LUCENT TECHNOLOGIES / CD RADIO
RECEIVER INTEGRATED CIRCUITS AGREEMENT*
THIS AGREEMENT is made by and between Lucent Technologies Inc., a Delaware
corporation, acting through its Microelectronics Group, having an office at ▇▇▇
▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("Lucent") and CD Radio, Inc., a
Delaware corporation, having its principal place of business at ▇▇▇▇ ▇ ▇▇▇▇▇▇
▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ("CD Radio"). The effective date of this Agreement is
the later of the dates of execution by the respective parties, as set forth
below herein.
IN CONSIDERATION OF the mutual covenants set forth hereinbelow, the parties
agree to the following terms and conditions:
PART 1: BUSINESS TERMS
1 BACKGROUND
This is an agreement between the Microelectronics Group of Lucent Technologies
Inc. ("Lucent") and CD Radio Inc. ("CD Radio") to develop a systems engineering
specification for the communications link of a Satellite Digital Audio Radio
Service (S-DARS), and a specification for a set of integrated circuits ("ICs")
for such a receiver ("chip set"). Upon the mutual acceptance of the chip set
specification by CD Radio and Lucent, Lucent would then fabricate and deliver a
prototype of the proposed receiver to verify the communications link performance
and thereafter design and manufacture first prototypes and then production chip
sets. The foregoing development plan is based upon Lucent's current
understanding of CD Radio's needs. It is Lucent's understanding that the
objective of the project is to develop a chip set for a low cost, addressable
satellite receiver for CD Radio's broadcasts. The details given herein are a
baseline, with further details to evolve as the project proceeds.
2 THREE PROJECT PHASES
The Lucent part of the project will be completed in three phases:
1. authorship and delivery of a systems engineering document and the development
of a chip set specification;
2. fabrication and delivery of a prototype receiver using existing components
from one or more integrated circuit ("IC") vendors; and
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* This agreement is subject to a confidential treatment request. The
confidential portions have been omitted from this Form 10-Q and have been
replaced by asterisks (*). The confidential portions have been filed
separately with the Commission as provided pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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3. the design, layout, fabrication, and delivery of prototype ICs and, after
approval by CD Radio, production devices for use in the consumer electronics
original equipment manufacturer's ("CE-OEM's") prototypes and production units.1
Lucent's IC development would facilitate the implementation by CD Radio of four
potential products:
(a) A radio including S-DARS capability for installed car sound systems. The
antenna unit would be hard-wired to the rest of the receiver;
(b) A "Plug 'n' Play" ("PnP") adapter for a subscriber's tape cassette car sound
system; and
(c) A PnP adapter for a subscriber's compact disk ("CD") car sound system.
(d) *
Bringing these products to market requires a division of labor between Lucent,
CD Radio, and the CE-OEM. This agreement gives the roles and responsibilities of
each.
In large measure, the chip sets for all four potential products are congruent
and can be pursued in parallel. However, the products identified in subsections
(b), (c) and (d) above require some extra effort in a few areas.
3 STATEMENT OF WORK
3.1 PHASE 1 - SYSTEMS ENGINEERING
The first task of Phase 1 shall be for Lucent and CD Radio to define and agree
on an overall system level specification.
The deliverables from the systems engineering phase are the communications link
systems engineering document, chip set specification, a non-exclusive software
license for a link simulator (runs slower than real time on a software platform
such as SIMULINK), a link emulator (runs in real time on technical DSP hardware
such as SPACE), and applicable documentation.
The documents, simulator, and emulator can be considered a prototype of a
portion of the earth station transmitter. This will enable CD Radio's
studio/earth station contractor to build a mission-critical version of the
encoder that will connect both a) digital audio feeds from the studios/content
providers and b) receiver command and control output from CD Radio's customer
center to c) the satellite up-link transmitter.
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1/ There may be more than one CE-OEM. For the sake of brevity, in this Agreement
we will take CE-OEM to mean "consumer electronics original equipment
manufacturer(s)".
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Note that the Lucent systems engineering work will not cover satellite tracking,
telemetry and control, nor the studios, nor the design and positioning of
terrestrial repeaters, nor the generation of receiver commands for activation,
billing, and deactivation of subscriber's accounts at CD Radio's customer
center.
At a minimum, the emulator will provide a baseband to baseband emulation. The
extent to which actual RF up-link and space hardware can be incorporated into
the emulator will depend on the level of cooperation provided by CD Radio's
transmitter and satellite manufacturers.
CD Radio shall test, review, and approve the work in Phase 1. After such review
and approval, Lucent shall not be responsible in the case that the
communications link does not meet CD Radio's need. Upon completion of Phase 1
Lucent will provide a quotation on chip set NRE and schedule and preliminary
quotation of unit price.
3.2 PHASE 2 - PROTOTYPE RECEIVER
To verify the systems engineering concepts, a prototype receiver will be built.
Lucent will obtain and assemble existing parts from one or more component
vendors. The prototype receiver will enable early verification of the air
interface specification and receiver design, but may contain parts that are
higher in cost/power/size than the chip sets in a production receiver. Lucent
will make the prototype receiver available to a CE-OEM for engineering into a
product at CD Radio's request. Making the prototype receiver into a product may
require the CE-OEM to modify the design to lower the implementation cost and/or
size and/or power. In such a case, Lucent agrees to grant a royalty-bearing,
non-exclusive license, on commercially reasonable terms, to CD Radio and/or the
CE-OEM under any issued patent owned by Lucent (to the extent Lucent has a right
to grant such license) which is infringed by such design. No further payment by
CD Radio is necessary if such patent rights are already exhausted in the sale by
Lucent to CD Radio and/or the CE-OEM of a Lucent integrated circuit. Such a
patent license will be limited to the specific field of use in which the Lucent
integrated circuits are intended to be used, namely CD Radio's satellite digital
audio broadcasting service and its associated terrestrial repeaters.
Specifically, the license will forbid the use of such patents in the field of
wholly terrestrial broadcasting.
CD Radio and its CE-OEM shall test, review, and approve the work in Phase 2.
After such review and approval, Lucent shall not be responsible in the case that
the communications link does not meet CD Radio's need.
After approval, the chip set design will proceed to Phase 3, as detailed below.
3.3 PHASES 1 AND 2 - PAYMENT SCHEDULE
Lucent will perform these two phases and charge CD Radio quarterly on a time and
materials basis. CD Radio approves a charge for such time and materials up a
maximum of $1,300,000, payable to Lucent:
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On signing of this Agreement *;
On completion of Phase 1 *; and
On completion of Phase 2 *.
Any funds not charged shall be refunded to CD Radio at the conclusion of Phase
2. If completion of Phases 1 and 2 exceeds this budget, Lucent will seek further
approval from CD Radio. Such approval shall be sought as soon as Lucent becomes
aware of any need for additional funds.
3.4 IC DEVELOPMENT AND PROTOTYPE PRODUCTION
The development work for Phase 3 will be performed by Lucent and charged to CD
Radio quarterly on a time and materials basis. The below stated fees are for the
design and development of the integrated circuit chip set and for 1,000
pre-production chip sets. These preliminary target design and development fees
are based on our current understanding of the project. They may change once
Phases 1 and 2 are completed.
