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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 8, 1994
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GEOTEK COMMUNICATIONS, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-17581 22-2358635
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(State or other juris- (Commission File Number) (IRS Employer Identi-
diction of incorporation) fication No.)
20 Craig Road, Montvale, New Jersey 07645
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(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code 201-930-9305
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N/A
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(Former name or former address, if changed since last report.)
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Item 5. Other Events
As of June 8, 1994, Geotek Communications, Inc. (the "Company") entered
into a definitive agreement with Mitsubishi Consumer Electronics America, Inc.
("Mitsubishi"), pursuant to which Mitsubishi will manufacture and supply the
FHMA(TM) Commercial Subscriber Units for use by subscribers to the Company's
digital wireless communications network ("GEONET(TM)").
As of May 19, 1995, the Company entered into a definitive agreement with
Hughes Network Systems, Inc. ("HNS"), pursuant to which HNS will manufacture and
supply the FHMA(TM) Portable Subscriber Units for use by subscribers to
GEONET(TM).
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
10.1 FHMA(TM) Commercial Subscriber Unit
Agreement, dated as of June 8, 1994, by and
between the Company and Mitsubishi Consumer
Electronics America, Inc.
10.2 FHMA(TM) Portable Subscriber Unit Agreement,
dated as of May 19, 1995, by and between the
Company and Hughes Network Systems, Inc.
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SIGNATURES
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 hereunto duly authorized.
GEOTEK COMMUNICATIONS, INC.
Date: June 26, 1995 By: /s/ Yoram Bibring
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Name: Yoram Bibring
Title: Executive Vice President,
Chief Financial Officer and
Chief Operating Officer
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EXHIBIT INDEX
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Exhibit No.
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10.1 FHMA(TM)Commercial Subscriber Unit Agreement, dated as of June 8,
1994, by and between the Company and Mitsubishi Consumer
Electronics America, Inc. (Confidential treatment has been
requested for portions of this Exhibit.)
10.2 FHMA(TM) Portable Subscriber Unit Agreement,
dated as of May 19, 1995, by and between the
Company and Hughes Network Systems, Inc.
(Confidential treatment has been requested for
portions of this Exhibit.)
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SUPPLY AGREEMENT FOR
FHMA(TM) COMMERCIAL SUBSCRIBER UNITS
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TABLE OF CONTENTS
1.0 DEFINITIONS.................................. 1
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2.0 MANAGING COORDINATORS...................... 4
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3.0 ESTABLISHMENT OF MANUFACTURING STANDARDS..... 4
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4.0 WORKING SAMPLES............................ 5
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5.0 PRODUCTION FILES........................... 7
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6.0 PRODUCTION UNITS........................... 7
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7.0 PURCHASE ORDERS/PRODUCT FORECAST........... 8
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8.0 MANUFACTURING.............................. 9
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9.0 QUALITY ASSURANCE.......................... 9
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10.0 LATE DELIVERY.............................. 9
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11.0 LABELING AND PACKAGING..................... 10
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12.0 REGULATORY COMPLIANCE...................... 10
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13.0 PARTS SUPPLY............................... 11
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14.0 ACCEPTANCE OR REJECTION.................... 11
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15.0 TRAINING AND TECHNICAL SUPPORT............. 11
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16.0 PRICING AND PAYMENT........................ 12
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17.0 LIMITED PRODUCT WARRANTY................... 13
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18.0 WARRANTY CLAIMS AND REPAIR................. 14
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19.0 CONFIDENTIALITY............................ 15
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20.0 INTELLECTUAL PROPERTY OWNERSHIP, LICENSE OF
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RIGHTS AND RESTRICTIONS.................... 17
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21.0 INTELLECTUAL PROPERTY INDEMNIFICATION...... 19
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22.0 OTHER INDEMNIFICATION...................... 22
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23.0 LIMITATION OF LIABILITY.................... 23
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24.0 INSURANCE.................................. 23
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25.0 TERM OF THE AGREEMENT...................... 23
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26.0 TERMINATION................................ 24
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27.0 FORCE MAJEURE.............................. 26
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28.0 ENGINEERING CHANGES........................ 26
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29.0 REPRESENTATIONS............................ 27
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30.0 ORDER OF PRECEDENCE........................ 27
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31.0 PUBLICITY.................................. 28
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32.0 ASSIGNMENT OR DELEGATION PROHIBITED........ 28
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33.0 GOVERNING LAW AND FORUM.................... 28
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34.0 NO WAIVER.................................. 28
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35.0 PROCUREMENT UNDERSTANDING.................. 29
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36.0 COMPLIANCE WITH U.S. GOVERNMENT EXPORT
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CONTROLS................................... 29
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37.0 SURVIVAL OF TERMS.......................... 29
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38.0 GENERAL.................................... 30
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39.0 NOTICES.................................... 30
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40.0 ENTIRE AGREEMENT........................... 31
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41.0 EFFECT OF TITLE AND HEADINGS............... 31
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42.0 COUNTERPARTS............................... 31
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FHMA(TM) COMMERCIAL SUBSCRIBER UNITS
THIS AGREEMENT ("Agreement") is made as of this 8th day of June, 1994,
by and between GEOTEK COMMUNICATIONS, INC., a Delaware corporation with offices
at 20 Craig Road, Montvale, New Jersey 07645, U.S.A. ("Geotek") and MITSUBISHI
CONSUMER ELECTRONICS AMERICA, INC., a Delaware corporation with offices at 1001
Cherry Drive, Braselton, Georgia 30517, U.S.A. ("MCEA").
RECITALS
Geotek, through its subsidiary, POWER SPECTRUM TECHNOLOGY LTD., a
corporation organized under the laws of Israel ("PST"), is engaged in the
development of certain digital, frequency hopping, wireless communications
technology known as Frequency Hopping Multiple Access ("FHMA(TM)") for the
purpose of providing wireless communications services. In connection with such
efforts, Geotek has developed a preliminary design for an FHMA(TM) commercial
subscriber unit.
Geotek is licensed by the United States Federal Communications
Commission to provide FHMA(TM) wireless communications services in the United
States.
MCEA is engaged in the business of manufacturing certain cellular
radiotelephone equipment based on extensive RF technology and manufacturing
experience.
Geotek desires to have MCEA establish the manufacturing standards for
the commercial subscriber units for inclusion in a definite production file (the
"Production File"), which shall also encompass such matters as delivery
schedules, performance standards based on engineering specifications by Geotek,
test strategy and process, targets for production, cost reduction targets,
component/vendor selection and reliability and quality assurance.
Geotek desires to have MCEA manufacture the commercial subscriber units
based on such manufacturing standards and sell the CSU to Geotek.
NOW THEREFORE, in consideration of the mutual and dependent provisions
hereinafter set forth, the parties, intending to be legally bound, agree as
follows:
1.0 DEFINITIONS.
1.1 "Affiliated Companies" shall mean those companies, corporations
or other entities which directly own or control, either party to this Agreement
and the Subsidiaries of such Affiliated Companies.
1.2 "Agreement" shall mean this document including the Attachments.
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1.3 "Billback Term" shall mean the period of time used to recalculate
the unit price for Product(s) actually ordered. The initial Billback Term shall
commence with first Purchase Order placement and shall apply to Purchase Orders
accepted by MCEA through __________. Subsequent Billback Terms shall be for one
(1) year, or as mutually agreed, with quantities credited on a cumulative basis
throughout the Term of this Agreement only for purposes of determining unit
pricing during subsequent Billback Terms.
1.4 "Days" shall mean calendar days.
1.5 "Deliver," "Delivery," "Delivered" or "Delivering" shall mean the
transfer of Product(s) to Geotek F.O.B. Braselton, Georgia.
1.6 "Delivery Date" shall mean the date a Working Sample or a
Production Unit shall be delivered to the Delivery location.
1.7 "Design Specification" shall mean the functional and performance
specifications (including, without limitation, bills of materials, schematic
diagrams, parts and assembly drawings) for CSU's, including improvements and
enhancements resulting from the collaborative work of Geotek and MCEA.
1.8 "Effective Date" shall mean the date of execution of this
Agreement first above written.
1.9 "Geotek Component" shall mean any components, whether modified or
unmodified, developed and supplied by Geotek or any of its Affiliated Companies
or Geotek Vendors for use in the Product(s) as required by the Design
Specification or the Manufacturing Standard and any Geotek approved changes to
such components thereafter.
1.10 "Geotek Vendors" shall mean producers and suppliers that have
been specified by Geotek as the source of certain parts and components to be
used by MCEA in the manufacture of the Products, whose parts and components, as
the case may be, are supplied as sub-assemblies by PST or Geotek.
1.11 "Manufacturing Standards" shall mean Technology developed by
MCEA and its Affiliated Companies at their expense in the course of deriving
production procedures to manufacture the CSU's according to the Design
Specification.
1.12 "MCEA Components" shall mean any components, whether modified or
unmodified, developed and/or supplied by MCEA or any of its Affiliated Companies
for use in the Product(s) as required by the Design Specification and any MCEA
approved changes to such components thereafter.
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1.13 "Product(s)," "Product" or "Products" shall mean the Geotek
digital, mobile, wireless Frequency Hopping Multiple Access commercial
subscriber units (the "CSU's") described in Attachment 1, Design Specification.
1.14 "Production File" shall mean the definite manufacturing
specification, attached hereto as Attachment 3 which shall include the Design
Specification and the Manufacturing Standards.
1.15 "Production Units" shall mean MCEA's commercial production units
of the Products which conform in all material respects to the requirements of
the Production File after Working Samples have been qualified for commercial use
and which may include improvements and enhancements of the Geotek FHMA(TM)
Technology.
1.16 "Proprietary Rights" shall mean, in any country, (i) the right
to file patent applications and any rights under patent applications; (ii)
rights under a grant of letters patent or any similar form of statutory
protection for inventions, such as utility model protection and industrial
design protection; (iii) rights under copyright, trade secret, mask work or
trademark law; and (iv) any other protectable intellectual property rights.
1.17 "Purchase Order" shall mean a Geotek purchase order issued to
and accepted by MCEA pursuant to the provisions of this Agreement.
1.18 "Section," "Subsection" and/or "Attachments" shall mean
Sections, Subsections and/or Attachments of or to this Agreement.
1.19 "Subsidiary" shall mean a corporation, company or other entity:
a. More than fifty percent (50%) of whose outstanding
shares or securities (representing the right to vote for the
election of directors or other managing authority) are now or
hereafter owned or controlled, directly or indirectly, by a
party, but such corporation, company or other entity shall be
deemed to be a Subsidiary only so long as such ownership or
control exists; or
b. Which does not have outstanding shares or securities, as
may be the case in a partnership, joint venture or
unincorporated association, but more than fifty percent (50%) of
whose ownership interest representing the right to make the
decisions for such company or other entity is now or hereafter
owned or controlled, directly or indirectly, by a party, but
such company or other entity shall be deemed to be a Subsidiary
only so long as such ownership or control exists.
1.20 "Technology" means inventions, discoveries, improvements,
innovations, works of authorship, software, documentation, know-how, designs,
drawings, specifications, reports, studies, memoranda, invention disclosures,
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technical data, technical writings, photographs, sound recordings and other
intellectual property that are of a type customarily retained in the normal
course of business. The term does not include financial reports, costs analyses,
and other information incidental to contract administration.
1.21 "Term" shall mean the period of time commencing on the date of
execution of this Agreement and expiring on June 7, 1996.
1.22 "Working Samples" shall mean MCEA's twenty (20) pilot prototypes
and eight hundred (800) pre-production units of the Products for Geotek's
internal laboratory and field testing in accordance with Section 4.0 of this
Agreement.
2.0 MANAGING COORDINATORS.
2.1 MCEA, Geotek and PST each shall appoint a Managing Coordinator
who shall manage such party's performance under this Agreement, be the primary
Product and technical interface with the other party and serve as the focal
point for the identification and resolution of any problems that may surface
during the course of Product development and manufacturing. Each party shall
give prompt notice to the other party in the event there is a change in Managing
Coordinators. The Managing Coordinators shall not have authority to amend or
modify the terms of this Agreement.
2.2 The initial Managing Coordinators for each party shall be:
Geotek: Tamir Friedrich MCEA: Douglas Harrison
Quality Control Manager,
PST: Ezra Shohet Cellular Telephone Division
3.0 ESTABLISHMENT OF MANUFACTURING STANDARDS.
3.1 MCEA shall provide Geotek and PST with analysis and suggestions toward
making the Design Specification suitable for manufacturing. Geotek, through its
Subsidiary PST, shall provide MCEA with the Design Specification for the
Products.
3.2 MCEA shall review the Design Specification promptly upon receipt, shall
consult with the Geotek design team and, as necessary, shall visit the
facilities of Geotek, PST and their subcontractors. MCEA shall advise PST and
Geotek about sourcing and qualifying components, cost analysis, recommending
modifications necessary for volume manufacturing and unit cost reduction and
such other activities reasonably necessary for the establishment of
Manufacturing Standards for the Products. MCEA shall inform PST and
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Geotek of the results of such meetings and activities and shall consult with
Geotek from time to time. At MCEA's request, Geotek shall participate in such
consultations and shall make available to MCEA all Geotek and PST personnel
(including subcontractor design personnel) as MCEA requests to correct any
problems that may become apparent during manufacturing of the Products.
3.3 Geotek shall cause PST to prepare a definitive Design Specification
based, among other things, upon its consultations with MCEA. PST shall endeavor
to deliver such definitive Design Specification to MCEA no later than August 31,
1994. Such Design Specification shall become Attachment 1.
3.4 MCEA shall use reasonable efforts to deliver to PST and Geotek a
preliminary set of manufacturing procedures within eight (8) weeks after PST
delivers a definitive Design Specification to MCEA, but in no event later than
October 31, 1994. MCEA's preliminary manufacturing procedures shall contain
proposed milestones and goals for the production and delivery of the Products,
test procedures, production targets, cost reduction targets, recommendations for
components and vendors and reliability and quality assurance guidelines.
3.5 As soon as practicable after MCEA delivers the preliminary
manufacturing procedures to PST and Geotek, Geotek shall review them with MCEA.
MCEA shall use reasonable efforts to deliver the final Manufacturing Standards
within four (4) weeks after PST's approval of the preliminary manufacturing
procedures, but in no event later the November 30, 1994. The Manufacturing
Standards shall include all subjects set forth in the preliminary manufacturing
procedures as modified pursuant to the conclusions of the review by mutual
agreement of MCEA, PST and Geotek, together with Technology developed by MCEA
for the production of the Products and any executable code developed by MCEA for
use in the Products or in manufacturing of the Products, but not the Design
Specification. Such Manufacturing Standards shall be incorporated herein as
Attachment 2.
4.0 WORKING SAMPLES.
4.1 Upon written approval by Geotek of the Manufacturing Standards, MCEA
shall produce and deliver to Geotek twenty (20) pilot prototypes of the Products
in accordance with the development and delivery schedule to be set forth in the
Manufacturing Standards. The primary goal of the production of the pilot
prototypes shall be to test the design and performance of the Products. All
components needed for such pilot prototypes and the base station simulator shall
be provided by Geotek.
4.2 If the parties agree during the course of development of the Working
Samples that changes should be made to the Design Specification or the
Manufacturing Standards, they shall embody such agreement in writing which
specifically amends Attachment 1 or Attachment 2, as the case may be. The
parties shall agree upon an equitable adjustment to accommodate the effect
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any such changes may have upon the charges for development, payment schedule,
delivery schedule of Working Samples and Production Units and the project
schedules. Geotek shall be responsible for the cost of changes Geotek requests
to the Design Specifications.
4.3 MCEA and Geotek shall test such pilot prototypes jointly in accordance
with the test procedures to be developed and mutually agreed upon by the parties
and incorporated as part of the Manufacturing Standards. Such testing shall be
completed within thirty (30) days after the delivery date of the prototypes to
Geotek. If the pilot prototypes successfully pass the test procedure, Geotek
shall provide MCEA with an acceptance notice and concurrently shall place with
MCEA an initial order for Production Units as described in Section 6.0.
4.4 If the pilot prototypes do not satisfactorily meet the requirements of
the test procedures, the Design Specification and the Manufacturing Standards
(the "Acceptance Criteria"), Geotek shall give MCEA notice thereof and shall
specify in reasonable detail why the pilot prototypes do not meet the Acceptance
Criteria. Geotek shall specify necessary corrections and provide means of
modification as necessary. MCEA shall promptly, subject to Section 4.6, take
necessary corrective action at its cost, but only if such failure is solely
caused by MCEA, and, following correction and re-testing, Geotek shall accept
the pilot prototypes if such pilot prototypes, as modified, meet the Acceptance
Criteria.
4.5 The failure of Geotek to notify MCEA within thirty (30) days after
receipt of the pilot prototypes (or in the case of correction of any
deficiencies, within fifteen (15) days following receipt of the corrected pilot
prototypes) of any specific reasons why the pilot prototypes do not meet the
acceptance criteria shall be deemed to constitute acceptance of the pilot
prototypes.
4.6 If, for a reason which is not attributable in any respect to a
deficiency in Geotek's design, MCEA fails to deliver pilot prototypes which meet
the Acceptance Criteria within three (3) months, or such longer period as the
parties may mutually agree to in writing after the date specified in the
Manufacturing Standards, Geotek may terminate this Agreement and shall have no
further liability to MCEA, except for payment of the development fees set forth
in Attachment 3 which have been earned by MCEA through the date of termination.
