Portions of this exhibit (indicated by brackets) have been omitted pursuant to a
request for confidential treatment.
PROCUREMENT AND SERVICES CONTRACT
---------------------------------
between
MAJORCO L.P.,
Owner
and
AT&T CORP.,
Vendor
Dated as of January 31, 1996
PROCUREMENT AND SERVICES CONTRACT
---------------------------------
This Procurement and Services Contract (the "Contract") is made and is
effective as of January 31, 1996 (the "Effective Date"), by and between MajorCo
L.P., a Delaware limited partnership (the "Owner"), and AT&T Corp., a New York
corporation by and through its Network Systems Group (the "Vendor" and, together
with the Owner, the "Parties").
RECITALS:
--------
A. The Federal Communications Commission (the "FCC") granted to the
Owner or certain of its Affiliates (as defined below) personal communications
services licenses (the "PCS FCC Licenses") to build and operate PCS Systems (as
defined below) in specified geographic areas in the United States;
B. The Owner desires to have the Vendor engineer and construct PCS
Systems in the geographic areas specified on Schedule 4 (collectively, the
"System Areas") pursuant to the terms of this Contract;
C. The Vendor, itself or through its Subcontractors (as defined below),
desires to provide Products (as defined below) and Services (as defined below)
to the Owner in connection with the engineering and construction of PCS Systems
in the System Areas, including, but not limited to, the Vendor's obligation to
engineer, equip, install, build, test and service an operating PCS System in
each System Area in accordance with the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth in this Contract, the Owner and the Vendor hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Definitions. In addition to the terms listed below, certain
-----------
additional terms are defined in the Exhibits, subject to the provisions of
subsection 1.2 hereof. As used in this Contract, the following terms have the
following meanings:
"AAA" means the American Arbitration Association.
---
"Acceptance Certificates" means the collective reference to the
-----------------------
Factory Test Certificate, the Initial PCS System Certificate, the Substantial
Completion Certificate and the Final Acceptance Completion Certificate.
"Acceptance Tests" means the collective reference to the performance
----------------
and reliability demonstrations and tests specified in Exhibits B1, B2 and B3 to
determine whether the Products, the Services, any of the PCS Systems and/or the
System meet the Specifications and the terms and conditions of any applicable
order and this Contract.
2
"Additional Affiliate Agreement" has the meaning ascribed thereto in
------------------------------
subsection 3.3.
"Additional Affiliate Arrangement" means a formal arrangement between
--------------------------------
the Owner and a Person to be designated an Additional Affiliate under the terms
of this Contract, which arrangement will include, but not be limited to,
agreements on marketing, backhaul, common billing, resale agreements and/or
revenue sharing.
"Additional Affiliate" has the meaning ascribed thereto in
--------------------
subsection 3.1.
"Affiliates" means the collective reference to the Initial
----------
Affiliates and the Additional Affiliates.
"Annual Release Maintenance Fees" means those recurring annual fees of
-------------------------------
the Vendor, usually invoiced annually in January, the Owner's payment of which
entitles the Owner to receive all Combined Software Releases, Software
Enhancements, and Software Upgrades applicable to PCS Products (but not Optional
Software Features) which will be made available to the Owner when made generally
available to the Vendor's Customers during the period for which the fees were
paid. All Annual Release Maintenance Fees will be as in the Vendor's Customer
Price Guides (subject to Section 26) except as otherwise set forth on Schedule
3. The Annual Release Maintenance Fees applicable to the Owner will for the
period from the Effective Date until the Final Acceptance of the last PCS System
within the Initial System always cover at least those PCS Products included in
the Initial System.
"ANSI" means the American National Standards Institute.
----
"APC" means American PCS, L.P., a Delaware limited partnership.
---
"Applicable Laws" means, as to any Person, the certificate of
---------------
incorporation and by-laws or other organizational or governing documents of such
Person, all United States or foreign laws (including, but not limited to, any
Environmental Laws), treaties, ordinances, judgments, decrees, injunctions,
writs, orders and stipulations of any court, arbitrator or governmental agency
or authority and statutes, rules, regulations, orders and interpretations
thereof of any federal, state, provincial, county, municipal, regional,
environmental or other Governmental Entity, instrumentality, agency, authority,
court or other body (i) applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject or (ii)
having jurisdiction over a or any part of any PCS System, the System or the Work
to be performed pursuant to the terms of this Contract.
"Applicable Permits" means any waiver, exemption, zoning, building,
------------------
variance, franchise, permit, authorization, approval, license or similar order
of or from any United States, foreign, federal, state, provincial, county,
municipal, regional, environmental or other governmental body, instrumentality,
agency, authority, court or other body having jurisdiction over all or any part
of any PCS System, the System or the Work to be performed pursuant to the terms
of this Contract.
3
"AT&T Assignment" has the meaning ascribed thereto in subsection
---------------
27.22
"Backwards Compatibility" or "Backwards Compatible" means that any
-------------------------------------------------
referenced prior Software Revision Level or Levels of the applicable Software
and any referenced prior Equipment Revision Level or Levels of the applicable
Equipment, as the case may be, remain fully functional in accordance with and up
to the performance levels to which it was performing immediately prior to any
such enhancement and/or revision after the integration with the succeeding
Software Revision Level or Equipment Revision Level, as the case may be, and
that after such integration such prior Software Revision Level or Equipment
Revision Level loses no functionality and such succeeding Software Revision
Level or Equipment Revision Level interoperates with all such functionalities of
such prior Software Revision Level or Equipment Revision Level.
"Base Station ("BTS")" means the radio subsystem that handles the
--------------------
Owner's PCS radio traffic in a designated cell. The Base Station includes all
amplification, modulation, synchronization and other circuitry required to
process a radio signal. The inputs to a Base Station are a landline or radio
signal (e.g., T1) and the radio signal that is fed into antenna lines.
"best efforts" means a Party's best efforts under the circumstances,
------------
provided that the use of best efforts will not require the Party to breach any
- - -------- ----
outstanding contract or to violate any Applicable Law.
"Bolt-down" means for the purposes of each PCS Product all work that
---------
needs to be done by the Vendor in order to permanently and securely place such
PCS Product in its appropriate location within the relevant System Element
Location, provided that Bolt-down will not necessarily constitute installation
-------- ----
of any such PCS Product.
"Building Ready Date" has the meaning ascribed thereto in subsection
-------------------
2.5.
"Build Notice" has the meaning ascribed thereto in subsection 2.7a.
------------
"Business Day" means any day of the year other than a Saturday,
------------
Sunday or a United States national holiday.
"Cable Microcell Integrator ("CMI")" means a form of cable microcell
----------------------------------
integrator that provides for transportation of wireless communication signals
over a cable TV distribution plant. The CMI takes certain signals from the
cable TV distribution plant (the "cable PCS band or bands") and suitably
heterodynes, filters and amplifies these signals such that they can be radiated
by a CMI antenna or antennas in the designated PCS band to PCS wireless
handsets. The CMI takes signals received from the PCS wireless handsets from
one or more CMI receiving antennas and suitably heterodynes, filters and
amplifies these signals for transportation by the cable TV distribution plant to
a Headend Interface Converter ("HIC") or Distributive Cable Access Provider
("DCAP") at a PCS Base Station. Additionally, the CMI unit responds to control
signaling and provides status signals. The CMI is normally collocated with the
cable TV distribution plant and takes power from the cable plant.
4
"CDMA" means code division multiple access as specified in ANSI-J-
----
STD-008.
"Change Orders" has the meaning ascribed thereto in subsection 7.2.
-------------
"Civil Work" means the labor and materials necessary in the
----------
performance of demolition, construction and renovation work (e.g., roads,
grading, fencing and structural improvements, including, but not limited to, any
buildings, towers and antennas) in order to construct a System Element Facility
in accordance with Exhibit E.
"Completion Cure Period" has the meaning ascribed thereto in
----------------------
subsection 15.3(a).
"Configuration Engineering" means the engineering required to
-------------------------
establish System Element configuration including, without limitation, preparing
component, inventory (including T1 quantities and configurations) and layout
drawings, Equipment labels, cable tray layout drawings, and "as-built" drawings
and Documentation. Configuration Engineering also includes the design, power
distribution and supply for each of the System Elements.
"Continental" means Continental Cablevision, Inc.
-----------
"Contract" has the meaning ascribed thereto in the prefatory paragraph
--------
to this Contract. "Contract" will in all instances include all Exhibits,
Schedules and Specifications and will, unless specifically stated otherwise,
always be deemed to include all amendments, modifications and supplements to the
Contract or any part thereof (including any Exhibits, Schedules or the
Specifications) pursuant to the terms of this Contract.
"Contract Price" has the meaning ascribed thereto in subsection 6.1.
--------------
"Customer" means any PCS customer of the Vendor doing business in
--------
North America or any PCS customer doing business in North America of any of the
Vendor's affiliates or subsidiaries.
"Customer Price Guide" means the Vendor's published "Network Wireless
--------------------
Systems Price Reference Guide" or other price notification releases furnished
for the purpose of communicating the Vendor's list pricing or pricing related
items applicable to PCS Products to Customers intending to operate PCS systems
in the United States, provided that the term does not necessarily include firm
-------- ----
price quotes.
"Custom Material" has the meaning ascribed thereto in subsection
---------------
11.9.1.
"Customer Service Request ("CSR")" has the meaning ascribed thereto
--------------------------------
in subsection 2.26.2.
5
"Defects and Deficiencies," "Defects or Deficiencies" or "Defective"
------------------------------------------------------------------
means any one or a combination of the following items or other items of a
substantially similar nature:
(a) when used with respect to the performance of labor or service items
of Work (including any work by any Subcontractor), such items that are not
provided in a workmanlike manner and in accordance with the standards and/or
Specifications set forth herein;
(b) when used with respect to structures, materials, Equipment and
Software items of Work (including any Work by any Subcontractor), such items
that are not (i) new and of good quality and free from improper workmanship and
defects in accordance with the standards and/or Specifications set forth herein
or established hereunder and standards of good procurement, manufacturing and
construction standards, or (ii) free from errors and omissions in design or
engineering services in light of such standards; or
(c) in general, (i) Work (including any Work by any Subcontractor) that
does not conform to the Specifications and/or requirements of this Contract, or
(ii) any design, engineering, start-up activities, materials, Equipment,
Software, tools, supplies, Installation or Training that (1) does not conform to
the standards and/or Specifications set forth herein or established hereunder,
(2) has improper or inferior workmanship, (3) would materially and adversely
affect the ability of the System and/or any PCS System and/or any material part
thereof to meet the performance criteria specified in Exhibit F on a consistent
and reliable basis or (4) would materially and adversely affect the continuous
operation of the System and/or any PCS System or any material part thereof in
accordance with the standards and/or Specifications set forth herein or
established hereunder. Defects and Deficiencies will be deemed to exist when
actually discovered or when they should have been apparent to a Person in the
Vendor's position after reasonable inspection and testing.
"Discontinued Products" has the meaning ascribed thereto in
---------------------
subsection 10.1.
"Documentation" means the documentation for the System and/or any
-------------
PCS System and/or any material part thereof.
"Effective Date" has the meaning ascribed thereto in the prefatory
--------------
paragraph to this Contract.
"E1 Emergency Condition ("E1")" has the meaning ascribed thereto in
-----------------------------
subsection 2.26.3(b).
"E2 Emergency Condition ("E2")" has the meaning ascribed thereto in
-----------------------------
subsection 2.26.3(b).
"Emergency Technical Assistance ("ETA")" means the provision of
--------------------------------------
emergency technical assistance to the Owner for the purpose of diagnosing and
resolving a
6
problem which adversely affects the System and/or any PCS System and/or a
material part thereof, its operation and/or its service pursuant to and in
connection with subsection 2.26.3.
"Engineer" means the engineer or engineers appointed from time to time
--------
by the Owner to do certain work and/or inspections and reviews on behalf of the
Owner and/or provide advice or information to the Owner in connection with the
System and/or any PCS System and/or any part thereof.
"Engineering" means all of the engineering required to be done by the
-----------
Vendor to complete the System in accordance with the Specifications including,
but not limited to, RF Engineering, Configuration Engineering and Facilities
Engineering done in accordance with the Specifications and the CDMA standards.
"Environmental Laws" means any and all United States and foreign,
------------------
federal, state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Entity, or
requirements of law (including, without limitation, common law) relating in any
manner to contamination, pollution, or protection of human health or the
environment, as now or may at any time hereafter be in effect.
"Equipment" means all equipment, hardware and other items of personal
---------
property which are required to be furnished by the Vendor or any Subcontractor
pursuant to and in accordance with the terms and conditions of this Contract and
in connection with the System and/or any PCS System and/or any part thereof in
accordance with the Specifications including, without limitation, additional
equipment required as a result of the expansion or additional coverage required
pursuant to subsection 2.2, or otherwise pursuant to the terms of this Contract,
and the equipment listed on Exhibit D or on Schedule 7 (parts A and B).
"Equipment Combined Release" has the meaning ascribed thereto in
--------------------------
subsection 13.1(a).
"Equipment Enhancements" means modifications or improvements made to
----------------------
the PCS Equipment which improve performance or capacity of such Equipment
(sometimes referred to by the Vendor as its "Class B" changes).
"Equipment Revision Level" means each version of an Item of PCS
------------------------
Equipment that reflects any modification or change from the immediately
preceding version of such Item of Equipment.
"Equipment Upgrade" means a change or modification in any delivered
-----------------
PCS Equipment which fixes or otherwise corrects faults, design shortcomings or
shortcomings in meeting the Specifications, required to correct defects of a
type that result in inoperative conditions, unsatisfactory operating conditions,
or which is recommended to enhance safety (sometimes referred to by the Vendor
as its "Class A" changes).
"Escrow Agreement" has the meaning ascribed thereto in subsection
----------------
11.7.
7
"Exchange Act" has the meaning ascribed thereto in subsection 27.22.
------------
"Expansions" means any additional Products or Services resulting from
----------
a modification by the Owner to the Specifications, the performance criteria set
forth in Exhibit F or the Project Milestones set forth on Exhibit A resulting in
a change to the System and/or any PCS System and/or any material part thereof,
including, but not limited to, the extension or expansion of the System and/or
any PCS System (i) into geographic areas outside of the System Areas covered by
the PCS Systems identified in Schedule 4, or (ii) to increase capacity and/or
performance of the System and/or any PCS System beyond the performance criteria
and/or Specifications originally contemplated herein. Expansions will not
include any additional Products or Services required to meet the Specifications
applicable to the Initial System.
"Extraordinary Transportation" means the Vendor's or its
----------------------------
Subcontractors' transport of Products and/or other materials pursuant to the
terms of this Contract where the circumstances of such transport require the
Vendor to use any one or a combination of the following extraordinary means of
transport and/or extraordinary methods of achieving access to the Owner's
facilities: (i) four-wheel drive vehicle (other than those typically used for
the delivery of Products), (ii) helicopter, (iii) boat, (iv) airplane, (v)
bulldozer, (vi) clear physical obstructions requiring the building of a new road
by the Vendor or its Subcontractors, or (vii) a construction crane.
"Facilities Engineering" means the engineering required to design each
----------------------
System Element Facility including, without limitation, System Element Locations
and System Element layout, drawings and relevant Specifications for the
construction of the buildings, towers, generators, cable and antennae and all
other items required to make the System Element Facility functional. Facilities
Engineering does not include Configuration Engineering.
"Facilities Preparation Services" means all Facilities Engineering,
-------------------------------
Civil Work, Site Plan Architectural Work, Structural Architectural Work, and
Utilities Work, all of which must be performed in accordance with the
Specifications. Pursuant to the definition of Civil Work, Facilities
Preparation Services will (unless otherwise agreed by the Owner) include all
Work to complete the Civil Work in a given System Element Location including,
but not limited to, the supply, building and installation of all buildings,
towers and antennas. Facility Preparation Services does not include Site
Acquisition, Network Interconnection, Microwave Relocation or any of the above
referenced activities for the construction of a Switch Site (except as otherwise
provided in this Contract).
"Facilities Preparation Services Warranty Period" has the meaning
-----------------------------------------------
ascribed thereto in subsection 17.2b.
"Factory Test Certificate" means a document submitted by the Vendor to
------------------------
the Owner and signed by an authorized representative of the Owner and an
authorized officer of the Vendor stating that in accordance with the
requirements of Exhibit B3 and this Contract the Vendor has successfully
completed all factory tests on the PCS Products (of the type to be
8
installed as part of the Initial System) in accordance with the requirements of
Exhibit B3 and this Contract.
"FCC" has the meaning ascribed thereto in the recitals to this
---
Contract.
"Final Acceptance" means, as to any PCS System, the successful
----------------
completion by the Vendor of all of the final acceptance tests and requirements
applicable to such PCS System set forth in Exhibit B3 in accordance with the
requirements of Exhibit B3 and the terms of this Contract.
"Final Acceptance Completion Certificate" means, with respect to a
---------------------------------------
given PCS System, a document submitted by the Vendor to the Owner and signed by
an authorized representative of the Owner and an authorized officer of the
Vendor stating that the Vendor has successfully completed the Acceptance Tests
and requirements applicable to the Final Acceptance of the Work to be done in
such PCS System in accordance with the requirements of Exhibit B3.
"Final RF Engineering Plan" has the meaning ascribed thereto in
-------------------------
subsection 2.6(c).
"Final RF Review Period" has the meaning ascribed thereto in
----------------------
subsection 2.6(c).
"Final Site Count" has the meaning ascribed thereto in subsection
----------------
2.6(c).
"Financing Interim Period" has the meaning ascribed thereto in
------------------------
subsection 24.9(a).
"Force Majeure" means the following:
-------------
(a) Acts of God, epidemic, earthquake, landslide, lightning, fire,
explosion, accident, tornado, drought, flood, hurricane, or extraordinary
weather conditions more severe than those normally and typically
experienced in the affected area constituted by each of the specified
System Areas in which the Vendor is seeking to claim Contract suspension
due to Force Majeure;
(b) Acts of a public enemy, war (declared or undeclared), blockade,
insurrection, riot or civil disturbance, sabotage, quarantine, or any
exercise of the police power by or on behalf of any public entity;
(c) (i) The valid order, judgment or other act of any federal,
state or local court, administrative agency, Governmental Entity or
authority issued after the Effective Date; (ii) with respect to the
Vendor, the suspension, termination, interruption, denial or failure of
or delay in renewal or issuance of any Applicable Permit required by this
Contract to be obtained by the Owner; (iii) with respect to the Owner,
the suspension, termination, interruption, denial or failure of or delay
in
9
renewal or issuance of any Applicable Permit required by this Contract to
be obtained by the Vendor; or (iv) a change in Applicable Law (including
the adoption of a new Applicable Law); provided that no such order,
-------- ----
judgment, act, event or change is the result of the action or inaction
of, or breach of this Contract by, the Party relying thereon;
(d) Strikes, boycotts or lockouts, except for any such strike,
boycott or lockout involving the employees of the Vendor or the permanent
employees (not hired on a contract basis) of a Subcontractor (for the
period from the Effective Date until the Final Acceptance of the last PCS
System within the Initial System but in no event to exceed three (3)
years from the Effective Date);
(e) A partial or entire delay or failure of utilities; or
transportation embargoes; or
(f) The presence of (i) any Hazardous Waste on or at any System
Element Location which materially interferes with the Work to be done
thereon or otherwise materially endangers the safety of any personnel at
such location; (ii) any unknown historical or archeological sites which
are not shown or indicated in the survey of any System Element Locations
and of which the Vendor could not have reasonably been expected to be
aware; or (iii) any mining or water recovery activities (other than such
activities by the Vendor or its Subcontractors) at or under any System
Element Location after the Effective Date.
Events of Force Majeure include the failure of a Subcontractor to
furnish labor, services, materials, or equipment in accordance with its
contractual obligations, only if such failure is itself due to an event of Force
Majeure. A Force Majeure does not include any delay in performance to the
extent due to the failure of the Vendor or any Subcontractor to provide an
adequate number of engineers or other workmen or to manufacture or procure an
adequate amount of Equipment, Software and/or Services.
"Governmental Entity" means any nation or government, any state,
-------------------
province or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranteed Substantial Completion Date" means the date which is
--------------------------------------
defined in Exhibit A as "Milestone 8."
"Hazardous Waste" means any and all hazardous or toxic substances,
---------------
wastes, materials or chemicals, petroleum (including crude oil or any fraction
thereof) and petroleum products, asbestos and asbestos-containing materials,
pollutants, contaminants, polychlorinated biphenyls and any and all other
materials, substances, regulated pursuant to any Environmental Laws or that
could result in the imposition of liability under any Environmental Laws.
10
"Headend Interface Converter ("HIC")" means a form of CMI that
-----------------------------------
provides for transportation of wireless communication signals over a cable TV
distribution plant. The HIC takes signals from the PCS Base Station transmitter
and suitably heterodynes, filters and amplifies these signals for processing by
the PCS Base Station receiver. Additionally, the HIC provides reference and
control signals to the CMI units and receives and processes status signals from
the CMI unit.
"Independent Auditor" means any of the Persons set forth on Schedule
-------------------
15.
"Indemnitees" has the meaning ascribed thereto in subsection 20.2(a)
-----------
"Initial Affiliates" means the collective reference to each of the
------------------
Persons set forth on Schedule 5.
"Initial Affiliate Agreement" has the meaning ascribed thereto in
---------------------------
subsection 3.2.
"Initial Commitment" has the meaning ascribed thereto in subsection
------------------
7.1.
"Initial PCS System" means that PCS System, or a portion thereof,
------------------
designated by the Owner within one hundred twenty (120) days of the Effective
Date as the Initial PCS System in which Substantial Completion must take place
in accordance with the terms of Exhibit B3 prior to and as a condition of the
Owner's acceptance of Substantial Completion of any other PCS System within the
Initial System; provided that at any time after the designation of the Initial
-------- ----
PCS System prior to the Substantial Completion of the first PCS System within
the Initial System the Parties may mutually agree to change the designation of
the Initial PCS System; provided further that in the event the Parties are
-------- -------
unable or unwilling to mutually agree on such redesignation of the Initial PCS
System in good faith within a reasonable time, for the purposes hereof the first
PCS System within the Initial System to actually achieve Substantial Completion
in accordance with and pursuant to the terms of Exhibit A1 and Exhibit B3 will
be deemed to be the Initial PCS System.
"Initial PCS System Certificate" means a document submitted by the
------------------------------
Vendor to the Owner and signed by an authorized representative of the Owner and
an authorized officer of the Vendor stating that the Vendor has successfully
completed the Acceptance Tests applicable to the Initial PCS System in
accordance with the requirements of Exhibit B3.
"Initial System" means the build-out of that portion of the System
--------------
Areas as shown on Schedule 4 prior to any Expansions or Owner requests for
additional coverage for such System Areas pursuant to the terms of this
Contract.
"Initial Term" has the meaning ascribed thereto in subsection 5.1.
------------
"In Revenue Service" or "In Revenue" means the commercial operation of
----------------------------------
any PCS System, or a portion thereof, exclusive of operation for purposes of
conducting Acceptance Tests; provided that In Revenue Service or In Revenue will
-------- ----
not by itself
11
constitute acceptance in accordance with the terms of this Contract of any such
PCS System or any portion thereof.
"Inspector" means a qualified Person designated as an authorized
---------
representative of the Owner assigned to make all necessary inspections of the
Work, or of the labor, materials and equipment furnished or being furnished by
the Vendor or any of its Subcontractors at the System Element Locations and the
other sites where the Vendor or any Subcontractor is prosecuting the Work,
subject to appropriate safety, security and confidentiality requirements.
"Installation" or "Installed" means the performance and supervision by
------------ ---------
the Vendor of all installation of Products within the System and/or any PCS
System.
"Intellectual Property Rights" has the meaning ascribed thereto in
----------------------------
subsection 14.2(a)
"Interim Delay Penalty" has the meaning ascribed thereto in
---------------------
subsection 15.2.
"Interim Milestone" has the meaning ascribed thereto in subsection
-----------------
15.2.
"Interoperability" means (i) the ability of the System and/or any PCS
----------------
System and/or any material part thereof to interconnect and successfully operate
with the equipment and software of other Systems and/or PCS Systems and/or any
material part thereof of the Vendor and/or the Other Vendors and/or other
suppliers whose equipment and software also meet the relevant ANSI standards and
other Specifications identified in Exhibit D and (ii) the ability of each of the
Products to operate with one another and to operate with and within the System,
including, but not limited to, the ability of the handsets (to be delivered
pursuant to subsection 2.3) to operate with and within the System, all in
accordance with the Specifications. Since certain sections of the ANSI
standards are currently undefined, and certain sections are left available for
independent development by suppliers, the potential for such interoperability or
incompatibility with properly designed systems exists, and must be resolved by
the Vendor or any Subcontractor providing PCS Systems to the Vendor in
accordance with the terms hereof.
"Item" means any item at any time listed in any of the Vendor's price
----
lists and it specifically includes, without limitation, all Software Upgrades,
Software Enhancements, Equipment Upgrades, Equipment Enhancements and
modifications, enhancements, updates or other revisions of any kind in any such
item, spare parts with respect to any of the foregoing and any other PCS/CDMA
related item.
"Late Completion Payment Cap" has the meaning ascribed thereto in
---------------------------
subsection 15.3
"Late Completion Payments" has the meaning ascribed thereto in
------------------------
subsection 15.3
12
"Liabilities" has the meaning ascribed thereto in subsection 20.1(a)
-----------
"Liquidated Damages" has the meaning ascribed thereto in subsection
------------------
15.1
"M5 Forecast" has the meaning ascribed thereto in subsection 2.7(a)
-----------
"Maintenance and Instruction Manuals" means the manuals prepared by
-----------------------------------
the Vendor and delivered to the Owner pursuant to subsection 2.21 containing
detailed procedures and specifications for the ongoing maintenance of the
System.
"Major Portion" of the Work means a segregated portion of the Work
-------------
with a cost to the Owner of $10,000,000 or more.
"MFC Certificate" has the meaning ascribed thereto in subsection
---------------
26.1(b)
"Microwave Delay Period" has the meaning ascribed thereto in
----------------------
subsection 2.38(a)
"Microwave Relocation" means the process by which incumbent point to
--------------------
point microwave users of the 1850 - 1990 Mhz frequency spectrum are moved to
other frequencies or alternate transmission facilities in order to clear the
licensed PCS spectrum for broadband wireless service.
"Microwave Relocation Completion" means, with respect to any given PCS
-------------------------------
System, the point at which the Owner will have finished sufficient Microwave
Relocation in such PCS System to permit the commercially viable and marketable
operation of such PCS System in accordance with the terms of this Contract.
"Minimum Commitment" means sixty percent (60%) of the Initial
------------------
Commitment.
"Nationwide Network" means all of the PCS Systems built or to be owned
------------------
and/or operated by the Owner or its Affiliates in North America.
"NDAB" means the New Development Advisory Board established pursuant
----
to the terms of this Contract including subsections 2.11, 2.32 and 2.33.
"Network Interconnection" means the transmission links between Base
-----------------------
Stations and MSCs, between an MSC and another MSC, and between MSCs and PSTNs
but does not include connections between demarcation points of transmission
links and System Elements for which the Vendor will be responsible pursuant to
the terms of this Contract, including its obligations to install and test upon
the Owner's completion of such transmission links. Typically T1 transmission
links are used for connectivity.
"NewTelCo" means NewTelCo. L.P., a Delaware limited partnership.
--------
13
"Non-Essential Equipment" means a Product other than a PCS Product
-----------------------
obtained from a third party supplier and furnished to the Owner as part of
Facilities Preparation Services in accordance with the terms of this Contract,
which Product will be furnished with an assignable warranty from the such third
party supplier of a length and scope determined by the Parties in the
development of the Specifications in accordance with the terms of Exhibit E for
the Product pursuant to the terms of this Contract, including but not limited
to;
Antennas
Transmission towers
Monopoles
Prefabricated equipment shelters
Power transformers
Batteries
Rectifiers
Uninterrupted power sources.
Non-Essential Equipment does not include normal construction materials
(including, but not limited to pipes, conduits, concrete, fences, lighting and
paving materials) used by the Vendor or its Subcontractors in the performance of
its Facilities Preparation Services.
"North America" means the United States, Canada (including the
-------------
Province of Quebec) and Mexico.
"Notice to Proceed" means a written notice given by the Owner to the
-----------------
Vendor in the form attached hereto as Schedule 9 and in compliance with the
provisions of this Contract, fixing the date on which the Vendor will have the
full right, in accordance with the terms of this Contract, and the full
obligation, subject to the terms of this Contract, to commence the Work to be
performed under this Contract.
"Notice to Proceed Date" means the date on which any Notice to Proceed
----------------------
is issued by the Owner in accordance with the terms of this Contract.
"OCC" has the meaning ascribed thereto in subsection 2.26.2.
---
"OM&P" has the meaning ascribed thereto in subsection 2.23(a).
----
"Operating Manuals" means the manuals to be prepared by the Vendor and
-----------------
delivered to the Owner pursuant to subsections 2.20, 2.22 and 2.23 containing
detailed procedures and specifications for the operation of the System and/or
any part thereof.
"Operative" has the meaning ascribed thereto in subsection 27.26.
---------
"Optional Software Features" means Software features for PCS Products
--------------------------
available to Customers on an optional, separate fee, basis. The initial fees
for such Optional Software Features are not included in Annual Release
Maintenance Fees.
14
"Other Vendors" means vendors, other than the Vendor, with whom the
-------------
Owner has entered, or may enter in the future, into a contract for the provision
of products and services for the engineering and construction of any portion of
the Nationwide Network. Other Vendors does not include any Subcontractors in
connection with the Work to be performed under this Contract in their capacity
as Subcontractors.
"Outage" has the meaning ascribed thereto in subsection 17.4(b).
------
"Owner" has the meaning ascribed thereto in the prefatory paragraph
-----
to this Contract.
"Owner Loss" means an insured loss incurred by the Owner relating to
----------
the System.
"Owner's Succeeding Entity" has the meaning ascribed thereto in
-------------------------
subsection 27.23.
"Parties" has the meaning ascribed thereto in the prefatory
-------
paragraph to this Contract.
"Patent License" has the meaning ascribed thereto in subsection
--------------
14.5.
"P1 Major Condition ("P1")" has the meaning ascribed thereto in
-------------------------
subsection 2.26.3(g).
"P2 Significant Problem ("P2")" has the meaning ascribed thereto in
-----------------------------
subsection 2.26.3(g).
"P3 Minor Problem ("P3")" has the meaning ascribed thereto in
-----------------------
subsection 2.26.3(g).
"Partners" means the collective reference to Sprint Spectrum, L.P., a
--------
Delaware limited partnership and/or Sprint Corporation ("Sprint"), TCI Network
Services, a Delaware general partnership ("TCI"), Cox Telephony Partnership, a
Delaware general partnership ("Cox"), and Comcast Telephony Services, a Delaware
general partnership ("Comcast").
"PCS" means personal communication services authorized by the FCC.
---
"PCS FCC Licenses" has the meaning ascribed thereto in the recitals
----------------
of this Agreement.
"PCS Products" means the Vendor's PCS Equipment and Software, as
------------
offered from time to time in the Customer Price Guide; provided that for the
-------- ----
purposes of this Contract PCS Products will always (subject to subsection 10.1)
include at least those Items listed on the Vendor's Customer Price Guide as of
the Effective Date. As the context
15
requires and notwithstanding the above, the term PCS Products includes all
Vendor manufactured Products provided to the Owner in connection with its
obligations pursuant to the terms of this Contract, but excludes Items furnished
solely as part of Facilities Preparation Services not otherwise integral to the
operation or maintenance of the PCS Items set forth on the Customer Price Guide,
including Non-Essential Equipment.
"PCS System" means all Products and other equipment, tools and
----------
software, all System Element Sites and any property located thereat necessary or
desirable to provide PCS in a given specified System Area.
"Person" means an individual, partnership, limited partnership,
------
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity of whatever
nature.
"Phillieco" means Phillieco L.P.
---------
"Preliminary RF Design" means an RF Engineering design which
---------------------
incorporates as many prequalified System Element Locations (including existing
structures and other sites provided by Site Acquisition that have a high
likelihood of meeting the zoning requirements) as possible without compromising
the quality of the System or System Element Location counts, design grids,
signal level plots and prequalified site map overlays for each of the System
Areas. The Preliminary RF Design must also include those Items listed on
Schedule 1. The Preliminary RF Design must be based upon all information
reasonably available to the Vendor or provided to the Vendor by the Owner as of
the Effective Date including, but not limited to, the information set forth in
this Contract.
"Product Warranty Period" has the meaning ascribed thereto in
-----------------------
subsection 17.1(a), 17.1(b).
"Product Contract Price" means, at the time of determination, the
----------------------
Contract Price minus the costs applicable to and actually invoiced to such date
by the Owner pursuant to and in accordance with Section 6 for Facilities
Preparation Services and RF Engineering.
"Products" means the collective reference to the PCS Products, the
--------
Equipment and the Software provided by the Vendor or any Subcontractor pursuant
to and in accordance with the terms of this Contract.
"Project Milestones" means the collective reference to the milestone
------------------
dates and intervals as set forth in Exhibits A1 and A2, each a "Milestone."
"Proprietary Information" has the meaning ascribed thereto in
-----------------------
subsection 27.19(a).
"Punch List" means that list prepared in conjunction with the
----------
Acceptance Tests and included in any Acceptance Certificate, which contains one
or more immaterial non-service-affecting items (specifying the cost of
completing such items either determined as
16
of the date of the Substantial Completion of the relevant PCS System or within a
reasonable time thereafter) which have not been fully completed by the Vendor as
of the Substantial Completion of any PCS System; provided that such incomplete
--------
portion of the Work will not, during its completion, materially impair the
normal daily operation of such PCS System in accordance with the Specifications.
"Reviewers" has the meaning ascribed thereto in subsection 21.4.
---------
"RF" means radio frequency.
--
"RF Engineering" means radio frequency engineering required in
--------------
connection with the architectural design of the System and/or any PCS System.
"RFP" has the meaning ascribed thereto in subsection 11.9.1(a).
---
"RTM License" has the meaning ascribed thereto in subsection 11.6.
-----------
"RTU License" has the meaning ascribed thereto in subsection 11.1.