Non-recurring engineering fees due total $8,000,000, triggered by pre-production
milestones detailed below. The fee cover both the engineering work and 1000
pre-production chip sets.
MILESTONE PAYMENT DUE
-------------------------------------------------------------------------
Go Ahead for Phase 3 *
Design Inspection 1 *
Design Inspection 2 *
Firmware Sign-off *
Prototype ICs *
Deliver 1000 pre-production chip sets *
TOTAL NRE FEES $8,000,000
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Any funds not charged shall be refunded to CD Radio at the conclusion of each
milestone. If completion of Phase 3 exceeds this budget, Lucent will seek
further approval from CD Radio. Such approval shall be sought as soon as Lucent
becomes aware of any need for additional funds.
3.5 DESIGN HAND-OFF REQUIREMENTS
CD Radio shall review Phase 3 of the project at Design Inspection 1, Design
Inspection 2, and Firmware Sign-off meetings. Review and approval by CD Radio at
these three points plus signature of the post-layout mask sign off sheet
(including prototype IC acceptance criteria) shall constitute the Design
Hand-Off Requirements mentioned below in Part 3 of this Agreement.
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3.6 PRODUCTION IC PRICING
Definitive production IC pricing is unknown at this time. However, Lucent
believes it is commercially reasonable to achieve CD Radio's objective of not
more than a $50 selling price per chip set, based on the information available
today. At or before the completion of Phase 2, Lucent and CD Radio will
establish a definitive pricing plan for commercially produced quantities of the
chip set, based on the method outlined in Part 3, Section 12. Based on the
outcome of this pricing plan, the period of exclusivity outlined in Section 6.0
will be determined.
CD Radio intends to use the jointly owned chip specification to seek competitive
bids on the chip set and to use any responses for the purposes of comparison
with the price based on the method outlined in Part 3, Section 12.
4 ENGINEERING RISK
Lucent shall not be held liable by CD Radio or its subsidiaries, affiliates, OEM
suppliers, subcontractors and customers, nor by any of their officers,
shareholders, employees, representatives, agents, attorneys and any other such
persons if the engineering objectives involved in this project are not met, so
long as Lucent's engineering work has been performed in a professional manner in
accordance with generally understood industry standards.
5 SCHEDULE
A chip development project would normally commence after Phases 1 and 2 are
complete, namely after Feb 28th, 1999. In previous projects such an effort takes
between * and * months to deliver IC prototypes, depending on complexity and how
well matched the project is to existing Lucent macrocells. Assuming * months is
realistic, this means that IC prototypes would be available *.
In this case, given the need of CD Radio to meet its service launch date of Dec
1st, 1999, Lucent will attempt an accelerated schedule, where several methods
are explored to make receivers available earlier than would normally be the
case.
The methods, to be explored in parallel, are:
1) Assess the practicality of the CE-OEM making the receiver prototype developed
in Phase 2 into a product for a Dec 1st, 1999 service launch.
2) Accelerate Phases 1 and 2 to complete them by Jun 15th 1998 and Jan 15th
1999, respectively.
3) ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇ to 10 months from 15 months
4) Commence some Phase 3 tasks in parallel with Phases 1 and 2. This shortens
the part of the chip set development that occurs after completion of Phases 1
and 2. The part of Phase 3 that has to occur after Phases 1 and 2 is a minimum
of 8 months.
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If all four methods are successful, CD Radio would have receivers based on the
Phase 2 prototypes for its Dec 1st, 1999 service launch, and prototype ICs for a
low cost Phase 3 receiver delivered to the CE-OEM for system integration Sep
15th, 1999. However, no assurances can be given by Lucent that these methods
will be successful in meeting these dates.
6 ONE WAY EXCLUSIVITY AND GUARANTEED MINIMUM PURCHASE
CD Radio and its CE-OEM shall make Lucent their exclusive supplier of CD Radio's
S-DARS receiver chip sets, for a limited period, as described below.
Nothing in this Agreement prevents Lucent from supplying the same or similar
chips incorporating any of CD Radio's IPRs to any other of its present or future
customers, including but not limited to CD Radio's competitor(s), so long as
such customers have a license agreement with CD Radio and any applicable royalty
is paid to CD Radio (as discussed under Intellectual Property below). Use of
existing CD Radio IPR by Lucent in serving non-CD Radio customers in the S-DARS
application area is contingent on CD Radio deciding to license any such IPR as
may be used in such ICs. Use of existing CD Radio IPR by Lucent in serving the
designated CE-OEM is hereby granted royalty free during the exclusivity period
described below. Use of existing CD Radio IPR by Lucent in serving any CD Radio
customers after the exclusivity period has ended is hereby granted royalty free.
The exclusivity arrangement shall be defined by the table below. The pricing in
the table does not constitute a quote. The start date shall be the date CD Radio
commences commercial operations, specifically, the date that the 1,000th
receiver built from the production chip sets is sold.
Initial Production Exclusivity period
Unit Selling Price (months)
* *
* *
* *
* *
* *
* *
CD Radio may cancel the exclusivity arrangement if Lucent fails to deliver to
orders prototype ICs within fifteen (15) months from the date of the go ahead
payment for Phase 3.
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Thereafter, CD Radio may cancel any exclusivity remaining if Lucent fails to
deliver on orders a minimum of one (1) million production chip sets during the
twelve (12) months following the start date, with a minimum of 75,000 in any
given month.
Thereafter, CD Radio may cancel any exclusivity remaining if Lucent fails to
deliver on orders a minimum of 450,000 chip sets in any given month.
Notwithstanding the above three (3) paragraphs, CD Radio shall not have the
right to cancel the exclusivity arrangement if Lucent halts delivery due to
non-payment of Lucent invoices for previously delivered services or products
relating to this project. Furthermore, the purchase orders shall be placed with
due consideration for Lucent's fabrication logistics and manufacturing lead time
as agreed prior to the commencement of Phase 3.
If CD Radio or the CE-OEM does not order and pay for a minimum of 1,000,000
delivered chip sets within the exclusivity period, CD Radio will compensate
Lucent in the amount of $2,000,000 minus $2 per chip set actually ordered,
delivered and paid for.
7 TERMINATION FOR CONVENIENCE
Either party may terminate this Agreement without cause upon six (6) months
written notice to the other party. Upon termination of this Agreement without
cause, neither party shall be liable to the other, either for compensation or
for damages of any kind or character whatsoever, whether on account of the loss
by Lucent or CD Radio of present or prospective profits on sales or anticipated
sales, or expenditures, investments or commitments made in connection therewith,
or on account of any other cause or thing whatsoever, except that termination
shall not prejudice or otherwise affect the rights or liabilities of the parties
with respect to any indebtedness then owing by either party to the other.
