SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
April 14, 1999
TELIGENT, INC.
(Exact name of Registrant as specified in its Charter)
Delaware 0-23387 54-1866562
(State or othe (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
8065 Leesburg Pike, Suite 400, Vienna, Virginia 22182
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 762-5100
<PAGE>
Item 5. Other Events
On April 14, 1999, Teligent, Inc. ("Teligent") issued a press release
announcing that it had entered into an equipment purchase agreement (the
"Agreement") with Hughes Network Systems ("Hughes"), a Hughes Electronic
Company, dated December 18, 1998. Under the terms of the five-year agreement,
Hughes will supply Teligent with certain equipment and services ("Deliverables")
for use in Teligent's operations.
According to the Agreement, Teligent has paid Hughes an up front
development fee for use by Hughes in the timely development of the Deliverables,
and such fee will be credited against Hughes' first invoices to Teligent. If
Hughes fails to deliver the first version of the Deliverables, discussed below,
by a certain date, Hughes will return the development fee to Teligent.
The Agreement provides Teligent with the right to purchase 24 GHz radio
equipment, software, services, drawings, documents, manuals, and training
according to a set of specifications agreed upon by the parties. Delivery of
equipment is made in a series of versions, with different specifications
applying to each version.
The prices specified in the Agreement ("Unit Prices") contemplate a
certain volume of purchases by Teligent over the life of the Agreement. Other
than for reasons of force majeure or termination for cause by Teligent, should
Teligent's actual purchase volume over the life of the Agreement fall below or
exceed the contemplated purchase volume, Teligent's Unit Prices for Deliverables
will be adjusted up or down, respectively, according to an adjustment schedule
included in the Agreement. This adjustment is accomplished through a "True-Up"
payment calculated and payable at the end of the term of the Agreement. In
addition to the True-Up payment, if Teligent's purchase volume over the life of
the Agreement falls below a specified level, Teligent must pay Hughes a sum
certain as a "Shortfall" payment at the end of the term. According to the
Agreement, Teligent's purchases could reach $250 million over the life of the
relationship.
After Teligent accepts the first set of Deliverables, the Agreement
provides that all Deliverables will be sold on terms at least as favorable to
Teligent as those offered to any Hughes customer for the same or substantially
similar equipment and services. Teligent may audit Hughes' compliance with this
requirement through an independent accounting firm of Teligent's choice.
The Agreement further provides Teligent with a series of
warranties--including a representation and warranty to continue production and
support of Deliverables after a cancellation of the Agreement by Teligent--and
repair and replacement guarantees applicable to Deliverables during their
warranty periods. In connection with the Agreement, Teligent and Hughes also
entered into a separate Maintenance Agreement governing the maintenance, repair,
and replacement of Deliverables after their warranty periods have expired.
Finally, the Agreement provides for the joint ownership of intellectual
property rights jointly developed by the parties and incorporated into Hughes
commercial equipment. Under the Agreement, for a specified period Hughes is
restricted from selling any equipment incorporating such joint inventions to
entities other than Teligent or its affiliates.
The foregoing information does not purport to be complete and is
qualified in its entirety by reference to the Exhibits to this Report.
<PAGE>
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The Exhibits listed on the accompanying Exhibit Index are filed as part
of this Report and are incorporated herein by reference.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
TELIGENT, INC.
Date: April 19, 1999 By: /s/ Laurence E. Harris
------------------
Name: Laurence E. Harris
Title: Senior Vice President
and General Counsel
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
10 Equipment Purchase Definitive Agreement, dated December 18, 1998, by
and between Teligent, Inc. and Hughes Network Systems [Portions of
this document have been omitted pursuant to a request for confidential
treatment].
99 Press release of Teligent, Inc. dated April 14, 1999.
EQUIPMENT PURCHASE
DEFINITIVE AGREEMENT
By and Between
Teligent, Inc.
And
Hughes Networks Systems,
A Hughes Electronics Company
December 18, 1998
Confidential
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Contents
Page
Article 1 - Scope Of Agreement 1
1.1 Deliverables 1
1.2 Funding Development of Deliverables 1
1.3 Extension to Affiliates and Strategic Partners 2
1.4 Defined Terms 3
1.5 Term of Agreement 3
Article 2 - Deliverables 3
2.1 Product Development, Services and Support 3
2.2 Supply of Deliverables 3
Article 3 - Prices for Deliverables 3
3.1 Unit Price and Purchase Price 3
3.2 Firm Unit Prices Over Term 4
3.3 Purchase Price Adjustments to Unit Prices 4
3.4 "Shortfall Payment" and "True-Up" at end of Term 4
3.5 [redacted] 5
3.6 Most Favored Customer 6
3.7 Other Goods and Services 6
3.8 Freight and Other Charges and Fees 6
Article 4 - Ordering, Forecasting, Delivery, Re-Scheduling, and Changes 7
4.1 Purchase Orders 7
4.2 Forecasting and Scheduling of Orders 7
4.3 Standard Delivery Intervals 7
4.4 TELIGENT's Right to Re-Schedule 8
4.5 TELIGENT's Right to Change Work 8
Article 5 - Responsibilities and Obligations of the Parties 8
5.1 Responsibility Matrix 8
5.2 Obligations of TELIGENT 8
5.3 Obligations of HUGHES 9
5.4 Appointment of Program Directors and Managers 11
5.5 On-Site Support 11
5.6 On-Call Service and Support 11
5.7 Developmental Conferences 12
5.8 Costs 12
Article 6 - HUGHES' Representations, Warranties and Covenents 12
6.1 HUGHES Acquainted With Details 12
6.2 New Equipment 12
6.3 Compliance of Equipment 12
6.4 Compatibility 13
6.5 Quality 13
6.6 Performance 13
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6.7 "Swap" Repair Turn-Around 15
6.8 Repairs 15
6.9 Availability 15
6.10 Covenant to [redacted] 15
6.11 Covenant Not to Discontinue Production and Support 16
6.12 HUGHES' Right-to-Use IPR 17
6.13 Limitation of Warranty 17
Article 7 - Software 17
7.1 Software License and Right-to-Use 17
7.2 Long-Term Support 17
Article 8 - Factory Examination, Inspection and Tests 17
8.1 Examination and Inspection 17
8.2 Extension to Sub-Orders 17
8.3 Right To Witness and/or Conduct Tests 18
8.4 Tests and Inspections Subject to Non-Disclosure Agreement 18
8.5 Advance Notice of HUGHES' Tests 18
Article 9 - Delivery and Acceptance 18
9.1 Responsibility For Incorrect Delivery 18
9.2 Date Available 18
9.3 Conveyance of Title 18
9.4 Acceptance Test Procedures 19
9.5 Partial Deliveries 20
Article 10 - Invoices and Payment 20
10.1 Invoicing Schedule 20
10.2 Payment Due Date 21
10.3 Interest Assessment and Fee 21
10.4 General 21
Article 11 - Interfaces 21
11.1 Industry Standard Interfaces 21
11.2 General Integration Support for Non-Standard Interfaces 22
11.3 POTS Capability 22
11.4 Interconnection With Third-Party Equipment 22
Article 12 - Remedies [redacted] 22
12.1 Late Acceptance of First Market Deliverables 22
12.2 Delay in Delivery or Acceptance of Extension Deliverables 23
12.3 Failure to Meet Availability Warranty 23
12.4 [redacted] 23
12.5 Warranty Cure 23
12.6 General Limitation of Liability 24
12.7 Availability of Other Remedies 24
Article 13 - Indemnity; Insurance 24
13.1 General Indemnity by HUGHES 24
13.2 Patent And Copyright Indemnity 25
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13.3 Demonstration of Insurance 26
Article 14 - Force Majeure 26
14.1 Extension of Time 26
14.2 Definition of Force Majeure 26
14.3 Actions Not Force Majeure 27
14.4 Notice Required 27
Article 15 - Jointly Developed Intellectual Property 27
15.1 Sole Inventions 27
15.2 Joint Inventions 27
Article 16 - Confidentiality 28
16.1 Survival and Incorporation of Revised Non-Disclosure
Agreement 28
16.2 TELIGENT Materials Remain Property of TELIGENT 29
16.3 HUGHES Materials Remain Property of HUGHES 29
Article 17 - Termination for Cause 29
17.1 Termination by TELIGENT 29
17.2 Termination by HUGHES 30
Article 18 - Termination for Convenience 30
18.1 Termination By Notice 30
18.2 Settlement In Event of Termination for Convenience 30
18.3 Adjustment For Deliverables Not Delivered 30
Article 19 - Miscellaneous 31
19.1 Waiver 31
19.2 Severability 31
19.3 Headings and Captions 31
19.4 Counterparts 31
19.5 Applicable Law 31
19.6 Assignment 31
19.7 Notices 32
19.8 Public Disclosure 33
19.9 Survival of Terms 33
19.10 Entire Agreement 33
Exhibit A - Definitions 35
ATTACHMENT 1 - PRODUCT PLAN AND PRICES
ATTACHMENT 2 - CRITICAL PRODUCT REQUIREMENTS DEVELOPMENT SCHEDULE
ATTACHMENT 3 - MAINTENANCE AGREEMENT
ATTACHMENT 4 - RESPONSIBILITY MATRIX
ATTACHMENT 5 - ACCEPTANCE TEST PROCEDURES
ATTACHMENT 6 - SAMPLE PURCHASE ORDER
ATTACHMENT 7 - HUGHES QUALITY MANAGEMENT SYSTEM
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This PURCHASE AGREEMENT ("Agreement") is entered into on December 18, 1998 by
and between Teligent, Inc., a Delaware corporation having its principal place of
business at 8065 Leesburg Pike, Vienna, VA 22182 ("TELIGENT") and Hughes Network
Systems, a Hughes Electronics Company, having its principal place of business at
11717 Exploration Lane, Germantown, MD 20876 ("HUGHES").
Whereas,
HUGHES designs, manufactures, sells, installs, maintains and otherwise supports
certain equipment, hardware, software and other goods used in, and renders
certain other services associated with, the operation of point-to-multipoint
systems; and
TELIGENT operates and holds licenses to operate such systems in a variety of
locations in the United States and may seek to obtain similar licenses in the
United States and various other countries; and
Pursuant to the terms and conditions set forth herein, TELIGENT desires to
purchase, and HUGHES desires to sell, the goods and render the services as set
forth in this Agreement and in the Attachments hereto which are specifically
incorporated herein and made a part hereof by reference.
NOW, THEREFORE, in consideration of the mutual obligations herein contained, the
Parties agree as follows:
Article 1 - Scope Of Agreement
1.1 Deliverables.
The terms and conditions established in this Agreement cover the purchase from
HUGHES of certain goods as specified herein (which may include, but are not
limited to, equipment, components thereof and drawings, documents and manuals
associated therewith, hardware and software (collectively, the "Goods")) and
services (which may include, but are not limited to, installation, maintenance
and support of the goods purchased, engineering services and the training of
TELIGENT personnel (collectively, the "Services")) for incorporation in or use
in conjunction with TELIGENT's operations (hereinafter such Goods and Services
collectively referred to as the "Deliverables").
1.2 Funding Development of Deliverables.
The Parties acknowledge that TELIGENT has paid [redacted] to HUGHES for the
express purpose of supporting HUGHES' timely development of the Deliverables
(said payment referred to herein as the "Developmental Funding"). The
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Developmental Funding shall be credited in full against HUGHES' first invoices
to TELIGENT for Deliverables, and TELIGENT hereby acknowledges that such
Developmental Funding does not entitle TELIGENT to any intellectual property
rights not provided for herein.
Subject to the allowance of a grace period as set forth in Article 12.1(b), in
the event that HUGHES fails to provide Generally Available Release 1.0
Deliverables on or before [redacted], and such failure is not excused by Force
Majeure pursuant to Article 14 hereof or Termination for Convenience by TELIGENT
pursuant to Article 18 hereof, HUGHES shall immediately (and in no event later
than [redacted] or, in the event of the allowance of a grace period pursuant to
Article 12.1 (b), [redacted]) return the Developmental Funding to TELIGENT.
Anything in the foregoing to the contrary notwithstanding, at TELIGENT's option
the terms and conditions of this Agreement shall continue and remain in full
force for the remainder of the Term hereof.
1.3 Extension to Affiliates and Strategic Partners.
(a) Upon the express written permission of TELIGENT, United States Affiliates of
TELIGENT are entitled to purchase Deliverables at the prices provided in this
Agreement and under the same terms and conditions, so long as such Affiliates
maintain the same creditworthiness as TELIGENT, as determined in HUGHES'
reasonable discretion. If an entity qualifies as both an Affiliate of TELIGENT
and as a Strategic Partner, it shall be accorded the status of Affiliate for the
purpose of purchases under, and the other terms and conditions of, this
Agreement.
(b) Upon the express written permission of TELIGENT, non-United States
Affiliates and all Strategic Partners of TELIGENT are entitled to purchase
Deliverables at the prices provided in this Agreement and upon reasonably
similar terms and conditions, provided that: (1) such entities are not resellers
-------------
of HUGHES Deliverables; (2) TELIGENT does not make a profit through marked-up
resale from such sales; and (3) such entities have and maintain equal or greater
creditworthiness to that of TELIGENT, in HUGHES' reasonable discretion.
(c) TELIGENT, on behalf of its Affiliates and Strategic Partners, understands
and agrees further that: (i) Services pricing is not included in such
Deliverables; and (ii) HUGHES may reasonably adjust, as a direct and reasonable
result of costs actually incurred by HUGHES, the prices of Deliverables sold to
Affiliates and Strategic Partners that are non-United States-based or sold to
TELIGENT, an Affiliate or Strategic Partner for use outside of the United States
for (A) country risks (e.g., currency, political, judicial), if reasonably
applicable; (B) product adaptations (e.g., frequency bands, channelization,
signaling requirements, country homologation and regulatory constraints), if
applicable; (C) existing Most Favored Customer clauses with other non-United
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States-based HUGHES customers; and (D) other exceptional costs beyond those
incurred by HUGHES in selling Deliverables to TELIGENT in the U.S. Adjustments
made by HUGHES pursuant to this Article 1.3(c) shall conform to the requirements
of Article 3.6.
(d) All equipment purchased by Affiliates and Strategic Partners shall be
credited to TELIGENT for the purpose of calculating TELIGENT's Actual Volume of
purchases, as defined in Article 3.
(e) HUGHES may, but shall not be obligated to, finance the purchases of
TELIGENT, any Affiliate, or Strategic Partner.
(f) All Deliverables purchased by TELIGENT pursuant to this Agreement may be
transferred by TELIGENT, either by sale, lease, assignment, or otherwise, to any
of its subsidiaries or Affiliates; provided, however, that, in the event of such
transfer, TELIGENT agrees to remain bound by and subject to the terms of this
Agreement, and provided further that if such sale, lease or assignment is to a
non-U.S. based entity or if the Deliverables are sold, leased or assigned for
deployment outside of the U.S., HUGHES reserves the right to make reasonable
adjustments, as a direct and reasonable result of costs actually incurred by
HUGHES, to the prices of the applicable Deliverables for applicable
corresponding cost increases.
1.4 Defined Terms.
Capitalized terms shall have the meaning set forth (in order of precedence, in
the case of any inconsistency):
(i) in the context of this document, including definitions in parentheses,
(ii)in Exhibit A, Definitions, or
(iii) as commonly understood within the telecommunications industry.
1.5 Term of Agreement.
This Agreement shall be effective for a period of five (5) years (the "Term")
from the effective date stated in the first sentence of this Agreement, unless
otherwise extended or terminated hereof in accordance with the terms hereof.
Article 2 - Deliverables
2.1 Product Development, Services and Support.
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The Product Plan, Attachment 1 hereto, describes the specific Deliverables which
HUGHES will make available on or before specified dates for purchase by TELIGENT
under this Agreement. HUGHES will supply the Deliverables as described in
Attachment 1, and shall do so in conformance with the Critical Product
Requirements Development Schedule set forth as Attachment 2 hereto. HUGHES will
support the Deliverables according to the Maintenance Agreement set forth as
Attachment 3 hereto.
The Parties shall perform their respective operational duties hereunder as
described in the Responsibility Matrix set forth as Attachment 4 hereto. Certain
related services not included herein, including installation and system
integration, will be offered as optional services by HUGHES at ordinary and
reasonable prices to be negotiated by the Parties. All Deliverables will conform
fully to the Specifications contained in this Agreement, including the
Attachments hereto, as the same may be modified from time to time by mutual
agreement of the Parties.
2.2 Supply of Deliverables.
(a) Deliverables shall be supplied as set forth in Article 4.
(b) Until Acceptance of the First Market Deliverables has been achieved,
TELIGENT will agree to limit its purchases of Deliverables other than those
related to the First Market to [redacted] or such other amount to which the
Parties may mutually agree.
Article 3 - Prices for Deliverables
3.1 Unit Price and Purchase Price.
Attachment 1 sets forth the Unit Prices at which HUGHES makes the listed
Deliverables available to TELIGENT. The actual purchase prices paid by TELIGENT
shall be the Unit Prices as such prices may be adjusted pursuant to Article 3.3
below.
3.2 Firm Unit Prices Over Term.
The Unit Prices stated in Attachment 1 are the firm Unit Prices HUGHES will
charge TELIGENT for the Deliverables during the term of this Agreement, provided
that there are no material changes to the terms and conditions hereof. The Unit
Prices shall be adjusted as provided for in this Article 3.
