Portions of this exhibit (indicated by brackets) have been omitted pursuant to a
request for confidential treatment.
PROCUREMENT AND SERVICES CONTRACT
---------------------------------
between
MAJORCO L.P.,
Owner
and
NORTHERN TELECOM INC.,
Vendor
Dated as of January 31, 1996
PROCUREMENT AND SERVICES CONTRACT
---------------------------------
This Procurement and Services Contract (the "Contract") is made and is
effective as of January 31, 1996 (the "Effective Date"), by and between MajorCo
L.P., a Delaware limited partnership (the "Owner"), and Northern Telecom Inc., a
Delaware corporation (the "Vendor" and, together with the Owner, the "Parties").
RECITALS:
--------
A. The Federal Communications Commission (the "FCC") granted to the
Owner or certain of its Affiliates (as defined below) personal communications
services licenses (the "PCS FCC Licenses") to build and operate PCS Systems (as
defined below) in specified geographic areas in the United States;
B. The Owner desires to have the Vendor engineer and construct PCS
Systems in the geographic areas specified on Schedule 4 (collectively, the
"System Areas") pursuant to the terms of this Contract;
C. The Vendor, itself or through its Subcontractors (as defined
below), desires to provide Products (as defined below) and Services (as defined
below) to the Owner in connection with the engineering and construction of PCS
Systems in the System Areas, including, but not limited to, the Vendor's
obligation to engineer, equip, install, build, test and service an operating PCS
System in each System Area in accordance with the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth in this Contract, the Owner and the Vendor hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Definitions. In addition to the terms listed below, certain
-----------
additional terms are defined in Schedule 1 and in the Exhibits, subject to the
provisions of subsection 1.2 hereof. As used in this Contract, the following
terms have the following meanings:
"AAA" means the American Arbitration Association.
---
"Acceptance Certificates" means the collective reference to the
-----------------------
Factory Test Certificate, the Initial PCS System Certificate, the Substantial
Completion Certificate and the Final Acceptance Certificate.
"Acceptance Tests" means the collective reference to the performance
----------------
and reliability demonstrations and tests specified in Exhibits B1, B2 and B3 to
determine whether the Products, the Services, any of the PCS Systems and/or the
System meet the Specifications and the terms and conditions of this Contract.
2
"Additional Affiliate Agreement" has the meaning ascribed thereto in
------------------------------
subsection 3.3.
"Additional Affiliate Arrangement" means a formal arrangement in
--------------------------------
connection with the Owner's build-out of the Nationwide Network between the
Owner and a Person to be designated an Additional Affiliate under the terms of
this Contract which arrangement must include agreements on marketing and any of
one or more of the following characteristics: backhaul, billing systems, resale
agreements (other than or in addition to marketing agreements) and/or revenue
sharing. In any event, the Parties understand that roaming agreements and/or
arrangements alone will not constitute an Additional Affiliate Arrangement
unless at least one of the other characteristics listed above (other than or in
addition to marketing agreements) is also made a part of any such agreement
and/or arrangement.
"Additional Affiliate" has the meaning ascribed thereto in
--------------------
subsection 3.1.
"Affiliates" means the collective reference to the Initial
----------
Affiliates and the Additional Affiliates.
"ANSI" means the American National Standards Institute.
----
"APC" means American PCS, L.P., a Delaware limited partnership.
---
"Applicable Laws" means, as to any Person, the certificate of
---------------
incorporation and by-laws or other organizational or governing documents of such
Person, all North American or foreign laws (including, but not limited to,
Environmental Laws), treaties, ordinances, judgments, decrees, injunctions,
writs, orders and stipulations of any court, arbitrator or governmental agency
or authority and statutes, rules, regulations, orders and interpretations
thereof of any federal, state, provincial, county, municipal, regional,
environmental or other Governmental Entity, instrumentality, agency, authority,
court or other body (i) applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject or (ii)
having jurisdiction over a or any part of any PCS System, the System or the Work
to be performed pursuant to the terms of this Contract.
"Applicable Permits" means any waiver, exemption, zoning, building,
------------------
variance, franchise, permit, authorization, approval, license or similar order
of or from any North American or foreign, federal, state, provincial, county,
municipal, regional, environmental or other governmental body, instrumentality,
agency, authority, court or other body having jurisdiction over all or any part
of any PCS System, the System or the Work to be performed pursuant to the terms
of this Contract.
"Backwards Compatibility" or "Backwards Compatible" means that any
-------------------------------------------------
referenced prior Software Revision Level or Levels of the applicable Software
and any referenced prior Equipment Revision Level or Levels of the applicable
Equipment, as the case may be, remain fully functional in accordance with and up
to the performance levels to which it was performing immediately prior to any
such enhancement and/or revision after the
3
integration with the succeeding Software Revision Level or Equipment Revision
Level, as the case may be, and that after such integration such prior Software
Revision Level or Equipment Revision Level loses no functionality and such
succeeding Software Revision Level or Equipment Revision Level interoperates
with all such functionalities of such prior Software Revision Level or Equipment
Revision Level.
"Base Station ("BTS")" means the radio subsystem that handles the
--------------------
Owner's PCS radio traffic in a designated cell. The Base Station includes all
amplification, modulation, synchronization and other circuitry required to
process a radio signal. The inputs to a Base Station are a landline signal
(e.g. T1) and the radio signal that is fed into antenna lines.
"Building Ready Date" has the meaning ascribed thereto in subsection
-------------------
2.5.
"Cable Microcell Integrator ("CMI")" means a form of cable microcell
----------------------------------
integrator that provides for transportation of wireless communication signals
over a cable TV distribution plant. The CMI takes certain signals from the
cable TV distribution plant (the "cable PCS band or bands") and suitably
heterodynes, filters and amplifies these signals such that they can be radiated
by a CMI antenna or antennas in the designated PCS band to PCS wireless
handsets. The CMI takes signals received from the PCS wireless handsets from
one or more CMI receiving antennas and suitably heterodynes, filters and
amplifies these signals for transportation by the cable TV distribution plant to
a Headend Interface Converter or Distributive Cable Access Provider ("DCAP") at
a PCS Base Station. Additionally, the CMI unit responds to control signaling
and provides status signals. The CMI is normally collocated with the cable TV
distribution plant and takes power from the cable plant.
"CDMA" means code division multiple access as specified in ANSI-J-
----
STD-008.
"Change Orders" has the meaning ascribed thereto in subsection 7.3.
-------------
"Civil Work" means the labor and materials necessary in the
----------
performance of demolition, construction and renovation work (e.g., roads,
grading, fencing and structural improvements, including, but not limited to, any
buildings and towers) in order to construct a System Element Facility in
accordance with Exhibit E.
"Completion Cure Period" has the meaning ascribed thereto in
----------------------
subsection 15.3.
"Configuration Engineering" means the engineering required to
-------------------------
establish System Element configuration including, without limitation, preparing
component, inventory and layout drawings, Equipment labels, cable tray layout
drawings, and "as-built" drawings and Documentation. Configuration Engineering
also includes the design, power distribution and supply for each of the System
Elements.
"Continental" means Continental Cablevision, Inc.
-----------
4
"Contract" has the meaning ascribed thereto in the prefatory
--------
paragraph to this Contract.
"Contract Documents" means this Contract and all of the Exhibits and
------------------
Schedules attached hereto.
"Contract Price" has the meaning ascribed thereto in subsection 6.1.
--------------
"CSR" has the meaning ascribed thereto in subsection 2.26.2.
---
"Customer" means any CDMA 1900 customer doing business in North
--------
America of the Vendor or any CDMA 1900 customer doing business in North America
of any of the Vendor's affiliates or subsidiaries.
"Custom Material" has the meaning ascribed thereto in subsection
---------------
11.10.1.
"Defects and Deficiencies," "Defects or Deficiencies" or "Defective""
-------------------------------------------------------------------
means any one or a combination of the following or items of a similar nature:
(a) when used with respect to the performance of labor or service items
of Work (including any work by any Subcontractor), such items that are not
provided in a workmanlike manner and in accordance with the standards and/or
Specifications set forth herein;
(b) when used with respect to structures, materials, Equipment and
Software items of Work (including any Work by any Subcontractor), such items
that are not (i) new and of good quality and free from improper workmanship and
defects in accordance with the standards set forth herein and standards of good
procurement, manufacturing and construction standards, or (ii) free from errors
and omissions in design or engineering services in light of such standards; or
(c) in general, (i) Work (including any Work by any Subcontractor) that
does not conform to the Specifications and/or requirements of this Contract,
(ii) Work (including any Work by any Subcontractor) that is not free from
excessive corrosion or erosion or (iii) any design, engineering, start-up
activities, materials, Equipment, Software, tools, supplies, Installation or
Training that (1) does not conform to the standards and/or Specifications set
forth herein, (2) has improper or inferior workmanship, (3) would materially and
adversely affect the ability of the System and/or any PCS System and/or any
material part thereof to meet the performance criteria specified in Exhibit F on
a consistent and reliable basis or (4) would materially and adversely affect the
continuous operation of the System and/or any PCS System or any material part
thereof.
"Discontinued Products" has the meaning ascribed thereto in
---------------------
subsection 10.2.
5
"Documentation" means the documentation for the System and/or any
-------------
PCS System and/or any material part thereof.
"Effective Date" has the meaning ascribed thereto in the prefatory
--------------
paragraph to this Contract.
"E1 Emergency Condition ("E1")" has the meaning ascribed thereto in
-----------------------------
subsection 2.26.3.
"E2 Emergency Condition ("E2")" has the meaning ascribed thereto in
-----------------------------
subsection 2.26.3.
"Emergency Technical Assistance ("ETA")" means the provision of
--------------------------------------
emergency technical assistance to the Owner for the purpose of diagnosing and
resolving a problem which adversely affects the System and/or any PCS System
and/or a material part thereof, its operation and/or its service pursuant to and
in connection with subsection 2.26.3.
"Engineer" means the engineer or engineers appointed from time to time
--------
by the Owner to do certain work and/or inspections and reviews on behalf of the
Owner and/or provide advice or information to the Owner in connection with the
System and/or any PCS System and/or any part thereof.
"Engineering" means all of the engineering required to be done by the
-----------
Vendor to complete the System in accordance with the Specifications including,
but not limited to, RF Engineering, Configuration Engineering, Network
Interconnection Engineering and Facilities Engineering done in accordance with
the Specifications and the CDMA standards.
"Engineering Warranty Period" has the meaning ascribed thereto in
---------------------------
subsection 17.3.
"Environmental Laws" means any and all North American and foreign,
------------------
federal, state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Entity, or
requirements of law (including, without limitation, common law) relating in any
manner to contamination, pollution, or protection of human health or the
environment, as now or may at any time hereafter be in effect.
"Equipment" means all equipment, hardware and other items of personal
---------
property which are required to construct and operate the System and/or any PCS
System and/or any part thereof in accordance with the Specifications including,
without limitation, additional equipment required as a result of the expansion
or additional coverage required pursuant to subsection 2.2 and the equipment
listed on Exhibit D or on Schedule 7 (parts A and B).
"Equipment Combined Release" has the meaning ascribed thereto in
--------------------------
subsection 13.1.
6
"Equipment Enhancements" means modifications or improvements made to
----------------------
the Equipment which improve performance or capacity of the Equipment.
"Equipment Revision Level" means each version of an Item of Equipment
------------------------
that reflects any modification or change from the immediately preceding version
of such Item of Equipment.
"Equipment Upgrade" means a change or modification in any Equipment
-----------------
which fixes or otherwise corrects faults, design shortcomings or shortcomings in
meeting the Specifications, or failure rates, or in any such case, that is
necessary to enable performance in accordance with the most current version of
the Equipment (which may be referred to by the Vendor as "class A changes").
"Escrow Agreement" has the meaning ascribed thereto in subsection
----------------
11.8.
"Exchange Act" has the meaning ascribed thereto in subsection 27.22.
------------
"Expansions" means any additional Products or Services resulting from
----------
a modification by the Owner to the Specifications, the performance criteria set
forth in Exhibit F or the Project Milestones set forth on Exhibit A resulting in
a change to the System and/or any PCS System and/or any material part thereof,
including, but not limited to, the extension or expansion of the System and/or
any PCS System (i) into geographic areas outside of the System Areas covered by
the PCS Systems identified in Schedule 4, or (ii) to increase capacity and/or
performance of the System and/or any PCS System beyond the performance criteria
and/or Specifications originally contemplated herein. Expansions will not
include any additional Products or Services required to meet the Specifications
applicable to the Initial System.
"Extraordinary Transportation" means the Vendor's or its
----------------------------
Subcontractors' transport of Products and/or other materials pursuant to the
terms of this Contract where the circumstances of such transport require the
Vendor to use any one or a combination of the following extraordinary means of
transport and/or extraordinary methods of achieving access to the Owner's
facilities: (i) four-wheel drive vehicle (other than those typically used for
the delivery of Equipment), (ii) helicopter, (iii) boat, (iv) airplane, (v)
bulldozer, (vi) clear physical obstructions requiring the building of a new road
by the Vendor or its Subcontractors or (vii) a construction crane.
"Facilities Engineering" means the engineering required to design each
----------------------
System Element Facility including, without limitation pursuant to and as
required by Exhibit E and Exhibit B2, building layout, drawings and relevant
Specifications for the construction of the buildings, towers, generators, cable
and antennae and all other items required to make the System Element Facility
functional. Facilities Engineering does not include Configuration Engineering.
"Facilities Preparation Services" means all Facilities Engineering,
-------------------------------
Civil Work, Site Plan Architectural Work, Structural Architectural Work, and
Utilities Work, all of
7
which must be performed in accordance with the Specifications. Facility
Preparation Services does not include Site Acquisition or Microwave Relocation.
"Facilities Preparation Services Warranty Period" has the meaning
-----------------------------------------------
ascribed thereto in subsection 17.3(c).
"Factory Test Certificate" means a document submitted by the Vendor to
------------------------
the Owner and signed by an authorized representative of the Owner and an
authorized officer of the Vendor stating that in accordance with the
requirements of Exhibit B3 and this Contract the Vendor has successfully
completed all factory tests on the Products in accordance with the requirements
of Exhibit B3 and this Contract.
"FCC" has the meaning ascribed thereto in the recitals to this
---
Contract.
"Final Acceptance" means, as to any PCS System, the successful
----------------
completion by the Vendor of all of the final acceptance tests and requirements
applicable to such PCS System set forth in Exhibit B3 in accordance with the
requirements of Exhibit B3 and the terms of this Contract.
"Final Acceptance Certificate" means a document submitted by the
----------------------------
Vendor to the Owner and signed by an authorized officer of the Vendor stating
that the Vendor has successfully completed the Final Acceptance Acceptance Tests
applicable to the relevant PCS System in accordance with the requirements of
Exhibit B3.
"Final RF Engineering Plan" has the meaning ascribed thereto in
-------------------------
subsection 2.6.
"Final RF Review Period" has the meaning ascribed thereto in
----------------------
subsection 2.6.
"Final Site Count" has the meaning ascribed thereto in subsection
----------------
2.6.
"Financing Interim Period" has the meaning ascribed thereto in
------------------------
subsection 24.9.
"Force Majeure" means the following:
-------------
(a) Acts of God, epidemic, earthquake, landslide, lightning, fire,
explosion, accident, tornado, drought, flood, hurricane, or extraordinary
weather conditions more severe than those normally and typically
experienced in the affected geographic area constituted by each of the
specified System Areas in which the Vendor is seeking to claim Contract
suspension due to Force Majeure;
(b) Acts of a public enemy, war (declared or undeclared), blockade,
insurrection, riot or civil disturbance, sabotage, quarantine, or any
exercise of the police power by or on behalf of any public entity;
8
(c) (i) The valid order, judgment or other act of any federal, state or
local court, administrative agency, Governmental Entity or authority
issued after the Effective Date; (ii) with respect to the Vendor, the
suspension, termination, interruption, denial or failure of or delay in
renewal or issuance of any Applicable Permit required by this Contract to
be obtained by the Owner; (iii) with respect to the Owner, the
suspension, termination, interruption, denial or failure of or delay in
renewal or issuance of any Applicable Permit required by this Contract to
be obtained by the Vendor; or (iv) a change in law; provided that no such
-------- ----
order, judgment, act, event or change is the result of the action or
inaction of, or breach of this Contract by, the Party relying thereon;
(d) Strikes, boycotts or lockouts, except for any such strike,
boycott or lockout involving the employees of the Vendor or the employees
of a material Subcontractor;
(e) A partial or entire delay or failure of utilities; or
transportation embargoes; or
(f) The presence of (i) any Hazardous Waste on or at any System
Element Location which materially interferes with the Work to be done
thereon or otherwise materially endangers the safety of any personnel at
such location; (ii) any unknown historical or archeological sites which
are not shown or indicated in the survey of any System Element Locations
and of which the Vendor could not have reasonably been expected to be
aware; or (iii) any mining or water recovery activities (other than such
activities by the Vendor or its Subcontractors) at or under any System
Element Location after the Effective Date.
Events of Force Majeure include the failure of a Subcontractor to
furnish labor, services, materials, or equipment in accordance with its
contractual obligations, only if such failure is itself due to an event of Force
Majeure. A Force Majeure does not include any delay in performance to the
extent due to the failure of the Vendor or any Subcontractor to provide an
adequate number of engineers or other workmen or to manufacture or procure an
adequate amount of Equipment, Software and/or Services.
"Friable Asbestos" has the meaning ascribed thereto in subsection
----------------
20.4.
"Governmental Entity" means any nation or government, any state,
-------------------
province or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranteed Substantial Completion Date" means the date which is
--------------------------------------
defined in Exhibit A as "Milestone M8" as such date may be delayed for the Non-
Designated System Areas pursuant to subsection 2.7(b) and any other System Area
pursuant to subsection 15.4(c).
"Hazardous Waste" means any and all hazardous or toxic substances,
---------------
wastes, materials or chemicals, petroleum (including crude oil or any fraction
thereof) and petroleum
9
products, asbestos and asbestos-containing materials, pollutants, contaminants,
polychlorinated biphenyls and any and all other materials or substances,
regulated pursuant to any Environmental Laws or that could result in the
imposition of liability under any Environmental Laws.
"Headend Interface Converter ("HIC")" means a form of CMI that
-----------------------------------
provides for transportation of wireless communication signals over a cable TV
distribution plant. The HIC takes signals from the PCS Base Station transmitter
and suitably heterodynes, filters and amplifies these signals for processing by
the PCS Base Station receiver. Additionally, the HIC provides reference and
control signals to the CMI units and receives and processes status signals from
the CMI unit.
"Independent Auditor" means any of the Persons set forth on Schedule
-------------------
15 or any Person mutually agreeable to the Parties.
"Indemnitees" has the meaning ascribed thereto in subsection 20.1.
-----------
"Initial Affiliates" means the collective reference to each of the
------------------
Persons set forth on Schedule 5.
"Initial Affiliate Agreement" has the meaning ascribed thereto in
---------------------------
subsection 3.2.
"Initial Commitment" has the meaning ascribed thereto in subsection
------------------
7.1.
"Initial PCS System" means that PCS System, or a portion thereof,
------------------
designated by the Owner within one hundred twenty (120) days of the Effective
Date as the Initial PCS System in which Substantial Completion must take place
in accordance with the terms of Exhibit B3 prior to and as a condition of the
Owner's acceptance of Substantial Completion of any other PCS System within the
Initial System; provided that at any time after the designation of the Initial
-------- ----
PCS System prior to the Substantial Completion of the first PCS System within
the Initial System the Parties may mutually agree to change the designation of
the Initial PCS System.
"Initial PCS System Certificate" means a document submitted by the
------------------------------
Vendor to the Owner and signed by an authorized representative of the Owner and
an authorized officer of the Vendor stating that the Vendor has successfully
completed the Acceptance Tests applicable to the Initial PCS System in
accordance with the requirements of Exhibit B3.
"Initial System" means the build-out of that portion of the System
--------------
Areas as shown on Schedule 4 prior to any Expansions or Owner requests for
additional coverage for such System Areas pursuant to the terms of this
Contract.
"Initial Term" has the meaning ascribed thereto in subsection 5.1.
------------
10
"In Revenue Service" means the commercial operation of any PCS System,
------------------
or a portion thereof, exclusive of operation for purposes of conducting
Acceptance Tests; provided that In Revenue Service will not by itself constitute
-------- ----
acceptance of any such PCS System or any portion thereof.
"Inspector" means a qualified Person designated as an authorized
---------
representative of the Owner assigned to make all necessary inspections of the
Work, or of the labor, materials and equipment furnished or being furnished by
the Vendor or any of its Subcontractors at the System Element Locations and the
other sites where the Vendor or any Subcontractor is prosecuting the Work,
subject to appropriate safety, security and confidentiality requirements.
"Installation" means the performance and supervision by the Vendor of
------------
all installation of Products within the System and/or any PCS System.
"Intellectual Property Rights" has the meaning ascribed thereto in
----------------------------
subsection 14.2.
"Interim Delay Penalty" has the meaning ascribed thereto in
---------------------
subsection 15.2.
"Interim Milestone" has the meaning ascribed thereto in subsection
-----------------
15.2.
"Interoperability" means (i) the ability of the System and/or any PCS
----------------
System and/or any material part thereof to interconnect and successfully operate
with the equipment and software of other Systems and/or PCS Systems and/or any
material part thereof of the Vendor and/or the Other Vendors and/or other
suppliers whose equipment and software also meet the relevant ANSI standards and
other Specifications identified in Exhibit D and (ii) the ability of each of the
Products to operate with one another and to operate with and within the System,
including, but not limited to, the ability of the handsets (to be delivered
pursuant to subsection 2.3) to operate with and within the System, all in
accordance with the Specifications. Since certain sections of the ANSI
standards are currently undefined, and certain sections are left available for
independent development by suppliers, the potential for such interoperability or
incompatibility with properly designed systems exists, and must be resolved by
the Vendor or any Subcontractor providing PCS Systems to the Vendor in
accordance with the terms hereof.
"Item" means any item at any time listed in any of the Vendor's price
----
lists and it specifically includes, without limitation, all Software Upgrades,
Software Enhancements, Equipment Upgrades, Equipment Enhancements and
modifications, enhancements, updates or other revisions of any kind in any such
item, spare parts with respect to any of the foregoing and any other PCS/CDMA
related item.
"Late Completion Payment Cap" has the meaning ascribed thereto in
---------------------------
subsection 15.3.
11
"Late Completion Payments" has the meaning ascribed thereto in
------------------------
subsection 15.3.
"Liabilities" has the meaning ascribed thereto in subsection 20.1.
-----------
"Liquidated Damages" has the meaning ascribed thereto in subsection
------------------
15.1.
"Maintenance and Instruction Manuals" means the manuals prepared by
-----------------------------------
the Vendor and delivered to the Owner pursuant to subsection 2.21 containing
detailed procedures and specifications for the ongoing maintenance of the
System.
"Major Portion" of the Work means a segregated portion of the Work
-------------
with a cost of ten million dollars ($10,000,000) or more.
"MFC Certificate" has the meaning ascribed thereto in subsection
---------------
26.1.
"Microwave Delay Period" has the meaning ascribed thereto in
----------------------
subsection 2.37.
"Microwave Relocation" means the process by which incumbent point to
--------------------
point microwave users of the 1850 - 1990 Mhz frequency spectrum are moved to
other frequencies or alternate transmission facilities in order to clear the
licensed PCS spectrum for broadband wireless service.
"Microwave Relocation Completion" means, with respect to any given PCS
-------------------------------
System, the point at which the Owner will have finished sufficient Microwave
Relocation in such PCS System to permit the commercially viable and marketable
operation of such PCS System in accordance with the terms of this Contract.
"Minimum Commitment" has the meaning ascribed thereto in subsection
------------------
7.2.
"Nationwide Network" means all of the PCS Systems built or to be owned
------------------
and/or operated by the Owner or its Affiliates in North America.
"NDAB" means the New Development Advisory Board established pursuant
----
to the terms of this Contract including subsections 2.11, 2.31 and 2.32.
"Net Price" means the final price paid by any Customer after all
---------
discounts, reductions, rebates, volume discounts or adjustments of any kind are
applied, whether under the original contract of purchase, as it may be amended,
supplemented or otherwise modified from time to time, or any supplemental,
separate, or complimentary transaction.
"Network Interconnection" means the transmission linkage between Base
-----------------------
Stations and MSCs and between MSCs and PSTNs but does not include Network
Interconnection Engineering. Typically T1 transmission links are used for
connectivity.
12
"Network Interconnection Engineering" means the traffic engineering
-----------------------------------
among all System Elements within the System.
"NewTelCo" means NewTelCo. L.P., a Delaware limited partnership.
--------
"Non-Designated System Areas" means the collective reference to the
----------------------------
four System Areas not set forth in the notice provided to the Vendor by the
Owner pursuant to subsection 15.4(c).
"Non-Essential Equipment" means all Equipment listed on part B of
-----------------------
Schedule 7.
"Non-Essential Equipment Warranty Period" has the meaning ascribed
---------------------------------------
thereto in subsection 17.2.
"North America" means the United States, Canada (including the
-------------
Province of Quebec) and Mexico.
"Notice to Proceed" means a written notice given by the Owner to the
-----------------
Vendor in the form attached hereto as Schedule 9 and in compliance with the
provisions of this Contract, fixing the date on which the Vendor will have the
full right, in accordance with the terms of this Contract, and the full
obligation, subject to the terms of this Contract, to commence the Work to be
performed under this Contract.
"Notice to Proceed Date" means the date on which any Notice to Proceed
----------------------
is issued by the Owner in accordance with the terms of this Contract.
"OCC" has the meaning ascribed thereto in subsection 2.26.2.
---
"OM&P" has the meaning ascribed thereto in subsection 2.23.
----
"Operating Manuals" means the manuals to be prepared by the Vendor and
-----------------
delivered to the Owner pursuant to subsections 2.20, 2.22 and 2.23 containing
detailed procedures and specifications for the operation of the System and/or
any part thereof.
"Operative" has the meaning ascribed thereto in subsection 27.26.
---------
"Other Vendors" means vendors, other than the Vendor, with whom the
-------------
Owner has entered, or may enter in the future, into a contract for the provision
of products and services for the engineering and construction of any portion of
the Nationwide Network. Other Vendors does not include any Subcontractors in
connection with the Work to be performed under this Contract in their capacity
as Subcontractors.
"Outage" has the meaning ascribed thereto in subsection 17.5.
------
13
"Owner" has the meaning ascribed thereto in the prefatory paragraph
-----
to this Contract.
"Owner Loss" means an insured loss incurred by the Owner relating to
----------
the System.
"Owner's Succeeding Entity" has the meaning ascribed thereto in
-------------------------
subsection 27.23.
"Parties" has the meaning ascribed thereto in the prefatory
-------
paragraph to this Contract.
"P1 Major Condition ("P1")" has the meaning ascribed thereto in
-------------------------
subsection 2.26.3.
"P2 Significant Problem ("P2")" has the meaning ascribed thereto in
-----------------------------
subsection 2.26.3.
"P3 Minor Problem ("P3")" has the meaning ascribed thereto in
-----------------------
subsection 2.26.3.
"Partners" means the collective reference to Sprint Spectrum, L.P., a
--------
Delaware limited partnership and/or Sprint Corporation ("Sprint"), TCI Network
Services, a Delaware general partnership ("TCI"), Cox Telephony Partnership, a
Delaware general partnership ("Cox"), and Comcast Telephony Services, a Delaware
general partnership ("Comcast").
"Patent License" has the meaning ascribed thereto in subsection
--------------
14.5.
"PCS" means personal communication services authorized by the FCC.
---
"PCS FCC Licenses" has the meaning ascribed thereto in the recitals
----------------
of this Agreement.
"PCS System" means all Products and other equipment, tools and
----------
software, all System Element Sites and any property located thereat necessary or
required to provide PCS in a given specified System Area.
"Person" means an individual, partnership, limited partnership,
------
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity of whatever
nature.
"Phillieco" means Phillieco L.P.
---------
"Preliminary RF Design" has the meaning ascribed thereto in
---------------------
subsection 2.6.
14
"Product Warranty Period" has the meaning ascribed thereto in
-----------------------
subsection 17.1.
"Products" means the collective reference to the Equipment and the
--------
Software provided by the Vendor or any Subcontractor pursuant to and in
accordance with the terms of this Contract.