8 CONSUMER ELECTRONICS ORIGINAL EQUIPMENT MANUFACTURER (CE-OEM)
CD Radio shall delegate to the CE-OEM the following roles and responsibilities:
o printed circuit board design;
o specification, procurement and integration of:
o discrete active components, such as transistors, diodes, varactors, light
emitting diodes etc.;
o passive components such as resistors, capacitors, inductors, filters,
crystal oscillators etc.;
o keypad and display;
o antennae;
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o commodity ICs such as memories, CD transmitter, FM transmitter, and power
ICs; and
o power supply and power supply management including any solar cells,
batteries, battery management, capstan generators, smoothing and
voltage regulation;
o field testing in a variety of vehicles and under a variety of conditions;
o mechanical engineering;
o electromagnetic interference and compatibility, and shielding;
o audio coupling to a tape head, or FM band transmitter, signal generator for
input to a subscriber's CD car sound system;
o making the product suitable for use by the majority of consumers, including:
o user interface hardware and firmware;
o ease of installation, set up and use; and
o consumer information booklet;
o micro-controller unit (MCU) and digital signal processor (DSP) firmware
development and integration;
o packaging, marketing and selling of receivers; and
o handling of receivers returned by consumers, if any.
o CD Radio shall oversee the CE-OEM and monitor its performance.
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PART 2: TERMS AND CONDITIONS APPLYING TO PHASES ONE AND TWO PURSUANT TO THIS
AGREEMENT
1 BINDING EFFECT
This Agreement is comprised of Parts 1, 2, and 3. The terms set forth in Parts 1
and 2 shall govern Phases 1 and 2, while the terms set forth in Parts 1 and 3
(as Part 3 may be amended by the parties before initiation of Phase 3) shall
govern Phase 3, if Phase 3 is initiated by CD Radio in its sole discretion. In
either case, Part 1 is incorporated by reference and the terms set forth in Part
1 shall prevail in the event of any conflict.
2 CONFIDENTIALITY
2.1 All information furnished or disclosed by one disclosing party to
the other receiving party which is marked with a restrictive notice or otherwise
tangibly designated as proprietary (hereinafter "Information") shall be deemed
the property of the disclosing party and shall be returned to the disclosing
party upon request. Unless such Information: (a) was previously known to the
receiving party free of any obligation to keep it confidential, or (b) has been
or is subsequently made public by the disclosing party or a third party under no
obligation of confidentiality, or c) is independently developed by the receiving
party, then the receiving party shall, for a period ending three (3) years after
the conclusion of this Agreement, use the same degree of care, but no less than
a reasonable standard of care, as it uses with regard to its own proprietary
information to prevent disclosure, use or publication thereof. Except as set
forth in section 2.2 below, information furnished hereunder may be used by
either party only for performance under this Agreement and may be used for other
purposes only upon such terms and conditions as may be mutually agreed upon in
writing.
2.2 Neither party shall disclose any of the terms and conditions of
this Agreement without the prior written consent of the other party.
Notwithstanding the foregoing, Lucent agrees that CD Radio may disclose a
summary of the material terms and conditions of this agreement in its reports,
registration statements and other documents required to be filed with the
Securities and Exchange Commission and as otherwise may be required by the rules
and regulations of the SEC or any other applicable regulatory agencies. To the
extent practicable, CD Radio will afford Lucent a reasonable opportunity to
review and comment on any such public disclosure prior thereto and shall
consider in good faith any proposed modification of such disclosure suggested in
writing by Lucent a reasonable period of time prior to the time public
disclosure is required to be made by CD radio. At the request of Lucent, CD
Radio will apply for confidential treatment of any portions of this Agreement
which Lucent designates as being a "trade secret" within the meaning of the
Freedom of Information Act and will diligently pursue obtaining an exemption
from any such disclosure requirements.
2.3 The parties agree that their obligations under this Section 2.0
shall survive and continue after any termination of this Agreement.
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3 OWNERSHIP OF INTELLECTUAL PROPERTY
3.1 All intellectual property developed or created prior to the
effective date of this Agreement ("Existing Intellectual Property") is and shall
remain the property of the party who made, developed or created or presently
owns such Existing Intellectual Property and, unless otherwise expressed in this
Agreement, no license is implied or granted herein to any Existing Intellectual
Property by virtue of this Agreement. The parties acknowledge and agree that, as
between them, any new intellectual property that is jointly developed or created
during Phases 1 and 2 and after the effective date of this Agreement ("New
Intellectual Property") shall be the joint property of the parties and each
party shall be free to use and exploit such jointly owned New Intellectual
Property without accounting in any way to the other party. In particular, the
systems engineering documents and the chip set specification jointly developed
under Phases 1 and 2 will be jointly owned by Lucent and CD Radio.
3.2 The IPR in the software simulator and emulator, and the prototype
receiver developed in Phases 1 and 2 will be solely owned by Lucent, but CD
Radio shall be granted a royalty-free license to use such software simulator,
emulator and prototype in the course of development of CD Radio's S-DARS.
4 TERMINATION OR CHANGE
CD Radio shall not terminate, suspend performance, reschedule or cancel any work
undertaken hereunder, in whole or in part, without Lucent's prior written
consent, which consent shall not be unreasonably withheld, and upon terms that
will compensate Lucent for any loss or damage resulting from such action.
5 LICENSES AND RIGHTS
No title or other ownership rights in any licensed products or any copies
thereof shall pass to CD Radio by virtue of any performance hereunder. CD Radio
agrees that it will not alter any notices on, prepare derivative works based on,
or reproduce, reverse engineer, disassemble or de-compile any software embodied
in licensed products or recorded in the purchased products furnished hereunder.
6 TERMS OF PAYMENT
CD Radio shall pay any amounts invoiced pursuant to the schedule and amounts set
forth in Part 1 pertaining to Phases 1 and 2 within thirty (30) days from the
date of Lucent's invoice. Delinquent payments are subject to an interest charge
at the rate of one and one-half percent (1 1/2%) per month, or portion thereof
(but not to exceed the maximum lawful rate).
7 TAXES
Any tax or related charge that Lucent shall be required to pay to or collect for
any government upon or with respect to services rendered hereunder shall be
billed to CD
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Radio as a separate item and paid by CD Radio, unless a valid exemption
certificate is furnished by CD Radio to Lucent.
8 EXPORT CONTROL
CD Radio acknowledges that technical information transmitted in connection
herewith may be subject to export restrictions under applicable law, including
the U.S. Department of Commerce Export Administration Regulations
("Regulations"), and CD Radio agrees to comply fully with same. CD Radio assures
Lucent that it will not transmit, sell, transfer or convey any products,
technical information or software, or goods produced through the use of same, to
any country, or citizen or resident of a country, other than the United States
without first securing the written consent, if required, of the U.S. Department
of Commerce.
9 LIMITATION OF LIABILITY
NOTWITHSTANDING ANY OTHER PROVISION HEREOF, EXCEPT AS MAY ARISE OUT OF
INTENTIONAL MISCONDUCT OR GROSS NEGLIGENCE, LUCENT SHALL NOT BE LIABLE FOR
INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR FOR LOST PROFITS,
SAVINGS OR REVENUES OF ANY KIND, WHETHER OR NOT LUCENT HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. THIS PROVISION SHALL SURVIVE FAILURE OF AN
EXCLUSIVE REMEDY.
