<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1996
REGISTRATION NO. 333-06609
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SPRINT SPECTRUM L.P.
(EXACT NAME OF CO-REGISTRANT ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 4812 48-1165245
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
---------------
SPRINT SPECTRUM FINANCE CORPORATION
(EXACT NAME OF CO-REGISTRANT ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 4812 43-1746537
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
---------------
4717 GRAND AVENUE--FIFTH FLOOR JOSEPH M. GENSHEIMER, ESQ.
KANSAS CITY, MISSOURI 64112 SPRINT SPECTRUM HOLDING COMPANY, L.P.
(816) 559-1000 4717 GRAND AVENUE--FIFTH FLOOR
(ADDRESS, INCLUDING ZIP CODE, AND KANSAS CITY, MISSOURI 64112
TELEPHONE NUMBER, (816) 559-1000
INCLUDING AREA CODE, OF EACH (NAME, ADDRESS, INCLUDING ZIP CODE,
REGISTRANT'S PRINCIPAL EXECUTIVE AND TELEPHONE NUMBER,
OFFICES) INCLUDING AREA CODE, OF AGENT FOR
SERVICE)
---------------
COPIES TO:
JOHN B. TEHAN, ESQ. JONATHAN A. SCHAFFZIN, ESQ.
SIMPSON THACHER & BARTLETT DANIEL J. ZUBKOFF, ESQ.
425 LEXINGTON AVENUE CAHILL GORDON & REINDEL
NEW YORK, NEW YORK 10017 80 PINE STREET
(212) 455-2000 NEW YORK, NEW YORK 10005
(212) 701-3000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As promptly
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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- - -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered which, except as
otherwise indicated, will be paid solely by the Registrants. All the amounts
shown are estimates, except the Securities and Exchange Commission
("Commission") registration fee and the NASD filing fee:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................ $224,138
NASD filing fee.................................................... $ 30,500
Accountants' fees and expenses .................................... $ *
Printing expenses.................................................. $ *
Legal fees and expenses............................................ $ *
Blue Sky fees and expenses......................................... $ 35,000
Trustees' fees and expenses........................................ $ *
Miscellaneous fees and expenses.................................... $ *
Other.............................................................. $ *
--------
Total............................................................ $
========
</TABLE>
--------
* To be determined.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subject to any terms, conditions or restrictions set forth in the
Partnership Agreement of Sprint Spectrum L.P. ("Sprint Spectrum"), Section 17-
108 of the Delaware Uniform Revised Limited Partnership Act empowers a
Delaware limited partnership to indemnify and hold harmless any partner or
other person from and against all claims and demands whatsoever. The
Partnership Agreement of Sprint Spectrum provides that no Partner, former
Partner or Representative or former Representative, no affiliate of any
thereof, no partner, shareholder, director, officer, employee or agent of any
of the foregoing, nor any officer or employee of Sprint Spectrum will be
liable in damages for any act or failure to act in such person's capacity as a
Partner or Representative or otherwise on behalf of Sprint Spectrum or any of
its subsidiaries unless such act or omission constituted bad faith, gross
negligence, fraud or willful misconduct of such person or a violation by such
person of the Partnership Agreement of Sprint Spectrum or an agreement between
such person and Sprint Spectrum or a subsidiary thereof. Subject to certain
conditions, each Partner, former Partner, Representative and former
Representative, each Affiliate of any thereof, each partner, shareholder,
director, officer, employee and agent of any of the foregoing, and each
officer and employee of Sprint Spectrum, will be indemnified and held harmless
by Sprint Spectrum from and against any liability for damages and expenses,
including reasonable attorneys' fees and disbursements and amounts paid in
settlement, resulting from any threatened, pending or completed action, suit
or proceeding relating to or arising out of such person's acts or omissions in
such person's capacity as a Partner or Representative or otherwise involving
such person's activities on behalf of Sprint Spectrum or any of its
subsidiaries, except to the extent that such damages or expenses result from
the bad faith, gross negligence, fraud or willful misconduct of such person or
a violation by such person of the Partnership Agreement of Sprint Spectrum, or
an agreement between such person and Sprint Spectrum or any of its
subsidiaries.
Under Section 145 of the Delaware General Corporation Law (the "Delaware
Law"), a corporation may indemnify its directors, officers, employees and
agents and its former directors, officers, employees and agents and those who
serve, at the corporation's request, in such capacity with another enterprise,
against expenses (including attorney's fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of
II-1
<PAGE>
them were or are made parties or are threatened to be made parties by reason
of their serving or having served in such capacity. The Delaware Law provides,
however, that such person must have acted in good faith and in a manner such
person reasonably believed to be in (or not opposed to) the best interests of
the corporation and, in the right of the corporation, where such person has
been adjudged liable to the corporation, unless, and only to the extent that a
court determines that such person fairly and reasonably is entitled to
indemnity for costs the court deems proper in light of liability adjudication.
Indemnity is mandatory to the extent a claim, issue or matter has been
successfully defended.
Sprint Spectrum Finance Corporation's Certificate of Incorporation and By-
Laws provide for mandatory indemnification of directors and officers on
generally the same terms as permitted by the Delaware Law. Under the By-Laws,
the Company is required to advance expenses incurred by an officer or director
in defending any such action if the director or officer undertakes to repay
such amount if it is determined that the director or officer is not entitled
to indemnification.
Reference is made to the form of Underwriting Agreement, filed as Exhibit
1.1 to this Registration Statement, which provides for the indemnification of
the partnership board representatives and officers of each of the Registrants
signing this Registration Statement and certain controlling persons of each of
the Registrants against certain liabilities (including those arising under the
Securities Act), in certain instances by the Underwriters.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
There have been no sales of securities of either of the Registrants.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1.1* Form of Underwriting Agreement, dated as of [ ], 1996 among the
Underwriters and the Registrants with respect to the Notes
3.1** [Intentionally omitted]
3.2** Certificate of Limited Partnership of Sprint Spectrum L.P.
3.3** Certificate of Incorporation of Sprint Spectrum Finance Corporation
3.4** By-laws of Sprint Spectrum Finance Corporation
3.5** Amended and Restated Agreement of Limited Partnership of MajorCo, L.P.
(renamed Sprint Spectrum Holding Company, L.P.), dated January 31,
1996, among Sprint Spectrum, L.P. (renamed Sprint Enterprises, L.P.),
TCI Network Services, Comcast Telephony Services and Cox Telephony
Partnership
3.6** Agreement of Limited Partnership of MajorCo Sub, L.P. (renamed Sprint
Spectrum L.P.), dated as of March 28, 1995, among MajorCo, L.P. and
MinorCo, L.P.
4.1* Form of Senior Note Indenture between the Registrants and The Bank of
New York, as Trustee
4.2* Form of Senior Note
4.3* Form of Senior Discount Note Indenture between the Registrants and The
Bank of New York, as Trustee
4.4* Form of Senior Discount Note
5.1* Opinion of Simpson Thacher & Bartlett regarding the legality of the
Notes being registered
10.1*** Procurement and Services Contract, dated as of January 31, 1996,
between MajorCo, L.P. and Northern Telecom, Inc. [Schedules omitted]
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.2*** Procurement and Services Contract, dated as of January 31, 1996,
between MajorCo, L.P. and AT&T Corp. [Schedules omitted]
10.3* Amended and Restated Sprint Trademark License Agreement, dated as of
January 31, 1996, between Sprint Communications Company, L.P. and
MajorCo, L.P.
10.4* Paging Sales Agency Agreement, dated as of January 17, 1996, between
MajorCo, L.P. and Sprint Communications Company, L.P. [Schedules
omitted]
10.5* Wirelessco Affiliation Agreement, dated as of January 9, 1995 between
American PCS, L.P. and WirelessCo, L.P.
10.6* Second Amended and Restated Limited Partnership Agreement of American
PCS, L.P., dated as of January 9, 1995, among American Personal
Communications, Inc., WirelessCo, L.P. and The Washington Post Company
10.7*** Purchase and Supply Agreement, dated as of June 21, 1996, between
Sprint Spectrum L.P. and QUALCOMM Personal Electronics and QUALCOMM
Incorporated and Sony Electronics Inc. [Schedules omitted]
10.8* Commitment Letter of Northern Telecom Inc. to Sprint Spectrum L.P.
dated as of June 11, 1996 [Annex omitted]
10.9* Commitment Letter of Chase Securities Inc. and Chemical Bank to Sprint
Spectrum L.P. dated June 7, 1996 [Annexes omitted]
10.10* Commitment Letter of Lucent Technologies, Inc. to Sprint Spectrum L.P.
dated June 21, 1996 [Annexes omitted]
10.11* Employment Agreement, dated as of September 29, 1995, by and among
MajorCo, L.P. and
Joseph M. Gensheimer
12.1 Not applicable
21.1** Subsidiaries of the Registrants
23.1* Consent of Simpson Thacher & Bartlett (included in Exhibit 5)
23.2** Consent of Deloitte & Touche LLP
23.3** Consent of Price Waterhouse LLP
24.1** Powers of Attorney (included on signature pages to Registration
Statement)
25.1* Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, on Form T-1 of The Bank of New York, as Trustee under the
Senior Note Indenture
25.2* Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, on Form T-1 of The Bank of New York, as Trustee under the
Senior Discount Note Indenture
</TABLE>
- - --------
* To be filed by subsequent amendment.
** Previously filed.
*** Portions of these Exhibits have been redacted. These portions have been
separately filed with the Commission pursuant to a request for confidential
treatment under Rule 406.
(b) Financial Statement Schedules
Schedules are omitted for the reason that they are not required or are not
applicable.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrants pursuant to the provisions described under Item 14 above, or
otherwise, the registrants have been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by any
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The Registrants hereby undertake:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained
II-3
<PAGE>
in the form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SPRINT SPECTRUM
L.P. HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
KANSAS CITY, MISSOURI, ON JULY 18, 1996.
Sprint Spectrum L.P.
By: Sprint Spectrum Holding Company,
L.P., its General Partner
/s/ Robert M. Neumeister, Jr.
By: _________________________________
Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
Chief Executive
* Officer and July 18, 1996
- - ------------------------------------- President
RONALD T. LEMAY
Chief Technology
* Officer July 18, 1996
- - -------------------------------------
ARTHUR A. KURTZE
* Chief Business
- - ------------------------------------- Development Officer July 18, 1996
BERNARD A. BIANCHINO
II-5
<PAGE>
SIGNATURES TITLE DATE
* Chief Financial
- - ------------------------------------- Officer July 18, 1996
ROBERT M. NEUMEISTER, JR.
* General Counsel and
- - ------------------------------------- Secretary July 18, 1996
JOSEPH M. GENSHEIMER
* Partnership Board
- - ------------------------------------- Representative July 18, 1996
WILLIAM T. ESREY
* Partnership Board
- - ------------------------------------- Representative July 18, 1996
GARY D. FORSEE
* Partnership Board
- - ------------------------------------- Representative July 18, 1996
GERALD W. GAINES
* Partnership Board
- - ------------------------------------- Representative July 18, 1996
ARTHUR B. KRAUSE
* Partnership Board
- - ------------------------------------- Representative July 18, 1996
JAMES O. ROBBINS
* Partnership Board
- - ------------------------------------- Representative July 18, 1996
LAWRENCE S. SMITH
/s/ Robert M. Neumeister, Jr.
*By__________________________________
ROBERT M. NEUMEISTER, JR.
ATTORNEY-IN-FACT
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SPRINT SPECTRUM
FINANCE CORPORATION HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF KANSAS CITY, MISSOURI, ON JULY 18, 1996.
Sprint Spectrum Finance Corporation
/s/ Robert M. Neumeister, Jr.
By: _________________________________
CHIEF FINANCIAL OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
President and
* Director July 18, 1996
- - -------------------------------------
RONALD T. LEMAY
* Vice President,
- - ------------------------------------- Treasurer July 18, 1996
ROBERT M. NEUMEISTER, JR. (Principal
Financial and
Accounting
Officer), and
Director
* Secretary and
- - ------------------------------------- Director July 18, 1996
JOSEPH M. GENSHEIMER
/s/ ROBERT M. NEUMEISTER, JR.
*By__________________________________
ROBERT M. NEUMEISTER, JR.
ATTORNEY-IN-FACT
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
------- ---------------------- ------------
<C> <S> <C>
1.1* Form of Underwriting Agreement, dated as of [ ],
1996 among the Underwriters and the Registrants with
respect to the Notes
3.1** [Intentionally omitted]
3.2** Certificate of Limited Partnership of Sprint Spectrum
L.P.
3.3** Certificate of Incorporation of Sprint Spectrum Finance
Corporation
3.4** By-laws of Sprint Spectrum Finance Corporation
3.5** Amended and Restated Agreement of Limited Partnership
of MajorCo, L.P. (renamed Sprint Spectrum Holding
Company, L.P.), dated January 31, 1996, among Sprint
Spectrum, L.P. (renamed Sprint Enterprises, L.P.), TCI
Network Services, Comcast Telephony Services and Cox
Telephony Partnership
3.6** Agreement of Limited Partnership of MajorCo Sub, L.P.
(renamed Sprint Spectrum L.P.), dated as of March 28,
1995, among MajorCo, L.P. and MinorCo, L.P.
4.1* Form of Senior Note Indenture between the Registrants
and The Bank of New York, as Trustee
4.2* Form of Senior Note
4.3* Form of Senior Discount Note Indenture between the
Registrants and The Bank of New York, as Trustee
4.4* Form of Senior Discount Note
5.1* Opinion of Simpson Thacher & Bartlett regarding the
legality of the Notes being registered
10.1*** Procurement and Services Contract, dated as of January
31, 1996, between MajorCo, L.P. and Northern Telecom,
Inc. [Schedules omitted]
10.2*** Procurement and Services Contract, dated as of January
31, 1996, between MajorCo, L.P. and AT&T Corp.
[Schedules omitted]
10.3* Amended and Restated Sprint Trademark License
Agreement, dated as of January 31, 1996, between Sprint
Communications Company, L.P. and MajorCo, L.P.
10.4* Paging Sales Agency Agreement, dated as of January 17,
1996, between MajorCo, L.P. and Sprint Communications
Company, L.P. [Schedules omitted]
10.5* Wirelessco Affiliation Agreement, dated as of January
9, 1995 between American PCS, L.P. and WirelessCo, L.P.
10.6* Second Amended and Restated Limited Partnership
Agreement of American PCS, L.P., dated as of January 9,
1995, among American Personal Communications, Inc.,
WirelessCo, L.P. and The Washington Post Company
10.7*** Purchase and Supply Agreement dated as of June 21,
1996, between Sprint Spectrum L.P. and QUALCOMM
Personal Electronics and QUALCOMM Incorporated and Sony
Electronics Inc. [Schedules Omitted]
10.8* Commitment Letter of Northern Telecom Inc. to Sprint
Spectrum L.P. dated June 11, 1996. [Annex omitted]
10.9* Commitment Letter of Chase Securities Inc. and Chemical
Bank to Sprint Spectrum L.P. dated June 7, 1996.
[Annexes omitted]
10.10* Commitment Letter from Lucent Technologies, Inc. to
Sprint Spectrum L.P. dated June 21, 1996. [Annexes
omitted]
10.11* Employment Agreement, dated as of September 29, 1995,
by and among MajorCo, L.P. and Joseph M. Gensheimer.
12.1 Not applicable.
21.1** Subsidiaries of the Registrants
23.1* Consent of Simpson Thacher & Bartlett (included in
Exhibit 5)
23.2** Consent of Deloitte & Touche LLP
23.3** Consent of Price Waterhouse LLP
24.1** Powers of Attorney (included on signature pages to
Registration Statement)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
------- ---------------------- ------------
<C> <S> <C>
25.1* Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, on Form T-1 of The Bank of New
York, as Trustee under the Senior Note Indenture
25.2* Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, on Form T-1 of The Bank of New
York, as Trustee under the Senior Discount Note
Indenture
</TABLE>
- - -------
* To be filed by subsequent amendment.
** Previously filed.
*** Portions of these Exhibits have been redacted. These portions have been
separately filed with the commission pursuant to a request for confidential
treatment under Rule 406.
<PAGE>
EXHIBIT 10.1
PROCUREMENT AND SERVICES CONTRACT
---------------------------------
between
MAJORCO L.P.,
Owner
and
NORTHERN TELECOM INC.,
Vendor
Dated as of January 31, 1996
The omitted portions indicated by brackets have been separately filed with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406.
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
-----------
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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;
<PAGE>
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
<PAGE>
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.
------------
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
------
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
32
(i) An E1 Emergency Condition means a problem resulting from any one or
more of the following events:
.[ ]
.[ ]
.[ ]
.[ ]
.[ ]
.[ ]
.[ ]
.[ ]
.[ ]
.[ ]
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
<PAGE>
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:
. [ ]
. [ ]
. [ ]
. [ ]
. [ ]
. [ ]
. [ ]
. [ ]
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:
<TABLE>
<CAPTION>
Vendor Contact Vendor Contact Name Telephone Number
------------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
One hour - Technical Assistance Mgr. to be designated to be designated
</TABLE>
<PAGE>
34
<TABLE>
<S> <C> <C> <C> <C>
Two hours - Customer Service Director Ron Fordon (214) 684-2999
Three hours - Customer Service AVP Norm Peters (214) 684-1299
Four hours - Vice President Chris MacIssac (905) 238-7229
</TABLE>
(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
<PAGE>
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:
<TABLE>
<CAPTION>
REPORTING LEVELS IF NON-EMERGENCY
IS NOT RESOLVED WITHIN
<S> <C> <C> <C> <C>
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
- - ------------------------------------------------------------------------------------------------
</TABLE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
39
in accordance with accepted forecasts will be subject to receipt of the Owner's
orders not later than [ ] days prior to delivery of commercially
available MSC Equipment and [ ] 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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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-
<PAGE>
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
- - -------- ----
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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;
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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, mark 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.
<PAGE>
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.
<PAGE>
58
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
-------- ----
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) [ ]
----------------
<PAGE>
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
-------- ----
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
-------- ----
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
<PAGE>
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
-------- ----
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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61
(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
-------- ----
the performance of Non-Essential Equipment causes a Defect or Deficiency or
failure in any Equipment, the Vendor
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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
-------- ----
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
<PAGE>
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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64
(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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65
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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66
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
<PAGE>
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
-------- ----
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
-------- -------
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.
<PAGE>
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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
<PAGE>
69
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 Incorporated ("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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71
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 System, any PCS System or any portion thereof 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
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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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74
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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75
(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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76
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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77
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;
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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)
-------- ----
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
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the Vendor due to a termination of this Contract pursuant to this subsection
24.9(a) for any of the
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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
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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
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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 [ ]
(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
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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.
<PAGE>
82
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
9221 Ward Parkway
Kansas City, Missouri 64113
Attention: Director, Program Management
If to the Vendor:
Northern Telecom Inc.
2435 N. Central Expressway
Richardson, TX 75080
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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:
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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/ Ronald T. LeMay
--------------------
Name: Ronald T. LeMay
Title: Chief Executive Officer
<PAGE>
EXHIBIT 10.2
PROCUREMENT AND SERVICES CONTRACT
---------------------------------
between
MAJORCO L.P.,
Owner
and
AT&T CORP.,
Vendor
Dated as of January 31, 1996
The omitted portions indicated by brackets have been separately filed with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406.
<PAGE>
PROCUREMENT AND SERVICES CONTRACT
---------------------------------
This Procurement and Services Contract (the "Contract") is made and is
effective as of January 31, 1996 (the "Effective Date"), by and between MajorCo
L.P., a Delaware limited partnership (the "Owner"), and AT&T Corp., a New York
corporation by and through its Network Systems Group (the "Vendor" and, together
with the Owner, the "Parties").
RECITALS:
--------
A. The Federal Communications Commission (the "FCC") granted to the
Owner or certain of its Affiliates (as defined below) personal communications
services licenses (the "PCS FCC Licenses") to build and operate PCS Systems (as
defined below) in specified geographic areas in the United States;
B. The Owner desires to have the Vendor engineer and construct PCS
Systems in the geographic areas specified on Schedule 4 (collectively, the
"System Areas") pursuant to the terms of this Contract;
C. The Vendor, itself or through its Subcontractors (as defined below),
desires to provide Products (as defined below) and Services (as defined below)
to the Owner in connection with the engineering and construction of PCS Systems
in the System Areas, including, but not limited to, the Vendor's obligation to
engineer, equip, install, build, test and service an operating PCS System in
each System Area in accordance with the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth in this Contract, the Owner and the Vendor hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Definitions. In addition to the terms listed below, certain
-----------
additional terms are defined in the Exhibits, subject to the provisions of
subsection 1.2 hereof. As used in this Contract, the following terms have the
following meanings:
"AAA" means the American Arbitration Association.
---
"Acceptance Certificates" means the collective reference to the
-----------------------
Factory Test Certificate, the Initial PCS System Certificate, the Substantial
Completion Certificate and the Final Acceptance Completion Certificate.
"Acceptance Tests" means the collective reference to the performance
----------------
and reliability demonstrations and tests specified in Exhibits B1, B2 and B3 to
determine whether the Products, the Services, any of the PCS Systems and/or the
System meet the Specifications and the terms and conditions of any applicable
order and this Contract.
<PAGE>
2
"Additional Affiliate Agreement" has the meaning ascribed thereto in
------------------------------
subsection 3.3.
"Additional Affiliate Arrangement" means a formal arrangement between
--------------------------------
the Owner and a Person to be designated an Additional Affiliate under the terms
of this Contract, which arrangement will include, but not be limited to,
agreements on marketing, backhaul, common billing, resale agreements and/or
revenue sharing.
"Additional Affiliate" has the meaning ascribed thereto in
--------------------
subsection 3.1.
"Affiliates" means the collective reference to the Initial
----------
Affiliates and the Additional Affiliates.
"Annual Release Maintenance Fees" means those recurring annual fees of
-------------------------------
the Vendor, usually invoiced annually in January, the Owner's payment of which
entitles the Owner to receive all Combined Software Releases, Software
Enhancements, and Software Upgrades applicable to PCS Products (but not Optional
Software Features) which will be made available to the Owner when made generally
available to the Vendor's Customers during the period for which the fees were
paid. All Annual Release Maintenance Fees will be as in the Vendor's Customer
Price Guides (subject to Section 26) except as otherwise set forth on Schedule
3. The Annual Release Maintenance Fees applicable to the Owner will for the
period from the Effective Date until the Final Acceptance of the last PCS System
within the Initial System always cover at least those PCS Products included in
the Initial System.
"ANSI" means the American National Standards Institute.
----
"APC" means American PCS, L.P., a Delaware limited partnership.
---
"Applicable Laws" means, as to any Person, the certificate of
---------------
incorporation and by-laws or other organizational or governing documents of such
Person, all United States or foreign laws (including, but not limited to, any
Environmental Laws), treaties, ordinances, judgments, decrees, injunctions,
writs, orders and stipulations of any court, arbitrator or governmental agency
or authority and statutes, rules, regulations, orders and interpretations
thereof of any federal, state, provincial, county, municipal, regional,
environmental or other Governmental Entity, instrumentality, agency, authority,
court or other body (i) applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject or (ii)
having jurisdiction over a or any part of any PCS System, the System or the Work
to be performed pursuant to the terms of this Contract.
"Applicable Permits" means any waiver, exemption, zoning, building,
------------------
variance, franchise, permit, authorization, approval, license or similar order
of or from any United States, foreign, federal, state, provincial, county,
municipal, regional, environmental or other governmental body, instrumentality,
agency, authority, court or other body having jurisdiction over all or any part
of any PCS System, the System or the Work to be performed pursuant to the terms
of this Contract.
<PAGE>
3
"AT&T Assignment" has the meaning ascribed thereto in subsection
---------------
27.22
"Backwards Compatibility" or "Backwards Compatible" means that any
-------------------------------------------------
referenced prior Software Revision Level or Levels of the applicable Software
and any referenced prior Equipment Revision Level or Levels of the applicable
Equipment, as the case may be, remain fully functional in accordance with and up
to the performance levels to which it was performing immediately prior to any
such enhancement and/or revision after the integration with the succeeding
Software Revision Level or Equipment Revision Level, as the case may be, and
that after such integration such prior Software Revision Level or Equipment
Revision Level loses no functionality and such succeeding Software Revision
Level or Equipment Revision Level interoperates with all such functionalities of
such prior Software Revision Level or Equipment Revision Level.
"Base Station ("BTS")" means the radio subsystem that handles the
--------------------
Owner's PCS radio traffic in a designated cell. The Base Station includes all
amplification, modulation, synchronization and other circuitry required to
process a radio signal. The inputs to a Base Station are a landline or radio
signal (e.g., T1) and the radio signal that is fed into antenna lines.
"best efforts" means a Party's best efforts under the circumstances,
------------
provided that the use of best efforts will not require the Party to breach any
- - -------- ----
outstanding contract or to violate any Applicable Law.
"Bolt-down" means for the purposes of each PCS Product all work that
---------
needs to be done by the Vendor in order to permanently and securely place such
PCS Product in its appropriate location within the relevant System Element
Location, provided that Bolt-down will not necessarily constitute installation
-------- ----
of any such PCS Product.
"Building Ready Date" has the meaning ascribed thereto in subsection
-------------------
2.5.
"Build Notice" has the meaning ascribed thereto in subsection 2.7a.
------------
"Business Day" means any day of the year other than a Saturday,
------------
Sunday or a United States national holiday.
"Cable Microcell Integrator ("CMI")" means a form of cable microcell
----------------------------------
integrator that provides for transportation of wireless communication signals
over a cable TV distribution plant. The CMI takes certain signals from the
cable TV distribution plant (the "cable PCS band or bands") and suitably
heterodynes, filters and amplifies these signals such that they can be radiated
by a CMI antenna or antennas in the designated PCS band to PCS wireless
handsets. The CMI takes signals received from the PCS wireless handsets from
one or more CMI receiving antennas and suitably heterodynes, filters and
amplifies these signals for transportation by the cable TV distribution plant to
a Headend Interface Converter ("HIC") or Distributive Cable Access Provider
("DCAP") at a PCS Base Station. Additionally, the CMI unit responds to control
signaling and provides status signals. The CMI is normally collocated with the
cable TV distribution plant and takes power from the cable plant.
<PAGE>
4
"CDMA" means code division multiple access as specified in ANSI-J-
----
STD-008.
"Change Orders" has the meaning ascribed thereto in subsection 7.2.
-------------
"Civil Work" means the labor and materials necessary in the
----------
performance of demolition, construction and renovation work (e.g., roads,
grading, fencing and structural improvements, including, but not limited to, any
buildings, towers and antennas) in order to construct a System Element Facility
in accordance with Exhibit E.
"Completion Cure Period" has the meaning ascribed thereto in
----------------------
subsection 15.3(a).
"Configuration Engineering" means the engineering required to
-------------------------
establish System Element configuration including, without limitation, preparing
component, inventory (including T1 quantities and configurations) and layout
drawings, Equipment labels, cable tray layout drawings, and "as-built" drawings
and Documentation. Configuration Engineering also includes the design, power
distribution and supply for each of the System Elements.
"Continental" means Continental Cablevision, Inc.
-----------
"Contract" has the meaning ascribed thereto in the prefatory paragraph
--------
to this Contract. "Contract" will in all instances include all Exhibits,
Schedules and Specifications and will, unless specifically stated otherwise,
always be deemed to include all amendments, modifications and supplements to the
Contract or any part thereof (including any Exhibits, Schedules or the
Specifications) pursuant to the terms of this Contract.
"Contract Price" has the meaning ascribed thereto in subsection 6.1.
--------------
"Customer" means any PCS customer of the Vendor doing business in
--------
North America or any PCS customer doing business in North America of any of the
Vendor's affiliates or subsidiaries.
"Customer Price Guide" means the Vendor's published "Network Wireless
--------------------
Systems Price Reference Guide" or other price notification releases furnished
for the purpose of communicating the Vendor's list pricing or pricing related
items applicable to PCS Products to Customers intending to operate PCS systems
in the United States, provided that the term does not necessarily include firm
-------- ----
price quotes.
"Custom Material" has the meaning ascribed thereto in subsection
---------------
11.9.1.
"Customer Service Request ("CSR")" has the meaning ascribed thereto
--------------------------------
in subsection 2.26.2.
<PAGE>
5
"Defects and Deficiencies," "Defects or Deficiencies" or "Defective"
------------------------------------------------------------------
means any one or a combination of the following items or other items of a
substantially similar nature:
(a) when used with respect to the performance of labor or service items
of Work (including any work by any Subcontractor), such items that are not
provided in a workmanlike manner and in accordance with the standards and/or
Specifications set forth herein;
(b) when used with respect to structures, materials, Equipment and
Software items of Work (including any Work by any Subcontractor), such items
that are not (i) new and of good quality and free from improper workmanship and
defects in accordance with the standards and/or Specifications set forth herein
or established hereunder and standards of good procurement, manufacturing and
construction standards, or (ii) free from errors and omissions in design or
engineering services in light of such standards; or
(c) in general, (i) Work (including any Work by any Subcontractor) that
does not conform to the Specifications and/or requirements of this Contract, or
(ii) any design, engineering, start-up activities, materials, Equipment,
Software, tools, supplies, Installation or Training that (1) does not conform to
the standards and/or Specifications set forth herein or established hereunder,
(2) has improper or inferior workmanship, (3) would materially and adversely
affect the ability of the System and/or any PCS System and/or any material part
thereof to meet the performance criteria specified in Exhibit F on a consistent
and reliable basis or (4) would materially and adversely affect the continuous
operation of the System and/or any PCS System or any material part thereof in
accordance with the standards and/or Specifications set forth herein or
established hereunder. Defects and Deficiencies will be deemed to exist when
actually discovered or when they should have been apparent to a Person in the
Vendor's position after reasonable inspection and testing.
"Discontinued Products" has the meaning ascribed thereto in
---------------------
subsection 10.1.
"Documentation" means the documentation for the System and/or any
-------------
PCS System and/or any material part thereof.
"Effective Date" has the meaning ascribed thereto in the prefatory
--------------
paragraph to this Contract.
"E1 Emergency Condition ("E1")" has the meaning ascribed thereto in
-----------------------------
subsection 2.26.3(b).
"E2 Emergency Condition ("E2")" has the meaning ascribed thereto in
-----------------------------
subsection 2.26.3(b).
"Emergency Technical Assistance ("ETA")" means the provision of
--------------------------------------
emergency technical assistance to the Owner for the purpose of diagnosing and
resolving a
<PAGE>
6
problem which adversely affects the System and/or any PCS System and/or a
material part thereof, its operation and/or its service pursuant to and in
connection with subsection 2.26.3.
"Engineer" means the engineer or engineers appointed from time to time
--------
by the Owner to do certain work and/or inspections and reviews on behalf of the
Owner and/or provide advice or information to the Owner in connection with the
System and/or any PCS System and/or any part thereof.
"Engineering" means all of the engineering required to be done by the
-----------
Vendor to complete the System in accordance with the Specifications including,
but not limited to, RF Engineering, Configuration Engineering and Facilities
Engineering done in accordance with the Specifications and the CDMA standards.
"Environmental Laws" means any and all United States and foreign,
------------------
federal, state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Entity, or
requirements of law (including, without limitation, common law) relating in any
manner to contamination, pollution, or protection of human health or the
environment, as now or may at any time hereafter be in effect.
"Equipment" means all equipment, hardware and other items of personal
---------
property which are required to be furnished by the Vendor or any Subcontractor
pursuant to and in accordance with the terms and conditions of this Contract and
in connection with the System and/or any PCS System and/or any part thereof in
accordance with the Specifications including, without limitation, additional
equipment required as a result of the expansion or additional coverage required
pursuant to subsection 2.2, or otherwise pursuant to the terms of this Contract,
and the equipment listed on Exhibit D or on Schedule 7 (parts A and B).
"Equipment Combined Release" has the meaning ascribed thereto in
--------------------------
subsection 13.1(a).
"Equipment Enhancements" means modifications or improvements made to
----------------------
the PCS Equipment which improve performance or capacity of such Equipment
(sometimes referred to by the Vendor as its "Class B" changes).
"Equipment Revision Level" means each version of an Item of PCS
------------------------
Equipment that reflects any modification or change from the immediately
preceding version of such Item of Equipment.
"Equipment Upgrade" means a change or modification in any delivered
-----------------
PCS Equipment which fixes or otherwise corrects faults, design shortcomings or
shortcomings in meeting the Specifications, required to correct defects of a
type that result in inoperative conditions, unsatisfactory operating conditions,
or which is recommended to enhance safety (sometimes referred to by the Vendor
as its "Class A" changes).
"Escrow Agreement" has the meaning ascribed thereto in subsection
----------------
11.7.
<PAGE>
7
"Exchange Act" has the meaning ascribed thereto in subsection 27.22.
------------
"Expansions" means any additional Products or Services resulting from
----------
a modification by the Owner to the Specifications, the performance criteria set
forth in Exhibit F or the Project Milestones set forth on Exhibit A resulting in
a change to the System and/or any PCS System and/or any material part thereof,
including, but not limited to, the extension or expansion of the System and/or
any PCS System (i) into geographic areas outside of the System Areas covered by
the PCS Systems identified in Schedule 4, or (ii) to increase capacity and/or
performance of the System and/or any PCS System beyond the performance criteria
and/or Specifications originally contemplated herein. Expansions will not
include any additional Products or Services required to meet the Specifications
applicable to the Initial System.
"Extraordinary Transportation" means the Vendor's or its
----------------------------
Subcontractors' transport of Products and/or other materials pursuant to the
terms of this Contract where the circumstances of such transport require the
Vendor to use any one or a combination of the following extraordinary means of
transport and/or extraordinary methods of achieving access to the Owner's
facilities: (i) four-wheel drive vehicle (other than those typically used for
the delivery of Products), (ii) helicopter, (iii) boat, (iv) airplane, (v)
bulldozer, (vi) clear physical obstructions requiring the building of a new road
by the Vendor or its Subcontractors, or (vii) a construction crane.
"Facilities Engineering" means the engineering required to design each
----------------------
System Element Facility including, without limitation, System Element Locations
and System Element layout, drawings and relevant Specifications for the
construction of the buildings, towers, generators, cable and antennae and all
other items required to make the System Element Facility functional. Facilities
Engineering does not include Configuration Engineering.
"Facilities Preparation Services" means all Facilities Engineering,
-------------------------------
Civil Work, Site Plan Architectural Work, Structural Architectural Work, and
Utilities Work, all of which must be performed in accordance with the
Specifications. Pursuant to the definition of Civil Work, Facilities
Preparation Services will (unless otherwise agreed by the Owner) include all
Work to complete the Civil Work in a given System Element Location including,
but not limited to, the supply, building and installation of all buildings,
towers and antennas. Facility Preparation Services does not include Site
Acquisition, Network Interconnection, Microwave Relocation or any of the above
referenced activities for the construction of a Switch Site (except as otherwise
provided in this Contract).
"Facilities Preparation Services Warranty Period" has the meaning
-----------------------------------------------
ascribed thereto in subsection 17.2b.
"Factory Test Certificate" means a document submitted by the Vendor to
------------------------
the Owner and signed by an authorized representative of the Owner and an
authorized officer of the Vendor stating that in accordance with the
requirements of Exhibit B3 and this Contract the Vendor has successfully
completed all factory tests on the PCS Products (of the type to be
<PAGE>
8
installed as part of the Initial System) in accordance with the requirements of
Exhibit B3 and this Contract.
"FCC" has the meaning ascribed thereto in the recitals to this
---
Contract.
"Final Acceptance" means, as to any PCS System, the successful
----------------
completion by the Vendor of all of the final acceptance tests and requirements
applicable to such PCS System set forth in Exhibit B3 in accordance with the
requirements of Exhibit B3 and the terms of this Contract.
"Final Acceptance Completion Certificate" means, with respect to a
---------------------------------------
given PCS System, a document submitted by the Vendor to the Owner and signed by
an authorized representative of the Owner and an authorized officer of the
Vendor stating that the Vendor has successfully completed the Acceptance Tests
and requirements applicable to the Final Acceptance of the Work to be done in
such PCS System in accordance with the requirements of Exhibit B3.
"Final RF Engineering Plan" has the meaning ascribed thereto in
-------------------------
subsection 2.6(c).
"Final RF Review Period" has the meaning ascribed thereto in
----------------------
subsection 2.6(c).
"Final Site Count" has the meaning ascribed thereto in subsection
----------------
2.6(c).
"Financing Interim Period" has the meaning ascribed thereto in
------------------------
subsection 24.9(a).
"Force Majeure" means the following:
-------------
(a) Acts of God, epidemic, earthquake, landslide, lightning, fire,
explosion, accident, tornado, drought, flood, hurricane, or extraordinary
weather conditions more severe than those normally and typically
experienced in the affected area constituted by each of the specified
System Areas in which the Vendor is seeking to claim Contract suspension
due to Force Majeure;
(b) Acts of a public enemy, war (declared or undeclared), blockade,
insurrection, riot or civil disturbance, sabotage, quarantine, or any
exercise of the police power by or on behalf of any public entity;
(c) (i) The valid order, judgment or other act of any federal,
state or local court, administrative agency, Governmental Entity or
authority issued after the Effective Date; (ii) with respect to the
Vendor, the suspension, termination, interruption, denial or failure of
or delay in renewal or issuance of any Applicable Permit required by this
Contract to be obtained by the Owner; (iii) with respect to the Owner,
the suspension, termination, interruption, denial or failure of or delay
in
<PAGE>
9
renewal or issuance of any Applicable Permit required by this Contract to
be obtained by the Vendor; or (iv) a change in Applicable Law (including
the adoption of a new Applicable Law); provided that no such order,
-------- ----
judgment, act, event or change is the result of the action or inaction
of, or breach of this Contract by, the Party relying thereon;
(d) Strikes, boycotts or lockouts, except for any such strike,
boycott or lockout involving the employees of the Vendor or the permanent
employees (not hired on a contract basis) of a Subcontractor (for the
period from the Effective Date until the Final Acceptance of the last PCS
System within the Initial System but in no event to exceed three (3)
years from the Effective Date);
(e) A partial or entire delay or failure of utilities; or
transportation embargoes; or
(f) The presence of (i) any Hazardous Waste on or at any System
Element Location which materially interferes with the Work to be done
thereon or otherwise materially endangers the safety of any personnel at
such location; (ii) any unknown historical or archeological sites which
are not shown or indicated in the survey of any System Element Locations
and of which the Vendor could not have reasonably been expected to be
aware; or (iii) any mining or water recovery activities (other than such
activities by the Vendor or its Subcontractors) at or under any System
Element Location after the Effective Date.
Events of Force Majeure include the failure of a Subcontractor to
furnish labor, services, materials, or equipment in accordance with its
contractual obligations, only if such failure is itself due to an event of Force
Majeure. A Force Majeure does not include any delay in performance to the
extent due to the failure of the Vendor or any Subcontractor to provide an
adequate number of engineers or other workmen or to manufacture or procure an
adequate amount of Equipment, Software and/or Services.
"Governmental Entity" means any nation or government, any state,
-------------------
province or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranteed Substantial Completion Date" means the date which is
--------------------------------------
defined in Exhibit A as "Milestone 8."
"Hazardous Waste" means any and all hazardous or toxic substances,
---------------
wastes, materials or chemicals, petroleum (including crude oil or any fraction
thereof) and petroleum products, asbestos and asbestos-containing materials,
pollutants, contaminants, polychlorinated biphenyls and any and all other
materials, substances, regulated pursuant to any Environmental Laws or that
could result in the imposition of liability under any Environmental Laws.
<PAGE>
10
"Headend Interface Converter ("HIC")" means a form of CMI that
-----------------------------------
provides for transportation of wireless communication signals over a cable TV
distribution plant. The HIC takes signals from the PCS Base Station transmitter
and suitably heterodynes, filters and amplifies these signals for processing by
the PCS Base Station receiver. Additionally, the HIC provides reference and
control signals to the CMI units and receives and processes status signals from
the CMI unit.
"Independent Auditor" means any of the Persons set forth on Schedule
-------------------
15.
"Indemnitees" has the meaning ascribed thereto in subsection 20.2(a)
-----------
"Initial Affiliates" means the collective reference to each of the
------------------
Persons set forth on Schedule 5.
"Initial Affiliate Agreement" has the meaning ascribed thereto in
---------------------------
subsection 3.2.
"Initial Commitment" has the meaning ascribed thereto in subsection
------------------
7.1.
"Initial PCS System" means that PCS System, or a portion thereof,
------------------
designated by the Owner within one hundred twenty (120) days of the Effective
Date as the Initial PCS System in which Substantial Completion must take place
in accordance with the terms of Exhibit B3 prior to and as a condition of the
Owner's acceptance of Substantial Completion of any other PCS System within the
Initial System; provided that at any time after the designation of the Initial
-------- ----
PCS System prior to the Substantial Completion of the first PCS System within
the Initial System the Parties may mutually agree to change the designation of
the Initial PCS System; provided further that in the event the Parties are
-------- -------
unable or unwilling to mutually agree on such redesignation of the Initial PCS
System in good faith within a reasonable time, for the purposes hereof the first
PCS System within the Initial System to actually achieve Substantial Completion
in accordance with and pursuant to the terms of Exhibit A1 and Exhibit B3 will
be deemed to be the Initial PCS System.
"Initial PCS System Certificate" means a document submitted by the
------------------------------
Vendor to the Owner and signed by an authorized representative of the Owner and
an authorized officer of the Vendor stating that the Vendor has successfully
completed the Acceptance Tests applicable to the Initial PCS System in
accordance with the requirements of Exhibit B3.
"Initial System" means the build-out of that portion of the System
--------------
Areas as shown on Schedule 4 prior to any Expansions or Owner requests for
additional coverage for such System Areas pursuant to the terms of this
Contract.
"Initial Term" has the meaning ascribed thereto in subsection 5.1.
------------
"In Revenue Service" or "In Revenue" means the commercial operation of
----------------------------------
any PCS System, or a portion thereof, exclusive of operation for purposes of
conducting Acceptance Tests; provided that In Revenue Service or In Revenue will
-------- ----
not by itself
<PAGE>
11
constitute acceptance in accordance with the terms of this Contract of any such
PCS System or any portion thereof.
"Inspector" means a qualified Person designated as an authorized
---------
representative of the Owner assigned to make all necessary inspections of the
Work, or of the labor, materials and equipment furnished or being furnished by
the Vendor or any of its Subcontractors at the System Element Locations and the
other sites where the Vendor or any Subcontractor is prosecuting the Work,
subject to appropriate safety, security and confidentiality requirements.
"Installation" or "Installed" means the performance and supervision by
------------ ---------
the Vendor of all installation of Products within the System and/or any PCS
System.
"Intellectual Property Rights" has the meaning ascribed thereto in
----------------------------
subsection 14.2(a)
"Interim Delay Penalty" has the meaning ascribed thereto in
---------------------
subsection 15.2.
"Interim Milestone" has the meaning ascribed thereto in subsection
-----------------
15.2.
"Interoperability" means (i) the ability of the System and/or any PCS
----------------
System and/or any material part thereof to interconnect and successfully operate
with the equipment and software of other Systems and/or PCS Systems and/or any
material part thereof of the Vendor and/or the Other Vendors and/or other
suppliers whose equipment and software also meet the relevant ANSI standards and
other Specifications identified in Exhibit D and (ii) the ability of each of the
Products to operate with one another and to operate with and within the System,
including, but not limited to, the ability of the handsets (to be delivered
pursuant to subsection 2.3) to operate with and within the System, all in
accordance with the Specifications. Since certain sections of the ANSI
standards are currently undefined, and certain sections are left available for
independent development by suppliers, the potential for such interoperability or
incompatibility with properly designed systems exists, and must be resolved by
the Vendor or any Subcontractor providing PCS Systems to the Vendor in
accordance with the terms hereof.
"Item" means any item at any time listed in any of the Vendor's price
----
lists and it specifically includes, without limitation, all Software Upgrades,
Software Enhancements, Equipment Upgrades, Equipment Enhancements and
modifications, enhancements, updates or other revisions of any kind in any such
item, spare parts with respect to any of the foregoing and any other PCS/CDMA
related item.
"Late Completion Payment Cap" has the meaning ascribed thereto in
---------------------------
subsection 15.3
"Late Completion Payments" has the meaning ascribed thereto in
------------------------
subsection 15.3
<PAGE>
12
"Liabilities" has the meaning ascribed thereto in subsection 20.1(a)
-----------
"Liquidated Damages" has the meaning ascribed thereto in subsection
------------------
15.1
"M5 Forecast" has the meaning ascribed thereto in subsection 2.7(a)
-----------
"Maintenance and Instruction Manuals" means the manuals prepared by
-----------------------------------
the Vendor and delivered to the Owner pursuant to subsection 2.21 containing
detailed procedures and specifications for the ongoing maintenance of the
System.
"Major Portion" of the Work means a segregated portion of the Work
-------------
with a cost to the Owner of $10,000,000 or more.
"MFC Certificate" has the meaning ascribed thereto in subsection
---------------
26.1(b)
"Microwave Delay Period" has the meaning ascribed thereto in
----------------------
subsection 2.38(a)
"Microwave Relocation" means the process by which incumbent point to
--------------------
point microwave users of the 1850 - 1990 Mhz frequency spectrum are moved to
other frequencies or alternate transmission facilities in order to clear the
licensed PCS spectrum for broadband wireless service.
"Microwave Relocation Completion" means, with respect to any given PCS
-------------------------------
System, the point at which the Owner will have finished sufficient Microwave
Relocation in such PCS System to permit the commercially viable and marketable
operation of such PCS System in accordance with the terms of this Contract.
"Minimum Commitment" means sixty percent (60%) of the Initial
------------------
Commitment.
"Nationwide Network" means all of the PCS Systems built or to be owned
------------------
and/or operated by the Owner or its Affiliates in North America.
"NDAB" means the New Development Advisory Board established pursuant
----
to the terms of this Contract including subsections 2.11, 2.32 and 2.33.
"Network Interconnection" means the transmission links between Base
-----------------------
Stations and MSCs, between an MSC and another MSC, and between MSCs and PSTNs
but does not include connections between demarcation points of transmission
links and System Elements for which the Vendor will be responsible pursuant to
the terms of this Contract, including its obligations to install and test upon
the Owner's completion of such transmission links. Typically T1 transmission
links are used for connectivity.
"NewTelCo" means NewTelCo. L.P., a Delaware limited partnership.
--------
<PAGE>
13
"Non-Essential Equipment" means a Product other than a PCS Product
-----------------------
obtained from a third party supplier and furnished to the Owner as part of
Facilities Preparation Services in accordance with the terms of this Contract,
which Product will be furnished with an assignable warranty from the such third
party supplier of a length and scope determined by the Parties in the
development of the Specifications in accordance with the terms of Exhibit E for
the Product pursuant to the terms of this Contract, including but not limited
to;
Antennas
Transmission towers
Monopoles
Prefabricated equipment shelters
Power transformers
Batteries
Rectifiers
Uninterrupted power sources.
Non-Essential Equipment does not include normal construction materials
(including, but not limited to pipes, conduits, concrete, fences, lighting and
paving materials) used by the Vendor or its Subcontractors in the performance of
its Facilities Preparation Services.
"North America" means the United States, Canada (including the
-------------
Province of Quebec) and Mexico.
"Notice to Proceed" means a written notice given by the Owner to the
-----------------
Vendor in the form attached hereto as Schedule 9 and in compliance with the
provisions of this Contract, fixing the date on which the Vendor will have the
full right, in accordance with the terms of this Contract, and the full
obligation, subject to the terms of this Contract, to commence the Work to be
performed under this Contract.
"Notice to Proceed Date" means the date on which any Notice to Proceed
----------------------
is issued by the Owner in accordance with the terms of this Contract.
"OCC" has the meaning ascribed thereto in subsection 2.26.2.
---
"OM&P" has the meaning ascribed thereto in subsection 2.23(a).
----
"Operating Manuals" means the manuals to be prepared by the Vendor and
-----------------
delivered to the Owner pursuant to subsections 2.20, 2.22 and 2.23 containing
detailed procedures and specifications for the operation of the System and/or
any part thereof.
"Operative" has the meaning ascribed thereto in subsection 27.26.
---------
"Optional Software Features" means Software features for PCS Products
--------------------------
available to Customers on an optional, separate fee, basis. The initial fees
for such Optional Software Features are not included in Annual Release
Maintenance Fees.
<PAGE>
14
"Other Vendors" means vendors, other than the Vendor, with whom the
-------------
Owner has entered, or may enter in the future, into a contract for the provision
of products and services for the engineering and construction of any portion of
the Nationwide Network. Other Vendors does not include any Subcontractors in
connection with the Work to be performed under this Contract in their capacity
as Subcontractors.
"Outage" has the meaning ascribed thereto in subsection 17.4(b).
------
"Owner" has the meaning ascribed thereto in the prefatory paragraph
-----
to this Contract.
"Owner Loss" means an insured loss incurred by the Owner relating to
----------
the System.
"Owner's Succeeding Entity" has the meaning ascribed thereto in
-------------------------
subsection 27.23.
"Parties" has the meaning ascribed thereto in the prefatory
-------
paragraph to this Contract.
"Patent License" has the meaning ascribed thereto in subsection
--------------
14.5.
"P1 Major Condition ("P1")" has the meaning ascribed thereto in
-------------------------
subsection 2.26.3(g).
"P2 Significant Problem ("P2")" has the meaning ascribed thereto in
-----------------------------
subsection 2.26.3(g).
"P3 Minor Problem ("P3")" has the meaning ascribed thereto in
-----------------------
subsection 2.26.3(g).
"Partners" means the collective reference to Sprint Spectrum, L.P., a
--------
Delaware limited partnership and/or Sprint Corporation ("Sprint"), TCI Network
Services, a Delaware general partnership ("TCI"), Cox Telephony Partnership, a
Delaware general partnership ("Cox"), and Comcast Telephony Services, a Delaware
general partnership ("Comcast").
"PCS" means personal communication services authorized by the FCC.
---
"PCS FCC Licenses" has the meaning ascribed thereto in the recitals
----------------
of this Agreement.
"PCS Products" means the Vendor's PCS Equipment and Software, as
------------
offered from time to time in the Customer Price Guide; provided that for the
-------- ----
purposes of this Contract PCS Products will always (subject to subsection 10.1)
include at least those Items listed on the Vendor's Customer Price Guide as of
the Effective Date. As the context
<PAGE>
15
requires and notwithstanding the above, the term PCS Products includes all
Vendor manufactured Products provided to the Owner in connection with its
obligations pursuant to the terms of this Contract, but excludes Items furnished
solely as part of Facilities Preparation Services not otherwise integral to the
operation or maintenance of the PCS Items set forth on the Customer Price Guide,
including Non-Essential Equipment.
"PCS System" means all Products and other equipment, tools and
----------
software, all System Element Sites and any property located thereat necessary or
desirable to provide PCS in a given specified System Area.
"Person" means an individual, partnership, limited partnership,
------
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity of whatever
nature.
"Phillieco" means Phillieco L.P.
---------
"Preliminary RF Design" means an RF Engineering design which
---------------------
incorporates as many prequalified System Element Locations (including existing
structures and other sites provided by Site Acquisition that have a high
likelihood of meeting the zoning requirements) as possible without compromising
the quality of the System or System Element Location counts, design grids,
signal level plots and prequalified site map overlays for each of the System
Areas. The Preliminary RF Design must also include those Items listed on
Schedule 1. The Preliminary RF Design must be based upon all information
reasonably available to the Vendor or provided to the Vendor by the Owner as of
the Effective Date including, but not limited to, the information set forth in
this Contract.
"Product Warranty Period" has the meaning ascribed thereto in
-----------------------
subsection 17.1(a), 17.1(b).
"Product Contract Price" means, at the time of determination, the
----------------------
Contract Price minus the costs applicable to and actually invoiced to such date
by the Owner pursuant to and in accordance with Section 6 for Facilities
Preparation Services and RF Engineering.
"Products" means the collective reference to the PCS Products, the
--------
Equipment and the Software provided by the Vendor or any Subcontractor pursuant
to and in accordance with the terms of this Contract.
"Project Milestones" means the collective reference to the milestone
------------------
dates and intervals as set forth in Exhibits A1 and A2, each a "Milestone."
"Proprietary Information" has the meaning ascribed thereto in
-----------------------
subsection 27.19(a).
"Punch List" means that list prepared in conjunction with the
----------
Acceptance Tests and included in any Acceptance Certificate, which contains one
or more immaterial non-service-affecting items (specifying the cost of
completing such items either determined as
<PAGE>
16
of the date of the Substantial Completion of the relevant PCS System or within a
reasonable time thereafter) which have not been fully completed by the Vendor as
of the Substantial Completion of any PCS System; provided that such incomplete
--------
portion of the Work will not, during its completion, materially impair the
normal daily operation of such PCS System in accordance with the Specifications.
"Reviewers" has the meaning ascribed thereto in subsection 21.4.
---------
"RF" means radio frequency.
--
"RF Engineering" means radio frequency engineering required in
--------------
connection with the architectural design of the System and/or any PCS System.
"RFP" has the meaning ascribed thereto in subsection 11.9.1(a).
---
"RTM License" has the meaning ascribed thereto in subsection 11.6.
-----------
"RTU License" has the meaning ascribed thereto in subsection 11.1.
-----------
"Services" means the collective reference to all of the services to be
--------
conducted by the Vendor as part of the Work pursuant to the terms of this
Contract including, but not limited to, Installation, Facilities Preparation
Services, RF Engineering, System Maintenance Support, System Support Services
and other repair and maintenance services, performed in accordance with the
terms of this Contract including, but not limited to, the Specifications.
Services does not include Site Acquisition, Network Interconnection or Microwave
Relocation.
"Services Warranty Period" has the meaning ascribed thereto in
------------------------
subsection 17.2(b).
"Site Acquisition" means the services to be performed by the Owner
----------------
and/or its subcontractors necessary for identifying and acquiring sufficient
rights to the System Element Locations within the System Areas including all
requisite zoning approvals and all building approvals required by any
Governmental Entity; provided that Site Acquisition does not include any of the
-------- ----
Site Plan Architectural Work or the Facilities Engineering.
"Site Acquisition Delay Period" has the meaning ascribed thereto in
-----------------------------
subsection 2.41.
"Site Acquisition Substantial Completion" means, with respect to any
---------------------------------------
PCS System, the point at which the Owner will have acquired, by purchase, lease
or otherwise, rights to a sufficient number of System Element Locations within
the specified System Area to be covered by such PCS System such that the
performance criteria specified in Exhibit F applicable to such PCS System would
be substantially satisfied in the reasonable opinion of the Owner subject to the
reasonable acceptance of the Vendor. If the Vendor upon receiving notice from
the Owner that Site Acquisition Substantial Completion has been achieved in any
<PAGE>
17
given PCS System disagrees with the Owner's claim, then the Vendor will have ten
(10) Business Days to detail its disagreement in writing to the Owner and a
Third Party Engineer chosen by the Owner and such Third Party Engineer will have
ten (10) Business Days from the receipt of such writing to make a determination
whether or not the Owner's claim of Site Acquisition Substantial Completion is
reasonable. The Third Party Engineer will have no discretion or authority to
provide the Parties with any answer other than whether in its judgment the
Owner's claim is reasonable. Such determination by the Third Party Engineer
will be final and binding upon the Parties.
"Site Acquisition Substantial Completion Date" means with respect to
--------------------------------------------
any PCS System the date on which the Owner will have achieved Site Acquisition
Substantial Completion.
"Site Plan Architectural Work" means the preparation of architectural
----------------------------
and/or engineering drawings, plans and/or specifications necessary to obtain
zoning permits and/or approvals, building permits and/or approvals and/or
conditional use permits for any given System Element Facility.
"Software" means (a) all computer software furnished hereunder for use
--------
with any Equipment including, but not limited to, computer programs contained on
a magnetic or optical storage medium, in a semiconductor device, or in another
memory device or system memory consisting of (i) hardwired logic instructions
which manipulate data in central processors, control input-output operations,
and error diagnostic and recovery routines, or (ii) instruction sequences in
machine-readable code furnished hereunder that control call processing,
peripheral equipment and administration and maintenance functions, (b) any
Software Enhancements, Software Features and Software Upgrades furnished by the
Vendor to the Owner hereunder, and (c) any Documentation furnished hereunder for
use and maintenance of the Software; provided that no Source Code versions of
-------- ----
Software are included in the term Software.
"Software Combined Release" means a Software Upgrade which is at any
-------------------------
time combined with any Software Enhancement.
"Software Enhancements" means modifications or improvements made to
---------------------
the Software relating to PCS Products which improve performance or capacity of
the Software or which provide additional functions to the Software.
"Software Licenses" means the collective reference to the RTU
-----------------
License and the RTM License.
"Software Revision Level" means each version of Software that reflects
-----------------------
any amendment, modification or change from the immediately preceding version.
"Software Upgrades" means periodic updates to the Software issued by
-----------------
the Vendor to the Owner under Warranty and Software maintenance obligations to
correct Defects or Deficiencies in the Software relating to PCS Products.