4.7 Promptly after Geotek accepts the pilot prototypes, Geotek shall
deliver its Purchase Order to MCEA for pre-production prototypes. Within
one-hundred and twenty (120) days after such acceptance, MCEA shall produce and
deliver to Geotek eight hundred (800) pre-production prototypes as are the
subject of the Purchase Order, which shall be the final confirmation of the
Design Specification and the Manufacturing Standards. All components needed for
such pre-production prototypes shall be provided by MCEA. If MCEA fails to
deliver the eight hundred (800) pre-production prototypes within such schedule,
except in the event of an Excusable Delay as defined in Section 27.1, or such
longer period as the parties may mutually agree to in writing, Geotek may
terminate this Agreement and shall have no obligation to purchase any Production
Units of the Products, except for payment of the Development Fees which have
been earned by MCEA through the date of termination.
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4.8 Title and risk of loss or damage to Working Samples shall pass to
Geotek upon delivery to Geotek, FOB, MCEA Braselton, Georgia. If Geotek returns
defective Working Samples, risk of loss or damage shall pass to MCEA when Geotek
returns such Working Samples to MCEA in Braselton, Georgia.
4.9 RELATIVE TO THE WORKING SAMPLES, MCEA DISCLAIMS ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE.
4.10 Subject to Geotek's performance of its obligations under the initial
Purchase Order pursuant to Subsection 6.1, MCEA shall be responsible for all
costs associated with the production and delivery of the Working Samples.
5.0 PRODUCTION FILES.
5.1 Upon acceptance of the pre-production prototypes, PST shall compile the
Design Specification and the Manufacturing Standards into a Production File,
which will be attached hereto as Attachment 3. Subject to Section 19 of this
Agreement and except for MCEA's Proprietary Rights and other intellectual
property rights contained in the Manufacturing Standards, the Production File
(including the right to sub-license for manufacture to third parties other than
MCEA) shall be owned by Geotek; provided that MCEA shall have the right and
license to use the Production File, except for Geotek's Proprietary Rights and
other intellectual property rights contained in the Design Specification, on a
royalty-free, non-exclusive, perpetual basis in order to produce and distribute
for itself or for third party customers products similar to the Products; and
further provided that Geotek shall notify MCEA before disclosing the Production
File to any third party manufacturer and MCEA shall have the right to review the
Production File promptly thereafter and to delete any MCEA Proprietary Rights,
Confidential Information and Technology which MCEA reasonably considers to be
trade secrets.
6.0 PRODUCTION UNITS.
6.1 [Information intentionally omitted and filed separately with the
Securities and Exchange Commission in connection with an application for
confidential treatment.]
6.2 MCEA shall ship Product(s) to up to a maximum of ten (10) destinations
consistent with the direction provided on the Purchase Orders. MCEA bears no
responsibility for payment of shipping expenses, and MCEA shall cause all such
expenses incurred at Geotek's request to be invoiced by the carrier(s) directly
to Geotek.
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7.0 PURCHASE ORDERS/PRODUCT FORECAST.
7.1 Following the initial Purchase Order, Geotek shall order Product(s) by
submitting Purchase Orders from time to time during the term of this Agreement.
Geotek shall issue such Purchase Orders at least one hundred and fifty (150)
days prior to the first Delivery Date requested therein. MCEA shall review this
lead time every six (6) months to determine if, in MCEA's reasonable judgment,
it can be shortened, and shall notify Geotek of the results of such reviews.
7.2 Geotek's order placement shall consist of five (5) separate Purchase
orders covering five (5) consecutive months. When month one (1) is completed and
shipped, Geotek shall submit a Purchase Order for month six (6) specifying part
numbers and quantity and alter the Purchase Order for month three (3) to
identify the part number, quantity and ship to location. Geotek shall follow
this procedure for each subsequent month to ensure that MCEA shall have five (5)
firm Purchase Orders on hand at all times. No quantity changes shall be made to
the Purchase Orders for month one (1) and month two (2). No more than a ten
percent (10%) variance plus or minus may be made for month three (3). No more
than a twenty percent (20%) variance plus or minus may be made for month four
(4). No more than a thirty percent (30%) variance plus or minus may be made for
month five (5).
7.3 Within fourteen (14) days of receipt of Purchase Order(s) or Purchase
Order alteration(s), MCEA shall furnish Geotek with a written order or
alteration acknowledgement; provided that significant changes in order
quantities (exceeding the allowance set forth in Section 7.2) and shipment
schedules shall be subject to the mutual agreement of the parties and further
provided that such Purchase Order(s) or Purchase Order alteration(s) shall be
issued in accordance with the terms of this Agreement.
7.4 Purchase Orders for month one (1) and month two (2) shall include,
without limitation, the, following information:
a. Product(s) being purchased by part number(s);
b. Quantity requested;
c. Unit and total price;
d. Destination address(es) and requested ship date(s);
e. Reference to this Agreement and Agreement number; and
f. If purchases are intended for internal use by Geotek (in which
event sales tax will apply).
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Purchase Orders for months three (3), four (4) and five (5) shall identify
the quantity only and authorize MCEA to procure parts in the amounts specified.
7.5 The risk of loss and title to the Product(s) shall pass to Geotek FOB
Braselton, Georgia.
7.6 Geotek may cancel Purchase Orders or any portions thereof for any
reason by notice to MCEA at least thirty (30) days prior to the scheduled
Delivery Date. In the event of such cancellation, Geotek shall pay MCEA for the
actual materials, labor costs and directly allocated overhead and general and
administrative costs directly incurred pursuant to Purchase Orders prior to the
effective date of the cancellation, plus a reasonable profit (not to exceed the
percentage specified in the applicable Price/Quantity Matrix, Attachment 4) on
such costs, and MCEA shall Deliver to Geotek all completed Product(s), work in
process and all components procured by MCEA before receipt of such notice for
such Purchase Orders.
8.0 MANUFACTURING.
8.1 MCEA shall provide or acquire all parts, including components (except
those parts provided by Geotek pursuant to Section 4. 1), labor and materials
necessary to perform MCEA's obligations pursuant to this Agreement. Geotek may
request that MCEA change specific material or parts for the manufacture or
assembly of the Product(s); providing that Geotek agrees in advance, in writing,
to any adjustments to the price and delivery schedule of the Product(s)
resulting from the use of such specific parts or materials. MCEA agrees to
manufacture and assemble Product(s) in accordance with the Production File.
8.2 MCEA shall perform final testing of all Products at its Braselton,
Georgia facility.
9.0 QUALITY ASSURANCE.
9.1 MCEA shall establish, maintain and manage a quality assurance program
for the Products that is consistent with standard industry practices to ensure
that the overall reliability, quality and performance objectives stated in the
Production File are achieved. Such quality assurance program is subject to
Geotek approval, which shall not be unreasonably withheld.
10.0 LATE DELIVERY.
10.1 If, with respect to orders for Products received by MCEA during any
period of ninety (90) days, MCEA has not shipped the Products by the agreed upon
Delivery dates for substantially all such orders, except due to the fault or
negligence of Geotek or because of Excusable Delay as defined in Section 27.1,
then Geotek may assign such orders to other of its manufacturers as may be
reasonably necessary to meet demand for the Products; provided that Geotek
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first shall give notice to MCEA and allow MCEA thirty (30) days to cure
such breach. If MCEA's plan is reasonably satisfactory to Geotek, it shall not
exercise the assignment rights provided in this Section. In no event, however,
shall Geotek use or disclose to any third party any MCEA Confidential
Information, as defined in Subsection 20.1, in connection with such alternate
manufacture. In no event shall MCEA be required to provide any design, software,
manufacturing drawings, schematics, mask works or part lists for MCEA Components
which MCEA considers confidential.
11.0 LABELING AND PACKAGING.
11.1 Geotek shall provide MCEA with all necessary specifications and
artwork for the labeling of the Products and packaging under the Geotek label.
At no additional charge to Geotek, MCEA shall package the Products in standard
cardboard boxes and pack them for shipment in containers suitable for reasonable
protection against damage during shipment, handling and storage in reasonable
dry and unheated storage space. Geotek shall provide MCEA with such packaging
configuration requirements.
11.2 All Products sold to Geotek shall be marked for identification with
(i) the serial number assigned by Geotek, (ii) unit model number, (iii) date
code pursuant to Geotek's system of date coding products, (iv) FCC compliance
legend and (v) if applicable, an Underwriter's Laboratory label (collectively,
"Identification"), in accordance with the sample Identification provided by
Geotek. MCEA shall produce and affix such Identification to the Products at no
additional cost to Geotek.
11.3 If Geotek requests additional marking or labeling information on, or
elaborate packaging for, the Products which result in a significant change in
the cost of materials or production, Geotek and MCEA shall negotiate an
equitable price adjustment in good faith.
12.0 REGULATORY COMPLIANCE.
12.1 ODC Compliance. MCEA represents and warrants that all Products and
packaging shall conform to the requirement of Title 40, Code of Federal
Regulations, Part 82, Protection of Stratospheric Ozone, including, without
limitation those regulations contained in Subpart E and all other applicable
rules and regulations relating to or governing the use of ozone depleting
chemicals ("ODC's").
12.2 FCC Compliance. Geotek and MCEA shall cooperate during the Working
Samples phase described in Section 4.0 to obtain certification from the Federal
Communications Commission that the Products comply with applicable standards and
regulations. MCEA represents and warrants that the Products will be in
compliance with applicable FCC regulations.
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13.0 PARTS SUPPLY.
13.1 For a period of three (3) years following the termination or
expiration of this Agreement, MCEA shall make available for sale to Geotek at
its then current prices replacement and repair parts for the Products. MCEA
reserves the right to substitute parts and materials that PST approves as
functionally equivalent to the original components.
14.0 ACCEPTANCE OR REJECTION.
14.1 Geotek may inspect and test all Product(s) prior to acceptance or
rejection, and may refuse to accept Product(s) which do not conform to the
Design Specification and the Manufacturing Standards. If, after thirty (30) days
from delivery of Product(s) to Geotek, Geotek has not notified MCEA of
rejection, the Product(s) shall be deemed to be accepted by Geotek. Payment for
Product(s) shall not of itself signify acceptance.
14.2 Prior to the return of rejected Product(s), Geotek shall obtain a
return product authorization from MCEA and shall return the Product(s) at MCEA's
expense. Unless the Product(s) were wrongfully rejected, MCEA shall repair or
replace, at MCEA's expense, rejected Product(s) which fail to meet the Design
Specification or the Manufacturing Standards.
14.3 Upon at least forty eight (48) hours prior notice and with the
agreement of MCEA, Geotek or its representatives may conduct spot functional
tests of the Products at MCEA's facility in Braselton during MCEA's normal
business hours. If any Products fail any material part of the test procedure set
forth in the Manufacturing Standards, Geotek may reject such Products, and MCEA
shall take all steps necessary to correct such failures.
14.4 Inspection of failure to inspect the Products upon delivery shall not
affect Geotek's rights under the Limited Warranty provisions of this Agreement.
14.5 MCEA agrees to record date codes and corrective action for all
Products rejected pursuant to this Section 14.0.
15.0 TRAINING AND TECHNICAL SUPPORT.
15.1 As soon as practicable, but in no event later than the Delivery Date
of production units of the Product to Geotek, MCEA in consultation with Geotek
shall develop a program of training covering all relevant aspects of
installation, operation and maintenance of the Products. This training program
shall be sufficient to permit a qualified authorized distributor of Geotek (a
"Designated Distributor") to install, operate and maintain the Products. MCEA
shall offer two (2) such training sessions per year at no additional cost to
Geotek and a reasonable number of Designated Distributors, such number to be
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established by agreement of the parties. Additional training, if requested by
Geotek, shall be provided by MCEA subject to a reasonable fee for each such
training program.
15.2 Training sessions may be held, at Geotek's option, at either Geotek's
facility or MCEA's facility. In the event Geotek elects to conduct the training
sessions at its facility, Geotek shall reimburse MCEA for reasonable travel and
living expenses of MCEA employees providing such training.
15.3 MCEA agrees to provide Geotek with ongoing technical support to assist
Geotek in the installation, operation and/or maintenance of the Products at no
additional charge to Geotek. MCEA shall provide, for a period of two (2) years
following the termination of this Agreement, such technical support on MCEA's
standard service terms and at MCEA's then current standard charges for such
services.
16.0 PRICING AND PAYMENT.
16.1 The unit prices to be paid by Geotek for Product(s), as set forth in
the Price/Quantity Matrix, Attachment 4, shall be based upon the total quantity
of Product(s) projected to be ordered during the initial Billback Term of this
Agreement and as subsequently amended by mutual agreement.
16.2 Except as otherwise provided in this Agreement, the unit price
includes all charges for the Product(s), any related deliverable items and
services and packaging for Delivery to Geotek.
16.3 If, at the end of each Billback Term, Geotek has ordered a total
quantity of Product(s) greater or less than the projected quantity specified in
the Price/Quantity Matrix, the unit price for each Product shall be recalculated
based upon the total quantity actually ordered by Geotek. If the actual quantity
ordered is less than the projected quantity, MCEA shall invoice Geotek and
Geotek shall pay the difference between the recalculated price and the price
already paid by Geotek for previously Delivered Product(s). If Geotek has
purchased more than the projected quantity, MCEA shall pay Geotek the difference
between the recalculated price and the price already paid by Geotek for
previously Delivered Product(s). Any such recalculation shall be based upon the
Engineering Change level and the Price/Quantity Matrix in effect for the
Product(s) at the time of their Delivery. Any payment required hereunder shall
be made within thirty (30) days after the end of the applicable Billback Term.
16.4 At any time during the term of this Agreement, the parties may
increase or decrease the projected quantity by mutual agreement. The unit price
to be paid by Geotek for Product(s) delivered after such notification shall be
the applicable price for the new projected quantity specified in the
Price/Quantity Matrix.
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16.5 Geotek represents and warrants to MCEA that, prior to the delivery of
the first Products pursuant hereto, it shall hold a valid reseller's exemption
certificate for Product(s) purchased for resale in each applicable taxing
jurisdiction. MCEA shall, where the law permits, treat Geotek as exempt from
applicable state and/or local sales tax for Product(s) purchased pursuant to
this Agreement. Where required by state or local law, Geotek shall provide MCEA
with a valid reseller's exemption certificate for each taxing jurisdiction to
which MCEA ships Product(s). Geotek shall promptly notify MCEA in writing of any
modification or revocation of its exempt status. Geotek shall reimburse MCEA for
any and all assessments, interest and penalties resulting from a refusal by a
taxing jurisdiction to recognize any of Geotek's exempt certificates or from
Geotek's failure to provide MCEA a valid certificate or to notify MCEA in
writing of any modification or revocation of its exempt status. When Geotek
purchases Products for internal use pursuant to this Agreement, Geotek shall
notify MCEA and shall pay any applicable sales tax to MCEA.
16.6 If Geotek and MCEA renew or extend the term of this Agreement, the
parties shall negotiate a new Price/Quantity Matrix based upon the quantities of
Product(s) projected to be ordered by Geotek during such renewal term.
16.7 MCEA shall submit invoice(s) periodically to Geotek (i) for
development work; (ii) upon shipment of Product(s); and (iii) for all other
charges and expenses payable by Geotek pursuant to this Agreement. Invoice(s)
shall be sent to:
Geotek Communications, Inc.
Accounts Payable
20 Craig Road
Montvale, New Jersey 07645
16.8 Terms of payment shall be net thirty (30) days after receipt of an
invoice by Geotek. If any amount is not paid when due, Geotek shall pay MCEA
interest at a rate not to exceed the lesser of one and one-half percent (1 1/2%)
per month or the maximum allowed by law on the delinquent payment. Geotek shall
also reimburse MCEA for any costs of collection and reasonable attorneys' fees.
16.9 Upon the request of Geotek, MCEA shall execute and deliver to Geotek
bills of sale in connection with the shipment of the Products which shall
evidence conveyance of the Products free and clear of all liens, security
interests and encumbrances.
17.0 LIMITED PRODUCT WARRANTY.
17.1 Except for the firmware, parts and other materials provided by Geotek
and Geotek Vendors as set forth in the List of Non-MCEA Components, Attachment
5, MCEA warrants to Geotek that Product(s) sold and delivered by MCEA pursuant
to this Agreement shall conform in all material respects to the Production File
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and shall be free from defects in material and workmanship under normal use and
operation for a period of one (1) year from the Delivery Date.
17.2 This warranty shall not apply to any claims, problems or defects which
are the result of normal wear and tear, mishandling, misuse, failure to follow
written instruction of MCEA for the operation, care and maintenance of the
Products, neglect or improper testing or repair. This limited warranty shall
survive inspection, acceptance and payment.
17.3 To the extent Products are distributed outside of the United States,
the Production File and, if appropriate, the price shall be equitably modified
and agreed to by both parties to reflect the requirements of local government
agencies in such countries.