"Project Milestones" means the collective reference to the milestone
------------------
dates and intervals as set forth in Exhibits A1 and A2, each a "Milestone."
"Proprietary Information" has the meaning ascribed thereto in
-----------------------
subsection 27.19.
"Punch List" means that list prepared in conjunction with the
----------
Acceptance Tests and included in any Acceptance Certificate, which contains one
or more immaterial non service-affecting items (specifying the cost of
completing such items) which have not been fully completed by the Vendor as of
the Substantial Completion of any PCS System; provided that the aggregate price
-------- ----
of completing such items will not exceed ten percent (10%) of the Contract Price
for any such PCS System, or in the case of acceptance of a System Element
Facility ten percent (10%) of the cost of the Civil Work related thereto, and
such incomplete portion of the Work will not during its completion, materially
impair the normal daily operation of such PCS System in accordance with the
Specifications.
"Qualcomm" has the meaning ascribed thereto in subsection 21.1.5.
--------
"Reviewers" has the meaning ascribed thereto in subsection 2.14.
---------
"RF" means radio frequency.
--
"RF Engineering" means radio frequency engineering required in
--------------
connection with the architectural design of the System and/or any PCS System.
"RF Services Warranty Period" has the meaning ascribed thereto in
---------------------------
subsection 17.3(b).
"RFP" has the meaning ascribed thereto in subsection 11.10.1.
---
"RTM License" has the meaning ascribed thereto in subsection 11.7.
-----------
"RTU License" has the meaning ascribed thereto in subsection 11.1.
-----------
"Services" means the collective reference to all of the services to be
--------
conducted by the Vendor as part of the Work pursuant to the terms of this
Contract including, but not limited to, Facilities Preparation Services, RF
Engineering, System Maintenance Support, System Support Services and other
repair and maintenance services, performed in accordance with the terms of this
Contract including, but not limited to, the Specifications.
15
Services does not include Site Acquisition, Network Interconnection or Microwave
Relocation.
"Services Warranty Periods" has the meaning ascribed thereto in
-------------------------
subsection 17.3(c).
"Site Acquisition" means the services to be performed by the Owner
----------------
and/or its subcontractors necessary for identifying and acquiring sufficient
rights to the System Element Locations within the System Areas including all
requisite zoning approvals and all building approvals required by any
Governmental Entity; provided that Site Acquisition does not include any of the
-------- ----
Site Plan Architectural Work.
"Site Acquisition Substantial Completion" means, with respect to any
---------------------------------------
PCS System, the point at which the Owner will have acquired, by purchase, lease
or otherwise, rights to a sufficient number of System Element Locations within
the specified System Area to be covered by such PCS System such that the
performance criteria specified in Exhibit F applicable to such PCS System would
be substantially satisfied in the reasonable opinion of the Owner subject to the
reasonable acceptance of the Vendor. If the Vendor upon receiving notice from
the Owner that Site Acquisition Substantial Completion has been achieved in any
given PCS System disagrees with the Owner's claim, then the Vendor will have ten
(10) days to detail its disagreement in writing to the Owner and an Independent
Auditor chosen by the Owner and such Independent Auditor will have ten (10)
business days from the receipt of such writing to make a determination whether
or not the Owner's claim of Site Acquisition Substantial Completion is
reasonable. The Independent Auditor will have no discretion or authority to
provide the Parties with any answer other than whether in its judgment the
Owner's claim is reasonable. If the Parties still disagree in good faith with
the determination by the Independent Auditor such dispute will be referred to
arbitration pursuant to the terms of subsection 23.1 for final resolution.
"Site Acquisition Substantial Completion Date" means with respect to
--------------------------------------------
any PCS System the date on which the Owner will have achieved Site Acquisition
Substantial Completion.
"Site Plan Architectural Work" means the preparation of architectural
----------------------------
and/or engineering drawings, plans and/or specifications necessary to obtain
zoning permits and/or approvals, building permits and/or approvals and/or
conditional use permits for any given System Element Facility.
"Software" means (a) all computer software furnished hereunder for use
--------
with any Equipment including, but not limited to, computer programs contained on
a magnetic or optical storage medium, in a semiconductor device, or in another
memory device or system memory consisting of (i) hardwired logic instructions
which manipulate data in central processors, control input-output operations,
and error diagnostic and recovery routines, or (ii) instruction sequences in
machine-readable code furnished hereunder that control call processing,
peripheral equipment and administration and maintenance functions, (b) any
Software Enhancements, Software Features and Software Upgrades furnished by the
Vendor
16
to the Owner hereunder, and (c) any Documentation furnished hereunder for use
and maintenance of the Software.
"Software Combined Release" has the meaning ascribed thereto in
-------------------------
subsection 12.1.
"Software Enhancements" means modifications or improvements made to
---------------------
the Software which improve performance or capacity of the Software or which
provide additional functions to the Software.
"Software Licenses" means the collective reference to the RTU
-----------------
License and the RTM License.
"Software Revision Level" means each version of Software that reflects
-----------------------
any amendment, modification or change from the immediately preceding version.
"Software Upgrades" means periodic updates to the Software issued by
-----------------
the Vendor to the Owner under Warranty and Software maintenance obligations to
correct Defects or Deficiencies in the Software (which may be referred to by the
Vendor as "patches").
"Sony/Qualcomm Agreement" has the meaning ascribed thereto in
-----------------------
subsection 2.3.
"Source Code" means all CDMA 1900 intellectual information including,
-----------
but not limited to, all relevant documentation, Software in human-readable form,
flow charts, schematics and annotations which comprise the pre-coding detailed
design specifications for Software (excluding Third Party Software) which are
then being maintained by the Vendor which constitutes the "embodiment of the
intellectual property" of the Software as such concept is referenced in Section
365(n) of the United States Bankruptcy Code, as amended.
"Specifications" means the collective reference to the specifications
--------------
and performance standards of the design, Facilities Preparation Services,
Engineering, Products, Installation and Services contemplated by this Contract
and includes any Expansions, amendments, modifications and/or other revisions
thereto made in accordance with the terms of this Contract and as more fully set
forth in Exhibits C, D, E and F; provided, however, that with respect to
-------- -------
Facilities Preparation Services, design, Engineering, Products, Installation and
Services for which specifications and performance standards are not provided and
listed in such Exhibits, "Specifications" refers to performance, functionality
and fitness for the intended purpose for which such design, Facilities
Preparation Services, Engineering, Products, Installation and Services are
employed specified in the manner as set forth in the Exhibits.
"Structural Architectural Work" means the preparation of all
-----------------------------
architectural drawings and blueprints relating to the structural specifications
for a System Element Facility.
17
"Subcontractor" means a contractor, vendor, supplier, licensor or
-------------
other Person, having a contract with the Vendor or with any other Subcontractor
of the Vendor who has been hired to assist the Vendor in certain specified areas
of its performance of its obligations under this Contract including, without
limitation, performance of any part of the Work.
"Substantial Completion" means the point at which the Vendor has
----------------------
completed a portion of the Work other than specified Items set forth on
applicable Punch Lists such that the geographic areas of any System Area as
specified in Schedule 4 all have been covered to the extent set forth in
Schedule 4, in accordance with the Specifications and the System Standards and
as verified to the Owner in accordance with the criteria and requirements set
forth in Exhibit B3.
"Substantial Completion Certificate" means, with respect to a given
----------------------------------
PCS System, a document submitted by the Vendor to the Owner and signed by an
authorized representative of the Owner and an authorized officer of the Vendor
stating that the Vendor has successfully completed the Acceptance Tests
applicable to the Substantial Completion of the Work to be done in such PCS
System in accordance with the requirements of Exhibit B3.
"System" means all of the PCS Systems built by the Vendor in the
------
System Areas allocated to the Vendor pursuant to the terms of this Contract and
as set forth on Schedule 4.
"System Areas" has the meaning ascribed thereto in the recitals to
------------
this Contract.
"System Element" means the Equipment and Software required to perform
--------------
radio, switching and/or related functions for the System and/or any PCS System
(which may include, without limitation, Authentication Center ("AUC"), Base
Station, Base Station Controller ("BSC"), Equipment Identity Register ("EIR"),
Messaging System ("MXE"), Mobile Switching Center/Visitor Location Register
("MSC/VLR"), Mobile Service Node ("MSN"), Signal Transfer Point ("STP"), Home
Location Register ("HLR"), Service Control Point ("SCP") and Intelligent
Peripheral ("IP")).
"System Element Facility" means the structures, improvements,
-----------------------
foundations, towers, and other facilities necessary to house or hold any System
Element and any related Equipment to be located at a particular System Element
Location.
"System Element Location" means the physical location for a System
-----------------------
Element.
"System Element Site" means the collective reference to a particular
-------------------
System Element, together with the related System Element Location and System
Element Facility.
"System Element Verification" means the Vendor's laboratory level
---------------------------
testing on the Products conducted by the Vendor in accordance with Exhibit B3.
18
"System Maintenance Support" means those Services offered by the
--------------------------
Vendor for maintenance of any of the Products and/or any System Element or
collection thereof.
"System Managers" means each of the managers designated by the Owner
---------------
and the Vendor, respectively, for the purposes of subsection 23.1.
"System Standards" means the collective reference to the industry
----------------
standards specified in Exhibits C, D, F, G and H.
"System Support Services" means those services offered by the Vendor
-----------------------
relating to System design, enhancement and optimization.
"System Warranty Period" has the meaning ascribed thereto in
----------------------
subsection 17.4.
"TCG" means the collective reference to Teleport Communications
---
Group, Inc., and TCG Partners.
"Technical Documentation" means the documentation identified as such
-----------------------
in the Specifications.
"Term" has the meaning ascribed thereto in subsection 5.2.
----
"Test-bed Laboratory" has the meaning ascribed thereto in subsection
-------------------
2.5.
"Third Party Software" means Software which is independently developed
--------------------
by a third party, sublicensed to the Owner under this Contract or otherwise
provided with the Products in accordance with the Specifications.
"Training" has the meaning ascribed thereto in subsection 2.23.
--------
"Trouble Report ("TR")" has the meaning ascribed thereto in
---------------------
subsection 2.26.2.
"Utilities Work" means the installation of electric and telephone
--------------
utilities at the System Element Locations.
"Vendor" has the meaning ascribed thereto in the prefatory paragraph
------
to this Contract.
"Vendor-Controlled Location" has the meaning ascribed thereto in
--------------------------
subsection 2.12.
"Vendor Developments" has the meaning ascribed thereto in subsection
-------------------
2.11.
19
"Vendor Event of Default" has the meaning ascribed thereto in
-----------------------
subsection 24.2.
"Vendor Patents" has the meaning ascribed thereto in subsection
--------------
14.5.
"Vendor procedural error" has the meaning ascribed thereto in
-----------------------
subsection 17.5.
"Vendor's Succeeding Entity" has the meaning ascribed thereto in
--------------------------
subsection 27.22.
"Warranty Damages" has the meaning ascribed thereto in subsection
----------------
17.5.
"Warranty Periods" means the collective reference to the Product
----------------
Warranty Period, the Non-Essential Equipment Warranty Period, the Services
Warranty Period and the System Warranty Period.
"Work" means all phases of this Contract, including engineering and
----
design, procurement, manufacture, construction and erection, installation,
training, start-up (including calibration, inspection and start-up operation),
testing and start-up and testing operation with respect to the System and/or any
PCS System and/or any part thereof to be performed by the Vendor or its
Subcontractors pursuant to this Contract. Work includes (i) all labor,
materials, equipment, services, and any other items to be used by the Vendor or
its Subcontractors in the prosecution of this Contract, wherever the same are
being engineered, designed, procured, manufactured, delivered, constructed,
installed, trained, erected, tested, started up or operated during start-up and
testing and whether the same are on or are not on any System Element Location or
any other site within the System and/or any PCS System and (ii) all related
items which would be required of a contractor of projects of comparable size and
design which are necessary for the System and/or any PCS System and/or any part
thereof to (x) operate in accordance with all Applicable Laws and Applicable
Permits, and (y) provide the operating personal communications service systems
required pursuant to this Contract. The Vendor will be responsible for
providing in accordance with the terms of this Contract any and all additional
items and services which are not expressly included by the terms of this
Contract and which are reasonably required for construction and start-up of the
System and/or any PCS System.
1.2 Other Definitional Provisions. 1.2.1 When used in any other
-----------------------------
Contract Documents, unless otherwise specified therein, all terms defined in
this Contract will have the defined meanings set forth herein. Terms defined in
Schedule 1 and the Exhibits are deemed to be terms defined herein; provided,
--------
that in the case of any terms that are defined both in this Contract, in
- - ----
Schedule 1 and/or an Exhibit, the definitions contained in this Contract will
supersede such other definitions for all purposes of this Contract; provided,
--------
further, that definitions contained in any Exhibit shall control as to such
- - -------
Exhibit.
1.2.2 The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Contract refer to this Contract as a whole and
not to any particular
20
provision of this Contract and Section, subsection, Schedule and Exhibit
references are to this Contract unless otherwise specified.
1.2.3 The meanings given to terms defined in this Contract are
equally applicable to both the singular and plural forms of such terms.
SECTION 2 SCOPE OF WORK, RESPONSIBILITIES AND PROJECT
MILESTONES
2.1 Scope of Work. Upon the terms and conditions herein set forth, the
-------------
Vendor will provide all Products and Services to the Owner required for the
establishment of the System including, but not limited to, the Vendor's
obligation to engineer, equip, install, build, test and service the PCS Systems
in the System Areas set forth on Schedule 4 in accordance with the
Specifications and that otherwise satisfies all conditions of Final Acceptance;
provided, that the Vendor will not be responsible for Site Acquisition (except
- - --------
to the extent certain Facilities Preparation Services, including Site Plan
Architectural Work, are required for the successful completion of Site
Acquisition), Network Interconnection or Microwave Relocation. The Vendor must
complete the Work in accordance with the Project Milestones set forth in Exhibit
A1 and as further specified herein. The Vendor must furnish all labor,
materials, tools, transportation and supplies required to complete the Work in
accordance with the Specifications and the terms of this Contract.
2.2 Additional Coverage. (a) The Owner has the option from time to
-------------------
time, upon not less than thirty (30) days' written notice to the Vendor, to
designate additional geographic areas, including, but not limited to, additional
System Areas, as to which the Owner may purchase from the Vendor some or all, as
determined by the Owner in its sole discretion, of the Products and Services
required for the PCS coverage of such areas as provided for in this Contract,
all on the terms and conditions set forth in this Contract; provided that the
-------- ----
Parties will mutually agree on the Project Milestones and the System performance
criteria applicable to such additional coverage pursuant to this subsection 2.2;
provided further that any such agreement on (i) such Project Milestones must be
- - -------- -------
based on substantially the same intervals (including, but not limited to, the
number of days specified in each such interval) as set forth in Exhibits A1 and
A2, to the extent possible or (ii) such System performance criteria must be
based on substantially the same System performance criteria as set forth in
Exhibit F, to the extent possible.
(b) The Owner has the option from time to time upon not less than thirty
(30) days' prior written notice to the Vendor and in accordance with applicable
ordering procedures set forth herein, to require the Vendor to increase the
level of capacity or coverage of an already allocated PCS System (whether such
PCS System has been so allocated pursuant to Schedule 4 or subsection 2.2(a)),
all on the terms and conditions of this Contract.
2.3 Handsets. The Vendor must supply the Owner with two thousand
--------
(2,000) subscriber handsets at the prices set forth on Schedule 2 and meeting
the criteria set forth in Exhibit H within sixty (60) days prior to the
Substantial Completion of the Initial PCS
21
System in accordance with Exhibit B3; provided that the criteria set forth in
-------- ----
Exhibit H will conform to the specifications and/or criteria agreed between the
Owner and Sony/Qualcomm (the "Sony/Qualcomm Agreement") if such agreement has
been entered into as of the date required for the delivery of handsets by the
Vendor pursuant to this subsection 2.3; provided further that in the event the
-------- -------
Sony/Qualcomm Agreement has not been entered into as of the date the Vendor is
required to deliver handsets pursuant to the first sentence of this subsection
2.3 the handsets required to be delivered by the Vendor pursuant to this
subsection 2.3, will substantially conform to the criteria set forth in Exhibit
H, but in any event will work with the System and in accordance with the
applicable requirements related thereto. The Vendor must supply a sufficient
number of subscriber handsets, but in no event not less than one hundred (100)
per PCS System within the Initial System, acceptable to the Owner and the
necessary equipment related thereto for testing and operation of each such PCS
System pursuant to, and in accordance with, the terms of this Contract, Exhibit
B3 and Exhibit H.
2.4 Initial PCS System. Pursuant to Exhibit B3, the Vendor must achieve
------------------
Substantial Completion of the Initial PCS System in accordance with the
requirements of Exhibit B3 prior to, and as a condition of, the Substantial
Completion of any other PCS System within the Initial System. This requirement
in no way relieves the Vendor of its obligations prior to the Substantial
Completion of the Initial PCS System to continue with the Work on all of the PCS
Systems constituting the Initial System in accordance with the requirements of
this Contract and the Project Milestones applicable to each such PCS System.
2.5 System Element Verification; Test-bed Laboratory. (a) In
------------------------------------------------
accordance with Milestone M4 (as set forth on Exhibit A1) the Vendor must
successfully complete System Element Verification pursuant to the terms of this
Contract including, but not limited to, the Specifications and Exhibit B3 no
later than August 19, 1996.
(b) The Vendor will supply, at no additional cost to the Owner, the
Products and Services necessary for the establishment of a test-bed laboratory,
which laboratory will include the Products and Services set forth on Exhibit I
(the "Test-bed Laboratory"), and the ongoing maintenance of such laboratory at
the then-current level of technology throughout the Term of this Contract. The
Test-bed Laboratory will be provided by the Vendor in accordance with Milestone
M3 applicable to the Initial PCS System as set forth on Exhibit A1 but in no
event later than ninety (90) days after a date specified by the Owner provided
--------
that such date is not before April 19, 1996 (the "Building Ready Date").
- - ----
2.6 RF Engineering and Site Acquisition. (a) In accordance with the
-----------------------------------
Project Milestones set forth on Exhibit A1, within sixty (60) days of the
Effective Date, the Vendor must deliver to the Owner a detailed preliminary RF
design (the "Preliminary RF Design") for each of the System Areas in accordance
with the requirements and criteria set forth in Exhibit B1. The Owner and the
Vendor agree to cooperate with each other to complete the RF Engineering and the
Site Acquisition. The Owner must notify the Vendor of desired coverage areas,
RF Engineering parameters or other information or restrictions the Owner wishes
to be included in the Final RF Engineering Plan for each PCS System. In
accordance with Exhibit B1, the Vendor will do the RF Engineering in each of the
PCS Systems and in connection therewith will use the parameters, information and
restrictions supplied by the Owner. As
22
part of the RF Engineering, the Vendor will establish "search rings" in each of
the PCS Systems that will specify areas in which the Owner may proceed with Site
Acquisition.
(b) In accordance with Exhibit B1 the Vendor will be kept reasonably
informed of the progress made on ongoing Site Acquisition within the System
Areas. As the Site Acquisition progresses, the Vendor agrees to regularly alter
the RF Engineering plan to determine a new search ring or rings to take into
account any changes or modifications requested by the Owner due to the Owner's
inability to acquire sufficient rights to a location which could constitute a
System Element Location in a timely or economic manner. When making changes to
the RF Engineering plan the Vendor must take into account the Site Acquisition
already completed by the Owner.
(c) In accordance with the Project Milestones set forth on Exhibit A1
and the requirements and criteria set forth in Exhibit B1, within five (5) days
of the Owner achieving Site Acquisition Substantial Completion within any given
System Area (the "Final RF Review Period"), the Owner and the Vendor will use
their best efforts to agree on a final System Element Location count (the "Final
Site Count") and a final RF Engineering plan (the "Final RF Engineering Plan")
for such System Area upon which the PCS System for such System Area will be
built by the Vendor. Failure of the Owner and the Vendor to reach satisfactory
agreement on a Final Site Count and/or a Final RF Engineering Plan for any given
System Area within the Final RF Review Period will automatically result in the
referral of any such disagreement to the most senior RF engineers of both the
Owner and the Vendor for their review and resolution within five (5) days after
the end of any such Final RF Review Period. If the senior RF engineers fail to
resolve any such disagreement within the extended five (5) day resolution
period, the disagreement shall automatically be referred for resolution in
accordance with subsection 23.1. It is understood by the Parties that during
the period of any such disagreement and the resolution thereof in accordance
with the Contract, the Work on such PCS System, to the extent possible, will be
ongoing and that Substantial Completion on such PCS System cannot be achieved
without agreement by the Parties on a Final RF Engineering Plan and/or a Final
Site Count for such PCS System and/or System Area.
2.7 Facilities Preparation Services, Installation and Substantial
-------------------------------------------------------------
Completion. (a) In accordance with the Project Milestones specified in Exhibit
- - ----------
A and the requirements and criteria of Exhibit B2, for each System Area the
Vendor must complete the Facilities Preparation Services for all System Element
Locations within such PCS System in accordance with the construction criteria
set forth in Exhibit E and the performance criteria set forth in Exhibit F no
later than ninety (90) days from the Owner/Vendor agreement on a Final Site
Count and a Final RF Engineering Plan for such System Area. Pursuant to the
Project Milestones the Vendor must complete Installation of the Products for any
given PCS System within three (3) days of its completion of the Facilities
Preparation Services for such PCS System pursuant to the requirements and
criteria set forth in Exhibit D and Exhibit F.
(b) In accordance with the terms of this Contract, including but not
limited to subsection 2.37, the Vendor must achieve Substantial Completion for
each PCS System within the Initial System pursuant to the Substantial Completion
testing set forth in Exhibit B3 by the later of (i) thirty (30) days from
Microwave Relocation Completion in such
23
PCS System or (ii) thirty (30) days from Milestone M7 (as set forth in Exhibit
A1) for such PCS System; provided that for any of the PCS Systems within the
-------- ----
Non-Designated System Areas the Vendor will not be required to achieve
Substantial Completion in accordance with Milestone M8 (as set forth on Exhibit
A1) and Exhibits A1 and B3 prior to June 1, 1997 and Milestone M6 (as set forth
on Exhibit A1) applicable to the PCS Systems in the Non-Designated System Areas
will not be required to be achieved by the Vendor prior to thirty-two and one-
half (32- 1/2) days prior to the Vendor's achievement of Substantial Completion
in such PCS Systems; provided, further that Vendor will endeavor to achieve
--------
Substantial Completion of the PCS Systems within such Non-Designated System
Areas on or about January 31, 1997. For example, if, with respect to a PCS
System within a Non-Designated System Area, the date specified in clauses (i) or
(ii) (excluding the first proviso in this subsection 27(b)) above occurs on
-------
December 15, 1996, then the Guaranteed Substantial Completion Date for such PCS
System would be June 1, 1997.
2.8 Site Acquisition Modifications. In the event that the Owner
------------------------------
determines that it is unlikely to achieve Site Acquisition Substantial
Completion for any PCS System in a timely and cost-effective manner, the Vendor
will modify certain performance criteria set forth in Exhibit F with respect to
such PCS System in the manner and to the degree that the Owner reasonably
specifies in writing to the Vendor in accordance with the terms of Exhibit B3.
2.9 Design/System Architecture and Engineering; Interoperability. (a)
------------------------------------------------------------
The Vendor must provide all Engineering and design services necessary for the
completion of the Work and the System in conformity with the Specifications and
the CDMA standards, including, but not limited to, the Engineering and design
necessary to describe and detail the System and the specified PCS Systems.
(b) Pursuant to and in accordance with the terms of Exhibits B3 and G,
BTS/BSC-MSC Interoperability must be achieved upon the earlier of (i) the
Substantial Completion of the last PCS System within the Initial System or (ii)
December 1, 1996 (provided that such date will change to reflect the actual
-------- ----
delay in the finalization of Attachment A to be attached to Exhibit G); provided
--------
that the requirements of this subsection 2.9(b) are a condition to the Vendor's
- - ----
Substantial Completion of such last PCS System within the Initial System and
Substantial Completion of such last PCS System will not be deemed to have been
achieved by the Vendor unless and until such Interoperability shall have been
achieved in accordance with the criteria set forth in Exhibit G; provided
--------
further that in no event will the achievement of BTS/BSC-MSC Interoperability in
- - -------
accordance with Exhibit G be required prior to December 1, 1996 and that in any
event any delay in such Interoperability which is not due substantially to the
fault of the Vendor will not be a delay pursuant to the terms of this subsection
2.9(b) subject to the reasonable opinion of the Owner.
2.10 Certification. The Vendor must coordinate its performance of the
-------------
Services described in subsection 2.9 with the Engineering and design efforts
(including, without limitation, any and all RF Engineering and/or Site
Acquisition) of all Subcontractors, the Owner, the Other Vendors, any and all
supply and transportation requirements and all federal, state and local
authorities or agencies. The Vendor will be fully knowledgeable about and
24
will, after reasonable review thereof, accept all Engineering, including,
without limitation, RF Engineering and design, irrespective of whether the
Vendor, the Other Vendors, the Owner or third parties such as the Subcontractors
may furnish such services. All Engineering requiring certification must be
certified by professional engineers licensed or properly qualified to perform
such Engineering services in all appropriate jurisdictions if such certification
is, in the Owner's opinion, appropriate and reasonable under the circumstances.
2.11 Notice of Developments. 2.11.1 Vendor Developments. The Vendor
---------------------- -------------------
must provide the Owner, through the NDAB or the Owner's vice president and/or
director of product development, with reasonable prior notice (but in any event
not less than ten (10) business days) of any CDMA 1900 Vendor Product
developments, innovations and/or technological advances (collectively "Vendor
Developments") relevant to the System prior to giving such notice to any other
Customer of the Vendor or otherwise making any such Vendor Development public
within the relevant marketplace; provided that any such notice pursuant to this
-------- ----
subsection 2.11.1 need not include any information originated by another
Customer which is proprietary to such other Customer of the Vendor. For the
purposes of this subsection 2.11.1 the term "Vendor" includes the Vendor and its
affiliates and subsidiaries.
2.11.2 Participation in Testing. The Owner has the right, but not the
------------------------
obligation, to witness and/or participate in any initial testing and/or
application of any Vendor Development; provided that any such initial testing of
-------- ----
such Vendor Development shall be subject to (i) scheduling as reasonably
determined by the Vendor, (ii) the qualification that the Owner's PCS System
meets the technical requirements for the testing of such Vendor Development as
reasonably determined by the Vendor (or otherwise that the Owner is willing to
update such PCS System to meet such requirements), (iii) the Owner's
acknowledgement that it will be able to provide the resources necessary to
implement the initial testing for such Vendor Development, and (iv) the Owner
and the Vendor executing a reasonable verification office testing agreement that
identifies the scope, terms, pricing, responsibilities and schedule related to
the initial testing of such Vendor Development. The Vendor must provide the
Owner at least thirty (30) days' prior notice of its intent to test any such
Vendor Development and upon the Owner's written request the Vendor will allow
the Owner to participate in such testing upon terms and in a testing environment
reasonably acceptable to the Parties at such time. The Owner will make its
Test-bed Laboratory and/or certain of its PCS Systems (following Final
Acceptance thereof) available to the Vendor for any such testing in which the
Owner has the right, and will have notified the Vendor of its desire, to
participate in pursuant to the terms of this subsection 2.11.2. The length of
the prior notice period described above may be shortened to under thirty (30)
days if necessary and appropriate under the circumstances, but in no event will
any such prior notice period be less than ten (10) days.
2.12 Safety. To the extent the Vendor is in control of any System
------
Element Location, or other site within the System or any System Area during the
term of this Contract (a "Vendor-Controlled Location") including, but not
limited to, during the build-out of the Initial System, the Vendor will be
solely responsible for initiating, maintaining, and supervising all safety
precautions and programs in connection with all such Vendor-Controlled
25
Locations. The Vendor must materially comply with Applicable Laws and
Applicable Permits and the Specifications bearing on safety of persons or
property or protection against injury, damages or loss. The Vendor must provide
a written report to the Owner describing fully all incidents affecting safety on
any Vendor-Controlled Location and must also furnish to the Owner copies of all
MSHA, OSHA and workers' compensation reports. The Vendor acknowledges and
agrees that until Substantial Completion of any given PCS System is achieved the
Vendor will be deemed to be in control of all Products, tools, designs,
buildings, structures and/or Engineering (other than those Products, tools,
designs, buildings, structures and/or Engineering specific to and necessary for
Site Acquisition, Network Interconnection and/or Microwave Relocation) at, in or
upon all System Element Locations and/or any other site within such PCS System.