3.3 Purchase Price Adjustments to Unit Prices.
(a) The following schedule of adjustments will apply to the Unit Prices, based
upon TELIGENT's projected purchase volume over the Term (the "Purchase
Commitment"). This Unit Price Adjustment Schedule will apply to all purchases of
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hardware and software Deliverables ("Covered Purchases"), beginning with the
first purchase by TELIGENT, but shall not apply to the purchase of Services.
- ------------------------------------------------------------------------------
Unit Price Adjustment Schedule for Covered Purchases
- ------------------------------------------------------------------------------
- ---------------------------------------------------|--------------------------
|
Cumulative Purchases Over Term | Adjustment To Unit Prices
| (shown in Attachment 1)
- ---------------------------------------------------|--------------------------
From $0 to and including [redacted] million | [redacted]
- ---------------------------------------------------|--------------------------
Greater than [redacted] million to and including | [redacted]
[redacted] million |
- ---------------------------------------------------|--------------------------
Greater than [redacted] million to and including | [redacted]
[redacted] million |
- ---------------------------------------------------|--------------------------
Greater than [redacted] million to and including | [redacted]
[redacted] million |
- ---------------------------------------------------|--------------------------
Greater than [redacted] million to and including | [redacted]
[redacted] million |
- ---------------------------------------------------|--------------------------
Greater than [redacted] million to and including | [redacted]
$250 million |
- ---------------------------------------------------|--------------------------
Greater than $250 million | [redacted]
|
(b) TELIGENT's Purchase Commitment is Two Hundred and Fifty-Five Million Dollars
($255,000,000). TELIGENT shall provide HUGHES with a pro forma forecast for the
term of this Agreement at the time of execution of this Agreement. The Parties
accordingly agree that, subject to Article 3.3(c) below, all purchase prices for
Covered Purchases shall therefore reflect a [redacted] percent [redacted]
discount from the Unit Prices set forth in Attachment 1.
(c) The Parties will meet within [redacted] days of the end of the [redacted]
year after the execution of this Agreement to determine whether or not
TELIGENT's Purchase Commitment should be re-stated based upon actual purchases
made and orders placed by the end of such [redacted] year, and, if so, whether a
different adjustment to the Unit Prices according to the schedule above should
be made on a going-forward basis for the remainder of the Term.
3.4 "Shortfall Payment" and "True-Up" at End of Term.
(a) If TELIGENT's actual purchase volume of Deliverables, including (i) any
unused credits due to TELIGENT and (ii) any adjustments pursuant to Article 3.5
below (the "Actual Volume") at the end of the Term is less than [redacted],
TELIGENT shall pay to HUGHES [redacted], said payment hereinafter being referred
to as the "Shortfall Payment," no later than thirty (30) days after the end of
the Term.
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(b) In addition to the Shortfall Payment, if TELIGENT's Actual Volume is less
than the Purchase Commitment at the end of the Term, TELIGENT will make a
"True-Up" Payment to HUGHES in an amount equal to the difference between the
actual price of purchased Deliverables and the price of such Deliverables
re-computed using the lesser discount applicable to the Actual Volume as shown
in the schedule above, no later than thirty (30) days after the end of the Term.
For example:
Purchase Commitment: $255,000,000
Actual Volume At End of Year 5: [redacted]
True-Up Payment: TELIGENT owes HUGHES the difference between the price
of Deliverables Purchased with [redacted] Premium (based on [redacted]
Actual Volume) less the price of Deliverables Purchased with [redacted]
Discount ($255,000,000 Actual Volume).
In order to obtain the True-Up Payment, HUGHES would multiply the
Actual Volume purchased [redacted] multiplied by [redacted], or
[redacted], and subtract the [redacted] paid to date.
The True-Up Payment would equal [redacted].
(c) If, as a result of Section 3.3 the unit prices are adjusted following the
end of the third year of this Agreement, and TELIGENT's Actual Volume exceeds
the restated Purchase Commitment at the end of the Term to an extent which would
have entitled TELIGENT to a greater discount over the Term, HUGHES will make a
payment to TELIGENT equivalent to [redacted] (including any unused credits due
TELIGENT) [redacted] re-computed using the formula set forth in Section 3.3
hereof.
(d) The "True-Up" Payment and/or the Shortfall Payment, if applicable, shall be
HUGHES' exclusive remedy in the event that TELIGENT's Actual Volume falls short
of the Purchase Commitment.
(e) Anything in the foregoing to the contrary notwithstanding, in the event that
the Actual Volume is less than (i) [redacted] or (ii) the amount of the Purchase
Commitment at the end of the Term, in either case due to either (A) Force
Majeure pursuant to Article 14 hereof, or (B) Termination for Cause by TELIGENT
pursuant to Article 17.1 hereof, TELIGENT shall have no liability to HUGHES for,
and shall not be obligated to pay, the Shortfall Payment or the "True-Up"
Payment, respectively.
3.5 [redacted].
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3.6 Most Favored Customer.
After Acceptance of the First Market Deliverables hereunder, sales of all
Deliverables ordered hereunder (including the First Market Deliverables if
Accepted) will be on terms at least as favorable as those offered to any HUGHES
customer for the same or substantially similar equipment, software and services
(based on similar terms and conditions taken as a whole). Verification of this
commitment shall be subject to confidential audit at TELIGENT's expense by an
independent accounting firm of TELIGENT's choice, subject to HUGHES' approval,
such approval not to be unreasonably withheld, conducted no more frequently than
once in any 12- month period.
If TELIGENT becomes aware through such audit procedure or by other verifiable
means that the pricing of Deliverables does not give TELIGENT Most Favored
Customer ("MFC") protection, HUGHES will lower its Unit Prices to TELIGENT for
Deliverables ordered thereafter as necessary to provide TELIGENT MFC protection
and rebate to TELIGENT [redacted] of the difference between the MFC-protected
price and the price TELIGENT actually paid, in addition to reimbursing TELIGENT
for all costs associated with the audit or investigation which uncovered such
price discrepancy.
If, on its own initiative and prior to receiving any notice of audit, HUGHES
notifies TELIGENT that TELIGENT is entitled to reduced prices for
previously-procured Deliverables under this Article prior to or in the absence
of the conduct of an audit, TELIGENT shall receive [redacted] in past prices
paid. In the event that HUGHES is required to provide a rebate to TELIGENT as a
result of an audit requested by TELIGENT as set forth in this section, TELIGENT
shall receive from HUGHES an amount equal to [redacted] paid by TELIGENT to
auditors in order to retain such auditors.
3.7 Other Goods and Services.
Goods and Services not listed or otherwise described in this Agreement or the
Attachments hereto also may become Deliverables under this Agreement. Such Goods
or Services shall become Deliverables upon the issuance by TELIGENT of one or
more Purchase Orders therefor, and the acceptance by HUGHES thereof. For Goods
and Services that are not listed in the Attachments hereto or presently
contemplated by the Parties hereunder but which become Deliverables under this
Agreement, the prices listed in the Purchase Order(s) accepted by HUGHES for
those goods or services shall constitute the contract price, adjusted, as
applicable, in accordance with this Agreement. The provisions of Article 3.6
shall apply thereto.
3.8 Freight and Other Charges and Fees.
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HUGHES' quoted prices are exclusive of all applicable freight charges or other
fees, taxes and duties. TELIGENT shall be responsible to pay all such reasonable
charges, fees, taxes and duties which are actually incurred by HUGHES in the
performance of its obligations under this Agreement. HUGHES agrees that such
charges, fees, taxes and duties shall not be subject to mark-up, and that
TELIGENT shall not be responsible for paying any additional handling or
miscellaneous charges and/or any withholding taxes or income taxes of HUGHES.
Article 4 - Ordering, Forecasting, Delivery, Re-Scheduling, and Changes
4.1 Purchase Orders.
(a) A Good or Service listed or described in this Agreement or in the
Attachments hereto becomes a Deliverable under this Agreement only upon the
issuance by TELIGENT of a Purchase Order for the Good or Service. TELIGENT may
issue one or more Purchase Orders for such goods or services, in such quantities
and at such times as it, in its sole discretion, may elect, subject to the
provisions of this Article 4. Purchase Orders shall include quantities to be
purchased by line item (as set forth in Attachment 6), and shall also include
the requested date of delivery.
Purchase orders may be issued by facsimile or U.S. or express delivery, or, upon
mutual agreement of the Parties, via electronic data interchange. HUGHES shall
accept or reject a Purchase Order in writing within five (5) business days after
issuance by TELIGENT. In the event that HUGHES does not so accept or reject,
TELIGENT shall have the right to escalate the Purchase Order from the Program
Manager to a Vice President or the General Manager of the Wireless Networks
Division of HUGHES. If HUGHES does not respond to the Purchase Order within
fifteen (15) days, the Purchase Order shall be deemed to be rejected.
(b) Purchase Orders shall conform to the Sample Purchase Order shown in
Attachment 6 hereto. All data sheets, drawings, specifications, conditions or
other documents attached to or included by reference in a Purchase Order are
integral parts thereof, as are the terms of this Agreement. In the event that
the terms of the Purchase Order and this Agreement conflict, the terms of this
Agreement shall govern.
4.2 Forecasting and Scheduling of Orders.
No later than six (6) months after the execution of this Agreement, TELIGENT
will provide a rolling forecast of its equipment purchases covering the first
four quarters of delivery under the Agreement. The rolling forecast will be
updated quarterly. For the first quarter of deliveries, the forecast delivered
six (6) months before the commencement of such quarter shall be binding. Each
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succeeding forecast shall provide a forecast for the 12-month period beginning 3
months after the delivery of such forecast.
The first quarter and thirty-three percent (33%) of the second quarter of every
such four-quarter forecast shall represent a non-reducible binding purchase
commitment, subject to TELIGENT's rescheduling rights described under Article
4.4. If ordered, HUGHES will be obligated to deliver up to one hundred twenty
percent (120%) of forecasted units in the first two quarters of any rolling
forecast. Items in excess of one hundred twenty percent (120%) shall be
delivered to a mutually agreed schedule.
4.3 Standard Delivery Intervals.
Deliverables will be delivered no later than the following time periods,
beginning on the date of submission of a Purchase Order, and will be based on
the quantities forecasted pursuant to Article 4.2.
----------------------------------------------------------------------
|Teligent Nodes (TNs) | [redacted] |
|-----------------------------------|---------------------------------|
|Teligent Access Sites (TASs) | [redacted] |
|-----------------------------------|---------------------------------|
|Other Deliverables |Individual Case Basis, as |
| |mutually agreed on by the Parties|
----------------------------------------------------------------------
These delivery intervals shall apply to all Purchase Orders, including any
Deliverables ordered before the First Market Deliverables have been Accepted,
but shall not require the delivery of product to a Market other than the First
Market before the delivery of First Market Deliverables.
4.4 TELIGENT's Right to Re-Schedule.
In the event that TELIGENT is unable to make its "room ready" dates upon the
schedule agreed pursuant to a Purchase Order, the scheduled delivery may be
postponed for up to thirty (30) days on a day-for-day basis to reflect the
actual room ready date. Beginning with the thirty-first (31st) day after the
agreed upon date, if TELIGENT is still unable to accept delivery, HUGHES shall
invoice, and TELIGENT shall pay, (1) the portion of the purchase price for such
rescheduled Deliverables that would be payable upon delivery and (2) documented
reasonable out-of-pocket daily storage charges for such rescheduled Deliverables
to HUGHES. HUGHES shall use commercially reasonable efforts to deliver
Deliverables by the rescheduled delivery date.
4.5 TELIGENT's Right to Change Work.
TELIGENT shall have full power at any time during the execution of HUGHES' work
under this Agreement to request HUGHES, by written purchase order, to make
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changes in, additions to or deduction from, the general scope of the
engineering, furnishing, delivery, installation and testing of Deliverables
(hereinafter referred to as "Work") ordered by TELIGENT.
Upon receipt of such written request for change, HUGHES shall submit a report
within ten (10) business days after the receipt of the change request setting
forth the effect, if any, on prices or timing of delivery or other performance
obligations. Within a reasonable time thereafter, TELIGENT and HUGHES will agree
to one of the following:
(a) to proceed with the change as requested;
(b) to agree to proceed with a mutually agreed upon, modified change
request; or
(c) to cancel the requested change and proceed with the Agreement as
originally executed.
HUGHES shall not proceed with any change unless authorized in writing by
TELIGENT.
The HUGHES report, as modified, if necessary, by mutual agreement of the
Parties, shall be deemed to be incorporated by reference into this Agreement.
Article 5 - Responsibilities and Obligations of the Parties
5.1 Responsibility Matrix.
Specific operational responsibilities of TELIGENT and HUGHES under this
Agreement are defined in the Responsibility Matrix included as Attachment 4
hereto.
5.2 Obligations of TELIGENT.
The obligations of TELIGENT include the following:
(i) Payment. TELIGENT shall make payments to HUGHES in accordance
with this Agreement.
(ii) Engineering Information. TELIGENT shall furnish engineering
information reasonably requested by HUGHES and necessary for
HUGHES to perform its obligations under this Agreement.
(iii) Punchlists. TELIGENT shall develop the punchlists necessary
to enable the complete installation of the Deliverables and
the proper interworking of the Deliverables and TELIGENT's
systems.
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(iv) Civil Works. TELIGENT shall be responsible for all civil works,
including establishment of premise conduits and cabling.
5.3 Obligations of HUGHES.
The obligations of HUGHES include the following:
(i) Authorizations and Permits. HUGHES shall be responsible for
obtaining all necessary permits and/or authorizations
associated with the discharge of its duties under this
Agreement, including, but not limited to, obtaining FCC Type
Acceptance and Verification of Deliverables prior to delivery
to TELIGENT and including, without limitation, those permits
and/or authorizations set forth in Attachment 4. HUGHES and
TELIGENT shall coordinate the permitting process to avoid
duplication of efforts.
(ii) Interconnection Interface Assistance. TELIGENT intends to
install certain third-party equipment and connect such
equipment to the Deliverables through standardized interfaces.
HUGHES shall facilitate the proper functioning of the
interface between its Deliverables and other TELIGENT
infrastructure, including networks with which TELIGENT
interconnects, including the relevant local exchange and
interexchange carriers as may reasonably be requested by
TELIGENT.
(iii)Integration Support. As part of the contract price of the
Deliverables, HUGHES will provide certain on-site integration
support services when TELIGENT notifies HUGHES that TELIGENT
has a new product requiring integration with the Deliverables.
(iv) Sales and Support Period. HUGHES agrees to make available to
TELIGENT maintenance, spare parts and software support for
equipment manufactured (including equipment "OEM'ed") by
HUGHES for [redacted] after the underlying equipment is
"Manufacturer Discontinued" through the Maintenance Agreement
attached hereto as Attachment 3. This commitment shall survive
termination of this Agreement.
(v) Systems Support. Notwithstanding anything to the contrary in,
and in addition to the provisions of, this Agreement, HUGHES
agrees to provide TELIGENT the services described and set
forth in the Maintenance Agreement attached hereto as
Attachment 3 at no cost to TELIGENT during applicable warranty
periods.
(vi) Technical Support. HUGHES shall offer as an option to TELIGENT
technical support services, whereby HUGHES supplies a
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technical expert in each Market for a period of [redacted]
following Acceptance. TELIGENT shall not use such consultation
as a substitute for services offered by HUGHES pursuant to the
Maintenance Agreement.
(vii) Training and Documents. For the First Market Deliverables
and once for each new Market, TELIGENT shall receive three
complete sets of documentation and 500 student-hours of
training credit at no additional charge. The training credit
may be "banked" and used by TELIGENT throughout the term of
this Agreement for any training (either classroom courses or
"suitcase" training) offered by HUGHES or under this
Agreement. HUGHES shall timely provide documentation to
TELIGENT sufficient to enable TELIGENT to specify, order,
operate, field repair and maintain the equipment and other
goods delivered. HUGHES shall provide at least two durable
(Mylar, etc.) copies of all irregularly-sized, blue-lined or
other perishable documentation. In addition to the training
and documentation included with First Market Deliverables and
Extension Deliverables, HUGHES will offer optional training
courses and documentation under this Agreement.
(viii) [Intentionally Deleted].
(ix) Perform to Schedule. HUGHES shall adhere to the schedule for
the performance of its responsibilities set forth herein,
except as impacted by TELIGENT's failure to adhere to the
schedule for performing TELIGENT's responsibilities hereunder.
(x) Installation Services. HUGHES may provide bids to perform
installation services for TELIGENT. Nothing herein shall
create an obligation on TELIGENT to award HUGHES any such
services. When contracted to do so, HUGHES shall install,
optimize and test the equipment and other goods delivered to
TELIGENT to ensure that, in addition to any other negotiated
standards, they meet the standards set out in this Agreement
and the Attachments hereto. Installation services performed by
subcontractors shall be warranted as if performed directly by
HUGHES. Upon documented reasonable request, any contractor to
which TELIGENT objects shall be replaced.
(xi) Retrofits. For any equipment and other goods delivered to
TELIGENT, HUGHES shall keep TELIGENT advised of any
modifications that may become necessary as the result of
relevant changes in standards subsequently put into effect by
the industry, the government, or regulatory agencies or other
bodies, as well as those promulgated by HUGHES, and shall
provide, at reasonable cost, any corresponding retrofit
packages on terms in accordance with this Agreement; provided,
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however, that any retrofit packages necessary with respect to
or in connection with Year 2000 compliance shall be provided
to TELIGENT at no cost.