-----------
"Services" means the collective reference to all of the services to be
--------
conducted by the Vendor as part of the Work pursuant to the terms of this
Contract including, but not limited to, Installation, Facilities Preparation
Services, RF Engineering, System Maintenance Support, System Support Services
and other repair and maintenance services, performed in accordance with the
terms of this Contract including, but not limited to, the Specifications.
Services does not include Site Acquisition, Network Interconnection or Microwave
Relocation.
"Services Warranty Period" has the meaning ascribed thereto in
------------------------
subsection 17.2(b).
"Site Acquisition" means the services to be performed by the Owner
----------------
and/or its subcontractors necessary for identifying and acquiring sufficient
rights to the System Element Locations within the System Areas including all
requisite zoning approvals and all building approvals required by any
Governmental Entity; provided that Site Acquisition does not include any of the
-------- ----
Site Plan Architectural Work or the Facilities Engineering.
"Site Acquisition Delay Period" has the meaning ascribed thereto in
-----------------------------
subsection 2.41.
"Site Acquisition Substantial Completion" means, with respect to any
---------------------------------------
PCS System, the point at which the Owner will have acquired, by purchase, lease
or otherwise, rights to a sufficient number of System Element Locations within
the specified System Area to be covered by such PCS System such that the
performance criteria specified in Exhibit F applicable to such PCS System would
be substantially satisfied in the reasonable opinion of the Owner subject to the
reasonable acceptance of the Vendor. If the Vendor upon receiving notice from
the Owner that Site Acquisition Substantial Completion has been achieved in any
17
given PCS System disagrees with the Owner's claim, then the Vendor will have ten
(10) Business Days to detail its disagreement in writing to the Owner and a
Third Party Engineer chosen by the Owner and such Third Party Engineer will have
ten (10) Business Days from the receipt of such writing to make a determination
whether or not the Owner's claim of Site Acquisition Substantial Completion is
reasonable. The Third Party Engineer will have no discretion or authority to
provide the Parties with any answer other than whether in its judgment the
Owner's claim is reasonable. Such determination by the Third Party Engineer
will be final and binding upon the Parties.
"Site Acquisition Substantial Completion Date" means with respect to
--------------------------------------------
any PCS System the date on which the Owner will have achieved Site Acquisition
Substantial Completion.
"Site Plan Architectural Work" means the preparation of architectural
----------------------------
and/or engineering drawings, plans and/or specifications necessary to obtain
zoning permits and/or approvals, building permits and/or approvals and/or
conditional use permits for any given System Element Facility.
"Software" means (a) all computer software furnished hereunder for use
--------
with any Equipment including, but not limited to, computer programs contained on
a magnetic or optical storage medium, in a semiconductor device, or in another
memory device or system memory consisting of (i) hardwired logic instructions
which manipulate data in central processors, control input-output operations,
and error diagnostic and recovery routines, or (ii) instruction sequences in
machine-readable code furnished hereunder that control call processing,
peripheral equipment and administration and maintenance functions, (b) any
Software Enhancements, Software Features and Software Upgrades furnished by the
Vendor to the Owner hereunder, and (c) any Documentation furnished hereunder for
use and maintenance of the Software; provided that no Source Code versions of
-------- ----
Software are included in the term Software.
"Software Combined Release" means a Software Upgrade which is at any
-------------------------
time combined with any Software Enhancement.
"Software Enhancements" means modifications or improvements made to
---------------------
the Software relating to PCS Products which improve performance or capacity of
the Software or which provide additional functions to the Software.
"Software Licenses" means the collective reference to the RTU
-----------------
License and the RTM License.
"Software Revision Level" means each version of Software that reflects
-----------------------
any amendment, modification or change from the immediately preceding version.
"Software Upgrades" means periodic updates to the Software issued by
-----------------
the Vendor to the Owner under Warranty and Software maintenance obligations to
correct Defects or Deficiencies in the Software relating to PCS Products.
18
"Sony/Qualcomm Agreement" has the meaning ascribed thereto in
-----------------------
subsection 2.3(a).
"Source Code" means Software in human-readable form and all
-----------
documentation, such as flow charts, schematics and annotations, that comprise
the precoding detailed design specifications (which constitutes the "embodiment
of the intellectual property" of the Software (excluding Third Party Software)
as such concept is referenced in Section 365(n) of the United States Bankruptcy
Code, as amended), which is necessary to enable the Owner to maintain and modify
the Software in accordance with the licenses granted in this Contract.
"Specifications" means the collective reference to the specifications
--------------
and performance standards of the design, Facilities Preparation Services,
Engineering, Products, Installation and Services contemplated by this Contract
and includes any Expansions, amendments, modifications and/or other revisions
thereto made in accordance with the terms of this Contract and as more fully set
forth in Exhibits C, D, E and F, or as otherwise determined hereunder pursuant
to the terms of this Contract; provided that, except as otherwise provided in or
-------- ----
determined pursuant to this Contract or as otherwise mutually agreed between the
Parties, the applicable Specifications for an Item will be the Vendor's or other
manufacturer's standard technical specifications for such Item, as applicable,
unless the Owner will have specifically not agreed with such Vendor or other
manufacturer specification; and provided further, that with respect to
-------- -------
Facilities Preparation Services, design, Engineering, Products, Installation and
Services for which specifications and performance standards are not provided and
listed in such Exhibits, "Specifications" refers to performance, functionality
and fitness for the intended purpose in which such design, Facilities
Preparation Services, Engineering, Products, Installation and Services are
employed.
"Structural Architectural Work" means the preparation of all
-----------------------------
architectural drawings and blueprints relating to the structural specifications
for a System Element Facility.
"Subcontractor" means a contractor, vendor, supplier, licensor or
-------------
other Person, having a direct or indirect contract with the Vendor or with any
other Subcontractor of the Vendor who has been hired specifically to assist the
Vendor in certain specified areas of its performance of its obligations under
this Contract including, without limitation, performance of any part of the
Work.
"Substantial Completion" means the point at which the Vendor has
----------------------
completed a portion of the Work other than specified Items set forth on
applicable Punch Lists such that the geographic areas of any System Area as
specified in Schedule 4 all have been covered to the extent set forth in
Schedule 4, in accordance with the Specifications and the System Standards and
as verified to the Owner in accordance with the criteria and requirements set
forth in Exhibit B3.
"Substantial Completion Certificate" means, with respect to a given
----------------------------------
PCS System, a document submitted by the Vendor to the Owner and signed by an
authorized representative of the Owner and an authorized officer of the Vendor
stating that the Vendor
19
has successfully completed the Acceptance Tests applicable to the Substantial
Completion of the Work to be done in such PCS System in accordance with the
requirements of Exhibit B3.
"Successor" has the meaning ascribed thereto in subsection 27.22.
---------
"Switch Site" means the System Element Location designated by the
-----------
Owner as the site in which it wants the MSC(s) to be Installed in any given PCS
System.
"Switch Site Notice" has the meaning ascribed thereto in subsection
------------------
2.6(d).
"Switch Site Notice Date" has the meaning ascribed thereto in
-----------------------
subsection 2.6(d).
"Switch Site Ready Date" has the meaning ascribed thereto in
----------------------
subsection 2.6(d).
"System" means all of the PCS Systems built by the Vendor in the
------
System Areas allocated to the Vendor pursuant to the terms of this Contract and
as set forth on Schedule 4.
"System Areas" has the meaning ascribed thereto in the recitals to
------------
this Contract.
"System Element" means the Equipment and Software required to perform
--------------
radio, switching and/or system element functions for the System and/or any PCS
System (which may include, without limitation, Base Station ("BTS"), Equipment
Identity Register ("EIR"), Messaging System ("MXE"), Mobile Switching
Center/Visitor Location Register ("MSC/VLR"), Mobile Service Node ("MSN"),
Signal Transfer Point ("STP"), Home Location Register ("HLR"), Service Control
Point ("SCP"), Intelligent Peripheral ("IP") and Access Manager ("AM")).
"System Element Facility" means the structures, improvements,
-----------------------
foundations, towers, and other facilities necessary to house or hold any System
Element and any related Equipment to be located at a particular System Element
Location.
"System Element Location" means the physical location for a System
-----------------------
Element.
"System Element Site" means the collective reference to a particular
-------------------
System Element, together with the related System Element Location and System
Element Facility.
"System Element Verification" means the Vendor's laboratory level
---------------------------
testing on the Products conducted by the Vendor in accordance with Exhibit B3.
"System Maintenance Support" means those Services offered by the
--------------------------
Vendor for maintenance of any of the Products and/or any System Element or
collection thereof.
20
"System Managers" means each of the managers designated by the Owner
---------------
and the Vendor, respectively, for the purposes of subsection 23.1.
"System Standards" means the collective reference to the industry
----------------
standards specified in Exhibits C, D, F, G and H.
"System Support Services" means those services offered by the Vendor
-----------------------
relating to System design, enhancement and optimization.
"System Warranty Period" has the meaning ascribed thereto in
----------------------
subsection 17.3.
"TCG" means the collective reference to Teleport Communications
---
Group, Inc. and TCG Partners.
"Technical Documentation" means the documentation identified as such
-----------------------
in the Specifications.
"Term" has the meaning ascribed thereto in subsection 5.2.
----
"Test-bed Laboratory" has the meaning ascribed thereto in subsection
-------------------
2.5.
"Third Party Engineer" means any one of the Persons listed on
--------------------
Schedule 14.
"Third Party Software" means Software which is independently developed
--------------------
by a third party, sublicensed to the Owner under this Contract or otherwise
provided with the Products in accordance with the Specifications.
"Training" has the meaning ascribed thereto in subsection 2.23.
--------
"Trouble Report ("TR")" has the meaning ascribed thereto in
---------------------
subsection 2.26.2.
"United States" means the fifty states of the United States and the
-------------
District of Columbia.
"Utilities Work" means the installation of electric and telephone
--------------
utilities at the System Element Locations.
"Vendor" has the meaning ascribed thereto in the prefatory paragraph
------
to this Contract.
"Vendor-Controlled Location" has the meaning ascribed thereto in
--------------------------
subsection 2.12.
21
"Vendor Developments" has the meaning ascribed thereto in subsection
-------------------
2.11.1.
"Vendor Event of Default" has the meaning ascribed thereto in
-----------------------
subsection 24.2.
"Vendor procedural error" has the meaning ascribed thereto in
-----------------------
subsection 17.4(c).
"Vendor Patents" has the meaning ascribed thereto in subsection
--------------
14.5.
"Vendor's Succeeding Entity" has the meaning ascribed thereto in
--------------------------
subsection 27.22.
"Warranty Damages" has the meaning ascribed thereto in subsection
----------------
17.4(c).
"Warranty Periods" means the collective reference to the Product
----------------
Warranty Period, the Non-Essential Equipment Warranty Period, the Services
Warranty Period and the System Warranty Period.
"Work" means all phases of this Contract, including, as required by
----
the terms of this Contract, engineering and design, procurement, manufacture,
construction and erection, installation, training, start-up (including
calibration, inspection and start-up operation), testing and start-up and
testing operation with respect to the System and/or any PCS System and/or any
part thereof to be performed by the Vendor or its Subcontractors pursuant to
this Contract. As required by the terms of this Contract, Work includes (i) all
labor, materials, equipment, services, and any other items to be used by the
Vendor or its Subcontractors in the prosecution of this Contract, wherever the
same are being engineered, designed, procured, manufactured, delivered,
constructed, installed, trained, erected, tested, started up or operated during
start-up and testing and whether the same are on or are not on any System
Element Location or any other site within the System and/or any PCS System and
(ii) all related items which would be required of a contractor of projects of
comparable size and design which are necessary for the System and/or any PCS
System and/or any part thereof to (x) operate in accordance with all Applicable
Laws and Applicable Permits, and (y) provide the operating personal
communications service systems required pursuant to this Contract. The Vendor
will be responsible for providing in accordance with the terms of this Contract
any and all additional items and services which are not expressly included by
the terms of this Contract and which are reasonably required for construction
and start-up of the System and/or any PCS System.
1.2 Other Definitional Provisions. (a) When used in this Contract,
-----------------------------
unless otherwise specified therein, all terms defined in this Contract will have
the defined meanings set forth herein. Terms defined in the Exhibits are deemed
to be terms defined herein; provided that in the case of any terms that are
-------- ----
defined both in this Contract and/or an Exhibit, the definitions contained in
this Contract will supersede such other definitions for all purposes
22
of this Contract; provided further, that definitions contained in any Exhibit
-------- -------
will control as to such Exhibit.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Contract refer to this Contract as a whole and not to
any particular provision of this Contract and Section, subsection, Schedule and
Exhibit references are to this Contract unless otherwise specified.
(c) The meanings given to terms defined in this Contract are equally
applicable to both the singular and plural forms of such terms.
SECTION 2 SCOPE OF WORK, RESPONSIBILITIES AND PROJECT
MILESTONES
2.1 Scope of Work. Upon the terms and conditions herein set forth, the
-------------
Vendor will provide all Products and Services to the Owner required for the
establishment of the System including, but not limited to, the Vendor's
obligation to engineer, equip, install, build, test and service the PCS Systems
in the System Areas set forth on Schedule 4 in accordance with the
Specifications and that otherwise satisfies all conditions of Final Acceptance;
provided, that the Vendor will not be responsible for Site Acquisition (except
- - --------
to the extent certain Facilities Preparation Services, including Site Plan
Architectural Work, are required for the successful completion of Site
Acquisition), Network Interconnection or Microwave Relocation. The Vendor must
complete the Work in accordance with the Project Milestones set forth in Exhibit
A1 and as further specified herein provided that Milestone 5 (as set forth on
-------- ----
Exhibit A1) in any PCS System within the Initial System will in no event be
deemed to have occurred prior to March 31, 1996. The Vendor must furnish all
labor, materials, tools, transportation and supplies required to complete the
Work in accordance with the Specifications and the terms of this Contract.
2.2 Additional Coverage. (a) The Owner has the option from time to
-------------------
time, upon not less than thirty (30) days, written notice to the Vendor, to
designate additional geographic areas in the United States, including, but not
limited to, additional System Areas, as to which the Owner may purchase from the
Vendor some or all, as determined by the Owner in its sole discretion, of the
Products and Services required for the PCS coverage of such areas as provided
for in this Contract, all on the terms and conditions set forth in this
Contract; provided that the Parties will mutually agree in good faith on the
-------- ----
payment terms (provided that pricing will be as set forth in this Contract),
-------- ----
liquidated damages, Project Milestones and the System performance criteria
applicable to such additional coverage pursuant to this subsection 2.2(a); and
provided further that any such agreement on (i) such Project Milestones must be
- - --------- -------
based on substantially the same intervals (including, but not limited to, the
number of days specified in each such interval) as set forth in Exhibits A1 and
A2, to the extent possible, (ii) such payment terms and liquidated damages must
be based on substantially the same terms as are otherwise set forth in this
Contract, and (iii) such System performance criteria must be based on
substantially the same System performance criteria as set forth in Exhibit F, to
the extent possible. The Parties agree that this subsection 2.2(a) will be
23
effective at any given time during the Term of this Contract as to the
determination of payment terms (other than pricing) and Project Milestones
applicable to the Vendor's provision of additional coverage pursuant to this
subsection 2.2(a) only if (i) the aggregate price of the Products and Services
to be provided by the Vendor at such time under this subsection 2.2(a) is at
such time at least five million dollars ($5,000,000) and (ii) the Vendor is at
such time providing Installation Services and at least one other Service
provided for under this Contract in connection with such additional coverage
provided by the Vendor at any time during the Term of this Contract pursuant to
this subsection 2.2(a). Unless otherwise mutually agreed among the Parties, the
payment terms for additional Products provided by the Vendor after Final
Acceptance of the last PCS System within the Initial System not otherwise
covered by or otherwise determined pursuant to this subsection 2.2(a) will be
subject to the terms of Section 6.
(b) The Owner has the option from time to time upon not less than thirty
(30) days' prior written notice to the Vendor and in accordance with the
applicable change order provisions of subsection 7.2 set forth herein, to
require the Vendor to increase the level of capacity or coverage of an already
allocated PCS System (whether such PCS System has been so allocated pursuant to
Schedule 4 or subsection 2.2(a), all on the terms and conditions of this
Contract.
(c) Where the Owner wishes to purchase PCS Products or Services for use
and/or application in a country outside the United States but within North
America including any territory of the United States not otherwise covered by
the definition of the "United States" as set forth herein, the Owner and the
Vendor will, in good faith, negotiate a separate agreement for such purchase
upon substantially all of the same terms as those set forth in this Contract,
with only such modifications as may reasonably be appropriate to reflect the
international nature of such transaction and to assure protection of the
Vendor's intellectual property. The PCS Product and Software prices and price
discounts set forth in this Contract will prevail in any such separate
agreement, subject only to reasonable pricing adjustments which will be in no
event ten percent (10%) higher than the prices set forth in or determined
pursuant to this Contract plus foreign import duties and taxes. Any such
agreement may, at the Vendor's option, be entered into by any of the
subsidiaries or other affiliates of the Vendor as listed on Schedule 13.
2.3 Handsets. (a) The Vendor must supply the Owner with two thousand
--------
(2,000) subscriber handsets at the prices set forth on Schedule 2 and
substantially meeting the applicable criteria set forth in Exhibit H within
sixty (60) days prior to the Substantial Completion of the Initial PCS System in
accordance with Exhibit B3; provided that the criteria set forth in Exhibit H
-------- ----
will substantially conform to the applicable specifications and/or criteria (but
which will in no event be more than what is required by Exhibit H) agreed
between the Owner and Sony/Qualcomm (the "Sony/Qualcomm Agreement") if such
agreement exists as of the date required for the delivery of handsets by the
Vendor pursuant to this subsection 2.3; provided further that in the event the
-------- -------
Sony/Qualcomm Agreement does not exist as of the date the Vendor is required to
deliver handsets pursuant to the first sentence of this subsection 2.3 the
handsets required to be delivered by the Vendor pursuant to this subsection 2.3
will substantially conform to the criteria set forth in Exhibit H, but in
24
any event will work in the System and in accordance with the applicable
requirements related thereto.
(b) The Vendor must supply at the prices set forth on Schedule 2 one
hundred (100) handsets per PCS System within the Initial System, acceptable to
the Owner, and the necessary equipment related thereto for testing and operation
of each such PCS System pursuant to, and in accordance with, the terms of this
Contract, Exhibit B3 and substantially in accordance with Exhibit H to the
extent applicable; provided however, with the consent of the Owner, which
-------- -------
consent will not be unreasonably withheld, such handsets will not be required to
be in substantial compliance with the criteria set forth in Exhibit H if they
will otherwise be sufficient to test and accurately demonstrate that the PCS
System meets the Specifications. The one hundred (100) handsets required to be
delivered by the Vendor pursuant to the immediately preceding sentence will be
delivered to the Owner on or before Milestone 7 (as set forth in Exhibit A1) for
the PCS System for which such handsets are provided.
(c) Notwithstanding any other provision of this Contract, including
Section 17, the Vendor does not warrant the handsets provided hereunder, but to
the extent that the Vendor is authorized to do so by the terms of any applicable
agreement or agreements with such third party suppliers, the Vendor will assign
or otherwise transfer any warranty received from its supplier(s) of the handsets
to the Owner at no additional cost to the Owner. For the purposes of this
Contract a supplier of handsets to the Vendor will not be deemed a
Subcontractor.
2.4 Initial PCS System. Pursuant to Exhibit B3, the Vendor must achieve
------------------
Substantial Completion of the Initial PCS System in accordance with the
requirements of Exhibit B3 prior to, and as a condition of, the Substantial
Completion of any other PCS System within the Initial System. This requirement
in no way relieves the Vendor of its obligations prior to the Substantial
Completion of the Initial PCS System to continue with the Work on all of the PCS
Systems constituting the Initial System in accordance with the requirements of
this Contract and the Project Milestones applicable to each such PCS System.
2.5 System Element Verification; Test-bed Laboratory. (a) In
------------------------------------------------
accordance with Milestone 4 (as set forth on Exhibit A1) the Vendor must
successfully complete System Element Verification pursuant to the terms of this
Contract including, but not limited to, the Specifications and Exhibit B3 no
later than August 19, 1996.
(b) The Vendor will supply, at no additional cost to the Owner (except
as provided in Exhibit I), the Products and Services necessary for the
establishment of a test-bed laboratory, which laboratory will include the
Products and Services set forth on Exhibit I (the "Test-bed Laboratory"). Such
Products and Services will be subject to the applicable warranty terms of this
Contract. The Vendor will provide all relevant Software Upgrades, Software
Enhancements and Software Combined Releases applicable to the Test-bed
Laboratory. Equipment Upgrades, Equipment Enhancements and Equipment Combined
Releases will be available for the Test-bed Laboratory as provided in this
Contract. The Test-bed Laboratory will be provided by the Vendor in accordance
with Milestone 3 applicable to the Initial PCS System as set forth on Exhibit
A1, but in no event will the Vendor be required
25
to provide the Test-bed Laboratory earlier than ninety (90) days after the
building site for such laboratory has been made ready by the Owner and the
Vendor has received the Owner's notice thereof, provided that such notice will
-------- ----
not be delivered to the Vendor before April 19, 1996 (the "Building Ready
Date"). The Owner expressly agrees that it will not use the Test-bed Laboratory
for In Revenue Service or any purpose other than testing without the prior
written consent of the Vendor, which consent the Vendor will not unreasonably
withhold or delay.
2.6 RF Engineering; Site Acquisition and MSC Installation. (a) In
-----------------------------------------------------
accordance with Milestone 2 as set forth on Exhibit A1, within sixty (60) days
of the Effective Date, the Vendor must deliver to the Owner the Preliminary RF
Design for each of the System Areas in accordance with the requirements and
criteria set forth in Exhibit B1 and Schedule 1; provided that the Vendor agrees
-------- ----
to (i) provide Preliminary RF Designs (as set forth above) to the Owner for each
of the Milwaukee, Denver, Salt Lake and Spokane System Areas (as set forth on
Schedule 4) within sixty (60) days of the Effective Date unless, within fourteen
(14) days from delivery of the existing RF information relating to the above
listed four (4) System Areas from the Owner to the Vendor, the Vendor, after
careful consideration determines in good faith that such information or plans
need to be redesigned so that the Vendor may achieve such Milestone 2 (as set
forth in Exhibit A1) for such four (4) System Areas in accordance with Schedule
1 and the terms of this Contract, in which case the Vendor will receive an
additional twenty-one (21) days in which to deliver such Preliminary RF Designs
for such four (4) System Areas only (in no event will such time period from the
Effective Date exceed eighty-one (81) days for such four (4) System Areas) and
(ii) provide to the Owner such a Preliminary RF Design for the Detroit System
Area (as set forth on Schedule 4) within eighty-one (81) days of the Effective
Date. The Vendor must provide the Owner with the applicable search rings for
each PCS System based upon the Preliminary RF Design within twenty (20) Business
Days of Milestone 2 (as set forth in Exhibit A1). The Owner and the Vendor
agree to cooperate with each other to complete the RF Engineering and the Site
Acquisition. The Owner must notify the Vendor of desired coverage areas, RF
Engineering parameters or other information or restrictions the Owner wishes to
be included in the Final RF Engineering Plan for each PCS System. In accordance
with Exhibit B1, the Vendor will do the RF Engineering in each of the PCS
Systems and in connection therewith will use the parameters, information and
restrictions supplied by the Owner. As part of the RF Engineering, the Vendor
will establish "search rings" in each of the PCS Systems that will specify areas
in which the Owner may proceed with Site Acquisition.
(b) In accordance with Exhibit B1 the Vendor, at its request, must be
kept informed of the progress made on ongoing Site Acquisition within the System
Areas. As the Site Acquisition progresses, the Vendor agrees to regularly alter
the RF Engineering plan to determine a new search ring or rings to take into
account any changes or modifications requested by the Owner or otherwise
requested by the Owner due to the Owner's inability to acquire sufficient rights
to a location which could constitute a System Element Location in a timely or
economic manner. When making changes to the RF Engineering plan the Vendor must
take into account the Site Acquisition already completed by the Owner.
26
(c) Milestone 5 (as set forth in Exhibit A1) will be achieved in each
PCS System in accordance with this subsection 2.6(c); provided that for each PCS
-------- ----
System the appropriate MSCs have been installed by the Vendor in the Owner's
relevant Switch Sites within each such PCS System in accordance with subsection
2.6(d) below. In accordance with the Project Milestones set forth on Exhibit A1
and the requirements and criteria set forth in Exhibit B1, within five (5) days
of the Owner achieving Site Acquisition Substantial Completion within any given
System Area (the "Final RF Review Period"), the Owner and the Vendor will use
their best efforts to agree on a final System Element Location count (the "Final
Site Count") and a final RF Engineering plan (the "Final RF Engineering Plan")
for such System Area upon which the PCS System for such System Area will be
built by the Vendor. Failure of the Owner and the Vendor to reach satisfactory
agreement on a Final Site Count and/or a Final RF Engineering Plan for any given
System Area within the Final RF Review Period will automatically result in the
referral of any such disagreement to the most senior RF engineers of both the
Owner and the Vendor for their review and resolution within five (5) days after
the end of any such Final RF Review Period. If the senior RF engineers fail to
resolve any such disagreement within the extended five (5) day resolution
period, the disagreement will automatically be referred for resolution in
accordance with subsection 23.1. It is understood by the Parties that during
the period of any such disagreement and the resolution thereof in accordance
with the Contract, the Work on such PCS System, to the extent possible, will be
ongoing and that Substantial Completion on such PCS System cannot be achieved
without agreement by the Parties on a Final RF Engineering Plan and/or a Final
Site Count for such PCS System and/or System Area.
(d) The Vendor will install each of the MSCs in each of the Switch Sites
identified by the Owner in each PCS System within the System within sixty (60)
days of the Switch Site Ready Date; provided that (i) the Owner will have
-------- ----
provided the Vendor with the MSC configuration engineering information at least
one hundred (100) days prior to the Switch Site Notice Date, for each such MSC,
such that the Vendor may actually perform the Owner's MSC configuration
engineering (other than the Switch Site layout configuration), (ii) the Owner
will have provided the Vendor with the applicable Switch Site description (in
appropriate detail) at least sixty (60) days prior to the Switch Site Notice
Date and (iii) as of the Switch Site Ready Date the applicable Switch Site will
have been made ready by the Owner such that the relevant MSC can in fact be
installed by the Vendor. For the purposes hereof (i) the "Switch Site Ready
Date" means the date specified by the Owner as the date on which the Switch Site
will in fact be ready for MSC installation as communicated to the Vendor by the
Owner in the Owner's Switch Site Notice to the Vendor, (ii) the "Switch Site
Notice Date" will mean, as to any Switch Site Notice, the date on which such
notice was delivered to the Vendor by the Owner and (iii) the "Switch Site
Notice" will mean the notice provided to the Vendor by the Owner in sufficient
detail to describe the Switch Site so that the Vendor may reasonably engineer
the layout of the MSC configuration specifically for such Switch Site. Nothing
contained herein will in any way limit the Vendor's obligation pursuant to the
terms of this Contract to do the MSC engineering and the RF Engineering in
accordance with the terms of this Contract. Pursuant to this subsection 2.6(d)
in no event will the Owner provide the Vendor the Switch Site Notice more than
sixty (60) days later than the date the Owner delivers the Vendor the Build
Notice pursuant to subsection 2.7(a).
27
2.7 Facilities Preparation Services and Installation. (a) For any
------------------------------------------------
given PCS System within the Initial System prior to Milestone 5 (as set forth on
Exhibit A1) for such PCS System the Owner (i) may, in its discretion, provide
notice to the Vendor when it has achieved Site Acquisition of at least fifty
(50) System Element Locations in any given PCS System or (ii) in any event, (if
the Owner hasn't already provided notice pursuant to clause (i) above) will
provide such notice to the Vendor when it has achieved Site Acquisition of at
least thirty percent (30%) of the System Element Locations in any given PCS
System (in either event, the "Build Notice"). The Build Notice calculation will
be based upon the Owner's reasonable estimate of System Element Locations within
or in connection with the Preliminary RF Design applicable to the PCS System in
which such Build Notice is issued to the Vendor. The Build Notice for each PCS
System will also include the Owner's best forecast based upon information
available at such time (the "M5 Forecast") of when it expects to be able to
declare Site Acquisition Substantial Completion within such PCS System. The
Owner understands that the Vendor will not be required to commence Facilities
Preparation Services and/or Installation in any given PCS System until and
unless it has received the applicable Build Notice pursuant to and in accordance
with this subsection 2.7.
(b) In accordance with the Project Milestones specified in Exhibit A and
the requirements and criteria of Exhibit B2, for each System Area the Vendor
must complete the Facilities Preparation Services for all System Element
Locations within such PCS System in accordance with the construction criteria
set forth in Exhibit E and the performance criteria set forth in Exhibit F no
later than ninety (90) days from the Owner/Vendor agreement on a Final Site
Count and a Final RF Engineering Plan for such System Area; provided that upon
-------- ----
the prior written request of the Vendor, the Owner may consent (which consent
will not be unreasonably withheld) to postpone Milestone 6 (as set forth in
Exhibit A1) with respect to any PCS System by not more than an additional sixty
(60) days in the event that more than ten percent (10%) of the System Element
Locations in such PCS System estimated as of the date of the Build Notice for
such PCS System have not been fully acquired by the Owner immediately prior to
the date on which Milestone 5 (as set forth in Exhibit A1) otherwise occurs in
such PCS System. Pursuant to the Project Milestones the Vendor must complete
Installation of the Products for any given PCS System within thirty-two and one
half (32-1/2) days of its completion of the Facilities Preparation Services in
accordance with Milestone 6 (as set forth on Exhibit A1) for such PCS System
pursuant to the requirements and criteria set forth in Exhibit D and Exhibit F.
2.8 Site Acquisition Modifications. In the event that the Owner
------------------------------
determines that it is unlikely to achieve Site Acquisition Substantial
Completion for any PCS System in a timely and cost-effective manner, the Vendor
will modify certain performance criteria set forth in Exhibit F with respect to
such PCS System in the manner and to the degree that the Owner reasonably
specifies in writing to the Vendor in accordance with the terms of Exhibit B3.
In the event the Owner notifies the Vendor of a modification to the System
performance criteria for such PCS System pursuant to this subsection 2.8, such
modified criteria, including any such lower number of System Element Locations
that the Owner, in its sole discretion, deems at such time to be satisfactory so
as to constitute Site Acquisition Substantial Completion, will be deemed the
performance criteria and the System Element Location count
28
applicable to such PCS System for the purposes of Milestone 5 (as set forth on
Exhibit A1) and all other remaining Project Milestones for such PCS System
thereafter.
2.9 Design/System Architecture and Engineering; Interoperability. (a)
------------------------------------------------------------
The Vendor must provide all Engineering and design services necessary for the
completion of the Work and the System in conformity with the Specifications and
the CDMA standards, including, but not limited to, the Engineering and design
necessary to describe and detail the System and the specified PCS Systems.
(b) Pursuant to and in accordance with the terms of Exhibits B3 and G,
BTS/BSC-MSC Interoperability must be demonstrated on or before December 1, 1996
(provided that such date will change to reflect the actual delay beyond December
-------- ----
31, 1995 in the finalization of "Attachment A" to be attached to Exhibit G);
provided that in any event the requirements of this subsection 2.9(b) are a
- - -------- ----
condition to the Vendor's Substantial Completion of the last PCS System within
the Initial System and Substantial Completion of such last PCS System will not
be deemed to have been achieved by the Vendor unless and until such
Interoperability will have been demonstrated in accordance with the criteria set
forth in Exhibit G; provided further that any delay in such Interoperability
-------- -------
which is not due substantially to the fault of the Vendor, in the reasonable
opinion of the Owner, will not be a delay pursuant to the terms of this
subsection 2.9(b).
2.10 Certification. The Vendor must coordinate its performance of the
-------------
Services described in subsection 2.9 with the Engineering and design efforts
(including, without limitation, any and all RF Engineering and/or Site
Acquisition) of all Subcontractors, the Owner, the Other Vendors, any and all
supply and transportation requirements and all federal, state and local
authorities or agencies. The Vendor will be fully knowledgeable about and will,
after reasonable review thereof, accept all Engineering, including, without
limitation, RF Engineering and design, irrespective of whether the Vendor, the
Other Vendors, the Owner or third parties such as the Subcontractors may furnish
such services. All Engineering requiring certification must be certified by
professional engineers licensed or properly qualified to perform such
Engineering services in all appropriate jurisdictions if such certification is,
in the Owner's opinion, appropriate and reasonable under the circumstances.
This subsection 2.10 will not modify or restrict the Vendor's obligation and/or
right to provide the Services contracted for pursuant to the terms of this
Contract.
2.11 Notice of Developments. 2.11.1 Vendor Developments. The Vendor
---------------------- -------------------
must provide the Owner, through the NDAB or the Owner's vice president and/or
director of product development, with reasonable prior notice of any PCS Product
developments, innovations and/or technological advances (collectively "Vendor
Developments") relevant to the System prior to giving such notice to any other
Customer or otherwise making any such Vendor Development public within the
relevant marketplace; provided that the Vendor will not be obligated to provide
-------- ----
the Owner such notice before any other Customer if doing so would not be
reasonable under the circumstances and/or otherwise breach any contractual
obligation to any other Customer; provided further that any such notice pursuant
-------- -------
to this subsection 2.11.1 need not include any information originated by another
Customer which is
29
proprietary to such other Customer of the Vendor. For the purposes of this
subsection 2.11.1 the term "Vendor" includes the Vendor and its affiliates and
subsidiaries.