2.13 Emergencies. In the event of any emergency endangering life or
-----------
property, the Vendor must take such action as may be reasonable and necessary to
prevent, avoid or mitigate injury, damage or loss and will, as soon as possible,
report any such incidents, including the Vendor's response thereto, to the
Owner. Whenever, in the reasonable opinion of the Owner, the Vendor has failed
to take sufficient precautions for the safety of the public or the protection of
the Work or of structures or property on or adjacent to any Vendor-Controlled
Location, creating, in the reasonable opinion of the Owner, an emergency
requiring immediate action, then the Owner, after having given reasonable prior
notice to the Vendor, may cause such sufficient precautions to be taken or
itself provide such protection. The taking or provision of any such precautions
or protection by the Owner or its agents or representatives will be for the
account of the Vendor and the Vendor must reimburse the Owner for the cost
thereof.
2.14 Right of Inspection. The Owner, the parties providing financing in
-------------------
connection with the build-out of the Nationwide Network or their duly appointed
representatives, including Inspectors (collectively "Reviewers"), will at all
reasonable times have access to the various sites where the Vendor or its
Subcontractors are prosecuting the Engineering, design, procurement, testing or
manufacture of the Work; provided that this subsection 2.14 will not be presumed
-------- ----
to give access to the Vendor's or its Subcontractors' sites to direct
competitors of the Vendor provided that such sites are not otherwise Owner
sites. For these purposes, reasonable access will be given during normal
business hours to the Vendor's and its Subcontractors' plants, premises, storage
and deposit areas, facilities and offices, sources of materials, Equipment being
assembled, already assembled or in operation, Equipment being performance tested
or tested to the Vendor's specifications and to any other places or areas
occupied by the Vendor or its Subcontractors in connection with the Work.
Notwithstanding anything herein to the contrary, any Reviewer's right of access
to the Vendor's and/or the Subcontractors' plants, premises, storage and deposit
areas, facilities and offices, sources of materials, Equipment being assembled,
already assembled or in operation, Equipment being performance tested or tested
to the Vendor's specifications and to any other places or areas occupied by the
Vendor or its Subcontractors in connection with the Work will be subject to the
reasonable confidentiality, safety and security requirements of same and further
subject to such Reviewers' non-interference with the Work and other work being
performed thereon. The Vendor must provide reasonable temporary office space
and services for the Reviewers to the extent necessary.
26
2.15 Transportation. The Vendor must provide for the transport and
--------------
delivery of all the Products to be delivered pursuant to, and in accordance
with, the terms of this Contract. The costs for such transportation will be
borne by the Vendor as part of the Contract Price; provided that the Owner will
-------- ----
reimburse the Vendor for any costs incurred by the Vendor for any Extraordinary
Transportation in such cases where the Vendor, subject to prior notice to the
Owner, found it actually necessary to utilize such Extraordinary Transportation;
provided, further that any amounts due to the Vendor from the Owner pursuant to
- - -------- -------
the first proviso of this subsection 2.15 will be reduced by the amount of non-
extraordinary transportation costs which otherwise would have been applicable to
the transport of such Products.
2.16 Security. During the course of the Work, the Vendor will perform
--------
the security services necessary to ensure the safety and security of the System
Element Locations, the Products and/or other materials or designs relevant to
the Work.
2.17 Materials and Equipment. Except for materials or Equipment to be
-----------------------
supplied by Subcontractors identified on part B of Schedule 7, whenever
materials or Equipment are specified or described in this Contract (including
the Specifications) by using the name of a proprietary item or the name of a
particular supplier, the naming of the item is intended to establish the type,
function and quality required, and substitute materials or Equipment may
nonetheless be used, provided that such materials or Equipment are equivalent or
equal to that named. If the Vendor wishes to furnish or use a substitute item
of material or Equipment, the Vendor must first certify that the proposed
substitute will perform at least as well the functions and achieve the results
called for by this Contract, will be substantially similar or of equal substance
to that specified and be suited for the same use as that specified. The Owner
may require the Vendor to furnish, at the Vendor's expense, additional data
about the proposed substitute as required to evaluate the substitution. For
Major Portions of the Work, or materials or Equipment listed on part B of
Schedule 7, the Vendor must first receive prior written approval of the Owner
for any substitution. The Owner will be allowed a reasonable time within which
to evaluate each proposed substitute.
2.18 Equipment and Data. The Vendor must furnish all drawings,
------------------
specifications, specific high level design data, preliminary arrangements and
outline drawings of the Equipment and all other information as required in
accordance with this Contract in sufficient detail to indicate that the
Equipment and fabricated materials to be supplied under this Contract comply
with the Specifications.
2.19 References to Certain Sources. Reference to standard
-----------------------------
specifications, manuals or codes of any technical society, organization or
association or to the laws or regulations of any Governmental Entity by this
Contract, means (unless specifically stated otherwise) the latest standard
specification, manual, code, laws or regulations in effect at the time of such
reference (unless specifically stated otherwise) except as may be otherwise
specifically agreed to by the Parties. However, no provision of any reference,
standard, specification, manual or code (whether or not specifically
incorporated by reference in this Contract) will be effective to change the
duties and responsibilities of the Owner, the Vendor, the Subcontractors or any
of their consultants, agents or employees from those set forth in this Contract.
27
2.20 Operating Manuals. The Vendor will provide the Owner Operating
-----------------
Manuals in accordance with this subsection 2.20 as soon as they are reasonably
available but in no event less than thirty (30) days prior to Substantial
Completion of the Initial PCS System. In accordance with this subsection 2.20
the Vendor will provide the Owner with as many sets of the Operating Manuals for
the entire System as the Owner then reasonably requires. The Operating Manuals
will be prepared in accordance with the relevant Specifications and in
sufficient detail to accurately represent the System and all of its component
System Elements as constructed and will recommend procedures for operation.
Operating Manuals with up to date (but not "as-built") drawings, specifications
and design sheets will be available for the Training as set forth in subsection
2.23. All other Technical Documentation not already delivered to the Owner
pursuant to the terms of the Contract must be delivered to the Owner within ten
(10) days after the successful achievement of all Final Acceptance tests in
accordance with Exhibit B3. The Owner will not be required to deliver the Final
Acceptance Certificate until all such Technical Documentation has been so
delivered (and Final Acceptance will not be deemed to have occurred earlier than
the date that is ten (10) days prior to the date of delivery of such Technical
Documentation).
2.21 Maintenance and Instruction Manuals. The Vendor will provide the
-----------------------------------
Owner Maintenance and Instruction Manuals in accordance with this subsection
2.21 as soon as they are reasonably available but in no event less than thirty
(30) days prior to Substantial Completion of the Initial PCS System. In
accordance with this subsection 2.20 the Vendor must provide the Owner with as
many sets of the Maintenance and Instruction Manuals for the entire System as
the Owner then reasonably requires. The Maintenance and Instruction Manuals
will be prepared in accordance with the Specifications and in sufficient detail
to accurately represent the System and all of its component System Elements as
constructed and will set forth procedures for inspection and maintenance.
Maintenance and Instruction Manuals with up to date (but not "as-built")
drawings, specifications and design sheets will be available for the Training
set forth in subsection 2.23. The Maintenance and Instruction Manuals must
include the volumes compiled by the Vendor containing all as-built Subcontractor
furnished product data.
2.22 Standards for Manuals. All Operating Manuals and Maintenance and
---------------------
Instruction Manuals required to be provided by the Vendor pursuant to this
Contract must be:
(a) detailed and comprehensive and prepared in conformance with the
System Standards and generally accepted national standards of professional care,
skill, diligence and competence applicable to telecommunications and operation
practices for facilities similar to the System;
(b) consistent with good quality industry operating practices for
operating personal communications service systems of similar size, type and
design;
(c) sufficient to enable the Owner to operate and maintain each PCS
System in each of the specified System Areas and the System as a whole on a
continuous basis; and
28
(d) prepared subject to the foregoing standards with the goal of
achieving operation of the System at the capacity, efficiency, reliability,
safety and maintainability levels contemplated by this Contract and the
Specifications and required by all Applicable Laws and Applicable Permits.
In addition to, and without limiting the requirements set forth in the
preceding sentence, the Operating Manuals and the Maintenance and Instruction
Manuals (but not "as-built" drawings) will be submitted to the Owner in CD-ROM
format in addition to hard-copy volume format if so requested by the Owner and
will include maintenance procedures for circuit breakers, relays and auxiliary
equipment and devices in accordance with the manufacturers' recommendations
therefor. In addition to any of the Owner's other rights and remedies, the
Owner will have the right to reject the Operating Manual and the Maintenance and
Instruction Manuals if in its reasonable judgment any of the foregoing does not
meet the standards set forth in this Contract.
2.23 Training. As more fully described below, starting at least one
--------
hundred and eighty (180) days prior to Substantial Completion of the Initial PCS
System, the Vendor must provide to the Owner a practical and participatory on-
site training program with respect to the System, which program will include
technical education (collectively, the "Training"). The Vendor will provide,
upon the Owner's prior written request and at the time or times required by the
Owner during the Term of this Contract, not less than four hundred and fifty
(450) Training seats or a minimum of four thousand five hundred ninety (4,590)
man days of Training and Training materials for the Owner's personnel, at no
cost to the Owner. Such Training must be kept current to encompass the latest
Software and Equipment, or any other Software Revision Level and/or Equipment
Revision Level directed by the Owner pursuant to the terms of this Contract.
Subject to the foregoing, Training course content and material will be designed
and agreed to by mutual consent between the Parties. Unless otherwise directed
by the Owner in writing to the Vendor, Training courses must be limited to a
maximum of eight (8) to ten (10) attendees in each course session (but not less
than six (6) attendees unless otherwise specifically requested by the Owner
subject to the reasonable agreement of the Vendor). The Owner agrees to
reimburse the Vendor for reasonable and actual travel and living expenses for
Vendor's on-site training so long as such costs do not exceed, in any event, the
Owner's own travel expense limitations for such attendees. The Vendor will
conduct classes for each course described below:
(a) Installation Training will include PCS Training to the Owner's
technical personnel presumed not qualified or trained specifically on
Installation or testing of a PCS System or the Equipment and/or Software
included therein. The subject matter of such Training will include (i) a
general overview of PCS/CDMA technology and the System, (ii) an overview of the
System which includes coverage of specific Equipment and Software, and (iii) any
other information necessary to successfully install and test each PCS System in
any System Area;
(b) Operations, maintenance and provisioning ("OM&P") Training will
include System Training to technical personnel presumed not qualified or trained
specifically on operating a PCS System or the Equipment and/or Software included
therein. The subject
29
matter will include (i) a general overview of PCS/CDMA technology and the
System, (ii) a System overview of the Equipment, Software initiation and
configuration requirements, required interconnections, troubleshooting and
testing requirements, recovery from System failures, and (iii) any other
information necessary to successfully operate, maintain, or set up the Equipment
and the Software to work in accordance with the System Element performance
criteria set forth in Exhibit D, in each case so that each PCS System
successfully operates in accordance with the performance criteria set forth in
Exhibit F within its System Area; and
(c) The Vendor must provide PCS/CDMA qualified technical staff and
material to train the Owner's personnel so as to enable them to train other
personnel of the Owner (i.e., train the trainers) on the subject matter topics
----
listed below. The Owner's personnel trained by the Vendor will be evaluated and
certified by the Vendor upon successful completion of the course as competent to
train other personnel of the Owner. Such content and materials may be tailored
or customized by the Owner for internal use only and include, without
limitation, Training with respect to the following topics:
(i) System Element configuration;
(ii) Communication interfaces and protocols;
(iii) Software operating system (current to the latest
Software Revision Level);
(iv) Database configuration, structure and content;
(v) Database down loading;
(vi) Program function;
(vii) Troubleshooting procedures; and
(viii) Other subject matter which is necessary or
desirable to understand the operation of the System and
maintenance of the System as well as any enhancements as they
are added to the System and/or any part thereof.
2.24 Manuals and Training. The training and the documentation provided
--------------------
in connection herewith, including, without limitation, all documentation
provided in CD-ROM format, and pursuant to subsections 2.20, 2.21 and 2.23 will
be updated pursuant to and in accordance with all technology and Product
upgrades applicable to the System, any PCS System and/or any part thereof.
2.25 Spare Parts. (a) Prior to the Substantial Completion of the
-----------
Initial PCS System the Vendor and the Owner will agree, pursuant to and in
accordance with the terms of this subsection 2.25, as to the type, quantity and
storage location of the spare parts required to continually operate the System
and in accordance with the Specifications. Until the
30
expiration of the applicable Warranty Periods, the Vendor will, if requested by
the Owner, provide such spare parts at its own expense. Following the
expiration of such Warranty Periods, the Vendor will provide such spare parts
pursuant to Schedule 12A and at the prices set forth on Schedule 12B. After the
expiration of the applicable Warranty Periods invoices for such System spare
parts will be issued directly to the Owner and will be paid for directly by the
Owner by the dates set forth on a schedule provided by the Owner, which schedule
will be consistent with the Vendor's schedule and in accordance with the terms
and conditions required by the suppliers of such System spare parts if such
supplier is a Person other than the Vendor. Any System spare parts utilized or
withdrawn from the System will be promptly replaced by the Vendor at its own
cost during the period the Vendor is responsible for providing such spare parts
at no cost pursuant to this subsection 2.25.
(b) The Owner has the right to withhold from its final payment to the
Vendor with respect to any PCS System an amount equal to the Owner's reasonably
estimated cost of any utilized or System spare parts for such PCS System not so
replaced prior to Final Acceptance; provided that such withheld funds will be
-------- ----
released upon such satisfactory replacement of such spare parts by the Vendor.
To the extent that System spare parts need to be acquired from third party
suppliers, the Vendor will use its best efforts to obtain from suppliers a
supply of System spare parts at no additional cost as part of the original
Product package. To the extent that the Vendor is able to so obtain such System
spare parts at no additional cost as part of the original Product package, it
will provide such System spare parts to the Owner without cost (and without any
charge for the procurement of such spare parts by the Vendor).
2.26 System Support Services. The Vendor will provide the specified
-----------------------
System support services for the operation, maintenance and/or repair of the
System and all Products to the extent set forth herein below and at the prices
set forth on Schedule 3.
2.26.1 Vendor Assistance. (a) Upon receipt of a request for technical
-----------------
assistance from the Owner, the nature of the problem will be identified by the
Owner, and a priority assigned by the Owner (upon discussion with the Vendor
which in no event will require the agreement and/or consent of the Vendor) as
either an emergency or non-emergency condition and resolution thereof will be
expedited accordingly.
(b) Following attempted corrective actions by the Owner in accordance
with applicable Maintenance and Instruction Manuals provided by the Vendor, when
the Vendor is notified by the Owner that the System, any PCS System or any part
thereof fails to operate in accordance with the Specifications, the Vendor will
promptly commence and diligently pursue all reasonable efforts to correct the
Defect or Deficiency.
(c) The Vendor's correction of such Defects or Deficiencies in the
System, any PCS System or any part thereof may take the form of new Software
codes, new or supplementary operating instructions or procedures, modifications
of the Software codes in the Owner's possession, or any other commonly used
method for correcting Software Defects or Deficiencies, as the Owner and Vendor
deem appropriate.
31
(d) When appropriate, the Vendor will provide non-emergency technical
support to the Owner via telephone, facsimile transmission, modem, or other
acceptable means during the Owner's normal business hours.
(e) The Vendor will provide emergency technical assistance to the Owner
via an ETA telephone number designated to the Owner in advance by the Vendor,
twenty-four (24) hours per day, three hundred sixty-five (365) days per year.
(f) The Vendor will provide remote intervention and assistance capability
to the Owner for remotely accessing operating System Elements. Upon mutual
agreement between the Parties, the Vendor may remotely access operating System
Elements for the purpose of ETA.
2.26.2 Trouble Reports. From time to time, failures in or degradation
---------------
of Products comprising the System may cause services provided by the System to
be adversely affected. It is necessary that immediate assistance be provided by
the Vendor to allow the Owner to restore the affected service. Critical service
Outages which cannot be resolved by the Owner's field technicians or technical
support engineers using procedures described in the Vendor's Operating Manuals,
Maintenance and Instruction Manuals and Training will be transmitted to the
Vendor as a Trouble Report ("TR"). The Vendor will assign an identifying number
to each TR to aid in tracking its disposition. TRs will be immediately
addressed by the Vendor through Emergency Technical Assistance under guidelines
set forth in this subsection 2.26.2. TRs may not be considered concluded until
the solution is concurred upon by an Owner's employee within the Owner's
operations control center ("OCC"). The root cause of problems resulting in TRs
may be System Defects or Deficiencies which must be corrected through Product or
procedure changes. Problems with the System requiring such changes will be
referred to the Vendor for action through a customer service request ("CSR").
The Vendor is authorized by the Owner to install and integrate, at the Vendor's
expense, any Software Upgrade or Software Enhancement pursuant to mutual
agreements reached between the Vendor and the Owner.
2.26.3 Emergency Technical Assistance. (a) When a problem is
------------------------------
encountered which adversely affects service and/or performance with respect to
the Products, any PCS System and/or the System and/or any part thereof, in each
case provided by the Vendor, an Owner maintenance technician will attempt to
repair or replace any malfunctioning Product adversely affecting such service
and/or performance using the procedures recommended in the Maintenance and
Instruction Manuals and/or the Operating Manuals. If unsuccessful, an Owner
technical representative will consult the Vendor's designated ETA group at the
telephone number provided by the Vendor in subsection 2.26.3(c) below.
Following receipt of notification by the ETA group, the ETA group will utilize
all available technical resources and will ensure that a qualified technical
engineer is communicating with the Owner's personnel regarding the problem
within fifteen (15) minutes of any such notification.
(b) A problem adversely affecting service that has a severity level
defined below either as an "E1 Emergency Condition" or an "E2 Emergency
Condition" is to be addressed under the ETA procedures set forth below in this
subsection 2.26.3 and in subsection 2.26.4.
32
(i) An E1 Emergency Condition means a problem resulting from any one or
more of the following events:
- An event including loss of origination and termination capability in
all terminations for a period longer than thirty (30)seconds.
- Any system-initiated or unplanned manual restart (warm, cold, reload,
or image) which causes a system loss of call processing capability
for more than thirty (30) seconds. Manual restarts with twenty-four
(24) hour notice would be planned.
- Useable billing data not being collected.
- Two (2) or more contiguous BTSs failing causing a loss of coverage.
- Ten percent (10%) or more of the total number of trunks are
out-of-service, where the disrupted traffic demand exceeds the
alternate routing capability.
- A one-hundred percent (100%) trunk group failure disrupting connections
between any switching offices, where the disrupted traffic demand
exceeds the alternate routing capability.
- IS41 networking failures, isolation of the MSC and related Equipment
from the rest of the network.
- Common channel signaling system networking failures, isolation of the
MSC and related Equipment from the rest of the network.
- Total loss of access to a specific service, total loss of access to one
or more specific services because of a fault conditions in the MSC
and related Equipment.
- Any BTS having a hard failure in excess of thirty (30) minutes.
The Vendor must clear all El Emergency Conditions within twelve
(12) hours of notification of their occurrence. Work must continue
without any cessation until the defect causing the E1 Emergency
Condition is solved or the
33
severity thereof is reduced to a "P1 Major Condition", as defined
below, or less.
(ii) An E2 Emergency Condition means a problem resulting from any one or
more of the following events:
- Loss of duplex functionality for any equipment that is duplicated
(e.g. CPU, CM, CMC, MS, XPM, IOC, NM, etc. (as such terms are
understood by the Owner and the Vendor)).
- Single BTS failing less than thirty (30) minutes that is not contiguous
with another failed BTS.
- Loss of the master clock or a network plane out-of-service.
- Fifty percent (50%) or more of the equipped tape or disk drive units
out-of-service.
- Loss of duplex recording of billing information.
- Inability to dump or initialize an office image.
- Inability to perform critical maintenance procedures.
- Loss of all links within a single link-set.
The Vendor must clear all E2 Emergency Conditions within
twenty-four (24) hours of notification of such E2 Emergency
Conditions. Work must continue without any cessation until the
defect causing the E2 Emergency Condition is solved or the severity
is reduced to a P1 Major Condition or less.
(c) In the event that an E1 Emergency Condition or an E2 Emergency
Condition should remain unresolved following referral to the Vendor by the
Owner, the problem causing such condition must be reported to the levels of
management set forth below (with comparable titles, if different) to ensure all
available resources necessary to address the problem will be committed in
accordance with the following:
The following are the reporting levels if an E1 Emergency Condition or
an E2 Emergency Condition is not resolved within the time periods set forth
below as amended from time to time following referral thereof to the Vendor by
the Owner:
Vendor Contact Vendor Contact Name Telephone Number
------------------------- ------------------- ----------------
One hour - Technical Assistance Mgr. to be designated to be designated
34
Two hours - Customer Service Director ▇▇▇ ▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Three hours - Customer Service AVP ▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Four hours - Vice President ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
(d) If the Owner reasonably determines that the Vendor has not provided
sufficient ETA to resolve any E1 Emergency Condition or E2 Emergency Condition
on a timely basis, the Owner will be entitled to withhold all payments with
respect to the affected PCS System then due or outstanding prior to the date of
such determination until such time as adequate ETA is provided to the Owner to
resolve such Emergency Condition.
(e) If an E1 Emergency Condition or an E2 Emergency Condition exists in a
PCS System prior to Final Acceptance of such PCS System the Vendor must deliver
to the Owner each Software Upgrade and each Equipment Upgrade developed by or on
behalf of the Vendor to resolve any E1 Emergency Condition or E2 Emergency
Condition promptly following completion of development of such Software Upgrades
or promptly following availability of such Equipment Upgrades but in no event
later than forty-eight (48) hours following such completion or such development
of such Software Upgrades or availability of such Equipment Upgrades.
(f) The term Non-Emergency Services includes providing to the Owner any
requested technical assistance and support, remote monitoring and outage review
consultation and the handling of Customer Service Requests ("CSR").
(g) Technical assistance and support must be provided for the purpose of
resolving non-emergency problems defined below as "P1 Major Condition", "P2
Significant Problem" and "P3 Minor Problem" which are reported to the Vendor.
(i) P1 Major Condition means any non-emergency
failure of specific features or functions of the System, any PCS
System and/or any Product that restricts its operations, but does
not render the System, any PCS System and/or any Product
inoperable, impact traffic capacity or coverage or require
significant manual intervention for the System, any PCS System
and/or any Product to operate properly and in accordance with its
applicable Specifications. These events will include loss of
diagnostic capabilities and/or loss of reporting functions.
(ii) P2 Significant Problem means any non-emergency
intermittently occurring problem related to specific primary
functions or features and/or any inoperable secondary functions,
which does not have a significant adverse effect on the overall
performance of the System, any PCS System and/or any Product.
By-pass or work around procedures must be used to alleviate such
P2 Significant Problem until it is corrected.
(iii) P3 Minor Problem means any non-emergency
problem that does not affect the performance or functions of the
System, any PCS System
35
and/or any Product, and, despite such problem, the System, any
PCS System and/or any Product is fully operable without
restrictions. Such P3 Minor Problems may include documentation
inaccuracies, cosmetics, minor requests for changes or
maintenance requests. The Vendor will resolve such P3 Minor
Problems during the next available scheduled Software Upgrade or
Equipment Upgrade.
(h) Should a non-emergency problem remain unresolved for the period or
periods of time set forth below following referral to the Vendor by the Owner,
such problem must be reported to the levels of management set forth below to
ensure all available resources necessary to correct such problem will be
committed to address such problem pursuant to the following:
REPORTING LEVELS IF NON-EMERGENCY
IS NOT RESOLVED WITHIN
CONDITION 1 DAY 2 DAYS 7 DAYS 30 DAYS
P1 Technical Technical Customer Service Vice President
Major Condition Assistance Manager Assistance Senior Director
Manager
P2 Technical Technical Customer
Significant Assistance Assistance Senior Service
Condition Manager Manager Director
P3 Technical Customer
Minor Condition Assistance Service
Manager Director
- - ------------------------------------------------------------------------------------------------
Non-emergency problems referred to the Vendor as a CSR will be resolved
based upon the priority assigned to them as determined by the Owner or as
mutually agreed by the Parties, and to the extent possible will be incorporated
into the next scheduled Software Release or Equipment Upgrade.
2.26.4 ETA and CSR. In the event that emergency or non-emergency
-----------
technical support provided from the Vendor's technical support center is not
sufficient to resolve an E1 Emergency Condition or an E2 Emergency Condition, a
P1 Major Condition or a P2 Significant Problem, the Vendor must send a
technically qualified person or persons to the site of such emergency condition
or problem to assist the Owner's employees in solving such condition or problem.
The Vendor's technically qualified person or persons must be on-site within
twelve (12) hours after notification to the Vendor by the Owner, or at such
later time as may be determined by the Owner. A CSR will be submitted by the
Owner to request a repair of the emergency condition or the non-emergency
problem, or to request the addition of a Software or Equipment Upgrade or other
Software or Equipment Feature Enhancement. The Owner's CSRs will define the
condition or problem and state whether the Owner considers the CSR to be for a
Software/Equipment Upgrade or Software/Equipment Enhancement. Changes to the
System or any PCS System resulting from CSRs must be fully
36
tested and accepted in accordance with the Specifications. The Vendor must
respond to the submission of a CSR by the Owner within five (5) business days,
acknowledging receipt of the CSR, confirming or denying agreement with the
Owner's assessment of whether the CSR may be considered a Software or Equipment
Upgrade or a Software or Equipment Feature Enhancement and summarizing the
Vendor's intended actions to handle the CSR. A CSR may result in System fixes,
or enhancements, resulting in Product modifications reasonably acceptable to the
Owner.
2.27 Review of Contract Documents. The Vendor has examined in detail and
----------------------------
carefully studied and compared the Contract Documents with all other information
furnished by the Owner as of the Effective Date and has promptly reported to the
Owner any material errors, inconsistencies or omissions so discovered or
discovered by any of the Subcontractors. The Vendor will not prosecute any
Major Portion of the Work knowing that it involves a material error,
inconsistency or omission in the Contract Documents without prior written notice
to and approval by the Owner. If for any reason the Vendor violates this
subsection 227, the Vendor will, in addition to being subject to any other
remedies of the Owner and, in such case, will be deemed to have waived any
claims for an adjustment in any of the Specifications and/or System Standards
which results directly from any such error, inconsistency or omission. This
subsection 227 does not, nor will be deemed to, in any manner limit the terms
of subsection 2.38.
2.28 Licenses, Permits and Approvals. Except as otherwise provided for
-------------------------------
herein with respect to Site Acquisition, Microwave Relocation and Network
Interconnection, any Applicable Permits required by any Government Entity
relating to the manufacture, importation, re-exportation, safety or use of the
Products, the System or any PCS System throughout North America or in any state,
province or any political sub-division thereof will be the sole responsibility
of the Vendor. Prior to the commencement of any Work and/or other activities by
the Vendor or any of its Subcontractors in connection with or pursuant to this
Contract, the Vendor will furnish the Owner with evidence that such Applicable
Permits have been obtained and are in full force and effect to the extent that
Applicable Permits are necessary for the commencement or undertaking of such
activities, and from time to time thereafter the Vendor, upon the reasonable
request of the Owner, will provide such further evidence as the Owner will deem
reasonably necessary.
2.29 Eligibility under Applicable Laws and Applicable Permits. The Vendor
--------------------------------------------------------
will be responsible for ensuring that the Vendor and its Subcontractors are and
remain eligible under all Applicable Laws and Applicable Permits to perform the
Work under this Contract in the various jurisdictions involved.
2.30 Customs Approvals. The Owner agrees to reasonably assist, so long as
-----------------
such assistance will not involve the incurrence of any costs or expenses by the
Owner, the Vendor to obtain and maintain (i) Applicable Permits for importation
or re-exportation of the Products on a duty and customs free basis and (ii)
entry or work permits, visas or authorizations required for personnel engaged by
the Vendor to perform Work under this Contract.