<PAGE>
18
"Sony/Qualcomm Agreement" has the meaning ascribed thereto in
-----------------------
subsection 2.3(a).
"Source Code" means Software in human-readable form and all
-----------
documentation, such as flow charts, schematics and annotations, that comprise
the precoding detailed design specifications (which constitutes the "embodiment
of the intellectual property" of the Software (excluding Third Party Software)
as such concept is referenced in Section 365(n) of the United States Bankruptcy
Code, as amended), which is necessary to enable the Owner to maintain and modify
the Software in accordance with the licenses granted in this Contract.
"Specifications" means the collective reference to the specifications
--------------
and performance standards of the design, Facilities Preparation Services,
Engineering, Products, Installation and Services contemplated by this Contract
and includes any Expansions, amendments, modifications and/or other revisions
thereto made in accordance with the terms of this Contract and as more fully set
forth in Exhibits C, D, E and F, or as otherwise determined hereunder pursuant
to the terms of this Contract; provided that, except as otherwise provided in or
-------- ----
determined pursuant to this Contract or as otherwise mutually agreed between the
Parties, the applicable Specifications for an Item will be the Vendor's or other
manufacturer's standard technical specifications for such Item, as applicable,
unless the Owner will have specifically not agreed with such Vendor or other
manufacturer specification; and provided further, that with respect to
-------- -------
Facilities Preparation Services, design, Engineering, Products, Installation and
Services for which specifications and performance standards are not provided and
listed in such Exhibits, "Specifications" refers to performance, functionality
and fitness for the intended purpose in which such design, Facilities
Preparation Services, Engineering, Products, Installation and Services are
employed.
"Structural Architectural Work" means the preparation of all
-----------------------------
architectural drawings and blueprints relating to the structural specifications
for a System Element Facility.
"Subcontractor" means a contractor, vendor, supplier, licensor or
-------------
other Person, having a direct or indirect contract with the Vendor or with any
other Subcontractor of the Vendor who has been hired specifically to assist the
Vendor in certain specified areas of its performance of its obligations under
this Contract including, without limitation, performance of any part of the
Work.
"Substantial Completion" means the point at which the Vendor has
----------------------
completed a portion of the Work other than specified Items set forth on
applicable Punch Lists such that the geographic areas of any System Area as
specified in Schedule 4 all have been covered to the extent set forth in
Schedule 4, in accordance with the Specifications and the System Standards and
as verified to the Owner in accordance with the criteria and requirements set
forth in Exhibit B3.
"Substantial Completion Certificate" means, with respect to a given
----------------------------------
PCS System, a document submitted by the Vendor to the Owner and signed by an
authorized representative of the Owner and an authorized officer of the Vendor
stating that the Vendor
<PAGE>
19
has successfully completed the Acceptance Tests applicable to the Substantial
Completion of the Work to be done in such PCS System in accordance with the
requirements of Exhibit B3.
"Successor" has the meaning ascribed thereto in subsection 27.22.
---------
"Switch Site" means the System Element Location designated by the
-----------
Owner as the site in which it wants the MSC(s) to be Installed in any given PCS
System.
"Switch Site Notice" has the meaning ascribed thereto in subsection
------------------
2.6(d).
"Switch Site Notice Date" has the meaning ascribed thereto in
-----------------------
subsection 2.6(d).
"Switch Site Ready Date" has the meaning ascribed thereto in
----------------------
subsection 2.6(d).
"System" means all of the PCS Systems built by the Vendor in the
------
System Areas allocated to the Vendor pursuant to the terms of this Contract and
as set forth on Schedule 4.
"System Areas" has the meaning ascribed thereto in the recitals to
------------
this Contract.
"System Element" means the Equipment and Software required to perform
--------------
radio, switching and/or system element functions for the System and/or any PCS
System (which may include, without limitation, Base Station ("BTS"), Equipment
Identity Register ("EIR"), Messaging System ("MXE"), Mobile Switching
Center/Visitor Location Register ("MSC/VLR"), Mobile Service Node ("MSN"),
Signal Transfer Point ("STP"), Home Location Register ("HLR"), Service Control
Point ("SCP"), Intelligent Peripheral ("IP") and Access Manager ("AM")).
"System Element Facility" means the structures, improvements,
-----------------------
foundations, towers, and other facilities necessary to house or hold any System
Element and any related Equipment to be located at a particular System Element
Location.
"System Element Location" means the physical location for a System
-----------------------
Element.
"System Element Site" means the collective reference to a particular
-------------------
System Element, together with the related System Element Location and System
Element Facility.
"System Element Verification" means the Vendor's laboratory level
---------------------------
testing on the Products conducted by the Vendor in accordance with Exhibit B3.
"System Maintenance Support" means those Services offered by the
--------------------------
Vendor for maintenance of any of the Products and/or any System Element or
collection thereof.
<PAGE>
20
"System Managers" means each of the managers designated by the Owner
---------------
and the Vendor, respectively, for the purposes of subsection 23.1.
"System Standards" means the collective reference to the industry
----------------
standards specified in Exhibits C, D, F, G and H.
"System Support Services" means those services offered by the Vendor
-----------------------
relating to System design, enhancement and optimization.
"System Warranty Period" has the meaning ascribed thereto in
----------------------
subsection 17.3.
"TCG" means the collective reference to Teleport Communications
---
Group, Inc. and TCG Partners.
"Technical Documentation" means the documentation identified as such
-----------------------
in the Specifications.
"Term" has the meaning ascribed thereto in subsection 5.2.
----
"Test-bed Laboratory" has the meaning ascribed thereto in subsection
-------------------
2.5.
"Third Party Engineer" means any one of the Persons listed on
--------------------
Schedule 14.
"Third Party Software" means Software which is independently developed
--------------------
by a third party, sublicensed to the Owner under this Contract or otherwise
provided with the Products in accordance with the Specifications.
"Training" has the meaning ascribed thereto in subsection 2.23.
--------
"Trouble Report ("TR")" has the meaning ascribed thereto in
---------------------
subsection 2.26.2.
"United States" means the fifty states of the United States and the
-------------
District of Columbia.
"Utilities Work" means the installation of electric and telephone
--------------
utilities at the System Element Locations.
"Vendor" has the meaning ascribed thereto in the prefatory paragraph
------
to this Contract.
"Vendor-Controlled Location" has the meaning ascribed thereto in
--------------------------
subsection 2.12.
<PAGE>
21
"Vendor Developments" has the meaning ascribed thereto in subsection
-------------------
2.11.1.
"Vendor Event of Default" has the meaning ascribed thereto in
-----------------------
subsection 24.2.
"Vendor procedural error" has the meaning ascribed thereto in
-----------------------
subsection 17.4(c).
"Vendor Patents" has the meaning ascribed thereto in subsection
--------------
14.5.
"Vendor's Succeeding Entity" has the meaning ascribed thereto in
--------------------------
subsection 27.22.
"Warranty Damages" has the meaning ascribed thereto in subsection
----------------
17.4(c).
"Warranty Periods" means the collective reference to the Product
----------------
Warranty Period, the Non-Essential Equipment Warranty Period, the Services
Warranty Period and the System Warranty Period.
"Work" means all phases of this Contract, including, as required by
----
the terms of this Contract, engineering and design, procurement, manufacture,
construction and erection, installation, training, start-up (including
calibration, inspection and start-up operation), testing and start-up and
testing operation with respect to the System and/or any PCS System and/or any
part thereof to be performed by the Vendor or its Subcontractors pursuant to
this Contract. As required by the terms of this Contract, Work includes (i) all
labor, materials, equipment, services, and any other items to be used by the
Vendor or its Subcontractors in the prosecution of this Contract, wherever the
same are being engineered, designed, procured, manufactured, delivered,
constructed, installed, trained, erected, tested, started up or operated during
start-up and testing and whether the same are on or are not on any System
Element Location or any other site within the System and/or any PCS System and
(ii) all related items which would be required of a contractor of projects of
comparable size and design which are necessary for the System and/or any PCS
System and/or any part thereof to (x) operate in accordance with all Applicable
Laws and Applicable Permits, and (y) provide the operating personal
communications service systems required pursuant to this Contract. The Vendor
will be responsible for providing in accordance with the terms of this Contract
any and all additional items and services which are not expressly included by
the terms of this Contract and which are reasonably required for construction
and start-up of the System and/or any PCS System.
1.2 Other Definitional Provisions. (a) When used in this Contract,
-----------------------------
unless otherwise specified therein, all terms defined in this Contract will have
the defined meanings set forth herein. Terms defined in the Exhibits are deemed
to be terms defined herein; provided that in the case of any terms that are
-------- ----
defined both in this Contract and/or an Exhibit, the definitions contained in
this Contract will supersede such other definitions for all purposes
<PAGE>
22
of this Contract; provided further, that definitions contained in any Exhibit
-------- -------
will control as to such Exhibit.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Contract refer to this Contract as a whole and not to
any particular provision of this Contract and Section, subsection, Schedule and
Exhibit references are to this Contract unless otherwise specified.
(c) The meanings given to terms defined in this Contract are equally
applicable to both the singular and plural forms of such terms.
SECTION 2 SCOPE OF WORK, RESPONSIBILITIES AND PROJECT
MILESTONES
2.1 Scope of Work. Upon the terms and conditions herein set forth, the
-------------
Vendor will provide all Products and Services to the Owner required for the
establishment of the System including, but not limited to, the Vendor's
obligation to engineer, equip, install, build, test and service the PCS Systems
in the System Areas set forth on Schedule 4 in accordance with the
Specifications and that otherwise satisfies all conditions of Final Acceptance;
provided, that the Vendor will not be responsible for Site Acquisition (except
- - --------
to the extent certain Facilities Preparation Services, including Site Plan
Architectural Work, are required for the successful completion of Site
Acquisition), Network Interconnection or Microwave Relocation. The Vendor must
complete the Work in accordance with the Project Milestones set forth in Exhibit
A1 and as further specified herein provided that Milestone 5 (as set forth on
-------- ----
Exhibit A1) in any PCS System within the Initial System will in no event be
deemed to have occurred prior to March 31, 1996. The Vendor must furnish all
labor, materials, tools, transportation and supplies required to complete the
Work in accordance with the Specifications and the terms of this Contract.
2.2 Additional Coverage. (a) The Owner has the option from time to
-------------------
time, upon not less than thirty (30) days, written notice to the Vendor, to
designate additional geographic areas in the United States, including, but not
limited to, additional System Areas, as to which the Owner may purchase from the
Vendor some or all, as determined by the Owner in its sole discretion, of the
Products and Services required for the PCS coverage of such areas as provided
for in this Contract, all on the terms and conditions set forth in this
Contract; provided that the Parties will mutually agree in good faith on the
-------- ----
payment terms (provided that pricing will be as set forth in this Contract),
-------- ----
liquidated damages, Project Milestones and the System performance criteria
applicable to such additional coverage pursuant to this subsection 2.2(a); and
provided further that any such agreement on (i) such Project Milestones must be
- - --------- -------
based on substantially the same intervals (including, but not limited to, the
number of days specified in each such interval) as set forth in Exhibits A1 and
A2, to the extent possible, (ii) such payment terms and liquidated damages must
be based on substantially the same terms as are otherwise set forth in this
Contract, and (iii) such System performance criteria must be based on
substantially the same System performance criteria as set forth in Exhibit F, to
the extent possible. The Parties agree that this subsection 2.2(a) will be
<PAGE>
23
effective at any given time during the Term of this Contract as to the
determination of payment terms (other than pricing) and Project Milestones
applicable to the Vendor's provision of additional coverage pursuant to this
subsection 2.2(a) only if (i) the aggregate price of the Products and Services
to be provided by the Vendor at such time under this subsection 2.2(a) is at
such time at least five million dollars ($5,000,000) and (ii) the Vendor is at
such time providing Installation Services and at least one other Service
provided for under this Contract in connection with such additional coverage
provided by the Vendor at any time during the Term of this Contract pursuant to
this subsection 2.2(a). Unless otherwise mutually agreed among the Parties, the
payment terms for additional Products provided by the Vendor after Final
Acceptance of the last PCS System within the Initial System not otherwise
covered by or otherwise determined pursuant to this subsection 2.2(a) will be
subject to the terms of Section 6.
(b) The Owner has the option from time to time upon not less than thirty
(30) days' prior written notice to the Vendor and in accordance with the
applicable change order provisions of subsection 7.2 set forth herein, to
require the Vendor to increase the level of capacity or coverage of an already
allocated PCS System (whether such PCS System has been so allocated pursuant to
Schedule 4 or subsection 2.2(a), all on the terms and conditions of this
Contract.
(c) Where the Owner wishes to purchase PCS Products or Services for use
and/or application in a country outside the United States but within North
America including any territory of the United States not otherwise covered by
the definition of the "United States" as set forth herein, the Owner and the
Vendor will, in good faith, negotiate a separate agreement for such purchase
upon substantially all of the same terms as those set forth in this Contract,
with only such modifications as may reasonably be appropriate to reflect the
international nature of such transaction and to assure protection of the
Vendor's intellectual property. The PCS Product and Software prices and price
discounts set forth in this Contract will prevail in any such separate
agreement, subject only to reasonable pricing adjustments which will be in no
event ten percent (10%) higher than the prices set forth in or determined
pursuant to this Contract plus foreign import duties and taxes. Any such
agreement may, at the Vendor's option, be entered into by any of the
subsidiaries or other affiliates of the Vendor as listed on Schedule 13.
2.3 Handsets. (a) The Vendor must supply the Owner with two thousand
--------
(2,000) subscriber handsets at the prices set forth on Schedule 2 and
substantially meeting the applicable criteria set forth in Exhibit H within
sixty (60) days prior to the Substantial Completion of the Initial PCS System in
accordance with Exhibit B3; provided that the criteria set forth in Exhibit H
-------- ----
will substantially conform to the applicable specifications and/or criteria (but
which will in no event be more than what is required by Exhibit H) agreed
between the Owner and Sony/Qualcomm (the "Sony/Qualcomm Agreement") if such
agreement exists as of the date required for the delivery of handsets by the
Vendor pursuant to this subsection 2.3; provided further that in the event the
-------- -------
Sony/Qualcomm Agreement does not exist as of the date the Vendor is required to
deliver handsets pursuant to the first sentence of this subsection 2.3 the
handsets required to be delivered by the Vendor pursuant to this subsection 2.3
will substantially conform to the criteria set forth in Exhibit H, but in
<PAGE>
24
any event will work in the System and in accordance with the applicable
requirements related thereto.
(b) The Vendor must supply at the prices set forth on Schedule 2 one
hundred (100) handsets per PCS System within the Initial System, acceptable to
the Owner, and the necessary equipment related thereto for testing and operation
of each such PCS System pursuant to, and in accordance with, the terms of this
Contract, Exhibit B3 and substantially in accordance with Exhibit H to the
extent applicable; provided however, with the consent of the Owner, which
-------- -------
consent will not be unreasonably withheld, such handsets will not be required to
be in substantial compliance with the criteria set forth in Exhibit H if they
will otherwise be sufficient to test and accurately demonstrate that the PCS
System meets the Specifications. The one hundred (100) handsets required to be
delivered by the Vendor pursuant to the immediately preceding sentence will be
delivered to the Owner on or before Milestone 7 (as set forth in Exhibit A1) for
the PCS System for which such handsets are provided.
(c) Notwithstanding any other provision of this Contract, including
Section 17, the Vendor does not warrant the handsets provided hereunder, but to
the extent that the Vendor is authorized to do so by the terms of any applicable
agreement or agreements with such third party suppliers, the Vendor will assign
or otherwise transfer any warranty received from its supplier(s) of the handsets
to the Owner at no additional cost to the Owner. For the purposes of this
Contract a supplier of handsets to the Vendor will not be deemed a
Subcontractor.
2.4 Initial PCS System. Pursuant to Exhibit B3, the Vendor must achieve
------------------
Substantial Completion of the Initial PCS System in accordance with the
requirements of Exhibit B3 prior to, and as a condition of, the Substantial
Completion of any other PCS System within the Initial System. This requirement
in no way relieves the Vendor of its obligations prior to the Substantial
Completion of the Initial PCS System to continue with the Work on all of the PCS
Systems constituting the Initial System in accordance with the requirements of
this Contract and the Project Milestones applicable to each such PCS System.
2.5 System Element Verification; Test-bed Laboratory. (a) In
------------------------------------------------
accordance with Milestone 4 (as set forth on Exhibit A1) the Vendor must
successfully complete System Element Verification pursuant to the terms of this
Contract including, but not limited to, the Specifications and Exhibit B3 no
later than August 19, 1996.
(b) The Vendor will supply, at no additional cost to the Owner (except
as provided in Exhibit I), the Products and Services necessary for the
establishment of a test-bed laboratory, which laboratory will include the
Products and Services set forth on Exhibit I (the "Test-bed Laboratory"). Such
Products and Services will be subject to the applicable warranty terms of this
Contract. The Vendor will provide all relevant Software Upgrades, Software
Enhancements and Software Combined Releases applicable to the Test-bed
Laboratory. Equipment Upgrades, Equipment Enhancements and Equipment Combined
Releases will be available for the Test-bed Laboratory as provided in this
Contract. The Test-bed Laboratory will be provided by the Vendor in accordance
with Milestone 3 applicable to the Initial PCS System as set forth on Exhibit
A1, but in no event will the Vendor be required
<PAGE>
25
to provide the Test-bed Laboratory earlier than ninety (90) days after the
building site for such laboratory has been made ready by the Owner and the
Vendor has received the Owner's notice thereof, provided that such notice will
-------- ----
not be delivered to the Vendor before April 19, 1996 (the "Building Ready
Date"). The Owner expressly agrees that it will not use the Test-bed Laboratory
for In Revenue Service or any purpose other than testing without the prior
written consent of the Vendor, which consent the Vendor will not unreasonably
withhold or delay.
2.6 RF Engineering; Site Acquisition and MSC Installation. (a) In
-----------------------------------------------------
accordance with Milestone 2 as set forth on Exhibit A1, within sixty (60) days
of the Effective Date, the Vendor must deliver to the Owner the Preliminary RF
Design for each of the System Areas in accordance with the requirements and
criteria set forth in Exhibit B1 and Schedule 1; provided that the Vendor agrees
-------- ----
to (i) provide Preliminary RF Designs (as set forth above) to the Owner for each
of the Milwaukee, Denver, Salt Lake and Spokane System Areas (as set forth on
Schedule 4) within sixty (60) days of the Effective Date unless, within fourteen
(14) days from delivery of the existing RF information relating to the above
listed four (4) System Areas from the Owner to the Vendor, the Vendor, after
careful consideration determines in good faith that such information or plans
need to be redesigned so that the Vendor may achieve such Milestone 2 (as set
forth in Exhibit A1) for such four (4) System Areas in accordance with Schedule
1 and the terms of this Contract, in which case the Vendor will receive an
additional twenty-one (21) days in which to deliver such Preliminary RF Designs
for such four (4) System Areas only (in no event will such time period from the
Effective Date exceed eighty-one (81) days for such four (4) System Areas) and
(ii) provide to the Owner such a Preliminary RF Design for the Detroit System
Area (as set forth on Schedule 4) within eighty-one (81) days of the Effective
Date. The Vendor must provide the Owner with the applicable search rings for
each PCS System based upon the Preliminary RF Design within twenty (20) Business
Days of Milestone 2 (as set forth in Exhibit A1). The Owner and the Vendor
agree to cooperate with each other to complete the RF Engineering and the Site
Acquisition. The Owner must notify the Vendor of desired coverage areas, RF
Engineering parameters or other information or restrictions the Owner wishes to
be included in the Final RF Engineering Plan for each PCS System. In accordance
with Exhibit B1, the Vendor will do the RF Engineering in each of the PCS
Systems and in connection therewith will use the parameters, information and
restrictions supplied by the Owner. As part of the RF Engineering, the Vendor
will establish "search rings" in each of the PCS Systems that will specify areas
in which the Owner may proceed with Site Acquisition.
(b) In accordance with Exhibit B1 the Vendor, at its request, must be
kept informed of the progress made on ongoing Site Acquisition within the System
Areas. As the Site Acquisition progresses, the Vendor agrees to regularly alter
the RF Engineering plan to determine a new search ring or rings to take into
account any changes or modifications requested by the Owner or otherwise
requested by the Owner due to the Owner's inability to acquire sufficient rights
to a location which could constitute a System Element Location in a timely or
economic manner. When making changes to the RF Engineering plan the Vendor must
take into account the Site Acquisition already completed by the Owner.
<PAGE>
26
(c) Milestone 5 (as set forth in Exhibit A1) will be achieved in each
PCS System in accordance with this subsection 2.6(c); provided that for each PCS
-------- ----
System the appropriate MSCs have been installed by the Vendor in the Owner's
relevant Switch Sites within each such PCS System in accordance with subsection
2.6(d) below. In accordance with the Project Milestones set forth on Exhibit A1
and the requirements and criteria set forth in Exhibit B1, within five (5) days
of the Owner achieving Site Acquisition Substantial Completion within any given
System Area (the "Final RF Review Period"), the Owner and the Vendor will use
their best efforts to agree on a final System Element Location count (the "Final
Site Count") and a final RF Engineering plan (the "Final RF Engineering Plan")
for such System Area upon which the PCS System for such System Area will be
built by the Vendor. Failure of the Owner and the Vendor to reach satisfactory
agreement on a Final Site Count and/or a Final RF Engineering Plan for any given
System Area within the Final RF Review Period will automatically result in the
referral of any such disagreement to the most senior RF engineers of both the
Owner and the Vendor for their review and resolution within five (5) days after
the end of any such Final RF Review Period. If the senior RF engineers fail to
resolve any such disagreement within the extended five (5) day resolution
period, the disagreement will automatically be referred for resolution in
accordance with subsection 23.1. It is understood by the Parties that during
the period of any such disagreement and the resolution thereof in accordance
with the Contract, the Work on such PCS System, to the extent possible, will be
ongoing and that Substantial Completion on such PCS System cannot be achieved
without agreement by the Parties on a Final RF Engineering Plan and/or a Final
Site Count for such PCS System and/or System Area.
(d) The Vendor will install each of the MSCs in each of the Switch Sites
identified by the Owner in each PCS System within the System within sixty (60)
days of the Switch Site Ready Date; provided that (i) the Owner will have
-------- ----
provided the Vendor with the MSC configuration engineering information at least
one hundred (100) days prior to the Switch Site Notice Date, for each such MSC,
such that the Vendor may actually perform the Owner's MSC configuration
engineering (other than the Switch Site layout configuration), (ii) the Owner
will have provided the Vendor with the applicable Switch Site description (in
appropriate detail) at least sixty (60) days prior to the Switch Site Notice
Date and (iii) as of the Switch Site Ready Date the applicable Switch Site will
have been made ready by the Owner such that the relevant MSC can in fact be
installed by the Vendor. For the purposes hereof (i) the "Switch Site Ready
Date" means the date specified by the Owner as the date on which the Switch Site
will in fact be ready for MSC installation as communicated to the Vendor by the
Owner in the Owner's Switch Site Notice to the Vendor, (ii) the "Switch Site
Notice Date" will mean, as to any Switch Site Notice, the date on which such
notice was delivered to the Vendor by the Owner and (iii) the "Switch Site
Notice" will mean the notice provided to the Vendor by the Owner in sufficient
detail to describe the Switch Site so that the Vendor may reasonably engineer
the layout of the MSC configuration specifically for such Switch Site. Nothing
contained herein will in any way limit the Vendor's obligation pursuant to the
terms of this Contract to do the MSC engineering and the RF Engineering in
accordance with the terms of this Contract. Pursuant to this subsection 2.6(d)
in no event will the Owner provide the Vendor the Switch Site Notice more than
sixty (60) days later than the date the Owner delivers the Vendor the Build
Notice pursuant to subsection 2.7(a).
<PAGE>
27
2.7 Facilities Preparation Services and Installation. (a) For any
------------------------------------------------
given PCS System within the Initial System prior to Milestone 5 (as set forth on
Exhibit A1) for such PCS System the Owner (i) may, in its discretion, provide
notice to the Vendor when it has achieved Site Acquisition of at least fifty
(50) System Element Locations in any given PCS System or (ii) in any event, (if
the Owner hasn't already provided notice pursuant to clause (i) above) will
provide such notice to the Vendor when it has achieved Site Acquisition of at
least thirty percent (30%) of the System Element Locations in any given PCS
System (in either event, the "Build Notice"). The Build Notice calculation will
be based upon the Owner's reasonable estimate of System Element Locations within
or in connection with the Preliminary RF Design applicable to the PCS System in
which such Build Notice is issued to the Vendor. The Build Notice for each PCS
System will also include the Owner's best forecast based upon information
available at such time (the "M5 Forecast") of when it expects to be able to
declare Site Acquisition Substantial Completion within such PCS System. The
Owner understands that the Vendor will not be required to commence Facilities
Preparation Services and/or Installation in any given PCS System until and
unless it has received the applicable Build Notice pursuant to and in accordance
with this subsection 2.7.
(b) In accordance with the Project Milestones specified in Exhibit A and
the requirements and criteria of Exhibit B2, for each System Area the Vendor
must complete the Facilities Preparation Services for all System Element
Locations within such PCS System in accordance with the construction criteria
set forth in Exhibit E and the performance criteria set forth in Exhibit F no
later than ninety (90) days from the Owner/Vendor agreement on a Final Site
Count and a Final RF Engineering Plan for such System Area; provided that upon
-------- ----
the prior written request of the Vendor, the Owner may consent (which consent
will not be unreasonably withheld) to postpone Milestone 6 (as set forth in
Exhibit A1) with respect to any PCS System by not more than an additional sixty
(60) days in the event that more than ten percent (10%) of the System Element
Locations in such PCS System estimated as of the date of the Build Notice for
such PCS System have not been fully acquired by the Owner immediately prior to
the date on which Milestone 5 (as set forth in Exhibit A1) otherwise occurs in
such PCS System. Pursuant to the Project Milestones the Vendor must complete
Installation of the Products for any given PCS System within thirty-two and one
half (32-1/2) days of its completion of the Facilities Preparation Services in
accordance with Milestone 6 (as set forth on Exhibit A1) for such PCS System
pursuant to the requirements and criteria set forth in Exhibit D and Exhibit F.
2.8 Site Acquisition Modifications. In the event that the Owner
------------------------------
determines that it is unlikely to achieve Site Acquisition Substantial
Completion for any PCS System in a timely and cost-effective manner, the Vendor
will modify certain performance criteria set forth in Exhibit F with respect to
such PCS System in the manner and to the degree that the Owner reasonably
specifies in writing to the Vendor in accordance with the terms of Exhibit B3.
In the event the Owner notifies the Vendor of a modification to the System
performance criteria for such PCS System pursuant to this subsection 2.8, such
modified criteria, including any such lower number of System Element Locations
that the Owner, in its sole discretion, deems at such time to be satisfactory so
as to constitute Site Acquisition Substantial Completion, will be deemed the
performance criteria and the System Element Location count
<PAGE>
28
applicable to such PCS System for the purposes of Milestone 5 (as set forth on
Exhibit A1) and all other remaining Project Milestones for such PCS System
thereafter.
2.9 Design/System Architecture and Engineering; Interoperability. (a)
------------------------------------------------------------
The Vendor must provide all Engineering and design services necessary for the
completion of the Work and the System in conformity with the Specifications and
the CDMA standards, including, but not limited to, the Engineering and design
necessary to describe and detail the System and the specified PCS Systems.
(b) Pursuant to and in accordance with the terms of Exhibits B3 and G,
BTS/BSC-MSC Interoperability must be demonstrated on or before December 1, 1996
(provided that such date will change to reflect the actual delay beyond December
-------- ----
31, 1995 in the finalization of "Attachment A" to be attached to Exhibit G);
provided that in any event the requirements of this subsection 2.9(b) are a
- - -------- ----
condition to the Vendor's Substantial Completion of the last PCS System within
the Initial System and Substantial Completion of such last PCS System will not
be deemed to have been achieved by the Vendor unless and until such
Interoperability will have been demonstrated in accordance with the criteria set
forth in Exhibit G; provided further that any delay in such Interoperability
-------- -------
which is not due substantially to the fault of the Vendor, in the reasonable
opinion of the Owner, will not be a delay pursuant to the terms of this
subsection 2.9(b).
2.10 Certification. The Vendor must coordinate its performance of the
-------------
Services described in subsection 2.9 with the Engineering and design efforts
(including, without limitation, any and all RF Engineering and/or Site
Acquisition) of all Subcontractors, the Owner, the Other Vendors, any and all
supply and transportation requirements and all federal, state and local
authorities or agencies. The Vendor will be fully knowledgeable about and will,
after reasonable review thereof, accept all Engineering, including, without
limitation, RF Engineering and design, irrespective of whether the Vendor, the
Other Vendors, the Owner or third parties such as the Subcontractors may furnish
such services. All Engineering requiring certification must be certified by
professional engineers licensed or properly qualified to perform such
Engineering services in all appropriate jurisdictions if such certification is,
in the Owner's opinion, appropriate and reasonable under the circumstances.
This subsection 2.10 will not modify or restrict the Vendor's obligation and/or
right to provide the Services contracted for pursuant to the terms of this
Contract.
2.11 Notice of Developments. 2.11.1 Vendor Developments. The Vendor
---------------------- -------------------
must provide the Owner, through the NDAB or the Owner's vice president and/or
director of product development, with reasonable prior notice of any PCS Product
developments, innovations and/or technological advances (collectively "Vendor
Developments") relevant to the System prior to giving such notice to any other
Customer or otherwise making any such Vendor Development public within the
relevant marketplace; provided that the Vendor will not be obligated to provide
-------- ----
the Owner such notice before any other Customer if doing so would not be
reasonable under the circumstances and/or otherwise breach any contractual
obligation to any other Customer; provided further that any such notice pursuant
-------- -------
to this subsection 2.11.1 need not include any information originated by another
Customer which is
<PAGE>
29
proprietary to such other Customer of the Vendor. For the purposes of this
subsection 2.11.1 the term "Vendor" includes the Vendor and its affiliates and
subsidiaries.
2.11.2 Participation in Testing. The Owner has the right, but not the
------------------------
obligation, to witness and/or participate in any initial testing and/or
application of any such Vendor Development (other than a Vendor Development
originated by another Customer which includes information which is proprietary
to such other Customer); provided that any such initial testing of Vendor
-------- ----
Developments will be subject to (i) scheduling as reasonably determined by the
Vendor, (ii) the qualification that the Owner's PCS System meets the technical
requirements for the testing of such Vendor Development as reasonably determined
by the Vendor (or otherwise that the Owner is willing to update such PCS System
to meet such requirements), (iii) the Owner's acknowledgement that it will be
able to provide the resources necessary to implement the initial testing for
such Vendor Development, and (iv) the Owner and the Vendor executing a
verification office testing agreement that identifies the scope, terms, pricing,
responsibilities and schedule related to the initial testing of such Vendor
Development. The Vendor must provide the Owner at least thirty (30) days' prior
notice of its intent to test any such Vendor Development and upon the Owner's
written request the Vendor will allow the Owner to participate in such testing
upon terms and in a testing environment reasonably acceptable to the Parties at
such time. The Owner will make its Test-bed Laboratory and/or certain of its
PCS Systems (following Final Acceptance thereof) available to the Vendor for any
such testing in which the Owner has the right, and will have notified the Vendor
of its desire, to participate in pursuant to the terms of this subsection
2.11.2. Where the Vendor and the Owner have agreed that the Owner's Test-bed
Laboratory or PCS System will be used as a test bed for Vendor Developments, the
Owner will not unreasonably withhold the Vendor's requests for other Customers
to observe the tests or to release results of the tests to other Customers;
provided that the Owner will have had reasonable prior notice that the Vendor
- - -------- ----
would like to have other Customers observe such testing and that the Vendor will
remain liable in all respects pursuant to the terms of this Contract for the
protection of Proprietary Information in connection with any such testing. The
length of the prior notice period described above may be shortened to under
thirty (30) days if necessary and appropriate under the circumstances, but in no
event will any such prior notice period be less than ten (10) days.
2.12 Safety. To the extent the Vendor is in control of any System
------
Element Location, or other site within the System or any System Area during the
term of this Contract (a "Vendor-Controlled Location") including, but not
limited to, during the build-out of the Initial System, the Vendor will be
solely responsible for initiating, maintaining, and supervising all safety
precautions and programs in connection with all such Vendor-Controlled
Locations. The Vendor must materially comply with Applicable Laws and
Applicable Permits and the Specifications bearing on safety of persons or
property or protection against injury, damages or loss. The Vendor must provide
a written report to the Owner describing fully all incidents affecting safety on
any Vendor-Controlled Location and must also furnish to the Owner copies of all
MSHA, OSHA and workers' compensation reports. The Vendor acknowledges and
agrees that until Bolt-down of all of the PCS Products to be provided by the
Vendor pursuant to the terms of this Contract on any given System Element
Location (other than the Switch Site or the Test-bed Laboratory) within any
given PCS System is
<PAGE>
30
achieved the Vendor will be deemed to be in control of all Products, tools,
designs, buildings, structures and/or Engineering (other than those Products,
tools, designs, buildings, structures and/or Engineering specific to and
necessary for Site Acquisition, Network Interconnection and/or Microwave
Relocation) at, in or upon any such System Element Location within such PCS
System; provided that in any event for each such System Element Location the
-------- ----
Vendor will always be deemed to be in control of such System Element Location
until the Facilities Preparation Services for such System Element Location have
been completed in accordance with Exhibit B2.
2.13 Emergencies. In the event of any emergency at a Vendor-Controlled
-----------
Location endangering life or property, the Vendor must take such action as may
be reasonable and necessary to prevent, avoid or mitigate injury, damage or loss
and will, as soon as possible, report any such incidents, including the Vendor's
response thereto, to the Owner. Whenever, in the reasonable opinion of the
Owner, the Vendor has failed to take sufficient precautions for the safety of
the public or the protection of the Work or of structures or property on or
adjacent to any Vendor-Controlled Location, creating, in the reasonable opinion
of the Owner, an emergency requiring immediate action, then the Owner, after
having given reasonable prior notice to the Vendor, may cause such sufficient
precautions to be taken or itself provide such protection. The taking or
provision of any such precautions or protection by the Owner or its agents or
representatives will be for the account of the Vendor and the Vendor must
reimburse the Owner for the cost thereof.
2.14 Right of Inspection. The Owner, the parties providing financing in
-------------------
connection with the build-out of the Nationwide Network or their duly appointed
representatives, including Inspectors (collectively "Reviewers"), will at all
reasonable times have access to the various sites where the Vendor or its
Subcontractors are prosecuting the Engineering, design, procurement, testing or
manufacture of the Work; provided that this subsection 2.14 will not be presumed
-------- ----
to give access to the Vendor's or its Subcontractors' sites to direct
competitors of the Vendor provided that such sites are not otherwise Owner
sites. For these purposes, reasonable access will be given during normal
business hours to the Vendor's and its Subcontractors' plants, premises, storage
and deposit areas, facilities and offices, sources of materials, Equipment being
assembled, already assembled or in operation, Equipment being performance tested
or tested to the Vendor's specifications and to any other places or areas
occupied by the Vendor or its Subcontractors in connection with the Work.
Notwithstanding anything herein to the contrary, any Reviewer's right of access
to the Vendor's and/or the Subcontractors' plants, premises, storage and deposit
areas, facilities and offices, sources of materials, Equipment being assembled,
already assembled or in operation, Equipment being performance tested or tested
to the Vendor's specifications and to any other places or areas occupied by the
Vendor or its Subcontractors in connection with the Work will be subject to the
reasonable confidentiality, safety and security requirements of same and further
subject to such Reviewers' non-interference with the Work and other work being
performed thereon. The Vendor must provide reasonable temporary office space
(in the Vendor's facilities where such space is available) and services for the
Reviewers to the extent necessary.
<PAGE>
31
2.15 Transportation. The Vendor must provide for the transport and
--------------
delivery of all the Products to be delivered pursuant to, and in accordance
with, the terms of this Contract. The costs for such transportation will be
borne by the Vendor as part of the Contract Price; provided that the Owner will
-------- ----
reimburse the Vendor for any costs incurred by the Vendor for any Extraordinary
Transportation in such cases where the Vendor, subject to prior notice to the
Owner, found it actually necessary to utilize such Extraordinary Transportation;
provided, further that any amounts due to the Vendor from the Owner pursuant to
- - -------- -------
the first proviso of this subsection 2.15 will be reduced by the amount of non-
extraordinary transportation costs which otherwise would have been applicable to
the transport of such Products.
2.16 Security. Subject to subsection 2.12, during the course of the
--------
Work, the Vendor will perform the security services necessary to ensure the
safety and security of the System Element Locations, the Products and/or other
materials or designs relevant to the Work.
2.17 Materials and Equipment. Except for materials or Equipment to be
-----------------------
supplied by Subcontractors identified on part B of Schedule 7, whenever
materials or Equipment are specified or described in this Contract (including
the Specifications) by using the name of a proprietary item or the name of a
particular supplier, the naming of the item is intended to establish the type,
function and quality required, and substitute materials or Equipment may
nonetheless be used, provided that such materials or Equipment are equivalent or
equal to that named. If the Vendor wishes to furnish or use a substitute item
of material or Equipment, the Vendor must first certify that the proposed
substitute will perform at least as well the functions and achieve the results
called for by this Contract, will be substantially similar or of equal substance
to that specified and be suited for the same use as that specified. The Owner
may require the Vendor to furnish, at the Vendor's expense, additional data
about the proposed substitute as required to evaluate the substitution. For
Major Portions of the Work, or materials or Equipment listed on part B of
Schedule 7, the Vendor must first receive prior written approval of the Owner
for any substitution. The Owner will be allowed a reasonable time within which
to evaluate each proposed substitute. Notwithstanding the foregoing, with
respect to PCS Products, prior to the shipment of such PCS Products pursuant to
the terms of this Contract, the Vendor may at any time without notice to or
consent of the Owner make changes in a Vendor PCS Product furnished pursuant to
this Contract, or modify the drawings and published specifications relating
thereto, or substitute Products of similar or later design to fulfill its
obligations under this Contract or otherwise fill an order, provided that the
--------
changes, modifications or substitutions will in no way affect or otherwise
impact upon the form, fit, or function of an ordered Product pursuant to and in
accordance with the applicable Specifications. With respect to changes,
modifications and substitutions which do in fact affect the form, fit, or
function of an ordered Product pursuant to and in accordance with the
Specifications, the Vendor must notify the Owner in writing at least thirty (30)
days prior to the effective dates of any such changes, modifications or
substitutions. In the event that any such change, modification or substitution
is not desired by the Owner, the Owner will notify the Vendor within thirty (30)
days from the date of notice and the Vendor will not furnish any such changed
Products to the Owner on any orders in process at the time the Owner is so
notified; provided that nothing contained herein will otherwise modify the
-------- ----
Vendor's obligations under the terms of this Contract.
<PAGE>
32
2.18 Equipment and Data. The Vendor must furnish all drawings,
------------------
specifications, specific design data, preliminary arrangements and outline
drawings of the Equipment and all other information as required in accordance
with this Contract in sufficient detail to indicate that the Equipment and
fabricated materials to be supplied under this Contract comply with the
Specifications.
2.19 References to Certain Sources. Reference to standard
-----------------------------
specifications, manuals or codes of any technical society, organization or
association or to the laws or regulations of any Governmental Entity, whether
such reference is specific or by implication, by this Contract, means the latest
standard specification, manual, code, laws or regulations in effect at the time
of such reference, except as may be otherwise specifically agreed to by the
Owner. However, no provision of any reference, standard, specification, manual
or code (whether or not specifically incorporated by reference in this Contract)
will be effective to change the duties and responsibilities of the Owner, the
Vendor, the Subcontractors or any of their consultants, agents or employees from
those set forth in this Contract; provided that nothing contained in this
-------- ----
Contract will require the Vendor to violate then existing and enforceable
Applicable Laws.
2.20 Operating Manuals. The Vendor will provide the Owner Operating
-----------------
Manuals in accordance with this subsection 2.20 as soon as they are reasonably
available but in no event less than thirty (30) days prior to Substantial
Completion of the Initial PCS System, the Vendor will provide the Owner with as
many sets of the Operating Manuals for the entire System as the Owner then
reasonably requires. The Operating Manuals will be prepared in accordance with
the relevant Specifications and in sufficient detail to accurately represent the
System and all of its component System Elements as constructed and will
recommend procedures for operation. Operating Manuals with up to date (but not
"as-built") drawings, specifications and design sheets will be available for the
Training as set forth in subsection 2.23. All other Technical Documentation not
already delivered to the Owner pursuant to the terms of the Contract must be
delivered to the Owner within ten (10) days after the successful achievement of
all Final Acceptance tests in accordance with Exhibit B3. The Owner will not be
required to deliver the Final Acceptance Certificate until all such Technical
Documentation has been so delivered (and Final Acceptance will not be deemed to
have occurred earlier than the date that is ten (10) days prior to the date of
delivery of such Technical Documentation).
2.21 Maintenance and Instruction Manuals. The Vendor will provide the
-----------------------------------
Owner Maintenance and Instruction Manuals in accordance with this subsection
2.21 as soon as they are reasonably available but in no event less than thirty
(30) days prior to Substantial Completion of the Initial PCS System, the Vendor
must provide the Owner with as many sets of the Maintenance and Instruction
Manuals for the entire System as the Owner then reasonably requires. The
Maintenance and Instruction Manuals will be prepared in accordance with the
Specifications and in sufficient detail to accurately represent the System and
all of its component System Elements as constructed and will set forth
procedures for inspection and maintenance. Maintenance and Instruction Manuals
with up to date (but not "as-built") drawings, specifications and design sheets
will be available for the Training set forth in subsection 223. The
Maintenance and Instruction Manuals must include the volumes compiled by the
Vendor containing all as-built Subcontractor furnished product data.
<PAGE>
33
2.22 Standards for Manuals. All Operating Manuals and Maintenance and
---------------------
Instruction Manuals required to be provided by the Vendor pursuant to this
Contract must be:
(a) detailed and comprehensive and prepared in conformance with the
System Standards and generally accepted national standards of professional care,
skill, diligence and competence applicable to telecommunications and operation
practices for facilities similar to the System;
(b) consistent with good quality industry operating practices for
operating personal communications service systems of similar size, type and
design;
(c) sufficient to enable the Owner to operate and maintain each PCS
System in each of the specified System Areas and the System as a whole on a
continuous basis; and
(d) prepared subject to the foregoing standards with the goal of
achieving operation of the System at the capacity, efficiency, reliability,
safety and maintainability levels contemplated by this Contract and the
Specifications and required by all Applicable Laws and Applicable Permits.
In addition to, and without limiting the requirements set forth in the
preceding sentence, the Operating Manuals and the Maintenance and Instruction
Manuals will be submitted to the Owner in CD-ROM format (as soon as such format
is available provided that such availability will be no later than December
1996) in addition to hard-copy volume format if so requested by the Owner. In
addition to any of the Owner's other rights and remedies, the Owner will have
the right to reject the Operating Manual and the Maintenance and Instruction
Manuals if in its reasonable judgment any of the foregoing does not meet the
standards set forth in this Contract.
2.23 Training. As more fully described below, starting at least one
--------
hundred and eighty (180) days prior to Substantial Completion of the Initial PCS
System, the Vendor must provide to the Owner a practical and participatory and,
where feasible, on-site training program with respect to the System, which
program will include technical education (collectively, the "Training"). The
Vendor will provide, upon the Owner's prior written request and at the time or
times mutually agreed in good faith by the Owner during the Initial Term of this
Contract, not less than a minimum of twelve thousand fifty (12,050) man days of
Training and Training materials for the Owner's personnel, at no cost to the
Owner. The Owner will be responsible for the travel and living expenses of
personnel receiving Training. Such Training must be kept current to encompass
the latest Software and Equipment, or any other Software Revision Level and/or
Equipment Revision Level directed by the Owner pursuant to the terms of this
Contract. Subject to the foregoing, Training course size, content and material
will be designed and agreed to by mutual consent between the Parties. The
Vendor will conduct classes for the subjects described below:
(a) Operations, maintenance and provisioning ("OM&P") Training will
include System Training to technical personnel presumed not qualified or trained
specifically on operating a PCS System or the Equipment and/or Software included
therein. The subject
<PAGE>
34
matter will include (i) a general overview of PCS/CDMA technology and the
System, (ii) a System overview of the Equipment, Software initiation and
configuration requirements, required interconnections, troubleshooting and
testing requirements, recovery from System failures, and (iii) any other
information necessary to successfully operate, maintain, or set up the Equipment
and the Software to work in accordance with the System Element performance
criteria set forth in Exhibit D, in each case so that each PCS System
successfully operates in accordance with the performance criteria set forth in
Exhibit F within its System Area;
(b) The Vendor must provide PCS/CDMA qualified technical staff and
material to train the Owner's personnel so as to enable them to train other
personnel of the Owner (i.e., train the trainers) on the subject matter topics
----
listed below. The Owner's personnel trained by the Vendor will be evaluated and
certified by the Vendor upon successful completion of the course as competent to
train other personnel of the Owner. Such content and materials may be tailored
or customized by the Owner for internal use only and include, without
limitation, Training with respect to the following topics:
(i) System Element configuration;
(ii) Communication interfaces and protocols;
(iii) Software operating system (current to the latest Software
Revision Level);
(iv) Database configuration, structure and content;
(v) Database down loading;
(vi) Program function;
(vii) Troubleshooting procedures; and
(viii) Other subject matter which is necessary or desirable to
understand the operation of the System and maintenance of the
System as well as any enhancements as they are added to the
System and/or any part thereof.
(c) Except for certain plug-in modules and certain Software delivered
under this Contract, the Vendor does not provide, nor does this Contract require
that the Vendor provide, Training, training manuals, Operating manuals or
Maintenance and Instruction Manuals intended to make the Owner proficient in
Installation of any of the Products furnished under this Contract. In the event
that the Vendor should elect to provide training, documentation and/or test
equipment to facilitate self-installation of the Products by a Customer
purchasing PCS Products from the Vendor, the Vendor agrees to make such items
available to the Owner under the Vendor's standard terms and conditions for such
offering as they may exist from time to time subject to the Vendor's obligations
under Section 26; and
<PAGE>
35
(d) Promptly upon execution of this Contract, the Vendor will establish
a training coordinator, whose responsibility will be to work with the Owner to
ensure that the Owner receives the Training set forth above. Such coordinator
(or his or her replacement) will continue in such assignment until the earlier
of (i) the Final Acceptance of the last PCS System within the Initial System, or
(ii) receipt by the Owner of all of the Training required to be provided at no
cost under this subsection 2.23.
2.24 Manuals and Training. The training and the documentation provided
--------------------
in connection herewith, including, without limitation, all documentation
provided in CD-ROM format, and pursuant to subsections 2.20, 2.21 and 2.23 will
be updated pursuant to and in accordance with all Product upgrades and/or
modifications applicable to the System, any PCS System and/or any part thereof.
2.25 Spare Parts. (a) Prior to the Substantial Completion of the
-----------
Initial PCS System the Vendor and the Owner will agree, pursuant to and in
accordance with the terms of this subsection 2.25, as to the type, quantity and
storage location of the spare parts required to continually operate the Initial
System as intended and in accordance with the Specifications. For a period of
two (2) years following Final Acceptance of each PCS System, the Vendor will, if
requested by the Owner, provide such spare parts at its own expense. Following
the expiration of such two (2) year period, the Vendor will provide such spare
parts pursuant to Schedule 12A and at the prices set forth on Schedule 12B.
After the expiration of such two (2) year period invoices for such System spare
parts will be issued directly to the Owner and will be paid for directly by the
Owner in accordance with the invoice and payment terms of this Contract. Any
PCS spare parts applicable to the System utilized or withdrawn from any PCS
System during such two (2) year period will be promptly replaced by the Vendor
at its own cost. With respect to such spare parts provided at the Vendor's
expense, the Owner expressly agrees that (i) the Owner will not utilize such
spare parts for increasing the performance or capacity of the PCS Systems for
which they were provided or otherwise expanding such PCS Systems or any other
PCS systems, (ii) until any such spare part is drawn from storage and utilized
as a replacement in a PCS System or until the Owner pays for such spare part,
title to such spare part will remain with the Vendor, (iii) risk of loss of or
damage to such a spare part will be with the Owner from the time of delivery to
the Owner, and (iv) the Owner will, at its expense, return to the Vendor any
Item replaced by a spare part delivered to the Owner pursuant to the terms of
this subsection 2.25.
(b) The Owner has the right to withhold from its final payment to the
Vendor with respect to any PCS System an amount equal to the Owner's reasonably
estimated cost of any utilized spare parts for such PCS System not so replaced
prior to Final Acceptance; provided that such withheld funds will be released
-------- ----
upon such satisfactory replacement of such spare parts by the Vendor.
(c) To the extent that System PCS spare parts need to be acquired from
third party suppliers, the Vendor will use its reasonable efforts to obtain from
suppliers a supply of System spare parts at no additional cost as part of the
original Product package. To the extent that the Vendor is able to so obtain
such System spare parts at no additional cost as
<PAGE>
36
part of the original Product package, it will provide such System spare parts to
the Owner without cost (and without any charge for the procurement of such spare
parts by the Vendor).
2.26 System Support Services. The Vendor will provide the specified
-----------------------
support services for the operation, maintenance and repair of the System and all
Products to the extent set forth herein below and at the Annual Release
Maintenance Fees.
2.26.1 Vendor Assistance. (a) Upon receipt of a request for technical
-----------------
assistance from the Owner, the nature of the problem will be identified by the
Owner, and a priority assigned by the Owner (upon discussion with the Vendor
which in no event will require the agreement and/or consent of the Vendor) as
either an emergency or non-emergency condition and resolution thereof will be
expedited in accordance with the severity levels set forth below.
(b) Following attempted corrective actions by the Owner in accordance
with applicable Maintenance and Instruction Manuals provided by the Vendor, when
the Vendor is notified by the Owner that the System, any PCS System or any part
thereof fails to operate in accordance with the Specifications, the Vendor will
promptly commence and diligently pursue all reasonable efforts to identify the
Defect or Deficiency and, in the event the Vendor has responsibility therefor,
to correct such Defect or Deficiency.
(c) The Vendor's correction of such Defects or Deficiencies in the
System, any PCS System or any part thereof may take the form of new software
codes, new or supplementary operating instructions or procedures, modifications
of the software codes in the Owner's possession, or any other commonly used
method for correcting Defects or Deficiencies in Software, as the Owner and the
Vendor deem appropriate.
(d) When appropriate, the Vendor will provide non-emergency technical
support to the Owner via telephone, facsimile transmission, modem, or other
means acceptable to the Owner during the Owner's normal business hours.
(e) The Vendor will provide emergency technical assistance to the Owner
via an ETA telephone number designated to the Owner in advance by the Vendor,
twenty-four (24) hours per day, three hundred sixty-five (365) days per year.
(f) The Vendor will provide remote intervention and assistance
capability to the Owner for remotely accessing operating System Elements. Upon
mutual agreement between the Parties, the Vendor may remotely access operating
System Elements for the purpose of ETA.
2.26.2 Trouble Reports. From time to time, failures in, or degradation
---------------
of, Products may cause services provided by the System to be adversely affected.
It is necessary that immediate assistance be provided by the Vendor to allow the
Owner to restore the affected service. Critical service outages that cannot be
resolved by the Owner's field technicians or technical support engineers using
procedures described in the Operating Manuals, Maintenance and Instruction
Manuals and Training will be transmitted to the Vendor as a Trouble Report
("TR"). The Vendor will assign an identifying number to each TR to aid in
<PAGE>
37
tracking its resolution. TRs will be immediately addressed by the Vendor
through Emergency Technical Assistance under guidelines set forth in subsection
2.26.3. TRs may not be considered concluded until the solution is concurred
upon by an employee of the Owner within the Owner's operations control center
("OCC"). The root cause of problems resulting in TRs may be Defects or
Deficiencies which must be corrected through Product or procedure changes.
Problems with the System requiring such changes will be referred to the Vendor
for action through a Customer Service Request ("CSR"). The Vendor is authorized
by the Owner to install and integrate, at the Vendor's expense, any Software
Upgrade or Software Enhancement pursuant to mutual agreements reached between
the Vendor and the Owner.
2.26.3 Emergency Technical Assistance ("ETA"). (a) When a problem is
--------------------------------------
encountered that adversely affects service or performance with respect to the
Products, any PCS System, the System or any part thereof, in each case provided
by the Vendor, an Owner maintenance technician will attempt to repair or replace
any malfunctioning Product adversely affecting such service or performance using
the procedures recommended in the Maintenance and Instruction Manuals or the
Operating Manuals. If unsuccessful, a technical representative of the Owner
will consult the Vendor's designated ETA group at the telephone number provided
by the Vendor in subsection 2.26.3(c) below. Following receipt of notification
by the ETA group, the ETA group will utilize all available technical resources
and will ensure that a qualified technical engineer is communicating with the
Owner's personnel regarding the problem on average within fifteen (15) minutes
of any such notification; provided that no single response will exceed thirty
-------- ----
(30) minutes. If necessary and appropriate the Owner's technician will be
dispatched to assist in the normal change-out of replaceable hardware units.
(b) A problem adversely affecting service that has a severity level
defined below either as an "E1 Emergency Condition" or an "E2 Emergency
Condition" is to be addressed under the ETA procedures set forth below in this
subsection 2.26.3 and in subsection 2.26.4.
(i) An E1 Emergency Condition (this roughly corresponds to a
Critical Condition in the Vendor's ISO 9001 documentation) means a
problem resulting from any one or more of the following events:
. [ ]
. [ ]
. [ ]
. [ ]
<PAGE>
38
. [ ]
. [ ]
. [ ]
The Vendor must clear all E1 Emergency Conditions within twelve
(12) hours of notification of their occurrence. Work must continue
without any cessation until the defect causing the E1 Emergency
Condition is solved or the severity thereof is reduced to a "P1
Major Condition", as defined below, or less.
(ii) An E2 Emergency Condition (this roughly corresponds to
Severity 1 Conditions in the Vendor's ISO 9001 documentation) means
a problem resulting from any one or more of the following events:
. [ ]
. [ ]
. [ ]
. [ ]
. [ ]
. [ ]
. [ ]
. [ ]
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.
<PAGE>
39
(c) In the event that an E1 Emergency Condition or an E2 Emergency
Condition should remain unresolved following referral to the Vendor by the
Owner, the problem causing such condition must be reported to the levels of
management set forth below (with comparable titles, if different) to ensure all
available resources necessary to address the problem will be committed in
accordance with the following:
The following are the reporting levels if an E1 Emergency Condition or
an E2 Emergency Condition is not resolved within the time periods set forth
below as amended from time to time with the reasonable acceptance of the Owner
following referral thereof to the Vendor by the Owner:
<TABLE>
<CAPTION>
Vendor Contact Vendor Contact Name Telephone Number
------------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
One hour - Technical Assistance Mgr. to be designated to be designated
Two hours - Customer Service Director to be designated to be designated
Three hours - Customer Service AVP R.B. Andrews (708) 713-1500
Four hours - Vice President R.G. Garriques to be designated
</TABLE>
(d) If the Owner reasonably determines that the Vendor has not provided
sufficient ETA to resolve any E1 Emergency Condition or E2 Emergency Condition
on a timely basis, the Owner will be entitled to withhold all payments with
respect to the affected PCS System then due or outstanding prior to the date of
such determination until such time as adequate ETA is provided to the Owner to
resolve such Emergency Condition.
(e) If an E1 Emergency Condition or an E2 Emergency Condition exists in a
PCS System prior to Final Acceptance of such PCS System, the Vendor will use all
reasonable efforts to deliver to the Owner each Software Upgrade and each
Equipment Upgrade developed by or on behalf of the Vendor to resolve any E1
Emergency Condition or E2 Emergency Condition within forty-eight (48) hours
following completion of development of such Software Upgrades or availability of
such Equipment Upgrades.
(f) The term Non-Emergency Services includes providing to the Owner any
requested technical assistance and support, remote monitoring and outage review
consultation and the handling of CSRs.
(g) Technical assistance and support must be provided for the purpose of
resolving non-emergency problems defined below as "P1 Major Condition", "P2
Significant Problem" and "P3 Minor Problem" which are reported to the Vendor.
(i) P1 Major Condition (this roughly corresponds to
Severity 1 Conditions in the Vendor's ISO 9001 documentation)
means any non-emergency failure of specific features or functions
of the System, any PCS System or any Product that restricts its
operations, but does not render the System, any PCS System or any
Product inoperable, impact traffic capacity or coverage or
require significant manual intervention for the System, any PCS
System or any Product to operate properly and in
<PAGE>
40
accordance with its applicable Specifications. These events will
include loss of diagnostic capabilities and loss of reporting
functions. The Vendor will use all reasonable efforts to use by-
pass or work-around procedures to alleviate such P1 Major
Condition until it is corrected and, upon mutual agreement of the
Parties, the Vendor will resolve such P1 Major Condition during
the next available scheduled Software Upgrade or Equipment
Upgrade.