10 ASSIGNMENT
Except to any entity that succeeds it as the result of a strategic merger,
acquisition, or other corporate reorganization, CD Radio shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of Lucent, which shall not be unreasonably withheld. Any such attempted
assignment without Lucent's consent shall be void and ineffective.
11 NON-WAIVER
No course of dealing or failure of either party to strictly enforce any term,
right or condition of this Agreement shall be construed as a waiver of such
term, right or condition. If these terms and conditions conflict with terms and
conditions of a purchase order or procurement document issued by CD Radio, the
terms and conditions contained herein shall govern. Lucent's acceptance of CD
Radio's order is conditioned upon CD Radio's acceptance of these terms and
conditions in writing. Lucent's failure to object to provisions contained in any
communication from CD Radio shall not be deemed a waiver of the provisions
herein.
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12 NO POWER TO BIND LUCENT TECHNOLOGIES
CD Radio specifically assures Lucent that it will not extend, directly or
indirectly, any warranty or representation in the name of Lucent or purport to
bind Lucent in any way.
13 TERMINATION FOR CAUSE
13.1 Either party may initiate termination of this Agreement for cause
by giving to the other party sixty (60) days prior written notice specifying the
reason for termination, which termination shall occur unless such reason for
termination is cured within such sixty (60) day period. A right to terminate
under this section shall arise upon the happening of any of the following
events:
13.1.1 a party becomes the subject of a bankruptcy petition
filed in a court in any jurisdiction, whether voluntary or involuntary; or
13.1.2 a receiver or a trustee is appointed for all or a
substantial portion of a party's assets; or
13.1.3 a party makes an assignment for the benefit of its
creditors; or
13.2 a party fails to perform substantially any material covenant,
obligation, representation or warranty under this Agreement including but not
limited to the timely payment of any fees or other charges specified under this
Agreement.
14 USE OF TRADEMARKS
The parties recognize each other's rights in their respective trademarks,
service marks, trade names and logos. Except as permitted by United States
trademark law and except as expressly provided herein, nothing in this Agreement
shall imply the grant by one party to the other of a license to use (i) any
trademark, service ▇▇▇▇, trade name or logo of that party or any of its
affiliates in connection with advertising, licensing, marketing or any other
use, or (ii) any trademark, service ▇▇▇▇, trade name or logo that is confusingly
similar to a name or ▇▇▇▇ used by that party or any of its affiliates.
15 FORCE MAJEURE
Except with respect to CD Radio's obligation to make timely payments when due,
neither party shall be held responsible for any delay or failure in performance
of any part of this Agreement to the extent such delay or failure is caused by
fire, flood, explosion, war, strike, embargo, government requirement, civil or
military authority, act of God, nature or the public enemy, inability to secure
material or transportation facilities, act or omission of carriers or any other
causes beyond its reasonable control.
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16 CHOICE OF LAW
The construction, interpretation and performance of this Agreement shall be
governed by the substantive laws, but not the conflicts of law, of the State of
New York. The U.N. Convention on Contracts for the International Sales of Goods
shall not apply hereto.
17 NOTICES
Unless otherwise provided, any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon: (i) personal
delivery to the party to be notified; (ii) seven (7) days after deposit in the
mail, by registered or certified mail, postage prepaid, return receipt
requested, (iii) on the day following facsimile transmission, with confirmed
transmission; or (iv) on the second day following deposit with a reputable
overnight courier service, in any case addressed to the party to be notified at
the address indicated for such party on the first page hereof, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other party.
18 PARTIAL INVALIDITY
If any paragraph, provision, or clause thereof in this Agreement shall be found
or be held to be invalid or unenforceable in any jurisdiction in which this
Agreement is being performed, the remainder of this Agreement shall be valid and
enforceable and the parties shall negotiate, in good faith, a substitute, valid
and enforceable provision which most nearly effects the parties' intent in
entering into this Agreement.
19 COUNTERPARTS
This Agreement may be executed in two or more counterparts, all of which, taken
together, shall be regarded as one and the same instrument.
20 SECTION HEADINGS
The section headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
21 RELATIONSHIP OF PARTIES
The parties to this Agreement are independent contractors. There is no
relationship of agency, partnership, joint venture, employment or franchise
between the parties. Neither party has the authority to bind the other or to
incur any obligation on its behalf.
22 DISPUTE RESOLUTION
22.1 If a dispute arises out of or relates to this Agreement, or its
breach, and if such dispute cannot be settled through good faith negotiations
within thirty (30) days, the parties agree to submit the dispute to a sole
mediator selected by the parties or, at
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any time at the option of a party, to mediation by a mediator selected by the
American Arbitration Association ("AAA"). The parties agree to make good faith
efforts to resolve disputes by mediation within thirty (30) days. If not thus
resolved, it shall be referred to a sole arbitrator selected by the parties
within thirty (30) days of the mediation, or in the absence of such selection,
to AAA arbitration which shall be governed by the United States Arbitration Act.
The mediator or arbitrator selected by the parties shall be knowledgeable in the
law and technology and the rules and regulations of the AAA. Such mediation or
arbitration shall be non-binding on the parties. In the event such dispute is
not resolved either by mediation or arbitration, then either party may initiate
suit in the federal or state courts in the State of New York.
22.2 The mediation or arbitration, if any, shall be held in New York
City. The requirement for mediation or arbitration shall not be deemed a waiver
of any right of termination under this Agreement and the mediator or arbitrator
is not empowered to act or make any award other than based solely on the rights
and obligations of the parties prior to any such termination.
22.3 The mediator or arbitrator may not limit, expand or otherwise
modify the terms of this Agreement.
22.4 Each party shall bear its own expenses but those related to the
compensation and expenses of the mediator or arbitrator shall be borne equally.
22.5 The mediator or arbitrator shall not have authority to award
punitive, exemplary or other damages in excess of compensatory damages and each
party irrevocably waives any claim thereto. The award shall be made within two
(2) months after selection of the mediator or arbitrator and may be entered in
any court.
22.6 The parties, their representatives, other participants and the
mediator and arbitrator shall hold the existence, content and result of
mediation or arbitration in confidence.
23 ENTIRE AGREEMENT
Except for any written agreement between the parties relating to confidentiality
of proprietary information, the terms and conditions contained in this Agreement
supersede all prior oral or written understandings between the parties and
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shall constitute the entire Agreement between the parties with respect to the
subject matter of this Agreement. This Agreement shall not be modified or
amended except by a writing signed by CD Radio and Lucent.
LUCENT TECHNOLOGIES INC. CD RADIO INC.