(xii) Upgrades and Enhancements. HUGHES shall make subsequent
upgrades and enhancements in equipment and other goods
delivered (other than retrofits, which may be purchased by
TELIGENT pursuant to subparagraph (xi) above) available to
TELIGENT at prices in accordance with this Agreement;
provided, however, that any upgrades and enhancements
necessary with respect to or in connection with Year 2000
compliance shall be provided to TELIGENT at no cost. HUGHES
shall add such upgrades and enhancements to its Deliverables
from time to time, pursuant to the schedule set forth in
Attachment 2, and as such schedule may be modified by mutual
agreement.
(xiii) Punchlists. HUGHES shall negotiate the punchlists with
TELIGENT in good faith. In the event that the negotiation
cannot be timely finalized due to disagreement, TELIGENT shall
have the right to escalate the requested punchlist items to a
Vice President or the General Manager of the Wireless Networks
Division of HUGHES.
5.4 Appointment of Program Directors and Managers.
Within 30 days after the execution of this Agreement, and continuing throughout
the Term of this Agreement, both TELIGENT and HUGHES shall appoint Program
Managers who shall oversee the day-to-day administration and management of this
Agreement and the execution of the obligations set out herein. The Parties will
each appoint additional Program Managers who shall assist their supervising
Program Managers in the performance of the responsibilities hereunder in a
defined geographic area, as necessary. Each Program Manager shall work directly
with his or her counterpart in the other Party's organization. The
responsibilities of these Program Managers shall include the following:
(i) Serve as primary contact.
(ii)Serve as focal point for all internal and field issues.
(iii) Schedule, oversee, review and approve accomplishment of
project responsibilities and milestones, as set out in the
Responsibility Matrix or as otherwise may be necessary and/or
appropriate to fulfill obligations under this Agreement.
(iv) Establish, disseminate and maintain project reports and
measurement procedures.
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(v) Ensure fulfillment of all project requirements.
(vi)Coordinate access to sites.
(vii) Meet regularly with counterpart, either by telephone or as
necessary in person, to review progress and project issues.
5.5 On-Site Support.
HUGHES shall offer to TELIGENT, at HUGHES' then-current prices if not already
provided under the terms of the Maintenance Agreement, certain Market on site
technical support. Such personnel shall be available at times to be mutually
agreed upon by the Parties. The personnel shall provide such technical
assistance to TELIGENT as TELIGENT may reasonably request.
In the event that HUGHES' on site personnel cannot timely accomplish their
mission without assistance from off-site HUGHES personnel, the on-site personnel
shall request, and HUGHES shall timely provide, such additional temporary
personnel as may be necessary to support TELIGENT's operations to TELIGENT's
satisfaction.
The on site personnel shall be directly responsive to TELIGENT's requests for
assistance, and shall not be required to seek approval or instruction from
off-site HUGHES personnel prior to providing requested assistance.
TELIGENT shall have the right to approve, which approval shall not be
unreasonably withheld, subcontractors contracted and paid for by HUGHES which
provide services under this Agreement directly to TELIGENT.
5.6 On-Call Service and Support.
[Intentionally deleted - covered in Section 2.1.1 of Maintenance Agreement]
5.7 Developmental Conferences.
The Parties recognize that the Product Plan included as Attachment 1 and the
Critical Product Requirements Development Schedule included as Attachment 2
hereto represent TELIGENT's best projection, at the time of execution of this
Agreement, of its foreseeable requirements for the Deliverables, but that these
needs and circumstances may change from time to time. Accordingly,
representatives of HUGHES and TELIGENT will meet at mutually convenient times
and places to address TELIGENT's changing needs and HUGHES' ability to
satisfactorily meet them.
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5.8 Costs.
Each Party shall pay their respective expenses incurred in connection with the
origination, negotiation, execution and administration of this Agreement. Except
as otherwise identified in this Agreement and the Attachments hereto, each party
shall bear the costs of its own telephone, postal and utility charges, legal
fees, and other services being supplied under this Agreement.
Article 6 - HUGHES' Representations, Warranties and Covenants
6.1 HUGHES Acquainted With Details.
HUGHES has carefully read the Specifications.
6.2 New Equipment.
All equipment purchased by TELIGENT hereunder shall be new and not refurbished
or remanufactured. HUGHES shall provide any documents which may be reasonably
requested by TELIGENT evidencing this fact, subject to any and all
confidentiality obligations undertaken by HUGHES. HUGHES agrees that it shall
provide all Deliverables hereunder in a manner to ensure that such Deliverables
are rendered in a workmanlike manner, in accordance with the practices and
highest professional standards used in well-managed operations.
6.3 Compliance of Equipment.
(a) HUGHES shall ensure, under its sole responsibility, that all Deliverables
will comply with, at or before the time of delivery to TELIGENT, all applicable
regulatory requirements, including, but not limited to, Federal Communications
Commission type acceptance and verification process requirements, and any
applicable federal, state and local laws, statutes, regulations and ordinances
then in effect. HUGHES represents and warrants that HUGHES' performance of its
obligations as provided for in this Agreement will comply in all material
respects with all federal, state and local laws, statutes, regulations and
ordinances.
Anything in the foregoing to the contrary notwithstanding, noncompliance by
HUGHES of any local statute or ordinance will not be a breach of this Agreement
as long as HUGHES is contesting in good faith the legality and/or the
applicability to HUGHES of such local statute or ordinance.
(b) All Deliverables will, at or before the time of delivery to TELIGENT, have
Underwriter Laboratories listing.
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(c) [redacted]
6.4 Compatibility.
HUGHES will provide, at its cost, backward interoperability for modifications
and updates of Deliverables. Alternatively, at HUGHES' sole discretion, HUGHES
may replace obsolete Deliverables with compatible next generation equipment, at
HUGHES' cost, if HUGHES reimburses TELIGENT for TELIGENT's direct labor costs
associated with the exchange and installation of such next generation
Deliverables.
6.5 Quality.
(a) All Deliverables shall be complete and defect-free (other than nonmaterial
defects in the software Deliverables, which shall be addressed as set forth in
Section 9.4 hereof, the Acceptance Test Procedures and the Maintenance
Agreement), including efficient operation and suitable maintenance. HUGHES shall
use QMS, its product quality system or its successor system, in the performance
of its obligations under this Agreement. The performance standards are set forth
in Attachment 7. Notwithstanding the foregoing, the terms of the main text of
this Agreement and all other Attachments take precedence over any inconsistent
or inferior performance standards in Attachment 7.
(b) Hardware shall be warranted as free of defects in material and workmanship
for the longer of [redacted], HUGHES' standard warranty period, or the term of
original manufacturer's warranty (if applicable), following Acceptance. This
warranty may be extended at TELIGENT's option for additional [redacted] periods
by payment of the annual maintenance fee set forth in the Maintenance Agreement;
provided, however, that the extension of this warranty for the Year 2000
compliance shall be at no cost to TELIGENT.
(c) Software shall be warranted for [redacted] following delivery or, for
software to be Accepted by TELIGENT, such software shall be warranted for
[redacted] following such Acceptance. This warranty may be extended at
TELIGENT's option for additional [redacted] periods by continued payment of the
maintenance fees set forth in the Maintenance Agreement; provided, however, that
the extension of this warranty for the Year 2000 compliance shall be at no cost
to TELIGENT.
6.6 Performance.
The representations, warranties and covenants set forth in this Section
6.6 will not apply to the extent not caused by HUGHES OR HUGHES'
subcontractors or agents where:
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(a) Defects in Deliverables are caused by alteration,
modification, or repair by any person other than HUGHES or
HUGHES' subcontractors or agents; provided, however, the
foregoing exclusion shall not apply if an alteration,
modification or repair is authorized by HUGHES;
(b) Defects are caused by TELIGENT's or TELIGENT's subcontractors'
mishandling or abuse; or
(c) Defects are caused from improper operation, interconnection or
installation as such is reasonably specified in the relevant
documentation supplied with the Deliverables.
(a) Specifications. HUGHES represents and warrants that its equipment (including
software) will meet the Specifications and the components will interact to form
a fully functioning network as contemplated in this Agreement and the
Attachments hereto. HUGHES agrees to (i) promptly notify TELIGENT if HUGHES has
reason to believe that such equipment (A) will not meet the Specifications, (B)
will not interact to form a properly functioning network, or (C) is in any
material manner lacking, incomplete or inadequate; and/or (ii) promptly repair
or replace any non-conforming item, in accordance with this Agreement, so long
as such item is covered under HUGHES warranty or the Maintenance Agreement
between the Parties.
(b) Parameters. HUGHES represents and warrants that the system parameters shall
be as follows:
(i) The "worst case" link budgets for microwave transmission shall
be warranted as specified in Attachment 1.
(ii)For operation within the link budget, the BER shall be less
than [redacted].
(iii) The MTBF shall be warranted as specified in Attachment 1.
(iv)The spectral efficiency in bits/second per Hz shall be
warranted, by development stage, as specified in Attachment 2.
(v) The microwave link reliability (excluding equipment failures)
shall be no less than [redacted] percent, averaged over any
[redacted] day period, averaged over all links within a
Market, excluding (i) path obstructions; (ii) outages due to
third-party events or individuals, acts of God, extended loss
of TELIGENT-provided input power, Force Majeure events, or the
actions of TELIGENT in materially failing to follow HUGHES'
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maintenance or operational instructions; and (iii) weather
conditions not considered in the mutually-agreed upon model.
(vi)For links designed to agreed-upon HUGHES' "official" link
budgets, the overall link reliability will be no less than
[redacted] percent (including equipment availability and
weather conditions), averaged over any [redacted] day period,
averaged over all other HUGHES links within a Market,
excluding outages due to third-party events or individuals,
acts of God, extended loss of TELIGENT provided input power,
Force Majeure events, or the actions of TELIGENT in failing to
follow HUGHES' maintenance or operational instructions.
For (v) and (vi) above, MTTR for calculation purposes shall be capped at
[redacted] hours.
(c) Capacity. HUGHES represents and warrants that the capacity of the
Deliverables, including future planned expansions and enhancements, shall be as
set forth in the Attachments hereto. If TELIGENT chooses to license a new
software release, such upgrade may require changes to the capacity or the
purchase of additional Deliverables. Each such software release shall have a
revised capacity warranty based on the new Deliverables configuration.
6.7 "Swap" Repair Turn-Around.
On an emergency basis (which shall mean whenever there is a Critical or Major
Problem, as defined in Attachment 3), critical swap/repair services shall be
made available within [redacted], provided that TELIGENT has purchased the
mutually agreed-upon number and types of spares, has maintained the software
pursuant to the Maintenance Agreement and agrees to return the failed FRU within
three days of the receipt of the applicable spare and provided that any parts to
be shipped in fulfillment of this Article shall be shipped by HUGHES in the most
expeditious manner, including counter-to-counter courier service, within such
[redacted] period.
HUGHES will repair or replace defective parts and modules for its Teligent Node
and Teligent Access Site equipment as set forth in Attachment 3 at no additional
charge for emergency services during the time when an applicable warranty or
maintenance agreement, as the case may be, is in effect. If there is no warranty
or maintenance agreement in effect, emergency service shall be billed to
TELIGENT at HUGHES' then-current service rates.
6.8 Repairs.
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Repaired and "swapped" Deliverables are warranted for the remainder of the
original warranty period, or [redacted], whichever is longer.
6.9 Availability.
During the Term of this Agreement, HUGHES represents and warrants that Major
Outages resulting from failures of its equipment, software or services shall be
limited to a total of [redacted] per Market during any [redacted] month period,
starting [redacted], provided that the redundancy and configuration features of
the TN have been engineered to HUGHES' specifications. Excluded are outages due
to third-party events or individuals, acts of God, extended loss of
TELIGENT-provided input power, Force Majeure events, double failures caused by
Independent Events (so long as the redundant unit starts and maintains normal
in-service operation for at least fifteen minutes), or the actions of TELIGENT
in materially failing to follow HUGHES' maintenance or operational instructions.
Also excluded are Planned Outages, scheduled at mutually-agreed times, of less
than [redacted] duration, unless the number of Planned Outages exceeds
[redacted] in any given twelve-month period, and as long as any such Planned
Outage does not require on-site support by TELIGENT personnel. Failure to meet
this warranty shall be subject to liquidated damages specified in Article 12.
6.10 Covenant to [redacted].
HUGHES covenants, on behalf of itself, its parent company HUGHES ELECTRONICS
CORPORATION, and any wholly owned or majority-owned subsidiaries of HUGHES
ELECTRONICS CORPORATION (collectively referenced herein as "HEC") that upon
execution of this Agreement it shall:
(1) [redacted]
(2) [redacted]
[redacted]
The covenants contained in this Article 6.10 shall be effective through and
including two years after the termination of this Agreement, provided that such
covenants shall immediately terminate in the event that (i) HUGHES terminates
this Agreement pursuant to Article 17.2 hereof, or (ii) TELIGENT terminates this
Agreement pursuant to Article 18 hereof.
6.11 Covenant Not to Discontinue Production and Support.
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HUGHES represents and warrants that, in the event of the cancellation of this
Agreement after TELIGENT has placed commercial customers on its network using
the Deliverables, HUGHES shall continue production and support of Deliverables
as set forth in the Maintenance Agreement and in this Agreement. HUGHES
recognizes and agrees that, were HUGHES to discontinue the supply and/or support
of Deliverables, TELIGENT customers accessing TELIGENT's network through HUGHES
Deliverables would be "stranded" in the marketplace.
Accordingly, HUGHES agrees that, during the term of this Agreement, and for the
support periods provided for in the Maintenance Agreement, HUGHES shall not
discontinue the supply and/or support of Deliverables. HUGHES recognizes that
its discontinuance of the supply and/or support of Deliverables would pose an
extraordinary burden on TELIGENT and its customers and, accordingly, agrees
that, in addition to any other remedies provided for in this Agreement for a
breach of a representation and warranty by HUGHES, TELIGENT shall be entitled to
seek specific performance of this covenant in equity.
6.12 HUGHES' Right-to-Use IPR.
HUGHES warrants that, to the best of its knowledge as of the date first set
forth above, it either possesses or is entitled to use to the extent legally
required to perform hereunder the patent rights, copyrights, trade secret and
other tangible or intangible property right for any Deliverables to be supplied
under this Agreement and that these rights can be used by TELIGENT without any
claim from third parties.
6.13 Limitation of Warranty.
THE ABOVE WARRANTIES ARE IN LIEU OF ANY OTHER WARRANTY, WHETHER EXPRESS, IMPLIED
OR STATUTORY, WITH RESPECT TO THE DELIVERABLES TO BE SUPPLIED UNDER THIS
AGREEMENT. HUGHES SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY AGAINST
INFRINGMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY. HUGHES
NEITHER ASSUMES NOR AUTHORIZES ANY PERSON TO ASSUME FOR IT ANY OTHER LIABILITY.
Article 7 - Software
7.1 Software License and Right-to-Use.
HUGHES' prices for the goods and services contemplated set forth in Attachment 1
include all software licenses and right-to-use fees for Release 1 and 2 products
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and features. The price of any subsequent software release not included in
Release 1 and 2 products and features or in the Maintenance Agreement shall be
negotiated by the Parties in good faith, such price to be subject to the Most
Favored Customer protections of Article 3.6. The license(s) shall be fully
assignable by TELIGENT at its sole discretion to any of its Affiliates,
Strategic Partners, parents, subsidiaries, or successor entities without further
cost to TELIGENT or its assignee(s), subject to the provisions of Section 1.3
hereof.
7.2 Long-Term Support.
[Intentionally deleted - covered under Section 5.3(iv).]
Article 8 - Factory Examination, Inspection and Tests
8.1 Examination and Inspection.
At TELIGENT's option, and upon reasonable request, the equipment Deliverables
covered by this Agreement will be subject to physical examination and inspection
by representatives of TELIGENT. Such examination may occur during regular
working hours at any and all of HUGHES' work locations and places of manufacture
related to the Deliverables. HUGHES' reasonable assistance and documentation
supporting product manufacture, assembly and testing shall be available to
TELIGENT.
8.2 Extension to Sub-Orders.
Significant Sub-Orders shall mean any sub-order whose value constitutes
[redacted] percent or more of the [redacted] cost to HUGHES of the Deliverables
to be delivered under a Purchase Order. In case of Significant Sub-Orders,
HUGHES' obligations under this Article shall extend also to its sub-vendors.
8.3 Right To Witness and/or Conduct Tests.
TELIGENT's personnel shall have the right, but not the obligation, to examine
and witness test or ordered equipment (other than standard third-party
equipment) during any and all stages of the production for the purpose of
ensuring compliance with this Agreement. The Parties agree that facilities
satisfactory to TELIGENT shall be made available within either Party's
then-existing premises for the testing of goods ordered by TELIGENT as they are
being developed and manufactured. If any good does not meet the Specifications
when tested, TELIGENT shall notify HUGHES within five (5) business days of its
discovery by TELIGENT. HUGHES shall then have ten (10) business days to provide
TELIGENT with a written schedule for the cure of the deficiency acceptable to
TELIGENT.
