Exhibit 10.2
COMMERCIAL MANUFACTURING AGREEMENT
BETWEEN
BLONDER TONGUE LABORATORIES, INC.
AND
▇▇▇▇▇▇ NETWORK SYSTEMS, A
▇▇▇▇▇▇ ELECTRONICS CORPORATION
FOR
DIGITAL SATELLITE SYSTEM EQUIPMENT
FEBRUARY 19, 1998
NOTICE OF PROPRIETARY INFORMATION
This document and its contents are proprietary to the issuer and are intended
solely for the contractual use of the issuer's customers. This publication and
its contents may not be reproduced or distributed for any other purposes without
the written permission of the issuer.
TABLE OF CONTENTS
SECTION PAGE
------- ----
1. DEFINITIONS............................................................. 1
2. SUPPLY OF DSS EQUIPMENT................................................. 2
3. DESIGN OF COMMERCIAL SYSTEM............................................. 3
4. INSPECTION AND TESTING.................................................. 4
5. SOFTWARE LICENSE........................................................ 5
6. GRANT OF LICENSE........................................................ 5
7. DERIVATIVE PRODUCT DESIGN AND DEVELOPMENT............................... 6
8. EQUIPMENT AVAILABILITY.................................................. 7
9. TERM OF AGREEMENT....................................................... 7
10. NATURE OF RELATIONSHIP.................................................. 7
11. HNS RESPONSIBILITIES.................................................... 8
12. BTL RESPONSIBILITIES.................................................... 8
13. FORECASTS AND ORDERS.................................................... 9
14. PRICES..................................................................10
15. AGREEMENTS WITH OTHER PARTIES...........................................11
16. PAYMENT.................................................................11
17. DELIVERY, TITLE, AND RISK OF LOSS.......................................11
18. INTENTIONALLY LEFT BLANK................................................11
19. HNS PROPERTY AND TRADEMARKS.............................................11
20. RIGHTS IN TECHNOLOGY....................................................13
21. CONFIDENTIAL INFORMATION................................................13
22. LIMITED WARRANTIES......................................................14
23. OUT-OF-WARRANTY REPAIRS, REPLACEMENT PARTS, CERTIFICATION OF
REPAIR CENTERS, CUSTOMER SERVICE SUPPORT, SPECIAL 90-DAY SUPPORT........15
24. LIMITATION OF LIABILITY.................................................15
25. PATENT AND COPYRIGHT INDEMNITY..........................................16
A-ii
26. INDEMNITY...............................................................17
27. INSURANCE...............................................................17
28. TERMINATION OF AGREEMENT................................................17
29. DISTRIBUTION AND EXPORT.................................................19
30. ARBITRATION.............................................................19
31. FORCE MAJEURE...........................................................19
32. PUBLIC RELEASE OF INFORMATION...........................................19
33. NOTICES.................................................................20
34. SEVERABILITY............................................................21
35. WAIVER..................................................................21
36. ASSIGNMENT..............................................................21
37. GOVERNING LAW...........................................................21
38. ENTIRE UNDERSTANDING....................................................21
A-iii
COMMERCIAL MANUFACTURING AGREEMENT
THIS AGREEMENT is made as of this 19th day of February 1998, by and between
Blonder Tongue Laboratories, Inc., organized under the laws of Delaware, and its
Affiliates, with its principal place of business at One ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter referred to as "BTL") and ▇▇▇▇▇▇ Network Systems,
a ▇▇▇▇▇▇ Electronics Corporation, a corporation organized and existing under the
laws of Delaware, with its principal place of business at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as "HNS").
WITNESSETH
WHEREAS, HNS is in the business of building certain Digital Satellite
System equipment for use with reception of DIRECTV(R), ("DSS(R)") programming.
WHEREAS, BTL is, among other things, a developer and supplier of equipment
and systems for delivery of television signal service to the Commercial Market
(defined below). BTL will design and develop a digital satellite system
comprised of Commercial Hardware (defined below), CCA Software (defined below)
and CI Software (defined below), which is compatible with and which incorporates
the DSS Equipment (defined below), for use in the Commercial Market.
WHEREAS, BTL wishes to purchase certain DSS Equipment for inclusion in the
Commercial System and to market and sell the Commercial System to customers in
the Territory.
NOW, THEREFORE, in consideration of mutual covenants and agreements herein
contained, the parties do hereby agree and contract as follows:
1. DEFINITIONS
In addition to any other defined terms in this Agreement and except as
otherwise expressly provided for in this Agreement, the following terms shall
have the following meaning:
A. "Affiliate" means any person or entity controlling, controlled by or
under common control with HNS or BTL, as the case may be.
B. "CCA Software" means the commercial conditional access software,
designed or to be designed by the collaborative efforts of HNS and BTL
at BTL's expense pursuant to this Agreement.
C. "CI Software" means the commercial interface software to be designed
and developed by BTL based upon certain interface specifications to be
provided by HNS (including the HNS Software) and which will permit
remote telephone access and control of the Commercial System.
D. "Commercial Hardware" means the hardware portion of an Commercial
System, as the same may be designed or developed pursuant to the
efforts of BTL, as contemplated by this Agreement for use primarily in
the Commercial Market, which incorporates the DSS Equipment (or a
variation thereof, as permitted by HNS) and which will meet the
specifications set forth in Exhibit "A", as the same may hereafter be
modified or revised by mutual agreement of the parties.
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E. "DSS Equipment" means certain integrated circuit components and
sub-assemblies which are capable of only receiving and converting a
digitized RF satellite signal to an analog signal only, as described
in Exhibit "B" hereto.
F. "Commercial Intellectual Property" means all patents, copyrights,
design rights, trademarks, service marks, trade secrets, know-how and
any other intellectual or industrial property rights (whether
registered or unregistered) and all applications for the same
developed pursuant to this Agreement by BTL with specific application
to the Commercial System, which constitute derivative works of the DSS
Equipment, including without limitation the CCA Software, the CI
Software (with the exception of those portions or aspects thereof
which do not relate to the interface specifications provided by HNS)
and the Commercial Hardware, all of which shall be owned by HNS and
subject to the Commercial IP License.
G. "Commercial IP License" means a perpetual, non-transferable (other
than transfers to affiliates of BTL pursuant to reorganization and
similar transactions which are permitted so long as such transferee
agrees to be bound by this Agreement), worldwide, exclusive, fully
paid, royalty free, irrevocable right and license granted to BTL to
(i) use, copy, modify, create derivative works based on, and (ii) use
the trade secrets and know-how embodied in the Commercial Intellectual
Property, for the purpose of manufacturing, assembling, supporting,
updating, enhancing and selling Commercial Systems and for the purpose
of creating new products for commercial exploitation in the Commercial
Market. Notwithstanding anything herein to the contrary, this license
shall survive the expiration or termination of this Agreement.
H. "Commercial Market" means and includes any television signal
distribution systems (i) wherein the television signal is converted
from digital to analog format at the headend, regardless of whether
the headend services or is a part of a franchised or private cable
system, or (ii) located in multiple dwelling units, hotels, motels,
prisons, schools or hospitals.
I. "Commercial System" means a digital satellite receiver system designed
by BTL for use in the Commercial Market, comprised of the Commercial
Hardware, CCA Software and CI Software, which is compatible with and
which incorporates the DSS Equipment and which meets the other
requirements set forth in Section 3 herein.
J. "Exclusivity Buy-out Fee" means (i) $50,000, if paid after the first
and before the second anniversary of the Effective Date, (ii) $25,000,
if paid after the second and before the third anniversary of the
Effective Date, (iii) $15,000, if paid after the third and before the
fourth anniversary of the Effective Date, and (iv) $10,000, if paid
after the fourth anniversary and before the fifth anniversary of the
Effective Date.