17.4 THE ABOVE WARRANTY IS THE EXCLUSIVE WARRANTY FROM MCEA TO GEOTEK WITH
RESPECT TO THE PRODUCTS. MCEA EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, WITH RESPECT TO THE PRODUCTS, INCLUDING BUT NOT LIMITED TO THE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
17.5 MCEA shall provide to Geotek detailed information, including location,
telephone number, contact person and hours of operation for the MCEA service
representative who will be Geotek's contact for warranty claims and questions.
17.6 The warranty period shall be extended by an amount equal to any time
period during which any Product covered by the warranty is being repaired.
Replaced Products shall be warranted for the balance of the original one (1)
year warranty period from their initial Delivery Date, plus time equal to the
time such Products are unavailable to the endusers because of replacement and
shipment time.
18.0 WARRANTY CLAIMS AND REPAIR.
18.1 Failures and/or defects attributable to the Design Specification or by
parts or components supplied by Geotek Vendors shall be the responsibility of
Geotek.
18.2 Geotek shall promptly notify MCEA of any Products which it believes do
not comply with MCEA's Limited Warranty and shall make such Products available
to MCEA for its inspection. Geotek shall be responsible, at its sole cost and
expense, for the initial level of problem diagnosis. Upon receipt of such
notification, MCEA shall, as soon as practicable, investigate any such claim to
determine the nature and cause and shall inform Geotek of the results.
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18.3 Geotek or Geotek's Designated Distributor shall return pursuant to
Subsection 14.2, Product(s) that are defective or that need repair or
replacement in accordance with this section to MCEA.
18.4 Except as provided in Section 18.5, MCEA shall, at MCEA's option,
either replace or repair Product(s) found to be defective during the warranty
period within a reasonable time after return by Geotek. Products repaired under
warranty shall appear and function as if they were new, excluding normal wear
and tear.
18.5 If the Product(s) are returned to MCEA and MCEA determines in good
faith that such Product(s) are not defective, Geotek shall pay MCEA a fixed
amount to be negotiated between MCEA and Geotek ("no defects found" charge) for
each such Product(s) and reimburse MCEA for the cost of return. Such charge
shall be renegotiated at the end of each Billback Term.
18.6 Upon receipt of the returned Product(s), MCEA shall repair and ship
the Product(s) to the location designated by Geotek or Geotek's Designated
Distributor(s) within ten (10) working days.
18.7 MCEA agrees to record date codes and corrective action for all
Product(s) returned for repair or replacement.
18.8 If Geotek so requests and agrees to bear the incremental cost,
Product(s) returned to MCEA for repairs shall be brought up to the latest
Engineering Change (EC) level when repaired (excluding "manufacturing only"
changes).
18.9 MCEA shall repair and upgrade non-warranty and/or post-warranty
Product(s) in accordance with Geotek or Geotek's Designated Distributor(s)
instruction and expense as set forth in Attachment 6, Repair Process. MCEA and
Geotek shall negotiate, in good faith, terms of a post-warranty repair agreement
for MCEA's continued repair of Product(s) for three (3) years after the
expiration or termination of this Agreement.
18.10 For warranty service, Geotek or its Designated Distributor(s) shall
pay the freight to MCEA, and MCEA shall pay the return shipping costs. For
post-warranty repairs, Geotek or its Designated Distributor(s) shall pay all
freight charges. MCEA shall issue Geotek a consolidated monthly invoice for all
such shipping costs.
19.0 CONFIDENTIALITY.
19.1 Before and during the term of this Agreement, each party may disclose
to the other party certain Technology, design and manufacturing data, business
and financial plans or other information related to the subject matter of this
Agreement, either in writing, by other tangible medium or orally, which the
disclosing party considers to be and desires to be treated as confidential
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("Confidential Information"). For purposes of this section, as to MCEA, the
Design Specification shall be Confidential Information of Geotek. As to Geotek,
the Manufacturing Standards shall be Confidential Information of MCEA. All such
information shall be labeled or identified as "Confidential" or "Proprietary" or
with some similar designation indicating its proprietary nature. If such
Confidential Information is disclosed orally, the disclosing party shall so
designate at the time of disclosure and shall confirm its confidential nature in
writing to the receiving party within fifteen (15) days after such oral
disclosure.
19.2 Without the prior written consent of such party, neither party shall
disclose the Confidential Information of the other party to any third party,
other than to its own employees and to employees of Subsidiaries, Affiliated
Companies or independent contractors with a need to know who are bound by
confidentiality agreements comparable in scope to this section, nor use the
Confidential Information of the other party for any other purpose other than the
performance of this Agreement.
19.3 Each party shall use the same degree of care to avoid inadvertent
disclosure and impermissible use of the disclosing party's Confidential
Information which the receiving party employs with respect to its own
proprietary confidential information of a similar nature which it does not wish
to have disseminated, published or disclosed.
19.4 This section shall not apply to, and neither party shall be liable
for, the disclosure and use of any such Confidential Information which is:
a. Already in the possession of the receiving party or its
Subsidiaries or Affiliated Companies without an obligation of
confidentiality as shown by documentary evidence;
b. Publicly known through no fault of the receiving party;
c. Obtained by the receiving party from a third party who did not
owe the disclosing party a duty to preserve its confidentiality;
d. Independently developed by the receiving party or by any of its
Subsidiaries or Affiliated Companies without use of the Confidential
Information of the disclosing party as shown by documentary evidence;
e. Furnished to any third party by the disclosing party without a
similar duty to maintain its confidentiality;
f. Approved in writing for release by the disclosing party; or
g. Required to be disclosed by a court or other government
authority; provided that prompt notice is given to the disclosing
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party and the receiving party cooperates with the disclosing
party if requested to do so to resist disclosing such material or
information.
19.5 Geotek and MCEA agree that either party's breach of this Section 19.0
will cause the other party irreparable injury for which it will not have an
adequate remedy at law. In the event of a breach of this section, the
non-breaching party shall be entitled to injunctive relief in addition to any
other remedies it may have at law or in equity.
19.6 All Confidential Information is and shall remain the property of the
disclosing party. Confidential Information, and any copies thereof, shall be
returned to the disclosing party if requested at any time or upon termination of
this Agreement; provided that the receiving party may retain one (1) copy in a
confidential file for archival purposes for not more than the first to occur of
(i) the expiration of the applicable statute of limitations for lawsuits to be
brought for breach of this Section 19.0 after termination of this Agreement if
no lawsuit is brought or (ii) a final unappealable resolution of any litigation
brought pursuant to this Section 19.0.
19.7 The obligations of Geotek and MCEA under this Section shall survive
the expiration or termination of this Agreement for a period of five (5) years
if this Agreement is terminated by either party within the first two years after
the Effective Date or three (3) years if termination occurs thereafter.
20. INTELLECTUAL PROPERTY OWNERSHIP, LICENSE OF RIGHTS AND
RESTRICTIONS.
20.1 Geotek shall exclusively own all Proprietary Rights in the Design
Specification, including any extensions or enhancements or Technology relating
thereto, made solely or jointly by one or more of employees of Geotek or of any
of its Subsidiaries or Affiliated Companies during the term of this Agreement
and the performance of services hereunder.
20.2 MCEA shall exclusively own all Proprietary Rights in the Manufacturing
Standards, the MCEA Components and any modifications, enhancements, improvements
and any other idea, design, concept, technique, invention or discovery related
to the Manufacturing Standards or to the MCEA Components, whether or not
patentable or registerable, made solely or jointly by one or more employees of
MCEA or of any of its Subsidiaries or Affiliated Companies during the term of
this Agreement and the performance of services hereunder. Nothing contained in
this Subsection shall be deemed or construed to modify Geotek's rights under
Section 5.0 of this Agreement.
20.3 Except as specifically provided in this Agreement, neither party shall
have any rights in the Technology in which the other party owns the Proprietary
Rights.
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20.4 In consideration of MCEA's obligations under this Agreement, Geotek
hereby grants MCEA a non-exclusive, non-transferrable, royalty-free license for
the duration of this Agreement to use the Design Specification for the purpose
of developing, manufacturing and servicing the Products for Geotek and its
customers.
20.5 Inventions. "Invention" shall mean any patentable invention which is
made solely by either party, or jointly by the parties, during the Term of this
Agreement and in the course of designing and/or manufacturing the Product(s) and
which is not based upon, derived from or required as an inherent part the use of
(i) the Design Specification or (ii) the Manufacturing Standards or MCEA's
components. The party making an Invention shall promptly make a complete written
disclosure to the other party of such Invention, specifically pointing out the
features or concepts which it believes to be new or different. Each Invention
made solely by either party shall be that party's property, subject to a license
which that party hereby grants to the other party. All licenses granted to
either party under this subsection are worldwide, irrevocable, nonexclusive,
nontransferable and fully paid up and convey the right to make, have made, use,
have used, lease, sell and/or otherwise transfer any Product(s), to practice any
method covered by the licensed patents and shall include the right to the
grantee to grant sublicenses to its Subsidiaries and Affiliated Companies and to
third parties without accounting. Any sublicenses shall include the right of the
sublicensed Subsidiaries and Affiliated Companies correspondingly to sublicense
other Subsidiaries and Affiliated Companies and third parties. These sublicenses
may be irrevocable. Inventions made jointly by the parties shall be jointly
owned. Title to all patents issued thereon shall be joint. All expenses incurred
in obtaining and maintaining such patents shall be equally shared (except as
hereinafter provided), and each party shall have the right to grant a license
under such patents as heretofore provided without accounting provided, however
that MCEA shall: (i) mark or otherwise visibly distinguish products manufactured
for or sold to such other customers so as to make them clearly identifiable as
different from the Products; and (ii) offer to sell to Geotek the Products on
terms of sale no less favorable than those MCEA offers to its other customers
for any products similar in function to the Products in the same quantities and
on the same delivery schedule. With respect to any joint Inventions, where one
party elects not to seek or maintain such protection thereon in any particular
country or not to share equally in the expenses thereof, the other party shall
have the right to seek or maintain such protection at its own expense and shall
have full control over the prosecution and maintenance thereof even though title
to any patent issuing thereon shall be joint. Nothing contained in this
Agreement shall be deemed to grant either directly or by implication, estoppel
or otherwise, any license under any patents or patent applications relating to
inventions of either party not covered by this subsection.
20.6 Works of Authorship. All original works of authorship in the form of
documentation or other material useful in manufacturing, operating and servicing
the Product(s) which is prepared for or submitted to Geotek by MCEA under this
Agreement shall be owned by MCEA and shall be subject to a worldwide,
royalty-free, irrevocable, nonexclusive, nontransferable and fully paid up
license from MCEA to Geotek to reproduce, prepare derivative works based upon
and distribute such works in connection with the commercial exploitation of the
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Product(s); provided that such license shall not extend to any such works which
relate to the Manufacturing Standards or the design, specifications,
manufacturing, testing or operation of MCEA Components. Works of authorship
created jointly by the parties shall be jointly owned and title to all
copyrights registered thereon shall be joint. All expenses incurred in obtaining
copyright registration shall be equally shared and each party shall have the
right to license third parties under such copyrights without accounting on the
terms set forth in Subsection 20.5. Nothing contained in this Agreement shall be
deemed to grant, either directly or by implication, estoppel or otherwise, any
license under any copyrights relating to works of authorship of either party not
covered by this subsection.
20.7 Trademarks. Any other provisions of this Agreement notwithstanding,
neither party shall have the right to use the trademarks, trade names or
Product(s) names of the other party (including those of Subsidiaries or
Affiliated Companies) directly or indirectly in connection with any Product(s),
promotion or publication without the prior written approval of the other party.
21.0 INTELLECTUAL PROPERTY INDEMNIFICATION.
21.1 MCEA shall defend, indemnify and hold harmless Geotek from any claims,
suits, actions, liabilities and costs of any kind, including reasonable
attorneys' fees and costs, arising from or related to any suit or claim against
Geotek to the extent such suit or claim is based upon an assertion that the
Manufacturing Standards (except for such portion of the Manufacturing Standards
which is reasonably and essentially required to comply with the Design
Specification) or any MCEA Component by itself or in combination with any other
MCEA Component as used in the Product(s) infringes Proprietary Rights of a third
party, and MCEA shall pay the amount of the settlement or the costs, damages and
attorneys' fees and costs finally awarded by a court in any such suit or claim,
provided that:
a. Geotek promptly notifies MCEA in writing of any such claim or
threatened or actual suit;
b. MCEA has sole control of the defense and settlement of such suit,
claim or the like and related settlement negotiations; and
c. Geotek cooperates in the defense and settlement negotiation of
such suit or claim.
21.2 In the event MCEA is notified of an actual claim or suit or of a
threatened claim or suit or determines that such claim or suit is likely to
occur for which it is obligated to provide indemnification pursuant hereto, MCEA
may, at its expense, without obligation to do so, procure for Geotek the right
to continue to market, use and have others market and use the Product(s), or
MCEA may, at its expense, replace or modify the Product(s) to make them
non-infringing, in which event Geotek shall return all the Product(s) in
Geotek's inventory or under its control using the allegedly infringing
Manufacturing Standards or MCEA Component(s) to MCEA in order for MCEA
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to perform such replacement or modification. In the event of an actual claim or
suit and if MCEA determines that none of the preceding alternatives is
reasonably available, Geotek shall return such Product(s) that are in Geotek's
inventory or under its control to MCEA, and MCEA shall give Geotek credit and/or
reimburse to Geotek an amount equal to the price paid by Geotek to MCEA for such
returned Products.
21.3 Geotek shall defend, indemnify and hold harmless MCEA and its
Affiliated Companies from any and all claims, suits, actions, liabilities and
costs of any kind, including reasonable attorneys' fees and costs, arising from
or related to any suit or claim against MCEA to the extent such suit or claim is
based upon an assertion that the Product(s) or any portion thereof (including,
but not limited to, the Design Specification, software and firmware of the
Products, parts and components obtained from Geotek vendors and the FHMA(TM)
technology), other than the Manufacturing Standards or the MCEA Components,
infringe Proprietary Rights of a third party, and Geotek shall pay the amount of
settlement or the costs, damages, and attorneys' fees and costs finally awarded
by a court in any such suit or claim, provided that:
a. MCEA promptly notifies Geotek in writing of any such claim or
threatened or actual suit;
b. Geotek has sole control of the defense and settlement of such
suit, claim or the like and related settlement negotiations; and
c. MCEA cooperates in the defense and settlement negotiation of such
suit, claim or the like.
21.4 In the event Geotek is notified of an actual claim or suit or of a
threatened claim or suit or determines that such claim or suit is likely to
occur for which it is obligated to provide indemnification pursuant hereto,
Geotek may, at its expense, without obligation to do so, procure for MCEA the
right to continue to manufacture the Product(s) for Geotek or its Designated
Distributor, or Geotek may, at its expense, replace or modify the infringing
Product(s) to make them non-infringing, in which event MCEA will cooperate with
Geotek, at Geotek's expense, in such replacement or modification. If Geotek
determines that none of the alternatives is reasonably available, Geotek agrees
to: (i) purchase from MCEA such Product(s) at the prices specified in Geotek's
then outstanding Purchase Order; (ii) pay MCEA its costs for work-in-process and
materials which MCEA is contractually obligated to purchase; and (iii) reimburse
MCEA for its nonrecurring engineering expenses incurred in the manufacturing of
the Product(s) that MCEA has not recovered to date.
21.5 Limitation on MCEA's Indemnification. MCEA shall have no obligation to
Geotek regarding any Proprietary Rights claim or suit, whether actual or
threatened, under the terms of this Section 21 to the extent that such claim or
suit is caused by, arises from or is attributable to:
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a. Any modification to any MCEA Component: (i) by Geotek or any
third party or (ii) by MCEA as instructed by Geotek or otherwise
pursuant to the Design Specification or a subsequent modification
thereof;
b. The combination, operation or use of a MCEA Component with any
other product, data, apparatus or application;
c. The use of the Product(s) or any MCEA Component in a manner that
is not within the contemplated scope or in connection with the terms
of this Agreement;
d. MCEA's compliance with the Design Specification or, to the extent
that such portion is reasonably and essentially required to comply
with the Design Specifications, any portion of the Manufacturing
Standards;
e. A device incorporated into the Product(s) which is procured from
a third party at the direction of Geotek;
f. The use of any Product(s) in a manner for which it was not
designed or in combination with any equipment not designed, developed
or manufactured by MCEA; or
g. The settlement of any suit or claim without the consent of MCEA.
21.6 Limitation on Geotek's Indemnification. Geotek shall have no
obligation to MCEA regarding any Proprietary Rights claim or suit, whether
actual or threatened, under the terms of this Section 21 to the extent that such
claim or suit is caused by, arises from or is attributable to:
a. Any modification of any Geotek Component: (i) by MCEA or (ii) by
Geotek as instructed in writing by MCEA;
b. The combination, operation or use of a Geotek Component with any
MCEA Component;
c. Geotek's compliance with the Manufacturing Standards;
d. A device incorporated into the Product(s) which is procured from
a third party at the direction of MCEA; or
e. The settlement of any claim or suit without the consent of
Geotek.
21.7 Avoidance of Infringement. In performing its obligations under this
Agreement, each party represents to the other that, to the best of its
knowledge, it is not infringing any patent, copyright, mask work right,
tradename, trademark or trade secret of any third party.
