Nortel Networks provides a
notice of Turnover to Company.
ARTICLE 2. SCOPE OF AGREEMENT
2.1 This Agreement sets forth the terms and conditions under which
Company may order Products and/or Services from Nortel Networks. Company may use
the Products itself, including use to provide services to others, subject to the
terms and conditions of this Agreement. Company expressly represents that it is
not buying Product for resale. All Products shall be delivered and installed in
the United States.
2.2 During the Term, Company commits to purchase Products and/or
Services as identified in Attachment 1 to Product Annex A.1 and Attachment 1 to
Product Annex A.2, to be shipped to the locations specified with the Order
("Sites") in the aggregate amount totaling thirty million dollars ($30,000,000)
("Committed Products") and as long as the Credit Agreement is in effect, Nortel
Networks agrees to Accept at least five million dollars ($5,000,000) in Customer
Orders for such Committed Products. During each year of the Term the Commitment
may be reduced pursuant to Section 3.3. Company commits to purchase a minimum
amount of ten million dollars ($10,000,000) of the Committed Products for a
total minimum commitment of thirty million dollars ($30,000,000) ("Commitment").
The Committed Products shall be purchased under the terms and conditions of this
Agreement and the financing associated with such purchase shall be governed by
the provisions of the Credit Agreement. In addition during the Term, Company may
purchase up to two hundred million dollars ($200,000,000) of products, such as
High Speed service and similar, from Nortel Networks, and if Company should be
awarded the such business by the State University of New York, Company agrees
that Nortel Networks will be the primary supplier of related products and
services.
2.3 To the extent any terms and conditions set forth in this Agreement
are inapplicable to a Product, the applicable terms and conditions and any
additional terms and conditions for such Product shall be set forth in a Product
Annex.
2.4 If specified in a Product Annex as a requirement, Company shall,
fifteen (15) days prior to each calendar quarter, submit to Nortel Networks a
consolidated non-binding forecast of Products by geographic region, that Company
anticipates purchasing or licensing over the next four (4) calendar quarters. In
addition to the type, quantity and cumulative dollar amount of Products, the
parties may agree upon additional information to be included in such forecast.
2.5 All references to prices, charges, fees or other amounts herein
shall be in U.S. dollars and all documentation, correspondence and
communication shall be in the English language.
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ARTICLE 3. PLACEMENT OF ORDERS
3.1 To order Products and/or Services, Company shall submit to the
Contracts Administration department at Nortel Networks, or another department
that Nortel Networks designates upon written notice to the Company, an Order
which shall at a minimum specify the following, if applicable:
(i) the types and quantities of Products and Services to be
furnished by Nortel Networks;
(ii) the applicable prices, charges and fees with respect to
such Products and Services;
(iii) the location or facility to which the Products are to be
delivered;
(iv) the incorporation by reference of this Agreement;
(v) the Installation Site, if known;
(vi) the requested Ship Date and Turnover Date of the System;
and
(vii) if the purchase shall not be pursuant to the terms and
conditions of the Credit Agreement, which portion is subject
to such Credit Agreement.
(viii) any other information required under this Agreement to
be included in an Order.
3.2 Payment for all Orders for Committed Product placed thereafter
shall be governed by the same terms and conditions set forth in the Credit
Agreement. Company shall order the Committed Products in the minimum quantities
specified in accordance with the Product Models specified in Attachment I to
Product Annex A.1 and Attachment I to Product Annex A.2, in accordance with
Section 2.2. of this Agreement.
3.3 All purchases pursuant to this Agreement shall be made by means of
Orders issued from time to time by Company and accepted by Nortel Networks in
writing within fifteen (15) days after receipt of Order. In the event Nortel
Networks fails to provide its acceptance of an Order in writing within such
fifteen (15) day period, such Order shall be deemed accepted. Nortel Networks
shall have the right to reject any Order, or the applicable portion of such
Order, placed hereunder where Company has a separate agreement with Nortel
Networks for the provision of the Products or Services requested in such Order
or the Order is otherwise not in accordance with this Agreement, provided
however that Nortel Networks shall be required to reject any Order in writing
within fifteen (15) days of receipt. Orders for the Committed Products Accepted
by Nortel Networks shall be financed in accordance with the terms and conditions
of the Credit
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Agreement. In the event Nortel Networks rejects an Order, in whole or in part,
or fails to make the financing available as required hereunder ("Rejected
Order"), Company shall be free to place the Order, in whole or in part with any
other vendor, in Company's sole discretion and the minimum Commitment shall be
reduced by the dollar amount of any such Rejected Order.
3.4 All Orders issued by Company pursuant to this Agreement shall refer
to and specifically incorporate this Agreement by reference and the terms and
conditions herein shall govern the transaction resulting from such Order
provided that such Order is accepted or deemed accepted by Nortel Networks.
Additionally, all Orders issued for, in whole or in part, Committed Products
shall specifically incorporate the Credit Agreement by reference and the
applicable terms and conditions therein shall also apply to such Order.
Preprinted terms and conditions set forth in Orders issued by Company, or in any
prior Quotations, acknowledgments or other related documentation issued by any
party, shall be considered null and void and shall have no force or effect.
However, any special terms and conditions written on the face of or otherwise
incorporated into an Order by Company shall, upon acceptance in writing by
Nortel Networks, for such Order only, supersede the specific terms and
conditions contained in this Agreement, including all Exhibits attached hereto,
which are in conflict, but only to the extent of such conflict.