37
2.31 Owner Participation. In addition to the right of observation
-------------------
contained in subsection 9.4 hereof, the Owner will be entitled to participate in
the Vendor's research and development activities (subject to the reasonable
acceptance of the Vendor) and product development and testing activities
pursuant to this Contract; provided that such observation will not affect the
--------
Vendor's responsibilities and warranties hereunder and will not otherwise
interfere with the Vendor's research and development activities.
2.32 New Development Advisory Board. In order to accommodate the Owner's
------------------------------
participation pursuant to this Contract, including, without limitation, pursuant
to subsections 2.11 and 2.31, the Owner and the Vendor will establish an NDAB
within sixty (60) days of the Effective Date. The purpose of the NDAB will be
to review the development requirements and high level development milestones, to
ensure that the Vendor understands the Owner's requirements for each PCS System,
the System and/or any extensions thereto including, without limitation, any
subsequent Products and/or enhancements. The NDAB will provide an executive
forum to discuss product ideas, Owner requirements and its recommended
development prioritization for improved infrastructure-based subscriber features
and System features, functions and capabilities. The focus of the NDAB will be
on System features and services, new CDMA Products, System enhancements,
critical operational issues, future developments beyond CDMA cellular without
the need for System additions and on such other matters as the Parties mutually
agree upon from time to time. Nothing contained in this subsection 2.32 will in
any way limit and/or modify the Owner's ability to enforce its rights under this
Contract and/or the Contract Documents or to otherwise maintain contacts with
the Vendor in any other way it sees fit.
2.33 Market Development Manager. The Vendor will provide a market
--------------------------
development manager to coordinate the efforts of the Vendor in meeting its
obligations relating to the NDAB who will specifically focus on new Products,
CDMA services and features. Such market development manager must be
knowledgeable in CDMA technology and the Owner's System and must work closely,
and on a regularly scheduled basis, with the Owner's senior engineering and
marketing personnel on feature development, feature roll-out, future road maps
for CDMA Products, and any other marketing aspect of providing PCS that the
Owner believes is beneficial to the System and/or any PCS System at such time.
The Vendor's market development manager and the manager's staff will serve as
the Owner's direct liaison with the Vendor to ensure that the Vendor's product
development teams are focusing on the Owner's priorities as described to the
Vendor by the Owner from time to time either through the NDAB or by any other
means acceptable to the Parties.
2.34 Further Assurances. The Vendor will execute and deliver all further
------------------
instruments and documents, and take all further action, including, but not
limited to, assisting the Owner in filing notices of completion with the
appropriate state, provincial and local lien recording offices, that may be
necessary or that the Owner may reasonably request in order to enable the Vendor
to complete performance of the Work or to effectuate the purposes or intent of
this Contract.
38
2.35 Liens and Other Encumbrances. (a) In consideration of the mutual
----------------------------
undertakings herein and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the Vendor:
(i) covenants and agrees to protect and keep free the System and/or
any PCS System and any and all interests and estates therein, and all
improvements and materials now or hereafter placed thereon under the terms
of this Contract, from any and all claims, liens, charges or encumbrances
of the nature of mechanics, labor or materialmen liens or otherwise arising
out of or in connection with performance by any Subcontractor, including
services or furnishing of any materials hereunder, and to promptly have any
such lien released by bond or otherwise;
(ii) give notice of this subsection 2.35 to each Subcontractor before
such Subcontractor furnishes any labor or materials for the System and/or
any PCS System; and
(iii) make any and all filings reasonably requested by the Owner in
order that the Owner may take advantage of the relevant local mechanics'
lien waiver procedures with respect to mechanics' liens of any such
Subcontractor and the Owner will cooperate in helping the Vendor to fulfill
its obligation under this clause (iii) to the extent necessary.
(b) If any laborers', materialmen's, mechanics', or other similar lien or
claim thereof is filed by any Subcontractor, the Vendor will cause such lien to
be satisfied or otherwise discharged, or will file a bond in form and substance
satisfactory to the Owner in lieu thereof within ten (10) business days. If any
such lien is filed or otherwise imposed, and the Vendor does not cause such lien
to be released and discharged forthwith, or file a bond in lieu thereof, then,
without limiting the Owner's other available remedies, the Owner has the right,
but not the obligation, to pay all sums necessary to obtain such release and
discharge or otherwise cause the lien to be removed or bonded to the Owner's
satisfaction from funds retained from any payment then due or thereafter to
become due to the Vendor.
(c) The Owner reserves the right to post or place within the System and/or
any PCS System notices of non-responsibility or to do any other act required by
Applicable Law, to exempt the Owner and the System from any liability to third
parties by reason of any work or improvements to be performed or furnished
hereunder; provided that failure by the Owner to do so will not release or
-------- ----
discharge the Vendor from any of its obligations hereunder.
2.36 Forecasting and Ordering. Throughout the Term of this Contract, on a
------------------------
quarterly basis commencing on the Effective Date, the Owner will provide the
Vendor with rolling twelve-month forecasts of its ongoing Product and Service
requirements. Upon the review and reasonable acceptance of such forecasts by
the Vendor pursuant to the terms of this Contract, the Owner will have the
right, but not the obligation, to confirm to the Vendor its orders for the
Products and Services set forth in such forecasts pursuant to the Owner's
delivery to the Vendor of formal written orders specifying the Products and/or
Services to be purchased in connection with the terms of this Contract. The
Vendor's obligation to deliver
39
in accordance with accepted forecasts will be subject to receipt of the Owner's
orders not later than eighty-four (84) days prior to delivery of commercially
available MSC Equipment and forty-two (42) days prior to delivery of
commercially available BTS Equipment; provided, however, that nothing contained
-------- -------
in this subsection 2.36 will in any way limit and/or modify the Vendor
obligations under this Contract to deliver Products and Services and to
otherwise do the Work in accordance with the Project Milestones set forth in
Exhibit A pursuant to the terms of this Contract.
2.37 Microwave Relocation; Network Interconnection. (a) The Vendor will
---------------------------------------------
not be responsible for Microwave Relocation within the System. Unless otherwise
waived by the Owner, however, completion of Microwave Relocation in any given
System Area will be a prerequisite to the commencement of the Substantial
Completion testing to be performed by the Vendor in accordance with Exhibit B3
in such System Area. The Owner may at its option choose instead to modify the
System performance criteria as set forth in Exhibit F by way of a Change Order
in order to account for the failure to fully and/or satisfactorily complete
Microwave Relocation in any such System Area such that Substantial Completion
testing in accordance with the requirements of Exhibit B3 may proceed.
Notwithstanding anything stated herein to the contrary (other than clause (b)
below), the Owner's failure and/or inability to fully complete Microwave
Relocation in any such System Area within eighteen (18) months of Milestone M6
(as set forth in Exhibit A1) (the "Microwave Delay Period") will entitle the
Vendor to otherwise commence Substantial Completion testing for the PCS System
in such System Area in accordance with Exhibit B3. Pursuant to the requirements
of Exhibits A1, B1 and B3 with respect to any PCS System within the System the
Owner may upon the prior written request of the Vendor consent (such consent not
to be unreasonably withheld) to extend the scheduling of the Vendor's
Substantial Completion testing by not more than an additional thirty (30) days
pursuant to Milestone M8 in the event that more than twenty-five percent (25%)
of the System Element Sites in such PCS System as set forth in the Final Site
Count for such PCS System require Vendor optimization pursuant to Exhibit B1
that was otherwise delayed due to incomplete Microwave Relocation in such PCS
System immediately prior to the date scheduled for Substantial Completion
testing pursuant to Milestone M8.
(b) The Vendor will not be responsible for Network Interconnection within
the System. Unless otherwise waived by the Owner, completion of Network
Interconnection in any given System Area will be a prerequisite to the
commencement of the Substantial Completion testing to be performed by the Vendor
in accordance with Exhibit B3 in such System Area. Notwithstanding anything
stated herein to the contrary (other than clause (a) above), if the Owner fails
to fully complete Network Interconnection in any such System Area within ninety
(90) days after Milestone 6 (as set forth on Exhibit A1), the Vendor will be
entitled to commence Substantial Completion testing for the PCS System in such
System Area in accordance with Exhibit B3.
2.38 Vendor To Inform Itself Fully; Waiver of Defense. (a) The Vendor
------------------------------------------------
will be deemed to have notice of and to have fully examined and approved the
Specifications and all other documents referred to herein, and all drawings,
specifications, schedules, terms and conditions of this Contract, regulations
and other information in relation to this Contract
40
and/or the Contract Documents and/or any amendments, modifications or
supplements thereto at any time on or after the Effective Date and to have fully
examined, understood and satisfied itself as to all relevant information of
which the Vendor is aware or should have been aware and which is relevant as to
the risks, contingencies and other circumstances which could affect this
Contract and in particular the installation of the System, any PCS System or any
part thereof. The Owner, its directors, officers, employees and agents and all
of them have no liability in law or equity or in contract or in tort with
respect to any such specifications, drawings, information, risks, contingencies
or other circumstances.
(b) The fact that the Owner may have prepared or taken part in the
preparation of Specifications, documents, drawings, Engineering, designs,
specifications, schedules, terms or conditions, or may have designated
particular types of Products and/or Services to be furnished hereunder or
designated particular manufacturers or suppliers of Products or Services, or may
have taken part in the designation of any particular Subcontractor(s) or
subcontractor(s), or given vetoes or approvals with respect to the Work, or
otherwise become involved in the Work, will not give rise to any claim by the
Vendor or any Subcontractor or any defense to any warranty or other claims
asserted against the Vendor or any Subcontractor to the extent any such claim or
defense arises out of any information, specifications, drawings, documents or
other information, which the Vendor is deemed to have had notice of pursuant to
subsection 238(a) above and with respect to any such information arising after
the Effective Date which the Vendor had a reasonable opportunity to review.
2.39 CMI/HIC. From time to time throughout the Term of this Contract the
-------
Parties may mutually agree as to the incorporation and integration of CMI/HIC
into the System in accordance with Exhibit D.
SECTION 3 AFFILIATES
3.1 Additional Affiliates. On a quarterly basis commencing on the
---------------------
Effective Date and during the term of this Contract, the Owner may, upon fifteen
(15) days' prior written notice to the Vendor, designate any Person which is not
an Initial Affiliate as an "Additional Affiliate"; provided that the Vendor will
-------- ----
have a reasonable opportunity to review and approve such designation, such
approval not to be unreasonably withheld, based upon (i) reasonable credit
criteria within the context of the PCS industry, (ii) the fact that such
proposed Additional Affiliate has not in the past materially breached prior
material agreements with the Vendor, (iii) the fact that the proposed Additional
Affiliate is not, at the time of such determination, a direct competitor to the
Vendor in the wireless telecommunications business and (iv) the fact that the
proposed Additional Affiliate is not, at the time of such determination,
otherwise engaged with the Vendor in a material agreement for the purchase
and/or supply of PCS CDMA wireless technology; and provided, further, that (x)
-------- -------
the Owner, any Partner or any Initial Affiliate has at least a ten percent (10%)
equity ownership in such Person, (y) such Person is controlled by or under the
common control with the Owner, any Partner or any Initial Affiliate or (z) there
exists between the Owner and such Person an Additional Affiliate Arrangement.
41
3.2 Agreements with Initial Affiliates. During the term of this Contract,
----------------------------------
the Owner will have the right, but not the obligation, to require that the
Vendor enter into separate agreements with any Initial Affiliate designated by
the Owner (each, an "Initial Affiliate Agreement") for the supply of Products
and Services on similar terms and conditions as those set forth herein that
relate to the initial build-out of the Initial System as set forth on Schedule
4; provided that the Vendor will not be required to include in any Initial
-------- ----
Affiliate Agreement any provisions substantially similar to those set forth in
Section 15 and subsections 2.5, 21.1, 24.1 and 27.5; and provided further that
-------- -------
after the date on which Final Acceptance of the last PCS System to reach Final
Acceptance has occurred, Initial Affiliate Agreements (whether or not executed
prior to such date) need not contain or retain substantially the same terms and
conditions as those set forth herein, except for those terms and conditions
related to pricing and warranties as are then available to the Owner pursuant to
this Contract. Any Initial Affiliate that enters into an Initial Affiliate
Agreement with the Vendor will have the right to choose among the Products and
Services offered to the Owner under this Contract solely for use within the
Nationwide Network.
3.3 Agreements with Additional Affiliates. During the term of this
-------------------------------------
Contract, the Owner will have the right, but not the obligation, to require that
the Vendor enter into separate agreements with any Additional Affiliate
designated by the Owner (each, an "Additional Affiliate Agreement") for the
supply of Products and Services at similar price and warranty terms as are then
available to the Owner pursuant to the terms of this Contract. The Vendor must
enter into good faith negotiations for the establishment of such Additional
Affiliate Agreements with any such Additional Affiliate promptly upon the
designation of such Additional Affiliate by the Owner and upon notice to the
Vendor that such Additional Affiliate desires to enter into an Additional
Affiliate Agreement. Any Additional Affiliate that enters into an Additional
Affiliate Agreement with the Vendor will have the right to choose among the
Products and Services offered to the Owner under this Contract solely for use
within the Nationwide Network.
3.4 Affiliate Rights. Notwithstanding anything herein contained to the
----------------
contrary, Affiliates will not be deemed third party beneficiaries to this
Contract or otherwise have any rights hereunder. Only the Owner may designate a
Person as an Affiliate in accordance with the terms of this Section 3 and only
the Owner has the right and/or the ability to enforce any rights hereunder
against the Vendor.
SECTION 4 SUBCONTRACTORS
4.1 Subcontractors. The Vendor will select Subcontractors in connection
--------------
with the performance of the Work such that all Products and Services provided by
any such Subcontractors meet the System Standards and reliability and
performance requirements set forth in this Contract. Regardless of whether or
not the Vendor obtains approval from the Owner of a Subcontractor or whether the
Vendor uses a Subcontractor recommended by the Owner, use by the Vendor of a
Subcontractor will not, under any circumstances: (i) give rise to any claim by
the Vendor against the Owner if such Subcontractor breaches its subcontract or
contract with the Vendor; (ii) give rise to any claim by such Subcontractor
against the
42
Owner; (iii) create any contractual obligation by the Owner to the
Subcontractor; (iv) give rise to a waiver by the Owner of its rights to reject
any Defects or Deficiencies or Defective Work; or (v) in any way release the
Vendor from being solely responsible to the Owner for the Work to be performed
under this Contract.
4.2 The Vendor's Liability. The Vendor is the general contractor for the
----------------------
Work and remains responsible for all of its obligations under this Contract,
including the Work, regardless of whether a subcontract or supply agreement is
made or whether the Vendor relies upon any Subcontractor to any extent. The
Vendor's use of Subcontractors for any of the Work will in no way increase the
Vendor's rights or diminish the Vendor's liabilities to the Owner with respect
to this Contract, and in all events, except as otherwise expressly provided for
herein, the Vendor's rights and liabilities hereunder with respect to the Owner
will be as though the Vendor had itself performed such Work. The Vendor will be
liable for any delays caused by any Subcontractor as if such delays were caused
by the Vendor.
4.3 No Effect of Inconsistent Terms in Subcontracts. The terms of this
-----------------------------------------------
Contract shall in all events be binding upon the Vendor regardless of and
without regard to the existence of any inconsistent terms in any agreement
between the Vendor and any Subcontractor whether or not and without regard to
the fact that the Owner may have directly and/or indirectly had notice of any
such inconsistent term.
4.4 Assignability of Subcontracts to Owner. The Vendor will use its best
--------------------------------------
efforts to ensure that each material agreement between the Vendor and a
Subcontractor must contain a provision stating that, in the event that the
Vendor is terminated for cause, convenience, abandonment of this Contract or
otherwise, (i) each Subcontractor will continue its portion of the Work as may
be requested by the Owner and (ii) such agreement permits assignment thereof
without penalty to the Owner and, in order to create security interests, to the
Other Vendors, in either case at the option of the Owner and for the same price
and under the same terms and conditions as originally specified in such
Subcontractor's agreement with the Vendor. Furthermore, the Vendor will use its
best efforts to ensure that each material agreement between the Vendor and a
Subcontractor contains a provision stating that such agreement may be made
available in whole or in part to the Owner at its reasonable request without
causing the violation and/or breach of any such agreement. In the event the
Vendor is unable to ensure each such material Subcontractor agreement complies
with all of the requirements of this subsection 4.4 to the Owner, the Vendor
will notify the Owner of its inability to do so prior to executing such
arrangement with such Subcontractor and the Vendor will provide the Owner a
reasonable opportunity to determine whether it requires any such requirement in
question and if the Owner determines in its reasonable opinion that it in fact
requires such requirement the Vendor will not execute such Subcontractor
agreement without first obtaining the prior written consent of the Owner.
4.5 Removal of Subcontractor or Subcontractor's Personnel. The Owner has
-----------------------------------------------------
the right at any time to require removal of a Subcontractor and/or any of a
Subcontractor's personnel from Work on the System upon reasonable grounds and
reasonable prior written notice to the Vendor. The exercise of such right by
the Owner will have no effect on the provisions of subsections 4.1 and 4.2.
43
4.6 Subcontractor Insurance. The Vendor must require all Subcontractors
-----------------------
to obtain, maintain and keep in force during the time they are engaged in
providing Products and Services hereunder adequate insurance coverage consistent
with Section 18 and Schedule 6 (provided that the maintenance of any such
Subcontractor insurance will not relieve the Vendor of its other obligations
pursuant to Section 18 and Schedule 6). The Vendor will, upon the Owner's
request, furnish the Owner with evidence of such insurance in form and substance
reasonably satisfactory to the Owner. To the extent requested by the Owner all
such insurance will be subject to the Owner's reasonable approval. All
Subcontractors must be of bondable financial condition.
4.7 Review and Approval not Relief of Vendor Liability. Any inspection,
--------------------------------------------------
review or approval by the Owner permitted under this Contract of any portion of
the Work by the Vendor or any Subcontractor will not relieve the Vendor of any
duties, liabilities or obligations under this Contract.
4.8 Vendor Warranties. Except as otherwise expressly provided in Section
-----------------
17, the warranties of the Vendor pursuant to Section 17 will be deemed to
apply to all Work performed by any Subcontractor as though the Vendor had itself
performed such Work. Except as otherwise specifically provided in Section 17,
the Parties agree that such warranties will not be enforceable merely on a
"pass-through" basis. The Owner may, but shall not be obligated to, enforce
such warranties of any Subcontractor to the extent that the Owner determines
that the Vendor is not paying and/or performing its warranties; provided that
-------- ----
any such election by the Owner will not relieve the Vendor from any obligations
or liability with respect to any such warranty.
4.9 Payment of Subcontractors. The Vendor must make all payments to all
-------------------------
Subcontractors (except in the case of legitimate disputes between the Vendor and
any such Subcontractor arising out of the agreement between the Vendor and such
Subcontractor) in accordance with the respective agreements between the Vendor
and its Subcontractors such that Subcontractors will not be in a position to
enforce liens and/or other rights against the Owner, the System or any part
thereof.
SECTION 5 TERM OF CONTRACT
5.1 Initial Term. The initial term of this Contract (the "Initial Term")
------------
is ten (10) years from the Effective Date, subject to the terms and conditions
of this Contract including, without limitation, the termination provisions set
forth in Section 24.
5.2 Renewal. This Contract is subject to renewal for one year periods
-------
(all such periods plus the Initial Term, the "Term") following the expiration of
the Initial Term, on the same terms and conditions contained herein, unless
either Party gives notice to each other Party of its intention not to renew this
Contract within ninety (90) days prior to the expiration of the then current
Term.
44
SECTION 6 PRICES AND PAYMENT
6.1 Prices. The prices for the Work to be performed pursuant to this
------
Contract (collectively, the "Contract Price") are as set forth on Schedules 2
and 3, subject to the price variation provisions contained on Schedule 2.
Prices for the Work not set forth on Schedules 2 or 3, if not otherwise set
forth in this Contract, will be no greater than the Vendor's best list prices
then in effect at the time of ordering by the Owner and at discounts otherwise
provided to the Owner pursuant to the terms of this Contract.
6.2 Price Reduction. The Contract Price will be reduced by all amounts
---------------
saved as a result of Engineering changes suggested by the Owner which are
incorporated into the Specifications by the Vendor provided that the Vendor
--------
reasonably believes that such changes will not make it impossible or
impracticable for it to comply with any of its obligations under this Contract.
Any reduction in Contract Price pursuant to the preceding sentence will be
agreed upon promptly by the Owner and the Vendor. Failure of the Parties to
mutually agree to such price reductions within ten (10) days from the date the
Owner delivered written notice to the Vendor of the need for such price
reduction due to incorporated Engineering changes will result in the automatic
reference of such matter to dispute resolution in accordance with subsection
23.1. During the pendency of any such dispute resolution prices payable
pursuant to subsection 6.1 will be payable by the Owner to the Vendor at the
reduced level pursuant to this subsection 6.2 so long as such dispute resolution
pursuant to this subsection 6.2 does not exceed thirty (30) days; provided that
-------- ----
in the event such dispute resolution exceeds thirty (30) days prices in question
pursuant to this subsection 6.2 will revert back to the level prior to the
Owner's invocation of this subsection 6.2 for the remaining period of any such
dispute resolution. If in accordance with subsection 23.1 such dispute
resolution results in a finding that such price reduction was not in fact
justified then the Owner will refund to the Vendor the amounts that would
otherwise have been payable to the Vendor during the pendency of such dispute
resolution.
6.3 Payments. Except with respect to Facilities Preparation Services and
--------
RF Engineering as set forth below, an invoice may be submitted to the Owner only
after shipment of a Product or performance of a Service. Invoices for Products
delivered and Services performed on or prior to Final Acceptance of the PCS
System to which such invoices relate are payable in the following manner:
(a) fifteen percent (15%) of the total amount due under subsection 6.1 will
be paid within thirty (30) days from receipt of the invoice by the Owner;
(b) sixty-five percent (65%) of the total amount due under subsection 6.1
will be paid within thirty (30) days from the later of (i) Substantial
Completion of the PCS System to which such invoice relates or (ii) receipt of
the invoice by the Owner; and
(c) twenty percent (20%) of the total amount due under subsection 6.1 will
be paid within thirty (30) days from the later of (i) Final Acceptance of the
PCS System to which such invoice relates or (ii) receipt of the invoice by the
Owner.
45
Notwithstanding the foregoing, (i) invoices for RF Engineering for each PCS
System will be payable in accordance with subsection 6.4(b) below and (ii)
invoices for Facilities Preparation Services within any PCS System will be
submitted by the Vendor in accordance with the terms of Exhibit B2 and will be
payable by the Owner with respect to each System Element Facility within forty-
five (45) days after the date of acceptance by the Owner of any such System
Element Facility in accordance with the terms of Exhibit B2.
Any invoice for Products delivered and installed by the Vendor or its
Subcontractors and Services performed by the Vendor or its Subcontractors after
Final Acceptance of the PCS System to which such invoice relates will be payable
as follows: [ ] of the amount of the invoice will be payable within forty-five
(45) days following receipt of such installed Products by the Owner or the full
performance of the Services by the Vendor and the outstanding balance will be
payable upon final acceptance by the Owner of the Products or Services to which
such invoice relates pursuant to section B.3.5 of Exhibit B3. Any invoice for
Products delivered by the Vendor but not installed by the Vendor or its
Subcontractors after Final Acceptance of the PCS System to which such invoice
relates will be payable by the Owner at the level of [ ] of the amount of
such invoice within forty-five (45) days from the date of delivery of such
invoice to the Owner.
6.4 Payments for Facilities Preparation Services and RF Engineering
---------------------------------------------------------------
Services. (a) The Vendor will pay each Subcontractor for Facilities
- - --------
Preparation Services the amount to which each Subcontractor is entitled pursuant
to such Subcontractor's agreement with the Vendor, based on each Subcontractor's
portion of such Work. By appropriate agreement in each Subcontractor's
agreement with the Vendor, the Vendor will require such Subcontractor to make
payments to sub-Subcontractors and materialmen in a similar manner. The Owner
shall have no obligations to pay any amount other than for Facilities
Preparation Services performed and shall have no obligations to pay any other
amount to which a Subcontractor may be entitled pursuant to its agreement with
the Vendor including, without limitations, any indemnity damage or penalty. The
Owner has no duty or obligation to insure the payment of money to a
Subcontractor, sub-Subcontractor, materialman or any other third party, any such
payment being the obligation of the Vendor. Subcontractors, sub-Subcontractors,
materialmen and any other third parties will not be deemed third party
beneficiaries of the Owner's obligations to pay the Vendor. On or before the
Owner's acceptance of the Facilities Preparation Services of any System Element
Facility within any given PCS System in accordance with the terms of Exhibit B2,
the Owner will have received details (in a form reasonably satisfactory to the
Owner) of all invoices and charges for such Facilities Preparation Services
incurred by the Vendor in connection with the Facilities Preparation Services
for such System Element Facility.
(b) The Owner will make payment to the Vendor for RF Engineering Services
performed by the Vendor within any given System Area pursuant to the terms of
this Contract based upon the following: (i) [ ] of the "RF Engineering
Services price" within the applicable System Area will be payable by the Owner
within forty-five (45) days after receiving the Preliminary RF Design for such
System Area pursuant to Milestone M2 for such System Area as set forth on
Exhibit A1; (ii) [ ] of the RF Engineering Services price within the
applicable PCS System will be payable by the Owner within forty-
46
five (45) days after the determination of the Final Site Count and delivery of
the Final RF Design for such PCS System in accordance with subsection 2.6 and
Milestone M5 for such System Area as set forth on Exhibit A1; and (iii) [ ] of
the RF Engineering Services price will be payable by the Owner within the
applicable PCS System within forty-five (45) days of the Vendor's Installation
of the Products for such PCS System in accordance with the terms of the Contract
and Milestone M7 for such System Area as set forth on Exhibit A1. For the
purposes of this subsection 6.4(b) the term "RF Engineering Services price"
shall mean the number of System Element Facilities within the applicable PCS
System pursuant to the build-out of the Initial System multiplied by the
Vendor's System Element Facility RF Engineering price as set forth on Schedule
3. In any given PCS System and/or System Area the RF Engineering Services price
shall be readjusted (and any amounts owed to either Party will be reimbursed) at
the point in time that payment would be made for such RF Engineering pursuant to
clause (iii) of this subsection 6.4(b) in accordance with the determination of
the actual Final Site Count and delivery of Final RF Design applicable to such
PCS System.
6.5 Monthly Forecasts. Commencing on the Effective Date, the Vendor will
-----------------
provide the Owner with monthly forecasts of the costs of RF Engineering and
Facilities Preparation Services in each PCS System in which such Services are
being provided by the Vendor and/or any of its Subcontractors throughout the
period that any such Services are being provided during the Term of this
Contract. The forecasts provided by the Vendor pursuant to this subsection 6.5
must be in sufficient detail to reasonably inform the Owner of the nature of the
costs to be incurred for each of RF Engineering and Facilities Preparation
Services in each of the PCS Systems in which such Services are being provided by
the Vendor and/or any of its Subcontractors pursuant to the terms of this
Contract.
6.6 No Payment in Event of Material Breach. Notwithstanding any other
--------------------------------------
provision to the contrary contained herein, within any given PCS System the
Owner will have no obligation to make any payment for work done in such PCS
System in addition to amounts previously paid to the Vendor at any time the
Vendor is in material breach of this Contract with respect to such PCS System
(whether within the Initial System or otherwise) until and unless such material
breach is cured or waived by the Owner in accordance with the terms of this
Contract.
6.7 Microwave Relocation Delay Partial Payments. In the event of a delay
-------------------------------------------
in the Owner's completion of Microwave Relocation in any given PCS System
pursuant to and in accordance with subsection 2.37 during the Microwave Delay
Period within such PCS System, the Owner agrees to pay to the Vendor (i) [ ]
provided that Substantial Completion of such PCS
- - -------- ----
47
System will have been achieved by the Vendor in accordance with the terms of
this Contract and Exhibit B3.
SECTION 7 ORDERS AND SCHEDULING
7.1 Initial Commitment. Subject to subsection 7.3 and to subsection 2.6
------------------
and the determination of the Final Site Count and the delivery of the Final RF
Engineering Plan for each PCS System, the Parties understand that the Products
and Services identified on Schedule 13 constitute the Owner's initial purchase
commitment under this Contract (the "Initial Commitment").
7.2 Minimum Commitment. The Minimum Commitment of the Owner to the Vendor
------------------
pursuant to this Contract is an amount of Services and Products purchased by the
Owner from the Vendor under this contract constituting an aggregate amount
payable to the Vendor based upon the pricing set forth in this Contract of not
less than one billion dollars ($1,000,000,000) (the "Minimum Commitment").