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21.8 MCEA's indemnification provided in this Section 21.0 does not extend
to (i) infringement that would not have occurred but for modifications or
additions by persons other than MCEA to the Products or to MCEA components; (ii)
infringement that would not have occurred but for modifications or additions to
the Design Specification or other materials provided by Geotek to MCEA under
this Agreement; (iii) settlement of any claim made without the consent of the
indemnifying party; or (iv) combination of the Products or MCEA components with
other products.
21.9 Limitations on the Parties' Intellectual Property Indemnification
Obligations. This Section 21.0 shall survive the expiration or termination of
this Agreement in any manner whatsoever. This Section 21.0 specifies the
exclusive remedies of the parties for any alleged infringement or
misappropriation of any Proprietary Right of any third party by the
Manufacturing Standards or the MCEA components provided by MCEA to Geotek under
this Agreement and by the Design Specification or other material provided by
Geotek to MCEA under this Agreement. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER BY VIRTUE OF ANY SUCH INFRINGEMENT OR VIOLATION FOR; (I) INCIDENTAL,
INDIRECT OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT OR TORT; OR (II) ANY
COSTS OR EXPENSES INCURRED WITHOUT THE OTHER'S WRITTEN AUTHORIZATION AND NOT IN
COMPLIANCE WITH THIS SECTION 21.
22.0 OTHER INDEMNIFICATION.
22.1 MCEA shall defend, indemnify and hold harmless Geotek from all
damages, costs, expenses, including reasonable attorneys' fees and costs, and
all other liabilities incurred by Geotek by reason of MCEA's violation of its
obligations under Section 12 of this Agreement or by reason of any claim for
bodily injury, including death, or damage to property caused by any defects in
the Product(s) produced and sold by MCEA pursuant to this Agreement; provided
that MCEA shall not be liable in any event for loss or injury to persons or
property to the extent such loss or injury is caused by, arises from or is
attributable to (i) compliance with the Design Specification; (ii) any
component, equipment or software not furnished by MCEA; (iii) misuse, neglect,
abuse of or accident to the Product(s) in an application for which they were not
intended or operation under environmental, power, electrical and operating
conditions which are beyond those specified by MCEA; (iv) use of the Product(s)
in an application for which they were not intended; (v) improper inadequate
installation, operation, maintenance or repair; or (vi) modification in a manner
not authorized in writing by MCEA.
22.2 Geotek shall defend, indemnify and hold harmless MCEA from and against
all damages, costs, expenses, including reasonable attorneys' fees and costs,
and all other liabilities incurred by MCEA by reason of claim for bodily injury,
including death, or damage to property caused by the negligence or willful
misconduct of Geotek or resulting or arising from the Design Specification or
the parts and components obtained from Geotek Vendors.
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22.3 Each party hereby agrees that its obligations to the other relative to
third party claims pursuant to this Section 22.0 are subject to:
a. The indemnified party promptly notifying the indemnifying party
of any claim or threatened or actual suit;
b. The indemnifying party having sole control of the defense and
settlement of such action or claim and related settlement
negotiations; and
c. The indemnified party cooperating in the defense and settlement
of such suit or claim.
23.0 LIMITATION OF LIABILITY.
23.1 NEITHER PARTY SHALL BE LIABLE TO THE OTHER, WHETHER IN CONTRACT OR IN
TORT, FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND,
INCLUDING, BUT WITHOUT LIMITATION, CLAIMS FOR LOST PROFITS OR LOSS OF GOODWILL,
EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, BY
REASON OF ANY BREACH OR DEFAULT UNDER THIS AGREEMENT.
24.0 INSURANCE.
24.1 Each party shall maintain its own workers' compensation and
comprehensive general liability insurance (including product liability coverage)
for claims for damages because of bodily injury or death and property damage
caused by or arising out of acts or omissions of its employees. The minimum
limits of such insurance shall be ONE MILLION DOLLARS ($1,000,000) combined
single limit per occurrence.
25.0 TERM OF THE AGREEMENT.
25.1 The term of this Agreement shall commence on the effective date first
set forth above and shall automatically expire June 7, 1996 without notice;
provided that this Agreement shall be extended automatically for three (3)
additional periods of one (1) year each unless terminated, with or without
cause, upon notice by either party to the other not less than one hundred eighty
(180) days prior to the end of an additional period.
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26.0 TERMINATION.
26.1 Either party shall have the right to immediately terminate this
Agreement by notice to the other party if the other party:
a. Files a petition in bankruptcy, undergoes a reorganization
pursuant to a petition in bankruptcy, is adjudicated bankrupt, becomes
insolvent, is dissolved or liquidated, files a petition for
dissolution or liquidation, makes an assignment for benefit of
creditors, has a receiver appointed for its business or otherwise
becomes unable to meet its debts as they become due and payable;
b. Has all or a substantial portion of its capital stock or assets
expropriated by any government or other sovereign entity; or
c. Is subject to a property attachment, court injunction or court
order which materially affects its performance under this Agreement.
d. Subject to Subsection 26.3, undergoes a change in control.
26.2 "Change of Control" shall be deemed to have occurred if:
a. Any person, group (within the meaning of rule 13d-5 under the
Securities Exchange Act as in effect as of the effective date of this
Agreement) or other entity shall come to own, directly or indirectly,
beneficially or of record, voting securities representing more than 50%
of the total voting power of the other party; or
b. The other party becomes a Subsidiary of a third party which is
not an Affiliated Company.
26.3 MCEA's right to terminate pursuant to Subsection 26.2 shall be
exercisable only in the event the Change in Control results in more than fifty
percent (50%) of the total voting power of Geotek being owned by a competitor of
MCEA in the wireless telecommunications equipment business and which Change in
Control is likely, in the reasonable judgment of MCEA, to result in a detriment
to MCEA in such business; provided that in the event of such termination (i)
MCEA shall refill all Purchase Order previously accepted by MCEA and outstanding
on the effective date of such termination on the terms set forth therein and
this Agreement and (ii) Geotek shall have the right, within thirty (30) days
after such termination to submit a final Purchase Order for such quantity of
Products that does not exceed the total number of Products delivered during the
Term pursuant to Geotek's two (2) largest consecutive monthly Purchase Orders.
26.4 Geotek and MCEA shall each have the right to terminate this Agreement
for material breach by the other party. Except for Geotek's failure to pay
timely any money due and owing to MCEA, for which five (5) days shall
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be the time for cure, and except as otherwise specifically provided in this
Agreement, termination shall become effective ninety (90) days after notice to
the breaching party if the breach is not cured within such ninety (90) days
period or, if not susceptible of cure within ninety (90) days, the breaching
party begins cure within ninety (90) days and diligently pursues cure to
completion. Such notice shall specifically identify the nature of the breach and
state an intent to terminate the Agreement.
26.5 If Geotek terminates this Agreement for any of the reasons specified
in Subsections 26.1 and 26.4, MCEA shall:
a. Immediately cease all assembly operation and production required
by Purchase Order(s) previously issued under this Agreement;
b. Deliver all completed Product(s) already manufactured pursuant to
such Purchase Order(s);
c. Return, at Geotek's expense, all loaned or leased equipment
provided to MCEA by Geotek under this Agreement; and
d. Prepare and submit to Geotek an itemization of all partially
completed Product(s), assemblies in process and parts inventories,
including parts which MCEA is committed to purchase from its
subcontractors ("Work in Process"), which are allocated to the
Purchase Order(s) placed under this Agreement.
Geotek shall pay MCEA (i) for Work in Process at MCEA's cost of material, labor
and overhead and (ii) the price specified in Geotek Purchase Orders for the
completed Product(s) Delivered pursuant to this Subsection 26.5 if termination
is pursuant to Subsection 26.1 or because of Geotek's uncured material breach of
this Agreement, but not if because of MCEA's uncured material breach of this
Agreement.
26.6 If MCEA terminates this Agreement for any of the reasons specified in
Subsections 26.1(a), (b), or (c), but not (d), or 26.4, Geotek shall (i) accept
delivery of all ordered Products, (ii) pay all MCEA invoices immediately upon
termination or when received if subsequently issued, (iii) pay for Work in
Progress and materials which MCEA has ordered or committed to purchase and
cannot cancel, (iv) pay for unrecovered development and tooling costs and (v)
pay a reasonable profit and price adjustment pursuant to the Price/Quantity
Matrix.
26.7 If Geotek terminates this Agreement pursuant to Subsection 26.1 or
26.4, Geotek shall not be liable for unit price recalculations specified in
Section 16.0 if there is a purchase shortfall. If MCEA terminates this Agreement
pursuant to Subsection 26.1 or 26.4, Geotek shall be liable for unit price
recalculations as specified in Section 16.0 if there is a purchase shortfall.
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27.0 FORCE MAJEURE.
27.1 Neither party shall be liable to the other party if the performance of
any of its obligations under this Agreement is prevented or delayed because of
causes beyond its reasonable control including, without limitation, fire,
strike, war, insurrection, act of God, law, regulation and embargo of government
agency, riot, severe weather, restriction on the use of power or nay other cause
beyond its reasonable control and not due to such party's own fault or
negligence (an "Excusable Delay"). Such party shall be excused from its
performance to the extent caused by such Excusable Delay; provided that such
party (i) gives notice of the Excusable Delay to the other party promptly after
its occurrence, (ii) uses its reasonable efforts to overcome, mitigate and
remove the cause of the event preventing or delaying performance, (iii)
continues the performance of all its obligations under this Agreement that are
not prevented or delayed and (iv) upon cessation of the Excusable Delay,
promptly performs or completes performance of the obligations which were
prevented or delayed.
28.0 ENGINEERING CHANGES.
28.1 "Engineering Change" shall mean any mechanical, electrical, software,
electro-mechanical or process change to any Product(s), including changes
originating from Geotek or MCEA, which would affect the safety, performance,
cost, reliability, serviceability, appearance, dimensions, tolerances, materials
and composition of any bill of material of the Product(s).
28.2 Either party may request an Engineering Change. The Managing
Coordinator of the requesting party shall give a written request for the
Engineering Change to the Managing Coordinator for the other party.
28.3 If Geotek requests an Engineering Change, within twenty (20) days of
receiving the request, MCEA shall either report to Geotek in writing the likely
effects of the change on the Product(s)'s performance, reliability, safety, time
of Delivery and prices or explain that such effects cannot be determined. If
MCEA requests an Engineering Change, it shall submit such report with the
request.
28.4 Geotek shall decide whether to implement an Engineering Change within
thirty (30) days of receiving the written report from MCEA. MCEA shall not
implement an Engineering Change without Geotek's written approval, and Geotek
agrees not to unreasonably withhold approval to a change requested by MCEA.
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29.0 REPRESENTATIONS.
29.1 Each party represents to the other that: (i) it has all requisite
power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby; (ii) the execution, delivery and performance
of this Agreement are duly authorized; (iii) this Agreement has been duly
executed and delivered by it and is a valid and binding obligation of it; and
(iv) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not conflict with or
violate its charter and by-laws, any other contract or agreement to which it is
a party or any applicable law or any order or judgment of any court or
governmental authority.
29.2 Geotek represents that it holds all necessary licenses and permits
required by the Federal Communications Commission to provide FHMA(TM) wireless
mobile communications services in the United States markets where it offers such
services and that such licenses and permits are in full force and effect.
29.3 MCEA represents that it has the rights, licenses, permits and power to
perform all obligations incurred by it under this agreement, including, but not
limited to, any necessary rights from MCEA's Affiliated Companies, to grant and
deliver to Geotek all Product(s) and rights as provided under this Agreement.
29.4 Geotek represents that it and PST have the rights, licenses, permits
and power to perform all obligations incurred by them under this Agreement,
including, but not limited to, any necessary rights to or ownership of the
Technology and Proprietary Rights related to the Design Specification and the
Products, and Geotek guarantees the performance of PST's obligations under this
Agreement.
30.0 ORDER OF PRECEDENCE.
30.1 In the event of any inconsistency in the provisions of the following,
the order of precedence shall be as follows:
a. This Agreement without its Attachments.
b. Attachments to this Agreement.
c. Provisions specified in Subsection 7.4 of this Agreement which
appear on the face of Geotek's Purchase Orders as may be modified and
mutually agreed upon by MCEA without regard to any pre-printed
provisions on any such Purchase Order.
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d. The terms and conditions set forth in this Agreement shall
supersede any inconsistent terms and conditions set forth in any
Purchase Order or other standard form used by either party.
31.0 PUBLICITY.
31.1 Neither party shall make or issue any publicity, news release, public
announcement or communication of any sort with the media, direct or indirect,
written or oral, concerning this Agreement or the transactions contemplated by
this Agreement without the prior written consent of the other party, not to be
unreasonably withheld, except as otherwise required in connection with
regulatory filing or by applicable law.
31.2 If either party proposes to include in any advertising a reference to
the other party or to any of the other party's trademarks, tradenames or service
marks ("Trademarks"), then the other party shall have the right to approve such
advertising copy before its publication, which shall not be unreasonably
withheld. Once a particular use of a party's corporate name or Trademarks has
been approved by such party, further approval of substantially the same usage
shall not be required.
32.0 ASSIGNMENT OR DELEGATION PROHIBITED.
32.1 Neither party shall assign its rights or delegate its obligations
under this Agreement without the prior written approval of the other party. Any
attempted assignment or delegation without such an approval shall be void.
33.0 GOVERNING LAW AND FORUM.
33.1 This Agreement shall be governed by and the legal relations between
the parties shall be determined in accordance with the substantive laws of the
State of Delaware without regard to the conflicts of law principles of Delaware.
The parties expressly waive any right to a jury trial and agree that any legal
proceeding shall be tried by a judge without a jury.
34.0 NO WAIVER.
34.1 Failure of either party to insist on strict conformance to any term of
this Agreement or Purchase Orders issued pursuant to this Agreement or failure
by either party to act in the event of a breach or default shall not be
construed as a consent to or waiver of such breach or default or of any
subsequent breach or default of the same or any other term contained in this
Agreement. No waiver by either party of any right or remedy under this Agreement
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<PAGE>
on any occasion shall be deemed a waiver or otherwise affect such right or
remedy on any other occasion. The right of either party to require strict
performance and observance of any obligation under this Agreement shall not be
affected by any previous waiver or course of dealing.
35.0 PROCUREMENT UNDERSTANDING.
35.1 Subject to Section 19 hereof, this Agreement does not preclude or
prohibit either party from entering into any other agreement with others, or
from itself developing, manufacturing or distributing any product or service,
including, without limitation, products similar to those which are the subject
to this Agreement provided, that MCEA shall: (i) mark or otherwise visibly
distinguish products manufactured for or sold to such other customers so as to
make them clearly identifiable as different from the Products; and (ii) offer to
sell to Geotek the Products on terms of sale no less favorable than those MCEA
offers to its other customers for any products similar in function to the
Products in the same quantities and on the same delivery schedule.
36.0 COMPLIANCE WITH U.S. GOVERNMENT EXPORT CONTROLS.
36.1 MCEA is selling the Products to Geotek for resale and use within the
United States. If either party exports any Product (or any Technology related
thereto created as a result of actions taken in furtherance of this Agreement),
such party shall be responsible for complying with the United States Export
Administration Act as amended from time to time, with the Export Administration
Regulations promulgated from time to time thereunder, with all other export laws
and regulations of the United States and with all amendments, modifications or
additions thereto, including all laws and regulations relating to re-export. In
addition, if Geotek requests MCEA to export Products or any Technology related
thereto, Geotek shall be responsible for providing MCEA with timely, complete
and accurate information for MCEA to determine, in its sole judgment, the type
of export license or permit required by applicable law. Except as provided in
the second sentence of this Subsection 36.1, in no event shall MCEA be liable to
Geotek or any third party for any delays or failure to obtain an export license
or permit or to export any such orders of Geotek. Each party shall indemnify and
hold harmless the other from all liabilities, damages, costs and expenses
arising from or connected with any breach of its obligations under this action.
37.0 SURVIVAL OF TERMS.
37.1 Except to the extent specifically provided for in Subsection 19.7, all
obligations and duties arising prior to the effective termination or expiration
date or that by their nature are intended to survive the expiration,
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<PAGE>
cancellation or termination of this Agreement shall remain in effect after
expiration, cancellation or termination.
38.0 GENERAL.
38.1 While on the other party's premises, each party shall abide by the
other party's procedures, rules and regulations with respect to safety and
security.
38.2 Each party is an independent contractor. Nothing in this Agreement
shall be construed as establishing a partnership, joint venture or
employer-employee relationship between Geotek and MCEA.
38.3 The following Attachments shall form an integral part of this
Agreement as though written out in full in this Agreement:
a. Attachment 1: Design Specification
b. Attachment 2: Manufacturing Standards
c. Attachment 3: Production File
d. Attachment 4: Price/Quantity Matrix
e. Attachment 5: List of Non-MCEA Components
f. Attachment 6: Repair Process
39.0 NOTICES.
39.1 All notices, requests and other communications permitted or required
to be given pursuant to this Agreement shall be in writing and shall be sent to
the recipient party at its address set forth below:
If to Geotek: 20 Craig Road
Montvale, New Jersey 07645
Attn: Yaron Eitan
Telephone: (201) 930-9305
Facsimile: (201) 930-9614
with a copy to its General Counsel at the same address.