8.4 Tests and Inspections Subject to Non-Disclosure Agreement.
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Any inspection and testing activities under this Article shall be subject to the
Parties' Non-Disclosure Agreement.
8.5 Advance Notice of HUGHES' Tests.
HUGHES shall provide TELIGENT with not less than 10 days' prior written notice
of the scheduling of factory check-out tests of major orders, such as First
Market Deliverables and Extension Deliverables, and shall afford TELIGENT the
opportunity to observe such tests.
Article 9 - Delivery and Acceptance
9.1 Responsibility For Incorrect Delivery.
If any item is incorrectly delivered, the Party responsible for the incorrect
delivery (which shall include the Party's agent) shall bear (a) any additional
direct expenses incurred in delivering it to the correct point of delivery and
(b) the risk of transportation.
9.2 Date Available.
The delivery time as stated in each Purchase Order is the time when the
Deliverables must be available at the point indicated. The Deliverables must be
completely manufactured, tested, packed, and marked, and must be accompanied by
all necessary documentation. Where the Purchase Order calls for installation by
HUGHES, the date of delivery shall be taken to mean the date by when the
Deliverables must have passed all requisite Acceptance Testing, and if
applicable, entered the relevant Soak Period.
9.3 Conveyance of Title.
Title and risk of loss shall pass to TELIGENT upon delivery to the Purchase
Order designated location or such other location TELIGENT may specify (FCA such
location), unless the Parties agree otherwise in an accepted Purchase Order.
Upon the conveyance of title to equipment and other goods, HUGHES shall convey
to TELIGENT all rights and title therein by appropriate documents with warranty
of title, free and clear of all liens and encumbrances. Title to software shall
not be conveyed to TELIGENT at any time, unless otherwise specifically agreed by
the Parties.
Alternatively, TELIGENT shall have the right to use a TELIGENT specified carrier
to deliver one or more of the Deliverables hereunder. In such event, title to
and risk of loss for such Deliverables shall pass to TELIGENT FOB Germantown,
Maryland. In such alternative case, TELIGENT and its specified carrier shall
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mutually determine all charges, fees and other costs incurred in connection with
the shipping of such Deliverables, and TELIGENT shall have no liability to
HUGHES for any such costs.
9.4 Acceptance Test Procedures.
(a) TELIGENT's acceptance of and payment for the First Market Deliverables or
Extension Deliverables, as the case may be, shall be subject to the Acceptance
Test Procedures, as described in Attachment 5 hereto, and as set forth below.
[redacted]
(b) Acceptance Testing for First Market Deliverables. The First Market
Deliverables shall be Accepted according to Acceptance Test Procedures. The
Acceptance tests shall be administered by HUGHES and observed by TELIGENT, and
test results shall be provided to TELIGENT. The punch list created following the
Acceptance Test Procedures shall not contain any Major Items. As part of the
Acceptance Test Procedures for the First Market Deliverables, TELIGENT may
subject such Deliverables to a sixty-day First Market Soak Period, which period
may include commercial service to TELIGENT customers. Any payment milestone for
the First Market Deliverables or any Extension Deliverables set forth in Article
10 which occur prior to the successful passage of the First Market Soak Period
shall be extended automatically up to and including the date of successful
passage of the First Market Soak Period.
(c) Acceptance Testing for Extension Deliverables. If HUGHES provides
installation services, HUGHES shall Commission Extension Deliverables to ensure
that the Deliverables are operational according to Specifications and have been
installed correctly. Commissioning of any Extension Deliverables shall include a
subset of critical Acceptance Test Procedures, to be mutually agreed upon by the
Parties. The punch list created following Commissioning of any Extension
Deliverables shall not contain any Major Items. As part of the Acceptance Test
Procedures for any Extension Deliverables, TELIGENT may subject such Extension
Deliverables to a thirty-day Extension Deliverables Soak Period, which period
may include commercial service to TELIGENT customers, without making payment to
HUGHES for the applicable payment milestone as set forth in Article 10.
The applicable payment milestone shall be the conclusion of the Soak Period,
rather than the date of the Commissioning of the Extension Deliverables, should
TELIGENT choose to conduct a Soak Period. If TELIGENT or a third party installs
the Deliverables, TELIGENT shall have thirty (30) days after delivery to inspect
and accept or reject the Deliverables before installing, Commissioning, and
placing the Extension Deliverables into the Extension Deliverables Soak Period.
If TELIGENT rejects any portion or all of such Extension Deliverables, the
invoice date for the Delivery milestone shall become the date such Deliverables
are repaired and/or replaced in a manner satisfactory to TELIGENT and no late
fees or interest shall accrue until [redacted] after such date. HUGHES shall
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have fair opportunity to inspect TELIGENT or third-party installations to ensure
that the Extension Deliverables have been installed correctly.
(d) The occurrence of a Major Outage during a Soak Period shall "re-start" the
applicable Soak Period (once the fault has been corrected). TELIGENT shall not
be required to pay for any on-site support services HUGHES elects to provide in
connection with a Soak Period.
(e) The Parties agree that the Acceptance Test Procedures set forth in
Attachment 5 hereto shall contain mutually agreed-upon time frames in which (i)
TELIGENT shall Accept or reject Deliverables after delivery to TELIGENT pursuant
to this Agreement and (ii) HUGHES shall repair and/or replace such Deliverables
after any such rejection by TELIGENT, subject to the further provisions of this
Section 9.4(e).
TELIGENT may conditionally Accept any Deliverables which do not have one or more
of the Critical Features set forth in Attachment 2 and pay to HUGHES [redacted],
pursuant to Section 3.5 hereof. For any other deviations from the Specifications
other than those listed on Attachment 2 hereto, TELIGENT shall be entitled to
[redacted] until such time as HUGHES has repaired and/or replaced such
Deliverables.
9.5 Partial Deliveries.
HUGHES shall not be entitled to claim payment for partial deliveries where the
effect of the partial delivery is to prevent TELIGENT from making beneficial use
of the facilities in question. If TELIGENT Accepts and makes beneficial use of
the facilities in question, then HUGHES shall be entitled to payment for those
goods or services delivered and Accepted or performed. Notwithstanding the
foregoing, HUGHES may invoice for partial deliveries when such partial delivery
is made at TELIGENT's express written request.
Article 10 - Invoices and Payment
10.1 Invoicing Schedule.
Invoices shall be rendered in accordance with the following schedules:
(a) For the First Market Deliverables:
-------------------------------------------------------------------------
Percentage of Total Cost of Order Milestone
-------------------------------------------------------------------------
[redacted] Upon issuance of order
-------------------------------------------------------------------------
[redacted] Upon completion of installation
[redacted] Upon Acceptance
-------------------------------------------------------------------------
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[redacted] Upon closure of the punch list
-------------------------------------------------------------------------
(b) Once the First Market Deliverables are Accepted, which Acceptance may
require, at TELIGENT's sole discretion, successful passage of the First Market
Soak Period, the invoicing schedule shall be revised as follows:
(i) If HUGHES performs the installation and Commissioning:
------------------------------------------------------------------------
Percentage of Total Cost of Order Milestone
------------------------------------------------------------------------
[redacted] Upon issuance of order
------------------------------------------------------------------------
[redacted] Upon completion of installation
------------------------------------------------------------------------
[redacted] Upon Acceptance
------------------------------------------------------------------------
[redacted] Upon closure of the punch list
------------------------------------------------------------------------
------------------------------------------------------------------------
(ii)If HUGHES does not perform the installation and Commissioning:
--------------------------------------------------------------------------
Percentage of Total Cost of Order Milestone
--------------------------------------------------------------------------
[redacted] Upon issuance of each order
--------------------------------------------------------------------------
[redacted] Upon delivery
--------------------------------------------------------------------------
10.2 Payment Due Date.
No payments for any invoices shall be considered due unless and until the First
Market Deliverables have passed Acceptance. Subject to the foregoing sentence
and Article 9.4 above, payment will be due within 30 days of TELIGENT's approval
of an invoice.
10.3 Interest Assessment and Fee.
(a) Notwithstanding Article 10.2 above, a First Market Deliverables or Extension
Deliverables invoice may accrue interest after [redacted] from receipt during
the relevant Soak Period, until the earlier of (i) the payment of the invoice,
or (ii) the occurrence of a Major Outage which causes the Soak Period to
"re-start." In the case of (ii), accrual of interest is suspended until the
successful completion of the Soak Period. Any invoice so held in abeyance which
is otherwise approved, due and payable, if paid by TELIGENT within five (5)
business days of the successful passage of the relevant Soak Period, shall
accrue no additional interest, if any.
(b) No interest fee shall be assessed on any invoice if payment is made within
[redacted] from invoice receipt. Payments made by TELIGENT shall be promptly
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credited. Past due payments will incur daily interest at an annualized rate of
the Prime Rate plus one percent (1%).
10.4 General.
(a) HUGHES may submit invoices to TELIGENT upon shipment. Such invoices shall be
in detail satisfactory to TELIGENT.
(b) Recommended spare parts (which shall be only the minimum necessary and shall
be subject to TELIGENT's approval) will be invoiced upon the same schedule as
the underlying Deliverables.
(c) Training, documentation and new software releases accompanying the First
Market Deliverables and Extension Deliverables will be invoiced upon the same
schedule as the underlying equipment. Subsequent documentation and training will
be invoiced [redacted] upon issuance of each order and [redacted] upon delivery.
New software releases will be subject to a 30 day First Office Application
verification period (as defined by industry standards) before payment is due.
Article 11 - Interfaces
11.1 Industry Standard Interfaces.
Deliverables shall interface with third-party network equipment through
standard industry interfaces, including TR-303, between the TAS and the TCO or
between two points mutually agreed upon by the Parties. The Parties will
mutually determine in good faith the requirements of the TR-303 and other
interfaces and required solution(s). Pricing from HUGHES to TELIGENT for such
solution(s) shall be determined at that time, and shall be governed by the
following principles:
(i) If an effective solution requiring reasonably minor
development effort by HUGHES is provided by a third party's
product, HUGHES will pass through the cost of it to TELIGENT
without additional charges.
(ii)If HUGHES must undertake substantial development efforts to
create a solution, such efforts shall be priced at
commercially reasonable rates.
11.2 General Integration Support for Non-Standard Interfaces.
HUGHES acknowledges that other infrastructure manufacturers supply competitive
and complementary equipment, software and services to TELIGENT. HUGHES
understands that its equipment and components must work with such third-party
network equipment. The Parties agree to mutually determine a budget under which
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HUGHES will work to accomplish such integration with third party deliverables if
TELIGENT requires integration with non-industry-standard interfaces.
11.3 POTS Capability.
HUGHES will propose a mutually-satisfactory POTS capability solution for Release
1 and shall incorporate POTS in its Release 2 product. The Parties will mutually
agree upon any other required interface specifications which the Deliverables
shall support.
11.4 Interconnection With Third-Party Equipment.
HUGHES agrees and understands that TELIGENT intends to install certain
third-party equipment and connect same to the Deliverables through standardized
interfaces. TELIGENT agrees that it shall make every commercially reasonably
effort to prevent any physical interference with the Deliverables during such
installation and connection of third party equipment, and further agrees that
HUGHES will not be liable in any way to the extent delay in Acceptance of any
Deliverables is due to such physical interference. If such third-party equipment
is installed prior to Acceptance of HUGHES Deliverables, the Acceptance Test
Procedure shall verify the proper function of the relevant standardized
interface in accordance with the interface specifications agreed upon. If the
third-party equipment complies with the relevant interface specification,
TELIGENT's use of such third-party equipment shall not impair any warranty
affecting Deliverables.
Article 12 - Remedies [redacted]
12.1 Late Acceptance of First Market Deliverables.
(a) If Acceptance of the First Market Deliverables is delayed beyond the date
for Generally Available Release 1.0 Deliverables as stated in Attachment 1, due
to the action or inaction of HUGHES and/or its subcontractors, HUGHES shall
[redacted], in addition to the return of the Developmental Funding pursuant to
Article 1.2. TELIGENT may [redacted] invoke price discounts and/or Warranty Cure
remedies for HUGHES' failure to make product Generally Available on the dates
specified pursuant to Article 3.5, but TELIGENT may not have the benefit of both
(i) and (ii) remedies.
(b) HUGHES shall be allowed a [redacted] grace period to meet the Generally
Available Date for Release 1.0 Deliverables specified in Attachment 1 (which
grace period shall extend such date from August 1, 1999 to September 1, 1999),
if HUGHES continuously uses its reasonable best efforts to meet such General
Availability Date.
12.2 Delay in Delivery or Acceptance of Extension Deliverables.
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(a) "Unexcused Delay" (i.e., a delay due to other than Force Majeure as provided
for in Article 14 hereof or a delay which is not otherwise approved in advance
in writing by TELIGENT) for more than [redacted] days beyond the scheduled
delivery date of any Extension Deliverables for which HUGHES is not to provide
the installation and Commissioning, when the delay is due to the action or
inaction of HUGHES and/or its subcontractors, shall result in a reduction of the
purchase price due by [redacted] of goods not timely delivered per week of
delay, up to a maximum of [redacted] of goods not timely delivered. Such
discounts shall be in addition to the purchase price adjustments provided for in
Article 3 hereof.
(b) Unexcused Delay of more than [redacted] days beyond the scheduled in-service
date in the Acceptance of any Extension Deliverables for which HUGHES is to
provide the installation and Commissioning, when the delay is due to the action
or inaction of HUGHES and/or its subcontractors, shall result in a reduction of
the purchase price due by [redacted] of goods not timely Accepted per week of
delay, up to a maximum of [redacted] of goods not timely Accepted. Such
discounts shall be in addition to the purchase price adjustments provided for in
Article 3 hereof.
12.3 Failure to Meet Availability Warranty.
[redacted]
12.4 [redacted].
12.5 Warranty Cure.
Additional equipment and costs incurred by TELIGENT, if any, which are directly
attributable to breach of the Performance Warranties specified in Article 6.6
shall be borne by HUGHES. The Parties shall attempt to negotiate such equipment
and costs in good faith. These costs may include needed additional Teligent
Nodes, Teligent Access Sites and/or related equipment, and consequential
additional real estate, maintenance or similar expenses. HUGHES' liability under
this Article is subject to Article 12.6.
12.6 General Limitation of Liability.
(a) Where specific liquidated damages, discounts and/or penalties are expressly
specified herein, such remedies shall be deemed to be sole and exclusive
remedies unless otherwise specified. In all other matters, the liability of
HUGHES under this Agreement will not, except as otherwise expressly provided for
in this Agreement, exceed the greater of [redacted] of the total price of
Deliverables purchased under this Agreement or [redacted].
(b) The liability of TELIGENT under this Agreement will not, except as otherwise
expressly provided for in this Agreement, exceed the greater of [redacted] of
the total price of Deliverables purchased under this Agreement or [redacted];
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provided, however, that the liability of TELIGENT under this Agreement with
respect to non-payment shall be limited to the total price of Deliverables
purchased under this Agreement.
(c) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR IN THIS AGREEMENT, IN NO EVENT
WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY IN AN ACTION BROUGHT BY THE OTHER
PARTY FOR SPECIAL, COLLATERAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION, LOSS OF GOODWILL, LOSS OF
PROFITS OR REVENUES, LOSS OF SAVINGS, AND INTERRUPTIONS OF BUSINESS) WHETHER
SUCH DAMAGES OCCUR PRIOR OR SUBSEQUENT TO, OR ARE ALLEGED AS A RESULT OF,
TORTIOUS CONDUCT OR BREACH OF ANY OF THE PROVISIONS OF THIS CONTRACT, EVEN IF
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(d) The limitations of liability set forth in this Article 12 shall not apply to
(i) any liability or obligations arising under Sections 6.11, 9.4(e), 13.1(ii)
or 13.2 or (ii) HUGHES' obligations as provided for in this Agreement to repair
or replace defective or non-conforming Deliverables after Acceptance of the
First Market Deliverables or (iii) HUGHES' obligation to refund to TELIGENT
monies paid for goods not Accepted.
12.7 Availability of Other Remedies.
Anything in this Agreement to the contrary notwithstanding, nothing in this
Agreement shall be construed to prevent or limit TELIGENT's ability to pursue
whatever remedies may be available to it before any competent judicial or
administrative body, at law or in equity.
Article 13 - Indemnity; Insurance
13.1 General Indemnity by HUGHES.
Unless expressly stated otherwise in this Agreement, HUGHES shall indemnify
TELIGENT, its officers, agents, employees or third parties, against all losses,
claims, damages and expenses whatsoever resulting from (i) the breach of
representations or warranties by HUGHES, its employees or agents, (ii) damage to
property and/or physical injury and/or death arising out of or in connection
with the performance of HUGHES, its employees, contractors or agents hereunder,
or (iii) the performance by HUGHES of its obligations hereunder. Upon TELIGENT's
request, HUGHES shall save harmless TELIGENT against any claims raised against
it by others on the aforementioned grounds, subject to the limitations set forth
in Article 12.6 hereof.