3.5 Company may at any time request additions, alterations, deductions
or deviations to an Order subject to the condition that such changes and any
adjustments resulting from such changes including, but not limited to, schedules
and prices, shall be mutually agreed upon and, if so agreed, subsequently
detailed in a written revision to the applicable Order ("Change Order"). Company
acknowledges that a premium charge may be applied by Nortel Networks should
Nortel Networks agree to process a Change Order outside of its standard Order
processing cycle for a Product or in the event that a Change Order requires an
additional amount of work (such as engineering) to be undertaken to comply with
such changes, provided however that any such premium charge shall be agreed upon
and specified in the Change Order.
3.6 If Company desires to receive a budgetary or firm Quotation from
Nortel Networks for a Product or Service, Company shall submit such request in
writing to Nortel Networks' Director, Commercial Marketing, or such other person
as designated by Nortel Networks. The request for Quotation shall include the
information listed in Section 3.1, as applicable.
3.7 Nortel Networks shall respond in writing to requests for budgetary
Quotations and requests for firm Quotations. Unless otherwise specified in the
firm Quotation, such firm Quotation shall be valid for ninety (90) days from the
date of such Quotation. Budgetary Quotations shall be provided for information
and planning purposes only and shall not be considered to be a final or firm
statement binding on either party. The Quotations shall include the following
information:
(i) Budgetary Quotations
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(a) preliminary Hardware and Software lists;
(b) the estimated charges for the Products;
(c) the estimated charges for Services requested; and
(d) any other information requested by Company.
(ii) Firm Quotations
(a) the price to be paid by Company for the Products, after
applying the applicable discounts, if any;
(b) fixed charges for Services requested;
(c) complete Hardware and Software lists and project
schedules; and
(d) any other information requested by Company.
3.8 The Ship Date shall be based on Nortel Networks' standard intervals
for the applicable Product; however, the parties shall always mutually agree on
the Ship Date and take into consideration any unique aspect of the applicable
project.
3.9 Orders may be issued either electronically, such as through
electronic data interchange, or via traditional manual methods, as mutually
agreed to by the parties.
ARTICLE 4. PRICE AND PAYMENT
4.1 Nortel Networks shall charge Company for each Product and/or
Service ordered by Company in accordance with the prices set forth in each
accepted Order, which prices shall be based upon prices identified in one of (i)
a Product Annex; (ii) a Firm Quotation; (iii) Nortel Networks' then current
prices; or (iv) as specified elsewhere in this Agreement or as otherwise
mutually agreed in writing.
4.2 Nortel Networks' prices, if set forth in Exhibit A, may be revised
by Nortel Networks no more than once each calendar year, by providing sixty (60)
days prior written notice to Company. Such notice shall specify the effective
date of the price change and shall apply to all Orders received by Nortel
Networks on or after the effective date of the price change. However, in the
event there is a recognized industry-wide shortage of a component that is
incorporated in a Product, Nortel Networks may increase the price of such
Product, following the provision of written notice to Company fifteen (15) days
prior to the effective date of such increase or such shorter date as is mutually
agreed in view of the shortage. The price increase of such Product due to a
recognized industry-wide component shortage shall be limited to a reasonable
amount under the then-current circumstances having regard for industry
conditions for the period of time during which such recognized shortage exists.
Following the implementation of a price increase due to a component shortage,
the parties shall jointly review every three (3) months or at such other time as
is mutually agreed, in good faith, whether such component shortage still exists.
If the component shortage has abated, the parties shall jointly determine
whether there still is a need for such price increase.
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4.3 Other than with respect to Committed Products, Nortel Networks
shall promptly extend to Company any price reductions made by Nortel Networks in
its generally available, then current list prices for Products and/or Services.
Such price reduction shall apply to all Orders received on or after the
effective date of such price reduction.
4.4 For all Orders, Nortel Networks shall invoice Company for Products
and Services as follows, unless otherwise agreed to in writing:
(i) for Systems, whether or not installation has been ordered
from Nortel Networks, one hundred percent (100%) of the price
of the Products on the Ship Date, one hundred percent (100%)
of the price of any Services upon the date of completion of
such Services, except with respect to installation Services,
if any, which shall be invoiced one hundred percent (100%)
upon Turnover. Except for installation Services, for Services
that have a duration of more than one (1) month to complete,
Nortel Networks may invoice Company monthly for that portion
of such Services which have been performed as of such
invoicing date.
(ii) for Merchandise or Documentation provided on a
furnish-only basis, one hundred percent (100%) of the price on
the Ship Date; and
(iii) for Orders covering Services only, one hundred percent
(100%) of the price for such Services following completion of
performance, except for recurring support Services which shall
be billed quarterly in advance unless otherwise agreed. Some
Services may be subject to monthly invoicing as set out in a
Product Annex or separate Service agreement. To the extent
such Services are to be invoiced differently then set out in
this paragraph (iii), such differences shall be set forth in
the applicable Product Annex or separate Service agreement and
such provisions shall take precedence.
4.5 Except for invoices to be paid in accordance with the Credit
Agreement, invoices shall be paid in full within thirty (30) days after the date
of such invoice. In the event that Company does not pay any invoice in full
within such thirty (30) day period, then Nortel Networks may charge Company
interest on the outstanding portion of such invoice, from day thirty one (31)
forward, at the rate of one and one half percent (1.5%) simple compound interest
per month, or such lesser amount as may be the maximum permissible rate under
applicable law, until such time as the outstanding invoice is paid. In addition,
Company agrees to pay all collection costs and reasonable legal fees incurred by
Nortel Networks as a result of late payment or non-payment by Company, other
than with respect to Products and Services that are subject to the terms and
conditions of the Credit Agreement.
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