7.3 Change Orders. The Owner has the right by way of written orders
-------------
("Change Orders") to request Expansions and/or other revisions in the Work,
including but not limited to the Specifications, the manner of performance of
the Work or the timing of the completion of the Work; provided that specific
-------- ----
Change Orders will be submitted to the Vendor and the Vendor will be entitled to
make reasonable price and/or Project Milestone adjustments to the Contract Price
(subject to the Owner's agreement) in the case of material modifications. The
Vendor must promptly notify the Owner of any such requested change or changes to
Products which may materially affect the operation and/or maintenance of the
System, any PCS System or any part thereof. The Parties agree that within
fifteen (15) business days after the Owner's initial request for a Change Order
pursuant to this subsection 7.3 they will mutually agree to all aspects of such
Change Order, which agreement shall be evidenced by a writing executed by an
authorized representative of each of the Parties. In the event the Vendor
refuses to agree to any such Change Order within such fifteen (15) day period
then the Vendor will provide a written notice to the Owner detailing its reasons
for such refusal and if the Owner, at such time, disagrees with the reasons set
forth in such Vendor notice the matter will then be referred to dispute
resolution pursuant to Section 23.
7.4 Cancellation. During the term of this Contract, and subject to
------------
Section 24, the Owner will have the right, but not the obligation, at any time
to cancel, in whole or in part, any order made pursuant to the terms of this
Contract upon advance written notice to the Vendor. In the event of a
cancellation permitted hereunder, the Owner will pay to the Vendor order
cancellation charges in accordance with, and pursuant to, the terms of Schedule
11.
7.5 Supply of Additional Products. During the Term of this Contract (but
-----------------------------
in no event less than ten (10) years from the Effective Date) and for a period
of three (3) years thereafter, the Vendor will make available for purchase by
the Owner, on terms and conditions, as applicable, set forth in subsection 2.2,
subsection 6.3, as otherwise set forth in this Contract or as otherwise mutually
agreed between the Parties, Vendor Products to enable
48
the Owner to expand the System and/or any PCS System and/or any part thereof,
which Products will provide equivalent functionality for and will be compatible
with the System or any such PCS System at such time.
SECTION 8 INSTALLATION
8.1 Installation. The Vendor will furnish and install the Products
------------
pursuant to the Project Milestones set forth on Exhibit A and in accordance with
the requirements and criteria set forth in Exhibit D. In accordance with the
Project Milestones set forth on Exhibit A, the Vendor will complete all Product
Installation in any given PCS System in conformance with the requirements and
criteria set forth in Exhibit D within three (3) days of completion of the
Facilities Preparation Services in such PCS System.
8.2 No Interference. The Vendor will install the Products and build each
---------------
of the PCS Systems so as to cause no unauthorized interference with or
obstruction to lands and thoroughfares or rights of way on or near which the
Installation work may be performed. The Vendor must exercise every reasonable
safeguard to avoid damage to existing facilities, and if repairs or new
construction are required in order to replace facilities damaged by the Vendor
due to its carelessness, negligence or willful misconduct, such repairs or new
construction will be at the Vendor's sole cost and expense.
SECTION 9 ACCEPTANCE TESTING AND ACCEPTANCE
9.1 Acceptance Testing. The Vendor must carry out the Acceptance Tests on
------------------
the Products and the PCS Systems as specified in Exhibit B3 and each PCS System
must successfully achieve acceptance (including Substantial Completion and Final
Acceptance) in accordance with the terms of Exhibit B3.
9.2 Costs and Expenses. The costs and expenses of such Acceptance Tests
------------------
will be borne by the Vendor, and the Owner will not be charged or billed for
such costs and expenses. If the Acceptance Tests performed by the Vendor are
not satisfied in accordance with the relevant requirements of Exhibit B3 or are
otherwise inconclusive in the reasonable judgment of the Owner, the Owner will
have the right to order further Acceptance Tests at the sole cost and expense of
the Vendor.
9.3 Notification. The Vendor will notify the Owner at least ten (10) days
------------
prior to the performance of any Acceptance Tests. Prior to or at the first
practicable date after such notification, the Vendor and the Owner will each
agree upon and approve any test forms to be used as part of the particular
Acceptance Test being conducted.
9.4 Presence at Acceptance Tests. The Owner and its representatives will
----------------------------
be permitted to witness and have unrestricted access to the Vendor's and its
Subcontractors' Acceptance Tests.
49
9.5 Correction of Defects. If any Acceptance Test is not satisfied, the
---------------------
Vendor will, at its sole cost and expense, (i) in writing, notify the Owner of
such failure, and (ii) promptly correct whatever Defects or Deficiencies caused
such Acceptance Test not to be satisfied. After such correction, the Vendor
must (i) repeat at its sole cost and expense the failed Acceptance Tests and as
many other Acceptance Tests as are necessary to ensure in the reasonable opinion
of the Owner that such correction made by the Vendor would not have affected the
outcome of such other Acceptance Tests, and (ii) in writing, notify the Owner as
to what correction was made and what Acceptance Tests were repeated.
9.6 Acceptance Certificate. Upon the successful completion of the
----------------------
Acceptance Tests for a PCS System or any part thereof conducted by the Vendor,
the Vendor must submit to the Owner an Acceptance Certificate certifying that
(i) such Acceptance Tests have been successfully completed, (ii) the Work so
tested has been completed in accordance with the terms of this Contract, and
(iii) if applicable, that the remainder of the Work is continuing in accordance
with the Project Milestones set forth on Exhibit A. Upon its reasonable
satisfaction that such Acceptance Certificate is correct and complete, the Owner
will acknowledge such certification by signing the Acceptance Certificate. In
the event of any dispute as to the results of any Acceptance Tests, such dispute
will be resolved pursuant to the dispute resolution mechanisms set forth in
subsection 23.1.
SECTION 10 DISCONTINUED PRODUCTS
10.1 Notice of Discontinuation. During the Term of this Contract, the
-------------------------
Vendor agrees to provide the Owner, or the respective Affiliates as the case may
be, not less than ninety (90) business days' prior written notice of its intent
to discontinue any Product being supplied by the Vendor to the Owner and/or any
Affiliate in connection with the terms of this Contract.
10.2 Discontinuation During Warranty Period. In the event that the Vendor
--------------------------------------
discontinues the manufacture of a Product ("Discontinued Products"), the Vendor
will promptly notify the Owner of such discontinuance. The Vendor, at its
option, may continue to make such Discontinued Products available to the Owner.
If, during the applicable Warranty Period thereof pursuant to Section 17, the
Vendor does not make such Products which were previously purchased by the Owner
and have become Discontinued Products available to the Owner, the price of any
Products provided as a replacement for the Discontinued Product by the Vendor
and required to be purchased by the Owner during such Warranty Period in order
to maintain performance and functionality equivalent to that previously provided
by the Discontinued Products will be discounted by an amount equal to 65% of the
price previously paid for such Discontinued Products.
10.3 Discontinuation After Warranty Period. In the event that the Vendor
-------------------------------------
discontinues the manufacture of a Product following the expiration of the
applicable Warranty Period and the Owner is required to replace a Product which
was previously purchased by the Owner and has become a Discontinued Product in
order to maintain performance and functionality, the Owner will receive a credit
in an amount equal to the percentage set forth
50
below multiplied by the purchase price paid for such original Product, which
credit will be applied against the Vendor's then-current list price for a
replacement for such Discontinued Product; provided that the credit will not
-------- ----
exceed the Vendor's then-current best price for such replacement Product subject
to the discounts available to the Owner pursuant to the terms of this Contract:
(i) up to and including one year following expiration of the
applicable Warranty Period: forty percent (40%);
(ii) more than one year and up to and including two years following
expiration of the applicable Warranty Period: thirty percent
(30%);
(iii) more than two years and up to and including three years following
expiration of the applicable Warranty Period: twenty percent
(20%); and
(iv) more than three years and up to and including four years
following expiration of the applicable Warranty Period: ten
percent (10%).
SECTION 11 SOFTWARE; CONFIDENTIAL INFORMATION
11.1 RTU License. The Owner is hereby granted a perpetual, non-exclusive,
-----------
non-transferable (except as set forth in subsections 11.5 and 27.4), fully paid-
up, worldwide multi-site (capability to move Software from site to site) right
to use ("RTU") license for the Software ("RTU License"), to operate each of the
PCS Systems and to operate the System as a whole subject to the payment of the
appropriate license fees pursuant to and in accordance with the terms of this
Contract. Except as otherwise provided herein, the Owner is granted no title or
ownership rights to the Software. Such rights will remain with the Vendor or
its Subcontractors, as appropriate.
11.2 Additional Copies. The Vendor must provide two (2) additional copies
-----------------
of the Software to the Owner for use in the Test-bed Laboratory and in
accordance with Exhibit I at no additional charge or expense; provided that such
-------- ----
copies will be used for testing and validation purposes only.
11.3 Owner's Obligations. The Owner agrees that the Software, whether or
-------------------
not modified, will be treated as proprietary and the Owner will:
(a) Utilize the Software solely in conjunction with the System and/or any
PCS System; provided that the Vendor acknowledges that the Software will be
-------- ----
connected in a working manner with systems, equipment and software provided by
other suppliers and customers including, but not limited to, the Other Vendors;
51
(b) Ensure that all copies of the Software will, upon reproduction by the
Owner and whether or not in the same form or format as such Software, contain
the same proprietary and confidentiality notices or legends which appear on the
Software provided pursuant hereto; and
(c) Hold secret and not disclose the Software to any person, except to (i)
such of its employees, contractors, agents or Affiliates that are involved in
the operation or management of the System and/or any PCS System or otherwise
need to have access thereto to fulfill their duties in such capacity, or (ii)
other Persons (other than the Other Vendors except to the extent required for
the implementation of Exhibit G pursuant to the terms of this Contract) who need
to use the Software to permit connection in a working manner of the System
and/or any PCS System with systems and software of other suppliers and customers
including, but not limited to, the Other Vendors; provided that such other
-------- ----
Persons (and/or the contractors or agents described in clause (i) above agree,
or are otherwise obligated, to hold secret and not disclose the Software to the
same extent as if they were subject to this Contract.
11.4 Backwards Compatibility. (a) In addition to the warranties
-----------------------
contained in Section 17 of this Contract, the Vendor represents and warrants
that each Software Revision Level during the Term of this Contract will be
Backwards Compatible with all existing in-service Equipment and all previous
Software Revision Levels of the Software made available to the Owner by the
Vendor during the three (3) year period prior to the date each such current
Software Revision Level is first made available to Owner. So long as the Owner
has opted to deploy any one of the last two (2) consecutive Software Revision
Levels prior to the current Software Revision Level, the Owner will not be
required to purchase more than one Software Revision Level of the Software at
each System Element Location to achieve the functionality and features of the
most current Software Revision Level of the Software and to maintain Backwards
Compatibility.
(b) In the event that Software supplied by the Vendor for any System
Element at any time does not provide Backwards Compatibility as required by this
subsection 11.4, then the Vendor will provide, without charge to the Owner, the
Software Upgrades of the Software to such System Element, and otherwise take
such steps as may be necessary to achieve Backwards Compatibility.
11.5 Assignment. The Owner and any successor to the Owner's title in the
----------
Products has the right (subject to written approval from the Vendor, which
approval will not be unreasonably withheld), to assign the Software licenses to
any other Person who acquires legal title to the Products including, but not
limited to, any Person or Persons taking part in the financing of any part of
the Nationwide Network provided that no such assignment to Persons taking part
-------- ----
in the financing of any part of the Nationwide Network will be permitted except
in accordance with the provisions of subsection 27.4 of this Contract. The
Vendor also hereby grants to the Owner the right to sublicense the Software
Licenses to any Affiliate.
11.6 Survival. The obligations of the Owner under the Software Licenses
--------
will survive the termination of this Contract, regardless of the cause of
termination.
52
11.7 Access to Source Codes. The Vendor grants the Owner a right to
----------------------
modify (the "RTM License") for the maintenance, modification and support of
those Products purchased from the Vendor and owned or operated by the Owner.
The RTM License does not permit access to Source Codes, except as set forth in
this Contract and in the Escrow Agreement under the following circumstances:
(a) If the Vendor becomes insolvent, makes a general assignment for the
benefit of creditors, files a voluntary petition in bankruptcy or an involuntary
petition in bankruptcy is filed against the Vendor which is not dismissed within
sixty (60) days, or suffers or permits the appointment of a receiver for its
business, or its assets become subject to any proceeding under a bankruptcy or
insolvency law, domestic or foreign, or has liquidated its business, or the
Vendor, or a business unit of the Vendor that is responsible for maintenance of
the Software, ceases doing business without providing for a successor, or the
Owner has reasonable cause to believe that any such event will occur; or
(b) Pursuant to the dispute resolution mechanisms set forth in subsection
23.1, it is determined that the Vendor or its transferee or assignee has proved
unwilling, or is otherwise unable, to provide the warranty service or support of
the System and/or any PCS System contemplated by this Contract.
11.8 Escrow Agreement. The Vendor agrees to become a party to a Source
----------------
Code escrow agreement (the "Escrow Agreement") which will enable the Owner to
obtain access to the applicable Source Codes in any of the circumstances set
forth in subsection 11.7. The Vendor shall do so promptly and cooperatively
upon the first to occur of the following events: (i) before Substantial
Completion of the last PCS System within the Initial System, upon the Owner
declaring to the Vendor in writing that any one of the occasions enumerated in
the alternative in subsection 11.7(a) has been realized; or (ii) after the
Substantial Completion of the last PCS System within the Initial System, upon
the Owner declaring over the signature of an officer of the Owner that the Owner
elects, in its sole discretion, to call upon the Vendor to enter into such an
Escrow Agreement. The Owner will pay all costs associated with such Escrow
Agreement including but not limited to the Vendor's reasonable Source Code
gathering costs in connection with such Escrow Agreement. The Vendor
represents, warrants and agrees that (i) the Source Codes delivered into escrow
in accordance with the Escrow Agreement will comprise the full Source Code
language statement of the Software as used, or required to be used, by the
Vendor to maintain or modify the System and/or any PCS System without the help
of any other Person or reference to any other material, (ii) such Source Codes
will include all relevant versions thereof, and (iii) such Source Codes must be
kept up to date, including all updates needed to maintain compliance with the
Specifications and the System Standards. In addition, all parts of the Source
Codes and all updates thereto (including, without limitation, those that are
necessary to maintain compliance with the Specifications) must be delivered into
escrow in accordance with the Escrow Agreement.
11.9 Software Maintenance. The Vendor represents and warrants that the
--------------------
Software delivered to the escrow agent pursuant to subsection 11.8 and to the
Owner pursuant to the Escrow Agreement will be in a form suitable for
reproduction by the Owner and will include
53
the full Source Code language statement of the Software as used by the Vendor
sufficient to allow the Owner to maintain or modify the System without the help
of any other Person or reference to any other material.
11.10 Custom Software. 11.10.1 Request for Custom Material. (a) From
--------------- ---------------------------
time to time, the Owner may have requirements for custom Software or custom
development of Equipment to be provided by the Vendor under this Contract (the
"Custom Material"). If the Owner has a requirement for Custom Material that is
a specific enhancement or modification of a previously licensed feature or of
previously purchased Products, the Owner will identify to the Vendor in writing
a summary of any such proposed development of Custom Material. Such summary
will provide a description of any proposed Custom Material sufficient to enable
the Vendor to determine the general demand for, and its plans, if any, to
develop the same or similar Products. The Vendor will respond to such summary
within ten (10) days after receipt thereof and indicate if it has the ability to
fulfill a subsequent Request for Proposal ("RFP") from the Owner for such
development of Custom Material.
(b) If the Vendor decides after reasonable review that it does not have
the technical ability or the capacity to fulfill a subsequent RFP for such
Custom Material development, the Vendor will (i) provide the Owner no later than
twenty (20) days from the date of receiving the initial request from the Owner
pursuant to this subsection 11.10 a detailed explanation of why it cannot
fulfill such RFP and (ii) use its best efforts to make available to the Owner an
alternative route for such development reasonably acceptable to the Owner.
(c) In the event the Vendor fails to agree to a request for Custom
Material development pursuant to the terms of this subsection 11.10 then the
matter will be referred to dispute resolution pursuant to Section 23.
11.10.2 Vendor Response. After reviewing such RFP, the Vendor will
---------------
respond to the Owner within ten (10) business days, stating the terms and
conditions upon which the Vendor would be willing to undertake such development,
including, but not limited to, a listing of specifications, ownership rights,
custom development charges, planned license fees and a proposed delivery
schedule provided, however, that no response shall require the Owner to forfeit
-------- -------
rights of invention or authorship otherwise arising under law or as a condition
of contracting with the Vendor for such Custom Developments, and in any event
the Vendor will use its best efforts to provide the Owner full ownership rights
to such Custom Developments where practical.
11.10.3 Ownership of Intellectual Property. The Vendor will own or
----------------------------------
have valid and enforceable licenses to use, transfer or distribute all forms of
intellectual property rights (including, but not limited to, patent, trade
secret, copyright and mask rights) pertaining to Products, and will have the
right to file for or otherwise secure and protect such rights. The foregoing
notwithstanding, the Parties understand and agree that from time to time the
Owner may devise, develop or otherwise create ideas or other concepts for
services or new products which are patentable or otherwise capable of receiving
protection from duplication. In such event, the Owner will have the right to
patent or otherwise protect such ideas or concepts for its own use and benefit.
54
SECTION 12 SOFTWARE CHANGES
12.1 Software Upgrades. Software Upgrades must be provided to the Owner
-----------------
by the Vendor at no charge to the Owner for the Term of this Contract. Software
Enhancements will be provided to the Owner by the Vendor, if requested by the
Owner, and the Owner will be obligated to pay a license fee therefor at a price
that is no less favorable to the Owner than that offered or available to any
other Customer of the Vendor, which fee will be adjusted pursuant to subsections
6.2, 7.3 and 27.16. The Owner will not be obligated to pay any fee related to
any Software Enhancement supplied to the Owner at the initiative of the Vendor
unless the Owner elects to utilize any new feature included therein, in which
event the fee for such Software Enhancement will be due and payable within
thirty (30) days of written notice from the Owner to the Vendor that the Owner
has elected to use such feature and has accepted such Software Enhancement. In
the event the Vendor at any time issues a Software Upgrade which is combined
with any Software Enhancement (collectively, the "Software Combined Release") to
such Software, the Software Combined Release will be provided at no charge to
the Owner unless and until the Owner elects to use any of the feature
enhancement or enhancements included within the Software Combined Release and
has accepted such Software Combined Release, in which event the fee for such
Software Combined Release will be due and payable within thirty (30) days of
written notice from the Owner to the Vendor that the Owner has elected to use
such feature enhancement and has accepted such Software Combined Release.
12.2 Notice. The Vendor must give the Owner not less than six (6) months
------
prior written notice of the introduction of any Software Enhancement release or
any Software Combined Release. In addition, on each January 15 and July 15 of
each year during the Term of this Contract, the Vendor must provide the Owner
with a forecast of future Software Enhancement releases or Software Combined
Releases then currently being developed by or on behalf of the Vendor.
12.3 Development Resources. During the Term of this Contract, if
---------------------
requested by the Owner, the Vendor will make available to the Owner sufficient
resources for the development of identified features or modifications to
Software or Software Enhancements for a fee no less favorable to the Owner than
that charged to any Customer other than the Owner, which fee will be adjusted as
contemplated by subsections 6.2, 7.3 and 27.16.
12.4 Installation, Testing and Maintenance. The installation and testing
-------------------------------------
of the Software by the Vendor and the acceptance thereof by the Owner will be
performed in accordance with the criteria set forth in Exhibit B3.
12.5 Software Fixes. In the event that any Software Upgrade or Software
--------------
Enhancement supplied by the Vendor during the Term of this Contract has the
effect of preventing the System and/or any PCS System or any part thereof from
satisfying, or performing in accordance with the Specifications, the System
Standards and/or Exhibit F or otherwise adversely affects the functionality or
features of the System, any PCS System or any part thereof, then the Vendor will
promptly retrofit or take such other corrective action as
55
may be necessary to assure that the System, any such PCS System or any such
affected part, as modified to include each such Software Upgrade or Software
Enhancement, will satisfy, and perform in accordance with, the Specifications,
the System Standards and/or Exhibit F and restore all pre-existing functionality
and features as well as provide any new features and functionality provided by
any of the foregoing modifications, in each case without any charge to the
Owner.
SECTION 13 EQUIPMENT CHANGES
13.1 Equipment Upgrades. Equipment Upgrades will be provided to the Owner
------------------
by the Vendor at no charge to the Owner for the Term of this Contract.
Equipment Enhancements must be provided to the Owner by the Vendor, if requested
by the Owner, and the Owner is obligated to make payment therefor in an amount
that is no higher than that payable by any Customer other than the Owner, which
amount of payment will be adjusted as set forth in subsections 6.2, 7.3 and
27.16. The Owner will not be obligated to pay any amount for any Equipment
Enhancement supplied to the Owner at the initiative of the Vendor unless the
Owner elects to utilize any new feature included therein, in which event the Net
Price for any such Equipment Enhancement will be due within forty-five (45) days
of written notice from the Owner to the Vendor that the Owner has elected to use
such new feature and has accepted such Equipment Enhancement. If the Vendor at
any time issues an Equipment Upgrade which is combined with any Equipment
Enhancement (collectively, the "Equipment Combined Release") to such Equipment,
the Equipment Combined Release will be provided at no charge to the Owner unless
and until the Owner elects to use any of the feature enhancement or enhancements
included within the Equipment Combined Release and has accepted such Equipment
Combined Release.
13.2 Notice. The Vendor will give the Owner not less than six (6) months
------
prior written notice of the introduction of any Equipment Enhancement or any
Equipment Combined Release. In addition, on each January 15 and July 15 of each
year during the Term of this Contract, the Vendor will provide the Owner with a
forecast of future Equipment Enhancements to the Equipment or Equipment Combined
Releases then currently being developed by or on behalf of the Vendor.
13.3 Development Resources. During the term of this Contract, if
---------------------
requested by the Owner, the Vendor will make available to the Owner sufficient
resources for the development of identified features, modifications or
enhancements to any Equipment, at charges no less favorable to the Owner than
those charged to any Customer other than the Owner, and such charges will be
adjusted as contemplated by subsections 6.2, 7.3 and 27.16.
13.4 Installation, Testing and Acceptance. The Installation and testing
------------------------------------
of the Equipment by the Vendor and the acceptance thereof by the Owner must be
performed in accordance with Exhibit B3 pursuant to the Project Milestones in
Exhibit A.
56
13.5 Equipment Fixes. In the event that any Equipment Upgrade or
---------------
Equipment Enhancement supplied by the Vendor during the Term of this Contract
has the effect of preventing the System and/or any PCS System or any part
thereof from satisfying, or performing in accordance with, the Specifications,
the System Standards and/or Exhibit F or otherwise adversely affects the
functionality, interoperability or features of the System, any such PCS System
or any part thereof then the Vendor will without any charge to the Vendor
promptly retrofit or take such other corrective action as may be necessary to
assure that the System, any such PCS System or any such affected part, as
modified to include each such Equipment Upgrade and Equipment Enhancement, will
satisfy, and perform in accordance with, the Specifications, the System
Standards and/or Exhibit F and restore all pre-existing functionality and
features as well as provide any features and functionality provided by any of
the foregoing modifications.
SECTION 14 INTELLECTUAL PROPERTY
14.1 Intellectual Property. The Vendor grants the Owner rights to use any
---------------------
copyrights, trademarks or servicemarks necessary or useful for the use,
operation, maintenance, marketing, advertising and publication of the System,
any PCS System or any part thereof, subject to the prior consent of the Vendor,
which consent will not be unreasonably withheld.
14.2 Infringement. The Vendor agrees that it will defend, at its own
------------
expense, all suits and claims against the Owner for infringement or violation of
any patent, trademark, copyright, trade secret, ▇▇▇▇ or other intellectual
property rights of any third party (collectively, "Intellectual Property
Rights"), covering, or alleged to cover, the Equipment, Software, the System
and/or any PCS System or any component thereof or the use thereof, in the form
furnished or as subsequently modified by the Vendor. The Vendor agrees that it
will pay all sums, including, without limitation, attorneys' fees and other
costs, which, by judgment or decree, or in settlement of any suit or claim, may
be assessed against the Owner on account of such infringement or violation,
provided that:
- - -------- ----
(a) the Vendor will be given written notice of all claims of any such
infringement or violation and of any suits or claims brought or threatened
against the Owner or the Vendor of which the Owner has actual knowledge and the
Vendor will promptly either accept or deny the defense of such claim;
(b) the Vendor will be given full authority to assume control of the
defense thereof through its own counsel at its sole expense but will not
compromise or settle any suits or claims without the express prior written
consent of the Owner provided that such consent will not be unreasonably
-------- ----
withheld; and
(c) the Owner will cooperate fully with the Vendor in the defense of such
suit or claims and provide the Vendor such assistance as the Vendor may
reasonably require in connection therewith so long as any such assistance will
not include any cost and/or expense to the Owner.
57
14.3 Vendor's Obligations. If in any such suit so defended, all or any
--------------------
part of the Equipment, Software, the System, any PCS System or any component
thereof or the use thereof is held to constitute an infringement or violation of
Intellectual Property Rights and its use is enjoined, or if in respect of any
claim of infringement or violation the Vendor deems it advisable to do so, the
Vendor will at its sole cost and expense take one or more of the following
actions: (i) procure the right to continue the use of the same without
interruption for the Owner; (ii) subject to the terms of subsection 2.17 replace
the same with noninfringing Equipment or Software that meets the Specifications;
or (iii) modify said Equipment, Software, the System, any PCS System or any
component thereof so as to be noninfringing, provided that the Equipment,
-------- ----
Software, the System, any PCS System or any component thereof as modified meets
all of the Specifications.
14.4 Vendor's Remedies. The Vendor's obligations under this Section 14
-----------------
will not apply to any infringement or violation of Intellectual Property Rights
caused by modification of the Products, the System, any PCS System or any
component thereof by the Owner, or any infringement caused solely by the Owner's
use and maintenance of the Products other than in accordance with the
Specifications or the purposes contemplated by this Contract, except as
expressly authorized or permitted by the Vendor. The Owner will indemnify the
Vendor against all liabilities and costs, including reasonable attorneys' fees,
for defense and settlement of any and all claims against the Vendor based upon
infringement or violation of third parties' Intellectual Property Rights in
connection with this subsection 14.4 and arising solely from modification of the
Equipment made without Vendor's express prior consent.
14.5 License to Use Vendor Patents. In consideration of the purchase of
-----------------------------
Products from the Vendor, the Vendor hereby grants to the Owner and its
Affiliates, under patents associated with such Products or parts thereof and
which the Vendor owns or has a right to license ("Vendor Patents"), a world-wide
royalty-free, non-exclusive license (the "Patent License") to utilize the Vendor
Patents in connection with the Owner's provision of telecommunications services
utilizing or in connection with the Products. The Patent License includes the
right to use not only the Products licensed or purchased hereunder, but also
combinations of the Equipment and the Software with other equipment and software
which are utilized by the Owner and its Affiliates in the provision of such
telecommunications services. The scope of the Patent License will extend only
to the right to use and/or the right to sell, but not manufacture, the Product
or Products to which such Patent License relates. The Patent License includes
those patents existing on the date of this Contract and those patents which come
into existence during the Term of this Contract. The Patent License will
continue for the entire unexpired term of the last to expire of such Vendor
Patents.
The Patent License may be assigned to any successor in interest of the
Owner which acquires all or substantially all of the assets of the Owner by
sale, merger, consolidation or otherwise. The Vendor will not assert any claim
of infringement against other suppliers (including, but not limited to, the
Other Vendors) of the Owner, arising out of authorized activities for
interconnection with Equipment or Software provided to the Owner by the Vendor.
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SECTION 15 DELAY
15.1 Liquidated Damages. (a) The Parties agree that damages for delay
------------------
are difficult to calculate accurately and, therefore, agree that liquidated
damages (the "Liquidated Damages") will be paid for non-performance or late
performance of the Vendor's obligations under this Contract pursuant to the
terms hereof. Except as otherwise specifically set forth in this Contract the
damages, penalties and/or payments payable to the Owner pursuant to subsections
15.1, 15.2 and 15.3 will be the sole and exclusive remedies for the specific
delays described in such subsections 15.1, 15.2 and 15.3.