(ii) P2 Significant Problem (this roughly corresponds
to Severity 2 Conditions in the Vendor's ISO 9001 documentation)
means any non-emergency, intermittently occurring problem related
to specific primary functions or features or any inoperable
secondary functions that do not have a significant adverse effect
on the overall performance of the System, any PCS System or any
Product. The Vendor will undertake appropriate and reasonable
efforts to correct such P2 Significant Problem.
(iii) P3 Minor Problem (this roughly corresponds to
Severity 3 Conditions in the Vendor's ISO 9001 documentation)
means any non-emergency problem that does not affect the
performance or functions of the System, any PCS System or any
Product, and, despite such problem, the System, any PCS System or
any Product is fully operable without restrictions. Such P3 Minor
Problems may include documentation inaccuracies, cosmetics, minor
requests for changes or maintenance requests. The Vendor will
undertake appropriate and reasonable efforts to correct such P3
Minor Problem.
(h) Should a non-emergency problem remain unresolved for the period or
periods of time set forth below following referral to the Vendor by the Owner,
such problem must be reported to the levels of management set forth below to
ensure all available resources necessary to correct such problem will be
committed to address such problem pursuant to the following:
- - ------------------------------------------------------------------------------
REPORTING LEVELS IF NON-EMERGENCY
IS NOT RESOLVED WITHIN
CONDITION 30 DAYS 45 DAYS 60 DAYS
- - ------------------------------------------------------------------------------
P1 Technical Manager Customer Service Vice President
Major Condition Director
P2 Technical Manager Customer Service
Significant Problem Director
P3 Technical Manager
Minor Problem
- - ------------------------------------------------------------------------------
<PAGE>
41
Non-emergency problems referred to the Vendor as a CSR will be resolved
based upon the priority assigned to them as determined by the Owner or as
mutually agreed by the Parties and, to the extent reasonably possible, will be
incorporated into the next scheduled Software release.
2.26.4 ETA and CSR. In the event that emergency technical support
-----------
provided from the Vendor's technical support center is not sufficient to resolve
an E1 Emergency Condition, the Vendor must send a technically qualified person
or persons to the site of such emergency condition or problem to assist the
Owner's employees in solving such condition or problem. The Vendor's
technically qualified person or persons must be on-site as soon as possible, but
in no event more than twenty-four (24) hours after notification to the Vendor by
the Owner, or at such later time as may be mutually agreed on by the Parties.
In the event that emergency technical support provided from the Vendor's
technical support center is not sufficient to resolve an E2 Emergency Condition,
then the Parties will mutually agree to a desired course of action, which may
include requiring the Vendor to send a technically qualified person or persons
to the site of such emergency.
A CSR may be submitted by the Owner to request a repair or work-around of
an emergency condition or repair of a non-emergency problem, or to request a
Software Upgrade or an Equipment Upgrade or other Software or Equipment
operational enhancement. The Owner's CSRs will define the condition or problem
and state whether the Owner considers the CSR to be for a Software Upgrade or an
Equipment Upgrade or other Software or Equipment operational enhancement.
Changes to the System or any PCS System resulting from any CSR must be fully
tested and accepted in accordance with the Specifications. The Vendor must
respond to the submission of a CSR by the Owner within five (5) Business Days,
acknowledging receipt of the CSR. Within thirty (30) days of receipt of the
CSR, the Vendor will respond to the CSR summarizing the Vendor's intended
actions to handle the CSR. A CSR may result in System fixes or enhancements, or
in Product modifications reasonably acceptable to the Owner.
Notwithstanding the above, no event, lack of functionality or failure of
the Test-bed Laboratory will be assigned as an E1 Emergency Condition or E2
Emergency Condition. Any such event, lack of functionality or failure
applicable to the Test-bed Laboratory, which would otherwise be assigned such a
category in accordance with the definitions above, will be assigned a P1 Major
Condition.
2.27 Supply of Additional Products. During the Initial Term of this
-----------------------------
Contract and for a period of three (3) years thereafter, the Vendor will make
available for purchase by the Owner, on applicable terms and conditions set
forth in this Contract or as otherwise mutually agreed between the Parties, PCS
Products to enable the Owner to expand the System and/or any PCS System and/or
any part thereof, which Products will provide equivalent functionality for and
will be compatible with the System or any such PCS System at such time. Nothing
herein will be deemed to prohibit the Vendor from designating any specific PCS
Products as Discontinued Products in accordance with Section 10 of this
Contract.
<PAGE>
42
2.28 Review of Contract. The Vendor has examined in detail and carefully
------------------
studied and compared the Contract with all other information furnished by the
Owner and has promptly reported to the Owner any material errors,
inconsistencies or omissions so discovered or discovered by any of the
Subcontractors. The Vendor will not prosecute any Major Portion of the Work
knowing that it involves a material error, inconsistency or omission in the
Contract without prior written notice to and approval by the Owner. If for any
reason the Vendor violates this subsection 2.28, the Vendor will, in addition to
being subject to any other remedies of the Owner, assume responsibility for such
violation and, in such case, will be deemed to have waived any claims for an
adjustment in any of the Specifications and/or System Standards which results
directly from any such error, inconsistency or omission. This subsection 2.28
does not, nor will be deemed to, in any manner limit the terms of subsection
2.39.
2.29 Licenses, Permits and Approvals. Except as otherwise provided for
-------------------------------
herein with respect to Site Acquisition, Microwave Relocation and Network
Interconnection, any Applicable Permits (in connection with the Vendor's Work)
required by any Government Entity relating to the manufacture, importation,
safety or use of the Products, the System or any PCS System throughout the
United States or in any state or any political sub-division thereof will be the
sole responsibility of the Vendor. Prior to the commencement of any Work and/or
other activities by the Vendor or any of its Subcontractors in connection with
or pursuant to this Contract, upon request of the Owner the Vendor will furnish
the Owner with evidence that such Applicable Permits have been obtained and are
in full force and effect to the extent that Applicable Permits are necessary for
the commencement or undertaking of such activities, and from time to time
thereafter the Vendor, upon the reasonable request of the Owner, will provide
such further evidence as the Owner will deem reasonably necessary.
2.30 Eligibility under Applicable Laws and Applicable Permits. The Vendor
--------------------------------------------------------
will be responsible for ensuring that the Vendor and its Subcontractors are and
remain eligible under all Applicable Laws and Applicable Permits to perform the
Work under this Contract in the various jurisdictions involved.
2.31 Customs Approvals. The Owner agrees to reasonably assist, so long as
-----------------
such assistance will not involve the incurrence of any costs or expenses by the
Owner, the Vendor to obtain and maintain (i) Applicable Permits for importation
into the Products on a duty and customs free basis and (ii) entry or work
permits, visas or authorizations required for personnel engaged by the Vendor to
perform Work under this Contract.
2.32 Owner Participation. In addition to the right of observation
-------------------
contained in subsection 9.4 hereof, the Owner will be entitled to participate in
the Vendor's research and development activities (subject to the reasonable
acceptance of the Vendor) and product development and testing activities
pursuant to this Contract (other than research and development activities
originated by another Customer which is proprietary to such other Customer);
provided that such observation and participation will not affect the Vendor's
- - --------
responsibilities and warranties hereunder and will not otherwise interfere with
the Vendor's research and development activities. Nothing contained in this
subsection 2.32 purports to grant the Owner rights to the Vendor's research and
development other than such rights
<PAGE>
43
otherwise granted to the Owner pursuant to the terms of this Contract or as
otherwise mutually agreed by the Parties at such time.
2.33 New Development Advisory Board. In order to accommodate the Owner's
------------------------------
participation pursuant to this Contract, including, without limitation, pursuant
to subsections 2.11 and 2.32, the Owner and the Vendor will establish an NDAB
within sixty (60) days of the Effective Date. The purpose of the NDAB will be
to review the development requirements and high level development milestones, to
ensure that the Vendor understands the Owner's requirements for each PCS System,
the System and/or any extensions thereto including, without limitation, any
subsequent Products and/or enhancements. The NDAB will provide an executive
forum to discuss product ideas, Owner requirements and its recommended
development prioritization for improved infrastructure-based subscriber features
and System features, functions and capabilities. The focus of the NDAB will be
on System features and services, new PCS Products, System enhancements, critical
operational issues, future developments beyond CDMA cellular without the need
for System additions and on such other matters as the Parties mutually agree
upon from time to time.
2.34 Market Development Manager. The Vendor will provide a market
--------------------------
development manager to coordinate the efforts of the Vendor in meeting its
obligations relating to the NDAB who will specifically focus on new Products,
CDMA services and features. Such market development manager must be
knowledgeable in CDMA technology and the Owner's System and must work closely,
and on a regularly scheduled basis, with the Owner's senior engineering and
marketing personnel on feature development, feature roll-out, future road maps
for PCS Products, and any other marketing aspect of providing PCS that the Owner
believes is beneficial to the System and/or any PCS System at such time. The
Vendor's market development manager and the manager's staff will serve as the
Owner's direct liaison with the Vendor to ensure that the Vendor's product
development teams are focusing on the Owner's priorities as described to the
Vendor by the Owner from time to time either through the NDAB or by any other
means acceptable to the Parties. Nothing contained in this subsection 2.34 will
in any way limit and/or modify the Owner's ability to enforce its rights under
this Contract or to otherwise maintain contacts with the Vendor in any other way
it sees fit.
2.35 Further Assurances. The Vendor will execute and deliver all further
------------------
instruments and documents, and take all further action, including, but not
limited to, assisting the Owner in filing notices of completion with the
appropriate state and local lien recording offices, that may be necessary or
that the Owner may reasonably request in order to enable the Vendor to complete
performance of the Work or to effectuate the purposes or intent of this
Contract.
2.36 Liens and Other Encumbrances. (a) In consideration of the mutual
----------------------------
undertakings herein and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the Vendor:
(i) covenants and agrees to protect and keep free the System and/or
any PCS System and any and all interests and estates therein, and all
improvements and
<PAGE>
44
materials now or hereafter placed thereon under the terms of this Contract,
from any and all claims, liens, charges or encumbrances of the nature of
mechanics, labor or materialmen liens or otherwise arising out of or in
connection with performance by any Subcontractor, including services or
furnishing of any materials hereunder, and to promptly have any such lien
released by bond or otherwise;
(ii) give notice of this subsection 2.36 to each Subcontractor before
such Subcontractor furnishes any labor or materials for the System and/or
any PCS System; and
(iii) make any and all filings reasonably requested by the Owner in
order that the Owner may take advantage of the relevant local mechanics'
lien waiver procedures with respect to mechanics' liens of any such
Subcontractor.
(b) If any laborers', materialmen's, mechanics', or other similar lien or
claim thereof is filed by any Subcontractor, the Vendor will cause such lien to
be satisfied or otherwise discharged, or will file a bond in form and substance
satisfactory to the Owner in lieu thereof within ten (10) days of the Vendor's
receipt of notice of such filing. If any such lien is filed or otherwise
imposed, and the Vendor does not cause such lien to be released and discharged
forthwith, or file a bond in lieu thereof, then, without limiting the Owner's
other available remedies, the Owner has the right, but not the obligation, to
pay all sums necessary to obtain such release and discharge or otherwise cause
the lien to be removed or bonded to the Owner's satisfaction from funds retained
from any payment then due or thereafter to become due to the Vendor.
(c) The Owner reserves the right to post or place within the System and/or
any PCS System notices of non-responsibility or to do any other act required by
Applicable Law, to exempt the Owner and the System from any liability to third
parties by reason of any work or improvements to be performed or furnished
hereunder; provided that failure by the Owner to do so will not release or
-------- ----
discharge the Vendor from any of its obligations hereunder.
2.37 Forecasting and Ordering. Throughout the Term of this Contract, on a
------------------------
monthly basis commencing on the Effective Date, the Owner will provide the
Vendor with rolling twelve-month forecasts of its ongoing Product and Service
requirements. Such forecasts will, to the extent applicable, include, but not
be limited to, the Owner's Site Acquisition, Switch Site Ready Date, Network
Interconnection and Microwave Relocation progress to such date. Upon the review
and reasonable acceptance of such forecasts by the Vendor pursuant to the terms
of this Contract, the Owner will have the right, but not the obligation, to
confirm to the Vendor its orders for the Products and Services set forth in such
forecasts pursuant to the Owner's delivery to the Vendor of formal written
orders specifying the Products and/or Services to be purchased in connection
with the terms of this Contract. The Vendor's obligation to deliver in
accordance with accepted forecasts will be subject to receipt of the Owner's
orders in accordance with the applicable ordering procedures. If the Owner
fails to deliver any forecast pursuant to this subsection 2.37 for any reason,
the Vendor will be responsible for asking the Owner to actually deliver such
forecast to the extent it requires such forecast at such time.
<PAGE>
45
2.38 Microwave Relocation; Network Interconnection. (a) The Vendor will
---------------------------------------------
not be responsible for Microwave Relocation within the System. Unless otherwise
waived by the Owner, however, completion of Microwave Relocation in any given
System Area will be a prerequisite to the commencement of the Substantial
Completion testing to be performed by the Vendor in accordance with Exhibit B3
in such System Area. The Owner may at its option choose instead to modify the
System performance criteria as set forth in Exhibit F by way of a Change Order
in order to account for the failure to fully and/or satisfactorily complete
Microwave Relocation in any such System Area such that Substantial Completion
testing in accordance with the requirements of Exhibit B3 may proceed.
Notwithstanding anything stated herein to the contrary (other than clause (b)
below), the Owner's failure and/or inability to fully complete Microwave
Relocation in any such System Area within twelve (12) months of Milestone 6 (as
set forth in Exhibit A1) (the "Microwave Delay Period") will entitle the Vendor
to otherwise commence Substantial Completion testing (as deemed applicable and
appropriate pursuant to good faith mutual agreement between the Parties at such
time) for the PCS System in such System Area in accordance with Exhibit B3.
Pursuant to the requirements of Exhibits A1, B1 and B3 with respect to any PCS
System within the System the Owner may, upon the prior written request of the
Vendor, consent (such consent not to be unreasonably withheld) to extend the
scheduling of the Vendor's Substantial Completion testing by not more than an
additional sixty (60) days pursuant to Milestone 8 in the event that more than
ten percent (10%) of the System Element Sites in such PCS System as set forth in
the Final Site Count for such PCS System require Vendor optimization pursuant to
Exhibit B1 that was otherwise delayed due to incomplete Microwave Relocation in
such PCS System immediately prior to the date scheduled for Substantial
Completion testing pursuant to Milestone 8 (as set forth on Exhibit A1).
(b) The Vendor will not be responsible for Network Interconnection within
the System. In any given System Area, completion of Network Interconnection in
such System Area at least sixty (60) days (or as otherwise mutually agreed
between the Parties at such time) prior to Milestone 7 (as set forth on Exhibit
A1) will be a prerequisite to the Vendor's obligation pursuant to the terms of
this Contract to successfully achieve Milestone 7 (as set forth in Exhibit A1)
in such System Area.
2.39 Vendor To Inform Itself Fully; Waiver of Defense. (a) The Vendor
------------------------------------------------
will be deemed to have notice of and to have fully examined and approved the
Specifications and all other documents referred to herein, and all drawings,
specifications, schedules, terms and conditions of this Contract, regulations
and other information in relation to this Contract and/or any amendments,
modifications or supplements thereto at any time on or after the Effective Date
and to have fully examined, understood and satisfied itself as to all
information of which the Vendor is aware or should have been aware and which is
relevant as to the risks, contingencies and other circumstances which could
affect this Contract and in particular the installation of the System, any PCS
System or any part thereof. The Owner, its directors, officers, employees and
agents and all of them have no liability in law or equity or in contract or in
tort with respect to any such specifications, drawings, information, risks,
contingencies or other circumstances.
<PAGE>
46
(b) The fact that the Owner may have prepared or taken part in the
preparation of Specifications, documents, drawings, Engineering, designs,
specifications, schedules, terms or conditions, or may have designated
particular types of Products and/or Services to be furnished hereunder or
designated particular manufacturers or suppliers of Products or Services, or may
have taken part in the designation of any particular Subcontractor(s) or
subcontractor(s), or given vetoes or approvals with respect to the Work, or
otherwise become involved in the Work, will not give rise to any claim by the
Vendor or any Subcontractor or any defense to any warranty or other claims
asserted against the Vendor or any Subcontractor to the extent that any such
claim or defense arises out of any specifications, drawings, documents, or other
information, which the Vendor is deemed to have had notice of pursuant to
subsection 2.39(a) above and with respect to any such information arising after
the Effective Date which the Vendor had a reasonable opportunity to review.
2.40 CMI/HIC. From time to time throughout the Term of this Contract the
-------
Parties may mutually agree as to the incorporation and integration of CMI/HIC
into the System in accordance with Exhibit D.
2.41 Site Acquisition Delay Testing. In any given System Area within the
------------------------------
Initial System, in the event Site Acquisition Substantial Completion is delayed
more than one hundred and fifty (150) days beyond the forecasted date for Site
Acquisition Substantial Completion as set forth in the M5 Forecast (the "Site
Acquisition Delay Period") provided to the Vendor with the Build Notice
applicable to such System Area due solely to the Owner's inability to achieve
sufficient Site Acquisition in such System Area, the Vendor will have the right,
but not the obligation, to commence Substantial Completion testing (as deemed
applicable and appropriate pursuant to good faith mutual agreement between the
Parties at such time but in any event to be completed within thirty (30) days of
such commencement) for that portion of the otherwise incomplete PCS System in
which the Vendor has (i) completed all applicable Facilities Preparation
Services and (ii) fully Installed, to the extent possible at such time, all such
Products to be Installed by the Vendor or its Subcontractors on otherwise fully
constructed System Element Locations within such PCS System. Subject to
Section 6, in the event the Vendor successfully completes such modified
Substantial Completion testing for such Installed portion of such otherwise
incomplete PCS System pursuant to and in accordance with this subsection 2.41
and Exhibit B3, the Vendor will be entitled to such portion of the payments that
otherwise would be made by the Owner pursuant to subsection 6.3(b) as applicable
only to those Services and Products actually provided by the Vendor pursuant to
and in accordance with the terms of this Contract in such portion of the
otherwise incomplete PCS System that was subject to testing pursuant to this
subsection 2.41. Nothing contained herein to the contrary will in any way
modify the Vendor's obligations as to the completion and testing of the
remaining portion of such PCS System pursuant to and in accordance with the
terms of this Contract, including but not limited to the Project Milestones set
forth in Exhibit A1. Nothing contained herein to the contrary will in any way
require the Owner to pay the Vendor amounts already paid or otherwise provided
for pursuant to any other provision of this Contract.
SECTION 3 AFFILIATES
<PAGE>
47
3.1 Additional Affiliates. On a quarterly basis commencing on the
---------------------
Effective Date and during the term of this Contract, the Owner may, upon fifteen
(15) days' prior written notice to the Vendor, designate any Person who has been
licensed to use PCS in the United States which is not an Initial Affiliate as an
"Additional Affiliate"; provided that the Vendor will have a reasonable
-------- ----
opportunity to review and approve such designation, such approval not to be
unreasonably withheld, based upon (i) reasonable credit criteria within the
context of the PCS industry, (ii) the fact that such proposed Additional
Affiliate has not in the past materially breached prior material agreements with
the Vendor, (iii) the fact that the proposed Additional Affiliate is not, at the
time of such determination, a direct competitor to the Vendor in the wireless
telecommunications business and (iv) the fact that the proposed Additional
Affiliate is not, at the time of such determination, otherwise engaged with the
Vendor in a material agreement for the purchase and/or supply of PCS CDMA
wireless technology; and provided, further, that (x) the Owner, any Partner or
-------- -------
any Initial Affiliate has at least a ten percent (10%) equity ownership in such
Person, (y) such Person is controlled by or under the common control with the
Owner, any Partner or any Initial Affiliate or (z) there exists between the
Owner and such Person an Additional Affiliate Arrangement.
3.2 Agreements with Initial Affiliates. During the term of this Contract,
----------------------------------
the Owner will have the right, but not the obligation, to require that the
Vendor enter into separate agreements with any Initial Affiliate designated by
the Owner (each, an "Initial Affiliate Agreement") for the supply of Products
and Services on similar terms and conditions as those set forth herein that
relate to the initial build-out of the Initial System as set forth on Schedule
4; provided that the Vendor will not be required to include in any Initial
-------- ----
Affiliate Agreement any provisions substantially similar to those set forth in
subsections 2.3(a), 2.5, 2.23 (but only to the extent of the specific amounts
set forth in such subsection 2.23), 3.1, 3.3, 11.7, 15.1, 21.1, 24.1 and 27.5;
and provided further that after the date on which Final Acceptance of the last
-------- -------
PCS System to reach Final Acceptance has occurred, Initial Affiliate Agreements
(whether or not executed prior to such date) need not contain or retain
substantially the same terms and conditions as those set forth herein, except
for those terms and conditions related to pricing and warranties as are then
available to the Owner pursuant to this Contract. Any Initial Affiliate that
enters into an Initial Affiliate Agreement with the Vendor will have the right
to choose among the Products and Services offered to the Owner under this
Contract solely for use within the Nationwide Network.
3.3 Agreements with Additional Affiliates. During the term of this
-------------------------------------
Contract, the Owner will have the right, but not the obligation, to require that
the Vendor enter into separate agreements with any Additional Affiliate
designated by the Owner (each, an "Additional Affiliate Agreement") for the
supply of Products and Services at similar price and warranty terms as are then
available to the Owner pursuant to the terms of this Contract. The Vendor must
enter into good faith negotiations for the establishment of such Additional
Affiliate Agreements with any such Additional Affiliate promptly upon the
designation of such Additional Affiliate by the Owner and upon notice to the
Vendor that such Additional Affiliate desires to enter into an Additional
Affiliate Agreement. Any Additional Affiliate that enters into an Additional
Affiliate Agreement with the Vendor will have the right to choose among the
Products and Services offered to the Owner under this Contract solely for use
within the Nationwide Network.
<PAGE>
48
3.4 Affiliate Rights. Notwithstanding anything herein contained to the
----------------
contrary, Affiliates will not be deemed third party beneficiaries to this
Contract or otherwise have any rights hereunder. Only the Owner may designate a
Person as an Affiliate in accordance with the terms of this Section 3 and only
the Owner has the right and/or the ability to enforce any rights hereunder
against the Vendor.
SECTION 4 SUBCONTRACTORS
4.1 Subcontractors. The Vendor will select Subcontractors in connection
--------------
with the performance of the Work such that all Products and Services provided by
any such Subcontractors meet the System Standards and reliability and
performance requirements set forth in this Contract. Regardless of whether or
not the Vendor obtains approval from the Owner of a Subcontractor or whether the
Vendor uses a Subcontractor recommended by the Owner, use by the Vendor of a
Subcontractor will not, under any circumstances: (i) give rise to any claim by
the Vendor against the Owner if such Subcontractor breaches its subcontract or
contract with the Vendor; (ii) give rise to any claim by such Subcontractor
against the Owner; (iii) create any contractual obligation by the Owner to the
Subcontractor; (iv) give rise to a waiver by the Owner of its rights to reject
any Defects or Deficiencies or Defective Work; or (v) in any way release the
Vendor from being solely responsible to the Owner for the Work to be performed
under this Contract.
4.2 The Vendor's Liability. The Vendor is the general contractor for the
----------------------
Work and remains responsible for all of its obligations under this Contract,
including the Work, regardless of whether a subcontract or supply agreement is
made or whether the Vendor relies upon any Subcontractor to any extent. The
Vendor's use of Subcontractors for any of the Work will in no way increase the
Vendor's rights or diminish the Vendor's liabilities to the Owner with respect
to this Contract, and in all events, except as otherwise expressly provided for
herein, the Vendor's rights and liabilities hereunder with respect to the Owner
will be as though the Vendor had itself performed such Work. The Vendor will be
liable for any delays caused by any Subcontractor as if such delays were caused
by the Vendor.
4.3 No Effect of Inconsistent Terms in Subcontracts. The terms of this
-----------------------------------------------
Contract will in all events be binding upon the Vendor regardless of and without
regard to the existence of any inconsistent terms in any agreement between the
Vendor and any Subcontractor whether or not and without regard to the fact that
the Owner may have directly and/or indirectly had notice of any such
inconsistent term.
4.4 Assignability of Subcontracts to Owner. Each agreement between the
--------------------------------------
Vendor and a Subcontractor must contain a provision stating that, in the event
that the Vendor is terminated for cause, convenience, abandonment of this
Contract or otherwise, (i) each Subcontractor will continue its portion of the
Work as may be requested by the Owner and (ii) such agreement permits assignment
thereof without penalty to the Owner and, in order to create security interests,
to the Other Vendors, in either case at the option of the Owner and for the same
price and under the same terms and conditions as originally specified in such
Subcontractor's agreement with the Vendor.
<PAGE>
49
4.5 Removal of Subcontractor or Subcontractor's Personnel. The Owner has
-----------------------------------------------------
the right at any time to require removal of a Subcontractor and/or any of a
Subcontractor's personnel from Work on the System upon reasonable grounds and
reasonable prior notice to the Vendor. The exercise of such right by the Owner
will have no effect on the provisions of subsections 4.1 and 4.2.
4.6 Subcontractor Insurance. The Vendor must require its Subcontractors
-----------------------
to obtain, maintain and keep in force during the time they are engaged in
providing Products and Services hereunder adequate insurance coverage consistent
with Section 18 and Schedule 6 (provided that the maintenance of any such
Subcontractor insurance will not relieve the Vendor of its other obligations
pursuant to Section 18 and Schedule 6). The Vendor will, upon the Owner's
request, furnish the Owner with evidence of such insurance in form and substance
reasonably satisfactory to the Owner. All such insurance will be subject to the
Owner's approval. All Subcontractors must be of bondable financial condition.
Nothing herein will be deemed to bar the Vendor or any Subcontractor from
obtaining such insurance on a project basis for each of the Subcontractors
participating in such project.
4.7 Review and Approval not Relief of Vendor Liability. Any inspection,
--------------------------------------------------
review or approval by the Owner permitted under this Contract of any portion of
the Work by the Vendor or any Subcontractor will not relieve the Vendor of any
duties, liabilities or obligations under this Contract, but nothing contained in
this subsection 4.7 will be deemed a bar of any waiver given by the Owner to the
Vendor pursuant to and in accordance with the terms of this Contract.
4.8 Vendor Warranties. Except as otherwise expressly provided in Section
-----------------
17, the warranties of the Vendor pursuant to Section 17 will be deemed to
apply to all Work performed by any Subcontractor as though the Vendor had itself
performed such Work. Except as otherwise specifically provided in Section 17,
the Parties agree that such warranties will not be enforceable merely on a
"pass-through" basis. The Owner may, but will not be obligated to, enforce
such warranties of any Subcontractor to the extent that the Owner determines
that the Vendor is not paying and/or performing its warranties; provided that
-------- ----
any such election by the Owner will not relieve the Vendor from any obligations
or liability with respect to any such warranty.
4.9 Payment of Subcontractors. The Vendor must make all payments to all
-------------------------
Subcontractors (except in the case of legitimate disputes between the Vendor and
any such Subcontractor arising out of the agreement between the Vendor and such
Subcontractor) in accordance with the respective agreements between the Vendor
and its Subcontractors such that Subcontractors will not be in a position to
enforce liens and/or other rights against the Owner, the System or any part
thereof.
SECTION 5 TERM OF CONTRACT
<PAGE>
50
5.1 Initial Term. The initial term of this Contract (the "Initial Term")
------------
is ten (10) years from the Effective Date, subject to the terms and conditions
of this Contract including, without limitation, the termination provisions set
forth in Section 24.
5.2 Renewal. This Contract is subject to renewal for one year periods
-------
(all such periods plus the Initial Term, the "Term") following the expiration of
the Initial Term, on the same terms and conditions contained herein, unless
either Party gives notice to each other Party of its intention not to renew this
Contract within ninety (90) days prior to the expiration of the then current
Term.
SECTION 6 PRICES AND PAYMENT
6.1 Prices. The prices for the Work to be performed pursuant to this
------
Contract (collectively, the "Contract Price") are as set forth on Schedules 2
and 3, subject to the price variation provisions contained on Schedule 2.
Notwithstanding the prices set forth on Schedules 2 and 3 and the Contract
Price, the Vendor will provide the Owner credits in aggregate value not to
exceed [ ] to purchase any Products in the following System Areas and in the
following amounts per such System Areas:
System Credit
Area Amount
----------- ----------
Detroit [ ]
Milwaukee [ ]
Denver [ ]
Salt Lake [ ]
Spokane [ ]
The Owner is also entitled to additional purchase credits of up to [ ] to be
applied in the Owner's discretion to the purchase of any Products in any or all
of the above listed System Areas. At any time during the Term of this Contract
that the Owner wishes to apply the purchase credits referenced in this
subsection 6.1 to any of its Products purchases for the System Areas listed
immediately above, the Owner must notify the Vendor of its intent to do so and
it will be the Vendor's sole responsibility, throughout the Term of this
Contract, to keep account of the remaining purchase credits available to the
Owner. Prices for the Work not otherwise set forth on Schedules 2 or 3, if not
otherwise set forth in this Contract, will be no greater than the Vendor's best
list prices then in effect at the time of ordering by the Owner (as established
by the Vendor's then applicable Customer Price Guide for sales in the United
States) and at discounts otherwise provided to the Owner pursuant to the terms
of this Contract.
6.2 Price Reduction. The Contract Price will be reduced by all amounts
---------------
saved as a result of Engineering changes suggested by the Owner which are
incorporated into the Specifications by the Vendor provided that the Vendor
--------
reasonably believes that such changes will not make it impossible or
impracticable to comply with any of its obligations under this
<PAGE>
51
Contract, including, without limitation, those Vendor obligations relating to
the performance criteria applicable to the System. Any reduction in Contract
Price pursuant to the preceding sentence will be agreed upon promptly by the
Owner and the Vendor. Failure of the Parties to mutually agree to such price
reductions within ten (10) days from the date the Owner delivered written notice
to the Vendor of the need for such price reduction due to incorporated
Engineering changes will result in the automatic reference of such matter to
dispute resolution in accordance with subsection 23.1. During the pendency of
any such dispute resolution prices payable pursuant to subsection 6.1 will be
payable by the Owner to the Vendor at the reduced level pursuant to this
subsection 6.2. If in accordance with subsection 23.1 such dispute resolution
results in a finding that such price reduction was not in fact justified then
the Owner will reimburse the Vendor the amounts that would otherwise have been
payable to the Vendor during the pendency of such dispute resolution.
6.3 Payments. Except with respect to Facilities Preparation Services and
--------
RF Engineering as set forth below, an invoice may be submitted to the Owner only
after shipment of a Product or performance of a Service. Invoices for Products
delivered and Services performed on or prior to Final Acceptance of the PCS
System to which such invoices relate are payable in the following manner:
(a) twenty-five percent (25%) of the amount of each invoice will be paid
within thirty (30) days from receipt of the invoice by the Owner,
(b) fifty-seven and one half percent (57-1/2%) of the amount of such
invoice will be paid within thirty (30) days from the later of (i) Substantial
Completion of the PCS System to which such invoice relates and (ii) receipt of
the invoice by the Owner;
(c) seventeen and one half percent (17-1/2%) of the amount of the invoice
will be paid within thirty (30) days from the later of (i) Final Acceptance of
the PCS System to which such invoice relates and (ii) receipt of the invoice by
the Owner; and
(d) Pursuant to subsection 2.6(d) and provided that any MSCs sought to be
covered hereby have in fact been installed by the Vendor in accordance with
subsection 2.6(d), the Owner will pay to the Vendor [ ] of the price invoiced
to the Owner for any MSC within any PCS System within the Initial System upon
the Vendor's successful achievement of Milestone 5 (as set forth in Exhibit A1)
in such PCS System and an additional [ ] of the price invoiced to the Owner
for any such MSC upon the Vendor's successful achievement of Milestone 8 (as set
forth in Exhibit A1) in such PCS System. All other amounts payable by the Owner
to the Vendor for MSCs within any PCS System within the Initial System will be
otherwise payable in accordance with the terms of this Contract provided that
--------
the Owner will not be obligated to make any payments to the Vendor for MSCs
pursuant to subsection 6.3(b) to the extent it made any payments for any such
MSCs pursuant to this subsection 6.3(d).
Notwithstanding the foregoing, (i) invoices for RF Engineering for each PCS
System will be payable in accordance with subsection 6.4(b) below and (ii)
invoices for Facilities Preparation Services within any PCS System may be
submitted by the Vendor in accordance
<PAGE>
52
with the terms of Exhibit B2 and will be payable by the Owner with respect to
each System Element Facility within thirty (30) days after the date of
acceptance by the Owner of any such System Element Facility in accordance with
the terms of Exhibit B2. Payments for third party manufactured Products (other
than any PCS Products or any Products integral to construction (e.g., concrete,
----
nuts, bolts and other customary building supplies)) purchased by the Vendor or
its Subcontractors for installation on the Owner's System Element Locations
during the course of and as part of Facilities Preparation Services may be made
by the Owner on a current basis (but in no event more often than monthly during
the course of such Facilities Preparation Services) as mutually agreed by the
Parties.
63.1 Additional Products not in Initial System or Otherwise Provided for
------------------------------------------------------------------
in Section 2.2. Any invoice for Products delivered and installed by the Vendor
- - -------------
and Services performed by the Vendor not otherwise provided for under this
subsection 6.3, subsection 2.2(a) or as otherwise specifically set forth in this
Contract will be payable as follows: [ ] of the amount of the invoice will be
payable within thirty (30) days following receipt of such Products by the Owner
or the full performance of the Services by the Vendor and the outstanding
balance will be payable upon final acceptance by the Owner of the Products or
Services to which such invoice relates. Any invoice (not otherwise provided for
under this subsection 6.3) for Products delivered by the Vendor but not
installed by the Vendor to which such invoice relates will be payable by the
Owner at the level of [ ] of the amount of such invoice within thirty (30)
days from the date of delivery of such invoice to the Owner. For any Services
not otherwise covered by this last paragraph of subsection 6.3, including
without limitation repair services, Engineering and Installation Services not
performed pursuant to a combined furnish and install order, and maintenance fees
(including Annual Release Maintenance Fees), an invoice will be payable by the
Owner at the level of [ ] of the amount of such invoice within thirty (30)
days from the date of delivery of such invoice to the Owner or as otherwise
mutually agreed in good faith between the Parties. For the purposes of this last
paragraph of this subsection 6.3 any acceptance or "final acceptance" relevant
to the Owner's obligation to pay will be deemed to occur on the earlier of (i)
the Owner's In Revenue use of such Products and/or Services, (ii) the Owner's
notification of acceptance of such Products and/or Services or (iii) thirty (30)
days following, as applicable, the Owner's completion of Installation of the
Products (where the Vendor is not performing Installation Services), without the
Owner's having given notice of non-acceptance of such Products and/or Services.
6.4 Payments for Facilities Preparation Services. (a) Upon receipt of
--------------------------------------------
payment from the Owner for Facilities Preparation Services the Vendor will
promptly pay each Subcontractor for Facilities Preparation Services the amount
to which each Subcontractor is entitled pursuant to such Subcontractor's
agreement with the Vendor, based on each Subcontractor's portion of such Work.
By appropriate agreement in each Subcontractor's agreement with the Vendor, the
Vendor will require such Subcontractor to make payments to sub-Subcontractors
and materialmen in a similar manner. The Owner has no duty or obligation to
insure the payment of money to a Subcontractor, sub-Subcontractor, materialman
or any other third party, any such payment being the obligation of the Vendor.
Subcontractors, sub-Subcontractors, materialmen and any other third parties will
not be deemed third party beneficiaries of the Owner's obligations to pay the
Vendor. On or before
<PAGE>
53
the Owner's acceptance of the Facilities Preparation Services of any System
Element Facility within any given PCS System in accordance with the terms of
Exhibit B2, the Owner will have received details (in a form reasonably
satisfactory to the Owner) of all invoices and charges for such Facilities
Preparation Services incurred by the Vendor in connection with the Facilities
Preparation Services for such System Element Facility.
(b) The Owner will make payment to the Vendor for RF Engineering Services
performed by the Vendor within any given System Area pursuant to the terms of
this Contract based upon the following: (i) [ ] of the "RF Engineering
Services price" within the applicable System Area will be payable by the Owner
within thirty (30) days after receiving the Preliminary RF Design for such
System Area pursuant to Milestone 2 for such System Area as set forth on
Exhibit A1; (ii) [ ] of the RF Engineering Services price within the
applicable PCS System will be payable by the Owner within thirty (30) days after
the determination of the Final Site Count and delivery of the Final RF Design
for such PCS System in accordance with subsection 2.6 and Milestone 5 for
such System Area as set forth on Exhibit A1; and (iii) [ ] of the RF
Engineering Services price will be payable by the Owner within the applicable
PCS System within thirty (30) days of the Vendor's Installation of the Products
for such PCS System in accordance with the terms of the Contract and Milestone 7
for such System Area as set forth on Exhibit A1. For the purposes of this
subsection 6.4(b) the term "RF Engineering Services price" will mean the number
of System Element Facilities within the applicable PCS System pursuant to the
build-out of the Initial System multiplied by the Vendor's System Element
Facility RF Engineering price as set forth on Schedule 3. In any given PCS
System and/or System Area the RF Engineering Services price will be readjusted
(and any amounts owed to either Party will be reimbursed) at the point in time
that payment would be made for such RF Engineering pursuant to clause (iii) of
this subsection 6.4(b) in accordance with the determination of the actual Final
Site Count and delivery of Final RF Design applicable to such PCS System.
6.5 Monthly Forecasts. Commencing on the Effective Date, the Vendor will
-----------------
provide the Owner with monthly forecasts of the costs of RF Engineering and
Facilities Preparation Services in each PCS System in which such Services are
being provided by the Vendor and/or any of its Subcontractors throughout the
period that any such Services are being provided during the Term of this
Contract. The forecasts provided by the Vendor pursuant to this subsection 6.5
must be in sufficient detail to reasonably inform the Owner of the nature of the
costs to be incurred for each of RF Engineering and Facilities Preparation
Services in each of the PCS Systems in which such Services are being provided by
the Vendor and/or any of its Subcontractors pursuant to the terms of this
Contract.
6.6 No Payment in Event of Material Breach. Notwithstanding any other
--------------------------------------
provision to the contrary contained herein, the Owner will have no obligation to
make any payment with respect to the affected PCS System in addition to amounts
previously paid to the Vendor at any time the Vendor is in material breach of
this Contract with respect to such PCS System until and unless such breach is
cured or waived by the Owner in accordance with the terms of this Contract.
<PAGE>
54
6.7 Microwave Relocation Delay Partial Payments. In the event the Vendor
-------------------------------------------
has achieved Milestone 7 (as set forth on Exhibit A1) within any given PCS
System but there is a delay in the Owner's completion of Microwave Relocation in
such PCS System pursuant to and in accordance with subsection 2.38, then during
the Microwave Delay Period within such PCS System, the Owner agrees to pay to
the Vendor [ ] provided that Substantial Completion (as deemed applicable and
-------- ----
appropriate pursuant to good faith mutual agreement between the Parties at such
time) of such PCS System will have been achieved by the Vendor in accordance
with the terms of this Contract and Exhibit B3. Nothing contained herein to the
contrary will in any way release the Vendor from its obligations or otherwise
modify the Vendor's obligations as to the completion of testing in accordance
with Exhibit B3 once Microwave Relocation in such affected PCS System or
affected portion of a PCS System has been successfully achieved by the Owner.
Nothing contained herein to the contrary will in any way require the Owner to
pay the Vendor amounts already paid or otherwise provided for pursuant to any
other provision of this Contract.
6.8 In Revenue Payments. At any time during the Site Acquisition Delay
-------------------
Period or the Microwave Delay Period, as the case may be, the Owner may, in its
sole discretion, decide to place the PCS System or any portion thereof which is
subject to such delay into In Revenue Service. In the event the Owner does in
fact decide, in its sole discretion, to place any PCS System or any portion of a
PCS System into In Revenue Service during any such Site Acquisition Delay Period
or Microwave Delay Period, as the case may be, the Owner will be obligated to
pay to the Vendor the amounts it would have otherwise paid to the Vendor upon
the Substantial Completion of such In Revenue PCS System or In Revenue portion
of such PCS System, as the case may be, and the Vendor will be entitled to
commence Substantial Completion testing for such In Revenue PCS System or In
Revenue portion of such PCS System; provided that the Owner understands that the
-------- ----
Vendor can only do such Substantial Completion testing as set forth in Exhibit
B3 as is at such time applicable and appropriate (pursuant to the good faith
mutual agreement of the Parties at such time) to such In Revenue PCS System or
In Revenue portion of such PCS System. The Parties expressly understand and
agree that this subsection 6.8 will only be effective in the event that the
Owner chooses, in its sole discretion, to place a PCS System or a portion
thereof In Revenue during a Microwave Delay Period or Site Acquisition Delay
Period, as applicable to such In Revenue PCS System or In Revenue portion of
such PCS System. Nothing contained herein to the contrary will in any way
modify the Vendor's obligations as to the completion and testing of the
remaining incomplete non-In Revenue portion of any such PCS System which is
otherwise partially In Revenue pursuant to and in accordance with the terms of
this Contract, including but not limited to the Project Milestones set forth on
Exhibit A1. Nothing contained herein to the contrary will in any way require
the Owner to pay the Vendor
<PAGE>
55
amounts already paid or otherwise provided for pursuant to any other provision
of this Contract.
SECTION 7 ORDERS AND SCHEDULING
7.1 Initial Commitment. Subject to subsection 7.2 and to subsection 2.6
------------------
and the determination of the Final Site Count and the delivery of the Final RF
Engineering Plan for each PCS System, the Parties understand that the quantities
of Products and Services identified on Schedules 2 and 3 which are necessary for
the build-out by the Vendor of the Initial System pursuant to the terms and
conditions of this Contract constitute the Owner's initial purchase commitment
under this Contract (the "Initial Commitment").
7.2 Change Orders. The Owner has the right by way of written orders
-------------
("Change Orders") to request Expansions, other revisions and/or modifications in
the Work, including but not limited to the Specifications, the manner of
performance of the Work or the timing of the completion of the Work; provided
--------
that specific Change Orders will be submitted to the Vendor and the Vendor
- - ----
(subject to the Owner's agreement) will be entitled to make reasonable price
and/or Project Milestone adjustments to the Contract Price in the case of
material modifications. The Vendor must promptly notify the Owner of any such
requested change or changes to Products which may materially affect the
operation and/or maintenance of the System, any PCS System or any part thereof.
The Parties agree that within fifteen (15) Business Days after the Owner's
initial request for a Change Order pursuant to this subsection 7.2 they will
mutually agree to all aspects of such Change Order which agreement will be
evidenced by a writing executed by an authorized representative of each of the
Parties. In the event the Vendor refuses to agree to any such Change Order
within such fifteen (15) day period then the Vendor will provide a written
notice to the Owner detailing its reasons for such refusal and if the Owner, at
such time, disagrees with the reasons set forth in such Vendor notice the matter
will then be referred to dispute resolution pursuant to Section 23. Nothing
contained in this subsection 7.2 is intended to limit the Vendor's right, from
time to time, to make suggestions for modifications to the Work or the
Specifications pursuant to and in accordance with this subsection 7.2 and the
terms of this Contract, provided that in any such event the Owner, in its sole
-------- ----
and absolute discretion pursuant to the terms of this Contract may refuse to
make any such modification or otherwise agree to issue a Change Order
incorporating any such Vendor suggestion.
7.3 Cancellation. During the term of this Contract, and subject to
------------
Section 24, the Owner will have the right, but not the obligation, at any time
to cancel, in whole or in part, any order made pursuant to the terms of this
Contract upon advance written notice to the Vendor. In the event of a
cancellation permitted hereunder, the Owner will pay to the Vendor order
cancellation charges in accordance with, and pursuant to, the terms of Schedule
11.
<PAGE>
56
SECTION 8 INSTALLATION
8.1 Installation. The Vendor will furnish and install the Products
------------
pursuant to the Project Milestones set forth on Exhibit A and in accordance with
the requirements and criteria set forth in Exhibit D. In accordance with and
subject to the Project Milestones set forth on Exhibit A (and the intervals set
forth therein and herein), the Vendor will complete all Product Installation in
any given PCS System in conformance with the requirements and criteria set forth
in Exhibit D within thirty-two and one-half (32-1/2) days of completion of the
Facilities Preparation Services pursuant to Milestone 6 (as set forth in Exhibit
A1) in such PCS System.
8.2 No Interference. The Vendor will install the Products and build each
---------------
of the PCS Systems so as to cause no unauthorized interference with or
obstruction to lands and thoroughfares or rights of way on or near which the
Installation work may be performed. The Vendor must exercise every reasonable
safeguard to avoid damage to existing facilities, and if repairs or new
construction are required in order to replace facilities damaged by the Vendor
due to its carelessness, negligence or willful misconduct, such repairs or new
construction will be at the Vendor's sole cost and expense.
SECTION 9 ACCEPTANCE TESTING AND ACCEPTANCE
9.1 Acceptance Testing. The Vendor must carry out the Acceptance Tests on
------------------
the Products and the PCS Systems as specified in Exhibit B3 and each PCS System
must successfully achieve acceptance (including Substantial Completion and Final
Acceptance) in accordance with the terms of Exhibit B3.
9.2 Costs and Expenses. The costs and expenses of such Acceptance Tests
------------------
will be borne by the Vendor, and the Owner will not be charged or billed for
such costs and expenses, except to the extent that such charges or expenses are
not included in the Contract Price pursuant to and in accordance with the terms
of this Contract. If the Acceptance Tests performed by the Vendor are not
satisfied in accordance with the relevant requirements of Exhibit B3 or are
otherwise inconclusive in the reasonable judgment of the Owner, the Owner will
have the right to order further Acceptance Tests at the sole cost and expense of
the Vendor.
9.3 Notification. The Vendor will notify the Owner at least ten (10) days
------------
prior to the performance of any Acceptance Tests. Prior to or at the first
practicable date after such notification, the Vendor and the Owner will each
agree upon and approve any test forms to be used as part of the particular
Acceptance Test being conducted.
9.4 Presence at Acceptance Tests. The Owner and its representatives will
----------------------------
be permitted to witness and have unrestricted access to the Vendor's and its
Subcontractors' Acceptance Tests, provided that no such access will materially
-------- ----
interfere with or cause undue delay of the Vendor's Work. Nothing herein will
be deemed to require the Vendor to reimburse the Owner for any costs incurred by
the Owner in the Owner's participation in or
<PAGE>
57
observation of Acceptance Tests or other tests performed by the Vendor pursuant
to and in accordance with the terms of this Section 9.
9.5 Correction of Defects. (a) If any Acceptance Test is not satisfied,
---------------------
the Vendor will, at its sole cost and expense, (i) in writing, notify the Owner
of such failure, and (ii) promptly correct whatever Defects or Deficiencies
caused such Acceptance Test not to be satisfied. After such correction, the
Vendor must (i) repeat at its sole cost and expense the failed Acceptance Tests
and as many other Acceptance Tests as are necessary to ensure in the reasonable
opinion of the Owner that such correction made by the Vendor would not have
affected the outcome of such other Acceptance Tests, and (ii) in writing, notify
the Owner as to what correction was made and what Acceptance Tests were
repeated.
(b) If Final Acceptance of a PCS System cannot be achieved after
Substantial Completion of such PCS System (provided that the Vendor will have
fully built-out the Final RF Engineering Plan in accordance with the Final Site
Count in accordance with the terms of this Contract) because such PCS System
fails to meet applicable performance criteria as set forth in Exhibit F, but
would do so with only the implementation and installation of additional Base
Stations at additional System Element Locations over and above the Final Site
Count for such PCS System, the Owner will have the right, in its sole and
absolute discretion, to (i) Finally Accept such PCS System in which case the
Parties will mutually agree in good faith on revised performance criteria for
such PCS System, or (ii) require the Vendor to continue to work (in which case
Final Acceptance of such PCS System will be delayed until completion of the work
and testing contemplated herein and in Exhibit B3) to cause such PCS System to
perform at the applicable levels of the then existing performance criteria as
set forth in Exhibit F, in which case, the required additional Base Stations and
additional System Element Locations will be treated as provided for in
subsections 17.5(c) and 17.10. Any additional Base Station(s) paid for by the
Owner pursuant to this subsection 9.5(b) (which would only have to be paid for
(including any costs associated with the installation thereof) by the Owner upon
the subsequent achievement of Final Acceptance by the Vendor in accordance with
Exhibit B3 which such payment will be made with the payments otherwise made on
Final Acceptance pursuant to Section 6) will be offset against the number of
new Base Stations that may subsequently be for the account of the Owner pursuant
to the terms of subsection 17.5(c). If the Parties are unable to agree upon
revised performance criteria as provided in clause (i) above, the matter will be
resolved in accordance with the provisions of subsection 23.3.
9.6 Acceptance Certificate. Upon the successful completion of the
----------------------
Acceptance Tests for a PCS System or any part thereof conducted by the Vendor,
the Vendor must submit to the Owner an Acceptance Certificate certifying that
(i) such Acceptance Tests have been successfully completed, (ii) the Work so
tested has been completed in accordance with the terms of this Contract, and
(iii) if applicable, that the remainder of the Work is continuing in accordance
with the Project Milestones set forth on Exhibit A. Upon its reasonable
satisfaction that such Acceptance Certificate is correct and complete, the Owner
will acknowledge such certification by signing the Acceptance Certificate. In
the event of any dispute as to the results of any Acceptance Tests, such dispute
will be resolved pursuant to
<PAGE>
58
the dispute resolution mechanisms set forth in Section 23 including, but not
limited to, the Third Party Engineer review mechanism set forth in subsection
23.3.
SECTION 10 DISCONTINUED PRODUCTS
10.1 Notice of Discontinuation. During the Term of this Contract the
-------------------------
Vendor agrees to provide the Owner, or the respective Affiliates as the case may
be, except under extraordinary circumstances not less than one (1) year notice
before the Vendor discontinues accepting orders for a PCS Product ("Discontinued
Products") sold under this Contract. Where the Vendor offers a product for sale
that is equivalent in form, fit and function in accordance with and pursuant to
the Specifications, the notification period may vary but in no event will be
less than the applicable notice period set forth in subsection 2.17.
Notwithstanding the foregoing, the Vendor will not discontinue accepting orders
for any PCS Product applicable to or otherwise used in the System or any portion
thereof until and unless the Vendor and the Owner have agreed upon a mutually
acceptable transition plan that takes into account the Owner's and its
Affiliates' existing investment in the Item scheduled for discontinuance subject
to the minimum terms and conditions set forth in subsections 10.2 and 10.3
below. The Parties' failure to reach agreement within sixty (60) days or such
other reasonable time as they may mutually establish will, upon the request of
either Party, be referred for resolution pursuant to Section 23. In the event
of the foregoing, the Vendor must continue to furnish PCS Products fully
compatible with the System Elements within the System at such time during the
Term of the Contract; provided that nothing herein will bar the Vendor from
-------- ----
discontinuing individual Items of PCS Products as provided in and pursuant to
this subsection 10.1.
10.2 Discontinuation During Warranty Period. If, during the Warranty
--------------------------------------
Period applicable to the relevant Discontinued Product pursuant to Section 17,
the Vendor does not make such Discontinued Products available to the Owner, the
price of any Products provided as a replacement for the Discontinued Product by
the Vendor and required to be purchased by the Owner during such Warranty Period
to replace existing Discontinued Products delivered to the Owner in order to
maintain performance and functionality equivalent to that previously provided by
the Discontinued Products will be discounted by an amount equal to fifty percent
(50%) of the price previously paid for such Discontinued Products.
10.3 Discontinuation After Warranty Period. In the event that the Vendor
-------------------------------------
discontinues the manufacture of a Product following the expiration of the
applicable Warranty Period and the Owner is required to replace an existing
Discontinued Product with a new Product in order to maintain performance and
functionality, the Owner will receive a credit in an amount equal to the
percentage set forth below multiplied by the purchase price paid for such
original Product, which credit will be applied against the Vendor's then-current
list price for a replacement for such Discontinued Product; provided that the
-------- ----
credit will not exceed the Vendor's then-current best list price (as determined
by the Customer Price Guide) for such replacement Product subject to the
discounts available to the Owner pursuant to Section 26 and the other terms of
this Contract:
<PAGE>
59
(i) up to and including one year following expiration
of the applicable Warranty Period: 40%;
(ii) more than one year and up to and including two years
following expiration of the applicable Warranty Period:
30%; and
(iii) more than two years and up to and including three years
following expiration of the applicable Warranty Period:
20%.
SECTION 11 SOFTWARE; CONFIDENTIAL INFORMATION
11.1 RTU License. The Owner is hereby granted a perpetual, non-exclusive,
-----------
non-transferable (except as set forth in subsections 11.4 and 27.4), fully paid-
up, multi-site (capability to move Software from site to site) right to use
license for the Software ("RTU License"), to operate the Products provided in
each of the PCS Systems and the System as a whole, subject to payment of any
license fees in accordance with the terms of this Contract. Except as otherwise
provided herein, the Owner is granted no title or ownership rights to the
Software. Such rights will remain with the Vendor, its Subcontractors or
suppliers, as appropriate.
11.2 Owner's Obligations. The Owner agrees that the Software, whether or
-------------------
not modified, will be treated as proprietary to the Vendor, its Subcontractors
or its suppliers, as appropriate and the Owner will:
(a) Utilize the Software solely in conjunction with the System and/or any
PCS System; provided that the Vendor acknowledges that the Software will be
-------- ----
integrated across interfaces with systems, equipment and software provided by
other suppliers and customers including, but not limited to, the Other Vendors;
(b) Ensure that all copies of the Software will, upon any reproduction by
the Owner authorized by the Vendor and whether or not in the same form or format
as such Software, contain the same proprietary, confidentiality and copyright
notices or legends which appear on the Software provided pursuant hereto; and
(c) Hold secret and not disclose the Software (or, subject to subsection
27.19, interfaces to or with such Software) to any person, except to (i) such of
its employees, contractors, agents or Affiliates that are involved in the
operation or management of the System and/or any PCS System and need to have
access thereto to fulfill their duties in such capacity, or (ii) other Persons
who need to use such Software to permit integration of the System and/or any PCS
System with systems and software of other suppliers and customers including, but
not limited to, the Other Vendors; provided that such persons agree, or are
-------- ----
otherwise obligated, to hold secret and not disclose the Software to the same
extent as if they were subject to this Contract.
<PAGE>
60
(d) When and if the Owner determines that it no longer needs the Software
or if the Owner's license is canceled or terminated pursuant to the terms of
this Contract, return all copies of such Software to the Vendor or follow
reasonable written disposition instructions provided by the Vendor. If the
Vendor authorizes disposition by erasure or destruction, the Owner will remove
from the medium on which Software resides all electronic evidence of the
Software, both original and derived, in such manner that prevents subsequent
recovery of such original or derived Software.
11.3 Backwards Compatibility. (a) In addition to the warranties
-----------------------
contained in Section 17 of this Contract, the Vendor represents and warrants
that each Software Revision Level during the Term of this Contract will be
Backwards Compatible with all existing in-service Equipment provided by the
Vendor and the immediately preceding Software Revision Level of such Software
made available to Customers by the Vendor.
(b) In the event that Software supplied by the Vendor at any System
Element Site at any time does not provide Backwards Compatibility as required by
this subsection 11.3, then the Vendor will provide, without charge to the Owner,
the most current Software Updates of the Software to each such System Element
Location, and otherwise take such steps as may be necessary to achieve Backwards
Compatibility.
11.4 Transfer and Relocation. (a) Except as provided in subsection 27.4,
-----------------------
where the Owner or any successor to the Owner's title in the Products (i) elects
to transfer a Product to a third party, and where such Product will remain in
place and operational for the purpose of continuing to provide PCS in the
franchise area in which such Product is installed, or (ii) elects to transfer
Products to an Affiliate for reuse within the United States, the Owner may
transfer its RTU License for the Software furnished under this Contract for use
with such Product, without the payment of any additional Software right-to-use
fees by the transferee, but only under the following conditions:
(A) The right to use such Software may be transferred only together
with the Products with which the Owner has a right to use such
Software, and such right to use the Software will continue to be
limited to use with such Products;
(B) Before any such Software are transferred, the Owner will notify
the Vendor of such transfer and the transferee will have agreed
in writing (a copy of which will be provided to the Vendor) to
keep the Software in confidence and to corresponding conditions
respecting possession and use of Software as those imposed on the
Owner in this Contract; and
(C) The transferee will have the same right to Software warranty and
Software maintenance for such Software as the transferor,
provided the transferee continues to pay the fees, including
recurring fees, such as Annual Release Maintenance Fees, if any,
associated with such Software warranty or maintenance.