2.11.2 Participation in Testing. The Owner has the right, but not the
------------------------
obligation, to witness and/or participate in any initial testing and/or
application of any such Vendor Development (other than a Vendor Development
originated by another Customer which includes information which is proprietary
to such other Customer); provided that any such initial testing of Vendor
-------- ----
Developments will be subject to (i) scheduling as reasonably determined by the
Vendor, (ii) the qualification that the Owner's PCS System meets the technical
requirements for the testing of such Vendor Development as reasonably determined
by the Vendor (or otherwise that the Owner is willing to update such PCS System
to meet such requirements), (iii) the Owner's acknowledgement that it will be
able to provide the resources necessary to implement the initial testing for
such Vendor Development, and (iv) the Owner and the Vendor executing a
verification office testing agreement that identifies the scope, terms, pricing,
responsibilities and schedule related to the initial testing of such Vendor
Development. The Vendor must provide the Owner at least thirty (30) days' prior
notice of its intent to test any such Vendor Development and upon the Owner's
written request the Vendor will allow the Owner to participate in such testing
upon terms and in a testing environment reasonably acceptable to the Parties at
such time. The Owner will make its Test-bed Laboratory and/or certain of its
PCS Systems (following Final Acceptance thereof) available to the Vendor for any
such testing in which the Owner has the right, and will have notified the Vendor
of its desire, to participate in pursuant to the terms of this subsection
2.11.2. Where the Vendor and the Owner have agreed that the Owner's Test-bed
Laboratory or PCS System will be used as a test bed for Vendor Developments, the
Owner will not unreasonably withhold the Vendor's requests for other Customers
to observe the tests or to release results of the tests to other Customers;
provided that the Owner will have had reasonable prior notice that the Vendor
- - -------- ----
would like to have other Customers observe such testing and that the Vendor will
remain liable in all respects pursuant to the terms of this Contract for the
protection of Proprietary Information in connection with any such testing. The
length of the prior notice period described above may be shortened to under
thirty (30) days if necessary and appropriate under the circumstances, but in no
event will any such prior notice period be less than ten (10) days.
2.12 Safety. To the extent the Vendor is in control of any System
------
Element Location, or other site within the System or any System Area during the
term of this Contract (a "Vendor-Controlled Location") including, but not
limited to, during the build-out of the Initial System, the Vendor will be
solely responsible for initiating, maintaining, and supervising all safety
precautions and programs in connection with all such Vendor-Controlled
Locations. The Vendor must materially comply with Applicable Laws and
Applicable Permits and the Specifications bearing on safety of persons or
property or protection against injury, damages or loss. The Vendor must provide
a written report to the Owner describing fully all incidents affecting safety on
any Vendor-Controlled Location and must also furnish to the Owner copies of all
MSHA, OSHA and workers' compensation reports. The Vendor acknowledges and
agrees that until Bolt-down of all of the PCS Products to be provided by the
Vendor pursuant to the terms of this Contract on any given System Element
Location (other than the Switch Site or the Test-bed Laboratory) within any
given PCS System is
30
achieved the Vendor will be deemed to be in control of all Products, tools,
designs, buildings, structures and/or Engineering (other than those Products,
tools, designs, buildings, structures and/or Engineering specific to and
necessary for Site Acquisition, Network Interconnection and/or Microwave
Relocation) at, in or upon any such System Element Location within such PCS
System; provided that in any event for each such System Element Location the
-------- ----
Vendor will always be deemed to be in control of such System Element Location
until the Facilities Preparation Services for such System Element Location have
been completed in accordance with Exhibit B2.
2.13 Emergencies. In the event of any emergency at a Vendor-Controlled
-----------
Location endangering life or property, the Vendor must take such action as may
be reasonable and necessary to prevent, avoid or mitigate injury, damage or loss
and will, as soon as possible, report any such incidents, including the Vendor's
response thereto, to the Owner. Whenever, in the reasonable opinion of the
Owner, the Vendor has failed to take sufficient precautions for the safety of
the public or the protection of the Work or of structures or property on or
adjacent to any Vendor-Controlled Location, creating, in the reasonable opinion
of the Owner, an emergency requiring immediate action, then the Owner, after
having given reasonable prior notice to the Vendor, may cause such sufficient
precautions to be taken or itself provide such protection. The taking or
provision of any such precautions or protection by the Owner or its agents or
representatives will be for the account of the Vendor and the Vendor must
reimburse the Owner for the cost thereof.
2.14 Right of Inspection. The Owner, the parties providing financing in
-------------------
connection with the build-out of the Nationwide Network or their duly appointed
representatives, including Inspectors (collectively "Reviewers"), will at all
reasonable times have access to the various sites where the Vendor or its
Subcontractors are prosecuting the Engineering, design, procurement, testing or
manufacture of the Work; provided that this subsection 2.14 will not be presumed
-------- ----
to give access to the Vendor's or its Subcontractors' sites to direct
competitors of the Vendor provided that such sites are not otherwise Owner
sites. For these purposes, reasonable access will be given during normal
business hours to the Vendor's and its Subcontractors' plants, premises, storage
and deposit areas, facilities and offices, sources of materials, Equipment being
assembled, already assembled or in operation, Equipment being performance tested
or tested to the Vendor's specifications and to any other places or areas
occupied by the Vendor or its Subcontractors in connection with the Work.
Notwithstanding anything herein to the contrary, any Reviewer's right of access
to the Vendor's and/or the Subcontractors' plants, premises, storage and deposit
areas, facilities and offices, sources of materials, Equipment being assembled,
already assembled or in operation, Equipment being performance tested or tested
to the Vendor's specifications and to any other places or areas occupied by the
Vendor or its Subcontractors in connection with the Work will be subject to the
reasonable confidentiality, safety and security requirements of same and further
subject to such Reviewers' non-interference with the Work and other work being
performed thereon. The Vendor must provide reasonable temporary office space
(in the Vendor's facilities where such space is available) and services for the
Reviewers to the extent necessary.
31
2.15 Transportation. The Vendor must provide for the transport and
--------------
delivery of all the Products to be delivered pursuant to, and in accordance
with, the terms of this Contract. The costs for such transportation will be
borne by the Vendor as part of the Contract Price; provided that the Owner will
-------- ----
reimburse the Vendor for any costs incurred by the Vendor for any Extraordinary
Transportation in such cases where the Vendor, subject to prior notice to the
Owner, found it actually necessary to utilize such Extraordinary Transportation;
provided, further that any amounts due to the Vendor from the Owner pursuant to
- - -------- -------
the first proviso of this subsection 2.15 will be reduced by the amount of non-
extraordinary transportation costs which otherwise would have been applicable to
the transport of such Products.
2.16 Security. Subject to subsection 2.12, during the course of the
--------
Work, the Vendor will perform the security services necessary to ensure the
safety and security of the System Element Locations, the Products and/or other
materials or designs relevant to the Work.
2.17 Materials and Equipment. Except for materials or Equipment to be
-----------------------
supplied by Subcontractors identified on part B of Schedule 7, whenever
materials or Equipment are specified or described in this Contract (including
the Specifications) by using the name of a proprietary item or the name of a
particular supplier, the naming of the item is intended to establish the type,
function and quality required, and substitute materials or Equipment may
nonetheless be used, provided that such materials or Equipment are equivalent or
equal to that named. If the Vendor wishes to furnish or use a substitute item
of material or Equipment, the Vendor must first certify that the proposed
substitute will perform at least as well the functions and achieve the results
called for by this Contract, will be substantially similar or of equal substance
to that specified and be suited for the same use as that specified. The Owner
may require the Vendor to furnish, at the Vendor's expense, additional data
about the proposed substitute as required to evaluate the substitution. For
Major Portions of the Work, or materials or Equipment listed on part B of
Schedule 7, the Vendor must first receive prior written approval of the Owner
for any substitution. The Owner will be allowed a reasonable time within which
to evaluate each proposed substitute. Notwithstanding the foregoing, with
respect to PCS Products, prior to the shipment of such PCS Products pursuant to
the terms of this Contract, the Vendor may at any time without notice to or
consent of the Owner make changes in a Vendor PCS Product furnished pursuant to
this Contract, or modify the drawings and published specifications relating
thereto, or substitute Products of similar or later design to fulfill its
obligations under this Contract or otherwise fill an order, provided that the
--------
changes, modifications or substitutions will in no way affect or otherwise
impact upon the form, fit, or function of an ordered Product pursuant to and in
accordance with the applicable Specifications. With respect to changes,
modifications and substitutions which do in fact affect the form, fit, or
function of an ordered Product pursuant to and in accordance with the
Specifications, the Vendor must notify the Owner in writing at least thirty (30)
days prior to the effective dates of any such changes, modifications or
substitutions. In the event that any such change, modification or substitution
is not desired by the Owner, the Owner will notify the Vendor within thirty (30)
days from the date of notice and the Vendor will not furnish any such changed
Products to the Owner on any orders in process at the time the Owner is so
notified; provided that nothing contained herein will otherwise modify the
-------- ----
Vendor's obligations under the terms of this Contract.
32
2.18 Equipment and Data. The Vendor must furnish all drawings,
------------------
specifications, specific design data, preliminary arrangements and outline
drawings of the Equipment and all other information as required in accordance
with this Contract in sufficient detail to indicate that the Equipment and
fabricated materials to be supplied under this Contract comply with the
Specifications.
2.19 References to Certain Sources. Reference to standard
-----------------------------
specifications, manuals or codes of any technical society, organization or
association or to the laws or regulations of any Governmental Entity, whether
such reference is specific or by implication, by this Contract, means the latest
standard specification, manual, code, laws or regulations in effect at the time
of such reference, except as may be otherwise specifically agreed to by the
Owner. However, no provision of any reference, standard, specification, manual
or code (whether or not specifically incorporated by reference in this Contract)
will be effective to change the duties and responsibilities of the Owner, the
Vendor, the Subcontractors or any of their consultants, agents or employees from
those set forth in this Contract; provided that nothing contained in this
-------- ----
Contract will require the Vendor to violate then existing and enforceable
Applicable Laws.
2.20 Operating Manuals. The Vendor will provide the Owner Operating
-----------------
Manuals in accordance with this subsection 2.20 as soon as they are reasonably
available but in no event less than thirty (30) days prior to Substantial
Completion of the Initial PCS System, the Vendor will provide the Owner with as
many sets of the Operating Manuals for the entire System as the Owner then
reasonably requires. The Operating Manuals will be prepared in accordance with
the relevant Specifications and in sufficient detail to accurately represent the
System and all of its component System Elements as constructed and will
recommend procedures for operation. Operating Manuals with up to date (but not
"as-built") drawings, specifications and design sheets will be available for the
Training as set forth in subsection 2.23. All other Technical Documentation not
already delivered to the Owner pursuant to the terms of the Contract must be
delivered to the Owner within ten (10) days after the successful achievement of
all Final Acceptance tests in accordance with Exhibit B3. The Owner will not be
required to deliver the Final Acceptance Certificate until all such Technical
Documentation has been so delivered (and Final Acceptance will not be deemed to
have occurred earlier than the date that is ten (10) days prior to the date of
delivery of such Technical Documentation).
2.21 Maintenance and Instruction Manuals. The Vendor will provide the
-----------------------------------
Owner Maintenance and Instruction Manuals in accordance with this subsection
2.21 as soon as they are reasonably available but in no event less than thirty
(30) days prior to Substantial Completion of the Initial PCS System, the Vendor
must provide the Owner with as many sets of the Maintenance and Instruction
Manuals for the entire System as the Owner then reasonably requires. The
Maintenance and Instruction Manuals will be prepared in accordance with the
Specifications and in sufficient detail to accurately represent the System and
all of its component System Elements as constructed and will set forth
procedures for inspection and maintenance. Maintenance and Instruction Manuals
with up to date (but not "as-built") drawings, specifications and design sheets
will be available for the Training set forth in subsection 223. The
Maintenance and Instruction Manuals must include the volumes compiled by the
Vendor containing all as-built Subcontractor furnished product data.
33
2.22 Standards for Manuals. All Operating Manuals and Maintenance and
---------------------
Instruction Manuals required to be provided by the Vendor pursuant to this
Contract must be:
(a) detailed and comprehensive and prepared in conformance with the
System Standards and generally accepted national standards of professional care,
skill, diligence and competence applicable to telecommunications and operation
practices for facilities similar to the System;
(b) consistent with good quality industry operating practices for
operating personal communications service systems of similar size, type and
design;
(c) sufficient to enable the Owner to operate and maintain each PCS
System in each of the specified System Areas and the System as a whole on a
continuous basis; and
(d) prepared subject to the foregoing standards with the goal of
achieving operation of the System at the capacity, efficiency, reliability,
safety and maintainability levels contemplated by this Contract and the
Specifications and required by all Applicable Laws and Applicable Permits.
In addition to, and without limiting the requirements set forth in the
preceding sentence, the Operating Manuals and the Maintenance and Instruction
Manuals will be submitted to the Owner in CD-ROM format (as soon as such format
is available provided that such availability will be no later than December
1996) in addition to hard-copy volume format if so requested by the Owner. In
addition to any of the Owner's other rights and remedies, the Owner will have
the right to reject the Operating Manual and the Maintenance and Instruction
Manuals if in its reasonable judgment any of the foregoing does not meet the
standards set forth in this Contract.
2.23 Training. As more fully described below, starting at least one
--------
hundred and eighty (180) days prior to Substantial Completion of the Initial PCS
System, the Vendor must provide to the Owner a practical and participatory and,
where feasible, on-site training program with respect to the System, which
program will include technical education (collectively, the "Training"). The
Vendor will provide, upon the Owner's prior written request and at the time or
times mutually agreed in good faith by the Owner during the Initial Term of this
Contract, not less than a minimum of twelve thousand fifty (12,050) man days of
Training and Training materials for the Owner's personnel, at no cost to the
Owner. The Owner will be responsible for the travel and living expenses of
personnel receiving Training. Such Training must be kept current to encompass
the latest Software and Equipment, or any other Software Revision Level and/or
Equipment Revision Level directed by the Owner pursuant to the terms of this
Contract. Subject to the foregoing, Training course size, content and material
will be designed and agreed to by mutual consent between the Parties. The
Vendor will conduct classes for the subjects described below:
(a) Operations, maintenance and provisioning ("OM&P") Training will
include System Training to technical personnel presumed not qualified or trained
specifically on operating a PCS System or the Equipment and/or Software included
therein. The subject
34
matter will include (i) a general overview of PCS/CDMA technology and the
System, (ii) a System overview of the Equipment, Software initiation and
configuration requirements, required interconnections, troubleshooting and
testing requirements, recovery from System failures, and (iii) any other
information necessary to successfully operate, maintain, or set up the Equipment
and the Software to work in accordance with the System Element performance
criteria set forth in Exhibit D, in each case so that each PCS System
successfully operates in accordance with the performance criteria set forth in
Exhibit F within its System Area;
(b) The Vendor must provide PCS/CDMA qualified technical staff and
material to train the Owner's personnel so as to enable them to train other
personnel of the Owner (i.e., train the trainers) on the subject matter topics
----
listed below. The Owner's personnel trained by the Vendor will be evaluated and
certified by the Vendor upon successful completion of the course as competent to
train other personnel of the Owner. Such content and materials may be tailored
or customized by the Owner for internal use only and include, without
limitation, Training with respect to the following topics:
(i) System Element configuration;
(ii) Communication interfaces and protocols;
(iii) Software operating system (current to the latest Software
Revision Level);
(iv) Database configuration, structure and content;
(v) Database down loading;
(vi) Program function;
(vii) Troubleshooting procedures; and
(viii) Other subject matter which is necessary or desirable to
understand the operation of the System and maintenance of the
System as well as any enhancements as they are added to the
System and/or any part thereof.
(c) Except for certain plug-in modules and certain Software delivered
under this Contract, the Vendor does not provide, nor does this Contract require
that the Vendor provide, Training, training manuals, Operating manuals or
Maintenance and Instruction Manuals intended to make the Owner proficient in
Installation of any of the Products furnished under this Contract. In the event
that the Vendor should elect to provide training, documentation and/or test
equipment to facilitate self-installation of the Products by a Customer
purchasing PCS Products from the Vendor, the Vendor agrees to make such items
available to the Owner under the Vendor's standard terms and conditions for such
offering as they may exist from time to time subject to the Vendor's obligations
under Section 26; and
35
(d) Promptly upon execution of this Contract, the Vendor will establish
a training coordinator, whose responsibility will be to work with the Owner to
ensure that the Owner receives the Training set forth above. Such coordinator
(or his or her replacement) will continue in such assignment until the earlier
of (i) the Final Acceptance of the last PCS System within the Initial System, or
(ii) receipt by the Owner of all of the Training required to be provided at no
cost under this subsection 2.23.
2.24 Manuals and Training. The training and the documentation provided
--------------------
in connection herewith, including, without limitation, all documentation
provided in CD-ROM format, and pursuant to subsections 2.20, 2.21 and 2.23 will
be updated pursuant to and in accordance with all Product upgrades and/or
modifications applicable to the System, any PCS System and/or any part thereof.
2.25 Spare Parts. (a) Prior to the Substantial Completion of the
-----------
Initial PCS System the Vendor and the Owner will agree, pursuant to and in
accordance with the terms of this subsection 2.25, as to the type, quantity and
storage location of the spare parts required to continually operate the Initial
System as intended and in accordance with the Specifications. For a period of
two (2) years following Final Acceptance of each PCS System, the Vendor will, if
requested by the Owner, provide such spare parts at its own expense. Following
the expiration of such two (2) year period, the Vendor will provide such spare
parts pursuant to Schedule 12A and at the prices set forth on Schedule 12B.
After the expiration of such two (2) year period invoices for such System spare
parts will be issued directly to the Owner and will be paid for directly by the
Owner in accordance with the invoice and payment terms of this Contract. Any
PCS spare parts applicable to the System utilized or withdrawn from any PCS
System during such two (2) year period will be promptly replaced by the Vendor
at its own cost. With respect to such spare parts provided at the Vendor's
expense, the Owner expressly agrees that (i) the Owner will not utilize such
spare parts for increasing the performance or capacity of the PCS Systems for
which they were provided or otherwise expanding such PCS Systems or any other
PCS systems, (ii) until any such spare part is drawn from storage and utilized
as a replacement in a PCS System or until the Owner pays for such spare part,
title to such spare part will remain with the Vendor, (iii) risk of loss of or
damage to such a spare part will be with the Owner from the time of delivery to
the Owner, and (iv) the Owner will, at its expense, return to the Vendor any
Item replaced by a spare part delivered to the Owner pursuant to the terms of
this subsection 2.25.
(b) The Owner has the right to withhold from its final payment to the
Vendor with respect to any PCS System an amount equal to the Owner's reasonably
estimated cost of any utilized spare parts for such PCS System not so replaced
prior to Final Acceptance; provided that such withheld funds will be released
-------- ----
upon such satisfactory replacement of such spare parts by the Vendor.
(c) To the extent that System PCS spare parts need to be acquired from
third party suppliers, the Vendor will use its reasonable efforts to obtain from
suppliers a supply of System spare parts at no additional cost as part of the
original Product package. To the extent that the Vendor is able to so obtain
such System spare parts at no additional cost as
36
part of the original Product package, it will provide such System spare parts to
the Owner without cost (and without any charge for the procurement of such spare
parts by the Vendor).
2.26 System Support Services. The Vendor will provide the specified
-----------------------
support services for the operation, maintenance and repair of the System and all
Products to the extent set forth herein below and at the Annual Release
Maintenance Fees.
2.26.1 Vendor Assistance. (a) Upon receipt of a request for technical
-----------------
assistance from the Owner, the nature of the problem will be identified by the
Owner, and a priority assigned by the Owner (upon discussion with the Vendor
which in no event will require the agreement and/or consent of the Vendor) as
either an emergency or non-emergency condition and resolution thereof will be
expedited in accordance with the severity levels set forth below.
(b) Following attempted corrective actions by the Owner in accordance
with applicable Maintenance and Instruction Manuals provided by the Vendor, when
the Vendor is notified by the Owner that the System, any PCS System or any part
thereof fails to operate in accordance with the Specifications, the Vendor will
promptly commence and diligently pursue all reasonable efforts to identify the
Defect or Deficiency and, in the event the Vendor has responsibility therefor,
to correct such Defect or Deficiency.
(c) The Vendor's correction of such Defects or Deficiencies in the
System, any PCS System or any part thereof may take the form of new software
codes, new or supplementary operating instructions or procedures, modifications
of the software codes in the Owner's possession, or any other commonly used
method for correcting Defects or Deficiencies in Software, as the Owner and the
Vendor deem appropriate.
(d) When appropriate, the Vendor will provide non-emergency technical
support to the Owner via telephone, facsimile transmission, modem, or other
means acceptable to the Owner during the Owner's normal business hours.
(e) The Vendor will provide emergency technical assistance to the Owner
via an ETA telephone number designated to the Owner in advance by the Vendor,
twenty-four (24) hours per day, three hundred sixty-five (365) days per year.
(f) The Vendor will provide remote intervention and assistance
capability to the Owner for remotely accessing operating System Elements. Upon
mutual agreement between the Parties, the Vendor may remotely access operating
System Elements for the purpose of ETA.
2.26.2 Trouble Reports. From time to time, failures in, or degradation
---------------
of, Products may cause services provided by the System to be adversely affected.
It is necessary that immediate assistance be provided by the Vendor to allow the
Owner to restore the affected service. Critical service outages that cannot be
resolved by the Owner's field technicians or technical support engineers using
procedures described in the Operating Manuals, Maintenance and Instruction
Manuals and Training will be transmitted to the Vendor as a Trouble Report
("TR"). The Vendor will assign an identifying number to each TR to aid in
37
tracking its resolution. TRs will be immediately addressed by the Vendor
through Emergency Technical Assistance under guidelines set forth in subsection
2.26.3. TRs may not be considered concluded until the solution is concurred
upon by an employee of the Owner within the Owner's operations control center
("OCC"). The root cause of problems resulting in TRs may be Defects or
Deficiencies which must be corrected through Product or procedure changes.
Problems with the System requiring such changes will be referred to the Vendor
for action through a Customer Service Request ("CSR"). The Vendor is authorized
by the Owner to install and integrate, at the Vendor's expense, any Software
Upgrade or Software Enhancement pursuant to mutual agreements reached between
the Vendor and the Owner.
2.26.3 Emergency Technical Assistance ("ETA"). (a) When a problem is
--------------------------------------
encountered that adversely affects service or performance with respect to the
Products, any PCS System, the System or any part thereof, in each case provided
by the Vendor, an Owner maintenance technician will attempt to repair or replace
any malfunctioning Product adversely affecting such service or performance using
the procedures recommended in the Maintenance and Instruction Manuals or the
Operating Manuals. If unsuccessful, a technical representative of the Owner
will consult the Vendor's designated ETA group at the telephone number provided
by the Vendor in subsection 2.26.3(c) below. Following receipt of notification
by the ETA group, the ETA group will utilize all available technical resources
and will ensure that a qualified technical engineer is communicating with the
Owner's personnel regarding the problem on average within fifteen (15) minutes
of any such notification; provided that no single response will exceed thirty
-------- ----
(30) minutes. If necessary and appropriate the Owner's technician will be
dispatched to assist in the normal change-out of replaceable hardware units.
(b) A problem adversely affecting service that has a severity level
defined below either as an "E1 Emergency Condition" or an "E2 Emergency
Condition" is to be addressed under the ETA procedures set forth below in this
subsection 2.26.3 and in subsection 2.26.4.
(i) An E1 Emergency Condition (this roughly corresponds to a
Critical Condition in the Vendor's ISO 9001 documentation) means a
problem resulting from any one or more of the following events:
- Any system-initiated event or unplanned manual restart (warm, cold,
reload or image) which causes a system loss of all call processing
capability for more than thirty (30) seconds. Manual restarts with
twenty-four (24) hour notice would be planned.
- Useable billing data not being collected.
- Two(2) or more contiguous BTSs failing causing a loss of coverage.
- Ten percent (10%) or more of the total number of voice trunks (BTS and
switch) are out-of-service.
- Ten percent (10%) or more of the total number of any links (including
IS-41, ISUP, X.25 and SS7) are out of service.
- Total loss of access to one or more specific services because of a
fault condition in the MSC and related Equipment.
- Any BTS having a total failure in excess of thirty (30) minutes after
recovery attempts from the OMP are executed.
38
The Vendor must clear all E1 Emergency Conditions within twelve
(12) hours of notification of their occurrence. Work must continue
without any cessation until the defect causing the E1 Emergency
Condition is solved or the severity thereof is reduced to a "P1
Major Condition", as defined below, or less.
(ii) An E2 Emergency Condition (this roughly corresponds to
Severity 1 Conditions in the Vendor's ISO 9001 documentation) means
a problem resulting from any one or more of the following events:
- Loss of duplex functionality for any equipment that is duplicated.
- Single BTS failing less than thirty (30) minutes that is not contiguous
with another failed BTS.
- Loss of the master clock.
- Fifty percent (50%) or more of the equipped tape or disk drive units
out-of-service.
- Loss of duplex recording of billing information.
- Inability to dump or initialize an office image (e.g. translations and/
or software).
- Inability to perform critical maintenance procedures.
- Loss of all links within a single link-set.
The Vendor must clear all E2 Emergency Conditions within
twenty-four (24) hours of notification of such E2 Emergency
Conditions. Work must continue without any cessation until the
defect causing the E2 Emergency Condition is solved or the severity
is reduced to a P1 Major Condition or less.
39
(c) In the event that an E1 Emergency Condition or an E2 Emergency
Condition should remain unresolved following referral to the Vendor by the
Owner, the problem causing such condition must be reported to the levels of
management set forth below (with comparable titles, if different) to ensure all
available resources necessary to address the problem will be committed in
accordance with the following:
The following are the reporting levels if an E1 Emergency Condition or
an E2 Emergency Condition is not resolved within the time periods set forth
below as amended from time to time with the reasonable acceptance of the Owner
following referral thereof to the Vendor by the Owner:
Vendor Contact Vendor Contact Name Telephone Number
------------------------- ------------------- ----------------
One hour - Technical Assistance Mgr. to be designated to be designated
Two hours - Customer Service Director to be designated to be designated
Three hours - Customer Service AVP ▇.▇. ▇▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Four hours - Vice President ▇.▇. ▇▇▇▇▇▇▇▇▇ to be designated
(d) If the Owner reasonably determines that the Vendor has not provided
sufficient ETA to resolve any E1 Emergency Condition or E2 Emergency Condition
on a timely basis, the Owner will be entitled to withhold all payments with
respect to the affected PCS System then due or outstanding prior to the date of
such determination until such time as adequate ETA is provided to the Owner to
resolve such Emergency Condition.
(e) If an E1 Emergency Condition or an E2 Emergency Condition exists in a
PCS System prior to Final Acceptance of such PCS System, the Vendor will use all
reasonable efforts to deliver to the Owner each Software Upgrade and each
Equipment Upgrade developed by or on behalf of the Vendor to resolve any E1
Emergency Condition or E2 Emergency Condition within forty-eight (48) hours
following completion of development of such Software Upgrades or availability of
such Equipment Upgrades.
(f) The term Non-Emergency Services includes providing to the Owner any
requested technical assistance and support, remote monitoring and outage review
consultation and the handling of CSRs.
(g) Technical assistance and support must be provided for the purpose of
resolving non-emergency problems defined below as "P1 Major Condition", "P2
Significant Problem" and "P3 Minor Problem" which are reported to the Vendor.
(i) P1 Major Condition (this roughly corresponds to
Severity 1 Conditions in the Vendor's ISO 9001 documentation)
means any non-emergency failure of specific features or functions
of the System, any PCS System or any Product that restricts its
operations, but does not render the System, any PCS System or any
Product inoperable, impact traffic capacity or coverage or
require significant manual intervention for the System, any PCS
System or any Product to operate properly and in
40
accordance with its applicable Specifications. These events will
include loss of diagnostic capabilities and loss of reporting
functions. The Vendor will use all reasonable efforts to use by-
pass or work-around procedures to alleviate such P1 Major
Condition until it is corrected and, upon mutual agreement of the
Parties, the Vendor will resolve such P1 Major Condition during
the next available scheduled Software Upgrade or Equipment
Upgrade.
(ii) P2 Significant Problem (this roughly corresponds
to Severity 2 Conditions in the Vendor's ISO 9001 documentation)
means any non-emergency, intermittently occurring problem related
to specific primary functions or features or any inoperable
secondary functions that do not have a significant adverse effect
on the overall performance of the System, any PCS System or any
Product. The Vendor will undertake appropriate and reasonable
efforts to correct such P2 Significant Problem.
(iii) P3 Minor Problem (this roughly corresponds to
Severity 3 Conditions in the Vendor's ISO 9001 documentation)
means any non-emergency problem that does not affect the
performance or functions of the System, any PCS System or any
Product, and, despite such problem, the System, any PCS System or
any Product is fully operable without restrictions. Such P3 Minor
Problems may include documentation inaccuracies, cosmetics, minor
requests for changes or maintenance requests. The Vendor will
undertake appropriate and reasonable efforts to correct such P3
Minor Problem.
(h) Should a non-emergency problem remain unresolved for the period or
periods of time set forth below following referral to the Vendor by the Owner,
such problem must be reported to the levels of management set forth below to
ensure all available resources necessary to correct such problem will be
committed to address such problem pursuant to the following:
- - ----------------------------------------------------------------------------
REPORTING LEVELS IF NON-EMERGENCY
IS NOT RESOLVED WITHIN
CONDITION 30 DAYS 45 DAYS 60 DAYS
- - ----------------------------------------------------------------------------
P1 Technical Manager Customer Service Vice President
Major Condition Director
P2 Technical Manager Customer Service
Significant Problem Director
P3 Technical Manager
Minor Problem
- - ----------------------------------------------------------------------------
41
Non-emergency problems referred to the Vendor as a CSR will be resolved
based upon the priority assigned to them as determined by the Owner or as
mutually agreed by the Parties and, to the extent reasonably possible, will be
incorporated into the next scheduled Software release.
2.26.4 ETA and CSR. In the event that emergency technical support
-----------
provided from the Vendor's technical support center is not sufficient to resolve
an E1 Emergency Condition, the Vendor must send a technically qualified person
or persons to the site of such emergency condition or problem to assist the
Owner's employees in solving such condition or problem. The Vendor's
technically qualified person or persons must be on-site as soon as possible, but
in no event more than twenty-four (24) hours after notification to the Vendor by
the Owner, or at such later time as may be mutually agreed on by the Parties.
In the event that emergency technical support provided from the Vendor's
technical support center is not sufficient to resolve an E2 Emergency Condition,
then the Parties will mutually agree to a desired course of action, which may
include requiring the Vendor to send a technically qualified person or persons
to the site of such emergency.
A CSR may be submitted by the Owner to request a repair or work-around of
an emergency condition or repair of a non-emergency problem, or to request a
Software Upgrade or an Equipment Upgrade or other Software or Equipment
operational enhancement. The Owner's CSRs will define the condition or problem
and state whether the Owner considers the CSR to be for a Software Upgrade or an
Equipment Upgrade or other Software or Equipment operational enhancement.
Changes to the System or any PCS System resulting from any CSR must be fully
tested and accepted in accordance with the Specifications. The Vendor must
respond to the submission of a CSR by the Owner within five (5) Business Days,
acknowledging receipt of the CSR. Within thirty (30) days of receipt of the
CSR, the Vendor will respond to the CSR summarizing the Vendor's intended
actions to handle the CSR. A CSR may result in System fixes or enhancements, or
in Product modifications reasonably acceptable to the Owner.
Notwithstanding the above, no event, lack of functionality or failure of
the Test-bed Laboratory will be assigned as an E1 Emergency Condition or E2
Emergency Condition. Any such event, lack of functionality or failure
applicable to the Test-bed Laboratory, which would otherwise be assigned such a
category in accordance with the definitions above, will be assigned a P1 Major
Condition.
2.27 Supply of Additional Products. During the Initial Term of this
-----------------------------
Contract and for a period of three (3) years thereafter, the Vendor will make
available for purchase by the Owner, on applicable terms and conditions set
forth in this Contract or as otherwise mutually agreed between the Parties, PCS
Products to enable the Owner to expand the System and/or any PCS System and/or
any part thereof, which Products will provide equivalent functionality for and
will be compatible with the System or any such PCS System at such time. Nothing
herein will be deemed to prohibit the Vendor from designating any specific PCS
Products as Discontinued Products in accordance with Section 10 of this
Contract.
42
2.28 Review of Contract. The Vendor has examined in detail and carefully
------------------
studied and compared the Contract with all other information furnished by the
Owner and has promptly reported to the Owner any material errors,
inconsistencies or omissions so discovered or discovered by any of the
Subcontractors. The Vendor will not prosecute any Major Portion of the Work
knowing that it involves a material error, inconsistency or omission in the
Contract without prior written notice to and approval by the Owner. If for any
reason the Vendor violates this subsection 2.28, the Vendor will, in addition to
being subject to any other remedies of the Owner, assume responsibility for such
violation and, in such case, will be deemed to have waived any claims for an
adjustment in any of the Specifications and/or System Standards which results
directly from any such error, inconsistency or omission. This subsection 2.28
does not, nor will be deemed to, in any manner limit the terms of subsection
2.39.
2.29 Licenses, Permits and Approvals. Except as otherwise provided for
-------------------------------
herein with respect to Site Acquisition, Microwave Relocation and Network
Interconnection, any Applicable Permits (in connection with the Vendor's Work)
required by any Government Entity relating to the manufacture, importation,
safety or use of the Products, the System or any PCS System throughout the
United States or in any state or any political sub-division thereof will be the
sole responsibility of the Vendor. Prior to the commencement of any Work and/or
other activities by the Vendor or any of its Subcontractors in connection with
or pursuant to this Contract, upon request of the Owner the Vendor will furnish
the Owner with evidence that such Applicable Permits have been obtained and are
in full force and effect to the extent that Applicable Permits are necessary for
the commencement or undertaking of such activities, and from time to time
thereafter the Vendor, upon the reasonable request of the Owner, will provide
such further evidence as the Owner will deem reasonably necessary.
2.30 Eligibility under Applicable Laws and Applicable Permits. The Vendor
--------------------------------------------------------
will be responsible for ensuring that the Vendor and its Subcontractors are and
remain eligible under all Applicable Laws and Applicable Permits to perform the
Work under this Contract in the various jurisdictions involved.
2.31 Customs Approvals. The Owner agrees to reasonably assist, so long as
-----------------
such assistance will not involve the incurrence of any costs or expenses by the
Owner, the Vendor to obtain and maintain (i) Applicable Permits for importation
into the Products on a duty and customs free basis and (ii) entry or work
permits, visas or authorizations required for personnel engaged by the Vendor to
perform Work under this Contract.