13.2 Patent And Copyright Indemnity.
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(a) HUGHES agrees to indemnify and hold Teligent harmless from, and to resist or
defend at its own expense, any request for royalty payments or any claim for
equitable relief or damages against TELIGENT based on an allegation that the
manufacture of any equipment delivered hereunder or the use, lease, or sale
thereof or that any documentation delivered by HUGHES hereunder infringes any
United States patent or copyright, and to pay any royalties and other costs
related to the settlement of such request and to pay any and all costs and
damages, including attorney's fees and settlement costs, finally awarded or
agreed upon as a result of any litigation based on such claim, provided that:
HUGHES is given prompt written notice of such request or claim by TELIGENT and
given authority and such reasonable assistance and information as HUGHES
requests in writing and as it is available to TELIGENT for resisting such
request or for the defense of such claim; provided, however, (i) TELIGENT's
failure to promptly provide to HUGHES written notice of a claim shall not
relieve HUGHES of liability under this Article except to the extent HUGHES was
prejudiced thereby; (ii) TELIGENT shall honor HUGHES' reasonable requests for
information and assistance in the defense, and HUGHES shall reimburse TELIGENT
for its reasonable and actual expenses in this regard; and (iii) HUGHES shall
regularly advise TELIGENT regarding the progress of the defense.
(b) In the event that, as a result of any such claim (i) prior to delivery, the
manufacture of any item supplied by HUGHES hereunder is enjoined, or (ii) after
delivery, the use, lease or sale thereof is enjoined, HUGHES will, at its option
and expense, either (A) negotiate a license or other agreement with plaintiff so
that such item is no longer infringing, (B) modify such item suitably or
substitute a suitable item therefor, which modified or substituted item is not
subject to such injunction, and to extend the provisions of this Article
thereto, or if (A) or (B) cannot be effected by HUGHES' reasonable and diligent
efforts, (C) repurchase enjoined items at their then current value on TELIGENT's
audited accounts. The remedies provided for in this Article 13.2(b) shall be in
addition to, and not in lieu of, any remedies provided for in Article 13.2(a).
(c) Notwithstanding the above, HUGHES will not indemnify TELIGENT for separate
damages or costs resulting exclusively from claims (i) that HUGHES' compliance
with TELIGENT's designs, specifications, or instructions, as contrasted with
HUGHES' design or manufacturing choices or recommendations, not directed by
TELIGENT, implementing or interpreting such designs, specifications or
instructions, (ii) that use of any item provided by HUGHES in combination with
products not supplied by HUGHES, or (iii) that a manufacturing or other process
carried out by or through TELIGENT (not at HUGHES' instruction) and utilizing
any item provided by HUGHES constitutes infringement of any United States patent
(such claims being collectively referred to herein as "Other Claims").
TELIGENT will indemnify and hold HUGHES harmless from, and will resist or defend
at its own expense, any request for royalty payments or any claim for equitable
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relief or damages against HUGHES and to pay any and all damages and costs
(including settlement costs) finally awarded or agreed upon for infringement of
any United States patent or copyright in any suit resulting from Other Claims,
and from reasonable and actual expenses incurred by HUGHES in defense of such
suit if TELIGENT does not undertake the defense thereof.
(d) This indemnity is subject to [redacted] TELIGENT hereunder attributable to
the infringement as of the date of the request for royalty payments or claim for
equitable relief or damages but in no event shall be less than [redacted]. This
indemnity is in lieu of any other indemnity or warranty, express or implied,
with respect to patents and copyrights.
13.3 Demonstration of Insurance.
(a) HUGHES shall demonstrate to TELIGENT's reasonable satisfaction that HUGHES
maintains in full force and effect throughout the duration of the Term a policy
or policies of insurance coverage, in quality and quantity of coverage, that
equal or exceed the following:
(1) commercial general liability insurance in the amount
(inclusive of any amounts provided by an umbrella or excess
policy) of at least:
bodily injury to any one person $10,000,000
bodily injury aggregate per occurrence $10,000,000
property damage in any one accident $10,000,000
property damages aggregate per occurrence $10,000,000
(2) if eligible, worker's compensation insurance as required by
the laws of the applicable jurisdiction; and
(3) automobile liability insurance for any vehicles used in the
performance of the Services in the amount of at least
$1,000,000.
All such insurance must be on an occurrence basis, and not on a claims made
basis. Coverage shall be obtained by HUGHES only from insurers who are rated A-7
or better in the then most recent edition of Best's Insurance Reports. Each
------------------------
insurance policy shall provide for a waiver of the insurer's subrogation rights
against TELIGENT.
(b) At such times as may be requested by TELIGENT, HUGHES shall cause its
insurers to deliver to TELIGENT certificates of insurance evidencing the
existence of the coverage required under this Agreement. If deemed necessary by
TELIGENT, HUGHES shall supply certificates of insurance naming TELIGENT as an
additional insured party. Each policy on which TELIGENT is an additional insured
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shall be endorsed to provide TELIGENT with at least ten (10) days' prior written
notice of cancellation, non-renewal, or restriction of coverage.
Article 14 - Force Majeure
14.1 Extension of Time.
In case of Force Majeure preventing, in whole or part, the fulfillment by either
of the Parties of their obligations under this Agreement, the time stipulated
for the fulfillment of the obligations of the party affected by Force Majeure
circumstances shall be extended for a reasonable period of time, however, such
period of time shall in no case exceed the period of time during which such
circumstances have prevented the fulfillment of the obligations.
14.2 Definition of Force Majeure.
Force Majeure are any events which: a) are caused by neither HUGHES nor
TELIGENT, b) were reasonably unforeseeable at the execution of this Agreement,
c) are uncontrollable and insurmountable by the party affected, and d) delay the
timely performance of this Agreement or render such performance impossible.
Without in any way limiting the generality of the foregoing, such events shall
include acts of God, riots, wars, industry-wide strikes or industry-wide
lock-outs involving HUGHES' employees and/or its subcontractors, suppliers and
other third parties used by HUGHES in fulfilling its obligations, or
insurmountable delays in the performance of subcontractors caused by any such
circumstances as referred to in this Article.
14.3 Actions Not Force Majeure.
Neither party shall be entitled to claim Force Majeure in the following cases:
(i) Shortage or price increase of labor, materials or utilities,
unless such shortage or price increase is the direct result of
an event of Force Majeure;
(ii)Delays, inefficiencies, late performance or similar occurrence
of sub-vendors, unless such occurrence is the direct result of
an event of Force Majeure;
(iii) Any actions or circumstances occurring after expiration of
the delivery time stipulated in the terms and conditions plus
any admissible adjustments thereto permitted under the terms
and conditions;
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(iv) Any actions or circumstances caused by the fault or negligence
of either Party or its subcontractors
(v) Competitive market conditions, including the entrance of a
competitor of TELIGENT into the marketplace.
14.4 Notice Required.
In the case of Force Majeure, the Party claiming Force Majeure shall claim such
Force Majeure only if it has notified the other Party in writing within three
business days after its commencement.
Article 15 - Jointly Developed Intellectual Property
15.1 Sole Inventions.
All inventions and other intellectual property conceived or first actually
reduced to practice solely by either Party under this Agreement, and all patents
issuing thereon, and any other intellectual property rights, including
copyrights, trade secrets, design rights, and the like, throughout the world,
arising from or covering such inventions, shall be the exclusive property of
that Party.
15.2 Joint Inventions.
(a) Each Party shall have an equal, undivided one-half interest in and to Joint
Inventions, as well as in and to patent applications and patents thereon in all
countries, without any obligation to account to the other party. An assignment
of rights in all Joint Inventions shall be executed in the names and for the
benefit of both TELIGENT and HUGHES. For the purposes of this Article, the term
"Joint Inventions" shall means inventions co-invented by one or more employees
or contractors of both parties.
(b) [redacted]
(c) The expenses for preparing, filing and securing each Joint Invention
application, and for issuance of the respective patent shall be borne by the
Party which prepares and files the application. The other Party shall furnish
the filing Party with all documents or other assistance that may be necessary
for the filing and prosecution of each application. Where such Joint Invention
application for patent is filed by either Party in a country which requires the
payment of taxes, annuities or maintenance fees on a pending application or on
an issued patent, the Party which files the application shall, prior to filing,
request the other Party to indicate whether it will agree to pay one-half of
such taxes, annuities or maintenance fees.
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If within sixty (60) days of receiving such request, the non-filing Party fails
to assume in writing the obligation to pay its proportionate share of such
taxes, annuities or maintenance fees, or if either Party subsequently fails to
continue such payments within sixty (60) days of demand, it shall after ten (10)
days further notice forthwith relinquish to the other Party, providing that said
other Party continues such payments, its share of the title to such application
and patent, subject, however, to retention of a paid-up, non-exclusive,
non-assignable license in favor of the relinquishing Party, its parent, and any
subsidiary thereof to make, use, lease and sell, apparatus and/or methods under
said application and patent.
(d) Any Joint Invention that is incorporated into HUGHES' commercial equipment
or software shall not be sold to or used by any non-Affiliate of TELIGENT until
at least [redacted] after it has been sold to TELIGENT for use in connection
with the Deliverables, unless such intellectual property enters the public
domain prior to that time.
Article 16 - Confidentiality
16.1 Survival and Incorporation of Revised Non-Disclosure Agreement.
(a) The Parties remain bound by the terms of the "Non-Disclosure Agreement" (the
"NDA") dated [redacted], which NDA is expressly incorporated herein by reference
and is specifically amended hereby to provide that (i) Confidential Information
is able to be used by the Parties for the purposes contemplated in this
Agreement, and (ii) the term of the NDA is extended to be coterminous with the
term of this Agreement, provided that the confidentiality provisions of the NDA
shall continue to survive as stated in the NDA.
(b) Each Party may, either orally, in written form, or otherwise, disclose to
the other Party, or the other Party may otherwise obtain, the disclosing Party's
Confidential Information in connection with this Agreement. The terms and
conditions of this Agreement, including all Attachments now in existence or as
may be created, and all Amendments as may be established, are Confidential
Information, except that TELIGENT has the right to disclose the terms and
conditions of this Agreement (i) to its Affiliates and Strategic Partners if
such Affiliates agree to be bound by the terms of the NDA, (ii) as otherwise may
be required by securities or other laws, or (iii) upon the prior written consent
of HUGHES.
(c) HUGHES shall ensure, to TELIGENT's reasonable satisfaction, that any
subcontractor used by HUGHES in connection with the provision of service to
TELIGENT is bound to the Confidentiality provisions of this Agreement.
16.2 TELIGENT Materials Remain Property of TELIGENT.
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All plans, drawings, designs and specifications submitted to HUGHES by TELIGENT
shall remain the property of TELIGENT and may not be copied or disclosed to
third parties without TELIGENT's written consent, except as otherwise provided
in the NDA. These materials shall be returned to TELIGENT immediately upon its
request.
16.3 HUGHES Materials Remain Property of HUGHES.
Except as to the Deliverables defined herein, all plans, drawings, designs and
specifications submitted to TELIGENT by HUGHES shall remain the property of
HUGHES and may not be copied or disclosed to third parties without HUGHES'
written consent, except as otherwise provided in the NDA. These materials shall
be returned to HUGHES immediately upon its request.
Article 17 - Termination for Cause
17.1 Termination by TELIGENT.
TELIGENT shall have the option to cancel this Agreement without liability,
including, without limitation, any liability for any Shortfall Payment or
"True-Up Payment" in the event that TELIGENT terminates this Agreement pursuant
to any of (a) through (d) below. In the event of any such termination, HUGHES'
obligations to TELIGENT under the Maintenance Agreement and the NDA shall
continue to survive as set forth in those documents. TELIGENT also shall be
entitled to exercise any and all rights it may have at law or in equity.
(a) Subject to a grace period pursuant to Sections 1.2 and 12.1(b), if HUGHES
fails to deliver Generally Available and Acceptable First Market Deliverables by
[redacted], or if HUGHES abandons this Agreement, TELIGENT shall have the option
to cancel this Agreement on thirty (30) days' written notice. In the event of
such cancellation, HUGHES shall pay to TELIGENT the amounts stated in such
Sections. TELIGENT also shall be entitled to exercise any and all rights it may
have at law or in equity.
(b) If HUGHES [redacted], TELIGENT shall have the option to cancel this
Agreement on thirty (30) days' written notice. In the event of such
cancellation, TELIGENT shall pay for Deliverables it has Accepted and shall pay
for other Deliverables it has received and elects to retain; provided, however,
TELIGENT may elect to return any Deliverables that have not been Accepted for a
full refund, such refund not subject to reduction for restocking, return or any
other such fee(s) by HUGHES.
(c) If HUGHES becomes insolvent or goes into liquidation, whether compulsory or
voluntary, TELIGENT shall be entitled to cancel this Agreement or any part
thereof. In the event of such cancellation, TELIGENT shall pay for Deliverables
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it has Accepted and shall pay for other Deliverables it has received and elects
to retain; provided, however, TELIGENT may elect to return any Deliverables for
a full refund, such refund not subject to reduction for restocking, return or
any other such fee(s) by HUGHES.
(d) In case HUGHES' claim of Force Majeure should endure for a period
endangering (in TELIGENT's reasonable discretion) the proper execution of
TELIGENT's overall network deployment or which is otherwise unacceptable for
TELIGENT, TELIGENT may cancel this Agreement or any part thereof.
17.2 Termination by HUGHES.
If TELIGENT materially breaches this Agreement and fails to cure such breach
within 30 days after notice thereof has been provided by HUGHES, HUGHES shall
have the option to cancel this Agreement. In the event of such cancellation,
TELIGENT shall pay for such Deliverables as it has Accepted. In the event of
such cancellation, HUGHES' obligations to TELIGENT under the Maintenance
Agreement and the NDA shall continue to survive as set forth in those documents.
Article 18 - Termination for Convenience
18.1 Termination By Notice.
TELIGENT may terminate this Agreement at any time by [redacted] written notice.
In the event of any such termination, HUGHES' obligations to Teligent under the
Maintenance Agreement and the NDA shall continue to survive as set forth in
those documents. TELIGENT also shall be entitled to exercise any and all rights
it may have at law or in equity.
18.2 Settlement In Event of Termination for Convenience.
If the Parties do not agree otherwise, TELIGENT will pay to HUGHES as complete
settlement the following amounts, offset by payments, whole or partial, already
made by TELIGENT:
(i) For Deliverables delivered and Accepted up to the date of
termination: the purchase price of such Deliverables, provided
that HUGHES transfers title to and makes delivery of such
Deliverables on a timely basis as set forth in the Attachments
hereto.
(ii)For Deliverables not delivered and Accepted up to the date of
termination: the actual costs incurred by HUGHES prior to the
date of termination which are properly allocable or
apportioned under recognized commercial accounting practices
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to the terminated portion of this Agreement. HUGHES shall
minimize and mitigate the above mentioned costs.
(iii) The amount(s) due, if any, under Article 3.4.
18.3 Adjustment For Deliverables Not Delivered.
With the consent of TELIGENT, HUGHES may retain at an agreed price or sell at a
price approved by TELIGENT any Deliverables not delivered and will credit or pay
the amounts so agreed or received as TELIGENT directs.
Article 19 - Miscellaneous
19.1 Waiver.
No waiver by either party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and executed by the party so waiving.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants, or
agreements contained herein, and in any documents delivered or to be delivered
pursuant to this Agreement. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
19.2 Severability.
If any provision of this Agreement shall be declared by any court of competent
jurisdiction to be illegal, void or unenforceable, all other provisions of this
Agreement shall not be affected and remain in full force and effect.
19.3 Headings and Captions.
The headings and captions in this Agreement are for the convenience of the
Parties and are not part of this Agreement.
19.4 Counterparts.
This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall constitute one and the
same instrument.
19.5 Applicable Law.
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The laws of the State of Delaware shall apply, without regard to the conflict of
law provisions of the same.
19.6 Assignment.
The terms and conditions of the Agreement shall inure to the benefit of and be
binding upon the Parties hereto and their respective successors and permitted
assigns. TELIGENT may assign its rights and/or obligations under this Agreement
to a parent company or any subsidiary or Affiliate ultimately owned by TELIGENT
or an Affiliate thereof or to any successor entity into which TELIGENT shall
have been merged or consolidated or to which TELIGENT shall have sold or
transferred all or substantially all of its assets.
HUGHES may assign its rights and/or obligations under this Agreement to its
parent company or any subsidiary or affiliate, provided that such assignee
provides evidence of creditworthiness and ability to perform such obligations to
the reasonable satisfaction of TELIGENT. Section 6.10 shall remain in effect
until two years after the expiration of the original five-year term of this
Agreement (subject to prior termination as provided in Section 6.10) regardless
of any assignment. This Agreement shall not be otherwise assigned by either
Party without the prior written consent of the other Party, such consent not
unreasonably withheld or delayed.
19.7 Notices.
(a) All communications provided for hereunder shall be in writing and shall be
deemed to be given when delivered in person or by private courier with receipt,
when telefaxed and received, or three (3) days after being deposited in the
United States mail, first-class, registered or certified, return receipt
requested, with postage paid and, addressed as follows:
(i) HUGHES shall send notices to TELIGENT at the following addresses:
Vice President Engineering
Teligent, Inc.
8065 Leesburg Pike, Third Floor
Vienna, VA 22182
703-762-5100 main
703-762-5115 direct
703-762-5349 fax
With a copy to:
General Counsel/Senior Vice President
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Teligent, Inc.