<PAGE>
61
(b) Except as provided in subsection 11.4(a) or subsection 27.4, and except
as may otherwise in this Contract be provided expressly, the Owner or any
successor to the Owner's title in the Products will have no right to transfer
Software furnished by the Vendor under this Contract without the consent of the
Vendor. If the Owner or such successor elects to transfer a Product purchased
under this Contract for which it does not under this Contract have the right to
transfer related Software, the Vendor agrees that upon written request of the
transferee of such Product, or of the Owner or such successor, the Vendor will
not without reasonable cause fail to grant to the transferee a license to use
such Software with the Products, whether to be located within the United States
or elsewhere, upon payment of a relicensing fee to the Vendor in an amount equal
to fifty percent (50%) of the license fee for the Software originally paid by
the Owner to the Vendor at the time of the original purchase of the Software
from the Vendor; provided that such relicensing fee will in no event exceed
-------- ----
fifteen percent (15%) of the price paid by the transferee to the Owner for the
Product with respect to which such Software is used.
11.5 Survival. The obligations of the Owner under the Software Licenses
--------
will survive the termination of this Contract, regardless of the cause of
termination.
11.6 Access to Source Codes. The Vendor grants the Owner a right to
----------------------
access the Source Code and to modify the Software (the "RTM License") for the
maintenance, enhancement and support of those Products purchased from the Vendor
and owned or operated by the Owner under the following circumstances which will
be set forth in the Escrow Agreement:
(a) If the Vendor becomes insolvent, makes a general assignment for the
benefit of creditors, files a voluntary petition in bankruptcy or an involuntary
petition in bankruptcy is filed against the Vendor which is not dismissed within
sixty (60) days, or suffers or permits the appointment of a receiver for its
business, or its assets become subject to any proceeding under a bankruptcy or
insolvency law, domestic or foreign, or has liquidated its business, or the
Vendor, or a business unit of the Vendor that is responsible for maintenance of
the Software, ceases doing business without providing for a successor, and the
Owner has reasonable cause to believe that any such event will cause the Vendor
to be unable to meet its warranty service or support requirements hereunder; or
(b) If it is determined, pursuant to the dispute resolution mechanisms set
forth in subsection 23.1, that the Vendor, its assignee or designee has failed,
or is unable, to provide the warranty service or support of the System and/or
any PCS System contemplated by this Contract.
11.7 Escrow Agreement. The Vendor agrees, at the Owner's request, to
----------------
become party to a Source Code escrow agreement (the "Escrow Agreement") which
will allow the Owner to obtain access to the applicable Source Codes in the
circumstances set forth in subsection 11.6 and such Escrow Agreement. The Owner
will pay all costs, including the Vendor's reasonable costs incurred in
gathering, organizing and delivering such Source Code, associated with such
Escrow Agreement. The Vendor represents, warrants and agrees that (i) the
Source Codes delivered into escrow in accordance with the Escrow Agreement will
<PAGE>
62
comprise the full Source Code language statement of the Software as used, or
required to be used, by the Vendor to maintain or modify the System and/or any
PCS System without the help of any other Person or reference to any other
material, (ii) such Source Codes will include all versions thereof from the date
of initial creation, and (iii) such Source Codes must be kept up to date,
including all updates needed to maintain compliance with the Specifications and
the System Standards. In addition, all parts of the Source Codes from the date
of creation thereof, and all updates thereto (including, without limitation,
those that are necessary to maintain compliance with the Specifications) must be
delivered into escrow in accordance with the Escrow Agreement.
11.8 Software Maintenance. The Vendor represents and warrants that the
--------------------
Software delivered to the escrow agent pursuant to subsection 11.7 for
redelivery to the Owner pursuant to the Escrow Agreement will be in a form
suitable for reproduction by the Owner and will include the full Source Code
language statement of the Software as used by the Vendor sufficient to allow
maintenance and modification.
11.9 Custom Development. 11.9.1 Request for Custom Material. (a) From
------------------ ---------------------------
time to time, the Owner may have requirements for custom Software (including,
but not limited to, development of identified features or modifications to
Software or Software Enhancements) or custom development of Equipment
(including, but not limited to, development of identified features or
modifications to Equipment or Equipment Enhancements) to be provided by the
Vendor under this Contract (the "Custom Material"). If the Owner has a
requirement for Custom Material that is a specific enhancement or modification
of a previously licensed feature or of previously purchased Products, the Owner
will identify to the Vendor in writing a summary of any such proposed
development of Custom Material. Such summary will provide a description of any
proposed Custom Material sufficient to enable the Vendor to determine the
general demand for, and its plans, if any, to develop the same or similar
Products. The Vendor will respond to such summary within thirty (30) days after
receipt thereof and indicate if it has the ability to fulfill a subsequent
Request for Proposal ("RFP") from the Owner for such development of Custom
Material. The Owner acknowledges that the Vendor will have no obligation to
develop any proprietary materials for Owner.
(b) If the Vendor decides that it does not have the technical ability or
the capacity to fulfill a subsequent RFP for such Custom Material development,
the Vendor's response pursuant to subsection 11.9.1(a) will (i) provide the
Owner an explanation of why it cannot fulfill such RFP and (ii) use reasonable
diligence to work with the Owner to identify an alternative source for such
development reasonably acceptable to the Owner. In determining whether the
Vendor has the technical ability or the capacity to fulfill the RFP, the Vendor
may consider factors including, but not limited to, (1) the Vendor's likelihood
of recovering its costs for performing such development, (2) the impact of such
development on the Vendor's actual outstanding commitments to perform work for
other Customers and to pursue strategic development activities; and (3) whether
the Vendor can perform the work utilizing existing software development staff
without stopping work underway.
<PAGE>
63
(c) If the Vendor fails to agree to a request for Custom Material
development pursuant to the terms of this subsection 11.9 then the matter may,
at the Owner's option, be referred to dispute resolution pursuant to Section
23.
11.9.2 Vendor Response. After reviewing an RFP issued for such
---------------
Custom Material, the Vendor will respond to the Owner within thirty (30) days,
unless otherwise agreed by the Parties, stating the terms and conditions upon
which the Vendor would be willing to undertake such development, including, but
not limited to, a listing of specifications, custom development charges, planned
license fees and a proposed delivery schedule.
11.9.3 Ownership of Intellectual Property. The Vendor will own all
----------------------------------
forms of intellectual property rights (including, but not limited to, patent,
trade secret, copyright and mask rights) pertaining to Products, and will have
the right to file for or otherwise secure and protect such rights. The
foregoing notwithstanding, the Parties understand and agree that from time to
time the Owner may devise, develop or otherwise create ideas or other concepts
for services or new products which are patentable or otherwise capable of
receiving protection from duplication. In such event, the Owner will have the
right to patent or otherwise protect such ideas or concepts for its own use and
benefit.
SECTION 12 SOFTWARE CHANGES
12.1 Annual Release Maintenance Fees. So long as the Owner pays the
-------------------------------
applicable Annual Release Maintenance Fees in accordance with the terms of this
Contract during the Term (including at any time after the Term so long as the
Owner at such time continues to pay the Annual Release Maintenance Fees), the
Vendor will provide to the Owner, at such times as they become generally
available to the Vendor's Customers, all Software Upgrades, all Software
Enhancements and all Combined Releases (but not Optional Software Features,
unless otherwise mutually agreed between the Parties) applicable to Software for
PCS Products for which the Owner has obtained a RTU License pursuant to the
terms of this Contract.
12.2 Notice. The Vendor must give the Owner not less than ninety (90)
------
days, prior written notice of the introduction of any Software Enhancement
release or any Software Combined Release or any Optional Software release. In
addition, in each February and August of each year during the Term of this
Contract, the Vendor must provide the Owner with a forecast of future Software
Enhancement releases or Software Combined Releases or any Optional Software
release, as the case may be, then currently being developed by or on behalf of
the Vendor.
12.3 Installation, Testing and Maintenance. The installation and testing
-------------------------------------
of the Software by the Vendor and the acceptance thereof by the Owner will be
performed in accordance with the criteria set forth in Exhibit B3.
<PAGE>
64
12.4 Software Fixes. In the event that any Software Upgrade, Software
--------------
Enhancement or Software Combined Release supplied by the Vendor during the Term
of this Contract has the effect of preventing the System and/or any PCS System
or any part thereof from satisfying, or performing in accordance with the
Specifications, the System Standards and/or Exhibit F or otherwise adversely
affects the functionality or features of the System, any PCS System or any part
thereof, then the Vendor will promptly retrofit or take such other corrective
action as may be necessary to assure that the System, any such PCS System or any
such affected part, as modified to include each such Software Upgrade, Software
Enhancement or Software Combined Release, will satisfy, and perform in
accordance with, the Specifications, the System Standards and/or Exhibit F and
restore all pre-existing functionality and features as well as provide any new
features and functionality provided by any of the foregoing modifications, in
each case without any charge to the Owner (other than payment of the applicable
Annual Release Maintenance Fees pursuant to the terms of this Contract).
SECTION 13 EQUIPMENT CHANGES
13.1 Equipment Upgrades. (a) Equipment Upgrades will be provided to the
------------------
Owner by the Vendor at no charge to the Owner as provided in subsection 13.1(b)
below. Equipment Enhancements must be provided to the Owner by the Vendor, if
requested by the Owner, and the Owner is obligated to make payment therefor in
an amount that is no higher than that payable by any Customer other than the
Owner, which amount of payment will be adjusted as set forth in subsections 6.2,
7.2 and 27.16 and Section 26. If the Vendor at any time issues an Equipment
Upgrade which is combined with any Equipment Enhancement (collectively, the
"Equipment Combined Release") to such Equipment, the Equipment Combined Release
will be provided at no charge to the Owner unless and until the Owner elects to
use any of the feature enhancement or enhancements included within the Equipment
Combined Release and has accepted such Equipment Combined Release.
(b) (i) After a PCS Product has been shipped to the Owner, if the Vendor
issues an Equipment Upgrade ("Class A change") or Equipment Enhancement ("Class
B change"), or where a modification to correct an error in field documentation
is to be introduced, the Vendor will promptly notify the Owner of such change
through the Vendor's design change management system or another Vendor
notification procedure. Each change notification, whether or not it bears a
restrictive legend, will be subject to subsection 27.19, except that such
information may be reproduced by the Owner for the Owner's use as required
within the System. If the Vendor has engineered, furnished, and installed a
Product which is subject to an Equipment Upgrade, the Vendor will implement such
change, at its sole cost and expense, if it is announced within fifteen (15)
years from the date of shipment of that Product, by, at its option (subject to
the reasonable review and acceptance of the Owner at such times as the Owner
reasonably determines that it needs to review such Vendor decision), either (A)
modifying the Product at the Owner's site; (B) modifying the Product which the
Owner has returned to the Vendor in accordance with the Vendor's reasonable
instructions pursuant to and in accordance with the terms of this Contract; or
(C) replacing the Product requiring the change with a replacement Product for
which such change has already been implemented. If
<PAGE>
65
the Vendor has not engineered the original Product application and accordingly
office records are not available to the Vendor, the Vendor will provide the
generic change information and associated parts for the Owner's use in
implementing such change.
(ii) In any of the instances described in clause (i) above, if the
Vendor and the Owner agree that a Product or part thereof subject
to such change is readily returnable, the Owner, at its expense,
will remove and return such Product or part to the Vendor's
designated facility within the United States and the Vendor, at
its sole expense, will implement such change (or replace it with
a Product or part for which such change has already been
implemented) at its facility and return such changed (or
replacement) Product or part at its sole cost and expense to the
Owner's designated location within the United States. Any such
reinstallation will be performed by the Owner at its sole
expense. At any such time that the Owner's spares or plug-in
stocks are not available to implement a rotational program for an
Equipment Upgrade, the Vendor will provide a seed stock, where
feasible and necessary.
(iii)If the Owner does not make or permit the Vendor to make an
Equipment Upgrade as stated above within one (1) year from the
date of change notification or such other period as the Vendor
may agree, subsequent changes, repairs or replacements affected
by the failure to make such change may, at the Vendor's option,
be invoiced to the Owner whether or not such subsequent change,
repair or replacement is covered under the warranty provided in
this Contract for such Product. If requested by the Owner,
Equipment Upgrades announced more than fifteen (15) years from
the date of shipment will be implemented at the Owner's expense.
(iv) If the Vendor issues an Equipment Enhancement after a PCS Product
has been shipped to the Owner, the Vendor will promptly notify
the Owner of such change if it is being offered to any of the
Vendor's Customers. Except as otherwise set forth above in
subsection 13.1(a), when an Equipment Enhancement is requested by
the Owner, the pricing set for such Equipment Enhancements will
be at the Vendor's standard charges subject to the applicable
discounts set forth in this Contract and Section 26.
(v) All change notifications for Equipment Upgrades and Equipment
Enhancements provided by the Vendor to the Owner pursuant to the
terms of this Contract must contain the following information:
(i) a detailed description of the change; (ii) the reason for the
change; (iii) the effective date of the change; and (iv) the
implementation schedule for such change, if appropriate.
<PAGE>
66
13.2 Notice. The Vendor will give the Owner not less than ninety (90)
------
days, prior written notice of the introduction of any Equipment Enhancement or
any Equipment Combined Release. In addition, in each February and August of
each year during the Term of this Contract, the Vendor will provide the Owner
with a forecast of future Equipment Enhancements to the Equipment or Equipment
Combined Releases then currently being developed by or on behalf of the Vendor.
13.3 Installation, Testing and Acceptance. The Installation and testing
------------------------------------
of the Equipment by the Vendor and the acceptance thereof by the Owner must be
performed in accordance with Exhibit B3 pursuant to the Project Milestones in
Exhibit A.
13.4 Equipment Fixes. In the event that any Equipment Upgrade or
---------------
Equipment Enhancement supplied by the Vendor during the Term of this Contract
has the effect of preventing the System and/or any PCS System or any part
thereof from satisfying, or performing in accordance with, the Specifications,
the System Standards and/or Exhibit F or otherwise adversely affects the
functionality, interoperability or features of the System, any such PCS System
or any part thereof then the Vendor will without any charge to the Owner
promptly retrofit or take such other corrective action as may be necessary to
assure that the System, any such PCS System or any such affected part, as
modified to include each such Equipment Upgrade and Equipment Enhancement, will
satisfy, and perform in accordance with, the Specifications, the System
Standards and/or Exhibit F and restore all pre-existing functionality and
features as well as provide any features and functionality provided by any of
the foregoing modifications.
SECTION 14 INTELLECTUAL PROPERTY
14.1 Intellectual Property. The Vendor grants the Owner rights to state
---------------------
that it is using the Vendor's Products or Services in the Owner's marketing,
advertising or promotion of the System, any PCS System or any part thereof. The
Owner has the right to use for such marketing, advertising or promotion the
Vendor's advertising and marketing materials (including pamphlets and brochures)
provided to the Owner by the Vendor describing the System, any PCS System or any
part thereof, or any Product. Other than as set forth in this subsection 14.1,
the Owner has the right to use the trademarks and service marks of the Vendor or
its assignee in the Owner's marketing, advertising and promotion of the System,
any PCS System or any part thereof only with the written consent of the Vendor
not to be unreasonably withheld subject to and in accordance with the terms of
subsection 27.13.
14.2 Infringement. (a) The Vendor agrees that it will defend, at its own
------------
expense, all suits and claims against the Owner for infringement or violation
(whether by use, sale or otherwise) in the United States of any patent,
trademark, copyright, trade secret or other intellectual property rights of any
third party (collectively, "Intellectual Property Rights"), covering, or alleged
to cover, the Equipment, Software, the System and/or any PCS System or any
component thereof for its intended use, in the form furnished or as subsequently
modified by the Vendor or as otherwise modified by the Owner pursuant to the
direction or approval of
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67
the Vendor. The Vendor agrees that it will pay all sums, including, without
limitation, attorneys' fees and other costs, which, by final judgment or decree,
or in settlement of any suit or claim to which the Vendor agrees, may be
assessed against the Owner on account of such infringement or violation,
provided that:
- - -------- ----
(i) the Vendor will be given prompt written notice of all claims of
any such infringement or violation and of any suits or claims
brought or threatened against the Owner or the Vendor of which
the Owner has actual knowledge;
(ii) the Vendor will be given full authority to assume control of the
defense (including appeals) thereof through its own counsel at
its sole expense and will have the sole right to settle any suits
or claims without the consent of the Owner; provided that the
-------- ----
Vendor will have no right to agree to injunctive relief against
the Owner; provided further that the Vendor will notify the
-------- -------
Owner of any proposed settlement condition prior to the
Vendor's acceptance of such settlement; and
(iii)the Owner will cooperate fully with the Vendor in the defense of
such suit or claims and provide the Vendor, at the Vendor's
expense, such assistance as the Vendor may reasonably require in
connection therewith.
(b) The Vendor's obligation under this subsection 14.2 will not extend to
alleged infringements or violations that arise because the Products provided by
the Vendor are used in combination with other products furnished by third
parties and where any such combination was not installed, recommended, approved,
explicitly or by implication, by the Vendor.
14.3 Vendor's Obligation to Cure. If in any such suit so defended, all or
---------------------------
any part of the Equipment, Software, the System, any PCS System or any component
thereof is held to constitute an infringement or violation of Intellectual
Property Rights and its use is enjoined, or if in respect of any claim of
infringement or violation the Vendor deems it advisable to do so, the Vendor
will at its sole cost, expense and option take one or more of the following
actions: (i) procure the right to continue the use of the same without
interruption for the Owner; (ii) subject to the terms of subsection 2.17 replace
the same with noninfringing Equipment or Software that meets the Specifications;
or (iii) modify said Equipment, Software, the System, any PCS System or any
component thereof so as to be noninfringing, provided that the Equipment,
-------- ----
Software, the System, any PCS System or any component thereof as modified meets
all of the Specifications. In the event that the Vendor is not able to cure the
infringement pursuant to clause (i), (ii) or (iii) in the immediately preceding
sentence, the Vendor will refund to the Owner the full purchase price paid by
the Owner for such infringing Product or feature, and the Owner will be under no
obligation to return to the Vendor such infringing Product or feature regardless
of whether, or by what means, the Owner, on its own or otherwise, subsequently
cures such infringement.
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68
14.4 Vendor's Obligations. The Vendor's obligations under this Section
--------------------
14 will not apply to any infringement or violation of Intellectual Property
Rights caused by modification of the Equipment, Software, the System, any PCS
System or any component thereof by the Owner, or any infringement caused solely
by the Owner's use and maintenance of the Products other than in accordance with
the Specifications and the purposes contemplated by this Contract, except as
expressly authorized or permitted by the Vendor. The Owner will indemnify the
Vendor against all liabilities and costs, including reasonable attorneys' fees,
for defense and settlement of any and all claims against the Vendor for
infringements or violations based upon this subsection 14.4.
14.5 License to Use Vendor Patents. (a) The Vendor grants to the Owner
-----------------------------
and its Affiliates, under patents which the Vendor (or in the event of an AT&T
Assignment pursuant to and in accordance with subsection 27.22 the Vendor's
Successor) owns or has a right to license ("Vendor Patents"), a worldwide,
royalty-free, nonexclusive license (the "Patent License") to use any Product
furnished by the Vendor under this Contract (including any combination of
products and services, whether or not furnished at the same time or as part of a
larger combination) for provision of telecommunications services; provided,
--------
however, that no rights are conveyed to the Owner and its Affiliates with
- - -------
respect to any invention which is directed to (i) a combination of a Product or
Products furnished with any other Item which the Vendor does not furnish to the
Owner under this Contract wholly or in part for such use, or (ii) a method or
process which is other than an inherent use of the Products furnished. As used
in this subsection 14.5, the term "inherent use" means a use that can be
completely performed by a Product furnished by the Vendor (or a combination of
Products furnished by the Vendor), without the need for any additional product,
service, development modification or programming by the Owner and its Affiliates
or by a third party. The Owner understands that in the event of an AT&T
Assignment pursuant to and in accordance with subsection 27.22 the Owner's
rights to any Patent Licenses granted pursuant to this subsection 14.5 will be
from the Vendor's Successor under only the patents the Vendor's Successor owns
or has a right to license and not those patents as to which there is no such
right to license.
(b) The Owner and any successor to the Owner's title in the Products has
the right (subject to written approval of the Vendor, which approval will not be
unreasonably withheld), to assign the Patent Licenses to any other Person who
acquires legal title to the Products including, but not limited to, any Person
or Persons who taking part in the financing or any part of the Nationwide
Network, provided that no such assignment to Persons taking part in the
-------- ----
financing of any part of the Nationwide Network will be permitted except in
accordance with the provisions of subsection 27.4 of this Contract. Nothing
contained in this subsection 14.5 is intended to, and shall not, limit any
rights or privileges that the Owner has under this Contract or otherwise under
Applicable Law.
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69
SECTION 15 DELAY
15.1 Liquidated Damages. The Parties agree that damages for delay are
------------------
difficult to calculate accurately and, therefore, agree that liquidated damages
(the "Liquidated Damages") will be paid for non-performance or late performance
of the Vendor's obligations under this Contract pursuant to the terms hereof.
15.2 Interim Delay. (a) Failure of the Vendor to complete the Work
-------------
necessary to achieve each of the Project Milestones applicable to any PCS System
(other than Milestone 3 (as set forth on Exhibit A1)) on or before the date
applicable to such Milestone for such PCS System that is required to be achieved
by the Vendor prior to the Guaranteed Substantial Completion Date for such PCS
System (each an "Interim Milestone") will result in the Vendor being liable to
pay to the Owner an amount equal to [ ]; provided that no such Interim Delay
-------- ----
Penalty will be due if the delay is directly and expressly attributable solely
to (i) an event constituting a Force Majeure pursuant to the terms of this
Contract or (ii) an act or omission of the Owner. Interim Delay Penalties
accrued pursuant to this subsection 15.2(a) will be offset against the payment
to be made by the Owner to the Vendor upon Substantial Completion of the PCS
System to which such interim delay relates. The Interim Delay Penalty applicable
to Milestone 4 (as set forth on Exhibit A1) will be [ ]. This subsection 15.2
will not be applicable to Milestone 3 (as set forth on Exhibit A1) for either
the System or any PCS System.
(b) To the extent that the Vendor is responsible for Interim Delay
Penalties pursuant to subsection 15.2(a) such penalties will be credited back to
the Vendor by the Owner to the extent that (i) the Vendor successfully achieves
the Interim Milestone subject to delay within thirty (30) days of the date
scheduled therefore pursuant to the terms hereof and Exhibit A and (ii) such
interim delay does not otherwise materially adversely affect the Owner, such PCS
System and/or the System as a whole. Any such reimbursement will be credited
back to the Vendor such that the Interim Delay Penalty otherwise offset against
the relevant Substantial Completion payment in accordance with subsection
15.2(a) above will be added back to such Substantial Completion payment to be
made to the Vendor by the Owner.
15.3 Completion Delay. (a) [ ]
----------------
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[ ]
(b) If any PCS System does not achieve Substantial Completion by the
Guaranteed Substantial Completion Date but the Owner nonetheless chooses (in its
sole discretion) to commence In Revenue Service in such incomplete PCS System
(such action in no way constituting the Owner's acceptance, express or implied,
of the System or such PCS System or any part thereof), then the Vendor will be
required to pay, on a daily basis, only that percentage of the daily Late
Completion Payment equal to that percentage of the geographic area to be
otherwise covered by such PCS System not otherwise placed In Revenue Service by
the Owner.
(c) In the event of a change in the Product Contract Price pursuant to
subsections 6.2, 7.2 or 27.16 or Section 26 during the Term of this Contract
from the amount originally set forth in this Contract pursuant to Section 6 the
per diem amount of Late Completion Payments set forth above will be increased or
decreased, as appropriate, by an amount equal to the increase or decrease in the
Owner's per diem interest payment obligation resulting from any change in the
amount of debt incurred or to be incurred by the Owner related to such change in
the Product Contract Price.
(d) Late Completion Payments, including any portions of such payments
payable in accordance with paragraphs (a) and (b) above, will be accrued during
the Completion Cure Period and offset against payments otherwise due to the
Vendor upon the achievement of Substantial Completion pursuant to the terms of
subsection 6.3. If the Vendor fails to achieve Substantial Completion within
sixty (60) days of the Guaranteed Substantial Completion Date for any reason
other than primarily because of (i) a Force Majeure event pursuant to Section
16 or (ii) the direct and explicit act or omission of the Owner, then the Owner
will have the option to terminate this Contract with respect to the PCS System
affected by any such delay without any penalty or payment obligation (other than
payment obligations under this Contract outstanding as of the date of any such
termination; provided that any such amounts payable by the Owner will not
-------- ----
include any amounts that would have been payable to the Vendor only upon
Substantial Completion or Final Acceptance); provided further that in the event
-------- -------
the Vendor fails to achieve Substantial Completion within such sixty (60) day
period in any two (2) PCS Systems within the Initial System over any period of
time (regardless of whether such events are concurrent or whether the first such
event was subsequently cured) the Owner will have the right, but not the
obligation, to terminate this Contract in its entirety.
SECTION 16 FORCE MAJEURE
16.1 (a) Either Party may make a claim for excusable failure or delay
with respect to any obligation of such Party under this Contract, except any
obligation to make payments when due. Excusable failure or delay will be
allowed only in the event of an event of Force Majeure that is beyond the
reasonable control of the affected Person. Notwithstanding the foregoing, the
Vendor will not be entitled to relief under this Section 16 to the extent that
any event otherwise constituting an event of Force Majeure results from the
negligence or fault of
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71
the Vendor or any Subcontractor, and the Owner will not be entitled to relief
under this Section 16 to the extent any event otherwise constituting an event
of Force Majeure results from the negligence or fault of the Owner.
(b) The Party claiming the benefit of excusable delay hereunder must (i)
promptly notify the other Party of the circumstances creating the failure or
delay and provide a statement of the impact of such Party failure or delay and
(ii) use reasonable efforts to avoid or remove such causes of nonperformance,
excusable failure or delay. If an event of Force Majeure prevents the Vendor
from performing its obligations under this Contract for a period exceeding sixty
(60) days, the Owner may, upon prior written notice to the Vendor, terminate
this Contract.
(c) The Party not claiming the benefit of excusable delay hereunder will
likewise be excused from performance of its obligations hereunder on a day-for-
day basis to the extent such Party's obligations are affected due to the other
Party's delayed performance.
(d) In the event of a Force Majeure which the Party claiming relief for
such event has used all best efforts to resolve in accordance with the terms of
this Contract, upon the written request of either Party, the other Party will in
good faith negotiate modifications, to the extent reasonable and necessary, in
scheduling and performance criteria in order to reasonably address the impact of
such Force Majeure.
SECTION 17 WARRANTIES
17.1 Product Warranty. (a) The Vendor warrants that, for a period of two
----------------
(2) years from the date of Final Acceptance of any PCS System (the "Product
Warranty Period"), all Products and all of the Installation and the
Configuration Engineering thereof within such PCS System will materially conform
with and perform the functions set forth in the Specifications and the relevant
performance criteria set forth in Exhibit D, to the extent applicable, and will
be free from Defects and Deficiencies in material or workmanship which impair
service to subscribers, System performance, billing, administration and/or
maintenance. In the case of Software, the Product Warranty Period applicable to
any such Software will be automatically extended upon, and simultaneous with,
any Software Upgrade issued pursuant to the terms of Section 12. The Vendor
will assign to the Owner all outstanding Subcontractor warranties attributable
to Non-Essential Equipment at such time that the Vendor's warranty on such Non-
Essential Equipment pursuant to this subsection 17.1 expires pursuant to and in
accordance with the Product Warranty Period applicable to such Item of Non-
Essential Equipment. The Warranty Period for a PCS Product or part thereof
repaired or provided as a replacement under this Product warranty is six (6)
months or the unexpired term of the new Product Warranty Period applicable to
the repaired or replaced PCS Product or part, whichever is longer.
(b) To the extent the Owner orders additional Products from the Vendor in
accordance with the terms of this Contract including, but not limited to,
subsections 2.2 and/or 7.2, any such Products so ordered by the Owner and
delivered and installed by the Vendor or its Subcontractors will be warranted to
the same extent as set forth in clause (a) above for a
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period of not less than twenty four (24) months from the earlier of (i) the date
the Owner puts such additional Products into In Revenue Service, (ii) the date
of the Owner's acceptance and (iii) thirty (30) days after the Vendor completes
the installation of such additional Products. If in the event, pursuant to the
Owner's order for such additional Products the Vendor is not required to install
such additional Products, the warranty on such additional products will run
twenty-four (24) months from the date the Vendor shipped such products to the
Owner.
17.2 Services Warranty. (a) The Vendor warrants that, for a period of not
-----------------
less than three (3) years from the date of completion of RF Engineering done by
the Vendor or its Subcontractors (but in no event earlier than the achievement
of Milestone 5 in such PCS System) in any given PCS System (the "RF Services
Warranty Period") the Final Site Count within and the Final RF Design applicable
to such PCS System will be accurate based upon the environmental circumstances
in such PCS System as they existed at the time of the Final Acceptance of such
PCS System provided that the projections of subscriber growth, traffic and other
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predictive data, including all applicable standards as identified in Exhibits
B1, D and H, upon which the Final Site Count and Final RF Design have been
determined, have not been materially exceeded or the applicable and relevant
industry standards have not materially changed; and provided further that in no
-------- ------- ----
event will the RF Engineering warranty pursuant to this subsection 17.2(a) cover
or warrant items or performance otherwise covered or warranted pursuant to
subsection 17.3 below.
(b) The Vendor warrants that, for a period of not less than two (2) years
from the date of completion of Facilities Preparation Services within any PCS
System but in no event later than the achievement of Milestone 8 pursuant to
Exhibit A1 in such PCS System (provided that in the event of a Microwave Delay
-------- ----
Period in such PCS System pursuant to subsection 23.8, the commencement of the
Facilities Preparation Services Warranty Period will not be later than three (3)
months from the date the Vendor would have otherwise been able to commence
Substantial Completion testing in such PCS System in accordance with Exhibit B3
and Milestone 8 as set forth on Exhibit A1 but for the existence of such
Microwave Delay Period) (the "Facilities Preparation Services Warranty Period"
and collectively with the RF Services Warranty Period, the "Services Warranty
Periods") such Facilities Preparation Services will be (i) operational in
accordance with the Specifications, (ii) in compliance with all material
Applicable Laws and material Applicable Permits in effect at the time of the
completion of such Facilities Preparation Services in such PCS System, and (iii)
free from Defects or Deficiencies.
(c) The Vendor warrants that, for a period of six (6) months from the date
of completion, with respect to other Services performed by the Vendor and not
otherwise covered elsewhere in this Section 17, including, but not limited to,
repair Services, such other Service(s) will be free from Defects or Deficiencies
for which the Vendor is responsible pursuant to the terms of this Contract.
17.3 System Warranty. The Vendor warrants that, for a period ending three
---------------
(3) years from the Final Acceptance of the last PCS System within the Initial
System (the "System Warranty Period"), the ongoing performance of each PCS
System together with all other PCS Systems within the System will conform with
and perform to the performance criteria set
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73
forth Exhibit F as of the date of the Final Acceptance of such PCS System based
on the circumstances within such PCS System on such date. The System warranty
pursuant to this subsection 17.3 will be limited to the extent that the
projections of subscriber growth, traffic and other predictive data, including
all applicable standards as identified in Exhibits B1, D and H, upon which the
Final Site Count and Final RF Design have been determined, have not been
materially exceeded or the applicable and relevant industry standards have not
materially changed.
17.4 Breach of Warranties. (a) In the event of any breach of any of the
--------------------
Warranties during any of the applicable Warranty Periods set forth in
subsections 17.1(a), 17.1(b), 17.2(a), 17.2(b), 17.2(c) and 17.3, the Vendor
will, in accordance with the terms of this Section 17, promptly repair or
replace the defective or nonconforming Product or otherwise cure any Defects and
Deficiencies so that each PCS System and the System as a whole will perform in
accordance with the Specifications and Exhibit F. If the Vendor fails to
promptly repair, replace and/or cure such defect, the Owner may, in addition to
exercising any other remedies available to it, itself cause such repair,
replacement and/or cure, at its option and at the sole cost and expense of the
Vendor.
(b) The Vendor recognizes that the Owner may suffer injury and may be
damaged in an amount which will be difficult to determine with certainty as a
result of Outages resulting from causes attributable to the failure of the
Vendor's Products and/or Services to perform in accordance with the
Specifications. As used herein, "Outage" means an unscheduled loss of
functionality of the System or any PCS System due to the failures of PCS
Products or any combination thereof defined as the loss of the capability to
originate or terminate [ ] or more of the active voice channels then in service
within the System or such PCS System for a period of time exceeding [ ] minutes.
(c) During the System Warranty Period, the Vendor will be liable to the
Owner for damages (the "Warranty Damages") for Outages (for other than in the
Test-bed Laboratory) that result from (i) the failure of the Vendor's Equipment
and/or Software to perform in accordance with the Specifications, (ii) the
failure of the Vendor to provide Services in accordance with the Specifications
applicable thereto, (iii) a Vendor procedural error or (iv) inaccurate Technical
Documentation, excluding marketing bulletins, sales literature or other
promotional materials provided by the Vendor to the Owner. As used herein,
"Vendor procedural error" means an error or improper deviation from the Vendor's
or its Subcontractors' procedures by, or attributable to, the Vendor's
personnel. Warranty Damages will be calculated based upon [ ] for each Outage
occurring in any given PCS System to the extent such Outage exceeds [ ] from
the time the Owner notified the Vendor of such Outage (not including such
[ ]), plus [ ] for each minute the duration of the Outage exceeds [ ]from
the time the Owner notifies the Vendor of such Outage (not including such [ ]).
(d) In no event will the Vendor's liability for Warranty Damages pursuant
to this subsection 17.4 exceed [ ] with respect to each Outage in any given
PCS System. In addition, the Vendor's total liability for Warranty Damages
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74
pursuant to this subsection 17.4 will not exceed [ ] per calendar year during
the Term of this Contract with respect to Outages in any given PCS System per
calendar year.
(e) Notwithstanding the foregoing, the Vendor will have no liability
pursuant to this subsection 17.4 for:
(i) Outages caused by a Force Majeure event as
described in Section 16 other than to the extent that any of the
Vendor's Products and/or Services resulting in such Outages
should, in accordance with the Specifications be able to
withstand any such Force Majeure event;
(ii) Outages resulting from a scheduled activity,
including, but not limited to, System maintenance or loading of
Software or Equipment Upgrades, Enhancements or Combined
Releases, unless said Outage (without fault of the Owner) extends
beyond the expected downtime, as provided in the Specifications
applicable thereto, associated with such Equipment or Software
maintenance Upgrades, Enhancements or Combined Releases;
(iii) alterations by the Owner and/or the Vendor at
the Owner's request or otherwise pursuant to the terms of this
Contract to the System and/or any PCS System, excluding normal
maintenance or parameter changes as prescribed by the applicable
Technical Documentation;
(iv) Outages resulting from the Owner's, its
subcontractors' or any third party's (if such third party is
employed by the Owner) failure to follow the Technical
Documentation;
(v) Outages resulting from the negligence, gross
negligence or willful misconduct of the Owner, or any of its
employees, agents or contractors or any other third party (other
than any Subcontractor or any employees, representatives or
agents of the Vendor); or
(vi) Outages resulting from failure of equipment or
software not supplied by the Vendor or any Subcontractors or from
the performance of services not performed by the Vendor or any
Subcontractors; or
(vii) Outages caused by the Owner's deactivation of
the System or any portion thereof, unless the deactivation is
undertaken in avoidance of an unplanned outage; or
(viii) Outages caused by the failure of the Network
Interconnection facilities.
(f) On or before the beginning of each quarter of each calendar year
during the Term of this Contract, the Owner will provide the Vendor a written
report summarizing any Outages occurring during the previous calendar quarter.
The amount of any Warranty
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Damages will be determined by the Owner as of the end of the fourth quarter of
each calendar year during the Term, for the preceding four quarterly reporting
periods during such Term. The Owner will notify the Vendor of any such Warranty
Damages in writing. Such Damages will be payable in credits on future purchases
under this Contract or otherwise if this Contract is terminated for any reason
within thirty (30) days of the occurrence. Any disputes regarding the
determination of the cause of an Outage or the amount of any such Warranty
Damages will be resolved in accordance with the provisions of Section 23.
17.5 Repair and Return. (a) If the Owner claims a breach of warranty
-----------------
under subsections 17.1, 17.2 or 17.3, it must notify the Vendor of the claimed
breach within a reasonable time after its determination that a breach has in
fact occurred. The Owner will allow the Vendor to inspect the Products, the
Services or the System, as the case may be, on-site, or, upon the Vendor's
reasonable request and, subject to subsection 17.5(d) below, at the Vendor's
sole expense: (i) with respect to Products, return such Products to any of the
Vendor's repair facilities located in the United States and listed on Schedule
8, or (ii) with respect to Non-Essential Equipment, return such Non-Essential
Equipment to the Vendor (or to the third party manufacturer if previously
requested by the Vendor) for further return to the applicable third party
manufacturer. The Vendor or such third party manufacturer may use either new,
remanufactured, reconditioned, refurbished, or functionally equivalent Products
or parts pursuant to the terms of this Contract, including, but not limited to,
the Specifications, in the furnishing of warranty repairs or replacements under
this Contract.
(b) The Vendor agrees to commence work on all such Products, Non-Essential
Equipment, Services or any System Defect, as the case may be, or Installation
defects as soon as practicable, but the Vendor will use reasonable efforts to
commence such Work in no event later than twenty-four (24) hours after
notification of such defect, and, subject to subsections 17.5(e) and 17.5(f),
the Vendor will cure such defect as promptly as practicable. During the Product
Warranty Period electronic circuit board components of Equipment or Non-
Essential Equipment, as the case may be, will be repaired or replaced by the
Vendor.
(c) Failure of the System to function to the level of the performance
warranty as set forth in subsection 17.3 will result in the obligation of the
Vendor to promptly make whatever repairs, modifications, alterations, expansions
or to take any other action of any kind, including but not limited to the
provision of additional Products and/or Services, necessary to satisfactorily
fix that portion of the System causing any failure for which the Vendor is
responsible. In the event of a breach of the warranties in Section 17 which
will be cured with the installation of additional PCS Products, the Vendor will
provide such PCS Products, together with related transportation, Installation
and optimization Services, as are reasonably required to remedy the shortfall,
at no charge to the Owner, provided that, if in order to remedy the shortfall,
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the number of additional Base Stations required to cure the Vendor's breach
under these warranties is not in excess of five percent (5%) of the total number
of Base Stations in the relevant PCS System (as such "total number" is as set
forth in the Final RF Engineering Plan), the Vendor will not be obligated to pay
for the Base Stations and the installation and transportation related thereto
required to cure such breach, provided further that the Vendor will be obligated
-------- ------- ----
to provide and pay for any Base Stations and the installation and transportation
related thereto in excess of any such five percent (5%) shortfall.
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(d) All costs associated with (i) removing or disconnecting the Products
or the Non-Essential Equipment subject to the warranty claim pursuant to the
terms of this Section 17 from any other Products, the respective PCS System or
any part thereof or from other equipment, any other pcs system or any part
thereof to which they are attached or connected, or (ii) dismantling surrounding
Products, the respective PCS System or any part thereof or any other equipment
or other pcs system or any part thereof in order to so remove or disconnect the
Products or Non-Essential Equipment subject to such warranty claim will be borne
by the Vendor throughout the applicable Warranty Period unless such Products are
readily returnable to the Vendor in which case the Owner will bear all such
costs. All packaging, shipping and freight charges incurred in connection with
the return of Items to the Vendor will be borne by the Owner. The Vendor will
be responsible for packing, shipping and freight charges for return of repaired
or replacement Items to the Owner, unless the Products or Non-Essential
Equipment, as the case may be, returned are not Defective or otherwise not
covered by the Vendor's warranty pursuant to subsection 17.1, in which case the
Owner will pay for all such charges between the Owner's point of origin and the
Vendor's applicable repair facility in the United States.
(e) For routine warranty service, the Vendor will, during the respective
Warranty Period, ship replacement or repaired Products or Non-Essential
Equipment (or components thereof) within thirty (30) days of receipt of the
Defective Equipment or Non-Essential Equipment (or components thereof) from the
Owner. In the event such replacement or repaired Products or Non-Essential
Equipment cannot be shipped within such time period, or if the Vendor determines
that due to the particular circumstances, on-site repairs or services are
required, the Vendor will undertake such repairs or replacement services on-site
within thirty (30) days of notification of the warranty Defect by the Owner. In
the event that the Vendor fails to repair or replace Defective Products and/or
Non-Essential Equipment within thirty (30) days from the Owner's notice to the
Vendor, then the Vendor will be deemed to be in breach of its obligations
pursuant to this Contract and the Owner will be entitled to receive a refund of
all amounts previously paid to the Vendor for the Defective Products or Non-
Essential Equipment, and will have no further obligation to pay additional
amounts in connection with the Defective Products or Non-Essential Equipment.
The Owner will return such Defective Products and Non-Essential Equipment to the
Vendor at the Vendor's sole cost and expense.
(f) For emergency warranty service situations, the Vendor will, during the
applicable Warranty Periods, use its best efforts to ship replacement Products
or Non-Essential Equipment (or components thereof) no later than twelve (12)
hours after notification of the warranty Defect by the Owner. The Owner will
ship the Defective Products or Non-Essential Equipment to the Vendor within
thirty (30) days of receipt of the replacement Products or Non-Essential
Equipment, as the case may be. In the event the Vendor fails to receive such
Defective Products or Non-Essential Equipment within such thirty (30) day
period, the Vendor will invoice the Owner for the replacement Products or Non-
Essential Equipment at the then-current price in effect therefor pursuant to the
terms of this Contract. If in an emergency warranty service situation, the
Owner and/or the Vendor determines that due to the particular circumstances, on-
site technical assistance is necessary, the Vendor will dispatch emergency
service personnel to the site in accordance with the terms of subsection 2.26.
For
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the purpose of this subsection 17.5, an emergency warranty service situation
will be deemed to exist upon the occurrence of any E1 Emergency Condition or E2
Emergency Condition. The Vendor agrees to commence work on all Equipment, Non-
Essential Equipment, Facilities Preparation Services or any System defect, as
the case may be, or Installation defects materially impairing service to
subscribers, System performance, billing, administration and/or maintenance as
soon as practicable, but in no event later than twenty-four (24) hours after
notification of such defect, and the Vendor will cure such defect as promptly as
practicable.
17.6 Technical Assistance Center. The Vendor must maintain a technical
---------------------------
assistance center in the United States, and during the Warranty Periods
established pursuant to subsections 17.1(a), 17.1(b), 17.2 and 17.3,
respectively, will make such support center available to the Owner twenty-four
(24) hours per day free of any additional charge to the Owner (other than
applicable Annual Release Maintenance Fees).
17.7 Scope of Warranties. Unless otherwise stated herein, the Vendor's
-------------------
warranties under this Section 17 will not apply to:
17.7.1 damage or defects resulting from the negligence, gross
negligence or willful misconduct of the Owner, or any of its employees, agents
or contractors;
17.7.2 any Equipment or Software damaged by accident or disaster,
including without limitation, fire, flood, wind, water, lightning or power
failure other than to the extent that any such Equipment or Software should in
accordance with the Specifications and/or the Vendor's representations be able
to withstand any such events; or
17.7.3 non-integral items (other than any Non-Essential Equipment
otherwise covered by subsection 17.1) normally consumed in operation or which
has a normal life inherently shorter than the Warranty Periods (e.g., fuses,
----
lamps, magnetic tape); or
17.7.4 damages or defects resulting directly from Other Vendor's
equipment provided that this will in no event limit the Vendor's obligations as
to Interoperability pursuant to the terms of this Contract;
17.7.5 Products which have had their serial numbers or months and
year of manufacture removed or obliterated by the Owner; or
17.7.6 failures or deficiencies in BTS performance resulting solely
from changed environmental conditions, including, but not limited to, the growth
of trees and other foliage, the erection of buildings, and interference from
third party radio transmissions not otherwise engineered for by the Vendor;
except when any such damage or defects are made, done or caused by the Vendor or
any of its Subcontractors.
17.8 Expenses. Except as otherwise provided in this Section 17, the
--------
Owner will reimburse the Vendor for the Vendor's out-of-pocket expenses incurred
at the Owner's
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request in responding to and/or remedying Products, Non-Essential Equipment,
Services or any System defect, or service Deficiencies not covered by the
warranties set forth herein or otherwise covered under a separate System
maintenance agreement (subject, however, to the terms and conditions of any such
agreement) between the Vendor and the Owner.
17.9 Third Party Warranties. If the Vendor purchases or subcontracts for
----------------------
the manufacture of any part of the System or the performance of any of the
Services to be provided hereunder from a third party, the warranties given to
the Vendor by such third party will inure, to the extent assigned to the Owner
pursuant to this Section 17 or permitted by law, to the benefit of the Owner,
and the Owner will have the right, at its sole discretion, to enforce such
warranties directly and/or through the Vendor. The warranties of such third
parties will be in addition to and will not, unless otherwise expressly stated
herein, be in lieu of any warranties given by the Vendor under this Contract.
17.10 Additional System Element Locations. In the event that under the
-----------------------------------
remedy provisions of this Section 17 the Vendor is required to provide
additional MSC and/or Base Stations requiring additional System Element
Locations, the Owner will be responsible for all Site Acquisition and Facilities
Preparation Services costs (other than any construction management costs or fees
which will be borne by the Vendor).
17.11 EXCLUSIVE REMEDIES. THE FOREGOING PRODUCT, SERVICES AND SYSTEM
------------------
WARRANTIES AND REMEDIES ARE EXCLUSIVE FOR THE PURPOSES OF ANY BREACH BY THE
VENDOR OF ANY SUCH WARRANTY AND ARE IN LIEU OF ALL OTHER EXPRESS AND IMPLIED
WARRANTIES, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
SECTION 18 INSURANCE
18.1 Insurance. The Vendor will maintain insurance in accordance with the
---------
provisions set forth in Schedule 6.
SECTION 19 TAXES
19.1 Taxes. The amounts to be paid by the Owner under this Contract do
-----
not include any state, provincial or local sales and use taxes, however
designated, which may be levied or assessed on the System, any PCS System or any
component thereof, including, but not limited to, the Services. With respect to
such taxes, the Owner will either furnish the Vendor with an appropriate
exemption certificate applicable thereto or pay to the Vendor, upon presentation
of invoices therefor, such amounts thereof as the Vendor may by law be required
to collect or pay; provided, however, that the Vendor will use its best efforts
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to minimize the amount of any such taxes. The Owner has no obligation to the
Vendor with respect to other taxes, including, but not limited to, those
relating to franchise, net or gross income or revenue,
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license, occupation, other real or personal property, and fees relating to
importation of the Products in the United States.
SECTION 20 INDEMNIFICATION AND LIMITATION OF LIABILITY
20.1 Vendor Indemnity. (a) The Vendor will indemnify and hold the Owner
----------------
and its Affiliates, partners, directors, officers, agents and employees (the
"Indemnitees") harmless from and against all third party claims, demands suits,
proceedings, damages, costs, expenses, liabilities (including, without
limitation, reasonable legal fees) or causes of action (collectively,
"Liabilities") brought against or incurred by any Indemnitee for (i) injury to
persons (including physical or mental injury, libel, slander and death), or (ii)
loss or damage to any property, or (iii) violations of Applicable Laws,
Applicable Permits, codes, ordinances or regulations by the Vendor, or (iv) any
patent or trademark claims arising out of the Vendor's obligation subject to
subsection 14.2 or (v) any other liability, resulting from the acts or
omissions, negligence, error, wilful misconduct or strict liability, of the
Vendor, its officers, agents, employees, or Subcontractors in the performance of
this Contract. If the Vendor and the Owner jointly cause such Liabilities, the
Parties will share the liability in proportion to their respective degree of
causal responsibility.
(b) The Vendor's obligation to indemnify under subsection 20.1(a) with
respect to any Liability will not arise unless the Owner or the Indemnitee (i)
notifies the Vendor in writing of such potential Liability, in the case of the
Owner, within a reasonable time after the Owner will receive written notice of
such Liability; provided that the lack of such notice will not affect the
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Vendor's obligation hereunder (A) if the Vendor otherwise has knowledge of such
Liability and (B) unless such lack of notice is the cause of the Vendor being
unable to adequately and reasonably defend such Liability, (ii) gives the Vendor
the opportunity and authority to assume the defense of and settle such
Liability, subject to the provisions of the next two sentences, and (iii)
furnishes to the Vendor all such reasonable information and assistance available
to the Owner (or other Indemnitees) as may be reasonably requested by the Vendor
and necessary for the defense against such Liability. The Vendor will assume on
behalf of the Indemnitee and conduct with due diligence and in good faith the
defense of such Liability with counsel (including in-house counsel) reasonably
satisfactory to the Indemnitee; provided that the Indemnitee will have the right
-------- ----
to be represented therein by advisory counsel of its own selection and at its
own expense. If the Indemnitee will have reasonably concluded that there may be
legal defenses available to it which are different from or additional to, or
inconsistent with, those available to the Vendor, the Indemnitee will have the
right to select separate counsel reasonably satisfactory to the Vendor to
participate in the defense of such action on its own behalf at the Vendor's
expense. In the event the Vendor fails to defend any Liability as to which an
indemnity might be provided herein, then the Indemnitee may, at the Vendor's
expense, contest or settle such matter without the Vendor's consent. All
payments, losses, damages and reasonable costs and expenses incurred in
connection with such contest, payment or settlement will be to the Vendor's
account and may be deducted from any amounts due to the Vendor. The Vendor will
not settle any such Liability without consent of the Indemnitee, which consent
will not be unreasonably withheld. This indemnity is in lieu of all other
obligations of the Vendor, expressed or implied, in law
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80
or in equity, to indemnify the Indemnitees (except pursuant to Section 14 or
any other Vendor indemnitees set forth in this Contract).
20.2 LIMITATION ON LIABILITY. EXCEPT AS PROVIDED IN SUBSECTIONS 14.2,
-----------------------
15.2, 15.3, 17.4, 20.1, AND 20.3 HEREOF, IN NO EVENT, AS A RESULT OF BREACH OF
CONTRACT OR BREACH OF WARRANTY, WILL EITHER PARTY HERETO BE LIABLE UNDER THIS
CONTRACT TO THE OTHER PARTY FOR ANY CONSEQUENTIAL OR INCIDENTAL DAMAGES,
INCLUDING LOST PROFITS OR REVENUES OF SUCH PARTY, BEFORE OR AFTER ACCEPTANCE,
WHETHER OR NOT SUCH DAMAGES ARE FORESEEABLE.
20.3 Damages for Fraud or Willful Misconduct (a) The Vendor will be
---------------------------------------
responsible for all damages, including without limitation, indirect, incidental
and consequential damages, incurred by the Owner as a result of any damage or
injury caused by or resulting from the fraud or willful misconduct of the
Vendor.
(b) The Vendor will be responsible for all damages, but excluding
indirect, incidental and consequential damages, incurred by the Owner as a
result of any damages or injury caused by or resulting from the fraud, gross
negligence or willful misconduct of any of the Subcontractors related to the
performance of the Work, to the extent the Vendor would have liability therefor
under this Contract if the Vendor had engaged in such conduct.
SECTION 21 REPRESENTATIONS AND WARRANTIES
21.1 Representations and Warranties of the Vendor. The Vendor hereby
--------------------------------------------
represents and warrants to the Owner as follows:
21.1.1 Due Organization of the Vendor. The Vendor is a corporation
------------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of New York and has all requisite corporate power and authority to own and
operate its business and properties and to carry on its business as such
business is now being conducted and is duly qualified to do business in all
jurisdictions in which the transaction of its business in connection with the
performance of its obligations under this Contract makes such qualification
necessary or required.
21.1.2 Due Authorization of the Vendor; Binding Obligation. The
---------------------------------------------------
Vendor has full corporate power and authority to execute and deliver this
Contract and to perform its obligations hereunder, and the execution, delivery
and performance of this Contract by the Vendor have been duly authorized by all
necessary corporate action on the part of the Vendor; this Contract has been
duly executed and delivered by the Vendor and is the valid and binding
obligation of the Vendor enforceable in accordance with its terms, except as
enforcement thereof may be limited by or with respect to the following: (i)
applicable insolvency, moratorium, bankruptcy, fraudulent conveyance and other
similar laws of general application relating to or affecting the rights and
remedies of creditors; (ii) application of equitable principles (whether
enforcement is sought in proceedings in equity or at law); and
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81
(iii) provided the remedy of specific enforcement or of injunctive relief is
subject to the discretion of the court before which any proceeding therefore may
be brought.
21.1.3 Non-Contravention. The execution, delivery and performance of
-----------------
this Contract by the Vendor and the consummation of the transactions
contemplated hereby do not and will not contravene the certificate of
incorporation or by-laws of the Vendor and do not and will not conflict with or
result in (i) a breach of or default under any indenture, mortgage, lease,
agreement, instrument, judgment, decree, order or ruling to which the Vendor is
a Party or by which it or any of its properties is bound or affected, or (ii) a
breach of any Applicable Law.
21.1.4 Regulatory Approvals. All authorizations by, approvals or
--------------------
orders by, consents of, notices to, filings with or other acts by or in respect
of any Governmental Entity or any other Person required in connection with the
execution, delivery and performance of this Contract by the Vendor have been
obtained or will be obtained in due course.
21.1.5 Non-Infringement. The Vendor represents and warrants to the
----------------
best of its knowledge based on reasonable diligence under the circumstances that
as of the Effective Date there are no actual claims or threatened or actual
suits in connection with patents and other intellectual property matters that
would materially adversely affect the Vendor's ability to perform its
obligations under this Contract.
21.1.6 Scope. The representations and warranties of the Vendor
-----
pursuant to this subsection 21.1 will be deemed to apply to all of the Work
performed by any Subcontractor employed by the Vendor as though the Vendor had
itself performed such Work.
21.1.7 Requisite Knowledge. The Vendor represents and warrants that
-------------------
it has all requisite knowledge, know-how, skill, expertise and experience to
perform the Work in accordance with the terms of this Contract.
21.1.8 Financial Capacity. The Vendor represents and warrants the
------------------
financial, management and manufacturing capacity and capabilities to do the Work
in a timely manner in accordance with the terms of this Contract.
21.2 Representations and Warranties of the Owner. The Owner hereby
-------------------------------------------
represents and warrants to the Vendor as follows:
21.2.1 Due Organization of the Owner. The Owner is a limited
-----------------------------
partnership, validly existing and in good standing under the laws of the State
of Delaware and has all requisite power and authority to own and operate its
business and properties and to carry on its business as such business is now
being conducted and is duly qualified to do business in Delaware and in any
other jurisdiction in which the transaction of its business makes such
qualification necessary.
21.2.2 Due Authorization of the Owner; Binding Obligation. The Owner
--------------------------------------------------
has full power and authority to execute and deliver this Contract and to perform
its obligations
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82
hereunder, and the execution, delivery and performance of this Contract by the
Owner have been duly authorized by all necessary partnership action on the part
of the Owner; this Contract has been duly executed and delivered by the Owner
and is the valid and binding obligation of the Owner enforceable in accordance
with its terms, except as enforcement thereof may be limited by or with respect
to the following: (i) applicable insolvency, moratorium, bankruptcy, fraudulent
conveyance and other similar laws of general application relating to or
affecting the rights and remedies of creditors; (ii) application of equitable
principles (whether enforcement is sought in proceedings in equity or at law);
and (iii) provided the remedy of specific enforcement or of injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.
21.2.3 Non-Contravention. The execution, delivery and performance of
-----------------
this Contract by the Owner and the consummation of the transactions contemplated
hereby do not and will not contravene the partnership arrangements governing the
conduct of the partners in the Owner and do not and will not conflict with or
result in (i) a breach of or default under any indenture, mortgage, lease,
agreement, instrument, judgment, decree, order or ruling to which the Owner is a
Party or by which it or any of its properties is bound or affected, or (ii) a
breach of any Applicable Law.
SECTION 22 TITLE AND RISK OF LOSS
22.1 Title. Title to each Item of Equipment (but in no case Software)
-----
will pass to the Owner upon delivery thereof by the Vendor to the System Element
Location to which each such Item belongs or such other location specifically
requested by the Owner or as otherwise mutually agreed to by the Parties. Prior
to acquiring title to the Equipment, the Owner will not cause or permit the
System, any PCS System or any portion thereof to be sold, leased or subjected to
a lien or other encumbrance.
22.2 Risk of Loss. Risk of loss of any Products furnished to the Owner in
------------
connection with this Contract will pass from the Vendor to the Owner upon the
completion of the Bolt-down by the Vendor of any PCS Product or at the
completion of installation of any other Product each at the appropriate System
Element Location within the given PCS System provided that the risk of loss of
any given PCS System within the System will not pass to the Owner until such
time as the Vendor is fully prepared to commence testing for the Substantial
Completion of such PCS System in accordance with and pursuant to Exhibit B3 and
Exhibit A1; provided, however, that the Owner will assume the risk of loss prior
-------- -------
to such Substantial Completion by the Vendor for any such Products damaged due
to the gross negligence or willful misconduct of the Owner (provided that the
-------- ----
Owner will also assume the risk of loss for its own negligence at any time after
Milestone 6 (as set forth in Exhibit A1) in each PCS System within the System).