2.32 Owner Participation. In addition to the right of observation
-------------------
contained in subsection 9.4 hereof, the Owner will be entitled to participate in
the Vendor's research and development activities (subject to the reasonable
acceptance of the Vendor) and product development and testing activities
pursuant to this Contract (other than research and development activities
originated by another Customer which is proprietary to such other Customer);
provided that such observation and participation will not affect the Vendor's
- - --------
responsibilities and warranties hereunder and will not otherwise interfere with
the Vendor's research and development activities. Nothing contained in this
subsection 2.32 purports to grant the Owner rights to the Vendor's research and
development other than such rights
43
otherwise granted to the Owner pursuant to the terms of this Contract or as
otherwise mutually agreed by the Parties at such time.
2.33 New Development Advisory Board. In order to accommodate the Owner's
------------------------------
participation pursuant to this Contract, including, without limitation, pursuant
to subsections 2.11 and 2.32, the Owner and the Vendor will establish an NDAB
within sixty (60) days of the Effective Date. The purpose of the NDAB will be
to review the development requirements and high level development milestones, to
ensure that the Vendor understands the Owner's requirements for each PCS System,
the System and/or any extensions thereto including, without limitation, any
subsequent Products and/or enhancements. The NDAB will provide an executive
forum to discuss product ideas, Owner requirements and its recommended
development prioritization for improved infrastructure-based subscriber features
and System features, functions and capabilities. The focus of the NDAB will be
on System features and services, new PCS Products, System enhancements, critical
operational issues, future developments beyond CDMA cellular without the need
for System additions and on such other matters as the Parties mutually agree
upon from time to time.
2.34 Market Development Manager. The Vendor will provide a market
--------------------------
development manager to coordinate the efforts of the Vendor in meeting its
obligations relating to the NDAB who will specifically focus on new Products,
CDMA services and features. Such market development manager must be
knowledgeable in CDMA technology and the Owner's System and must work closely,
and on a regularly scheduled basis, with the Owner's senior engineering and
marketing personnel on feature development, feature roll-out, future road maps
for PCS Products, and any other marketing aspect of providing PCS that the Owner
believes is beneficial to the System and/or any PCS System at such time. The
Vendor's market development manager and the manager's staff will serve as the
Owner's direct liaison with the Vendor to ensure that the Vendor's product
development teams are focusing on the Owner's priorities as described to the
Vendor by the Owner from time to time either through the NDAB or by any other
means acceptable to the Parties. Nothing contained in this subsection 2.34 will
in any way limit and/or modify the Owner's ability to enforce its rights under
this Contract or to otherwise maintain contacts with the Vendor in any other way
it sees fit.
2.35 Further Assurances. The Vendor will execute and deliver all further
------------------
instruments and documents, and take all further action, including, but not
limited to, assisting the Owner in filing notices of completion with the
appropriate state and local lien recording offices, that may be necessary or
that the Owner may reasonably request in order to enable the Vendor to complete
performance of the Work or to effectuate the purposes or intent of this
Contract.
2.36 Liens and Other Encumbrances. (a) In consideration of the mutual
----------------------------
undertakings herein and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the Vendor:
(i) covenants and agrees to protect and keep free the System and/or
any PCS System and any and all interests and estates therein, and all
improvements and
44
materials now or hereafter placed thereon under the terms of this Contract,
from any and all claims, liens, charges or encumbrances of the nature of
mechanics, labor or materialmen liens or otherwise arising out of or in
connection with performance by any Subcontractor, including services or
furnishing of any materials hereunder, and to promptly have any such lien
released by bond or otherwise;
(ii) give notice of this subsection 2.36 to each Subcontractor before
such Subcontractor furnishes any labor or materials for the System and/or
any PCS System; and
(iii) make any and all filings reasonably requested by the Owner in
order that the Owner may take advantage of the relevant local mechanics'
lien waiver procedures with respect to mechanics' liens of any such
Subcontractor.
(b) If any laborers', materialmen's, mechanics', or other similar lien or
claim thereof is filed by any Subcontractor, the Vendor will cause such lien to
be satisfied or otherwise discharged, or will file a bond in form and substance
satisfactory to the Owner in lieu thereof within ten (10) days of the Vendor's
receipt of notice of such filing. If any such lien is filed or otherwise
imposed, and the Vendor does not cause such lien to be released and discharged
forthwith, or file a bond in lieu thereof, then, without limiting the Owner's
other available remedies, the Owner has the right, but not the obligation, to
pay all sums necessary to obtain such release and discharge or otherwise cause
the lien to be removed or bonded to the Owner's satisfaction from funds retained
from any payment then due or thereafter to become due to the Vendor.
(c) The Owner reserves the right to post or place within the System and/or
any PCS System notices of non-responsibility or to do any other act required by
Applicable Law, to exempt the Owner and the System from any liability to third
parties by reason of any work or improvements to be performed or furnished
hereunder; provided that failure by the Owner to do so will not release or
-------- ----
discharge the Vendor from any of its obligations hereunder.
2.37 Forecasting and Ordering. Throughout the Term of this Contract, on a
------------------------
monthly basis commencing on the Effective Date, the Owner will provide the
Vendor with rolling twelve-month forecasts of its ongoing Product and Service
requirements. Such forecasts will, to the extent applicable, include, but not
be limited to, the Owner's Site Acquisition, Switch Site Ready Date, Network
Interconnection and Microwave Relocation progress to such date. Upon the review
and reasonable acceptance of such forecasts by the Vendor pursuant to the terms
of this Contract, the Owner will have the right, but not the obligation, to
confirm to the Vendor its orders for the Products and Services set forth in such
forecasts pursuant to the Owner's delivery to the Vendor of formal written
orders specifying the Products and/or Services to be purchased in connection
with the terms of this Contract. The Vendor's obligation to deliver in
accordance with accepted forecasts will be subject to receipt of the Owner's
orders in accordance with the applicable ordering procedures. If the Owner
fails to deliver any forecast pursuant to this subsection 2.37 for any reason,
the Vendor will be responsible for asking the Owner to actually deliver such
forecast to the extent it requires such forecast at such time.
45
2.38 Microwave Relocation; Network Interconnection. (a) The Vendor will
---------------------------------------------
not be responsible for Microwave Relocation within the System. Unless otherwise
waived by the Owner, however, completion of Microwave Relocation in any given
System Area will be a prerequisite to the commencement of the Substantial
Completion testing to be performed by the Vendor in accordance with Exhibit B3
in such System Area. The Owner may at its option choose instead to modify the
System performance criteria as set forth in Exhibit F by way of a Change Order
in order to account for the failure to fully and/or satisfactorily complete
Microwave Relocation in any such System Area such that Substantial Completion
testing in accordance with the requirements of Exhibit B3 may proceed.
Notwithstanding anything stated herein to the contrary (other than clause (b)
below), the Owner's failure and/or inability to fully complete Microwave
Relocation in any such System Area within twelve (12) months of Milestone 6 (as
set forth in Exhibit A1) (the "Microwave Delay Period") will entitle the Vendor
to otherwise commence Substantial Completion testing (as deemed applicable and
appropriate pursuant to good faith mutual agreement between the Parties at such
time) for the PCS System in such System Area in accordance with Exhibit B3.
Pursuant to the requirements of Exhibits A1, B1 and B3 with respect to any PCS
System within the System the Owner may, upon the prior written request of the
Vendor, consent (such consent not to be unreasonably withheld) to extend the
scheduling of the Vendor's Substantial Completion testing by not more than an
additional sixty (60) days pursuant to Milestone 8 in the event that more than
ten percent (10%) of the System Element Sites in such PCS System as set forth in
the Final Site Count for such PCS System require Vendor optimization pursuant to
Exhibit B1 that was otherwise delayed due to incomplete Microwave Relocation in
such PCS System immediately prior to the date scheduled for Substantial
Completion testing pursuant to Milestone 8 (as set forth on Exhibit A1).
(b) The Vendor will not be responsible for Network Interconnection within
the System. In any given System Area, completion of Network Interconnection in
such System Area at least sixty (60) days (or as otherwise mutually agreed
between the Parties at such time) prior to Milestone 7 (as set forth on Exhibit
A1) will be a prerequisite to the Vendor's obligation pursuant to the terms of
this Contract to successfully achieve Milestone 7 (as set forth in Exhibit A1)
in such System Area.
2.39 Vendor To Inform Itself Fully; Waiver of Defense. (a) The Vendor
------------------------------------------------
will be deemed to have notice of and to have fully examined and approved the
Specifications and all other documents referred to herein, and all drawings,
specifications, schedules, terms and conditions of this Contract, regulations
and other information in relation to this Contract and/or any amendments,
modifications or supplements thereto at any time on or after the Effective Date
and to have fully examined, understood and satisfied itself as to all
information of which the Vendor is aware or should have been aware and which is
relevant as to the risks, contingencies and other circumstances which could
affect this Contract and in particular the installation of the System, any PCS
System or any part thereof. The Owner, its directors, officers, employees and
agents and all of them have no liability in law or equity or in contract or in
tort with respect to any such specifications, drawings, information, risks,
contingencies or other circumstances.
46
(b) The fact that the Owner may have prepared or taken part in the
preparation of Specifications, documents, drawings, Engineering, designs,
specifications, schedules, terms or conditions, or may have designated
particular types of Products and/or Services to be furnished hereunder or
designated particular manufacturers or suppliers of Products or Services, or may
have taken part in the designation of any particular Subcontractor(s) or
subcontractor(s), or given vetoes or approvals with respect to the Work, or
otherwise become involved in the Work, will not give rise to any claim by the
Vendor or any Subcontractor or any defense to any warranty or other claims
asserted against the Vendor or any Subcontractor to the extent that any such
claim or defense arises out of any specifications, drawings, documents, or other
information, which the Vendor is deemed to have had notice of pursuant to
subsection 2.39(a) above and with respect to any such information arising after
the Effective Date which the Vendor had a reasonable opportunity to review.
2.40 CMI/HIC. From time to time throughout the Term of this Contract the
-------
Parties may mutually agree as to the incorporation and integration of CMI/HIC
into the System in accordance with Exhibit D.
2.41 Site Acquisition Delay Testing. In any given System Area within the
------------------------------
Initial System, in the event Site Acquisition Substantial Completion is delayed
more than one hundred and fifty (150) days beyond the forecasted date for Site
Acquisition Substantial Completion as set forth in the M5 Forecast (the "Site
Acquisition Delay Period") provided to the Vendor with the Build Notice
applicable to such System Area due solely to the Owner's inability to achieve
sufficient Site Acquisition in such System Area, the Vendor will have the right,
but not the obligation, to commence Substantial Completion testing (as deemed
applicable and appropriate pursuant to good faith mutual agreement between the
Parties at such time but in any event to be completed within thirty (30) days of
such commencement) for that portion of the otherwise incomplete PCS System in
which the Vendor has (i) completed all applicable Facilities Preparation
Services and (ii) fully Installed, to the extent possible at such time, all such
Products to be Installed by the Vendor or its Subcontractors on otherwise fully
constructed System Element Locations within such PCS System. Subject to
Section 6, in the event the Vendor successfully completes such modified
Substantial Completion testing for such Installed portion of such otherwise
incomplete PCS System pursuant to and in accordance with this subsection 2.41
and Exhibit B3, the Vendor will be entitled to such portion of the payments that
otherwise would be made by the Owner pursuant to subsection 6.3(b) as applicable
only to those Services and Products actually provided by the Vendor pursuant to
and in accordance with the terms of this Contract in such portion of the
otherwise incomplete PCS System that was subject to testing pursuant to this
subsection 2.41. Nothing contained herein to the contrary will in any way
modify the Vendor's obligations as to the completion and testing of the
remaining portion of such PCS System pursuant to and in accordance with the
terms of this Contract, including but not limited to the Project Milestones set
forth in Exhibit A1. Nothing contained herein to the contrary will in any way
require the Owner to pay the Vendor amounts already paid or otherwise provided
for pursuant to any other provision of this Contract.
SECTION 3 AFFILIATES
47
3.1 Additional Affiliates. On a quarterly basis commencing on the
---------------------
Effective Date and during the term of this Contract, the Owner may, upon fifteen
(15) days' prior written notice to the Vendor, designate any Person who has been
licensed to use PCS in the United States which is not an Initial Affiliate as an
"Additional Affiliate"; provided that the Vendor will have a reasonable
-------- ----
opportunity to review and approve such designation, such approval not to be
unreasonably withheld, based upon (i) reasonable credit criteria within the
context of the PCS industry, (ii) the fact that such proposed Additional
Affiliate has not in the past materially breached prior material agreements with
the Vendor, (iii) the fact that the proposed Additional Affiliate is not, at the
time of such determination, a direct competitor to the Vendor in the wireless
telecommunications business and (iv) the fact that the proposed Additional
Affiliate is not, at the time of such determination, otherwise engaged with the
Vendor in a material agreement for the purchase and/or supply of PCS CDMA
wireless technology; and provided, further, that (x) the Owner, any Partner or
-------- -------
any Initial Affiliate has at least a ten percent (10%) equity ownership in such
Person, (y) such Person is controlled by or under the common control with the
Owner, any Partner or any Initial Affiliate or (z) there exists between the
Owner and such Person an Additional Affiliate Arrangement.
3.2 Agreements with Initial Affiliates. During the term of this Contract,
----------------------------------
the Owner will have the right, but not the obligation, to require that the
Vendor enter into separate agreements with any Initial Affiliate designated by
the Owner (each, an "Initial Affiliate Agreement") for the supply of Products
and Services on similar terms and conditions as those set forth herein that
relate to the initial build-out of the Initial System as set forth on Schedule
4; provided that the Vendor will not be required to include in any Initial
-------- ----
Affiliate Agreement any provisions substantially similar to those set forth in
subsections 2.3(a), 2.5, 2.23 (but only to the extent of the specific amounts
set forth in such subsection 2.23), 3.1, 3.3, 11.7, 15.1, 21.1, 24.1 and 27.5;
and provided further that after the date on which Final Acceptance of the last
-------- -------
PCS System to reach Final Acceptance has occurred, Initial Affiliate Agreements
(whether or not executed prior to such date) need not contain or retain
substantially the same terms and conditions as those set forth herein, except
for those terms and conditions related to pricing and warranties as are then
available to the Owner pursuant to this Contract. Any Initial Affiliate that
enters into an Initial Affiliate Agreement with the Vendor will have the right
to choose among the Products and Services offered to the Owner under this
Contract solely for use within the Nationwide Network.
3.3 Agreements with Additional Affiliates. During the term of this
-------------------------------------
Contract, the Owner will have the right, but not the obligation, to require that
the Vendor enter into separate agreements with any Additional Affiliate
designated by the Owner (each, an "Additional Affiliate Agreement") for the
supply of Products and Services at similar price and warranty terms as are then
available to the Owner pursuant to the terms of this Contract. The Vendor must
enter into good faith negotiations for the establishment of such Additional
Affiliate Agreements with any such Additional Affiliate promptly upon the
designation of such Additional Affiliate by the Owner and upon notice to the
Vendor that such Additional Affiliate desires to enter into an Additional
Affiliate Agreement. Any Additional Affiliate that enters into an Additional
Affiliate Agreement with the Vendor will have the right to choose among the
Products and Services offered to the Owner under this Contract solely for use
within the Nationwide Network.
48
3.4 Affiliate Rights. Notwithstanding anything herein contained to the
----------------
contrary, Affiliates will not be deemed third party beneficiaries to this
Contract or otherwise have any rights hereunder. Only the Owner may designate a
Person as an Affiliate in accordance with the terms of this Section 3 and only
the Owner has the right and/or the ability to enforce any rights hereunder
against the Vendor.
SECTION 4 SUBCONTRACTORS
4.1 Subcontractors. The Vendor will select Subcontractors in connection
--------------
with the performance of the Work such that all Products and Services provided by
any such Subcontractors meet the System Standards and reliability and
performance requirements set forth in this Contract. Regardless of whether or
not the Vendor obtains approval from the Owner of a Subcontractor or whether the
Vendor uses a Subcontractor recommended by the Owner, use by the Vendor of a
Subcontractor will not, under any circumstances: (i) give rise to any claim by
the Vendor against the Owner if such Subcontractor breaches its subcontract or
contract with the Vendor; (ii) give rise to any claim by such Subcontractor
against the Owner; (iii) create any contractual obligation by the Owner to the
Subcontractor; (iv) give rise to a waiver by the Owner of its rights to reject
any Defects or Deficiencies or Defective Work; or (v) in any way release the
Vendor from being solely responsible to the Owner for the Work to be performed
under this Contract.
4.2 The Vendor's Liability. The Vendor is the general contractor for the
----------------------
Work and remains responsible for all of its obligations under this Contract,
including the Work, regardless of whether a subcontract or supply agreement is
made or whether the Vendor relies upon any Subcontractor to any extent. The
Vendor's use of Subcontractors for any of the Work will in no way increase the
Vendor's rights or diminish the Vendor's liabilities to the Owner with respect
to this Contract, and in all events, except as otherwise expressly provided for
herein, the Vendor's rights and liabilities hereunder with respect to the Owner
will be as though the Vendor had itself performed such Work. The Vendor will be
liable for any delays caused by any Subcontractor as if such delays were caused
by the Vendor.
4.3 No Effect of Inconsistent Terms in Subcontracts. The terms of this
-----------------------------------------------
Contract will in all events be binding upon the Vendor regardless of and without
regard to the existence of any inconsistent terms in any agreement between the
Vendor and any Subcontractor whether or not and without regard to the fact that
the Owner may have directly and/or indirectly had notice of any such
inconsistent term.
4.4 Assignability of Subcontracts to Owner. Each agreement between the
--------------------------------------
Vendor and a Subcontractor must contain a provision stating that, in the event
that the Vendor is terminated for cause, convenience, abandonment of this
Contract or otherwise, (i) each Subcontractor will continue its portion of the
Work as may be requested by the Owner and (ii) such agreement permits assignment
thereof without penalty to the Owner and, in order to create security interests,
to the Other Vendors, in either case at the option of the Owner and for the same
price and under the same terms and conditions as originally specified in such
Subcontractor's agreement with the Vendor.
49
4.5 Removal of Subcontractor or Subcontractor's Personnel. The Owner has
-----------------------------------------------------
the right at any time to require removal of a Subcontractor and/or any of a
Subcontractor's personnel from Work on the System upon reasonable grounds and
reasonable prior notice to the Vendor. The exercise of such right by the Owner
will have no effect on the provisions of subsections 4.1 and 4.2.
4.6 Subcontractor Insurance. The Vendor must require its Subcontractors
-----------------------
to obtain, maintain and keep in force during the time they are engaged in
providing Products and Services hereunder adequate insurance coverage consistent
with Section 18 and Schedule 6 (provided that the maintenance of any such
Subcontractor insurance will not relieve the Vendor of its other obligations
pursuant to Section 18 and Schedule 6). The Vendor will, upon the Owner's
request, furnish the Owner with evidence of such insurance in form and substance
reasonably satisfactory to the Owner. All such insurance will be subject to the
Owner's approval. All Subcontractors must be of bondable financial condition.
Nothing herein will be deemed to bar the Vendor or any Subcontractor from
obtaining such insurance on a project basis for each of the Subcontractors
participating in such project.
4.7 Review and Approval not Relief of Vendor Liability. Any inspection,
--------------------------------------------------
review or approval by the Owner permitted under this Contract of any portion of
the Work by the Vendor or any Subcontractor will not relieve the Vendor of any
duties, liabilities or obligations under this Contract, but nothing contained in
this subsection 4.7 will be deemed a bar of any waiver given by the Owner to the
Vendor pursuant to and in accordance with the terms of this Contract.
4.8 Vendor Warranties. Except as otherwise expressly provided in Section
-----------------
17, the warranties of the Vendor pursuant to Section 17 will be deemed to
apply to all Work performed by any Subcontractor as though the Vendor had itself
performed such Work. Except as otherwise specifically provided in Section 17,
the Parties agree that such warranties will not be enforceable merely on a
"pass-through" basis. The Owner may, but will not be obligated to, enforce
such warranties of any Subcontractor to the extent that the Owner determines
that the Vendor is not paying and/or performing its warranties; provided that
-------- ----
any such election by the Owner will not relieve the Vendor from any obligations
or liability with respect to any such warranty.
4.9 Payment of Subcontractors. The Vendor must make all payments to all
-------------------------
Subcontractors (except in the case of legitimate disputes between the Vendor and
any such Subcontractor arising out of the agreement between the Vendor and such
Subcontractor) in accordance with the respective agreements between the Vendor
and its Subcontractors such that Subcontractors will not be in a position to
enforce liens and/or other rights against the Owner, the System or any part
thereof.
SECTION 5 TERM OF CONTRACT
50
5.1 Initial Term. The initial term of this Contract (the "Initial Term")
------------
is ten (10) years from the Effective Date, subject to the terms and conditions
of this Contract including, without limitation, the termination provisions set
forth in Section 24.
5.2 Renewal. This Contract is subject to renewal for one year periods
-------
(all such periods plus the Initial Term, the "Term") following the expiration of
the Initial Term, on the same terms and conditions contained herein, unless
either Party gives notice to each other Party of its intention not to renew this
Contract within ninety (90) days prior to the expiration of the then current
Term.
SECTION 6 PRICES AND PAYMENT
6.1 Prices. The prices for the Work to be performed pursuant to this
------
Contract (collectively, the "Contract Price") are as set forth on Schedules 2
and 3, subject to the price variation provisions contained on Schedule 2.
Notwithstanding the prices set forth on Schedules 2 and 3 and the Contract
Price, the Vendor will provide the Owner credits in aggregate value not to
exceed [ ] to purchase any Products in the following System Areas and in the
following amounts per such System Areas:
System Credit
Area Amount
----------- ----------
Detroit [ ]
Milwaukee [ ]
Denver [ ]
Salt Lake [ ]
Spokane [ ]
The Owner is also entitled to additional purchase credits of up to [ ] to be
applied in the Owner's discretion to the purchase of any Products in any or all
of the above listed System Areas. At any time during the Term of this Contract
that the Owner wishes to apply the purchase credits referenced in this
subsection 6.1 to any of its Products purchases for the System Areas listed
immediately above, the Owner must notify the Vendor of its intent to do so and
it will be the Vendor's sole responsibility, throughout the Term of this
Contract, to keep account of the remaining purchase credits available to the
Owner. Prices for the Work not otherwise set forth on Schedules 2 or 3, if not
otherwise set forth in this Contract, will be no greater than the Vendor's best
list prices then in effect at the time of ordering by the Owner (as established
by the Vendor's then applicable Customer Price Guide for sales in the United
States) and at discounts otherwise provided to the Owner pursuant to the terms
of this Contract.
6.2 Price Reduction. The Contract Price will be reduced by all amounts
---------------
saved as a result of Engineering changes suggested by the Owner which are
incorporated into the Specifications by the Vendor provided that the Vendor
--------
reasonably believes that such changes will not make it impossible or
impracticable to comply with any of its obligations under this
51
Contract, including, without limitation, those Vendor obligations relating to
the performance criteria applicable to the System. Any reduction in Contract
Price pursuant to the preceding sentence will be agreed upon promptly by the
Owner and the Vendor. Failure of the Parties to mutually agree to such price
reductions within ten (10) days from the date the Owner delivered written notice
to the Vendor of the need for such price reduction due to incorporated
Engineering changes will result in the automatic reference of such matter to
dispute resolution in accordance with subsection 23.1. During the pendency of
any such dispute resolution prices payable pursuant to subsection 6.1 will be
payable by the Owner to the Vendor at the reduced level pursuant to this
subsection 6.2. If in accordance with subsection 23.1 such dispute resolution
results in a finding that such price reduction was not in fact justified then
the Owner will reimburse the Vendor the amounts that would otherwise have been
payable to the Vendor during the pendency of such dispute resolution.
6.3 Payments. Except with respect to Facilities Preparation Services and
--------
RF Engineering as set forth below, an invoice may be submitted to the Owner only
after shipment of a Product or performance of a Service. Invoices for Products
delivered and Services performed on or prior to Final Acceptance of the PCS
System to which such invoices relate are payable in the following manner:
(a) twenty-five percent (25%) of the amount of each invoice will be paid
within thirty (30) days from receipt of the invoice by the Owner,
(b) fifty-seven and one half percent (57-1/2%) of the amount of such
invoice will be paid within thirty (30) days from the later of (i) Substantial
Completion of the PCS System to which such invoice relates and (ii) receipt of
the invoice by the Owner;
(c) seventeen and one half percent (17-1/2%) of the amount of the invoice
will be paid within thirty (30) days from the later of (i) Final Acceptance of
the PCS System to which such invoice relates and (ii) receipt of the invoice by
the Owner; and
(d) Pursuant to subsection 2.6(d) and provided that any MSCs sought to be
covered hereby have in fact been installed by the Vendor in accordance with
subsection 2.6(d), the Owner will pay to the Vendor [ ] of the price invoiced
to the Owner for any MSC within any PCS System within the Initial System upon
the Vendor's successful achievement of Milestone 5 (as set forth in Exhibit A1)
in such PCS System and an additional [ ] of the price invoiced to the Owner
for any such MSC upon the Vendor's successful achievement of Milestone 8 (as set
forth in Exhibit A1) in such PCS System. All other amounts payable by the Owner
to the Vendor for MSCs within any PCS System within the Initial System will be
otherwise payable in accordance with the terms of this Contract provided that
--------
the Owner will not be obligated to make any payments to the Vendor for MSCs
pursuant to subsection 6.3(b) to the extent it made any payments for any such
MSCs pursuant to this subsection 6.3(d).
Notwithstanding the foregoing, (i) invoices for RF Engineering for each PCS
System will be payable in accordance with subsection 6.4(b) below and (ii)
invoices for Facilities Preparation Services within any PCS System may be
submitted by the Vendor in accordance
52
with the terms of Exhibit B2 and will be payable by the Owner with respect to
each System Element Facility within thirty (30) days after the date of
acceptance by the Owner of any such System Element Facility in accordance with
the terms of Exhibit B2. Payments for third party manufactured Products (other
than any PCS Products or any Products integral to construction (e.g., concrete,
----
nuts, bolts and other customary building supplies)) purchased by the Vendor or
its Subcontractors for installation on the Owner's System Element Locations
during the course of and as part of Facilities Preparation Services may be made
by the Owner on a current basis (but in no event more often than monthly during
the course of such Facilities Preparation Services) as mutually agreed by the
Parties.
63.1 Additional Products not in Initial System or Otherwise Provided for
------------------------------------------------------------------
in Section 2.2. Any invoice for Products delivered and installed by the Vendor
- - -------------
and Services performed by the Vendor not otherwise provided for under this
subsection 6.3, subsection 2.2(a) or as otherwise specifically set forth in this
Contract will be payable as follows: [ ] of the amount of the invoice will be
payable within thirty (30) days following receipt of such Products by the Owner
or the full performance of the Services by the Vendor and the outstanding
balance will be payable upon final acceptance by the Owner of the Products or
Services to which such invoice relates. Any invoice (not otherwise provided for
under this subsection 6.3) for Products delivered by the Vendor but not
installed by the Vendor to which such invoice relates will be payable by the
Owner at the level of [ ] of the amount of such invoice within thirty (30)
days from the date of delivery of such invoice to the Owner. For any Services
not otherwise covered by this last paragraph of subsection 6.3, including
without limitation repair services, Engineering and Installation Services not
performed pursuant to a combined furnish and install order, and maintenance fees
(including Annual Release Maintenance Fees), an invoice will be payable by the
Owner at the level of [ ] of the amount of such invoice within thirty (30)
days from the date of delivery of such invoice to the Owner or as otherwise
mutually agreed in good faith between the Parties. For the purposes of this last
paragraph of this subsection 6.3 any acceptance or "final acceptance" relevant
to the Owner's obligation to pay will be deemed to occur on the earlier of (i)
the Owner's In Revenue use of such Products and/or Services, (ii) the Owner's
notification of acceptance of such Products and/or Services or (iii) thirty (30)
days following, as applicable, the Owner's completion of Installation of the
Products (where the Vendor is not performing Installation Services), without the
Owner's having given notice of non-acceptance of such Products and/or Services.
6.4 Payments for Facilities Preparation Services. (a) Upon receipt of
--------------------------------------------
payment from the Owner for Facilities Preparation Services the Vendor will
promptly pay each Subcontractor for Facilities Preparation Services the amount
to which each Subcontractor is entitled pursuant to such Subcontractor's
agreement with the Vendor, based on each Subcontractor's portion of such Work.
By appropriate agreement in each Subcontractor's agreement with the Vendor, the
Vendor will require such Subcontractor to make payments to sub-Subcontractors
and materialmen in a similar manner. The Owner has no duty or obligation to
insure the payment of money to a Subcontractor, sub-Subcontractor, materialman
or any other third party, any such payment being the obligation of the Vendor.
Subcontractors, sub-Subcontractors, materialmen and any other third parties will
not be deemed third party beneficiaries of the Owner's obligations to pay the
Vendor. On or before
53
the Owner's acceptance of the Facilities Preparation Services of any System
Element Facility within any given PCS System in accordance with the terms of
Exhibit B2, the Owner will have received details (in a form reasonably
satisfactory to the Owner) of all invoices and charges for such Facilities
Preparation Services incurred by the Vendor in connection with the Facilities
Preparation Services for such System Element Facility.
(b) The Owner will make payment to the Vendor for RF Engineering Services
performed by the Vendor within any given System Area pursuant to the terms of
this Contract based upon the following: (i) [ ] of the "RF Engineering
Services price" within the applicable System Area will be payable by the Owner
within thirty (30) days after receiving the Preliminary RF Design for such
System Area pursuant to Milestone 2 for such System Area as set forth on
Exhibit A1; (ii) [ ] of the RF Engineering Services price within the
applicable PCS System will be payable by the Owner within thirty (30) days after
the determination of the Final Site Count and delivery of the Final RF Design
for such PCS System in accordance with subsection 2.6 and Milestone 5 for
such System Area as set forth on Exhibit A1; and (iii) [ ] of the RF
Engineering Services price will be payable by the Owner within the applicable
PCS System within thirty (30) days of the Vendor's Installation of the Products
for such PCS System in accordance with the terms of the Contract and Milestone 7
for such System Area as set forth on Exhibit A1. For the purposes of this
subsection 6.4(b) the term "RF Engineering Services price" will mean the number
of System Element Facilities within the applicable PCS System pursuant to the
build-out of the Initial System multiplied by the Vendor's System Element
Facility RF Engineering price as set forth on Schedule 3. In any given PCS
System and/or System Area the RF Engineering Services price will be readjusted
(and any amounts owed to either Party will be reimbursed) at the point in time
that payment would be made for such RF Engineering pursuant to clause (iii) of
this subsection 6.4(b) in accordance with the determination of the actual Final
Site Count and delivery of Final RF Design applicable to such PCS System.
6.5 Monthly Forecasts. Commencing on the Effective Date, the Vendor will
-----------------
provide the Owner with monthly forecasts of the costs of RF Engineering and
Facilities Preparation Services in each PCS System in which such Services are
being provided by the Vendor and/or any of its Subcontractors throughout the
period that any such Services are being provided during the Term of this
Contract. The forecasts provided by the Vendor pursuant to this subsection 6.5
must be in sufficient detail to reasonably inform the Owner of the nature of the
costs to be incurred for each of RF Engineering and Facilities Preparation
Services in each of the PCS Systems in which such Services are being provided by
the Vendor and/or any of its Subcontractors pursuant to the terms of this
Contract.
6.6 No Payment in Event of Material Breach. Notwithstanding any other
--------------------------------------
provision to the contrary contained herein, the Owner will have no obligation to
make any payment with respect to the affected PCS System in addition to amounts
previously paid to the Vendor at any time the Vendor is in material breach of
this Contract with respect to such PCS System until and unless such breach is
cured or waived by the Owner in accordance with the terms of this Contract.
54
6.7 Microwave Relocation Delay Partial Payments. In the event the Vendor
-------------------------------------------
has achieved Milestone 7 (as set forth on Exhibit A1) within any given PCS
System but there is a delay in the Owner's completion of Microwave Relocation in
such PCS System pursuant to and in accordance with subsection 2.38, then during
the Microwave Delay Period within such PCS System, the Owner agrees to pay to
the Vendor [ ] provided that Substantial Completion (as deemed applicable and
-------- ----
appropriate pursuant to good faith mutual agreement between the Parties at such
time) of such PCS System will have been achieved by the Vendor in accordance
with the terms of this Contract and Exhibit B3. Nothing contained herein to the
contrary will in any way release the Vendor from its obligations or otherwise
modify the Vendor's obligations as to the completion of testing in accordance
with Exhibit B3 once Microwave Relocation in such affected PCS System or
affected portion of a PCS System has been successfully achieved by the Owner.
Nothing contained herein to the contrary will in any way require the Owner to
pay the Vendor amounts already paid or otherwise provided for pursuant to any
other provision of this Contract.
6.8 In Revenue Payments. At any time during the Site Acquisition Delay
-------------------
Period or the Microwave Delay Period, as the case may be, the Owner may, in its
sole discretion, decide to place the PCS System or any portion thereof which is
subject to such delay into In Revenue Service. In the event the Owner does in
fact decide, in its sole discretion, to place any PCS System or any portion of a
PCS System into In Revenue Service during any such Site Acquisition Delay Period
or Microwave Delay Period, as the case may be, the Owner will be obligated to
pay to the Vendor the amounts it would have otherwise paid to the Vendor upon
the Substantial Completion of such In Revenue PCS System or In Revenue portion
of such PCS System, as the case may be, and the Vendor will be entitled to
commence Substantial Completion testing for such In Revenue PCS System or In
Revenue portion of such PCS System; provided that the Owner understands that the
-------- ----
Vendor can only do such Substantial Completion testing as set forth in Exhibit
B3 as is at such time applicable and appropriate (pursuant to the good faith
mutual agreement of the Parties at such time) to such In Revenue PCS System or
In Revenue portion of such PCS System. The Parties expressly understand and
agree that this subsection 6.8 will only be effective in the event that the
Owner chooses, in its sole discretion, to place a PCS System or a portion
thereof In Revenue during a Microwave Delay Period or Site Acquisition Delay
Period, as applicable to such In Revenue PCS System or In Revenue portion of
such PCS System. Nothing contained herein to the contrary will in any way
modify the Vendor's obligations as to the completion and testing of the
remaining incomplete non-In Revenue portion of any such PCS System which is
otherwise partially In Revenue pursuant to and in accordance with the terms of
this Contract, including but not limited to the Project Milestones set forth on
Exhibit A1. Nothing contained herein to the contrary will in any way require
the Owner to pay the Vendor
55
amounts already paid or otherwise provided for pursuant to any other provision
of this Contract.