8065 Leesburg Pike
Suite 400
Vienna, VA 22182
703-762-5100 main
703-762-5101 fax
(ii)TELIGENT shall send notices to HUGHES at the following addresses:
General Manager, Wireless Networks Division
Hughes Network Systems
11717 Exploration Lane
Germantown, MD 20876
301-428-5617 direct
301-428-2818 fax
With a copy to:
Director, Legal Affairs
Hughes Network Systems
11717 Exploration Lane
Germantown, MD 20876
301-428-7058 direct
301-428-2818 fax
(b) Notices delivered via facsimile shall be sent during the receiving Party's
normal business hours with a confirming call to the stated individual, his/her
named assistant, and/or his/her voice mail box.
(c) Either Party may change the persons and corresponding addresses for giving
notice from time to time by written instructions to the other Party of such
change of address.
19.8 Public Disclosure.
No press release or public disclosure shall be issued or made by HUGHES
indicating the existence of this Agreement, or of the Terms Sheet leading up to
the establishment of this Agreement, or any of the respective terms thereof, or
of the negotiations attending the creation of either of these documents, without
TELIGENT's prior written approval.
19.9 Survival of Terms.
Where the context of any provision of this Agreement indicates that it shall
survive the term of this Agreement, then it shall survive.
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<PAGE>
19.10 Entire Agreement.
This Agreement and the Attachments hereto collectively set forth the entire
understanding of the parties hereto with respect to the transactions
contemplated hereunder and thereunder and supersede all prior arrangements or
understandings with respect thereto, written or oral, other than documents
referred to herein or therein. Except as specifically set forth herein or in any
collateral agreement to be executed by the parties as set forth herein, nothing
in the Agreement or any such collateral agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto and thereto,
and their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities.
Notwithstanding any other provision of this Agreement or of any of the
collateral agreements to be executed by the parties hereto as contemplated
herein, the rights, obligations, liabilities, covenants, agreements, conditions,
representations, warranties, terms and conditions contained in this Agreement
shall be in addition to and shall in no way be limited, restricted or otherwise
affected by any provision, term or condition of any such collateral agreement.
IN WITNESS WHEREOF, each of the Parties hereto have caused this Agreement to be
duly executed by their authorized representatives and to be effective as of the
date first above written.
TELIGENT, INC. HUGHES NETWORK SYSTEMS
A HUGHES ELECTRONICS COMPANY
By: /s/ Alex Mandl By: /s/ Pradeep Kaul
---------- ------------
Name: Alex Mandl Name: Pradeep Kaul
Title: Chief Executive Officer Title: E.V.P. Wireless Network Division
Address: 8065 Leesburg Pike Address: 11717 Exploration Lane
Vienna, VA 22182 Germantown, MD 20876
40
<PAGE>
And for the limited purposes of the covenants contained in Article 6.10:
HUGHES ELECTRONICS CORPORATION
By: /s/ Pradman Kaul
------------
Name: Pradman Kaul
Title: Vice President
Address: 11717 Exploration Lane
Germantown, MD 20876
41
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Exhibit A - Definitions
1. Acceptance (and variants such as Accept, Accepted and Acceptable) shall mean,
as to the applicable Deliverables, that the Parties shall have successfully
completed the Acceptance Test Procedures as provided for in Article 9.4 hereof,
which such Acceptance Test Procedures shall otherwise be mutually agreed upon by
the Parties and shall thereupon become Attachment 5 to this Agreement.
2. Actual Volume. TELIGENT's actual purchases of Deliverables, including
Services, any unused credits due to TELIGENT, and any adjustments pursuant to
Article 3.5.
3. Affiliates of TELIGENT are those entities which are controlled by TELIGENT,
or which are under "common control" with TELIGENT, as further defined by
regulations promulgated by the U.S. Securities and Exchange Commission.
4. Commissioning (and variants such as Commission) shall mean those procedures
after installation which are necessary to ensure proper operation of the
Deliverables and the conformance of the Deliverables with the Specifications.
When applicable, Commissioning is the step prior to the placement of the
Deliverables under a Soak Period.
5. Covered Purchases. Purchases of hardware and software Deliverables, excluding
Services, that are subject to the Unit Price Adjustment Schedule shown in
Article 3.3.
6. Agreement. This contract, including all exhibits, schedules and other
material incorporated therein by reference between the Parties containing all of
the terms and conditions relating to the Deliverables.
7. Deliverables. The 24 GHz equipment, software, services, drawings,
documents, manuals and training to be supplied by HUGHES in accordance with the
Specifications are collectively referred to as the "Deliverables."
8. Developmental Funding. A payment of [redacted] as described in Article 2
hereof.
9. Extension Deliverables. Those Deliverables ordered after the First Market
Deliverables.
10. FCC. Federal Communications Commission.
11. First Market Deliverables. The first set of Deliverables that attain
Acceptance, and shall consist of at least [redacted].
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12. Generally Available. Features are Generally Available if TELIGENT has
Accepted them. Equipment and software are Generally Available if they can be
produced in quantities sufficient to meet TELIGENT's forecasted demand as set
forth pursuant to Article 4.2 hereof.
13. HUGHES and HNS. Hughes Network Systems, a Hughes Electronics Company, its
successors and approved assigns.
14. Independent Events shall mean: Faults not rooted to any common problem,
faults not linked to each other, or faults not connected by "cascading" events.
15. Jointly Developed Intellectual Property. Intellectual property is Jointly
Developed if, when related to Deliverables, Teligent contributes to and
participates in (i) the development of concept and (ii) the creation of the
protectable elements of the intellectual property necessary to effectuate the
execution of the concept. Nothing in this definition shall be construed as
limiting or enhancing TELIGENT's, its employees', or HUGHES' or its employees',
rights of intellectual ownership or inventorship under applicable federal law.
16. Major Items are any service-affecting problems that impair or degrade
service, service levels, options, features, capabilities, or performance, etc.,
and may include documentation errors that impair service to customers.
17. Major Outage shall mean a loss in excess of [redacted] of transmission or
processing capacity in a TN, or any service-affecting failure in a TN affecting
[redacted] or more of, but not less than [redacted], TELIGENT customers served
by such TN (according to the system logs).
18. Market shall mean any one of TELIGENT's FCC-awarded SMSAs.
19. Party and Parties. HUGHES and TELIGENT, individually or collectively, as the
context shall warrant.
20. Planned Outage shall mean a service outage requested by HUGHES for the
purpose of maintenance, diagnostic testing, upgrade or repair of Deliverables,
scheduled at a mutually-agreed time, of less than ten minutes duration.
21. POTS shall mean "Plain Old Telephone Service."
22. Product Plan. The plan created by HUGHES detailing the schedule of
Deliverables as set forth in Attachment 1 hereto.
23. Prime Rate shall be as specified in the Wall Street Journal.
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24. Purchase Commitment TELIGENT's projected purchase volume over the Term, as
stated in Article 3.3. 25. Purchase Order. A document issued by TELIGENT to
HUGHES indicating TELIGENT's desire to have specific types and quantities of
goods or services made available by HUGHES under this Agreement supplied to
TELIGENT at a particular time and place.
26. Soak Period shall mean that period after the Commissioning of First Market
or Extension Deliverables, as specified in Article 9, which shall pass without
Major Outage, before the applicable Acceptance payment shall become due.
27. Specifications shall include, without limitation, those specifications set
forth in Attachments 1 and 2 to this Agreement, and any other specifications
that may otherwise be agreed to by the Parties.
28. Strategic Partner. Any person or entity to which one or more of the
following conditions apply: (a) TELIGENT or any Affiliate has at least a
thirty-three percent (33%) equity ownership in such entity or such an entity has
at least a ten percent (10%) ownership interest in TELIGENT, or (b) such entity
is under the common control with TELIGENT or any Affiliate, or (c) there exists
between TELIGENT or any TELIGENT Affiliate and such entity a material
infrastructure or revenue sharing arrangement, or (d) with respect to a licensee
joint venture or consortium operating outside of the United States, in which
TELIGENT or a direct or indirect TELIGENT Affiliate owns at least a ten percent
(10%) equity interest.
29. TCO. TELIGENT Central Office, which contains a digital telecommunications
switch and related network management equipment that interfaces with TELIGENT
Nodes and connecting networks and facilities.
30. TELIGENT. Teligent, Inc., its successors and assigns, and its Affiliates and
Strategic Partners, as the context shall warrant.
31. TELIGENT Access Site. ("TAS") Radio equipment and related equipment located
at the site of the TELIGENT's customer (roof top access site) which interfaces
with a Teligent Node.
32. TELIGENT Node ("TN"). Radio equipment and related equipment that interfaces
with TELIGENT Access Sites and a TCO. Also referred to as a Hub.
33. Unit Prices. The base prices shown in Attachment 1, which shall, for
purposes of establishing the purchase prices, be adjusted in accordance
44
<PAGE>
with the schedule shown in Article 3.3, or as may be otherwise subject to
discounts with the provisions herein.
45
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Teligent - Hughes Equipment Purchase Agreement - Attachment 1
Attachment 1 - Product Plan and Prices
RELEASE PLANS FOR PRODUCT:
TELIGENT NODES (HUBS) AND TELIGENT ACCESS SITES
AND RELATED EQUIPMENT AND SOFTWARE
Teligent system functionality will be made available in three Releases. To
achieve the General Availability dates indicated below, HNS depends on Teligent
making resources, market and spectrum available for various stages of testing
such as, preliminary field testing, alpha testing, beta testing and acceptance
testing. The contents and General Availability date for Releases are as follows:
RELEASE - 1.0 (General Availability Date: [redacted])
o [redacted]
[redacted] are transported from the user port. The [redacted]
-----------------------------------------------------------
is output at the hub in the [redacted] interface.
------------------------------------------------
Specifications:
Framing: [redacted]
Line coding: [redacted]
[redacted] buffering
Line impedance: [redacted]
Cable type: carried on a [redacted]
o [redacted]
(uses up all of a [redacted] capacity over the RF link)
Both payload-only and [redacted] will be available.
The [redacted] is output at the hub in the [redacted]
interface.
Specifications:
Framing: [redacted]
Line coding: [redacted]
[redacted] buffering
<PAGE>
Teligent - Hughes Equipment Purchase Agreement - Attachment 1
Line impedance: [redacted]
Cable type: [redacted]
o [redacted] multiplexer at the hub [redacted]
Total bit rate is [redacted] at hub interface.
In [redacted] Mode: [redacted] can be supported.
[redacted] per radio and up to [redacted] can be carried or
packed into the [redacted] interface.
Specifications
Line impedance: [redacted]
Cable type: [redacted]
o [redacted] Hub interface.
Optical interface
[redacted] stream (sustained up to [redacted] per hub IDU due
to air interface limitation)
o [redacted] muxing function (with [redacted])
This function is supported with off-the-shelf HNS or third
party equipment. Various levels of redundancy can be
configured.
o [redacted] hub antenna integrated with [redacted].
o [redacted] interface (at the remote)
[redacted] can be supported.
o [redacted] Ports Universal Interface Card:
The universal interface card will provide [redacted] as well
as [redacted] capability. Each [redacted] port can operate in
a structured or unstructured mode. Each [redacted] port can be
configured to operate in [redacted] mode. In structured mode,
multiple [redacted] channels within a [redacted] can operate
in [redacted] mode. All [redacted] shall be contiguous in this
case. Each configured [redacted] circuit should be
individually configurable for operation in [redacted] mode.
o [redacted] modulation
<PAGE>
Teligent - Hughes Equipment Purchase Agreement - Attachment 1
o Redundancy: [redacted]
o Network Management:
o Capability to support all network management traffic at the
[redacted] via in-band communication. All NMS traffic shall
flow in-band between [redacted].
o Alarm reporting
Alarm is reported by a hub or a remote to Element Management
System (EMS). EMS provides logging and viewing of the alarm
for an operator.
o Configuration Management:
o Configuration of the Equipment: Capability to configure each
Remote and Hub configurations in a database using appropriate
limits checks.
o Component State management: Ability to pre-provision a
component in the system and to put an operation component
In-Service or Out-Of-Service.
o Remote Provisioning: Ability to provision equipment and
services from a central location. A remote receives pertinent
information over-the-air from the hub.
o Installation Mode: Auto startup, ranging and other
pre-service processing for installation of a remote.
o On-line/off-line configuration database: Permits the use of
multiple off-line databases with one on-line database for
pre-provisioning or testing
o Down line load and Software Distribution: Permits multiple
releases of Software versions, configuration of multiple
domains
o Fault Management:
o Summary status reporting: Ability to detect component
failures via a heart-bit mechanism. Failures are
automatically detected and reported.
o Loop-back tests: Permits bi-directional loop-back of any
interface card for testing.
o Connection monitoring: Status monitoring for a radio path
for a given circuit
o Connection tracing: Identifies the both sides of the link or
path
o Performance Management:
Statistics are collected for usage of user interfaces and
radio links. Periodically statistics are reported to EMS.
(over RF link for remotes)
<PAGE>
Teligent - Hughes Equipment Purchase Agreement - Attachment 1
o Security Management:
Each operator is assigned a user name and a password.
Operator profiles can be created and stored in EMS.
o Report generation
Configuration reports by hub, sector and remote
o Safety and FCC certifications/authorizations. These include
applicable UL and FCC certifications/authorizations.
o MTBF: [redacted]. For all other HNS Deliverables, HNS will
provide MBTF figures such that individual components and
complete systems will meet or exceed the parameters in
this Agreement.
RELEASE - 2.0 (General Availability Date: [redacted])
o Release-1 functionality
o Full [redacted] functionality
o [redacted] sector antennas to be available
[redacted]
[redacted] modulation supports the bandwidth necessary to
carry up to [redacted] over the air in [redacted] mode.
o [redacted] multiplexer at the hub [redacted]
Total bit rate is [redacted] at hub interface.
In [redacted] Mode: [redacted] are occupied.
All traffic multiplexed into a [redacted] can be handled. Any
number of [redacted] is supported, from [redacted] by
configuration.
Specifications
Line impedance: [redacted]
Cable type: [redacted]
o [redacted] interface (at the remote)
QAM Mode: [redacted] are occupied.
<PAGE>
Teligent - Hughes Equipment Purchase Agreement - Attachment 1
o [redacted] remote interface.
o [redacted]
o [redacted] Function at the remote.
Up to [redacted] (from [redacted]) are supported at a single
remote site. The combined [redacted] and [redacted] are
multiplexed onto one [redacted]. A Fiber Extender Module will
be used at the [redacted] and at the [redacted] for
connection. The [redacted] shall support both [redacted] over
one [redacted]. [redacted] shall offer a total of [redacted].
o Network Management:
o Operator Paging
An operator can be paged based on a pre-defined failure mode.
Paging profiles can be stored in a database.
o Hierarchical map
Hub and remotes can be viewed using the network hierarchy.
This allows an operator to view the network differently
compared to using screens.
o Local management
A PC can be connected to a hub or a remote [redacted] for
monitoring purposes.
o SNMP interface to EMS from the NOC
Potentially this interface can be used for Billing,
Provisioning and Alarm interfaces. This requires discussions
with Teligent to define the interfaces.
RELEASE - 3 (General Availability Date: [redacted])
Full functionality for Release 3 is not finalized at present. HNS will work
closely with Teligent to prioritize and address Teligent's requirements. The
current plan for availability of this release is end of [redacted]. The features
required in this release shall be finalized by [redacted]. At present, only one
feature is identified for this release.
o Release-2 functionality
o [redacted]
o [redacted]
<PAGE>
Teligent - Hughes Equipment Purchase Agreement - Attachment 1
A [redacted] functionality is to be made available
in Release 3. This [redacted] algorithm shall be based on
[redacted]. It will be on a per radio basis.
o [redacted]
A [redacted] capability for customer connections utilizing
[redacted] connectivity. Bandwidth over the air shall be
[redacted]. This applies to all [redacted] interface types,
including: [redacted].
<PAGE>
Teligent - Hughes Equipment Purchase Agreement - Attachment 1
Prices
Section 1: UNIT PRICES
Listed below are 1) the Deliverables which may be purchased by Teligent from
time to time as specified in the Definitive Agreement, 2) the configuration, and
3) the per unit base pricing.
Any changes will only be upon mutual agreement, in writing, and the Parties will
so amend this Attachment to conform to the agreed upon changes.
PRICES FOR SUBSCRIBER UNITS (TASs):
Subscriber Unit consisting of Antenna, [redacted] [redacted]
Note: Requires an [redacted] for service provision. If an [redacted] is to be
added then it requires a [redacted], which will occupy an SSI slot, to connect
to an [redacted]. The [redacted] will have either 110 VAC or -48 VDC power
supply.
EXPANSION MULTIPLEXER FOR COMMERCIAL SUBSCRIBER UNITS:
Expansion Unit consisting of Common Equipment and Power
Supply [redacted]
Note: Requires a pair of [redacted] one at the main [redacted] and second one
at the [redacted]. The [redacted] will have [redacted] slots, [redacted] for
[redacted] and other [redacted] for SSIs. The price for [redacted] interface
card is given in sub section E.
PRICES FOR HUB RADIOS:
Hub Radio consisting of Antenna, [redacted] and [redacted] for network
management connection[redacted]
Note: Requires either a [redacted] or an [redacted] for [redacted] mode or
[redacted] for [redacted] mode. To support dual mode to connect to the
transmission equipment at the Hub [redacted] both [redacted] and [redacted] or
[redacted] and [redacted] cards will be required.
PRICE FOR HUB COMMON EQUIPMENT
Rack Assembly [redacted] [redacted]
Hub LAN Router and 56k modem [redacted]
This router will connect all Hub [redacted] via Thinnet or Ethernet and
have POTS interface for dial up access. It will also do PPP to/from IP
conversion. This router is required to provide dial-up access to [redacted] and
to provide inter [redacted] communications for redundancy switching.