With respect to Products delivered by the Vendor but not otherwise installed by
the Vendor pursuant to and in accordance with the terms of this Contract, risk
of loss will pass to the Owner upon delivery by the Vendor to the Owner's
designated site. Until such time as risk passes to the Owner, the Vendor will,
at its sole cost and expense, remedy, repair and replace all physical damage,
loss or injury to such property; provided that, prior to the passing of risk of
-------- ----
loss to the Owner, any actual proceeds of its
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83
applicable insurance payable with respect to such physical damage at such time,
loss or injury are paid to the Vendor as necessary to achieve such remedy,
repair or replacement.
SECTION 23 DISPUTE RESOLUTION
23.1 Dispute Resolution. Subject to subsection 24.3 and subsection 23.4,
------------------
in the event any controversy, claim, dispute, difference or misunderstanding
arises out of or relates to this Contract, any term or condition hereof, any of
the Work to be performed hereunder or in connection herewith, the respective
System Managers of the Owner and the Vendor will meet and negotiate in good
faith in an attempt to amicably resolve such controversy, claim, dispute,
difference or misunderstanding in writing. Such System Managers must meet for
this purpose within ten (10) Business Days, or such other time period mutually
agreed to by the Parties, after such controversy, claim, dispute, difference or
misunderstanding arises. If the Parties are unable to resolve the controversy,
claim, dispute, difference or misunderstanding through good faith negotiations
within such ten (10) business day period, each Party will, within five (5)
Business Days after the expiration of such ten (10) business day period, prepare
a written position statement which summarizes the unresolved issues and such
Party's proposed resolution. Such position statement must be delivered by the
Vendor to the Owner's Vice President of Engineering or Operations and by the
Owner to the Vendor's corresponding officer or representative for resolution
within (5) Business Days, or such other time period mutually agreed to by the
Parties.
If the Parties continue to be unable to resolve the controversy, claim,
dispute, difference or misunderstanding, either Party may initiate arbitration
in accordance with the provisions of subsection 23.2 below; provided, however,
-------- -------
that with respect to any controversy, claim, dispute, difference or
misunderstanding arising out of or relating to this Contract by which either
Party seeks to obtain from the other monetary damages in excess of twenty-five
million dollars ($25,000,000), either Party, in such case, may commence an
action in any state or federal court in accordance with subsection 27.7 to
resolve such matter in lieu of proceeding with an arbitration pursuant to and in
accordance with subsection 23.2. The arbitrators hired or otherwise chosen
pursuant to and in accordance with the terms of this Contract will determine
issues of arbitrability pursuant to the terms of this Contract but may not in
any way limit, expand or otherwise modify the terms of this Contract nor will
they have any authority to award punitive or other damages in excess of
compensatory damages (other than as specifically set forth in this Contract) and
each Party irrevocably waives any such claim thereto when invoking the
arbitration provisions of subsection 23.2.
23.2 Arbitration. An arbitration proceeding initiated by either
-----------
Party under this Contract with respect to any controversy, claim, dispute,
difference or misunderstanding will be conducted in Kansas City, Missouri in
accordance with the Commercial Arbitration rules of the AAA, except that, at the
request of either Party, a stenographic transcript of the testimony and
proceedings will be taken and the arbitrators will base their decision upon the
records and briefs of the Parties.
<PAGE>
84
Such arbitration will be initiated by either Party by notifying the other
Party in writing and will be settled before three (3) impartial arbitrators, one
of whom will be named by the Owner, one by the Vendor and the third by the two
arbitrators appointed by the Owner and the Vendor, respectively. All of the
named arbitrators will have significant experience in the wireless
telecommunications industry. If either the Owner or the Vendor fails to select
an arbitrator within ten (10) days after notice has been given of the initiation
of the arbitration, the officer in charge of the Kansas City, Missouri office of
the AAA will have the right to appoint the other arbitrator, and the two
arbitrators thus chosen will then select the third arbitrator.
Except as the Parties may otherwise mutually agree, the arbitration
hearings will commence within fifteen (15) Business Days after a Party's
initiation of the arbitration. The Federal Rules of Evidence will apply and
reasonable discovery, including depositions, will be permitted. Discovery
issues will be decided by the arbitrators and post-hearing briefs will be
permitted.
The arbitrators will render a decision within ten (10) days after the
conclusion of the hearing(s) and submission of post-hearing briefs and a written
opinion setting forth findings of fact and conclusions of law will be made
available to the Parties within that time period. The decision of the majority
of the arbitrators regarding the matter submitted will be final and binding upon
the Parties. Judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof.
Each Party will pay for the services and expenses of the arbitrator
appointed by it, its witnesses and attorneys, and all other costs incurred in
connection with the arbitration (including, without limitation, the cost of the
services and expenses of the arbitrator appointed by the two arbitrators
appointed by the Parties) will be paid in equal part by the Parties, unless the
award will specify a different division of the costs. Unless otherwise
specifically stated in this Contract, during the pendency of any arbitration
proceedings, the Parties agree to continue to perform their obligations
hereunder in the same manner as prior to the institution of arbitration
proceedings.
23.3 Third Party Engineer. Disputes arising under subsections 2.6, 2.7,
--------------------
9.5(b), 9.6, 10.1 and 17.4 of this Contract, or as otherwise specifically
provided elsewhere in this Contract, or as otherwise mutually agreed by the
Parties, are to be resolved by the Third Party Engineer in the manner provided
in this subsection 23.3. The Vendor and the Buyer will first attempt to resolve
the dispute through consultation and negotiation in good faith and in a spirit
of mutual cooperation as provided in subsection 23.1 above. If those attempts
fail, then either Party may submit its written notice to the other Party
requesting that the dispute be resolved by the Third Party Engineer, in
accordance with the merits of the dispute. If, within ten (10) Business Days
after the receipt of such notice by the notified Party, the dispute is not
resolved, the Owner will select one of the Third Party Engineers listed on
Schedule 14 to render decision in the dispute. The Third Party Engineer will
issue a written decision containing an explanation of how and why the decision
was reached. The Third Party Engineer's decision will be final and binding,
except with respect to any opinion that over the Term of the Contract will
impact the losing Party in the amount of one million dollars
<PAGE>
85
($1,000,000) or more. If within ten (10) Business Days following the issuance
of any such opinion the Parties have not agreed to implement the terms of any
such opinion that is not final, either Party may seek arbitration pursuant to
the provisions of subsection 23.2 above. In such arbitration, either Party may
introduce into evidence the opinion of the Third Party Engineer, but the
arbitrator(s) must rule on all issues of the dispute on a de novo basis, except
-------
as to any facts or other matters set forth in the opinion and stipulated by both
of the Parties. If none of the listed Third Party Engineers is available or if
none accepts the assignment and the Parties cannot otherwise mutually agree to
another Third Party Engineer, an experienced and reputable engineer (who is not
employed by either Party or any of their Affiliates or affiliates) will be
chosen by the then President of the Institute of Electrical and Electronic
Engineers (or the Vice President, if the President is a present or former
employee of any such entities) to serve as the Third Party Engineer for the
purposes of resolving the dispute. Unless otherwise mutually agreed by the
Parties, any Person who is an officer or employee, agent, Subcontractor or
subcontractor of, or a technical consultant to, either Party will be
automatically ineligible to be the Third Party Engineer. The costs of
utilizing a Third Party Engineer to resolve disputes under this subsection 23.3
will be shared equally by both Parties.
23.4 Other Remedies. Notwithstanding anything to the contrary herein
--------------
contained, each Party will be entitled to pursue any equitable rights and
remedies that are available at law or in equity without complying with
subsection 23.2 or 23.3.
23.5 Tolling. All applicable statutes of limitation will be tolled to the
-------
extent permitted by Applicable Law while the dispute resolution procedures
specified in this Section 23 are pending, and nothing herein will be deemed to
bar any Party from taking such action as the Party may reasonably deem to be
required to effectuate such tolling.
SECTION 24 TERMINATION AND EVENTS OF DEFAULT
24.1 Termination Without Cause. (a) The Owner may, at its sole option,
-------------------------
terminate this Contract, in its entirety, for convenience upon ninety (90) days'
prior written notice at any time; provided that prior to any such termination
-------- ----
pursuant to this subsection 24.1 the Minimum Commitment will have been fulfilled
by the Owner in accordance with the terms of this Contract.
(b) Any orders for Vendor Work within any PCS System within the System
made by the Owner pursuant to and in accordance with the terms of this Contract
and the program management procedures of the Owner prior to any such termination
described in clause (a) above, other than the Initial Commitment, will remain in
effect and will be fulfilled to the extent that such orders are outstanding as
of the date of such termination. For the purposes of this subsection 24.1(b) an
"order" will not include the Initial Commitment or any order for a full PCS
System within the Initial System or the System.
24.2 Termination for Cause. The Owner also has the right to terminate
---------------------
this Contract in its entirety (except as otherwise set forth in clause (l)
below) without any penalty or
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86
payment obligation upon the occurrence of any Vendor event of default (each a
"Vendor Event of Default") as set forth below. The occurrence of any of the
following will constitute a Vendor Event of Default:
(a) the Vendor (i) files a voluntary petition in bankruptcy or has an
involuntary petition in bankruptcy filed against it that is not dismissed within
forty-five (45) days of such involuntary filing, (ii) admits the material
allegations of any petition in bankruptcy filed against it, (iii) is adjudged
bankrupt, or (iv) makes a general assignment for the benefit of its creditors,
or if a receiver is appointed for all or a substantial portion of its assets and
is not discharged within sixty (60) days after his appointment; or
(b) the Vendor commences any proceeding for relief from its creditors in
any court under any state insolvency statutes; or
(c) the Vendor materially disregards or materially violates material
Applicable Laws or material Applicable Permits; or
(d) the Vendor persistently and materially allows Defects and Deficiencies
to exist; or
(e) the Vendor fails to fulfill its obligations with respect to the
satisfaction, discharge or bonding of liens as set forth in subsection 23.6
hereof; or
(f) the Vendor abandons or ceases for a period in excess of thirty (30)
days its performance of the Work (except as a result of a casualty which is
fully covered by insurance or as to which other provisions reasonably acceptable
to the Owner are being diligently pursued) or fails to begin the Work within
thirty (30) days after the Notice to Proceed Date; or
(g) the Vendor assigns or subcontracts Work other than as provided for in
this Contract; or
(h) the Vendor fails to materially comply with any Change Order; or
(i) the Vendor fails to perform this Contract (including, without
limitation, any action the Vendor may take on any Vendor-Controlled Site) and
thereby prejudices in any way deemed material by the parties providing financing
in connection with the build-out of the Nationwide Network and/or the Owner in
their reasonable opinion the Owner's efforts to obtain financing for the System
and/or the Nationwide System; or
(j) the Vendor fails to pay to the Owner any material amount due to the
Owner by the date required for such payment; or
(k) the Vendor fails to comply with subsection 27.22;
(l) the Vendor misses any Interim Milestone within any given PCS System by
a period in excess of thirty (30) days and such failure to achieve such Interim
Milestone was
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87
not caused by (i) a Force Majeure event and/or (ii) any act or omission of the
Owner; provided that in such case the Owner will have the right, but not the
-------- ----
obligation, to terminate this Contract with respect to only that PCS System in
which such interim delay occurred unless such interim delay relates to Milestone
4 (as set forth on Exhibit A1) in which case the Owner will have the right, but
not the obligation, to terminate this Contract in its entirety as otherwise set
forth in this subsection 24.2; or
(m) the Vendor otherwise materially breaches any provision of this
Contract.
24.3 Remedies. (a) If any of the Vendor Events of Default exists, the
--------
Owner may, without prejudice to any other rights or remedies of the Owner in
this Contract or at law or in equity, terminate this Contract upon written
notice to the Vendor; provided, however, that the Owner will have first provided
-------- -------
to the Vendor the following periods of notice and opportunity to cure:
(i) in the case of an Event of Default specified in the
foregoing clauses (e) and (k), the Owner will have provided seven (7) days'
prior written notice to the Vendor, and the Vendor will have failed to
remedy such breach entirely by the end of such seven (7) day period;
(ii) in the case of an Event of Default specified in the
foregoing clauses (a) or (b), no notice or opportunity to cure will be
required from the Owner; and
(iii) in the case of any other Event of Default by the Vendor,
the Owner will have provided forty-five (45) days' prior written notice,
and the Vendor will have failed (i) to commence to cure the default within
five (5) days of delivery of such notice, and (ii) to diligently pursue
such cure and remedy the breach entirely by the end of said forty-five (45)
day notice period.
(b) If the Owner elects to terminate this Contract, the Owner may, without
prejudice to any other rights or remedies of the Owner in this Contract or of
law or in equity, do one or more of the following:
(i) Take possession of all Engineering and design data,
procurement data, manufacturing data, construction and erection data,
start-up and testing data, materials, and Products that will become part of
the System and/or the specified PCS Systems, or the Work, whether any of
the same is in a partial state of completion or completed condition, and
title to any of said items vests in the Owner (if not already vested by the
provisions of this Contract);
(ii) Take temporary possession and control of all of the
Vendor's installation equipment, machinery, and the Vendor's materials,
supplies, Software and any and all tools (including, but not limited to,
any and all RF Engineering tools and/or software) at any project site,
including but not limited to any System Element Location, within the System
and/or the specified PCS Systems which in the Owner's opinion are necessary
to finish the Work;
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88
(iii) Direct that the Vendor assign its Subcontractor agreements to
the Owner without any change of price or conditions therein or penalty or
payment therefor; or
(iv) Take over and finish the Work by whatever reasonable
methods the Owner may deem expedient;
provided, that, nothing contained in paragraphs (a) through (d) above will
- - -------- ----
require the Vendor to relinquish to the Owner any of its manufacturing
facilities, specific Product designs (other than such designs previously
provided to the Owner pursuant to the terms of this Contract), Software Source
Codes, trade secrets or proprietary information not previously provided or made
available to the Owner, the System or any part thereof or any materials,
supplies, inventories, tools, software, engineering and/or designs that are not
integral or relevant to the completion of the Work.
24.4 Discontinuance of Work. Upon such notification of termination, the
----------------------
Vendor must immediately discontinue all of the Work (unless such notice of
termination directs otherwise), and, as more fully set forth in subsection
24.3(b) clauses (i) through (iv), deliver to the Owner copies of all data,
drawings, specifications, reports, estimates, summaries, and such other
information, and materials as may have been accumulated by the Vendor in
performing the Work, whether completed or in process. Furthermore, the Vendor
must assign, assemble and deliver to the Owner all purchase orders and
Subcontractor agreements requested by the Owner.
24.5 Payments. When the Owner terminates this Contract for cause pursuant
--------
to subsection 24.2, the Vendor will not be entitled to receive further payment
other than payments due and payable under this Contract and not subject to
dispute prior to such termination (provided that any such disputed amounts will
-------- ----
be paid by the Owner when and if such dispute is in fact resolved).
Notwithstanding anything herein to the contrary, the Owner may withhold
payments, if any, to the Vendor for the purposes of offset of amounts owed to
the Owner pursuant to the terms of this Contract until such time as the exact
amount of damages due the Owner from the Vendor is fully determined.
24.6 Costs. In the event of a termination due to a Vendor Event of
-----
Default, the Owner will be entitled to the costs in connection with finishing
the Work (exclusive of any Liquidated Damages already paid and/or owing to the
Owner upon termination of this Contract), and if such costs exceed the unpaid
balance of the Contract Price, the Vendor will be liable to pay such excess to
the Owner. The amount to be paid by the Vendor pursuant to this subsection 24.6
will survive termination of this Contract and will be subject to the limitations
of liability in this Contract.
24.7 Continuing Obligations. Termination of this Contract for any reason
----------------------
(i) will not relieve either Party of its obligations with respect to the
confidentiality of the Proprietary Information as set forth in subsection 27.19,
(ii) will not relieve either Party of any obligation which applies to it and
which expressly or by implication survives termination, and (iii) except as
otherwise provided in any provision of this Contract expressly limiting the
liability of either Party, will not relieve either Party of any obligations or
liabilities for loss or damage
<PAGE>
89
to the other Party arising out of or caused by acts or omissions of such Party
prior to the effectiveness of such termination or arising out of its obligations
as to portions of the Work already performed or of obligations assumed by the
Vendor prior to the date of such termination.
24.8 Vendor's Right to Terminate. The Vendor will have the option to
---------------------------
terminate this Contract without any penalty or payment obligations, other than
undisputed payment obligations outstanding as of the date of any such
termination pursuant to the terms of this Contract if:
(a) the Owner (i) files a voluntary petition in bankruptcy or has an
involuntary petition in bankruptcy filed against it that is not dismissed within
forty-five (45) days of such involuntary filing, (ii) admits the material
allegations of any petition in bankruptcy filed against it, (iii) is adjudged
bankrupt, or (iv) makes a general assignment for the benefit of its creditors,
or if a receiver is appointed for all or a substantial portion of its assets and
is not discharged within sixty (60) days after his appointment, and any such
filing, proceeding, adjudication or assignment as described herein above will
otherwise materially impair the Owner's ability to perform its obligations under
this Contract;
(b) the Owner commences any proceeding for relief in any court under any
state insolvency statutes;
(c) the Owner fails to make payments of undisputed amounts due to the
Vendor pursuant to the terms of this Contract which are more than sixty (60)
days overdue, provided that such failure has continued for at least thirty (30)
-------- ----
days after the Vendor has notified the Owner of its right and intent to so
terminate on account of such overdue amount;
(d) the Owner persistently and materially breaches subsection 11.1 or
subsection 27.19 notwithstanding the fact that the Vendor will have provided the
Owner with prior written notice describing the alleged material breaches and
will have given the Owner a reasonable time (not less than thirty (30) days) to
cure any such breaches; or
(e) except as otherwise provided in subsection 24.1 the Owner fails to
fulfill its Initial Commitment within five (5) years of the Effective Date for
whatever reason other than (i) any act or omission of the Vendor, (ii) failure
or inability to successfully complete Microwave Relocation in any PCS System,
(iii) failure or inability to successfully attain Site Acquisition Substantial
Completion in any given PCS System or (iv) any event otherwise constituting a
Force Majeure hereunder.
24.9 Special Termination Events. (a) In the event that financing for the
--------------------------
Owner's build-out of the initial phase of the Nationwide Network has not been
finalized with the Vendor and the Other Vendors on terms and conditions
reasonably satisfactory to the Owner, on or before one hundred and eighty (180)
days after the Effective Date, the Owner will have the right, but not the
obligation, to terminate this Contract in its entirety without charge or penalty
of any kind. In the event of a termination of this Contract pursuant to this
subsection 24.9 the Owner will remain liable for amounts due to the Vendor for
all Work performed
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90
or Products delivered by the Vendor or any of its Subcontractors pursuant to the
specific terms of this Contract which had been directly delivered to or
performed for the Owner and/or any of its facilities or sites in accordance with
the terms of this Contract including, but not limited to, the Project
Milestones. Any amounts owed by the Owner for Work done or Products delivered by
the Vendor during such interim one hundred and eighty (180) day period (the
"Financing Interim Period") not otherwise invoiced to the Owner by the Vendor
prior to the termination of such Financing Interim Period, will be invoiced to
the Owner by the Vendor within thirty (30) days (but failure to so invoice will
not excuse the Owner's obligation to otherwise pay the Vendor pursuant to the
terms of this subsection 24.9(a)) of such termination pursuant to this
subsection 24.9(a) and will be payable to the extent not otherwise in dispute by
the Owner within thirty (30) days of receipt of such invoice; provided that in
-------- ----
no event will the Owner be liable to the Vendor due to a termination
of this Contract pursuant to this subsection 24.9(a) for any of the Vendor's
direct or indirect costs or expenses incurred in connection with any supplies or
equipment ordered by the Vendor or agreements entered into by the Vendor in
order to enable it to fulfill its obligations hereunder or in connection with
the establishment of and/or upgrade to its manufacturing, personnel,
engineering, administrative or other capacities and/or resources in
contemplation of or pursuant to its performance in accordance with the terms of
this Contract and any amounts due to the Vendor pursuant to this subsection
24.9(a) will be limited in all cases to Work actually done or Products or
Services actually delivered to the Owner, its sites or its facilities.
(b) If at any time after the Effective Date any material change will have
occurred in any Applicable Law or in the interpretation thereof by any
Governmental Entity, or there will be rendered any decision in any judicial or
administrative case, in either case which, in the reasonable opinion of the
Owner, would make the Owner's use of any part of any PCS System illegal or would
subject the Owner or any of its Affiliates to any material penalty, other
material liability or onerous condition or to any burdensome regulation by any
Governmental Entity or otherwise render the use of such PCS System economically
nonviable, then, with respect to such PCS System, or affected part thereof, or
with respect to the entire System if so affected, the Owner may terminate this
Contract without charge or penalty of any kind; provided that (i) the Owner
-------- ----
gives the Vendor prior written notice of any such change or decision; (ii) that
the Owner uses its reasonable efforts for a reasonable time to reverse or
ameliorate such change or decision to the extent possible or practical prior to
declaring such termination and (iii) the Owner, at the Vendor's request, gives
the Vendor a legal opinion from a reputable law firm with experience in the area
confirming the Owner's reasonable opinion as set forth above. In the event of a
termination pursuant to this subsection 24.9(b), payment obligations incurred by
the Owner for Work actually done or Products or Services actually delivered by
the Vendor prior to such termination pursuant to this Contract will be payable
by the Owner to the Vendor on the same terms and subject to the limitations set
forth in subsection 24.9(a) above.
<PAGE>
91
SECTION 25 SUSPENSION
25.1 Owner's Right to Suspend Work. The Owner may, at any time and upon
-----------------------------
reasonable notice to the Vendor, order the Vendor, in writing, to suspend all or
any part of the Work for such reasonable period of time as the Owner may
reasonably determine to be appropriate for its convenience. Any request by the
Vendor for a change in the Specifications caused by the Owner's suspension of
the Work pursuant to this subsection 25.1 will be subject to the review and
reasonable acceptance of the Owner. No modification to the Specifications will
be made to the extent that performance is, was or would have been suspended,
delayed or interrupted for any other cause due to the Vendor's fault or if the
suspension had no effect on agreed upon performance deadlines and/or Project
Milestones set forth in this Contract. In the event of any such suspension, the
Vendor will be compensated for any actual and reasonable loss, actual and
reasonable damages or actual and reasonable expenses arising directly from such
delay, including but not limited to payments contractually required under any
Subcontractor agreements and reimbursement of reasonable expenses associated
with the necessary re-deployment of the Vendor's resources; provided that the
-------- ----
Vendor will in such event use reasonable efforts to estimate and report to the
Owner any such costs or expenses prior to the commencement of any such Owner
suspension pursuant to this subsection 25.1.
SECTION 26 MOST FAVORED CUSTOMER
26.1 Most Favored Customer Status. (a) With respect to the deployment of
----------------------------
the Initial System (including any Expansions or additions to the Initial System
within the context of the Initial System pursuant to the terms of this
Contract), the Owner will be deemed one of the Vendor's most important and
favored Customers and will always receive priority in terms of availability and
quantity [ ]
(b) On an annual basis throughout the Term of this Contract commencing on
the Effective Date the Vendor will be required to audit its offering of all CDMA
PCS Products, engineering and services provided to the then-existing ten (10)
largest of its Customers (other than Initial Affiliates and/or Additional
Affiliates pursuant to the terms of this Contract) (based on volume purchased or
to be purchased) in the preceding calendar year and certify to the Owner in a
certificate executed by a duly authorized officer of the Vendor (the "MFC
Certificate") that the Owner has in fact received the prices, payment and other
contract terms,
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92
availability and quantity of and on Products, Engineering and Services in
accordance with the terms of clause (a) above.
(c) To the extent the Owner determines pursuant to clause (b) above, or
otherwise, that the Vendor has not in fact complied with the terms of clause (a)
above the Owner will have thirty (30) Business Days from receipt of the MFC
Certificate to provide the Vendor with a written claim for Product and/or
Engineering and/or Service pricing rebates on future purchases under this
Contract based upon the Owner's reasonable calculation of the impact on the
Owner of the Vendor's failure to comply with clause (a) of this subsection 26.1.
The Owner's written claim will specify the reasoning underlying its claim. To
the extent the Vendor disagrees with any such claim for such pricing rebates
made by the Owner pursuant to this clause (c) the Vendor will have the right
within ten (10) Business Days of receiving the Owner's written rebate claim to
request management escalation of the matter as provided in subsection 23.1. In
the event that the Parties have not resolved the matter within ten (10) Business
Days after commencement of such escalation, either Party will have the right to
submit the Owner's claim and the Vendor's written response thereto to an
Independent Auditor who will have the authority only to determine whether the
Vendor is in non-compliance with the terms of clause (a) above and whether the
Owner's calculation of the claimed pricing rebate is fair and reasonable in
light of the Vendor's non-compliance with the terms of clause (a) above. Any
such independent determination will be made upon specific procedures and a set
of factors mutually agreed by the Parties. The Vendor will provide to the
Independent Auditor records and summaries of its agreements with such ten (10)
largest Customers pursuant to and in accordance with the terms of this
subsection 26.1. The Independent Auditor's determination must be made and
delivered to both the Vendor and the Owner within ten (10) Business Days of
receiving the request from the Vendor. The report of the Independent Auditor
will not be determinative of the Owner's right to pricing rebates under this
clause, and any dispute between the Vendor and the Owner as to such matter after
the Independent Auditor has rendered its opinion may be referred to arbitration
as provided in subsection 23.2; provided that the report of such Independent
-------- ----
Auditor will be admissible as evidence in any such arbitration. The Party
requesting a determination by an Independent Auditor will bear the cost of the
auditor, provided that, if the other Party's position is not supported by the
-------- ----
Independent Auditor, such other Party will bear any such cost.
SECTION 27 MISCELLANEOUS
27.1 Amendments. The terms and conditions of this Contract, including the
----------
provisions of Exhibits and Schedules hereto, may only be amended by mutually
agreed contract amendments. Each amendment must be in writing and will identify
the provisions to be changed and the changes to be made. Contract amendments
must be signed by duly authorized representatives of each of the Vendor and the
Owner.
27.2 Owner Liabilities. The Parties understand and agree that none of the
-----------------
Partners, nor any of their Affiliates, will guarantee or otherwise be in any way
liable with respect to any obligations or liabilities of the Owner or any of its
subsidiaries pursuant to this Contract. The Parties further understand and
agree that neither the Owner nor any of its subsidiaries
<PAGE>
93
will guarantee or otherwise be in any way liable for any obligations or
liabilities of any of the Partners or any Affiliate of the Owner pursuant to
this Contract unless, and only to the extent, (i) the Owner or any one of its
subsidiaries in accordance with the Owner's direction expressly agrees in
writing to guarantee or otherwise be liable for such liability, or (ii) in the
case of an Affiliate, such Affiliate orders Products and/or Services through the
Owner pursuant to the terms of this Contact.
27.3 Offset. The Vendor hereby waives any right of offset of amounts owed
------
by the Owner to the Vendor pursuant to the terms of this Contract.
27.4 Assignment. Except as otherwise permitted herein, neither this
----------
Contract nor any portion hereof may be assigned by either Party without the
express prior written consent of the other Party provided that such consent will
-------- ----
not otherwise be unreasonably withheld (provided further that the Owner's
-------- ------- ----
reasonable concern about an assignee's ability to perform the obligations and/or
the Work of the Vendor pursuant to and in accordance with the terms of this
Contract will be deemed to be reasonable grounds for the Owner withholding any
such consent). The Owner may, without the consent of the Vendor, collaterally
assign its rights hereunder (including, but not limited to, all licenses with
respect to the Software) to any or all parties providing financing for any part
of the Nationwide Network under a collateral trust for the benefit of the Vendor
and one or more other entities providing financing for any part of the
Nationwide Network or similar arrangement for the benefit of the Vendor and one
or more other entities providing for the financing for any part of the
Nationwide Network, in either case, which collateral trust or similar
arrangement, as the case may be, is reasonably acceptable to the Vendor in
accordance with the terms of the financing documents. If requested by the
Owner, the Vendor will within seven (7) days of such request provide a written
consent to any such assignment; provided that such consent will permit
-------- ----
reassignment if the financing parties exercise their remedies under the
documents for such financing subject to reasonable standards as to (i) the
creditworthiness of the assignee and (ii) the fact that the assignee is not at
such time a competitor of the Vendor. The foregoing rights and obligations are
in addition to those set forth in subsection 27.21. Any attempted assignment in
violation of the terms of this Contract will be null and void.
27.5 Enforcement. The Parties agree that either Party may enforce the
-----------
provisions of subsections 11.4 and 27.4 regarding assignment by an action for
injunction or other equitable remedies.
27.6 Notices. Any notice, request, consent, waiver or other communication
-------
required or permitted hereunder will be effective only if it is in writing and
personally delivered by hand or by overnight courier or sent by certified or
registered mail, postage prepaid, return receipt requested, addressed as
follows:
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94
If to the Owner:
MajorCo L.P.
c/o Sprint Telecommunications Venture
9221 Ward Parkway
Kansas City, Missouri 64113
Attention: Director, Program Management
If to the Vendor:
AT&T Corp.
7500 College Boulevard
Suite 1212
Overland Park, Kansas 66210
Attention: W.M. Plunkett
With a copy to;
AT&T Network Systems
Law Department
475 South Street
Morristown, New Jersey 07962
Attention: General Counsel
Written notice given pursuant to this subsection 27.6 will be delivered in
accordance with this subsection 27.6 in writing and when so delivered will be
deemed to have been fully served and delivered. By written notice provided
pursuant to this subsection 27.6, either Party may change its designated
addressee for purposes of giving notices under this Contract.
27.7 Governing Law and Forums. This Contract is governed by the laws and
------------------------
statutes of the State of Missouri, exclusive of Missouri's conflict of laws
rules. This Contract and the Work will be deemed to be made, executed and
performed in the State of Missouri. If one Party commences a lawsuit in
relation to this Contract against the other Party, such lawsuit can only be
brought in the State of Missouri. The Parties hereby waive a trial by jury in
any such lawsuit. The Vendor and the Owner each hereby irrevocably (a) agrees
that any suit, action or other legal proceeding arising out of or relating to
this Contract will be brought in the Federal District Court for the Western
District of Missouri, or in the Federal District Court for the District of
Delaware, which courts will have exclusive jurisdiction over any controversy
arising out of this Contract, (b) consents to the jurisdiction of such courts in
any such suit, action or proceeding and (c) waives any objection which it may
have to the laying of venue of any such suit, action or proceeding in such
courts and claim that any such suit, action or proceeding has been brought in an
inconvenient forum. Service of process in any suit, action or proceeding may be
made by mailing or delivering a copy of such process to the Owner or the Vendor,
as the case may be, at the addresses indicated in subsection 27.6 hereof and in
the manner set forth in such subsection 27.6. Nothing in this subsection 27.7
<PAGE>
95
will affect the right of the Owner or the Vendor to serve legal process in any
other manner permitted by law.
27.8 Compliance with Law. The Owner and the Vendor will (a) comply with
-------------------
all Applicable Laws in the performance of this Contract, including, without
limitation, the laws and regulations of the United States Department of Commerce
and State Department and any other applicable agency or department of the United
States regarding the import, re-import, export or re-export of products or
technology; and (b) indemnify each other for any loss, liability or expense
incurred as the result of breach of this subsection 27.8.
27.9 Independent Contractor. All work performed by any Party under this
----------------------
Contract will be performed as an independent contractor and not as an agent of
the other and no Persons furnished by the performing Party will be considered
the employees or agents of the other. The performing Party will be responsible
for its employees' compliance with all laws, rules, and regulations while
performing all work under this Contract.
27.10 Headings. The headings given to the Sections and subsections herein
--------
are inserted only for convenience and are in no way to be construed as part of
this Contract or as a limitation of the scope of the particular Section or
subsection to which the title refers.
27.11 Severability. Whenever possible, each provision of this Contract
------------
will be interpreted in such a manner as to be effective and valid under such
applicable law, but, if any provision of this Contract will be held to be
prohibited or invalid in any jurisdiction, the remaining provisions of this
Contract will remain in full force and effect and such prohibited or invalid
provision will remain in effect in any jurisdiction in which it is not
prohibited or invalid.
27.12 Waiver. Unless otherwise specifically provided by the terms of this
------
Contract, no delay or failure to exercise a right resulting from any breach of
this Contract will impair such right or will be construed to be a waiver
thereof, but such right may be exercised from time to time as may be deemed
expedient. If any representation, warranty or covenant contained in this
Contract is breached by either Party and thereafter waived by the other Party,
such waiver will be limited to the particular breach so waived and not be deemed
to waive any other breach under this Contract.
27.13 Public Statements and Advertising. (a) Neither Party nor its
---------------------------------
Subcontractors will issue any public statement (or any private statement unless
required in the performance of the Work), except as stated below, relating to or
in any way disclosing any aspect of the Work, the System, or any PCS System
including the scope, the specific terms of this Contract, extent or value of the
Work and/or the System or any PCS System. Express written consent of the other
Party is required prior to the invitation of or permission to any reporter or
journalist to enter upon the System or any part thereof. The Vendor agrees not
to use for publicity purposes any photographs, drawings and/or materials
describing the System or any PCS System without obtaining the prior written
consent of the Owner, which consent will not be unreasonably withheld. This
subsection 27.13(a) is not intended to exclude the provision of necessary
information to prospective Subcontractors and the Vendor's or the Owner's
<PAGE>
96
personnel, agents or consultants. All other such public disclosures by a Party
require the written consent of the other Party. The obligations of the Parties
under this subsection 27.13(a) are in addition to their respective obligations
pursuant to subsection 27.19. This subsection 27.13(a) will in no way limit
either Party from responding to customary press inquiries or otherwise making
public or private statements not otherwise disclosing Proprietary Information or
the specific terms of this Contract in the normal course of its business and/or
in connection with the Work hereunder.
(b) Subject to the last sentence of subsection 27.13(a), each Party will
submit to the other proposed copies of all advertising (other than public
statements or press releases) wherein the name, trademark or service mark of the
other Party or its Affiliates or affiliates is mentioned; and neither Party will
publish or use such advertising without the other Party's prior written
approval. Such approval will be granted as promptly as possible and will not be
unreasonably withheld. The Parties acknowledge that the obtaining of prior
written approval for each such use pursuant to this subsection 27.13(b) may be
an administrative burden. At the request of either Party, the Owner and the
Vendor will establish mutually acceptable guidelines that will constitute pre-
authorization for the uses specified therein. Such guidelines will be subject to
change from time to time at the reasonable request of either Party.
27.14 Records and Communications. To the extent not already established,
--------------------------
promptly after the Work begins, procedures for keeping and distributing orderly
and complete records of the Work and its progress will be established. The
procedures so established will be followed throughout the course of the Work
unless the Owner and the Vendor mutually agree in advance in writing to revise
the procedures. Furthermore, immediately after the Notice to Proceed is issued,
complete procedures for communications among the Owner and the Vendor will be
established. The procedures so established will be followed throughout the
course of the Work unless the Owner and the Vendor mutually agree in advance and
in writing to revise such procedure.
27.15 Ownership of Specifications. Neither the Vendor nor any
---------------------------
Subcontractor, nor any other Person performing or furnishing the Work, whether
or not under a direct or indirect contract with the Owner, will have or acquire
any title to or ownership rights in any of the Specifications, or in any other
part or portion of this Contract (or copies of any of the Specifications or this
Contract); and no such Person will reuse any of the Specifications on and/or
with respect to any other project without the prior written consent of the
Owner. The Specifications and this Contract (and any and all copies thereof),
are owned by and title resides in the Owner, unless otherwise agreed between the
Owner and any other Person. Notwithstanding anything contained herein to the
contrary, the Owner will not acquire any patent, copyright or trade secret
rights as a result of this Contract, except with respect to copyright and trade
secret rights pursuant to licenses and other approvals provided in connection
with the performance of the Work and except to the extent that a non-exclusive
license of any of the Vendor's copyright or trade secret rights is required to
perform the Work.
27.16 Financing Parties Requirements. The Vendor acknowledges that the
------------------------------
Owner represents that attainment of financing for construction of the Nationwide
Network may be
<PAGE>
97
subject to conditions that are customary and appropriate for the providers of
such financing. Therefore, the Vendor agrees to execute promptly any reasonable
amendment to or modification or assignment of this Contract required by such
providers (including, without limitation, any pertinent industrial development
authority or other similar governmental agency issuing bonds for financing of
the System) which do not materially modify the scope of the Vendor's Work in
order to obtain such financing. In the event that any such amendment or
modification materially increases the Vendor's risk or costs hereunder, the
Owner and the Vendor will negotiate in good faith to adjust the Contract Price,
and to equitably adjust such other provisions of this Contract, if any, which
may be affected thereby, to the extent necessary to reflect such increased risk
or costs. In no event will the Vendor be required to accept any modification or
amendment pursuant to this subsection 27.16 which places material increased risk
on the Vendor or otherwise materially modifies the scope of the Vendor's Work,
if, in the Vendor's reasonable opinion, such materially increased risk or
material modification in the Work is not otherwise adequately addressed by the
Owner or otherwise. The Vendor will be responsible for and pay all costs as a
result of the Vendor's unreasonable refusal to promptly comply with the request
for any such modification or amendment made by any provider of financing
described in this subsection 27.16.
27.17 Owner Review, Comment and Approval. To the extent that various
----------------------------------
provisions of this Contract provide for the Owner's review, comment, inspection,
evaluation, recommendation or approval, the Owner may at its option do so in
conjunction and/or consultation with the Vendor. To the extent that this
Contract requires the Owner to submit, furnish, provide or deliver to the Vendor
any report, notice, Change Order, request or other items, the Owner may at its
option and upon written notice to the Vendor designate the Engineer to submit,
furnish, provide or deliver such items as the Owner's agent therefor. To the
extent that various provisions of this Contract provide that the Owner may
order, direct or make requests with respect to performance of the Work or is
provided access to the System sites or any other site, the Owner may at its
option and upon written notice to the Vendor authorize the Engineer to act as
the Owner's agent therefor. Upon receipt of such notice, the Vendor will be
entitled to rely upon such authorization until a superseding written notice from
the Owner is received by the Vendor.
27.18 Specifications. The Owner acknowledges that parts of the
--------------
Specifications are comprised of Specifications prepared by the Vendor and that
the Vendor contributed significantly to many other portions thereof. The Owner
also acknowledges that, during the normal design, evolution and development
process, portions of the Specifications may appear in design and procurement
documents prepared by the Vendor in its normal course of business; provided,
--------
however, that the Owner will have no liability for any third party infringement
- - -------
claims arising from such Specifications prepared by the Vendor and the Vendor
will hold the Owner harmless from any such third party claims as provided in
subsection 14.2.
27.19 Confidentiality. (a) All information, including without limitation
---------------
all oral and written information (including, but not limited to, determinations
or reports by arbitrators or the Third Party Engineer pursuant to the terms of
this Contract), disclosed to the other Party is deemed to be confidential,
restricted and proprietary to the disclosing Party (hereinafter
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98
referred to as "Proprietary Information"). Each Party agrees to use the
Proprietary Information received from the other Party only for the purpose of
this Contract. Except as specified in this Contract, no other rights, and
particularly licenses, to trademarks, inventions, copyrights, patents, or any
other intellectual property rights are implied or granted under this Contract or
by the conveying of Proprietary Information between the Parties. Proprietary
Information supplied is not to be reproduced in any form except as required to
accomplish the intent of, and in accordance with the terms of, this Contract.
The receiving Party must provide the same care to avoid disclosure or
unauthorized use of Proprietary Information as it provides to protect its own
similar proprietary information but in no event will the receiving Party fail to
use reasonable care under the circumstances to avoid disclosure or unauthorized
use of Proprietary Information. All Proprietary Information must be retained by
the receiving Party in a secure place with access limited to only such of the
receiving Party's employees, subcontractors or agents who need to know such
information for purposes of this Contract and to such third parties as the
disclosing Party has consented to by prior written approval. All Proprietary
Information, unless otherwise specified in writing (i) remains the property of
the disclosing Party, (ii) must be used by the receiving Party only for the
purpose for which it was intended, and (iii) such Proprietary Information,
including all copies of such information, must be returned to the disclosing
Party or destroyed after the receiving Party's need for it has expired or upon
request of the disclosing Party, and, in any event, upon termination of this
Contract. At the request of the disclosing Party, the receiving Party will
furnish a certificate of an officer of the receiving Party certifying that
Proprietary Information not returned to disclosing Party has been destroyed.
For the purposes hereof, Proprietary Information does not include information
which:
(i) is published or is otherwise in the public domain
through no fault of the receiving Party at the time of any
claimed disclosure or unauthorized use by the receiving Party;
(ii) prior to disclosure pursuant to this Contract is
properly within the legitimate possession of the receiving Party
as evidenced by reasonable documentation to the extent
applicable;
(iii) subsequent to disclosure pursuant to this Contract
is lawfully received from a third party having rights in the
information without restriction of the third party's right to
disseminate the information and without notice of any restriction
against its further disclosure;
(iv) is independently developed by the receiving Party or
is otherwise received through parties who have not had, either
directly or indirectly, access to or knowledge of such
Proprietary Information;
(v) is transmitted to the receiving Party after the
disclosing Party has received written notice from the receiving
Party after termination or expiration of this Contract that it
does not desire to receive further Proprietary Information;
<PAGE>
99
(vi) is obligated to be produced under order of a
court of competent jurisdiction or other similar requirement of a
Governmental Entity, so long as the Party required to disclose
the information provides the other Party with prior notice of
such order or requirement and its cooperation to the extent
reasonable in preserving its confidentiality; or
(vii) the disclosing Party agrees in writing is free of
such restrictions.
(b) Because damages may be difficult to ascertain, the Parties agree,
without limiting any other rights and remedies specified herein, an injunction
may be sought against the Party who has breached or threatened to breach this
subsection 27.19. Each Party represents and warrants that it has the right to
disclose all Proprietary Information which it has disclosed to the other Party
pursuant to this Contract, and each Party agrees to indemnify and hold harmless
the other from all claims by a third party related to the wrongful disclosure of
such third party's proprietary information. Otherwise, neither Party makes any
representation or warranty, express or implied, with respect to any Proprietary
Information.
27.20 Entirety of Contract; No Oral Change. This Contract and the
------------------------------------
Exhibits and Schedules referenced herein constitute the entire contract between
the Parties with respect to the subject matter hereof, and supersede all
proposals, oral or written, all previous negotiations, and all other
communications between the Parties with respect to the subject matter hereof.
No modifications, alterations or waivers of any provisions herein contained will
be binding on the Parties hereto unless evidenced in writing signed by duly
authorized representatives of both Parties as set forth in subsection 27.1. Any
representations by the Vendor in any RFP response and/or any documentation
otherwise provided to the Owner in connection with the Vendor's solicitation of
the business granted pursuant hereto prior to the execution hereof will also be
deemed to be incorporated into and otherwise made a part of this Contract;
provided that any such information will in no way be deemed to modify the
- - -------- ----
Specifications unless otherwise specifically mutually agreed by the Parties.
27.21 Successors and Assigns. This Contract will bind and inure to the
----------------------
benefit of the Parties to this Contract, their successors and permitted assigns.
27.22 Change of Control of the Vendor. The Vendor will not consolidate
-------------------------------
with or merge into any other Person or convey, transfer or lease all or
substantially all of its assets to any Person, nor will any Person or group (as
such term is defined in the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) own or acquire fifty percent (50%) of the value of the Vendor's
equity where such Person or group did not own as of the Effective Date in excess
of ten percent (10%) of such equity (any such Person or group will be referred
to as the "Vendor's Succeeding Entity"), unless:
(i) the Vendor's Succeeding Entity will agree to
assume the obligations of the Vendor under this Contract; and
(ii) the Owner will have approved the transaction,
based solely on (i) the creditworthiness of the Vendor's
Succeeding Entity, (ii) whether the
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100
Vendor's Succeeding Entity is a competitor of the Owner and (iii)
whether in the Owner's reasonable judgment the Vendor's
Succeeding Entity will be able to fulfill the obligations for
present and future orders under this Contract.
Notwithstanding the foregoing paragraph, by provision of prior written
notice in accordance with this Contract, the Vendor will have the right, without
further consent of the Owner, to assign the Vendor's rights and delegate the
Vendor's obligations and liabilities under this Contract in whole (but not in
part), to any Person that is, or that was immediately prior to the assignment, a
current or former subsidiary, business unit, division or other affiliate of the
Vendor, provided that such entity is in fact the full successor to the Network
Systems Group (the "Successor") in connection with the transaction effecting
restructure of the Vendor and its affiliates announced on September 20, 1995
(the "AT&T Assignment"). The notice of the AT&T Assignment will state the
effective date of the AT&T Assignment. Upon the effective date of the AT&T
Assignment, the Vendor will be released and discharged from all obligations and
liabilities under this Contract provided that the Successor will have assumed
-------- ----
all obligations and liabilities under this Contract. The AT&T Assignment will
be complete and will not be altered by the termination of the affiliation
between the Vendor and the Successor.
27.23 Change of Control of the Owner. Except as otherwise permitted under
------------------------------
the documents relating to the financing of the build-out of the Nationwide
Network, the Owner will not consolidate with or merge into any other business
entity or convey, transfer or lease all or substantially all of its assets to
any Person, nor will any Person or group (as such term is defined in the
Exchange Act) own or acquire fifty percent (50%) of the value of the Owner's
limited partnership interests or general partnership interests where such Person
or group did not own as of the Effective Date in excess of ten percent (10%) of
either of such partnership interests (any such Person or group will be referred
to as the "Owner's Succeeding Entity"), unless:
(a) the Owner's Succeeding Entity will agree to assume the obligations of
the Owner under this Contract; and
(b) the Vendor will have approved the transaction, based solely on (i) the
creditworthiness of the Owner's Succeeding Entity and (ii) whether the Owner's
Succeeding Entity is a competitor of the Vendor.
27.24 Relationship of the Parties. Pursuant to subsection 27.9, nothing
---------------------------
in this Contract will be deemed to constitute either Party a partner, agent or
legal representative of the other Party, or to create any fiduciary relationship
between the Parties. The Vendor is and will remain an independent contractor in
the performance of this Contract, maintaining complete control of its personnel,
workers, Subcontractors and operations required for performance of the Work.
This Contract will not be construed to create any relationship, contractual or
otherwise, between the Owner and any Subcontractor.
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101
27.25 Discretion. Notwithstanding anything contained herein to the
----------
contrary, to the extent that various provisions of this Contract call for an
exercise of discretion in making decisions or granting approvals or consents,
the Parties will be required to exercise such discretion, decision or approvals
in accordance with accepted PCS industry practices and in good faith.
27.26 Non-Recourse. No past, present or future limited or general partner
------------
in or of the Owner, no parent or other affiliate of any company comprising the
Owner, and no officer, employee, servant, executive, director, agent or
authorized representative of any of them (each, an "Operative") will be liable
by virtue of the direct or indirect ownership interest of such Operative in the
Owner for payments due under this Contract or for the performance of any
obligation, or breach of any representation or warranty made by the Owner
hereunder. The sole recourse of the Vendor for satisfaction of the obligations
of the Owner under this Contract will be against the Owner and the Owner's
assets and not against any Operative or any assets or property of any such
Operative. In the event that a default occurs in connection with such
obligations, no action will be brought against any such Operative by virtue of
its direct or indirect ownership interest in the Owner. The foregoing
provisions of this subsection 27.26 will not in any way limit or restrict any
right or remedy of the Vendor with respect to, and the Operatives will remain
fully liable for, any fraud perpetuated by such Operatives.
27.27 Improvements, Inventions and Innovations. All rights in any
----------------------------------------
improvements, inventions, and innovations made by the Owner will vest in the
Owner, and the Owner and its affiliates will have the right to exploit such
improvements, inventions, and innovations. All rights in any improvements,
inventions and innovations made by the Vendor will vest in the Vendor, and the
Vendor and its affiliates will have the right to exploit such improvements,
inventions and innovations; provided, however, that subject to and in accordance
-------- -------
with subsection 11.9 the Owner and its affiliates may be granted certain rights
to improvements, inventions or innovations made in connection with the System
pursuant to subsection 11.9 by the Vendor (but not by any Subcontractor) in the
course and as a result of performing the Work and in which the Vendor owns or
possesses any proprietary interest (provided that the immediately preceding
-------- ----
proviso of this last sentence of this subsection 27.27 is not subject to
subsection 23.2).
27.28 Attachments and Incorporations. All Schedules and Exhibits attached
------------------------------
hereto, are hereby incorporated by reference herein and made a part of this
Contract with the same force and effect as though set forth in their entirety
herein.
27.29 Conflicts. In the event of any conflict or inconsistency among the
---------
provisions of this Contract and the documents attached hereto and incorporated
herein, such conflict or inconsistency will be resolved by giving precedence to
this Contract and thereafter to the Exhibits, Schedules and Specifications.
27.30 Counterparts. This Contract may be executed by one or more of the
------------
Parties to this Contract on any number of separate counterparts, and all of said
counterparts taken together will be deemed to constitute one and the same
instrument.
<PAGE>
102
THE OWNER AND THE VENDOR HAVE READ THIS CONTRACT INCLUDING ALL SCHEDULES
AND EXHIBITS HERETO AND AGREE TO BE BOUND BY ALL THE TERMS AND CONDITIONS HEREOF
AND THEREOF.
IN WITNESS WHEREOF, the Parties have executed this Contract as of the
date first above written.
AT&T CORP., as the Vendor
By: /s/ Daniel C. Stanzione
-------------------------
Name: Daniel C. Stanzione
Title: President, Network Systems
MAJORCO L.P., as the Owner
By: /s/ Ronald T. LeMay
---------------------
Name: Ronald T. LeMay
Title: Chief Executive Officer
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1 DEFINITIONS
1.1 Definitions......................................... 1
1.2 Other Definitional Provisions....................... 21
SECTION 2 SCOPE OF WORK, RESPONSIBILITIES AND PROJECT
MILESTONES
2.1 Scope of Work....................................... 22
2.2 Additional Coverage................................. 22
2.3 Handsets............................................ 23
2.4 Initial PCS System.................................. 24
2.5 System Element Verification; Test-bed Laboratory.... 24
2.6 RF Engineering; Site Acquisition and MSC
Installation............................................ 25
2.7 Facilities Preparation Services and Installation.... 27
2.8 Site Acquisition Modifications...................... 27
2.9 Design/System Architecture and Engineering.......... 28
2.10 Certification...................................... 28
2.11 Notice of Developments............................. 28
2.11.1 Vendor Developments.............................. 28
2.11.2 Participation in Testing......................... 29
2.12 Safety............................................. 29
2.13 Emergencies........................................ 30
2.14 Right of Inspection................................ 30
2.15 Transportation..................................... 31
2.16 Security........................................... 31
2.17 Materials and Equipment............................ 31
2.18 Equipment and Data................................. 32
2.19 References to Certain Sources...................... 32
2.20 Operating Manuals.................................. 32
2.21 Maintenance and Instruction Manuals................ 32
2.22 Standards for Manuals.............................. 33
2.23 Training........................................... 33
2.24 Manuals and Training............................... 35
2.25 Spare Parts........................................ 35
2.26 System Support Services............................ 36
2.26.1 Vendor Assistance................................ 36
2.26.2 Trouble Reports.................................. 36
2.26.3 Emergency Technical Assistance ("ETA")........... 37
2.26.4 ETA and CSR...................................... 41
2.27 Supply of Additional Products...................... 41
2.28 Review of Contract................................. 42
2.29 Licenses, Permits and Approvals.................... 42
2.30 Eligibility under Applicable Laws and Applicable
Permits................................................. 42
</TABLE>
<PAGE>
<TABLE>
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<S> <C> <C>
2.31 Customs Approvals.. 42
2.32 Owner Participation... 42
2.33 New Development Advisory Board 43
2.34 Market Development Manager 43
2.35 Further Assurances.... 43
2.36 Liens and Other Encumbrances 43
2.37 Forecasting and Ordering 44
2.38 Microwave Relocation; Network Interconnection 45
2.39 Vendor To Inform Itself Fully; Waiver of Defense 45
2.40 CMI/HIC 46
2.41 Site Acquisition Delay Testing 46
SECTION 3 AFFILIATES
3.1 Additional Affiliates.. 47
3.2 Agreements with Initial Affiliates 47
3.3 Agreements with Additional Affiliates 47
3.4 Affiliate Rights....... 48
SECTION 4 SUBCONTRACTORS
4.1 Subcontractors......... 48
4.2 The Vendor's Liability 48
4.3 No Effect of Inconsistent Terms in Subcontracts 48
4.4 Assignability of Subcontracts to Owner 48
4.5 Removal of Subcontractor or Subcontractor's
Personnel.................. 49
4.6 Subcontractor Insurance 49
4.7 Review and Approval not Relief of Vendor Liability 49
4.8 Vendor Warranties...... 49
4.9 Payment of Subcontractors 49
SECTION 5 TERM OF CONTRACT
5.1 Initial Term 50
5.2 Renewal 50
SECTION 6 PRICES AND PAYMENT
6.1 Prices 50
6.2 Price Reduction........ 50
6.3 Payments 51
6.3.1 Additional Products not in Initial System
or Otherwise Provided for in Section 22....