K. "Territory" means the continental United States and such other regions
of the world in which HNS is authorized by DIRECTV(R), INC. to sell
DSS Equipment, subject to approval by DIRECTV(R), INC. and such other
third parties as may be required.
2. SUPPLY OF DSS EQUIPMENT
HNS will supply to BTL, and BTL will purchase from HNS the DSS Equipment
for use solely in Commercial Systems. Except to the extent necessary to perform
its obligations hereunder, BTL may not alter the DSS Equipment in any manner nor
shall it perform any engineering,
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modification, alteration, change, or adjustment (hereinafter referred to as a
"Modification") on the DSS Equipment without the specific prior written approval
of HNS. In the event that BTL determines that the DSS Equipment requires any
such Modification in order to operate in the Commercial System, BTL will so
advise HNS in writing, setting forth with particularity the Modification which
is required. Within thirty (30) days following written notice from BTL to HNS
that the DSS Equipment requires Modification, HNS shall advise BTL in writing
that either (i) HNS will promptly provide such support and perform the requested
Modification for BTL on a time and materials basis which shall be at BTL's
expense to be mutually agreed upon by the parties hereto, provided, however that
the prices charged by HNS for the time and materials provided pursuant hereto
shall be at least as favorable to BTL as the most favorable prices offered by
HNS to any other person or entity engaging HNS for the provision of Modification
services upon similar terms and conditions, or (ii) HNS will not perform the
Modifications, in which case BTL may perform or engage others (subject to the
prior execution of appropriate non disclosure agreements in form satisfactory to
HNS and any necessary third-party approvals) to perform such Modifications and
HNS shall provide BTL with such information and materials as necessary to permit
BTL or its subcontractors, as the case may be, to perform such Modifications.
3. DESIGN OF COMMERCIAL SYSTEM
A. BTL shall design and develop the Commercial System strictly in
accordance with the terms and conditions of this Agreement. All
Commercial Systems shall incorporate a conditional access module and
verifier technology as specified by HNS. BTL shall design, develop and
manufacture Commercial Systems to be compatible and fully operable
with the 101(degree) DBS Network (and at BTL's option as more fully
described in the following sentence, other DBS Networks with respect
to which HNS is authorized by DIRECTV(R)to provide service), as
reasonably determined by HNS, and such Commercial Systems shall be in
full conformance with DSS technical specifications described in
Exhibit "A". If HNS becomes authorized by DIRECTV(R)to provide service
to any DBS Networks other than the 101(degree) DBS Network ("Other
Networks"), HNS shall so notify BTL in writing and BTL shall have a
right of first refusal, exercisable by written notice within 30 days
thereafter to HNS of BTL's intention, to design and develop a
commercial system which is compatible with such Other Networks and the
parties hereto shall treat such new commercial system as a Commercial
System for purposes of this Agreement. If BTL does not so notify HNS
as aforesaid or notifies HNS that BTL does not intend to design and
develop a commercial system for such Other Network, HNS shall
thereupon be free to design and develop a commercial system which is
compatible with such Other Network; provided, however that HNS shall
not be permitted to use the Commercial Intellectual Property in
furtherance of such design and development without BTL's prior written
consent. Except as otherwise specifically provided herein, BTL shall
be solely responsible for all costs and expenses associated with the
Commercial System design, development, manufacturing, testing,
approvals, marketing, distribution and sales and as otherwise arising
out of its rights and obligations under this Agreement. The Commercial
System, shall be deemed Commercial Intellectual Property, shall be
owned by HNS, and if susceptible to patent or copyright protection,
shall be patented or copyrighted in the name of HNS. BTL shall have
the exclusive, irrevocable, perpetual, royalty-free right and license
to (i) use, copy, modify, create derivative works based on, and (ii)
use the trade secrets and know-how embodied in, the Commercial System
for the purpose of manufacturing, supporting, assembling, updating,
enhancing and selling the Commercial System and for the purpose of
creating new products for commercial exploitation in the Commercial
Market. Except
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to the extent otherwise agreed to in writing by both parties hereto,
neither HNS nor BTL shall have the right to sublicense the rights to
the Commercial System or any portion thereof to any third party. HNS
acknowledges that the Commercial System will be designed and developed
based upon the existing platform of the consumer DSS digital satellite
system and agrees, subject to limitations imposed by third-party
contracts and to mutually acceptable agreements regarding
confidentiality, to make all information and data relating thereto
available to BTL in furtherance of the Commercial System design and
development efforts contemplated by this Agreement.
B. If, as and when HNS develops further generations of the consumer
versions of the DSS Equipment or the DSS Equipment Software, which BTL
determines will necessitate Modifications in order to operate in the
Commercial System, BTL will so advise HNS in writing, setting forth
with particularity the Modifications which are required. Within thirty
(30) days following written notice from BTL to HNS that the DSS
Equipment or the DSS Equipment Software requires Modification, HNS
shall advise BTL in writing that either (i) HNS will promptly provide
such support and perform the requested Modification for BTL on a time
and materials basis which shall be at BTL's expense to be mutually
agreed upon by the parties hereto, provided, however that the prices
charged by HNS for the time and materials provided pursuant hereto
shall be at least as favorable to BTL as the most favorable prices
offered by HNS to any other person or entity engaging HNS for the
provision of Modification services on similar terms and conditions, or
(ii) HNS will not perform the Modifications, in which case BTL may
perform or engage others (subject to the prior execution of
appropriate non disclosure agreements in form satisfactory to HNS) to
perform such Modifications and HNS shall provide BTL with such
information and materials as necessary to permit BTL or its
subcontractors, as the case may be, to perform such Modifications.
Whether BTL or HNS perform the Modifications to the consumer DSS
Equipment and/or DSS Equipment Software to create commercial market
versions thereof (the "New Commercial Versions"), such New Commercial
Versions shall constitute Commercial Intellectual Property hereunder
and shall be the sole proprietary property of HNS, but shall be
available to BTL pursuant to the licenses granted hereunder without
the payment of license fees or royalty fees, subject only to the
payment obligations contemplated by Section 14 herein.
4. INSPECTION AND TESTING
A. HNS shall have the right to enter any BTL location where any part of
the Commercial System is being manufactured and conduct an inspection
solely for the purpose of ensuring that BTL is in compliance with the
terms and conditions of this Agreement. Such inspection shall be
carried out on at least one week's prior written notice to BTL and
shall be performed so as to minimize the impact and interference with
BTL operations. Any such inspection will not be carried out more often
than twice every six (6) months except in the case where BTL is found
to be in violation of the terms of this Agreement. In the event that
BTL is found to be in violation of the terms of this Agreement it
shall be given ninety (90) days to cure the violation or such longer
period as the parties may agree. BTL shall notify HNS within the
aforementioned stipulated time frame that the violation has been cured
and HNS shall be entitled to conduct an inspection twice more within
the succeeding six (6) month period. In the event that HNS determines
that BTL has not cured the defect, this Agreement shall be subject to
immediate termination and BTL shall immediately cease all
manufacturing of the Commercial Systems using any DSS Equipment,
provided, however, that
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notwithstanding the termination of this Agreement or the rights
granted hereunder, so long as such termination is not as a result of
violation by BTL of Sections 28.A.(i), (ii) or (vii) of this
Agreement, for a period of ninety (90) days following termination of
this Agreement or the rights granted hereunder, BTL shall be permitted
to sell all of its remaining inventory of Commercial Systems, build
and sell its remaining raw materials inventory of components and DSS
Equipment into finished Commercial Systems and otherwise build and
sell such additional Commercial Systems as are necessary to fulfill
all then-existing firm purchase orders for Commercial Systems from
BTL's customers.