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(Signature) (Signature)
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(Name Printed) (Name Printed)
------------------------------ ------------------------------
(Title Printed) (Title Printed)
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(Date) (Date)
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PART 3: TERMS AND CONDITIONS APPLYING TO PHASE THREE PRODUCTION PURSUANT TO
THIS AGREEMENT
1 AGREEMENT
This Agreement, effective as of the date of latest execution by a party hereto
shown hereon, applies to one or more products (hereinafter "Device(s)") that are
identified in Lucent's Business Terms to which these terms and conditions are
attached and any additional Agreement that references this Agreement,
(hereinafter "Agreement"). As used herein, "Agreement" refers to these terms and
conditions and those parts of Part 1: Business Terms (the "Business Terms") that
refer to Phase 3 of the project. This Agreement, together with the Business
Terms, supersedes all prior oral or written understandings between the parties,
and constitutes the entire agreement between the parties, with respect to all
transactions relating to the subject matter of the Business Terms. In the event
of a conflict between the applicable Business Terms and these terms and
conditions, the terms and conditions of the Business Terms shall prevail.
Additional or differing terms appearing on any purchase order or other
procurement document do not apply. This Agreement may not be modified or amended
except by a writing signed by both parties.
2 CHANGE OF BUSINESS TERMS
Proposed prices, fees and charges are valid only for the parameters or other
particulars relating to the Device as stated in the Business Terms. If any
changes in such parameters or particulars become necessary, including but not
limited to revision or redefinition of the specification or variations in
quantities, functional description, package type, or testing requirements, upon
mutual agreement the parties may revise such prices by amendment to the Business
Terms. Other proposed fees and charges are valid only for the respective
particulars stated in the Business Terms. The parties may also amend the
Business Terms with respect to any of such indicated fees and charges to make
adjustments for changes in CD Radio's requirements. Any such amendments to the
Business Terms shall reference the Business Terms and shall be further
identified by their respective dates and shall be signed by both parties.
3 PROTOTYPE IC APPROVAL
Within ninety (90) days after receipt of prototype ICs for any Device covered by
this Agreement, CD Radio may return any claimed non-conforming prototype ICs to
Lucent with a written rejection statement specifying the alleged failure or
failures of the prototype ICs to meet the acceptance criteria as provided in the
mask order sign off sheet or mutually agreed modifications thereof (the
"Acceptance Criteria"). If CD Radio does not return the prototype ICs with a
written rejection statement within such ninety (90) day period, then the design
and prototype ICs shall be deemed to have been approved by CD Radio and
development work shall be deemed to have been completed by Lucent.
17
If any prototype IC does not meet the Acceptance Criteria and is rejected by CD
Radio, Lucent shall use commercially reasonable efforts to replace it with one
which does comply with the Acceptance Criteria. Lucent shall not, however, be
obligated to replace any non-complying prototype ICs of which it has not been
notified within ninety (90) days of shipment of same to CD Radio. If Lucent,
within ninety (90) days after receipt of CD Radio's timely written rejection
report, is unable to supply CD Radio with conforming prototype ICs, then either
party may by written notice to the other terminate this Agreement as to such
Device. Provided CD Radio has fulfilled all "Design Hand-Off Requirements," as
defined in the Business Terms, if so terminated, unless otherwise provided in
the Business Terms, all moneys paid by CD Radio to Lucent with respect to such
Device will be refunded in full within thirty (30) days. Such refund of moneys
shall be CD Radio's sole and exclusive remedy and Lucent's entire liability with
respect to non-conforming prototype ICs.
In the event that delivered prototype ICs comply with the Acceptance Criteria,
but do not function in CD Radio's application (e.g., logic design error, change
in required function, etc., not attributable to Lucent), CD Radio shall pay all
charges incurred for the development of the Device and then CD Radio and Lucent
may negotiate a mutually agreeable redesign schedule and price.
4 ORDERS
No order for production quantities of the Device shall be placed by CD Radio or
accepted by Lucent unless and until CD Radio has approved the prototype ICs for
the Device, paid all fees then due under the Business Terms and made any other
payments due to Lucent under any order based on this Agreement. All orders for
the design of the Device, for changes, for technical assistance, for production
quantities of the Device or for any other service by Lucent relating to this
Agreement shall be in writing, shall reference the Business Terms by its number
and date and any current amendments thereto by their respective dates, and shall
be signed by CD Radio. Lucent shall acknowledge all orders in writing.
5 RESCHEDULING OF ORDERS
CD Radio may reschedule an order pursuant to the following schedule:
Days.....Time between date of reschedule request and current factory promise
date.
DAYS RESCHEDULE
---- ----------
Within 30 days (0-30) No rescheduling
31 days to lead-time One time reschedule by up to 90 days beyond
factory promised date is permitted with no
further reschedule or cancellation.
Beyond lead-time Reschedules and cancellations without
limits.
PULL-IN WITHIN AGREED DELIVERY DATE
18
CD Radio request date ("RD") may be pulled in as desired by CD Radio.
Lucent will make reasonable efforts to meet the new RD.
If improvement of the acknowledged date is possible, a new acknowledged date
will be issued.
If improvement cannot be made, the current acknowledged date will be retained;
in all cases, the requested pull-in date will be maintained with the order
history in the event an improvement can be made at a later date.
6 CANCELLATION OF ORDERS
Should CD Radio cancel any order which has been acknowledged and a shipping date
assigned, either in whole or in part, such cancellation shall be upon terms and
conditions that will compensate Lucent for any loss or damage resulting from
such cancellation. Notwithstanding the foregoing, Lucent shall use its best
efforts to mitigate any loss or damage resulting from such cancellation. Lucent
shall not be obligated to permit a cancellation if a reschedule has been
previously negotiated at CD Radio's request.
Compensation by CD Radio for production quantities of the Device shall be
according to the following schedule:
Days.....Time between date of cancellation and current factory promise date.
Liability.....Liability is the percentage of aggregate purchase price of the
canceled portion of the order.
DAYS PERCENT OF LIABILITY
---- --------------------
0 to lead-time 100
Greater than lead-time 0
7 WARRANTY
Lucent warrants the Device as a production item ("Item"), but not related
services or prototypes of any such Items, to be free from defects in material
and workmanship and to be in conformance with the written specification
contained in the Business Terms and amendments thereto, if any, and referenced
in an order by CD Radio. With respect to prototype ICs, Lucent shall use
commercially reasonable efforts to ensure freedom from defects and conformity
with written specifications, if any. If any defect in material or workmanship or
failure to conform to such specification ("Defect") is suspected in any such
Items, CD Radio, after obtaining a Returned Material Authorization Number from
Lucent, shall ship suspected defective samples of the Items to Lucent, following
Lucent's instructions regarding the return. No product will be accepted for
repair, replacement, credit or refund without the written
19
authorization of and in accordance with Lucent's instructions, which
authorization and instructions shall not be unreasonably withheld or delayed.