6.4 Payments for Facilities Preparation Services 52
6.5 Monthly Forecasts...... 53
6.6 No Payment in Event of Material Breach 53
6.7 Microwave Relocation Delay Partial Payments 54
6.8 In Revenue Payments.... 54
SECTION 7 ORDERS AND
SCHEDULING
</TABLE>
<PAGE>
<TABLE>
Page
<S> <C> <C>
7.1 Initial Commitment..... 55
7.2 Change Orders.......... 55
7.3 Cancellation 55
SECTION 8 INSTALLATION
8.1 Installation 56
8.2 No Interference........ 56
SECTION 9 ACCEPTANCE TESTING
AND ACCEPTANCE
9.1 Acceptance Testing..... 56
9.2 Costs and Expenses..... 56
9.3 Notification 56
9.4 Presence at Acceptance Tests 56
9.5 Correction of Defects.. 57
9.6 Acceptance Certificate 57
SECTION 10 DISCONTINUED
PRODUCTS
10.1 Notice of Discontinuation 58
10.2 Discontinuation During Warranty Period 58
10.3 Discontinuation After Warranty Period 58
SECTION 11 SOFTWARE;
CONFIDENTIAL INFORMATION
11.1 RTU License........... 59
11.2 Owner's Obligations... 59
11.3 Backwards Compatibility 60
11.4 Transfer and Relocation 60
11.5 Survival 61
11.6 Access to Source Codes 61
11.7 Escrow Agreement...... 61
11.8 Software Maintenance.. 62
11.9 Custom Development.... 62
11.9.1 Request for Custom Material 62
11.9.2 Vendor Response 63
11.9.3 Ownership of Intellectual Property 63
SECTION 12 SOFTWARE CHANGES
12.1 Annual Release Maintenance Fees 63
12.2 Notice 63
12.3 Installation, Testing and Maintenance 63
12.4 Software Fixes........ 64
SECTION 13 EQUIPMENT CHANGES
13.1 Equipment Upgrades.... 64
13.2 Notice 66
13.3 Installation, Testing and Acceptance 66
13.4 Equipment Fixes....... 66
</TABLE>
<PAGE>
<TABLE>
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<S> <C> <C>
SECTION 14 INTELLECTUAL
PROPERTY
14.1 Intellectual Property 66
14.2 Infringement.......... 66
14.3 Vendor's Obligation to Cure 67
14.4 Vendor's Obligations.. 68
14.5 License to Use Vendor Patents 68
SECTION 15 DELAY
15.1 Liquidated Damages.... 69
15.2 Interim Delay......... 69
15.3 Completion Delay...... 69
SECTION 16 FORCE MAJEURE
SECTION 17 WARRANTIES
17.1 Product Warranty...... 71
17.2 Services Warranty..... 72
17.3 System Warranty....... 72
17.4 Breach of Warranties.. 73
17.5 Repair and Return..... 75
17.6 Technical Assistance Center 77
17.7 Scope of Warranties... 77
17.8 Expenses 77
17.9 Third Party Warranties 78
17.10 Additional System Element Locations 78
17.11 EXCLUSIVE REMEDIES... 78
SECTION 18 INSURANCE
18.1 Insurance 78
SECTION 19 TAXES
19.1 Taxes 78
SECTION 20 INDEMNIFICATION
AND LIMITATION OF LIABILITY
20.1 Vendor Indemnity...... 79
20.2 LIMITATION ON LIABILITY 80
20.3 Damages for Fraud or Willful Misconduct 80
SECTION 21 REPRESENTATIONS
AND WARRANTIES
21.1 Representations and Warranties of the Vendor 80
21.1.1 Due Organization of the Vendor 80
21.1.2 Due Authorization of the Vendor; Binding
Obligation.............. 80
211.3 Non-Contravention 81
211.4 Regulatory Approvals 81
211.5 Non-Infringement 81
211.6 Scope 81
</TABLE>
<PAGE>
<TABLE>
Page
<S> <C> <C>
21.1.7 Requisite Knowledge 81
21.1.8 Financial Capacity 81
21.2 Representations and Warranties of the Owner 81
21.2.1 Due Organization of the Owner 81
21.2.2 Due Authorization of the Owner; Binding
Obligation.............. 81
21.2.3 Non-Contravention 82
SECTION 22 TITLE AND RISK OF
LOSS
22.1 Title 82
22.2 Risk of Loss.......... 82
SECTION 23 DISPUTE RESOLUTION
23.1 Dispute Resolution.... 83
23.2 Arbitration 83
23.3 Third Party Engineer.. 84
23.4 Other Remedies........ 85
23.5 Tolling 85
SECTION 24 TERMINATION AND
EVENTS OF DEFAULT
24.1 Termination Without Cause 85
24.2 Termination for Cause. 85
24.3 Remedies 87
24.4 Discontinuance of Work 88
24.5 Payments 88
24.6 Costs
24.7 Continuing Obligations 88
24.8 Vendor's Right to Terminate 89
24.9 Special Termination Events 89
SECTION 25 SUSPENSION
25.1 Owner's Right to Suspend Work 91
SECTION 26 MOST FAVORED CUSTOMER
26.1 Most Favored Customer Status 91
SECTION 27 MISCELLANEOUS
27.1 Amendments............ 92
27.2 Owner Liabilities..... 92
27.3 Offset 93
27.4 Assignment............ 93
27.5 Enforcement........... 3
27.6 Notices 3
27.7 Governing Law and Forums 4
27.8 Compliance with Law... 5
27.9 Independent Contractor 5
27.10 Headings 5
</TABLE>
<PAGE>
<TABLE>
Page
<S> <C> <C>
27.11 Severability...... 95
27.12 Waiver 95
27.13 Public Statements and Advertising 95
27.14 Records and Communications 96
27.15 Ownership of Specifications 96
27.16 Financing Parties Requirements 96
27.17 Owner Review, Comment and Approval 97
27.18 Specifications....... 97
27.19 Confidentiality...... 97
27.20 Entirety of Contract; No Oral Change 99
27.21 Successors and Assigns 99
27.22 Change of Control of the Vendor 99
27.23 Change of Control of the Owner 100
27.24 Relationship of the Parties 100
27.25 Discretion 101
27.26 Non-Recourse......... 101
27.27 Improvements, Inventions and Innovations 101
27.28 Attachments and Incorporations 101
27.29 Conflicts 101
27.30 Counterparts......... 101
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C><C>
Exhibit A1 - Project Milestones
Exhibit A2 - PCS Product Availability
Exhibit B1 - RF Design and Acceptance Process
Exhibit B2 - Acceptance Process for Completion of System Element Facilities
Exhibit B3 - Validation and Acceptance Testing
Exhibit C - Owner Required Wireless Features and Functions
Exhibit D - System Elements
Exhibit E - Construction Management Criteria
Exhibit F - RF Performance Criteria
Exhibit G - BTS/BSC - MSC Interoperability
Exhibit H - Handsets
Exhibit I - Technology Integration Laboratory Requirements
SCHEDULES
Schedule 1 - Preliminary RF Design
Schedule 2 - Product Prices
Schedule 3 - Services Prices
Schedule 4 - Allocated System Areas
Schedule 5 - Initial Affiliates
Schedule 6 - Insurance Provisions
Schedule 7 - Products
Schedule 8 - Vendor's Repair Facilities
Schedule 9 - Form of Notice to Proceed
Schedule 10 - [Intentionally Omitted]
Schedule 11 - Order Cancellation Charges
Schedule 12A - Spare Parts Requirements
Schedule 12B - Spare Parts Prices
Schedule 13 - AT&T Foreign Subsidiaries and Affiliates
Schedule 14 - Third Party Engineers
Schedule 15 - Independent Auditors
</TABLE>
<PAGE>
Schedule 13
-----------
Foreign Affiliates
Each entity referred to in subsection 2.2 (c) is the Vendor's primary
subsidiary offering PCS Products and Services in the country or territory
involved on the Effective Date, or its successor. As of the Effective Date,
these entities are for Canada, AT&T Canada Inc., and for Mexico, AT&T de Mexico
--------------
SA de CV. This list includes any other foreign or other Vendor affiliate
- - --------
otherwise designated.
<PAGE>
EXHIBIT 10.7
EXECUTION COPY
--------------
PURCHASE AND SUPPLY AGREEMENT
-----------------------------
Between
SPRINT SPECTRUM L.P.,
Owner
and
QUALCOMM Personal Electronics,
Vendor
and
QUALCOMM Incorporated,
Guarantor
and
SONY ELECTRONICS INC.
Guarantor
Dated as of June 21, 1996
The omitted portions indicated by brackets have been separately filed with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406.
<PAGE>
PURCHASE AND SUPPLY AGREEMENT
-----------------------------
This Purchase and Supply Agreement (the "Agreement") dated as of
June 21, 1996 (the "Effective Date") by and between QUALCOMM Personal
Electronics, a California general partnership (the "Vendor"), Sprint Spectrum
L.P., a Delaware limited partnership (the "Owner"), QUALCOMM Incorporated, a
Delaware corporation ("QUALCOMM"), and SONY Electronics Inc., a Delaware
corporation ("Sony" and together with QUALCOMM, the "Guarantors," each a
"Guarantor").
RECITALS:
--------
WHEREAS, the Vendor has certain rights to use certain proprietary
Code Division Multiple Access ("CDMA") technology;
WHEREAS, the Federal Communications Commission ("FCC") has defined
six spectral bands near 1.9 Ghz for use in Personal Communications Services
("PCS") for auction to bidders;
WHEREAS, the FCC granted to the Owner or certain of its Affiliates
PCS licenses to build and operate PCS systems in specified geographic areas in
the United States;
WHEREAS, the Owner desires to purchase certain CDMA subscriber
equipment from the Vendor and the Vendor desires to sell such equipment to the
Owner in accordance with the terms and conditions of this Agreement;
WHEREAS, in consideration for the Owner entering into this
Agreement the Guarantors as the owners of the Vendor have agreed to guaranty
the obligations of the Vendor under this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth in this Agreement, the Owner and the Vendor hereby agree as
follows:
SECTION 1. HEADINGS AND DEFINITIONS
All headings used in this Agreement are inserted for convenience
only and are not intended to affect the meaning or interpretation of this
Agreement or any section or clause of this Agreement. References to "third
party" or "third parties" will not mean either Party. The meanings given to
terms defined in this Agreement are equally applicable to both the singular and
the plural forms of such terms. Terms used and/or defined in the Exhibits,
appendices or Schedules attached hereto that are not otherwise defined in this
Agreement, will have the meanings as set forth in those Exhibits, appendices or
Schedules for the purposes of those Exhibits, appendices or Schedules only.
For the purposes of this Agreement, the following definitions apply:
<PAGE>
"AAA" means the American Arbitration Association.
---
"Accessories" mean those accessories for the Subscriber Units
-----------
and made generally available to Customers and will include, without limitation,
a car kit, cigarette lighter adapter, desktop charger, travel charger, leather
case, hand strap and extra batteries (all in accordance with and pursuant to
the Specifications) and such other items as are specified in the Specifications
or agreed upon by the Parties from time to time. Individually, an
"Accessory".
---------
"Additional Affiliate" has the meaning ascribed thereto in
--------------------
subsection 12.2.
"Additional Affiliate Agreement" has the meaning ascribed
------------------------------
thereto in subsection 12.3.
"Additional Affiliate Arrangement" means a formal arrangement
--------------------------------
between the Owner and a Person to be designated an Additional Affiliate under
the terms of this Agreement, which arrangement will include, but not be limited
to, agreements on marketing, backhaul, common billing, resale agreements and/or
revenue sharing.
"Affected Products" has the meaning ascribed thereto in
-----------------
subsection 3.6(b).
"Affiliates" means the collective reference to the Initial
----------
Affiliates and the Additional Affiliates.
"Agents" means the Owner's agents with resale capability in the
------
Territory.
"Agreement" means this written contract together with all
---------
appendices, exhibits and schedules attached hereto, as this Agreement may be
amended, supplemented or otherwise modified from time to time in accordance
with the provisions of subsection 11.13 of this Agreement.
"Annual Minimum Commitment" has the meaning ascribed thereto in
-------------------------
subsection 3.2(b).
"Annual Supply Period" has the meaning ascribed thereto in
--------------------
subsection 3.2(b).
"Applicable Laws" means, as to any Person, the certificate of
---------------
incorporation and by-laws or other organizational or governing documents of
such Person, all laws (including, but not limited to, any Environmental Laws),
treaties, ordinances, judgments, orders and stipulations of any court 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 all or any part of the Products or otherwise
in connection with the Vendor's obligations under this Agreement.
-2-
<PAGE>
"Beta Software" has the meaning ascribed thereto in subsection
-------------
3.2(a).
"Buffer Stock" has the meaning ascribed thereto in subsection
------------
5.1(b).
"Buffer Stock Commencement Date" has the meaning ascribed
------------------------------
thereto in subsection 5.2(d).
"Business Day" means any day of the year other than a Saturday
------------
or Sunday or a United States national public holiday.
"Catastrophic Defect" has the meaning ascribed thereto in
-------------------
subsection 3.10.
"Catastrophic Defect Cure Period" has the meaning ascribed
-------------------------------
thereto in subsection 3.10(a).
"Change Order" has the meaning ascribed thereto in subsection
------------
3.23.
"Commencement" has the meaning ascribed thereto in subsection
------------
4.2(d).
"Commencement Date" has the meaning ascribed thereto in
-----------------
subsection 3.2(a).
"Consumer Warranty" has the meaning ascribed thereto in
-----------------
subsection 3.8.
"Contract Vendors" means the counterparties to Procurement and
----------------
Services Contracts.
"Co-op Marketing Fund" has the meaning ascribed thereto in
--------------------
subsection 3.4(c).
"Customer" means any CDMA customer of the Vendor offering
--------
Products for sale within the Territory (including any CDMA customer outside of
the Territory who intends to use or resell Products within the Territory) or
any CDMA customer of any of the Vendor's affiliates or subsidiaries offering
Products for sale within the Territory.
"Custom Material" has the meaning ascribed thereto in
---------------
subsection 7.9.
"Defects and Deficiencies," "Defects or Deficiencies" or
--------------------------------------------------------
"Defective"" means when used with respect to any Products, such items that
- - -----------
are not (i) new (unless otherwise as specifically set forth in this Agreement)
and of good quality and free from improper or inferior workmanship and defects
or (ii) otherwise in conformance with the Specifications; provided that
-------- ----
any Product defect or deficiency caused by the misuse, neglect or other
improper handling of a Product or Products by any Person other than the Vendor
as described in subsection 3.7(c) will not be deemed a Defect or Deficiency for
the purposes hereof.
-3-
<PAGE>
"Delay Grace Period" has the meaning ascribed thereto in
------------------
subsection 4.2.
"Delay Period" has the meaning ascribed thereto in subsection
------------
4.2(d).
"Delayed Products" has the meaning ascribed thereto in
----------------
subsection 4.2(d).
"End Date" has the meaning ascribed thereto in Section 2.
--------
"Environmental Laws" means any and all federal, state, local
------------------
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
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.
"Excess Purchase Order" has the meaning ascribed thereto in
---------------------
subsection 5.2.
"Exchange Act" has the meaning ascribed thereto in subsection
------------
11.18.
"FCC Rules and Regulations" has the meaning ascribed thereto in
-------------------------
subsection 3.20.
"Financing Interim Period" has the meaning ascribed thereto in
------------------------
subsection 10.10.
"First Annual Minimum Commitment" has the meaning ascribed
-------------------------------
thereto in subsection 3.2(b).
"First Sale Date" has the meaning ascribed-thereto in
---------------
subsection 3.10(a).
"First System" has the meaning ascribed thereto in subsection
------------
4.2(d).
"FOB point" means the dock or other distribution point of the
---------
Vendor's then applicable manufacturing facility or facilities or as otherwise
mutually agreed between the Parties from time to time.
"Force Majeure" has the meaning ascribed thereto in subsection
-------------
11.17.
"Forecast" has the meaning ascribed thereto in subsection 5.1.
--------
"Forecast Period" has the meaning ascribed thereto in
---------------
subsection 5.1.
"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 within the Territory.
-4-
<PAGE>
"Independent Auditor" means any of the Persons set forth on
-------------------
Schedule 1 or any Person otherwise mutually agreeable to the Parties other than
the then acting Independent Public Accountant.
"Independent Public Accountant" has the meaning ascribed
-----------------------------
thereto in subsection 3.3(b).
"Infrastructure Equipment" means any radio subsystem or any
------------------------
combination of radio subsystems that handle the Owner's PCS radio traffic in a
cell or cells within any given Owner PCS System and all other
telecommunications equipment which is necessary to the functioning of any such
radio subsystem(s) (i) with any other radio subsystem or (ii) otherwise within
the Nationwide Network or any part thereof.
"Initial Affiliates" means the collective reference to each of
------------------
the Persons set forth on Schedule 2.
"Initial Affiliate Agreement" has the meaning ascribed thereto
---------------------------
in subsection 12.1
"Initial Subscriber Units" has the meaning ascribed thereto in
------------------------
subsection 3.2(a).
"Initial Term" has the meaning ascribed thereto in Section 2.
------------
"Intellectual Property Rights" has the meaning ascribed thereto
----------------------------
in subsection 7.1.
"Late Amount" has the meaning ascribed thereto in subsection
-----------
3.4(a).
"Late Postponement" has the meaning ascribed thereto in
-----------------
subsection 5.2(c).
"Launch Units" has the meaning ascribed thereto in subsection
------------
4.2(a).
"Mark" has the meaning ascribed thereto in subsection 3.15.
----
"Material Accessories" means, with respect to each Subscriber
--------------------
Unit, the desktop charger (and the plug therefor), handstrap and the battery.
"MFC Certificate" has the meaning ascribed thereto in
---------------
subsection 3.3(b).
"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 subsection 3.18.
-5-
<PAGE>
"New Products" has the meaning ascribed thereto in subsection
------------
3.11.
"Non-Conforming Products" has the meaning ascribed thereto in
-----------------------
subsection 3.22(b).
"North America" means the United States, Canada (including the
-------------
Province of Quebec) and Mexico.
"NTF Products" or "No Trouble Found Products" means Products
-------------------------------------------
returned to the Vendor pursuant to subsection 3.9(a) which the Vendor has, in
good faith and only after applicable testing, found not to be Defective.
"OEM Customer" means (i) QUALCOMM and Sony Corporation and
------------
their respective subsidiaries and affiliates, (ii) any foreign affiliate of the
Vendor which is selling Products outside of the Territory for use and/or resale
outside of the Territory and (iii) a manufacturer of telecommunications
equipment and a purchaser of products from the Vendor that is not a provider of
cellular and/or PCS services (other than such a manufacturer and purchaser that
holds only a minority non-controlling interest in any such provider) in the
Territory or elsewhere, and that either (i) purchases private-labelled products
(i.e., labelled with the OEM Customer's brand name or trademark) from the
----
Vendor for the primary purpose of reselling such products on a wholesale basis
into channels of distribution, or (ii) is purchasing products from the Vendor
primarily for the purpose of supplying and/or reselling such products to its
customers that purchase telecommunications equipment for resale and use outside
the Territory.
"Operating Subsidiary" means an entity (i) at least fifty-one
--------------------
percent (51%) owned or controlled by an other entity, (ii) operating in the
telecommunications industry and (iii) having assets of at least twenty five
million dollars ($25,000,000).
"Originally Scheduled Supply Period" has the meaning ascribed
----------------------------------
thereto in subsection 3.2(c).
"Owner Defined Feature" means (a) the features listed on
---------------------
Schedule 5 and (b) any feature, enhancement, modification or upgrade to or to
be added to any Product (i) which is not currently listed on or described in
Exhibit A1 or Exhibit A2, (ii) which is, after the Effective Date, specifically
requested in writing by the Owner to the Vendor to be added to any Product
pursuant to and in accordance with the terms of this Agreement, (iii) which is
not otherwise made generally available to the Vendor's Customers and (iv) which
is developed by the Vendor for the Owner based solely upon the initiation of
the Owner.
"Owner Event of Default" has the meaning ascribed thereto in
----------------------
subsection 10.8.
-6-
<PAGE>
"Owner's Succeeding Entity" has the meaning ascribed thereto in
-------------------------
subsection 11.19.
"Parties" means, collectively, the Owner and the Vendor, and
-------
"Party" will individually mean the Owner or the Vendor.
-----
"Partners" means the collective reference to Sprint
--------
Corporation, a Delaware corporation ("Sprint"), Sprint Enterprises, L.P., a
Delaware limited partnership, Tele-Communications Inc., a Delaware corporation,
TCI Network Services, a Delaware general partnership ("TCI"), Comcast
Corporation, a Delaware corporation, Comcast Telephony Services, a Delaware
general partnership ("Comcast"), Cox Communications, Inc., a Delaware
corporation, and Cox Telephony Partnership, a Delaware general partnership
("Cox").
"PCS" has the meaning ascribed thereto in the second Recital.
---
"PCS System" means all products and other equipment, tools and
----------
software, all system element sites and any property located there necessary or
desirable to provide PCS in a given specified System Area.
"Person" means an individual, partnership, limited partnership,
------
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity of whatever
nature.
"Previously Existing Products" has the meaning ascribed thereto
----------------------------
in subsection 3.12.
"Procurement and Services Contract" means a procurement and
---------------------------------
services contract entered into, or to be entered into, between the Owner and
the counterparty or counterparties thereto in connection with the engineering
and construction of PCS Systems or any part thereof, as the same may be
amended, supplemented or otherwise modified from time to time.
"Product Class" has the meaning ascribed thereto in subsection
-------------
3.10(a).
"Product Depreciation" means the depreciation in the value of
--------------------
the relevant Product (based on the prices set forth in Appendix 1) over a
straight line five (5) year term from the date of shipment of such Product.
"Product Enhancements" means modifications or improvements made
--------------------
to the Products which improve performance of such Products.
"Products" means all of the Subscriber Units and the
--------
Accessories provided by the Vendor pursuant to and in accordance with this
Agreement.
-7-
<PAGE>
"Proprietary Information" has the meaning ascribed thereto in
-----------------------
subsection 8.2.
"Proprietary Marks" has the meaning ascribed thereto in
-----------------
subsection 3.17(b).
"Purchase Order" means a written order by the Owner to purchase
--------------
Products pursuant to and in accordance with the terms of this Agreement, each
of which will be deemed to incorporate all terms, conditions and provisions of
this Agreement unless the Parties expressly agree otherwise.
"Purchaser" means a Person who purchases Products from the
---------
Owner or an Agent as an initial end user of the Product or Products
(provided that an Agent that uses the Product will in no event be a
----
Purchaser).
"RF Interference Condition" has the meaning ascribed thereto in
-------------------------
subsection 3.20.
"Purchasing Credits" has the meaning ascribed thereto in
------------------
subsection 3.6(c).
"RFP" has the meaning ascribed thereto in subsection 7.9.
---
"Second Annual Minimum Commitment" has the meaning ascribed
--------------------------------
thereto in subsection 3.2(b).
"Shipped-to Location" has the meaning ascribed thereto in
-------------------
subsection 5.2.
"Shortfall" has the meaning ascribed thereto in subsection
---------
3.2(c).
"Software" has the meaning ascribed thereto in subsection
--------
7.5(a).
"Software Enhancements" means modifications or improvements
---------------------
made to the Software relating to PCS Products which improve performance of the
Software or which provide additional functions to the Software.
"Sony Branded Product" means any Product which bears a
--------------------
trademark, insignia, logo or other proprietary mark listed on Schedule 6 if
such trademark, insignia, logo or other mark consists of or incorporates the
term "Sony" and/or any variations thereof.
"Sony Corporation" means Sony Corporation, a Japanese
----------------
corporation, the parent company of Sony.
"Specifications" means the specifications and performance
--------------
standards of the Products contemplated by this Agreement and includes any
amendments, modifications
-8-
<PAGE>
and/or other revisions thereto made in accordance with the terms of this
Agreement and as more fully set forth in the Exhibits.
"Stub Period" has the meaning ascribed thereto in subsection
-----------
3.2(b).
"Subscriber Unit" means (i) the Vendor's QCP-1900 hand held
---------------
portable phone that provides CDMA service in the PCS band, (ii) the Vendor's
CM-D600 hand held portable phone that provides CDMA service in the PCS band,
and (iii) subsequent portable phone models added pursuant to this Agreement,
all in accordance with and pursuant to the Specifications.
"Succeeding Delay Grace Period" has the meaning ascribed
-----------------------------
thereto in subsection 4.2(b).
"System Area" means a major trading area to which the Owner has
-----------
FCC Licenses to operate PCS services.
"System Managers" means each of the managers designated by the
---------------
Owner and the Vendor, respectively, for the purposes of subsection 11.8.
"Term" has the meaning ascribed thereto in Section 2.
----
"Territory" means (i) with respect to the Vendor's QCP-1900
---------
Subscriber Unit, CM-D600 Subscriber Unit and Accessories therefor, the United
States and Canada (including the province of Quebec) and (ii) with respect to
subsequent hand held portable models and Accessories therefor added pursuant to
this Agreement, such geographical areas as will be mutually agreed to by the
Parties (but in any event not less than the United States); provided
--------
that for Sony Branded Products only, Territory shall not include Canada.
- - ----
"Third Annual Minimum Commitment" has the meaning ascribed
-------------------------------
thereto in subsection 3.2(b).
"Total Minimum Commitment" has the meaning ascribed thereto in
------------------------
subsection 3.2(b).
"Training" has the meaning ascribed thereto in subsection 6.1.
--------
"United States" means the fifty states of the United States,
-------------
the District of Columbia and all United States territories and possessions;
provided that for Sony Branded Products only, the term "United States"
----
shall mean only the continental United States, Alaska and the District of
Columbia.
"UPC" means the Universal Product Code.
---
-9-
<PAGE>
"Vendor Event of Default" has the meaning ascribed thereto in
-----------------------
subsection 10.2.
"Vendor Indemnities" has the meaning ascribed thereto in
------------------
subsection 9.3(a).
"Vendor Liabilities" has the meaning ascribed thereto in
------------------
subsection 9.3(a).
"Vendor's affiliate","affiliate of the Vendor" or "Vendor's
------------------------------------------------------------
affiliates" or the like means any Person which directly or indirectly
- - -----------
controls, or is controlled by, or is under common control with, the Vendor,
Sony Corporation or any of Sony Corporation's affiliates and subsidiaries. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person.
"Vendor's Succeeding Entity" has the meaning ascribed thereto
--------------------------
in subsection 11.18.
"Warranty Period" means (x) as to each Subscriber Unit the
---------------
period expiring (i) with respect to the Owner, twenty four (24) months after
the respective date of delivery of such Subscriber Unit to the FOB point, and
(ii) with respect to a Purchaser, either twenty four (24) months or twelve (12)
months (at the election of the Owner in accordance with subsection 3.8) after
the respective date of first sale of such Subscriber Unit to such Purchaser and
(y) as to each Accessory, the period expiring (i) with respect to the Owner,
twelve (12) months after the respective date of delivery of such Accessory to
the FOB point and (ii) with respect to a Purchaser, twelve (12) months after
the respective date of first sale of such Accessory to such Purchaser.
SECTION 2. TERM
This Agreement will commence on the date first set forth above and will
continue for a period of three (3) years (the "Initial Term") following the
initial purchase of production Subscriber Units by the Owner (the "End Date").
The Initial Term of this Agreement may be extended beyond the End Date for
successive periods by mutual agreement of the Parties hereto (all such periods
plus the Initial Term, the "Term"). The terms, conditions and provisions of
this Agreement will apply to all Purchase Orders issued by the Owner for any
Products during the Term, unless otherwise agreed by the Parties.
SECTION 3. PRODUCT PURCHASES
3.1 Right to Purchase, Resell and Use. (a) During the Term of this
---------------------------------
Agreement, the Owner will purchase Subscriber Units and Accessories on a
non-exclusive basis from the Vendor pursuant to and in accordance with the
terms and conditions of this Agreement. The Vendor understands and agrees that
the Owner will purchase Products from the Vendor pursuant to this Agreement for
the purpose of reselling such Products
-10-
<PAGE>
to the Owner's Agents and/or Purchasers in accordance with the applicable terms
of this Agreement. The Vendor further understands, acknowledges, and agrees
that the Products sold hereunder will be used in accordance with their intended
purpose on and within the Owner's Nationwide Network. The Owner will use its
reasonable efforts to ensure that it will not modify the form, fit, function,
specifications, performance or design of the Products (or components or
subcomponents thereof) without the express authorization of the Vendor, which
authorization, if any, will be provided by the Vendor pursuant to and in
accordance with the terms of this Agreement.
(b) The Vendor hereby grants to the Owner a nonexclusive right to resell
the Products within the Territory by means of (i) the Owner's own direct sales
utilizing its outbound sales force and/or through retail outlets owned or
operated by the Owner, and (ii) resales to Agents, all upon the terms and
conditions set forth herein. Subject to Applicable Law, the Owner agrees that,
in each contract between the Owner and an Agent, the Owner will use its
reasonable commercial efforts to require the Agent to which it supplies,
directly or indirectly, Products to resell such Products only to bona fide end
users, Purchasers or other Agents and only within the Territory. For the
purposes hereof a "bona fide end user" means any Person who is purchasing
Products without the intent to resell such Products.
3.2 Availability of Subscriber Units and Accessories; Minimum
----------------------------------------------------------
Commitment. (a) Subscriber Units and the Accessories therefor may be ordered
- - ----------
by the Owner for delivery at any time during the Term on or after (i) for
Subscriber Units (with accompanying Material Accessories), July 1, 1996 (the
"Commencement Date"), and for other additional Accessories, the respective
dates set forth on APPENDIX 1, in accordance with the lead times and
----------
forecasts set forth in Sections 4 and 5 below; provided that the
----
Accessories specifically listed in APPENDIX 1 hereto shall be available
----------
no later than the dates set forth for such accessories in APPENDIX 1.
----------
Notwithstanding the above, the Owner acknowledges and agrees that, unless the
Vendor otherwise notifies the Owner in writing to the contrary, the Software
contained in any Subscriber Unit manufactured by the Vendor prior to September
24, 1996 may contain "bugs" that may adversely impact the functionality,
performance and/or compliance of the Subscriber Unit with the Specifications
(such Software being hereinafter referred to as the "Beta Software"). With
respect to Subscriber Units forecasted pursuant to subsection 5.1(a) for
delivery on or before October 1, 1996 (the "Initial Subscriber Units"), the
Vendor will build and hold the Initial Subscriber Units in the Vendor's
inventory and will deliver such Initial Subscriber Units in accordance with the
provisions of this subsection 3.2(a). Commencing on September 24, 1996 (and
assuming that the Owner will have placed Purchase Orders for such Products with
the Vendor in accordance with the lead times set forth in this Agreement), the
Vendor will deliver to the FOB point on a daily basis (or such other longer
time intervals ending before October 8, 1996 as the Vendor may request in
writing) those Initial Subscriber Units in which the Vendor has upgraded to the
Specifications the Beta Software. On October 8, 1996, the Vendor will deliver
to the FOB point any then remaining Initial Subscriber Units still in the
Vendor's inventory as of such date (and the Owner will have placed Purchase
Orders for such Products with the Vendor in accordance with the lead times set
forth in this Agreement). Prior to
-11-
<PAGE>
their respective delivery to the FOB point pursuant to the prior two sentences,
the Vendor will upgrade to the Specifications the Beta Software in the subject
Initial Subscriber Units. For each of the Initial Subscriber Units so held in
the Vendor's inventory and upgraded, the Owner will pay to the Vendor a fee of
[ ] Initial Subscriber Unit to be upgraded to the Specifications, such
fee due and payable on the date the invoice for such Products is due and
payable. The Owner may request in writing that up to [ ] of the Initial
Subscriber Units be delivered (with their accompanying Material Accessories)
prior to the dates specified above. Upon such written request, the Vendor will
use its reasonable commercial efforts to comply with the dates and quantities
specified by the Owner in such request forsuch Initial Subscriber Units to be
delivered prior to September 24, 1996; provided that between September 24, 1996
-------- ----
and October 8, 1996, the Owner may request the delivery of any remaining Initial
Subscriber Units (subject to the [ ] limitation set forth above) that have not
been upgraded and were not earlier delivered prior to September 24, 1996. During
the period from September 24, 1996 to October 8, 1996 the Owner may request and
the Vendor will deliver as many upgraded Specification compliant Subscriber
Units as it has so upgraded and otherwise made available pursuant to and in
accordance with the forecasting and ordering requirements set forth in this
Agreement. With respect to any such Initial Subscriber Unit delivered prior to
the dates specified above, (i) acceptance of such Initial Subscriber Units with
the Beta Software will be deemed to have occurred upon delivery, (ii) the Vendor
makes no warranty with respect to the Beta Software (such Beta Software being
delivered on an "AS IS" basis), nor does the Vendor make any warranty with
respect to compliance of such Initial Subscriber Units with the Specifications
as a result of the fact that such Initial Subscriber Units contain Beta
Software; provided that any such Initial Subscriber Unit will be fully
-------- ----
compliant with all other applicable Specifications and the Vendor's warranties
pursuant to subsections 3.7 and 3.8 shall remain in full force and effect except
with respect to the effects of such Beta Software, and (iii) the Vendor shall
have no obligation to upgrade the Beta Software in such delivered Initial
Subscriber Units, but the Vendor agrees to cooperate, to the extent set forth in
the next sentence, with the Owner to assist the Owner to upgrade such Beta
Software in the field. In the event that there are Initial Subscriber Units
containing Beta Software delivered by the Vendor, the Vendor will supply to the
Owner, at no charge to the Owner, the computer disks containing the software
upgrades and reasonable amounts of training and assistance to permit the Owner
to implement a field upgrade of such Beta Software. The provisions of subsection
5.2(c) and subsection 5.2(d) will not apply to Initial Subscriber Units unless
and only to the extent that the Owner postpones delivery of any Initial
Subscriber Units to a date after October 8, 1996 (in which event, for purposes
of applying the provisions of subsection 5.2(c) and subsection 5.2(d), the
initial shipment date for such Initial Subscriber Units will be deemed to be
October 8, 1996). For the purposes hereof, a "bug" or "bugs" means a Software
imperfection, but in any event such Initial Subscriber Units with Beta Software
will be able to at least perform the following basic functions: which are
"power-up," "power-down," placing calls, receiving calls, perform self-check on
power-up, store phone numbers, recall phone numbers and speed dial phone
numbers.
-12-
<PAGE>
(b) Pursuant to and in accordance with the terms of this Agreement,
during the Initial Term of this Agreement the Owner will purchase from the
Vendor not less than [ ] Subscriber Units (the "Total Minimum Commitment").
During the first six (6) months from the Commencement Date (such first six month
period and each succeeding twelve (12) month period during the Term an "Annual
Supply Period") the Owner will only be required to purchase from the Vendor
[ ] Subscriber Units (the "First Annual Minimum Commitment"). During the
second Annual Supply Period the Owner will only be required to purchase from the
Vendor [ ] Subscriber Units (the "Second Annual Minimum Commitment"). During
the third Annual Supply Period the Owner will only be required to purchase from
the Vendor [ ] Subscriber Units (the "Third Annual Minimum Commitment"; each
of the First Annual Minimum Commitment, Second Annual Minimum Commitment, and
Third Annual Minimum Commitment, an "Annual Minimum Commitment").
Notwithstanding anything stated in this subsection 3.2(b) to the contrary, in
any given Annual Supply Period the Owner will only have to purchase [ ] of the
respective amounts set forth in the second, third and fourth sentences of this
subsection 3.2(b), provided that at any time prior to the termination of the
-------- ----
Initial Term (unless earlier terminated in accordance with Section 10) the Owner
will have fulfilled its Total Minimum Commitment pursuant to and in accordance
with the terms of this Agreement. Pursuant to and in accordance with the
immediately preceding sentence, any amounts (up to [ ]) not purchased, or
otherwise subject to firm Purchase Orders in accordance with this Agreement, by
the Owner in any given Annual Supply Period will increase the Annual Minimum
Commitment in the next succeeding Annual Supply Period (without any penalty or
Shortfall payment by the Owner to the Vendor); provided that for the third
-------- ----
Annual Supply Period any such amounts [ ] will be carried over and into the
remaining period within the Initial Term (the "Stub Period") and must be
purchased by the Owner in accordance with the terms of this Agreement during the
Stub Period. Prior to the end of the first Annual Supply Period, the second
Annual Supply Period and the third Annual Supply Period, the Owner will give the
Vendor prior written notice of any election by the Owner to exercise the Owner's
rights under the preceding sentence to purchase less than [ ] of the amount of
the First Annual Minimum Commitment, the Second Annual Minimum Commitment and
the Third Annual Minimum Commitment, as applicable, in the respective first
Annual Supply Period, second Annual Supply Period and the third Annual Supply
Period, as the case may be.
(c) In the event that the Owner elects, in its sole discretion, not to
place Purchase Orders for delivery of Subscriber Units in accordance with the
terms of this Agreement in the amounts as set forth in subsection 3.2(b) above
(the difference between each of the Annual Minimum Commitments and the amount
actually ordered for delivery during each of the relevant Annual Supply Periods
set forth in subsection 3.2(b) or otherwise during the Stub Period by the Owner
herein referred to as the "Shortfall"), then the amount of the relevant Annual
Minimum Commitment for such period (or the residual amount to be purchased in
the Stub Period, as applicable) will be reduced (by an amount equal to the
amount of the Shortfall for such Annual Supply
-13-
<PAGE>
Period or the Stub Period, as the case may be) by paying to the Vendor the
following amounts per Subscriber Unit which are in any such Shortfall, as full
compensation to the Vendor for such a reduction in the applicable Annual
Minimum Commitments:
Charge per Subscriber
Amount of Shortfall Unit in the Shortfall
- - ------------------- ---------------------
Shortfall greater than or equal to [ ] [ ] per Subscriber Unit in
of the applicable Annual Minimum Shortfall
Commitment
Shortfall greater than or equal to [ ] [ ] per Subscriber Unit in
and less than [ ] of the applicable Shortfall
Annual Minimum Commitment
Shortfall greater than or equal to [ ] [ ] per Subscriber Unit in
and less than [ ] of the applicable Shortfall
Annual Minimum Commitment
Shortfall less than [ ] of the applicable [ ] per Subscriber
Annual Minimum Commitment Unit in Shortfall
To the extent there is a Shortfall in any Annual Supply Period or the
Stub Period, as the case may be, the Vendor may invoice the Owner for any
amounts owed by the Owner to the Vendor pursuant to this subsection 3.2(c) no
earlier than 5:00 p.m. on the last Business Day of such period and no later
than ninety (90) days from the last Business Day of such period and the Owner
will have sixty (60) days to pay any such invoice to the extent the amount of
any such invoice is not in good faith dispute between the Parties pursuant to
subsection 11.8. To the extent the Owner is required to pay the Vendor amounts
as set forth in this subsection 3.2(c) for any Shortfall during any Annual
Supply Period, or during the Stub Period, as the case may be, any such amounts
once paid by the Owner will be full compensation to the Vendor for such
reduction in the Annual Minimum Commitments and the Owner will have no further
liability or obligation of any kind to the Vendor for any such reductions in
the Annual Minimum Commitments and any such payment will be the Vendor's sole
remedy (at law or in equity) for any such reductions in the Annual Minimum
Commitments. Nothing set forth in subsections 3.2(b) or 3.2(c) will be
construed or interpreted as relieving the Owner of purchasing those amounts of
Products projected by the Owner in the first five (5) months of a Forecast
which are subject to a firm Purchase Order in accordance with subsection 5.1.
For the purpose of subsections 3.2(b) and 3.2(c), any Purchase Order or Excess
Purchase Order postponed by the Owner pursuant to subsection 5.2(c) which, as a
result of such postponement, would cause the Products subject to such Purchase
Order or Excess Purchase Order not to be purchased in the Annual Supply Period
(the "Originally Scheduled Supply Period") in which such Products otherwise
were to be purchased (but for such postponement), will not be considered to be
Purchase Orders for Products ordered for delivery in the Originally Scheduled
Supply Period and such Products may be considered as part of any such Shortfall
during the Originally Scheduled Supply Period.
-14-
<PAGE>
3.3 Most Favored Customer Status. (a) With respect to all Products
----------------------------
(including any New Products ordered by the Owner pursuant to the terms of this
Agreement), the Owner will be deemed the most important and favored Customer of
the Vendor and will always throughout the [ ]. Notwithstanding the
above, the Vendor will not be obligated to provide such priority to Owner if
providing such priority either (i) would cause the Vendor, QUALCOMM or Sony
(including their respective affiliates) to breach any of their then-existing
contracts and/or any Applicable Law, or (ii) if the Owner elects to exercise
any of its remedies, as specified in subsection 4.2. At any time during the
Term, the Owner will receive Products (including any New Products ordered by
the Owner pursuant to the terms of this Agreement) at prices (prior to taking
into account price increases due to customization specific to the Owner;
[ ]. For the purposes of subsection 3.3 only, "Customer" will not include any
(i) OEM Customer or (ii) any other Customer who is only receiving Products from
the Vendor (or its affiliates) as a piece of a larger telecommunications,
engineering and/or design contract (other than with respect to Products sold
under a contract(s) with a third party to the extent that (x) the price
differential between the Product(s) sold under such third party contract (taking
into account corresponding time periods) multiplied by the number of units of
---------- --
Product(s) to be sold under such third party contract (at a lower price), is (y)
greater than [ ] of the total contract value of such third party contract), the
primary purpose of which is not the sale or supply of Subscriber Units.
(b) On an annual basis throughout the Term of this Agreement commencing
on the Effective Date, each of the Vendor, Sony and QUALCOMM will be required
to audit their pricing of all similar products provided to all of their
customers selling or using or intending to sell or use the Products in the
Territory in the preceding calendar year and certify to the Owner in a
certificate (or in separate certificates) executed by a duly authorized officer
of each such entity (the "MFC Certificate") that the Owner has in fact received
the prices and availability of Products in accordance with the terms of
-15-
<PAGE>
clause (a) of this subsection 3.3. The annual MFC Certificate delivered to the
Owner in accordance with this subsection 3.3(b) will be subject to
verification, at the election of the Owner, by any public accounting firm
reasonably acceptable to the Owner and listed on Schedule 1 (the "Independent
Public Accountant") and at the sole cost and expense of the Party whose
position is not supported by the report of the Independent Public Accountant
or, if contested, the report of the Independent Auditor. The Independent
Public Accountant will in no event disclose to the Owner or any other third
party the details of any contract or amendment between the Vendor and any
Customer (or between QUALCOMM and any of QUALCOMM's customers or between Sony
and any of Sony's customers or between any affiliate and such affiliate's
customers) other than details as necessary to summarize terms including, but
not limited to, pricing relevant to determinations under subsections 3.3(a) and
(b).
(c) To the extent that it is determined pursuant to subsection 3.3(b)
that the provisions of subsection 3.3(a) have not been complied with, the Owner
will have thirty (30) Business Days from receipt of the MFC Certificate (as
verified by the Independent Public Accountant, if the MFC Certificate(s) was so
subject to verification) to provide the Vendor with a written claim for Product
pricing rebates (as measured from the date any Product is delivered at any such
lower prices in violation of this subsection 3.3) on future purchases under
this Agreement based upon (i) the Independent Public Accountant's calculation
of the price differentials between the Vendor's prices for Products (including
any New Products) under this Agreement and any lower prices charged by the
Vendor, Sony or QUALCOMM, as the case may be, to any other Customer (including
customers of either QUALCOMM or Sony (including their respective affiliates)
who intend to use or resell, or who actually use or resell, such Products
within the Territory) in violation of clause (a) of this subsection 3.3. To
the extent that the Vendor, Sony or QUALCOMM, as the case may be, disagrees
with any such claim for such pricing rebates made by the Owner pursuant to this
subsection 3.3(c), the Vendor will have the right within ten (10) Business Days
of receiving the Owner's written rebate claim to submit such claim (including,
but not limited to, the Independent Public Accountant's report on which it as
based) and the Vendor's written response thereto to an Independent Auditor
(other than the Independent Public Accountant) who will have the authority to
determine whether, based on the information provided by the Owner and the
Vendor, the provisions of subsection 3.3(a) have been complied with. As part
of any such submission to the Independent Auditor, either Party may dispute the
validity or accuracy of the Independent Public Accountant's report. If the
Independent Auditor finds that the Owner's pricing rebate claim is incorrect
but that the provisions of subsection 3.3(a) have been violated, then the
Independent Auditor will have the right to adjust any such claim as appropriate
under such circumstances. The Independent Auditor's determination must be made
and delivered to both the Vendor and the Owner within ten (10) Business Days of
receiving the request from the Vendor. Such determination once made by the
Independent Auditor will be final and binding on the Parties and will not be
subject to further modification. The costs and expenses of the Independent
Auditor will be borne by the Party whose position is not supported by the
Independent Auditor or otherwise equitably under the circumstances.
-16-
<PAGE>
3.4 Payment Terms, Taxes and Co-op Marketing Fund. (a) Pursuant to
---------------------------------------------
and in accordance with the terms of this Agreement, the Vendor will invoice the
Owner for Products purchased upon delivery of such Products to the FOB point,
and the Owner will pay all such invoices within [ ] days after the
invoice date unless the Owner disputes (in accordance with subsection 11.8) in
good faith either the Vendor's entitlement to, or the amount of, any such
invoiced amount. The Owner agrees to pay to the Vendor a late charge for
amounts actually due and not paid when due in accordance with the terms of this
Agreement (a "Late Amount") equal to the lesser of [ ] per month,
pro-rata, of the Late Amount, or the maximum amount permitted by Applicable
Law; provided that any such late payment penalties will not accrue
----
until amounts owed by the Owner to the Vendor are actually late and outstanding
and will stop accruing immediately upon the Owner's payment of such Late Amount
plus any such accrued late payment penalties. All amounts stated herein and/or
otherwise required to be paid under or pursuant to this Agreement are stated
in, and will be paid in, U.S. Dollars. In the event that, at any given time,
there are undisputed amounts, in aggregate, of [ ] or more, which the Owner
has failed to pay when due in accordance with the terms of this Agreement, then
the Vendor, upon five Business Days prior written notice to the Owner, shall be
entitled to, without any penalty or payment obligations, suspend shipping
Products.
(b) The amounts to be paid by the Owner under this Agreement do not
include any state, provincial or local sales and use taxes, however designated,
which may be levied or assessed on the Products to be sold hereunder. 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 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 to the FOB point.
(c) Throughout the Term the Vendor will contribute cash amounts equal
to [ ] of the invoiced FOB point price of any Subscriber Units (and their
included accompanying Material Accessories) so invoiced by the Vendor to the
Owner for such Products purchased and paid for by the Owner pursuant to the
terms of this Agreement to a separate fund owned by the Owner and designated in
writing to the Vendor from time to time by the Owner (the "Co-op Marketing
Fund"). Any and all amounts in the Co-op Marketing Fund may be used by the Owner
in its sole and absolute discretion for any purpose in connection with the
marketing and/or advancement of the Nationwide Network or any part thereof,
subject only to the terms of subsection 3.17(b) and Section 8. In accordance
with the terms of this subsection 3.4(c), the Vendor must make any such
contribution to the Co-op Marketing Fund within ten (10) Business Days of
receipt by the Vendor of full payment by the Owner of amounts due under any such
invoice for Subscriber Units (and their included Material Accessories). The
amount of any such contribution to be made by the Vendor pursuant
-17-
<PAGE>
to this subsection 3.4(c) will be calculated based upon [ ] of the invoiced
FOB point price for Subscriber Units (and their included Material Accessories)
invoiced by the Vendor to the Owner. The failure of the Vendor to make the
contributions in cash to the Owner's Co-op Marketing Fund in accordance with and
subject to the terms of this subsection 3.4(c) will entitle the Owner to
withhold any such amounts from any future Vendor invoices (until such time as
the Vendor does make any such required contributions).
3.5 Delivery. (a) All deliveries of Products will be made to the
--------
FOB point. The Owner will specify the desired method of shipping. Unless
otherwise agreed in writing, the Owner will pay for all shipping, freight,
insurance and other similar charges incurred in connection with such
deliveries. In the absence of written shipping instructions from the Owner,
the Vendor will select the carrier and insurance company at the Owner's
expense, taking into account the charges levied by the carriers and insurance
companies under consideration, and will ship Products utilizing ground
transportation; provided that, in the absence of prior shipping
-------- ----
instructions, the Vendor will use reasonable efforts to contact the Owner to
request such shipping instructions prior to making any such selections.
(b) The Owner will inspect and either accept or reject all Products in
whole or in part within ten (10) Business Days after the date of receipt at the
delivery location applicable to such Products pursuant to the terms of this
Agreement. If the Owner fails to reject any Product delivered within such
period, the Owner shall be deemed to have accepted such Product; provided,
--------
however, that any such acceptance will in no event limit, modify, waive or
- - -------
otherwise restrict the Owner's rights under the terms, including without
limitation the warranty provisions, of this Agreement.
(c) The Owner may request that the Vendor provide more extensive
logistical and distribution capabilities to the Owner, which capabilities the
Vendor will use its reasonable commercial efforts to provide. If the Vendor
agrees to provide such services, there may be, depending on the level and scope
of such services, additional charges to the Owner on a per Product basis. Any
such charges will be mutually agreed upon by the Parties during negotiations
between the Parties on the provision of any such additional logistical and
distribution services beyond those outlined in this subsection 3.5;
provided that, in determining any such charges, the Owner will be
- - -------- ----
deemed the Vendor's most important and favored Customer and will receive such
services at prices, on payment terms and subject to all other contract terms on
terms no less favorable to the Owner than those offered or available to any
other Customer subject to and in accordance with the terms of subsection 3.3.
3.6 Pricing. (a) The Owner will purchase Products from the Vendor
-------
in accordance with the Product pricing set forth on Appendix 1. The price for
Products will be the price in effect on the date of the applicable Purchase
Order. Notwithstanding anything to the contrary contained in subsection 3.2(b)
or subsection 5.2(c), to the extent the Owner orders or is required to order
Subscriber Units during 1996, the Owner will be required to pay the 1996 price
(as set forth in Appendix 1) for
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<PAGE>
such Subscriber Units, even if and notwithstanding the fact that the Owner will
have moved, or delayed the delivery (pursuant to subsection 3.2(b) or
subsection 5.2(c)) of any such first Annual Supply Period Subscriber Units into
a succeeding Annual Supply Period or the Stub Period, as the case may be;
provided, however, that nothing contained in this sentence will in any
- - -------- -------
way limit or modify the Owner's right to reduce its First Annual Minimum
Commitment pursuant to the shortfall mechanisms in subsection 3.2(c);
provided further, however, in the event the Owner so reduces its
- - -------- ------- -------
First Annual Minimum Commitment but does purchase Subscriber Units subsequent
to December 31, 1996, then the Owner will be required to pay, for each
Subscriber Unit until such time as the Owner has purchased, in aggregate, [ ]
Subscriber Units, an amount equal to (i) the 1996 price (as set forth in
Appendix 1) for such Subscriber Units, less (ii) the amount paid by the Owner to
the Vendor (calculated on a per Subscriber Unit basis) pursuant to subsection
3.2(c) as a result of there being a Shortfall in the First Annual Supply Period.
Pursuant to the terms of this Agreement the Vendor may, upon not less than sixty
(60) days prior written notice to the Owner, increase its pricing for any of its
Products covered by the terms of this Agreement as set forth in Appendix 1 only
once in any given Annual Supply Period, in accordance with the most favored
customer provisions set forth herein; provided that any such price increase will
-------- ----
in no event be in excess of [ ] above the previously established price as set
forth in Appendix 1 for any such Product; and provided further, that nothing in
-------- -------
this subsection 3.6 will limit or otherwise pertain to a price increase
implemented pursuant to a Change Order pursuant to and in accordance with
subsection 3.23. In the event of any such price increase the Owner will have the
right, but not the obligation, by written notice to the Vendor, to reduce the
then remaining unpurchased portion of the applicable Annual Minimum Commitment
by the same percentage [ ] as such price increase in such Annual Supply
Period. For example, if the Vendor pursuant to the terms of this subsection
3.6(a) chose to increase its prices during the First Annual Supply Period by
[ ], then the Owner would have the corresponding right to decrease the then
remaining unpurchased portion of the First Annual Minimum Commitment by [ ].
Initial pricing for new Products not otherwise covered by Appendix 1 or the
terms of this Agreement will be established by mutual good faith agreement
between the Parties, such agreement to be reached no less than ninety (90) days
prior to the commercial availability of any such new Products to any Customer.
All such pricing for such new Products will be determined in accordance with the
terms of this Agreement, including, but not limited to, the most favored
customer provisions set forth herein.
(b) In the event that the Vendor reduces the price (other than the
automatic annual price reductions set forth in Appendix 1 or any price reduction
due to a violation of subsection 3.3) of any Product, the Vendor will credit the
Owner's accounts payable with an amount equal to the difference between the
reduced price (less the applicable [ ] Co-op Marketing Fund contribution
referenced in subsection 3.4(c)) and the price (less the applicable [ ] Co-op
Marketing Fund contribution referenced in subsection 3.4(c)) in effect
immediately prior to such reduction multiplied by the number of units of such
Product which were shipped to the Owner during the thirty (30) days immediately
prior to such price reduction and which remain in the
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<PAGE>
Owner's inventory at such time (the "Affected Products"). Within thirty (30)
days of such price reduction taking effect, the Vendor will notify the Owner of
such price reduction. If the Vendor fails to provide the Owner with such a
credit within such thirty (30) day period after notification by the Owner of
such quantities remaining in the Owner's inventory, the Owner will be entitled
to offset the amount of such credit (calculated in accordance with the
immediately preceding sentence) first against the amounts owed for any of the
Affected Products, and second against any other amounts due to the Vendor by
the Owner pursuant to this Agreement. The Vendor will have the right, but not
the obligation, to have an Independent Auditor audit the Owner's calculation of
the quantity of Products that remain in the Owner's inventory immediately prior
to such price reduction, provided that the Party whose position is not
-------- ----
supported by the Independent Auditor will be responsible for the costs and
expenses of the Independent Auditor designated pursuant to this subsection
3.6(b).
(c) The Owner will receive from the Vendor purchasing credits to be
applied as a reduction in the purchase price of Subscriber Units (with
accompanying Material Accessories) purchased by the Owner in 1998 as follows:
for each Subscriber Unit (with accompanying Material Accessories) purchased by
the Owner in 1997, the Owner will receive from the Vendor [ ] credit (the
"Purchasing Credits"). The Purchasing Credits will be applied by the Vendor
against purchases by the Owner of Subscriber Units in 1998 as a
reduction in the purchase price of such Subscriber Units; provided,
--------
however the amount of the Purchasing Credits to be applied to reduce the
- - -------
purchase price of any individual Subscriber Unit (with accompanying Material
Accessories) purchased in 1998 will be [ ] or such lesser then remaining
unused amount (if the amount of remaining unused Purchasing Credits is then
less than [ ].
3.7 Warranty to the Owner. (a) The Vendor warrants to the Owner
---------------------
that each Product will be, during the applicable Warranty Period, free from
Defects or Deficiencies in material and workmanship.
(b) In the event of any breach of the warranty set forth in subsection
3.7(a) during the applicable Warranty Period, the Vendor will, in accordance
with the terms of this subsection 3.7, promptly repair or replace (in
accordance with subsection 3.9) the defective or nonconforming Product or
otherwise cure any Defects and Deficiencies so that the defective or
nonconforming Product will perform in accordance with the Specifications. If
the Vendor fails to promptly repair, replace and/or cure such defect or
nonconformance, the Vendor will promptly refund any monies paid by the Owner
for such Defective Product, less any amounts contributed by the Vendor to the
Co-op Marketing Fund relating to such defective Product (such refund to be made
no later than the notice to the Owner that it will not repair and replace).
The remedies set forth in this subsection 3.7(b) will be the sole and exclusive
remedies in the event of a breach by the Vendor of its obligation under this
subsection 3.7.
(c) No warranty will extend to any Product which has been subjected to
misuse, neglect or improper storage or installation by any Person other than
the Vendor, its
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<PAGE>
agents, employees, subsidiaries and/or affiliates or which has been used with
accessories other than Accessories provided by the Vendor (or expressly
authorized in writing by the Vendor for use with the subject Product) or any
Product which has been opened, repaired, modified or altered by anyone other
than the Vendor or a Vendor authorized repair facility.
(d) The Owner hereby acknowledges and agrees that it has not relied on
any representations or warranties other than those expressly set forth in this
Agreement. During the applicable Warranty Period (in no event less than the
Term), Vendor will provide, at Vendor's sole expense, to the Owner telephonic
technical support, including a hotline staffed from 7:00 a.m to 10:00 p.m.
Eastern time seven (7) days a week.
3.8 Consumer Warranty. (a) In addition to the warranty provided in
-----------------
subsection 3.7, the Vendor will provide a warranty ("Consumer Warranty") to
Purchasers of Sony Branded Products, on the terms and conditions set forth on
APPENDIX 3, and to Purchasers of all other Products, on the terms and
- - ----------
conditions set forth on APPENDIX 2. At the election of the Owner and
----------
upon prior written notice to the Vendor, the Consumer Warranty for Subscriber
Units not yet delivered to the FOB point can be extended from twelve (12)
months to twenty four (24) months from the date of sale and the forms of the
Consumer Warranty set forth on Appendices 2 and 3 (which shall accompany such
Subscriber Units, as applicable) shall be appropriately modified to implement
the warranty extension for such Subscriber Units. The amount of prior written
notice which the Owner must give to the Vendor to implement such a warranty
extension shall be mutually agreed upon (in any event not in excess of ninety
(90) days) in each instance, taking into account such factors as printing and
packaging lead times, which may vary depending on the number of phones to be
subject to such warranty extension, and any other relevant factor. The Parties
agree that the Consumer Warranty is made solely by the Vendor and that the
Owner makes no warranties with respect to the Products pursuant to this
Agreement. In the event any such Purchaser inadvertently or otherwise forwards
Products subject to the Consumer Warranty to the Owner, the Owner will have the
right to forward such Products to the Vendor and the Vendor will perform its
obligations under the Consumer Warranty as if such Purchaser forwarded such
Products directly to the Vendor.
(b) During the Consumer Warranty period the Vendor agrees to allow a
Purchaser to return a Subscriber Unit (with the original accompanying Material
Accessories) to the Owner or to the locations described in Schedule 4 (or, with
respect to Sony Branded Product, to any authorized dealer or service facility,
as contemplated by APPENDIX 3) for a replacement thereof by the Vendor
----------
in the event that such Subscriber Unit or any such accompanying Material
Accessory suffers from a Defect or Deficiency within ten (10) days after the
purchase of such Subscriber Unit (with such accompanying Material Accessories).
Upon the Owner's receipt of a Defective Product (and prescribed accompanying
Products, if required) from a Purchaser the Owner will have the right to
deliver any such Defective Product (and prescribed accompanying Products, if
required) to the Vendor and the Vendor will within ten (10) days of its receipt
of such Defective Product (and prescribed accompanying Products, if required)
from the Owner replace
-21-
<PAGE>
such Defective Product by sending a replacement Product directly to the Owner
or its designated agents, or as otherwise mutually agreed by the Parties.
3.9 Repair and Replacement Services. (a) If the Owner claims a
-------------------------------
breach of warranty under subsection 3.7, it must notify the Vendor of the
claimed breach within a reasonable time (in any event during the applicable
Warranty Period) after its determination that a breach has in fact occurred.
The Owner will allow the Vendor to inspect the Products, at the Owner's
location designated for such purpose, or, upon the Vendor's issuance of a
return authorization number and at the Vendor's sole expense, the Owner will
return via ground transportation such Products to any of the Vendor's
designated repair facilities located in the United States and listed on
Schedule 4. Notwithstanding anything to the contrary in this subsection
3.9(a), the Owner agrees to pay to the Vendor the lesser of (i) the Vendor's
then current standard cost to refurbish and transport the NTF Product or (ii)
[ ] per NTF Product for each NTF Product actually replaced with a refurbished
or new Product by the Vendor, provided that the Owner will have the right, but
-------- ----
not the obligation, to designate an Independent Auditor to verify the Vendor's
calculation of the quantity of and the Vendor's standard cost to refurbish and
transport any such NTF Products received by the Vendor pursuant to this
subsection 3.9; provided further that the costs and expenses of the Independent
-------- -------
Auditor will be borne by the Party whose position is not supported by the
Independent Auditor or otherwise equitably under the circumstances.