15.2 Interim Delay. (a) Subject to the terms of this Contract, failure
-------------
of the Vendor to complete the Work necessary to achieve each of the Project
Milestones set forth in Exhibit A1 applicable to any PCS System on or before the
date applicable to such Milestone for such PCS System that is required to be
achieved by the Vendor prior to the Guaranteed Substantial Completion Date for
such PCS System (each an "Interim Milestone") will result in the Vendor being
liable to pay to the Owner an amount equal to [ ]; provided that no such
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Interim Delay Penalty will be due if the delay is directly and expressly
attributable primarily to (i) an event constituting a Force Majeure pursuant to
the terms of this Contract or (ii) an act or omission of the Owner. Interim
Delay Penalties accrued pursuant to this subsection 15.2(a) will be offset
against the payment to be made by the Owner to the Vendor upon Substantial
Completion of the PCS System to which such interim delay relates. The Interim
Delay Penalty applicable to each of Project Milestones M3 and M4 as set forth on
Exhibit A will be [ ]
(b) To the extent that the Vendor is responsible for Interim Delay
Penalties pursuant to subsection 15.2(a) such penalties will be credited back to
the Vendor by the Owner to the extent that (i) the Vendor successfully achieves
the Interim Milestone subject to delay within thirty (30) days of the date
scheduled therefor pursuant to the terms hereof and Exhibit A and (ii) such
interim delay does not otherwise materially adversely affect the Owner, such PCS
System and/or the System as a whole. Any such reimbursement will be credited
back to the Vendor such that the Interim Delay Penalty otherwise offset against
the relevant Substantial Completion payment in accordance with subsection
15.1(a) above will be added back to such Substantial Completion payment to be
made to the Vendor by the Owner. Interim Delay Penalties applicable to Interim
Milestones M6 and M7 within any PCS System in any Non-Designated System Area may
be assessed on the earliest date any such Interim Delay Penalties may be
retroactively calculated in accordance with subsection 2.7(b).
15.3 Completion Delay. (a) [ ]
----------------
59
[ ]
(b) If any PCS System does not achieve Substantial Completion by the
Guaranteed Substantial Completion Date but the Owner nonetheless chooses (in its
sole discretion) to commence In Revenue Service in such incomplete PCS System
(such action in no way constituting the Owner's acceptance, express or implied,
of the System or such PCS System or any part thereof), then the Vendor will be
required to pay, on a daily basis, only that percentage of the daily Late
Completion Payment equal to that percentage of the geographic area to be
otherwise covered by such PCS System not otherwise placed in In Revenue Service
by the Owner.
(c) In the event of a change in the Contract Price pursuant to subsections
6.2, 7.3 or 27.16 during the Term of this Contract from the amount originally
set forth in this Contract pursuant to Section 6 the per diem amount of Late
Completion Payments set forth above will be increased or decreased, as
appropriate, by an amount equal to the increase or decrease in the Owner's per
diem interest payment obligation resulting from any change in the amount of debt
incurred or to be incurred by the Owner related to such change in the Contract
Price.
(d) Late Completion Payments, including any portions of such payments
payable in accordance with paragraphs (a) and (b) above, will be accrued during
the Completion Cure Period and offset against payments otherwise due to the
Vendor upon the achievement of Substantial Completion pursuant to the terms of
subsection 6.3. If the Vendor fails to achieve Substantial Completion within
forty-five (45) days, or thirty (30) days in the event the Owner chooses to
commence In Revenue Service as described in clauses (b) and (c) to this
subsection 15.3, of the Guaranteed Substantial Completion Date for any reason
other than primarily because of (i) a Force Majeure event pursuant to Section
16 or (ii) the direct and explicit act or omission of the Owner, then the Owner
will have the option to terminate this Contract without any penalty or payment
obligation (other than payment obligations under this Contract outstanding as of
the date of any such termination; provided that any such amounts payable by the
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Owner will not include any amounts that would have been payable to the Vendor
only upon Substantial Completion or Final Acceptance). For the purposes of
determining amounts owed to the Owner by the Vendor pursuant to the terms of
this subsection 15.3, the term "Contract Price" as applicable to any given PCS
System will mean the total cost of such PCS System as incurred by the Owner and
payable to the Vendor or any of its Subcontractors for any and all Products and
Services provided or performed by the Vendor or any of its Subcontractors in
connection with the construction and operation of such PCS System pursuant to
the terms of this Contract other than Facilities Preparation Services performed
within such PCS System; provided that in the event of any delay in the Vendor's
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performance in a given PCS System subject to the damages set forth in this
subsection 15.3 that is due in whole or in part, directly or indirectly, to a
delay in satisfactory completion of the Facilities Preparation Services within
such PCS System to be performed by the Vendor or any of its Subcontractors
pursuant to the terms of this Contract and in accordance with
60
Exhibit E, the calculation of the Contract Price will include the full cost of
all Facilities Preparation Services performed by the Vendor or any of its
Subcontractors in such PCS System. In any given PCS System the aggregate amount
of all Interim Delay Penalties and Late Completion Payments owed to the owner
pursuant to this Section 15 will in no event exceed thirty-five percent (35%) of
the Contract Price applicable to such PCS System.
15.4 PCS System and System Element Delivery Prioritization. (a) In no
-----------------------------------------------------
event will the Vendor be required under the terms of this Contract to deliver to
the Owner Products on a time schedule and/or in amounts greater than that set
forth on Exhibit A2.
(b) In the event the Vendor is required pursuant to the progression
of the Work and the Project Milestones in every PCS System within the System to
deliver an amount of Products equal to or more than ninety-five percent (95%) of
the amount of Products indicated for delivery by the Vendor in the fourth
quarter of 1996 as set forth on Exhibit A2, the Vendor will have the right, but
not the obligation, pursuant to this subsection 15.4, to request in writing that
the Owner re-prioritize up to three (3) PCS Systems within the System and in
such event the Owner will delay the Project Milestones to be achieved by the
Vendor in each such PCS System as the Owner will designate to the Vendor, in its
sole and absolute discretion, for a period not in excess of ninety (90) days
without any penalty to the Vendor under this Section 15.
(c) The Owner will use reasonable efforts to inform the Vendor by
5:00 p.m. on April 15, 1996 which System Areas, of all of the System Areas set
forth on Schedule 4, it, in its sole and absolute discretion, has determined to
designate as the thirteen (13) System Areas which should receive priority as to
the build-out by the Vendor of the PCS Systems within such System Areas. The
remaining four System Areas are the "Non-Designated System Areas" referred to
herein. Any such notification provided pursuant to and in accordance with this
subsection 15.4(c) will in no way modify the Vendor's obligations under the
terms of this Contract; provided that any delay by the Owner in providing the
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Vendor the notice described in this subsection 15.4(c) will result in day-for-
day delays in the Guaranteed Completion Dates applicable to the PCS Systems
within the Initial System (other than the PCS Systems in the Non-Designated
System Areas).
SECTION 16 FORCE MAJEURE
16.1 (a) Either Party may make a claim for excusable failure or delay
with respect to any obligation of such Party under this Contract, except any
obligation to make payments when due. Excusable failure or delay will be
allowed only in the event of an event of Force Majeure that is beyond the
reasonable control of the affected Person. Notwithstanding the foregoing, the
Vendor will not be entitled to relief under this Section 16 to the extent that
any event otherwise constituting an event of Force Majeure results from the
negligence or fault of the Vendor or any Subcontractor, and the Owner will not
be entitled to relief under this Section 16 to the extent any event otherwise
constituting an event of Force Majeure results from the negligence or fault of
the Owner.
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(b) The Party claiming the benefit of excusable delay hereunder must (i)
promptly notify the other Party of the circumstances creating the failure or
delay and provide a statement of the impact of such Party failure or delay and
(ii) use reasonable efforts to avoid or remove such causes of nonperformance,
excusable failure or delay. If an event of Force Majeure prevents the Vendor
from performing its obligations under this Contract for a period exceeding sixty
(60) days, the Owner may, upon prior written notice to the Vendor, terminate
this Contract.
(c) The Party not claiming the benefit of excusable delay hereunder will
likewise be excused from performance of its obligations hereunder on a day-for-
day basis to the extent such Party's obligations are affected due to the other
Party's delayed performance.
SECTION 17 WARRANTIES
17.1 Product Warranty. (a) Except as otherwise provided below in
----------------
subsection 17.2, the Vendor warrants that, for a period of three (3) years from
the date of Final Acceptance of any PCS System (the "Product Warranty Period"),
all Products and the Installation thereof within such PCS System will materially
conform with and perform the functions set forth in the Specifications and the
relevant performance criteria set forth in Exhibit D and will be free from
Defects and Deficiencies in material or workmanship which impair service to
subscribers, System performance, billing, administration and/or maintenance. In
the case of Software, the Product Warranty Period applicable to any such
Software shall be automatically extended upon, and simultaneous with, any
Software Upgrade pursuant to the terms of Section 12.
(b) To the extent the Owner orders additional Products from the Vendor in
accordance with the terms of this Contract including, but not limited to,
subsections 2.2 and/or 7.3, any such Products so ordered by the Owner and
delivered and installed by the Vendor or its Subcontractors will be warranted to
the same extent as set forth in clause (a) above for a period of not less than
twelve (12) months from the date the Owner puts such additional Products into
commercial service but for a period of not greater than fifteen (15) months from
shipment. If in the event, pursuant to the Owner's order for such additional
Products the Vendor is not required to install such additional Products, the
warranty on such additional products will run fifteen (15) months from the date
the Vendor shipped such products to the Owner.
17.2 Non-Essential Equipment Warranty. The Vendor warrants, to the extent
--------------------------------
and for the time period of the warranties received by the Vendor from any third
party manufacturer or supplier of Non-Essential Equipment (the "Non-Essential
Equipment Warranty Period"), that all such Non-Essential Equipment and the
Installation thereof will conform with and perform the functions set forth in
the Specifications and the performance criteria set forth in Exhibit F and will
be free from Defects and Deficiencies in material or workmanship which impair
service to subscribers, System performance, billing, administration and/or
maintenance; provided that to the extent any Defect or Deficiency or failure in
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the performance of Non-Essential Equipment causes a Defect or Deficiency or
failure in any Equipment, the Vendor
62
will be responsible for the repair and/or replacement of such Equipment
throughout the applicable Product Warranty Period in accordance with subsection
17.1 except to the extent the Owner is otherwise covered by insurance for any
such failure in Equipment. The Owner agrees to maintain reasonable and ordinary
levels of insurance for each of the PCS Systems within the System.
17.3 Services Warranty (a) The Vendor warrants that, for a period of not
-----------------
less than three (3) years from the date of completion of Network Interconnection
Engineering or Configuration Engineering provided by the Vendor to the Owner
pursuant to the terms of this Contract in any given PCS System (the "Engineering
Warranty Period"), such Network Interconnection Engineering or Configuration
Engineering, as the case may be, will be (i) operational in accordance with the
Specifications, (ii) in compliance with all material Applicable Laws and
material Applicable Permits in effect at the time of the completion of such
engineering in such PCS System, and (iii) free from Defects or Deficiencies in
design, materials, workmanship or otherwise.
(b) The Vendor warrants that, for a period of not less than three (3)
years from the date of completion of RF Engineering to be done by the Vendor or
its Subcontractors (but in no event earlier than the achievement of Milestone M5
in such PCS System) in any given PCS System (the "RF Services Warranty Period")
the Final Site Count within and the Final RF Design applicable to such PCS
System will be accurate based upon the circumstances in such PCS System as they
existed at the time of the Final Acceptance of such PCS System; provided that in
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no event will the RF Engineering warranty pursuant to this subsection 17.3(b)
cover or warrant items or performance otherwise covered or warranted pursuant to
subsection 17.4 below.
(c) The Vendor warrants that, for a period of not less than three (3)
years from the date of completion of Facilities Preparation Services within any
PCS System but in no event later than the achievement of Milestone M8 pursuant
to Exhibit A1 in such PCS System (provided that in the event of a Microwave
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Delay Period in such PCS System pursuant to subsection 2.37, the commencement of
the Facilities Preparation Services Warranty Period will not be later than three
(3) months from the date the Vendor would have otherwise been able to commence
Substantial Completion testing in such PCS System in accordance with Exhibit B3
and Milestone M8 as set forth on Exhibit A1 but for the existence of such
Microwave Delay Period) (the "Facilities Preparation Services Warranty Period"
and collectively with the Engineering Warranty Period and the RF Services
Warranty Period, the "Services Warranty Periods") such Facilities Preparation
Services will be (i) operational in accordance with the Specifications, (ii) in
compliance with all material Applicable Laws and material Applicable Permits in
effect at the time of the completion of such Facilities Preparation Services in
such PCS System, and (iii) free from Defects or Deficiencies in design,
materials, workmanship or otherwise.
17.4 System Warranty. The Vendor warrants that, for a period three (3)
---------------
years from the Final Acceptance of the last PCS System within the Initial System
(the "System Warranty Period"), the ongoing performance of each PCS System
together with all other PCS Systems within the System will conform with and
perform to the performance criteria set forth
63
Exhibit F as of the date of the Final Acceptance of such PCS System based on the
circumstances within such PCS System on such date.
17.5 Breach of Warranties. (a) In the event of any breach of any of the
--------------------
Warranties during any of the applicable Warranty Periods set forth in
subsections 17.1, 17.2, 17.3(a), 17.3(b), 17.3(c) and 17.4, the Vendor will, in
accordance with the terms of this Section 17, promptly repair or replace the
defective or nonconforming Product or otherwise cure any Defects and
Deficiencies so that each PCS System and the System as a whole will perform in
accordance with the Specifications and Exhibit F. If the Vendor fails to
promptly repair, replace and/or cure such defect, the Owner may, in addition to
exercising any other remedies available to it, itself cause such repair,
replacement and/or cure, at its option and at the sole cost and expense of the
Vendor.
(b) The Vendor recognizes that the Owner may suffer injury and may be
damaged in an amount which will be difficult to determine with certainty as a
result of Outages resulting from causes attributable to the failure of the
Vendor's Products and/or Services to perform in accordance with the
Specifications. As used herein, "Outage" means an unscheduled loss of
functionality of the System or any PCS System defined as the loss of the
capability to originate or terminate [ ] or more of the active voice channels
then in service within the System or such PCS System for a period of time
exceeding [ ] minutes.
(c) During the System Warranty Period, the Vendor will be liable to the
Owner for damages (the "Warranty Damages") for Outages that result from (i) the
failure of the Vendor's Equipment and/or Software to perform in accordance with
the Specifications, (ii) the failure of the Vendor to provide Services in
accordance with the Specifications applicable thereto, (iii) a Vendor procedural
error or (iv) inaccurate Technical Documentation, excluding marketing bulletins,
sales literature or other promotional materials provided by the Vendor to the
Owner. As used herein, "Vendor procedural error" means an error or improper
deviation from the Vendor's or its Subcontractors' procedures by, or
attributable to, the Vendor's personnel. Warranty Damages will be calculated
based upon [ ] for each Outage occurring in any given PCS System to the extent
such Outage exceeds [ ] from the time the Owner notified the Vendor of
such Outage (not including such first hour), plus [ ] per minute for each
minute the duration of the Outage exceeds one (1) hour from the time the Owner
notifies the Vendor of such Outage (not including such first hour).
(d) In no event will the Vendor's liability for Warranty Damages pursuant
to this subsection 17.5 exceed [ ] with respect to each Outage in any given
PCS System. In addition, the Vendor's total liability for Warranty Damages
pursuant to this subsection 17.5 will not exceed [ ] per calendar year during
the Term of this Contract with respect to Outages in any given PCS System per
calendar year.
(e) Notwithstanding the foregoing, the Vendor will have no liability
pursuant to this subsection 17.5 for:
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(i) Outages caused by a Force Majeure event as
described in Section 16 other than to the extent that any of the
Vendor's Products and/or Services resulting in such Outages
should, in accordance with the Specifications and/or the Vendor's
representations be able to withstand any such Force Majeure
event;
(ii) Outages resulting from a scheduled activity,
including, but not limited to, System maintenance or Software or
Equipment Upgrades, unless said Outage extends beyond the
expected downtime, as provided in the Specifications applicable
thereto, associated with such Equipment or Software maintenance
Upgrades;
(iii) alterations by the Owner and/or the Vendor at
the Owner's request or otherwise pursuant to the terms of this
Contract to the System and/or any PCS System, excluding normal
maintenance or parameter changes as prescribed by the applicable
Technical Documentation;
(iv) Outages resulting from the Owner's, its
subcontractors' or any third party's (if such third party is
employed by the Owner) failure to follow the Technical
Documentation;
(v) Outages resulting from the gross negligence or
willful misconduct of the Owner, or any of its employees, agents
or contractors; or
(vi) Outages resulting from failure of equipment or
software not supplied by the Vendor or any Subcontractors or from
the performance of services not performed by the Vendor or any
Subcontractors.
(f) On or before the beginning of each quarter of each calendar year
during the Term of this Contract, the Owner shall provide the Vendor a written
report summarizing any Outages occurring during the previous calendar quarter.
The amount of any Warranty Damages shall be determined by the Owner as of the
end of the fourth quarter of each calendar year during the Term, for the
preceding four quarterly reporting periods during such Term. The Owner will
notify the Vendor of any such Warranty Damages in writing. Such Damages will be
payable in credits on future purchases under this Contract or otherwise if this
Contract is terminated for any reason within thirty (30) days of the occurrence.
Any disputes regarding the determination of the cause of an Outage or the amount
of any such Warranty Damages shall be resolved in accordance with the provisions
of Section 23.
17.6 Repair and Return. (a) If the Owner claims a breach of warranty
-----------------
under subsections 17.1, 17.2, 17.3 or 17.4, it must notify the Vendor of the
claimed breach within a reasonable time after its determination that a breach
has in fact occurred. The Owner will allow the Vendor to inspect the Products,
the Non-Essential Equipment, the Services or the System, as the case may be, on-
site, or, upon the Vendor's reasonable request and, subject to subsection
17.6(d) below, at the Vendor's sole expense: (i) with respect to Products,
return such Products to any of the Vendor's repair facilities located in North
America and listed on
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Schedule 8, or (ii) with respect to Non-Essential Equipment, return such Non-
Essential Equipment to the Vendor for further return to the applicable third
party manufacturer.
(b) The Vendor agrees to commence work on all such Products, Non-
Essential Equipment, Services or any System Defect, as the case may be, or
Installation Defects as soon as practicable, but in no event later than twenty-
four (24) hours after notification of such defect, and, subject to subsections
17.6(e) and 17.6(f), the Vendor will cure such defect as promptly as
practicable. During the Product Warranty Period and the Non-Essential Equipment
Warranty Period, electronic circuit board components of Equipment or Non-
Essential Equipment, as the case may be, will be repaired or replaced by the
Vendor.
(c) Failure of the System to function to the level of the performance
warranty as set forth in subsection 17.4 will result in the obligation of the
Vendor to promptly make whatever repairs, modifications, alterations, expansions
or to take any other action of any kind, including but not limited to the
provision of additional Products and/or Services, necessary to satisfactorily
fix that portion of the System causing such failure.
(d) All costs associated with (i) removing or disconnecting the
Products or the Non-Essential Equipment subject to the warranty claim pursuant
to the terms of this Section 17 from any other Products, the respective PCS
System or any part thereof or from other equipment, any other pcs system or any
part thereof to which they are attached or connected, or (ii) dismantling
surrounding Products, the respective PCS System or any part thereof or any other
equipment or other pcs system or any part thereof in order to so remove or
disconnect the Products or Non-Essential Equipment subject to such warranty
claim shall be borne by the Vendor throughout the applicable Warranty Period.
All packaging, shipping and freight charges incurred in connection with the
Vendor's obligations under this subsection 17.6 will be borne by the Vendor,
unless the Products or Non-Essential Equipment, as the case may be, returned are
not Defective or otherwise not covered by the Vendor's warranty pursuant to
subsections 17.1 and 17.2, in which case the Owner will pay for all such charges
between the Owner's point of origin and the Vendor's applicable repair facility
in North America.
(e) For routine warranty service, the Vendor will, during the
respective Warranty Period, ship replacement or repaired Products or Non-
Essential Equipment (or components thereof) within thirty (30) days of receipt
of the Defective Equipment or Non-Essential Equipment (or components thereof)
from the Owner. In the event such replacement or repaired Products or Non-
Essential Equipment cannot be shipped within such time period, or if the Vendor
determines that due to the particular circumstances, on-site repairs or services
are required, the Vendor shall undertake such repairs or replacement services
on-site within thirty (30) days of notification of the warranty Defect by the
Owner. In the event that the Vendor fails to repair or replace Defective
Products and/or Non-Essential Equipment within thirty (30) days from the Owner's
notice to the Vendor, then the Vendor shall be deemed to be in material breach
of its obligations pursuant to this Contract and the Owner shall be entitled to
receive a refund of all amounts previously paid to the Vendor for the Defective
Products or Non-Essential Equipment, and shall have no further obligation to pay
additional amounts in connection with the Defective Products or Non-Essential
Equipment.
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The Owner shall return such Defective Products and Non-Essential Equipment to
the Vendor at the Vendor's sole cost and expense.
(f) For emergency warranty service situations, the Vendor will,
during the applicable Warranty Periods, use its best efforts to ship replacement
Products or Non-Essential Equipment (or components thereof) no later than twelve
(12) hours after notification of the warranty Defect by the Owner. The Owner
shall ship the Defective Products or Non-Essential Equipment to the Vendor
within thirty (30) days of receipt of the replacement Products or Non-Essential
Equipment, as the case may be. In the event the Vendor fails to receive such
Defective Products or Non-Essential Equipment within such thirty (30) day
period, the Vendor shall invoice the Owner for the replacement Products or Non-
Essential Equipment at the then-current price in effect therefor pursuant to the
terms of this Contract. If in an emergency warranty service situation, the
Owner and/or the Vendor determines that due to the particular circumstances, on-
site technical assistance is necessary, the Vendor shall use its best efforts to
dispatch emergency service personnel to the site within twelve (12) hours of
notification of the warranty Defect by the Owner. For the purpose of this
subsection 17.6, an emergency warranty service situation shall be deemed to
exist upon the occurrence of any E1 Emergency Condition or E2 Emergency
Condition. The Vendor agrees to commence work on all Equipment, Non-Essential
Equipment, Facilities Preparation Services or any System defect, as the case may
be, or Installation defects materially impairing service to subscribers, System
performance, billing, administration and/or maintenance as soon as practicable,
but in no event later than twenty-four (24) hours after notification of such
defect, and the Vendor will cure such defect as promptly as practicable.
17.7 Technical Assistance Center. The Vendor must maintain a technical
---------------------------
assistance center in the United States, and during the Warranty Periods
established pursuant to subsections 17.1, 17.2, 17.3 and 17.4, respectively,
will make such support center available to the Owner twenty-four (24) hours per
day free of charge to the Owner.
17.8 Scope of Warranties. Unless otherwise stated herein, the Vendor's
-------------------
warranties under this Section 17 will not apply to:
17.8.1 damage or defects resulting from the gross negligence or willful
misconduct of the Owner, or any of its employees, agents or
contractors;
17.8.2 any Equipment or Software damaged by accident or disaster,
including without limitation, fire, flood, wind, water, lightning
or power failure other than to the extent that any such Equipment
or Software should in accordance with the Specifications and/or the
Vendor's representations be able to withstand any such events;
17.8.3 Non-Essential Equipment normally consumed in operation or which has
a normal life inherently shorter than the Warranty Periods (e.g.,
----
fuses, lamps, magnetic tape); or
67
17.8.4 damages or defects resulting directly from the Other Vendor's
equipment provided that this will in no event limit the Vendor's
obligation as to Interoperability pursuant to the terms of this
Contract.
17.9 Expenses. Except as otherwise provided in this Section 17, the
--------
Owner will reimburse the Vendor for the Vendor's out-of-pocket expenses incurred
at the Owner's request in responding to and/or remedying Products, Non-Essential
Equipment, Services or any System defect, or service Deficiencies not covered by
the warranties set forth herein or otherwise covered under a separate System
maintenance agreement (subject, however, to the terms and conditions of any such
agreement) between the Vendor and the Owner.
17.10 Third Party Warranties. If the Vendor purchases or subcontracts for
----------------------
the manufacture of any part of the System or the performance of any of the
Services to be provided hereunder from a third party, the warranties given to
the Vendor by such third party will inure, to the extent applicable or permitted
by law, to the benefit of the Owner, and the Owner will have the right, at its
sole discretion, to enforce such warranties directly and/or through the Vendor.
The warranties of such third parties will be in addition to and will not, unless
otherwise expressly stated herein, be in lieu of any warranties given by the
Vendor under this Contract.
SECTION 18 INSURANCE
18.1 Insurance. The Vendor and the Owner will maintain insurance in
---------
accordance with the provisions set forth in Schedule 6; provided that the Owner
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will have the right to maintain otherwise reasonable levels of insurance
substantially similar to that set forth on Schedule 6.
SECTION 19 TAXES
19.1 Taxes. The amounts to be paid by the Owner under this Contract do
-----
not include any state, provincial or local sales and use taxes, however
designated, which may be levied or assessed on the System, any PCS System or any
component thereof, including, but not limited to, the Services. With respect to
such taxes, the Owner will either furnish the Vendor with an appropriate
exemption certificate applicable thereto or pay to the Vendor, upon presentation
of invoices therefor, such amounts thereof as the Vendor may by law be required
to collect or pay; provided, however, that the Vendor will use its reasonable
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efforts to minimize the amount of any such taxes. The Owner has no obligation
to the Vendor with respect to other taxes, including, but not limited to, those
relating to franchise, net or gross income or revenue, license, occupation,
other real or personal property, and fees relating to importation or exportation
of the Products.
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SECTION 20 INDEMNIFICATION AND LIMITATION OF LIABILITY
20.1 Vendor Indemnity. The Vendor will indemnify and hold the Owner and
----------------
its Affiliates, partners, directors, officers, agents and employees (the
"Indemnitees") harmless from and against all claims, demands suits, proceedings,
damages, costs, expenses, liabilities (including, without limitation, reasonable
legal fees) or causes of action (collectively, "Liabilities") brought against or
incurred by any Indemnitee for (i) injury to persons (including physical or
mental injury, libel, slander and death), or (ii) loss or damage to property
including, without limitation, the System, any PCS System or any part thereof or
(iii) violations of Applicable Laws, Applicable Permits, codes, ordinances or
regulations by the Vendor, or (iv) any claims arising out of or in connection
with the Vendor's obligation pursuant to subsection 14.2 or (v) any other
liability, resulting from the gross negligence, wilful misconduct or product
liability, of the Vendor, its officers, agents, employees, or Subcontractors in
the performance of this Contract. If the Vendor and the Owner jointly cause
such Liabilities, the Parties will share the liability in proportion to their
respective degree of causal responsibility.
20.2 LIMITATION ON LIABILITY. EXCEPT AS TO THE DAMAGES, AMOUNTS AND/OR
-----------------------
COSTS PROVIDED IN SUBSECTIONS 14.2, 15.2, 15.3, 17.5, 20.1, AND 20.3 HEREOF, IN
NO EVENT, AS A RESULT OF BREACH OF CONTRACT OR BREACH OF WARRANTY, WILL EITHER
PARTY HERETO OR EITHER PARTY'S SUBCONTRACTORS, BE LIABLE UNDER THIS CONTRACT TO
THE OTHER PARTY FOR ANY CONSEQUENTIAL OR INCIDENTAL DAMAGES, INCLUDING LOST
PROFITS OR REVENUES OF SUCH PARTY, BEFORE OR AFTER ACCEPTANCE, WHETHER OR NOT
SUCH DAMAGES ARE FORESEEABLE. SUCH LIMITATION SHALL NOT APPLY TO LIABILITIES
PAYABLE UNDER THE VENDOR'S OR ANY SUBCONTRACTOR'S INSURANCE POLICIES. EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH IN THIS CONTRACT NOTHING CONTAINED HEREIN WILL BE
DEEMED TO IMPLY A WARRANTY OF FITNESS FOR PARTICULAR PURPOSE.