Lucent shall analyze the failures, making use, when appropriate, of technical
information provided by CD Radio relating to the circumstances surrounding the
failures. Lucent will verify whether any Defect appears in the Items. If Lucent
determines that the returned products are not defective, CD Radio may seek
evaluation by a competent and disinterested third party approved by Lucent
(which approval shall not be unreasonably withheld). If such third party
determines that the returned products are not defective, CD Radio shall pay
Lucent all costs of handling, inspection, repairs and transportation at Lucent's
then prevailing rates. Lucent shall, at Lucent's option, either credit or refund
the purchase price or repair or replace the defective product with the same or
equivalent product without charge at Lucent's manufacturing or repair facility
provided: (i) CD Radio notifies Lucent in writing of the claimed Defect within
thirty (30) days after CD Radio knows or reasonably should know of the claimed
Defect and (ii) Lucent's and/or the disinterested third party's examination of
the Items discloses that the claimed Defect actually exists. In the event of a
replacement, Lucent shall ship the replacing Items FOB point of origin, freight
prepaid to CD Radio's destination. Any replaced Item shall become Lucent's
property. The method of disposition of any replaced Items will be as mutually
agreed by both parties in writing. Lucent shall not be responsible for
de-installation or reinstallation of any Item or for the expenses thereof.
Repairs and replacements covered by the above warranty are warranted to be free
from defects as set forth above. Inspection and acceptance of Items by CD Radio
and/or payment therefor shall not relieve Lucent of responsibilities hereunder.
The above warranty does not apply to, and Lucent makes no warranties with
respect to products that: are software programs (except for software programs
Lucent developed and incorporated into the Device), experimental products or
prototypes (all of which are provided "AS IS") or to Items which have been
subjected to misuse, neglect, accident or abuse or operating or environmental
conditions that materially deviate from the parameters established in applicable
specifications; or have been improperly installed, stored, maintained, repaired
or altered by anyone other than Lucent; or have had their serial numbers or
month and year of manufacture or shipment removed, defaced or altered. This
warranty does not extend to any system into which a Device is incorporated. This
warranty applies only to CD Radio and its successors and may not be assigned or
extended by CD Radio to any of its customers or other users of the Items. Lucent
will not accept returns from CD Radio's customers or users of CD Radio's
products.
EXCEPT AS STATED IN THE SECTION ENTITLED WARRANTY, LUCENT, ITS SUBSIDIARIES AND
AFFILIATES, SUBCONTRACTORS AND SUPPLIERS MAKE NO WARRANTIES, EXPRESS OR IMPLIED,
AND SPECIFICALLY DISCLAIM ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. CD RADIO'S SOLE AND EXCLUSIVE REMEDY SHALL BE LUCENT'S
OBLIGATION TO REPAIR OR REPLACE OR CREDIT OR REFUND AS SET FORTH ABOVE.
20
8 PROPRIETARY RIGHTS IN TECHNICAL INFORMATION
Unless otherwise agreed in writing, CD Radio-supplied design information
relating to the Device, as incorporated in circuit design information, test
vectors, test tapes, and special requirements specifications shall remain the
property of CD Radio. CD Radio hereby authorizes Lucent to use such information
and results solely and exclusively for the design, manufacture and sale of the
Device to CD Radio and in providing related production services. The systems
engineering documents and the chip set specification jointly developed under
Phases 1 and 2 will be jointly owned by Lucent and CD Radio. Lucent retains all
ownership rights in Lucent's processing information, mask works, mask sets,
macro cells, and the like used in design, production or in filling orders placed
by CD Radio hereunder. CD Radio has no rights in or to such processing
information, mask works, mask sets, macro cells, and the like.
If and to the extent CD Radio in its sole discretion, during the term of this
Agreement, reaches any agreement with a third party to license intellectual
property rights that are solely CD Radio's in the field of digital broadcasting,
it shall either: (a) negotiate with Lucent the grant of a non-exclusive license
to such intellectual property rights (with royalty terms dependent on the
agreement reached with the third party or parties) or (b) provide in such
third-party license (or licenses) for the grant of a sublicense (with the terms
of the sublicense to be as set forth in the third-party license or exhibit
thereto), in both cases for the purpose of permitting Lucent to make, have made,
use, lease, sell and import chip sets and receivers for the purposes of
commercializing digital broadcasting. In either case (license or sublicense),
Lucent shall be limited to supplying such Devices only to authorized CD Radio
licensees.
IPR developed by Lucent under Phase 3, as detailed herein, will be owned
exclusively by Lucent.
9 INTELLECTUAL PROPERTY INDEMNITY
Lucent will indemnify and hold harmless CD Radio from and against any claim by a
third party against CD Radio alleging that any Device furnished under this
Agreement directly infringes any patent, copyright or trademark of such third
party. Lucent shall have the obligation, at its own expense, to defend or settle
all such claims, subject to CD Radio's reasonable participation, at its own
expense, in the conduct of any such proceeding or settlement. Lucent shall
reimburse CD Radio for any costs incurred at Lucent's written request relating
to such claim and shall pay damages and costs assessed by final judgment against
CD Radio, or resulting from settlement, and attributable to such claim.
In addition, Lucent will have the right, at any time and at its option and
expense to: (i) procure for CD Radio the right to continue using such Device;
(ii) replace or modify any such Device provided or to be provided to render it
free of the infringement, while maintaining equivalent functionality and
complete compatibility
21
with CD Radio's products; or (iii) require return of such Device and refund the
purchase price.
Lucent's obligations hereunder are conditioned upon: (i) CD Radio giving Lucent
written notice within thirty (30) days of any such claim asserted against it;
(ii) Lucent having complete control of the defense and settlement thereof,
subject to CD Radio's reasonable participation and consent (in the case of
settlement or litigation decisions affecting CD Radio); (iii) CD Radio
cooperating fully with Lucent, at Lucent's expense, to facilitate the defense or
settlement of such claim; and (iv) CD Radio's substantial compliance with the
material terms of this Agreement.
Notwithstanding the foregoing, Lucent shall have no obligation to defend or
settle any claim, and CD Radio shall indemnify and save harmless Lucent and its
suppliers and affiliated companies from all costs, expenses, liabilities and
claims, for any such claim: (i) arising from Lucent's compliance with CD Radio's
specifications, designs or instructions; or (ii) relating to any Device
furnished hereunder in combination with item(s), whether or not furnished by
Lucent, even if such combination results from the Device's necessary or inherent
use or the use for which the device is purchased.
The sale of any Device by Lucent shall not in any way confer upon CD Radio, or
upon anyone claiming under CD Radio, any license (expressly, by implication, by
estoppel or otherwise) under any patent claim of Lucent or others covering or
relating to any combination, machine or process in which such Device is or might
be used, or to any process or method of making such Device.
THE FOREGOING STATES THE SOLE AND EXCLUSIVE REMEDY AND OBLIGATION OF THE PARTIES
HERETO FOR INFRINGEMENT OR OTHER VIOLATION OF ANY INTELLECTUAL PROPERTY RIGHTS
ARISING OUT OF THIS AGREEMENT AND IS IN LIEU OF ALL WARRANTIES, EXPRESS, IMPLIED
OR STATUTORY, IN REGARD THERETO.
10 NONDISCLOSURE
During performance of this Agreement, the parties may disclose or furnish to
each other proprietary marketing, technical, or business information, including,
without limitation, products and/or software ("information"), relating to the
subject of this Agreement.
Information provided in tangible form shall be clearly marked as proprietary.