(b) Upon request by the Owner for a return authorization, pursuant to
subsection 3.7 or 3.8, whether for replacement or for repair of a Product, the
Vendor agrees that, within thirty (30) days of such Owner request, it will
either issue such return authorization number or provide the Owner in writing
with reasons for refusing to issue such return authorization number. In the
event that the Vendor fails to provide the return authorization number, or
provide written reasons for refusing to do so, the Owner will be permitted to
offset the value of any amount paid for the Product against any other amounts
owed by the Owner to the Vendor pursuant to this Agreement; provided
--------
that in the event of any such offset the Vendor may request the return of
- - ----
the subject Product and, in the event of such request, the Owner will return
such Product.
(c) The Vendor will repair Products as soon as practicable after receipt
of the Defective Product giving rise to the warranty claim and will maintain a
maximum ten (10) day turn-around time to either repair or replace Products.
Turn-around time is the time between receipt by the Vendor of the Defective
Product and shipment for return by the Vendor of the repaired or replacement
Product. When repairing or replacing any Defective Product, the Vendor will
maintain the quality of the Product and will not substitute any component
thereof with a component of lesser quality or with a component that has a
lesser performance standard or capability. Subject to the immediately
preceding sentence, the Vendor will be entitled to repair or replace defective
Products using refurbished components and refurbished Products.
-22-
<PAGE>
3.10 Catastrophic Defects (a) Throughout the applicable Warranty
--------------------
Period for each Product, as applicable to each Product, in the event that (i) in
excess of [ ] of the Products in any class, category or type of Products (a
"Product Class") shipped to the Owner in the initial [ ] period following the
first commercial sale by the Vendor to the Owner of such Product (a "First Sale
Date") (provided that in any event at least [ ] separate Products) are found to
-------- ----
be Defective within any consecutive [ ] month period, (ii) in excess of [ ] of
the Products in any Product Class shipped to the Owner in the second [ ] month
period following the First Sale Date (provided that in any event at least
-------- ----
[ ] separate Products) are found to be Defective within any consecutive [ ]
month period or (iii) in excess of [ ] of the Products in any Product Class
shipped to the Owner after the [ ] month period following the First Sale Date
(provided that in any event at least [ ] separate Products) are found to be
-------- ----
Defective within any consecutive six (6) month period (any such defect described
in clauses (i), (ii) or (iii) above hereinafter referred to as a "Catastrophic
Defect") the Owner will notify the Vendor thereof. Upon receipt of such
notification, the Vendor will have ninety (90) days in which to determine the
cause of and to remedy such Defect (the "Catastrophic Defect Cure Period"). Upon
such remediation, the Vendor will promptly repair or replace any and all
Products that were subject to the same or similar condition(s) causing such
Catastrophic Defect (in the Owner's inventory and any such Products sold by the
Owner to Purchasers) with repaired or otherwise replaced Products at the
Vendor's sole expense (including, without limitation, all freight and duty
payments applicable thereto). In order to accurately determine that any
Catastrophic Defect has in fact been cured by the Vendor in accordance with the
terms of this subsection 3.10, the Owner will not exercise any of its remedies
under this subsection 3.10 against the Vendor until and unless the Defect
percentages for any such class, category or type of Products subject to such a
Catastrophic Defect, as measured during a ninety (90) day period starting on the
date the Vendor commences any such remediation, has failed to fall below the
applicable threshold percentages set forth in clauses (i), (ii) or (iii) above.
(b) In the event that such Catastrophic Defect is not remedied within
the Catastrophic Defect Cure Period in accordance with this subsection 3.10,
the Owner will have the right, but not the obligation, to terminate this
Agreement and to resell to the Vendor for cash payment any and all Products
which are then in the Owner's inventory and which are subject to such
Catastrophic Defect or which are subject to the same or similar condition(s)
causing such Catastrophic Defect at the price paid (less any applicable amounts
contributed by the Vendor to the Co-op Marketing Fund for such Product and less
any Product Depreciation) to the Vendor by the Owner, without charge
(including, without limitation, any restock charge) or penalty; provided
--------
that if the Vendor is diligently pursuing a cure, prior to any such
- - ----
termination the Owner will allow the Vendor an additional fifty (50) days to
remedy such Catastrophic Defect (provided further that any such resale
-------- -------
will be implemented at the end of the initial ninety (90) day cure period for
such Catastrophic Defect). Regardless of whether the Owner exercises the
rights set forth in the immediately preceding sentence, in the event that such
Catastrophic Defect is not remedied, the Vendor agrees to reimburse the Owner
for any
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<PAGE>
and all reasonable direct out of pocket expenses and costs in excess of any
expenses and costs the Owner would have otherwise incurred hereunder in
reasonably replacing (using replacement Products with the most comparable
features and functionality available at such time) the Owner's or any
Purchasers' Products as a result of such Catastrophic Defect and to repurchase
from the Owner any Vendor Products repurchased or otherwise recalled by the
Owner due to the Vendor's failure to remedy any such Catastrophic Defect.
(c) In the event the Vendor has failed to perform any of its warranty
obligations under the terms of this Agreement and if the Vendor purchases or
subcontracts for the manufacture of any part of any Product to be provided
hereunder from a third party, the warranties given to the Vendor by such third
party will inure, to the extent applicable, permitted by such warranties and
permitted by Applicable Law, to the benefit of the Owner, and the Owner will
have the right, to the extent permitted by such warranties and Applicable Law,
in its sole discretion, to enforce such warranties directly against such third
party. The remedies set forth in subsections 3.10(b) and (c) will be the sole
and exclusive remedies in the event of a breach by the Vendor of its obligation
under subsection 3.10(a) above.
(d) Notwithstanding that the applicable Warranty Period in respect
thereof may have expired, the Vendor will provide repair and maintenance (but
not replacement) services as set forth in subsection 3.9 with respect to any
Product purchased under this Agreement for a period of five (5) years following
the purchase of such Product at its standard commercial prices which will be
reasonable, unless (i) such Product has been subjected by a Person other than
the Vendor (or any of its subcontractors or suppliers) to misuse, neglect or
improper storage or installation or (ii) is in such deteriorated or damaged
condition that it cannot reasonably be repaired. In the event that a Product
is not repairable, the Vendor will return such Product to the Person who
returned such Product (at such Person's cost), with a statement certifying the
reasons why such Product cannot be repaired.
3.11 New Generation of Products. The Vendor may, from time to time
--------------------------
during the Term of this Agreement, modify, update or enhance existing or
produce new generations, or updated, modified or enhanced versions, of Products
sold hereunder ("New Products"). In the event that the Vendor makes such New
Products generally available to any of its other Customers, the Vendor will
offer to sell such New Products to the Owner on terms and conditions pursuant
to and in accordance with subsection 3.3. Notwithstanding anything stated
herein to the contrary, no Product subject to a modification which in no way
affects the form, fit or functionality of the Product will be deemed a New
Product and any such Product will remain a Previously Existing Product.
3.12 Right to Cease Supply of Obsolete Products. If the Vendor
------------------------------------------
begins selling and making generally available New Products or products to
replace or as a substitute for previously existing Products ("Previously
Existing Products"), the Vendor may, with the Owner's prior written consent,
such consent not to be unreasonably withheld, cease supplying the Previously
Existing Products to the Owner under this Agreement by
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<PAGE>
delivering six (6) months' prior written notice to the Owner regarding such
cessation; provided that the Vendor will offer to supply to the Owner
-------- ----
such replacement or substitute Products on terms and conditions pursuant to and
in accordance with subsection 3.3; and provided further that the
-------- -------
New Products or replacement or substitute Products maintain performance and
functionality equivalent to that previously provided by the Previously Existing
Products (unless any such lower performance and/or functionality has been
consented to by the Owner, such consent not to be unreasonably withheld).
Notwithstanding anything stated herein to the contrary, the Vendor will not be
required to provide the Owner notice under this subsection 3.12 or otherwise of
any modification to a Product or a component thereof which in no way affects
the form, fit and/or functionality of such Product. The Vendor will under no
circumstances be entitled to cease supplying such Previously Existing Products
which are covered under a then unfilled Purchase Order from the Owner. The
Vendor will have no right to cease supplying the Owner under this subsection
3.12 with any such Previously Existing Products so long as the Vendor continues
to supply and make available such Previously Existing Products to any other
Customer. It is expressly understood by the Owner that the Vendor does intend,
not earlier than April 1997, to obsolete the QCP-1900 and the CM-D600 models of
Subscriber Units and replace them with a New Product (at the same prices set
forth in Appendix 1) in accordance with this subsection 3.12. Such New Product
will comply with the specifications as set forth in Exhibit A3. In accordance
with this subsection 3.12, the Owner does hereby give its written consent to
the substitution of the New Product as specified in Exhibit A3 for any QCP-1900
and/or CM-D600 models of Subscriber Units ordered by the Owner under this
Agreement.
3.13 [Intentionally Omitted].
---------------------
3.14 Right to Return Products. The Vendor agrees that at any time within
------------------------
[ ] days immediately prior to the End Date (or the last Business Day of the
Term in the event the End Date should be extended pursuant to the terms of this
Agreement), in the event that items of a Product are not purchased by Purchasers
and remain in the Owner's inventory at such time, the Owner will be permitted,
but not required, to return such items to the Vendor; provided that the
-------- ----
aggregate value of any such Products will not exceed [ ] minus the reasonable
actual rework costs incurred by the Vendor for any such Products which were
customized for the Owner pursuant to and in accordance with the terms of this
Agreement. Upon return of such items to the Vendor, the Vendor will refund to
the Owner the price paid for such items (less such rework costs and less any
amounts contributed by the Vendor to the Co-op Marketing Fund relating to such
returned Products) without charge or penalty or offsetting order, provided that
-------- ----
such returned items are new, unused, in the original as shipped by the Vendor to
the Owner and are not Previously Existing Products. Such refund (less such
rework costs and less any amounts contributed by the Vendor to the Co-op
Marketing Fund relating to such returned Products) will be offset against
outstanding invoices or, if there are no such invoices, in cash. Any freight and
other charges incurred in connection with returning such items to the Vendor
within such [ ] day period will be paid by the Owner.
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<PAGE>
3.15 Labeling and Logo Changes. (a) The exterior of each
-------------------------
Subscriber Unit and its packaging will bear the technology mark, as specified
in Appendix 4, or such other substantially equivalent technology mark as
mutually agreed upon by the Parties (a "Mark"). The Mark will be positioned in
accordance with Appendix 4. At the Owner's option, and at the Vendor's sole
expense, and with appropriate lead times agreed to by the Parties, each
Subscriber Unit may be otherwise labeled and/or logoed on the front of the
Subscriber Unit below the key pad in accordance with the Specifications.
(b) The Parties acknowledge that the Owner may want to participate in
certain aspects of the Product labeling and the Vendor agrees to design, upon
mutual agreement with the Owner as to feasibility, timing and additional cost
(subject to the Vendor's obligations as to prices and costs pursuant to
subsection 3.3), if any, associated with any such labeling change not otherwise
at the Vendor's expense pursuant to the terms of this Agreement including, but
not limited to, the Specifications, Product labeling to complement the Owner's
marketing effort in accordance with the Owner's instructions.
3.16 Materials and Equipment. Whenever materials are specified or
-----------------------
described in this Agreement (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 may nonetheless be used, provided that such
-------- ----
materials are equivalent or equal to that named. If the Vendor wishes to
furnish or use a substitute item, the Vendor must first certify that the
proposed substitute will perform at least as well as the intended functions and
achieve the results called for by this Agreement (including but not limited to
the Specifications), 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. The Owner
will be allowed a reasonable time within which to evaluate each proposed
substitute. Notwithstanding the foregoing, prior to the shipment of Products
pursuant to the terms of this Agreement, the Vendor may at any time without
notice to or consent of the Owner make changes in a Vendor Product furnished
pursuant to this Agreement, or modify the drawings and published specifications
relating thereto, or substitute Products of similar or later design to fulfill
its obligations under this Agreement or otherwise fill an order, provided
--------
that any such changes, modifications or substitutions will in no way have
- - ----
an adverse affect or otherwise adversely impact upon the form, fit, or function
of an ordered Product pursuant to and in accordance with the applicable
Specifications. With respect to changes, modifications and substitutions which
do in fact adversely affect the form, fit, or function of an ordered Product
pursuant to and in accordance with the Specifications, the Vendor must notify
the Owner in writing at least ninety (90) days prior to the effective dates of
any such changes, modifications or substitutions. In the event that any such
change, modification or substitution is not desired by the Owner, the Owner
will notify the Vendor within thirty (30) days from the date of notice and the
Vendor will not furnish any such changed Products to the Owner on any orders in
process at the time the Owner is so notified; provided further, nothing
-------- -------
contained herein will otherwise modify Vendor's obligations under the terms of
this Agreement.
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<PAGE>
3.17 Logos. (a) The Products will bear only those logos as agreed
-----
to by the Owner pursuant to the terms of this Agreement (other than the Mark
pursuant to subsection 3.15). The Products will bear the "Sprint" label or
logo and/or such other labels or logos as the Owner shall require from time to
time, in such size and position on the Products as the Owner shall notify to
the Vendor from time to time pursuant to and in accordance with subsection
3.15.
(b) Throughout the Term of this Agreement, the Owner may use only those
trademarks, insignias, logos or other proprietary marks listed on Schedule 6 or
as otherwise consented to in writing by the Vendor ("Proprietary Marks") in
connection with the Owner's sales, advertisements and marketing of the
Products; provided that the Owner's use thereof shall be in accordance
-------- ----
with the Vendor's, Sony's or Qualcomm's, as applicable, reasonable directions
and policies. The Owner agrees that it has no rights with respect to the
Proprietary Marks, except as expressly provided in this subsection 3.17(b), and
will not use the Proprietary Marks as part of the business name of the Owner.
(c) The Vendor will use its reasonable efforts to cooperate with the
Owner in the development of Product packaging that is fully integrated with the
Owner's branding strategy and which supports the Owner's marketing
communication and segmentation strategy as reasonably communicated to the
Vendor by the Owner from time to time. Such cooperation will focus on the
contents of Product packaging, the configuration, physical dimensions and
materials of such packaging, communications, colors, graphics and descriptive
language used in connection with such Products and such other items as the
Parties shall agree upon from time to time.
(d) If the Vendor is itself unable to meet the Owner's packaging needs
as set forth in subsection 3.17(c) or as otherwise reasonably communicated by
the Owner to the Vendor from time to time, the Vendor agrees to supply the
Products in specified configurations and bulk packaging to the Owner's
designated packager for the required packaging; provided that in such
-------- ----
case the Vendor will credit the Owner against the purchase price for the
subject Products with any amounts saved by the Vendor for not having had to
perform the packaging services as required by the Specifications.
3.18 New Development Advisory Board; Notice of New Developments.
----------------------------------------------------------
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 Product (including New 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. The
focus of the NDAB will be on Product features, new CDMA products, Product
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. Throughout the Term, the Vendor
will use its reasonable efforts to provide the Owner notice of its
technological innovations
-27-
<PAGE>
and advancements relevant to the Products within a time reasonably prior to
making any such information generally available to its Customers, provided
--------
that nothing herein will require the Vendor to disclose any information
- - ----
proprietary to any other Customer.
3.19 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 reasonably
knowledgeable in CDMA technology and the Owner's Nationwide Network 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 Nationwide Network and/or any
PCS System and/or Products 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 advise the Vendor's product development teams of the Owner's
priorities as described to the Vendor by the Owner from time to time either
through the NDAB or by any other means acceptable to the Parties. Nothing
contained in this subsection 3.19 will in any way limit and/or modify the
Owner's ability to enforce its rights under this Agreement or to otherwise
maintain contacts with the Vendor in any other way it sees fit. Within a
reasonable time after the Effective Date the Owner will use reasonable efforts
to designate appropriate personnel to coordinate with the Vendor's market
development manager pursuant to this subsection 3.19.
3.20 Applicable Law and Radio Frequency Energy Standards. All
---------------------------------------------------
Products must comply, to the extent applicable, with all Applicable Law as of
their respective date of delivery to the FOB point including, but not limited
to, the requirements of Subpart J of Part 15 of the rules and regulations
promulgated by the FCC, as the same may be amended from time to time (the "FCC
Rules and Regulations"), including, without limitation, those provisions
concerning the labeling of Products and the suppression of radio frequency and
electromagnetic radiation to specified levels. In the event that the Products
produce radio frequency interference, notwithstanding that such Products comply
with the FCC Rules and Regulations, the Vendor will use reasonable efforts to
provide the Owner with reasonable technical information in its possession on
the methods to suppress such interference and will exercise reasonable
commercial efforts to isolate and remediate any such radio frequency
interference caused by the Products which constitutes a condition materially
adversely affecting the Nationwide Network (a "RF Interference Condition") or
any part thereof, provided that the Owner will cooperate to the extent
-------- ----
reasonable with the Vendor to achieve such remediation. Nothing in this
subsection 3.20 will be deemed to diminish or otherwise limit the Vendor's
warranty obligations pursuant to this Agreement.
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3.21 [Intentionally Omitted].
-----------------------
3.22 Test Products; Product Verification and Testing. (a) The
-----------------------------------------------
Vendor agrees to supply the Owner with ten (10) pre-production items of each
Subscriber Unit and Material Accessory no later than five (5) Business Days
after the Effective Date and ten (10) additional pre-production items of each
Subscriber Unit and Material Accessory no later than July 31, 1996 in order to
allow the Owner to test such items to determine whether such Subscriber Units
and Material Accessories comply with the requirements of this Agreement,
including the Specifications; provided that no such tests or any such
-------- ----
knowledge or experience gained or otherwise acquired from such tests or
otherwise will in any way be deemed a waiver of or to reduce or affect the
Vendor's obligations with respect to the provision of warranties pursuant to
this Agreement. The Owner will use reasonable efforts to provide the Vendor
with the results of such tests. In the event of the Vendor's introduction of
New Products pursuant to the terms of this Agreement, the Vendor will provide
the Owner reasonably sufficient numbers of pre-production units (in any event
not more than ten (10)) of any such New Product for the purposes of Owner
testing at least ninety (90) days prior to the general market availability of
any such New Products. Notwithstanding anything stated herein to the contrary,
the warranties set forth in subsections 3.7 and 3.8 will not apply to any
pre-production Subscriber Units required to be delivered by the Vendor pursuant
to this subsection 3.22(a) or otherwise purchased by the Owner. Exhibits B1
and B2 are preliminary and subject to final revision as mutually agreed to by
the Parties in good faith; provided that Exhibits B1 and B2 will be
-------- ----
finalized no later than July 15, 1996; provided further that in the
-------- -------
event the Parties are unable to mutually agree in good faith by July 15, 1996
such disagreement will be immediately referred to dispute resolution pursuant
to and in accordance with the terms of subsection 11.8.
(b) The Vendor will test the Products and verify to the Owner their
performance in accordance with the Specifications pursuant to and in accordance
with the requirements and milestones set forth in Exhibits B1, B2 and B3. The
failure of the Vendor to verify the performance of the Products pursuant to the
requirements of Exhibits B1, B2 and B3 will result in the Owner having the
absolute right to suspend or cancel (in its sole and absolute discretion) any
then existing or future Purchase Orders for any such Products which have not in
fact complied with the requirements of Exhibits B1, B2 and B3. To the extent
any class, category or type of Products do not comply with the requirements of
Exhibits B1, B2 and B3 within ninety (90) days (one hundred forty (140) days in
the event a semiconductor component modification is required) of the testing
dates provided for any such verifications pursuant to Exhibits B1, B2 and B3
(in the case of Exhibit B3 at the Vendor's testing facility), the Owner will
have the right, but not the obligation, to terminate this Agreement without
payment or penalty of any kind; provided that at any time after the
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first thirty (30) days of any such applicable cure period as set forth above in
this sentence, the Owner will have the right, in addition to any other rights
set forth in the immediately preceding sentence, to cancel (in its sole and
absolute discretion) any then existing Purchase Orders for Products delivered
or required to be delivered on such date which have not in fact complied with
the requirements of Exhibits B1, B2 or B3 and the Vendor agrees to reimburse
the Owner
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for any and all reasonable direct out of pocket expenses and costs in excess of
any expenses and costs the Owner would have otherwise incurred hereunder in
reasonably replacing (using replacement Products with the most comparable
specified features and functionality available at such time) any such Products.
In the event that the Owner chooses to terminate this Agreement pursuant to
this subsection 3.22(b) such termination will be the Owner's sole and exclusive
remedy; provided that in the event the Owner does not terminate under
-------- ----
this subsection 3.22(b), the Owner will retain all rights to enforce any and
all delay penalties against the Vendor pursuant to and in accordance with
subsection 4.2 as its sole and exclusive remedy in such case; provided
--------
further that nothing contained herein will be deemed to diminish or
- - -------
otherwise limit the Vendor's warranty obligations pursuant to this Agreement.
Notwithstanding anything to the contrary stated herein above, to the extent
that the Owner decides (in its sole and absolute discretion) to take, delivery
of and place into service any such Products which have failed to pass the
testing required by Exhibits B1, B2 or B3 ("Non-Conforming Products"), the
Owner will be deemed to have accepted any such Non-Conforming Products with any
such non-conformance; provided that, in such case, the Owner will in no
-------- ----
way be deemed to have waived any of its rights to enforce the Vendor's complete
conformance (including, but not limited to, conformance with any requirement
not otherwise met by such Non-Conforming Products) with the testing
requirements set forth in Exhibits B1, B2 and B3 and the Specifications on all
other Products (except for previously delivered and accepted Non-Conforming
Products) already then delivered or yet to be delivered by the Vendor pursuant
to the terms of this Agreement.
3.23 Change Orders. From time to time the Owner may request changes
-------------
or modifications to the Products or packaging and/or the Specifications
("Change Orders"). All such Change Orders requested in writing by the Owner to
the Vendor will be subject to the reasonable good faith and timely agreement
(including, but not limited to, agreement on terms such as one-time charges,
price increases, minimum purchase commitments and schedule impacts) of the
Vendor and the Owner which agreement will be evidenced by a writing executed by
an authorized representative of each of the Parties.
SECTION 4. LEAD TIMES AND DELAY
4.1 Lead Times. Provided that the Owner submits Forecasts to the
----------
Vendor and places Purchase Orders for Products in accordance with Section 5
below and subject to the provisions of subsection 3.2(a), the Vendor will ship
Products (other than as specified in the last sentence of this subsection 4.1)
ordered by the Owner against such Forecasts within the later of (i) ten (10)
Business Days after receipt and the Vendor's acknowledgement of the Owner's
Purchase Order therefor, and (ii) the shipment date specified by the Owner in
such Purchase Order pursuant to subsection 5.2(a); provided that the
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Vendor has acknowledged receipt of such Purchase Order, and the time period
from the date of the Vendor's acknowledgement and the specified shipment date
is longer than ten (10) Business Days. The Vendor will be able to provide the
Owner with specific lead times (which will in no event be in excess of ten (10)
days from receipt and acknowledgement by the Vendor of the Owner's Purchase
Order subject to the terms of
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<PAGE>
the first sentence of this subsection 4.1) applicable to each Purchase Order
for Products at the time the Vendor receives and acknowledges the Owner's
Purchase Order therefor. The Vendor will ship Products maintained in the
Buffer Stock ordered by the Owner against Forecasts for such Buffer Stock in
accordance with the provisions set forth in subsection 5.2.
4.2 Delivery Delay. (a) With respect to the first [ ] Subscriber Units
--------------
(and their included Material Accessories) purchased hereunder (the "Launch
Units"), in the event that the Vendor fails to deliver the Launch Units within
[ ] days (the "Delay Grace Period") of the applicable dates for shipment
referred to in subsection 4.1, the Vendor will pay to the Owner as liquidated
damages for such late performance (i) for each of the first [ ] days
beyond such Delay Grace Period, an amount equal to [ ] per day (for such
[ ] day period) of the total price of such undelivered Launch Units and
(ii) on the thirty fourth day after the date set for shipment pursuant to
subsection 4.1, an amount equal to [ ] of the total price of such undelivered
Launch Units; provided that in no event will the Vendor incur aggregate damages
-------- ----
with respect to Launch Units under this subsection 4.2(a) in excess of [ ] and
further, in no event will the Vendor incur damages with respect to Launch Units
on any given day pursuant to this subsection 4.2(a) in excess of [ ] per day;
provided further, that no such liquidated damages for delivery delay will be due
- - -------- -------
if the delay is attributable solely to (i) an event constituting a Force Majeure
pursuant to the terms of this Agreement or (ii) an act or omission of the Owner.
The Owner may offset the amount of such delay penalty against any amounts owed
to the Vendor for Products supplied under this Agreement.
(b) With respect to Subscriber Units (and their included Material
Accessories) that do not constitute Launch Units, for each of the first [
] days beyond the applicable "Succeeding Delay Grace Period" that the Vendor
fails to deliver any Subscriber Units (and their included Material
Accessories), the Vendor will pay to the Owner as liquidated damages for such
late performance an amount equal to [ ] per day (for such [ ] day period)
of the total price of such Subscriber Units (and included Material Accessories)
up to an amount not to exceed, in aggregate, [ ] of the total price of such
Subscriber Units (and included Material Accessories); provided that no such
-------- ----
liquidated damages for delivery delay will be due if the delay is attributable
solely to (i) an event constituting a force majeure pursuant to the terms of
this Agreement or (ii) an act or omission of the Owner. The Owner may offset the
amount of any delay penalty against any amounts owed to the Vendor for Products
supplied under this Agreement. For the purposes hereof, Products that will have
been rightfully rejected by the Owner in accordance with the terms of this
Agreement will not be deemed to be delivered by the Vendor; provided that
-------- ----
liquidated damages for delivery delay will not accrue during the time it takes
the Owner to inspect and reject any such Products. For the purposes of this
subsection 4.2(b) "Succeeding Delay Grace Period" shall mean [ ] days
beyond the applicable dates for shipment referred to in subsection 4.1.
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<PAGE>
(c) Notwithstanding anything stated in this subsection 4.2 to the
contrary, during any time that the Owner is in default under this Agreement for
undisputed payments owed to the Vendor, the Owner will not be entitled to any of
the delay penalties set forth in this subsection 4.2, nor shall any such delay
penalties accrue during the period any such default remains outstanding.
Furthermore, in the event that on the last day of the Initial Term the Owner's
aggregate Shortfall over the Initial Term exceeds [ ] of the Total Minimum
Commitment, the Owner will, within (30) days of receiving an invoice from the
Vendor, refund to the Vendor any delay penalties collected by the Owner pursuant
to this subsection 4.2 (or if such delay penalties have accrued but have not yet
been paid, the obligation to pay such penalties shall be absolved); provided
--------
that in no event will the Owner be obligated to make any such refund if the
- - ----
Owner's Shortfall was reasonably due to the Vendor's delivery delays throughout
the Initial Term.
(d) No liquidated damages for delivery delays under subsection 4.2 will
accrue (nor will the Owner be entitled to exercise any other remedies set forth
herein with respect to the enforcement of timely delivery) with respect to any
Subscriber Units not timely delivered by the Vendor (the "Delayed Products")
(i) to the extent, and only to the extent, that the Delayed Products were
intended for distribution and use in the first System Area in which the Owner
plans (in its sole and absolute discretion) to commence commercial operation
("Commencement") having more than [ ], (ii) if the Commencement of the First
System would have been delayed, even with timely delivery of the Delayed
Products beyond that date the Owner anticipated Commencement was to occur when
the Owner ordered the Delayed Products (the length of such delay being the
"Delay Period"), (iii) the Delayed Products are delivered before the end of the
Delay Period and (iv) the Owner, in such instance, will have given the Vendor
prior written notice of such Commencement delay. The Owner agrees to promptly
give the Vendor written notice of any delay in Commencement. It is the intent of
the Parties that the length of the Delay Period be equal to the number of days
from the date the Owner anticipated Commencement was to occur when the Owner
ordered the Delayed Products until the date Commencement would have occurred
assuming that the Owner had received the Delayed Products. For the purpose of
subsection 4.2(a), liquidated damages for delivery delays will be calculated
with respect to Delayed Products by using the day following the last day of the
Delay Period as the date on which the Delayed Products were to have been
delivered by the Vendor. It is expressly understood and agreed that this
subsection 4.2(d) will only apply to Products ordered by the Owner for the First
System and that the Vendor will not be entitled to the benefits of this
subsection 4.2(d) for any other Products or any other System Area to or for
which Products are to be shipped pursuant to the terms of this Agreement.
(e) In the event (i) there are delivery delays in any given Annual
Supply Period, or the Stub Period, as the case may be, which Vendor fails to
cure within the applicable Delay Grace Period, which delivery delays involve
the Vendor's failure to timely deliver more than [ ] Subscriber Units, in
aggregate, and (ii) the percentage of deliveries of Subscriber Units which are
subject to delivery delays in any given Annual Supply Period, or the Stub
Period, as the case may be, and which Vendor fails to cure
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<PAGE>
within the applicable Delay Grace Period, exceeds [ ], provided that in any
-------- ----
event the actual number of delivery delays referenced in the immediately
proceeding clause (ii) will be at least [ ] of the number of scheduled
deliveries, then the Owner will have the right, but not the obligation, to
terminate this Agreement without any payment or penalty. In the event the Vendor
fails to cure any delivery delay within thirty (30) days from the date delivery
was due, the Owner will have the right, but not the obligation, to cancel the
Purchase Order subject to such delay without any payment or penalty. With
respect to any such cancelled Purchase Order, the Owner will be entitled to
receive from the Vendor any and all reasonable direct out of pocket expenses and
costs in excess of any expenses and costs the Owner would have otherwise
incurred hereunder in order to reasonably fulfill (using replacement products
with the most comparable features and functionality) such cancelled Purchase
Order with any third party supplier acceptable to the Owner.
(f) Notwithstanding anything in this subsection 4.2 to the contrary, the
Vendor will only be obligated to pay to the Owner one-half (1/2) of the Delay
Penalties otherwise applicable to the late delivery of Products ordered
pursuant to an Excess Purchase Order.
(g) In the event the Owner exercises its rights under this subsection
4.2 due to a Vendor delivery delay, the remedies for any such Vendor delivery
delay as set forth in this subsection 4.2 will be exclusive.
SECTION 5. FORECASTS AND ORDERING
5.1 Forecasts. (a) Upon execution of this Agreement and on the
---------
first of each month thereafter, the Owner will deliver to the Vendor written
forecasts (a "Forecast") specifying its estimate of the quantity of each type
of Product that it expects to purchase on a month to month basis during the
twelve (12) months following the date of such Forecast (a "Forecast Period"),
which shall, subject to the provisions of subsection 3.2(a), be treated as
follows;
(i) quantities forecasted to be ordered during the first three
(3) months of each Forecast Period will be a firm Purchase
Order which, pursuant to the terms of this Agreement, must be
taken by the Owner in the month indicated. The Owner will
place one or more Purchase Orders to purchase Products in
accordance with the applicable Forecast;
(ii) quantities forecasted to be ordered during month four (4) of
each such Forecast Period shall be considered reasonably
accurate estimates of prospective Purchase Orders and
accordingly, the Owner will issue the Vendor firm Purchase
Orders to ensure that at least [ ] and not more than [ ]
of the quantities specified during this segment of
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<PAGE>
the Forecast Period are covered by firm Purchase Orders from
the Owner;
(iii) quantities forecasted to be ordered during month five (5) of
each such Forecast Period shall be considered reasonably
accurate estimates of prospective Purchase Orders, and
accordingly, the Owner will issue the Vendor firm Purchase
Orders to ensure that at least [ ] and not more than [ ]
of the quantities specified during this segment of the
Forecast Period are covered by firm Purchase Orders from the
Owner; and
(iv) quantities forecasted to be ordered during months six (6)
through twelve (12) of each such Forecast Period will only be
estimates of prospective Purchase Orders, and subsequent
Forecasts and actual Purchase Orders may completely vary and
be completely changeable by the Owner in its absolute
discretion.
Any reductions in firm Purchase Orders below the specified
forecasted amounts or any increases in firm Purchase Orders above the specified
forecasted amounts pursuant to clause (iii) of this subsection 5.1(a) may, in
the Owner's sole discretion, be cumulative with any such increase or decrease
pursuant to clause (ii) of this subsection 5.1(a). For example, if a
forecasted amount for month five in any forecast is subsequently reduced by the
Owner by [ ] pursuant to clause (iii) of this subsection 5.1(a) the Owner
will have the right, but not the obligation, to further reduce such reduced
amount by an additional [ ] pursuant to clause (ii) of this subsection
5.1(a). The first Forecast to be delivered by the Owner to the Vendor is
attached hereto as Schedule 8 and is expressly accepted by the Vendor. Except
with respect to such first Forecast, in no event will the Vendor be required to
accept an amount in any given month of a Forecast which is greater than [ ]
of the average amount forecasted by the Owner for the five months immediately
preceding the subject month. In the event the Owner fails to deliver to the
Vendor a new Forecast by the first Business Day of any given month, then the
new Forecast for such new twelve month period shall be deemed to be the prior
Forecast, adjusted by shifting the monthly quantities up one month (i.e, the
quantity that used to be forecasted for month two will instead be the quantity
for month one) with the new amount forecasted for month twelve being the same as
the amount for the new month eleven. Notwithstanding anything set forth in this
Agreement, in no event shall the Owner be entitled to increase the amount of
Products forecasted in the months of July through December, 1996 above the
amounts forecasted for any such month in the first Forecast.
(b) Within any Forecast provided to the Vendor by the Owner
pursuant to and in accordance with the terms of this subsection 5.1, the Owner
may designate to the Vendor a certain percentage of each type of the Product
requirements so forecasted ((i) up to [ ] in the Owner's sole
discretion during the first Annual Supply
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<PAGE>
Period and (ii) up to [ ] in the Owner's sole discretion during any
succeeding Annual Supply Period, or the Stub Period, as the case may be) to
be held by the Vendor in separate buffer stock ("Buffer Stock") for accelerated
ordering and shipment of such Products within such Buffer Stock. In the event
of any such designation pursuant to this clause (b) of subsection 5.1, the
Vendor will maintain such Buffer Stock and deliver to the Owner any Products
within such Buffer Stock in accordance with the lead times and ordering
provisions for such Buffer Stock set forth in this Agreement.
(c) The Forecasts will be in a format mutually acceptable to the
Parties; provided that the format of the first Forecast as set forth in
-------- ----
Schedule 8 will at all times be deemed in a format acceptable to both Parties.
5.2 Ordering. (a) In order to be effective, all orders by the
--------
Owner for Products will be made by the Owner in the form of written Purchase
Orders, specifying the quantity of each type of Product to be purchased and the
date or dates on which such Products are required to be shipped to the Owner,
the shipping method and the location to which such Products should be shipped;
provided that such shipment date will be no earlier than (i) ten (10)
- - -------- ----
Business Days after the date of such Purchase Order in the event of Purchase
Orders for Products not in Buffer Stock, (ii) one (1) Business Day for not more
than (x) [ ] Subscriber Units (with accompanying Accessories) and not
exceeding (y) [ ] separate destinations to which Products will be shipped as
designated by the Owner in Purchase Orders (each such destination a
"Shipped-to Location") for Products in Buffer Stock and (iii) two Business Days
for not more than (x) [ ] Subscriber Units (with accompanying Accessories)
and not exceeding (y) [ ] separate Shipped-to Locations for Products in
Buffer Stock; and provided further that the Vendor will use its reasonable
-------- -------
efforts to fulfill Purchase Orders in excess of forecasted quantities that the
Owner is entitled to turn into firm Purchase Orders pursuant to and in
accordance with subsection 5.1 (each an "Excess Purchase Order"). Each Purchase
Order will be submitted to the Vendor, 10300 Campus Point Drive, San Diego, CA
92121, Attn: Sprint Spectrum L.P. Account Manager (or any other authorized
representative of the Vendor designated to the Owner in writing by the Vendor
from time to time) and will be subject to the acknowledgement by the Vendor in
writing to the designated authorized representative of the Owner within two (2)
Business Days of receipt of Purchase Orders for Products in Vendor stock and
within one (1) Business Day of receipt of Purchase Orders for Products in Buffer
Stock. The Vendor will acknowledge Purchase Orders that the appropriate
personnel of the Vendor have actual knowledge of. Subject to the immediately
preceding sentence, failure of the Vendor to acknowledge to the Owner in writing
receipt of any Purchase Order or Excess Purchase Order shall be deemed to render
any such Purchase Order or Excess Purchase Order null and void. Within ten (10)
Business Days of receipt of Purchase Orders for Products in Vendor stock and
within one (1) Business Day of receipt of Purchase Orders for Products in Buffer
Stock, the Vendor will (subject to the terms of the last three sentences of this
subsection 5.2(a)) have the right to reject for non-conformance with the terms
of this Agreement any such Purchase Orders the receipt of which it has
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acknowledged pursuant to the terms set forth above; provided that for
-------- ----
any acknowledged Purchase Orders which must be fulfilled within one (1)
Business Day pursuant to clause (ii) above, the Vendor must reject for such
non-conformance any such Purchase Order on the same day as the acknowledgment
of such Purchase Order. The failure of the Vendor to so reject Purchase Orders
within the time frames above will be deemed acceptance by the Vendor of any
such acknowledged Purchase Orders. The Vendor will not have the right to
disagree with, reject, modify or otherwise amend any Purchase Order in
conformance with the terms of this Agreement including, but not limited to,
quantities which have already been the subject of Forecasts by the Owner
pursuant to the terms of subsection 5.1; provided that subject to the
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terms of the immediately preceding sentence of this subsection 5.2(a), the
Vendor may reject or otherwise respond to any Excess Purchase Order,
provided that failure of the Vendor to respond to any such acknowledged
- - -------- ----
Excess Purchase Order within ten (10) days of receipt thereof will be deemed
acceptance thereof. Any Vendor rejection of or modification to a Purchase
Order (other than Excess Purchase Orders) in conformance with the terms of this
Agreement pursuant to and in accordance with subsection 5.1 will be deemed a
material breach of this Agreement by the Vendor. Notwithstanding subsection
5.2(f) below, to the extent that the Vendor is actually aware that any Purchase
Order in any way contradicts or is not otherwise in conformance with the terms
of this Agreement, the Vendor agrees to promptly notify the Owner of any such
contradiction or non-conformance as soon as possible upon becoming actually
aware of such contradiction or non-conformance so that the Owner will have a
reasonable opportunity to correct any such contradiction or non-conformance and
furthermore to the extent reasonable under the circumstances the Vendor will
endeavor to fulfill any such non-conforming Purchase Order ignoring any such
non-conformity unless the Owner, after notification from the Vendor, will have
expressly refused to accept the fulfillment of such Purchase Order with any
such correcting modification.
(b) [Intentionally Omitted]
(c) Subject to subsections 3.2(b) and 3.2(c), any Purchase Order or
Excess Purchase Order may, in the Owner's sole and absolute discretion, be
postponed once without penalty by written notice from the Owner to the Vendor
at any time prior to ninety (90) days immediately prior to the initial shipment
date established for such Purchase Order pursuant to the terms of this
Agreement for a period not in excess of ninety (90) days from such initial
shipment date. If the Owner chooses to postpone a Purchase Order (for a period
not in excess of ninety (90) days from the initial shipment date for such
Purchase Order) at any time within the ninety (90) days immediately prior to
the initial shipment date (a "Late Postponement"), the Owner will pay to the
Vendor an amount equal to [ ] of the value (based upon the prices set forth in
Appendix 1) of any increased Product inventory for each month or portion of a
month (such amount to be prorated if such time periods are not whole months) the
Vendor is required to carry such increased Product inventory due to such Late
Postponement. The Vendor will invoice any such amounts on a monthly basis. In
any event and notwithstanding anything to the contrary in this clause (c) of
subsection 5.2, no Purchase Order or Excess Purchase Order may be postponed by
the Owner (i) within (10)
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Business Days of the initial shipment date for such Purchase Order or Excess
Purchase Order or (ii) if an Owner Event of Default has occurred or is
continuing pursuant to subsection 10.8.
(d) In accordance with the terms of subsection 5.1(b), the Vendor will
maintain Buffer Stock of Products which, when ordered by the Owner from the
Vendor in accordance with the Owner's Forecasts, will be delivered to the Owner
in accordance with the terms of subsection 5.2(a). The Owner will be liable
for and will pay to the Vendor an amount equal to [ ] of the value
(based upon the prices set forth in Appendix 1) of such Buffer Stock held in the
Vendor's inventory for each month or portion of a month (such amount to be
prorated if such time periods are not whole months) such Buffer Stock is so held
by the Vendor in its inventory in excess of thirty (30) days from the date the
Vendor commenced holding any such Buffer Stock for the Owner pursuant to and in
accordance with subsection 5.1 (each such date a "Buffer Stock Commencement
Date"); provided that during the first Annual Supply Period the Owner will
-------- ----
not be liable for any such amounts during the first thirty (30) day period
commencing upon the applicable Buffer Stock Commencement Date.
(e) The Vendor will reasonably cooperate with the Owner, and/or any
Person designated by the Owner for such purpose, (i) to utilize UPC stock
control numbering and other bar-coding requirements relating to inventory
processes and systems, and (ii) to develop processes and systems that will
maximize delivery logistics. Metric targets will be defined by the mutual good
faith agreement of the Parties for acceptable stock out percentages, delivery
times and total logistics costs.
(f) Unless the Parties otherwise expressly agree in writing, each
Purchase Order will be deemed to incorporate by reference all of the terms and
conditions of this Agreement. Should the terms of any Purchase Order conflict
with the terms of this Agreement, the terms of this Agreement will govern
unless the Parties expressly agree in writing (signed by a duly authorized
representative of both Parties) to the contrary. This Agreement will continue
to apply to a Purchase Order during the Term of this Agreement until all
obligations herein and thereunder are performed.
SECTION 6. SALES AND TECHNICAL SUPPORT
6.1 Sales Training. The Vendor will work with the Owner, at the
--------------
Vendor's sole expense, to agree on a sales training program for the
distribution channel used by the Owner for Subscriber Units. The goal of this
program will be to provide sales training ("Training") to the Owner's personnel
on CDMA and the features of the Subscriber Units, as well as to provide
appropriate Product related collateral material. The training program will
include, but will not be limited to, the following topics: CDMA; Product
features and usage; Subscriber Unit programming, installation and
troubleshooting; and such other matters as the Parties may reasonably agree
upon from time to time. The target audiences for the training will be the
Owner's marketing and sales personnel. These training programs will take place
at mutually agreeable locations (such locations to be provided at the Owner's
sole expense) in each of the Owner's System Areas at
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least once a year for the first two (2) years after introduction of the
Subscriber Units, at no charge to the Owner. Such training program will last
for a period of time as reasonably agreed upon by the Parties. The Vendor
anticipates that the Owner may want to influence aspects of the training and
will design the CDMA training program to complement the Owner's marketing and
sales effort. Should the Owner request the Vendor to modify the program in
such a way as to increase the Vendor's actual expenses, the Owner and the
Vendor will negotiate the terms and conditions of implementing the Owner's
request in good faith.
6.2 Sales and Promotional Efforts. (a) In order to ensure that the
-----------------------------
relationship between the Parties contemplated by this Agreement will be
mutually advantageous, and in recognition of the expertise and commitment by
the Parties necessary for the effective marketing and support of the Products,
the Owner agrees to encourage and develop the sales potential for such
Products, to employ competent personnel to meet the demands and needs for
marketing and support of the Products, and to encourage the purchase of
Products by Agents and Purchasers. Nothing contained in this subsection 6.2(a)
will in any way limit or otherwise modify the Vendor's obligations under this
Agreement.
(b) In order to assist the Owner to promote sales of the Products, the
Vendor will furnish the Owner, at the Vendor's sole expense, Vendor catalogs,
point of sales literature, training documentation, printed technical
information, data sheets and other reasonable advertising materials in such
quantities and at such time as may be reasonably agreed to by the Parties.
(c) If the Owner reasonably requires customized Vendor sales and
training literature, the content of the Vendor's appropriate existing
literature will be provided to the Owner, in the Owner's discretion, at the
Vendor's sole expense, in electronic form, or CD-ROM format or artwork to allow
the Owner to produce literature and promotional pieces that are of the Owner's
style and name. The use of any such literature will be subject to the
guidelines established between the Parties pursuant to subsection 8.1(b). In
addition, the Vendor agrees to grant the Owner a world-wide non-exclusive
royalty-free license to reprint any Vendor-owned sales literature in connection
with the Owner's sales, advertising and promotion of the Products. In
addition, the Vendor agrees to grant the Owner a non-exclusive royalty-free
license to distribute within the Territory any of the Vendor's own sales
literature in connection with the Owner's sales, advertising and promotion of
the Products; provided that in the event any such literature is in fact
-------- ----
distributed outside of the Territory by any Person other than the Owner (or by
an agent or affiliate of the Owner acting on the Owner's behalf or upon the
Owner's direction), the Vendor will not, in such event, take any action for
damages of any nature against the Owner under this Agreement or otherwise.
(d) The Vendor and the Owner agree to reasonably cooperate with each
other in the areas of sales and marketing in support of sales of the Vendor's
Products to customers of the Owner's telecommunications services.
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SECTION 7. INTELLECTUAL PROPERTY
7.1 Intellectual Property Rights Infringement. Subject to the
-----------------------------------------
provisions of subsections 7.3 and 7.4, the Vendor agrees that it will defend,
at its own expense, all suits and claims against the Owner, its affiliates,
directors, officers, agents and employees for infringement or violation
(whether by use, sale or otherwise) of any patent, trademark, copyright, trade
secret or other intellectual property rights of any third party (collectively,
"Intellectual Property Rights"), arising under or in connection with Applicable
Law within the Territory covering, or alleged to cover, the Products or any
component thereof for its intended use, 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
final judgment or decree, or in settlement of any suit or claim to which the
Vendor agrees, may be assessed against the Owner on account of such
infringement or violation, provided that:
-------- ----
(i) the Vendor will be given prompt written notice of all claims
of any such infringement or violation and of any suits or
claims brought or threatened against the Owner or the Vendor
of which the Owner has actual knowledge;
(ii) the Vendor is given full authority to assume control of the
defense (including appeals) thereof through its own counsel
at its sole expense and will have the sole right to settle
any suits or claims without the consent of the Owner;
provided that the Vendor has no right and will have
-------- ----
no right to agree to injunctive relief against the Owner;
provided further that the Vendor will notify the
-------- -------
Owner of any proposed settlement prior to the Vendor's
acceptance of such settlement; and
(iii) the Owner will cooperate fully with the Vendor in the defense
of such suit or claims and provide the Vendor, at the
Vendor's expense, such assistance as the Vendor may
reasonably require in connection therewith.
7.2 The Vendor's Obligation to Cure. If in any such suit so
-------------------------------
defended all or any part of the Products or the Software or any component
thereof is held to constitute an infringement or violation of Intellectual
Property Rights and its use is enjoined, or if in respect of any claim of
infringement or violation the Vendor deems it advisable to do so, the Vendor
will, within one hundred twenty (120) days, at its sole cost, expense and
option take one or more of the following actions: (i) procure the right to
continue the use of the same without interruption for the Owner; (ii) replace
the infringing Product, Software or component with a noninfringing product,
noninfringing Software or a non-infringing component, as applicable, that meets
the Specifications; or (iii) modify said Product, Software or any component
thereof so as to be noninfringing, provided that the Product, Software
-------- ----
or any component thereof as modified meets all of the Specifications. In the
event that the Vendor is not able, using reasonable commercial efforts, to cure
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the infringement pursuant to clause (i), (ii) or (iii) in the immediately
preceding sentence, the Vendor will refund to the Owner the full purchase price
paid (less Product Depreciation and less any amounts contributed by the Vendor
to the Co-op Marketing Fund relating to such Products) by the Owner for such
infringing Product, and the Owner will, if requested by the Vendor, use
reasonable efforts to return, at the Vendor's sole cost and expense, any such
infringing Products which are then available to it; provided that the
-------- ----
Vendor will have first refunded any such monies for such infringing
Products to the Owner. The obligations of the Vendor under subsection 7.1 and
the remedies under this subsection 7.2 will be the sole and exclusive
obligations of the Vendor and the sole and exclusive remedies available to the
Owner against the Vendor in the event of a claim against the Owner which is
covered by subsection 7.1 above.
7.3 The Vendor's Obligations. The Vendor's obligations under this
------------------------
Section 7 will not apply to (i) any infringement or violation of Intellectual
Property Rights caused by modification of any Product, Software or any
component thereof by any Person other than the Vendor, its employees or agents
acting on the Vendor's behalf or at its direction, or (ii) any infringement
caused directly by any such Person's use and maintenance of such Product other
than in accordance with the Specifications and the purposes contemplated by
this Agreement for use in the Owner's Nationwide Network, except as expressly
authorized in writing by the Vendor. The Vendor's obligations under subsection
7.1 will not extend to alleged infringements or violations that arise because
the Products provided by the Vendor are used in combination with other products
(other than Infrastructure Equipment) furnished by third parties and where any
such combination was not installed, recommended or approved, expressly in
writing by the Vendor; provided that in no event will the Owner seek
-------- ----
indemnification against the Vendor under this Section 7 for an infringement
claim based upon any such combination of Products with Infrastructure Equipment
to the extent and only to such extent the Owner is covered by an indemnity
under a then existing Procurement and Services Contract. The Vendor's
indemnification obligations specified in this Section 7 will not apply to any
intellectual property infringement caused directly by an Owner Defined Feature.
Nothing contained herein to the contrary will in any way constitute a waiver or
modification of the Vendor's rights to enforce its intellectual property rights
against third parties.
7.4 The Owner's Obligations. The Owner agrees that it will defend,
-----------------------
at its own expense, and indemnify and hold harmless the Vendor, its affiliates,
directors, officers, agents, employees and successors, from and against all
suits and claims for infringements or violations of any patent, trademark,
copyright, trade secret or other intellectual property rights of any third
party (i) caused directly by the Owner's (or by an affiliate's or agent's if
done at the direction of the Owner) modification, use or maintenance of any
Product other than in accordance with the Specifications and the terms of this
Agreement or the Vendor's written authorization, (ii) to the extent that any
Owner Defined Feature directly gives rise to an intellectual property
infringement claim against the Vendor, its affiliates, directors, officers,
agents, employees and successors, or (iii) to the extent, but only to such
extent, that an intellectual property infringement claim involves any markings
or logos specifically requested by the Owner in writing. The
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Owner agrees that it will pay all sums, including, without limitation,
attorneys' fees, damages, losses, liabilities, expenses and other costs, which,
by final judgment or decree, or in settlement of any suit or claim to which the
Owner agrees, may be assessed against the Vendor on account of such matters,
provided that:
- - -------- ----
(a) the Owner will be given prompt written notice of all claims of
any such infringement or violation and of any suits or claims brought or
threatened against the Vendor or the Owner of which the Vendor has actual
knowledge;
(b) the Owner is given full authority to assume control of the
defense (including appeals) thereof through its own counsel at its sole
expense and will have the sole right to settle any suits or claims
without the consent of the Vendor, provided that the Owner has no
-------- ----
right to agree to injunctive relief against the Vendor; provided
--------
further that the Owner will notify the Vendor of any proposed
-------
settlement prior to the Owner's acceptance of such settlement; and
(c) the Vendor will cooperate fully with the Owner in the defense
of such suit or claims and provide the Owner, at the Owner's expense,
such assistance as the Owner may reasonably require in connection
therewith, including, but not limited to, implementation of modifications
to Products or other manufacturing fixes pursuant to the provisions of
subsection 3.23.
7.5 Software License. (a) Certain Products sold to the Owner
----------------
hereunder may contain software in executable code form ("Software"), and,
except as otherwise expressly provided herein, all references to "Products" in
this Agreement will be deemed to include the accompanying Software,
provided that nothing herein will be construed as the sale of any
- - -------- ----
Software to the Owner. The Vendor hereby grants to the Owner a non-exclusive
royalty-free world-wide license to use (for the period of time the Product is
in use in accordance with its intended use), and sublicense to the Owner's or
its Agents' Purchasers or end user customers (in object form only), the
Software solely in each of the Products purchased by the Owner from the Vendor
and for use only in the manner in which such Products are intended to be used
pursuant to the terms of this Agreement, including, without limitation, the
Specifications.
(b) The Owner will not, without the prior written consent of the Vendor:
(i) alter, modify, translate or adapt any Software or create any derivative
works based thereon; (ii) copy any Software; (iii) assign, sublicense or
otherwise transfer the Software in whole or in part, except as permitted
herein; (iv) use the Software except as specifically contemplated in this
Agreement; or (v) disclose the Software to any third party except as required
by Applicable Law or pursuant to an order of a court of competent jurisdiction
or other similar requirement of a Governmental Entity; provided that
-------- ----
the Owner will use reasonable efforts to provide the Vendor prior written
notice prior to any such disclosure. The entire right, title and interest in
the Software will remain with the Vendor, and the Owner will not remove any
copyright notices or other legends from the Software or any accompanying
documentation, without the prior written consent of the Vendor.
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7.6 Sublicense of Software. The Owner may sub-license to Agents,
----------------------
Purchasers or other end-user customers the right to use the Software in object
form only with the use of the Products resold by the Owner to such customers,
and such right will survive termination of this Agreement.
7.7 Ownership of Intellectual Property Rights. (a) Except for
-----------------------------------------
licenses expressly granted under this Agreement, the sale of Products and the
license of Software to the Owner does not convey to the Owner any intellectual
property rights in such Products or Software. Neither the sale of Products,
the license of any Software, nor any provision of this Agreement will be
construed to grant to the Owner, either expressly, by implication or by way of
estoppel, any license under any patents or other intellectual property rights
of the Vendor covering or relating to any other product or invention of the
Vendor or any combination of Product or Software with any other product of the
Vendor. 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.
(b) The Owner hereby acknowledges and agrees that nothing herein gives
it any right, title or interest in the Mark and that upon termination of this
Agreement, by expiration or termination in accordance with this Agreement, the
Owner will no longer use the Mark in advertising or in any other manner,
provided that such termination will not affect any use by the Owner's
- - -------- ----
Agents, Purchasers or other customers of Products sold by the Owner and
provided further that nothing in this subsection 7.7 will prohibit or
- - -------- -------
otherwise inhibit in any way the sale following such termination by the Owner
of inventory held by it at the time of such termination. The Owner will not
challenge the validity of the Vendor's ownership of or right to use of the Mark
or the Vendor's copyrights, nor otherwise impair the interest of the Vendor in
the Mark or such copyrights. Except as specifically provided for under this
Agreement, the Owner will not use any mark which is confusingly similar to, or
a colorable imitation of the Mark. The Owner will use the Products and
Software furnished by the Vendor solely in accordance with the terms of this
Agreement, and the Owner will not, directly or indirectly, disassemble,
decompile, reverse engineer, or analyze or copy the physical construction of,
any of the Products or Software or any component thereof for any purpose other
than as expressly permitted by the Vendor in writing.
7.8 Intellectual Property. Subject to the Vendor's then existing
---------------------
reasonable marketing policies, if any, with respect to Products sold hereunder,
the Vendor grants the Owner rights to state that it is using the Vendor's
Products in the Owner's marketing, advertising or promotion of the Nationwide
Network, any PCS System, any part thereof or any Product. Subject to the
Vendor's then existing reasonable marketing policies, if any, with respect to
Products sold hereunder the Owner has the right to use for such marketing,
advertising or promotion the Vendor's advertising and marketing materials
(including pamphlets and brochures) provided to the Owner by the Vendor
describing the Nationwide Network, any PCS System, any part thereof or any
Product.
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<PAGE>
Other than as set forth in this subsection 7.8 or subsections 3.17 or 6.2, the
Owner has the right to use the trademarks and service marks of the Vendor in
the Owner's marketing, advertising and promotion of the Nationwide Network, any
PCS System, any part thereof or any Product only with the written consent of
the Vendor, such consent not to be unreasonably withheld, subject to and in
accordance with the terms of subsection 8.1.
7.9 Request for Custom Development. (a) From time to time, the
------------------------------
Owner may have requirements for custom Software (including, but not limited to,
development of identified features or modifications to Software or Software
Enhancements) or custom development of Products (including, but not limited to,
development of identified features or modifications to Products or Product
Enhancements) to be provided by the Vendor under this Agreement (the "Custom
Material"). If the Owner has a requirement for Custom Material that is a
specific enhancement or modification of a previously licensed feature or of
previously purchased Products, the Owner will identify to the Vendor in writing
a summary of any such proposed development of Custom Material. Such summary
will provide a description of any proposed Custom Material sufficient to enable
the Vendor to determine the general demand for, and its plans, if any, to
develop the same or similar Products. The Vendor will respond to such summary
within thirty (30) days after receipt thereof and indicate if it has the
ability to fulfill a subsequent Request for Proposal ("RFP") from the Owner for
such development of Custom Material. The Owner acknowledges that the Vendor
shall have no obligation to develop any proprietary materials for Owner other
than as expressly set forth in this subsection 7.9.