20.3 Damages for Fraud, Gross Negligence or Willful Misconduct (a) The
---------------------------------------------------------
Vendor shall be responsible for all damages incurred by the Owner as a result of
any damage or injury caused by or resulting from the fraud, gross negligence or
willful misconduct of the Vendor.
(b) The Vendor shall be responsible for all damages, but excluding
indirect, incidental and consequential damages, incurred by the Owner as a
result of any damages or injury caused by or resulting from the fraud, gross
negligence or willful misconduct of any of the Subcontractors.
20.4 Friable Asbestos. (a) Each party will notify the other Party in
----------------
writing of the existence of any friable asbestos that is an imminent health
hazard ("Friable Asbestos") at any System Element Location which is the subject
of the Work hereunder of which such Party has actual knowledge. The foregoing
notwithstanding, the Owner will not be required to notify the Vendor of the
existence of any Friable Asbestos which is contained in Equipment
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supplied by the Vendor or its Subcontractors or brought onto any System Element
Location by the Vendor. If the Owner fails to notify the Vendor of the
existence of such Friable Asbestos as required by this subsection 20.4 and the
Vendor, during the performance of Services hereunder, discovers that Friable
Asbestos is present, other than such Friable Asbestos brought onto the premises
or otherwise disturbed by the Vendor or any Subcontractor at the System Element
Location where such Services are to be performed, the Vendor may upon written
notice to the Owner, and without penalty, suspend the performance of the
Services at the affected System Element Location for only the period of time
that Friable Asbestos remains an imminent health hazard.
(b) The Owner shall be responsible for, without cost to the Vendor, the
abatement or removal of the imminent health hazard presented by the Friable
Asbestos encountered by the Vendor; provided that the Vendor shall be
-------- ----
responsible for, without cost to the Owner, the abatement or removal of such
health hazard if the Friable Asbestos causing such health hazard was brought
onto the premises or otherwise disturbed by the Vendor or any of its
Subcontractors. In the event the Owner chooses not to do the foregoing, the
Owner shall provide, at no charge to the Vendor, alternative plans for providing
such Services that will not expose the Vendor or its Subcontractors to such
imminent health hazard. In the event the Vendor elects to suspend the
performance of Services hereunder due to the presence of Friable Asbestos, the
Vendor's obligations with respect to the performance of the Work on such System
Element Location will only be delayed for that period of time such Friable
Asbestos remains unabated.
(c) Except where such Friable Asbestos was brought onto the premises or
otherwise disturbed by the Vendor or any of its Subcontractors the Owner will
indemnify and hold harmless the Vendor against and in respect of any and all
damages, claims, losses, liabilities and reasonable legal expenses which may be
imposed upon or incurred by the Vendor or asserted against the Vendor by any
employees and/or contractors of the Vendor or any of its Subcontractors and any
Governmental Entity arising out of or in connection with the Owner's failure to
identify and inform the Vendor of the existence of Friable Asbestos as required
by this subsection 20.4.
SECTION 21 REPRESENTATIONS AND WARRANTIES
21.1 Representations and Warranties of the Vendor. The Vendor hereby
--------------------------------------------
represents and warrants to the Owner as follows:
21.1.1 Due Organization of the Vendor. The Vendor is a corporation
------------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own and
operate its business and properties and to carry on its business as such
business is now being conducted and is duly qualified to do business in all
jurisdictions in which the transaction of its business in connection with the
performance of its obligations in connection with this Contract makes such
qualification necessary.
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21.1.2 Due Authorization of the Vendor; Binding Obligation. The
---------------------------------------------------
Vendor has full corporate power and authority to execute and deliver this
Contract and to perform its obligations hereunder, and the execution, delivery
and performance of this Contract by the Vendor have been duly authorized by all
necessary corporate action on the part of the Vendor; this Contract has been
duly executed and delivered by the Vendor and is the valid and binding
obligation of the Vendor enforceable in accordance with its terms, except as
enforcement thereof may be limited by or with respect to the following: (i)
applicable insolvency, moratorium, bankruptcy, fraudulent conveyance and other
similar laws of general application relating to or affecting the rights and
remedies of creditors; (ii) application of equitable principles (whether
enforcement is sought in proceedings in equity or at law); and (iii) provided
the remedy of specific enforcement or of injunctive relief is subject to the
discretion of the court before which any proceeding therefore may be brought.
21.1.3 Non-Contravention. The execution, delivery and performance of
-----------------
this Contract by the Vendor and the consummation of the transactions
contemplated hereby do not and will not contravene the certificate of
incorporation or by-laws of the Vendor and do not and will not conflict with or
result in (i) a breach of or default under any indenture, agreement, judgment,
decree, order or ruling to which the Vendor is a party which would materially
adversely affect the Vendor's ability to perform its obligations under this
Contract; or (ii) a breach of any Applicable Law.
21.1.4 Regulatory Approvals. All authorizations by, approvals or
--------------------
orders by, consents of, notices to, filings with or other acts by or in respect
of any Governmental Entity or any other Person required in connection with the
execution, delivery and performance of this Contract by the Vendor have been
obtained or will be obtained in due course.
21.1.5 Non-Infringement. The Vendor represents and warrants to the
----------------
best of its knowledge based on reasonable diligence that as of the Effective
Date there are no threatened or actual claims or suits in connection with
patents and other intellectual property matters that would materially adversely
affect the Vendor's ability to perform its obligations under this Contract.
Furthermore, the Vendor represents and warrants to the best of its knowledge
that its own agreements with ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ("Qualcomm") for the
licensing of CDMA technology are enforceable in accordance with their terms and
that the Vendor has all necessary rights and licenses to such CDMA technology so
as to be authorized and/or able to perform its obligations under this Contract
with respect thereto.
21.1.6 Scope. The representations and warranties of the Vendor
-----
pursuant to this subsection 21.1 will be deemed to apply to all of the Work
performed by any Subcontractor employed by the Vendor as though the Vendor had
itself performed such Work.
21.1.7 Requisite Knowledge. The Vendor represents and warrants that
-------------------
it has all requisite knowledge, know-how, skill, expertise and experience to
perform the Work in accordance with the terms of this Contract.
21.2 Representations and Warranties of the Owner. The Owner hereby
-------------------------------------------
represents and warrants to the Vendor as follows:
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21.2.1 Due Organization of the Owner. The Owner is a limited
-----------------------------
partnership, validly existing and in good standing under the laws of the State
of Delaware and has all requisite power and authority to own and operate its
business and properties and to carry on its business as such business is now
being conducted and is duly qualified to do business in Delaware and in any
other jurisdiction in which the transaction of its business makes such
qualification necessary.
21.2.2 Due Authorization of the Owner; Binding Obligation. The Owner
--------------------------------------------------
has full power and authority to execute and deliver this Contract and to perform
its obligations hereunder, and the execution, delivery and performance of this
Contract by the Owner have been duly authorized by all necessary partnership
action on the part of the Owner; this Contract has been duly executed and
delivered by the Owner and is the valid and binding obligation of the Owner
enforceable in accordance with its terms, except as enforcement thereof may be
limited by or with respect to the following: (i) applicable insolvency,
moratorium, bankruptcy, fraudulent conveyance and other similar laws of general
application relating to or affecting the rights and remedies of creditors; (ii)
application of equitable principles (whether enforcement is sought in
proceedings in equity or at law); and (iii) provided the remedy of specific
enforcement or of injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought.
21.2.3 Non-Contravention. The execution, delivery and performance of
-----------------
this Contract by the Owner and the consummation of the transactions contemplated
hereby do not and will not contravene the partnership arrangements governing the
conduct of the partners in the Owner and do not and will not conflict with or
result in (i) a breach of or default under any indenture, agreement, judgment,
decree, order or ruling to which the Owner is a party which would materially
adversely affect the Owner's ability to perform its obligations under this
Contract or (ii) a breach of any Applicable Law.
SECTION 22 TITLE AND RISK OF LOSS
22.1 Title. Title to each Item of Equipment will pass to the Owner upon
-----
delivery thereof by the Vendor to the System Element Location to which each such
Item belongs. Prior to acquiring title to the Equipment, the Owner will not
cause or permit the Equipment to be sold, leased or subjected to a lien or other
encumbrance.
22.2 Risk of Loss. Risk of loss of any Products furnished to the Owner in
------------
connection with this Contract will pass from the Vendor to the Owner upon the
completion of the Installation by the Vendor of any such Product at the
appropriate System Element Location within the given PCS System provided that
the risk of loss of any given PCS System within the System will not pass to the
Owner until such time as the Vendor is fully prepared to commence testing for
the Substantial Completion of such PCS System in accordance with and pursuant to
Exhibit B3 and Exhibit A1; provided, however, that the Owner will assume the
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risk of loss prior to such Substantial Completion by the Vendor for any such
Products damaged due to the gross negligence or willful misconduct of the Owner.
Until such time as
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risk passes to the Owner, the Vendor will, at its sole cost and expense, remedy,
repair and replace all physical damage, loss or injury to such property;
provided that, prior to the passing of risk of loss to the Owner, any actual
- - -------- ----
proceeds of the insurance described in Schedule 6 payable with respect to such
physical damage, loss or injury, and any deductible payable with respect to an
Owner Loss, are paid to the Vendor as necessary to achieve such remedy, repair
or replacement.
SECTION 23 DISPUTE RESOLUTION
23.1 Dispute Resolution. Subject to subsections 24.1, 24.2, 24.3, 24.8
------------------
and 23.3, in the event any controversy, claim, dispute, difference or
misunderstanding arises out of or relates to this Contract, any term or
condition hereof, any of the Work to be performed hereunder or in connection
herewith, the respective System Managers of the Owner and the Vendor will meet
and negotiate in good faith in an attempt to amicably resolve such controversy,
claim, dispute, difference or misunderstanding in writing. Such System Managers
must meet for this purpose within ten (10) business days, or such other time
period mutually agreed to by the Parties, after such controversy, claim,
dispute, difference or misunderstanding arises. If the Parties are unable to
resolve the controversy, claim, dispute, difference or misunderstanding through
good faith negotiations within such ten (10) business day period, each Party
will, within five (5) business days after the expiration of such ten (10)
business day period, prepare a written position statement which summarizes the
unresolved issues and such Party's proposed resolution. Such position statement
must be delivered by the Vendor to the Owner's Vice President of Engineering or
Operations and by the Owner to the Vendor's corresponding officer or
representative for resolution within (5) business days, or such other time
period mutually agreed to by the Parties.
If the Parties continue to be unable to resolve the controversy, claim,
dispute, difference or misunderstanding, either Party may initiate arbitration
in accordance with the provisions of subsection 23.2 below; provided, however,
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that with respect to any controversy, claim, dispute, difference or
misunderstanding arising out of or relating to this Contract by which either
Party seeks to obtain from the other monetary damages in excess of ($5,000,000)
either Party, in such case, may commence an action in any state or federal court
in accordance with subsection 27.7 to resolve such matter in lieu of proceeding
with an arbitration pursuant to and in accordance with subsection 23.2.
23.2 Arbitration. An arbitration proceeding initiated by either Party
-----------
under this Contract with respect to any controversy, claim, dispute, difference
or misunderstanding will be conducted in Kansas City, Missouri in accordance
with the Commercial Arbitration rules of the AAA, except that, at the request of
either Party, a stenographic transcript of the testimony and proceedings will be
taken and the arbitrators will base their decision upon the records and briefs
of the Parties.
Such arbitration will be initiated by either Party by notifying the other
Party in writing and will be settled before three (3) impartial arbitrators, one
of whom will be named by the Owner, one by the Vendor and the third by the two
arbitrators appointed by the Owner and
73
the Vendor, respectively. All of the named arbitrators will have significant
experience in the wireless telecommunications industry. If either the Owner or
the Vendor fails to select an arbitrator within ten (10) days after notice has
been given of the initiation of the arbitration, the officer in charge of the
Kansas City, Missouri office of the AAA will have the right to appoint the other
arbitrator, and the two arbitrators thus chosen will then select the third
arbitrator.
The arbitration hearings will be held within fifteen (15) business days
after a Party's initiation of the arbitration. The Federal Rules of Evidence
will apply and reasonable discovery, including depositions, will be permitted.
Discovery issues will be decided by the arbitrators and post-hearing briefs will
be permitted.
The arbitrators will render a decision within ten (10) days after the
conclusion of the hearing(s) and a written opinion setting forth findings of
fact and conclusions of law will be made available to the Parties within that
time period. The decision of the majority of the arbitrators regarding the
matter submitted will be final and binding upon the Parties. Judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
Each Party will pay for the services and expenses of the arbitrator
appointed by it, its witnesses and attorneys, and all other costs incurred in
connection with the arbitration (including, without limitation, the cost of the
services and expenses of the arbitrator appointed by the two arbitrators
appointed by the Parties) will be paid in equal part by the Parties, unless the
award will specify a different division of the costs. Unless otherwise
specifically stated in this Contract, during the pendency of any arbitration
proceedings, the Parties agree to continue to perform their obligations
hereunder in the same manner as prior to the institution of arbitration
proceedings.
23.3 Other Remedies. Notwithstanding anything to the contrary herein
--------------
contained, each Party will be entitled to pursue any equitable rights and
remedies that are available at law or in equity without complying with
subsection 23.1 or 23.2.
SECTION 24 TERMINATION AND EVENTS OF DEFAULT
24.1 Termination Without Cause. (a) The Owner may, at its sole option,
-------------------------
terminate this Contract, in its entirety, for convenience upon sixty (60) days'
prior written notice at any time; provided that prior to any such termination
-------- ----
pursuant to this subsection 24.1 the Minimum Commitment will have been fulfilled
by the Owner in accordance with the terms of this Contract.
(b) Any orders made prior to any such termination described in clause (a)
above, other than the Initial Commitment, will remain in effect and will be
fulfilled to the extent that such orders are outstanding as of the date of such
termination.
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24.2 Termination for Cause. The Owner also has the right to terminate
---------------------
this Contract in its entirety (except as otherwise set forth in clause (l)
below) without any penalty or payment obligation upon the occurrence of any
Vendor event of default (each a "Vendor Event of Default") as set forth below.
The occurrence of any of the following will constitute a Vendor Event of
Default:
(a) the Vendor (i) files a voluntary petition in bankruptcy or has an
involuntary petition in bankruptcy filed against it that is not dismissed within
sixty (60) days of such involuntary filing, (ii) admits the material allegations
of any petition in bankruptcy filed against it, (iii) is adjudged bankrupt, or
(iv) makes a general assignment for the benefit of its creditors, or if a
receiver is appointed for all or a substantial portion of its assets and is not
discharged within sixty (60) days after his appointment; or
(b) the Vendor commences any proceeding for relief from its creditors in
any court under any state insolvency statutes; or
(c) the Vendor materially disregards or materially violates material
Applicable Laws or material Applicable Permits; or
(d) the Vendor persistently and materially fails to timely correct Defects
and Deficiencies in accordance with the terms of this Contract; or
(e) the Vendor persistently fails to fulfill its obligations with respect
to the satisfaction, discharge or bonding of liens as set forth in subsection
2.35 hereof; or
(f) the Vendor abandons or ceases for a period in excess of thirty (30)
days its performance of the Work (except as a result of an event of Force
Majeure or a casualty which is fully covered by insurance or as to which other
provisions reasonably acceptable to the Owner are being diligently pursued) or
fails to begin the Work within thirty (30) days after the Notice to Proceed
Date; or
(g) the Vendor assigns or subcontracts Work other than in accordance with
the terms and conditions of Section 4; or
(h) the Vendor fails to materially comply with any accepted Change Order
pursuant to subsection 7.3; or
(i) the Vendor materially breaches this Contract (including, without
limitation, any action the Vendor may take on any Vendor-Controlled Site) and
thereby prejudices in any way deemed material by the parties providing financing
in connection with the build-out of the Nationwide Network in their reasonable
opinion (whether expressed and/or communicated through the Owner or otherwise);
or
(j) the Vendor fails to pay to the Owner any material amount due not
otherwise in good faith dispute to the Owner by the date required for such
payment; or
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(k) the Vendor fails to comply with subsection 27.22; or
(l) the Vendor misses any Interim Milestone within any given PCS System by
a period in excess of thirty (30) days and such failure to achieve such Interim
Milestone was not caused by (i) a Force Majeure event and/or (ii) any act or
omission of the Owner; provided that in such case the Owner will have the right,
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but not the obligation, to terminate this Contract with respect to only that PCS
System in which such interim delay occurred unless such interim delay relates to
Project Milestones M3 and M4 as set forth on Exhibit A1 in which case the Owner
will have the right, but not the obligation, to terminate this Contract in its
entirety as otherwise set forth in this subsection 24.2; or
(m) the Vendor otherwise materially breaches any provision of this
Contract.
24.3 Remedies. (a) If any of the Vendor Events of Default exists, the
--------
Owner may, without prejudice to any other rights or remedies of the Owner in
this Contract or at law or in equity, terminate this Contract upon written
notice to the Vendor; provided, however, that the Owner will have first provided
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to the Vendor the following periods of notice and opportunity to cure:
(i) in the case of an Event of Default specified in the
foregoing subsections 24.2 (e) and (k), the Owner will have provided
ten (10) business days' prior written notice to the Vendor, and the
Vendor will have failed to remedy such breach entirely by the end of
such ten (10) business day period;
(ii) in the case of an Event of Default specified in the
foregoing subsections 24.2 (a) or (b), no notice or opportunity to
cure will be required from the Owner; and
(iii) in the case of any other Event of Default by the
Vendor, the Owner will have provided forty-five (45) days' prior
written notice, and the Vendor will have failed (i) to commence to
cure the default within five (5) days after receipt of such notice,
and (ii) to diligently pursue such cure and remedy the breach entirely
by the end of said forty-five (45) day notice period.
(b) If the Owner elects to terminate this Contract, the Owner may,
without prejudice to any other rights or remedies of the Owner in this Contract
or of law or in equity, do one or more of the following:
(i) Take possession of all Engineering and design data,
procurement data, manufacturing data, construction and erection data,
start-up and testing data, materials, and Products that will become
part of the System and/or the specified PCS Systems, or the Work and
which Owner will have the right of ownership to and/or possession of
under the terms of this Contract, whether any of
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the same is in a partial state of completion or completed condition,
and title to any of said items vests in the Owner (if not already
vested by the provisions of this Contract);
(ii) Take possession of all Engineering and design data,
procurement data, manufacturing data, construction and erection data,
start-up and testing data, materials, and Products that will become
part of the System and/or the specified PCS Systems, or the Work
whether any of the same is in a partial state of completion or
completed condition (if not already vested in the Owner by the
provisions of this Contract);
(iii) Take temporary possession and control of all of the
Vendor's installation equipment, machinery, and the Vendor's
materials, supplies, Software and any and all tools (including, but
not limited to, any and all RF Engineering tools and/or software) at
any project site, including but not limited to any System Element
Location, within the System and/or the specified PCS Systems which in
the Owner's opinion are necessary to finish the Work subject to any
enforceable licenses related thereto or any confidentiality
restrictions otherwise contained in this Contract;
(iv) Direct that the Vendor assign its Subcontractor
agreements to the Owner without any change of price or conditions
therein or penalty or payment therefor to the full extent permitted by
such agreement or agreements; or
(v) Take over and finish the Work by whatever reasonable
methods the Owner may deem expedient;
provided, that, nothing contained in paragraphs (a) through (d) above will
- - -------- ----
require the Vendor to relinquish to the Owner any of its manufacturing
facilities, specific Product designs (other than such designs previously
provided to the Owner pursuant to the terms of this Contract), Software Source
Codes, trade secrets or proprietary information not previously provided or made
available to the Owner, the System or any part thereof or any materials,
supplies, inventories, tools, software, engineering and/or designs that are not
integral or relevant to the completion of the Work.
24.4 Discontinuance of Work. Upon such notification of termination, the
----------------------
Vendor must immediately discontinue all of the Work (unless such notice of
termination directs otherwise), and, as more fully set forth in subsection
24.3(b), deliver to the Owner copies of all data, drawings, specifications,
reports, estimates, summaries, and such other information, and materials as may
have been accumulated by the Vendor in performing the Work, whether completed or
in process. Furthermore, the Vendor must assign, assemble and deliver to the
Owner all purchase orders and Subcontractor agreements (and in connection with
such agreements, to the full extent permitted by such agreements) requested by
the Owner.
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24.5 Payments. In the event the Owner terminates this Contract for cause
--------
pursuant to subsection 24.2, the Vendor will not be entitled to receive further
payment other than payments due and payable under this Contract and not subject
to dispute prior to such termination. Notwithstanding anything herein to the
contrary, the Owner may withhold payments, if any, to the Vendor for the
purposes of offset of amounts owed to the Owner pursuant to the terms of this
Contract until such time as the exact amount of damages due the Owner from the
Vendor is fully determined; provided, however, that the amount of any such
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offset pursuant to this subsection 24.5 will not be greater than the amounts
otherwise owed to the Vendor and claimed hereunder.
24.6 Costs. In the event of a termination due to a Vendor Event of
-----
Default, the Owner will be entitled to the costs in connection with finishing
the Work (exclusive of any Liquidated Damages already paid and/or owing to the
Owner upon termination of this Contract), and if such costs exceed the unpaid
balance of the Contract Price for such Work, the Vendor will be liable to pay
such excess to the Owner, provided that the Owner will use the same care as it
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would otherwise use in light of the extraordinary circumstances contemplated
under this subsection 24.6. The amount to be paid by the Vendor pursuant to
this subsection 24.6 will survive termination of this Contract and will be
subject to the limitations of liability in this Contract.
24.7 Continuing Obligations. Termination of this Contract for any reason
----------------------
(i) will not relieve either Party of its obligations with respect to the
confidentiality of the Proprietary Information as set forth in subsection 27.19,
(ii) shall not relieve either Party of any obligation which expressly or by
implication survives termination, and (iii) except as otherwise provided in any
provision of this Contract expressly limiting the liability of either Party,
will not relieve either Party of any obligations or liabilities for loss or
damage to the other Party arising out of or caused by acts or omissions of such
Party prior to the effectiveness of such termination or arising out of its
obligations as to portions of the Work already performed or of obligations
assumed by the Vendor prior to the date of such termination.
24.8 Vendor's Right to Terminate. The Vendor will have the option to
---------------------------
terminate this Contract without any penalty or payment obligations, other than
undisputed payment obligations outstanding as of the date of any such
termination pursuant to the terms of this Contract if:
(a) the Owner (i) files a voluntary petition in bankruptcy or has an
involuntary petition in bankruptcy filed against it that is not dismissed within
forty-five (45) days of such involuntary filing, (ii) admits the material
allegations of any petition in bankruptcy filed against it, (iii) is adjudged
bankrupt, or (iv) makes a general assignment for the benefit of its creditors,
or if a receiver is appointed for all or a substantial portion of its assets and
is not discharged within sixty (60) days after his appointment, and any such
filing, proceeding, adjudication or assignment as described herein above will
otherwise materially impair the Owner's ability to perform its obligations under
this Contract;
78
(b) the Owner commences any proceeding for relief in any court under any
state insolvency statutes;
(c) the Owner fails to make payments of undisputed amounts due to the
Vendor pursuant to the terms of this Contract which are more than sixty (60)
days overdue, provided that such failure has continued for at least thirty (30)
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days after the Vendor has notified the Owner of its right and intent to so
terminate on account of such overdue amount;
(d) the Owner continuously and materially breaches subsection 11.1 or
subsection 27.19 notwithstanding the fact that the Vendor will have provided the
Owner with prior written notice describing the alleged material breaches and
will have given the Owner a reasonable time (not less than thirty (30) days) to
cure any such breaches; or
(e) except as otherwise provided in subsection 24.1 the Owner fails to
fulfill its Initial Commitment within five (5) years of the Effective Date for
whatever reason other than (i) any act or omission of the Vendor, (ii) inability
to successfully complete Microwave Relocation in any PCS System, (iii) inability
to successfully attain Site Acquisition Substantial Completion in any given PCS
System or (iv) any event otherwise constituting a Force Majeure hereunder; or
(f) the Owner otherwise materially breaches this Contract in a way which
materially and adversely affects the Vendor and/or its performance under this
Contract, provided that in no event will (i) Site Acquisition, Microwave
-------- ----
Relocation and/or Network Interconnection be deemed to be obligations of the
Owner under this Contract for the purposes of this subsection 24.8(f) or (ii)
the failure and/or inability of the Owner to complete any such activities for
any reason whatsoever be deemed a breach of the Owner under the terms of this
Contract including, but not limited to, this subsection 24.8(f).
24.9 Special Termination Events. (a) In the event that financing for the
--------------------------
Owner's build-out of the initial phase of the Nationwide Network has not been
finalized with the Vendor and the Other Vendors on terms and conditions
reasonably satisfactory to the Owner, on or before one hundred and eighty (180)
days after the Effective Date, the Owner will have the right, but not the
obligation, to terminate this Contract in its entirety without charge or penalty
of any kind. In the event of a termination of this Contract pursuant to this
subsection 24.9(a) the Owner will remain liable for amounts due to the Vendor
for all Work performed or Products delivered by the Vendor or any of its
Subcontractors pursuant to the specific terms of this Contract which had been
directly delivered to or performed for the Owner and/or any of its facilities or
sites in accordance with the terms of this Contract including, but not limited
to, the Project Milestones. Any amounts owed by the Owner for Work done or
Products delivered by the Vendor during such interim one hundred and eighty
(180) day period (the "Financing Interim Period") not otherwise invoiced to the
Owner by the Vendor prior to the termination of such Financing Interim Period,
will be invoiced to the Owner by the Vendor within forty-five (45) days of such
termination pursuant to this subsection 24.9(a) and will be payable to the
extent not otherwise in dispute by the Owner within forty-five (45) days of
receipt of such invoice; provided that in no event will the Owner be liable to
-------- ----
the Vendor due to a termination of this Contract pursuant to this subsection
24.9(a) for any of the
79
Vendor's direct or indirect costs or expenses incurred in connection with any
suppliers or equipment ordered by the Vendor or agreements entered into by the
Vendor in order to enable it to fulfill its obligations hereunder or in
connection with the establishment of and/or upgrade to its manufacturing,
personnel, engineering, administrative or other capacities and/or resources in
contemplation of or pursuant to its performance in accordance the terms of this
Contract and any amounts due to the Vendor pursuant to this subsection 24.9(a)
will be limited in all cases to Work actually done or Products actually
delivered to the Owner, its sites or its facilities.
(b) At any time after the Effective Date of this Contract during the
Financing Interim Period, the Vendor will have the right, but not the
obligation, upon not less than thirty (30) days' prior written notice to the
Owner, to terminate its obligations under this Contract without penalty if it
believes, in its reasonable opinion, that the financing for the System and/or
the Nationwide Network is not likely to be finalized by the end of any such
Financing Interim Period. In the event of a termination pursuant to this
subsection 24.9(b) payment obligations incurred by the Owner for Work done by
the Vendor pursuant to the terms of this Contract will be payable by the Owner
to the Vendor on the same terms and subject to the limitations set forth in
subsection 24.9(a) above.
(c) If at any time after the Effective Date any material change shall have
occurred in any Applicable Law or in the interpretation thereof by any
Governmental Entity, or there shall be rendered any decision in any judicial or
administrative case, in either case which, in the reasonable opinion of the
Owner, would make the Owner's use of any part of any PCS System illegal or would
subject the Owner or any of its Affiliates to any material penalty, other
material liability or onerous condition or to any burdensome regulation by any
Governmental Entity or otherwise render the use of such PCS System economically
nonviable, then, with respect to such PCS System, or affected part thereof, or
with respect to the entire System if so affected, the Owner may terminate this
Contract without charge or penalty of any kind; provided that (i) the Owner
-------- ----
gives the Vendor prior written notice of any such change or decision; (ii) that
the Owner uses its reasonable efforts for a reasonable time to reverse or
ameliorate such change or decision to the extent possible or practical prior to
declaring such termination and (iii) the Owner, at the Vendor's request, gives
the Vendor a legal opinion from a reputable law firm with experience in the area
confirming the Owner's reasonable opinion as set forth above. In the event of a
termination pursuant to this subsection 24.9(c), payment obligations incurred by
the Owner for work done by the Vendor prior to such termination pursuant to this
Contract will be payable by the Owner to the Vendor on the same terms and
subject to the limitations set forth in subsection 24.9(a) above.