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If to MCEA: 2001 Cherry Drive
Braselton, Georgia 30517
Attn: John Savage
Telephone: (706) 654-3011
Facsimile: (706) 654-3940
with a copy to: Exec. Vice President & General Counsel
Mitsubishi Electric America, Inc.
5665 Plaza Drive
Cypress, California 90630
39.2 Any such notice shall be effective on delivery if delivered in person;
when receipt is acknowledged if sent by facsimile; upon signature of receipt if
sent by prepaid certified mail; and upon the expiration of a second business day
after such notice is sent by Federal Express or other reputable overnight
delivery service. The parties may, by notice given in accordance herewith,
designate other addresses and/or facsimile numbers for receipt of notice.
40.0 ENTIRE AGREEMENT.
40.1 This Agreement, together with its Attachments, constitutes the entire
agreement of the parties respecting its subject matter. It supersedes all
previous communications and understanding and agreements, written or oral,
between the parties relative to its subject matter and merges all discussions
between them.
40.2 This Agreement may only be amended by subsequent written agreement
which is signed by authorized officers of both parties. If any provision of this
Agreement is held to be illegal, invalid or unenforceable, the legality,
validity and enforceability of the remaining provisions shall not be affected or
impaired.
41.0 EFFECT OF TITLE AND HEADINGS.
41.1 The title of this Agreement and the headings of its sections are
included for convenience and shall have no interpretive significance.
42.0 COUNTERPARTS.
This Agreement may be executed by the parties and counterparts, both of
which, when taken together, shall constitute a single agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the date first written above.
GEOTEK COMMUNICATIONS, INC. MITSUBISHI CONSUMER
ELECTRONICS AMERICA, INC.
By: /s/ Yaron Eitan By: /s/ John A. Savage
------------------------- ---------------------------
By: Yaron Eitan By: John A. Savage
------------------------- ---------------------------
Print Name Print Name
Title: President Title: Executive Vice President
------------------------- ---------------------------
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Attachment 1: Design Specification
----------------------------------
[To be provided by PST pursuant to Section 3.3 of the Agreement]
<PAGE>
Attachment 2: Manufacturing Standards
-------------------------------------
[To be provided by MCEA pursuant to Section 3.5 of the Agreement]
<PAGE>
Attachment 3: Production File
-----------------------------
[To be compiled by PST pursuant to Section 5.1 of the Agreement]
<PAGE>
Attachment 4: Price/Quantity Matrix
-----------------------------------
[To be mutually agreed to by the Parties.]
<PAGE>
Attachment 5: List of Non-MCEA Components
-----------------------------------------
[To be provided by Geotek pursuant to Section 17.1 of the Agreement]
<PAGE>
Attachment 6: Repair Process
----------------------------
[To be provided by Geotek pursuant to Section 18.9 of the Agreement]
<PAGE>
FHMA PORTABLE SUBSCRIBER UNIT AGREEMENT
by and between
HUGHES NETWORK SYSTEMS, INC.
and
GEOTEK COMMUNICATIONS, INC.
Dated as of May 19, 1995
<PAGE>
AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of this 19th day
of May, 1995 (the "Effective Date"), by and between GEOTEK COMMUNICATIONS, INC.,
a Delaware corporation, with offices at 20 Craig Road, Montvale, New Jersey
07645 ("Geotek"), and HUGHES NETWORK SYSTEMS, INC., a Delaware corporation, with
offices at 10450 Pacific Center Court, San Diego, California 92121 ("HNS").
RECITALS
A. Geotek is engaged in the business of providing wireless
communication services (voice and data) and is the owner of licenses (the "FCC
Licenses") issued by the Federal Communications Commission ("FCC") in certain
markets within the United States. Geotek, through its subsidiary, PowerSpectrum
Technology, Ltd., a corporation organized under the laws of Israel ("PST"), is
engaged In the development of certain proprietary digital wireless
communications technology known as Frequency Hopping Multiple Access ("FHMA")
for the purpose of providing wireless communications services (the "FHMA
Technology"), as more particularly described in Annex A attached hereto. In
connection with such efforts, Geotek desires for HNS to develop a design
specification and a manufacturing specification for an FHMA - based portable
subscriber unit (the "PSU900D"), and to manufacture PSU900Ds for sale to Geotek
and its end users pursuant to the terms hereof.
B. HNS is engaged in the business of designing, manufacturing and
distributing wireless communications equipment, including digital cellular radio
terminals, and is the owner of certain proprietary information related thereto.
HNS desires to develop a design specification for the PSU900D and to manufacture
PSU900Ds for sale to Geotek and its end users pursuant to the term hereof.
C. Geotek and HNS have entered into an Interim Agreement, dated as of
March 8, 1995, under which the parties hereto expressed their interest in
mutually cooperating toward, among other things, the development and
manufacturing of the PSU900D, and wish to establish in this Agreement the terms
and conditions relating to such development and production of PSU900Ds.
D. Geotek and HNS acknowledge that trade-offs may be necessary in the
development of the PSU900D under this Agreement that might affect one or more of
the schedule, costs, performance or reliability of the PSU900Ds.
E. Geotek and HNS acknowledge that time to market is a critical success
factor for the PSU900D, Geotek service business and other market acceptance of
the FHMA Technology, therefore Geotek and HNS have established [Information
intentionally omitted and filed separately with the Securities and Exchange
Commission in connection with an application for confidential treatment.] as the
target date for starting delivery of Production Units (as defined below). Geotek
and HNS further acknowledge that the scheduled date for initial production
cannot be determined until the completion of the Design Specification and
Project Plan to be incorporated in Annex D.
<PAGE>
AGREEMENT
NOW THEREFORE, in consideration of the mutual provisions hereinafter
set forth, Geotek and HNS, intending to be legally bound, agree as follows:
ARTICLE 1
MANAGING COORDINATORS
HNS and Geotek each shall appoint a "Managing Coordinator" who shall
manage such party's performance under this Agreement, be the primary
manufacturing and technical interface with the other party and serve as the
focal point for the identification and resolution of any problems that may
surface during the course of development and manufacturing of the PSU900D.
Promptly following the Effective Date, each party shall provide written notice
to the other party of its initial Managing Coordinator, and thereafter shall
give prompt notice to the other party in the event there is a change in its
Managing Coordinator. The Managing Coordinators shall not have authority to
amend or modify the terms of this Agreement.
ARTICLE 2
DEVELOPMENT
2.1. Deliveries by Geotek. Within 30 days following the Effective Date,
Geotek shall provide to HNS the documents set forth in Annex B hereto (the
"Geotek Specification"). HNS acknowledges that such documents may be in final or
draft form. HNS shall provide written confirmation to Geotek upon receipt of all
such documents, and promptly notify Geotek if any additional information or
documents are required by HNS prior to the preparation of the items set forth in
Section 2.2. Following the receipt of any such additional documents, HNS and
Geotek will have 10 days to review and reach mutual agreement as to the
requirements set forth in Annex B.
2.2. Deliveries by HNS. Within 60 days of reaching the mutual agreement
set forth in Section 2.1, HNS shall prepare and deliver to Geotek the following:
(a) Design Specification. A design specification for the
PSU900D (the "Design Specification"), which shall incorporate the requirements
outlined in the Geotek Specification and shall contain the items set forth in
Annex C hereof;
(b) Project Plan. A development and production schedule and
project plan (the "Project Plan") which shall contain an outline of the
development effort for the PSU900D, set forth milestone dates in respect of such
development effort (including but not limited to events where mutual agreement,
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approvals or testing is required and deliverables from sub-contractors are
due), and set forth the preliminary production schedule.
2.3. Interactive Support. Both parties acknowledge that the development
of the items set forth in Sections 2.1 and 2.2 is a collective effort which will
include, without limitation, the sharing of information (including proprietary
information) necessary for the timeliness and completeness of the deliverables.
2.4. Approval of Design Specification and Project Plan.
(a) Upon delivery of the Design Specification, Geotek and HNS
shall review the Design Specification and determine whether the product defined
therein incorporates the requirements of the Geotek Specification, and whether
the Acceptance Test Plan set forth therein will adequately demonstrate that the
PSU900D meets the Design Specification. The Design Specification, upon mutual
approval, shall be used as the controlling document for the design effort and
for acceptance of the product developed hereunder by Geotek.
(b) Geotek and HNS shall review the Project Plan and agree
upon the milestone dates for the development schedule and production schedule
set forth therein, which shall be consistent with this Agreement. Upon mutual
approval, HNS shall use its best efforts to meet the milestones set forth in the
Project Plan.
(c) Geotek shall have 10 business days from its receipt of
deliveries from HNS pursuant to Section 2.4(a) and (b) to review such deliveries
and provide comments to HNS. Any item not specifically disapproved within such
period shall be deemed approved by Geotek.
(d) All aspects of the Design Specification and Project Plan
which affect HNS' ability to meet the schedule, cost and performance,
development and delivery parameters of the project shall be subject to mutual
agreement. Geotek shall make the final decision with respect to all other
matters relating thereto.
(e) Upon mutual approval thereof by Geotek and HNS, the Design
Specification and the Project Plan shall be attached hereto as Annex D and shall
thereupon be incorporated herein.
2.5 Quarterly Reviews. Following approval of the Design Specification
and the Project Plan and until the Completion of Development (as defined in
Section 2.11), HNS and Geotek shall hold quarterly reviews of the development
effort for the PSU900D, which shall cover, among other things, progress toward
meeting milestone dates and the cost of development.
2.6 Amendments. The Design Specification and the Project Plan, once
approved by Geotek and HNS, shall be amended or modified only upon the consent
of both parties, which consent shall not be unreasonably withheld. Any such
amendment or modification shall be made only by a written agreement executed by
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each party specifically amending Annex D hereto. In the event of a change in the
Design Specification or the Project Plan, the parties shall, to the extent
appropriate, negotiate in good faith reasonable and equitable, adjustments in
the price, payments and/or payment schedule set forth in Articles 4 and 5
(including without limitation the advance payments set forth in Section 5.2).
2.7 Delivery of Development Units. Prior to prototype delivery, HNS
shall build and deliver five development units (the "Development Units") to
Geotek. The Development Units shall be equivalent in form and function to the
prototypes described in Section 2.8; however the Development Units may not meet
all requirements and specifications set forth in the Design Specification. An
exceptions letter, stating the requirements and specifications that are not met,
shall be included by HNS with the shipment of the Development Units.
2.8 Production of Prototypes. HNS shall produce, and deliver to Geotek
20 pilot prototypes of the PSU900D, which shall be in conformity with the Design
Specification and the project Plan (the "Prototypes"). The primary goal of the
production of the Prototypes shall be to test the design and performance of the
PSU900D.
2.9 Testing of Prototypes. HNS and Geotek shall test the Prototypes in
accordance with the test procedures set forth in the Design Specification.
Geotek shall provide, at no cost to HNS, network equipment (defined as "Customer
Furnished Equipment" in the Design Specification) for testing Prototypes at an
HNS-approved design center in the United States, and HNS shall test such
Prototypes (or HNS shall cause such testing to be done). HNS shall have the
right to re-ship Customer Furnished Equipment for testing, at its own expense,
to locations outside the United States. Upon such Prototypes meeting the test
criteria set forth in the Acceptance Test Plan contained in the Design
Specification pursuant to Annex C, HNS shall ship such Prototypes to Geotek.
Geotek shall complete its testing of the Prototypes within 30 days after the
delivery of the Prototypes to Geotek. If the Prototypes shall fail to meet the
Geotek Acceptance Criteria contained in the documents delivered pursuant to
Annex B, Geotek shall give HNS notice thereof and shall specify in reasonable
detail why the Prototypes do not meet the Acceptance Criteria or the Acceptance
Test Plan. HNS shall promptly make modifications to such Prototypes to enable
the Prototypes thereafter to meet the Acceptance Criteria and the Acceptance
Test Plan, and such modified Prototypes shall be retested as reasonably
appropriate and as set forth above. If the Prototypes shall meet the Acceptance
Criteria, as reasonably determined by Geotek, Geotek shall provide HNS with an
acceptance notice acknowledging such compliance, provided, however, that the
failure of Geotek to notify HNS within 30 days after its receipt of the
Prototypes (or in the case of correction of any failure to meet the Acceptance
Criteria or the Acceptance Test Plan 15 days following Geotek's receipt of the
corrected Prototypes) of any failure to meet the Acceptance Criteria or the
Acceptance Test Plan shall be deemed to constitute Geotek's acceptance of the
Prototypes.
2.10 Delivery and Testing of Pre-Production Units. Upon Geotek's
acceptance of the Prototypes and upon HNS' completion of additional development
efforts, and incorporation of Geotek's comments with respect thereto, in
accordance with Section 2.9, HNS shall produce and deliver to Geotek 100
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pre-production units of the PSU900D (the "Pre-Production Units"), which shall be
in conformity with the Design Specification and the Project Plan, and shall be
built using processes similar to the processes to be used in manufacturing the
Production Units. The Pre-Production Units shall be tested and accepted or
rejected in accordance with the Production Test Plan as set forth in Annex C.
Ten of the Pre-Production Units shall be retested in accordance with the
Acceptance Test Plan set forth in the Design Specification.
2.11 Completion of Development. Upon Geotek's acceptance of the
Pre-Production Units, HNS shall take such further steps as shall be necessary to
complete the development process of the PSU900D. Completion of the development
of the PSU900D ("Completion of Development") shall occur when 1000 consecutive
PSU900Ds are manufactured that comply with the Production Test Plan, inclusive
of manufacturing yields and design margins goals. HNS shall provide written
notice to Geotek upon the Completion of Development.
2.12 Witnessing of Testing. HNS shall permit Geotek personnel to
observe all acceptance testing conducted by HNS pursuant to Section 2.9 and
2.10.
ARTICLE 3
PRODUCTION
3.1 Production Order. Geotek hereby places with HNS a non-cancelable
order for the production of [Information intentionally omitted and filed
separately with the Securities and Exchange Commission in connection with an
application for confidential treatment.] PSU900Ds (the "Production Units")
subject to its rights and remedies hereunder. Such Production Units shall be
manufactured by HNS and delivered to Geotek in accordance with the Project Plan
subject to rescheduling to the extent provided in Section 3.4 hereof. Such
Production Units shall be delivered and purchased over a period of not more than
[Information intentionally omitted and filed separately with the Securities and
Exchange Commission in connection with an application for confidential
treatment.] after Completion of Development, as set forth in the Project Plan.
3.2 Release Orders. Geotek shall, pursuant to the Project Plan (but
subject to rescheduling to the extent permitted by Section 3.4), issue to HNS
release orders (each a "Release Order") directing the shipment and delivery of
increments of the Production Units. Geotek shall issue each Release Order at
least 180 days prior to the first delivery date requested therein. HNS shall
review this lead time every six months and shall notify Geotek if, in HNS'
reasonable judgment, such lead time may be shortened. Within 14 days of receipt
of a Release Order, HNS shall furnish Geotek with a written acknowledgment
thereof. Each Release Order shall include the following information: (a)
Production Units to be delivered, (b) quantity requested, (c) unit and total
price, (d) destination addresses and requested ship date(s), (e) reference to
this Agreement, and (f) whether purchases are intended for internal use by
Geotek (in which event sales tax will apply). In the case of any conflict
between a Release Order and the terms of this Agreement or the Project Plan,
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this Agreement or the Project Plan, as applicable, shall prevail. Subject to the
foregoing sentence, HNS shall deliver Production Units to Geotek in accordance
with the Release Orders (subject to any rescheduling by Geotek permitted by
Section 3.4).
3.3 Manufacturing Release Plan. Based upon the order for [Information
intentionally omitted and filed separately with the Securities and Exchange
Commission in connection with an application for confidential treatment.]
Production Units set forth in Section 3.1, HNS will negotiate blanket purchase
orders with its suppliers for [Information intentionally omitted and filed
separately with the Securities and Exchange Commission in connection with an
application for confidential treatment.] unit pricing. HNS will issue release
orders against these blanket purchase orders so that HNS generates an inventory
turn profile of at least four times a year. Generally HNS orders are placed six
months before delivery date. Annex E hereto indicates the typical ordering
process, delivery dates and cancellation exposure for a product similar to the
PSU900D.
3.4 Rescheduling.
(a) HNS shall give Geotek 6 months advance notice of the
expected date of the Completion of Development. Within 10 days of receipt of
such notice, Geotek may provide to HNS a revised production and delivery
schedule, superseding the preliminary production and delivery schedule set forth
in the Project Plan. Upon HNS' review and approval thereof, such revised
production and delivery schedule shall constitute an amendment to the Project
Plan, and shall be executed by both parties in accordance with Section 2.6.
(b) During production of the PSU900Ds, Geotek may increase
deliveries of PSU900Ds for any delivery date specified in the Project Plan up to
30% above the amount shown in the Project Plan by giving HNS written notice at
least 120 days prior to such delivery date, up to a maximum delivery of
[Information intentionally omitted and filed separately with the Securities and
Exchange Commission in connection with an application for confidential
treatment.] Production Units per month. Geotek may increase deliveries of
PSU900Ds for any delivery date specified in the Project Plan up to 100% above
the amount shown in the Project Plan by giving HNS written notice at least 180
days prior to such delivery date. Geotek may decrease deliveries of PSU900Ds for
any delivery date specified in the Project Plan up to 10% below the amount shown
in the Project Plan by giving HNS written notice at least 90 days from the
original delivery date. In no event shall Geotek decrease or reschedule
deliveries as a result of or to accommodate orders for PSU900Ds (or equivalent
products) given to other manufacturers.