PRICES FOR INTERFACE CARDS
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Teligent - Hughes Equipment Purchase Agreement - Attachment 1
[redacted] card is [redacted] compliant [redacted] (see Item 14,
Attachment 2).
[redacted] [redacted]
[redacted] [redacted]
[redacted] [redacted]
Octal Universal card [redacted] capable, [redacted] interface)
(for delivery period of year 1) [redacted]
(for delivery period of year 2 and beyond) [redacted]
[redacted] [redacted]
PRICES FOR ELEMENT MANAGEMENT SYSTEM
OMC can be deployed to provide remote management either on a network
basis or clusters of Hubs. The hardware/software platform priced below supports
1500 Network Elements.
Hardware Platform [redacted]
Software [redacted]
Printers (2) [redacted]
X-terminals (operator consoles) [redacted]
Terminal Server [redacted]
NETWORK MANAGEMENT SOFTWARE:
Element Management System (EMS) one time license Fee [redacted] per
for both Subscriber and Hub radio. [redacted]
PRICES FOR [redacted] REDUNDANCY
Required for only [redacted] mode for the interim period (to be used with the
[redacted] at the [redacted]). This external switch provides up to 1:4 (four
primary + 1 back up) redundancy across multiple Hub Terminals in a single
sector. It is priced in (i) below. Price for a TN with four sectors sized for up
to 1:4 redundancy each is as given in (ii) below.
Redundancy switch for single sector, up to 1:4 redundancy [redacted]
Redundancy switch for four sectors (up to 1:4 per sector) [redacted]
<PAGE>
Teligent - Hughes Equipment Purchase Agreement - Attachment 1
PRICES FOR POTS:
An external access device will be used to provide POTS functionality.
This device will interface with the [redacted] via [redacted] ports. 24 POTS
lines will be supported per [redacted] interface in an uncompressed format. UPS
or battery back up for POTS access node is not included in these prices.
12 POTS line access node, 1 [redacted] interface to [redacted] [redacted]
24 POTS line access node, 1 [redacted] interface to [redacted] [redacted]
36 POTS line access node, 2 [redacted] interfaces to [redacted] [redacted]
48 POTS line access node, 2 [redacted] interfaces to [redacted] [redacted]
2:1 local concentration at the POTS unit can be provided using TR-08. This
would save 1 T1 interface for other services.
36 POTS line access node, 1 [redacted] interfaces to [redacted] [redacted]
48 POTS line access node, 1 [redacted] interfaces to [redacted] [redacted]
PRICES FOR BATTERY BACKUP:
[redacted] site.
(These battery back up system is sized for a nominal case [redacted] which has 4
redundant sectors, total of 8 [redacted] consuming a total of 1200 watts +
additional 300 watts for mux and LAN router. The rectifiers are capable of fully
recharging the depleted batteries in less than 48 hours. The batteries are sized
for [redacted]. The rack housing the batteries and rectifiers is of 23" x 23" x
84"H and assuming 1" aisle spacing both in front and back will have ~80 lb/sqft
load)
Price for the DC power supply (1500 watts, -48 VDC) and battery backup
system, including rack and battery tray. [redacted]
[redacted] site.
Battery back up for [redacted] [redacted]
(190 watts, -48 VDC, [redacted], 48 hour recharge time, stand alone
unit)
This wattage will support the POTS access unit if it is co-located otherwise it
may need to be backed up separately.
PRICES FOR MULTIPLEXING AT THE [redacted]
Hughes Network Systems is in the process of doing a high level design
for a low cost solution to provide multiplexing and redundancy at the
<PAGE>
Teligent - Hughes Equipment Purchase Agreement - Attachment 1
[redacted] for both [redacted] and [redacted] modes. For the nominal
size [redacted] (4 sectors, 1:1 redundant ) HNS guarantees the
following Not to Exceed pricing for the multiplexing function:
-------------
1. [redacted], 4 Sector, 1:1 redundancy, 1 [redacted] Output: [redacted]
2. [redacted], 4 Sector, 1:1 redundancy, 1 [redacted] Output: [redacted]
(Note: HNS, at its discretion, may apportion the costs to other parts
within the [redacted] but the total price of this nominal configuration
will not exceed the total price based on the current pricing structure)
This solution will be available starting [redacted]. If the [redacted]
solution is not available at [redacted] between [redacted] and
[redacted], TELIGENT shall be entitled to dollar for dollar equipment
credits, to be used for prospective purchases, for all [redacted]
multiplexors purchased in that 90-day period in the amount of
[redacted].
In the interim period HNS offers the following options for the multiplexing:
[redacted] Multiplexor:
The [redacted] will be used to multiplex [redacted] from the Hub [redacted] and
connect to the network via one or more [redacted] ports. In the configuration
quoted below, the [redacted] will meet the Teligent requirement of not having a
single point of failure in the traffic path both on the input and output ports
(except as noted on Feature 4 on Attachment 2).
Pricing for the [redacted], per the configuration below:
[redacted]
This configuration will be able to support a 4-sector Hub with each sector
having redundant radios [redacted], and provide a concentration of 4:1, with 4
[redacted] inputs mapped to one (1) [redacted] output with 1:1 redundancy
supported on all modules.
o 12-slot [redacted] shelf with -48V dc supply, fan unit, and
maintenance interface card with a 1:1 backup redundant power
supply and maintenance interface card.
o Four (4) [redacted] interface modules to interface to the Hub
[redacted], configured with a 1:1 redundancy
o One (1) [redacted] output port with a 1:1 redundancy.
[redacted] Multiplexor:
Two options are offered. HUGHES reserves the right to request and obtain mutual
agreement for the selection of a third option not specified below, so long as
such option offers substantially similar functionality and no increase in price
to TELIGENT. If the Parties do select an option other than one of the options
listed below, HUGHES will include all support costs of network management in the
selected option with no increase in price. Only one option will be selected.
Option 1: HNS [redacted]
<PAGE>
Teligent - Hughes Equipment Purchase Agreement - Attachment 1
The first option using [redacted] switch meets Teligent requirement of not
introducing a single point of failure in the traffic path.
[redacted] is a high availability carrier class switch. In addition to
providing the required concentration across sectors and the required redundancy
function this switch can be used by Teligent to build a distributed backbone
connecting a number of [redacted] within a Metropolitan Area or across an entire
market ( Wide Area Network ). This backbone can also be a very cost effective
outer tier of a two tier backbone architecture.
This ATM switch will be used to multiplex [redacted] from the Hub [redacted] and
connect to the network via one or more [redacted] or [redacted] ports. It is
also used to provide redundancy for the Hub [redacted]. This mux offers a fully
redundant package that has no single point of failure; it offers multi-level of
protection both for common equipment including switch fabric and for I/O paths.
Additionally, it supports both 1:1 and 1:n redundancy for the HTs. Some example
cases and pricing for them are given below. These examples are chosen to
represent Teligent nominal scenarios. In the [redacted] common equipment there
is 1:1 redundancy for power box (supply and feed), 1:1 redundancy for Switch
Control Module, 1:n redundancy for the switch fabric as well for the fans in the
fan tray. I/O details are as given below:
(i) [redacted] sectors, 1:1 redundant solution [redacted]
(total[redact
ed] ports
supporting
four 1:1
feeds to
[redacted]
and total of
[redacted]
ports
supporting two
1:1 feeds
from Network)
(ii) [redacted] sectors, 1:1 redundant solution [redacted]
(total [redacted] ports supporting eight 1:1 feeds to
[redacted] and total of [redacted] ports supporting two
1:1 feeds from Network)
(iii) [redacted] sectors, 2:1 redundant solution [redacted]
(total [redacted] ports supporting four 2:1 feeds to
[redacted] and total of [redacted] ports supporting two
1:1 feeds from Network)
(iv) [redacted] sectors, 3:1 redundant solution [redacted]
(total [redacted] ports supporting four 3:1 feeds to
[redacted] and total of [redacted] ports supporting two
1:1 feeds from Network.
This solution requires [redacted] option, addition of 2nd common
equipment)
<PAGE>
Teligent - Hughes Equipment Purchase Agreement - Attachment 1
Option 2: [redacted] Switch
The second option using [redacted] switch does not meet Teligent requirement of
not introducing a single point of failure in the traffic path as the switch
fabric used in it is non-redundant. An [redacted] multiplexor will be used to
multiplex [redacted] from the Hub [redacted] and connect to the network via one
or more [redacted] or [redacted] ports. This mux will support four sectors 1:1,
four sectors 1:2, four sectors 1:3 and eight sectors 1:1 redundancy schemes. It
has total [redacted] input ports (thus providing 1:1 redundancy for [redacted]
connections) and total of [redacted] (or [redacted]) output ports which can be
configured for 1:1 or up to 1:3 redundancy. This mux has a single point of
failure in the switch fabric and thus does not meet Teligent's requirement of no
single point of failure in the traffic path at the [redacted].
(i) [redacted] sectors, 1:1 redundant solution [redacted]
(total [redacted] ports supporting four or eight 1:1
feeds to [redacted] and total of [redacted] ports
supporting two 1:1 feeds from Network)
(ii) [redacted] sectors, 2:1 redundant solution [redacted]
(total [redacted] ports supporting four 2:1 feeds to
[redacted] and total of [redacted] ports supporting two
1:1 feeds from Network)
(iii) [redacted] sectors, 3:1 redundant solution [redacted]
(total [redacted] ports supporting four 3:1 feeds to
[redacted] and total of [redacted] ports supporting two
1:1 feeds from Network.
<PAGE>
Teligent - Hughes Equipment Purchase Agreement - Attachment 1
SECTION 2.0
NOTES TO PRICING
The following items are not included in the Pricing.
A0 SUBSCRIBER
(i) *IFL cable to connect [redacted]
(ii) Option for DC Primary Power
(iii)*Custom Subscriber Antenna Mounting Kit, if required (standard
pole mount is included)
(iv) *Custom Installation Tools, if required (standard tools included)
(v) Local Craft Terminal (vi) Cables for subscriber connection (vii)
Custom Antenna mounting kit, if required
B0 [redacted]
(i) *Cable(s) required to interconnect [redacted]
(ii) UPS or Battery systems
C. HUB
(i) *IFL cables to connect [redacted] and [redacted]
(ii) Miscellaneous RF and other Test Equipment
(iii) Site Monitoring (A.C., entry, fire, etc.)
(iv) *Interconnect cables
(v) Any adapters or converters required to interface with
transmission or backhaul equipment
(vi) Timing reference source (assumption: the transport network
equipment will provide it)
* HNS can quote prices and supply once standard configurations are finalized.
<PAGE>
Teligent - Hughes Equipment Purchase Agreement - Attachment 2
Attachment 2 - Critical Product Requirements Development Schedule
[redacted]
<PAGE>
Teligent - Hughes Equipment Purchase Agreement -Attachment 3
Attachment 3 - Maintenance Agreement
SECTION 1.0
SCOPE AND DEFINITIONS
34. SCOPE
This Exhibit defines work to be performed by HNS to provide System Support
Services to TELIGENT and TELIGENT's operational and maintenance designees
(collectively, hereinafter referred to as "TELIGENT"). This Agreement
supplements the one between the Parties for Teligent's purchase of Hughes
equipment ("Definitive Agreement"), dated December ___, 1998. The terms of the
Definitive Agreement shall control in the event of a conflict between this
agreement and the Definitive Agreement
35. DEFINITIONS
36. System Support Services
System Support Services are those services performed by HNS during the Warranty
Period and Extended Warranty Period(s), as applicable, for each System and
System component. The System Support Services described herein shall be
performed in an identical fashion under both warranty and extended warranty
(except as otherwise described in Section 3.4.3 (Shipping) below). They include
the following categories of service which are further described herein: (i)
Factory Repair and Return services, (ii) Technical Assistance Center (TAC)
Support Services, (iii) Software Maintenance and Support, (iv) On-Site Support
and (v) Emergency FRU Replacement.
37. Problem
A Problem is any failure or fault of the System or any part thereof to perform
according to the Specifications, Documentation and any other agreed upon
specifications or requirements. Problems will be characterized as Critical
Problems, Major Problems or Minor Problems as defined below. The classification
of a given Problem may change as corrective actions partially restore System
functionality.
38. Critical Problem
A Critical Problem is where the Problem(s) causes a System (or any part thereof)
failure or fault (partial failure) resulting in either (i) loss of service or
degraded service on a repeated or continuous basis or (ii) an impaired ability
to provision, manage or maintain services on a real-time basis.
39. Major Problem
<PAGE>
Teligent - Hughes Equipment Purchase Agreement -Attachment 3
A Major Problem is one in which such Problem(s) causes a System (or part
thereof) failure or fault (partial failure) which results in loss of service
level functionality resulting in either (i) degraded service on an intermittent
basis or (ii) an impaired ability to provision, manage and maintain services on
a real-time basis.
40. Minor Problem
A Minor Problem is where the Problem(s) causes a System (or part thereof)
failure or fault (partial failure) that does not affect service level
functionality but does cause a minor operator inconvenience.
41. FRU
Field Replaceable Units (FRUs) include those of components, modules, or
subassemblies of equipment mutually agreed to by the parties as field
replaceable.
42. Response
First callback to TELIGENT from an HNS technical support engineer after
TELIGENT's initial call to Technical Assistance Center (TAC).
43. Response Time
Response Time is the elapsed time between TELIGENT's initial call reporting a
Problem to the TAC and the completion of the Response.
44. Other Definitions
Other capitalized terms have the meaning given them in the Definitive Agreement.
References to "System," "Equipment," or "equipment" herein shall mean the
Deliverables provided under the Definitive Agreement.
SECTION 2.0
TECHNICAL ASSISTANCE CENTER (TAC)
45. TAC AVAILABILITY
46. HNS will provide Technical Assistance Center support to TELIGENT
24 hours a day, 7days a week, 365 days a year. The TAC will be the
interface between TELIGENT and HNS for System Support Services.
The System Support Services that will be performed by the TAC are
described in this Exhibit.
<PAGE>
Teligent - Hughes Equipment Purchase Agreement -Attachment 3
47. The TAC will provide single-point-of-contact administration for
all System Support Services. The TAC will log all service calls,
track their status, inform TELIGENT of the call status upon
TELIGENT's request, and will coordinate all aspects of the System
Support Services.
48. TELIGENT will reasonably comply with the System Support Services
administrative and technical procedures provided by HNS. Such
procedures may be modified from time to time by HNS upon
reasonable notice to TELIGENT. Such procedures will not limit,
contradict or adversely impact the System Support Services set
forth herein.
49. RESPONSE TIMES
HNS will provide a Response to TELIGENT in compliance with the following
intervals:
o Critical Problems - TAC calls initiated during HNS normal business
hours: [redacted].
o Critical Problems - TAC calls initiated outside HNS normal business hours:
within [redacted].
o Major Problems - TAC calls initiated during HNS normal business hours:
within [redacted].
o Major Problems - TAC calls initiated outside HNS normal business hours:
within [redacted].
o Minor Problems - TAC calls initiated during HNS normal business hours:
within [redacted]
o HNS' normal business hours are Monday - Friday, 8:30 a.m. - 5:30 p.m. EST.
SECTION 3.0
TAC support services; factory repair and return; software maintenance and
support; on-site support; emergency FRU replacement
50. TAC ASSISTANCE
The TAC will provide technical assistance, via a USA Domestic toll free (800)
number, to TELIGENT's designated operational and maintenance personnel. Requests
for support that do not require immediate assistance can also be made via
facsimile and electronic mail. Tasks that will be performed by the TAC will
include:
o Help TELIGENT resolve operational problems
o Help TELIGENT with fault isolation and problem determination for
Systems
<PAGE>
Teligent - Hughes Equipment Purchase Agreement -Attachment 3
o Provide remote diagnostic support via a dial-up connection to
TELIGENT's equipment where provided
o Explain Documentation
o Administer System Support Services, including logging calls, tracking
status, making status available, and coordinating all aspects of System
Support Service
o Coordinate escalation and engineering support
o Coordinate FRU return materials authorizations via the HNS Customer
Service Material Return Center
o Provide emergency FRU replacement service via coordination with the HNS
Customer Service Material Return Center
o Provide third-party maintenance when covered under the System Support
Service (such services to be performed by underlying third party
manufacturer)
o Accept requests for System Support Services from TELIGENT's authorized
personnel as updated from time to time by TELIGENT
o Provide System Release Notices
o Provide Software version updates and new releases
o Provide Documentation updates
o Provide TAC Bulletins and Customer Service Bulletins
51. PROBLEM RESOLUTION
As potential Problems are identified by TELIGENT, TELIGENT will be asked for an
initial classification using the above definitions (i.e., Critical, Major and
Minor). The TAC will provide a Response to TELIGENT based upon such
classification and will create a trouble log entry and commence fault isolation
and Problem determination procedure.