SECTION 25 SUSPENSION
25.1 Owner's Right to Suspend Work. The Owner may, at any time and upon
-----------------------------
reasonable notice to the Vendor, order the Vendor, in writing, to suspend all or
any part of the Work for such reasonable period of time as the Owner may
reasonably determine to be appropriate for its convenience. Any request by the
Vendor for a change in the Specifications caused by the Owner's suspension of
the Work pursuant to this subsection 25.1 will be
80
subject to the review and reasonable acceptance of the Owner. No modification
to the Specifications will be made to the extent that performance is, was or
would have been suspended, delayed or interrupted for any other cause due to the
Vendor's fault or if the suspension had no effect on agreed upon performance
deadlines and/or Project Milestones set forth in this Contract.
SECTION 26 MOST FAVORED CUSTOMER
26.1 Most Favored Customer Status. (a) With respect to the Initial
----------------------------
System (including any Expansions or additions to the Initial System within the
context of the Initial System pursuant to the terms of this Contract), the Owner
will be deemed the Vendor's most important and favored Customer and will always
receive priority in terms of price, availability and quantity of CDMA 1900
Products, Engineering and Services. [ ] the Owner will receive Products,
Engineering and Services at prices and on payment terms no less favorable to the
Owner than those offered or available to any other Customer (other than Initial
Affiliates and/or Additional Affiliates pursuant to the terms of this Contract)
of the Vendor.
(b) On an annual basis throughout the Term of this Contract commencing on
the Effective Date the Vendor will be required to audit its pricing of all CDMA
1900 products, engineering and services provided to all of its Customers (other
than Initial Affiliates and/or Additional Affiliates pursuant to the terms of
this Contract) in the preceding calendar year and certify to the Owner in a
certificate executed by a duly authorized officer of the Vendor (the "MFC
Certificate") that the Owner has in fact received the prices, availability and
quantity of and on Products, Engineering and Services in accordance with the
terms of clause (a) above. The annual MFC Certificate delivered to the Owner in
accordance with this subsection 26.1 will be subject to verification by an
independent, reputable and nationwide public accounting firm reasonably
acceptable to the Owner and at the sole cost and expense of the Vendor.
(c) To the extent that it is determined pursuant to clause (b) above that
the Vendor has not in fact complied with the terms of clause (a) above the Owner
will have thirty (30) business days from receipt of the MFC Certificate as
verified by the independent public accountant to provide the Vendor with a
written claim for Product and/or Engineering and/or Service pricing rebates on
future purchases under this Contract based upon the Owner's reasonable
calculation of the impact on the Owner of the Vendor's failure to comply with
clause (a) of this subsection 26.1. To the extent the Vendor disagrees with any
such claim for such pricing rebates made by the Owner pursuant to this clause
(c) the Vendor will have the right within ten (10) business days of receiving
the Owner's written rebate claim to submit the Owner's claim and the Vendor's
written response thereto to an Independent Auditor who will have the authority
only to determine whether the Owner's calculation of the claimed pricing rebate
is fair and reasonable in light of the Vendor's non-compliance with the terms of
clause (a) above. The Independent Auditor's determination must be made and
delivered to both the Vendor and the Owner within ten (10) business days of
receiving the
81
request from the Vendor. Such determination once made by the Independent
Auditor will be final and binding on the Parties and will not be subject to
further modification.
SECTION 27 MISCELLANEOUS
27.1 Amendments. The terms and conditions of this Contract, including the
----------
provisions of Exhibits and Schedules hereto, may only be amended by mutually
agreed contract amendments. Each amendment must be in writing and will identify
the provisions to be changed and the changes to be made. Contract amendments
must be signed by duly authorized representatives of each of the Vendor and the
Owner.
27.2 Owner Liabilities. The Parties understand and agree that none of the
-----------------
Partners, nor any of their affiliates will guarantee or otherwise be in any way
liable with respect to any obligations or liabilities of the Owner or any of its
subsidiaries pursuant to this Contract. The Parties further understand and
agree that neither the Owner nor any of its subsidiaries will guarantee or
otherwise be in any way liable for any obligations or liabilities of any of the
Partners or any Affiliate of the Owner pursuant to this Contract unless, and
only to the extent, (i) the Owner or any one of its subsidiaries in accordance
with the Owner's direction expressly agrees in writing to guarantee or otherwise
be liable for such liability, or (ii) in the case of an Affiliate, such
Affiliate orders Products and/or Services through the Owner under this Contact.
27.3 Offset. The Vendor hereby waives any right of offset of amounts owed
------
by the Owner to the Vendor pursuant to the terms of this Contract.
27.4 Assignment. Except as otherwise permitted herein, neither this
----------
Contract nor any portion hereof may be assigned by either Party without the
express prior written consent of the other Party. The Owner may, without the
consent of the Vendor, collaterally assign its rights hereunder to any or all
parties providing financing for any part of the Nationwide Network under a
collateral trust for the benefit of the Vendor and one or more other entities
providing financing for any part of the Nationwide Network or similar
arrangement for the benefit of the Vendor and one or more other entities
providing for the financing for any part of the Nationwide Network, in either
case, which collateral trust or similar arrangement, as the case may be, is
reasonably acceptable to the Vendor in accordance with the terms of the
financing documents. If requested by the Owner, the Vendor will within seven
(7) days of such request provide a written consent to any such assignment;
provided that such consent will permit re-assignment if the financing parties
- - -------- ----
exercise their remedies under the documents for such financing subject to
reasonable standards as to (i) the creditworthiness of the assignee and (ii) the
fact that the assignee is not at such time a competitor of the Vendor. The
foregoing rights and obligations are in addition to those set forth in
subsection 27.21. Any attempted assignment in violation of the terms of this
Contract will be null and void.
27.5 Enforcement. The Parties agree that the Owner may enforce the
-----------
provisions of subsections 11.5 and 27.4 regarding assignment by an action for
injunction or other equitable remedies.
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27.6 Notices. Any notice, request, consent, waiver or other communication
-------
required or permitted hereunder will be effective only if it is in writing and
personally delivered by hand or by overnight courier or sent by certified or
registered mail, postage prepaid, return receipt requested, addressed as
follows:
If to the Owner:
MajorCo L.P.
c/o Sprint Telecommunications Venture
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Director, Program Management
If to the Vendor:
Northern Telecom Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Director, CDMA 1900 Wireless Contract Administration
Written notice given pursuant to this subsection 27.6 will be delivered to
recipients authorized by the Owner and the Vendor, as the case may be, in
writing and when so delivered will be deemed to have been fully served and
delivered.
27.7 Governing Law and Forums. This Contract is governed by the laws and
------------------------
statutes of the State of Missouri, exclusive of Missouri's conflict of laws
rules. This Contract and the Work will be deemed to be made, executed and
performed in the State of Missouri. If one Party commences a lawsuit in
relation to this Contract against the other Party, such lawsuit can only be
brought in the State of Missouri or the State of Delaware. The Parties hereby
waive a trial by jury in any such lawsuit. The Vendor and the Owner each hereby
irrevocably (a) agrees that any suit, action or other legal proceeding arising
out of or relating to this Contract will be brought in the Federal District
Court for the Western District of Missouri or the District of Delaware, as the
case may be, which courts will have exclusive jurisdiction over any controversy
arising out of this Contract, (b) consents to the jurisdiction of such courts in
any such suit, action or proceeding and (c) waives any objection which it may
have to the laying of venue of any such suit, action or proceeding in such
courts and claim that any such suit, action or proceeding has been brought in an
inconvenient forum. Service of process in any suit, action or proceeding may be
made by mailing or delivering a copy of such process to the Owner or the Vendor,
as the case may be, at the addresses indicated in subsection 27.6 hereof and in
the manner set forth in such subsection 27.6. Nothing in this subsection 27.7
will affect the right of the Owner or the Vendor to serve legal process in any
other manner permitted by law.
27.8 Compliance with Law. The Owner and the Vendor will (a) comply with
-------------------
all Applicable Laws in the performance of this Contract, including, without
limitation, the laws
83
and regulations of the United States Department of Commerce and State Department
and any other applicable agency or department of the United States regarding the
import, re-import, export or re-export of products or technology; and (b)
indemnify each other for any loss, liability or expense incurred as the result
of breach of this subsection 27.8.
27.9 Independent Contractor. All work performed by any Party under this
----------------------
Contract will be performed as an independent contractor and not as an agent of
the other and no Persons furnished by the performing Party will be considered
the employees or agents of the other. The performing Party will be responsible
for its employees' compliance with all laws, rules, and regulations while
performing all work under this Contract.
27.10 Headings. The headings given to the Sections and subsections herein
--------
are inserted only for convenience and are in no way to be construed as part of
this Contract or as a limitation of the scope of the particular Section or
subsection to which the title refers.
27.11 Severability. Whenever possible, each provision of this Contract
------------
will be interpreted in such a manner as to be effective and valid under such
applicable law, but, if any provision of this Contract will be held to be
prohibited or invalid in any jurisdiction, the remaining provisions of this
Contract will remain in full force and effect and such prohibited or invalid
provision will remain in effect in any jurisdiction in which it is not
prohibited or invalid.
27.12 Waiver. Unless otherwise specifically provided by the terms of this
------
Contract, no delay or failure to exercise a right resulting from any breach of
this Contract will impair such right or will be construed to be a waiver
thereof, but such right may be exercised from time to time as may be deemed
expedient. If any representation, warranty or covenant contained in this
Contract is breached by either Party and thereafter waived by the other Party,
such waiver will be limited to the particular breach so waived and not be deemed
to waive any other breach under this Contract.
27.13 Public Statements. Neither the Owner, Vendor nor its Subcontractors
-----------------
will issue any public statement (or any private statement unless required in the
performance of the Work), except as stated below, relating to or in any way
disclosing any aspect of the Work, the System, or any PCS System including the
scope, extent or value of the Work and/or the System or any PCS System. Express
written consent of the other Party (except in the case of any Subcontractors the
consent of the Owner will be required) is required prior to the invitation of or
permission to any reporter or journalist to enter upon the System or any part
thereof. The Vendor agrees not to use for publicity purposes any photographs,
drawings and/or materials describing the System without obtaining the prior
written consent of the Owner, which consent will not be unreasonably withheld.
This subsection 27.13 is not intended to exclude the provision of necessary
information to prospective Subcontractors and the Vendor's personnel. All other
such public disclosures require the written consent of the Owner. The
obligations of the Parties under this subsection 27.13 are in addition to their
respective obligations pursuant to subsection 27.19.
84
27.14 Records and Communications. To the extent not already established,
--------------------------
promptly after the Work begins, procedures for keeping and distributing orderly
and complete records of the Work and its progress will be established. The
procedures so established will be followed throughout the course of the Work
unless the Owner and the Vendor mutually agree in advance in writing to revise
the procedures. Furthermore, immediately after the Notice to Proceed is issued,
complete procedures for communications among the Owner and the Vendor will be
established. The procedures so established will be followed throughout the
course of the Work unless the Owner and the Vendor mutually agree in advance and
in writing to revise such procedure.
27.15 Ownership of Specifications. Neither the Vendor nor any
---------------------------
Subcontractor, nor any other Person performing or furnishing the Work, whether
or not under a direct or indirect contract with the Owner, will have or acquire
any title to or ownership rights in any of the Specifications, or in any other
part or portion of this Contract (or copies of any of the Specifications or this
Contract); and no such Party will reuse any of the Specifications on and/or with
respect to any other project without the prior written consent of the Owner.
The Specifications and this Contract (and any and all copies thereof), are owned
by and title resides in the Owner, unless otherwise agreed between the Owner and
any other Person. Notwithstanding anything contained in this subsection 27.15
to the contrary, the Owner will not acquire any patent, copyright or trade
secret rights as a result of this Contract, except pursuant to licenses and
other approvals provided in connection with the performance of the Work and
except to the extent that a non-exclusive license of any of the Vendor's patent,
copyright or trade secret rights is required to perform the Work and as further
provided for in this Contract.
27.16 Financing Parties Requirements. The Vendor acknowledges that the
------------------------------
Owner represents that attainment of financing for construction of the Nationwide
Network may be subject to conditions that are customary and appropriate for the
providers of such financing. Therefore, the Vendor agrees to execute promptly
any reasonable amendment to or modification of this Contract required by such
providers (including, without limitation, any pertinent industrial development
authority or other similar governmental agency issuing bonds for financing of
the System) in order to obtain such financing. In the event that any such
amendment or modification materially increases the Vendor's risk or costs
hereunder, the Owner and the Vendor will negotiate in good faith to adjust the
Contract Price, and to equitably adjust such other provisions of this Contract,
if any, which may be affected thereby, to the extent necessary to reflect such
increased risk or costs. Amendments or modifications not materially increasing
the Vendor's risk or costs will be made without charge by the Vendor. The
Vendor will be responsible for and pay all costs as a result of the Vendor's or
its Subcontractors' failure to promptly comply with the request for any such
modification or amendment made by any provider of financing described in this
subsection.
27.17 Owner Review, Comment and Approval. To the extent that various
----------------------------------
provisions of this Contract provide for the Owner's review, comment, inspection,
evaluation, recommendation or approval, the Owner may at its option do so in
conjunction and/or consultation with the Vendor. To the extent that this
Contract requires the Owner to submit, furnish, provide or deliver to the Vendor
any report, notice, Change Order, request or other
85
items, the Owner may at its option and upon written notice to the Vendor
designate the Engineer to submit, furnish, provide or deliver such items as the
Owner's agent therefor. To the extent that various provisions of this Contract
provide that the Owner may order, direct or make requests with respect to
performance of the Work or is provided access to the System sites or any other
site, the Owner may at its option and upon written notice to the Vendor
authorize the Engineer to act as the Owner's agent therefor. Upon receipt of
such notice, the Vendor shall be entitled to rely upon such authorization until
a superseding written notice from the Owner is received by the Vendor.
27.18 Specifications. The Owner acknowledges that parts of the
--------------
Specifications are comprised of Specifications prepared by the Vendor and that
the Vendor contributed significantly to many other portions thereof. The Owner
also acknowledges that, during the normal design, evolution and development
process, portions of the Specifications may appear in design and procurement
documents prepared by the Vendor in its normal course of business; provided,
--------
however, that the Owner will have no liability for any third party claims for
- - -------
contributor infringement or the like with respect to such Specifications
prepared by the Vendor or portions thereof to which the Vendor contributed
significant portions or use and the Vendor will hold the Owner harmless from any
such third party claims.
27.19 Confidentiality. (a) All information, including without limitation
---------------
all oral and written information, disclosed to the other Party is deemed to be
confidential, restricted and proprietary to the disclosing Party (hereinafter
referred to as "Proprietary Information"). Each Party agrees to use the
Proprietary Information received from the other Party only for the purpose of
this Contract. Except as specified in this Contract, no other rights, and
particularly licenses, to trademarks, inventions, copyrights, patents, or any
other intellectual property rights are implied or granted under this Contract or
by the conveying of Proprietary Information between the Parties. Proprietary
Information supplied is not to be reproduced in any form except as required to
accomplish the intent of, and in accordance with the terms of, this Contract.
The receiving Party must provide the same care to avoid disclosure or
unauthorized use of Proprietary Information as it provides to protect its own
similar proprietary information. All Proprietary Information must be retained
by the receiving Party in a secure place with access limited to only such of the
receiving Party's employees or agents who need to know such information for
purposes of this Contract and to such third parties as the disclosing Party has
consented to by prior written approval. All Proprietary Information, unless
otherwise specified in writing (i) remains the property of the disclosing Party,
(ii) must be used by the receiving Party only for the purpose for which it was
intended, and (iii) such Proprietary Information, including all copies of such
information, must be returned to the disclosing Party or destroyed after the
receiving Party's need for it has expired or upon request of the disclosing
Party, and, in any event, upon termination of this Contract. At the request of
the disclosing Party, the receiving Party will furnish a certificate of an
officer of the receiving Party certifying that Proprietary Information not
returned to disclosing Party has been destroyed. For the purposes hereof,
Proprietary Information does not include information which:
86
(i) has been or may in the future be published or is now or may
in the future be otherwise in the public domain through no fault
of the receiving Party;
(ii) prior to disclosure pursuant to this Contract is properly
within the legitimate possession of the receiving Party;
(iii) subsequent to disclosure pursuant to this Contract is
lawfully received from a third party having rights in the
information without restriction of the third party's right to
disseminate the information and without notice of any restriction
against its further disclosure;
(iv) is independently developed by the receiving Party through
parties who have not had, either directly or indirectly, access
to or knowledge of such Proprietary Information;
(v) is transmitted to the receiving Party after the disclosing
Party has received written notice from the receiving Party that
it does not desire to receive further Proprietary Information; or
(vi) is obligated to be produced under order of a court of
competent jurisdiction or other similar requirement of a
Governmental Entity, so long as the Party required to disclose
the information provides the other Party with prior notice of
such order or requirement.
(b) Because damages may be difficult to ascertain, the Parties agree that
in the event of a breach or threatened breach of this Contract, without limiting
any other rights and remedies specified herein, an injunction may be sought
against the Party who has breached or threatened to breach this subsection
27.19. Each Party represents and warrants that it has the right to disclose all
Proprietary Information which it has disclosed to the other Party pursuant to
this Contract, and each Party agrees to indemnify and hold harmless the other
from all claims by a third party related to the wrongful disclosure of such
third party's proprietary information. Otherwise, neither Party makes any
representation or warranty, express or implied, with respect to any Proprietary
Information.
27.20 Entirety of Contract; No Oral Change. This Contract and the
------------------------------------
Exhibits and Schedules referenced herein constitute the entire contract between
the Parties with respect to the subject matter hereof, and supersede all
proposals, oral or written, all previous negotiations, and all other
communications between the Parties with respect to the subject matter hereof.
No modifications, alterations or waivers of any provisions herein contained will
be binding on the Parties hereto unless evidenced in writing signed by duly
authorized representatives of both Parties as set forth in subsection 27.1. Any
representations by the Vendor in any RFP response and/or any documentation
otherwise provided to the Owner in connection with the Vendor's solicitation of
the business granted pursuant hereto prior to the execution hereof will also be
deemed to be incorporated into and otherwise made a part of this Contract.
87
27.21 Successors and Assigns. This Contract will bind and inure to the
----------------------
benefit of the Parties to this Contract, their successors and permitted assigns.
27.22 Change of Control of the Vendor. The Vendor will not consolidate
-------------------------------
with or merge into any other Person or convey, transfer or lease all or
substantially all of its assets to any Person, nor will any Person or group (as
such term is defined in the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) own or acquire fifty percent (50%) of the value of the Vendor's
equity where such Person or group did not own as of the Effective Date in excess
of ten percent (10%) of such equity (any such Person or group will be referred
to as the "Vendor's Succeeding Entity"), unless:
(i) the Vendor's Succeeding Entity will agree to
assume the obligations of the Vendor under this Contract; and
(ii) the Owner will have approved the transaction,
based solely on (i) the creditworthiness of the Vendor's
Succeeding Entity, (ii) whether the Vendor's Succeeding Entity is
a competitor of the Owner and (iii) whether in the Owner's
reasonable judgment the Vendor's Succeeding Entity will be able
to fulfill the obligations for present and future orders under
this Contract.
27.23 Change of Control of the Owner. Except as otherwise permitted under
------------------------------
the documents relating to the financing of the build-out of the Nationwide
Network, the Owner will not consolidate with or merge into any other business
entity or convey, transfer or lease all or substantially all of its assets to
any Person, nor will any Person or group (as such term is defined in the
Exchange Act) own or acquire fifty percent (50%) of the value of the Owner's
limited partnership interests or general partnership interests where such Person
or group did not own as of the Effective Date in excess of ten percent (10%) of
either of such partnership interests (any such Person or group will be referred
to as the "Owner's Succeeding Entity"), unless:
(a) the Owner's Succeeding Entity will agree to assume the obligations of
the Owner under this Contract; and
(b) the Vendor will have approved the transaction, based solely on (i) the
creditworthiness of the Owner's Succeeding Entity and (ii) whether the Owner's
Succeeding Entity is a competitor of the Vendor.
27.24 Relationship of the Parties. Pursuant to subsection 27.9, nothing
---------------------------
in this Contract will be deemed to constitute either Party a partner, agent or
legal representative of the other Party, or to create any fiduciary relationship
between the Parties. The Vendor is and will remain an independent contractor in
the performance of this Contract, maintaining complete control of its personnel,
workers, Subcontractors and operations required for performance of the Work.
This Contract will not be construed to create any relationship, contractual or
otherwise, between the Owner and any Subcontractor.
88
27.25 Discretion. Notwithstanding anything contained herein to the
----------
contrary, to the extent that various provisions of this Contract call for an
exercise of discretion in making decisions or granting approvals or consents,
the Parties will be required to exercise such discretion, decision or approvals
in accordance with accepted PCS industry practices.
27.26 Non-Recourse. No past, present or future limited or general partner
------------
in or of the Owner, no parent or other affiliate of any company comprising the
Owner, and no officer, employee, servant, executive, director, agent or
authorized representative of any of them (each, an "Operative") will be liable
by virtue of the direct or indirect ownership interest of such Operative in the
Owner for payments due under this Contract or for the performance of any
obligation, or breach of any representation or warranty made by the Owner
hereunder. The sole recourse of the Vendor for satisfaction of the obligations
of the Owner under this Contract will be against the Owner and the Owner's
assets and not against any Operative or any assets or property of any such
Operative. In the event that a default occurs in connection with such
obligations, no action will be brought against any such Operative by virtue of
its direct or indirect ownership interest in the Owner. The foregoing
provisions of this subsection 27.26 will not in any way limit or restrict any
right or remedy of the Vendor with respect to, and the Operatives will remain
fully liable for, any fraud perpetuated by such Operatives.
27.27 Improvements, Inventions and Innovations. All rights in any
----------------------------------------
improvements, inventions, and innovations made by the Owner will vest in the
Owner, and the Owner and its affiliates will have the right to exploit such
improvements, inventions, and innovations. Except as may have been otherwise
agreed with respect to Custom Material under subsection 11.10.2, all rights in
any improvements, inventions and innovations made by the Vendor will vest in the
Vendor, and the Vendor and its affiliates will have the right to exploit such
improvements, inventions and innovations; provided, however, that the Owner and
-------- -------
its affiliates will be granted a non-exclusive royalty-free license for use in
any future project in connection with or related to the System by the Owner (or
the parties that comprise the Owner or their respective affiliates) of any such
improvement, invention or innovation made by the Vendor (but not by any
Subcontractor) in the course and as a result of performing the Work and in which
the Vendor owns or possesses any proprietary interest.
27.28 Attachments and Incorporations. All Schedules and Exhibits attached
------------------------------
hereto, are hereby incorporated by reference herein and made a part of this
Contract with the same force and effect as though set forth in their entirety
herein.
27.29 Conflicts. In the event of any conflict or inconsistency among the
---------
provisions of this Contract and the documents attached hereto and incorporated
herein, such conflict or inconsistency will be resolved by giving precedence to
this Contract and thereafter to the Exhibits and Schedules.
27.30 Counterparts. This Contract may be executed by one or more of the
------------
Parties to this Contract on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
THE OWNER AND THE VENDOR HAVE READ THIS CONTRACT INCLUDING ALL SCHEDULES
AND EXHIBITS HERETO AND AGREE TO BE BOUND BY ALL THE TERMS AND CONDITIONS HEREOF
AND THEREOF.
IN WITNESS WHEREOF, the Parties have executed this Contract as of the date
first above written.
NORTHERN TELECOM INC.
By: /s/ D.A. Twyver
----------------
Name: D.A. Twyver
Title: Vice President
MAJORCO L.P., as the Owner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
SCHEDULE 2
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SCHEDULE 3
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SCHEDULE 4
ALLOCATED SYSTEM AREAS
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(NORTEL)
CITY
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Miami
New Orleans
Louisville
Birmingham
Nashville
St. Louis
Dallas
San Antonio
Kansas City
Oklahoma City
Little Rock
Wichita
Tulsa
Omaha
Minneapolis
Des Moines
Indianapolis
Attached are the Owner's System Area (or MTA) coverage definition maps.
LEGEND
The highways shown in green are only those highways with an average daily
traffic count of greater than 10,000 vehicles. The darker green represents an
average daily traffic count of greater than 50,000 vehicles.
The census tracts of the System Areas were combined and ranked by demand
density in erlangs (wireless talk time traffic) per square mile for year 10,
based on busy hour (peak daily demand hour) minutes of use estimates. Those
tracts which fall within the top 70% of the population total a national level
are displayed in red. Those tracts which fall within the next 10% of the total
population (70 to 80% at the national level) are displayed in pink.
INITIAL SYSTEM COVERAGE
For contiguous Initial System coverage, the Contract's requirement is to
cover all of the red, pink and green areas within the blue "Arbitron Radio
Market" boundaries. This represents 60% covered population at the national
level for the Initial System.
Birmingham MTA
[MAP]
Dallas MTA
[MAP]
Des Moines MTA
[MAP]
Indianapolis MTA
[MAP]
Kansas City MTA
[MAP]
Little Rock MTA
[MAP]
Louisville MTA
[MAP]
Miami MTA
[MAP]
Minneapolis MTA
[MAP]
Nashville MTA
[MAP]
New Orleans MTA
[MTA]
Oklahoma MTA
[MAP]
Omaha MTA
[MAP]
San Antonio MTA
[MAP]
St Louis MTA
[MAP]
Tulsa MTA
[MAP]
Wichita MTA
[MAP]
SCHEDULE 5
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INITIAL AFFILIATES
1. Each of the Partners and their operating subsidiaries.
2. APC and its operating subsidiaries.
3. PhillieCo and its operating subsidiaries.
4. Continental and its operating subsidiaries.
5. TCG and its operating subsidiaries.
6. NewTelCo. And its operating subsidiaries.
SCHEDULE 7
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PRODUCTS
A. Essential Equipment: (Including Applicable Software)
* DMS-MTX
* Base Station Controller (BSC) and Base Station Manager (BSM)
* Base Transceiver Station (BTS)
* Visual Display Units (VDU) used as DMS-MTX Maintenance and Administration
Positions (MAP) and provided by Vendor
* Printers used at DMS-MTX Maintenance and Administration Positions (MAP) and
provided by Vendor
* Voice Mail Systems if provided by Vendor
* Service Node if provided by Vendor
* HLR/SCP if provided by Vendor
* DC Power plants and batteries if provided by Vendor
B. Non-Essential Equipment:
Non-Essential Equipment includes, by way of example:
* Towers
* Antennas
* Concrete
* Fences
* Roads
* Buildings/Shelters
* Fire Extinguishers
* 120 VAC Electrical Systems
* Lighting
* Thermostats
* Heater/Air Conditioners
* Cable Rack
* Nuts, Bolts, Connectors, Washers
* Isolators
* Furniture
* Coax Cable
* Antenna Mounting Assemblies
* Connectors, Isolators
* Cable Rack
* CMI/HIC (Including Applicable Software)
Schedule 11
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CANCELLATION CHARGES
Without charge and/or penalty, the Owner may cancel any order for a Product no
later than ninety (90) days prior to the earliest date scheduled for shipment of
such Product; or
If the Owner cancels an order less than ninety (90) days prior to the earliest
date scheduled for shipment of such Product, the Owner shall pay to the Vendor a
cancellation charge of ten percent (10%) of the price for such Product pursuant
to Schedule 2; or
If the Owner cancels an order less than sixty (60) days prior to the earliest
date scheduled for shipment of such Product, the Owner shall pay to the Vendor a
cancellation charge of fifteen percent (15%) of the price for such Product
pursuant to Schedule 2; or
If the Owner cancels an order less than thirty (30) days prior to the earliest
date scheduled for shipment of such Product, the Owner shall pay to the Vendor a
cancellation charge of twenty percent (20%) of the price for such Product
pursuant to Schedule 2.
The Owner may not cancel an order after the applicable date scheduled for
shipment of such Product. The payment of such charges shall be the Vendor's
sole remedy and the Owner's sole obligation for such canceled order. Any
changes requested by the Owner that involve the return or exchange of Non-
essential Equipment will be subject to the standard policies of the applicable
Non-essential Equipment supplier unless such policies of such supplier are
otherwise set out in the applicable agreement between such Non-essential
Equipment supplier and the Vendor, in which case the Owner will be entitled to
cancel any such order for Non-essential Equipment in accordance with the terms
of such agreement. For the purposes of this Schedule 11, the term "order" shall
not mean the Minimum Commitment or the Initial Commitment.
SCHEDULE 12 A/B
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SCHEDULE 13
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