B. BTL will notify HNS when the first Commercial System has been
completed and is ready for a full functionality test at least thirty
(30) days in advance of such test, but in no event later than six
months after the date hereof. HNS shall appoint a representative to
observe the test being carried out by BTL. This test shall demonstrate
that the Commercial System is in full compliance with the terms and
conditions of this Agreement. HNS shall be liable for the travel and
accommodation costs, meals, medical and insurance costs incurred by
their representatives in respect of such inspections.
5. SOFTWARE LICENSE
Subject to the performance by BTL of the terms and conditions of this
Agreement, HNS hereby grants to BTL and BTL hereby accepts from HNS a limited,
nontransferable, nonexclusive royalty free, license to use the DSS Equipment
software solely in the operation of the DSS Equipment commencing on the date of
the delivery of the relevant DSS Equipment and payment therefor, to last for the
life of the relevant DSS Equipment. BTL acknowledges that any DSS Equipment
software delivered hereunder is subject to the proprietary rights of HNS or its
vendors and that HNS, or its vendors, as the case may be, shall retain title to
all of such software. Except as otherwise provided herein, BTL agrees that it
shall not copy or duplicate or permit anyone else to copy or duplicate, any part
of the software, or create or attempt to create, or permit others to create or
attempt to create, by reverse engineering or otherwise, the source programs or
any part thereof from the object programs or from other information made
available under this Agreement, other than as necessary to carry out BTL's
obligations under this Agreement with HNS's prior written approval, which
approval shall not be unreasonably withheld, and subject to limitations imposed
by third-party contracts, other than for archival purposes.
6. GRANT OF LICENSE
A. Subject to Sections 6.B., 6.C and 6.D. below and further subject to
BTL's compliance with the terms of this Agreement, during the term of
this Agreement, HNS hereby grants to BTL an exclusive,
non-transferable (other than to affiliates of BTL pursuant to
reorganization and similar transactions which are permitted only long
as such transferee agrees to be bound by this Agreement), royalty free
license under HNS' intellectual property rights to use the proprietary
portions of HNS's specifications and technology, and to use and
purchase DSS Equipment, exclusively for the purpose of manufacturing
and assembling (with the right to engage others to subcontract
manufacture) digital satellite systems that incorporate HNS' DSS
Equipment and are compatible with and capable of receiving
DSS(R)programming for sale and use in the Commercial Market, including
without limitation, Commercial Systems and of selling Commercial
Systems in the Territory solely for ultimate use by customers in the
Commercial Market (the "License"). BTL shall use its commercially
reasonable efforts to market and sell Commercial Systems in the
Territory for use by customers in the Commercial Market.
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The parties agree and acknowledge that the License does not include the
right to manufacture, subcontract manufacture, market or sell Commercial Systems
in any market other than the Commercial Market, or otherwise incorporate
features for use by consumers outside the Commercial Market, (except to the
extent of those features which are common to products sold and/or marketed to
both the consumer market and the Commercial Market). BTL acknowledges that with
respect to clause "(i)" in the definition of Commercial Market set forth in
Section 1.H. herein, DIRECTV(R), INC. and programmer approval may be required
for signal distribution to these areas and BTL shall be responsible for
obtaining any such necessary approval prior to any such distribution of the
Commercial System.
B. The License shall cease to be exclusive, but shall otherwise remain in
force if other than as a result of HNS failure to timely supply
adequate quantities of DSS Equipment: (i) BTL does not provide a
prototype Commercial System which is fully compatible and operable
with the 101(degree) DBS Network, within seven (7) months after
execution of this Agreement; or (ii) BTL fails to commence manufacture
of the Commercial Systems (either directly or through a subcontractor)
within six months after the parties have agreed in writing that the
prototype Commercial System is in full compliance with the terms and
conditions of this Agreement, as contemplated by Section 4.B hereof;
or (iii) BTL fails to manufacture and sell a minimum of at least 2,500
units of Commercial System in any 12 month period commencing one (1)
month after the first calendar month in which BTL manufactures at
least 100 units of Commercial System under this Agreement, unless BTL
can reasonably demonstrate that market demand for Commercial Systems
is lower than 2,500 units per 12 month period and that BTL is
manufacturing Commercial Systems in quantities sufficient to satisfy
market demand, provided, however, that BTL shall have sixty (60) days
following written notice from HNS of any of the above referenced
defaults by BTL to cure such defaults.
C. At any time after the first anniversary of the Effective Date, HNS may
pay to BTL the Exclusivity Buy-out Fee, whereupon the License shall
cease to be exclusive, but shall otherwise remain in force.
D. Termination of exclusivity of the License as a result of the events
described in Section 6.B. above or upon payment of the Exclusivity
Buy-out Fee described in Section 6.C. above, shall in no way alter,
modify or otherwise abrogate the exclusivity in favor of BTL, of the
Commercial IP License. Any digital satellite receivers designed or
manufactured for the Commercial Market by HNS or any other person may
not incorporate or otherwise use or rely upon the Commercial
Intellectual Property, in the absence of the prior written consent of
BTL.
7. DERIVATIVE PRODUCT DESIGN AND DEVELOPMENT
HNS shall, subject to licensing restrictions, provide BTL with selected
relevant HNS licensed software and other technical information as reasonably
determined by the mutual agreement of BTL and HNS to be necessary for BTL to
develop the Commercial System (hereinafter referred to as the "HNS Software").
BTL shall use HNS Software solely in the performance of this Agreement. All HNS
Software will be returned by BTL to HNS upon completion of the development of
the Commercial System, upon the request of HNS following a default hereunder by
BTL, or upon termination of this Agreement which ever occurs first. Any
derivative product developed hereunder shall be deemed Commercial Intellectual
Property, owned by HNS.
All other provisions of this Agreement notwithstanding, all information
exchanged by the parties related to upgrades, and new or modified features, and
all background proprietary property
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including patents, copyrights, trade secrets and know-how developed or acquired
by each party before the execution of this Agreement shall remain the
proprietary property of the originating party and subject to the protection of
Articles 19, 20 and 21 hereof.
8. EQUIPMENT AVAILABILITY
A. HNS shall have the right, at its absolute discretion, and without
thereby incurring any liability to BTL with respect to any purchase
order theretofore placed, or otherwise, to change the design or to
discontinue the manufacture or sale of any DSS Equipment covered by
this Agreement; provided however that to the extent practicable, HNS
will make such quantities of the DSS Equipment in its pre-existing
design available as is necessary to permit BTL to fulfill all
then-existing firm purchase orders for Commercial Systems from BTL's
customers.
B. HNS shall notify BTL at least ninety (90) days prior to the delivery
of any DSS Equipment that incorporates a change in design that would
adversely affect the value or salability of any DSS Equipment in BTL's
inventory. HNS shall also notify BTL at least ninety (90) days prior
to the discontinuance of manufacture or sale of any DSS Equipment
covered by this Agreement.
C. In the event of a shortage of any DSS Equipment for any reason, HNS
shall have the right to allocate available products among its
distributors and other customers in such manner HNS shall consider to
be equitable.
9. TERM OF AGREEMENT
The term of this Agreement shall be five (5) years from the date first
written above (the "Effective Date"), subject to earlier termination pursuant to
the provisions of this Agreement. HNS may extend the term of this Agreement if
requested to do so by BTL. Such request to extend must be made by BTL in writing
to HNS no less than sixty (60) days before the expiration of the term of this
Agreement. Extensions, if granted by HNS, will be on a year-to-year basis.