With respect to any devices, any technical information, including but not
limited to circuit layout, design, or software, embedded in any such device is
proprietary information notwithstanding the absence of any proprietary marking
on such device. Information provided orally will be considered proprietary, if
the disclosing party says it is proprietary at the time of oral disclosure and
summarizes it in a proprietary writing provided to the other party within 20
(twenty) days of the oral disclosure.
22
The receiving party shall: (a) hold information in confidence using the same
degree of care as it normally exercises to protect its own proprietary
information; (b) restrict disclosure and use of information to employees
(including any contractors or consultants) with a need-to-know, and not disclose
it to any other parties; (c) advise those employees, contractors and consultants
of their obligations with respect to the information; (d) not copy, duplicate,
reverse engineer or decompile information; (e) use the information only in
furtherance of performance under this Agreement; and (f) upon expiration or
termination of this Agreement, return all information to the disclosing party or
at the request of the disclosing party, destroy such information.
The receiving party shall have no obligation to keep confidential information
that: (a) was previously known to it free of any confidentiality obligation; (b)
was independently developed by it; (c) is or becomes publicly available other
than by unauthorized disclosure; (d) is disclosed to third parties by the
disclosing party without restriction; or (e) is received from a third party
without violation of any confidentiality obligation.
If a party is faced with legal action or a requirement under government
regulations to disclose or make available proprietary information received
hereunder, such party shall forthwith notify the furnishing party and, upon
request of the latter, cooperate in contesting such action or requirement at the
requesting party's expense. Neither party shall be liable for damages for any
disclosure or unauthorized access pursuant to legal action or government
regulations or for inadvertent disclosure, access, or use if the customary
degree of care as it uses with respect to its own proprietary information has
been exercised and if, upon discovery of such inadvertent disclosure, access, or
use the furnishing or receiving party has endeavored to prevent any further
(inadvertent or otherwise) disclosure or use.
Obligations imposed by this Section 10 shall survive for a period of five (5)
years after termination or expiration of this Agreement.
11 TERM OF AGREEMENT
The term of this Agreement as related to any specific Device covered by this
Agreement shall expire at the end of the purchase period specified in the
Business Terms and any agreed extensions thereto. Lucent reserves the right to
discontinue the supply of any Device(s) hereunder, subject to providing CD Radio
six (6) months written notice of discontinuation, during which period CD Radio
may place orders for reasonable quantities calling for delivery within lead-time
of the Device, and subject to the immediate termination of the exclusivity
period provided for in Part 1, if such period has not already concluded.
12 PRICE AND PAYMENT TERMS
Lucent and CD Radio will collect market price data on ICs with comparable
functions and volumes to the ICs in the chip set, for example, ICs used in IS-95
cellular telephones. Both parties will work together to estimate the difference
in value the
23
actual ICs have with respect to the open market ICs. After allowances are made
for differences in function and performance, the price Lucent charges for the
chip sets shall not exceed that of comparable ICs at comparable cumulative
volume. Lucent will take the NRE fees paid by CD Radio into account when
calculating the chip set selling price in this way.
The price for each unit of the Device shall be as set forth in Appendix 1 (+)
hereto, as may be amended from time to time by mutual agreement of the parties.
CD Radio shall pay the invoiced amount within thirty (30) days from the date of
Lucent's invoice. Payment terms for all design and development activities of
Lucent are as specified in the Business Terms. Lucent may exercise an option to
assess an interest charge of up to one and one-half percent (1 1/2%) per month
on all amounts which are not timely paid (but not to exceed the maximum lawful
rate). CD Radio hereby grants to Lucent a purchase money security interest in
the product to secure the purchase price of the product until the purchase price
is paid in full. CD Radio agrees to execute and deliver all documents reasonably
requested by Lucent to perfect and maintain Lucent's security interest. Orders
are subject to a maximum outstanding credit limit (measured counting all
outstanding invoices, whether or not past due, combined with the value of all
accepted orders) as reasonably determined by Lucent. Lucent may refuse to accept
purchase orders, if such acceptance would result in CD Radio exceeding such
credit limit. The amount of credit or terms of payment may be changed or credit
withdrawn by Lucent at any time upon reasonable advance notice to CD Radio. Each
shipment shall constitute an independent transaction and CD Radio shall pay for
same in accordance with the specified payment terms. Lucent will invoice CD
Radio upon shipment. If shipments are delayed by CD Radio, Lucent may invoice CD
Radio when Lucent is prepared to ship. Lucent may invoice CD Radio immediately
upon termination or cancellation of any order. Prices shall be quoted and
invoices shall be rendered and paid in United States currency.
13 DELIVERY, TITLE, RISK OF LOSS AND TRANSPORTATION
Unless otherwise agreed to by Lucent in writing as part of the Business Terms or
any amendment thereto referenced by CD Radio in an order, (a) delivery terms on
shipments to any point in the United States shall be F.O.B. point of origin, and
(b) delivery terms on shipments to any point outside of the United States shall
be pursuant to Incoterms 1990 (FCA, country of export). Where, in order to meet
CD Radio's requests, Lucent ships or packs the Device or other materials in
other than its normal manner for shipment, additional billing may be rendered.
risk of loss shall pass to CD Radio upon delivery.
14 PRODUCT CHANGES
Lucent may at any time make changes in the Devices (i) that do not materially
affect physical or functional interchangeability or performance or (ii) when
required for purposes of safety. In the case of (ii), Lucent shall ensure that
such changes do not
-------------------
(+) Appendix 1 hereto does not currently exist and is not expected to be
created in the future.
24
adversely affect the functionality of the Device or its compatibility with CD
Radio's products. No changes by Lucent may result in any price increase.
15 MANUFACTURING FACILITY
Notwithstanding anything contained herein to the contrary, Lucent reserves the
right to manufacture the Device in any Lucent-qualified facility. Lucent also
reserves the right to transfer production from one qualified facility to another
or to manufacture at multiple qualified facilities.
16 EXCLUSIVE REMEDIES AND LIMITATIONS OF LIABILITY
A. For purposes of the exclusive remedies and limitations of liability
set forth in this section, Lucent shall be deemed to include Lucent Technologies
Inc., its subsidiaries and affiliates and the directors, officers, employees,
agents, representatives, subcontractors and suppliers of all of them; and
"Damages" shall be deemed to refer collectively to all injury, damage, loss or
expense incurred.
B. Lucent's entire liability and CD Radio's exclusive remedies against
Lucent for any damages caused by any Device defect or failure, or arising from
the performance or non-performance of any work, regardless of the form of
action, whether in contract, tort, including negligence, strict liability or
otherwise, except as may arise from intentional misconduct or gross negligence,
shall be:
1 For infringement, the remedies set forth in the section
entitled Intellectual Property Indemnity;
2 For failure to deliver conforming prototypes, CD Radio's
sole and exclusive remedy and Lucent's entire liability shall be CD Radio's
right to a refund of moneys paid by CD Radio as provided in Section 3 of this
Part 3. For any other failure of the Device or work performed, the remedies
stated in the section entitled Warranty;
3 For delays in delivery of production quantities, Lucent
shall have no liability unless the delivery is delayed by more than thirty (30)
days by causes not attributable either to CD Radio or to conditions beyond
Lucent's reasonable control, in which case CD Radio shall have the right, as its
sole remedy, to cancel the order without incurring cancellation charges;
4 For bodily injury or death to any person proximately caused
by Lucent, CD Radio's right to proven direct damages; and
5 For claims other than set forth above, Lucent's liability
shall be limited to direct damages that are proven, in an amount not to exceed
one hundred thousand ($100,000) dollars.