SECTION 7 ORDERS AND SCHEDULING
7.1 Initial Commitment. Subject to subsection 7.2 and to subsection 2.6
------------------
and the determination of the Final Site Count and the delivery of the Final RF
Engineering Plan for each PCS System, the Parties understand that the quantities
of Products and Services identified on Schedules 2 and 3 which are necessary for
the build-out by the Vendor of the Initial System pursuant to the terms and
conditions of this Contract constitute the Owner's initial purchase commitment
under this Contract (the "Initial Commitment").
7.2 Change Orders. The Owner has the right by way of written orders
-------------
("Change Orders") to request Expansions, other revisions and/or modifications in
the Work, including but not limited to the Specifications, the manner of
performance of the Work or the timing of the completion of the Work; provided
--------
that specific Change Orders will be submitted to the Vendor and the Vendor
- - ----
(subject to the Owner's agreement) will be entitled to make reasonable price
and/or Project Milestone adjustments to the Contract Price in the case of
material modifications. The Vendor must promptly notify the Owner of any such
requested change or changes to Products which may materially affect the
operation and/or maintenance of the System, any PCS System or any part thereof.
The Parties agree that within fifteen (15) Business Days after the Owner's
initial request for a Change Order pursuant to this subsection 7.2 they will
mutually agree to all aspects of such Change Order which agreement will be
evidenced by a writing executed by an authorized representative of each of the
Parties. In the event the Vendor refuses to agree to any such Change Order
within such fifteen (15) day period then the Vendor will provide a written
notice to the Owner detailing its reasons for such refusal and if the Owner, at
such time, disagrees with the reasons set forth in such Vendor notice the matter
will then be referred to dispute resolution pursuant to Section 23. Nothing
contained in this subsection 7.2 is intended to limit the Vendor's right, from
time to time, to make suggestions for modifications to the Work or the
Specifications pursuant to and in accordance with this subsection 7.2 and the
terms of this Contract, provided that in any such event the Owner, in its sole
-------- ----
and absolute discretion pursuant to the terms of this Contract may refuse to
make any such modification or otherwise agree to issue a Change Order
incorporating any such Vendor suggestion.
7.3 Cancellation. During the term of this Contract, and subject to
------------
Section 24, the Owner will have the right, but not the obligation, at any time
to cancel, in whole or in part, any order made pursuant to the terms of this
Contract upon advance written notice to the Vendor. In the event of a
cancellation permitted hereunder, the Owner will pay to the Vendor order
cancellation charges in accordance with, and pursuant to, the terms of Schedule
11.
56
SECTION 8 INSTALLATION
8.1 Installation. The Vendor will furnish and install the Products
------------
pursuant to the Project Milestones set forth on Exhibit A and in accordance with
the requirements and criteria set forth in Exhibit D. In accordance with and
subject to the Project Milestones set forth on Exhibit A (and the intervals set
forth therein and herein), the Vendor will complete all Product Installation in
any given PCS System in conformance with the requirements and criteria set forth
in Exhibit D within thirty-two and one-half (32-1/2) days of completion of the
Facilities Preparation Services pursuant to Milestone 6 (as set forth in Exhibit
A1) in such PCS System.
8.2 No Interference. The Vendor will install the Products and build each
---------------
of the PCS Systems so as to cause no unauthorized interference with or
obstruction to lands and thoroughfares or rights of way on or near which the
Installation work may be performed. The Vendor must exercise every reasonable
safeguard to avoid damage to existing facilities, and if repairs or new
construction are required in order to replace facilities damaged by the Vendor
due to its carelessness, negligence or willful misconduct, such repairs or new
construction will be at the Vendor's sole cost and expense.
SECTION 9 ACCEPTANCE TESTING AND ACCEPTANCE
9.1 Acceptance Testing. The Vendor must carry out the Acceptance Tests on
------------------
the Products and the PCS Systems as specified in Exhibit B3 and each PCS System
must successfully achieve acceptance (including Substantial Completion and Final
Acceptance) in accordance with the terms of Exhibit B3.
9.2 Costs and Expenses. The costs and expenses of such Acceptance Tests
------------------
will be borne by the Vendor, and the Owner will not be charged or billed for
such costs and expenses, except to the extent that such charges or expenses are
not included in the Contract Price pursuant to and in accordance with the terms
of this Contract. If the Acceptance Tests performed by the Vendor are not
satisfied in accordance with the relevant requirements of Exhibit B3 or are
otherwise inconclusive in the reasonable judgment of the Owner, the Owner will
have the right to order further Acceptance Tests at the sole cost and expense of
the Vendor.
9.3 Notification. The Vendor will notify the Owner at least ten (10) days
------------
prior to the performance of any Acceptance Tests. Prior to or at the first
practicable date after such notification, the Vendor and the Owner will each
agree upon and approve any test forms to be used as part of the particular
Acceptance Test being conducted.
9.4 Presence at Acceptance Tests. The Owner and its representatives will
----------------------------
be permitted to witness and have unrestricted access to the Vendor's and its
Subcontractors' Acceptance Tests, provided that no such access will materially
-------- ----
interfere with or cause undue delay of the Vendor's Work. Nothing herein will
be deemed to require the Vendor to reimburse the Owner for any costs incurred by
the Owner in the Owner's participation in or
57
observation of Acceptance Tests or other tests performed by the Vendor pursuant
to and in accordance with the terms of this Section 9.
9.5 Correction of Defects. (a) If any Acceptance Test is not satisfied,
---------------------
the Vendor will, at its sole cost and expense, (i) in writing, notify the Owner
of such failure, and (ii) promptly correct whatever Defects or Deficiencies
caused such Acceptance Test not to be satisfied. After such correction, the
Vendor must (i) repeat at its sole cost and expense the failed Acceptance Tests
and as many other Acceptance Tests as are necessary to ensure in the reasonable
opinion of the Owner that such correction made by the Vendor would not have
affected the outcome of such other Acceptance Tests, and (ii) in writing, notify
the Owner as to what correction was made and what Acceptance Tests were
repeated.
(b) If Final Acceptance of a PCS System cannot be achieved after
Substantial Completion of such PCS System (provided that the Vendor will have
fully built-out the Final RF Engineering Plan in accordance with the Final Site
Count in accordance with the terms of this Contract) because such PCS System
fails to meet applicable performance criteria as set forth in Exhibit F, but
would do so with only the implementation and installation of additional Base
Stations at additional System Element Locations over and above the Final Site
Count for such PCS System, the Owner will have the right, in its sole and
absolute discretion, to (i) Finally Accept such PCS System in which case the
Parties will mutually agree in good faith on revised performance criteria for
such PCS System, or (ii) require the Vendor to continue to work (in which case
Final Acceptance of such PCS System will be delayed until completion of the work
and testing contemplated herein and in Exhibit B3) to cause such PCS System to
perform at the applicable levels of the then existing performance criteria as
set forth in Exhibit F, in which case, the required additional Base Stations and
additional System Element Locations will be treated as provided for in
subsections 17.5(c) and 17.10. Any additional Base Station(s) paid for by the
Owner pursuant to this subsection 9.5(b) (which would only have to be paid for
(including any costs associated with the installation thereof) by the Owner upon
the subsequent achievement of Final Acceptance by the Vendor in accordance with
Exhibit B3 which such payment will be made with the payments otherwise made on
Final Acceptance pursuant to Section 6) will be offset against the number of
new Base Stations that may subsequently be for the account of the Owner pursuant
to the terms of subsection 17.5(c). If the Parties are unable to agree upon
revised performance criteria as provided in clause (i) above, the matter will be
resolved in accordance with the provisions of subsection 23.3.
9.6 Acceptance Certificate. Upon the successful completion of the
----------------------
Acceptance Tests for a PCS System or any part thereof conducted by the Vendor,
the Vendor must submit to the Owner an Acceptance Certificate certifying that
(i) such Acceptance Tests have been successfully completed, (ii) the Work so
tested has been completed in accordance with the terms of this Contract, and
(iii) if applicable, that the remainder of the Work is continuing in accordance
with the Project Milestones set forth on Exhibit A. Upon its reasonable
satisfaction that such Acceptance Certificate is correct and complete, the Owner
will acknowledge such certification by signing the Acceptance Certificate. In
the event of any dispute as to the results of any Acceptance Tests, such dispute
will be resolved pursuant to
58
the dispute resolution mechanisms set forth in Section 23 including, but not
limited to, the Third Party Engineer review mechanism set forth in subsection
23.3.
SECTION 10 DISCONTINUED PRODUCTS
10.1 Notice of Discontinuation. During the Term of this Contract the
-------------------------
Vendor agrees to provide the Owner, or the respective Affiliates as the case may
be, except under extraordinary circumstances not less than one (1) year notice
before the Vendor discontinues accepting orders for a PCS Product ("Discontinued
Products") sold under this Contract. Where the Vendor offers a product for sale
that is equivalent in form, fit and function in accordance with and pursuant to
the Specifications, the notification period may vary but in no event will be
less than the applicable notice period set forth in subsection 2.17.
Notwithstanding the foregoing, the Vendor will not discontinue accepting orders
for any PCS Product applicable to or otherwise used in the System or any portion
thereof until and unless the Vendor and the Owner have agreed upon a mutually
acceptable transition plan that takes into account the Owner's and its
Affiliates' existing investment in the Item scheduled for discontinuance subject
to the minimum terms and conditions set forth in subsections 10.2 and 10.3
below. The Parties' failure to reach agreement within sixty (60) days or such
other reasonable time as they may mutually establish will, upon the request of
either Party, be referred for resolution pursuant to Section 23. In the event
of the foregoing, the Vendor must continue to furnish PCS Products fully
compatible with the System Elements within the System at such time during the
Term of the Contract; provided that nothing herein will bar the Vendor from
-------- ----
discontinuing individual Items of PCS Products as provided in and pursuant to
this subsection 10.1.
10.2 Discontinuation During Warranty Period. If, during the Warranty
--------------------------------------
Period applicable to the relevant Discontinued Product pursuant to Section 17,
the Vendor does not make such Discontinued Products available to the Owner, the
price of any Products provided as a replacement for the Discontinued Product by
the Vendor and required to be purchased by the Owner during such Warranty Period
to replace existing Discontinued Products delivered to the Owner in order to
maintain performance and functionality equivalent to that previously provided by
the Discontinued Products will be discounted by an amount equal to fifty percent
(50%) of the price previously paid for such Discontinued Products.
10.3 Discontinuation After Warranty Period. In the event that the Vendor
-------------------------------------
discontinues the manufacture of a Product following the expiration of the
applicable Warranty Period and the Owner is required to replace an existing
Discontinued Product with a new Product in order to maintain performance and
functionality, the Owner will receive a credit in an amount equal to the
percentage set forth below multiplied by the purchase price paid for such
original Product, which credit will be applied against the Vendor's then-current
list price for a replacement for such Discontinued Product; provided that the
-------- ----
credit will not exceed the Vendor's then-current best list price (as determined
by the Customer Price Guide) for such replacement Product subject to the
discounts available to the Owner pursuant to Section 26 and the other terms of
this Contract:
59
(i) up to and including one year following expiration
of the applicable Warranty Period: 40%;
(ii) more than one year and up to and including two years
following expiration of the applicable Warranty Period:
30%; and
(iii) more than two years and up to and including three years
following expiration of the applicable Warranty Period:
20%.
SECTION 11 SOFTWARE; CONFIDENTIAL INFORMATION
11.1 RTU License. The Owner is hereby granted a perpetual, non-exclusive,
-----------
non-transferable (except as set forth in subsections 11.4 and 27.4), fully paid-
up, multi-site (capability to move Software from site to site) right to use
license for the Software ("RTU License"), to operate the Products provided in
each of the PCS Systems and the System as a whole, subject to payment of any
license fees in accordance with the terms of this Contract. Except as otherwise
provided herein, the Owner is granted no title or ownership rights to the
Software. Such rights will remain with the Vendor, its Subcontractors or
suppliers, as appropriate.
11.2 Owner's Obligations. The Owner agrees that the Software, whether or
-------------------
not modified, will be treated as proprietary to the Vendor, its Subcontractors
or its suppliers, as appropriate and the Owner will:
(a) Utilize the Software solely in conjunction with the System and/or any
PCS System; provided that the Vendor acknowledges that the Software will be
-------- ----
integrated across interfaces with systems, equipment and software provided by
other suppliers and customers including, but not limited to, the Other Vendors;
(b) Ensure that all copies of the Software will, upon any reproduction by
the Owner authorized by the Vendor and whether or not in the same form or format
as such Software, contain the same proprietary, confidentiality and copyright
notices or legends which appear on the Software provided pursuant hereto; and
(c) Hold secret and not disclose the Software (or, subject to subsection
27.19, interfaces to or with such Software) to any person, except to (i) such of
its employees, contractors, agents or Affiliates that are involved in the
operation or management of the System and/or any PCS System and need to have
access thereto to fulfill their duties in such capacity, or (ii) other Persons
who need to use such Software to permit integration of the System and/or any PCS
System with systems and software of other suppliers and customers including, but
not limited to, the Other Vendors; provided that such persons agree, or are
-------- ----
otherwise obligated, to hold secret and not disclose the Software to the same
extent as if they were subject to this Contract.
60
(d) When and if the Owner determines that it no longer needs the Software
or if the Owner's license is canceled or terminated pursuant to the terms of
this Contract, return all copies of such Software to the Vendor or follow
reasonable written disposition instructions provided by the Vendor. If the
Vendor authorizes disposition by erasure or destruction, the Owner will remove
from the medium on which Software resides all electronic evidence of the
Software, both original and derived, in such manner that prevents subsequent
recovery of such original or derived Software.
11.3 Backwards Compatibility. (a) In addition to the warranties
-----------------------
contained in Section 17 of this Contract, the Vendor represents and warrants
that each Software Revision Level during the Term of this Contract will be
Backwards Compatible with all existing in-service Equipment provided by the
Vendor and the immediately preceding Software Revision Level of such Software
made available to Customers by the Vendor.
(b) In the event that Software supplied by the Vendor at any System
Element Site at any time does not provide Backwards Compatibility as required by
this subsection 11.3, then the Vendor will provide, without charge to the Owner,
the most current Software Updates of the Software to each such System Element
Location, and otherwise take such steps as may be necessary to achieve Backwards
Compatibility.
11.4 Transfer and Relocation. (a) Except as provided in subsection 27.4,
-----------------------
where the Owner or any successor to the Owner's title in the Products (i) elects
to transfer a Product to a third party, and where such Product will remain in
place and operational for the purpose of continuing to provide PCS in the
franchise area in which such Product is installed, or (ii) elects to transfer
Products to an Affiliate for reuse within the United States, the Owner may
transfer its RTU License for the Software furnished under this Contract for use
with such Product, without the payment of any additional Software right-to-use
fees by the transferee, but only under the following conditions:
(A) The right to use such Software may be transferred only together
with the Products with which the Owner has a right to use such
Software, and such right to use the Software will continue to be
limited to use with such Products;
(B) Before any such Software are transferred, the Owner will notify
the Vendor of such transfer and the transferee will have agreed
in writing (a copy of which will be provided to the Vendor) to
keep the Software in confidence and to corresponding conditions
respecting possession and use of Software as those imposed on the
Owner in this Contract; and
(C) The transferee will have the same right to Software warranty and
Software maintenance for such Software as the transferor,
provided the transferee continues to pay the fees, including
recurring fees, such as Annual Release Maintenance Fees, if any,
associated with such Software warranty or maintenance.
61
(b) Except as provided in subsection 11.4(a) or subsection 27.4, and except
as may otherwise in this Contract be provided expressly, the Owner or any
successor to the Owner's title in the Products will have no right to transfer
Software furnished by the Vendor under this Contract without the consent of the
Vendor. If the Owner or such successor elects to transfer a Product purchased
under this Contract for which it does not under this Contract have the right to
transfer related Software, the Vendor agrees that upon written request of the
transferee of such Product, or of the Owner or such successor, the Vendor will
not without reasonable cause fail to grant to the transferee a license to use
such Software with the Products, whether to be located within the United States
or elsewhere, upon payment of a relicensing fee to the Vendor in an amount equal
to fifty percent (50%) of the license fee for the Software originally paid by
the Owner to the Vendor at the time of the original purchase of the Software
from the Vendor; provided that such relicensing fee will in no event exceed
-------- ----
fifteen percent (15%) of the price paid by the transferee to the Owner for the
Product with respect to which such Software is used.
11.5 Survival. The obligations of the Owner under the Software Licenses
--------
will survive the termination of this Contract, regardless of the cause of
termination.
11.6 Access to Source Codes. The Vendor grants the Owner a right to
----------------------
access the Source Code and to modify the Software (the "RTM License") for the
maintenance, enhancement and support of those Products purchased from the Vendor
and owned or operated by the Owner under the following circumstances which will
be set forth in the Escrow Agreement:
(a) If the Vendor becomes insolvent, makes a general assignment for the
benefit of creditors, files a voluntary petition in bankruptcy or an involuntary
petition in bankruptcy is filed against the Vendor which is not dismissed within
sixty (60) days, or suffers or permits the appointment of a receiver for its
business, or its assets become subject to any proceeding under a bankruptcy or
insolvency law, domestic or foreign, or has liquidated its business, or the
Vendor, or a business unit of the Vendor that is responsible for maintenance of
the Software, ceases doing business without providing for a successor, and the
Owner has reasonable cause to believe that any such event will cause the Vendor
to be unable to meet its warranty service or support requirements hereunder; or
(b) If it is determined, pursuant to the dispute resolution mechanisms set
forth in subsection 23.1, that the Vendor, its assignee or designee has failed,
or is unable, to provide the warranty service or support of the System and/or
any PCS System contemplated by this Contract.
11.7 Escrow Agreement. The Vendor agrees, at the Owner's request, to
----------------
become party to a Source Code escrow agreement (the "Escrow Agreement") which
will allow the Owner to obtain access to the applicable Source Codes in the
circumstances set forth in subsection 11.6 and such Escrow Agreement. The Owner
will pay all costs, including the Vendor's reasonable costs incurred in
gathering, organizing and delivering such Source Code, associated with such
Escrow Agreement. The Vendor represents, warrants and agrees that (i) the
Source Codes delivered into escrow in accordance with the Escrow Agreement will
62
comprise the full Source Code language statement of the Software as used, or
required to be used, by the Vendor to maintain or modify the System and/or any
PCS System without the help of any other Person or reference to any other
material, (ii) such Source Codes will include all versions thereof from the date
of initial creation, and (iii) such Source Codes must be kept up to date,
including all updates needed to maintain compliance with the Specifications and
the System Standards. In addition, all parts of the Source Codes from the date
of creation thereof, and all updates thereto (including, without limitation,
those that are necessary to maintain compliance with the Specifications) must be
delivered into escrow in accordance with the Escrow Agreement.
11.8 Software Maintenance. The Vendor represents and warrants that the
--------------------
Software delivered to the escrow agent pursuant to subsection 11.7 for
redelivery to the Owner pursuant to the Escrow Agreement will be in a form
suitable for reproduction by the Owner and will include the full Source Code
language statement of the Software as used by the Vendor sufficient to allow
maintenance and modification.
11.9 Custom Development. 11.9.1 Request for Custom Material. (a) From
------------------ ---------------------------
time to time, the Owner may have requirements for custom Software (including,
but not limited to, development of identified features or modifications to
Software or Software Enhancements) or custom development of Equipment
(including, but not limited to, development of identified features or
modifications to Equipment or Equipment Enhancements) to be provided by the
Vendor under this Contract (the "Custom Material"). If the Owner has a
requirement for Custom Material that is a specific enhancement or modification
of a previously licensed feature or of previously purchased Products, the Owner
will identify to the Vendor in writing a summary of any such proposed
development of Custom Material. Such summary will provide a description of any
proposed Custom Material sufficient to enable the Vendor to determine the
general demand for, and its plans, if any, to develop the same or similar
Products. The Vendor will respond to such summary within thirty (30) days after
receipt thereof and indicate if it has the ability to fulfill a subsequent
Request for Proposal ("RFP") from the Owner for such development of Custom
Material. The Owner acknowledges that the Vendor will have no obligation to
develop any proprietary materials for Owner.
(b) If the Vendor decides that it does not have the technical ability or
the capacity to fulfill a subsequent RFP for such Custom Material development,
the Vendor's response pursuant to subsection 11.9.1(a) will (i) provide the
Owner an explanation of why it cannot fulfill such RFP and (ii) use reasonable
diligence to work with the Owner to identify an alternative source for such
development reasonably acceptable to the Owner. In determining whether the
Vendor has the technical ability or the capacity to fulfill the RFP, the Vendor
may consider factors including, but not limited to, (1) the Vendor's likelihood
of recovering its costs for performing such development, (2) the impact of such
development on the Vendor's actual outstanding commitments to perform work for
other Customers and to pursue strategic development activities; and (3) whether
the Vendor can perform the work utilizing existing software development staff
without stopping work underway.
63
(c) If the Vendor fails to agree to a request for Custom Material
development pursuant to the terms of this subsection 11.9 then the matter may,
at the Owner's option, be referred to dispute resolution pursuant to Section
23.
11.9.2 Vendor Response. After reviewing an RFP issued for such
---------------
Custom Material, the Vendor will respond to the Owner within thirty (30) days,
unless otherwise agreed by the Parties, stating the terms and conditions upon
which the Vendor would be willing to undertake such development, including, but
not limited to, a listing of specifications, custom development charges, planned
license fees and a proposed delivery schedule.
11.9.3 Ownership of Intellectual Property. The Vendor will own all
----------------------------------
forms of intellectual property rights (including, but not limited to, patent,
trade secret, copyright and mask rights) pertaining to Products, and will have
the right to file for or otherwise secure and protect such rights. The
foregoing notwithstanding, the Parties understand and agree that from time to
time the Owner may devise, develop or otherwise create ideas or other concepts
for services or new products which are patentable or otherwise capable of
receiving protection from duplication. In such event, the Owner will have the
right to patent or otherwise protect such ideas or concepts for its own use and
benefit.
SECTION 12 SOFTWARE CHANGES
12.1 Annual Release Maintenance Fees. So long as the Owner pays the
-------------------------------
applicable Annual Release Maintenance Fees in accordance with the terms of this
Contract during the Term (including at any time after the Term so long as the
Owner at such time continues to pay the Annual Release Maintenance Fees), the
Vendor will provide to the Owner, at such times as they become generally
available to the Vendor's Customers, all Software Upgrades, all Software
Enhancements and all Combined Releases (but not Optional Software Features,
unless otherwise mutually agreed between the Parties) applicable to Software for
PCS Products for which the Owner has obtained a RTU License pursuant to the
terms of this Contract.
12.2 Notice. The Vendor must give the Owner not less than ninety (90)
------
days, prior written notice of the introduction of any Software Enhancement
release or any Software Combined Release or any Optional Software release. In
addition, in each February and August of each year during the Term of this
Contract, the Vendor must provide the Owner with a forecast of future Software
Enhancement releases or Software Combined Releases or any Optional Software
release, as the case may be, then currently being developed by or on behalf of
the Vendor.
12.3 Installation, Testing and Maintenance. The installation and testing
-------------------------------------
of the Software by the Vendor and the acceptance thereof by the Owner will be
performed in accordance with the criteria set forth in Exhibit B3.
64
12.4 Software Fixes. In the event that any Software Upgrade, Software
--------------
Enhancement or Software Combined Release supplied by the Vendor during the Term
of this Contract has the effect of preventing the System and/or any PCS System
or any part thereof from satisfying, or performing in accordance with the
Specifications, the System Standards and/or Exhibit F or otherwise adversely
affects the functionality or features of the System, any PCS System or any part
thereof, then the Vendor will promptly retrofit or take such other corrective
action as may be necessary to assure that the System, any such PCS System or any
such affected part, as modified to include each such Software Upgrade, Software
Enhancement or Software Combined Release, will satisfy, and perform in
accordance with, the Specifications, the System Standards and/or Exhibit F and
restore all pre-existing functionality and features as well as provide any new
features and functionality provided by any of the foregoing modifications, in
each case without any charge to the Owner (other than payment of the applicable
Annual Release Maintenance Fees pursuant to the terms of this Contract).
SECTION 13 EQUIPMENT CHANGES
13.1 Equipment Upgrades. (a) Equipment Upgrades will be provided to the
------------------
Owner by the Vendor at no charge to the Owner as provided in subsection 13.1(b)
below. Equipment Enhancements must be provided to the Owner by the Vendor, if
requested by the Owner, and the Owner is obligated to make payment therefor in
an amount that is no higher than that payable by any Customer other than the
Owner, which amount of payment will be adjusted as set forth in subsections 6.2,
7.2 and 27.16 and Section 26. If the Vendor at any time issues an Equipment
Upgrade which is combined with any Equipment Enhancement (collectively, the
"Equipment Combined Release") to such Equipment, the Equipment Combined Release
will be provided at no charge to the Owner unless and until the Owner elects to
use any of the feature enhancement or enhancements included within the Equipment
Combined Release and has accepted such Equipment Combined Release.
(b) (i) After a PCS Product has been shipped to the Owner, if the Vendor
issues an Equipment Upgrade ("Class A change") or Equipment Enhancement ("Class
B change"), or where a modification to correct an error in field documentation
is to be introduced, the Vendor will promptly notify the Owner of such change
through the Vendor's design change management system or another Vendor
notification procedure. Each change notification, whether or not it bears a
restrictive legend, will be subject to subsection 27.19, except that such
information may be reproduced by the Owner for the Owner's use as required
within the System. If the Vendor has engineered, furnished, and installed a
Product which is subject to an Equipment Upgrade, the Vendor will implement such
change, at its sole cost and expense, if it is announced within fifteen (15)
years from the date of shipment of that Product, by, at its option (subject to
the reasonable review and acceptance of the Owner at such times as the Owner
reasonably determines that it needs to review such Vendor decision), either (A)
modifying the Product at the Owner's site; (B) modifying the Product which the
Owner has returned to the Vendor in accordance with the Vendor's reasonable
instructions pursuant to and in accordance with the terms of this Contract; or
(C) replacing the Product requiring the change with a replacement Product for
which such change has already been implemented. If
65
the Vendor has not engineered the original Product application and accordingly
office records are not available to the Vendor, the Vendor will provide the
generic change information and associated parts for the Owner's use in
implementing such change.
(ii) In any of the instances described in clause (i) above, if the
Vendor and the Owner agree that a Product or part thereof subject
to such change is readily returnable, the Owner, at its expense,
will remove and return such Product or part to the Vendor's
designated facility within the United States and the Vendor, at
its sole expense, will implement such change (or replace it with
a Product or part for which such change has already been
implemented) at its facility and return such changed (or
replacement) Product or part at its sole cost and expense to the
Owner's designated location within the United States. Any such
reinstallation will be performed by the Owner at its sole
expense. At any such time that the Owner's spares or plug-in
stocks are not available to implement a rotational program for an
Equipment Upgrade, the Vendor will provide a seed stock, where
feasible and necessary.
(iii)If the Owner does not make or permit the Vendor to make an
Equipment Upgrade as stated above within one (1) year from the
date of change notification or such other period as the Vendor
may agree, subsequent changes, repairs or replacements affected
by the failure to make such change may, at the Vendor's option,
be invoiced to the Owner whether or not such subsequent change,
repair or replacement is covered under the warranty provided in
this Contract for such Product. If requested by the Owner,
Equipment Upgrades announced more than fifteen (15) years from
the date of shipment will be implemented at the Owner's expense.
(iv) If the Vendor issues an Equipment Enhancement after a PCS Product
has been shipped to the Owner, the Vendor will promptly notify
the Owner of such change if it is being offered to any of the
Vendor's Customers. Except as otherwise set forth above in
subsection 13.1(a), when an Equipment Enhancement is requested by
the Owner, the pricing set for such Equipment Enhancements will
be at the Vendor's standard charges subject to the applicable
discounts set forth in this Contract and Section 26.
(v) All change notifications for Equipment Upgrades and Equipment
Enhancements provided by the Vendor to the Owner pursuant to the
terms of this Contract must contain the following information:
(i) a detailed description of the change; (ii) the reason for the
change; (iii) the effective date of the change; and (iv) the
implementation schedule for such change, if appropriate.
66
13.2 Notice. The Vendor will give the Owner not less than ninety (90)
------
days, prior written notice of the introduction of any Equipment Enhancement or
any Equipment Combined Release. In addition, in each February and August of
each year during the Term of this Contract, the Vendor will provide the Owner
with a forecast of future Equipment Enhancements to the Equipment or Equipment
Combined Releases then currently being developed by or on behalf of the Vendor.
13.3 Installation, Testing and Acceptance. The Installation and testing
------------------------------------
of the Equipment by the Vendor and the acceptance thereof by the Owner must be
performed in accordance with Exhibit B3 pursuant to the Project Milestones in
Exhibit A.
13.4 Equipment Fixes. In the event that any Equipment Upgrade or
---------------
Equipment Enhancement supplied by the Vendor during the Term of this Contract
has the effect of preventing the System and/or any PCS System or any part
thereof from satisfying, or performing in accordance with, the Specifications,
the System Standards and/or Exhibit F or otherwise adversely affects the
functionality, interoperability or features of the System, any such PCS System
or any part thereof then the Vendor will without any charge to the Owner
promptly retrofit or take such other corrective action as may be necessary to
assure that the System, any such PCS System or any such affected part, as
modified to include each such Equipment Upgrade and Equipment Enhancement, will
satisfy, and perform in accordance with, the Specifications, the System
Standards and/or Exhibit F and restore all pre-existing functionality and
features as well as provide any features and functionality provided by any of
the foregoing modifications.
SECTION 14 INTELLECTUAL PROPERTY
14.1 Intellectual Property. The Vendor grants the Owner rights to state
---------------------
that it is using the Vendor's Products or Services in the Owner's marketing,
advertising or promotion of the System, any PCS System or any part thereof. The
Owner has the right to use for such marketing, advertising or promotion the
Vendor's advertising and marketing materials (including pamphlets and brochures)
provided to the Owner by the Vendor describing the System, any PCS System or any
part thereof, or any Product. Other than as set forth in this subsection 14.1,
the Owner has the right to use the trademarks and service marks of the Vendor or
its assignee in the Owner's marketing, advertising and promotion of the System,
any PCS System or any part thereof only with the written consent of the Vendor
not to be unreasonably withheld subject to and in accordance with the terms of
subsection 27.13.
14.2 Infringement. (a) The Vendor agrees that it will defend, at its own
------------
expense, all suits and claims against the Owner for infringement or violation
(whether by use, sale or otherwise) in the United States of any patent,
trademark, copyright, trade secret or other intellectual property rights of any
third party (collectively, "Intellectual Property Rights"), covering, or alleged
to cover, the Equipment, Software, the System and/or any PCS System or any
component thereof for its intended use, in the form furnished or as subsequently
modified by the Vendor or as otherwise modified by the Owner pursuant to the
direction or approval of
67
the Vendor. The Vendor agrees that it will pay all sums, including, without
limitation, attorneys' fees and other costs, which, by final judgment or decree,
or in settlement of any suit or claim to which the Vendor agrees, may be
assessed against the Owner on account of such infringement or violation,
provided that:
- - -------- ----
(i) the Vendor will be given prompt written notice of all claims of
any such infringement or violation and of any suits or claims
brought or threatened against the Owner or the Vendor of which
the Owner has actual knowledge;
(ii) the Vendor will be given full authority to assume control of the
defense (including appeals) thereof through its own counsel at
its sole expense and will have the sole right to settle any suits
or claims without the consent of the Owner; provided that the
-------- ----
Vendor will have no right to agree to injunctive relief against
the Owner; provided further that the Vendor will notify the
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Owner of any proposed settlement condition prior to the
Vendor's acceptance of such settlement; and
(iii)the Owner will cooperate fully with the Vendor in the defense of
such suit or claims and provide the Vendor, at the Vendor's
expense, such assistance as the Vendor may reasonably require in
connection therewith.
(b) The Vendor's obligation under this subsection 14.2 will not extend to
alleged infringements or violations that arise because the Products provided by
the Vendor are used in combination with other products furnished by third
parties and where any such combination was not installed, recommended, approved,
explicitly or by implication, by the Vendor.
14.3 Vendor's Obligation to Cure. If in any such suit so defended, all or
---------------------------
any part of the Equipment, Software, the System, any PCS System or any component
thereof is held to constitute an infringement or violation of Intellectual
Property Rights and its use is enjoined, or if in respect of any claim of
infringement or violation the Vendor deems it advisable to do so, the Vendor
will at its sole cost, expense and option take one or more of the following
actions: (i) procure the right to continue the use of the same without
interruption for the Owner; (ii) subject to the terms of subsection 2.17 replace
the same with noninfringing Equipment or Software that meets the Specifications;
or (iii) modify said Equipment, Software, the System, any PCS System or any
component thereof so as to be noninfringing, provided that the Equipment,
-------- ----
Software, the System, any PCS System or any component thereof as modified meets
all of the Specifications. In the event that the Vendor is not able to cure the
infringement pursuant to clause (i), (ii) or (iii) in the immediately preceding
sentence, the Vendor will refund to the Owner the full purchase price paid by
the Owner for such infringing Product or feature, and the Owner will be under no
obligation to return to the Vendor such infringing Product or feature regardless
of whether, or by what means, the Owner, on its own or otherwise, subsequently
cures such infringement.
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14.4 Vendor's Obligations. The Vendor's obligations under this Section
--------------------
14 will not apply to any infringement or violation of Intellectual Property
Rights caused by modification of the Equipment, Software, the System, any PCS
System or any component thereof by the Owner, or any infringement caused solely
by the Owner's use and maintenance of the Products other than in accordance with
the Specifications and the purposes contemplated by this Contract, except as
expressly authorized or permitted by the Vendor. The Owner will indemnify the
Vendor against all liabilities and costs, including reasonable attorneys' fees,
for defense and settlement of any and all claims against the Vendor for
infringements or violations based upon this subsection 14.4.