10. NATURE OF RELATIONSHIP
A. This Agreement shall not constitute BTL as an employee, franchisee,
agent, partner, or legal representative of HNS for any purposes, or
give HNS any right to supervise or direct the functions of BTL
hereunder. BTL shall have no authority to act for or obligate HNS in
any way or to extend any warranty or representation on behalf of HNS.
B. Except as specifically set forth herein, HNS shall have no obligation
or liability to BTL for compensation, commissions, or other
remuneration. All direct and indirect costs and expenses of BTL shall
be paid by BTL.
C. This Agreement does not grant any rights to BTL with respect to HNS
equipment other than the DSS Equipment and does not grant any rights
with respect to any equipment manufactured by other companies,
including companies related to HNS.
D. This Agreement does not grant any rights to BTL with respect to
programming from DIRECTV(R) or USSB.
E. Except as specifically set forth herein, HNS grants no rights to BTL
in any copyright, trademark, patent or other intellectual property.
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11. HNS RESPONSIBILITIES
HNS shall during the Term of this Agreement:
A. Make available/sell to BTL the DSS Equipment set forth in Exhibit "B".
B. Provide BTL with such technical assistance and other information as
BTL and HNS mutually deem reasonably necessary to assist BTL in its
design, development, and marketing efforts.
C. Keep BTL regularly advised of changes in the published specifications
and design of the DSS Equipment.
D. HNS is willing to participate in meetings with BTL and DIRECTV, INC.
to explore implementing and maintaining reasonable procedures and
protocols designed to encourage customers in the Commercial Market to
purchase Commercial Systems, including without limitation by (i)
maintaining separate databases for customers and equipment used in the
Commercial Market as against customers and equipment used in the
consumer market, and (ii) limiting access to and availability of
special pricing promotions on consumer Digital Satellite System
equipment only to purchasers of such equipment for home use in the
consumer market; provided, however that such special pricing
promotions shall be made available to BTL under its Distributorship
Agreement with HNS relating to consumer Digital Satellite Systems
equipment for pass through to its customers for consumer Digital
Satellite System equipment sold by BTL for Commercial applications
using L-Band distribution which contemplates a digital satellite
receiver in each subscriber location, (iii) except with respect to
consumer Digital Satellite Systems sold by BTL as contemplated by
clause (ii) above, prohibit the authorization of consumer Digital
Satellite Receiver Systems in the Commercial Market. BTL acknowledges
that despite HNS' reasonable best efforts, DIRECTV may determine, in
its discretion, that it will not implement or maintain any procedures
or protocols designed to encourage customers in the Commercial Market
to Purchase Commercial Systems.
12. BTL RESPONSIBILITIES
BTL shall during the Term of this Agreement:
A. Maintain adequate capital and technical resources and other
capabilities to maintain its operations on a financially sound basis
in order to develop and promote the sale of the Commercial System
pursuant hereto.
B. BTL shall determine its pricing to its customers in the Territory.
C. Maintain employees or agents sufficient to develop and maintain an
efficient, competent, financially sound marketing organization for the
purpose of selling and offering consultation on the Commercial System;
and maintain personal contacts with research, industrial, and
commercial users, current and potential, of the Commercial System in
order to advise such users of up-to-date information on new Commercial
Systems and procurement matters.
D. Maintain a marketing organization that is reasonably informed on the
Commercial System information that may be issued to BTL and that
disseminates adequately such information to prospects in the
Territory.
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E. Furnish to HNS sales data regarding DSS Equipment as is reasonably
necessary for HNS to confirm BTL's compliance with its obligations
under Section 6.B. herein.
F. Notify HNS immediately of any litigation or defect involving DSS
Equipment incorporated into Commercial Systems, of which BTL becomes
aware.
G. Comply with all material federal, state, and local laws, rules,
regulations and ordinances applicable to BTL's business and BTL's
performance of its obligations hereunder.
H. If BTL provides programming or services, BTL shall be responsible for
entering into any required licensing agreement and for paying any
corresponding fees with DIRECTV and/or USSB for the provision of any
such programming or services.
I. Not manufacture, market or sell Commercial Systems for, or pursuant to
an agreement similar hereto with, any other DIRECTV(R) licensee (e.g.
▇▇▇▇▇▇▇▇, Sony, etc.).
J. Treat all HNS products at least as favorably as it treats any other
product distributed by BTL that are competitive with any HNS product.
Specifically, BTL agrees that it will not market or promote any HNS
product in a manner that states or could reasonably be interpreted to
imply that the HNS product is inferior or secondary to any other
product. For example, BTL will not market or promote any other product
as "preferred", "premier" "primary" or the like as compared to an HNS
product. In addition, BTL will display and/or showcase HNS products at
least as favorably as it displays and/or showcases any other products
distributed by BTL that are competitive with any HNS product.
13. FORECASTS AND ORDERS
A. Upon the execution of this Agreement, BTL shall provide HNS with a
twelve (12) month written forecast of DSS Equipment estimating its
orders hereunder for deliveries commencing in the first calendar month
following the month in which the parties have agreed in writing that
the prototype of the Commercial System is in full compliance with this
Agreement, as contemplated by Section 4.B hereof. Thereafter, on or
before the last business day of each month during the Term hereof,
such then-current month being called "MO", BTL shall submit to HNS a
written update of its twelve (12) month forecast of its orders for DSS
Equipment deliveries, such months being called "M1" through "M12". BTL
shall provide at its sole cost and expense, a single point of contact
for all such forecasts, and voice access between HNS order management
systems and such single point of contact.
B. The volumes and Equipment included in ▇▇, ▇▇, and M3 shall constitute
a firm non-modifiable, non cancelable purchase order. The volumes and
Equipment included in ▇▇, ▇▇, ▇▇, ▇▇▇, M11 and M12 of each such
forecast shall be for planning purposes only and shall not constitute
a firm purchase order. Each M4 forecast shall constitute a firm,
non-modifiable, non-cancelable purchase order for at least 50% of the
volume stated therein, each M5 forecast shall constitute a firm,
non-modifiable, non-cancelable purchase order for at least 30% of the
volume stated therein and each M6 forecast shall constitute a firm,
non-modifiable, noncancelable purchase order for at least 20% of the
volume state therein. In addition, the relative proportions of the DSS
Equipment included in the M4, M5 and M6 forecasts may not be changed
unless HNS agrees that it has the material available for making a
requested change. HNS
9
will make reasonable efforts to respond to BTL's requests to change
DSS Equipment stated in M4, M5 and M6 of the twelve (12) month
forecasts.
C. BTL shall order purchases of DSS Equipment hereunder by written
purchase orders. The terms and conditions of this Agreement shall
supersede any inconsistent provisions contained in BTL's purchase
orders and in HNS's order acknowledgement, confirmation and invoice
forms. Any inconsistent terms and conditions in any such forms used by
either party hereto, shall be null and void unless adopted by BTL and
HNS as an explicit written amendment to this Agreement. Each purchase
order shall be subject to HNS's written acceptance thereof, which
acceptance shall not be unreasonably withheld. Shipment of DSS
Equipment shall be scheduled in accordance with such purchase orders
and HNS's acceptance of such purchase orders.
14. PRICES
A. BTL shall pay to HNS the prices set forth in Exhibit "B" for DSS
Equipment ordered, subject to adjustments as set forth in this
Agreement. BTL shall pay such prices in accordance with Section 16
below entitled "Payment." In the event that prices set forth in
Exhibit "B" for the DSS Equipment decline, or should HNS, at any time
during the term of this Agreement, provide the same or substantially
the same DSS Equipment under substantially similar quantity, delivery
conditions and/or under special marketing or promotional activities,
to any other similar entity at prices below those set forth in this
Agreement or those extended to BTL, then such lower prices shall be
extended to BTL on such similar terms and conditions for all
outstanding and future orders.