25
C. Notwithstanding any other provision of this Agreement, Lucent shall
not be liable for incidental, indirect, special, exemplary or consequential
damages or for lost profits, savings or revenues of any kind, whether or not
Lucent has been advised of the possibility of such damages. This provision shall
survive failure of an exclusive remedy.
17 CD RADIO'S DESIGNATED EMPLOYEES ON SELLER'S PREMISES
CD Radio's personnel shall, while on any location of Lucent or any of its
affiliates, comply with rules and regulations with regard to safety and security
at such location. Lucent shall inform such personnel of such rules and
regulations. CD Radio shall have full control over such personnel and shall be
entirely responsible for their complying with such rules and regulations. CD
Radio agrees to indemnify and save Lucent and any of its affiliates harmless
from any claims or demands, including the costs, expenses and reasonable
attorney's fees incurred on account thereof, that may be made by (i) anyone for
injuries to persons or damage to property resulting from the acts or omissions
of CD Radio's personnel or (ii) CD Radio's personnel under Worker's Compensation
or similar laws. CD Radio agrees to defend Lucent and its affiliates, at
Lucent's request, against any such claim or demand.
18 EXPORT CONTROL
The parties acknowledge that any products, software, and technical information
(including, but not limited to, services and training) provided under this
Agreement are subject to U.S. exports laws and regulations and any use or
transfer of such products, software, and technical information must be
authorized under those regulations. The parties agree that they will not use,
distribute, transfer, or transmit the products, software, or technical
information (even if incorporated into other products) except in compliance with
U.S. export regulations. If requested by Lucent, CD Radio also agrees to sign
written assurances and other export-related documents as may be required for
Lucent to comply with U.S. export regulations.
19 ASSIGNMENT
Except for Lucent's right to assign this Agreement to any of its affiliates and
CD Radio's right to assign this Agreement to any entity that succeeds it as the
result of a strategic merger, acquisition, or other corporate reorganization,
neither party shall have the right to assign this Agreement except upon the
prior written consent of the other and any such purported assignment shall be
void and ineffective.
20 IDENTIFICATION
Except as permitted by United States trademark law and except as expressly
provided herein, neither Lucent nor CD Radio shall use any identification of, or
reference to, any code, drawing, specification, trade name, trademark, trade
device, insignia, service ▇▇▇▇, symbol, or any abbreviation, contraction, or
simulation thereof, of the other party in any advertising or promotional efforts
without such other party's prior approval.
26
21 EXCUSE OF PERFORMANCE
Except with respect to CD Radio's obligation to make timely payments when due,
neither party shall be held responsible for any delay or failure in performance
of any part of this Agreement to the extent such delay or failure is caused by
fire, flood, explosion, war, strike, embargo, government requirement, civil or
military authority, act of God, nature or the public enemy, inability to secure
material or transportation facilities, inadequate yield of products despite
Lucent's reasonable efforts, act or omission of carriers or any other causes
beyond its reasonable control. After conclusion of the exclusivity period
provided for in Part 1, Lucent may, in the event of any such circumstance,
allocate in a fair and reasonable manner, taking into account Lucent's
contractual commitments, its available production output among itself and its
other customers, including at Lucent's option those not under contract.
22 NON-WAIVER
No course of dealing or failure of either party to strictly enforce any term,
right or condition with respect to any transaction or order hereunder shall be
construed as a waiver of such term, right or condition.
23 TAXES
Any tax or related charge which Lucent shall be required to pay to or collect
for any government upon or with respect to services rendered or the sale, use or
delivery of the Device or other materials shall be billed to the CD Radio as a
separate item and paid by CD Radio, unless a valid exemption certificate is
furnished by CD Radio to Lucent.
24 CHOICE OF LAW
The construction, interpretation, and performance of this Agreement and any
transaction hereunder shall be governed by the substantive laws, but not the
conflicts of law rules, of the State of New York. The U.N. Convention on
Contracts for the International Sales of Goods shall not apply to the sale of
product hereunder.
25 MEDICAL AND LIFE SUPPORT APPLICATIONS
Lucent does not recommend the use of any Devices for medical or life support
applications wherein a failure or malfunction of the Device may directly
threaten life or cause injury and Lucent will not knowingly sell its Devices for
such use except pursuant to a written exception to this policy granted on a
case-by-case basis. No warranty is made with respect to any such medical or life
support use of any Device.
26 DISPUTES
26.1 If a dispute arises out of or relates to this Agreement, or its
breach, and if such dispute cannot be settled through good faith negotiations
within thirty (30) days, the parties agree to submit the dispute to a sole
mediator selected by the parties or, at
27
any time at the option of a party, to mediation by a mediator selected by the
American Arbitration Association ("AAA"). The parties agree to make good faith
efforts to resolve disputes by mediation within thirty (30) days. If not thus
resolved, it shall be referred to a sole arbitrator selected by the parties
within thirty (30) days of the mediation, or in the absence of such selection,
to AAA arbitration which shall be governed by the United States Arbitration Act.
The mediator or arbitrator selected by the parties shall be knowledgeable in the
law and technology and the rules and regulations of the AAA. Such mediation or
arbitration shall be non-binding on the parties. In the event such dispute is
not resolved either by mediation or arbitration, then either party may initiate
suit in the federal or state courts in the State of New York.
26.2 The mediation or arbitration, if any, shall be held in New York
City. The requirement for mediation or arbitration shall not be deemed a waiver
of any right of termination under this Agreement and the mediator or arbitrator
is not empowered to act or make any award other than based solely on the rights
and obligations of the parties prior to any such termination.
26.3 The mediator or arbitrator may not limit, expand or otherwise
modify the terms of this Agreement.
26.4 Each party shall bear its own expenses but those related to the
compensation and expenses of the mediator or arbitrator shall be borne equally.
26.5 The mediator or arbitrator shall not have authority to award
punitive, exemplary or other damages in excess of compensatory damages and each
party irrevocably waives any claim thereto. The award shall be made within two
(2) months after selection of the mediator or arbitrator and may be entered in
any court.
26.6 The parties, their representatives, other participants and the
mediator and arbitrator shall hold the existence, content and result of
mediation or arbitration in confidence.
28
THE PARTIES, agreeing to the above terms and conditions, including by reference
all terms and conditions contained in the Business Terms, and intending to be
legally bound thereby, have caused the signatures of their respective authorized
representatives to be affixed below on the date so written.
LUCENT TECHNOLOGIES INC. CD RADIO INC.
------------------------------ ------------------------------
(Signature) (Signature)
------------------------------ ------------------------------
(Name Printed) (Name Printed)
------------------------------ ------------------------------
(Title Printed) (Title Printed)
------------------------------ ------------------------------
(Date) (Date)