14.5 License to Use Vendor Patents. (a) The Vendor grants to the Owner
-----------------------------
and its Affiliates, under patents which the Vendor (or in the event of an AT&T
Assignment pursuant to and in accordance with subsection 27.22 the Vendor's
Successor) owns or has a right to license ("Vendor Patents"), a worldwide,
royalty-free, nonexclusive license (the "Patent License") to use any Product
furnished by the Vendor under this Contract (including any combination of
products and services, whether or not furnished at the same time or as part of a
larger combination) for provision of telecommunications services; provided,
--------
however, that no rights are conveyed to the Owner and its Affiliates with
- - -------
respect to any invention which is directed to (i) a combination of a Product or
Products furnished with any other Item which the Vendor does not furnish to the
Owner under this Contract wholly or in part for such use, or (ii) a method or
process which is other than an inherent use of the Products furnished. As used
in this subsection 14.5, the term "inherent use" means a use that can be
completely performed by a Product furnished by the Vendor (or a combination of
Products furnished by the Vendor), without the need for any additional product,
service, development modification or programming by the Owner and its Affiliates
or by a third party. The Owner understands that in the event of an AT&T
Assignment pursuant to and in accordance with subsection 27.22 the Owner's
rights to any Patent Licenses granted pursuant to this subsection 14.5 will be
from the Vendor's Successor under only the patents the Vendor's Successor owns
or has a right to license and not those patents as to which there is no such
right to license.
(b) The Owner and any successor to the Owner's title in the Products has
the right (subject to written approval of the Vendor, which approval will not be
unreasonably withheld), to assign the Patent Licenses to any other Person who
acquires legal title to the Products including, but not limited to, any Person
or Persons who taking part in the financing or any part of the Nationwide
Network, provided that no such assignment to Persons taking part in the
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financing of any part of the Nationwide Network will be permitted except in
accordance with the provisions of subsection 27.4 of this Contract. Nothing
contained in this subsection 14.5 is intended to, and shall not, limit any
rights or privileges that the Owner has under this Contract or otherwise under
Applicable Law.
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SECTION 15 DELAY
15.1 Liquidated Damages. The Parties agree that damages for delay are
------------------
difficult to calculate accurately and, therefore, agree that liquidated damages
(the "Liquidated Damages") will be paid for non-performance or late performance
of the Vendor's obligations under this Contract pursuant to the terms hereof.
15.2 Interim Delay. (a) Failure of the Vendor to complete the Work
-------------
necessary to achieve each of the Project Milestones applicable to any PCS System
(other than Milestone 3 (as set forth on Exhibit A1)) on or before the date
applicable to such Milestone for such PCS System that is required to be achieved
by the Vendor prior to the Guaranteed Substantial Completion Date for such PCS
System (each an "Interim Milestone") will result in the Vendor being liable to
pay to the Owner an amount equal to [ ]; provided that no such Interim Delay
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Penalty will be due if the delay is directly and expressly attributable solely
to (i) an event constituting a Force Majeure pursuant to the terms of this
Contract or (ii) an act or omission of the Owner. Interim Delay Penalties
accrued pursuant to this subsection 15.2(a) will be offset against the payment
to be made by the Owner to the Vendor upon Substantial Completion of the PCS
System to which such interim delay relates. The Interim Delay Penalty applicable
to Milestone 4 (as set forth on Exhibit A1) will be [ ]. This subsection 15.2
will not be applicable to Milestone 3 (as set forth on Exhibit A1) for either
the System or any PCS System.
(b) To the extent that the Vendor is responsible for Interim Delay
Penalties pursuant to subsection 15.2(a) such penalties will be credited back to
the Vendor by the Owner to the extent that (i) the Vendor successfully achieves
the Interim Milestone subject to delay within thirty (30) days of the date
scheduled therefore pursuant to the terms hereof and Exhibit A and (ii) such
interim delay does not otherwise materially adversely affect the Owner, such PCS
System and/or the System as a whole. Any such reimbursement will be credited
back to the Vendor such that the Interim Delay Penalty otherwise offset against
the relevant Substantial Completion payment in accordance with subsection
15.2(a) above will be added back to such Substantial Completion payment to be
made to the Vendor by the Owner.
15.3 Completion Delay. (a) [ ]
----------------
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[ ]
(b) If any PCS System does not achieve Substantial Completion by the
Guaranteed Substantial Completion Date but the Owner nonetheless chooses (in its
sole discretion) to commence In Revenue Service in such incomplete PCS System
(such action in no way constituting the Owner's acceptance, express or implied,
of the System or such PCS System or any part thereof), then the Vendor will be
required to pay, on a daily basis, only that percentage of the daily Late
Completion Payment equal to that percentage of the geographic area to be
otherwise covered by such PCS System not otherwise placed In Revenue Service by
the Owner.
(c) In the event of a change in the Product Contract Price pursuant to
subsections 6.2, 7.2 or 27.16 or Section 26 during the Term of this Contract
from the amount originally set forth in this Contract pursuant to Section 6 the
per diem amount of Late Completion Payments set forth above will be increased or
decreased, as appropriate, by an amount equal to the increase or decrease in the
Owner's per diem interest payment obligation resulting from any change in the
amount of debt incurred or to be incurred by the Owner related to such change in
the Product Contract Price.
(d) Late Completion Payments, including any portions of such payments
payable in accordance with paragraphs (a) and (b) above, will be accrued during
the Completion Cure Period and offset against payments otherwise due to the
Vendor upon the achievement of Substantial Completion pursuant to the terms of
subsection 6.3. If the Vendor fails to achieve Substantial Completion within
sixty (60) days of the Guaranteed Substantial Completion Date for any reason
other than primarily because of (i) a Force Majeure event pursuant to Section
16 or (ii) the direct and explicit act or omission of the Owner, then the Owner
will have the option to terminate this Contract with respect to the PCS System
affected by any such delay without any penalty or payment obligation (other than
payment obligations under this Contract outstanding as of the date of any such
termination; provided that any such amounts payable by the Owner will not
-------- ----
include any amounts that would have been payable to the Vendor only upon
Substantial Completion or Final Acceptance); provided further that in the event
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the Vendor fails to achieve Substantial Completion within such sixty (60) day
period in any two (2) PCS Systems within the Initial System over any period of
time (regardless of whether such events are concurrent or whether the first such
event was subsequently cured) the Owner will have the right, but not the
obligation, to terminate this Contract in its entirety.
SECTION 16 FORCE MAJEURE
16.1 (a) Either Party may make a claim for excusable failure or delay
with respect to any obligation of such Party under this Contract, except any
obligation to make payments when due. Excusable failure or delay will be
allowed only in the event of an event of Force Majeure that is beyond the
reasonable control of the affected Person. Notwithstanding the foregoing, the
Vendor will not be entitled to relief under this Section 16 to the extent that
any event otherwise constituting an event of Force Majeure results from the
negligence or fault of
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the Vendor or any Subcontractor, and the Owner will not be entitled to relief
under this Section 16 to the extent any event otherwise constituting an event
of Force Majeure results from the negligence or fault of the Owner.
(b) The Party claiming the benefit of excusable delay hereunder must (i)
promptly notify the other Party of the circumstances creating the failure or
delay and provide a statement of the impact of such Party failure or delay and
(ii) use reasonable efforts to avoid or remove such causes of nonperformance,
excusable failure or delay. If an event of Force Majeure prevents the Vendor
from performing its obligations under this Contract for a period exceeding sixty
(60) days, the Owner may, upon prior written notice to the Vendor, terminate
this Contract.
(c) The Party not claiming the benefit of excusable delay hereunder will
likewise be excused from performance of its obligations hereunder on a day-for-
day basis to the extent such Party's obligations are affected due to the other
Party's delayed performance.
(d) In the event of a Force Majeure which the Party claiming relief for
such event has used all best efforts to resolve in accordance with the terms of
this Contract, upon the written request of either Party, the other Party will in
good faith negotiate modifications, to the extent reasonable and necessary, in
scheduling and performance criteria in order to reasonably address the impact of
such Force Majeure.
SECTION 17 WARRANTIES
17.1 Product Warranty. (a) The Vendor warrants that, for a period of two
----------------
(2) years from the date of Final Acceptance of any PCS System (the "Product
Warranty Period"), all Products and all of the Installation and the
Configuration Engineering thereof within such PCS System will materially conform
with and perform the functions set forth in the Specifications and the relevant
performance criteria set forth in Exhibit D, to the extent applicable, and will
be free from Defects and Deficiencies in material or workmanship which impair
service to subscribers, System performance, billing, administration and/or
maintenance. In the case of Software, the Product Warranty Period applicable to
any such Software will be automatically extended upon, and simultaneous with,
any Software Upgrade issued pursuant to the terms of Section 12. The Vendor
will assign to the Owner all outstanding Subcontractor warranties attributable
to Non-Essential Equipment at such time that the Vendor's warranty on such Non-
Essential Equipment pursuant to this subsection 17.1 expires pursuant to and in
accordance with the Product Warranty Period applicable to such Item of Non-
Essential Equipment. The Warranty Period for a PCS Product or part thereof
repaired or provided as a replacement under this Product warranty is six (6)
months or the unexpired term of the new Product Warranty Period applicable to
the repaired or replaced PCS Product or part, whichever is longer.
(b) To the extent the Owner orders additional Products from the Vendor in
accordance with the terms of this Contract including, but not limited to,
subsections 2.2 and/or 7.2, any such Products so ordered by the Owner and
delivered and installed by the Vendor or its Subcontractors will be warranted to
the same extent as set forth in clause (a) above for a
72
period of not less than twenty four (24) months from the earlier of (i) the date
the Owner puts such additional Products into In Revenue Service, (ii) the date
of the Owner's acceptance and (iii) thirty (30) days after the Vendor completes
the installation of such additional Products. If in the event, pursuant to the
Owner's order for such additional Products the Vendor is not required to install
such additional Products, the warranty on such additional products will run
twenty-four (24) months from the date the Vendor shipped such products to the
Owner.
17.2 Services Warranty. (a) The Vendor warrants that, for a period of not
-----------------
less than three (3) years from the date of completion of RF Engineering done by
the Vendor or its Subcontractors (but in no event earlier than the achievement
of Milestone 5 in such PCS System) in any given PCS System (the "RF Services
Warranty Period") the Final Site Count within and the Final RF Design applicable
to such PCS System will be accurate based upon the environmental circumstances
in such PCS System as they existed at the time of the Final Acceptance of such
PCS System provided that the projections of subscriber growth, traffic and other
-------- ----
predictive data, including all applicable standards as identified in Exhibits
B1, D and H, upon which the Final Site Count and Final RF Design have been
determined, have not been materially exceeded or the applicable and relevant
industry standards have not materially changed; and provided further that in no
-------- ------- ----
event will the RF Engineering warranty pursuant to this subsection 17.2(a) cover
or warrant items or performance otherwise covered or warranted pursuant to
subsection 17.3 below.
(b) The Vendor warrants that, for a period of not less than two (2) years
from the date of completion of Facilities Preparation Services within any PCS
System but in no event later than the achievement of Milestone 8 pursuant to
Exhibit A1 in such PCS System (provided that in the event of a Microwave Delay
-------- ----
Period in such PCS System pursuant to subsection 23.8, the commencement of the
Facilities Preparation Services Warranty Period will not be later than three (3)
months from the date the Vendor would have otherwise been able to commence
Substantial Completion testing in such PCS System in accordance with Exhibit B3
and Milestone 8 as set forth on Exhibit A1 but for the existence of such
Microwave Delay Period) (the "Facilities Preparation Services Warranty Period"
and collectively with the RF Services Warranty Period, the "Services Warranty
Periods") such Facilities Preparation Services will be (i) operational in
accordance with the Specifications, (ii) in compliance with all material
Applicable Laws and material Applicable Permits in effect at the time of the
completion of such Facilities Preparation Services in such PCS System, and (iii)
free from Defects or Deficiencies.
(c) The Vendor warrants that, for a period of six (6) months from the date
of completion, with respect to other Services performed by the Vendor and not
otherwise covered elsewhere in this Section 17, including, but not limited to,
repair Services, such other Service(s) will be free from Defects or Deficiencies
for which the Vendor is responsible pursuant to the terms of this Contract.
17.3 System Warranty. The Vendor warrants that, for a period ending three
---------------
(3) years from the Final Acceptance of the last PCS System within the Initial
System (the "System Warranty Period"), the ongoing performance of each PCS
System together with all other PCS Systems within the System will conform with
and perform to the performance criteria set
73
forth Exhibit F as of the date of the Final Acceptance of such PCS System based
on the circumstances within such PCS System on such date. The System warranty
pursuant to this subsection 17.3 will be limited to the extent that the
projections of subscriber growth, traffic and other predictive data, including
all applicable standards as identified in Exhibits B1, D and H, upon which the
Final Site Count and Final RF Design have been determined, have not been
materially exceeded or the applicable and relevant industry standards have not
materially changed.
17.4 Breach of Warranties. (a) In the event of any breach of any of the
--------------------
Warranties during any of the applicable Warranty Periods set forth in
subsections 17.1(a), 17.1(b), 17.2(a), 17.2(b), 17.2(c) and 17.3, the Vendor
will, in accordance with the terms of this Section 17, promptly repair or
replace the defective or nonconforming Product or otherwise cure any Defects and
Deficiencies so that each PCS System and the System as a whole will perform in
accordance with the Specifications and Exhibit F. If the Vendor fails to
promptly repair, replace and/or cure such defect, the Owner may, in addition to
exercising any other remedies available to it, itself cause such repair,
replacement and/or cure, at its option and at the sole cost and expense of the
Vendor.
(b) The Vendor recognizes that the Owner may suffer injury and may be
damaged in an amount which will be difficult to determine with certainty as a
result of Outages resulting from causes attributable to the failure of the
Vendor's Products and/or Services to perform in accordance with the
Specifications. As used herein, "Outage" means an unscheduled loss of
functionality of the System or any PCS System due to the failures of PCS
Products or any combination thereof defined as the loss of the capability to
originate or terminate [ ] or more of the active voice channels then in service
within the System or such PCS System for a period of time exceeding [ ] minutes.
(c) During the System Warranty Period, the Vendor will be liable to the
Owner for damages (the "Warranty Damages") for Outages (for other than in the
Test-bed Laboratory) that result from (i) the failure of the Vendor's Equipment
and/or Software to perform in accordance with the Specifications, (ii) the
failure of the Vendor to provide Services in accordance with the Specifications
applicable thereto, (iii) a Vendor procedural error or (iv) inaccurate Technical
Documentation, excluding marketing bulletins, sales literature or other
promotional materials provided by the Vendor to the Owner. As used herein,
"Vendor procedural error" means an error or improper deviation from the Vendor's
or its Subcontractors' procedures by, or attributable to, the Vendor's
personnel. Warranty Damages will be calculated based upon [ ] for each Outage
occurring in any given PCS System to the extent such Outage exceeds [ ] from
the time the Owner notified the Vendor of such Outage (not including such
[ ]), plus [ ] for each minute the duration of the Outage exceeds [ ]from
the time the Owner notifies the Vendor of such Outage (not including such [ ]).
(d) In no event will the Vendor's liability for Warranty Damages pursuant
to this subsection 17.4 exceed [ ] with respect to each Outage in any given
PCS System. In addition, the Vendor's total liability for Warranty Damages
74
pursuant to this subsection 17.4 will not exceed [ ] per calendar year during
the Term of this Contract with respect to Outages in any given PCS System per
calendar year.
(e) Notwithstanding the foregoing, the Vendor will have no liability
pursuant to this subsection 17.4 for:
(i) Outages caused by a Force Majeure event as
described in Section 16 other than to the extent that any of the
Vendor's Products and/or Services resulting in such Outages
should, in accordance with the Specifications be able to
withstand any such Force Majeure event;
(ii) Outages resulting from a scheduled activity,
including, but not limited to, System maintenance or loading of
Software or Equipment Upgrades, Enhancements or Combined
Releases, unless said Outage (without fault of the Owner) extends
beyond the expected downtime, as provided in the Specifications
applicable thereto, associated with such Equipment or Software
maintenance Upgrades, Enhancements or Combined Releases;
(iii) alterations by the Owner and/or the Vendor at
the Owner's request or otherwise pursuant to the terms of this
Contract to the System and/or any PCS System, excluding normal
maintenance or parameter changes as prescribed by the applicable
Technical Documentation;
(iv) Outages resulting from the Owner's, its
subcontractors' or any third party's (if such third party is
employed by the Owner) failure to follow the Technical
Documentation;
(v) Outages resulting from the negligence, gross
negligence or willful misconduct of the Owner, or any of its
employees, agents or contractors or any other third party (other
than any Subcontractor or any employees, representatives or
agents of the Vendor); or
(vi) Outages resulting from failure of equipment or
software not supplied by the Vendor or any Subcontractors or from
the performance of services not performed by the Vendor or any
Subcontractors; or
(vii) Outages caused by the Owner's deactivation of
the System or any portion thereof, unless the deactivation is
undertaken in avoidance of an unplanned outage; or
(viii) Outages caused by the failure of the Network
Interconnection facilities.
(f) On or before the beginning of each quarter of each calendar year
during the Term of this Contract, the Owner will provide the Vendor a written
report summarizing any Outages occurring during the previous calendar quarter.
The amount of any Warranty
75
Damages will be determined by the Owner as of the end of the fourth quarter of
each calendar year during the Term, for the preceding four quarterly reporting
periods during such Term. The Owner will notify the Vendor of any such Warranty
Damages in writing. Such Damages will be payable in credits on future purchases
under this Contract or otherwise if this Contract is terminated for any reason
within thirty (30) days of the occurrence. Any disputes regarding the
determination of the cause of an Outage or the amount of any such Warranty
Damages will be resolved in accordance with the provisions of Section 23.
17.5 Repair and Return. (a) If the Owner claims a breach of warranty
-----------------
under subsections 17.1, 17.2 or 17.3, it must notify the Vendor of the claimed
breach within a reasonable time after its determination that a breach has in
fact occurred. The Owner will allow the Vendor to inspect the Products, the
Services or the System, as the case may be, on-site, or, upon the Vendor's
reasonable request and, subject to subsection 17.5(d) below, at the Vendor's
sole expense: (i) with respect to Products, return such Products to any of the
Vendor's repair facilities located in the United States and listed on Schedule
8, or (ii) with respect to Non-Essential Equipment, return such Non-Essential
Equipment to the Vendor (or to the third party manufacturer if previously
requested by the Vendor) for further return to the applicable third party
manufacturer. The Vendor or such third party manufacturer may use either new,
remanufactured, reconditioned, refurbished, or functionally equivalent Products
or parts pursuant to the terms of this Contract, including, but not limited to,
the Specifications, in the furnishing of warranty repairs or replacements under
this Contract.
(b) The Vendor agrees to commence work on all such Products, Non-Essential
Equipment, Services or any System Defect, as the case may be, or Installation
defects as soon as practicable, but the Vendor will use reasonable efforts to
commence such Work in no event later than twenty-four (24) hours after
notification of such defect, and, subject to subsections 17.5(e) and 17.5(f),
the Vendor will cure such defect as promptly as practicable. During the Product
Warranty Period electronic circuit board components of Equipment or Non-
Essential Equipment, as the case may be, will be repaired or replaced by the
Vendor.
(c) Failure of the System to function to the level of the performance
warranty as set forth in subsection 17.3 will result in the obligation of the
Vendor to promptly make whatever repairs, modifications, alterations, expansions
or to take any other action of any kind, including but not limited to the
provision of additional Products and/or Services, necessary to satisfactorily
fix that portion of the System causing any failure for which the Vendor is
responsible. In the event of a breach of the warranties in Section 17 which
will be cured with the installation of additional PCS Products, the Vendor will
provide such PCS Products, together with related transportation, Installation
and optimization Services, as are reasonably required to remedy the shortfall,
at no charge to the Owner, provided that, if in order to remedy the shortfall,
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the number of additional Base Stations required to cure the Vendor's breach
under these warranties is not in excess of five percent (5%) of the total number
of Base Stations in the relevant PCS System (as such "total number" is as set
forth in the Final RF Engineering Plan), the Vendor will not be obligated to pay
for the Base Stations and the installation and transportation related thereto
required to cure such breach, provided further that the Vendor will be obligated
-------- ------- ----
to provide and pay for any Base Stations and the installation and transportation
related thereto in excess of any such five percent (5%) shortfall.
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(d) All costs associated with (i) removing or disconnecting the Products
or the Non-Essential Equipment subject to the warranty claim pursuant to the
terms of this Section 17 from any other Products, the respective PCS System or
any part thereof or from other equipment, any other pcs system or any part
thereof to which they are attached or connected, or (ii) dismantling surrounding
Products, the respective PCS System or any part thereof or any other equipment
or other pcs system or any part thereof in order to so remove or disconnect the
Products or Non-Essential Equipment subject to such warranty claim will be borne
by the Vendor throughout the applicable Warranty Period unless such Products are
readily returnable to the Vendor in which case the Owner will bear all such
costs. All packaging, shipping and freight charges incurred in connection with
the return of Items to the Vendor will be borne by the Owner. The Vendor will
be responsible for packing, shipping and freight charges for return of repaired
or replacement Items to the Owner, unless the Products or Non-Essential
Equipment, as the case may be, returned are not Defective or otherwise not
covered by the Vendor's warranty pursuant to subsection 17.1, in which case the
Owner will pay for all such charges between the Owner's point of origin and the
Vendor's applicable repair facility in the United States.
(e) For routine warranty service, the Vendor will, during the respective
Warranty Period, ship replacement or repaired Products or Non-Essential
Equipment (or components thereof) within thirty (30) days of receipt of the
Defective Equipment or Non-Essential Equipment (or components thereof) from the
Owner. In the event such replacement or repaired Products or Non-Essential
Equipment cannot be shipped within such time period, or if the Vendor determines
that due to the particular circumstances, on-site repairs or services are
required, the Vendor will undertake such repairs or replacement services on-site
within thirty (30) days of notification of the warranty Defect by the Owner. In
the event that the Vendor fails to repair or replace Defective Products and/or
Non-Essential Equipment within thirty (30) days from the Owner's notice to the
Vendor, then the Vendor will be deemed to be in breach of its obligations
pursuant to this Contract and the Owner will be entitled to receive a refund of
all amounts previously paid to the Vendor for the Defective Products or Non-
Essential Equipment, and will have no further obligation to pay additional
amounts in connection with the Defective Products or Non-Essential Equipment.
The Owner will return such Defective Products and Non-Essential Equipment to the
Vendor at the Vendor's sole cost and expense.
(f) For emergency warranty service situations, the Vendor will, during the
applicable Warranty Periods, use its best efforts to ship replacement Products
or Non-Essential Equipment (or components thereof) no later than twelve (12)
hours after notification of the warranty Defect by the Owner. The Owner will
ship the Defective Products or Non-Essential Equipment to the Vendor within
thirty (30) days of receipt of the replacement Products or Non-Essential
Equipment, as the case may be. In the event the Vendor fails to receive such
Defective Products or Non-Essential Equipment within such thirty (30) day
period, the Vendor will invoice the Owner for the replacement Products or Non-
Essential Equipment at the then-current price in effect therefor pursuant to the
terms of this Contract. If in an emergency warranty service situation, the
Owner and/or the Vendor determines that due to the particular circumstances, on-
site technical assistance is necessary, the Vendor will dispatch emergency
service personnel to the site in accordance with the terms of subsection 2.26.
For
77
the purpose of this subsection 17.5, an emergency warranty service situation
will be deemed to exist upon the occurrence of any E1 Emergency Condition or E2
Emergency Condition. The Vendor agrees to commence work on all Equipment, Non-
Essential Equipment, Facilities Preparation Services or any System defect, as
the case may be, or Installation defects materially impairing service to
subscribers, System performance, billing, administration and/or maintenance as
soon as practicable, but in no event later than twenty-four (24) hours after
notification of such defect, and the Vendor will cure such defect as promptly as
practicable.
17.6 Technical Assistance Center. The Vendor must maintain a technical
---------------------------
assistance center in the United States, and during the Warranty Periods
established pursuant to subsections 17.1(a), 17.1(b), 17.2 and 17.3,
respectively, will make such support center available to the Owner twenty-four
(24) hours per day free of any additional charge to the Owner (other than
applicable Annual Release Maintenance Fees).
17.7 Scope of Warranties. Unless otherwise stated herein, the Vendor's
-------------------
warranties under this Section 17 will not apply to:
17.7.1 damage or defects resulting from the negligence, gross
negligence or willful misconduct of the Owner, or any of its employees, agents
or contractors;
17.7.2 any Equipment or Software damaged by accident or disaster,
including without limitation, fire, flood, wind, water, lightning or power
failure other than to the extent that any such Equipment or Software should in
accordance with the Specifications and/or the Vendor's representations be able
to withstand any such events; or
17.7.3 non-integral items (other than any Non-Essential Equipment
otherwise covered by subsection 17.1) normally consumed in operation or which
has a normal life inherently shorter than the Warranty Periods (e.g., fuses,
----
lamps, magnetic tape); or
17.7.4 damages or defects resulting directly from Other Vendor's
equipment provided that this will in no event limit the Vendor's obligations as
to Interoperability pursuant to the terms of this Contract;
17.7.5 Products which have had their serial numbers or months and
year of manufacture removed or obliterated by the Owner; or
17.7.6 failures or deficiencies in BTS performance resulting solely
from changed environmental conditions, including, but not limited to, the growth
of trees and other foliage, the erection of buildings, and interference from
third party radio transmissions not otherwise engineered for by the Vendor;
except when any such damage or defects are made, done or caused by the Vendor or
any of its Subcontractors.
17.8 Expenses. Except as otherwise provided in this Section 17, the
--------
Owner will reimburse the Vendor for the Vendor's out-of-pocket expenses incurred
at the Owner's
78
request in responding to and/or remedying Products, Non-Essential Equipment,
Services or any System defect, or service Deficiencies not covered by the
warranties set forth herein or otherwise covered under a separate System
maintenance agreement (subject, however, to the terms and conditions of any such
agreement) between the Vendor and the Owner.
17.9 Third Party Warranties. If the Vendor purchases or subcontracts for
----------------------
the manufacture of any part of the System or the performance of any of the
Services to be provided hereunder from a third party, the warranties given to
the Vendor by such third party will inure, to the extent assigned to the Owner
pursuant to this Section 17 or permitted by law, to the benefit of the Owner,
and the Owner will have the right, at its sole discretion, to enforce such
warranties directly and/or through the Vendor. The warranties of such third
parties will be in addition to and will not, unless otherwise expressly stated
herein, be in lieu of any warranties given by the Vendor under this Contract.
17.10 Additional System Element Locations. In the event that under the
-----------------------------------
remedy provisions of this Section 17 the Vendor is required to provide
additional MSC and/or Base Stations requiring additional System Element
Locations, the Owner will be responsible for all Site Acquisition and Facilities
Preparation Services costs (other than any construction management costs or fees
which will be borne by the Vendor).
17.11 EXCLUSIVE REMEDIES. THE FOREGOING PRODUCT, SERVICES AND SYSTEM
------------------
WARRANTIES AND REMEDIES ARE EXCLUSIVE FOR THE PURPOSES OF ANY BREACH BY THE
VENDOR OF ANY SUCH WARRANTY AND ARE IN LIEU OF ALL OTHER EXPRESS AND IMPLIED
WARRANTIES, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
SECTION 18 INSURANCE
18.1 Insurance. The Vendor will maintain insurance in accordance with the
---------
provisions set forth in Schedule 6.
SECTION 19 TAXES
19.1 Taxes. The amounts to be paid by the Owner under this Contract do
-----
not include any state, provincial or local sales and use taxes, however
designated, which may be levied or assessed on the System, any PCS System or any
component thereof, including, but not limited to, the Services. With respect to
such taxes, the Owner will either furnish the Vendor with an appropriate
exemption certificate applicable thereto or pay to the Vendor, upon presentation
of invoices therefor, such amounts thereof as the Vendor may by law be required
to collect or pay; provided, however, that the Vendor will use its best efforts
-------- -------
to minimize the amount of any such taxes. The Owner has no obligation to the
Vendor with respect to other taxes, including, but not limited to, those
relating to franchise, net or gross income or revenue,
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license, occupation, other real or personal property, and fees relating to
importation of the Products in the United States.
SECTION 20 INDEMNIFICATION AND LIMITATION OF LIABILITY
20.1 Vendor Indemnity. (a) The Vendor will indemnify and hold the Owner
----------------
and its Affiliates, partners, directors, officers, agents and employees (the
"Indemnitees") harmless from and against all third party claims, demands suits,
proceedings, damages, costs, expenses, liabilities (including, without
limitation, reasonable legal fees) or causes of action (collectively,
"Liabilities") brought against or incurred by any Indemnitee for (i) injury to
persons (including physical or mental injury, libel, slander and death), or (ii)
loss or damage to any property, or (iii) violations of Applicable Laws,
Applicable Permits, codes, ordinances or regulations by the Vendor, or (iv) any
patent or trademark claims arising out of the Vendor's obligation subject to
subsection 14.2 or (v) any other liability, resulting from the acts or
omissions, negligence, error, wilful misconduct or strict liability, of the
Vendor, its officers, agents, employees, or Subcontractors in the performance of
this Contract. If the Vendor and the Owner jointly cause such Liabilities, the
Parties will share the liability in proportion to their respective degree of
causal responsibility.
(b) The Vendor's obligation to indemnify under subsection 20.1(a) with
respect to any Liability will not arise unless the Owner or the Indemnitee (i)
notifies the Vendor in writing of such potential Liability, in the case of the
Owner, within a reasonable time after the Owner will receive written notice of
such Liability; provided that the lack of such notice will not affect the
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Vendor's obligation hereunder (A) if the Vendor otherwise has knowledge of such
Liability and (B) unless such lack of notice is the cause of the Vendor being
unable to adequately and reasonably defend such Liability, (ii) gives the Vendor
the opportunity and authority to assume the defense of and settle such
Liability, subject to the provisions of the next two sentences, and (iii)
furnishes to the Vendor all such reasonable information and assistance available
to the Owner (or other Indemnitees) as may be reasonably requested by the Vendor
and necessary for the defense against such Liability. The Vendor will assume on
behalf of the Indemnitee and conduct with due diligence and in good faith the
defense of such Liability with counsel (including in-house counsel) reasonably
satisfactory to the Indemnitee; provided that the Indemnitee will have the right
-------- ----
to be represented therein by advisory counsel of its own selection and at its
own expense. If the Indemnitee will have reasonably concluded that there may be
legal defenses available to it which are different from or additional to, or
inconsistent with, those available to the Vendor, the Indemnitee will have the
right to select separate counsel reasonably satisfactory to the Vendor to
participate in the defense of such action on its own behalf at the Vendor's
expense. In the event the Vendor fails to defend any Liability as to which an
indemnity might be provided herein, then the Indemnitee may, at the Vendor's
expense, contest or settle such matter without the Vendor's consent. All
payments, losses, damages and reasonable costs and expenses incurred in
connection with such contest, payment or settlement will be to the Vendor's
account and may be deducted from any amounts due to the Vendor. The Vendor will
not settle any such Liability without consent of the Indemnitee, which consent
will not be unreasonably withheld. This indemnity is in lieu of all other
obligations of the Vendor, expressed or implied, in law
80
or in equity, to indemnify the Indemnitees (except pursuant to Section 14 or
any other Vendor indemnitees set forth in this Contract).
20.2 LIMITATION ON LIABILITY. EXCEPT AS PROVIDED IN SUBSECTIONS 14.2,
-----------------------
15.2, 15.3, 17.4, 20.1, AND 20.3 HEREOF, IN NO EVENT, AS A RESULT OF BREACH OF
CONTRACT OR BREACH OF WARRANTY, WILL EITHER PARTY HERETO BE LIABLE UNDER THIS
CONTRACT TO THE OTHER PARTY FOR ANY CONSEQUENTIAL OR INCIDENTAL DAMAGES,
INCLUDING LOST PROFITS OR REVENUES OF SUCH PARTY, BEFORE OR AFTER ACCEPTANCE,
WHETHER OR NOT SUCH DAMAGES ARE FORESEEABLE.
20.3 Damages for Fraud or Willful Misconduct (a) The Vendor will be
---------------------------------------
responsible for all damages, including without limitation, indirect, incidental
and consequential damages, incurred by the Owner as a result of any damage or
injury caused by or resulting from the fraud or willful misconduct of the
Vendor.
(b) The Vendor will be responsible for all damages, but excluding
indirect, incidental and consequential damages, incurred by the Owner as a
result of any damages or injury caused by or resulting from the fraud, gross
negligence or willful misconduct of any of the Subcontractors related to the
performance of the Work, to the extent the Vendor would have liability therefor
under this Contract if the Vendor had engaged in such conduct.
SECTION 21 REPRESENTATIONS AND WARRANTIES
21.1 Representations and Warranties of the Vendor. The Vendor hereby
--------------------------------------------
represents and warrants to the Owner as follows:
21.1.1 Due Organization of the Vendor. The Vendor is a corporation
------------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of New York and has all requisite corporate power and authority to own and
operate its business and properties and to carry on its business as such
business is now being conducted and is duly qualified to do business in all
jurisdictions in which the transaction of its business in connection with the
performance of its obligations under this Contract makes such qualification
necessary or required.
21.1.2 Due Authorization of the Vendor; Binding Obligation. The
---------------------------------------------------
Vendor has full corporate power and authority to execute and deliver this
Contract and to perform its obligations hereunder, and the execution, delivery
and performance of this Contract by the Vendor have been duly authorized by all
necessary corporate action on the part of the Vendor; this Contract has been
duly executed and delivered by the Vendor and is the valid and binding
obligation of the Vendor enforceable in accordance with its terms, except as
enforcement thereof may be limited by or with respect to the following: (i)
applicable insolvency, moratorium, bankruptcy, fraudulent conveyance and other
similar laws of general application relating to or affecting the rights and
remedies of creditors; (ii) application of equitable principles (whether
enforcement is sought in proceedings in equity or at law); and
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(iii) provided the remedy of specific enforcement or of injunctive relief is
subject to the discretion of the court before which any proceeding therefore may
be brought.
21.1.3 Non-Contravention. The execution, delivery and performance of
-----------------
this Contract by the Vendor and the consummation of the transactions
contemplated hereby do not and will not contravene the certificate of
incorporation or by-laws of the Vendor and do not and will not conflict with or
result in (i) a breach of or default under any indenture, mortgage, lease,
agreement, instrument, judgment, decree, order or ruling to which the Vendor is
a Party or by which it or any of its properties is bound or affected, or (ii) a
breach of any Applicable Law.