B. Subject to HNS's compliance with subsection 14.A. herein, HNS may
change the prices set forth in Exhibit "B" at any time by providing
BTL a minimum of thirty (30) days written notice.
C. In addition to the DSS Equipment price, BTL shall pay to HNS any sales
taxes (to the extent applicable), shipping, shipping insurance, or
related or similar charges incurred by HNS, other than any such taxes
or similar charges relating to or based upon the income of HNS. Other
charges that HNS may be required to pay or collect with respect to the
DSS Equipment, or any part thereof, shall be billed to BTL at HNS'
cost. In the event BTL becomes eligible for a rebate for any such
taxes or duties advanced by HNS, HNS will assist BTL in obtaining such
rebate.
10
15. AGREEMENTS WITH OTHER PARTIES
BTL agrees to enter into all agreements with other parties as may be
necessary for BTL to market and sell the Commercial System(s); provided, however
that the parties hereto acknowledge that BTL, in its limited capacity as a
manufacturer and distributor of Commercial Systems, is not involved in the
carriage, transmission or retransmission of television programming and therefore
is not expected to require a license from DIRECTV, News Digital Systems, Inc. or
other programming providers, as a condition precedent to the manufacture and
sale of Commercial Systems.
16. PAYMENT
A. All payments made under this Agreement shall be in United States
dollars is the full amount invoiced, without reduction on account of
any tax, exchange differential, bank transfer charge, or other similar
deduction and shall be sent by mail, wired, or cabled to HNS' account
in such bank as HNS shall have previously notified BTL. HNS shall
invoice BTL for all payments required hereunder.
B. Payment terms are net thirty (30) days from the later of HNS' invoice
date or date of shipment on an approved credit line established by BTL
with HNS. A late payment charge, at an annual rate of the lesser of
(i) the current prime rate (or equivalent), as last quoted by The Wall
Street Journal prior to the due date of the payment, plus two percent
(2%), or (ii) the maximum rate allowed by applicable law, shall be
applied to any payment not received by the due date thereof.
17. DELIVERY, TITLE, AND RISK OF LOSS
A. Delivery of all DSS Equipment pursuant to this Agreement shall be
F.O.B. HNS' facility, continental USA. Title to all or any part of the
DSS Equipment that is to become the property of BTL pursuant to this
Agreement shall pass to BTL at the time of shipment. BTL shall bear
all risk of loss or damage to the DSS Equipment, commencing at the
time of shipment.
B. Delivery schedules and shipment destinations will be subject to mutual
agreement.
C. Unless otherwise agreed in writing from HNS, the packaging, packing,
and preservation of all items to be delivered hereunder shall be in
accordance with HNS's standard practice suitable for transport by air
and land.
D. In the event that any part of the DSS Equipment is ready for delivery
in accordance with the delivery schedule, and HNS delays shipment
pursuant to BTL's request or because BTL is not prepared to accept a
scheduled shipment, HNS shall notify BTL that such DSS Equipment is
available for shipment, and BTL shall reimburse HNS for all reasonable
and actual storage or other costs and expenses that HNS incurs by
reason of any such delay which exceeds thirty (30) days.
18. INTENTIONALLY LEFT BLANK
19. HNS PROPERTY AND TRADEMARKS
A. As used in this Agreement, "HNS Property" means all proprietary
inventions, processes, product designs, machine designs, intellectual
property in any medium, and information, whether patented by HNS (or
its parent, affiliates, or subsidiaries) in the Territory or not,
heretofore and hereafter acquired or developed by HNS (or its
11
parent, affiliates, or subsidiaries) that is associated with the
Equipment. "HNS Trademarks" means any service ▇▇▇▇, commercial name,
trademark, or trade name, whether registered by HNS (or its parent,
affiliates, or subsidiaries) in the Territory or not, heretofore or
hereafter acquired or developed, that is associated with Equipment, or
service of HNS (or its parent, affiliates, or subsidiaries). HNS
trademarks include but are not limited to OnLine(TM) Guide,
LogoBeIt(TM), SeeThru(TM) Banner and PreSelect(TM).
B. During the term of this Agreement, BTL may use HNS' name and
Trademarks in advertising and other sales promotion activities with
respect to the product; provided that HNS reserves the right to
terminate BTL's right to use HNS' name and Trademarks in any such
activities to which HNS reasonably objects. From time to time HNS may
make spot checks of BTL's use of HNS' Trademarks. If HNS determines
that any use of such Trademarks are not in accordance with HNS'
standard guidelines BTL agrees that such use will be terminated
immediately. This Agreement shall not be construed to grant any other
rights with respect to names, Trademarks, Property or anything else of
HNS' parent, affiliates, or subsidiaries. BTL shall not label or
market DSS Equipment under any name except names designated by HNS
from time to time. BTL shall neither alter HNS Trademarks appearing on
DSS Equipment nor use HNS Trademarks or HNS' name on stationery, or in
BTL's corporate or firm name, unless the written approval of HNS is
obtained in advance of such use, and such use, if approved, shall in
no way bestow any rights to HNS Trademarks upon BTL.
C. All HNS Property and all HNS Trademarks are the exclusive property of
HNS, or its parent, affiliates, or subsidiaries, and BTL neither has
nor shall have any right, title, or interest in HNS Property or HNS
Trademarks, or any goodwill related thereto, during or after the term
of this Agreement. BTL represents and warrants that BTL has not sought
or obtained, and agrees not to seek or obtain, in the Territory or
elsewhere, any patent or registration embodying HNS Property or HNS
Trademarks and further agrees to discontinue all use of HNS Property
and HNS Trademarks immediately from and after the termination of this
Agreement, provided, however, so long as such termination is not as a
result of violation by BTL of Sections 28.A.(i), (ii) or (vii) of this
Agreement, for a period of ninety (90) days following termination of
this Agreement or the rights granted hereunder, BTL shall be permitted
to sell all of its remaining inventory of Commercial Systems, build
and sell its remaining raw materials inventory of components and DSS
Equipment into finished Commercial Systems and otherwise build and
sell such additional Commercial Systems as are necessary to fulfill
all then-existing firm purchase orders for Commercial Systems from
BTL's customers. HNS, or HNS's vendor, as the case may be, shall be
the sole owner of and shall have exclusive rights to the intellectual
property and technology relating to all DSS Equipment. The rights or
ownership of the DSS Equipment and the operation or use thereof
granted herein shall not be construed as a license from HNS for BTL to
any of the intellectual property with respect to the DSS Equipment or
to alter or manufacture or have manufactured any DSS Equipment. Except
as otherwise permitted by this Agreement, BTL shall not design,
manufacture, or sell any product embodying HNS proprietary technology
or identified with HNS Trademarks. BTL shall not use or disclose any
HNS proprietary technology in any manner adverse to the best interests
of HNS. Any enhancement in the value of HNS proprietary technology or
HNS Trademarks, or goodwill related thereto, in the Territory or
elsewhere, that results from the efforts of BTL shall be effected to
HNS's sole benefit and shall not give rise to any further compensation
to BTL.
12
D. BTL shall not directly or indirectly sell, offer, lease, license or
otherwise transfer rights to use HNS's name and Trademarks.
E. BTL expressly acknowledges that this Agreement does not grant any
rights with respect to the names, Trademarks, Property or anything
else owned by DIRECTV, Inc. BTL shall enter into a trademark
licensing agreement with DIRECTV, Inc. in the form attached hereto as
Exhibit "C" prior to engaging in any activities for which such an
agreement would be necessary.