52. Critical Problem
If a Problem is a Critical Problem, HNS will use reasonable best efforts to
restore full System functionality via a software patch, by providing an
operational workaround, by changing a database, by suggesting that Equipment
<PAGE>
Teligent - Hughes Equipment Purchase Agreement -Attachment 3
components be replaced, or by some other method. HNS personnel, with TELIGENT
permission, may attempt to dial in to the System to identify the cause of the
Critical Problem. Should the Critical Problem continue and HNS cannot simulate
or recreate or otherwise identify the cause of the Problem at HNS' facility, HNS
will dispatch a qualified maintenance engineer to travel to TELIGENT's site. The
designated HNS maintenance engineer shall remain on-site and dedicated to
TELIGENT until such time as the Critical Problem is either resolved or
downgraded to a Major Problem. HNS' TAC will continue telephone assistance, as
required, during the duration of Problem resolution.
If the Critical Problem resolution shows that the Problem which resulted in
on-site support was not caused by Equipment or Software provided by HNS, or if
HNS demonstrates that TELIGENT has not maintained the Equipment in accordance
with the Documentation, or TELIGENT has not reasonably followed the System
Support Services administrative and technical procedures provided by HNS, then
TELIGENT will pay HNS for the site visit at HNS standard rates and any related
out of pocket expenses.
53. Major Problem
If a Problem is a Major Problem, HNS will attempt to restore full System
functionality via a software patch, by changing a database, by suggesting that
Equipment components be replaced, or by some other method. HNS personnel, with
TELIGENT permission, may attempt to dial in to the System to identify the cause
of the Major Problem. Should a software patch, if required and requested, not be
provided within [redacted] of Response and HNS cannot simulate or recreate or
otherwise identify the cause of the Problem at HNS' facility, HNS will dispatch,
at TELIGENT's request, a qualified maintenance engineer to travel to TELIGENT's
site. The designated HNS maintenance engineer shall remain on-site and dedicated
to TELIGENT until such time as the Major Problem is either resolved or
downgraded to a Minor Problem. HNS' TAC will continue telephone assistance, as
required, during the duration of Problem resolution.
If the Major Problem resolution shows that the Problem which resulted in on-site
support was not caused by Equipment or Software provided by HNS, or if HNS
demonstrates that TELIGENT has not maintained the Equipment in accordance with
the Documentation, or TELIGENT has not reasonably followed the System Support
Services administrative and technical procedures provided by HNS, then TELIGENT
will pay HNS for the site visit in accordance with HNS standard rates and any
related out of pocket expenses.
54. Minor Problem Resolution
For Minor Problems, HNS will provide a Response to TELIGENT within [redacted].
The fix for the Minor Problem, if software related, will be provided either as a
patch or permanent fix in a software maintenance release, version update or
major release on a mutually agreed to schedule.
55. Escalation
<PAGE>
Teligent - Hughes Equipment Purchase Agreement -Attachment 3
TAC management will review the status of each Problem which exceeds the
intervals set forth above (i.e. Response intervals, software patch intervals)
for each Problem classification. The TAC will obtain additional HNS resources as
appropriate to accelerate Problem resolution. The TAC will escalate to more
senior levels within the organization and will obtain support from the
engineering development teams as appropriate to accelerate Problem resolution.
3.1 FACTORY REPAIR AND RETURN SERVICE
56. Optional Repair or Replace
HNS will, at its option, repair or replace defective FRUs which have been
delivered by TELIGENT to HNS' Customer Service Material Return Center (MRC).
Equipment replacement will be coordinated through the HNS Customer Service
Material Return Center. Normal hours for the Material Return Center are 7 AM to
5 PM, Monday - Friday (Eastern Time). Emergency Sparing, as described in Section
3.11, is available 24 hours per day, 365 days per year.
3.1.1 Procedures
TELIGENT will return failed FRUs to HNS' Customer Service Material Return Center
following the reasonable procedures established by the MRC. HNS will repair or
replace TELIGENT returned FRUs, bringing the repaired or replaced FRU to the
latest hardware revision level when such revision represents a functional
improvement , and return a repaired or replaced FRU to TELIGENT within 45 days
of receipt by HNS.
57. Shipping
HNS will supply TELIGENT with any required specialized shipping instructions (
HNS will be shipping in re-useable packaging for the FRUs) to ensure further
damage to Equipment does not occur during shipping. While Equipment is under
warranty (i.e., during the Warranty Period), HNS will pay for shipment of failed
and repaired or replaced Equipment in both directions. During the Extended
Warranty Period, TELIGENT will pay for shipping of failed Equipment to the HNS
Customer Service Material Return Center, and HNS will pay for shipping of
repaired or replaced Equipment.
58. Warranty
The repaired or replacement FRU will be warranted for [redacted] after shipment
or the remainder of the original Warranty Period, whichever is greater.
59. Non-FRU Repairs
<PAGE>
Teligent - Hughes Equipment Purchase Agreement -Attachment 3
At TELIGENT's request, HNS will provide and install replacements for failed
HNS-provided non-FRU equipment (i.e. cables, backplanes), including equipment
manufactured by third parties. HNS will perform such services at its standard
rates plus the cost of parts, if any.
60. CUSTOMER REQUESTED CALL OUT SERVICE
At TELIGENT's request, an experienced System maintenance engineer will travel to
TELIGENT's site to provide on-site support services. This support is to be made
available on a mutually agreeable schedule, at HNS standard rates as specified
in Exhibit 5 for such services.
61. SYSTEM RELEASE NOTICES
HNS will send System Release Notices to TELIGENT from time to time. System
Release Notices will provide information about upcoming new System features and
new System releases and versions. Notices will be provided in advance of
releases to allow TELIGENT time for planning and evaluation.
3.2 SOFTWARE MAINTENANCE
HNS will, from time to time, issue Software version updates and new releases.
These will be sent out to fix problems, provide improved operational
performance, or to remain current with the latest release of embedded
third-party software. These releases and version updates will be provided
subject to the terms of the Definitive Agreement. TELIGENT will upgrade to the
current version of the Software within 1 year of each release or upgrade such
that at no time will the Software version deployed by TELIGENT be more than one
year behind the latest HNS release. Updates to the latest release may be
required to correct a software defect. The upgrade path may require loading an
intermediate release if TELIGENT is more than one release behind.
62. DOCUMENTATION UPDATES
HNS will provide updates to the standard Documentation, including any required
updates to third-party equipment or software documentation. Updates will be
provided with all new major releases of the software. HNS will provide
preliminary software Documentation updates with the related System Release
Notice.
3.3 TAC AND CUSTOMER SERVICE BULLETINS
HNS will issue TAC and Customer Service Bulletins from time to time to notify
System operators of Problems found in the System along with steps to work around
these Problems. TAC Bulletins provide technical information associated with the
<PAGE>
Teligent - Hughes Equipment Purchase Agreement -Attachment 3
operation of the System. Customer Service Bulletins are provided to provide
information associated with services provided by the TAC. HNS may also issue TAC
Bulletins from time to time to provide additional information, not in the
current Documentation, that will make operation of the System easier. HNS will
incorporate information in the TAC Bulletins into the next update of the
Documentation.
3.4 CONFIGURATION CONTROL
The TAC will maintain accurate records of Equipment including assembly number,
hardware revision level delivered to each market, and software version and patch
delivered to the NOC and EMS. These records do not include TELIGENT's databases.
3.5 SERVICE LIMITATIONS
HNS will not be obligated to provide Services if HNS demonstrates that the
Equipment to be serviced is not reasonably accessible or that conditions at the
Equipment site are unsafe. In such an event, TELIGENT will promptly provide
access or correct the safety problem. Upon correction of the safety problem, HNS
will promptly provide the Services.
3.6 EMERGENCY SPARING
As the Parties shall mutually agree.
SECTION 4.0
CUSTOMER RESPONSIBILITIES
4.1 FAULT ISOLATION AND PROBLEM DETERMINATION
TELIGENT will maintain NOC personnel and regional maintenance technicians who
have received HNS training on the operations and maintenance of the Equipment.
TELIGENT NOC personnel and maintenance technicians will be on call for trouble
management and will be available on-site at EMS, hub, and subscriber locations
to assist TAC personnel in problem diagnosis as required.
TELIGENT is responsible for day to day operation of the Equipment to include
operation, maintenance and configuration of System databases, proactive network
monitoring and traffic analysis, observing and responding to network events and
alarm messages, and initial identification of Problems. After TELIGENT performs
initial troubleshooting procedures and is unable to clear a Problem, TELIGENT
will call TAC to report the Problem.
4.2 PERSONNEL ACCESS TO CUSTOMER EQUIPMENT
TELIGENT hereby grants HNS and HNS authorized representatives reasonable access
to TELIGENT sites for the purpose of providing Services. HNS will comply with
TELIGENT's security regulations and procedures for site access.
<PAGE>
Teligent - Hughes Equipment Purchase Agreement -Attachment 3
4.3 DIAL-UP ACCESS TO CUSTOMER EQUIPMENT
TELIGENT will provide necessary dial-up facilities at its' NOC and will allow
qualified HNS personnel, if requested by the TAC, to access TELIGENT's Equipment
via a dial-up telephone line. TELIGENT will permit HNS personnel to troubleshoot
the System via the dial-in consoles. Such troubleshooting may include temporary
operation of the Equipment upon authorization by TELIGENT. To the extent dial-up
access is required, HNS' obligations hereunder are subject to the availability
of this access. HNS dial-up access will be secured by means of dial-back modems
or other suitable security method.
4.4 CUSTOMER SYSTEM SUPPORT MANAGER
TELIGENT will identify to the TAC a limited number of TELIGENT personnel
authorized to request System Support Services from HNS. TELIGENT will identify
to HNS a single executive who is responsible for operation of the network.
4.5 OPTIONAL SERVICES
Re-certification Of Equipment
If, upon commencement of Service under this Agreement, any Equipment is not
currently under warranty from, or a prior extended warranty with, HNS, then HNS
will inspect such Equipment and perform such repair or maintenance as may be
required to put the Equipment into acceptable operating condition and TELIGENT
will pay HNS for such inspection, repair and maintenance at the established
rates and charges for TELIGENT Requested Call Out Service plus the prevailing
price for required parts.
4.6 UTILITY ACCESS
TELIGENT will provide HNS access to electrical power, water, and other
utilities, and free telephone and fax access to the TAC where feasible. TELIGENT
will also provide, upon HNS' request, toll free telephone access from NOC and
EMS sites to facilitate fault isolation. HNS maintenance personnel on site at
TELIGENT's location shall carry cellular telephones for use from rooftops or
other Equipment locations where phone service is not available for communication
with TAC, NOC or other HNS technical support/engineering personnel.
4.7 OPERATING ENVIRONMENT
TELIGENT will maintain minimum site-environment conditions, as specified in the
Documentation.
4.8 PURCHASE OF SPARES
<PAGE>
Teligent - Hughes Equipment Purchase Agreement -Attachment 3
TELIGENT will purchase and maintain an inventory of spares, based in part on HNS
recommendations.
4.9 EQUIPMENT TAGS
TELIGENT will not place or affix any permanent type of identification or
permanent accounting mark or tag on any FRU that may have to be returned to HNS
for repair or replacement.
SECTION 5.0
SYSTEMS SUPPORT SERVICES PRICING
- -------------------------------------- -----------------------------------------
Category I |Annual price shall be equal to [redacted] per
TAC |year of the price of all Equipment delivered
Problem Resolution |to TELIGENT, calculated at the end of each
System Release Notices |quarter, plus [redacted] per Element Manager
TAC and Customer Service Bulletins|for Software maintenance; provided, however,
Configuration Control |that for Equipment to be Accepted by
Emergency Sparing |TELIGNT, such Equipment shall not be included
On-site Support |in the calculation of this price until it has
Software Maintenance and Support |been Accepted.
Documentation Updates |
- --------------------------------------------------------------------------------
Category II |Annual price shall be [redacted] of price of
Factory Repair and Return |all Equipment delivered to TELIGENT for which
|warranty period has expired, calculated at
|the end of each quarter
- ----------------------------------------------------------- --------------------
SECTION 6.0
Article 19 - Miscellaneous of the Definitive Agreement is incorporated herein by
this reference.
IN WITNESS WHEREOF, each of the Parties hereto have caused this Agreement to be
duly executed by their authorized representatives and to be effective as of the
date first above written.
TELIGENT, INC. HUGHES NETWORK SYSTEMS
A HUGHES ELECTRONICS COMPANY
By: By:
Name: Name:
Title: Title:
Address: Address:
<PAGE>
Teligent - Hughes Equipment Purchase Agreement -Attachment 3
70
Attachment 4 - Responsibility Matrix
<to be developed mutually; will be a detailed division of responsibility, along
the lines of those developed for the cellular environment>
Attachment 5 - Acceptance Test Procedures
<to be developed mutually>
Attachment 6 - Sample Purchase Order
<supplied by Hughes separately>
Attachment 7 - HUGHES Quality Management System
<to be supplied by Hughes>
[redacted]
70
EXHIBIT 99
CONTACTS: FOR IMMEDIATE RELEASE
Media Investors
Robert W. Stewart Michael S. Kraft
703-762-5175 703-762-5359
888-894-7812 800-981-5994
Teligent adds Hughes AIReach(TM) equipment to its broadband wireless roster
VIENNA, VA., April 14, 1999 - Teligent, an integrated communications company,
today announced that Hughes Network Systems will become an additional equipment
supplier for Teligent's local communications networks.
Hughes becomes a second supplier of point-to-multipoint microwave radios and
electronics for Teligent, which is offering local, long distance, high-speed
data and Internet access services over its digital SmartWave(TM) networks in 26
markets throughout the country. Teligent will continue its existing relationship
with Nortel Networks, which acts as both an equipment supplier and Teligent's
principal network integrator.
"We're delighted to welcome Hughes Network Systems to the Teligent family," said
Teligent Chairman and Chief Executive Officer Alex J. Mandl. "In the past 18
months, we've built a strong platform for our local communications services with
network equipment supplied by Nortel and now we will be adding new equipment
from Hughes. Nortel will continue to be a key technology supplier and
integrator, working with Teligent to incorporate equipment from Hughes into
Teligent's facilities-based local networks." Teligent President and Chief
Operating Officer Kirby G. "Buddy" Pickle said the new Hughes product "will give
Teligent additional flexibility in our network deployment, enhance our radio
capabilities and create more competition in the broadband wireless equipment
marketplace." Pickle added: "That's good news for Teligent and for our
customers, because, as we've said many times, competition drives down costs and
enhances product performance."
Under the terms of the five-year agreement, Hughes will supply Teligent with its
AIReach(TM) broadband, point-to-multipoint microwave radios and supporting
electronics, to operate in Teligent's licensed spectrum band of 24 GHz. The
value of the contract could reach $250 million.
Like Teligent's existing equipment, the Hughes radios and electronics will
integrate voice and data traffic on an ATM (Asynchronous Transfer Mode) platform
for transmission from Teligent's customers to its switching facilities. Hughes
has designed the equipment to integrate access multiplexing into a single,
unified networking solution and provide high spectrum efficiency by transporting
information at speeds of 45 mbps into a 12.5 MHz radio frequency channel.
Teligent launched commercial communications services in its first 15 markets at
the end of 1998, and has initiated service in 11 additional markets so far this
year. The company expects to offer service in a total of 40 markets by year-end.
Those 40 markets comprise more than 575 cities and towns with a combined
population of more than 100 million.
With its SmartWave(TM) technology, Teligent delivers service by installing small
antennas on the roofs of customer buildings. When a customer picks up a
telephone, accesses the Internet or activates a videoconference, the signal
travels over inside wiring to Teligent's indoor electronics cabinet and from
there to the rooftop antenna. The antenna then relays the voice, data or video
signals, which are carried over an ATM platform, to a Teligent base station
antenna.
The base station gathers signals from a cluster of surrounding customer
buildings, aggregates the signals and then routes them to a Teligent broadband
switching center. At the switching center, Teligent uses ATM switches and data
routers along with Nortel DMS switches to hand off the traffic to other networks
- - the public circuit-switched voice network, the packet-switched Internet, and
private data networks.
Integrating advanced point-to-multipoint and point-to-point microwave radio
equipment with traditional broadband wireline technology, Teligent SmartWave(TM)
networks offer customers the advantages of lower costs and greater flexibility.
Based in Vienna, Va., Teligent, Inc. (NASDAQ: TGNT) is a full-service,
integrated communications company that is offering small and medium-sized
business customers local, long distance, high-speed data and dedicated Internet
services over its digital SmartWave(TM) local networks in 26 major markets.
Eventually, Teligent will expand service to 74 major metropolitan areas
throughout the United States. Teligent's offerings of regulated services are
subject to tariff approval.
Headquartered in Germantown, Md., near Washington, DC, with international sales
and support offices worldwide, Hughes Network Systems is a leading supplier of
wireless, satellite and enterprise network solutions. HNS is a unit of Hughes
Electronics Corporation. The earnings of Hughes Electronics are used to
calculate the earnings per share attributable to GMH (NYSE symbol) common stock.
For more information, visit the Teligent website at: www.teligent.com
For additional information about Hughes Network Systems, visit their web site
at: www.hns.com.
Teligent and SmartWave are trademarks of Teligent, Inc. AIReach is a trademark
of Hughes Network Systems, a unit of Hughes Electronics Corporation.
Except for any historical information, the matters discussed in this press
release contain forward-looking statements that involve risks and uncertainties,
including but not limited to economic, key employee, competitive, governmental,
regulatory and technological factors affecting the company's growth, operations,
markets, products, services, licenses and other factors discussed in the
company's filings with the Securities and Exchange Commission. Actual results
may vary materially due to these and other risks and uncertainties.