(c) Any changes in the production schedule pursuant to
Sections 3.4(a) or (b) resulting in aggregate monthly volumes in excess of
[Information intentionally omitted and filed separately with the Securities and
Exchange Commission in connection with an application for confidential
treatment.] Production Units shall result in a one-time mutually agreed added
cost for additional customized factory test equipment.
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3.5 Production Testing. Geotek may at its cost and at any time during
normal business hours of HNS conduct spot tests or other reviews of PSU900Ds at
HNS' facility to determine compliance of PSU900Ds with the Design Specification,
provided, however, such inspections shall not unreasonably interfere with the
normal conduct of HNS' business or operations.
3.6 Labelling. Geotek shall provide the artwork for the PSU900Ds and
packaging bearing the Geotek label. HNS shall provide the artwork for PSU900Ds
and packaging under its label, which shall be subject to the reasonable approval
of Geotek. All Production Units shall be marked for identification purposes with
(i) serial numbers; (ii) unit model number; (iii) date code; (iv) Federal
Communications Commission ("FCC") compliance legend; (v) where required, an
Underwriters Laboratory ("UL") label; and (vi) where applicable, the relevant
patent numbers (collectively, "Identification"), in accordance with the sample
identification provided by Geotek in the Geotek Specification. HNS shall be
responsible for producing and affixing the foregoing identification to the
PSU900Ds at no additional cost to Geotek. HNS agrees to add any other
identification to the PSU900Ds which might reasonably be requested by Geotek at
mutually agreed prices. HNS will work with Geotek on a best efforts basis to
implement a serial numbering system selected by Geotek for the PSU900Ds.
3.7 Reassignment. If HNS fails to ship Production Units in accordance
with any Release Order, except due to the fault of Geotek or because of
Excusable Delay (as defined in Section 17.6), then, in addition to and not in
limitation of any other rights or remedies available to Geotek, Geotek may
reassign such orders to other of its manufacturers as may be reasonably
necessary to meet customer and Geotek demand for such Production Units; provided
that Geotek first shall give notice to HNS and allow HNS 30 days to cure such
failure and deliver the Production Units in accordance with the Release Order(s)
in question. If HNS' cure is reasonably satisfactory to Geotek, it shall not
exercise the assignment rights provided in this Section. Any reassignment
pursuant to this Section 3.7 shall not reduce Geotek's obligation to purchase an
aggregate of [Information intentionally omitted and filed separately with the
Securities and Exchange Commission in connection with an application for
confidential treatment.] Production Units from HNS, as set forth in Section 3.1.
If Geotek reassigns any orders pursuant to this Section, HNS shall grant Geotek
such licenses, and provide Geotek with such information, with respect to the
PSU900D as is reasonably necessary to permit a third party to manufacture the
PSU900D.
ARTICLE 4
PAYMENT FOR DEVELOPMENT COSTS
4.1 Development Cost. Geotek shall pay 50% of the total direct and
indirect costs actually incurred by HNS in developing the PSU900D pursuant to
this Agreement, as determined from the books and records of HNS in accordance
with HNS' standard accounting practices (the "Development Cost"). Such
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Development Cost shall be calculated in accordance with Annex F hereto. Such
payment shall be made in the manner set forth in Sections 4.2, 4.3 and 4.4
4.2 Advance Payment. Concurrently with the execution of this Agreement,
Geotek shall make a nonrefundable advance payment to HNS with respect to the
Development Cost in the amount of [Information intentionally omitted and filed
separately with the Securities and Exchange Commission in connection with an
application for confidential treatment.], representing an aggregate
nonrefundable (subject to Article 16) advance payment of [Information
intentionally omitted and filed separately with the Securities and Exchange
Commission in connection with an application for confidential treatment.]
reduced by the sum of [Information intentionally omitted and filed separately
with the Securities and Exchange Commission in connection with an application
for confidential treatment.] previously paid by Geotek to HNS (receipt of which
[Information intentionally omitted and filed separately with the Securities and
Exchange Commission in connection with an application for confidential
treatment.] is hereby acknowledged by HNS).
4.3 Estimated Development Cost. Geotek and HNS shall cooperate and
reach mutual agreement in developing an estimate of the costs which will be
incurred in connection with the development of the PSU900D (the "Estimated
Development Cost"). Concurrently with the delivery of the Design Specification
pursuant to Section 2.2 hereof, HNS shall provide to Geotek a final statement of
the Estimated Development Cost. Such statement shall be itemized in reasonable
detail, setting forth each phase and element of the anticipated development of
the PSU900D. Prior to the later of (i) 30 days following the delivery of such
statement of the Estimated Development Cost or (ii) the date which if five
months after the Effective Date, Geotek shall pay to HNS an amount equal to (a)
50% of the aggregate Estimated Development Cost as set forth in the statement
prepared by HNS, less (b) the advance payments previously made by Geotek to HNS
in respect of the Development Cost. Amounts paid by Geotek under this Section
4.3 shall be nonrefundable (subject to Article 16), except pursuant to the
reconciliation described in Section 4.4.
4.4 Reconciliation upon Completion of Development. Forty-five days
after Completion of Development of the PSU900D, HNS shall submit to Geotek a
statement showing the aggregate direct and indirect cost actually incurred by
HNS for the development of the PSU900D (the "Final Development Cost"). If 50% of
the Final Development Cost (as modified in accordance with Section 4.5 hereof,
if applicable) shall be an amount greater than the aggregate amount paid to HNS
by Geotek in respect of the Estimated Development Cost (including advance
payments thereof), Geotek shall, within 30 days of delivery of such statement or
the Auditor's Report described in Section 4.5, as applicable, pay the difference
to HNS. If 50% of the Final Development Cost (as modified in accordance with
Section 4.5, if applicable) shall be an amount less than the aggregate amount
paid to HNS by Geotek in respect of the Estimated Development Cost (including
advance payment thereof), HNS shall, within 30 days of delivery of such
statement or the Auditor's Report described in Section 4.5, as applicable, pay
the difference to Geotek.
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4.5 Audit.
(a) Upon the request of Geotek (but no later than 45 days
after the delivery to Geotek of the statement of the Final Development Cost),
the parties shall mutually select an independent auditor (the "Auditor") to
review the accuracy of the statement of the Final Development Cost. The report
of such Auditor (the "Auditor's Report") shall be delivered within 30 days of
the appointment of such Auditor, and the cost thereof shall be added to the
final Development Cost (and each party shall pay 50% thereof). The Final
Development Cost shall be adjusted to reflect the results of such Auditor's
Report.
(b) HNS hereby grants to Geotek, its agents (reasonably
acceptable to HNS) and the Auditor access to all pertinent ledgers, books,
records, receipts and allocations related to work authorized under this
Agreement, provided, however, (i) all information provided to Geotek and such
agents and the Auditor under this Section shall be subject to the
confidentiality terms in Article 8 of this Agreement and (ii) individual
compensation information of HNS employees shall be made available only to the
Auditor (and the Auditor shall agree not to disclose the same to Geotek or any
other person or entity).
ARTICLE 5
PAYMENT FOR PRODUCTION UNITS
5.1 Payment Schedule. Subject to Section 5.3, Geotek shall pay to HNS
in respect of Production Units delivered by HNS a purchase price as follows:
[Information intentionally omitted and filed separately with the Securities and
Exchange Commission in connection with an application for confidential
treatment.]
Such prices shall be subject to the credit for advance payments set forth in
Section 5.2 hereof and to the Vendor Financing set forth in Article 6 hereof.
5.2 Advance Payments. Geotek shall make the following nonrefundable
advance payments (subject to Article 16) to HNS in respect of amounts payable
for Production Units:
[Information intentionally omitted and filed separately with the Securities and
Exchange Commission in connection with an application for confidential
treatment.]
5.3 Changed Costs. The parties acknowledge that the pricing set forth
in Section 5.1 is based upon the preliminary scope of the PSU900D attached
hereto as Annex G (the "Preliminary Product Outline"). Concurrently with
delivery of the Design Specification and the Project Plan, HNS shall deliver to
Geotek a notice either (a) confirming the pricing set forth in Section 5.1 or
(b) stating that material changes in product requirements set forth in the
Geotek Specification (as compared to the Preliminary Product Outline and the
parties' understanding of the PSU900D as of the Effective Date) will cause a
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material change in the cost of producing the PSU900Ds hereunder. In case of a
notice delivered under clause (b) of the immediately preceding sentence, the
parties hereto shall negotiate in good faith reasonable and equitable
adjustments to the purchase price of such PSU900Ds set forth in this Article,
and either party shall have the right to terminate this Agreement (which shall
be a termination governed by Section 16(a)) if no agreement is reached with
respect to such adjustments or if such material changes in the cost of producing
PSU900Ds shall (as determined by Geotek) render the sale of PSU900Ds by Geotek
to end users impractical.
5.4 Invoicing and Payment. HNS shall submit to Geotek, concurrently
with each shipment, invoices in respect of Production Units shipped to Geotek.
Geotek shall pay HNS within 30 calendar days of receipt of invoice the amount
set forth therein, in U.S. dollars. HNS may, at its sole discretion, charge a
late payment penalty at a rate of 2% per month on all payments due from Geotek
that are not made 60 days after invoice date. Each party agrees that it shall be
liable for all costs of collection, including but not limited to reasonable
attorney's fees, reasonably incurred by the other party for the collection of
any sums due hereunder.
ARTICLE 6
VENDOR FINANCING
6.1 Financing Provided by HNS. Subject to Section 6.4, Geotek at its
option may utilize one or both of the vendor credits (the "Vendor Credits")
provided by HNS as set forth in this Section, and HNS shall make available to
Geotek such Vendor Credits for utilization in procuring PSU900Ds from HNS.
(a) Vendor Credit One:
Vendor Credit One shall be established based upon the
following formula:
[Information intentionally omitted and filed separately with the Securities and
Exchange Commission in connection with an application for confidential
treatment.]
(b) Vendor Credit Two:
Vendor Credit Two shall be established based upon the
following formula:
[Information intentionally omitted and filed separately with the Securities and
Exchange Commission in connection with an application for confidential
treatment.]
(c) Sample calculations in respect of the financing to be
provided under this Section are set forth in Annex H hereto.
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6.2 Repayment of Vendor Credits. Each utilization of Vendor Credits by
Geotek hereunder shall constitute a loan by HNS and a borrowing by Geotek, and
shall be repaid in [Information intentionally omitted and filed separately with
the Securities and Exchange Commission in connection with an application for
confidential treatment.] installments of principal and interest, based on an
interest rate of Prime (as quoted in the Wall Street Journal on the date of such
borrowing) plus 2%, payable monthly in arrears.
6.3 Credit Agreement. Within 180 days of the execution of this
Agreement, HNS and Geotek shall enter into a credit agreement (the "Credit
Agreement") with respect to the financing described in Section 6.1 hereof, in
the form and content attached hereto as Annex I.
6.4 Conditions to Utilization of Vendor Credits. Availability of the
Vendor Credits described in Section 6.1 shall be subject to (a) Geotek providing
in form and substance satisfactory to HNS, the collateral and agreements set
forth in Annex J hereto, and (b) Geotek complying with the covenants set forth
in Annex K hereto.
ARTICLE 7
REGULATORY COMPLIANCE
7.1 Approvals. HNS shall obtain the approvals set forth in the Design
Specification delivered pursuant to Annex C with respect to the manufacture and
sale in the United States of the Production Units, including, FCC and UL
certification. Geotek shall cooperate with HNS, upon HNS' reasonable request, in
obtaining such approvals. The costs of obtaining such approvals shall be
included in the Final Development Cost as set forth in Section 4.4.
7.2 Representations and Warranties with Respect to Regulatory
Compliance. HNS represents and warrants that the Production Units will be in
compliance with the FCC certification applicable to the PSU900D as of the
effective date of the application for such certification. HNS represents and
warrants that all materials and packaging supplied by or on behalf of HNS for
the PSU900Ds (other than materials or packaging supplied at the request of
Geotek) shall conform to the requirements of 40 C.F.R. ss. 82, Protection of
Stratospheric Ozone, including without limitation those regulations contained in
Subpart E relating to or governing the use of ozone depleting chemicals.
ARTICLE 8
CONFIDENTIAL INFORMATION
8.1 Exchange of Confidential Information. Before and during the term of
this Agreement, it is anticipated that each party will disclose to the other
party certain information, including but not limited to, technology, design and
manufacturing data, know-how, business and financial plans or other information
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related to the subject matter of this Agreement, either in writing, by other
tangible medium or orally, which the disclosing party considers to be and
desires to be treated as confidential ("Confidential Information"). For purposes
of this Article 8, the Geotek Specification, the FHMA Technology, and any
technology or know-how developed by Geotek (except as otherwise provided herein)
shall be Confidential Information of Geotek, and any technology or know-how
developed by HNS (except as otherwise provided herein) shall be Confidential
Information of HNS. All Confidential Information shall be clearly marked at the
time of first disclosure with a suitable legend such as "Confidential."
Information disclosed orally which is confirmed in writing as confidential
within 30 days after disclosure to the receiving party shall also be deemed
Confidential Information for purposes of this Article 8.
8.2 Non-Disclosure of Confidential Information. Each party agrees not
to disclose any Confidential Information received from the other party to any
third party, except to its employees, consultants, subcontractors, accountants
and counsel as may be necessary for the performance of its obligations under
this Agreement (which disclosure shall be made pursuant to confidentiality
restrictions substantively equivalent to those contained herein). The receiving
party agrees that any Confidential Information shall be handled with the same
degree of care which it applies to its own Confidential Information (but in no
event less than reasonable care). The receiving party shall use the Confidential
Information solely for the purpose of carrying out its obligations under this
Agreement. No copies of such Confidential Information shall be made, except for
the exclusive use of the receiving party's employees, consultants,
subcontractors, accountant and counsel involved in the operations contemplated
by this Agreement.
8.3 Reasonable Precautions. The receiving party agrees to take
precautions necessary and appropriate to guard the confidentiality of the
Confidential Information, including informing its employees who handle such
Confidential Information and all others to whom Confidential Information is
disclosed that it is confidential and shall not be disclosed to others.
8.4 No License. The furnishing by the transmitting party of
Confidential Information hereunder shall not constitute or be construed as a
grant of any express or implied license or other right under any intellectual
property right of such party.
8.5 Exceptions. The following types of information shall not be deemed
Confidential Information and shall be excluded from the obligations set forth in
this Article 8: (a) information which the receiving party already had in its
possession without confidential limitation at the time of disclosure by the
transmitting party; (b) information which is independently developed without
breach of this Agreement; (c) information known or that becomes known to the
general public without breach of this Agreement; (d) information disclosed by
the transmitting party to a third party without an obligation of confidentiality
that is received rightfully and without confidential limitation by the receiving
party from such third party; and (e) information which is required to be
disclosed by a court or other government authority, provided that in the case of
subsection (e) hereof the receiving party shall give prompt notice to the
transmitting party and shall cooperate with the transmitting party, upon the
transmitting party's reasonable request, to resist disclosing such information
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or to disclose such information only under a protective order limiting the use
of such information.
8.6 Injunctive Relief. Geotek and HNS agree that in the event of a
breach of any provision of this Article, the non-breaching party shall be
entitled to seek injunctive relief in addition to any other remedies it may have
at law or in equity.
8.7 Survival. The obligations of Geotek and HNS under this Article 8
shall survive the expiration or termination of this Agreement for the later of
(a) five years after the date of such expiration or termination, or (b) nine
years after the Effective Date of this Agreement.
ARTICLE 9
OWNERSHIP OF TECHNOLOGY, ETC.
9.1 Ownership of Proprietary Information.
(a) All of Geotek's patent, copyright, mask work or industrial
design rights and other intellectual property rights which were developed by
Geotek prior to or subsequent to the Effective Date of this Agreement (including
without limitation the Geotek Specification, the FHMA Technology, and other
rights and intellectual property relating to the FHMA Technology) (the "Geotek
Proprietary Information") shall be owned solely by Geotek, and HNS shall have no
ownership or use rights therein other than as specifically set forth elsewhere
in this Agreement, except that Geotek hereby grants HNS a fully paid-up
nontransferable limited license to use the Geotek Proprietary Information solely
to develop and manufacture and sell the PSU900D to Geotek or its end users and
otherwise perform its obligations under this Agreement.
(b) All of HNS' patent, copyright, mask work or industrial
design rights and other intellectual property rights which were developed by HNS
prior to or subsequent to (but excluding the Joint Technology as defined in
Paragraph 9.3) the Effective Date of this Agreement (the "HNS Proprietary
Information") shall be owned solely by HNS, and Geotek shall have no ownership
or use rights therein other than as specifically set forth elsewhere in this
Agreement, except that HNS hereby grants Geotek a fully paid-up nontransferable
limited license to use the HNS Proprietary Information solely in connection with
the sale to end users of the PSU900Ds manufactured by HNS.