F. BTL expressly acknowledges that, under this Agreement it is only
purchasing the then current software code with respect to the DSS
Equipment and that it does not acquire the rights to any future
releases of software with respect to the DSS Equipment; provided,
however, that if a future release of such software is incompatible
with DSS Equipment previously sold by HNS to BTL pursuant hereto, such
that the future release of such software is necessary for the
continued operation of the DSS Equipment previously sold by HNS to
BTL, then HNS will provide such future release software to BTL and its
customers to insure the continued operability of such previously sold
DSS Equipment.
20. RIGHTS IN TECHNOLOGY
Except as otherwise provided by this Agreement, each party, or that party's
vendor as the case may be, shall be sole owner of and shall have exclusive
rights in the technology relating to all equipment and software provided
hereunder which was originated by that party or vendor. The rights or ownership
of the software and the use thereof granted herein shall not be construed as a
license from one party to the other to manufacture or have manufactured any
equipment and/or software, except as permitted by this Agreement.
21. CONFIDENTIAL INFORMATION
A. HNS and BTL, to the extent of their contractual and lawful right to do
so, shall exchange proprietary or confidential information as
reasonably necessary for each to perform its obligations under this
Agreement. All information relating to the Equipment provided by
either party to the other, whether before or after the date thereof
and whether verbal or written, shall be and is hereby deemed to be
confidential and proprietary information (the "Confidential
Information"), when designated in writing or by appropriate stamp or
legend to be of a proprietary or confidential nature, subject to the
provisions of this Section 21.
B. Except as set forth in Paragraph C below, a party receiving
Confidential Information pursuant hereto (the "Receiving Party") shall
protect such Confidential Information, using the same standards of
care the Receiving Party normally affords its own confidential
information, from (i) use for any purpose other than in connection
with the DSS Equipment or, the performance of this Agreement, or (ii)
disclosure to any persons or entities other than the employees and
consultants of the Receiving Party (and subcontractors) who reasonably
need to have access to the Confidential Information and who have
agreed in writing to protect the Confidential Information as if they
were a party to this Agreement.
C. A Receiving Party shall not be liable for disclosure of Confidential
Information, or any part thereof, if the Receiving Party can
demonstrate that such Confidential Information (i) is in the public
domain at the time it is disclosed as a result of a legal disclosure
by one of the parties hereto; (ii) is known to or in the possession of
the
13
Receiving Party from a source other than the party hereto that
disclosed the information (the "Disclosing Party") without breach of
this Section by the Receiving Party; or (iii) is disclosed more than
five (5) years after the expiration of this Agreement. In the event of
any such disclosure, each of HNS and BTL agree to comply with requests
by the other party to maintain confidentiality for a reasonable period
up to the limits specified in (iii) above. In the event of any legal
action or proceeding or asserted requirement under applicable law or
government regulations calling for or compelling the disclosure of
Confidential Information furnished hereunder, the Receiving Party
shall promptly notify the Disclosing Party and, upon the request and
at the expense of the Disclosing Party, shall cooperate with the
Disclosing Party in lawfully contesting such disclosure. Except in
connection with any failure to discharge its responsibilities under
the preceding sentence, the Receiving Party shall not be liable for
any disclosure pursuant to any court or administrative order.
D. Confidential Information shall remain the property of the Disclosing
Party and shall, at the Disclosing Party's request and after it is no
longer needed in connection with the Equipment or the performance of
this Agreement, promptly be returned thereto or be destroyed, together
with all copies made by the Receiving Party and by anyone to whom such
Confidential Information has been made available by the Receiving
Party in accordance with the provisions of this Section 21.
22. LIMITED WARRANTIES
A. HNS shall deliver good title to all or any part of the DSS Equipment
that is to become the property of BTL pursuant to this Agreement, free
from any and all liens, claims, or encumbrances, except as provided in
Section 17 herein entitled "Delivery; Title; Risk of Loss."
Subject to the terms and conditions hereof, HNS warrants for a period
of one year from the date of sale of an Commercial System to BTL's
customer (the "Warranty Period") the DSS Equipment developed by HNS
and provided to BTL pursuant to this Agreement against defects in
material and workmanship that materially affect its performance in
accordance with the specifications set forth in this Agreement
("Defects"). HNS shall, as its sole liability for Defects and/or
breach of warranty and at its option and expense, promptly repair or
replace, or cause to be repaired or replaced, within fifteen (15) days
following the return thereof to HNS, any DSS Equipment that proves to
have a Defect during such Warranty Period.
B. The limited warranties set forth in this Section 22, except for the
warranty of title, are contingent upon BTL notifying HNS of an alleged
defect or failure within ten (10) days following expiration of the
Warranty Period. Repair, replacement, amendment, or alteration will be
performed in accordance with HNS's standard practices with respect to
such DSS Equipment. BTL shall be responsible for the return of DSS
Equipment to HNS's designated repair location, freight prepaid and
packed to ensure safe arrival. HNS shall return repaired, replaced,
amended, or altered DSS Equipment, freight prepaid and packed to
ensure safe arrival to BTL's designated location.
C. Notwithstanding anything in this Agreement to the contrary, HNS shall
have no obligation for any Defects in DSS Equipment that have been
caused by accident, misuse, neglect, mishandling, misapplication,
modification, acts of God, improper
14
service or maintenance (other than by HNS), or loss of programming
services due to failure of the applicable satellites.
D. The warranties set forth in this Section 22 allocate the risks of DSS
Equipment defects between HNS and BTL as authorized by the Uniform
Commercial Code and other applicable law. HNS's pricing under this
Agreement reflects this allocation of risk and the limitations of
liability contained in this Agreement.
E. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, HNS NEITHER MAKES, NOR
ASSUMES ANY LIABILITY UNDER, ANY WARRANTIES (WHETHER EXPRESS, IMPLIED,
OR STATUTORY) ON OR WITH RESPECT TO THE EQUIPMENT OR ANY COMPONENT
THEREOF, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED CONDITIONS OR
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Service of DSS Equipment, in the manner and for the period of time
provided above, shall constitute fulfillment of all liabilities of HNS
to BTL, whether based on contract, negligence, or otherwise with
respect to the DSS Equipment delivered to BTL hereunder; other than
any liabilities specifically agreed to by HNS in a written agreement
executed by an authorized representative of HNS. The employees and
agents of HNS are not authorized to make modifications to such
warranties or additional warranties binding on HNS; accordingly,
additional statements, whether oral or written, do not constitute
warranties and should not be relied upon by BTL.
23. OUT-OF-WARRANTY REPAIRS, REPLACEMENT PARTS, CERTIFICATION OF REPAIR
CENTERS, CUSTOMER SERVICE SUPPORT, SPECIAL 90-DAY SUPPORT
A. If any DSS Equipment proves to be defective after delivery hereunder,
but such defect is not covered (whether through the passage of time or
otherwise) by the warranties provided for in Section 22 above, then
BTL shall be responsible, at its sole cost and expense, for providing
all necessary maintenance and repair service and replacement parts for
any such defective DSS Equipment.
B. Replacement parts for each particular model of the DSS Equipment will
be available for purchase by BTL from HNS for a period of five (5)
years from the date of expiration of this Agreement.
C. Replacement parts ordered by BTL (which orders shall be irrevocable)
shall be delivered F.O.B. HNS' facility, continental USA. Prices for
replacement parts will be negotiated from time to time in good faith
by HNS and BTL and shall in any event be not higher than the lowest
prices charged by HNS to its best customers purchasing similar
quantities on similar payment terms. Payment and passage of title and
risk of loss shall be as stated in Sections 15 and 16 above,
respectively.
D. HNS shall establish a certification process for non-HNS repair
centers. Such repair centers may be required to procure specified test
and related fixtures as part of such certification process and at its
sole cost, EDI and voice access between it and HNS's service support
systems.