21.1.4 Regulatory Approvals. All authorizations by, approvals or
--------------------
orders by, consents of, notices to, filings with or other acts by or in respect
of any Governmental Entity or any other Person required in connection with the
execution, delivery and performance of this Contract by the Vendor have been
obtained or will be obtained in due course.
21.1.5 Non-Infringement. The Vendor represents and warrants to the
----------------
best of its knowledge based on reasonable diligence under the circumstances that
as of the Effective Date there are no actual claims or threatened or actual
suits in connection with patents and other intellectual property matters that
would materially adversely affect the Vendor's ability to perform its
obligations under this Contract.
21.1.6 Scope. The representations and warranties of the Vendor
-----
pursuant to this subsection 21.1 will be deemed to apply to all of the Work
performed by any Subcontractor employed by the Vendor as though the Vendor had
itself performed such Work.
21.1.7 Requisite Knowledge. The Vendor represents and warrants that
-------------------
it has all requisite knowledge, know-how, skill, expertise and experience to
perform the Work in accordance with the terms of this Contract.
21.1.8 Financial Capacity. The Vendor represents and warrants the
------------------
financial, management and manufacturing capacity and capabilities to do the Work
in a timely manner in accordance with the terms of this Contract.
21.2 Representations and Warranties of the Owner. The Owner hereby
-------------------------------------------
represents and warrants to the Vendor as follows:
21.2.1 Due Organization of the Owner. The Owner is a limited
-----------------------------
partnership, validly existing and in good standing under the laws of the State
of Delaware and has all requisite power and authority to own and operate its
business and properties and to carry on its business as such business is now
being conducted and is duly qualified to do business in Delaware and in any
other jurisdiction in which the transaction of its business makes such
qualification necessary.
21.2.2 Due Authorization of the Owner; Binding Obligation. The Owner
--------------------------------------------------
has full power and authority to execute and deliver this Contract and to perform
its obligations
82
hereunder, and the execution, delivery and performance of this Contract by the
Owner have been duly authorized by all necessary partnership action on the part
of the Owner; this Contract has been duly executed and delivered by the Owner
and is the valid and binding obligation of the Owner enforceable in accordance
with its terms, except as enforcement thereof may be limited by or with respect
to the following: (i) applicable insolvency, moratorium, bankruptcy, fraudulent
conveyance and other similar laws of general application relating to or
affecting the rights and remedies of creditors; (ii) application of equitable
principles (whether enforcement is sought in proceedings in equity or at law);
and (iii) provided the remedy of specific enforcement or of injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.
21.2.3 Non-Contravention. The execution, delivery and performance of
-----------------
this Contract by the Owner and the consummation of the transactions contemplated
hereby do not and will not contravene the partnership arrangements governing the
conduct of the partners in the Owner and do not and will not conflict with or
result in (i) a breach of or default under any indenture, mortgage, lease,
agreement, instrument, judgment, decree, order or ruling to which the Owner is a
Party or by which it or any of its properties is bound or affected, or (ii) a
breach of any Applicable Law.
SECTION 22 TITLE AND RISK OF LOSS
22.1 Title. Title to each Item of Equipment (but in no case Software)
-----
will pass to the Owner upon delivery thereof by the Vendor to the System Element
Location to which each such Item belongs or such other location specifically
requested by the Owner or as otherwise mutually agreed to by the Parties. Prior
to acquiring title to the Equipment, the Owner will not cause or permit the
Equipment to be sold, leased or subjected to a lien or other encumbrance.
22.2 Risk of Loss. Risk of loss of any Products furnished to the Owner in
------------
connection with this Contract will pass from the Vendor to the Owner upon the
completion of the Bolt-down by the Vendor of any PCS Product or at the
completion of installation of any other Product each at the appropriate System
Element Location within the given PCS System provided that the risk of loss of
any given PCS System within the System will not pass to the Owner until such
time as the Vendor is fully prepared to commence testing for the Substantial
Completion of such PCS System in accordance with and pursuant to Exhibit B3 and
Exhibit A1; provided, however, that the Owner will assume the risk of loss prior
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to such Substantial Completion by the Vendor for any such Products damaged due
to the gross negligence or willful misconduct of the Owner (provided that the
-------- ----
Owner will also assume the risk of loss for its own negligence at any time after
Milestone 6 (as set forth in Exhibit A1) in each PCS System within the System).
With respect to Products delivered by the Vendor but not otherwise installed by
the Vendor pursuant to and in accordance with the terms of this Contract, risk
of loss will pass to the Owner upon delivery by the Vendor to the Owner's
designated site. Until such time as risk passes to the Owner, the Vendor will,
at its sole cost and expense, remedy, repair and replace all physical damage,
loss or injury to such property; provided that, prior to the passing of risk of
-------- ----
loss to the Owner, any actual proceeds of its
83
applicable insurance payable with respect to such physical damage at such time,
loss or injury are paid to the Vendor as necessary to achieve such remedy,
repair or replacement.
SECTION 23 DISPUTE RESOLUTION
23.1 Dispute Resolution. Subject to subsection 24.3 and subsection 23.4,
------------------
in the event any controversy, claim, dispute, difference or misunderstanding
arises out of or relates to this Contract, any term or condition hereof, any of
the Work to be performed hereunder or in connection herewith, the respective
System Managers of the Owner and the Vendor will meet and negotiate in good
faith in an attempt to amicably resolve such controversy, claim, dispute,
difference or misunderstanding in writing. Such System Managers must meet for
this purpose within ten (10) Business Days, or such other time period mutually
agreed to by the Parties, after such controversy, claim, dispute, difference or
misunderstanding arises. If the Parties are unable to resolve the controversy,
claim, dispute, difference or misunderstanding through good faith negotiations
within such ten (10) business day period, each Party will, within five (5)
Business Days after the expiration of such ten (10) business day period, prepare
a written position statement which summarizes the unresolved issues and such
Party's proposed resolution. Such position statement must be delivered by the
Vendor to the Owner's Vice President of Engineering or Operations and by the
Owner to the Vendor's corresponding officer or representative for resolution
within (5) Business Days, or such other time period mutually agreed to by the
Parties.
If the Parties continue to be unable to resolve the controversy, claim,
dispute, difference or misunderstanding, either Party may initiate arbitration
in accordance with the provisions of subsection 23.2 below; provided, however,
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that with respect to any controversy, claim, dispute, difference or
misunderstanding arising out of or relating to this Contract by which either
Party seeks to obtain from the other monetary damages in excess of twenty-five
million dollars ($25,000,000), either Party, in such case, may commence an
action in any state or federal court in accordance with subsection 27.7 to
resolve such matter in lieu of proceeding with an arbitration pursuant to and in
accordance with subsection 23.2. The arbitrators hired or otherwise chosen
pursuant to and in accordance with the terms of this Contract will determine
issues of arbitrability pursuant to the terms of this Contract but may not in
any way limit, expand or otherwise modify the terms of this Contract nor will
they have any authority to award punitive or other damages in excess of
compensatory damages (other than as specifically set forth in this Contract) and
each Party irrevocably waives any such claim thereto when invoking the
arbitration provisions of subsection 23.2.
23.2 Arbitration. An arbitration proceeding initiated by either
-----------
Party under this Contract with respect to any controversy, claim, dispute,
difference or misunderstanding will be conducted in Kansas City, Missouri in
accordance with the Commercial Arbitration rules of the AAA, except that, at the
request of either Party, a stenographic transcript of the testimony and
proceedings will be taken and the arbitrators will base their decision upon the
records and briefs of the Parties.
84
Such arbitration will be initiated by either Party by notifying the other
Party in writing and will be settled before three (3) impartial arbitrators, one
of whom will be named by the Owner, one by the Vendor and the third by the two
arbitrators appointed by the Owner and the Vendor, respectively. All of the
named arbitrators will have significant experience in the wireless
telecommunications industry. If either the Owner or the Vendor fails to select
an arbitrator within ten (10) days after notice has been given of the initiation
of the arbitration, the officer in charge of the Kansas City, Missouri office of
the AAA will have the right to appoint the other arbitrator, and the two
arbitrators thus chosen will then select the third arbitrator.
Except as the Parties may otherwise mutually agree, the arbitration
hearings will commence within fifteen (15) Business Days after a Party's
initiation of the arbitration. The Federal Rules of Evidence will apply and
reasonable discovery, including depositions, will be permitted. Discovery
issues will be decided by the arbitrators and post-hearing briefs will be
permitted.
The arbitrators will render a decision within ten (10) days after the
conclusion of the hearing(s) and submission of post-hearing briefs and a written
opinion setting forth findings of fact and conclusions of law will be made
available to the Parties within that time period. The decision of the majority
of the arbitrators regarding the matter submitted will be final and binding upon
the Parties. Judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof.
Each Party will pay for the services and expenses of the arbitrator
appointed by it, its witnesses and attorneys, and all other costs incurred in
connection with the arbitration (including, without limitation, the cost of the
services and expenses of the arbitrator appointed by the two arbitrators
appointed by the Parties) will be paid in equal part by the Parties, unless the
award will specify a different division of the costs. Unless otherwise
specifically stated in this Contract, during the pendency of any arbitration
proceedings, the Parties agree to continue to perform their obligations
hereunder in the same manner as prior to the institution of arbitration
proceedings.
23.3 Third Party Engineer. Disputes arising under subsections 2.6, 2.7,
--------------------
9.5(b), 9.6, 10.1 and 17.4 of this Contract, or as otherwise specifically
provided elsewhere in this Contract, or as otherwise mutually agreed by the
Parties, are to be resolved by the Third Party Engineer in the manner provided
in this subsection 23.3. The Vendor and the Buyer will first attempt to resolve
the dispute through consultation and negotiation in good faith and in a spirit
of mutual cooperation as provided in subsection 23.1 above. If those attempts
fail, then either Party may submit its written notice to the other Party
requesting that the dispute be resolved by the Third Party Engineer, in
accordance with the merits of the dispute. If, within ten (10) Business Days
after the receipt of such notice by the notified Party, the dispute is not
resolved, the Owner will select one of the Third Party Engineers listed on
Schedule 14 to render decision in the dispute. The Third Party Engineer will
issue a written decision containing an explanation of how and why the decision
was reached. The Third Party Engineer's decision will be final and binding,
except with respect to any opinion that over the Term of the Contract will
impact the losing Party in the amount of one million dollars
85
($1,000,000) or more. If within ten (10) Business Days following the issuance
of any such opinion the Parties have not agreed to implement the terms of any
such opinion that is not final, either Party may seek arbitration pursuant to
the provisions of subsection 23.2 above. In such arbitration, either Party may
introduce into evidence the opinion of the Third Party Engineer, but the
arbitrator(s) must rule on all issues of the dispute on a de novo basis, except
-------
as to any facts or other matters set forth in the opinion and stipulated by both
of the Parties. If none of the listed Third Party Engineers is available or if
none accepts the assignment and the Parties cannot otherwise mutually agree to
another Third Party Engineer, an experienced and reputable engineer (who is not
employed by either Party or any of their Affiliates or affiliates) will be
chosen by the then President of the Institute of Electrical and Electronic
Engineers (or the Vice President, if the President is a present or former
employee of any such entities) to serve as the Third Party Engineer for the
purposes of resolving the dispute. Unless otherwise mutually agreed by the
Parties, any Person who is an officer or employee, agent, Subcontractor or
subcontractor of, or a technical consultant to, either Party will be
automatically ineligible to be the Third Party Engineer. The costs of
utilizing a Third Party Engineer to resolve disputes under this subsection 23.3
will be shared equally by both Parties.
23.4 Other Remedies. Notwithstanding anything to the contrary herein
--------------
contained, each Party will be entitled to pursue any equitable rights and
remedies that are available at law or in equity without complying with
subsection 23.2 or 23.3.
23.5 Tolling. All applicable statutes of limitation will be tolled to the
-------
extent permitted by Applicable Law while the dispute resolution procedures
specified in this Section 23 are pending, and nothing herein will be deemed to
bar any Party from taking such action as the Party may reasonably deem to be
required to effectuate such tolling.
SECTION 24 TERMINATION AND EVENTS OF DEFAULT
24.1 Termination Without Cause. (a) The Owner may, at its sole option,
-------------------------
terminate this Contract, in its entirety, for convenience upon ninety (90) days'
prior written notice at any time; provided that prior to any such termination
-------- ----
pursuant to this subsection 24.1 the Minimum Commitment will have been fulfilled
by the Owner in accordance with the terms of this Contract.
(b) Any orders for Vendor Work within any PCS System within the System
made by the Owner pursuant to and in accordance with the terms of this Contract
and the program management procedures of the Owner prior to any such termination
described in clause (a) above, other than the Initial Commitment, will remain in
effect and will be fulfilled to the extent that such orders are outstanding as
of the date of such termination. For the purposes of this subsection 24.1(b) an
"order" will not include the Initial Commitment or any order for a full PCS
System within the Initial System or the System.
24.2 Termination for Cause. The Owner also has the right to terminate
---------------------
this Contract in its entirety (except as otherwise set forth in clause (l)
below) without any penalty or
86
payment obligation upon the occurrence of any Vendor event of default (each a
"Vendor Event of Default") as set forth below. The occurrence of any of the
following will constitute a Vendor Event of Default:
(a) the Vendor (i) files a voluntary petition in bankruptcy or has an
involuntary petition in bankruptcy filed against it that is not dismissed within
forty-five (45) days of such involuntary filing, (ii) admits the material
allegations of any petition in bankruptcy filed against it, (iii) is adjudged
bankrupt, or (iv) makes a general assignment for the benefit of its creditors,
or if a receiver is appointed for all or a substantial portion of its assets and
is not discharged within sixty (60) days after his appointment; or
(b) the Vendor commences any proceeding for relief from its creditors in
any court under any state insolvency statutes; or
(c) the Vendor materially disregards or materially violates material
Applicable Laws or material Applicable Permits; or
(d) the Vendor persistently and materially allows Defects and Deficiencies
to exist; or
(e) the Vendor fails to fulfill its obligations with respect to the
satisfaction, discharge or bonding of liens as set forth in subsection 23.6
hereof; or
(f) the Vendor abandons or ceases for a period in excess of thirty (30)
days its performance of the Work (except as a result of a casualty which is
fully covered by insurance or as to which other provisions reasonably acceptable
to the Owner are being diligently pursued) or fails to begin the Work within
thirty (30) days after the Notice to Proceed Date; or
(g) the Vendor assigns or subcontracts Work other than as provided for in
this Contract; or
(h) the Vendor fails to materially comply with any Change Order; or
(i) the Vendor fails to perform this Contract (including, without
limitation, any action the Vendor may take on any Vendor-Controlled Site) and
thereby prejudices in any way deemed material by the parties providing financing
in connection with the build-out of the Nationwide Network and/or the Owner in
their reasonable opinion the Owner's efforts to obtain financing for the System
and/or the Nationwide System; or
(j) the Vendor fails to pay to the Owner any material amount due to the
Owner by the date required for such payment; or
(k) the Vendor fails to comply with subsection 27.22;
(l) the Vendor misses any Interim Milestone within any given PCS System by
a period in excess of thirty (30) days and such failure to achieve such Interim
Milestone was
87
not caused by (i) a Force Majeure event and/or (ii) any act or omission of the
Owner; provided that in such case the Owner will have the right, but not the
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obligation, to terminate this Contract with respect to only that PCS System in
which such interim delay occurred unless such interim delay relates to Milestone
4 (as set forth on Exhibit A1) in which case the Owner will have the right, but
not the obligation, to terminate this Contract in its entirety as otherwise set
forth in this subsection 24.2; or
(m) the Vendor otherwise materially breaches any provision of this
Contract.
24.3 Remedies. (a) If any of the Vendor Events of Default exists, the
--------
Owner may, without prejudice to any other rights or remedies of the Owner in
this Contract or at law or in equity, terminate this Contract upon written
notice to the Vendor; provided, however, that the Owner will have first provided
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to the Vendor the following periods of notice and opportunity to cure:
(i) in the case of an Event of Default specified in the
foregoing clauses (e) and (k), the Owner will have provided seven (7) days'
prior written notice to the Vendor, and the Vendor will have failed to
remedy such breach entirely by the end of such seven (7) day period;
(ii) in the case of an Event of Default specified in the
foregoing clauses (a) or (b), no notice or opportunity to cure will be
required from the Owner; and
(iii) in the case of any other Event of Default by the Vendor,
the Owner will have provided forty-five (45) days' prior written notice,
and the Vendor will have failed (i) to commence to cure the default within
five (5) days of delivery of such notice, and (ii) to diligently pursue
such cure and remedy the breach entirely by the end of said forty-five (45)
day notice period.
(b) If the Owner elects to terminate this Contract, the Owner may, without
prejudice to any other rights or remedies of the Owner in this Contract or of
law or in equity, do one or more of the following:
(i) Take possession of all Engineering and design data,
procurement data, manufacturing data, construction and erection data,
start-up and testing data, materials, and Products that will become part of
the System and/or the specified PCS Systems, or the Work, whether any of
the same is in a partial state of completion or completed condition, and
title to any of said items vests in the Owner (if not already vested by the
provisions of this Contract);
(ii) Take temporary possession and control of all of the
Vendor's installation equipment, machinery, and the Vendor's materials,
supplies, Software and any and all tools (including, but not limited to,
any and all RF Engineering tools and/or software) at any project site,
including but not limited to any System Element Location, within the System
and/or the specified PCS Systems which in the Owner's opinion are necessary
to finish the Work;
88
(iii) Direct that the Vendor assign its Subcontractor agreements to
the Owner without any change of price or conditions therein or penalty or
payment therefor; or
(iv) Take over and finish the Work by whatever reasonable
methods the Owner may deem expedient;
provided, that, nothing contained in paragraphs (a) through (d) above will
- - -------- ----
require the Vendor to relinquish to the Owner any of its manufacturing
facilities, specific Product designs (other than such designs previously
provided to the Owner pursuant to the terms of this Contract), Software Source
Codes, trade secrets or proprietary information not previously provided or made
available to the Owner, the System or any part thereof or any materials,
supplies, inventories, tools, software, engineering and/or designs that are not
integral or relevant to the completion of the Work.
24.4 Discontinuance of Work. Upon such notification of termination, the
----------------------
Vendor must immediately discontinue all of the Work (unless such notice of
termination directs otherwise), and, as more fully set forth in subsection
24.3(b) clauses (i) through (iv), deliver to the Owner copies of all data,
drawings, specifications, reports, estimates, summaries, and such other
information, and materials as may have been accumulated by the Vendor in
performing the Work, whether completed or in process. Furthermore, the Vendor
must assign, assemble and deliver to the Owner all purchase orders and
Subcontractor agreements requested by the Owner.
24.5 Payments. When the Owner terminates this Contract for cause pursuant
--------
to subsection 24.2, the Vendor will not be entitled to receive further payment
other than payments due and payable under this Contract and not subject to
dispute prior to such termination (provided that any such disputed amounts will
-------- ----
be paid by the Owner when and if such dispute is in fact resolved).
Notwithstanding anything herein to the contrary, the Owner may withhold
payments, if any, to the Vendor for the purposes of offset of amounts owed to
the Owner pursuant to the terms of this Contract until such time as the exact
amount of damages due the Owner from the Vendor is fully determined.
24.6 Costs. In the event of a termination due to a Vendor Event of
-----
Default, the Owner will be entitled to the costs in connection with finishing
the Work (exclusive of any Liquidated Damages already paid and/or owing to the
Owner upon termination of this Contract), and if such costs exceed the unpaid
balance of the Contract Price, the Vendor will be liable to pay such excess to
the Owner. The amount to be paid by the Vendor pursuant to this subsection 24.6
will survive termination of this Contract and will be subject to the limitations
of liability in this Contract.
24.7 Continuing Obligations. Termination of this Contract for any reason
----------------------
(i) will not relieve either Party of its obligations with respect to the
confidentiality of the Proprietary Information as set forth in subsection 27.19,
(ii) will not relieve either Party of any obligation which applies to it and
which expressly or by implication survives termination, and (iii) except as
otherwise provided in any provision of this Contract expressly limiting the
liability of either Party, will not relieve either Party of any obligations or
liabilities for loss or damage
89
to the other Party arising out of or caused by acts or omissions of such Party
prior to the effectiveness of such termination or arising out of its obligations
as to portions of the Work already performed or of obligations assumed by the
Vendor prior to the date of such termination.
24.8 Vendor's Right to Terminate. The Vendor will have the option to
---------------------------
terminate this Contract without any penalty or payment obligations, other than
undisputed payment obligations outstanding as of the date of any such
termination pursuant to the terms of this Contract if:
(a) the Owner (i) files a voluntary petition in bankruptcy or has an
involuntary petition in bankruptcy filed against it that is not dismissed within
forty-five (45) days of such involuntary filing, (ii) admits the material
allegations of any petition in bankruptcy filed against it, (iii) is adjudged
bankrupt, or (iv) makes a general assignment for the benefit of its creditors,
or if a receiver is appointed for all or a substantial portion of its assets and
is not discharged within sixty (60) days after his appointment, and any such
filing, proceeding, adjudication or assignment as described herein above will
otherwise materially impair the Owner's ability to perform its obligations under
this Contract;
(b) the Owner commences any proceeding for relief in any court under any
state insolvency statutes;
(c) the Owner fails to make payments of undisputed amounts due to the
Vendor pursuant to the terms of this Contract which are more than sixty (60)
days overdue, provided that such failure has continued for at least thirty (30)
-------- ----
days after the Vendor has notified the Owner of its right and intent to so
terminate on account of such overdue amount;
(d) the Owner persistently and materially breaches subsection 11.1 or
subsection 27.19 notwithstanding the fact that the Vendor will have provided the
Owner with prior written notice describing the alleged material breaches and
will have given the Owner a reasonable time (not less than thirty (30) days) to
cure any such breaches; or
(e) except as otherwise provided in subsection 24.1 the Owner fails to
fulfill its Initial Commitment within five (5) years of the Effective Date for
whatever reason other than (i) any act or omission of the Vendor, (ii) failure
or inability to successfully complete Microwave Relocation in any PCS System,
(iii) failure or inability to successfully attain Site Acquisition Substantial
Completion in any given PCS System or (iv) any event otherwise constituting a
Force Majeure hereunder.
24.9 Special Termination Events. (a) In the event that financing for the
--------------------------
Owner's build-out of the initial phase of the Nationwide Network has not been
finalized with the Vendor and the Other Vendors on terms and conditions
reasonably satisfactory to the Owner, on or before one hundred and eighty (180)
days after the Effective Date, the Owner will have the right, but not the
obligation, to terminate this Contract in its entirety without charge or penalty
of any kind. In the event of a termination of this Contract pursuant to this
subsection 24.9 the Owner will remain liable for amounts due to the Vendor for
all Work performed
90
or Products delivered by the Vendor or any of its Subcontractors pursuant to the
specific terms of this Contract which had been directly delivered to or
performed for the Owner and/or any of its facilities or sites in accordance with
the terms of this Contract including, but not limited to, the Project
Milestones. Any amounts owed by the Owner for Work done or Products delivered by
the Vendor during such interim one hundred and eighty (180) day period (the
"Financing Interim Period") not otherwise invoiced to the Owner by the Vendor
prior to the termination of such Financing Interim Period, will be invoiced to
the Owner by the Vendor within thirty (30) days (but failure to so invoice will
not excuse the Owner's obligation to otherwise pay the Vendor pursuant to the
terms of this subsection 24.9(a)) of such termination pursuant to this
subsection 24.9(a) and will be payable to the extent not otherwise in dispute by
the Owner within thirty (30) days of receipt of such invoice; provided that in
-------- ----
no event will the Owner be liable to the Vendor due to a termination
of this Contract pursuant to this subsection 24.9(a) for any of the Vendor's
direct or indirect costs or expenses incurred in connection with any supplies or
equipment ordered by the Vendor or agreements entered into by the Vendor in
order to enable it to fulfill its obligations hereunder or in connection with
the establishment of and/or upgrade to its manufacturing, personnel,
engineering, administrative or other capacities and/or resources in
contemplation of or pursuant to its performance in accordance with the terms of
this Contract and any amounts due to the Vendor pursuant to this subsection
24.9(a) will be limited in all cases to Work actually done or Products or
Services actually delivered to the Owner, its sites or its facilities.
(b) If at any time after the Effective Date any material change will have
occurred in any Applicable Law or in the interpretation thereof by any
Governmental Entity, or there will be rendered any decision in any judicial or
administrative case, in either case which, in the reasonable opinion of the
Owner, would make the Owner's use of any part of any PCS System illegal or would
subject the Owner or any of its Affiliates to any material penalty, other
material liability or onerous condition or to any burdensome regulation by any
Governmental Entity or otherwise render the use of such PCS System economically
nonviable, then, with respect to such PCS System, or affected part thereof, or
with respect to the entire System if so affected, the Owner may terminate this
Contract without charge or penalty of any kind; provided that (i) the Owner
-------- ----
gives the Vendor prior written notice of any such change or decision; (ii) that
the Owner uses its reasonable efforts for a reasonable time to reverse or
ameliorate such change or decision to the extent possible or practical prior to
declaring such termination and (iii) the Owner, at the Vendor's request, gives
the Vendor a legal opinion from a reputable law firm with experience in the area
confirming the Owner's reasonable opinion as set forth above. In the event of a
termination pursuant to this subsection 24.9(b), payment obligations incurred by
the Owner for Work actually done or Products or Services actually delivered by
the Vendor prior to such termination pursuant to this Contract will be payable
by the Owner to the Vendor on the same terms and subject to the limitations set
forth in subsection 24.9(a) above.
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SECTION 25 SUSPENSION
25.1 Owner's Right to Suspend Work. The Owner may, at any time and upon
-----------------------------
reasonable notice to the Vendor, order the Vendor, in writing, to suspend all or
any part of the Work for such reasonable period of time as the Owner may
reasonably determine to be appropriate for its convenience. Any request by the
Vendor for a change in the Specifications caused by the Owner's suspension of
the Work pursuant to this subsection 25.1 will be subject to the review and
reasonable acceptance of the Owner. No modification to the Specifications will
be made to the extent that performance is, was or would have been suspended,
delayed or interrupted for any other cause due to the Vendor's fault or if the
suspension had no effect on agreed upon performance deadlines and/or Project
Milestones set forth in this Contract. In the event of any such suspension, the
Vendor will be compensated for any actual and reasonable loss, actual and
reasonable damages or actual and reasonable expenses arising directly from such
delay, including but not limited to payments contractually required under any
Subcontractor agreements and reimbursement of reasonable expenses associated
with the necessary re-deployment of the Vendor's resources; provided that the
-------- ----
Vendor will in such event use reasonable efforts to estimate and report to the
Owner any such costs or expenses prior to the commencement of any such Owner
suspension pursuant to this subsection 25.1.
SECTION 26 MOST FAVORED CUSTOMER
26.1 Most Favored Customer Status. (a) With respect to the deployment of
----------------------------
the Initial System (including any Expansions or additions to the Initial System
within the context of the Initial System pursuant to the terms of this
Contract), the Owner will be deemed one of the Vendor's most important and
favored Customers and will always receive priority in terms of availability and
quantity of Products, Engineering and Services no less favorable than any other
Customer of the Vendor and in any event always in accordance with the terms of
this Contract, including, but not limited to, Exhibit A2. At any time during the
Term, the Owner will receive PCS Products, Engineering and Services at prices
and on payment terms and all other contract terms, including financing terms, no
less favorable to the Owner (when viewed collectively) than those offered or
available to any other Customer (other than Initial Affiliates and/or Additional
Affiliates pursuant to the terms of this Contract) of the Vendor for use of such
Items within the Unites States who are involved in transactions and/or
arrangements of similar or lesser volumes (for the purposes hereof, the Owner's
volume will always be deemed to be at least the level of the Initial Commitment
plus any more PCS Products, Services and/or Engineering ordered at such time
- - ----
during the Term of this Contract.)
(b) On an annual basis throughout the Term of this Contract commencing on
the Effective Date the Vendor will be required to audit its offering of all CDMA
PCS Products, engineering and services provided to the then-existing ten (10)
largest of its Customers (other than Initial Affiliates and/or Additional
Affiliates pursuant to the terms of this Contract) (based on volume purchased or
to be purchased) in the preceding calendar year and certify to the Owner in a
certificate executed by a duly authorized officer of the Vendor (the "MFC
Certificate") that the Owner has in fact received the prices, payment and other
contract terms,
92
availability and quantity of and on Products, Engineering and Services in
accordance with the terms of clause (a) above.
(c) To the extent the Owner determines pursuant to clause (b) above, or
otherwise, that the Vendor has not in fact complied with the terms of clause (a)
above the Owner will have thirty (30) Business Days from receipt of the MFC
Certificate to provide the Vendor with a written claim for Product and/or
Engineering and/or Service pricing rebates on future purchases under this
Contract based upon the Owner's reasonable calculation of the impact on the
Owner of the Vendor's failure to comply with clause (a) of this subsection 26.1.
The Owner's written claim will specify the reasoning underlying its claim. To
the extent the Vendor disagrees with any such claim for such pricing rebates
made by the Owner pursuant to this clause (c) the Vendor will have the right
within ten (10) Business Days of receiving the Owner's written rebate claim to
request management escalation of the matter as provided in subsection 23.1. In
the event that the Parties have not resolved the matter within ten (10) Business
Days after commencement of such escalation, either Party will have the right to
submit the Owner's claim and the Vendor's written response thereto to an
Independent Auditor who will have the authority only to determine whether the
Vendor is in non-compliance with the terms of clause (a) above and whether the
Owner's calculation of the claimed pricing rebate is fair and reasonable in
light of the Vendor's non-compliance with the terms of clause (a) above. Any
such independent determination will be made upon specific procedures and a set
of factors mutually agreed by the Parties. The Vendor will provide to the
Independent Auditor records and summaries of its agreements with such ten (10)
largest Customers pursuant to and in accordance with the terms of this
subsection 26.1. The Independent Auditor's determination must be made and
delivered to both the Vendor and the Owner within ten (10) Business Days of
receiving the request from the Vendor. The report of the Independent Auditor
will not be determinative of the Owner's right to pricing rebates under this
clause, and any dispute between the Vendor and the Owner as to such matter after
the Independent Auditor has rendered its opinion may be referred to arbitration
as provided in subsection 23.2; provided that the report of such Independent
-------- ----
Auditor will be admissible as evidence in any such arbitration. The Party
requesting a determination by an Independent Auditor will bear the cost of the
auditor, provided that, if the other Party's position is not supported by the
-------- ----
Independent Auditor, such other Party will bear any such cost.
SECTION 27 MISCELLANEOUS
27.1 Amendments. The terms and conditions of this Contract, including the
----------
provisions of Exhibits and Schedules hereto, may only be amended by mutually
agreed contract amendments. Each amendment must be in writing and will identify
the provisions to be changed and the changes to be made. Contract amendments
must be signed by duly authorized representatives of each of the Vendor and the
Owner.
27.2 Owner Liabilities. The Parties understand and agree that none of the
-----------------
Partners, nor any of their Affiliates, will guarantee or otherwise be in any way
liable with respect to any obligations or liabilities of the Owner or any of its
subsidiaries pursuant to this Contract. The Parties further understand and
agree that neither the Owner nor any of its subsidiaries
93
will guarantee or otherwise be in any way liable for any obligations or
liabilities of any of the Partners or any Affiliate of the Owner pursuant to
this Contract unless, and only to the extent, (i) the Owner or any one of its
subsidiaries in accordance with the Owner's direction expressly agrees in
writing to guarantee or otherwise be liable for such liability, or (ii) in the
case of an Affiliate, such Affiliate orders Products and/or Services through the
Owner pursuant to the terms of this Contact.
27.3 Offset. The Vendor hereby waives any right of offset of amounts owed
------
by the Owner to the Vendor pursuant to the terms of this Contract.
27.4 Assignment. Except as otherwise permitted herein, neither this
----------
Contract nor any portion hereof may be assigned by either Party without the
express prior written consent of the other Party provided that such consent will
-------- ----
not otherwise be unreasonably withheld (provided further that the Owner's
-------- ------- ----
reasonable concern about an assignee's ability to perform the obligations and/or
the Work of the Vendor pursuant to and in accordance with the terms of this
Contract will be deemed to be reasonable grounds for the Owner withholding any
such consent). The Owner may, without the consent of the Vendor, collaterally
assign its rights hereunder (including, but not limited to, all licenses with
respect to the Software) to any or all parties providing financing for any part
of the Nationwide Network under a collateral trust for the benefit of the Vendor
and one or more other entities providing financing for any part of the
Nationwide Network or similar arrangement for the benefit of the Vendor and one
or more other entities providing for the financing for any part of the
Nationwide Network, in either case, which collateral trust or similar
arrangement, as the case may be, is reasonably acceptable to the Vendor in
accordance with the terms of the financing documents. If requested by the
Owner, the Vendor will within seven (7) days of such request provide a written
consent to any such assignment; provided that such consent will permit
-------- ----
reassignment if the financing parties exercise their remedies under the
documents for such financing subject to reasonable standards as to (i) the
creditworthiness of the assignee and (ii) the fact that the assignee is not at
such time a competitor of the Vendor. The foregoing rights and obligations are
in addition to those set forth in subsection 27.21. Any attempted assignment in
violation of the terms of this Contract will be null and void.
27.5 Enforcement. The Parties agree that either Party may enforce the
-----------
provisions of subsections 11.4 and 27.4 regarding assignment by an action for
injunction or other equitable remedies.
27.6 Notices. Any notice, request, consent, waiver or other communication
-------
required or permitted hereunder will be effective only if it is in writing and
personally delivered by hand or by overnight courier or sent by certified or
registered mail, postage prepaid, return receipt requested, addressed as
follows:
94
If to the Owner:
MajorCo L.P.
c/o Sprint Telecommunications Venture
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Director, Program Management
If to the Vendor:
AT&T Corp.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇▇▇
With a copy to;
AT&T Network Systems
Law Department
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Written notice given pursuant to this subsection 27.6 will be delivered in
accordance with this subsection 27.6 in writing and when so delivered will be
deemed to have been fully served and delivered. By written notice provided
pursuant to this subsection 27.6, either Party may change its designated
addressee for purposes of giving notices under this Contract.