(b) If the Vendor decides that it does not have the technical ability or
the capacity to fulfill a RFP for such Custom Material development, the
Vendor's response pursuant to subsection 7.9(a) will (i) provide the Owner an
explanation of why it cannot fulfill such RFP and (ii) use reasonable diligence
to work with the Owner to identify an alternative source for such development
reasonably acceptable to the Owner. In determining whether the Vendor has the
technical ability or the capacity to fulfill the RFP, the Vendor may consider
factors including, but not limited to, (i) the Vendor's likelihood of
recovering the costs for performing such development, (ii) the impact of such
development on the Vendor's actual outstanding commitments to perform work for
other Customers and to pursue strategic development activities; and (iii)
whether the Vendor can perform the work utilizing existing software development
staff without stopping work underway.
7.10 Vendor Response. After reviewing an RFP issued to the Vendor
---------------
from the Owner for such Custom Material, the Vendor will respond to the Owner
within thirty (30) days, unless otherwise agreed by the Parties, stating the
terms and conditions upon which the Vendor would be willing to undertake such
development, including, but not limited to, a listing of specifications, custom
development charges, planned license fees and a proposed delivery schedule.
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SECTION 8. PROPRIETARY INFORMATION
8.1 Public Statements and Advertising. (a) Except to the extent
---------------------------------
specifically set forth herein, the Vendor will not issue any public statement
(or any private statement unless required in the performance of the work
contemplated by this Agreement) relating to or in any way disclosing any aspect
of the work contemplated by this Agreement, the Nationwide Network, any Owner
PCS System or any Product (other than statements regarding the Vendor's
products generally) including the scope, the specific terms of this Agreement,
extent or value of the work contemplated by this Agreement, the Products (other
than statements regarding the Vendor's products generally) and/or the
Nationwide Network or any Owner PCS System. The Owner will not issue any
public statement (or any private statement unless required in the performance
of the work contemplated by this Agreement) relating to or in any way
disclosing any aspect of the work contemplated by this Agreement or any Product
(other than statements regarding the Vendor's products generally), including
the scope, the specific terms of this Agreement, the extent or value of the
work contemplated by this Agreement and/or the Products (other than statements
regarding the Vendor's products generally). The Vendor agrees not to use for
publicity purposes any photographs, drawings and/or materials describing any
PCS System or any part of the Nationwide Network (other than Vendor Products),
without obtaining the prior written consent of the Owner, such consent not to
be unreasonably withheld. The obligations of the Parties under this subsection
8.1 are in addition to their respective obligations pursuant to subsection 8.2
but in no way limit the exceptions to public disclosure specifically referred
to in subsection 8.2(a) clauses (i) through (vii). This subsection 8.1 will in
no way limit (i) either Party from responding to customary press inquiries or
otherwise making public or private statements not otherwise disclosing
Proprietary Information or the specific terms of this Agreement in the normal
course of its business and/or in connection with the obligations hereunder or
(ii) the provision of necessary information to prospective suppliers and the
Vendor's or the Owner's personnel, agents or consultants.
(b) Each Party will submit to the other proposed copies of all
advertising (other than public statements or press releases pursuant to and in
accordance with the last sentence of subsection 8.1(a) above) wherein the name,
trademark or service mark of the other Party or its Affiliates or affiliates is
mentioned; and neither Party will publish or use such advertising without the
other Party's prior written approval. Such approval will be granted as
promptly as possible and will not be unreasonably withheld. The Parties
acknowledge that the obtaining of prior written approval for each such use
pursuant to this subsection 8.1(b) may be an administrative burden. From time
to time at the request of either Party, the Owner and the Vendor will establish
mutually acceptable guidelines that will constitute pre-authorization for the
uses specified therein. Such guidelines will be subject to change from time to
time at the reasonable request of either Party subject to the mutual agreement
of the Parties.
8.2 Confidentiality. (a) All information, including without
---------------
limitation all oral and written information (including, but not limited to,
determinations or reports by arbitrators pursuant to the terms of this
Agreement), disclosed to the other Party is
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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 Agreement. Except as specified in this Agreement, no other
rights, and particularly licenses, to trademarks, inventions, copyrights,
patents, or any other intellectual property rights are implied or granted under
this Agreement 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 Agreement. The receiving Party must provide the same care to
avoid disclosure or unauthorized use of Proprietary Information as it provides
to protect its own similar proprietary information but in no event will the
receiving Party fail to use reasonable care under the circumstances to avoid
disclosure or unauthorized use of Proprietary Information. All Proprietary
Information must be retained by the receiving Party in a secure place with
access limited to only such of the receiving Party's employees, subcontractors,
suppliers or agents who need to know such information for purposes of this
Agreement 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 Agreement. 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 the disclosing Party has been destroyed. For the purposes hereof,
Proprietary Information does not include information that:
(i) is published or is otherwise in the public domain through no
fault of the receiving Party at the time of any claimed
disclosure or unauthorized use by the receiving Party;
(ii) prior to disclosure pursuant to this Agreement is properly
within the legitimate possession of the receiving Party as
evidenced by reasonable documentation to the extent
applicable;
(iii) subsequent to disclosure pursuant to this Agreement is
lawfully received from a third party having rights in the
information without restriction of the third party's right to
disseminate the information and without notice of any
restriction against its further disclosure;
(iv) is independently developed by the receiving Party or is
otherwise received through parties who have not had, either
directly or indirectly, access to or knowledge of such
Proprietary Information;
(v) is transmitted to the receiving Party after the disclosing
Party has received written notice from the receiving Party,
after termination
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or expiration of this Agreement, that it does not desire to
receive further Proprietary Information;
(vi) is obligated to be produced under order of a court of
competent jurisdiction or other similar requirement of a
Governmental Entity, so long as the Party required to
disclose the information provides the other Party with prior
notice of such order or requirement and its cooperation to
the extent reasonable in preserving its confidentiality; or
(vii) the disclosing Party agrees in writing is free of such
restrictions.
(b) Because damages may be difficult to ascertain, the Parties agree
that, 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 8.2. 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 Agreement, 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.
SECTION 9. INDEMNIFICATION/LIMITATION OF LIABILITY
9.1 Vendor Indemnity. (a) The Vendor will indemnify and hold the
----------------
Owner and its affiliates, partners, directors, officers, agents and employees
(the "Indemnitees") harmless from and against all third party claims, demands,
suits, proceedings, damages, costs, expenses, liabilities, including, without
limitation, reasonable legal fees (collectively, "Liabilities") brought against
or incurred by any Indemnitee for (i) injury to persons (including physical or
mental injury, libel, slander and death), or (ii) loss or damage to any
property, or (iii) any other liability, in each instance resulting from the
negligence, willful misconduct or gross negligence, of the Vendor in the
performance of this Agreement. If the Vendor and the Owner jointly cause such
Liabilities, the Parties will share the liability in proportion to their
respective degree of causal responsibility.
(b) The Vendor's obligation to indemnify under subsection 9.1(a) with
respect to any Liability will not arise unless the Indemnitee (i) notifies the
Vendor in writing of such potential Liability within a reasonable time after
the Indemnitee is aware of such potential Liability; provided that the
-------- ----
lack of providing such notice will not affect the Vendor's obligation hereunder
(A) if the Vendor otherwise has actual knowledge of such Liability and (B)
unless such lack of notice is the cause of the Vendor being unable to
adequately and reasonably defend such Liability, (ii) gives the Vendor the
opportunity and authority to assume the defense of and settle such Liability,
subject to the provisions of the next two sentences, and (iii) furnishes to the
Vendor all such reasonable information and assistance available to the Owner
(or other Indemnities) as may be reasonably requested by the Vendor and
necessary for the defense against such Liability.
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The Vendor will assume on behalf of the Indemnitee and conduct in good faith
the defense of such Liability with counsel (including in-house counsel)
reasonably satisfactory to the Indemnitee; provided that the Indemnitee
-------- ----
will have the right to be represented therein by advisory counsel of its own
selection and at its own expense. If the Indemnitee will have reasonably
concluded that there may be legal defenses available to it which are different
from or additional to, or inconsistent with, those available to the Vendor, the
Indemnitee will have the right to select separate counsel reasonably
satisfactory to the Vendor to participate in the defense of such action on its
own behalf at such Indemnitee's expense. In the event the Vendor fails, after
written demand by such Indemnitee, to defend any Liability as to which an
indemnity should be provided under subsection 9.1(a), then the Indemnitee may,
at the Vendor's expense, contest or settle such matter without the Vendor's
consent. All payments, losses, damages and reasonable costs and expenses
incurred in connection with such contest, payment or settlement controlled by
such Indemnitee will be to the Vendor's account. The Vendor will not settle
any such Liability without the consent of the Indemnitee, which consent will
not be unreasonably withheld. Any such Indemnitee will exercise its best
efforts to respond to any request for a consent prior to the expiration of any
such settlement offer. This indemnity is in lieu of all other obligations of
the Vendor, expressed or implied, in law or in equity, to indemnify the
Indemnitees (except those other indemnity obligations expressly set forth in
this Agreement).
(c) EXCEPT AS EXPRESSLY SET FORTH IN SUBSECTIONS 3.7 AND 3.8 OF THIS
AGREEMENT, THE VENDOR MAKES NO WARRANTIES AS TO PRODUCTS, SOFTWARE, TECHNOLOGY,
MATERIALS, SERVICES, INFORMATION OR OTHER ITEMS IT FURNISHES TO THE OWNER,
AGENTS OR PURCHASERS, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, OR THAT
SUCH ITEMS ARE FREE FROM THE RIGHTFUL CLAIM OF ANY THIRD PARTY, BY WAY OF
INFRINGEMENT OR THE LIKE.
(d) EXCEPT AS PROVIDED IN SUBSECTIONS 3.2(c), 4.2, 5.2(c), 5.2(d), 7.1,
7.4, 9.2 AND 9.4 HEREOF, NEITHER PARTY WILL BE LIABLE TO THE OTHER (ITS AGENTS
OR, IN THE CASE OF THE VENDOR, THE PURCHASERS) FOR ANY INCIDENTAL,
CONSEQUENTIAL OR SPECIAL DAMAGES OR ANY OTHER INDIRECT LOSSES OR DAMAGES
ARISING OUT OF THIS AGREEMENT, THE DELIVERY OR THE FAILURE TO DELIVER ANY OF
THE PRODUCTS OR ANY COMPONENT THEREOF, ANY BREACH OF THIS AGREEMENT, THE
FAILURE OF THE PRODUCTS TO PERFORM AS WARRANTED OR OTHERWISE OR ANY RESULTING
OBLIGATION, OR THE USE OR INABILITY TO USE OF ANY PRODUCTS DELIVERED PURSUANT
TO THIS AGREEMENT, WHETHER IN AN ACTION FOR OR ARISING OUT OF BREACH OF
CONTRACT, FOR TORT, OR ANY OTHER CAUSE OF ACTION.
EXCEPT AS PROVIDED IN SUBSECTIONS 3.2(c), 4.2, 5.2(c), 5.2(d), 7.1, 7.4,
9.2 AND 9.4 HEREOF, IN NO EVENT WILL EITHER PARTY BE LIABLE TO
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THE OTHER (ITS AGENTS OR, IN THE CASE OF THE VENDOR, THE PURCHASERS) FOR ANY
SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGE OR LOSS OF ANY NATURE
WHICH MAY ARISE IN CONNECTION WITH THE USE, DISTRIBUTION, INSTALLATION,
REMOVAL, MAINTENANCE OR SUPPORT OF PRODUCTS AND/OR SOFTWARE (SEPARATELY OR IN
COMBINATION WITH EACH OTHER OR WITH OTHER PRODUCTS AND/OR SOFTWARE NOT PROVIDED
BY VENDOR) BY OWNER, AGENTS AND ANY PURCHASER PURSUANT TO OR UNDER THIS
AGREEMENT, REGARDLESS OF WHETHER SUCH CLAIMS ARE BASED OR REMEDIES ARE SOUGHT
IN WARRANTY, CONTRACT, NEGLIGENCE, STRICT LIABILITY, TORT, PRODUCTS LIABILITY
OR OTHERWISE, EVEN IF THE PARTY SOUGHT TO BE HELD LIABLE HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGE OR LOSS.
(e) IN NO EVENT WILL THE TOTAL LIABILITY OF THE VENDOR UNDER THIS
AGREEMENT, WHETHER SUCH LIABILITY BE IN CONTRACT, STRICT LIABILITY, PRODUCTS
LIABILITY OR TORT (INCLUDING NEGLIGENCE), EXCEED THE GREATER OF (x) [ ] AND
[ ] PROVIDED THAT ANY SUCH PURCHASE ORDERS ARE IN FACT PAID FOR PRIOR TO
-------- ----
OR OFFSET AGAINST THE PAYMENT OF ANY AMOUNTS OWED BY THE VENDOR TO THE OWNER
PURSUANT TO THE VENDOR INDEMNITIES UNDER THIS AGREEMENT. NOTWITHSTANDING
ANYTHING TO THE CONTRARY SET FORTH IN THIS AGREEMENT, IN THE EVENT THE OWNER
EXERCISES ITS RIGHTS TO PURCHASE REPLACEMENT PRODUCTS IN CONNECTION WITH THE
CANCELLATION OF A PURCHASE ORDER, THE TERMINATION OF THIS AGREEMENT OR THE
REPURCHASE OR RECALL OF ANY PRODUCTS (WHETHER PURSUANT TO SUBSECTION 3.10(b),
3.22(b), 4.2(e), 10.2, 10.3, 10.6, 11.10 OF OTHERWISE), THE AMOUNT THAT THE
VENDOR SHALL BE LIABLE TO THE OWNER WITH RESPECT TO THOSE ADDITIONAL EXPENSES
AND COSTS INCURRED BY THE OWNER (IN CONNECTION WITH ACQUIRING SUCH REPLACEMENT
PRODUCTS) IN EXCESS OF ANY EXPENSES AND COSTS THE OWNER WOULD HAVE OTHERWISE
INCURRED UNDER THIS AGREEMENT IN PURCHASING THE SUBJECT PRODUCTS, SHALL NOT
EXCEED (I) IF THE SUBJECT PRODUCTS TO BE REPLACED ARE PRODUCTS THAT CONSTITUTE
PART OF THE FIRST [ ] OF THE TOTAL MINIMUM COMMITMENT, [ ] OF THE PURCHASE
PRICE OF THE SUBJECT PRODUCTS SO REPLACED, AND (II) WITH RESPECT TO ALL OTHER
PRODUCTS, [ ] OF THE PURCHASE PRICE OF THE SUBJECT PRODUCTS SO REPLACED.
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(f) IN NO EVENT WILL THE TOTAL LIABILITY OF THE OWNER UNDER THIS
AGREEMENT, WHETHER SUCH LIABILITY BE IN CONTRACT, STRICT LIABILITY, PRODUCTS
LIABILITY OR TORT (INCLUDING NEGLIGENCE), EXCEED THE GREATER OF (x) [ ] AND
[ ].
9.2 Vendor Damages for Fraud. The Vendor will be responsible for
------------------------
all actual damages incurred by the Owner as a result of any damage or injury
caused by or resulting from the fraud of the Vendor; provided, however,
-------- -------
if the senior management of the Vendor knew or should have known of such fraud,
then the Vendor will be responsible for all damages (including, but not limited
to, actual, consequential, incidental and special) so incurred by the Owner for
such fraud.
9.3 Owner Indemnity. (a) The Owner will indemnify and hold the
---------------
Vendor and its affiliates, partners, directors, officers, agents and employees
(the "Vendor Indemnitees") harmless from and against all third party claims,
demands, suits, proceedings, damages, costs, expenses, liabilities, including,
without limitation, reasonable legal fees (collectively, "Vendor Liabilities")
brought against or incurred by any Vendor Indemnitee for (i) injury to persons
(including physical or mental injury, libel, slander and death), or (ii) loss
or damage to any property, or (iii) any other liability, in each instance
resulting from the negligence, willful misconduct or gross negligence, of the
Owner in the performance of this Agreement. If the Vendor and the Owner
jointly cause such Vendor Liabilities, the Parties will share the liability in
proportion to their respective degree of causal responsibility.
(b) The Owner's obligation to indemnify under subsection 9.3(a) with
respect to any Vendor Liability will not arise unless the Vendor Indemnitee (i)
notifies the Owner in writing of such potential Vendor Liability within a
reasonable time after the Vendor Indemnitee is aware of such potential Vendor
Liability; provided that the lack of providing such notice will not
-------- ----
affect the Owner's obligation hereunder (A) if the Owner otherwise has actual
knowledge of such Vendor Liability and (B) unless such lack of notice is the
cause of the Owner being unable to adequately and reasonably defend such Vendor
Liability, (ii) gives the Owner the opportunity and authority to assume the
defense of and settle such Vendor Liability, subject to the provisions of the
next two sentences, and (iii) furnishes to the Owner all such reasonable
information and assistance available to the Vendor (or other Vendor
Indemnitees) as may be reasonably requested by the Owner and necessary for the
defense against such Vendor Liability. The Owner will assume on behalf of the
Vendor Indemnitee and conduct in good faith the defense of such Liability with
counsel (including in-house counsel) reasonably satisfactory to the Vendor
Indemnitee; provided that the Vendor Indemnitee will have
-------- ----
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the right to be represented therein by advisory counsel of its own selection
and at its own expense. If the Vendor Indemnitee will have reasonably
concluded that there may be legal defenses available to it which are different
from or additional to, or inconsistent with, those available to the Owner, the
Vendor Indemnitee will have the right to select separate counsel reasonably
satisfactory to the Owner to participate in the defense of such action on its
own behalf at such Vendor Indemnitee's expense. In the event the Owner fails,
after written demand by such Vendor Indemnitee, to defend any Vendor Liability
as to which an indemnity should be provided under subsection 9.3(a), then the
Vendor Indemnitee may, at the Owner's expense, contest or settle such matter
without the Owner's consent. All payments, losses, damages and reasonable
costs and expenses incurred in connection with such contest, payment or
settlement controlled by such Vendor Indemnitee will be to the Owner's account.
The Owner will not settle any such Vendor Liability without the consent of the
Vendor Indemnitee, which consent will not be unreasonably withheld.
Furthermore, the Owner will indemnify and hold the Vendor Indemnitees harmless
from and against all Vendor Liabilities brought against or incurred by any
Vendor Indemnitee for (i) injury to persons (including physical or mental
injury, libel, slander and death), or (ii) loss or damage to any property, or
(iii) any other liability resulting directly and solely from the unauthorized
modification by the Owner of the Products or by the Owner's use of any Product
in combination with any other Subscriber Unit accessory not furnished and/or
authorized in writing for such use by the Vendor. This indemnity is in lieu of
all other obligations of the Owner, expressed or implied, in law or in equity,
to indemnify the Vendor Indemnitees (except those other indemnity obligations
expressly set forth in this Agreement).
9.4 Owner Damages for Fraud. The Owner will be responsible for
-----------------------
actual damages incurred by the Vendor as a result of any damage or injury
caused by or resulting from the fraud of the Owner; provided, however,
-------- -------
if the senior management of the Owner knew or should have known of such fraud,
then the Owner will be responsible for all damages (including, but not limited
to, actual, consequential, incidental and special) so incurred by the Vendor
for such fraud.
SECTION 10. TERMINATION
10.1 Termination. This Agreement will terminate on the End Date,
-----------
unless extended by mutual agreement of the Parties hereto, in accordance with
Section 2, or unless sooner terminated as provided herein. Any such
termination in accordance with the terms of this Section 10 will in no way
terminate, modify, amend or otherwise affect the Vendor's warranties hereunder
(or the enforceability thereof) in connection with Products sold pursuant to
the terms of this Agreement.
10.2 Termination For Cause. The Owner has the right to terminate
---------------------
this Agreement in its entirety 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:
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(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 violates any Applicable Law and the effect of such
violation materially impairs the Vendor's ability to perform its obligation
under this Agreement; or
(d) the Vendor fails to perform this Agreement in any material respect
and thereby prejudices in any way deemed material by the parties providing
financing in connection with the build-out of the Nationwide Network, in such
parties' reasonable opinion, the Owner's efforts to obtain financing for the
Nationwide Network; or
(e) the Vendor fails to comply with subsection 11.18; or
(f) the Vendor breaches any other provision of this Agreement and the
effect of such breach materially impairs the Vendor's ability to perform its
obligations under this Agreement.
10.3 Remedies. 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 Agreement or at law or in equity (except as such legal or equitable
remedies may be limited by this Agreement), terminate this Agreement upon
written notice to the Vendor; provided, however, that the Owner will
-------- -------
have first provided to the Vendor the following periods of notice and
opportunity to cure:
(i) in the case of an Event of Default specified in subsections
10.2(a) and 10.2(b), no notice or opportunity to cure will be required
from the Owner; and
(ii) in the case of any other Event of Default by the Vendor, the
Owner will have provided thirty (30) days' prior written notice, and the
Vendor will have failed to diligently pursue such cure and remedy the
breach entirely by the end of said thirty (30) day notice period.
10.4 Discontinuance of Supply. Upon such notification of
------------------------
termination, the Vendor must immediately discontinue all supply of Products.
10.5 Payments. When the Owner terminates this Agreement for cause
--------
pursuant to subsection 10.2, notwithstanding anything herein to the contrary,
the Owner may
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<PAGE>
withhold payments in amounts that it reasonably believes are in dispute, if
any, at such time to the Vendor for the purposes of offset of amounts owed to
the Owner pursuant to the terms of this Agreement, until such time as the exact
amount of damages due to the Owner from the Vendor is fully determined;
provided that in the event that any such disputed amounts are
----
determined to in fact be owed by the Owner to the Vendor, such amounts will be
increased by the late payment penalties, if any, applicable thereto pursuant to
subsection 3.4.
10.6 Costs. In the event of a termination due to a Vendor Event of
-----
Default, the Owner will be entitled to receive from the Vendor the following:
(i) with respect to those costs and expenses incurred by the Owner in procuring
substitute subscriber units (and their included accessories) for the Products
not delivered by the Vendor, only those reasonable direct out of pocket costs
and expenses incurred by the Owner in reasonably procuring substitute
subscriber units (and their included accessories) having the most comparable
features and functionality available at such time, in excess of the costs and
expenses the Owner would have otherwise incurred hereunder in purchasing such
undelivered Products; and (ii) with respect to any other costs and expenses
incurred by the Owner, only those reasonable direct out-of-pocket costs and
expenses incurred by the Owner that the Owner would not otherwise have incurred
under this Agreement which arise as a result of the Vendor's failure to perform
any other obligation under this Agreement. For the purpose of clause "(i)" of
this subsection 10.6, the Owner shall be entitled to recover only those
reasonable direct out of pocket costs and expenses pertaining to procuring that
number of substitute subscriber units (and their included accessories) equal to
(x) the amount of the Total Minimum Commitment (as such amount may be increased
or decreased from time to time pursuant to the terms of this Agreement), minus
(y) that number of Subscriber Units purchased by the Owner as of the date of
any such termination. The amount to be paid by the Vendor pursuant to this
subsection 10.6 will survive termination of this Agreement and will be subject
to the limitations of liability set forth in this Agreement.
10.7 Continuing Obligations. Termination of this Agreement 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 8.2,
(ii) will not relieve either Party of any obligation which applies to it and
which expressly or by implication survives termination, and (iii) except as
otherwise provided in any provision of this Agreement 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.
10.8 The Vendor's Right to Terminate. The Vendor has the right to
-------------------------------
terminate this Agreement in its entirety without any penalty or payment
obligations, upon the occurrence of any of the following (each an "Owner Event
of Default"):
(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 sixty (60) days of such involuntary filing, (ii) admits the material
allegations of any petition in bankruptcy filed
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<PAGE>
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 Owner commences any proceeding for relief from its creditors in
any court under any state insolvency statutes; or
(c) the Owner fails to (i) make payments of undisputed amounts
(considered separately and not in aggregate) of less than five million
($5,000,000) due to the Vendor pursuant to the terms of this Agreement,
provided that such failure has continued for at least fifteen (15) days
- - -------- ----
after the Vendor has provided the Owner with written notice of its intent to so
terminate on account of such overdue amount, or (ii) make payments of
undisputed amounts in excess of five million ($5,000,000) due to the Vendor
pursuant to the terms of this Agreement, provided that such failure has
-------- ----
continued for at least thirty (30) days after the Vendor has provided the Owner
with written notice of its intent to so terminate on account of such overdue
amount; and provided further that if the Vendor notice provided to the
-------- -------
Owner pursuant to and in accordance with either clause (i) or (ii) is the first
such notice provided to the Owner by the Vendor in any rolling twelve (12)
month period, the Owner will have an additional thirty (30) days to cure any
such default prior to the Vendor having the right to terminate this Agreement
pursuant to this subsection 10.8(c); or
(d) the Owner repeatedly and materially breaches subsection 8.2
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) the Owner fails to comply with subsection 11.19; or
(f) the Owner violates any Applicable Laws, and the effect of such
violation materially impairs the Owner's ability to perform its obligations
under this Agreement; or
(g) the Owner fails to purchase in any of the respective Annual Supply
Periods or the Stub Period, as applicable, the First Annual Minimum Commitment,
the Second Annual Minimum Commitment, the Third Annual Minimum Commitment or
the residual amount to be purchased in the Stub Period, as applicable and as
such Annual Minimum Commitments may reduced from time to time in accordance
with the terms of this Agreement; or
(h) the Owner fails to issue Purchase Orders for those amounts of
Products which are considered to be under firm Purchase Orders pursuant to any
Forecast and in accordance with the terms of this Agreement; or
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<PAGE>
(i) the Owner fails to pay when due more than ten (10) undisputed
payment amounts in aggregate value in excess of seven million five hundred
thousand dollars ($7,500,000) in any given consecutive nine (9) month period;
or
(j) the Owner otherwise materially breaches any provision of this
Agreement which such material breach it has not cured within a reasonable time
after notification by the Vendor thereof.
10.9 Vendor Remedies. If any of the Owner Events of Default exist,
---------------
the Vendor may, without prejudice to any rights or remedies of the Vendor in
this Agreement or at law or in equity (except as such legal or equitable
remedies may be limited by this Agreement), terminate this Agreement (i)
immediately upon the occurrence of any Owner Event of Default specified in
clauses (a), (b), (c), (d), (i) and (j) and (ii) after thirty (30) days prior
written notice upon the occurrence of any other Owner Event of Default. All
amounts owed by the Owner to the Vendor prior to any such termination shall be
payable immediately upon termination. Notwithstanding anything set forth in
this Agreement, immediately upon the occurrence of any Owner Event of Default
the Vendor shall have the right, without any penalty or payment obligations, to
suspend Vendor's performance with respect to manufacturing Products, to stop
shipment of all Products subject to Purchase Orders, and to recall, if
possible, all Products subject to unfulfilled or undelivered Purchase Orders.
10.10 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 Contract Vendors on terms and conditions reasonably
satisfactory to the Owner, on or before July 29, 1996, the Owner will have the
right, but not the obligation, to terminate this Agreement in its entirety
without charge or penalty of any kind; provided that the Owner will
-------- ----
only have this right if it has terminated or materially amended (as a result of
a failure to achieve adequate financing) at least one of its then existing
Procurement and Services Contracts; and provided further that in the
-------- -------
event the Owner elects to exercise its rights under this subsection 10.10 and
any Procurement and Services Contract then remains outstanding and in force,
the Vendor and the Owner will negotiate in good faith to make any equitable
modifications in Annual Minimum Commitments and corresponding pricing prior to
and in lieu of any such termination. The "Financing Interim Period" means the
period from the Effective Date to July 29, 1996. In the event of a termination
of this Agreement pursuant to this subsection 10.10, the Owner will remain
liable for amounts due to the Vendor for (i) amounts owed by the Owner to the
Vendor prior to such termination, (ii) all Products which are forecasted in the
first five months of the then current Forecast Period for the then current
Forecast (up to the full amount of such forecasted Products) which are
delivered by the Vendor pursuant to the specific terms of this Agreement to the
FOB point, the Owner and/or any of its facilities or sites in accordance with
the terms of this Agreement and (iii) all such other amounts for customization,
specific engineering or change orders ordered by the Owner prior to such
termination. Any amounts owed by the Owner for Products delivered by the
Vendor during such Financing Interim Period not otherwise invoiced to the Owner
by the Vendor prior to the termination of such Financing Interim
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<PAGE>
Period, will be invoiced to the Owner by the Vendor within thirty (30) days
(but failure to so invoice will not excuse the Owner's obligation to otherwise
pay the Vendor pursuant to the terms of this subsection 10.10) of such
termination pursuant to this subsection 10.10 and will be payable by the Owner
within thirty (30) days of receipt of such invoice. Except as specifically set
forth in clause (i), clause (ii) and/or clause (iii) above, in this subsection
10.10, in no event will the Owner be liable to the Vendor due to a termination
of this Agreement pursuant to this subsection 10.10 for any of the Vendor's
direct or indirect costs or expenses incurred in connection with any supplies
or equipment ordered by the Vendor or agreements entered into by the Vendor in
order to enable it to fulfill its obligations hereunder or in connection with
the establishment of and/or upgrade to its manufacturing, personnel,
engineering, administrative or other capacities and/or resources in
contemplation of or pursuant to its performance in accordance with the terms of
this Agreement.
(b) If, prior to [ ] the Vendor, for any reason whatsoever, fails or is
otherwise unable to commence delivery to the Owner of Subscriber Units with an
average of [ ] hours of continuous talk time based on [ ] voice activity,
[ ] dBm transmit power at the antenna,and a standard battery pack, the Owner
will be able to, in its sole discretion, [ ] or at any time within the ten
(10) Business Day period thereafter, terminate this Agreement in its entirety
without any payment or penalty of either Party whatsoever; provided that within
-------- ----
thirty (30) days of such termination each Party will pay any and all monies then
actually outstanding, owed, accrued or otherwise due to the other Party up to
the point of such termination including payment for any Purchase Orders or
Excess Purchase Orders from the Owner to the Vendor outstanding at the time of
such termination; and provided further the Owner will still be committed to
-------- -------
submit Purchase Orders and pay for all Products delivered subject to the most
recent then outstanding Forecasts for [ ], pursuant to the terms of this
Agreement.
SECTION 11. GENERAL PROVISIONS
11.1 Assignment. Except as otherwise permitted herein, neither this
----------
Agreement nor any portion hereof may be assigned by either Party without the
express prior written consent of the other Party provided that such
-------- ----
consent will not otherwise be unreasonably withheld. The Owner may, without
the consent of the Vendor, (i) assign in whole, but not in part, its rights
hereunder to any direct or indirect wholly owned operating subsidiary of the
Owner or of Sprint Spectrum Holding Company, L.P., a Delaware limited
partnership (provided that any such assignment to any such subsidiary
-------- ----
will not be deemed a release of the Owner's obligations hereunder unless the
Vendor will have given prior written consent to any such release) and/or (ii)
collaterally assign its rights hereunder (including, but not limited to, all
licenses with respect to the Software) to the 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 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
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<PAGE>
acceptable to the parties providing financing for any part of the Nationwide
Network in accordance with the terms of the financing documents. If requested
by the Owner, the Vendor, will within seven (7) days of such request, provide a
written consent to any such assignment; provided that such consent will
-------- ----
permit reassignment if the financing parties exercise their remedies under the
documents for such financing subject to reasonable standards as to (i) the
creditworthiness of the assignee and (ii) the fact that the assignee is not at
such time a direct competitor of the Vendor or of its affiliates. The
foregoing rights and obligations are in addition to those set forth in
subsection 11.2. Any attempted assignment in violation of the terms of this
Agreement will be null and void.
11.2 Successors and Assigns. This Agreement will bind and inure to
----------------------
the benefit of the Parties to this Agreement, their successors and permitted
assigns.
11.3 Survival of Obligations. The Parties' rights and obligations
-----------------------
which, by their nature, would continue beyond the termination, cancellation, or
expiration of this Agreement, including but not limited to those rights and
obligations of the Parties set forth in subsections 3.7, 3.8, 10.6 and 10.9 and
Sections 7, 8 and 9, will survive such termination, cancellation or expiration.
11.4 Severability. If any provision in this Agreement will be held
------------
to be invalid or unenforceable, the remaining portions will remain in effect.
In the event such invalid or unenforceable provision is considered an essential
element of this Agreement, the Parties will promptly negotiate a replacement
provision.
11.5 Non-waiver. No waiver of the terms and conditions of this
----------
Agreement, or the failure of either party strictly to enforce any such term or
condition on one or more occasions will be construed as a waiver of the same or
of any other term or condition of this Agreement on any other occasion.
11.6 Compliance with United States Regulations.Nothing contained in
-----------------------------------------
this Agreement will require or permit the Owner or the Vendor to do any act
inconsistent with the requirements of (a) the regulations of the United States
Department of Commerce, or (b) the foreign assets controls or foreign
transactions controls regulations of the United States Treasury Department, or
(c) any Applicable Law, regulation or executive order as the same may be in
effect in the Territory from time to time.
11.7 Notices. All notices, requests, demands, consents, agreements
-------
and other communications required or permitted to be given under this Agreement
will be in writing and will be mailed to the party to whom notice is to be
given, by facsimile, and confirmed by first class mail, postage prepaid, and
properly addressed as follows (in which case such notice will be deemed to have
been duly given on the day the notice is first received by the party):
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SPRINT SPECTRUM L.P.
4717 Grand Avenue
Kansas City, Missouri 64112
Attention: Vice President, Business Development
Facsimile No.: (816) 559-6040
Telephone No.: (816) 559-6000
with a copy to:
Joe Gensheimer
General Counsel
Sprint Spectrum L.P.
4717 Grand Avenue
Kansas City, Missouri 64112
Facsimile No.: (816) 559-2591
Telephone No.: (816) 559-2500
QUALCOMM Personal Electronics
10300 Campus Point Drive
San Diego, CA 92121-1579
Facsimile No.: (619) 658-1564
Telephone No.: (619) 658-2626
Attn.:Director of Strategic Accounts, Sony/QUALCOMM CDMA Marketing
with a copy to:
Steven Altman
Secretary
6455 Lusk Boulevard
San Diego, California 92121-2779
Facsimile No.: (619) 658-2500
Telephone No.: (619) 658-4811
QUALCOMM Incorporated
6455 Lusk Boulevard
San Diego, CA 92121-2779
Facsimile No.: (619) 658-1564
Telephone No.: (619) 658-2933
Attn.:Vice President and General Manager, Subscriber Products Division
with a copy to:
SONY ELECTRONICS INC.
16450 West Bernardo Drive
San Diego, California 92127
Facsimile No.: (619) 673-3232
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<PAGE>
Telephone No.: (619) 673-3219
Attn.:President, Wireless Telecommunications Co.
The above addresses can be changed by providing notice to the other
Party in accordance with this subsection 11.7.
11.8 Dispute Resolution. (a) Subject to subsections 10.2, 10.3,
------------------
10.8, 10.9 and 11.10, in the event any controversy, claim, dispute, difference
or misunderstanding arises out of or relates to this Agreement, 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 or then equivalent officer 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.
(b) 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 11.9; provided,
--------
however, that with respect to any controversy, claim, dispute, difference
- - -------
or misunderstanding (other than an undisputed claim with respect to the payment
of money) arising out of or relating to this Agreement by which either Party
seeks to obtain from the other monetary damages in excess of [ ], either Party,
in such case, may commence an action in any state or federal court in accordance
with subsection 11.12 to resolve such matter in lieu of proceeding with an
arbitration pursuant to and in accordance with subsection 11.9. The arbitrators
hired or otherwise chosen pursuant to and in accordance with the terms of this
Agreement will determine issues of arbitrability pursuant to the terms of this
Agreement but may not in any way limit, expand or otherwise modify the terms of
this Agreement nor will they have any authority to award punitive or other
damages in excess of compensatory damages (other than as specifically set forth
in this Agreement) and each Party irrevocably waives any such claim thereto when
invoking the arbitration provisions of subsection 11.9.
11.9 Arbitration. (a) An arbitration proceeding initiated by
-----------
either Party under this Agreement with respect to any controversy, claim,
dispute, difference or misunderstanding will be conducted in New York in
accordance with the Commercial Arbitration rules of the AAA, except that, at
the request of either Party, a stenographic
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<PAGE>
transcript of the testimony and proceedings will be taken and the arbitrators
will base their decision upon the records and briefs of the Parties.
(b) Such arbitration will be initiated by either Party by notifying the
other Party in writing and will be settled before three (3) impartial
arbitrators, one of whom will be named by the Owner, one by the Vendor and the
third by the two arbitrators appointed by the Owner and the Vendor,
respectively. All of the named arbitrators will have significant experience in
the wireless telecommunications industry. If either the Owner or the Vendor
fails to select an arbitrator within ten (10) days after notice has been given
of the initiation of the arbitration, the officer in charge of the New York
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.
(c) Except as the Parties may otherwise mutually agree, the arbitration
hearings will commence within fifteen (15) Business Days after a Party's
initiation of the arbitration. The Federal Rules of Evidence will apply and
reasonable discovery, including depositions, will be permitted. Discovery
issues will be decided by the arbitrators and post-hearing briefs will be
permitted.
(d) The arbitrator will render a decision within ten (10) days after the
conclusion of the hearing(s) and submission of post-hearing briefs and a
written opinion setting forth findings of fact and conclusions of law will be
made available to the Parties within that time period. The decision of the
majority of the arbitrators regarding the matter submitted will be final and
binding upon the Parties. Judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.
(e) 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 Agreement, 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.
11.10 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 11.9.
11.11 Tolling. All applicable statutes of limitation will be tolled
-------
to the extent permitted by Applicable Law while the dispute resolution
procedures specified in subsections 11.8 and 11.9 are pending, and nothing
herein will be deemed to bar any Party from taking such action as the Party may
reasonably deem to be required to effectuate such tolling.
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11.12 Governing Law and Forums. This Agreement is governed by the
------------------------
laws and statutes of the State of New York, exclusive of New York's conflict of
laws rules. This Agreement will be deemed to be made and executed in the State
of New York. If one Party commences a lawsuit in relation to this Agreement
against the other Party, such lawsuit can only be brought in the State of New
York. 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 Agreement will be
brought in the Federal District Court for the Southern District of New York
which court will have exclusive jurisdiction over any controversy arising out
of this Agreement, (b) consents to the jurisdiction of such court 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 court 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 11.7
hereof and in the manner set forth in such subsection 11.7. Nothing in this
subsection 11.12 will affect the right of the Owner or the Vendor to serve
legal process in any other manner permitted by law.
11.13 Entire Agreement. This Agreement, together with all
----------------
Appendices, Exhibits and Schedules attached hereto, which are incorporated
herein by this reference, constitutes the entire agreement between the Parties
and supersedes all prior oral or written negotiations and agreements between
the Parties with respect to the subject matter hereof. No modification,
variation or amendment to this Agreement will be effective unless made in
writing and signed by duly authorized representatives of each of the Parties.
Except as otherwise provided in this Agreement, any additional or inconsistent
terms stated by the Owner in any Purchase Order issued hereunder will be of no
force or effect other than to express types and quantities of Products ordered
and shipment destinations.
11.14 Improvements, Inventions and Innovations. All rights in any
----------------------------------------
improvements, inventions, and innovations made by the Owner will vest in the
Owner, and the Owner and its Affiliates will have the right to exploit such
improvements, inventions, and innovations. All rights in any improvements,
inventions and innovations made by the Vendor will vest in the Vendor, and the
Vendor and its affiliates will have the right to exploit such improvements,
inventions and innovations.
11.15 Conflicts. In the event of any conflict or inconsistency
---------
among the provisions of this Agreement and the documents attached hereto and
incorporated herein, such conflict or inconsistency will be resolved by giving
precedence to this Agreement and thereafter to the Exhibits, Schedules and the
Appendices.
11.16 Independent Contractors. The relationship between the Vendor
-----------------------
and the Owner pursuant to this Agreement is that of independent contractors.
The Vendor and the Owner are not joint venturers, partners, principal and
agent, master and servant,
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employer or employee, and have no other relationship pursuant to this Agreement
other than independent contracting parties.
11.17 Force Majeure. If the performance of this Agreement
-------------
(including without limitation any deliveries hereunder) is interfered with by
reason of any circumstance beyond the reasonable control of the Party affected,
including without limitation, fire, acts of God or the public enemy, riots and
insurrections, strikes, boycotts or lockouts, embargoes, judicial action, lack
of or inability to obtain export permits or approvals, necessary labor,
materials, energy, components or machinery, and acts of civil or military
authorities (each an event of "Force Majeure"), then the Party affected will be
excused from such performance on a day-for-day basis to the extent of such
interference (and the other Party will likewise be excused from performance on
a day-for-day basis to the extent such Party's obligations relate to the
performance so interfered with); provided that the Party so affected
-------- ----
will use its best efforts under the circumstances to remove such causes of
nonperformance. In the event of a Force Majeure claimed by the Vendor which
lasts in excess of one-hundred twenty (120) days from the commencement of any
such claim by the Vendor hereunder, the Owner will have the right, but not the
obligation, to terminate this Agreement. The Vendor will not be liable to the
Owner for any damages or other amounts as a result of any termination pursuant
to this subsection 11.17. Notwithstanding anything in this subsection 11.17 to
the contrary, from the Effective Date until July 1, 1997, neither Party will be
entitled to claim an event of Force Majeure pursuant to this subsection 11.17
or otherwise, due to or based upon lack or inability to obtain export permits
or approvals, or lack of necessary labor, materials, energy, components or
machinery, unless such lack or inability to obtain export permits or approvals,
lack of necessary labor, materials, energy, components or machinery is due to a
verifiable force majeure claim from a third party supplier (to the Owner or the
Vendor, as the case may be) based upon a fire, act of God or public enemy, riot
or insurrection, strike, boycott or lockout, embargo, judicial action, and/or
acts of civil or military authorities that is beyond the reasonable control of
such third party supplier.
11.18 Change of Control of the Vendor. The Vendor will not
-------------------------------
consolidate with or merge into any other Person or convey, transfer or lease
(other than in connection with sale leaseback or lease financing transactions
in connection with ongoing Vendor operations) all or substantially all of its
assets to any Person, nor will the Vendor permit any Person or group (as such
term is defined in the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) to own or acquire fifty percent (50%) of the value of the
Vendor's equity interests where such Person or group did not own as of the
Effective Date in excess of ten percent (10%) of such equity interests (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 Agreement; 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
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(iii) whether in the Owner's reasonable judgment the Vendor's
Succeeding Entity will be able to fulfill the obligations of
the Vendor (including, but not limited to, the Vendor's
obligations as to then present or future orders) under this
Agreement.
11.19 Change of Control of the Owner. Except as otherwise permitted
------------------------------
under subsection 11.1, 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 the Owner permit any Person or group (as
such term is defined in the Exchange Act) to 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 Agreement; 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 direct competitor of the Vendor or any affiliate
of the Vendor in the business of selling wireless telephones.
11.20 Offset. Either Party may deduct or retain out of any moneys
------
which may be due or become due to the other Party hereunder or otherwise any
amounts such other Party owes to such first Party hereunder or otherwise.
11.21 Additional Insured. In addition to any indemnities for
------------------
product liability provided by the Vendor to the Owner hereunder as of the
Effective Date, the Vendor will name the Owner as an additional insured on its
product liability insurance policies to provide the Owner with ten million
dollars ($10,000,000) of coverage under such policies. Such policies will be
with reputable carriers and will have terms reasonably satisfactory to the
Owner. With respect to such policies as of the Effective Date, the Owner
acknowledges that the carriers and the terms of such policies are satisfactory
to the Owner.
SECTION 12. AFFILIATES
12.1 Agreements with Initial Affiliates. During the Initial Term of
----------------------------------
this Agreement, 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 pursuant to the same prices as set forth herein and on
similar warranty and indemnity terms and conditions as those set forth in this
Agreement.
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12.2 Additional Affiliates. On a quarterly basis commencing on the
---------------------
Effective Date and during the Initial Term of this Agreement, the Owner may,
upon fifteen (15) days' prior written notice to the Vendor, designate any
Person which has been licensed to use PCS in the Territory but 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, (ii) the fact that such proposed Additional
Affiliate has not in the past materially breached prior material agreements
with the Vendor or its affiliates, (iii) the fact that the proposed Additional
Affiliate is not, at the time of such determination, a direct competitor to the
Vendor or its affiliates 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 or its affiliates 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.
12.3 Agreements with Additional Affiliates. During the Initial Term
-------------------------------------
of this Agreement, 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 at similar price and warranty terms as are then
available to the Owner pursuant to the terms of this Agreement. 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 offered to the Owner under this Agreement solely for use
within the Nationwide Network.
12.4 Affiliate Rights. Notwithstanding anything herein contained to
----------------
the contrary, Affiliates will not be deemed third party beneficiaries to this
Agreement or otherwise have any rights hereunder. Only the Owner may designate
a Person as an Affiliate in accordance with the terms of this Section 12 and
only the Owner has the right and/or the ability to enforce any rights hereunder
against the Vendor.
SECTION 13. REPRESENTATIONS AND WARRANTIES
13.1 Representations and Warranties of the Vendor and the
-----------------------------------------------------
Guarantors. The Vendor and the Guarantors hereby represent and warrant to
- - ----------
the Owner as follows:
(a) Due Organization of the Vendor and the Guarantors. (i) The
-------------------------------------------------
Vendor is a general partnership, validly existing and in good standing under
the laws of the State of California and has all requisite power and authority
to own and operate its business and
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properties and to carry on its business as such business is now being conducted
and is duly qualified to do business in all jurisdictions in which the
transaction of its business in connection with the performance of its
obligations under this Agreement makes such qualification necessary or
required.
(ii) QUALCOMM is a corporation, 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 all jurisdictions in which the transaction of its business in
connection with the performance of its obligations under this Agreement makes
such qualification necessary or required.
(iii) Sony is a corporation, 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 all jurisdictions in which the transaction of its business in
connection with the performance of its obligations under this Agreement makes
such qualification necessary or required.
(b) Due Authorization of the Vendor and the Guarantors; Binding
------------------------------------------------------------
Obligation. The Vendor and each of the Guarantors have full partnership or
- - ----------
corporate power and authority to execute and deliver this Agreement and to
perform their respective obligations hereunder, and the execution, delivery and
performance of this Agreement by each of the Vendor and the Guarantors has been
duly authorized by all necessary corporate and/or partnership action on the
part of each of the Vendor and the Guarantors; this Agreement 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. This Agreement
has been duly executed and delivered by each of the Guarantors, in their
capacity as guarantors pursuant to Section 14, and is the valid and binding
obligation of each Guarantor 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.
(c) Non-Contravention. The execution, delivery and performance of
-----------------
this Agreement by the Vendor and the Guarantors and the consummation of the
transactions
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contemplated hereby do not and will not contravene the partnership arrangements
governing the conduct of the partners in the Vendor or corporate arrangements
governing each of the Guarantors and do not and will not conflict with or
result in (i) a breach of or default under any material indenture, mortgage,
instrument, judgment, decree, order or ruling to which the Vendor or any of the
Guarantors are a party or by which it or any of its properties is bound or
affected, or (ii) a breach of any Applicable Law.
(d) Regulatory Approvals. All material 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 Agreement by the Vendor
and the Guarantors have been obtained or will be obtained in due course.
(e) Non-Infringement. Except as set forth on Schedule 7, the Vendor
----------------
and the Guarantors each represent and warrant that as of the Effective Date
there are no threatened or actual claims or threatened or actual suits in
connection with patents and other intellectual property matters that would or
could materially adversely affect the Vendor's or the Guarantors' ability to
perform their obligations under this Agreement.
(f) Requisite Knowledge. The Vendor has or will obtain all
-------------------
requisite knowledge, know-how, skill, expertise and experience to perform its
obligations in accordance with the terms of this Agreement.
(g) Financial Capacity. The Vendor has the financial, management
------------------
and manufacturing capacity and capabilities to do the work in a timely manner
in accordance with the terms of this Agreement.
13.2 Representations and Warranties of the Owner. The Owner hereby
-------------------------------------------
represents and warrants to the Vendor and each Guarantor as follows:
(a) 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 or required.
(b) Due Authorization of the Owner; Binding Obligation. The Owner
--------------------------------------------------
has full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and the execution, delivery and performance
of this Agreement by each of the Owner have been duly authorized by all
necessary partnership action on the part of the Owner; this Agreement 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
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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.
(c) Non-Contravention. The execution, delivery and performance of
-----------------
this Agreement 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 material
indenture, agreement, instrument, judgment, decree, order or ruling to which
the Owner is a Party or by which it or any of its properties is bound or
affected, or (ii) a breach of any Applicable Law.
(d) Regulatory Approvals. All material 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 Agreement by the Owner
have been obtained or will be obtained in due course.
(e) Requisite Knowledge. The Owner has all requisite knowledge,
-------------------
know-how, skill, expertise and experience to perform its obligations under this
Agreement.
SECTION 14. GUARANTY
14.1 Guaranty. Each of the Guarantors hereby irrevocably and
---------
unconditionally, severally but not jointly, guarantees the punctual payment and
performance of each and every obligation of the Vendor under this Agreement
and agrees that if for any reason whatsoever the Vendor will fail or be unable
duly, punctually and fully to perform any such obligation under this Agreement,
either of the Guarantors will forthwith perform each and every such obligation,
or cause each such obligation to be performed, without regard to any exercise
or nonexercise by the Owner of any right, remedy, power or privilege under or
in respect of the Agreement against the Vendor. The obligations of each of the
Guarantors will be subject to the Owner providing each of the Guarantors
written notice (unless the giving of such notice is prevented by Applicable Law
or court order) of any default of the Vendor in performing any obligation for
which the Owner is seeking the guaranty of either Guarantor. The Guarantors
will cure such default within fifteen (15) Business Days after receipt by the
Guarantors of written notice thereof specifying the nature of such default. In
addition, the Guarantors agree to reimburse the Owner on demand for any and all
expenses (including counsel fees and expenses) reasonably incurred by the Owner
in enforcing or attempting to enforce any rights under this guaranty.
Notwithstanding anything to the contrary stated in this Section 14, QUALCOMM
will only be liable for up to fifty one percent (51%) of the obligations under
this Section 14, including, but not limited, to all payment obligations under
this Section 14 and Sony will only be liable for up to forty
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nine percent (49%) of the obligations under this Section 14, including, but not
limited to, all payment obligations under this Section 14.
14.2 Guaranty Absolute. The liability of each of the
-----------------
Guarantors under this Guaranty with respect to the guaranteed obligations will
be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of this Agreement or any
other agreement or instrument relating thereto;
(b) any amendment to, waiver of or consent to departure from, or
failure to exercise any right, remedy, power or privilege under or
in respect of, this Agreement, unless the Owner, and any assignee
of Owner pursuant to Subsection 11.1, shall expressly agree
otherwise in writing, and then only to the extent that such
liability is released in such written agreement;
(c) any exchange, release or nonperfection of any collateral, or any
release or amendment or waiver of or consent to departure from any
other guaranty of or security for the performance of all or any of
the obligations of the Vendor under the Agreement;
(d) the insolvency of the Vendor or any other guarantor or any
proceeding, voluntary or involuntary, involving the bankruptcy,
insolvency, receivership, reorganization, arrangement, dissolution
or liquidation of the Vendor or any other guarantor or any defense
which the Vendor or any other guarantor may have by reason of the
order, decree or decision of any court or administrative body
resulting from any such proceeding;
(e) any change in ownership of the Vendor or any change, whether direct
or indirect, in the relationship of either of the Guarantors to the
Vendor, including, without limitation, any such change by reason of
any merger or any sale, transfer, issuance, or other disposition of
any stock of the Vendor, each of the Guarantors or any other
entity; and
(f) any other circumstance of a similar or different nature that might
otherwise constitute a defense available to either of the
Guarantors as a guarantor.
Except as provided above in this subsection 14.2, in no event shall
the obligations of the Guarantors hereunder exceed the obligations the
Guarantors would have had if either were itself a party to this Agreement, and
each of the Guarantors shall have all rights and defenses of the "Vendor" under
the terms of this Agreement. This Guaranty shall continue to be effective, or
be reinstated, as the case may be, if at any time any payment made, or any
part thereof, to the Owner by the Vendor under this Agreement or by either of
the Guarantors hereunder is ordered rescinded or must otherwise be returned by
the Owner to the Vendor or its representative for any reason,
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including, without limitation, upon the insolvency, bankruptcy, reorganization,
dissolution or liquidation of the Vendor or otherwise, all as though such
payment had not been made.
14.3 Waiver. Each of the Guarantors hereby waives promptness,
------
diligence, notice of acceptance and any other notice with respect to this
guaranty and any requirement that the Owner exhaust any right or take any
action against or with respect to the Vendor or any other person or entity or
any property.
14.4 No Subrogation. Notwithstanding any payment or payments
--------------
made by either of the Guarantors under or pursuant to this Section 14 or any
set-off or application of funds of either of the Guarantors by the Owner,
neither of the Guarantors shall, until all of the Vendor's obligations under
this Agreement (including warranty obligations) shall have been fulfilled, (a)
be entitled to be subrogated to any of the rights of Owner against the Vendor
or any other guarantor or in any collateral security or guaranty or right of
offset held by the Owner for the performance and payment of all of the
obligations of the Vendor under this Agreement, or (b) seek any reimbursement
or contribution from the Vendor or any other guarantor in respect of any
payment, set-off or application of funds made by either of the Guarantors under
or pursuant to this Section 14.
14.5 No Petition. Neither of the Guarantors will, without the
-----------
prior consent of Owner, voluntarily commence, or join with or solicit any other
person or entity in commencing, any case or other proceeding seeking
liquidation, reorganization or other relief with respect to the Vendor or its
debts under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of the Vendor.
14.6 Continuing Guaranty: Assignments. The Guaranty set forth
--------------------------------
in this Section 14 will be construed as a continuing, absolute and
unconditional guaranty of payment and performance, and, except as specifically
provided in subsection 14.1 above, the obligations of the Guarantors hereunder
will not be conditioned or contingent upon the pursuit by Owner at any time of
any right or remedy against the Vendor or against any other person or entity
which may be or become liable in respect of all or any part of the obligations
of the Vendor under this Agreement or against any collateral security or
guaranty therefor. The Guaranty set forth in this Section 14 will (i) remain
in full force and effect until satisfaction in full of all the Vendor's
obligations under this Agreement, (ii) be binding upon each of the Guarantors
and their respective successors and (iii) inure to the benefit of and be
enforceable by the Owner and its successors, transferees and assigns. Except
as may be necessary to fulfill its obligations hereunder in a timely manner,
and with the consent of Owner, not to be unreasonably withheld or delayed,
neither of the Guarantors will have any right, power or authority to delegate
all or any of its obligations hereunder; provided that upon any such
-------- ----
delegation permitted hereunder, each of the Guarantors will nevertheless remain
liable for the performance of any obligations so delegated.
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14.7 Other Terms. Subsections 11.1, 11.2, 11.3, 11.4, 11.5,
-----------
11.7, 11.8, 11.9, 11.10, 11.11 and 11.12 will apply to and be binding upon each
of the Guarantors to the same extent as such provisions apply to and are
binding upon the Vendor. In executing this Agreement, each of QUALCOMM and
Sony are directly bound by the provisions of subsection 3.3 applicable to them,
in addition to their obligations as Guarantors hereunder. For purposes of this
Agreement, any breach by either Guarantor of any representation or warranty in
this Agreement shall be deemed to only be a breach of such representation and
warranty by the Vendor, and not such Guarantor; provided that this
-------- ----
sentence will in no way limit the Guarantors' obligations under Section 14.
SECTION 15. OTHER
15.1 Owner Liabilities. The Parties understand and agree that
-----------------
none of the Partners, nor any of their affiliates (other than the Owner), have
guaranteed or otherwise are now in any way liable with respect to any
obligations or liabilities of the Owner or any of its subsidiaries pursuant to
or in connection with this Agreement. 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 Agreement unless, and only to
the extent the Owner or any one of its subsidiaries expressly agrees in writing
to guarantee or otherwise be liable for such liability.
15.2 Counterparts. This Agreement may be executed by one or
------------
more of the Guarantors and the Parties to this Agreement on any number of
separate counterparts, and all of said counterparts taken together will be
deemed to constitute one and the same instrument.
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THE OWNER, THE VENDOR AND EACH OF THE GUARANTORS HAVE READ THIS
AGREEMENT INCLUDING ALL APPENDICES, EXHIBITS AND SCHEDULES HERETO AND AGREE TO
BE BOUND BY ALL THE TERMS AND CONDITIONS HEREOF AND THEREOF.
IN WITNESS WHEREOF, the Parties hereto and each of the Guarantors
have caused their authorized representatives to execute this Agreement
effective as of the date first set forth above.
SPRINT SPECTRUM L.P.,
Owner
/s/ Bernie Bianchino
By: _______________________________________
Name: Bernie Bianchino
Title: Chief Business Development Officer
QUALCOMM Personal Electronics,
Vendor
/s/ Stephen Burke
By: _______________________________________
Name: Stephen Burke
Title: Vice President and General Manager
QUALCOMM Incorporated,
Guarantor
/s/ Paul E. Jacobs
By: _______________________________________
Name: Paul E. Jacobs
Title: Vice President and General Manager
Subscriber Products
SONY ELECTRONICS INC.,
Guarantor
/s/ Yutaka Sato
By: _______________________________________
Name: Yutaka Sato
Title: President WTC
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