24. LIMITATION OF LIABILITY
The remedies of BTL set forth herein are exclusive and the liability of HNS
with respect to any of the DSS Equipment covered by or furnished under this
Agreement, shall not, except as expressly provided herein, exceed return of
monies paid for DSS Equipment on which such liability is
15
based. SUBJECT TO THE REMEDIES SPECIFICALLY SET FORTH HEREIN, IN NO EVENT SHALL
HNS BE LIABLE TO BTL OR ANYONE ELSE FOR SPECIAL, COLLATERAL, EXEMPLARY,
PUNITIVE, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT
LIMITATION, LOSS OF GOODWILL, LOSS OF PROFITS OF REVENUES, LOSS OF SAVINGS, LOSS
OF USE, INTERRUPTION OF BUSINESS, AND CLAIMS OF CUSTOMERS), WHETHER SUCH DAMAGES
OCCUR PRIOR OR SUBSEQUENT TO, OR ARE ALLEGED AS A RESULT OF, TORTIOUS CONDUCT OR
BREACH OF ANY OF THE PROVISIONS OF THIS AGREEMENT, EVEN IF HNS HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES. This limitation of liability will not apply
to death or injury to persons or damage to tangible property caused by the
negligence or willful misconduct of HNS.
25. PATENT AND COPYRIGHT INDEMNITY
A. HNS shall, at its own expense, defend, indemnify and hold BTL harmless
from and against any request for royalty payments or any claim for
equitable relief or damages against BTL based on an allegation that
the manufacture of any product acquired by BTL under this Agreement
(including without limitation the DSS Equipment or any New Commercial
Versions thereof, the DSS Equipment software described in Section 5 of
this Agreement and any other products acquired by BTL from HNS
pursuant to this agreement), or the use, lease, or sale thereof,
infringes any United States patent or copyright, and shall pay any
royalties and other costs related to the settlement of such request,
and shall pay the costs and damages, including attorneys' fees,
finally awarded as the result of any suit based on such claim,
provided that BTL is using the latest version of such product provided
by HNS and that HNS is given prompt written notice of such request or
claim by BTL and given authority and such assistance and information
as HNS requests in writing and as it is available to BTL for resisting
such request or for the defense of such claim. Any such assistance or
information that is furnished by BTL at the written request of HNS is
to be at HNS's expense.
B. In the event that, as a result of any such suit, the use, lease, or
sale of any product is enjoined, HNS shall, at its option, (i)
negotiate a license or other agreement with plaintiff so that such
product is no longer infringing, (ii) modify such product suitably or
substitute a suitable product therefor, which modified or substituted
product is not subject to such injunction and which shall be covered
by the terms of this Agreement, or if (i) or (ii) cannot be effected
by HNS's reasonable and diligent efforts, (iii) refund to BTL all
payments received from BTL for that DSS Equipment rendered useless
upon return receipt by HNS of such DSS Equipment.
C. Notwithstanding the above, HNS shall not be liable for any damage or
costs to the extent specifically resulting from claims (i) that HNS's
compliance with BTL's designs, specifications, or instructions, (ii)
that use of any of the DSS Equipment in combination with products not
supplied by HNS, or (iii) that a manufacturing or other process
carried out by or through BTL and utilizing any of the DSS Equipment,
constitutes either direct or contributory infringement of any United
States patent (such claim being collectively referred to herein as
"Other Claims"). BTL shall indemnify HNS from any and all damage and
costs (including settlement costs) finally awarded or agreed upon for
infringement of any United States patent or copyright in any suit to
the extent specifically resulting from Other Claims, and from
reasonable expenses incurred by HNS in defense of such suit if BTL
does not undertake the defense thereof.
16
D. This indemnity is in lieu of any other liability, whether or not based
on indemnity or warranty, express or implied, with respect to patents
and copyrights.
E. Notwithstanding anything herein to the contrary, the maximum liability
of either party to the other arising pursuant to this Section 25 shall
be limited to $1,000,000 per claim. Liability under this Section 25
shall not be subject to the limitations imposed under Section 24.
26. INDEMNITY
BTL agrees to indemnify and hold harmless HNS, its parent, affiliates,
subsidiaries, and their officers, directors, and employees from and against any
and all claims, awards, damages, costs, expenses (including but not limited to,
reasonable attorney's fees and costs) or any other liability in any form or
shape that may result from in whole or in part the claims of any and all third
parties, related to any installation, servicing and/or use of the Commercial
System, any product liability claim involving the Commercial System, and/or
claims for violation of any warranty which BTL may offer, unless and to the
extent said claim is a result of or caused by the DSS Equipment, the DSS
Equipment Software described in Section 5 of this Agreement or any other
products supplied by HNS or services supplied by HNS (collectively "DSS Products
and Services"). HNS agrees to indemnify and hold harmless BTL, its affiliates,
subsidiaries, and their officers, directors, and employees from and against any
and all claims, awards, damages, costs, expenses (including but not limited to,
reasonable attorney's fees and costs) or any other liability in any form or
shape that may result from in whole or in part the claims of any and all third
parties; related to any DSS Products and Services or any product liability claim
involving DSS Products and Services.
27. INSURANCE
Without in any way limiting the obligations set forth in Section 26A above,
BTL shall maintain in full force and effect such insurance coverage and limits
of liability, as more fully described in the Certificate of Insurance set forth
in Exhibit "D" hereto.
A. Normal and customary comprehensive general liability insurance
coverage in an amount equal to or in excess of $1,000,000 for injury,
death or property damage resulting from each occurrence.
B. Automobile liability insurance covering owned, non-owned and rented
automobile equipment providing at least $1,000,000 for coverage of
injury, death or property damage resulting from each occurrence.
C. All risk contents insurance insuring all HNS-furnished equipment and
materials against any loss or damage during such period of time that
such equipment and materials are under BTL's possession or control.
D. The insurance described above shall remain in full force and effect
throughout the term of this Agreement and shall: (i) include HNS as an
Additional Insured, and (ii) state that no insurance will be canceled
or materially changed without thirty (30) days prior written notice to
HNS.
28. TERMINATION OF AGREEMENT
A. HNS may terminate this Agreement, effective immediately upon written
notice to BTL, in the event: (i) the criminal conviction of BTL
related to this Agreement or the DSS Equipment, (ii) that BTL modifies
DSS Equipment in an attempt to receive
17
programming at no cost, (iii) that BTL admits in writing its inability
to pay its debts generally as they become due, or files a petition
looking to reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future
federal or state statute, law or regulation, or BTL appoints a
receiver, liquidator, custodian, assignee, trustee, sequestrator or
other similar official for BTL or any substantial part of BTL's
property, or BTL makes an assignment of all or substantially all of
its assets for the benefit of its creditors, (iv) that BTL ceases to
operate as a going concern or to conduct its operations in the normal
course of business, (v) that HNS receives numerous complaints from
dealers or consumers regarding BTL's unprofessional behavior or
activity in connection with the Commercial product, which complaints
have been verified as justifiable following reasonable investigation
by HNS and represent a regular and continuous pattern of
unprofessional behavior or activity, (vi) that BTL attempts to
persuade a dealer or consumer with whom BTL established contact
through a lead from HNS to purchase DSS(R) equipment manufactured by a
competitor of HNS, (vii) that BTL falsifies information given to HNS
in connection with Section 14 hereof, or (viii) that HNS determines
that BTL has violated any of HNS' intellectual property rights and
such violation will cause or is likely to cause material harm to HNS.