(c) Neither party shall modify, merge, translate, decompile,
decode, reverse engineer or otherwise alter, use, copy or transfer any
components or software provided by the other party including pursuant to this
Agreement, in whole or in part, except as specifically provided in this
Agreement.
9.2 Trademarks, Etc. HNS shall acquire no right or license to use any
of Geotek's trademarks, service marks or trade names. Without limiting the
foregoing, HNS shall obtain no rights in or to the trade names GEONET or FHMA.
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HNS shall not use any of Geotek's trademarks, service marks or trade names in
any advertising copy, promotional material, signs or other written materials.
Except as set forth below, Geotek shall acquire no right or license to use any
of HNS' trademarks, service marks or trade names. Geotek is hereby granted a
fully paid-up nontransferable limited license to use HNS' trademarks, service
marks, trade names and trade dress solely for the purpose of selling HNS branded
PSU900Ds manufactured by HNS under this Agreement.
9.3 Joint Technology. All technology, inventions, discoveries,
industrial designs, copyrights, mask works and improvements conceived and
developed by HNS or its subcontractors (except that, with respect to PST, this
paragraph will apply only for work performed by PST under a written agreement
with HNS for the PSU900D) for the PSU900D and funded under this Agreement,
whether or not such discoveries or improvements are patentable or copyrightable
and whether or not made solely or jointly with others and regardless of whether
conceived or developed during actual working hours for work performed pursuant
to this Agreement (except for any Geotek Proprietary Information or HNS
Proprietary Information contained therein) shall be owned jointly by HNS and
Geotek (the "Joint Technology"). Ownership of the Joint Technology shall not
give rise to any ownership, license or right to use or sub-license any part of
the Geotek Proprietary Information or the HNS Proprietary Information.
9.4 Use of Joint Technology. Each party shall possess all rights to use
and/or sub-license the Joint Technology, and each party shall, promptly upon the
written request of the other party, execute and deliver such instruments and
agreements as such other party may reasonably request in order to confirm the
foregoing. Except as otherwise specifically set forth in this Agreement, each
party shall notify the other party before disclosing any of the Joint Technology
to any third party and the other party shall have the right to review such Joint
Technology proposed to be disclosed promptly after receipt of such notice and to
delete any of its Confidential Information and any Geotek Proprietary
Information or HNS Proprietary Information, as applicable, contained therein.
9.5 Patents, etc., Respecting Joint Technology.
(a) The parties shall jointly file patent, copyright, mask
work or industrial design applications based upon the Joint Technology
inventions conceived or reduced to practice during the term of this Agreement
and shall jointly obtain U.S. and/or foreign patents, copyrights, mask works and
other design protection covering such Joint Technology. Geotek and HNS shall
confer on the filing of all such Joint Technology patent, copyright, mask work
or industrial design applications.
(b) The parties shall share equally the obligation to pay all
fees and expenses for searching, preparing, prosecuting, maintaining, reissuing,
and reexamining all joint patent, copyright, mask work and design applications
and patents, copyrights, mask works and industrial design registrations covering
the Joint Technology.
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(c) In the event either party elects not to file one or more
patent, copyright, mask work or industrial design applications on the Joint
Technology as provided in this Article, such party shall notify the other party
of such decision, and such other party shall after receipt of such notice have
the right to make such filing solely on its own behalf, at its sole expense. The
party making such filing shall grant to the other party a fully paid-up
unlimited irrevocable nontransferable license to use the subject matter of any
such application.
(d) The parties shall fully cooperate in the execution of all
documents necessary to make the foregoing filings and to obtain and to enforce
all such rights with respect to the Joint Technology throughout the world.
9.6 Other Products and Development.
(a) Notwithstanding any other provision of this Agreement,
Geotek hereby grants to HNS a non-exclusive, and fully paid-up worldwide right
and license to use any Geotek Proprietary Information as the parties may
reasonably agree as necessary to develop, manufacture and sell, at HNS' own
cost, the PSU900D or derivatives, equivalents or future generations of portable
products thereof for sale to Geotek or to third parties for use in Geotek's
system.
(b) HNS shall be solely responsible for the payment of all
royalties to Geotek's licensor(s), identified by Geotek, resulting from the
manufacture and sale by HNS of the PSU900D or derivatives, equivalents or future
generations thereof. Geotek agrees to cooperate with HNS to identify such
licensor(s) with whom Geotek has entered into royalty arrangements. Upon the
failure of HNS to abide by the royalty obligations identified to it by Geotek or
by Geotek's licensor's or upon the sale by HNS of PSU900D or derivatives,
equivalents or future generations outside the scope of the license granted by
this Section 9.6, such license shall terminate if HNS does not cure failure
within 60 days.
ARTICLE 10
INDEMNIFICATION
10.1 HNS Indemnity with Respect to Patents, etc.
(a) HNS agrees to resist and defend at its own expense any
claim for royalty payments, or any claim for equitable relief or damages against
Geotek, based on an allegation that the manufacture of any PSU900D or
derivatives, equivalents or future generations thereof, or the use, lease, or
sale thereof, or that any documentation thereof, infringes any United States
patent, copyright, trade secret, or trademark, and to pay any royalties and
other costs related to the settlement of such claim, and to pay the costs and
damages finally awarded as the result of any suit based on such claim, provided
that HNS is given prompt written notice of such claim by Geotek had given
authority and such reasonable assistance and information as HNS requests in
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writing and as it is available to Geotek for resisting such claim or for the
defense of such claim.
(b) Notwithstanding the above, HNS will not be liable for any
damages or costs resulting from claims that (i) HNS' compliance with the Geotek
Specification or other specific direction given in writing by Geotek; (ii) HNS'
use of technology supplied by Geotek or any Geotek affiliate or supplier; (iii)
use of PSU900D in combination with products not supplied by HNS; or (iv) any
manufacturing, modification or development process carried out other than by or
on behalf of HNS utilizing the PSU900D, constitutes either direct or
contributory infringement of any United States patent, copyright or trademark.
In no event will HNS be liable for damages hereunder in excess of the aggregate
amount actually paid by Geotek to HNS pursuant to this Agreement, or for
consequential damages or costs. This indemnity is in lieu of any other indemnity
or warranty, express or implied, with respect to patents, copyrights and
trademarks.
10.2 Geotek Indemnity with Respect to Patents, etc. Geotek agrees to
resist and defend at its own expense any claim for royalty payments, or any
claim for equitable relief or damages against HNS, based on an allegation that
the manufacture of any PSU900D or the use, lease, or sale thereof, or that any
documentation thereof, infringes any United States patent, copyright, trade
secret, or trademark, as a result of (i) HNS' compliance with the Geotek
Specification or other specific direction given in writing by Geotek; (ii) HNS'
use of technology supplied by Geotek or any Geotek affiliate or supplier; (iii)
use of the PSU900D in combination with products supplied by Geotek or any
affiliate or supplier thereof; or (iv) any manufacturing, modification or
development process utilizing the PSU900D carried out by or through Geotek or
any affiliate or supplier thereof, and to pay any royalties and other costs
related to the settlement of such claim, and to pay the costs and damages
finally awarded as the result of any suit based on such claim, provided that
Geotek is given prompt written notice of such claim by HNS and given authority
and such reasonable assistance and information as Geotek requests in writing and
as it is available to HNS for resisting such claim or for the defense of such
claim. This indemnity is in lieu of any other indemnity or warranty, express or
implied, with respect to patents, copyrights and trademarks.
10.3 Indemnity with Respect to Personal Injury, etc.
(a) HNS agrees to resist and defend at its own expense any
claim for equitable relief or damages against Geotek, based on any allegation of
death, personal injury or property damage arising from the negligence, gross
negligence or willful misconduct of HNS, and to pay any damages or costs related
to the settlement of such claim, and to pay the costs and damages finally
awarded as the result of any suit based on such claim, provided that HNS is
given prompt written notice of such claim by Geotek and given authority and such
reasonable assistance and information as HNS requests in writing and as it is
available to Geotek for resisting such claim or for the defense of such claim.
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(b) Geotek agrees to resist and defend at its own expense any
claim for equitable relief or damages against HNS, based on any allegation of
death, personal injury or property damage arising from the negligence, gross
negligence or willful misconduct of Geotek, and to pay any damages or costs
related to the settlement of such claim, and to pay the costs and damages
finally awarded as the result of any suit based on such claim, provided that
Geotek is given prompt written notice of such claim by HNS and given authority
and such reasonable assistance and information as Geotek requests in writing and
as it is available to HNS for resisting such claim or for the defense of such
claim.
10.4 Indemnification Procedure. Each indemnified party shall give
notice as promptly as reasonably practicable to each indemnifying party of any
action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability which it may have otherwise than on
account of this indemnity agreement. An indemnified party may also participate
at its own expense in the defense of any such action, provided that the counsel
selected by the indemnifying party shall control the defense. If it so elects
within a reasonable time after receipt of such notice, an indemnified party may
assume control of the defense of such action with counsel chosen by it. If an
indemnified party elects to assume control of the defense of an action, the
indemnifying party shall not be liable for any fees and expenses of counsel for
the indemnified party incurred thereafter in connection with the action or for
any damages or liabilities resulting therefrom.
10.5 Third Party Infringement. If a third party allegedly, actually or
imminently threatens to infringe on any patent, industrial design, copyright,
mask work, trademark or trade secret covering the Joint Technology, the parties
shall promptly notify one another and provide all material information
concerning any such act by any third party. Both parties shall use their good
faith efforts in cooperation with each other to terminate such infringement or
misappropriation without litigation. If the efforts of the parties are not
successful in abating the infringement or misappropriation within 30 days after
the infringer or misappropriator has been formally notified of the infringement
or misappropriation, either party shall have the right to commence suit on its
own account upon 30 days notice from the date of termination of the 30 day
notice period to the other party. Within the 30 days specified above, the other
party may give notice to said party of its intention to join such suit. All
expenses of such suit shall be the responsibility of the party of account in
such suit and said party of account shall receive all recoveries. If such suit
is joined by both parties, the parties shall mutually select counsel and all
expenses and recoveries will be proportioned according to the actual damages to
each party or by any other agreed upon formula. Each party agrees to cooperate
fully with the other in litigation proceedings instituted hereunder and, upon
request and expense of the party bringing suit, the other party shall agree to
make available to the party bringing suit all relevant records, papers,
information, samples, specimens, and the like which may be relevant and in its
possession.
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ARTICLE 11
TECHNICAL SUPPORT; WARRANTIES
11.1 Limited Warranty. HNS hereby warrants (the "Limited Warranty") all
Production Units under normal use and wear to be free from defects in material
and workmanship for a period of fifteen (15) months from the date of delivery to
Geotek (the "Warranty Period"). If, under normal use and wear, any Production
Unit becomes defective in materials or workmanship and is returned by Geotek or
any end user to HNS (or a service center authorized by HNS) during the Warranty
Period, HNS shall repair or replace, at HNS' sole and exclusive option, such
Production Unit at no charge to Geotek or any end user. HNS shall provide to
Geotek and end users the name of a contact person at HNS who will be the contact
for Warranty claims and questions.
THE REMEDIES OF GEOTEK WITH RESPECT TO BREACH OF WARRANTY SET FORTH IN
ARTICLE 11 OF THIS AGREEMENT ARE EXCLUSIVE. THE WARRANTY SET FORTH IN ARTICLE 11
OF THIS AGREEMENT IS THE SOLE WARRANTY OF HNS TO GEOTEK OR ANY CUSTOMER THEREOF
WITH RESPECT TO ANY PRODUCT DEVELOPED OR MANUFACTURED UNDER THIS AGREEMENT AND
IS EXPRESSLY IN LIEU OF ALL EXPRESS, IMPLIED OR STATUTORY WARRANTIES, INCLUDING
ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
11.2 Limitations on Warranty.
(a) The Limited Warranty shall be void in its entirety if the
Production Unit is not used and maintained in accordance with any written
instructions furnished by HNS to Geotek and the end users, or is served by
anyone other than HNS or a service center authorized by HNS. Geotek's and all
end users' sole and exclusive remedy shall be the repair or replacement of the
defective Production Units, as specifically described above. HNS neither assumes
nor authorizes any authorized service center or any other person or entity to
assume any other obligation or liability beyond that provided in the Limited
Warranty.
(b) The Limited Warranty shall not cover any of the following:
products or accessory equipment not manufactured or provided by HNS; failures or
defects caused by misuse, abuse, accident, alteration or neglect; unauthorized
installation, removal or repair; failure to follow instructions; fire, flood or
other acts of God; spills of food or liquids; normal wear and tear; improper
installation, maintenance, operation or repair; performance of the Production
Unit as a result of use in combination with other products or equipment not
manufactured or provided by HNS; or payments for labor or service to
representative or service center not authorized by HNS.
11.3 Repair Procedures During Warranty Period. Geotek or any end user
shall obtain a Return Material Authorization ("RMA") number from HNS prior to
shipping any defective Production Unit to HNS. Geotek or any end user shall
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<PAGE>
request the RMA via fax on HNS' RMA request form. Such form shall indicate the
exact quantity of Production Units to be returned for warranty repair and the
specific defect associated with each Production Unit so returned. Repairs
covered by the Limited Warranty shall be made by HNS promptly following receipt
of the Production Unit(s) at HNS' service locations. Any replacement, repair or
modification performed by HNS on the Production Unit(s) shall be warranted under
the terms of the Limited Warranty for the remainder of the Warranty Period. If
HNS cannot duplicate the problem indicated on the RMA for a Production Unit
returned as defective, Geotek shall pay to HNS an amount to be mutually
determined for each such Production Unit determined by HNS to be functional.
11.4 Non-Warranty Repair Procedures. HNS agrees to provide to Geotek
repair services at HNS' service locations on all Production Units for a period
of five years after the expiration of this Agreement. The non-warranty repairs
shall follow the same procedures applicable to the Warranty repairs. Charges for
non-warranty repairs shall be mutually agreed between the parties. Such charges
shall be no greater than HNS' then-current price for similar services to
purchasers of similar products. All invoices for non-warranty repairs originated
by HNS shall be clearly marked as such and shall contain a reference to the RMA
number. Geotek shall pay for all non-warranty service requested by Geotek within
30 days of invoice date.
11.5 Transport Costs. Transportation of Production Units returned
during the Warranty Period to HNS shall be the responsibility of Geotek or the
end user, at Geotek's or the end user's sole expense and risk of loss.
Transportation to Geotek or the end user of Production Units returned and
repaired or replaced under Warranty shall be the responsibility of HNS, at HNS'
sole expense and risk of loss. Transportation of Production Units returned
out-ofWarranty shall be the responsibility of Geotek, at Geotek's sole expense
and risk of loss.
11.6 Continuing Availability of Spare Parts. During the term of this
Agreement, and for a five-year period following termination or expiration of
this Agreement, HNS shall provide Geotek with spare parts for the PSU900Ds in
accordance with a spare parts list provided by the Geotek Managing Coordinator
and approved by HNS, including mutually agreed upon prices therefor. Pricing for
spare parts shall be calculated as set forth in Annex L attached hereto.
Notwithstanding the termination or expiration of this Agreement, the specific
obligation of HNS to furnish Geotek replacement parts shall continue for a
period of five years following the date of such termination or expiration.
11.7 Technical Support. Geotek shall be entitled to ongoing technical
support from HNS at mutually agreed prices. Technical support shall be available
during HNS' normal business hours. If on-site technical assistance is required,
HNS shall provide such assistance within five business days of a request
therefore from Geotek. The form of support and on-site assistance will be
determined by HNS as necessary to resolve technical issues in a timely and
efficient manner.
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11.8 Training with Respect to Service Centers. HNS shall develop a
training program for Geotek authorized service centers for the PSU900D. The
training program shall include the following:
(a) Operation and programming of the PSU900D;
(b) Diagnostic procedures for fault determination of the
PSU900D;
(c) Repair and maintenance of field replaceable components;
and
(d) Return procedures for warranty and repair work.
HNS shall provide up to four personnel training sessions for
Geotek personnel so that Geotek may train their service center personnel, at
such time and location as determined by Geotek. Geotek shall have the right, at
its sole discretion, to purchase additional training sessions.
11.9 Extended Warranty. Geotek and HNS acknowledge that provision of an
extended warranty may be a market requirement and agree to mutually develop
extended warranty offerings for the PSU900D. Both parties agree that the
extended warranty offerings shall, to the extent necessary, be agreed to no
later than 180 days before the first delivery of commercial equipment. Geotek
shall be responsible for specifying the market requirements for such offerings.
HNS shall determine the approach to satisfy the market requirements and the
price of such offerings.