27.7 Governing Law and Forums. This Contract is governed by the laws and
------------------------
statutes of the State of Missouri, exclusive of Missouri's conflict of laws
rules. This Contract and the Work will be deemed to be made, executed and
performed in the State of Missouri. If one Party commences a lawsuit in
relation to this Contract against the other Party, such lawsuit can only be
brought in the State of Missouri. The Parties hereby waive a trial by jury in
any such lawsuit. The Vendor and the Owner each hereby irrevocably (a) agrees
that any suit, action or other legal proceeding arising out of or relating to
this Contract will be brought in the Federal District Court for the Western
District of Missouri, or in the Federal District Court for the District of
Delaware, which courts will have exclusive jurisdiction over any controversy
arising out of this Contract, (b) consents to the jurisdiction of such courts in
any such suit, action or proceeding and (c) waives any objection which it may
have to the laying of venue of any such suit, action or proceeding in such
courts and claim that any such suit, action or proceeding has been brought in an
inconvenient forum. Service of process in any suit, action or proceeding may be
made by mailing or delivering a copy of such process to the Owner or the Vendor,
as the case may be, at the addresses indicated in subsection 27.6 hereof and in
the manner set forth in such subsection 27.6. Nothing in this subsection 27.7
95
will affect the right of the Owner or the Vendor to serve legal process in any
other manner permitted by law.
27.8 Compliance with Law. The Owner and the Vendor will (a) comply with
-------------------
all Applicable Laws in the performance of this Contract, including, without
limitation, the laws and regulations of the United States Department of Commerce
and State Department and any other applicable agency or department of the United
States regarding the import, re-import, export or re-export of products or
technology; and (b) indemnify each other for any loss, liability or expense
incurred as the result of breach of this subsection 27.8.
27.9 Independent Contractor. All work performed by any Party under this
----------------------
Contract will be performed as an independent contractor and not as an agent of
the other and no Persons furnished by the performing Party will be considered
the employees or agents of the other. The performing Party will be responsible
for its employees' compliance with all laws, rules, and regulations while
performing all work under this Contract.
27.10 Headings. The headings given to the Sections and subsections herein
--------
are inserted only for convenience and are in no way to be construed as part of
this Contract or as a limitation of the scope of the particular Section or
subsection to which the title refers.
27.11 Severability. Whenever possible, each provision of this Contract
------------
will be interpreted in such a manner as to be effective and valid under such
applicable law, but, if any provision of this Contract will be held to be
prohibited or invalid in any jurisdiction, the remaining provisions of this
Contract will remain in full force and effect and such prohibited or invalid
provision will remain in effect in any jurisdiction in which it is not
prohibited or invalid.
27.12 Waiver. Unless otherwise specifically provided by the terms of this
------
Contract, no delay or failure to exercise a right resulting from any breach of
this Contract will impair such right or will be construed to be a waiver
thereof, but such right may be exercised from time to time as may be deemed
expedient. If any representation, warranty or covenant contained in this
Contract is breached by either Party and thereafter waived by the other Party,
such waiver will be limited to the particular breach so waived and not be deemed
to waive any other breach under this Contract.
27.13 Public Statements and Advertising. (a) Neither Party nor its
---------------------------------
Subcontractors will issue any public statement (or any private statement unless
required in the performance of the Work), except as stated below, relating to or
in any way disclosing any aspect of the Work, the System, or any PCS System
including the scope, the specific terms of this Contract, extent or value of the
Work and/or the System or any PCS System. Express written consent of the other
Party is required prior to the invitation of or permission to any reporter or
journalist to enter upon the System or any part thereof. The Vendor agrees not
to use for publicity purposes any photographs, drawings and/or materials
describing the System or any PCS System without obtaining the prior written
consent of the Owner, which consent will not be unreasonably withheld. This
subsection 27.13(a) is not intended to exclude the provision of necessary
information to prospective Subcontractors and the Vendor's or the Owner's
96
personnel, agents or consultants. All other such public disclosures by a Party
require the written consent of the other Party. The obligations of the Parties
under this subsection 27.13(a) are in addition to their respective obligations
pursuant to subsection 27.19. This subsection 27.13(a) will in no way limit
either Party from responding to customary press inquiries or otherwise making
public or private statements not otherwise disclosing Proprietary Information or
the specific terms of this Contract in the normal course of its business and/or
in connection with the Work hereunder.
(b) Subject to the last sentence of subsection 27.13(a), each Party will
submit to the other proposed copies of all advertising (other than public
statements or press releases) wherein the name, trademark or service ▇▇▇▇ of the
other Party or its Affiliates or affiliates is mentioned; and neither Party will
publish or use such advertising without the other Party's prior written
approval. Such approval will be granted as promptly as possible and will not be
unreasonably withheld. The Parties acknowledge that the obtaining of prior
written approval for each such use pursuant to this subsection 27.13(b) may be
an administrative burden. At the request of either Party, the Owner and the
Vendor will establish mutually acceptable guidelines that will constitute pre-
authorization for the uses specified therein. Such guidelines will be subject to
change from time to time at the reasonable request of either Party.
27.14 Records and Communications. To the extent not already established,
--------------------------
promptly after the Work begins, procedures for keeping and distributing orderly
and complete records of the Work and its progress will be established. The
procedures so established will be followed throughout the course of the Work
unless the Owner and the Vendor mutually agree in advance in writing to revise
the procedures. Furthermore, immediately after the Notice to Proceed is issued,
complete procedures for communications among the Owner and the Vendor will be
established. The procedures so established will be followed throughout the
course of the Work unless the Owner and the Vendor mutually agree in advance and
in writing to revise such procedure.
27.15 Ownership of Specifications. Neither the Vendor nor any
---------------------------
Subcontractor, nor any other Person performing or furnishing the Work, whether
or not under a direct or indirect contract with the Owner, will have or acquire
any title to or ownership rights in any of the Specifications, or in any other
part or portion of this Contract (or copies of any of the Specifications or this
Contract); and no such Person will reuse any of the Specifications on and/or
with respect to any other project without the prior written consent of the
Owner. The Specifications and this Contract (and any and all copies thereof),
are owned by and title resides in the Owner, unless otherwise agreed between the
Owner and any other Person. Notwithstanding anything contained herein to the
contrary, the Owner will not acquire any patent, copyright or trade secret
rights as a result of this Contract, except with respect to copyright and trade
secret rights pursuant to licenses and other approvals provided in connection
with the performance of the Work and except to the extent that a non-exclusive
license of any of the Vendor's copyright or trade secret rights is required to
perform the Work.
27.16 Financing Parties Requirements. The Vendor acknowledges that the
------------------------------
Owner represents that attainment of financing for construction of the Nationwide
Network may be
97
subject to conditions that are customary and appropriate for the providers of
such financing. Therefore, the Vendor agrees to execute promptly any reasonable
amendment to or modification or assignment of this Contract required by such
providers (including, without limitation, any pertinent industrial development
authority or other similar governmental agency issuing bonds for financing of
the System) which do not materially modify the scope of the Vendor's Work in
order to obtain such financing. In the event that any such amendment or
modification materially increases the Vendor's risk or costs hereunder, the
Owner and the Vendor will negotiate in good faith to adjust the Contract Price,
and to equitably adjust such other provisions of this Contract, if any, which
may be affected thereby, to the extent necessary to reflect such increased risk
or costs. In no event will the Vendor be required to accept any modification or
amendment pursuant to this subsection 27.16 which places material increased risk
on the Vendor or otherwise materially modifies the scope of the Vendor's Work,
if, in the Vendor's reasonable opinion, such materially increased risk or
material modification in the Work is not otherwise adequately addressed by the
Owner or otherwise. The Vendor will be responsible for and pay all costs as a
result of the Vendor's unreasonable refusal to promptly comply with the request
for any such modification or amendment made by any provider of financing
described in this subsection 27.16.
27.17 Owner Review, Comment and Approval. To the extent that various
----------------------------------
provisions of this Contract provide for the Owner's review, comment, inspection,
evaluation, recommendation or approval, the Owner may at its option do so in
conjunction and/or consultation with the Vendor. To the extent that this
Contract requires the Owner to submit, furnish, provide or deliver to the Vendor
any report, notice, Change Order, request or other items, the Owner may at its
option and upon written notice to the Vendor designate the Engineer to submit,
furnish, provide or deliver such items as the Owner's agent therefor. To the
extent that various provisions of this Contract provide that the Owner may
order, direct or make requests with respect to performance of the Work or is
provided access to the System sites or any other site, the Owner may at its
option and upon written notice to the Vendor authorize the Engineer to act as
the Owner's agent therefor. Upon receipt of such notice, the Vendor will be
entitled to rely upon such authorization until a superseding written notice from
the Owner is received by the Vendor.
27.18 Specifications. The Owner acknowledges that parts of the
--------------
Specifications are comprised of Specifications prepared by the Vendor and that
the Vendor contributed significantly to many other portions thereof. The Owner
also acknowledges that, during the normal design, evolution and development
process, portions of the Specifications may appear in design and procurement
documents prepared by the Vendor in its normal course of business; provided,
--------
however, that the Owner will have no liability for any third party infringement
- - -------
claims arising from such Specifications prepared by the Vendor and the Vendor
will hold the Owner harmless from any such third party claims as provided in
subsection 14.2.
27.19 Confidentiality. (a) All information, including without limitation
---------------
all oral and written information (including, but not limited to, determinations
or reports by arbitrators or the Third Party Engineer pursuant to the terms of
this Contract), disclosed to the other Party is deemed to be confidential,
restricted and proprietary to the disclosing Party (hereinafter
98
referred to as "Proprietary Information"). Each Party agrees to use the
Proprietary Information received from the other Party only for the purpose of
this Contract. Except as specified in this Contract, no other rights, and
particularly licenses, to trademarks, inventions, copyrights, patents, or any
other intellectual property rights are implied or granted under this Contract or
by the conveying of Proprietary Information between the Parties. Proprietary
Information supplied is not to be reproduced in any form except as required to
accomplish the intent of, and in accordance with the terms of, this Contract.
The receiving Party must provide the same care to avoid disclosure or
unauthorized use of Proprietary Information as it provides to protect its own
similar proprietary information but in no event will the receiving Party fail to
use reasonable care under the circumstances to avoid disclosure or unauthorized
use of Proprietary Information. All Proprietary Information must be retained by
the receiving Party in a secure place with access limited to only such of the
receiving Party's employees, subcontractors or agents who need to know such
information for purposes of this Contract and to such third parties as the
disclosing Party has consented to by prior written approval. All Proprietary
Information, unless otherwise specified in writing (i) remains the property of
the disclosing Party, (ii) must be used by the receiving Party only for the
purpose for which it was intended, and (iii) such Proprietary Information,
including all copies of such information, must be returned to the disclosing
Party or destroyed after the receiving Party's need for it has expired or upon
request of the disclosing Party, and, in any event, upon termination of this
Contract. At the request of the disclosing Party, the receiving Party will
furnish a certificate of an officer of the receiving Party certifying that
Proprietary Information not returned to disclosing Party has been destroyed.
For the purposes hereof, Proprietary Information does not include information
which:
(i) is published or is otherwise in the public domain
through no fault of the receiving Party at the time of any
claimed disclosure or unauthorized use by the receiving Party;
(ii) prior to disclosure pursuant to this Contract is
properly within the legitimate possession of the receiving Party
as evidenced by reasonable documentation to the extent
applicable;
(iii) subsequent to disclosure pursuant to this Contract
is lawfully received from a third party having rights in the
information without restriction of the third party's right to
disseminate the information and without notice of any restriction
against its further disclosure;
(iv) is independently developed by the receiving Party or
is otherwise received through parties who have not had, either
directly or indirectly, access to or knowledge of such
Proprietary Information;
(v) is transmitted to the receiving Party after the
disclosing Party has received written notice from the receiving
Party after termination or expiration of this Contract that it
does not desire to receive further Proprietary Information;
99
(vi) is obligated to be produced under order of a
court of competent jurisdiction or other similar requirement of a
Governmental Entity, so long as the Party required to disclose
the information provides the other Party with prior notice of
such order or requirement and its cooperation to the extent
reasonable in preserving its confidentiality; or
(vii) the disclosing Party agrees in writing is free of
such restrictions.
(b) Because damages may be difficult to ascertain, the Parties agree,
without limiting any other rights and remedies specified herein, an injunction
may be sought against the Party who has breached or threatened to breach this
subsection 27.19. Each Party represents and warrants that it has the right to
disclose all Proprietary Information which it has disclosed to the other Party
pursuant to this Contract, and each Party agrees to indemnify and hold harmless
the other from all claims by a third party related to the wrongful disclosure of
such third party's proprietary information. Otherwise, neither Party makes any
representation or warranty, express or implied, with respect to any Proprietary
Information.
27.20 Entirety of Contract; No Oral Change. This Contract and the
------------------------------------
Exhibits and Schedules referenced herein constitute the entire contract between
the Parties with respect to the subject matter hereof, and supersede all
proposals, oral or written, all previous negotiations, and all other
communications between the Parties with respect to the subject matter hereof.
No modifications, alterations or waivers of any provisions herein contained will
be binding on the Parties hereto unless evidenced in writing signed by duly
authorized representatives of both Parties as set forth in subsection 27.1. Any
representations by the Vendor in any RFP response and/or any documentation
otherwise provided to the Owner in connection with the Vendor's solicitation of
the business granted pursuant hereto prior to the execution hereof will also be
deemed to be incorporated into and otherwise made a part of this Contract;
provided that any such information will in no way be deemed to modify the
- - -------- ----
Specifications unless otherwise specifically mutually agreed by the Parties.
27.21 Successors and Assigns. This Contract will bind and inure to the
----------------------
benefit of the Parties to this Contract, their successors and permitted assigns.
27.22 Change of Control of the Vendor. The Vendor will not consolidate
-------------------------------
with or merge into any other Person or convey, transfer or lease all or
substantially all of its assets to any Person, nor will any Person or group (as
such term is defined in the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) own or acquire fifty percent (50%) of the value of the Vendor's
equity where such Person or group did not own as of the Effective Date in excess
of ten percent (10%) of such equity (any such Person or group will be referred
to as the "Vendor's Succeeding Entity"), unless:
(i) the Vendor's Succeeding Entity will agree to
assume the obligations of the Vendor under this Contract; and
(ii) the Owner will have approved the transaction,
based solely on (i) the creditworthiness of the Vendor's
Succeeding Entity, (ii) whether the
100
Vendor's Succeeding Entity is a competitor of the Owner and (iii)
whether in the Owner's reasonable judgment the Vendor's
Succeeding Entity will be able to fulfill the obligations for
present and future orders under this Contract.
Notwithstanding the foregoing paragraph, by provision of prior written
notice in accordance with this Contract, the Vendor will have the right, without
further consent of the Owner, to assign the Vendor's rights and delegate the
Vendor's obligations and liabilities under this Contract in whole (but not in
part), to any Person that is, or that was immediately prior to the assignment, a
current or former subsidiary, business unit, division or other affiliate of the
Vendor, provided that such entity is in fact the full successor to the Network
Systems Group (the "Successor") in connection with the transaction effecting
restructure of the Vendor and its affiliates announced on September 20, 1995
(the "AT&T Assignment"). The notice of the AT&T Assignment will state the
effective date of the AT&T Assignment. Upon the effective date of the AT&T
Assignment, the Vendor will be released and discharged from all obligations and
liabilities under this Contract provided that the Successor will have assumed
-------- ----
all obligations and liabilities under this Contract. The AT&T Assignment will
be complete and will not be altered by the termination of the affiliation
between the Vendor and the Successor.
27.23 Change of Control of the Owner. Except as otherwise permitted under
------------------------------
the documents relating to the financing of the build-out of the Nationwide
Network, the Owner will not consolidate with or merge into any other business
entity or convey, transfer or lease all or substantially all of its assets to
any Person, nor will any Person or group (as such term is defined in the
Exchange Act) own or acquire fifty percent (50%) of the value of the Owner's
limited partnership interests or general partnership interests where such Person
or group did not own as of the Effective Date in excess of ten percent (10%) of
either of such partnership interests (any such Person or group will be referred
to as the "Owner's Succeeding Entity"), unless:
(a) the Owner's Succeeding Entity will agree to assume the obligations of
the Owner under this Contract; and
(b) the Vendor will have approved the transaction, based solely on (i) the
creditworthiness of the Owner's Succeeding Entity and (ii) whether the Owner's
Succeeding Entity is a competitor of the Vendor.
27.24 Relationship of the Parties. Pursuant to subsection 27.9, nothing
---------------------------
in this Contract will be deemed to constitute either Party a partner, agent or
legal representative of the other Party, or to create any fiduciary relationship
between the Parties. The Vendor is and will remain an independent contractor in
the performance of this Contract, maintaining complete control of its personnel,
workers, Subcontractors and operations required for performance of the Work.
This Contract will not be construed to create any relationship, contractual or
otherwise, between the Owner and any Subcontractor.
101
27.25 Discretion. Notwithstanding anything contained herein to the
----------
contrary, to the extent that various provisions of this Contract call for an
exercise of discretion in making decisions or granting approvals or consents,
the Parties will be required to exercise such discretion, decision or approvals
in accordance with accepted PCS industry practices and in good faith.
27.26 Non-Recourse. No past, present or future limited or general partner
------------
in or of the Owner, no parent or other affiliate of any company comprising the
Owner, and no officer, employee, servant, executive, director, agent or
authorized representative of any of them (each, an "Operative") will be liable
by virtue of the direct or indirect ownership interest of such Operative in the
Owner for payments due under this Contract or for the performance of any
obligation, or breach of any representation or warranty made by the Owner
hereunder. The sole recourse of the Vendor for satisfaction of the obligations
of the Owner under this Contract will be against the Owner and the Owner's
assets and not against any Operative or any assets or property of any such
Operative. In the event that a default occurs in connection with such
obligations, no action will be brought against any such Operative by virtue of
its direct or indirect ownership interest in the Owner. The foregoing
provisions of this subsection 27.26 will not in any way limit or restrict any
right or remedy of the Vendor with respect to, and the Operatives will remain
fully liable for, any fraud perpetuated by such Operatives.
27.27 Improvements, Inventions and Innovations. All rights in any
----------------------------------------
improvements, inventions, and innovations made by the Owner will vest in the
Owner, and the Owner and its affiliates will have the right to exploit such
improvements, inventions, and innovations. All rights in any improvements,
inventions and innovations made by the Vendor will vest in the Vendor, and the
Vendor and its affiliates will have the right to exploit such improvements,
inventions and innovations; provided, however, that subject to and in accordance
-------- -------
with subsection 11.9 the Owner and its affiliates may be granted certain rights
to improvements, inventions or innovations made in connection with the System
pursuant to subsection 11.9 by the Vendor (but not by any Subcontractor) in the
course and as a result of performing the Work and in which the Vendor owns or
possesses any proprietary interest (provided that the immediately preceding
-------- ----
proviso of this last sentence of this subsection 27.27 is not subject to
subsection 23.2).
27.28 Attachments and Incorporations. All Schedules and Exhibits attached
------------------------------
hereto, are hereby incorporated by reference herein and made a part of this
Contract with the same force and effect as though set forth in their entirety
herein.
27.29 Conflicts. In the event of any conflict or inconsistency among the
---------
provisions of this Contract and the documents attached hereto and incorporated
herein, such conflict or inconsistency will be resolved by giving precedence to
this Contract and thereafter to the Exhibits, Schedules and Specifications.
27.30 Counterparts. This Contract may be executed by one or more of the
------------
Parties to this Contract on any number of separate counterparts, and all of said
counterparts taken together will be deemed to constitute one and the same
instrument.
102
THE OWNER AND THE VENDOR HAVE READ THIS CONTRACT INCLUDING ALL SCHEDULES
AND EXHIBITS HERETO AND AGREE TO BE BOUND BY ALL THE TERMS AND CONDITIONS HEREOF
AND THEREOF.
IN WITNESS WHEREOF, the Parties have executed this Contract as of the
date first above written.
AT&T CORP., as the Vendor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President, Network Systems
MAJORCO L.P., as the Owner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
TABLE OF CONTENTS
-----------------
Page
SECTION 1 DEFINITIONS
1.1 Definitions......................................... 1
1.2 Other Definitional Provisions....................... 21
SECTION 2 SCOPE OF WORK, RESPONSIBILITIES AND PROJECT
MILESTONES
2.1 Scope of Work....................................... 22
2.2 Additional Coverage................................. 22
2.3 Handsets............................................ 23
2.4 Initial PCS System.................................. 24
2.5 System Element Verification; Test-bed Laboratory.... 24
2.6 RF Engineering; Site Acquisition and MSC
Installation............................................ 25
2.7 Facilities Preparation Services and Installation.... 27
2.8 Site Acquisition Modifications...................... 27
2.9 Design/System Architecture and Engineering.......... 28
2.10 Certification...................................... 28
2.11 Notice of Developments............................. 28
2.11.1 Vendor Developments.............................. 28
2.11.2 Participation in Testing......................... 29
2.12 Safety............................................. 29
2.13 Emergencies........................................ 30
2.14 Right of Inspection................................ 30
2.15 Transportation..................................... 31
2.16 Security........................................... 31
2.17 Materials and Equipment............................ 31
2.18 Equipment and Data................................. 32
2.19 References to Certain Sources...................... 32
2.20 Operating Manuals.................................. 32
2.21 Maintenance and Instruction Manuals................ 32
2.22 Standards for Manuals.............................. 33
2.23 Training........................................... 33
2.24 Manuals and Training............................... 35
2.25 Spare Parts........................................ 35
2.26 System Support Services............................ 36
2.26.1 Vendor Assistance................................ 36
2.26.2 Trouble Reports.................................. 36
2.26.3 Emergency Technical Assistance ("ETA")........... 37
2.26.4 ETA and CSR...................................... 41
2.27 Supply of Additional Products...................... 41
2.28 Review of Contract................................. 42
2.29 Licenses, Permits and Approvals.................... 42
2.30 Eligibility under Applicable Laws and Applicable
Permits................................................. 42
Page
2.31 Customs Approvals.. 42
2.32 Owner Participation... 42
2.33 New Development Advisory Board 43
2.34 Market Development Manager 43
2.35 Further Assurances.... 43
2.36 Liens and Other Encumbrances 43
2.37 Forecasting and Ordering 44
2.38 Microwave Relocation; Network Interconnection 45
2.39 Vendor To Inform Itself Fully; Waiver of Defense 45
2.40 CMI/HIC 46
2.41 Site Acquisition Delay Testing 46
SECTION 3 AFFILIATES
3.1 Additional Affiliates.. 47
3.2 Agreements with Initial Affiliates 47
3.3 Agreements with Additional Affiliates 47
3.4 Affiliate Rights....... 48
SECTION 4 SUBCONTRACTORS
4.1 Subcontractors......... 48
4.2 The Vendor's Liability 48
4.3 No Effect of Inconsistent Terms in Subcontracts 48
4.4 Assignability of Subcontracts to Owner 48
4.5 Removal of Subcontractor or Subcontractor's
Personnel.................. 49
4.6 Subcontractor Insurance 49
4.7 Review and Approval not Relief of Vendor Liability 49
4.8 Vendor Warranties...... 49
4.9 Payment of Subcontractors 49
SECTION 5 TERM OF CONTRACT
5.1 Initial Term 50
5.2 Renewal 50
SECTION 6 PRICES AND PAYMENT
6.1 Prices 50
6.2 Price Reduction........ 50
6.3 Payments 51
6.3.1 Additional Products not in Initial System
or Otherwise Provided for in Section 22....
6.4 Payments for Facilities Preparation Services 52
6.5 Monthly Forecasts...... 53
6.6 No Payment in Event of Material Breach 53
6.7 Microwave Relocation Delay Partial Payments 54
6.8 In Revenue Payments.... 54
SECTION 7 ORDERS AND
SCHEDULING
Page
7.1 Initial Commitment..... 55
7.2 Change Orders.......... 55
7.3 Cancellation 55
SECTION 8 INSTALLATION
8.1 Installation 56
8.2 No Interference........ 56
SECTION 9 ACCEPTANCE TESTING
AND ACCEPTANCE
9.1 Acceptance Testing..... 56
9.2 Costs and Expenses..... 56
9.3 Notification 56
9.4 Presence at Acceptance Tests 56
9.5 Correction of Defects.. 57
9.6 Acceptance Certificate 57
SECTION 10 DISCONTINUED
PRODUCTS
10.1 Notice of Discontinuation 58
10.2 Discontinuation During Warranty Period 58
10.3 Discontinuation After Warranty Period 58
SECTION 11 SOFTWARE;
CONFIDENTIAL INFORMATION
11.1 RTU License........... 59
11.2 Owner's Obligations... 59
11.3 Backwards Compatibility 60
11.4 Transfer and Relocation 60
11.5 Survival 61
11.6 Access to Source Codes 61
11.7 Escrow Agreement...... 61
11.8 Software Maintenance.. 62
11.9 Custom Development.... 62
11.9.1 Request for Custom Material 62
11.9.2 Vendor Response 63
11.9.3 Ownership of Intellectual Property 63
SECTION 12 SOFTWARE CHANGES
12.1 Annual Release Maintenance Fees 63
12.2 Notice 63
12.3 Installation, Testing and Maintenance 63
12.4 Software Fixes........ 64
SECTION 13 EQUIPMENT CHANGES
13.1 Equipment Upgrades.... 64
13.2 Notice 66
13.3 Installation, Testing and Acceptance 66
13.4 Equipment Fixes....... 66
Page
SECTION 14 INTELLECTUAL
PROPERTY
14.1 Intellectual Property 66
14.2 Infringement.......... 66
14.3 Vendor's Obligation to Cure 67
14.4 Vendor's Obligations.. 68
14.5 License to Use Vendor Patents 68
SECTION 15 DELAY
15.1 Liquidated Damages.... 69
15.2 Interim Delay......... 69
15.3 Completion Delay...... 69
SECTION 16 FORCE MAJEURE
SECTION 17 WARRANTIES
17.1 Product Warranty...... 71
17.2 Services Warranty..... 72
17.3 System Warranty....... 72
17.4 Breach of Warranties.. 73
17.5 Repair and Return..... 75
17.6 Technical Assistance Center 77
17.7 Scope of Warranties... 77
17.8 Expenses 77
17.9 Third Party Warranties 78
17.10 Additional System Element Locations 78
17.11 EXCLUSIVE REMEDIES... 78
SECTION 18 INSURANCE
18.1 Insurance 78
SECTION 19 TAXES
19.1 Taxes 78
SECTION 20 INDEMNIFICATION
AND LIMITATION OF LIABILITY
20.1 Vendor Indemnity...... 79
20.2 LIMITATION ON LIABILITY 80
20.3 Damages for Fraud or Willful Misconduct 80
SECTION 21 REPRESENTATIONS
AND WARRANTIES
21.1 Representations and Warranties of the Vendor 80
21.1.1 Due Organization of the Vendor 80
21.1.2 Due Authorization of the Vendor; Binding
Obligation.............. 80
211.3 Non-Contravention 81
211.4 Regulatory Approvals 81
211.5 Non-Infringement 81
211.6 Scope 81
Page
21.1.7 Requisite Knowledge 81
21.1.8 Financial Capacity 81
21.2 Representations and Warranties of the Owner 81
21.2.1 Due Organization of the Owner 81
21.2.2 Due Authorization of the Owner; Binding
Obligation.............. 81
21.2.3 Non-Contravention 82
SECTION 22 TITLE AND RISK OF
LOSS
22.1 Title 82
22.2 Risk of Loss.......... 82
SECTION 23 DISPUTE RESOLUTION
23.1 Dispute Resolution.... 83
23.2 Arbitration 83
23.3 Third Party Engineer.. 84
23.4 Other Remedies........ 85
23.5 Tolling 85
SECTION 24 TERMINATION AND
EVENTS OF DEFAULT
24.1 Termination Without Cause 85
24.2 Termination for Cause. 85
24.3 Remedies 87
24.4 Discontinuance of Work 88
24.5 Payments 88
24.6 Costs
24.7 Continuing Obligations 88
24.8 Vendor's Right to Terminate 89
24.9 Special Termination Events 89
SECTION 25 SUSPENSION
25.1 Owner's Right to Suspend Work 91
SECTION 26 MOST FAVORED CUSTOMER
26.1 Most Favored Customer Status 91
SECTION 27 MISCELLANEOUS
27.1 Amendments............ 92
27.2 Owner Liabilities..... 92
27.3 Offset 93
27.4 Assignment............ 93
27.5 Enforcement........... 3
27.6 Notices 3
27.7 Governing Law and Forums 4
27.8 Compliance with Law... 5
27.9 Independent Contractor 5
27.10 Headings 5
Page
27.11 Severability...... 95
27.12 Waiver 95
27.13 Public Statements and Advertising 95
27.14 Records and Communications 96
27.15 Ownership of Specifications 96
27.16 Financing Parties Requirements 96
27.17 Owner Review, Comment and Approval 97
27.18 Specifications....... 97
27.19 Confidentiality...... 97
27.20 Entirety of Contract; No Oral Change 99
27.21 Successors and Assigns 99
27.22 Change of Control of the Vendor 99
27.23 Change of Control of the Owner 100
27.24 Relationship of the Parties 100
27.25 Discretion 101
27.26 Non-Recourse......... 101
27.27 Improvements, Inventions and Innovations 101
27.28 Attachments and Incorporations 101
27.29 Conflicts 101
27.30 Counterparts......... 101
EXHIBITS
Exhibit A1 - Project Milestones
Exhibit A2 - PCS Product Availability
Exhibit B1 - RF Design and Acceptance Process
Exhibit B2 - Acceptance Process for Completion of System Element
Facilities
Exhibit B3 - Validation and Acceptance Testing
Exhibit C - Owner Required Wireless Features and Functions
Exhibit D - System Elements
Exhibit E - Construction Management Criteria
Exhibit F - RF Performance Criteria
Exhibit G - BTS/BSC - MSC Interoperability
Exhibit H - Handsets
Exhibit I - Technology Integration Laboratory Requirements
SCHEDULES
Schedule 1 - Preliminary RF Design
Schedule 2 - Product Prices
Schedule 3 - Services Prices
Schedule 4 - Allocated System Areas
Schedule 5 - Initial Affiliates
Schedule 6 - Insurance Provisions
Schedule 7 - Products
Schedule 8 - Vendor's Repair Facilities
Schedule 9 - Form of Notice to Proceed
Schedule 10 - [Intentionally Omitted]
Schedule 11 - Order Cancellation Charges
Schedule 12A - Spare Parts Requirements
Schedule 12B - Spare Parts Prices
Schedule 13 - AT&T Foreign Subsidiaries and Affiliates
Schedule 14 - Third Party Engineers
Schedule 15 - Independent Auditors
Schedule 13
-----------
Foreign Affiliates
Each entity referred to in subsection 2.2 (c) is the Vendor's primary
subsidiary offering PCS Products and Services in the country or territory
involved on the Effective Date, or its successor. As of the Effective Date,
these entities are for Canada, AT&T Canada Inc., and for Mexico, AT&T de Mexico
--------------
SA de CV. This list includes any other foreign or other Vendor affiliate
- - --------
otherwise designated.
Schedules 2 and 3
-----------------
[ ]
SCHEDULE 4
Allocated System Areas
----------------------
(AT&T)
City
----
San Francisco
New York
Boston
Portland
Seattle
Pittsburgh
Phoenix
Philadelphia
Buffalo
Detroit
Milwaukee
Denver
Salt Lake
Spokane
including maps of the aforementioned MTAs
Attached are the Owner's System Area (or MTA) coverage definition maps.
Legend
The highways shown in green are only those highways with an average
daily traffic count of greater than 10,000 vehicles. The darker green
represents an average daily traffic count of greater than 50,000 vehicles.
The census tracts of the System Areas were combined and ranked by demand
density in erlangs (wireless talk time traffic) per square mile for year 10,
based on busy hour (peak daily demand hour) minutes of use estimates. Those
tracts which fall within the top 70% of the population total a national level
are displayed in red. Those tracts which fall within the next 10% of the total
population (70 to 80% at the national level) are displayed in pink.
Initial System Coverage
For contiguous Initial System coverage, the Contract's requirement is to
cover all of the red, pink and green areas within the blue "Arbitron Radio
Market" boundaries. This represents 60% covered population at the national
level for the Initial System.
Schedule 5
----------
INITIAL AFFILIATES
1. Each of the Partners and their operating subsidiaries.
2. APC and its operating subsidiaries.
3. PhillieCo and its operating subsidiaries.
4. Continental and its operating subsidiaries.
5. TCG and its operating subsidiaries.
6. NewTelCo. and its operating subsidiaries.
Schedule 11
-----------
Without charge and/or penalty, the Owner may cancel any Order for Products no
later than ninety (90) days prior to the earliest date scheduled for shipment of
such Product; or
If the Owner cancels an Order less than ninety (90) days prior to the earliest
date scheduled for shipment of such Product, the Owner will pay to the Vendor a
cancellation charge of ten percent (10%) of the price for such Product as
determined pursuant to the Contract; or
If the Owner cancels an Order less than sixty (60) days prior to the earliest
date scheduled for shipment of such Product, the Owner will pay to the Vendor a
cancellation charge of fifteen percent (15%) of the price for such Product as
determined pursuant to the Contract; or
If the Owner cancels an Order less than thirty (30) days prior to the earliest
date scheduled for shipment of such Product, the Owner will pay to the Vendor a
cancellation charge of twenty percent (20%) of the price for such Product as
determined pursuant to the Contract.
The Owner may not cancel an Order after the applicable date scheduled for
shipment of such Product. The payment of such charges will be the Vendor's sole
remedy and the Owner's sole obligation for such canceled Order. Any changes
requested by the Owner that involve the return or exchange of Non-Essential
Equipment will be subject to the standard policies of the applicable Non-
Essential Equipment supplier unless such policies are otherwise set out in the
applicable agreement between such Non-essential Equipment supplier and the
Vendor, in which case the Owner will be entitled to cancel any such Order for
Non-essential Equipment in accordance with the terms of such agreement. For the
purposes of this Schedule 11, the term "Order" will not include the Minimum
Commitment or the Initial Commitment.
Nothing herein will be deemed to bar the Vendor's right to invoice the Owner for
all Services actually performed prior to the date of such performance by the
Vendor in respect of such Products in accordance with the provisions of this
Contract.