B. BTL agrees that it shall, not later than forty five (45) days
following the effective date of expiration or termination of this
Agreement, pay all monies owed to HNS at the time of the expiration or
any termination of this Agreement regardless of the terms of payment
of such monies that may have otherwise been granted to BTL by HNS
prior to the effective date of such expiration or termination;
provided, however, that if the terms for payment of any invoice to BTL
by HNS at the time of such expiration or termination then provide for
payment thereof in less than forty five (45) days, such invoice shall
be payable pursuant to the applicable terms of payment.
C. Except as expressly provided herein, the expiration or termination of
this Agreement shall not affect or impair the rights, liabilities and
obligations of either party to the other as provided pursuant to this
Agreement or under any release or purchase order for DSS Equipment
existing prior to such expiration or termination, nor shall such
expiration or termination relieve either party of any obligation or
liability accrued under this Agreement or pursuant to any release or
purchase order prior to such expiration or termination, nor affect or
impair the rights of either party arising under this Agreement prior
to such expiration or termination.
D. Upon termination of this Agreement for any reason, neither party shall
be liable or obligated to the other party with respect to any payments
or future profits; exemplary, punitive, special, or consequential
damages; indemnifications, or other compensation regarding such
termination, irrespective of whether such obligations or liabilities
may be contemplated in the law of the Territory or elsewhere, and each
party hereby waives and relinquishes any rights, pursuant to law or
otherwise, to any such payments, indemnifications or compensation. All
remedies of either party hereunder contained herein pursuant to law or
equity shall be cumulative and not alternative.
E. Upon termination of its Agreement, BTL shall, at its own expense, (i)
immediately return to HNS all property of HNS then in BTL's
possession, and (ii) cease all usage of HNS trademarks, trade-names,
advertising materials and similar items; provided, however that if
such termination was for any reason other than a violation of section
28.A(i), (ii) or (vii) above, BTL shall, for a period of ninety (90)
days after the date of such termination, be permitted to sell all of
its remaining inventory of Commercial Systems, build and sell its
remaining raw materials inventory of components and DSS
18
Equipment into finished Commercial Systems and otherwise build and
sell such additional Commercial Systems as are necessary to fulfill
all then-existing firm purchase orders for Commercial Systems from
BTL's customers.
F. Notwithstanding anything herein to the contrary, the terms and
obligations of Sections 3, 5, 19, 20, 21, 22, 23, 25, 26, and 28 shall
survive termination of this Agreement.
29. DISTRIBUTION AND EXPORT
BTL agrees that (a) it will not market and sell the DSS Equipment outside
of the Territory and (b) it will not participate in the transfer, by any means,
of any commodity or technical data acquired from HNS: (i) in violation of the
Export Administration Act ("Act") or any regulation, order or license issued
under the Act, or (ii) with the knowledge or with reason to know that a
violation of the Act, or a regulation, an order or a license issued thereunder,
has occurred, is about to occur, or is intended to occur with respect to any
such commodity or technical data.
30. ARBITRATION
Any controversy, dispute, or claim arising out of or relating to this
Agreement, any modification or extension hereof, or any breach hereof (including
the question whether any particular matter is arbitrable hereunder) shall, at
the written request of either party to the other party not less than thirty (30)
days in advance of submittal to arbitration, be settled exclusively by
arbitration in accordance with the then applicable Rules of Arbitration of the
American Arbitration Association by one (1) or more arbitrators appointed in
accordance with said Rules. Judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof. The
Arbitrators shall sit in Washington, DC.
31. FORCE MAJEURE
HNS shall not be liable for nondelivery, delay in delivery or any other
impairment of performance hereunder, in whole or in part, caused by the
occurrence of any contingency beyond the control either of HNS or of HNS's
suppliers, including but not limited to war (whether an actual declaration
thereof is made or not), sabotage, insurrection, rebellion, riot or other act of
civil disobedience, act of a public enemy, failure or delay in transportation,
failure of or delay in performance of BTL's obligations under this Agreement,
act of any government or any agency or subdivision thereof, judicial action,
labor dispute, fire, accident, explosion, epidemic, quarantine, restrictions,
storm, flood, earthquake or other act of God, or shortage of labor, fuel, raw
material, or machinery, where HNS has exercised ordinary care in the prevention
thereof. If any such contingency occurs, HNS shall allocate production, and
deliveries among HNS's customers in such manner as will insure the interrupted
flow of DSS Equipment to BTL at a level of at least 80% of the levels set forth
in the forecast contemplated by Section 13 herein.
32. PUBLIC RELEASE OF INFORMATION
Except in the case of public disclosures required by applicable law, with
advance notice when possible, each party shall obtain the written approval of
the other party concerning the content and timing of news releases, articles,
brochures, advertisements, prepared speeches, and other information releases
concerning this Agreement within a reasonable time prior to the release of such
information. Such approval shall not be unreasonably withheld.
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33. NOTICES
All notices, demands, requests, or other communications that may be or are
required to be given, served, or sent by either party to the other party
pursuant to this Agreement (the "Notice") shall be in writing and shall be
deemed to have been given, if delivered personally by messenger or transmitted
by telegram, telex or facsimile (with receipt confirmed), or the day following
delivery to a reputable overnight courier that guarantees delivery within
twenty-four (24) hours, addressed to the respective parties as set forth below,
or to such other addresses as either party may substitute by Notice to the
other:
If to HNS:
▇▇▇▇▇▇ Network Systems, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Director, Contracts
Satellite Networks Division
If to BTL:
Blonder Tongue Laboratories, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇ Ronon ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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34. SEVERABILITY
In the event any one or more of the provisions of this Agreement shall for
any reason be held to be invalid or unenforceable, the remaining provisions of
this Agreement shall be unimpaired, and the invalid or unenforceable provision
shall be replaced by a mutually acceptable provision that, being valid and
enforceable, comes closest to the intention of the parties underlying the
invalid or unenforceable provision.
35. WAIVER
Neither the waiver by either of the parties hereto of a breach of, or a
default under, any of the provisions of this Agreement, nor the failure of
either of the parties, on one or more occasions, to enforce any of the
provisions of this Agreement or to exercise any right or privilege hereunder
shall thereafter be construed as a waiver of any subsequent breach or default of
a similar nature, or as waiver of any of such provisions, rights, or privileges
hereunder.
36. ASSIGNMENT
This Agreement shall not be assignable by either party without the prior
written consent of the other party hereto, except that this Agreement may be
assigned by either party to any entity that is (i) noncompetitive to the
nonassigning party in the sale of DSS Equipment in the Territory; (ii) a wholly
owned subsidiary or a company wholly owned by the corporation wholly owning the
assigning party; or (iii) a corporation that acquires substantially all of the
assets and assumes substantially all of the liabilities (including this
Agreement) of such assigning party. In the event of such assignment by
acquisition, the assigning party shall notify the other party of such assignment
in writing concurrent with the date of the assignment.
37. GOVERNING LAW
This Agreement, the rights and obligations of the parties hereto, and any
claim or disputes relating thereto, shall be governed by and construed in
accordance with the laws of the State of Delaware as of the Effective Date
(without regard to its laws on the conflict of laws).
38. ENTIRE UNDERSTANDING
This Agreement supersedes and replaces any and all prior agreements,
understandings, or arrangements, whether oral or written, heretofore made
between the parties and relating to the subject matter hereof, and together with
the exhibits attached hereto constitutes the entire understanding of the parties
with respect to the subject matter of this Agreement. This Agreement may not be
modified, changed, altered, or amended except by an express written agreement
signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or have
caused this Agreement to be duly executed on their behalf, effective as of the
date first written above.
▇▇▇▇▇▇ NETWORK SYSTEMS, INC. BLONDER TONGUE LABORATORIES, INC.
(HNS) (BTL)
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- -----------------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President Title: President
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