ARTICLE 12
LIMITATION OF LIABILITY
THE LIABILITY OF HNS UNDER THIS AGREEMENT WILL NOT EXCEED THE AGGREGATE AMOUNT
ACTUALLY PAID TO HNS BY GEOTEK PURSUANT TO THIS AGREEMENT. IN NO EVENT WILL HNS
BE LIABLE TO GEOTEK OR ANYONE ELSE FOR SPECIAL, COLLATERAL, EXEMPLARY, PUNITIVE,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION,
LOSS OF GOODWILL, LOSS OF PROFITS AND REVENUES, LOSS OF SAVINGS, LOSS OF USE,
INTERRUPTIONS OF BUSINESS, AND CLAIMS OF CUSTOMERS) WHETHER SUCH DAMAGES OCCUR
PRIOR OR SUBSEQUENT TO, OR ARE ALLEGED AS A RESULT OF, TORTIOUS CONDUCT OR
BREACH OF ANY OF THE PROVISIONS OF THIS CONTRACT OR A BREACH OF WARRANTY, EVEN
IF HNS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
EXCEPT AS SPECIFICALLY SET FORTH IN ARTICLE 16, THE LIABILITY OF GEOTEK UNDER
THIS AGREEMENT WILL NOT EXCEED THE AGGREGATE AMOUNT PAYABLE BY GEOTEK IN RESPECT
OF THE DEVELOPMENT COSTS, PRODUCTION COSTS AND PURCHASE PRICE OF PRODUCTS
DELIVERED TO GEOTEK. IN NO EVENT WILL GEOTEK BE LIABLE TO HNS OR ANYONE ELSE FOR
SPECIAL, COLLATERAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR
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CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION, LOSS OF GOODWILL, LOSS OF
PROFITS AND REVENUES, LOSS OF SAVINGS, LOSS OF USE, INTERRUPTIONS OF BUSINESS,
AND CLAIMS OF CUSTOMERS) WHETHER SUCH DAMAGES OCCUR PRIOR OR SUBSEQUENT TO, OR
ARE ALLEGED AS A RESULT OF, TORTIOUS CONDUCT OR BREACH OF ANY OF THE PROVISIONS
OF THIS CONTRACT OR A BREACH OF WARRANTY, EVEN IF GEOTEK HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
The limitation on liability set forth in this Article 12 shall not
apply to any claim in respect of death, personal injury or property damage.
ARTICLE 13
TERM AND TERMINATION
13.1 Term. This Agreement shall have a term of five years commencing
on the Effective Date, subject to the rights of the parties as provided in this
Agreement. This Agreement shall not be renewed except pursuant to a written
agreement executed by both parties.
13.2 Termination. Either party may terminate this Agreement pursuant to
Article 16.
13.3 No Waiver. The failure of a party to enforce any right to
termination contained herein shall not in any manner act as a waiver of such
party's right to terminate this Agreement.
13.4 Survival. Notwithstanding anything set forth in this Agreement,
the provisions of Articles 8, 9, 10, 11, 12, and 16 shall survive the expiration
or earlier termination of this Agreement provided, however, that Section 9.6
shall only survive for so long as HNS complies with the terms thereof, and the
provisions of Articles 4 and 5 shall survive such expiration or termination
until all amounts due hereunder are paid in full.
ARTICLE 14
NON-COMPETITION
Except as specifically provided in this Agreement, HNS agrees that it
will not at any time during the term of this Agreement sell, offer to sell,
license or otherwise transfer the PSU900D or any other product identical to the
PSU900D to any entity or person other than (a) Geotek or (b) any third party for
intended use in connection with Geotek's system. Geotek acknowledges that HNS
may manufacture and sell mobile communications equipment other than the PSU900D
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(collectively "Other Products") to customers other than Geotek or such third
parties; provided, however, that HNS shall mark or otherwise visibly distinguish
such Other Products manufactured for or sold to such other customers so as to
make then clearly identifiable as different from the PSU900D manufactured and
sole hereunder, and otherwise take all reasonable measurers to assure that such
Other Products manufactured for or sold to other customers shall be incapable of
functioning (in the condition sold by HNS to such other customers) as receiving
or as transmitting units in any of Geotek's FHMA systems without prior written
approval of Geotek.
ARTICLE 15
DEFAULTS
The following events and/or conditions shall constitute Events of
Default under this Agreement:
(a) Except as otherwise, specifically set forth in this
Agreement, the failure by a party to comply with any of the agreements,
covenants or conditions set forth in this Agreement (but excluding the financial
covenants set forth in Annex K), or of any representation or warranty to be true
and correct in all material respects, which failure continues for a period of 45
days after notice thereof from the nondefaulting party to the defaulting party.
(b) If any party becomes the subject of a proceeding under the
United States Bankruptcy Code, if an assignment is made of a party's assets for
the benefit of creditors, if a receiver, trustee in bankruptcy or like official
is appointed to take all or part of a party's assets, or if a party ceases doing
business in the ordinary course of business.
ARTICLE 16
REMEDIES; RIGHTS UPON TERMINATION
With respect to the termination of this Agreement, and notwithstanding
any other provisions of this Agreement, except for Paragraph 9.6, the parties
shall have the rights set forth below:
(a) If either party terminates this Agreement on or before
thirty (30) days after delivery of the items set forth in Paragraph 2.2, other
than as a result of an Event of Default by the other party, then (i) HNS shall
provide Geotek with all documentation prepared and/or completed by HNS pursuant
to this Agreement; (ii) HNS shall grant to Geotek a non-exclusive, irrevocable,
perpetual and fully paid-up worldwide license to use and sub-license such
documentation and the information contained therein to develop and build the
PSU900D (except for HNS Proprietary Information, which shall be licensed to
Geotek at reasonable royalties); and (iii) Geotek shall pay to HNS the total
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Development Costs incurred by HNS in connection with this Agreement as of the
date of such termination, plus 10% of such amount.
(b) If Geotek terminates this Agreement more than thirty (30)
days after delivery of the items set forth in Paragraph 2.2, other than as a
result of an Event of Default by HNS; (i) Geotek shall pay to HNS the total
Development Costs and, if applicable, production efforts incurred by HNS in
connection with this Agreement as of the date of such termination (including but
not limited to all inventory, inventory cancellation or restocking costs, work
in process and finished goods, equipment, tooling and costs associated with
ceasing such development, (collectively, the Production Costs, all of which HNS
shall use its best efforts to minimize)) plus 10% of such amount; (ii) the
parties shall have the intellectual property rights set forth in Section 9;
(iii) upon full payment by Geotek, HNS shall deliver to Geotek all equipment,
parts and inventory related to the PSU900D; (iv) HNS shall have the rights set
forth in Section 9.6.
(c) If Geotek terminates this Agreement as a result of HNS'
inability to develop and deliver the PSU900D, then (i) the parties shall perform
an accounting, payments shall be made as necessary so that each party pays 50%
of the Development Costs of the PSU900D plus Geotek shall pay HNS an amount
equal to 100% of all Production Costs incurred by HNS hereunder; (ii) the
parties shall have the intellectual property rights set forth in Section 9; and
(iii) HNS shall provide Geotek with all documentation prepared and/or completed
by HNS pursuant to this Agreement; (iv) upon full payment by Geotek of the costs
set forth in clause (i) hereof, HNS shall deliver to Geotek all equipment, parts
and inventory related to the PSU900D and HNS shall grant to Geotek a
nonexclusive, irrevocable, perpetual and fully paid-up worldwide license to use
and sublicense such documentation and the information contained therein to
develop and build the PSU900D (except for HNS Proprietary Information, which
shall be licensed to Geotek at reasonable royalties).
(d) If Geotek terminates this Agreement as a result of an
Event of Default by HNS other than as described above, the parties shall attempt
to mutually agree as to the respective rights thereof resulting from such
termination, or, if no agreement can be reached, such rights shall be determined
in accordance with Section 17.2. In such event Geotek shall have the right to
pursue specific performance under Section 17.2.
(e) If HNS terminates this Agreement as a result of an Event
of Default by Geotek, then (i) Geotek shall pay to HNS all Development Costs and
Production Costs incurred by HNS in connection with this Agreement as of the
date of such termination, plus an amount equal to 10% of such costs; (ii) the
parties shall have the intellectual property rights set forth in Section 9, and
(iii) HNS shall have the rights set forth in Section 9.6.
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ARTICLE 17
MISCELLANEOUS
17.1 Resolution of Disputes. All disputes arising between the parties
concerning the validity, construction, interpretation or effect of any provision
of this Agreement, or the rights and obligations created hereunder shall be
brought before a conciliation committee of executives representing both parties
which shall, within two weeks after being informed of the dispute, attempt to
work out a recommendation for settlement of the dispute.
17.2 Arbitration. Unless otherwise mandated by applicable law, any
dispute which cannot be settled amicably by conciliation as provided above shall
be heard, settled and decided under the Commercial Arbitration Rules of the
American Arbitration Association by arbitrators appointed in accordance with
such Rules. Such arbitration shall be held in New York, New York if Geotek is
the complaining party and in San Diego, California if HNS is the complaining
party. The award in such arbitration shall be binding, final and enforceable in
any court of competent jurisdiction. In any such arbitration, the parties shall
have the right to take discovery to the extent provided for in the Federal Rules
of Civil Procedure. The award in such arbitration shall be binding, final and
enforceable in any court of competent jurisdiction.
17.3 Captions. The captions used herein are for convenience of
reference only and shall not be deemed as in any way affecting the substantive
meaning of the provisions to which such captions refer.
17.4 No Assignment. Neither party shall assign or otherwise transfer or
convey any of its rights or obligations under this Agreement to any other party
without the prior written consent of the other party, which consent may be
withheld in such party's sole and absolute discretion.
17.5 Severability. Any provision of this Agreement found to be
prohibited by law shall be disregarded to the extent of such prohibition without
invalidating any other provision of this Agreement.
17.6 Force Majeure. If the performance of this Agreement, or any
obligation hereunder (other than an obligation for the payment of money) is
prevented or restricted by reason or fire, war, government action, natural
disaster, delays by PST or other cause beyond the reasonable control of the
party so affected (an Excusable Delay), such party, upon giving notice to the
other shall be excused from performance to the extent of such prevention or
restriction, provided, however, that the affected party shall use its best
efforts to remove such condition as soon as possible. In the event such
Excusable Delay continues for more than five months, either party may terminate
this Agreement and, in that event, the parties shall negotiate a fair and
equitable resolution of the Agreement.
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17.7 Notices. Any notices or other communications hereunder shall be in
writing and shall be sent to the recipient party at its address or facsimile
number set forth below by fax or registered mails.
If to Geotek:
20 Craig Road
Montvale, NJ 07645
Attn: Yaron Eitan
Facsimile: (201) 930-9614
(with a copy to its General Counsel at the same address)
If to HNS:
10450 Pacific Center Court
San Diego, CA 92121
Attn: Jim Gandolfi
Facsimile: (619) 457-4994
(with a copy to its General Counsel at the same address)
Any such notice shall be effective on delivery if delivered in
person; when receipt is acknowledged or confirmed if sent by facsimile; upon
signature of receipt if sent by prepaid certified mail; and upon the expiration
of the second business day after such notice is sent by Federal Express or other
reputable overnight delivery service. The parties may, by notice given in
accordance herewith, designate other addresses and/or facsimile numbers for
receipt of notice.
17.8 Entire Agreement; Modification. The terms and conditions herein
set forth the entire agreement between the parties and shall supersede all
previous communications and agreements, either oral or written, between the
parties with respect to the subject matter of this Agreement. This Agreement can
be modified only by a written amendment executed by both parties. Without
limiting the foregoing, the terms and conditions set forth in this Agreement
shall supersede any inconsistent terms and conditions set forth in any Release
Order or other standard form used by either party.
17.9 Governing Law. This Agreement and performance by the parties
hereunder shall be governed by and construed in accordance with the laws of the
State of New York, U.S.A. without application of its conflicts of law provisions
or principles.
17.10 Title and Risk of Loss. Title and risk of loss or damage to the
Prototypes shall pass to Geotek upon delivery to Geotek, FOB, San Diego,
California. If Geotek returns defective or disapproved Prototypes, risk of loss
or damage shall pass to HNS when Geotek returns them to HNS FOB Geotek's testing
facilities. Title and risk of loss or damage to the Production Units shall pass
to Geotek upon delivery to Geotek, FOB, San Diego, California.
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17.11 Royalties, Reporting, Payments.
(a) In the event that HNS manufactures any products which are
identical to or equivalent to, or derivative from (including future generations)
the PSU900D, which products utilize the Geotek Proprietary Information and which
products are sold or leased by HNS to third parties as permitted under any of
the provisions of this Agreement (but excluding any sales pursuant to the
production order under this Agreement) then HNS shall pay Geotek's licensor(s) a
royalty for each such product sold or leased. The amount of such royalty shall
be equal to and shall be payable on the same terms and conditions as Geotek's
obligation to pay to Geotek's licensor(s).
(b) Geotek shall have the rights, through a third party
accounting firm reasonably acceptable to HNS, to periodically inspect during
ordinary business hours, HNS books of accounts and records pertaining to
products only for the purpose of (i) verifying any royalty payment made under
this Agreement, and/or (ii) to obtain information as to royalties due and
payable in case of failure of HNS to report. Such inspections shall be made no
more often than quarterly. If upon examination it is determined that royalties
due Geotek have been underpaid by HNS by at least 15%, then such royalty payment
and all reasonable costs associated with the examination shall be paid by HNS
within thirty (30) days following such determination.
IN WITNESS WHEREOF, this Agreement has been duly executed by each party
by duly authorized representative on the date first set forth above.
GEOTEK COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Yaron Eitan
-----------------------------
Name: Yaron Eitan
Title: President
HUGHES NETWORK SYSTEMS, INC.
a Delaware corporation
By: /s/ James F. Gandolfi
------------------------------
Name: James F. Gandolfi
Title: Vice President - Digital Cellular
Systems and General Manager
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Annex A
FHMA Technology
[To be supplied by Geotek within 30 days after the Effective Date]
<PAGE>
Annex B
Geotek Specification
[To be supplied by Geotek within 30 days after the Effective Date]
a) Geotek System Level Specification for the PSU900D, incorporating
the following:
The PowerSpectrum System Specification
System Processes and Services
System Algorithms
Common Air Interface
Air Interface Messages
Data System Specification
Base Station Simulator Equipment Description
b) Portable Subscriber Unit Documents, including the following:
Geonet PSU900D Marketing Requirements Documents
Geonet PSU900D Portable Subscriber Unit System Specification
Geonet PSU900D Portable Subscriber Unit Performance Specifications
Geonet PSU900D User Interface Specifications
Geonet PSU900D Industrial Design Description
Geonet PSU900D Requested Production Unit Shipping Schedule
Geonet PSU900D Acceptance Criteria Plan
Geonet CSU Asic Design Description
<PAGE>
Annex C
Design Specification Requirements
The Design Specification delivered pursuant to Section 2.2 of the
Agreement shall include the following documents. All such documents shall upon
approval be incorporated as Annex D, and shall be modified or amended only
pursuant to the terms of Section 2.6 of this Agreement.
PSU900D System Description, including: General hardware design,
General software design, General mechanical design
Audio Performance Specification
Interfaces Control Specifications
User Interfaces Functions and features
Minimum Radio Performance
Acceptance Test Plan - Prototypes and Pre-Production Units
Production Test Plan - Pre-production and Production Units
Reliability Target
Regulatory Compliance Requirements
Manufacturing Yield and Design Margins Goals
Serviceability and Diagnostics
Mechanical and Environmental Specifications
System Constraints
<PAGE>
Annex D
Design Specification and Project Plan
[To be supplied by HNS pursuant to Section 2.2 of the Agreement]
<PAGE>
Annex E
Delivery Schedule
[Information intentionally omitted and filed separately with the
Securities and Exchange Commission in connection with an
application for confidential treatment.]
<PAGE>
Annex F
Development Cost
[Information intentionally omitted and filed separately with the
Securities and Exchange Commission in connection with an
application for confidential treatment.]
<PAGE>
Annex G
Preliminary Product Outline - PSU900D
[Information intentionally omitted and filed separately with the
Securities and Exchange Commission in connection with an
application for confidential treatment.]
<PAGE>
Annex H
Sample Calculations of Vendor Credit
[Information intentionally omitted and filed separately with the
Securities and Exchange Commission in connection with an
application for confidential treatment.]
<PAGE>
Annex I
Credit Agreement
[To be mutually agreed to by HNS and Geotek
within 180 days after the Effective Date]
<PAGE>
Annex J
Collateral for Vendor Credits
Geotek's utilization of the Vendor Credits set forth in Article 6 of the
Agreement shall be conditioned upon HNS' receipt of a Security Agreement
executed by Geotek in form and substance satisfactory to HNS, pledging to HNS,
as collateral for Geotek's full and timely payment of principal and interest in
respect of such Vendor Credits, Geotek's Accounts Receivable attributable to the
sale of PSU900D's.
<PAGE>
Annex K
Conditions to Vendor Financing
The following shall be true as of the date of each borrowing under the Vendor
Financing:
(a) No event or condition shall have occurred and be continuing which
constitutes, or which with notice or the passage of time or both would
constitute, a default or Event of Default under the 14 3/4% Senior Secured
Convertible Notes due 1998 and related documents (as determined by HNS).
(b) Ninety days from Effective Date of this Agreement HNS and Geotek will
mutually agree to other conditions pertaining to Vendor Financing.
(c) Ninety days prior to the first use of the vendor credits, HNS and Geotek
will meet and mutually agree to any adjustments to the financial conditions
which may be required due to changed financial or other business conditions of
either party. Vendor credits cannot be utilized until HNS and Geotek have agreed
that the foregoing financial conditions (as so amended) have been met.
<PAGE>
Annex L
Spare Parts Pricing
[To be supplied by HNS within 90 days
before first production shipment]
